Putnam
New
Opportunities
Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
6-30-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Discussion of the innovative and dynamic companies that make up Putnam New
Opportunities Fund's portfolio always makes for compelling reading, and
those covered in this report for fiscal 1999 are no exception. These are
the companies on the leading edge of their industries, the companies that
are seeking the next breakthrough or have already begun to exploit it.
Many are involved with the exciting new technologies associated with
electronic communications -- the Internet, telecommunications, and the
like. Others are finding innovative ways to thrive in more traditional
industries.
Identifying the most promising of these companies is a challenging task,
for many that push the boundaries of their fields are destined to fall by
the wayside. While it is impossible to build a portfolio comprising only
winners, your fund's managers, backed by one of the most extensive equity
research capabilities in our industry, are at a distinct advantage. I am
pleased to announce the appointment of Kenneth W. Lang to the management
team shortly after the close of the fiscal year. Before joining Putnam in
1997, Ken was with Montgomery Securities and Morgan Stanley. He has 9
years of investment experience.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
August 18, 1999
Report from the Fund Managers
Daniel L. Miller
Jeffrey R. Lindsey
Like much of the rest of the world, Putnam New Opportunities Fund was
profoundly influenced by technology -- and especially the Internet --
during the 12 months ended June 30, 1999. An insatiable appetite for
advanced technology from businesses and consumers helped boost performance
throughout the portfolio and led to solid returns for your fund's ninth
fiscal year.
In the financial markets, several shifts occurred during the period, which
began on a volatile note with last summer's worldwide turbulence. Although
U.S. markets had recovered by the fiscal year's midpoint, a small group of
large-company growth stocks continued to outperform all other types of
investments.
Toward the end of the period, however, stocks of small and midsize
companies began to show signs of improvement, finally pulling away from
the shadow of large-company stocks. In these changing conditions, your
fund's ability to invest in companies of all sizes proved beneficial, and
we're happy to report on a number of strong performing small, midsize, and
large companies throughout the portfolio.
Total return for 12 months ended 6/30/99
Class A Class B Class M
NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------
17.81% 11.04% 17.01% 12.01% 17.19% 13.10%
- ----------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods begins on page 6.
* INTERNET FUELS PERFORMANCE OF SEVERAL HOLDINGS
The explosive growth in Internet use has propelled companies in the fund's
portfolio, including many that play behind-the-scenes roles in Internet
commerce. VeriSign, Inc., whose stock has risen nearly 500% since last
October, is one example. VeriSign provides services that allow businesses
and individuals to conduct secure transactions online. The company
provides digital IDs that allow Internet sites to safeguard information,
such as credit-card numbers that are transmitted online. The digital ID
from VeriSign has become recognized by Web users as a sign that a site is
legitimate. VeriSign has worked with government agencies and large firms,
such as Visa, Microsoft, and Morgan Stanley Dean Witter, and has become
the dominant player in this market.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Telecommunication
services 13.2%
Retail 10.4%
Broadcasting 8.2%
Networking and
telecommunication
equipment 7.8%
Electronics and
electrical equipment 7.2%
Footnote reads:
*Based on net assets as of 6/30/99. Holdings will vary over time.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Clear Channel Communications,
Inc.
Broadcasting
American Telephone & Telegraph
Corp.
Telecommunication services
Microsoft Corp.
Computer software
General Electric Co.
Electronics and electrical equipment
Costco Companies, Inc.
Retail
Tyco International Ltd.
Conglomerate
QUALCOMM, Inc.
Networking and telecommunication
equipment
Lucent Technologies, Inc.
Networking and telecommunication
equipment
CBS Corp.
Broadcasting
Outdoor Systems, Inc.
Advertising
Footnote reads:
These holdings represent 19.1% of the fund's net assets as of 6/30/99.
Portfolio holdings will vary over time.
Critical Path, Inc. is another company that has benefited from businesses'
reliance on electronic communications. The company provides e-mail hosting
services that allow organizations and Internet service providers to reduce
costs and improve customer service by outsourcing their e-mail systems.
While these holdings, along with others discussed in this report, were
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.
* TRADITIONAL MEDIA ALSO BENEFIT FROM INTERNET
Also reaping the rewards of Internet growth are media companies that allow
Internet companies to advertise through traditional methods. Internet
companies looking to build brand recognition are turning to billboards,
radio, and television. Stocks in the portfolio that have benefited include
Infinity Broadcasting, which operates 160 radio stations serving 34 U.S.
markets; Clear Channel Communications, which operates 206 radio and 18 TV
stations; and media giant CBS Corp. In addition, the stock of Outdoor
Systems, a billboard advertising company, was an outstanding performer
during the period.
The fund's portfolio also includes the most obvious beneficiaries of
Internet growth -- the Internet companies themselves. One example is
VerticalNet, Inc., which was founded in 1995 and operates 41 online
"communities" that provide business-to-business news, information, and
discussion forums. Each VerticalNet community is focused on a specific
business or industry and caters to individuals with similar professional
interests. Examples of VerticalNet communities include solidwaste.com,
foodservicecentral.com, and fiberopticsonline.com. Professionals from
across the globe visit the sites to exhange ideas, search for career
opportunities, and monitor industry events. The site attracts nearly 2
million visitors per month, including buyers and sellers who do business
online.
