-----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, Bid56EApj6fDu1MVFGWe1vl4gu8TpF7lVhx6POUCkoRam7nnC+YRxImgyc9Z7WuI FuHnfKBc00BUt/j+Qj7jyA== 0000914120-95-000005.txt : 19950615 0000914120-95-000005.hdr.sgml : 19950615 ACCESSION NUMBER: 0000914120-95-000005 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950313 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM NEW OPPORTUNITIES FUND CENTRAL INDEX KEY: 0000865177 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [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: 95520269 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: A6 ZIP: 02109 BUSINESS PHONE: 6172921000 N-30D 1 PUTNAM NEW OPPORTUNITIES FUND Putnam New Opportunities Fund [Artwork] SEMIANNUAL REPORT December 31, 1994 [Putnam Logo] Boston * London * Tokyo PERFORMANCE HIGHLIGHTS As of December 31, 1994, the fund's class A shares continued to hold Morning- star's highest rating: five stars. * According to Lipper Analytical Services, the fund's class A- and class B-share returns surpassed more than 85% of the returns of all growth funds tracked by Lipper over the 12-month period ended December 31, 1994. + Performance should always be considered in light of a fund's investment strate- gy. Putnam New Opportunities Fund is designed for investors seeking long-term capital appreciation primarily through common stock investments in companies in economic sectors with above-average long-term growth potential. SEMIANNUAL RESULTS AT A GLANCE - ------------------------------------------------------------------------------- CLASS A CLASS B CLASS M TOTAL RETURN: NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------------- (change in value during period plus reinvested distributions) 6 months ended 12/31/94 16.44% 9.77% 16.04% 11.04% -- -- - ------------------------------------------------------------------------------- CLASS A CLASS B CLASS M SHARE VALUE: NAV POP NAV NAV POP - ------------------------------------------------------------------------------- 6/30/94 $21.88 $23.21 $21.68 -- -- 12/1/94 (inception of class M shares) -- -- -- $24.72 $25.62 12/31/94 25.26 26.80 24.94 25.26 26.18 - ------------------------------------------------------------------------------- LONG-TERM DISTRIBUTIONS: NO. INCOME CAPITAL GAINS TOTAL - ------------------------------------------------------------------------------- Class A 1 -- $0.201 $0.201 Class B 1 -- 0.201 0.201 Class M 1 -- 0.201 0.201 - ------------------------------------------------------------------------------- Performance data represent past results and will differ for each share class. For performance over longer periods, see page 8. POP assumes 5.75% maximum sa- les charge for class A shares and 3.50% for class M shares, which became ef- fective December 1, 1994. CDSC for class B shares assumes a 5% maximum contin- gent deferred sales charge. Performance for class M shares is not shown becau- se of the brevity of the reporting period. * Morningstar, Inc., rates a fund in relation to other funds with similar in- vestment objectives, based on the fund's 3-year average annual returns, adjus- ted for risk factors and sales charges. Ratings are updated monthly. The five- star rating for the period ending 12/31/94 puts the fund in the top 10% of the 1,132 equity funds rated. Past performance is not indicative of future results. + Lipper Analytical Services is an industry research firm whose rankings vary over time and do not include the effects of sales charges. Return figures re- present total returns (change in share price plus reinvestment of distribu- tions). For periods ended 12/31/94, the fund's class A and class B shares ran- ked as follows: 51 and 72 out of 481 growth funds for 1-year performance, res- pectively, and class A shares ranked 4 out of 284 growth funds for 3-year per- formance. Past performance is not indicative of future results. FROM THE CHAIRMAN [Photograph of George Putnam] * (C) Karsh, Ottawa DEAR SHAREHOLDER: STRONG CORPORATE EARNINGS AND ROBUST ECONOMIC GROWTH GENERALLY FAILED TO TRANS- LATE INTO HIGHER STOCK PRICES DURING 1994 AS EQUITY INVESTORS WORRIED THAT THE FEDERAL RESERVE BOARD'S ANTI-INFLATION POLICY WOULD CHOKE OFF ECONOMIC GROWTH. ONLY A FEW SECTORS, NOTABLY HEALTH CARE AND TECHNOLOGY, ACHIEVED FIRMLY POSITIVE RETURNS IN THIS ENVIRONMENT. PUTNAM NEW OPPORTUNITIES FUND CLEARLY FELT THE EFFECTS OF THIS LACKLUSTER MARKET DURING CALENDAR 1994'S FIRST HALF. NEVERTHELESS, THE FUND POSTED EXCEPTIONAL RE- SULTS FOR THE YEAR'S SECOND HALF, OUTPACING THE BROADER MARKET BY A WIDE MARGIN. PROSPECTS FOR 1995 APPEAR BRIGHT. CONTINUED ECONOMIC RECOVERY IN JAPAN AND EURO- PE MAY SPARK DEMAND FOR AMERICAN GOODS FROM INDUSTRIES IN WHICH U.S. COMPANIES HAVE COMPETITIVE ADVANTAGES. THESE INCLUDE TELECOMMUNICATIONS, MEDIA, AND NET- WORKING TECHNOLOGY -- SECTORS FUND MANAGER DAN MILLER AND HIS SPECIALTY GROWTH GROUP TYPICALLY RESEARCH FOR COMPANIES WITH THE POTENTIAL FOR SUSTAINABLE LEVELS OF PROFITABILITY AND GROWTH. IN THE REPORT THAT FOLLOWS, DAN DISCUSSES THE FUND'S SEMIANNUAL RESULTS, AND EX- PLAINS HOW HE PLANS TO POSITION YOUR FUND IN THE MONTHS AHEAD. RESPECTFULLY YOURS, GEORGE PUTNAM CHAIRMAN OF THE TRUSTEES FEBRUARY 15, 1995 * (C) Copyright REPORT FROM THE FUND MANAGER DANIEL L. MILLER Despite volatile market conditions, Putnam New Opportunities Fund turned in a superior performance for the first half of fiscal 1995. The fund's calendar-year results, as shown on page 8, reflect the selling pressure that weighed down the NASDAQ over-the-counter market from February through late summer. For the six months through December 31, 1994, however, the fund rallied strongly: class A shares and class B shares posted total returns of 16.44% and 16.04%, respective- ly, at net asset value (NAV). The fund also surpassed the broader market's 6- and 12-month results of 4.87% and 1.36%, respectively, as represented by the Standard & Poor's 500*(R) Index. We attribute the fund's strong showing to its two largest industry weightings - -- applied/advanced technology and medical technology/cost containment -- which were among the best-performing market sectors during the second half of 1994. Several large positions in each of these industry sectors propelled the fund as the market refocused on the generally