Putnam
Voyager
Fund
ANNUAL REPORT
July 31, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
*"The fund's team chooses companies that they think can beat
earnings estimates, but also offer reasonable valuations compared with
their industries and their own trading histories. That aspect has helped
offset some of the trading volatility in growth stocks, earning the fund
solid historical risk scores."
-- Morningstar, Inc., May 23, 1997
*"When blue-chips soared, stocks of small companies sagged. But when
the smoke clears and the next market cycle takes over, the small caps may
finally have their day."
-- Forbes, May 5, 1997
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
24 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
As the market's strength continued throughout much of Putnam Voyager Fund's
fiscal year, your fund's diversified search for growth worked both for it and
against it. Buoyed by the strength of its large-capitalization stock holdings,
your fund delivered attractive results despite the struggle on the part of its
small- and mid-cap holdings. For much of the 12-month period ended July 31,
1997, these stocks were under pressure as investors sought the stability of
large-cap stocks. However, as the fiscal year drew to a close, the relatively
undervalued stocks of small and medium-size companies were clearly showing
signs of gathering strength.
Your fund's managers, Roland Gillis, Charles Swanberg, and Robert Beck,
believe all the pieces are now in place for the stocks of smaller high-growth
companies to begin a recovery, and they have positioned the portfolio to take
what they believe will be maximum advantage of such an environment. The
following report explains the strategy they pursued during the fiscal year,
provides some forecast of what fiscal 1998 may bring, and profiles several
companies they consider especially attractive in each sector of the portfolio.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
September 18, 1997
Report from the Fund Managers
Roland W. Gillis
Charles H. Swanberg
Robert R. Beck
The stock market's significant climb during the fiscal year ended July 31,
1997, impressed even the most pessimistic economic naysayers. Driven by
continued economic growth and low inflation, the widely followed Dow Jones
Industrial Average climbed from one new high to another. Large-capitalization
stocks were steady performers throughout the period, with small- and
medium-cap stocks joining the rally by mid spring. With approximately one
third of the fund's assets invested in each of these market sectors, Putnam
Voyager Fund produced total returns in excess of 30% for all three share
classes at net asset value for the 12-month period. These returns, however,
fell short of the return on Standard & Poor's 500(registered trademark) Index,
which comprises only the heavily favored large-company stocks. Complete
performance information appears on pages 9 and 10.
* RECORD-SETTING PACE ON WALL STREET
The fund's fiscal year saw a continuation of one of the most impressive bull
markets in history. The Dow Jones Industrial Average passed the milestone 6000
mark in October and topped 7000 in February. Five months later -- just before
the close of the fund's fiscal period -- this market indicator crossed the
8000 barrier. In addition, the technology-laden NASDAQ Composite Index surged
up almost one third during the last fiscal quarter. Stock investors were
clearly pleased with the breadth and pace of economic growth.
Two factors fueling the rise in stock prices were corporate profits and low
inflation -- both of which exceeded most expectations. In addition, a
forward-looking Federal Reserve Board, with Chairman Alan Greenspan at its
helm, has been fostering steady growth while remaining vigilant for warning
signs of inflation. The Fed's short-term interest rate increase on March 25
was a temporary bump as investors acknowledged that this near-term adjustment
was necessary to keep the economy robust over the longer term. The stock
market's rally was further strengthened by Washington's summer deficit
reduction package, which included a decrease in the capital gains tax.
Given such a rapid advance in such a short time, Greenspan has warned about
"excessive optimism" and "irrational exuberance" on several occasions. Such
advice is worth heeding, and we ask our shareholders to temper their
expectations accordingly in this prolonged rally.
* CAPTURING MOMENTUM OF LARGE-CAP STOCKS
For the first three quarters of the fiscal year, large-cap stocks outperformed
their small and medium-sized counterparts. The economy's strong performance in
late 1996 and early 1997, while favorable for corporate profits, raised fears
of inflation and a potential interest-rate increase by the Fed -- an event
that encouraged investors to seek the security of large-company stocks.
The fund's large-cap holdings are solid leaders in their respective
industries, each characterized by a catalyst -- a driving factor that seems
likely to boost the price of a stock within a reasonable period of time. Such
a catalyst might be a new product, restructuring, or management rejuvenation.
American Express Co., one of the fund's top holdings, exemplifies this
strategy. In addition to its growing worldwide business and greater
distribution fees, American Express is also expected to benefit from a
reorganization of some of its business units in an effort to streamline
operations. While these and other holdings were viewed favorably as of July
31, 1997, there is no guarantee the fund will continue to hold these
securities in the future.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Computer software 10.1%
Retail 10.0%
Pharmaceuticals and biotechnology 5.7%
Business services 5.0%
Electronics and electronic equipment 4.6%
Footnote reads:
*Based on net assets as of 7/31/97. Holdings will vary over time.
* SMALLER CAPS BOLSTERED BY LOW INFLATION AND CAPITAL GAINS TAX REDUCTION
By late spring, with the outlook for inflation and growth moderating, investor
enthusiasm for smaller companies began to return, and prices rebounded from
their April lows. We remain optimistic about this universe for several
reasons. First, a less robust economy could dampen the earnings outlook for
large-cap stocks, which are dependent on the overall trends in the economy.
Smaller-cap stocks -- technology stocks in particular -- are dependent to a
greater extent on product cycles and the desire on the part of their customers
to increase productivity. Second, the relative value of small-cap stocks is
attractive and their earnings growth rates tend to be greater than those of
large-cap stocks. It seems reasonable to expect that the federal budget
agreement, with its reduction in the capital gains tax, will further support
these prices. Finally, history has shown that smaller-company stocks
experience a rise in prices as the market factors in an improving after-tax
return for these growth stocks.
* TECHNOLOGY HOLDINGS STRENGTHEN LATE IN PERIOD
Although volatility throughout the technology sector continued well into the
second half of the fiscal year, many of the fund's holdings in this area
nevertheless proved profitable. Baan Company, which provides business
management software to more than 2,300 companies, is experiencing strong
revenues as a result of larger deals, growing software licenses, and
improvements in its pricing structure. America Online (AOL) was another strong
contributor to performance. While AOL was hurt by increased network and
equipment costs, it benefited from a growing number of subscribers and
increased advertising revenues.
Our decision to increase the weighting of the semiconductor-related stocks
proved advantageous over the past six months. These holdings are concentrated
in analog or mixed-signal suppliers, including Linear Technology, Maxim
Integrated Products, and Sipex Corp. The fund also has a notable exposure to
semiconductor equipment stocks. The ever-increasing complexity of
manufacturing integrated circuits has driven a strong capital spending cycle
in the equipment segment. Telecommunications equipment holdings are benefiting
from a global boom in industry spending. There are several factors that bode
well for this industry's future, including deregulation, the growth in new
wireless systems, and the surge in the use of the Internet.
TOP 10 HOLDINGS
Computer Associates Intl., Inc.
Computer software
American Express Co.
Finance
Costco Companies, Inc.
