-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L6e+lNmL4+wMzxJ/lbKbohhCBDxNqParaH+mOAX9Xgf0ugLHaz/ACTnrobz/9sTD 2qZAvg/FUmvCY2+efNAcIw== 0000928816-96-000050.txt : 19960308 0000928816-96-000050.hdr.sgml : 19960308 ACCESSION NUMBER: 0000928816-96-000050 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960307 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: 96531962 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: A6 ZIP: 02109 BUSINESS PHONE: 6172921000 N-30D 1 PUTNAM NEW OPPURTUNITIES FUND Putnam New Opportunities Fund SEMIANNUAL REPORT December 31, 1995 [SCALES LOGO] BOSTON * LONDON * TOKYO Fund highlights * "Call it phenomenal, call it incredible, call it awesome -- any one of those adjectives accurately describes the track record of Putnam New Opportunities Fund (class A). . . . Address congratulations to Dan Miller, portfolio manager of the fund from its start. With the help of analysts at Putnam Investment Management, Miller picks what he thinks are the best stocks poised for growth in what he believes are the strongest industries." -- Investment Advisor, September 1995 * Morningstar, Inc. once again awarded Putnam New Opportunities Fund's class A shares its highest rating of five stars as of December 31, 1995. The five-star rating places the fund's class A shares among 10% of the 950 equity funds rated.* * "Unlike the majority of growth funds, New Opportunities excels in slow markets as well as in raging bull markets. Its 25 percent return in 1992, for example, far outpaced the market's sluggish 9 percent rise. And in 1994, when the average stock fund lost money, it was up 3.3 percent."+ -- Smart Money, February 1996 CONTENTS 4 Report from Putnam Management 9 Fund performance summary 13 Portfolio holdings 20 Financial statements *Morningstar is an independent research firm that rates a fund in relation to other funds with similar investment objectives, based on the fund's class A shares' 3- and 5-year average annual returns, adjusted for risk factors and sales charges. For each of these periods ended 12/31/95, there were 1,394 and 950 in the equity category, and the fund's class A shares received 5 stars for each period. Ratings are subject to change monthly. Past performance is not indicative of future results. +Past performance is not indicative of future results. See page 9 for total return performance of the Fund. [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] (copyright) Karsh, Ottawa From the Chairman Dear Shareholder: It would be difficult to conceal our satisfaction with the outstanding results delivered by Putnam New Opportunities Fund during the six months ended December 31, 1995. At the same time, it behooves us to counsel that while we are looking for continued positive performance during the remainder of fiscal 1996, returns of similar proportions are not likely. For one thing, the much heralded strength of technology stocks is beginning to level off. For another, the market is quite likely to take a breather or two as it digests the sustained rise of 1995. Finally, the economic slowdown is almost certain to be reflected in more modest corporate earnings expectations -- and in actual earnings -- over the months ahead. Thus, the market may be in for some choppiness, especially over the near term. Nevertheless, Putnam Management believes equities, on balance, may continue their upward course in 1996, though at a more subdued pace than they enjoyed in 1995. Respectfully yours, /s/George Putnam George Putnam Chairman of the Trustees February 21 , 1996 Report from the Fund Manager Daniel L. Miller When Putnam New Opportunities Fund marked its fifth anniversary on August 31, 1995, we were able to reflect back on a gratifying performance record. And your fund's stellar track record up to that point -- a 33.2% average annual total return at net asset value -- has only been enhanced by its performance during this latest semiannual period. For the six months ended December 31, 1995, your fund's class A shares rose 24.92%, class B shares gained 24.44%, and class M shares rose 24.57%, all at net asset value. The returns at the maximum public offering price were 17.75%, 19.44% (CDSC, see page 9), and 20.21%, respectively. The fund's semiannual period began in the middle of calendar 1995, a year that encompassed an incredible joyride for U.S. equity investors. The strength of the 1995 stock market -- especially the performance of technology-related stocks -- greatly contributed to the fund's impressive returns. However, as most investors know, the powerful combination of strong corporate earnings and falling interest rates that fueled the 1995 financial markets is unlikely to continue unabated. With that in mind, we are shifting the portfolio toward stocks of companies that tend to do well regardless of the direction of the overall economy. We will continue to look for such factors as strong long-term growth prospects, dominant market share, and quality management as we enter the second half of fiscal 1996. * TECHNOLOGY STOCKS DRIVE PERFORMANCE AGAIN During the period, technology-related holdings continued to be a highlight of the fund's portfolio. In early 1995, the strongest technology sector was the semiconductor market. As the year progressed, however, the market began to favor networking-related stocks, which make up a large portion of the fund's technology holdings. Notable positions included Ascend Communications, a manufacturer of wide-area- network access products, whose stock price rose dramatically in 1995, and Cisco Systems, Inc., which was recently awarded a contract to work with China's government to implement a nationwide network for high- speed access to the Internet. As the technology market began to rotate in favor of the stocks the fund owned, other emerging-growth sectors in which the fund was underweighted -- such as retail -- were showing signs of weakness. For these reasons, our relatively high weighting in technology-related stocks proved extremely beneficial during the period. * CUTTING-EDGE MEDICAL COMPANIES ALSO PROVE BENEFICIAL The medical technology/cost containment sector was another powerful contributor to performance during the period. As the portfolio's second-largest sector, this category includes two types of health-care companies: those dedicated to providing high quality service at a lower cost and those involved in developing and manufacturing breakthrough medical devices and drugs. Some standouts in the portfolio include Thermo Cardiosystems, Inc., which manufactures ventricular-assist devices. These allow patients who are awaiting heart transplants an alternative until a donor heart becomes available. The company has produced the only implantable organ ever approved by the FDA, and its devices are already being used in more than 50 U.S. transplant centers. Medtronic, the world's leading medical technology company, has developed impressive products to assist cardiac surgeons, including mechanical heart valves. Boston Scientific, another medical device manufacturer, has recently announced acquisition plans that could broaden the company's exposure to high-growth markets. In the biotechnology industry, Gilead Sciences, Inc., has made great progress in developing innovative drugs such as Vistide, a potential treatment for AIDS-related retinitis, a condition that can lead to blindness. [GRAPHIC OMITTED: SECTOR ALLOCATION SHIFTS CHART. Chart is a vertical bar chart with white bars representing the Dec. 31, 95 fiscal ending and black bars representing the Jun. 30, 95 fiscal ending. The following are the sectors and percentages in the chart: JUNE 30, 1995 DEC. 31, 1995 ------------- ------------- Applied/advanced technology 29.1% 35.8% Medical technology/cost containment 18.6% 19.4% Value-oriented consuming 16.7% 