Putnam
New
Opportunities
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
12-31-98
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "This offering might look like just another one of those funds that have
latched on to bigger-cap stocks even after the current blue-chip-led
market was well under way. . . . The fund's embrace of large caps doesn't
amount to performance chasing, though. Part of the increase simply owes to
the fact that many of the fund's long-held names have done quite well over
the years, and management has simply had the good sense to hang on to
them. Management has held stocks such as America Online and
Telecommunications, Inc. for years, watching them grow from small fry into
market leaders."
-- Morningstar Mutual Funds, August 21, 1998
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
20 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
For all of the grief the stock market caused investors during the early
months of Putnam New Opportunities Fund's fiscal 1999, its strong rally
toward the fiscal year's midpoint considerably brightened the fund's
prospects for the second half. As he writes in the following report, Fund
Manager Daniel Miller was pleased by the strong showing in the portfolio's
more aggressive small-company growth stocks and heartened by the signs of
a more favorable environment for these issues. For all of his optimism,
however, Dan holds no illusions that market volatility is behind us. But
he believes that in the current low interest-rate, low inflation economic
climate, the market should be able to support historically high absolute
valuations.
I am pleased to announce that Jeffrey R. Lindsey has joined Dan in the
management of your fund. Jeff, a specialist in large-cap growth stocks,
replaces Carol C. McMullen, who was recently promoted to head Putnam's
extensive global investment research operation. Jeff came to Putnam in
1994 from Strategic Portfolio Management and State Street Boston. He has
14 years of investment experience.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
February 17, 1999
Report from the Fund Managers
Daniel L. Miller
Jeffrey R. Lindsey
Just after Putnam New Opportunities Fund began its 1999 fiscal year, the
Dow Jones Industrial Average reached a then all-time high of 9333, only to
plummet more than 512 points the following month, wiping out the entire
year's gains. After registering its worst quarter in eight years in
September, the Dow began a turnaround that was almost as dramatic as the
late-summer plunge. Finally, following one of its most volatile years in
more than a decade, the U.S. equity market finished 1998 with double-digit
returns for the fourth consecutive year.
During this eventful six months, your fund benefited from its ability to
invest in companies of all sizes. We did take particular advantage of
large-company stocks, which continued to display incredible strength in
the media, technology, and pharmaceutical sectors. However, the year-end
market rally also provided a much-needed boost for many of the small- and
mid-cap stocks that make up your fund's more aggressive holdings. For the
six months ended December 31, 1998, the fund's class A shares provided a
total return of 4.92% at net asset value (NAV) and -1.11% at public
offering price (POP). For the 12 months ended December 31, 1998, the
returns were 24.39% at NAV and 17.23% at POP. For complete performance
information, please refer to the summary that begins on page 9.
* MEDIA STOCKS CONTINUE TO OUTPERFORM
Once again, we are pleased to report that stocks in the media sector of
the fund's portfolio were key contributors to performance. Many
broadcasting, cable, and telecommunications companies continue to grow
rapidly as a result of loosened restrictions on the industry. The
Telecommunications Act of 1996 has also created a wave of mergers and
acquisitions, as media companies are now allowed multiple ownership of
properties such as TV and radio stations.
The stock of Internet service provider America Online (AOL), a holding in
the portfolio's media sector, increased an astounding 586% in calendar
1998. Long before it became a household name, AOL was part of your fund's
portfolio. In fact, it was a holding as far back as June 1993, when our
annual report to shareholders stated, "The trend in technology is clearly
moving toward a vast increase in electronic services and digital
transmission. . . .We believe firms with sophisticated programming
capabilities will be in a position to take full advantage of emerging
business opportunities."
Today AOL is the number-one provider of online services, including news,
Internet searches, and e-mail. During December 1998, the company drew
54.5% of all Internet users -- nearly 31 million individuals -- outpacing
its nearest competitor by more than six percentage points. The company
also announced that its members spent more than $1 billion with online
retailers during the six-week holiday shopping season. AOL continues to
seek new growth opportunities, such as its recent alliance with Bell
Atlantic Corp., to offer high-speed Internet access over Bell phone lines
- -- marking AOL's entry into the broadband Internet access market. While
this holding, along with others discussed in this report, was viewed
favorably at the end of the fiscal period, all holdings 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*
Retail 11.3%
Pharmaceuticals and
biotechnology 9.2%
Computer software 9.0%
Broadcasting 7.2%
Computer services 6.7%
Footnote reads:
*Based on net assets as of 12/31/98. Holdings will vary over time.
* TELECOMMUNICATIONS COMPANIES BOOST RETURNS
An impressive holding in the telecommunications sector was Global
Crossing, Ltd., a leader in the battle to control the underwater lanes of
telecommunications. The company provides global Internet and long-distance
telecommunications services using a network of undersea digital
fiber-optic cable systems. Global Crossing is embarking on a plan to build
fiber-optic loops that will link the United States with Asia, Europe, and
Latin America. Through deals with land-based carriers, the company will be
able to offer phone and Internet carriers seamless connections between the
world's 100 largest cities.
Qwest Communications, another portfolio standout, builds fiber-optic
networks for traditional telecommunications services as well as for
Internet-based data, voice, and image communications. The company has
constructed an impressive technologically advanced network that includes
the installation of 15,000 miles of fiber-optic cable around the United
States. Qwest has also partnered with Microsoft Corp. to provide
Internet-related services.
