Putnam
Voyager
Fund II
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
12-31-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
It is always a pleasure to bring shareholders a report containing news of
robust performance, and this year's annual report for Putnam Voyager Fund
II is no exception. It is also customary in such cases to caution that
results of this magnitude should not become an annual expectation, though
we remain confident that your fund's long-term prospects remain bright.
This is the last letter to you and the other shareholders of Putnam
Voyager Fund II that I will be signing. After more than 30 years as
Chairman of the Trustees and President of the Putnam Funds, the time has
come for me to step aside. In June, John Hill will become Chairman. John
is currently an independent Trustee and has served on the board for the
past 14 years. In addition, my son, George Putnam, III, will take on the
role of President. I am confident that the leadership of the funds will be
in exceptionally strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay in
close touch with the funds. It has been my privilege to serve you.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
February 16, 2000
Report from the Fund Managers
Charles H. Swanberg
Roland W. Gillis
Jeffrey R. Lindsey
While Putnam Voyager Fund II focuses on individual stocks rather than
placing sector bets, there is no denying that the fund's fiscal 1999
performance reflected the extraordinary strength of the sectors where most
of our selections were located. For example, the potential we saw in
numerous technology companies led to an increased weighting in this
sector, and contributed to the strongest annual return in the fund's
six-year history. At the end of fiscal 1999, your fund was not only far
ahead of its competitive benchmark, the Russell MidCap Growth Index --
which returned 51.29% for the year -- but among the top 20% of all midcap
growth funds tracked by Lipper, Inc. for every performance period in its
history (see page 3 for more information).
Total return for 12 months ended 12/31/99
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- ------------------------------------------------------------------------
79.90% 69.59% 78.56% 73.56% 78.75% 77.75% 79.04% 72.77%
- ------------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods and explanation of performance calculation
methods begin on page 6.
* TECHNOLOGY STOCKS HELP DRIVE PERFORMANCE
As we noted in the semiannual report, strong stock selection in the
technology, media and specialty retail sectors was the key to the fund's
outstanding performance. The technology sector became even more important
in the second half of the fiscal year. Due to a combination of new
purchases and appreciation of existing holdings, the fund's technology
weighting* rose to 42% of the portfolio -- the highest it has been since
inception -- during the year. Again, this reflects not so much a decision
to focus on the sector but the fact that the technology stocks we are
looking at have the best relative earnings momentum in the marketplace at
present. There are a number of reasons for this, including the upsurge of
venture capital activity around the world, the reduction of trade barriers
over the past few years, and the increased sophistication of the financial
markets, with the flow of information becoming virtually instantaneous.
Furthermore, the formation of new companies worldwide is on the upswing
and many of them are technology related, Internet stocks being the prime
example. Approximately half the technology stocks in the portfolio are
Internet related and they have made a significant contribution to
performance.
*We classify companies within the following industries -- communications
equipment, computers, software, electronics (including semiconductors),
semiconductor capital equipment and photography/imaging -- as technology
related.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Computer software 19.4%
Computer services 11.6%
Telecommunications 7.3%
Broadcasting 7.1%
Semiconductors 5.8%
Footnote reads:
*Based on net assets as of 12/31/99. Holdings will vary over time.
Other areas of technology also proved rewarding, in particular, software,
semiconductors and semiconductor capital equipment. Key software holdings
included SAP, an international developer and supplier of integrated
business application software now expanding into e-commerce solutions;
Intuit, Inc., which specializes in small business, tax preparation, and
consumer finance software; Oracle Corp., producer of information
management software and the world's second largest software company;
Microsoft Corp., the world's largest. (The SAP position was sold before
the end of the fiscal year.) While a breakup of Microsoft was not
anticipated as this report was being written, even if such an event was to
occur, we believe that the value inherent in the company would continue to
be recognized. 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.
In the semiconductor area, two strong performers were Linear Technology
Corp. and Maxim Integrated Products, Inc. Both have benefited from the
explosive growth of PCs worldwide, particularly in Latin America and Asia,
and from the ongoing substitution of microprocessors for mechanical
devices in all types of consumer products. And both are analog
semiconductor companies; while this means that their products may be
somewhat pedestrian compared to next-generation computer chips, the
companies have a much broader product base and a longer product life cycle
than digital semiconductor companies such as Intel. Applied Materials, a
semiconductor capital equipment company that supplies wafer fabrication
equipment to the industry, has also provided rewarding results.
* SECTOR WEIGHTINGS AND FOREIGN HOLDINGS FURTHER CONTRIBUTE TO PERFORMANCE
Compared to the fund's benchmark, the Russell MidCap Growth Index, the
portfolio has been heavily overweighted in the media sector, with a
weighting nearly three times that of the index. Outperformance in this
sector made a substantial contribution to the year's results. A
significant underweighting in a weaker sector -- health-care -- also paid
off in terms of performance; our reduced exposure to this sector meant
that its dismal results did not dampen the fund's returns. Shortly after
the end of the fiscal year, as the health-care regulatory environment
appeared to ease, we began taking a fresh look at companies in this sector
and may increase the weighting as the atmosphere becomes more favorable.
Putnam Voyager Fund II was in the top 17% of all multi-cap growth funds
tracked by Lipper, Inc. for the 1-year period ended December 31, 1999,
ranking 57 of 342 funds.
