Putnam
Growth
Opportunities
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
1-31-00
[SCALE LOGO OMITTED]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The markets continued to provide their share of challenges and
opportunities as your fund closed its books on the first half of fiscal
2000. In the following report, the fund's managers discuss performance for
the period and prospects for the months ahead.
This is the last letter to you and the other shareholders of Putnam Growth
Opportunities Fund that I will be signing. After more than 30 years as
Chairman of the Trustees and President of the Putnam Funds, the time has
come for me to step aside. In June, John Hill will become Chairman. John
is currently an independent Trustee and has served on the board for the
past 14 years. In addition, my son, George Putnam, III, will take on the
role of President. I am confident that the leadership of the funds will be
in exceptionally strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay in
close touch with the funds. It has been my privilege to serve you.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
March 15, 2000
Report from the Fund Managers
Jeffrey R. Lindsey
C. Beth Cotner
David J. Santos
Technology continued to dominate the market during the six months ended
January 31, 2000, as many U.S.-based companies made some of their most
astounding advances. Results for Putnam Growth Opportunities Fund's
semiannual period, which ended just after the close of a record-breaking
year for the U.S. market, reflect the strength of this sector. Your fund
was positioned with an increased emphasis on technology and strategic
stock selection in the strong performing media, telecommunications, and
cellular industries.
Tech stocks powered the extraordinary performance of the Nasdaq Composite
Index, which gained 85.6% during the 1999 calendar year, the biggest
annual gain for a major market index in U.S. history. This index, which
includes small-, mid- and large-capitalization stocks, is considered a key
indicator of performance trends in the technology sector. The sector's
strength is also reflected in the performance of other market indexes; the
Dow Jones Industrial Average gained 27.2% in 1999 and the S&P 500 Index
rose 21.0%, a record fifth consecutive year of double-digit performance
for both.
Total return for 6 months ended 1/31/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- -------------------------------------------------------------------------
31.71% 24.16% 31.28% 26.28% 31.26% 30.26% 31.35% 26.77%
- -------------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods begins on page 6.
* TECHNOLOGY DOMINATES MARKETS AND ECONOMY
During the semiannual period, the pervasive influence of technology -- and
especially the Internet -- touched almost every growth sector. The
inclusion of Microsoft and Intel in the Dow Jones Industrial Average and
the addition of Internet stocks Yahoo! and America Online to the S&P 500
Index illustrated the growing influence of technology in today's economy.
In the last year, approximately 150,000 new users worldwide went online
each day and more than 61 million U.S. homes are now connected to the
Internet.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Communications
equipment 11.4%
Software 10.0%
Telecommunications 9.0%
Computers 8.9%
Conglomerates 8.7%
Footnote reads:
*Based on net assets as of 1/31/00. Holdings will vary over time.
During the period, we added several stocks to the fund's portfolio because
we believed they would greatly benefit from the surging Internet demand.
One example was VERITAS Software Corp., which provides services and
software to help businesses manage and store computer data. VERITAS
products also speed data recovery and guard computer networks against data
loss from crashes and errors. Storage companies such as VERITAS have
experienced phenomenal growth due in large part to new demands from
Internet service providers and corporate intranets.
We re-established a position in Oracle Corporation, one of the best-known
names in database management software, which lets multiple users and
applications access the same data simultaneously. Oracle has repositioned
itself to take greater advantage of Internet and e-commerce opportunities
and has also successfully reduced operating expenses. While these holdings
and others discussed in this report were viewed favorably at the end of
the fiscal period, all are subject to review and adjustment in accordance
with the fund's investment strategy and may vary in the future.
* DEMAND FOR WIRELESS COMMUNICATIONS REMAINS INSATIABLE
While the number of cell-phone users continues to skyrocket around the
world, another new trend has begun to benefit wireless companies --
accessing the Internet through mobile phones. According to a new report
from IDC Research, 61.5 million people in the United States will be using
wireless devices to access the Internet by 2003 -- a 728% increase over
February 2000. Although wireless Internet service is in its infancy, it
has already boosted a number of stocks, including fund holding Nextel
Communications, Inc. The company provides mobile phone service, two-way
radio dispatch, and paging services to business users through one Motorola
handset. Now the company has added Internet access to its services and has
won an investment from Microsoft, which is adapting its MSN Web site for
use on Nextel's mobile handsets. Another fund holding, QUALCOMM, Inc., was
among the fastest-growing stocks during the period. The company pioneered
CDMA (code-division multiple access) technology, which has become the
high-quality standard for the next generation of cell phones, wireless
telecom equipment, and satellite ground stations around the world.
