Putnam
Voyager
Fund II
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
6-30-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The flight of the world's equity investors to the safety of U.S. Treasury
securities and large-capitalization stocks had a negative impact on the
stocks of small and midsize companies that was still being felt as Putnam
Voyager Fund II began its fiscal year last summer. As the period
approached its close on June 30, 1999, investors appeared to have overcome
much of their aversion to risk and began turning away from the
large-capitalization stocks that have dominated market performance in
recent years.
This shift in investor mood is not the last we can expect to see in the
coming months; volatility is likely to remain part of the investment
equation for the foreseeable future. As they explain in the following
report, your fund's managers are confident that their combination of
effective stock selection and diversification should serve the fund well
as it embarks upon a new fiscal year.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
August 18, 1999
Report from the Fund Managers
Charles H. Swanberg
Roland W. Gillis
Jeffrey R. Lindsey
After more than a year of narrow market performance dominated by the
stocks of large growth-oriented companies, the market broadened in the
first half of 1999, improving returns for some of 1998's most neglected
sectors. Effective stock selection and ample diversification helped Putnam
Voyager Fund II navigate this rapidly changing market and produce a
double-digit gain for the fund's shareholders. In fact, the fund's class A
shares at NAV outpaced the Russell MidCap Growth Index, its unmanaged
benchmark, which returned 14.19% during the period. The fund's return is
especially gratifying coming on the heels of a 23% gain in 1998.
Total return for 6 months ended 6/30/99
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- ----------------------------------------------------------------------------
15.64% 9.01% 15.23% 10.23% 15.37% 14.37% 15.35% 11.32%
- ----------------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods begins on page 6.
* OPPORTUNITY IN BROADENING MARKET
Investors had a lot to worry about in 1998. Volatility in overseas
markets, combined with a deep recession in Asia, convinced many that the
United States would be the next victim in the global financial crisis.
U.S. manufacturing suffered and banks reported tighter lending practices
in the fall, prompting the Federal Reserve Board to cut interest rates on
three separate occasions. Sensing vulnerability in the market, investors
flocked to the biggest and least economically sensitive names.
Consequently, although the S&P 500 gained close to 30% in 1998, 60% of the
7,200 stocks traded in the United States dropped in value.
By the spring of 1999, the tense market environment had been neutralized
by a series of favorable developments. Growth in Japan and other parts of
Asia stabilized, and U.S. manufacturing staged a comeback. After growing
at a rate of 6.0% in the fourth quarter of 1998, the U.S. economy advanced
an additional 4.3% in the first quarter of 1999. In addition, corporate
profits increased 4.3% in the first three months of this year after
falling 1.7% in the fourth quarter. The gain was the largest recorded
since the first quarter of 1995.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Computer software 9.6%
Broadcasting 9.3%
Retail 9.1%
Computer services 6.2%
Telecommunications 5.7%
Footnote reads:
*Based on net assets as of 6/30/99. Holdings will vary over time.
The return of stability to global markets and the strength of corporate
profits at home coaxed investors into a number of previously overlooked
sectors. In fact, some of the best-performing stocks during the second
quarter of 1999 were those that had been hardest hit in 1998. These
included oil-related stocks and cyclical stocks whose fortunes are tied
closely to those of the broader economy. Similarly many of last year's top
performers gave back their gains in 1999. Internet stocks tumbled from
their winter highs, and many multinational growth companies suffered
declining stock prices after reporting disappointing earnings in the
spring.
* FLEXIBLE STRATEGY PREVAILS
Your fund seeks to provide long-term capital appreciation by investing in
rapidly growing companies of all sizes across a wide range of industries.
Companies included in the portfolio typically have growth rates of 26% or
more projected for the next 3 to 5 years in addition to successful and
experienced management.
The fund's strong performance during the semiannual period was primarily
the result of our stock selection in the technology, media, and specialty
retail sectors. Although many Internet-related stocks suffered setbacks in
the last three months of the period, the gains for the full six-month
period remained strong. Nevertheless, the fund's Internet strategy is
broad, extending beyond service providers to semiconductor makers and
companies building infrastructure to facilitate the flow of data around
the world.
"Whether or not the market continues to broaden away from last year's
large-company bias, your fund's ability to take advantage of opportunities
in a number of areas should serve it well for the remainder of the year."
- -- Charles H. Swanberg, manager Putnam Voyager Fund II
Global Crossing Ltd. is a good example. This Bermuda-based company is
helping expand the flow of data among Europe, the United States, and Asia
through a network of undersea digital fiber-optic cables. During the
semiannual period, Global Crossing's stock gained 89%. Similarly
Metromedia Fiber Network, Inc. is providing high-bandwidth, fiber-optic
communications networks to corporate and government customers.
Metromedia's stock returned an astounding 114% during the period. While
these holdings, along with others discussed in this report, were viewed
favorably at the end of the period, all are subject to review and
adjustment in accordance with the fund's investment strategy and may vary
in the future.
The growth of the Internet and the proliferation of wireless
communications have produced some unexpected beneficiaries. In their
struggle to increase market share, purveyors of new technologies
increasingly have turned to radio and television to market their new
products and services. Even billboard companies have profited from the
boon in high-tech advertising. Media and advertising-related holdings that
aided fund performance during the period include Univision, Hispanic
Broadcasting, and Outdoor Systems, Inc., up 81%, 54%, and 22%,
respectively. Operating under new and less restrictive regulatory
guidelines, media and broadcasting companies have also benefited from
aggressive industry consolidation, as companies continue to buy their way
into greater market share.
A disciplined approach to a flexible strategy
Although Putnam Voyager Fund II employs a flexible investment strategy to
pursue its objectives, its management style is highly disciplined. Each of
the fund's portfolio managers -- Charles Swanberg, Roland Gillis, and Jeff
Lindsey -- manages a distinct portion of the fund's assets. Generally 40%
of the fund's assets is managed by Roland, who focuses on the smallest and
fastest-growing companies in the fund's investment universe, those under $1
billion in market capitalization and with growth rates in excess of 20%.
