-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LK1M7pybMgxPPkZ88eE18uO9UWNaaRE8H8vPdKiq4LuawKxLGQId4eDjC9pt1nW3 wZgQ/GN3PmomUEnd8D+JUw== 0000928816-96-000301.txt : 19961003 0000928816-96-000301.hdr.sgml : 19961003 ACCESSION NUMBER: 0000928816-96-000301 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19961002 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM VOYAGER FUND CENTRAL INDEX KEY: 0000081280 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046187125 STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01682 FILM NUMBER: 96638346 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921000 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM VOYAGER FUND INC /PRED/ DATE OF NAME CHANGE: 19821109 N-30D 1 PUTNAM VOYAGER FUND Putnam Voyager Fund ANNUAL REPORT July 31, 1996 [LOGO: BOSTON * LONDON * TOKYO] Fund highlights * "Putnam Voyager Fund remains true to its founding spirit . . . returns so far have lived up to its past. . . . The fund's risk-reducing diversity comes as an added bonus to its competitive long-term returns."* -- Morningstar Mutual Funds, June 21, 1996 * Putnam Voyager Fund's class A shares have consistently performed in the top quartile of the funds in Lipper Analytical Services' capital appreciation fund category. For the 1-, 3-, 5-, and 10-year performance periods ended June 30, 1996, the fund's class A shares ranked 27 out of 169 (top 16%), 10 out of 113 (top 9%), 11 out of 82 (top 14%), and 3 out of 52 (top 6%), respectively.+ CONTENTS 4 Report from Putnam Management 9 Fund performance summary 14 Portfolio holdings 26 Financial statements *For detailed performance information and comparison to index returns please see pages 9 and 10. +Lipper rankings are based on total return performance, vary over time, and do not reflect the effects of sales charges. Class B shares ranked 34 out of 169 funds and class M shares ranked 30 out of 169 funds for 1-year performance. Past performance is not indicative of future results. From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] (copyright) Karsh, Ottawa Dear Shareholder: Putnam Voyager Fund reaped the benefits of a stock market rise that continued throughout virtually all of the fiscal year ended July 31, 1996. In the final weeks of the period, however, the market delivered a stern reminder that such advances do not continue without interruption. The portfolio's commitment to stocks of companies and industry sectors with above-average growth prospects allowed the fund to make the most of the rally and to weather the decline well. With its time-tested approach of focusing investments on what management calls foundation growth stocks, premier growth stocks, and opportunity stocks, the fund thus was able to close its books on yet another year of solidly positive results. In the report that follows, your fund's management team discusses the strategy as it applied to fiscal '96 performance and examines prospects for fiscal '97. Respectfully yours, /S/George Putnam George Putnam Chairman of the Trustees September 16, 1996 Report from the Fund Managers Roland W. Gillis Charles H. Swanberg Robert R. Beck After enjoying a spectacular ride for much of fiscal 1996, Putnam Voyager Fund encountered some rough patches this past June and July. Bracing for the possibility of higher inflation, rising interest rates, and earnings disappointments, investors fled the equity market, causing the broad averages to decline sharply. Because the fund is able to diversify holdings among companies at varying stages of development, the portfolio's foundation growth, premier growth, and opportunity segments, or "sleeves," were able to complement one another as market conditions changed. Consequently, despite the market's correction, your fund stayed on track, with each share class posting double-digit total returns at net asset value for the 12 months ended July 31, 1996. Please see pages 9 and 10 for full performance details. * FOUNDATION GROWTH STOCKS: LITTLE ENGINES THAT CAN There is no doubt that the smaller, more aggressive growth stocks that make up the fund's foundation growth sleeve came under the greatest pressure this summer. Although July's correction began with these stocks, it quickly spread across the entire market. In our opinion, the correction had more to do with bringing excessive valuations back into line than with any serious concerns about earnings growth rates or the long-term potential of foundation growth stocks. Throughout the turbulence, we have remained focused on companies that can develop innovative products and services, which, in turn, should allow them to grow faster than the market over the long run. The foundation growth sleeve continues to emphasize stocks in the telecommunications, computer networking, and client-server software areas, in which many holdings have posted earnings above our expectations despite recent short-term price declines. Weak computer equipment demand and disappointing earnings projections led us to eliminate most semiconductor stocks from the portfolio by period's end. Some top performers included Cisco Systems, Pairgain Technology, Tellabs, Adtran, and Cascade Communications. While these stocks, along with others discussed in this report, were viewed favorably at the end of the fiscal period, all portfolio holdings are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. In addition to benefiting long-distance carriers, wireless communications companies, and competitive access providers, the Telecommunications Act of 1996 has had a favorable impact on radio and television broadcasters. We positioned the fund to benefit further from this trend by adding companies like Chancellor Broadcasting, Jacor Communications, and Sinclair Broadcast Group to the portfolio. We refined the sleeve's health-care exposure as the fiscal year progressed, shifting assets out of managed-care providers such as Healthsource and Pacificare Health, which have been adversely affected by industry price pressures, and into medical information technology and medical services companies, such as Guidant Corporation, which stand to benefit from their supportive roles to hospitals. Finally, innovative companies with specific market niches and the demonstrated ability to grab market share from more traditional competitors continued to dominate our selections. HFS, Inc., a long- standing holding in the lodging area, Bed Bath and Beyond, a specialty retailer, Corporate Express in the office products field, and Circus Circus in the gaming industry are just a few holdings of this type that have proved their worth. [GRAPHIC OMITTED: Horizontal bar chart TOP INDUSTRY SECTORS] Computer software 8.2% Business services 7.0% Pharmaceuticals and biotechnology 4.8% Retail 4.4% Medical supplies and devices 4.4% Footnote reads: *Based on net assets as of 7/31/96. Sector allocations will vary over time. * PREMIER GROWTH: THE MOMENTUM CHUGS ALONG Premier growth holdings, while featuring above-average growth rates, differ from foundation growth stocks in their market capitalization and stage of development. They constitute midsize to large companies with strong earnings momentum, substantial business franchises, and considerable financial strength. Roughly two thirds of the stocks found in the premier growth sleeve are NASDAQ-listed issues, the remainder are large enough to be listed on the New York Stock Exchange. Not surprisingly, then, both foundation and premier growth holdings often capitalize on the same industry themes. Networking stocks and software technology companies, for example, also played key roles in the premier segment's returns, with Cisco Systems and Cascade Communications among this sleeve's most attractive holdings. Other performance boosters included Microsoft, Rational Software, Ascend Communications, and Parametric Technology. Some of the top-performing companies we highlighted in earlier reports, such as America Online and U.S. Robotics, were sold at considerable profit this past spring just prior to their dramatic price declines this summer. We have also had success with select companies in the financial, specialty retailing, and office products sectors. Since the beginning of the fiscal year, Federal Home Loan Mortgage Corporation and Federal National Mortgage Association each have risen in price by more than 40%. In the credit card business, MBNA and First Data Corporation have posted gains in excess of 25% and 35%, respectively. Home Depot and Starbucks continue to dominate their market niches, and Viking Office Products and Corporate Express have risen considerably in price. The fund's foreign exposure has remained the same, making up roughly 14% of the premier growth segment and around 7.4% for the fund overall. International top performers include Rentokil, a British diversified business services company, and Sandoz, a Swiss pharmaceutical and chemicals concern. [GRAPHIC OMITTED: TOP 10 HOLDINGS] HFS, Inc. Lodging Computer Associates Intl., Inc. Computer software Thermo Electron Corp. Energy Parametric Technology Corp. Computer software HBO & Co. Health-care information systems MBNA Corp. Financial services Corporate Express, Inc. Business services Microsoft Corp. Computer software Cascade Communications Corp. Networking equipment Citicorp Banking Footnote reads: These holdings represent 11.8% of the fund's assets as of 7/31/96. Portfolio holdings will vary over time. In response to growing economic uncertainty, we've engaged in some defensive strategies, which include an increase in the sleeve's exposure to health care -- specifically the medical device makers and industry- leading pharmaceutical giants that stand to benefit from continued strong demand. Shared Medical, Medtronic, Johnson & Johnson, Boston Scientific, Sandoz, and Pfizer have been solid performers and possess further appreciation potential. Additionally, we've added a few large consumer nondurable names, such as Gillette and Newell Co. * OPPORTUNITY HOLDINGS HELPED PREVENT DERAILMENT Opportunity stocks -- the stocks of large, well-established companies