Putnam
New
Opportunities
Fund
SEMIANNUAL REPORT
December 31, 1995
[SCALES LOGO]
BOSTON * LONDON * TOKYO
Fund highlights
* "Call it phenomenal, call it incredible, call it
awesome -- any one of those adjectives accurately describes the track
record of Putnam New Opportunities Fund (class A). . . . Address
congratulations to Dan Miller, portfolio manager of the fund from its
start. With the help of analysts at Putnam Investment Management,
Miller picks what he thinks are the best stocks poised for growth in
what he believes are the strongest industries."
-- Investment Advisor, September 1995
* Morningstar, Inc. once again awarded Putnam New
Opportunities Fund's class A shares its highest rating of five stars as
of December 31, 1995. The five-star rating places the fund's class A
shares among 10% of the 950 equity funds rated.*
* "Unlike the majority of growth funds, New Opportunities
excels in slow markets as well as in raging bull markets. Its 25
percent return in 1992, for example, far outpaced the market's sluggish
9 percent rise. And in 1994, when the average stock fund lost money, it
was up 3.3 percent."+
-- Smart Money, February 1996
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
20 Financial statements
*Morningstar is an independent research firm that rates a fund in
relation to other funds with similar investment objectives, based on
the fund's class A shares' 3- and 5-year average annual returns,
adjusted for risk factors and sales charges. For each of these periods
ended 12/31/95, there were 1,394 and 950 in the equity category, and
the fund's class A shares received 5 stars for each period. Ratings are
subject to change monthly. Past performance is not indicative of future
results.
+Past performance is not indicative of future results. See page 9 for
total return performance of the Fund.
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
From the Chairman
Dear Shareholder:
It would be difficult to conceal our satisfaction with the outstanding
results delivered by Putnam New Opportunities Fund during the six
months ended December 31, 1995. At the same time, it behooves us to
counsel that while we are looking for continued positive performance
during the remainder of fiscal 1996, returns of similar proportions are
not likely.
For one thing, the much heralded strength of technology stocks is
beginning to level off. For another, the market is quite likely to take
a breather or two as it digests the sustained rise of 1995. Finally,
the economic slowdown is almost certain to be reflected in more modest
corporate earnings expectations -- and in actual earnings -- over the
months ahead.
Thus, the market may be in for some choppiness, especially over the
near term. Nevertheless, Putnam Management believes equities, on
balance, may continue their upward course in 1996, though at a more
subdued pace than they enjoyed in 1995.
Respectfully yours,
/s/George Putnam
George Putnam
Chairman of the Trustees
February 21 , 1996
Report from the Fund Manager
Daniel L. Miller
When Putnam New Opportunities Fund marked its fifth anniversary on
August 31, 1995, we were able to reflect back on a gratifying
performance record. And your fund's stellar track record up to that
point -- a 33.2% average annual total return at net asset value -- has
only been enhanced by its performance during this latest semiannual
period. For the six months ended December 31, 1995, your fund's class A
shares rose 24.92%, class B shares gained 24.44%, and class M shares
rose 24.57%, all at net asset value. The returns at the maximum public
offering price were 17.75%, 19.44% (CDSC, see page 9), and 20.21%,
respectively.
The fund's semiannual period began in the middle of calendar 1995, a
year that encompassed an incredible joyride for U.S. equity investors.
The strength of the 1995 stock market -- especially the performance of
technology-related stocks -- greatly contributed to the fund's
impressive returns. However, as most investors know, the powerful
combination of strong corporate earnings and falling interest rates
that fueled the 1995 financial markets is unlikely to continue
unabated. With that in mind, we are shifting the portfolio toward
stocks of companies that tend to do well regardless of the direction of
the overall economy. We will continue to look for such factors as
strong long-term growth prospects, dominant market share, and quality
management as we enter the second half of fiscal 1996.
* TECHNOLOGY STOCKS DRIVE PERFORMANCE AGAIN
During the period, technology-related holdings continued to be a
highlight of the fund's portfolio. In early 1995, the strongest
technology sector was the semiconductor market. As the year progressed,
however, the market began to favor networking-related stocks, which
make up a large portion of the fund's technology holdings. Notable
positions included Ascend Communications, a manufacturer of wide-area-
network access products, whose stock price rose dramatically in 1995,
and Cisco Systems, Inc., which was recently awarded a contract to work
with China's government to implement a nationwide network for high-
speed access to the Internet.
As the technology market began to rotate in favor of the stocks the
fund owned, other emerging-growth sectors in which the fund was
underweighted -- such as retail -- were showing signs of weakness. For
these reasons, our relatively high weighting in technology-related
stocks proved extremely beneficial during the period.
* CUTTING-EDGE MEDICAL COMPANIES ALSO PROVE BENEFICIAL
The medical technology/cost containment sector was another powerful
contributor to performance during the period. As the portfolio's
second-largest sector, this category includes two types of health-care
companies: those dedicated to providing high quality service at a lower
cost and those involved in developing and manufacturing breakthrough
medical devices and drugs.
Some standouts in the portfolio include Thermo Cardiosystems, Inc.,
which manufactures ventricular-assist devices. These allow patients who
are awaiting heart transplants an alternative until a donor heart
becomes available. The company has produced the only implantable organ
ever approved by the FDA, and its devices are already being used in
more than 50 U.S. transplant centers. Medtronic, the world's leading
medical technology company, has developed impressive products to assist
cardiac surgeons, including mechanical heart valves. Boston Scientific,
another medical device manufacturer, has recently announced acquisition
plans that could broaden the company's exposure to high-growth markets.
