-----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, MlX9z7f3Fj1EDpWqrPNvTi97rG4KhG3eS/3M7Mp1RV6dhpKG2TYgnHIr43+9BPBC AGJ1kLL92TObQWPBN2ts0w== 0000928816-98-000057.txt : 19980226 0000928816-98-000057.hdr.sgml : 19980226 ACCESSION NUMBER: 0000928816-98-000057 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19980225 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: SEC FILE NUMBER: 811-06128 FILM NUMBER: 98548991 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: A6 ZIP: 02109 BUSINESS PHONE: 6172921000 N-30D 1 PUTNAM NEW OPPORTUNITIES FUND Putnam New Opportunities Fund SEMIANNUAL REPORT December 31, 1997 [LOGO: BOSTON * LONDON * TOKYO] * "As we enter the second half of fiscal 1998, we realize that turmoil in Asian markets may continue to impact markets around the world for some time. We will carefully consider its impact and will seek to minimize the fund's risk in terms of exposure to Asian markets." -- Daniel L. Miller, manager Putnam New Opportunities Fund CONTENTS 4 Report from Putnam Management 10 Fund performance summary 14 Portfolio holdings 22 Financial statements From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] [copyright] Karsh, Ottawa Dear Shareholder: While Putnam New Opportunities Fund's performance during the first half of fiscal 1998 was positive in absolute terms, it fell somewhat short of the expectations of shareholders who had become accustomed to more vibrant results. For that reason, it is useful to issue a reminder that all sectors of the market do not move at the same pace. Over the past year or so, stocks of the small and midsize companies generally associated with above-average growth have actually been lagging the market as investors willingly paid a premium for the safety and liquidity of stocks of large, established companies. Events in Asia that touched off a worldwide disruption in equity markets only exacerbated the situation. Had your fund's managers yielded to the temptation to shift strategies in pursuit of gains available elsewhere, it could well affect their ability to position the fund to proper advantage when the market resumes a more traditional course. Seasoned investors can attest to the merits of patience at times like the present. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees February 18, 1998 Report from the Fund Managers Daniel L. Miller Carol C. McMullen When Putnam New Opportunities Fund entered its new fiscal year last July, we were looking forward to an improving investment climate -- one that would deliver better times for small and midsize companies and some respite from the market turbulence we had endured throughout fiscal 1997. We got half our wish; small- and midsize-company stocks rebounded, but market volatility has actually increased, masking much of the progress our holdings have made during the period. Perhaps the most notable event for U.S. investors was the historic stock market selloff on October 27, when the Dow Jones Industrial Average dropped 554 points, leaving the index 13% below its August high. The very next day, the Dow took a dramatic turn upward, soaring 337 points and marking its biggest single-day rally in history. By the close of the semiannual period on December 31, 1997, markets around the world were suffering as volatility escalated in Asian stock and currency markets. All things considered, we believe your fund has successfully weathered the recent turbulence while building a more diversified portfolio, thanks in part to a strategy that allows it to take advantage of growth opportunities from companies of all sizes. During the period, the fund's class A shares provided a total return of 11.97% at net asset value and 5.54% at public offering price. For complete performance information, please refer to the summary that begins on page 10. * MEDIA STOCKS REAP REWARDS OF NEW LEGISLATION The media sector of the fund's portfolio proved to be a buffer against market turbulence, delivering strong performance from many holdings. Although it was passed in 1996, legislation that loosened restrictions on broadcasters continued to benefit stocks in this sector throughout 1997. Passage of the Telecommunications Act of 1996 allowed for ownership of multiple radio and television stations, which boosted the value of many broadcasting companies poised for expansion. One beneficiary was Chancellor Media Corporation, which was formed in September with the merger of Chancellor Broadcasting and Evergreen Media Corporation -- both of which had previously been in your fund's portfolio. The new company owns and operates 99 radio stations in 21 of the nation's largest markets. Another outstanding performer was CBS Corporation, formerly Westinghouse Electric. Soon to be a pure broadcasting business, the company is better positioned to benefit from this rapidly growing sector. CBS has already profited from numerous radio acquisitions and continues to make improvements in other areas, such as television programming and the launch of new cable networks. Another advantage of stocks in the media sector is that they have minimal foreign exposure, which has proved beneficial during the recent Asian market turmoil. For similar reasons, outdoor advertising and communications services were also areas of strength. 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 9.4% Retail 8.2% Pharmaceuticals and biotechnology 6.9% Business services 6.8% Broadcasting 6.0% Footnote reads: *Based on net assets as of 12/31/97. Holdings will vary over time. * MERGER ACTIVITY CONTINUES TO BOOST COMMUNICATIONS SERVICES STOCKS Heavy merger and acquisition activity, such as we have seen in the communications services sector, often signifies a healthy, thriving industry to investors. The rising stock prices of long-distance communications companies and competitive local exchange carriers (CLECs) provide additional evidence that this sector is flourishing. CLECs are the smaller telephone companies that compete in local markets with larger providers, such as the Bell operating companies. As a result of the Telecommunications Act of 1996, CLECs are allowed to enter local markets on a much wider basis. CLEC stocks that have boosted the fund's portfolio include Tel-Save Holdings, Inc., Intermedia Communications, and Teleport Communications, which recently announced an agreement to merge with AT&T Corp. * TECHNOLOGY SECTOR'S STRENGTH DAMPENED BY MARKET VOLATILITY The fund's technology stocks were affected by ongoing market volatility to a much greater degree than either our media or communications holdings. On October 9, the NASDAQ Composite Index, an index with a heavy technology weighting, reached its 47th record high of 1997. However, technology stocks experienced their share of declines during the year, especially in late fall, when concerns escalated about the Asian financial crisis and its impact on companies that provide products to Asian markets. Even prior to the Asian crisis, the U.S. market was particularly unforgiving of the technology sector, and the stock prices of companies with even the slightest shortfall in earnings were punished harshly. While this environment has been a challenging one, we were pleased with the performance of many of the fund's technology holdings, notably Computer Associates, Compuware, and PeopleSoft, Inc. Computer Associates, a developer and marketer of computer software, has seen a skyrocketing demand for its products due to the resurgence of the mainframe computer. Despite recent troubles in Asia, the company is taking a long-term view, targeting India and China as key areas for the company's expansion. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS Cendant Corp. Consumer services Computer Associates Intl., Inc. Computer software CBS Corp. Broadcasting HEALTHSOUTH Corp. Health-care services HBO & Co. Health-care information services Clear Channel Communications, Inc. Broadcasting General Electric Co. Electronics and electrical equipment CVS Corp. Retail EMC Corp. Computer peripherals USA Waste Services, Inc. Environmental control Footnote reads: These holdings represent 18.3% of the fund's net assets as of 12/31/97. Portfolio holdings will vary over time. Compuware Corporation is a provider of software products and professional services that help information technology professionals efficiently develop, implement, and support the applications that run their businesses. Founded in 1973, Compuware today ranks as one of the largest independent software providers in the world. PeopleSoft went public in 1992 and has since developed a solid reputation as a designer and developer of application software products for large and midsize businesses. PeopleSoft has expanded its product line in recent years and demand for its services continues to grow. * LARGE-COMPANY STOCKS SHINE IN HEALTH-CARE SECTOR We have always focused a portion of the fund's resources on large- company stocks while maintaining its approach of targeting growth- oriented sectors of the economy and the strongest companies within those sectors. During 1997, the management team was expanded to ensure that the fund was able to maintain its focus on small-, midsize-, and large-company stocks as the fund's assets continue to grow. Your fund's exposure to large-company pharmaceutical stocks proved particularly valuable in the health-care sector during the semiannual period. The spiraling cost of health care and the pressures on providers to contain it represent an industry trend that has boosted the profitability of pharmaceutical companies. Since one of the most effective ways to keep medical costs down is to keep people out of the hospital, the ability to develop effective drugs with fewer side effects has become even more valuable. Successful pharmaceutical companies are being rewarded by the market to a much greater extent than they were a few years ago. One such thriving company in your fund's portfolio is Bristol-Myers Squibb. Since the merger of Bristol-Myers, originally a consumer products company, with Squibb Corporation in 1989, the company has become a world leader in most of its core businesses and has developed into a pharmaceutical powerhouse. The company's strongest growth potential comes from innovative products that are marketed in nearly every country in the world. Bristol-Myers Squibb's latest sign of success came in January, when it received clearance from the U.S. Food and Drug Administration to market a migraine medication called Excedrin Migraine. It will be the first migraine medication available to consumers without a prescription. Other than pharmaceuticals, the health-care sector was a mixed bag in terms of performance during the period. Although we were disappointed by stocks of HMOs and physician practice management companies, we remain optimistic about the health services industry. Demographics continue to favor every health-care sector as more and more members of the baby-boom generation reach 50, a trend that is expected to keep drugs, supplies, and services in strong demand. * MORE VOLATILITY LIKELY; CONTINUED FOCUS ON STOCK SELECTION As the second half of the fiscal year begins, we are anticipating more volatility in world markets. We remain cautiously optimistic about the U.S. economy and are in hopes that it will serve as a pillar of strength among world markets by continuing to offer moderate growth, low inflation, and low interest rates. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 12/31/97, 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 midsize 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 12/31/97 Class A Class B Class M (inception date) (8/31/90) (3/2/93) (12/1/94) NAV POP NAV CDSC NAV POP - -------------------------------------------------------------------- 6 months 11.97% 5.54% 11.54% 6.54% 11.69% 7.79% - -------------------------------------------------------------------- 1 year 22.52 15.48 21.59 16.59 21.91 17.64 - -------------------------------------------------------------------- 5 years 172.36 156.77 162.67 160.67 165.70 156.46 Annual average 22.19 20.76 21.31 21.12 21.58 20.73 - -------------------------------------------------------------------- Life of fund 534.85 498.41 499.96 499.96 510.16 488.67 Annual average 28.68 27.64 27.69 27.69 27.98 27.36 - -------------------------------------------------------------------- COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/97 S&P 500 Russell 2000 Consumer Index Index Price Index - -------------------------------------------------------------------- 6 months 10.58% 11.04% 0.62% - -------------------------------------------------------------------- 1 year 33.36 22.36 1.70 - -------------------------------------------------------------------- 5 years 151.62 113.70 13.67 Annual average 20.27 16.40 2.60 - -------------------------------------------------------------------- Life of fund 266.23 253.91 22.57 Annual average 19.36 18.81 2.81 - -------------------------------------------------------------------- Returns for class A and class M shares reflect the current maximum initial sales charges of 5.75% and 3.50%, respectively. Class B share returns for the 1-, 5-, and 10-year (where available) and life-of-fund periods reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declines 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 expenses 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. PRICE AND DISTRIBUTION INFORMATION 6 months ended 12/31/97 Class A Class B Class M - -------------------------------------------------------------------- Distributions (number) 1 1 1 - -------------------------------------------------------------------- Income -- -- -- - -------------------------------------------------------------------- Capital gains - -------------------------------------------------------------------- Long-term $1.09 $1.09 $1.09 - -------------------------------------------------------------------- Short-term -- -- -- - -------------------------------------------------------------------- Total $1.09 $1.09 $1.09 - -------------------------------------------------------------------- Share value: NAV POP NAV NAV POP - -------------------------------------------------------------------- 6/30/97 $44.47 $47.18 $43.08 $43.91 $45.50 - -------------------------------------------------------------------- 12/31/97 48.65 51.62 46.91 47.90 49.64 - -------------------------------------------------------------------- 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 charge and a higher 12b-1 fee than class A shares and no sales charge on redemption. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares, not including any initial or contingent deferred sales charge. Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the maximum 5.75% sales charge for class A shares and 3.50% for class M shares. Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of class B shares and assumes redemption at the end of the period. Your fund's CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. COMPARATIVE BENCHMARKS Russell 2000 Index is composed of the 2,000 smallest securities in the Russell 3000 Index, representing approximately 7% of the Russell 3000 total market capitalization. This index is widely regarded in the industry as the premiere measure of the small capitalization stock.