-----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, GlG1gyb/W/FtyglNefduWMFH5fN874iCbcLJsyYzDXKjHbmT+93SJa2D2pXf3XOw ZdElypsDlt8E5YUrGIwGBQ== 0000928816-97-000277.txt : 19970828 0000928816-97-000277.hdr.sgml : 19970828 ACCESSION NUMBER: 0000928816-97-000277 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970827 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: 97670517 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: A6 ZIP: 02109 BUSINESS PHONE: 6172921000 N-30D 1 PUTNAM NEW OPPORTUNITIES FUND Putnam New Opportunities Fund ANNUAL REPORT June 30, 1997 [LOGO: BOSTON * LONDON * TOKYO] Fund highlights * "There are more large caps now, but the fund has always held a few blue chips . . . nor does the large-cap portion conflict with the fund's strategy. Management looks for the most robust sectors of the economy, then selects stocks that meet growth criteria, such as high projected earnings growth or after-tax cash flows . . . Although it has grown, the fund is little changed in its stylistic consistency and capable management." -- Morningstar analysis, May 23, 1997 CONTENTS 4 Report from Putnam Management 8 Fund performance summary 12 Portfolio holdings 20 Financial statements 35 Results of February 6, 1997 shareholder meeting From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] [copyright] Karsh, Ottawa Dear Shareholder: Investor acceptance of Putnam New Opportunities Fund has been enthusiastic since the fund's 1991 introduction. It has been so intense, in fact, that it has generated an unrestrained inflow of assets -- to the point at which Putnam Management concluded this spring that further growth would hamper the fund's ability to achieve its goal of pursuing long-term capital appreciation potential in fast-growing industries. As a consequence, Putnam Management has decided to restrict the assets flowing into the fund, as explained in a letter to shareholders in June. Shareholders wishing to purchase new shares of the fund or exchange assets from another Putnam fund now may do so only by setting up a systematic investment or systematic exchange program. Of course, shareholders may continue to reinvest distributions and to take advantage of Putnam's reinstatement privilege for assets they withdraw from the fund and wish to reinvest. If you have questions or would like more information about the new provisions, please contact your financial advisor or call Putnam toll free at 1-800-225-1581. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees August 20, 1997 Report from the Fund Managers Daniel L. Miller, lead manager Carol C. McMullen For most of Putnam New Opportunities Fund's 1997 fiscal year, it appeared the only constant was change. As market turbulence tested the mettle of the fund's management team, Putnam Management began implementing administrative transitions intended to expand the fund's strategy and, shortly thereafter, to enhance the effectiveness of that strategy. Now, as fiscal 1998 begins, it appears that these changes are proving beneficial and that a more favorable climate is ahead for those who -- as we wrote in our last report -- "stood firm against a hostile wind." For example, your fund's midyear performance decline reflected a period when small- and mid-capitalization companies -- always the portfolio's mainstay -- lost ground as the market embarked on a love affair with highly liquid large-cap stocks. It was shortly before the year's midpoint that Carol McMullen joined the management team. She began focusing a portion of the fund's resources on large-cap stocks while maintaining the fund's characteristic approach of targeting both growth-oriented sectors of the economy and the strongest companies within those sectors. As her efforts began to bear fruit, the fund's small- and mid-cap holdings staged a recovery. Result: the fund benefited substantially from the opportunity to take advantage of growth opportunities without regard for market capitalization. Complete performance information begins on page 8. * FUND DRAWS ON ECONOMIC THEMES TO IDENTIFY AND LINK GROWTH-ORIENTED INDUSTRY SECTORS As your fund has grown in size, we are able not only to take greater advantage of the potential of large-cap stocks but to expand our original industry-sector approach into a unique blend of bottom-up stock picking with larger-scale trend analysis and forecasting. For example, the aging of the baby-boom population in the United States is clearly creating opportunities in all facets of the health-care industry as well as in peripheral areas such as pharmaceuticals, vitamins, and other nutritional products. Less obvious is the fact that older boomers are focusing on their fast-approaching retirements and feeling the need to save more. These are favorable trends for both personal financial planning companies and large-format retailers -- especially those that sell products for the home -- which would otherwise have very little in common. In this example, we have our theme and target industries. But the actual portfolio holdings will not be determined until we complete hours of fundamental research and analysis. We want to identify and purchase the stocks of companies with the best available combination of growth potential, quality management, healthy finances, reasonable valuation, and strong market or leadership positioning. Examples of portfolio stocks we consider poised to benefit from the aging of the boomer population are Dura Pharmaceuticals, which specializes in drugs for various respiratory problems; HealthSouth Corporation, which merges a surgical-care center with an accompanying rehabilitation center; and the drugstore chain CVS. While these holdings, along with others discussed in this report, were viewed favorably at the end of the fiscal period, all are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. [GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS*] TOP INDUSTRY SECTORS* Computer software 10.3% Pharmaceuticals and biotechnology 8.4% Retail 5.7% Business services 5.4% Electronics and electrical equipment 4.6% Footnote reads: *Based on net assets as of 6/30/97. Holdings will vary over time. * "YEAR 2000" DILEMMA CREATES WEALTH OF OPPORTUNITies Another trend influencing our portfolio selections is considerably narrower in scope but offers literally a once-in-a-millennium opportunity. Companies around the world are struggling to prevent the loss of essential data, applications, and even hardware within systems that are not equipped to digest dates after December 31, 1999. Each company faces a unique set of challenges that must be addressed from a business as well as a technological viewpoint. However, in most cases the response is to reprogram existing systems, to replace outdated software and hardware, or to customize a solution that combines both approaches. Compuware, headquartered in Farmington Hills, Michigan, is a relatively new holding that appears well positioned to benefit from this situation. Its Production 2000 focus combines a battery of productivity products already in use by three of every four Fortune 1000 companies with an extensive professional services organization. The blend enables Compuware to deliver technology, conversion talent, and techniques adapted to each specific client. Other portfolio holdings with strong potential to benefit from the Year 2000 dilemma include EMC, which produces large-scale storage systems essential to the testing and implementation of new -- or revamped -- software and valuable data, and Peoplesoft, whose efficient, affordable human resources information system is prompting many companies to replace rather than rework their current software. * ENTERTAINMENT FOCUS REFLECTS MULTIPLE THEMES Many of the fund's large-capitalization holdings interested us because they have the potential to benefit from several trends at once. As the aging boomer population shifts its priorities, we believe industries such as broadcasting and other areas of entertainment that can add to boomers' enjoyment of life should be well rewarded for their efforts. Companies such as Time Warner and Westinghouse, which encompasses CBS and the recently acquired Infinity Broadcasting, are good examples. Both possess extensive distribution systems that are often more profitable overseas than within the United States. This reflects another trend, the globalization of American industry, which has translated into substantial gains for those companies that can participate successfully. TOP 10 HOLDINGS HEALTHSOUTH Corp. Health care services WorldCom, Inc. Telephone services Clear Channel Communications, Inc. Broadcasting HFS, Inc. Lodging MBNA Corp. Financial services General Electric Co. Electronics and electrical equipment Tellabs, Inc. Telecommunications EMC Corp. Computer equipment America Online, Inc. Computer Services Elan Corp. PLC ADR Pharmaceuticals and biotechnology Footnote reads: These holdings represent 14.8% of the fund's net assets as of 6/30//97. Portfolio holdings will vary over time. With the U.S. economy slowing to a more moderate pace and with no clear-cut signs of inflation, it seems likely that the months ahead will bring an environment of moderate economic growth. This combination, in turn, could continue to create a favorable investment climate for aggressive growth stocks. We continue to position your fund to take advantage of the full range of growth stock opportunities in the United States. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 6/30/97, there is no guarantee the fund will continue to hold these securities in the future. This fund invests a portion of its assets in small to medium-sized companies. Such investments increase the risk of greater price fluctuations. Performance summary This section provides information about your fund's performance, which should always be considered in light of its 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. TOTAL RETURN FOR PERIODS ENDED 6/30/97 Class A Class B Class M (inception date) (8/31/90) (3/1/93) (12/1/94) NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------------ 1 year 4.26% -1.73% 3.50% -1.50% 3.75% 0.12% - ------------------------------------------------------------------------------ 5 years 223.02 204.54 211.45 209.45 215.05 204.07 Annual average 26.43 24.95 25.51 25.35 25.80 24.91 - ------------------------------------------------------------------------------ Life of fund 466.99 434.44 437.88 437.88 446.31 427.07 Annual average 28.92 27.81 27.93 27.93 28.22 27.55 - ------------------------------------------------------------------------------ COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/97 Consumer S&P 500 Russell 2000 Price Index - ------------------------------------------------------------------------------ 1 year 34.68% 16.33% 2.30% - ------------------------------------------------------------------------------ 5 years 146.38 127.59 14.34 Annual average 19.77 17.88 2.72 - ------------------------------------------------------------------------------ Life of fund 231.05 218.73 21.81 Annual average 19.15 18.49 2.93 - ------------------------------------------------------------------------------ Returns for class A and class M shares reflect the current maximum initial sales charges of 5.75% for class A shares and 3.50% for class M shares. One-, five-, and ten-year (when applicable) and life-of-fund returns for class B shares reflect the applicable contingent deferred sales charges (CDSC), which is 5% in the first year, declines each year to 1% in the sixth year, and is eliminated thereafter. Returns shown for class B and class M shares for periods prior to their inception are derived from the historical performance of class A shares, adjusted to reflect both the initial sales charge or CDSC, if any, currently applicable to each class and, in the case of class B and class M shares, the higher operating costs applicable to such shares. All returns assume reinvestment of distributions at NAV and represent past performance; they do not guarantee future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. [GRAPHIC OMITTED worm chart GROWTH OF A 10,000 INVESTMENT] Cumulative total return of $10,000 investment since 8/31/90. Fund's Class A Russell 2000 Consumer Price shares at POP Index Price Index 8/31/90 9425 10000 10000 12/31/90 10441 9577 10167 12/31/91 17492 13986 10479 12/31/92 21971 16561 10763 12/31/93 29154 19688 11079 12/31/94 30119 19329 11375 12/31/95 44058 24828 11664 12/31/96 48841 28923 12052 6/30/97 53444 31873 12181 Footnote reads: Past performance is no assurance of future results. At the end of the same time period, a $10,000 investment in the fund's class B shares would have been valued at $53,788 and no contingent deferred sales charges would apply; and a $10,000 investment in the fund's class M shares would have been valued at $54,631 ($52,707 at public offering price). See first page of performance section for performance calculation method. PRICE AND DISTRIBUTION INFORMATION 12 months ended 6/30/97 Class A Class B Class M - ------------------------------------------------------------------------------ Distributions (number) 1 1 1 - ------------------------------------------------------------------------------ Income -- -- -- - ------------------------------------------------------------------------------ Capital gains - ------------------------------------------------------------------------------ Long-term $0.3190 $0.3190 $0.3190 - ------------------------------------------------------------------------------ Short-term -- -- -- - ------------------------------------------------------------------------------ Total $0.3190 $0.3190 $0.3190 - ------------------------------------------------------------------------------ Share value: NAV POP NAV NAV POP - ------------------------------------------------------------------------------ 6/30/96 $42.99 $45.61 $41.96 $42.66 $44.21 - ------------------------------------------------------------------------------ 6/30/97 44.47 47.18 43.08 43.91 45.50 - ------------------------------------------------------------------------------ TERMS AND DEFINITIONS 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. 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 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.* 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. Report of independent accountants For the fiscal year ended June 30, 1997 To the Trustees and Shareholders of Putnam New Opportunities Fund We have audited the accompanying statement of assets and liabilities of Putnam New Opportunities Fund, including the portfolio of investments owned, as of June 30, 1997, and the related statement of operations for the year then ended and the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 1997, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Putnam New Opportunities Fund as of June 30, 1997, the results of its operations for the year then ended and the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Boston, Massachusetts August 14, 1997 Portfolio of investments owned June 30, 1997
COMMON STOCKS (95.5%) * NUMBER OF SHARES VALUE Advertising (1.0%) - ------------------------------------------------------------------------------------------------------------ 1,250,000 Lamar Advertising Co. + $ 31,875,000 2,199,100 Outdoor Systems, Inc. + 84,115,575 750,000 Universal Outdoor Holdings, Inc. + 26,156,250 --------------- 142,146,825 Aerospace and Defense (0.8%) - ------------------------------------------------------------------------------------------------------------ 2,064,600 Boeing Co. 109,552,838 Banks (0.9%) - ------------------------------------------------------------------------------------------------------------ 1,648,500 Barnett Banks, Inc. 86,546,250 834,500 Washington Mutual, Inc. 49,861,375 --------------- 136,407,625 Broadcasting (4.2%) - ------------------------------------------------------------------------------------------------------------ 900,000 Chancellor Broadcasting Corp. Class A +[SECTION MARK] 36,000,000 3,610,100 Clear Channel Communications, Inc. + 222,021,150 1,090,000 Emmis Broadcasting Corp. Class A +[SECTION MARK] 47,551,250 1,090,010 Evergreen Media Corp. Class A + 48,641,696 1,242,900 Jacor Communications, Inc. + 47,540,925 900,000 LIN Television Corp. + 39,712,500 600,000 SFX Broadcasting, Inc. Class A +[SECTION MARK] 25,312,500 921,800 Sinclair Broadcast Group, Inc. Class A + 28,460,575 900,000 Univision Communications, Inc. Class A + 35,212,500 1,425,000 Westwood One, Inc. + 45,956,250 677,800 Young Broadcasting Corp. Class A +[SECTION MARK] 22,028,500 --------------- 598,437,846 Building Products (0.2%) - ------------------------------------------------------------------------------------------------------------ 1,000,000 Barnett, Inc. +[SECTION MARK] 24,500,000 Business Services (5.4%) - ------------------------------------------------------------------------------------------------------------ 1,700,000 Affiliated Computer Services, Inc. Class A +[SECTION MARK] 47,600,000 3,515,000 Airgas, Inc. +[SECTION MARK] 69,640,938 1,675,000 Corestaff, Inc. +[SECTION MARK] 45,225,000 5,115,000 Corporate Express, Inc. + 73,847,813 985,000 Interim Services, Inc. +[SECTION MARK] 43,832,500 691,350 Labor Ready, Inc. +[SECTION MARK] 6,999,919 4,350,000 Officemax, Inc. + 62,803,125 2,587,500 Paychex, Inc. 98,325,000 985,900 Precision Response Corp. + 16,267,350 29,000,000 Rentokil Group PLC (United Kingdom) 101,844,636 2,200,000 Robert Half International, Inc. + 103,537,500 622,200 Select Appointments Holdings PLC ADR (United Kingdom) + 9,644,100 1,014,500 Snyder Communications, Inc. + 27,328,094 1,600,000 TeleTech Holdings, Inc. + 42,000,000 550,000 The Registry, Inc. + 25,300,000 --------------- 774,195,975 Chemicals (0.7%) - ------------------------------------------------------------------------------------------------------------ 1,739,700 Praxair, Inc. 97,423,200 Computer Equipment (2.0%) - ------------------------------------------------------------------------------------------------------------ 4,878,500 EMC Corp. + 190,261,500 1,749,000 Hewlett-Packard Co. 97,944,000 --------------- 288,205,500 Computer Services (3.6%) - ------------------------------------------------------------------------------------------------------------ 3,350,000 America Online, Inc. + 186,343,750 1,750,000 Cambridge Technology Partners, Inc. +[SECTION MARK] 56,000,000 1,082,400 CBT Group PLC ADR (Ireland) +[SECTION MARK] 68,326,500 2,250,000 Computer Horizons Corp. +[SECTION MARK] 77,062,500 700,000 National TechTeam, Inc. + 14,962,500 250,000 Renaissance Solutions, Inc. + 9,250,000 2,335,000 Sterling Commerce, Inc. + 76,763,125 1,054,350 Sykes Enterprises, Inc. + 27,413,100 266,100 Whittman-Hart, Inc. + 7,484,063 --------------- 523,605,538 Computer Software (10.3%) - ------------------------------------------------------------------------------------------------------------ 1,315,000 Baan Co., N.V. (Netherlands) + 90,570,625 575,000 BMC Software, Inc. + 31,840,625 2,635,000 Cadence Design Systems, Inc. + 88,272,500 359,500 Citrix Systems, Inc. + 15,773,063 2,592,000 Computer Associates Intl., Inc. 144,342,000 1,165,000 Compuware Corp. + 55,628,750 375,000 Documentum, Inc. + 9,328,125 1,725,000 Electronic Arts, Inc. + 58,003,125 1,000,000 Electronics for Imaging, Inc. + 47,250,000 685,000 HNC Software, Inc. + 26,115,625 1,391,400 Inso Corp. +[SECTION MARK] 28,610,663 70,500 Legato Systems, Inc. +[SECTION MARK] 1,304,250 2,050,000 McAfee Associates, Inc. + 129,406,250 1,168,400 Microsoft Corp. + 147,656,550 3,807,200 Parametric Technology Corp. + 162,043,950 2,634,400 PeopleSoft, Inc. + 138,964,600 73,500 Project Software & Development, Inc. +[SECTION MARK] 1,065,750 600,000 Remedy Corp. + 24,000,000 380,800 Sapient Corp. + 18,849,600 800,000 Saville Systems Ireland PLC ADR (Ireland) + 41,600,000 1,772,000 Security Dynamics Technologies, Inc. +[SECTION MARK] 65,342,500 2,199,700 Synopsys, Inc.[SECTION MARK] 80,838,975 1,400,000 Vantive Corp. +[SECTION MARK] 39,550,000 475,000 Viasoft, Inc. + 24,106,250 95,500 Wind River Systems 3,652,875 --------------- 1,474,116,651 Conglomerates (0.5%) - ------------------------------------------------------------------------------------------------------------ 978,100 Tyco International Ltd. 68,039,081 Consumer Products (1.5%) - ------------------------------------------------------------------------------------------------------------ 1,040,800 Gillette Co. 98,615,800 829,500 Procter & Gamble Co. 117,166,875 --------------- 215,782,675 Cosmetics (0.4%) - ------------------------------------------------------------------------------------------------------------ 1,239,400 Estee Lauder Cos. Class A 62,279,850 Education (0.7%) - ------------------------------------------------------------------------------------------------------------ 990,100 Apollo Group, Inc. Class A + 34,901,025 940,000 Learning Tree International, Inc. +[SECTION M 41,712,500 729,111 Sylvan Learning Systems, Inc. + 24,789,774 --------------- 101,403,299 Electric Utilities (0.6%) - ------------------------------------------------------------------------------------------------------------ 2,155,000 Calenergy, Inc. + 81,890,000 Electronics and Electrical Equipment (4.6%) - ------------------------------------------------------------------------------------------------------------ 745,600 ADT Ltd. + 24,604,800 1,182,100 Applied Materials, Inc. + 83,707,456 1,020,000 Cognex Corp. + 27,030,000 3,321,700 General Electric Co. 217,156,138 975,450 Microchip Technology, Inc. + 29,019,638 1,623,900 Motorola, Inc. 123,416,400 6,880,100 Westinghouse Electric Corp. 159,102,313 --------------- 664,036,745 Energy-Related (0.3%) - ------------------------------------------------------------------------------------------------------------ 1,500,000 Thermo Electron Corp. + 51,562,500 Entertainment (1.3%) - ------------------------------------------------------------------------------------------------------------ 1,215,100 Disney (Walt) Productions, Inc. 97,511,775 1,920,000 Time Warner, Inc. 92,640,000 --------------- 190,151,775 Environmental Control (1.3%) - ------------------------------------------------------------------------------------------------------------ 1,300,000 Philip Services Corp. (Canada) + 20,637,500 1,083,988 Republic Industries, Inc. + 26,964,202 1,481,700 U.S. Filter Corp. + 40,376,325 2,430,000 USA Waste Services, Inc. + 93,858,750 --------------- 181,836,777 Finance (1.2%) - ------------------------------------------------------------------------------------------------------------ 1,507,500 American Express Co. 112,308,750 1,225,000 TCF Financial Corp. 60,484,375 --------------- 172,793,125 Financial Services (2.8%) - ------------------------------------------------------------------------------------------------------------ 1,000,000 Finova Group, Inc. 76,500,000 824,000 First USA Paymentech, Inc. + 23,844,500 1,251,610 FIRSTPLUS Financial Group, Inc. + 42,554,740 5,976,500 MBNA Corp. 218,889,313 1,200,000 PMT Svcs., Inc. + 18,300,000 510,000 Sirrom Capital Corp. 17,595,000 --------------- 397,683,553 Food and Beverages (1.6%) - ------------------------------------------------------------------------------------------------------------ 1,415,400 Campbell Soup Co. 70,770,000 1,204,100 Coca-Cola Co. 81,276,750 3,257,400 Coca-Cola Enterprises, Inc. 74,920,200 --------------- 226,966,950 Funeral/Cemetery Services (1.8%) - ------------------------------------------------------------------------------------------------------------ 560,000 Loewen Group, Inc. 19,460,000 3,025,000 Service Corp. International 99,446,875 3,418,300 Stewart Enterprises, Inc. Class A [SECTION MARK] 143,568,600 --------------- 262,475,475 Health Care Information Systems (1.2%) - ------------------------------------------------------------------------------------------------------------ 1,225,000 ABR Information Services, Inc. +[SECTION MARK] 35,525,000 2,000,000 HBO & Co. 137,750,000 --------------- 173,275,000 Health Care Services (4.3%) - ------------------------------------------------------------------------------------------------------------ 1,783,500 Cardinal Health, Inc. 102,105,375 892,600 Carematrix Corp. +[SECTION MARK] 22,036,063 810,000 Emcare Holdings, Inc. +[SECTION MARK] 29,666,250 9,737,200 HEALTHSOUTH Corp. + 242,821,425 2,400 Henry Schein, Inc. + 75,300 4,000,000 MedPartners, Inc. + 86,500,000 1,410,000 Renal Treatment Centers, Inc. [SECTION MARK] 37,893,750 850,000 Rotech Medical Corp. + 17,053,125 1,100,000 Sunrise Assisted Living, Inc. +[SECTION MARK] 38,500,000 885,000 Total Renal Care Holdings, Inc. + 35,565,938 --------------- 612,217,226 Hospital Management (1.1%) - ------------------------------------------------------------------------------------------------------------ 5,522,000 Health Management Assoc., Inc. +[SECTION MARK] 157,377,000 Household Products (0.3%) - ------------------------------------------------------------------------------------------------------------ 363,500 Clorox Co. 47,982,000 Insurance (2.8%) - ------------------------------------------------------------------------------------------------------------ 846,800 Aetna, Inc. 86,691,150 505,900 CIGNA Corp. 89,797,250 1,725,700 Conseco, Inc. 63,850,900 643,250 CRA Managed Care, Inc. +[SECTION MARK] 33,569,609 1,800,000 HCC Insurance Holdings, Inc. [SECTION MARK] 48,037,500 1,340,133 Travelers Group, Inc. 84,512,137 --------------- 406,458,546 Leisure (0.2%) - ------------------------------------------------------------------------------------------------------------ 900,000 Signature Resorts, Inc. + 31,106,250 Lodging (4.1%) - ------------------------------------------------------------------------------------------------------------ 2,000,400 Doubletree Corp. +[SECTION MARK] 82,266,450 4,965,966 Extended Stay America, Inc. +[SECTION MARK] 78,213,965 3,800,000 HFS, Inc. + 220,400,000 1,570,500 Marriott International, Inc. 96,389,438 2,150,000 Prime Hospitality Corp. +[SECTION MARK] 42,462,500 1,763,400 Promus Hotel Corp. + 68,331,750 --------------- 588,064,103 Medical Supplies and Devices (1.6%) - ------------------------------------------------------------------------------------------------------------ 1,330,000 Boston Scientific Corp. + 81,711,875 696,800 Neuromedical Systems, Inc. + 3,854,175 2,620,000 Omnicare, Inc. 82,202,500 2,200,000 Physician Sales & Service, Inc. +[SECTION MARK] 41,800,000 300,200 Sybron International Corp. + 11,970,475 554,100 Thermo Cardiosystems, Inc. + 14,406,600 --------------- 235,945,625 Medical Management Services (1.2%) - ------------------------------------------------------------------------------------------------------------ 450,000 NCS HealthCare, Inc. Class A + 13,668,750 1,400,000 OccuSystems, Inc. +[SECTION MARK] 40,600,000 1,038,600 Pediatrix Medical Group, Inc. +[SECTION MARK] 47,580,863 1,939,100 Phycor, Inc. + 66,777,756 --------------- 168,627,369 Networking Equipment (0.8%) - ------------------------------------------------------------------------------------------------------------ 1,456,800 Cisco Systems, Inc. + 97,787,700 504,200 Newbridge Networks Corp. (Canada) 21,932,700 --------------- 119,720,400 Nursing Homes (1.1%) - ------------------------------------------------------------------------------------------------------------ 2,195,000 Genesis Health Ventures, Inc. +[SECTION MARK] 74,081,250 2,400,000 Health Care & Retirement Corp. +[SECTION MARK] 80,100,00 --------------- 154,181,250 Office Equipment and Products (0.5%) - ------------------------------------------------------------------------------------------------------------ 1,500,000 BT Office Products International, Inc. + 11,250,000 3,325,000 Viking Office Products, Inc. + 63,175,000 --------------- 74,425,000 Oil and Gas (0.7%) - ------------------------------------------------------------------------------------------------------------ 758,400 Schlumberger Ltd. 94,800,000 Pharmaceuticals and Biotechnology (8.4%) - ------------------------------------------------------------------------------------------------------------ 1,777,600 Abbott Laboratories 118,654,800 2,015,300 Bristol-Myers Squibb Co. 163,239,300 1,750,000 Dura Pharmaceuticals, Inc. + 69,781,250 4,100,000 Elan Corp. PLC ADR + 185,525,000 1,725,000 Gilead Sciences, Inc. +[SECTION MARK] 47,653,125 1,565,000 Jones Medical Industries, Inc. [SECTION MARK] 74,337,500 962,400 Lilly (Eli) & Co. 105,202,350 146,600 Martek Biosciences Corp. + 1,722,550 1,600,000 Merck & Co., Inc. 165,600,000 700,000 Parexel International Corp. + 22,225,000 510,000 Quintiles Transnational Corp. + 35,508,750 1,047,100 Smithkline Beecham PLC ADR (United Kingdom) 95,940,538 911,500 Warner-Lambert Co. 113,253,875 --------------- 1,198,644,038 Publishing (0.7%) - ------------------------------------------------------------------------------------------------------------ 969,400 Gannett Co., Inc. 95,728,250 Restaurants (1.4%) - ------------------------------------------------------------------------------------------------------------ 1,803,300 Applebee's International, Inc. [SECTION MARK] 48,238,275 2,159,432 J.D. Wetherspoon PLC (United Kingdom) 48,970,410 1,650,000 Landry's Seafood Restaurants, Inc. +[SECTION MARK] 37,950,000 1,796,800 Papa Johns International, Inc. +[SECTION MARK] 66,032,400 192,200 Rainforest Cafe, Inc. +[SECTION MARK] 4,877,075 --------------- 206,068,160 Retail (5.7%) - ------------------------------------------------------------------------------------------------------------ 3,850,000 Bed Bath & Beyond, Inc. +[SECTION MARK] 116,943,750 1,541,900 CompUSA, Inc. + 33,150,850 3,612,299 CVS Corp. 185,130,324 2,236,900 Dayton Hudson Corp. 118,975,119 3,300,000 Dixons Group PLC (United Kingdom) 25,650,068 425,000 Dollar Tree Stores, Inc. + 21,409,375 1,878,900 Federated Department Stores, Inc. + 65,291,775 584,300 Global DirectMail Corp. + 15,228,319 1,262,700 Lowe's Cos., Inc. 46,877,738 585,700 Rexall Sundown, Inc. + 22,842,300 3,000,000 Staples, Inc. + 69,750,000 2,925,000 Wolverine World Wide, Inc. [SECTION MARK] 88,846,875 --------------- 810,096,493 Semiconductors (3.8%) - ------------------------------------------------------------------------------------------------------------ 725,000 Altera Corp. + 36,612,500 1,130,000 Analog Devices, Inc. + 30,015,625 1,094,800 Credence Systems Corp. +[SECTION MARK] 32,775,575 668,800 Intel Corp. 94,844,200 965,900 KLA Instruments Corp. + 47,087,625 575,000 Lattice Semiconductor Corp. + 32,487,500 1,785,000 Linear Technology Corp. 92,373,750 2,060,000 Maxim Integrated Products, Inc. + 117,162,500 1,134,800 Xilinx, Inc. + 55,676,125 --------------- 539,035,400 Specialty Consumer Products (0.2%) - ------------------------------------------------------------------------------------------------------------ 557,000 Central Garden and Pet Co. + 13,925,000 640,000 West Marine, Inc. + 16,480,000 --------------- 30,405,000 Telecommunications (3.4%) - ------------------------------------------------------------------------------------------------------------ 103,300 Advanced Fibre Communications + 6,236,738 1,485,000 Aspect Telecommunications Corp. + 33,041,250 1,063,400 Brooks Fiber Properties, Inc. + 35,889,750 1,090,900 Northern Telecom Ltd. (Canada) 99,271,900 2,106,000 Pairgain Technologies, Inc. +[SECTION MARK] 32,643,000 2,110,000 Panamsat Corp. +[SECTION MARK] 61,190,000 559,400 Qwest Communications International, Inc. + 15,243,650 3,537,800 Tellabs, Inc. 197,674,575 --------------- 481,190,863 Telephone Services (3.6%) - ------------------------------------------------------------------------------------------------------------ 1,000,000 Intermedia Communications, Inc. +[SECTION MARK] 32,375,000 733,800 ICG Communications, Inc. + 14,125,650 739,700 IXC Communications, Inc. + 19,417,125 1,500,000 McLeod, Inc. Class A + 50,625,000 1,966,200 Sprint Corp. 103,471,275 4,300,000 Tel-Save Holdings, Inc. +[SECTION MARK] 65,575,000 7,333,300 WorldCom, Inc. + 234,665,600 --------------- 520,254,650 Wireless Communications (0.7%) - ------------------------------------------------------------------------------------------------------------ 1,400,000 Clearnet Communications, Inc. Class A (Canada) +[SECTION MARK] 16,975,000 4,400,000 NEXTEL Communications, Inc. Class A + 83,325,000 --------------- 100,300,000 --------------- Total Common Stocks (cost $10,544,877,066) $13,691,396,426 SHORT-TERM INVESTMENTS (4.5%) * PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ $50,000,000 Asset Securitized Cooperative Corp. for an effective yield of 5.56%, July 30, 1997 $ 49,776,056 25,000,000 Corporate Asset Funding Corp. for an effective yield of 5.60%, July 2, 1997 24,996,110 30,000,000 Falcon Asset Securitization Corp. for an effective yield of 5.56%, August 20, 1997 29,768,333 25,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 5.54%, August 15, 1997 24,826,875 50,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 5.45%, August 4, 1997 49,742,639 50,000,000 Federal National Mortgage Association for an effective yield of 5.44%, September 15, 1997 49,425,776 50,000,000 Federal National Mortgage Association for an effective yield of 5.41%, July 24, 1997 49,827,180 50,000,000 Ford Motor Credit Corp. for an effective yield of 5.54%, August 25, 1997 49,576,804 50,000,000 General Electric Capital Corp. for an effective yield of 5.54%, August 18, 1997 49,630,666 50,000,000 GTE Funding, Inc. for an effective yield of 5.57%, July 16, 1997 49,883,958 30,000,000 Metlife Funding Corp. for an effective yield of 5.54%, August 11, 1997 29,810,716 15,600,000 National Rural Utilities Cooperative Finance Corp. for an effective yield of 5.57%, July 14, 1997 15,568,622 27,700,000 Preferred Receivables Funding Corp. for an effective yield of 5.65%, August 13, 1997 27,513,063 30,000,000 Sheffield Receivables Corp. for an effective yield of 5.58%, September 9, 1997 29,674,500 14,804,000 Interest in $293,634,000 joint repurchase agreement dated June 30, 1997 with UBS Securities due July 1, 1997 with respect to various U.S. Treasury obligations -- maturity value of $14,806,426 for an effective yield of 5.90% 14,806,426 100,000,000 Interest in $750,000,000 joint repurchase agreement dated June 30, 1997 with Goldman, Sachs & Co. due July 1, 1997 with respect to various U.S. Treasury obligations -- maturity value of $100,016,319 for an effective yield of 5.875% 100,016,319 --------------- Total Short-Term Investments (cost $644,844,043) $ 644,844,043 - ------------------------------------------------------------------------------------------------------------ Total Investments (cost $11,189,721,109) *** $14,336,240,469 - ------------------------------------------------------------------------------------------------------------ * Percentages indicated are based on net assets of $14,332,732,237. *** The aggregate identified cost on a tax basis is $11,213,708,404, resulting in gross unrealized appreciation and depreciation of $3,428,551,245 and $306,019,180, respectively, or net unrealized appreciation of $3,122,532,065. + Non-income-producing security. [SECTION MARK] Affiliated Companies (Note 5) ADR after the name of a foreign holding stands for American Depository Receipts, representing ownership of foreign securities on deposit with a domestic custodian bank. The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities June 30, 1997 Assets - --------------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $11,189,721,109) (Note 1) $14,336,240,469 - --------------------------------------------------------------------------------------------------- Dividends, interest and other receivable 5,330,072 - --------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 36,998,098 - --------------------------------------------------------------------------------------------------- Receivable for securities sold 67,447,116 - --------------------------------------------------------------------------------------------------- Total