Putnam
Classic Equity
Fund
Item 1. Report to Stockholders:
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The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
5-31-05
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
During the period ended May 31, 2005, the Federal Reserve Board's series
of gradual increases in the federal funds rate occupied investors'
attention. The Fed's more restrictive monetary policy, along with high
energy prices, has moderated the pace of the economic expansion. Recent
reports show the economy is growing at a respectable rate of about 3.5%
annually, but some investors believe that this pace cannot sustain
corporate profits near their robust levels of late. This concern has
held the stock market in check and focused attention on credit risk in
the bond market, even as long-term bond yields remained low. Major
credit rating agencies underscored market concerns in early May by
downgrading bonds issued by Ford and General Motors. Amid the
uncertainties of this environment, security selection takes on even
greater importance and the in-depth, professional research and active
management that mutual funds can provide makes them an intelligent
choice for today's investors.
We want you to know that Putnam Investments' management team, under the
leadership of Chief Executive Officer Ed Haldeman, continues to focus on
investment performance and remains committed to putting the interests of
shareholders first. In keeping with these goals, we are including
additional disclosure about your fund's management team in this report.
Following the Outlook for Your Fund, we provide manager compensation
information that pertains to your fund. In addition, on page 19 of this
report we provide information about the 2004 approval by the Trustees of
your fund's management contract with Putnam.
We would also like to take this opportunity to announce the retirement
of one of your fund's Trustees, Ronald J. Jackson, who has been an
independent Trustee of the Putnam funds since 1996. We thank him for his
service.
In the following pages, members of your fund's management team discuss
the fund's performance, the strategies used to pursue the fund's
investment objectives during the reporting period, and the team's
outlook for the months ahead.
As always, we thank you for your continuing confidence in Putnam.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
July 20, 2005
Report from Fund Management
Fund highlights
* For the six months ended May 31, 2005, Putnam Classic Equity Fund's
class A shares returned 2.85% without sales charges.
* The fund's benchmark, the S&P 500 Index, returned 2.42%.
* The average return for the fund's Lipper category, Large-Cap Value
Funds, was 2.31%.
* See the Performance Summary beginning on page 10 for additional fund
performance, comparative performance, and Lipper data.
Performance commentary
During the first six months of the fund's fiscal year, equity market
returns were generally modest because high energy prices and rising
short-term interest rates combined to constrain economic growth.
Although your fund's returns for the period reflect this environment,
they were nevertheless sufficient to outpace both its benchmark, the S&P
500 Index, and the average for its Lipper peer group, based on results
at net asset value (NAV, or without sales charges). We attribute this
outperformance, in part, to the fund's value orientation, as value
stocks continued to dominate the market through much of the period. In
addition, favorable stock selection and allocation among market sectors
worked to our advantage. In particular, our greater-than-benchmark
weighting within the technology sector boosted the fund's relative
returns.
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TOTAL RETURN FOR
PERIODS ENDED 5/31/05
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Class A
(inception 1/5/95) NAV POP
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6 months 2.85% -2.54%
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1 year 8.73 3.00
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5 years 9.74 4.01
Annual average 1.88 0.79
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10 years 112.13 101.06
Annual average 7.81 7.23
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Annual average
(life of fund) 8.94 8.38
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Data is historical. Past performance does not guarantee 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 NAV do not
reflect a sales charge of 5.25%. For the most recent month-end
performance, visit www.putnaminvestments.com. A short-term trading fee
of up to 2% may apply.
FUND PROFILE
Putnam Classic Equity Fund invests in stocks of midsize and large-cap
companies that we believe are undervalued and undergoing positive
changes. Its relative-value strategy is to pursue attractive
opportunities in all industry sectors, including sectors that are
experiencing rapid growth. The fund may be appropriate for investors
seeking capital growth and, as a secondary goal, the potential for
current income from common stock dividends.
Market overview
The stock market ended 2004 with a flourish, but shortly into 2005,
investors became more cautious. The capital markets reflected concerns
about the pace of monetary tightening by the Federal Reserve Board (the
Fed) and the potential drag on the economy of sustained high oil prices.
Gross domestic product (GDP) increased at an annual rate of 3.5% in the
first quarter, down from 3.8% in the fourth quarter of 2004. As economic
growth slowed, domestic stocks lost ground.
In an environment of rising short-term interest rates, yields on
longer-term bonds were widely expected to rise as well, but just the
opposite occurred, leaving many investors wondering what the bond market
was forecasting. Amid this heightened uncertainty, stocks traded within
a narrow range, yet major indexes did generate positive returns in April
and May. Large-capitalization stocks, which had been lagging small caps
for several years, established a firm lead in 2005. Value stocks
outperformed growth stocks for most of the period, but growth stocks
made a strong comeback in May, the last month of the reporting period.
By far, the strongest sector during the period was the energy sector,
which benefited from heightened demand for energy resources, and pricing
that reached historically high levels. Consumer spending remained
strong, particularly within the housing market, and an increase in
corporate capital spending boosted the technology sector in May.
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MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 5/31/05
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Equities
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S&P 500 Index (broad stock market) 2.42%
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S&P 500/Barra Value Index (large-company value stocks) 1.82%
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S&P 500/Barra Growth Index (large-company growth stocks) 3.07%
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MSCI EAFE Index (international stocks) 1.81%
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Bonds
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Lehman Government Bond Index (U.S. Treasury and agency
securities) 3.27%
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JP Morgan Global High Yield Index (global high-yield
corporate bonds) 0.99%
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Lehman Credit Index (corporate bonds) 3.01%
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These indexes provide an overview of performance in different market
sectors for the six months ended 5/31/05.
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Strategy overview
The fund seeks to outperform its benchmark through effective stock
selection and by adjusting the portfolio's industry and sector
weightings to take advantage of valuation opportunities in the
marketplace. The fund follows a "relative value" investment strategy; in
other words, it does not limit its investments to traditional "value"
sectors or stocks, but rather targets stocks with what we consider to be
the most attractive price/earnings ratios, relative to their peers, in
each industry sector. This gives your management team the flexibility to
invest in faster-growing sectors and also promotes broad diversification
across all market sectors. Relative to its benchmark, the S&P 500 Index,
the fund had an overweighted position in technology. This strategy was
validated during the period as technology stocks, which had been
underperforming, appreciated dramatically in May. The portfolio also
emphasized the U.S. government-sponsored mortgage resellers, Fannie Mae
and Freddie Mac. While this position was not rewarded during the period,
recent developments in the regulatory environment appear to be
favorable. Also, within the financial sector, the portfolio was
significantly underweighted to banks and other businesses whose
profitability relies heavily on taking advantage of yield spreads, i.e.,
the difference in yield between short-term and long-term bonds. The
environment did not favor these types of businesses, as yield spreads
were historically narrow for much of the period. The portfolio did
emphasize insurance stocks, which became attractively priced in the wake
of New York Attorney General Eliot Spitzer's review of insurance
industry practices. The portfolio had underweight positions in
communication services and in the automotive industry, both of which
underperformed.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY WEIGHTINGS COMPARED]
TOP INDUSTRY WEIGHTINGS COMPARED
as of 11/30/04 as of 5/31/05
Financial 10.1% 10.2%
Oil and gas 9.4% 10.0%
Insurance 5.3% 6.9%
Pharmaceuticals 7.4% 6.8%
Electronics 3.2% 5.0%
Footnote reads:
This chart shows how the fund's top weightings have changed over the
last six months. Weightings are shown as a percentage of net assets.
Holdings will vary over time.
How fund holdings affected performance
One of the portfolio's top contributors during the period was Intel,
which manufactures semiconductor chips and microprocessors that are used
in a wide range of computers, networking devices, and communication
products. Shares of the company's stock had been trading very
inexpensively in November when we increased the fund's position. When
the technology sector rebounded in May, Intel appreciated strongly and
boosted the fund's returns. We continue to hold that position. Marathon
Oil was also among the fund's top contributors. It is an integrated oil
company; in other words, it is involved in every aspect of the energy
business, from exploration to refining, marketing, and delivery. For
much of the period, the riskier, specialized exploration and production
(E&P) companies outperformed, but toward the end of the period, the
market favored the more broadly diversified companies. Marathon
benefited from high oil prices and higher profit margins from its
refining operations. We believe the stock still offers appreciation
potential. Office Depot had been lagging behind its major competitor,
Staples, in terms of profitability. A new CEO with a successful track
record of cost-cutting and increasing margins was installed and the
market reacted favorably to this change. As the stock price appreciated
on improved investor sentiment, we trimmed the position.
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TOP HOLDINGS
(Percent of fund's net assets as of 5/31/05)
1 ExxonMobil Corp. (4.4%)
Oil and gas
2 Citigroup, Inc. (3.9%)
Financial
3 Pfizer, Inc. (3.3%)
Pharmaceuticals
4 Intel Corp. (2.9%)
Electronics
5 ChevronTexaco Corp. (2.9%)
Oil and gas
6 Johnson & Johnson (2.5%)
Pharmaceuticals
7 General Electric Co. (2.4%)
Conglomerates
8 JPMorgan Chase & Co. (2.4%)
Financial
9 IBM Corp. (2.3%)
Computers
10 Fannie Mae (2.0%)
Financial
Footnote reads:
The fund's holdings will change over time.
IBM was among the top detractors from results for the period. Technology
stocks and, in particular, stocks of hardware manufacturers, had been
trading at very attractive levels early in the year. We believed that IBM
represented a compelling opportunity and so we established a position in
January. Our thesis was that as corporate capital spending picked up,
technology stocks in general would benefit. While this proved to be true
for Intel, IBM shares had not enjoyed much appreciation as of the end of
the period. We continue to hold the position, and our thesis has not
changed. Shares of Fannie Mae, a government-sponsored entity, also
detracted from returns. This stock has struggled as the company's
accounting practices were called into question and regulatory issues
clouded its future prospects. One issue being considered was whether the
government should set a limit on the company's growth. While there had not
been resolution as of the end of the period, at least one bill had been
proposed that did not call for any such limits on growth, and the market
reaction was favorable. In the weeks since the fund's semiannual period
ended, Fannie Mae's stock price has rallied a bit. Despite the recent
developments, we believe this position still offers potential for
long-term appreciation and are maintaining it. Long-term fund holding Tyco
International increased its first-quarter dividend by nearly 800%, a move
that engendered very high investor expectations. Yet, the slowing rate of
economic growth put pressure on the conglomerate, and shares drifted
downward during the period. We believe the stock continues to represent a
strong value opportunity, and we remain quite bullish. The stock recovered
significantly in the first two weeks of June, after the reporting period
ended.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary
in the future.
The outlook for your fund
The following commentary reflects anticipated developments that could
affect your fund over the next six months, as well as your management
team's plans for responding to them.
Our near-term outlook is one of cautious optimism. We believe that the
Fed may soon stop raising short-term interest rates to avoid a further
flattening of the yield curve. If we are right, this would bode well for
the economy and, we believe, for stock prices as well.
We believe the price of oil is currently settling into a new, higher
range. While we don't think prices will retreat to their prior levels,
we also don't expect them to increase significantly. Accordingly, we
have emphasized stocks of integrated oil companies, because we think
they will benefit from an environment of more stable oil prices.
We believe that corporate capital spending is poised to increase, and
that this will especially benefit the technology sector. The portfolio
is currently positioned with a focus on hardware. We will monitor
developments in the sector and may shift incrementally to software if it
seems prudent to do so. In our view, basic materials have probably
experienced their peak within this economic cycle. We have been taking
profits and reducing the portfolio's exposure to raw materials,
chemicals, and other early-cycle basic industrial stocks. In addition,
we have been adding incrementally to positions in defensive sectors,
such as utilities and health care.
