Putnam
Voyager
Fund II
SEMIANNUAL REPORT
June 30, 1996
[LOGO:BOSTON * LONDON * TOKYO]
Fund highlights
* Morningstar, Inc., an independent rating agency, once again
awarded Putnam Voyager Fund II's class A shares its highest ranking
of 5 stars for 3-year performance as of June 30, 1996. Only 10% of
the 1,583 funds in the growth category received 5 stars.*
* According to Lipper Analytical Services, the fund's class A share
total return ranked 26 out of 619 growth funds for the 12 months
ended June 30, 1996, placing it in the top 5% of funds in this
category.+
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
25 Financial statements
*Morningstar ratings reflect risk-adjusted performance through
6/30/96 and are subject to change every month. Morningstar ratings
are calculated from a fund's 3-, 5-, and 10-year returns adjusted
for risk factors and sales charges. For the 1-year period, the fund
received 4 stars among the 2,882 equity funds rated. Performance of
other share classes will vary. 10% of the funds receive 5 stars and
22.5% receive 4 stars.
+Lipper Analytical Services, an independent research organization,
ranks funds according to total return performance. Their rankings
vary over time and do not reflect the effects of sales charges. For
the 3-year period ended 6/30/96, the fund's class A shares ranked 8
out of 379 growth funds.
Class A shares became available on 4/14/93 and thus are not rated
for longer than a 3-year period. Class B and class M shares became
available on 10/2/95 and currently are not rated by either
Morningstar or Lipper. Past performance is not indicative of
future results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
As the accolades from mutual fund rating services on the facing page
attest, Putnam Voyager Fund II continued to take maximum advantage
of the generally favorable stock market environment that prevailed
throughout most of the first half of its current fiscal year, the
six months ended June 30, 1996.
Toward the end of the period, the market began providing a foretaste
of what may be a more unsettled climate during the latter half of
the year. Funds like yours, which tend to ride near the crest of
rising markets, also tend to fall more sharply on the downside.
Astute investors can often profit from such declines by using them
as opportunities to increase their positions at bargain prices.
In any case, those seeking capital growth should continue to find
the fund an excellent choice over the long term, regardless of the
market's ups and downs along the way. In the report that follows,
your fund's management team provides a review of the first half of
fiscal 1996 and its outlook for the second half.
Respectfully yours,
/S/ George Putnam
George Putnam
Chairman of the Trustees
August 21, 1996
Report from the Fund Managers
Charles H. Swanberg
Roland W. Gillis
Robert R. Beck
For most of the first half of fiscal 1996, Putnam Voyager Fund II
benefited from a stock market that had enjoyed unprecedented
prosperity since the end of 1994. The overall economic environment
was moderate with favorable interest rates, low inflation, and
increasing earnings for growth-oriented stocks relative to the
market. The corporate earnings of American businesses remained
strong enough, for the most part, to produce excellent results for
the majority of growth stocks.
In the last month of the semiannual period, however, confusion
emerged from beneath the surface of this seemingly bright and placid
environment. Concerns over both a possible increase in interest
rates by the Federal Reserve Board and a likely slowdown in
corporate earnings growth raised new questions about the strength of
the U.S. economy and began to diminish investor enthusiasm for
equities. A stock market correction seemed probable. While year-
over-year earnings comparisons began to appear less favorable and
anxiety intensified on Wall Street, your fund nevertheless posted
strong results. At net asset value, the fund's three classes of
shares all outpaced the Standard & Poor's 500(registered trademark)
Index, which gained 10.08% for the six months ended June 30, 1996
(10.76% for class A, 10.37% for class B, and 10.56% for class M).
Results at public offering price were 4.38% and 6.71% for class A
and class M shares, respectively, and 5.37% for class B shares,
reflecting a contingent deferred sales charge. Please see pages 9
and 10 for complete performance details.
* STRENGTH FROM ASTUTE STOCK SELECTIONS AMONG DIVERSE INDUSTRY
SECTORS
Among the three portions, or "sleeves," of your fund, small-
capitalization growth companies enjoyed the most pronounced rate of
earnings growth, followed by mid-capitalization and large-
capitalization growth companies. At period's end, small-cap stocks
made up 42% of the fund's portfolio, while mid-cap stocks and large-
cap stocks accounted for 40% and 18% of holdings, respectively.
Three domestic sectors -- technology, broadcasting, and retail --
made exceptional contributions to fund performance during the
period. In addition, several of your fund's foreign holdings proved
to be remarkable growth opportunities.
Technology. Stocks in the technology sector continued to represent
one of the largest portions of your fund's portfolio. We chose to
weight investments toward those companies that are at the forefront
of the infrastructure buildout of the Internet, of the evolution of
wireless communications, and of the continuing development of
computer networking systems. Our stock selections proved rewarding,
as many of these securities reported outstanding performance and
enhanced your fund's total return.
In the first half of the year, the stock value of U.S. Robotics, a
telecommunications equipment manufacturer, rose more than 80%. Even
more dramatically, the value of Rational Software stock soared over
130%. Rational Software designs and supports software development
products used in the defense, aerospace, transportation,
telecommunications, and financial services industries. In our
opinion, the company's object-oriented software paradigm gives it a
strong competitive advantage. Three other top-performing stocks from
this sector were among the portfolio's top 10 holdings, including
Cisco Systems, Parametric Technology, and Cascade Communications.
While these stocks, along with others discussed in this report, were
viewed favorably as of June 30, 1996, all portfolio holdings are
subject to review and adjustment in accordance with the fund's
investment strategy and may well vary in the future.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS*]
Computer software 11.9%
Business services 4.9%
Networking equipment 4.7%
Retail 4.4%
Restaurants 4.3%
*Based on net assets as of 6/30/96. Allocations will vary over time.
Beginning in the third quarter of 1995 until the end of June 1996,
we reduced the fund's holdings in semiconductor equipment companies.
Many semiconductor manufacturers added new plants following a
tremendous buildup in demand in 1995. Unfortunately, as overall
demand weakened, this increased -- yet underutilized -- capacity
further exacerbated the negative environment for the industry. While
most semiconductor companies reported disappointing earnings growth
earlier this year, we believe their stock prices may have corrected
to the point where they can again offer the fund renewed potential
for appreciation.
Broadcasting. In addition to technology, your fund capitalized on
strong growth from radio stocks. Clear Channel Communications
approached the midyear mark with its stock value up 89%. Infinity
Broadcasting also boosted fund performance with an impressive stock
price gain.
Retail. Selected retailers continued to demonstrate improved
earnings and high profitability in the first half of 1996. Among
them were Home Depot, Corporate Express, Viking Office Products, and
Starbucks. Italian-based Luxottica Group saw its stock price
increase in value by more than 70%. Luxottica manufacturers and
markets specialty eyeglass frames.
