PUTNAM
VOYAGER
FUND
[Artwork]
ANNUAL REPORT
July 31, 1995
[Putnam Logo]
Boston * London * Tokyo
<PAGE>
PERFORMANCE HIGHLIGHTS
Over its annual period, Putnam Voyager Fund handily outperformed the average
fund in Lipper Analytical Services' capital appreciation category. The funds in
the category gained an average of 26.06% for the one year ended July 31, 1995.
Over the same period, Putnam Voyager Fund's class A shares returned 34.72% at
net asset value. *
FISCAL 1995 RESULTS AT A GLANCE
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CLASS A CLASS B CLASS M
TOTAL RETURN: NAV POP NAV CDSC NAV POP
- -------------------------------------------------------------------------------
(change in value during period
plus reinvested distributions)
12 months ended 7/31/95 34.72% 27.00% 33.65% 28.65% -- --
Life of class M (12/1/94) -- -- -- -- 27.42% 22.93%
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CLASS A CLASS B CLASS M
SHARE VALUE: NAV POP NAV NAV POP
- -------------------------------------------------------------------------------
7/31/94 $11.19 $11.87 $10.97 -- --
12/1/94 -- -- -- $11.79 $12.22
7/31/95 14.42 15.30 14.01 14.37 14.89
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LONG-TERM
DISTRIBUTIONS: NO. INCOME CAPITAL GAINS TOTAL
- -------------------------------------------------------------------------------
Class A 1 -- $0.508 $0.508
Class B 1 -- 0.508 0.508
Class M 1 -- 0.508 0.508
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Performance data represent past results, are no assurance of future results,
and will differ for each share class. For performance over longer periods,
see pages 8 and 9. POP assumes 5.75% maximum sales charge for class A shares
and 3.50% for class M shares, which became effective 12/1/94. CDSC assumes 5%
maximum contingent deferred sales charge.
* Lipper's averages are based on total return and do not take into account the
effects of sales charges or commissions. Performance for other share classes
will vary. Past performance does not guarantee future results.
<PAGE>
FROM THE CHAIRMAN [PHOTOGRAPH OF GEORGE PUTNAM]
* (C) KARSH, OTTAWA
DEAR SHAREHOLDER:
THE STOCK MARKET'S ROBUST RISE DURING THE FIRST HALF OF 1995 HAS LED SOME ANA-
LYSTS TO BRACE FOR A DECLINE AND OTHERS TO ANTICIPATE EVEN GREATER STRENGTH. WE
TAKE MORE OF A MIDDLE VIEW. ALTHOUGH WE THINK THE PACE OF THE RISE IS PROBABLY
UNSUSTAINABLE, WE BELIEVE A MODERATE SHORT-TERM CORRECTION, FOLLOWED BY A PERIOD
OF UNSETTLED PERFORMANCE, IS A MORE LIKELY DEVELOPMENT.
OUR ASSESSMENT IS BASED ON THE SOMEWHAT UNCERTAIN ECONOMY'S IMPACT ON CORPORATE
EARNINGS. EARNINGS DECLINES, IF THEY OCCUR, MIGHT MAKE INVESTORS SKITTISH. CU-
RRENTLY, THOUGH, CORPORATE EARNINGS APPEAR STRONG, AND ABLE TO WITHSTAND A MILD
ECONOMIC SLOWDOWN.
HOWEVER, LOWER INTEREST RATES MAY EVENTUALLY RE-STIMULATE THE ECONOMY, PROBABLY
SOME TIME NEXT YEAR. RISING U.S. CORPORATE CASH FLOWS AND PROFITS OF U.S. COR-
PORATIONS, AUGMENTED BY FOREIGN INVESTORS' PURCHASES OF BARGAIN-PRICED U.S.
STOCKS, MAY LEAD TO THE NEXT LEG OF A BULL MARKET.
IN THE FOLLOWING REPORT, THE MANAGEMENT TEAM OF PUTNAM VOYAGER FUND REVIEWS THE
FUND'S PERFORMANCE DURING THE FISCAL YEAR ENDED JULY 31, 1995, AND COMMENTS ON
THE OUTLOOK FOR THE FISCAL YEAR AHEAD.
RESPECTFULLY YOURS,
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
SEPTEMBER 20, 1995
* (C) Copyright
<PAGE>
REPORT FROM THE FUND MANAGERS
CHARLES SWANBERG, CO-MANAGER
ROBERT R. BECK, CO-MANAGER
ROLAND GILLIS, CO-MANAGER
Persistent strength in domestic financial markets has meant an ultimately rewar-
ding ride for Putnam Voyager Fund's shareholders throughout fiscal 1995. Chan-
ging economic expectations and a shift in the direction of interest rates were
the primary influences on the stock-market's dramatic recovery in the fiscal
year's latter half. However, several other factors also contributed to U.S.
stocks' superior performance: economic expansion within many countries, a weak
U.S. dollar, strong corporate profits, stock buybacks, and new trade legisla-
tion.
Your fund performed extremely well in this environment. For the 12 months ended
July 31, 1995, your fund's class A shares returned 34.72% at net asset value,
and class B shares posted a 33.65% gain.
EXPANDED INVESTMENT UNIVERSE LETS FUND CLIMB "LADDER OF GROWTH"
During fiscal 1995, we expanded the fund's investment universe to include a much
wider range of growth opportunities -- allowing the fund to profit from strong
earnings momentum during various stages of a company's development. The portfo-
lio is currently divided into three sleeves, each constituting approximately one
third of the fund's net assets:
Foundation growth -- concentrating specifically on the stocks of small to mid-
size companies poised for rapid earnings gains
Opportunity growth -- targeting larger, well-established companies undergoing
positive change with the potential for near-term growth
Premier growth -- consisting of midsize to large companies at a more mature
stage of development than foundation growth companies, typically having above-
average growth rates, substantial business franchises, and considerable finan-
cial strength
This approach has already shown its merit. At the midpoint of the fund's fiscal
year, large-cap growth stocks and attractively valued shares of larger companies
with good earnings momentum -- like those found in the fund's opportunity and
premier growth sleeves -- were favored by investors. More recently, small-cap
foundation growth stocks have advanced smartly.
<PAGE>
PERFORMANCE BOOSTED BY SECTOR STRENGTH AND KEEN STOCK SELECTION
While the 1995 rally boosted performance throughout the broad stock market, po-
ckets of exceptional strength stood out. Technology, medical device companies,
and pharmaceuticals were particularly robust, leading us to increase holdings
in these industries within the foundation growth and premier growth sleeves.
In technology, proposed deregulation in the peripheral cable and telecommunica-
tion groups, booming revenues from semiconductor firms, growing global market
share, increased capital spending, and new products pushed this sector upward.
More than a few of the portfolio's technology holdings have realized tremendous
price appreciation as a result. Semiconductor stocks such as Xilinx, Maxim,
Linear Technology, and Analog Devices have risen more than 190%, 160%, 80%, and
70%, respectively since July 31, 1994. The most dramatic performance over the
period, however, has come from America Online, a leading on-line computer ser-
vice provider. The stock has risen more than 260% in one year's time. While it
has not moved nearly as dramatically as the semiconductor stocks, Comcast Corpo-
ration, a communications company with domestic and international interests in
cable television, wireless telecommunications, and television programming has
performed very well recently.
With the chances of a national health-care program low, pharmaceutical companies
and those manufacturing medical equipment have benefited enormously from the
change in market sentiment.
[Bar Chart - Page 5]
TOP INDUSTRY SECTORS *
Semiconductors 7.1%
Retail 6.0%
Computer software 4.9%
Business services 4.2%
Broadcasting 3.7%
Cable television 3.7%
Pharmaceutical and biotechnology 3.6%
*Based on net assets as of 7/31/95. Holdings will vary over time.
<PAGE>
Medtronic, the world's leading producer of heart pacemakers, had a 52-week re-
turn of more than 90% at period's end. Boston Scientific, an innovator in nonin-
vasive surgical devices, has risen some 160% the past year. The replenishment
of inventories by providers and hospitals also helped boost the price apprecia-
tion of pharmaceutical giants like Astra, Pfizer, and Roche.
Anticipating a slower-growth environment and slackened demand, we have trimmed
the fund's retail exposure. We also drastically reduced the portfolio's weight-
ing in health maintenance organization (HMO) stocks around midyear, thereby lar-
gely avoiding last spring's dramatic selloff caused by investor uncertainty
about declining revenues.
