-----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, BQ81aMzS34ULm5yKUfP5f0oRdIoL4E50hw5VIu1Y3DAqwozwuZ4QLHb5cHqEa0gF hD+I+Gb/VfxE6XgX+WBKeg== 0000928816-99-000257.txt : 19990820 0000928816-99-000257.hdr.sgml : 19990820 ACCESSION NUMBER: 0000928816-99-000257 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990819 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: 99695982 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: A6 ZIP: 02109 BUSINESS PHONE: 6172921000 N-30D 1 PUTNAM NEW OPPORTUNITIES FUND Putnam New Opportunities Fund ANNUAL REPORT ON PERFORMANCE AND OUTLOOK 6-30-99 [LOGO: BOSTON * LONDON * TOKYO] From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] [copyright] Karsh, Ottawa Dear Shareholder: Discussion of the innovative and dynamic companies that make up Putnam New Opportunities Fund's portfolio always makes for compelling reading, and those covered in this report for fiscal 1999 are no exception. These are the companies on the leading edge of their industries, the companies that are seeking the next breakthrough or have already begun to exploit it. Many are involved with the exciting new technologies associated with electronic communications -- the Internet, telecommunications, and the like. Others are finding innovative ways to thrive in more traditional industries. Identifying the most promising of these companies is a challenging task, for many that push the boundaries of their fields are destined to fall by the wayside. While it is impossible to build a portfolio comprising only winners, your fund's managers, backed by one of the most extensive equity research capabilities in our industry, are at a distinct advantage. I am pleased to announce the appointment of Kenneth W. Lang to the management team shortly after the close of the fiscal year. Before joining Putnam in 1997, Ken was with Montgomery Securities and Morgan Stanley. He has 9 years of investment experience. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees August 18, 1999 Report from the Fund Managers Daniel L. Miller Jeffrey R. Lindsey Like much of the rest of the world, Putnam New Opportunities Fund was profoundly influenced by technology -- and especially the Internet -- during the 12 months ended June 30, 1999. An insatiable appetite for advanced technology from businesses and consumers helped boost performance throughout the portfolio and led to solid returns for your fund's ninth fiscal year. In the financial markets, several shifts occurred during the period, which began on a volatile note with last summer's worldwide turbulence. Although U.S. markets had recovered by the fiscal year's midpoint, a small group of large-company growth stocks continued to outperform all other types of investments. Toward the end of the period, however, stocks of small and midsize companies began to show signs of improvement, finally pulling away from the shadow of large-company stocks. In these changing conditions, your fund's ability to invest in companies of all sizes proved beneficial, and we're happy to report on a number of strong performing small, midsize, and large companies throughout the portfolio. Total return for 12 months ended 6/30/99 Class A Class B Class M NAV POP NAV CDSC NAV POP - ---------------------------------------------------------------- 17.81% 11.04% 17.01% 12.01% 17.19% 13.10% - ---------------------------------------------------------------- Past performance is no indication of future results. Performance information for longer periods begins on page 6. * INTERNET FUELS PERFORMANCE OF SEVERAL HOLDINGS The explosive growth in Internet use has propelled companies in the fund's portfolio, including many that play behind-the-scenes roles in Internet commerce. VeriSign, Inc., whose stock has risen nearly 500% since last October, is one example. VeriSign provides services that allow businesses and individuals to conduct secure transactions online. The company provides digital IDs that allow Internet sites to safeguard information, such as credit-card numbers that are transmitted online. The digital ID from VeriSign has become recognized by Web users as a sign that a site is legitimate. VeriSign has worked with government agencies and large firms, such as Visa, Microsoft, and Morgan Stanley Dean Witter, and has become the dominant player in this market. [GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS] TOP INDUSTRY SECTORS* Telecommunication services 13.2% Retail 10.4% Broadcasting 8.2% Networking and telecommunication equipment 7.8% Electronics and electrical equipment 7.2% Footnote reads: *Based on net assets as of 6/30/99. Holdings will vary over time. [GRAPHIC OMITTED: TOP 10 HOLDINGS] TOP 10 HOLDINGS Clear Channel Communications, Inc. Broadcasting American Telephone & Telegraph Corp. Telecommunication services Microsoft Corp. Computer software General Electric Co. Electronics and electrical equipment Costco Companies, Inc. Retail Tyco International Ltd. Conglomerate QUALCOMM, Inc. Networking and telecommunication equipment Lucent Technologies, Inc. Networking and telecommunication equipment CBS Corp. Broadcasting Outdoor Systems, Inc. Advertising Footnote reads: These holdings represent 19.1% of the fund's net assets as of 6/30/99. Portfolio holdings will vary over time. Critical Path, Inc. is another company that has benefited from businesses' reliance on electronic communications. The company provides e-mail hosting services that allow organizations and Internet service providers to reduce costs and improve customer service by outsourcing their e-mail systems. While these holdings, along with others discussed in this report, were viewed favorably at the end of the fiscal period, all holdings are subject to review and adjustment in accordance with the fund's investment strategy and may vary in the future. * TRADITIONAL MEDIA ALSO BENEFIT FROM INTERNET Also reaping the rewards of Internet growth are media companies that allow Internet companies to advertise through traditional methods. Internet companies looking to build brand recognition are turning to billboards, radio, and television. Stocks in the portfolio that have benefited include Infinity Broadcasting, which operates 160 radio stations serving 34 U.S. markets; Clear Channel Communications, which operates 206 radio and 18 TV stations; and media giant CBS Corp. In addition, the stock of Outdoor Systems, a billboard advertising company, was an outstanding performer during the period. The fund's portfolio also includes the most obvious beneficiaries of Internet growth -- the Internet companies themselves. One example is VerticalNet, Inc., which was founded in 1995 and operates 41 online "communities" that provide business-to-business news, information, and discussion forums. Each VerticalNet community is focused on a specific business or industry and caters to individuals with similar professional interests. Examples of VerticalNet communities include solidwaste.com, foodservicecentral.com, and fiberopticsonline.com. Professionals from across the globe visit the sites to exhange ideas, search for career opportunities, and monitor industry events. The site attracts nearly 2 million visitors per month, including buyers and sellers who do business online. * TELECOMMUNICATIONS SECTOR CONTINUES RAPID GROWTH Another sector showing substantial growth during the fiscal year was communications services. Among the larger companies in the portfolio was MCI WorldCom, Inc., the second-largest long-distance company in the United States. MCI provides telecommunications services to businesses, governments, and consumers from a network of fiber-optic cables and digital microwave and satellite stations. The company was formed in 1997 in one of the largest corporate mergers in history -- the $43 billion acquisition of MCI Communications Corp. by WorldCom, Inc. Despite intense competition, MCI WorldCom remains well positioned, offering competitive products and services such as its local-to-global-to-local networks, which connect directly to customer