Putnam
New
Opportunities
Fund
ANNUAL REPORT
June 30, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "There are more large caps now, but the fund has always held a few
blue chips . . . nor does the large-cap portion conflict with the fund's
strategy. Management looks for the most robust sectors of the economy,
then selects stocks that meet growth criteria, such as high projected
earnings growth or after-tax cash flows . . . Although it has grown, the
fund is little changed in its stylistic consistency and capable
management."
-- Morningstar analysis, May 23, 1997
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
12 Portfolio holdings
20 Financial statements
35 Results of February 6, 1997 shareholder meeting
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Investor acceptance of Putnam New Opportunities Fund has been enthusiastic
since the fund's 1991 introduction. It has been so intense, in fact, that it
has generated an unrestrained inflow of assets -- to the point at which Putnam
Management concluded this spring that further growth would hamper the fund's
ability to achieve its goal of pursuing long-term capital appreciation
potential in fast-growing industries.
As a consequence, Putnam Management has decided to restrict the assets flowing
into the fund, as explained in a letter to shareholders in June. Shareholders
wishing to purchase new shares of the fund or exchange assets from another
Putnam fund now may do so only by setting up a systematic investment or
systematic exchange program. Of course, shareholders may continue to reinvest
distributions and to take advantage of Putnam's reinstatement privilege for
assets they withdraw from the fund and wish to reinvest.
If you have questions or would like more information about the new provisions,
please contact your financial advisor or call Putnam toll free at
1-800-225-1581.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
August 20, 1997
Report from the Fund Managers
Daniel L. Miller, lead manager
Carol C. McMullen
For most of Putnam New Opportunities Fund's 1997 fiscal year, it appeared the
only constant was change. As market turbulence tested the mettle of the fund's
management team, Putnam Management began implementing administrative
transitions intended to expand the fund's strategy and, shortly thereafter, to
enhance the effectiveness of that strategy. Now, as fiscal 1998 begins, it
appears that these changes are proving beneficial and that a more favorable
climate is ahead for those who -- as we wrote in our last report -- "stood
firm against a hostile wind."
For example, your fund's midyear performance decline reflected a period when
small- and mid-capitalization companies -- always the portfolio's mainstay --
lost ground as the market embarked on a love affair with highly liquid
large-cap stocks. It was shortly before the year's midpoint that Carol
McMullen joined the management team. She began focusing a portion of the
fund's resources on large-cap stocks while maintaining the fund's
characteristic approach of targeting both growth-oriented sectors of the
economy and the strongest companies within those sectors. As her efforts began
to bear fruit, the fund's small- and mid-cap holdings staged a recovery.
Result: the fund benefited substantially from the opportunity to take
advantage of growth opportunities without regard for market capitalization.
Complete performance information begins on page 8.
* FUND DRAWS ON ECONOMIC THEMES TO IDENTIFY AND LINK GROWTH-ORIENTED INDUSTRY
SECTORS
As your fund has grown in size, we are able not only to take greater advantage
of the potential of large-cap stocks but to expand our original
industry-sector approach into a unique blend of bottom-up stock picking with
larger-scale trend analysis and forecasting. For example, the aging of the
baby-boom population in the United States is clearly creating opportunities in
all facets of the health-care industry as well as in peripheral areas such as
pharmaceuticals, vitamins, and other nutritional products. Less obvious is the
fact that older boomers are focusing on their fast-approaching retirements and
feeling the need to save more. These are favorable trends for both personal
financial planning companies and large-format retailers -- especially those
that sell products for the home -- which would otherwise have very little in
common.
In this example, we have our theme and target industries. But the actual
portfolio holdings will not be determined until we complete hours of
fundamental research and analysis. We want to identify and purchase the stocks
of companies with the best available combination of growth potential, quality
management, healthy finances, reasonable valuation, and strong market or
leadership positioning. Examples of portfolio stocks we consider poised to
benefit from the aging of the boomer population are Dura Pharmaceuticals,
which specializes in drugs for various respiratory problems; HealthSouth
Corporation, which merges a surgical-care center with an accompanying
rehabilitation center; and the drugstore chain CVS. While these holdings,
along with others discussed in this report, were viewed favorably at the end
of the fiscal period, all are subject to review and adjustment in accordance
with the fund's investment strategy and may vary in the future.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS*]
TOP INDUSTRY SECTORS*
Computer software 10.3%
Pharmaceuticals and biotechnology 8.4%
Retail 5.7%
Business services 5.4%
Electronics and electrical equipment 4.6%
Footnote reads:
*Based on net assets as of 6/30/97. Holdings will vary over time.
* "YEAR 2000" DILEMMA CREATES WEALTH OF OPPORTUNITies
Another trend influencing our portfolio selections is considerably narrower in
scope but offers literally a once-in-a-millennium opportunity. Companies
around the world are struggling to prevent the loss of essential data,
applications, and even hardware within systems that are not equipped to digest
dates after December 31, 1999. Each company faces a unique set of challenges
that must be addressed from a business as well as a technological viewpoint.
However, in most cases the response is to reprogram existing systems, to
replace outdated software and hardware, or to customize a solution that
combines both approaches.
Compuware, headquartered in Farmington Hills, Michigan, is a relatively new
holding that appears well positioned to benefit from this situation. Its
Production 2000 focus combines a battery of productivity products already in
use by three of every four Fortune 1000 companies with an extensive
professional services organization. The blend enables Compuware to deliver
technology, conversion talent, and techniques adapted to each specific client.
Other portfolio holdings with strong potential to benefit from the Year 2000
dilemma include EMC, which produces large-scale storage systems essential to
the testing and implementation of new -- or revamped -- software and valuable
data, and Peoplesoft, whose efficient, affordable human resources information
system is prompting many companies to replace rather than rework their current
software.
* ENTERTAINMENT FOCUS REFLECTS MULTIPLE THEMES
Many of the fund's large-capitalization holdings interested us because they
have the potential to benefit from several trends at once. As the aging boomer
population shifts its priorities, we believe industries such as broadcasting
and other areas of entertainment that can add to boomers' enjoyment of life
should be well rewarded for their efforts. Companies such as Time Warner and
Westinghouse, which encompasses CBS and the recently acquired Infinity
Broadcasting, are good examples. Both possess extensive distribution systems
that are often more profitable overseas than within the United States. This
reflects another trend, the globalization of American industry, which has
translated into substantial gains for those companies that can participate
successfully.
TOP 10 HOLDINGS
HEALTHSOUTH Corp.
Health care services
WorldCom, Inc.
Telephone services
Clear Channel Communications, Inc.
Broadcasting
HFS, Inc.
Lodging
MBNA Corp.
Financial services
General Electric Co.
Electronics and electrical equipment
Tellabs, Inc.
Telecommunications
EMC Corp.
Computer equipment
America Online, Inc.
Computer Services
Elan Corp. PLC ADR
Pharmaceuticals and biotechnology
Footnote reads:
These holdings represent 14.8% of the fund's net assets as of 6/30//97.
Portfolio holdings will vary over time.
With the U.S. economy slowing to a more moderate pace and with no clear-cut
signs of inflation, it seems likely that the months ahead will bring an
environment of moderate economic growth. This combination, in turn, could
continue to create a favorable investment climate for aggressive growth
stocks. We continue to position your fund to take advantage of the full range
of growth stock opportunities in the United States.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed
favorably as of 6/30/97, there is no guarantee the fund will continue to hold
these securities in the future. This fund invests a portion of its assets in
small to medium-sized companies. Such investments increase the risk of greater
price fluctuations.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
New Opportunities Fund is designed for investors seeking long-term capital
appreciation primarily through common stock investments in companies in
economic sectors with above-average long-term growth potential.