undergoing positive change -- provided the fund with considerable insulation against market declines during the equity market's bumpy ride. The volatility and speculation that flared up among small to medium-sized companies were tempered by the investments we made for the fund's opportunity segment. The market's changing dynamics prompted us to initiate and increase sizable positions in several attractively priced, well-established companies. We also took profits in some of the portfolio's longer-held issues. New holdings include those of companies undergoing restructuring and companies in more economically sensitive industries exhibiting the ability to benefit from accelerating worldwide growth. Meaningful new positions have been established in NationsBank, a super-regional banking concern; Enron, Columbia Gas, and El Paso Gas, three natural gas companies; large retailers such as Dayton Hudson Corp., Payless Shoe Stores, and Federated Department Stores; and beverage conglomerate Anheuser-Busch. We also increased existing positions in companies such as BankAmerica and Kimberly-Clark. We sold out of Digital Equipment Corporation, Columbia HCA, and Royal Dutch Petroleum, realizing handsome profits as the stocks gained recognition in the marketplace. * NEAR-TERM VOLATILITY NOT OUT OF THE QUESTION, BUT OUTLOOK FAR FROM BLEAK Without a doubt, the market's next move is open to interpretation. Mixed signals about the economy, interest rates, and inflation abound from all directions and continued volatility over the near term is a much greater likelihood than any return to relative stability. However, we believe the outlook for growth-stock investing remains positive over the long term as macroeconomic conditions, when taken in a historical context, remain favorable. Worldwide competition continues to prevent inflation from running unchecked, global interest rates are historically low, and the U.S. economy is much healthier today than in previous decades. Furthermore, we believe that your fund, with its three distinct growth stock segments, is well positioned to take advantage of opportunities in a broad range of various-sized companies featuring the ability to increase earnings much faster than the overall market, regardless of the economic environment. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 7/31/96, there is no guarantee the fund will continue to hold these securities in the future. Performance summary Performance should always be considered in light of a fund's investment strategy. Putnam Voyager Fund is designed for investors aggressively seeking capital appreciation primarily through common stocks. This section provides, at a glance, information about your fund's performance. Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund. TOTAL RETURN FOR PERIODS ENDED 7/31/96 Class A Class B Class M (inception date) (4/1/69) (4/27/92) (12/1/94) NAV POP NAV CDSC NAV POP - ----------------------------------------------------------------------- 1 year 15.49% 8.85% 14.70% 9.70% 14.97% 10.95% - ----------------------------------------------------------------------- 5 years 122.74 109.91 -- -- -- -- Annual average 17.37 15.99 -- -- -- -- - ----------------------------------------------------------------------- 10 years 367.53 340.66 -- -- -- -- Annual average 16.68 15.99 -- -- -- -- - ----------------------------------------------------------------------- Life of class -- -- 96.62 94.62 46.49 41.33 Annual average -- -- 17.20 16.92 25.68 23.02 - ----------------------------------------------------------------------- COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/96 Standard & Poor's Consumer (registered trademark) Price 500 Index Index - ----------------------------------------------------------------------- 1 year 16.47% 2.95% - ----------------------------------------------------------------------- 5 years 89.22 15.27 Annual average 13.60 2.88 - ----------------------------------------------------------------------- 10 years 268.20 43.38 Annual average 13.92 3.67 - ----------------------------------------------------------------------- Life of class B 72.92 12.54 Annual average 13.72 2.81 - ----------------------------------------------------------------------- Life of class M 47.21 4.88 Annual average 26.06 2.89 - ----------------------------------------------------------------------- Performance data represent past results, do not reflect future performance, and will differ for each share class. They do not take into account any adjustment for taxes payable on reinvested distributions, or, for class A shares, distribution fees prior to implementation of the class A distribution plan in 1990. Investment returns and net asset value will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. POP assumes 5.75% maximum sales charge for class A shares and 3.50% for class M shares. CDSC for class B shares assumes the applicable sales charge, with the maximum being 5%. GROWTH OF A $10,000 INVESTMENT Cumulative total return of a $10,000 investment since 7/31/86 Starting value (Insert ending Total) $9,425 Fund's class A shares at POP $43,707 $10,000 S&P 500 Index $36,820 $10,000 Consumer Price Index $14,338 (plot points for 10-year total return mountain chart) Fund's Class A S&P 500 Consumer Price Date/year shares at POP Index Index - --------- ----------- ------ ------ 7/31/86 9,425 10,000 10,000 7/31/87 12,407 13,936 10,393 7/31/88 11,195 12,304 10,822 7/31/89 14,145 16,216 11,361 7/31/90 15,186 17,251 11,909 7/31/91 16,159 19,458 12,438 7/31/92 17,698 21,941 12,831 7/31/93 23,527 23,848 13,187 7/31/94 24,662 25,085 13,553 7/31/95 37,320 31,614 13,927 7/31/96 43,707 36,820 14,338 Footnote reads: Past performance is no assurance of future results. A $10,000 investment in the fund's class B shares at inception on 4/27/92 would have been valued at $19,662 on 7/31/96 ($19,462 with a redemption at the end of the period). A $10,000 investment in the fund's class M shares at inception on 12/1/94 would have been valued at $14,649 at net asset value on 7/31/96 ($14,333 at public offering price). PRICE AND DISTRIBUTION INFORMATION 12 months ended 7/31/96 Class A Class B Class M - ----------------------------------------------------------------------- Distributions (number) 1 1 1 - ----------------------------------------------------------------------- Capital gains - ----------------------------------------------------------------------- Long-term $0.738 $0.738 $0.738 - ----------------------------------------------------------------------- Short-term 0.122 0.122 0.122 - ----------------------------------------------------------------------- Total $0.86 $0.86 $0.86 - ----------------------------------------------------------------------- Share value: NAV POP NAV NAV POP - ----------------------------------------------------------------------- 7/31/95 $14.42 $15.30 $14.01 $14.37 $14.89 - ----------------------------------------------------------------------- 7/31/96 15.73 16.69 15.15 15.60 16.17 - ----------------------------------------------------------------------- TOTAL RETURN FOR PERIODS ENDED 6/30/96 (most recent calendar quarter) Class A Class B Class M (inception date) (4/1/69) (4/27/92) (12/1/94) NAV POP NAV CDSC NAV POP - ----------------------------------------------------------------------- 1 year 33.82% 26.15% 32.84% 27.84% 33.12% 28.45% - ----------------------------------------------------------------------- 5 years 159.91 144.97 -- -- -- -- Annual average 21.05 19.62 -- -- -- -- - ----------------------------------------------------------------------- 10 years 358.83 332.49 -- -- -- -- Annual average 16.46 15.77 -- -- -- -- - ----------------------------------------------------------------------- Life of class -- -- 113.23 111.23 58.88 53.29 Annual average -- -- 19.86 19.59 34.05 31.04 - ----------------------------------------------------------------------- Performance data represent past results, do not reflect future performance, and will differ for each share class. Investment returns and net asset value will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. TERMS AND DEFINITIONS Class A shares are generally subject to an initial sales charge. Class B shares may be subject to a sales charge upon redemption. Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial or contingent deferred sales charge. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the maximum 5.75% sales charge for class A shares and 3.50% for class M shares. Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of class B shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. COMPARATIVE BENCHMARKS Standard & Poor's(registered trademark) 500 Price Index is an unmanaged list of common stocks that is frequently used as a general measure of stock market performance. It assumes reinvestment of all distributions and interest payments and does not take in account brokerage fees or taxes. Securities in the fund do not match those in the index and performance of the fund will differ. It is not possible to invest directly in an index. Consumer Price Index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Report of independent accountants To the Trustees and Shareholders of Putnam Voyager Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments owned, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam Voyager Fund (the "fund") at July 31, 1996, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at July 31, 1996 by correspondence with the custodian and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Boston, Massachusetts September 13, 1996