* SOFTWARE BOOM HELPS TECHNOLOGY HOLDINGS
Our stock selection in the technology portion of the portfolio was not as
effective as it was in other sectors over this period. However, there were
some notable standouts. Electronic Arts, Inc., for example, is an
entertainment company that creates, markets, and distributes interactive
entertainment software. During 1998, the home video game business
continued its recovery from a multiyear slump. As one of the largest
entertainment software companies, Electronic Arts has strong software
development capabilities, broad distribution channels, and financial
stability, all of which give it a competitive advantage over smaller
companies in this field.
Data storage company EMC Corp. was also a strong performer during the
period. EMC produces large-scale storage systems essential to the testing
and implementation of new or revamped software and the storage of valuable
data. Compuware Corporation, a provider of computer software and services,
had another strong year in 1998, helping to boost your fund's returns in
the technology sector.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
America Online, Inc.
Internet services
EMC Corp.
Data storage
Clear Channel Communications, Inc.
Broadcasting
Microsoft Corp.
Computer software and services
Costco Companies, Inc.
Retail
Waste Management, Inc.
Environmental services
CBS Corp.
Broadcasting
Schering-Plough Corp.
Pharmaceuticals
Warner-Lambert Co.
Pharmaceuticals
Health Management Associates, Inc.
Hospital management
Footnote reads:
These holdings represent 20.5% of the fund's net assets as of 12/31/98.
Portfolio holdings will vary over time.
* HEALTH-CARE HOLDINGS SHOW MIXED RESULTS
The health-care sector of the portfolio has been a study in contrasts.
Large pharmaceutical companies have been powerhouses, proving that demand
for innovative drugs and services remains strong, despite volatile
economic conditions. The strength of these drug companies, however, has
been offset somewhat by weak performance from the fund's health-care
service holdings. A difficult regulatory environment, ongoing concerns
about Medicare spending cuts, and rising health-care costs continue to put
pressure on health-care service companies, such as HMOs and physician
practice management companies.
Pharmaceutical companies that boosted the fund's health-care sector
included Schering-Plough, maker of Claritin, which dominates the booming
antihistamine market, and Warner-Lambert, which produces Lipitor, the
cholesterol-lowering drug, and Rezulin, a treatment for type II diabetes.
While the largest drug companies have been the strongest performers, there
were some exceptional performers among smaller companies, such as Elan
Corp., a company in the fast-growing drug-delivery sector. Companies in
this industry develop new methods for administering drug treatments that
are often more effective and less painful. Headquartered in Ireland, Elan
has improved its capabilities by acquiring and establishing joint ventures
with other drug and biotechnology companies, especially in important
growth niches such as neurology.
* MORE VOLATILITY POSSIBLE IN FISCAL YEAR'S SECOND HALF
As we enter the second half of fiscal 1999, we are optimistic about the
state of the U.S. economy, which is characterized by a low interest-rate
environment and few signs of inflation on the horizon. However, with the
roller-coaster ride of 1998 fresh in our minds, we have by no means ruled
out the prospect of more volatility. While our outlook is constructive, we
will continue to monitor carefully economic conditions in the United
States and around the world, positioning the portfolio to take advantage
of the most compelling growth opportunities.
The views expressed here are exclusively those of Putnam Management. They
are not meant as investment advice. Although the described holdings were
viewed favorably as of 12/31/98, there is no guarantee the fund will
continue to hold these securities in the future.
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 12/31/98
Class A Class B Class M
(inception date) (8/31/90) (3/1/93) (12/1/94)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 4.92% -1.11% 4.52% -0.48% 4.64% 0.99%
- ------------------------------------------------------------------------------
1 year 24.39 17.23 23.49 18.49 23.75 19.41
- ------------------------------------------------------------------------------
5 years 155.33 140.69 145.98 143.98 149.09 140.35
Annual average 20.62 19.20 19.72 19.53 20.02 19.17
- ------------------------------------------------------------------------------
Life of fund 689.71 644.38 640.86 640.86 655.02 628.48
Annual average 28.16 27.25 27.18 27.18 27.47 26.92
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/98
Russell 2000 Russell Midcap Consumer
Index Growth Index Price Index
- ------------------------------------------------------------------------------
6 months -7.12% 5.36% 0.74%
- ------------------------------------------------------------------------------
1 year -2.55 17.86 1.80
- ------------------------------------------------------------------------------
5 years 75.19 122.41 12.62
Annual average 11.87 17.34 2.41
- ------------------------------------------------------------------------------
Life of fund 244.90 318.50 24.77
Annual average 16.02 18.74 2.69
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 5.75% and
3.50% respectively. Class B share returns for the 1-, 5-, and 10-year
(where available) and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines 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 expenses applicable to such shares. All returns assume
reinvestment of distributions at NAV. 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.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 12/31/98
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term $1.875 $1.875 $1.875
- ------------------------------------------------------------------------------
Short-term -- -- --
- ------------------------------------------------------------------------------
Total $1.875 $1.875 $1.875
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
6/30/98 $57.68 $61.20 $55.42 $56.65 $58.70
- ------------------------------------------------------------------------------
12/31/98 58.43 61.99 55.84 57.19 59.26
- ------------------------------------------------------------------------------
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 charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the maximum 5.75% sales charge for class A
shares and 3.50% or 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.
Russell Midcap Growth Index* is composed of all medium and medium/small
companies in the Russell 1000 Index. The Russell 1000 represents the
universe of stocks from which the most active money managers typically
select.