homes and businesses instead of relying on local phone company networks to transmit phone calls. The company recently acquired paging company SkyTel Communications, a move that will allow it to expand to wireless messaging and data services. Fund performance was also boosted by NextLink Communications, Inc., one of the fastest-growing providers of competitive telecommunications services in the United States. Nextlink has evolved into a rapidly growing broadband communications services company, adding new customers and launching in new markets every quarter. Nextlink recently announced that it would team with Microsoft and Westbank Projects Corporation of Vancouver to create a state-of-the-art technology environment in a new commercial office, retail, hotel, and residential development in the state of Washington. "The explosive growth in technology has been a pervasive theme for every sector of the fund's portfolio. It has benefited companies of all sizes, from Internet firms and semiconductor companies to businesses that provide technological infrastructure and equipment. It has even contributed to the success of more traditional businesses such as broadcasting, advertising, and outsourcing." - -- Daniel L. Miller, manager Putnam New Opportunities Fund Growing hand in hand with the telecommunications business are companies that provide equipment to transmit growing amounts of data at faster speeds. As the former equipment arm of AT&T Corp., fund holding Lucent Technologies has a solid position in the telephone equipment market and is becoming an increasingly powerful player in the data and Internet markets. Lucent continues to see strong demand across all its business segments and is expected to benefit substantially as telecommunications companies seek to upgrade their networks to handle increased demands for data services. Lucent recently teamed up with wireless carrier Winstar Communications -- another strong performing fund holding -- to market high-speed wireless service to corporate customers. Under the deal, Lucent will provide the equipment for customers to access Winstar's network, which offers high-speed service for voice, data, and Internet connections. Continued strength in the U.S. economy and rising consumer confidence provided a significant boost for retail stocks throughout the period. In 1998, consumer spending rose at its fastest pace in 14 years and a surge in early income tax refunds and home mortgage refinancing has put more disposable income into consumer pockets. This environment helped stocks such as discount retailing giant Wal-Mart Stores, Inc. Known for extraordinary customer service and creative in-store promotions, Wal-Mart has experienced rapid growth and has crushed competitors on a regular basis. Wal-Mart's entry into food retailing presents enormous growth potential. While its Supercenters combine groceries with other retail departments, the company is also experimenting with Wal-Mart Neighborhood Markets, which would compete more directly with local grocers. A highlight from the fund's smaller retail holdings was The TJX Companies, Inc., which has had great success with its multiple retail concepts. The company operates off-price apparel and home fashions retail stores, including T.J. Maxx Stores, Marshalls Stores, and Winners Apparel Ltd. Stores. * VOLATILITY, CONTINUED BROADENING POSSIBLE FOR FISCAL 2000 In the closing months of the fiscal year, stocks of small and midsize companies finally began to show signs of improvement. While it may be too soon to determine whether this change represents a long-term shift in investor sentiment, we are optimistic in our outlook for the smaller, more aggressively postured companies in the portfolio. However, with the U.S. markets at record levels, we recognize that volatility is possible in the coming fiscal year, and we will be watching for signs of inflation or accelerated economic growth that could affect the interest-rate outlook and the valuation level of the portfolio. The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 6/30/99, there is no guarantee the fund will continue to hold these securities in the future. This fund invests all or a portion of its assets in small or 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 6/30/99 Class A Class B Class M (inception dates) (8/31/90) (3/1/93) (12/1/94) NAV POP NAV CDSC NAV POP - ------------------------------------------------------------------------- 1 year 17.81% 11.04% 17.01% 12.01% 17.19% 13.10% - ------------------------------------------------------------------------- 5 years 223.14 204.61 211.56 209.56 215.10 204.01 Annual average 26.44 24.95 25.52 25.36 25.80 24.90 - ------------------------------------------------------------------------- Life of fund 786.75 735.85 729.35 729.35 745.65 715.86 Annual average 28.04 27.18 27.07 27.07 27.35 26.84 - ------------------------------------------------------------------------- COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/99 Russell Russell Midcap 2000 Consumer Growth Index Index price index - ------------------------------------------------------------------------- 1 year 20.31% 1.50% 1.96% - ------------------------------------------------------------------------- 5 years 174.15 104.70 12.30 Annual average 22.35 15.41 2.35 - ------------------------------------------------------------------------- Life of fund 377.88 276.92 26.29 Annual average 19.38 16.22 2.68 - ------------------------------------------------------------------------- Past performance is no assurance of future results. More recent returns may be more or less than those shown. 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-year 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. Investment return and principal value will fluctuate so that an investor's shares when redeemed may be worth more or less than their original cost. [GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT] GROWTH OF A $10,000 INVESTMENT Cumulative total return of a $10,000 investment since 8/31/90 Fund's class A Russell Midcap Consumer price Date shares at POP Growth Index index 8/31/90 9,426 10,000 10,000 6/30/91 12,841 12,828 10,334 6/30/92 16,545 14,391 10,653 6/30/93 24,176 17,077 10,973 6/30/94 25,867 17,432 11,246 6/30/95 35,271 22,038 11,588 6/30/96 51,260 12,528 10,266 6/30/97 53,444 32,028 12,181 6/30/98 70,948 39,720 12,386 6/30/99 $83,585 $47,788 $12,629 Footnote reads: Past performance is no assurance of future results. At the end of the same time period, a $10,000 investment in the fund's class B shares would have been valued at $82,935 and no contingent deferred sales charges would apply; a $10,000 investment in the fund's class M shares would have been valued at $84,565 ($81,586 at public offering price). PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 6/30/99 Class A Class B Class M - ----------------------------------------------------------------------------- Distributions (number) 1 1 1 - ----------------------------------------------------------------------------- Income -- -- -- - ----------------------------------------------------------------------------- Capital gains Long-term $1.875 $1.875 $1.875 - ----------------------------------------------------------------------------- Short-term -- -- -- - ----------------------------------------------------------------------------- Total $1.875 $1.875 $1.875 - ----------------------------------------------------------------------------- Share value: NAV POP NAV NAV POP - ----------------------------------------------------------------------------- 6/30/98 $57.68 $61.20 $55.42 $56.65 $58.70 - ----------------------------------------------------------------------------- 6/30/99 65.61 69.61 62.51 64.05 66.37 - ----------------------------------------------------------------------------- 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 5.75% maximum 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 class B 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 an unmanaged list of common