Portfolio of investments owned July 31, 1996 COMMON STOCKS (95.8%) * NUMBER OF SHARES VALUE Advertising (0.5%) - ------------------------------------------------------------------------------------------------------------------------------ 899,750 Omnicom Group, Inc. 36,439,875 412,350 Outdoor Systems, Inc. + 11,288,081 401,368 Universal Outdoor Holdings, Inc. + 8,428,728 ---------------- 56,156,684 Aerospace and Defense (0.6%) - ------------------------------------------------------------------------------------------------------------------------------ 350,000 Boeing Co. 30,975,000 250,000 Lockheed Martin Corp. 20,718,750 328,400 Northrop Grumman Corp. 22,577,500 ---------------- 74,271,250 Alcoholic Beverages (0.9%) - ------------------------------------------------------------------------------------------------------------------------------ 550,000 Anheuser-Busch Cos., Inc. 41,112,500 2,050,000 Seagram Co., Ltd. 68,162,500 ---------------- 109,275,000 Apparel (1.2%) - ------------------------------------------------------------------------------------------------------------------------------ 1,817,550 Gucci Group NV (Italy) + 103,145,937 699,600 Tommy Hilfiger Corp. + 35,504,700 ---------------- 138,650,637 Automotive (0.8%) - ------------------------------------------------------------------------------------------------------------------------------ 1,511,900 Echlin, Inc. 50,459,663 1,100,000 Snap-On Inc. 48,812,500 ---------------- 99,272,163 Banks (2.4%) - ------------------------------------------------------------------------------------------------------------------------------ 600,000 Bank of Boston Corp. 31,800,000 1,000,000 BankAmerica Corp. 79,750,000 1,300,000 Citicorp 106,437,500 680,000 NationsBank Corp. 58,395,000 ---------------- 276,382,500 Basic Industrial Products (0.3%) - ------------------------------------------------------------------------------------------------------------------------------ 1,000,000 General Signal Corp. 39,125,000 Biotechnology (0.2%) - ------------------------------------------------------------------------------------------------------------------------------ 552,700 IDEXX Laboratories, Inc. + 21,417,125 Broadcasting (2.8%) - ------------------------------------------------------------------------------------------------------------------------------ 449,174 Chancellor Broadcasting Corp. Class A + 15,496,503 1,119,070 Clear Channel Communications, Inc. + 89,105,949 248,600 Evergreen Media Corp. Class A + 10,876,250 676,800 Heartland Wireless Communications, Inc. + 14,889,600 1,099,185 Infinity Broadcasting Corp. Class A + 30,227,588 383,521 Jacor Communications, Inc. + 11,697,391 416,620 LIN Television Corp. + 15,467,018 1,462,300 Paxson Communications Corp. + 14,166,031 953,561 Providence Journal Co. Class A + 17,164,098 1,182,150 Renaissance Communications Corp. + 40,784,175 165,540 SFX Broadcasting, Inc. Class A + 6,683,678 618,507 Sinclair Broadcast Group, Inc. Class A + 25,049,534 1,849,600 Westwood One, Inc. + 25,894,400 173,900 Young Broadcasting Corp. Class A + 5,347,425 ---------------- 322,849,640 Building Products (0.2%) - ------------------------------------------------------------------------------------------------------------------------------ 1,000,000 Masco Corp. 27,875,000 Business Services (7.0%) - ------------------------------------------------------------------------------------------------------------------------------ 274,900 Affiliated Computer Services, Inc. Class A + 15,119,500 1,732,980 Airgas, Inc. + 32,060,130 1,048,200 Alco Standard Corp. 45,858,750 496,050 Corestaff, Inc. + 19,966,013 3,184,030 Corporate Express, Inc. + 119,003,121 1,215,284 Danka Business Systems ADR (United Kingdom) 33,420,310 2,250,000 Deluxe Corp. 82,968,750 1,300,000 Dow Jones & Co., Inc. 50,862,500 464,030 FlightSafety International, Inc. 21,345,380 2,285,480 Input/Output, Inc. + 71,992,620 392,900 Interim Services, Inc. + 14,537,300 865,324 Interpublic Group of Cos., Inc. 38,182,422 1,553,500 Metromedia International Group, Inc. + 15,923,375 101,030 National Data Corp. 4,015,943 47,600 NOVA Corp. + 1,481,550 1,541,957 Paychex, Inc. 70,544,533 12,888,080 Rentokil Group Ord. PLC (United Kingdom) 77,859,147 450,000 Reuters Holdings PLC ADR (United Kingdom) 28,181,250 2,531,724 Robert Half International, Inc. + 71,521,203 ---------------- 814,843,797 Cable Television (0.6%) - ------------------------------------------------------------------------------------------------------------------------------ 1,307,684 Tele-Comm Liberty Media Group, Inc. Class A + 28,769,048 2,500,000 Tele-Communications Inc. Class A + 35,625,000 ---------------- 64,394,048 Chemicals (2.5%) - ------------------------------------------------------------------------------------------------------------------------------ 600,000 Air Products & Chemicals, Inc. 32,025,000 350,000 Betz Laboratories, Inc. 15,881,250 600,000 Great Lakes Chemical Corp. 34,575,000 400,000 Loctite Corp. 17,100,000 200,000 Mallinckrodt Group, Inc. 7,475,000 1,150,000 Praxair, Inc. 44,131,250 1,100,000 Raychem Corp. 72,737,500 41,400 Sandoz AG (Switzerland) 46,219,103 600,000 Witco Chemical Corp. 17,400,000 ---------------- 287,544,103 Computer Equipment (0.6%) - ------------------------------------------------------------------------------------------------------------------------------ 3,642,300 EMC Corp. + 70,569,563 Computer Services (1.5%) - ------------------------------------------------------------------------------------------------------------------------------ 955,646 America Online, Inc. + 29,147,203 419,200 CBT Group PLC ADR (Ireland) + 18,340,000 1,241,190 First Data Corp. 96,347,374 598,900 IDT Corp. + 6,887,350 402,300 Sterling Commerce, Inc. + 12,722,738 201,200 Transaction Systems Architects, Inc. Class A + 6,337,800 ---------------- 169,782,465 Computer Software (8.2%) - ------------------------------------------------------------------------------------------------------------------------------ 94,900 Arbor Software Corp. + 3,606,200 2,434,200 Baan Co., N.V. (Netherlands) + 72,417,450 416,300 Business Objects S.A., ADR (France) + 8,013,775 305,200 Cadence Design Systems, Inc. + 9,308,600 226,300 Citrix Systems, Inc. + 8,542,825 119,000 Clarify, Inc. + 4,730,250 3,262,896 Computer Associates Intl., Inc. 165,999,834 2,633,578 Electronic Arts, Inc. + 79,007,340 973,650 Electronics for Imaging, Inc. + 56,715,113 788,400 Fulcrum Technologies, Inc. + 9,657,900 682,300 Geoworks + 13,987,150 583,300 GT Interactive Software Corp. + 11,301,438 536,800 Legato Systems, Inc. + 17,580,200 600 Lycos, Inc. + 3,563 504,900 McAfee Associates, Inc. + 25,371,225 987,731 Microsoft Corp. + 116,428,792 842,686 Netscape Communications Corp. + 33,286,097 266,268 Objective Systems Integrators, Inc. + 5,192,226 3,375,050 Parametric Technology Corp. + 140,486,456 790,560 PeopleSoft, Inc. + 53,412,210 298,400 Pure Software, Inc. + 7,460,000 123,500 Raptor Systems, Inc. + 2,331,063 573,375 Rational Software Corp. + 25,443,516 191,100 Security Dynamics Technologies, Inc. + 11,657,100 765,000 Softkey International, Inc. + 14,152,500 685,200 Synopsys, Inc. + 25,523,700 439,100 Vantive Corp. + 18,991,075 184,500 Viasoft, Inc. + 7,011,000 ---------------- 947,618,598 Consumer Products (1.8%) - ------------------------------------------------------------------------------------------------------------------------------ 373,200 Central Garden & Pet Co. + 7,837,200 904,680 Gillette Co. 57,560,265 1,200,000 Kimberly-Clark Corp. 91,200,000 762,900 Newell Co. 24,508,163 1,000,000 Sara Lee Corp. 32,000,000 ---------------- 213,105,628 Consumer Services (0.2%) - ------------------------------------------------------------------------------------------------------------------------------ 663,400 Loewen Group, Inc. 17,787,413 Containers (0.1%) - ------------------------------------------------------------------------------------------------------------------------------ 200,000 Temple Inland, Inc. 9,475,000 Cosmetics (0.3%) - ------------------------------------------------------------------------------------------------------------------------------ 305,000 Douglas Holding AG (Germany) 11,709,248 884,400 Thermolase Corp. + 19,677,900 ---------------- 31,387,148 Data Communications (0.7%) - ------------------------------------------------------------------------------------------------------------------------------ 1,898,300 MFS Communications, Inc. + 59,796,450 764,100 Omnipoint Corp. + 21,394,800 ---------------- 81,191,250 Electric Utilities (0.1%) - ------------------------------------------------------------------------------------------------------------------------------ 292,700 Calenergy, Inc. + 7,683,375 Electronics and Electrical Equipment (1.4%) - ------------------------------------------------------------------------------------------------------------------------------ 2,100,000 ADT Ltd. + 39,637,500 448,000 CHS Electronics, Inc. + 4,816,000 500,000 General Electric Co. 41,187,500 550,000 Honeywell, Inc. 29,150,000 563,300 Lernout & Hauspie Speech Products N.V. (Belgium) + 10,702,700 1,035,047 Thermo Instrument Systems, Inc. + 34,803,455 ---------------- 160,297,155 Energy-Related (1.3%) - ------------------------------------------------------------------------------------------------------------------------------ 4,090,739 Thermo Electron Corp. + 152,891,370 Entertainment (0.4%) - ------------------------------------------------------------------------------------------------------------------------------ 901,208 Disney (Walt) Productions, Inc. 50,129,695 Environmental Control (0.4%) - ------------------------------------------------------------------------------------------------------------------------------ 673,300 Memtec Ltd. ADR (Australia) 20,030,675 900,000 WMX Technologies, Inc. 26,662,500 ---------------- 46,693,175 Finance (2.8%) - ------------------------------------------------------------------------------------------------------------------------------ 1,935,823 American Express Co. 84,692,256 696,336 Federal Home Loan Mortgage Corp. 58,666,308 2,956,873 Federal National Mortgage Association 93,880,718 482,850 Financial Federal Corp. + 6,277,050 343,400 Morgan (J.P.) & Co., Inc. 29,532,400 208,300 Student Loan Marketing Assn. 15,205,900 1,160,050 TCF Financial Corp. 40,021,725 ---------------- 328,276,357 Financial Services (1.6%) - ------------------------------------------------------------------------------------------------------------------------------ 442,118 Concord EFS, Inc. + 11,274,009 158,602 First