| UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 |
FORM N-CSR
| CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES |
Investment Company Act file number: (811- 01561 )
Exact name of registrant as specified in charter: Putnam Vista Fund
Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109
| Name and address of agent for service: | Beth S. Mazor, Vice President | |
| One Post Office Square | ||
| Boston, Massachusetts 02109 | ||
| Copy to: | John W. Gerstmayr, Esq. | |
| Ropes & Gray LLP | ||
| One International Place | ||
| Boston, Massachusetts 02110 | ||
| Registrant’s telephone number, including area code: | (617) 292-1000 | |
Date of fiscal year end: July 31, 2006
Date of reporting period: August 1, 2005—January 31, 2006
Item 1. Report to Stockholders:
The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:
What makes Putnam different?
In 1830, Massachusetts Supreme Judicial Court Justice Samuel Putnam established The Prudent Man Rule, a legal foundation for responsible money management.
THE PRUDENT MAN RULE
All that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion. He is to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.
| A time-honored tradition in money management Since 1937, our values have been rooted in a profound sense of responsibility for the money entrusted to us. A prudent approach to investing We use a research-driven team approach to seek consistent, dependable, superior investment results over time, although there is no guarantee a fund will meet its objectives. Funds for every investment goal We offer a broad range of mutual funds and other financial products so investors and their financial representatives can build diversified portfolios. A commitment to doing what’s right for investors We have below-average expenses and stringent investor protections, and provide a wealth of information about the Putnam funds. Industry-leading service We help investors, along with their financial representatives, make informed investment decisions with confidence. |
| Putnam Vista Fund |
| 1| 31| 06 Semiannual Report |
| Message from the Trustees | 2 |
| About the fund | 4 |
| Report from the fund managers | 7 |
| Performance | 12 |
| Expenses | 15 |
| Portfolio turnover | 17 |
| Risk | 18 |
| Your fund’s management | 19 |
| Terms and definitions | 22 |
| Trustee approval of management contract | 24 |
| Other information for shareholders | 29 |
| Financial statements | 31 |
| Brokerage commissions | 55 |
Cover photograph: Vineyard, Napa County, California © Charles O’Rear
| Message from the Trustees |
Dear Fellow Shareholder
The performance of U.S. financial markets in the early weeks of 2006 suggests that investors remain generally optimistic this year. Stocks have advanced briskly while bonds have remained subdued. We consider these results typical of an expanding economy capable of generating both profits and inflation. As is often the case, the fundamental data painted a more conflicted picture than the market’s movements. In the final months of 2005, the economic growth rate slipped to a low level of 1.1%, according to initial estimates. Nevertheless, labor market conditions have strengthened, and energy prices, though elevated, did not spike in the winter months, thanks in part to mild winter weather in many regions of the country. Inflationary pressures remain contained, to borrow the terminology of the U.S. Federal Reserve Board (the Fed). At its January 31 meeting, marking the end of former Chairman Alan Greenspan’s 18 years of service, the Fed again raised interest rates, but hinted that the end of this tightening cycle might not be far away. Whatever the course the economy and monetary policy take in coming months, in our view it is fortunate that the Fed’s new Chairman, Ben Bernanke, like his predecessor, regards the Fed’s role in pursuing both price stability and economic growth as essential to encouraging investment.
Although there is no guarantee a fund will achieve its objectives, we believe that the professional research, diversification, and active management that mutual funds provide continue to make them an intelligent choice for investors. We want you to know that Putnam Investments, under the leadership of Chief Executive Officer Ed Haldeman, continues to focus on delivering consistent, dependable, superior investment performance over time.
2
In the following pages, members of your fund’s management team discuss the fund’s performance and strategies, and their outlook for the months ahead. We thank you for your support of the Putnam funds.
| Putnam Vista Fund: Midsize growth companies have offered investors compelling opportunities |
Despite enduring its share of challenges throughout the past 37 years, over time Putnam Vista Fund has rewarded long-term investors for their persistence, as illustrated in the growth chart below.
There are several key reasons why midsize growth stocks may continue to offer investors compelling opportunities:
First, stocks of midsize companies — also called mid-capitalization or mid-cap stocks — are generally more stable than small-cap stocks. By the time a company’s capitalization qualifies it as mid cap, it is generally large enough to have developed a solid infrastructure, including professional management, a comprehensive business plan, and a mature sales and marketing structure. It has typically weathered a full economic cycle. These characteristics generally enable midsize companies to offer investors a greater degree of stability than that offered by smaller, less mature companies.
Second, mid-cap stocks generally have greater price inefficiencies than large-cap stocks. While midsize companies may have many of the same business characteristics as large companies, fewer analysts generally follow their stocks. This makes mid-cap stocks less efficiently priced and means that extensive research capabilities, such as those employed by your fund’s management team,
Putnam Vista Fund seeks capital appreciation by investing mainly in midsize companies across a wide range of industry sectors. The fund targets relatively well-established companies that may have higher growth rates than larger, mature companies, but offer a greater degree of stability than smaller, less mature companies. The fund may be appropriate for investors seeking growth of capital and exposure to growth-oriented companies.
| Highlights * For the six months ended January 31, 2006, Putnam Vista Fund’s class A shares returned 12.56% without sales charges. * Over the same period, the fund’s benchmark, the Russell Midcap Growth Index, returned 10.38% . * The average return for the fund’s Lipper category, Mid-Cap Growth Funds, was 10.69% . * Additional fund performance, comparative performance, and Lipper data can be found in the performance section beginning on page 12. |
Performance
Total return for class A shares for periods ended 1/31/06
Since the fund’s inception (6/3/68), average annual return is 10.12% at NAV and 9.97% at POP.
| Average annual return | Cumulative return | |||
| NAV | POP | NAV | POP | |
| 10 years | 8.81% | 8.23% | 132.71% | 120.54% |
| 5 years | –2.86 | –3.91 | –13.53 | –18.07 |
| 3 years | 24.20 | 21.98 | 91.58 | 81.50 |
| 1 year | 22.50 | 16.12 | 22.50 | 16.12 |
| 6 months | — | — | 12.56 | 6.65 |
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.putnam.com. A short-term trading fee of up to 2% may apply.
6
Report from the fund managers
The period in review
During the first six months of the fiscal year, the market environment for your fund improved as investors shifted their preferences from value stocks to growth stocks. The fund’s disciplined strategy of investing in high-quality, mid-cap growth companies at favorable valuations enabled it to outperform both its benchmark, the Russell Midcap Growth Index, and the average for its Lipper peer group, based on results at net asset value (NAV, or without sales charges). The fund avoided major sector bets, favoring instead an approach that combines moderate thematic concentrations with rigorous, bottom-up stock picking. Our investments in technology, consumer, energy, and basic materials companies were the keys to the fund’s competitive performance.
Market overview
In the first half of your fund’s 2006 fiscal year, investors rewarded the solid fundamentals and favorable earnings prospects of many growth-oriented companies by driving growth stocks to a leadership position relative to value stocks. Furthermore, the superior performance of growth stocks, as measured by the Russell Midcap indexes, reversed the trend of the prior fiscal period. For the six months ended January 31, 2006, the Russell Midcap Growth Index returned 10.38% while the Russell Midcap Value Index returned 6.32% . During the prior period — the fund’s fiscal year ending July 31, 2005 — the Russell Midcap Growth Index measured a return of 25.65% but trailed the 31.15% result posted by its value counterpart.
This change in market leadership can be explained by stronger performance from technology stocks, particularly those in the semiconductor and Internet-related categories. At the same time, relatively lackluster returns for integrated oil and utility companies held back the performance of value stocks. Early in the fiscal period, oil prices and energy stocks rose sharply due to hurricanes in the Gulf Coast region, but they receded significantly in October.
With respect to the market dynamics underlying the performance of growth stocks over the period, earnings
7
momentum was the major influence during the early and later months of the period, while relative valuation held sway during the middle months. Recognizing that the market rewards different criteria at different times, our approach is to hold stocks that have the potential to benefit despite the market’s changing preferences for momentum versus valuation.
Strategy overview
In managing your fund, our goal is to invest in a limited number of stocks in order to better focus our research and analysis on what we consider to be the most attractive opportunities in the mid-cap growth-stock universe. Specifically, we look for high-quality growth companies at favorable valuations. As such, our stock-selection strategy is based on three fundamental criteria: quality of the company, near-term growth prospects, and a valuation forecast that meets our parameters. The ability to rotate between these criteria gives the fund the advantage of potentially favorable market positioning whether the market is rewarding one, two, or all three of these factors.
Although it may not be a key consideration for other growth fund managers, valuation is a central tenet in our investment process. We believe our strategy of holding growth stocks with favorable valuations may cushion the volatility of the overall portfolio through changing market environments.
Our approach to valuing companies incorporates both historical financial data and a forward-looking scenario
| Market sector performance | |
These indexes provide an overview of performance in different market sectors for the | |
| six months ended 1/31/06. | |
| Equities | |
Russell Midcap Growth Index (midsize-company growth stocks) | 10.38% |
| S&P 500 Index (broad stock market) | 4.68% |
| Russell 2000 Index (small-company stocks) | 8.50% |
| MSCI EAFE Index (international stocks) | 18.31% |
Bonds | |
| Lehman Municipal Bond Index (tax-exempt bonds) | 1.32% |
| Lehman Aggregate Bond Index (broad bond market) | 0.84% |
| Lehman Global Aggregate Bond Index (international bonds) | 0.05% |
8
analysis that enables us to examine a range of possible outcomes. We evaluate each company’s ability to generate cash flow relative to its current market price (price-to-free-cash-flow ratio). We also examine the company’s operating profit margin and look for companies that have the potential to expand their margins. We then break these companies down into 21 distinct market sectors and rank them in comparison to other companies with similar growth potential, operating margins, competitive environments, and capital requirements. Finally, in order to gauge current market sentiment toward a company, we will consider indicators such as analysts’ earnings forecasts.
Your fund’s holdings
The fund’s overweight allocation to technology stocks was the biggest contributor to its strong performance during the period. Apple Computer, one of the fund’s large technology holdings, was an exceptional performer, appreciating by 77% over the period. The success of the firm’s iPod Nano product reawakened the Apple brand, which, in turn, bolstered the firm’s PC sales.
The fund’s investments in semiconductor companies, most notably Broadcom and Lam Research, also boosted performance. There is competitive differentiation occurring within the semiconductor industry, and the relative performance of different stocks in the sector reflects this trend. For example, Broadcom’s price advanced by
Comparison of top industry weightings
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.
9
44% during the final month of the period while Intel, the world’s largest manufacturer of semiconductors and a company we opted to avoid, declined by about 17% over the same time. This disparity is the result of the market’s differing assessments of the current business fundamentals for these two companies.
After lagging early in the period, the fund’s consumer holdings rebounded in the period’s second half and contributed substantially to performance. Retailers and apparel manufacturers drove results in this sector. Two noteworthy standouts were Claire’s Stores, the world’s largest operator of specialty stores devoted solely to inexpensive fashion accessories for women, and Guess?, a designer and marketer of casual apparel, including the well-known Guess? brand of blue jeans.
