-----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, OAEushqXliwA+pcxlMKwUME+RQ2Unwjx2NNfbSFkw2/2Jstn2QkCVi7zv9NZMr7s 05kRtZlfgVF/41XA5zW1Yw== 0000928816-97-000063.txt : 19970305 0000928816-97-000063.hdr.sgml : 19970305 ACCESSION NUMBER: 0000928816-97-000063 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970304 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: 97550022 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 SEMIANNUAL REPORT December 31, 1996 [LOGO: BOSTON * LONDON * TOKYO] Fund highlights * According to Lipper Analytical Services, Putnam New Opportunities Fund's class A share total return ranked 3 out of 255 growth funds for the five-year period ended December 31, 1996, placing the fund in the top 2% in this category.* CONTENTS 4 Report from Putnam Management 9 Fund performance summary 12 Portfolio holdings 21 Financial statements * Lipper Analytical Services, an independent research organization, ranks funds according to total return performance. Their rankings vary over time and do not reflect the effects of sales charges. For periods ended 12/31/96, class A, class B, and class M shares ranked 615, 630, and 627, respectively, out of 672 funds for 1-year performance; class B shares ranked 100 out of 430 funds for 3-year performance. Class B and class M shares were not ranked over longer periods. Past performance is not indicative of future results. From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] (copyright) Karsh, Ottawa Dear Shareholder: The first half of Putnam New Opportunities Fund's fiscal 1997 was a period that certainly tested the mettle of growth-stock investors. During the six months ended December 31, 1996, the stock market turned its back on the high-growth industries that had previously fueled its record-breaking advance. Thus, the stocks in which your fund typically invests languished as investors grew increasingly wary of the market's capacity for continued advance and began opting for stocks of large, established companies in the belief that they would best weather any market volatility. Fund Manager Daniel Miller views this environment as inevitable -- and temporary. He has already been able to take advantage of stock valuations that he believes had dropped to attractive levels, and expects to see opportunities for other bargain-priced portfolio acquisitions. Meanwhile, Carol McMullen, the chief investment officer of Putnam's Core Growth Equity Group, joined your fund's management team in late 1996 to focus on growth opportunities among large-company stocks. Carol has been with Putnam since 1995; she was previously senior vice president and senior portfolio manager of Baring Asset Management. Respectfully yours, /S/George Putnam George Putnam Chairman of the Trustees February 19, 1997 Report from the Fund Managers Daniel L. Miller, lead manager Carol C. McMullen "Be sure to put your feet in the right place, then stand firm against a hostile wind." While Abraham Lincoln was not known for his money management expertise, his words offer useful advice to individual investors and portfolio managers alike. Lincoln's words not only summarize the discipline needed to pursue long-term growth successfully, but provide an appropriate description of the stock market environment that persisted through Putnam New Opportunities Fund's semiannual fiscal period ended December 31, 1996. Since its inception, the fund has had its feet firmly planted in what we consider to be the right place and its performance has mostly confirmed our judgment. With this in mind, the fund stood its ground when the equity market's winds changed direction during the period. Amid a market driven by the strength of large corporations such as those listed among the Standard & Poor's 500(registered trademark), your fund maintained its long-term focus on companies with above-average growth potential within fast-growing and emerging industries. As a result, we continued to invest much of the portfolio in midsize companies, which are more likely to exhibit the growth and quality characteristics your fund's strategy calls for. Unfortunately, over the period, the performance of midsize companies clearly lagged that of larger capitalization stocks. Indeed, while the S&P 500 Index gained 11.68% during the period -- propelled largely by the stellar performance of technology giants IBM, Intel, Microsoft, and General Electric - -- the midcap-oriented Russell 2000 Index returned only 5.56%. Performance information for the fund appears on pages 9 and 10. * MORE EFFICIENT PORTFOLIO MANAGEMENT AS FUND GROWS Your fund is designed to pursue long-term growth, and therefore we are not apt to change its investment style as a result of short-term market turbulence. As we mentioned above, our management approach typically leads us toward midsize companies -- those valued between $1 billion and $5 billion -- that possess high-quality management and offer outstanding growth potential. At the same time, however, your fund's increasing size and the market's interest in larger capitalization stocks has spurred us to invest a larger portion of its assets in companies whose capitalization is greater than $5 billion. For this segment of the portfolio, which should enable us to enhance the fund's capital appreciation potential, we maintain the same stringent growth and quality requirements that govern all of the fund's investments. As part of our added emphasis on larger companies, which now make up roughly 25% of the portfolio, this portion of the fund is now overseen by Putnam's Core Growth Equity Group. This group specializes in the research and analysis of the large-capitalization segment of the equity market. Placing this segment of the fund's portfolio in the hands of specialists strengthens the fund's management team by enabling each team member to focus on his or her area of expertise. * TELECOMMUNICATIONS HOLDINGS DEMONSTRATE BOTH STRENGTH AND WEAKNESS The telecommunications deregulation act passed in February 1996 continued to impact a significant portion of the fund's holdings during the period. 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 providers, such as the Bell operating companies, in local markets. Your fund has derived substantial benefits from several holdings in this industry segment. For example, MFS Communications (which was recently acquired by WorldCom) was one of the portfolio's strongest performers during the period. After successfully constructing the fiber-optic networks required to attract corporate customers, MFS is now starting to enjoy considerable success in competing with larger telephone service providers. While this security and others discussed in this report were viewed favorably during the period, all portfolio holdings are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. [GRAPHIC HORIZONTAL BAR CHART OMITTED: TOP INDUSTRY SECTORS] TOP INDUSTRY SECTORS* Computer software 11.2% Business services 7.1% Networking equipment 5.7% Health care services 5.6% Pharmaceuticals and biotechnology 5.6% Footnote reads: * Based on net assets as of 12/31/96. Allocations and industry sectors will vary over time. Less profitable during the period were several of the fund's media/ entertainment holdings. While the passage of the telecommunications act loosens restrictions on the radio and television industries and allows ownership of multiple stations in one market, investors became concerned early in the period that the still-evolving law will ultimately be less permissive than was widely expected upon passage. Consequently, several of the fund's larger media holdings that had prospered in the first few months after the legislation was passed began to decline in value. Among these were SFX Broadcasting and Clear Channel Communications. We believe that the final limitations on this industry -- which will still be less restrictive than in the past -- will allow for substantial growth and that investors' current concerns will eventually dissipate. In addition, a significant number of stocks in this sector have now declined to the point at which they represent outstanding opportunities. Therefore, we remain optimistic about the sector's prospects. * TECHNOLOGY SECTOR CONTINUES TO THRIVE With a significant portfolio weighting in technology-related stocks, the fund was able to benefit from some of this sector's sturdy performance over the past six months. Holdings in the networking