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.
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<TABLE>
<CAPTION>
Portfolio of investments owned
December 31, 1998 (Unaudited)
COMMON STOCKS (97.9%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Advertising (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
2,420,000 Lamar Advertising Co. (NON) $ 90,145,000
7,955,000 Outdoor Systems, Inc. (NON) 238,650,000
---------------
328,795,000
Airlines (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
860,000 Ryanair Holdings, PLC ADR (Ireland) (NON) 32,465,000
Apparel (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,150,200 Gap, Inc. (The) 64,698,750
Banks (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
480,900 Firstar Corp. 44,843,925
2,178,500 TCF Financial Corp. 52,692,469
705,000 Zions Bancorp 43,974,375
---------------
141,510,769
Broadcasting (7.2%)
- --------------------------------------------------------------------------------------------------------------------------
9,914,600 CBS Corp. 324,703,150
5,025,000 Chancellor Media Corp. (NON) 240,571,875
8,689,312 Clear Channel Communications, Inc. (NON) 473,567,504
897,000 Heftel Broadcasting Corp. Class A (NON) 44,177,250
3,372,000 Infinity Broadcasting Corp. Class A (NON) 92,308,500
4,681,600 Sinclair Broadcast Group, Inc. Class A (NON) 91,583,800
2,455,000 Univision Communications Inc. Class A (NON) 88,840,313
1,520,000 Westwood One, Inc. (NON) (AFF) 46,360,000
---------------
1,402,112,392
Business Services (6.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,842,000 Affiliated Computer Services, Inc. Class A (NON) 82,890,000
962,800 Applied Graphics Technologies, Inc. (NON) 15,886,200
739,400 Celestica Inc. (Canada) (NON) 18,253,938
6,590,000 Cendant Corp. (NON) 125,621,875
1,576,000 Interim Services Inc. (NON) 36,839,000
709,300 Lason Holdings, Inc. (NON) 41,272,394
1,626,000 Metamor Worldwide, Inc. (NON) 40,650,000
2,081,800 Modis Professional Services, Inc. (NON) 30,186,100
3,409,935 NOVA Corp./Georgia (NON) 118,282,120
3,112,250 Paychex, Inc. 160,086,345
1,578,400 Pitney Bowes, Inc. 104,273,050
14,085,000 Rentokil Group PLC (United Kingdom) 105,763,251
3,270,000 Robert Half International, Inc. (NON) 146,128,125
1,495,000 Sanmina Corp. (NON) 93,437,500
1,186,900 Select Appointments Holdings PLC ADR (United Kingdom) 25,518,350
4,355,000 Snyder Communications, Inc. (NON) (AFF) 146,981,250
---------------
1,292,069,498
Cable Television (2.6%)
- --------------------------------------------------------------------------------------------------------------------------
3,359,300 Tele-Comm Liberty Media Group, Inc. Class A (NON) 154,737,756
4,315,700 Tele-Communications, Inc. Class A (NON) 238,712,156
4,874,500 Tele-Communications TCI Ventures Group Class A (NON) 114,855,406
---------------
508,305,318
Computer Equipment (4.6%)
- --------------------------------------------------------------------------------------------------------------------------
3,131,700 Compaq Computer Corp. 131,335,669
5,893,500 EMC Corp. (NON) 500,947,500
648,100 IBM Corp. 119,736,475
1,789,800 Sun Microsystems, Inc. (NON) 153,251,625
---------------
905,271,269
Computer Services (6.7%)
- --------------------------------------------------------------------------------------------------------------------------
5,187,100 America Online, Inc. (NON) 829,936,000
3,100,500 Ciber, Inc. (NON) 86,620,219
510,000 Complete Business Solutions, Inc. (NON) 17,276,250
695,000 Computer Horizons Corp. (NON) 18,504,375
889,000 Computer Sciences Corp. (NON) 57,284,938
791,000 Keane, Inc. (NON) 31,590,563
1,217,000 Mastech Corp. (NON) 34,836,625
755,000 Policy Management Systems Corp. (NON) 38,127,500
2,392,000 Sterling Commerce, Inc. (NON) 107,640,000
441,400 VeriSign, Inc. 26,097,775
2,131,900 Whittman-Hart, Inc. (NON) 58,893,738
---------------
1,306,807,983
Computer Software (9.0%)
- --------------------------------------------------------------------------------------------------------------------------
857,000 Aspect Development, Inc. (NON) 37,975,813
2,072,350 BMC Software, Inc. (NON) 92,349,097
6,091,270 Cadence Design Systems, Inc. (NON) 181,215,283
4,135,950 Computer Associates International, Inc. 176,294,869
3,102,800 Compuware Corp. (NON) 242,406,250
2,191,100 Electronic Arts, Inc. (NON) 122,975,488
676,500 Entrust Technologies Inc. (NON) 16,151,438
1,260,000 Intuit, Inc. (NON) 91,350,000
535,000 Legato Systems, Inc. (NON) 35,276,563
475,000 Lernout & Hauspie Speech Products N.V. (Belgium) (NON) 15,496,875
2,589,800 Microsoft Corp. (NON) 359,172,888
7,807,700 Parametric Technology Corp. (NON) 126,875,125
128,240 Peregrine Systems, Inc. (NON) 5,947,130
2,280,200 PLATINUM Technology, Inc. (NON) 43,608,825
1,167,800 Software AG Systems, Inc. (NON) 21,166,375
2,720,000 Synopsys, Inc. (NON) 147,560,000
2,130,000 The Learning Company, Inc. (NON) 55,246,875
---------------
