-----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, FTIsNlC3C8RYdntDLWye6+ZQPArrDn3aE6Wux951VgaT5jlQWo3iC2SGN40tpy6X TEeomu21f96T1T1izy+qKg== 0000928816-96-000265.txt : 19960903 0000928816-96-000265.hdr.sgml : 19960903 ACCESSION NUMBER: 0000928816-96-000265 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960830 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: 96624299 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 ANNUAL REPORT June 30, 1996 [LOGO: BOSTON * LONDON * TOKYO] Fund highlights * "Putnam New Opportunities Fund is the Energizer Bunny of growth funds. . . . As growth stocks have marched relentlessly upward over the past several years, this fund has run circles around its peers."* -- Morningstar Mutual Funds, July 5, 1996 * As of June 30, 1996, Putnam New Opportunities Fund's class A shares ranked 1 out of 248 growth funds tracked by Lipper Analytical Services for 5-year performance. For 3-year performance, the fund ranked 2 out of 379 (top 1%), and for 1-year performance, the fund ranked 8 out of 619 (top 2%).+ CONTENTS 4 Report from Putnam Management 9 Fund performance summary 13 Portfolio holdings 21 Financial statements *Morningstar proprietary ratings reflect historical risk-adjusted performance as of 6/30/96. The ratings are subject to change every month. Past performance is no guarantee of future results. Morningstar ratings are calculated from the funds' 3-, 5-, and 10-year average annual returns, if applicable, in excess of 90-day Treasury bill returns with appropriate fee adjustments, and a risk factor that reflects fund performance below 90-day T-bill returns. The 1-year rating is calculated using the same methodology, but it is separate from, and not a component of, the overall rating. The fund's class A shares received Morningstar's highest rating of 5 stars for the 1-, 3- , and 5-year periods ended 6/30/96. For the 1-, 3-, and 5-year periods, there were 2,882, 1,583, and 997 equity funds rated, respectively. Among the aggressive growth funds rated for the 1-, 3- and 5-year periods ended 6/30/96, the fund was rated 6 out of 89, 4 out of 63, and 2 out of 46 funds, respectively. Performance of other share classes will vary. +Lipper rankings are based on total return performance, vary over time, and do not reflect the effects of sales charges. The fund's class B shares ranked 3 out of 379 (top 1%) for 3-year performance and 10 out of 619 (top 2%) for 1-year performance. Class M shares ranked 9 out of 619 (top 2%) for 1-year performance. Performance of other share classes will vary. Past performance is not indicative of future results. From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] (copyright) Karsh, Ottawa Dear Shareholder: Putnam New Opportunities Fund continues to capture headlines with its standout performance record, a fact that makes us justly proud. The numbers for the fiscal year that ended on June 30, 1996, only serve to reconfirm that Fund Manager Daniel Miller and the Putnam team that stands behind him must be doing something right. Following such a sustained run of positive performance, however, we are moved to caution that in the unsettled market that may lie ahead, even the most successful funds may experience significant volatility. After all, the U.S. equity market has enjoyed its longest and strongest advance in history, and as Putnam Management has been saying for some time now, a correction is in order. Funds like Putnam New Opportunities, which tend to ride the crest of rising markets, also tend to fall more sharply on the downside. Instead of cutting and running, astute investors can often profit from such declines by using them as opportunities to increase their positions at bargain prices. In any case, we believe those seeking above-average growth potential should continue to find the fund an excellent choice over the long term, regardless of the market's ups and downs along the way. Respectfully yours, /S/George Putnam George Putnam Chairman of the Trustees August 21, 1996 Report from the Fund Manager Daniel L. Miller Buoyed by the strength of holdings in several key sectors, Putnam New Opportunities Fund was able to finish fiscal 1996 with a solid performance record despite increasing volatility in the U.S. equity market. For the 12 months ended June 30, 1996, your fund's class A shares gained an impressive 45.34% at net asset value and 37.00% at public offering price. These returns handily outpaced the Standard & Poor's 500(registered trademark) Index, which rose 25.93% over the same period. In fact, in every year since the fund's inception in 1990, its returns have consistently surpassed the S&P 500 Index. Please see page 9 of this report for complete performance information. During the second half of fiscal 1996, the U.S. stock market surged to record highs, peaking in early June. However, toward the end of the fiscal year, some weakness began to appear in technology and smaller- company stocks. In keeping with the strategy that has served the fund well since inception, we drew on the strength of companies with above- average long-term growth prospects and dominant market share. This strategy allows the fund to invest in stocks that tend to do well regardless of the direction of the overall economy. * TECHNOLOGY AGAIN MAKES KEY CONTRIBUTION TO RETURNS Technology-related stocks -- the fund's largest sector at approximately 29% of net assets -- provided a significant boost to performance. Holdings in the networking and computer services segments of the industry contributed substantially to the fund's returns, while the semiconductor market remained weak. Among the strongest performers were stocks of companies that provide the equipment to transmit data over long distances, such as telecommuting applications that link computer systems between homes and businesses. The computer services segment, another area of strength for the fund, includes companies that assist businesses with the installation and maintenance of computer systems. One such holding, Cambridge Technology Partners, Inc., offers consulting and software development services to businesses, industries, and government agencies. The company has 22 offices, recently won 7 large contracts in the Northeast, and is expected to open several new offices in the United States and overseas. Another strong holding was Alternative Resources Corporation (ARC), a provider of technical support for businesses with complex information technology operations. ARC, which currently serves more than 600 client companies, has profited from the trend toward outsourcing computer services. While these stocks, along with others discussed in this report, were viewed favorably at the end of the fiscal period, all portfolio holdings are subject to review and adjustment in accordance with the fund's investment strategy and may well vary in the future. * HEALTH-CARE SECTOR EXHIBITS SOME WEAKNESS While we continue to believe in the potential of medical technology/cost containment -- currently the portfolio's second- largest sector -- there is no denying that it was weaker this year than we have seen in some time. This is, to some extent, a reflection of higher costs for products and services, which had its greatest impact on companies in cost containment. This area includes companies, such as HMOs, that seek to provide high quality health-care service at lower costs. Because the cost increases were affecting the profitability of many companies, we have reduced the fund's weighting in this area. Another key segment of the health-care industry, medical technology, delivered strong returns in the first half of fiscal 1996, but weakened somewhat over the last six months. [GRAPHIC OMITTED: horizontial bar chart TOP INDUSTRY SECTORS*] Networking and communications equipment 12.1% Computer software 10.9% Business services 7.9% Health care services 5.6% Broadcasting 4.4% * Based on net assets