Putnam
Growth
Opportunities
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
1-31-99
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Putnam Growth Opportunities Fund's class A shares ranked 5 out of 134
large-cap growth funds (top 4%) tracked by Lipper Analytical Services for
the 3-year period and 16 out of 218 large-cap growth funds (top 8%) for
the 1-year period ended January 31, 1999.*
* "The fund's focus on large, fast-growing, and financially strong
companies has put it squarely in an area the stock market now favors."
-- The Boston Globe, March 1, 1999
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
12 Portfolio holdings
15 Financial statements
* Past performance is not indicative of future results. Lipper is an
industry research firm whose rankings are based on total return
performance, vary over time, and do not reflect the effects of sales
charges. The fund was not ranked for longer periods. Performance of other
share classes will vary.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Basking in the warmth of continued investor partiality toward large,
financially strong companies, Putnam Growth Opportunities Fund posted
solid returns for the first half of fiscal 1999. The fact that the
companies in which the fund invests also possess strong track records for
growth surely must have brought smiles to shareholders' faces, given the
rocky path many other growth-oriented investments continued to travel
during the same period.
As fund managers Jeffrey Lindsey and Beth Cotner explain in the following
report, the technology sector remained the primary driver of the fund's
performance. It is interesting to note how many of the companies that Jeff
and Beth specifically discuss can attribute their attainment of
large-capitalization stature to the explosion of the Internet into a truly
global -- and still expanding -- presence.
Your fund's portfolio reflects other growth patterns as well. Retailers
have benefited from consumer optimism about the economy, and inflation and
drug companies are prospering by attending to the aches and pains of an
aging baby boom generation. Seeking out the opportunities presented by
such trends is the principal task of your fund's management team.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
March 17, 1999
Report from the Fund Managers
Jeffrey R. Lindsey
C. Beth Cotner
Large-company stocks began Putnam Growth Opportunities Fund's fiscal year
by continuing their two-year marathon and then, like a long-distance
runner, seemed to hit the proverbial wall. Fortunately, by the end of the
six-month period ended January 31, 1999, they had recovered their momentum
and were back on pace. Nevertheless, the period presented investors with a
tough lesson in stock market volatility, as major market indexes hit
record-setting highs, fell to sobering lows, and then rose again.
Following one of its most volatile years in over a decade, the U.S. equity
market finished 1998 with double-digit returns for the fourth consecutive
year. The market's strength continued into January as your fund reached
its fiscal year midpoint. Overall our emphasis on large-capitalization
stocks proved successful during the period.
We believe, however, it is the type of large-cap company we concentrate on
rather than simply our large-cap orientation that enabled your fund to
withstand the effects of recent market volatility -- in particular, the
fund's focus on companies that tend to dominate their industries with
large and growing market shares. These companies typically have dynamic
management teams and many are benefiting from the consolidation trend
affecting many industries. For the 6 months ended January 31, 1999, your
fund's class A shares provided a total return of 25.01% at net asset value
and 17.80% at public offering price. For complete performance information,
please refer to the summary that begins on page 9.
* INCREASED EMPHASIS ON TECHNOLOGY SECTOR
The most significant trend during the period was the fund's increased
emphasis on the technology sector, in which many large companies
demonstrated dramatic earnings growth over the period. During the period,
fund performance was boosted by several key technology holdings, including
Sun Microsystems, Inc., Microsoft Corp., and EMC Corp. A producer of
computer networking products, hardware, software, and services, Sun
Microsystems has benefited from strong sales of its workstations, servers,
and data storage products. The company continues to unveil promising new
products, such as Jini software, which seeks to make connecting any
computing device to a network as easy as plugging in a telephone. This
software has received significant attention within the industry and Sun
expects that 35 companies, including Philips Electronics and
Hewlett-Packard, will be among the first to license Jini software.
We believe that Microsoft still offers the potential for rapid growth;
however, the company's strength lies in its ability to identify and
dominate the growth phases of the future. One 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.