assets 14,446,015,755 Liabilities - --------------------------------------------------------------------------------------------------- Payable to subcustodian (Note 2) 213,532 - --------------------------------------------------------------------------------------------------- Payable for securities purchased 59,628,778 - --------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 20,772,036 - --------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 16,067,978 - --------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 4,386,024 - --------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 100,511 - --------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 15,221 - --------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 9,797,467 - --------------------------------------------------------------------------------------------------- Other accrued expenses 2,301,971 - --------------------------------------------------------------------------------------------------- Total liabilities 113,283,518 - --------------------------------------------------------------------------------------------------- Net assets $14,332,732,237 Represented by - --------------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $11,464,181,173 - --------------------------------------------------------------------------------------------------- Accumulated net investment loss (Note 1) (29,062) - --------------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (Note 1) (277,940,665) - --------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 3,146,520,791 - --------------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $14,332,732,237 Computation of net asset value and offering price - --------------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($7,381,623,986 divided by 165,997,512 shares) $44.47 - --------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $44.47)* $47.18 - --------------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($6,359,446,948 divided by 147,610,222 shares)** $43.08 - --------------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($337,534,961 divided by 7,687,198 shares) $43.91 - --------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $43.91)* $45.50 - --------------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($254,126,342 divided by 5,670,417 shares) $44.82 - --------------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
Statement of operations Year ended June 30, 1997 Investment income: - -------------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $379,979) (including dividend income of $776,166 from investments in affiliated issuers) (Note 5) $ 35,082,287 - -------------------------------------------------------------------------------------------------- Interest 28,817,501 - -------------------------------------------------------------------------------------------------- Total investment income 63,899,788 Expenses: - -------------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 58,689,609 - -------------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 26,542,177 - -------------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 551,555 - -------------------------------------------------------------------------------------------------- Administrative services (Note 2) 61,623 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 14,851,376 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 52,780,396 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 2,093,847 - -------------------------------------------------------------------------------------------------- Reports to shareholders 943,534 - -------------------------------------------------------------------------------------------------- Registration fees 1,355,299 - -------------------------------------------------------------------------------------------------- Auditing 168,972 - -------------------------------------------------------------------------------------------------- Legal 179,697 - -------------------------------------------------------------------------------------------------- Postage 3,724,881 - -------------------------------------------------------------------------------------------------- Other 2,449,085 - -------------------------------------------------------------------------------------------------- Total expenses 164,392,051 - -------------------------------------------------------------------------------------------------- Expense reduction (Note 2) (3,490,771) - -------------------------------------------------------------------------------------------------- Net expenses 160,901,280 - -------------------------------------------------------------------------------------------------- Net investment loss (97,001,492) - -------------------------------------------------------------------------------------------------- Net realized loss on investments (Notes 1, 3 and 5) (including realized loss of $81,761,967 on sales of investments in affiliated issuers) (262,314,286) - -------------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 16,936 - -------------------------------------------------------------------------------------------------- Net unrealized appreciation of assets and liabilities in foreign currencies during the year 1,674 - -------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments during the year 1,063,186,644 - -------------------------------------------------------------------------------------------------- Net loss on investments 800,890,968 - -------------------------------------------------------------------------------------------------- Net decrease in net assets resulting from operations $ 703,889,476 - -------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Year ended June 30 ---------------------------------- 1997 1996 - ---------------------------------------------------------------------------------------------------------------------- Increase in net assets - ---------------------------------------------------------------------------------------------------------------------- Operations: - ---------------------------------------------------------------------------------------------------------------------- Net investment loss $ (97,001,492) $ (43,790,952) - ---------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions (262,297,350) 90,705,125 - ---------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 1,063,188,318 1,532,698,538 - ---------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 703,889,476 1,579,612,711 - ---------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - ---------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (37,775,305) -- - ---------------------------------------------------------------------------------------------------------------------- Class B (35,446,992) -- - ---------------------------------------------------------------------------------------------------------------------- Class M (1,848,838) -- - ---------------------------------------------------------------------------------------------------------------------- Class Y (976,630) -- - ---------------------------------------------------------------------------------------------------------------------- In excess of net realized gains on investments Class A (7,788,281) -- - ---------------------------------------------------------------------------------------------------------------------- Class B (7,308,244) -- - ---------------------------------------------------------------------------------------------------------------------- Class M (381,182) -- - ---------------------------------------------------------------------------------------------------------------------- Class Y (201,355) -- - ---------------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 4,383,952,454 5,361,199,461 - ---------------------------------------------------------------------------------------------------------------------- Total increase in net assets 4,996,115,103 6,940,812,172 Net assets - ---------------------------------------------------------------------------------------------------------------------- Beginning of year 9,336,617,134 2,395,804,962 - ---------------------------------------------------------------------------------------------------------------------- End of year (including accumulated net investment loss of $29,062 and $25,244, respectively) $14,332,732,237 $9,336,617,134 - ---------------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) CLASS A - ----------------------------------------------------------------------------------------------------------------------------- Per-share operating performance Year ended June 30 - ----------------------------------------------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $42.99 $29.58 $21.88 $20.83 $14.50 - ----------------------------------------------------------------------------------------------------------------------------- Investment operations - ----------------------------------------------------------------------------------------------------------------------------- Net investment loss (.20)(c) (.21)(c) (.12) (.06) (.12) - ----------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 2.00 13.62 8.02 1.56 6.77 - ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.80 13.41 7.90 1.50 6.65 - ----------------------------------------------------------------------------------------------------------------------------- Less distributions: - ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.26) -- (.15) (.45) (.32) - ----------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains (.06) -- (.04) -- -- - ----------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- (.