* TELECOMMUNICATIONS SECTOR CONTINUES RAPID GROWTH
Another sector showing substantial growth during the fiscal year was
communications services. Among the larger companies in the portfolio was
MCI WorldCom, Inc., the second-largest long-distance company in the United
States. MCI provides telecommunications services to businesses,
governments, and consumers from a network of fiber-optic cables and
digital microwave and satellite stations.
The company was formed in 1997 in one of the largest corporate mergers in
history -- the $43 billion acquisition of MCI Communications Corp. by
WorldCom, Inc. Despite intense competition, MCI WorldCom remains well
positioned, offering competitive products and services such as its
local-to-global-to-local networks, which connect directly to customer
homes and businesses instead of relying on local phone company networks to
transmit phone calls.
The company recently acquired paging company SkyTel Communications, a move
that will allow it to expand to wireless messaging and data services. Fund
performance was also boosted by NextLink Communications, Inc., one of the
fastest-growing providers of competitive telecommunications services in
the United States. Nextlink has evolved into a rapidly growing broadband
communications services company, adding new customers and launching in new
markets every quarter. Nextlink recently announced that it would team with
Microsoft and Westbank Projects Corporation of Vancouver to create a
state-of-the-art technology environment in a new commercial office,
retail, hotel, and residential development in the state of Washington.
"The explosive growth in technology has been a pervasive theme for every
sector of the fund's portfolio. It has benefited companies of all sizes,
from Internet firms and semiconductor companies to businesses that provide
technological infrastructure and equipment. It has even contributed to the
success of more traditional businesses such as broadcasting, advertising,
and outsourcing."
- -- Daniel L. Miller, manager
Putnam New Opportunities Fund
Growing hand in hand with the telecommunications business are companies
that provide equipment to transmit growing amounts of data at faster
speeds. As the former equipment arm of AT&T Corp., fund holding Lucent
Technologies has a solid position in the telephone equipment market and is
becoming an increasingly powerful player in the data and Internet markets.
Lucent continues to see strong demand across all its business segments and
is expected to benefit substantially as telecommunications companies seek
to upgrade their networks to handle increased demands for data services.
Lucent recently teamed up with wireless carrier Winstar Communications --
another strong performing fund holding -- to market high-speed wireless
service to corporate customers. Under the deal, Lucent will provide the
equipment for customers to access Winstar's network, which offers
high-speed service for voice, data, and Internet connections.
Continued strength in the U.S. economy and rising consumer confidence
provided a significant boost for retail stocks throughout the period. In
1998, consumer spending rose at its fastest pace in 14 years and a surge
in early income tax refunds and home mortgage refinancing has put more
disposable income into consumer pockets.
This environment helped stocks such as discount retailing giant Wal-Mart
Stores, Inc. Known for extraordinary customer service and creative
in-store promotions, Wal-Mart has experienced rapid growth and has crushed
competitors on a regular basis. Wal-Mart's entry into food retailing
presents enormous growth potential. While its Supercenters combine
groceries with other retail departments, the company is also experimenting
with Wal-Mart Neighborhood Markets, which would compete more directly with
local grocers. A highlight from the fund's smaller retail holdings was The
TJX Companies, Inc., which has had great success with its multiple retail
concepts. The company operates off-price apparel and home fashions retail
stores, including T.J. Maxx Stores, Marshalls Stores, and Winners Apparel
Ltd. Stores.
* VOLATILITY, CONTINUED BROADENING POSSIBLE FOR FISCAL 2000
In the closing months of the fiscal year, stocks of small and midsize
companies finally began to show signs of improvement. While it may be too
soon to determine whether this change represents a long-term shift in
investor sentiment, we are optimistic in our outlook for the smaller, more
aggressively postured companies in the portfolio. However, with the U.S.
markets at record levels, we recognize that volatility is possible in the
coming fiscal year, and we will be watching for signs of inflation or
accelerated economic growth that could affect the interest-rate outlook
and the valuation level of the portfolio.
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 6/30/99, there is no guarantee the fund will
continue to hold these securities in the future. This fund invests all or
a portion of its assets in small or midsize 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 6/30/99
Class A Class B Class M
(inception dates) (8/31/90) (3/1/93) (12/1/94)
NAV POP NAV CDSC NAV POP
- -------------------------------------------------------------------------
1 year 17.81% 11.04% 17.01% 12.01% 17.19% 13.10%
- -------------------------------------------------------------------------
5 years 223.14 204.61 211.56 209.56 215.10 204.01
Annual average 26.44 24.95 25.52 25.36 25.80 24.90
- -------------------------------------------------------------------------
Life of fund 786.75 735.85 729.35 729.35 745.65 715.86
Annual average 28.04 27.18 27.07 27.07 27.35 26.84
- -------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/99
Russell Russell
Midcap 2000 Consumer
Growth Index Index price index
- -------------------------------------------------------------------------
1 year 20.31% 1.50% 1.96%
- -------------------------------------------------------------------------
5 years 174.15 104.70 12.30
Annual average 22.35 15.41 2.35
- -------------------------------------------------------------------------
Life of fund 377.88 276.92 26.29
Annual average 19.38 16.22 2.68
- -------------------------------------------------------------------------
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-year 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.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 8/31/90
Fund's class A Russell Midcap Consumer price
Date shares at POP Growth Index index
8/31/90 9,426 10,000 10,000
6/30/91 12,841 12,828 10,334
6/30/92 16,545 14,391 10,653
6/30/93 24,176 17,077 10,973
6/30/94 25,867 17,432 11,246
6/30/95 35,271 22,038 11,588
6/30/96 51,260 12,528 10,266
6/30/97 53,444 32,028 12,181
6/30/98 70,948 39,720 12,386
6/30/99 $83,585 $47,788 $12,629
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 $82,935 and no contingent deferred sales charges would
apply; a $10,000 investment in the fund's class M shares would have been
valued at $84,565 ($81,586 at public offering price).
