Putnam
Vista Fund
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:
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
7-31-03
[GRAPHIC OMITTED: BINOCULARS]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
We are pleased to bring you this report of positive performance for
Putnam Vista Fund for the fiscal year ended July 31, 2003. This good
news is dampened somewhat by the fact that the fund's results lagged
those of both its benchmark index and its Lipper category average. You
will find the details on the facing page.
To a degree, the cause of the underperformance lies in some unusual
circumstances that skewed the numbers for the mid-cap growth indexes
against which the fund's performance is measured. In a number of cases,
for example, the high-performing stocks that drove index performance
simply did not fit your fund's selection criteria. Of more importance,
in our view, is the team's decision to position the fund for future
growth rather than pursuing short-term gains. In the following pages,
the managers discuss their strategy in detail and offer their view of
prospects for the fund in the months ahead.
While no one can make assurances in such matters, market conditions
suggest that better days may lie ahead for equity investors. What we
told you at the midpoint of this fiscal year bears repeating here. We
deeply appreciate your continued confidence in Putnam and we firmly
believe that over the long haul your patience will be rewarded.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
September 17, 2003
Report from Fund Management
Fund highlights
* During the fiscal year ended July 31, 2003, Putnam Vista Fund's class A
shares had total returns of 13.02% at net asset value (NAV) and 6.59% at
public offering price.
* The fund underperformed its primary benchmark, the Russell Midcap Growth
Index, which returned 23.15% during the 12-month period. The primary
reason for this underperformance was that the fund did not own, or was
underweighted in, many strong-performing cyclical stocks that were
included in this index.
* For the same reason, the fund underperformed the average return of 15.98%
for the Lipper Mid-Cap Growth Funds category.
* See the Performance Summary that begins on page 7 for complete fund
performance, comparative performance, and Lipper data.
* The fund's management team changed in composition during the period, which
we believe will have a positive impact on the investment process. Please see
page 5 for details.
Performance commentary
Despite solid absolute returns, the fund's disappointing relative
performance over the past 12 months should be considered in the context of
an unusual period for the mid-cap growth stock universe. During the first
half of the fund's fiscal year, several formerly large-capitalization
companies fell on hard times due to the significant weakening in the U.S.
economy that has occurred over the past three years. The presence of these
so-called "fallen angels" in the Russell Midcap Growth Index proved to have
a significant effect on that index's performance, as many of these stocks
had strong returns during the period. In addition, the mid-cap growth
market's recovery in 2003 was led by smaller, cyclical, and in some cases,
more speculative stocks -- especially in the beaten-down technology and
telecommunications sectors -- which your fund did not own. Both of these
phenomena contributed to the fund's significant underperformance of its
benchmark, as well as its less severe underperformance of its Lipper peer
group.
FUND PROFILE
Putnam Vista Fund seeks capital appreciation by investing in midsize
companies across a wide range of industry sectors. The fund targets
relatively well-established companies that may 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.
Market overview
During the past 12 months, U.S. stocks have headed toward recovery from
one of the most difficult bear markets in history. After nearly three
consecutive years of negative returns, stock prices finally began to
turn upward in the final quarter of 2002. Hopes for a brighter economic
outlook took hold in October 2002, after a dismal summer in which
earnings sank, high-profile scandals dominated the news, and the economy
weakened. While stocks remained volatile as the war with Iraq loomed,
the steady trend of negative performance finally appeared to be abating.
After the war ended more quickly than many had expected, investors
focused on the economy. In June, the Federal Reserve Board signaled
optimism about a recovery, citing a number of signs that the economy was
gaining strength -- namely higher productivity, increased consumer
confidence, a turnaround in the manufacturing sector, and increases in
capital spending after several years of stagnation. Many institutional
investors who had been on the sidelines returned to the market as the
rally's momentum increased.
The mid-cap growth sector of the market has had outstanding performance,
especially in the past four months. The stocks leading the performance
have included some so-called "fallen angels" -- formerly large-cap
companies that entered the mid-cap universe when their stock prices
collapsed. These stocks included companies like Amazon, eBay, Nextel,
and Sprint PCS, which remained overvalued by historical measures even
after their prices fell, but still attracted significant attention and
appreciated considerably in the second half of the period.