1,771,068,894
Conglomerates (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
3,414,600 Tyco International Ltd. 257,588,888
Consumer Products (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,540,100 Colgate-Palmolive Co. 143,036,788
Cosmetics (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,512,500 Estee Lauder Cos. Class A 129,318,750
Education (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,896,700 Apollo Group, Inc. Class A (NON) 64,250,713
Electric Utilities (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
970,000 CalEnergy, Inc. (NON) 33,646,875
Electronics and Electrical Equipment (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
982,400 American Power Conversion Corp. (NON) 47,585,000
2,195,100 Applied Materials, Inc. (NON) 93,703,331
1,366,900 ASM Lithography Holding N.V. (Netherlands) (NON) 41,690,450
2,430,100 General Electric Co. 248,022,081
1,144,170 KLA Tencor Corp. (NON) 49,628,374
382,700 Novellus Systems, Inc. (NON) 18,943,650
304,350 Teradyne, Inc. (NON) 12,896,831
465,450 Uniphase Corp. (NON) 32,290,594
---------------
544,760,311
Energy-Related (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,646,700 Thermo Electron Corp. (NON) 27,890,981
Entertainment (2.2%)
- --------------------------------------------------------------------------------------------------------------------------
650,000 SFX Entertainment, Inc. Class A (NON) 35,668,750
3,933,600 Time Warner, Inc. 244,129,050
2,019,300 Viacom, Inc. Class B (NON) 149,428,200
---------------
429,226,000
Environmental Services (2.3%)
- --------------------------------------------------------------------------------------------------------------------------
3,815,000 Allied Waste Industries, Inc. (NON) 90,129,375
2,121,400 Republic Services, Inc. (NON) 39,113,313
6,995,764 Waste Management, Inc. (NON) 326,177,490
---------------
455,420,178
Financial Services (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,864,000 Associates First Capital Corp. 78,987,000
1,216,540 Concord EFS, Inc. (NON) 51,550,883
1,088,000 Finova Group, Inc. 58,684,000
1,236,000 Merrill Lynch & Co., Inc. 82,503,000
804,000 Morgan Stanley, Dean Witter, Discover and Co. 57,084,000
---------------
328,808,883
Funeral/Cemetery Services (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
3,087,100 Service Corp. International 117,502,744
7,345,100 Stewart Enterprises, Inc. Class A (AFF) 163,428,475
---------------
280,931,219
Health Care Information Systems (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
100,600 Eclipsys Corp. (NON) 2,917,400
8,507,900 HBO & Co. 244,070,381
1,060,000 IMS Health, Inc. 79,963,750
---------------
326,951,531
Health Care Services (2.5%)
- --------------------------------------------------------------------------------------------------------------------------
2,381,400 Cardinal Health, Inc. 180,688,725
1,059,500 Carematrix Corp. (NON) (AFF) 32,447,188
3,090,000 Lincare Holdings, Inc. (NON) (AFF) 125,338,125
562,200 Sunrise Assisted Living, Inc. (NON) 29,164,125
4,162,250 Total Renal Care Holdings, Inc. (NON) (AFF) 123,046,516
---------------
490,684,679
Hospital Management (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
12,279,750 Health Management Assoc., Inc. (NON) 265,549,594
Insurance (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,428,300 American International Group, Inc. 138,009,488
Lodging (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
4,625,000 Extended Stay America, Inc. (NON) 48,562,500
90,400 Four Seasons Hotels, Inc. (Canada) 2,644,200
2,127,100 Prime Hospitality Corp. (NON) 22,467,494
2,785,000 Promus Hotel Corp. (NON) 90,164,375
---------------
163,838,569
Medical Management Services (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
381,600 American Oncology Resources, Inc. (NON) 5,557,050
997,900 Pediatrix Medical Group, Inc. (NON) (AFF) 59,811,631
298,600 Physician Reliance Network, Inc. (NON) 3,919,125
---------------
69,287,806
Medical Supplies and Devices (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,420,000 Henry Schein, Inc. (NON) 63,545,000
292,700 IDEXX Laboratories, Inc. (NON) 7,875,459
3,097,700 Omnicare, Inc. 107,645,075
5,080,000 Sybron International Corp. (NON) 138,112,500
1,010,000 Waters Corp. (NON) 88,122,500
---------------
405,300,534
Networking & Telecommunication Equipment (3.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,285,000 3Com Corp. (NON) 57,584,063
3,685,000 Ascend Communications, Inc. (NON) 242,288,750
1,882,600 Cisco Systems, Inc. (NON) 174,728,813
845,000 Comverse Technology, Inc. (NON) 59,995,000
116,400 Network Appliance, Inc. (NON) 5,238,000
1,308,140 PanAmSat Corp. (NON) 50,935,701
3,296,700 Qwest Communications International, Inc. (NON) 164,835,000
1,000,000 Tekelec (NON) 16,562,500
---------------
772,167,827
Pharmaceuticals and Biotechnology (9.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,810,900 Bristol-Myers Squibb Co. 242,321,056