As always, we remain committed to identifying the most attractively
valued stocks in all sectors of the market, in pursuit of above-market
returns. We believe this fund can play an important role in a
diversified portfolio by providing broad exposure to the equities market
and a disciplined, value-oriented strategy.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. The fund invests
some or all of its assets in small and/or midsize companies. Such
investments increase the risk of greater price fluctuations.
Your fund's management
Your fund is managed by the members of the Putnam Large-Cap Value Team.
Michael Abata and Ronald Bukovac are Portfolio Leaders of your fund. The
Portfolio Leaders coordinate the team's management of the fund.
For a complete listing of the members of the Putnam Large-Cap Value
Team, including those who are not Portfolio Leaders or Portfolio Members
of your fund, visit Putnam's Individual Investor Web site at
www.putnaminvestments.com.
Fund ownership
The table below shows how much the fund's current Portfolio Leaders have
invested in the fund (in dollar ranges). Information shown is as of May
31, 2005, and May 31, 2004.
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FUND PORTFOLIO LEADERS
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$1 - $10,001 - $50,001- $100,001 - $500,001 - $1,000,001
Year $0 $10,000 $50,000 $100,000 $500,000 $1,000,000 and over
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Michael Abata 2005 *
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Portfolio Leader N/A
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Ronald Bukovac 2005 *
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Portfolio Leader 2004 *
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N/A indicates the individual was not a Portfolio Leader or Portfolio
Member as of 5/31/04.
Fund manager compensation
The total 2004 fund manager compensation that is attributable to your
fund is approximately $660,000. This amount includes a portion of 2004
compensation paid by Putnam Management to the fund managers listed in
this section for their portfolio management responsibilities, calculated
based on the fund assets they manage taken as a percentage of the total
assets they manage. The compensation amount also includes a portion of
the 2004 compensation paid to the Group Chief Investment Officer of the
fund's broader investment category for his oversight responsibilities,
calculated based on the fund assets he oversees taken as a percentage of
the total assets he oversees. This amount does not include compensation
of other personnel involved in research, trading, administration,
systems, compliance, or fund operations; nor does it include
non-compensation costs. These percentages are determined as of the
fund's fiscal period-end. For personnel who joined Putnam Management
during or after 2004, the calculation reflects annualized 2004
compensation or an estimate of 2005 compensation, as applicable.
Other Putnam funds managed by the Portfolio Leaders
Michael Abata is also a Portfolio Member of The George Putnam Fund of
Boston and Putnam New Value Fund.
Michael Abata and Ronald Bukovac may also manage other accounts and
variable trust funds advised by Putnam Management or an affiliate.
Changes in your fund's Portfolio Leader and Portfolio Members
During the year ended May 31, 2005, Michael Abata and Ronald Bukovac
became Portfolio Leaders of your fund, following the departure of
Portfolio Member Coleman Lannum and Portfolio Leader Deborah Kuenstner
from your fund's management team.
Fund ownership
The table below shows how much the members of Putnam's Executive Board
have invested in the fund (in dollar ranges). Information shown is as of
May 31, 2005, and May 31, 2004.
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PUTNAM EXECUTIVE BOARD
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$1 - $10,001 - $50,001- $100,001
Year $0 $10,000 $50,000 $100,000 and over
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Philippe Bibi 2005 *
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Chief Technology Officer 2004 *
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John Boneparth 2005 *
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Head of Global Institutional Mgmt 2004 *
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Joshua Brooks 2005 *
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Deputy Head of Investments N/A
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Kevin Cronin 2005 *
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Head of Investments 2004 *
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Charles Haldeman, Jr. 2005 *
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President and CEO 2004 *
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Amrit Kanwal 2005 *
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Chief Financial Officer 2004 *
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Steven Krichmar 2005 *
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Chief of Operations 2004 *
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Francis McNamara, III 2005 *
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General Counsel 2004 *
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Richard Monaghan 2005 *
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Head of Retail Management 2004 *
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Richard Robie, III 2005 *
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Chief Administrative Officer 2004 *
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Edward Shadek 2005 *
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Deputy Head of Investments N/A
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N/A indicates the individual was not a member of Putnam's Executive
Board as of 5/31/04.
Performance summary
This section shows your fund's performance during the first half of its
fiscal year, which ended May 31, 2005. In accordance with regulatory
requirements, we also include performance for the most current calendar
quarter-end. Performance should always be considered in light of a
fund's investment strategy. Data represents past performance. Past
performance does not guarantee 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. For the most recent month-end performance, please visit
www.putnaminvestments.com.
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TOTAL RETURN FOR PERIODS ENDED 5/31/05
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Class A Class B Class C Class M Class R
(inception dates) (1/5/95) (1/5/95) (2/1/99) (1/5/95) (12/1/03)
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NAV POP NAV CDSC NAV CDSC NAV POP NAV
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6 months 2.85% -2.54% 2.40% -2.60% 2.45% 1.45% 2.61% -0.98% 2.67%
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1 year 8.73 3.00 7.90 2.90 7.88 6.88 8.24 4.43 8.42
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5 years 9.74 4.01 5.68 3.68 5.71 5.71 7.07 3.31 8.43
Annual average 1.88 0.79 1.11 0.72 1.12 1.12 1.38 0.65 1.63
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10 years 112.13 101.06 96.53 96.53 96.89 96.89 101.75 94.79 106.84
Annual average 7.81 7.23 6.99 6.99 7.01 7.01 7.27 6.89 7.54
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Annual average
(life of fund) 8.94 8.38 8.11 8.11 8.13 8.13 8.39 8.02 8.67
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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 5.25% and 3.50%, respectively (which
for class M shares does not reflect a reduction in sales charges that
went into effect on April 1, 2005; if this reduction had been in place
for all periods indicated, returns would have been higher). 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. Class R shares have no initial
sales charge or CDSC. Performance for class C and R shares before their
inception is derived from the historical performance of
class A shares, adjusted for the applicable sales charge (or CDSC) and
higher operating expenses for such shares.
A 2% short-term trading fee may be applied to shares exchanged or sold
within 5 days of purchase.
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 5/31/05
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Lipper Large-Cap
S&P 500 Value Funds
Index category average*
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6 months 2.42% 2.31%
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1 year 8.24 10.17
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5 years -9.26 16.64
Annual average -1.93 2.94
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10 years 163.54 152.78
Annual average 10.18 9.57
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Annual average
(life of fund) 11.45 10.69
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Index and Lipper results should be compared to fund performance at net
asset value.
* Over the 6 month and 1-year, 5-year, and 10-year periods ended
5/31/05, there were 442, 434, 230, and 103 funds, respectively, in this
Lipper category.
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PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 5/31/05
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Class A Class B Class C Class M Class R
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Distributions (number) 2 2 2 2 2
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Income $0.135 $0.087 $0.085 $0.104 $0.122
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Capital gains -- -- -- -- --
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Total $0.135 $0.087 $0.085 $0.104 $0.122
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Share value: NAV POP NAV NAV NAV POP NAV
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11/30/04 $12.48 $13.17 $12.37 $12.45 $12.42 $12.87 $12.47
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5/31/05 12.70 13.40 12.58 12.67 12.64 13.06* 12.68
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Current return
(end of period)
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Current dividend rate 1 0.88% 0.84% 0.10% 0.09% 0.38% 0.37% 0.66%
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Current 30-day
SEC yield 2 0.83 0.78 0.10 0.09 0.34 0.33 0.59
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* Reflects a reduction in sales charges that took effect on April 1,
2005.
1 Most recent distribution, excluding capital gains, annualized and
divided by NAV or POP at end of period.
2 Based only on investment income, calculated using SEC guidelines.
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TOTAL RETURN FOR PERIODS ENDED 6/30/05 (MOST RECENT CALENDAR QUARTER)
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Class A Class B Class C Class M Class R
(inception dates) (1/5/95) (1/5/95) (2/1/99) (1/5/95) (12/1/03)
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NAV POP NAV CDSC NAV CDSC NAV POP NAV
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6 months 0.51% -4.78% 0.20% -4.80% 0.15% -0.85% 0.27% -3.24% 0.33%
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1 year 7.14 1.52 6.30 1.29 6.25 5.25 6.64 2.89 6.78
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5 years 11.64 5.74 7.50 5.50 7.45 7.45 8.93 5.15 10.24
Annual average 2.23 1.12 1.46 1.08 1.45 1.45 1.73 1.01 1.97
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10 years 110.74 99.62 95.38 95.38 95.47 95.47 100.48 93.41 105.41
Annual average 7.74 7.16 6.93 6.93 6.93 6.93 7.20 6.82 7.46
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Annual average
(life of fund) 8.95 8.39 8.12 8.12 8.14 8.14 8.40 8.03 8.67
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Understanding your
fund's expenses
As a mutual fund investor, you pay ongoing expenses, such as management
fees, distribution fees (12b-1 fees), and other expenses. Using the
information below, you can estimate how these expenses affect your
investment and compare them with the expenses of other funds. You may
also pay one-time transaction expenses, including sales charges (loads)
and redemption fees, which are not shown in this section and would have
resulted in higher total expenses. For more information, see your fund's
prospectus or talk to your financial advisor.
Review your fund's expenses
The table below shows the expenses you would have paid on a $1,000
investment in Putnam Classic Equity Fund from December 1, 2004, to May
31, 2005. It also shows how much a $1,000 investment would be worth at
the close of the period, assuming actual returns and expenses.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 5/31/05
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Class A Class B Class C Class M Class R
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Expenses paid per
$1,000* $5.87 $9.64 $9.64 $8.39 $7.12
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Ending value (after
expenses) $1,028.50 $1,024.00 $1,024.50 $1,026.10 $1,026.70
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* Expenses for each share class are calculated using the fund's
annualized expense ratio for each class, which represents the ongoing
expenses as a percentage of net assets for the six months ended 5/31/05.
The expense ratio may differ for each share class (see the table at the
bottom of the next page). Expenses are calculated by multiplying the
expense ratio by the average account value for the period; then
multiplying the result by the number of days in the period; and then
dividing that result by the number of days in the year.
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended May
31, 2005, use the calculation method below. To find the value of your
investment on December 1, 2004, go to www.putnaminvestments.com and log
on to your account. Click on the "Transaction History" tab in your Daily
Statement and enter 12/01/2004 in both the "from" and "to" fields.
Alternatively, call Putnam at 1-800-225-1581.
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HOW TO CALCULATE THE EXPENSES YOU PAID
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Total
Value of your Expenses paid expenses
investment on 12/1/04 [DIV] $1,000 X per $1,000 = paid
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Example Based on a $10,000 investment in class A shares of your fund.
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$10,000 [DIV] $1,000 X $5.87 (see table above) = $58.70
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Comparing your fund's expenses with those of other funds
Using the SEC's method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines
to help investors assess fund expenses. Per these guidelines, the table
below shows your fund's expenses based on a $1,000 investment, assuming
a hypothetical 5% annualized return. You can use this information to
compare the ongoing expenses (but not transaction expenses or total
costs) of investing in the fund with those of other funds. All mutual
fund shareholder reports will provide this information to help you make
this comparison. Please note that you cannot use this information to
estimate your actual ending account balance and expenses paid during the
period.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return for the 6 months ended 5/31/05
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Class A Class B Class C Class M Class R
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Expenses paid per
$1,000* $5.84 $9.60 $9.60 $8.35 $7.09
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Ending value (after
expenses) $1,019.15 $1,015.41 $1,015.41 $1,016.65 $1,017.90
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* Expenses for each share class are calculated using the fund's
annualized expense ratio for each class, which represents the ongoing
expenses as a percentage of net assets for the six months ended 5/31/05.