- ----------------------------------------------------------------------------
MARKET SECTOR PERFORMANCE 12 MONTHS ENDED 7/31/03
- ----------------------------------------------------------------------------
Stocks
- ----------------------------------------------------------------------------
Russell Midcap Growth Index (midsize-company growth stocks) 23.15%
- ----------------------------------------------------------------------------
S&P 500 Index (broad stock market) 10.64%
- ----------------------------------------------------------------------------
Russell 2000 Index (small-company stocks) 23.11%
- ----------------------------------------------------------------------------
MSCI EAFE Index (international stocks) 6.30%
- ----------------------------------------------------------------------------
Bonds
- ----------------------------------------------------------------------------
Lehman Municipal Bond Index 3.60%
- ----------------------------------------------------------------------------
Lehman Aggregate Bond Index (taxable bonds) 5.42%
- ----------------------------------------------------------------------------
Lehman Global Aggregate Bond Index (global bonds) 10.56%
- ----------------------------------------------------------------------------
These indexes provide an overview of performance in different market
sectors for the 12 months ended 7/31/03.
Strategy overview
As the stock market has struggled to emerge from its doldrums, we have
seen a variety of sectors come into and go out of favor rapidly. In
recent months, for example, some financial companies have benefited from
low interest rates, as have housing and automotive companies. Meanwhile,
technology stocks, many of which had been brought down to extremely low
valuations, have performed well based on the hope that a stronger
economy would boost demand for technology products. Just as quickly,
however, some of the same financial stocks have been hurt by rising
interest rates, and several market analysts have commented that many
technology stocks have become overvalued.
Rather than chasing these trends, which we believe may be cyclical and
short-term in nature, we have invested more broadly to gain exposure to
all sectors that we believe have solid long-term growth prospects. We
have invested the fund's assets not just in companies with earnings
momentum that we believe can be sustained, but also in those we believe
have solid balance sheets, low debt, healthy inventory turnover, and
other attractive fundamental characteristics. Moreover, we have enhanced
the fund's management team by making some key personnel changes that we
believe will help in the effective implementation of this strategy.
As a result of this strategy and the management team's decision not to
pursue the "hot" stocks driving recent market gains, the fund was
underweighted in a number of technology, telecommunications, and
health-care stocks that performed well over the past six months. We
believed that many of these were overvalued before their prices began to
surge, and we did not want to invest long-term shareholder assets in
what we suspected was, in many cases, a "bandwagon" phenomenon.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY WEIGHTINGS COMPARED]
TOP INDUSTRY WEIGHTINGS COMPARED
as of 1/3/2003 as of 7/31/2003
Software 7.6% 8.9%
Retail 8.5% 8.3%
Electronics 4.5% 7.5%
Health care services 12.2% 7.2%
Biotechnology 5.8% 7.0%
Technology services 6.1% 6.4%
Footnote reads:
This chart shows how the fund's top weightings have changed over the last
six months. Weightings are shown as a percentage of net assets. Holdings
will vary over time.
How fund holdings affected performance
There were a number of portfolio positions that both enhanced and detracted
(on a relative basis) from the fund's performance over the past 12 months.
The fund's holdings in semiconductor stocks did not perform well for the
first half of the period, but in the second half this sector recovered
strongly, and the fund's overweighted positions -- relative to the benchmark
index -- made solid contributions to the fiscal-year results. For example,
the fund was overweighted in Marvell Technology Group, which has expanded
from supplying semiconductor products to large disk drive manufacturers such
as Fujitsu, Samsung, and Toshiba. Marvell now manufactures products for the
high-speed networking industry, counting firms such as Cisco, 3Com Corp, and
Intel as its customers. Biotechnology companies have also performed well for
the fund. Large fund holdings such as Gilead Sciences and Genzyme Corp. made
strong performance contributions during the fiscal year. Gilead has
successfully come to market with more effective HIV drugs, while Genzyme has
also been highly profitable and recently obtained approval in the United
States and Europe for two highly successful drugs -- Fabrazyme and
Aldurazyme. These drugs treat diseases that result from enzyme deficiencies,
such as Fabry's disease (in the case of Fabrazyme). Also in the health-care
sector, the fund benefited from owning Caremark Rx, which was a strong
performer during the fiscal year. Caremark helps companies manage
pharmaceutical benefits within health plans, which provides an essential
cost control for both the company and the employee. This has been a
high-growth business, as corporate health-care costs have skyrocketed over
the past several years and companies are increasingly asking their employees
to increase health-care contributions. Moreover, after the period ended,
Caremark agreed to purchase its largest rival, Advance PCS, which would
create the second-largest company in the pharmaceutical benefits business.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