favorable earnings outlook for growth stocks in 1995. FUND BENEFITS FROM GROWTH OF COMPUTER NETWORKING Applied/advanced technology was the fund's largest industry weighting at the end of 1994, constituting nearly 25% of net assets. Several positions in this sector did extremely well; America Online (AOL) and Stratacom were notable standouts. The prices of both stocks rose dramatically during the semi-annual period, with AOL advancing 96% and Stratacom surging more than 233%. Both companies continue to benefit, albeit in different ways, from the proliferation of computer net- working. AOL is rapidly increasing its share of the fast-growing consumer market for on- line services, including electronic mail, software, electronic magazines and newspapers, and other services. At the end of 1994, AOL had more than one mil- lion subscribers, up from 300,000 in mid-1993. Stratacom, based in San Jose, California, designs, manufactures, and markets equipment for high-speed data * (R) Registered mark transfer, as well as other products used in public and private computer net- works. It has been a major beneficiary of the trend toward decentralization of corporate computing resources and the demand for various network services that enable people to communicate and share data. Stratacom sells its products to companies such as AT&T, which, in turn, sells networking services to its busi- ness customers. GROWING ACCEPTANCE OF HMOs HIGHLIGHTS MEDICAL OPPORTUNITIES Medical cost-containment has been an emerging economic theme for the past seve- ral years as employers seek new methods of controlling the expenses associated with providing employee health insurance. One way your fund has participated in this trend is by purchasing the stocks of health maintenance organizations (HMOs). HMOs offer medical services at lower costs than the traditional indemnity health insurance plans do. In exchange, subscribers are required to use doctors and hospitals that are affiliated with the organization. Enrollment in HMOs has grown fivefold since [Bar Chart - Page 5] SECTOR ALLOCATION SHIFTS * 6/30/94 12/31/94 Applied/advanced technology 18.4 % 24.9 % Medical technology/cost containment 19.8 23.1 Value-oriented consuming 16.7 14.4 Media/entertainment 15.7 12.0 Personal communications 8.6 10.5 Miscellaneous 7.9 6.5 Personal financial services 3.4 1.9 Environmental services 0.3 0.8 * Based on a percentage of net assets. Holding will vary over time. 1982, giving the plans considerable bargaining leverage when negotiating dis- counts on health services. One of the fund's largest investments over the latter half of 1994 was Oxford Health Plans, a Connecticut-based managed-care company that offers health plans in the greater New York metropolitan area. Oxford is building its subscriber ba- se by offering an innovative plan that gives members the option to seek medical services outside the HMO. The company is also benefiting from the competitive dynamics of the New York marketplace, where relatively few HMOs are available to city residents. During the six months ended December 31, 1994, Oxford's stock price rose 78%. LONG-DISTANCE CARRIER EXPLOITS PROFITABLE MARKET NICHE Several stocks in the personal communications sector also contributed to the fund's performance in the fiscal first half. One noteworthy example is LCI In- ternational, a long-distance telephone-service provider, whose stock price clim- bed 67% over the period. LCI targets the small to medium-sized business market where it can offer a level of service beyond that of the major long-distance companies. LCI has developed a successful niche and gained a share of a huge market; so huge, in fact, that a share as small as 1% translates into several hundred million dollars of revenue. THE TWO SIDES OF HIGHER INTEREST RATES: RISK AND OPPORTUNITY Our outlook for the second half of fiscal 1995 acknowledges both the risk and the opportunity of higher interest rates and their effect on the economy. The Federal Reserve Board raised short-term interest rates seven times in the past 13 months, and has left the door open for further increases in 1995. The goal of these increases has been to slow the rate of economic growth without pushing the economy into recession. This is an extremely difficult balancing act, which, historically, the Fed has not been able to maintain. Consequently, the risk of a significant economic slowdown later in 1995 cannot be ignored. However, rates appear to have risen enough to cause the consumer-driven segments of the economy to slow somewhat. Most retailers reported disappointing Christmas sales, providing one indicator of waning consumer demand. If this is a precursor TOP 10 HOLDINGS, 12/31/94 - ------------------------------------------------------------------------------- ROBERT HALF INTERNATIONAL, INC. World's largest staffing services company - ------------------------------------------------------------------------------- INFINITY BROADCASTING CORP., CLASS A Largest U.S.-based radio station owner/operator - ------------------------------------------------------------------------------- HOSPITALITY FRANCHISE SYSTEMS, INC. World's largest hotel frnachise company - ------------------------------------------------------------------------------- AMERICAN ONLINE, INC. On-line computer services - ------------------------------------------------------------------------------- BLOCK (H&R), INC. Income tax and on-line computer services - ------------------------------------------------------------------------------- OXFORD HEALTH PLAN, INC. Healtg Maintenance Organization (HMO) - ------------------------------------------------------------------------------- DANKA BUSINESS SYSTEMS PLC, ADR Office equipment services - ------------------------------------------------------------------------------- LINCARE HOLDINGS, INC. Health care services - ------------------------------------------------------------------------------- VIACOM, INC., CLASS B Cable television programming - ------------------------------------------------------------------------------- VENCOR, INC. Health care services - ------------------------------------------------------------------------------- These holdings represent 14.4% of the fund's net assets. Portfolio holdings will