Retail
EMC Corp.
Computer services
Compuware Corp.
Computer software
Federal Home Loan Mortgage Corp.
Finance
Linear Technology Corp.
Semiconductors
Clear Channel Communications, Inc.
Broadcasting
Citicorp
Banks
Microsoft Corp.
Computer software
Footnote reads:
These holdings represent 13.2% of the fund's net assets as of 7/31/97.
Portfolio holdings will vary over time.
* SOLID ECONOMIC GROWTH BENEFITS CONSUMER, FINANCIAL AND HEALTH-CARE SECTORS
Consumer cyclical stocks, which include companies whose profits are tied to
the strength of the economy, were big winners during the year. Retailing
stocks have enjoyed a steady comeback, with Dayton Hudson Corp. and Payless
Shoesource, Inc. among the better performers. Higher employment and consumer
confidence levels coupled with downsizing and consolidations by many
department stores have resulted in well-managed inventory levels and improving
profit margins. The fund's oil and gas stocks were led by the oil services
companies, such as Halliburton and Schlumberger.
Our heavy weighting in financial stocks was also a big contributor to
performance. This sector experienced a setback in the weeks leading up to the
Fed's rate increase in March. Financial stocks are typically interest-rate
sensitive, since higher interest rates can pinch profits. However, this sector
resumed its climb as it became apparent that evidence of real inflation --
generally a precursor of higher interest rates -- was nonexistent. Money
center banks were among the portfolio's best performing financial stocks, with
holdings such as Citicorp, BankAmerica, Banc One, and NationsBank climbing
substantially by the close of the fiscal year. Global growth strategies,
mergers, and cost savings arising out of technologically driven productivity
gains have benefited this industry tremendously, as has baby boomers'
increasing focus on investing for retirement.
A presence in several subsectors within the health-care industries --
pharmaceuticals, medical equipment and supplies, and information systems --
also contributed to the fund's performance. Warner-Lambert Co. and Eli Lilly
and Co. stand out in this industry.
* SMALL AND MIDSIZE COMPANIES MAY HAVE THEIR DAY
Just following the close of the fiscal period, investor sentiment for large,
blue-chip stocks turned negative in the wake of a series of disappointing
earnings reports. As investors re-evaluate their large-cap holdings, we
believe they may turn to smaller companies as their earnings growth rates
become more attractive. The average small-cap stock in your fund carries an
earnings growth rate of over 30%, which is 3 to 4 times the anticipated
earnings growth rate for the overall stock market in 1998. Given the fund's
ability to select companies of all sizes, however, we believe the portfolio is
well positioned for longer-term capital appreciation in relation to the
overall market.
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 7/31/97, there is no guarantee the fund will continue to hold
these securities in the future. The fund invests all or a portion of its
assets in small to medium-size companies. Such investments increase the risk
of greater price fluctuations.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Voyager Fund is designed for investors seeking aggressive capital
appreciation primarily through common stocks.
TOTAL RETURN FOR PERIODS ENDED 7/31/97
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 32.22% 24.62% 31.17% 26.17% 31.57% 26.93%
- ------------------------------------------------------------------------------
5 years 159.73 144.80 150.13 148.13 153.28 144.52
Annual average 21.03 19.61 20.12 19.93 20.43 19.58
- ------------------------------------------------------------------------------
10 years 355.73 329.59 318.77 318.77 330.84 315.77
Annual average 16.38 15.69 15.40 15.40 15.73 15.31
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/97
Standard & Poors Consumer
500 Index Price Index
- ------------------------------------------------------------------------------
1 year 52.11% 2.23%
- ------------------------------------------------------------------------------
5 years 155.27 14.23
Annual average 20.62 2.70
- ------------------------------------------------------------------------------
10 years 302.62 41.04
Annual average 14.94 3.50
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% for class A shares and 3.50% for class M shares.
One-, five-, and ten-year returns for class B shares reflect the
applicable contingent deferred sales charges (CDSC), which is 5% in the
first year, declines to 1% in the sixth year, and is eliminated
thereafter. Returns shown for class B and class M shares for periods prior
to their inception are derived from the historical performance of class A
shares, adjusted to reflect both the initial sales charge or CDSC, if any,
currently applicable to each class and in the case of class B and class M
shares, the higher operating expenses are applicable to such shares. All
returns assume reinvestment of distributions at NAV and represent past
performance; they do not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost.
[GRAPHIC OMITTED: line chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of
a $10,000 investment since
7/31/87
Fund's Consumer
class A shares S&P 500 Price
at POP Index Index
7/31/87 9425 10000 10000
7/31/88 8459 8832 10413
7/31/89 11216 11650 10931
7/31/90 11754 12402 11459
7/31/91 14580 13989 11968
7/31/92 16532 15773 12346
7/31/93 19787 17129 12689
7/31/94 20873 18013 13040
7/31/95 28120 22709 13401
7/31/96 32476 26468 13796
7/31/97 42959 40262 14104
Footnote reads:
Past performance is no assurance of future results. At the end of the same
time period, a $10,000 investment in the fund's class B shares would have been
valued at $41,877 and no contingent deferred sales charges would apply; a
$10,000 investment in the fund's class M shares would have been valued at
$43,084 ($41,577 at public offering price). See first page of performance
section for performance calculation method.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 7/31/97
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term $1.088 $1.088 $1.088
- ------------------------------------------------------------------------------
Short-term -- -- --
- ------------------------------------------------------------------------------
Total $1.088 $1.088 $1.088
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
7/31/96 $15.73 $16.69 $15.15 $15.60 $16.17
- ------------------------------------------------------------------------------
6/31/97 19.49 20.68 18.57 19.22 19.92
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 6/30/97
(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 12.34% 5.89% 11.50% 6.50% 11.77% 7.88%
- ------------------------------------------------------------------------------
5 years 147.40 133.18 138.02 136.02 141.30 132.92
Annual average 19.86 18.45 18.94 18.74 19.26 18.42
- ------------------------------------------------------------------------------
10 years 337.80 312.62 302.60 302.60 313.65 299.40
Annual average 15.91 15.23 14.94 14.94 15.26 14.85
- ------------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns and
principal value will fluctuate so that an investor's shares when sold may
be worth more or less than their original cost. See first page of
performance section for performance calculation method.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
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 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
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Standard & Poor's 500 Index is an unmanaged list of common stocks that is
frequently used as a general measure of stock market performance. The
index assumes reinvestment of all distributions and interest payments and
does not take in account brokerage fees or taxes. Securities in the fund
do not match those in the indexes and performance of the fund will differ.
It is not possible to invest directly in an index.
