Putnam
Growth
Opportunities
Fund
SEMIANNUAL REPORT
January 31, 1998
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Putnam Growth Opportunities Fund's class A shares ranked 77 out of
653 growth funds (top 12%) tracked by Lipper Analytical Services for the
2-year period ended January 31, 1998. For the 1-year period, the fund's
class A shares ranked 254 out of 846 growth funds.*
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
12 Portfolio holdings
16 Financial statements
* Lipper rankings are based on total return performance, vary over time,
and do not include the effects of sales charges. The fund's class B and
class M shares were not ranked. Past performance is not indicative of
future results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
As Putnam Growth Opportunities Fund began its new fiscal year last July, both
domestic and international equity markets were still strong overall but
somewhat inverted, with old-line conservative stocks outpacing young upstarts.
This turnabout had occurred as investors, growing increasingly cautious about
the durability of the aging global bull market, sought refuge in quality. The
situation was exacerbated when last fall's Asian currency crisis sent the
world's stock markets reeling.
Your fund's focus on high-quality growth stocks helped it weather the ensuing
turmoil. While positive, the young fund's semiannual results nevertheless
might seem somewhat subdued when compared with results posted for prior
reporting periods. Past performance, of course, should never be taken as
assurance of future results; nevertheless, investors with a long-term
perspective might find the fund's 12-month and lifetime results more
appropriate gauges of its potential over time.
In the following report, your fund's managers discuss performance thus far in
fiscal 1998 and comment on prospects for the second half.
Respectfully yours,
/S/GEORGE PUTNAM
Chairman of the Trustees
March 18, 1998
Report from the Fund Managers
Carol C. McMullen
Jeffrey R. Lindsey
When Putnam Growth Opportunities Fund began its new fiscal year six months
ago, we realized that the record-breaking momentum of large-company stocks was
unlikely to continue indefinitely. We noted in our last report, however, that
your fund's strategy is to target companies that we believe will maintain
rapid growth rates even in shifting market conditions. As it turns out, the
first half of fiscal 1998 was dominated by "shifting market conditions."
During the six months ended January 31, 1998, investors' nerves were tested by
turbulence throughout the world's markets, largely resulting from escalating
problems in Asian economies. Despite this environment, your fund found
strength in its investment strategy and the types of companies in which it
invests. While many U.S. companies suffered stock price declines and earnings
disappointments, many of your fund's holdings reported relatively strong sales
and earnings that were uninterrupted by the Asian turmoil. Although the
results for the six-month period fall somewhat short of the fund's more
vibrant earlier results, it is important to note its stronger long-term
returns. For complete performance information, please refer to the summary
that begins on page 9.
* TECHNOLOGY SECTOR DAMPENED BY MARKET VOLATILITY
Technology stocks were among the hardest hit by the recent market turbulence,
especially those of companies that provide their products to Asian markets.
Even prior to the Asian crisis, however, the U.S. market was particularly
unforgiving of the technology sector, and the stocks of companies with even
the slightest shortfall in earnings were punished harshly. While this
environment has been a challenging one, we were pleased with the performance
of several technology holdings, including Microsoft Corp. and Computer
Associates. When looking at the powerful and ubiquitous Microsoft, it may be
hard to believe there remains potential for additional rapid growth. But
Microsoft's strength lies in its ability to identify -- and dominate -- the
growth phases of the future. A recent example is the company's role in
integrating computer software with television and its purchase of WebTV
Networks, Inc., which allows access to the World Wide Web using a television
set.
Computer Associates, another stellar holding during the period, is a developer
and marketer of computer software. The company has seen a skyrocketing demand
for its products as a result of the successful adaptation of its mainframe
software to the client/server environment.
Although we reduced the fund's overall technology holdings during the period,
we added some companies whose low stock prices we believe represented
compelling opportunities. Texas Instruments, a giant in the battered
semiconductor industry, is a noteworthy example. While these holdings, along
with others discussed in this report, were viewed favorably at the end of the
fiscal period, all are subject to review and adjustment in accordance with the
fund's investment strategy and may vary in the future.