vary over time. of a broader economic slowdown, the equity markets may gain confidence that in- terest rates are peaking. Such a development would likely be positive for growth stocks because, with interest-rate uncertainty reduced, investors may shift their focus to companies that are capable of increasing their earnings despite a slowdown in the overall economy. We will continue to keep abreast not only of the economic factors that affect growth stocks, but also of the specific industry and company fundamentals - -- profitability, resources, competitive position, etc. -- that guide our in- vestment decision-making process. By doing so, we believe we can keep the fund on course for maximum long-term growth potential even in the midst of short-term market fluctuations. The views expressed in this report are exclusively those of Putnam Management and are not meant as investment advise. Although the described holdings were viewed favorably as of December 31, 1994, there is no guarantee the fund will continue to hold these 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, assu- ming 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 relative to appropiate indexes and benchmarks. TOTAL RETURN FOR PERIODS ENDED 12/31/94 STANDARD CLASS A CLASS B & POOR'S NAV POP NAV CDSC 500 INDEX CPI - ------------------------------------------------------------------------------- 6 months 16.44% 9.77% 16.04% 11.04% 4.87% 1.15% - ------------------------------------------------------------------------------- 1 year 3.31 -2.61 2.55 -2.45 1.36 2.68 - ------------------------------------------------------------------------------- 3 years 72.19 62.24 -- -- 20.01 8.56 Annual average 19.86 17.50 -- -- 6.27 2.77 - ------------------------------------------------------------------------------- Life of class A 219.54 201.19 -- -- 63.23 13.75 Annual average 30.69 28.92 -- -- 11.95 3.01 - ------------------------------------------------------------------------------- Life of class B -- -- 44.30 40.30 9.94 4.61 Annual average -- -- 22.19 20.32 5.31 2.49 - ------------------------------------------------------------------------------- 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 and effective 12/1/94, the fund began offering class M shares. Performance for class M shares is not shown because of the brevity of the reporting period. Fund per- formance data do not take into account any adjustment for taxes payable on rein- vested distributions. Performance data represent past results and differ for each share class. Investment returns and net asset value will fluctuate so an investor's shares, when sold, may be worth more or less than their original cost. TERMS AND DEFINITIONS CLASS A SHARES are generally subject to an initial sales charge. CLASS B SHARES may be subject to a sales charge upon redemption. CLASS M SHARES have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption. NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any liabili- ties, 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 maximum sales charge of 5.75% for class A shares and 3.50% for class M shares. CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the redemption of class B shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. COMPARATIVE BENCHMARKS STANDARD & POOR'S 500 INDEX is an unmanaged list of common stocks that is fre- quently used as a general measure of stock market performance. The index assumes reinvestment of all distributions and does not take into account brokerage com- missions or other costs. The fund's portfolio contains securities that do not match those in the index. CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it does not represent an investment return. PORTFOLIO OF INVESTMENTS OWNED December 31, 1994 (Unaudited) COMMON STOCKS (92.8%)(a) NUMBER OF SHARES VALUE COMPUTER SOFTWARE (9.5%) - ------------------------------------------------------------------------------- $ 345,300 Alias Research, Inc. (b) $ 6,215,400 325,000 Applied Voice Technology, Inc. (b) 5,443,750 119,800 BMC Software, Inc. (b) 6,813,625 250,000 Caere Corp. (b) 4,531,250 410,000 FTP Software, Inc. (b) 12,966,250 330,000 Infosoft International, Inc. (b) 11,591,250 510,000 Mercury Interactive Corp. (b) 6,757,500 380,000 Netmanage, Inc. (b) 15,390,000 450,000 Novell, Inc. (b) 7,706,250 195,000 Oracle Systems Corp. (b) 8,604,375 537,800 Platinum Software Corp. (b) 6,991,400 550,700 PLATINUM Technology Inc. (b) 12,459,587 265,000 PeopleSoft, Inc. (b) 10,003,750 167,450 Security Dynamics Technologies, Inc. (b) 3,118,756 355,000 Synopsys, Inc. (b) 15,531,250 250,000 Wall Data, Inc. (b) 9,937,500 -------------- 144,061,893 HEALTH CARE SERVICES (8.9%) - ------------------------------------------------------------------------------- 540,000 Coram Healthcare Corp. (b) 8,910,000 299,100 Emcare Holdings, Inc. (b) 4,336,950 556,200 Health Management, Inc. (b) 9,942,075 360,000 Homedco Group, Inc. (b) 13,545,000 390,000 Horizon Healthcare Corp. (b) 10,920,000 675,000 Lincare Holdings, Inc. (b) 19,575,000 310,000 Quantum Health Resources, Inc. (b) 8,912,500 252,500 Ren Corp. USA (b) 3,345,625 270,000 Renal Treatment Centers, Inc. (b) 5,872,500 355,000 Rotech Medical Corp. 10,117,500 153,200 Summit Care Corp. (b) 2,910,800 210,000 Value Health, Inc. (b) 7,822,500 660,000 Vencor, Inc. (b) 18,397,500 353,200 Vivra, Inc. (b) 9,889,600 -------------- 134,497,550 HMOs (7.2%) - ------------------------------------------------------------------------------- 425,000 Healthsource, Inc. (b) 17,371,875 555,800 Mid Atlantic Medical Services, Inc. (b) 12,713,925 273,400 Oxford Health Plans Inc. (b) 21,666,950 90,000 Pacificare Health Systems, Inc. (b) 5,861,250 180,000 Pacificare Health Systems, Inc. Class B (b) 11,880,000 425,000 Sierra Health Services (b) 13,440,625 COMMON STOCKS NUMBER OF SHARES VALUE HMOs (continued) - ------------------------------------------------------------------------------- 335,000 United American Healthcare (b) $ 8,333,125 350,000 United Healthcare Corp. 15,793,750 91,600 Wellcare Management Group, Inc. (b) 2,244,200 -------------- 109,305,700 BUSINESS SERVICES (7.0%) - ------------------------------------------------------------------------------- 257,500 Alternative Resources Corp. (b) 8,111,250 600,000 Block (H & R), Inc. 22,275,000 124,400 Corporate Express, Inc. (b) 2,425,800 950,000 Danka Business Systems ADR 20,543,750 360,000 Interim Services, Inc. (b) 8,865,000 11,400 Kelly Services, Inc. Class A 313,500 425,000 Manpower, Inc. 11,953,125 230,000 Olsten Corp. (The) 7,302,500 1,019,200 Robert Half International, Inc. (b) 24,460,800 -------------- 106,250,725 RETAIL (6.2%) - ------------------------------------------------------------------------------- 600,000 Bed Bath & Beyond, Inc. (b) 18,000,000 275,300 Ernst Home Ctr., Inc. (b) 2,340,050 175,000 Gymboree Corp. (b) 5,031,250 400,000 Heilig-Meyers Co. 10,100,000 135,000 Home Depot, Inc. (The) 6,210,000 37,270 Hornbach Holding 3,729,407 470,000 Office Depot, Inc. (b) 11,280,000 385,400 Revco D.S., Inc. (b) 9,105,075 420,000 Sunglass Hut International (b) 9,660,000 425,000 Talbots, Inc. 13,281,250 225,000 The Sports Authority, Inc. (b) 4,725,000 -------------- 93,462,032 CABLE TELEVISION (5.9%) - ------------------------------------------------------------------------------- 382,500 Antec Corp. (b) 7,028,437 170,000 Cablevision Systems Corp. (b) 8,585,000 825,000 Century Communications Corp. Class A 6,187,500 550,000 Comcast Corp. Special Class A 8,628,125 260,000 General Instrument Corp. (b) 7,800,000 400,000 International Family Entertainment, Inc. (b) 5,050,000 225,000 Oak Industries, Inc. (b) 5,146,875 279,000 Star Sight Telecast, Inc. (b) 2,162,250 200,000 TCA Cable TV, Inc. 4,350,000 725,000 Tele-Communications Class A (b) 15,768,750 475,000 Viacom, Inc. Class B (b) 19,296,875 -------------- 90,003,812 TELEPHONE SERVICES (5.4%) - ------------------------------------------------------------------------------- 500,000 ALC Communications Corp. (b) 15,562,500 255,000 Century Telephone Enterprises, Inc. 7,522,500 525,000 Communications Central, Inc. (b) 9,778,125 560,000 LCI International, Inc. (b) 14,980,000 COMMON STOCKS NUMBER OF SHARES VALUE TELEPHONE SERVICES (continued) - ------------------------------------------------------------------------------- 730,000 LDDS Communications, Inc. (b) $ 14,189,375 230,000 MFS Communications Company, Inc. (b) 7,532,500 265,000 Telephone & Data Systems, Inc. 12,223,125 -------------- 81,788,125 COMPUTER SERVICES (5.1%) - ------------------------------------------------------------------------------- 425,400 America Online, Inc. (b) 23,822,400 195,400 Broadway & Seymour, Inc. (b) 4,249,950 775,000 Cambridge Technology Partners, Inc. (b) 17,243,750 250,000 First Data Corp. 11,843,750 450,000 Fiserv Inc. (b) 9,675,000 275,000 Paychex, Inc. 11,137,500 -------------- 77,972,350 WIRELESS COMMUNICATIONS (4.9%) - ------------------------------------------------------------------------------- 560,000 Airtouch Communications, Inc. (b) 16,310,000 15,150 Cellular Communications of Puerto Rico, Inc. (b) 507,525 120,000 Cellular Communications, Inc. Class A (b) 6,420,000 505,000 Centennial Cellular Corp. Class A (b) 8,585,000 500,000 Paging Network, Inc. (b) 17,000,000 425,000 Pricellular Corp. Class A (b) 4,143,750 225,000 United States Cellular Corp. (b) 7,368,750 520,000 Vanguard Cellular Systems, Inc. (b) 13,390,000 -------------- 73,725,025 BROADCASTING (4.5%) - ------------------------------------------------------------------------------- 224,750 Clear Channel Communications, Inc. (b) 11,406,062 525,000 Emmis Broadcasting Corp. Class A (b) 7,087,500 775,000 Infinity Broadcasting Corp. Class A (b) 24,412,500 325,000 Renaissance Communications Corp. (b) 9,018,750 405,000 SFX Broadcasting, Inc. Class A (b) 7,492,500 5,500 Westcott Communications, Inc. (b) 70,125 925,000 Westwood One, Inc. (b) 9,018,750 -------------- 68,506,187 RESTAURANTS (3.7%) - ------------------------------------------------------------------------------- 775,000 Apple South, Inc. 10,171,875 361,400 Applebee's International, Inc. 4,833,725 500,000 Buffets, Inc. (b) 4,937,500 355,500 DF&R Restaurants, Inc. (b) 5,288,063 335,000 Landry's Seafood Restaurants, Inc. (b) 9,505,625 470,000 Outback Steakhouse, Inc. (b) 11,045,000 215,200 Papa Johns International, Inc. (b) 6,133,200 450,000 Taco Cabana, Inc. (b) 4,106,250 -------------- 56,021,238 MEDICAL EQUIPMENT AND SUPPLIES (3.0%) - ------------------------------------------------------------------------------- 1,000,000 Bioject Medical Technologies (b) 3,000,000 500,000 Boston Scientific Corp. (b) 8,687,500 590,000 I-Stat Corp. (b) 11,210,000 COMMON STOCKS NUMBER OF SHARES VALUE MEDICAL EQUIPMENT AND SUPPLIES (continued) - ------------------------------------------------------------------------------- 50,900 Idexx Laboratories, Inc. (b) $ 1,832,400 475,000 Igen, Inc. (b) 2,553,125 370,000 Medisense Inc. (b) 8,556,250 265,000 STERIS Corp. (b) 9,937,500 -------------- 45,776,775 LODGING (2.7%) - ------------------------------------------------------------------------------- 56,495 Doubletree Corp. (b) 1,031,034 900,000 Hospitality Franchise Systems, Inc. (b) 23,850,000 720,000 La Quinta Inns, Inc. 15,390,000 -------------- 40,271,034 SEMICONDUCTORS (2.5%) - ------------------------------------------------------------------------------- 320,000 Analog Devices Inc. (b) 11,240,000 165,000 Maxim Integrated Products Inc. (b) 5,775,000 220,000 Xilinx, Inc. (b) 13,035,000 250,000 Zilog Inc. (b) 7,375,000 -------------- 37,425,000 NETWORKING EQUIPMENT (2.1%) - ------------------------------------------------------------------------------- 40,800 Ascend Communications, Inc. (b) 1,662,600 345,000 Cisco Systems, Inc. (b) 12,118,125 110,004 General Datacomm Industries, Inc. (b) 3,561,380 110,000 Shiva Corp. (b) 4,386,250 300,000 Stratacom, Inc. (b) 10,500,000 -------------- 32,228,355 FINANCIAL SERVICES (1.8%) - ------------------------------------------------------------------------------- 370,000 First USA, Inc. 12,163,750 665,000 MBNA Corp. 15,544,375 -------------- 27,708,125 COMPUTER PERIPHERALS (1.7%) - ------------------------------------------------------------------------------- 450,000 American Power Conversion Corp. (b) 7,368,750 64,600 Dialogic Corp. (b) 1,518,100 810,000 EMC Corp. (b) 17,516,250 -------------- 26,403,100 CONSUMER SERVICES (1.7%) - ------------------------------------------------------------------------------- 335,000 CUC International, Inc. (b) 11,222,500 540,000 Loewen