Putnam
New
Opportunities
Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
6-30-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM, III]
Dear Shareholder:
It is a pleasure to greet you in our new roles as Chairman of the
Trustees and President of the Funds. As you know, both of us have been
members of the Board of Trustees for a number of years -- years during
which the global securities markets, the mutual fund industry, and
Putnam itself have experienced tremendous growth and change.
As we look to the future, we are certain that the changes that lie ahead
will be even more breathtaking in their scope. What will not change is
the Trustees' dedication to serving the best interests of our
shareholders.
We welcome the challenges ahead and are confident that Putnam and your
Board will continue to meet those challenges successfully, as they have
for more than 60 years. We look forward to helping you meet your
financial objectives for many years to come.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
August 16, 2000
REPORT FROM FUND MANAGEMENT
Daniel L. Miller
Jeffrey R. Lindsey
For Putnam New Opportunities Fund and the U.S. stock market, the
12-month period ended June 30, 2000, was a study in contrasts. In our
last report six months ago, we highlighted the skyrocketing performance
of technology stocks and record-breaking returns for U.S. market
indexes. This momentum continued into 2000 but reversed sharply in mid
March, leading to a series of double-digit losses and a correction in
the Nasdaq Composite Index, a common measure of technology stocks. In
the final month of the period, the markets began a gradual recovery as
investors took advantage of buying opportunities, and inflation fears
diminished as the economy showed signs of slowing. Throughout this
volatile period, we remained focused on finding the sectors and stocks
that offer the most compelling long-term growth prospects.
Total return for 12 months ended 6/30/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
----------------------------------------------------------------------
60.49% 51.26% 59.53% 54.53% 59.34% 58.34% 59.71% 54.12%
----------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 6.
* SHARP MARKET DECLINES DAMPEN SHORT-TERM PERFORMANCE
Not surprisingly, the stocks that delivered the strongest performance in
the first half of the period were also hardest hit by the market's
downturn in the latter half. Your fund targets the economy's
fastest-growing sectors, including technology and related industries
such as telecommunications, wireless, software, media, and Internet
infrastructure. These rapidly changing and emerging sectors, by their
very nature, are prone to volatility. However, we continue to believe
they also offer the greatest potential long-term returns. In the wake of
the market decline, many of these stocks were selling below their
long-term fundamental values. We took advantage of their attractive
prices to add significantly to the portfolio's holdings.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Software 12.7%
Semiconductors 11.9%
Telecommunications 11.8%
Media 11.0%
Communications
equipment 10.3%
Footnote reads:
*Based on net assets as of 6/30/00. Holdings will vary over time.
* TECHNOLOGY REMAINS KEY GROWTH DRIVER
While the mood of the markets has changed significantly over the past 12
months, the major growth themes have not. In technology, the long-term
growth potential is explosive as consumers and businesses demand better,
faster, and more sophisticated systems for sending, receiving, and
storing information. Companies that wish to remain competitive are
recognizing that new technology is essential for improving efficiency,
increasing productivity, and cutting costs. Today, technology represents
nearly half of all business equipment spending by U.S. companies.
Consumers are also embracing technology: the latest data indicate that
spending on information technology as a percentage of disposable income
has nearly tripled in the past 12 years.
With this background in mind, we focused on the companies that should
benefit most from these trends. One important term that has entered the
vocabulary of the marketplace is "bandwidth," and it is key to
understanding future technology growth trends. Bandwidth refers to the
amount of data that can be sent through a computer network; the higher
the bandwidth, the faster the network functions. With the explosive
growth in Internet usage comes a huge demand for more bandwidth. Among
the companies profiting from this demand are those that provide the
equipment to increase bandwidth and those that provide the networks to
deliver that bandwidth. Examples within the fund's portfolio include
large companies such as networking giant Cisco Systems as well as
smaller firms such as Efficient Networks, Inc., which develops and
supplies digital subscriber line (DSL) equipment. DSL allows for
high-speed Internet access and more efficient electronic commerce,
remote access, and telecommuting capabilities.
"Despite recent declines, our outlook remains extremely positive. Strong
global demand for broadband, wireless and Internet solutions is expected
to continue its positive impact on technology industries such as
semiconductors, communications, fiber optics, and computer storage."
-- Daniel L. Miller, manager, Putnam New Opportunities Fund
These equipment suppliers, in turn, are dependent on semiconductors to
manufacture their products. Strong-performing semiconductor stocks in
the portfolio included Broadcom Corporation, Applied Micro Circuits
Corporation, and PMC-Sierra, Inc. While these holdings and others
discussed in this report were viewed favorably at the end of the fiscal
period, all are subject to review and adjustment in accordance with the
fund's investment strategy and may vary in the future.
* STRONG GROWTH PROSPECTS FOR SOFTWARE, BUSINESS SERVICES
Throughout the business world -- from traditional manufacturers and
established blue-chip giants to emerging firms with revolutionary new
products -- competitive companies must develop e-commerce strategies to
bring their products and services to the Internet. As a result,
businesses that provide e-commerce support have outstanding growth
potential. In the software sector, it includes companies such as fund
holding Portal Software, Inc. Portal's products allow businesses to
manage online customer relationships efficiently and deal with complex
Internet accounting, billing, reporting, and marketing needs.
As increasing amounts of data fly across corporate networks, businesses
also need more efficient methods for storing and managing the
information. Another company in the fund's portfolio, Brocade
Communications Systems, Inc., is benefiting from this demand. Brocade
products allow businesses to improve the performance and increase the
size and scope of their computer servers and storage systems. In the
business services sector, the fund focused on consulting firms that help
companies incorporate all aspects of technology, from Internet to
wireless to networking, into their business plans. Internet consulting
firms in the portfolio included Sapient Corporation, Viant Corporation,
and Proxicom, Inc.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
General Electric Co.
Conglomerates
Viacom, Inc. Class B
Entertainment
VERITAS Software Corp.
Software
Metromedia Fiber Network, Inc.
Class A
Telecommunications
Clear Channel
Communications, Inc.
Media
Cisco Systems, Inc.
Communications Equipment
AT&T Corp. - Liberty Media Group
Class A
Media
Nextlink Communications, Inc.
Class A
Telecommunications
Nokia Oyj AB ADR (Finland)
Communications Equipment
Pfizer, Inc.