* RETAIL STOCKS BOOSTED BY ECONOMIC CONDITIONS
Continued strength in the U.S. economy and relatively low exposure to the
problems in Asia provided a significant boost for retail stocks during the
period. The best performers in the portfolio were those of value-oriented
companies such as Wal-Mart Stores and Home Depot. Wal-Mart operates a chain of
discount department stores, including Sam's Club warehouse membership stores
and Wal-Mart Supercenters, a supermarket/department store combination. In
addition, the company recently acquired Wertkauf, a chain of one-stop shopping
centers in Germany. Home Depot, one of the fastest-growing large retailers in
the United States, has benefited from low interest rates, which have
strengthened the housing market and are prompting new home construction,
remodeling, and home repairs.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Pharmaceuticals and biotechnology 14.0%
Retail 11.2%
Financial services 8.8%
Computer software 6.6%
Electronics and electrical equipment 5.7%
Footnote reads:
*Based on net assets as of 1/31/98. Holdings will vary over time.
* NEW GROWTH POTENTIAL FROM CONSUMER FRANCHISES
Several recharged consumer franchises contributed to your fund's performance
in the first half of fiscal 1998. The growth potential of CBS Corporation, for
example, has increased significantly since the company separated from
Westinghouse Electric and became a pure broadcasting business. CBS is now
better poised to benefit from opportunities in the rapidly growing (and
recently deregulated) broadcasting industry. Now that the Telecommunications
Act of 1996 has loosened restrictions on cable, TV, and radio companies, CBS
has been able to build its business by acquiring stations in several markets.
The company is also working to improve its television programming and is
launching new cable networks.
Entertainment giant Walt Disney Company, a new addition to the portfolio, also
has impressive growth potential thanks to its constant introduction of
creative new initiatives. For example, Disney's Animal Kingdom, the fourth
major theme park at Walt Disney World Resort, will open in April. The park is
almost five times the size of Disney's Magic Kingdom and will be the largest
zoo in the world. The park will expand in phases through the end of the
century. Another promising venture is the Disney Cruise Line, due later in
1998 and offering adult and family cruise ship vacations.
* PHARMACEUTICALS CONTINUE TO DELIVER
Pharmaceutical companies continued to represent a significant portion of the
portfolio and maintained their status as growth powerhouses during the period.
Two holdings worth noting are Warner-Lambert and Schering-Plough. During the
period, we took advantage of a buying opportunity after Warner-Lambert stock
faced a short-term setback. In December, the company announced that its new
diabetes drug Rezulin would require stricter medical monitoring because of
liver disorders in a small number of the drug's users. Glaxo Wellcome,
marketer of the drug in Great Britain, suspended distribution temporarily and
several Wall Street analysts lowered their earnings estimates for
Warner-Lambert. When the stock price dropped more than 18% in one day, we
bought additional shares. We believed investors may have overreacted to a
short-term setback and that Warner-Lambert remained a fundamentally strong
company with solid long-term growth potential. Our decision proved profitable;
the price of Warner-Lambert stock has since reached an all-time high. In
addition to Rezulin, Warner-Lambert has had great success with another
innovative drug, Lipitor, a treatment to lower cholesterol.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
General Electric Co.
Electronics and electrical equipment
Microsoft Corp.
Computer software
Pfizer, Inc.
Pharmaceuticals
Warner-Lambert Co.
Pharmaceuticals
Schering-Plough Corp.
Pharmaceuticals
Bristol-Myers Squibb Co.
Pharmaceuticals
Procter & Gamble
Consumer products
Computer Associates International, Inc.
Computer software
Wal-Mart Stores, Inc.
Retail
The Home Depot, Inc.
Retail
Footnote reads:
These holdings represent 33.1% of the fund's net assets as of 1/31/98.
Portfolio holdings will vary over time.
Schering-Plough, a new addition to the fund's pharmaceutical sector, has built
a strong line of new products. The company is best known for Claritin, the
world's number-one prescription antihistamine, but is also developing drugs
for the treatment of hepatitis, brain tumors, and diabetes.