At the beginning of the period, the fund’s substantial exposure to stocks of oil refiners boosted performance. Standout holdings in this sector included Sunoco and Frontier Oil. Seeking superior relative valuation, we redeployed assets from refiners to exploration and production companies, emphasizing natural gas over oil. Within the natural gas category, Burlington Resources, which was acquired by ConocoPhilips during the period, was a major contributor to the fund’s positive results.
The fund also maintained an overweight position in the basic materials sector during the period. Within this group, JLG Industries had the greatest
Top holdings
This table shows the fund’s top holdings, and the percentage of the fund’s net assets that each comprised, as of 1/31/06. The fund’s holdings will change over time.
| Holding (percent of fund’s net assets) | Industry |
| Claire’s Stores, Inc. (2.2%) | Retail |
| Sunoco, Inc. (2.2%) | Oil and gas |
| National Semiconductor Corp. (2.1%) | Electronics |
| Varian Medical Systems, Inc. (2.0%) | Medical technology |
| Burlington Resources, Inc. (2.0%) | Oil and gas |
| Bear Stearns Cos., Inc. (2.0%) | Investment banking/brokerage |
| Newfield Exploration Co. (2.0%) | Oil and gas |
| JLG Industries, Inc. (1.9%) | Machinery |
| Broadcom Corp. Class A (1.9%) | Electronics |
| Black & Decker Manufacturing Co. (1.8%) | Consumer cyclicals |
10
impact on performance. JLG makes telescopic hydraulic excavators, aerial work platforms, and related accessories. The firm is an excellent example of a well-run, “old economy” industrial company that is generating strong returns on capital, thanks to superior management and state-of-the-art information systems.
The fund’s overweight position in certain software companies detracted from performance over the period. Specifically, shares of McAfee, a developer of network security and anti-virus products, declined by approximately 16% during the final week of the fiscal period following a disappointing earnings forecast. We plan to maintain our exposure to McAfee, as we believe that the valuation of its stock is more in our favor at current price levels.
Health care was another sector that detracted from performance during the period. One of the most notable detractors was Kos Pharmaceuticals, a firm that reformulates existing drugs to provide new benefits to patients. The stock underperformed throughout the period due to market concerns about competitive pressures and slower earnings growth. At current price levels, we view the stock as being attractively valued and continue to hold the position.
Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is 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 team’s plans for responding to them.
For growth stocks, earnings estimates and growth forecasts are vital considerations. As such, our earnings growth forecast for the companies in the fund’s portfolio is in the range of 14% to 18%, which is about twice the average rate for companies in the S&P 500. At the same time, the aggregate valuation for the companies in the portfolio is about 30% higher than the average for companies in the S&P 500. What this means is that we believe we hold a portfolio of stocks with favorable earnings growth potential that are valued at a reasonable premium relative to the stock market as a whole.
Looking ahead, we are particularly upbeat about energy and basic materials stocks, and plan to maintain the fund’s current overweight allocations to both of these sectors. We see consumer stocks as a wild card and continue to closely monitor trends in consumer spending and sentiment. In fact, consumer spending is one of two key themes we are watching that could be catalysts for growth stocks as a whole. The other is enterprise capital expenditure; specifically, how much businesses will invest in new technology over the coming months.
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 fluctuations in the value of your investment.
11
| Your fund’s performance |
This section shows your fund’s performance during the first half of its fiscal year, which ended January 31, 2006. In accordance with regulatory requirements for mutual funds, we also include performance for the most recent calendar quarter-end. 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.putnam.com or call Putnam at 1-800-225-1581. Class Y shares are generally only available to corporate and institutional clients. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.
| Fund performance | ||||||||||
| Total return for periods ended 1/31/06 | ||||||||||
| Class A | Class B | Class C | Class M | Class R | Class Y | |||||
| (inception dates) | (6/3/68) | (3/1/93) | (7/26/99) | (12/8/94) | (1/21/03) | (3/28/95) | ||||
| NAV | POP | NAV | CDSC | NAV | CDSC | NAV | POP | NAV | NAV | |
| Annual average | ||||||||||
| (life of fund) | 10.12% | 9.97% | 9.13% | 9.13% | 9.30% | 9.30% | 9.41% | 9.31% | 9.86% | 10.21% |
| 10 years | 132.71 | 120.54 | 116.09 | 116.09 | 116.08 | 116.08 | 121.71 | 114.56 | 127.30 | 139.13 |
| Annual average | 8.81 | 8.23 | 8.01 | 8.01 | 8.01 | 8.01 | 8.29 | 7.93 | 8.56 | 9.11 |
| 5 years | –13.53 | –18.07 | –16.65 | –18.32 | –16.59 | –16.59 | –15.59 | –18.33 | –14.37 | –12.36 |
| Annual average | –2.86 | –3.91 | –3.58 | –3.97 | –3.56 | –3.56 | –3.33 | –3.97 | –3.06 | –2.60 |
| 3 years | 91.58 | 81.50 | 87.34 | 84.33 | 87.35 | 87.35 | 88.91 | 82.70 | 90.57 | 92.83 |
| Annual average | 24.20 | 21.98 | 23.27 | 22.61 | 23.28 | 23.28 | 23.62 | 22.25 | 23.98 | 24.47 |
| 1 year | 22.50 | 16.12 | 21.60 | 16.60 | 21.60 | 20.60 | 21.94 | 17.99 | 22.25 | 22.82 |
| 6 months | 12.56 | 6.65 | 12.23 | 7.23 | 12.25 | 11.25 | 12.34 | 8.64 | 12.53 | 12.76 |
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 3.25%, 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 and Y shares have no initial sales charge or CDSC. Performance for class B, C, M, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and, except for class Y shares, the 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.
12
| Comparative index returns | ||
| For periods ended 1/31/06 | ||
| Lipper Mid-Cap | ||
| Russell Midcap | Growth Funds | |
| Growth Index | category average† | |
| Annual average | ||
| (life of fund) | —* | 9.48% |
| 10 years | 152.67% | 139.51 |
| Annual average | 9.71 | 8.72 |
| 5 years | 7.37 | 5.35 |
| Annual average | 1.43 | 0.48 |
| 3 years | 97.75 | 82.24 |
| Annual average | 25.52 | 22.03 |
| 1 year | 22.08 | 20.50 |
| 6 months | 10.38 | 10.69 |
| Index and Lipper results should be compared to fund performance at net asset value. * The inception date of the Russell Midcap Growth Index was 12/31/85. † Over the 6-month and 1-, 3-, 5-, and 10-year periods ended 1/31/06, there were 583, 555, 462, 353, and 127 funds, respectively, in this Lipper category. |
| Fund price and distribution* information | ||||||||
| For the six-month period ended 1/31/06 | ||||||||
| Class A | Class B | Class C | Class M | Class R | Class Y | |||
| Share value: | NAV | POP | NAV | NAV | NAV | POP | NAV | NAV |
| 7/31/05 | $10.11 | $10.67 | $8.83 | $9.63 | $9.40 | $9.72 | $10.06 | $10.50 |
| 1/31/06 | 11.38 | 12.01 | 9.91 | 10.81 | 10.56 | 10.91 | 11.32 | 11.84 |
* The fund made no distributions during the period.
13
| Fund performance for most recent calendar quarter | ||||||||||
| Total return for periods ended 12/31/05 | ||||||||||
| Class A | Class B | Class C | Class M | Class R | Class Y | |||||
| (inception dates) | (6/3/68) | (3/1/93) | (7/26/99) | (12/8/94) | (1/21/03) | (3/28/95) | ||||
| NAV | POP | NAV | CDSC | NAV | CDSC | NAV | POP | NAV | NAV | |
| Annual average | ||||||||||
| (life of fund) | 9.96% | 9.80% | 8.97% | 8.97% | 9.13% | 9.13% | 9.24% | 9.15% | 9.69% | 10.04% |
| 10 years | 117.03 | 105.73 | 101.66 | 101.66 | 101.49 | 101.49 | 106.72 | 100.08 | 112.13 | 123.00 |
| Annual average | 8.06 | 7.48 | 7.27 | 7.27 | 7.26 | 7.26 | 7.53 | 7.18 | 7.81 | 8.35 |
| 5 years | -18.13 | -22.42 | -21.14 | -22.71 | -21.11 | -21.11 | -20.11 | -22.73 | -19.02 | -17.05 |
| Annual average | -3.92 | -4.95 | -4.64 | -5.02 | -4.63 | -4.63 | -4.39 | -5.03 | -4.13 | -3.67 |
| 3 years | 77.96 | 68.67 | 73.97 | 70.97 | 74.06 | 74.06 | 75.04 | 69.35 | 76.96 | 79.16 |
| Annual average | 21.18 | 19.04 | 20.27 | 19.57 | 20.29 | 20.29 | 20.52 | 19.20 | 20.96 | 21.45 |
| 1 year | 12.21 | 6.28 | 11.39 | 6.39 | 11.32 | 10.32 | 11.63 | 7.97 | 11.93 | 12.48 |
| 6 months | 12.33 | 6.39 | 11.93 | 6.93 | 11.93 | 10.93 | 12.13 | 8.44 | 12.17 | 12.48 |
14
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. 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 Vista Fund from August 1, 2005, to January 31, 2006. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
| Class A | Class B | Class C | Class M | Class R | Class Y | |
| Expenses paid per $1,000* | $ 5.73 | $ 9.74 | $ 9.74 | $ 8.40 | $ 7.07 | $ 4.40 |
| Ending value (after expenses) | $1,125.60 | $1,122.30 | $1,122.50 | $1,123.40 | $1,125.30 | $1,127.60 |
* 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 1/31/06. 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 January 31, 2006, use the calculation method below. To find the value of your investment on August 1, 2005, go to www.putnam.com and log on to your account. Click on the “Transaction History” tab in your Daily Statement and enter 08/01/2005 in both the “from” and “to” fields. Alternatively, call Putnam at 1-800-225-1581.
15
Compare expenses using the SEC’s method
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.
| Class A | Class B | Class C | Class M | Class R | Class Y | |
| Expenses paid per $1,000* | $ 5.45 | $ 9.25 | $ 9.25 | $ 7.98 | $ 6.72 | $ 4.18 |
| Ending value (after expenses) | $1,019.81 | $1,016.03 | $1,016.03 | $1,017.29 | $1,018.55 | $1,021.07 |
* 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 1/31/06. 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.
Compare expenses using industry averages
You can also compare your fund’s expenses with the average of its peer group, as defined 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.
| Class A | Class B | Class C | Class M | Class R | Class Y | |
| Your fund’s annualized | ||||||
| expense ratio | 1.07% | 1.82% | 1.82% | 1.57% | 1.32% | 0.82% |
| Average annualized expense | ||||||
| ratio for Lipper peer group * | 1.51% | 2.26% | 2.26% | 2.01% | 1.76% | 1.26% |
* Simple average of the expenses of all front-end load funds in the fund’s Lipper peer group, calculated in accordance with Lipper’s standard method for comparing fund expenses (excluding 12b-1 fees and without giving effect to any expense offset and brokerage service arrangements that may reduce fund expenses). This average reflects each fund’s expenses for its most recent fiscal year available to Lipper as of 12/31/05. To facilitate comparison, Putnam has adjusted this average to reflect the 12b-1 fees carried by each class of shares other than class Y shares, which do not incur 12b-1 fees. The peer group may include funds that are significantly smaller or larger than the fund, which may limit the comparability of the fund’s expenses to the simple average, which typically is higher than the asset-weighted average.
