PUTNAM
NEW
OPPORTUNITIES
FUND
[Artwork]
ANNUAL REPORT
June 30, 1995
[Putnam Logo]
Boston * London * Tokyo
<PAGE>
PERFORMANCE HIGHLIGHTS
Morningstar, Inc., an independent rating agency, awarded the fund's class A
shares its highest ranking of five stars for risk-adjusted performance for the
three-year period ended 6/30/95. *
Lipper Analytical Services, an industry research firm, ranked the fund's class
A shares higher than 95% of all growth funds tracked for the one- and three-
year periods ended 6/30/95. +
FISCAL 1995 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)
12 months ended 6/30/95 36.36% 28.54% 35.34% 30.34% -- --
Since 12/1/94 (inception of
Class M shares) -- -- -- -- 20.40% 16.17%
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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
6/30/95 29.58 31.38 29.09 29.51 30.58
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CAPITAL GAINS
SHORT- LONG- RETURN
DISTRIBUTIONS: NO. INCOME TERM TERM OF CAPITAL(1) TOTAL
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Class A 1 -- -- $0.195 $0.006 $.201
Class B 1 -- -- 0.195 0.006 .201
Class M 1 -- -- 0.195 0.006 .201
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Performance data represent past results and will differ for each share class.
For performance over longer periods, see pages 8 and 9. POP assumes 5.75% ma-
ximum sales charge for class A shares and 3.50% for class M shares, which be-
came effective 12/1/94. CDSC for class B shares assumes 5% maximum contingent
deferred sales charge. (1) See page 30 for more information.
* Morningstar rates a fund in relation to other funds with similar investment
objectives, based on the fund's 3-, 5-, and 10-year average annual returns,
adjusted for risk factors and sales charges. The five-star rating for the
three year period ending 6/30/95 puts the fund in the top 10% of all 1,234
equity funds rated. Five-year and ten-year periods ending 6/30/95 were not
rated.
+ Lipper Analytical Services is an industry research firm whose rankings vary
over time and do not include the effects of sales charges. For periods ended
6/30/95, the fund's class A and class B shares ranked as follows: 17 and 20
out of 514 growth funds for one year, respectively, and class A shares ranked
1 out of 303 growth funds for three-year performance.
* Past performance is not indicative of future results.
<PAGE>
FROM THE CHAIRMAN [Photograph of George Putnam]
*(C) Karsh, Ottawa
DEAR SHAREHOLDER:
THE STOCK MARKET MADE A REMARKABLE LEAP OUT OF THE DOLDRUMS DURING THE FIRST
HALF OF CALENDAR 1995, AND PUTNAM NEW OPPORTUNITIES FUND CLEARLY WAS AMONG THE
BENEFICIARIES OF THIS TURNABOUT.
FUND MANAGER DANIEL MILLER IS SATISFIED WITH THE CURRENT COMPOSITION OF YOUR
FUND'S PORTFOLIO, AS WELL HE SHOULD BE; THE FUND CONTINUED TO RUN SIGNIFICANTLY
AHEAD OF THE MARKET AT LARGE, AS MEASURED BY THE STANDARD & POOR'S 500*(R) IN-
DEX. IN SELECTING YOUR FUND'S HOLDINGS, DAN SEEKS OUT STOCKS WITH ABOVE-AVERAGE
LONG-TERM GROWTH POTENTIAL.
IT IS WELL WORTH NOTING THAT OVER THE FUND'S LIFE (SINCE AUGUST 31, 1990), ITS
CLASS A SHARES HAVE PROVIDED AN AVERAGE ANNUAL RETURN OF JUST UNDER 30% AFTER
ACCOUNTING FOR THE MAXIMUM SALES CHARGE. THAT COMPARES WITH ABOUT 15% FOR THE
S&P 500.
WITH RETURNS CONSISTENTLY THIS STRONG, IT BEHOOVES US TO REMIND YOU THAT PAST
PERFORMANCE DOES NOT ENSURE FUTURE RESULTS. OCCASIONAL PERIODS OF BELOW-PAR
GROWTH ARE TO BE EXPECTED FROM THE STOCKS IN WHICH YOUR FUND INVESTS. HOWEVER,
THESE DECLINES OFTEN PROVIDE THE POTENTIAL FOR ACHIEVING STRONGER-THAN-MARKET
GAINS OVER THE LONG TERM.
IN THE PAGES THAT FOLLOW, DAN REVIEWS YOUR FUND'S PERFORMANCE IN FISCAL 1995
AND WHAT HE SEES AS ITS PROSPECTS FOR FISCAL 1996.
RESPECTFULLY YOURS,
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
AUGUST 16, 199
*(C) Copyright
*(R) Rigistered Mark
<PAGE>
REPORT FROM THE FUND MANAGER
DANIEL L. MILLER
One headline from the July 10, 1995, issue of Barron's epitomized the sheer po-
wer of mutual funds with big stakes in technology-related stocks over the first
six months of 1995: "Slugfest: Tech-powered funds rip the cover off the ball."
The same can be said for Putnam New Opportunities Fund, whose nearly 30% stake
in applied/advanced technology helped push the fund's class A shares to a 36.36%
total return and its class B shares to 35.34% both at net asset value (NAV), for
the fiscal year ended June 30, 1995. As the tables on pages 8 and 9 will attest,
these returns were more than enough to propel the fund beyond the Standard &
Poor's 500 Index, the fund's benchmark index, as it has done consistently since
its introduction on August 31, 1990.
We believe the fund owns the stocks of companies that truly exemplify the fund's
goals: strong long-term growth prospects, dominant market shares, quality mana-
gement, and freedom from excessive government regulation. Although future per-
formance can not be guaranteed, over the long term, we believe that the fund
should continue to produce the outstanding results for which it has become
known.
