Putnam
New
Opportunities
Fund
[Artwork]
SEMIANNUAL REPORT
December 31, 1994
[Putnam Logo]
Boston * London * Tokyo
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PERFORMANCE HIGHLIGHTS
As of December 31, 1994, the fund's class A shares continued to hold Morning-
star's highest rating: five stars. *
According to Lipper Analytical Services, the fund's class A- and class B-share
returns surpassed more than 85% of the returns of all growth funds tracked by
Lipper over the 12-month period ended December 31, 1994. +
Performance should always be considered in light of a fund's investment strate-
gy. 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.
SEMIANNUAL RESULTS AT A GLANCE
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CLASS A CLASS B CLASS M
TOTAL RETURN: NAV POP NAV CDSC NAV POP
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(change in value during period
plus reinvested distributions)
6 months ended 12/31/94 16.44% 9.77% 16.04% 11.04% -- --
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CLASS A CLASS B CLASS M
SHARE VALUE: NAV POP NAV NAV POP
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6/30/94 $21.88 $23.21 $21.68 -- --
12/1/94
(inception of class M shares) -- -- -- $24.72 $25.62
12/31/94 25.26 26.80 24.94 25.26 26.18
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LONG-TERM
DISTRIBUTIONS: NO. INCOME CAPITAL GAINS TOTAL
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Class A 1 -- $0.201 $0.201
Class B 1 -- 0.201 0.201
Class M 1 -- 0.201 0.201
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Performance data represent past results and will differ for each share class.
For performance over longer periods, see page 8. POP assumes 5.75% maximum sa-
les charge for class A shares and 3.50% for class M shares, which became ef-
fective December 1, 1994. CDSC for class B shares assumes a 5% maximum contin-
gent deferred sales charge. Performance for class M shares is not shown becau-
se of the brevity of the reporting period.
* Morningstar, Inc., rates a fund in relation to other funds with similar in-
vestment objectives, based on the fund's 3-year average annual returns, adjus-
ted for risk factors and sales charges. Ratings are updated monthly. The five-
star rating for the period ending 12/31/94 puts the fund in the top 10% of
the 1,132 equity funds rated. Past performance is not indicative of future
results.
+ Lipper Analytical Services is an industry research firm whose rankings vary
over time and do not include the effects of sales charges. Return figures re-
present total returns (change in share price plus reinvestment of distribu-
tions). For periods ended 12/31/94, the fund's class A and class B shares ran-
ked as follows: 51 and 72 out of 481 growth funds for 1-year performance, res-
pectively, and class A shares ranked 4 out of 284 growth funds for 3-year per-
formance. Past performance is not indicative of future results.
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FROM THE CHAIRMAN [Photograph of George Putnam]
* (C) Karsh, Ottawa
DEAR SHAREHOLDER:
STRONG CORPORATE EARNINGS AND ROBUST ECONOMIC GROWTH GENERALLY FAILED TO TRANS-
LATE INTO HIGHER STOCK PRICES DURING 1994 AS EQUITY INVESTORS WORRIED THAT THE
FEDERAL RESERVE BOARD'S ANTI-INFLATION POLICY WOULD CHOKE OFF ECONOMIC GROWTH.
ONLY A FEW SECTORS, NOTABLY HEALTH CARE AND TECHNOLOGY, ACHIEVED FIRMLY POSITIVE
RETURNS IN THIS ENVIRONMENT.
PUTNAM NEW OPPORTUNITIES FUND CLEARLY FELT THE EFFECTS OF THIS LACKLUSTER MARKET
DURING CALENDAR 1994'S FIRST HALF. NEVERTHELESS, THE FUND POSTED EXCEPTIONAL RE-
SULTS FOR THE YEAR'S SECOND HALF, OUTPACING THE BROADER MARKET BY A WIDE MARGIN.
PROSPECTS FOR 1995 APPEAR BRIGHT. CONTINUED ECONOMIC RECOVERY IN JAPAN AND EURO-
PE MAY SPARK DEMAND FOR AMERICAN GOODS FROM INDUSTRIES IN WHICH U.S. COMPANIES
HAVE COMPETITIVE ADVANTAGES. THESE INCLUDE TELECOMMUNICATIONS, MEDIA, AND NET-
WORKING TECHNOLOGY -- SECTORS FUND MANAGER DAN MILLER AND HIS SPECIALTY GROWTH
GROUP TYPICALLY RESEARCH FOR COMPANIES WITH THE POTENTIAL FOR SUSTAINABLE LEVELS
OF PROFITABILITY AND GROWTH.
IN THE REPORT THAT FOLLOWS, DAN DISCUSSES THE FUND'S SEMIANNUAL RESULTS, AND EX-
PLAINS HOW HE PLANS TO POSITION YOUR FUND IN THE MONTHS AHEAD.
RESPECTFULLY YOURS,
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
FEBRUARY 15, 1995
* (C) Copyright
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REPORT FROM THE FUND MANAGER
DANIEL L. MILLER
Despite volatile market conditions, Putnam New Opportunities Fund turned in a
superior performance for the first half of fiscal 1995. The fund's calendar-year
results, as shown on page 8, reflect the selling pressure that weighed down the
NASDAQ over-the-counter market from February through late summer. For the six
months through December 31, 1994, however, the fund rallied strongly: class A
shares and class B shares posted total returns of 16.44% and 16.04%, respective-
ly, at net asset value (NAV). The fund also surpassed the broader market's 6-
and 12-month results of 4.87% and 1.36%, respectively, as represented by the
Standard & Poor's 500*(R) Index.
We attribute the fund's strong showing to its two largest industry weightings
- -- applied/advanced technology and medical technology/cost containment -- which
were among the best-performing market sectors during the second half of 1994.
Several large positions in each of these industry sectors propelled the fund as
the market refocused on the generally favorable earnings outlook for growth
stocks in 1995.
FUND BENEFITS FROM GROWTH OF COMPUTER NETWORKING
Applied/advanced technology was the fund's largest industry weighting at the end
of 1994, constituting nearly 25% of net assets. Several positions in this sector
did extremely well; America Online (AOL) and Stratacom were notable standouts.