stocks that is frequently used as a performance measure for small and midsize company stocks. Russell Midcap Growth 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. A guide to the financial statements These sections of the report, preceded by the Report of independent accountants, constitute the fund's financial statements. The fund's portfolio lists all the fund's investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification. Statement of assets and liabilities shows how the fund's net assets and share price is determined. All investment and non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the net assets allocated to remarketed preferred shares.) Statement of operations shows the fund's net investment gain or loss for the reporting period. This is determined by adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses. This statement also lists any net gain or loss the fund realized on the sales of its holdings and -- for holdings that remain in the portfolio -- any change in unrealized gains or losses over the period. Statement of changes in net assets shows how the fund's net assets were affected by distributions to shareholders and by changes in the number of the fund's shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Financial highlights provide an overview of the fund's investment results, per-share distributions, expense ratios, net investment income ratios and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period. For open-ended funds, a separate table is provided for each share class. Report of independent accountants For the fiscal year ended June 30, 1999 To the Trustees and Shareholders of Putnam New Opportunities Fund In our opinion, the accompanying statement of assets and liabilities, including the fund's portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam New Opportunities Fund (the "fund") at June 30, 1999, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at June 30, 1999 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Boston, Massachusetts August 12, 1999
The fund's portfolio June 30, 1999 COMMON STOCKS (97.9%) (a) NUMBER OF SHARES VALUE Advertising (2.0%) - -------------------------------------------------------------------------------------------------------------------------- 2,690,000 Lamar Advertising Co. (NON) $ 110,121,875 8,685,000 Outdoor Systems, Inc. (NON) 317,002,500 --------------- 427,124,375 Airlines (0.3%) - -------------------------------------------------------------------------------------------------------------------------- 1,150,800 Ryanair Holdings, plc ADR (Ireland) (NON) 60,992,400 Banks (1.2%) - -------------------------------------------------------------------------------------------------------------------------- 4,174,600 Firstar Corp. 116,888,800 3,380,800 National Commerce Bancorporation 73,955,000 1,265,000 Zions Bancorp (NON) 80,327,500 --------------- 271,171,300 Broadcasting (8.2%) - -------------------------------------------------------------------------------------------------------------------------- 7,328,900 CBS Corp. 318,349,094 5,025,000 Chancellor Media Corp. 277,003,125 705,400 Citadel Communications Corp. (NON) 25,526,663 9,528,900 Clear Channel Communications, Inc. (NON) 656,898,544 535,500 Entercom Communications Corp. 22,892,625 897,000 Hispanic Broadcasting Corp. (NON) 68,059,875 4,815,000 Infinity Broadcasting Corp. Class A (NON) 143,246,250 3,272,000 Sinclair Broadcast Group, Inc. Class A 53,579,000 2,455,000 Univision Communications, Inc. Class A (NON) 162,030,000 1,520,000 WestWood One, Inc. (NON) (AFF) 54,245,000 --------------- 1,781,830,176 Business Services (1.5%) - -------------------------------------------------------------------------------------------------------------------------- 1,635,900 Cendant Corp. (NON) 33,535,950 1,065,000 Exodus Communications, Inc. (NON) 127,733,438 4,695,000 Snyder Communications, Inc. (NON) (AFF) 153,761,250 144,700 VerticalNet, Inc. (NON) 15,193,500 --------------- 330,224,138 Cable Television (1.3%) - -------------------------------------------------------------------------------------------------------------------------- 553,385 Adelphia Communications Class A (NON) 35,209,121 1,175,700 Century Communications Corp. (NON) 54,082,200 4,013,100 Comcast Corp. Class A (NON) 154,253,531 557,500 MediaOne Group, Inc. (NON) 41,464,063 --------------- 285,008,915 Computer Equipment (2.8%) - -------------------------------------------------------------------------------------------------------------------------- 2,580,000 Comdisco, Inc. (NON) 66,112,500 4,504,900 EMC Corp. (NON) 247,769,500 4,161,000 Sun Microsystems, Inc. (NON) 286,588,875 --------------- 600,470,875 Computer Services (3.6%) - -------------------------------------------------------------------------------------------------------------------------- 2,295,000 Affiliated Computer Services, Inc. Class A (NON) 116,184,375 1,183,000 America Online, Inc. (NON) 130,721,500 656,100 CheckFree Holdings Corp. (NON) 18,083,756 1,425,000 Covad Communications Group 144A (NON) 75,970,313 604,500 Critical Path, Inc. (NON) 33,436,406 2,040,000 Entrust Technologies, Inc. (NON) 67,830,000 230,000 RealNetworks, Inc. (NON) 15,841,250 3,415,000 USWeb Corp. (NON) 75,770,313 592,400 Verio, Inc. (NON) 41,171,800 1,454,000 VeriSign, Inc. (NON) 125,407,500 2,539,600 Whittman-Hart, Inc. (NON) 80,632,300 --------------- 781,049,513 Computer Software (6.8%) - -------------------------------------------------------------------------------------------------------------------------- 1,420,000 Amdocs Ltd. (NON) 32,305,000 406,000 BroadVision, Inc. (NON) 29,942,500 455,000 Check Point Software Technologies Ltd. (Israel) (NON) 24,399,375 2,191,100 Electronic Arts, Inc. (NON) 118,867,175 1,555,900 I2 Technologies, Inc. (NON) 66,903,700 1,279,400 Intuit, Inc. (NON) 115,305,925 574,800 ISS Group, Inc. (NON) 21,698,700 825,000 Lernout & Hauspie Speech Products N.V. (Belgium) (NON) 29,235,938 217,000 Lycos, Inc. (NON) 19,936,875 970,000 Macromedia, Inc. (NON) 34,192,500 5,196,700 Microsoft Corp. (NON) 468,677,381 8,420,000 Parametric Technology Corp. (NON) 116,827,500 116,500 Peregrine Systems, Inc. (NON) 2,992,594 930,000 Rational Software Corp. (NON) 30,631,875 1,000,600 Research in Motion Ltd. (Canada) (NON) 20,262,150 960,000 Sapient Corp. (NON) 54,360,000 860,000 Security First Technologies Corp. (NON) 38,807,500 2,858,700 Synopsys, Inc. 157,764,506 1,000,000 VERITAS Software Corp. (NON) 94,937,500 --------------- 1,478,048,694 Conglomerates (2.1%) - -------------------------------------------------------------------------------------------------------------------------- 3,648,900 Tyco International Ltd. (NON) 345,733,275 1,633,000 United Technologies Corp. 117,065,688 --------------- 462,798,963 Consumer Products (0.7%) - -------------------------------------------------------------------------------------------------------------------------- 853,100 Colgate-Palmolive Co. 84,243,625 1,128,500 Kimberly-Clark Corp. 64,324,500 --------------- 148,568,125 Consumer Services (0.4%) - -------------------------------------------------------------------------------------------------------------------------- 60,700 MarketWatch.com, Inc. (NON) 3,573,713 160,700 SportsLine USA, Inc. (NON) 5,765,113 436,100 StarMedia Network, Inc. (NON) 27,964,913 535,900 TMP Worldwide, Inc. (NON) 34,029,650 551,000 Ziff Davis, Inc. -- ZDNet (NON) 14,326,000 --------------- 85,659,389 Cosmetics (0.7%) - -------------------------------------------------------------------------------------------------------------------------- 3,112,400 Estee Lauder Cos. Class A 156,009,050 Education (0.2%) - -------------------------------------------------------------------------------------------------------------------------- 1,806,000 ITT Educational Services, Inc. (NON) (AFF) 47,068,875 Electric Utilities (0.6%) - -------------------------------------------------------------------------------------------------------------------------- 1,925,000 CalEnergy Co., Inc. (NON) 