Putnam
Voyager
Fund
ANNUAL REPORT
July 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "Putnam Voyager Fund remains true to its founding spirit . . .
returns so far have lived up to its past. . . . The fund's
risk-reducing diversity comes as an added bonus to its competitive
long-term returns."*
-- Morningstar Mutual Funds, June 21, 1996
* Putnam Voyager Fund's class A shares have consistently performed in
the top quartile of the funds in Lipper Analytical Services' capital
appreciation fund category. For the 1-, 3-, 5-, and 10-year
performance periods ended June 30, 1996, the fund's class A shares
ranked 27 out of 169 (top 16%), 10 out of 113 (top 9%), 11 out of 82
(top 14%), and 3 out of 52 (top 6%), respectively.+
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
14 Portfolio holdings
26 Financial statements
*For detailed performance information and comparison to index returns
please see pages 9 and 10.
+Lipper rankings are based on total return performance, vary over time,
and do not reflect the effects of sales charges. Class B shares ranked
34 out of 169 funds and class M shares ranked 30 out of 169 funds for
1-year performance. Past performance is not indicative of future
results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
Putnam Voyager Fund reaped the benefits of a stock market rise that
continued throughout virtually all of the fiscal year ended July 31,
1996. In the final weeks of the period, however, the market delivered a
stern reminder that such advances do not continue without interruption.
The portfolio's commitment to stocks of companies and industry sectors
with above-average growth prospects allowed the fund to make the most of
the rally and to weather the decline well.
With its time-tested approach of focusing investments on what management
calls foundation growth stocks, premier growth stocks, and opportunity
stocks, the fund thus was able to close its books on yet another year of
solidly positive results. In the report that follows, your fund's
management team discusses the strategy as it applied to fiscal '96
performance and examines prospects for fiscal '97.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
September 16, 1996
Report from the Fund Managers
Roland W. Gillis
Charles H. Swanberg
Robert R. Beck
After enjoying a spectacular ride for much of fiscal 1996, Putnam
Voyager Fund encountered some rough patches this past June and July.
Bracing for the possibility of higher inflation, rising interest rates,
and earnings disappointments, investors fled the equity market, causing
the broad averages to decline sharply.
Because the fund is able to diversify holdings among companies at
varying stages of development, the portfolio's foundation growth,
premier growth, and opportunity segments, or "sleeves," were able to
complement one another as market conditions changed. Consequently,
despite the market's correction, your fund stayed on track, with each
share class posting double-digit total returns at net asset value for
the 12 months ended July 31, 1996. Please see pages 9 and 10 for full
performance details.
* FOUNDATION GROWTH STOCKS: LITTLE ENGINES THAT CAN
There is no doubt that the smaller, more aggressive growth stocks that
make up the fund's foundation growth sleeve came under the greatest
pressure this summer. Although July's correction began with these
stocks, it quickly spread across the entire market. In our opinion, the
correction had more to do with bringing excessive valuations back into
line than with any serious concerns about earnings growth rates or the
long-term potential of foundation growth stocks. Throughout the
turbulence, we have remained focused on companies that can develop
innovative products and services, which, in turn, should allow them to
grow faster than the market over the long run.
The foundation growth sleeve continues to emphasize stocks in the
telecommunications, computer networking, and client-server software
areas, in which many holdings have posted earnings above our
expectations despite recent short-term price declines. Weak computer
equipment demand and disappointing earnings projections led us to
eliminate most semiconductor stocks from the portfolio by period's end.
Some top performers included Cisco Systems, Pairgain Technology,
Tellabs, Adtran, and Cascade Communications. While these stocks, along
with others discussed in this report, were viewed favorably at the end
of the fiscal period, all portfolio holdings are subject to review and
adjustment in accordance with the fund's investment strategy and may
vary in the future.
In addition to benefiting long-distance carriers, wireless
communications companies, and competitive access providers, the
Telecommunications Act of 1996 has had a favorable impact on radio and
television broadcasters. We positioned the fund to benefit further from
this trend by adding companies like Chancellor Broadcasting, Jacor
Communications, and Sinclair Broadcast Group to the portfolio.
We refined the sleeve's health-care exposure as the fiscal year
progressed, shifting assets out of managed-care providers such as
Healthsource and Pacificare Health, which have been adversely affected
by industry price pressures, and into medical information technology and
medical services companies, such as Guidant Corporation, which stand to
benefit from their supportive roles to hospitals.
Finally, innovative companies with specific market niches and the
demonstrated ability to grab market share from more traditional
competitors continued to dominate our selections. HFS, Inc., a long-
standing holding in the lodging area, Bed Bath and Beyond, a specialty
retailer, Corporate Express in the office products field, and Circus
Circus in the gaming industry are just a few holdings of this type that
have proved their worth.
[GRAPHIC OMITTED: Horizontal bar chart TOP INDUSTRY SECTORS]
Computer software 8.2%
Business services 7.0%
Pharmaceuticals
and biotechnology 4.8%
Retail 4.4%
Medical supplies and
devices 4.4%
Footnote reads:
*Based on net assets as of 7/31/96. Sector allocations will vary
over time.
* PREMIER GROWTH: THE MOMENTUM CHUGS ALONG
Premier growth holdings, while featuring above-average growth rates,
differ from foundation growth stocks in their market capitalization and
stage of development. They constitute midsize to large companies with
strong earnings momentum, substantial business franchises, and
considerable financial strength. Roughly two thirds of the stocks found
in the premier growth sleeve are NASDAQ-listed issues, the remainder are
large enough to be listed on the New York Stock Exchange. Not
surprisingly, then, both foundation and premier growth holdings often
capitalize on the same industry themes.
Networking stocks and software technology companies, for example, also
played key roles in the premier segment's returns, with Cisco Systems
and Cascade Communications among this sleeve's most attractive holdings.
Other performance boosters included Microsoft, Rational Software, Ascend
Communications, and Parametric Technology. Some of the top-performing
companies we highlighted in earlier reports, such as America Online and
U.S. Robotics, were sold at considerable profit this past spring just
prior to their dramatic price declines this summer.
We have also had success with select companies in the financial,
specialty retailing, and office products sectors. Since the beginning of
the fiscal year, Federal Home Loan Mortgage Corporation and Federal
National Mortgage Association each have risen in price by more than 40%.
In the credit card business, MBNA and First Data Corporation have posted
gains in excess of 25% and 35%, respectively. Home Depot and Starbucks
continue to dominate their market niches, and Viking Office Products and
Corporate Express have risen considerably in price.
The fund's foreign exposure has remained the same, making up roughly 14%
of the premier growth segment and around 7.4% for the fund overall.
International top performers include Rentokil, a British diversified
business services company, and Sandoz, a Swiss pharmaceutical and
chemicals concern.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
HFS, Inc.
Lodging
Computer Associates Intl., Inc.
Computer software
Thermo Electron Corp.
Energy
Parametric Technology Corp.
Computer software
HBO & Co.
Health-care information systems
MBNA Corp.
Financial services
Corporate Express, Inc.
Business services
Microsoft Corp.
Computer software
Cascade Communications Corp.
Networking equipment
Citicorp
Banking
Footnote reads:
These holdings represent 11.8% of the fund's assets as of 7/31/96.
Portfolio holdings will vary over time.