* CONTINUED FOCUS ON STOCK SELECTION
As the second half of the fiscal year begins, we are anticipating more
volatility in world markets. We remain cautiously optimistic about the U.S.
economy and are in hopes that it will serve as a pillar of strength by
continuing to offer moderate growth, low inflation, and low interest rates. As
always, we will continue to target the best large growth companies, seeking
financially strong, well-established leaders with extraordinary growth
potential.
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 1/31/98, there is no guarantee the fund will continue to hold
these securities in the future. The fund's concentrated portfolio may add a
measure of volatility to performance, as major fluctuations in any one holding
will likely affect the fund more than a fund with greater diversification.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Growth Opportunities Fund is designed for investors seeking capital
appreciation by investing primarily in stocks of well-established,
large-capitalization companies that Putnam believes will benefit from
promising growth themes worldwide.
TOTAL RETURN FOR PERIODS ENDED 1/31/98
Class A Class B Class M
(inception date) (10/2/95) (8/1/97) (8/1/97)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 2.29% -3.62% 2.07% -2.93% 2.14% -1.40%
- ------------------------------------------------------------------------------
1 year 24.20 17.08 23.17 18.17 23.48 19.17
- ------------------------------------------------------------------------------
Life of fund 80.98 70.55 77.13 74.13 78.05 71.87
Annual average 28.99 25.75 27.81 26.88 28.09 26.17
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/98
Standard & Russell
Standard & Poor's 1000 Consumer
Poor's Barra Growth Growth Price
500 Index Index Index Index
- ------------------------------------------------------------------------------
6 months 3.56% 4.97% 3.28% 0.69%
- ------------------------------------------------------------------------------
1 year 26.91 30.88 25.58 1.57
- ------------------------------------------------------------------------------
Life of fund 76.59 84.78 74.09 5.48
Annual average 27.61 30.03 26.83 2.31
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% and 3.50%, respectively. Class B share returns for
the 1-year and life-of-fund periods reflect the applicable contingent
deferred sales charge (CDSC), which is 5% in the first year, declines to
1% in the sixth year, and is eliminated thereafter. Returns shown for
class B and class M shares for periods prior to their inception are
derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and, in the case of class B and class M shares,
the higher operating expenses applicable to such shares. All returns
assume reinvestment of distributions at NAV and represent past
performance; they do not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost. An expense limitation
was in effect during this performance period; without the limitation,
total returns would have been lower.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 1/31/98
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term $0.013 $0.013 $0.013
- ------------------------------------------------------------------------------
Short-term 0.012 0.012 0.012
- ------------------------------------------------------------------------------
Total $0.025 $0.025 $0.025
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
$13.38 $14.20 -- -- --
- ------------------------------------------------------------------------------
13.66 14.49 13.62 13.63 14.12
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 12/31/97
(most recent calendar quarter)
Class A Class B Class M
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 9.53% 3.20% 9.11% 4.11% 9.19% 5.41%
- ------------------------------------------------------------------------------
1 year 30.03 22.54 28.89 23.89 29.11 24.55
- ------------------------------------------------------------------------------
Life of class 80.98 67.05 73.49 70.49 74.39 68.34
Annual average 28.99 25.62 27.75 26.76 28.04 26.05
- ------------------------------------------------------------------------------
All returns assume reinvestment of distributions at NAV and represent past
performance; they do not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost. Please see the
preceding page for the method of performance calculation.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the maximum 5.75% sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B shares and assumes redemption at the end of the
period. Your fund's CDSC declines from a 5% maximum during the first year
to 1% during the sixth year. After the sixth year, the CDSC no longer
applies.
COMPARATIVE BENCHMARKS
Standard & Poor's 500 Index* is an unmanaged list of common stocks that is
frequently used as a general measure of stock market performance.
Standard & Poor's Barra/Growth Index* is a capitalization-weighted index
of all common stocks within the S&P 500 with high price-earnings ratios.
Russell 1000 Growth Index*+ The Russell 1000 Growth Index contains those
Russell 1000 securities with a greater-than-average growth orientation.
Companies in this index tend to exhibit higher price-to-book and
price-earnings ratios, lower dividend yields and higher forecasted growth
values than the Russell 1000 Value Index. (The Russell 1000 Index is
composed of the 1000 largest companies in the Russell 3000 Index.)