66,653,125 980,000 Montana Power Co. (NON) 69,090,000 --------------- 135,743,125 Electronics and Electrical Equipment (7.2%) - -------------------------------------------------------------------------------------------------------------------------- 1,205,000 Applied Materials, Inc. (NON) 89,019,375 1,775,000 ASM Lithography Holding N.V. (Netherlands) (NON) 105,390,625 2,950,000 Celestica, Inc. (Canada) (NON) 127,771,875 1,640,000 Flextronics International Ltd. (NON) 91,020,000 3,884,500 General Electric Co. 438,948,500 1,144,170 KLA Tencor Corp. (NON) 74,228,029 1,046,000 Illinois Tool Works, Inc. 85,772,000 1,675,000 Jabil Circuit, Inc. (NON) 75,584,375 590,000 Novellus Systems, Inc. (NON) 40,267,500 1,950,000 Sanmina Corp. (NON) 147,956,250 1,305,000 Solectron Corp. (NON) 87,027,188 1,105,000 Teradyne, Inc. (NON) 79,283,750 693,800 Uniphase Corp. (NON) 115,170,800 --------------- 1,557,440,267 Energy-Related (0.1%) - -------------------------------------------------------------------------------------------------------------------------- 251,600 Calpine Corp. (NON) 13,586,400 Entertainment (3.3%) - -------------------------------------------------------------------------------------------------------------------------- 3,480,000 Harrah's Entertainment, Inc. (NON) 76,560,000 1,232,900 International Speedway Corp. Class A 58,562,750 1,635,000 SFX Entertainment, Inc. Class A (NON) 104,640,000 3,814,300 Time Warner, Inc. 280,351,050 4,383,800 Viacom, Inc. Class B 192,887,200 --------------- 713,001,000 Financial Services (4.3%) - -------------------------------------------------------------------------------------------------------------------------- 3,406,950 Citigroup, Inc. 161,830,125 3,212,000 Concord EFS, Inc. (NON) 135,907,750 620,000 Donaldson, Lufkin & Jenrette, Inc. 37,355,000 1,610,000 E(a)Trade Group, Inc. (NON) 64,299,375 2,125,000 Finova Group, Inc. 111,828,125 199,700 Goldman Sachs Group, Inc. (The) 14,428,325 248,300 Investment Technology Group, Inc. 8,038,713 1,131,900 Morgan Stanley, Dean Witter, Discover and Co. 116,019,750 553,100 Providian Financial Corp. 51,714,850 1,347,200 Schwab (Charles) Corp. 148,023,600 2,517,000 TCF Financial Corp. 70,161,375 688,325 TD Waterhouse Group, Inc. (NON) 17,251,145 --------------- 936,858,133 Funeral/Cemetery Services (0.4%) - -------------------------------------------------------------------------------------------------------------------------- 6,803,500 Stewart Enterprises, Inc. Class A (AFF) 99,075,969 Gas Pipelines (1.2%) - -------------------------------------------------------------------------------------------------------------------------- 1,349,700 Enron Corp. (NON) 110,337,975 3,401,300 Williams Cos., Inc. (NON) 144,767,831 --------------- 255,105,806 Health Care Information Services (0.1%) - -------------------------------------------------------------------------------------------------------------------------- 1,001,100 Eclipsys Corp. (NON) 23,963,831 Health Care Services (0.7%) - -------------------------------------------------------------------------------------------------------------------------- 752,172 CareMatrix Corp. (NON) 9,355,139 117,800 Healtheon Corp. (NON) 9,070,600 2,384,700 Lincare Holdings, Inc. (NON) 59,617,500 964,400 Sunrise Assisted Living, Inc. (NON) 33,633,450 690,000 TLC The Laser Center, Inc. (Canada) (NON) 33,120,000 --------------- 144,796,689 Hospital Management (0.4%) - -------------------------------------------------------------------------------------------------------------------------- 7,480,000 Health Management Assoc., Inc. (NON) 84,150,000 Insurance (0.7%) - -------------------------------------------------------------------------------------------------------------------------- 1,372,300 American International Group, Inc. 160,644,869 Lodging (0.5%) - -------------------------------------------------------------------------------------------------------------------------- 5,032,700 Extended Stay America, Inc. (NON) (AFF) 60,392,400 1,020,000 Four Seasons Hotels, Inc. (Canada) (NON) 44,943,750 --------------- 105,336,150 Medical Management Services (0.1%) - -------------------------------------------------------------------------------------------------------------------------- 997,900 Pediatrix Medical Group, Inc. (NON) (AFF) 21,205,375 Medical Supplies and Devices (2.8%) - -------------------------------------------------------------------------------------------------------------------------- 948,000 Bausch & Lomb, Inc. (NON) 72,522,000 1,615,000 Biomet, Inc. (NON) 64,196,250 1,420,000 Henry Schein, Inc. (NON) 44,996,250 1,318,600 Johnson & Johnson 129,222,800 5,265,000 Sybron International Corp. (NON) (AFF) 145,116,563 556,000 VISX, Inc. (NON) 44,028,250 2,144,600 Waters Corp. (NON) 113,931,875 --------------- 614,013,988 Networking and Telecommunication Equipment (7.8%) - -------------------------------------------------------------------------------------------------------------------------- 1,243,700 CIENA Corp. (NON) 37,544,194 4,353,100 Cisco Systems, Inc. (NON) 280,502,881 1,417,500 Comverse Technology, Inc. (NON) 107,021,250 2,157,800 General Instrument Corp. (NON) 91,706,500 1,853,400 International Network Services (NON) 74,831,025 20,271 Juniper Networks, Inc. (NON) 3,020,379 5,025,400 Lucent Technologies, Inc. 338,900,413 1,257,500 Network Appliance, Inc. (NON) 70,262,813 2,463,500 Nokia Corp. ADR (Finland) 225,564,219 2,401,200 QUALCOMM, Inc. (NON) 344,572,200 1,805,800 Tellabs, Inc. (NON) 122,004,363 --------------- 1,695,930,237 Pharmaceuticals and Biotechnology (5.8%) - -------------------------------------------------------------------------------------------------------------------------- 3,142,900 American Home Products Corp. (NON) 180,716,750 2,260,300 Amgen, Inc. (NON) 137,595,763 7,554,100 Elan Corp. PLC ADR (Ireland) (NON) 209,626,275 1,087,800 Forest Laboratories, Inc. (NON) 50,310,750 1,206,000 IDEXX Laboratories, Inc. (NON) 28,114,875 121,700 Jones Medical Industries, Inc. 4,791,938 1,657,500 Medicis Pharmaceutical Corp. Class A (NON) (AFF) 42,059,063 285,000 QLT PhotoTherapeutics, Inc. (Canada) (NON) 15,675,000 5,471,600 Schering-Plough Corp. 289,994,800 1,195,000 Sepracor, Inc. (NON) 97,093,750 1,033,000 Transkaryotic Therapies, Inc. (Malaysia) (NON) (AFF) 34,089,000 1,840,200 Warner-Lambert Co. 127,663,875 1,125,000 Watson Pharmaceuticals, Inc. (NON) 39,445,313 --------------- 1,257,177,152 Restaurants (0.2%) - -------------------------------------------------------------------------------------------------------------------------- 10,141,767 J.D. Wetherspoon PLC (United Kingdom) (AFF) 47,187,005 Retail (10.4%) - -------------------------------------------------------------------------------------------------------------------------- 383,900 Amazon.com, Inc. (NON) 48,035,488 6,933,900 Bed Bath & Beyond, Inc. (NON) 266,955,150 655,000 Beyond.com Corp. (NON) 18,790,313 4,693,500 Costco Companies, Inc. (NON) 375,773,344 3,171,100 CVS Corp. 160,933,325 1,988,600 Dollar Tree Stores, Inc. (NON) 87,498,400 2,998,200 Gap, Inc. (The) (NON) 151,034,325 4,119,000 Home Depot, Inc. (The) 265,418,063 2,590,000 Kohls Corp. (NON) 199,915,625 2,674,200 Safeway, Inc. (NON) 132,372,900 6,198,800 TJX Cos., Inc. (The) 206,497,525 6,211,000 Wal-Mart Stores, Inc. 299,680,750 1,090,200 Williams-Sonoma, Inc. (NON) 37,952,588 --------------- 2,250,857,796 Semiconductors (6.3%) - -------------------------------------------------------------------------------------------------------------------------- 3,118,000 Analog Devices, Inc. (NON) 156,484,625 565,000 Applied Micro Circuits Corp. (NON) 46,471,250 1,179,500 E-Tek Dynamics, Inc. (NON) 56,099,969 3,609,400 Linear Technology Corp. 242,732,150 3,125,000 Maxim Integrated Products, Inc. (NON) 207,812,500 596,400 Micrel, Inc. (NON) 44,133,600 2,236,600 Motorola, Inc. 211,917,850 1,615,000 PMC - Sierra, Inc. (NON) 95,184,063 55,100 RF Micro Devices, Inc. (NON) 4,111,892 493,200 SDL, Inc. (NON) 25,184,025 1,369,500 Texas Instruments, Inc. 198,577,500 1,505,000 