Putnam
New
Opportunities
Fund
Item 1. Report to Stockholders:
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The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
12-31-04
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
During the past several months, Putnam has introduced a number of
reforms for the benefit of shareholders, including increasing the amount
of disclosure for our funds. We are now including in this report
portfolio turnover information for your fund, which explains how the
rate at which a fund buys and sells portfolio securities might affect
its return and its taxable distributions to shareholders. We are also
including additional disclosure about your fund's management team.
Following the Outlook for Your Fund, we list any changes in your fund's
Portfolio Leaders and Portfolio Members during the prior year period, as
well as these individuals' other fund management responsibilities at
Putnam. We also show how much these individuals have invested in the
fund (in dollar ranges), and fund ownership (in dollar ranges) is also
shown for the members of Putnam's Executive Board. In equity fund
reports, we now list the largest brokerage relationships of your fund
following the Notes to the Financial Statements. Finally, on page 18, we
provide certain information about the most recent approval of your
fund's management contract with Putnam by the Trustees.
We are also pleased to announce that three new Trustees have joined your
fund's Board of Trustees. Nominated by your fund's independent Trustees,
these individuals have had outstanding careers as leaders in the
investment management industry. Myra R. Drucker is a Vice Chair of the
Board of Trustees of Sarah Lawrence College and serves as ex-officio
member and past Chair of the New York Stock Exchange (NYSE) Pension
Managers Advisory Committee and as a Trustee of Commonfund, a
not-for-profit asset management firm. Richard B. Worley is Managing
Partner of Permit Capital LLC, an investment management firm. Both Ms.
Drucker and Mr. Worley are independent Trustees (i.e., Trustees who are
not "interested persons" of your fund or its investment advisor).
Charles E. Haldeman, Jr., the third new Trustee, is President and Chief
Executive Officer of Putnam Investments. With these new Trustees in
place, we also announce the retirement of one of your fund's Trustees,
A.J.C. Smith, formerly Chairman of Putnam Investments and Consultant to
Marsh & McLennan Companies, Inc.
In the following pages, your fund's management teams discuss
performance, strategy, and their outlook for the remainder of fiscal
2005.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
February 16, 2005
Report from Fund Management
Fund highlights
* For the six months ended December 31, 2004, Putnam New Opportunities
Fund's class A shares returned 6.60% without sales charges and 1.00%
with maximum sales charges reflected.
* The fund's benchmark, the Russell 3000 Growth Index, returned 3.86%.
* The average return for the fund's Lipper category, Multi-Cap Growth
Funds, was 6.62%.
* See the Performance Summary beginning on page 10 for additional fund
performance, comparative performance, and Lipper data.
Performance commentary
We are pleased to report that, for the six months ended December 31,
2004, your fund's return at NAV (net asset value, without sales charges)
was ahead of that of its benchmark, the Russell 3000 Growth Index. It
was also in line with the average for funds in its Lipper peer group.
Our stock selection in the financial, technology, and consumer cyclical
sectors contributed positively to your fund's performance. Holdings in
the basic materials sector -- which represents a small portion of the
fund's assets -- detracted modestly from returns. Throughout the period,
the fund continued to benefit from our bottom-up approach to stock
selection. Rather than trying to forecast broad market trends, we select
stocks based on each company's valuation, quality, and growth
characteristics.
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TOTAL RETURN FOR
PERIODS ENDED 12/31/04
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Class A
(inception 8/31/90) NAV POP
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6 months 6.60% 1.00%
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1 year 10.13 4.35
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5 years -47.67 -50.42
Annual average -12.15 -13.09
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10 years 119.39 107.86
Annual average 8.17 7.59
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Annual average
(life of fund) 14.55 14.13
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Data is historical. Past performance does not guarantee future results.
More recent returns may be less or more than those shown. Investment
return and principal value will fluctuate and you may have a gain or a
loss when you sell your shares. Performance assumes reinvestment of
distributions and does not account for taxes. Returns at NAV do not
reflect a sales charge of 5.25%. For the most recent month-end
performance, visit www.putnaminvestments.com. For a portion of the
period, this fund limited expenses, without which returns would have
been lower. Had expenses not been limited, returns would have been
lower. A short-term trading fee of up to 2% may apply.
FUND PROFILE
Putnam New Opportunities Fund has a multi-cap strategy, seeking to
invest in the highest-quality large-cap companies as well as small- and
mid-cap growth companies. The fund's management teams seek to identify
dynamic companies that are positioned in sectors believed to offer
above-average growth potential. The fund may be appropriate for
investors who are seeking long-term growth potential from stocks of
small, midsize, and large companies.
Market overview
During the first six months of your fund's fiscal year, the stock market
posted gains, although investors were distracted by a number of
concerns. On the one hand, the backdrop for stocks was generally
favorable: the economy continued to expand, job creation was uneven but
improving, and corporate profits were generally solid. However, these
positive trends were offset by worries over rising interest rates,
soaring energy prices, and uncertainty over the outcome of U.S.
elections. After rallying in response to favorable economic data in the
spring, stocks fell sharply from July to mid-August, responding to a
series of interest-rate increases by the Federal Reserve Board, the
dramatic rise in oil prices, and a series of destabilizing events in
Iraq. The semiannual period ended on a bright note, as stocks posted
strong gains in November and December. Investors responded positively to
lower oil prices and the completion of the presidential election, and
appeared to focus on reports of sustained economic expansion and strong
corporate earnings. For the second consecutive calendar year, major
stock market indexes posted gains -- the first back-to-back yearly gain
for stocks since 1999.
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MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 12/31/04
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Equities
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Russell 3000 Growth Index (large-company growth stocks) 3.86%
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S&P 500 Index (broad stock market) 7.19%
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S&P 500/Barra Value Index (large-company value stocks) 11.08%
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MSCI EAFE Index (international stocks) 15.00%
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Bonds
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Lehman Aggregate Bond Index (broad bond market) 4.18%
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Lehman Government Bond Index (U.S. Treasury and agency
securities) 3.61%
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Citigroup World Government Bond Index (global government
bonds) 12.06%
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These indexes provide an overview of performance in different market
sectors for the six months ended 12/31/04.
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Strategy overview
A new management team was put in place during the first half of the
fund's fiscal year. Your fund has two new Portfolio Leaders and is now
managed by the Putnam Mid-Cap Growth Team and the Putnam Small and
Emerging Growth Team. These changes are designed to more effectively
focus the investment team's resources and make the fund's investment
process more efficient -- with the ultimate goal of improving fund
performance over time.
Drawing on the expertise of a dedicated team of stock analysts, we began
to streamline the portfolio during the period. Our goal is to invest in
a smaller number of stocks in order to better focus our research and
analysis on what we consider the most attractive investment
opportunities in the growth-stock universe. Through a systematic
investment process, we develop computer models to test companies on a
number of variables -- particularly their quality, growth potential, and
valuations. Once a stock is selected for the fund's portfolio, it is
regularly assessed to ensure that it continues to meet our criteria.
Using this disciplined, company-by-company approach, we pared the fund's
holdings down from more than 240 stocks to approximately 185 at the
close of the period.
It is also important to note that your fund has a new benchmark, the
Russell 3000 Growth Index. This index, which includes companies of all
sizes, is a better reflection of the fund's holdings than its former
benchmark, the Russell Midcap Growth Index, which measures the
performance of a more narrowly focused group of mid-cap stocks.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY WEIGHTINGS COMPARED]
TOP INDUSTRY WEIGHTINGS COMPARED
as of 6/30/04 as of 12/31/04
Software 9.5% 11.4%
Retail 12.4% 8.6%
Medical technology 5.7% 8.5%
Pharmaceuticals 4.7% 8.0%
Consumer goods 1.3% 5.1%
Footnote reads:
This chart shows how the fund's top weightings have changed over the
last six months. Weightings are shown as a percentage of net assets.
Holdings will vary over time.
How fund holdings affected performance
Among the stocks that made a positive contribution to performance during
the semiannual period was Adobe Systems, a computer software company.
Adobe's strong revenue growth in 2004 was due in large part to the
growing popularity of its products among consumers and creative arts
professionals. Its most successful products include Adobe Acrobat[R] for
creating PDF files and Adobe Photoshop for editing digital photographs.
In addition to its growth potential, we selected Adobe for its quality
- -- it is a fundamentally strong company that generates a lot of free
cash flow.
Another company with strong free cash flow and double-digit growth was
Network Appliance. This company is the leading supplier in one of the
market's fastest-growing areas, file storage systems. Despite a weak
environment for information technology, Network Appliance sales grew 40%
in 2004. Its WAFL -- Write Anywhere File Layout -- file system design
was introduced in 1995 and today is the dominant operating system in the
file server market.
Also helping your fund's returns during the period was the stock of
American Eagle Outfitters, a retailer of casual clothing for 15- to
25-year-olds. After sluggish earnings in 2003, American Eagle made
several improvements to its product line in order to appeal to its
target customers. In 2004, the company's sales grew 30% -- at a time
when overall retail sales were weak as consumers worried about job
losses and rising energy prices. We chose this stock because of its
growth potential as well as its valuation, which we found to be
attractive in the wake of the company's struggling sales prior to 2004.
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TOP HOLDINGS
(Percent of fund's net assets as of 12/31/04)
1 Microsoft Corp. (3.4%)
Software
2 Johnson & Johnson (3.3%)
Pharmaceuticals
3 Cisco Systems, Inc. (2.5%)
Communications equipment
4 Proctor & Gamble Co. (The) (2.3%)
Consumer goods
5 Adobe Systems, Inc. (1.8%)
Software
6 Home Depot, Inc. (The) (1.7%)
Retail
7 UnitedHealth Group, Inc. (1.6%)
Health-care services
8 Capital One Financial Corp. (1.5%)
Consumer finance
9 Citrix Systems, Inc. (1.4%)
Software
10 Gillette Co. (The) (1.3%)
Consumer goods
Footnote reads:
The fund's holdings will change over time.
Another portfolio highlight for the semiannual period was Harman
International Industries, which makes audio, video, and electronic
systems for cars, homes, and computer applications. Harman delivered
strong growth in 2004, and has been particularly successful with
products such as navigational systems and DVDs for high-end automobiles.
Among the retailers that struggled during the semiannual period was fund
holding Advance Auto Parts. The stock of this auto-parts chain, which we
sold from the fund's portfolio by the close of the period, declined due
to lower-than-expected sales growth. We believe growth in this industry
will remain weak because there are currently too many companies
competing in this market segment. Fund holding Coca Cola Enterprises
also performed poorly as consumer preferences shifted to water and other
non-carbonated beverages. Earnings for the company, which is the
distributor for Coca Cola products, were disappointing and the stock
declined. By the close of the period, we had sold Coca Cola Enterprises
from the portfolio. We reduced the fund's position in Mylan
Laboratories, a pharmaceutical company that manufactures both brand-name
and generic drugs. Mylan stock suffered as FDA approval was delayed for
some of the company's drugs. The company announced plans to acquire King
Pharmaceuticals, which also caused the stock to decline. Another
portfolio disappointment for the period was semiconductor company
Intersil Corporation. Intersil produces chips for devices such as CD and
DVD drives for computers, and has faced fierce price competition from
Taiwanese manufacturers. During the period, we sold Intersil from the
fund's portfolio, due in part to our concerns about excess inventory
across the industry for the types of chips the company produces.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
The outlook for your fund
The following commentary reflects anticipated developments that could
affect your fund over the next six months, as well as your management
teams' plans for responding to them.
As always, when we consider the outlook for your fund, we are more
concerned with the long-term potential of individual companies than with
short-term developments in the economy or the markets. While the market
as a whole is affected by world events and economic cycles, we believe
investors' long-term goals are best served by our bottom-up approach to
stock selection, which relies heavily on fundamental research and
analysis. Of course, our beliefs about the general themes at work in the
market do influence our decisions.