* FOREIGN STOCKS ENHANCE PERFORMANCE; HEALTH-CARE STOCKS DISAPPOINT
Foreign stocks, as a group, outperformed domestic stocks over the
period and the fund's active presence in foreign markets took full
advantage of this trend. Exceptional performers during the period
included Rentokil, an environmental services company in the United
Kingdom; Carrefour Supermarche, a large French retail chain
comparable to America's Wal-Mart; and Roche, a Swiss pharmaceutical
manufacturer.
In general, health-care stocks lagged throughout the first six
months of the year. Earnings of medical device companies were very
disappointing, as were those of health maintenance organizations
(HMOs). Fortunately, the fund was underweighted in the services side
of the health-care industry. Nursing homes and HMOs, very few of
which were in the portfolio, came under pressure because of rising
loss ratios. Because medical services companies offer a product with
a fixed price, escalating loss ratios had a negative impact on their
earnings margins. However, with their stock prices beaten down to
bargain levels and the traditional need for medical care ever
continuing, we may look for additional buying opportunities among
these securities in the coming months.
Top 10 Holdings (6/30/96)*
HFS, Inc.
Lodging
Thermo Electron Corp.
Energy-related
Cisco Systems
Networking Systems
HBO & Company
Hospital information services
Gucci Group NV-NY Reg. Shrs.
Apparel
Thermo Cardiosystems
Medical devices
Microsoft Corp.
Computer software
Parametric Technology Corp.
Computer Software
Corporate Express, Inc.
Business Services
Cascade Communications Corp.
Networking Equipment
*These holdings represent 12.2 % of the fund's net assets. Portfolio
holdings will vary over time.
By contrast, health-care companies on the technology side -- those
that provide information systems to hospitals in order to lower
costs and increase productivity -- have done very well for the fund
so far this year. Examples include HBO & Company and Shared Medical.
* LARGE-CAP SLEEVE: A BUFFER AGAINST VOLATILITY
For the most part, your fund invests in small to medium-sized
companies with a potential for high growth rates. However, we are
currently increasing the portfolio's weighting of "opportunity"
stocks to about 20% of net assets, up from about 15%. These stocks
of larger out-of-favor companies could benefit from changes we
believe may improve their earnings potential. We believe these
value-type stocks may improve their multiples and valuations in the
marketplace, providing excellent downside protection in an uncertain
equity market. Your fund's large-cap opportunity sleeve thus
provides a constant buffer against the volatility and speculation
that can flare up among small to medium-sized caps or stocks with
high price-to-earnings ratios.
* OUTLOOK INCLUDES A FOREIGN FOCUS AND CAUTIOUS OPTIMISM
For the remainder of fiscal 1996, we will continue to provide a
well-diversified, multi-sector portfolio of rapidly growing,
prudently managed companies. We feel confident that conditions will
remain positive for U.S. equities and that many high-quality small-
and mid-cap companies may experience earnings growth surpassing the
market averages. We believe opportunities for continued growth also
exist outside U.S. markets and we plan to augment the fund's foreign
holdings gradually.
It is important to note that, in our opinion, any correction
sustained by the popular market averages (the S&P 500 and the Dow
Jones Industrial Average) would be just that -- a normal self-
correction in the economy and not the start of a bear market.
Indeed, following a period of rapid runup, a consolidation phase
with a pullback of cash flows entering stock funds is in some
respects to be expected.
Looking forward, we are cautiously optimistic because we know that
good growth stocks tend to outperform the market even in a weak
economy. We do not believe that a recession is on the near-term
horizon. Regardless of what occurs in the months ahead, we will
maintain our focus on the long term, seeking attractive investments
in companies with dominant positions within their industries and
evaluating their performance over time.
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 6/30/96, there is no guarantee
the fund will continue to hold these securities in the future. This
fund invests a portion of its assets in small to medium-sized
companies. Such investments increase the risk of greater price
fluctuations.
Performance summary
Performance should always be considered in light of a fund's
investment strategy. Putnam Voyager Fund II 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 6/30/96
(most recent calendar quarter)
Class A Class B Class M
(inception date) (4/14/93) (10/2/95) (10/2/95)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------
6 months 10.76% 4.38% 10.37% 5.37% 10.56% 6.71%
- -----------------------------------------------------------------
1 year 37.06 29.20 -- -- -- --
- -----------------------------------------------------------------
3 years 96.66 85.37 -- -- -- --
Annual average 25.29 22.84 -- -- -- --
- -----------------------------------------------------------------
Life of class 105.21 93.38 21.86 16.86 22.24 18.00%
Annual average 25.10 22.81 -- -- -- --
- -----------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/96
Standard & Poor's Consumer
500 Index Price Index
- -----------------------------------------------------------------
6 months 10.08% 2.08%
- -----------------------------------------------------------------
1 year 25.93 2.75
- -----------------------------------------------------------------
3 years 60.94 8.52
Annual average 17.19 2.76
- -----------------------------------------------------------------
Life of class A 62.78 9.12
Annual average 16.39 2.76
- -----------------------------------------------------------------
Life of class B and M 17.22 2.28
Annual average -- --
- -----------------------------------------------------------------
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. 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%.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 6/30/96
Class A Class B Class M
- -----------------------------------------------------------------
Distributions (number) -- -- --
- -----------------------------------------------------------------
Total $0.00 $0.00 $0.00
- -----------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- -----------------------------------------------------------------
12/31/95 $14.40 $15.28 $14.37 $14.39 $14.91
- -----------------------------------------------------------------
6/30/96 15.95 16.92 15.86 15.91 16.49
- -----------------------------------------------------------------
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 500 Composite Stock Price Index is an index of common
stocks frequently used as a general measure of stock market performance.
Performance results assume reinvestment of all distributions and interest
payments and do not take into 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.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
International New Opportunities Fund
Investors Fund
Global Natural Resources Fund
New Opportunities Fund
OTC Emerging Growth Fund
International Growth Fund
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
Intermediate U.S. Government Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
STATE TAX-FREE INCOME FUNDS*
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio and Pennsylvania
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that
spread your money across a variety of stocks, bonds, and money market
investments to help maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS+
Putnam money market funds:
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts++
* Not available in all states.
+ Relative to above.
++ Not offered by Putnam Investments. Certificates of deposit offer a
fixed rate of return and may be insured up to certain limits by
federal/state agencies. Savings accounts may also be insured up
to certain limits. Please contact your financial advisor or Putnam at
1-800-225-1581 to obtain a prospectus for any Putnam fund. It contains
more complete information, including charges and expenses. Please read
it carefully before you invest or send money.