The prices of both stocks rose dramatically during the semi-annual period, with
AOL advancing 96% and Stratacom surging more than 233%. Both companies continue
to benefit, albeit in different ways, from the proliferation of computer net-
working.
AOL is rapidly increasing its share of the fast-growing consumer market for on-
line services, including electronic mail, software, electronic magazines and
newspapers, and other services. At the end of 1994, AOL had more than one mil-
lion subscribers, up from 300,000 in mid-1993.
Stratacom, based in San Jose, California, designs, manufactures, and markets
equipment for high-speed data
* (R) Registered mark
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transfer, as well as other products used in public and private computer net-
works. It has been a major beneficiary of the trend toward decentralization of
corporate computing resources and the demand for various network services that
enable people to communicate and share data. Stratacom sells its products to
companies such as AT&T, which, in turn, sells networking services to its busi-
ness customers.
GROWING ACCEPTANCE OF HMOs HIGHLIGHTS MEDICAL OPPORTUNITIES
Medical cost-containment has been an emerging economic theme for the past seve-
ral years as employers seek new methods of controlling the expenses associated
with providing employee health insurance. One way your fund has participated in
this trend is by purchasing the stocks of health maintenance organizations
(HMOs).
HMOs offer medical services at lower costs than the traditional indemnity health
insurance plans do. In exchange, subscribers are required to use doctors and
hospitals that are affiliated with the organization. Enrollment in HMOs has
grown fivefold since
[Bar Chart - Page 5]
SECTOR ALLOCATION SHIFTS *
6/30/94 12/31/94
Applied/advanced technology 18.4 % 24.9 %
Medical technology/cost containment 19.8 23.1
Value-oriented consuming 16.7 14.4
Media/entertainment 15.7 12.0
Personal communications 8.6 10.5
Miscellaneous 7.9 6.5
Personal financial services 3.4 1.9
Environmental services 0.3 0.8
* Based on a percentage of net assets. Holding will vary over time.
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1982, giving the plans considerable bargaining leverage when negotiating dis-
counts on health services.
One of the fund's largest investments over the latter half of 1994 was Oxford
Health Plans, a Connecticut-based managed-care company that offers health plans
in the greater New York metropolitan area. Oxford is building its subscriber ba-
se by offering an innovative plan that gives members the option to seek medical
services outside the HMO. The company is also benefiting from the competitive
dynamics of the New York marketplace, where relatively few HMOs are available to
city residents. During the six months ended December 31, 1994, Oxford's stock
price rose 78%.
LONG-DISTANCE CARRIER EXPLOITS PROFITABLE MARKET NICHE
Several stocks in the personal communications sector also contributed to the
fund's performance in the fiscal first half. One noteworthy example is LCI In-
ternational, a long-distance telephone-service provider, whose stock price clim-
bed 67% over the period. LCI targets the small to medium-sized business market
where it can offer a level of service beyond that of the major long-distance
companies. LCI has developed a successful niche and gained a share of a huge
market; so huge, in fact, that a share as small as 1% translates into several
hundred million dollars of revenue.
THE TWO SIDES OF HIGHER INTEREST RATES: RISK AND OPPORTUNITY
Our outlook for the second half of fiscal 1995 acknowledges both the risk and
the opportunity of higher interest rates and their effect on the economy. The
Federal Reserve Board raised short-term interest rates seven times in the past
13 months, and has left the door open for further increases in 1995. The goal of
these increases has been to slow the rate of economic growth without pushing the
economy into recession. This is an extremely difficult balancing act, which,
historically, the Fed has not been able to maintain. Consequently, the risk of
a significant economic slowdown later in 1995 cannot be ignored.
However, rates appear to have risen enough to cause the consumer-driven segments
of the economy to slow somewhat. Most retailers reported disappointing Christmas
sales, providing one indicator of waning consumer demand. If this is a precursor
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TOP 10 HOLDINGS, 12/31/94
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ROBERT HALF INTERNATIONAL, INC.
World's largest staffing services company
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INFINITY BROADCASTING CORP., CLASS A
Largest U.S.-based radio station owner/operator
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HOSPITALITY FRANCHISE SYSTEMS, INC.
World's largest hotel frnachise company
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AMERICAN ONLINE, INC.
On-line computer services
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BLOCK (H&R), INC.
Income tax and on-line computer services
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OXFORD HEALTH PLAN, INC.
Healtg Maintenance Organization (HMO)
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DANKA BUSINESS SYSTEMS PLC, ADR
Office equipment services
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LINCARE HOLDINGS, INC.
Health care services
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VIACOM, INC., CLASS B
Cable television programming
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VENCOR, INC.
Health care services
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These holdings represent 14.4% of the fund's net assets. Portfolio holdings
will vary over time.
of a broader economic slowdown, the equity markets may gain confidence that in-
terest rates are peaking. Such a development would likely be positive for growth
stocks because, with interest-rate uncertainty reduced, investors may shift
their focus to companies that are capable of increasing their earnings despite
a slowdown in the overall economy.
We will continue to keep abreast not only of the economic factors that affect
growth stocks, but also of the specific industry and company fundamentals
- -- profitability, resources, competitive position, etc. -- that guide our in-
vestment decision-making process. By doing so, we believe we can keep the fund
on course for maximum long-term growth potential even in the midst of short-term
market fluctuations.
The views expressed in this report are exclusively those of Putnam Management
and are not meant as investment advise. Although the described holdings were
viewed favorably as of December 31, 1994, there is no guarantee the fund will
continue to hold these securities in the future.
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PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's performance.