As we enter the second half of your fund's fiscal year, we believe an
environment of modest economic growth coupled with low inflation is
likely to persist. In addition, stock returns may be modest. Regardless
of the direction the market takes in the months ahead, our strategy and
focus remain the same. We will continue to conduct intensive research in
order to identify a wide array of companies with the potential to reward
investors over time.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. The fund invests
some or all of its assets in small and/or midsize companies. Such
investments increase the risk of greater price fluctuations.
Your fund's management
Your fund is managed by the members of the Putnam Mid-Cap Growth and
Small and Emerging Growth teams. Kevin Divney and Paul Marrkand are the
Portfolio Leaders, and Richard Weed is a Portfolio Member of your fund.
The Portfolio Leaders and Portfolio Member coordinate the teams'
management of the fund.
For a complete listing of the members of the Putnam Mid-Cap Growth and
Small and Emerging Growth teams, including those who are not Portfolio
Leaders or Portfolio Members of your fund, visit Putnam's Individual
Investor Web site at www.putnaminvestments.com.
Fund ownership
The table below shows how much the fund's current Portfolio Leaders and
Portfolio Member have invested in the fund (in dollar ranges).
Information shown is for the current and prior year ended December 31.
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FUND PORTFOLIO LEADERS AND PORTFOLIO MEMBER
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$1 - $10,001 - $50,001- $100,001 - $500,001 - $1,000,001
Year $0 $10,000 $50,000 $100,000 $500,000 $1,000,000 and over
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Kevin Divney 2004 *
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Portfolio Leader N/A
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Paul Marrkand 2004 *
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Portfolio Leader N/A
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Richard Weed 2004 *
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Portfolio Member N/A
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N/A indicates the individual was not a Portfolio Leader or Portfolio
Member as of 12/31/03.
Other Putnam funds managed by the Portfolio Leader and Portfolio Members
Kevin Divney is also a Portfolio Leader of Putnam Vista Fund.
Paul Marrkand is also a Portfolio Leader of Putnam Vista Fund.
Richard Weed is also a Portfolio Leader of Putnam Discovery Growth Fund,
Putnam OTC & Emerging Growth Fund, and Putnam Small Cap Growth Fund.
Kevin Divney, Paul Marrkand, and Richard Weed may also manage other
accounts and variable trust funds advised by Putnam Management or an
affiliate.
Changes in your fund's Portfolio Leader and Portfolio Members
During the year ended December 31, 2004, your fund's management teams
shifted from the Putnam Large-Cap Growth and Specialty Growth teams to
the Mid-Cap Growth and Small and Emerging Growth teams. Consequently,
Portfolio Member Brian O'Toole of the Putnam Large-Cap Growth Team is no
longer a member of your fund's management teams. In addition, Portfolio
Leader Dan Miller and Portfolio Member Kevin Doerr left your fund's
management teams. Kevin Divney and Paul Marrkand, furthermore, became
Portfolio Leaders and Richard Weed became a Portfolio Member of your
fund.
Fund ownership
The table below shows how much the members of Putnam's Executive Board
have invested in the fund (in dollar ranges). Information shown is for
the current and prior year ended December 31.
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PUTNAM EXECUTIVE BOARD
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$1 - $10,001 - $50,001- $100,001
Year $0 $10,000 $50,000 $100,000 and over
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Philippe Bibi 2004 *
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Chief Technology Officer 2003 *
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John Boneparth 2004 *
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Head of Global Institutional Mgmt 2003 *
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Kevin Cronin 2004 *
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Deputy Head of Investments N/A
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Charles Haldeman, Jr. 2004 *
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President and CEO 2003 *
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Amrit Kanwal 2004 *
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Chief Financial Officer N/A
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Steven Krichmar 2004 *
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Chief of Operations N/A
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Francis McNamara, III 2004 *
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General Counsel N/A
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Richard Monaghan 2004 *
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Head of Retail Management 2003 *
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Stephen Oristaglio 2004 *
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Head of Investments 2003 *
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Richard Robie, III 2004 *
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Chief Administrative Officer N/A
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N/A indicates the individual was not a member of Putnam's Executive
Board as of 12/31/03.
Performance summary
This section shows your fund's performance during the first half of its
fiscal year, which ended December 31, 2004. Performance should always be
considered in light of a fund's investment strategy. Data represents
past performance. Past performance does not guarantee future results.
More recent returns may be less or more than those shown. Investment
return and principal value will fluctuate and you may have a gain or a
loss when you sell your shares. For the most recent month-end
performance, please visit www.putnaminvestments.com.
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TOTAL RETURN FOR PERIODS ENDED 12/31/04
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Class A Class B Class C Class M Class R
(inception dates) (8/31/90) (3/1/93) (7/26/99) (12/1/94) (1/21/03)
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NAV POP NAV CDSC NAV CDSC NAV POP NAV
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6 months 6.60% 1.00% 6.17% 1.17% 6.19% 5.19% 6.33% 2.60% 6.46%
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1 year 10.13 4.35 9.29 4.29 9.28 8.28 9.57 5.72 9.85
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5 years -47.67 -50.42 -49.53 -50.40 -49.60 -49.60 -48.96 -50.76 -48.28
Annual average -12.15 -13.09 -12.78 -13.09 -12.81 -12.81 -12.59 -13.21 -12.35
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10 years 119.39 107.86 104.12 104.12 103.57 103.57 108.64 101.31 114.16
Annual average 8.17 7.59 7.40 7.40 7.37 7.37 7.63 7.25 7.91
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Annual average
(life of fund) 14.55 14.13 13.71 13.71 13.70 13.70 13.96 13.67 14.28
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Performance assumes reinvestment of distributions and does not account
for taxes. Returns at public offering price (POP) for class A and M
shares reflect a sales charge of 5.25% and 3.50%, respectively. Class B
share returns reflect the applicable contingent deferred sales charge
(CDSC), which is 5% in the first year, declining to 1% in the sixth
year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the
first year that is eliminated thereafter. Class R share returns have no
initial sales charge or CDSC. Performance for class B, C, M, and R
shares before their inception is derived from the historical performance
of class A shares, adjusted for the applicable sales charge (or CDSC)
and higher operating expenses for such shares.
A 2% short-term trading fee may be applied to shares exchanged or sold
within 5 days of purchase.
For a portion of the period, this fund limited expenses, without which
returns would have been lower.
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 12/31/04
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Lipper
Multi-Cap
Russell Midcap Russell 3000 Growth Funds
Growth Index Growth Index* category average+
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6 months 9.01% 3.86% 6.62%
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1 year 15.48 6.93 10.71
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5 years -15.69 -37.15 -28.64
Annual average -3.36 -8.87 -7.51
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10 years 189.95 143.34 183.57
Annual average 11.23 9.30 10.42
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Annual average
(life of fund) 12.39 10.19 11.94
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Index and Lipper results should be compared to fund performance at net
asset value.
* Putnam Management has recently undertaken a review of the fund's
benchmarks. This index replaces the Russell Midcap Growth Index as the
primary performance benchmark for this fund because, in Putnam
Management's opinion, the securities tracked by this index more
accurately reflect the types of securities generally held by the fund.
+ Over the 6-month and 1-, 5-, and 10-year periods ended 12/31/04, there
were 429, 418, 223, and 74 funds, respectively, in this Lipper category.
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PRICE AND DISTRIBUTION* INFORMATION 6 MONTHS ENDED 12/31/04
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Class A Class B Class C Class M Class R
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Share value: NAV POP NAV NAV NAV POP NAV
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6/30/04 $38.96 $41.12 $35.34 $37.49 $36.83 $38.17 $38.85
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12/31/04 41.53 43.83 37.52 39.81 39.16 40.58 41.36
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* The fund made no distributions during the period.
Understanding your fund's expenses
As a mutual fund investor, you pay ongoing expenses, such as management
fees, distribution fees (12b-1 fees), and other expenses. In the most
recent six-month period, your fund limited these expenses; had it not
done so, expenses would have been higher. Using the information below,
you can estimate how these expenses affect your investment and compare
them with the expenses of other funds. You may also pay one-time
transaction expenses, including sales charges (loads) and redemption
fees, which are not shown in this section and would have resulted in
higher total expenses. For more information, see your fund's prospectus
or talk to your financial advisor.
Review your fund's expenses
The table below shows the expenses you would have paid on a $1,000
investment in Putnam New Opportunities Fund from July 1, 2004, to
December 31, 2004. It also shows how much a $1,000 investment would be
worth at the close of the period, assuming actual returns and expenses.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 12/31/04
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Class A Class B Class C Class M Class R
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Expenses paid per $1,000* $5.94 $9.82 $9.82 $8.53 $7.23
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Ending value (after expenses) $1,066.00 $1,061.70 $1,061.90 $1,063.30 $1,064.60
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* Expenses for each share class are calculated using the fund's annualized
expense ratio for each class, which represents the ongoing expenses as a
percentage of net assets for the six months ended 12/31/04. The expense
ratio may differ for each share class (see the table at the bottom of the
next page). Expenses are calculated by multiplying the expense ratio by
the average account value for the period; then multiplying the result by
the number of days in the period; and then dividing that result by the
number of days in the year.
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended
December 31, 2004, use the calculation method below. To find the value
of your investment on July 1, 2004, go to www.putnaminvestments.com and
log on to your account. Click on the "Transaction History" tab in your
Daily Statement and enter 07/01/2004 in both the "from" and "to" fields.
Alternatively, call Putnam at 1-800-225-1581.
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HOW TO CALCULATE THE EXPENSES YOU PAID
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Total
Value of your Expenses paid expenses
investment on 7/1/04 [DIV] $1,000 X per $1,000 = paid
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Example Based on a $10,000 investment in class A shares of your fund.
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$10,000 [DIV] $1,000 X $5.94 (see table above) = $59.40
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Comparing your fund's expenses with those of other funds
Using the SEC's method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines
to help investors assess fund expenses. Per these guidelines, the table
below shows your fund's expenses based on a $1,000 investment, assuming
a hypothetical 5% annualized return. You can use this information to
compare the ongoing expenses (but not transaction expenses or total
costs) of investing in the fund with those of other funds. All mutual
fund shareholder reports will provide this information to help you make
this comparison. Please note that you cannot use this information to
estimate your actual ending account balance and expenses paid during the
period.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return for the 6 months ended
12/31/04
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Class A Class B Class C Class M Class R
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Expenses paid per $1,000* $5.80 $9.60 $9.60 $8.34 $7.07
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Ending value (after expenses) $1,019.46 $1,015.68 $1,015.68 $1,016.94 $1,018.20
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* Expenses for each share class are calculated using the fund's
annualized expense ratio for each class, which represents the ongoing
expenses as a percentage of net assets for the six months ended
12/31/04. The expense ratio may differ for each share class (see the
table at the bottom of this page). Expenses are calculated by
multiplying the expense ratio by the average account value for the
period; then multiplying the result by the number of days in the period;
and then dividing that result by the number of days in the year.
Using industry averages to compare expenses
You can also compare your fund's expenses with industry averages, as
determined by Lipper, an independent fund-rating agency that ranks funds
relative to others that Lipper considers to have similar investment
styles or objectives. The expense ratio for each share class shown below
indicates how much of your fund's net assets have been used to pay
ongoing expenses during the period.
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EXPENSE RATIO COMPARISONS USING ANNUALIZED DATA
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Class A Class B Class C Class M Class R
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Your fund's annualized
expense ratio 1.14% 1.89% 1.89% 1.64% 1.39%
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Average annualized expense
ratio for Lipper peer group+ 1.57% 2.32% 2.32% 2.07% 1.82%
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+ Average of the expenses of front-end load funds viewed by Lipper as having
the same investment classification or objective as the fund, as of 12/31/04,
calculated in accordance with Lipper's standard reporting methodology for
comparing expenses within a given universe (excluding 12b-1 fees and without
giving effect to any expense offset and brokerage service arrangements that
may reduce fund expenses). To facilitate comparison, Putnam has adjusted
this average to reflect the 12b-1 fees carried by each class of shares. The
peer group may include funds that are significantly larger or smaller than
the fund, which may limit the comparability of the fund's expenses to the
Lipper average.