Past performance is not indicative of future results. Lipper rankings are
based on total return performance, vary over time, and do not include the
effect of sales charges. For the 1-year period ended 12/31/99, the fund's
class A shares ranked 57 out of 342 growth funds (top 17%); for the 3- and
5-year periods ended 12/31/99, class A shares ranked 37 out of 243 funds
(top 16%) and 21 out of 151 funds (top 14%), respectively. Performance of
other share classes will vary.
Approximately 12% of the portfolio was invested outside the United States
at the close of fiscal 1999, with the lion's share of that in Japan.
Several Japanese holdings have performed extremely well for us, among them
Itoen LTD, a beverage company specializing in green tea drinks, and Hikari
Tsushin, Inc., a chain of cellular handset stores located throughout
Japan. Another Japanese holding, Softbank Corp., an Internet holding
company, has quadrupled in value since its purchase.
Kohl's Corp.: An innovative approach to mid-range retailing
An emphasis on quality, national brand merchandise, and exceptional value
for customers characterizes this chain of 213 family-oriented department
stores that has grown from a single store opened in 1962. With fewer
departments than traditional, full-line department stores, Kohl's offers
larger selections of styles, colors, and sizes in the categories it
features -- apparel and shoes for women, children, and men; domestics; and
housewares. A computerized tracking system helps monitor which items are
selling and enables stores to maintain inventory levels of popular and
advertised items. Most stores are stand-alones or located in strip malls
where parking is plentiful. They combine supermarket-style centralized
checkout lanes with traditional department store features such as private
dressing rooms and special promotions for charge customers.
An aggressive expansion program has dampened the performance of Kohl's stock
this year as new stores come on-line and get up and running. However, the
company's success at building customer loyalty in the past bodes well for
its future -- a recent Wall Street Journal article showed it achieving major
inroads within the territory of rival J.C. Penney. Kohl's innovative approach
to value-oriented retailing exemplifies the type of dynamic management and
rapid growth potential we seek for your fund.
Other foreign holdings that have proved rewarding this year include MLP
(Marschollek, Lautenschlaeger und Partner), a German financial services
company that has benefited from the growing popularity of investing in
Europe, and Capita Group PLC, a British company involved with project
management outsourcing. British municipalities are taking advantage of
Capita's ability to provide services, such as management of local bus and
train service to water resources, more efficiently and at a lower cost to
taxpayers.
* RETAIL HOLDINGS STILL HOLD PROMISE
Two key holdings in the retail sector have produced disappointing
performance this year but we believe that both retain their potential to
excel in the future. Bed Bath and Beyond, Inc., which operates domestics
and home furnishings superstores in 35 states, is expanding its proven
merchandising approach to the Web. Kohl's Corp., which sells national
brand clothing at moderate prices in the midwestern and mid-Atlantic
states, has acquired Caldors' stores in the Northeast and has the ability
to penetrate other regions as well. The Kohl's formula is a disciplined,
cookie-cutter operation that has quickly generated customer loyalty in
each new territory (see box on page 4) and is a good example of the kind
of innovative approach that distinguishes many of the companies we select
for the portfolio.
* MORE VOLATILITY EXPECTED IN 2000 BUT REWARD POTENTIAL REMAINS
With the market reaching record highs -- and experiencing some record
drops -- in 1999, volatility has become more of a fact of investing life.
This is especially true in the technology sector and your fund's greater
exposure to that sector may mean a higher level of share price fluctuation
going forward. However, we believe that the reward potential in this
sector is substantial enough to justify taking on additional risk.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
VeriSign, Inc.
Computer services
VERITAS Software Corp.
Computer software
Intuit, Inc.
Computer software
Oracle Corp.
Computer software
General Electric Co.
Electronics and electrical equipment
Microsoft Corp.
Computer software
QUALCOMM, Inc.
Telecommunications
Home Depot, Inc. (The)
Retail
Lycos, Inc.
Computer software
Comverse Technology, Inc.
Computer services
Footnote reads:
These holdings represent 13.5% of the fund's net assets as of 12/31/99.
Portfolio holdings will vary over time.
Keep in mind also that the fund's focus on fundamental, bottom-up research
has built a portfolio that is well diversified with regard to company
size. This year, our strongest performers have been mid-cap companies,
which have capitalizations ranging from $1 billion to $5 billion. Linear
Technology, Maxim, Applied Materials, Itoen, Hikari Tsushin, and MLP all
fall in this category. But you'll also find fast-growing,
small-capitalization companies such as Capita side by side with large
companies such as Microsoft, Intuit, SAP, Oracle, and Softbank, which have
market capitalizations in excess of $5 billion. This flexibility has
served the fund very well in the past and we are confident that it will
continue to do so in the future.
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 12/31/99, there is no guarantee the fund will
continue to hold these securities in the future.