1,955,000 Centocor, Inc. (NON) 88,219,375
3,805,300 Elan Corp. PLC ADR (Ireland) (NON) 264,706,181
1,025,000 Jones Medical Industries, Inc. 37,412,500
1,635,200 Lilly (Eli) & Co. 145,328,400
1,105,000 Medicis Pharmaceutical Corp. Class A (NON) (AFF) 65,885,625
2,075,800 Pfizer, Inc. 260,383,163
5,643,200 Schering-Plough Corp. 311,786,800
1,027,500 Sepracor, Inc. (NON) 90,548,438
985,000 Transkaryotic Therapies, Inc. (Malaysia) (NON) (AFF) 24,994,375
3,699,400 Warner-Lambert Co. 278,148,638
---------------
1,809,734,551
Recreation (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
929,500 International Speedway Corp. Class A (NON) 37,644,750
Restaurants (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
10,141,767 J.D. Wetherspoon PLC (United Kingdom) (NON) (AFF) 30,091,677
674,200 McDonald's Corp. 51,660,575
725,000 Papa Johns International, Inc. (NON) 31,990,625
---------------
113,742,877
Retail (11.3%)
- --------------------------------------------------------------------------------------------------------------------------
6,933,900 Bed Bath & Beyond, Inc. (NON) 236,619,338
1,935,000 Borders Group, Inc. (NON) 48,254,063
4,693,500 Costco Cos., Inc. (NON) 338,812,031
3,990,200 CVS Corp. 219,461,000
1,988,600 Dollar Tree Stores, Inc. (NON) 86,876,963
4,312,100 Home Depot, Inc. (The) 263,846,619
665,600 Kohls Corp. (NON) 40,892,800
1,415,100 Kroger Co. (NON) 85,613,550
5,632,900 Office Depot, Inc. (NON) 208,065,244
1,904,500 Rite Aid Corp. 94,391,781
2,735,700 Safeway, Inc. (NON) 166,706,719
5,722,100 TJX Cos., Inc. (The) 165,940,900
3,186,300 Wal-Mart Stores, Inc. 259,484,306
109,700 Williams-Sonoma, Inc. (NON) 4,422,281
---------------
2,219,387,595
Semiconductors (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
1,398,810 Analog Devices, Inc. (NON) 43,887,664
295,000 Applied Micro Circuits Corp. (NON) 10,020,781
1,181,000 Intel Corp. 140,022,313
1,804,700 Linear Technology Corp. 161,633,444
3,023,800 Maxim Integrated Products Inc. (NON) 132,102,263
930,000 PMC -- Sierra, Inc. (NON) 58,706,250
---------------
546,372,715
Telecommunication Services (5.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,329,500 E. Spire Communications, Inc. (NON) 8,475,563
1,027,600 Global Crossing Ltd. (NON) 46,370,450
1,180,800 Global TeleSystems Group, Inc. (NON) 65,829,600
1,485,000 Intermedia Communications, Inc. (NON) 25,616,250
1,877,400 Lucent Technologies, Inc. 206,514,000
3,482,200 MCI WorldCom, Inc. (NON) 249,847,850
1,424,800 McLeod, Inc. Class A (NON) 44,525,000
3,900,000 Metromedia Fiber Network, Inc. Class A (NON) (AFF) 130,650,000
704,000 NTL Inc. (NON) 39,732,000
2,355,000 NEXTLINK Communications, Inc. Class A (NON) 66,823,125
2,215,200 RSL Communications, Ltd. Class A (NON) 65,348,400
1,798,600 Sprint Corp. 151,307,225
---------------
1,101,039,463
Tobacco (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,996,000 Philip Morris Cos., Inc. 106,786,000
Wireless Communications (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,513,200 Airtouch Communications, Inc. (NON) 109,139,550
2,255,000 American Tower Corp. Class A 66,663,438
---------------
175,802,988
---------------
Total Common Stocks (cost $11,627,498,390) $19,190,285,426
SHORT-TERM INVESTMENTS (2.2%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$ 50,000,000 Asset Securitization Corp. for an effective yield of 5.10%,
February 12, 1999 $ 49,702,500
50,000,000 Ciesco L.P. for an effective yield of 5.45%, February 3, 1999 49,750,208
50,000,000 Deutsche Bank Financial Inc. for an effective yield of 5.95%,
January 6, 1999 49,958,681
50,000,000 Fed Home Loan Mortgage Corp. for an effective yield of
5.0%, March 23, 1999 49,437,500
50,000,000 Ford Motor Credit Puerto Rico for an effective yield of
5.11%, March 5, 1999 49,553,750
25,000,000 General Electric Capital Corp. for an effective yield of
5.50%, January 28, 1999 24,896,875
25,000,000 Merrill Lynch & Co. Inc for an effective yield of 5.10%,
February 26, 1999 24,801,667
35,000,000 Metlife Funding for an effective yield of 5.25%,
January 19, 1999 34,908,125
40,000,000 Windmill Funding for an effective yield of 5.35%,
February 3, 1999 39,803,833
62,314,000 Interest in 500,000,000 joint tri-party repurchase
agreement dated December 31,1998 with
Lehman Brothers due January 4, 1999 with respect
to various U.S. Treasury obligations -- maturity value
of $62,347,580 for an effective yield of 4.85%. 62,322,395
---------------
Total Short-Term Investments (cost $435,135,534) $ 435,135,534
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $12,062,633,924) (b) $19,625,420,960
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $19,592,480,002.
(b) The aggregate identified cost on a tax basis is $12,077,188,006, resulting in gross unrealized appreciation and
depreciation of $7,855,619,874 and $307,386,920, respectively, or net unrealized appreciation of $7,548,232,954.