As computer systems worldwide become increasingly complex and require more
space to store data, fund holding EMC Corp. has exhibited explosive
growth. Much of the need for EMC's products has been triggered by the
Internet and by large corporations looking for data storage solutions that
are dependable, flexible, and responsive. EMC is expected to continue
reaping the rewards of the Internet and e-commerce, as 8 of the 10 largest
Internet service providers already use EMC storage solutions. While these
holdings, along with others discussed in this report, were viewed
favorably at the end of the fiscal period, all are subject to review and
adjustment in accordance with the fund's investment strategy and may vary
in the future.
[GRAPHIC OMITTED: TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Retail 16.2%
Pharmaceuticals and
biotechnology 13.1%
Computer software 12.7%
Computers 8.1%
Telecommunications
equipment 7.5%
Footnote reads:
*Based on net assets as of 1/31/99. Holdings will vary over time.
* RETAIL STOCKS CONTINUE TO BENEFIT FROM STRONG ECONOMY
Continued strength in the U.S. economy provided a significant boost for
retail stocks. During the six-month period, U.S. retail sales rose each
month, led by department and clothing stores. January sales gains, on top
of a robust December, suggested that consumer demand had a good deal of
momentum heading into the second half of your fund's fiscal year.
Consumer spending rose in 1998 at its fastest pace in 14 years and is not
expected to slow much in the months ahead. Consumer confidence remained
high as we began calendar 1999; moreover, a surge in early income tax
refunds and home mortgage refinancing is giving people more money to
spend.
The best performers in this sector were those of value- oriented companies
such as Wal-Mart Stores, Inc. Known for extraordinary customer service and
creative in-store promotions, Wal-Mart has experienced rapid growth and
has vanquished competitors on a regular basis. The company operates a
chain of Wal-Mart discount department stores as well as Sam's Club
warehouse membership stores and Wal-Mart Supercenters, which combine
supermarket and discount department store characteristics in one facility.
The company is also experimenting with Wal-Mart Neighborhood Markets,
which would compete more directly with local grocers.
* PHARMACEUTICALS REMAIN HEALTHY SOURCE OF GROWTH
Pharmaceutical companies continued to make up a large portion of the
fund's portfolio. Recent news in this sector has been good with major
product launches and more consolidation in the industry. One holding worth
noting is Pfizer, Inc. Although it's best known as the maker of the
blockbuster male impotence drug, Viagra, this pharmaceutical company's
strengths extend far beyond that product. Adding to Pfizer's growth
potential is the fact that most of its product line is patent protected
for five or more years, allowing the company to benefit from the
exclusivity of its drugs in the marketplace. Pfizer also enhances its
profitability through cross licensing, in which it markets and sells drugs
developed by other companies and shares in the resulting profits. One
example is Celebrex, an arthritis drug that Pfizer markets in conjunction
with two other pharmaceutical companies.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Microsoft Corp.
Computer software
America Online, Inc.
Computer services
EMC Corp.
Computers
Schering-Plough Corp.
Pharmaceuticals and biotechnology
Tyco International Ltd.
Conglomerate
MCI WorldCom, Inc.
Telecommunications equipment
Pfizer, Inc.
Pharmaceuticals and biotechnology
Wal-Mart Stores, Inc.
Retail
Warner-Lambert Co.
Pharmaceuticals and biotechnology
Lucent Technologies, Inc.
Telecommunications equipment
Footnote reads:
These holdings represent 35.1% of the fund's net assets as of 1/31/99.
Portfolio holdings will vary over time.
* CONTINUED FOCUS ON GROWTH LEADERS
As 1999 begins, investors have become accustomed to market turmoil. We
believe that global markets are far less vulnerable to a severely volatile
event than they were six months ago. One reason for this belief is that
throughout the fall and winter, central banks worldwide have restored
liquidity to the financial system through a series of interest-rate cuts.
Furthermore, banks and other market participants appear to be less exposed
to leveraged speculation and have grown more alert to likely sources of
risk.
Of course, no one can predict market volatility. However, should the
moderate economic growth, low inflation, and low interest rates continue
in the U.S., we are optimistic that the large-cap companies in which the
fund invests will remain sound. We believe that a continued focus on the
best large growth companies -- financially strong, well-established
leaders with demonstrated growth -- has the potential to deliver
attractive results in a variety of market environments.
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 1/31/99, there is no guarantee the fund will
continue to hold these securities in the future. Investments in a highly
focused portfolio with a relatively small number of holdings may be
subject to greater risk than a more broadly diversified portfolio.