Pharmaceuticals
Footnote reads:
These holdings represent 19.9% of the fund's net assets as of 6/30/00.
Portfolio holdings will vary over time.
* FLEXIBILITY VITAL TO TARGETING GROWTH TRENDS
A fundamental aspect of your fund's strategy is its flexibility to shift
to accommodate changing growth themes. Our current focus on
technology-related industries is a reflection of the market's direction
as well as our intensive research and stock selection process. The
fund's investments in the health-care sector provide an illustration of
how growth themes can change. Just two years ago, health-care companies
offered remarkable growth potential and represented nearly 20% of the
fund's net assets. Today, health care represents a significantly smaller
segment of the portfolio -- approximately 8%. As the global economy
strengthened in recent years, the health-care sector suffered as
investors sought opportunities in industries that offered more growth
potential. In addition, uncertainty about potential Medicare reform and
drug reimbursement programs have dampened performance of drug and
health-care services stocks. During the fiscal year, we limited our
health-care investments to the fastest-growing industries, such as
biotechnology, specialty pharmaceuticals, and medical technology.
* GROWTH STOCK OUTLOOK POSITIVE FOR FISCAL 2001
As we entered the a new fiscal year, several factors contributed to our
positive outlook for the stocks in which your fund invests. The Federal
Reserve Board's series of interest rate increases over the past year
should lower the risk of inflationary pressures in the market.
Businesses were continuing to invest heavily in technology equipment in
a drive to enhance productivity, and the earnings outlook for most U.S.
corporations remained extremely positive. As always, we remain focused
on targeting stocks of companies with a proprietary advantage or market
leadership in a particular sector, superior management teams, sound
business models, and a record of strong performance.
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 6/30/00, there is no guarantee the fund will
continue to hold these securities in the future. The 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 6/30/00
Class A Class B Class C Class M
(inception dates) (8/31/90) (3/1/93) (7/26/99) (12/1/94)
NAV POP NAV CDSC NAV CDSC NAV POP
------------------------------------------------------------------------------
1 year 60.49% 51.26% 59.53% 54.53% 59.34% 58.34% 59.71% 54.12%
------------------------------------------------------------------------------
5 years 280.32 258.49 267.22 265.22 266.34 266.34 270.78 257.79
Annual average 30.63 29.09 29.71 29.57 29.65 29.65 29.96 29.04
------------------------------------------------------------------------------
Life of fund 1323.07 1241.38 1223.07 1223.07 1222.35 1222.35 1250.50 1202.93
Annual average 31.01 30.23 30.05 30.05 30.04 30.04 30.32 29.84
------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 6/30/00
Russell Midcap Consumer
Growth Index price index
-------------------------------------------------------------
1 year 48.59% 3.67%
-------------------------------------------------------------
5 years 222.22 12.98
Annual average 26.35 2.47
-------------------------------------------------------------
Life of fund 610.10 30.93
Annual average 22.06 2.78
-------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Recent returns reflect favorable
market conditions that may not be sustainable. 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,
5-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. For class C
shares, returns for periods prior to their inception are derived from
the historical performance of class A shares, adjusted to reflect both
the CDSC currently applicable to class C shares, which is 1% for the
first year and is eliminated thereafter, and the higher operating
expenses applicable to class C 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 11/7/90
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 35,270 22,038 11,588
6/30/96 51,260 27,237 11,915
6/30/97 53,444 32,028 12,188
6/30/98 70,948 39,720 12,386
6/30/99 83,585 47,788 12,629
6/30/00 $134,138 $71,010 $13,093
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
and class C shares would have been valued at $132,307 and $132,235,
respectively and no contingent deferred sales charges would apply;
a $10,000 investment in the fund's class M shares would have been
valued at $135,050 ($130,293 at public offering price).
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 6/30/00
Class A Class B Class C Class M
------------------------------------------------------------------------------
Distributions (number) 1 1 1 1
------------------------------------------------------------------------------
Income -- -- -- --
------------------------------------------------------------------------------
Capital gains
------------------------------------------------------------------------------
Long-term $7.300 $7.300 $7.300 $7.300
------------------------------------------------------------------------------
Short-term -- -- -- --
------------------------------------------------------------------------------
Total $7.300 $7.300 $7.300 $7.300
------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
------------------------------------------------------------------------------
6/30/99 $65.61 $ 69.61 $62.51 $ -- $64.05 $66.37
------------------------------------------------------------------------------
7/26/99* -- -- -- 65.31 -- --
------------------------------------------------------------------------------
6/30/00 96.61 102.50 91.07 95.94 93.63 97.03
------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance section for performance calculation method.
*Inception of class C shares.
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 C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
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 or C 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. The CDSC for class C shares is 1% for one
year after purchase.
COMPARATIVE BENCHMARKS
Russell Midcap Growth Index measures the performance of Russell Midcap
Index companies with higher price-to-book ratios and higher forecasted
growth values. The index assumes reinvestment of all distributions and
interest payments and does not take into account brokerage fees or
taxes. Securities in the fund do not match those in the index and
performance of the fund will differ. It is not possible to invest
directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Welcome to www.putnaminvestments.com
Now you can use your PC to get up-to-date information about your funds,
learn more about investing and retirement planning, and access market
news and economic outlooks from Putnam.
VISIT PUTNAM'S SITE ON THE WORLD WIDE WEB FOR:
* the benefits of investing with Putnam
* Putnam's money management philosophy
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You can also read Putnam economist Dr. Robert Goodman's commentary and
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The site can be accessed through any of the major online services
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New features will be added to the site regularly. So be sure to bookmark us at
http://www.putnaminvestments.com
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 are determined. All investment and noninvestment 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-end funds, a
separate table is provided for each share class.