Morningstar gave Putnam Growth Opportunities Fund's class A shares its highest
rating of 5 stars for overall performance as of December 31, 1999. Of the
3,469 domestic equity funds rated, the top 10% received 5 stars.
Past performance is not indicative of future results. Morningstar ratings
reflect risk-adjusted performance through 12/31/99 and are subject to change
every month. Morningstar ratings are calculated from a fund's 3-, 5- and
10-year returns (with fee adjustments) in excess of 90-day Treasury bill
returns. For 3-year performance, the fund received 5 stars and 3,469 domestic
equity funds were rated. The top 10% of funds in an investment category
receive 5 stars. The fund was not rated over longer periods. Ratings of other
share classes will vary.
A new holding in the fund's telecommunications sector is Global Crossing
Ltd., which is building fiber-optic cable systems under the oceans and
across the globe. Its undersea cables connect the United States and
Europe, and the company is currently connecting Japan to its network.
During the period, Global Crossing completed its purchase of U.S.-based
telephone company Frontier, which gave it a foothold in the North American
market with a million local and long distance telephone customers for its
intercontinental fiber-optic network.
Short-term performance vs. long-term potential
The potential for growth in a fund's portfolio can be just as important as
stocks that perform well during a given period. One recent example is your
fund's investment in the stock of Time Warner, Inc. As a fund holding during
the semiannual period, the stock of Time Warner delivered lackluster
performance. However, just before the close of the period, in January 2000,
Internet services giant America Online announced plans to acquire Time Warner
in a deal that astounded the financial industry. While it is too early to
determine the outcome of such a merger, the growth potential of the combined
companies is unprecedented. It brings together the nation's top Internet
service provider and the world's leading media conglomerate and could
represent a powerhouse in the new economy.
* SURGE IN ADVERTISING BOOSTS BROADCASTING SECTOR
The broadcasting sector of the fund's portfolio also reaped the rewards of
Internet growth. Building brand recognition is vital to many Internet
companies and one of the most effective methods for doing this is to
advertise through traditional outlets such as TV, radio, and billboards.
In addition, drug companies have increased their advertising dramatically
since 1997, when the Food and Drug Administration eased direct-to-consumer
advertising regulations. This surge in advertising, which also reflects
the strength of the economy, benefited fund holdings such as CBS Corp.,
radio broadcaster Clear Channel Communications, and AT&T-Liberty Media,
which holds equity positions in nearly 100 cable channels, including BET,
Discovery Channel, E!, Encore, QVC, and USA Networks. AT&T-Liberty Media
also has numerous positions in overseas cable systems, many of which are
in their infancy and are expected to experience rapid growth. The company
also has 95% ownership of Liberty Digital, which includes music and online
properties.
* GROWTH DYNAMICS REMAIN EXCITING, BUT VOLATILITY LIKELY
The first half of fiscal 2000 has provided one of the most exciting
environments in recent years for aggressive growth funds. Solid corporate
earnings and continued demand for new technology should continue to drive
U.S. stocks in the months ahead. Recovering overseas economies and
continued economic strength in the United States also contribute to a
generally optimistic outlook.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Microsoft Corp.
Software
General Electric Co.
Conglomerate
Sun Microsystems, Inc.
Computers
Nokia Corp.
Communications equipment
Cisco Systems, Inc.
Communications equipment
Tyco International Ltd.
Conglomerate
AT&T Corp. -- Liberty Media
Cable television
Motorola, Inc.
Electronics
Warner-Lambert Co.
Pharmaceuticals
Oracle Corp.
Software
Footnote reads:
These holdings represent 40.3% of the fund's net assets as of 1/31/00.
Portfolio holdings will vary over time.