as of 6/30/96. Allocations and industry sectors will vary over time. One bright spot in medical technology/cost containment was the fund's holdings in physician practice management services. These include stocks of companies that provide business management services for medical practices and clinics. One example is Phycor, Inc., a physician practice management company that operates 36 specialty clinics with over 2,200 physicians in 21 states. The company has an impressive track record and continues to target physicians' practices that are highly regarded in their communities. Also strengthening the portfolio was Pediatrix Medical Group, which manages hospital-based neonatal intensive care units for infants with medical complications. * BUDGET-CONSCIOUS BUYING BOOSTS RETAIL HOLDINGS Within the fund's value-oriented consuming sector, we continued to focus on casual theme restaurants, office product superstores, and discount hard-goods retailers. In this sector, we have found strength in companies like Bed Bath & Beyond, Inc., a national operator of home furnishing superstores that take advantage of budget-conscious buying. Another example is PETSMART, the largest operator of pet superstores in the United States. The company is known as an industry innovator that seeks to make shopping for pet supplies an entertaining and educational experience. We have also taken advantage of a growing industry with a large, underserved market: extended-stay hotels. These hotels cater specifically to travelers who need lodging for relatively long periods of time. One extended-stay hotel chain in the fund's portfolio, Studio Plus Hotels, Inc., owns, develops, and manages facilities that provide the flexibility of hotels combined with the amenities found in apartments. Another of the fund's holdings, Extended Stay America, Inc., also manages extended-stay facilities and targets business travelers, people who are relocating, and travelers on temporary work assignments. [GRAPHIC OMITTED: TOP 10 HOLDINGS (6/30/96)] HFS, Inc. Hotel and real estate brokerage franchises Computer Associates International, Inc. Systems software packages Stratacom, Inc. Manufacturer of wide area network computer systems Cisco Systems, Inc. Manufacturer of computer networking products WorldCom, Inc. Long distance telephone services First Data Corp. Credit card processing services Cascade Communications Corp. Developer of wide area networks U.S. Robotics Corp. Networking access devices Circus Circus Enterprises, Inc. Gaming and hotels Microsoft Corp. Software for microcomputers These holdings represent 13.0% of the portfolio. Holdings will vary over time. * CONSOLIDATION IS THE FOCUS IN MEDIA AND ENTERTAINMENT The most significant event affecting the portfolio's media/ entertainment sector this year has been the passing of the Telecommunications Act of 1996, which allows for ownership of multiple television or radio stations, among other changes. Most of the fund's holdings in this sector are companies involved in the wave of consolidations generated by this new legislation. In radio, SFX Broadcasting, Inc., Clear Channel Communications, and Emmis Broadcasting have all been acquiring new stations, while several of the fund's television station stocks, Sinclair Broadcast Group and Young Broadcasting among them, have also benefited from acquisitions. One of your fund's largest holdings through most of fiscal 1996, Infinity Broadcasting Corp., provided an additional boost for the portfolio after the announcement that Westinghouse Electric Corp. planned to purchase it for $3.72 billion. * PERSONAL COMMUNICATIONS ENHANCED BY NEW INDUSTRY SEGMENT The Telecommunications Act has further implications for your fund. Specifically, within the personal communications sector, the act allows competitive local exchange carriers (CLECs) to enter local markets on a much wider basis. CLECs are smaller telephone companies that compete with the larger telephone providers -- especially the Bell operating companies -- within local markets. Your fund has already benefited from this new industry segment, in which we believe there is significant further growth potential. Intermedia Communications, Inc., one of the fund's holdings in this sector, provides competitive telecommunications services in the Southeast and recently acquired the telecommunications division of EMI Communications Corp. This acquisition doubled the number of Intermedia's service locations as well as its customer base. * REALISTIC OUTLOOK FOR THE COMING FISCAL YEAR As the fund enters its new fiscal year, prospects remain positive for long-term investors. While we anticipate increased volatility over the coming months, we also expect slow but positive growth, benign inflation, and a stable interest-rate climate to provide a relatively positive environment for companies with excellent long-term prospects. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 6/30/96, there is no guarantee the fund will continue to hold these securities in the future. This fund invests all or a portion of its assets in small to medium-sized companies. Such investments increase the risk of greater price fluctuations. 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 6/30/96 Class A Class B Class M (inception date) (8/31/90) (3/1/93) (12/1/94) NAV POP NAV CDSC NAV POP - ---------------------------------------------------------------------- 1 year 45.34% 37.00% 44.24% 39.24% 44.56% 39.50% - ---------------------------------------------------------------------- 5 years 299.21 276.11 -- -- -- -- Annual average 31.90 30.34 -- -- -- -- - ---------------------------------------------------------------------- Life of class 443.82 412.60 142.77 139.77 74.05 67.94 Annual average 33.71 32.36 30.52 30.03 42.01 38.84 - ---------------------------------------------------------------------- COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/96 Standard & Poor's Consumer 500 Index Price Index - --------------------------------------------------------------------- 1 year 25.93% 2.75% - --------------------------------------------------------------------- 5 years 107.19 15.22 Annual average 15.68 2.87 - --------------------------------------------------------------------- Life of class A 146.97 19.07 Annual average 16.78 3.04 - --------------------------------------------------------------------- Life of class B 66.33 9.50 Annual average 16.51 2.76 - --------------------------------------------------------------------- Life of class M 55.91 4.68 Annual average 32.46 2.94 - --------------------------------------------------------------------- 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 net asset 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. CDSC for class B shares assumes the applicable sales charge, with the maximum being 5%. [GRAPHIC WORM CHART OMITTED: GROWTH OF A $10,000] Caption reads: Cumulative total return of a $10,000 investment since 8/31/90 Starting value (Insert ending Total) $9,425 Fund's class A shares at POP $51,260 $10,000 S&P 500 $24,697 $10,000 Consumer Price Index $11,907 (plot points for 10-year total return mountain chart) Date/year Fund at POP S&P 500 CPI - ----------------------------------------------- 8/31/90 9,425 10,000 10,000 6/30/91 12,841 11,920 10,334 6/30/92 16,545 13,512 10,653 6/30/93 24,176 15,346 10,973 6/30/94 25,867 15,565 11,246 6/30/95 35,271 19,611 11,588 6/30/96 51,260 24,697 11,907 Past performance is no assurance of future results. A $10,000 investment in the fund's class B shares at inception on 3/1/93 would have been valued at $24,277 on 6/30/96 ($23,977 with a redemption at the end of the period). A $10,000 investment in the fund's class M shares at inception on 12/1/94 would have been valued at $17,405 at net asset value on 6/30/96, $16,794 at public offering price. PRICE AND DISTRIBUTION INFORMATION 12 months ended 6/30/96 Class A Class B Class M - ---------------------------------------------------------------------- Distributions (number) 0 0 0 - ---------------------------------------------------------------------- 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 - ---------------------------------------------------------------------- 6/30/96 42.99 45.61 41.96 42.66 44.21 - ---------------------------------------------------------------------- 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. 