Xilinx, Inc. (NON) 86,161,250 --------------- 1,374,870,674 Telecommunication Services (13.2%) - -------------------------------------------------------------------------------------------------------------------------- 2,367,000 ADC Telecommunications, Inc. (NON) 107,846,438 1,891,500 Allegiance Telecom, Inc. (NON) 103,796,063 14,627,104 American Telephone & Telegraph Corp. 537,546,072 3,446,600 American Tower Corp. Class A (NON) 82,718,400 244,000 Copper Mountain Networks, Inc. (NON) 18,849,000 875,000 Frontier Corp. (NON) 51,625,000 1,265,753 Global Crossing Ltd. (NON) 53,952,722 2,645,000 Global TeleSystems Group, Inc. (NON) 214,245,000 1,485,000 Intermedia Communications, Inc. (NON) 44,550,000 2,743,300 MCI WorldCom, Inc. (NON) 236,095,256 2,770,000 McLeod, Inc. Class A (NON) 152,350,000 7,800,000 Metromedia Fiber Network, Inc. Class A (NON) 280,312,500 3,025,400 NEXTLINK Communications, Inc. Class A (NON) 225,014,125 870,000 NTL, Inc. (NON) 74,983,125 3,179,500 Qwest Communications International, Inc. (NON) 105,122,219 1,690,200 RSL Communications Ltd. Class A (NON) 32,641,988 3,197,500 Sprint PCS 182,657,188 3,455,800 Sprint Corp. 182,509,438 646,700 Vodafone AirTouch PLC (United Kingdom) (NON) 127,399,900 1,155,000 WinStar Communications, Inc. (NON) 56,306,250 --------------- 2,870,520,684 --------------- Total Common Stocks (cost $13,595,052,980) $21,277,489,938 COMMERCIAL PAPER (2.0%) (a) PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------------------------------------------------- $50,000,000 Asset Securitization Corp. for an effective yield of 4.92%, July 23, 1999 $ 49,849,667 49,000,000 Corporate Receivables Corp. for an effective yield of 4.82%, July 9, 1999 48,947,516 30,000,000 Credit Suisse First Boston for an effective yield of 4.82%, August 5, 1999 29,859,417 25,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 4.81%, July 19, 1999 24,939,875 50,000,000 Federal Home Loan Mortgage Corp. for an effective yield of 4.71%, July 20, 1999 49,874,389 50,000,000 Federal National Mortgage Association for an effective yield of 4.81%, July 6, 1999 49,966,597 50,000,000 Ford Motor Credit Corp. for an effective yield of 4.79%, July 9, 1999 49,946,556 50,000,000 General Electric Capital Corp. for an effective yield of 4.81%, July 28, 1999 49,819,625 33,653,000 Prudential Funding Corp. for an effective yield of 5.50%, July 1, 1999 33,647,858 50,000,000 Sigma Finance Inc. for an effective yield of 4.85%, July 12, 1999 49,926,055 --------------- Total Commercial Paper (cost $436,777,555) $ 436,777,555 - -------------------------------------------------------------------------------------------------------------------------- Total Investments (cost $14,031,830,535) (b) $21,714,267,493 - -------------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $21,723,320,879. (b) The aggregate identified cost on a tax basis is $14,048,064,985, resulting in gross unrealized appreciation and depreciation of $8,068,625,136 and $402,422,628, respectively, or net unrealized appreciation of $7,666,202,508. (NON) Non-income-producing security. (AFF) Affiliated Companies (Note 5). 144A after the name of a security represents those exempt from registration under rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR after the name of a foreign holding stands for American Depositary Receipts, representing ownership of foreign securities on deposit with a domestic custodian bank. The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities June 30, 1999 Assets - ----------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $14,031,830,535) (Note 1) $21,714,267,493 - ----------------------------------------------------------------------------------------------- Cash 21,982,328 - ----------------------------------------------------------------------------------------------- Dividends, interest and other receivables 2,955,548 - ----------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 19,822,704 - ----------------------------------------------------------------------------------------------- Receivable for securities sold 218,294,868 - ----------------------------------------------------------------------------------------------- Total assets 21,977,322,941 Liabilities - ----------------------------------------------------------------------------------------------- Payable for securities purchased 150,922,980 - ----------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 61,209,561 - ----------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 24,849,142 - ----------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 2,120,903 - ----------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 318,306 - ----------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 14,518 - ----------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 13,486,413 - ----------------------------------------------------------------------------------------------- Other accrued expenses 1,080,239 - ----------------------------------------------------------------------------------------------- Total liabilities 254,002,062 - ----------------------------------------------------------------------------------------------- Net assets $21,723,320,879 Represented by - ----------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $11,722,919,385 - ----------------------------------------------------------------------------------------------- Accumulated net realized gains on investments and foreign currency transactions (Note 1) 2,317,965,228 - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 7,682,436,266 - ----------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $21,723,320,879 Computation of net asset value and offering price - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($11,817,797,892 divided by 180,134,512 shares) $65.61 - ----------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $65.61)* $69.61 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($8,382,291,940 divided by 134,090,104 shares)** $62.51 - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class M share ($491,208,632 divided by 7,668,713 shares) $64.05 - ----------------------------------------------------------------------------------------------- Offering price per class M share (100/96.50 of $64.05)* $66.37 - ----------------------------------------------------------------------------------------------- Net asset value, offering price and redemption price per class Y share ($1,032,022,415 divided by 15,521,953 shares) $66.49 - ----------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales, the offering price is reduced. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
Statement of operations Year ended June 30, 1999 Investment income: - ----------------------------------------------------------------------------------------------- Interest $ 21,430,525 - ----------------------------------------------------------------------------------------------- Dividends (net of foreign tax of $157,759, including dividend income of $853,076 from investments in affiliated issuers) (Note 5) 43,997,777 - ----------------------------------------------------------------------------------------------- Total investment income 65,428,302 Expenses: - ----------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 90,089,683 - ----------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 28,070,068 - ----------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 316,688 - ----------------------------------------------------------------------------------------------- Administrative services (Note 2) 56,132 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class A (Note 2) 25,255,230 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 68,843,851 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 3,226,323 - ----------------------------------------------------------------------------------------------- Reports to shareholders 413,222 - ----------------------------------------------------------------------------------------------- Registration