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 capital appreciation
primarily through common stocks.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 12/31/99 (most recent calendar quarter)
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>
1 year 79.90% 69.59% 78.56% 73.56% 78.75% 77.75% 79.04% 72.77%
- -----------------------------------------------------------------------------------------
5 years 343.51 318.21 327.28 325.28 327.65 327.65 333.18 318.23
Annual average 34.70 33.13 33.70 33.58 33.73 33.73 34.07 33.13
- -----------------------------------------------------------------------------------------
Life of fund 447.29 415.75 420.50 420.50 420.88 420.88 429.53 411.13
Annual average 28.83 27.70 27.87 27.87 27.88 27.88 28.20 27.52
- -----------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/99
Russell MidCap Consumer
Growth Index price index
- ------------------------------------------------------------------------
1 year 51.29% 2.80%
- ------------------------------------------------------------------------
5 years 243.93 12.76
Annual average 28.03 2.43
- ------------------------------------------------------------------------
Life of fund 270.80 17.55
Annual average 21.42 2.42
- ------------------------------------------------------------------------
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 1-, 5-, and 10-year
(where available) 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.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 4/14/93
Fund's class A Russell MidCap Consumer price
Date shares at POP Growth Index index
4/14/93 9,425 10,000 10,000
12/31/93 11,589 11,020 10,153
12/31/94 11,629 10,781 10,425
12/31/95 17,459 14,444 10,689
12/31/96 18,805 16,969 11,045
12/31/97 23,210 20,794 11,233
12/31/98 28,670 24,509 11,435
12/31/99 $51,575 $37,080 $11,755
Footnote reads:
Past performance is no assurance of future results. At the end of the same
time period, a $10,000 investment in the fund's class B or class C shares
would have been valued at $52,050 and $52,088, respectively and no
contingent deferred sales charges would apply; a $10,000 investment in the
fund's class M shares would have been valued at $52,953 ($51,113 at public
offering price). See first page of performance section for performance
calculation method.
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 12/31/99
Class A Class B Class C Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1 1
- ------------------------------------------------------------------------------
Income -- -- -- --
- ------------------------------------------------------------------------------
Capital gains
Long-term $2.111 $2.111 $2.111 $2.111
- ------------------------------------------------------------------------------
Short-term 0.051 0.051 0.051 0.051
- ------------------------------------------------------------------------------
Total $2.162 $2.162 $2.162 $2.162
- ------------------------------------------------------------------------------
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 -- --
- ------------------------------------------------------------------------------
12/31/99 38.45 40.80 37.13 38.21 37.61 38.97
- ------------------------------------------------------------------------------
*Inception 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 measures the performance of those Russell
Midcap companies with higher price-to-book ratios and higher forecasted
growth values. The stocks are also members of the Russell 1000 Growth
Index. 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.
A guide to the financial statements
These sections of the report, preceded by the Report of independent
accountants, 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 are determined. All investment and noninvestment 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-end funds, a separate
table is provided for each share class.
Report of independent accountants
For the fiscal year ended December 31, 1999
To the Trustees and Shareholders of
Putnam Voyager Fund II
In our opinion, the accompanying statement of assets and liabilities,
including the fund's portfolio, and the related statements of operations
and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Putnam Voyager Fund II
(the "fund") at December 31, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in
the United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility
of the fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of investments owned at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 8, 2000
<TABLE>
<CAPTION>
The fund's portfolio
December 31, 1999
COMMON STOCKS (97.0%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Advertising (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
187,244 Lamar Advertising Co. (NON) $ 11,339,965
190,350 Omnicom Group, Inc. 19,035,000
79,100 TMP Worldwide, Inc. (NON) 11,232,200
121,600 Young & Rubicam, Inc. 8,603,200
--------------
50,210,365
Airlines (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
309,000 Ryanair Holdings, PLC ADR (Ireland) (NON) 17,033,625
Apparel (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
62,050 American Eagle Outfitters, Inc. 2,792,250
110,200 Gucci Group N.V. (Netherlands) 12,617,900
217,500 Nike, Inc. 10,779,844
--------------
26,189,994
Banks (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