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 1/31/99
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 25.01% 17.80% 24.62% 19.62% 24.72% 20.38%
- ------------------------------------------------------------------------------
1 year 55.49 46.58 54.26 49.26 54.73 49.36
- ------------------------------------------------------------------------------
Life of fund 181.41 165.18 173.24 170.24 175.50 165.94
Annual average 36.44 34.03 35.24 34.79 35.57 34.14
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/99
Russell
Standard & 1000 Consumer
Poor's Growth Price
500 Index Index Index
- ------------------------------------------------------------------------------
6 months 22.80% 15.02% 0.86%
- ------------------------------------------------------------------------------
1 year 42.59 32.49 1.86
- ------------------------------------------------------------------------------
Life of fund 146.68 132.89 7.44
Annual average 31.07 28.83 2.17
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 5.75% and
3.50% respectively. Class B share returns for the 1-, 5-, and 10-year
(where available) and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their inception
are derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and in the case of class B and class M shares,
the higher operating expenses applicable to such shares. All returns
assume reinvestment of distributions at NAV. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost. The fund's performance
reflects a voluntary expense limitation currently or previously in effect.
Without the limitation, total return would have been lower.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 1/31/99
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number)*
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
7/31/98 $16.99 $18.03 $16.86 $16.91 $17.52
- ------------------------------------------------------------------------------
1/31/99 21.24 22.54 21.01 21.09 21.85
- ------------------------------------------------------------------------------
*The Fund did not make any distributions during this period.
TOTAL RETURN FOR PERIODS ENDED 12/31/98
(most recent calendar quarter)
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 16.96% 10.23% 16.54% 11.54% 16.68% 12.59%
- ------------------------------------------------------------------------------
1 year 47.38 38.87 46.33 41.33 46.74 41.65
- ------------------------------------------------------------------------------
Life of fund 161.27 146.20 153.87 150.87 155.91 147.02
Annual average 34.38 31.95 33.20 32.71 33.53 32.08
- ------------------------------------------------------------------------------
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. 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 5.75% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B shares and assumes redemption at the end of the
period. Your fund's 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.
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.
<TABLE>
<CAPTION>
Portfolio of investments owned
January 31, 1999 (Unaudited)
COMMON STOCKS (98.4%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Banks (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
82,500 Firstar Corp. $ 7,275,469
Business Services (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
272,100 Pitney Bowes, Inc. 18,723,881
Cable Television (3.9%)
- --------------------------------------------------------------------------------------------------------------------------
468,500 Tele-Comm Liberty Media Group, Inc. Class A (NON) 25,064,750
484,600 Tele-Communications, Inc. Class A (NON) 33,225,388
--------------
58,290,138
Computer Services (4.6%)
- --------------------------------------------------------------------------------------------------------------------------
333,700 America Online, Inc. 58,626,919
156,300 Computer Sciences Corp. (NON) 10,716,319
--------------
69,343,238
Computer Software (12.7%)
- --------------------------------------------------------------------------------------------------------------------------
13,600 BMC Software, Inc. (NON) 634,950
189,000 Dell Computer Corp. (NON) 18,900,000
291,600 Intel Corp. 41,097,375
455,400 Microsoft Corp. (NON) 79,695,000
299,100 Oracle Corp. (NON) 16,562,663
314,700 Sun Microsystems, Inc. (NON) 35,167,725
--------------
192,057,713
Computers (8.1%)
- --------------------------------------------------------------------------------------------------------------------------
550,700 Compaq Computer Corp. 26,227,088
520,700 EMC Corp. (NON) 56,691,213
107,800 IBM Corp. 19,754,350
200,400 Texas Instruments, Inc. 19,814,550
--------------