<TABLE>
<CAPTION>
Portfolio of investments owned
June 30, 1996 (Unaudited)
COMMON STOCKS (95.1%)*
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Advertising (0.6%)
- ------------------------------------------------------------------------------------------------------------
31,830 Omnicom Group $1,480,095
45,500 Outdoor Systems, Inc. + 1,603,875
------------
3,083,970
Aerospace and Defense (0.4%)
- ------------------------------------------------------------------------------------------------------------
6,600 Boeing Co. 575,025
4,700 Lockheed Martin Corp. 394,800
12,000 Northrop Grumman Corp. 817,500
------------
1,787,325
Alcoholic Beverages (0.3%)
- ------------------------------------------------------------------------------------------------------------
10,600 Anheuser-Busch Cos., Inc. 795,000
22,700 Seagram Co. 763,288
------------
1,558,288
Apparel (2.9%)
- ------------------------------------------------------------------------------------------------------------
60,825 Designer Holdings Ltd. + 1,619,466
85,801 Gucci Group + 5,534,165
27,000 Intimate Brands, Inc. 617,625
58,500 Loehmann's Holdings, Inc. + 1,345,500
79,972 St. John Knits, Inc. 3,568,751
13,100 Tommy Hilfiger Corp. + 702,488
18,000 Warnaco Group, Inc. 463,500
------------
13,851,495
Automotive (0.4%)
- ------------------------------------------------------------------------------------------------------------
29,300 Echlin, Inc. 1,109,738
18,800 Snap-On Inc. 890,650
------------
2,000,388
Banks (1.1%)
- ------------------------------------------------------------------------------------------------------------
12,100 Bank of Boston Corp. 598,950
20,700 BankAmerica Corp. 1,568,025
26,900 Citicorp 2,222,613
12,000 NationsBank Corp. 991,500
------------
5,381,088
Basic Industrial Products (0.2%)
- ------------------------------------------------------------------------------------------------------------
23,000 General Signal Corp. 871,125
Broadcasting (2.9%)
- ------------------------------------------------------------------------------------------------------------
20,994 Chancellor Broadcasting Corp. Class A + 656,063
40,614 Clear Channel Communications, Inc. + 3,345,578
4,590 Evergreen Media Corp. Class A + 196,223
36,191 Infinity Broadcasting Corp. Class A 1,085,730
15,900 Jacor Communications, Inc. + 490,913
34,343 LIN Television Corp. + 1,236,348
75,300 Metromedia International Group, Inc. + 1,007,138
59,100 Paxson Communications Corp. + 627,938
68,800 Providence Journal Co. Class A + 1,057,800
13,460 Renaissance Communications Corp. + 434,085
31,900 SFX Broadcasting, Inc. Class A + 1,244,100
32,378 Sinclair Broadcast Group, Inc. Class A + 1,408,443
20,366 Westwood One, Inc. + 310,582
19,600 Young Broadcasting Corp. Class A + 749,700
------------
13,850,641
Building Products (0.3%)
- ------------------------------------------------------------------------------------------------------------
30,000 Masco Corp. 907,500
14,000 Sherwin Williams Co. 651,000
------------
1,558,500
Business Services (4.9%)
- ------------------------------------------------------------------------------------------------------------
44,150 Accustaff, Inc. + 1,203,088
14,500 Affiliated Computer Services, Inc. Class A + 681,500
28,712 Corestaff, Inc. + 1,284,862
127,125 Corporate Express, Inc. + 5,085,000
58,570 Danka Business Systems PLC ADR (UK) 1,713,173
26,900 Dow Jones & Co., Inc. 1,123,075
106,015 Input/Output, Inc. + 3,432,236
6,700 Interim Services Inc. + 288,100
2,700 NOVA Corp./Georgia + 91,125
68,408 Paychex, Inc. 3,292,135
1,400 Pharmaceutical Product Develoment, Inc. + 46,900
571,645 Rentokil Group Ord. 3,629,087
71,756 Robert Half International, Inc. + 2,000,199
------------
23,870,480
Cable Television (0.2%)
- ------------------------------------------------------------------------------------------------------------
10,850 Tele-Comm Liberty Media Group, Inc. Class A + 287,525
44,600 Tele-Communications Class A + 808,375
------------
1,095,900
Chemicals (1%)
- ------------------------------------------------------------------------------------------------------------
12,400 Air Products & Chemicals, Inc. 716,100
12,000 Betz Laboratories, Inc. 526,500
15,900 Great Lakes Chemical Corp. 989,775
10,000 Loctite Corp. 465,000
7,750 Mallinckrodt Group, Inc. 301,281
10,400 Praxair, Inc. 439,400
17,500 Raychem Corp. 1,257,813
------------
4,695,869
Computer Services (2.3%)
- ------------------------------------------------------------------------------------------------------------
60,084 America Online, Inc. + 2,628,675
21,756 CBT Group PLC ADR (Ireland) + 1,006,215
25,200 CMG Information Services, Inc. + 680,400
44,610 First Data Corp. 3,552,071
91,500 IDT Corp. + 880,688
2,400 Metromail Corp. + 53,700
18,900 NETCOM On-Line Communication Services, Inc. + 510,300
2,200 Siebel Systems, Inc. + 67,650
19,400 Sterling Commerce, Inc. + 720,225
16,100 Transaction Systems Architects, Inc. Class A + 1,078,700
------------
11,178,624
Computer Software (11.9%)
- ------------------------------------------------------------------------------------------------------------
1,900 Arbor Software Corp. + 113,525
47,800 Aspect Development, Inc. + 1,218,900
138,856 Baan Co. + 4,721,104
50,014 Business Objects S.A., ADR (France) + 2,013,064
13,400 Cadence Design Systems, Inc. + 452,250
48,300 Citrix Systems, Inc. + 1,835,400
19,571 Clarify, Inc. + 968,765
64,460 Computer Associates Intl., Inc. 4,592,775
113,463 Electronic Arts, Inc. + 3,035,135
66,698 Electronics for Imaging, Inc. + 4,627,174
48,600 Epic Design Technology, Inc. + 1,227,150
42,448 Fulcrum Technologies, Inc. + 546,518
27,400 Geoworks + 972,700
40,100 GT Interactive Software Corp. + 671,675
26,800 Legato Systems, Inc. + 1,474,000
32,000 McAfee Associates, Inc. + 1,568,000
44,140 Microsoft Corp. + 5,302,318
52,709 Netscape Communications Corp. + 3,281,135
47,400 Objective Systems Integrators, Inc. + 1,730,100
117,976 Parametric Technology Corp. + 5,117,209
11,500 Pure Software, Inc. + 391,000
40,000 Raptor Systems, Inc. + 1,060,000
45,850 Rational Software Corp. + 2,464,438
18,000 Remedy Corp. + 1,314,000
16,700 Security Dynamics Technologies, Inc. + 1,373,575
46,360 Softkey International, Inc. + 877,943