1 Lexmark International, Inc.
Computers
2 Gilead Sciences, Inc.
Biotechnology
3 Fiserv, Inc.
Technology services
4 Adobe Systems, Inc.
Software
5 Electronic Arts, Inc.
Software
6 Allergan, Inc.
Pharmaceuticals
7 Genzyme Corp.
Biotechnology
8 SunGard Data Systems, Inc.
Technology services
9 Starbucks Corp.
Restaurants
10 International Game Technology
Gaming & lottery
Footnote reads:
These holdings represent 15.1% of the fund's net assets as of 7/31/03.
The fund's holdings will change over time.
In the consumer cyclicals sector, International Game Technology and
Progressive Gaming Systems both performed well for the fund, benefiting from
the need for large casinos to continue updating their gaming machines to
draw in customers, as well as from growth in the gaming industry.
(Progressive Gaming was sold before the end of the period.) International
Game, for example, has more than 70% market share in slot machine sales and
has seen significant growth over the past few years.
Several of the fund's technology holdings were more defensive in nature and
therefore detracted from the fund's relative performance during the fiscal
year. Affiliated Computer Services, Inc. and SunGard Data Systems fall into
this category. SunGard is in the disaster recovery business, helping
companies with backup storage for their vital computer data systems.
Affiliated Computer handles a great deal of outsourced data processing, such
as Medicare and Medicaid processing for governmental clients. These have
been stable businesses with long-term contracts, solid cash flows, and
attractive balance sheets. However, they are not the type of cyclical,
fast-growth technology companies, such as Yahoo, eBay, or Amazon, that have
performed so well during the past six months. Fiserv is another large
holding that has performed well, but has not outperformed the market. This
company contracts back-office work for large banks and has also been a solid
long-term stock that we feel is worth keeping in the portfolio. All three of
these stocks are significant holdings in the fund, and as a result, their
underperformance of the fund's benchmark had a significant impact on the
fund's results during the fiscal year. we believe all three holdings will
prove their value if the market begins to reflect more normal historical
performance trends.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
OF SPECIAL INTEREST
The fund's management team changed in composition during the period.
Portfolio Members Dana Clark and Margery Parker were replaced by new
Portfolio Members Kevin Divney, Paul Marrkand, and Justin Scott. We
believe that these personnel changes will have a positive long-term
effect on the fund's investment management process and are optimistic
that fund performance may be enhanced as a result.
The fund's management team
The fund is managed by the Putnam Mid-Cap Growth Team. The members of
the team are Eric Wetlaufer (Portfolio Leader), Kevin Divney (Portfolio
Member), Kenneth Doerr (Portfolio Member), Paul Marrkand (Portfolio
Member), and Justin Scott (Portfolio Member).
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.
Putnam Vista Fund is designed to invest in high-quality companies that have
the potential to perform well over the long term. After the significant
gains in the stock market, which have been led in large part by low-priced
companies, some of which have benefited from momentum investing, we believe
that at this point the market is poised for more stable growth that should
have broader support than we saw in the second half of the fund's fiscal
year. The economy is showing signs of growth, which include rising
productivity, significant fiscal and monetary stimulus, and the signs of
increased capital spending by corporations. As the economy continues to
recover, we believe that the fund's holdings of high-quality growth stocks
from a wide array of industries and economic sectors should benefit. We are
confident that our approach of owning financially healthy, less cyclical
stocks with the potential to grow earnings over the long term will benefit
shareholders in the years to come.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. The fund invests
all or a portion of its assets in small to midsize companies. Such
investments increase the risk of greater price fluctuations.
Performance summary
This section provides information about your fund's performance during
its fiscal year, which ended July 31, 2003. In accordance with
regulatory requirements, we also include performance for the most
current calendar quarter-end. Performance should always be considered in
light of a fund's investment strategy. Past performance does not
indicate 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. A profile of
your fund's strategy appears on the first page of this report. See page
9 for definitions of some terms used in this section.