122,487,201
Conglomerates (3.3%)
- --------------------------------------------------------------------------------------------------------------------------
641,700 Tyco International Ltd. 49,451,006
Consumer Products (--%)
- --------------------------------------------------------------------------------------------------------------------------
3,900 Colgate-Palmolive Co. 313,817
Cosmetics (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
257,200 Estee Lauder Cos. Class A 21,106,475
Electronics and Electrical Equipment (4.5%)
- --------------------------------------------------------------------------------------------------------------------------
386,000 Applied Materials, Inc.(NON) 24,390,375
413,200 General Electric Co. 43,334,350
--------------
67,724,725
Entertainment (4.9%)
- --------------------------------------------------------------------------------------------------------------------------
691,700 Time Warner, Inc. 43,231,250
360,400 Viacom, Inc. Class B (NON) 30,634,000
--------------
73,865,250
Environmental Control (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
499,900 Waste Management, Inc.(NON) 24,963,756
Financial Services (3.3%)
- --------------------------------------------------------------------------------------------------------------------------
310,100 Associates First Capital Corp. 12,578,431
255,700 Merrill Lynch & Co., Inc. 19,433,200
210,900 Morgan Stanley, Dean Witter, Discover and Co. 18,308,756
--------------
50,320,387
Health Care Services (3.2%)
- --------------------------------------------------------------------------------------------------------------------------
405,000 Cardinal Health, Inc. 29,944,688
246,457 Mckesson HBOC, Inc. 18,515,082
--------------
48,459,770
Insurance (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
251,200 American International Group, Inc. 25,857,900
Medical Supplies and Devices (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
153,200 Medtronic, Inc. 12,208,125
Networking Equipment (2.4%)
- --------------------------------------------------------------------------------------------------------------------------
331,100 Cisco Systems, Inc. (NON) 36,938,344
Pharmaceuticals and Biotechnology (13.1%)
- --------------------------------------------------------------------------------------------------------------------------
208,000 Bristol-Myers Squibb Co. 26,663,000
287,600 Lilly (Eli) & Co. 26,944,525
365,000 Pfizer, Inc. 46,948,125
959,600 Schering-Plough Corp. 52,298,200
638,700 Warner-Lambert Co. 46,106,156
--------------
198,960,006
Retail (16.2%)
- --------------------------------------------------------------------------------------------------------------------------
382,400 Costco Companies, Inc. (NON) 31,691,400
678,500 CVS Corp. 37,147,875
356,650 Gap, Inc. (The) 22,892,472
733,300 Home Depot, Inc. (The) 44,272,988
235,400 Kroger Co. (NON) 14,947,900
481,100 Safeway, Inc. (NON) 27,001,738
717,000 TJX Cos., Inc. (The) 21,196,313
541,800 Wal-Mart Stores, Inc. 46,594,800
--------------
245,745,486
Telecommunications Equipment (7.5%)
- --------------------------------------------------------------------------------------------------------------------------
408,600 Lucent Technologies, Inc. 45,993,038
126,100 Nokia Corp Class A. ADR (Finland) 18,158,400
612,300 MCI WorldCom, Inc. (NON) 48,830,925
--------------
112,982,363
Telephone Services (1.8%)
- --------------------------------------------------------------------------------------------------------------------------
316,300 Sprint Corp. 26,529,663
Wireless Communications (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
266,100 AirTouch Communications, Inc. 25,695,281
--------------
Total Common Stocks (cost $1,109,992,569) $1,489,299,994
SHORT-TERM INVESTMENTS (2.6%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$ 842,000 A1 Credit Corporation for an effective yield of 4.82%,
February 1, 1999 $ 842,000
38,000,000 Interest in $407,512,000 joint repurchase agreement
dated January 29, 1999 with Warburg Securities due
February 1, 1999 with respect to various U.S. Treasury
obligations -- maturity value of $38,014,883 for an
effective yield of 4.70% 38,000,000
--------------
Total Short-Term Investments (cost $38,842,000) $ 38,842,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,148,834,569) (b) $1,528,141,994
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $1,513,282,579.
(b) The aggregate identified cost on a tax basis is $1,148,834,620, resulting in gross unrealized appreciation and
depreciation of $383,586,792 and $4,279,418, respectively, or net unrealized appreciation of $379,307,374.