Group, Inc. 14,310,000 -------------- 25,532,500 HOSPITAL MANAGEMENT (1.5%) - ------------------------------------------------------------------------------- 249,500 Community Health Systems (b) 6,798,875 660,000 Health Management Assoc., Inc. (b) 16,500,000 -------------- 23,298,875 COMMON STOCKS NUMBER OF SHARES VALUE RECREATION (1.5%) - ------------------------------------------------------------------------------- 702,800 Mirage Resorts, Inc. (b) $ 14,407,400 90,000 National Gaming Corp. (b) 1,080,000 635,500 Rio Hotel & Casino, Inc. (b) 7,705,437 -------------- 23,192,837 PHARMACEUTICALS AND BIOTECHNOLOGY (1.5%) - ------------------------------------------------------------------------------- 232,343 COR Therapeutics, Inc. (b) 2,555,773 400,000 Elan Corp. PLC ADR (b) 14,250,000 97,080 Immulogic Pharmaceutical Corp. (b) 703,830 450,000 Penederm, Inc. (b) 2,812,500 279,300 Theratech, Inc. (b) 2,583,525 -------------- 22,905,628 ELECTRICAL EQUIPMENT (0.8%) - ------------------------------------------------------------------------------- 250,000 Cognex Corp. (b) 6,437,500 445,000 Medar, Inc. (b) 6,118,750 -------------- 12,556,250 HEALTH CARE INFORMATION SYSTEMS (0.7%) - ------------------------------------------------------------------------------- 197,800 HBO & Co. 6,824,100 118,500 Health Management Systems, Inc. (b) 3,940,125 -------------- 10,764,225 OIL AND GAS (0.7%) - ------------------------------------------------------------------------------- 415,000 Newpark Resources, Inc. (b) 9,960,000 ELECTRIC UTILITIES (0.5%) - ------------------------------------------------------------------------------- 500,000 Huaneng Power International, Inc. ADR 7,375,000 DATA COMMUNICATIONS (0.5%) - ------------------------------------------------------------------------------- 448,100 Eis International, Inc. (b) 6,833,525 APPAREL (0.4%) - ------------------------------------------------------------------------------- 125,000 Tommy Hilfiger Corp. (b) 5,640,625 HOUSEHOLD PRODUCTS (0.4%) - ------------------------------------------------------------------------------- 174,450 Duracraft Corp. (b) 5,560,594 FREIGHT (0.3%) - ------------------------------------------------------------------------------- 81,000 Fritz Companies, Inc. (b) 3,807,000 ENVIRONMENTAL SERVICES (0.2%) - ------------------------------------------------------------------------------- 175,000 Molten Metal Technology, Inc. (b) 2,843,750 - ------------------------------------------------------------------------------- TOTAL COMMON STOCKS (cost $1,193,886,909) $1,405,677,835 - ------------------------------------------------------------------------------- PREFERRED STOCKS (0.7%) (cost $9,648,179) NUMBER OF SHARES VALUE COMPUTER SOFTWARE (0.7%) - ------------------------------------------------------------------------------- 19,000 Sap Ag Systeme Preference Bearer $ 10,843,125 CONVERTIBLE BONDS AND NOTES (0.5%) NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------- 3,245,000 Summit Health Ltd. cv. sub. notes 7 1/2s, 2003 4,303,681 4,500,000 Office Depot Inc. sub. liquid yield, cv. notes zero %, 2007 3,307,500 - ------------------------------------------------------------------------------- TOTAL CONVERTIBLE BONDS AND NOTES (cost $6,810,880) $ 7,611,181 - ------------------------------------------------------------------------------- CONVERTIBLE PREFERRED STOCKS (0.3%) (cost $1,992,838) (a) NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------- 72,000 Cellular Communications, Inc. Class A (b) 3,852,000 SHORT-TERM INVESTMENTS (8.1%) (a) PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------- $20,000,000 Bellsouth Telecomm, Inc. 5.98s, 1/12/95 $ 19,963,456 20,000,000 Ciesco, Inc. 6s, January 19, 1995 19,940,000 15,000,000 Corporate Asset Funding Co., 5.9s, 1/12/95 14,972,959 25,000,000 Ford Motor Credit Co. 4.88s, January 5, 1995 24,983,889 23,195,000 Interest in $267,187,000 joint repurchase agreement dated December 30, 1994 with Morgan (J.P) & Co., due January 3, 1995 with respect to various U.S. Treasury Obligations -- maturity value of $267,344,343 for an effective yield of 5.3% 23,201,830 20,000,000 Merrill Lynch & Co. Inc. 6.05s, January 19, 1995 19,939,500 - ------------------------------------------------------------------------------- TOTAL SHORT-TERM INVESTMENTS (cost $123,001,634) $123,001,634 - ------------------------------------------------------------------------------- TOTAL INVESTMENTS (cost $1,335,340,440) (c) $1,550,985,775 - ------------------------------------------------------------------------------- NOTES - ------------------------------------------------------------------------------- (a) Percentages indicated are based on total net assets of $1,514,119,157, which correspond to a net asset value per class A, class B, class M and class Y share of $25.26, $24.94, $25.26 and $25.30, respectively. (b) Non-income-producing security. (c) The aggregate identified cost for federal income tax purposes is $1,337,990,987, resulting in gross unrealized appreciation and depreciation of $261,686,141 and $48,691,353, respectively, or net unrealized apprecia- tion of $212,994,788. ADR or ADS after the name of a foreign holding stands for American Depository Receipt or American Depository Shares, respectively, representing ownership of foreign securities on deposit with a domestic custodian bank. The accompanying notes are an integral part of these financial statements. STATEMENT OF ASSETS AND LIABILITIES December 31, 1994 (Unaudited) ASSETS - ------------------------------------------------------------------------------- Investments in securities, at value (identified cost $1,335,340,440) (Note 1) $1,550,985,775 Cash 5,021 Dividends receivable 394,917 Interest receivable 60,844 Receivable for shares of the fund sold 14,761,679 Receivable for securities sold 9,002,196 Unamortized organization expenses (Note 1) 1,915 - ------------------------------------------------------------------------------- TOTAL ASSETS $1,575,212,347 LIABILITIES - ------------------------------------------------------------------------------- Payable for securities purchased 50,143,176 Payable for shares of the fund repurchased 6,924,644 Payable for compensation of Manager (Note 2) 2,160,974 Payable for distribution fees (Note 