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 6/30/99
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
- -----------------------------------------------------------------------------
6/30/99 65.61 69.61 62.51 64.05 66.37
- -----------------------------------------------------------------------------
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 5.75% maximum 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 class B 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 an unmanaged list of common stocks that is
frequently used as a performance measure for small and midsize company
stocks.
Russell Midcap Growth 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.
A guide to the financial statements
These sections of the report, preceded by the Report of independent
accountants, constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values as of
the last day of the reporting period. Holdings are organized by asset type and
industry sector, country, or state to show areas of concentration and
diversification.
Statement of assets and liabilities shows how the fund's net assets and share
price is determined. All investment and non-investment assets are added
together. Any unpaid expenses and other liabilities are subtracted from this
total. The result is divided by the number of shares to determine the net
asset value per share, which is calculated separately for each class of
shares. (For funds with preferred shares, the amount subtracted from total
assets includes the net assets allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for the
reporting period. This is determined by adding up all the fund's earnings --
from dividends and interest income -- and subtracting its operating expenses.
This statement also lists any net gain or loss the fund realized on the sales
of its holdings and -- for holdings that remain in the portfolio -- any change
in unrealized gains or losses over the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of the
fund's shares. It lists distributions and their sources (net investment income
or realized capital gains) over the current reporting period and the most
recent fiscal year-end. The distributions listed here may not match the
sources listed in the Statement of operations because the distributions are
determined on a tax basis and may be paid in a different period from the one
in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also includes
the current reporting period. For open-ended funds, a separate table is
provided for each share class.
Report of independent accountants
For the fiscal year ended June 30, 1999
To the Trustees and Shareholders of
Putnam New Opportunities Fund
In our opinion, the accompanying statement of assets and liabilities,
including the fund's portfolio, and the related statements of operations
and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Putnam New
Opportunities Fund (the "fund") at June 30, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of investments owned at June 30, 1999 by correspondence with
the custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 12, 1999
<TABLE>
<CAPTION>
The fund's portfolio
June 30, 1999
COMMON STOCKS (97.9%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Advertising (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
2,690,000 Lamar Advertising Co. (NON) $ 110,121,875
8,685,000 Outdoor Systems, Inc. (NON) 317,002,500
---------------
427,124,375
Airlines (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,150,800 Ryanair Holdings, plc ADR (Ireland) (NON) 60,992,400
Banks (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
4,174,600 Firstar Corp. 116,888,800
3,380,800 National Commerce Bancorporation 73,955,000
1,265,000 Zions Bancorp (NON) 80,327,500
---------------
271,171,300
Broadcasting (8.2%)
- --------------------------------------------------------------------------------------------------------------------------
7,328,900 CBS Corp. 318,349,094
5,025,000 Chancellor Media Corp. 277,003,125
705,400 Citadel Communications Corp. (NON) 25,526,663
9,528,900 Clear Channel Communications, Inc. (NON) 656,898,544
535,500 Entercom Communications Corp. 22,892,625
897,000 Hispanic Broadcasting Corp. (NON) 68,059,875
4,815,000 Infinity Broadcasting Corp. Class A (NON) 143,246,250
3,272,000 Sinclair Broadcast Group, Inc. Class A 53,579,000
2,455,000 Univision Communications, Inc. Class A (NON) 162,030,000
1,520,000 WestWood One, Inc. (NON) (AFF) 54,245,000
---------------
1,781,830,176
Business Services (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,635,900 Cendant Corp. (NON) 33,535,950
1,065,000 Exodus Communications, Inc. (NON) 127,733,438
4,695,000 Snyder Communications, Inc. (NON) (AFF) 153,761,250
144,700 VerticalNet, Inc. (NON) 15,193,500
---------------
330,224,138
Cable Television (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
553,385 Adelphia Communications Class A (NON) 35,209,121
1,175,700 Century Communications Corp. (NON) 54,082,200
4,013,100 Comcast Corp. Class A (NON) 154,253,531
557,500 MediaOne Group, Inc. (NON) 41,464,063
---------------
285,008,915
Computer Equipment (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
2,580,000 Comdisco, Inc. (NON) 66,112,500
4,504,900 EMC Corp. (NON) 247,769,500
4,161,000 Sun Microsystems, Inc. (NON) 286,588,875
---------------
600,470,875
Computer Services (3.6%)
- --------------------------------------------------------------------------------------------------------------------------
2,295,000 Affiliated Computer Services, Inc. Class A (NON) 116,184,375
1,183,000 America Online, Inc. (NON) 130,721,500
656,100 CheckFree Holdings Corp. (NON) 18,083,756
1,425,000 Covad Communications Group 144A (NON) 75,970,313
604,500 Critical Path, Inc. (NON) 33,436,406
2,040,000 Entrust Technologies, Inc. (NON) 67,830,000
230,000 RealNetworks, Inc. (NON) 15,841,250
3,415,000 USWeb Corp. (NON) 75,770,313
592,400 Verio, Inc. (NON) 41,171,800
1,454,000 VeriSign, Inc. (NON) 125,407,500
2,539,600 Whittman-Hart, Inc. (NON) 80,632,300
---------------
781,049,513
Computer Software (6.8%)
- --------------------------------------------------------------------------------------------------------------------------