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, 1997, 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, 1997 by correspondence with the
custodian and the application of alternative auditing procedures where
investments purchased were not yet received by the custodian, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
September 16, 1997
Portfolio of investments owned
July 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS (98.7%) *
NUMBER OF SHARES VALUE
Advertising (1.3%)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
807,221 Lamar Advertising Co. + $ 22,551,737
1,628,797 Omnicom Group, Inc. 113,710,391
2,544,621 Outdoor Systems, Inc. + 67,432,457
465,645 TMP Worldwide Inc. + [SECTION MARK] 11,291,891
649,275 Universal Outdoor Holdings, Inc. + 23,617,378
----------------
238,603,854
Aerospace and Defense (0.6%)
- ------------------------------------------------------------------------------------------------------------
577,300 Boeing Co. 33,952,456
250,000 Lockheed Martin Corp. 26,625,000
428,400 Northrop Grumman Corp. 49,319,550
----------------
109,897,006
Agriculture (0.1%)
- ------------------------------------------------------------------------------------------------------------
228,500 Delta & Pine Land Co. 8,683,000
Alcoholic Beverages (0.4%)
- ------------------------------------------------------------------------------------------------------------
2,050,000 Seagram Co., Ltd. 78,540,625
Apparel (0.5%)
- ------------------------------------------------------------------------------------------------------------
1,181,369 Gucci Group N.V. (Netherlands) + 74,573,918
450,902 The Men's Wearhouse, Inc. + 16,683,374
----------------
91,257,292
Automotive (0.7%)
- ------------------------------------------------------------------------------------------------------------
1,625,000 Echlin, Inc. 60,226,563
1,800,000 Snap-On Inc. 74,250,000
----------------
134,476,563
Banks (4.2%)
- ------------------------------------------------------------------------------------------------------------
1,450,000 Banc One Corp. 81,381,250
2,400,000 BankAmerica Corp. 181,200,000
200,000 Barnett Banks, Inc. 11,387,500
1,400,000 Citicorp 190,050,000
869,200 Fifth Third Bancorp 54,922,575
1,860,000 NationsBank Corp. 132,408,750
1,638,300 Washington Mutual, Inc. 113,247,488
----------------
764,597,563
Basic Industrial Products (0.8%)
- ------------------------------------------------------------------------------------------------------------
1,331,000 American Standard Companies, Inc. + 66,134,063
295,000 Cooper Industries, Inc. 16,390,938
1,350,000 General Signal Corp. 66,403,125
----------------
148,928,126
Broadcasting (2.7%)
- ------------------------------------------------------------------------------------------------------------
563,825 Chancellor Broadcasting Corp. Class A + [SECTION MARK] 23,257,781
3,099,853 Clear Channel Communications, Inc. + 192,965,849
1,782,200 Evergreen Media Corp. Class A + [SECTION MARK] 81,981,200
79,800 Heftel Broadcasting Corp. Class A + 4,668,300
649,988 Jacor Communications, Inc. + 27,868,236
416,620 LIN Television Corp. + 20,049,838
546,500 ProSieben Media AG 144A (Germany) + 24,354,891
165,540 SFX Broadcasting, Inc. Class A + 9,704,783
573,907 Sinclair Broadcast Group, Inc. Class A + 19,943,268
477,800 Univision Communications Inc. Class A + 20,545,400
2,015,000 Westwood One, Inc. + [SECTION MARK] 64,731,875
218,600 Young Broadcasting Corp. Class A + 6,721,950
----------------
496,793,371
Building Products (0.3%)
- ------------------------------------------------------------------------------------------------------------
1,250,000 Masco Corp. 58,593,750
Business Services (5.0%)
- ------------------------------------------------------------------------------------------------------------
308,869 Abacus Direct Corp. + 9,266,070
730,836 Accustaff, Inc. + 19,915,281
616,545 Affiliated Computer Services, Inc. Class A + 16,723,783
3,106,723 Airgas, Inc. + 61,357,779
56,700 Caribiner Intl., Inc. + 2,062,463
413,800 Cintas Corp. 27,103,900
1,375,024 Corestaff, Inc. + 42,625,744
5,201,770 Corporate Express, Inc. + 78,026,550
2,562,400 Deluxe Corp. 85,359,950
1,150,411 Gartner Group Inc. Class A + 32,642,912
687,263 Interim Services Inc. + 31,313,420
2,251,547 Interpublic Group of Cos., Inc. 100,756,728
582,800 Metromedia International Group, Inc. + 6,556,500
659,566 Paychex, Inc. 26,629,977
404,325 Pharmaceutical Product Development, Inc. + 9,451,097
492,300 Precision Response Corp. + 5,599,913
30,054,960 Rentokil Initial PLC (United Kingdom) 107,199,505
350,000 Reuters Holdings PLC ADR (United Kingdom) 22,618,750
2,588,824 Robert Half International, Inc. + 142,547,122
840,000 Select Appointments Holdings PLC ADR
(United Kingdom) 14,700,000
1,958,073 Serco Group PLC (United Kingdom) + 23,360,344
72,700 Snyder Communications, Inc. + 2,253,700
778,600 Teletech Holdings, Inc. + 15,572,000
328,994 The Registry, Inc. + 16,655,321
----------------
900,298,809
Cable Television (1.2%)
- ------------------------------------------------------------------------------------------------------------
1,200,000 Tele-Comm Liberty Media Group, Inc. Class A + 30,675,000
10,805,300 Tele-Communications, Inc. Class A + 185,040,763
----------------
215,715,763
Chemicals (1.7%)
- ------------------------------------------------------------------------------------------------------------
750,000 Air Products & Chemicals, Inc. 66,140,625
650,000 Great Lakes Chemical Corp. 32,540,625
1,200,000 Praxair, Inc. 66,150,000
1,175,000 Raychem Corp. 113,975,000
650,000 Witco Chemical Corp. 29,656,250
----------------
308,462,500
Computer Equipment (0.5%)
- ------------------------------------------------------------------------------------------------------------
1,645,139 Newbridge Networks Corp. (Canada) 85,752,870
28,000 PMC -- Sierra, Inc. + 917,000
285,788 Western Digital Corp. + 11,002,838
----------------
97,672,708
Computer Services (4.1%)
- ------------------------------------------------------------------------------------------------------------
2,568,938 America Online, Inc. + 173,403,315
429,200 CBT Group PLC ADR (Ireland) + 28,434,500
4,772,973 EMC Corp. + 241,035,137
431,900 Galileo International, Inc. + 11,391,363
1,404,200 Getronics Electric N.V. (Netherlands) 48,778,116
817,940 IDT Corp. + 6,850,248
1,734,004 Keane, Inc. + 105,990,995
900,000 NCR Corp. + 28,856,250
2,616,292 Sterling Commerce, Inc. + 98,601,505
93,600 Transaction Systems Architects, Inc. Class A + 3,463,200