TECHNOLOGY CONTINUES TO BENEFIT FUND, ON-LINE SERVICES STAND OUT
The 1995 stock-market rally owed a great deal of its strength to the outstanding
performance of high-tech stocks. Technology-related investments have, in many
cases, returned 20% or more through June 30. Like any "hot" area of the stock
market, however, there is always the risk that today's stock market darlings
could be tomorrow's dogs. Therefore, we have peppered our technology weighting
with stocks that we believe offer good secular growth potential, i.e., those
that have the potential for strong performance over time.
Companies whose businesses are related to the burgeoning on-line services indus-
try are good examples. The on-line services industry includes business related
to the Internet, electronic mail, and software. As we noted in the fund's semi-
annual report, we believe America Online, Inc. will continue to capture the
lion's share of the fast-growing consumer market for on-line services. In fact,
following the close of the fund's fiscal year, the company announced that it now
serves three million subscribers (up from 1.5 million at the close of the fund's
semiannual period). Additionally, the company's stock recently achieved a 52-
week high.
<PAGE>
With the potential of the on-line world being compared with that of the televi-
sion industry in the 1940s, many companies and organizations have sought ways to
take part. A primary concern for them, however, is ensuring the security and in-
tegrity of their products. One company in the fund's portfolio has capitalized
on this need quite successfully: Security Dynamics Technologies, Inc., of Cam-
bridge, Massachusetts, with its patented computer log-on system. Since we pur-
chased the company's stock last year at its initial public offering, its price
has tripled. As network access security becomes increasingly important in to-
day's technology-driven organizations, this company should be in an excellent
position to benefit.
HMOS/HEALTH-SERVICE STOCKS UNDERVALUED
Like a game of musical chairs, 1995 may come to be known as the year the music
stopped for most health maintenance organizations (HMOs). The majority of these
companies have survived a period of improving profit margins, aggressive pri-
cing, and strong membership
[Bar Chart - Page 5]
SECTOR ALLOCATION SHIFTS *
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12/31/94 6/30/95
APPLIED/ADVANCED TECHNOLOGY 24.90 29.10
MEDICAL
TECHNOLOGY/COST CONTAINMENT 23.10 18.60
VALUE-ORIENTED CONSUMING 14.40 16.70
MEDIA/ENTERTAINMENT 12.00 13.50
PERSONAL COMMUNICATIONS 10.50 8.50
MISCELLANEOUS
(CASH AND OTHER) 6.40 4.60
PERSONAL FINANCIAL SERVICES 1.90 1.60
ENVIRONMENTAL SERVICES 0.80 0.00
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* Based on percentage of net assets. Holdings will vary over time.
<PAGE>
rates. As Wall Street wondered whether or not this heady period could last for-
ever, signs of price competition began to hurt the stocks of managed-care provi-
ders -- including those owned by your fund.
We firmly believe, however, that we have identified companies that have dominant
market positions in their respective regions and that will be able to maintain
solid earnings over time. Some of these companies include Healthsource, Inc.,
which has tapped the wide-open HMO market in New Hampshire; Oxford Health Plans
Inc., which is an innovative player in New York's tri-state metropolitan area,
the largest metropolitan area in the country; and Sierra Health Services of Las
Vegas, which is considered to be one of the fastest growing-areas of the United
States.
We also believe that companies that offer products which improve medical func-
tions and procedures will also have a promising future. One of these firms is
I-Stat Corp. The company has successfully marketed an innovative blood testing
product and has formed potentially lucrative alliances with other companies such
as Hewlett-Packard.
RADIO STATION OPERATOR COMMANDS BIG POSITION IN LARGE MARKETS
Most people probably know Infinity Broadcasting Corp., which is one of our major
broadcasting holdings, because it is the employer of radio personality Howard
Stern. But over the last several years the company has quietly become the coun-
ty's largest radio station operator. It has done this through an aggressive ac-
quisition strategy of buying attractively priced stations in key markets across
the United States. Legislation now winding its way through Congress would, if
passed, allow Infinity -- a holding in the media/ entertainment sector of the
portfolio -- to expand its acquisition effort.
BUSINESS SERVICES: A GROWTH SECTOR FOR TODAY AND TOMORROW
One of the challenges we face in managing this portfolio is not only taking ad-
vantage of the fast-growing industries of today, but targeting the emerging ones
of tomorrow. We continue to see strong potential in the business services indus-
try. In our opinion, as corporate downsizing pushes many vital services to the
outside, companies that fill the void will stand to benefit.
One such company is Danka Business Systems PLC, an office-equipment service pro-
vider whose shares are owned by the fund in the form of American Depository Re-
ceipts (shares of foreign companies issued by U.S. banks). The company controls
a large position in this growing market and could stand to benefit if more com-
panies contract out for tasks such as maintaining copier machines.
<PAGE>
TOP 10 COMMON STOCK HOLDINGS, 6/30/95
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AMERICA ONLINE, INC.
On-line computer services
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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 franchise company
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XILINX, INC.
Semiconductors
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OFFICE DEPOT, INC.
Retail office supply
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MIRAGE RESORTS, INC.
Gaming
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PAGING NETWORK, INC.
Wireless communications
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ALC COMMUNICATIONS CORP.
Telephone services
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CISCO SYSTEMS, INC.
Networking equipment
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ROBERT HALF INTERNATIONAL, INC.
World's largest staffing services company
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The trend toward leaner corporations also benefits the temporary help industry.
As corporate America attempts to streamline its payrolls, we believe temporary
help will play a larger role. Some of the companies in which the fund invests
include Manpower, Inc. and Robert Half International, Inc.
SMALL-CAP STOCKS EXPECTED TO EXCEL IN CALENDAR 1995
Financial pundits are currently predicting a resurgence in small-capitalization
stocks for the remainder of 1995. Since your fund tends to own small to medium-
sized companies, that would certainly be a plus. Additionally, we believe the
economy is in a period of slow but steady growth with little evidence of infla-
tion.
However, we want to remind investors that current market conditions are not our
primary focus. We will continue to target sectors of the company -- and compa-
nies within them -- with above-average long-term growth potential and then in-
vest in the companies within those sectors that we believe have best prospect
over time.