While at times we may capitalize on industry themes, we do so only as a comple-
ment to our time-tested strategy of identifying growth opportunities on a stock-
by-stock basis. In fact, industry trends do not even play a role in the selec-
tion of stocks within the opportunity sleeve. We choose stocks for this sleeve
according to the issuing company's ability to effect positive change in its bu-
siness enterprises. Eastman Kodak, for example, has emerged from a year of res-
tructuring in strong shape; under new management, we believe the firm has great-
ly improved its competitive position and profitability potential. The Seagram
Company, another example, having acquired the Hollywood studio MCA, recast it-
self from an investment vehicle dominated by DuPont into an operating company
focused on consumer favorites: beverages and entertainment.
THE NEW GLOBAL ECONOMY PRESENTS GROWTH OPPORTUNITIES
Throughout the fiscal year, strong corporate profits and a consistently high le-
vel of positive earnings surprises -- even as the economy slowed this spring --
illustrated what we have believed all along: corporate America has regained its
competitive edge in world markets. This transformation, coupled with growing
overseas economies and a weak dollar, fueled the demand for U.S. exports. Many
of your fund's holdings benefited from this trend. In fact, the fund's average
technology derived 30% to 50% of its revenue from non-U.S. sources as global
demand for cellular equipment and networking communications grew.
Additionally, portfolio companies with a global reach continue to realize signi-
ficant growth in the new world economy. Multinationals like Coca-Cola and McDo-
nald's realized most of their profits this year from overseas operations. Many
of the fund's foreign holdings also benefited from improving economic conditions
in their respective homelands; and once the gains were translated into weak U.S.
dollars, their appreciation was further compounded.
<PAGE>
TOP 10 HOLDINGS (7/31/95)
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TELE-COMMUNICATIONS INC.
Cable television services
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FLIGHTSAFETY INTERNATIONAL
High technology training for aircraft pilots
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MAXIM INTEGRATED PRODUCTS, INC.
Semiconductor manufacturer
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HOSPITALITY FRANCHISE
Hotel franchising and services
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H & R BLOCK
Tax preparation services; owns CompuServe on-line service
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CITICORP
Global financial services; largest U.S. bank
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INFINITY BROADCASTING CORP.
Owns and operates radio stations
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PREMARK INTERNATIONAL INC.
Tupperware, consumer and decorative products, food equipment
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SEAGRAM CO., LTD.
Beverages, entertainment
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FIRST DATA CORP.
Credit card processing services
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These holdings represent 12.4% of the fund's net assets. Portfolio holdings will
vary over time.
FUND REMAINS FOCUSED ON FUNDAMENTALS
As we enter fiscal 1996, a period of stable-to-declining interest rates, subdued
economic growth, and low inflation characterize the investment environment. Such
a scenario bodes well for the price appreciation and earnings potential of
growth stocks. In addition, the proposed capital-gains tax cut and deficit re-
duction initiatives, if approved, could further enhance the appeal of growth
stocks.
The possibility of some near-term turbulence exists, however, as investors worry
over further economic slowing and a decline in corporate profits. To offset
this, we have included certain defensive stocks in the portfolio -- stocks of
companies that are well established and can produce attractive earnings even in
a decelerating economy. We believe Pioneer Hi-Bred, a leading seeds supplier,
is a good example of such a company.
While the market may fluctuate somewhat, we will remain focused on companies
that are gaining market share, both domestically and globally, maintaining their
competitive advantage, and using cash flow to reinvest in high-margin businesses
or to repurchase shares.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed fa-
vorably as of 7/31/95, there is no guarantee the fund will continue to hold the-
se securities in the future. Investment in non-U.S. securities may be subject to
certain risks, such as currency fluctuations and political developments.
<PAGE>
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's performance.
Total return shows how the value of the fund's shares changed over time, assum-
ing you held the shares through the entire period and reinvested all distribu-
tions back into the fund. We show total return in two ways: on a cumulative
long-term basis and on average how the fund might have grown each year over va-
rying periods.
Performance should always be considered in light of a fund's investment strate-
gy. Putnam Voyager Fund is designed for investors aggressively seeking capital
appreciation primarily through common stocks.
TOTAL RETURNS FOR PERIOD ENDED 7/31/95
CLASS A CLASS B CLASS M
NAV POP NAV CDSC NAV POP
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1 year 34.72% 27.00% 33.65% 28.65% -- --
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5 years 139.23 125.39 -- -- -- --
Annual average 19.06 17.65 -- -- -- --
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10 years 431.62 401.01 -- -- -- --
Annual average 18.18 17.49 -- -- -- --
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Life of class B -- -- 71.41 68.41 -- --
Annual average -- -- 17.98 17.34 -- --
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Life of class M -- -- -- -- 27.42% 22.93%
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TOTAL RETURNS FOR PERIOD ENDED 6/30/95
(MOST RECENT CALENDAR QUARTER)
CLASS A CLASS B CLASS M
NAV POP NAV CDSC NAV POP
- -------------------------------------------------------------------------------
1 year 29.86% 22.42% 28.92% 23.92% -- --
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5 years 117.27 104.81 -- -- -- --
Annual average 16.79 15.42 -- -- -- --
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10 years 400.65 371.88 -- -- -- --
Annual average 17.48 16.78 -- -- -- --
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Life of class B -- -- 60.53 57.53 -- --
Annual average -- -- 16.05 15.36 -- --
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Life of class M -- -- -- -- 19.35% 15.15%
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Fund performance data do not take into account any adjustment for taxes payable
on reinvested distributions or, for class A shares, distribution fees prior to
implementation of the class A distribution plan in 1990. Effective 4/27/92, the
fund began offering class B shares, and 12/1/94, class M shares. Performance of
share classes will differ. Performance data represent past results. Investment
returns and net asset value will fluctuate so an investor's shares, when sold,
may be worth more or less than their original cost.
COMPARATIVE INDEX RETURNS FOR PERIOD ENDED 7/31/95
STANDARD & POOR'S (R)* 500 INDEX CONSUMER PRICE INDEX
- -------------------------------------------------------------------------------
1 year 26.03% 2.76%
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5 years 83.26 16.95
Annual average 12.88 3.18
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10 years 305.72 41.47
Annual average 15.03 3.53
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Life of class B 50.83 9.32
Annual average 13.44 2.77
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Life of class M 27.74 1.87
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* (R) Registered mark
<PAGE>
[Line Chart - Page 9]
GROWTH OF A $10,000 INVESTMENT
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FUND'S CLASS A
SHARES AT POP S&P 500 CONSUMER PRICE INDEX
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1985 $ 9425 $10000 $10000
1986 12376 12833 10158
1987 16796 17884 10557
1988 15071 15790 10993
1989 19983 20811 11540
1990 20943 22138 12096
1991 25978 24972 12635
1992 29456 28158 13033
1993 35255 30605 13395
1994 37190 32192 13766
1995 50101 40572 14147
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Past performance is no assurance of future results. A $10,000 investment in the
fund's class B shares at inception on 4/27/92 would have been valued at $17,141
on 7/31/95 ($16,841 with a redemption at the end of the period). A $10,000 in-
vestment in the fund's class M shares at inception on 12/1/94, would have been
valued at $12,742 at NAV, and $12,293 at POP on 7/31/95.
TERMS AND DEFINITIONS
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any liabili-
ties, divided by the number of outstanding shares, not including any initial or
contingent deferred sales charge.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share plus the maximum
sales charge levied at the time of purchase. POP performance figures shown here
assume the maximum 5.75% sales charge for class A shares and 3.50% for class M
shares.
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
CLASS M SHARES have a lower initial sales charge and a higher 12b-1 fee than
class A shares and no sales charge on redemption.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the
redemption of class B shares and assumes redemption at the end of the period.
Your fund's CDSC declines from a 5% maximum during the first year to 1% during
the sixth year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
STANDARD & POOR'S (R)* 500 INDEX is an unmanaged list of common stocks that is
frequently used as a general measure of stock market performance. The index
assumes reinvestment of all distributions and does not take into account broke-
rage commissions or other costs. The fund's portfolio contains securities that
do not match those in the index.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it does not
represent an investment return.
* (R) Registered mark
<PAGE>
A PUTNAM PERSPECTIVE ON RISK AND REWARD
You've probably been told how important it is to understand the relationship be-
tween an investment's potential rewards and its accompanying risks. Given the
cautionary nature of such instructions, it may take most investors a while to
realize that risk has a positive side.