TOTAL RETURN FOR PERIODS ENDED 6/30/97
Class A Class B Class M
(inception date) (8/31/90) (3/1/93) (12/1/94)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
1 year 4.26% -1.73% 3.50% -1.50% 3.75% 0.12%
- ------------------------------------------------------------------------------
5 years 223.02 204.54 211.45 209.45 215.05 204.07
Annual average 26.43 24.95 25.51 25.35 25.80 24.91
- ------------------------------------------------------------------------------
Life of fund 466.99 434.44 437.88 437.88 446.31 427.07
Annual average 28.92 27.81 27.93 27.93 28.22 27.55
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/97
Consumer
S&P 500 Russell 2000 Price Index
- ------------------------------------------------------------------------------
1 year 34.68% 16.33% 2.30%
- ------------------------------------------------------------------------------
5 years 146.38 127.59 14.34
Annual average 19.77 17.88 2.72
- ------------------------------------------------------------------------------
Life of fund 231.05 218.73 21.81
Annual average 19.15 18.49 2.93
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% for class A shares and 3.50% for class M shares.
One-, five-, and ten-year (when applicable) and life-of-fund returns for
class B shares reflect the applicable contingent deferred sales charges
(CDSC), which is 5% in the first year, declines each year to 1% in the
sixth year, and is eliminated thereafter. Returns shown for class B and
class M shares for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect both the
initial sales charge or CDSC, if any, currently applicable to each class
and, in the case of class B and class M shares, the higher operating costs
applicable to such shares. All returns assume reinvestment of
distributions at NAV and represent past performance; they do not guarantee
future results. Investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
[GRAPHIC OMITTED worm chart GROWTH OF A 10,000 INVESTMENT]
Cumulative total return of $10,000 investment since 8/31/90.
Fund's Class A Russell 2000 Consumer Price
shares at POP Index Price Index
8/31/90 9425 10000 10000
12/31/90 10441 9577 10167
12/31/91 17492 13986 10479
12/31/92 21971 16561 10763
12/31/93 29154 19688 11079
12/31/94 30119 19329 11375
12/31/95 44058 24828 11664
12/31/96 48841 28923 12052
6/30/97 53444 31873 12181
Footnote reads:
Past performance is no assurance of future results. At the end of the same
time period, a $10,000 investment in the fund's class B shares would have been
valued at $53,788 and no contingent deferred sales charges would apply; and a
$10,000 investment in the fund's class M shares would have been valued at
$54,631 ($52,707 at public offering price). See first page of performance
section for performance calculation method.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 6/30/97
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term $0.3190 $0.3190 $0.3190
- ------------------------------------------------------------------------------
Short-term -- -- --
- ------------------------------------------------------------------------------
Total $0.3190 $0.3190 $0.3190
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
6/30/96 $42.99 $45.61 $41.96 $42.66 $44.21
- ------------------------------------------------------------------------------
6/30/97 44.47 47.18 43.08 43.91 45.50
- ------------------------------------------------------------------------------
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales 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.
COMPARATIVE BENCHMARKS
Russell 2000 Index is composed of the 2,000 smallest securities in the
Russell 3000 Index, representing approximately 7% of the Russell 3000
total market capitalization. This index is widely regarded in the industry
as the premiere measure of the small capitalization stock.*
Standard & Poor's 500 Index is an unmanaged list of common stocks that is
frequently used as a general measure of stock market performance.*
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or taxes. Securities in
the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
Report of independent accountants
For the fiscal year ended June 30, 1997
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, 1997, and the related statement of operations for the year then ended
and the statements 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 therein. 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
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights 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, 1997, by correspondence with the custodian and brokers.
An audit also includes 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, 1997, the results of its
operations for the year then ended and 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 14, 1997
Portfolio of investments owned
June 30, 1997
<TABLE>
<CAPTION>
COMMON STOCKS (95.5%) *
NUMBER OF SHARES VALUE
Advertising (1.0%)
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1,250,000 Lamar Advertising Co. + $ 31,875,000
2,199,100 Outdoor Systems, Inc. + 84,115,575
750,000 Universal Outdoor Holdings, Inc. + 26,156,250
---------------
142,146,825
Aerospace and Defense (0.8%)
- ------------------------------------------------------------------------------------------------------------
2,064,600 Boeing Co. 109,552,838
Banks (0.9%)
- ------------------------------------------------------------------------------------------------------------
1,648,500 Barnett Banks, Inc. 86,546,250
834,500 Washington Mutual, Inc. 49,861,375
---------------
136,407,625
Broadcasting (4.2%)
- ------------------------------------------------------------------------------------------------------------
900,000 Chancellor Broadcasting Corp. Class A +[SECTION MARK] 36,000,000
3,610,100 Clear Channel Communications, Inc. + 222,021,150
1,090,000 Emmis Broadcasting Corp. Class A +[SECTION MARK] 47,551,250
1,090,010 Evergreen Media Corp. Class A + 48,641,696
1,242,900 Jacor Communications, Inc. + 47,540,925
900,000 LIN Television Corp. + 39,712,500
600,000 SFX Broadcasting, Inc. Class A +[SECTION MARK] 25,312,500
921,800 Sinclair Broadcast Group, Inc. Class A + 28,460,575
900,000 Univision Communications, Inc. Class A + 35,212,500
1,425,000 Westwood One, Inc. + 45,956,250
677,800 Young Broadcasting Corp. Class A +[SECTION MARK] 22,028,500
---------------
598,437,846
Building Products (0.2%)
- ------------------------------------------------------------------------------------------------------------
1,000,000 Barnett, Inc. +[SECTION MARK] 24,500,000
Business Services (5.4%)
- ------------------------------------------------------------------------------------------------------------
1,700,000 Affiliated Computer Services, Inc. Class A +[SECTION MARK] 47,600,000
3,515,000 Airgas, Inc. +[SECTION MARK] 69,640,938
1,675,000 Corestaff, Inc. +[SECTION MARK] 45,225,000
5,115,000 Corporate Express, Inc. + 73,847,813
985,000 Interim Services, Inc. +[SECTION MARK] 43,832,500
691,350 Labor Ready, Inc. +[SECTION MARK] 6,999,919
4,350,000 Officemax, Inc. + 62,803,125
2,587,500 Paychex, Inc. 98,325,000
985,900 Precision Response Corp. + 16,267,350
29,000,000 Rentokil Group PLC (United Kingdom) 101,844,636
2,200,000 Robert Half International, Inc. + 103,537,500
622,200 Select Appointments Holdings PLC ADR (United Kingdom) + 9,644,100
1,014,500 Snyder Communications, Inc. + 27,328,094
1,600,000 TeleTech Holdings, Inc. + 42,000,000
550,000 The Registry, Inc. + 25,300,000
---------------
774,195,975
Chemicals (0.7%)
- ------------------------------------------------------------------------------------------------------------
1,739,700 Praxair, Inc. 97,423,200
Computer Equipment (2.0%)
- ------------------------------------------------------------------------------------------------------------