105,100 Whittman-Hart, Inc. + 2,706,325
----------------
749,510,954
Computer Software (10.1%)
- ------------------------------------------------------------------------------------------------------------
309,065 Arbor Software Corp. + 13,289,795
1,328,378 Baan Co., N.V. (Netherlands) + 91,658,082
2,454,214 BMC Software, Inc. + 147,866,394
920,393 Cadence Design Systems, Inc. + 40,899,964
646,327 Citrix Systems, Inc. + 30,619,742
5,159,094 Computer Associates Intl., Inc. 351,140,835
3,782,515 Compuware Corp. + 234,043,116
437,732 Documentum, Inc. + 14,499,873
2,590,443 Electronic Arts, Inc. + 86,779,841
2,092,948 Electronics for Imaging, Inc. + 115,112,140
731,300 Geoworks + [SECTION MARK] 7,084,469
300,836 HNC Software, Inc. + 10,566,865
222,700 Information Management Resources, Inc. 7,015,050
630,200 Lernout & Hauspie Speech Products N.V. (Belgium) + 19,536,200
757,350 McAfee Associates, Inc. + 49,369,753
1,330,481 Microsoft Corp. + 188,263,062
3,542,779 Parametric Technology Corp. + 173,596,171
1,132,100 PeopleSoft, Inc. + 66,227,850
899,805 Security Dynamics Technologies, Inc. + 37,566,859
2,291,000 SEMA Group PLC (United Kingdom) 52,598,153
1,049,838 Synopsys, Inc. + 35,300,803
878,200 Vantive Corp. + 27,443,750
302,423 Viasoft, Inc. + 18,296,592
----------------
1,818,775,359
Consumer Products (0.5%)
- ------------------------------------------------------------------------------------------------------------
1,673,800 Kimberly-Clark Corp. 84,840,738
Consumer Services (0.5%)
- ------------------------------------------------------------------------------------------------------------
3,448,500 CUC International, Inc. + 84,919,313
25,100 Sabre Group Holdings, Inc. + 740,450
----------------
85,659,763
Containers (0.1%)
- ------------------------------------------------------------------------------------------------------------
350,000 Temple Inland, Inc. 23,559,375
Cosmetics (--%)
- ------------------------------------------------------------------------------------------------------------
403,464 ThermoLase Corp. + 5,875,445
Education Services (0.5%)
- ------------------------------------------------------------------------------------------------------------
525,172 Apollo Group, Inc. Class A + 19,497,011
1,000,244 DeVry, Inc. + 29,382,168
408,300 Learning Tree International, Inc. + 16,638,225
484,529 Sylvan Learning Systems, Inc. + 18,896,631
----------------
84,414,035
Electric Utilities (0.4%)
- ------------------------------------------------------------------------------------------------------------
1,774,687 CalEnergy, Inc. + 71,542,070
Electronics and Electrical Equipment (4.6%)
- ------------------------------------------------------------------------------------------------------------
1,855,581 Applied Materials, Inc. + 170,481,504
1,000,000 General Electric Co. 70,187,500
1,879,000 Hewlett-Packard Co. 131,647,438
222,550 Microchip Technology, Inc. + 8,289,988
1,786,100 Motorola, Inc. 143,446,156
413,400 Sipex Corp. + [SECTION MARK] 19,223,100
730,965 Solectron Corp. + 57,654,864
1,557,680 Thermo Instrument Systems, Inc. + 56,660,610
7,513,425 Westinghouse Electric Corp. 180,791,789
----------------
838,382,949
Energy-Related (0.9%)
- ------------------------------------------------------------------------------------------------------------
352,677 AES Corp. + 27,861,483
4,732,055 Thermo Electron Corp. + 161,777,130
----------------
189,638,613
Environmental Control (1.3%)
- ------------------------------------------------------------------------------------------------------------
1,300,000 Browning-Ferris Industries, Inc. 48,100,000
515,900 Memtec Ltd. ADR (Australia) 14,187,250
1,582,353 Philip Services Corp. (Canada) + 23,537,501
3,440,431 Republic Industries, Inc. + 84,720,613
225,300 United Waste Systems, Inc. + 9,631,575
1,345,653 USA Waste Services, Inc. + 54,246,637
----------------
234,423,576
Finance (4.6%)
- ------------------------------------------------------------------------------------------------------------
3,912,110 American Express Co. 327,639,213
5,533,627 Federal Home Loan Mortgage Corp. 199,556,424
3,822,860 Federal National Mortgage Association 180,869,064
333,400 Morgan Stanley, Dean Witter, Discover and Co. 17,440,988
208,300 Student Loan Marketing Assn. 31,231,981
1,260,482 TCF Financial Corp. 67,514,567
----------------
824,252,237
Financial Services (1.7%)
- ------------------------------------------------------------------------------------------------------------
1,250,100 Associates First Capital Corp. 82,428,469
479,718 Concord EFS, Inc. + 14,121,699
304,302 First USA Paymentech, Inc. + 8,748,683
599,684 FIRSTPLUS Financial Group, Inc. + 27,360,583
3,605,303 MBNA Corp. 162,238,635
553,644 Southern Pacific Funding Corp. + 9,481,154
----------------
304,379,223
Food and Beverages (1.5%)
- ------------------------------------------------------------------------------------------------------------
2,837,500 Archer Daniels Midland Co. 63,843,750
3,200,000 PepsiCo, Inc. 122,600,000
1,350,000 Sara Lee Corp. 59,146,875
875,000 Whitman Corp. 22,093,750
----------------
267,684,375
Gas Pipelines (0.5%)
- ------------------------------------------------------------------------------------------------------------
710,700 El Paso Natural Gas Co. 41,087,344
904,500 Sonat, Inc. 45,111,938
----------------
86,199,282
Gas Utilities (0.6%)
- ------------------------------------------------------------------------------------------------------------
1,500,000 Columbia Gas System, Inc. 103,125,000
Health Care Information Systems (0.5%)
- ------------------------------------------------------------------------------------------------------------
1,081,479 HBO & Co. 83,679,438
Health Care Services (1.8%)
- ------------------------------------------------------------------------------------------------------------
611,293 ABR Information Services, Inc. + 16,657,734
438,200 CareMatrix Corp. + 11,064,550
2,316,200 HEALTHSOUTH Corp. + 61,379,300
1,698,355 MedPartners, Inc. + 40,335,931
775,572 Renal Treatment Centers, Inc. + 22,879,374
103,300 Rotech Medical Corp. + 1,951,402
545,700 Total Renal Care Holdings, Inc. + 22,510,125
2,725,839 United Healthcare Corp. 155,372,823
----------------
332,151,239
Hospital Management (0.4%)
- ------------------------------------------------------------------------------------------------------------
2,383,797 Health Management Assoc., Inc. + 76,132,533
Household Products (0.7%)