16
| 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.
| Turnover comparisons | |||||
Percentage of holdings that change every year | |||||
| 2005 | 2004 | 2003 | 2002 | 2001 | |
| Putnam Vista Fund | 74% | 78% | 65% | 89% | 109% |
| Lipper Mid-Cap Growth Funds | |||||
| category average | 117% | 126% | 138% | 169% | 167% |
Turnover data for the fund is calculated based on the fund’s fiscal-year period, which ends on July 31. 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 2005 is based on information available as of 12/31/05.
17
Your fund’s risk
This risk comparison is designed 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.
Your fund’s Overall Morningstar® Risk
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, 2005. 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 2006 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.
18
Your fund’s management
Your fund is managed by the members of the Putnam Mid-Cap Growth Team. Kevin Divney is the Portfolio Leader and Brian DeChristopher is a Portfolio Member of your fund. The Portfolio Leader and Portfolio Member coordinate the team’s management of the fund.
For a complete listing of the members of the Putnam Mid-Cap Growth Team, including those who are not Portfolio Leaders or Portfolio Members of your fund, visit Putnam’s Individual Investor Web site at www.putnam.com.
Fund ownership by the Portfolio Leader and Portfolio Member
The table below shows how much the fund’s current Portfolio Leader and Portfolio Member have invested in the fund (in dollar ranges). Information shown is as of January 31, 2006, and January 31, 2005.
| $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 | |
| Kevin Divney | 2006 | * | ||||||
| Portfolio Leader | 2005 | * | ||||||
| Brian DeChristopher | 2006 | * | ||||||
| Portfolio Member | N/A | |||||||
N/A indicates the individual was not a Portfolio Leader or Portfolio Member as of 1/31/05.
19
Fund manager compensation
The total 2005 fund manager compensation that is attributable to your fund is approximately $1,100,000. This amount includes a portion of 2005 compensation paid by Putnam Management to the fund managers listed in this section for their portfolio management responsibilities, calculated based on the fund assets they manage taken as a percentage of the total assets they manage. The compensation amount also includes a portion of the 2005 compensation paid to the Chief Investment Officer of the team for his oversight responsibilities, calculated based on the fund assets he oversees taken as a percentage of the total assets he oversees. This amount does not include compensation of other personnel involved in research, trading, administration, systems, compliance, or fund operations; nor does it include non-compensation costs. These percentages are determined as of the fund’s fiscal period-end. For personnel who joined Putnam Management during or after 2005, the calculation reflects annualized 2005 compensation or an estimate of 2006 compensation, as applicable.
Other Putnam funds managed by the Portfolio Leader
Kevin Divney is also a Portfolio Leader of Putnam New Opportunities Fund.
Brian DeChristopher is also a Portfolio Member of Putnam New Opportunities Fund.
Kevin Divney and Brian DeChristopher 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 Member
During the year ended January 31, 2006, Brian DeChristopher became a Portfolio Member of the fund, following the departure of Portfolio Leader Paul Marrkand from your fund’s management team.
20
Fund ownership by Putnam’s Executive Board
The table below shows how much the members of Putnam’s Executive Board have invested in the fund (in dollar ranges). Information shown is as of January 31, 2006, and January 31, 2005.
| $1 – | $10,001 – | $50,001– | $100,001 | |||
| Year | $0 | $10,000 | $50,000 | $100,000 | and over | |
| Philippe Bibi | 2006 | * | ||||
| Chief Technology Officer | 2005 | * | ||||
| Joshua Brooks | 2006 | * | ||||
| Deputy Head of Investments | N/A | |||||
| William Connolly | 2006 | * | ||||
| Head of Retail Management | N/A | |||||
| Kevin Cronin | 2006 | * | ||||
| Head of Investments | 2005 | * | ||||
| Charles Haldeman, Jr. | 2006 | * | ||||
| President and CEO | 2005 | * | ||||
| Amrit Kanwal | 2006 | * | ||||
| Chief Financial Officer | 2005 | * | ||||
| Steven Krichmar | 2006 | * | ||||
| Chief of Operations | 2005 | * | ||||
| Francis McNamara, III | 2006 | * | ||||
| General Counsel | 2005 | * | ||||
| Richard Robie, III | 2006 | * | ||||
| Chief Administrative Officer | 2005 | * | ||||
| Edward Shadek | 2006 | * | ||||
| Deputy Head of Investments | N/A | |||||
| Sandra Whiston | 2006 | * | ||||
| Head of Institutional Management | N/A | |||||
N/A indicates the individual was not a member of Putnam’s Executive Board as of 1/31/05.
21
Terms and definitions
Important terms
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 3.25% 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.
Share classes
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.
Class Y shares are not subject to an initial sales charge or CDSC, and carry no 12b-1 fee. They are only available to eligible purchasers, including eligible defined contribution plans or corporate IRAs.
22
Comparative indexes
Lehman Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.
Lehman Global Aggregate Bond Index is an unmanaged index of global investment-grade fixed-income securities.
Lehman Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds.
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged index of equity securities from developed countries in Western Europe, the Far East, and Australasia.
Russell 2000 Index is an unmanaged index of the 2,000 smallest companies in the Russell 3000 Index.
Russell Midcap Growth Index is an unmanaged index of those companies in the Russell Midcap Index chosen for their growth 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 mutual funds. Lipper rankings are based on total return at net asset value and do not reflect sales charges. Funds are ranked among other funds with similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.
23
| 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 your fund’s management contract with Putnam Management. In this regard, the Board of Trustees, with the assistance of its Contract Committee consisting solely of Trustees who are not “interested persons” (as such term is defined in the Investment Company Act of 1940, as amended) of the Putnam funds (the “Independent Trustees”), requests and evaluates all information it deems reasonably necessary under the circumstances. Over the course of several months beginning in March and ending in June 2005, the Contract Committee met five times to consider 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 management contract, effective July 1, 2005.
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 services, 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 and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the fee arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that certain aspects of such arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements in prior years.
24
Model fee schedules and categories; total expenses
The Trustees’ review of the management fees and total expenses of the Putnam funds focused on three major themes:
| * Consistency. The Trustees, working in cooperation with Putnam Management, have devel- oped 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 family of funds and compares favorably with fees paid by competitive funds spon- sored by other investment advisors. Under this approach, each Putnam fund is assigned to one of several fee categories based on a combination of factors, including competitive fees and perceived difficulty of management, and a common fee schedule is implemented for all funds in a given fee category. The Trustees reviewed the model fee schedule then in effect for your fund, including fee levels and breakpoints, and the assignment of the fund to a particular fee category under this structure. (“Breakpoints” refer to reductions in fee rates that apply to additional assets once specified asset levels are reached.) The Trustees concluded that no changes should be made in the fund’s current fee schedule at this time. * Competitiveness. The Trustees also reviewed comparative fee and expense information for competitive funds, which indicated that, in a custom peer group of competitive funds selected by Lipper Inc., your fund ranked in the 13th percentile in management fees and in the 13th percentile in total expenses (less any applicable 12b-1 fees) as of December 31, 2004 (the first percentile being the least expensive funds and the 100th percentile being the most expensive funds). (Because the fund’s custom peer group is smaller than the fund’s broad Lipper Inc. peer group, this expense comparison may differ from the Lipper peer expense information found elsewhere in this report.) The Trustees noted that expense ratios for a number of Putnam funds, which show the percentage of fund assets used to pay for management and administrative services, distribution (12b-1) fees and other expenses, 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 limita- tions implemented in January 2004 and which Putnam Management, in consultation with the Contract Committee, has committed to maintain at least through 2006. The Trustees expressed their intention to monitor this information closely to ensure that fees and expenses of the Putnam funds continue to meet evolving competitive standards. * Economies of scale. 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. Your fund currently has the benefit of breakpoints in its management fee that provide shareholders with significant economies of scale, which means that the effective management fee rate of a fund (as a percentage of fund assets) declines as a fund grows in size and crosses specified asset thresholds. The Trustees examined the existing breakpoint structure of the Putnam funds’ management fees in light of competitive industry practices. The Trustees considered various possible modifications to the Putnam funds’ current breakpoint structure, but |
25
ultimately concluded that the current breakpoint structure continues to serve the interests of fund shareholders. Accordingly, the Trustees continue to believe that the fee schedules currently in effect for the funds represent an appropriate sharing of economies of scale at current asset levels. The Trustees noted that significant redemptions 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. In view of these changes, the Trustees intend to consider whether a greater sharing of the economies of scale by fund shareholders would be appropriate if and when aggregate assets in the Putnam funds begin to experience meaningful growth.
In connection with their review of the management fees and total expenses of the Putnam funds, the Trustees also reviewed the costs of the services to be provided and profits to be realized by Putnam Management and its affiliates from the relationship with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability with respect to the funds’ management contracts, allocated on a fund-by-fund basis.
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 your fund’s management contract. The Trustees were assisted in their review of the funds’ investment process and performance by the work of the Investment Oversight Committees of the Trustees, which meet on a regular monthly basis with the funds’ portfolio teams throughout the year. The Trustees concluded that Putnam Management generally provides 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 - but also recognize that this 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 underperformance 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 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.
26
In the case of your fund, the Trustees considered that your fund’s class A share cumulative total return performance at net asset value was in the following percentiles of its Lipper Inc. peer group (Lipper Mid-Cap Growth Funds) for the one-, three- and five-year periods ended December 31, 2004 (the first percentile being the best-performing funds and the 100th percentile being the worst-performing funds):
| One-year period | Three-year period | Five-year period |
| 12th | 54th | 76th |
(Because of the passage of time, these performance results may differ from the performance results for more recent periods shown elsewhere in this report. Over the one-, three-, and five-year periods ended December 31, 2004, there were 529, 425, and 282 funds, respectively, in your fund’s Lipper peer group.* Past performance is no guarantee of future performance.)
The Trustees noted the disappointing performance for your fund for the five-year period ended December 31, 2004. In this regard, the Trustees considered that over the last year, Putnam Management has clarified the fund’s investment philosophy and made changes to the investment team. In addition, the fund has adopted a redesigned investment process which incorporates a blend of quantitative techniques and fundamental analysis.
As a general matter, the Trustees believe that cooperative efforts between the Trustees and Putnam Management represent the most effective way to address investment performance problems. The Trustees believe that investors in the Putnam funds have, in effect, placed their trust in the Putnam organization, under the oversight of the funds’ Trustees, to make appropriate decisions regarding the management of the funds. Based on the responsiveness of Putnam Management in the recent past to Trustee concerns about investment performance, the Trustees believe that it is preferable to seek change within Putnam Management to address performance shortcomings. In the Trustees’ view, the alternative of terminating a management contract and engaging a new investment advisor for an underperforming fund would entail significant disruptions and would not 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, whereby a portion of the commissions paid by a fund for brokerage is earmarked to pay for research services that may be utilized by a fund’s investment advisor, subject to the obligation to seek best execution.