(NON) 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, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,148,834,569) (Note 1) $1,528,141,994
- -----------------------------------------------------------------------------------------------
Cash 483
- -----------------------------------------------------------------------------------------------
Dividends receivable 227,119
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 25,440,398
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 6,318,775
- -----------------------------------------------------------------------------------------------
Unamortized organization expenses (Note 1) 3,653
- -----------------------------------------------------------------------------------------------
Total assets 1,560,132,422
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 42,611,125
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,503,950
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,715,441
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 42,354
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 5,396
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,531
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 724,918
- -----------------------------------------------------------------------------------------------
Payable for organization expenses (Note 1) 8,843
- -----------------------------------------------------------------------------------------------
Other accrued expenses 236,285
- -----------------------------------------------------------------------------------------------
Total liabilities 46,849,843
- -----------------------------------------------------------------------------------------------
Net assets $1,513,282,579
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,155,622,724
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (3,866,204)
- -----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (17,781,366)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 379,307,425
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $1,513,282,579
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($686,876,100 divided by 32,341,285 shares) $21.24
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $21.24)* $22.54
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($769,149,122 divided by 36,608,761 shares)** $21.01
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($57,257,357 divided by 2,714,839 shares) $21.09
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $21.09)* $21.85
- -----------------------------------------------------------------------------------------------
* 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 nat 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, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $950) $ 2,006,420
- -----------------------------------------------------------------------------------------------
Interest 513,025
- -----------------------------------------------------------------------------------------------
Total investment income 2,519,445
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 2,820,124
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 416,424
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 11,596
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 8,009
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 496,038
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 2,149,356
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 127,194
- -----------------------------------------------------------------------------------------------
Amortization of organization expenses (Note 1) 724
- -----------------------------------------------------------------------------------------------
Reports to shareholders 54,086
- -----------------------------------------------------------------------------------------------
Registration fees 168,345
- -----------------------------------------------------------------------------------------------
Auditing 18,106
- -----------------------------------------------------------------------------------------------
Legal 2,906
- -----------------------------------------------------------------------------------------------
Postage 64,748
- -----------------------------------------------------------------------------------------------
Other 90,275
- -----------------------------------------------------------------------------------------------
Total expenses 6,427,931
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (42,282)
- -----------------------------------------------------------------------------------------------
Net expenses 6,385,649
- -----------------------------------------------------------------------------------------------
Net investment loss (3,866,204)
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (13,276,801)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 288,709,054
- -----------------------------------------------------------------------------------------------
Net gain on investments 275,432,253
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $271,566,049
- -----------------------------------------------------------------------------------------------
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
1999* 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (3,866,204) $ (2,138,308)
- ---------------------------------------------------------------------------------------------------------------
Net realized loss on investments (13,276,801) (4,490,208)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 288,709,054 89,355,391
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 271,566,049 82,726,875
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A -- (169,802)
- ---------------------------------------------------------------------------------------------------------------
Class B -- (163,947)
- ---------------------------------------------------------------------------------------------------------------
Class M -- (15,005)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 630,461,121 523,492,191
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 902,027,170 605,870,312
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 611,255,409 5,385,097
- ---------------------------------------------------------------------------------------------------------------
End of period (accumulated net investment loss of
$3,866,204 and $--, respectively) $1,513,282,579 $611,255,409
- ---------------------------------------------------------------------------------------------------------------
* 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 For the period
Per-share January 31 Oct. 2, 1995+
operating performance (Unaudited) Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $16.99 $13.38 $10.15 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(a) (.04)(d) (.07)(d) .03 .03
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.29 3.71 4.43 1.67
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.25 3.64 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 $21.24 $16.99 $13.38 $10.15
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 25.01* 27.23 47.34 20.08*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $686,876 $287,291 $5,385 $2,647
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(a)(c) .56* 1.25 1.05 .89*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%)(a) (.25)* (.43) .20 .30*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 31.29* 70.90 145.10 151.15*
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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 each of class A, B and M, for the period
ended July 31, 1998 and $0.11 per share for each of the periods ended July 31, 1997 and July 31, 1996.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges and reflects an
expense limitation currently in effect. Without the limitation, the total return would have been lower.
(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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 August 1, 1997+
operating performance (Unaudited) to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $16.86 $13.38
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(a) (.11)(d) (.18)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.26 3.69
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.15 3.51
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $21.01 $16.86
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 24.62* 26.25
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $769,149 $299,195
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(a)(c) .93* 2.00
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%)(a) (.63)* (1.19)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 31.29* 70.90
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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 each of class A, B and M, for the period
ended July 31, 1998 and $0.11 per share for each of the periods ended July 31, 1997 and July 31, 1996.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges and reflects an
expense limitation currently in effect. Without the limitation, the total return would have been lower.