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 6/30/95, there is no guarantee the fund will continue to
hold thse securities in the future.
<PAGE>
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 relati-
ve to appropriate indices and benchmarks.
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.
TOTAL RETURN FOR PERIODS ENDED 6/30/95
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CLASS A CLASS B CLASS M
NAV POP NAV CDSC NAV POP
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1 year 36.36% 28.54% 35.34% 30.34% -- --
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3 year 113.17 100.98 -- -- -- --
Annual average 28.70 26.20 -- -- -- --
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Life of class A 274.18 252.70 -- -- -- --
Annual average 31.34 29.75 -- -- -- --
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Life of class B -- -- 68.31 65.31 -- --
Annual average -- -- 25.04 24.08 -- --
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Life of class M -- -- -- -- 20.40% 16.17%
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COMPARATIVE INDEX RETURNS FOR PERIOD ENDED 6/30/95
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STANDARD &POOR'S CONSUMER
500 INDEX PRICE INDEX
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1 year 26.03% 3.04%
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3 years 45.21 8.77
Annual average 13.25 2.84
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Life of class A 95.11 15.88
Annual average 14.84 3.09
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Life of class B 31.13 6.57
Annual average 12.32 2.77
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Life of class M 21.97 1.87
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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 on
12/1/94, class M shares. Fund performance data do not take into account any ad-
justment for taxes payable on reinvested distributions. Performance data repre-
sent 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 mo-
re or less than their original cost.
<PAGE>
[Line Chart - Page 9]
GROWTH OF$10,000 COMPARED
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FUND'S CLASS A COMPETITIVE INDEX CONSUMER
SHARES AT POP (S&P 500 INDEX) PRICE INDEX
8/31/90 $ 9,425 $10,000 $10,000
6/30/91 12,841 11,920 10,334
6/30/92 16,545 13,512 10,653
6/30/93 24,176 15,346 10,973
6/30/94 25,867 15,565 11,246
6/30/95 $35,270 $19,611 $11,588
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Past performance is no assurance of future results. A $10,000 investment in the
fund's class B shares at inception on 3/1/93 would have been valued at $16,831
on 6/30/95 ($16,531 with a redemption at the end of the period). A $10,000 in-
vestment in the fund's class M shares at inception on 12/1/94 would have been
valued at $12,040 on 6/30/95 ($11,617 with a sales charge).
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 the maximum 5.75% sales charge for class A shares and 3.50% for class M
shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the
redemption of class B shares and assumes redemption at the end of the period.
Your fund's CDSC declines from a 5% maximum during the first year to 1% during
the sixth year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
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.
<PAGE>
A PUTNAM PERSPECTIVE ON RISK AND REWARD
You've probably been told how important it is to understand the relationship be-
tween an investment's potential rewards and its accompanying risks. Given the
cautionary nature of such instructions, it may take most investors a while to
realize that risk has a positive side.
EVERY RISK SIGNALS A POTENTIAL REWARD. Selecting only those investments that
offer the greatest degree of security generally leads to only modest rewards.
Furthermore, even insured or guaranteed investments may be subject to changes
in their rates of return or, in some cases, in their principal values. Experi-
enced investors know that no investment is truly risk free and are therefore
willing to take on some measure of risk in order to increase their potential
gains.
THE GREATER THE RISK, THE GREATER THE POTENTIAL REWARD. Accepting an appropriate
level of investment risk can give you a better chance of outpacing inflation
over time and seeking to maximize your investment's return. How much risk? Your
A RUNDOWN OF RISK TYPES
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MARKET RISK Most important for stock funds, but relevant to all funds, this is
a measure of how sensitive a fund's holdings are to changes in general market
conditions. Remember, though, that securities that lose value quickly in market
declines may also show the strongest gains in more favorable environments.
INTEREST-RATE RISK Since bond prices fall as interest rates rise, this type of
risk is a particular concern for fixed-income investors. However, interest-rate
increases can also have a substantial negative effect on the stock market.
INFLATION RISK If your investments cannot keep pace with inflation, your money
will begin to lose its purchasing power. Stock investments are generally consi-
dered among the best ways of addressing inflation risk over the long term.
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<PAGE>
financial advisor's feedback and your time horizon can make all the difference
in determining how much risk is compatible with your investment goals and your
peace of mind.
FITTING YOUR FUND SELECTION TO YOUR RISK TOLERANCE
How do you find the right balance between investment risks and their potential
rewards? It's helpful to understand the types of risks that can apply to diffe-
rent types of investments, and to look at your own portfolio with this perspec-
tive.
For short-term goals, your first priority may be managing market risk. Longer-
term investors may be more concerned with inflation risk. And all income-
oriented investors should consider interest-rate, credit, and prepayment risks
carefully. Within each of Putnam's four investment categories, you can select
funds with differing levels of risk and reward potential to customize your port-
folio.
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CREDIT AND PREPAYMENT Risk Credit risk is the concern that the security's issuer
will not be able to meet its payment, while prepayment risk involves the prema-
ture payoff of a loan, with a resulting loss of interest income. Professional
management and in-depth research are invaluable in managing both these risks.
LIQUIDITY RISK Not all investments can be readily converted into cash at their
perceived market values. Liquidity risk can affect the price of securities held
in the fund's portfolio and, thus, the fund's share prices.
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This list covers only the most general types of risks; however, each investment
will also have its own specific risks. You will find a more detailed discussion
of these risk considerations in each fund's prospectus.