247,150 Fifth Third Bancorp 18,134,631
250,000 Firstar Corp. 5,281,250
76,100 Northern Trust Corp. 4,033,300
--------------
27,449,181
Broadcasting (7.1%)
- --------------------------------------------------------------------------------------------------------------------------
166,500 Acme Communications, Inc. 5,536,125
237,100 AMFM, Inc. (NON) 18,553,075
556,100 CBS Corp. (NON) 35,555,644
320,000 Citadel Communications Corp. (NON) 20,760,000
366,100 Clear Channel Communications, Inc. (NON) 32,674,425
402,035 Cumulus Media, Inc. Class A (NON) 20,403,276
65,700 Echostar Communications Corp. Class A (NON) 6,405,750
279,900 Entercom Communications Corp. (NON) 18,473,400
70,000 Hispanic Broadcasting Corp. (NON) 6,455,313
722,562 Infinity Broadcasting Corp. Class A (NON) 26,147,712
107,000 Pegasus Communications Corp. (NON) 10,459,250
207,900 Radio One, Inc. (NON) 19,126,800
215,200 Salem Communications Corp. Class A (NON) 4,868,900
15,500 Spanish Broadcasting System, Inc. Class A (NON) 623,875
65,600 Univision Communications Inc. Class A (NON) 6,703,500
112,266 WestWood One, Inc. (NON) 8,532,216
--------------
241,279,261
Business Equipment and Services (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
84,600 About.com, Inc. (NON) 7,592,850
113,500 Affiliated Computer Services, Inc. Class A (NON) 5,221,000
110,700 Braun Consulting, Inc. (NON) 7,915,050
270,350 Cintas Corp. (NON) 14,362,344
10,400 Management Network Group, Inc. (The) (NON) 339,300
210,500 NCO Group, Inc. (NON) 6,341,313
226,900 Serco Group PLC (United Kingdom) (NON) 7,070,446
--------------
48,842,303
Cable Television (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
222,700 Comcast Corp. Class A 11,260,269
8,100 Insight Communications Company, Inc. 239,963
140,700 USA Networks, Inc. (NON) 7,773,675
--------------
19,273,907
Computer Equipment (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
94,000 PMC - Sierra, Inc. (NON) 15,069,375
79,000 PRI Automation, Inc. 5,302,875
411,600 Sun Microsystems, Inc. (NON) 31,873,275
--------------
52,245,525
Computer Services (11.6%)
- --------------------------------------------------------------------------------------------------------------------------
366,100 America Online, Inc. (NON) 27,617,669
94,800 Ariba, Inc. (NON) 16,815,150
132,100 Aware, Inc. (NON) 4,805,138
112,100 BackWeb Technologies Ltd. (Israel) (NON) 4,722,213
65,000 Brocade Communications Systems (NON) 11,505,000
692,774 Capita Group PLC (United Kingdom) 12,589,955
64,650 CDW Computer Centers, Inc. (NON) 5,083,106
74,600 CheckFree Holdings Corp. (NON) 7,795,700
75,000 CMG Information Services, Inc. (NON) 20,765,625
224,300 CNET, Inc. (NON) 12,729,025
251,550 Comverse Technology, Inc. (NON) 36,411,863
281,650 Covad Communications Group 144A (NON) 15,754,797
81,000 DoubleClick, Inc. (NON) 20,498,063
1,700 Freemarkets, Inc. (NON) 580,231
88,300 Harris Interactive, Inc. (NON) 1,153,419
275,800 IMS Health, Inc. 7,498,313
74,000 InfoSpace.com, Inc. (NON) 15,836,000
65,000 InterVU, Inc. (NON) 6,825,000
159,900 McAfee.com Corp. (NON) 7,195,500
1,206,000 Misys PLC (United Kingdom) (NON) 18,799,864
136,850 Multex.com, Inc. (NON) 5,148,981
149,300 Sykes Enterprises, Inc. (NON) 6,550,538
185,200 USWeb Corp. (NON) 8,229,825
128,100 Verio, Inc. (NON) 5,916,619
397,600 VeriSign, Inc. (NON) 75,916,750
80,000 VerticalNet, Inc. (NON) 13,120,000
126,200 Viant Corp. (NON) 12,493,800
151,900 Whittman-Hart, Inc. (NON) 8,145,638
2,100 Yahoo!, Inc. (NON) 908,644
197,400 Zamba Corp. (NON) 3,429,825
65,900 Ziff-Davis, Inc. (NON) 1,383,900
--------------
396,226,151
Computer Software (19.4%)
- --------------------------------------------------------------------------------------------------------------------------
98,900 Agile Software Corp. (NON) 21,484,480
128,100 Be Free, Inc. (NON) 9,207,188
171,000 BroadVision, Inc. (NON) 29,080,688
6,700 C-Bridge Internet Solutions, Inc. (NON) 325,788
335,000 CBT Group PLC ADR (Ireland) (NON) 11,222,500
53,400 E.piphany, Inc. (NON) 11,914,875
154,436 Electronic Arts, Inc. (NON) 12,972,624
109,800 Engage Technologies, Inc. (NON) 6,588,000
79,200 I2 Technologies, Inc. (NON) 15,444,000
80,000 Informatica Corp. (NON) 8,510,000
13,100 Intertrust Technologies Corp. (NON) 1,540,888
869,100 Intuit, Inc. (NON) 52,091,681
459,350 Lycos, Inc. (NON) 36,547,034
194,000 Macromedia, Inc. (NON) 14,186,250
10,300 Mediaplex, Inc. (NON) 646,325
8,900 Metasolv Software, Inc. (NON) 727,575
351,400 Microsoft Corp. (SEG) (NON) 41,025,950
58,228 Net Perceptions, Inc. (NON) 2,445,576
173,400 Netegrity, Inc. (NON) 9,872,963
3,600 OpenTV Corp. (NON) 288,900
409,900 Oracle Corp. (NON) 45,934,419
550,900 Parametric Technology Corp. (NON) 14,908,731
213,600 Phone.com, Inc. (NON) 24,764,250
91,600 Portal Software, Inc. (NON) 9,423,350
87,100 Proxicom, Inc. (NON) 10,827,619
144,600 RealNetworks, Inc. (NON) 17,397,188
76,800 Quest Software, Inc. (NON) 7,833,600
312,800 Rational Software Corp. (NON) 15,366,300
120,000 Sapient Corp. (NON) 16,912,500
127,700 Silknet Software, Inc. (NON) 21,166,275
9,100 SilverStream Software, Inc. (NON) 1,082,900
30,900 Softbank Corp. (Japan) 29,575,455
165,000 Software.com, Inc. (NON) 15,840,000
206,050 Symantec Corp. (NON) 12,079,681
226,800 Synopsys, Inc. (NON) 15,138,900
200,000 TSI International Software, Ltd. (NON) 11,325,000
247,756 Usinternetworking, Inc. (NON) 17,311,951