and computer services segments of the industry helped boost the fund's returns somewhat, as did the fund's allocation to the semiconductor market. [GRAPHIC CHART OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS* HFS, Inc. Hotels, motels, and real estate franchises Cisco Systems, Inc. Networking products Computer Associates International, Inc. Computer software Healthsouth Rehabilitation Corp. Physical therapy and rehabilitation EMC Corp. Computers and memory devices Parametric Technology Corp. Computer software Boston Scientific Corp. Medical products Microsoft Corp. Computer software HBO & Co. Medical information systems Cascade Communications Corp. Telecommunication equipment * These holdings represent 14.2% of the fund's net assets as of 12/31/96. Portfolio holdings will vary over time. As computer networking becomes increasingly popular, individual and corporate consumers continue their active search for innovative technologies and other connectivity tools in order to create networks and to simplify Internet access. It stands to reason, then, that companies providing such services and products have generally prospered in recent months. For your fund, profitable producers of networking and connectivity tools included Ascend Communications, Cascade Communications, and Cisco Systems, producers of networking and Internet-related products. When investing in semiconductors, we typically select those securities with the greatest growth potential. During the period, these were companies whose products are essential to multimedia applications -- that is, those used to incorporate non-computerized voices and images into communications and computer-based applications. Here the portfolio's holdings included Analog Devices, Linear Technologies, and Maxim Integrated Products, three solid performers whose returns benefited the fund. * GROWTH-ORIENTED MIDCAPS MAY PROSPER AS ECONOMIC GROWTH SLOWS As we move into 1997, we are optimistic about the fund's prospects for long-term growth. The economy shows few signs of deviating from its course of slow but steady growth, benign inflation, and low interest rates. Corporate earnings remain healthy, although we suspect that the productivity-driven earnings of larger companies may begin to decline in 1997. If this occurs, growth-oriented investors may turn their attention -- and, more importantly, their investment dollars -- toward somewhat smaller companies with more attractive internal growth potential. These smaller companies represent the bulk of your fund's holdings, and their success may bode well for your fund -- especially in the longer term. Bear in mind, however, that there can be no assurances that these events will take place. Regardless of the way events unfold, we will continue to target companies of all sizes with high-quality management and superior prospects for long-term growth. 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 12/31/96, 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 12/31/96 Class A Class B Class M (inception date) (8/31/90) (3/1/93) (12/1/94) NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------------ 6 months -4.72% -10.19% -5.05% -9.76% -4.95% -8.28% - ------------------------------------------------------------------------------ 1 year 10.86 4.49 10.06 5.06 10.31 6.46 - ------------------------------------------------------------------------------ 5 years 179.22 163.09 -- -- -- -- Annual average 22.80 21.34 -- -- -- -- - ------------------------------------------------------------------------------ Life of class 418.16 388.41 130.51 127.51 65.45 59.64 Annual average 29.63 28.42 24.29 23.87 27.24 25.08 - ------------------------------------------------------------------------------ COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/96 Standard & Poor's Russell Consumer 500 Index Index 2000 Price Index - ------------------------------------------------------------------------------ 6 months 11.68% 5.56% 1.21% - ------------------------------------------------------------------------------ 1 year 22.95 16.49 3.32 - ------------------------------------------------------------------------------ 5 years 102.89 106.80 15.01 Annual average 15.19 15.63 2.84 - ------------------------------------------------------------------------------ Life of class A 174.50 189.23 20.52 Annual average 17.28 18.25 2.99 - ------------------------------------------------------------------------------ Life of class B 84.49 72.92 10.83 Annual average 17.30 15.34 2.71 - ------------------------------------------------------------------------------ Life of class M 71.59 53.66 5.94 Annual average 29.54 22.86 2.80 - ------------------------------------------------------------------------------ Footnote reads: 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. CDSC for class B shares assumes the applicable sales charge, with the maximum being 5%. PRICE AND DISTRIBUTION INFORMATION 6 months ended 12/31/96 Class A Class B Class M - ------------------------------------------------------------------------------ Distributions (number) 1 1 1 - ------------------------------------------------------------------------------ Income -- -- -- - ------------------------------------------------------------------------------ Capital gains - ------------------------------------------------------------------------------ Long-term 0.319 0.319 0.319 - ------------------------------------------------------------------------------ Short-term -- -- -- - ------------------------------------------------------------------------------ Total $0.319 $0.319 $0.319 - ------------------------------------------------------------------------------ Share value: NAV POP NAV NAV POP - ------------------------------------------------------------------------------ 6/30/96 $42.99 $45.61 $41.96 $42.66 $44.21 - ------------------------------------------------------------------------------ 12/31/96 40.64 43.12 39.52 40.23 41.69 - ------------------------------------------------------------------------------ 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 Russell 2000 Index is composed of the 2,000 smallest securities in the Russell 3000 Index, representing approximately 7% of the Russell 3000 total market capitalization. This index is widely regarded in the industry as the premiere measure of the small capitalization stock. Since the fund's holdings consist largely of mid-sized equity securities and smaller allocations to small- and large-cap stocks, it is Putnam Management's opinion that this index is a more appropriate benchmark than the Standard & Poor's 500 Index. Standard & Poor's 500 Index is an unmanaged list of common stocks that is frequently used as a general measure of stock market performance. Consumer Price Index (CPI) is a commonly used measure of inflation; it does not represent an investment return. * Securities indexes assume reinvestment of all distributions and interest payments and do not take in account brokerage fees or taxes. Securities in the fund do not match those in the indexes and performance of the fund will differ. It is not possible to invest directly in an index.
Portfolio of investments owned December 31, 1996 (Unaudited) COMMON STOCKS (96.6%) * NUMBER OF SHARES VALUE Advertising (0.8%) - --------------------------------------------------------------------------------------------------------- 1,150,000 Lamar Advertising Co. + $ 27,887,500 1,650,000 Outdoor Systems, Inc. + 46,406,250 750,000 Universal Outdoor Holdings, Inc. + 17,625,000 -------------- 91,918,750 Aerospace and Defense (0.5%) - --------------------------------------------------------------------------------------------------------- 565,000 Boeing Co. 60,101,875 Apparel (1.3%) - --------------------------------------------------------------------------------------------------------- 443,700 Nautica Enterprises, Inc. + 11,203,425 830,700 Nike, Inc. 49,634,325 793,700 Tommy Hilfiger Corp. + 38,097,600 1,950,000 Wolverine World Wide, Inc. 56,550,000 -------------- 155,485,350 Broadcasting (3.8%) - --------------------------------------------------------------------------------------------------------- 900,000 Chancellor Broadcasting Corp. Class A + 21,375,000 3,405,000 Clear Channel Communications, Inc. + 123,005,625 157,000 Cox Radio, Inc. Class A + 2,747,500 1,090,000 Emmis Broadcasting Corp. Class A + 35,697,500 1,000,010 Evergreen Media Corp. Class A + 25,000,250 