Chuck manages an additional 40% of the fund's assets with an emphasis on
companies between $1 billion and $5 billion in size and growing at a rate
of more than 15%. Jeff handles the remaining assets in the portfolio by
focusing on the largest companies in the fund's universe, those with market
capitalizations in excess of $5 billion and growing at a rate of at least
12%. By organizing the portfolio's assets in this manner, the fund's managers
are able to seek opportunity in a wide segment of the marketplace: from small,
rapidly growing companies in the early stages of their growth cycles to large
companies that while still growing, entail less investment risk than their
smaller counterparts.
In retail, the fund's strategy has been to focus on specialty chains.
Although consumer spending was strong throughout the period, consumers
have shown a preference for stores offering both volume and discounted
prices. Costco is just such a store. The largest wholesale club operator
in the United States, Costco Companies has 300 membership warehouse stores
serving 27 million members. Its stores offer discount prices on over 4,000
products ranging from alcoholic beverages and computer hardware and
software to pharmaceuticals and tires. For the 6-month period, Costco's
stock returned 11%. Other standout performers in this area include Ames
and Kohl's Corporation, which returned 69% and 25%, respectively.
With any portfolio of investments, there are bound to be disappointments
from time to time. Among those that detracted from performance during the
period were stocks in the health-care field, which were negatively
affected by legislative proposals aimed at lowering the costs charged by
pharmaceutical companies and medical providers. The list includes PSS
World Medical Systems, Vertex Pharmaceuticals, and Health Management
Associates.
* MARKET BACKDROP REMAINS POSITIVE
After months of speculation about the future direction of interest rates,
investors got their answer on June 30, when the Federal Reserve Board
voted to raise short-term rates by one quarter of one percentage point,
citing a tight labor market among other inflationary pressures. However,
the Fed reassured investors by suggesting it might not raise rates again
in the near term. Although we expect volatility in certain segments of the
market, we are optimistic about the overall economic backdrop, which
continues to be characterized by low inflation, relatively lower interest
rates, and strong growth. Whether or not the market continues to broaden
away from last year's large-company bias, your fund's ability to take
advantage of opportunities in a number of areas should serve it well for
the remainder of the year.
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 6/30/99, there is no guarantee the fund will
continue to hold these securities in the future. The fund invests a
portion of its assets in small to midsize companies. Such investments
increase the risk of greater price fluctuation.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
AT&T Corp. -- Liberty Media
Broadcasting
CBS Corp.
Broadcasting
Clear Channel Communications, Inc.
Broadcasting
The Home Depot, Inc.
Retail
Microsoft Corp.
Computer software
Costco Companies, Inc.
Retail
VeriSign, Inc.
Computer services
Kohl's Corp.
Retail
Intuit, Inc.
Computer software
Linear Technology Corp.
Semiconductors
Footnote reads:
These holdings represent 15.8% of the fund's net assets as of 6/30/99.
Portfolio holdings will vary over time.
Performance summary
This section provides information about your fund's performance, which should
always be considered in light of its investment strategy. Putnam Voyager Fund
II is designed for investors aggressively seeking long-term growth of capital
primarily through growth stocks.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 6/30/99
Class A Class B Class C Class M
(inception dates) (4/14/93) (10/2/95) (2/1/99) (10/2/95)
NAV POP NAV CDSC NAV CDSC NAV POP
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months 15.64% 9.01% 15.23% 10.23% 15.37% 14.37% 15.35% 11.32%
- ---------------------------------------------------------------------------------------
1 year 22.30 20.52 21.42 16.42 21.52 20.52 21.72 17.45
- ---------------------------------------------------------------------------------------
5 years 211.83 193.78 200.44 198.44 200.81 200.81 204.38 193.86
Annual average 25.54 24.05 24.61 24.44 24.64 24.64 24.93 24.06
- ---------------------------------------------------------------------------------------
Life of fund 251.80 231.52 235.89 235.89 236.17 236.17 241.19 229.33
Annual average 22.45 21.29 21.54 21.54 21.56 21.56 21.85 21.16
- ----------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/99
Russell MidCap Consumer
Growth Index price index
- ----------------------------------------------------------------------------
6 months 14.19% 1.22%
- ----------------------------------------------------------------------------
1 year 20.31 1.96
- ----------------------------------------------------------------------------
5 years 174.15 12.30
Annual average 22.35 2.35
- ----------------------------------------------------------------------------
Life of fund 191.85 15.42
Annual average 18.97 2.35
- ----------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 5.75% and
3.50% respectively. Class B share returns for the 6 months, 1-year,
5-years and life-of-fund periods reflect the applicable contingent
deferred sales charge (CDSC), which is 5% in the first year, declines to
1% in the sixth year, and is eliminated thereafter. Returns shown for
class B and class M shares for periods prior to their inception are
derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and in the case of class B and class M shares the
higher operating expenses applicable to such shares. For class C shares,
returns for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect both the
CDSC currently applicable to class C shares, which is 1% for the first
year and is eliminated thereafter, and the higher operating expenses
applicable to class C shares. All returns assume reinvestment of
distributions at NAV. Investment return and principal value will fluctuate
so that an investor's shares when redeemed may be worth more or less than
their original cost.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 6/30/99
Class A Class B Class C Class M
- ------------------------------------------------------------------------------
Distributions (number)* -- -- -- --
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- ------------------------------------------------------------------------------
12/31/98 $22.70 $24.08 $22.13 $ -- $22.34 $23.15
- ------------------------------------------------------------------------------
2/1/99+ -- -- -- 23.95 -- --
- ------------------------------------------------------------------------------
6/30/99 26.25 27.85 25.50 26.20 25.77 26.70
- ------------------------------------------------------------------------------
* The fund did not make any distributions during this period.
