-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OIvq3wbfHRDoT/YDWDAx3tG7vEbP/w7Vz674rp1p7hNBj85RShOnSi64+7FlpwT6 c90RYwuw9BkW6k5MtN5kSA== 0000914120-94-000007.txt : 19940830 0000914120-94-000007.hdr.sgml : 19940830 ACCESSION NUMBER: 0000914120-94-000007 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW OPPORTUNITIES FUND CENTRAL INDEX KEY: 0000865177 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 043091455 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06128 FILM NUMBER: 94546726 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: A6 ZIP: 02109 BUSINESS PHONE: 6172921000 N-30D 1 PUTNAM NEW OPPORTUNITIES FUND - ANNUAL REPORT Putnam New Opportunities Fund [Artwork] ANNUAL REPORT June 30, 1994 [Putnam Logo] Boston * London * Tokyo PERFORMANCE HIGHLIGHTS The fund has earned Morningstar's highest ranking of five stars, based on risk- adjusted performance through June 30, 1994, a ranking it has held since August 31, 1993. * The fund's long-term leadership is clearly apparent when compared with other growth funds for the three years ended June 30, 1994, the fund was ranked first of all 270 growth funds tracked by Lipper Analytical Services. + Performance should always be considered in light of a fund's investment strate- gy. Putnam New Opportunities Fund is for investors seeking long-term capital appreciation primarily through common stock investments in companies in economic sectors with above-average long-term growth potential. FISCAL 1994 RESULTS AT A GLANCE - -------------------------------------------------------------------------------- Class A Class B Total return: NAV POP NAV CDSC 12 months ended 6/30/94 (change in value during period plus reinvested distributions) 7.00% 0.85% 6.18% 1.18% - -------------------------------------------------------------------------------- Share value: NAV POP NAV 6/30/93 $20.83 $22.10 $20.80 6/30/94 2188 23.21 21.68 - -------------------------------------------------------------------------------- Capital gains Long- Short- Distributions: No. Income term term Total - -------------------------------------------------------------------------------- Class A 1 __ $0.400 $0.047 $0.447 Class B 1 __ 0.400 0.047 0.447 - -------------------------------------------------------------------------------- Performance data represent past results. For performance over longer periods, see page 8. POP assumes 5.75% maximum sales charge. CDSC assumes 5% maximum contingent deferred sales charge. * Morningstar is an independent research firm that rates funds relative to other funds with similar investment objectives, based on risk-adjusted medium- and long-term performance, as applicable, and adjusted for sales charges. Ratings are subject to change monthly. Past performance is no assurance of future re- sults. + Lipper rankings vary over time and do not include the effects of sales char- ges. Past performance is no assurance of future results. For periods ended 6/30/94, the fund's class A shares were ranked as follows: one year, 53 of 422 funds; two years, 3 of 313 funds; three years, 1 of 270 funds. FROM THE CHAIRMAN [Photograph of George Putnam] *(C) Karsh, Ottawa Dear Shareholder: The first six months of 1994 served as a reminder that the world's closely linked financial markets are always shifting and sometimes do so dramatically. This spring, higher interest rates in the United States lessened fears of infla- tion and moderated growth while sparking volatility that affected virtually eve- ry sector of the stock and bond markets. Conditions now appear more stable. Most of the world's major economies show stronger fundamentals, while Japan and Euro- pe appear on the brink of recovery. Yet, some apprehension lingers. The markets continue to overanticipate another rise in U.S. interest rates and discount the generally good economic news. Mean- while the dollar poses a new concern as it loses ground to other currencies. Most stocks in the growth category joined other investments in losing value du- ring the past five months. However it is important to remember that declines in the market have traditionally paved the way for gains that more than made up for the downturn. In the report that follows, Fund Manager Daniel Miller explains how he plans to use Putnam's considerable resources in positioning your fund to meet the cha- llenges of the coming months. Respectfully yours, George Putnam Chairman of the Trustees August 17, 1994 * (C) Copyright REPORT FROM THE FUND MANAGER DANIEL L. MILLER In its search for above-average growth, Putnam New Opportunities Fund has held its place in the vanguard of the market, even through one of the more turbulent investment periods in recent memory. The fund's strategy - selecting high- potential stocks within what we believe are the fastest-growing sectors of the economy - produced total returns of 7.00% and 6.18% for class A and class B shares, respectively, based on results at net asset value. This performance, which exceeded the Standard & Poor's (R)* 500 Index return of 1.43%, reflects our dedication to longer-term goals during uncertain markets. SPRING'S VOLATILITY OFFSETS WINTER'S STRENGTHS Returns for the second half of the fiscal year eroded much of the strong perfor- mance we reported at the end of the semiannual period. This spring's interest rate increases were among the key factors. Although the rate changes didn't affect our strategy directly, they did affect the market's willingness to pay a high premium for the superior prospects of high-growth stocks. Much of the value of these stocks rests on perceptions of their future earnings prospects - which are discounted to a greater degree in periods of rising rates. Thus, these stocks, in general, experienced significant price declines. In our opinion, the recent rate adjustments appear to have run their course and should have the desired effect of moderating economic growth. However, through- out most of the portfolio, we generally focus on stocks that we believe have the potential to do well regardless of the economic environment. Therefore, despite recent volatility, we are maintaining the fund's long-term perspective and stra- tegy. * (R) Registered mark LONG-TERM APPROACH STILL ALLOWS RESPONSE TO SHORT-TERM EVENTS While your fund's investments are concentrated in several clearly defined sec- tors of the economy, we also have one distinct portfolio sector, or "sleeve" which gives us the flexibility to anticipate - and respond to - current trends. This miscellaneous sector, which constituted about 8% of the portfolio at the end of the period, is now