11,178 Synopsys, Inc. + 444,326
8,600 Unison Software, Inc. + 217,150
43,600 Vantive Corp. + 1,460,600
35,000 Viasoft, Inc. + 2,261,875
------------
57,333,804
Computers (0.6%)
- ------------------------------------------------------------------------------------------------------------
148,100 EMC Corp. + 2,758,363
Consumer Non Durables (0.3%)
- ------------------------------------------------------------------------------------------------------------
19,308 Luxottica Group SPA ADS (Italy) 1,416,725
Consumer Products (0.5%)
- ------------------------------------------------------------------------------------------------------------
24,281 Kimberly-Clark Corp. 1,875,707
15,500 Lowe's Cos., Inc. 559,938
------------
2,435,645
Containers (0.1%)
- ------------------------------------------------------------------------------------------------------------
10,000 Temple Inland, Inc. 467,500
Cosmetics (0.9%)
- ------------------------------------------------------------------------------------------------------------
6,990 Douglas Holding AG (Germany) 278,590
142,410 Thermolase Corp. + 3,880,673
------------
4,159,263
Drugs (0.4%)
- ------------------------------------------------------------------------------------------------------------
1,750 Sandoz AG (Switzerland) 1,999,082
Education (0.8%)
- ------------------------------------------------------------------------------------------------------------
141,000 Apollo Group, Inc. Class A 3,948,000
Electronics and Electrical Equipment (1.9%)
- ------------------------------------------------------------------------------------------------------------
34,300 ADT Ltd. + 647,413
19,700 CHS Electronics, Inc. + 265,950
7,950 General Electric Co. 687,675
11,500 Honeywell, Inc. 626,750
38,200 Lernout & Hauspie Speech Products N.V. (Belgium) + 859,500
119,560 Thermo Instrument Systems, Inc. 3,855,810
148,100 ThermoQuest Corp. + 2,054,888
------------
8,997,986
Energy-Related (1.6%)
- ------------------------------------------------------------------------------------------------------------
184,105 Thermo Electron Corp. + 7,663,371
Entertainment (0.8%)
- ------------------------------------------------------------------------------------------------------------
62,522 Disney (Walt) Productions, Inc. 3,931,071
Environmental Control (0.3%)
- ------------------------------------------------------------------------------------------------------------
27,208 Memtec Ltd. ADR (Australia) 999,894
12,600 WMX Technologies, Inc. 412,650
------------
1,412,544
Ethical Pharmaceuticals (0.2%)
- ------------------------------------------------------------------------------------------------------------
24,000 Allergan Inc. 942,000
Finance (1.5%)
- ------------------------------------------------------------------------------------------------------------
71,081 American Express Co. 3,171,990
95,513 Mercury Finance Co. 1,217,791
4,000 Morgan (J.P.) & Co., Inc. 338,500
76,354 TCF Financial Corp. 2,538,771
------------
7,267,052
Financial Services (0.2%)
- ------------------------------------------------------------------------------------------------------------
1,100 First USA Paymentech, Inc. + 44,000
28,000 Olympic Financial Ltd. + 644,000
------------
688,000
Food and Beverages (0.4%)
- ------------------------------------------------------------------------------------------------------------
40,500 Archer Daniels Midland Co. 774,563
18,000 IBP, Inc. 497,250
10,000 Sara Lee Corp. 323,750
20,700 Whitman Corporation 499,388
------------
2,094,951
Forest Products (0.1%)
- ------------------------------------------------------------------------------------------------------------
16,600 Fort Howard Corp. + 329,925
Funeral/Cemetery Services (0.2%)
- ------------------------------------------------------------------------------------------------------------
32,600 Loewen Group, Inc. 986,150
Gaming (1.5%)
- ------------------------------------------------------------------------------------------------------------
17,400 Anchor Gaming 1,048,350
15,000 Bally Entertainment Corp. + 412,500
103,410 Circus Circus Enterprises, Inc. + 4,239,810
25,000 Mirage Resorts, Inc. + 1,350,000
------------
7,050,660
Gas Pipelines (0.4%)
- ------------------------------------------------------------------------------------------------------------
32,100 Enron Corp. 1,312,088
19,000 Sonat, Inc. 855,000
------------
2,167,088
Gas Utilities (0.3%)
- ------------------------------------------------------------------------------------------------------------
29,000 Columbia Gas System, Inc. 1,511,625
HMOs (0.4%)
- ------------------------------------------------------------------------------------------------------------
48,320 Healthsource, Inc. + 845,600
20,900 Oxford Health Plans Inc. + 859,513
------------
1,705,113
Health Care (0.5%)
- ------------------------------------------------------------------------------------------------------------
66,205 Lincare Holdings, Inc. 2,598,546
Health Care Information Systems (1.1%)
- ------------------------------------------------------------------------------------------------------------
81,900 HBO & Co. 5,548,725
Health Care Services (2.4%)
- ------------------------------------------------------------------------------------------------------------
20,000 ABR Information Services, Inc. + 1,005,000
29,646 Apria Healthcare Group, Inc. + 930,143
98,396 Healthsouth Rehabilitation Corp. 3,542,256
22,400 IDEXX Laboratories, Inc. + 879,200
30,100 Medaphis Corp. + 1,196,475
19,878 Owen Healthcare, Inc. + 275,807
16,956 Renal Treatment Centers, Inc. + 487,485
19,400 Total Renal Care Holdings, Inc. + 819,650
41,629 Vencor, Inc. + 1,269,685
35,416 Vivra, Inc. + 1,164,301
------------
11,570,002
Home Building (0.3%)
- ------------------------------------------------------------------------------------------------------------
81,425 Clayton Homes, Inc. 1,628,500
Hospital Management (1.1%)
- ------------------------------------------------------------------------------------------------------------
154,208 Health Management Assoc., Inc. (New) + 3,122,702
100,805 Physician Reliance Network, Inc. + 2,242,911
------------
5,365,613
Household Products (0.7%)