Total return shows how the value of the fund's shares changed, over time, assu-
ming you held the shares through the entire period and reinvested all distribu-
tions back into the fund. We show total return in two ways: on a cumulative
long-term basis and on average how the fund might have grown each year over va-
rying periods. For comparative purposes, we show how the fund performed relative
to appropiate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 12/31/94
STANDARD
CLASS A CLASS B & POOR'S
NAV POP NAV CDSC 500 INDEX CPI
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6 months 16.44% 9.77% 16.04% 11.04% 4.87% 1.15%
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1 year 3.31 -2.61 2.55 -2.45 1.36 2.68
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3 years 72.19 62.24 -- -- 20.01 8.56
Annual average 19.86 17.50 -- -- 6.27 2.77
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Life of class A 219.54 201.19 -- -- 63.23 13.75
Annual average 30.69 28.92 -- -- 11.95 3.01
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Life of class B -- -- 44.30 40.30 9.94 4.61
Annual average -- -- 22.19 20.32 5.31 2.49
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The fund began investment operations on 8/31/90, offering shares now known as
class A shares. Effective 3/1/93, the fund began offering class B shares and
effective 12/1/94, the fund began offering class M shares. Performance for class
M shares is not shown because of the brevity of the reporting period. Fund per-
formance data do not take into account any adjustment for taxes payable on rein-
vested distributions. Performance data represent past results and differ for
each share class. Investment returns and net asset value will fluctuate so an
investor's shares, when sold, may be worth more or less than their original
cost.
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TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
CLASS M SHARES have a lower initial sales charge and a higher 12b-1 fee than
class A shares and no sales charge on redemption.
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any liabili-
ties, 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 maximum sales charge of 5.75% for class A shares and 3.50% for class M
shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the
redemption of class B shares and assumes redemption at the end of the period.
Your fund's CDSC declines from a 5% maximum during the first year to 1% during
the sixth year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
STANDARD & POOR'S 500 INDEX is an unmanaged list of common stocks that is fre-
quently used as a general measure of stock market performance. The index assumes
reinvestment of all distributions and does not take into account brokerage com-
missions or other costs. The fund's portfolio contains securities that do not
match those in the index.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it does not
represent an investment return.
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PORTFOLIO OF INVESTMENTS OWNED
December 31, 1994 (Unaudited)
COMMON STOCKS (92.8%)(a)
NUMBER OF SHARES VALUE
COMPUTER SOFTWARE (9.5%)
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$ 345,300 Alias Research, Inc. (b) $ 6,215,400
325,000 Applied Voice Technology, Inc. (b) 5,443,750
119,800 BMC Software, Inc. (b) 6,813,625
250,000 Caere Corp. (b) 4,531,250
410,000 FTP Software, Inc. (b) 12,966,250
330,000 Infosoft International, Inc. (b) 11,591,250
510,000 Mercury Interactive Corp. (b) 6,757,500
380,000 Netmanage, Inc. (b) 15,390,000
450,000 Novell, Inc. (b) 7,706,250
195,000 Oracle Systems Corp. (b) 8,604,375
537,800 Platinum Software Corp. (b) 6,991,400
550,700 PLATINUM Technology Inc. (b) 12,459,587
265,000 PeopleSoft, Inc. (b) 10,003,750
167,450 Security Dynamics Technologies, Inc. (b) 3,118,756
355,000 Synopsys, Inc. (b) 15,531,250
250,000 Wall Data, Inc. (b) 9,937,500
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144,061,893
HEALTH CARE SERVICES (8.9%)
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540,000 Coram Healthcare Corp. (b) 8,910,000
299,100 Emcare Holdings, Inc. (b) 4,336,950
556,200 Health Management, Inc. (b) 9,942,075
360,000 Homedco Group, Inc. (b) 13,545,000
390,000 Horizon Healthcare Corp. (b) 10,920,000
675,000 Lincare Holdings, Inc. (b) 19,575,000
310,000 Quantum Health Resources, Inc. (b) 8,912,500
252,500 Ren Corp. USA (b) 3,345,625
270,000 Renal Treatment Centers, Inc. (b) 5,872,500
355,000 Rotech Medical Corp. 10,117,500
153,200 Summit Care Corp. (b) 2,910,800
210,000 Value Health, Inc. (b) 7,822,500
660,000 Vencor, Inc. (b) 18,397,500
353,200 Vivra, Inc. (b) 9,889,600
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134,497,550
HMOs (7.2%)
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425,000 Healthsource, Inc. (b) 17,371,875
555,800 Mid Atlantic Medical Services, Inc. (b) 12,713,925
273,400 Oxford Health Plans Inc. (b) 21,666,950
90,000 Pacificare Health Systems, Inc. (b) 5,861,250
180,000 Pacificare Health Systems, Inc. Class B (b) 11,880,000
425,000 Sierra Health Services (b) 13,440,625
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COMMON STOCKS
NUMBER OF SHARES VALUE
HMOs (continued)
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335,000 United American Healthcare (b) $ 8,333,125
350,000 United Healthcare Corp. 15,793,750
91,600 Wellcare Management Group, Inc. (b) 2,244,200
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109,305,700
BUSINESS SERVICES (7.0%)
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257,500 Alternative Resources Corp. (b) 8,111,250
600,000 Block (H & R), Inc. 22,275,000
124,400 Corporate Express, Inc. (b) 2,425,800
950,000 Danka Business Systems ADR 20,543,750
360,000 Interim Services, Inc. (b) 8,865,000
11,400 Kelly Services, Inc. Class A 313,500
425,000 Manpower, Inc. 11,953,125
230,000 Olsten Corp. (The) 7,302,500
1,019,200 Robert Half International, Inc. (b) 24,460,800
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106,250,725
RETAIL (6.2%)
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600,000 Bed Bath & Beyond, Inc. (b) 18,000,000
275,300 Ernst Home Ctr., Inc. (b) 2,340,050
175,000 Gymboree Corp. (b) 5,031,250
400,000 Heilig-Meyers Co. 10,100,000