+ Inception date of class C shares.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are subject
to a contingent deferred sales charge only if the shares are redeemed
during the first year.
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 5.75% maximum 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 or C shares and assumes redemption at the end of
the period. Your fund's class B 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. The CDSC for class C shares is 1% for one year after
purchase.
Comparative benchmarks
Russell MidCap Growth Index is an unmanaged list of common stocks that is
frequently used as a general measure of stock market performance. The
index assumes reinvestment of all distributions and interest payments and
does not take in account brokerage fees or taxes. Securities in the fund
do not match those in the 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.
Welcome to www.putnaminv.com
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economic outlooks from Putnam.
VISIT PUTNAM'S SITE ON THE WORLD WIDE WEB FOR:
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New features will be added to the site regularly. So be sure
to bookmark us at http://www.putnaminv.com
A guide to the financial statements
These sections of the report constitute the fund's financial
statements.
The fund's portfolio lists all the fund's investments and their values as of
the last day of the reporting period. Holdings are organized by asset type and
industry sector, country, or state to show areas of concentration and
diversification.
Statement of assets and liabilities shows how the fund's net assets and share
price is determined. All investment and non-investment assets are added
together. Any unpaid expenses and other liabilities are subtracted from this
total. The result is divided by the number of shares to determine the net
asset value per share, which is calculated separately for each class of
shares. (For funds with preferred shares, the amount subtracted from total
assets includes the net assets allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for the
reporting period. This is determined by adding up all the fund's earnings --
from dividends and interest income - and subtracting its operating expenses.
This statement also lists any net gain or loss the fund realized on the sales
of its holdings and - for holdings that remain in the portfolio - any change
in unrealized gains or losses over the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of the
fund's shares. It lists distributions and their sources (net investment income
or realized capital gains) over the current reporting period and the most
recent fiscal year-end. The distributions listed here may not match the
sources listed in the Statement of operations because the distributions are
determined on a tax basis and may be paid in a different period from the one
in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also includes
the current reporting period. For open-ended funds, a separate table is
provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
June 30, 1999 (Unaudited)
COMMON STOCKS (96.9%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Advertising (3.1%)
- --------------------------------------------------------------------------------------------------------------------------
107,000 AdForce, Inc. (NON) $ 2,514,500
83,650 Catalina Marketing Corp. (NON) 7,695,800
172,244 Lamar Advertising Co. (NON) 7,051,239
189,000 Omnicom Group, Inc. 15,120,000
496,456 Outdoor Systems, Inc. (NON) 18,120,644
58,700 TMP Worldwide Inc. (NON) 3,727,450
112,150 Young & Rubicam, Inc. 5,095,815
--------------
59,325,448
Airlines (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
134,000 COMAIR Holdings, Inc. 2,788,875
336,650 Ryanair Holdings, PLC ADR (Ireland) (NON) 17,842,450
--------------
20,631,325
Apparel (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
236,500 David's Bridal, Inc. (NON) 3,680,531
142,950 Gap, Inc. (The) 7,201,106
129,150 Nike, Inc. 8,176,809
--------------
19,058,446
Automotive (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
73,500 O'Reilly Automotive, Inc. (NON) 3,702,563
Banks (2.5%)
- --------------------------------------------------------------------------------------------------------------------------
278,300 Fifth Third Bancorp 18,524,344
487,850 Firstar Corp. 13,659,800
61,800 National Commerce Bancorporation 1,351,875
79,600 Northern Trust Corp. 7,721,200
96,915 Washington Mutual, Inc. 3,428,368
51,900 Zions Bancorp 3,295,650
--------------
47,981,237
Basic Industrial Products (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
52,000 Illinois Tool Works, Inc. 4,264,000
78,650 Sidel S.A. (France) 9,592,748
40,900 W W Grainger 2,200,931
--------------
16,057,679
Broadcasting (9.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,357,116 AT&T Corp. -- Liberty Media (NON) 49,874,013
718,700 CBS Corp. (NON) 31,218,531
283,600 Chancellor Media Corp. (NON) 15,633,450
320,000 Citadel Communications Corp. (NON) 11,580,000
430,600 Clear Channel Communications, Inc. (NON) 29,684,488
133,300 Entercom Communications Corp. (NON) 5,698,575
70,000 Hispanic Broadcasting Corp. (NON) 5,311,250
502,100 Infinity Broadcasting Corp. Class A (NON) 14,937,475