3,500 VA Linux Systems, Inc. (NON) 723,188
389,875 VERITAS Software Corp. (NON) 55,800,859
135,600 Vignette Corp. (NON) 22,102,800
220,400 Worldgate Communications, Inc. (NON) 10,482,775
--------------
662,121,026
Computers (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
375,150 Dell Computer Corp. (NON) 19,132,650
179,400 EMC Corp. (NON) 19,599,450
265,000 Gateway, Inc. 19,096,563
--------------
57,828,663
Consumer Non Durables (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
95,200 Colgate-Palmolive Co. 6,188,000
Consumer Services (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
496,300 Network Event Theater, Inc. (NON) 14,764,925
275,400 SportsLine USA, Inc. (NON) 13,804,425
40,900 Stamps.com, Inc. (NON) 1,702,463
--------------
30,271,813
Cosmetics (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
168,500 Estee Lauder Cos. Class A 8,498,719
21,400 Fancl Corp. (Japan) 5,738,501
--------------
14,237,220
Education Services (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
164,950 Apollo Group, Inc. Class A 3,309,309
Electronic Components (4.3%)
- --------------------------------------------------------------------------------------------------------------------------
138,000 Act Manufacturing, Inc. (NON) 5,175,000
148,000 Applied Micro Circuits Corp. (NON) 18,833,000
187,900 ASM Lithography Holding N.V. (Netherlands) (NON) 21,373,625
269,400 Celestica Inc. (Canada) (NON) 14,951,700
656,500 Metromedia Fiber Network, Inc. Class A (NON) 31,470,969
90,000 Optical Coating Laboratory, Inc. 26,640,000
89,122 Sanmina Corp. (NON) 8,901,060
491,200 Sipex Corp. (NON) 12,065,100
150,000 Zoran Corp. (NON) 8,362,500
--------------
147,772,954
Electronics and Electrical Equipment (5.1%)
- --------------------------------------------------------------------------------------------------------------------------
15,600 Agilent Technologies, Inc. (NON) 1,206,075
113,830 Applied Materials, Inc. (NON) 14,420,838
290,000 Flextronics International Ltd. (NON) 13,340,000
266,000 General Electric Co. 41,163,500
268,900 Jabil Circuit, Inc. (NON) 19,629,700
23,000 Keyence Corp (Japan) 9,341,358
156,000 Lernout & Hauspie Speech Products N.V. (Belgium) (NON) 7,215,000
411,500 LTX Corp. (NON) 9,207,313
229,900 Motorola, Inc. 33,852,775
116,600 Solectron Corp. (NON) 11,091,575
74,300 SonoSite, Inc. (NON) 2,349,738
160,720 Teradyne, Inc. (NON) 10,607,520
--------------
173,425,392
Entertainment (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
115,000 Harrah's Entertainment, Inc. 3,040,313
142,050 SFX Entertainment, Inc. Class A (NON) 5,140,434
204,000 Time Warner, Inc. 14,777,250
242,400 Viacom, Inc. Class B (NON) 14,650,050
--------------
37,608,047
Financial Services (2.5%)
- --------------------------------------------------------------------------------------------------------------------------
41,850 Aiful Corp. (Japan) 5,119,642
243,700 Citigroup, Inc. 13,540,581
527,850 Concord EFS, Inc. (NON) 13,592,138
138,550 Knight/Trimark Group, Inc. (NON) 6,373,300
67,700 Marschollek, Lautenschlaeger und Partner AG (Germany) 17,775,718
47,000 Marschollek, Lautenschlaeger und Partner AG (Germany) 14,184,600
230,900 Schwab (Charles) Corp. 8,860,788
225,029 TCF Financial Corp. 5,597,596
--------------
85,044,363
Food and Beverages (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
256,400 Itoen, Ltd. (Japan) 35,857,859
Hospital Management (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
240,000 Advance Paradigm, Inc. (NON) 5,175,000
1,280,200 Health Management Assoc., Inc. (NON) 17,122,675
--------------
22,297,675
Insurance (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
89,750 American International Group, Inc. 9,704,219
57,900 Progressive Corp. (The) 4,233,938
--------------
13,938,157
Medical Management Services (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
32,300 eBenX Inc. (NON) 1,461,575
235,000 Renal Care Group, Inc. (NON) 5,493,125
--------------
6,954,700
Medical Supplies and Devices (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
320,340 Medtronic, Inc. 11,672,389
190,100 Mentor Corp. 4,906,956
126,100 Minimed, Inc. (NON) 9,236,825
300,000 PSS World Medical, Inc. (NON) 2,831,250
135,200 Stryker Corp. 9,413,300
145,199 Thermo Cardiosystems, Inc. (NON) 952,868
459,100 Tyco International Ltd. (NON) 17,847,513
--------------
56,861,101
Networking Equipment (3.1%)
- --------------------------------------------------------------------------------------------------------------------------
62,900 CIENA Corp. (NON) 3,616,750
231,000 Cisco Systems, Inc. (NON) 24,745,875
138,800 E-Tek Dynamics, Inc. (NON) 18,685,950
180,000 Emulex Corp. (NON) 20,250,000
80,000 Exodus Communications, Inc. (NON) 7,105,000
87,700 Extreme Networks, Inc. (NON) 7,322,950
22,815 Juniper Networks, Inc. (NON) 7,757,100
140,000 Network Appliance, Inc. (NON) 11,628,750
34,800 Reback Networks, Inc. (NON) 6,177,000
--------------
107,289,375
Oil and Gas (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
240,150 Nabors Industries, Inc. (NON) 7,429,641
308,200 Noble Drilling Corp. (NON) 10,093,550
--------------
17,523,191
Packaging and Containers (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
153,300 Sealed Air Corp. (NON) 7,942,856
Pharmaceuticals and Biotechnology (2.7%)
- --------------------------------------------------------------------------------------------------------------------------