(NON) Non-income-producing security.
(AFF) 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
December 31, 1998 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $12,062,633,924) (Note 1) $19,625,420,960
- -----------------------------------------------------------------------------------------------
Cash 6,884,918
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 3,866,292
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 22,082,438
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 55,305,971
- -----------------------------------------------------------------------------------------------
Total assets 19,713,560,579
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 38,779,475
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 45,911,803
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 20,428,277
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,931,861
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 193,143
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 13,649
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 12,621,598
- -----------------------------------------------------------------------------------------------
Other accrued expenses 1,200,771
- -----------------------------------------------------------------------------------------------
Total liabilities 121,080,577
- -----------------------------------------------------------------------------------------------
Net assets $19,592,480,002
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $12,109,681,262
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) ($71,137,705)
- -----------------------------------------------------------------------------------------------
Distribution in excess of net realized gains on investments (Note 1) (8,840,422)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 7,562,776,867
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $19,592,480,002
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($10,679,765,740 divided by 182,793,855 shares) $58.43
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $58.43)* $61.99
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($7,910,625,592 divided by 141,678,578 shares)** $55.84
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($455,072,836 divided by 7,957,052 shares) $57.19
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $57.19)* $59.26
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($547,015,834 divided by 9,250,338 shares) $59.13
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended December 31, 1998 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Interest $22,584,558
- -----------------------------------------------------------------------------------------------
Dividends (including dividend income of $301,916
from investments in affiliated issuers) (Note 5) 12,477,036
- -----------------------------------------------------------------------------------------------
Total investment income 35,061,594
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 41,705,596
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 12,358,457
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 149,475
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 27,118
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 11,588,850
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 35,114,254
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 1,507,256
- -----------------------------------------------------------------------------------------------
Reports to shareholders 154,644
- -----------------------------------------------------------------------------------------------
Auditing 140,973
- -----------------------------------------------------------------------------------------------
Legal 35,862
- -----------------------------------------------------------------------------------------------
Postage 1,873,406
- -----------------------------------------------------------------------------------------------
Other 2,376,002
- -----------------------------------------------------------------------------------------------
Total expenses 107,031,893
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (832,594)
- -----------------------------------------------------------------------------------------------
Net expenses 106,199,299
- -----------------------------------------------------------------------------------------------
Net investment loss (71,137,705)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments
(including realized loss of $(164,708,001)
on sales of investments in affiliated issuers) (Notes 1, 3 and 5) 19,972,492
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the period (10,169)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 877,472,482
- -----------------------------------------------------------------------------------------------
Net gain on investments 897,434,805
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $826,297,100
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
December 31 June 30
1998* 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (71,137,705) $ (135,338,935)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments 19,972,492 1,228,126,644
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 877,462,313 3,538,793,763
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 826,297,100 4,631,581,472
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (332,351,314) (185,202,878)
- ---------------------------------------------------------------------------------------------------------------
Class B (257,923,945) (157,607,099)
- ---------------------------------------------------------------------------------------------------------------
Class M (14,531,244) (8,456,807)
- ---------------------------------------------------------------------------------------------------------------
Class Y (15,917,465) (7,008,141)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 352,311,418 428,556,668
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 557,884,550 4,701,863,215
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 19,034,595,452 14,332,732,237
- ---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss of $ 71,137,705 and $-, respectively) $19,592,480,002 $19,034,595,452
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the year)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share December 31
operating performance (Unaudited) Year ended June 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $57.68 $44.47 $42.99 $29.58 $21.88 $20.83
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (.13)(c) (.25) (.20)(c) (.21)(c) (.12) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.76 14.55 2.00 13.62 8.02 1.56
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.63 14.30 1.80 13.41 7.90 1.50
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.88) (1.09) (.26) -- (.15) (.45)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- (.06) -- (.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.88) (1.09) (.32) -- (.20) (.45)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $58.43 $57.68 $44.47 $42.99 $29.58 $21.88
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.92* 32.75 4.26 45.34 36.36 7.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $10,679,766 $10,163,886 $7,381,624 $4,752,611 $1,341,877 $648,787
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .47* .98 1.06 1.11 1.13 1.23
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.26)* (.49) (.48) (.54) (.55) (.82)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 57.04* 65.21 66.74 36.61 56.99 52.76
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the year)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share December 31
operating performance (Unaudited) Year ended June 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $55.42 $43.08 $41.96 $29.09 $21.68 $20.80
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (.32)(c) (.62) (.49)(c) (.48)(c) (.23) (.11)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.62 14.05 1.93 13.35 7.84 1.44
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.30 13.43 1.44 12.87 7.61 1.33
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.88) (1.09) (.26) -- (.15) (.45)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- (.06) -- (.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.88) (1.09) (.32) -- (.20) (.45)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $55.84 $55.42 $43.08 $41.96 $29.09 $21.68
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.52* 31.78 3.50 44.24 35.34 6.18
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $7,910,626 $7,950,848 $6,359,447 $4,254,962 $1,013,379 $333,738
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .85* 1.73 1.81 1.87 1.87 2.04
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.63)* (1.24) (1.23) (1.30) (1.30) (1.55)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 57.04* 65.21 66.74 36.61 56.99 52.76
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the year)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share December 31 Dec. 1,1994+
operating performance (Unaudited) Year ended June 30 to June 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $56.65 $43.91 $42.66 $29.51 $24.72
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (.26)(c) (.49) (.40)(c) (.40)(c) (.05)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.68 14.32 1.97 13.55 5.04
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.42 13.83 1.57 13.15 4.99
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.88) (1.09) (.26) -- (.15)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- (.06) -- (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- -- -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.88) (1.09) (.32) -- (.20)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $57.19 $56.65 $43.91 $42.66 $29.51
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.64* 32.09 3.75 44.56 20.40*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $455,073 $444,325 $337,535 $210,404 $16,011
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .72* 1.48 1.56 1.64 .94*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.51)* (.99) (.98) (1.06) (.53)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 57.04* 65.21 66.74 36.61 56.99
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the year)
CLASS Y
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share December 31 July 19,1994+
operating performance (Unaudited) Year ended June 30 to June 30
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $58.28 $44.82 $43.21 $29.66 $22.59
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (.07)(c) (.13)(c) (.09)(c) (.11)(c) (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.80 14.68 2.02 13.66 7.31
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.73 14.55 1.93 13.55 7.27
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.88) (1.09) (.26) -- (.15)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- (.06) -- (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- -- -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.88) (1.09) (.32) -- (.20)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $59.13 $58.28 $44.82 $43.21 $29.66
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 5.04* 33.05 4.54 45.68 32.42*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $547,016 $476,037 $254,126 $118,640 $24,538
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .35* .73 .81 .86 .83*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.13)* (.24) (.23) (.29) (.26)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 57.04* 65.21 66.74 36.61 56.99
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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.