Understanding your fund's portfolio turnover
Putnam funds are actively managed by teams of experts who buy and sell
securities based on intensive analysis of companies, industries,
economies, and markets. Portfolio turnover is a measure of how often a
fund's managers buy and sell securities for your fund. A portfolio
turnover of 100%, for example, means that the managers sold and replaced
securities valued at 100% of a fund's assets within a one-year period.
Funds with high turnover may be more likely to generate capital gains
and dividends that must be distributed to shareholders as taxable
income. High turnover may also cause a fund to pay more brokerage
commissions and other transaction costs, which may detract from
performance.
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TURNOVER COMPARISONS
percentage of holdings that change every year
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2004 2003 2002 2001 2000
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Putnam New
Opportunities Fund 61% 42% 77% 68% 53%
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Lipper Multi-Cap Growth
Funds category average 170% 158% 159% 186% 145%
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Turnover data for the fund is calculated based on the fund's fiscal-year
period, which ends on June 30. Turnover data for the fund's Lipper
category is calculated based on the average of the turnover of each fund
in the category for its fiscal year ended during the indicated year.
Fiscal years vary across funds in the Lipper category, which may limit
the comparability of the fund's portfolio turnover rate to the Lipper
average. Comparative data for 2004 is based on information available as
of 12/31/04.
Risk comparison
As part of new initiatives to enhance disclosure, we are including a
risk comparison to help you understand how your fund compares with other
funds. The comparison utilizes a risk measure developed by Morningstar,
an independent fund-rating agency. This risk measure is referred to as
the fund's Overall Morningstar Risk.
[GRAPHIC OMITTED: chart MORNINGSTAR [REGISTRATION MARK] RISK]
MORNINGSTAR [REGISTRATION MARK] RISK
Fund's Overall
Morningstar Risk 6.33
U.S. stock
fund average 3.36
0% INCREASING RISK 100%
Your fund's Overall Morningstar Risk is shown alongside that of the
average fund in its broad asset class, as determined by Morningstar. The
risk bar broadens the comparison by translating the fund's Overall
Morningstar Risk into a percentile, which is based on the fund's ranking
among all funds rated by Morningstar as of December 31, 2004. A higher
Overall Morningstar Risk generally indicates that a fund's monthly
returns have varied more widely.
Morningstar determines a fund's Overall Morningstar Risk by assessing
variations in the fund's monthly returns -- with an emphasis on downside
variations -- over 3-, 5-, and 10-year periods, if available. Those
measures are weighted and averaged to produce the fund's Overall
Morningstar Risk. The information shown is provided for the fund's class
A shares only; information for other classes may vary. Overall
Morningstar Risk is based on historical data and does not indicate
future results. Morningstar does not purport to measure the risk
associated with a current investment in a fund, either on an absolute
basis or on a relative basis. Low Overall Morningstar Risk does not mean
that you cannot lose money on an investment in a fund. Copyright 2004
Morningstar, Inc. All Rights Reserved. The information contained herein
(1) is proprietary to Morningstar and/or its content providers; (2) may
not be copied or distributed; and (3) is not warranted to be accurate,
complete, or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this
information.
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.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. NAV
is calculated by dividing the net assets of each class of shares by the
number of outstanding shares in the class.
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 5.25% 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.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without 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 (except on certain
redemptions of shares bought without an initial sales charge).
Class R shares are not subject to an initial sales charge or CDSC and
are available only to certain defined contribution plans.
Comparative indexes
Citigroup World Government Bond Index is an unmanaged index of
government bonds from 14 countries.
Lehman Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fixed-income securities.
Lehman Government Bond Index is an unmanaged index of U.S. Treasury and
agency securities.
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
index of international stocks from Europe, Australasia, and the Far
East.
Russell 3000 Growth Index is an unmanaged index of those companies in
the Russell 3000 Index chosen for their growth orientation.
Russell Midcap Growth Index is an unmanaged index of all medium and
medium/small companies in the Russell 1000 Index chosen for their growth
orientation.
S&P 500/Barra Value Index is an unmanaged index of
capitalization-weighted stocks chosen for their value orientation.
S&P 500 Index is an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for
fees. Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
Lipper is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
Trustee approval of management contract
General conclusions
The Board of Trustees of the Putnam funds oversees the management of
each fund and, as required by law, determines annually whether to
approve the continuance of each fund's management contract with Putnam
Management. In this regard the Board of Trustees, with the assistance of
its Contract Committee consisting solely of Independent Trustees,
requests and evaluates all information it deems reasonably necessary in
the circumstances. Over the course of several months beginning in March
and ending in June of 2004, the Contract Committee reviewed the
information provided by Putnam Management and other information
developed with the assistance of the Board's independent counsel and
independent staff. The Contract Committee reviewed and discussed key
aspects of this information with all of the Independent Trustees. Upon
completion of this review, the Contract Committee recommended and the
Independent Trustees approved the continuance of your fund's contract,
effective July 1, 2004.
This approval was based on the following conclusions:
* That the fee schedule currently in effect for your fund represents
reasonable compensation in light of the nature and quality of the
services being provided to the fund, the fees paid by competitive funds
and the costs incurred by Putnam Management in providing such service,
and
* That such fee schedule represents an appropriate sharing between fund
shareholders and Putnam Management of such economies of scale as may
exist in the management of the fund at current asset levels.
These conclusions were based on a comprehensive consideration of all
information provided to the Trustees and were not the result of any
single factor. Some of the factors that figured particularly in the
Trustees' deliberations are described below.
Model fee schedules and categories; total expenses
The Trustees, working in cooperation with Putnam Management, have
developed and implemented a series of model fee schedules for the Putnam
funds designed to ensure that each fund's management fee is consistent
with the fees for similar funds in the Putnam complex and compares
favorably with fees paid by competitive funds sponsored by other
advisors. The Trustees reviewed the model fee schedule currently in
effect for the fund, including fee levels and breakpoints, and the
assignment of the fund to a particular fee category under this
structure. The Trustees also reviewed comparative fee and expense
information for competitive funds. The Trustees concluded that no
changes should be made in the fund's current fee schedule at this time.
The Trustees noted that expense ratios for a number of Putnam funds had
been increasing recently as a result of declining net assets and the
natural operation of fee breakpoints. They noted that such expense ratio
increases were currently being controlled by expense limitations
implemented in January 2004. They also noted that the competitive
landscape regarding mutual fund fees may be changing as a result of fee
reductions accepted by various other fund groups in connection with
recent regulatory settlements and greater focus on fees and expenses in
the mutual fund industry generally. The Trustees indicated an intention
to monitor these developments closely.
Economies of scale
As noted above, the Trustees concluded that the fee schedule currently
in effect for your fund represents an appropriate sharing of economies
of scale at current asset levels. The Trustees indicated their intention
to continue their ongoing consideration of economies of scale and in
particular to consider further the possible operation of such economies
in the event that a significant recovery in the equity markets or net
fund sales were to raise asset levels substantially above current
levels. In this regard, the Trustees noted that they had reviewed data
relating to the substantial increase in asset levels of the Putnam funds
that occurred during the years leading up to the market peak in 2000,
the subsequent decline in assets and the resulting impact on revenues
and expenses of Putnam Management. The Trustees also noted that recent
declines in net assets in many Putnam funds, together with significant
changes in the cost structure of Putnam Management have altered the
economics of Putnam Management's business in significant ways. The
Trustees concluded that they would monitor these changes carefully and
evaluate the resulting impact on Putnam Management's economics and the
sharing of economies of scale between the parties.
Investment performance
The quality of the investment process provided by Putnam Management
represented a major factor in the Trustees' evaluation of the quality of
services provided by Putnam Management under the Management Contracts.
The Trustees recognized that a high quality investment process -- as
measured by the experience and skills of the individuals assigned to the
management of fund portfolios, the resources made available to such
personnel, and in general the ability of Putnam Management to attract
and retain high-quality personnel -- does not guarantee favorable
investment results for every fund in every time period. The Trustees
considered the investment performance of each fund over multiple time
periods and considered information comparing the fund's performance with
various benchmarks and with the performance of competitive funds. The
Trustees noted the satisfactory investment performance of many Putnam
funds.
They also noted the disappointing investment performance of certain
funds in recent years and continued to discuss with senior management of
Putnam Management the factors contributing to such under-performance and
actions being taken to improve performance. The Trustees recognized
that, in recent years, Putnam Management has made significant changes in
its investment personnel and processes and in the fund product line in
an effort to address areas of underperformance. The Trustees indicated
their intention to continue to monitor performance trends to assess the
effectiveness of these changes and to evaluate whether additional
remedial changes are warranted. As a general matter, the Trustees
concluded that consultation between the Trustees and Putnam Management
represents the most effective way to address investment performance
problems. The Trustees believe that investors in the Putnam funds and
their financial advisors have, as a general matter, effectively placed
their trust in the Putnam organization, under the supervision of the
funds' Trustees, to make appropriate decisions regarding the management
of the funds. The Trustees believe that the termination of the
Management Contract and engagement of a new investment adviser for
under-performing funds, with all the attendant disruptions, would not
serve the interests of fund shareholders at this time and would not
necessarily provide any greater assurance of improved investment
performance.
Brokerage and soft-dollar allocations; other benefits
The Trustees considered various potential benefits that Putnam
Management may receive in connection with the services it provides under
the Management Contract with your fund. These include principally
benefits related to brokerage and soft-dollar allocations, which pertain
mainly to funds investing in equity securities. The Trustees believe
that soft-dollar credits and other potential benefits associated with
the allocation of fund brokerage represent assets of the funds that
should be used for the benefit of fund shareholders. The Trustees noted
recent trends in the allocation of fund brokerage, including commission
costs, the allocation of brokerage to firms that provide research
services to Putnam Management, and the sources and application of
available soft-dollar credits. Effective December 31, 2003, reflecting a
decision made by the Trustees earlier that year, Putnam Management
ceased allocating brokerage in connection with the sale of fund shares.
In addition, in preparing its budget for commission allocations in 2004,
Putnam Management voluntarily reduced substantially the allocation of
brokerage commissions to acquire research services from third-party
service providers. In light of evolving best practices in the mutual
fund industry, the Trustees concluded that this practice should be
further curtailed and possibly eliminated in the near future. The
Trustees indicated that they would continue to monitor the allocation of
the funds' brokerage to ensure that the principle of "best price and
execution" remains paramount in the portfolio trading process.
Comparison of retail and institutional fee schedules
The information examined by the Trustees as part of the annual contract
reviews included information regarding fees charged by Putnam Management
and its affiliates to institutional clients such as defined benefit
pension plans and college endowments. This information included
comparison of such fees with fees charged to the Putnam funds, as well
as a detailed assessment of the differences in the services provided to
these two types of clients. The Trustees devoted special attention to
these issues and reviewed recent articles by critics of mutual fund
fees, articles by the ICI defending such fee differences, and relevant
guidance provided by decisions of the courts. The Trustees observed, in
this regard, that the differences in fee rates between institutional
clients and mutual funds are by no means uniform when examined by
individual asset sectors, suggesting that differences in the pricing of
investment management services to these types of clients reflects to a
substantial degree historical competitive forces operating in separate
market places. In reaching their conclusions, the Trustees considered
the fact that fee rates across all asset sectors are higher on average
for mutual funds than for institutional clients, and also considered the
differences between the services that Putnam provides to the Putnam
funds and those that it provides to institutional clients of the firm.