166,800 Alkermes, Inc. (NON) 8,194,050
251,100 Amgen, Inc. (NON) 15,081,694
34,100 Biogen, Inc. (NON) 2,881,450
39,900 Biovail Corp. International (Canada) (NON) 3,740,625
47,200 Genentech, Inc. (NON) 6,348,400
18,100 Medimmune, Inc. (NON) 3,002,338
146,200 QLT PhotoTherapeutics, Inc. (Canada) (NON) 8,589,250
347,600 Schering-Plough Corp. 14,664,375
81,700 Sepracor, Inc. (NON) 8,103,619
71,672 Transkaryotic Therapies, Inc. (Malaysia) (NON) 2,759,372
209,600 Warner-Lambert Co. 17,174,100
--------------
90,539,273
Publishing (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
30,700 Kadokawa Shoten Publishing Co., Ltd. (Japan) 10,335,486
Recreation (--%)
- --------------------------------------------------------------------------------------------------------------------------
33,200 International Speedway Corp. Class A 1,672,450
Restaurants (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
249,773 J.D. Wetherspoon PLC (United Kingdom) (NON) 1,751,118
618,900 PizzaExpress PLC (United Kingdom) (NON) 7,323,323
479,146 Starbucks Corp. (NON) 11,619,291
--------------
20,693,732
Retail (5.6%)
- --------------------------------------------------------------------------------------------------------------------------
41,100 Amazon.com, Inc. (NON) 3,128,738
202,000 Ames Department Stores, Inc. (NON) 5,820,125
98,900 Bed Bath & Beyond, Inc. (NON) 3,436,775
34,400 Castorama Dubois (France) 10,451,133
116,150 Costco Wholesale Corp. (NON) 10,598,688
61,900 Dayton Hudson Corp. 4,545,781
239,502 Dollar Tree Stores, Inc. (NON) 11,600,830
225,000 Factory 2-U Stores, Inc. (NON) 6,384,375
555,300 Home Depot, Inc. (The) 38,072,756
230,500 Kohls Corp. (NON) 16,639,219
100,000 Linens 'N Things, Inc. (NON) 2,962,500
154,090 Michaels Stores, Inc. (NON) 4,391,565
701,250 Next PLC (United Kingdom) 6,728,828
779,600 Office Depot, Inc. (NON) 8,526,875
77,000 Seven-Eleven Japan Co., Ltd. (Japan) (NON) 12,207,868
54,300 Shimamura Co., Ltd. (Japan) 8,608,925
101,450 Tiffany & Co. 9,054,413
150,000 TJX Cos., Inc. (The) 3,065,625
112,300 Tuesday Morning Corp. (NON) 2,070,531
286,300 Wal-Mart Stores, Inc. 19,790,488
84,956 Williams-Sonoma, Inc. (NON) 3,907,976
--------------
191,994,014
Semiconductors (5.8%)
- --------------------------------------------------------------------------------------------------------------------------
244,700 Altera Corp. (NON) 12,127,944
131,200 Intel Corp. 10,799,400
199,000 KLA Tencor Corp. (NON) 22,163,625
346,500 Linear Technology Corp. 24,796,406
763,800 Maxim Integrated Products, Inc. (NON) 36,041,813
181,000 QLogic Corp. (NON) 28,937,375
60,400 SDL, Inc. (NON) 13,167,200
111,000 Silicon Image, Inc. (NON) 7,776,938
164,800 Texas Instruments, Inc. 15,965,000
270,900 Vitesse Semiconductor Corp. (NON) 14,205,319
278,000 Xilinx, Inc. (NON) 12,640,313
--------------
198,621,333
Specialty Consumer Products (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
101,750 Fastenal Co. (NON) 4,572,391
Telecommunications (7.3%)
- --------------------------------------------------------------------------------------------------------------------------
325,000 Advanced Fibre Communications (NON) 14,523,438
13,300 Aether Systems, Inc. (NON) 952,613
51,300 Allegiance Telecom, Inc. (NON) 4,732,425
325,750 Global Crossing Ltd. (NON) 16,287,500
495,800 Global TeleSystems Group, Inc. (NON) 17,167,075
7,100 Hikari Tsushin, Inc. (Japan) (NON) 14,244,471
185,776 JDS Uniphase Corp. (NON) 29,967,991
205,350 MCI WorldCom, Inc. (NON) 10,896,384
92,300 NEXTEL Communications, Inc. Class A (NON) 9,518,438
174,500 Nokia Corp. ADR (Finland) (NON) 33,155,000
104,875 NTL, Inc. (NON) 13,083,156
174,150 Oy Nokia AB Class A, (Finland) 31,535,082
75,000 Proxim, Inc. (NON) 8,250,000
225,692 QUALCOMM, Inc. (NON) 39,750,004
28,100 Tellabs, Inc. (NON) 1,803,669
130,850 Williams Communications Group, Inc. (NON) 3,786,472
--------------
249,653,718
Telephone Services (4.3%)
- --------------------------------------------------------------------------------------------------------------------------
174,200 Amdocs Ltd. (NON) 6,009,900
393,401 AT&T Corp. (NON) 22,325,450
120,500 Focal Communications Corp. (NON) 2,907,063
94,150 Level 3 Communications, Inc. (NON) 7,708,531
215,300 Lucent Technologies, Inc. 16,107,131
470,000 McLeod, Inc. Class A (NON) 27,671,250
370,812 NEXTLINK Communications, Inc. Class A (NON) 30,800,572
220,400 Sprint Corp. 14,835,675
173,400 Sprint PCS (NON) 17,773,500
--------------
146,139,072
Wireless Communications (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
351,200 American Tower Corp. Class A (NON) 10,733,550
150,000 Lightbridge, Inc. (NON) 4,162,500
369,300 Pinnacle Holdings, Inc. (NON) 15,649,124
65,600 RF Micro Devices, Inc. (NON) 4,489,500
--------------
35,034,674
--------------
Total Common Stocks (cost $1,743,320,347) $3,314,478,156
SHORT-TERM INVESTMENTS (2.6%) (a) (cost $89,577,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$89,577,000 Interest in $624,736,000 joint repurchase agreement
dated December 31, 1999 with S.B.C. Warburg Inc.
due January 3, 2000 with respect to various
U.S. Treasury obligations -- maturity value of
$89,597,528 for an effective yield of 2.75% $ 89,577,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,832,897,347) (b) $3,404,055,156
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $3,415,849,462.