83,000 Radio One, Inc. (NON) 3,859,500
133,500 Sinclair Broadcast Group, Inc. Class A (NON) 2,186,063
73,500 Univision Communications Inc. Class A (NON) 4,851,000
29,466 WestWood One, Inc. (NON) 1,051,568
--------------
175,885,913
Building and Construction (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
75,000 Insituform Technologies, Inc. (NON) 1,621,875
Business Equipment and Services (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
40,000 AnswerThink Consulting Group, Inc. (NON) 3,660,000
281,930 Cintas Corp. 18,942,172
103,200 Interpublic Group Cos. Inc. 8,939,700
120,950 Metzler Group, Inc. (NON) 3,341,244
220,239 Serco Group PLC (United Kingdom) (NON) 5,036,734
--------------
39,919,850
Cable Television (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
35,700 Adelphia Communications Corp. (NON) 2,271,413
30,900 Century Communications Corp. (NON) 1,421,400
200,700 Comcast Corp. Class A 7,714,406
27,900 MediaOne Group Inc. (NON) 2,075,063
148,700 USA Networks, Inc. (NON) 5,966,588
--------------
19,448,870
Computer Equipment (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
176,500 EMC Corp. (NON) 9,707,500
120,000 PMC -- Sierra, Inc. (NON) 7,072,500
200,300 Sun Microsystems, Inc. (NON) 13,795,663
--------------
30,575,663
Computer Services (6.2%)
- --------------------------------------------------------------------------------------------------------------------------
59,300 America Online, Inc. (NON) 6,552,650
11,400 Ariba, Inc. (NON) 1,108,650
99,999 Aware, Inc. (NON) 4,612,499
59,300 At Home Corp. Series A 3,198,642
12,100 BackWeb Technologies Ltd. (Israel) (NON) 331,238
5,000 Brocade Communications Systems (NON) 482,188
190,674 Capita Group PLC (United Kingdom) 1,969,788
25,000 CMG Information Services, Inc. (NON) 2,851,563
62,400 CNET, Inc. (NON) 3,595,800
181,975 Comverse Technology, Inc. (NON) 13,739,113
148,050 Covad Communications Group 144A (NON) 7,892,916
102,800 Critical Path, Inc. (NON) 5,686,125
90,000 E(a)Trade Group, Inc. (NON) 3,594,375
600 GoodNoise Corp. (NON) 12,375
114,850 Multex.com Inc. (NON) 3,000,456
200 Network Solutions, Inc. (NON) 15,825
74,000 RealNetworks, Inc. (NON) 5,096,750
4,000 Scient Corp. (NON) 190,250
11,400 StarMedia Network, Inc. (NON) 731,025
128,050 Sterling Commerce, Inc. (NON) 4,673,825
135,100 Sykes Enterprises, Inc. (NON) 4,508,963
175,150 USWeb Corp. (NON) 3,886,141
47,900 Verio Inc. (NON) 3,329,050
304,800 VeriSign, Inc. (NON) 26,289,000
126,200 Viant Corp. (NON) 4,417,000
145,300 Whittman-Hart, Inc. (NON) 4,613,275
--------------
116,379,482
Computer Software (9.6%)
- --------------------------------------------------------------------------------------------------------------------------
110,200 Affiliated Computer Services, Inc. Class A (NON) 5,578,875
343,900 Beyond.com Corp. (NON) 9,865,631
35,350 BMC Software, Inc. (NON) 1,908,900
73,000 BroadVision, Inc. (NON) 5,383,750
200,000 CBT Group PLC ADR (Ireland) (NON) 3,300,000
154,436 Electronic Arts, Inc. (NON) 8,378,153
148,300 I2 Technologies, Inc. (NON) 6,376,900
283,750 Intuit, Inc. (NON) 25,572,969
104,200 ISS Group, Inc. (NON) 3,933,550
94,000 Macromedia, Inc. (NON) 3,313,500
314,950 Microsoft Corp. (NON) 28,404,553
58,228 Net Perceptions, Inc. (NON) 1,270,098
206,200 Oracle Corp. (NON) 7,655,175
345,650 Parametric Technology Corp. (NON) 4,795,894
9,700 Phone.com, Inc. (NON) 543,200
307,750 Rational Software Corp. (NON) 10,136,516
153,200 Research in Motion Ltd. (Canada) (NON) 3,102,300
100,000 Security First Technologies Corp. (NON) 4,512,500
5,700 Silknet Software, Inc. (NON) 230,850
47,600 Softbank Corp. (Japan) 9,645,936
224,100 Synopsys, Inc. (NON) 12,367,519
330,200 TSI Interntional Software, Ltd. (NON) 9,369,425
95,100 VERITAS Software Corp. (NON) 9,028,556
86,000 Verity, Inc. (NON) 4,660,125
94,390 Visual Networks, Inc. (NON) 3,020,480
--------------
182,355,355
Conglomerates (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
172,900 Tyco International Ltd. 16,382,275
81,200 United Technologies Corp. 5,821,025
--------------
22,203,300
Consumer Non Durables (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
42,800 Colgate-Palmolive Co. 4,226,500
263,200 Luxottica Group S.P.A. ADR (Italy) 4,096,050
--------------
8,322,550
Consumer Products (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
56,200 Kimberly-Clark Corp. 3,203,400
Consumer Services (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
114,500 Central Parking Corp. 3,921,625
168,600 SportsLine USA, Inc. (NON) 6,048,525
--------------
9,970,150
Cosmetics (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
151,800 Estee Lauder Cos. Class A 7,608,975
Electronic Components (2.4%)
- --------------------------------------------------------------------------------------------------------------------------
119,000 Applied Micro Circuits Corp. (NON) 9,787,750
96,000 ASM Lithography Holding N.V. (Netherlands) (NON) 5,700,000
505,200 Metromedia Fiber Network, Inc. Class A (NON) 18,155,625
40,000 Optical Coating Laboratory, Inc. 3,345,000
89,122 Sanmina Corp. (NON) 6,762,132
91,200 Sipex Corp. (NON) 1,869,600
--------------
45,620,107
Electronics and Electrical Equipment (5.1%)