4,878,500 EMC Corp. + 190,261,500
1,749,000 Hewlett-Packard Co. 97,944,000
---------------
288,205,500
Computer Services (3.6%)
- ------------------------------------------------------------------------------------------------------------
3,350,000 America Online, Inc. + 186,343,750
1,750,000 Cambridge Technology Partners, Inc. +[SECTION MARK] 56,000,000
1,082,400 CBT Group PLC ADR (Ireland) +[SECTION MARK] 68,326,500
2,250,000 Computer Horizons Corp. +[SECTION MARK] 77,062,500
700,000 National TechTeam, Inc. + 14,962,500
250,000 Renaissance Solutions, Inc. + 9,250,000
2,335,000 Sterling Commerce, Inc. + 76,763,125
1,054,350 Sykes Enterprises, Inc. + 27,413,100
266,100 Whittman-Hart, Inc. + 7,484,063
---------------
523,605,538
Computer Software (10.3%)
- ------------------------------------------------------------------------------------------------------------
1,315,000 Baan Co., N.V. (Netherlands) + 90,570,625
575,000 BMC Software, Inc. + 31,840,625
2,635,000 Cadence Design Systems, Inc. + 88,272,500
359,500 Citrix Systems, Inc. + 15,773,063
2,592,000 Computer Associates Intl., Inc. 144,342,000
1,165,000 Compuware Corp. + 55,628,750
375,000 Documentum, Inc. + 9,328,125
1,725,000 Electronic Arts, Inc. + 58,003,125
1,000,000 Electronics for Imaging, Inc. + 47,250,000
685,000 HNC Software, Inc. + 26,115,625
1,391,400 Inso Corp. +[SECTION MARK] 28,610,663
70,500 Legato Systems, Inc. +[SECTION MARK] 1,304,250
2,050,000 McAfee Associates, Inc. + 129,406,250
1,168,400 Microsoft Corp. + 147,656,550
3,807,200 Parametric Technology Corp. + 162,043,950
2,634,400 PeopleSoft, Inc. + 138,964,600
73,500 Project Software & Development, Inc. +[SECTION MARK] 1,065,750
600,000 Remedy Corp. + 24,000,000
380,800 Sapient Corp. + 18,849,600
800,000 Saville Systems Ireland PLC ADR (Ireland) + 41,600,000
1,772,000 Security Dynamics Technologies, Inc. +[SECTION MARK] 65,342,500
2,199,700 Synopsys, Inc.[SECTION MARK] 80,838,975
1,400,000 Vantive Corp. +[SECTION MARK] 39,550,000
475,000 Viasoft, Inc. + 24,106,250
95,500 Wind River Systems 3,652,875
---------------
1,474,116,651
Conglomerates (0.5%)
- ------------------------------------------------------------------------------------------------------------
978,100 Tyco International Ltd. 68,039,081
Consumer Products (1.5%)
- ------------------------------------------------------------------------------------------------------------
1,040,800 Gillette Co. 98,615,800
829,500 Procter & Gamble Co. 117,166,875
---------------
215,782,675
Cosmetics (0.4%)
- ------------------------------------------------------------------------------------------------------------
1,239,400 Estee Lauder Cos. Class A 62,279,850
Education (0.7%)
- ------------------------------------------------------------------------------------------------------------
990,100 Apollo Group, Inc. Class A + 34,901,025
940,000 Learning Tree International, Inc. +[SECTION M 41,712,500
729,111 Sylvan Learning Systems, Inc. + 24,789,774
---------------
101,403,299
Electric Utilities (0.6%)
- ------------------------------------------------------------------------------------------------------------
2,155,000 Calenergy, Inc. + 81,890,000
Electronics and Electrical Equipment (4.6%)
- ------------------------------------------------------------------------------------------------------------
745,600 ADT Ltd. + 24,604,800
1,182,100 Applied Materials, Inc. + 83,707,456
1,020,000 Cognex Corp. + 27,030,000
3,321,700 General Electric Co. 217,156,138
975,450 Microchip Technology, Inc. + 29,019,638
1,623,900 Motorola, Inc. 123,416,400
6,880,100 Westinghouse Electric Corp. 159,102,313
---------------
664,036,745
Energy-Related (0.3%)
- ------------------------------------------------------------------------------------------------------------
1,500,000 Thermo Electron Corp. + 51,562,500
Entertainment (1.3%)
- ------------------------------------------------------------------------------------------------------------
1,215,100 Disney (Walt) Productions, Inc. 97,511,775
1,920,000 Time Warner, Inc. 92,640,000
---------------
190,151,775
Environmental Control (1.3%)
- ------------------------------------------------------------------------------------------------------------
1,300,000 Philip Services Corp. (Canada) + 20,637,500
1,083,988 Republic Industries, Inc. + 26,964,202
1,481,700 U.S. Filter Corp. + 40,376,325
2,430,000 USA Waste Services, Inc. + 93,858,750
---------------
181,836,777
Finance (1.2%)
- ------------------------------------------------------------------------------------------------------------
1,507,500 American Express Co. 112,308,750
1,225,000 TCF Financial Corp. 60,484,375
---------------
172,793,125
Financial Services (2.8%)
- ------------------------------------------------------------------------------------------------------------
1,000,000 Finova Group, Inc. 76,500,000
824,000 First USA Paymentech, Inc. + 23,844,500
1,251,610 FIRSTPLUS Financial Group, Inc. + 42,554,740
5,976,500 MBNA Corp. 218,889,313
1,200,000 PMT Svcs., Inc. + 18,300,000
510,000 Sirrom Capital Corp. 17,595,000
---------------
397,683,553
Food and Beverages (1.6%)
- ------------------------------------------------------------------------------------------------------------
1,415,400 Campbell Soup Co. 70,770,000
1,204,100 Coca-Cola Co. 81,276,750
3,257,400 Coca-Cola Enterprises, Inc. 74,920,200
---------------
226,966,950
Funeral/Cemetery Services (1.8%)
- ------------------------------------------------------------------------------------------------------------
560,000 Loewen Group, Inc. 19,460,000
3,025,000 Service Corp. International 99,446,875
3,418,300 Stewart Enterprises, Inc. Class A [SECTION MARK] 143,568,600
---------------
262,475,475
Health Care Information Systems (1.2%)
- ------------------------------------------------------------------------------------------------------------
1,225,000 ABR Information Services, Inc. +[SECTION MARK] 35,525,000
2,000,000 HBO & Co. 137,750,000
---------------
173,275,000
Health Care Services (4.3%)
- ------------------------------------------------------------------------------------------------------------
1,783,500 Cardinal Health, Inc. 102,105,375
892,600 Carematrix Corp. +[SECTION MARK] 22,036,063
810,000 Emcare Holdings, Inc. +[SECTION MARK] 29,666,250
9,737,200 HEALTHSOUTH Corp. + 242,821,425
2,400 Henry Schein, Inc. + 75,300
4,000,000 MedPartners, Inc. + 86,500,000
1,410,000 Renal Treatment Centers, Inc. [SECTION MARK] 37,893,750
850,000 Rotech Medical Corp. + 17,053,125
1,100,000 Sunrise Assisted Living, Inc. +[SECTION MARK] 38,500,000
885,000 Total Renal Care Holdings, Inc. + 35,565,938
---------------
612,217,226
Hospital Management (1.1%)
- ------------------------------------------------------------------------------------------------------------
5,522,000 Health Management Assoc., Inc. +[SECTION MARK] 157,377,000
Household Products (0.3%)
- ------------------------------------------------------------------------------------------------------------
363,500 Clorox Co. 47,982,000
Insurance (2.8%)
- ------------------------------------------------------------------------------------------------------------
846,800 Aetna, Inc. 86,691,150
505,900 CIGNA Corp. 89,797,250
1,725,700 Conseco, Inc. 63,850,900
643,250 CRA Managed Care, Inc. +[SECTION MARK] 33,569,609
1,800,000 HCC Insurance Holdings, Inc. [SECTION MARK] 48,037,500
1,340,133 Travelers Group, Inc. 84,512,137
---------------
406,458,546
Leisure (0.2%)
- ------------------------------------------------------------------------------------------------------------
900,000 Signature Resorts, Inc. + 31,106,250
Lodging (4.1%)
- ------------------------------------------------------------------------------------------------------------
2,000,400 Doubletree Corp. +[SECTION MARK] 82,266,450
4,965,966 Extended Stay America, Inc. +[SECTION MARK] 78,213,965