<PAGE>
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund Capital Appreciation Fund *
Diversified Equity Trust Europe Growth Fund
Global Growth Fund Health Sciences Trust
Investors Fund Natural Resources Trust
New Opportunities Fund OTC Emerging Growth Fund
Overseas Growth Fund Vista Fund
Voyager Fund
PUTNAM GROWTH AND INCOME FUNDS
Balanced Retirement Fund Convertible Income-Growth Trust
Equity Income Fund The George Putnam Fund of Boston
The Putnam Fund for Growth and Income Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund American Government Income Fund
Diversified Income Trust Federal Income Trust
Global Governmental Income Trust High Yield Advantage Fund
High Yield Trust Income Fund
Intermediate U.S. Government Income Fund Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE INCOME FUNDS Intermediate Tax Exempt Fund
Municipal Income Fund Tax Exempt Income Fund
Tax-Free High Yield Fund Tax-Free Insured Fund
STATE TAX-FREE INCOME FUNDS +
Arizona, California, Florida, Massachusetts, Michigan,
Minnesota, New Jersey, New York, Ohio, and Pennsylvania
LIFESTAGE (SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments to help
maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE INVESTMENTS ++
Putnam money market funds:
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs AND SAVINGS ACCOUNTS **
* Temporarily closed to new investors.
+ Not available in all states.
++ Relative to above.
+++ Formerly Putnam Daily Dividend Trust.
** Not offered by Putnam Investments. Certificates of deposit offer a fixed
rate of return and may be insured, up to certain limits, by federal/state
agencies. Savings accounts may also be insured up to certain limits.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a
prospectus for any Putnam fund. It contains more complete information, inclu-
ding charges and expenses. Read it carefully before you invest or send money.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
For the Fiscal Year Ended June 30, 1995
To the Trustees and Shareholders of
Putnam New Opportunities Fund
We have audited the accompanying statement of assets and liabilities of Putnam
New Opportunities Fund, including the portfolio of investments owned, as of June
30, 1995, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the "Financial Highlights" for each of the periods indicated there-
in. These financial statements and "Financial Highlights" are the responsibility
of the fund's management. Our responsibility is to express an opinion on these
financial statements and "Financial Highlights" based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain rea-
sonable assurance about whether the financial statements and "Financial High-
lights" are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1995 by correspondence with the custodian and brokers. An audit also inclu-
des assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and "Financial Highlights" referred to
above present fairly, in all material respects, the financial position of Putnam
New Opportunities Fund as of June 30, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended, and the "Financial Highlights" for each of the periods
indicated therein, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
August 16, 1995
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
june 30, 1995
COMMON STOCKS (91.5%)*
NUMBER OF SHARES VALUE
APPAREL (0.6%)
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490,700 Tommy Hilfiger Corp.+ $ 13,739,600
BROADCASTING (5.4%)
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295,000 Clear Channel Communications, Inc.+ 18,990,625
575,000 Emmis Broadcasting Corp. Class A+ 15,668,750
1,162,500 Infinity Broadcasting Corp. Class A+ 38,798,438
285,000 LIN Television Corp.+ 9,583,125
489,500 Renaissance Communications Corp.+ 16,398,250
405,000 SFX Broadcasting, Inc. Class A+ 10,833,750
200,000 Sinclair Broadcast Group, Inc. Class A+ 5,600,000
925,000 Westwood One, Inc.+ 13,528,125
----------------
129,401,063
BUSINESS SERVICES (4.4%)
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296,400 Airgas, Inc.+ 7,965,750
630,000 Alternative Resources Corp.+ 16,695,000
420,450 Corporate Express, Inc.+ 8,987,119
635,400 Danka Business Systems PLC ADR (United Kingdom) 15,368,738
300,000 Flight Safety International, Inc. 14,625,000
650,000 Manpower, Inc. 16,575,000
1,028,300 Robert Half International, Inc.+ 26,350,188
----------------
106,566,795
CABLE TELEVISION (5.3%)
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200,000 Cablevision Systems Corp. (Class A)+ 12,750,000
1,100,000 Century Communications Corp. Class A+ 10,312,500
750,000 Comcast Corp. Special Class A 13,921,875
605,000 General Instrument Corp. 23,216,875
450,000 Oak Industries, Inc.+ 11,587,500
200,000 TCA Cable TV, Inc. 5,400,000
1,025,000 Tele-Communications Class A+ 24,023,438
565,000 Viacom, Inc. Class B+ 26,201,875
----------------
127,414,063
COMPUTER SERVICES (5.7%)
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975,000 America Online, Inc.+ 42,900,000
320,900 Broadway & Seymour, Inc.+ 6,658,675
22,700 CBT Group PLC ADR (Ireland)+ 961,913