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. It is not possible to invest directly in an index. Consumer Price Index (CPI ) is a commonly used measure of inflation; it does not represent an investment return. Report of independent accountants For the fiscal year ended June 30, 1996 To the Trustees and Shareholders of Putnam New Opportunities Fund We have audited the accompanying statement of assets and liabilities of Putnam New Opportunities Fund, including the portfolio of investments owned, as of June 30, 1996, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1996, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Putnam New Opportunities Fund as of June 30, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts August 15, 1996
Portfolio of investments owned June 30, 1996 COMMON STOCKS (90.9%) * NUMBER OF SHARES VALUE Advertising (0.2%) - ------------------------------------------------------------------------------------------------------- 465,000 Outdoor Systems, Inc. + $16,391,250 Apparel (0.6%) - ------------------------------------------------------------------------------------------------------- 525,000 Tommy Hilfiger Corp. + 28,153,125 800,000 Wolverine World Wide, Inc. 26,000,000 -------------- 54,153,125 Broadcasting (4.4%) - ------------------------------------------------------------------------------------------------------- 822,300 Chancellor Broadcasting Corp. Class A + 25,696,875 935,000 Clear Channel Communications, Inc. + 77,020,625 850,000 Emmis Broadcasting Corp. Class A + 42,500,000 775,000 Heartland Wireless Communications, Inc. + 18,406,250 1,657,900 Infinity Broadcasting Corp. Class A + 49,737,000 683,300 Jacor Communications, Inc. + 21,096,888 750,000 LIN Television Corp. + 27,000,000 1,200,000 Paxson Communications Corp + 12,750,000 1,000,000 Renaissance Communications Corp. + 32,250,000 450,000 SFX Broadcasting, Inc. Class A + 17,550,000 996,100 Sinclair Broadcast Group, Inc. Class A + 43,330,350 1,325,000 Westwood One, Inc. + 20,206,250 578,700 Young Broadcasting Corp. Class A + 22,135,275 -------------- 409,679,513 Building Products (0.3%) - ------------------------------------------------------------------------------------------------------- 978,600 Barnett, Inc. + 28,134,750 Business Services (7.9%) - ------------------------------------------------------------------------------------------------------- 388,600 Affiliated Computer Services, Inc. Class A + 18,264,200 1,475,000 Airgas, Inc. + 28,025,000 1,500,000 Alco Standard Corp. 67,875,000 1,025,000 Alternative Resources Corp. + 37,668,750 891,050 Corestaff, Inc. + 39,874,488 2,000,000 Corporate Express, Inc. + 80,000,000 1,399,500 Danka Business Systems PLC ADR (United Kingdom) 40,935,375 1,400,000 First Data Corp. 111,475,000 250,000 First USA Paymentech, Inc. + 10,000,000 1,000,000 Input/Output, Inc. + 32,375,000 44,600 Labor Ready, Inc. + 1,248,800 1,066,100 Manpower, Inc. 41,844,425 573,000 NOVA Corp. / Georgia + 19,338,750 1,500,000 Paychex, Inc. 72,187,500 9,775,000 Rentokil Group Ord. PLC (United Kingdom) 62,056,568 2,200,000 Robert Half International, Inc. + 61,325,000 108,900 Sykes Enterprises, Inc. + 5,363,325 104,200 Transaction Systems Architects, Inc. Class A + 6,981,400 -------------- 736,838,581 Cable Television (1.1%) - ------------------------------------------------------------------------------------------------------- 500,000 Cablevision Systems Corp. + 23,125,000 1,454,900 Century Communications Corp. Class A + 12,366,650 1,000,000 Tele-Comm Liberty Media Group, Inc. Class A + 26,500,000 2,250,000 Tele-Communications Inc. Class A + 40,781,250 -------------- 102,772,900 Computer Services (3.1%) - ------------------------------------------------------------------------------------------------------- 2,300,000 America Online, Inc. + 100,625,000 2,325,000 Cambridge Technology Partners, Inc. + 70,912,500 1,023,600 CBT Group PLC ADR (Ireland) + 47,341,500 500,000 CMG Information Services, Inc. + 13,500,000 1,300,000 Computer Horizons Corp. + 51,350,000 110,050 Sapient Corp. + 4,649,613 -------------- 288,378,613 Computer Software (10.9%) - ------------------------------------------------------------------------------------------------------- 103,500 Arbor Software Corp. + 6,184,125 1,150,000 Baan Co. N.V. + 39,100,000 1,355,200 Business Objects S.A., ADR (France) + 54,546,800 270,400 Clarify, Inc. + 13,384,800 1,875,000 Computer Associates Intl., Inc. 133,593,750 2,200,000 Electronic Arts, Inc. + 58,850,000 611,000 Fulcrum Technologies, Inc. + 7,866,625 1,600,000 GT Interactive Software Corp. + 26,800,000 975,000 Inso Corp. + 51,065,625 465,000 Legato Systems, Inc. + 25,575,000 223,200 Lycos, Inc. + 2,483,100 987,500 McAfee Associates, Inc. + 48,387,500 850,000 Microsoft Corp. + 102,106,250 350,000 Netscape Communications Corp. + 21,787,500 2,250,000 Parametric Technology Corp. + 97,593,750 1,000,000 PeopleSoft, Inc. + 71,250,000 371,500 Project Software & Development, Inc. + 17,414,063 549,700 Rational Software Corp. + 29,546,375 105,500 Remedy Corp. + 7,701,500 738,300 Security Dynamics Technologies, Inc. + 60,725,175 1,650,000 Softkey International, Inc. + 31,246,875 1,425,000 Synopsys, Inc. + 56,643,750 550,100 Unison Software, Inc. + 13,890,025 700,000 Vantive Corp. + 23,450,000 279,000 Viasoft, Inc. + 18,030,375 -------------- 1,019,222,963 Computer Peripherals (0.7%) - ------------------------------------------------------------------------------------------------------- 3,300,000 EMC Corp. + 61,462,500 Consumer Services (0.3%) - ------------------------------------------------------------------------------------------------------- 900,000 Thermolase Corp. + 24,525,000 Energy-Related (0.5%) - ------------------------------------------------------------------------------------------------------- 1,050,000 Thermo Electron Corp. + 43,706,250 Finance (0.2%) - ------------------------------------------------------------------------------------------------------- 662,150 TCF Financial Corp. 22,016,488 Financial Services (1.8%) - ------------------------------------------------------------------------------------------------------- 700,000 First USA, Inc. 38,500,000 3,100,000 MBNA Corp. 88,350,000 1,600,000 Olympic Financial Ltd. + 36,800,000 362,400 Schwab (Charles) Corp. 8,878,800 -------------- 172,528,800 Funeral/Cemetery Services (1.7%) - ------------------------------------------------------------------------------------------------------- 1,900,000 Loewen Group, Inc. 57,475,000 675,000 Service Corp. International 38,812,500 2,025,000 Stewart Enterprises, Inc. Class A 63,281,250 -------------- 159,568,750 Gaming (2.2%) - ------------------------------------------------------------------------------------------------------- 2,500,000 Circus Circus Enterprises, Inc. + 102,500,000 1,550,000 Mirage Resorts, Inc. 83,700,000 1,107,400 Rio Hotel & Casino, Inc. + 17,026,275 -------------- 203,226,275 HMOs (1.1%) - ------------------------------------------------------------------------------------------------------- 699,600 Compdent Corp. + 32,531,400 1,150,000 Healthsource, Inc. + 20,125,000 1,175,000 Oxford Health Plans Inc. + 48,321,875 31,000 Pacificare Health Systems, Inc. + 2,046,000 -------------- 103,024,275 Health Care Information Systems (1.0%) - ------------------------------------------------------------------------------------------------------- 384,000 ABR Information Services, Inc. + 19,296,000 1,100,000 HBO & Co. 