2) 994,858 Payable for administrative services (Note 2) 9,166 Payable for compensation of Trustees (Note 2) 1,055 Payable for organization expenses (Note 1) 23,788 Payable for investor servicing and custodian fees (Note 2) 347,326 Other accrued expenses 488,203 - ------------------------------------------------------------------------------- TOTAL LIABILITIES 61,093,190 - ------------------------------------------------------------------------------- NET ASSETS $1,514,119,157 REPRESENTED BY - ------------------------------------------------------------------------------- Paid-in capital (Note 4) $1,298,158,172 Accumulated net investment loss (5,641,939) Accumulated net realized gain on investment transactions 5,957,589 Net unrealized appreciation of investments 215,645,335 - ------------------------------------------------------------------------------- TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO CAPITAL SHARES OUTSTANDING $1,514,119,157 COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE - ------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($917,410,540 divided by 36,317,188 shares) $25.26 Offering price per class A share (100/94.25 of $25.26) * $26.80 Net asset value and redemption price per class B share ($585,260,011 divided by 23,471,144 shares) + $24.94 Net asset value and redemption price per class M share ($755,947 divided by 29,932) $25.26 Offering price per class M share (100/96.50 of $25.26) * $26.18 Net asset and redemption price per class Y share ($10,692,659 divided by 422,705) $25.30 - ------------------------------------------------------------------------------- * 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 Six months ended December 31, 1994 (Unaudited) INVESTMENT INCOME - ------------------------------------------------------------------------------- Interest $ 2,498,161 - ------------------------------------------------------------------------------- Dividends (Net foreign tax of $11,870) 1,196,099 - ------------------------------------------------------------------------------- TOTAL INVESTMENT INCOME 3,694,260 - ------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------------------------------------- Compensation of Manager (Note 2) 3,988,968 - ------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 1,184,237 - ------------------------------------------------------------------------------- Administrative services (Note 2) 9,338 - ------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 16,518 - ------------------------------------------------------------------------------- Distribution fee . class A (Note 2) 994,289 - ------------------------------------------------------------------------------- Distribution fee . class B (Note 2) 2,332,315 - ------------------------------------------------------------------------------- Distribution fee . class M (Note 2) 187 - ------------------------------------------------------------------------------- Reports to shareholders 234,355 - ------------------------------------------------------------------------------- Auditing 21,548 - ------------------------------------------------------------------------------- Legal 13,283 - ------------------------------------------------------------------------------- Postage 373,715 - ------------------------------------------------------------------------------- Registration fees 109,076 - ------------------------------------------------------------------------------- Amortization of organization expenses (Note 1) 5,926 - ------------------------------------------------------------------------------- Other 52,444 - ------------------------------------------------------------------------------- TOTAL EXPENSES 9,336,199 - ------------------------------------------------------------------------------- NET INVESTMENT LOSS (5,641,939) - ------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 8,785,071 - ------------------------------------------------------------------------------- Net unrealized appreciation of investments during the period 173,142,457 - ------------------------------------------------------------------------------- NET GAIN ON INVESTMENTS 181,927,528 - ------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $176,285,589 - ------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED YEAR ENDED DECEMBER 31 1994* JUNE 30 1994 - ------------------------------------------------------------------------------- INCREASE IN NET ASSETS - ------------------------------------------------------------------------------- Operations: - ------------------------------------------------------------------------------- Net investment loss $ (5,641,939) $ (6,596,640) - ------------------------------------------------------------------------------- Net realized gain on investments 8,785,071 16,471,902 - ------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments 173,142,457 (40,895,256) - ------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 176,285,589 (31,019,994) - ------------------------------------------------------------------------------- Distributions to shareholders from Net realized gain on investments Class A (6,964,261) (8,898,215) - ------------------------------------------------------------------------------- Class B (4,468,043) (2,205,357) - ------------------------------------------------------------------------------- Class M (77,516) -- - ------------------------------------------------------------------------------- Class Y (892) -- - ------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 366,819,193 690,524,657 - ------------------------------------------------------------------------------- TOTAL INCREASE IN NET ASSETS 531,594,070 648,401,091 - ------------------------------------------------------------------------------- NET ASSETS Beginning of period 982,525,087 334,123,996 - ------------------------------------------------------------------------------- END OF PERIOD (including accumulated net investment loss of $5,641,939 and $0, respectively) $1,541,119,157 $982,525,087 - ------------------------------------------------------------------------------- *Unaudited. 