16.4% Media/entertainment 13.5% 9.4% Personal communications 8.5% 5.6% Personal financial servies 1.6% 2.4% Cash 7.3% 5.9% Miscellaneous 3.7% 5.1% Footnote reads: * Based on percentage of net assets. Holdings will vary over time] * CONSOLIDATION AND DOWNSIZING BRING STRENGTH TO SEVERAL HOLDINGS Despite -- or perhaps because of -- a relatively weak consumer economy, some of the fund's retail holdings were able to flourish during the period. In an environment that did not particularly favor retail business in general, office-products companies like Corporate Express and Boise Cascade Office Products succeeded by driving down their costs through systems automation, which gave them a distinct advantage over many competitors. Corporate downsizing efforts helped to propel some of the fund's business service holdings. As more corporations worked to trim their payrolls during the slowing economy, some businesses benefited, including temporary help service providers Robert Half International, Inc., and Alternative Resources. Another strong contributor in the fund's value-oriented consuming sector was HFS, Inc., a hotel franchising organization. The company, which traditionally has specialized in lodging services, recently acquired the Century 21 real estate franchise. This expansion into a new business arena has had a tremendous impact on the stock price and growth prospects for HFS. Also showing strong growth prospects is Renaissance Hotel Group, a hotel management company. With contracts throughout Europe, Asia, and the United States, the company has established a strong pipeline for expanding its business. *DIMINISHED EMPHASIS ON MEDIA AND PERSONAL COMMUNICATIONS During the period, the outlook for personal communications and media became less attractive as cellular, long-distance, and cable television companies were faced with increased competition. Cable TV franchises, for example, are under increasing pressure from direct-broadcast services, which offer consumers satellite dishes to replace traditional cable service. In order to compete with these services, cable companies may have to make expensive improvements to their infrastructures. While long-term growth opportunities still exist within these businesses, we have reduced the fund's weightings until we see more evidence of potential outperformance. Top 10 Holdings (12/31/95) HFS, Inc. Hotel franchises America Online, Inc. On-line computer services Cisco Systems Manufacturer of computer networking products Paging Network, Inc. Wireless communications U.S. Robotics Corp. Networking access devices Infinity Broadcasting Corp., Class A Largest U.S.-based radio station owner/operator Corporate Express, Inc. Office product supplier Vencor, Inc. Health care services Oxford Health Plans Inc. Health benefit services in New York area Stratacom, Inc. Manufacturer of wide area network systems These holdings represent 13.6% of the fund's net assets. Portfolio holdings will vary over time. There were some bright spots within the fund's media and entertainment sector, including Mirage Resorts, Inc., a gaming industry standout; Infinity Broadcasting, the largest U.S.-based radio station operator; and Texas-based Clear Channel Communications, which owns and operates 33 radio stations and 9 television stations. * Looking forward: favorable conditions should continue It appears that economic conditions will remain favorable for the U.S. equity market in the months ahead. The inflation rate is expected to remain steady with modest economic growth. This type of environment tends to favor those companies in which we tend to invest. We will continue to monitor the economic factors that affect growth stocks, as well as the specific industry and company fundamentals that impact our investment decisions. We also plan to adhere to the strategy that has served the fund so well during its five years of operations: targeting a handful of industry sectors with strong secular growth potential, and then selecting companies within those sectors that possess what we believe are above- average growth characteristics. We expect this strategy will continue to serve the fund well over the remainder of fiscal 1996 and into the future. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 12/31/95, there is no guarantee the fund will continue to hold these securities in the future. Performance summary Performance should always be considered in light of a fund's investment strategy. 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. This section provides, at a glance, information about your fund's performance. Total return shows how the value of the fund's shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund.
TOTAL RETURN FOR PERIODS ENDED 12/31/95 Class A Class B Class M (8/31/90) (3/1/93) (12/1/94) Inception date NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------------------ 6 months 24.92% 17.75% 24.44% 19.44% 24.57% 20.21% - ------------------------------------------------------------------------------------ 1 year 46.28 37.87 45.15 40.15 45.53 40.41 - ------------------------------------------------------------------------------------ 5 years 321.96 297.84 -- -- -- -- Annual average 33.37 31.81 -- -- -- -- - ------------------------------------------------------------------------------------ Life of class 367.41 340.58 109.44 106.44 49.98 44.71 Annual average 33.48 32.01 29.73 29.08 45.54 40.81 - ------------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/95 Standard & Poor's Consumer 500 Index Price Index - ------------------------------------------------------------------------------------ 6 months 14.40% 0.66% - ------------------------------------------------------------------------------------ 1 year 37.45 2.54 - ------------------------------------------------------------------------------------ 5 years 114.99 14.72 Annual average 16.54 2.79 - ------------------------------------------------------------------------------------ Life of class A 124.36 16.64 Annual average 16.34 2.92 - ------------------------------------------------------------------------------------ Life of class B 50.64 7.27 Annual average 15.52 2.50 - ------------------------------------------------------------------------------------ Life of class M 40.15 2.54 Annual average 36.69 2.35 - ------------------------------------------------------------------------------------ Performance data represent past results, do not reflect future performance, and will differ for each share class. They do not take into account any adjustment for taxes payable on reinvested distributions. Investment returns and principal value will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. POP assumes 5.75% maximum sales charge for class A shares and 3.50% for class M shares, which became effective 12/1/94. CDSC for class B shares assumes 5% maximum contingent deferred sales charge. An expense limitation was in effect during part of the period; without the limitation, total return would have been lower.
PRICE AND DISTRIBUTION INFORMATION 6 months ended 12/31/95 Class A Class B Class M - ------------------------------------------------------------------------------------ Distributions1 (number) 0 0 0 - ------------------------------------------------------------------------------------ Income -- -- -- - ------------------------------------------------------------------------------------ Capital gains Long-term -- -- -- Short-term -- -- -- - ------------------------------------------------------------------------------------ Total $0.00 $0.00 $0.00 - ------------------------------------------------------------------------------------ Share value: NAV POP NAV NAV POP - ------------------------------------------------------------------------------------ 6/30/95 $29.58 $31.38 $29.09 $29.51 $30.58 - ------------------------------------------------------------------------------------ 12/31/95 36.95 39.20 36.20 36.76 38.09 - ------------------------------------------------------------------------------------ 1 The Fund had no ordinary income or capital gains to distribute during the semi-annual period.