- ------------------------------------------------------------------------------------------------------------
1,677,450 Blyth Industries, Inc. + 60,283,359
2,110,500 Tupperware Corp. 73,339,875
----------------
133,623,234
Insurance (2.5%)
- ------------------------------------------------------------------------------------------------------------
950,000 Aetna Inc. 108,240,625
600,000 AFLAC Inc. 33,450,000
1,773,200 American General Corp. 94,422,900
562,500 American International Group, Inc. 59,906,250
585,200 AON Corp. 32,771,200
264,000 CIGNA Corp. 52,668,000
633,700 Conseco Inc. 25,823,275
516,464 HCC Insurance Holdings, Inc. 16,300,895
1,000,000 USF&G Corp. 24,562,500
----------------
448,145,645
Leisure (0.4%)
- ------------------------------------------------------------------------------------------------------------
1,046,180 Adidas AG 144A ADS (Germany) 61,201,530
92,400 Signature Resorts, Inc. + 3,557,400
----------------
64,758,930
Lodging (1.3%)
- ------------------------------------------------------------------------------------------------------------
777,000 Doubletree Corp. + 32,634,000
1,973,392 Extended Stay America, Inc. + 31,820,946
1,726,799 HFS, Inc. + 100,586,042
1,392,800 Prime Hospitality Corp. + 25,592,700
980,912 Promus Hotel Corp. + 38,562,103
----------------
229,195,791
Medical Management Services (0.6%)
- ------------------------------------------------------------------------------------------------------------
105,200 NCS HealthCare, Inc. Class A + 2,958,750
391,300 OccuSystems, Inc. + 11,152,050
2,787,342 Phycor, Inc. + 93,375,957
84,349 Sunrise Assisted Living, Inc. + 3,047,108
----------------
110,533,865
Medical Supplies and Devices (3.5%)
- ------------------------------------------------------------------------------------------------------------
896,900 Bard (C.R.), Inc. 33,745,863
796,247 Cytyc Corp. + 18,612,274
414,200 Henry Schein, Inc. + 15,325,400
2,012,150 Johnson & Johnson 125,382,097
614,000 Lifecore Biomedical, Inc. + [SECTION MARK] 8,289,000
368,467 Medtronic, Inc. 32,148,746
410,000 Minimed, Inc. + 12,505,000
821,444 Omnicare, Inc. 24,181,258
560,517 Physician Sales & Service, Inc. + 10,369,565
3,887,587 Stryker Corp. 151,615,893
336,700 Sybron International Corp. + 13,783,656
2,126,125 Thermo Cardiosystems, Inc. + 42,256,734
399,050 Thermotrex Corp. + 9,103,328
31,285 Trex Medical Corp. + 393,018
1,155,192 Tyco International Ltd. 93,570,552
1,000,000 U.S. Surgical Corp. 37,125,000
----------------
628,407,384
Metals and Mining (0.3%)
- ------------------------------------------------------------------------------------------------------------
110,600 Freeport-McMoRan Copper & Gold Co., Inc. Class A 3,013,850
786,600 Miller Industries, Inc./Tennessee + 13,273,875
234,560 SGL Carbon AG (Germany) 31,168,435
----------------
47,456,160
Networking Equipment (0.9%)
- ------------------------------------------------------------------------------------------------------------
2,115,833 Cisco Systems, Inc. + 168,340,963
Nursing Homes (0.3%)
- ------------------------------------------------------------------------------------------------------------
1,390,800 Health Care & Retirement Corp. + 49,721,100
Office Equipment (1.1%)
- ------------------------------------------------------------------------------------------------------------
4,922,663 Viking Office Products, Inc. + 98,760,926
1,250,000 Xerox Corp. 102,812,500
----------------
201,573,426
Oil and Gas (3.4%)
- ------------------------------------------------------------------------------------------------------------
1,019,252 British Petroleum PLC ADR (United Kingdom) 84,024,587
423,600 Ente Nazionale Idrocarburi S.P.A. (ENI) ADR (Italy) 24,912,975
796,000 Exxon Corp. 51,143,000
2,050,000 Halliburton Co. 94,300,000
2,000,000 Mobil Corp. 153,000,000
1,150,000 Schlumberger Ltd. 87,831,250
2,548,900 Total Corp. ADR (France) 128,560,144
----------------
623,771,956
Paper and Forest Products (0.4%)
- ------------------------------------------------------------------------------------------------------------
1,511,800 Unisource Worldwide, Inc. + 28,157,275
800,000 Weyerhaeuser Co. 49,800,000
----------------
77,957,275
Pharmaceuticals and Biotechnology (5.7%)
- ------------------------------------------------------------------------------------------------------------
1,692,000 Bristol-Myers Squibb Co. 132,716,250
994,300 Dura Pharmaceuticals, Inc. + 38,777,700
1,010,422 Elan Corp. PLC ADR (Ireland) + 47,995,045
1,104,182 Gilead Sciences, Inc. + 31,193,142
311,157 Jones Medical Industries, Inc. 9,218,026
900,000 Lilly (Eli) & Co. 101,700,000
211,300 Medicis Pharmaceutical Corp. Class A + 9,534,913
725,795 Merck & Co., Inc. 75,437,318
63,550 Novartis AG ADR (Switzerland) 101,859,629
608,344 Parexel International Corp. + 23,421,244
3,081,008 Pfizer, Inc. 183,705,102
2,625,151 Pharmacia & Upjohn, Inc. 99,099,450
336,362 Quintiles Transnational Corp. + 25,353,286
618,768 Sepracor, Inc. + 15,546,546
850,500 Smithkline Beecham PLC ADR (United Kingdom) 82,711,125
280,000 Transkaryotic Therapies, Inc. (Malaysia) + 9,800,000
583,127 Vertex Pharmaceuticals, Inc. + 20,482,336
173,800 Warner-Lambert Co. 24,277,688
----------------
1,032,828,800
Photography (0.6%)
- ------------------------------------------------------------------------------------------------------------
1,701,300 Polaroid Corp. 101,227,350
Publishing (1.8%)
- ------------------------------------------------------------------------------------------------------------
20,700 CMP Media, Inc. Class A + 558,900
250,000 Gannett Co., Inc. 24,828,125
831,700 Harcourt General, Inc. 39,297,825
500,000 McGraw-Hill, Inc. 33,906,250
1,250,000 Tribune Co. 66,171,875
1,275,228 Wolters Kluwer N.V. (Netherlands) 167,840,112
----------------
332,603,087
Railroads (0.2%)
- ------------------------------------------------------------------------------------------------------------
300,000 Burlington Northern Santa Fe Corp. + 28,968,750
Restaurants (0.8%)
- ------------------------------------------------------------------------------------------------------------
793,382 Applebee's International, Inc. 23,801,460
683,400 Cracker Barrel Old Country Store, Inc. 19,562,325
1,882,564 J.D. Wetherspoon PLC (United Kingdom) 42,603,591
798,900 Landry's Seafood Restaurants, Inc. + 20,371,950
826,410 Papa Johns International, Inc. + 27,271,530
526,900 PizzaExpress PLC (United Kingdom) 5,629,372
----------------
139,240,228
Retail (10.0%)
- ------------------------------------------------------------------------------------------------------------