REPORT OF INDEPENDENT ACCOUNTANTS
For the fiscal year ended June 30, 2000
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, 2000, and the
results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with
accounting principles generally accepted in the United States. 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 auditing standards
generally accepted in the United States, 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, 2000 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 10, 2000
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
June 30, 2000
COMMON STOCKS (97.7%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Aerospace/Defense (0.3%)
-------------------------------------------------------------------------------------------------------------------
1,448,600 General Motors Corp. Class H (NON) $ 127,114,650
Airlines (0.3%)
-------------------------------------------------------------------------------------------------------------------
2,779,380 Ryanair Holdings, PLC ADR (Ireland) (NON) 101,447,370
Banking (0.5%)
-------------------------------------------------------------------------------------------------------------------
3,290,520 National Commerce Bancorporation 52,853,978
2,310,000 TCF Financial Corp. 59,338,125
1,602,900 Zions Bancorp 73,558,083
----------------
185,750,186
Biotechnology (3.2%)
-------------------------------------------------------------------------------------------------------------------
4,551,900 Amgen, Inc. (NON) 319,770,975
825,000 Biovail Corporation (Canada) (NON) 45,735,938
650,000 Cephalon, Inc. (NON) 38,918,750
1,792,300 Genentech, Inc. (NON) 308,275,600
807,500 Medimmune, Inc. (NON) 59,755,000
720,000 Millennium Pharmaceuticals, Inc. 80,550,000
2,390,260 Sepracor, Inc. (NON) 288,325,113
1,140,000 Transkaryotic Therapies, Inc. (NON) (AFF) 41,895,000
----------------
1,183,226,376
Commercial and Consumer Services (0.1%)
-------------------------------------------------------------------------------------------------------------------
311,000 Macrovision Corp. (NON) 19,879,703
Communications Equipment (10.3%)
-------------------------------------------------------------------------------------------------------------------
4,140,760 ADC Telecommunications, Inc. (NON) 347,306,245
2,025,000 Advanced Fibre Communications (NON) 91,757,813
1,948,514 Brocade Communications Systems, Inc. (NON) 357,521,873
11,108,200 Cisco Systems, Inc. (NON) 706,064,963
4,100,000 Comverse Technology, Inc. (NON) 381,300,000
495,000 Crossroads Systems, Inc. (NON) 12,498,750
1,380,000 Efficient Networks, Inc. (NON) 101,516,250
90,300 Extreme Networks, Inc. (NON) 9,526,650
2,240,000 Finisar Corp. (NON) 58,660,000
2,252,600 Juniper Networks, Inc. (NON) 327,894,088
12,336,700 Nokia Oyj AB ADR (Finland) 616,063,956
4,259,700 Nortel Networks Corp. 290,724,525
1,529,434 Redback Networks, Inc. (NON) 272,239,252
1,035,000 Scientific-Atlanta, Inc. 77,107,500
2,187,200 Tellabs, Inc. (NON) 149,686,500
----------------
3,799,868,365
Computers-Hardware (2.5%)
-------------------------------------------------------------------------------------------------------------------
5,567,600 EMC Corp. (NON) 428,357,225
5,546,500 Sun Microsystems, Inc. (NON) 504,384,844
----------------
932,742,069
Computers-Software and Services (2.1%)
-------------------------------------------------------------------------------------------------------------------
437,000 Ariba, Inc. (NON) 42,846,484
6,776,940 Parametric Technology Corp. (NON) 74,546,340
1,550,000 RealNetworks, Inc. (NON) 78,371,875
503,000 Retek, Inc. (NON) 16,096,000
3,244,885 VeriSign, Inc. (NON) 572,722,203
----------------
784,582,902
Computer Services (1.1%)
-------------------------------------------------------------------------------------------------------------------
1,201,600 CheckFree Holdings Corp. (NON) 61,957,500
521,900 Digex, Inc. (NON) 35,456,581
1,179,400 Exodus Communications, Inc. (NON) 54,326,113
70,577 MarchFirst, Inc. (NON) 1,288,030
1,223,600 Proxicom, Inc. (NON) 58,579,850
1,354,520 Rare Medium Group, Inc. (NON) 21,418,348
450,000 Sapient Corp. (NON) 48,121,875
820,000 Scient Corp. (NON) 36,182,500
1,644,453 Viant Corp. (NON) 48,716,920
1,059,600 Wireless Facilities, Inc. (NON) 53,973,375
----------------
420,021,092
Conglomerates (3.6%)
-------------------------------------------------------------------------------------------------------------------
16,995,500 General Electric Co. (SEG) 900,761,500
9,093,000 Tyco International, Ltd. 430,780,875
----------------
1,331,542,375
Consumer Goods (0.7%)
-------------------------------------------------------------------------------------------------------------------
1,834,900 Colgate-Palmolive Co. 109,864,638
3,328,900 Estee Lauder Cos. Class A 164,572,494
----------------
274,437,132
Consumer Services (0.4%)
-------------------------------------------------------------------------------------------------------------------
2,087,840 TMP Worldwide, Inc. (NON) 154,108,690
Electric Utilities (0.8%)
-------------------------------------------------------------------------------------------------------------------
4,346,000 Calpine Corp. (NON) 285,749,500
Electronic Manufacturing Services (2.7%)
-------------------------------------------------------------------------------------------------------------------
3,750,000 Celestica, Inc. (Canada) (NON) 186,093,750
2,873,800 Flextronics International, Ltd. 197,394,138
5,803,100 Jabil Circuit, Inc. (NON) 287,978,838
2,820,000 Sanmina Corp. (NON) 241,110,000
2,109,000 SCI Systems, Inc. (NON) 82,646,438
----------------
995,223,164
Electronics (4.2%)