- --------------------------------------------------------------------------------------------------------------------------
145,000 Flextronics International Ltd. (NON) 8,047,500
194,800 General Electric Co. 22,012,400
201,200 Harmonic Lightwaves, Inc. (NON) 11,556,425
236,900 Jabil Circuit, Inc. (NON) 10,690,113
200,200 KCI Konecranes International PLC (Finland) 6,898,731
154,100 Lernout & Hauspie Speech Products N.V. (Belgium) (NON) 5,460,919
111,500 Motorola, Inc. 10,564,625
89,800 Solectron Corp. (NON) 5,988,538
80,360 Teradyne, Inc. (NON) 5,765,830
28,394 Uniphase Corp. (NON) 4,713,404
104,000 Waters Corp. (NON) 5,525,000
--------------
97,223,485
Energy-Related (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
134,713 Thermo Electron Corp. (NON) 2,702,680
Entertainment (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
115,000 Harrah's Entertainment, Inc. (NON) 2,530,000
90,100 SFX Entertainment, Inc. Class A (NON) 5,766,400
183,700 Time Warner, Inc. 13,501,950
218,300 Viacom, Inc. Class B (NON) 9,605,200
--------------
31,403,550
Financial Services (4.4%)
- --------------------------------------------------------------------------------------------------------------------------
22,650 American Express Co. 2,947,331
168,200 Citigroup, Inc. 7,989,500
345,750 Concord EFS, Inc. (NON) 14,629,547
10,000 Goldman Sachs Group, Inc. (The) (NON) 722,500
44,600 Investment Technology Group, Inc. 1,443,925
44,050 Knight/Trimark Group, Inc. (NON) 2,687,050
21,900 Marschollek, Lautenschlaeger und Partner AG (Germany) (NON) 10,308,275
168,250 MBNA Corp. 5,152,656
56,600 Morgan Stanley, Dean Witter, Discover and Co. 5,801,500
27,700 Providian Financial Corp. 2,589,950
141,400 Schwab (Charles) Corp. 15,536,325
258,429 TCF Financial Corp. 7,203,708
75,000 TD Waterhouse Group, Inc. (NON) 1,879,688
75,200 The Equitable Cos., Inc. 5,038,400
--------------
83,930,355
Food and Beverages (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
92,200 Itoen, Ltd. (Japan) 6,174,618
135,047 Tootsie Roll Industries, Inc. 5,216,190
80,000 Whole Foods Market, Inc. (NON) 3,845,000
--------------
15,235,808
Health Care Information Systems (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
175,000 Eclipsys Corp. (NON) 4,189,063
194,362 Medquist, Inc. (NON) 8,503,338
--------------
12,692,401
Health Care Services (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
500 CareMatrix Corp. (NON) 6,219
54,000 Healtheon Corp. (NON) 4,158,000
192,400 Lincare Holdings, Inc. (NON) 4,810,000
69,900 TLC The Laser Center Inc. (Canada) (NON) 3,355,200
172,700 United Healthcare Corp. 10,815,338
--------------
23,144,757
Hospital Management (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
44,000 Advance Paradigm, Inc. (NON) 2,684,000
99,300 Health Management Assoc., Inc. (NON) 1,117,125
--------------
3,801,125
Insurance (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
230,700 AFLAC, Inc. 11,044,763
65,000 American International Group, Inc. 7,609,063
56,150 Progressive Corp. (The) 8,141,750
--------------
26,795,576
Lodging (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
100,000 Extended Stay America, Inc. (NON) 1,200,000
348,950 Florida Panthers Holdings, Inc. (NON) 3,729,403
--------------
4,929,403
Medical Management Services (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
79,000 Sunrise Assisted Living, Inc. (NON) 2,755,125
Medical Supplies and Devices (2.5%)
- --------------------------------------------------------------------------------------------------------------------------
129,100 Biomet, Inc. 5,131,725
65,600 Johnson & Johnson 6,428,800
219,700 Medtronic, Inc. 17,109,138
300,000 PSS World Medical, Inc. (NON) 3,356,250
131,274 Stryker Corp. 7,892,849
200,000 Sybron International Corp. (NON) 5,512,500
145,199 Thermo Cardiosystems, Inc. (NON) 1,579,039
--------------
47,010,301
Networking Equipment (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
130,500 CIENA Corp. (NON) 3,939,469
217,700 Cisco Systems, Inc. (NON) 14,028,044
259,100 Concur Technologies, Inc. (NON) 7,287,188
26,700 Emulex Corp. (NON) 2,968,706
139,700 Entrust Technologies Inc. (NON) 4,645,025
79,800 E-Tek Dynamics, Inc. (NON) 3,795,488
80,000 Exodus Communications, Inc. (NON) 9,595,000
10,500 International Network Services (NON) 423,938
1,115 Juniper Networks, Inc. (NON) 166,135
104,000 Network Appliance, Inc. (NON) 5,811,000
5,100 NorthPoint Communications Group, Inc. (NON) 186,150
4,900 Reback Networks Inc. (NON) 615,256
--------------
53,461,399
Oil and Gas (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
67,200 Enron Corp. 5,493,600
Packaging and Containers (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
148,800 Sealed Air Corp. (NON) 9,653,400
Pharmaceuticals and Biotechnology (3.1%)
- --------------------------------------------------------------------------------------------------------------------------
157,100 American Home Products Corp. 9,033,250
113,000 Amgen Inc. (NON) 6,878,875
56,900 Forest Laboratories, Inc. (NON) 2,631,625
135,000 Medicis Pharmaceutical Corp. Class A (NON) 3,425,625
73,100 QLT PhotoTherapeutics Inc. (Canada) (NON) 4,020,500
264,200 Schering-Plough Corp. 14,002,600
81,700 Sepracor, Inc. (NON) 6,638,125
71,672 Transkaryotic Therapies, Inc. (Malaysia) (NON) 2,365,176