It is important to note, however, that exceptional periods of growth such
as what we've experienced in the first half of the fiscal year are often
followed by periods of volatility. A much-anticipated series of Federal
Reserve Board interest-rate increases in 2000, beginning with the
quarter-point increase shortly after the close of the period, could temper
stock gains as companies face steeper borrowing costs and equity investors
shift money into higher-yielding bonds. With these factors in mind, we
enter the second half of fiscal 2000 with a strategic eye on market
conditions while continuing to target the most compelling growth
opportunities.
The views expressed here are exclusively those of Putnam Management. They
are not meant as investment advice. Although the described holdings were
viewed favorably as of 1/31/00, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
This section provides information about your fund's performance, which should
always be considered in light of its investment strategy. Putnam 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.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 1/31/00
Class A Class B Class C Class M
(inception dates) (10/2/95) (8/1/97) (2/1/99) (8/1/97)
NAV POP NAV CDSC NAV CDSC NAV POP
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months 31.71% 24.16% 31.28% 26.28% 31.26% 30.26% 31.35% 26.77%
- ---------------------------------------------------------------------------------------
1 year 33.57 25.87 32.65 27.65 32.86 31.86 32.91 28.29
- ---------------------------------------------------------------------------------------
Life of fund 275.87 254.20 262.46 260.46 264.45 264.45 266.16 253.45
Annual average 35.77 33.92 34.64 34.46 34.81 34.81 34.95 33.86
- ---------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/00
Standard & Russell 1000 Consumer
Poor's 500 Index Growth Index price index
- -------------------------------------------------------------------------
6 months 5.59% 18.68% 1.44%
- -------------------------------------------------------------------------
1 year 10.35 19.88 2.67
- -------------------------------------------------------------------------
Life of fund 156.98 195.71 10.38
Annual average 24.31 28.40 2.30
- -------------------------------------------------------------------------
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. For class C shares,
returns for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect both the
CDSC currently applicable to class C shares, which is 1% for the first
year and is eliminated thereafter, and the higher operating expenses
applicable to class C shares. All returns assume reinvestment of
distributions at NAV. Investment return and principal value will fluctuate
so that an investor's shares when redeemed may be worth more or less than
their original cost. The fund's performance reflects a voluntary expense
limitation previously in effect. Without the limitation, total return
would have been lower. For a portion of these periods, the fund was
offered on a limited basis and had limited assets.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 1/31/00
Class A Class B Class C Class M
- -------------------------------------------------------------------------------
Distributions (number)*
- -------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- -------------------------------------------------------------------------------
7/31/99 $21.54 $22.85 $21.23 $21.50 $21.34 $22.11
- -------------------------------------------------------------------------------
1/31/00 28.37 30.10 27.87 28.22 28.03 29.05
- -------------------------------------------------------------------------------
* The fund did not make any distributions during the period.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 12/31/99 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (10/2/95) (8/1/97) (2/1/99) (8/1/97)
NAV POP NAV CDSC NAV CDSC NAV POP
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months 34.04% 26.32% 33.61% 28.61% 33.59% 32.59% 33.71% 29.03%
- ---------------------------------------------------------------------------------------
1 year 51.37 42.69 50.31 45.31 50.58 49.58 50.64 45.37
- ---------------------------------------------------------------------------------------
Life of fund 295.48 272.68 281.58 279.58 283.69 283.69 285.49 272.11
Annual average 38.20 36.28 37.04 36.87 37.22 37.22 37.37 36.23
- ---------------------------------------------------------------------------------------
</TABLE>
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance section for performance calculation method.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are subject
to a contingent deferred sales charge only if the shares are redeemed
during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 5.75% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B or C shares and assumes redemption at the end of
the period. Your fund's class B CDSC declines from a 5% maximum during the
first year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies. The CDSC for class C shares is 1% for one year after
purchase.
Comparative benchmarks
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. (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.
Welcome to www.putnaminv.com
Now you can use your PC to get up-to-date information about your funds, learn
more about investing and retirement planning, and access market news and
economic outlooks from Putnam.