COMPARATIVE BENCHMARKS Standard & Poor's 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 brokerage commissions 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. TERMS AND DEFINITIONS Class A shares are generally subject to an initial sales charge. Class B shares may be subject to a sales charge upon redemption. Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial or contingent deferred sales charge. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the maximum 5.75% sales charge for class A shares and 3.50% for class M shares. Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of class B shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. PUTNAM GROWTH FUNDS Asia Pacific Growth Fund Capital Appreciation Fund Diversified Equity Trust Europe Growth Fund Global Growth Fund Health Sciences Trust International New Opportunities Fumd Investors Fund Natural Resources Fund New Opportunities Fund OTC Emerging Growth Fund Overseas Growth Fund Vista Fund Voyager Fund Voyager Fund II PUTNAM GROWTH AND INCOME FUNDS Balanced Retirement Fund Convertible Income-Growth Trust Equity Income Fund The George Putnam Fund of Boston The Putnam Fund for Growth and Income Growth and Income Fund II Utilities Growth and Income Fund PUTNAM INCOME FUNDS Adjustable Rate U.S. Government Fund American Government Income Fund Diversified Income Trust Federal Income Trust Global Governmental Income Trust High Yield Advantage Fund High Yield Trust Income Fund Intermediate U.S. Government Income Fund Preferred Income Fund U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Municipal Income Fund Tax Exempt Income Fund Tax-Free High Yield Fund Tax-Free Insured Fund State tax-free 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+ California Tax Exempt Money Market Fund Money Market Fund New York Tax Exempt Money Market Fund Tax Exempt Money Market Fund CDs and savings accounts++ * Not available in all states. + Relative to above. ++ Not offered by Putnam Investments Certificates of deposit offer a fixed rate of return and may be insured, up to certain limits, by federal/state agencies. Savings accounts may also be insured up to certain limits. Please call your financial advisor or Putnam at 1-800- 225-1581 to obtain a prospectus for any Putnam fund. It contains more complete information, including charges and expenses. Please read it carefully before you invest or send money.
Portfolio of investments owned December 31, 1995 (Unaudited) Common Stocks (93.0%)* NUMBER OF SHARES Apparel (0.5%) VALUE - -------------------------------------------------------------------------------------------- 525,000 Tommy Hilfiger Corp. + $22,246,875 Biotechnology (0.6%) - -------------------------------------------------------------------------------------------- 559,301 IDEXX Laboratories, Inc. 26,287,100 Broadcasting (3.8%) - -------------------------------------------------------------------------------------------- 590,000 Clear Channel Communications, Inc. + 26,033,750 575,000 Emmis Broadcasting Corp. Class A + 17,825,000 500,000 Evergreen Media Corp. Class A + 16,000,000 1,366,800 Infinity Broadcasting Corp. Class A + 50,913,300 365,800 LIN Television Corp. + 10,882,550 734,250 Renaissance Communications Corp. + 16,245,281 405,000 SFX Broadcasting, Inc. Class A + 12,251,250 390,500 Sinclair Broadcast Group, Inc. Class A + 6,736,125 925,000 Westwood One, Inc. + 13,065,625 -------------- 169,952,881 Business Services (6.9%) - -------------------------------------------------------------------------------------------- 725,000 Airgas, Inc. + 24,106,250 800,000 Alternative Resources Corp. + 24,200,000 21,700 Corestaff, Inc. + 792,050 1,675,000 Corporate Express, Inc. + 50,459,375 142,800 Flight Safety International, Inc. 7,175,700 1,050,000 Danka Business Systems PLC ADR (United Kingdom) 38,850,000 385,000 Input/Output, Inc. + 22,233,750 1,000,000 Manpower, Inc. 28,125,000 699,259 Paychex, Inc. 34,875,543 5,500,000 Rentokil Group Ord. PLC (United Kingdom) 28,558,750 1,100,000 Robert Half International, Inc. + 46,062,500 -------------- 305,438,918 Cable Television (1.5%) - -------------------------------------------------------------------------------------------- 200,000 Cablevision Systems Corp. Class A + 10,850,000 1,142,200 Century Communications Corp. Class A + 9,137,600 750,000 Comcast Corp. Special Class A 13,640,625 200,000 TCA Cable TV, Inc. 5,525,000 256,250 Tele-Comm Liberty Media Group, Inc. Class A 6,886,719 1,025,000 Tele-Communications Inc. Class A 20,371,875 -------------- 66,411,819 Computer Services (6.5%) - -------------------------------------------------------------------------------------------- 2,171,050 America Online, Inc. + 81,414,375 380,300 Broadway & Seymour, Inc. + 6,179,875 457,900 CBT Group PLC ADR (Ireland) + 24,268,700 134,900 CMG Information Services, Inc. 12,528,838 775,000 Cambridge Technology Partners, Inc. 44,562,500 342,300 Computer Horizons Corp. + 13,007,400 550,000 First Data Corp. 36,781,250 600,000 Fiserv Inc. + 18,000,000 200,000 NETCOM On-Line Communication Services, Inc. + 7,200,000 504,200 PsiNet, Inc. + 11,533,575 199,200 Secure Computing Corp. + 11,155,200 731,400 Tivoli Systems, Inc. + 24,688,120 -------------- 291,319,833 Computer Software (12.8%) - -------------------------------------------------------------------------------------------- 243,900 Baan Co., N.V. + 11,036,475 450,000 Business Objects S.A., ADR + 21,768,750 365,000 Computer Associates Intl., Inc. 20,759,375 235,500 Datalogix International, Inc. + 2,973,188 835,000 Discreet Logic, Inc. (Canada) + 20,875,000 875,000 Electronic Arts, Inc. + 22,859,375 750,000 GT Interactive Software Corp. + 10,500,000 670,000 Informix Corp. + 20,100,000 439,200 Insignia Solutions, Inc. ADR + 5,160,600 800,000 INSO CORPORATION + 34,000,000 315,200 Intuit, Inc. + 24,585,600 250,000 Legato Systems, Inc. + 7,750,000 342,200 Macromedia, Inc. + 17,879,950 425,000 Maxis, Inc. + 16,150,000 715,000 Mercury Interactive Corp. 13,048,750 72,000 Metatools, Inc. + 1,872,000 189,100 Microsoft Corp. + 16,593,525 82,800 Netscape Communications Corp. + 11,509,200 375,000 Novadigm, Inc. + 10,640,625 865,000 Novell, Inc. + 12,326,250 531,900 Objective Systems Integrators, Inc. + 29,121,525 525,000 Parametric Technology Corp. + 34,912,500 540,000 PeopleSoft, Inc. + 23,220,000 695,600 Platinum Software Corp. + 3,912,750 234,100 Project Software & Development, Inc. + 8,164,238 219,900 Scopus Technology, Inc, + 5,552,475 738,300 Security Dynamics Technologies, Inc. + 40,237,350 46,600 Sierra On-Line, Inc. + 1,339,750 1,125,000 Softkey International, Inc. + 26,015,625 500,000 Spyglass, Inc. + 28,500,000 475,000 Sybase, Inc. + 17,100,000 900,000 Synopsys, Inc. + 34,200,000 340,100 Unison Software, Inc. + 5,866,725 425,300 Vantive Corp. + 9,569,250 -------------- 570,100,851 Consumer Services (0.5%) - -------------------------------------------------------------------------------------------- 685,000 CUC International, Inc. 23,375,625 Entertainment (1.4%) - -------------------------------------------------------------------------------------------- 750,000 Scientific Games Holdings Corp. + 28,312,500 675,000 Viacom, Inc. Class B + 31,978,125 -------------- 60,290,625 Financial Services (2.1%) - -------------------------------------------------------------------------------------------- 1150000 Credit Acceptance Corp. + 23,862,500 525,000 First USA, Inc. 23,296,875 1,225,000 MBNA Corp. 45,171,875 -------------- 92,331,250 Funeral/Cemetery Services (1.2%) - -------------------------------------------------------------------------------------------- 700,000 Loewen Group, Inc. 17,718,750 965,000 Stewart Enterprises, Inc. Class A 35,705,000 -------------- 53,423,750 Gaming (2.1%) - -------------------------------------------------------------------------------------------- 1,200,000 Circus Circus Enterprises, Inc. + 33,450,000 1,350,000 Mirage Resorts, Inc. 46,575,000 1,050,000 Rio Hotel & Casino, Inc. + 12,468,750 -------------- 92,493,750 HMOs (3.2%) - -------------------------------------------------------------------------------------------- 1,259,000 Healthsource, Inc. + 45,324,000 647,500 Oxford Health Plans Inc. + 47,834,063 136,100 Pacificare Health Systems, Inc. 11,840,700 300,000 Pacificare Health Systems, Inc. Class B + 26,100,000 396,200 Sierra Health Services + 12,579,350 -------------- 143,678,113 Health Care Information Services (0.7%) - -------------------------------------------------------------------------------------------- 228,500 CyCare Systems, Inc. + 5,855,313 335,000 HBO & Co. 25,669,375 -------------- 31,524,688 Health Care Services (5.4%) - -------------------------------------------------------------------------------------------- 122,200 Access Health, Inc. + 5,407,350 1,125,000 Apria Healthcare Group, Inc. + 31,781,250 535,000 Emcare Holdings, Inc. + 12,840,000 650,000 Emeritus Corp. + 7,556,250 1,025,000 Lincare Holdings, Inc. + 25,625,000 550,000 Medaphis Corp. + 20,350,000 425,000 Owen Healthcare, Inc. + 11,740,625 321,450 Pediatrix Medical Group, Inc. + 8,839,875 520,000 Renal Treatment Centers, Inc. + 22,880,000 364,600 Rotech Medical Corp. + 10,026,500 58,000 Total Renal Care Holdings, Inc. + 1,711,000 1,493,500 Vencor, Inc. 48,538,750 1,275,000 Vivra, Inc. + 32,034,375 -------------- 239,330,975 Hospital Management (0.9%) - -------------------------------------------------------------------------------------------- 1,550,000 Health Management Assoc., Inc. + 40,493,750 Insurance (0.4%) - -------------------------------------------------------------------------------------------- 600,000 Amerin Corp. + 16,050,000 Lodging (3.6%) - -------------------------------------------------------------------------------------------- 674,742 Doubletree Corp. + 17,711,978 1,160,800 HFS, Inc. + 94,895,400 975,000 La Quinta Inns, Inc. 26,690,625 22,512 Red Lion Hotels, Inc. + 393,960 784,900 Renaissance Hotel Group N.V. + 20,014,950 -------------- 159,706,913 Medical Supplies and Devices (3.3%) - -------------------------------------------------------------------------------------------- 550,000 Boston Scientific Corp. + 26,950,000 400,000 Endosonics Corp. + 6,050,000 675,000 I-Stat Corp. + 21,937,500 725,000 ICU Medical, Inc. + 12,325,000 700,000 Igen, Inc. 4,112,500 525,000 Medisense Inc. + 16,603,125 290,000 Medtronic, Inc. 16,203,750 630,000 Mentor Corp. Minnesota 14,490,000 223,000 Neuromedical Systems, Inc. + 4,487,875 298,800 Thermo Cardiosystems, Inc. + 23,082,300 -------------- 146,242,050 Networking Equipment (7.0%) - -------------------------------------------------------------------------------------------- 580,000 Ascend Communications, Inc. + 47,052,500 425,000 Cabletron Systems, Inc. + 34,425,000 475,000 Cascade Communications Corp. + 40,493,750 950,000 Cisco Systems, Inc. + 70,893,750 450,000 Network Express, Inc. + 2,306,250 200,000 Shiva Corp. + 14,550,000 647,300 Stratacom, Inc. + 47,576,550 635,100 U.S. Robotics Corp. + 55,730,025 -------------- 313,027,825 Nursing Homes (1.8%) - -------------------------------------------------------------------------------------------- 675,000 Genesis Health Ventures, Inc. + 24,637,500 1,000,000 Health Care & Retirement Corp. + 35,000,000 875,000 Horizon/CMS Healthcare Corp. + 22,093,750 -------------- 81,731,250 Pharmaceuticals and Biotechnology (3.3%) - -------------------------------------------------------------------------------------------- 500,000 Amgen, Inc. + 29,687,500 900,000 Astra AB (Sweden) + 35,906,778 561,700 CytoTherapeutics, Inc. + 9,619,113 550,000 Biochem Pharmaceutical, Inc. + 22,068,750 900,000 Gilead Sciences, Inc +. 28,800,000 470,000 Martek Biosciences Corp. + 11,867,500 400,000 Theratech, Inc. + 7,200,000 -------------- 145,149,641 Publishing (0.2%) - -------------------------------------------------------------------------------------------- 460,000 Mecklermedia Corp. + 7,360,000 Restaurants (4.0%) - -------------------------------------------------------------------------------------------- 1,230,800 Apple South, Inc. 26,462,200 420,000 Applebee's International, Inc. 9,555,000 1,000,000 Boston Chicken, Inc. + 32,125,000 1,350,000 J.D. Wetherspoon PLC (United Kingdom) 13,433,850 1,050,000 Landry's Seafood Restaurants, Inc. 17,915,625 610,000 Lone Star Steakhouse & Saloon + 23,408,750 960,000 Outback Steakhouse, Inc. + 34,440,000 508,900 Papa Johns International, Inc. + 20,960,319 -------------- 178,300,744 Retail (4.1%) - -------------------------------------------------------------------------------------------- 275,000 Barnes & Noble, Inc. + 7,975,000 1,225,000 Bed Bath & Beyond, Inc. + 47,545,313 925,000 Boise Cascade Office Products + 39,543,750 345,000 CompUSA, Inc. + 10,738,125 457,560 Hollywood Entertainment Corp. + 3,832,065 1,600,000 Office Depot, Inc. + 31,600,000 768,800 Officemax, Inc. + 17,201,900 900,000 Revco D.S., Inc. + 25,425,000 -------------- 183,861,153 Semiconductors (5.1%) - -------------------------------------------------------------------------------------------- 525,000 Altera Corp. + 26,118,750 650,000 Analog Devices Inc. + 22,993,750 700,000 Atmel Corp. + 15,662,500 325,000 Credence Systems Corp. + 7,434,375 175,000 Cyberoptics Corp. + 6,956,250 725,000 KLA Instruments Corp. + 18,895,313 888,500 Linear Technology Corp. 34,873,625 965,000 Maxim Integrated Products Inc. + 37,152,500 550,000 Silicon Valley Group, Inc. + 13,887,500 1,350,000 Xilinx, Inc. 41,175,000 -------------- 225,149,563 Specialty Consumer Products (1.9%) - -------------------------------------------------------------------------------------------- 800,000 Department 56, Inc. + 30,700,000 307,000 Franklin Electronic Publishers, Inc. + 9,056,500 175,200 Gemstar International Group Ltd. + 4,971,300 943,634 Sunglass Hut International + 22,411,308 525,000 Wolverine World Wide, Inc. 16,537,500 -------------- 83,676,608 Telecommunication Equipment (2.7%) - -------------------------------------------------------------------------------------------- 420,600 Adtran, Inc. + 22,843,838 775,000 Gandalf Technologies, Inc. + 13,175,000 334,350 Glenayre Technologies, Inc. + 13,875,525 650,000 P-Com, Inc. + 13,000,000 800,000 Pairgain Technologies, Inc. + 43,800,000 145,100 Premisys Communications, Inc. + 8,125,600 169,400 VideoServer, Inc. + 5,336,100 -------------- 120,156,063 Telephone Services (2.9%) - -------------------------------------------------------------------------------------------- 1,511,400 Frontier Corp. 45,342,000 1,800,000 LCI International, Inc. + 36,900,000 200,000 MIDCOM Communications, Inc. + 3,650,000 250,000 Tel-Save Holdings, Inc. + 3,468,750 1,100,000 WorldCom, Inc. + 38,775,000 -------------- 128,135,750 Wireless Communications (2.6%) - -------------------------------------------------------------------------------------------- 1,250,000 Airtouch Communications, Inc. + 35,312,500 505,000 Centennial Cellular Corp. Class A + 8,648,125 2,300,000 Paging Network, Inc. + 56,062,500 189,300 United States Cellular Corp. + 6,388,875 617,964 Vanguard Cellular Systems, Inc. + 12,513,770 -------------- 118,925,770 -------------- Total Common Stocks (cost $2,902,190,761) $4,136,174,133 PREFERRED STOCKS (0.4%)*(cost $5,850,545) NUMBVALUE - -------------------------------------------------------------------------------------------- 120,000 Sap Ag Systeme Preference