74,525,000 -------------- 93,821,000 Health Care Services (5.6%) - ------------------------------------------------------------------------------------------------------- 203,900 American HomePatient, Inc. + 9,022,575 1,000,000 American Medical Response + 35,250,000 1,675,000 Apria Healthcare Group, Inc. + 52,553,125 535,000 Emcare Holdings, Inc. + 15,916,250 725,000 Emeritus Corp. + 12,778,125 2,413,300 Healthsouth Rehabilitation Corp. 86,878,800 1,114,300 Lincare Holdings, Inc. + 43,736,275 1,250,000 Medaphis Corp. + 49,687,500 283,100 Owen Healthcare, Inc. + 3,928,013 1,286,400 Renal Treatment Centers, Inc. + 36,984,000 850,000 Rotech Medical Corp. + 16,575,000 200,000 Total Renal Care Holdings, Inc. + 8,450,000 2,425,000 Vencor, Inc. + 73,962,500 2,300,000 Vivra, Inc. + 75,612,500 -------------- 521,334,663 Hospital Management (1.3%) - ------------------------------------------------------------------------------------------------------- 4,100,000 Health Management Assoc., Inc. + 83,025,000 1,850,000 Physician Reliance Network, Inc. + 41,162,500 -------------- 124,187,500 Insurance (0.7%) - ------------------------------------------------------------------------------------------------------- 1,035,800 Amerin Corp. + 27,707,650 1,525,000 HCC Insurance Holdings, Inc. 34,312,500 -------------- 62,020,150 Lodging (4.3%) - ------------------------------------------------------------------------------------------------------- 1,366,200 Doubletree Corp. + 48,500,100 821,000 Extended Stay America, Inc. + 25,861,500 2,625,800 HFS, Inc. + 183,806,000 175,750 Interstate Hotels Co. + 3,910,438 1,200,000 La Quinta Inns, Inc. 40,200,000 540,600 Prime Hospitality Corp. + 8,919,900 1,375,000 Promus Hotel Corp. + 40,734,375 1,200,000 Renaissance Hotel Group N.V. + 25,500,000 629,900 Studio Plus Hotels, Inc. + 20,786,700 -------------- 398,219,013 Medical Equipment and Supplies (3.4%) - ------------------------------------------------------------------------------------------------------- 750,000 Boston Scientific Corp. + 33,750,000 331,000 Cardiothoracic Systems, Inc. + 4,385,750 400,000 Endosonics Corp. + 7,150,000 775,000 I-Stat Corp. + 14,628,125 552,800 ICU Medical, Inc. + 7,601,000 1,400,000 Idexx Laboratories, Inc. 54,950,000 700,000 Igen, Inc. 4,900,000 775,000 Medtronic, Inc. 43,400,000 1,400,000 Mentor Corp. Minnesota 35,700,000 450,000 Neuromedical Systems, Inc. + 6,750,000 843,100 Shared Medical Systems Corp. 54,169,175 1,200,000 Thermo Cardiosystems, Inc. + 53,700,000 -------------- 321,084,050 Medical Management Services (1.8%) - ------------------------------------------------------------------------------------------------------- 714,800 OccuSystems, Inc. + 26,715,650 447,000 Pediatrix Medical Group, Inc. + 21,679,500 1,387,500 Phycor, Inc. + 52,725,000 1,096,700 Phymatrix, Inc. + 25,498,275 750,000 Physicians Resource Group, Inc. + 25,031,250 777,373 Sunrise Assisted Living, Inc. + 18,656,952 -------------- 170,306,627 Networking and Communications Equipment (12.1%) - ------------------------------------------------------------------------------------------------------- 861,100 Adtran, Inc. + 61,030,463 800,000 Ascend Communications, Inc. + 45,000,000 1,200,000 Cabletron Systems, Inc. + 82,350,000 1,620,400 Cascade Communications Corp. + 110,187,200 2,050,000 Cisco Systems, Inc. + 116,081,250 288,900 Diana Corp. + 11,736,563 1,725,000 Gandalf Technologies, Inc. + 13,800,000 1,637,900 Glenayre Technologies, Inc. + 81,895,000 1,011,800 Objective Systems Integrators, Inc. + 36,930,700 763,600 P-Com, Inc. + 24,053,400 1,600,000 Pairgain Technologies, Inc. + 99,200,000 800,000 Premisys Communications, Inc. + 48,800,000 1,050,000 Shiva Corp. + 84,000,000 2,300,000 Stratacom, Inc. + 129,375,000 1,200,000 Tellabs, Inc. + 80,250,000 1,250,000 U.S. Robotics Corp. + 106,875,000 54,500 Verilink Corp. + 1,389,750 -------------- 1,132,954,326 Nursing Homes (1.0%) - ------------------------------------------------------------------------------------------------------- 1,519,500 Genesis Health Ventures, Inc. + 47,674,313 2,055,000 Health Care & Retirement Corp. + 48,806,250 -------------- 96,480,563 Office Equipment and Products (2.5%) - ------------------------------------------------------------------------------------------------------- 1,825,900 Boise Cascade Office Products + 63,221,788 1,200,000 BT Office Products International, Inc. + 21,450,000 625,000 Global DirectMail Corp. + 24,687,500 1,300,000 U. S. Office Products Co. + 54,600,000 2,092,900 Viking Office Products, Inc. + 65,664,738 -------------- 229,624,026 Pharmaceuticals and Biotechnology (3.5%) - ------------------------------------------------------------------------------------------------------- 330,500 Alpha-Beta Technology, Inc. + 2,933,188 750,000 Amgen, Inc. + 40,500,000 100,000 Astra AB ADR 4,375,000 1,725,000 Astra AB (Sweden) + 76,233,030 1,000,000 Biochem Pharmaceutical, Inc. + 37,500,000 581,700 CytoTherapeutics, Inc. + 6,471,413 1,250,000 Elan Corp. PLC ADR + 71,406,250 350,000 Fiusz Technologies Ltd. + 6,650,000 1,600,000 Gilead Sciences, Inc. + 40,400,000 505,000 Martek Biosciences Corp. + 14,771,250 600,000 Neurogen Corp. + 15,450,000 261,400 Theratech, Inc. + 5,031,950 -------------- 321,722,081 Publishing (0.1%) - ------------------------------------------------------------------------------------------------------- 579,400 Mecklermedia Corp. + 11,732,850 Restaurants (4.0%) - ------------------------------------------------------------------------------------------------------- 2,070,000 Apple South, Inc. 55,372,500 968,900 Applebee's International, Inc. 31,368,138 2,100,000 Boston Chicken, Inc. + 68,250,000 1,630,621 J.D. Wetherspoon PLC (United Kingdom) 25,437,052 1,375,000 Landry's Seafood Restaurants, Inc. + 34,031,250 1,041,300 Lone Star Steakhouse & Saloon + 39,309,075 1,466,400 Outback Steakhouse, Inc. + 50,567,874 937,500 Papa Johns International, Inc. + 45,703,125 550,000 Rainforest Cafe, Inc. + 27,500,000 -------------- 377,539,014 Retail (3.6%) - ------------------------------------------------------------------------------------------------------- 650,000 Autozone, Inc. + 22,587,500 3,100,000 Bed Bath & Beyond, Inc. + 82,925,000 1,000,000 CompUSA, Inc. + 34,125,000 1,492,000 Office Depot, Inc. 30,399,500 2,350,000 Officemax, Inc. + 56,106,250 850,000 PETSMART, Inc. + 40,587,500 1,300,000 Revco D.S., Inc. + 31,037,500 2,100,000 Staples, Inc. + 40,950,000 -------------- 338,718,250 Semiconductors (1.9%) - ------------------------------------------------------------------------------------------------------- 1,500,000 Analog Devices Inc. + 38,250,000 650,548 Atmel Corp. + 19,597,759 654,200 Credence Systems Corp. + 8,790,813 650,000 Intel Corp. 47,734,375 1,205,000 Linear Technology Corp. 36,150,000 1,050,000 Maxim Integrated Products Inc. + 28,678,125 -------------- 179,201,072 Specialty Consumer Products (0.1%) - ------------------------------------------------------------------------------------------------------- 315,300 Gemstar International Group Ltd. + 9,459,000 Telephone Services (4.1%) - ------------------------------------------------------------------------------------------------------- 321,500 Brooks Fiber Properties, Inc. + 10,609,500 906,800 Intermedia Communications, Inc. + 29,244,300 3,000,000 LCI International, Inc. + 94,125,000 1,410,100 MFS Communications Company, Inc. + 53,055,013 635,300 McLeod, Inc. Class A + 15,247,200 352,400 Premiere Technologies, Inc. + 11,100,600 1,799,100 Tel-Save Holdings, Inc. + 38,230,875 575,000 U.S. Long Distance Corp. + 20,412,500 2,050,000 WorldCom, Inc. + 113,518,750 -------------- 385,543,738 Wireless Communications (2.9%) - ------------------------------------------------------------------------------------------------------- 1,625,000 Airtouch Communications, Inc. + 45,906,250 1,200,000 Centennial Cellular Corp. Class A + 20,250,000 1,175,000 Clearnet