Settlement of regulatory charges related to market timing
Finally, in reaching their conclusions, the Trustees considered all
matters pertinent to the administrative charges filed against Putnam
Management by the SEC and the Commonwealth of Massachusetts in October
2003 relating to market timing, the firm's settlement of those charges,
and the conclusions and recommendations of the Trustees' Audit and
Pricing Committee based on its review of these matters. The Trustees
considered the actions taken by the owner of Putnam Management and its
new senior management to terminate or discipline the individuals
involved, to implement new compliance systems, to indemnify the funds
against all costs and liabilities related to these matters, and
otherwise to ensure that the interests of the funds and their
shareholders are fully protected. The Trustees noted that, in addition
to the settlements of the regulatory charges which will provide
comprehensive restitution for any losses suffered by shareholders, the
new senior management of Putnam Management has moved aggressively to
control expense ratios of funds affected by market timing, to reduce
charges to new investors, to improve disclosure of fees and expenses,
and to emphasize the paramount role of investment performance in
achieving shareholders' investment goals.
Other information for shareholders
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
Proxy voting
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. The Putnam funds' proxy voting guidelines and
procedures, as well as information regarding how your fund voted proxies
relating to portfolio securities during the 12-month period ended June
30, 2004, are available on the Putnam Individual Investor Web site,
www.putnaminvestments.com/individual, and on the SEC's Web site,
www.sec.gov. If you have questions about finding forms on the SEC's Web
site, you may call the SEC at 1-800-SEC-0330. You may also obtain the
Putnam funds' proxy voting guidelines and procedures at no charge by
calling Putnam's Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
For periods ending on or after July 9, 2004, the fund will file a
complete schedule of its portfolio holdings with the SEC for the first
and third quarters of each fiscal year on Form N-Q. Shareholders may
obtain the fund's Forms N-Q on the SEC's Web site at www.sec.gov. In
addition, the fund's Forms N-Q may be reviewed and copied at the SEC's
public reference room in Washington, D.C. You may call the SEC at
1-800-SEC-0330 for information about the SEC's Web site or the operation
of the public reference room.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
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.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or loss
the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by the fund's net investment gain or loss, 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.
The fund's portfolio
December 31, 2004 (Unaudited)
Common stocks (99.6%) (a)
Number of shares Value
Advertising and Marketing Services (0.2%)
- -------------------------------------------------------------------------------
172,100 Omnicom Group, Inc. $14,511,472
Aerospace and Defense (2.4%)
- -------------------------------------------------------------------------------
963,200 Raytheon Co. 37,401,056
533,100 Rockwell Collins, Inc. 21,025,464
1,465,800 United Defense Industries, Inc.
(NON) 69,259,050
372,800 United Technologies Corp. 38,528,880
--------------
166,214,450
Automotive (0.2%)
- -------------------------------------------------------------------------------
442,700 Copart, Inc. (NON) 11,651,864
Banking (1.9%)
- -------------------------------------------------------------------------------
405,500 Doral Financial Corp. 19,970,875
190,600 TCF Financial Corp. 6,125,884
261,900 UnionBanCal Corp. 16,887,312
533,154 W Holding Co., Inc. 12,230,553
750,900 Wells Fargo & Co. 46,668,435
467,500 Zions Bancorp. 31,804,025
--------------
133,687,084
Beverage (0.3%)
- -------------------------------------------------------------------------------
746,300 Pepsi Bottling Group, Inc. (The) 20,179,952
Biotechnology (1.1%)
- -------------------------------------------------------------------------------
196,700 Amylin Pharmaceuticals, Inc. (NON) 4,594,912
857,300 Celgene Corp. (NON) 22,744,169
896,400 Genzyme Corp. (NON) 52,053,948
--------------
79,393,029
Broadcasting (0.6%)
- -------------------------------------------------------------------------------
1,021,200 XM Satellite Radio Holdings, Inc.
Class A (NON) 38,417,544
Building Materials (0.3%)
- -------------------------------------------------------------------------------
515,800 Sherwin Williams Co. 23,020,154
Coal (0.4%)
- -------------------------------------------------------------------------------
592,029 CONSOL Energy, Inc. 24,302,790
Commercial and Consumer Services (1.3%)
- -------------------------------------------------------------------------------
398,865 CDW Corp. 26,464,693
748,800 Corporate Executive Board Co. (The) 50,124,672
394,900 Yahoo!, Inc. (NON) 14,879,832
--------------
91,469,197
Communications Equipment (4.4%)
- -------------------------------------------------------------------------------
9,225,800 Cisco Systems, Inc. (NON) 178,057,940
1,155,700 Harris Corp. 71,410,703
258,800 Juniper Networks, Inc. (NON) 7,036,772
991,500 Scientific-Atlanta, Inc. 32,729,415
2,315,700 Tellabs, Inc. (NON) 19,891,863
--------------
309,126,693
Computers (3.6%)
- -------------------------------------------------------------------------------
425,100 Anixter International, Inc. 15,299,349
1,590,800 Dell, Inc. (NON) 67,036,312
769,560 Lexmark International, Inc. (NON) 65,412,600
224,900 Micros Systems, Inc. (NON) 17,555,694
336,500 NCR Corp. (NON) 23,295,895
2,011,300 Network Appliance, Inc. (NON) 66,815,386
--------------
255,415,236
Conglomerates (1.8%)
- -------------------------------------------------------------------------------
374,300 Danaher Corp. 21,488,563
458,000 Harman International Industries,
Inc. 58,166,000
413,000 ITT Industries, Inc. 34,877,850
211,100 Textron, Inc. 15,579,180
--------------
130,111,593
Consumer Cyclicals (1.0%)
- -------------------------------------------------------------------------------
833,100 Black & Decker Manufacturing Co. 73,587,723
Consumer Finance (2.4%)
- -------------------------------------------------------------------------------
1,292,800 Capital One Financial Corp. 108,866,688
704,300 Countrywide Financial Corp. 26,066,143
2,171,300 Providian Financial Corp. (NON) 35,761,311
--------------
170,694,142
Consumer Goods (5.1%)
- -------------------------------------------------------------------------------
862,100 Energizer Holdings, Inc. (NON) 42,837,749
287,600 Fortune Brands, Inc. 22,196,968
2,047,700 Gillette Co. (The) 91,696,006
1,075,700 Newell Rubbermaid, Inc. 26,021,183
2,905,800 Procter & Gamble Co. (The) 160,051,464
506,600 Yankee Candle Co., Inc. (The) (NON) 16,808,988
--------------
359,612,358
Consumer Services (1.6%)
- -------------------------------------------------------------------------------
1,248,200 Alliance Data Systems Corp. (NON) 59,264,536
795,400 Getty Images, Inc. (NON) 54,763,290
--------------
114,027,826
Containers (0.3%)
- -------------------------------------------------------------------------------
530,800 Ball Corp. 23,344,584
Distributors (0.2%)
- -------------------------------------------------------------------------------
510,400 Hughes Supply, Inc. 16,511,440
Electronics (5.0%)
- -------------------------------------------------------------------------------
842,500 Arrow Electronics, Inc. (NON) 20,472,750
4,579,300 Atmel Corp. (NON) 17,950,856
2,318,000 Cypress Semiconductor Corp. (NON) 27,190,140
1,499,700 Intel Corp. 35,077,983
427,000 International Rectifier Corp. (NON) 19,031,390
2,061,700 Linear Technology Corp. 79,911,492
859,100 Microchip Technology, Inc. 22,903,606
1,960,500 Motorola, Inc. 33,720,600
1,226,000 National Semiconductor Corp. 22,006,700
758,600 PerkinElmer, Inc. 17,060,914
557,900 SanDisk Corp. (NON) 13,930,763
1,491,200 Storage Technology Corp. (NON) 47,136,832
--------------
356,394,026
Energy (0.8%)
- -------------------------------------------------------------------------------
478,600 BJ Services Co. 22,274,044
219,500 Cooper Cameron Corp. (NON) 11,811,295
1,495,700 Superior Energy Services (NON) 23,048,737
--------------
57,134,076
Entertainment (0.4%)
- -------------------------------------------------------------------------------
300,600 Pixar, Inc. (NON) 25,734,366
Financial (2.3%)
- -------------------------------------------------------------------------------
233,100 Chicago Mercantile Exchange 53,309,970
416,000 Fannie Mae 29,623,360
922,400 Moody's Corp. 80,110,440
--------------
163,043,770
Food (0.2%)
- -------------------------------------------------------------------------------
570,600 7-Eleven, Inc. (NON) 13,665,870
Gaming & Lottery (1.3%)
- -------------------------------------------------------------------------------
303,300 Ameristar Casinos, Inc. 13,075,263
1,407,400 GTECH Holdings Corp. 36,522,030
655,100 Harrah's Entertainment, Inc. 43,819,639
--------------
93,416,932
Health Care Services (4.9%)
- -------------------------------------------------------------------------------
439,300 AmerisourceBergen Corp. 25,778,124
321,500 Community Health Systems, Inc. (NON) 8,963,420
848,190 Coventry Health Care, Inc. (NON) 45,021,925
267,100 Laboratory Corp. of America Holdings
(NON) 13,306,922
708,200 McKesson Corp. 22,279,972
241,100 PacifiCare Health Systems, Inc.
(NON) 13,626,972
1,246,500 UnitedHealth Group, Inc. 109,729,395
1,623,300 VCA Antech, Inc. (NON) 31,816,680
417,500 WellChoice, Inc. (NON) 22,294,500
435,900 WellPoint, Inc. (NON) 50,128,500
--------------
342,946,410
Homebuilding (1.8%)
- -------------------------------------------------------------------------------
183,200 KB Home 19,126,080
284,400 M.D.C. Holdings, Inc. 24,583,536
104,900 NVR, Inc. (NON) 80,710,060
--------------
124,419,676
Insurance (1.8%)
- -------------------------------------------------------------------------------
734,500 Everest Re Group, Ltd. (Bermuda) 65,781,820
746,700 W.R. Berkley Corp. 35,221,839
541,800 Willis Group Holdings, Ltd. (United
Kingdom) 22,305,906
--------------
123,309,565
Investment Banking/Brokerage (1.1%)
- -------------------------------------------------------------------------------
417,400 Bear Stearns Cos., Inc. (The) 42,704,194
1,411,200 E(a)Trade Group, Inc. (NON) 21,097,440
299,800 Eaton Vance Corp. 15,634,570
--------------
79,436,204
Leisure (1.5%)
- -------------------------------------------------------------------------------
529,600 Brunswick Corp. 26,215,200
258,700 Harley-Davidson, Inc. 15,716,025
955,400 Polaris Industries, Inc. 64,986,308
--------------
106,917,533
Lodging/Tourism (0.2%)
- -------------------------------------------------------------------------------
698,600 Hilton Hotels Corp. 15,886,164
Machinery (0.6%)
- -------------------------------------------------------------------------------
952,800 Terex Corp. (NON) 45,400,920
Manufacturing (0.3%)
- -------------------------------------------------------------------------------
433,000 Mettler-Toledo International, Inc.
(Switzerland) (NON) 22,217,230
Medical Technology (8.5%)
- -------------------------------------------------------------------------------
526,400 Bausch & Lomb, Inc. 33,931,744
565,800 Becton, Dickinson and Co. 32,137,440
1,194,100 Biomet, Inc. 51,811,999
1,204,300 C.R. Bard, Inc. 77,051,114
705,300 Charles River Laboratories
International, Inc. (NON) 32,450,853
538,500 Dade Behring Holdings, Inc. (NON) 30,156,000
362,642 Gen-Probe, Inc. (NON) 16,395,045
579,900 Haemonetics Corp. (NON) 20,998,179
739,200 Kinetic Concepts, Inc. (NON) 56,400,960
326,500 Medtronic, Inc. 16,217,255
895,200 Respironics, Inc. (NON) 48,663,072
2,021,200 St. Jude Medical, Inc. (NON) 84,748,916
320,400 Sybron Dental Specialties, Inc.