3,800,000 HFS, Inc. + 220,400,000
1,570,500 Marriott International, Inc. 96,389,438
2,150,000 Prime Hospitality Corp. +[SECTION MARK] 42,462,500
1,763,400 Promus Hotel Corp. + 68,331,750
---------------
588,064,103
Medical Supplies and Devices (1.6%)
- ------------------------------------------------------------------------------------------------------------
1,330,000 Boston Scientific Corp. + 81,711,875
696,800 Neuromedical Systems, Inc. + 3,854,175
2,620,000 Omnicare, Inc. 82,202,500
2,200,000 Physician Sales & Service, Inc. +[SECTION MARK] 41,800,000
300,200 Sybron International Corp. + 11,970,475
554,100 Thermo Cardiosystems, Inc. + 14,406,600
---------------
235,945,625
Medical Management Services (1.2%)
- ------------------------------------------------------------------------------------------------------------
450,000 NCS HealthCare, Inc. Class A + 13,668,750
1,400,000 OccuSystems, Inc. +[SECTION MARK] 40,600,000
1,038,600 Pediatrix Medical Group, Inc. +[SECTION MARK] 47,580,863
1,939,100 Phycor, Inc. + 66,777,756
---------------
168,627,369
Networking Equipment (0.8%)
- ------------------------------------------------------------------------------------------------------------
1,456,800 Cisco Systems, Inc. + 97,787,700
504,200 Newbridge Networks Corp. (Canada) 21,932,700
---------------
119,720,400
Nursing Homes (1.1%)
- ------------------------------------------------------------------------------------------------------------
2,195,000 Genesis Health Ventures, Inc. +[SECTION MARK] 74,081,250
2,400,000 Health Care & Retirement Corp. +[SECTION MARK] 80,100,00
---------------
154,181,250
Office Equipment and Products (0.5%)
- ------------------------------------------------------------------------------------------------------------
1,500,000 BT Office Products International, Inc. + 11,250,000
3,325,000 Viking Office Products, Inc. + 63,175,000
---------------
74,425,000
Oil and Gas (0.7%)
- ------------------------------------------------------------------------------------------------------------
758,400 Schlumberger Ltd. 94,800,000
Pharmaceuticals and Biotechnology (8.4%)
- ------------------------------------------------------------------------------------------------------------
1,777,600 Abbott Laboratories 118,654,800
2,015,300 Bristol-Myers Squibb Co. 163,239,300
1,750,000 Dura Pharmaceuticals, Inc. + 69,781,250
4,100,000 Elan Corp. PLC ADR + 185,525,000
1,725,000 Gilead Sciences, Inc. +[SECTION MARK] 47,653,125
1,565,000 Jones Medical Industries, Inc. [SECTION MARK] 74,337,500
962,400 Lilly (Eli) & Co. 105,202,350
146,600 Martek Biosciences Corp. + 1,722,550
1,600,000 Merck & Co., Inc. 165,600,000
700,000 Parexel International Corp. + 22,225,000
510,000 Quintiles Transnational Corp. + 35,508,750
1,047,100 Smithkline Beecham PLC ADR (United Kingdom) 95,940,538
911,500 Warner-Lambert Co. 113,253,875
---------------
1,198,644,038
Publishing (0.7%)
- ------------------------------------------------------------------------------------------------------------
969,400 Gannett Co., Inc. 95,728,250
Restaurants (1.4%)
- ------------------------------------------------------------------------------------------------------------
1,803,300 Applebee's International, Inc. [SECTION MARK] 48,238,275
2,159,432 J.D. Wetherspoon PLC (United Kingdom) 48,970,410
1,650,000 Landry's Seafood Restaurants, Inc. +[SECTION MARK] 37,950,000
1,796,800 Papa Johns International, Inc. +[SECTION MARK] 66,032,400
192,200 Rainforest Cafe, Inc. +[SECTION MARK] 4,877,075
---------------
206,068,160
Retail (5.7%)
- ------------------------------------------------------------------------------------------------------------
3,850,000 Bed Bath & Beyond, Inc. +[SECTION MARK] 116,943,750
1,541,900 CompUSA, Inc. + 33,150,850
3,612,299 CVS Corp. 185,130,324
2,236,900 Dayton Hudson Corp. 118,975,119
3,300,000 Dixons Group PLC (United Kingdom) 25,650,068
425,000 Dollar Tree Stores, Inc. + 21,409,375
1,878,900 Federated Department Stores, Inc. + 65,291,775
584,300 Global DirectMail Corp. + 15,228,319
1,262,700 Lowe's Cos., Inc. 46,877,738
585,700 Rexall Sundown, Inc. + 22,842,300
3,000,000 Staples, Inc. + 69,750,000
2,925,000 Wolverine World Wide, Inc. [SECTION MARK] 88,846,875
---------------
810,096,493
Semiconductors (3.8%)
- ------------------------------------------------------------------------------------------------------------
725,000 Altera Corp. + 36,612,500
1,130,000 Analog Devices, Inc. + 30,015,625
1,094,800 Credence Systems Corp. +[SECTION MARK] 32,775,575
668,800 Intel Corp. 94,844,200
965,900 KLA Instruments Corp. + 47,087,625
575,000 Lattice Semiconductor Corp. + 32,487,500
1,785,000 Linear Technology Corp. 92,373,750
2,060,000 Maxim Integrated Products, Inc. + 117,162,500
1,134,800 Xilinx, Inc. + 55,676,125
---------------
539,035,400
Specialty Consumer Products (0.2%)
- ------------------------------------------------------------------------------------------------------------
557,000 Central Garden and Pet Co. + 13,925,000
640,000 West Marine, Inc. + 16,480,000
---------------
30,405,000
Telecommunications (3.4%)
- ------------------------------------------------------------------------------------------------------------
103,300 Advanced Fibre Communications + 6,236,738
1,485,000 Aspect Telecommunications Corp. + 33,041,250
1,063,400 Brooks Fiber Properties, Inc. + 35,889,750
1,090,900 Northern Telecom Ltd. (Canada) 99,271,900
2,106,000 Pairgain Technologies, Inc. +[SECTION MARK] 32,643,000
2,110,000 Panamsat Corp. +[SECTION MARK] 61,190,000
559,400 Qwest Communications International, Inc. + 15,243,650
3,537,800 Tellabs, Inc. 197,674,575
---------------
481,190,863
Telephone Services (3.6%)
- ------------------------------------------------------------------------------------------------------------
1,000,000 Intermedia Communications, Inc. +[SECTION MARK] 32,375,000
733,800 ICG Communications, Inc. + 14,125,650
739,700 IXC Communications, Inc. + 19,417,125
1,500,000 McLeod, Inc. Class A + 50,625,000
1,966,200 Sprint Corp. 103,471,275
4,300,000 Tel-Save Holdings, Inc. +[SECTION MARK] 65,575,000
7,333,300 WorldCom, Inc. + 234,665,600
---------------
520,254,650
Wireless Communications (0.7%)
- ------------------------------------------------------------------------------------------------------------
1,400,000 Clearnet Communications, Inc. Class A (Canada) +[SECTION MARK] 16,975,000
4,400,000 NEXTEL Communications, Inc. Class A + 83,325,000
---------------
100,300,000
---------------
Total Common Stocks (cost $10,544,877,066) $13,691,396,426
SHORT-TERM INVESTMENTS (4.5%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$50,000,000 Asset Securitized Cooperative Corp. for an effective
yield of 5.56%, July 30, 1997 $ 49,776,056
25,000,000 Corporate Asset Funding Corp. for an effective yield
of 5.60%, July 2, 1997 24,996,110
30,000,000 Falcon Asset Securitization Corp. for an effective yield
of 5.56%, August 20, 1997 29,768,333
25,000,000 Federal Home Loan Mortgage Corp. for an effective
yield of 5.54%, August 15, 1997 24,826,875
50,000,000 Federal Home Loan Mortgage Corp. for an effective
yield of 5.45%, August 4, 1997 49,742,639
50,000,000 Federal National Mortgage Association for an effective
yield of 5.44%, September 15, 1997 49,425,776
50,000,000 Federal National Mortgage Association for an effective
yield of 5.41%, July 24, 1997 49,827,180
50,000,000 Ford Motor Credit Corp. for an effective yield of 5.54%,
August 25, 1997 49,576,804
50,000,000 General Electric Capital Corp. for an effective yield
of 5.54%, August 18, 1997 49,630,666
50,000,000 GTE Funding, Inc. for an effective yield of 5.57%,
July 16, 1997 49,883,958
30,000,000 Metlife Funding Corp. for an effective yield of 5.54%,
August 11, 1997 29,810,716
15,600,000 National Rural Utilities Cooperative Finance Corp.