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------- Total distributions (.32) -- (.20) (.45) (.32) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $44.47 $42.99 $29.58 $21.88 $20.83 - ----------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 4.26 45.34 36.36 7.00 46.12 - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $7,381,624 $4,752,611 $1,341,877 $648,787 $318,426 - ----------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.06 1.11 1.13 1.23 1.31 - ----------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.48) (.54) (.55) (.82) (.98) - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 66.74 36.61 56.99 52.76 93.59 - ----------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (d) $.0490 - ----------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2) (c) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during the period. (d) Average commission rate paid on security trades is required for fiscal periods beginning on or after September 1, 1995.
Financial highlights (For a share outstanding throughout the period) CLASS B - ----------------------------------------------------------------------------------------------------------------------------- For the period Per-share March 1,1993+ operating performance Year ended June 30 to June 30 - ----------------------------------------------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $41.96 $29.09 $21.68 $20.80 $17.76 - ----------------------------------------------------------------------------------------------------------------------------- Investment operations - ----------------------------------------------------------------------------------------------------------------------------- Net investment loss (.49)(c) (.48)(c) (.23) (.11) (.05) - ----------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.93 13.35 7.84 1.44 3.09 - ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.44 12.87 7.61 1.33 3.04 - ----------------------------------------------------------------------------------------------------------------------------- Less distributions: - ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.26) -- (.15) (.45) -- - ----------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains (.06) -- (.04) -- -- - ----------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- (.01) -- -- - ----------------------------------------------------------------------------------------------------------------------------- Total distributions (.32) -- (.20) (.45) -- - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $43.08 $41.96 $29.09 $21.68 $20.80 - ----------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 3.50 44.24 35.34 6.18 17.12* - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $6,359,447 $4,254,962 $1,013,379 $333,738 $15,698 - ----------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.81 1.87 1.87 2.04 .67* - ----------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (1.23) (1.30) (1.30) (1.55) (.57)* - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 66.74 36.61 56.99 52.76 93.59 - ----------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (d) $.0490 - ----------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2) (c) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during the period. (d) Average commission rate paid on security trades is required for fiscal periods beginning on or after September 1, 1995.
Financial highlights (For a share outstanding throughout the period) CLASS M - ----------------------------------------------------------------------------------------------------------------------------- For the period Per-share Dec. 1,1994+ operating performance Year ended June 30 to June 30 - ----------------------------------------------------------------------------------------------------------------------------- 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $42.66 $29.51 $24.72 - ----------------------------------------------------------------------------------------------------------------------------- Investment operations - ----------------------------------------------------------------------------------------------------------------------------- Net investment loss (.40)(c) (.40)(c) (.05) - ----------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 1.97 13.55 5.04 - ----------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.57 13.15 4.99 - ----------------------------------------------------------------------------------------------------------------------------- Less distributions: - ----------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.26) -- (.15) - ----------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains (.06) -- (.04) - ----------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- (.01) - ----------------------------------------------------------------------------------------------------------------------------- Total distributions (.32) -- (.20) - ----------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $43.91 $42.66 $29.51 - ----------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 3.75 44.56 20.40* - ----------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $337,535 $210,404 $16,011 - ----------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.56 1.64 .94* - ----------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.98) (1.06) (.53)* - ----------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 66.74 36.61 56.99 - ----------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (d) $.0490 - ----------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2) (c) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during the period. (d) Average commission rate paid on security trades is required for fiscal periods beginning on or after September 1, 1995.
Financial highlights (For a share outstanding throughout the period) CLASS Y - -------------------------------------------------------------------------------------------------------------------------- For the period Per-share July 19,1994+ operating performance Year ended June 30 to June 30 - -------------------------------------------------------------------------------------------------------------------------- 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $43.21 $29.66 $22.59 - -------------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------------- Net investment loss (.09)(c) (.11)(c) (.04) - -------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 2.02 13.66 7.31 - -------------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.93 13.55 7.27 - -------------------------------------------------------------------------------------------------------------------------- Less distributions: - -------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (.26) -- (.15) - -------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains (.06) -- (.04) - -------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- (.01) - -------------------------------------------------------------------------------------------------------------------------- Total distributions (.32) -- (.20) - -------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $44.82 $43.21 $29.66 - -------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - -------------------------------------------------------------------------------------------------------------------------- Total investment return at net asset value (%)(a) 4.54 45.68 32.42* - -------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $254,126 $118,640 $24,538 - -------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) .81 .86 .83* - -------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.23) (.29) (.26)* - -------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 66.74 36.61 56.99 - -------------------------------------------------------------------------------------------------------------------------- Average commission rate paid (d) $.0490 - -------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter includes amounts paid through expense offset and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2) (c) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during the period. (d) Average commission rate paid on security trades is required for fiscal periods beginning on or after September 1, 1995.