- ------------------------------------------------------------------------------------------------------------
77,650 Blyth Industries, Inc. + 3,523,369
Insurance (0.8%)
- ------------------------------------------------------------------------------------------------------------
27,900 American General Corp. 1,014,863
7,000 American International Group, Inc. 690,375
41,004 Amerin Corp. + 1,096,857
5,000 AON Corp. 253,750
19,250 HCC Insurance Holdings, Inc. + 433,125
26,700 USF&G Corp. 437,213
------------
3,926,183
Insurance and Finance (0.9%)
- ------------------------------------------------------------------------------------------------------------
154,486 MBNA Corp. 4,402,851
Lodging (2.6%)
- ------------------------------------------------------------------------------------------------------------
25,974 Doubletree Corp. + 922,077
17,600 Extended Stay America, Inc. + 554,400
125,426 HFS, Inc. + 8,779,820
2,000 Interstate Hotels Co. + 44,500
22,700 Prime Hospitality Corp. + 374,550
18,300 Promus Hotel Corp. + 542,138
61,278 Renaissance Hotel Group N.V. + 1,302,158
3,300 Studio Plus Hotels, Inc. + 108,900
------------
12,628,543
Medical Equipment and Supplies (2.6%)
- ------------------------------------------------------------------------------------------------------------
25,700 American HomePatient, Inc. + 1,137,225
19,387 Boston Scientific Corp. + 872,415
40,100 Endosonics Corp. + 716,788
48,700 Johnson & Johnson 2,410,650
80,765 Lifecore Biomedical, Inc. + 1,716,256
35,225 Medtronic, Inc. 1,972,600
25,300 Neuromedical Systems, Inc. + 379,500
109,876 Stryker Corp. 2,499,679
21,300 U.S. Surgical Corp. 660,300
------------
12,365,413
Medical Management Services (1.5%)
- ------------------------------------------------------------------------------------------------------------
14,100 OccuSystems, Inc. + 526,988
1,800 Orthodontic Centers of America, Inc. + 47,700
41,615 Pediatrix Medical Group, Inc. + 2,018,328
16,000 Phymatrix, Inc. + 372,000
90,350 Phycor, Inc. + 3,433,300
3,800 Physicians Resouce Group, Inc. + 126,825
26,400 Renal Care Group, Inc. + 851,400
------------
7,376,541
Medical Supplies and Devices (3.1%)
- ------------------------------------------------------------------------------------------------------------
66,525 Guidant Corp. 3,276,356
40,900 Perclose, Inc. + 920,250
36,900 Shared Medical Systems Corp. 2,370,825
40,645 St. Jude Medical Inc. + 1,361,608
118,682 Thermo Cardiosystems, Inc. + 5,311,020
14,350 Thermotrex Corp. + 706,738
44,305 Trex Medical Corp. + 836,257
------------
14,783,054
Metals and Mining (0.2%)
- ------------------------------------------------------------------------------------------------------------
29,600 Freeport-McMoRan Copper & Gold Co., Inc. Class A 884,300
Networking Equipment (4.7%)
- ------------------------------------------------------------------------------------------------------------
79,598 Ascend Communications, Inc. + 4,477,388
42,549 Cabletron Systems, Inc. + 2,919,925
73,605 Cascade Communications Corp. + 5,005,140
101,828 Cisco Systems, Inc. + 5,766,011
35,556 Shiva Corp. + 2,844,480
18,417 U.S. Robotics Corp. + 1,574,654
------------
22,587,598
Nursing Homes (0.8%)
- ------------------------------------------------------------------------------------------------------------
62,450 American Medical Response + 2,201,363
19,467 Genesis Health Ventures, Inc. + 610,777
42,096 Health Care & Retirement Corp. + 999,780
------------
3,811,920
Office Equipment (1.3%)
- ------------------------------------------------------------------------------------------------------------
42,700 BT Office Products Co. + 763,263
20,100 U S Office Products Co. + 844,200
147,890 Viking Office Products, Inc. + 4,640,049
------------
6,247,512
Oil Services (0%)
- ------------------------------------------------------------------------------------------------------------
6,000 Baker Hughes Inc. 197,250
Oil and Gas (1%)
- ------------------------------------------------------------------------------------------------------------
6,144 British Petroleum PLC ADR (United Kingdom) 656,640
14,875 Chevron, Inc. 877,625
43,900 Geoscience Corp. + 614,600
13,000 Halliburton Co. 721,500
10,000 Schlumberger Ltd. 842,500
34,200 Total Corp. ADR (France) 1,269,675
------------
4,982,540
Paging (0.5%)
- ------------------------------------------------------------------------------------------------------------
96,467 Paging Network, Inc. 2,315,208
Paper (0.2%)
- ------------------------------------------------------------------------------------------------------------
22,000 Weyerhaeuser Co. 935,000
Pharmaceuticals and Biotechnology (3.5%)
- ------------------------------------------------------------------------------------------------------------
48,630 Astra AB (Sweden) + 2,149,109
77,400 Biochem Pharmaceutical, Inc. + 2,902,500
26,706 Chiron Corp. + 2,617,188
55,891 CytoTherapeutics, Inc. + 621,787
20,200 Elan Corp. PLC ADR (Ireland) + 1,153,925
51,090 Gilead Sciences, Inc. + 1,290,023
8,000 Lilly (Eli) & Co. 520,000
35,771 Martek Biosciences Corp. + 1,046,302
26,156 Neurogen Corp. + 673,517
13,200 Parexel International Corp. + 636,900
38,442 Pharmacia & Upjohn, Inc. 1,705,864
14,000 Smithkline Beecham PLC ADR (United Kingdom) 761,250
24,428 Vical, Inc. + 390,848
74,000 Virus Research Institute, Inc. + 675,250
------------
17,144,463
Photography (0.6%)
- ------------------------------------------------------------------------------------------------------------
15,900 Eastman Kodak Co. 1,236,225
41,400 Polaroid Corp. 1,888,875
------------
3,125,100
Publishing (0.8%)
- ------------------------------------------------------------------------------------------------------------
12,200 Belo (A.H.) Corp. Ser. A 454,450
44,400 Deluxe Corp. 1,576,200
13,900 Harcourt General, Inc. 695,000
15,700 Tribune Co. 1,140,213
------------
3,865,863
Railroads (0.5%)
- ------------------------------------------------------------------------------------------------------------
13,000 Burlington Northern Santa Fe Corp. 1,051,375
48,198 Wisconsin Central Transportation Corp. + 1,566,435
------------
2,617,810
Restaurants (4.3%)