In the biotechnology industry, Gilead Sciences, Inc., has made great
progress in developing innovative drugs such as Vistide, a potential
treatment for AIDS-related retinitis, a condition that can lead to
blindness.
[GRAPHIC OMITTED: SECTOR ALLOCATION SHIFTS CHART. Chart is a vertical bar
chart with white bars representing the Dec. 31, 95 fiscal ending and black bars
representing the Jun. 30, 95 fiscal ending. The following are the sectors
and percentages in the chart:
JUNE 30, 1995 DEC. 31, 1995
------------- -------------
Applied/advanced technology 29.1% 35.8%
Medical technology/cost containment 18.6% 19.4%
Value-oriented consuming 16.7% 16.4%
Media/entertainment 13.5% 9.4%
Personal communications 8.5% 5.6%
Personal financial servies 1.6% 2.4%
Cash 7.3% 5.9%
Miscellaneous 3.7% 5.1%
Footnote reads: * Based on percentage of net assets. Holdings will vary
over time]
* CONSOLIDATION AND DOWNSIZING BRING STRENGTH TO SEVERAL HOLDINGS
Despite -- or perhaps because of -- a relatively weak consumer economy,
some of the fund's retail holdings were able to flourish during the
period. In an environment that did not particularly favor retail
business in general, office-products companies like Corporate Express
and Boise Cascade Office Products succeeded by driving down their costs
through systems automation, which gave them a distinct advantage over
many competitors.
Corporate downsizing efforts helped to propel some of the fund's
business service holdings. As more corporations worked to trim their
payrolls during the slowing economy, some businesses benefited,
including temporary help service providers Robert Half International,
Inc., and Alternative Resources.
Another strong contributor in the fund's value-oriented consuming
sector was HFS, Inc., a hotel franchising organization. The company,
which traditionally has specialized in lodging services, recently
acquired the Century 21 real estate franchise. This expansion into a
new business arena has had a tremendous impact on the stock price and
growth prospects for HFS. Also showing strong growth prospects is
Renaissance Hotel Group, a hotel management company. With contracts
throughout Europe, Asia, and the United States, the company has
established a strong pipeline for expanding its business.
*DIMINISHED EMPHASIS ON MEDIA AND PERSONAL COMMUNICATIONS
During the period, the outlook for personal communications and media
became less attractive as cellular, long-distance, and cable television
companies were faced with increased competition. Cable TV franchises,
for example, are under increasing pressure from direct-broadcast
services, which offer consumers satellite dishes to replace traditional
cable service. In order to compete with these services, cable companies
may have to make expensive improvements to their infrastructures. While
long-term growth opportunities still exist within these businesses, we
have reduced the fund's weightings until we see more evidence of
potential outperformance.
Top 10 Holdings (12/31/95)
HFS, Inc.
Hotel franchises
America Online, Inc.
On-line computer services
Cisco Systems
Manufacturer of computer networking products
Paging Network, Inc.
Wireless communications
U.S. Robotics Corp.
Networking access devices
Infinity Broadcasting Corp., Class A
Largest U.S.-based radio station owner/operator
Corporate Express, Inc.
Office product supplier
Vencor, Inc.
Health care services
Oxford Health Plans Inc.
Health benefit services in New York area
Stratacom, Inc.
Manufacturer of wide area network systems
These holdings represent 13.6% of the fund's net assets. Portfolio
holdings will vary over time.
There were some bright spots within the fund's media and entertainment
sector, including Mirage Resorts, Inc., a gaming industry standout;
Infinity Broadcasting, the largest U.S.-based radio station operator;
and Texas-based Clear Channel Communications, which owns and operates
33 radio stations and 9 television stations.
* Looking forward: favorable conditions should continue
It appears that economic conditions will remain favorable for the U.S.
equity market in the months ahead. The inflation rate is expected to
remain steady with modest economic growth. This type of environment
tends to favor those companies in which we tend to invest. We will
continue to monitor the economic factors that affect growth stocks, as
well as the specific industry and company fundamentals that impact our
investment decisions.
We also plan to adhere to the strategy that has served the fund so well
during its five years of operations: targeting a handful of industry
sectors with strong secular growth potential, and then selecting
companies within those sectors that possess what we believe are above-
average growth characteristics. We expect this strategy will continue
to serve the fund well over the remainder of fiscal 1996 and into the
future.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described
holdings were viewed favorably as of 12/31/95, there is no guarantee
the fund will continue to hold these securities in the future.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam New Opportunities Fund is designed for investors
seeking long-term capital appreciation primarily through common stock
investments in companies in economic sectors with above-average long-
term growth potential.
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, assuming you held the shares through the entire
period and reinvested all distributions in the fund.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 12/31/95
Class A Class B Class M
(8/31/90) (3/1/93) (12/1/94)
Inception date NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6 months 24.92% 17.75% 24.44% 19.44% 24.57% 20.21%
- ------------------------------------------------------------------------------------
1 year 46.28 37.87 45.15 40.15 45.53 40.41
- ------------------------------------------------------------------------------------
5 years 321.96 297.84 -- -- -- --
Annual average 33.37 31.81 -- -- -- --
- ------------------------------------------------------------------------------------
Life of class 367.41 340.58 109.44 106.44 49.98 44.71
Annual average 33.48 32.01 29.73 29.08 45.54 40.81
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/95
Standard & Poor's Consumer
500 Index Price Index
- ------------------------------------------------------------------------------------
<S> <C> <C>
6 months 14.40% 0.66%
- ------------------------------------------------------------------------------------
1 year 37.45 2.54
- ------------------------------------------------------------------------------------
5 years 114.99 14.72
Annual average 16.54 2.79
- ------------------------------------------------------------------------------------
Life of class A 124.36 16.64
Annual average 16.34 2.92
- ------------------------------------------------------------------------------------
Life of class B 50.64 7.27
Annual average 15.52 2.50
- ------------------------------------------------------------------------------------
Life of class M 40.15 2.54
Annual average 36.69 2.35
- ------------------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take into
account any adjustment for taxes payable on reinvested distributions.