(NON) 11,335,752
1,608,700 Varian Medical Systems, Inc. (NON) 69,560,188
451,500 Waters Corp. (NON) 21,125,685
--------------
602,984,202
Metals (0.5%)
- -------------------------------------------------------------------------------
1,715,700 AK Steel Holding Corp. (NON) 24,826,179
325,500 Steel Dynamics, Inc. 12,329,940
--------------
37,156,119
Oil & Gas (2.4%)
- -------------------------------------------------------------------------------
257,400 Amerada Hess Corp. 21,204,612
934,300 Burlington Resources, Inc. 40,642,050
268,600 Noble Energy, Inc. 16,561,876
548,800 Oil States International, Inc. (NON) 10,586,352
422,300 Pogo Producing Co. 20,477,327
321,100 Southwestern Energy Co. (NON) 16,276,559
406,800 Sunoco, Inc. 33,239,628
325,300 Tesoro Petroleum Corp. (NON) 10,364,058
--------------
169,352,462
Pharmaceuticals (8.0%)
- -------------------------------------------------------------------------------
1,023,800 Abbott Laboratories 47,760,270
138,600 Allergan, Inc. 11,236,302
1,223,850 Barr Pharmaceuticals, Inc. (NON) 55,734,129
1,105,000 Caremark Rx, Inc. (NON) 43,570,150
1,147,100 Cephalon, Inc. (NON) 58,364,448
3,682,700 Johnson & Johnson 233,556,834
434,600 Medicis Pharmaceutical Corp. Class A 15,258,806
958,300 Mylan Laboratories, Inc. 16,942,744
3,206,200 Pfizer, Inc. 86,214,718
--------------
568,638,401
Photography/Imaging (0.2%)
- -------------------------------------------------------------------------------
655,100 Xerox Corp. (NON) 11,143,251
Real Estate (0.4%)
- -------------------------------------------------------------------------------
440,000 Ryland Group, Inc. (The) 25,317,600
Restaurants (0.2%)
- -------------------------------------------------------------------------------
415,800 CEC Entertainment, Inc. (NON) 16,619,526
Retail (8.6%)
- -------------------------------------------------------------------------------
564,000 Abercrombie & Fitch Co. Class A 26,479,800
793,900 Aeropostale, Inc. (NON) 23,364,477
1,111,600 American Eagle Outfitters, Inc. 52,356,360
657,520 Barnes & Noble, Inc. (NON) 21,218,170
603,202 Best Buy Co., Inc. 35,842,203
752,200 Borders Group, Inc. 19,105,880
632,200 Claire's Stores, Inc. 13,434,250
965,800 Coach, Inc. (NON) 54,471,120
828,100 Costco Wholesale Corp. 40,088,321
196,700 Fossil, Inc. (NON) 5,043,388
2,777,800 Home Depot, Inc. (The) 118,723,172
1,096,300 Limited Brands, Inc. 25,236,826
1,158,800 Michaels Stores, Inc. 34,729,236
1,170,765 PETCO Animal Supplies, Inc. (NON) 46,221,802
537,500 Regis Corp. 24,805,625
1,966,700 Staples, Inc. 66,297,457
--------------
607,418,087
Schools (1.4%)
- -------------------------------------------------------------------------------
816,900 Apollo Group, Inc. Class A (NON) 65,931,999
772,259 Career Education Corp. (NON) 30,890,360
--------------
96,822,359
Semiconductor (0.4%)
- -------------------------------------------------------------------------------
969,100 Lam Research Corp. (NON) 28,016,681
Shipping (1.2%)
- -------------------------------------------------------------------------------
76,800 FedEx Corp. 7,564,032
1,411,000 J. B. Hunt Transport Services, Inc. 63,283,350
235,400 Ryder System, Inc. 11,245,058
--------------
82,092,440
Software (11.4%)
- -------------------------------------------------------------------------------
1,987,600 Adobe Systems, Inc. 124,702,024
833,400 Amdocs, Ltd. (Guernsey) (NON) 21,876,750
1,792,600 Autodesk, Inc. 68,029,170
4,055,500 BMC Software, Inc. (NON) 75,432,300
3,918,700 Citrix Systems, Inc. (NON) 96,125,711
587,400 Cognos, Inc. (Canada) (NON) 25,880,844
855,800 McAfee, Inc. (NON) 24,758,294
8,927,200 Microsoft Corp. (SEG) 238,445,512
2,873,300 Oracle Corp. (NON) 39,421,676
3,079,200 Siebel Systems, Inc. (NON) 32,331,600
1,782,500 Symantec Corp. (NON) 45,917,200
438,400 Veritas Software Corp. (NON) 12,516,320
--------------
805,437,401
Technology (0.4%)
- -------------------------------------------------------------------------------
460,300 Dun & Bradstreet Corp. (The) (NON) 27,456,895
Technology Services (2.1%)
- -------------------------------------------------------------------------------
272,700 Accenture, Ltd. Class A (Bermuda)
(NON) 7,362,900
823,000 Acxiom Corp. 21,644,900
466,600 Ask Jeeves, Inc. (NON) 12,481,550
1,166,110 Automatic Data Processing, Inc. 51,716,979
1,388,400 Ingram Micro, Inc. Class A (NON) 28,878,720
166,800 Total Systems Services, Inc 4,053,240
649,900 VeriSign, Inc. (NON) 21,784,648
--------------
147,922,937
Telecommunications (0.7%)
- -------------------------------------------------------------------------------
594,900 American Tower Corp. Class A (NON) 10,946,160
2,103,694 Earthlink, Inc. (NON) 24,234,555
564,800 Western Wireless Corp. Class A (NON) 16,548,640
--------------
51,729,355
Textiles (1.7%)
- -------------------------------------------------------------------------------
312,200 Armor Holdings, Inc. (NON) 14,679,644
954,900 NIKE, Inc. 86,599,881
621,740 WESCO International, Inc. (NON) 18,428,374
--------------
119,707,899
Tobacco (0.2%)
- -------------------------------------------------------------------------------
257,300 Altria Group, Inc. 15,721,030
--------------
Total Common stocks
(cost $6,056,963,993) $7,038,738,518
Warrants (--%) (a) (NON) (cost $--) Expiration
Number of warrants date Value
- -------------------------------------------------------------------------------
7,377 Lucent Technologies, Inc. 12/10/07 $11,361
Short-term investments (1.6%) (a)
Principal amount Value
- -------------------------------------------------------------------------------
$50,000,000 JP Morgan Chase & Co. zero %,
January 3, 2005 $49,993,833
64,000,000 UBS Finance (Delaware), LLC zero %,
January 3, 2005 63,988,267
2,129,000 Interest in $700,000,000 joint
tri-party repurchase agreement
dated December 31, 2004 with Goldman
Sachs & Co. due January 3, 2005 with
respect to various U.S. government
obligations -- maturity value of
$2,129,406 for an effective yield of
2.29% (collateralized by Fannie Mae
securities with yields ranging from
4.193% to 7.00% and due dates
ranging from January 1, 2009 to
November 1, 2034) 2,129,000
- -------------------------------------------------------------------------------
Total Short-term investments
(cost $116,111,100) $116,111,100
- -------------------------------------------------------------------------------
Total Investments
(cost $6,173,075,093) $7,154,860,979
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $7,070,450,834.
(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 December
31, 2004.
Futures contracts outstanding at December 31, 2004 (Unaudited)
Aggregate Expiration Unrealized
Value face value date depreciation
- -------------------------------------------------------------------------------------
NASDAQ 100 Index (Long) $651,400 $652,668 Mar-05 $(1,268)
Russell 2000 Index Mini (Long) 261,600 261,693 Mar-05 (93)
S&P 500 Index (Long) 1,820,550 1,822,580 Mar-05 (2,030)
- -------------------------------------------------------------------------------------
$(3,391)
- -------------------------------------------------------------------------------------
Written options outstanding at December 31, 2004 (Unaudited)
(premiums received $69,044)
Contract Expiration date/
amount strike price Value
- -----------------------------------------------------------------------------------
58,412 Abercrombie & Fitch Co. Class A (Call) Jan 05/$50.22 $6,075
59,705 National Semiconductor Corp. (Call) Jan 05/$18.45 18,915
36,669 Steel Dynamics, Inc. (Call) Jan 05/$39.43 19,082
- -----------------------------------------------------------------------------------
$44,072
- -----------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of assets and liabilities
December 31, 2004 (Unaudited)
Assets
- -------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$6,173,075,093) (Note 1) $7,154,860,979
- -------------------------------------------------------------------------------
Cash 209
- -------------------------------------------------------------------------------
Dividends and other receivables 4,479,824
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 1,837,622
- -------------------------------------------------------------------------------
Receivable for securities sold 11,763,804
- -------------------------------------------------------------------------------
Receivable for variation margin (Note 1) 88,724
- -------------------------------------------------------------------------------
Total assets 7,173,031,162
Liabilities
- -------------------------------------------------------------------------------
Payable for securities purchased 9,445,809
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 75,012,917
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Notes 2 and 5) 9,245,392
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,469,047
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 891,497
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 6,095
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 4,211,997
- -------------------------------------------------------------------------------
Written options outstanding, at value (premiums received
$69,044) (Note 1) 44,072
- -------------------------------------------------------------------------------
Other accrued expenses 2,253,502
- -------------------------------------------------------------------------------
Total liabilities 102,580,328
- -------------------------------------------------------------------------------
Net assets $7,070,450,834
Represented by
- -------------------------------------------------------------------------------
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) $11,042,623,639
- -------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 8,263,846
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (Note 1) (4,962,249,780)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 981,813,129
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $7,070,450,834
Computation of net asset value and offering price
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($5,041,791,756 divided by 121,411,750 shares) $41.53
- -------------------------------------------------------------------------------
Offering price per class A share (100/94.75 of $41.53)* $43.83
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,162,701,442 divided by 30,990,300 shares)** $37.52
- -------------------------------------------------------------------------------
Net asset value and offering price per class C share
($49,739,393 divided by 1,249,494 shares)** $39.81
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($122,109,297 divided by 3,118,233 shares) $39.16
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $39.16)* $40.58
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class R share ($100,737 divided by 2,436 shares) $41.36
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class Y share ($694,008,209 divided by 16,202,337 shares) $42.83
- -------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
Statement of operations
Six months ended December 31, 2004 (Unaudited)
Investment income:
- -------------------------------------------------------------------------------
Dividends (net of foreign tax of $9,115) $48,966,017
- -------------------------------------------------------------------------------
Interest (including interest income of $1,077,002 from
investments in affiliated issuers) (Note 5) 1,375,994
- -------------------------------------------------------------------------------
Total investment income 50,342,011
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 18,522,492
- -------------------------------------------------------------------------------
Investor servicing fees (Note 2) 10,317,841
- -------------------------------------------------------------------------------
Custodian fees (Note 2) 183,736
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 72,439
- -------------------------------------------------------------------------------
Administrative services (Note 2) 52,611
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 5,984,894
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 6,657,424
- -------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 246,531
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 455,169
- -------------------------------------------------------------------------------
Distribution fees -- Class R (Note 2) 157
- -------------------------------------------------------------------------------
Other 2,546,049
- -------------------------------------------------------------------------------
Non-recurring costs (Notes 2 and 6) 244,698
- -------------------------------------------------------------------------------
Costs assumed by Manager (Notes 2 and 6) (244,698)
- -------------------------------------------------------------------------------
Fees waived and reimbursed by Manager (Note 5) (86,430)
- -------------------------------------------------------------------------------
Total expenses 44,952,913
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (2,874,748)
- -------------------------------------------------------------------------------
Net expenses 42,078,165
- -------------------------------------------------------------------------------
Net investment income 8,263,846
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 560,478,134
- -------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 10,321,253
- -------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 1,042
- -------------------------------------------------------------------------------
Net realized gain on written options (Notes 1 and 3) 361,476
- -------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the period 4,929
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments, futures
contracts and written options during the period (178,245,661)
- -------------------------------------------------------------------------------
Net gain on investments 392,921,173
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $401,185,019
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
Statement of changes in net assets
Six months ended Year ended
December 31 June 30
Decrease in net assets 2004* 2004
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income (loss) $8,263,846 $(59,236,644)
- -------------------------------------------------------------------------------
Net realized gain on investments and foreign
currency transactions 571,161,905 1,627,695,547
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments and assets and liabilities in
foreign currencies (178,240,732) 34,872,707
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 401,185,019 1,603,331,610
- -------------------------------------------------------------------------------
Redemption fees (Note 1) 10,796 --
- -------------------------------------------------------------------------------
Decrease from capital share transactions
(Note 4) (1,120,605,143) (3,093,014,749)
- -------------------------------------------------------------------------------
Total decrease in net assets (719,409,328) (1,489,683,139)
Net assets
- -------------------------------------------------------------------------------
Beginning of period 7,789,860,162 9,279,543,301
- -------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $8,263,846 and $--,