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 7/31/03
- --------------------------------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
(inception dates} (6/3/68) (3/1/93) (7/26/99) (12/8/94) (1/21/03)
NAV POP NAV CDSC NAV CDSC NAV POP NAV
- --------------------------------------------------------------------------------------------------------
1 year 13.02% 6.59% 12.26% 7.26% 12.22% 11.22% 12.44% 8.43% 12.84%
- --------------------------------------------------------------------------------------------------------
5 years -15.40 -20.25 -18.47 -19.45 -18.45 -18.45 -17.44 -20.33 -16.32
Annual average -3.29 -4.42 -4.00 -4.23 -4.00 -4.00 -3.76 -4.44 -3.50
- --------------------------------------------------------------------------------------------------------
10 years 111.89 99.60 96.53 96.53 96.78 96.78 101.63 94.53 107.06
Annual average 7.80 7.16 6.99 6.99 7.00 7.00 7.26 6.88 7.55
- --------------------------------------------------------------------------------------------------------
Annual average
(life of fund) 9.41 9.23 8.42 8.42 8.59 8.59 8.69 8.58 9.15
- --------------------------------------------------------------------------------------------------------
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 5.75% and 3.50%, respectively. Class B share
returns reflect the applicable contingent deferred sales charge (CDSC),
which is 5% in the first year, declining to 1% in the sixth year, and is
eliminated thereafter. Class C shares reflect a 1% CDSC the first year that
is eliminated thereafter. Class R shares have no initial sales charge or
CDSC. Performance for class B, C, M, and R shares before their inception is
derived from the historical performance of class A shares, adjusted for the
applicable sales charge (or CDSC) and higher operating expenses for such
shares.
- ----------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/03
- ----------------------------------------------------------------------------
Lipper
Mid-Cap
Russell Midcap Growth Funds
Growth Index category average+
- ----------------------------------------------------------------------------
1 year 23.15% 15.98%
- ----------------------------------------------------------------------------
5 years 4.77 8.37
Annual average 0.94 1.01
- ----------------------------------------------------------------------------
10 years 134.00 117.75
Annual average 8.87 7.44
- ----------------------------------------------------------------------------
Annual average
(life of fund) --* 7.56
- ----------------------------------------------------------------------------
* Index began operations on 12/31/85.
+ Index and Lipper results should be compared to fund performance at net
asset value. Over the 1-, 5-, and 10-year periods ended 7/31/03, there
were 507, 224, and 75 funds, respectively, in this Lipper category.
[GRAPHIC OMITTED: worm chart CHANGE IN THE VALUE OF A $10,000 INVESTMENT]
CHANGE IN THE VALUE OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment, 7/31/93 to 7/31/03
Fund's class A Russell Midcap
Date shares at POP Growth Index
7/31/93 9,425 10,000
7/31/94 9,679 10,524
7/31/95 12,701 13,761
7/31/96 14,813 14,758
7/31/97 20,184 20,616
7/31/98 23,594 22,334
7/31/99 27,152 27,179
7/31/00 41,593 39,073
7/31/01 25,847 26,643
7/31/02 17,661 19,001
7/31/03 $19,960 $23,400
Footnote reads:
Past performance does not indicate future results. At the end of the same
time period, a $10,000 investment in the fund's class B and class C
shares would have been valued at $19,653 and $19,678, respectively, and
no contingent deferred sales charges would apply; a $10,000 investment in
the fund's class M shares would have been valued at $20,163 ($19,453 at
public offering price); and a $10,000 investment in the fund's class R
shares would have been valued at $20,706. See first page of performance
section for performance calculation method.
- -------------------------------------------------------------------------------------
PRICE AND DISTRIBUTION* INFORMATION 12 MONTHS ENDED 7/31/03
- -------------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
- -------------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP NAV
- -------------------------------------------------------------------------------------
7/31/02 $6.30 $6.68 $5.63 $6.14 $5.95 $6.17 --
- -------------------------------------------------------------------------------------
1/21/03+ -- -- -- -- -- -- $6.14
- -------------------------------------------------------------------------------------
7/31/03 7.12 7.55 6.32 6.89 6.69 6.93 7.12
- -------------------------------------------------------------------------------------
* The fund did not make any distributions during the period.