135,000 Home Depot, Inc. (The) 6,210,000
37,270 Hornbach Holding 3,729,407
470,000 Office Depot, Inc. (b) 11,280,000
385,400 Revco D.S., Inc. (b) 9,105,075
420,000 Sunglass Hut International (b) 9,660,000
425,000 Talbots, Inc. 13,281,250
225,000 The Sports Authority, Inc. (b) 4,725,000
--------------
93,462,032
CABLE TELEVISION (5.9%)
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382,500 Antec Corp. (b) 7,028,437
170,000 Cablevision Systems Corp. (b) 8,585,000
825,000 Century Communications Corp. Class A 6,187,500
550,000 Comcast Corp. Special Class A 8,628,125
260,000 General Instrument Corp. (b) 7,800,000
400,000 International Family Entertainment, Inc. (b) 5,050,000
225,000 Oak Industries, Inc. (b) 5,146,875
279,000 Star Sight Telecast, Inc. (b) 2,162,250
200,000 TCA Cable TV, Inc. 4,350,000
725,000 Tele-Communications Class A (b) 15,768,750
475,000 Viacom, Inc. Class B (b) 19,296,875
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90,003,812
TELEPHONE SERVICES (5.4%)
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500,000 ALC Communications Corp. (b) 15,562,500
255,000 Century Telephone Enterprises, Inc. 7,522,500
525,000 Communications Central, Inc. (b) 9,778,125
560,000 LCI International, Inc. (b) 14,980,000
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COMMON STOCKS
NUMBER OF SHARES VALUE
TELEPHONE SERVICES (continued)
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730,000 LDDS Communications, Inc. (b) $ 14,189,375
230,000 MFS Communications Company, Inc. (b) 7,532,500
265,000 Telephone & Data Systems, Inc. 12,223,125
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81,788,125
COMPUTER SERVICES (5.1%)
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425,400 America Online, Inc. (b) 23,822,400
195,400 Broadway & Seymour, Inc. (b) 4,249,950
775,000 Cambridge Technology Partners, Inc. (b) 17,243,750
250,000 First Data Corp. 11,843,750
450,000 Fiserv Inc. (b) 9,675,000
275,000 Paychex, Inc. 11,137,500
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77,972,350
WIRELESS COMMUNICATIONS (4.9%)
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560,000 Airtouch Communications, Inc. (b) 16,310,000
15,150 Cellular Communications of Puerto Rico, Inc. (b) 507,525
120,000 Cellular Communications, Inc. Class A (b) 6,420,000
505,000 Centennial Cellular Corp. Class A (b) 8,585,000
500,000 Paging Network, Inc. (b) 17,000,000
425,000 Pricellular Corp. Class A (b) 4,143,750
225,000 United States Cellular Corp. (b) 7,368,750
520,000 Vanguard Cellular Systems, Inc. (b) 13,390,000
--------------
73,725,025
BROADCASTING (4.5%)
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224,750 Clear Channel Communications, Inc. (b) 11,406,062
525,000 Emmis Broadcasting Corp. Class A (b) 7,087,500
775,000 Infinity Broadcasting Corp. Class A (b) 24,412,500
325,000 Renaissance Communications Corp. (b) 9,018,750
405,000 SFX Broadcasting, Inc. Class A (b) 7,492,500
5,500 Westcott Communications, Inc. (b) 70,125
925,000 Westwood One, Inc. (b) 9,018,750
--------------
68,506,187
RESTAURANTS (3.7%)
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775,000 Apple South, Inc. 10,171,875
361,400 Applebee's International, Inc. 4,833,725
500,000 Buffets, Inc. (b) 4,937,500
355,500 DF&R Restaurants, Inc. (b) 5,288,063
335,000 Landry's Seafood Restaurants, Inc. (b) 9,505,625
470,000 Outback Steakhouse, Inc. (b) 11,045,000
215,200 Papa Johns International, Inc. (b) 6,133,200
450,000 Taco Cabana, Inc. (b) 4,106,250
--------------
56,021,238
MEDICAL EQUIPMENT AND SUPPLIES (3.0%)
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1,000,000 Bioject Medical Technologies (b) 3,000,000
500,000 Boston Scientific Corp. (b) 8,687,500
590,000 I-Stat Corp. (b) 11,210,000
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COMMON STOCKS
NUMBER OF SHARES VALUE
MEDICAL EQUIPMENT AND SUPPLIES (continued)
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50,900 Idexx Laboratories, Inc. (b) $ 1,832,400
475,000 Igen, Inc. (b) 2,553,125
370,000 Medisense Inc. (b) 8,556,250
265,000 STERIS Corp. (b) 9,937,500
--------------
45,776,775
LODGING (2.7%)
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56,495 Doubletree Corp. (b) 1,031,034
900,000 Hospitality Franchise Systems, Inc. (b) 23,850,000
720,000 La Quinta Inns, Inc. 15,390,000
--------------
40,271,034
SEMICONDUCTORS (2.5%)
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320,000 Analog Devices Inc. (b) 11,240,000
165,000 Maxim Integrated Products Inc. (b) 5,775,000
220,000 Xilinx, Inc. (b) 13,035,000
250,000 Zilog Inc. (b) 7,375,000
--------------
37,425,000
NETWORKING EQUIPMENT (2.1%)
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40,800 Ascend Communications, Inc. (b) 1,662,600
345,000 Cisco Systems, Inc. (b) 12,118,125
110,004 General Datacomm Industries, Inc. (b) 3,561,380
110,000 Shiva Corp. (b) 4,386,250
300,000 Stratacom, Inc. (b) 10,500,000
--------------
32,228,355
FINANCIAL SERVICES (1.8%)
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370,000 First USA, Inc. 12,163,750
665,000 MBNA Corp. 15,544,375
--------------
27,708,125
COMPUTER PERIPHERALS (1.7%)
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450,000 American Power Conversion Corp. (b) 7,368,750
64,600 Dialogic Corp. (b) 1,518,100
810,000 EMC Corp. (b) 17,516,250
--------------
26,403,100
CONSUMER SERVICES (1.7%)
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335,000 CUC International, Inc. (b) 11,222,500
540,000 Loewen Group, Inc. 14,310,000
--------------
25,532,500
HOSPITAL MANAGEMENT (1.5%)
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249,500 Community Health Systems (b) 6,798,875
660,000 Health Management Assoc., Inc. (b) 16,500,000
--------------
23,298,875
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COMMON STOCKS
NUMBER OF SHARES VALUE
RECREATION (1.5%)
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702,800 Mirage Resorts, Inc. (b) $ 14,407,400
90,000 National Gaming Corp. (b) 1,080,000
635,500 Rio Hotel & Casino, Inc. (b) 7,705,437
--------------
23,192,837
PHARMACEUTICALS AND BIOTECHNOLOGY (1.5%)
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232,343 COR Therapeutics, Inc. (b) 2,555,773
400,000 Elan Corp. PLC ADR (b) 14,250,000
97,080 Immulogic Pharmaceutical Corp. (b) 703,830