- ------------------------------------------------------------------------------------------------------------
58,164 Apple South, Inc. 1,555,887
66,178 Applebee's International, Inc. 2,142,513
85,600 Boston Chicken, Inc. + 2,782,000
49,558 J.D. Wetherspoon PLC (United Kingdom) 773,085
152,620 Landry's Seafood Restaurants, Inc. + 3,777,345
69,528 Lone Star Steakhouse & Saloon + 2,624,682
71,276 Outback Steakhouse, Inc. 2,457,908
55,800 PizzaExpress PLC (United Kingdom) 316,137
19,400 Rainforest Cafe, Inc. + 970,000
113,440 Starbucks Corp.. 3,204,680
------------
20,604,237
Retail (4.4%)
- ------------------------------------------------------------------------------------------------------------
44,900 AutoZone Inc. + 1,560,275
32,666 Bed Bath & Beyond, Inc. + 873,816
29,000 Boise Cascade Office Products + 1,004,125
51,600 CompUSA, Inc. + 1,760,850
8,300 Dayton Hudson Corporation 855,938
30,400 Federated Department Stores Inc. + 1,037,400
9,800 Global DirectMail Corp. + 387,100
69,645 Home Depot, Inc. (The) 3,760,830
15,000 Limited, Inc. 322,500
14,500 May Department Stores Co. 634,375
21,100 MSC Industrial Direct Co., Inc. Class A + 680,475
25,000 Neiman-Marcus Group, Inc. + 675,000
66,609 Office Depot, Inc. 1,357,158
64,444 Officemax, Inc. + 1,538,601
22,320 Payless Shoesource, Inc. + 708,660
6,300 Payment Svcs., Inc. + 180,338
10,000 Penney (J.C.) Co., Inc. 525,000
28,700 Petco Animal Supplies, Inc. + 825,125
17,050 Price/Costco, Inc. + 368,706
40,500 Revco D.S., Inc. + 966,938
40,000 Staples, Inc. + 780,000
18,000 TJX Cos., Inc. (The) 607,500
------------
21,410,710
Semiconductors (1.9%)
- ------------------------------------------------------------------------------------------------------------
30,337 Analog Devices Inc. + 773,594
12,821 Atmel Corp. + 386,233
42,500 Intel Corp. 3,121,094
62,713 Linear Technology Corp. 1,881,390
70,297 Maxim Integrated Products Inc. + 1,919,987
57,300 National Semiconductor Corp. + 888,150
------------
8,970,448
Specialty Consumer Products (0.4%)
- ------------------------------------------------------------------------------------------------------------
18,328 Fastenal Co. 797,268
31,209 Gemstar International Group Ltd. + 936,270
------------
1,733,538
Steel (0.1%)
- ------------------------------------------------------------------------------------------------------------
7,000 Nucor Corp. 354,375
Supermarkets (0.4%)
- ------------------------------------------------------------------------------------------------------------
3,368 Carrefour Supermarche (France) 1,886,630
Telecommunication (2.0%)
- ------------------------------------------------------------------------------------------------------------
22,800 Airtouch Communications, Inc. + 644,100
40,200 Heartland Wireless Communications, Inc. + 954,750
50,000 MFS Communications, Inc. + 1,881,250
149,500 NEXTEL Communications, Inc. Class A + 2,849,844
84,100 Omnipoint Corp. + 2,191,856
60,600 Wireless One, Inc. + 1,090,800
------------
9,612,600
Telecommunication Equipment (3.3%)
- ------------------------------------------------------------------------------------------------------------
30,364 Adtran, Inc. + 2,152,049
3,300 Asia Satellite Telecommunications Holdings Ltd. ADR (Hong Kong) + 98,175
800 Boston Communications Group, Inc. + 13,200
20,150 Brooks Fiber Properties, Inc. + 664,950
53,000 DSC Communications Corp. + 1,596,625
45,100 Glenayre Technologies, Inc. + 2,255,000
42,253 P-Com, Inc. + 1,330,970
30,414 Pairgain Technologies, Inc. + 1,885,668
3,800 Premiere Technologies, Inc. + 119,700
59,966 Premisys Communications, Inc. + 3,657,911
29,026 Tellabs, Inc. + 1,941,114
1,300 Verilink Corp, + 33,150
------------
15,748,512
Telephone Services (2.9%)
- ------------------------------------------------------------------------------------------------------------
24,300 GTE Corp. 1,087,425
22,700 Intermedia Communications, Inc. + 732,075
27,800 LCI International, Inc. + 872,225
6,900 Lucent Technologies, Inc. + 261,338
47,775 MCI Communications Corp. 1,224,234
85,000 MIDCOM Communications, Inc. + 1,221,875
55,500 McLeod, Inc. Class A + 1,332,000
34,400 Octel Communications Corp. + 679,400
31,500 Sprint Corp. 1,323,000
39,600 Tel-Save Holdings, Inc. + 841,500
55,100 US Long Distance Corp. + 1,956,050
45,971 WorldCom, Inc. + 2,545,644
------------
14,076,766
Telephone Utilities (0.2%)
- ------------------------------------------------------------------------------------------------------------
21,000 SBC Communications, Inc. 1,034,250
Tobacco (0.1%)
- ------------------------------------------------------------------------------------------------------------
10,400 UST, Inc. 356,200
Trucking (0.1%)
- ------------------------------------------------------------------------------------------------------------
17,150 Ryder System, Inc. 482,344
Wireless Communications (0.6%)
- ------------------------------------------------------------------------------------------------------------
5,833 360 Communications Co. + 139,992
38,100 Intercel, Inc. + 762,000
28,400 Preferred Networks, Inc. + 244,950
83,000 Western Wireless Corp. Class A + 1,774,110
------------
$2,921,052
- ------------------------------------------------------------------------------------------------------------
Total Common Stocks (cost $411,054,784) $459,673,177
- ------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS (0.2%) * (cost $882,011)
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
5,070 Fresenius AG pfd. (Germany) $916,295
SHORT-TERM INVESTMENTS (4.7%) * (cost $22,787,202)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$22,777,000 Interest in $434,902,000 joint repurchase agreement dated June 28,
1996 with Goldman, Sachs & Co. due July 1, 1996 with respect to
various U.S. Treasury obligations-maturity value of $22,787,202
for an effective yield of 5.375% $22,787,202
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $434,723,997)*** $483,376,674
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $483,712,251.
+ Non-income-producing security.
*** The aggregate identified cost on a tax basis is
$435,907,799, resulting in gross unrealized appreciation and
depreciation of $65,618,366 and $17,219,865, respectively,
or net unrealized appreciation of $48,398,501.