Communications Inc. Class A (Canada)+ 19,681,250 650,000 Intercel, Inc. + 13,000,000 2,700,000 NEXTEL Communications, Inc. Class A + 51,468,750 1,000,000 Omnipoint Corp. + 26,062,500 3,147,700 Paging Network, Inc. + 75,544,800 356,300 Preferred Networks, Inc. + 3,073,088 189,300 United States Cellular Corp. + 5,868,300 303,400 Western Wireless Corp. Class A + 6,485,175 -------------- 267,340,113 -------------- Total Common Stocks (cost $6,403,541,999) $8,486,918,069 Short-Term Investments (8.4%) * PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------- $25,000,000 Ciesco L.P. for an effective yield of 5.50%, July 1, 1996 $25,000,000 20,000,000 Ciesco L.P. for an effective yield of 5.39%, August 23, 1996 19,841,294 10,000,000 Corporate Receivables Corp. for an effective yield of 5.35%, August 9, 1996 9,942,042 25,000,000 Corporate Receivables Corp. for an effective yield of 5.30%, July 25, 1996 24,911,666 50,000,000 Delaware Funding Corp. for an effective yield of 5.32%, July 11, 1996 49,926,111 40,000,000 Falcon Asset Securitization Corp. for an effective yield of 5.37%, July 16, 1996 39,910,500 25,000,000 Federal Home Loan Bank for an effective yield of 5.29%, July 29, 1996 24,897,139 12,940,000 Federal Home Loan Bank for an effective yield of 5.17%, September 19, 1996 12,785,982 15,000,000 Federal Home Loan Bank for an effective yield of 5.16%, October 23, 1996 14,746,521 25,000,000 Federal Home Loan Bank for an effective yield of 5.11%, September 6, 1996 24,750,194 25,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 5.34%, September 26, 1996 24,676,111 25,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 5.25%, July 8, 1996 24,974,479 15,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 5.20%, July 15, 1996 14,969,666 18,000,000 Federal National Mortgage Association for an effective yield of 5.27%, July 26, 1996 17,926,220 25,000,000 Federal National Mortgage Association for an effective yield of 5.26%, September 3, 1996 24,762,118 25,000,000 Federal National Mortgage Association for an effective yield of 5.24%, September 3, 1996 24,762,118 15,000,000 Federal National Mortgage Association for an effective yield of 5.23%, August 6, 1996 14,921,550 20,000,000 Federal National Mortgage Association for an effective yield of 5.20%, July 24, 1996 19,933,555 20,000,000 Federal National Mortgage Association for an effective yield of 5.07%, August 29, 1996 19,824,333 20,000,000 Fleet National Bank for an effective yield of 5.34%, July 12, 1996 19,967,367 20,000,000 Ford Motor Credit Corp. for an effective yield of 5.38%, July 12, 1996 19,841,589 25,000,000 General Electric Capital Corp. for an effective yield of 5.39%, September 9, 1996 24,736,708 20,000,000 General Electric Capital Corp. for an effective yield of 5.36%, August 12, 1996 19,874,934 20,000,000 General Motors Acceptance Corp. for an effective yield of 5.41%, July 22, 1996 19,936,883 22,000,000 Heinz (H.J.) Co. for an effective yield of 5.35%, July 25, 1996 21,921,533 25,000,000 Household Finance Corp. for an effective yield of 5.28%, July 31, 1996 24,890,000 26,033,000 Metropolitan Life Funding for an effective yield of 5.28%, July 12, 1996 25,990,999 20,000,000 National Rural Utilities Cooperative Finance Corp. for an effective yield of 5.27%, July 23, 1996 19,935,589 32,100,000 Preferred Receivables Funding Corp. for an effective yield of 5.41%, August 28, 1996 31,820,213 25,400,000 Preferred Receivables Funding Corp. for an effective yield of 5.32%, August 8, 1996 25,257,365 40,000,000 Sheffield Receivables Corp. for an effective yield of 5.30%, July 1, 1996 40,000,000 10,000,000 USAA Capital Corp. for an effective yield of 5.34%, August 13, 1996 9,936,217 52,974,000 Interest in $500,000,000 repurchase agreement dated June 28, 1996 with Lehman Brothers Inc. due July 1, 1996 with respect to various U.S. Treasury obligations-maturity value of $52,997,838 for an effective yield of 5.5% 52,997,838 - ------------------------------------------------------------------------------------------------------- Total Short-Term Investments (cost $790,612,188) $790,568,834 - ------------------------------------------------------------------------------------------------------- Total Investments (cost $7,194,154,187)*** $9,277,486,903 - ------------------------------------------------------------------------------------------------------- * Percentages indicated are based on net assets of $9,336,617,134. + Non-income-producing security. *** The aggregate identified cost on a tax basis is $7,209,780,568, resulting in gross unrealized appreciation and depreciation of $2,330,862,173 and $263,155,838, respectively, or net unrealized appreciation of $2,067,706,335. ADR after the name of a foreign holding stands for American Depository Receipts, 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 June 30, 1996 Assets Investments in securities, at value (identified cost $7,194,154,187) (Note 1) $9,277,486,903 - -------------------------------------------------------------------------------------------------------- Cash 2,616,819 - -------------------------------------------------------------------------------------------------------- Dividends, interest and other receivables 1,193,284 - -------------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 118,964,616 - -------------------------------------------------------------------------------------------------------- Receivable for securities sold 78,060,779 - -------------------------------------------------------------------------------------------------------- Total assets 9,478,322,401 Liabilities - -------------------------------------------------------------------------------------------------------- Payable for securities purchased 111,907,555 - -------------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 6,350,650 - -------------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 10,433,996 - -------------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 4,468,745 - -------------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 11,530 - -------------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 13,486 - -------------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 6,280,287 - -------------------------------------------------------------------------------------------------------- Payable for organization expenses (Note 1) 23,788 - -------------------------------------------------------------------------------------------------------- Other accrued expenses 2,215,230 - -------------------------------------------------------------------------------------------------------- Total liabilities 141,705,267 - -------------------------------------------------------------------------------------------------------- Net assets $9,336,617,134 Represented by - -------------------------------------------------------------------------------------------------------- Paid-in-capital (Notes 1 and 4) $7,177,262,140 - -------------------------------------------------------------------------------------------------------- Accumulated net investment loss (Note 1) (25,244) - -------------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions (Note 1) 76,047,765 - -------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 2,083,332,473 - -------------------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $9,336,617,134 Computation of net asset value and offering price - -------------------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($4,752,610,948 divided by 110,555,009 shares) $42.99 - -------------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $42.99)* $45.61 - -------------------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($4,254,961,917 divided by 101,400,736 shares)** $41.96 - -------------------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($210,404,045 divided by 4,932,667 shares) $42.66 - -------------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $42.66)* $44.21 - -------------------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($118,640,224 divided by 2,745,959 shares) $43.21 - -------------------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