Bearer (Germany) $18,112,263 SHORT-TERM INVESTMENTS (6.1%)* PRINVALUE - -------------------------------------------------------------------------------------------- $ 20,000,000 Ciesco L.P. 5.68s, January 18, 1996 $19,946,356 20,000,000 Corporate Asset Funding Corp. 5.70s, January 11, 1996 19,968,333 13,000,000 Federal Home Loan Bank 5.59s, January 3, 1996 12,995,963 24,000,000 Federal Home Loan Mortgage Corp. 5.70s, February 5, 1996 23,870,033 20,100,000 Federal Home Loan Mortgage Corp. 5.56s, February 1, 1996 20,003,766 13,000,000 Federal Home Loan Mortgage Corp. 5.37s, May 13, 1996 12,740,650 15,000,000 Federal National Mortgage Assn. 5.58s, January 25, 1996 14,944,200 10,000,000 Federal National Mortgage Assn. 5.58s, February 9, 1996 9,939,875 25,000,000 Ford Motor Credit Co. 5.71s, January 12, 1996 24,956,382 20,000,000 General Electric Capital Corp. 5.56s, January 31, 1996 19,910,422 30,000,000 Household Finance Corp. 5.67s, January 25, 1996 29,886,600 15,000,000 Metropolitan Life Funding, 5.68s, January 15, 1996 14,973,967 20,000,000 National Rural Utilities Cooperative Finance Corp. 5.63s, February 13, 1996 19,865,504 10,000,000 USAA Capital Corp. 5.68s, January 5, 1996 9,993,689 17,330,000 Interest in $308,242,000 repurchase agreement dated December 29, 1996 with Lehman Brothers Inc. due January 2, 1996 with respect to various U.S. Treasury obligations-maturity value of $17,341,360 for an effective yield of 5.90% 17,338,521 -------------- Total Short-Term Investments (cost $271,332,820) $271,334,261 - -------------------------------------------------------------------------------------------- Total Investments (cost $3,179,374,126)*** $4,425,620,657 - -------------------------------------------------------------------------------------------- * Percentage indicated are based on net assets of $4,445,315,887. + Non-income-producing security. *** The aggregate identified cost on a tax cost basis is $3,184,645,006 resulting in gross unrealized appreciation and depreciation of $1,330,890,800 and $89,915,149, respectively, or net unrealized appreciation of $1,240,975,651. ADR after the name of a foreign holding stands for American Depository Reciepts, 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 31,1995 (Unaudited) Assets - --------------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $ 3,179,374,126) (Note 1) $4,425,620,657 - --------------------------------------------------------------------------------------------------- Cash 114 - --------------------------------------------------------------------------------------------------- Dividends and other receivables 450,389 - --------------------------------------------------------------------------------------------------- Foreign tax reclaim 11,824 - --------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 64,682,119 - --------------------------------------------------------------------------------------------------- Receivable for securities sold 3,755,578 - --------------------------------------------------------------------------------------------------- Total assets 4,494,520,681 Liabilities - --------------------------------------------------------------------------------------------------- Payable for securities purchased 30,858,898 - --------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 7,498,422 - --------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 5,174,477 - --------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 3,406 - --------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 12,498 - --------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 2,894,821 - --------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 1,986,403 - --------------------------------------------------------------------------------------------------- Payable for organizational expenses (Note 1) 23,788 - --------------------------------------------------------------------------------------------------- Other accrued expenses 752,081 - --------------------------------------------------------------------------------------------------- Total liabilities 49,204,794 - --------------------------------------------------------------------------------------------------- Net assets $4,445,315,887 Represented by - --------------------------------------------------------------------------------------------------- Paid in Capital (Note 4) $3,211,188,029 - --------------------------------------------------------------------------------------------------- Accumulated net investment loss (15,425,270) - --------------------------------------------------------------------------------------------------- Accumulated net realized gain on investment transactions 3,306,951 - --------------------------------------------------------------------------------------------------- Net unrealized appreciation on investments 1,246,246,177 - --------------------------------------------------------------------------------------------------- Total - Representing net assets applicable to capital shares outstanding $4,445,315,887 Computation of net asset value and offering price - --------------------------------------------------------------------------------------------------- Net asset value and redemption price of class A shares ($2,387,817,938 divided by 64,626,150 shares) $36.95 - --------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $36.95)* $39.20 - --------------------------------------------------------------------------------------------------- Net asset value and offering price of class B shares ($1,930,794,109 divided by 53,333,705 shares)** $36.20 - --------------------------------------------------------------------------------------------------- Net asset value and redemption price of class M shares ($ 65,059,385 divided by 1,770,021 shares) $36.76 - --------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $36.76)* $38.09 - --------------------------------------------------------------------------------------------------- Net asset value and offering price of class Y shares ($ 61,644,455 divided by 1,662,246 shares)** $37.09 - --------------------------------------------------------------------------------------------------- * 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 31,1995 (Unaudited) Investment Income - --------------------------------------------------------------------------------------------------- Interest $ 7,062,234 - --------------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $58,265) 1,940,841 - --------------------------------------------------------------------------------------------------- Total investment income 9,003,075 Expenses: - --------------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 9,284,375 - --------------------------------------------------------------------------------------------------- Investor Servicing and custodian fees (Note 2) 4,260,236 - --------------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 27,405 - --------------------------------------------------------------------------------------------------- Reports to shareholders 144,573 - --------------------------------------------------------------------------------------------------- Auditing 42,420 - --------------------------------------------------------------------------------------------------- Legal 24,214 - --------------------------------------------------------------------------------------------------- Postage 335,552 - --------------------------------------------------------------------------------------------------- Registration Fees 471,511 - --------------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 2,290,589 - --------------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 7,285,325 - --------------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 129,327 - --------------------------------------------------------------------------------------------------- Administrative services (Note 2) 25,163 - --------------------------------------------------------------------------------------------------- Other expenses 104,995 - --------------------------------------------------------------------------------------------------- Total expenses 24,425,685 - --------------------------------------------------------------------------------------------------- Net investment loss (15,422,610) - --------------------------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 17,982,416 - --------------------------------------------------------------------------------------------------- Net realized loss on forward currency translation (Notes 1 and 3) (3,181) - --------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments during the period 695,612,242 - --------------------------------------------------------------------------------------------------- Net gain on investments 713,591,477 - --------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $698,168,867 - --------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Six months ended Year ended December 31 June 30 1995* 1995 - --------------------------------------------------------------------------------------------------- ------------------- Increase in net assets - --------------------------------------------------------------------------------------------------- ------------------- Operations: - --------------------------------------------------------------------------------------------------- ------------------- Net investment loss $ (15,422,610) $ (13,274,739) - --------------------------------------------------------------------------------------------------- ------------------- Net realized gain (loss) on investments and foreign currencies 17,979,235 (12,179,793) - --------------------------------------------------------------------------------------------------- ------------------- Net unrealized appreciation of investments 695,612,242 508,131,057 - --------------------------------------------------------------------------------------------------- ------------------- Net increase in net assets resulting from operations 698,168,867 482,676,525 - --------------------------------------------------------------------------------------------------- ------------------- Distributions to shareholders - --------------------------------------------------------------------------------------------------- ------------------- From net realized gain on investments: Class A - (5,252,966) - --------------------------------------------------------------------------------------------------- ------------------- Class B - (3,371,127) - --------------------------------------------------------------------------------------------------- ------------------- Class M - (673) - --------------------------------------------------------------------------------------------------- ------------------- Class Y - (58,463) - --------------------------------------------------------------------------------------------------- ------------------- In excess of net realized gains Class A - (1,509,455) - --------------------------------------------------------------------------------------------------- ------------------- Class B - (968,703) - --------------------------------------------------------------------------------------------------- ------------------- Class M - (193) - --------------------------------------------------------------------------------------------------- ------------------- Class Y - (16,800) - --------------------------------------------------------------------------------------------------- ------------------- Return of capital Class A - (202,496) - --------------------------------------------------------------------------------------------------- ------------------- Class B - (129,953) - --------------------------------------------------------------------------------------------------- ------------------- Class M - (26) - --------------------------------------------------------------------------------------------------- ------------------- Class Y - (2,254) - --------------------------------------------------------------------------------------------------- ------------------- Increase from capital share transactions (Note 4) 1,351,342,058 942,116,459 - --------------------------------------------------------------------------------------------------- ------------------- Total increase in net assets 2,049,510,925 1,413,279,875 - --------------------------------------------------------------------------------------------------- ------------------- Net Assets - --------------------------------------------------------------------------------------------------- ------------------- Beginning of period 2,395,804,962 982,525,087 - --------------------------------------------------------------------------------------------------- ------------------- End of period (including accumulated net investment loss of $15,425,270 and $2,660, respectively) $4,445,315,887 $2,395,804,962 - --------------------------------------------------------------------------------------------------- ------------------- * Unaudited
Financial highlights (For a share outstanding throughout the period) For the period For the period July 19, 1994 December 1, 1994 For six months (commencement For six months (commencement ended of operations) ended of operations) to December 31 to June 30 December 31 June 30 - ---------------------------------------------------------------------------------------------------------- 1995* 1995 1995* 1995 - ---------------------------------------------------------------------------------------------------------- Class Y Class M - ---------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $29.66 $22.59 $29.51 $24.72 - ---------------------------------------------------------------------------------------------------------- Investment operations - ---------------------------------------------------------------------------------------------------------- Net investment (loss) (.08) (.04) (.12) (.05) - ---------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 7.51 7.31 7.37 5.04 - ---------------------------------------------------------------------------------------------------------- Total from investment operations 7.43 7.27 7.25 4.99 - ---------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - ---------------------------------------------------------------------------------------------------------- From net realized gain on investments -- (.15) -- (.15) - ---------------------------------------------------------------------------------------------------------- In excess of net realized gains -- (.04) -- (.04) - ---------------------------------------------------------------------------------------------------------- Return of capital -- (.01) -- (.01) - ---------------------------------------------------------------------------------------------------------- Total distributions -- (.20) -- (.20) - ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $37.09 $29.66 $36.76 $29.51 - ---------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (e) 25.05 (b) 32.42 (b) 24.57 (b) 20.40 (b) - ---------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $61,644 $24,538 $65,059 $16,011 - ---------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) .45 (b) .83 (b) .84 (b) .94 (b) - ---------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.18) (b) (.26) (b) (.57) (b) (.53) (b) - ---------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 12.82 (b) 56.99 12.82 (b) 56.99 - ---------------------------------------------------------------------------------------------------------- * Unaudited (a) Reflects an 