VISIT PUTNAM'S SITE ON THE WORLD WIDE WEB FOR:
* the benefits of investing with Putnam
* Putnam's money management philosophy
* complete fund information, daily pricing and long-term performance
* your current account value, portfolio value and transaction history
* the latest on new funds and other Putnam news
You can also read Putnam economist Dr. Robert Goodman's commentary and Putnam's
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The site can be accessed through any of the major online services (America
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access it via Netscape or Microsoft Internet Explorer, using an independent
Internet service provider.
New features will be added to the site regularly. So be sure to bookmark us at
http://www.putnaminv.com
A guide to the financial statements
These sections of the report constitute the fund's financial
statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for
the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that remain
in the portfolio -- any change in unrealized gains or losses over the
period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of
the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed here
may not match the sources listed in the Statement of operations because
the distributions are determined on a tax basis and may be paid in a
different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate
table is provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
January 31, 2000 (Unaudited)
COMMON STOCKS (98.0%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Biotechnology (3.8%)
- --------------------------------------------------------------------------------------------------------------------------
2,071,100 Amgen Inc. (NON) $ 131,903,181
546,700 Genentech, Inc. (NON) 76,811,350
--------------
208,714,531
Broadcasting (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
754,100 CBS Corp. (NON) 43,973,456
866,800 Clear Channel Communications, Inc. (NON) 74,869,850
--------------
118,843,306
Cable Television (4.7%)
- --------------------------------------------------------------------------------------------------------------------------
3,373,900 AT&T Corp. -- Liberty Media Class A (NON) 172,490,638
1,836,400 Comcast Corp. Class A 84,474,400
--------------
256,965,038
Communications Equipment (11.4%)
- --------------------------------------------------------------------------------------------------------------------------
1,996,400 Cisco Systems, Inc. (NON) 218,605,800
1,485,800 Nokia Corp. ADR (Finland) 271,901,400
1,078,100 QUALCOMM, Inc. (NON) 136,918,700
--------------
627,425,900
Computers (8.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,247,700 Dell Computer Corp. (NON) 47,958,469
1,508,400 EMC Corp. (NON) 160,644,600
3,593,400 Sun Microsystems, Inc. (NON) 282,306,488
--------------
490,909,557
Conglomerates (8.7%)
- --------------------------------------------------------------------------------------------------------------------------
2,208,200 General Electric Co. (SEG) 294,518,675
4,309,000 Tyco International Ltd. 184,209,750
--------------
478,728,425
Consumer Goods (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
786,300 Colgate-Palmolive Co. 46,588,275
1,393,600 Estee Lauder Cos. Class A 71,247,800
--------------
117,836,075
Electronics (6.6%)
- --------------------------------------------------------------------------------------------------------------------------
755,700 JDS Uniphase Corp. (NON) 154,115,569
1,257,200 Motorola, Inc. 171,922,100
527,800 Solectron Corp. (NON) 38,331,475
--------------
364,369,144
Entertainment (2.5%)
- --------------------------------------------------------------------------------------------------------------------------
2,450,800 Viacom, Inc. Class B (NON) 135,713,050
Financial (2.1%)
- --------------------------------------------------------------------------------------------------------------------------
2,063,300 Citigroup, Inc. 118,510,794
Insurance (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
766,100 American International Group, Inc. 79,770,163
Media (2.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,707,700 Time Warner, Inc. 136,509,269
Pharmaceuticals (6.5%)
- --------------------------------------------------------------------------------------------------------------------------
909,500 Bristol-Myers Squibb Co. 60,027,000
2,930,700 Schering-Plough Corp. 128,950,800
1,775,000 Warner-Lambert Co. 168,514,063
--------------
357,491,863
Retail (6.5%)
- --------------------------------------------------------------------------------------------------------------------------
499,800 Amazon.com, Inc. (NON) 32,268,338
2,730,400 Home Depot, Inc. (The) 154,608,900
530,900 Target Corp. 35,072,581
2,523,100 Wal-Mart Stores, Inc. 138,139,725
--------------
360,089,544
Semiconductor (7.2%)
- --------------------------------------------------------------------------------------------------------------------------
641,100 Applied Materials, Inc. (NON) 87,990,975
1,592,100 Intel Corp. 157,518,394
1,429,700 Texas Instruments, Inc. 154,228,888
--------------
399,738,257
Software (10.0%)
- --------------------------------------------------------------------------------------------------------------------------
3,012,900 Microsoft Corp. (NON) 294,887,588
3,358,800 Oracle Corp. (NON) 167,782,556
595,200 VERITAS Software Corp. (NON) 86,824,800
--------------
549,494,944
Technology Services (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
1,811,100 America Online, Inc. (NON) 103,119,506
17,700 Yahoo! Inc. (NON) 5,700,501
--------------
108,820,007
Telecommunications (9.0%)
- --------------------------------------------------------------------------------------------------------------------------
2,012,800 Global Crossing Ltd. (NON) 102,149,600
186,800 Level 3 Communications, Inc. (NON) 22,030,725
298,200 Metromedia Fiber Network, Inc. Class A (NON) 20,184,413
782,500 NEXTEL Communications, Inc. Class A (NON) 83,238,438
168,300 NEXTLINK Communications, Inc. Class A (NON) 14,200,313
1,514,300 Sprint Corp. 97,956,281
1,433,500 Sprint PCS (NON) 157,774,594
--------------
497,534,364
--------------
Total Common Stocks (cost $3,841,240,710) $5,407,464,231
SHORT-TERM INVESTMENTS (1.7%) (a) (cost $96,404,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$96,404,000 Interest in $525,429,000 joint repurchase
agreement dated January 31, 2000 with
Morgan (J.P.) & Co., Inc. due February 1, 2000
with respect to various U.S. Treasury obligations --
maturity value of $96,419,210 for an effective
yield of 5.68% $ 96,404,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $3,937,644,710) (b) $5,503,868,231
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $5,519,665,552.