In response to growing economic uncertainty, we've engaged in some
defensive strategies, which include an increase in the sleeve's exposure
to health care -- specifically the medical device makers and industry-
leading pharmaceutical giants that stand to benefit from continued
strong demand. Shared Medical, Medtronic, Johnson & Johnson, Boston
Scientific, Sandoz, and Pfizer have been solid performers and possess
further appreciation potential. Additionally, we've added a few large
consumer nondurable names, such as Gillette and Newell Co.
* OPPORTUNITY HOLDINGS HELPED PREVENT DERAILMENT
Opportunity stocks -- the stocks of large, well-established companies
undergoing positive change -- provided the fund with considerable
insulation against market declines during the equity market's bumpy
ride. The volatility and speculation that flared up among small to
medium-sized companies were tempered by the investments we made for the
fund's opportunity segment.
The market's changing dynamics prompted us to initiate and increase
sizable positions in several attractively priced, well-established
companies. We also took profits in some of the portfolio's longer-held
issues. New holdings include those of companies undergoing restructuring
and companies in more economically sensitive industries exhibiting the
ability to benefit from accelerating worldwide growth. Meaningful new
positions have been established in NationsBank, a super-regional banking
concern; Enron, Columbia Gas, and El Paso Gas, three natural gas
companies; large retailers such as Dayton Hudson Corp., Payless Shoe
Stores, and Federated Department Stores; and beverage conglomerate
Anheuser-Busch.
We also increased existing positions in companies such as BankAmerica
and Kimberly-Clark. We sold out of Digital Equipment Corporation,
Columbia HCA, and Royal Dutch Petroleum, realizing handsome profits as
the stocks gained recognition in the marketplace.
* NEAR-TERM VOLATILITY NOT OUT OF THE QUESTION, BUT OUTLOOK FAR FROM
BLEAK
Without a doubt, the market's next move is open to interpretation. Mixed
signals about the economy, interest rates, and inflation abound from all
directions and continued volatility over the near term is a much greater
likelihood than any return to relative stability. However, we believe
the outlook for growth-stock investing remains positive over the long
term as macroeconomic conditions, when taken in a historical context,
remain favorable. Worldwide competition continues to prevent inflation
from running unchecked, global interest rates are historically low, and
the U.S. economy is much healthier today than in previous decades.
Furthermore, we believe that your fund, with its three distinct growth
stock segments, is well positioned to take advantage of opportunities in
a broad range of various-sized companies featuring the ability to
increase earnings much faster than the overall market, regardless of the
economic environment.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 7/31/96, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam Voyager Fund is designed for investors aggressively
seeking capital appreciation primarily through common stocks.
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions in the fund.
TOTAL RETURN FOR PERIODS ENDED 7/31/96
Class A Class B Class M
(inception date) (4/1/69) (4/27/92) (12/1/94)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
1 year 15.49% 8.85% 14.70% 9.70% 14.97% 10.95%
- -----------------------------------------------------------------------
5 years 122.74 109.91 -- -- -- --
Annual average 17.37 15.99 -- -- -- --
- -----------------------------------------------------------------------
10 years 367.53 340.66 -- -- -- --
Annual average 16.68 15.99 -- -- -- --
- -----------------------------------------------------------------------
Life of class -- -- 96.62 94.62 46.49 41.33
Annual average -- -- 17.20 16.92 25.68 23.02
- -----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/96
Standard & Poor's Consumer
(registered trademark) Price
500 Index Index
- -----------------------------------------------------------------------
1 year 16.47% 2.95%
- -----------------------------------------------------------------------
5 years 89.22 15.27
Annual average 13.60 2.88
- -----------------------------------------------------------------------
10 years 268.20 43.38
Annual average 13.92 3.67
- -----------------------------------------------------------------------
Life of class B 72.92 12.54
Annual average 13.72 2.81
- -----------------------------------------------------------------------
Life of class M 47.21 4.88
Annual average 26.06 2.89
- -----------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They 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. Investment returns and net asset
value will fluctuate so that an investor's shares, when sold, may be
worth more or less than their original cost. POP assumes 5.75% maximum
sales charge for class A shares and 3.50% for class M shares. CDSC for
class B shares assumes the applicable sales charge, with the maximum
being 5%.
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 7/31/86
Starting value (Insert ending Total)
$9,425 Fund's class A shares at POP $43,707
$10,000 S&P 500 Index $36,820
$10,000 Consumer Price Index $14,338
(plot points for 10-year total return mountain chart)
Fund's Class A S&P 500 Consumer Price
Date/year shares at POP Index Index
- --------- ----------- ------ ------
7/31/86 9,425 10,000 10,000
7/31/87 12,407 13,936 10,393
7/31/88 11,195 12,304 10,822
7/31/89 14,145 16,216 11,361
7/31/90 15,186 17,251 11,909
7/31/91 16,159 19,458 12,438
7/31/92 17,698 21,941 12,831
7/31/93 23,527 23,848 13,187
7/31/94 24,662 25,085 13,553
7/31/95 37,320 31,614 13,927
7/31/96 43,707 36,820 14,338
Footnote reads:
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 $19,662 on 7/31/96
($19,462 with a redemption at the end of the period). A
$10,000 investment in the fund's class M shares at inception
on 12/1/94 would have been valued at $14,649 at net asset
value on 7/31/96 ($14,333 at public offering price).
PRICE AND DISTRIBUTION INFORMATION
12 months ended 7/31/96
Class A Class B Class M
- -----------------------------------------------------------------------
Distributions (number) 1 1 1
- -----------------------------------------------------------------------
Capital gains
- -----------------------------------------------------------------------
Long-term $0.738 $0.738 $0.738
- -----------------------------------------------------------------------
Short-term 0.122 0.122 0.122
- -----------------------------------------------------------------------
Total $0.86 $0.86 $0.86
- -----------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- -----------------------------------------------------------------------
7/31/95 $14.42 $15.30 $14.01 $14.37 $14.89
- -----------------------------------------------------------------------
7/31/96 15.73 16.69 15.15 15.60 16.17
- -----------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 6/30/96
(most recent calendar quarter)
Class A Class B Class M
(inception date) (4/1/69) (4/27/92) (12/1/94)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
1 year 33.82% 26.15% 32.84% 27.84% 33.12% 28.45%
- -----------------------------------------------------------------------
5 years 159.91 144.97 -- -- -- --
Annual average 21.05 19.62 -- -- -- --
- -----------------------------------------------------------------------
10 years 358.83 332.49 -- -- -- --
Annual average 16.46 15.77 -- -- -- --
- -----------------------------------------------------------------------
Life of class -- -- 113.23 111.23 58.88 53.29
Annual average -- -- 19.86 19.59 34.05 31.04
- -----------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns
and net asset value will fluctuate so that an investor's shares, when
sold, may be worth more or less than their original cost.
TERMS AND DEFINITIONS
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the maximum 5.75% sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B shares and assumes redemption at the end of
the period. Your fund's CDSC declines from a 5% maximum during the first
year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies.