645,900 Heartland Wireless Communications, Inc. + 8,477,438 1,197,900 Infinity Broadcasting Corp. Class A + 40,279,388 1,010,000 Jacor Communications, Inc. + 27,648,750 900,000 LIN Television Corp. + 38,025,000 600,000 SFX Broadcasting, Inc. Class A + 17,850,000 1,123,600 Sinclair Broadcast Group, Inc. Class A + 29,213,600 825,400 Univision Communications Inc. Class A + 30,539,800 1,425,000 Westwood One, Inc. + 23,690,625 799,800 Young Broadcasting Corp. Class A + 23,394,150 -------------- 446,944,626 Building Products (0.2%) - --------------------------------------------------------------------------------------------------------- 1,000,000 Barnett, Inc. + 27,250,000 Business Services (7.1%) - --------------------------------------------------------------------------------------------------------- 1,172,300 Affiliated Computer Services, Inc. Class A + 34,875,925 3,100,000 Airgas, Inc. + 68,200,000 550,000 APAC Teleservices, Inc. + 21,106,250 1,675,000 Corestaff, Inc. + 39,676,563 3,410,000 Corporate Express, Inc. + 100,381,875 1,350,000 Employee Solutions, Inc. + 27,675,000 3,615,000 First Data Corp. 131,947,500 1,400,000 Global DirectMail Corp. + 61,075,000 800,000 Interim Services Inc. + 28,400,000 691,350 Labor Ready, Inc. + 9,333,225 505,500 NOVA Corp./Georgia + 11,184,188 1,500,000 Paychex, Inc. 77,156,250 1,054,000 PMT Svcs., Inc. + 18,445,000 23,300 Precision Response Corp. + 818,413 14,500,000 Rentokil Group Ord. PLC (United Kingdom) 108,977,360 2,200,000 Robert Half International, Inc. + 75,625,000 560,100 Select Appointments Holdings PLC ADR (United Kingdom) + 6,441,150 103,100 Snyder Communications Inc. + 2,783,700 800,000 TeleTech Holdings Inc. + 20,800,000 -------------- 844,902,399 Cable Television (--%) - --------------------------------------------------------------------------------------------------------- 701,866 Century Communications Corp. Class A + 3,991,863 Chemicals (0.7%) - --------------------------------------------------------------------------------------------------------- 1,795,000 Praxair, Inc. 82,794,375 Computer Services (3.2%) - --------------------------------------------------------------------------------------------------------- 3,200,000 America Online, Inc. + 106,400,000 1,750,000 Cambridge Technology Partners, Inc. + 58,734,375 1,052,900 CBT Group PLC ADR (Ireland) + 57,119,825 1,500,000 Computer Horizons Corp. + 57,750,000 700,000 National Tech. Team, Inc. + 14,000,000 181,683 Renaissance Solutions, Inc. + 8,130,314 300,000 Sykes Enterprises, Inc. + 11,250,000 1,880,000 Vanstar Corp. + 46,060,000 369,400 Whittman-Hart, Inc. + 9,465,875 233,600 XLConnect Solutions Inc. + 6,716,000 -------------- 375,626,389 Computer Software (11.2%) - --------------------------------------------------------------------------------------------------------- 2,050,000 Baan Co., N.V. (Netherlands) + 71,237,500 889,600 CCC Information Services Group + 14,233,600 633,800 Clarify, Inc. + 30,422,400 3,960,000 Computer Associates Intl., Inc. 197,010,000 375,000 Documentum, Inc. + 12,656,250 2,060,000 Electronic Arts, Inc. + 61,671,250 500,000 Forte Software, Inc. + 16,375,000 1,250,000 Inso Corp. + 49,687,500 930,000 Legato Systems, Inc. + 30,341,250 1,800,000 McAfee Associates, Inc. 79,200,000 1,687,400 Microsoft Corp. + 139,421,425 2,900,000 Parametric Technology Corp. + 148,987,500 1,619,000 PeopleSoft, Inc. + 77,610,813 700,000 Project Software & Development, Inc. + 29,662,500 1,200,000 Rational Software Corp. + 47,475,000 529,100 Remedy Corp. + 28,439,125 680,700 Saville Systems Ireland PLC ADR (Ireland) + 27,653,438 1,772,000 Security Dynamics Technologies, Inc. + 55,818,000 380,800 Sapient Corp. + 16,041,200 2,175,000 Synopsys, Inc. + 100,593,750 1,279,700 Learning Co. Inc. (The) + 18,395,688 1,400,000 Vantive Corp. + 43,750,000 558,000 Viasoft, Inc. + 26,365,500 -------------- 1,323,048,689 Computer Peripherals (1.3%) - --------------------------------------------------------------------------------------------------------- 4,647,200 EMC Corp. + 153,938,500 Consumer Products (2.1%) - --------------------------------------------------------------------------------------------------------- 353,000 Clorox Co. 35,432,375 1,040,000 Gillette Co. 80,860,000 841,200 Kimberly-Clark Corp. 80,124,300 465,000 Procter & Gamble Co. 49,987,500 -------------- 246,404,175 Consumer Services (0.1%) - --------------------------------------------------------------------------------------------------------- 811,600 Thermolase Corp. + 12,782,700 Cosmetics (0.4%) - --------------------------------------------------------------------------------------------------------- 747,000 Avon Products, Inc. 42,672,375 Education (0.6%) - --------------------------------------------------------------------------------------------------------- 990,100 Apollo Group, Inc. Class A + 33,106,469 1,139,850 Learning Tree International, Inc. + 33,625,575 -------------- 66,732,044 Electric Equipment (0.2%) - --------------------------------------------------------------------------------------------------------- 1,000,000 Cognex Corp. + 18,500,000 Electric Utilities (0.5%) - --------------------------------------------------------------------------------------------------------- 1,800,000 Calenergy, Inc. + 60,525,000 Electronics and Electrical Equipment (0.9%) - --------------------------------------------------------------------------------------------------------- 1,035,000 General Electric Co. 102,335,625 Energy-Related (0.3%) - --------------------------------------------------------------------------------------------------------- 1,000,000 Thermo Electron Corp. + 41,250,000 Environmental Control (0.4%) - --------------------------------------------------------------------------------------------------------- 1,334,000 U.S. Filter Corp. + 42,354,500 Finance (1.4%) - --------------------------------------------------------------------------------------------------------- 1,129,000 American Express Co. 63,788,500 1,487,000 Federal National Mortgage Association 55,390,750 1,041,850 TCF Financial Corp. 45,320,475 -------------- 164,499,725 Financial Services (2.0%) - --------------------------------------------------------------------------------------------------------- 1,175,035 Aames Financial Corp. 42,154,381 1,000,000 Finova Group, Inc. 64,250,000 750,000 First USA Paymentech, Inc. + 25,406,250 1,050,000 MBNA Corp. 87,150,000 1,000,000 RAC Financial Group, Inc. + 21,125,000 -------------- 240,085,631 Food and Beverages (1.5%) - --------------------------------------------------------------------------------------------------------- 849,000 Campbell Soup Co. 68,132,250 1,614,500 Coca-Cola Enterprises, Inc. 78,303,250 465,000 Pioneer Hi-Bred International, Inc. 32,550,000 -------------- 178,985,500 Funeral/Cemetery Services (1.9%) - --------------------------------------------------------------------------------------------------------- 1,206,500 Loewen Group, Inc. 47,204,313 2,650,000 Service Corp. International 74,200,000 2,900,000 Stewart Enterprises, Inc. Class A 98,600,000 -------------- 220,004,313 Health Care Services (5.6%) - --------------------------------------------------------------------------------------------------------- 850,000 ABR Information Services, Inc. + 33,468,750 486,400 Access Health, Inc. + 21,766,400 1,250,000 American Medical Response + 40,625,000 1,800,000 Cardinal Health, Inc. 104,850,000 755,000 Carematrix Corp. + 9,909,375 810,000 Emcare Holdings, Inc. + 18,832,500 2,100,000 Genesis Health Ventures, Inc. + 65,362,500 4,496,435 Healthsouth Rehabilitation Corp. + 173,674,802 1,410,000 Renal Treatment Centers, Inc. + 35,955,000 850,000 Rotech Medical Corp. + 17,850,000 1,100,000 Sunrise Assisted Living, Inc. + 30,662,500 750,000 Total Renal Care Holdings, Inc. + 27,187,500 509,500 Vencor, Inc. + 16,112,938 2,500,000 Vivra, Inc. + 69,062,500 -------------- 665,319,765 HMOs (0.2%) - --------------------------------------------------------------------------------------------------------- 699,600 Compdent Corp. + 24,660,900 Hospital Management (1.0%) - --------------------------------------------------------------------------------------------------------- 5,500,000 Health Management Assoc., Inc. + 123,750,000 Insurance (1.6%) - --------------------------------------------------------------------------------------------------------- 519,000 American International Group, Inc. 56,181,750 