ADR or ADS after the name of a foreign holding
stands for American Depository Receipts or American Depository
Shares, respectively, representing ownership of foreign
securities on deposit with a domestic custodian bank.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
June 30, 1996 (Unaudited)
<S> <C>
Assets
- --------------------------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $ 434,723,997) (Note 1) $483,376,674
- --------------------------------------------------------------------------------------------------------------------
Cash 74,484
- --------------------------------------------------------------------------------------------------------------------
Dividends, interest and other receivables 146,151
- --------------------------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 6,933,088
- --------------------------------------------------------------------------------------------------------------------
Receivable for securities sold 4,161,653
- --------------------------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 4,272
- --------------------------------------------------------------------------------------------------------------------
Total assets 494,696,322
Liabilities
- --------------------------------------------------------------------------------------------------------------------
Payable for securities purchased 9,013,310
- --------------------------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 454,009
- --------------------------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 705,584
- --------------------------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,258
- --------------------------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 335,197
- --------------------------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 301,947
- --------------------------------------------------------------------------------------------------------------------
Payable for organizational expenses (Note 1) 17,230
- --------------------------------------------------------------------------------------------------------------------
Other accrued expenses 154,536
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 10,984,071
- --------------------------------------------------------------------------------------------------------------------
Net assets $483,712,251
Represented by
- --------------------------------------------------------------------------------------------------------------------
Paid-in-capital (Note 4) $443,494,780
- --------------------------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (1,639,075)
- --------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (6,796,144)
- --------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 48,652,690
- --------------------------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $483,712,251
Computation of net asset value and offering price
- --------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share ($239,197,157 divided by 14,992,124 shares) $15.95
- --------------------------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $15.95)* $16.92
- --------------------------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share ($221,066,158 divided by 13,939,910 shares)** $15.86
- --------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share ($23,448,936 divided by 1,474,258 shares) $15.91
- --------------------------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $15.91)* $16.49
- --------------------------------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended June 30, 1996 (Unaudited)
<S> <C>
Investment income:
Dividends (net of foreign tax of $12,776) $684,691
- -------------------------------------------------------------------------------------
Interest 436,076
- -------------------------------------------------------------------------------------
Total investment income 1,120,767
- -------------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,103,987
- -------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 549,607
- -------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 6,051
- -------------------------------------------------------------------------------------
Reports to shareholders 27,808
- -------------------------------------------------------------------------------------
Auditing 18,170
- -------------------------------------------------------------------------------------
Postage 37,213
- -------------------------------------------------------------------------------------
Registration fees 113,442
- -------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 198,316
- -------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 714,482
- -------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 52,720
- -------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 3,431
- -------------------------------------------------------------------------------------
Administrative services (Note 2) 4,630
- -------------------------------------------------------------------------------------
Other 53,207
- -------------------------------------------------------------------------------------
Total expenses 2,883,064
- -------------------------------------------------------------------------------------
Expense reduction (Note 2) (123,236)
- -------------------------------------------------------------------------------------
Net expenses 2,759,828
- -------------------------------------------------------------------------------------
Net investment loss (1,639,061)
- -------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (6,502,276)
- -------------------------------------------------------------------------------------
Net realized loss on forward currency translation. (Note 1) (413)
- -------------------------------------------------------------------------------------
Net unrealized appreciation on investments during the period 38,038,027
- -------------------------------------------------------------------------------------
Net gain on investments 31,535,338
- -------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $29,896,277
- -------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
June 30 December 31
1996* 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------------
Net investment loss ($1,639,061) ($121,381)
- ---------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (6,502,689) 466,880
- ---------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 38,038,027 10,341,405
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 29,896,277 10,686,904
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders
- ---------------------------------------------------------------------------------------------------------------------
From net realized gain on investments:
- ---------------------------------------------------------------------------------------------------------------------
Class A (338) (218,962)
- ---------------------------------------------------------------------------------------------------------------------
Class B (149,415)
- ---------------------------------------------------------------------------------------------------------------------
Class M -- (13,756)
- ---------------------------------------------------------------------------------------------------------------------
In excess of net investment income:
- ---------------------------------------------------------------------------------------------------------------------
Class A -- (167,955)
- ---------------------------------------------------------------------------------------------------------------------
Class B -- (114,610)
- ---------------------------------------------------------------------------------------------------------------------
Class M -- (10,552)
- ---------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 297,197,850 143,417,234
- ---------------------------------------------------------------------------------------------------------------------
Total increase in net assets 327,093,789 153,428,888
- ---------------------------------------------------------------------------------------------------------------------
Net asset
- ---------------------------------------------------------------------------------------------------------------------
Beginning of period 156,618,462 3,189,574
- ---------------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of net investment income of
$1,639,075 and $14, respectively) $483,712,251 $156,618,462
- ---------------------------------------------------------------------------------------------------------------------
*Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
For the period
October 2, 1995
Six months (commencement Six months
ended of operations) to ended
June 30 December 31 June 30
- ----------------------------------------------------------------------------------------------------------------------
1996* 1995 1996*
- ----------------------------------------------------------------------------------------------------------------------
Class M Class B
<S> <C> <C> <C>
Net asset value, beginning of period $14.39 $13.08 $14.37
- ----------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.05) -- (.07)
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1.57 1.38 1.56
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.52 1.38 1.49
- ----------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income -- -- --
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (.04) --
- ----------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- (.03) --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions -- (.07) --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.91 $14.39 $15.86
- ----------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(c) 10.56 (d) 10.57 (d) 10.37 (d)
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $23,449 $6,115 $221,066
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(e) .98 (d) .47 (d) 1.11 (d)
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to average net assets (%) (.58)(d) (.21)(d) (.71)(d)
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 29.19 (d) 49.81 29.19 (d)
- ----------------------------------------------------------------------------------------------------------------------
Average commission rate paid (f) .047 .047
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (continued)
(For a share outstanding throughout the period)
For the period
October 2, 1995
(commencement Six months
of operations) to ended Year ended
December 31 June 30 December 31
- --------------------------------------------------------------------------------------------------------------------
1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------
Class B
<S> <C> <C> <C>
Net asset value, beginning of period $13.08 $14.40 $9.75
- --------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.04)(a)(b) (.04) (.01)(b)
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1.40 1.59 4.88
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.36 1.55 4.87
- --------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------
From net investment income -- -- --
- --------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.04) -- (.12)
- --------------------------------------------------------------------------------------------------------------------
In excess of net investment income (.03) -- (.10)
- --------------------------------------------------------------------------------------------------------------------
Total distributions (.07) -- (.22)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.37 $15.95 $14.40
- --------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(c) 10.41 (d) 10.76 (d) 50.14
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $66,978 $239,197 $83,526
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(e) .54 (d) .73 1.31 (b)
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to average net assets (%) (.29)(d) (.33) (.28)(b)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 49.81 29.19 (d) 49.81
- --------------------------------------------------------------------------------------------------------------------
Average commission rate paid (f) .047
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial Highlights (continued)
(For a share outstanding throughout the period)
For the period
April 14, 1993
(commencement
Year ended of operations) to
December 31 December 31
- --------------------------------------------------------------------------------------------------------------
1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $10.29 $8.50
- --------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02)(b) -- (b)
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments .05 1.95
- --------------------------------------------------------------------------------------------------------------
Total from investment operations .03 1.95
- --------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------
From net investment income (.01) --
- --------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.56) (.16)
- --------------------------------------------------------------------------------------------------------------
In excess of net investment income -- --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.57) (.16)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.75 $10.29
- --------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(c) 0.34 22.98 (d)
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $3,190 $2,895
- --------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(e) .92 (b) .72 (d) (b)
- --------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to average net assets (%) (.18)(b) (.04)(d) (b)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 101.94 76.02 (c)
- --------------------------------------------------------------------------------------------------------------
Average commission rate paid (f)
- --------------------------------------------------------------------------------------------------------------
* Unaudited
(a) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(b) Reflects an expense limitation which expired on December 31, 1995.