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take in account brokerage fees or taxes. Securities
in the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
+This index replaces the S&P Barra/Growth Index as the fund's benchmark,
since Management believes it provides a better representation of the
strategy of Putnam Growth Opportunities Fund.
Portfolio of investments owned
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (99.6%) *
NUMBER OF SHARES VALUE
Banks (0.5%)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
25,900 First Union Corp. $ 1,244,818
Broadcasting (2.4%)
- ------------------------------------------------------------------------------------------------------------
181,500 CBS Corp. 5,433,656
Business Services (3.5%)
- ------------------------------------------------------------------------------------------------------------
155,200 Cendant Corp. + 5,257,400
62,700 Pitney Bowes, Inc. 2,876,362
--------------
8,133,762
Cable Television (1.5%)
- ------------------------------------------------------------------------------------------------------------
126,800 Tele-Communications, Inc. Class A + 3,550,400
Computer Software (6.6%)
- ------------------------------------------------------------------------------------------------------------
118,100 Computer Associates Intl., Inc. 6,281,443
57,600 Microsoft Corp. + 8,593,200
6,600 PeopleSoft, Inc. + 231,000
--------------
15,105,643
Computers (3.8%)
- ------------------------------------------------------------------------------------------------------------
114,800 Compaq Computer Corp. 3,451,175
164,300 EMC Corp. + 5,350,018
--------------
8,801,193
Consumer Products (4.1%)
- ------------------------------------------------------------------------------------------------------------
39,400 Colgate-Palmolive Co. 2,886,050
83,100 Procter & Gamble Co. 6,512,963
--------------
9,399,013
Cosmetics (1.6%)
- ------------------------------------------------------------------------------------------------------------
67,000 Estee Lauder Cos. Class A 3,680,813
Electronics and Electrical Equipment (5.7%)
- ------------------------------------------------------------------------------------------------------------
134,200 General Electric Co. 10,400,500
50,000 Illinois Tool Works, Inc. 2,784,375
--------------
13,184,875
Entertainment (4.5%)
- ------------------------------------------------------------------------------------------------------------
41,400 Disney (Walt) Productions, Inc. 4,411,687
91,900 Time Warner, Inc. 5,898,831
--------------
10,310,518
Environmental Control (1.0%)
- ------------------------------------------------------------------------------------------------------------
63,100 USA Waste Services, Inc. + 2,318,925
Financial Services (8.8%)
- ------------------------------------------------------------------------------------------------------------
49,800 American Express Co. 4,167,637
38,000 Fannie Mae 2,346,500
164,000 MBNA Corp. 5,094,250
69,900 Morgan Stanley, Dean Witter, Discover and Co. 4,080,413
93,400 Travelers Group Inc. 4,623,300
--------------
20,312,100
Food and Beverages (4.6%)
- ------------------------------------------------------------------------------------------------------------
131,700 Coca-Cola Enterprises, Inc. 4,197,938
140,900 PepsiCo, Inc. 5,081,206
24,700 Sara Lee Corp. 1,347,694
--------------
10,626,838
Health Care Information Systems (1.9%)
- ------------------------------------------------------------------------------------------------------------
83,900 HBO & Co. 4,389,019
Health Care Services (3.3%)
- ------------------------------------------------------------------------------------------------------------
55,500 Cardinal Health, Inc. 4,297,781
144,400 HEALTHSOUTH Corp. + 3,239,975
--------------
7,537,756
Insurance (1.4%)
- ------------------------------------------------------------------------------------------------------------
30,000 American International Group, Inc. 3,309,375
Lodging (2.0%)
- ------------------------------------------------------------------------------------------------------------
65,600 Marriott International, Inc. 4,534,600
Medical Supplies and Devices (4.1%)
- ------------------------------------------------------------------------------------------------------------
68,100 Medtronic, Inc. 3,477,356
131,900 Tyco International Ltd. 5,853,063
--------------
9,330,419
Networking Equipment (2.4%)
- ------------------------------------------------------------------------------------------------------------
88,950 Cisco Systems, Inc. + 5,609,409
Oil and Gas (1.1%)
- ------------------------------------------------------------------------------------------------------------
14,800 Halliburton Co. 665,075
25,800 Schlumberger Ltd. 1,901,138
--------------
2,566,213
Pharmaceuticals and Biotechnology (14.0%)
- ------------------------------------------------------------------------------------------------------------
75,400 Bristol-Myers Squibb Co. 7,516,438
103,000 Pfizer, Inc. 8,439,562
110,200 Schering-Plough Corp. 7,975,725
54,500 Warner-Lambert Co. 8,202,250
--------------
32,133,975
REIT's (Real Estate Investment Trust) (0.8%)
- ------------------------------------------------------------------------------------------------------------
34,700 Starwood Lodging Trust 1,886,813
Retail (11.2%)
- ------------------------------------------------------------------------------------------------------------
81,100 Costco Companies, Inc. + 3,517,713
87,400 CVS Corp. 5,730,163
101,700 Home Depot, Inc. (The) 6,133,781
68,000 Rite Aid Corp. 4,245,750
156,200 Wal-Mart Stores, Inc. 6,228,475
--------------
25,855,882
Semiconductors (1.8%)
- ------------------------------------------------------------------------------------------------------------
77,800 Texas Instruments, Inc. 4,249,825
Telecommunication Equipment (1.2%)
- ------------------------------------------------------------------------------------------------------------
59,800 Northern Telecom Ltd. (Canada) 2,698,475
Telephone Services (3.5%)
- ------------------------------------------------------------------------------------------------------------