450,000 Penederm, Inc. (b) 2,812,500
279,300 Theratech, Inc. (b) 2,583,525
--------------
22,905,628
ELECTRICAL EQUIPMENT (0.8%)
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250,000 Cognex Corp. (b) 6,437,500
445,000 Medar, Inc. (b) 6,118,750
--------------
12,556,250
HEALTH CARE INFORMATION SYSTEMS (0.7%)
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197,800 HBO & Co. 6,824,100
118,500 Health Management Systems, Inc. (b) 3,940,125
--------------
10,764,225
OIL AND GAS (0.7%)
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415,000 Newpark Resources, Inc. (b) 9,960,000
ELECTRIC UTILITIES (0.5%)
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500,000 Huaneng Power International, Inc. ADR 7,375,000
DATA COMMUNICATIONS (0.5%)
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448,100 Eis International, Inc. (b) 6,833,525
APPAREL (0.4%)
- -------------------------------------------------------------------------------
125,000 Tommy Hilfiger Corp. (b) 5,640,625
HOUSEHOLD PRODUCTS (0.4%)
- -------------------------------------------------------------------------------
174,450 Duracraft Corp. (b) 5,560,594
FREIGHT (0.3%)
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81,000 Fritz Companies, Inc. (b) 3,807,000
ENVIRONMENTAL SERVICES (0.2%)
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175,000 Molten Metal Technology, Inc. (b) 2,843,750
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TOTAL COMMON STOCKS (cost $1,193,886,909) $1,405,677,835
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<PAGE>
<PAGE>
PREFERRED STOCKS (0.7%) (cost $9,648,179)
NUMBER OF SHARES VALUE
COMPUTER SOFTWARE (0.7%)
- -------------------------------------------------------------------------------
19,000 Sap Ag Systeme Preference Bearer $ 10,843,125
CONVERTIBLE BONDS AND NOTES (0.5%)
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------
3,245,000 Summit Health Ltd. cv. sub. notes 7 1/2s, 2003 4,303,681
4,500,000 Office Depot Inc. sub. liquid yield, cv. notes
zero %, 2007 3,307,500
- -------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS AND NOTES (cost $6,810,880) $ 7,611,181
- -------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS (0.3%) (cost $1,992,838) (a)
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------
72,000 Cellular Communications, Inc. Class A (b) 3,852,000
SHORT-TERM INVESTMENTS (8.1%) (a)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------
$20,000,000 Bellsouth Telecomm, Inc. 5.98s, 1/12/95 $ 19,963,456
20,000,000 Ciesco, Inc. 6s, January 19, 1995 19,940,000
15,000,000 Corporate Asset Funding Co., 5.9s, 1/12/95 14,972,959
25,000,000 Ford Motor Credit Co. 4.88s, January 5, 1995 24,983,889
23,195,000 Interest in $267,187,000 joint repurchase agreement
dated December 30, 1994 with Morgan (J.P) & Co., due
January 3, 1995 with respect to various U.S. Treasury
Obligations -- maturity value of $267,344,343 for an
effective yield of 5.3% 23,201,830
20,000,000 Merrill Lynch & Co. Inc. 6.05s, January 19, 1995 19,939,500
- -------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (cost $123,001,634) $123,001,634
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,335,340,440) (c) $1,550,985,775
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
NOTES
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on total net assets of $1,514,119,157, which
correspond to a net asset value per class A, class B, class M and class Y
share of $25.26, $24.94, $25.26 and $25.30, respectively.
(b) Non-income-producing security.
(c) The aggregate identified cost for federal income tax purposes is
$1,337,990,987, resulting in gross unrealized appreciation and depreciation
of $261,686,141 and $48,691,353, respectively, or net unrealized apprecia-
tion of $212,994,788.
ADR or ADS after the name of a foreign holding stands for American Depository
Receipt or American Depository Shares, respectively, representing ownership of
foreign securities on deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994 (Unaudited)
ASSETS
- -------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,335,340,440) (Note 1) $1,550,985,775
Cash 5,021
Dividends receivable 394,917
Interest receivable 60,844
Receivable for shares of the fund sold 14,761,679
Receivable for securities sold 9,002,196
Unamortized organization expenses (Note 1) 1,915
- -------------------------------------------------------------------------------
TOTAL ASSETS $1,575,212,347
LIABILITIES
- -------------------------------------------------------------------------------
Payable for securities purchased 50,143,176
Payable for shares of the fund repurchased 6,924,644
Payable for compensation of Manager (Note 2) 2,160,974
Payable for distribution fees (Note 2) 994,858
Payable for administrative services (Note 2) 9,166
Payable for compensation of Trustees (Note 2) 1,055
Payable for organization expenses (Note 1) 23,788
Payable for investor servicing and custodian fees (Note 2) 347,326
Other accrued expenses 488,203
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 61,093,190
- -------------------------------------------------------------------------------
NET ASSETS $1,514,119,157
REPRESENTED BY
- -------------------------------------------------------------------------------
Paid-in capital (Note 4) $1,298,158,172
Accumulated net investment loss (5,641,939)
Accumulated net realized gain on investment transactions 5,957,589
Net unrealized appreciation of investments 215,645,335
- -------------------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO
CAPITAL SHARES OUTSTANDING $1,514,119,157
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($917,410,540 divided by 36,317,188 shares) $25.26
Offering price per class A share (100/94.25 of $25.26) * $26.80
Net asset value and redemption price per class B share
($585,260,011 divided by 23,471,144 shares) + $24.94
Net asset value and redemption price per class M share
($755,947 divided by 29,932) $25.26
Offering price per class M share (100/96.50 of $25.26) * $26.18
Net asset and redemption price per class Y share
($10,692,659 divided by 422,705) $25.30
- -------------------------------------------------------------------------------
* 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.
