PUTNAM NEW OPPORTUNITIES FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 1, 1993, AS REVISED JULY 11 , 1994
This Statement of Additional Information is not a Prospectus
and is only authorized for distribution when accompanied or
preceded by the Prospectus of the Fund dated November 1, 1993, as
revised from time to time. This Statement contains information
which may be useful to investors but which is not included in the
Prospectus. If the Fund has more than one form of current
Prospectus, each reference to the Prospectus in this Statement
shall include all the Fund's Prospectuses, unless otherwise
noted. The Statement should be read together with the applicable
Prospectus. Investors may obtain a free copy of the applicable
Prospectus from Putnam Investor Services, Mailing address: P.O.
Box 41203, Providence, RI 02940-1203.
Part I of this Statement contains specific information about
the Fund. Part II includes information about the Fund and the
other Putnam funds.
TABLE OF CONTENTS
PART I PAGE
INVESTMENT RESTRICTIONS OF THE FUND. . . . . . . . . . . . . . . . . . .I-3
FUND CHARGES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . .I-6
INVESTMENT PERFORMANCE OF THE FUND . . . . . . . . . . . . . . . . . . .I-8
ADDITIONAL OFFICERS OF THE FUND. . . . . . . . . . . . . . . . . . . . I-13
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS . . . . . . . . . . . I-13
<PAGE>
PART II
MISCELLANEOUS INVESTMENT PRACTICES. . . . . . . . . . . . . . II-1
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-22
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . .II-27
DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . . . . .II-36
HOW TO BUY SHARES . . . . . . . . . . . . . . . . . . . . . .II-38
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . .II-49
INVESTOR SERVICES . . . . . . . . . . . . . . . . . . . . . .II-49
SIGNATURE GUARANTEES. . . . . . . . . . . . . . . . . . . . .II-56
SUSPENSION OF REDEMPTIONS . . . . . . . . . . . . . . . . . .II-56
SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . . . . .II-56
STANDARD PERFORMANCE MEASURES . . . . . . . . . . . . . . . .II-57
COMPARISON OF PORTFOLIO PERFORMANCE . . . . . . . . . . . . .II-58
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .II-63
<PAGE>
PUTNAM NEW OPPORTUNITIES FUND
STATEMENT OF ADDITIONAL INFORMATION
PART I
INVESTMENT RESTRICTIONS OF THE FUND
As fundamental investment policies, which may not be changed
without a vote of a majority of the outstanding voting
securities, the Fund may not and will not:
(1) Borrow money in excess of 10% of the value (taken at
the lower of cost or current value) of its total assets (not
including the amount borrowed) at the time the borrowing is made,
and then only from banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes. Such
borrowings will be repaid before any additional investments are
purchased.
(2) Pledge, hypothecate, mortgage or otherwise encumber
its assets in excess of 15% of its total assets (taken at current
value) and then only to secure borrowings permitted by
restriction 1 above. (The deposit of underlying securities and
other assets in escrow and collateral arrangements with respect
to margin for financial futures contracts, options on such
contracts and on securities indices are not deemed to be pledges
or other encumbrances.)
(3) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and
sales of securities, and except that it may make margin payments
in connection with futures contracts and related options.
(4) Make short sales of securities or maintain a short
sale position for the account of the Fund unless at all times
when a short position is open it owns an equal amount of such
securities or owns securities which, without payment of any
further consideration, are convertible into or exchangeable for
securities of the same issue as, and at least equal in amount to,
the securities sold short.
(5) Underwrite securities issued by other persons except
to the extent that, in connection with the disposition of its
portfolio investments, it may be deemed to be an underwriter
under certain federal securities laws.
(6) Purchase or sell real estate, although it may purchase
securities of issuers which deal in real estate, securities which
are secured by interests in real estate, and securities
representing interests in real estate, and it may acquire and
dispose of real estate or interests in real estate acquired
through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein.
<PAGE>
(7) Purchase or sell commodities or commodity contracts,
except that the Fund may write and purchase financial futures
contracts and related options.
(8) Make loans, except by purchase of debt obligations in
which the Fund may invest consistent with its investment
policies, or by entering into repurchase agreements with respect
to not more than 25% of its total assets (taken at current
value).
(9) Invest in securities of any issuer if, to the
knowledge of the Fund, officers and Trustees of the Fund and
officers and directors of Putnam Management who beneficially own
more than 0.5% of the shares or securities of that issuer
together own more than 5%.
(10) Invest in securities of any issuer if, immediately
after such investment, more than 5% of the total assets of the
Fund (taken at current value) would be invested in the securities
of such issuer; provided that this limitation does not apply to
obligations issued or guaranteed as to interest and principal by
the U.S. government or its agencies or instrumentalities.
(11) Acquire more than 10% of the voting securities of any
issuer.