Statement of operations Year ended June 30, 1996 Investment income: - ------------------------------------------------------------------------------------ Interest $20,581,757 - ------------------------------------------------------------------------------------ Dividends (net of foreign tax of $272,821) 5,852,832 - ------------------------------------------------------------------------------------ Total investment income 26,434,589 Expenses: - ------------------------------------------------------------------------------------ Compensation of Manager (Note 2) $26,621,482 - ------------------------------------------------------------------------------------ Investor servicing and custodian fees (Note 2) 12,379,732 - ------------------------------------------------------------------------------------ Compensation of Trustees (Note 2) 89,418 - ------------------------------------------------------------------------------------ Administrative services (Note 2) 52,249 - ------------------------------------------------------------------------------------ Distribution fees -- Class A (Note 2) 6,592,569 - ------------------------------------------------------------------------------------ Distribution fees -- Class B (Note 2) 22,085,471 - ------------------------------------------------------------------------------------ Distribution fees -- Class M (Note 2) 595,173 - ------------------------------------------------------------------------------------ Reports to shareholders 258,058 - ------------------------------------------------------------------------------------ Registration fees 1,856,162 - ------------------------------------------------------------------------------------ Auditing 81,853 - ------------------------------------------------------------------------------------ Legal 72,938 - ------------------------------------------------------------------------------------ Postage 823,532 - ------------------------------------------------------------------------------------ Other 420,878 - ------------------------------------------------------------------------------------ Total expenses 71,929,515 - ------------------------------------------------------------------------------------ Expense reduction (Note 2) (1,703,974) - ------------------------------------------------------------------------------------ Net expenses 70,225,541 - ------------------------------------------------------------------------------------ Net investment loss (43,790,952) - ------------------------------------------------------------------------------------ Net realized gain on investments (Notes 1 and 3) 90,720,003 - ------------------------------------------------------------------------------------ Net realized loss on forward currency translation (Note 1) (14,878) - ------------------------------------------------------------------------------------ Net unrealized appreciation on investments during the year 1,532,698,538 - ------------------------------------------------------------------------------------ Net gain on investments 1,623,403,663 - ------------------------------------------------------------------------------------ Net increase in net assets resulting from operations $1,579,612,711 - ------------------------------------------------------------------------------------ The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Year ended June 30 ---------------------------------- 1996 1995 - ----------------------------------------------------------------------------------------------------- Increase in net assets - ----------------------------------------------------------------------------------------------------- Operations: - ----------------------------------------------------------------------------------------------------- Net investment loss $(43,790,952) $(13,274,739) - ----------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions 90,705,125 (12,179,793) - ----------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments 1,532,698,538 508,131,057 - ----------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 1,579,612,711 482,676,525 - ----------------------------------------------------------------------------------------------------- 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 gain on investments Class A -- (1,509,455) - ----------------------------------------------------------------------------------------------------- Class B -- (968,703) - ----------------------------------------------------------------------------------------------------- Class M -- (193) - ----------------------------------------------------------------------------------------------------- Class Y -- (16,800) - ----------------------------------------------------------------------------------------------------- From paid-in capital Class A -- (202,496) - ----------------------------------------------------------------------------------------------------- Class B -- (129,953) - ----------------------------------------------------------------------------------------------------- Class M -- (26) - ----------------------------------------------------------------------------------------------------- Class Y -- (2,254) - ----------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 5,361,199,461 942,116,459 - ----------------------------------------------------------------------------------------------------- Total increase in net assets 6,940,812,172 1,413,279,875 - ----------------------------------------------------------------------------------------------------- Net assets - ----------------------------------------------------------------------------------------------------- Beginning of year 2,395,804,962 982,525,087 - ----------------------------------------------------------------------------------------------------- End of year (including accumulated net investment loss of $25,244 and $2,660, respectively) $9,336,617,134 $2,395,804,962 - ----------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Financial Highlights (For a share outstanding throughout the period) For the period July 19, 1994 (commencement Year ended of operations) to Year ended June 30 June 30 June 30 -------------------------------------------------------- 1996 1995 1996 -------------------------------------------------------- Class Y Class M - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $29.66 $22.59 $29.51 - -------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------- Net investment loss (.11)(f) (.04) (.40)(f) - -------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 13.66 7.31 13.55 - -------------------------------------------------------------------------------------------------------------------- Total from investment operations 13.55 7.27 13.15 - -------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - -------------------------------------------------------------------------------------------------------------------- From net realized gain on investments -- (.15) -- - -------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- (.04) -- - -------------------------------------------------------------------------------------------------------------------- Return of capital -- (.01) -- - -------------------------------------------------------------------------------------------------------------------- Total distributions -- (.20) -- - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $43.21 $29.66 $42.66 - -------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (d) 45.68 32.42 (c) 44.56 - -------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $118,640 $24,538 $210,404 - -------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(e) .86 .83 (c) 1.64 - -------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.29) (.26)(c) (1.06) - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 36.61 56.99 36.61 - -------------------------------------------------------------------------------------------------------------------- Financial Highlights (continued) (For a share outstanding throughout the period) For the period December 1, 1994 (commencement of operations) to June 30 Year ended June 30 -------------------------------------------------------- 1995 1996 1995 -------------------------------------------------------- Class M Class B - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $24.72 $29.09 $21.68 - -------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------- Net investment loss (.05) (.48)(f) (.23) - -------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 5.04 13.35 7.84 - -------------------------------------------------------------------------------------------------------------------- Total from investment operations 4.99 12.87 7.61 - -------------------------------------------------------------------------------------------------------------------- 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 $29.51 $41.96 $29.09 - -------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (d) 20.40 (c) 44.24 35.34 - -------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $16,011 $4,254,962 $1,013,379 - -------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(e) .94 (c) 1.87 1.87 - -------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.53)(c) (1.30) (1.30) - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 56.99 36.61 56.99 - -------------------------------------------------------------------------------------------------------------------- Financial Highlights (continued) (For a share outstanding throughout the period) For the period March 1, 1993 Year (commencement ended of operations) to June 30 June 30 -------------------------------------------------------- 1994 1993 1996 -------------------------------------------------------- Class B - -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $20.80 $17.76 $29.58 - -------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------- Net investment loss (.11) (.05) (.21)(f) - -------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.44 3.09 13.62 - -------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.33 3.04 13.41 - -------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - -------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.45) -- -- - -------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- -- - -------------------------------------------------------------------------------------------------------------------- Return of capital -- -- -- - -------------------------------------------------------------------------------------------------------------------- Total distributions (.45) -- -- - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $21.68 $20.80 $42.99 - -------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (d) 6.18 17.12 (c) 45.34 - -------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $333,738 $15,698 $4,752,611 - -------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(e) 2.04 .67 (c) 1.11 - -------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (1.55) (.57)(c) (.54) - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 52.76 93.59 36.61 - -------------------------------------------------------------------------------------------------------------------- Financial Highlights (continued) (For a share outstanding throughout the period) Year ended June 30 -------------------------------------------------------- 1995 1994 1993 -------------------------------------------------------- Class A -------------------------------------------------------- Net asset value, beginning of period $21.88 $20.83 $14.50 - -------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------- Net investment loss (.12) (.06) (.12) - -------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 8.02 1.56 6.77 - -------------------------------------------------------------------------------------------------------------------- Total from investment operations 7.90 1.50 6.65 - -------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - -------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.15) (.45) (.32) - -------------------------------------------------------------------------------------------------------------------- In excess of net realized gains (.04) -- -- - -------------------------------------------------------------------------------------------------------------------- Return of capital (.01) -- -- - -------------------------------------------------------------------------------------------------------------------- Total distributions (.20) (.45) (.32) - -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $29.58 $21.88 $20.83 - -------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (d) 36.36 7.00 46.12 - -------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,341,877 $648,787 $318,426 - -------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(e) 1.13 1.23 1.31 - -------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.55) (.82) (.98) - -------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 56.99 52.76 93.59 - -------------------------------------------------------------------------------------------------------------------- Financial Highlights (continued) (For a share outstanding throughout the period) - -------------------------------------------------------------------------- 1992 - -------------------------------------------------------------------------- Net asset value, beginning of period $11.56 - -------------------------------------------------------------------------- Investment operations Net investment loss (.02) - -------------------------------------------------------------------------- Net realized and unrealized gain on investments 3.33(a) - -------------------------------------------------------------------------- Total from investment operations 3.31 - -------------------------------------------------------------------------- Less distributions to shareholders: - -------------------------------------------------------------------------- From net realized gain on investments (.37) - -------------------------------------------------------------------------- In excess of net realized gains -- - -------------------------------------------------------------------------- Return of capital -- - -------------------------------------------------------------------------- Total distributions (.37) - -------------------------------------------------------------------------- Net asset value, end of period $14.50 - -------------------------------------------------------------------------- Total investment return at net asset value (%) (d) 28.85 - -------------------------------------------------------------------------- Net assets, end of period (in thousands) $141,206 - -------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(e) 1.64 - -------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.91) - -------------------------------------------------------------------------- Portfolio turnover (%) 116.04 (b) - -------------------------------------------------------------------------- (a) 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. (b) Portfolio turnover excludes the impact of assets received from the acquisition of Putnam Information Sciences Trust. (c) Not annualized. (d) Total investment return assumes dividend reinvestment and does not reflect the efect of sales charges. (e) The ratio of expenses to average net assets for the year ended June 30, 1996 includes amounts paid through expense offset arrangements. Prior period ratios exclude these amounts (Note 2) (f) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during the period.