(b) The aggregate identified cost on a tax basis is $1,837,522,474, resulting in gross unrealized appreciation and
depreciation of $1,604,809,089 and $38,276,407, respectively, or net unrealized appreciation of $1,566,532,682.
(NON) Non-income-producing security.
(SEG) A portion of this security was pledged and segregated with the custodian to cover margin requirements for futures
contracts at December 31, 1999.
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.
- -------------------------------------------------------------------------------
Futures Contracts Outstanding at December 31, 1999
Aggregate Face Expiration Unrealized
Total Value Value Date Appreciation
- -------------------------------------------------------------------------------
S&P 500 Index (Long) $22,634,050 $22,575,424 Mar-00 $58,626
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
December 31, 1999
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,832,897,347) (Note 1) $3,404,055,156
- -----------------------------------------------------------------------------------------------
Cash 282,770
- -----------------------------------------------------------------------------------------------
Foreign currency (cost $176) 111
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 488,088
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 18,442,374
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 19,732,487
- -----------------------------------------------------------------------------------------------
Receivable for variation margin 44,365
- -----------------------------------------------------------------------------------------------
Total assets 3,443,045,351
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 14,633,146
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 6,046,214
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 3,686,217
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 276,166
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 60,713
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 5,239
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 2,235,170
- -----------------------------------------------------------------------------------------------
Other accrued expenses 253,024
- -----------------------------------------------------------------------------------------------
Total liabilities 27,195,889
- -----------------------------------------------------------------------------------------------
Net assets $3,415,849,462
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,738,472,541
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 106,227,954
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 1,571,148,967
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $3,415,849,462
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,663,371,295 divided by 43,264,021 shares) $38.45
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $38.45)* $40.80
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,505,718,977 divided by 40,552,455 shares)** $37.13
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($76,097,125 divided by 1,991,295 shares)** $38.21
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($170,662,065 divided by 4,538,031 shares) $37.61
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $37.61)* $38.97
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended December 31, 1999
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax $99,189) $ 3,790,343
- -----------------------------------------------------------------------------------------------
Interest 2,101,700
- -----------------------------------------------------------------------------------------------
Total investment income 5,892,043
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 11,530,451
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 2,665,204
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 41,206
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 20,495
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,383,880
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 8,753,859
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 235,280
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 770,863
- -----------------------------------------------------------------------------------------------
Reports to shareholders 86,733
- -----------------------------------------------------------------------------------------------
Registration fees 169,075
- -----------------------------------------------------------------------------------------------
Auditing 70,173
- -----------------------------------------------------------------------------------------------
Legal 15,565
- -----------------------------------------------------------------------------------------------
Postage 312,968
- -----------------------------------------------------------------------------------------------
Other 304,991
- -----------------------------------------------------------------------------------------------
Total expenses 27,360,743
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (262,438)
- -----------------------------------------------------------------------------------------------
Net expenses 27,098,305
- -----------------------------------------------------------------------------------------------
Net investment loss (21,206,262)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 293,607,662
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency contracts 2,560,694
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (69,274)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 1,125,017,403
- -----------------------------------------------------------------------------------------------
Net gain on investments 1,421,116,485
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,399,910,223
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended December 31
-------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (21,206,262) $ (12,142,472)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 296,168,356 58,089,525
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 1,124,948,129 227,630,502
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,399,910,223 273,577,555
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (85,402,662) (26,466,797)
- ---------------------------------------------------------------------------------------------------------------
Class B (80,535,688) (25,149,952)
- ---------------------------------------------------------------------------------------------------------------
Class C (3,713,864) --
- ---------------------------------------------------------------------------------------------------------------
Class M (9,081,113) (3,023,078)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 657,805,994 229,497,911
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 1,878,982,890 448,435,639
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of year 1,536,866,572 1,088,430,933
- ---------------------------------------------------------------------------------------------------------------
End of year (including accumulated net investment loss
of $-- and $2,529, respectively) $3,415,849,462 $1,536,866,572
- ---------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended December 31
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $22.70 $19.11 $15.51 $14.40 $9.75
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (c) (.19) (.12) (.10) (.11) (.01)(b)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 18.10 4.54 3.73 1.22 4.88
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 17.91 4.42 3.63 1.11 4.87
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- -- (.10)
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (2.16) (.83) (.03) -- (.12)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.16) (.83) (.03) -- (.22)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $38.45 $22.70 $19.11 $15.51 $14.40
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 79.90 23.52 23.42 7.71 50.14
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,663,371 $753,319 $532,287 $348,261 $83,526
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (d) 1.03 1.12 1.22 1.44 1.31(b)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.71) (.59) (.58) (.69) (.28)(b)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 89.74 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. 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 include amounts paid through brokerage service and expense offset arrangements
(Note 2).
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Oct. 2, 1995+
operating performance 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) (.38) (.27) (.22) (.22) (.04)(b)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 17.54 4.45 3.67 1.21 1.40
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 17.16 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 (2.16) (.83) (.03) -- (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.16) (.83) (.03) -- (.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $37.13 $22.13 $18.78 $15.36 $14.37
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 78.56 22.66 22.48 6.89 10.41*
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,505,719 $699,040 $496,501 $328,268 $66,978
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (d) 1.78 1.87 1.97 2.19 .54(b)*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.46) (1.34) (1.33) (1.45) (.29)(b)*
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 89.74 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. 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 include amounts paid through brokerage service and expense offset arrangements
(Note 2).