being positioned to take advantage of two trends that have become widespread in U.S. industry: consolidation and outsourcing. Investments in temporary help companies, such as Kelly Services, Inc., and the Olsten Corp., have the potential to perform well in response to the outsourcing trend, as does Robert Half, whose AccounTemps subsidiary is one of the larger, better-known professional placement agencies in the United States. Danka Business Systems is another one of the holdings that looked promising at fiscal year's end. This office equipment service company's consolidation efforts are enabling it to gain market share and acquire other companies in an industry that has, thus far, been dominated by small family-owned companies. (Bar Chart) SECTOR ALLOCATION SHIFTS * 12/31/93 6/30/94 Value-oriented consuming 19.8% 18.1% Medical technology / cost containment 21.6 19.6 Applied / advanced technology 13.4 17.5 Media / entertainment 20.5 15.7 Personal communications 7.8 8.3 Miscellaneous 2.3 7.2 Personal financial services 4.2 3.4 Environmental services 0.6 0.3 * Based on percentage of net assets. Future holdings will vary. SECTOR OVERVIEW As you can see from the sector allocation chart, noticeable changes have been made in some of the portfolio allocations, most in the last few months of the fiscal year. Medical technology/cost containment was identified as a promising sector well before health care reform began to influence this portion of the market and re- mains one of the largest portfolio sectors. This reflects our belief that health care reform legislation now appears likely to have a minimal effect on the industry. We are particularly looking for companies that are helping to re- duce the cost of health care and consequently would be able to benefit under virtually any type of health care reform scenario. Health care information sys- tems, managed care providers, and biotechnology are some of the services and products we think show strong potential in this area. A good example is Mid- Atlantic Medical Services, a health maintenance organization whose earnings strength and market share growth have made it one of the stronger health care stocks this year. Value-oriented consuming remains a major focus for the portfolio, with La Quinta Inns, a budget motel chain, one of our current favorites. The company recently underwent a management change and the results have brought strong improvements in room and occupancy rates, which suggests potential for future earnings growth. Applied/advanced technology, holdings, including computer software, networking and other computer services, had grown significantly by fiscal year's end. We have moved away from our emphasis on education/entertainment companies and are now focusing more on client/server and networking software. We are especially on the lookout for companies with proprietary technology that is of great value within a specific market niche. An example: InfoSoft, a recent initial public offering, creates language processing and productivity tools which are supplied to larger software-producing companies for incorporating in their word-process- ing or other software applications. TOP 10 HOLDINGS (6/30/94) - ---------------------------------------------------------------- Hospitality Franchise Systems, Inc. World's largest hotel franchise company - ---------------------------------------------------------------- Robert Half International, Inc. Temporary and permanent staffing services company - ---------------------------------------------------------------- Bed Bath & Beyond, Inc. Domestics and housewares discounter - ---------------------------------------------------------------- Infinity Broadcasting Corp., Class A Largest U.S.-based radio station owner/operator - ---------------------------------------------------------------- Paging Network, Inc. Largest provider of paging services in the U.S. - ---------------------------------------------------------------- Block (H & R), Inc. Income tax services and on-line computer services - ---------------------------------------------------------------- Wellfleet Communications, Inc. Multi-protocol networking products for computers - ---------------------------------------------------------------- Danka Business Systems ADR Office equipment services - ---------------------------------------------------------------- Liberty Media Corp. Class A Cable television systems and program networks - ---------------------------------------------------------------- PeopleSoft, Inc. Client/server applications software - ---------------------------------------------------------------- These holdings represent 16.3% of the fund's net assets. Portfolio holdings are subject to change. Personal communications and media/entertainment have been quite active over the second half of the fiscal year. Several gaming and programming positions were sold, reducing the media section allocation. We have become increasingly selec- tive in both sectors, with one current choice being Renaissance Communications. This TV station chain has six stations, five of them Fox affiliates. We believe this bodes well for advertising revenues down the road. OUTLOOK: BETTER TIMES COULD BE AHEAD Prices of the stocks of smaller and medium-sized companies can change dramati- cally as the market's perception of future earnings prospects moves up or down. Nevertheless, we believe that once the markets begin to focus forward - i.e., on earnings expectations for 1995 - the higher earnings potential of emerging growth stocks will make these investments attractive. We will work to position your fund to benefit accordingly. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed fa- vorably as of 6/30/94, there is no guarantee the fund will continue to hold the- se securities in the future. PERFORMANCE SUMMARY This section provides, at a glance, information about your fund's performance. Total return shows how the value of the fund's shares changed over time, assum- ing you held the shares through the entire period and reinvested all distribu- tions back into the fund. We show total return in two ways: on a cumulative long-term basis and on average how the fund might have grown each year over va- rying periods. For comparative purposes, we show how the fund performed relati- ve to appropriate indices and benchmarks. TOTAL RETURN FOR PERIODS ENDING IN 6/30/94 Standard Class A Class B & Poor's (R)* NAV POP NAV CDSC 500 Index CPI - ------------------------------------------------------------------------------- 1 year 7.00% 0.85% 6.18% 1.18% 1.43% 2.49% - ------------------------------------------------------------------------------- 3 years 101.45 89.79 -- -- 30.59 8.82 Annual average 26.30 23.81 -- -- 9.30 2.86 - ------------------------------------------------------------------------------- Life of class A 174.42 158.67 -- -- 55.66 12.46 Annual average 30.07 28.08 -- -- 12.21 3.11 - ------------------------------------------------------------------------------- Life of class B -- -- 24.35 20.35 4.51 3.42 Annual average -- -- 17.81 14.95 3.37 2.56 - ------------------------------------------------------------------------------- The fund began investment operations on 8/31/90, offering shares now known as class A shares. Effective 3/1/93, the fund began offering class B shares. Fund performance data do not take into account any adjustment for taxes payable on reinvested distributions. Performance data represent past results and differ for each share class. Investment returns and principal value will fluctuate so an investor's shares, when sold, may be worth more or less than their original cost. (Line Chart) GROWTH OF A $10,000 INVESTMENT Cumulative total return of a $10,000 investment since 8/31/90 Class A Shares at POP Competitive Index (S&P 500) CPI 8/31/90 $ 9,425 $ 10,000 $ 10,000 6/30/91 12,841 11,840 10,334 6/30/92 16,545 13,426 10,653 6/30/93 24,176 15,253 10,973 6/30/94 25,879 15,566 11,246 Past performance is no assurance of future results. A $10,000 investment in the fund's class B shares at inception (3/1/93) would have grown to $12,435 by 6/30/94 ($12,035 with a redemption at the end of the period). * (R) Registered mark TERMS AND DEFINITIONS CLASS A SHARES are generally subject to an initial sales charge. CLASS B SHARES may be subject to a sales charge upon redemption. NET ASSET VALUE (NAV) is the value of all fund assets, minus liabilities, divi- ded by the number of outstanding shares. It does not include any initial or con- tingent deferred sales charges. CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the redemption of shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. COMPARATIVE BENCHMARKS STANDARD & POOR'S (R)* 500 INDEX is an unmanaged list of common stocks that is frequently used as a general measure of stock market performance. The index assumes reinvestment of all distributions and does not take into account broke- rage commissions or other costs. The fund's portfolio contains securities that do not match those in the index. CONSUMER PRICE INDEX is a commonly used measure of inflation; it does not repre- sent an investment return. * (R) Registered mark THE PUTNAM FUND SELECTOR (TM)* The Putnam Fund Selector shows the many opportunities for investors within every investment strategy. All investors should first accumulate a base of conservati- ve, cash-equivalent investments. Then, with the help of your investment advisor, diversify your portfolio by investing in the Putnam Family of Funds. (Pyramid Graphic) Risk/Reward PUTNAM GROWTH FUNDS PUTNAM GROWTH AND INCOME FUNDS PUTNAM INCOME OR TAX-FREE INCOME FUNDS MOST CONSERVATIVE INVESTMENTS * (TM) Trademark PUTNAM GROWTH FUNDS Asia Pacific Growth Fund Diversified Equity Trust Europe Growth Fund Global Growth Fund Health Sciences Trust Investors Fund Natural Resources Trust New Opportunities Fund OTC Emerging Growth Fund Overseas Growth Fund Vista Fund Voyager Fund PUTNAM GROWTH AND INCOME FUNDS Convertible Income-Growth Trust Dividend Growth Fund Equity Income Fund The George Putnam Fund of Boston The Putnam Fund for Growth and Income Managed Income Trust Utilities Growth and Income Fund PUTNAM INCOME FUNDS Adjustable Rate U.S. Government Fund American Government Income Fund Balanced Government Fund Corporate Asset Trust Diversified Income Trust Federal Income Trust Global Governmental Income Trust High Yield Advantage Fund High Yield Trust Income Fund U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Intermediate Tax Exempt Fund Municipal Income Fund Tax Exempt Income Fund Tax-Free High Yield Fund Tax-Free Insured Fund State tax-free income funds * Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, and Pennsylvania LIFESTAGE (SM) FUNDS Putnam Asset Allocation Funds - three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments to help maximize your return and reduce your risk. The three portfolios: Putnam Asset Allocation: Balanced Portfolio Putnam Asset Allocation: Conservative Portfolio Putnam Asset Allocation: Growth Portfolio MOST CONSERVATIVE INVESTMENTS + Putnam money market funds: Daily Dividend Trust Tax Exempt Money Market Fund CDs and savings accounts ++ * Not available in all states. ++ Not offered by Putnam Investments. Certificates of deposit offer a fixed rate of return and may be insured, up to certain limits, by federal/state agen- cies. Savings accounts may also be insured up to certain limits. + Relative to above. Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a pros- pectus for any Putnam fund. It contains more complete information, including charges and expenses. Please read it carefully before you invest or send money. REPORT OF INDEPENDENT ACCOUNTANTS Annual Report For the Fiscal Year Ended June 30, 1994 To the Trustees and Shareholders of Putnam New Opportunities Fund We have audited the accompanying statement of assets and liabilities of Putnam New Opportunities Fund, including the portfolio of investments owned, as of June 30, 1994, and the related statement of operations, the statements of changes in net assets for each of the two years in the period then ended, and the "Finan- cial Highlights" for each of the three years in the period then ended and for the period August 31, 1990 (commencement of operations) to June 30, 1991 for Class A shares and for the year ended June 30, 1994 and for the period March 1, 1993 (commencement of operations) to June 30, 1993 for Class B shares. These fi- nancial statements and "Financial Highlights" are the responsibility of the fund's management. Our responsibility is to express an opinion on these finan- cial statements and "Financial Highlights" based on our audits. We conducted our audits in accordance with generally accepted auditing stan- dards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and "Financial High- lights" are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1994 by correspondence with the custodian and brokers. An audit also inclu- des assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and "Financial Highlights" referred to above present fairly, in all material respects, the financial position of Putnam New Opportunities Fund as of June 