for an effective yield of 5.57%, July 14, 1997 15,568,622
27,700,000 Preferred Receivables Funding Corp. for an effective
yield of 5.65%, August 13, 1997 27,513,063
30,000,000 Sheffield Receivables Corp. for an effective yield of 5.58%,
September 9, 1997 29,674,500
14,804,000 Interest in $293,634,000 joint repurchase agreement dated
June 30, 1997 with UBS Securities due July 1, 1997 with
respect to various U.S. Treasury obligations -- maturity
value of $14,806,426 for an effective yield of 5.90% 14,806,426
100,000,000 Interest in $750,000,000 joint repurchase agreement dated
June 30, 1997 with Goldman, Sachs & Co. due July 1, 1997
with respect to various U.S. Treasury obligations -- maturity
value of $100,016,319 for an effective yield of 5.875% 100,016,319
---------------
Total Short-Term Investments (cost $644,844,043) $ 644,844,043
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $11,189,721,109) *** $14,336,240,469
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $14,332,732,237.
*** The aggregate identified cost on a tax basis is $11,213,708,404,
resulting in gross unrealized appreciation and depreciation of
$3,428,551,245 and $306,019,180, respectively, or net unrealized
appreciation of $3,122,532,065.
+ Non-income-producing security.
[SECTION MARK] Affiliated Companies (Note 5)
ADR after the name of a foreign holding stands for American Depository Receipts, 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
June 30, 1997
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $11,189,721,109) (Note 1) $14,336,240,469
- ---------------------------------------------------------------------------------------------------
Dividends, interest and other receivable 5,330,072
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 36,998,098
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 67,447,116
- ---------------------------------------------------------------------------------------------------
Total assets 14,446,015,755
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 213,532
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 59,628,778
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 20,772,036
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 16,067,978
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 4,386,024
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 100,511
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 15,221
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 9,797,467
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 2,301,971
- ---------------------------------------------------------------------------------------------------
Total liabilities 113,283,518
- ---------------------------------------------------------------------------------------------------
Net assets $14,332,732,237
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $11,464,181,173
- ---------------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (29,062)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (Note 1) (277,940,665)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 3,146,520,791
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $14,332,732,237
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($7,381,623,986 divided by 165,997,512 shares) $44.47
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $44.47)* $47.18
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($6,359,446,948 divided by 147,610,222 shares)** $43.08
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($337,534,961 divided by 7,687,198 shares) $43.91
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $43.91)* $45.50
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($254,126,342 divided by 5,670,417 shares) $44.82
- ---------------------------------------------------------------------------------------------------
* 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
Year ended June 30, 1997
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $379,979) (including dividend
income of $776,166 from investments in affiliated issuers) (Note 5) $ 35,082,287
- --------------------------------------------------------------------------------------------------
Interest 28,817,501
- --------------------------------------------------------------------------------------------------
Total investment income 63,899,788
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 58,689,609
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 26,542,177
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 551,555
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 61,623
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 14,851,376
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 52,780,396
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 2,093,847
- --------------------------------------------------------------------------------------------------
Reports to shareholders 943,534
- --------------------------------------------------------------------------------------------------
Registration fees 1,355,299
- --------------------------------------------------------------------------------------------------
Auditing 168,972
- --------------------------------------------------------------------------------------------------
Legal 179,697
- --------------------------------------------------------------------------------------------------
Postage 3,724,881
- --------------------------------------------------------------------------------------------------
Other 2,449,085
- --------------------------------------------------------------------------------------------------
Total expenses 164,392,051
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (3,490,771)
- --------------------------------------------------------------------------------------------------
Net expenses 160,901,280
- --------------------------------------------------------------------------------------------------
Net investment loss (97,001,492)
- --------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1, 3 and 5)
(including realized loss of $81,761,967 on
sales of investments in affiliated issuers) (262,314,286)
- --------------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 16,936
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the year 1,674
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 1,063,186,644
- --------------------------------------------------------------------------------------------------
Net loss on investments 800,890,968
- --------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ 703,889,476
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended June 30
----------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment loss $ (97,001,492) $ (43,790,952)
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currency transactions (262,297,350) 90,705,125
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 1,063,188,318 1,532,698,538
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 703,889,476 1,579,612,711
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (37,775,305) --
- ----------------------------------------------------------------------------------------------------------------------
Class B (35,446,992) --
- ----------------------------------------------------------------------------------------------------------------------
Class M (1,848,838) --
- ----------------------------------------------------------------------------------------------------------------------
Class Y (976,630) --
- ----------------------------------------------------------------------------------------------------------------------
In excess of net realized gains on investments
Class A (7,788,281) --
- ----------------------------------------------------------------------------------------------------------------------
Class B (7,308,244) --
- ----------------------------------------------------------------------------------------------------------------------
Class M (381,182) --
- ----------------------------------------------------------------------------------------------------------------------
Class Y (201,355) --
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 4,383,952,454 5,361,199,461
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 4,996,115,103 6,940,812,172
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of year 9,336,617,134 2,395,804,962
- ----------------------------------------------------------------------------------------------------------------------
End of year (including accumulated net investment loss
of $29,062 and $25,244, respectively) $14,332,732,237 $9,336,617,134
- ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended June 30
- -----------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $42.99 $29.58 $21.88 $20.83 $14.50
- -----------------------------------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss (.20)(c) (.21)(c) (.12) (.06) (.12)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.00 13.62 8.02 1.56 6.77
- -----------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.80 13.41 7.90 1.50 6.65
- -----------------------------------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.26) -- (.15) (.45) (.32)
- -----------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains (.06) -- (.04) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- (.01) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (.32) -- (.20) (.45) (.32)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $44.47 $42.99 $29.58 $21.88 $20.83
- -----------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.26 45.34 36.36 7.00 46.12
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $7,381,624 $4,752,611 $1,341,877 $648,787 $318,426
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.06 1.11 1.13 1.23 1.31
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.48) (.54) (.55) (.82) (.98)
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 66.74 36.61 56.99 52.76 93.59
- -----------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0490
- -----------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter
includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment loss has been determined on the basis of the weighted average number
of shares outstanding during the period.