fees 8,488 - ----------------------------------------------------------------------------------------------- Auditing 133,506 - ----------------------------------------------------------------------------------------------- Legal 104,323 - ----------------------------------------------------------------------------------------------- Postage 3,174,312 - ----------------------------------------------------------------------------------------------- Other 3,437,460 - ----------------------------------------------------------------------------------------------- Total expenses 223,129,286 - ----------------------------------------------------------------------------------------------- Expense reduction (Note 2) (2,444,849) - ----------------------------------------------------------------------------------------------- Net expenses 220,684,437 - ----------------------------------------------------------------------------------------------- Net investment loss (155,256,135) - ----------------------------------------------------------------------------------------------- Net realized gain on investments (including net realized loss of $309,606,687 on sales of investments in affiliated issuers) (Note 5) 2,352,941,644 - ----------------------------------------------------------------------------------------------- Net realized gain on foreign currency transactions (Note 1) 1,551 - ----------------------------------------------------------------------------------------------- Net unrealized depreciation of assets and liabilities in foreign currencies during the year (692) - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments during the year 997,122,404 - ----------------------------------------------------------------------------------------------- Net gain on investments 3,350,064,907 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $3,194,808,772 - ----------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Year ended June 30 ------------------------------- 1999 1998 - --------------------------------------------------------------------------------------------------------------- Increase in net assets - --------------------------------------------------------------------------------------------------------------- Operations: - --------------------------------------------------------------------------------------------------------------- Net investment loss $ (155,256,135) $ (135,338,935) - --------------------------------------------------------------------------------------------------------------- Net realized gain on investments and foreign currency transactions 2,352,943,195 1,228,126,644 - --------------------------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 997,121,712 3,538,793,763 - --------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 3,194,808,772 4,631,581,472 - --------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - --------------------------------------------------------------------------------------------------------------- From net realized gain on investments Class A (332,350,742) (185,202,878) - --------------------------------------------------------------------------------------------------------------- Class B (257,923,945) (157,607,099) - --------------------------------------------------------------------------------------------------------------- Class M (14,531,244) (8,456,807) - --------------------------------------------------------------------------------------------------------------- Class Y (15,917,465) (7,008,141) - --------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 114,640,051 428,556,668 - --------------------------------------------------------------------------------------------------------------- Total increase in net assets 2,688,725,427 4,701,863,215 Net assets - --------------------------------------------------------------------------------------------------------------- Beginning of year 19,034,595,452 14,332,732,237 - --------------------------------------------------------------------------------------------------------------- End of year (including undistributed net investment income of $-- and $--, respectively) $21,723,320,879 $19,034,595,452 - --------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) CLASS A - -------------------------------------------------------------------------------------------------------------------------------- Per-share operating performance Year ended June 30 - -------------------------------------------------------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $57.68 $44.47 $42.99 $29.58 $21.88 - -------------------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------------------- Net investment loss (.32)(c) (.25) (.20)(c) (.21)(c) (.12) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 10.13 14.55 2.00 13.62 8.02 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 9.81 14.30 1.80 13.41 7.90 - -------------------------------------------------------------------------------------------------------------------------------- Less distributions: - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (1.88) (1.09) (.26) -- (.15) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- (.06) -- (.04) - -------------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- -- -- (.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.88) (1.09) (.32) -- (.20) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $65.61 $57.68 $44.47 $42.99 $29.58 - -------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - -------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 17.81 32.75 4.26 45.34 36.36 - -------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $11,817,798 $10,163,386 $7,381,624 $4,752,611 $1,341,877 - -------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) .93 .98 1.06 1.11 1.13 - -------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.56) (.49) (.48) (.54) (.55) - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 76.54 65.21 66.74 36.61 56.99 - -------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total 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.
Financial highlights (For a share outstanding throughout the period) CLASS B - -------------------------------------------------------------------------------------------------------------------------------- Per-share operating performance Year ended June 30 - -------------------------------------------------------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $55.42 $43.08 $41.96 $29.09 $21.68 - -------------------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------------------- Net investment loss (.66)(c) (.62) (.49)(c) (.48)(c) (.23) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 9.63 14.05 1.93 13.35 7.84 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 8.97 13.43 1.44 12.87 7.61 - -------------------------------------------------------------------------------------------------------------------------------- Less distributions: - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (1.88) (1.09) (.26) -- (.15) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- (.06) -- (.04) - -------------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- -- -- (.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.88) (1.09) (.32) -- (.20) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $62.51 $55.42 $43.08 $41.96 $29.09 - -------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - -------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 17.01 31.78 3.50 44.24 35.34 - -------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $8,382,292 $7,950,848 $6,359,447 $4,254,962 $1,013,379 - -------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) 1.60 1.73 1.81 1.87 1.87 - -------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (1.23) (1.24) (1.23) (1.30) (1.30) - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 76.54 65.21 66.74 36.61 56.99 - -------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total 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.