The expense ratio may differ for each share class (see the table at the
bottom of this page). Expenses are calculated by multiplying the expense
ratio by the average account value for the period; then multiplying the
result by the number of days in the period; and then dividing that
result by the number of days in the year.
Using industry averages to compare expenses
You can also compare your fund's expenses with the average of its peer
group, as defined by Lipper, an independent fund-rating agency that
ranks funds relative to others that Lipper considers to have similar
investment styles or objectives. The expense ratio for each share class
shown below indicates how much of your fund's net assets have been used
to pay ongoing expenses during the period.
- -----------------------------------------------------------------------------
EXPENSE RATIO COMPARISONS USING ANNUALIZED DATA
- -----------------------------------------------------------------------------
Class A Class B Class C Class M Class R
- -----------------------------------------------------------------------------
Your fund's annualized
expense ratio 1.16% 1.91% 1.91% 1.66% 1.41%
- -----------------------------------------------------------------------------
Average annualized expense
ratio for Lipper peer
group+ 1.20% 1.95% 1.95% 1.70% 1.45%
- -----------------------------------------------------------------------------
+ Simple average of the expenses of all front-end load funds in the fund's
Lipper peer group, calculated in accordance with Lipper's standard
method for comparing fund expenses (excluding 12b-1 fees and without
giving effect to any expense offset and brokerage service arrangements
that may reduce fund expenses). This average reflects each fund's
expenses for its most recent fiscal year available to Lipper as of
3/31/05. To facilitate comparison, Putnam has adjusted this average to
reflect the 12b-1 fees carried by each class of shares. The peer group
may include funds that are significantly smaller or larger than the
fund, which may limit the comparability of the fund's expenses to the
simple average, which typically is higher than the asset-weighted
average.
Understanding your fund's
portfolio turnover
Putnam funds are actively managed by teams of experts who buy and sell
securities based on intensive analysis of companies, industries,
economies, and markets. Portfolio turnover is a measure of how often a
fund's managers buy and sell securities for your fund. A portfolio
turnover of 100%, for example, means that the managers sold and replaced
securities valued at 100% of a fund's assets within a one-year period.
Funds with high turnover may be more likely to generate capital gains
and dividends that must be distributed to shareholders as taxable
income. High turnover may also cause a fund to pay more brokerage
commissions and other transaction costs, which may detract from
performance.
- ------------------------------------------------------------------------------
TURNOVER COMPARISONS
percentage of holdings that change every year
- ------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------
Putnam Classic Equity
Fund 44% 56% 48% 81% 80%
- ------------------------------------------------------------------------------
Lipper Large-Cap Value
Funds category
average 53% 77% 65% 73% 77%
- ------------------------------------------------------------------------------
Turnover data for the fund is calculated based on the fund's fiscal-year
period, which ends on November 30. Turnover data for the fund's Lipper
category is calculated based on the average of the turnover of each fund
in the category for its fiscal year ended during the indicated year.
Fiscal years vary across funds in the Lipper category, which may limit
the comparability of the fund's portfolio turnover rate to the Lipper
average. Comparative data for 2004 is based on information available as
of 3/31/05.
Risk comparison
This risk comparison is designed to help you understand how your fund
compares with other funds. The comparison utilizes a risk measure
developed by Morningstar, an independent fund-rating agency. This risk
measure is referred to as the fund's Overall Morningstar Risk.
[GRAPHIC OMITTED: chart MORNINGSTAR [REGISTRATION MARK] RISK]
MORNINGSTAR [REGISTRATION MARK] RISK
Fund's Overall
Morningstar Risk 2.12
U.S. stock
fund average 3.10
0% INCREASING RISK 100%
Your fund's Overall Morningstar Risk is shown alongside that of the
average fund in its broad asset class, as determined by Morningstar. The
risk bar broadens the comparison by translating the fund's Overall
Morningstar Risk into a percentile, which is based on the fund's ranking
among all funds rated by Morningstar as of June 30, 2005. A higher Overall
Morningstar Risk generally indicates that a fund's monthly returns have
varied more widely.
Morningstar determines a fund's Overall Morningstar Risk by assessing
variations in the fund's monthly returns -- with an emphasis on downside
variations -- over 3-, 5-, and 10-year periods, if available. Those
measures are weighted and averaged to produce the fund's Overall
Morningstar Risk. The information shown is provided for the fund's class
A shares only; information for other classes may vary. Overall
Morningstar Risk is based on historical data and does not indicate
future results. Morningstar does not purport to measure the risk
associated with a current investment in a fund, either on an absolute
basis or on a relative basis. Low Overall Morningstar Risk does not mean
that you cannot lose money on an investment in a fund. Copyright 2004
Morningstar, Inc. All Rights Reserved. The information contained herein
(1) is proprietary to Morningstar and/or its content providers; (2) may
not be copied or distributed; and (3) is not warranted to be accurate,
complete, or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this
information.
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. NAV
is calculated by dividing the net assets of each class of shares by the
number of outstanding shares in the class.
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 5.25% maximum sales charge for class A
shares and 3.50% for class M shares (since reduced to 3.25%).
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).
Class R shares are not subject to an initial sales charge or CDSC and
are available only to certain defined contribution plans.
Comparative indexes
JP Morgan Global High Yield Index is an unmanaged index of global
high-yield fixed-income securities.
Lehman Credit Index is an unmanaged index of investment-grade corporate
bonds.
Lehman Government Bond Index is an unmanaged index of U.S. Treasury and
agency securities.
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
index of equity securities from developed countries in Western Europe,
the Far East, and Australasia.
S&P 500 Index is an unmanaged index of common stock performance.
S&P 500/Barra Growth Index is an unmanaged capitalization-weighted index
of large-cap stocks chosen for their growth orientation.
S&P 500/Barra Value Index is an unmanaged capitalization-weighted index
of large-cap stocks chosen for their value orientation.
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.
Lipper is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
Trustee approval of management contract
General conclusions
The Board of Trustees of the Putnam funds oversees the management of
each fund and, as required by law, determines annually whether to
approve the continuance of each fund's management contract with Putnam
Management. In this regard the Board of Trustees, with the assistance of
its Contract Committee consisting solely of Independent Trustees,
requests and evaluates all information it deems reasonably necessary in
the circumstances. Over the course of several months beginning in March
and ending in June of 2004, the Contract Committee reviewed the
information provided by Putnam Management and other information
developed with the assistance of the Board's independent counsel and
independent staff. The Contract Committee reviewed and discussed key
aspects of this information with all of the Independent Trustees. Upon
completion of this review, the Contract Committee recommended and the
Independent Trustees approved the continuance of your fund's contract,
effective July 1, 2004.
This approval was based on the following conclusions:
* That the fee schedule currently in effect for your fund represents
reasonable compensation in light of the nature and quality of the
services being provided to the fund, the fees paid by competitive funds
and the costs incurred by Putnam Management in providing such service,
and
* That such fee schedule represents an appropriate sharing between fund
shareholders and Putnam Management of such economies of scale as may
exist in the management of the fund at current asset levels.
These conclusions were based on a comprehensive consideration of all
information provided to the Trustees and were not the result of any
single factor. Some of the factors that figured particularly in the
Trustees' deliberations are described below.
Model fee schedules and categories; total expenses
The Trustees, working in cooperation with Putnam Management, have
developed and implemented a series of model fee schedules for the Putnam
funds designed to ensure that each fund's management fee is consistent
with the fees for similar funds in the Putnam complex and compares
favorably with fees paid by competitive funds sponsored by other advisors.
The Trustees reviewed the model fee schedule currently in effect for the
fund, including fee levels and breakpoints, and the assignment of the fund
to a particular fee category under this structure. The Trustees also
reviewed comparative fee and expense information for competitive funds.
The Trustees concluded that no changes should be made in the fund's
current fee schedule at this time. The Trustees noted that expense ratios
for a number of Putnam funds had been increasing recently as a result of
declining net assets and the natural operation of fee breakpoints. They
noted that such expense ratio increases were currently being controlled by
expense limitations implemented in January 2004. They also noted that the
competitive landscape regarding mutual fund fees may be changing as a
result of fee reductions accepted by various other fund groups in
connection with recent regulatory settlements and greater focus on fees
and expenses in the mutual fund industry generally. The Trustees indicated
an intention to monitor these developments closely.
Economies of scale
As noted above, the Trustees concluded that the fee schedule currently
in effect for your fund represents an appropriate sharing of economies
of scale at current asset levels. The Trustees indicated their intention
to continue their ongoing consideration of economies of scale and in
particular to consider further the possible operation of such economies
in the event that a significant recovery in the equity markets or net
fund sales were to raise asset levels substantially above current
levels. In this regard, the Trustees noted that they had reviewed data
relating to the substantial increase in asset levels of the Putnam funds
that occurred during the years leading up to the market peak in 2000,
the subsequent decline in assets and the resulting impact on revenues
and expenses of Putnam Management. The Trustees also noted that recent
declines in net assets in many Putnam funds, together with significant
changes in the cost structure of Putnam Management have altered the
economics of Putnam Management's business in significant ways. The
Trustees concluded that they would monitor these changes carefully and
evaluate the resulting impact on Putnam Management's economics and the
sharing of economies of scale between the parties.
Investment performance
The quality of the investment process provided by Putnam Management
represented a major factor in the Trustees' evaluation of the quality of
services provided by Putnam Management under the Management Contracts.
The Trustees recognized that a high quality investment process -- as
measured by the experience and skills of the individuals assigned to the
management of fund portfolios, the resources made available to such
personnel, and in general the ability of Putnam Management to attract
and retain high-quality personnel -- does not guarantee favorable
investment results for every fund in every time period. The Trustees
considered the investment performance of each fund over multiple time
periods and considered information comparing the fund's performance with
various benchmarks and with the performance of competitive funds. The
Trustees noted the satisfactory investment performance of many Putnam
funds.
They also noted the disappointing investment performance of certain
funds in recent years and continued to discuss with senior management of
Putnam Management the factors contributing to such under-performance and
actions being taken to improve performance. The Trustees recognized
that, in recent years, Putnam Management has made significant changes in
its investment personnel and processes and in the fund product line in
an effort to address areas of underperformance. The Trustees indicated
their intention to continue to monitor performance trends to assess the
effectiveness of these changes and to evaluate whether additional
remedial changes are warranted. As a general matter, the Trustees
concluded that consultation between the Trustees and Putnam Management
represents the most effective way to address investment performance
problems. The Trustees believe that investors in the Putnam funds and
their financial advisors have, as a general matter, effectively placed
their trust in the Putnam organization, under the supervision of the
funds' Trustees, to make appropriate decisions regarding the management
of the funds. The Trustees believe that the termination of the
Management Contract and engagement of a new investment adviser for
under-performing funds, with all the attendant disruptions, would not
serve the interests of fund shareholders at this time and would not
necessarily provide any greater assurance of improved investment
performance.
Brokerage and soft-dollar allocations; other benefits
The Trustees considered various potential benefits that Putnam
Management may receive in connection with the services it provides under
the Management Contract with your fund. These include principally
benefits related to brokerage and soft-dollar allocations, which pertain
mainly to funds investing in equity securities. The Trustees believe
that soft-dollar credits and other potential benefits associated with
the allocation of fund brokerage represent assets of the funds that
should be used for the benefit of fund shareholders. The Trustees noted
recent trends in the allocation of fund brokerage, including commission
costs, the allocation of brokerage to firms that provide research
services to Putnam Management, and the sources and application of
available soft-dollar credits. Effective December 31, 2003, reflecting a
decision made by the Trustees earlier that year, Putnam Management
ceased allocating brokerage in connection with the sale of fund shares.