-------------------------------------------------------------------------------------------------------------------
252,800 Ditech Communications Corp. (NON) 23,905,400
1,655,000 E-Tek Dynamics, Inc. (NON) 436,609,688
4,965,000 JDS Uniphase Corp. (NON) 595,179,375
1,704,800 SDL, Inc. (NON) 486,187,650
----------------
1,541,882,113
Entertainment (2.8%)
-------------------------------------------------------------------------------------------------------------------
1,737,400 International Speedway Corp. Class A 71,884,925
2,309,600 SFX Entertainment, Inc. Class A (NON) 104,653,750
12,624,777 Viacom, Inc. Class B (NON) 860,851,982
----------------
1,037,390,657
Financial (0.5%)
-------------------------------------------------------------------------------------------------------------------
4,032,000 Intuit, Inc. (NON) 166,824,000
Insurance (0.6%)
-------------------------------------------------------------------------------------------------------------------
1,784,200 American International Group, Inc. 209,643,500
Investment Banking/Brokerage (1.3%)
-------------------------------------------------------------------------------------------------------------------
972,300 Merrill Lynch & Co., Inc. 111,814,500
2,615,100 Morgan Stanley, Dean Witter, Discover and Co. 217,707,075
5,122,950 Schwab (Charles) Corp. 172,259,194
----------------
501,780,769
Lodging/Tourism (0.2%)
-------------------------------------------------------------------------------------------------------------------
1,440,800 Four Seasons Hotels, Inc. (Canada) 89,599,750
Media (11.0%)
-------------------------------------------------------------------------------------------------------------------
2,987,800 America Online, Inc. (NON) 157,606,450
5,447,420 AMFM, Inc. (NON) 375,871,980
28,319,062 AT&T Corp. - Liberty Media Group Class A (NON) 686,737,254
2,560,000 Citadel Communications Corp. (NON) (AFF) 89,440,000
9,560,300 Clear Channel Communications, Inc. (NON) 717,022,500
1,858,800 CMG Information Services, Inc. (NON) 85,156,275
1,716,200 CNET Networks, Inc. (NON) 42,154,163
1,493,400 DoubleClick, Inc. (NON) 56,935,875
2,954,600 Echostar Communications Corp. Class A (NON) 97,824,959
1,655,512 Entercom Communications Corp. (NON) 80,706,210
15,693,700 Infinity Broadcasting Corp. Class A (NON) 571,839,194
3,861,800 InfoSpace.com, Inc. (NON) 213,364,450
2,040,000 Hispanic Broadcasting Corp. (NON) 67,575,000
2,610,000 Lamar Advertising Co. (NON) 113,045,625
2,628,800 Lycos, Inc. (NON) 141,955,200
3,901,000 Time Warner, Inc. 296,476,000
1,256,600 Univision Communications, Inc. Class A (NON) 130,058,100
4,137,800 WestWood One, Inc. (NON) 141,202,425
----------------
4,064,971,660
Medical Technology (1.5%)
-------------------------------------------------------------------------------------------------------------------
3,853,200 PE Corp. 253,829,550
5,386,990 Sybron International Corp. (NON) (AFF) 106,729,739
1,570,000 Waters Corp. (NON) 195,955,625
----------------
556,514,914
Pharmaceuticals (3.1%)
-------------------------------------------------------------------------------------------------------------------
513,400 IVAX Corp. (NON) 21,306,100
1,950,200 Lilly (Eli) & Co. 194,776,226
824,620 Medicis Pharmaceutical Corp. Class A (NON) 47,003,340
12,402,500 Pfizer, Inc. 595,320,000
1,311,800 Pharmacia Corp. 67,803,663
3,547,400 Schering-Plough Corp. 179,143,700
568,500 Shire Pharmaceuticals Group PLC ADR (United Kingdom) (NON) 29,490,938
----------------
1,134,843,967
Restaurants (0.1%)
-------------------------------------------------------------------------------------------------------------------
8,800,387 J.D. Wetherspoon PLC (United Kingdom) 49,947,696
Retail (4.1%)
-------------------------------------------------------------------------------------------------------------------
7,892,500 Bed Bath & Beyond, Inc. (NON) (AFF) 286,103,125
4,229,574 Dollar Tree Stores, Inc. (NON) 167,332,521
6,001,400 Home Depot, Inc. (The) 299,694,913
4,722,000 Kohls Corp. (NON) 262,661,250
1,711,900 Priceline.com, Inc. (NON) 65,025,452
905,900 Target Corp. 52,542,200
2,353,500 TJX Cos., Inc. (The) 44,128,125
5,429,900 Wal-Mart Stores, Inc. 312,897,988
1,045,900 Whole Foods Market, Inc. (NON) 43,208,744
----------------
1,533,594,318
Schools (0.1%)
-------------------------------------------------------------------------------------------------------------------
1,168,300 SmartForce Public Limited Co. ADR (Ireland) (NON) 56,078,400
Semiconductors (11.9%)
-------------------------------------------------------------------------------------------------------------------
2,410,100 Altera Corp. (NON) 245,679,569
6,259,800 Analog Devices, Inc. (NON) 475,744,800
1,976,000 Applied Micro Circuits Corp. (NON) 195,130,000
1,220,600 Broadcom Corp. (NON) 267,235,113
573,200 GlobeSpan, Inc. (NON) 69,975,181
4,288,200 Intel Corp. 573,278,738
6,746,000 Linear Technology Corp. 431,322,375
7,551,300 Maxim Integrated Products, Inc. (NON) 513,016,444
2,536,400 Micrel, Inc. (NON) 110,174,875
2,070,000 PMC - Sierra, Inc. (NON) 367,813,125
1,360,000 QLogic Corp. (NON) 89,845,000
1,325,000 RF Micro Devices, Inc. (NON) 116,103,125
600,000 Semtech Corp. (NON) 45,890,625
5,482,800 Texas Instruments, Inc. 376,599,825
1,014,500 Virata Corp. (NON) 60,489,563
2,623,500 Vitesse Semiconductor Corp. (NON) 192,991,219
3,380,380 Xilinx, Inc. (NON) 279,092,624
----------------
4,410,382,201
Semiconductor Production Equipment (3.0%)
-------------------------------------------------------------------------------------------------------------------
5,166,000 Applied Materials, Inc. (NON) 468,168,750
3,990,900 ASM Lithography Holding NV (Netherlands) (NON) 176,098,463
3,816,260 KLA Tencor Corp. (NON) 223,489,726