120,000 Vertex Pharmaceuticals, Inc. (NON) 2,895,000
94,700 Warner-Lambert Co. 6,569,813
--------------
58,460,589
Publishing (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
126,256 Wolters Kluwer N.V. (Netherlands) 5,041,616
Recreation (--%)
- --------------------------------------------------------------------------------------------------------------------------
18,400 International Speedway Corp. Class A 874,000
Restaurants (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
249,773 J.D. Wetherspoon PLC (United Kingdom) 1,162,129
606,620 PizzaExpress PLC (United Kingdom) 8,706,526
279,596 Starbucks Corp. (NON) 10,502,325
--------------
20,370,980
Retail (9.1%)
- --------------------------------------------------------------------------------------------------------------------------
19,300 Amazon.com, Inc. (NON) 2,414,913
198,400 Ames Department Stores, Inc. (NON) 9,052,000
140,950 Bed Bath & Beyond, Inc. (NON) 5,426,575
151,900 Consolidated Stores Corp. (NON) 4,101,300
348,600 Costco Companies, Inc. (NON) 27,909,788
155,500 CVS Corp. 7,891,625
235,401 Dollar Tree Stores, Inc. (NON) 10,357,644
458,500 Home Depot, Inc. (The) 29,544,594
334,650 Kohls Corp. (NON) 25,830,791
154,090 Michaels Stores, Inc. (NON) 4,719,006
133,100 Next Plc (United Kingdom) (NON) 1,617,475
127,800 Safeway, Inc. (NON) 6,326,100
341,200 TJX Cos., Inc. (The) 11,366,225
112,300 Tuesday Morning Corp. (NON) 2,863,650
297,600 Wal-Mart Stores, Inc. 14,359,200
219,956 Williams-Sonoma, Inc. (NON) 7,657,218
--------------
171,438,104
Semiconductors (5.2%)
- --------------------------------------------------------------------------------------------------------------------------
237,600 Altera Corp. (NON) 8,746,650
19,800 American Xtal Technology, Inc. (NON) 471,488
26,100 Hi/Fn, Inc. (NON) 1,986,863
131,600 KLA Tencor Corp. (NON) 8,537,550
373,800 Linear Technology Corp. 25,138,050
374,600 Maxim Integrated Products Inc. (NON) 24,910,900
68,000 QLogic Corp. (NON) 8,976,000
36,800 SDL, Inc. (NON) 1,879,100
68,300 Texas Instruments, Inc. 9,903,500
139,000 Xilinx, Inc. (NON) 7,957,750
--------------
98,507,851
Specialty Consumer Products (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
25,050 Fastenal Co. 1,313,559
Telecommunications (5.7%)
- --------------------------------------------------------------------------------------------------------------------------
100,400 ADC Telecommunications, Inc. (NON) 4,574,476
134,100 Allegiance Telecom, Inc. (NON) 7,358,738
46,800 Copper Mountain Networks, Inc. (NON) 3,615,300
61,405 Global Crossing Ltd. (NON) 2,617,388
190,100 Global TeleSystems Group, Inc. (NON) 15,398,100
136,800 MCI WorldCom, Inc. (NON) 11,773,350
123,800 Nokia Corp. ADR (Finland) (NON) 11,335,438
66,300 NTL Inc. (NON) 5,714,231
140,850 Oy Nokia AB Class A (Finland) 12,385,292
110,600 QUALCOMM, Inc. (NON) 15,871,100
232,538 Qwest Communications International, Inc. (NON) 7,688,288
1,800 Rhythms Netconnections, Inc. (NON) 105,075
259,700 Tekelec (NON) 3,165,094
90,500 Tellabs, Inc. (NON) 6,114,406
--------------
107,716,276
Telephone Services (4.1%)
- --------------------------------------------------------------------------------------------------------------------------
123,000 Amdocs Ltd. (NON) 2,798,250
62,000 Frontier Corp. 3,658,000
106,974 Intermedia Communications, Inc. (NON) 3,209,220
372,749 Lucent Technologies, Inc. 25,137,244
155,000 McLeod, Inc. Class A (NON) 8,525,000
15,000 Network Plus Corp. (NON) 313,125
126,406 NEXTLINK Communications, Inc. Class A (NON) 9,401,446
43,800 RSL Communications, Ltd. Class A (NON) 845,888
168,000 Sprint Corp. 8,872,500
156,200 Sprint (PCS Group) (NON) 8,922,925
99,000 WinStar Communications. Inc. (NON) 4,826,250
--------------
76,509,848
Transportation (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
141,250 C.H. Robinson Worldwide, Inc. 5,190,938
203,000 FDX Corp. (NON) 11,012,750
--------------
16,203,688
Wireless Communications (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
345,900 American Tower Corp. Class A (NON) 8,301,600
298,900 Pinnacle Holdings Inc. (NON) 7,323,050
92,100 RF Micro Devices, Inc. (NON) 6,872,963
32,350 Vodafone AirTouch PLC (United Kingdom) 6,372,950
--------------
28,870,563
--------------
Total Common Stocks (cost $1,244,006,689) $1,835,412,227
PREFERRED STOCKS (0.4%) (a) (cost $2,473,376)
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------------
15,200 Marschollek, Lautenschlaeger und Partner AG DEM
3.05 pfd. (Germany) $ 7,264,673
SHORT-TERM INVESTMENTS (3.4%) (a) (cost $64,704,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$64,704,000 Interest in $500,000,000 joint repurchase agreement
dated June 30, 1999 with Goldman Sachs & Co. due
July 1, 1999 with respect to various U.S. Treasury
obligations -- maturity value of $64,712,717 for an
effective yield of 4.85% $ 64,704,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,311,184,065) (b) $1,907,380,900
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $1,893,462,789.
(b) The aggregate identified cost on a tax basis is $1,314,520,040, resulting in gross unrealized appreciation and
depreciation of $631,986,966 and $39,126,106, respectively, or net unrealized appreciation of $592,860,860.
(NON) Non-income-producing security.