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 period ended June 30, 1991, reflect a reduction of $0.05 per share. (b) Not annualized. (c) Portfolio turnover excludes the impact of assets 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 (For a share outstanding throughout the period) For the period March 1, 1993 For six months (commencement ended of operations) to December 31 Year ended June 30 June 30 - ---------------------------------------------------------------------------------------------------------- 1995* 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------- Class B Class A - ---------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $29.09 $21.68 $20.80 $17.76 - ---------------------------------------------------------------------------------------------------------- Investment operations - ---------------------------------------------------------------------------------------------------------- Net investment (loss) (.16) (.23) (.11) (.05) - ---------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 7.27 7.84 1.44 3.09 - ---------------------------------------------------------------------------------------------------------- Total from investment operations 7.11 7.61 1.33 3.04 - ---------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - ---------------------------------------------------------------------------------------------------------- From net realized gain on investments -- (.15) (.45) -- - ---------------------------------------------------------------------------------------------------------- In excess of net realized gains -- (.04) -- -- - ---------------------------------------------------------------------------------------------------------- Return of capital -- (.01) -- -- - ---------------------------------------------------------------------------------------------------------- Total distributions -- (.20) (.45) -- - ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $36.20 $29.09 $21.68 $20.80 - ---------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (e) 24.44 (b) 35.34 6.18 17.12 (b) - ---------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,930,794 $1,013,379 $333,738 $15,698 - ---------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) .95 (b) 1.88 2.04 .67 (b) - ---------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.68) (b) (1.30) (1.55) (.57) (b) - ---------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 12.82 (b) 56.99 52.76 93.59 (b) - ---------------------------------------------------------------------------------------------------------- For the period August 31, 1990 For six months (commencement ended of operations) to December 31 Year ended June 30 June 30 - ---------------------------------------------------------------------------------------------------------------------------------- 1995* 1995 1994 1993 1992 1991 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $29.58 $21.88 $20.83 $14.50 $11.56 $8.54 - ---------------------------------------------------------------------------------------------------------------------------------- Investment operations - ---------------------------------------------------------------------------------------------------------------------------------- Net investment (loss) (.10) (.12) (.06) (.12) (.02) (.11) (a) - ---------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 7.47 8.02 1.56 6.77 3.33 (d) 3.19 - ---------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 7.37 7.9 1.5 6.65 3.31 3.08 - ---------------------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - ---------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investment -- (.15) (.45) (.32) (.37) (.06) - ---------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- (.04) -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Return of capital -- (.01) -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Total distributions -- (.20) (.45) (.32 ) (.37) (.06) - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $36.95 $29.58 $21.88 $20.83 $14.50 $11.56 - ---------------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (e) 24.92 (b) 36.36 7 46.12 28.85 36.23 (b) - ---------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $2,387,818 $1,341,877 $648,787 $318,426 $141,206 $3,164 - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets .57 (b) 1.13 1.23 1.31 1.64 2.28 (a)(b) - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.30) (b) (.55) (.82) (.98) (.91) (1.14) (a)(b) - ---------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 12.82 (b) 56.99 52.76 93.59 116.04 (c) 71.54 (b) - ----------------------------------------------------------------------------------------------------------------------------------
Notes to financial statements December 31, 1995 (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. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares, which convert to class A shares after eight years, do not pay a front-end sales charge but pay a higher ongoing distribution fee than class A shares, and may be subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class M shares are sold with a maximum front end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B shares. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A shares and class B shares, but do not bear a distribution fee. Class Y shares are sold to defined contribution plans that initially invest at least $250 million in a combination of Putnam Funds. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class of would receive their pro-rata share of the net assets of the fund, if that fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements are in conformity with generally accepted accounting principles and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Actual results could differ from these estimates. A) Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sale price, or, if no sales are reported -- as in the case of some securities traded over-the-counter -- the last reported bid price, except that certain U.S. government obligations are stated at the mean between the 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 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). 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 companies managed by Putnam Investment Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc. and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. D) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount least equal to 102% of the resale price, including accrued interest. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. E) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held and for excise tax on income and capital gains. F) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Capital gain distributions, if any, are recorded on the ex-dividend date and paid annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. G) Unamortized organization expenses Expenses incurred by the fund in connection with its organization, its registration with the Securities Exchange Commission and with various states and the initial public offering of its shares were $54,369. These expenses are being amortized by the fund on a straight-line basis over a five-year period. The fund will reimburse Putnam Management for the payment of these expenses. Note 2 Management fee, administrative services, and other transactions Compensation of Putnam Management for management and investment advisory services is paid quarterly based on the average net assets of the fund. 