1,566,825 Bed Bath & Beyond, Inc. + 51,705,225
1,323,277 CompUSA, Inc. + 35,563,069
542,111 Consolidated Stores Corp. + 21,819,968
6,854,762 Costco Companies, Inc. + 259,624,111
2,126,520 CVS Corp. 120,945,825
1,800,000 Dayton Hudson Corp. 116,325,000
7,297,749 Dixons Group PLC (United Kingdom) 72,703,040
576,700 Dollar General Corp. 25,374,800
1,293,124 Dollar Tree Stores, Inc. + 53,987,927
1,750,000 Federated Department Stores, Inc. + 76,671,875
1,503,800 General Nutrition Companies, Inc. + 42,858,300
336,700 Global DirectMail Corp. + 8,796,288
1,098,550 Home Depot, Inc. 54,790,181
2,571,717 Kohls Corp. + 162,018,171
1,450,000 Lowe's Cos., Inc. 54,556,250
81,700 MSC Industrial Direct Co., Inc. Class A + 3,533,525
367,300 Nordstrom, Inc. 20,821,319
7,246,753 Officemax, Inc. + 101,454,542
1,100,000 Payless Shoesource, Inc. + 67,650,000
785,137 Payment Services., Inc. + 12,856,618
970,179 Petco Animal Supplies, Inc. + [SECTION MARK] 25,709,744
215,000 Rexall Sundown, Inc. + 7,686,250
1,450,000 Rite Aid Corp. 75,309,375
4,122,297 Staples, Inc. + 103,572,712
4,550,950 Starbucks Corp. + [SECTION MARK] 186,304,516
651,942 Williams-Sonoma, Inc. + 28,155,745
689,936 Wolverine World Wide, Inc. 18,843,863
----------------
1,809,638,239
Satellite Services (0.4%)
- ------------------------------------------------------------------------------------------------------------
2,128,800 PanAmSat Corp. + 65,327,550
Semiconductors (3.6%)
- ------------------------------------------------------------------------------------------------------------
280,476 Altera Corp. + 16,933,739
343,416 Analog Devices, Inc. + 10,796,141
942,215 KLA-Tencor Instruments Corp. + 57,062,896
268,821 Lattice Semiconductor Corp. + 18,111,815
2,921,006 Linear Technology Corp. 195,342,276
2,578,131 Maxim Integrated Products Inc. + 178,213,305
1,700,000 National Semiconductor Corp. + 53,550,000
700,000 Texas Instruments, Inc. 80,500,000
744,311 Xilinx, Inc. + 35,261,734
----------------
645,771,906
Specialty Consumer Products (0.9%)
- ------------------------------------------------------------------------------------------------------------
587,093 Central Garden and Pet Co. + 15,117,645
1,276,497 Fastenal Co. 71,404,051
510,298 Luxottica Group S.P.A. ADR (Italy) 35,146,775
238,300 Marks Brothers Jewelers, Inc. + 3,068,113
810,500 Mattel, Inc. 28,164,875
----------------
152,901,459
Supermarkets (0.2%)
- ------------------------------------------------------------------------------------------------------------
62,250 Carrefour Supermarche SA (France) 41,955,142
Telecommunication Equipment (1.1%)
- ------------------------------------------------------------------------------------------------------------
474,550 Advanced Fibre Communications + 33,159,181
352,700 Brooks Fiber Properties, Inc. + 13,270,338
329,100 Premisys Communications, Inc. + 6,741,416
1,119,800 Qwest Communications International, Inc. + 34,853,775
176,400 Sawtek Inc. + 6,725,250
135,300 Tekelec + 8,320,950
1,656,642 Tellabs, Inc. 99,191,440
----------------
202,262,350
Telephone Services (2.0%)
- ------------------------------------------------------------------------------------------------------------
265,200 Intermedia Communications, Inc. + 9,646,650
1,718,400 MCI Communications Corp. 60,681,000
1,321,600 McLeod, Inc. Class A + 45,430,000
242,895 Natural Microsystems Corp. + 8,501,325
500,000 SBC Communications, Inc. 29,593,750
1,700,000 Sprint Corp. 84,150,000
994,080 Tel-Save Holdings, Inc. + 16,899,360
2,942,453 WorldCom, Inc. + 102,801,918
----------------
357,704,003
Textiles (0.2%)
- ------------------------------------------------------------------------------------------------------------
783,800 St. John Knits, Inc. 35,662,900
Trucking (0.3%)
- ------------------------------------------------------------------------------------------------------------
1,300,000 Ryder System, Inc. 46,556,250
Wireless Communications (0.9%)
- ------------------------------------------------------------------------------------------------------------
558,080 Clearnet Communications, Inc. Class A, (Canada) + 7,394,560
438,080 ICG Communications, Inc. + 9,418,720
6,384,009 NEXTEL Communications, Inc. Class A + 154,014,217
----------------
170,827,497
----------------
Total Common Stocks (cost $12,265,620,478) $ 17,863,708,374
CONVERTIBLE BONDS AND NOTES (--%) *(cost $8,241,000)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$ 8,000,000 Signature Resorts, Inc. cv. sub. notes 5 3/4s, 2007 $ 8,520,000
UNITS (--%) *(cost $8,991,520)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
292,948 ThermoLase Corp. $ 5,236,446
SHORT-TERM INVESTMENTS (1.5%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$ 25,000,000 Bank of America effective yield of 5.54%, 8/11/97 $ 24,961,528
30,000,000 Corporate Asset Funding Co., Inc. effective yield of
5.55%, 8/19/97 29,916,750
28,795,000 Federal Home Loan Banks effective yield of
5.41%, 9/3/97 28,652,201
27,000,000 Federal National Mortgage Association effective
yield of 5.45%, 10/3/97 26,742,488
25,000,000 Federal National Mortgage Association effective
yield of 5.45%, 8/4/97 24,988,646
50,000,000 Ford Motor Credit Co. effective yield of 5.58%, 8/25/97 49,814,000
50,000,000 Merrill Lynch & Co., Inc effective yield of 5.57%,
9/15/97 49,651,875
25,000,000 USAA Capital Corp. effective yield of 5.49%, 9/18/97 24,817,000
12,890,000 Interest in $204,956,000 joint repurchase agreement
dated July 31, 1997 with UBS Securities due
August 1, 997 with respect to various U.S. Treasury
obligations -- maturity value of $12,892,062 for
an effective yield of 5.76% 12,892,062
----------------
Total Short-Term Investments (cost $272,436,550) $ 272,436,550
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $12,555,289,548) *** $ 18,149,901,370
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $18,092,390,353.
*** The aggregate identified cost on a tax basis is $12,593,724,046,
resulting in gross unrealized appreciation and depreciation of
$5,823,411,115 and $267,233,791, respectively, or net unrealized
appreciation of $5,556,177,324.
+ Non-income-producing security.
144A after the name of a security represents those exempt from
registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
ADR or ADS after the name of a foreign holding stands for American
Depository Receipts or American Depository Shares, respectively,
representing ownership of foreign securities on deposit with a domestic
custodian bank.