144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign
securities on deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
June 30, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,311,184,065) (Note 1) $1,907,380,900
- -----------------------------------------------------------------------------------------------
Cash 4,338,812
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 344,467
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 3,896,623
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 15,790,480
- -----------------------------------------------------------------------------------------------
Total assets 1,931,751,282
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 31,774,224
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 2,194,222
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 2,612,562
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 192,163
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 21,555
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 5,114
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,372,996
- -----------------------------------------------------------------------------------------------
Other accrued expenses 115,657
- -----------------------------------------------------------------------------------------------
Total liabilities 38,288,493
- -----------------------------------------------------------------------------------------------
Net assets $1,893,462,789
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,190,385,955
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (8,730,443)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments
and foreign currency transactions (Note 1) 115,675,612
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 596,131,665
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $1,893,462,789
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($919,976,977 divided by 35,042,835 shares) $26.25
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $26.25)* $27.85
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($846,784,184 divided by 33,208,291 shares)** $25.50
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($25,769,559 divided by 983,587 shares)** $26.20
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($100,932,069 divided by 3,916,136 shares) $25.77
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $25.77)* $26.70
- -----------------------------------------------------------------------------------------------
* 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, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax $78,810) $2,096,777
- -----------------------------------------------------------------------------------------------
Interest 665,798
- -----------------------------------------------------------------------------------------------
Total investment income 2,762,575
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 4,993,007
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,129,569
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 12,670
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 10,088
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 1,010,222
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 3,722,651
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 44,395
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 331,563
- -----------------------------------------------------------------------------------------------
Reports to shareholders 46,070
- -----------------------------------------------------------------------------------------------
Registration fees 27,988
- -----------------------------------------------------------------------------------------------
Auditing 38,169
- -----------------------------------------------------------------------------------------------
Legal 7,575
- -----------------------------------------------------------------------------------------------
Postage 101,454
- -----------------------------------------------------------------------------------------------
Other 111,341
- -----------------------------------------------------------------------------------------------
Total expenses 11,586,762
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (96,273)
- -----------------------------------------------------------------------------------------------
Net expenses 11,490,489
- -----------------------------------------------------------------------------------------------
Net investment loss (8,727,914)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 105,728,477
- -----------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (1,700)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities
in foreign currencies during the period (66,976)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 149,997,803
- -----------------------------------------------------------------------------------------------
Net gain on investments 255,657,604
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $246,929,690
- -----------------------------------------------------------------------------------------------
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
1999* 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (8,727,914) $ (12,142,472)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 105,726,777 58,089,525
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 149,930,827 227,630,502
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 246,929,690 273,577,555
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A -- (26,466,797)
- ---------------------------------------------------------------------------------------------------------------
Class B -- (25,149,952)
- ---------------------------------------------------------------------------------------------------------------
Class M -- (3,023,078)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 109,666,527 229,497,911
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 356,596,217 448,435,639
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 1,536,866,572 1,088,430,933
- ---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss of $8,730,443 and $2,529, respectively) $1,893,462,789 $1,536,866,572
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share June 30
operating performance (Unaudited) Year ended December 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $22.70 $19.11 $15.51 $14.40 $9.75 $10.29
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (c) (.08) (.12) (.10) (.11) (.01)(b) (.02)(b)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.63 4.54 3.73 1.22 4.88 .05
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment activities 3.55 4.42 3.63 1.11 4.87 .03
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- -- (.10) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.83) (.03) -- (.12) (.56)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.83) (.03) -- (.22) (.57)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $26.25 $22.70 $19.11 $15.51 $14.40 $9.75
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 15.64* 23.52 23.42 7.71 50.14 0.34
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $919,977 $753,319 $532,287 $348,261 $83,526 $3,190
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (d) .51* 1.12 1.22 1.44 1.31 (b) .92(b)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.34)* (.59) (.58) (.69) (.28)(b) (.18)(b)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 50.10* 91.61 73.73 68.95 49.81 101.94
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Reflects an expense limitation which expired on December 31, 1995. As a result of such limitation, expenses of the fund for
the year ended December 31, 1994, reflect a per share reduction of approximately $0.16. 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) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) The ratio of expenses to average net assets for the period ended December 31, 1995 and for the years ended thereafter, include
amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. (Note 2)
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share June 30 October 2, 1995+
operating performance (Unaudited) Year ended December 31 to Dec. 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $22.13 $18.78 $15.36 $14.37 $13.08
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (c) (.17) (.27) (.22) (.22) (.04)(b)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.54 4.45 3.67 1.21 1.40
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment activities 3.37 4.18 3.45 .99 1.36
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.83) (.03) -- (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.83) (.03) -- (.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $25.50 $22.13 $18.78 $15.36 $14.37
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 15.23* 22.66 22.48 6.89 10.41*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $846,784 $699,040 $496,501 $328,268 $66,978
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (d) .89* 1.87 1.97 2.19 .54(b)*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.72)* (1.34) (1.33) (1.45) (.29)(b)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 50.10* 91.61 73.73 68.95 49.81
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Reflects an expense limitation which expired on December 31, 1995. As a result of such limitation, expenses of the fund for
the year ended December 31, 1994, reflect a per share reduction of approximately $0.16. 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) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) The ratio of expenses to average net assets for the period ended December 31, 1995 and for the years ended thereafter, include
amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. (Note 2)
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
February 1, 1999+
Per-share to June 30
operating performance (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $23.95
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (c) (.11)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.36
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment activities 2.25
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $26.20
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 9.39*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $25,770
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (d) .74*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.57)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 50.10*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Reflects an expense limitation which expired on December 31, 1995. As a result of such limitation, expenses of the fund for
the year ended December 31, 1994, reflect a per share reduction of approximately $0.16. 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) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) The ratio of expenses to average net assets for the period ended December 31, 1995 and for the years ended thereafter, include
amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. (Note 2)
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share June 30 October 2, 1995+
operating performance (Unaudited) Year ended December 31 to Dec. 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $22.34 $18.91 $15.42 $14.39 $13.08
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (c) (.14) (.22) (.18) (.19) --(b)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.57 4.48 3.70 1.22 1.38
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment activities 3.43 4.26 3.52 1.03 1.38
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.83) (.03) -- (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.83) (.03) -- (.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $25.77 $22.34 $18.91 $15.42 $14.39
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 15.35* 22.92 22.84 7.16 10.57*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $100,932 $84,507 $59,643 $37,325 $6,115
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (d) .76* 1.62 1.72 1.94 .47(b)*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.59)* (1.09) (1.08) (1.20) (.21)(b)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 50.10* 91.61 73.73 68.95 49.81
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Reflects an expense limitation which expired on December 31, 1995. As a result of such limitation, expenses of the fund for
the year ended December 31, 1994, reflect a per share reduction of approximately $0.16. 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) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) The ratio of expenses to average net assets for the period ended December 31, 1995 and for the years ended thereafter, include
amounts paid through brokerage service and expense offset arrangements. Prior period ratios exclude these amounts. (Note 2)
</TABLE>
Notes to financial statements
June 30, 1999 (Unaudited)
Note 1
Significant accounting policies
The Putnam Voyager Fund II ("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 primarily in growth stocks.