EVERY RISK SIGNALS A POTENTIAL REWARD. Selecting only those investments that
offer the greatest degree of security generally leads to only modest rewards.
Furthermore, even insured or guaranteed investments may be subject to changes in
their rates of return or, in some cases, in their principal values. Experienced
investors know that no investment is truly risk free and are therefore willing
to take on some measure of risk in order to increase their potential gains.
THE GREATER THE RISK, THE GREATER THE POTENTIAL REWARD. Accepting an appropriate
level of investment risk can give you a better chance of outpacing inflation
over time and seeking to maximize your investment's return. How much risk? Your
A RUNDOWN OF RISK TYPES
- -------------------------------------------------------------------------------
MARKET RISK Most important for stock funds, but relevant to all funds, this is
a measure of how sensitive a fund's holdings are to changes in general market
conditions. Remember, though, that securities that lose value quickly in market
declines may also show the strongest gains in more favorable environments.
INTEREST-RATE RISK Since bond prices fall as interest rates rise, this type of
risk is a particular concern for fixed-income investors. However, interest-rate
increases can also have a _substantial negative effect on the stock market.
INFLATION RISK If your investments cannot keep pace with inflation, your money
will begin to lose its purchasing power. Stock investments are generally consi-
dered among the best ways of addressing inflation risk over the long term.
- -------------------------------------------------------------------------------
<PAGE>
financial advisor's feedback and your time horizon can make all the difference
in determining how much risk is compatible with your investment goals and your
peace of mind.
FITTING YOUR FUND SELECTION TO YOUR_RISK TOLERANCE
How do you find the right balance between investment risks and their potential
rewards? It's helpful to understand the types of risks that can apply to diffe-
rent types of investments, and to look at your own portfolio with this perspec-
tive.
For short-term goals, your first priority may be managing market risk. Longer-
term investors may be more concerned with inflation risk. And all income-
oriented investors should consider interest-rate, credit, and prepayment risks
carefully. Within each of Putnam's four investment categories, you can select
funds with differing levels of risk and reward potential to customize your port-
folio.
- -------------------------------------------------------------------------------
CREDIT AND PREPAYMENT RISK Credit risk is the concern that the security's issuer
will not be able to meet its payment, while prepayment risk involves the prema-
ture payoff of a loan, with a resulting loss of interest income. Professional
management and in-depth research are invaluable in managing both these risks.
LIQUIDITY RISK Not all investments can be readily converted into cash at their
perceived market values. Liquidity risk can affect _the price of securities held
in the fund's portfolio and, thus, the _fund's share prices.
- -------------------------------------------------------------------------------
This list covers only the most general types of risks; however, each investment
will also have its own specific risks. You will find a more detailed discussion
of these risk considerations in each fund's prospectus.
<PAGE>
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund Capital Appreciation Fund *
Diversified Equity Trust Europe Growth Fund
Global Growth Fund Health Sciences Trust
International New Opportunities Fund Investors Fund
Natural Resources Trust New Opportunities Fund
OTC Emerging Growth Fund Overseas Growth Fund
Vista Fund Voyager Fund
Voyager Fund II +++
PUTNAM GROWTH AND INCOME FUNDS
Balanced Retirement Fund Convertible Income-Growth Trust
Equity Income Fund The George Putnam Fund of Boston
The Putnam Fund for Growth and Income Growth & Income Fund II
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund American Government Income Fund
Diversified Income Trust Federal Income Trust
Global Governmental Income Trust High Yield Advantage Fund
High Yield Trust Income Fund
Intermediate U.S. Government Fund Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE INCOME FUNDS
Intermediate Tax Exempt Fund Municipal Income Fund
Tax Exempt Income Fund Tax-Free High Yield Fund
Tax-Free Insured Fund STATE TAX-FREE INCOME FUNDS +
Arizona, California, Florida, Massachusetts, Michigan,
Minnesota, New Jersey, New York, Ohio, and Pennsylvania
LIFESTAGE (SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments to help
maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE INVESTMENTS ++
PUTNAM MONEY MARKET FUNDS:
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts**
* Temporarily closed to new investors.
+++ Formerly Putnam Growth Fund.
+ Not available in all states.
++ Relative to above.
** Not offered by Putnam Investments. Certificates of deposit offer a fixed ra-
te of return and may be insured, _up to certain limits, by federal/state
agencies. Savings accounts may also be insured up to certain limits.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a
prospectus for any Putnam fund. It contains more complete information, in-
cluding charges and expenses, investment policies and risk. Read it carefu-
lly before you invest or send money.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
For the Year Ended July 31, 1995
To the Trustees and Shareholders of
Putnam Voyager Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments owned, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all ma-
terial respects, the financial position of Putnam Voyager Fund (the "fund") at
July 31, 1995, and the results of its operations, the changes in its net assets,
and the financial highlights for the periods indicated, in conformity with gene-
rally accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the responsibi-
lity of the fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An au-
dit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial presentation. We believe that our audits, which included confirmation
of investments owned at July 31, 1995 by correspondence with the custodian and
brokers and the application of alternative auditing procedures where confirma-
tions from brokers were not received, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
September 14, 1995
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
July 31, 1995
COMMON STOCKS (93.9%)*
NUMBER OF SHARES VALUE
ADVERTISING (0.4%)
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524,200 Omnicom Group $ 31,648,575
AEROSPACE (1.9%)
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350,000 Boeing Co. 23,450,000
2,473,830 FlightSafety International, Inc. 113,486,951
----------------
136,936,951
AIRLINES (--%)
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66,900 ValuJet Airlines, Inc. + 2,065,538
ALCOHOLIC BEVERAGES (1.0%)
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2,021,400 Seagram Co., Ltd. 72,517,725
APPAREL (0.3%)
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699,600 Tommy Hilfiger Corp. + 22,124,850
AUTOMOTIVE (0.4%)
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600,000 Snap-On Inc. 25,050,000
BANKS (2.0%)
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488,800 Bank of Boston Corp. 21,201,700
800,000 BankAmerica Corp. 43,200,000
1,300,000 Citicorp 81,087,500
----------------
145,489,200
BROADCASTING (3.7%)
- -------------------------------------------------------------------------------
75,000 CBS Inc. 5,821,875
430,000 Capital Cities/ABC, Inc. 50,202,500
534,835 Clear Channel Communications, Inc. + 35,767,091