775,000 Cambridge Technology Partners, Inc.+ 25,575,000
455,000 First Data Corp. 25,878,125
450,000 Fiserv Inc.+ 12,656,250
600,000 Paychex, Inc. 21,750,000
----------------
136,379,963
<PAGE>
COMMON STOCKS (continued)
NUMBER OF SHARES VALUE
COMPUTER SOFTWARE (8.7%)
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236,800 Applied Voice Technology, Inc.+ $ 3,374,400
214,600 Baan Co., N.V.+ 6,625,775
350,000 Business Objects S.A., ADR+ 11,550,000
538,000 Datalogix International, Inc.+ 13,113,750
166,800 Discreet Logic, Inc. (Canada)+ 4,741,335
9,600 HNC Software, Inc.+ 204,000
330,000 Inso Corporation+ 19,717,500
96,200 Macromedia, Inc.+ 4,160,650
611,000 Mercury Interactive Corp.+ 12,296,375
821,400 Novell, Inc.+ 16,376,663
277,000 Oracle Systems Corp.+ 10,699,125
307,950 Parametric Technology Corp.+ 15,320,513
300,000 PeopleSoft, Inc.+ 16,275,000
537,800 Platinum Software Corp.+ 7,798,100
221,400 Security Dynamics Technologies, Inc.+ 9,963,000
45,400 Seer Technologies, Inc.+ 911,700
450,000 Sierra On-Line, Inc.+ 11,250,000
601,700 Softkey International, Inc.+ 19,179,188
17,400 Spyglass, Inc.+ 498,075
394,000 Synopsys, Inc.+ 24,674,250
----------------
208,729,399
CONSUMER SERVICES (3.1%)
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530,000 CUC International, Inc.+ 22,260,000
447,423 Block (H & R), Inc. 18,400,271
565,000 Loewen Group, Inc. 20,128,125
370,700 Stewart Enterprises, Inc. Class A 12,418,450
----------------
73,206,846
ELECTRONICS AND ELECTRICAL EQUIPMENT (0.3%)
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307,000 Franklin Electronic Publishers, Inc.+ 7,866,875
FINANCIAL SERVICES (1.6%)
- -------------------------------------------------------------------------------
335,000 First USA, Inc. 14,865,625
700,000 MBNA Corp. 23,625,000
----------------
38,490,625
GAMING (2.7%)
- -------------------------------------------------------------------------------
325,000 Circus Circus Enterprises, Inc.+ 11,456,250
975,000 Mirage Resorts, Inc.+ 29,859,375
90,000 National Gaming Corp.+ 776,250
825,000 Rio Hotel & Casino, Inc.+ 11,343,750
424,800 Scientific Games Holdings Corp.+ 11,788,200
----------------
65,223,825
<PAGE>
COMMON STOCKS (continued)
NUMBER OF SHARES VALUE
HMOs (4.0%)
- -------------------------------------------------------------------------------
629,500 Healthsource, Inc.+ $ 22,032,500
550,000 Mid Atlantic Medical Services, Inc.+ 10,175,000
485,000 Oxford Health Plans Inc.+ 22,916,250
105,000 Pacificare Health Systems, Inc.+ 5,328,750
300,000 Pacificare Health Systems, Inc. Class B+ 15,300,000
450,000 Sierra Health Services+ 11,025,000
475,000 United American Healthcare+ 8,312,500
----------------
95,090,000
HEALTH CARE INFORMATION SYSTEMS (0.5%)
- -------------------------------------------------------------------------------
220,000 HBO & Co. 11,990,000
HEALTH CARE SERVICES (7.2%)
- -------------------------------------------------------------------------------
800,000 Apria Healthcare Group, Inc.+ 22,600,000
516,500 Coram Healthcare Corp.+ 7,295,563
393,800 Emcare Holdings, Inc.+ 7,580,650
500,000 Genesis Health Ventures, Inc.+ 14,812,500
552,050 Health Care & Retirement Corp.+ 16,147,463
660,000 Health Management Assoc., Inc.+ 19,305,000
271,700 Horizon Healthcare Corp.+ 4,856,638
825,000 Lincare Holdings, Inc.+ 21,914,063
252,500 Ren Corp. USA+ 4,008,438
460,500 Renal Treatment Centers, Inc.+ 11,339,813
355,000 Rotech Medical Corp.+ 9,851,250
92,800 Value Health, Inc.+ 2,992,800
775,000 Vencor, Inc.+ 24,412,500
184,197 Vivra, Inc.+ 4,996,344
----------------
172,113,022
HOSPITAL MANAGEMENT (0.2%)
- -------------------------------------------------------------------------------
161,700 Community Health Systems+ 5,477,588
LODGING (3.1%)
- -------------------------------------------------------------------------------
659,042 Doubletree Corp.+ 14,210,593
1,100,000 Hospitality Franchise Systems, Inc. 38,087,500
800,000 La Quinta Inns, Inc. 21,600,000
----------------
73,898,093
MEDICAL EQUIPMENT AND SUPPLIES (3.7%)
- -------------------------------------------------------------------------------
643,100 Bioject Medical Technologies+ 964,650
550,000 Boston Scientific Corp.+ 17,531,250
675,000 I-Stat Corp.+ 24,637,500
57,900 ICU Medical, Inc.+ 817,838
350,000 IDEXX Laboratories, Inc.+ 9,100,000
691,900 Igen, Inc.+ 4,064,913
625,000 Medisense Inc.+ 12,109,375
265,000 Medtronic, Inc. 20,438,125
----------------
89,663,651
<PAGE>
COMMON STOCKS (continued)
NUMBER OF SHARES VALUE
MEDICAL MANAGEMENT SERVICES (0.1%)
- -------------------------------------------------------------------------------
131,400 Health Management, Inc.+ $ 1,412,550
NETWORKING EQUIPMENT (5.0%)
- -------------------------------------------------------------------------------
125,000 ALANTEC Corp.+ 4,281,250
269,600 Ascend Communications, Inc.+ 13,614,800
420,000 Cascade Communications Corp.+ 18,165,000
525,000 Cisco Systems, Inc.+ 26,545,313
397,350 EIS International, Inc.+ 6,407,269
200,000 Shiva Corp.+ 8,650,000
450,000 Stratacom, Inc.+ 21,937,500
183,000 U.S. Robotics Corp.+ 19,947,000
----------------
119,548,132
OIL AND GAS (0.4%)