USA Paymentech, Inc. + 6,482,857 4,528,565 MBNA Corp. 126,233,749 3,069,839 Mercury Finance Co. 33,384,499 407,500 Olympic Financial Ltd. + 6,520,000 ---------------- 183,895,114 Food and Beverages (1.3%) - ------------------------------------------------------------------------------------------------------------------------------ 2,150,000 Archer Daniels Midland Co. 38,162,500 2,605,787 PepsiCo, Inc. 82,408,014 1,075,000 Whitman Corporation 24,053,125 ---------------- 144,623,639 Gaming (1.2%) - ------------------------------------------------------------------------------------------------------------------------------ 227,900 Anchor Gaming + 13,332,150 2,296,800 Circus Circus Enterprises, Inc. + 70,626,600 1,811,100 Mirage Resorts, Inc. + 40,749,750 630,900 Rio Hotel & Casino, Inc. + 9,700,088 ---------------- 134,408,588 Gas Pipelines (0.9%) - ------------------------------------------------------------------------------------------------------------------------------ 200,000 El Paso Natural Gas Co. 7,800,000 1,650,000 Enron Corp. 64,968,750 693,900 Sonat, Inc. 29,577,488 ---------------- 102,346,238 Gas Utilities (0.7%) - ------------------------------------------------------------------------------------------------------------------------------ 1,450,000 Columbia Gas System, Inc. + 77,756,250 HMOs (0.1%) - ------------------------------------------------------------------------------------------------------------------------------ 492,700 Sierra Health Services, Inc. + 12,933,375 Health Care Information Systems (1.1%) - ------------------------------------------------------------------------------------------------------------------------------ 2,081,570 HBO & Co. 127,496,163 Health Care Services (2.7%) - ------------------------------------------------------------------------------------------------------------------------------ 370,800 ABR Information Services, Inc. + 18,818,100 988,820 Apria Healthcare Group, Inc. + 24,349,693 2,079,050 Healthsouth Rehabilitation Corp. + 63,151,144 1,291,300 Lincare Holdings, Inc. + 50,360,700 658,100 Medaphis Corp. + 24,431,963 331,112 Oxford Health Plans Inc. + 11,423,364 775,572 Renal Treatment Centers, Inc. + 21,716,016 694,000 Rotech Medical Corp. + 12,145,000 545,700 Total Renal Care Holdings, Inc. + 19,508,775 1,463,900 Vencor, Inc. + 40,074,263 742,705 Vivra, Inc. + 21,631,283 ---------------- 307,610,301 Home Building (0.5%) - ------------------------------------------------------------------------------------------------------------------------------ 3,113,100 Clayton Homes, Inc. 54,479,250 Hospital Management (0.8%) - ------------------------------------------------------------------------------------------------------------------------------ 3,612,020 Health Management Assoc., Inc. + 72,691,903 146,100 Owen Healthcare, Inc. + 1,917,563 1,546,090 Physician Reliance Network, Inc. + 20,872,215 ---------------- 95,481,681 Household Products (0.6%) - ------------------------------------------------------------------------------------------------------------------------------ 1,172,300 Blyth Industries, Inc. + 52,900,038 450,000 Tupperware Corp. + 19,237,500 ---------------- 72,137,538 Insurance (1.4%) - ------------------------------------------------------------------------------------------------------------------------------ 1,350,000 American General Corp. 46,912,500 375,000 American International Group, Inc. 35,296,875 1,341,092 Amerin Corp. + 29,839,297 110,000 General Re Corp. 16,142,500 583,250 HCC Insurance Holdings, Inc. 15,529,031 1,000,000 USF&G Corp. 15,875,000 ---------------- 159,595,203 Leisure (0.1%) - ------------------------------------------------------------------------------------------------------------------------------ 506,000 Family Golf Centers, Inc. + 11,511,500 Lodging (2.8%) - ------------------------------------------------------------------------------------------------------------------------------ 606,400 Doubletree Corp. + 19,859,600 983,600 Extended Stay America, Inc. + 14,754,000 3,296,095 HFS, Inc. + 197,765,700 137,200 Interstate Hotels Co. + 3,121,300 1,401,300 Prime Hospitality Corp. + 24,873,075 597,900 Promus Hotel Corp. + 16,292,775 1,935,600 Renaissance Hotel Group N.V. (Hong Kong) + 40,405,650 145,500 Studio Plus Hotels, Inc. + 2,873,625 ---------------- 319,945,725 Medical Management Services (0.8%) - ------------------------------------------------------------------------------------------------------------------------------ 391,300 OccuSystems, Inc. + 11,152,050 103,000 Orthodontic Centers of America, Inc. + 3,180,125 1,968,980 Phycor, Inc. + 60,546,135 478,300 Phymatrix, Inc. + 10,343,238 88,200 Physicians Resource Group, Inc. + 1,764,000 ---------------- 86,985,548 Medical Supplies and Devices (4.4%) - ------------------------------------------------------------------------------------------------------------------------------ 127,800 American HomePatient, Inc. + 3,099,150 731,000 Boston Scientific Corp. + 34,905,250 250,900 Endosonics Corp. + 3,136,250 8,430 Fresenius AG (Germany) 1,580,947 1,873,864 Johnson & Johnson 89,477,006 600,000 Lifecore Biomedical, Inc. + 9,750,000 829,710 Medtronic, Inc. 39,307,511 241,300 Neuromedical Systems, Inc. + 3,468,688 372,790 Omnicare, Inc. 8,713,966 945,825 Shared Medical Systems Corp. 52,020,375 926,600 Sola International, Inc. + 27,450,525 1,365,466 St. Jude Medical Inc. + 45,913,794 3,274,029 Stryker Corp. 80,469,494 1,677,125 Thermo Cardiosystems, Inc. + 53,668,000 376,450 Thermotrex Corp. + 13,175,750 29,485 Trex Medical Corp. + 600,757 1,125,000 U.S. Surgical Corp. 38,531,250 ---------------- 505,268,713 Metals and Mining (0.3%) - ------------------------------------------------------------------------------------------------------------------------------ 1,300,000 Freeport-McMoRan Copper & Gold Co., Inc. Class A 36,075,000 Networking Equipment (3.4%) - ------------------------------------------------------------------------------------------------------------------------------ 1,185,331 Ascend Communications, Inc. + 57,488,554 1,458,300 Cabletron Systems, Inc. + 83,487,675 1,767,275 Cascade Communications Corp. + 108,687,413 1,888,938 Cisco Systems, Inc. + 97,752,542 775,000 Shiva Corp. + 40,106,250 ---------------- 387,522,434 Nursing Homes (0.5%) - ------------------------------------------------------------------------------------------------------------------------------ 304,900 American Medical Response + 10,099,813 459,150 Genesis Health Ventures, Inc. + 11,536,144 1,390,800 Health Care & Retirement Corp. + 33,031,500 ---------------- 54,667,457 Office Equipment (1.0%) - ------------------------------------------------------------------------------------------------------------------------------ 704,200 BT Office Products International, Inc. + 8,890,525 432,200 U.S. Office Products Co. + 12,317,700 3,282,175 Viking Office Products, Inc. + 96,824,163 ---------------- 118,032,388 Oil and Gas (2.8%) - ------------------------------------------------------------------------------------------------------------------------------ 399,977 British Petroleum PLC ADR (United Kingdom) 43,947,473 700,000 Chevron, Inc. 40,512,500 250,000 Exxon Corp. 20,562,500 700,000 Halliburton Co. 36,487,500 375,000 Mobil Corp. 41,390,625 480,000 Production Operators Corp. 15,000,000 575,000 Schlumberger Ltd. 46,000,000 2,140,987 Total Corp. ADR (France) 76,540,273 ---------------- 320,440,871 Paper and Forest Products (0.4%) - ------------------------------------------------------------------------------------------------------------------------------ 600,000 Fort Howard Corp. + 13,725,000 850,000 Weyerhaeuser Co. 35,487,500 ---------------- 49,212,500 Pharmaceuticals and Biotechnology (4.8%) - ------------------------------------------------------------------------------------------------------------------------------ 300,000 Allergan Inc. 12,225,000 656,400 Amgen, Inc. + 35,855,850 1,575,344 Astra AB (Sweden) 66,291,298 459,200 Biochem Pharmaceutical, Inc. + 13,718,600 422,328 Chiron Corp. + 37,164,864 567,800 CytoTherapeutics, Inc. + 4,542,400 505,211 Elan Corp. PLC ADR (Ireland) + 29,681,146 1,028,000 Gilead Sciences, Inc. + 19,532,000 1,170,050 Guidant Corp. 59,380,038 700,000 Lilly (Eli) & Co. 39,200,000 372,000 Martek Biosciences Corp. + 9,346,500 561,700 Neurogen Corp. + 9,970,175 105,800 Parexel International Corp. + 4,284,900 1,160,657 Pfizer, Inc. 81,100,908 2,112,800 Pharmacia & Upjohn, Inc. 87,153,000 750,500 Smithkline Beecham PLC ADR (United Kingdom) 40,339,375 ---------------- 549,786,054 Photography (1.5%) - ------------------------------------------------------------------------------------------------------------------------------ 1,225,000 Eastman Kodak Co. 91,415,625 2,000,000 Polaroid Corp. 84,500,000 ---------------- 175,915,625 Publishing (1.8%) - ------------------------------------------------------------------------------------------------------------------------------ 500,000 Belo (A.H.) Corp. Class A 20,125,000 819,600 Harcourt General, Inc. 39,238,350 500,000 McGraw-Hill, Inc. 19,500,000 9,800 Mecklermedia Corp. + 164,150 500,000 Tribune Co. 35,000,000 787,378 Wolters Kluwer N.V. (Netherlands) 91,689,823 ---------------- 205,717,323 Railroads (0.7%) - ------------------------------------------------------------------------------------------------------------------------------ 565,000 Burlington Northern Santa Fe Corp. 44,564,375 1,074,821 Wisconsin Central Transportation Corp. + 33,588,156 ---------------- 78,152,531 Restaurants (2.3%) - ------------------------------------------------------------------------------------------------------------------------------ 1,340,800 Apple South, Inc. 27,318,800 1,354,500 Applebee's International, Inc. 34,031,813 1,086,900 Boston Chicken, Inc. + 28,802,850 1,871,738 J.D. Wetherspoon PLC (United Kingdom)+ 25,176,280 798,900 Landry's Seafood Restaurants, Inc. + 17,775,525 1,304,348 Lone Star Steakhouse & Saloon + 40,760,875 373,515 Outback Steakhouse, Inc. + 9,618,011 139,000 PizzaExpress PLC (United Kingdom) 862,419 2,924,100 