* 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. PUTNAM GROWTH FUNDS Asia Pacific Growth Fund Capital Appreciation Fund Diversified Equity Trust Europe Growth Fund Global Growth Fund Global Natural Resources Fund Growth Opportunities Fund Health Sciences Trust International Growth Fund * International New Opportunities Fund Investors Fund New Opportunities Fund + OTC & Emerging Growth Fund [DBL. DAGGER] Vista Fund Voyager Fund Voyager Fund II PUTNAM GROWTH AND INCOME FUNDS Balanced Retirement Fund Convertible Income-Growth Trust Equity Income Fund The George Putnam Fund of Boston Global Growth and Income Fund The Putnam Fund for Growth and Income Growth and Income Fund II International Growth and Income Fund New Value Fund Utilities Growth and Income Fund PUTNAM INCOME FUNDS American Government Income Fund Diversified Income Trust Diversified Income Trust II Federal Income Trust Global Governmental Income Trust High Yield Advantage Fund + High Yield Total Return Fund High Yield Trust + Income Fund Money Market Fund ** Intermediate U.S. Government Income Fund Preferred Income Fund U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Municipal Income Fund Tax Exempt Income Fund Tax Exempt Money Market Fund** Tax-Free High Yield Fund Tax-Free Insured Fund State tax-free income funds [SECTION MARK] Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio and Pennsylvania State tax-free money market funds [SECTION MARK] California, New York LIFESTAGESM FUNDS Putnam Asset Allocation Funds--three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments. The three portfolios: Asset Allocation: Balanced Portfolio Asset Allocation: Conservative Portfolio Asset Allocation: Growth Portfolio * Formerly Overseas Growth Fund + Closed to new investors. Some exceptions may apply. Contact Putnam for details. [DBL. DAGGER] Formerly OTC Emerging Growth Fund [SECTION MARK] Not available in all states. ** An investment in a money market fund is neither insured nor guaranteed by the U.S. government. These funds are managed to maintain a price of $1.00 per share, although there is no assurance that this price will be maintained in the future. Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus for any Putnam fund. It contains more complete information, including charges and expenses. Please read it carefully before you invest or send money. Portfolio of investments owned December 31, 1997 (Unaudited)
COMMON STOCKS (97.4%) * NUMBER OF SHARES VALUE Advertising (1.4%) - ------------------------------------------------------------------------------------------------------------ 1,250,000 Lamar Advertising Co. + $ 49,687,500 3,390,000 Outdoor Systems, Inc. + 130,091,250 966,800 Universal Outdoor Holdings, Inc. + 50,273,600 --------------- 230,052,350 Agriculture (0.1%) - ------------------------------------------------------------------------------------------------------------ 653,333 Delta & Pine Land Co. 19,926,657 Apparel (0.5%) - ------------------------------------------------------------------------------------------------------------ 3,405,000 Wolverine World Wide, Inc. [SECTION MARK] 77,038,125 Automotive (0.5%) - ------------------------------------------------------------------------------------------------------------ 1,843,300 Avis Rent A Car, Inc. + [SECTION MARK] 58,870,394 490,000 Budget Group, Inc. (Japan) + 16,935,625 --------------- 75,806,019 Banks (1.6%) - ------------------------------------------------------------------------------------------------------------ 1,617,000 First Union Corp. 82,871,250 2,705,800 TCF Financial Corp. 91,828,088 1,217,500 Washington Mutual, Inc. 77,691,719 --------------- 252,391,057 Broadcasting (6.0%) - ------------------------------------------------------------------------------------------------------------ 10,774,400 CBS Corp. 317,171,400 2,044,565 Chancellor Media Corp. + 152,575,663 3,610,100 Clear Channel Communications, Inc. + 286,777,319 756,500 Emmis Broadcasting Corp. Class A + [SECTION MARK] 34,515,313 1,402,500 Sinclair Broadcast Group, Inc. Class A 65,391,563 900,000 Univision Communications, Inc. Class A + 62,831,250 1,425,000 Westwood One, Inc. + 52,903,125 --------------- 972,165,633 Building Products (0.1%) - ------------------------------------------------------------------------------------------------------------ 1,000,000 Barnett, Inc. + [SECTION MARK] 22,000,000 Business Services (6.8%) - ------------------------------------------------------------------------------------------------------------ 1,520,000 ABR Information Services, Inc. + [SECTION MARK] 36,290,000 3,133,700 Accustaff, Inc. + 72,075,100 1,700,000 Affiliated Computer Services, Inc. Class A + 44,731,250 3,351,500 Airgas, Inc. + 46,921,000 831,300 Applied Graphics Technologies, Inc. + 44,266,725 925,000 Caribiner Intl., Inc. + 41,162,500 1,820,000 Corestaff, Inc. + [SECTION MARK] 48,230,000 5,115,000 Corporate Express, Inc. + 65,855,625 1,970,000 Interim Services, Inc. + 50,973,750 865,000 Jabil Circuit, Inc. + 34,383,750 355,275 Labor Ready, Inc. + 6,839,044 2,641,500 Paychex, Inc. 133,725,938 1,425,000 PMT Services, Inc. + 19,771,875 29,000,000 Rentokil Group PLC (United Kingdom) 126,725,650 3,300,000 Robert Half International, Inc. + 132,000,000 475,000 Sanmina Corp. + 32,181,250 1,255,000 Select Appointments Holdings PLC ADR (United Kingdom) 22,903,750 1,543,000 Snyder Communications, Inc. + 56,319,500 3,325,000 Viking Office Products, Inc. + 72,526,563 --------------- 1,087,883,270 Computer Equipment (0.5%) - ------------------------------------------------------------------------------------------------------------ 1,466,300 Compaq Computer Corp. 82,754,306 Computer Peripherals (1.4%) - ------------------------------------------------------------------------------------------------------------ 8,484,700 EMC Corp. + 232,798,956 Computer Services (3.9%) - ------------------------------------------------------------------------------------------------------------ 2,480,000 America Online, Inc. + 221,185,000 1,750,000 Cambridge Technology Partners, Inc. + 72,843,750 685,000 Ciber, Inc. + 39,730,000 1,270,900 CheckFree Holding Corp. + 34,314,300 1,300,000 Computer Horizons Corp. + 59,150,000 1,000,000 Renaissance Worldwide, Inc. + 45,875,000 2,460,000 Sterling Commerce, Inc. + 94,556,250 380,800 Sapient Corp. + 23,324,000 1,285,000 Sykes Enterprises, Inc. + 25,057,500 536,100 Whittman-Hart, Inc. + 18,361,425 --------------- 634,397,225 Computer Software (9.4%) - ------------------------------------------------------------------------------------------------------------ 745,300 BMC Software, Inc. + 48,910,313 6,025,200 Cadence Design Systems, Inc. + 147,617,400 400,000 Citrix Systems, Inc. + 30,400,000 6,410,700 Computer Associates Intl., Inc. 338,965,763 2,980,000 Compuware Corp. + 95,360,000 375,000 Documentum, Inc. + 15,796,875 1,935,000 Electronic Arts, Inc. + 73,167,188 185,000 Lernout & Hauspie Speech Products N.V. (Belgium) + 8,602,500 1,168,400 Microsoft Corp. + 151,015,700 2,805,000 Parametric Technology Corp. + 132,886,875 3,594,000 PeopleSoft, Inc. + 140,166,000 1,179,100 Remedy Corp. + 24,761,100 1,928,200 Saville Systems Ireland PLC ADR (Ireland) + 80,020,300 2,132,600 Security Dynamics Technologies, Inc. + [SECTION MARK] 76,240,450 2,821,500 Synopsys, Inc. + 100,868,625 1,400,000 Vantive Corp. + [SECTION MARK] 35,350,000 393,600 Viasoft, Inc. + 16,629,600 --------------- 1,516,758,689 Conglomerates (0.9%) - ------------------------------------------------------------------------------------------------------------ 3,159,700 Tyco International Ltd. 142,383,981 Consumer Products (2.2%) - ------------------------------------------------------------------------------------------------------------ 1,031,300 Central Garden and Pet Co. + 27,071,625 1,714,100 Colgate-Palmolive Co. 125,986,350 1,719,300 Procter & Gamble Co. 137,221,631 2,085,800 Rexall Sundown, Inc. + 62,965,088 --------------- 353,244,694 Consumer Services (3.1%) - ------------------------------------------------------------------------------------------------------------ 14,286,524 Cendant Corp. + 491,099,263 Correctional Facilities (0.5%) - ------------------------------------------------------------------------------------------------------------ 1,965,000 Corrections Corp. + 72,827,813 Cosmetics (0.6%) - ------------------------------------------------------------------------------------------------------------ 1,740,000 Estee Lauder Cos. Class A 89,501,250 Education (0.3%) - ------------------------------------------------------------------------------------------------------------ 990,100 Apollo Group, Inc. Class A + 46,782,225 97,111 Sylvan Learning Systems, Inc. + 3,787,329 --------------- 50,569,554 Education Services (0.5%) - ------------------------------------------------------------------------------------------------------------ 