- -------------------------------------------------------------------------------
334,100 Petro Geo-Services ADR (Norway)+ 9,605,375
PHARMACEUTICALS AND BIOTECHNOLOGY (2.7%)
- -------------------------------------------------------------------------------
255,000 Amgen, Inc.+ 20,511,563
675,000 Astra AB (Sweden) 20,841,355
214,936 Elan PLC (Ireland) ADR+ 8,758,642
569,100 Gilead Sciences, Inc.+ 10,030,388
241,900 Penederm, Inc.+ 1,239,738
250,300 Theratech, Inc.+ 3,472,913
----------------
64,854,599
RESTAURANTS (4.4%)
- -------------------------------------------------------------------------------
965,750 Apple South, Inc. 18,832,125
361,400 Applebee's International, Inc. 9,306,050
1,350,000 J.D Wetherspoon PLC (United Kingdom) 11,569,959
780,000 Landry's Seafood Restaurants, Inc.+ 15,600,000
440,000 Lone Star Steakhouse & Saloon+ 13,337,500
830,000 Outback Steakhouse, Inc.+ 23,966,250
335,000 Papa Johns International, Inc.+ 11,725,000
----------------
104,336,884
RETAIL (6.2%)
- -------------------------------------------------------------------------------
805,000 Bed Bath & Beyond, Inc.+ 19,521,250
550,000 Boise Cascade Office Products+ 12,237,500
404,200 CompUSA, Inc.+ 13,439,650
425,000 Gymboree Corp.+ 12,351,563
386,600 Hollywood Entertainment Corp.+ 17,397,000
1,175,000 Office Depot, Inc.+ 33,046,875
675,000 Revco D.S., Inc.+ 16,200,000
330,000 Sunglass Hut International+ 11,550,000
350,000 Talbots, Inc. 13,912,500
----------------
149,656,338
<PAGE>
COMMON STOCKS (continued)
NUMBER OF SHARES VALUE
SEMICONDUCTORS (7.0%)
- -------------------------------------------------------------------------------
525,000 Altera Corp.+ $ 22,706,250
525,000 Analog Devices Inc.+ 17,850,000
225,000 Atmel Corp.+ 12,459,375
155,000 Cognex Corp.+ 6,238,750
210,000 Credence Systems Corp.+ 6,352,500
275,100 Linear Technology Corp. 18,156,600
393,200 Maxim Integrated Products Inc.+ 20,053,200
340,000 Silicon Valley Group, Inc.+ 12,325,000
360,000 Xilinx, Inc.+ 33,840,000
360,000 Zilog Inc.+ 17,955,000
----------------
167,936,675
SPECIALTY CONSUMER PRODUCTS (0.8%)
- -------------------------------------------------------------------------------
475,000 Department 56, Inc.+ 18,168,750
TELEPHONE SERVICES (4.3%)
- -------------------------------------------------------------------------------
600,000 ALC Communications Corp.+ 27,075,000
347,200 Century Telephone Enterprises, Inc. 9,851,800
850,000 LCI International, Inc.+ 26,031,250
460,000 Telephone & Data Systems, Inc. 16,732,500
825,000 WorldCom, Inc.+ 22,275,000
----------------
101,965,550
WIRELESS COMMUNICATIONS (4.1%)
- -------------------------------------------------------------------------------
900,000 Airtouch Communications, Inc.+ 25,650,000
250,000 Cellular Communications, Inc. Class A+ 11,375,000
505,000 Centennial Cellular Corp. Class A+ 8,458,750
868,400 Paging Network, Inc.+ 29,742,700
189,300 United States Cellular Corp.+ 5,726,325
750,000 Vanguard Cellular Systems, Inc.+ 18,000,000
----------------
98,952,775
----------------
TOTAL COMMON STOCKS (cost $1,657,138,503) $2,191,689,036
<PAGE>
PREFERRED STOCKS
NUMBER OF SHARES VALUE
21,000 SAP AG Systeme Preference Bearer (Germany) $ 26,631,701
CONVERTIBLE PREFERRED STOCKS (0.1%)* (cost $1,992,839)
NUMBER OF SHARES VALUE
72,000 Cellular Communications, Inc. $.01 cv. pfd.+ $ 3,276,000
SHORT-TERM INVESTMENTS (7.6%)*
PRINCIPAL AMOUNT VALUE
$20,000,000 American Telephone & Telegraph Capital Corp.
5.72s, September 20, 1995 $ 19,742,600
20,000,000 Corporate Asset Funding Co. Inc. 5.88s,
August 17, 1995 19,846,467
20,000,000 Federal Home Loan Banks 5.67s, August 7, 1995 19,883,450
16,000,000 Federal National Mortgage Assn. 5.78s,
September 21, 1995 15,789,351
30,000,000 Federal National Mortgage Assn. 5.91s, July 6, 1995 29,975,375
20,000,000 General Electric Capital Corp. 6.00s, July 18, 1995 19,943,333
20,000,000 Sears Roebuck Acceptance Corp. 5.98s, July 17, 1995 19,946,844
20,000,000 Sheffield Receivables Corp. 5.95s, July 20, 1995 19,937,194
17,207,000 Interest in $453,426,000 repurchase agreement dated
June 30, 1995 with Lehman Brothers Inc. due July 3,
1995 with respect to various U.S. Treasury obligations
-- maturity value of $17,215,919 for an effective
yield of 6.22% 17,209,973
TOTAL SHORT-TERM INVESTMENTS (cost $182,274,587) $ 182,274,587
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $1,853,237,389)*** $2,403,871,324
- -------------------------------------------------------------------------------
<PAGE>
NOTES
* Percentages indicated are based on net assets of $2,395,804,962, which co-
rrespond to a net asset value per class A, class B, class M and class Y sha-
re of $29.58, $29.09, $29.51 and $29.66, respectively.
+ Non-income-producing security.
*** The aggregate identified cost for federal income tax purposes is
$1,855,941,800, resulting in gross unrealized appreciation and depreciation
of $576,876,575 and $28,947,050, respectively, or net unrealized apprecia-
tion of $547,929,525.
ADR after the name of a foreign holding stands for American Depository Re-
ceipts, representing ownership of foreign securities on deposit with a do-
mestic custodian bank.