Affiliated Companies (Note 5)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
July 31, 1997
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $12,555,289,548) (Note 1) $18,149,901,370
- ---------------------------------------------------------------------------------------------------
Dividends, interest, and other receivables 10,848,922
- ---------------------------------------------------------------------------------------------------
Foreign currency (cost $308,279) 308,279
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 38,558,238
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 150,317,666
- ---------------------------------------------------------------------------------------------------
Total assets 18,349,934,475
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 7,688
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 204,111,893
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 18,767,163
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 20,234,310
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 5,291,911
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 111,462
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 4,940
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 7,037,592
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 1,977,163
- ---------------------------------------------------------------------------------------------------
Total liabilities 257,544,122
- ---------------------------------------------------------------------------------------------------
Net assets $18,092,390,353
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $12,041,956,306
- ---------------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (17,751)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 455,882,777
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 5,594,569,021
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $18,092,390,353
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($11,158,272,554 divided by 572,565,650 shares) $19.49
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $19.49)* $20.68
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($5,664,374,740 divided by 304,963,617 shares)** $18.57
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($208,656,370 divided by 10,856,717 shares) $19.22
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $19.22)* $19.92
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($1,061,086,689 divided by 53,866,915 shares) $19.70
- ---------------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000 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, 1997
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $1,809,327) $ 116,578,777
- --------------------------------------------------------------------------------------------------
Interest 26,430,568
- --------------------------------------------------------------------------------------------------
Total investment income 143,009,345
- --------------------------------------------------------------------------------------------------
Expenses:
Compensation of Manager (Note 2) 71,453,260
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 33,592,374
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 332,974
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 59,815
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 22,343,711
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 44,357,003
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 1,035,616
- --------------------------------------------------------------------------------------------------
Reports to shareholders 979,211
- --------------------------------------------------------------------------------------------------
Registration fees 1,153,997
- --------------------------------------------------------------------------------------------------
Auditing 173,075
- --------------------------------------------------------------------------------------------------
Legal 173,863
- --------------------------------------------------------------------------------------------------
Postage 1,915,219
- --------------------------------------------------------------------------------------------------
Other 1,371,566
- --------------------------------------------------------------------------------------------------
Total expenses 178,941,684
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (3,852,442)
- --------------------------------------------------------------------------------------------------
Net expenses 175,089,242
- --------------------------------------------------------------------------------------------------
Net investment loss (32,079,897)
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1, 3, and 5) (including realized
loss of $12,046,853 on sales of investments in affiliated issuers) 574,582,154
- --------------------------------------------------------------------------------------------------
Net realized gain on foreign currency translations (Note 1) 25,010
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (51,551)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 3,610,070,235
- --------------------------------------------------------------------------------------------------
Net gain on investments 4,184,625,848
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $4,152,545,951
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended July 31
------------------------
1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------
Net investment loss $ (32,079,897) $ (28,749,167)
- ---------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 574,607,164 962,821,663
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 3,610,018,684 144,557,473
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,152,545,951 1,078,629,969
- ---------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------
From net realized gain on investments
- ---------------------------------------------------------------------------------------------------------
Class A (548,605,542) (317,069,690)
- ---------------------------------------------------------------------------------------------------------
Class B (281,238,919) (135,078,052)
- ---------------------------------------------------------------------------------------------------------
Class M (8,171,341) (2,101,620)
- ---------------------------------------------------------------------------------------------------------
Class Y (52,119,074) (22,695,086)
- ---------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 3,295,035,279 3,796,887,582
- ---------------------------------------------------------------------------------------------------------
Total increase in net assets 6,557,446,354 4,398,573,103
- ---------------------------------------------------------------------------------------------------------
Net assets
- ---------------------------------------------------------------------------------------------------------
Beginning of year 11,534,943,999 7,136,370,896
- ---------------------------------------------------------------------------------------------------------
End of year (including accumulated net investment
loss of $17,751 and --, respectively) $18,092,390,353 $11,534,943,999
- ---------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended July 31
- -----------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $15.73 $14.42 $11.19 $11.02 $9.67
- -----------------------------------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) --(d) (.02)(d) .02 (.02) (.02)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4.85 2.19 3.72 .65 1.89
- -----------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.85 2.17 3.74 .63 1.87
- -----------------------------------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.09) (.86) (.51) (.46) (.52)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (1.09) (.86) (.51) (.46) (.52)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $19.49 $15.73 $14.42 $11.19 $11.02
- -----------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 32.22 15.49 34.72 5.49 19.69
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $11,158,273 $7,332,248 $4,895,180 $3,051,878 $2,403,332
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.02 1.03 1.07 1.10 1.12
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) -- (.10) .17 (.18) (.14)
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 59.77 57.92 65.43 57.74 64.62
- -----------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $0.0546
- -----------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter,
includes amounts paid through brokerage services and expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
(c) Average commission rate paid on security trades is requried for fiscal periods beginning on or
after September 1, 1995.
(d) Per share net investment income (loss) has been determined on the basis of weighted average
number of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- -------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended July 31
- -------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $15.15 $14.01 $10.97 $10.89 $9.63
- -------------------------------------------------------------------------------------------------------------------------
Investment operations
- -------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.12)(d) (.13)(d) (.06) (.05) (.03)
- -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4.63 2.13 3.61 .59 1.81
- -------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.51 2.00 3.55 .54 1.78
- -------------------------------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.09) (.86) (.51) (.46) (.52)
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (1.09) (.86) (.51) (.46) (.52)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $18.57 $15.15 $14.01 $10.97 $10.89
- -------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 31.17 14.70 33.65 4.71 18.79
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $5,664,375 $3,405,318 $1,870,370 $911,069 $408,361
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.77 1.78 1.82 1.84 1.87
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.75) (.85) (.58) (.91) (.91)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 59.77 57.92 65.43 57.74 64.62
- -------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $0.0546
- -------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter,
includes amounts paid through brokerage services and expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
(c) Average commission rate paid on security trades is required for fiscal periods beginning on or
after September 1, 1995.
(d) Per share net investment income (loss) has been determined on the basis of weighted average
number of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- -----------------------------------------------------------------------------------------------------------------
For the period
Per-share Dec. 1, 1994+
operating performance Year ended July 31 to July 31
- -----------------------------------------------------------------------------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $15.60 $14.37 $11.79
- -----------------------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.08)(d) (.09)(d) (.01)
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4.79 2.18 3.10
- -----------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.71 2.09 3.09
- -----------------------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.09) (.86) (.51)
- -----------------------------------------------------------------------------------------------------------------
Total distributions (1.09) (.86) (.51)
- -----------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $19.22 $15.60 $14.37
- -----------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 31.57 14.97 27.42 *
- -----------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $208,656 $87,782 $19,004
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.52 1.50 1.06 *
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.50) (.57) (.24)*
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 59.77 57.92 65.43
- -----------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $0.0546
- -----------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter,
includes amounts paid through brokerage services and expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
(c) Average commission rate paid on security trades is required for fiscal periods beginning on or
after September 1, 1995.