As a result of such limitation, expenses for the fund for the period
ended December 31, 1993 and the year ended December 31, 1994,
reflect a per share reduction of approximately $0.11 and $0.16,
respectively. Expenses for the period ended December 31, 1995
for class A, B and M shares reflect a per share reduction of $0.04,
$0.04 and $0.03, respectively.
(c) Total investment return assumes dividend reinvestment
and does not reflect the effect of sales charges.
(d) Not annualized.
(e) The ratio of expenses to average net assets for the periods ended December 31,
1995, and thereafter, includes amounts paid through expense offset
and brokerage service arrangements.
Prior period ratios exclude these amounts (Note 2).
(f) The fund is required to disclose average commission rate paid per share for fiscal
periods beginning on or after September 1, 1995.
</TABLE>
Notes to financial statements
June 30, 1996 (Unaudited)
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 seeks long-term growth of capital by investing in primarily a
portfolio of common stocks.
The fund offers class A, class B and class M 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 approximately eight years, do not
pay a front-end sales charge, but pay a higher ongoing distribution fee
than class A shares and are subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class
M shares are sold with a maximum front-end sales charge of 3.50% and pay
an ongoing distribution fee that is lower than class B shares and higher
than class A shares.
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 the fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently 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, except that certain U.S. government obligations are stated at the
mean between the bid and asked prices. Short-term investments having
remaining maturities of 60 days or less are stated at amortized cost,
which approximates 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 Investment Management,
Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. 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) 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 transactions represent net exchange gains or
losses on closed forward currency contracts, disposition of foreign
currencies and the difference between the amount of investment income
and foreign withholding taxes recorded on the fund's books and the U.S.
dollar equivalent amounts actually received or paid. Net unrealized
gains and losses on foreign currency transactions arise from changes in
the value of open forward currency contracts and assets and liabilities
other than investments at the period end, resulting from changes in the
exchange rate.
E) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis
and dividend income is recorded on the ex-dividend date, except that
certain dividends from foreign securities are recorded as soon as the
fund is informed of the ex-dividend date.
F) Federal income 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 of securities held and excise tax on income and capital
gains.
G) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid annually. The amount and character of income and gains to be
distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
H) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities
and Exchange Commission and with various state and the initial public
offering of its shares were $17,221. These expenses are being amortized
on a straight-line basis over a five-year period. The fund will
reimburse Putnam Management for the payment of the expenses.
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% thereafter, subject to
reduction in any year to the extent that expenses (exclusive of
distribution fees, brokerage, interest and taxes) of the fund exceed
2.5% of the first $30 million of average net assets, 2.0% of the next
$70 million and 1.5% of any amount over $100 million and by the amount
of 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.
Trustees of the fund receive an annual Trustees fee of $630 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 invested in the fund or in other Putnam funds until distribution in
accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended June 30, 1996 fund expenses were reduced by
$123,236 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.
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%, 0.75% and 0.75% of the average
net assets attributable to class A, class B and class M shares,
respectively.
For the six months ended June 30, 1996, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $693,102 and $40,737
from the sale of class A and class M shares, respectively and received
$85,337 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 six months ended June 30, 1996,
Putnam Mutual Funds Corp., acting as underwriter received $5 on class A
redemptions.
Note 3
Purchases and sales of securities
During the six months ended June 30, 1996, purchases and sales of
investment securities other than short-term investments aggregated
$368,741,088 and $88,644,990, respectively. 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 June 30, 1996, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
June 30, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 14,207,076 $217,146,240
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 12 167
- ----------------------------------------------------
14,207,088 217,146,407
Shares
repurchased (5,014,879) (77,082,604)
- ----------------------------------------------------
Net increase 9,192,209 $140,063,803
- ----------------------------------------------------
Year ended
December 31, 1995
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 6,559,419 $89,096,620
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 27,847 377,316
- ----------------------------------------------------
6,587,266 89,473,936
Shares
repurchased (1,114,390) (15,228,902)
- ----------------------------------------------------
Net increase 5,472,876 $74,245,034
- ----------------------------------------------------
Six months ended
June 30, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 9,758,473 $148,411,194
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 234 3,179
- ----------------------------------------------------
9,758,707 148,414,373
Shares
repurchased (479,269) (7,349,937)
- ----------------------------------------------------
Net increase 9,279,438 $141,064,436
- ----------------------------------------------------
From October 1, 1995
(commencement of
operations) to
December 31, 1995
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 4,792,353 $65,229,944
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 18,762 254,787
- ----------------------------------------------------
4,811,115 65,484,731
Shares
repurchased (150,643) (2,067,751)
- ----------------------------------------------------
Net increase 4,660,472 $63,416,980
- ----------------------------------------------------
Six months ended
June 30, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 1,206,357 $18,484,179
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 42 570
- ----------------------------------------------------
1,206,399 18,484,749
Shares
repurchased (157,141) (2,415,138)
- ----------------------------------------------------
Net increase 1,049,258 $16,069,611
- ----------------------------------------------------
From October 1, 1995
(commencement of
operations) to
December 31, 1995
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 444,206 $6,019,954
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,787 24,308
- ----------------------------------------------------
445,993 6,044,262
Shares
repurchased (20,993) (289,042)
- ----------------------------------------------------
Net increase 425,000 $5,755,220
- ----------------------------------------------------
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investor Services has won the DALBAR Quality Tested Service Seal
for the past six years. In 1995, over 146,000 tests of 56 shareholder
service components demonstrated that Putnam outperformed the industry
standard in every category.
* HELP YOUR INVESTMENT GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market fund or from your checking or savings
account.*
* SWITCH FUNDS EASILY
You can move money from one account to another with the same class of
shares without a service charge. (This privilege is subject to change or
termination.)
* ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares any business day at
the then-current net asset value, which may be more or less than the
original cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a
helpful Putnam representative.
To make an additional investment in this or any other Putnam fund,
contact your financial advisor or call our toll-free number: 1-800-225-
1581.
* Regular investing of course, does not guarantee a profit or protect
against a loss in a declining market.
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
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
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 II. 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
- -------------------
26304-377/2AR/20A 8/96