Notes to financial statements June 30, 1997 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 judgment 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. Effective June 24, 1997 the fund is closed to new investors. The fund offers class A, class B, class M and class Y shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge but pay a higher ongoing distribution fee than class A shares, and may be subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class M shares are sold with a maximum front end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B shares. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A shares, class B and class M shares, but do not bear a distribution fee. Class Y shares are sold to defined contribution plans that initially invest at least $250 million in a combination of Putnam Funds. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if the fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements 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. 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 Management. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. E) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such fluctuations are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. F) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, as amended. 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. At June 30, 1997, the fund had a capital loss carryover of approximately $97,881,000 available to offset future net capital gain, if any, which will expire on June 30, 2005. 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 at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include treatment of realized gains on foreign currency and net operating losses. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended June 30, 1997, the fund reclassified $96,997,674 to decrease accumulated net investment loss and $97,033,421 to decrease paid-in-capital, with a decrease to distributions in excess of gains on investments of $35,747. The calculation of net investment income per share in the financial highlights table excludes these adjustments. Note 2 Management fee, administrative services and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion, and 0.43% of any amount thereafter. The fund reimburses Putnam Management for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the year ended June 30, 1997, fund expenses were reduced by $3,490,771 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 Trustee fee of $13,210 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 year ended June 30, 1997, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $11,364,742 and $438,607 from the sale of class A and class M shares, respectively and $10,457,694 in contingent deferred sales charges from redemptions of class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the year ended June 30, 1997, Putnam Mutual Funds Corp., acting as underwriter received $237,484 on class A redemptions. Note 3 Purchase and sales of securities During the year ended June 30, 1997, purchases and sales of investment securities other than short-term investments aggregated $11,846,233,129 and $7,442,399,971, respectively. There were no purchases and sales of U.S. government obligations. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At June 30, 1997, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Year ended June 30, 1997 - ------------------------------------------------------------ Class A Shares Amount - ------------------------------------------------------------ Shares sold 142,393,856 $5,850,578,384 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 1,061,020 42,820,121 - ------------------------------------------------------------ 143,454,876 5,893,398,505 Shares repurchased (88,012,373) (3,602,785,988) - ------------------------------------------------------------ Net increase 55,442,503 $2,290,612,517 - ------------------------------------------------------------ Year ended June 30, 1996 - ------------------------------------------------------------ Class A Shares Amount - ------------------------------------------------------------ Shares sold 108,115,547 $4,157,515,940 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions -- -- - ------------------------------------------------------------ 108,115,547 4,157,515,940 Shares repurchased (42,919,318) (1,604,367,366) - ------------------------------------------------------------ Net increase 65,196,229 $2,553,148,574 - ------------------------------------------------------------ Year ended June 30, 1997 - ------------------------------------------------------------ Class B Shares Amount - ------------------------------------------------------------ Shares sold 75,798,177 $3,034,787,180 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 943,158 37,028,368 - ------------------------------------------------------------ 76,741,335 3,071,815,548 Shares repurchased (30,531,849) (1,209,675,509) - ------------------------------------------------------------ Net increase 46,209,486 $1,862,140,039 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Year ended June 30, 1997 - ------------------------------------------------------------ Class M Shares Amount - ------------------------------------------------------------ Shares sold 5,520,573 $225,053,765 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 50,716 2,026,092 - ------------------------------------------------------------ 5,571,289 227,079,857 Shares repurchased (2,816,758) (114,396,085) - ------------------------------------------------------------ Net increase 2,754,531 $112,683,772 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Year ended June 30, 1997 - ------------------------------------------------------------ Class Y Shares Amount - ------------------------------------------------------------ Shares sold 4,581,487 $186,531,899 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 29,007 1,177,985 - ------------------------------------------------------------ 4,610,494 187,709,884 Shares repurchased (1,686,036) (69,193,758) - ------------------------------------------------------------ Net increase 2,924,458 $118,516,126 - ------------------------------------------------------------ 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 Affiliated Companies
Transactions during the period with companies in which the fund owns at least 5% of the voting securities were as follows: Purchases Sales Dividend Market Name of affiliate cost cost Income Value - -------------------------------------------------------------------------------------------------- ABR Information Services $ 19,346,341 $ 11,574,650 $ -- $ 35,525,000 Aames FInancial Corp. 56,474,293 56,474,293 150,163 -- Affiliated Computer Services Class A 22,779,138 -- -- 47,600,000 Airgas Inc. 43,346,609 -- -- 69,640,938 Alternative Resource Corp. 2,379,063 23,669,473 -- -- American Medical Response 7,763,245 40,759,546 -- -- Apple South, Inc. 4,113,000 38,822,312 17,200 -- Applebees Intl. Inc. 26,011,639 1,327,325 -- 48,238,275 Barnett, Inc. 552,709 -- -- 24,500,000 Bed, Bath & Beyond, Inc. 14,780,824 -- -- 116,943,750 CBT Group PLC ADR (Ireland) -- -- -- 68,326,500 CMG Information Services, Inc. -- 14,702,039 -- -- CRA Managed Care, Inc. 30,884,281 -- -- 33,569,609 Cambridge Technology Partners, Inc. -- 3,237,525 -- 56,000,000 Carematrix Corp. 14,154,408 -- 105,000 22,036,063 Centennial Cellular Corp. -- 18,586,280 -- -- Chancellor Broadcasting Corp. Class A 2,292,298 -- -- 36,000,000 Clearnet Communications, Inc. Class A 3,635,812 -- -- 16,975,000 Compudent Corp. -- 26,218,154 -- -- Computer Horizons Corp. 5,698,498 -- -- 77,062,500 Corestaff, Inc. 8,690,505 -- -- 45,225,000 Credence Systems Corp. 10,811,855 1,675,991 -- 32,775,575 Diana Corp. 1,321,077 27,540,180 -- -- Doubletree Corp. 23,260,776 -- -- 82,226,450 Emcare Holdings, Inc. 9,016,636 1,821,018 -- 29,666,250 Emeritus Corp. 2,798,775 13,570,171 -- -- Emmis Broadcasting, Corp. Class A 9,376,937 -- -- 47,551,250 Extended Stay America, Inc. 44,512,430 1,089,084 -- 78,213,965 Genesis Health Ventures, Inc. 18,594,959 -- -- 74,081,250 Gilead Sciences, Inc. 2,536,641 -- -- 47,653,125 Glenayre Technologies, Inc. 14,314,661 82,252,848 -- -- HCC Insurance Holdings, Inc 7,898,388 -- 156,500 48,037,500 Health Management Associates, Inc. 30,397,364 -- -- 157,377,000 Health Care & Retirement Corp. 8,942,373 -- -- 80,100,000 Heartland Wireless Communications Inc. 4,878,951 26,320,450 -- -- I-Stat Corp. 5,105,660 20,352,589 -- -- Inso Corp. 15,398,609 -- -- 28,610,663 Intermedia Communications, 2,345,756 -- -- 32,375,000 Interim Services, Inc. 41,502,524 -- -- 43,832,500 Jones Medical Industries, Inc. 