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 July 19, 1994 December 1, 1994 (commencement of (commencement of Six months operations) to operations) to ended Year ended December 31* December 31* December 31* June 30 1994 1994 1994 1994 - ------------------------------------------------------------------------------------------------------------------- Class Y Class M Class B - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $22.59 $24.72 $21.68 $20.80 - ------------------------------------------------------------------------------------------------------------------- Investment operations Net investment gain (loss) (.02) (.01) (.16) (.11) - ------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 2.93 .75 3.62 1.44 - ------------------------------------------------------------------------------------------------------------------- Total from investment operations 2.91 .74 3.46 1.33 - ------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders from net realized gain on investments (.20) (.20) (.20) (.45) - ------------------------------------------------------------------------------------------------------------------- Total distributions (.20) (.20) (.20) (.45) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $25.30 $25.26 $24.94 $21.68 - ------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (e) 12.96(b) 3.06(b) 16.04(b) 6.18 - ------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $10,693 $756 $585,260 $333,738 - ------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) 0.49 0.11 .99 2.04 - ------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) (0.20) (0.12) (.69) (1.55) - ------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 28.16(b) 28.16(b) 28.16(b) 52.76 - ------------------------------------------------------------------------------------------------------------------- * Unaudited (a) Reflects a voluntary absorption of expenses incurred by the fund and an expense limitation during the period. As a result of these limitations, expenses of the fund for the periods ended June 30, 1991 reflect a reduction of $0.05 per share. (See Note 2.) (b) Not annualized. (c) Portfolio turnover excludes the impact of assets received from the acquisition 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 Putnam Information Sciences Trust. (e) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
FINANCIAL HIGHLIGHTS (Continued) (For a share outstanding throughout the period) For the period For the period March 1, 1993 August 31, 1990 (commencement of Six months (commencement of operations) to ended Year ended operations) to June 30 December 31* June 30 June 30 1993 1994 1994 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------------------- Class A - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $17.76 $21.88 $20.83 $14.50 $11.56 $8.54 - ----------------------------------------------------------------------------------------------------------------------------------- Investment operations Net investment gain (loss) (.05) (.06) (.06) (.12) (.02) (.11)(a) - ----------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 3.09 3.64 1.56 6.77 3.33(d) 3.19 - ----------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 3.04 3.58 1.50 6.65 3.31 3.08 - ----------------------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders from net realized gain on investments -- (.20) (.45) (.32) (.37) (.06) - ----------------------------------------------------------------------------------------------------------------------------------- Total distributions -- (.20) (.45) (.32) (.37) (.06) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $20.80 $25.26 $21.88 $20.83 $14.50 $11.56 - ----------------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (e) 17.12(b) 16.44(b) 7.00 46.12 28.85 36.22(b) - ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $15,698 $917,411 $648,787 $318,426 $141,206 $3,164 - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) 0.67(b) 0.60 1.23 1.31 1.64 2.28(a)(b) - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) (0.57)(b) (0.31) (.82) (0.98) (.91) (1.14)(a)(b) - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 93.59(b) 28.16(b) 52.76 93.59 116.04(c) 71.54(b) - -----------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS December 31, 1994 (Unaudited) NOTE 1 SIGNIFICANT ACCOUNTING POLICIES The fund is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company. The fund seeks 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 class A, class B, class M and class Y shares. The fund commenced its public offering of class M and Y shares on December 1, 1994 and July 18, 1994, respectively. 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 on- going distribution fee than class A shares and are subject to a contingent defe- rred sales charge if those shares are redeemed within six years of purchase. Class M shares are sold with a maximum front-end sales charge of 3.50%. Class Y shares which do not pay a front-end or contingent deferred sales charge, are ge- nerally subject to the same expenses as class A, class B and class M shares, but do not bear a distribution fee. Class Y shares are sold only to defined contri- bution plans with an initial investment of $240 million in a combination of Put- nam funds and other investments managed by Putnam. 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 ma- tters 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. In addition, the Trustees decla- re separate dividends on each class of shares. 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 available are stated at market value, which is determined using the last repor- ted sale price, or, if no sales are reported -- as in the case of some securi- ties traded over-the-counter -- the last reported bid price, except that certain U.S. government 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, and other inves- tments 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). Interest income is recorded on the accrual basis and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. 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. Therefo- re, no provision has been made for federal taxes on income, capital gains or un- realized 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. 