1,420,000 Amdocs Ltd. (NON) 32,305,000
406,000 BroadVision, Inc. (NON) 29,942,500
455,000 Check Point Software Technologies Ltd. (Israel) (NON) 24,399,375
2,191,100 Electronic Arts, Inc. (NON) 118,867,175
1,555,900 I2 Technologies, Inc. (NON) 66,903,700
1,279,400 Intuit, Inc. (NON) 115,305,925
574,800 ISS Group, Inc. (NON) 21,698,700
825,000 Lernout & Hauspie Speech Products N.V. (Belgium) (NON) 29,235,938
217,000 Lycos, Inc. (NON) 19,936,875
970,000 Macromedia, Inc. (NON) 34,192,500
5,196,700 Microsoft Corp. (NON) 468,677,381
8,420,000 Parametric Technology Corp. (NON) 116,827,500
116,500 Peregrine Systems, Inc. (NON) 2,992,594
930,000 Rational Software Corp. (NON) 30,631,875
1,000,600 Research in Motion Ltd. (Canada) (NON) 20,262,150
960,000 Sapient Corp. (NON) 54,360,000
860,000 Security First Technologies Corp. (NON) 38,807,500
2,858,700 Synopsys, Inc. 157,764,506
1,000,000 VERITAS Software Corp. (NON) 94,937,500
---------------
1,478,048,694
Conglomerates (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
3,648,900 Tyco International Ltd. (NON) 345,733,275
1,633,000 United Technologies Corp. 117,065,688
---------------
462,798,963
Consumer Products (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
853,100 Colgate-Palmolive Co. 84,243,625
1,128,500 Kimberly-Clark Corp. 64,324,500
---------------
148,568,125
Consumer Services (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
60,700 MarketWatch.com, Inc. (NON) 3,573,713
160,700 SportsLine USA, Inc. (NON) 5,765,113
436,100 StarMedia Network, Inc. (NON) 27,964,913
535,900 TMP Worldwide, Inc. (NON) 34,029,650
551,000 Ziff Davis, Inc. -- ZDNet (NON) 14,326,000
---------------
85,659,389
Cosmetics (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
3,112,400 Estee Lauder Cos. Class A 156,009,050
Education (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,806,000 ITT Educational Services, Inc. (NON) (AFF) 47,068,875
Electric Utilities (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,925,000 CalEnergy Co., Inc. (NON) 66,653,125
980,000 Montana Power Co. (NON) 69,090,000
---------------
135,743,125
Electronics and Electrical Equipment (7.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,205,000 Applied Materials, Inc. (NON) 89,019,375
1,775,000 ASM Lithography Holding N.V. (Netherlands) (NON) 105,390,625
2,950,000 Celestica, Inc. (Canada) (NON) 127,771,875
1,640,000 Flextronics International Ltd. (NON) 91,020,000
3,884,500 General Electric Co. 438,948,500
1,144,170 KLA Tencor Corp. (NON) 74,228,029
1,046,000 Illinois Tool Works, Inc. 85,772,000
1,675,000 Jabil Circuit, Inc. (NON) 75,584,375
590,000 Novellus Systems, Inc. (NON) 40,267,500
1,950,000 Sanmina Corp. (NON) 147,956,250
1,305,000 Solectron Corp. (NON) 87,027,188
1,105,000 Teradyne, Inc. (NON) 79,283,750
693,800 Uniphase Corp. (NON) 115,170,800
---------------
1,557,440,267
Energy-Related (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
251,600 Calpine Corp. (NON) 13,586,400
Entertainment (3.3%)
- --------------------------------------------------------------------------------------------------------------------------
3,480,000 Harrah's Entertainment, Inc. (NON) 76,560,000
1,232,900 International Speedway Corp. Class A 58,562,750
1,635,000 SFX Entertainment, Inc. Class A (NON) 104,640,000
3,814,300 Time Warner, Inc. 280,351,050
4,383,800 Viacom, Inc. Class B 192,887,200
---------------
713,001,000
Financial Services (4.3%)
- --------------------------------------------------------------------------------------------------------------------------
3,406,950 Citigroup, Inc. 161,830,125
3,212,000 Concord EFS, Inc. (NON) 135,907,750
620,000 Donaldson, Lufkin & Jenrette, Inc. 37,355,000
1,610,000 E(a)Trade Group, Inc. (NON) 64,299,375
2,125,000 Finova Group, Inc. 111,828,125
199,700 Goldman Sachs Group, Inc. (The) 14,428,325
248,300 Investment Technology Group, Inc. 8,038,713
1,131,900 Morgan Stanley, Dean Witter, Discover and Co. 116,019,750
553,100 Providian Financial Corp. 51,714,850
1,347,200 Schwab (Charles) Corp. 148,023,600
2,517,000 TCF Financial Corp. 70,161,375
688,325 TD Waterhouse Group, Inc. (NON) 17,251,145
---------------
936,858,133
Funeral/Cemetery Services (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
6,803,500 Stewart Enterprises, Inc. Class A (AFF) 99,075,969
Gas Pipelines (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,349,700 Enron Corp. (NON) 110,337,975
3,401,300 Williams Cos., Inc. (NON) 144,767,831
---------------
255,105,806
Health Care Information Services (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,001,100 Eclipsys Corp. (NON) 23,963,831
Health Care Services (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
752,172 CareMatrix Corp. (NON) 9,355,139
117,800 Healtheon Corp. (NON) 9,070,600
2,384,700 Lincare Holdings, Inc. (NON) 59,617,500
964,400 Sunrise Assisted Living, Inc. (NON) 33,633,450
690,000 TLC The Laser Center, Inc. (Canada) (NON) 33,120,000
---------------
144,796,689
Hospital Management (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
7,480,000 Health Management Assoc., Inc. (NON) 84,150,000
Insurance (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,372,300 American International Group, Inc. 160,644,869
Lodging (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
5,032,700 Extended Stay America, Inc. (NON) (AFF) 60,392,400
1,020,000 Four Seasons Hotels, Inc. (Canada) (NON) 44,943,750
---------------
105,336,150
Medical Management Services (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
997,900 Pediatrix Medical Group, Inc. (NON) (AFF) 21,205,375
Medical Supplies and Devices (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
948,000 Bausch & Lomb, Inc. (NON) 72,522,000
1,615,000 Biomet, Inc. (NON) 64,196,250
1,420,000 Henry Schein, Inc. (NON) 44,996,250
1,318,600 Johnson & Johnson 129,222,800
5,265,000 Sybron International Corp. (NON) (AFF) 145,116,563
556,000 VISX, Inc. (NON) 44,028,250
2,144,600 Waters Corp. (NON) 113,931,875
---------------
614,013,988
Networking and Telecommunication Equipment (7.8%)
- --------------------------------------------------------------------------------------------------------------------------