+ Inception date of class R shares.
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 6/30/03(MOST RECENT CALENDAR QUARTER)
- ------------------------------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
(inception date} (6/3/68) (3/1/93) (7/26/99) (12/8/94) (1/21/03)
NAV POP NAV CDSC NAV CDSC NAV POP NAV
- ------------------------------------------------------------------------------------------------------
1 year -0.86% -6.50% -1.45% -6.37% -1.62% -2.60% -1.22% -4.70% -1.00%
- ------------------------------------------------------------------------------------------------------
5 years -20.32 -24.92 -23.19 -24.11 -23.20 -23.20 -22.21 -24.91 -21.20
Annual average -4.44 -5.57 -5.14 -5.37 -5.14 -5.14 -4.90 -5.57 -4.65
- ------------------------------------------------------------------------------------------------------
10 years 106.73 94.91 91.91 91.91 91.92 91.92 96.89 89.91 101.99
Annual average 7.53 6.90 6.74 6.74 6.74 6.74 7.01 6.62 7.28
- ------------------------------------------------------------------------------------------------------
Annual average
(life of fund) 9.34 9.15 8.35 8.35 8.52 8.52 8.62 8.51 9.07
- ------------------------------------------------------------------------------------------------------
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. The
NAV is calculated by dividing the net value of all the fund's assets by
the number of outstanding shares.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 5.75% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
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 charges or CDSC and
are available only to certain defined contribution plans.
Comparative indexes
Russell Midcap Growth Index is an unmanaged index of all medium and
medium/small companies in the Russell 1000 Index chosen for their growth
orientation.
S&P 500 Index is an unmanaged index of common stock performance.
Russell 2000 Index is an unmanaged index of common stocks that generally
measure performance of small to midsize companies within the Russell
3000 Index.
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
index of international stocks from Europe, Australasia, and the Far
East.
Lehman Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
Lehman Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fixed-income securities.
Lehman Global Aggregate Bond Index is an unmanaged index used as a broad
measure of international investment-grade bonds.
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 Inc. is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
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.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
preceded by the Independent Auditors' Report, constitute the fund's
financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
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 year.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios, and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
Independent auditors' report
The Board of Trustees and Shareholders
Putnam Vista Fund
We have audited the accompanying statement of assets and liabilities of
Putnam Vista Fund, including the fund's portfolio, as of July 31, 2003,
and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the four
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform our audit to obtain reasonable assurance about
whether the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as
of July 31, 2003 by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Putnam Vista Fund as of July 31, 2003, the results of its operations for the
year then ended, and the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the four
years in the period then ended in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Boston, Massachusetts
September 10, 2003
The fund's portfolio
July 31, 2003
Common stocks (98.6%) (a)
Number of shares Value
Advertising and Marketing Services (0.5%)
- -------------------------------------------------------------------------------------------------------------------
318,200 ADVO, Inc. (NON) $14,780,390
128,360 Lamar Advertising Co. (NON) 4,404,032
-------------
19,184,422
Aerospace and Defense (0.5%)
- -------------------------------------------------------------------------------------------------------------------
117,900 L-3 Communications Holdings, Inc. (NON) 5,786,532
464,700 Rockwell Collins, Inc. 12,096,141
-------------
17,882,673
Airlines (0.4%)
- -------------------------------------------------------------------------------------------------------------------
848,100 Southwest Airlines Co. 13,917,321
Automotive (0.2%)