30, 1994, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the "Financial Highlights" for each of the three years in the period then ended and for the period August 31, 1990 (commencement of operations) to June 30, 1991 for Class A shares and for the year ended June 30, 1994 and for the period March 1, 1993 (commencement of operations) to June 30, 1993 for Class B shares, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts August 17, 1994 PORTFOLIO OF INVESTMENTS OWNED June 30, 1994 COMMON STOCKS (90.6%)(a) Number of Shares Value HEALTH CARE SERVICES (9.4%) 620,000 Careline, Inc. (b) $ 6,200,000 337,500 Health Management Assoc., Inc. (b) 6,918,750 556,200 Homecare Management, Inc. (b) 8,064,900 360,000 Homedco Group, Inc. (b) 10,080,000 350,000 Horizon Healthcare Corp. (b) 8,006,250 610,000 Lincare Holdings, Inc. (b) 11,818,750 227,400 Quantum Health Resources, Inc. (b) 7,191,525 101,500 Ren Corporation (b) 862,750 270,000 Renal Treatment Centers, Inc. (b) 4,590,000 355,000 Rotech Medical Corp. (b) 6,745,000 58,100 Summit Care Corp. (b) 1,060,325 160,000 Value Health, Inc. (b) 6,120,000 365,300 Vencor, Inc. (b) 12,602,850 106,120 Vivra, Inc. (b) 2,546,880 ---------------- 92,807,980 COMPUTER SOFTWARE (9.3%) 350,900 Alias Research, Inc. (b) 4,605,563 150,000 Compuware Corp. (b) 6,206,250 25,434 Concord Communications Inc. 12,717 343,907 FTP Software, Inc. (b) 5,244,582 307,400 Infosoft International, Inc. (b) 7,070,200 140,000 Intuit, Inc. (b) 4,655,000 270,000 Mercury Interactive Corp. (b) 2,767,500 380,000 Netmanage, Inc. (b) 5,320,000 130,000 Parametric Technology Corp. (b) 2,941,250 365,000 PeopleSoft, Inc. (b) 12,775,000 145,000 Powersoft Corp. (b) 7,032,500 185,000 Sybase, Inc. (b) 9,065,000 305,000 Synopsys, Inc. (b) 11,437,500 300,000 Wall Data, Inc. (b) 11,775,000 ---------------- 90,908,062 BUSINESS SERVICES (7.2%) 365,000 Danka Business Systems ADR (c) 14,554,365 345,000 Interim Services, Inc. (b) 7,978,125 300,000 Kelly Services, Inc. Class A 8,250,000 300,000 Manpower, Inc. 6,300,000 250,000 Olsten Corp. (The) 8,000,000 220,000 Paychex, Inc. 6,435,000 475,000 Robert Half International, Inc. (b) 19,178,125 ---------------- 70,695,615 Number of Shares Value CABLE TELEVISION (6.3%) 420,000 Antec Corp. (b) $ 9,870,000 140,000 Cablevision Systems Corp. (b) 6,545,000 530,000 Century Communications Corp. Class A 3,908,750 300,000 Comcast Corp. Special Class A 5,400,000 330,000 International Family Entertainment, Inc. (b) 5,445,000 670,000 Liberty Media Corp. Class A (b) 13,232,500 255,000 Star Sight Telecast, Inc. (b) 3,060,000 151,000 TCA Cable TV, Inc. 3,416,375 180,000 Tele-Communications, Inc. Class A (b) 3,667,500 225,000 Viacom, Inc. Class B (b) 7,115,625 ---------------- 61,660,750 RETAIL (6.1%) 600,000 Bed Bath & Beyond, Inc. (b) 17,175,000 335,000 Books-A-Million, Inc. (b) 7,872,500 1,250,000 Cifra SA de c.v., Series C (Mexico) (c) 2,912,875 53,500 Gymboree Corp. (b) 2,113,250 335,000 Heilig-Meyers Co. 9,086,875 100,000 Home Depot, Inc. 4,212,500 180,000 Office Depot, Inc. (b) 3,600,000 172,628 Stein Mart, Inc. (b) 3,020,990 315,000 Talbots, Inc. 9,450,000 ---------------- 59,443,990 RESTAURANTS (5.7%) 450,000 Apple South, Inc. 6,525,000 400,000 Applebee.s International, Inc. 4,900,000 500,000 Buffets, Inc. (b) 9,187,500 435,000 DF&R Restaurants, Inc. (b) 10,331,250 94,563 Fresh Choice, Inc. (b) 2,009,464 401,300 Landry.s Seafood Restaurants, Inc. (b) 7,398,969 385,700 Outback Steakhouse, Inc. (b) 9,305,013 450,000 Taco Cabana, Inc. (b) 6,075,000 ---------------- 55,732,196 WIRELESS COMMUNICATIONS (5.3%) 450,000 Airtouch Communications, Inc. (b) 10,631,250 110,000 Cellular Communications, Inc. Class A (b) 5,280,000 345,000 Centennial Cellular Corp. Class A (b) 5,778,750 12,150 Grupo Iusacell S.A. Series D (Mexico) ADR (b)(c) 320,456 28,350 Grupo Iusacell S.A. Series L (Mexico) ADR (b)(c) 737,100 585,000 Paging Network, Inc. (b) 16,087,500 240,000 United States Cellular Corp. (b) 5,970,000 220,200 Vanguard Cellular Systems, Inc. (b) 7,266,600 ---------------- 52,071,656 Number of Shares Value BROADCASTING (5.2%) 218,750 Clear Channel Communications, Inc. (b) $ 8,230,469 285,000 Emmis Broadcasting Corp. Class A (b) 4,061,250 695,000 Infinity Broadcasting Corp. Class A (b) 16,853,750 260,000 Renaissance Communications Corp. (b) 5,980,000 385,000 SFX Broadcasting, Inc. Class A (b) 5,293,750 500,000 Westcott Communications, Inc. (b) 4,875,000 750,000 Westwood One, Inc. (b) 5,812,500 ---------------- 51,106,719 HMOs (4.8%) 43,900 Coventry Corp. (b) 1,613,325 310,000 Healthsource, Inc. (b) 8,835,000 240,000 Mid Atlantic Medical Services, Inc. (b) 10,680,000 180,000 Oxford Health Plans Inc. (b) 8,010,000 70,000 Pacificare Health Systems, Inc. (b) 3,500,000 125,000 Pacificare Health Systems, Inc. Class B (b) 6,125,000 79,900 United American Healthcare (b) 1,348,313 160,000 United Healthcare Corp. 7,120,000 ---------------- 47,231,638 RECREATION (3.9%) 310,000 Blockbuster Entertainment Corp. 8,021,250 279,000 Boomtown, Inc. (b) 4,673,250 90,000 Disney (Walt) Productions Inc. 3,746,250 590,000 Mirage Resorts, Inc. (b) 11,062,500 37,500 Players International, Inc. (b) 562,500 250,000 Promus Companies, Inc. (b) 7,406,250 221,100 Rio Hotel & Casino, Inc. (b) 2,874,300 ---------------- 38,346,300 CONSUMER SERVICES (3.8%) 400,000 Block (H & R), Inc. 15,700,000 405,000 CUC International, Inc. (b) 10,833,750 300,000 Loewen Group, Inc. 7,387,500 157,617 Stewart Enterprises, Inc. Class A 3,428,170 ---------------- 37,349,420 COMPUTER SERVICES (3.6%) 160,000 America Online, Inc. (b) 9,120,000 685,000 Cambridge Technology Partners (b) 10,446,250 200,000 First Data Corp. 8,275,000 375,000 Fiserv Inc. (b) 7,687,500 ---------------- 35,528,750 Number of Shares Value LODGING (3.4%) 815,000 Hospitality Franchise Systems, Inc. (b) $ 19,967,500 450,000 La Quinta Inns, Inc. 11,756,250 100,946 Supertel Hospitality, Inc. (b) 1,211,352 ---------------- 32,935,102 TELEPHONE SERVICES (3.0%) 345,000 ALC Communications Corp. (b) 10,608,750 425,000 Communications Central, Inc. (b) 5,100,000 230,000 MFS Communications Company, Inc. (b) 5,692,500 225,000 Telephone & Data Systems, Inc. 8,325,000 ---------------- 29,726,250 NETWORKING EQUIPMENT (2.8%) 280,000 Cisco Systems, Inc. (b) 6,545,000 100,000 Newbridge Networks Corp. (b) 3,437,500 120,000 Stratacom, Inc. (b) 2,520,000 598,200 Wellfleet Communications, Inc. (b) 14,955,000 ---------------- 27,457,500 PHARMACEUTICALS AND BIOTECHNOLOGY (2.6%) 110,000 Biogen, Inc. (b) 3,148,750 37,701 Cephalon, Inc. (b) 339,309 270,000 Cor Therapeutics, Inc. (b) 3,172,500 