In addition, in preparing its budget for commission allocations in 2004,
Putnam Management voluntarily reduced substantially the allocation of
brokerage commissions to acquire research services from third-party
service providers. In light of evolving best practices in the mutual
fund industry, the Trustees concluded that this practice should be
further curtailed and possibly eliminated in the near future. The
Trustees indicated that they would continue to monitor the allocation of
the funds' brokerage to ensure that the principle of "best price and
execution" remains paramount in the portfolio trading process.
Comparison of retail and institutional fee schedules
The information examined by the Trustees as part of the annual contract
reviews included information regarding fees charged by Putnam Management
and its affiliates to institutional clients such as defined benefit
pension plans and college endowments. This information included
comparison of such fees with fees charged to the Putnam funds, as well
as a detailed assessment of the differences in the services provided to
these two types of clients. The Trustees devoted special attention to
these issues and reviewed recent articles by critics of mutual fund
fees, articles by the ICI defending such fee differences, and relevant
guidance provided by decisions of the courts. The Trustees observed, in
this regard, that the differences in fee rates between institutional
clients and mutual funds are by no means uniform when examined by
individual asset sectors, suggesting that differences in the pricing of
investment management services to these types of clients reflects to a
substantial degree historical competitive forces operating in separate
market places. In reaching their conclusions, the Trustees considered
the fact that fee rates across all asset sectors are higher on average
for mutual funds than for institutional clients, and also considered the
differences between the services that Putnam provides to the Putnam
funds and those that it provides to institutional clients of the firm.
Settlement of regulatory charges related to market timing
Finally, in reaching their conclusions, the Trustees considered all
matters pertinent to the administrative charges filed against Putnam
Management by the SEC and the Commonwealth of Massachusetts in October
2003 relating to market timing, the firm's settlement of those charges,
and the conclusions and recommendations of the Trustees' Audit and
Pricing Committee based on its review of these matters. The Trustees
considered the actions taken by the owner of Putnam Management and its
new senior management to terminate or discipline the individuals
involved, to implement new compliance systems, to indemnify the funds
against all costs and liabilities related to these matters, and
otherwise to ensure that the interests of the funds and their
shareholders are fully protected. The Trustees noted that, in addition
to the settlements of the regulatory charges which will provide
comprehensive restitution for any losses suffered by shareholders, the
new senior management of Putnam Management has moved aggressively to
control expense ratios of funds affected by market timing, to reduce
charges to new investors, to improve disclosure of fees and expenses,
and to emphasize the paramount role of investment performance in
achieving shareholders' investment goals.
Other information for shareholders
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
Proxy voting
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. The Putnam funds' proxy voting guidelines and
procedures, as well as information regarding how your fund voted proxies
relating to portfolio securities during the 12-month period ended June
30, 2004, are available on the Putnam Individual Investor Web site,
www.putnaminvestments.com/individual, and on the SEC's Web site,
www.sec.gov. If you have questions about finding forms on the SEC's Web
site, you may call the SEC at 1-800-SEC-0330. You may also obtain the
Putnam funds' proxy voting guidelines and procedures at no charge by
calling Putnam's Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
The fund will file a complete schedule of its portfolio holdings with
the SEC for the first and third quarters of each fiscal year on Form
N-Q. Shareholders may obtain the fund's Forms N-Q on the SEC's Web site
at www.sec.gov. In addition, the fund's Forms N-Q may be reviewed and
copied at the SEC's public reference room in Washington, D.C. You may
call the SEC at 1-800-SEC-0330 for information about the SEC's Web site
or the operation of the public reference room.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and 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 period.
Statement of changes in net assets shows how the fund's net assets were
affected by the fund's net investment gain or loss, by distributions to
shareholders, and by changes in the number of the fund's shares. It
lists distributions and their sources (net investment income or realized
capital gains) over the current reporting period and the most recent
fiscal year-end. The distributions listed here may not match the sources
listed in the Statement of operations because the distributions are
determined on a tax basis and may be paid in a different period from the
one in which they were earned.
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.
The fund's portfolio
May 31, 2005 (Unaudited)
Common stocks (99.7%) (a)
Number of shares Value
Aerospace and Defense (1.9%)
- -------------------------------------------------------------------------------
99,800 Boeing Co. (The) $6,377,220
175,700 Lockheed Martin Corp. 11,401,173
--------------
17,778,393
Automotive (0.4%)
- -------------------------------------------------------------------------------
114,000 American Axle & Manufacturing
Holdings, Inc. (S) 2,359,800
14,100 Magna International, Inc. Class A
(Canada) 958,941
--------------
3,318,741
Banking (3.7%)
- -------------------------------------------------------------------------------
323,100 Bank of America Corp. 14,965,992
410,700 U.S. Bancorp 12,045,831
112,700 Wells Fargo & Co. (S) 6,808,207
--------------
33,820,030
Beverage (0.6%)
- -------------------------------------------------------------------------------
112,600 Coca-Cola Co. (The) 5,025,338
Biotechnology (0.4%)
- -------------------------------------------------------------------------------
63,400 Amgen, Inc. (NON) 3,967,572
Broadcasting (0.3%)
- -------------------------------------------------------------------------------
89,200 Viacom, Inc. Class B 3,058,668
Building Materials (1.5%)
- -------------------------------------------------------------------------------
300,000 Masco Corp. 9,606,000
73,900 Vulcan Materials Co. (S) 4,428,827
--------------
14,034,827
Cable Television (0.6%)
- -------------------------------------------------------------------------------
155,700 Comcast Corp. Class A (NON) (S) 5,013,540
Chemicals (0.9%)
- -------------------------------------------------------------------------------
101,000 Dow Chemical Co. (The) 4,574,290
59,400 PPG Industries, Inc. 3,884,166
--------------
8,458,456
Commercial and Consumer Services (1.6%)
- -------------------------------------------------------------------------------
98,100 ARAMARK Corp. Class B (S) 2,561,391
585,400 Cendant Corp. 12,416,334
--------------
14,977,725
Communications Equipment (1.2%)
- -------------------------------------------------------------------------------
587,500 Cisco Systems, Inc. (NON) 11,385,750
Computers (4.9%)
- -------------------------------------------------------------------------------
121,300 Dell, Inc. (NON) 4,838,657
821,600 Hewlett-Packard Co. 18,494,216
284,600 IBM Corp. 21,501,530
--------------
44,834,403
Conglomerates (3.6%)
- -------------------------------------------------------------------------------
599,700 General Electric Co. 21,877,056
370,700 Tyco International, Ltd. (S) 10,724,351
--------------
32,601,407
Consumer Finance (2.8%)
- -------------------------------------------------------------------------------
105,000 Capital One Financial Corp. 7,917,000
349,800 Countrywide Financial Corp. 13,002,066
260,200 Providian Financial Corp. (NON) 4,636,764
--------------
25,555,830
Consumer Goods (1.1%)
- -------------------------------------------------------------------------------
127,500 Estee Lauder Cos., Inc. (The) Class
A (S) 4,983,975
89,900 Procter & Gamble Co. (The) 4,957,985
--------------
9,941,960
Containers (0.7%)
- -------------------------------------------------------------------------------
172,500 Ball Corp. 6,477,375
Electric Utilities (2.6%)
- -------------------------------------------------------------------------------
196,500 Alliant Energy Corp. 5,423,400
54,500 Constellation Energy Group, Inc. 2,913,025
243,300 PG&E Corp. 8,702,841
114,500 PPL Corp. 6,584,895
--------------
23,624,161
Electronics (5.0%)
- -------------------------------------------------------------------------------
992,800 Intel Corp. 26,736,104
804,500 Motorola, Inc. 13,974,165
174,700 Storage Technology Corp. (NON) 5,639,316
--------------
46,349,585
Energy (0.3%)
- -------------------------------------------------------------------------------
42,400 Cooper Cameron Corp. (NON) (S) 2,506,264
Financial (10.2%)
- -------------------------------------------------------------------------------
769,800 Citigroup, Inc. 36,265,278
316,600 Fannie Mae 18,755,384
261,000 Freddie Mac 16,975,440
607,200 JPMorgan Chase & Co. 21,707,400
--------------
93,703,502
Food (1.1%)
- -------------------------------------------------------------------------------
82,600 General Mills, Inc. 4,088,700
321,100 Tyson Foods, Inc. Class A (S) 5,927,506
--------------
10,016,206
Forest Products and Packaging (0.9%)
- -------------------------------------------------------------------------------
130,500 Weyerhaeuser Co. 8,371,575
Gaming & Lottery (0.3%)
- -------------------------------------------------------------------------------
106,400 GTECH Holdings Corp. 3,004,736
Health Care Services (2.5%)
- -------------------------------------------------------------------------------
148,100 AmerisourceBergen Corp. (S) 9,562,817
140,300 Cardinal Health, Inc. 8,127,579
50,000 CIGNA Corp. 4,862,500
--------------
22,552,896
Homebuilding (0.6%)
- -------------------------------------------------------------------------------
24,500 Lennar Corp. 1,421,245
5,600 NVR, Inc. (NON) 4,250,400
--------------
5,671,645
Household Furniture and Appliances (0.7%)
- -------------------------------------------------------------------------------
94,500 Whirlpool Corp. (S) 6,501,600
Insurance (6.9%)
- -------------------------------------------------------------------------------
288,900 ACE, Ltd. (Bermuda) 12,486,258
37,200 American International Group, Inc. 2,066,460
125,800 Chubb Corp. (The) 10,596,134
120,500 Hartford Financial Services Group,
Inc. (The) 9,012,195
59,900 Lincoln National Corp. 2,727,247
181,300 MetLife, Inc. 8,085,980
24,500 Prudential Financial, Inc. 1,551,095
108,800 St. Paul Travelers Cos., Inc. (The) 4,121,344
258,750 W.R. Berkley Corp. 9,175,275
52,100 XL Capital, Ltd. Class A (Bermuda) 3,922,088
--------------
63,744,076
Investment Banking/Brokerage (2.1%)
- -------------------------------------------------------------------------------
27,000 Goldman Sachs Group, Inc. (The) 2,632,500
101,400 Lehman Brothers Holdings, Inc. 9,349,080
138,800 Merrill Lynch & Co., Inc. 7,531,288
--------------
19,512,868
Leisure (0.6%)
- -------------------------------------------------------------------------------
137,700 Brunswick Corp. (S) 5,926,608
Lodging/Tourism (0.4%)
- -------------------------------------------------------------------------------
74,100 Royal Caribbean Cruises, Ltd. 3,416,751
Machinery (1.2%)
- -------------------------------------------------------------------------------
45,500 Cummins, Inc. 3,091,725
125,300 Parker-Hannifin Corp. 7,559,349
--------------
10,651,074
Manufacturing (0.7%)
- -------------------------------------------------------------------------------
61,800 Dover Corp. 2,340,366
55,500 Ingersoll-Rand Co. Class A (Bermuda) 4,296,255
--------------
6,636,621
Media (0.7%)
- -------------------------------------------------------------------------------
160,400 Time Warner, Inc. (NON) 2,790,960
131,500 Walt Disney Co. (The) 3,608,360
--------------
6,399,320
Medical Technology (2.0%)
- -------------------------------------------------------------------------------
41,400 Becton, Dickinson and Co. 2,378,430
281,100 Boston Scientific Corp. (NON) (S) 7,614,999
157,200 Medtronic, Inc. 8,449,500
--------------
18,442,929
Metals (1.0%)
- -------------------------------------------------------------------------------
128,800 Alcoa, Inc. 3,490,480
146,500 United States Steel Corp. (S) 5,826,305
--------------
9,316,785
Natural Gas Utilities (0.6%)
- -------------------------------------------------------------------------------
141,400 Sempra Energy 5,609,338
Oil & Gas (10.0%)
- -------------------------------------------------------------------------------
105,200 Amerada Hess Corp. (S) 9,767,820
496,100 ChevronTexaco Corp. 26,680,258
716,700 ExxonMobil Corp. 40,278,540
247,700 Marathon Oil Corp. 12,010,973
28,600 Sunoco, Inc. 2,933,502
--------------
91,671,093
Pharmaceuticals (6.8%)
- -------------------------------------------------------------------------------
67,200 Barr Pharmaceuticals, Inc. (NON) (S) 3,415,104
35,800 Eli Lilly Co. 2,087,140
338,600 Johnson & Johnson 22,720,060
1,081,300 Pfizer, Inc. 30,168,270
84,900 Wyeth 3,682,113
--------------
62,072,687
Photography/Imaging (0.9%)
- -------------------------------------------------------------------------------
595,000 Xerox Corp. (NON) 8,074,150
Railroads (0.4%)
- -------------------------------------------------------------------------------
117,400 Norfolk Southern Corp. 3,747,408
Regional Bells (2.6%)
- -------------------------------------------------------------------------------
678,600 Verizon Communications, Inc. 24,008,868
Restaurants (1.2%)
- -------------------------------------------------------------------------------
360,600 McDonald's Corp. 11,156,964
Retail (4.4%)
- -------------------------------------------------------------------------------