(12) Purchase securities (other than securities of the
U.S. government, its agencies or instrumentalities) if as a
result of such purchase more than 25% of the Fund's total assets
would be invested in any one industry.
(13) Purchase securities the disposition of
which is restricted under federal securities
laws , if, as a result, such investments would exceed
15% of the value of the Fund's net assets , excluding
restricted securities that have been determined by the Trustees
of the Fund (or the person designated by them to make such
determinations) to be readily marketable .
(14) Buy or sell oil, gas, or other mineral leases,
rights, or royalty contracts, although it may purchase securities
of issuers which deal in, represent interests in, or are secured
by interests in such leases, rights, or contracts, and it may
acquire or dispose of such leases, rights, or contracts acquired
through the exercise of its rights as a holder of debt
obligations secured thereby.
(15) Make investments for the purpose of gaining
control of a company's management.
(16) Issue any class of securities which is senior
to the Fund's shares of beneficial interest.
<PAGE>
IT IS CONTRARY TO THE FUND'S PRESENT POLICY, WHICH MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL, TO:
(1) Invest in (a) securities which at the time of such
investment are not readily marketable, (b) securities restricted
as to resale (excluding securities determined by the Trustees of
the Fund (or the person designated by the Trustees of the Fund to
make such determinations) to be readily marketable), and (c)
repurchase agreements maturing in more than seven days, if, as a
result, more than 15% of the Fund's net assets (taken at current
value) would be invested in the aggregate in securities described
in (a), (b) and (c) above.
(2) Invest in warrants (other than warrants acquired by
the Fund as a part of a unit or attached to securities at the
time of purchase) if, as a result, such investments (valued at
the lower of cost or market) would exceed 5% of the value of the
Fund's net assets; provided that not more than 2% of the Fund's
net assets may be invested in warrants not listed on the New York
or American Stock Exchanges.
(3) Invest in securities of any issuer if the party
responsible for payment, together with any predecessors, has been
in operation for less than three consecutive years and, as a
result of the investment, the aggregate of such investments would
exceed 5% of the value of the Fund's net assets; provided,
however, that this restriction shall not apply to any obligation
of the United States or its agencies or instrumentalities.
(4) Purchase or sell real property (including limited
partnership interests), except that the Fund may (a) purchase or
sell readily marketable interests in real estate investment
trusts or readily marketable securities of companies which invest
in real estate (b) purchase or sell securities that are secured
by interests in real estate or interests therein, or (c) acquire
real estate through exercise of its rights as a holder of
obligations secured by real estate or interests therein or sell
real estate so
acquired
.
(5) Invest in the securities of other registered open-
end investment companies, except as they may be acquired as part
of a merger or consolidation or acquisition of assets.
In addition, the Fund has agreed that so long as shares of
beneficial interest in the Fund are registered for offer and sale
in the State of Texas and such undertaking is required as a
condition to such registration, the Fund will not, without the
prior written consent of the Texas Securities Commissioner,
purchase or sell real property (including limited partnership
interests), except that the Fund may purchase readily marketable
interests in real estate investment trusts or readily marketable
securities of companies which invest in real estate and may own
real estate used principally for its own office space.
<PAGE>
Although certain of the Fund's fundamental investment
restrictions permit the Fund to borrow money to a limited extent,
the Fund does not currently intend to do so and did not do so
last year.
---------------------
All percentage limitations on investments will apply at
the time of the making of an investment and shall not be
considered violated unless an excess or deficiency occurs or
exists immediately after and as a result of such investment.
The Investment Company Act of 1940 provides that a "vote
of a majority of the outstanding voting securities" of the Fund
means the affirmative vote of the lesser of (1) more than 50% of
the outstanding shares of the Fund, or (2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding
shares are represented at the meeting in person or by proxy.
FUND CHARGES AND EXPENSES
MANAGEMENT FEES
Under a Management Contract dated December 5, 1991, the
Fund pays a quarterly fee to Putnam Management based on the
average net assets of the Fund, as determined at the close of
each business day during the quarter, at an annual rate of 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
any amount over $1.5 billion. For its 1992 and 1993 fiscal
years, pursuant to the Management Contract and a management
contract in effect prior to December 5, 1991, under which the
management fee payable to Putnam Management was paid at the rate
of 0.85% of the average net assets of the Fund, the Fund incurred
fees of $346,061 and $1,547,368, respectively. The Fund did not
incur any management fees during its 1991 fiscal period, which
reflects a complete reduction of $13,780 pursuant to an expense
limitation in effect during the period.