(b) The aggregate identified cost on a tax basis is $3,944,691,368 resulting in gross unrealized appreciation and
depreciation of $1,642,587,346 and $83,410,483, respectively, or net unrealized appreciation of $1,559,176,863.
(NON) Non-income-producing security.
(SEG) A portion of this security was pledged and segregated with the custodian to cover margin requirements for futures
contracts at January 31, 2000.
ADR after the name of a foreign holding stands for American Depositary Receipts, representing ownership of foreign
securities on deposit with a domestic custodian bank.
- -----------------------------------------------------------------------------
Futures Contracts Outstanding at January 31, 2000 (Unaudited)
Aggregate Face Expiration Unrealized
Total Value Value Date Appreciation
- -----------------------------------------------------------------------------
S&P 500 Index (long) $47,283,750 $47,051,413 Mar-00 $232,337
- -----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31, 2000 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $3,937,644,710) (Note 1) $5,503,868,231
- -----------------------------------------------------------------------------------------------
Cash 1,590,230
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 163,484
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 50,085,485
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 21,457,654
- -----------------------------------------------------------------------------------------------
Receivable for variation margin 848,272
- -----------------------------------------------------------------------------------------------
Unamortized organization expense (Note 1) 1,176
- -----------------------------------------------------------------------------------------------
Total assets 5,578,014,532
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 39,383,144
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 8,532,490
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 6,448,555
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 485,614
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 10,705
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,740
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 3,032,877
- -----------------------------------------------------------------------------------------------
Other accrued expenses 452,855
- -----------------------------------------------------------------------------------------------
Total liabilities 58,348,980
- -----------------------------------------------------------------------------------------------
Net assets $5,519,665,552
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $4,046,159,179
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (20,451,647)
- -----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (72,497,838)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,566,455,858
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $5,519,665,552
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,394,796,475 divided by 84,407,338 shares) $28.37
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $28.37)* $30.10
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($2,749,651,905 divided by 98,674,055 shares)** $27.87
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($184,799,876 divided by 6,548,699 shares)** $28.22
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($142,507,149 divided by 5,083,946 shares) $28.03
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $28.03)* $29.05
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($47,910,147 divided by 1,682,205 shares) $28.48
- -----------------------------------------------------------------------------------------------
* 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, 2000 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends $ 5,342,487
- -----------------------------------------------------------------------------------------------
Interest 2,300,022
- -----------------------------------------------------------------------------------------------
Total investment income 7,642,509
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 11,010,462
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 2,718,186
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 28,464
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 20,637
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,213,087
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 10,223,816
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 567,901
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 428,110
- -----------------------------------------------------------------------------------------------
Amortization of organization expense (Note 1) 1,969
- -----------------------------------------------------------------------------------------------
Reports to shareholders 106,703
- -----------------------------------------------------------------------------------------------
Registration fees 368,464
- -----------------------------------------------------------------------------------------------
Auditing 18,686
- -----------------------------------------------------------------------------------------------
Legal 13,295
- -----------------------------------------------------------------------------------------------
Postage 264,658
- -----------------------------------------------------------------------------------------------
Other 343,636
- -----------------------------------------------------------------------------------------------
Total expenses 28,328,074
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (233,918)
- -----------------------------------------------------------------------------------------------
Net expenses 28,094,156
- -----------------------------------------------------------------------------------------------
Net investment loss (20,451,647)
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (33,315,645)
- -----------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Notes 1 and 3) (3,457,160)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
futures contracts during the period 1,147,442,528
- -----------------------------------------------------------------------------------------------
Net gain on investments 1,110,669,723
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,090,218,076
- -----------------------------------------------------------------------------------------------
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
2000* 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (20,451,647) $ (14,552,426)
- ---------------------------------------------------------------------------------------------------------------