54,900 American Telephone & Telegraph Co. 3,438,113
77,700 Sprint Corp. 4,613,438
--------------
8,051,551
Wireless Communications (2.3%)
- ------------------------------------------------------------------------------------------------------------
118,100 AirTouch Communications, Inc. + 5,181,637
--------------
Total Common Stocks (cost $215,076,906) $ 229,437,503
SHORT-TERM INVESTMENTS (1.2%) * (cost $2,791,864)
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$2,791,000 Interest in $363,996,000 joint repurchase agreement
dated January 30, 1998 with Morgan Stanley Group Inc.
due February 2, 1998 with respect to various U.S. Treasury
obligations -- maturity value of $2,792,295 for an
effective yield of 5.57% $ 2,791,864
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $217,868,770) *** $232,229,367
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $230,346,537.
*** The aggregate identified cost on a tax basis is $217,869,629, resulting in gross unrealized
appreciation and depreciation of $17,113,946 and $2,754,208, respectively, or net unrealized
appreciation of $14,359,738.
+ Non-income-producing security.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31, 1998 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $217,868,770) (Note 1) $232,229,367
- ---------------------------------------------------------------------------------------------------
Cash 315,403
- ---------------------------------------------------------------------------------------------------
Dividends receivable 95,304
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 3,336,216
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 5,027,348
- ---------------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 4,983
- ---------------------------------------------------------------------------------------------------
Total assets 241,008,621
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 9,965,151
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 175,900
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 264,143
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 50,122
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 1,622
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 583
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 101,883
- ---------------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 8,843
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 93,837
- ---------------------------------------------------------------------------------------------------
Total liabilities 10,662,084
- ---------------------------------------------------------------------------------------------------
Net assets $230,346,537
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $220,148,985
- ---------------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (343,081)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (3,819,964)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 14,360,597
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $230,346,537
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($110,589,156 divided by 8,093,897 shares) $13.66
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $13.66)* $14.49
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($109,528,573 divided by 8,044,222 shares)** $13.62
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($10,228,808 divided by 750,402 shares) $13.63
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $13.63)* $14.12
- ---------------------------------------------------------------------------------------------------
* 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 contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended January 31,1998 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $2,526) $ 450,250
- --------------------------------------------------------------------------------------------------
Interest 96,905
- --------------------------------------------------------------------------------------------------
Total investment income 547,155
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 418,842
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 208,674
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 2,718
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 3,510
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 73,112
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 266,565
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 21,086
- --------------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 626
- --------------------------------------------------------------------------------------------------
Reports to shareholders 21,290
- --------------------------------------------------------------------------------------------------
Registration fees 65,557
- --------------------------------------------------------------------------------------------------
Auditing 15,370
- --------------------------------------------------------------------------------------------------
Legal 2,553
- --------------------------------------------------------------------------------------------------
Postage 4,799
- --------------------------------------------------------------------------------------------------
Other 5,590
- --------------------------------------------------------------------------------------------------
Fees waived by Manager (Note 2) (150,558)
- --------------------------------------------------------------------------------------------------
Total expenses 959,734
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (69,498)
- --------------------------------------------------------------------------------------------------
Net expenses 890,236
- --------------------------------------------------------------------------------------------------
Net investment loss (343,081)
- --------------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (3,808,295)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 13,117,617
- --------------------------------------------------------------------------------------------------