* The percentile rankings for your fund’s class A share annualized total return performance in the Lipper Mid-Cap Growth Funds category for the one-, five-, and ten-year periods ended December 31, 2005, were 30th, 76th, and 55th, respectively. Over the one-, five-, and ten-year periods ended December 31, 2005, the fund ranked 164th out of 553, 263rd out of 348, and 69th out of 126 funds, respectively. Note that this more recent information was not available when the Trustees approved the continuance of your fund’s management contract.
27
The Trustees believe that soft-dollar credits and other potential benefits associated with the allocation of fund brokerage, which pertains mainly to funds investing in equity securities, represent assets of the funds that should be used for the benefit of fund shareholders. This area has been marked by significant change in recent years. In July 2003, acting upon the Contract Committee’s recommendation, the Trustees directed that allocations of brokerage to reward firms that sell fund shares be discontinued no later than December 31, 2003. In addition, commencing in 2004, the allocation of brokerage commissions by Putnam Management to acquire research services from third-party service providers has been significantly reduced, and continues at a modest level only to acquire research that is customarily not available for cash. The Trustees will 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.
The Trustees’ annual review of your fund’s management contract also included the review of its distributor’s contract and distribution plan with Putnam Retail Management Limited Partnership and the custodian agreement and investor servicing agreement with Putnam Fiduciary Trust Company, all of which provide benefits to affiliates of Putnam Management.
Comparison of retail and institutional fee schedules
The information examined by the Trustees as part of their annual contract review has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, etc. This information included comparison of such fees with fees charged to the funds, as well as a detailed assessment of the differences in the services provided to these two types of clients. The Trustees observed, in this regard, that the differences in fee rates between institutional clients and the 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 reflect to a substantial degree historical competitive forces operating in separate market places. The Trustees considered the fact that fee rates across all asset sectors are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to institutional clients of the firm, but have not relied on such comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.
28
| Other information for shareholders |
Important notice regarding delivery of shareholder documents
In accordance with SEC regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.
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, 2005, are available on the Putnam Individual Investor Web site, www.putnam.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
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.
29
| Putnam’s policy on confidentiality |
In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ addresses, telephone numbers, Social Security numbers, and the names of their financial advisors. We use this information to assign an account number and to help us maintain accurate records of transactions and account balances. It is our policy to protect the confidentiality of your information, whether or not you currently own shares of our funds, and in particular, not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use. Under certain circumstances, we share this information with outside vendors who provide services to us, such as mailing and proxy solicitation. In those cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. We may also share this information with our Putnam affiliates to service your account or provide you with information about other Putnam products or services. It is also our policy to share account information with your financial advisor, if you’ve listed one on your Putnam account. If you would like clarification about our confidentiality policies or have any questions or concerns, please don’t hesitate to contact us at 1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time.
30
| Financial statements |
| A guide to 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 liquidation preference of 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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.
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.
31
| The fund’s portfolio 1/31/06 (Unaudited) | |||
| COMMON STOCKS (98.8%)* | |||
| Shares | Value | ||
| Aerospace and Defense (1.9%) | |||
| L-3 Communications Holdings, Inc. | 351,228 | $ | 28,456,493 |
| Precision Castparts Corp. (S) | 542,700 | 27,107,865 | |
| 55,564,358 | |||
| Automotive (0.5%) | |||
| Oshkosh Truck Corp. (S) | 322,333 | 15,894,240 | |
| Banking (0.2%) | |||
| Washington Mutual, Inc. | 133,881 | 5,665,844 | |
| Biotechnology (1.6%) | |||
| Genzyme Corp. † | 649,700 | 46,089,718 | |
| Broadcasting (0.7%) | |||
| XM Satellite Radio Holdings, Inc. Class A † (S) | 827,500 | 21,663,950 | |
| Building Materials (3.4%) | |||
| Building Material Holding Corp. (S) | 247,900 | 19,626,243 | |
| USG Corp. † (S) | 543,559 | 51,746,817 | |
| Vulcan Materials Co. | 354,710 | 25,496,555 | |
| 96,869,615 | |||
| Commercial and Consumer Services (3.0%) | |||
| Corporate Executive Board Co. (The) | 368,600 | 31,014,004 | |
| IAC/InterActiveCorp. † (S) | 203,639 | 5,909,604 | |
| Monster Worldwide, Inc. † (S) | 741,800 | 31,645,188 | |
| Robert Half International, Inc. | 296,600 | 10,834,798 | |
| West Corp. † (S) | 137,300 | 5,605,959 | |
| 85,009,553 | |||
| Communications Equipment (2.0%) | |||
| Harris Corp. | 347,900 | 16,152,997 | |
| Scientific-Atlanta, Inc. | 957,042 | 40,923,116 | |
| 57,076,113 | |||
| Computers (3.8%) | |||
| Apple Computer, Inc. † (S) | 321,217 | 24,255,096 | |
| Emulex Corp. † | 1,597,751 | 29,318,731 | |
| Logitech International SA ADR (Switzerland) † (S) | 267,893 | 11,385,453 | |
| Mercury Interactive Corp. † (S) | 262,500 | 9,121,875 | |
| Network Appliance, Inc. † (S) | 1,099,100 | 34,291,920 | |
| 108,373,075 | |||
| Conglomerates (0.7%) | |||
| AMETEK, Inc. (S) | 277,600 | 11,420,464 | |
| ITT Industries, Inc. | 82,241 | 8,429,703 | |
| 19,850,167 | |||
32
| COMMON STOCKS (98.8%)* continued | |||
| Shares | Value | ||
| Consumer Cyclicals (2.9%) | |||
| Black & Decker Manufacturing Co. | 601,100 | $ | 51,874,930 |
| Harman International Industries, Inc. (S) | 290,087 | 31,909,570 | |
| 83,784,500 | |||
| Consumer Finance (1.1%) | |||
| Accredited Home Lenders Holding Co. † (S) | 144,700 | 7,601,091 | |
| Nelnet, Inc. Class A † (S) | 571,325 | 23,481,458 | |
| 31,082,549 | |||
| Consumer Goods (0.6%) | |||
| Scotts Miracle-Gro Co. (The) Class A (S) | 206,338 | 10,213,731 | |
| Yankee Candle Co., Inc. (The) (S) | 250,308 | 6,282,731 | |
| 16,496,462 | |||
| Consumer Services (1.9%) | |||
| Alliance Data Systems Corp. † (S) | 687,700 | 29,055,325 | |
| Labor Ready, Inc. † (S) | 1,053,900 | 24,545,331 | |
| 53,600,656 | |||
| Electronics (7.7%) | |||
| Altera Corp. † (S) | 854,700 | 16,504,257 | |
| Amphenol Corp. Class A (S) | 426,758 | 21,692,109 | |
| Broadcom Corp. Class A † (S) | 791,774 | 53,998,987 | |
| Intermec, Inc. † (S) | 506,600 | 17,665,142 | |
| National Semiconductor Corp. (S) | 2,111,541 | 59,566,572 | |
| Omnivision Technologies, Inc. † (S) | 1,062,219 | 26,799,785 | |
| SanDisk Corp. † (S) | 142,000 | 9,565,120 | |
| Silicon Laboratories, Inc. † (S) | 345,600 | 17,013,888 | |
| 222,805,860 | |||
| Energy (2.3%) | |||
| BJ Services Co. (S) | 1,272,700 | 51,531,623 | |
| Pride International, Inc. † | 456,200 | 16,108,422 | |
| 67,640,045 | |||
| Entertainment (1.3%) | |||
| Dreamworks Animation SKG, Inc. Class A † (S) | 921,400 | 24,693,520 | |
| Pixar, Inc. † (S) | 200,100 | 11,561,778 | |
| 36,255,298 | |||
| Financial (2.2%) | |||
| First American Corp. (S) | 397,500 | 18,610,950 | |
| Moody’s Corp. | 687,300 | 43,519,836 | |
| 62,130,786 | |||
| Food (0.1%) | |||
| Pilgrim’s Pride Corp. (S) | 128,658 | 3,131,536 | |
33
| COMMON STOCKS (98.8%)* continued | |||
| Shares | Value | ||
| Forest Products and Packaging (0.6%) | |||
| Louisiana-Pacific Corp. (S) | 555,800 | $ | 16,368,310 |
| Gaming & Lottery (1.2%) | |||
| GTECH Holdings Corp. | 1,013,500 | 33,871,170 | |
| Health Care Services (5.5%) | |||
| Express Scripts, Inc. † | 474,645 | 43,330,342 | |
| Hologic, Inc. † | 68,000 | 3,499,280 | |
| Kindred Healthcare, Inc. † (S) | 367,300 | 8,411,170 | |
| Laboratory Corp. of America Holdings † (S) | 511,556 | 30,002,759 | |
| McKesson Corp. | 685,000 | 36,305,000 | |
| Pediatrix Medical Group, Inc. † (S) | 64,600 | 5,664,128 | |
| Sierra Health Services, Inc. † (S) | 778,300 | 30,836,246 | |
| 158,048,925 | |||
| Homebuilding (1.3%) | |||
| NVR, Inc. † (S) | 45,441 | 36,091,514 | |
| Insurance (1.6%) | |||
| Everest Re Group, Ltd. (Barbados) | 119,600 | 11,559,340 | |
| W.R. Berkley Corp. (S) | 690,150 | 34,093,410 | |
| 45,652,750 | |||
| Investment Banking/Brokerage (2.0%) | |||
| Bear Stearns Cos., Inc. (The) (S) | 449,395 | 56,830,492 | |
| Lodging/Tourism (0.1%) | |||
| Choice Hotels International, Inc. (S) | 91,500 | 4,348,995 | |
| Machinery (2.8%) | |||
| Cummins, Inc. (S) | 95,700 | 9,311,610 | |
| JLG Industries, Inc. (S) | 1,007,200 | 54,872,256 | |
| MSC Industrial Direct Co., Inc. Class A | 226,009 | 10,154,584 | |
| Terex Corp. † (S) | 70,400 | 4,963,200 | |
| 79,301,650 | |||
| Manufacturing (1.9%) | |||