respectively) $7,070,450,834 $7,789,860,162
- -------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
December 31
Per-share (Unaudited) Year ended June 30
operating performance 2004 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $38.96 $32.79 $32.28 $47.97 $96.61 $65.61
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) .07 (d)(f) (.19)(d) (.17) (.22) (.37) (.54)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.50 6.36 .68 (15.47) (38.81) 38.84
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.57 6.17 .51 (15.69) (39.18) 38.30
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (9.46) (7.30)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (9.46) (7.30)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $41.53 $38.96 $32.79 $32.28 $47.97 $96.61
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.60* 18.82 1.58 (32.71) (43.10) 60.49
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $5,041,792 $5,075,005 $6,262,164 $7,683,016 $12,595,034 $21,138,863
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .58* (d) 1.09 (d) 1.09 .98 .89 .86
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .19* (d)(f) (.52) (d) (.57) (.57) (.55) (.64)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 69.90* 60.86 42.43 76.67 67.74 53.13
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
December 31, 2004 and June 30, 2004 reflect a reduction of less than
0.01% of average net assets for class A shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a special dividend which amounted to $0.14 per share and
0.38% of average net assets.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS B
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
December 31
Per-share (Unaudited) Year ended June 30
operating performance 2004 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $35.34 $29.96 $29.72 $44.50 $91.07 $62.51
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.08) (d)(f) (.43) (d) (.36) (.48) (.77) (.98)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.26 5.81 .60 (14.30) (36.34) 36.84
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.18 5.38 .24 (14.78) (37.11) 35.86
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (9.46) (7.30)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (9.46) (7.30)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $37.52 $35.34 $29.96 $29.72 $44.50 $91.07
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.17* 17.96 0.81 (33.21) (43.48) 59.53
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,162,701 $1,674,238 $1,850,775 $2,739,100 $6,137,938 $12,343,996
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .95* (d) 1.84 (d) 1.84 1.73 1.53 1.46
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.23)* (d)(f) (1.27)(d) (1.33) (1.32) (1.19) (1.24)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 69.90* 60.86 42.43 76.67 67.74 53.13
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment loss has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
December 31, 2004 and June 30, 2004 reflect a reduction of less than
0.01% of average net assets for class B shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a special dividend which amounted to $0.14 per share and
0.38% of average net assets.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS C
- ----------------------------------------------------------------------------------------------------------------------------
Six months For the
ended period
December 31 July 26, 1999+
Per-share (Unaudited) Year ended June 30 to June 30
operating performance 2004 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $37.49 $31.79 $31.53 $47.21 $95.94 $65.31
- ----------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.07) (d)(f) (.45) (d) (.37) (.50) (.82) (1.13)
- ----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.39 6.15 .63 (15.18) (38.45) 39.06
- ----------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.32 5.70 .26 (15.68) (39.27) 37.93
- ----------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (9.46) (7.30)
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (9.46) (7.30)
- ----------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $39.81 $37.49 $31.79 $31.53 $47.21 $95.94
- ----------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.19* 17.93 0.83 (33.21) (43.53) 60.14*
- ----------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $49,739 $55,005 $64,015 $79,149 $136,417 $118,720
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .95* (d) 1.84 (d) 1.84 1.73 1.64 1.50*
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.19)*(d)(f) (1.27) (d) (1.32) (1.32) (1.29) (1.30)*
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 69.90* 60.86 42.43 76.67 67.74 53.13
- ----------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment loss has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
December 31, 2004 and June 30, 2004 reflect a reduction of less than
0.01% of average net assets for class C shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a special dividend which amounted to $0.14 per share and
0.38% of average net assets.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS M
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
December 31
Per-share (Unaudited) Year ended June 30
operating performance 2004 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $36.83 $31.15 $30.82 $46.03 $93.63 $64.05
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.02) (d)(f) (.36)(d) (.30) (.40) (.69) (.93)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.35 6.04 .63 (14.81) (37.45) 37.81
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.33 5.68 .33 (15.21) (38.14) 36.88
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (9.46) (7.30)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (9.46) (7.30)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $39.16 $36.83 $31.15 $30.82 $46.03 $93.63
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.33* 18.24 1.07 (33.04) (43.38) 59.71
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $122,109 $134,157 $171,675 $223,964 $411,251 $770,194
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .83* (d) 1.59 (d) 1.59 1.48 1.39 1.36
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.07)* (d)(f) (1.02) (d) (1.07) (1.07) (1.05) (1.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 69.90* 60.86 42.43 76.67 67.74 53.13
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment loss has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect the
effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
December 31, 2004 and June 30, 2004 reflect a reduction of less than
0.01% of average net assets for class M shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a special dividend which amounted to $0.14 per share and
0.38% of average net assets.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS R
- ----------------------------------------------------------------------------------------------------
Six months For the
ended Year period
December 31 ended January 21, 2003+
Per-share (Unaudited) June 30 to June 30
operating performance 2004 2004 2003
- ----------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $38.85 $32.76 $28.90
- ----------------------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------------------
Net investment income (loss) (a) .02 (d)(f) (.27) (d) (.10)
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.49 6.36 3.96
- ----------------------------------------------------------------------------------------------------
Total from
investment operations 2.51 6.09 3.86
- ----------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- --
- ----------------------------------------------------------------------------------------------------
Net asset value,
end of period $41.36 $38.85 $32.76
- ----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.46* 18.59 13.36*
- ----------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $101 $25 $1
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .70* (d) 1.34 (d) .59*
- ----------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .06* (d)(f) (.76)(d) (.36)*
- ----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 69.90* 60.86 42.43
- ----------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
December 31, 2004 and June 30, 2004 reflect a reduction of less than
0.01% of average net assets for class R shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a special dividend which amounted to $0.14 per share and
0.38% of average net assets.
The accompanying notes are an integral part of these financial
statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS Y
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
December 31
Per-share (Unaudited) Year ended June 30
operating performance 2004 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $40.14 $33.70 $33.09 $49.05 $98.28 $66.49
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (a) .11 (d)(f) (.10)(d) (.10) (.13) (.21) (.34)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.58 6.54 .71 (15.83) (39.56) 39.43
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.69 6.44 .61 (15.96) (39.77) 39.09
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (9.46) (7.30)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (9.46) (7.30)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $42.83 $40.14 $33.70 $33.09 $49.05 $98.28
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 6.70* 19.11 1.85 (32.54) (42.96) 60.88
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $694,008 $851,430 $930,912 $1,170,852 $1,703,399 $2,684,761
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .45* (d) .84 (d) .84 .73 .64 .61
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (%) .29* (d)(f) (.27) (d) (.33) (.32) (.30) (.39)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 69.90* 60.86 42.43 76.67 67.74 53.13
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with
investments in Putnam Prime Money Market Fund during the period. As a
result of such waivers, the expenses of the fund for the periods ended
December 31, 2004 and June 30, 2004 reflect a reduction of less than
0.01% of average net assets for class Y shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a special dividend which amounted to $0.14 per share and
0.38% of average net assets.
The accompanying notes are an integral part of these financial
statements.
Notes to financial statements
December 31, 2004 (Unaudited)
Note 1
Significant accounting policies
Putnam New Opportunities Fund (the "fund"), a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The
fund seeks capital appreciation by investing principally in common
stocks of companies in sectors of the economy which, in the judgment of
Putnam Investment Management, LLC ("Putnam Management"), the fund's
manager, an indirect wholly-owned subsidiary of Putnam, LLC, possess
above-average, long-term growth potential.
The fund offers class A, class B, class C, class M, class R and class Y
shares. Class A shares are sold with a maximum front-end sales charge of
5.25%. 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, class M and class R
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 and class R shares but lower than class
B and class C shares. Class R shares are sold without a front-end sales
charge and pay an ongoing distribution fee that is higher than class A
shares, but lower than class B, class C and class M shares. Class R
shares are offered to qualified employee-benefit plans. Class Y shares,
which are sold at net asset value, are generally subject to the same
expenses as class A, class B, class C, class M and class R shares, but
do not bear a distribution fee. Class Y shares are sold to certain
eligible purchasers including certain defined contribution plans
(including corporate IRAs), bank trust departments, trust companies and
certain college savings plans.
Effective April 19, 2004 (May 3, 2004 for defined contribution plans
administered by Putnam), a 2.00% redemption fee may apply to any shares
that are redeemed (either by selling or exchanging into another fund)
within 5 days of purchase. The redemption fee is accounted for as an
addition to paid-in-capital.
Investment income, realized and unrealized gains and losses and expenses
of the fund are borne pro-rata based on the relative net assets of each
class to the total net assets of the fund, except that each class bears
expenses unique to that class (including the distribution fees
applicable to such classes). 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 accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in 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 valued at the last reported sales price on their
principal exchange, or official closing price for certain markets. If no
sales are reported -- as in the case of some securities traded
over-the-counter -- a security is valued at its last reported bid price.
Many securities markets and exchanges outside the U.S. close prior to
the close of the New York Stock Exchange and therefore the closing
prices for securities in such markets or on such exchanges may not fully
reflect events that occur after such close but before the close of the
New York Stock Exchange. Accordingly, on certain days, the fund will
fair value foreign securities taking into account multiple factors,
including movements in the U.S. securities markets. The number of days
on which fair value prices will be used will depend on market activity
and it is possible that fair value prices will be used by the fund to a
significant extent. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. Short-term
investments having remaining maturities of 60 days or less are valued at
amortized cost, which approximates fair value. Other investments,
including certain restricted securities, are valued at fair value
following procedures approved by the Trustees. Such valuations and
procedures are reviewed periodically by the Trustees.
B) Joint trading account Pursuant to an exemptive order from the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances, including cash collateral received under security lending
arrangements, 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 issues of
high-grade short-term investments having maturities of up to 397 days
for collateral received under security lending arrangements and up to 90
days for other cash investments.
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 recorded 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, net
of applicable withholding taxes, is recognized on the ex-dividend date
except that certain dividends from foreign securities are recognized as
soon as the fund is informed of the ex-dividend date. Non-cash
dividends, if any, are recorded at the fair market value of the
securities received.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized
appreciation and depreciation of assets and liabilities in foreign
currencies arise from changes in the value of open forward currency
contracts and assets and liabilities other than investments at the
period end, resulting from changes in the exchange rate. Investments in
foreign securities involve certain risks, including those related to
economic instability, unfavorable political developments, and currency
fluctuations, not present with domestic investments.
F) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. Risks may exceed amounts recognized on the statement
of assets and liabilities. When the contract is closed, the fund records
a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities. If a written call
option is exercised, the premium originally received is recorded as an
addition to sales proceeds. If a written put option is exercised, the
premium originally received is recorded as a reduction to the cost of
investments.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The fund and the broker
agree to exchange an amount of cash equal to the daily fluctuation in
the value of the futures contract. Such receipts or payments are known
as "variation margin." Exchange-traded options are valued at the last
sale price, or if no sales are reported, the last bid price for
purchased options and the last ask price for written options. Options
traded over-the-counter are valued using prices supplied by dealers.
Futures and written option contracts outstanding at period end, if any,
are listed after the fund's portfolio.
G) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code of 1986 (the "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 Code, 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 June 30, 2004, the fund had a capital loss carryover of
$5,515,781,251 available to the extent allowed by the Code to offset
future net capital gain, if any. The amount of the carryover and the
expiration dates are:
Loss Carryover Expiration
- --------------------------------
$3,739,293,333 June 30, 2010
1,776,487,918 June 30, 2011
The aggregate identified cost on a tax basis is $6,190,699,238,
resulting in gross unrealized appreciation and depreciation of
$1,051,469,946 and $87,308,205, respectively, or net unrealized
appreciation of $964,161,741.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Distributions from capital gains, 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.
Note 2
Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on the following annual rates: 0.70% of the first $500 million
of average net assets, 0.60% of the next $500 million, 0.55% of the next
$500 million, 0.50% of the next $5 billion, 0.475% of the next $5
billion, 0.455% of the next $5 billion, 0.44% of the next $5 billion,
0.43% of the next $5 billion, 0.42% of the next $5 billion, 0.41% of the
next $5 billion, 0.40% of the next $5 billion, 0.39% of the next $5
billion, 0.38% of the next $8.5 billion and 0.37% thereafter.
Effective January 28, 2004, Putnam Management has agreed to waive fees
and reimburse expenses of the fund through June 30, 2005, to the extent
necessary to ensure that the fund's expenses do not exceed the average
expenses of the front-end load funds viewed by Lipper, Inc. as having
the same investment classification or objective as the fund. The expense
reimbursement is based on a comparison of the fund's expenses with the
average annualized operating expenses of the funds in its Lipper peer
group for each calendar quarter during the fund's last fiscal year,
excluding 12b-1 fees and without giving effect to any expense offset and
brokerage service arrangements that may reduce fund expenses. For the
period ended December 31, 2004, Putnam Management did not waive any of
its management fee from the fund.
For the period ended December 31, 2004, Putnam Management has assumed
$244,698 of legal, shareholder servicing and communication, audit and
Trustee fees incurred by the fund in connection with certain legal and
regulatory matters (including those described in Note 6).
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, LLC. Putnam
Investor Services, a division of PFTC, provides investor servicing agent
functions to the fund. During the six months ended December 31, 2004,
the fund paid PFTC $9,962,498 for these services.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. The fund also reduced expenses through
brokerage service arrangements. For the six months ended December 31,
2004, the fund's expenses were reduced by $2,874,748 under these
arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $6,157, as a quarterly retainer, has been allocated to the fund,
and an additional fee for each Trustees meeting attended. Trustees
receive additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Trustee compensation and expenses in the
statement of operations. Accrued pension liability is included in
Payable for Trustee compensation and expenses in the statement of assets
and liabilities. The Trustees have terminated the Pension Plan with
respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C, class M and class R shares pursuant to
Rule 12b-1 under the Investment Company Act of 1940. The purpose of the
Plans is to compensate Putnam Retail Management, a wholly-owned
subsidiary of Putnam, LLC and Putnam Retail Management GP, Inc., for
services provided and expenses incurred in distributing shares of the
fund. The Plans provide for payments by the fund to Putnam Retail
Management at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and
1.00% of the average net assets attributable to class A, class B, class
C, class M and class R shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, 0.75% and
0.50% of the average net assets attributable to class A, class B, class
C, class M and class R shares, respectively.
For the six months ended December 31, 2004, Putnam Retail Management,
acting as underwriter, received net commissions of $94,007 and $3,397
from the sale of class A and class M shares, respectively, and received
$1,033,903 and $1,884 in contingent deferred sales charges from
redemptions of class B and class C shares, respectively. A deferred
sales charge of up to 1.00% and 0.65% is assessed on certain redemptions
of class A and class M shares, respectively. For the six months ended
December 31, 2004, Putnam Retail Management, acting as underwriter,
received $5,885 and no monies on class A and class M redemptions,
respectively.
Note 3
Purchases and sales of securities
During the six months ended December 31, 2004, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $4,853,175,995 and $5,912,603,910, respectively.
There were no purchases or sales of U.S. government securities.
Written option transactions during the year are summarized as follows:
Contract Premiums
Amounts Received
- ----------------------------------------------------------------
Written options
outstanding at
beginning of period 566,310 $281,528
- ----------------------------------------------------------------
Options opened 1,219,544 711,697
Options exercised (185,956) (114,131)
Options expired (1,232,391) (693,820)
Options closed (212,721) (116,230)
- ----------------------------------------------------------------
Written options
outstanding at
end of period 154,786 $69,044
- ----------------------------------------------------------------
Note 4
Capital shares
At December 31, 2004, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended December 31, 2004
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 13,925,010 $520,568,913
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
13,925,010 520,568,913
Shares repurchased (22,767,142) (860,878,643)
- ----------------------------------------------------------------
Net decrease (8,842,132) $(340,309,730)
- ----------------------------------------------------------------
Year ended June 30, 2004
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 14,590,688 $535,348,614
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
14,590,688 535,348,614
Shares repurchased (75,306,819) (2,799,613,692)
- ----------------------------------------------------------------
Net decrease (60,716,131) $(2,264,265,078)
- ----------------------------------------------------------------
Six months ended December 31, 2004
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 761,223 $25,964,372
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
761,223 25,964,372
Shares repurchased (17,150,492) (580,459,706)
- ----------------------------------------------------------------
Net decrease (16,389,269) $(554,495,334)
- ----------------------------------------------------------------
Year ended June 30, 2004
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 3,322,964 $111,478,488
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
3,322,964 111,478,488
Shares repurchased (17,708,510) (600,679,415)
- ----------------------------------------------------------------
Net decrease (14,385,546) $(489,200,927)
- ----------------------------------------------------------------
Six months ended December 31, 2004
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 52,525 $1,910,863
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
52,525 1,910,863
Shares repurchased (270,161) (9,775,752)
- ----------------------------------------------------------------
Net decrease (217,636) $(7,864,889)
- ----------------------------------------------------------------
Year ended June 30, 2004
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 231,436 $8,172,513
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
231,436 8,172,513
Shares repurchased (777,907) (27,913,184)
- ----------------------------------------------------------------
Net decrease (546,471) $(19,740,671)
- ----------------------------------------------------------------
Six months ended December 31, 2004
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 135,739 $4,828,177
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
135,739 4,828,177
Shares repurchased (659,805) (23,637,139)
- ----------------------------------------------------------------
Net decrease (524,066) $(18,808,962)
- ----------------------------------------------------------------
Year ended June 30, 2004
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 456,573 $15,939,911
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
456,573 15,939,911
Shares repurchased (2,324,721) (81,851,788)
- ----------------------------------------------------------------
Net decrease (1,868,148) $(65,911,877)
- ----------------------------------------------------------------
Six months ended December 31, 2004
- ----------------------------------------------------------------
Class R Shares Amount
- ----------------------------------------------------------------
Shares sold 1,823 $67,192
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
1,823 67,192
Shares repurchased (35) (1,279)
- ----------------------------------------------------------------
Net increase 1,788 $65,913
- ----------------------------------------------------------------
Year ended June 30, 2004
- ----------------------------------------------------------------
Class R Shares Amount
- ----------------------------------------------------------------
Shares sold 633 $24,270
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
633 24,270
Shares repurchased (20) (802)
- ----------------------------------------------------------------
Net increase 613 $23,468
- ----------------------------------------------------------------
Six months ended December 31, 2004
- ----------------------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------------------
Shares sold 1,925,826 $73,996,874
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
1,925,826 73,996,874
Shares repurchased (6,935,638) (273,189,015)
- ----------------------------------------------------------------
Net decrease (5,009,812) $(199,192,141)
- ----------------------------------------------------------------
Year ended June 30, 2004
- ----------------------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------------------
Shares sold 8,529,967 $320,027,855
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
8,529,967 320,027,855
Shares repurchased (14,943,384) (573,947,519)
- ----------------------------------------------------------------
Net decrease (6,413,417) $(253,919,664)
- ----------------------------------------------------------------
Note 5
Investment in Putnam Prime Money Market Fund
Pursuant to an exemptive order from the Securities and Exchange
Commission, the fund invests in Putnam Prime Money Market Fund, an
open-end management investment company managed by Putnam Management.
Management fees paid by the fund are reduced by an amount equal to the
management fees paid by Putnam Prime Money Market Fund with respect to
assets invested by the fund in Putnam Prime Money Market Fund. For the
period ended December 31, 2004, management fees paid were reduced by
$86,430 relating to the fund's investment in Putnam Prime Money Market
Fund. Income distributions earned by the fund are recorded as income in
the statement of operations and totaled $1,077,002 for the period ended
December 31, 2004.
Note 6
Regulatory matters and litigation
On April 8, 2004, Putnam Management entered into agreements with the
Securities and Exchange Commission and the Massachusetts Securities
Division representing a final settlement of all charges brought against
Putnam Management by those agencies on October 28, 2003 in connection
with excessive short-term trading by Putnam employees and, in the case
of the charges brought by the Massachusetts Securities Division, by
participants in some Putnam-administered 401(k) plans. The settlement
with the SEC requires Putnam Management to pay $5 million in
disgorgement plus a civil monetary penalty of $50 million, and the
settlement with the Massachusetts Securities Division requires Putnam
Management to pay $5 million in restitution and an administrative fine
of $50 million. The settlements also leave intact the process
established under an earlier partial settlement with the SEC under which
Putnam Management agreed to pay the amount of restitution determined by
an independent consultant, which may exceed the disgorgement and
restitution amounts specified above, pursuant to a plan to be developed
by the independent consultant.
Putnam Management, and not the investors in any Putnam fund, will bear
all costs, including restitution, civil penalties and associated legal
fees stemming from both of these proceedings. The SEC's and
Massachusetts Securities Division's allegations and related matters also
serve as the general basis for numerous lawsuits, including purported
class-action lawsuits filed against Putnam Management and certain
related parties, including certain Putnam funds. Putnam Management has
agreed to bear any costs incurred by Putnam funds in connection with
these lawsuits. Based on currently available information, Putnam
Management believes that the likelihood that the pending private
lawsuits and purported class-action lawsuits will have a material
adverse financial impact on the fund is remote, and the pending actions
are not likely to materially affect its ability to provide investment
management services to its clients, including the Putnam funds.
The fund may experience increased redemptions as a result of these
matters, which could result in increased transaction costs and operating
expenses.
In connection with its investigation of certain brokerage matters, the
staff of the Philadelphia district office of the SEC has raised the
question whether, in years prior to 2004, Putnam Management fully and
effectively disclosed its practices relating to the allocation of
brokerage on mutual fund portfolio transactions to broker-dealers who
sold shares of the funds. Putnam Management ceased directing brokerage
to broker-dealers in connection with the sale of fund shares as of
January 1, 2004. Putnam Management and the Philadelphia office
negotiated an offer of settlement under which Putnam Management would
pay a civil penalty in the amount of $40 million and disgorgement in the
amount of $1, and the total amount would be distributed to certain
Putnam funds. The offer of settlement is subject to final documentation
and approval by the Commissioners and the staff of the SEC. Discussions
with the staff with respect to the offer of settlement are ongoing.