(d) Average commission rate paid on security trades is required for fiscal periods beginning on or after
September 1, 1995.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------
For the period
Per-share March 1,1993+
operating performance Year ended June 30 to June 30
- -----------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $41.96 $29.09 $21.68 $20.80 $17.76
- -----------------------------------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss (.49)(c) (.48)(c) (.23) (.11) (.05)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.93 13.35 7.84 1.44 3.09
- -----------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.44 12.87 7.61 1.33 3.04
- -----------------------------------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.26) -- (.15) (.45) --
- -----------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains (.06) -- (.04) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- (.01) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (.32) -- (.20) (.45) --
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $43.08 $41.96 $29.09 $21.68 $20.80
- -----------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 3.50 44.24 35.34 6.18 17.12*
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $6,359,447 $4,254,962 $1,013,379 $333,738 $15,698
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.81 1.87 1.87 2.04 .67*
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.23) (1.30) (1.30) (1.55) (.57)*
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 66.74 36.61 56.99 52.76 93.59
- -----------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0490
- -----------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter
includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment loss has been determined on the basis of the weighted average number
of shares outstanding during the period.
(d) Average commission rate paid on security trades is required for fiscal periods beginning on or after
September 1, 1995.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- -----------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Dec. 1,1994+
operating performance Year ended June 30 to June 30
- -----------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $42.66 $29.51 $24.72
- -----------------------------------------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss (.40)(c) (.40)(c) (.05)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.97 13.55 5.04
- -----------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.57 13.15 4.99
- -----------------------------------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.26) -- (.15)
- -----------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains (.06) -- (.04)
- -----------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- (.01)
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions (.32) -- (.20)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $43.91 $42.66 $29.51
- -----------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 3.75 44.56 20.40*
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $337,535 $210,404 $16,011
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.56 1.64 .94*
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.98) (1.06) (.53)*
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 66.74 36.61 56.99
- -----------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0490
- -----------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter
includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment loss has been determined on the basis of the weighted average number
of shares outstanding during the period.
(d) Average commission rate paid on security trades is required for fiscal periods beginning on or after
September 1, 1995.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- --------------------------------------------------------------------------------------------------------------------------
For the period
Per-share July 19,1994+
operating performance Year ended June 30 to June 30
- --------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $43.21 $29.66 $22.59
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment loss (.09)(c) (.11)(c) (.04)
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.02 13.66 7.31
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.93 13.55 7.27
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.26) -- (.15)
- --------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains (.06) -- (.04)
- --------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- (.01)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.32) -- (.20)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $44.82 $43.21 $29.66
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.54 45.68 32.42*
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $254,126 $118,640 $24,538
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .81 .86 .83*
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.23) (.29) (.26)*
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 66.74 36.61 56.99
- --------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0490
- --------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended June 30, 1996 and thereafter
includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment loss has been determined on the basis of the weighted average number
of shares outstanding during the period.
(d) Average commission rate paid on security trades is required for fiscal periods beginning on or after
September 1, 1995.
</TABLE>
Notes to financial statements
June 30, 1997
Note 1
Significant accounting policies
Putnam New Opportunities Fund ("the fund") is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management
investment company. The fund seeks capital appreciation by investing
principally in common stocks of companies in sectors of the economy which, in
the judgment of Putnam Investment Management, Inc. ("Putnam Management"), the
fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc. possess
above-average, long-term growth potential. Effective June 24, 1997 the fund is
closed to new investors. 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 approximately
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, class B
and class M 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 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
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally accepted
accounting principles and requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price on the principal market in which the securities are
traded, or, if no sales are reported -- as in the case of some securities
traded over-the-counter -- the last reported bid price. Short-term investments
having remaining maturities of 60 days or less are stated at amortized cost,
which approximates market value, and other investments are stated at fair
value following procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other registered
investment companies and certain other accounts managed by Putnam Management.
These balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through its
custodian, receives delivery of the underlying securities, the market value of
which at the time of purchase is required to be in an amount at least equal to
the resale price, including accrued interest. Putnam Management is responsible
for determining that the value of these underlying securities is at all times
at least equal to the resale price, including accrued interest.
D) Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis. Dividend income
is recorded on the ex-dividend date except that certain dividends from foreign
securities are recorded as soon as the fund is informed of the ex-dividend
date.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities, currency
holdings, other assets and liabilities are recorded in the books and records
of the fund after translation to U.S. dollars based on the exchange rates on
that day. The cost of each security is determined using historical exchange
rates. Income and withholding taxes are translated at prevailing exchange
rates when accrued or incurred. The fund does not isolate that portion of
realized or unrealized gains or losses resulting from changes in the foreign
exchange rate on investments from fluctuations arising from changes in the
market prices of the securities. Such fluctuations are included with the net
realized and unrealized gain or loss on investments. Net realized gains and
losses on foreign currency transactions represent net exchange gains or losses
on closed forward currency contracts, disposition of foreign currencies and
the difference between the amount of investment income and foreign withholding
taxes recorded on the fund's books and the U.S. dollar equivalent amounts
actually received or paid. Net unrealized appreciation and depreciation of
assets and liabilities in foreign currencies arise from changes in the value
of open forward currency contracts and assets and liabilities other than
investments at the period end, resulting from changes in the exchange rate.
F) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
At June 30, 1997, the fund had a capital loss carryover of approximately
$97,881,000 available to offset future net capital gain, if any, which will
expire on June 30, 2005.
G) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date. Capital
gain distributions, if any, are recorded on the ex-dividend date and paid at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences include treatment
of realized gains on foreign currency and net operating losses.
Reclassifications are made to the fund's capital accounts to reflect income
and gains available for distribution (or available capital loss carryovers)
under income tax regulations. For the year ended June 30, 1997, the fund
reclassified $96,997,674 to decrease accumulated net investment loss and
$97,033,421 to decrease paid-in-capital, with a decrease to distributions in
excess of gains on investments of $35,747. The calculation of net investment
income per share in the financial highlights table excludes these adjustments.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund. Such
fee is based on the following annual rates: 0.70% of the first $500 million of
average net assets, 0.60% of the next $500 million, 0.55% of the next $500
million, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455%
of the next $5 billion, 0.44% of the next $5 billion, and 0.43% of any amount
thereafter.
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.
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.
For the year ended June 30, 1997, fund expenses were reduced by $3,490,771
under expense offset arrangements with PFTC and broker service arrangements.
Investor servicing and custodian fees reported in the Statement of operations
exclude these credits. The fund could have invested a portion of the assets
utilized in connection with the expense offset arrangements in an income
producing asset if it had not entered into such arrangements.