1,243,700 CIENA Corp. (NON) 37,544,194
4,353,100 Cisco Systems, Inc. (NON) 280,502,881
1,417,500 Comverse Technology, Inc. (NON) 107,021,250
2,157,800 General Instrument Corp. (NON) 91,706,500
1,853,400 International Network Services (NON) 74,831,025
20,271 Juniper Networks, Inc. (NON) 3,020,379
5,025,400 Lucent Technologies, Inc. 338,900,413
1,257,500 Network Appliance, Inc. (NON) 70,262,813
2,463,500 Nokia Corp. ADR (Finland) 225,564,219
2,401,200 QUALCOMM, Inc. (NON) 344,572,200
1,805,800 Tellabs, Inc. (NON) 122,004,363
---------------
1,695,930,237
Pharmaceuticals and Biotechnology (5.8%)
- --------------------------------------------------------------------------------------------------------------------------
3,142,900 American Home Products Corp. (NON) 180,716,750
2,260,300 Amgen, Inc. (NON) 137,595,763
7,554,100 Elan Corp. PLC ADR (Ireland) (NON) 209,626,275
1,087,800 Forest Laboratories, Inc. (NON) 50,310,750
1,206,000 IDEXX Laboratories, Inc. (NON) 28,114,875
121,700 Jones Medical Industries, Inc. 4,791,938
1,657,500 Medicis Pharmaceutical Corp. Class A (NON) (AFF) 42,059,063
285,000 QLT PhotoTherapeutics, Inc. (Canada) (NON) 15,675,000
5,471,600 Schering-Plough Corp. 289,994,800
1,195,000 Sepracor, Inc. (NON) 97,093,750
1,033,000 Transkaryotic Therapies, Inc. (Malaysia) (NON) (AFF) 34,089,000
1,840,200 Warner-Lambert Co. 127,663,875
1,125,000 Watson Pharmaceuticals, Inc. (NON) 39,445,313
---------------
1,257,177,152
Restaurants (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
10,141,767 J.D. Wetherspoon PLC (United Kingdom) (AFF) 47,187,005
Retail (10.4%)
- --------------------------------------------------------------------------------------------------------------------------
383,900 Amazon.com, Inc. (NON) 48,035,488
6,933,900 Bed Bath & Beyond, Inc. (NON) 266,955,150
655,000 Beyond.com Corp. (NON) 18,790,313
4,693,500 Costco Companies, Inc. (NON) 375,773,344
3,171,100 CVS Corp. 160,933,325
1,988,600 Dollar Tree Stores, Inc. (NON) 87,498,400
2,998,200 Gap, Inc. (The) (NON) 151,034,325
4,119,000 Home Depot, Inc. (The) 265,418,063
2,590,000 Kohls Corp. (NON) 199,915,625
2,674,200 Safeway, Inc. (NON) 132,372,900
6,198,800 TJX Cos., Inc. (The) 206,497,525
6,211,000 Wal-Mart Stores, Inc. 299,680,750
1,090,200 Williams-Sonoma, Inc. (NON) 37,952,588
---------------
2,250,857,796
Semiconductors (6.3%)
- --------------------------------------------------------------------------------------------------------------------------
3,118,000 Analog Devices, Inc. (NON) 156,484,625
565,000 Applied Micro Circuits Corp. (NON) 46,471,250
1,179,500 E-Tek Dynamics, Inc. (NON) 56,099,969
3,609,400 Linear Technology Corp. 242,732,150
3,125,000 Maxim Integrated Products, Inc. (NON) 207,812,500
596,400 Micrel, Inc. (NON) 44,133,600
2,236,600 Motorola, Inc. 211,917,850
1,615,000 PMC - Sierra, Inc. (NON) 95,184,063
55,100 RF Micro Devices, Inc. (NON) 4,111,892
493,200 SDL, Inc. (NON) 25,184,025
1,369,500 Texas Instruments, Inc. 198,577,500
1,505,000 Xilinx, Inc. (NON) 86,161,250
---------------
1,374,870,674
Telecommunication Services (13.2%)
- --------------------------------------------------------------------------------------------------------------------------
2,367,000 ADC Telecommunications, Inc. (NON) 107,846,438
1,891,500 Allegiance Telecom, Inc. (NON) 103,796,063
14,627,104 American Telephone & Telegraph Corp. 537,546,072
3,446,600 American Tower Corp. Class A (NON) 82,718,400
244,000 Copper Mountain Networks, Inc. (NON) 18,849,000
875,000 Frontier Corp. (NON) 51,625,000
1,265,753 Global Crossing Ltd. (NON) 53,952,722
2,645,000 Global TeleSystems Group, Inc. (NON) 214,245,000
1,485,000 Intermedia Communications, Inc. (NON) 44,550,000
2,743,300 MCI WorldCom, Inc. (NON) 236,095,256
2,770,000 McLeod, Inc. Class A (NON) 152,350,000
7,800,000 Metromedia Fiber Network, Inc. Class A (NON) 280,312,500
3,025,400 NEXTLINK Communications, Inc. Class A (NON) 225,014,125
870,000 NTL, Inc. (NON) 74,983,125
3,179,500 Qwest Communications International, Inc. (NON) 105,122,219
1,690,200 RSL Communications Ltd. Class A (NON) 32,641,988
3,197,500 Sprint PCS 182,657,188
3,455,800 Sprint Corp. 182,509,438
646,700 Vodafone AirTouch PLC (United Kingdom) (NON) 127,399,900
1,155,000 WinStar Communications, Inc. (NON) 56,306,250
---------------
2,870,520,684
---------------
Total Common Stocks (cost $13,595,052,980) $21,277,489,938
COMMERCIAL PAPER (2.0%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$50,000,000 Asset Securitization Corp. for an effective yield of 4.92%,
July 23, 1999 $ 49,849,667
49,000,000 Corporate Receivables Corp. for an effective yield of 4.82%,
July 9, 1999 48,947,516
30,000,000 Credit Suisse First Boston for an effective yield of 4.82%,
August 5, 1999 29,859,417
25,000,000 Federal Home Loan Mortgage Corp. for an effective yield
of 4.81%, July 19, 1999 24,939,875
50,000,000 Federal Home Loan Mortgage Corp. for an effective yield
of 4.71%, July 20, 1999 49,874,389
50,000,000 Federal National Mortgage Association for an effective yield
of 4.81%, July 6, 1999 49,966,597
50,000,000 Ford Motor Credit Corp. for an effective yield of 4.79%,
July 9, 1999 49,946,556
50,000,000 General Electric Capital Corp. for an effective yield of 4.81%,
July 28, 1999 49,819,625
33,653,000 Prudential Funding Corp. for an effective yield of 5.50%,
July 1, 1999 33,647,858
50,000,000 Sigma Finance Inc. for an effective yield of 4.85%, July 12, 1999 49,926,055
---------------
Total Commercial Paper (cost $436,777,555) $ 436,777,555
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $14,031,830,535) (b) $21,714,267,493
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $21,723,320,879.
(b) The aggregate identified cost on a tax basis is $14,048,064,985, resulting in gross unrealized appreciation and
depreciation of $8,068,625,136 and $402,422,628, respectively, or net unrealized appreciation of $7,666,202,508.
(NON) Non-income-producing security.
(AFF) Affiliated Companies (Note 5).
144A after the name of a security represents those exempt from registration under rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
ADR after the name of a foreign holding stands for American Depositary 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, 1999