| Actuant Corp. Class A (S) | 152,893 | 8,753,124 | |
| Graco, Inc. | 435,775 | 17,509,440 | |
| IDEX Corp. (S) | 608,700 | 28,000,200 | |
| 54,262,764 | |||
| Medical Technology (6.6%) | |||
| C.R. Bard, Inc. (S) | 630,600 | 39,992,652 | |
| Dade Behring Holdings, Inc. (S) | 559,400 | 21,889,322 | |
| Edwards Lifesciences Corp. † | 721,662 | 30,988,166 | |
| Respironics, Inc. † | 734,500 | 26,464,035 | |
| St. Jude Medical, Inc. † | 248,500 | 12,208,805 | |
| Varian Medical Systems, Inc. † (S) | 974,300 | 58,662,603 | |
| 190,205,583 | |||
34
| COMMON STOCKS (98.8%)* continued | |||
| Shares | Value | ||
| Metals (2.3%) | |||
| Freeport-McMoRan Copper & Gold, Inc. Class B (S) | 97,400 | $ | 6,257,950 |
| Phelps Dodge Corp. | 242,424 | 38,909,052 | |
| Reliance Steel & Aluminum Co. | 258,846 | 20,578,257 | |
| 65,745,259 | |||
| Oil & Gas (8.3%) | |||
| Burlington Resources, Inc. | 635,582 | 58,003,213 | |
| Frontier Oil Corp. (S) | 860,700 | 40,788,573 | |
| Newfield Exploration Co. † (S) | 1,083,900 | 56,796,360 | |
| Sunoco, Inc. | 650,171 | 61,896,279 | |
| Tesoro Petroleum Corp. (S) | 306,128 | 22,185,096 | |
| 239,669,521 | |||
| Pharmaceuticals (3.4%) | |||
| Allergan, Inc. (S) | 167,886 | 19,541,930 | |
| Barr Pharmaceuticals, Inc. † | 624,700 | 40,967,826 | |
| Hospira, Inc. † | 351,793 | 15,742,737 | |
| Kos Pharmaceuticals, Inc. † | 482,200 | 21,125,182 | |
| 97,377,675 | |||
| Publishing (0.5%) | |||
| Marvel Entertainment, Inc. † (S) | 936,463 | 15,592,109 | |
| Restaurants (0.5%) | |||
| Darden Restaurants, Inc. | 377,639 | 15,354,802 | |
| Retail (8.4%) | |||
| American Eagle Outfitters, Inc. (S) | 665,215 | 17,947,501 | |
| Barnes & Noble, Inc. (S) | 545,667 | 23,147,194 | |
| Childrens Place Retail Stores, Inc. (The) † | 66,400 | 2,907,656 | |
| Claire’s Stores, Inc. | 2,006,885 | 63,537,994 | |
| Expedia, Inc. † (S) | 443,274 | 11,533,989 | |
| Guess ?, Inc. † (S) | 463,159 | 19,651,836 | |
| Michaels Stores, Inc. | 725,384 | 24,394,664 | |
| Staples, Inc. | 1,926,874 | 45,686,183 | |
| Timberland Co. (The) Class A † | 609,910 | 21,322,454 | |
| Toro Co. (The) | 285,933 | 12,641,098 | |
| 242,770,569 | |||
| Schools (0.8%) | |||
| Career Education Corp. † (S) | 198,100 | 6,436,269 | |
| Strayer Education, Inc. (S) | 184,940 | 16,378,286 | |
| 22,814,555 | |||
| Semiconductor (1.6%) | |||
| Lam Research Corp. † | 1,001,235 | 46,487,341 | |
| Shipping (1.7%) | |||
| CNF Transportation, Inc. (S) | 637,351 | 32,664,239 | |
| Overseas Shipholding Group (S) | 328,833 | 16,961,206 | |
| 49,625,445 | |||
35
| COMMON STOCKS (98.8%)* continued | |||
| Shares | Value | ||
| Software (5.5%) | |||
| Adobe Systems, Inc. | 588,800 | $ | 23,387,136 |
| BMC Software, Inc. † # | 894,445 | 19,767,235 | |
| Citrix Systems, Inc. † (S) | 1,266,650 | 39,063,486 | |
| Hyperion Solutions Corp. † | 350,400 | 12,057,264 | |
| McAfee, Inc. † (S) | 1,483,141 | 34,394,040 | |
| Websense, Inc. † (S) | 463,700 | 30,571,741 | |
| 159,240,902 | |||
| Technology (0.4%) | |||
| CACI International, Inc. Class A † (S) | 184,492 | 10,534,493 | |
| Technology Services (2.8%) | |||
| Acxiom Corp. | 235,400 | 5,571,918 | |
| Equifax, Inc. | 908,800 | 34,825,216 | |
| Fair Isaac Corp. | 928,200 | 41,137,824 | |
| 81,534,958 | |||
| Tire & Rubber (0.2%) | |||
| Goodyear Tire & Rubber Co. (The) † (S) | 322,982 | 5,051,438 | |
| Tobacco (0.5%) | |||
| UST, Inc. (S) | 365,000 | 14,213,100 | |
| Transportation Services (0.4%) | |||
| C.H. Robinson Worldwide, Inc. (S) | 288,739 | 11,682,380 | |
| Total common stocks (cost $2,294,874,017) | $ | 2,841,661,025 | |
| SHORT-TERM INVESTMENTS (16.6%)* | |||
| Principal amount/shares | Value | ||
| Short-term investments held as collateral for | |||
| loaned securities with yields ranging from 4.33% | |||
| to 4.65% and due dates ranging from | |||
| February 1, 2006 to March 24, 2006 (d) | $422,091,409 | $ | 421,889,275 |
| Putnam Prime Money Market Fund (e) | 55,057,218 | 55,057,218 | |
| Total short-term investments (cost $476,946,493) | $ | 476,946,493 | |
| TOTAL INVESTMENTS | |||
| Total investments (cost $2,771,820,510) | $ | 3,318,607,518 | |
| * Percentages indicated are based on net assets of $2,875,120,897. † Non-income-producing security. (S) Securities on loan, in part or in entirety, at January 31, 2006. # A portion of this security was pledged and segregated with the custodian to cover margin requirements for futures contracts at January 31, 2006. (d) See Note 1 to the financial statements. |
36
| (e) See Note 5 to the financial statements regarding investments in Putnam Prime Money Market Fund. At January 31, 2006, liquid assets totaling $24,616,839 have been designated as collateral for open futures contracts. ADR after the name of a foreign holding stands for American Depository Receipts, representing ownership of foreign securities on deposit with a custodian bank. |
| FUTURES CONTRACTS OUTSTANDING at 1/31/06 (Unaudited) | ||||
| Unrealized | ||||
| Number of | Expiration | appreciation/ | ||
| contracts | Value | date | (depreciation) | |
| NASDAQ 100 Index Mini (Long) | 104 | $3,576,560 | Mar-06 | $ (87,927) |
| Russell 2000 Index Mini (Long) | 113 | 8,324,710 | Mar-06 | 212,599 |
| S&P 500 Index (Long) | 21 | 6,738,900 | Mar-06 | 40,866 |
| S&P MidCap 400 Mini (Long) | 76 | 5,960,680 | Mar-06 | 65,174 |
| Total | $230,712 | |||
The accompanying notes are an integral part of these financial statements.
37
| Statement of assets and liabilities 1/31/06 (Unaudited) | |
| ASSETS | |
| Investment in securities, at value, including $412,472,947 of securities on loan (Note 1): | |
| Unaffiliated issuers (identified cost $2,716,763,292) | $3,263,550,300 |
| Affiliated issuers (identified cost $55,057,218) (Note 5) | 55,057,218 |
| Cash | 1,670,476 |
| Dividends, interest and other receivables | 609,230 |
| Receivable for shares of the fund sold | 2,401,217 |
| Receivable for securities sold | 40,423,602 |
| Receivable for variation margin (Note 1) | 61,956 |
| Total assets | 3,363,773,999 |
| LIABILITIES | |
| Payable for securities purchased | 46,426,977 |
| Payable for shares of the fund repurchased | 14,653,692 |
| Payable for compensation of Manager (Notes 2 and 5) | 3,602,520 |
| Payable for investor servicing and custodian fees (Note 2) | 480,411 |
| Payable for Trustee compensation and expenses (Note 2) | 368,485 |
| Payable for administrative services (Note 2) | 3,661 |
| Payable for distribution fees (Note 2) | 912,454 |
| Collateral on securities loaned, at value (Note 1) | 421,889,275 |
| Other accrued expenses | 315,627 |
| Total liabilities | 488,653,102 |
| Net assets | $2,875,120,897 |
| REPRESENTED BY | |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $5,988,488,883 |
| Accumulated net investment loss (Note 1) | (4,908,851) |
| Accumulated net realized loss on investments (Note 1) | (3,655,476,855) |
| Net unrealized appreciation of investments | 547,017,720 |
| Total — Representing net assets applicable to capital shares outstanding | $2,875,120,897 |
| (Continued on next page) | |
38
| Statement of assets and liabilities (Continued) | |
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| Net asset value and redemption price per class A share | |
| ($2,053,710,913 divided by 180,395,036 shares) | $11.38 |
| Offering price per class A share | |
| (100/94.75 of $11.38)* | $12.01 |
| Net asset value and offering price per class B share | |
| ($501,313,453 divided by 50,579,480 shares)** | $9.91 |
| Net asset value and offering price per class C share | |
| ($42,455,156 divided by 3,927,845 shares)** | $10.81 |
| Net asset value and redemption price per class M share | |
| ($37,841,457 divided by 3,584,042 shares) | $10.56 |
| Offering price per class M share | |
| (100/96.75 of $10.56)* | $10.91 |
| Net asset value, offering price and redemption price per class R share | |
| ($662,542 divided by 58,546 shares) | $11.32 |
| Net asset value, offering price and redemption price per class Y share | |
| ($239,137,376 divided by 20,192,343 shares) | $11.84 |
| * 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.
39
| Statement of operations Six months ended 1/31/06 (Unaudited) | |
| INVESTMENT INCOME | |
| Dividends | $ 10,225,872 |
| Interest (including interest income of $513,598 | |
| from investments in affiliated issuers) (Note 5) | 563,350 |
| Securities lending | 191,331 |
| Total investment income | 10,980,553 |
| EXPENSES | |
| Compensation of Manager (Note 2) | 7,182,049 |
| Investor servicing fees (Note 2) | 3,724,378 |
| Custodian fees (Note 2) | 146,854 |
| Trustee compensation and expenses (Note 2) | 34,819 |
| Administrative services (Note 2) | 20,241 |
| Distribution fees — Class A (Note 2) | 2,463,965 |
| Distribution fees — Class B (Note 2) | 2,529,071 |
| Distribution fees — Class C (Note 2) | 198,149 |
| Distribution fees — Class M (Note 2) | 145,023 |
| Distribution fees — Class R (Note 2) | 1,000 |
| Other | 444,588 |
| Non-recurring costs (Notes 2 and 6) | 24,906 |
| Costs assumed by Manager (Notes 2 and 6) | (24,906) |
| Fees waived and reimbursed by Manager (Note 5) | (18,922) |
| Total expenses | 16,871,215 |
| Expense reduction (Note 2) | (981,811) |
| Net expenses | 15,889,404 |
| Net investment loss | (4,908,851) |
| Net realized gain on investments (Notes 1 and 3) | 221,858,744 |
| Net realized loss on futures contracts (Note 1) | (455,576) |
| Net unrealized appreciation of investments | |
| and futures contracts during the period | 111,898,560 |
| Net gain on investments | 333,301,728 |
| Net increase in net assets resulting from operations | $328,392,877 |
The accompanying notes are an integral part of these financial statements.