</TABLE>
Notes to financial statements
December 31, 1998 (Unaudited)
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.
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 are 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, class B, and class M
shares, but do not bear a distribution fee. Class Y shares are sold to
defined contribution plans that invest at least $250 million in a
combination of Putnam Funds and other accounts managed by affiliates of
Putnam Management.
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 that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. 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, and 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 gains and losses are included with the net realized and unrealized
gain or loss on investments. Net realized gains and losses on foreign
currency transactions represent net realized 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) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended December 31, 1998, the fund had no borrowings against the line of
credit.
G) 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.
H) 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.
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.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 0.70% of the first $500
million of average net assets, 0.60% of the next $500 million, 0.55% of
the next $500 million, and 0.50% of 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% thereafter.
The fund reimburses Putnam Management an allocated amount 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 subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended December 31, 1998, fund expenses were reduced by
$832,594 under expense offset arrangements with PFTC and brokerage 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.
Each Trustee of the fund receives an annual Trustee fee, of which $13,010
has been allocated to the fund, 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 has adopted a Trustee Fee Deferral Plan (the "Deferral 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 are invested in certain Putnam funds until distribution in
accordance with the Deferral 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 to an annual
rate of 0.25%, 1.00% and 0.75% of the average net assets attributable to
class A, class B and class M shares, respectively.
For the six months ended December 31, 1998, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $816,702 and $29,876
from the sale of class A and class M shares, respectively and $5,305,863
in contingent deferred sales charges from redemptions of class B shares. A
deferred sales charge of up to 1% is assessed on certain redemptions of
class A shares. For the six months ended December 31, 1998, Putnam Mutual
Funds Corp., acting as underwriter received $37,782 on class A
redemptions.
Note 3
Purchase and sales of securities
During the six months ended December 31, 1998, purchases and sales of
investment securities other than short-term investments aggregated
$5,148,351,932 and $5,377,891,919, 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, 1998, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
December 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 21,670,310 $1,117,893,002
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,045,736 317,279,073
- -----------------------------------------------------------------------------
27,716,046 1,435,172,075
Shares
repurchased (21,132,751) (1,076,352,544)
- -----------------------------------------------------------------------------
Net increase 6,583,295 $ 358,819,531
- -----------------------------------------------------------------------------
Year ended
June 30, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 42,566,727 $2,162,347,087
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,792,795 176,109,174
- -----------------------------------------------------------------------------
46,359,522 2,338,456,261
Shares
repurchased (36,146,474) (1,835,480,082)
- -----------------------------------------------------------------------------
Net increase 10,213,048 $ 502,976,179
- -----------------------------------------------------------------------------
Six months ended
December 31, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 5,589,895 $276,702,390
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,483,251 224,924,735
- -----------------------------------------------------------------------------
10,073,146 501,627,125
Shares
repurchased (11,865,060) (575,553,377)
- -----------------------------------------------------------------------------
Net decrease (1,791,914) $(73,926,252)
- -----------------------------------------------------------------------------
Year ended
June 30, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 10,958,089 $ 534,080,968
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,063,932 137,202,777
- -----------------------------------------------------------------------------
14,022,021 671,283,745
Shares
repurchased (18,161,751) (885,361,106)
- -----------------------------------------------------------------------------
Net decrease (4,139,730) $(214,077,361)
- -----------------------------------------------------------------------------
Six months ended
December 31, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 787,472 $39,340,338
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 266,436 13,692,745
- -----------------------------------------------------------------------------
1,053,908 53,033,083
Shares
repurchased (940,620) (47,140,608)
- -----------------------------------------------------------------------------
Net increase 113,288 $ 5,892,475
- -----------------------------------------------------------------------------
Year ended
June 30, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,779,820 $87,997,481
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 165,573 7,570,046
- -----------------------------------------------------------------------------
1,945,393 95,567,527
Shares
repurchased (1,788,827) (88,903,355)
- -----------------------------------------------------------------------------
Net increase 156,566 $ 6,664,172
- -----------------------------------------------------------------------------
Six months ended
December 31, 1998
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,221,499 $118,973,033
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 299,733 15,917,465
- -----------------------------------------------------------------------------
2,521,232 134,890,498
Shares
repurchased (1,438,847) (73,364,834)
- -----------------------------------------------------------------------------
Net increase 1,082,385 $ 61,525,664
- -----------------------------------------------------------------------------
Year ended
June 30, 1998
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,222,463 $222,106,964
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 149,625 7,008,141
- -----------------------------------------------------------------------------
4,372,088 229,115,105
Shares
repurchased (1,874,552) (96,121,427)
- -----------------------------------------------------------------------------
Net increase 2,497,536 $132,993,678
- -----------------------------------------------------------------------------
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:
Purchase Sales Dividend Market
Name of Affiliate cost cost Income Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Accustaff, Inc. $ 44,887,394 $ -- $ -- $ --
Applied Graphics Technology 28,702,336 33,254,971 -- 15,886,200
Barnett, Inc. -- 21,829,192 --
Carematrix Corporation 3,048,618 -- -- 32,447,188
CBT Group PLC Sponsored ADR 3,153,006 33,209,078 -- --
Concentra Managed Care, Inc. -- 78,056,282 -- --
Extended Stay America, Inc. 692,065 8,175,973 -- 48,562,500
Gilead Sciences, Inc. -- 39,616,013 -- --
HCR Manor Care, Inc. -- 50,907,779 -- --
International Speedway Corp.