COMPARATIVE BENCHMARKS
Standard & Poor's(registered trademark) 500 Price Index is an unmanaged
list of common stocks that is frequently used as a general measure of
stock market performance. It assumes reinvestment of all distributions
and interest payments and does not take in account brokerage fees or
taxes. Securities in the fund do not match those in the index and
performance of the fund will differ. It is not possible to invest
directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Report of independent accountants
To the Trustees and Shareholders of
Putnam Voyager Fund
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments owned, and the related statements
of operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Putnam Voyager Fund (the "fund") at July 31, 1996, and the results of
its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
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 audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of investments owned at July 31,
1996 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
September 13, 1996
<TABLE>
<CAPTION>
Portfolio of investments owned
July 31, 1996
<S> <C> <C> <C>
COMMON STOCKS (95.8%) *
NUMBER OF SHARES VALUE
Advertising (0.5%)
- ------------------------------------------------------------------------------------------------------------------------------
899,750 Omnicom Group, Inc. 36,439,875
412,350 Outdoor Systems, Inc. + 11,288,081
401,368 Universal Outdoor Holdings, Inc. + 8,428,728
----------------
56,156,684
Aerospace and Defense (0.6%)
- ------------------------------------------------------------------------------------------------------------------------------
350,000 Boeing Co. 30,975,000
250,000 Lockheed Martin Corp. 20,718,750
328,400 Northrop Grumman Corp. 22,577,500
----------------
74,271,250
Alcoholic Beverages (0.9%)
- ------------------------------------------------------------------------------------------------------------------------------
550,000 Anheuser-Busch Cos., Inc. 41,112,500
2,050,000 Seagram Co., Ltd. 68,162,500
----------------
109,275,000
Apparel (1.2%)
- ------------------------------------------------------------------------------------------------------------------------------
1,817,550 Gucci Group NV (Italy) + 103,145,937
699,600 Tommy Hilfiger Corp. + 35,504,700
----------------
138,650,637
Automotive (0.8%)
- ------------------------------------------------------------------------------------------------------------------------------
1,511,900 Echlin, Inc. 50,459,663
1,100,000 Snap-On Inc. 48,812,500
----------------
99,272,163
Banks (2.4%)
- ------------------------------------------------------------------------------------------------------------------------------
600,000 Bank of Boston Corp. 31,800,000
1,000,000 BankAmerica Corp. 79,750,000
1,300,000 Citicorp 106,437,500
680,000 NationsBank Corp. 58,395,000
----------------
276,382,500
Basic Industrial Products (0.3%)
- ------------------------------------------------------------------------------------------------------------------------------
1,000,000 General Signal Corp. 39,125,000
Biotechnology (0.2%)
- ------------------------------------------------------------------------------------------------------------------------------
552,700 IDEXX Laboratories, Inc. + 21,417,125
Broadcasting (2.8%)
- ------------------------------------------------------------------------------------------------------------------------------
449,174 Chancellor Broadcasting Corp. Class A + 15,496,503
1,119,070 Clear Channel Communications, Inc. + 89,105,949
248,600 Evergreen Media Corp. Class A + 10,876,250
676,800 Heartland Wireless Communications, Inc. + 14,889,600
1,099,185 Infinity Broadcasting Corp. Class A + 30,227,588
383,521 Jacor Communications, Inc. + 11,697,391
416,620 LIN Television Corp. + 15,467,018
1,462,300 Paxson Communications Corp. + 14,166,031
953,561 Providence Journal Co. Class A + 17,164,098
1,182,150 Renaissance Communications Corp. + 40,784,175
165,540 SFX Broadcasting, Inc. Class A + 6,683,678
618,507 Sinclair Broadcast Group, Inc. Class A + 25,049,534
1,849,600 Westwood One, Inc. + 25,894,400
173,900 Young Broadcasting Corp. Class A + 5,347,425
----------------
322,849,640
Building Products (0.2%)
- ------------------------------------------------------------------------------------------------------------------------------
1,000,000 Masco Corp. 27,875,000
Business Services (7.0%)
- ------------------------------------------------------------------------------------------------------------------------------
274,900 Affiliated Computer Services, Inc. Class A + 15,119,500
1,732,980 Airgas, Inc. + 32,060,130
1,048,200 Alco Standard Corp. 45,858,750
496,050 Corestaff, Inc. + 19,966,013
3,184,030 Corporate Express, Inc. + 119,003,121
1,215,284 Danka Business Systems ADR (United Kingdom) 33,420,310
2,250,000 Deluxe Corp. 82,968,750
1,300,000 Dow Jones & Co., Inc. 50,862,500
464,030 FlightSafety International, Inc. 21,345,380
2,285,480 Input/Output, Inc. + 71,992,620
392,900 Interim Services, Inc. + 14,537,300
865,324 Interpublic Group of Cos., Inc. 38,182,422
1,553,500 Metromedia International Group, Inc. + 15,923,375
101,030 National Data Corp. 4,015,943
47,600 NOVA Corp. + 1,481,550
1,541,957 Paychex, Inc. 70,544,533
12,888,080 Rentokil Group Ord. PLC (United Kingdom) 77,859,147
450,000 Reuters Holdings PLC ADR (United Kingdom) 28,181,250
2,531,724 Robert Half International, Inc. + 71,521,203
----------------
814,843,797
Cable Television (0.6%)
- ------------------------------------------------------------------------------------------------------------------------------
1,307,684 Tele-Comm Liberty Media Group, Inc. Class A + 28,769,048
2,500,000 Tele-Communications Inc. Class A + 35,625,000
----------------
64,394,048
Chemicals (2.5%)
- ------------------------------------------------------------------------------------------------------------------------------
600,000 Air Products & Chemicals, Inc. 32,025,000
350,000 Betz Laboratories, Inc. 15,881,250
600,000 Great Lakes Chemical Corp. 34,575,000
400,000 Loctite Corp. 17,100,000
200,000 Mallinckrodt Group, Inc. 7,475,000
1,150,000 Praxair, Inc. 44,131,250
1,100,000 Raychem Corp. 72,737,500
41,400 Sandoz AG (Switzerland) 46,219,103
600,000 Witco Chemical Corp. 17,400,000
----------------
287,544,103
Computer Equipment (0.6%)
- ------------------------------------------------------------------------------------------------------------------------------
3,642,300 EMC Corp. + 70,569,563
Computer Services (1.5%)
- ------------------------------------------------------------------------------------------------------------------------------
955,646 America Online, Inc. + 29,147,203
419,200 CBT Group PLC ADR (Ireland) + 18,340,000
1,241,190 First Data Corp. 96,347,374
598,900 IDT Corp. + 6,887,350
402,300 Sterling Commerce, Inc. + 12,722,738
201,200 Transaction Systems Architects, Inc. Class A + 6,337,800
----------------
169,782,465
Computer Software (8.2%)
- ------------------------------------------------------------------------------------------------------------------------------
94,900 Arbor Software Corp. + 3,606,200
2,434,200 Baan Co., N.V. (Netherlands) + 72,417,450
416,300 Business Objects S.A., ADR (France) + 8,013,775
305,200 Cadence Design Systems, Inc. + 9,308,600
226,300 Citrix Systems, Inc. + 8,542,825