BROKERAGE COMMISSIONS
During its 1991 fiscal period and 1992 and 1993 fiscal
years, the Fund incurred brokerage commissions aggregating
$3,872, $89,116 and $389,826, respectively, on agency
transactions. In fiscal 1991, 1992 and 1993, the Fund incurred
underwriting commissions aggregating $27,109, $326,329 and
$2,133,551, respectively, on underwritten transactions. In
fiscal 1993, Putnam Management, on behalf of the Fund, placed
agency and underwritten transactions having an approximate
aggregate dollar value of $116,340,222 (18.01% of the Fund's
agency and underwritten transactions on which approximately
$454,344 of commissions were paid) with brokers and dealers to
recognize research, statistical and quotation services Putnam
Management considered to be particularly useful to it and its
affiliates.
<PAGE>
ADMINISTRATIVE EXPENSE REIMBURSEMENT
The Fund reimbursed Putnam Management $25,104 for
administrative services in fiscal 1993, including $22,711 for the
compensation of certain officers of the Fund and their staff and
contributions to Putnam Investments, Inc. Profit Sharing
Retirement Plan for their benefit.
TRUSTEE FEES
Each Trustee of the Fund receives an annual fee of $1,440
and an additional fee for each Trustees' 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 incurred
Trustees' fees aggregating $17,741 in fiscal 1993.
OWNERSHIP OF FUND SHARES
At September 30, 1993 the officers and Trustees of the
Fund as a group owned less than 1% of the outstanding shares of
either class of the Fund, and to the knowledge of the Fund no
person owned of record or beneficially 5% or more of the shares
of either class of the Fund.
CLASS A SALES CHARGES, CONTINGENT DEFERRED SALES CHARGES AND
12B-1 FEES
During fiscal 1992 and 1993, Putnam Mutual Funds received
$1,732,242 and $3,070,990, respectively, in sales charges on
sales of Class A shares of the Fund, of which it retained
$268,090 and $357,774, respectively, after allowance of dealer
concessions. During fiscal 1991 and 1992, Putnam Mutual Funds
did not receive any contingent deferred sales charges upon
redemptions of Class A shares of the Fund. During fiscal 1993,
Putnam Mutual Funds received $25 in contingent deferred sales
charges upon redemptions of Class A shares of the Fund. During
fiscal 1991, Putnam Mutual Funds did not receive any sales
charges on sales of shares of the Fund or any contingent deferred
sales charges upon redemptions of shares of the Fund. During
fiscal 1993, the Fund incurred $559,785 in 12b-1 fees to Putnam
Mutual Funds pursuant to the Fund's Class A Distribution Plan.
CLASS B CONTINGENT DEFERRED SALES CHARGES AND 12B-1 FEES
During fiscal 1993, Putnam Mutual Funds received $2,008 in
contingent deferred sales charges upon redemptions of Class B
shares of the Fund. During fiscal 1993, the Fund incurred
$22,069 in 12b-1 fees to Putnam Mutual Funds pursuant to the
Fund's Class B Distribution Plan.
INVESTOR SERVICING AND CUSTODY FEES AND EXPENSES
During the 1993 fiscal year, the Fund incurred $575,227 in
fees and out-of-pocket expenses for investor servicing and
custody services provided by Putnam Fiduciary Trust Company.
<PAGE>
INVESTMENT PERFORMANCE OF THE FUND
STANDARD PERFORMANCE MEASURES
The Fund's average annual total return (compounded
annually) for Class A shares for the one-year period ended June
30, 1993 and for the life of the Fund through that date was
+37.76% and +36.46%, respectively, adjusted to reflect deduction
of the maximum sales charge of 5.75%. The cumulative total
return for Class B shares since the commencement of the public
offering of such shares on March 1, 1993 through June 30, 1993
was +12.12%, adjusted to reflect the deduction of the maximum
contingent deferred sales charge of 5.00%. See "Standard
Performance Measures" in Part II of this Statement for
information on how the Fund's total return is calculated.
PERFORMANCE RATINGS
For the 1993 fiscal year, the Fund was ranked 3 of 327
growth funds by Lipper Analytical Services, Inc. and 3 of 358
long-term growth funds by CDA/Wiesenberger's Management Results.
See "Comparison of Portfolio Performance" in Part II of this
Statement for information about how these rankings are
determined. Past performance is no guarantee of future results.
OTHER PERFORMANCE INFORMATION
The tables below show total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment
in one share of the Fund during the life of the Fund. This was a
period of fluctuating security prices. The tables do not project
the future performance of the Fund.