1,082,400 CBT Group PLC ADR (Ireland) + 88,892,100 Electric Utilities (0.3%) - ------------------------------------------------------------------------------------------------------------ 1,724,000 Calenergy, Inc. + 49,565,000 Electronics and Electrical Equipment (2.4%) - ------------------------------------------------------------------------------------------------------------ 355,000 ASM Lithography Holding N.V. (Netherlands) + 23,962,500 1,020,000 Cognex Corp. + 27,795,000 3,229,500 General Electric Co. 236,964,563 925,500 Illinois Tool Works, Inc. 55,645,688 890,000 Microchip Technology, Inc. + 26,700,000 560,000 Uniphase Corp. + 23,170,000 --------------- 394,237,751 Energy-Related (0.7%) - ------------------------------------------------------------------------------------------------------------ 2,465,200 Thermo Electron Corp. + 109,701,400 Entertainment (0.7%) - ------------------------------------------------------------------------------------------------------------ 559,800 Disney (Walt) Productions, Inc. 55,455,188 1,006,500 Time Warner, Inc. 62,403,000 --------------- 117,858,188 Environmental Services (2.1%) - ------------------------------------------------------------------------------------------------------------ 461,700 Allied Waste Industries, Inc. + 10,763,381 5,308,300 Philip Services Corp. (Canada) + 76,306,813 535,400 U.S. Filter Corp. + 16,028,538 5,864,300 USA Waste Services, Inc. + 230,173,775 --------------- 333,272,507 Financial Services (3.4%) - ------------------------------------------------------------------------------------------------------------ 1,371,100 American Express Co. 122,370,675 2,388,000 Finova Group, Inc. 118,653,750 1,544,710 FIRSTPLUS Financial Group, Inc. + 59,278,246 3,988,750 MBNA Corp. 108,942,734 1,673,100 Morgan Stanley, Dean Witter, Discover and Co. 98,922,038 612,500 Sirrom Capital Corp. 31,926,563 --------------- 540,094,006 Food and Beverages (1.4%) - ------------------------------------------------------------------------------------------------------------ 3,171,900 Coca-Cola Enterprises, Inc. 112,800,694 3,014,400 PepsiCo, Inc. 109,837,200 --------------- 222,637,894 Funeral/Cemetery Services (1.6%) - ------------------------------------------------------------------------------------------------------------ 2,685,000 Service Corp. International 99,177,188 3,558,800 Stewart Enterprises, Inc. Class A [SECTION MARK] 165,929,050 --------------- 265,106,238 Health Care Information Systems (1.8%) - ------------------------------------------------------------------------------------------------------------ 6,015,500 HBO & Co. 288,744,000 Health Care Services (5.7%) - ------------------------------------------------------------------------------------------------------------ 1,325,500 Cardinal Health, Inc. 99,578,188 892,600 Carematrix Corp. + [SECTION MARK] 25,662,250 2,363,144 Concentra Managed Care, Inc. + [SECTION MARK] 79,756,110 10,536,200 HEALTHSOUTH Corp. + 292,379,550 915,000 Henry Schein, Inc. + 32,025,000 1,360,000 Lincare Holdings, Inc. + 77,520,000 450,000 NCS HealthCare, Inc. Class A + 11,868,750 2,748,300 Omnicare, Inc. 85,197,300 770,000 Parexel International Corp. + 28,490,000 2,200,000 Physician Sales & Service, Inc. + [SECTION MARK] 47,300,000 1,092,400 Quintiles Transnational Corp. + 41,784,300 1,410,000 Renal Treatment Centers, Inc. + [SECTION MARK] 50,936,250 1,558,333 Total Renal Care Holdings, Inc. + 42,854,167 --------------- 915,351,865 Hospital Management (1.3%) - ------------------------------------------------------------------------------------------------------------ 8,187,000 Health Management Assoc., Inc. + [SECTION MARK] 206,721,750 Insurance (0.9%) - ------------------------------------------------------------------------------------------------------------ 1,643,800 HCC Insurance Holdings, Inc. 34,930,750 1,952,300 Travelers Group, Inc. 105,180,136 --------------- 140,110,886 Leisure (0.2%) - ------------------------------------------------------------------------------------------------------------ 1,277,200 Signature Resorts, Inc. + 27,938,750 Lodging (2.3%) - ------------------------------------------------------------------------------------------------------------ 4,965,966 Extended Stay America, Inc. + [SECTION MARK] 61,764,202 1,570,500 Marriott International, Inc. 108,757,125 2,126,500 Prime Hospitality Corp. + 43,327,438 3,707,488 Promus Hotel Corp. + 155,714,475 --------------- 369,563,240 Medical Management Services (1.5%) - ------------------------------------------------------------------------------------------------------------ 5,685,000 MedPartners, Inc. + 127,201,875 997,900 Pediatrix Medical Group, Inc. + [SECTION MARK] 42,660,225 2,375,000 Phycor, Inc. + 64,125,000 --------------- 233,987,100 Medical Supplies and Devices (1.3%) - ------------------------------------------------------------------------------------------------------------ 2,603,300 Medtronic, Inc. 136,185,131 1,400,600 Sybron International Corp. + 65,740,663 --------------- 201,925,794 Networking Equipment (0.7%) - ------------------------------------------------------------------------------------------------------------ 1,883,850 Cisco Systems, Inc. + 105,024,638 Nursing Homes (1.0%) - ------------------------------------------------------------------------------------------------------------ 2,370,000 Genesis Health Ventures, Inc. + [SECTION MARK] 62,508,750 2,356,200 Health Care & Retirement Corp. + [SECTION MARK] 94,837,050 --------------- 157,345,800 Oil and Gas (1.1%) - ------------------------------------------------------------------------------------------------------------ 1,690,800 Halliburton Co. 87,815,925 1,048,000 Schlumberger Ltd. 84,364,000 --------------- 172,179,925 Pharmaceuticals and Biotechnology (6.9%) - ------------------------------------------------------------------------------------------------------------ 1,809,100 Bristol-Myers Squibb Co. 171,186,088 2,075,000 Dura Pharmaceuticals, Inc. + 95,190,625 4,100,000 Elan Corp. PLC ADR + 209,868,750 1,710,000 Gilead Sciences, Inc. + [SECTION MARK] 65,407,500 904,200 Jones Medical Industries, Inc. 34,585,650 2,475,100 Pfizer, Inc. 184,549,644 2,654,900 Schering-Plough Corp. 164,935,663 730,800 Transkaryotic Therapies, Inc. + 25,669,350 1,301,600 Warner-Lambert Co. 161,398,400 --------------- 1,112,791,670 Publishing (0.7%) - ------------------------------------------------------------------------------------------------------------ 1,881,200 Gannett Co., Inc. 116,281,675 REIT's (Real Estate Investment Trust) (0.1%) - ------------------------------------------------------------------------------------------------------------ 417,300 Starwood Lodging Trust 24,151,238 Restaurants (1.2%) - ------------------------------------------------------------------------------------------------------------ 10,797,160 J.D. Wetherspoon PLC (United Kingdom) 59,289,041 1,650,000 Landry's Seafood Restaurants, Inc. + [SECTION MARK] 39,600,000 2,010,800 Papa Johns International, Inc. + [SECTION MARK] 70,126,650 559,300 Starbucks Corp. + 21,463,138 --------------- 190,478,829 Retail (8.2%) - ------------------------------------------------------------------------------------------------------------ 1,644,400 AutoZone, Inc. + 47,687,600 3,784,800 Bed Bath & Beyond, Inc. + [SECTION MARK] 145,714,800 1,303,300 Borders Group, Inc. + 40,809,560 1,630,800 CompUSA, Inc. + 50,554,800 1,075,000 Consolidated Stores Corp. + 47,232,813 1,949,100 Costco Companies, Inc. + 86,978,588 3,635,300 CVS Corp. 232,886,406 4,622,900 Dixons Group PLC (United Kingdom) 46,577,520 637,500 Dollar Tree Stores, Inc. + 26,376,563 2,448,800 Home Depot, Inc. (The) 144,173,100 241,500 Kohls Corp. + 16,452,188 973,700 Nordstrom, Inc. 58,787,138 2,525,000 Office Depot, Inc. + 60,442,188 3,488,950 Officemax, Inc. + 49,717,538 1,624,600 Rite Aid Corp. 95,343,713 1,140,000 Stage Stores, Inc. + 42,607,500 3,319,200 Wal-Mart Stores, Inc. 130,900,950 --------------- 1,323,242,965 Semiconductors (3.2%) - ------------------------------------------------------------------------------------------------------------ 790,000 Altera Corp. + 26,168,750 3,125,000 Analog Devices, Inc. + 86,523,438 1,094,800 Credence Systems Corp. + [SECTION MARK] 32,433,450 540,000 Lattice Semiconductor Corp. + 25,582,500 1,940,000 Linear Technology Corp. 111,792,500 3,890,000 Maxim Integrated Products, Inc. + 134,205,000 177,800 Photronics, Inc. + 4,311,650 1,916,000 Texas Instruments, Inc. 86,220,000 --------------- 507,237,288 Telecommunication Equipment (2.7%) - ------------------------------------------------------------------------------------------------------------ 1,735,000 Aspect Telecommunications Corp. + 36,218,125 756,100 Northern Telecom Ltd. (Canada) 67,292,900 2,110,000 Panamsat Corp. + 90,993,750 1,830,200 P-Com, Inc. + 31,570,950 4,023,200 Tellabs, Inc. + 212,726,700 --------------- 438,802,425 Telephone Services (2.2%) - ------------------------------------------------------------------------------------------------------------ 954,400 Intermedia Communications, Inc. + [SECTION MARK] 57,979,800 852,200 McLeod, Inc. Class A + 27,270,400 142,400 Metromedia Fiber Network, Inc. Class A + 2,367,400 900,000 NEXTLINK Communications, Inc. Class A + 19,181,250 567,000 Qwest Communications International, Inc. + 33,736,500 634,100 RSL Communications, Ltd. Class A + 13,950,200 1,867,900 Sprint Corp. 109,505,638 920,000 Teleport Communications Group, Inc. Class A + 50,485,000 1,903,500 Tel-Save Holdings, Inc. + 37,832,063 --------------- 352,308,251 Transportation (--%) - ------------------------------------------------------------------------------------------------------------ 44,900 C.H. Robinson Worldwide, Inc. 1,004,638 Wireless Communications (1.5%) - ------------------------------------------------------------------------------------------------------------ 2,847,800 Airtouch Communications, Inc. + 118,361,688 1,400,000 Clearnet Communications, Inc. Class A, (Canada) + 15,925,000 4,330,100 NEXTEL Communications, Inc. Class A + 112,582,600 --------------- 246,869,288 --------------- Total Common Stocks (cost $11,534,076,168) $15,657,025,941 SHORT-TERM INVESTMENTS (3.6%) * PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------ $20,000,000 American Home Products Corp. effective yield of 5.74%, March 11, 1998 $ 19,779,967 24,000,000 Bellsouth Telecommunications, Inc. effective yield of 6.10%, January 9, 1998 23,967,467 30,000,000 Corporate Receivables Corp. effective yield of 5.71%, March 17, 1998 29,643,125 25,000,000 Credit Suisse First Boston effective yield of 5.71%, March 4, 1998 24,599,904 25,000,000 Delaware Funding Corp. effective yield of 5.62%, January 16, 1998 24,941,458 25,000,000 Deutsche Bank Financial, Inc. effective yield of 5.69%, January 20, 1998 24,924,924 25,000,000 Falcon Asset Securitization Corp. effective yield of 6.05%, February 5, 1998 24,852,951 25,000,000 Fed Home Loan Mortgage Corp. effective yield of 5.64%, February 20, 1998 24,804,167 25,000,000 Federal National Mortgage Association effective yield of 5.62%, March 12, 1998 24,726,806 50,000,000 Federal National Mortgage Association effective yield of 5.59%, March 24, 1998 49,363,311 26,596,000 Federal National Mortgage Association effective yield of 5.58%, March 12, 1998 26,307,433 25,000,000 Ford Motor Co. S.A. De C.V. effective yield of 5.72%, March 23, 1998 24,678,250 25,000,000 General Electric Capital Corp. effective yield of 5 3/4%, February 23, 1998 24,788,368 25,000,000 General Electric Capital Corp. effective yield of 5.62%, January 14, 1998 24,949,264 25,000,000 Merrill Lynch & Co., Inc. effective yield of 5.7%, March 25, 1998 24,671,458 25,000,000 Metlife Funding, Inc. effective yield of 5 3/4%, February 13, 1998 24,828,299 25,000,000 Morgan (J.P.) & Co., Inc. effective yield of 5.67%, April 17, 1998 24,598,375 25,000,000 National Rural Utilities Cooperative Finance Corp. effective yield of 5.6%, April, 21, 1998 24,572,222 25,000,000 Sheffield Receivables Corp. effective yield of 5 3/4%, January 13, 1998 24,952,083 82,560,000 Interest in $509,463,000 joint repurchase agreement dated December 31, 1997 with SBC Warburg due January 2, 1998 with respect to various U.S. Treasury obligations -- maturity value of $82,589,813 for an effective yield of 6.50% 82,574,907 --------------- Total Short-Term Investments (cost $578,524,739) $ 578,524,739 - ------------------------------------------------------------------------------------------------------------ Total Investments (cost $12,112,600,907) *** $16,235,550,680 - ------------------------------------------------------------------------------------------------------------ * Percentages indicated are based on net assets of $16,079,467,574. *** The aggregate identified cost on a tax basis is $12,136,588,202, resulting in gross unrealized appreciation and depreciation of $4,453,556,677 and $354,594,199, respectively, or net unrealized appreciation of $4,098,962,478. + 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 December 31, 1997 (Unaudited) Assets - -------------------------------------------------------------------------------------------------- Investments in securities at value (identified cost $12,112,600,907) (Note 1) $16,235,550,680 - -------------------------------------------------------------------------------------------------- Cash 17,146,156 - -------------------------------------------------------------------------------------------------- Dividends, interest and other receivables 6,428,615 - -------------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 18,110,612 - -------------------------------------------------------------------------------------------------- Receivable for securities sold 36,591,094 - -------------------------------------------------------------------------------------------------- Total assets 16,313,827,157 Liabilities - -------------------------------------------------------------------------------------------------- Distributions payable to shareholders 64,081 - -------------------------------------------------------------------------------------------------- Payable for securities purchased 166,980,392 - -------------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 29,717,265 - -------------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 19,632,321 - -------------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 4,958,362 - -------------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 140,378 - -------------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 14,836 - -------------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 11,666,825 - -------------------------------------------------------------------------------------------------- Other accrued expenses 1,185,123 - -------------------------------------------------------------------------------------------------- Total liabilities 234,359,583 - -------------------------------------------------------------------------------------------------- Net assets $16,079,467,574 Represented by - -------------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $11,881,591,367 - -------------------------------------------------------------------------------------------------- Accumulated net investment loss (Note 1) (61,049,177) - -------------------------------------------------------------------------------------------------- Accumulated net realized gain on investments and foreign currency transactions (Note 1) 135,974,407 - -------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 4,122,950,977 - -------------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $16,079,467,574 Computation of net asset value and offering price - -------------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($8,447,510,765 divided by 173,650,079 shares) $48.65 - -------------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $48.65)* $51.62 - -------------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($6,926,294,810 divided by 147,639,115 shares)** $46.91 - -------------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($380,302,161 divided by 7,939,356 shares) $47.90 - -------------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $47.90)* $49.64 - -------------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($325,359,838 divided by 6,627,245 shares) $49.09 - -------------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