119,000 Clarify, Inc. + 4,730,250
3,262,896 Computer Associates Intl., Inc. 165,999,834
2,633,578 Electronic Arts, Inc. + 79,007,340
973,650 Electronics for Imaging, Inc. + 56,715,113
788,400 Fulcrum Technologies, Inc. + 9,657,900
682,300 Geoworks + 13,987,150
583,300 GT Interactive Software Corp. + 11,301,438
536,800 Legato Systems, Inc. + 17,580,200
600 Lycos, Inc. + 3,563
504,900 McAfee Associates, Inc. + 25,371,225
987,731 Microsoft Corp. + 116,428,792
842,686 Netscape Communications Corp. + 33,286,097
266,268 Objective Systems Integrators, Inc. + 5,192,226
3,375,050 Parametric Technology Corp. + 140,486,456
790,560 PeopleSoft, Inc. + 53,412,210
298,400 Pure Software, Inc. + 7,460,000
123,500 Raptor Systems, Inc. + 2,331,063
573,375 Rational Software Corp. + 25,443,516
191,100 Security Dynamics Technologies, Inc. + 11,657,100
765,000 Softkey International, Inc. + 14,152,500
685,200 Synopsys, Inc. + 25,523,700
439,100 Vantive Corp. + 18,991,075
184,500 Viasoft, Inc. + 7,011,000
----------------
947,618,598
Consumer Products (1.8%)
- ------------------------------------------------------------------------------------------------------------------------------
373,200 Central Garden & Pet Co. + 7,837,200
904,680 Gillette Co. 57,560,265
1,200,000 Kimberly-Clark Corp. 91,200,000
762,900 Newell Co. 24,508,163
1,000,000 Sara Lee Corp. 32,000,000
----------------
213,105,628
Consumer Services (0.2%)
- ------------------------------------------------------------------------------------------------------------------------------
663,400 Loewen Group, Inc. 17,787,413
Containers (0.1%)
- ------------------------------------------------------------------------------------------------------------------------------
200,000 Temple Inland, Inc. 9,475,000
Cosmetics (0.3%)
- ------------------------------------------------------------------------------------------------------------------------------
305,000 Douglas Holding AG (Germany) 11,709,248
884,400 Thermolase Corp. + 19,677,900
----------------
31,387,148
Data Communications (0.7%)
- ------------------------------------------------------------------------------------------------------------------------------
1,898,300 MFS Communications, Inc. + 59,796,450
764,100 Omnipoint Corp. + 21,394,800
----------------
81,191,250
Electric Utilities (0.1%)
- ------------------------------------------------------------------------------------------------------------------------------
292,700 Calenergy, Inc. + 7,683,375
Electronics and Electrical Equipment (1.4%)
- ------------------------------------------------------------------------------------------------------------------------------
2,100,000 ADT Ltd. + 39,637,500
448,000 CHS Electronics, Inc. + 4,816,000
500,000 General Electric Co. 41,187,500
550,000 Honeywell, Inc. 29,150,000
563,300 Lernout & Hauspie Speech Products N.V. (Belgium) + 10,702,700
1,035,047 Thermo Instrument Systems, Inc. + 34,803,455
----------------
160,297,155
Energy-Related (1.3%)
- ------------------------------------------------------------------------------------------------------------------------------
4,090,739 Thermo Electron Corp. + 152,891,370
Entertainment (0.4%)
- ------------------------------------------------------------------------------------------------------------------------------
901,208 Disney (Walt) Productions, Inc. 50,129,695
Environmental Control (0.4%)
- ------------------------------------------------------------------------------------------------------------------------------
673,300 Memtec Ltd. ADR (Australia) 20,030,675
900,000 WMX Technologies, Inc. 26,662,500
----------------
46,693,175
Finance (2.8%)
- ------------------------------------------------------------------------------------------------------------------------------
1,935,823 American Express Co. 84,692,256
696,336 Federal Home Loan Mortgage Corp. 58,666,308
2,956,873 Federal National Mortgage Association 93,880,718
482,850 Financial Federal Corp. + 6,277,050
343,400 Morgan (J.P.) & Co., Inc. 29,532,400
208,300 Student Loan Marketing Assn. 15,205,900
1,160,050 TCF Financial Corp. 40,021,725
----------------
328,276,357
Financial Services (1.6%)
- ------------------------------------------------------------------------------------------------------------------------------
442,118 Concord EFS, Inc. + 11,274,009
158,602 First USA Paymentech, Inc. + 6,482,857
4,528,565 MBNA Corp. 126,233,749
3,069,839 Mercury Finance Co. 33,384,499
407,500 Olympic Financial Ltd. + 6,520,000
----------------
183,895,114
Food and Beverages (1.3%)
- ------------------------------------------------------------------------------------------------------------------------------
2,150,000 Archer Daniels Midland Co. 38,162,500
2,605,787 PepsiCo, Inc. 82,408,014
1,075,000 Whitman Corporation 24,053,125
----------------
144,623,639
Gaming (1.2%)
- ------------------------------------------------------------------------------------------------------------------------------
227,900 Anchor Gaming + 13,332,150
2,296,800 Circus Circus Enterprises, Inc. + 70,626,600
1,811,100 Mirage Resorts, Inc. + 40,749,750
630,900 Rio Hotel & Casino, Inc. + 9,700,088
----------------
134,408,588
Gas Pipelines (0.9%)
- ------------------------------------------------------------------------------------------------------------------------------
200,000 El Paso Natural Gas Co. 7,800,000
1,650,000 Enron Corp. 64,968,750
693,900 Sonat, Inc. 29,577,488
----------------
102,346,238
Gas Utilities (0.7%)
- ------------------------------------------------------------------------------------------------------------------------------
1,450,000 Columbia Gas System, Inc. + 77,756,250
HMOs (0.1%)
- ------------------------------------------------------------------------------------------------------------------------------
492,700 Sierra Health Services, Inc. + 12,933,375
Health Care Information Systems (1.1%)
- ------------------------------------------------------------------------------------------------------------------------------
2,081,570 HBO & Co. 127,496,163
Health Care Services (2.7%)
- ------------------------------------------------------------------------------------------------------------------------------
370,800 ABR Information Services, Inc. + 18,818,100
988,820 Apria Healthcare Group, Inc. + 24,349,693
2,079,050 Healthsouth Rehabilitation Corp. + 63,151,144
1,291,300 Lincare Holdings, Inc. + 50,360,700
658,100 Medaphis Corp. + 24,431,963
331,112 Oxford Health Plans Inc. + 11,423,364
775,572 Renal Treatment Centers, Inc. + 21,716,016
694,000 Rotech Medical Corp. + 12,145,000
545,700 Total Renal Care Holdings, Inc. + 19,508,775
1,463,900 Vencor, Inc. + 40,074,263
742,705 Vivra, Inc. + 21,631,283
----------------
307,610,301
Home Building (0.5%)
- ------------------------------------------------------------------------------------------------------------------------------
3,113,100 Clayton Homes, Inc. 54,479,250
Hospital Management (0.8%)
- ------------------------------------------------------------------------------------------------------------------------------
3,612,020 Health Management Assoc., Inc. + 72,691,903
146,100 Owen Healthcare, Inc. + 1,917,563
1,546,090 Physician Reliance Network, Inc. + 20,872,215
----------------
95,481,681
Household Products (0.6%)
- ------------------------------------------------------------------------------------------------------------------------------