Starbucks Corp. + 76,026,600 ---------------- 260,373,173 Retail (4.4%) - ------------------------------------------------------------------------------------------------------------------------------ 120,700 AutoZone, Inc. + 3,485,213 1,566,825 Bed Bath & Beyond, Inc. + 34,470,150 1,498,462 Boise Cascade Office Products + 33,715,395 672,600 CompUSA, Inc. + 26,567,700 1,549,200 Dayton-Hudson Corporation 46,863,300 1,500,000 Federated Department Stores Inc. + 45,375,000 291,000 Global DirectMail Corp. + 11,858,250 1,773,418 Home Depot, Inc. 89,557,609 950,000 Lowe's Cos., Inc. 30,993,750 3,134,250 Officemax, Inc. + 41,528,813 1,000,000 Payless Shoesource, Inc. + 32,375,000 175,200 Payment Services., Inc. + 4,861,800 860,218 Petco Animal Supplies, Inc. + 19,139,851 1,000,000 Price/Costco, Inc. + 20,500,000 2,000,000 Revco D.S., Inc. + 45,500,000 1,159,550 Staples, Inc. + 19,277,519 ---------------- 506,069,350 Semiconductors (1.6%) - ------------------------------------------------------------------------------------------------------------------------------ 815,700 Analog Devices Inc. + 17,027,738 459,200 Credence Systems Corp. + 6,084,400 318,050 Intel Corp. 23,893,506 1,510,427 Linear Technology Corp. 47,578,451 2,351,410 Maxim Integrated Products Inc. + 67,015,185 1,800,000 National Semiconductor Corp. + 25,425,000 ---------------- 187,024,280 Specialty Consumer Products (0.6%) - ------------------------------------------------------------------------------------------------------------------------------ 893,591 Fastenal Co. 38,424,413 341,300 Gemstar International Group Ltd. + 8,276,525 396,395 Luxottica Group S.P.A. ADR (Italy) 28,144,045 ---------------- 74,844,983 Steel (0.1%) - ------------------------------------------------------------------------------------------------------------------------------ 300,000 Nucor Corp. 14,062,500 Supermarkets (0.3%) - ------------------------------------------------------------------------------------------------------------------------------ 52,875 Carrefour Supermarche SA (France) 29,019,028 Telecommunication Equipment (2.3%) - ------------------------------------------------------------------------------------------------------------------------------ 1,122,000 Adtran, Inc. + 68,161,500 17,100 Boston Communications Group, Inc. + 239,400 307,400 Brooks Fiber Properties, Inc. + 9,625,463 1,825,000 DSC Communications Corp. + 54,750,000 830,449 Glenayre Technologies, Inc. + 30,622,807 526,900 P-Com, Inc. + 12,645,600 606,600 Pairgain Technologies, Inc. + 33,666,300 126,700 Premiere Technologies, Inc. + 2,787,400 668,100 Premisys Communications, Inc. + 20,210,025 613,364 Tellabs, Inc. + 36,648,499 ---------------- 269,356,994 Telephone Services (3.6%) - ------------------------------------------------------------------------------------------------------------------------------ 1,200,000 GTE Corp. 49,500,000 438,080 Intelcom Group, Inc. + 8,433,040 249,800 Intermedia Communications, Inc. + 6,307,450 406,196 IXC Communications Inc. + 5,280,548 608,300 LCI International, Inc. + 18,401,075 476,500 Lucent Technologies, Inc. 17,690,063 2,720,100 MCI Communications Corp. 66,982,463 1,270,000 McLeod, Inc. Class A + 32,067,500 772,307 Octel Communications Corp. + 18,149,215 132,800 Pacific Gateway Exchange Inc. + 1,593,600 328,000 Pacific Telesis Group 11,029,000 700,700 SBC Communications, Inc. 34,246,713 1,700,000 Sprint Corp. 62,262,500 487,600 Tel-Save Holdings, Inc. + 11,702,400 107,300 Teletech Holdings, Inc. + 1,555,850 232,600 U.S. Long Distance Corp. + 5,669,625 2,565,700 WorldCom, Inc. + 66,387,488 ---------------- 417,258,530 Textiles (0.4%) - ------------------------------------------------------------------------------------------------------------------------------ 946,257 Designer Holdings Ltd. + 17,387,472 783,800 St. John Knits, Inc. 30,960,100 ---------------- 48,347,572 Tobacco (0.3%) - ------------------------------------------------------------------------------------------------------------------------------ 1,200,000 UST, Inc. 39,900,000 Trucking (0.3%) - ------------------------------------------------------------------------------------------------------------------------------ 1,300,000 Ryder System, Inc. 34,612,500 Wireless Communications (1.6%) - ------------------------------------------------------------------------------------------------------------------------------ 566,666 360 Communications Co. + 13,104,151 1,200,000 Airtouch Communications, Inc. + 33,000,000 159,800 Clearnet Communications Inc. Class A, (Canada) + 2,676,650 418,300 Intercel, Inc. + 7,477,113 3,501,700 NEXTEL Communications, Inc. Class A + 52,963,213 3,030,319 Paging Network, Inc. + 58,333,641 728,700 Preferred Networks, Inc. + 6,102,863 679,800 Western Wireless Corp. Class A + 10,621,875 ---------------- 184,279,506 Total Common Stocks (cost $9,073,134,513) $ 11,056,090,564 Preferred Stocks (0.2%) * (Cost $18,013,734) NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------ 103,570 Fresenius AG pfd. (Germany) $ 19,599,270 Short-Term Investments (4.2%) * PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------------------ $ 35,000,000 American Home Products effective yield of 5.41%, 8/27/96 $ 34,863,247 25,000,000 Corporate Receivables Corp. effective yield of 5.42%, 10/8/96 24,746,417 5,000,000 Corporate Receivables Corp. effective yield of 5.39%, 8/5/96 4,997,006 20,950,000 Falcon Asset Security Corp. effective yield of 5.4%, 8/26/96 20,871,438 30,000,000 Federal Home Loan Bank effective yield of 5.33%, 10/28/96 29,609,133 25,000,000 Federal Home Loan Mortgage Corp. effective yield of 5 1/2%, 8/1/96 25,000,000 30,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.34%, 9/26/96 29,750,800 17,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.31%, 9/12/96 16,894,685 8,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.30%, 8/12/96 7,987,044 25,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.29%, 9/23/96 24,805,299 15,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.22%, 8/28/96 14,941,275 15,000,000 Federal National Mortgage Association effective yield of 5.32%, 9/6/96 14,920,200 25,000,000 Ford Motor Co. effective yield of 5.41%, 10/7/96 24,750,146 33,000,000 Heinz H J Co. effective yield of 5.37%, 8/8/96 32,965,543 20,000,000 JP Morgan & Co. Inc. effective yield of 5.31%, 8/19/96 19,946,900 30,000,000 Merrill Lynch & Co. Inc. effective yield of 5.40%, 9/17/96 29,788,500 30,000,000 Metropolitan Life Funding effective yield of 5.34%, 8/19/96 29,919,900 25,000,000 National Rural Utilities Corp. effective yield of 5.36%, 8/19/96 24,933,000 20,000,000 Nationsbank Corp. effective yield of 5.31%, 8/5/96 19,988,200 25,000,000 USAA Capital Corp. effective yield of 5.35%, 9/13/96 24,840,243 27,697,000 Interest in $500,000,000 joint repurchase agreement dated July 31, 1996 with Lehman Brothers Inc. due August 1, 1996 with respect to various U.S. Treasury obligations-maturity value of $27,701,347 for an effective yield of 5.65% 27,701,347 ---------------- Total Short-Term Investments (cost $484,220,323) $ 484,220,323 - ------------------------------------------------------------------------------------------------------------------------------ Total Investments (cost $9,575,368,570) *** $ 11,559,910,157 - ------------------------------------------------------------------------------------------------------------------------------ * Percentages indicated are based on net assets of $11,534,943,999. ** The aggregate identified cost on a tax basis is $9,594,647,581, resulting in gross unrealized appreciation and depreciation of $2,506,650,828 and $541,388,252, respectively, or net unrealized appreciation of $1,965,262,576. ADR after the name of a foreign holding stands for American Depository Receipt, representing ownership of foreign securities on deposit with a domestic custodian bank. + Non-income-producing security. The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities July 31, 1996 Assets Investments in securities, at value (identified cost $9,575,368,570) (Note 1) $11,559,910,157 - --------------------------------------------------------------------------------------------------------------------------------- Cash 2,738,649 - --------------------------------------------------------------------------------------------------------------------------------- Dividends, interest and other receivables 5,163,369 - --------------------------------------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 43,308,323 - --------------------------------------------------------------------------------------------------------------------------------- Receivable for securities sold 43,492,348 - --------------------------------------------------------------------------------------------------------------------------------- Total assets 11,654,612,846 Liabilities - --------------------------------------------------------------------------------------------------------------------------------- Payable for securities purchased 81,542,671 - --------------------------------------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 9,871,169 - --------------------------------------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 14,919,224 - --------------------------------------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 6,924,106 - --------------------------------------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 19,905 - --------------------------------------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 5,151 - --------------------------------------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 4,522,393 - --------------------------------------------------------------------------------------------------------------------------------- Other accrued expenses 1,864,228 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities 119,668,847 - --------------------------------------------------------------------------------------------------------------------------------- Net assets $11,534,943,999 Represented by - --------------------------------------------------------------------------------------------------------------------------------- Paid-in-capital (Notes 1 and 4) $8,778,958,163 - --------------------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions (Note 1) 771,435,499 - --------------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 1,984,550,337 - --------------------------------------------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $11,534,943,999 Computation of net asset value and offering price - --------------------------------------------------------------------------------------------------------------------------------- Net asset value and redemption price of class A shares ($7,332,248,429 divided by 466,154,655 shares) $15.73 - --------------------------------------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $15.73) * $16.69 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value and offering price of class B shares ($3,405,318,062 divided by 224,833,465 shares) ** $15.15 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value and redemption price of class M shares ($87,782,443 divided by 5,626,361 shares) $15.60 - --------------------------------------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $15.60) * $16.17 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price of class Y shares ($709,595,065 divided by 44,771,220 shares) $15.85 - --------------------------------------------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