1,615,000 LTX Corp. (NON) 56,424,063
2,600,000 Teradyne, Inc. (NON) 191,100,000
----------------
1,115,281,002
Software (12.7%)
-------------------------------------------------------------------------------------------------------------------
894,734 Agile Software Corp. (NON) 63,246,510
2,930,430 Amdocs Ltd. 224,910,503
4,491,100 BroadVision, Inc. (NON) 228,204,019
523,000 Check Point Software Technologies Ltd. (Israel) 110,745,250
574,800 E.piphany, Inc. (NON) 61,611,375
1,464,990 Electronic Arts, Inc. (NON) 106,852,708
2,398,700 I2 Technologies, Inc. (NON) 250,101,955
381,606 Informatica Corp. (NON) 31,267,842
769,800 ISS Group, Inc. (NON) 76,005,722
655,202 Kana Communications, Inc. (NON) 40,540,624
688,600 Kana Communications, Inc. (acquired 6/7/00,
cost $34,430,000) (NON) (RES) 38,346,413
2,219,200 Macromedia, Inc. (NON) 214,568,900
1,215,000 Micromuse, Inc. (NON) 201,063,516
6,317,200 Microsoft Corp. (NON) 505,376,000
7,367,700 Misys PLC (United Kingdom) 62,222,658
5,650,000 Oracle Corp. (NON) 474,953,125
1,630,000 Peregrine Systems, Inc. (NON) 56,540,625
382,900 Phone.com, Inc. (NON) 24,936,363
3,960,000 Portal Software, Inc. (NON) 252,945,000
2,239,600 Rational Software Corp. (NON) 208,142,825
1,003,400 Siebel Systems, Inc. (NON) 164,118,613
920,000 Software.com, Inc. (NON) 119,485,000
7,555,900 VERITAS Software Corp. (NON) 853,934,761
4,990,000 Vignette Corp. (NON) 259,557,969
160,210 Vitria Technology, Inc. (NON) 9,792,836
359,000 webMethods, Inc. (NON) 56,430,313
----------------
4,695,901,425
Telecommunications (11.8%)
-------------------------------------------------------------------------------------------------------------------
3,225,400 Allegiance Telecom, Inc. (NON) 206,425,600
4,597,700 American Tower Corp. Class A (NON) 191,666,619
3,775,000 Covad Communications Group, Inc. (NON) 60,871,875
1,551,800 Crown Castle International Corp. (NON) 56,640,700
1,590,300 Focal Communications Corp. (NON) 57,548,981
5,027,003 Global Crossing Ltd. (Bermuda) 132,273,016
5,102,300 Global Telesystems Group, Inc. 61,546,494
879,700 Intermedia Communications, Inc. (NON) 26,171,075
1,921,700 Level 3 Communication, Inc. (NON) 169,109,600
21,336,300 McLeodUSA, Inc. Class A (NON) 441,394,706
20,064,800 Metromedia Fiber Network, Inc. Class A (NON) 796,321,750
1,363,300 MGC Communications, Inc. (NON) 81,712,794
1,975,000 Network Plus Corp. (NON) 22,959,375
674,300 Next Level Communications, Inc. (NON) 57,821,225
3,646,600 Nextel Communications, Inc. Class A (NON) 223,126,338
16,536,840 Nextlink Communications, Inc. Class A (NON) (AFF) 627,366,348
2,240,000 NTL, Inc. (NON) 134,120,000
1,845,000 Pinnacle Holdings, Inc. (NON) 99,630,000
6,064,800 Sprint Corp. (NON) 360,855,600
1,822,900 Telecorp PCS, Inc. (NON) 73,485,657
5,588,900 Vodafone AirTouch PLC (United Kingdom) 231,590,044
1,490,000 VoiceStream Wireless Corp. (NON) 173,282,344
2,536,170 WinStar Communications, Inc. (NON) 85,912,759
----------------
4,371,832,900
Transportation Services (0.2%)
-------------------------------------------------------------------------------------------------------------------
1,201,100 United Parcel Service, Inc. 70,864,900
----------------
Total Common Stocks (cost $18,543,929,030) $ 36,203,027,746
SHORT-TERM INVESTMENTS (2.6%) (a)
PRINCIPAL AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------
$75,000,000 Corporate Asset Funding effective yield
of 6.56%, July 28, 2000 $ 74,631,000
50,000,000 Corporate Receivables Corp. effective yield
of 6.55%, July 12, 2000 49,899,930
100,000,000 CXC, Inc. effective yield of 6.9%, July 5, 2000 99,904,167
81,980,000 Delaware Funding Corp. effective yield
of 6.6%, July 25, 2000 81,619,288
50,000,000 Diageo Capital PLC effective yield
of 6.82%, July 7, 2000 (United Kingdom) 49,933,694
50,000,000 General Electric Capital Corp. effective yield
of 6.59%, July 6, 2000 49,954,236
50,000,000 Goldman Sachs Group effective yield
of 6.65%, July 7, 2000 49,944,583
50,000,000 Merrill Lynch & Co., Inc. effective yield
of 6.55%, July 5, 2000 49,963,611
50,000,000 Morgan Stanley Dean Witter, Discover & Co. effective yield
of 6.85%, July 5, 2000 49,952,431
50,000,000 Morgan Stanley Dean Witter, Discover & Co. effective yield
of 6.7%, July 13, 2000 49,888,333
73,000,000 PNC Funding Corp. effective yield of 6.85%, July 6, 2000 72,930,549
78,837,000 Preferred Receivables Funding Corp. effective yield
of 6.6%, August 10, 2000 78,244,408
39,586,000 Thunder Bay Funding, Inc. effective yield of 6.61%, July 11, 2000 39,513,316
50,000,000 UBS AG effective yield of 6.74%, July 3, 2000 49,981,278
75,000,000 Windmill Funding Corp. effective yield of 6.22%, July 24, 2000 74,681,354
48,709,000 Interest in $729,703,000 joint repurchase agreement
dated June 30, 2000 with Morgan (J.P.) & Co. Inc.
due July 3, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $48,735,181 for an
effective yield of 6.45% $ 48,709,000
----------------
Total Short-Term Investments (cost $969,751,178) $ 969,751,178
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $19,513,680,208) (b) $ 37,172,778,924
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $37,056,534,340.
(b) The aggregate identified cost on a tax basis is $19,557,668,100,
resulting in gross unrealized appreciation and depreciation of
$18,772,205,693 and $1,157,094,869, respectively, or net unrealized
appreciation of $17,615,110,824.
(NON) Non-income-producing security.
(AFF) Affiliated Companies (Note 5).
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at June 30,
2000.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at June 30, 2000, was
$38,346,413 or 0.1% of net assets.
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.