Financial highlights (For a share outstanding throughout the period) CLASS M - -------------------------------------------------------------------------------------------------------------------------------- For the period Per-share Dec. 1,1994+ operating performance Year ended June 30 to June 30 - -------------------------------------------------------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $56.65 $43.91 $42.66 $29.51 $24.72 - -------------------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------------------- Net investment loss (.58)(c) (.49) (.40)(c) (.40)(c) (.05) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 9.86 14.32 1.97 13.55 5.04 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 9.28 13.83 1.57 13.15 4.99 - -------------------------------------------------------------------------------------------------------------------------------- Less distributions: - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (1.88) (1.09) (.26) -- (.15) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- (.06) -- (.04) - -------------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- -- -- (.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.88) (1.09) (.32) -- (.20) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $64.05 $56.65 $43.91 $42.66 $29.51 - -------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - -------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 17.19 32.09 3.75 44.56 20.40* - -------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $491,209 $444,325 $337,535 $210,404 $16,011 - -------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) 1.43 1.48 1.56 1.64 .94* - -------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (1.06) (.99) (.98) (1.06) (.53)* - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 76.54 65.21 66.74 36.61 56.99 - -------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total 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.
Financial highlights (For a share outstanding throughout the period) CLASS Y - -------------------------------------------------------------------------------------------------------------------------------- For the period Per-share July 19,1994+ operating performance Year ended June 30 to June 30 - -------------------------------------------------------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $58.28 $44.82 $43.21 $29.66 $22.59 - -------------------------------------------------------------------------------------------------------------------------------- Investment operations - -------------------------------------------------------------------------------------------------------------------------------- Net investment loss (.19)(c) (.13)(c) (.09)(c) (.11)(c) (.04) - -------------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized gain on investments 10.28 14.68 2.02 13.66 7.31 - -------------------------------------------------------------------------------------------------------------------------------- Total from investment operations 10.09 14.55 1.93 13.55 7.27 - -------------------------------------------------------------------------------------------------------------------------------- Less distributions: - -------------------------------------------------------------------------------------------------------------------------------- From net realized gain on investments (1.88) (1.09) (.26) -- (.15) - -------------------------------------------------------------------------------------------------------------------------------- In excess of net realized gains -- -- (.06) -- (.04) - -------------------------------------------------------------------------------------------------------------------------------- Return of capital -- -- -- -- (.01) - -------------------------------------------------------------------------------------------------------------------------------- Total distributions (1.88) (1.09) (.32) -- (.20) - -------------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $66.49 $58.28 $44.82 $43.21 $29.66 - -------------------------------------------------------------------------------------------------------------------------------- Ratios and supplemental data - -------------------------------------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 18.11 33.05 4.54 45.68 32.42* - -------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,032,022 $476,037 $254,126 $118,640 $24,538 - -------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%) (b) .68 .73 .81 .86 .83* - -------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment loss to average net assets (%) (.32) (.24) (.23) (.29) (.26)* - -------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover (%) 76.54 65.21 66.74 36.61 56.99 - -------------------------------------------------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total 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.
Notes to financial statements June 30, 1999 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, which is currently closed to new investors, offers class A, class B, class M and class Y shares. Effective July 26, 1999, the fund will begin offering class C 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, 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 $150 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. Collateral for certain tri-party repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the fund and the counterparty. 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, and 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 realized 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 year ended June 30, 1999, 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. 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. These differences include temporary and permanent differences of losses on wash sale transactions and net operating losses. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended June 30, 1999, the fund reclassified $155,256,135 to decrease accumulated net investment loss and $149,090,510 to decrease paid-in-capital, with a decrease to accumulated net realized gains of $6,165,625. The calculation of net investment income per share in the financial highlights table excludes these adjustments. Note 2 Management fee, administrative services and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.70% of the first $500 million of average net assets, 0.60% of the next $500 million, 0.55% of the next $500 million, and 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion, 0.43% of the next $5 billion, 0.42% of the next $5 billion, 0.41% of the next $5 billion, 0.40% of the next $5 billion, and 0.39% thereafter. Prior to June 4, 1999, any amount over $21.5 billion was based on 0.43%. 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 year ended June 30, 1999, fund expenses were reduced by $2,444,849 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 $12,510 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 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 have approved payment by the fund to an annual rate of 0.25%, 0.85% and 0.75% of the average net assets attributable to class A, class B and class M shares, respectively. Prior to January 1, 1999, the annual rate was 1.00% of the average net assets attributable to class B shares. For the year ended June 30, 1999, Putnam Mutual Funds Corp., acting as underwriter received net commissions of $1,697,897 and $58,756 from the sale of class A and class M shares, respectively and $11,247,609 in contingent deferred sales charges from redemptions of class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the year ended June 30, 1999, Putnam Mutual Funds Corp., acting as underwriter received $93,167 on class A redemptions. Note 3 Purchases and sales of securities During the year ended June 30, 1999, purchases and sales of investment securities other than short-term investments aggregated $14,030,762,803 and $14,624,264,787, respectively. There were no purchases and sales of U.S. government obligations. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At June 30, 1999, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class A Shares Amount - ----------------------------------------------------------------------------- Shares sold 45,594,076 $2,572,784,440 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 6,046,651 317,327,118 - ----------------------------------------------------------------------------- 51,640,727 2,890,111,558 Shares repurchased (47,716,775) (2,689,861,510) - ----------------------------------------------------------------------------- Net increase 3,923,952 $ 200,250,048 - ----------------------------------------------------------------------------- Year ended June 30, 1998 - ----------------------------------------------------------------------------- Class A Shares Amount - ----------------------------------------------------------------------------- Shares sold 42,566,727 $2,162,347,087 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,792,795 176,109,174 - ----------------------------------------------------------------------------- 46,359,522 2,338,456,261 Shares repurchased (36,146,474) (1,835,480,082) - ----------------------------------------------------------------------------- Net increase 10,213,048 $ 502,976,179 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class B Shares Amount - ----------------------------------------------------------------------------- Shares sold 9,985,427 $ 532,229,736 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 4,483,603 224,942,388 - ----------------------------------------------------------------------------- 14,469,030 757,172,124 Shares repurchased (23,849,418) (1,272,000,118) - ----------------------------------------------------------------------------- Net decrease (9,380,388) $(514,827,994) - ----------------------------------------------------------------------------- Year ended June 30, 1998 - ----------------------------------------------------------------------------- Class B Shares Amount - ----------------------------------------------------------------------------- Shares sold 10,958,089 $ 534,080,968 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,063,932 137,202,777 - ----------------------------------------------------------------------------- 14,022,021 671,283,745 Shares repurchased (18,161,751) (885,361,106) - ----------------------------------------------------------------------------- Net decrease (4,139,730) $(214,077,361) - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class M Shares Amount - ----------------------------------------------------------------------------- Shares sold 1,659,416 $ 90,965,413 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 266,448 13,693,360 - ----------------------------------------------------------------------------- 1,925,864 104,658,773 Shares repurchased (2,100,915) (116,130,595) - ----------------------------------------------------------------------------- Net decrease (175,051) $(11,471,822) - ----------------------------------------------------------------------------- Year ended June 30, 1998 - ----------------------------------------------------------------------------- Class M Shares Amount - ----------------------------------------------------------------------------- Shares sold 1,779,820 $ 87,997,481 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 165,573 7,570,046 - ----------------------------------------------------------------------------- 1,945,393 95,567,527 Shares repurchased (1,788,827) (88,903,355) - ----------------------------------------------------------------------------- Net increase 156,566 $ 6,664,172 - ----------------------------------------------------------------------------- Year ended June 30, 1999 - ----------------------------------------------------------------------------- Class Y Shares Amount - ----------------------------------------------------------------------------- Shares sold 10,843,488 $643,820,161 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 299,803 15,917,465 - ----------------------------------------------------------------------------- 11,143,291 659,737,626 Shares repurchased (3,789,291) (219,047,807) - ----------------------------------------------------------------------------- Net increase 7,354,000 $440,689,819 - ----------------------------------------------------------------------------- Year ended June 30, 1998 - ----------------------------------------------------------------------------- Class Y Shares Amount - ----------------------------------------------------------------------------- Shares sold 4,222,463 $222,106,964 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 149,625 7,008,141 - ----------------------------------------------------------------------------- 4,372,088 229,115,105 Shares repurchased (1,874,552) (96,121,427) - ----------------------------------------------------------------------------- Net increase 2,497,536 $132,993,678 - -----------------------------------------------------------------------------
Note 5 Transactions with Affiliated Companies Transactions during the period with companies in which the fund owned at least 5% of the voting securities were as follows: Purchase Sales Dividend Market Affiliates cost cost Income Value - ------------------------------------------------------------------------------------------------------------------- Accustaff, Inc. $ 44,887,394 $ -- $ -- $ -- Applied Graphics Technologies, Inc. 28,702,336 76,113,787 -- -- Barnett, Inc. -- 21,829,192 -- -- Carematrix Corporation 5,506,342 9,353,810 -- -- CBT Group PLC Sponsored ADR 3,153,006 33,209,078 -- -- Ciber, Inc. 31,684,881 72,212,668 -- -- Concentra Managed Care, Inc. -- 78,056,282 -- -- Extended Stay America, Inc. 4,288,926 8,175,973 -- 60,392,400 Gilead Sciences, Inc. -- 29,991,459 -- -- HCR Manor Care, Inc. -- 50,907,779 -- -- International Speedway Corp. Class A 43,157,919 -- -- -- ITT Educational Services, Inc. 56,314,761 -- -- 47,068,875 J.D. Wetherspoon PLC 235,766 -- 412,370 47,187,005 Landry's Seafood Restaurant Inc. -- 31,458,569 -- -- Lason Holdings, Inc. 33,436,814 33,436,814 -- -- Lincare Holdings, Inc. 13,235,395 23,441,098 -- -- Medicis Pharmaceutical Corp. Class A 4,776,704 -- -- 42,059,063 Metamor Worldwide, Inc. 1,216,210 52,140,270 -- -- Metromedia Fiber Network Class A 23,269,662 -- -- -- Modis Professional Services, Inc. 4,562,920 157,752,417 -- -- Network Solutions, Inc 70,447,379 70,477,379 -- -- Nova Corp. 29,276,632 117,418,529 -- -- Papa Johns International, Inc. 472,726 36,243,765 -- -- Pediatrix Medical Group, Inc. -- -- -- 21,205,375 PMT Services, Inc. 18,044,888 -- -- -- Rexall Sundown, Inc. 8,814,850 81,761,524 -- -- RSL Communications Ltd. Class A 43,769,278 19,479,805 -- -- Saville Systems Ireland ADR 847,273 34,861,026 -- -- Snyder Communications, Inc. 96,664,299 -- -- 153,761,250 Stewart Enterprises, Inc. Class A 1,739,027 11,727,250 440,706 99,075,969 Sybron International Corp. 31,663,409 -- -- 145,116,563 Total Renal Care Holdings -- 69,099,290 -- -- Transkaryotic Therapies, Inc. 7,506,837 -- -- 34,089,000 Verisign, Inc. 44,382,513 -- -- -- Westwood One, Inc. -- -- -- 54,245,000 - ------------------------------------------------------------------------------------------------------------------- Totals $652,058,147 $1,119,147,764 $853,076 $704,200,500 - -------------------------------------------------------------------------------------------------------------------
Federal tax information (Unaudited) Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund hereby designates $2,334,199,107 as capital gain for its taxable year ended June 30, 1999. The Form 1099 you receive in January 2000 will show the tax status of all distributions paid to your account in calendar 1999. Fund information WEB SITE www.putnaminv.com INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman John A. Hill, Vice Chairman Jameson Adkins Baxter Hans H. Estin Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson 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 Jeffrey R. Lindsey Vice President and Fund Manager Richard A. Monaghan Vice President John R. Verani Vice President 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' Web site: 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 - --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminv.com AN013-53944 852/358/983/526 8/99 PUTNAM INVESTMENTS [SCALE LOGO OMITTED] - ---------------------------------------------------------------------------- Putnam New Opportunities Fund Supplement to Annual Report dated 6/30/99 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 $150 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 annual report. ANNUAL RESULTS AT A GLANCE - ---------------------------------------------------------------------------- Total return for periods ended 6/30/99 NAV 1 year 18.11% 5 years 227.25 Annual average 26.76 10 years 6.00 Annual average 6.00 Life of fund (since class A inception, 8/31/90) 798.03 Annual average 28.22 Share value: NAV 6/30/98 $58.28 6/30/99 $66.49 - ---------------------------------------------------------------------------- Distributions: No. Income Capital gains Total 1 $0.000 1.880 $1.880 - ---------------------------------------------------------------------------- Please note that past performance does not indicate future results. More recent returns may be more or less than those shown. Returns shown for class Y shares for periods prior to their inception are derived from the historical performance of class A shares, adjusted to reflect the initial sales charge currently applicable to class A shares. These returns have not been adjusted to reflect differences in operating expenses which, for class Y shares, are lower than the operating expenses applicable to class A shares. All returns assume reinvestment of distributions at net asset value. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. If you have questions, please consult your fund prospectus or call Putnam toll free at 1-800-752-9894. -----END PRIVACY-ENHANCED MESSAGE-----