643,250 CRA Managed Care, Inc. + 28,946,250 1,800,000 HCC Insurance Holdings, Inc. 43,200,000 1,298,933 Travelers Group Inc. 58,939,085 -------------- 187,267,085 Leisure (0.2%) - --------------------------------------------------------------------------------------------------------- 650,000 Signature Resorts, Inc. + 22,912,500 Lodging (4.4%) - --------------------------------------------------------------------------------------------------------- 1,830,000 Doubletree Corp. + 82,350,000 2,451,000 Extended Stay America, Inc. + 49,326,375 3,800,000 HFS, Inc. + 227,050,000 1,064,500 Marriott International, Inc. 58,813,625 2,057,000 Prime Hospitality Corp. + 33,169,125 1,575,500 Promus Hotel Corp. + 46,674,188 362,700 Renaissance Hotel Group N.V. (Hong Kong) + 8,523,450 842,750 Studio Plus Hotels, Inc. + 13,273,313 -------------- 519,180,076 Medical Computer Services (1.5%) - --------------------------------------------------------------------------------------------------------- 2,340,000 HBO & Co. 138,937,500 1,061,920 Medic Computer Systems, Inc. 42,808,650 -------------- 181,746,150 Medical Management Services (1.5%) - --------------------------------------------------------------------------------------------------------- 258,400 NCS HealthCare, Inc. Class A + 7,525,900 1,130,000 OccuSystems, Inc. + 30,510,000 1,038,600 Pediatrix Medical Group, Inc. + 38,428,200 1,939,100 Phycor, Inc. + 55,021,963 966,900 Phymatrix, Inc. + 13,778,325 1,850,000 Physician Reliance Network, Inc. + 14,337,500 1,200,000 Physicians Resource Group, Inc. + 21,300,000 -------------- 180,901,888 Medical Supplies and Devices (4.1%) - --------------------------------------------------------------------------------------------------------- 2,450,700 Boston Scientific Corp. + 147,042,000 400,000 Endosonics Corp. + 6,100,000 1,050,000 I-Stat Corp. + 24,937,500 1,700,000 IDEXX Laboratories, Inc. + 61,200,000 950,000 Medtronic, Inc. 64,600,000 800,000 Neuromedical Systems, Inc. + 10,600,000 2,575,000 Omnicare, Inc. 82,721,875 2,200,000 Physician Sales & Service, Inc. + 31,625,000 675,000 Spine-Tech, Inc. + 16,875,000 1,235,000 Thermo Cardiosystems, Inc. + 37,050,000 -------------- 482,751,375 Networking Equipment (5.7%) - --------------------------------------------------------------------------------------------------------- 1,125,000 Ascend Communications, Inc. + 69,890,625 1,000,000 Bay Networks Inc. + 20,875,000 265,500 Black Box Corp. + 10,951,875 3,450,000 Cabletron Systems, Inc. + 114,712,500 2,444,000 Cascade Communications Corp. + 134,725,500 3,561,400 Cisco Systems, Inc. + 226,594,075 752,000 3Com Corp. + 55,178,000 1,300,000 Shiva Corp. + 45,337,500 -------------- 678,265,075 Nursing Homes (0.6%) - --------------------------------------------------------------------------------------------------------- 2,400,000 Health Care & Retirement Corp. + 68,700,000 Office Equipment and Products (0.8%) - --------------------------------------------------------------------------------------------------------- 1,500,000 BT Office Products International, Inc. + 13,312,500 3,100,000 Viking Office Products, Inc. + 82,731,250 -------------- 96,043,750 Oil and Gas (0.6%) - --------------------------------------------------------------------------------------------------------- 654,000 Schlumberger Ltd. 65,318,250 Pharmaceuticals and Biotechnology (5.6%) - --------------------------------------------------------------------------------------------------------- 1,667,000 Abbott Laboratories 84,600,250 1,250,000 Biochem Pharmaceutical, Inc. + 62,812,500 1,006,800 Dura Pharmaceuticals, Inc. 48,074,700 4,000,000 Elan Corp. PLC ADR (Ireland) + 133,000,000 1,725,000 Gilead Sciences, Inc. + 43,125,000 505,000 Martek Biosciences Corp. + 10,100,000 1,583,000 Merck & Co., Inc. 125,452,750 194,100 Neurogen Corp. + 3,736,425 350,000 Parexel International Corp. + 18,068,750 1,498,000 Pfizer, Inc. 124,146,750 182,900 Quintiles Transnational Corp. + 12,117,125 -------------- 665,234,250 Photography (0.5%) - --------------------------------------------------------------------------------------------------------- 772,000 Eastman Kodak Co. 61,953,000 Publishing (1.0%) - --------------------------------------------------------------------------------------------------------- 747,000 Gannett Co., Inc. 55,931,625 179,300 Mecklermedia Corp. + 3,541,175 748,000 Tribune Co. 58,998,500 -------------- 118,471,300 Restaurants (2.4%) - --------------------------------------------------------------------------------------------------------- 1,500,000 Applebee's International, Inc. 41,250,000 2,950,000 Boston Chicken, Inc. + 105,831,250 1,937,747 J.D. Wetherspoon PLC (United Kingdom) 38,813,844 1,525,000 Landry's Seafood Restaurants, Inc. + 32,596,875 1,317,850 Papa Johns International, Inc. + 44,477,438 1,000,000 Rainforest Cafe, Inc. + 23,500,000 -------------- 286,469,407 Retail (5.2%) - --------------------------------------------------------------------------------------------------------- 3,850,000 Bed Bath & Beyond, Inc. + 93,362,500 811,625 Boise Cascade Office Products + 17,044,125 123,700 Borders Group, Inc. + 4,437,738 3,000,000 CompUSA, Inc. + 61,875,000 1,037,000 CVS Corp. 42,905,875 3,050,000 Dixons Group PLC (United Kingdom) 28,327,180 1,696,000 Federated Department Stores + 57,876,000 4,825,000 Officemax, Inc. + 51,265,625 2,000,000 Revco D.S., Inc. + 74,000,000 1,219,000 Sears, Roebuck & Co. 56,226,375 3,150,000 Staples, Inc. + 56,896,875 1,468,000 TJX Cos., Inc. (The) 69,546,500 -------------- 613,763,793 Satellite Services (0.4%) - --------------------------------------------------------------------------------------------------------- 1,923,600 PanAmSat Corp. + 53,860,800 Semiconductors (3.7%) - --------------------------------------------------------------------------------------------------------- 1,700,000 Analog Devices Inc. + 57,587,500 1,150,000 Credence Systems Corp. + 23,143,750 906,000 Intel Corp. 118,629,375 1,500,000 Linear Technology Corp. 65,812,500 1,550,000 Maxim Integrated Products Inc. + 67,037,500 384,300 Microchip Technology, Inc. + 19,551,263 661,000 Texas Instruments, Inc. 42,138,750 1,350,000 Xilinx, Inc. + 49,696,875 -------------- 443,597,513 Specialty Consumer Products (0.2%) - --------------------------------------------------------------------------------------------------------- 557,000 Central Garden and Pet Co. + 11,731,813 455,000 West Marine, Inc. + 12,853,750 -------------- 24,585,563 Telecommunication Equipment (2.3%) - --------------------------------------------------------------------------------------------------------- 1,063,400 Brooks Fiber Properties, Inc. + 27,116,700 336,000 Diana Corp. + 9,240,000 2,900,000 Pairgain Technologies, Inc. + 88,268,750 750,000 Premisys Communications, Inc. + 25,312,500 3,250,000 Tellabs, Inc. + 122,281,250 -------------- 272,219,200 Telephone Services (3.7%) - --------------------------------------------------------------------------------------------------------- 1,000,000 Intermedia Communications, Inc. + 25,750,000 1,200,000 IXC Communications, Inc. + 36,900,000 727,000 LCI International, Inc. + 15,630,500 1,500,000 McLeod, Inc. Class A + 38,250,000 1,770,114 MFS Communications Company, Inc. + 96,471,213 1,570,000 Sprint Corp. 62,603,750 2,150,000 Tel-Save Holdings, Inc. + 62,350,000 3,690,875 WorldCom, Inc. + 96,193,430 -------------- 434,148,893 Wireless Communications (1.4%) - --------------------------------------------------------------------------------------------------------- 1,400,000 Clearnet Communications Inc. Class A (Canada) + 15,400,000 733,800 ICG Communications, Inc. + 12,933,225 3,830,000 NEXTEL Communications, Inc. Class A + 50,029,375 820,600 Omnipoint Corp. + 15,796,550 4,700,000 Paging Network, Inc. + 71,675,000 432,700 Preferred Networks, Inc. + 2,812,550 89,500 Western Wireless Corp. Class A + 1,241,813 -------------- 169,888,513 -------------- Total Common Stocks (cost $9,740,449,222) $11,444,143,450 CONVERTIBLE PREFERRED STOCKS (-%) * (cost $3,340,000) NUMBER OF SHARES VALUE - --------------------------------------------------------------------------------------------------------- 66,800 Vanstar Fin. Trust 144A $3.375 cv. pfd. $ 3,456,900 SHORT-TERM INVESTMENTS (3.8%) * PRINCIPAL AMOUNT VALUE - --------------------------------------------------------------------------------------------------------- $ 25,000,000 American Home Products Corp. for