1,172,300 Blyth Industries, Inc. + 52,900,038
450,000 Tupperware Corp. + 19,237,500
----------------
72,137,538
Insurance (1.4%)
- ------------------------------------------------------------------------------------------------------------------------------
1,350,000 American General Corp. 46,912,500
375,000 American International Group, Inc. 35,296,875
1,341,092 Amerin Corp. + 29,839,297
110,000 General Re Corp. 16,142,500
583,250 HCC Insurance Holdings, Inc. 15,529,031
1,000,000 USF&G Corp. 15,875,000
----------------
159,595,203
Leisure (0.1%)
- ------------------------------------------------------------------------------------------------------------------------------
506,000 Family Golf Centers, Inc. + 11,511,500
Lodging (2.8%)
- ------------------------------------------------------------------------------------------------------------------------------
606,400 Doubletree Corp. + 19,859,600
983,600 Extended Stay America, Inc. + 14,754,000
3,296,095 HFS, Inc. + 197,765,700
137,200 Interstate Hotels Co. + 3,121,300
1,401,300 Prime Hospitality Corp. + 24,873,075
597,900 Promus Hotel Corp. + 16,292,775
1,935,600 Renaissance Hotel Group N.V. (Hong Kong) + 40,405,650
145,500 Studio Plus Hotels, Inc. + 2,873,625
----------------
319,945,725
Medical Management Services (0.8%)
- ------------------------------------------------------------------------------------------------------------------------------
391,300 OccuSystems, Inc. + 11,152,050
103,000 Orthodontic Centers of America, Inc. + 3,180,125
1,968,980 Phycor, Inc. + 60,546,135
478,300 Phymatrix, Inc. + 10,343,238
88,200 Physicians Resource Group, Inc. + 1,764,000
----------------
86,985,548
Medical Supplies and Devices (4.4%)
- ------------------------------------------------------------------------------------------------------------------------------
127,800 American HomePatient, Inc. + 3,099,150
731,000 Boston Scientific Corp. + 34,905,250
250,900 Endosonics Corp. + 3,136,250
8,430 Fresenius AG (Germany) 1,580,947
1,873,864 Johnson & Johnson 89,477,006
600,000 Lifecore Biomedical, Inc. + 9,750,000
829,710 Medtronic, Inc. 39,307,511
241,300 Neuromedical Systems, Inc. + 3,468,688
372,790 Omnicare, Inc. 8,713,966
945,825 Shared Medical Systems Corp. 52,020,375
926,600 Sola International, Inc. + 27,450,525
1,365,466 St. Jude Medical Inc. + 45,913,794
3,274,029 Stryker Corp. 80,469,494
1,677,125 Thermo Cardiosystems, Inc. + 53,668,000
376,450 Thermotrex Corp. + 13,175,750
29,485 Trex Medical Corp. + 600,757
1,125,000 U.S. Surgical Corp. 38,531,250
----------------
505,268,713
Metals and Mining (0.3%)
- ------------------------------------------------------------------------------------------------------------------------------
1,300,000 Freeport-McMoRan Copper & Gold Co., Inc. Class A 36,075,000
Networking Equipment (3.4%)
- ------------------------------------------------------------------------------------------------------------------------------
1,185,331 Ascend Communications, Inc. + 57,488,554
1,458,300 Cabletron Systems, Inc. + 83,487,675
1,767,275 Cascade Communications Corp. + 108,687,413
1,888,938 Cisco Systems, Inc. + 97,752,542
775,000 Shiva Corp. + 40,106,250
----------------
387,522,434
Nursing Homes (0.5%)
- ------------------------------------------------------------------------------------------------------------------------------
304,900 American Medical Response + 10,099,813
459,150 Genesis Health Ventures, Inc. + 11,536,144
1,390,800 Health Care & Retirement Corp. + 33,031,500
----------------
54,667,457
Office Equipment (1.0%)
- ------------------------------------------------------------------------------------------------------------------------------
704,200 BT Office Products International, Inc. + 8,890,525
432,200 U.S. Office Products Co. + 12,317,700
3,282,175 Viking Office Products, Inc. + 96,824,163
----------------
118,032,388
Oil and Gas (2.8%)
- ------------------------------------------------------------------------------------------------------------------------------
399,977 British Petroleum PLC ADR (United Kingdom) 43,947,473
700,000 Chevron, Inc. 40,512,500
250,000 Exxon Corp. 20,562,500
700,000 Halliburton Co. 36,487,500
375,000 Mobil Corp. 41,390,625
480,000 Production Operators Corp. 15,000,000
575,000 Schlumberger Ltd. 46,000,000
2,140,987 Total Corp. ADR (France) 76,540,273
----------------
320,440,871
Paper and Forest Products (0.4%)
- ------------------------------------------------------------------------------------------------------------------------------
600,000 Fort Howard Corp. + 13,725,000
850,000 Weyerhaeuser Co. 35,487,500
----------------
49,212,500
Pharmaceuticals and Biotechnology (4.8%)
- ------------------------------------------------------------------------------------------------------------------------------
300,000 Allergan Inc. 12,225,000
656,400 Amgen, Inc. + 35,855,850
1,575,344 Astra AB (Sweden) 66,291,298
459,200 Biochem Pharmaceutical, Inc. + 13,718,600
422,328 Chiron Corp. + 37,164,864
567,800 CytoTherapeutics, Inc. + 4,542,400
505,211 Elan Corp. PLC ADR (Ireland) + 29,681,146
1,028,000 Gilead Sciences, Inc. + 19,532,000
1,170,050 Guidant Corp. 59,380,038
700,000 Lilly (Eli) & Co. 39,200,000
372,000 Martek Biosciences Corp. + 9,346,500
561,700 Neurogen Corp. + 9,970,175
105,800 Parexel International Corp. + 4,284,900
1,160,657 Pfizer, Inc. 81,100,908
2,112,800 Pharmacia & Upjohn, Inc. 87,153,000
750,500 Smithkline Beecham PLC ADR (United Kingdom) 40,339,375
----------------
549,786,054
Photography (1.5%)
- ------------------------------------------------------------------------------------------------------------------------------
1,225,000 Eastman Kodak Co. 91,415,625
2,000,000 Polaroid Corp. 84,500,000
----------------
175,915,625
Publishing (1.8%)
- ------------------------------------------------------------------------------------------------------------------------------
500,000 Belo (A.H.) Corp. Class A 20,125,000
819,600 Harcourt General, Inc. 39,238,350
500,000 McGraw-Hill, Inc. 19,500,000
9,800 Mecklermedia Corp. + 164,150
500,000 Tribune Co. 35,000,000
787,378 Wolters Kluwer N.V. (Netherlands) 91,689,823
----------------
205,717,323
Railroads (0.7%)
- ------------------------------------------------------------------------------------------------------------------------------
565,000 Burlington Northern Santa Fe Corp. 44,564,375
1,074,821 Wisconsin Central Transportation Corp. + 33,588,156
----------------
78,152,531
Restaurants (2.3%)
- ------------------------------------------------------------------------------------------------------------------------------
1,340,800 Apple South, Inc. 27,318,800
1,354,500 Applebee's International, Inc. 34,031,813
1,086,900 Boston Chicken, Inc. + 28,802,850
1,871,738 J.D. Wetherspoon PLC (United Kingdom)+ 25,176,280
798,900 Landry's Seafood Restaurants, Inc. + 17,775,525
1,304,348 Lone Star Steakhouse & Saloon + 40,760,875
373,515 Outback Steakhouse, Inc. + 9,618,011
139,000 PizzaExpress PLC (United Kingdom) 862,419
2,924,100 Starbucks Corp. + 76,026,600
----------------
260,373,173
Retail (4.4%)
- ------------------------------------------------------------------------------------------------------------------------------
120,700 AutoZone, Inc. + 3,485,213
1,566,825 Bed Bath & Beyond, Inc. + 34,470,150