Net gain on investments 9,309,322
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 8,966,241
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
January 31 July 31
1998* 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (343,081) $ 7,012
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (3,808,295) 410,793
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 13,117,617 1,080,288
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 8,966,241 1,498,093
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income
Class A -- (9,336)
- ----------------------------------------------------------------------------------------------------------------------
Class B -- --
- ----------------------------------------------------------------------------------------------------------------------
Class M -- --
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (169,801) (317,426)
- ----------------------------------------------------------------------------------------------------------------------
Class B (163,947) --
- ----------------------------------------------------------------------------------------------------------------------
Class M (15,005) --
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 216,343,952 1,567,224
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 224,961,440 2,738,555
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 5,385,097 2,646,542
- ----------------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment loss
of $343,081 and $--, respectively) $230,346,537 $5,385,097
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited
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
- ---------------------------------------------------------------------------------------------------------------------------
Six months
ended Year For the period
Per-share January 31 ended Oct. 2, 1995+
operating performance (Unaudited) July 31 to July 31
- ---------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $13.38 $10.15 $8.50
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.01)(a)(d) .03(a) .03(a)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .32 4.43 1.67
- ---------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .31 4.46 1.70
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------
From net
investment income -- (.04) (.04)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.03) (1.19) (.01)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.03) (1.23) (.05)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.66 $13.38 $10.15
- ---------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(b) 2.29* 47.34 20.08*
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $110,589 $5,385 $2,647
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .63*(a) 1.05(a) .89*(a)
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.11)*(a) .20(a) .30*(a)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 47.81* 145.10 151.15*
- ---------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0353 $.0463 $.0414
- ---------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Reflects an expense limitation in effect during the period ( Note 2). As a result of such limitation,
expenses of the fund reflect a reduction of $0.01 per share for class A, B and M, respectively for
the period January 31, 1998 and $0.11 per share for the period ended July 31, 1997
and July 31, 1996 respectively.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) 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
- -------------------------------------------------------------------------------------------------------------------
For the period
August 1, 1997+
Per-share to January 31
operating performance (Unaudited)
- -------------------------------------------------------------------------------------------------------------------
1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $13.38
- -------------------------------------------------------------------------------------------------------------------
Investment operations
- -------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.06)(a)(d)
- -------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .33
- -------------------------------------------------------------------------------------------------------------------
Total from
investment operations .27
- -------------------------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------------------------
From net
investment income --
- -------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.03)
- -------------------------------------------------------------------------------------------------------------------
Total distributions (.03)
- -------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.62
- -------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(b) 2.07*
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $109,529
- -------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.00*(a)
- -------------------------------------------------------------------------------------------------------------------
Ratio of net investment (loss)
to average net assets (%) (.49)*(a)
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 47.81*
- -------------------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0353
- -------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Reflects an expense limitation in effect during the period (Note 2). As a result of such limitation,
expenses of the fund reflect a reduction of $0.01 per share for class A, B and M, respectively for
the period January 31, 1998 and $0.11 per share for the period ended July 31, 1997
and July 31, 1996 respectively.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) Per share net investment loss has been determined on the basis of the weighted average number
of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ----------------------------------------------------------------------------------------------------------------
For the period
August 1, 1997+
Per-share to January 31
operating performance (Unaudited)
- ----------------------------------------------------------------------------------------------------------------