Net realized loss on investments (36,772,805) (31,220,468)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,147,442,528 328,414,959
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,090,218,076 282,642,065
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 1,360,144,304 2,175,405,698
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 2,450,362,380 2,458,047,763
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 3,069,303,172 611,255,409
- ---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss of $20,451,647 and $--, respectively) $5,519,665,552 $3,069,303,172
- ---------------------------------------------------------------------------------------------------------------
* 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
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $21.54 $16.99 $13.38 $10.15 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.07)(d) (.09)(d) (.07)(a)(d) .03(a) .03(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 6.90 4.64 3.71 4.43 1.67
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 6.83 4.55 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 $28.37 $21.54 $16.99 $13.38 $10.15
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 31.71* 26.78 27.23 47.34 20.08*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,394,796 $1,348,515 $287,291 $5,385 $2,647
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .50* 1.01 1.25(a) 1.05(a) .89*(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.30)* (.48) (.43)(a) .20(a) .30*(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 25.73* 82.18 70.90 145.10 151.15*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation in effect during the period. 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. For periods prior to July 31,
1999 an expense limitation was in effect. Without the limitation, the total return would have been lower.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(e) Net investment income (loss) was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 Year ended Aug. 1, 1997+
operating performance (Unaudited) July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $21.23 $16.86 $13.38
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(d) (.17) (.24) (.18)(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 6.81 4.61 3.69
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 6.64 4.37 3.51
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $27.87 $21.23 $16.86
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 31.28* 25.92 26.25*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,749,652 $1,539,409 $299,195
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .87* 1.76 2.00*(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.67)* (1.23) (1.19)*(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 25.73* 82.18 70.90
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation in effect during the period. 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. For periods prior to July 31,
1999 an expense limitation was in effect. Without the limitation, the total return would have been lower.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(e) Net investment income (loss) was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 Feb. 1, 1999+
operating performance (Unaudited) to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $21.50 $21.24
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(d) (.17) (.12)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 6.89 .38
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 6.72 .26
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $28.22 $21.50
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 31.26* 1.22*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $184,800 $70,286
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .87* .88*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.68)* (.63)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 25.73* 82.18
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation in effect during the period. 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. For periods prior to July 31,
1999 an expense limitation was in effect. Without the limitation, the total return would have been lower.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(e) Net investment income (loss) was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 Year ended Aug. 1, 1997+
operating performance (Unaudited) July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $21.34 $16.91 $13.38
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(d) (.14) (.19) (.14)(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 6.83 4.62 3.70
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 6.69 4.43 3.56
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $28.03 $21.34 $16.91
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 31.35* 26.20 26.63*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $142,507 $90,285 $24,769
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .75* 1.51 1.75*(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.55)* (.98) (.93)*(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 25.73* 82.18 70.90
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation in effect during the period. 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. For periods prior to July 31,
1999 an expense limitation was in effect. Without the limitation, the total return would have been lower.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(e) Net investment income (loss) was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 July 1, 1999+
operating performance (Unaudited) to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $21.55 $22.27
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(d) (.04) --(e)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 6.97 (.72)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 6.93 (.72)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $28.48 $21.55
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 32.16* (3.23)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $47,910 $20,808
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .37* .06*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) (.18)* (.02)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 25.73* 82.18
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Reflects an expense limitation in effect during the period. 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. For periods prior to July 31,
1999 an expense limitation was in effect. Without the limitation, the total return would have been lower.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(e) Net investment income (loss) was less than $0.01 per share.