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $14,031,830,535) (Note 1) $21,714,267,493
- -----------------------------------------------------------------------------------------------
Cash 21,982,328
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 2,955,548
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 19,822,704
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 218,294,868
- -----------------------------------------------------------------------------------------------
Total assets 21,977,322,941
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 150,922,980
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 61,209,561
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 24,849,142
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 2,120,903
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 318,306
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 14,518
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 13,486,413
- -----------------------------------------------------------------------------------------------
Other accrued expenses 1,080,239
- -----------------------------------------------------------------------------------------------
Total liabilities 254,002,062
- -----------------------------------------------------------------------------------------------
Net assets $21,723,320,879
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $11,722,919,385
- -----------------------------------------------------------------------------------------------
Accumulated net realized gains on investments and
foreign currency transactions (Note 1) 2,317,965,228
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 7,682,436,266
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $21,723,320,879
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($11,817,797,892 divided by 180,134,512 shares) $65.61
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $65.61)* $69.61
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($8,382,291,940 divided by 134,090,104 shares)** $62.51
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($491,208,632 divided by 7,668,713 shares) $64.05
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $64.05)* $66.37
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($1,032,022,415 divided by 15,521,953 shares) $66.49
- -----------------------------------------------------------------------------------------------
* 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, 1999
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Interest $ 21,430,525
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $157,759, including dividend income
of $853,076 from investments in affiliated issuers) (Note 5) 43,997,777
- -----------------------------------------------------------------------------------------------
Total investment income 65,428,302
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 90,089,683
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 28,070,068
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 316,688
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 56,132
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 25,255,230
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 68,843,851
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 3,226,323
- -----------------------------------------------------------------------------------------------
Reports to shareholders 413,222
- -----------------------------------------------------------------------------------------------
Registration fees 8,488
- -----------------------------------------------------------------------------------------------
Auditing 133,506
- -----------------------------------------------------------------------------------------------
Legal 104,323
- -----------------------------------------------------------------------------------------------
Postage 3,174,312
- -----------------------------------------------------------------------------------------------
Other 3,437,460
- -----------------------------------------------------------------------------------------------
Total expenses 223,129,286
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (2,444,849)
- -----------------------------------------------------------------------------------------------
Net expenses 220,684,437
- -----------------------------------------------------------------------------------------------
Net investment loss (155,256,135)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (including net realized loss of $309,606,687
on sales of investments in affiliated issuers) (Note 5) 2,352,941,644
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 1,551
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in foreign
currencies during the year (692)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 997,122,404
- -----------------------------------------------------------------------------------------------
Net gain on investments 3,350,064,907
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $3,194,808,772
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended June 30
-------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (155,256,135) $ (135,338,935)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign
currency transactions 2,352,943,195 1,228,126,644
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 997,121,712 3,538,793,763
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,194,808,772 4,631,581,472
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (332,350,742) (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) 114,640,051 428,556,668
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 2,688,725,427 4,701,863,215
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of year 19,034,595,452 14,332,732,237
- ---------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $-- and $--, respectively) $21,723,320,879 $19,034,595,452
- ---------------------------------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $57.68 $44.47 $42.99 $29.58 $21.88