an effective yield of 5.6%, February 11, 1997 $ 24,840,556 15,000,000 Bellsouth Telecomm Inc. for an effective yield of 5.3%, February 4, 1997 14,924,917 15,000,000 Ciesco L.P. for an effective yield of 5.3%, February 12, 1997 14,907,250 10,000,000 Ciesco L.P. for an effective yield of 5.3%, January 30, 1997 9,957,306 40,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 5.55%, January 24, 1997 39,858,166 30,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 5.22%, January 2, 1997 29,996,265 15,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 5.21%, February 12, 1997 14,908,825 30,000,000 Federal National Mortgage Association for an effective yield of 5 1/4%, March 17, 1997 29,671,875 25,000,000 Federal National Mortgage Association for an effective yield of 5.24%, January 28, 1997 24,901,750 20,000,000 Ford Motor Credit Corp. for an effective yield of 5.29%, February 27, 1997 19,832,483 25,000,000 Merrill Lynch & Co Inc. for an effective yield of 5.36%, February 7, 1997 24,862,278 40,000,000 Merrill Lynch & Co Inc. for an effective yield of 5.35%, January 21, 1997 39,881,111 25,000,000 Metlife Funding, Inc., for an effective yield of 5.3%, January 14, 1997 24,952,153 20,000,000 National Rural Utilities Cooperative Finance Corp. for an effective yield of 5.3%, January 10, 1997 19,973,500 30,000,000 Sheffield Receivables Corp. for an effective yield of 5.33%, January 16, 1997 29,933,375 85,245,000 Interest in $624,569,000 joint repurchase agreement dated December 31, 1996, with S.B.C. Warburg Inc., due January 2, 1997, with respect to various U.S. Treasury obligations -- maturing value of $85,276,967 for an effective yield of 6.75% 85,260,983 -------------- Total Short-Term Investments (cost $448,662,178) $ 448,662,793 - --------------------------------------------------------------------------------------------------------- Total Investments (cost $10,192,451,400) *** $11,896,263,143 - --------------------------------------------------------------------------------------------------------- * Percentages indicated are based on net assets of $11,842,858,069. *** The aggregate identified cost on a tax basis is $10,208,077,720, resulting in gross unrealized appreciation and depreciation of $2,240,557,739 and $552,372,316, respectively, or net unrealized appreciation of $1,688,185,423. + Non-income-producing security. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR or ADS after the name of a foreign holding stands for American Depository Receipts and American Depository Shares, respectively, representing ownership of foreign securities on deposit with a domestic custodian bank. The accompanying notes are an integral part of these financial statments.
Statement of assets and liabilities December 31, 1996 (Unaudited) Assets - --------------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $10,192,451,400) (Note 1) $ 11,896,263,143 - --------------------------------------------------------------------------------------------------- Dividends, interest and other receivables 4,289,743 - --------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 61,231,038 - --------------------------------------------------------------------------------------------------- Receivable for securities sold 36,249,187 - --------------------------------------------------------------------------------------------------- Total assets 11,998,033,111 Liabilities - --------------------------------------------------------------------------------------------------- Payable to subcustodian (Note 2) 68,643 - --------------------------------------------------------------------------------------------------- Distributions payable to shareholders 178,892 - --------------------------------------------------------------------------------------------------- Payable for securities purchased 91,927,734 - --------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 33,448,436 - --------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 14,739,402 - --------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 3,573,973 - --------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 69,648 - --------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 15,041 - --------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 8,776,596 - --------------------------------------------------------------------------------------------------- Payable for organization expenses 23,788 - --------------------------------------------------------------------------------------------------- Other accrued expenses 2,352,889 - --------------------------------------------------------------------------------------------------- Total liabilities 155,175,042 - --------------------------------------------------------------------------------------------------- Net assets $11,842,858,069 Represented by - --------------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $ 10,272,439,901 - --------------------------------------------------------------------------------------------------- Accumulated net investment loss (Note 1) (46,112,379) - --------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (Note 1) (87,283,043) - --------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 1,703,813,590 - --------------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $11,842,858,069 Computation of net asset value and offering price - --------------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($5,965,441,233 divided by 146,799,281 shares) $40.64 - --------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $40.64)* $43.12 - --------------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($5,437,231,861 divided by 137,595,349 shares)** $39.52 - --------------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($287,471,992 divided by 7,146,600 shares) $40.23 - --------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $40.23)* $41.69 - --------------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($152,712,983 divided by 3,733,441 shares) $40.90 - --------------------------------------------------------------------------------------------------- * 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, 1996 (Unaudited) Investment income: - -------------------------------------------------------------------------------------------------- Interest $ 17,910,023 - -------------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $62,600) 9,302,317 - -------------------------------------------------------------------------------------------------- Total investment income 27,212,340 Expenses: - -------------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 27,049,679 - -------------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 11,537,237 - -------------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 119,882 - -------------------------------------------------------------------------------------------------- Administrative services (Note 2) 31,302 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 6,740,208 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 24,455,076 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 948,215 - -------------------------------------------------------------------------------------------------- Reports to shareholders 503,215 - -------------------------------------------------------------------------------------------------- Registration fees 964,445 - -------------------------------------------------------------------------------------------------- Auditing 87,213 - -------------------------------------------------------------------------------------------------- Legal 112,350 - -------------------------------------------------------------------------------------------------- Postage 1,425,566 - -------------------------------------------------------------------------------------------------- Other 979,684 - -------------------------------------------------------------------------------------------------- Total expenses 74,954,072 - -------------------------------------------------------------------------------------------------- Expense reduction (Note 2) (1,654,597) - -------------------------------------------------------------------------------------------------- Net expenses 73,299,475 - -------------------------------------------------------------------------------------------------- Net investment loss (46,087,135) - -------------------------------------------------------------------------------------------------- Net