Investment returns and principal value will fluctuate so that an
investor's shares, when sold, may be worth more or less than their
original cost. POP assumes 5.75% maximum sales charge for class A
shares and 3.50% for class M shares, which became effective 12/1/94.
CDSC for class B shares assumes 5% maximum contingent deferred sales
charge. An expense limitation was in effect during part of the period;
without the limitation, total return would have been lower.
</TABLE>
<TABLE>
<CAPTION>
PRICE AND DISTRIBUTION INFORMATION
6 months ended 12/31/95
Class A Class B Class M
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Distributions1 (number) 0 0 0
- ------------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------------
Capital gains
Long-term -- -- --
Short-term -- -- --
- ------------------------------------------------------------------------------------
Total $0.00 $0.00 $0.00
- ------------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------------
6/30/95 $29.58 $31.38 $29.09 $29.51 $30.58
- ------------------------------------------------------------------------------------
12/31/95 36.95 39.20 36.20 36.76 38.09
- ------------------------------------------------------------------------------------
1 The Fund had no ordinary income or capital gains to distribute during
the semi-annual period.
</TABLE>
COMPARATIVE BENCHMARKS
Standard & Poor's 500 Index is an unmanaged list of common stocks that
is frequently used as a general measure of stock market performance. The
index assumes reinvestment of all distributions and does not take into
account brokerage commissions 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.
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
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the maximum 5.75% sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B shares and assumes redemption at the end of
the period. Your fund's CDSC declines from a 5% maximum during the first
year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
International New Opportunities Fumd
Investors Fund
Natural Resources Fund
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
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
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free 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+
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++
* Not available in all states.
+ Relative to above.
++ 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, including charges and expenses. Please read it
carefully before you invest or send money.
<TABLE>
<CAPTION>
Portfolio of investments owned
December 31, 1995 (Unaudited)
Common Stocks (93.0%)*
NUMBER OF SHARES
<S> <C> <C>
Apparel (0.5%) VALUE
- --------------------------------------------------------------------------------------------
525,000 Tommy Hilfiger Corp. + $22,246,875
Biotechnology (0.6%)
- --------------------------------------------------------------------------------------------
559,301 IDEXX Laboratories, Inc. 26,287,100
Broadcasting (3.8%)
- --------------------------------------------------------------------------------------------
590,000 Clear Channel Communications, Inc. + 26,033,750
575,000 Emmis Broadcasting Corp. Class A + 17,825,000
500,000 Evergreen Media Corp. Class A + 16,000,000
1,366,800 Infinity Broadcasting Corp. Class A + 50,913,300
365,800 LIN Television Corp. + 10,882,550
734,250 Renaissance Communications Corp. + 16,245,281
405,000 SFX Broadcasting, Inc. Class A + 12,251,250
390,500 Sinclair Broadcast Group, Inc. Class A + 6,736,125
925,000 Westwood One, Inc. + 13,065,625
--------------
169,952,881
Business Services (6.9%)
- --------------------------------------------------------------------------------------------
725,000 Airgas, Inc. + 24,106,250
800,000 Alternative Resources Corp. + 24,200,000
21,700 Corestaff, Inc. + 792,050
1,675,000 Corporate Express, Inc. + 50,459,375
142,800 Flight Safety International, Inc. 7,175,700
1,050,000 Danka Business Systems PLC ADR (United Kingdom) 38,850,000
385,000 Input/Output, Inc. + 22,233,750
1,000,000 Manpower, Inc. 28,125,000
699,259 Paychex, Inc. 34,875,543
5,500,000 Rentokil Group Ord. PLC (United Kingdom) 28,558,750
1,100,000 Robert Half International, Inc. + 46,062,500
--------------
305,438,918
Cable Television (1.5%)
- --------------------------------------------------------------------------------------------
200,000 Cablevision Systems Corp. Class A + 10,850,000
1,142,200 Century Communications Corp. Class A + 9,137,600
750,000 Comcast Corp. Special Class A 13,640,625
200,000 TCA Cable TV, Inc. 5,525,000
256,250 Tele-Comm Liberty Media Group, Inc. Class A 6,886,719
1,025,000 Tele-Communications Inc. Class A 20,371,875
--------------
66,411,819
Computer Services (6.5%)
- --------------------------------------------------------------------------------------------
2,171,050 America Online, Inc. + 81,414,375
380,300 Broadway & Seymour, Inc. + 6,179,875
457,900 CBT Group PLC ADR (Ireland) + 24,268,700
134,900 CMG Information Services, Inc. 12,528,838
775,000 Cambridge Technology Partners, Inc. 44,562,500
342,300 Computer Horizons Corp. + 13,007,400
550,000 First Data Corp. 36,781,250
600,000 Fiserv Inc. + 18,000,000
200,000 NETCOM On-Line Communication Services, Inc. + 7,200,000
504,200 PsiNet, Inc. + 11,533,575
199,200 Secure Computing Corp. + 11,155,200
731,400 Tivoli Systems, Inc. + 24,688,120
--------------
291,319,833
Computer Software (12.8%)
- --------------------------------------------------------------------------------------------
243,900 Baan Co., N.V. + 11,036,475
450,000 Business Objects S.A., ADR + 21,768,750
365,000 Computer Associates Intl., Inc. 20,759,375
235,500 Datalogix International, Inc. + 2,973,188
835,000 Discreet Logic, Inc. (Canada) + 20,875,000
875,000 Electronic Arts, Inc. + 22,859,375
750,000 GT Interactive Software Corp. + 10,500,000
670,000 Informix Corp. + 20,100,000
439,200 Insignia Solutions, Inc. ADR + 5,160,600
800,000 INSO CORPORATION + 34,000,000
315,200 Intuit, Inc. + 24,585,600
250,000 Legato Systems, Inc. + 7,750,000
342,200 Macromedia, Inc. + 17,879,950
425,000 Maxis, Inc. + 16,150,000
715,000 Mercury Interactive Corp. 13,048,750
72,000 Metatools, Inc. + 1,872,000
189,100 Microsoft Corp. + 16,593,525
82,800 Netscape Communications Corp. + 11,509,200
375,000 Novadigm, Inc. + 10,640,625
865,000 Novell, Inc. + 12,326,250
531,900 Objective Systems Integrators, Inc. + 29,121,525
525,000 Parametric Technology Corp. + 34,912,500
540,000 PeopleSoft, Inc. + 23,220,000
695,600 Platinum Software Corp. + 3,912,750
234,100 Project Software & Development, Inc. + 8,164,238
219,900 Scopus Technology, Inc, + 5,552,475
738,300 Security Dynamics Technologies, Inc. + 40,237,350