-----------------------------------------------------------------------------
Futures Contracts Outstanding at June 30, 2000
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
-----------------------------------------------------------------------------
S&P 500 Index (Long) $146,810,000 $149,333,535 Sep-00 $(2,523,535)
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $19,513,680,208) (Note 1) $37,172,778,924
-------------------------------------------------------------------------------------------
Cash 175,140
-------------------------------------------------------------------------------------------
Foreign currency (cost $375) 357
-------------------------------------------------------------------------------------------
Dividends, interest and other receivables 1,968,844
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 55,717,048
-------------------------------------------------------------------------------------------
Receivable for securities sold 61,535,556
-------------------------------------------------------------------------------------------
Receivable for variation margin 1,010,000
-------------------------------------------------------------------------------------------
Total assets 37,293,185,869
Liabilities
-------------------------------------------------------------------------------------------
Payable for securities purchased 121,170,068
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 48,249,712
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 39,075,659
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 4,134,516
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 618,073
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 14,919
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 21,349,443
-------------------------------------------------------------------------------------------
Other accrued expenses 2,039,139
-------------------------------------------------------------------------------------------
Total liabilities 236,651,529
-------------------------------------------------------------------------------------------
Net assets $37,056,534,340
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $16,582,775,138
-------------------------------------------------------------------------------------------
Accumulated net realized gains on investments and foreign
currency transactions (Note 1) 2,817,184,039
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 17,656,575,163
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $37,056,534,340
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($21,138,863,039 divided by 218,809,800 shares) $96.61
-------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $96.61)* $102.50
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($12,343,996,374 divided by 135,542,245 shares)** $91.07
-------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($118,720,459 divided by 1,237,427 shares)** $95.94
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($770,193,814 divided by 8,225,737 shares) $93.63
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $93.63)* $97.03
-------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($2,684,760,654 divided by 27,318,202 shares) $98.28
-------------------------------------------------------------------------------------------
* 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, 2000
<S> <C>
Investment income:
-------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $435,350, including dividend income
of $526,849 from investments in affiliated issuers) (Note 5) $ 39,370,776
-------------------------------------------------------------------------------------------
Interest 22,503,843
-------------------------------------------------------------------------------------------
Total investment income 61,874,619
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 136,725,887
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 35,669,847
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 279,891
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 58,556
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 41,436,248
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 90,314,303
-------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 385,626
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 4,826,211
-------------------------------------------------------------------------------------------
Other 8,309,477
-------------------------------------------------------------------------------------------
Total expenses 318,006,046
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (3,960,767)
-------------------------------------------------------------------------------------------
Net expenses 314,045,279
-------------------------------------------------------------------------------------------
Net investment loss (252,170,660)
-------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1, 3 and 5)
(including net realized loss of $65,216,146 on
sales of investments in affiliated issuers) 3,177,977,304
-------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 2,145,560
-------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 172,814
-------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and
liabilities in foreign currency during the year 674
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures during the year 9,974,138,223
-------------------------------------------------------------------------------------------
Net gain on investments 13,154,434,575
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $12,902,263,915
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year ended June 30
---------------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment loss $ (252,170,660) $ (155,256,135)
--------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 3,180,295,678 2,352,943,195
--------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 9,974,138,897 997,121,712
--------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 12,902,263,915 3,194,808,772
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (1,314,506,964) (332,350,742)
--------------------------------------------------------------------------------------------------
Class B (933,682,378) (257,923,945)
--------------------------------------------------------------------------------------------------
Class C (488,124) --
--------------------------------------------------------------------------------------------------
Class M (54,386,506) (14,531,244)
--------------------------------------------------------------------------------------------------
Class Y (125,842,222) (15,917,465)
--------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 4,859,855,740 114,640,051
--------------------------------------------------------------------------------------------------
Total increase in net assets 15,333,213,461 2,688,725,427
Net assets
--------------------------------------------------------------------------------------------------
Beginning of year 21,723,320,879 19,034,595,452
--------------------------------------------------------------------------------------------------
End of the year (including accumulated net investment
loss of $-- and $--, respectively) $37,056,534,340 $21,723,320,879
--------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $65.61 $57.68 $44.47 $42.99 $29.58
----------------------------------------------------------------------------------------------------
Investment operations
----------------------------------------------------------------------------------------------------
Net investment loss (.54)(c) (.32)(c) (.25) (.20)(c) (.21)(c)
----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 38.84 10.13 14.55 2.00 13.62
----------------------------------------------------------------------------------------------------
Total from
investment operations 38.30 9.81 14.30 1.80 13.41
----------------------------------------------------------------------------------------------------
Less distributions:
----------------------------------------------------------------------------------------------------
From net realized gain
on investments (7.30) (1.88) (1.09) (.26) --
----------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- -- (.06) --
----------------------------------------------------------------------------------------------------
Total distributions (7.30) (1.88) (1.09) (.32) --
----------------------------------------------------------------------------------------------------
Net asset value,
end of period $96.61 $65.61 $57.68 $44.47 $42.99
----------------------------------------------------------------------------------------------------
Ratios and supplemental data
----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 60.49 17.81 32.75 4.26 45.34
----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $21,138,863 $11,817,798 $10,163,386 $7,381,624 $4,752,611
----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .86 .93 .98 1.06 1.11
----------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.64) (.56) (.49) (.48) (.54)
----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.13 76.54 65.21 66.74 36.61
----------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements. (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
----------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $62.51 $55.42 $43.08 $41.96 $29.09
----------------------------------------------------------------------------------------------------
Investment operations
----------------------------------------------------------------------------------------------------
Net investment loss (.98)(c) (.66)(c) (.62) (.49)(c) (.48)(c)
----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 36.84 9.63 14.05 1.93 13.35
----------------------------------------------------------------------------------------------------
Total from
investment operations 35.86 8.97 13.43 1.44 12.87
----------------------------------------------------------------------------------------------------
Less distributions:
----------------------------------------------------------------------------------------------------
From net realized gain
on investments (7.30) (1.88) (1.09) (.26) --
----------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- -- (.06) --
----------------------------------------------------------------------------------------------------
Total distributions (7.30) (1.88) (1.09) (.32) --
----------------------------------------------------------------------------------------------------
Net asset value,