<PAGE>
<PAGE>
STATEMENT OF OPERATIONS
Six months ended December 31, 1994 (Unaudited)
INVESTMENT INCOME
- -------------------------------------------------------------------------------
Interest $ 2,498,161
- -------------------------------------------------------------------------------
Dividends (Net foreign tax of $11,870) 1,196,099
- -------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 3,694,260
- -------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 3,988,968
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,184,237
- -------------------------------------------------------------------------------
Administrative services (Note 2) 9,338
- -------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 16,518
- -------------------------------------------------------------------------------
Distribution fee . class A (Note 2) 994,289
- -------------------------------------------------------------------------------
Distribution fee . class B (Note 2) 2,332,315
- -------------------------------------------------------------------------------
Distribution fee . class M (Note 2) 187
- -------------------------------------------------------------------------------
Reports to shareholders 234,355
- -------------------------------------------------------------------------------
Auditing 21,548
- -------------------------------------------------------------------------------
Legal 13,283
- -------------------------------------------------------------------------------
Postage 373,715
- -------------------------------------------------------------------------------
Registration fees 109,076
- -------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 5,926
- -------------------------------------------------------------------------------
Other 52,444
- -------------------------------------------------------------------------------
TOTAL EXPENSES 9,336,199
- -------------------------------------------------------------------------------
NET INVESTMENT LOSS (5,641,939)
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 8,785,071
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 173,142,457
- -------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 181,927,528
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $176,285,589
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31 1994* JUNE 30 1994
- -------------------------------------------------------------------------------
INCREASE IN NET ASSETS
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment loss $ (5,641,939) $ (6,596,640)
- -------------------------------------------------------------------------------
Net realized gain on investments 8,785,071 16,471,902
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 173,142,457 (40,895,256)
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 176,285,589 (31,019,994)
- -------------------------------------------------------------------------------
Distributions to shareholders from
Net realized gain on investments
Class A (6,964,261) (8,898,215)
- -------------------------------------------------------------------------------
Class B (4,468,043) (2,205,357)
- -------------------------------------------------------------------------------
Class M (77,516) --
- -------------------------------------------------------------------------------
Class Y (892) --
- -------------------------------------------------------------------------------
Increase from capital share transactions
(Note 4) 366,819,193 690,524,657
- -------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 531,594,070 648,401,091
- -------------------------------------------------------------------------------
NET ASSETS
Beginning of period 982,525,087 334,123,996
- -------------------------------------------------------------------------------
END OF PERIOD (including accumulated net
investment loss of $5,641,939 and $0,
respectively) $1,541,119,157 $982,525,087
- -------------------------------------------------------------------------------
*Unaudited.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
For the period For the period
July 19, 1994 December 1, 1994
(commencement of (commencement of Six months
operations) to operations) to ended Year ended
December 31* December 31* December 31* June 30
1994 1994 1994 1994
- -------------------------------------------------------------------------------------------------------------------
Class Y Class M Class B
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $22.59 $24.72 $21.68 $20.80
- -------------------------------------------------------------------------------------------------------------------
Investment operations
Net investment gain (loss) (.02) (.01) (.16) (.11)
- -------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 2.93 .75 3.62 1.44
- -------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.91 .74 3.46 1.33
- -------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from
net realized gain on investments (.20) (.20) (.20) (.45)
- -------------------------------------------------------------------------------------------------------------------
Total distributions (.20) (.20) (.20) (.45)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $25.30 $25.26 $24.94 $21.68
- -------------------------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (e) 12.96(b) 3.06(b) 16.04(b) 6.18
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $10,693 $756 $585,260 $333,738
- -------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) 0.49 0.11 .99 2.04
- -------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (0.20) (0.12) (.69) (1.55)
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 28.16(b) 28.16(b) 28.16(b) 52.76
- -------------------------------------------------------------------------------------------------------------------
<FN>
* Unaudited
(a) Reflects a voluntary absorption of expenses incurred by the fund and an expense limitation during the period. As a result of
these limitations, expenses of the fund for the periods ended June 30, 1991 reflect a reduction of $0.05 per share. (See Note
2.)
(b) Not annualized.
(c) Portfolio turnover excludes the impact of assets received from the acquisition of Putnam Information Sciences Trust.
(d) The amount shown is a balancing figure and does not accord with the net loss on investments which excludes the unrealized
appreciation acquired from Putnam Information Sciences Trust.
(e) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (Continued)
(For a share outstanding throughout the period)
For the period For the period
March 1, 1993 August 31, 1990
(commencement of Six months (commencement of
operations) to ended Year ended operations) to
June 30 December 31* June 30 June 30
1993 1994 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $17.76 $21.88 $20.83 $14.50 $11.56 $8.54
- -----------------------------------------------------------------------------------------------------------------------------------
Investment operations
Net investment gain (loss) (.05) (.06) (.06) (.12) (.02) (.11)(a)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 3.09 3.64 1.56 6.77 3.33(d) 3.19
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.04 3.58 1.50 6.65 3.31 3.08
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from
net realized gain on investments -- (.20) (.45) (.32) (.37) (.06)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.20) (.45) (.32) (.37) (.06)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.80 $25.26 $21.88 $20.83 $14.50 $11.56
- -----------------------------------------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (e) 17.12(b) 16.44(b) 7.00 46.12 28.85 36.22(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $15,698 $917,411 $648,787 $318,426 $141,206 $3,164
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) 0.67(b) 0.60 1.23 1.31 1.64 2.28(a)(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (0.57)(b) (0.31) (.82) (0.98) (.91) (1.14)(a)(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 93.59(b) 28.16(b) 52.76 93.59 116.04(c) 71.54(b)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1994 (Unaudited)
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
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 Putnam Investment Management's judgment, possess above-
average, long-term growth potential.