46,600 Sierra On-Line, Inc. + 1,339,750
1,125,000 Softkey International, Inc. + 26,015,625
500,000 Spyglass, Inc. + 28,500,000
475,000 Sybase, Inc. + 17,100,000
900,000 Synopsys, Inc. + 34,200,000
340,100 Unison Software, Inc. + 5,866,725
425,300 Vantive Corp. + 9,569,250
--------------
570,100,851
Consumer Services (0.5%)
- --------------------------------------------------------------------------------------------
685,000 CUC International, Inc. 23,375,625
Entertainment (1.4%)
- --------------------------------------------------------------------------------------------
750,000 Scientific Games Holdings Corp. + 28,312,500
675,000 Viacom, Inc. Class B + 31,978,125
--------------
60,290,625
Financial Services (2.1%)
- --------------------------------------------------------------------------------------------
1150000 Credit Acceptance Corp. + 23,862,500
525,000 First USA, Inc. 23,296,875
1,225,000 MBNA Corp. 45,171,875
--------------
92,331,250
Funeral/Cemetery Services (1.2%)
- --------------------------------------------------------------------------------------------
700,000 Loewen Group, Inc. 17,718,750
965,000 Stewart Enterprises, Inc. Class A 35,705,000
--------------
53,423,750
Gaming (2.1%)
- --------------------------------------------------------------------------------------------
1,200,000 Circus Circus Enterprises, Inc. + 33,450,000
1,350,000 Mirage Resorts, Inc. 46,575,000
1,050,000 Rio Hotel & Casino, Inc. + 12,468,750
--------------
92,493,750
HMOs (3.2%)
- --------------------------------------------------------------------------------------------
1,259,000 Healthsource, Inc. + 45,324,000
647,500 Oxford Health Plans Inc. + 47,834,063
136,100 Pacificare Health Systems, Inc. 11,840,700
300,000 Pacificare Health Systems, Inc. Class B + 26,100,000
396,200 Sierra Health Services + 12,579,350
--------------
143,678,113
Health Care Information Services (0.7%)
- --------------------------------------------------------------------------------------------
228,500 CyCare Systems, Inc. + 5,855,313
335,000 HBO & Co. 25,669,375
--------------
31,524,688
Health Care Services (5.4%)
- --------------------------------------------------------------------------------------------
122,200 Access Health, Inc. + 5,407,350
1,125,000 Apria Healthcare Group, Inc. + 31,781,250
535,000 Emcare Holdings, Inc. + 12,840,000
650,000 Emeritus Corp. + 7,556,250
1,025,000 Lincare Holdings, Inc. + 25,625,000
550,000 Medaphis Corp. + 20,350,000
425,000 Owen Healthcare, Inc. + 11,740,625
321,450 Pediatrix Medical Group, Inc. + 8,839,875
520,000 Renal Treatment Centers, Inc. + 22,880,000
364,600 Rotech Medical Corp. + 10,026,500
58,000 Total Renal Care Holdings, Inc. + 1,711,000
1,493,500 Vencor, Inc. 48,538,750
1,275,000 Vivra, Inc. + 32,034,375
--------------
239,330,975
Hospital Management (0.9%)
- --------------------------------------------------------------------------------------------
1,550,000 Health Management Assoc., Inc. + 40,493,750
Insurance (0.4%)
- --------------------------------------------------------------------------------------------
600,000 Amerin Corp. + 16,050,000
Lodging (3.6%)
- --------------------------------------------------------------------------------------------
674,742 Doubletree Corp. + 17,711,978
1,160,800 HFS, Inc. + 94,895,400
975,000 La Quinta Inns, Inc. 26,690,625
22,512 Red Lion Hotels, Inc. + 393,960
784,900 Renaissance Hotel Group N.V. + 20,014,950
--------------
159,706,913
Medical Supplies and Devices (3.3%)
- --------------------------------------------------------------------------------------------
550,000 Boston Scientific Corp. + 26,950,000
400,000 Endosonics Corp. + 6,050,000
675,000 I-Stat Corp. + 21,937,500
725,000 ICU Medical, Inc. + 12,325,000
700,000 Igen, Inc. 4,112,500
525,000 Medisense Inc. + 16,603,125
290,000 Medtronic, Inc. 16,203,750
630,000 Mentor Corp. Minnesota 14,490,000
223,000 Neuromedical Systems, Inc. + 4,487,875
298,800 Thermo Cardiosystems, Inc. + 23,082,300
--------------
146,242,050
Networking Equipment (7.0%)
- --------------------------------------------------------------------------------------------
580,000 Ascend Communications, Inc. + 47,052,500
425,000 Cabletron Systems, Inc. + 34,425,000
475,000 Cascade Communications Corp. + 40,493,750
950,000 Cisco Systems, Inc. + 70,893,750
450,000 Network Express, Inc. + 2,306,250
200,000 Shiva Corp. + 14,550,000
647,300 Stratacom, Inc. + 47,576,550
635,100 U.S. Robotics Corp. + 55,730,025
--------------
313,027,825
Nursing Homes (1.8%)
- --------------------------------------------------------------------------------------------
675,000 Genesis Health Ventures, Inc. + 24,637,500
1,000,000 Health Care & Retirement Corp. + 35,000,000
875,000 Horizon/CMS Healthcare Corp. + 22,093,750
--------------
81,731,250
Pharmaceuticals and Biotechnology (3.3%)
- --------------------------------------------------------------------------------------------
500,000 Amgen, Inc. + 29,687,500
900,000 Astra AB (Sweden) + 35,906,778
561,700 CytoTherapeutics, Inc. + 9,619,113
550,000 Biochem Pharmaceutical, Inc. + 22,068,750
900,000 Gilead Sciences, Inc +. 28,800,000
470,000 Martek Biosciences Corp. + 11,867,500
400,000 Theratech, Inc. + 7,200,000
--------------
145,149,641
Publishing (0.2%)
- --------------------------------------------------------------------------------------------
460,000 Mecklermedia Corp. + 7,360,000
Restaurants (4.0%)
- --------------------------------------------------------------------------------------------
1,230,800 Apple South, Inc. 26,462,200
420,000 Applebee's International, Inc. 9,555,000
1,000,000 Boston Chicken, Inc. + 32,125,000
1,350,000 J.D. Wetherspoon PLC (United Kingdom) 13,433,850
1,050,000 Landry's Seafood Restaurants, Inc. 17,915,625
610,000 Lone Star Steakhouse & Saloon + 23,408,750
960,000 Outback Steakhouse, Inc. + 34,440,000
508,900 Papa Johns International, Inc. + 20,960,319
--------------
178,300,744
Retail (4.1%)
- --------------------------------------------------------------------------------------------
275,000 Barnes & Noble, Inc. + 7,975,000
1,225,000 Bed Bath & Beyond, Inc. + 47,545,313
925,000 Boise Cascade Office Products + 39,543,750
345,000 CompUSA, Inc. + 10,738,125
457,560 Hollywood Entertainment Corp. + 3,832,065
1,600,000 Office Depot, Inc. + 31,600,000
768,800 Officemax, Inc. + 17,201,900
900,000 Revco D.S., Inc. + 25,425,000
--------------
183,861,153
Semiconductors (5.1%)
- --------------------------------------------------------------------------------------------
525,000 Altera Corp. + 26,118,750
650,000 Analog Devices Inc. + 22,993,750
700,000 Atmel Corp. + 15,662,500
325,000 Credence Systems Corp. + 7,434,375
175,000 Cyberoptics Corp. + 6,956,250
725,000 KLA Instruments Corp. + 18,895,313