- --------------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss (.32)(c) (.25) (.20)(c) (.21)(c) (.12)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 10.13 14.55 2.00 13.62 8.02
- --------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 9.81 14.30 1.80 13.41 7.90
- --------------------------------------------------------------------------------------------------------------------------------
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 $65.61 $57.68 $44.47 $42.99 $29.58
- --------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 17.81 32.75 4.26 45.34 36.36
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $11,817,798 $10,163,386 $7,381,624 $4,752,611 $1,341,877
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .93 .98 1.06 1.11 1.13
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.56) (.49) (.48) (.54) (.55)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 76.54 65.21 66.74 36.61 56.99
- --------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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 period)
CLASS B
- --------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended June 30
- --------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $55.42 $43.08 $41.96 $29.09 $21.68
- --------------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss (.66)(c) (.62) (.49)(c) (.48)(c) (.23)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 9.63 14.05 1.93 13.35 7.84
- --------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 8.97 13.43 1.44 12.87 7.61
- --------------------------------------------------------------------------------------------------------------------------------
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 $62.51 $55.42 $43.08 $41.96 $29.09
- --------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 17.01 31.78 3.50 44.24 35.34
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $8,382,292 $7,950,848 $6,359,447 $4,254,962 $1,013,379
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) 1.60 1.73 1.81 1.87 1.87
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.23) (1.24) (1.23) (1.30) (1.30)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 76.54 65.21 66.74 36.61 56.99
- --------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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 period)
CLASS M
- --------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Dec. 1,1994+
operating performance Year ended June 30 to June 30
- --------------------------------------------------------------------------------------------------------------------------------
1999 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 (.58)(c) (.49) (.40)(c) (.40)(c) (.05)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 9.86 14.32 1.97 13.55 5.04
- --------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 9.28 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 $64.05 $56.65 $43.91 $42.66 $29.51
- --------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 17.19 32.09 3.75 44.56 20.40*
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $491,209 $444,325 $337,535 $210,404 $16,011
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) 1.43 1.48 1.56 1.64 .94*
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.06) (.99) (.98) (1.06) (.53)*
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 76.54 65.21 66.74 36.61 56.99
- --------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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 period)
CLASS Y
- --------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share July 19,1994+
operating performance Year ended June 30 to June 30
- --------------------------------------------------------------------------------------------------------------------------------
1999 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 (.19)(c) (.13)(c) (.09)(c) (.11)(c) (.04)
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 10.28 14.68 2.02 13.66 7.31
- --------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 10.09 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 $66.49 $58.28 $44.82 $43.21 $29.66
- --------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 18.11 33.05 4.54 45.68 32.42*
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,032,022 $476,037 $254,126 $118,640 $24,538
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .68 .73 .81 .86 .83*
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.32) (.24) (.23) (.29) (.26)*
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 76.54 65.21 66.74 36.61 56.99
- --------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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
June 30, 1999
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, which is currently closed to new investors, offers class A,
class B, class M and class Y shares. Effective July 26, 1999, the fund
will begin offering class C 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 $150 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 year ended June
30, 1999, 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. These
differences include temporary and permanent differences of losses on wash
sale transactions 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, 1999, the fund reclassified
$155,256,135 to decrease accumulated net investment loss and $149,090,510
to decrease paid-in-capital, with a decrease to accumulated net realized
gains of $6,165,625. 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, 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, 0.43% of the next $5 billion, 0.42% of the next $5 billion, 0.41%
of the next $5 billion, 0.40% of the next $5 billion, and 0.39%
thereafter. Prior to June 4, 1999, any amount over $21.5 billion was based
on 0.43%.
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 year ended June 30, 1999, fund expenses were reduced by $2,444,849
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 $12,510
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
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%, 0.85% and 0.75% of the average net assets attributable to
class A, class B and class M shares, respectively. Prior to January 1,
1999, the annual rate was 1.00% of the average net assets attributable to
class B shares.