(d) Per share net investment income (loss) has been determined on the basis of weighted average
number of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
For the period
Per-share March 31, 1994+
operating performance Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $15.85 $14.48 $11.22 $11.24
- ------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------
Net investment income .04(d) .02(d) .03 --
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4.90 2.21 3.74 (.02)
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.94 2.23 3.77 (.02)
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.09) (.86) (.51) --
- ------------------------------------------------------------------------------------------------------------------
Total distributions (1.09) (.86) (.51) --
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $19.70 $15.85 $14.48 $11.22
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 32.56 15.85 34.90 (0.18)*
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,061,087 $709,595 $351,817 $82,102
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .77 .77 .83 .31*
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .25 .15 .39 (.05)*
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 59.77 57.92 65.43 57.74
- ------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $0.0546
- ------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter,
includes amounts paid through brokerage services and expense offset arrangements. Prior period ratios
exclude these amounts (Note 2).
(c) Average commission rate paid on security trades is required for fiscal periods beginning on or
after September 1, 1995.
(d) Per share net investment income (loss) has been determined on the basis of weighted average
number of shares outstanding during the period.
</TABLE>
Notes to financial statements
July 31, 1997
Note 1
Significant accounting policies
Putnam Voyager Fund (the "fund") is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. The fund invests primarily in common stocks of companies that Putnam
Investment Management, 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 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 and other accounts managed by
affiliates of Putnam Management.
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 and certain other accounts managed by Putnam Management.
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) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities, currency
holdings, and other assets and liabilities are recorded in the books and
records of the fund after translation to U.S. dollars based on the exchange
rates on that day. The cost of each security is determined using historical
exchange rates. Income and withholding taxes are translated at prevailing
exchange rates when accrued or incurred. The fund does not isolate that
portion of realized or unrealized gains or losses resulting from changes in
the foreign exchange rate on investments from fluctuations arising from
changes in the market prices of the securities. Such fluctuations are included
with the net realized and unrealized gain or loss on investments. Net realized
gains and losses on foreign currency transactions 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 transactions 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.
F) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
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 nor for excise tax
on income and capital gains.
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 at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences include treatment
of net operating loss, losses on wash sale transactions, and 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, 1997, the fund reclassified
$32,062,146 to decrease accumulated net investment loss and 32,037,136 to
decrease paid-in-capital, with a decrease to accumulated net realized gains on
investments of $25,010. 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.
As part of the custodian contract between the subcustodian bank and PFTC, the
subcustodian bank has a lien of the securities of the fund to the extent
permitted by the fund's investment restrictions to cover any advances made by
the subcustodian bank for the settlement of securities purchased by the fund.
At July 31, 1997, the payable to the subcustodian bank represents the amount
due for cash advance for the settlement of a security purchased.
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 year ended July 31, 1997, fund expenses were reduced by $3,852,442
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 $11,733 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 has 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 an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B 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, 1997, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $6,667,683 and $170,791 from the sale
of class A and class M shares, respectively and $6,493,953 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, 1997, Putnam Mutual Funds Corp., acting as underwriter
received $145,471 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended July 31, 1997, purchases and sales of investment
securities other than short-term investments aggregated $10,957,733,274 and
$8,340,771,948, 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, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
July 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 234,017,903 $ 3,953,449,438
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 32,563,535 527,855,140
- ------------------------------------------------------------
266,581,438 4,481,304,578
Shares
repurchased (160,170,443) (2,692,322,364)
- ------------------------------------------------------------
Net increase 106,410,995 $ 1,788,982,214
- ------------------------------------------------------------
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, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 105,067,672 $ 1,702,505,550
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 16,881,432 261,999,265
- ------------------------------------------------------------
121,949,104 1,964,504,815
Shares
repurchased (41,818,952) (673,171,844)
- ------------------------------------------------------------
Net increase 80,130,152 $ 1,291,332,971
- ------------------------------------------------------------
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, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 7,188,244 $121,126,210
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 474,478 7,605,878
- ------------------------------------------------------------
7,662,722 128,732,088
Shares
repurchased (2,432,366) (40,629,278)
- ------------------------------------------------------------
Net increase 5,230,356 $ 88,102,810
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Year ended
July 31, 1997
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 31,072,579 $ 513,070,605
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,185,837 52,119,074
- ------------------------------------------------------------
34,258,416 565,189,679
Shares
repurchased (25,162,721) (438,572,395)
- ------------------------------------------------------------
Net increase 9,095,695 $ 126,617,284
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Note 5
Transactions with Affiliated Companies
Transactions during the period with companies in which the fund owns at least
5% of the voting securities were as follows:
Purchase Sales Dividend Market
Name of Affiliate Cost Cost Income Value
- ------------------------------------------------------------------------------
Chancellor Broadcasting,
Class A $ 3,370,439 $ -- $-- $ 23,257,781
Evergreen Media Corp.,
Class A 43,316,001 -- -- 81,981,200
Fulcrum Technologies, Inc. -- 8,893,294 -- --
Geoworks 937,125 -- -- 7,084,469
LifeCore Biomedical, Inc. 256,375 -- -- 8,289,000
Petco Animal Supplies, Inc. 2,455,294 -- -- 25,709,744
Preferred Networks, Inc. -- 7,329,264 -- --
Sipex Corp. 10,765,425 1,087,100 -- 19,223,100
Starbucks Corp. 85,035,597 21,748,007 -- 186,304,516
TMP Worldwide, Inc. 6,539,436 -- -- 11,291,891
Western Wireless Corp., Class A -- 15,504,405 -- --
WestWood One, Inc. 2,811,800 -- -- 64,731,875
- ------------------------------------------------------------------------------
Totals $155,487,492 $54,562,070 $-- $427,873,576
==============================================================================
Federal tax information
(Unaudited)
Pursuant to section 852 of the Internal Revenue Code, the Fund hereby
designates $1.088 per share (or if different, the amount necessary to offset
net capital gains earned by the fund) [for all share classes] as capital gain
dividends for its capital taxable year ended July 31,1997.
The Form 1099 you receive in January 1998 will show the tax status of all
distributions paid to your account in calendar 1997.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund *
International New Opportunities Fund
Investors Fund
New Opportunities Fund +
OTC & Emerging Growth Fund [DBL. DAGGER]
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Total Return Fund
High Yield Trust +
Income Fund
Money Market Fund **
Intermediate U.S. Government
Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK]
California, New York
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Overseas Growth Fund
+ Closed to new investors. Some exceptions may apply. Contact Putnam
for details.
[DBL. DAGGER] Formerly OTC Emerging Growth Fund
[SECTION MARK] Not available in all states.
** An investment in a money market fund is neither insured nor
guaranteed by the U.S. government. These funds are managed to maintain a
price of $1.00 per share, although there is no assurance that this price
will be maintained in the future.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you
invest or send money.
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
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
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
John J. Morgan, Jr.
Vice President
Daniel L. Miller
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. You can also learn more at Putnam
Investments' website: http://www.putnaminv.com.
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 principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------------
35902-007/883/530/516 9/97