Class A 28,187,322 -- -- 37,644,750
J.D. Wetherspoon PLC 235,766 -- 155,014 30,091,677
Landry's Seafood Restaurant Inc. -- 31,458,569 --
Lason Holdings, Inc. 33,436,814 -- -- 41,272,394
Lincare Holdings, Inc. 13,235,395 -- -- 125,338,125
Medicis Pharmaceutical Class A 4,776,704 -- -- 65,885,625
Metamor Worldwide, Inc. 1,216,210 7,125,665 -- 40,650,000
Metromedia Fiber Network
Class A 23,269,662 -- -- 130,650,000
Modis Professional Services 4,562,920 117,895,292 -- 30,186,100
Papa Johns International, Inc. 472,726 25,565,175 -- 31,990,625
Pediatrix Medical Group, Inc. -- -- -- 59,811,631
PMT Services, Inc. 18,043,279 -- -- --
Rexall Sundown, Inc. 8,814,850 81,761,524 -- --
RSL Communications Ltd.
Class A 43,775,240 -- -- 65,348,400
Saville Systems Ireland ADR 847,273 34,861,026 -- --
Snyder Communications, Inc. 85,037,299 -- -- 146,981,250
Stewart Enterprises, Inc. Class A 1,739,027 -- 146,902 163,428,475
Sybron International Corp. 27,185,219 -- -- 138,112,500
Total Renal Care Holdings -- -- -- 123,046,516
Transkaryotic Therapies, Inc. 6,117,047 -- -- 24,994,375
Westwood One, Inc. -- -- -- 46,360,000
- -------------------------------------------------------------------------------------------------------------------
Totals $381,436,172 $563,716,539 $301,916 $1,398,688,331
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Opportunities Fund [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Quality Bond Fund +
High Yield Advantage Fund [DBL. DAGGER]
High Yield Total Return Fund
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund *
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK]
California, New York
LIFESTAGE SM FUNDS
Putnam Asset Allocation Funds-three investment portfolios that spread
your money across a variety of stocks, bonds, and money market investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
*Formerly Putnam Diversified Income Trust II
+Formerly Putnam Federal Income Trust
[DBL. DAGGER] Closed to new investors. Some exceptions may apply.
Contact Putnam for details.
[SECTION MARK] Not available in all states.
**An investment in a money market fund is neither insured nor guaranteed
by the U.S. government. These funds are managed to maintain a price of
$1.00 per share, although there is no assurance that this price will be
maintained in the future.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you invest
or send money.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
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
John J. Morgan, Jr.
Vice President
Daniel L. Miller
Vice President and Fund Manager
Jeffrey R. Lindsey
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
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 the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
www.putnaminv.com
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
SA013-49329 852/358/983/526/ 2/99
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ---------------------------------------------------------------------------
Putnam New Opportunities Fund
Supplement to Semiannual Report dated 12/31/98
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 $150 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.
SEMIANNUAL RESULTS AT A GLANCE
- ---------------------------------------------------------------------------
Total return
for periods ended 12/31/98 NAV
6 months 5.04%
1 year 24.71
5 years 158.22
Annual average 20.89
Life of fund (since class A inception, 8/31/90) 698.64
Annual average 28.33
Share value: NAV
6/30/98 $58.28
12/31/98 $59.13
- ---------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 -- $1.875 $1.875
- ---------------------------------------------------------------------------
Please note that past performance does not indicate future results. Returns
shown for class Y shares for periods prior to their inception are derived
from the historical performance of class A shares, adjusted to reflect the
initial sales charge currently applicable to class A shares. These returns
have not been adjusted to reflect differences in operating expenses which,
for class Y shares, are lower than the operating expenses applicable to
class A shares. All returns assume reinvestment of distributions at net
asset value. Performance data reflects an expense limitation previously in
effect. Without the expense limitation, total returns would have been
lower. Investment return and principal value will fluctuate so your shares,
when redeemed, may be worth more or less than their original cost. See full
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.