1,498,462 Boise Cascade Office Products + 33,715,395
672,600 CompUSA, Inc. + 26,567,700
1,549,200 Dayton-Hudson Corporation 46,863,300
1,500,000 Federated Department Stores Inc. + 45,375,000
291,000 Global DirectMail Corp. + 11,858,250
1,773,418 Home Depot, Inc. 89,557,609
950,000 Lowe's Cos., Inc. 30,993,750
3,134,250 Officemax, Inc. + 41,528,813
1,000,000 Payless Shoesource, Inc. + 32,375,000
175,200 Payment Services., Inc. + 4,861,800
860,218 Petco Animal Supplies, Inc. + 19,139,851
1,000,000 Price/Costco, Inc. + 20,500,000
2,000,000 Revco D.S., Inc. + 45,500,000
1,159,550 Staples, Inc. + 19,277,519
----------------
506,069,350
Semiconductors (1.6%)
- ------------------------------------------------------------------------------------------------------------------------------
815,700 Analog Devices Inc. + 17,027,738
459,200 Credence Systems Corp. + 6,084,400
318,050 Intel Corp. 23,893,506
1,510,427 Linear Technology Corp. 47,578,451
2,351,410 Maxim Integrated Products Inc. + 67,015,185
1,800,000 National Semiconductor Corp. + 25,425,000
----------------
187,024,280
Specialty Consumer Products (0.6%)
- ------------------------------------------------------------------------------------------------------------------------------
893,591 Fastenal Co. 38,424,413
341,300 Gemstar International Group Ltd. + 8,276,525
396,395 Luxottica Group S.P.A. ADR (Italy) 28,144,045
----------------
74,844,983
Steel (0.1%)
- ------------------------------------------------------------------------------------------------------------------------------
300,000 Nucor Corp. 14,062,500
Supermarkets (0.3%)
- ------------------------------------------------------------------------------------------------------------------------------
52,875 Carrefour Supermarche SA (France) 29,019,028
Telecommunication Equipment (2.3%)
- ------------------------------------------------------------------------------------------------------------------------------
1,122,000 Adtran, Inc. + 68,161,500
17,100 Boston Communications Group, Inc. + 239,400
307,400 Brooks Fiber Properties, Inc. + 9,625,463
1,825,000 DSC Communications Corp. + 54,750,000
830,449 Glenayre Technologies, Inc. + 30,622,807
526,900 P-Com, Inc. + 12,645,600
606,600 Pairgain Technologies, Inc. + 33,666,300
126,700 Premiere Technologies, Inc. + 2,787,400
668,100 Premisys Communications, Inc. + 20,210,025
613,364 Tellabs, Inc. + 36,648,499
----------------
269,356,994
Telephone Services (3.6%)
- ------------------------------------------------------------------------------------------------------------------------------
1,200,000 GTE Corp. 49,500,000
438,080 Intelcom Group, Inc. + 8,433,040
249,800 Intermedia Communications, Inc. + 6,307,450
406,196 IXC Communications Inc. + 5,280,548
608,300 LCI International, Inc. + 18,401,075
476,500 Lucent Technologies, Inc. 17,690,063
2,720,100 MCI Communications Corp. 66,982,463
1,270,000 McLeod, Inc. Class A + 32,067,500
772,307 Octel Communications Corp. + 18,149,215
132,800 Pacific Gateway Exchange Inc. + 1,593,600
328,000 Pacific Telesis Group 11,029,000
700,700 SBC Communications, Inc. 34,246,713
1,700,000 Sprint Corp. 62,262,500
487,600 Tel-Save Holdings, Inc. + 11,702,400
107,300 Teletech Holdings, Inc. + 1,555,850
232,600 U.S. Long Distance Corp. + 5,669,625
2,565,700 WorldCom, Inc. + 66,387,488
----------------
417,258,530
Textiles (0.4%)
- ------------------------------------------------------------------------------------------------------------------------------
946,257 Designer Holdings Ltd. + 17,387,472
783,800 St. John Knits, Inc. 30,960,100
----------------
48,347,572
Tobacco (0.3%)
- ------------------------------------------------------------------------------------------------------------------------------
1,200,000 UST, Inc. 39,900,000
Trucking (0.3%)
- ------------------------------------------------------------------------------------------------------------------------------
1,300,000 Ryder System, Inc. 34,612,500
Wireless Communications (1.6%)
- ------------------------------------------------------------------------------------------------------------------------------
566,666 360 Communications Co. + 13,104,151
1,200,000 Airtouch Communications, Inc. + 33,000,000
159,800 Clearnet Communications Inc. Class A, (Canada) + 2,676,650
418,300 Intercel, Inc. + 7,477,113
3,501,700 NEXTEL Communications, Inc. Class A + 52,963,213
3,030,319 Paging Network, Inc. + 58,333,641
728,700 Preferred Networks, Inc. + 6,102,863
679,800 Western Wireless Corp. Class A + 10,621,875
----------------
184,279,506
Total Common Stocks (cost $9,073,134,513) $ 11,056,090,564
Preferred Stocks (0.2%) * (Cost $18,013,734)
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
103,570 Fresenius AG pfd. (Germany) $ 19,599,270
Short-Term Investments (4.2%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------
$ 35,000,000 American Home Products effective yield of 5.41%, 8/27/96 $ 34,863,247
25,000,000 Corporate Receivables Corp. effective yield of 5.42%, 10/8/96 24,746,417
5,000,000 Corporate Receivables Corp. effective yield of 5.39%, 8/5/96 4,997,006
20,950,000 Falcon Asset Security Corp. effective yield of 5.4%, 8/26/96 20,871,438
30,000,000 Federal Home Loan Bank effective yield of 5.33%, 10/28/96 29,609,133
25,000,000 Federal Home Loan Mortgage Corp. effective yield of 5 1/2%, 8/1/96 25,000,000
30,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.34%, 9/26/96 29,750,800
17,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.31%, 9/12/96 16,894,685
8,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.30%, 8/12/96 7,987,044
25,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.29%, 9/23/96 24,805,299
15,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.22%, 8/28/96 14,941,275
15,000,000 Federal National Mortgage Association effective yield of 5.32%, 9/6/96 14,920,200
25,000,000 Ford Motor Co. effective yield of 5.41%, 10/7/96 24,750,146
33,000,000 Heinz H J Co. effective yield of 5.37%, 8/8/96 32,965,543
20,000,000 JP Morgan & Co. Inc. effective yield of 5.31%, 8/19/96 19,946,900
30,000,000 Merrill Lynch & Co. Inc. effective yield of 5.40%, 9/17/96 29,788,500
30,000,000 Metropolitan Life Funding effective yield of 5.34%, 8/19/96 29,919,900
25,000,000 National Rural Utilities Corp. effective yield of 5.36%, 8/19/96 24,933,000
20,000,000 Nationsbank Corp. effective yield of 5.31%, 8/5/96 19,988,200
25,000,000 USAA Capital Corp. effective yield of 5.35%, 9/13/96 24,840,243
27,697,000 Interest in $500,000,000 joint repurchase agreement dated July 31, 1996
with Lehman Brothers Inc. due August 1, 1996 with respect to various
U.S. Treasury obligations-maturity value of $27,701,347 for an effective yield of 5.65% 27,701,347
----------------
Total Short-Term Investments (cost $484,220,323) $ 484,220,323
- ------------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $9,575,368,570) *** $ 11,559,910,157
- ------------------------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $11,534,943,999.
** The aggregate identified cost on a tax basis is $9,594,647,581, resulting in gross unrealized appreciation and depreciation
of $2,506,650,828 and $541,388,252, respectively, or net unrealized appreciation of $1,965,262,576.
ADR after the name of a foreign holding stands for American Depository Receipt, representing ownership of foreign securities
on deposit with a domestic custodian bank.