888,500 Linear Technology Corp. 34,873,625
965,000 Maxim Integrated Products Inc. + 37,152,500
550,000 Silicon Valley Group, Inc. + 13,887,500
1,350,000 Xilinx, Inc. 41,175,000
--------------
225,149,563
Specialty Consumer Products (1.9%)
- --------------------------------------------------------------------------------------------
800,000 Department 56, Inc. + 30,700,000
307,000 Franklin Electronic Publishers, Inc. + 9,056,500
175,200 Gemstar International Group Ltd. + 4,971,300
943,634 Sunglass Hut International + 22,411,308
525,000 Wolverine World Wide, Inc. 16,537,500
--------------
83,676,608
Telecommunication Equipment (2.7%)
- --------------------------------------------------------------------------------------------
420,600 Adtran, Inc. + 22,843,838
775,000 Gandalf Technologies, Inc. + 13,175,000
334,350 Glenayre Technologies, Inc. + 13,875,525
650,000 P-Com, Inc. + 13,000,000
800,000 Pairgain Technologies, Inc. + 43,800,000
145,100 Premisys Communications, Inc. + 8,125,600
169,400 VideoServer, Inc. + 5,336,100
--------------
120,156,063
Telephone Services (2.9%)
- --------------------------------------------------------------------------------------------
1,511,400 Frontier Corp. 45,342,000
1,800,000 LCI International, Inc. + 36,900,000
200,000 MIDCOM Communications, Inc. + 3,650,000
250,000 Tel-Save Holdings, Inc. + 3,468,750
1,100,000 WorldCom, Inc. + 38,775,000
--------------
128,135,750
Wireless Communications (2.6%)
- --------------------------------------------------------------------------------------------
1,250,000 Airtouch Communications, Inc. + 35,312,500
505,000 Centennial Cellular Corp. Class A + 8,648,125
2,300,000 Paging Network, Inc. + 56,062,500
189,300 United States Cellular Corp. + 6,388,875
617,964 Vanguard Cellular Systems, Inc. + 12,513,770
--------------
118,925,770
--------------
Total Common Stocks (cost $2,902,190,761) $4,136,174,133
PREFERRED STOCKS (0.4%)*(cost $5,850,545)
NUMBVALUE
- --------------------------------------------------------------------------------------------
120,000 Sap Ag Systeme Preference Bearer (Germany) $18,112,263
SHORT-TERM INVESTMENTS (6.1%)*
PRINVALUE
- --------------------------------------------------------------------------------------------
$ 20,000,000 Ciesco L.P. 5.68s, January 18, 1996 $19,946,356
20,000,000 Corporate Asset Funding Corp. 5.70s, January 11, 1996 19,968,333
13,000,000 Federal Home Loan Bank 5.59s, January 3, 1996 12,995,963
24,000,000 Federal Home Loan Mortgage Corp. 5.70s, February 5, 1996 23,870,033
20,100,000 Federal Home Loan Mortgage Corp. 5.56s, February 1, 1996 20,003,766
13,000,000 Federal Home Loan Mortgage Corp. 5.37s, May 13, 1996 12,740,650
15,000,000 Federal National Mortgage Assn. 5.58s, January 25, 1996 14,944,200
10,000,000 Federal National Mortgage Assn. 5.58s, February 9, 1996 9,939,875
25,000,000 Ford Motor Credit Co. 5.71s, January 12, 1996 24,956,382
20,000,000 General Electric Capital Corp. 5.56s, January 31, 1996 19,910,422
30,000,000 Household Finance Corp. 5.67s, January 25, 1996 29,886,600
15,000,000 Metropolitan Life Funding, 5.68s, January 15, 1996 14,973,967
20,000,000 National Rural Utilities Cooperative Finance Corp. 5.63s,
February 13, 1996 19,865,504
10,000,000 USAA Capital Corp. 5.68s, January 5, 1996 9,993,689
17,330,000 Interest in $308,242,000 repurchase agreement dated
December 29, 1996 with Lehman Brothers Inc. due
January 2, 1996 with respect to various U.S. Treasury
obligations-maturity value of $17,341,360 for an
effective yield of 5.90% 17,338,521
--------------
Total Short-Term Investments (cost $271,332,820) $271,334,261
- --------------------------------------------------------------------------------------------
Total Investments (cost $3,179,374,126)*** $4,425,620,657
- --------------------------------------------------------------------------------------------
* Percentage indicated are based on net assets of $4,445,315,887.
+ Non-income-producing security.
*** The aggregate identified cost on a tax cost basis is $3,184,645,006
resulting in gross unrealized appreciation and depreciation of
$1,330,890,800 and $89,915,149, respectively, or net unrealized
appreciation of $1,240,975,651.
ADR after the name of a foreign holding stands for American
Depository Reciepts, representing ownership of foreign securities on
deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
December 31,1995 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $ 3,179,374,126) (Note 1) $4,425,620,657
- ---------------------------------------------------------------------------------------------------
Cash 114
- ---------------------------------------------------------------------------------------------------
Dividends and other receivables 450,389
- ---------------------------------------------------------------------------------------------------
Foreign tax reclaim 11,824
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 64,682,119
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 3,755,578
- ---------------------------------------------------------------------------------------------------
Total assets 4,494,520,681
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 30,858,898
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 7,498,422
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 5,174,477
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 3,406
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 12,498
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 2,894,821
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,986,403
- ---------------------------------------------------------------------------------------------------
Payable for organizational expenses (Note 1) 23,788
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 752,081
- ---------------------------------------------------------------------------------------------------
Total liabilities 49,204,794
- ---------------------------------------------------------------------------------------------------
Net assets $4,445,315,887
Represented by
- ---------------------------------------------------------------------------------------------------
Paid in Capital (Note 4) $3,211,188,029
- ---------------------------------------------------------------------------------------------------
Accumulated net investment loss (15,425,270)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 3,306,951
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 1,246,246,177
- ---------------------------------------------------------------------------------------------------
Total - Representing net assets applicable to
capital shares outstanding $4,445,315,887
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($2,387,817,938 divided by 64,626,150 shares) $36.95