90,700 Echostar Communications Corp. Class A + 1,383,175
248,600 Evergreen Media Corp. Class A + 8,203,800
2,052,590 Infinity Broadcasting Corp. Class A + 75,945,830
416,620 LIN Television Corp. + 15,727,405
788,100 Renaissance Communications Corp. + 30,144,825
72,000 SFX Broadcasting, Inc. Class A + 1,980,000
204,200 Sinclair Broadcast Group, Inc. Class A + 6,228,100
1,849,600 Westwood One, Inc. + 29,131,200
----------------
260,535,801
BUSINESS SERVICES (4.2%)
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661,390 Airgas, Inc. + 18,518,920
2,136,650 Corporate Express, Inc. + 54,217,494
1,063,584 Danka Business Systems ADR (United Kingdom) 31,774,572
1,150,000 Dow Jones & Co., Inc. 40,825,000
1,196,534 Interpublic Group of Cos. Inc. 44,720,458
650,000 Manpower, Inc. 18,281,250
<PAGE>
COMMON STOCKS (Continued)
NUMBER OF SHARES VALUE
BUSINESS SERVICES (continued)
- -------------------------------------------------------------------------------
8,230,680 Rentokil Group PLC (United Kingdom) $ 37,341,772
700,000 Reuters Holdings PLC ADR Class B (United Kingdom) 35,262,500
790,000 Robert Half International, Inc. + 21,823,750
----------------
302,765,716
CABLE TELEVISION (3.7%)
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431,770 Cablevision Systems Corp. Class A + 29,630,216
1,800,000 Century Communications Corp. Class A + 15,975,000
2,084,125 Comcast Corp. Special Class A 42,203,531
1,374,815 TCA Cable TV, Inc. 40,900,746
5,106,356 Tele-Communications Inc. Class A + 127,658,886
----------------
256,368,379
CHEMICALS (2.1%)
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146,900 FMC Corp. + 10,576,800
370,000 Great Lakes Chemical Corp. 24,281,250
1,150,000 Praxair, Inc. 32,200,000
1,150,000 Raychem Corp. 43,700,000
779,783 Schulman (A.), Inc. 22,028,870
574,100 Witco Chemical Corp. 18,658,250
----------------
151,445,170
COMPUTER EQUIPMENT (0.2%)
- -------------------------------------------------------------------------------
303,000 Oak Technology, Inc. + 14,013,750
COMPUTER SERVICES (2.7%)
- -------------------------------------------------------------------------------
1,132,480 America Online, Inc. + 62,427,960
11,300 CBT Group PLC ADR (Ireland) + 512,031
86,800 Dendrite International, Inc. + 1,410,500
1,222,200 First Data Corp. 71,345,925
1,489,287 Paychex, Inc. 55,475,941
16,500 UUNET Technologies, Inc. + 699,188
----------------
191,871,545
COMPUTER SOFTWARE (4.9%)
- -------------------------------------------------------------------------------
1,128,300 Adobe Systems, Inc. 69,672,525
15,600 ArcSys, Inc. + 760,500
274,000 Baan Co., N.V. (Netherlands) + 9,144,750
32,800 Business Objects S.A., ADR (France) + 1,193,100
50,000 Cerner Corp. + 3,081,250
196,000 Computer Associates International, Inc. 14,381,500
28,300 Datalogix International, Inc. + 711,038
188,400 Discreet Logic, Inc. (Canada) + 7,912,800
10,100 HNC Software, Inc. + 244,925
17,000 Inso Corporation + 1,181,500
183,000 Intuit, Inc. + 15,783,750
41,000 Macromedia, Inc. + 1,957,750
269,100 Microsoft Corp. + 24,353,550
154,800 Novadigm, Inc. + 3,212,100
2,492,800 Novell, Inc. + 45,182,000
719,000 Parametric Technology Corp. + 40,443,750
395,280 PeopleSoft, Inc. + 28,262,520
<PAGE>
COMMON STOCKS (Continued)
NUMBER OF SHARES VALUE
COMPUTER SOFTWARE (continued)
- -------------------------------------------------------------------------------
600,000 Platinum Software Corp. + $ 9,450,000
87,900 Project Software & Development, Inc. + 2,351,325
141,700 SAP Aktiengesellschaft 144A ADS (Germany) + 7,580,950
195,500 Seer Technologies, Inc. + 4,105,500
410,000 Sierra On-Line, Inc. + 14,965,000
403,800 Softkey International, Inc. + 17,514,825
38,900 Spyglass, Inc. + 1,731,050
342,600 Synopsys, Inc. + 22,097,700
49,300 Unison Software, Inc. + 739,500
133,800 XcelleNet, Inc. + 2,475,300
----------------
350,490,458
CONSUMER PRODUCTS (1.1%)
- -------------------------------------------------------------------------------
650,000 Kimberly-Clark Corp. 41,193,750
234,980 Lowe's Cos., Inc. 8,664,888
1,120,100 Newell Co. 28,422,538
----------------
78,281,176
CONSUMER NON DURABLES (0.8%)
- -------------------------------------------------------------------------------
579,720 Luxottica Group SPA ADR (Italy) 23,840,985
1,100,000 Sara Lee Corp. 31,487,500
----------------
55,328,485
CONSUMER SERVICES (2.7%)
- -------------------------------------------------------------------------------
2,239,680 Block (H & R), Inc. 83,988,000
1,968,510 CUC International, Inc. + 59,301,364
1,426,220 Loewen Group, Inc. 50,452,533
----------------
193,741,897
CONTAINERS (0.4%)
- -------------------------------------------------------------------------------
695,700 Bemis Inc. 19,740,488
784,070 Owens-Illinois, Inc. + 10,878,971
----------------
30,619,459
COSMETICS (0.4%)
- -------------------------------------------------------------------------------
418,300 Avon Products, Inc. 28,444,400
ELECTRONICS (0.1%)
- -------------------------------------------------------------------------------
153,400 LSI Logic Corp. + 7,171,450
ELECTRONICS AND ELECTRICAL EQUIPMENT (2.8%)
- -------------------------------------------------------------------------------
1,658,600 ADT Ltd. + 19,903,200
494,800 Adtran, Inc. + 18,183,900
590,450 Baldor Electric Co. 19,263,431
155,600 Franklin Electronic Publishers, Inc. + 4,901,400
500,000 General Electric Co. 29,500,000
768,700 General Instrument Corp. (New) + 28,345,813
903,820 Input/Output, Inc. + 37,734,485
225,000 Motorola, Inc. 17,240,625
367,700 Solectron Corp. + 13,375,088
241,900 Symbol Technologies, Inc. + 9,222,438
----------------
197,670,380
<PAGE>
COMMON STOCKS (Continued)
NUMBER OF SHARES VALUE
ENERGY-RELATED (0.5%)
- -------------------------------------------------------------------------------
826,000 Thermo Electron Corp. + $ 35,311,500
ENVIRONMENTAL CONTROL (0.8%)
- -------------------------------------------------------------------------------
1,940,100 WMX Technologies, Inc. 60,628,125
FINANCE (1.9%)
- -------------------------------------------------------------------------------
565,990 Federal Home Loan Mortgage Corp. 37,072,345
382,787 Federal National Mortgage Assn. 35,838,433
433,300 Financial Federal Corp. + 7,691,075
294,000 Greentree Financial Corp. 15,912,750
343,400 Morgan (J.P.) & Co., Inc. 25,111,125
293,800 Student Loan Marketing Assn. 15,828,475
----------------
137,454,203
FINANCIAL SERVICES (0.9%)
- -------------------------------------------------------------------------------
625,400 First USA, Inc. 28,533,875
1,015,359 MBNA Corp. 36,426,004
----------------
64,959,879
FOOD AND BEVERAGES (0.8%)
- -------------------------------------------------------------------------------
530,600 Coca-Cola Co. 34,953,275
19,400 IBP, Inc. 906,950
484,800 Pioneer Hi-Bred International, Inc. 20,482,800
----------------
56,343,025
GAMING (0.7%)
- -------------------------------------------------------------------------------
712,000 Circus Circus Enterprises, Inc. + 21,182,000
550,000 Mirage Resorts, Inc. + 17,118,750
630,900 Rio Hotel & Casino, Inc. + 8,359,425
170,500 Scientific Games Holdings Corp. + 5,306,813
----------------
51,966,988
GAS UTILITIES (0.5%)
- -------------------------------------------------------------------------------
1,050,000 Columbia Gas System, Inc. + 36,750,000
HMOs (1.3%)
- -------------------------------------------------------------------------------
700,000 Healthsource, Inc. + 25,462,500
685,800 Mid Atlantic Medical Services, Inc. + 13,458,825
374,100 Oxford Health Plans Inc. + 19,312,913
400,000 Pacificare Health Systems, Inc. Class B + 24,200,000
492,700 Sierra Health Services + 13,056,550
----------------
95,490,788
HEALTH CARE INFORMATION SYSTEMS (0.2%)
- -------------------------------------------------------------------------------
196,060 HBO & Co. 10,832,315