<PAGE>
<TABLE>
<CAPTION>
CLASS A SHARES
CUMULATIVE
FISCAL MAXIMUM NET ASSET DISTRIBUTIONS NET ASSET VALUE
YEAR OFFERING VALUE ------------------- AT YEAR-END
ENDED PRICE AT ----------------- FROM FROM WITH ALL
JUNE BEGINNING BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
30 OF PERIOD OF PERIOD PERIOD INCOME GAINS REINVESTED
- ------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
1991(1) $9.06 $8.54 $11.56 ----- $0.06 $11.63
1992 $12.27 $11.56 $14.50 ----- $0.372 $14.99
1993 $15.38 $14.50 $20.83 ----- $0.315 $21.90
------ -----
Total distributions $ ----- $0.747
====== =====
(1) Investment operations began August 31, 1990.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES DURING LIFE OF FUND (CLASS A SHARES)
PUTNAM NEW OPPORTUNITIES FUND
------------------------------
STANDARD &
FISCAL MAXIMUM OFFERING NET ASSET VALUE POOR'S 500
YEAR PRICE TO NET TO NET COMPOSITE NASDAQ CONSUMER
ENDED ASSET VALUE ASSET VALUE STOCK INDEX INDUSTRIALS PRICE INDEX
JUNE CUMULA- CUMULA- CUMULA- CUMULA- CUMULA-
30 ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
1991(1) -- +28.41% -- +36.22% -- +19.22% -- +29.51% +3.35% +3.35%
1992 +21.40% +65.45 +28.85% +75.53 +13.38% +35.18 +14.13% +47.83 +3.09 +6.54
1993 +37.76 +141.76 +46.12 +156.48 +13.58 +53.50 +21.25 +79.24 +3.00 +9.73
(1) Investment operations began August 31, 1990. Returns for this period are not annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS B SHARES
CUMULATIVE
FISCAL NET ASSET DISTRIBUTIONS NET ASSET VALUE
YEAR VALUE ---------------------- AT YEAR-END
ENDED ----------------- FROM FROM WITH ALL
JUNE BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
30 OF PERIOD PERIOD INCOME GAINS REINVESTED
- -----------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
1993(1) $17.76 $20.80 $---- $---- $20.80
----- -----
Total distributions $---- $----
======== ======
(1) Class B shares were offered beginning March 1, 1993.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE CHANGES SINCE THE COMMENCEMENT OF THE PUBLIC OFFERING OF CLASS B SHARES
PUTNAM NEW OPPORTUNITIES FUND
------------------------------
STANDARD &
FISCAL RETURN AT NET ASSET VALUE POOR'S 500
YEAR APPLICABLE TO NET COMPOSITE NASDAQ CONSUMER
ENDED CDSC ASSET VALUE STOCK INDEX INDUSTRIALS PRICE INDEX
JUNE CUMULA- CUMULA- CUMULA- CUMULA- CUMULA-
30 ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
1993(1) -- 12.12% -- 17.12% -- 3.04% -- 4.61% -- 0.91%
(1) Class B shares were offered beginning March 1, 1993. Returns for this period are not annualized.
</TABLE>
<PAGE>
The tables are not adjusted for any taxes payable on
reinvested distributions. The total values for the Fund as of
the end of each period reflect reinvestment of all distributions
and all changes in net asset value.
The NASDAQ Industrial Average is an unmanaged list of
stocks traded in the NASDAQ National Market System. Its
performance figures reflect changes of market prices but do not
reflect reinvestment of cash dividends. Standard & Poor's 500
Composite Stock Price Index is an unmanaged list of common stocks
frequently used as a general measure of stock market performance.
Its performance figures reflect changes of market prices and
reinvestment of all regular cash dividends but are not adjusted
for commissions or other costs. Because the Fund is a managed
portfolio investing in common stocks, the securities it owns will
not match those in the indices.
ADDITIONAL OFFICERS OF THE FUND
In addition to the persons listed as officers of the Fund
in Part II of this Statement, the following persons are also
officers of the Fund. Officers of Putnam Management hold the
same offices in Putnam Management's parent company, Putnam
Investments, Inc.
DANIEL L. MILLER, Vice President. Senior Vice President
of Putnam Management. Vice President of certain of the Putnam
funds.
PETER CARMAN, Vice President. Senior Managing Director
of Putnam Management. Prior to August 1, 1993, Mr. Carman was
Chief Investment Officer, Chairman of the U.S. Equity Investment
Policy Committee and a Director of Sanford C. Bernstein &
Company, Inc.
MATTHEW A. WEATHERBIE, Vice President. Managing Director
of Putnam Management. Vice President, Putnam Fiduciary Trust
Company. Vice President of certain of the Putnam funds.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Coopers & Lybrand are the Fund's independent accountants,
providing audit services, tax return review and other tax
consulting services and assistance and consultation in connection
with the review of various Securities and Exchange Commission
filings. The Report of Independent Accountants and financial
statements included in the Fund's Annual Report for the fiscal
year ended June 30, 1993, filed electronically on August 27, 1993
(811-6128), are incorporated by reference into this Statement of
Additional Information. The selected per share data and ratios
included in the Prospectus under the heading "Financial
highlights" and the financial statements incorporated by
reference into the Prospectus and the Statement of Additional
Information have been so included and incorporated in reliance
upon the report of the independent accountants, given on their
authority as experts in auditing and accounting.