(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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 August 1, 1997+
operating performance (Unaudited) to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $16.91 $13.38
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(a) (.09)(d) (.14)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.27 3.70
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.18 3.56
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $21.09 $16.91
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 24.72* 26.63
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $57,257 $24,769
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(a)(c) .81* 1.75
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%)(a) (.50)* (.93)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 31.29* 70.90
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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 each of class A, B and M, for the period
ended July 31, 1998 and $0.11 per share for each of the periods ended July 31, 1997 and July 31, 1996.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges and reflects an
expense limitation currently in effect. Without the limitation, the total return would have been lower.
(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, 1999 (Unaudited)
Note 1
Significant accounting policies
Putnam Growth 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 invests primarily in common stocks
of companies that Putnam Investment Management, Inc. ("Putnam
Management"), the fund's Manager, a wholly-owned subsidiary of Putnam
Investments, Inc., believes have potential for capital appreciation
significantly greater than that of the market averages.
The fund offers class A, class B and class M shares. Effective February 1,
1999, the fund began offering class C 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to the
resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the fund is
informed of the ex-dividend date.
E) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended January 31, 1999, 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.
At July 31, 1998, the fund had a capital loss carryover of approximately
$506,488 available to offset future net capital gain, if any, which will
expire on July 31, 2006.
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.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended January 31, 1999, fund expenses were reduced by
$42,282 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 $1,330
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, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $841,202 and $41,864
from the sale of class A and class M shares, respectively and $358,374 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, 1999, Putnam Mutual
Funds Corp., acting as underwriter received $12,278 on class A
redemptions.
Note 3
Purchase and sales of securities
During the six months ended January 31, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$877,397,222 and $270,880,786, 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, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 19,968,593 $351,488,768
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
19,968,593 351,488,768
Shares
repurchased (4,539,429) (76,663,058)
- -----------------------------------------------------------------------------
Net increase 15,429,164 $274,825,710
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 19,027,520 $279,728,139
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 12,807 164,435
- -----------------------------------------------------------------------------
19,040,327 279,892,574
Shares
repurchased (2,530,771) (37,177,983)
- -----------------------------------------------------------------------------
Net increase 16,509,556 $242,714,591
- -----------------------------------------------------------------------------
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 22,161,308 $388,442,974
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
22,161,308 388,442,974
Shares
repurchased (3,293,219) (54,962,043)
- -----------------------------------------------------------------------------
Net increase 18,868,089 $333,480,931
- -----------------------------------------------------------------------------
For the period August 1, 1997
(commencement of operations)
to July 31, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 19,821,376 $290,193,248
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 12,262 156,947
- -----------------------------------------------------------------------------
19,833,638 290,350,195
Shares
repurchased (2,092,966) (30,848,946)
- -----------------------------------------------------------------------------
Net increase 17,740,672 $259,501,249
- -----------------------------------------------------------------------------
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,069,388 $35,043,011
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
2,069,388 35,043,011
Shares
repurchased (819,602) (12,888,531)
- -----------------------------------------------------------------------------
Net increase 1,249,786 $22,154,480
- -----------------------------------------------------------------------------
For the period August 1, 1997
(commencement of operations)
to July 31, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,625,623 $23,686,551
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,156 14,812
- -----------------------------------------------------------------------------
1,626,779 23,701,363
Shares
repurchased (161,726) (2,425,012)
- -----------------------------------------------------------------------------
Net increase 1,465,053 $21,276,351
- -----------------------------------------------------------------------------
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investments has won the DALBAR Service Award 8 times in the past 9
years. In 1997 and 1998, Putnam was the only company to win all three
DALBAR awards: for service to investors, to financial advisors, and to
variable annuity contract holders.*
* 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 Website.
www.putnaminv.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.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
John J. Morgan, Jr.
Vice President
C. Beth Cotner
Vice President and Fund Manager
Jeffrey R. Lindsey
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam 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
www.putnaminv.com
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
SA061/49941 -- 2AP 3/99