HEALTH CARE SERVICES (2.9%)
- -------------------------------------------------------------------------------
75,000 ABR Information Services, Inc. + 1,575,000
888,120 Apria Healthcare Group, Inc. + 28,863,900
850,000 Columbia/HCA Healthcare Corp. 41,650,000
545,400 Health Care & Retirement Corp. + 17,452,800
800,000 Health Management Assoc., Inc. + 25,700,000
<PAGE>
COMMON STOCKS (Continued)
NUMBER OF SHARES VALUE
HEALTH CARE SERVICES (continued)
- -------------------------------------------------------------------------------
402,000 Lincare Holdings, Inc. + $ 13,969,500
387,786 Renal Treatment Centers, Inc. + 9,985,490
280,800 Rotech Medical Corp. + 8,213,400
600,000 United Healthcare Corp. 27,150,000
1,004,700 Vencor, Inc. + 32,527,163
----------------
207,087,253
HOME BUILDING (0.6%)
- -------------------------------------------------------------------------------
2,282,600 Clayton Homes, Inc. 45,652,000
HOSPITAL MANAGEMENT (0.1%)
- -------------------------------------------------------------------------------
211,755 Horizon/CMS Healthcare Corp. + 4,790,957
HOUSEHOLD PRODUCTS (1.4%)
- -------------------------------------------------------------------------------
653,375 Blyth Industries, Inc. + 29,483,547
1,385,300 Premark International, Inc. 73,247,738
----------------
102,731,285
INSURANCE (2.5%)
- -------------------------------------------------------------------------------
1,125,000 American General Corp. 40,921,875
161,550 American International Group, Inc. 12,116,250
205,789 Cincinnati Financial Corp. 11,112,606
592,989 Gallagher (Arthur J.) & Co. 22,311,211
398,110 General RE Corp. 52,799,339
391,900 Transatlantic Holdings Inc. 25,865,400
646,100 USF&G Corp. 10,660,650
----------------
175,787,331
LODGING (1.8%)
- -------------------------------------------------------------------------------
355,000 Doubletree Corp. + 8,076,250
2,057,780 Hospitality Franchise Systems, Inc. 90,542,320
979,950 La Quinta Inns, Inc. 27,561,094
42,800 Red Lion Hotels, Inc. + 909,500
----------------
127,089,164
MEDICAL EQUIPMENT AND SUPPLIES (3.3%)
- -------------------------------------------------------------------------------
1,714,565 Boston Scientific Corp. + 62,581,623
175,000 Johnson & Johnson 12,556,250
400,000 Medisense Inc. + 9,250,000
801,360 Medtronic, Inc. 65,711,520
391,890 Stryker Corp. 17,145,188
489,300 Thermo Cardiosystems, Inc. + 18,838,050
2,046,000 U.S. Surgical Corp. 49,104,000
----------------
235,186,631
MEDICAL SUPPLIES (0.3%)
- -------------------------------------------------------------------------------
842,900 Sola International, Inc. 23,390,475
NETWORKING (0.1%)
- -------------------------------------------------------------------------------
200,000 Madge Networks N.V. (Netherlands) + 4,825,000
45,600 Network Express, Inc. + 849,300
----------------
5,674,300
<PAGE>
COMMON STOCKS (Continued)
NUMBER OF SHARES VALUE
NETWORKING EQUIPMENT (2.3%)
- -------------------------------------------------------------------------------
278,400 ALANTEC Corp. + $ 10,022,400
275,900 Ascend Communications, Inc. + 20,002,750
300,000 Cascade Communications Corp. + 15,225,000
1,049,100 Cisco Systems, Inc. + 58,487,325
131,600 Premisys Communications, Inc. + 10,659,600
116,200 Shiva Corp. + 5,621,175
380,900 Stratacom, Inc. + 20,663,825
78,700 U.S. Order, Inc. + 1,731,400
150,200 U.S. Robotics Corp. + 21,854,100
----------------
164,267,575
OFFICE EQUIPMENT (0.2%)
- -------------------------------------------------------------------------------
490,300 Viking Office Products, Inc. + 17,283,075
OIL AND GAS (2.4%)
- -------------------------------------------------------------------------------
719,900 Coflexip Engineers ADR (France) 17,817,525
147,000 Exxon Corp. 10,657,500
107,800 Mobil Corp. 10,537,450
1,201,150 Petro Geo-Services AS ADR (Norway) + 34,232,775
600,000 Production Operators Corp. 17,550,000
176,400 Royal Dutch Petroleum Co. PLC ADR (Netherlands) 22,402,800
350,000 Schlumberger Ltd. 23,450,000
1,018,295 Total Corp. ADR (France) 31,694,447
----------------
168,342,497
PAPER (0.5%)
- -------------------------------------------------------------------------------
325,900 Alco Standard Corp. 26,520,113
254,800 Weyerhaeuser Co. 11,911,900
----------------
38,432,013
PHARMACEUTICALS AND BIOTECHNOLOGY (3.6%)
- -------------------------------------------------------------------------------
330,000 Abbott Laboratories 13,200,000
353,200 Amgen, Inc. + 30,066,150
1,274,000 Astra AB (Sweden) 43,140,551
241,420 Genzyme Corp. 11,889,935
400,000 Gilead Sciences, Inc. + 7,600,000
300,000 Lilly (Eli) & Co. 23,475,000
421,400 Neurogen Corp. + 6,321,000
1,330,000 Pfizer, Inc. 67,165,000
4,169 Roche Holdings AG Rights (Switzerland) 28,408,519
600,000 Smithkline Beecham PLC ADR (United Kingdom) 27,000,000
----------------
258,266,155
PHOTOGRAPHY (1.4%)
- -------------------------------------------------------------------------------
750,000 Eastman Kodak Co. 43,218,750
1,250,000 Polaroid Corp. 53,593,750
----------------
96,812,500
<PAGE>
COMMON STOCKS (Continued)
NUMBER OF SHARES VALUE
PUBLISHING (1.2%)
- -------------------------------------------------------------------------------
600,000 Harcourt General, Inc. $ 27,000,000
250,000 McGraw-Hill, Inc. 19,218,750
436,726 Wolters Kluwer N.V. (Netherlands) 39,587,099
----------------
85,805,849
RAILROADS (1.1%)
- -------------------------------------------------------------------------------
400,000 Burlington Northern Inc. 27,700,000
750,000 Union Pacific Corp. 48,843,750
----------------
76,543,750
RESTAURANTS (3.0%)
- -------------------------------------------------------------------------------
504,900 Apple South, Inc. 10,792,238
1,277,700 Applebee's International, Inc. 36,095,025
1,091,973 Buffets, Inc. + 15,424,119
1,804,225 J.D Wetherspoon PLC (United Kingdom) 15,477,679
623,300 Landry's Seafood Restaurants, Inc. + 11,647,919
824,400 Lone Star Steakhouse & Saloon + 32,254,650
1,085,458 McDonald's Corp. 41,925,815
1,431,065 Outback Steakhouse, Inc. + 49,908,392
----------------
213,525,837
RETAIL (6.0%)
- -------------------------------------------------------------------------------
784,400 Bed Bath & Beyond, Inc. + 24,316,400
464,381 Boise Cascade Office Products + 12,073,906
805,800 CompUSA, Inc. + 27,900,825
1,400,000 Federated Department Stores Inc. + 39,725,000
938,720 Gymboree Corp. + 28,982,980
747,550 Heilig-Meyers Co. 18,875,638
762,800 Hollywood Entertainment Corp. + 21,358,400
15,083 Hornbach Holding 20,931,955
6,283,100 Next PLC (United Kingdom) 38,442,676
1,963,427 Office Depot, Inc. + 57,675,668
1,809,600 Officemax, Inc. + 40,716,000
1,400,000 Revco D.S., Inc. + 29,575,000
596,650 Sunglass Hut International + 24,164,325
537,300 Talbots, Inc. 22,163,625
300,000 Tandy Corp. 17,812,500
----------------
424,714,898
SEMICONDUCTORS (7.1%)
- -------------------------------------------------------------------------------
600,000 Altera Corp. + 33,562,500
1,787,350 Analog Devices Inc. + 64,791,438
419,000 Atmel Corp. + 28,544,375
501,500 Cognex Corp. + 25,200,375
569,300 Credence Systems Corp. + 19,925,500
314,000 Integrated Process Equipment Corp. + 14,130,000
545,200 Lam Research Corp. + 37,209,900
682,186 Linear Technology Corp. 52,869,415
1,552,750 Maxim Integrated Products Inc. + 91,806,344
1,050,000 National Semiconductor Corp. + 28,350,000
652,100 Silicon Valley Group, Inc. + 30,404,163
<PAGE>
COMMON STOCKS (Continued)
NUMBER OF SHARES VALUE
SEMICONDUCTORS (continued)
- -------------------------------------------------------------------------------
54,000 Telcom Semiconductor, Inc. + $ 820,125
80,000 Texas Instruments, Inc. 12,500,000
566,650 Xilinx, Inc. + 67,927,169
----------------
508,041,304
SOFT DRINKS (0.2%)
- -------------------------------------------------------------------------------