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $36.95)* $39.20
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price of class B shares
($1,930,794,109 divided by 53,333,705 shares)** $36.20
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price of class M shares
($ 65,059,385 divided by 1,770,021 shares) $36.76
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $36.76)* $38.09
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price of class Y shares
($ 61,644,455 divided by 1,662,246 shares)** $37.09
- ---------------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the
offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent deferred
sales charge
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended December 31,1995 (Unaudited)
<S> <C>
Investment Income
- ---------------------------------------------------------------------------------------------------
Interest $ 7,062,234
- ---------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $58,265) 1,940,841
- ---------------------------------------------------------------------------------------------------
Total investment income 9,003,075
Expenses:
- ---------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 9,284,375
- ---------------------------------------------------------------------------------------------------
Investor Servicing and custodian fees (Note 2) 4,260,236
- ---------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 27,405
- ---------------------------------------------------------------------------------------------------
Reports to shareholders 144,573
- ---------------------------------------------------------------------------------------------------
Auditing 42,420
- ---------------------------------------------------------------------------------------------------
Legal 24,214
- ---------------------------------------------------------------------------------------------------
Postage 335,552
- ---------------------------------------------------------------------------------------------------
Registration Fees 471,511
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,290,589
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 7,285,325
- ---------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 129,327
- ---------------------------------------------------------------------------------------------------
Administrative services (Note 2) 25,163
- ---------------------------------------------------------------------------------------------------
Other expenses 104,995
- ---------------------------------------------------------------------------------------------------
Total expenses 24,425,685
- ---------------------------------------------------------------------------------------------------
Net investment loss (15,422,610)
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 17,982,416
- ---------------------------------------------------------------------------------------------------
Net realized loss on forward currency translation (Notes 1 and 3) (3,181)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 695,612,242
- ---------------------------------------------------------------------------------------------------
Net gain on investments 713,591,477
- ---------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $698,168,867
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
December 31 June 30
1995* 1995
<S> <C> <C>
- --------------------------------------------------------------------------------------------------- -------------------
Increase in net assets
- --------------------------------------------------------------------------------------------------- -------------------
Operations:
- --------------------------------------------------------------------------------------------------- -------------------
Net investment loss $ (15,422,610) $ (13,274,739)
- --------------------------------------------------------------------------------------------------- -------------------
Net realized gain (loss) on investments and
foreign currencies 17,979,235 (12,179,793)
- --------------------------------------------------------------------------------------------------- -------------------
Net unrealized appreciation of investments 695,612,242 508,131,057
- --------------------------------------------------------------------------------------------------- -------------------
Net increase in net assets resulting from operations 698,168,867 482,676,525
- --------------------------------------------------------------------------------------------------- -------------------
Distributions to shareholders
- --------------------------------------------------------------------------------------------------- -------------------
From net realized gain on investments:
Class A - (5,252,966)
- --------------------------------------------------------------------------------------------------- -------------------
Class B - (3,371,127)
- --------------------------------------------------------------------------------------------------- -------------------
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) 1,351,342,058 942,116,459
- --------------------------------------------------------------------------------------------------- -------------------
Total increase in net assets 2,049,510,925 1,413,279,875
- --------------------------------------------------------------------------------------------------- -------------------
Net Assets
- --------------------------------------------------------------------------------------------------- -------------------
Beginning of period 2,395,804,962 982,525,087
- --------------------------------------------------------------------------------------------------- -------------------
End of period (including accumulated net investment loss
of $15,425,270 and $2,660, respectively) $4,445,315,887 $2,395,804,962
- --------------------------------------------------------------------------------------------------- -------------------
* Unaudited
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
For the period For the period
July 19, 1994 December 1, 1994
For six months (commencement For six months (commencement
ended of operations) ended of operations) to
December 31 to June 30 December 31 June 30
- ----------------------------------------------------------------------------------------------------------
1995* 1995 1995* 1995
- ----------------------------------------------------------------------------------------------------------
Class Y Class M
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $29.66 $22.59 $29.51 $24.72
- ----------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------
Net investment (loss) (.08) (.04) (.12) (.05)