40
| Statement of changes in net assets | ||
| INCREASE IN NET ASSETS | ||
| Six months ended | Year ended | |
| 1/31/06* | 7/31/05 | |
| Operations: | ||
| Net investment loss | $ (4,908,851) | $ (18,874,951) |
| Net realized gain on investments | 221,403,168 | 384,975,128 |
| Net unrealized appreciation of investments | 111,898,560 | 277,335,986 |
| Net increase in net assets resulting from operations | 328,392,877 | 643,436,163 |
| Redemption fees (Note 1) | 6,559 | 9,823 |
| Decrease from capital share transactions (Note 4) | (327,104,660) | (581,589,475) |
| Total increase in net assets | 1,294,776 | 61,856,511 |
| NET ASSETS | ||
| Beginning of period | 2,873,826,121 | 2,811,969,610 |
| End of period (including accumulated net investment | ||
| loss of $4,908,851 and $—, respectively) | $2,875,120,897 | $2,873,826,121 |
| * Unaudited | ||
The accompanying notes are an integral part of these financial statements.
41
Financial highlights (For a common share outstanding throughout the period)
| CLASS A | ||||||
| Six months ended** | Year ended | |||||
| 1/31/06 | 7/31/05 | 7/31/04 | 7/31/03 | 7/31/02 | 7/31/01 | |
| Net asset value, | ||||||
| beginning of period | $10.11 | $8.04 | $7.12 | $6.30 | $9.22 | $19.10 |
| Investment operations: | ||||||
| Net investment loss (a) | (.01)(d) | (.05)(d,f ) | (.05)(d) | (.03) | (.04) | (.06) |
| Net realized and unrealized | ||||||
| gain (loss) on investments | 1.28 | 2.12 | .97 | .85 | (2.88) | (6.00) |
| Total from | ||||||
| investment operations | 1.27 | 2.07 | .92 | .82 | (2.92) | (6.06) |
| Less distributions: | ||||||
| From net realized gain | ||||||
| on investments | — | — | — | — | — | (3.81) |
| From return of capital | — | — | — | — | — | (.01) |
| Total distributions | — | — | — | — | — | (3.82) |
| Redemption fees | —(e) | —(e) | —(e) | — | — | — |
| Net asset value, | ||||||
| end of period | $11.38 | $10.11 | $8.04 | $7.12 | $6.30 | $9.22 |
| Total return at | ||||||
| net asset value (%)(b) | 12.56* | 25.75 | 12.92 | 13.02 | (31.67) | (37.86) |
| RATIOS AND SUPPLEMENTAL DATA | ||||||
| Net assets, end of period | ||||||
| (in thousands) | $2,053,711 | $1,996,475 | $1,798,906 | $2,238,709 | $2,563,995 | $4,614,523 |
| Ratio of expenses to | ||||||
| average net assets (%)(c) | .54*(d) | 1.10(d) | 1.08(d) | 1.09 | 1.00 | .89 |
| Ratio of net investment loss | ||||||
| to average net assets (%) | (.11)*(d) | (.51)(d,f ) | (.60)(d) | (.54) | (.56) | (.47) |
| Portfolio turnover (%) | 39.80* | 73.81 | 77.95 | 64.83 | 89.19 | 109.13 |
| * Not annualized. ** Unaudited. (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 January 31, 2006, July 31, 2005 and July 31, 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 non-recurring accrual related to Putnam Management’s settlement with the SEC regarding brokerage allocation practices, which amounted to less than $0.01 per share and 0.04% of average net assets for class A shares (Note 6). |
The accompanying notes are an integral part of these financial statements.
42
Financial highlights (For a common share outstanding throughout the period)
| CLASS B | ||||||
| Six months ended** | Year ended | |||||
| 1/31/06 | 7/31/05 | 7/31/04 | 7/31/03 | 7/31/02 | 7/31/01 | |
| Net asset value, | ||||||
| beginning of period | $8.83 | $7.08 | $6.32 | $5.63 | $8.30 | $17.73 |
| Investment operations: | ||||||
| Net investment loss (a) | (.04)(d) | (.10)(d,f ) | (.10)(d) | (.07) | (.09) | (.15) |
| Net realized and unrealized | ||||||
| gain (loss) on investments | 1.12 | 1.85 | .86 | .76 | (2.58) | (5.46) |
| Total from | ||||||
| investment operations | 1.08 | 1.75 | .76 | .69 | (2.67) | (5.61) |
| Less distributions: | ||||||
| From net realized gain | ||||||
| on investments | — | — | — | — | — | (3.81) |
| From return of capital | — | — | — | — | — | (.01) |
| Total distributions | — | — | — | — | — | (3.82) |
| Redemption fees | —(e) | —(e) | —(e) | — | — | — |
| Net asset value, | ||||||
| end of period | $9.91 | $8.83 | $7.08 | $6.32 | $5.63 | $8.30 |
| Total return at | ||||||
| net asset value (%)(b) | 12.23* | 24.72 | 12.03 | 12.26 | (32.17) | (38.31) |
| RATIOS AND SUPPLEMENTAL DATA | ||||||
| Net assets, end of period | ||||||
| (in thousands) | $501,313 | $539,589 | $674,172 | $842,635 | $913,467 | $1,776,848 |
| Ratio of expenses to | ||||||
| average net assets (%)(c) | .92*(d) | 1.85(d) | 1.83(d) | 1.84 | 1.75 | 1.64 |
| Ratio of net investment loss | ||||||
| to average net assets (%) | (.49)*(d) | (1.27)(d,f ) | (1.35)(d) | (1.29) | (1.31) | (1.22) |
| Portfolio turnover (%) | 39.80* | 73.81 | 77.95 | 64.83 | 89.19 | 109.13 |
| * Not annualized. ** Unaudited. (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 January 31, 2006, July 31, 2005 and July 31, 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 non-recurring accrual related to Putnam Management’s settlement with the SEC regarding brokerage allocation practices, which amounted to less than $0.01 per share and 0.03% of average net assets for class B shares (Note 6). |
The accompanying notes are an integral part of these financial statements.
43
Financial highlights (For a common share outstanding throughout the period)
| CLASS C | ||||||
| Six months ended** | Year ended | |||||
| 1/31/06 | 7/31/05 | 7/31/04 | 7/31/03 | 7/31/02 | 7/31/01 | |
| Net asset value, | ||||||
| beginning of period | $9.63 | $7.72 | $6.89 | $6.14 | $9.05 | $18.95 |
| Investment operations: | ||||||
| Net investment loss (a) | (.05)(d) | (.11)(d,f ) | (.10)(d) | (.08) | (.10) | (.15) |
| Net realized and unrealized | ||||||
| gain (loss) on investments | 1.23 | 2.02 | .93 | .83 | (2.81) | (5.93) |
| Total from | ||||||
| investment operations | 1.18 | 1.91 | .83 | .75 | (2.91) | (6.08) |
| Less distributions: | ||||||
| From net realized gain | ||||||
| on investments | — | — | — | — | — | (3.81) |
| From return of capital | — | — | — | — | — | (.01) |
| Total distributions | — | — | — | — | — | (3.82) |
| Redemption fees | —(e) | —(e) | —(e) | — | — | — |
| Net asset value, | ||||||
| end of period | $10.81 | $9.63 | $7.72 | $6.89 | $6.14 | $9.05 |
| Total return at | ||||||
| net asset value (%)(b) | 12.25* | 24.74 | 12.05 | 12.22 | (32.15) | (38.33) |
| RATIOS AND SUPPLEMENTAL DATA | ||||||
| Net assets, end of period | ||||||
| (in thousands) | $42,455 | $38,881 | $36,770 | $48,585 | $52,939 | $115,495 |
| Ratio of expenses to | ||||||
| average net assets (%)(c) | .92*(d) | 1.85(d) | 1.83(d) | 1.84 | 1.75 | 1.64 |
| Ratio of net investment loss | ||||||
| to average net assets (%) | (.49)*(d) | (1.26)(d,f ) | (1.35)(d) | (1.29) | (1.31) | (1.20) |
| Portfolio turnover (%) | 39.80* | 73.81 | 77.95 | 64.83 | 89.19 | 109.13 |
| * Not annualized. ** Unaudited. (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 January 31, 2006, July 31, 2005 and July 31, 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 non-recurring accrual related to Putnam Management’s settlement with the SEC regarding brokerage allocation practices, which amounted to less than $0.01 per share and 0.04% of average net assets for class C shares (Note 6). |
The accompanying notes are an integral part of these financial statements.
44
Financial highlights (For a common share outstanding throughout the period)
| CLASS M | ||||||
| Six months ended** | Year ended | |||||
| 1/31/06 | 7/31/05 | 7/31/04 | 7/31/03 | 7/31/02 | 7/31/01 | |
| Net asset value, | ||||||
| beginning of period | $9.40 | $7.51 | $6.69 | $5.95 | $8.74 | $18.40 |
| Investment operations: | ||||||
| Net investment loss (a) | (.03)(d) | (.08)(d,f ) | (.08)(d) | (.06) | (.08) | (.13) |
| Net realized and unrealized | ||||||
| gain (loss) on investments | 1.19 | 1.97 | .90 | .80 | (2.71) | (5.71) |
| Total from | ||||||
| investment operations | 1.16 | 1.89 | .82 | .74 | (2.79) | (5.84) |
| Less distributions: | ||||||
| From net realized gain | ||||||
| on investments | — | — | — | — | — | (3.81) |
| From return of capital | — | — | — | — | — | (.01) |
| Total distributions | — | — | — | — | — | (3.82) |
| Redemption fees | —(e) | —(e) | —(e) | — | — | — |
| Net asset value, | ||||||
| end of period | $10.56 | $9.40 | $7.51 | $6.69 | $5.95 | $8.74 |
| Total return at | ||||||
| net asset value (%)(b) | 12.34* | 25.17 | 12.26 | 12.44 | (31.92) | (38.15) |
| RATIOS AND SUPPLEMENTAL DATA | ||||||
| Net assets, end of period | ||||||
| (in thousands) | $37,841 | $41,068 | $44,375 | $60,957 | $73,816 | $142,887 |
| Ratio of expenses to | ||||||
| average net assets (%)(c) | .79*(d) | 1.60(d) | 1.58(d) | 1.59 | 1.50 | 1.39 |
| Ratio of net investment loss | ||||||
| to average net assets (%) | (.36)*(d) | (1.01)(d,f ) | (1.10)(d) | (1.04) | (1.06) | (.97) |
| Portfolio turnover (%) | 39.80* | 73.81 | 77.95 | 64.83 | 89.19 | 109.13 |
| * Not annualized. ** Unaudited. (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 January 31, 2006, July 31, 2005 and July 31, 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 non-recurring accrual related to Putnam Management’s settlement with the SEC regarding brokerage allocation practices, which amounted to less than $0.01 per share and 0.03% of average net assets for class M shares (Note 6). |
The accompanying notes are an integral part of these financial statements.