250,000 PepsiCo, Inc. 11,718,750
SPECIALTY CONSUMER PRODUCTS (1.2%)
- -------------------------------------------------------------------------------
1,180,852 Department 56, Inc. + 50,924,243
1,124,720 Fastenal Co. 37,678,120
----------------
88,602,363
STEEL (0.5%)
- -------------------------------------------------------------------------------
621,300 Nucor Corp. 33,394,875
TELEPHONE SERVICES (2.9%)
- -------------------------------------------------------------------------------
1,028,880 Century Telephone Enterprises, Inc. 29,323,080
496,000 Colonial Data Technologies Corp. + 12,586,000
2,100,000 MCI Communications Corp. 50,400,000
1,600,000 Sprint Corp. 54,800,000
1,008,740 Telephone & Data Systems, Inc. 39,088,675
666,800 WorldCom, Inc. + 19,920,650
----------------
206,118,405
TELEPHONE UTILITIES (0.3%)
- -------------------------------------------------------------------------------
449,800 SBC Communications, Inc. 21,646,625
TEXTILES (0.3%)
- -------------------------------------------------------------------------------
391,900 St. John Knits, Inc. 18,762,213
TOBACCO (0.5%)
- -------------------------------------------------------------------------------
1,350,000 UST, Inc. 36,787,500
TRUCKING (0.5%)
- -------------------------------------------------------------------------------
1,300,000 Ryder System, Inc. 32,337,500
WIRELESS COMMUNICATIONS (2.3%)
- -------------------------------------------------------------------------------
1,367,833 Airtouch Communications, Inc. + 43,086,740
249,131 Cellular Communications of Puerto Rico, Inc. + 7,723,061
303,000 Cellular Communications, Inc. Class A + 15,756,000
1,575,580 Paging Network, Inc. + 62,235,410
1,369,700 Vanguard Cellular Systems, Inc. + 36,297,050
----------------
165,098,261
----------------
TOTAL COMMON STOCKS (cost $4,919,546,077) $6,698,209,069
PREFERRED STOCKS (0.9%)* (cost $22,615,526)
NUMBER OF SHARES VALUE
39,990 SAP AG Systeme Preference Bearer (Germany) $ 63,012,794
<PAGE>
880,900 Cellular Communications, Inc. $0.01 cv. pfd. $ 45,806,800
WARRANTS (--%)*_ (cost $--)
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
10,673 Jan Bell Marketing, Inc. 12/16/98 $ 672
SHORT-TERM INVESTMENTS (4.6%)*
PRINCIPAL AMOUNT VALUE
$30,000,000 American Telephone & Telegraph Capital Corp. 5.84s,
September 1, 1995 $ 29,849,133
25,500,000 Ciesco L.P. 5.65s, October 26, 1995 25,155,821
16,295,000 Federal Home Loan Mortgage Corp. 5.6s,
October 24, 1995 16,082,079
20,000,000 Federal National Mortgage Association 5 3/4s,
August 8, 1995 19,977,639
30,000,000 Federal National Mortgage Association 5.74s,
September 8, 1995 29,818,233
20,000,000 Federal National Mortgage Association 5.55s,
December 1, 1995 19,623,833
25,000,000 Ford Motor Credit Co. 5.65s, October 24, 1995 24,670,417
18,000,000 GTE Southwest Inc. 5.72s, August 3, 1995 17,994,280
25,000,000 General Electric Capital Corp. 5.75s, August 16, 1995 24,940,104
15,000,000 Hewlett Packard Co. 5.65s, October 31, 1995 14,785,771
16,000,000 IBM Credit Corp. 5.87s, September 8, 1995 15,900,862
24,270,000 Penney (J.C.) Funding Corp. 5.950s, August 1, 1995 24,270,000
32,000,000 Sears Roebuck Acceptance Corp. 5.77s,
August 28, 1995 31,861,520
15,000,000 USAA Capital Corp. 5.73s, August 11, 1995 14,976,125
21,814,000 Interest in $672,198,000 joint repurchase agreement
dated July 31, 1995 with Morgan (J.P.) & Co., Inc.
due August 1, 1995 with respect to various U.S.
Treasury obligations-maturity value of $21,817,515
or an effective yield of 5.8% 21,817,515
----------------
TOTAL SHORT-TERM INVESTMENTS (cost $331,723,332) $ 331,723,332
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $5,298,760,994)*** $7,138,752,667
- -------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $7,136,370,896, which co-
rrespond to a net asset value per class A share, class B share, class M sha-
re and class Y share of $14.42, 14.01, $14.37 and $14.48, respectively.
+ Non-income-producing security.
*** The aggregate identified cost for federal income tax purposes is
$5,310,526,224 resulting in gross unrealized appreciation and depreciation
of $1,873,155,092 and $44,928,649, respectively, or net unrealized apprecia-
tion of $1,828,226,443.
ADR or ADS after the name of a foreign holding stands for American Deposito-
ry Receipt or American Depository Shares, respectively, representing owner-
ship of foreign securities on deposit with a domestic custodian bank.
144A after the name of a security represents those exempt from registration
under Rule 144A of the Securities Act of 1933. These securities may be re-
sold in transactions exempt from registration, normally to qualified insti-
tutional buyers.
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1995
ASSETS
- -------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $5,298,760,994) (Note 1) $7,138,752,667
- -------------------------------------------------------------------------------
Cash 645
- -------------------------------------------------------------------------------
Dividends, interest and other receivables 2,305,061
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 40,845,453
- -------------------------------------------------------------------------------
Receivable for securities sold 40,564,814
- -------------------------------------------------------------------------------
TOTAL ASSETS $7,222,468,640
LIABILITIES
- -------------------------------------------------------------------------------
Payable for securities purchased 61,696,876
- -------------------------------------------------------------------------------
Payable for compensation of trustees' fees (Note 2) 2,332
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 8,317,562
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 8,418,501
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 4,315,022
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 5,230
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 2,538,116
- -------------------------------------------------------------------------------
Other accrued expenses 804,105
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 86,097,744
- -------------------------------------------------------------------------------
NET ASSETS $7,136,370,896
REPRESENTED BY
- -------------------------------------------------------------------------------
Paid-in capital (Note 4) $5,010,880,298
- -------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions
(Note 1) 285,497,734
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments and foreign currency
translation 1,839,992,864
- -------------------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO
CAPITAL SHARES OUTSTANDING $7,136,370,896
- -------------------------------------------------------------------------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- -------------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($4,895,179,910 divided by 339,575,203 shares) $14.42
- -------------------------------------------------------------------------------
Offering price per class A shares (100/94.25 of $14.42) * $15.30
- -------------------------------------------------------------------------------
Net asset value and offering price of class B shares
($1,870,370,310 divided by 133,480,732 shares) ** $14.01
- -------------------------------------------------------------------------------
Net asset value and redemption of class M shares
($19,003,613 divided by 1,322,330 shares) * $14.37
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $14.37) * $14.89
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price of
class Y shares ($351,817,063 divided by 24,291,891 shares) $14.48
- -------------------------------------------------------------------------------
* 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.