Trustees of the fund receive an annual Trustee fee of $13,210 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of the
Trustees receive additional fees for attendance at certain committee meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows the
Trustees to defer the receipt of all or a portion of Trustees Fees payable on
or after July 1, 1995. The deferred fees remain in the fund and invested in
the fund or in other Putnam funds until distribution in accordance with the
Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to compensate
Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments,
Inc., for services provided and expenses incurred by it in distributing shares
of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds
Corp. at an annual rate up to 0.35%, 1.00% and 1.00% of the average net assets
attributable to class A, class B and class M shares, respectively. The
Trustees have approved payment by the fund 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, 1997, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $11,364,742 and $438,607 from the sale
of class A and class M shares, respectively and $10,457,694 in contingent
deferred sales charges from redemptions of class B shares. A deferred sales
charge of up to 1% is assessed on certain redemptions of class A shares. For
the year ended June 30, 1997, Putnam Mutual Funds Corp., acting as underwriter
received $237,484 on class A redemptions.
Note 3
Purchase and sales of securities
During the year ended June 30, 1997, purchases and sales of investment
securities other than short-term investments aggregated $11,846,233,129 and
$7,442,399,971, respectively. There were no purchases and sales of U.S.
government obligations. In determining the net gain or loss on securities
sold, the cost of securities has been determined on the identified cost basis.
Note 4
Capital shares
At June 30, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
June 30, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 142,393,856 $5,850,578,384
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,061,020 42,820,121
- ------------------------------------------------------------
143,454,876 5,893,398,505
Shares
repurchased (88,012,373) (3,602,785,988)
- ------------------------------------------------------------
Net increase 55,442,503 $2,290,612,517
- ------------------------------------------------------------
Year ended
June 30, 1996
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 108,115,547 $4,157,515,940
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ------------------------------------------------------------
108,115,547 4,157,515,940
Shares
repurchased (42,919,318) (1,604,367,366)
- ------------------------------------------------------------
Net increase 65,196,229 $2,553,148,574
- ------------------------------------------------------------
Year ended
June 30, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 75,798,177 $3,034,787,180
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 943,158 37,028,368
- ------------------------------------------------------------
76,741,335 3,071,815,548
Shares
repurchased (30,531,849) (1,209,675,509)
- ------------------------------------------------------------
Net increase 46,209,486 $1,862,140,039
- ------------------------------------------------------------
Year ended
June 30, 1996
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 79,329,108 $3,030,302,256
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ------------------------------------------------------------
79,329,108 3,030,302,256
Shares
repurchased (12,759,527) (468,230,792)
- ------------------------------------------------------------
Net increase 66,569,581 $2,562,071,464
- ------------------------------------------------------------
Year ended
June 30, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 5,520,573 $225,053,765
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 50,716 2,026,092
- ------------------------------------------------------------
5,571,289 227,079,857
Shares
repurchased (2,816,758) (114,396,085)
- ------------------------------------------------------------
Net increase 2,754,531 $112,683,772
- ------------------------------------------------------------
Year ended
June 30, 1996
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 4,924,723 $193,394,190
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ------------------------------------------------------------
4,924,723 193,394,190
Shares
repurchased (534,648) (20,478,335)
- ------------------------------------------------------------
Net increase 4,390,075 $172,915,855
- ------------------------------------------------------------
Year ended
June 30, 1997
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 4,581,487 $186,531,899
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 29,007 1,177,985
- ------------------------------------------------------------
4,610,494 187,709,884
Shares
repurchased (1,686,036) (69,193,758)
- ------------------------------------------------------------
Net increase 2,924,458 $118,516,126
- ------------------------------------------------------------
Year ended
June 30, 1996
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 2,245,795 $85,569,219
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ------------------------------------------------------------
2,245,795 85,569,219
Shares
repurchased (327,162) (12,505,651)
- ------------------------------------------------------------
Net increase 1,918,633 $73,063,568
- ------------------------------------------------------------
Note 5
Transactions with Affiliated Companies
<TABLE>
<CAPTION>
Transactions during the period with companies in which the fund owns at least
5% of the voting securities were as follows:
Purchases Sales Dividend Market
Name of affiliate cost cost Income Value
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABR Information
Services $ 19,346,341 $ 11,574,650 $ -- $ 35,525,000
Aames FInancial Corp. 56,474,293 56,474,293 150,163 --
Affiliated Computer Services
Class A 22,779,138 -- -- 47,600,000
Airgas Inc. 43,346,609 -- -- 69,640,938
Alternative Resource Corp. 2,379,063 23,669,473 -- --
American Medical Response 7,763,245 40,759,546 -- --
Apple South, Inc. 4,113,000 38,822,312 17,200 --
Applebees Intl. Inc. 26,011,639 1,327,325 -- 48,238,275
Barnett, Inc. 552,709 -- -- 24,500,000
Bed, Bath & Beyond, Inc. 14,780,824 -- -- 116,943,750
CBT Group PLC ADR (Ireland) -- -- -- 68,326,500
CMG Information Services, Inc. -- 14,702,039 -- --
CRA Managed Care, Inc. 30,884,281 -- -- 33,569,609
Cambridge Technology
Partners, Inc. -- 3,237,525 -- 56,000,000
Carematrix Corp. 14,154,408 -- 105,000 22,036,063
Centennial Cellular Corp. -- 18,586,280 -- --
Chancellor Broadcasting Corp.
Class A 2,292,298 -- -- 36,000,000
Clearnet Communications, Inc.
Class A 3,635,812 -- -- 16,975,000
Compudent Corp. -- 26,218,154 -- --
Computer Horizons Corp. 5,698,498 -- -- 77,062,500
Corestaff, Inc. 8,690,505 -- -- 45,225,000
Credence Systems Corp. 10,811,855 1,675,991 -- 32,775,575
Diana Corp. 1,321,077 27,540,180 -- --
Doubletree Corp. 23,260,776 -- -- 82,226,450
Emcare Holdings, Inc. 9,016,636 1,821,018 -- 29,666,250
Emeritus Corp. 2,798,775 13,570,171 -- --
Emmis Broadcasting, Corp.
Class A 9,376,937 -- -- 47,551,250
Extended Stay America, Inc. 44,512,430 1,089,084 -- 78,213,965
Genesis Health Ventures, Inc. 18,594,959 -- -- 74,081,250
Gilead Sciences, Inc. 2,536,641 -- -- 47,653,125
Glenayre Technologies, Inc. 14,314,661 82,252,848 -- --
HCC Insurance Holdings, Inc 7,898,388 -- 156,500 48,037,500
Health Management
Associates, Inc. 30,397,364 -- -- 157,377,000
Health Care & Retirement Corp. 8,942,373 -- -- 80,100,000
Heartland Wireless
Communications Inc. 4,878,951 26,320,450 -- --
I-Stat Corp. 5,105,660 20,352,589 -- --
Inso Corp. 15,398,609 -- -- 28,610,663
Intermedia Communications, 2,345,756 -- -- 32,375,000
Interim Services, Inc. 41,502,524 -- -- 43,832,500
Jones Medical Industries, Inc. 52,555,194 -- 70,425 74,337,500
Labor Ready, Inc. 12,951,114 -- -- 6,999,919
Landry's Seafood Restaurant 6,423,772 -- -- 37,950,000
Learning Company, Inc. (The) 2,560,864 56,406,943 -- --
Learning Tree International 27,380,085 6,899,565 -- 41,712,500
Legato Systems, Inc. -- 14,200,294 -- 1,304,250
Mecklermedia Corp. -- 11,480,928 -- --
Mentor Corp. Minn 12,875,897 44,664,167 64,290 --
OccuSystems, Inc. 18,205,687 -- -- 40,600,000
Olympic Financial Ltd. 30,379,230 65,154,889 -- --
P-Com, Inc. 6,755,435 20,036,517 -- --
Pairgain Technologies, Inc. 11,210,881 11,794,482 -- 32,643,000
Panamsat Corp. 60,633,258 -- -- 61,190,000
Papa Johns Intl., Inc. 15,884,829 3,615,896 -- 66,032,400
Pediatrix Medical Group, Inc. 23,326,541 -- -- 47,580,863
Phymatrix, Inc. 900,335 25,576,486 -- --
Physicians Resource
Group, Inc. 20,420,050 42,946,457 -- --
Physician Sales & Services, 46,689,276 -- -- 41,800,000
Prime Hospitality Corp. 28,525,852 -- -- 42,462,500
Project Software &
Development, Inc. 10,593,018 17,801,042 -- 1,065,750
Rainforest Cafe, Inc. 15,808,084 26,850,508 -- 4,877,076
Renaissance Hotel Group N.V -- 31,118,509 -- --
Renal Treatment Centers., Inc. 3,466,990 -- -- 37,893,750
Rio Casino & Hotel, Inc. -- 14,671,092 -- --
Security Dynamics
Technologies, Inc 10,361,242 -- -- 65,342,500
SFX Broadcasting, Inc.