The fund offers class A, class B, class M and class Y shares. The fund commenced
its public offering of class M and Y shares on December 1, 1994 and July 18,
1994, respectively. Class A shares are sold with a front-end sales charge of
5.75%. Class B shares do not pay a front-end sales charge, but pay a higher on-
going distribution fee than class A shares and are subject to a contingent defe-
rred 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%. Class Y
shares which do not pay a front-end or contingent deferred sales charge, are ge-
nerally 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 only to defined contri-
bution plans with an initial investment of $240 million in a combination of Put-
nam funds and other investments managed by Putnam. Each class bears expenses
unique to that class (including the distribution fees applicable to such class)
and votes as a class only with respect to its own distribution plan or other ma-
tters on which a class vote is required by law or determined by the Trustees.
All other expenses of the fund are borne pro-rata by the holders of both classes
of shares. Shares of each class would receive their pro rata share of the net
assets of the fund if the fund were liquidated. In addition, the Trustees decla-
re separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently fo-
llowed by the fund in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles.
A) SECURITY VALUATION Investments for which market quotations are readily
available are stated at market value, which is determined using the last repor-
ted sale price, or, if no sales are reported -- as in the case of some securi-
ties traded over-the-counter -- the last reported bid price, except that certain
U.S. government obligations are stated at the mean between the last reported bid
and asked prices. Short-term investments having remaining maturities of 60 days
or less are stated at amortized cost which approximates market, and other inves-
tments are stated at fair value following procedures approved by the Trustees.
B) 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 and 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.
<PAGE>
<PAGE>
C) 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 compa-
nies managed by Putnam Investment Management, Inc. ("Putnam Management)", the
fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc. and cer-
tain other accounts. These balances may be invested in one or more repurchase
agreements and/or short-term money market instruments.
D) REPURCHASE AGREEMENTS The fund, 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 accru-
ed interest. The fund's Manager 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.
E) FEDERAL TAXES It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the In-
ternal 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. Therefo-
re, no provision has been made for federal taxes on income, capital gains or un-
realized appreciation of securities held, and excise tax on income and capital
gains.
F) DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded by
the fund on the ex-dividend date.
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.
G) UNAMORTIZED ORGANIZATION EXPENSES Expenses incurred by the fund in connection
with its organization, its registration with the Securities Exchange Commission
and with various state and the initial public offering of its shares aggregated
$54,369. These expenses are being amortized by the fund on a straight-line basis
over a five-year period.
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management, for management and investment advisory servi-
ces 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 any amount over $1.5 billion, subject to reduction in any year by the
amount of certain brokerage commissions and fees (less expenses) received by
affiliates of the Manager of the fund's portfolio transactions.
The fund also reimburses the Manager for the compensation and related expenses
of certain officers of the fund and their staff who provide administrative ser-
vices to the fund. The aggregate amount of all such reimbursements is determined
annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $2,020 and an additional
fee for each Trustees' meeting attended. Trustees who are not interested persons
of the Manager and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
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.
Investor servicing and custodian fees reported in the Statement of
<PAGE>
<PAGE>
operations for the six months ended December 31, 1994 have been reduced by cre-
dits allowed by PFTC.
The fund has adopted a distribution plan with respect to its class A shares
("the Class A Plan") pursuant to Rule 12b-1 under the Investment Company Act
of 1940. The purpose of the Class A Plan is to compensate Putnam Mutual Funds
Corp., a wholly owned subsidiary of Putnam Investments, Inc., for services pro-
vided and expenses incurred by it in distributing class A shares. The Trustees
have approved payment by the fund to Putnam Mutual Funds Corp. at an annual rate
of 0.25% of the fund's average net assets attributable to class A shares.
During the period ended December 31, 1994 , Putnam Mutual Funds Corp., a wholly
owned subsidiary of Putnam Investments, Inc., acting as an underwriter, received
net commissions of $783,299 from the sale of class A shares of the fund.
A deferred sales charge of up to 1% is assessed on certain redemptions of class
A shares purchased as part of an investment of $1 million or more. For the pe-
riod ended December 31, 1994, Putnam Mutual Funds Corp., acting as an underwri-
ter received $4,749 on such redemptions.
The fund has adopted a separate distribution plan with respect to its class B
shares (the "Class B Plan") pursuant to rule 12b-1 under the Investment Company
Act of 1940. The purpose of the Class B Plan is to compensate Putnam Mutual
Funds Corp. for services provided and expenses incurred by it in distributing
class B shares. The Class B Plan provides payments by the fund to Putnam Mutual
Funds Corp. at an annual rate of 1.00% of the funds average net assets attribu-
table to class B shares.
Putnam Mutual Funds Corp. also receives the proceeds of contingent deferred sa-
les charges levied on class B share redemptions with in four years of purchase.
The charge is based on declining rates, which begin at 5.0% of the net asset va-
lue of the redeemed shares. Putnam Mutual Funds Corp. received contingent defe-
rred sales charges of $349,311 from such redemptions for the period ended Decem-
ber 31, 1994.
On December 1, 1994 the fund adopted a separate distribution plan with respect
to its class M shares (the "Class M Plan") pursuant to rule 12b-1 under the In-
vestment Company Act of 1940. The purpose of the Class M Plan is to compensate
Putnam Mutual Funds Corp. for services provided and expenses incurred by it in
distributing class M shares. The Class M Plan provides for payments by the fund
to Putnam Mutual Funds Corp. at an annual rate of 1.00% of the fund's average
net assets attributable to class M shares. The Trustees have approved payment by
the fund to Putnam Mututal Funds Corp. at an annual rate of 0.75% of the fund's
average net assets attributable to class M shares.