52,555,194 -- 70,425 74,337,500 Labor Ready, Inc. 12,951,114 -- -- 6,999,919 Landry's Seafood Restaurant 6,423,772 -- -- 37,950,000 Learning Company, Inc. (The) 2,560,864 56,406,943 -- -- Learning Tree International 27,380,085 6,899,565 -- 41,712,500 Legato Systems, Inc. -- 14,200,294 -- 1,304,250 Mecklermedia Corp. -- 11,480,928 -- -- Mentor Corp. Minn 12,875,897 44,664,167 64,290 -- OccuSystems, Inc. 18,205,687 -- -- 40,600,000 Olympic Financial Ltd. 30,379,230 65,154,889 -- -- P-Com, Inc. 6,755,435 20,036,517 -- -- Pairgain Technologies, Inc. 11,210,881 11,794,482 -- 32,643,000 Panamsat Corp. 60,633,258 -- -- 61,190,000 Papa Johns Intl., Inc. 15,884,829 3,615,896 -- 66,032,400 Pediatrix Medical Group, Inc. 23,326,541 -- -- 47,580,863 Phymatrix, Inc. 900,335 25,576,486 -- -- Physicians Resource Group, Inc. 20,420,050 42,946,457 -- -- Physician Sales & Services, 46,689,276 -- -- 41,800,000 Prime Hospitality Corp. 28,525,852 -- -- 42,462,500 Project Software & Development, Inc. 10,593,018 17,801,042 -- 1,065,750 Rainforest Cafe, Inc. 15,808,084 26,850,508 -- 4,877,076 Renaissance Hotel Group N.V -- 31,118,509 -- -- Renal Treatment Centers., Inc. 3,466,990 -- -- 37,893,750 Rio Casino & Hotel, Inc. -- 14,671,092 -- -- Security Dynamics Technologies, Inc 10,361,242 -- -- 65,342,500 SFX Broadcasting, Inc. Class A 6,171,564 -- -- 25,312,500 Softkey International, Inc. 10,949,384 53,846,079 -- -- Spine-Tech, Inc. 17,946,939 17,946,939 -- -- Stewart Enterprises, Inc. Class A 47,429,398 -- 212,588 143,568,600 Studio Plus Hotels, Inc. -- 7,548,432 -- -- Sunrise Assisted Living, Inc. 7,649,410 -- -- 38,500,000 Synopsys, Inc. 35,191,407 -- -- 80,838,975 Tel-Save Holdings, Inc. 7,949,476 -- -- 65,575,000 Unison Software, Inc. -- 10,142,458 -- -- Vantive Corp. -- -- -- 39,550,000 Vivra, Inc. 6,433,895 65,186,528 -- -- Wolverine World Wide, Inc. 18,712,366 -- -- 88,846,875 Young Broadcasting Corp. Class A 8,133,908 4,971,687 -- 22,028,500 - ------------------------------------------------------------------------------------------------- Totals $1,100,392,416 $907,827,556 $776,166 $2,588,151,621 - -------------------------------------------------------------------------------------------------
Federal tax information (Unaudited) The Form 1099 you receive in January 1998 will show the tax status of all distributions paid to your account in calendar 1997. Results of February 6, 1997 shareholder meeting (Unaudited) An annual meeting of shareholders of the fund was held on February 6, 1997. At the meeting, each of the nominees for Trustees was elected, as follows: Votes for Votes withheld Jameson Adkins Baxter 142,133,188 2,610,107 Hans H. Estin 142,139,867 2,603,428 John A. Hill 142,215,448 2,527,847 R.J. Jackson 142,189,540 2,553,755 Elizabeth T. Kennan 142,029,530 2,713,765 Lawrence J. Lasser 142,219,573 2,523,722 Robert E. Patterson 142,215,931 2,527,364 Donald S. Perkins 142,117,295 2,626,000 William F. Pounds 142,176,020 2,567,275 George Putnam 142,127,767 2,615,528 George Putnam, III 142,073,200 2,670,095 Eli Shapiro 141,879,043 2,864,252 A.J.C. Smith 142,161,800 2,581,495 W. Nicholas Thorndike 142,023,760 2,716,535 A proposal to ratify the selection of Coopers & Lybrand L.L.P. as auditors for the fund was approved as follows: 139,349,601 votes for, and 1,367,253 votes against, with 4,026,441 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to diversification was approved as follows: 118,126,330 votes for, and 10,911,872 votes against, with 15,705,093 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to investments in the securities of a single issuer was approved as follows: 117,417,057 votes for, and 10,919,634 votes against, with 16,406,604 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to making loans was approved as follows: 114,460,811 votes for, and 13,946,681 votes against, with 16,335,803 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to investments in commodities was approved as follows: 115,948,890 votes for, and 12,708,266 votes against, with 16,086,139 abstentions and broker non-votes. A proposal to amend the fund's fundamental investment restriction with respect to investments in senior securities was approved as follows: 119,633,562 votes for, and 8,606,401 votes against, with 16,503,332 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to investments in securities of issuers in which management of the fund or Putnam Investment Management, Inc. owns securities was approved as follows: 115,706,000 votes for, and 12,717,833 votes against, with 16,319,462 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to margin transactions was approved as follows: 112,463,479 votes for, and 15,681,165 votes against, with 16,598,651 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to short sales was approved as follows: 111,866,372 votes for, and 16,292,243 votes against, with 16,584,680 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to pledging assets was approved as follows: 111,716,457 votes for, and 16,238,602 votes against, with 16,788,236 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to investments in restricted securities was approved as follows: 114,223,893 votes for, and 13,828,760 votes against, with 16,690,642 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to investments in certain oil, gas and mineral interests was approved as follows: 115,849,452 votes for, and 12,680,764 votes against, with 16,213,079 abstentions and broker non-votes. A proposal to eliminate the fund's fundamental investment restriction with respect to investing to gain control of a company's management was approved as follows: 116,343,767 votes for, and 11,965,918 votes against, with 16,433,610 abstentions and broker non-votes. All tabulations are rounded to nearest whole number. WELCOME TO www.putnaminv.com Now you can get up-to-date information about your funds, learn more about investing and retirement planning, and access market news and an economic outlook from Putnam experts -- with just a few clicks of the mouse! VISIT PUTNAM'S NEW SITE ON THE WORLD WIDE WEB TO FIND OUT: * the benefits of investing with Putnam * Putnam's money management philosophy * daily fund pricing and long-term fund performance * how to tell if your retirement savings plan is on track * how quickly money can accumulate in a tax-deferred investment You can also read Dr. Robert Goodman's economic commentary and Putnam's Capital Markets Forum outlook, search for a particular Putnam fund by name or objective . . . and much more. The site can be accessed through any of the major online services (America Online, CompuServe, Prodigy) that offer web access. Of course, you can also access it via Netscape and an independent Internet service provider. New features will be added to the site on an ongoing basis. So, visit us at http://www.putnaminv.com -- often! Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Ronald J. Jackson Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III 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 Ian C. Ferguson 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. [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - ---------------- Bulk Rate U.S. Postage PAID Putnam Investments - ---------------- AN013 - 35090 - 852/358/983/526 8/97 PUTNAM INVESTMENTS [SCALE LOGO] - ------------------------------------------------------------------------ Putnam New Opportunities Fund Supplement to Annual Report dated 6/30/97 The following information has been prepared to provide class Y shareholders with a performance overview specific to their holdings. Class Y shares are offered exclusively to defined contribution plans investing $250 million or more in one or more of Putnam's funds or private accounts. Performance of class Y shares, which incur neither a front-end load, distribution fee, nor contingent deferred sales charge, will differ from performance of class A, B, and M shares, which are discussed more extensively in the semiannual report. ANNUAL RESULTS AT A GLANCE - ------------------------------------------------------------------------ Total return: NAV One year ended 6/30/97 4.54% 5 years cum 225.54% annual average 26.63% Life of class (since 7/19/94) 471.42% Annual average 29.07% - ------------------------------------------------------------------------ Share value: NAV 6/30/96 $43.21 6/30/97 44.82 - ------------------------------------------------------------------------ Distributions: No. Income Capital gains Total 1 $0.0000 $0.3190 $0.3190 - ------------------------------------------------------------------------ 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 annual 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-----