45
Financial highlights (For a common share outstanding throughout the period)
| CLASS R | ||||
| Six months | Period | |||
| ended** | Year ended | Year ended | 1/21/03†- | |
| 1/31/06 | 7/31/05 | 7/31/04 | 7/31/03 | |
| Net asset value, | ||||
| beginning of period | $10.06 | $8.02 | $7.12 | $6.14 |
| Investment operations: | ||||
| Net investment loss (a) | (.02)(d) | (.07)(d,f ) | (.06)(d) | (.03) |
| Net realized and unrealized | ||||
| gain on investments | 1.28 | 2.11 | .96 | 1.01 |
| Total from | ||||
| investment operations | 1.26 | 2.04 | .90 | .98 |
| Redemption fees | —(e) | —(e) | —(e) | — |
| Net asset value, | ||||
| end of period | $11.32 | $10.06 | $8.02 | $7.12 |
| Total return at | ||||
| net asset value (%)(b) | 12.53* | 25.44 | 12.64 | 15.96* |
| RATIOS AND SUPPLEMENTAL DATA | ||||
| Net assets, end of period | ||||
| (in thousands) | $663 | $248 | $37 | $1 |
| Ratio of expenses to | ||||
| average net assets (%)(c) | .67*(d) | 1.35(d) | 1.33(d) | .71* |
| Ratio of net investment loss | ||||
| to average net assets (%) | (.22)*(d) | (.73)(d,f ) | (.88)(d) | (.42)* |
| Portfolio turnover (%) | 39.80* | 73.81 | 77.95 | 64.83 |
| † Commencement of operations. * Not annualized. ** Unaudited. (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. (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 January 31, 2006, July 31, 2005 and July 31, 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 non-recurring accrual related to Putnam Management’s settlement with the SEC regarding brokerage allocation practices, which amounted to less than $0.01 per share and 0.05% of average net assets for class R shares (Note 6). |
The accompanying notes are an integral part of these financial statements.
46
Financial highlights (For a common share outstanding throughout the period)
| CLASS Y | ||||||
| Six months ended** | Year ended | |||||
| 1/31/06 | 7/31/05 | 7/31/04 | 7/31/03 | 7/31/02 | 7/31/01 | |
| Net asset value, | ||||||
| beginning of period | $10.50 | $8.33 | $7.36 | $6.50 | $9.48 | $19.48 |
| Investment operations: | ||||||
| Net investment gain (loss) (a) | —(d,e) | (.02)(d,f ) | (.03)(d) | (.02) | (.03) | (.03) |
| Net realized and unrealized | ||||||
| gain (loss) on investments | 1.34 | 2.19 | 1.00 | .88 | (2.95) | (6.15) |
| Total from | ||||||
| investment operations | 1.34 | 2.17 | .97 | .86 | (2.98) | (6.18) |
| Less distributions: | ||||||
| From net realized gain | ||||||
| on investments | — | — | — | — | — | (3.81) |
| From return of capital | — | — | — | — | — | (.01) |
| Total distributions | — | — | — | — | — | (3.82) |
| Redemption fees | —(e) | —(e) | —(e) | — | — | — |
| Net asset value, | ||||||
| end of period | $11.84 | $10.50 | $8.33 | $7.36 | $6.50 | $9.48 |
| Total return at | ||||||
| net asset value (%)(b) | 12.76* | 26.05 | 13.18 | 13.23 | (31.43) | (37.71) |
| RATIOS AND SUPPLEMENTAL DATA | ||||||
| Net assets, end of period | ||||||
| (in thousands) | $239,137 | $257,564 | $257,709 | $554,344 | $600,170 | $877,950 |
| Ratio of expenses to | ||||||
| average net assets (%)(c) | .42*(d) | .85(d) | .83(d) | .84 | .75 | .64 |
| Ratio of net investment gain | ||||||
| (loss) to average net assets (%) | .02*(d) | (.26)(d,f ) | (.35)(d) | (.28) | (.32) | (.21) |
| Portfolio turnover (%) | 39.80* | 73.81 | 77.95 | 64.83 | 89.19 | 109.13 |
| * Not annualized. ** Unaudited. (a) Per share net investment gain (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 January 31, 2006, July 31, 2005 and July 31, 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 non-recurring accrual related to Putnam Management’s settlement with the SEC regarding brokerage allocation practices, which amounted to less than $0.01 per share and 0.04% of average net assets for class Y shares (Note 6). |
The accompanying notes are an integral part of these financial statements.
47
Notes to financial statements 1/31/06 (Unaudited)
Note 1: Significant accounting policies
Putnam Vista Fund (the “fund”), a Massachusetts business trust, is registered under the Investment Company Act of 1940, as amended, as a diversi-fied, open-end management investment company. The fund seeks capital appreciation by investing primarily in common stocks selected for above-average growth potential.
The fund offers class A, class B, class C, class M, class R and class Y shares. Class A and class M shares are sold with a maximum front-end sales charge of 5.25% and 3.25%, respectively, and generally do not pay a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge and are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class R shares, which are offered to qualified employee-benefit plans are sold without a front-end sales charge or a contingent deferred sales charge. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. 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 and trust companies.
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.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund expects the risk of material loss to be remote.
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 equity securities taking into account multiple factors, including
48
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, if any, are translated into U.S. dollars at the current exchange rate. 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 Investment Management, LLC (“Putnam Management”), the fund’s manager, an indirect wholly-owned subsidiary of Putnam, LLC. 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 coun-terparty. 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 (the 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, if any, 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) 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, or for other investment purposes. The fund may also write options on swaps or 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
49
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.
F) Security lending The fund may lend securities, through its agents, to qualified borrowers in order to earn additional income. The loans are collateralized by cash and/or securities in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agents; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the statement of operations. At January 31, 2006, the value of securities loaned amounted to $412,472,947. The fund received cash collateral of $421,889,275 which is pooled with collateral of other Putnam funds into 22 issues of high grade short-term investments.
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 July 31, 2005, the fund had a capital loss carryover of $3,874,200,109 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 |
| $2,424,226,347 | July 31, 2010 |
| 1,449,973,762 | July 31, 2011 |
The aggregate identified cost on a tax basis is $2,772,496,322, resulting in gross unrealized appreciation and depreciation of $608,161,244 and $62,050,048, respectively, or net unrealized appreciation of $546,111,196.
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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. 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: 0.65% of the first $500 million of average net assets, 0.55% of the next $500 million, 0.50% of the next $500 million, 0.45% of the next $5 billion, 0.425% of the next $5 billion, 0.405% of the next $5 billion, 0.39% of the next $5 billion and 0.38% thereafter.
Putnam Management has agreed to waive fees and reimburse expenses of the fund through July 31, 2006 to the extent necessary to ensure that the fund’s expenses do not exceed the simple
50
average of the expenses of all 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 January 31, 2006, Putnam Management did not waive any of its management fee from the fund.
For the period ended January 31, 2006, Putnam Management has assumed $24,906 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. PFTC receives fees for custody services based on the fund’s asset level, the number of its security holdings and transaction volumes. Putnam Investor Services, a division of PFTC, provides investor servicing agent functions to the fund. Putnam Investor Services receives fees for investor servicing based on the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund. During the period ended January 31, 2006, the fund incurred $3,871,232 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 January 31, 2006, the fund’s expenses were reduced by $981,811 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of which $751, 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, industry seminars and for certain compliance-related matters. Trustees also are reimbursed for expenses they incur relating to their services as Trustees. George Putnam, III, who is not an independent Trustee, also receives the foregoing fees for his services as Trustee.
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 and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average total retainer and meeting fees for the three years ended December 31, 2005. 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,
51
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 January 31, 2006, Putnam Retail Management, acting as underwriter, received net commissions of $33,933 and $613 from the sale of class A and class M shares, respectively, and received $297,428 and $1,061 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 January 31, 2006, Putnam Retail Management, acting as underwriter, received $434 and no monies on class A and class M redemptions, respectively.
Note 3: Purchases and sales of securities
During the six months ended January 31, 2006, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $1,098,854,120 and $1,356,987,589, respectively. There were no purchases or sales of U.S. government securities.
Note 4: Capital shares
At January 31, 2006, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
| CLASS A | Shares | Amount |
| Six months ended 1/31/06: | ||
| Shares sold | 16,680,301 | $173,188,427 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 16,680,301 | 173,188,427 | |
| Shares | ||
| repurchased | (33,844,381) | (350,543,637) |
| Net decrease | (17,164,080) | $(177,355,210) |
| Year ended 7/31/05: | ||
| Shares sold | 43,148,995 | $391,321,488 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 43,148,995 | 391,321,488 | |
| Shares | ||
| repurchased | (69,418,110) | (625,358,357) |
| Net decrease | (26,269,115) | $(234,036,869) |
| CLASS B | Shares | Amount |
| Six months ended 1/31/06: | ||
| Shares sold | 1,911,861 | $17,306,334 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 1,911,861 | 17,306,334 | |
| Shares | ||
| repurchased | (12,431,425) | (111,524,677) |
| Net decrease | (10,519,564) | $(94,218,343) |
| Year ended 7/31/05: | ||
| Shares sold | 5,448,263 | $43,249,540 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 5,448,263 | 43,249,540 | |
| Shares | ||
| repurchased | (39,615,569) | (313,250,306) |
| Net decrease | (34,167,306) | $(270,000,766) |
52
| CLASS C | Shares | Amount |
| Six months ended 1/31/06: | ||
| Shares sold | 425,969 | $4,193,356 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 425,969 | 4,193,356 | |
| Shares | ||
| repurchased | (535,240) | (5,288,612) |
| Net decrease | (109,271) | $(1,095,256) |
| Year ended 7/31/05: | ||
| Shares sold | 728,734 | $6,374,583 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 728,734 | 6,374,583 | |
| Shares | ||
| repurchased | (1,456,256) | (12,604,284) |
| Net decrease | (727,522) | $(6,229,701) |
| CLASS M | Shares | Amount |
| Six months ended 1/31/06: | ||
| Shares sold | 203,014 | $1,955,603 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 203,014 | 1,955,603 | |
| Shares | ||
| repurchased | (990,223) | (9,524,202) |
| Net decrease | (787,209) | $(7,568,599) |
| Year ended 7/31/05: | ||
| Shares sold | 863,745 | $7,233,467 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 863,745 | 7,233,467 | |
| Shares | ||
| repurchased | (2,401,790) | (20,044,225) |
| Net decrease | (1,538,045) | $(12,810,758) |
| CLASS R | Shares | Amount |
| Six months ended 1/31/06: | ||
| Shares sold | 41,339 | $425,370 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 41,339 | 425,370 | |
| Shares | ||
| repurchased | (7,404) | (76,121) |
| Net increase | 33,935 | $349,249 |
| Year ended 7/31/05: | ||
| Shares sold | 25,574 | $229,101 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 25,574 | 229,101 | |
| Shares | ||
| repurchased | (5,609) | (50,632) |
| Net increase | 19,965 | $178,469 |
| CLASS Y | Shares | Amount |
| Six months ended 1/31/06: | ||
| Shares sold | 3,228,393 | $35,117,484 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 3,228,393 | 35,117,484 | |
| Shares | ||
| repurchased | (7,568,051) | (82,333,985) |
| Net decrease | (4,339,658) | $(47,216,501) |
| Year ended 7/31/05: | ||
| Shares sold | 8,151,981 | $75,401,917 |
| Shares issued | ||
| in connection | ||
| with reinvestment | ||
| of distributions | — | — |
| 8,151,981 | 75,401,917 | |
| Shares | ||
| repurchased | (14,563,230) | (134,091,767) |
| Net decrease | (6,411,249) | $(58,689,850) |
53
| 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 and administrative services 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 January 31, 2006, management fees paid were reduced by $18,922 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 $513,598 for the period ended January 31, 2006. During the period ended January 31, 2006, cost of purchases and cost of sales of investments in Putnam Prime Money Market Fund aggregated $247,727,849 and $303,612,019, respectively.