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 Putnam Management of the fund's portfolio transactions. The fund reimburses Putnam Management for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Trustees of the fund receive an annual Trustees fee of $3,570 and an additional fee for each Trustee's meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. During the period ended December 31, 1995, the fund adopted a Trustee Fee Deferral Plan ("the Plan") which allows the Trustees to defer the receipt of all or portion of the Trustees Fees payable on or after July 1, 1995. The deferred fees remain in the fund and are invested in the fund or other Putnam funds until distribution in accordance with the Plan. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly owned subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the average net assets attributable to class A, class B and class M shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average net assets attributable to class A, class B and class M shares respectively. For the six months ended December 31, 1995, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $2,920,963 and $87,577 from the sale of class A and class M shares, respectively and received $869,023 in contingent deferred sales charges from redemptions of class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the six months ended December 31, 1995, Putnam Mutual Funds Corp., acting as underwriter received $13,086 on class A redemptions. Note 3 Purchases and sales of securities During the six months ended December 31, 1995, purchases and sales of investment securities other than short-term investments aggregated $1,612,774,984 and $394,274,993, respectively. There were no purchases and sales of U.S. government obligations. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At December 31, 1995, there was an unlimited number of shares of beneficial interest 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, 1995 Class A Shares Amount - ---------------------------------------------------- Shares sold 39,772,714 $1,357,471,575 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 2 140 - ---------------------------------------------------- 39,772,716 1,357,471,715 Shares repurchased (20,505,346) (698,645,820) - ---------------------------------------------------- Net increase 19,267,370 $658,825,895 - ---------------------------------------------------- Year ended June, 30 1995 Class A Shares Amount - ---------------------------------------------------- Shares sold 43,682,500 $1,128,122,574 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 272,982 6,390,513 - ---------------------------------------------------- 43,955,482 1,134,513,087 Shares repurchased (28,250,033) (728,037,391) - ---------------------------------------------------- Net increase 15,705,449 $406,475,696 - ---------------------------------------------------- Six months ended December 31, 1995 Class B Shares Amount - ---------------------------------------------------- Shares sold 24,234,811 $812,581,611 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 31 680 - ---------------------------------------------------- 24,234,842 812,582,291 Shares repurchased (5,732,292) (190,631,216) - ---------------------------------------------------- Net increase 18,502,550 $621,951,075 - ---------------------------------------------------- Year ended June 30, 1995 Class B Shares Amount - ---------------------------------------------------- Shares sold 26,763,724 $688,264,693 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 173,288 4,006,394 - ---------------------------------------------------- 26,937,012 692,271,087 Shares repurchased (7,498,289) (192,825,799) - ---------------------------------------------------- Net increase 19,438,723 $499,445,288 - ---------------------------------------------------- Six months ended December 31, 1995 Class M Shares Amount - ---------------------------------------------------- Shares sold 1,424,839 $49,109,806 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------- 1,424,839 49,109,806 Shares repurchased (197,410) (6,781,856) - ---------------------------------------------------- Net increase 1,227,429 $42,327,950 - ---------------------------------------------------- For the period December 1, 1994 (commencement of operations) to June 30, 1995 Class M Shares Amount - ---------------------------------------------------- Shares sold 573,538 $15,676,754 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 38 892 - ---------------------------------------------------- 573,576 15,677,646 Shares repurchased (30,984) (846,834) - ---------------------------------------------------- Net increase 542,592 $14,830,812 - ---------------------------------------------------- Six months ended December 31, 1995 Class Y Shares Amount - ---------------------------------------------------- Shares sold 968,448 $32,815,158 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------- 968,448 32,815,158 Shares repurchased (133,528) (4,578,020) - ---------------------------------------------------- Net increase 834,920 $28,237,138 - ---------------------------------------------------- For the period July 19, 1994 (commencement of operations) to June 30, 1995 Class Y Shares Amount - ---------------------------------------------------- Shares sold 914,699 $23,722,392 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,307 77,517 - ---------------------------------------------------- 918,006 23,799,909 Shares repurchased (90,680) (2,435,246) - ---------------------------------------------------- Net increase 827,326 $21,364,663 - ---------------------------------------------------- Our commitment to quality service * CHOOSE AWARD-WINNING SERVICE Putnam Investor Services has won the DALBAR Quality Tested Service Seal for the past six years. In 1995, over 146,000 tests of 56 shareholder service components demonstrated that Putnam outperformed the industry standard in every category. * HELP YOUR INVESTMENT GROW Set up a systematic program for investing with as little as $25 a month from a Putnam money market fund or from your checking or savings account.* * SWITCH FUNDS EASILY You can move money from one account to another with the same class of shares without a service charge. (This privilege is subject to change or termination.) * ACCESS YOUR MONEY QUICKLY You can get checks sent regularly or redeem shares any business day at the then-current net asset value, which may be more or less than the original cost of the shares. For details about any of these or other services, contact your financial advisor or call the toll-free number shown below and speak with a helpful Putnam representative. * To make an additional investment in this or any other Putnam fund, contact your financial advisor or call our toll-free number: 1-800-225-1581. * Regular investing of course, does not guarantee a profit or protect against a loss in a declining market. Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company legal counsel Ropes & Gray TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III Eli Shapiro A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Senior Vice President Peter Carman Vice President Brett C. Browchuk Vice President Daniel L. Miller Vice President and Fund Manager William N. Shiebler Vice President John R. Verani Vice President Paul M. O'Neil Vice President Beverly Marcus Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam 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 objectives, and operating policies of the fund, and the most recent copy of Putnam's Quarterly Performance Summary. For more information, or to request a prospectus, call toll free: 1-800-225-1581. Shares of mutual funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution, are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any other agency, and involve risk, including the possible loss of principal amount invested. The Putnam Funds One Post Office Square Boston Massachusetts, 02109 22798-852/358/983 1/96 Bulk Rate U.S. Postage PAID Putnam Investments 24 -----END PRIVACY-ENHANCED MESSAGE-----