Notes to financial statements June 30, 1996 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 the judgement of Putnam Investment Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc. 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 approximately 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, class B and class M 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 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 followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with generally accepted accounting principles and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates. A) Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sale price on the principal market in which the securities are traded, 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 value, and other investments are stated at fair value following procedures approved by the Trustees. B) Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies managed by Putnam Management and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. E) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such fluctuations are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized gains and losses on foreign currency transactions arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. F) 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. G) 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. These differences include treatment of losses on wash sales transactions, net operating loss and post October loss deferrals. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended June 30, 1996, the fund reclassified $43,768,368 to decrease accumulated net investment loss and $43,783,292 to decrease paid-in-capital, with an increase to accumulated net realized gains on investments of $14,924. The calculation of net investment income per share in the financial highlights table excludes these adjustments. Note 2 Management fee, administrative services and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion, 0.43% of any amount over $21.5 billion subject, under current law, to reduction in any year by the amount of certain brokerage commissions and fees (less expenses) received by affiliates of Putnam Management on 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. 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. For the year ended June 30, 1996, fund expenses were reduced by $1,703,974 under expense offset arrangements with PFTC. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Trustees of the fund receive an annual Trustees fee of $5,580 and an additional fee for each Trustee's meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain in the fund and invested in the fund or in other Putnam funds until distribution in accordance with the Plan. 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 year ended June 30, 1996, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $12,190,512 and $459,313 from the sale of class A and class M shares, respectively and $2,472,765 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 year ended June 30, 1996, Putnam Mutual Funds Corp., acting as underwriter received $50,583 on class A redemptions. Note 3 Purchase and sales of securities During the year ended June 30, 1996, purchases and sales of investment securities other than short-term investments aggregated $6,376,968,954 and $1,735,109,808, respectively. There were no purchases and sales of U.S. government obligations. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At June 30, 1996, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Year ended June 30 1996 - ---------------------------------------------------- Class A Shares Amount - ---------------------------------------------------- Shares sold 108,115,547 $4,157,515,940 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------- 108,115,547 4,157,515,940 Shares repurchased (42,919,318) (1,604,367,366) - ---------------------------------------------------- Net increase 65,196,229 $2,553,148,574 - ---------------------------------------------------- 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 - ---------------------------------------------------- Year ended June 30 1996 - ---------------------------------------------------- Class B Shares Amount - ---------------------------------------------------- Shares sold 79,329,108 $3,030,302,256 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------- 79,329,108 3,030,302,256 Shares repurchased (12,759,527) (468,230,792) - ---------------------------------------------------- Net increase 66,569,581 $2,562,071,464 - ---------------------------------------------------- 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 - ---------------------------------------------------- Year ended June 30, 1996 - ---------------------------------------------------- Class M Shares Amount - ---------------------------------------------------- Shares sold 4,924,723 $193,394,190 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------- 4,924,723 193,394,190 Shares repurchased (534,648) (20,478,335) - ---------------------------------------------------- Net increase 4,390,075 $172,915,855 - ---------------------------------------------------- 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 - ---------------------------------------------------- Year ended June 30, 1996 - ---------------------------------------------------- Class Y Shares Amount - ---------------------------------------------------- Shares sold 2,245,795 $85,569,219 - ---------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ---------------------------------------------------- 2,245,795 85,569,219 Shares repurchased (327,162) (12,505,651) - ---------------------------------------------------- Net increase 1,918,633 $73,063,568 - ---------------------------------------------------- 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 - ---------------------------------------------------- - ---------------------------------------------------- Federal tax information (Unaudited) The Form 1099 you receive in January 1997 will show the tax status of all distributions paid to your account in calendar 1996. Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Ronald J. Jackson 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 Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Peter Carman Vice President John J. Morgan, Jr. 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. PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 Bulk Rate U.S. Postage PAID Putnam Investments 26302 - 852/358/983 8/96 PUTNAM INVESTMENTS [LOGO] - --------------------------------------------------------------------------- Putnam New Opportunities Fund Supplement to Annual Report dated 6/30/96 The following information has been prepared to provide class Y shareholders with a performance overview specific to their holdings. Class Y shares are offered exclusively to defined contribution plans investing $250 million or more in one or more of Putnam's funds or private accounts. Performance of class Y shares, which incur neither a front-end load, distribution fee, nor contingent deferred sales charge, will differ from performance of class A, B, and M shares, which are discussed more extensively in the semiannual report. ANNUAL RESULTS AT A GLANCE - --------------------------------------------------------------------------- Total return:NAV One year ended 6/30/96 45.68% Life of class (since 7/19/94) 92.92 Annual average 40.07 - --------------------------------------------------------------------------- Share value: NAV 6/30/95 $29.66 6/30/96 43.21 - --------------------------------------------------------------------------- Please note that past performance does not indicate future results. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. If you have questions, please consult your fund prospectus or call Putnam toll free at 1-800-752-9894. -----END PRIVACY-ENHANCED MESSAGE-----