365,000 Elan Corp. PLC ADR (b)(c) 12,683,750 125,000 Immulogic Pharmaceutical Corp. (b) 937,500 220,000 Penederm, Inc. (b) 2,255,000 275,000 Theratech, Inc. (Delaware) (b) 3,368,750 ---------------- 25,905,559 FINANCIAL SERVICES (2.2%) 330,000 Equitable Cos., Inc. 5,857,500 220,000 First USA, Inc. 8,442,500 325,000 MBNA Corp. 7,312,500 ---------------- 21,612,500 MEDICAL EQUIPMENT AND SUPPLIES (2.1%) 346,812 Ballard Medical Products Co. 3,511,472 700,000 Bioject Medical Technologies (b) 1,618,750 300,000 Haemonetics Corp. (b) 5,437,500 304,900 Igen, Inc. (b) 2,134,300 200,000 Medisense, Inc. (b) 2,400,025 330,081 Protocol Systems, Inc. (b) 2,063,006 298,100 Zoll Medical Corp. (b) 3,651,725 ---------------- 20,816,778 Number of Shares Value INSURANCE (1.2%) 280,000 Bankers Life Holding Corp. $ 5,635,000 140,000 Sunamerica, Inc. 5,722,500 ---------------- 11,357,500 HEALTH CARE INFORMATION SYSTEMS (0.9%) 369,743 Clinicom, Inc. (b) 5,361,274 150,000 HBO & Co. 3,787,500 ---------------- 9,148,774 COMPUTER PERIPHERALS (0.5%) 150,000 American Power Conversion Corp. (b) 2,418,750 240,000 Medar, Inc. (b) 2,880,000 ---------------- 5,298,750 HOUSEHOLD PRODUCTS (0.5%) 110,000 Duracraft Corp. (b) 4,812,500 PUBLISHING (0.3%) 185,000 Marvel Enterainment Group, Inc. (b) 3,376,250 ENVIRONMENTAL SERVICES (0.3%) 145,000 Molten Metal Technology, Inc. (b) 2,610,000 APPAREL (0.2%) 60,000 Tommy Hilfiger Corp. (b) 2,385,000 ---------------- TOTAL COMMON STOCKS (cost $849,846,529) $ 890,325,539 CONVERTIBLE BONDS (0.5%) (a) Principal Amount Value $2,350,000 Careline, Inc. sr. cv. notes 8s, 2001 (b)(d) $2,256,000 4,500,000 Office Depot Inc. sub. liquid yield, cv. notes zero %, 2007 2,958,750 ---------------- TOTAL CONVERTIBLE BONDs (cost $4,654,043) $5,214,750 CONVERTIBLE PREFERRED STOCKS (0.4%) (a) (cost $1,992,839) Number of Shares Value 72,000 Cellular Communications, Inc. Class A (b) $3,456,000 SHORT-TERM INVESTMENTS (10.3%)(a) Principal Amount Value $20,000,000 Bank of Boston Corp. 4.25s, July 12, 1994 $ 19,971,666 20,000,000 Federal Home Loan Mortgage Corp. 4.31s, August 25, 1994 19,865,911 20,000,000 Federal National Mortgage Assn. 4.37s, September 1, 1994 19,854,335 20,000,000 General Motors Acceptance Corp. 4.3s, July 13, 1994 19,968,944 10,000,000 Goldman Sachs Group 4.35s, July 5, 1994 9,993,958 11,361,000 Interest in $410,000,000 joint repurchase agreement dated June 30, 1994 with Goldman Sachs & Co., Inc., due July 1, 1994 with respect to va- rious U.S. Treasury obligations - maturity value of $11,361,000 for an effective yield of 4.25% $ 11,361,000 ---------------- TOTAL SHORT-TERM INVESTMENTS (cost $101,015,814) $101,015,814 ---------------- TOTAL INVESTMENTS (cost $957,509,225)(e) $1,000,012,103 (a) Percentages indicated are based on total net assets of $982,525,087, which correspond to a net asset value per Class A share and Class B share of $21.88 and $21.68, respectively. (b) Non-income-producing security. (c) ADR after the name of a foreign holding stands for American Depository Re- ceipt, representing ownership of foreign securities on deposit with a domes- tic custodian bank. (d) Security exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30,1994, this security was valued at 2,256,000 or 0.2% of net assets. (e) The aggregate identified cost for federal income tax purposes is $959,983,375, resulting in gross unrealized appreciation and depreciation of $110,607,581 and $70,578,853, respectively, or net unrealized appreciation of $40,028,728. The accompanying notes are an integral part of these financial statements. STATEMENT OF ASSETS AND LIABILITIES June 30, 1994 ASSETS - ------------------------------------------------------------------------------- Investments in securities, at value (identified cost $957,509,225) (Note 1) $1,000,012,103 Cash 462 Dividends and interest receivable 300,938 Receivable for shares of the fund sold 9,368,287 Receivable for securities sold 10,715,064 Unamortized organization expenses (Note 1) 7,842 - ------------------------------------------------------------------------------- TOTAL ASSETS 1,020,404,696 LIABILITIES - ------------------------------------------------------------------------------- Payable for securities purchased $ 129,795,701 Payable for shares of the fund repurchased 5,194,950 Payable for compensation of Manager (Note 2) 1,529,048 Payable for distribution fees (Note 2) 669,735 Payable for administrative services (Note 2) 4,412 Payable for compensation of Trustees (Note 2) 1,035 Payable for investor servicing and custodian fees (Note 2) 337,014 Payable for organization expenses (Note 1) 23,788 Other accrued expenses 323,926 - ------------------------------------------------------------------------------- TOTAL LIABILITIES 37,879,609 - ------------------------------------------------------------------------------- NET ASSETS $ 982,525,087 REPRESENTED BY - ------------------------------------------------------------------------------- Paid-in capital (Note 4) $ 931,338,979 Accumulated net realized gain on investment transactions 8,683,230 Net unrealized appreciation of investments 42,502,878 TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO CAPITAL SHARES OUTSTANDING $ 982,525,087 COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE - ------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($648,786,907 divided by 29,653,331 shares) $21.88 Offering price per Class A share (100/94.25 of $21.88) * $23.21 Net asset value and redemption price per Class B share ($333,738,180 divided by 15,392,432 shares) ** $21.68 - ------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements. STATEMENT OF OPERATIONS Year ended June 30, 1994 INVESTMENT INCOME: - ------------------------------------------------------------------------------- Interest $ 11,777,008 - ------------------------------------------------------------------------------- Dividends (Net foreign tax of $2,831) 1,117,163 - ------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 2,894,171 - ------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------------------------------------- Compensation of Manager (Note 2) $ 4,492,598 - ------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 1,433,091 - ------------------------------------------------------------------------------- Administrative services (Note 2) 16,991 - ------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 24,431 - ------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 1,278,169 - ------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 1,561,106 - ------------------------------------------------------------------------------- Reports to shareholders 127,776 - ------------------------------------------------------------------------------- Registration fees 243,950 - ------------------------------------------------------------------------------- Auditing 28,331 - ------------------------------------------------------------------------------- Legal 21,643 - ------------------------------------------------------------------------------- Postage 208,951 - ------------------------------------------------------------------------------- Amortization of organization expenses (Note 1) 11,884 - ------------------------------------------------------------------------------- Other expenses 41,890 - ------------------------------------------------------------------------------- TOTAL EXPENSES 9,490,811 - ------------------------------------------------------------------------------- NET INVESTMENT LOSS (6,596,640) - ------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 16,471,902 - ------------------------------------------------------------------------------- Net unrealized depreciation of investments during the year (40,895,256) - ------------------------------------------------------------------------------- Net loss on investments (24,423,354) - ------------------------------------------------------------------------------- Net decrease in net assets resulting from operations $ (31,019,994) - ------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. STATEMENT OF CHANGES IN NET ASSETS Year ended June 30 1994 1993 - ------------------------------------------------------------------------------- INCREASE IN NET ASSETS - ------------------------------------------------------------------------------- Operations: - ------------------------------------------------------------------------------- Net investment loss $ (6,596,640) $ (2,175,729) - ------------------------------------------------------------------------------- Net realized gain on investments 16,471,902 3,536,111 - ------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments (40,895,256) 80,388,469 - ------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (31,019,994) 81,748,851 - ------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM net realized gain on investments - class A (8,898,215) (3,728,798) - ------------------------------------------------------------------------------- net realized gain on investments - class B (2,205,357) -- - ------------------------------------------------------------------------------- Increase from capital share transactions (Note 4 ) 690,524,657 114,897,684 - ------------------------------------------------------------------------------- TOTAL INCREASE IN NET ASSETS 648,401,091 192,917,737 - ------------------------------------------------------------------------------- Beginning of year 334,123,996 141,206,259 - ------------------------------------------------------------------------------- END OF YEAR (including accumulated net investment loss of $0 and $2,644,703, respectively) $ 982,525,087 $ 334,123,996 - ------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS * (For a share outstanding throughout the period) For the period For the period March 1, 1993 August 31, 1990 Year (commencement (commencement of ended of operations) to operations) to June 30 June 30 Year ended June 30 June 30 - ----------------------------------------------------------------------------------------------------------------------------------- 1994 1993 1994 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------------------- Class B Class A - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $20.80 $17.76 $20.83 $14.50 $11.56 $8.54 Investment operation: Net investment income (loss) (.11) (.05) (.06) (.12) (.02) (.11) (a) Net realized and unrealized gain on investments 1.44 3.09 1.56 6.77 3.33 (d) 3.19 Total from investment operations 1.33 3.04 1.50 6.65 3.31 3.08 Less distributions to shareholders from net realized gain on investments (.45) -- (.45) (.32) (.37) (.06) Total distributions (.45) -- (.45) (.32) (.37) (.06) Net asset value, end of period $21.68 $20.80 $21.88 $20.83 $14.50 $11.56 Total investment return at net asset value (%) (e) 6.18 51.88 (b) 7.00 46.12 28.85 43.12 (b) Net assets, end of period (in thousands) $333,738 $15,698 $648,787 $318,426 $141,206 $3,164 Ratio of expenses to average net assets (%) 2.04 .67 (f) 1.23 1.31 1.64 2.28 (a)(f) Ratio of net investment loss to average net assets (%) (1.55) (.57)(f) (.82) (0.98) (.91) (1.14)(a)(f) Portfolio Turnover (%) 52.76 93.59 (f) 52.76 93.59 116.04 (c) 71.54 (f) - ----------------------------------------------------------------------------------------------------------------------------------- * Financial highlights for periods ended through June 30, 1992 have been re- stated to conform with requirements issued by the SECin April 1993. (a) Reflects a voluntary absorption of expenses incurred by the fund and an ex- pense limitation during the period. As a result of these limitations, expen- ses of the fund for the period ended June 30, 1991 reflect a reduction of $0.05 per share. (See Note 2.) (b) Annualized. (c) Portfolio turnover excludes the impact of assets received from the acquisi- tion of Putnam Information Sciences Trust. (d) The amount shown is a balancing figure and does not accord with the net loss on investments which excludes the unrealized appreciation acquired from Put- nam Information Sciences Trust. (e) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (f) Not annualized.
NOTES TO FINANCIAL STATEMENTS June 30, 1994 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES The fund is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company. The fund seeks capital appreciation by investing principally in common stocks of companies in sectors of the economy which, in Putnam Investment Management's judgment, possess above- average, long-term growth potential. The fund offers both class A and class B shares. The fund commenced its public offering of class B shares on March 1, 1993. Class A shares are sold with a front-end sales charge of 5.75%. Class B shares 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. In addition, the Trustees declare separate divi- dends on each class of shares. Each class bears expenses unique to that class (including the distribution fees applicable to such class) and 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. All other expenses of the fund are borne pro-rata by the holders of both classes of shares. Shares of each class would receive their pro rata share of the net assets of the fund if the fund were liquidated. The following is a summary of significant accounting policies consistently fo- llowed by the fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A) SECURITY VALUATION Investments for which market quotations are readily avail- able are stated at market value, which is determined using the last reported sa- le price, or, if no sales are reported - as in the case of some securities tra- ded over-the-counter - the last reported bid price, except that certain U.S. go- vernment obligations are stated at the mean between the last reported bid and asked prices. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value, and other investments are stated at fair value following procedures approved by the Trustees. B) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security transactions are accounted for on the trade date (date the order to buy or sell is executed). In- terest income is recorded on the accrual basis and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. C) 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 compa- nies managed by Putnam Investment Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc., and cer- tain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. D) REPURCHASE AGREEMENTS The fund, 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 accru- ed interest. The fund's Manager 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. E) FEDERAL TAXES It is the policy of the fund to distribute all of its income within the prescribed time and otherwise comply with the provisions of the In- ternal 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. There- fore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation of securities held, and excise tax on income and capital gains. F) DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded by the fund on the ex-dividend date. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include treatment of non-taxable divi- dends, wash sales and organization expenses. 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 June 30, 1994, the Fund reclassified $6,596,640 to increase undistri- buted net investment income, $26,338 to decrease accumulated net realized gain on investments, and $6,570,302 to decrease paid-in capital. G) UNAMORTIZED ORGANIZATION EXPENSES Expenses incurred by the fund in connection with its organization, its registration with the Securities Exchange Commission and with various state and the initial public offering of its shares aggregated $54,369. These expenses are being amortized by the fund on a straight-line basis over a five-year period. NOTE 2 MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS Compensation of Putnam Management, for management and investment advisory servi- ces 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, and 0.50% of any amount over $1.5 billion, subject to reduction in any year by the amount of certain brokerage commissions and fees (less expenses) received by affiliates of the Manager of the fund's portfolio transactions. The fund also reimburses the Manager for the compensation and related expenses of certain officers of the fund and their staff who provide administrative ser- vices to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. For the year ended June 30, 1994, the fund incurred $16,991 for these services. Trustees of the fund receive an annual Trustee.s fee of $1,440 and an additional fee for each Trustees. meeting attended. Trustees who are not interested persons of the Manager and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. 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. Fees paid for these investor servicing and custodial functions for the year ended June 30, 1994 amounted to $1,433,091. Investor servicing and custodian fees reported in the Statement of operations for the year ended June 30, 1994 have been reduced by credits allowed by PFTC. The fund has adopted a distribution plan with respect to its Class A shares (the "Class A Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of Class A Plan 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 Class A shares. The Trustees have appro- ved payment by the fund to Putnam Mutual Funds Corp. at an annual rate of 0.25% of the fund's average net assets attributable to Class A shares. For the year ended June 30, 1994, the fund paid Putnam Mutual Funds Corp. distribution fees of $1,278,169 for Class A shares. During the year ended June 30, 1994, Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments, Inc., acting as an underwriter, received net commissions of $1,399,762 from the sale of class A shares of the fund. A deferred sales charge of up to 1% is assessed on certain redemptions of Class A shares purchased as part of an investment of $1 million or more. For the year ended June 30, 1994, Putnam Mutual Funds Corp., acting as underwriter, received $2,636 on such redemptions. The fund has adopted a separate distribution plan with respect to its Class B shares (the .Class B Plan.) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Class B Plan is to compensate Putnam Mutual Funds Corp. for services provided and expenses incurred by it in distributing Class B shares. The Class B Plan provides for payments by the fund to Putnam Mu- tual Funds Corp. at an annual rate of 1.00% of the funds average net assets attributable to Class B shares. For the year ended June 30, 1994, the fund in- curred fees of $1,561,106 for Class B shares. Putnam Mutual Funds Corp. also receives the proceeds of contingent deferred sa- les charges levied on Class B share redemptions within four years of purchase. The charge is based on declining rates, which begin at 5.0% of the net asset va- lue of the redeemed shares . Putnam Mutual Funds Corp. received contingent de- ferred sales charges of $258,694 from such redemptions for the year ended June 30, 1994. NOTE 3 PURCHASES AND SALES OF SECURITIES During the year ended June 30, 1994, purchases and sales of investment securi- ties other than short-term investments aggregated $943,570,508 and $327,325,956, respectively. There were no purchases or sales of U.S. government obligations during the year. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. NOTE 4 CAPITAL SHARES At June 30, 1994, there was an unlimited number of shares of beneficial interest authorized, divided into two classes, class A and class B capital shares. Tran- sactions in capital shares were as follows: Year ended June 30 1994 Class A Shares Amount - ------------------------------------------------------------------------------- Shares sold 33,758,633 $802,293,848 Shares issued in connection with reinvestment of distributions 333,672 8,021,432 34,092,305 810,315,280 Shares repurchased (19,724,856) (468,827,584) NET INCREASE 14,367,449 341,487,696 Year ended June 30 1993 Class A Shares Amount - ------------------------------------------------------------------------------- Shares sold 15,622,166 $282,584,004 Shares issued in connection with reinvestment of distributions 180,756 3,313,941 15,802,922 285,897,945 Shares repurchased (10,253,778) (185,483,706) NET INCREASE 5,549,144 100,414,239 Year ended June 30 1994 Class B Shares Amount - ------------------------------------------------------------------------------- Shares sold 16,813,104 $400,427,970 Shares issued in connection with reinvestment of distributions 84,593 2,023,470 16,897,697 402,451,440 Shares repurchased (2,259,924) (53,414,479) NET INCREASE 14,637,773 349,036,961 For the period March 1, 1993 (commencement of operations) to June 30 1993 Class B Shares Amount - ------------------------------------------------------------------------------- Shares sold 780,431 $14,991,747 Shares issued in connection with reinvestment of distributions -- -- 780,431 14,991,747 Shares repurchased (25,772) (508,302) NET INCREASE 754,659 14,483,445 NOTE 5 RECLASSIFICATION OF CAPITAL ACCOUNT Effective July 1, 1993, Putnam New Opportunities Fund has adopted the provisions of Statement of Position 93-2 "Determination, Disclosure and Financial Statement Presentation of Income, Capital Gain and Return of Capital Distributions by In- vestment Companies (SOP)." The purpose of this SOP is to report the accumulated net investment income (loss) and accumulated net realized gain (loss) accounts in such a manner as to approximate amounts available for future distributions (or to offset future realized capital gains) and to achieve uniformity in the presentation of distributions by investment companies. As a result of the SOP, the fund has reclassified $2,644,703 to increase undis- tributed net investment income and decrease accumulated net realized gain by $7,424, with a decrease of $2,637,279 to additional paid-in capital. These ad- justments represent the cumulative amounts necessary to report these balances through June 30, 1993. FEDERAL TAX INFORMATION Of the total distributions made, $0.447 per share was classified as long-term capital gain whether received in cash or additional Fund shares, and regardless of how long you had owned your shares before the distribution was made. The Form 1099 you receive in January 1995 will show you the tax status of all distributions paid to your account in calendar year 1994. If you're a shareholder in an IRA or other tax-sheltered retirement plan, this statement is for information only and will serve as a record of distributions reinvested in your account during the fiscal year. Money invested in these plans generally is not subject to federal income tax until you withdraw it. As required by law, your Fund reports to the Internal Revenue Service on a ca- lendar basis the amount of distributions paid to each shareholder. Date Paid Short-term Capital Gain Long-term Capital Gain Total Paid - ------------------------------------------------------------------------------- Class A - ------------------------------------------------------------------------------- December 20, 1993 $0.000 $0.447 $0.447 - ------------------------------------------------------------------------------- Class B - ------------------------------------------------------------------------------- December 20, 1993 $0.000 $0.447 $0.447 - ------------------------------------------------------------------------------- OUR COMMITMENT TO QUALITY SERVICE CHOOSE AWARD-WINNING SERVICE. Putnam Investor Services has won the DALBAR Quality Tested Service Seal every year since the award.s 1990 inception. DALBAR, an independent research firm, ran more than 10,000 tests of 38 shareholder service components. In every category, Putnam outperformed the industry standard. HELP YOUR INVESTMENT GROW. Set up a sytematic program for investing with as little as $25 a month from a Putnam fund or from your checking or savings account. * SWITCH FUNDS EASILY. You can move money from one account to another with the same class of shares without a service charge. (This privilege is subject to change or termination.) ACCESS YOUR MONEY QUICKLY. You can get checks sent regularly or redeem shares any business day at the then- current net asset value, which may be more or less than their original cost. For details about any of these or other services, contact your financial advisor or call the toll-free number shown below and speak with a helpful Putnam repre- sentative. To make an additional investment in this or any other Putnam fund, contact your financial advisor or call our toll-free number: 1-800-225-1581. * Regular investing, of course, does not guarantee a profit or protect against a loss in a declining market. Investors should consider their ability to con- tinue purchasing shares during periods of low price levels. FUND INFORMATION INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam Charles E. Porter President Executive Vice President Patricia C. Flaherty Lawrence J. Lasser Senior Vice President Vice President Gordon H. Silver Peter Carman Vice President Vice President Daniel L. Miller William N. Shiebler Vice President and Fund Manager Vice President John R. Verani Paul M. O.Neil Vice President Vice President John D. Hughes Beverly Marcus Vice President and Treasurer Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam New Opportunities Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objec- tives and operating policies of the fund, and the most recent Putnam Quarterly Performance Summary. PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Bulk Rate U.S. Postage Paid Boston, MA Permit No. 53749 852/358-13352 APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND EDGAR-FILED TEXTS: (1) Boldface typeface is displayed with capital letters, italic typeface is displayed in normal type. (2) Because the printed page breaks are not reflected, certain tabular and columnar headings and symbols are displayed differently in this filing. (3) Bullet points and similar graphic signals are omitted. (4) Page numbering has been omitted. (5) The trademark symbol has been replaced by (TM). (6) The copyright symbol has been replaced by (C). (7) The dagger symbol has been replaced by (+). (8) The registered mark symbol has been replaced by (R). -----END PRIVACY-ENHANCED MESSAGE-----