74,700 Best Buy Co., Inc. 4,065,921
193,200 Gap, Inc. (The) (S) 4,057,200
151,900 Lowe's Cos., Inc. 8,690,199
286,200 Office Depot, Inc. (NON) 5,643,864
1,304,600 Rite Aid Corp. (NON) 5,166,216
72,600 Safeway, Inc. (S) 1,597,926
171,300 Supervalu, Inc. 5,611,788
125,500 Wal-Mart Stores, Inc. 5,927,365
--------------
40,760,479
Schools (0.3%)
- -------------------------------------------------------------------------------
69,900 Career Education Corp. (NON) 2,423,433
Shipping (0.2%)
- -------------------------------------------------------------------------------
39,100 Yellow Roadway Corp. (NON) 2,063,698
Software (2.3%)
- -------------------------------------------------------------------------------
280,700 BMC Software, Inc. (NON) 4,777,514
382,200 Microsoft Corp. 9,860,760
512,200 Oracle Corp. (NON) 6,566,404
--------------
21,204,678
Technology Services (0.5%)
- -------------------------------------------------------------------------------
113,300 Fiserv, Inc. (NON) 4,871,900
Telecommunications (0.2%)
- -------------------------------------------------------------------------------
81,100 PanAmSat Holding Corp. 1,541,711
Tobacco (3.3%)
- -------------------------------------------------------------------------------
456,200 Altria Group, Inc. 30,629,268
--------------
Total Common stocks
(cost $871,837,066) $916,434,892
Short-term investments (3.0%) (a)
Principal amount Value
- -------------------------------------------------------------------------------
$5,901,093 Putnam Prime Money Market Fund (d) $5,901,093
21,614,725 Short-term investments held as
collateral for loaned
securities with yields ranging from
3.01% to 3.21% and due dates ranging
from June 1, 2005 to June 27, 2005
(e) 21,592,238
--------------
Total Short-term investments
(cost $27,493,331) $27,493,331
- -------------------------------------------------------------------------------
Total Investments
(cost $899,330,397) $943,928,223
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $918,830,481.
(NON) Non-income-producing security.
(S) Securities on loan, in part or in entirety, at May 31, 2005.
(d) See Note 5 to the financial statements regarding investments in
Putnam Prime Money Market Fund.
(e) See Note 1 to the financial statements.
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
May 31, 2005 (Unaudited)
Assets
- -------------------------------------------------------------------------------
Investment in securities, at value, including $21,003,559 of securities
on loan (Note 1):
- -------------------------------------------------------------------------------
Unaffiliated issuers (identified cost $893,429,304) $938,027,130
- -------------------------------------------------------------------------------
Affiliated issuers (identified cost $5,901,093) 5,901,093
- -------------------------------------------------------------------------------
Dividends, interest and other receivables 2,156,852
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 120,595
- -------------------------------------------------------------------------------
Total assets 946,205,670
Liabilities
- -------------------------------------------------------------------------------
Payable for securities purchased 1,366,089
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,737,496
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Notes 2 and 5) 1,421,259
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 356,740
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 187,938
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 3,299
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 477,276
- -------------------------------------------------------------------------------
Collateral on securities loaned, at value (Note 1) 21,592,238
- -------------------------------------------------------------------------------
Other accrued expenses 232,854
- -------------------------------------------------------------------------------
Total liabilities 27,375,189
- -------------------------------------------------------------------------------
Net assets $918,830,481
Represented by
- -------------------------------------------------------------------------------
Paid-in capital (Unlimited shares authorized) (Notes 1 and
4) $1,014,995,678
- -------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 3,171,725
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (143,934,748)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 44,597,826
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $918,830,481
Computation of net asset value and offering price
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($649,473,582 divided by 51,143,627 shares) $12.70
- -------------------------------------------------------------------------------
Offering price per class A share (100/94.75 of $12.70)* $13.40
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($212,784,899 divided by 16,911,402 shares)** $12.58
- -------------------------------------------------------------------------------
Net asset value and offering price per class C share
($16,325,704 divided by 1,288,940 shares)** $12.67
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($34,388,415 divided by 2,721,122 shares) $12.64
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $12.64)* $13.06
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class R share ($12,871 divided by 1,015 shares) $12.68
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class Y share ($5,845,010 divided by 459,942 shares) $12.71
- -------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial
statements.
Statement of operations
Six months ended May 31, 2005 (Unaudited)
Investment income:
- -------------------------------------------------------------------------------
Dividends (net of foreign tax of $4,733) $9,621,077
- -------------------------------------------------------------------------------
Interest (including interest income of $72,981 from
investments in affiliated issuers) (Note 5) 72,981
- -------------------------------------------------------------------------------
Securities lending 12,947
- -------------------------------------------------------------------------------
Other income (Note 6) 492,361
- -------------------------------------------------------------------------------
Total investment income 10,199,366
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 2,890,673
- -------------------------------------------------------------------------------
Investor servicing fees (Note 2) 1,199,433
- -------------------------------------------------------------------------------
Custodian fees (Note 2) 92,100
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 21,886
- -------------------------------------------------------------------------------
Administrative services (Note 2) 27,131
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 818,140
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,231,186
- -------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 74,960
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 135,280
- -------------------------------------------------------------------------------
Distribution fees -- Class R (Note 2) 28
- -------------------------------------------------------------------------------
Other 128,109
- -------------------------------------------------------------------------------
Non-recurring costs (Notes 2 and 6) 6,935
- -------------------------------------------------------------------------------
Costs assumed by Manager (Notes 2 and 6) (6,935)
- -------------------------------------------------------------------------------
Fees waived and reimbursed by Manager (Note 5) (4,483)
- -------------------------------------------------------------------------------
Total expenses 6,614,443
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (260,551)
- -------------------------------------------------------------------------------
Net expenses 6,353,892
- -------------------------------------------------------------------------------
Net investment income 3,845,474
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 54,846,920
- -------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 1,108
- -------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (2,858)
- -------------------------------------------------------------------------------
Net realized gain on written options (Notes 1 and 3) 6,395
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments, futures
contracts and written options during the period (32,744,343)
- -------------------------------------------------------------------------------
Net gain on investments 22,107,222
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $25,952,696
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Six months ended Year ended
May 31 November 30
Decrease in net assets 2005* 2004
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income $3,845,474 $9,027,920
- -------------------------------------------------------------------------------
Net realized gain on investments and foreign
currency transactions 54,851,565 109,644,711
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments (32,744,343) 8,652,067
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 25,952,696 127,324,698
- -------------------------------------------------------------------------------
Distributions to shareholders: (Note 1)
- -------------------------------------------------------------------------------
From net investment income
Class A (7,064,145) (6,556,784)
- -------------------------------------------------------------------------------
Class B (1,924,307) (454,000)
- -------------------------------------------------------------------------------
Class C (118,829) (18,601)
- -------------------------------------------------------------------------------
Class M (313,521) (173,759)
- -------------------------------------------------------------------------------
Class R (112) (35)
- -------------------------------------------------------------------------------
Class Y (75,864) (74,853)
- -------------------------------------------------------------------------------
Redemption fees (Note 1) 201 36
- -------------------------------------------------------------------------------
Decrease from capital share transactions
(Note 4) (99,207,515) (269,690,513)
- -------------------------------------------------------------------------------
Total decrease in net assets (82,751,396) (149,643,811)
Net assets
- -------------------------------------------------------------------------------
Beginning of period 1,001,581,877 1,151,225,688
- -------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $3,171,725 and
$8,823,029, respectively) $918,830,481 $1,001,581,877
- -------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $12.48 $11.18 $10.09 $11.88 $12.52 $13.95
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (a) .06 (d)(e) .13 (e) .11 .11 .11 .12
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .30 1.28 1.08 (1.81) (.65) (.11)
- ---------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .36 1.41 1.19 (1.70) (.54) .01
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.14) (.11) (.10) (.09) (.10) (.12)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- (1.32)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.14) (.11) (.10) (.09) (.10) (1.44)
- ---------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (f) -- (f) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.70 $12.48 $11.18 $10.09 $11.88 $12.52
- ---------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 2.85* (d) 12.65 11.85 (14.38) (4.33) .12
- ---------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $649,474 $661,852 $766,396 $929,950 $1,159,070 $1,099,713
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .58* (e) 1.17 (e) 1.11 1.04 .97 .94
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .51* (d)(e) 1.09 (e) 1.12 .99 .88 .97
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 30.49* 43.68 55.57 47.91 80.65 80.05
- ---------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
(d) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to $0.01 per share and 0.05% of average net assets for class A
shares (Note 6).
(e) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
May 31, 2005 and November 30, 2004 reflect a reduction of less than
0.01% of average net assets for class A shares (Note 5).
(f) 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 B
- ---------------------------------------------------------------------------------------------------------------------------
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $12.37 $11.08 $10.00 $11.77 $12.40 $13.82
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (a) .02 (d)(e) .04 (e) .04 .02 .02 .03
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .28 1.27 1.06 (1.78) (.65) (.11)
- ---------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .30 1.31 1.10 (1.76) (.63) (.08)
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.09) (.02) (.02) (.01) -- (f) (.02)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- (1.32)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.09) (.02) (.02) (.01) -- (1.34)
- ---------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (f) -- (f) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.58 $12.37 $11.08 $10.00 $11.77 $12.40
- ---------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 2.40* (d) 11.81 11.02 (15.00) (5.07) (.59)
- ---------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $212,785 $277,457 $311,914 $362,466 $728,188 $1,032,497
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .95* (e) 1.92 (e) 1.86 1.79 1.72 1.69
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .14* (d)(e) .34 (e) .37 .22 .13 .22
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 30.49* 43.68 55.57 47.91 80.65 80.05
- ---------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
(d) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to $0.01 per share and 0.05% of average net assets for class B
shares (Note 6).
(e) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
May 31, 2005 and November 30, 2004 reflect a reduction of less than
0.01% of average net assets for class B shares (Note 5).