Results of November 11, 2004
and January 10, 2005
shareholder meetings
(Unaudited)
A special meeting of shareholders of the fund was held on November 11,
2004. At that meeting consideration of certain proposals was adjourned
to a final meeting held on January 10, 2005.
November 11, 2004 meeting
At the meeting, each of the nominees for Trustees was elected, as follows:
Votes Votes
for withheld
- ----------------------------------------------------------------
Jameson A. Baxter 113,453,010 5,295,919
Charles B. Curtis 113,103,198 5,645,731
Myra R. Drucker 114,336,142 4,412,787
Charles E. Haldeman, Jr. 114,335,290 4,413,639
John A. Hill 113,462,522 5,286,407
Ronald J. Jackson 113,496,027 5,252,902
Paul L. Joskow 113,454,552 5,294,377
Elizabeth T. Kennan 113,355,675 5,393,254
John H. Mullin, III 113,468,723 5,280,206
Robert E. Patterson 113,423,684 5,325,245
George Putnam, III 113,400,111 5,348,818
A.J.C. Smith* 113,360,795 5,388,134
W. Thomas Stephens 113,433,818 5,315,111
Richard B. Worley 114,332,735 4,416,194
January 10, 2005 meeting
A proposal to amend the fund's fundamental investment restriction with
respect to borrowing to allow the fund the investment flexibility
permitted by the Investment Company Act was defeated as follows:
Votes Votes
for against Abstentions
- ----------------------------------------------------------------
72,516,047 8,322,183 37,841,141
A proposal to amend the fund's fundamental investment restriction with
respect to making loans to enhance the fund's ability to participate in
an interfund borrowing and lending program was defeated as follows:
Votes Votes
for against Abstentions
- ----------------------------------------------------------------
72,912,864 8,034,507 37,732,000
A proposal to amend the fund's fundamental investment restriction with
respect to diversification of investments to enhance the fund's ability
to invest in registered investment companies such as Putnam Prime Money
Market Fund was defeated
as follows:
Votes Votes
for against Abstentions
- ----------------------------------------------------------------
77,103,763 4,088,773 37,486,835
A proposal to amend the fund's Agreement and Declaration of Trust to
permit the fund to satisfy redemption requests other than in cash was
defeated as follows:
Votes Votes
for against Abstentions
- ----------------------------------------------------------------
67,711,783 12,439,915 38,527,673
* Mr. Smith resigned from the Board of Trustees on January 21, 2005.
All tabulations are rounded to nearest whole number.
Brokerage commissions
(Unaudited)
Brokerage commissions are paid to firms that execute trades on behalf of
your fund. When choosing these firms, Putnam is required by law to seek
the best execution of the trades, taking all relevant factors into
consideration, including expected quality of execution and commission
rate. Listed below are the largest relationships based upon brokerage
commissions for your fund and the other funds in Putnam's U.S. Small-
and Mid-Cap group for the year ended December 31, 2004. The other Putnam
mutual funds in this group are Putnam Capital Opportunities Fund, Putnam
Discovery Growth Fund, Putnam Mid Cap Value Fund, Putnam OTC & Emerging
Growth Fund, Putnam Small Cap Growth Fund, Putnam Small Cap Value Fund,
Putnam Vista Fund, Putnam VT Capital Opportunities Fund, Putnam VT
Discovery Growth Fund, Putnam VT Mid Cap Value Fund, Putnam VT New
Opportunities Fund, Putnam VT OTC & Emerging Growth Fund, Putnam VT
Small Cap Value Fund, and Putnam VT Vista Fund.
The top five firms that received brokerage commissions for trades
executed for the U.S. Small- and Mid-Cap group are (in descending order)
Citigroup, Goldman Sachs, Merrill Lynch, JP Morgan, and Credit Suisse
First Boston. Commissions paid to these firms together represented
approximately 36% of the total brokerage commissions paid for the year
ended December 31, 2004.
Commissions paid to the next 10 firms together represented approximately
39% of the total brokerage commissions paid during the period. These
firms are (in alphabetical order) Bank of America, Bear Stearns,
Deutsche Bank, Lazard Freres, Lehman Brothers, Morgan Stanley, Royal
Bank of Canada, SG Cowen, Union Bank of Switzerland, and Wachovia.
Additional information about brokerage commissions is available on the
Securities and Exchange Commission (SEC) Web site at www.sec.gov. Putnam
funds disclose commissions by firm to the SEC in semiannual filings on
form N-SAR.
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds.
Investors should carefully consider the investment objective, risks,
charges, and expenses of a fund before investing. For a prospectus
containing this and other information for any Putnam fund or product,
call your financial advisor at 1-800-225-1581 and ask for a prospectus.
Please read the prospectus carefully before investing.
Growth Funds
Discovery Growth Fund
Growth Opportunities Fund
Health Sciences Trust
International New Opportunities Fund*
New Opportunities Fund
OTC & Emerging Growth Fund
Small Cap Growth Fund
Vista Fund
Voyager Fund
Blend Funds
Capital Appreciation Fund
Capital Opportunities Fund
Europe Equity Fund*
Global Equity Fund*
Global Natural Resources Fund*
International Capital
Opportunities Fund*
International Equity Fund*
Investors Fund
Research Fund
Tax Smart Equity Fund
Utilities Growth and Income Fund
Value Funds
Classic Equity Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth
and Income
International Growth and Income Fund*
Mid Cap Value Fund
New Value Fund
Small Cap Value Fund+
Income Funds
American Government Income Fund
Diversified Income Trust
Floating Rate Income Fund
Global Income Trust*
High Yield Advantage Fund*+
High Yield Trust*
Income Fund
Limited Duration Government
Income Fund++
Money Market Fund [SECTION MARK]
U.S. Government Income Trust
* A 1% redemption fee on total assets redeemed or exchanged between 6 and
90 days of purchase may be imposed for all share classes of these funds.
+ Closed to new investors.
++ Formerly Putnam Intermediate U.S. Government Income Fund.
[SECTION MARK] 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 fund seeks to
preserve your investment at $1.00 per share, it is possible
to lose money by investing in the fund.
The Putnam family of funds
Tax-free Income Funds
AMT-Free Insured Municipal Fund**
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund
Tax-Free High Yield Fund
State tax-free income funds:
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio, and Pennsylvania
Asset Allocation Portfolios
Putnam Asset Allocation Portfolios--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
Putnam RetirementReady[REGISTRATION MARK] Funds
Putnam RetirementReady Funds -- nine investment portfolios that offer
diversification among stocks, bonds, and money market instruments and
adjust to become more conservative over time based on a target date for
withdrawing assets.
The nine portfolios:
Putnam RetirementReady 2045 Fund
Putnam RetirementReady 2040 Fund
Putnam RetirementReady 2035 Fund
Putnam RetirementReady 2030 Fund
Putnam RetirementReady 2025 Fund
Putnam RetirementReady 2020 Fund
Putnam RetirementReady 2015 Fund
Putnam RetirementReady 2010 Fund
Putnam RetirementReady Maturity Fund
** Formerly Putnam Tax-Free Insured Fund.
With the exception of money market funds, a 2% redemption fee will be
applied to shares exchanged or sold within 5 days of purchase.
Check your account balances and the most recent month-end performance at
www.putnaminvestments.com.
Fund information
About Putnam Investments
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary Trust Company
Legal Counsel
Ropes & Gray LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Myra R. Drucker
Charles E. Haldeman, Jr.
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
George Putnam, III
W. Thomas Stephens
Richard B. Worley
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President, Associate
Treasurer and Principal Executive
Officer
Jonathan S. Horwitz
Senior Vice President and Treasurer
Steven D. Krichmar
Vice President and
Principal Financial Officer
Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer
Daniel T. Gallagher
Vice President and Legal and
Compliance Liaison Officer
Beth S. Mazor
Vice President
James P. Pappas
Vice President
Richard S. Robie, III
Vice President
Mark C. Trenchard
Vice President and BSA Compliance Officer
Francis J. McNamara, III
Vice President and Chief Legal Officer
Charles A. Ruys de Perez
Vice President and Chief Compliance Officer
Judith Cohen
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam New
Opportunities Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, the most recent copy
of Putnam's Quarterly Performance Summary, and Putnam's Quarterly
Ranking Summary. For more recent performance, please visit
www.putnaminvestments.com. Investors should carefully consider the
investment objective, risks, charges, and expenses of a fund, which are
described in its prospectus. For this and other information or to
request a prospectus, call 1-800-225-1581 toll free. Please read the
prospectus carefully before investing. The fund's Statement of
Additional Information contains additional information about the fund's
Trustees and is available without charge upon request by calling
1-800-225-1581.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
Call 1-800-225-1581 or visit our Web site
www.putnaminvestments.com.
SA013-216569 2/05
Not FDIC Insured May Lose Value No Bank Guarantee
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ----------------------------------------------------------------------------
Putnam New Opportunities Fund
Supplement to Semiannual Report dated 12/31/04
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 clients that meet the eligibility requirements
specified in the fund's prospectus for such shares. Performance of class Y
shares, which do not incur a front-end load, a distribution fee, or a
contingent deferred sales charge, will differ from the performance of class
A, B, C, M, and R shares, which are discussed more extensively in the annual
report.
RESULTS AT A GLANCE
- ----------------------------------------------------------------------------
Total return for periods ended 12/31/04
NAV
6 months 6.70%
1 year 10.39
5 years -47.02
Annual average -11.93
10 years 124.87
Annual average 8.44
Life of fund (since class A inception, 8/31/90)
Annual average 14.76
Share value: NAV
6/30/04 $40.14
12/31/04 $42.83
- ----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
-- -- -- --
- ----------------------------------------------------------------------------
Please note that past performance is not indicative of future results. More
recent returns may be more or less than those shown. Returns shown for class
Y shares for periods prior to their inception (7/19/94) are derived from the
historical performance of class A shares, and are not adjusted to reflect
the initial sales charge currently applicable to class A shares. These
returns have not been adjusted to reflect differences in operating expenses
which, for class Y shares, are lower than the operating expenses applicable
to class A shares. All returns assume reinvestment of distributions at net
asset value. Investment return and principal value will fluctuate so your
shares, when redeemed, may be worth more or less than their original cost.
See full report for information on comparative benchmarks. If you have
questions, please consult your fund prospectus or call Putnam toll free at
1-800-752-9894.
Please see pages 12-13 of the accompanying shareholder report for a
discussion of the information appearing in the tables below:
- ----------------------------------------------------------------------------
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 12/31/04
Class Y
Expenses paid per $1,000* $4.64
Ending value (after expenses) $1,067.00
- ----------------------------------------------------------------------------
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return for the 6 months ended 12/31/04
Class Y
Expenses paid per $1,000* $4.53
Ending value (after expenses) $1,020.72
- ----------------------------------------------------------------------------
EXPENSE RATIO COMPARISON USING ANNUALIZED DATA
Your fund's annualized expense ratio 0.89%
Average annualized expense ratio for Lipper peer group+ 1.32%
- ----------------------------------------------------------------------------
Item 2. Code of Ethics:
- -----------------------
Not applicable
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Item 5. Audit Committee: Not applicable
- -------------------------
Item 6. Schedule of Investments: Not applicable
- --------------------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. Purchases of Equity Securities by Closed-End Management Investment
- --------------------------------------------------------------------------
Companies and Affiliated Purchasers: Not applicable
------------------------------------
Item 9. Submission of Matters to a Vote of Security Holders:
- ------------------------------------------------------------
Not applicable
Item 10. Controls and Procedures:
- ---------------------------------
(a) The registrant's principal executive officer and principal
financial officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report, that the design and operation of
such procedures are generally effective to provide reasonable
assurance that information required to be disclosed by the registrant
in this report is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
- ------------------
(a) Not applicable
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act
of 2002 are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: February 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: February 28, 2005
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: February 28, 2005