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995
ASSETS
- -------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,853,237,389) (Note 1) $2,403,871,324
- -------------------------------------------------------------------------------
Cash 775
- -------------------------------------------------------------------------------
Dividends receivable 366,734
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 26,713,454
- -------------------------------------------------------------------------------
Receivable for securities sold 17,415,760
- -------------------------------------------------------------------------------
TOTAL ASSETS $2,448,368,047
LIABILITIES
- -------------------------------------------------------------------------------
Payable for securities purchased 40,766,688
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 5,970,550
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 3,058,306
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,554,699
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 8,543
- -------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 2,158
- -------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 23,788
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 741,275
- -------------------------------------------------------------------------------
Other accrued expenses 437,078
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 52,563,085
- -------------------------------------------------------------------------------
NET ASSETS $2,395,804,962
REPRESENTED BY
- -------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,859,845,971
- -------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (2,660)
- -------------------------------------------------------------------------------
Accumulated net realized loss on investment
transactions (Note 1) (14,672,284)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 550,633,935
- -------------------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO
CAPITAL SHARES OUTSTANDING $2,395,804,962
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,341,877,319 divided by 45,358,780 shares) $29.58
- -------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $29.58) * $31.38
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,013,379,297 divided by 34,831,155 shares) + $29.09
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($16,010,662 divided by 542,592 shares) $29.51
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $29.51) * $30.58
- -------------------------------------------------------------------------------
Net asset value and offering price per class Y share
($24,537,684 divided by 827,326 shares) + $29.66
- -------------------------------------------------------------------------------
* 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>
STATEMENT OF OPERATIONS
June 30, 1995
INVESTMENT INCOME
- -------------------------------------------------------------------------------
Interest 6,575,806
- -------------------------------------------------------------------------------
Dividends (Net foreign tax of $73,885) 2,551,973
- -------------------------------------------------------------------------------
Total investment income 9,127,779
- -------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 9,564,255
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 3,341,144
- -------------------------------------------------------------------------------
Administrative services (Note 2) 31,430
- -------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 43,198
- -------------------------------------------------------------------------------
Distribution fee -- class A (Note 2) 2,369,059
- -------------------------------------------------------------------------------
Distribution fee -- class B (Note 2) 6,115,799
- -------------------------------------------------------------------------------
Distribution fee -- class M (Note 2) 23,333
- -------------------------------------------------------------------------------
Reports to shareholders 212,905
- -------------------------------------------------------------------------------
Auditing 59,710
- -------------------------------------------------------------------------------
Legal 29,438
- -------------------------------------------------------------------------------
Postage 136,056
- -------------------------------------------------------------------------------
Registration fees 332,497
- -------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 7,841
- -------------------------------------------------------------------------------
Other 135,853
- -------------------------------------------------------------------------------
TOTAL EXPENSES 22,402,518
- -------------------------------------------------------------------------------
NET INVESTMENT LOSS (13,274,739)
- -------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (12,177,134)
- -------------------------------------------------------------------------------
Net realized loss on foreign currency translation (2,659)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 508,131,057
- -------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 495,951,264
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $482,676,525
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED JUNE 30
1995 1994
- -------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations:
Net investment loss $(13,274,739) $(6,596,640)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currencies (12,179,793) 16,471,902
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 508,131,057 (40,895,256)
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 482,676,525 (31,019,994)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (5,252,966) (8,898,215)
Class B (3,371,127) (2,205,357)
Class M (673) --
Class Y (58,463) --
- -------------------------------------------------------------------------------
In excess of net realized gains
Class A (1,509,455) --
Class B (968,703) --
Class M (193) --
Class Y (16,800) --
- -------------------------------------------------------------------------------
Return of capital
Class A (202,496) --
Class B (129,953) --
Class M (26) --
Class Y (2,254) --
- -------------------------------------------------------------------------------
Increase from capital share transactions
(Note 4) 942,116,459 690,524,657
- -------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,413,279,875 648,401,091
- -------------------------------------------------------------------------------
NET ASSETS
Beginning of year 982,525,087 334,123,996
- -------------------------------------------------------------------------------
END OF YEAR (including accumulated net investment
loss of $2,660 and $0, respectively) $2,395,804,962 $982,525,087
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<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 (COMMENCEMENT
OF OPERATIONS) TO OF OPERATIONS) TO
JUNE 30 JUNE 30 YEAR ENDED JUNE 30
1995 1995 1995 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 (loss) (.04) (.05) (.23) (.11)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 7.31 5.04 7.84 1.44
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 7.27 4.99 7.61 1.33
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gain on investments (.15) (.15) (.15) (.45)
- ------------------------------------------------------------------------------------------------------------------------
In excess of net realized gains (.04) (.04) (.04) --
- ------------------------------------------------------------------------------------------------------------------------
Return of capital (.01) (.01) (.01) --
- ------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.20) (.20) (.20) (.45)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $29.66 $29.51 $29.09 $21.68
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE (%) (e) 32.42(b) 20.40(b) 35.34 6.18
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(in thousands) $24,538 $16,011 $1,013,379 $333,738
- ------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) .83(b) .94(b) 1.88 2.04
- ------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.26)(b) (.53)(b) (1.30) (1.55)
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 56.99 56.99 56.99 52.76
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Reflects an 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 period ended June 30, 1991 reflect a reduction of $0.05 per share.
(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>
<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 (COMMENCEMENT
OF OPERATIONS) TO OF OPERATIONS) TO
JUNE 30 YEAR ENDED JUNE 30 JUNE 30
1993 1995 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 (loss) (.05) (.12) (.06) (.12) (.02) (.11)(a)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 3.09 8.02 1.56 6.77 3.33(d) 3.19
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.04 7.90 1.50 6.65 3.31 3.08
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gain on investments -- (.15) (.45) (.32) (.37) (.06)
- -----------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gains -- (.04) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Return of capital -- (.01) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS -- (.20) (.45) (.32) (.37) (.06)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $20.80 $29.58 $21.88 $20.83 $14.50 $11.56
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE (%) (e) 17.12(b) 36.36 7.00 46.12 28.85 36.23(b)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(in thousands) $15,698 $1,341,877 $648,787 $318,426 $141,206 $3,164
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) .67(b) 1.13 1.23 1.31 1.64 2.28(a)(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.57)(b) (.55) (.82) (.98) (.91) (1.14)(a)(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 93.59 56.99 52.76 93.59 116.04(c) 71.54(b)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
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 19,
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 de-
ferred 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 sales or contingent deferred sales charge,
are generally subject to the same expenses as class A, class B and class M sha-
res, but do not bear a distribution fee. Class Y shares are sold only to defined
contribution plans with an initial investment of $250 million in a combination
of Putnam funds and other investments managed by Putnam. Each class bears expen-
ses 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 matters 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
each class 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 declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently fol-
lowed 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 avail-
able are stated at market value, which is determined using the last reported sa-
le price, or, if no sales are reported -- as in the case of some securities tra-
ded 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 value, and other in-
vestments are stated at fair value following procedures approved by the Trus-
tees.
B) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security transactions are
accounted for on the trade date (date the order to buy or
<PAGE>
sell is executed). Interest income is recorded on the accrual basis and divi-
dend 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.