</TABLE>
Notes to financial statements
January 31, 2000 (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 0f 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, class C, class M and class Y shares.
Class A shares are sold with a maximum front-end sales charge of 5.75%.
Class B shares, which convert to class A shares after approximately eight
years, do not pay a front-end sales charge, but pay a higher ongoing
distribution fee than class A shares, and are subject to a contingent
deferred sales charge, if those shares are redeemed within six years of
purchase. Class C shares are subject to the same fees and expenses as
class B shares, except that class C shares have a one-year 1.00%
contingent deferred sales charge and do not convert to class A shares.
Class M shares are sold with a maximum front-end sales charge of 3.50% and
pay an ongoing distribution fee that is higher than class A shares but
lower than class B and class C shares. Class Y shares, which are sold at
net asset value, are generally subject to the same expenses as class A,
class B, class C and class M shares, but do not bear a distribution fee.
Class Y shares are sold to defined contribution plans that invest at least
$150 million in a combination of Putnam funds and other accounts managed
by affiliates of Putnam Management.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if 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
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period.
Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sales price on its principal exchange, or, if no sales are
reported -- as in the case of some securities traded over the counter --
the last reported bid price. Short-term investments having remaining
maturities of 60 days or less are stated at amortized cost, which
approximates market value. 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). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date.
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, 2000, 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, 1999, the fund had a capital loss carryover of approximately
$28,678,000 available to offset future capital gains, if any. The amount
of the carryover and the expiration dates are:
Loss Carryover Expiration
- -------------- -------------
$ 506,000 July 31, 2006
28,172,000 July 31, 2007
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.
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, 2000, fund expenses were reduced by
$233,918 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 $3,478
has been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of Trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B, class C and class M shares pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam 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%,
1.00% and 1.00% of the average net assets attributable to class A, class
B, class C and class M shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00%, 1.00% and 0.75% of
the average net assets attributable to class A, class B, class C and class
M shares respectively.
For the six months ended January 31, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $1,664,357 and $57,347
from the sale of class A and class M shares, respectively and received
$1,570,877 and $19,749 in contingent deferred sales charges from
redemptions of class B and C shares, respectively. A deferred sales charge
of up to 1% is assessed on certain redemptions of class A shares. For the
six months ended January 31, 2000, Putnam Mutual Funds Corp., acting as
underwriter received $15,922 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended January 31, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $2,289,831,880 and $1,025,607,839, respectively.