realized loss on investments (Notes 1 and 3) (71,583,904) - -------------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 13,136 - -------------------------------------------------------------------------------------------------- Net unrealized appreciation of assets and liabilities in foreign currencies during the period 1,479 - -------------------------------------------------------------------------------------------------- Net unrealized depreciation of investments during the period (379,520,362) - -------------------------------------------------------------------------------------------------- Net loss on investments (451,089,651) - -------------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations $(497,176,786) - -------------------------------------------------------------------------------------------------- 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 1996* 1996 - ---------------------------------------------------------------------------------------------------------------------- Increase in net assets - ---------------------------------------------------------------------------------------------------------------------- Operations: - ---------------------------------------------------------------------------------------------------------------------- Net investment loss $ (46,087,135) $ (43,790,952) - ---------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions (71,570,768) 90,705,125 - ---------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies (379,518,883) 1,532,698,538 - ---------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (497,176,786) 1,579,612,711 - ---------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - ---------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (45,603,411) -- - ---------------------------------------------------------------------------------------------------------------------- Class B (42,751,343) -- - ---------------------------------------------------------------------------------------------------------------------- Class M (2,227,397) -- - ---------------------------------------------------------------------------------------------------------------------- Class Y (1,177,889) -- - ---------------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 3,095,177,761 5,361,199,461 - ---------------------------------------------------------------------------------------------------------------------- Total increase in net assets 2,506,240,935 6,940,812,172 - ---------------------------------------------------------------------------------------------------------------------- Net Assets - ---------------------------------------------------------------------------------------------------------------------- Beginning of period 9,336,617,134 2,395,804,962 - ---------------------------------------------------------------------------------------------------------------------- End of period (including accumulated net investment loss of $46,112,379 and $25,244, respectively) $11,842,858,069 $9,336,617,134 - ---------------------------------------------------------------------------------------------------------------------- * Unaudited. The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) For the period Six months July 19,1994 ended (commencement of December 31 Year ended operations) to (unaudited) June 30 June 30 1996 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Class Y - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $43.21 $29.66 $22.59 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment loss (.09) (.11)(e) (.04) - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments (1.90) 13.66 7.31 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations (1.99) 13.55 7.27 - --------------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - --------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.32) -- (.15) - --------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- (.04) - --------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- (.01) - --------------------------------------------------------------------------------------------------------------------------- Total distributions (.32) -- (.20) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $40.90 $43.21 $29.66 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(c) (4.60)* 45.68 32.42* - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $152,713 $118,640 $24,538 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(d) .40* .86 .83* - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.13)* (.29) (.26)* - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 32.10* 36.61 56.99 - --------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (f) $0.0495 - --------------------------------------------------------------------------------------------------------------------------- See page 27 for Notes to Financial Highlights Financial highlights (continued) (For a share outstanding throughout the period) For the period Six months December 1,1994 ended (commencement of December 31 operations) (unaudited) to June 30 1996 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Class M - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $42.66 $29.51 $24.72 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment loss (.17) (.40)(e) (.05) - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments (1.94) 13.55 5.04 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations (2.11) 13.15 4.99 - --------------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - --------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.32) -- (.15) - --------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- (.04) - --------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- (.01) - --------------------------------------------------------------------------------------------------------------------------- Total distributions (.32) -- (.20) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $40.23 $42.66 $29.51 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(c) (4.95)* 44.56 20.40* - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $287,472 $210,404 $16,011 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(d) .78* 1.64 .94* - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.51)* (1.06) (.53)* - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 32.10* 36.61 56.99 - --------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (f) $0.0495 - --------------------------------------------------------------------------------------------------------------------------- Financial highlights (continued) (For a share outstanding throughout the period) Six months ended December 31 (unaudited) Year ended June 30 - --------------------------------------------------------------------------------------------------------------------------- 1996 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Class B Class B - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $41.96 $29.09 $21.68 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment loss (.19) (.48)(e) (.23) - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments (1.93) 13.35 7.84 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations (2.12) 12.87 7.61 - --------------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - --------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.32) -- (.15) - --------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- (.04) - --------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- (.01) - --------------------------------------------------------------------------------------------------------------------------- Total distributions (.32) -- (.20) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $39.52 $41.96 $29.09 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(c) (5.07)* 44.24 35.34 - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $5,437,232 $4,254,962 $1,013,379 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(d) .91* 1.87 1.87 - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.63)* (1.30) (1.30) - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 32.10* 36.61 56.99 - --------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (f) $0.0495 - --------------------------------------------------------------------------------------------------------------------------- Financial highlights (continued) (For a share outstanding throughout the period) For