1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $13.38
- ----------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------
Net investment loss (.05)(a)(d)
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .33
- ----------------------------------------------------------------------------------------------------------------
Total from
investment operations .28
- ----------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------
From net
investment income --
- ----------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.03)
- ----------------------------------------------------------------------------------------------------------------
Total distributions (.03)
- ----------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.63
- ----------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(b) 2.14*
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $10,229
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .88*(a)
- ----------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.36)*(a)
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 47.81*
- ----------------------------------------------------------------------------------------------------------------
Average commission
rate paid $.0353
- ----------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Reflects an expense limitation in effect during the period (Note 2). As a result of such limitation,
expenses of the fund reflect a reduction of $0.01 per share for class A, B and M, respectively for
the period January 31, 1998 and $0.11 per share for the period ended July 31, 1997
and July 31, 1996 respectively.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) 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
January 31, 1998 (Unaudited)
Note 1
Significant accounting policies
Putnam Growth Opportunities Fund (the "fund") is one of a series of Putnam
Investment Funds (the "trust") which 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 primarily
in stocks of well-established, large-capitalization companies that Putnam
Investment Management, Inc. ("Putnam Management"), the fund's manager, a
wholly-owned subsidiary of Putnam Investments, Inc. believes will benefit from
major long-term economic trends, business conditions, and/or consumer
behavior.
The fund offers class A, class B and class M shares. Class B and Class M
shares commenced operations on August 1, 1997. Class A shares are sold with a
maximum front-end sales charge of 5.75%. Class B shares, which convert to
class A shares after approximately eight years, do not pay a front-end sales
charge, but pay a higher ongoing distribution fee than class A shares, and are
subject to a contingent deferred sales charge, if those shares are redeemed
within six years of purchase. Class M shares are sold with a maximum front-end
sales charge of 3.50% and pay an ongoing distribution fee that is lower than
class B shares and higher than class A shares.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class (including
the distribution fees applicable to such class). Each class votes as a class
only with respect to its own distribution plan or other matters on which a
class vote is required by law or determined by the Trustees. Shares of each
class would receive their pro-rata share of the net assets of the fund, if the
fund were liquidated. In addition, the Trustees declare separate dividends on
each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally accepted
accounting principles and requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or, if no sales are reported -- as in the case of some
securities traded over-the-counter -- the last reported bid price. Short-term
investments having remaining maturities of 60 days or less are stated at
amortized cost, which approximates market value, and other investments are
stated at fair value following procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other registered
investment companies and certain other accounts managed by Putnam Management.
These balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through its
custodian, receives delivery of the underlying securities, the market value of
which at the time of purchase is required to be in an amount at least equal to
the resale price, including accrued interest. Putnam Management is responsible
for determining that the value of these underlying securities is at all times
at least equal to the resale price, including accrued interest.
D) Security transactions and related investment income Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Interest income is recorded on the accrual basis. Dividend income
is recorded on the ex-dividend date except that certain dividends from foreign
securities are recorded as soon as the fund is informed of the ex-dividend
date.
E) 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 period ended January 31, 1998, the fund
had no borrowings against the line of credit.
F) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
G) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date. Capital
gain distributions, if any, are recorded on the ex-dividend date and paid at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. 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.
H) Expenses of the trust Expenses directly charged or attributable to any fund
will be paid from the assets of that fund. Generally, expenses of the trust
will be allocated among and charged to the assets of each fund on a basis that
the Trustees deem fair and equitable, which may be based on the relative
assets of each fund or the nature of the services performed and relative
applicability to each fund.
I) Unamortized organization expenses Expenses incurred by the fund in
connection with its organization, its registration with the Securities and
Exchange Commission and with various states and the initial public offering of
its shares were $8,843. These expenses are being amortized on projected net
asset levels over a five-year period. The fund will reimburse Putnam
Management for the payment of these expenses.