Statement of operations Six months ended December 31, 1997 (Unaudited) Investment income: - -------------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $252,906) (including dividend income of $653,099 from investments in affiliated issuers) (Note 5) $ 31,721,276 - -------------------------------------------------------------------------------------------------- Interest 10,830,494 - -------------------------------------------------------------------------------------------------- Total investment income 42,551,770 - -------------------------------------------------------------------------------------------------- Expenses: - -------------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 38,627,450 - -------------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 17,092,548 - -------------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 133,513 - -------------------------------------------------------------------------------------------------- Administrative services (Note 2) 29,503 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 10,232,279 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 34,285,548 - -------------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 1,396,408 - -------------------------------------------------------------------------------------------------- Reports to shareholders 1,203,166 - -------------------------------------------------------------------------------------------------- Registration fees 150,387 - -------------------------------------------------------------------------------------------------- Auditing 68,983 - -------------------------------------------------------------------------------------------------- Legal 57,053 - -------------------------------------------------------------------------------------------------- Postage 773,110 - -------------------------------------------------------------------------------------------------- Other 1,198,682 - -------------------------------------------------------------------------------------------------- Total expenses 105,248,630 - -------------------------------------------------------------------------------------------------- Expense reduction (Note 2) (1,676,745) - -------------------------------------------------------------------------------------------------- Net expenses 103,571,885 - -------------------------------------------------------------------------------------------------- Net investment loss (61,020,115) - -------------------------------------------------------------------------------------------------- Net realized gain on investments (including realized gain of $109,446,263 on sales of investments in affiliated issuers) (Notes 1, 3 and 5) 772,189,997 - -------------------------------------------------------------------------------------------------- Net unrealized depreciation of assets and liabilities in foreign currencies during the year (227) - -------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments during the period 976,430,413 - -------------------------------------------------------------------------------------------------- Net gain on investments 1,748,620,183 - -------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $1,687,600,068 - -------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Six months ended Year ended December 31 June 30 1997* 1997 - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- Increase in net assets - ---------------------------------------------------------------------------------------------------------------------- Operations: - ---------------------------------------------------------------------------------------------------------------------- Net investment loss $ (61,020,115) $ (97,001,492) - ---------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions 772,189,997 (262,297,350) - ---------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 976,430,186 1,063,188,318 - ---------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 1,687,600,068 703,889,476 - ---------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - ---------------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (185,202,878) (37,775,305) - ---------------------------------------------------------------------------------------------------------------------- Class B (157,607,099) (35,446,992) - ---------------------------------------------------------------------------------------------------------------------- Class M (8,456,807) (1,848,838) - ---------------------------------------------------------------------------------------------------------------------- Class Y (7,008,141) (976,630) - ---------------------------------------------------------------------------------------------------------------------- In excess of realized gain 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) 417,410,194 4,383,952,454 - ---------------------------------------------------------------------------------------------------------------------- Total increase in net assets 1,746,735,337 4,996,115,103 Net assets - ---------------------------------------------------------------------------------------------------------------------- Beginning of period 14,332,732,237 9,336,617,134 - ---------------------------------------------------------------------------------------------------------------------- End of period (including accumulated net investment loss of $61,049,177 and $29,062, respectively) $16,079,467,574 $14,332,732,237 - ---------------------------------------------------------------------------------------------------------------------- *Unaudited The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) CLASS A - ------------------------------------------------------------------------------------------------------------------------------------ Six months ended Per-share December 31 operating performance (Unaudited) Year ended June 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1997 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $44.47 $42.99 $29.58 $21.88 $20.83 $14.50 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment loss (.11) (.20)(c) (.21)(c) (.12) (.06) (.12) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 5.38 2.00 13.62 8.02 1.56 6.77 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 5.27 1.80 13.41 7.90 1.50 6.65 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (1.09) (.26) -- (.15) (.45) (.32) - ------------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gains -- (.06) -- (.04) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Return of capital -- -- -- (.01) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (1.09) (.32) -- (.20) (.45) (.32) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $48.65 $44.47 $42.99 $29.58 $21.88 $20.83 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 11.97* 4.26 45.34 36.36 7.00 46.12 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $8,447,511 $7,381,624 $4,752,611 $1,341,877 $648,787 $318,426 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .51* 1.06 1.11 1.13 1.23 1.31 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.22)* (.48) (.54) (.55) (.82) (.98) - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 37.20* 66.74 36.61 56.99 52.76 93.59 - ------------------------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) $.0483 $.