(f) 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 C
- ---------------------------------------------------------------------------------------------------------------------------
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $12.45 $11.15 $10.06 $11.85 $12.48 $13.91
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (a) .02 (d)(e) .03 (e) .04 .02 .02 .03
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .29 1.28 1.07 (1.80) (.65) (.11)
- ---------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .31 1.31 1.11 (1.78) (.63) (.08)
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.09) (.01) (.02) (.01) -- (f) (.03)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- (1.32)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.09) (.01) (.02) (.01) -- (1.35)
- ---------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (f) -- (f) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.67 $12.45 $11.15 $10.06 $11.85 $12.48
- ---------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 2.45* (d) 11.77 11.05 (15.05) (5.02) (.63)
- ---------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $16,326 $17,591 $19,378 $24,587 $36,580 $37,786
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .95* (e) 1.92 (e) 1.86 1.79 1.72 1.69
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .14* (d)(e) .34 (e) .37 .23 .13 .22
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 30.49* 43.68 55.57 47.91 80.65 80.05
- ---------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
(d) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to $0.01 per share and 0.05% of average net assets for class C
shares (Note 6).
(e) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
May 31, 2005 and November 30, 2004 reflect a reduction of less than
0.01% of average net assets for class C shares (Note 5).
(f) 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
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $12.42 $11.13 $10.04 $11.82 $12.45 $13.87
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (a) .03 (d)(e) .07 (e) .06 .05 .05 .06
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .29 1.27 1.07 (1.80) (.65) (.11)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .32 1.34 1.13 (1.75) (.60) (.05)
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income (.10) (.05) (.04) (.03) (.03) (.05)
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- (1.32)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.10) (.05) (.04) (.03) (.03) (1.37)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (f) -- (f) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.64 $12.42 $11.13 $10.04 $11.82 $12.45
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 2.61* (d) 12.04 11.34 (14.82) (4.79) (.35)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $34,388 $38,187 $47,467 $64,254 $101,349 $120,613
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .83* (e) 1.67 (e) 1.61 1.54 1.47 1.44
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .26* (d)(e) .58 (e) .63 .48 .38 .47
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 30.49* 43.68 55.57 47.91 80.65 80.05
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
(d) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to $0.01 per share and 0.05% of average net assets for class M
shares (Note 6).
(e) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
May 31, 2005 and November 30, 2004 reflect a reduction of less than
0.01% of average net assets for class M shares (Note 5).
(f) 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 R
- ---------------------------------------------------------------------------------------
Six months For the period
ended December 1,
May 31 2003+ to
Per-share (Unaudited) November 30
operating performance 2005 2004
- ---------------------------------------------------------------------------------------
Net asset value,
beginning of period $12.47 $11.18
- ---------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------
Net investment income (a) .05 (d)(e) .13 (e)
- ---------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .28 1.26
- ---------------------------------------------------------------------------------------
Total from
investment operations .33 1.39
- ---------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------
From net investment income (.12) (.10)
- ---------------------------------------------------------------------------------------
Total distributions (.12) (.10)
- ---------------------------------------------------------------------------------------
Redemption fees -- (f) -- (f)
- ---------------------------------------------------------------------------------------
Net asset value,
end of period $12.68 $12.47
- ---------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 2.67* (d) 12.45
- ---------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $13 $11
- ---------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .70* (e) 1.42 (e)
- ---------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .39* (d)(e) 1.14 (e)
- ---------------------------------------------------------------------------------------
Portfolio turnover (%) 30.49* 43.68
- ---------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
(d) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to $0.01 per share and 0.06% of average net assets for class R
shares (Note 6).
(e) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
May 31, 2005 and November 30, 2004 reflect a reduction of less than
0.01% of average net assets for class R shares (Note 5).
(f) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS Y
- ---------------------------------------------------------------------------------------------------------------------------
Six months
ended
May 31
Per-share (Unaudited) Year ended November 30
operating performance 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $12.49 $11.19 $10.10 $11.88 $12.53 $13.96
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (a) .08 (d)(e) .16 (e) .14 .14 .14 .15
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .29 1.28 1.07 (1.80) (.66) (.11)
- ---------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .37 1.44 1.21 (1.66) (.52) .04
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.15) (.14) (.12) (.12) (.13) (.15)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- (1.32)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.15) (.14) (.12) (.12) (.13) (1.47)
- ---------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (f) -- (f) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.71 $12.49 $11.19 $10.10 $11.88 $12.53
- ---------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 2.98* (d) 12.95 12.12 (14.09) (4.15) .38
- ---------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $5,845 $6,485 $6,071 $6,538 $8,882 $11,347
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .45* (e) .92 (e) .86 .79 .72 .69
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) .63* (d)(e) 1.36 (e) 1.37 1.23 1.13 1.21
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 30.49* 43.68 55.57 47.91 80.65 80.05
- ---------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
(d) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to $0.01 per share and 0.05% of average net assets for class Y
shares (Note 6).
(e) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
May 31, 2005 and November 30, 2004 reflect a reduction of less than
0.01% of average net assets for class Y shares (Note 5).
(f) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial
statements.
Notes to financial statements
May 31, 2005 (Unaudited)
Note 1
Significant accounting policies
Putnam Classic Equity Fund ("the fund"), a Massachusetts business trust,
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The fund seeks
capital growth as a primary objective and current income as a secondary
objective by investing primarily in a portfolio of common stocks that
offer the potential for capital growth, current income or both.
The fund offers class A, class B, class C, class M, class R and class Y
shares. Class A and class M shares are sold with a maximum front-end
sales charge of 5.25% and 3.25%, respectively, and do not pay a
contingent deferred sales charge. Prior to April 1, 2005, the maximum
front-end sales charge for class M shares was 3.50%. Class B shares,
which convert to class A shares after approximately eight years, do not
pay a front-end sales charge and are subject to a contingent deferred
sales charge, if those shares are redeemed within six years of purchase.
Class C shares have a one-year 1.00% contingent deferred sales charge
and do not convert to class A shares. Class R shares, which are offered
to qualified employee-benefit plans, are sold without a front-end sales
charge or a contingent deferred sales charge. The expenses for class A,
class B, class C, class M and class R shares may differ based on each
class' distribution fee, which is identified in Note 2. Class Y shares,
which are sold at net asset value, are generally subject to the same
expenses as class A, class B, class C, class M and class R shares, but
do not bear a distribution fee. Class Y shares are sold to certain
eligible purchasers including certain defined contribution plans
(including corporate IRAs), bank trust departments and trust companies.
A 2.00% redemption fee may apply to any shares that are redeemed (either
by selling or exchang ing into another fund) within 5 days of purchase.
The redemption fee is accounted for as an addition to paid-in-capital.
Investment income, realized and unrealized gains and losses and expenses
of the fund are borne pro-rata based on the relative net assets of each
class to the total net assets of the fund, except that each class bears
expenses unique to that class (including the distribution fees
applicable to such classes). Each class votes as a class only with
respect to its own distribution plan or other matters on which a class
vote is required by law or determined by the Trustees. Shares of each
class would receive their pro-rata share of the net assets of the fund,
if the fund were liquidated. In addition, the Trustees declare separate
dividends on each class of shares.
In the normal course of business, the fund enters into contracts that
may include agreements to indemnify another party under given
circumstances. The fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be, but have not
yet been, made against the fund. However, the fund expects the risk of
material loss to be remote.
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 valued at the last reported sales price on their principal
exchange, or official closing price for certain markets. If no sales are
reported -- as in the case of some securities traded over-the-counter -- a
security is valued at its last reported bid price. Many securities markets
and exchanges outside the U.S. close prior to the close of the New York
Stock Exchange and therefore the closing prices for securities in such
markets or on such exchanges may not fully reflect events that occur after
such close but before the close of the New York Stock Exchange.
Accordingly, on certain days, the fund will fair value foreign securities
taking into account multiple factors, including movements in the U.S.
securities markets. The number of days on which fair value prices will be
used will depend on market activity and it is possible that fair value
prices will be used by the fund to a significant extent.
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 valued at amortized cost, which
approximates fair value. Other investments, including certain restricted
securities, are valued at fair value following procedures approved by
the Trustees. Such valuations and procedures are reviewed periodically
by the Trustees.
B) Joint trading account Pursuant to an exemptive order from the
Securities and Exchange Com mis sion, the fund may transfer uninvested
cash balances, including cash collateral received under security lending
arrangements, into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Man agement, LLC ("Putnam Management"), the fund's
manager, an indirect wholly-owned sub sidiary of Putnam, LLC. These
balances may be invested in issues 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) Security transactions and related investment income Security
transactions are recorded 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, net of applicable withholding taxes, is
recognized on the ex-dividend date. Non-cash dividends, if any, are
recorded at the fair market value of the securities received.
D) 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 earned or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized
appreciation and depreciation of assets and liabilities in foreign
currencies arise from changes in the value of open forward currency
contracts and assets and liabilities other than investments at the
period end, resulting from changes in the exchange rate. Investments in
foreign securities involve certain risks, including those related to
economic instability, unfavorable political developments, and currency
fluctuations, not present with domestic investments.
E) 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. Risks may exceed amounts recognized on the statement of assets
and liabilities. 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. If a written call option is exercised,
the premium originally received is recorded as an addition to sales
proceeds. If a written put option is exercised, the premium originally
received is recorded as a reduction to the cost of investments.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The fund and the broker
agree to exchange 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.
Futures and written option contracts outstanding at period end, if any,
are listed after the fund's portfolio.
F) Security lending The fund may lend securities, through its agents, 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 the fund's agents; 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 May 31, 2005, the value of
securities loaned amounted to $21,003,559. The fund received cash
collateral of $21,592,238 which is pooled with collateral of other
Putnam funds into 21 issuers of high grade short-term investments.
G) 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 of 1986 (the "Code") applicable
to regulated investment companies. It is also the intention of the fund
to distribute an amount sufficient to avoid imposition of any excise tax
under Section 4982 of the Code, 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 November 30, 2004, the fund had a capital loss carryover of
$198,332,878 available to the extent allowed by the Code to offset
future net capital gain, if any. This capital loss carryover will expire
on November 30, 2010.
The aggregate identified cost on a tax basis is $899,790,455, resulting
in gross unrealized appreciation and depreciation of $99,435,789 and
$55,298,021, respectively, or net unrealized appreciation of
$44,137,768.
H) 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. Reclassifications are made to the fund's capital
accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on the following annual rates: 0.65% of the first $500 million
of average net assets, 0.55% of the next $500 million, 0.50% of the next
$500 million, 0.45% of the next $5 billion, 0.425% of the next $5
billion, 0.405% of the next $5 billion, 0.39% of the next $5 billion and
0.38% thereafter.
Putnam Management has agreed to waive fees and reimburse expenses of the
fund through November 30, 2005, to the extent necessary to ensure that
the fund's expenses do not exceed the average expenses of the front-end
load funds viewed by Lipper, Inc. as having the same investment
classification or objective as the fund. The expense reimbursement is
based on a com parison of the fund's expenses with the average
annualized operating expenses of the funds in its Lipper peer group for
each calendar quarter during the fund's last fiscal year, excluding
12b-1 fees and without giving effect to any expense offset and brokerage
service arrangements that may reduce fund expenses. For the period ended
May 31, 2005, Putnam Management did not waive any of its management fee
from the fund.
For the period ended May 31, 2005, Putnam Management has assumed $6,935
of legal, shareholder servicing and communication, audit and Trustee
fees incurred by the fund in connection with certain legal and
regulatory matters (including those described in Note 6).