Note 2
Management fee, administrative
services, and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund. Such
fee is based on the following annual rates: 0.70% of the first $500 million of
average net assets, 0.60% of the next $500 million, 0.55% of the next $500
million, 0.50% of the next $5 billion, 0.475% of the next $5 billion, 0.455%
of the next $5 billion, 0.44% of the next $5 billion, and 0.43% thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through July 31, 1998, to the extent that
expenses of the fund (exclusive of brokerage commissions, interest, taxes,
deferred organizational and extraordinary expense, credits from Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. and
payments under the Trust's distribution plan) would exceed an annual rate of
1.00% of the fund's average net assets.
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 PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a division
of PFTC.
For the six months ended January 31, 1998, fund expenses were reduced by
$69,498 under expense offset arrangements with PFTC. 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 $650 has
been allocated to the fund, and an additional fee for each Trustee's meeting
attended. Trustees who are not interested persons of Putnam Management and who
serve on committees of the Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which
allows the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund and are
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of Trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to compensate
Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments
Inc., for services provided and expenses incurred by it in distributing shares
of the fund. The Plans provide for payments by the fund to Putnam Mutual Funds
Corp. at an annual rate up to 0.35%, 1.00%, and 1.00% of the average net
assets attributable to class A, class B, and class M shares, respectively. The
Trustees currently limit payment by the fund to an annual rate of 0.25%, 1.00%
and 0.75% of the average net assets attributable to class A, class B and class
M shares respectively.
For the six months ended January 31, 1998, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $539,167 and $31,145 from the sale
of class A and class M shares, respectively and received $28,344 in contingent
deferred sales charges from redemptions of class B shares. A deferred sales
charge of up to 1% is assessed on certain redemptions of class A shares. For
the six months ended January 31, 1998, Putnam Mutual Funds Corp., acting as
underwriter received $297 on class A redemptions.
Note 3
Purchase and sales of securities
During the six months ended January 31, 1998, purchases and sales of
investment securities other than short-term investments aggregated
$270,907,549 and $56,058,128, respectively. There were no purchases and sales
of U.S. government obligations. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the identified
cost basis.
Note 4
Capital shares
At January 31, 1998, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 8,810,028 $115,601,096
- ------------------------------------------------------------
Shares issued
in connection
with reinvestment
of distribution 12,801 164,367
- ------------------------------------------------------------
8,822,829 115,765,463
Shares
repurchased (1,131,497) (14,818,680)
- ------------------------------------------------------------
Net increase 7,691,332 $100,946,783
- ------------------------------------------------------------
Year ended
July 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 116,963 $1,315,416
- ------------------------------------------------------------
Shares issued
in connection
with reinvestment
of distribution 31,358 326,433
- ------------------------------------------------------------
148,321 1,641,849
Shares
repurchased (6,623) (74,625)
- ------------------------------------------------------------
Net increase 141,698 $1,567,224
- ------------------------------------------------------------
For the period
August 1, 1997
(commencement of
operations) to
January 31, 1998
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 8,911,689 $116,940,896
- ------------------------------------------------------------
Shares issued
in connection
with reinvestment
of distribution 12,261 156,937
- ------------------------------------------------------------
8,923,950 117,097,833
Shares
repurchased (879,728) (11,538,503)
- ------------------------------------------------------------
Net increase 8,044,222 $105,559,330
- ------------------------------------------------------------
For the period
August 1, 1997
(commencement of
operations) to
January 31, 1998
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 805,933 $10,578,484
- ------------------------------------------------------------
Shares issued
in connection
with reinvestment
of distribution 1,156 14,812
- ------------------------------------------------------------
807,089 10,593,296
Shares
repurchased (56,687) (755,457)
- ------------------------------------------------------------
Net increase 750,402 $9,837,839
- ------------------------------------------------------------
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
John J. Morgan, Jr.
Vice President
Carol C. McMullen
Vice President and Fund Manager
Jeffrey R. Lindsey
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Growth
Opportunities Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales charges,
investment objectives, and operating policies of the fund, and the most recent
copy of Putnam's Quarterly Performance Summary. For more information or to
request a prospectus, call toll free: 1-800-225-1581. You can also learn more
at Putnam Investments' website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution; are not insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency;
and involve risk, including the possible loss of the principal amount
invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------------
SA061 40529-2AP 3/98