end of period $91.07 $62.51 $55.42 $43.08 $41.96
----------------------------------------------------------------------------------------------------
Ratios and supplemental data
----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 59.53 17.01 31.78 3.50 44.24
----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $12,343,996 $8,382,292 $7,950,848 $6,359,447 $4,254,962
----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.46 1.60 1.73 1.81 1.87
----------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.24) (1.23) (1.24) (1.23) (1.30)
----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.13 76.54 65.21 66.74 36.61
----------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements. (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>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS C
---------------------------------------------------------------------
For the period
Per-share July 26, 1999+
operating performance to June 30
---------------------------------------------------------------------
2000
---------------------------------------------------------------------
Net asset value,
beginning of period $65.31
---------------------------------------------------------------------
Investment operations
---------------------------------------------------------------------
Net investment loss (c) (1.13)
---------------------------------------------------------------------
Net realized and unrealized
gain on investments 39.06
---------------------------------------------------------------------
Total from
investment operations 37.93
---------------------------------------------------------------------
Less distributions:
---------------------------------------------------------------------
From net realized gain
on investments (7.30)
---------------------------------------------------------------------
In excess of net
realized gains --
---------------------------------------------------------------------
Total distributions (7.30)
---------------------------------------------------------------------
Net asset value,
end of period $95.94
---------------------------------------------------------------------
Ratios and supplemental data
---------------------------------------------------------------------
Total return at
net asset value (%)(a) 60.14*
---------------------------------------------------------------------
Net assets, end of period
(in thousands) $118,720
---------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.50*
---------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.30)*
---------------------------------------------------------------------
Portfolio turnover (%) 53.13
---------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements. (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>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
----------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended June 30
----------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $64.05 $56.65 $43.91 $42.66 $29.51
----------------------------------------------------------------------------------------------------
Investment operations
----------------------------------------------------------------------------------------------------
Net investment loss (.93)(c) (.58)(c) (.49) (.40)(c) (.40)(c)
----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 37.81 9.86 14.32 1.97 13.55
----------------------------------------------------------------------------------------------------
Total from
investment operations 36.88 9.28 13.83 1.57 13.15
----------------------------------------------------------------------------------------------------
Less distributions:
----------------------------------------------------------------------------------------------------
From net realized gain
on investments (7.30) (1.88) (1.09) (.26) --
----------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- -- (.06) --
----------------------------------------------------------------------------------------------------
Total distributions (7.30) (1.88) (1.09) (.32) --
----------------------------------------------------------------------------------------------------
Net asset value,
end of period $93.63 $64.05 $56.65 $43.91 $42.66
----------------------------------------------------------------------------------------------------
Ratios and supplemental data
----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 59.71 17.19 32.09 3.75 44.56
----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $770,194 $491,209 $444,325 $337,535 $210,404
----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.36 1.43 1.48 1.56 1.64
----------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.14) (1.06) (.99) (.98) (1.06)
----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.13 76.54 65.21 66.74 36.61
----------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements. (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
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended June 30
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $66.49 $58.28 $44.82 $43.21 $29.66
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment loss (c) (.34) (.19) (.13) (.09) (.11)
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 39.43 10.28 14.68 2.02 13.66
------------------------------------------------------------------------------------------------
Total from
investment operations 39.09 10.09 14.55 1.93 13.55
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net realized gain
on investments (7.30) (1.88) (1.09) (.26) --
------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- -- (.06) --
------------------------------------------------------------------------------------------------
Total distributions (7.30) (1.88) (1.09) (.32) --
------------------------------------------------------------------------------------------------
Net asset value,
end of period $98.28 $66.49 $58.28 $44.82 $43.21
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 60.88 18.11 33.05 4.54 45.68
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,684,761 $1,032,022 $476,037 $254,126 $118,640
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .61 .68 .73 .81 .86
------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.39) (.32) (.24) (.23) (.29)
------------------------------------------------------------------------------------------------
Portfolio turnover (%) 53.13 76.54 65.21 66.74 36.61
------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset and brokerage service
arrangements. (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, 2000
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 re-opened to new investors on April 28, 2000, offers
class A, class B, class C, class M and class Y shares. The fund began
offering class C shares on July 26, 1999. 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 C
shares do not pay a front-end sales charge, pay a lower ongoing
distribution fee than class B shares but have a one-year 1.00%
contingent deferred sales charge and do not convert to class A shares.
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 and class C shares. Class Y shares, which are
sold at net asset value, are generally subject to the same expenses as
class A, class B, class C 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 of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reporting period. 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 sales price on its principal exchange, or if no sales
are reported -- as in the case of some securities traded
over-the-counter -- the last reported bid price. Securities quoted in
foreign currencies are translated into U.S. dollars at the current
exchange rate. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates market
value. Other investments, including restricted securities, 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). Gains or losses on securities sold are determined
on the identified cost basis.
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. Non-cash dividends, if any, are recorded at the fair
market value of the securities received.
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. Investments in foreign securities involve certain risks, including
those related to economic instability, unfavorable political
developments, and currency fluctuations, not present with domestic
investments.
F) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.
G) 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, 2000, the fund had no borrowings against the line of credit.
H) 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.
I) 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, foreign currency gains
and losses, and unrealized gains and losses on certain futures
contracts. 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, 2000, the fund reclassified $252,170,660 to decrease
distributions in excess of net investment income and $13 to increase
paid-in-capital, with an decrease to accumulated net realized gains of
$252,170,673. The calculation of net investment income per share in the
financial highlights table excludes these adjustments.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based on the following annual rates: 0.70% of the
first $500 million of average net assets, 0.60% of the next $500
million, 0.55% of the next $500 million, 0.50% of the next $5 billion,
0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of
the next $5 billion, 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.
Effective July 1, 2000 the following annual rates will be in effect
after $41.5 billion: 0.39% of the next $5 billion, 0.38% of the next $5
billion and 0.37% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
For the year ended June 30, 2000, fund expenses were reduced by
$3,960,767 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 $8,401
has been allocated to the fund, and an additional fee for each Trustees
meeting attended. 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 a 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, class C 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 Retail Management, Inc., 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 Retail Management, Inc. at an annual rate up to
0.35%, 1.00%, 1.00% and 1.00% of the average net assets attributable to
class A, class B, class C and class M shares, respectively. The Trustees
have approved payment by the fund at an annual rate of 0.25%, 0.85%,
1.00% and 0.75% of the average net assets attributable to class A, class
B, class C and class M shares, respectively.