the period March 1,1993 Six months (commencement of ended Year ended operations) to December 31 June 30 June 30 (unaudited) 1994 1993 1996 - --------------------------------------------------------------------------------------------------------------------------- Class B - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $20.80 $17.76 $42.99 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment loss (.11) (.05) (.12) - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.44 3.09 (1.91) - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.33 3.04 (2.03) - --------------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders: - --------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.45) -- (.32) - --------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- -- - --------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- -- - --------------------------------------------------------------------------------------------------------------------------- Total distributions (.45) -- (.32) - --------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $21.68 $20.80 $40.64 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (c) 6.18 17.12* (4.72)* - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $333,738 $15,698 $5,965,441 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(d) 2.04 .67* .53* - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (1.55) (.57)* (.26)* - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 52.76 93.59 32.10* - --------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (f) $0.0495 - --------------------------------------------------------------------------------------------------------------------------- Financial highlights (continued) (For a share outstanding throughout the period) Year ended June 30 1996 1995 1994 - --------------------------------------------------------------------------------------------------------------------------- Class A - --------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $29.58 $21.88 $20.83 - --------------------------------------------------------------------------------------------------------------------------- Investment operations - --------------------------------------------------------------------------------------------------------------------------- Net investment loss (.21)(e) (.12) (.06) - --------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 13.62 8.02 1.56 - --------------------------------------------------------------------------------------------------------------------------- Total from investment operations 13.41 7.90 1.50 - --------------------------------------------------------------------------------------------------------------------------- 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 $42.99 $29.58 $21.88 - --------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%) (c) 45.34 36.36 7.00 - --------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $4,752,611 $1,341,877 $648,787 - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(d) 1.11 1.13 1.23 - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.54) (.55) (.82) - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 36.61 56.99 52.76 - --------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (f) - --------------------------------------------------------------------------------------------------------------------------- Financial highlights (continued) (For a share outstanding throughout the period) Year ended June 30 - ------------------------------------------------------------------------------------------------------ 1993 1992 - ------------------------------------------------------------------------------------------------------ Class A - ------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $14.50 $11.56 - ------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------ Net investment loss (.12) (.02) - ------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 6.77 3.33(a) - ------------------------------------------------------------------------------------------------------ Total from investment operations 6.65 3.31 - ------------------------------------------------------------------------------------------------------ Less distributions to shareholders: - ------------------------------------------------------------------------------------------------------ From net realized gain on investments (.32) (.37) - ------------------------------------------------------------------------------------------------------ In excess of net realized gains -- -- - ------------------------------------------------------------------------------------------------------ Return of capital -- -- - ------------------------------------------------------------------------------------------------------ Total distributions (.32) (.37) - ------------------------------------------------------------------------------------------------------ Net asset value, end of period $20.83 $14.50 - ------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(c) 46.12 28.85 - ------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $318,426 $141,206 - ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(d) 1.31 1.64 - ------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.98) (.91) - ------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 93.59 116.04(b) - ------------------------------------------------------------------------------------------------------ Average commission rate paid (f) - ------------------------------------------------------------------------------------------------------ * Not annualized. (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) Total investment return assumes dividend reinvestment and does not reflect the efect of sales charges. (d) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter includes amounts paid through expense offset arrangements. Prior period ratios exclude these amounts (Note 2) (e) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during the period. (f) Average commission rate paid on security trades si required for fiscal periods beginning on or after September 1, 1995.
Notes to financial statements December 31, 1996 (Unaudited) Note 1 Significant accounting policies Putnam New Opportunities Fund ("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 invest at least $250 million in a combination of Putnam Funds and other accounts managed by affiliates of Putnam Management. 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. Securities quoted in foreign currencies are translated in U.S. dollars at the current exchange rate. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value, 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 and certain other accounts managed by Putnam Investment Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc.. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. 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) 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 nor for excise tax on income and capital gains. F) 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. 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. 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. 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 the next $5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion, and 0.43% of any amount over $21.5 billion. As part of the custodian contract between the subcustodian bank and PFTC, the subcustodian bank has a lien on the securities of the fund to the extent permitted by the funds investment restrictions to cover any advances made by the subcustodian bank for the settlement of securities purchased by the fund. At December 31, 1996, the payable to the subcustodian bank represents the amount due for cash advance for the settlement of a security purchased. 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 period ended December 31, 1996, fund expenses were reduced by $1,654,597 under expense offset arrangements with PFTC and broker service arrangements. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Trustees of the fund receive an annual Trustees fee of $7,860 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 an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. The fund has adopted distribution plans (the "Plans") with respect to its class A, class B 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 period ended December 31, 1996, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $7,590,812 and $282,314 from the sale of class A and class M shares, respectively and $3,506,932 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 period ended December 31, 1996, Putnam Mutual Funds Corp., acting as underwriter received $98,148 on class A redemptions. Note 3 Purchase and sales of securities During the six months ended December 31, 1996, purchases and sales of investment securities other than short-term investments aggregated $6,616,297,115 and $3,204,443,036, 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, 1996, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Six months ended December 31, 1996 - ------------------------------------------------------------ Class A Shares Amount - ------------------------------------------------------------ Shares sold 71,992,359 $2,981,069,069 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 1,060,965 42,820,556 - ------------------------------------------------------------ 73,053,324 3,023,889,625 Shares repurchased (36,809,052) (1,521,130,991) - ------------------------------------------------------------ Net increase 36,244,272 $1,502,758,634 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Six months ended December 31, 1996 - ------------------------------------------------------------ Class B Shares Amount - ------------------------------------------------------------ Shares sold 46,951,031 $1,891,304,905 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 942,861 37,016,697 - ------------------------------------------------------------ 47,893,892 1,928,321,602 Shares repurchased (11,699,279) (467,894,563) - ------------------------------------------------------------ Net increase 36,194,613 $1,460,427,039 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Six months ended December 31, 1996 - ------------------------------------------------------------ Class M Shares Amount - ------------------------------------------------------------ Shares sold 2,950,417 $120,996,443 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 50,699 2,025,443 - ------------------------------------------------------------ 3,001,116 122,991,886 Shares repurchased (787,183) (32,052,614) - ------------------------------------------------------------ Net increase 2,213,933 $ 90,939,272 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Six months ended December 31, 1996 - ------------------------------------------------------------ Class Y Shares Amount - ------------------------------------------------------------ Shares sold 1,458,190 $ 60,640,912 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 29,005 1,177,889 - ------------------------------------------------------------ 1,487,195 61,818,801 Shares repurchased (499,713) (20,765,985) - ------------------------------------------------------------ Net increase 987,482 $ 41,052,816 - ------------------------------------------------------------ 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 - ------------------------------------------------------------
Note 5 Transactions with Certain Companies Transactions during the period with companies in which the fund owned at least 5% of the voting securities were as follows: Purchases Sales Dividend Name of Affiliate Cost Cost Income Market Value - ------------------------------- -------------- -------------- -------------- -------------- ABR Information Services $19,346,341 $33,468,750 Aames FInancial Corp. 56,474,293 $57,152 42,154,381 Alternative Resource Corp. 2,379,062 $23,669,473 American Medical Response 7,763,245 40,625,000 Apple South Inc. 4,113,000 38,822,312 Barnett, Inc. 552,709 27,250,000 Bed, Bath & Beyond, Inc. 14,780,824 93,362,500 CGM Information Services, Inc. 14,702,039 CRA Managed Care, Inc. 30,884,281 28,946,250 Cambridge Technology Partners, Inc. 3,237,525 58,734,375 Centennial Cellular Corp. 18,586,280 Chancellor Broadcasting Corp. Class A 2,292,298 21,375,000 Clearnet Communications, Inc. Class A 3,635,812 15,400,000 Compudent Corp. 24,660,900 Computer Horizons Corp. 5,698,498 57,750,000 Core Staff, Inc. 8,690,505 39,676,563 Diana Corp. 1,321,077 9,240,000 Doubletree Corp. 17,168,541 82,350,000 Emcare Holdings, Inc. 9,016,636 1,821,018 18,832,500 Emeritus Corp. 2,798,775 13,570,171 Emmis Broadcasting, Corp. Class A 9,376,937 35,697,500 Genesis Health Ventures, Inc. 15,572,650 65,362,500 Gilead Sciences, Inc. 2,536,641 43,125,000 Glenayre Technologies, Inc. 14,314,661 82,252,848 HCC Insurance Holdings, Inc. 7,898,388 102,500 43,200,000 Health Management Associates, Inc. 29,855,614 123,750,000 Health Care & Retirement Corp. 8,942,373 68,700,000 Heartland Wireless Communications, Inc. 4,878,951 10,003,325 8,477,438 I-Stat Corp. 5,105,660 24,937,500 Inso Corp. 11,862,363 49,687,500 Intermedia Communications, Inc. 2,345,756 25,750,000 Labor Ready, Inc. 12,951,114 9,333,225 Landry's Seafood Restaurants 3,750,917 32,596,875 Learning Company, Inc. (The) 2,560,864 29,262,835 18,395,688 Learning Tree International, Inc. 25,806,050 33,625,575 Legato Systems, Inc. 30,341,250 Mecklermedia Corp. 8,114,760 3,541,175 Mentor Corp. Minn 31,788,270 64,290 Occusystems, Inc. 11,601,732 30,510,000 Olympic Financial Ltd. 30,379,230 65,154,889 P-Com Inc. 6,755,435 20,036,517 Panamsat Corp. 55,273,146 53,860,600 Pairgain Technologies, Inc. 2,055,097 88,268,750 Papa Johns Intl,. Inc. 3,159,375 3,615,896 44,477,438 Pediatrix Medical Group, Inc. 23,326,541 38,428,200 Phymatrix, Inc. 900,335 4,186,452 13,778,325 Physicians Resource Group, Inc. 20,420,050 12,429,493 21,300,000 Physician Sales & Services, Inc. 46,689,276 31,625,000 Prime Hospitality Corp. 26,777,644 33,169,125 Project Software & Development, Inc. 10,593,018 29,662,500 Rainforest Cafe, Inc. 11,023,060 4,237,000 23,500,000 Renal Treatment Centers., Inc. 3,466,990 35,955,000 Renaissance Hotel Group N.V. 6,355,000 30,673,659 8,523,450 Rio Casino & Hotel, Inc. 14,671,092 Security Dynamics Technologies, Inc. 10,361,242 55,818,000 SFX Broadcasting, Inc. Class A 17,850,000 Softkey International, Inc. 10,949,384 Spine-Tech, Inc. 17,872,564 16,875,000 Stewart Enterprises, Inc. Class A 28,698,808 88,190 98,600,000 Studio Plus Hotels, Inc. 2,119,761 13,273,313 Sunrise Assisted Living, Inc. 7,649,410 30,662,500 Synopsys, Inc. 34,447,320 100,593,750 Tel-Save Holdings, Inc. 7,949,476 62,350,000 Unison Software, Inc. 10,142,458 Vantive Corp. 43,750,000 Vivra, Inc. 6,433,895 69,062,500 Wolverine World Wide, Inc. 18,712,366 32,000 56,550,000 Young Broadcasting Corp. Class A 8,133,908 126,275 23,394,150 - ----------------------------------------------------------------------------------------------------------- Totals $752,604,041 $445,279,445 $344,132 $2,252,185,046 - -----------------------------------------------------------------------------------------------------------
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 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 Brett C. Browchuk Vice President Daniel L. Miller Vice President and Fund Manager Carol C. McMullen 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. You can also learn more at Putnam Investments' website: http://www.putnaminv.com. Shares of mutual funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution, are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any other agency, and involve risk, including the possible loss of principal amount invested. PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - -------------------- Bulk Rate U.S. Postage PAID Putnam Investments - -------------------- 30602-852/358/983/526 2/97 PUTNAM INVESTMENTS [LOGO] - ----------------------------------------------------------------------- Putnam New Opportunities Fund Supplement to Semiannual Report dated December 31, 1996 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. SEMIANNUAL RESULTS AT A GLANCE - ----------------------------------------------------------------------- Total return: NAV Six months ended 12/31/96 -4.60% One year ended 12/31/96 11.14 Life of class (since 7/19/94) 84.04 Annual average 28.14 - ----------------------------------------------------------------------- Share value: NAV 6/30/96 $43.21 12/31/96 40.90 - ----------------------------------------------------------------------- Distributions: No. Income Capital gains Total 1 $0.00 $0..319 $0.319 - ----------------------------------------------------------------------- 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-----