There were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At January 31, 2000, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 32,999,402 $ 847,541,607
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
32,999,402 847,541,607
Shares
repurchased (11,202,795) (276,890,714)
- -----------------------------------------------------------------------------
Net increase 21,796,607 $ 570,650,893
- -----------------------------------------------------------------------------
Year ended July 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 60,495,064 $1,226,507,333
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
60,495,064 1,226,507,333
Shares
repurchased (14,796,454) (297,764,756)
- -----------------------------------------------------------------------------
Net increase 45,698,610 $ 928,742,577
- -----------------------------------------------------------------------------
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 34,012,325 $854,640,680
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
34,012,325 854,640,680
Shares
repurchased (7,844,210) (190,860,081)
- -----------------------------------------------------------------------------
Net increase 26,168,115 $663,780,599
- -----------------------------------------------------------------------------
Year ended July 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 64,661,133 $1,294,888,144
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
64,661,133 1,294,888,144
Shares
repurchased (9,895,865) (194,839,289)
- -----------------------------------------------------------------------------
Net increase 54,765,268 $1,100,048,855
- -----------------------------------------------------------------------------
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,545,336 $91,815,011
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
3,545,336 91,815,011
Shares
repurchased (265,723) (6,599,128)
- -----------------------------------------------------------------------------
Net increase 3,279,613 $85,215,883
- -----------------------------------------------------------------------------
For the period February 1, 1999
(commencement of operations)
to July 31, 1999
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,383,619 $72,850,113
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
3,383,619 72,850,113
Shares
repurchased (114,533) (2,464,821)
- -----------------------------------------------------------------------------
Net increase 3,269,086 $70,385,292
- -----------------------------------------------------------------------------
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,444,192 $ 36,133,180
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
1,444,192 36,133,180
Shares
repurchased (590,934) (14,753,173)
- -----------------------------------------------------------------------------
Net increase 853,258 $ 21,380,007
- -----------------------------------------------------------------------------
Year ended July 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,076,095 $ 78,161,548
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
4,076,095 78,161,548
Shares
repurchased (1,310,460) (23,322,789)
- -----------------------------------------------------------------------------
Net increase 2,765,635 $ 54,838,759
- -----------------------------------------------------------------------------
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,211,561 $32,016,051
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
1,211,561 32,016,051
Shares
repurchased (495,132) (12,899,129)
- -----------------------------------------------------------------------------
Net increase 716,429 $19,116,922
- -----------------------------------------------------------------------------
For the period July 1, 1999
(commencement of operations)
to July 31, 1999
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,006,739 $22,318,441
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
1,006,739 22,318,441
Shares
repurchased (40,963) (928,226)
- -----------------------------------------------------------------------------
Net increase 965,776 $21,390,215
- -----------------------------------------------------------------------------
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 Web site.
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.
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds. Please
call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus
for any Putnam fund. It contains more complete information, including charges
and expenses. Please read it carefully before you invest or send money.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities Fund
Europe Growth Fund
Global Equity Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Century Growth Fund
New Opportunities Fund [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
Tax Smart Equity Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Small Cap Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund *
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK] **
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Putnam Diversified Income Trust II
[DBL. DAGGER] Closed to new investors. Some exceptions may apply. Contact
Putnam for details.
[SECTION MARK] Not available in all states.
** An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
Fund information
WEB SITE
www.putnaminv.com
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
John J. Morgan, Jr.
Vice President
C. Beth Cotner
Vice President and Fund Manager
Jeffrey R. Lindsey
Vice President and Fund Manager
David J. Santos
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
This report is for the information of shareholders of Putnam 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' Web site: www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA061-58986 2AP 3/00
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- -----------------------------------------------------------------------------
Putnam Growth Opportunities Fund
Supplement to Semiannual Report dated 1/31/00
The following information has been prepared to provide class Y shareholders
with a performance overview specific to their holdings. Class Y shares are
offered exclusively to defined contribution plans investing $150 million or
more in one or more of Putnam's funds or private accounts. Performance of
class Y shares, which incur neither a front-end load, distribution fee, nor
contingent deferred sales charge, will differ from performance of class A, B,
and M shares, which are discussed more extensively in the semiannual report.
SEMIANNUAL RESULTS AT A GLANCE
- -----------------------------------------------------------------------------
Total return
for periods ended 1/31/00 NAV
6 months 32.16%
1 year 34.24
Life of fund (since class A inception, 10/2/95) 280.94
Annual average 36.18
Share value: NAV
7/31/99 $21.55
1/31/00 $28.48
- -----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
-- -- -- --
- -----------------------------------------------------------------------------
Please note that past performance is no guarantee of future results. Returns
shown for class Y shares for periods prior to their inception are derived
from the historical performance of class A shares, adjusted to reflect the
initial sales charge currently applicable to class A shares. These returns
have not been adjusted to reflect differences in operating expenses which,
for class Y shares, are lower than the operating expenses applicable to class
A shares. All returns assume reinvestment of distributions at net asset
value. Performance data reflects an expense limitation previously in effect.
Without the expense limitation, total returns would have been lower.
Investment return and principal value will fluctuate so your shares, when
redeemed, may be worth more or less than their original cost. See full report
for information on comparative benchmarks. If you have questions, please
consult your fund prospectus or call Putnam toll free at 1-800-752-9894.