+ Non-income-producing security.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
July 31, 1996
<S> <C>
Assets
Investments in securities, at value (identified cost $9,575,368,570) (Note 1) $11,559,910,157
- ---------------------------------------------------------------------------------------------------------------------------------
Cash 2,738,649
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends, interest and other receivables 5,163,369
- ---------------------------------------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 43,308,323
- ---------------------------------------------------------------------------------------------------------------------------------
Receivable for securities sold 43,492,348
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 11,654,612,846
Liabilities
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for securities purchased 81,542,671
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 9,871,169
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 14,919,224
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 6,924,106
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 19,905
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 5,151
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 4,522,393
- ---------------------------------------------------------------------------------------------------------------------------------
Other accrued expenses 1,864,228
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities 119,668,847
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets $11,534,943,999
Represented by
- ---------------------------------------------------------------------------------------------------------------------------------
Paid-in-capital (Notes 1 and 4) $8,778,958,163
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions (Note 1) 771,435,499
- ---------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and liabilities in foreign currencies 1,984,550,337
- ---------------------------------------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $11,534,943,999
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price of class A shares ($7,332,248,429 divided by 466,154,655 shares) $15.73
- ---------------------------------------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $15.73) * $16.69
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value and offering price of class B shares ($3,405,318,062 divided by 224,833,465 shares) ** $15.15
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price of class M shares ($87,782,443 divided by 5,626,361 shares) $15.60
- ---------------------------------------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $15.60) * $16.17
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price of class Y shares ($709,595,065 divided by 44,771,220 shares) $15.85
- ---------------------------------------------------------------------------------------------------------------------------------
* 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.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended July 31, 1996
<S> <C>
Investment Income:
- ------------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $1,406,212) $71,503,392
- ------------------------------------------------------------------------------------------------------
Interest 14,863,552
- ------------------------------------------------------------------------------------------------------
Total investment income 86,366,944
Expenses:
- ------------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 48,811,392
- ------------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 21,833,626
- ------------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 153,768
- ------------------------------------------------------------------------------------------------------
Administrative services (Note 2) 61,879
- ------------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 15,846,214
- ------------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 27,053,037
- ------------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 385,447
- ------------------------------------------------------------------------------------------------------
Reports to shareholders 448,775
- ------------------------------------------------------------------------------------------------------
Registration fees 1,316,277
- ------------------------------------------------------------------------------------------------------
Auditing 157,107
- ------------------------------------------------------------------------------------------------------
Legal 163,022
- ------------------------------------------------------------------------------------------------------
Postage 989,020
- ------------------------------------------------------------------------------------------------------
Other 290,695
- ------------------------------------------------------------------------------------------------------
Total expenses 117,510,259
- ------------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (2,394,148)
- ------------------------------------------------------------------------------------------------------
Net expenses 115,116,111
- ------------------------------------------------------------------------------------------------------
Net investment loss (28,749,167)
- ------------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 962,853,545
- ------------------------------------------------------------------------------------------------------
Net realized loss on foreign currency translation (Note 1) (31,882)
- ------------------------------------------------------------------------------------------------------
Net unrealized appreciation on foreign currency translation during the year 7,558
- ------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments during the year 144,549,915
- ------------------------------------------------------------------------------------------------------
Net gain on investments 1,107,379,136
- ------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,078,629,969
- ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended July 31
-----------------------------------
1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- --------------------------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------------------------
Net investment loss $(28,749,167) $(272,404)
- --------------------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency transactions 962,821,663 340,186,139
- --------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and liabilities
in foreign currency transactions 144,557,473 1,308,965,207
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,078,629,969 1,648,878,942
- --------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- --------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (317,069,690) (145,558,356)
- --------------------------------------------------------------------------------------------------------------------
Class B (135,078,052) (49,513,213)
- --------------------------------------------------------------------------------------------------------------------
Class M (2,101,620) (12,706)
- --------------------------------------------------------------------------------------------------------------------
Class Y (22,695,086) (4,827,692)
- --------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 3,796,887,582 1,642,355,205
- --------------------------------------------------------------------------------------------------------------------
Total increase in net assets 4,398,573,103 3,091,322,180
- --------------------------------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------------------------
Beginning of year 7,136,370,896 4,045,048,716
- --------------------------------------------------------------------------------------------------------------------
End of year $11,534,943,999 $7,136,370,896
- --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
(For a share outstanding throughout the period)
April 1, 1994
(commencement
Year ended of operations) to
July 31 July 31
-----------------------------------------------------
1996 1995 1994
-----------------------------------------------------
Class Y
-----------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.48 $11.22 $11.24
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02* .03 --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.21 3.74 (.02)
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.23 3.77 (.02)
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (.86) (.51) --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.86) (.51) --
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.85 $14.48 $11.22
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 15.85 34.90 (0.18)(b)
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $709,595 $351,817 $82,102
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) .77 .83 .31(b)
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) .15 .39 (.05)(b)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 57.92 65.43 57.74
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (continued)
(For a share outstanding throughout the period)
December 1, 1994
Year (commencement
ended of operations) to
July 31 July 31
-----------------------------------------------------
1996 1995 1996
-----------------------------------------------------
Class M
-----------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $14.37 $11.79 $14.01
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.09)* (.01) (.13)*
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.18 3.10 2.13
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.09 3.09 2.00
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (.86) (.51) (.86)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.86) (.51) (.86)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.60 $14.37 $15.15
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 14.97 27.42(b) 14.70
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $87,782 $19,004 $3,405,318
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.50 1.06(b) 1.78
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) (.57) (.24)(b) (.85)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 57.92 65.43 57.92
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (continued)
(For a share outstanding throughout the period)
Year ended July 31
-----------------------------------------------------
1995 1994 1993
-----------------------------------------------------
Class B
-----------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.97 $10.89 $9.63
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.06) (.05) (.03)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 3.61 .59 1.81
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.55 .54 1.78
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (.51) (.46) (.52)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.51) (.46) (.52)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.01 $10.97 $10.89
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 33.65 4.71 18.79
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,870,370 $911,069 $408,361
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.82 1.84 1.87
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) (.58) (.91) (.91)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 65.43 57.74 64.62
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (continued)
(For a share outstanding throughout the period)
April 27
(commencement
of operations) to
July 31 Year ended July 31
-----------------------------------------------------
1992 1996 1995
-----------------------------------------------------
-----------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.34 $14.42 $11.19
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.04)* (.02)* .02
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .33 2.19 3.72
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .29 2.17 3.74
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments -- (.86) (.51)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.86) (.51)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.63 $15.73 $14.42
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 3.11(b) 15.49 34.72
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $42,492 $7,332,248 $4,895,180
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) .63(b) 1.03 1.07
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) (.39)(b) (.10) .17
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 44.17 57.92 65.43
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (continued)
(For a share outstanding throughout the period)
Year ended July 31
-----------------------------------------------------
1994 1993 1992
-----------------------------------------------------
Class A
-----------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.02 $9.67 $9.00
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02) (.02) .02
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .65 1.89 1.16
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .63 1.87 1.18
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income -- -- (.03)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (.46) (.52) (.48)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.46) (.52) (.51)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.19 $11.02 $9.67
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 5.49 19.69 13.39
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $3,051,878 $2,403,332 $1,549,128
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.10 1.12 1.20
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) (.18) (.14) .27
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 57.74 64.62 44.17
- ---------------------------------------------------------------------------------------------------------------------------
* 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.
(c) The ratio of expenses to average net assets for the period ended July 31, 1996 includes expense offset and brokerage
service arrangements. Prior period ratios excluded these amounts (Note 2).