The fund offers class A, class B, class C and class M shares. Effective
February 1, 1999, the fund began offering class C 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 C
shares are subject to the same fees and expenses as class B shares, except
that class C shares have a one-year 1.00% contingent deferred sales charge
and do not convert to class A shares. 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 C
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.
Short-term investments having remaining maturities of 60 days or less are
stated at amortized cost which approximates market, and other investments
are stated at fair value following procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Management, Inc. ("Putnam Management"), the fund's
manager, a wholly-owned subsidiary of Putnam Investments, Inc. 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to the
resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the fund is
informed of the ex-dividend date.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The fund
does not isolate that portion of realized or unrealized gains or losses
resulting from changes in the foreign exchange rate on investments from
fluctuations arising from changes in the market prices of the securities.
Such gains and losses are included with the net realized and unrealized
gain or loss on investments. Net realized gains and losses on foreign
currency transactions represent net realized 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 appreciation
and depreciation of assets and liabilities in foreign currencies arise
from changes in the value of open forward currency contracts and assets
and liabilities other than investments at the period end, resulting from
changes in the exchange rate.
F) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended June 30, 1999, the fund had no borrowings against the line of
credit.
G) 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, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
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.
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.
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.
The fund reimburses Putnam Management an allocated amount 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 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, 1999, fund expenses were reduced by
$96,273 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.
Each Trustee of the fund receives an annual Trustee fee, of which $1,650
has been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees who are not interested persons of Putnam
Management and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral 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
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of Trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B, class C 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%,
1.00% and 1.00% of the average net assets attributable to class A, class
B, class C and class M shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00%, 1.00% and 0.75% of
the average net assets attributable to class A, class B, class C and class
M shares respectively.
For the six months ended June 30, 1999, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $372,671 and $19,903 from the
sale of class A and class M shares, respectively and received $638,325 and
$748 in contingent deferred sales charges from redemptions of class B and
C 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, 1999,
Putnam Mutual Funds Corp., acting as underwriter received $950 on class A
redemptions.
Note 3
Purchases and sales of securities
During the six months ended June 30, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$885,767,433 and $822,853,432, 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 June 30, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended June 30, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 6,747,966 $ 161,197,388
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
6,747,966 161,197,388
Shares
repurchased (4,894,831) (116,730,724)
- -----------------------------------------------------------------------------
Net increase 1,853,135 $ 44,466,664
- -----------------------------------------------------------------------------
Year ended December 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 11,250,184 $ 229,784,065
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,231,846 25,696,173
- -----------------------------------------------------------------------------
12,482,030 255,480,238
Shares
repurchased (7,152,946) (144,393,448)
- -----------------------------------------------------------------------------
Net increase 5,329,084 $ 111,086,790
- -----------------------------------------------------------------------------
Six months ended June 30, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 5,062,592 $118,218,894
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
5,062,592 118,218,894
Shares
repurchased (3,447,705) (80,160,524)
- -----------------------------------------------------------------------------
Net increase 1,614,887 $ 38,058,370
- -----------------------------------------------------------------------------
Year ended December 31, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 9,104,215 $ 183,140,840
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,150,403 23,410,690
- -----------------------------------------------------------------------------
10,254,618 206,551,530
Shares
repurchased (5,096,384) (100,793,004)
- -----------------------------------------------------------------------------
Net increase 5,158,234 $ 105,758,526
- -----------------------------------------------------------------------------
For the period February 1, 1999
(commencement of operations)
to June 30, 1999
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,033,756 $25,037,298
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
1,033,756 25,037,298
Shares
repurchased (50,169) (1,210,807)
- -----------------------------------------------------------------------------
Net increase 983,587 $23,826,491
- -----------------------------------------------------------------------------
Six months ended June 30, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,142,583 $ 26,732,464
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
1,142,583 26,732,464
Shares
repurchased (1,009,629) (23,417,462)
- -----------------------------------------------------------------------------
Net increase 132,954 $ 3,315,002
- -----------------------------------------------------------------------------
Year ended December 31, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,642,303 $32,976,095
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 142,779 2,932,667
- -----------------------------------------------------------------------------
1,785,082 35,908,762
Shares
repurchased (1,155,810) (23,256,167)
- -----------------------------------------------------------------------------
Net increase 629,272 $12,652,595
- -----------------------------------------------------------------------------
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds. Please
call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus
for any Putnam fund. It contains more complete information, including charges
and expenses. Please read it carefully before you invest or send money.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Opportunities Fund [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund *
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK] **
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds-three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Putnam Diversified Income Trust II
[DBL.DAGGER] Closed to new investors. Some exceptions may apply. Contact
Putnam for details.
[SECTION MARK] Not available in all states.
** An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
Fund information
WEB SITE
www.putnaminv.com
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
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
John J. Morgan, Jr.
Vice President
Daniel L. Miller
Vice President
Charles H. Swanberg
Vice President and Fund Manager
Roland W. Gillis
Vice President and Fund Manager
Jeffrey R. Lindsey
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
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.
You can also learn more at Putnam Investments' Web site: www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA017-53941-377/2AR/2AO 8/99