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 subsidiary of Putnam, LLC. Putnam
Investor Services, a division of PFTC, provides investor servicing agent
functions to the fund. During the six months ended May 31, 2005, the
fund paid PFTC $1,289,873 for these services.
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 six months ended May 31, 2005,
the fund's expenses were reduced by $260,551 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $2,045, as a quarterly retainer, 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.
George Putnam III also receives the foregoing fees for his service as a
Trustee.
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 Trustee compensation and expenses in the
statement of operations. Accrued pension liability is included in
Payable for Trustee compensation and expenses in the statement of assets
and liabilities. The Trustees have terminated the Pension Plan with
respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C, class M and class R 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 in distributing shares of the
fund. The Plans provide for payments by the fund to Putnam Retail
Management at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and
1.00% of the average net assets attributable to class A, class B, class
C, class M and class R shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, 0.75% and
0.50% of the average net assets attributable to class A, class B, class
C, class M and class R shares, respectively.
For the six months ended May 31, 2005, Putnam Retail Management, acting
as underwriter, received net commissions of $24,195 and $688 from the
sale of class A and class M shares, respectively, and received $118,538
and $326 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 six months ended May 31, 2005, Putnam
Retail Management, acting as underwriter, received $1,020 and no monies
on class A and class M redemptions, respectively.
Note 3
Purchases and sales of securities
During the six months ended May 31, 2005, cost of purchases and proceeds
from sales of investment securities other than short-term invest ments
aggregated $291,377,289 and $377,722,625, respectively. There were no
purchases or sales of U.S. government securities.
Written option transactions during the period are summarized as follows:
Contract Premiums
Amounts Received
- ----------------------------------------------------------------
Written options
outstanding at
beginning of period 6,997 $6,395
- ----------------------------------------------------------------
Options opened -- --
Options expired (6,997) (6,395)
Options closed -- --
- ----------------------------------------------------------------
Written options
outstanding at
end of period -- $--
- ----------------------------------------------------------------
Note 4
Capital shares
At May 31, 2005, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended May 31, 2005
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 4,604,921 $57,841,858
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 529,201 6,708,228
- ----------------------------------------------------------------
5,134,122 64,550,086
Shares repurchased (7,015,300) (88,240,734)
- ----------------------------------------------------------------
Net decrease (1,881,178) $(23,690,648)
- ----------------------------------------------------------------
Year ended November 30, 2004
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 3,120,943 $37,140,578
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 524,762 6,232,947
- ----------------------------------------------------------------
3,645,705 43,373,525
Shares repurchased (19,166,210) (227,471,721)
- ----------------------------------------------------------------
Net decrease (15,520,505) $(184,098,196)
- ----------------------------------------------------------------
Six months ended May 31, 2005
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 404,047 $5,038,434
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 144,370 1,814,904
- ----------------------------------------------------------------
548,417 6,853,338
Shares repurchased (6,070,312) (75,654,515)
- ----------------------------------------------------------------
Net decrease (5,521,895) $(68,801,177)
- ----------------------------------------------------------------
Year ended November 30, 2004
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 1,374,416 $16,243,572
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 36,130 427,110
- ----------------------------------------------------------------
1,410,546 16,670,682
Shares repurchased (7,133,911) (83,997,514)
- ----------------------------------------------------------------
Net decrease (5,723,365) $(67,326,832)
- ----------------------------------------------------------------
Six months ended May 31, 2005
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 78,439 $981,501
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 8,707 110,240
- ----------------------------------------------------------------
87,146 1,091,741
Shares repurchased (211,438) (2,656,265)
- ----------------------------------------------------------------
Net decrease (124,292) $(1,564,524)
- ----------------------------------------------------------------
Year ended November 30, 2004
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 160,235 $1,901,093
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 1,431 17,091
- ----------------------------------------------------------------
161,666 1,918,184
Shares repurchased (486,560) (5,769,909)
- ----------------------------------------------------------------
Net decrease (324,894) $(3,851,725)
- ----------------------------------------------------------------
Six months ended May 31, 2005
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 54,264 $678,930
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 23,723 299,496
- ----------------------------------------------------------------
77,987 978,426
Shares repurchased (430,891) (5,393,540)
- ----------------------------------------------------------------
Net decrease (352,904) $(4,415,114)
- ----------------------------------------------------------------
Year ended November 30, 2004
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 177,128 $2,103,567
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 13,954 165,394
- ----------------------------------------------------------------
191,082 2,268,961
Shares repurchased (1,383,129) (16,387,932)
- ----------------------------------------------------------------
Net decrease (1,192,047) $(14,118,971)
- ----------------------------------------------------------------
Six months ended May 31, 2005
- ----------------------------------------------------------------
Class R Shares Amount
- ----------------------------------------------------------------
Shares sold 536 $6,734
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 9 112
- ----------------------------------------------------------------
545 6,846
Shares repurchased (403) (5,047)
- ----------------------------------------------------------------
Net increase 142 $1,799
- ----------------------------------------------------------------
For the period December 1, 2003
(commencement of operations)
to November 30, 2004
- ----------------------------------------------------------------
Class R Shares Amount
- ----------------------------------------------------------------
Shares sold 870 $10,291
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 3 35
- ----------------------------------------------------------------
873 10,326
Shares repurchased -- --
- ----------------------------------------------------------------
Net increase 873 $10,326
- ----------------------------------------------------------------
Six months ended May 31, 2005
- ----------------------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------------------
Shares sold 40,971 $518,236
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 5,984 75,864
- ----------------------------------------------------------------
46,955 594,100
Shares repurchased (106,181) (1,331,951)
- ----------------------------------------------------------------
Net decrease (59,226) $(737,851)
- ----------------------------------------------------------------
Year ended November 30, 2004
- ----------------------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------------------
Shares sold 115,239 $1,357,919
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 6,298 74,853
- ----------------------------------------------------------------
121,537 1,432,772
Shares repurchased (144,892) (1,737,887)
- ----------------------------------------------------------------
Net decrease (23,355) $(305,115)
- ----------------------------------------------------------------
At May 31, 2005, Putnam , LLC owned 91 class R shares of the
fund (9.0% of class R shares outstanding), valued at $1,154.
Note 5
Investment in Putnam Prime Money Market Fund
Pursuant to an exemptive order from the Securities and Exchange
Commission, the fund invests in Putnam Prime Money Market Fund, an
open-end management investment company managed by Putnam Management.
Management fees paid by the fund are reduced by an amount equal to the
management and administrative services fees paid by Putnam Prime Money
Market Fund with respect to assets invested by the fund in Putnam Prime
Money Market Fund. For the period ended May 31, 2005, management fees
paid were reduced by $4,483 relating to the fund's investment in Putnam
Prime Money Market Fund. Income distributions earned by the fund are
recorded as income in the statement of operations and totaled $72,981
for the period ended May 31, 2005. During the period ended May 31, 2005,
cost of purchases and cost of sales of investments in Putnam Prime Money
Market Fund aggregated $71,483,327 and $83,234,991, respectively.
Note 6
Regulatory matters and litigation
Putnam Management has entered into agreements with the Securities and
Exchange Commission and the Massachusetts Securities Division settling
charges connected with excessive short-term trading by Putnam employees
and, in the case of the charges brought by the Massachusetts Securities
Division, by participants in some Putnam-administered 401(k) plans.
Pursuant to these settlement agreements, Putnam Manage ment will pay a
total of $193.5 million in penalties and restitution, with $153.5
million being paid to shareholders and the funds. The restitution amount
will be allocated to shareholders pursuant to a plan developed by an
independent consultant, with payments to shareholders following approval
of the plan by the SEC and the Massachusetts Securities Division.
The Securities and Exchange Commission's and Massachusetts Securities
Division's allegations and related matters also serve as the general
basis for numerous lawsuits, including purported class action lawsuits
filed against Putnam Management and certain related parties, including
certain Putnam funds. Putnam Management will bear any costs incurred by
Putnam funds in connection with these lawsuits. Putnam Management
believes that the likelihood that the pending private lawsuits and
purported class action lawsuits will have a material adverse financial
impact on the fund is remote, and the pending actions are not likely to
materially affect its ability to provide investment management services
to its clients, including the Putnam funds.
On March 23, 2005, Putnam Management entered into a settlement with the
Securities and Exchange Commission resolving its inquiry into Putnam
Management's alleged failure to fully and effectively disclose a former
brokerage allocation practice to the Board of Trustees and shareholders
of the Putnam Funds. This practice, which Putnam Management ceased as of
January 1, 2004, involved allocating a portion of the brokerage on
mutual fund portfolio transactions to certain broker-dealers who sold
shares of Putnam mutual funds. Under the settlement order, Putnam
Management has paid a civil penalty of $40 million and disgorgement of
$1 to the Securities and Exchange Commission. These amounts, which are
included in Other income on the Statement of operations, subsequently
will be distributed to certain Putnam funds pursuant to a plan to be
approved by the Securities and Exchange Commission. As part of the
settlement, Putnam Management neither admitted nor denied any
wrongdoing.
Putnam Investments has recorded a charge of $30 million for the
estimated cost that it believes will be necessary to address issues
relating to the calculation of certain amounts paid by the Putnam mutual
funds in previous years. The previous payments were cost reimbursements
by the Putnam funds to Putnam for transfer agent services relating to
defined contribution operations. Putnam currently anticipates that any
payments made by Putnam related to this issue will be paid to the Putnam
funds. Review of this issue is ongoing.
Results of November 11, 2004 and January 10, 2005 shareholder meetings
(Unaudited)
An annual meeting of shareholders of the fund was held on November 11,
2004. At that meeting consideration of certain proposals was adjourned
to a final meeting held on January 10, 2005.
November 11, 2004 meeting
At the meeting, each of the nominees for Trustees was elected, as
follows:
Votes Votes
For Withheld
- -----------------------------------------------------------------
Jameson A. Baxter 43,762,901 1,752,192
Charles B. Curtis 43,763,445 1,751,648
Myra R. Drucker 43,698,010 1,817,083
Charles E. Haldeman, Jr. 43,741,894 1,773,199
John A. Hill 43,765,454 1,749,639
Ronald J. Jackson* 43,765,482 1,749,611
Paul L. Joskow 43,776,492 1,738,601
Elizabeth T. Kennan 43,749,991 1,765,102
John H. Mullin, III 43,752,155 1,762,937
Robert E. Patterson 43,738,373 1,776,720
George Putnam, III 43,693,604 1,821,489
A.J.C. Smith+ 43,651,617 1,863,476
W. Thomas Stephens 43,807,793 1,707,299
Richard B. Worley 43,744,307 1,770,786
A proposal to amend the fund's fundamental investment restriction with
respect to borrowing to allow the fund the investment flexibility
permitted by the Investment Company Act was approved as follows:
Votes Votes
For Against Abstentions
- -----------------------------------------------------------------
31,211,273 2,609,612 11,694,208
* Mr. Jackson retired from the Board of Trustees on June 10, 2005.
+ Mr. Smith resigned from the Board of Trustees on January 14, 2005.
All tabulations are rounded to nearest whole number.