- ----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 7.51 7.31 7.37 5.04
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 7.43 7.27 7.25 4.99
- ----------------------------------------------------------------------------------------------------------
Less distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (.15) -- (.15)
- ----------------------------------------------------------------------------------------------------------
In excess of net realized gains -- (.04) -- (.04)
- ----------------------------------------------------------------------------------------------------------
Return of capital -- (.01) -- (.01)
- ----------------------------------------------------------------------------------------------------------
Total distributions -- (.20) -- (.20)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $37.09 $29.66 $36.76 $29.51
- ----------------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (e) 25.05 (b) 32.42 (b) 24.57 (b) 20.40 (b)
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $61,644 $24,538 $65,059 $16,011
- ----------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) .45 (b) .83 (b) .84 (b) .94 (b)
- ----------------------------------------------------------------------------------------------------------
Ratio of net investment loss to
average net assets (%) (.18) (b) (.26) (b) (.57) (b) (.53) (b)
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 12.82 (b) 56.99 12.82 (b) 56.99
- ----------------------------------------------------------------------------------------------------------
* Unaudited
(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 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.
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
For the period
March 1, 1993
For six months (commencement
ended of operations) to
December 31 Year ended June 30 June 30
- ----------------------------------------------------------------------------------------------------------
1995* 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------
Class B Class A
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $29.09 $21.68 $20.80 $17.76
- ----------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------
Net investment (loss) (.16) (.23) (.11) (.05)
- ----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 7.27 7.84 1.44 3.09
- ----------------------------------------------------------------------------------------------------------
Total from investment operations 7.11 7.61 1.33 3.04
- ----------------------------------------------------------------------------------------------------------
Less distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (.15) (.45) --
- ----------------------------------------------------------------------------------------------------------
In excess of net realized gains -- (.04) -- --
- ----------------------------------------------------------------------------------------------------------
Return of capital -- (.01) -- --
- ----------------------------------------------------------------------------------------------------------
Total distributions -- (.20) (.45) --
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $36.20 $29.09 $21.68 $20.80
- ----------------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (e) 24.44 (b) 35.34 6.18 17.12 (b)
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,930,794 $1,013,379 $333,738 $15,698
- ----------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) .95 (b) 1.88 2.04 .67 (b)
- ----------------------------------------------------------------------------------------------------------
Ratio of net investment loss to
average net assets (%) (.68) (b) (1.30) (1.55) (.57) (b)
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 12.82 (b) 56.99 52.76 93.59 (b)
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
For the period
August 31, 1990
For six months (commencement
ended of operations) to
December 31 Year ended June 30 June 30
- ----------------------------------------------------------------------------------------------------------------------------------
1995* 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $29.58 $21.88 $20.83 $14.50 $11.56 $8.54
- ----------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment (loss) (.10) (.12) (.06) (.12) (.02) (.11) (a)
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 7.47 8.02 1.56 6.77 3.33 (d) 3.19
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 7.37 7.9 1.5 6.65 3.31 3.08
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investment -- (.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 $36.95 $29.58 $21.88 $20.83 $14.50 $11.56
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (e) 24.92 (b) 36.36 7 46.12 28.85 36.23 (b)
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,387,818 $1,341,877 $648,787 $318,426 $141,206 $3,164
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets .57 (b) 1.13 1.23 1.31 1.64 2.28 (a)(b)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to
average net assets (%) (.30) (b) (.55) (.82) (.98) (.91) (1.14) (a)(b)
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 12.82 (b) 56.99 52.76 93.59 116.04 (c) 71.54 (b)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes to financial statements
December 31, 1995 (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. Class A
shares are sold with a maximum front-end sales charge of 5.75%. Class B
shares, which convert to class A shares after eight years, do not pay a
front-end sales charge but pay a higher ongoing distribution fee than
class A shares, and may be subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class
M shares are sold with a maximum front end sales charge of 3.50% and pay
an ongoing distribution fee that is higher than class A shares but lower
than class B shares. Class Y shares, which are sold at net asset value,
are generally subject to the same expenses as class A shares and class B
shares, but do not bear a distribution fee. Class Y shares are sold to
defined contribution plans that initially invest at least $250 million
in a combination of Putnam Funds.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class of would receive their pro-rata share of
the net assets of the fund, if that fund were liquidated. In addition,
the Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements are in conformity
with generally accepted accounting principles and require management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements. Actual
results could differ from these estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported -- as in the
case of some securities 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 investments 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.