<PAGE>
STATEMENT OF OPERATIONS
Year ended July 31, 1995
INVESTMENT INCOME:
- -------------------------------------------------------------------------------
Dividends (net of foreign tax of $911,749) $ 46,065,558
- -------------------------------------------------------------------------------
Interest 18,430,249
- -------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 64,495,807
- -------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 27,744,004
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 13,326,765
- -------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 112,514
- -------------------------------------------------------------------------------
Distribution fees -- class A (Note 2) 9,430,624
- -------------------------------------------------------------------------------
Distribution fees -- class B (Note 2) 12,855,704
- -------------------------------------------------------------------------------
Distribution fees -- class M (Note 2) 31,024
- -------------------------------------------------------------------------------
Reports to shareholders 215,929
- -------------------------------------------------------------------------------
Auditing 144,841
- -------------------------------------------------------------------------------
Legal 77,294
- -------------------------------------------------------------------------------
Postage 20,918
- -------------------------------------------------------------------------------
Administrative services (Note 2) 60,903
- -------------------------------------------------------------------------------
Registration fees 563,821
- -------------------------------------------------------------------------------
Other 183,870
- -------------------------------------------------------------------------------
TOTAL EXPENSES 64,768,211
- -------------------------------------------------------------------------------
NET INVESTMENT LOSS (272,404)
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 340,211,726
- -------------------------------------------------------------------------------
Net realized loss on foreign currency translation (Notes 1 and 3) (25,587)
- -------------------------------------------------------------------------------
Net unrealized appreciation of foreign currency translation 1,191
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 1,308,964,016
- -------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 1,649,151,346
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,648,878,942
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JULY 31
1995 1994
- -------------------------------------------------------------------------------
INCREASE IN NET ASSETS
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment loss $ (272,404) $ (11,101,856)
- -------------------------------------------------------------------------------
Net realized gain on investments
and foreign currency translation 340,186,139 197,390,941
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments and foreign currency translation 1,308,965,207 (66,870,273)
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 1,648,878,942 119,418,812
- -------------------------------------------------------------------------------
Distributions to shareholders from:
Net realized gain on investment transactions
Class A (145,558,356) (104,366,667)
Class B (49,513,213) (22,949,719)
Class M (12,706) --
Class Y (4,827,692) --
- -------------------------------------------------------------------------------
Increase from capital share transactions
(Note 4) 1,642,355,205 1,241,253,150
- -------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 3,091,322,180 1,233,355,576
- -------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------
Beginning of year 4,045,048,716 2,811,693,140
- -------------------------------------------------------------------------------
END OF YEAR (including undistributed net
investment income of $0 and $0, respectively) $7,136,370,896 $4,045,048,716
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
APRIL 1, 1994 DECEMBER 1, 1994
(COMMENCE- (COMMENCE-
YEAR MENT OF MENT OF
ENDED OPERATIONS) OPERATIONS)
JULY 31 TO JULY 31 TO JULY 31 YEAR ENDED JULY 31
1995 1994 1995 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS Y CLASS M CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $11.22 $11.24 $11.79 $10.97 $10.89 $9.63
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income
(loss) .03 -- (.01) (.06) (.05) (.03)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 3.74 (.02) 3.10 3.61 .59 1.81
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.77 (.02) 3.09 3.55 .54 1.78
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (.51) -- (.51) (.51) (.46) (.52)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.51) -- (.51) (.51) (.46) (.52)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $14.48 $11.22 $14.37 $14.01 $10.97 $10.89
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE (%) (a) 34.90 (.18)(b) 27.42(b) 33.65 4.71 18.79
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(in thousands) $351,817 $82,102 $19,004 $1,870,370 $911,069 $408,361
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses
to average net assets (%) .83 .31(b) 1.06(b) 1.82 1.84 1.87
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets (%) .39 (.05)(b) (.24)(b) (.58) (.91) (.91)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 65.43 57.74 65.43 65.43 57.74 64.62
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
** Per share net investment income has been determined on the basis of weighted average number of shares outstanding
during the period.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Not annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
APRIL 27, 1992**
(COMMENCEMENT
OF OPERATIONS)
TO JULY 31 YEAR ENDED JULY 31
1992 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $9.34 $11.19 $11.02 $9.67 $9.00 $7.98
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income
(loss) (.04) .02 (.02) (.02) .02 .02
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .33 3.72 .65 1.89 1.16 1.70
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .29 3.74 .63 1.87 1.18 1.72
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income -- -- -- -- (.03) (.07)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments -- (.51) (.46) (.52) (.48) (.63)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS -- (.51) (.46) (.52) (.51) (.70)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.63 $14.42 $11.19 $11.02 $9.67 $9.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE (%) (a) 3.11(b) 34.72 5.49 19.69 13.39 24.04
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(in thousands) $42,492 $4,895,180 $3,051,878 $2,403,332 $1,549,128 $1,016,539
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of total expenses
to average net assets (%) .63(b) 1.07 1.10 1.12 1.20 1.10
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets (%) (.39)(b) .17 (.18) (.14) .27 .29
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 44.17 65.43 57.74 64.62 44.17 49.43
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
July 31, 1995
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. The fund invests primari-
ly in common stocks of small to medium-sized companies that Putnam Investment
Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned sub-
sidiary of Putnam Investments, Inc., believes have potential for capital appre-
ciation significantly greater than that of the market averages.
The fund offers class A, class B, class Y and class M shares. The fund commenced
its public offering of class M shares on December 1, 1994. Class A shares are
sold with a maximum front-end sales charge of 5.75%. Class B shares do not pay
a front-end sales charge, but pay a higher ongoing distribution fee than class
A shares, and may be subject to a contingent deferred sales charge, if those
shares are redeemed within six years of purchase. Class M shares are sold with
a maximum front end sales charge of 3.50% and pay an ongoing distribution fee
that is lower than class B shares and higher than class A shares. Class Y sha-
res, which do not pay a front end or contingent deferred sales charge are gene-
rally subject to the same expenses as class A, B and M shares, but do not bear
a distribution fee. Class Y shares are sold only to defined contribution plans
with an initial investment of at least $250 million in a combination of Putnam
funds and other investments managed by Putnam. Expenses of the fund are borne
pro-rata by the holders of each class of shares, except that each class bears
expenses unique to that class including the distribution fees applicable to such
class. Each class votes only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the Trustees.
Shares of each class would receive their pro-rata share of the net assets of the
fund, if the fund were liquidated. In addition, the Trustees declare separate
dividends on each class of shares.
The following is a summary of significant accounting policies consistently fo-
llowed by the fund in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles.
A) SECURITY VALUATION Investments for which market quotations are readily avail-
able are stated at market value, which is determined using the last reported sa-
le price, or, if no sales are reported -- as in the case of some securities tra-
ded over the counter -- the last reported bid price, except that certain U.S.
government obligations are stated at the mean between the bid and asked prices.
Short-term investments having remaining maturities of 60 days or less are stated
at amortized cost which approximates market, and other investments are stated at
fair value following procedures approved by the Trustees.
<PAGE>
B) JOINT TRADING ACCOUNT Pursuant to an exemptive order issued by the Securities
and Exchange Commission, the fund may transfer uninvested cash balances into a
joint trading account, along with the cash of other registered investment compa-
nies managed by Putnam Management and certain other accounts. These balances may
be invested in one or more repurchase agreements and/or short-term money market
instruments.
C) REPURCHASE AGREEMENTS The fund, through its custodian, receives delivery of
the underlying securities, the market value of which at the time of purchase is
required to be in an amount at least equal to the resale price, including ac-
crued interest. The fund's Manager is responsible for determining that the value
of these underlying securities is at all times at least equal to the resale pri-
ce, including accrued interest.
D) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security transactions are
accounted for on the trade date (date the order to buy or sell is executed).
Interest income is recorded on the accrual basis and dividend income is recorded
on the ex-dividend date, except that certain dividends from foreign securities
are recorded as soon as the fund is informed of the ex-dividend date. Foreign
currency denominated receivables and payables are "marked-to-market" using the
current exchange rate. The fluctuation between the original exchange rate and
the current exchange rate is recorded as unrealized gain or loss. Upon receipt
of payment, the funds realize a gain or loss on foreign currency amounting to
the difference between the original value and the ending value of the receivable
or payable.
E) FOREIGN CURRENCY TRANSLATION The accounting records of the fund are maintain-
ed in U.S. dollars. The market values of currency holdings, 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 of that day. The cost of each secu-
rity is determined using historical exchange rates. Income and withholding taxes
are translated at prevailing exchange rates when accrued or incurred. The funds
do not isolate that portion of realized or unrealized gains or losses resulting
from changes in the foreign exchange rate on investments from fluctuations ari-
sing from changes in the market prices of the securities. Such fluctuations are
included with the net realized and unrealized gain or loss on investments. Net
realized gains or losses on foreign currency transactions represent net exchan-
ge gains or losses on closed forward currency contracts, disposition of foreign
currencies and the difference between the amount of investment income and fore-
ign withholding taxes recorded on the fund's books and the U.S. dollar equiva-
lent amounts actually received or paid. Net unrealized gains and losses on fore-
ign currency transactions arise from changes in the value of open forward cu-
rrency contracts and assets and liabilities other than investments at the period
end, resulting from changes in the exchange rate.
F) FEDERAL TAXES It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid im-
position
<PAGE>
of any excise tax under Section 4982 of the Internal Revenue Code of 1986. The-
refore, no provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held and for excise tax on income and ca-
pital gains.
G) DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded by
the fund on the ex-dividend date. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. The differences inclu-
de treatment of losses on wash sales transactions and non-taxable dividends.
Reclassifications are made to the fund's capital accounts to reflect income and
gains available for distribution (or available capital loss carryovers) under
income tax regulations. For the year ended July 31, 1995, the fund reclassified
272,404 to decrease undistributed net investment loss, $132,692 to decrease
accumulated net realized gain and $139,712 to decrease paid-in capital.