</TABLE>
Notes to financial statements
July 31, 1996
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 primarily in common stocks of companies that Putnam
Investment Management, Inc. ("Putnam Management"), the fund's Manager, a
wholly-owned subsidiary of Putnam Investments, Inc., believes have
potential for capital appreciation significantly greater than that of
the market averages.
The fund offers class A, class B, class M and class Y shares. Class A
shares are sold with a maximum front-end sales charge of 5.75%. Class B
shares, which convert to class A shares after eight years, 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 higher than class A shares but lower
than class B and class Y shares. Class Y shares, which are sold at net
asset value, are generally subject to the same expenses as class A,
class B and class M shares, but do not bear a distribution fee. Class Y
shares are sold to defined contribution plans that initially invest at
least $250 million in a combination of Putnam Funds.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies followed
by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported -- as in the
case of some securities traded over the counter -- the last reported bid
price. Short-term investments having remaining maturities of 60 days or
less are stated at amortized cost, which approximates market value, and
other investments are stated at fair value following procedures approved
by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies 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, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Putnam Management is responsible for determining that the value of these
underlying securities is at all times at least equal to the resale
price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the fund is
informed of the ex-dividend date.
E) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, 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 capital
gains.
F) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
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 on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such fluctuations are included with the net realized
and unrealized gain or loss on investments. Net realized gains and
losses on foreign currency translation represent net exchange gains or
losses on closed forward currency contracts, disposition of foreign
currencies and the difference between the amount of investment income
and foreign withholding taxes recorded on the fund's books and the U.S.
dollar equivalent amounts actually received or paid. Net unrealized
gains and losses on foreign currency translation 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.
G) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid annually. The amount and character of income and gains to be
distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences include treatment of losses on wash sale transactions,
realized gains and losses on short-term foreign currency contracts.
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,
1996, the fund reclassified $28,749,167 to decrease accumulated net
investment loss and $28,809,717 to decrease paid-in-capital, with an
increase to accumulated net realized gain on investments of $60,550. The
calculation of net investment income per share in the financial
highlights table excludes these adjustments.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund for the quarter. Such fee is based on the following annual
rates: 0.70% of the first $500 million of average net assets, 0.60% of
the next $500 million, 0.55% of the next $500 million, 0.50% of the next
$5 billion, 0.475% of the next $5 billion, 0.455% of the next $5
billion, 0.44% of the next $5 billion, and 0.43% of any amount over
$21.5 billion, subject, under current law, to reduction in any year by
the amount of certain brokerage commissions and fees (less expenses)
received by affiliates of the Manager on the fund's portfolio
transactions.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the period ended July 31, 1996, fund expenses were reduced by
$2,394,148 under expense offset arrangements with PFTC and brokerage
service arrangements. Investor servicing and custodian fees reported in
the Statement of operations exclude these credits. The fund could have
invested a portion of the assets utilized in connection with the expense
offset arrangements in an income producing asset if it had not entered
into such arrangements.
Trustees of the fund receive an annual Trustees fee of $8,750 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
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.
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 Company 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 provided 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, 1996, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $7,022,604 and $151,537 from the
sale of class A and class M shares, respectively and received $2,957,794
in contingent deferred 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. For the year ended July 31, 1996, Putnam Mutual Funds
Corp., acting as underwriter received $73,974 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended July 31, 1996, purchases and sales of investment
securities other than short-term investments aggregated $8,606,873,688
and $5,400,228,660, respectively. There were no purchases and sales of
U.S. government 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, 1996, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
July 31, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 195,466,332 $3,099,427,469
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 20,779,804 304,214,751
- ----------------------------------------------------
216,246,136 3,403,642,220
Shares
repurchased (89,666,684) (1,411,912,865)
- ----------------------------------------------------
Net increase 126,579,452 $1,991,729,355
- ----------------------------------------------------
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
- ----------------------------------------------------
Year ended
July 31, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 107,598,758 $1,654,943,119
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8,896,693 125,976,810
- ----------------------------------------------------
116,495,451 1,780,919,929
Shares
repurchased (25,142,718) (384,623,376)
- ----------------------------------------------------
Net increase 91,352,733 $1,396,296,553
- ----------------------------------------------------
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, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 4,921,187 $77,977,369
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 137,798 2,007,717
- ----------------------------------------------------
5,058,985 79,985,086
Shares
repurchased (754,954) (11,970,795)
- ----------------------------------------------------
Net increase 4,304,031 $68,014,291
- ----------------------------------------------------
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
- ----------------------------------------------------
Year ended
July 31, 1996
- ----------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------
Shares sold 24,769,497 $410,764,510
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,540,741 22,695,086
- ----------------------------------------------------
26,310,238 433,459,596
Shares
repurchased (5,830,909) (92,612,213)
- ----------------------------------------------------
Net increase 20,479,329 $340,847,383
- ----------------------------------------------------
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
- ----------------------------------------------------
Note 5
Transactions with Affiliated Companies
Transactions during the year with companies in which the fund owns at
least 5% of the voting securities were as follows:
Purchase Sales Dividend Market
Affiliates cost proceeds Income Value
- -----------------------------------------------------------------------
Name of affiliate
- -----------------------------------------------------------------------
Financial
Federal Corp. $ 4,064,729 $2,565,335 $-- $ 6,277,050
Fulcrum
Technologies 8,893,294 -- -- 9,657,900
Geoworks 15,553,256 -- -- 13,987,150
Lifecore
Biomedical Inc. 7,739,300 -- -- 9,750,000
Preferred
Networks Inc. 7,329,264 -- -- 6,102,863
Western
Wireless Corp. Cl. A 16,848,605 -- -- 10,621,875
Westwood
One Inc. 13,705,724 -- -- 25,894,400
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, the fund hereby
designates $0.738 per share (or if different, the amount necessary to
offset net capital gain earned by the Fund for all classes of shares) as
capital gain dividends for its taxable year ended July 31, 1996.
The Form 1099 you receive in January 1997 will show the tax status of
all distributions paid to your account in calendar 1996.
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
Ronald J. Jackson
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
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
John J. Morgan, Jr.
Vice President
Daniel L. Miller
Vice President
Brett C. Browchuck
Vice President
Roland W. Gillis
Vice President and Fund Manager
Charles H. Swanberg
Vice President and Fund Manager
Robert R. Beck
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
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.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- ------------------
27081-007/883/530 9/96
PUTNAM INVESTMENTS [LOGO]
- ---------------------------------------------------------------------------
Putnam Voyager Fund
Supplement to Annual Report dated July 31, 1996
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 defined contribution plans investing $250 million or
more in one or more of PutnamOs funds or private accounts. Performance of
class Y shares, which incur neither a front-end load, distribution fee, nor
contingent deferred sales charge, will differ from performance of class A,
B, and M shares, which are discussed more extensively in the annual report.
ANNUAL RESULTS AT A GLANCE
- ---------------------------------------------------------------------------
Total return: NAV
One year ended 7/31/96 15.85%
Life of class (since 4/1/94) 56.01
Annual average 20.93
- ---------------------------------------------------------------------------
Share value: NAV
7/31/95 $14.48
7/31/96 15.85
- ---------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $0.0000 $0.860 $0.860
- ---------------------------------------------------------------------------
Please note that past performance does not indicate future results.
Investment return and principal value will fluctuate so your shares, when
redeemed, may be worth more or less than their original cost. See full
report for information on comparative benchmarks. If you have questions,
please consult your fund prospectus or call Putnam toll free at
1-800-752-9894.