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- ---------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Feb. 1, 1999+
operating performance to Dec. 31
- ---------------------------------------------------------------------------------------------------------------------------------
1999
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $23.95
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (c) (.38)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 16.80
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 16.42
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------------------------------
From net
investment income --
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income --
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (2.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $38.21
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 69.50*
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $76,097
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (d) 1.63*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.34)*
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 89.74
- ---------------------------------------------------------------------------------------------------------------------------------
+ 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. 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 include amounts paid through brokerage service and expense offset arrangements
(Note 2).
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ---------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Oct. 2, 1995+
operating performance 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) (.32) (.22) (.18) (.19) --(b)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 17.75 4.48 3.70 1.22 1.38
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 17.43 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 (2.16) (.83) (.03) -- (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.16) (.83) (.03) -- (.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $37.61 $22.34 $18.91 $15.42 $14.39
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 79.04 22.92 22.84 7.16 10.57*
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $170,662 $84,507 $59,643 $37,325 $6,115
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (d) 1.53 1.62 1.72 1.94 .47(b)*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.21) (1.09) (1.08) (1.20) (.21)(b)*
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 89.74 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. 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 include amounts paid through brokerage service and expense offset arrangements
(Note 2).
</TABLE>
Notes to financial statements
December 31, 1999
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 common 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
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
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 sales price on its principal exchange, or if no sales are
reported -- as in the case of some securities traded over-the-counter
- -- the last reported bid price. Securities quoted in foreign currencies
are translated into U.S. dollars at the current exchange rate. Short-term
investments having remaining maturities of 60 days or less are stated at
amortized cost, which approximates market value. Other investments,
including restricted securities, 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). Gains or losses on securities sold are determined on
the identified cost basis.
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. Investments in foreign securities involve
certain risks, including those related to economic instability,
unfavorable political developments, and currency fluctuations, not present
with domestic investments.
F) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on securities
it owns or in which it may invest to increase its current returns.
The potential risk to the fund is that the change in value of futures and
options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of
the underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparty to the contract is unable to
perform. When the contract is closed, the fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed. Realized gains and
losses on purchased options are included in realized gains and losses on
investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices supplied
by dealers.
G) 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 year ended
December 31, 1999, the fund had no borrowings against the line of credit.
H) 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.
I) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences include temporary and permanent differences of losses on wash
sale transactions, foreign currency gains and losses and unrealized gains
and losses on certain futures contracts. Reclassifications are made to the
fund's capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. For the year ended December 31, 1999, the fund reclassified
$21,208,791 to decrease accumulated net investment loss and $52,881 to
decrease paid-in-capital, with a decrease to accumulated net realized
gains of $21,155,910. The calculation of net investment income per share
in the financial highlights table excludes these adjustments.
Note 2
Management fee, administrative
services, and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
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 year ended December 31, 1999, fund expenses were reduced by
$262,438 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 $1,936
has been allocated to the fund, and an additional fee for each Trustees
meeting attended. 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 a 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 year ended December 31, 1999, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $913,693 and $47,982 from the sale
of class A and class M shares, respectively, and received $1,129,716 and
$4,880 in contingent deferred sales charges from redemptions of class B
and class C shares, respectively. A deferred sales charge of up to 1% is
assessed on certain redemptions of class A shares. For the year ended
December 31, 1999, Putnam Mutual Funds Corp., acting as underwriter
received $2,107 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended December 31, 1999, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $2,114,920,649 and $1,742,905,945, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
Capital shares
At December 31, 1999, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended December 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 17,735,558 $493,996,704
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,367,568 82,449,807
- -----------------------------------------------------------------------------
20,103,126 576,446,511
Shares
repurchased (10,028,805) (266,866,656)
- -----------------------------------------------------------------------------
Net increase 10,074,321 $309,579,855
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Year ended December 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 15,759,777 $431,528,199
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,214,594 74,509,134
- -----------------------------------------------------------------------------
17,974,371 506,037,333
Shares
repurchased (9,015,320) (237,554,812)
- -----------------------------------------------------------------------------
Net increase 8,959,051 $268,482,521
- -----------------------------------------------------------------------------
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 December 31, 1999
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,219,919 $61,369,858
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 101,541 3,516,354
- -----------------------------------------------------------------------------
2,321,460 64,886,212
Shares
repurchased (330,165) (8,337,615)
- -----------------------------------------------------------------------------
Net increase 1,991,295 $56,548,597
- -----------------------------------------------------------------------------
Year ended December 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,240,671 $57,924,106
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 257,778 8,784,830
- -----------------------------------------------------------------------------
2,498,449 66,708,936
Shares
repurchased (1,743,600) (43,513,915)
- -----------------------------------------------------------------------------
Net increase 754,849 $23,195,021
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Federal tax information
(Unaudited)
The Form 1099 you receive in January 2000 will show the tax status of all
distributions paid to your account in calendar 1999.
The fund has designated 3.85% of the distributions from net investment
income as qualifying for the dividends received deduction for
corporations.
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund
hereby designates $197,750,850 as capital gain, for its taxable year ended
December 31, 1999.
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
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
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
Stephen Oristaglio
Vice President
Daniel L. Miller
Vice President
Carol C. McMullen
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
AN017-58387 377/2AR/2AO 12/99