Class A 6,171,564 -- -- 25,312,500
Softkey International, Inc. 10,949,384 53,846,079 -- --
Spine-Tech, Inc. 17,946,939 17,946,939 -- --
Stewart Enterprises, Inc.
Class A 47,429,398 -- 212,588 143,568,600
Studio Plus Hotels, Inc. -- 7,548,432 -- --
Sunrise Assisted Living, Inc. 7,649,410 -- -- 38,500,000
Synopsys, Inc. 35,191,407 -- -- 80,838,975
Tel-Save Holdings, Inc. 7,949,476 -- -- 65,575,000
Unison Software, Inc. -- 10,142,458 -- --
Vantive Corp. -- -- -- 39,550,000
Vivra, Inc. 6,433,895 65,186,528 -- --
Wolverine World Wide, Inc. 18,712,366 -- -- 88,846,875
Young Broadcasting Corp.
Class A 8,133,908 4,971,687 -- 22,028,500
- -------------------------------------------------------------------------------------------------
Totals $1,100,392,416 $907,827,556 $776,166 $2,588,151,621
- -------------------------------------------------------------------------------------------------
</TABLE>
Federal tax information
(Unaudited)
The Form 1099 you receive in January 1998 will show the tax status of all
distributions paid to your account in calendar 1997.
Results of February 6, 1997 shareholder meeting
(Unaudited)
An annual meeting of shareholders of the fund was held on February 6, 1997. At
the meeting, each of the nominees for Trustees was elected, as follows:
Votes for Votes withheld
Jameson Adkins Baxter 142,133,188 2,610,107
Hans H. Estin 142,139,867 2,603,428
John A. Hill 142,215,448 2,527,847
R.J. Jackson 142,189,540 2,553,755
Elizabeth T. Kennan 142,029,530 2,713,765
Lawrence J. Lasser 142,219,573 2,523,722
Robert E. Patterson 142,215,931 2,527,364
Donald S. Perkins 142,117,295 2,626,000
William F. Pounds 142,176,020 2,567,275
George Putnam 142,127,767 2,615,528
George Putnam, III 142,073,200 2,670,095
Eli Shapiro 141,879,043 2,864,252
A.J.C. Smith 142,161,800 2,581,495
W. Nicholas Thorndike 142,023,760 2,716,535
A proposal to ratify the selection of Coopers & Lybrand L.L.P. as auditors for
the fund was approved as follows: 139,349,601 votes for, and 1,367,253 votes
against, with 4,026,441 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with respect
to diversification was approved as follows: 118,126,330 votes for, and
10,911,872 votes against, with 15,705,093 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with respect
to investments in the securities of a single issuer was approved as follows:
117,417,057 votes for, and 10,919,634 votes against, with 16,406,604
abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with respect
to making loans was approved as follows: 114,460,811 votes for, and 13,946,681
votes against, with 16,335,803 abstentions and broker non-votes.
A proposal to amend the fund's fundamental investment restriction with respect
to investments in commodities was approved as follows: 115,948,890 votes for,
and 12,708,266 votes against, with 16,086,139 abstentions and broker
non-votes.
A proposal to amend the fund's fundamental investment restriction with respect
to investments in senior securities was approved as follows: 119,633,562 votes
for, and 8,606,401 votes against, with 16,503,332 abstentions and broker
non-votes.
A proposal to eliminate the fund's fundamental investment restriction with
respect to investments in securities of issuers in which management of the
fund or Putnam Investment Management, Inc. owns securities was approved as
follows: 115,706,000 votes for, and 12,717,833 votes against, with 16,319,462
abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction with
respect to margin transactions was approved as follows: 112,463,479 votes for,
and 15,681,165 votes against, with 16,598,651 abstentions and broker
non-votes.
A proposal to eliminate the fund's fundamental investment restriction with
respect to short sales was approved as follows: 111,866,372 votes for, and
16,292,243 votes against, with 16,584,680 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction with
respect to pledging assets was approved as follows: 111,716,457 votes for, and
16,238,602 votes against, with 16,788,236 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction with
respect to investments in restricted securities was approved as follows:
114,223,893 votes for, and 13,828,760 votes against, with 16,690,642
abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction with
respect to investments in certain oil, gas and mineral interests was approved
as follows: 115,849,452 votes for, and 12,680,764 votes against, with
16,213,079 abstentions and broker non-votes.
A proposal to eliminate the fund's fundamental investment restriction with
respect to investing to gain control of a company's management was approved as
follows: 116,343,767 votes for, and 11,965,918 votes against, with 16,433,610
abstentions and broker non-votes.
All tabulations are rounded to nearest whole number.
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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
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Daniel L. Miller
Vice President and Fund Manager
Carol C. McMullen
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. You can also learn more at Putnam
Investments' website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, are not insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency,
and involve risk, including the possible loss of principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ----------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- ----------------
AN013 - 35090 - 852/358/983/526 8/97
PUTNAM INVESTMENTS [SCALE LOGO]
- ------------------------------------------------------------------------
Putnam New Opportunities Fund
Supplement to Annual Report dated 6/30/97
The following information has been prepared to provide class Y shareholders
with a performance overview specific to their holdings. Class Y shares are
offered exclusively to defined contribution plans investing $250 million or
more in one or more of Putnam's funds or private accounts. Performance of
class Y shares, which incur neither a front-end load, distribution fee, nor
contingent deferred sales charge, will differ from performance of class A, B,
and M shares, which are discussed more extensively in the semiannual report.
ANNUAL RESULTS AT A GLANCE
- ------------------------------------------------------------------------
Total return: NAV
One year ended 6/30/97 4.54%
5 years cum 225.54%
annual average 26.63%
Life of class (since 7/19/94) 471.42%
Annual average 29.07%
- ------------------------------------------------------------------------
Share value: NAV
6/30/96 $43.21
6/30/97 44.82
- ------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $0.0000 $0.3190 $0.3190
- ------------------------------------------------------------------------
Please note that past performance does not indicate future results.
Investment return and principal value will fluctuate so your shares, when
redeemed, may be worth more or less than their original cost. See full
annual report for information on comparative benchmarks. If you have
questions, please consult your fund prospectus or call Putnam toll free
at 1-800-752-9894.