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management, for management and investment advisory servi-
ces is paid quarterly based on the average net assets of the fund for the quar-
ter. Such fee is based on the following annual rates: 0.70% of the first $500
million of average net assets, 0.60% of the next $500 million, 0.55% of the next
$500 million, and 0.50% _of the next $5 billion, subject to reduction in any
year to the extent that expenses (exclusive of brokerage, interest, taxes, dis-
tribution fees, credits allowed by PFTC and extraordinary expenses) of the fund
exceed 2.5% of the first $30 million of average net assets, 2.0% of the next
$70 million and 1.5% of any amount over $100 million, and by the amount of cer-
tain brokerage commissions and fees (less expenses) received by affiliates of
the Manager on the fund's portfolio transactions.
The fund also reimburses the Manager for the compensation and related expenses
of certain officers of the fund and their staff who provide administrative ser-
vices to the fund. The aggregate amount of all such reimbursements is determined
annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $6,828, and an additio-
nal fee for each Trustees' meeting attended. Trustees who are not interested
persons of the Manager and who serve on committees of the Trustees receive addi-
tional fees for attendance at certain committee meetings.
During the year ended July 31, 1995, the fund adopted a Trustee Fee Deferral
Plan (the "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 in the fund and are invested in the fund or in other Putnam funds until
distribution in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust
Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing
agent functions are provided to the fund by Putnam Investor Services, a division
of PFTC.
<PAGE>
Investor servicing and custodian fees reported in the Statement of operations
for the year ended July 31, 1995 have been reduced by credits allowed by PFTC.
The fund has adopted distribution plans (the "Plans") with respect to its class
A, class B and class M shares pursuant to Rule 12b-1 under the Investment Compa-
ny Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds
Corp., a wholly-owned subsidiary of Putnam Investments Inc., for services provi-
ded and expenses incurred by it in distributing shares of the fund. The Plans
provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate
up to 0.35%, 1.00% and 1.00% of the average net assets attributable to class A,
class B and class M shares, respectively. The Trustees have approved payment by
the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average net assets
attributable to class A, class B and class M shares, respectively.
For the year ended July 31, 1995, Putnam Mutual Funds Corp., acting as underwri-
ter received net commissions of $2,820,782 from the sale of class A shares and
$36,137 for the sale of class M shares. There was $2,111,108 in contingent de-
ferred sales charges from redemptions of class B shares. A deferred sales charge
of up to 1% is assessed on certain redemptions of class A shares purchased as
part of an investment of $1 million or more. For the year ended July 31, 1995,
Putnam Mutual Funds Corp., acting as underwriter received $14,146 on class A
redemptions. There were no contingent deferred sales charges on class M redemp-
tions.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the year ended July 31, 1995, purchases and sales of investment securi-
ties other than short-term investments aggregated $4,524,635,187 and
$2,994,592,796, respectively. There were no purchases or sales of U.S. govern-
ment obligations. In determining the net gain or loss on securities sold, the
cost of securities has been determined on the identified cost basis.
NOTE 4
CAPITAL SHARES
At July 31, 1995, there was an unlimited number of shares of beneficial interest
authorized, divided into class A, class B, class Y and class M capital shares.
Transactions in capital shares were as follows:
YEAR ENDED JULY 31, 1995
CLASS A SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 148,502,110 $1,832,997,253
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 12,438,947 139,191,797
- -------------------------------------------------------------------------------
160,941,057 1,972,189,050
- -------------------------------------------------------------------------------
Shares repurchased (94,138,474) (1,170,082,797)
- -------------------------------------------------------------------------------
Net increase 66,802,583 $ 802,106,253
- -------------------------------------------------------------------------------
<PAGE>
YEAR ENDED JULY 31, 1994
CLASS A SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 120,147,917 $1,398,407,256
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 8,467,321 99,321,439
- -------------------------------------------------------------------------------
128,615,238 1,497,728,695
- -------------------------------------------------------------------------------
Shares repurchased (73,942,159) (860,942,051)
- -------------------------------------------------------------------------------
Net increase 54,673,079 $ 636,786,644
- -------------------------------------------------------------------------------
YEAR ENDED JULY 31, 1995
CLASS B SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 62,162,491 $748,057,897
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 4,231,663 46,209,683
- -------------------------------------------------------------------------------
66,394,154 794,267,580
- -------------------------------------------------------------------------------
Shares repurchased (15,970,928) (191,170,815)
- -------------------------------------------------------------------------------
Net increase 50,423,226 $603,096,765
- -------------------------------------------------------------------------------
YEAR ENDED JULY 31, 1994
CLASS B SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 54,297,802 $622,475,746
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 1,839,090 21,241,295
- -------------------------------------------------------------------------------
56,136,892 643,717,041
- -------------------------------------------------------------------------------
Shares repurchased (10,567,655) (121,046,605)
- -------------------------------------------------------------------------------
Net increase 45,569,237 $522,670,436
- -------------------------------------------------------------------------------
YEAR ENDED JULY 31, 1995
CLASS Y SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 19,003,487 $246,497,467
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 430,221 4,827,084
- -------------------------------------------------------------------------------
19,433,708 251,324,551
- -------------------------------------------------------------------------------
Shares repurchased (2,461,794) (31,084,728)
- -------------------------------------------------------------------------------
Net increase 16,971,914 $220,239,823
- -------------------------------------------------------------------------------
<PAGE>
APRIL 1, 1994
(COMMENCEMENT OF
OPERATIONS) TO
JULY 31, 1994
CLASS Y SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 7,360,249 $82,242,284
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions -- --
- -------------------------------------------------------------------------------
7,360,249 82,242,284
- -------------------------------------------------------------------------------
Shares repurchased (40,272) (446,214)
- -------------------------------------------------------------------------------
Net increase 7,319,977 $81,796,070
- -------------------------------------------------------------------------------
DECEMBER 1, 1994
(COMMENCEMENT OF
OPERATIONS) TO
JULY 31, 1995
CLASS M SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 1,405,252 $17,976,348
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 1,112 12,448
- -------------------------------------------------------------------------------
1,406,364 17,988,796
- -------------------------------------------------------------------------------
Shares repurchased (84,034) (1,076,432)
- -------------------------------------------------------------------------------
Net increase 1,322,330 $16,912,364
- -------------------------------------------------------------------------------
<PAGE>
FEDERAL TAX INFORMATION
Pursuant to section 852 of the Internal Revenue Code, the Fund hereby designates
$0.508 per share (or if different, the amount necessary to offset net capital
gain earned by the Fund) for all share classes as capital gain dividends for its
taxable year ended July 1995.
The Form 1099 you receive in January 1996 will show the tax status of all dis-
tributions paid to your account in calendar 1995.
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
independent accountants
Price Waterhouse LLP
TRUSTEES
George Putnam, Chairman William F. Pounds, Vice Chairman
Jameson Adkins Baxter Hans H. Estin
John A. Hill Elizabeth T. Kennan
Lawrence J. Lasser Robert E. Patterson
Donald S. Perkins George Putnam, III
Eli Shapiro A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam Charles E. Porter
President Executive Vice President
Patricia C. Flaherty Lawrence J. Lasser
Senior Vice President Vice President
Gordon H. Silver Charles H. Swanberg
Vice President Vice President and Fund Manager
Roland W. Gillis Robert R. Beck
Vice President and Fund Manager Vice President and Fund Manager
William N. Shiebler John R. Verani
Vice President Vice President
Paul M. O'Neil John D. Hughes
Vice President Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Voyager Fund. It
may also be used as sales literature when preceded or accompanied by the current
prospectus, which gives details of sales charges, investment objectives and
operating policies of the fund, and the most recent copy of Putnam's Quarterly
Performance Summary. For more information, or to request a prospectus, call toll
free: 1-800-225-1581.
SHARES OF MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY,
AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
---------------
PUTNAM INVESTMENTS Bulk Rate
U.S. Postage
THE PUTNAM FUNDS PAID
One Post Office Square Putnam
Boston, Massachusetts 02109 Investments
---------------
119842-007/883/530
<PAGE>
<PAGE>
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EDGAR-FILED TEXTS:
(1) Boldface typeface is displayed with capital letters, italic typeface is
displayed in normal type.
(2) Because the printed page breaks are not reflected, certain tabular and
columnar headings and symbols are displayed differently in this filing.
(3) Bullet points and similar graphic signals are omitted.
(4) Page numbering has been omitted.
(5) The trademark symbol has been replaced by (TM).
(6) The copyright symbol has been replaced by (C).
(7) The registered mark symbol has been replaced by (R).
(8) The dagger symbol has been replaced by +
(9) The double dagger symbol has been replaced by ++
(10) The section symbol has been replaced by +++