Note 6: Regulatory matters and litigation
Putnam Management has entered into agreements with the Securities and Exchange Commission and the Massachusetts Securities Division settling charges connected 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. Pursuant to these settlement agreements, Putnam Management will pay a total of $193.5 million in penalties and restitution, with $153.5 million being paid to certain open-end funds and their shareholders. The amount will be allocated to shareholders and funds pursuant to a plan developed by an independent consultant, and will be paid following approval of the plan by the SEC and the Massachusetts Securities Division.
The Securities and Exchange Commission’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 will bear any costs incurred by Putnam funds in connection with these lawsuits. 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.
Pursuant to a settlement with the Securities and Exchange Commission relating to Putnam Management’s brokerage allocation practices, on October 13, 2005 the fund received $1,011,756 in proceeds paid by Putnam Management. The fund had accrued a receivable for this amount in the prior fiscal year.
Putnam Investments has recorded a charge of $30 million for the estimated cost, excluding interest, that it believes will be necessary to address issues relating to the calculation of certain amounts paid by the Putnam mutual funds in previous years. The previous payments were cost reimbursements by the Putnam funds to Putnam for transfer agent services relating to defined contribution operations. In March 2006, the fund recorded a receivable of $2,125,145 from Putnam Investments in connection with this matter. Review of the matter is ongoing and the amount received by the fund may be adjusted in the future. Such adjustment is not expected to be material.
Putnam Management and Putnam Retail Management are named as defendants in a civil suit in which the plaintiffs allege that the management and distribution fees paid by certain Putnam funds were excessive and seek recovery under the Investment Company Act of 1940. Putnam Management and Putnam Retail Management have contested the plaintiffs’ claims and the matter is currently pending in the U.S. District Court for the District of Massachusetts. Based on currently available information, Putnam Management believes that this action is without merit and that it is unlikely to have a material effect on Putnam Management’s and Putnam Retail Management’s ability to provide services to their clients, including the fund.
54
| 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 January 31, 2006. The other Putnam mutual funds in this group are Putnam Capital Opportunities Fund, Putnam Discovery Growth Fund, Putnam Mid Cap Value Fund, Putnam New Opportunities Fund, Putnam OTC & Emerging Growth Fund, Putnam Small Cap Growth Fund, Putnam Small Cap Value 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 Global Markets, Goldman Sachs, Lehman Brothers, Bank of America, and Bear Stearns & Company. Commissions paid to these firms together represented approximately 37% of the total brokerage commissions paid for the year ended January 31, 2006.
Commissions paid to the next 10 firms together represented approximately 36% of the total brokerage commissions paid during the period. These firms are (in alphabetical order) CIBC World Markets, Credit Suisse First Boston, Deutsche Bank Securities, Instinet, JP Morgan Clearing, Merrill Lynch, Morgan Stanley Dean Witter, RBC Capital Markets, SG Cowen, and UBS Warburg.
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.
55
| 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 | Value funds |
| Discovery Growth Fund | Classic Equity Fund |
| Growth Opportunities Fund | Convertible Income-Growth Trust |
| Health Sciences Trust | Equity Income Fund |
| International New Opportunities Fund* | The George Putnam Fund of Boston |
| New Opportunities Fund | The Putnam Fund for Growth |
| OTC & Emerging Growth Fund | and Income |
| Small Cap Growth Fund | International Growth and Income Fund* |
| Vista Fund | Mid Cap Value Fund |
| Voyager Fund | New Value Fund |
| Small Cap Value Fund† | |
| Blend funds | Income funds |
| Capital Appreciation Fund | American Government Income Fund |
| Capital Opportunities Fund | Diversified Income Trust |
| Europe Equity Fund* | Floating Rate Income Fund |
| Global Equity Fund* | Global Income Trust* |
| Global Natural Resources Fund* | High Yield Advantage Fund*† |
| International Capital | High Yield Trust* |
| Opportunities Fund* | Income Fund |
| International Equity Fund* | Limited Duration Government |
| Investors Fund | Income Fund‡ |
| Research Fund | Money Market Fund§ |
| Tax Smart Equity Fund® | U.S. Government Income Trust |
| Utilities Growth and Income Fund | |
| * 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. § 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. |
56
| Tax-free income funds | Putnam RetirementReady® Funds |
| AMT-Free Insured Municipal Fund** | Putnam RetirementReady Funds — ten |
| Tax Exempt Income Fund | investment portfolios that offer diversifica- |
| Tax Exempt Money Market Fund§ | tion among stocks, bonds, and money |
| Tax-Free High Yield Fund | market instruments and adjust to become |
| State tax-free income funds: | more conservative over time based on a |
| Arizona, California, Florida, Massachusetts, | target date for withdrawing assets. |
| Michigan, Minnesota, New Jersey, New York, | |
| Ohio, and Pennsylvania | The ten funds: |
| Putnam RetirementReady 2050 Fund | |
| Asset allocation funds | Putnam RetirementReady 2045 Fund |
| Income Strategies Fund | Putnam RetirementReady 2040 Fund |
| Putnam RetirementReady 2035 Fund | |
| Putnam Asset Allocation Funds — three | Putnam RetirementReady 2030 Fund |
| investment portfolios that spread your | Putnam RetirementReady 2025 Fund |
| money across a variety of stocks, bonds, | Putnam RetirementReady 2020 Fund |
| and money market investments. | Putnam RetirementReady 2015 Fund |
| Putnam RetirementReady 2010 Fund | |
| The three portfolios: | Putnam RetirementReady Maturity Fund |
| Asset Allocation: Balanced Portfolio | |
| Asset Allocation: Conservative Portfolio | |
| Asset Allocation: Growth Portfolio |
| ** Formerly Putnam Tax-Free Insured Fund. With the exception of money market funds, a 2% redemption fee may 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.putnam.com. |
57
Services for shareholders
Investor services
Help your investment grow Set up a program for systematic investing with as little as $25 a month from a Putnam fund or from your own savings or checking account. (Regular investing does not guarantee a profit or protect against loss in a declining market.)
Switch funds easily* You can move money from one Putnam fund to another within the same class of shares without a service charge.
Access your money easily You can have checks sent regularly or redeem shares any business day at the then-current net asset value, which may be more or less than the original cost of the shares. Class B and class C shares carry a sales charge that is applied to certain withdrawals.
How to buy additional shares You may buy shares through your financial advisor or directly from Putnam. To open an account by mail, send a check made payable to the name of the fund along with a completed fund application. To add to an existing account, complete the investment slip found at the top of your Confirmation of Activity statement and return it with a check payable to your fund.
For more information
Visit www.putnam.com A secure section of our Web site contains complete information on your account, including balances and transactions, updated daily. You may also conduct transactions, such as exchanges, additional investments, and address changes. Log on today to get your password.
Call us toll free at 1-800-225-1581 Ask a helpful Putnam representative or your financial advisor for details about any of these or other services, or see your prospectus.
| *This privilege is subject to change or termination. An exchange of funds may result in a taxable event. In addition, a 2% redemption fee will be applied to shares exchanged or sold within 5 days of purchase, and certain funds have imposed a 1% redemption fee on total assets redeemed or exchanged between 6 and 90 days of purchase. |
58
| Putnam puts your interests first |
In January 2004, Putnam began introducing a number of voluntary initiatives designed to reduce fund expenses, provide investors with more useful information, and help safeguard the interests of all Putnam investors. Visit www.putnam.com for details.
Cost-cutting initiatives
Reduced sales charges The maximum sales charge for class A shares has been reduced to 5.25% for equity funds (formerly 5.75%) and 3.75% for most income funds (formerly 4.50%) . The maximum sales charge for class M shares has been reduced to 3.25% for equity funds (formerly 3.50%) .*
Lower class B purchase limit To help ensure that investors are in the most cost-effective share class, the maximum amount that can be invested in class B shares has been reduced to $100,000. (Larger trades or accumulated amounts will be refused.)
Ongoing expenses will be limited Through calendar 2006, total ongoing expenses, including management fees for all funds, will be maintained at or below the average of each fund’s industry peers in its Lipper load-fund universe. For more information, please see the Statement of Additional information.
Improved disclosure
Putnam fund prospectuses and shareholder reports have been revised to disclose additional information that will help shareholders compare funds and weigh their costs and risks along with their potential benefits. Shareholders will find easy-to-understand information about fund expense ratios, portfolio manager compensation, risk comparisons, turnover comparisons, brokerage commissions, and employee and trustee ownership of Putnam funds. Disclosure of breakpoint discounts has also been enhanced to alert investors to potential cost savings.
Protecting investors’ interests
Short-term trading fee introduced To discourage short-term trading, which can interfere with a fund’s long-term strategy, a 2% short-term trading fee may be imposed on any Putnam fund shares (other than money market funds) redeemed or exchanged within five calendar days of purchase.
| * The maximum sales charge for class A shares of Putnam Limited Duration Government Income Fund (formerly Putnam Intermediate U.S. Government Income Fund) and Putnam Floating Rate Income Fund remains 3.25% . |
59
Fund information
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 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, |
| Vice Chairman |
| Charles B. Curtis |
| Myra R. Drucker |
| Charles E. Haldeman, Jr. |
| 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 |
| Senior Vice President, |
| Staff Counsel and |
| Compliance Liaison |
Beth S. Mazor |
| Vice President |
| James P. Pappas |
| Vice President |
Richard S. Robie, III |
| Vice President |
Francis J. McNamara, III |
| Vice President and |
| Chief Legal Officer |
Charles A. Ruys de Perez |
| Vice President and |
| Chief Compliance Officer |
Mark C. Trenchard |
| Vice President and |
| BSA Compliance Officer |
Judith Cohen |
| Vice President, Clerk and |
| Assistant Treasurer |
Wanda M. McManus |
| Vice President, Senior Associate |
| Treasurer and Assistant Clerk |
Nancy T. Florek |
| Vice President, Assistant Clerk, |
| Assistant Treasurer and |
| Proxy Manager |
This report is for the information of shareholders of Putnam Vista 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.putnam.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.
60
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 of Listed Registrants
Not applicable
Item 6. Schedule of Investments:
The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.
| Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
Not applicable
Item 8. Portfolio Managers of Closed-End Investment Companies
Not Applicable
| Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
Not applicable
Item 10. Submission of Matters to a Vote of Security Holders:
Not applicable
Item 11. 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 12. Exhibits:
(a)(1) Not applicable
(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.
(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, 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.
Putnam Vista Fund
By (Signature and Title):
| /s/Michael T. Healy Michael T. Healy Principal Accounting Officer |
Date: March 29, 2006
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: March 29, 2006
By (Signature and Title):
| /s/Steven D. Krichmar Steven D. Krichmar Principal Financial Officer |
Date: March 29, 2006