For the year ended June 30, 2000, Putnam Retail Management, Inc., acting
as underwriter received net commissions of $4,304,875 and $142,260 from
the sale of class A and class M shares, respectively, and received
$8,209,871 and $25,794 in contingent deferred sales charges from
redemptions of class B and class C shares, respectively. A deferred
sales charge of up to 1% is assessed on certain redemptions of class A
shares. For the year ended June 30, 2000, Putnam Retail Management,
Inc., acting as underwriter received $44,674 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended June 30, 2000, cost of purchases and proceeds from
sales of investment securities other than short-term investments
aggregated $17,242,830,990 and $15,472,020,560, respectively. There were
no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At June 30, 2000, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended June 30, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 72,591,101 $6,479,545,574
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 15,450,176 1,255,170,146
---------------------------------------------------------------------------
88,041,277 7,734,715,720
Shares
repurchased (49,365,989) (4,178,555,133
---------------------------------------------------------------------------
Net increase 38,675,288 $3,556,160,587
---------------------------------------------------------------------------
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, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 18,928,179 $1,574,034,629
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 10,607,897 815,111,339
---------------------------------------------------------------------------
29,536,076 2,389,145,968
Shares
repurchased (28,083,935) (2,351,741,945)
---------------------------------------------------------------------------
Net increase 1,452,141 $ 37,404,023
---------------------------------------------------------------------------
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)
---------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations)
to June 30, 2000
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 1,291,349 $117,360,127
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 5,221 422,953
---------------------------------------------------------------------------
1,296,570 117,783,080
Shares
repurchased (59,143) (5,563,414)
---------------------------------------------------------------------------
Net increase 1,237,427 $112,219,666
---------------------------------------------------------------------------
Year ended June 30, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 2,159,752 $175,108,567
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 650,665 51,370,000
---------------------------------------------------------------------------
2,810,417 226,478,567
Shares
repurchased (2,253,393) (178,919,840)
---------------------------------------------------------------------------
Net increase 557,024 $ 47,558,727
---------------------------------------------------------------------------
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, 2000
---------------------------------------------------------------------------
Class Y Shares Amount
---------------------------------------------------------------------------
Shares sold 20,748,825 $1,902,139,962
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,525,241 125,842,222
---------------------------------------------------------------------------
22,274,066 2,027,982,184
Shares
repurchased (10,477,817) (921,469,447)
---------------------------------------------------------------------------
Net increase 11,796,249 $1,106,512,737
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Note 5
Transactions with Affiliated Companies
Transactions during the year with companies in which the fund owned at least
5% of the voting securities were as follows:
<TABLE>
<CAPTION>
Purchase Sales Dividend Market
Affiliates cost cost Income Value
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bed Bath & Beyond, Inc. $ 32,273,975 $ 1,565,793 $ -- $ 286,103,125
Celestica, Inc. 33,886,598 78,201,082 -- --
Citadel Communications Corp. 79,546,227 4,114,483 -- 89,440,000
Extended Stay America, Inc. -- 75,838,693 -- --
Intuit, Inc. 7,651,972 -- -- --
ITT Educational Services, Inc. -- 56,314,761 -- --
J.D. Wetherspoon PLC 3,689 2,934,056 390,779 --
Medicis Pharmaceutical Corp.
Class A -- 26,221,371 -- --
Micrel, Inc. 5,854,458 -- -- --
Nextlink Communications, Inc.
Class A 214,741,477 1,751,800 -- 627,366,368
Pediatrix Medical Group, Inc. -- 32,455,977 -- --
Snyder Communications, Inc. -- 160,863,124 -- --
Stewart Enterprises, Inc. Class A -- 92,105,612 136,070 --
Sybron International Corp. 6,077,712 2,177,846 -- 106,729,739
Transkaryotic Therapies, Inc. 3,970,211 -- -- 41,895,000
USWEB 24,400,705 2,064,659 -- --
Westwood One, Inc. 31,545,367 -- -- --
Whittman-Hart Inc. 42,539,463 75,845,003 -- --
---------------------------------------------------------------------------------------------
Totals $482,491,854 $612,454,260 $526,849 $1,151,534,232
---------------------------------------------------------------------------------------------
</TABLE>
FEDERAL TAX INFORMATION
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the
Fund hereby designates $1,726,270,690 as capital gain, for its taxable
year ended June 30, 2000.
The fund has designated 2.12% of the distributions from net investment
income as qualifying for the dividends received deduction for
corporations.
The Form 1099 you receive in January 2001 will show the tax status of
all distributions paid to your account in calendar 2000.
OUR COMMITMENT TO QUALITY SERVICE
* CHOOSE AWARD-WINNING SERVICE
Putnam has won the DALBAR Award for Service nine times in the past ten
years and has won the Intermediary Service Award for advisors all three
years in which it has been given.*
* HELP YOUR INVESTMENTS GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market fund or from your checking or savings
account.+
* SWITCH FUNDS EASILY
Within the same class of shares, you can move money from one account to
another without a service charge. (This privilege is subject to change
or termination.)
* ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares any business day at
the then-current net asset value, which may be more or less than the
original cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a
helpful Putnam representative. To learn more about Putnam, visit our Web
site.
www.putnaminvestments.com
To make an additional investment in this or any other Putnam fund,
contact your financial advisor or call our toll-free number.
1-800-225-1581
*DALBAR, Inc., an independent research firm, presents the awards to financial
services firms that provide consistently excellent service.
+Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market.
THE PUTNAM FAMILY OF FUNDS
The following is a complete list of Putnam's open-end mutual funds.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you
invest or send money.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Capital Opportunities Fund
Europe Growth Fund
Global Equity Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Century Growth Fund
New Opportunities Fund
OTC & Emerging Growth Fund
Research Fund
Tax Smart Equity Fund
Technology Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Fund
Balanced Retirement Fund
Classic Equity Fund *
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
International Growth and Income Fund
New Value Fund
Small Cap Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund **
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK] **
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Putnam Growth and Income Fund II
[DBL. DAGGER] Closed to new investors. Some exceptions may apply.
Contact Putnam for details.
[SECTION MARK] Not available in all states.
**An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at
www.putnaminvestments.com.
FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
TRUSTEES
John A. Hill, 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, III
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
Stephen Oristaglio
Vice President
Daniel L. Miller
Vice President and Fund Manager
Jeffrey R. Lindsey
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
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.putnaminvestments.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
---------------------
PRST STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
----------------------------------------------------------------------------
Putnam New Opportunities Fund
Supplement to Annual Report dated 6/30/00
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, C, and M shares, which are discussed more extensively in the annual
report.
ANNUAL RESULTS AT A GLANCE
----------------------------------------------------------------------------
Total return for periods ended 6/30/00
NAV
1 year 60.88%
5 years 285.10
Annual average 30.95
Life of fund (since class A inception, 8/31/90) 1344.84
Annual average 31.22
Share value: NAV
6/30/99 $66.49
6/30/00 $98.28
----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 -- $7.30 $7.30
----------------------------------------------------------------------------
Please note that past performance is not indicative of 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, typically 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.
AN013-63298 852/358/983/526 8/00