Statement of operations Year ended July 31, 1996 Investment Income: - ------------------------------------------------------------------------------------------------------ Dividends (net of foreign tax of $1,406,212) $71,503,392 - ------------------------------------------------------------------------------------------------------ Interest 14,863,552 - ------------------------------------------------------------------------------------------------------ Total investment income 86,366,944 Expenses: - ------------------------------------------------------------------------------------------------------ Compensation of Manager (Note 2) 48,811,392 - ------------------------------------------------------------------------------------------------------ Investor servicing and custodian fees (Note 2) 21,833,626 - ------------------------------------------------------------------------------------------------------ Compensation of Trustees (Note 2) 153,768 - ------------------------------------------------------------------------------------------------------ Administrative services (Note 2) 61,879 - ------------------------------------------------------------------------------------------------------ Distribution fees -- Class A (Note 2) 15,846,214 - ------------------------------------------------------------------------------------------------------ Distribution fees -- Class B (Note 2) 27,053,037 - ------------------------------------------------------------------------------------------------------ Distribution fees -- Class M (Note 2) 385,447 - ------------------------------------------------------------------------------------------------------ Reports to shareholders 448,775 - ------------------------------------------------------------------------------------------------------ Registration fees 1,316,277 - ------------------------------------------------------------------------------------------------------ Auditing 157,107 - ------------------------------------------------------------------------------------------------------ Legal 163,022 - ------------------------------------------------------------------------------------------------------ Postage 989,020 - ------------------------------------------------------------------------------------------------------ Other 290,695 - ------------------------------------------------------------------------------------------------------ Total expenses 117,510,259 - ------------------------------------------------------------------------------------------------------ Expense reduction (Note 2) (2,394,148) - ------------------------------------------------------------------------------------------------------ Net expenses 115,116,111 - ------------------------------------------------------------------------------------------------------ Net investment loss (28,749,167) - ------------------------------------------------------------------------------------------------------ Net realized gain on investments (Notes 1 and 3) 962,853,545 - ------------------------------------------------------------------------------------------------------ Net realized loss on foreign currency translation (Note 1) (31,882) - ------------------------------------------------------------------------------------------------------ Net unrealized appreciation on foreign currency translation during the year 7,558 - ------------------------------------------------------------------------------------------------------ Net unrealized appreciation on investments during the year 144,549,915 - ------------------------------------------------------------------------------------------------------ Net gain on investments 1,107,379,136 - ------------------------------------------------------------------------------------------------------ Net increase in net assets resulting from operations $1,078,629,969 - ------------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Year ended July 31 ----------------------------------- 1996 1995 - -------------------------------------------------------------------------------------------------------------------- Increase in net assets - -------------------------------------------------------------------------------------------------------------------- Operations: - -------------------------------------------------------------------------------------------------------------------- Net investment loss $(28,749,167) $(272,404) - -------------------------------------------------------------------------------------------------------------------- Net realized gain on investments and foreign currency transactions 962,821,663 340,186,139 - -------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currency transactions 144,557,473 1,308,965,207 - -------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 1,078,629,969 1,648,878,942 - -------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - -------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (317,069,690) (145,558,356) - -------------------------------------------------------------------------------------------------------------------- Class B (135,078,052) (49,513,213) - -------------------------------------------------------------------------------------------------------------------- Class M (2,101,620) (12,706) - -------------------------------------------------------------------------------------------------------------------- Class Y (22,695,086) (4,827,692) - -------------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 3,796,887,582 1,642,355,205 - -------------------------------------------------------------------------------------------------------------------- Total increase in net assets 4,398,573,103 3,091,322,180 - -------------------------------------------------------------------------------------------------------------------- Net Assets - -------------------------------------------------------------------------------------------------------------------- Beginning of year 7,136,370,896 4,045,048,716 - -------------------------------------------------------------------------------------------------------------------- End of year $11,534,943,999 $7,136,370,896 - -------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Financial Highlights (For a share outstanding throughout the period) April 1, 1994 (commencement Year ended of operations) to July 31 July 31 ----------------------------------------------------- 1996 1995 1994 ----------------------------------------------------- Class Y ----------------------------------------------------- Net asset value, beginning of period $14.48 $11.22 $11.24 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .02* .03 -- - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 2.21 3.74 (.02) - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations 2.23 3.77 (.02) - --------------------------------------------------------------------------------------------------------------------------- Less distributions from: - --------------------------------------------------------------------------------------------------------------------------- Net investment income -- -- -- - --------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments (.86) (.51) -- - --------------------------------------------------------------------------------------------------------------------------- Total distributions (.86) (.51) -- - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $15.85 $14.48 $11.22 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 15.85 34.90 (0.18)(b) - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $709,595 $351,817 $82,102 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) .77 .83 .31(b) - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) .15 .39 (.05)(b) - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 57.92 65.43 57.74 - --------------------------------------------------------------------------------------------------------------------------- Financial Highlights (continued) (For a share outstanding throughout the period) December 1, 1994 Year (commencement ended of operations) to July 31 July 31 ----------------------------------------------------- 1996 1995 1996 ----------------------------------------------------- Class M ----------------------------------------------------- Net asset value, beginning of period $14.37 $11.79 $14.01 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.09)* (.01) (.13)* - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 2.18 3.10 2.13 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations 2.09 3.09 2.00 - --------------------------------------------------------------------------------------------------------------------------- Less distributions from: - --------------------------------------------------------------------------------------------------------------------------- Net investment income -- -- -- - --------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments (.86) (.51) (.86) - --------------------------------------------------------------------------------------------------------------------------- Total distributions (.86) (.51) (.86) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $15.60 $14.37 $15.15 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 14.97 27.42(b) 14.70 - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $87,782 $19,004 $3,405,318 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.50 1.06(b) 1.78 - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.57) (.24)(b) (.85) - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 57.92 65.43 57.92 - --------------------------------------------------------------------------------------------------------------------------- Financial Highlights (continued) (For a share outstanding throughout the period) Year ended July 31 ----------------------------------------------------- 1995 1994 1993 ----------------------------------------------------- Class B ----------------------------------------------------- Net asset value, beginning of period $10.97 $10.89 $9.63 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.06) (.05) (.03) - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments 3.61 .59 1.81 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations 3.55 .54 1.78 - --------------------------------------------------------------------------------------------------------------------------- Less distributions from: - --------------------------------------------------------------------------------------------------------------------------- Net investment income -- -- -- - --------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments (.51) (.46) (.52) - --------------------------------------------------------------------------------------------------------------------------- Total distributions (.51) (.46) (.52) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.01 $10.97 $10.89 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 33.65 4.71 18.79 - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,870,370 $911,069 $408,361 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.82 1.84 1.87 - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.58) (.91) (.91) - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 65.43 57.74 64.62 - --------------------------------------------------------------------------------------------------------------------------- Financial Highlights (continued) (For a share outstanding throughout the period) April 27 (commencement of operations) to July 31 Year ended July 31 ----------------------------------------------------- 1992 1996 1995 ----------------------------------------------------- ----------------------------------------------------- Net asset value, beginning of period $9.34 $14.42 $11.19 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.04)* (.02)* .02 - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .33 2.19 3.72 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations .29 2.17 3.74 - --------------------------------------------------------------------------------------------------------------------------- Less distributions from: - --------------------------------------------------------------------------------------------------------------------------- Net investment income -- -- -- - --------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments -- (.86) (.51) - --------------------------------------------------------------------------------------------------------------------------- Total distributions -- (.86) (.51) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.63 $15.73 $14.42 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 3.11(b) 15.49 34.72 - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $42,492 $7,332,248 $4,895,180 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) .63(b) 1.03 1.07 - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.39)(b) (.10) .17 - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 44.17 57.92 65.43 - --------------------------------------------------------------------------------------------------------------------------- Financial Highlights (continued) (For a share outstanding throughout the period) Year ended July 31 ----------------------------------------------------- 1994 1993 1992 ----------------------------------------------------- Class A ----------------------------------------------------- Net asset value, beginning of period $11.02 $9.67 $9.00 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.02) (.02) .02 - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain (loss) on investments .65 1.89 1.16 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations .63 1.87 1.18 - --------------------------------------------------------------------------------------------------------------------------- Less distributions from: - --------------------------------------------------------------------------------------------------------------------------- Net investment income -- -- (.03) - --------------------------------------------------------------------------------------------------------------------------- Net realized gain on investments (.46) (.52) (.48) - --------------------------------------------------------------------------------------------------------------------------- Total distributions (.46) (.52) (.51) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.19 $11.02 $9.67 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 5.49 19.69 13.39 - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $3,051,878 $2,403,332 $1,549,128 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(c) 1.10 1.12 1.20 - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (%) (.18) (.14) .27 - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 57.74 64.62 44.17 - --------------------------------------------------------------------------------------------------------------------------- * Per share net investment income has been determined on the basis of weighted average number of shares outstanding during the period. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Not annualized. (c) The ratio of expenses to average net assets for the period ended July 31, 1996 includes expense offset and brokerage service arrangements. Prior period ratios excluded these amounts (Note 2).
Notes to financial statements July 31, 1996 Note 1 Significant accounting policies The fund is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund invests primarily in common stocks of companies that Putnam Investment Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc., believes have potential for capital appreciation significantly greater than that of the market averages. The fund offers class A, class B, class M and class Y shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares, which convert to class A shares after eight years, do not pay a front-end sales charge but pay a higher ongoing distribution fee than class A shares, and may be subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class M shares are sold with a maximum front end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B and class Y shares. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B and class M shares, but do not bear a distribution fee. Class Y shares are sold to defined contribution plans that initially invest at least $250 million in a combination of Putnam Funds. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if that fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with generally accepted accounting principles and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates. A) Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sale price, or, if no sales are reported -- as in the case of some securities traded over the counter -- the last reported bid price. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value, and other investments are stated at fair value following procedures approved by the Trustees. B) Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies managed by Putnam Management and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. E) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held and for excise tax on income and capital gains. F) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such fluctuations are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency translation represent net exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized gains and losses on foreign currency translation arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. G) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Capital gain distributions, if any, are recorded on the ex-dividend date and paid annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include treatment of losses on wash sale transactions, realized gains and losses on short-term foreign currency contracts. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended July 31, 1996, the fund reclassified $28,749,167 to decrease accumulated net investment loss and $28,809,717 to decrease paid-in-capital, with an increase to accumulated net realized gain on investments of $60,550. The calculation of net investment income per share in the financial highlights table excludes these adjustments. Note 2 Management fee, administrative services, and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund for the quarter. Such fee is based on the following annual rates: 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion, and 0.43% of any amount over $21.5 billion, subject, under current law, to reduction in any year by the amount of certain brokerage commissions and fees (less expenses) received by affiliates of the Manager on the fund's portfolio transactions. The fund reimburses Putnam Management for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the period ended July 31, 1996, fund expenses were reduced by $2,394,148 under expense offset arrangements with PFTC and brokerage service arrangements. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Trustees of the fund receive an annual Trustees fee of $8,750 and an additional fee for each Trustee's meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain in the fund and are invested in the fund or in other Putnam funds until distribution in accordance with the Plan. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments, Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the average net assets attributable to class A, class B and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average net assets attributable to class A, class B and class M shares, respectively. For the year ended July 31, 1996, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $7,022,604 and $151,537 from the sale of class A and class M shares, respectively and received $2,957,794 in contingent deferred sales charges from redemptions of class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the year ended July 31, 1996, Putnam Mutual Funds Corp., acting as underwriter received $73,974 on class A redemptions. Note 3 Purchases and sales of securities During the year ended July 31, 1996, purchases and sales of investment securities other than short-term investments aggregated $8,606,873,688 and $5,400,228,660, respectively. There were no purchases and sales of U.S. government obligations. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At July 31, 1996, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Year ended July 31, 1996 - ---------------------------------------------------- Class A Shares Amount - ---------------------------------------------------- Shares sold 195,466,332 $3,099,427,469 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 20,779,804 304,214,751 - ---------------------------------------------------- 216,246,136 3,403,642,220 Shares repurchased (89,666,684) (1,411,912,865) - ---------------------------------------------------- Net increase 126,579,452 $1,991,729,355 - ---------------------------------------------------- Year ended July 31, 1995 - ---------------------------------------------------- Class A Shares Amount - ---------------------------------------------------- Shares sold 148,502,110 $1,832,997,253 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 12,438,947 139,191,797 - ---------------------------------------------------- 160,941,057 1,972,189,050 Shares repurchased (94,138,474) (1,170,082,797) - ---------------------------------------------------- Net increase 66,802,583 $802,106,253 - ---------------------------------------------------- Year ended July 31, 1996 - ---------------------------------------------------- Class B Shares Amount - ---------------------------------------------------- Shares sold 107,598,758 $1,654,943,119 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 8,896,693 125,976,810 - ---------------------------------------------------- 116,495,451 1,780,919,929 Shares repurchased (25,142,718) (384,623,376) - ---------------------------------------------------- Net increase 91,352,733 $1,396,296,553 - ---------------------------------------------------- Year ended July 31, 1995 - ---------------------------------------------------- Class B Shares Amount - ---------------------------------------------------- Shares sold 62,162,491 $748,057,897 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 4,231,663 46,209,683 - ---------------------------------------------------- 66,394,154 794,267,580 Shares repurchased (15,970,928) (191,170,815) - ---------------------------------------------------- Net increase 50,423,226 $603,096,765 - ---------------------------------------------------- Year ended July 31, 1996 - ---------------------------------------------------- Class M Shares Amount - ---------------------------------------------------- Shares sold 4,921,187 $77,977,369 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 137,798 2,007,717 - ---------------------------------------------------- 5,058,985 79,985,086 Shares repurchased (754,954) (11,970,795) - ---------------------------------------------------- Net increase 4,304,031 $68,014,291 - ---------------------------------------------------- December 1, 1994 (commencement of operations) to July 31, 1995 - ---------------------------------------------------- Class M Shares Amount - ---------------------------------------------------- Shares sold 1,405,252 $17,976,348 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 1,112 12,448 - ---------------------------------------------------- 1,406,364 17,988,796 Shares repurchased (84,034) (1,076,432) - ---------------------------------------------------- Net increase 1,322,330 $16,912,364 - ---------------------------------------------------- Year ended July 31, 1996 - ---------------------------------------------------- Class Y Shares Amount - ---------------------------------------------------- Shares sold 24,769,497 $410,764,510 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 1,540,741 22,695,086 - ---------------------------------------------------- 26,310,238 433,459,596 Shares repurchased (5,830,909) (92,612,213) - ---------------------------------------------------- Net increase 20,479,329 $340,847,383 - ---------------------------------------------------- Year ended July 31, 1995 - ---------------------------------------------------- Class Y Shares Amount - ---------------------------------------------------- Shares sold 19,003,487 $246,497,467 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 430,221 4,827,084 - ---------------------------------------------------- 19,433,708 251,324,551 Shares repurchased (2,461,794) (31,084,728) - ---------------------------------------------------- Net increase 16,971,914 $220,239,823 - ---------------------------------------------------- Note 5 Transactions with Affiliated Companies Transactions during the year with companies in which the fund owns at least 5% of the voting securities were as follows: Purchase Sales Dividend Market Affiliates cost proceeds Income Value - ----------------------------------------------------------------------- Name of affiliate - ----------------------------------------------------------------------- Financial Federal Corp. $ 4,064,729 $2,565,335 $-- $ 6,277,050 Fulcrum Technologies 8,893,294 -- -- 9,657,900 Geoworks 15,553,256 -- -- 13,987,150 Lifecore Biomedical Inc. 7,739,300 -- -- 9,750,000 Preferred Networks Inc. 7,329,264 -- -- 6,102,863 Western Wireless Corp. Cl. A 16,848,605 -- -- 10,621,875 Westwood One Inc. 13,705,724 -- -- 25,894,400 Federal tax information (Unaudited) Pursuant to Section 852 of the Internal Revenue Code, the fund hereby designates $0.738 per share (or if different, the amount necessary to offset net capital gain earned by the Fund for all classes of shares) as capital gain dividends for its taxable year ended July 31, 1996. The Form 1099 you receive in January 1997 will show the tax status of all distributions paid to your account in calendar 1996. Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Price Waterhouse LLP TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Ronald J. Jackson Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III Eli Shapiro A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Peter Carman Vice President John J. Morgan, Jr. Vice President Daniel L. Miller Vice President Brett C. Browchuck Vice President Roland W. Gillis Vice President and Fund Manager Charles H. Swanberg Vice President and Fund Manager Robert R. Beck Vice President and Fund Manager William N. Shiebler Vice President John R. Verani Vice President Paul M. O'Neil Vice President Beverly Marcus Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam Voyager Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives, and operating policies of the fund, and the most recent copy of Putnam's Quarterly Performance Summary. For more information, or to request a prospectus, call toll free: 1-800-225-1581. Shares of mutual funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution; are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency; and involve risk, including the possible loss of the principal amount invested. PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - ------------------ Bulk Rate U.S. Postage PAID Putnam Investments - ------------------ 27081-007/883/530 9/96 PUTNAM INVESTMENTS [LOGO] - --------------------------------------------------------------------------- Putnam Voyager Fund Supplement to Annual Report dated July 31, 1996 The following information has been prepared to provide class Y shareholders with a performance overview specific to their holdings. Class Y shares are offered exclusively to defined contribution plans investing $250 million or more in one or more of PutnamOs funds or private accounts. Performance of class Y shares, which incur neither a front-end load, distribution fee, nor contingent deferred sales charge, will differ from performance of class A, B, and M shares, which are discussed more extensively in the annual report. ANNUAL RESULTS AT A GLANCE - --------------------------------------------------------------------------- Total return: NAV One year ended 7/31/96 15.85% Life of class (since 4/1/94) 56.01 Annual average 20.93 - --------------------------------------------------------------------------- Share value: NAV 7/31/95 $14.48 7/31/96 15.85 - --------------------------------------------------------------------------- Distributions: No. Income Capital gains Total 1 $0.0000 $0.860 $0.860 - --------------------------------------------------------------------------- Please note that past performance does not indicate future results. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. If you have questions, please consult your fund prospectus or call Putnam toll free at 1-800-752-9894. -----END PRIVACY-ENHANCED MESSAGE-----