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 - ------------------------------------------------------------------------------------------------------------------------------------ Six months ended For the period Per-share December 31 March 1,1993+ operating performance (Unaudited) Year ended June 30 to June 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1997 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $43.08 $41.96 $29.09 $21.68 $20.80 $17.76 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment loss (.28) (.49)(c) (.48)(c) (.23) (.11) (.05) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 5.20 1.93 13.35 7.84 1.44 3.09 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 4.92 1.44 12.87 7.61 1.33 3.04 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (1.09) (.26) -- (.15) (.45) -- - ------------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gains -- (.06) -- (.04) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Return of capital -- -- -- (.01) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (1.09) (.32) -- (.20) (.45) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $46.91 $43.08 $41.96 $29.09 $21.68 $20.80 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 11.54* 3.50 44.24 35.34 6.18 17.12* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $6,926,295 $6,359,447 $4,254,962 $1,013,379 $333,738 $15,698 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .88* 1.81 1.87 1.87 2.04 .67* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.60)* (1.23) (1.30) (1.30) (1.55) (.57)* - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 37.20* 66.74 36.61 56.99 52.76 93.59 - ------------------------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) $.0483 $.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 - ------------------------------------------------------------------------------------------------------------------------------------ Six months ended For the period Per-share December 31 Dec. 1,1994+ operating performance (Unaudited) Year ended June 30 to June 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1997 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $43.91 $42.66 $29.51 $24.72 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment loss (.22) (.40)(c) (.40)(c) (.05) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 5.30 1.97 13.55 5.04 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 5.08 1.57 13.15 4.99 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (1.09) (.26) -- (.15) - ------------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gains -- (.06) -- (.04) - ------------------------------------------------------------------------------------------------------------------------------------ Return of capital -- -- -- (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (1.09) (.32) -- (.20) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $47.90 $43.91 $42.66 $29.51 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 11.69* 3.75 44.56 20.40* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $380,302 $337,535 $210,404 $16,011 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .76* 1.56 1.64 .94 * - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.47)* (.98) (1.06) (.53)* - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 37.20* 66.74 36.61 56.99 - ------------------------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) $.0483 $.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 - ------------------------------------------------------------------------------------------------------------------------------------ Six months ended For the period Per-share December 31 July 19,1994+ operating performance (Unaudited) Year ended June 30 to June 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1997 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $44.82 $43.21 $29.66 $22.59 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment loss (.05)(c) (.09)(c) (.11)(c) (.04) - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 5.41 2.02 13.66 7.31 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 5.36 1.93 13.55 7.27 - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net realized gain on investments (1.09) (.26) -- (.15) - ------------------------------------------------------------------------------------------------------------------------------------ In excess of net realized gains -- (.06) -- (.04) - ------------------------------------------------------------------------------------------------------------------------------------ Return of capital -- -- -- (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (1.09) (.32) -- (.20) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $49.09 $44.82 $43.21 $29.66 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 12.07* 4.54 45.68 32.42* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $325,360 $254,126 $118,640 $24,538 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .38* .81 .86 .83* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment loss to average net assets (%) (.10)* (.23) (.29) (.26)* - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 37.20* 66.74 36.61 56.99 - ------------------------------------------------------------------------------------------------------------------------------------ Average commission rate paid (d) $.0483 $.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 December 31, 1997 (Unaudited) Note 1 Significant accounting policies Putnam New Opportunities Fund ("the fund") is registered under the Investment Company Act of 1940, as amended, as a diversified open- end management investment company. The fund seeks capital appreciation by investing principally in common stocks of companies in sectors of the economy which, in the 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. 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 are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class M shares are sold with a maximum front end sales charge of 3.50% and pay an ongoing distribution fee that is higher than class A shares but lower than class B shares. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A shares , class B, and class M shares, but do not bear a distribution fee. Class Y shares are sold to defined contribution plans that invest at least $250 million in a combination of Putnam Funds and other accounts managed by affiliates of Putnam Management. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if that fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares. The following is a summary of significant accounting policies 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 gains and losses 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) Line of credit The fund has entered into a committed line of credit with certain banks. This line of credit agreement includes restrictions that the fund maintain an asset coverage ratio of at least 300% and borrowings must not exceed prospectus limitations. For the six months ended December 31, 1997, the fund had no borrowings against the line of credit. G) 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. H) 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. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. Note 2 Management fee, administrative services and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, 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% thereafter. The fund reimburses Putnam Management an allocated amount 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 subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the six months ended December 31, 1997, fund expenses were reduced by $1,676,745 under expense offset arrangements with PFTC and brokerage 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. Each Trustee of the fund receives an annual Trustee fee, of which $12,910 has been allocated to the fund, 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 has adopted a Trustee Fee Deferral Plan (the "Deferral 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 are invested in certain Putnam funds until distribution in accordance with the Deferral 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 currently limit payment by the fund to an annual rate of 0.25%, 1.00% and 0.75% of the average net assets attributable to class A, class B and class M shares respectively. For the six months ended December 31, 1997, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $911,330 and $41,651 from the sale of class A and class M shares, respectively and $5,630,907 in contingent deferred sales charges from redemptions of class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the six months ended December 31, 1997, Putnam Mutual Funds Corp., acting as underwriter received $128,995 on class A redemptions. Note 3 Purchases and sales of securities During the six months ended December 31, 1997, purchases and sales of investment securities other than short-term investments aggregated $5,812,387,557 and $5,610,184,177, respectively. There were no purchases and sales of U.S. government obligations. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At December 31, 1997, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Six months ended December 31, 1997 - ------------------------------------------------------------ Class A Shares Amount - ------------------------------------------------------------ Shares sold 21,102,823 $1,014,165,110 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 3,792,795 176,061,365 - ------------------------------------------------------------ 24,895,618 1,190,226,475 Shares repurchased (17,243,051) (826,955,836) - ------------------------------------------------------------ Net increase 7,652,567 $363,270,639 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Six months ended December 31, 1997 - ------------------------------------------------------------ Class B Shares Amount - ------------------------------------------------------------ Shares sold 5,757,564 $266,916,055 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 3,063,932 137,202,778 - ------------------------------------------------------------ 8,821,496 404,118,833 Shares repurchased (8,792,603) (407,716,681) - ------------------------------------------------------------ Net increase (decrease) 28,893 $(3,597,848) - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Six months ended December 31, 1997 - ------------------------------------------------------------ Class M Shares Amount - ------------------------------------------------------------ Shares sold 966,941 $45,634,167 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 165,574 7,570,044 - ------------------------------------------------------------ 1,132,515 53,204,211 Shares repurchased (880,357) (41,718,846) - ------------------------------------------------------------ Net increase 252,158 $11,485,365 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ Six months ended December 31, 1997 - ------------------------------------------------------------ Class Y Shares Amount - ------------------------------------------------------------ Shares sold 1,611,294 $78,221,618 - ------------------------------------------------------------ Shares issued in connection with reinvestment of distributions 149,625 7,008,141 - ------------------------------------------------------------ 1,760,919 85,229,759 Shares repurchased (804,091) (38,977,721) - ------------------------------------------------------------ Net increase 956,828 $46,252,038 - ------------------------------------------------------------ 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 - ------------------------------------------------------------ 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:
Purchase Sales Dividend Market Name of Affiliate cost cost Income Value - ------------------------------------------------------------------------------------------------------------- ABR Information Services, Inc. $ 6,755,294 $ -- $ -- $ 36,290,000 Affiliated Computer Services Class A -- -- -- 44,731,250 Airgas, Inc. -- 3,945,080 -- 46,921,000 Applebees Intl., Inc. -- 43,041,975 -- -- Avis Rent A Car, Inc. 49,345,489 -- -- 58,870,394 Barnett, Inc. -- 80,302,564 368,590 22,000,000 Bed Bath & Beyond, Inc. -- 1,984,565 -- 145,714,800 Carematrix Corp. -- -- -- 25,662,250 Chancellor Media Corp. Class A 6,255,398 -- -- 152,575,663 Clearnet Communications, Inc. Class A, (Canada) -- -- -- 15,925,000 Computer Horizons Corp. -- 25,389,137 -- 59,150,000 Concentra Managed Care, Inc. 63,484,092 6,527,599 -- 79,756,110 Corestaff, Inc. 5,770,225 1,846,984 -- 48,230,000 Credence Systems Corp. -- -- -- 32,433,450 CRA Managed Care, Inc. -- 30,884,281 -- -- Doubletree Corp. -- 57,721,125 -- -- Emcare Holdings, Inc. -- 15,701,621 -- -- Emmis Broadcasting Corp. Class A -- 11,685,499 -- 34,515,313 Extended Stay America, Inc. -- -- -- 61,764,202 Genesis Health Ventures, Inc. 5,344,607 -- -- 62,508,750 Gilead Sciences, Inc. 5,043,295 5,804,555 -- 65,407,500 Health Care & Retirement Corp. -- 1,217,380 -- 94,837,050 Health Management Assoc., Inc. -- 1,493,180 -- 206,721,750 Inso Corp. -- 35,559,742 -- -- Interim Services, Inc. -- -- -- 50,973,750 Intermedia Communications, Inc. -- 1,690,210 -- 57,979,800 Jones Medical Industries, Inc. -- 23,963,804 -- 34,585,650 Labor Ready, Inc. -- 9,530,374 -- 6,839,044 Landry's Seafood Restaurants -- -- -- 39,600,000 Occusystems, Inc. -- 32,599,811 -- -- Papa Johns International, Inc. 6,496,438 -- -- 70,126,650 Pediatrix Medical Group, Inc. -- 2,031,222 -- 42,660,225 Physician Sales & Services, Inc. -- -- -- 47,300,000 Prime Hospitality Corp. -- 447,370 -- 43,327,438 Renal Treatment Centers, Inc. -- -- -- 50,936,250 Security Dynamics Technologies, Inc. 14,066,779 -- -- 76,240,450 SFX Broadcasting, Inc. Class A -- 14,069,779 -- -- Stewart Enterprises, Inc. Class A 6,161,194 -- 136,732 165,929,050 Sunrise Assisted Living, Inc. -- 26,229,448 -- -- Tel-Save Holdings, Inc. -- 25,300,407 -- 37,832,063 Vantive Corp. -- -- -- 35,350,000 Wolverine World Wide, Inc. 11,844,148 -- 147,777 77,038,125 Young Broadcasting Corp. Class A -- 24,203,188 -- -- - ------------------------------------------------------------------------------------------------------------- Totals $180,566,959 $483,170,900 $653,099 $2,130,732,977 - -------------------------------------------------------------------------------------------------------------
Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Ronald J. Jackson Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Thomas Stephens 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 John J. Morgan, Jr. 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 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 the 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 - -------------------- SA013-36892-852/358/983/526 2/98 PUTNAM INVESTMENTS [SCALE LOGO OMITTED] - --------------------------------------------------------------------------- Putnam New Opportunities Fund Supplement to semiannual report dated12/31/97 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. SEMIANNUAL RESULTS AT A GLANCE - --------------------------------------------------------------------------- Total return: NAV Six months ended 12/31/97 12.08% One year ended 12/31/97 22.82 Annual average (since Class A inception, 8/31/90) 28.81 - --------------------------------------------------------------------------- Share value: NAV 6/30/97 $44.82 12/31/97 $49.09 - --------------------------------------------------------------------------- Distributions: No. Income Capital gains Total 0 $0.0000 $1.09 $1.09 - --------------------------------------------------------------------------- Class Y shares are offered without an initial sales charge or CDSC. The class Y share returns shown for periods before their inception (7/19/94) are derived from the historical performance of class A shares for such periods, but have not been adjusted to reflect differences in expenses, which are lower for class Y shares than for class A shares. All returns assume reinvestment of distributions at NAV and represent past performance; they do not guarantee future results. Investment return will fluctuate and may involve the loss of principal. Performance of other share classes will vary. See full report for information on comparative benchmarks. If you have questions, please consult your fund prospectus or call Putnam toll free at 1-800-752-9894. -----END PRIVACY-ENHANCED MESSAGE-----