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, or any joint trading account, through its
custodian, receives delivery of the underlying securities, the market value of
which at the time of purchase is required to be in an amount at least equal to
the resale price, including accrued interest. Putnam Management is responsible
for determining that the value of these underlying securities is at all times
at least equal to the resale price, including accrued interest.
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. At June 30, 1995 the fund had a capital loss carryover of approximately
$2,214,000 which may be available to offset realized capital gains in future
years. This amount will expire on June 30, 2003.
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. These differences in-
clude post-October loss deferrals, wash sales and the capital loss carryover.
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, 1995, the fund reclassified $13,272,079 to decrease
accumulated net investment loss and $2,659 to decrease accumulated net realized
loss, with a decrease to paid-in capital of $13,274,738. The calculation of net
investment income per share in the financial highlights table excludes these
adjustments.
G) UNAMORTIZED ORGANIZATION EXPENSES Expenses incurred by the fund in connection
with its organization, its registration with the Securities Exchange Commission
and with various states and the initial public offering of its shares aggregated
$54,369. These expenses have been amortized by the fund on a straight-line basis
over a five-year period.
<PAGE>
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 Putnam Management for the compensation and related ex-
penses of certain officers of the fund and their staff who provide administra-
tive services 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 $3,080 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 addi-
tional 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 operations
for the year ended June 30, 1995 have been reduced by credits allowed by PFTC.
These credits amounted to $1,152,990.
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 Compa-
ny 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 provi-
ded and expenses incurred by it in distributing shares of the fund. The Trustees
have approved payment to Putnam Mutual Funds by the fund at an annual rate of
0.25%, 1.00% and 0.75% of the average net assets attributable to class A, class
B and class M shares, respectively.
For the year ended June 30, 1995, Putnam Mutual Funds Corp., acting as underwri-
ter received net commissions of $2,046,542 from the sale of class A shares and
$35,002 for the sale of class M shares. There was $1,048,690 in contingent de-
ferred 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 purchased as
part of an investment of $1 million or more. For the year ended June 30, 1995,
Putnam Mutual Funds Corp., acting as underwriter received $33,664 on class A
redemptions, and no monies on class M redemptions.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the year ended June 30, 1995, purchases and sales of investment securi-
ties other than short-term investments aggregated $1,656,076,820 and
$837,888,338, 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>
NOTE 4
CAPITAL SHARES
At June 30, 1995, there was an unlimited number of shares of beneficial interest
authorized divided into four classes, class A, class B, class M and class Y ca-
pital shares. Transactions in capital shares were as follows:
YEAR ENDED
JUNE 30, 1995
CLASS A SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 43,682,500 $1,128,122,574
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 272,982 6,390,513
- -------------------------------------------------------------------------------
43,955,482 1,134,513,087
- -------------------------------------------------------------------------------
Shares repurchased (28,250,033) (728,037,391)
- -------------------------------------------------------------------------------
NET INCREASE 15,705,449 $ 406,475,696
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
YEAR ENDED
JUNE 30, 1995
CLASS B SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 26,763,724 $688,264,693
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 173,288 4,006,394
- -------------------------------------------------------------------------------
26,937,012 692,271,087
- -------------------------------------------------------------------------------
Shares repurchased (7,498,289) (192,825,799)
- -------------------------------------------------------------------------------
NET INCREASE 19,438,723 $499,445,288
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
FOR THE PERIOD
DECEMBER 1, 1994
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 1995
CLASS M SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 573,538 $15,676,754
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 38 892
- -------------------------------------------------------------------------------
573,576 15,677,646
- -------------------------------------------------------------------------------
Shares repurchased (30,984) (846,834)
- -------------------------------------------------------------------------------
NET INCREASE 542,592 $14,830,812
- -------------------------------------------------------------------------------
FOR THE PERIOD
JULY 19, 1994
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 1995
CLASS Y SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 914,699 $23,722,392
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 3,307 77,517
- -------------------------------------------------------------------------------
918,006 23,799,909
- -------------------------------------------------------------------------------
Shares repurchased (90,680) (2,435,246)
- -------------------------------------------------------------------------------
NET INCREASE 827,326 $21,364,663
- -------------------------------------------------------------------------------
<PAGE>
FEDERAL TAX INFORMATION
Pursuant to section 852 of the Internal Revenue Code, the Fund hereby designates
$0.195 per share (or if different, the amount necessary to offset capital gain
income earned by the Fund) as capital gain dividends for its taxable year ended
June 30, 1995.
The Form 1099 that you will receive in January 1996 will show you the tax status
of all distributions paid to your account in calendar year 1995.
Unusually large growth in the number of fund shareholders -- and consequently,
in the number of shares outstanding -- took place in December 1994, subsequent
to the fund's declaration of its annual capital gains distribution. Consequen-
tly, the amount of gains required for distribution was greater than expected,
resulting in a small return of capital.
For the year ended June 30, 1995, 2.91% of the Fund's distributions represents
a return of capital and is therefore non-taxable to shareholders.
<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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman William F. Pounds, Vice Chairman
Jameson Adkins Baxter Hans H. Estin
John A. Hill Elizabeth T. Kennan
Lawrence J. Lasser Robert E. Patterson
Donald S. Perkins George Putnam, III
Eli Shapiro 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 Daniel L. Miller
Vice President Vice President and Fund Manager
William N. Shiebler John R. Verani
Vice President Vice President
Paul M. O'Neil John D. Hughes
Vice President Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam New Opportunities
Fund. It may also be used as sales literature when preceded or accompanied by
the current prospectus, which gives details of sales charges, investment 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 OR OBLIGATIONS OF, OR GUARANTEED OR EN-
DORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT IN-
SURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
---------------
PUTNAM INVESTMENTS Bulk Rate
U.S. Postage
THE PUTNAM FUNDS PAID
One Post Office Square Putnam
Boston, Massachusetts 02109 Investments
---------------
19391-852/358
<PAGE>
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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).
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