For the period December 1, 1994 (commencement of operations) to December 31,
1994, Putnam Mutual Funds Corp., acting as an underwriter, received commissions
of $3,099 from the sales of class M shares of the fund.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the six months ended December 31, 1994, purchases and sales of invest-
ment securities other than short-term investments aggregated $692,026,754 and
$330,129,274, respectively.
There were no purchases or sales of U.S. government obligations during the year.
In determining the net gain or loss on securities sold, the cost of securities
has been determined on the identified cost basis.
<PAGE>
<PAGE>
NOTE 4
CAPITAL SHARES
At December 31, 1994, there was an unlimited number of shares of beneficial in-
terest authorized divided into four classes, class A, class B, class M and class
Y capital shares. Transactions in capital shares were as follows:
SIX MONTHS ENDED
DECEMBER 31, 1994
CLASS A SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 19,612,259 $476,817,629
Shares issued in connection with
reinvestment of distributions 272,938 6,389,457
- -------------------------------------------------------------------------------
19,885,197 483,207,086
- -------------------------------------------------------------------------------
Shares repurchased (13,221,140) (321,596,530)
NET INCREASE 6,664,057 $161,610,556
- -------------------------------------------------------------------------------
YEAR ENDED JUNE 30, 1994
CLASS A SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 33,758,633 $802,293,848
Shares issued in connection with
reinvestment of distributions 333,672 8,021,432
- -------------------------------------------------------------------------------
34,092,305 810,315,280
- -------------------------------------------------------------------------------
Shares repurchased (19,724,856) (468,827,584)
NET INCREASE 14,367,449 $341,487,696
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
DECEMBER 31, 1994
CLASS B SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 10,547,576 $253,640,156
Shares issued in connection with
reinvestment of distributions 173,177 4,003,828
- -------------------------------------------------------------------------------
10,720,753 257,643,984
- -------------------------------------------------------------------------------
Shares repurchased (2,642,041) (63,644,452)
NET INCREASE 8,078,712 $193,999,532
- -------------------------------------------------------------------------------
YEAR ENDED JUNE 30, 1994
CLASS B SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 16,813,104 $400,427,970
Shares issued in connection with
reinvestment of distributions 84,593 2,023,470
- -------------------------------------------------------------------------------
16,897,697 402,451,440
- -------------------------------------------------------------------------------
Shares repurchased (2,259,924) (53,414,479)
NET INCREASE 14,637,773 $349,036,961
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
DECEMBER 31, 1994
CLASS M SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 30,778 $746,712
Shares issued in connection with
reinvestment of distributions 38 892
- -------------------------------------------------------------------------------
30,816 747,604
- -------------------------------------------------------------------------------
Shares repurchased (884) (21,187)
NET INCREASE 29,932 $726,417
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
DECEMBER 31, 1994
CLASS Y SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 442,951 $10,988,594
Shares issued in connection with
reinvestment of distributions 3,307 77,515
- -------------------------------------------------------------------------------
446,258 11,066,109
- -------------------------------------------------------------------------------
Shares repurchased (23,553) (583,421)
NET INCREASE 422,705 $10,482,688
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
OUR COMMITMENT TO QUALITY SERVICE
CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested Service Seal for the
past five years, through 1994. DALBAR, an independent research firm, ran more
than 10,000 tests of 38 shareholder service components. In every category, Put-
nam outperformed the industry standard.
HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month from a
Putnam fund or from your checking or savings account. *
SWITCH FUNDS EASILY.
You can move money from one account to another with the same class of shares
without a service charge. (This privilege is subject to change or termination.)
ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business day at the then-
current net asset value, which may be more or less than their original cost.
For details about any of these or other services, contact your financial advisor
or call the toll-free number shown below and speak with a helpful Putnam repre-
sentative.
To make an additional investment in this or any other Putnam fund, contact your
financial advisor or call our toll-free number:
1-800-225-1581.
* Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market. Investors should consider their ability to con-
tinue purchasing shares during periods of low price levels.
<PAGE>
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman William F. Pounds, Vice Chairman
Jameson Adkins Baxter Hans H. Estin
John A. Hill Elizabeth T. Kennan
Lawrence J. Lasser Robert E. Patterson
Donald S. Perkins George Putnam, III
A.J.C. Smith W. Nicholas Thorndike
OFFICERS
George Putnam Charles E. Porter
President Executive Vice President
Patricia C. Flaherty Lawrence J. Lasser
Senior Vice President Vice President
Gordon H. Silver Peter Carman
Vice President Vice President
Brett C. Browchuk Matthew Weatherbie
Vice President Vice President
Daniel L. Miller William N. Shiebler
Vice President and Fund Manager Vice President
John R. Verani Paul M. O.Neil
Vice President Vice President
John D. Hughes Beverly Marcus
Vice President and Treasurer Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam New Opportunities
Fund. It may also be used as sales literature when preceded or accompanied by
the current prospectus, which gives details of sales charges, investment objec-
tives 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.
Shares of mutual funds are not deposits of, or guaranteed or endorsed by, any
financial institution, are not insured by the Federal Deposit Insurance Corpora-
tion (FDIC), the Federal Reserve Board, or any other agency, and involve risk,
including the possible loss of the principal amount invested.
<PAGE>
<PAGE>
PUTNAM INVESTMENTS Bulk Rate
U.S. Postage
The Putnam Funds Paid
One Post Office Square Putnam
Boston, Massachusetts 02109 Investments
852/358-16294
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APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND
EDGAR-FILED TEXTS:
(1) Boldface typeface is displayed with capital letters, italic typeface is
displayed in normal type.
(2) Because the printed page breaks are not reflected, certain tabular and
columnar headings and symbols are displayed differently in this filing.
(3) Bullet points and similar graphic signals are omitted.
(4) Page numbering has been omitted.
(5) The trademark symbol has been replaced by (TM).
(6) The copyright symbol has been replaced by (C).
(7) The dagger symbol has been replaced by (+).
(8) The registered mark symbol has been replaced by (R).