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. Trustees of the fund receive an annual Trustee's fee of $2,020 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. Investor servicing and custodian fees reported in the Statement of operations for the six months ended December 31, 1994 have been reduced by cre- dits 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 the Class A Plan is to compensate Putnam Mutual Funds Corp., a wholly owned subsidiary of Putnam Investments, Inc., for services pro- vided and expenses incurred by it in distributing class A shares. The Trustees have approved 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. During the period ended December 31, 1994 , Putnam Mutual Funds Corp., a wholly owned subsidiary of Putnam Investments, Inc., acting as an underwriter, received net commissions of $783,299 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 pe- riod ended December 31, 1994, Putnam Mutual Funds Corp., acting as an underwri- ter received $4,749 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 payments by the fund to Putnam Mutual Funds Corp. at an annual rate of 1.00% of the funds average net assets attribu- table to class B shares. Putnam Mutual Funds Corp. also receives the proceeds of contingent deferred sa- les charges levied on class B share redemptions with in 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 defe- rred sales charges of $349,311 from such redemptions for the period ended Decem- ber 31, 1994. On December 1, 1994 the fund adopted a separate distribution plan with respect to its class M shares (the "Class M Plan") pursuant to rule 12b-1 under the In- vestment Company Act of 1940. The purpose of the Class M Plan is to compensate Putnam Mutual Funds Corp. for services provided and expenses incurred by it in distributing class M shares. The Class M Plan provides for payments by the fund to Putnam Mutual Funds Corp. at an annual rate of 1.00% of the fund's average net assets attributable to class M shares. The Trustees have approved payment by the fund to Putnam Mututal Funds Corp. at an annual rate of 0.75% of the fund's average net assets attributable to class M shares. For the period December 1, 1994 (commencement of operations) to December 31, 1994, Putnam Mutual Funds Corp., acting as an underwriter, received commissions of $3,099 from the sales of class M shares of the fund. NOTE 3 PURCHASES AND SALES OF SECURITIES During the six months ended December 31, 1994, purchases and sales of invest- ment securities other than short-term investments aggregated $692,026,754 and $330,129,274, 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 December 31, 1994, there was an unlimited number of shares of beneficial in- terest authorized divided into four classes, class A, class B, class M and class Y capital shares. Transactions in capital shares were as follows: SIX MONTHS ENDED DECEMBER 31, 1994 CLASS A SHARES AMOUNT - ------------------------------------------------------------------------------- Shares sold 19,612,259 $476,817,629 Shares issued in connection with reinvestment of distributions 272,938 6,389,457 - ------------------------------------------------------------------------------- 19,885,197 483,207,086 - ------------------------------------------------------------------------------- Shares repurchased (13,221,140) (321,596,530) NET INCREASE 6,664,057 $161,610,556 - ------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------- SIX MONTHS ENDED DECEMBER 31, 1994 CLASS B SHARES AMOUNT - ------------------------------------------------------------------------------- Shares sold 10,547,576 $253,640,156 Shares issued in connection with reinvestment of distributions 173,177 4,003,828 - ------------------------------------------------------------------------------- 10,720,753 257,643,984 - ------------------------------------------------------------------------------- Shares repurchased (2,642,041) (63,644,452) NET INCREASE 8,078,712 $193,999,532 - ------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------- SIX MONTHS ENDED DECEMBER 31, 1994 CLASS M SHARES AMOUNT - ------------------------------------------------------------------------------- Shares sold 30,778 $746,712 Shares issued in connection with reinvestment of distributions 38 892 - ------------------------------------------------------------------------------- 30,816 747,604 - ------------------------------------------------------------------------------- Shares repurchased (884) (21,187) NET INCREASE 29,932 $726,417 - ------------------------------------------------------------------------------- SIX MONTHS ENDED DECEMBER 31, 1994 CLASS Y SHARES AMOUNT - ------------------------------------------------------------------------------- Shares sold 442,951 $10,988,594 Shares issued in connection with reinvestment of distributions 3,307 77,515 - ------------------------------------------------------------------------------- 446,258 11,066,109 - ------------------------------------------------------------------------------- Shares repurchased (23,553) (583,421) NET INCREASE 422,705 $10,482,688 - ------------------------------------------------------------------------------- OUR COMMITMENT TO QUALITY SERVICE CHOOSE AWARD-WINNING SERVICE. Putnam Investor Services has won the DALBAR Quality Tested Service Seal for the past five years, through 1994. DALBAR, an independent research firm, ran more than 10,000 tests of 38 shareholder service components. In every category, Put- nam outperformed the industry standard. HELP YOUR INVESTMENT GROW. Set up a systematic 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 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 Brett C. Browchuk Matthew Weatherbie 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 copy of Putnam's Quarterly Performance Summary. For more information, or to request a prospectus, call toll free: 1-800-225-1581. Shares of mutual funds are not deposits of, or guaranteed or endorsed by, any financial institution, are not insured by the Federal Deposit Insurance Corpora- tion (FDIC), the Federal Reserve Board, or any other agency, and involve risk, including the possible loss of the principal amount invested. PUTNAM INVESTMENTS Bulk Rate U.S. Postage The Putnam Funds Paid One Post Office Square Putnam Boston, Massachusetts 02109 Investments 852/358-16294 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-----