For the year ended June 30, 1999, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $1,697,897 and $58,756 from the
sale of class A and class M shares, respectively and $11,247,609 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, 1999, Putnam Mutual Funds
Corp., acting as underwriter received $93,167 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended June 30, 1999, purchases and sales of investment
securities other than short-term investments aggregated $14,030,762,803
and $14,624,264,787, 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, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended June 30, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 45,594,076 $2,572,784,440
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,046,651 317,327,118
- -----------------------------------------------------------------------------
51,640,727 2,890,111,558
Shares
repurchased (47,716,775) (2,689,861,510)
- -----------------------------------------------------------------------------
Net increase 3,923,952 $ 200,250,048
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Year ended June 30, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 9,985,427 $ 532,229,736
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,483,603 224,942,388
- -----------------------------------------------------------------------------
14,469,030 757,172,124
Shares
repurchased (23,849,418) (1,272,000,118)
- -----------------------------------------------------------------------------
Net decrease (9,380,388) $(514,827,994)
- -----------------------------------------------------------------------------
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)
- -----------------------------------------------------------------------------
Year ended June 30, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,659,416 $ 90,965,413
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 266,448 13,693,360
- -----------------------------------------------------------------------------
1,925,864 104,658,773
Shares
repurchased (2,100,915) (116,130,595)
- -----------------------------------------------------------------------------
Net decrease (175,051) $(11,471,822)
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Year ended June 30, 1999
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 10,843,488 $643,820,161
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 299,803 15,917,465
- -----------------------------------------------------------------------------
11,143,291 659,737,626
Shares
repurchased (3,789,291) (219,047,807)
- -----------------------------------------------------------------------------
Net increase 7,354,000 $440,689,819
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Note 5
Transactions with Affiliated Companies
Transactions during the period with companies in which the fund owned at
least 5% of the voting securities were as follows:
Purchase Sales Dividend Market
Affiliates cost cost Income Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Accustaff, Inc. $ 44,887,394 $ -- $ -- $ --
Applied Graphics
Technologies, Inc. 28,702,336 76,113,787 -- --
Barnett, Inc. -- 21,829,192 -- --
Carematrix Corporation 5,506,342 9,353,810 -- --
CBT Group PLC Sponsored
ADR 3,153,006 33,209,078 -- --
Ciber, Inc. 31,684,881 72,212,668 -- --
Concentra Managed Care, Inc. -- 78,056,282 -- --
Extended Stay America, Inc. 4,288,926 8,175,973 -- 60,392,400
Gilead Sciences, Inc. -- 29,991,459 -- --
HCR Manor Care, Inc. -- 50,907,779 -- --
International Speedway Corp.
Class A 43,157,919 -- -- --
ITT Educational Services, Inc. 56,314,761 -- -- 47,068,875
J.D. Wetherspoon PLC 235,766 -- 412,370 47,187,005
Landry's Seafood
Restaurant Inc. -- 31,458,569 -- --
Lason Holdings, Inc. 33,436,814 33,436,814 -- --
Lincare Holdings, Inc. 13,235,395 23,441,098 -- --
Medicis Pharmaceutical Corp.
Class A 4,776,704 -- -- 42,059,063
Metamor Worldwide, Inc. 1,216,210 52,140,270 -- --
Metromedia Fiber Network
Class A 23,269,662 -- -- --
Modis Professional Services, Inc. 4,562,920 157,752,417 -- --
Network Solutions, Inc 70,447,379 70,477,379 -- --
Nova Corp. 29,276,632 117,418,529 -- --
Papa Johns International, Inc. 472,726 36,243,765 -- --
Pediatrix Medical Group, Inc. -- -- -- 21,205,375
PMT Services, Inc. 18,044,888 -- -- --
Rexall Sundown, Inc. 8,814,850 81,761,524 -- --
RSL Communications Ltd.
Class A 43,769,278 19,479,805 -- --
Saville Systems Ireland ADR 847,273 34,861,026 -- --
Snyder Communications, Inc. 96,664,299 -- -- 153,761,250
Stewart Enterprises, Inc.
Class A 1,739,027 11,727,250 440,706 99,075,969
Sybron International Corp. 31,663,409 -- -- 145,116,563
Total Renal Care Holdings -- 69,099,290 -- --
Transkaryotic Therapies, Inc. 7,506,837 -- -- 34,089,000
Verisign, Inc. 44,382,513 -- -- --
Westwood One, Inc. -- -- -- 54,245,000
- -------------------------------------------------------------------------------------------------------------------
Totals $652,058,147 $1,119,147,764 $853,076 $704,200,500
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund
hereby designates $2,334,199,107 as capital gain for its taxable year
ended June 30, 1999.
The Form 1099 you receive in January 2000 will show the tax status of all
distributions paid to your account in calendar 1999.
Fund information
WEB SITE
www.putnaminv.com
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
PricewaterhouseCoopers LLP
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
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
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' Web site: 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
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
AN013-53944 852/358/983/526 8/99
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ----------------------------------------------------------------------------
Putnam New Opportunities Fund
Supplement to Annual Report dated 6/30/99
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 annual report.
ANNUAL RESULTS AT A GLANCE
- ----------------------------------------------------------------------------
Total return
for periods ended 6/30/99 NAV
1 year 18.11%
5 years 227.25
Annual average 26.76
10 years 6.00
Annual average 6.00
Life of fund (since class A inception, 8/31/90) 798.03
Annual average 28.22
Share value: NAV
6/30/98 $58.28
6/30/99 $66.49
- ----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $0.000 1.880 $1.880
- ----------------------------------------------------------------------------
Please note that past performance does not indicate future results. More
recent returns may be more or less than those shown. 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.
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.