A proposal to amend the fund's fundamental investment restriction with
respect to making loans to enhance the fund's ability to participate in an
interfund borrowing and lending program was approved as follows:
Votes Votes
For Against Abstentions
- -----------------------------------------------------------------
31,385,253 2,375,154 11,754,686
A proposal to amend the fund's fundamental investment restriction with
respect to diversification of investments to enhance the fund's ability
to invest in registered investment companies such as Putnam Prime Money
Market Fund was approved as follows:
Votes Votes
For Against Abstentions
- -----------------------------------------------------------------
32,598,840 1,334,739 11,581,514
A proposal to amend the fund's fundamental investment restriction with
respect to senior securities to clarify that permitted borrowings are not
prohibited was approved as follows:
Votes Votes
For Against Abstentions
- -----------------------------------------------------------------
31,967,964 1,701,492 11,845,637
January 10, 2005 meeting
A proposal to amend the fund's Agreement and Declaration of Trust to
permit the fund to satisfy redemption requests other than in cash was
defeated as follows:
Votes Votes
For Against Abstentions
- -----------------------------------------------------------------
31,866,342 1,722,631 12,037,711
All tabulations are rounded to nearest whole number.
Brokerage commissions
(Unaudited)
Brokerage commissions are paid to firms that execute trades on behalf of
your fund. When choosing these firms, Putnam is required by law to seek
the best execution of the trades, taking all relevant factors into
consideration, including expected quality of execution and commission
rate. Listed below are the largest relationships based upon brokerage
commissions for your fund and the other funds in Putnam's Large-Cap Value
group for the year ended May 31, 2005. The other Putnam mutual funds in
this group are The George Putnam Fund of Boston, Putnam Convertible
Income-Growth Trust, Putnam Equity Income Fund, The Putnam Fund for Growth
and Income, Putnam New Value Fund, Putnam VT Equity Income Fund, Putnam VT
The George Putnam Fund of Boston, Putnam VT Growth and Income Fund, and
Putnam VT New Value Fund.
The top five firms that received brokerage commissions for trades executed
for the Large-Cap Value group are (in descending order) Goldman Sachs,
Citigroup Global Markets, Deutsche Bank Securities, Lehman Brothers, and
Merrill Lynch. Commissions paid to these firms together represented
approximately 48% of the total brokerage commissions paid for the year
ended May 31, 2005.
Commissions paid to the next 10 firms together represented approximately
32% of the total brokerage commissions paid during the period. These firms
are (in alphabetical order) Bank of America, Bear Stearns & Company,
Credit Suisse First Boston, Investment Technology Group, JP Morgan
Clearing, Lazard Freres & Co., Morgan Stanley Dean Witter, RBC Capital
Markets, UBS Warburg, and Wachovia Securities.
Additional information about brokerage commissions is available on the
Securities and Exchange Commission (SEC) Web site at www.sec.gov. Putnam
funds disclose commissions by firm to the SEC in semiannual filings on
form N-SAR.
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds.
Investors should carefully consider the investment objective, risks,
charges, and expenses of a fund before investing. For a prospectus
containing this and other information for any Putnam fund or product, call
your financial advisor at 1-800-225-1581 and ask for a prospectus. Please
read the prospectus carefully before investing.
Growth Funds
Discovery Growth Fund
Growth Opportunities Fund
Health Sciences Trust
International New Opportunities Fund*
New Opportunities Fund
OTC & Emerging Growth Fund
Small Cap Growth Fund
Vista Fund
Voyager Fund
Blend Funds
Capital Appreciation Fund
Capital Opportunities Fund
Europe Equity Fund*
Global Equity Fund*
Global Natural Resources Fund*
International Capital
Opportunities Fund*
International Equity Fund*
Investors Fund
Research Fund
Tax Smart Equity Fund
Utilities Growth and Income Fund
Value Funds
Classic Equity Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth
and Income
International Growth and Income Fund*
Mid Cap Value Fund
New Value Fund
Small Cap Value Fund+
Income Funds
American Government Income Fund
Diversified Income Trust
Floating Rate Income Fund
Global Income Trust*
High Yield Advantage Fund*+
High Yield Trust*
Income Fund
Limited Duration Government
Income Fund++
Money Market Fund[SECTION MARK]
U.S. Government Income Trust
* A 1% redemption fee on total assets redeemed or exchanged between 6 and 90
days of purchase may be imposed for all share classes of these funds.
+ Closed to new investors.
++ Formerly Putnam Intermediate U.S. Government Income Fund.
[SECTION MARK] An investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to
preserve your investment at $1.00 per share, it is possible
to lose money by investing in the fund.
The Putnam family of funds
Tax-free Income Funds
AMT-Free Insured Municipal Fund**
Tax Exempt Income Fund
Tax Exempt Money Market Fund
Tax-Free High Yield Fund
State tax-free income funds:
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio, and Pennsylvania
Asset Allocation Portfolios
Putnam Asset Allocation Portfolios--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
Putnam RetirementReady[REGISTRATION MARK] Funds
Putnam RetirementReady Funds -- ten investment portfolios that offer
diversification among stocks, bonds, and money market instruments and
adjust to become more conservative over time based on a target date for
withdrawing assets.
The ten funds:
Putnam RetirementReady 2050 Fund
Putnam RetirementReady 2045 Fund
Putnam RetirementReady 2040 Fund
Putnam RetirementReady 2035 Fund
Putnam RetirementReady 2030 Fund
Putnam RetirementReady 2025 Fund
Putnam RetirementReady 2020 Fund
Putnam RetirementReady 2015 Fund
Putnam RetirementReady 2010 Fund
Putnam RetirementReady Maturity Fund
** Formerly Putnam Tax-Free Insured Fund.
With the exception of money market funds, a 2% redemption fee may be
applied to shares exchanged or sold within 5 days of purchase.
Check your account balances and the most recent month-end performance
at www.putnaminvestments.com.
Putnam puts your interests first
In January 2004, Putnam began introducing a number of voluntary
initiatives designed to reduce fund expenses, provide investors with more
useful information, and help safeguard the interests of all Putnam
investors. Visit www.putnaminvestments.com for details.
Cost-cutting initiatives
Reduced sales charges
The maximum sales charge for class A shares has been reduced to 5.25% for
equity funds (formerly 5.75%) and 3.75% for most income funds (formerly 4.50%).
The maximum sales charge for class M shares has been reduced to 3.25% for
equity funds (formerly 3.50%).*
Lower class B purchase limit
To help ensure that investors are in the most cost-effective share class,
the maximum amount that can be invested in class B shares has been reduced
to $100,000. (Larger trades or accumulated amounts will be refused.)
Ongoing expenses will be limited
Through calendar 2005, total ongoing expenses, including management fees
for all funds, will be maintained at or below the average of each fund's
industry peers in its Lipper load-fund universe. For more information,
please see the Statement of Additional information.
Improved disclosure
Putnam fund prospectuses and shareholder reports have been revised to
disclose additional information that will help shareholders compare funds
and weigh their costs and risks along with their potential benefits.
Shareholders will find easy-to-understand information about fund expense
ratios, portfolio manager compensation, risk comparisons, turnover
comparisons, brokerage commissions, and employee and trustee ownership of
Putnam funds. Disclosure of breakpoint discounts has also been enhanced to
alert investors to potential cost savings.
Protecting investors' interests
Short-term trading fee introduced
To discourage short-term trading, which can interfere with a fund's
long-term strategy, a 2% short-term trading fee will be imposed on any
Putnam fund shares (other than money market funds) redeemed or exchanged
within five calendar days of purchase.
* The maximum sales charge for class A shares of Putnam Limited Duration
Government Income Fund (formerly Putnam Intermediate U.S. Government
Income Fund) and Putnam Floating Rate Income Fund remains 3.25%.
Fund information
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary Trust Company
Legal Counsel
Ropes & Gray LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Myra R. Drucker
Charles E. Haldeman, Jr.
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
George Putnam, III
W. Thomas Stephens
Richard B. Worley
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President, Associate
Treasurer and Principal Executive
Officer
Jonathan S. Horwitz
Senior Vice President and Treasurer
Steven D. Krichmar
Vice President and Principal
Financial Officer
Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer
Daniel T. Gallagher
Senior Vice President, Staff
Counsel and Compliance Liaison
Beth S. Mazor
Vice President
James P. Pappas
Vice President
Richard S. Robie, III
Vice President
Mark C. Trenchard
Vice President and BSA Compliance Officer
Francis J. McNamara, III
Vice President and Chief Legal Officer
Charles A. Ruys de Perez
Vice President and Chief Compliance Officer
Judith Cohen
Vice President, Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Classic
Equity Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, the most recent copy of Putnam's
Quarterly Performance Summary, and Putnam's Quarterly Ranking Summary.
For more recent performance, please visit www.putnaminvestments.com.
Investors should carefully consider the investment objective, risks,
charges, and expenses of a fund, which are described in its prospectus.
For this and other information or to request a prospectus, call
1-800-225-1581 toll free. Please read the prospectus carefully before
investing. The fund's Statement of Additional Information contains
additional information about the fund's Trustees and is available
without charge upon request by calling 1-800-225-1581.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
Call 1-800-225-1581 or visit our Web site
www.putnaminvestments.com.
SA023-225855 7/05
Not FDIC Insured May Lose Value No Bank Guarantee
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ----------------------------------------------------------------------------
Putnam Classic Equity Fund
Supplement to Semiannual Report dated 5/31/05
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 do not incur a front-end load, a
distribution fee, or a contingent deferred sales charge, will differ from
the performance of class A, B, C, M, and R shares, which are discussed
more extensively in the semiannual report.
RESULTS AT A GLANCE
- ----------------------------------------------------------------------------
Total return for periods ended 5/31/05
NAV
6 months 2.98%
1 year 9.01
5 years 11.23
Annual average 2.15
10 years 115.81
Annual average 8.00
Life of fund (since class A inception, 1/5/95)
Annual average 9.12
Share value: NAV
11/30/04 $12.49
5/31/05 $12.71
- ----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
2 $0.151 -- $0.151
- ----------------------------------------------------------------------------
Data represents past performance. Past performance does not guarantee
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. For the most recent month-end
performance, please visit www.putnaminvestments.com.
Performance assumes reinvestment of distributions and does not account for
taxes. Returns shown for class Y shares for periods prior to their
inception (10/1/98) 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. Returns have not been adjusted to reflect
differences in operating expenses which, for class Y shares, are lower
than the operating expenses applicable to class A shares. 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.
A short-term trading fee of up to 2% may apply.
Please see pages 13-14 of the accompanying shareholder report for a
discussion of the information appearing in the tables below:
- ----------------------------------------------------------------------------
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 5/31/05
Class Y
Expenses paid per $1,000* $4.61
Ending value (after expenses) $1,029.80
- ----------------------------------------------------------------------------
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return
for the 6 months ended 5/31/05
Class Y
Expenses paid per $1,000* $4.58
Ending value (after expenses) $1,020.39
- ----------------------------------------------------------------------------
EXPENSE RATIO COMPARISON USING ANNUALIZED DATA
Your fund's annualized expense ratio 0.91%
Average annualized expense ratio for Lipper peer group+ 0.95%
+ For class Y shares, Putnam has adjusted the Lipper total expense average
to reflect that class Y shares do not incur 12b-1 fees.
- ----------------------------------------------------------------------------
Item 2. Code of Ethics:
- -----------------------
Not applicable
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Item 5. Audit Committee: Not applicable
- -------------------------
Item 6. Schedule of Investments: Not applicable
- --------------------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. Purchases of Equity Securities by Closed-End Management Investment
- --------------------------------------------------------------------------
Companies and Affiliated Purchasers: Not applicable
------------------------------------
Item 9. Submission of Matters to a Vote of Security Holders:
- ------------------------------------------------------------
Not applicable
Item 10. Controls and Procedures:
- ---------------------------------
(a) The registrant's principal executive officer and principal
financial officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report, that the design and operation of
such procedures are generally effective to provide reasonable
assurance that information required to be disclosed by the registrant
in this report is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
- ------------------
(a) Not applicable
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act
of 2002 are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: July 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: July 28, 2005
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: July 28, 2005