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 companies managed by Putnam Investment Management,
Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. and certain 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 least equal to 102% of 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
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held and for excise tax on income and capital
gains.
F) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid annually. The amount and character of income and gains to be
distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
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 were $54,369. These expenses are being amortized
by the fund on a straight-line basis over a five-year period. The fund
will reimburse Putnam Management for the payment of these expenses.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 0.70% of the first $500
million of average net assets, 0.60% of the next $500 million, 0.55% of
the next $500 million, and 0.50% of 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 Putnam
Management of the fund's portfolio transactions.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustees fee of $3,570 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
During the period ended December 31, 1995, the fund adopted a Trustee
Fee Deferral Plan ("the Plan") which allows the Trustees to defer the
receipt of all or portion of the Trustees Fees payable on or after July
1, 1995. The deferred fees remain in the fund and are invested in the
fund or other Putnam funds until distribution in accordance with the
Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00% and 1.00% of the average net assets attributable to class A, class
B and class M shares, respectively. The Trustees have approved payment
by the fund 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 six months ended December 31, 1995, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $2,920,963 and $87,577
from the sale of class A and class M shares, respectively and received
$869,023 in contingent deferred sales charges from redemptions of class
B shares. A deferred sales charge of up to 1% is assessed on certain
redemptions of class A shares. For the six months ended December 31,
1995, Putnam Mutual Funds Corp., acting as underwriter received $13,086
on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended December 31, 1995, purchases and sales of
investment securities other than short-term investments aggregated
$1,612,774,984 and $394,274,993, respectively. There were no purchases
and sales of U.S. government obligations. In determining the net gain or
loss on securities sold, the cost of securities has been determined on
the identified cost basis.
Note 4
Capital shares
At December 31, 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 capital shares. Transactions in capital shares
were as follows:
Six months ended
December 31, 1995
Class A Shares Amount
- ----------------------------------------------------
Shares sold 39,772,714 $1,357,471,575
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2 140
- ----------------------------------------------------
39,772,716 1,357,471,715
Shares
repurchased (20,505,346) (698,645,820)
- ----------------------------------------------------
Net increase 19,267,370 $658,825,895
- ----------------------------------------------------
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
- ----------------------------------------------------
Six months ended
December 31, 1995
Class B Shares Amount
- ----------------------------------------------------
Shares sold 24,234,811 $812,581,611
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 31 680
- ----------------------------------------------------
24,234,842 812,582,291
Shares
repurchased (5,732,292) (190,631,216)
- ----------------------------------------------------
Net increase 18,502,550 $621,951,075
- ----------------------------------------------------
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
- ----------------------------------------------------
Six months ended
December 31, 1995
Class M Shares Amount
- ----------------------------------------------------
Shares sold 1,424,839 $49,109,806
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
1,424,839 49,109,806
Shares
repurchased (197,410) (6,781,856)
- ----------------------------------------------------
Net increase 1,227,429 $42,327,950
- ----------------------------------------------------
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
- ----------------------------------------------------
Six months ended
December 31, 1995
Class Y Shares Amount
- ----------------------------------------------------
Shares sold 968,448 $32,815,158
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ----------------------------------------------------
968,448 32,815,158
Shares
repurchased (133,528) (4,578,020)
- ----------------------------------------------------
Net increase 834,920 $28,237,138
- ----------------------------------------------------
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
- ----------------------------------------------------
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investor Services has won the DALBAR Quality Tested Service Seal
for the past six years. In 1995, over 146,000 tests of 56 shareholder
service components demonstrated that Putnam outperformed the industry
standard in every category.
* HELP YOUR INVESTMENT GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market 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 the
original cost of the shares.
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 representative.
* 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.
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
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Senior Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
Daniel L. Miller
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam New
Opportunities Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives details
of sales charges, investment objectives, and operating policies of the
fund, and the most recent copy of Putnam's Quarterly Performance
Summary. For more information, or to request a prospectus, call toll
free: 1-800-225-1581.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, are not insured by the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board
or any other agency, and involve risk, including the possible loss of
principal amount invested.
The Putnam Funds
One Post Office Square
Boston Massachusetts, 02109
22798-852/358/983 1/96
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
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