- -------------------------------------------------------------------------------------------------------------------
110,246 Lear Corp. (NON) 5,730,587
Banking (2.6%)
- -------------------------------------------------------------------------------------------------------------------
236,400 Brookline Bancorp, Inc. 3,519,996
111,000 Charter One Financial, Inc. 3,609,720
261,600 Commerce Bancorp, Inc. 10,597,416
181,700 Doral Financial Corp. 7,976,630
267,500 Greenpoint Financial Corp. 13,444,550
993,550 Investors Financial Services Corp. 31,664,439
77,083 M&T Bank Corp. 6,827,241
92,253 North Fork Bancorp., Inc. 3,233,468
319,000 South Trust Corp. 9,142,540
149,400 Zions Bancorp. 8,342,496
-------------
98,358,496
Beverage (0.8%)
- -------------------------------------------------------------------------------------------------------------------
251,500 Coca-Cola Enterprises, Inc. 4,288,075
1,111,000 Pepsi Bottling Group, Inc. (The) 24,419,780
-------------
28,707,855
Biotechnology (7.0%)
- -------------------------------------------------------------------------------------------------------------------
694,200 Celgene Corp. (NON) 25,414,662
82,200 Chiron Corp. (NON) 3,748,320
1,047,608 Genzyme Corp. (NON) 52,841,348
928,710 Gilead Sciences, Inc. (NON) 63,384,458
896,600 IDEC Pharmaceuticals Corp. (NON) 30,340,944
128,218 IDEXX Laboratories, Inc. (NON) 5,188,982
585,299 Invitrogen Corp. (NON) 30,318,488
1,196,789 MedImmune, Inc. (NON) 46,902,161
54,100 Trimeris, Inc. (NON) 2,399,335
-------------
260,538,698
Broadcasting (0.6%)
- -------------------------------------------------------------------------------------------------------------------
61,100 Entercom Communications Corp. (NON) 2,895,529
276,300 Radio One, Inc. Class D (NON) 4,583,817
160,908 Univision Communications, Inc. Class A (NON) 5,020,330
280,604 Westwood One, Inc. (NON) 8,569,646
-------------
21,069,322
Cable Television (0.2%)
- -------------------------------------------------------------------------------------------------------------------
207,500 Echostar Communications Corp. Class A (NON) 7,526,025
Commercial and Consumer Services (1.8%)
- -------------------------------------------------------------------------------------------------------------------
279,000 CDW Corp. 13,358,520
481,800 Choicepoint, Inc. (NON) 18,375,852
120,000 Cintas Corp. 4,940,400
353,000 Ecolab, Inc. 8,722,630
202,200 Iron Mountain, Inc. (NON) 7,400,520
453,500 Yahoo!, Inc. (NON) 14,117,455
-------------
66,915,377
Communications Equipment (0.8%)
- -------------------------------------------------------------------------------------------------------------------
491,400 Advanced Fibre Communications (NON) 8,289,918
777,900 CIENA Corp. (NON) 4,519,599
873,500 Corning, Inc. (NON) 7,110,290
642,500 Juniper Networks, Inc. (NON) 9,271,275
-------------
29,191,082
Computers (2.4%)
- -------------------------------------------------------------------------------------------------------------------
432,000 Emulex Corp. (NON) 8,791,200
1,009,866 Lexmark International, Inc. (NON) 64,803,101
524,700 Network Appliance, Inc. (NON) 8,384,706
616,300 Symbol Technologies, Inc. 7,894,803
-------------
89,873,810
Consumer Finance (1.7%)
- -------------------------------------------------------------------------------------------------------------------
805,600 Capital One Financial Corp. 38,596,296
2,582,600 Providian Financial Corp. (NON) 24,922,090
-------------
63,518,386
Consumer Goods (2.0%)
- -------------------------------------------------------------------------------------------------------------------
106,200 Alberto-Culver Co. Class B 5,907,906
1,476,600 Dial Corp. (The) 28,911,828
1,057,800 Newell Rubbermaid, Inc. 24,995,814
607,900 Yankee Candle Co., Inc. (The) (NON) 14,601,758
-------------
74,417,306
Electric Utilities (1.1%)
- -------------------------------------------------------------------------------------------------------------------
724,051 Entergy Corp. 37,295,867
111,914 Progress Energy, Inc. 4,559,376
-------------
41,855,243
Electronics (7.5%)
- -------------------------------------------------------------------------------------------------------------------
11,781,000 Agere Systems, Inc. Class A (NON) 33,104,610
1,251,300 Altera Corp. (NON) 24,075,012
144,900 Broadcom Corp. Class A (NON) 2,937,123
201,000 Celestica, Inc. (Canada) (NON) 3,081,330
701,600 Integrated Circuit Systems, Inc. (NON) 21,083,080
1,556,800 Integrated Device Technology, Inc. (NON) 17,918,768
546,700 Intersil Corp. Class A (NON) 13,481,622
521,000 Jabil Circuit, Inc. (NON) 12,009,050
263,806 Linear Technology Corp. 9,729,165
561,900 Marvell Technology Group, Ltd. (Bermuda) (NON) 19,756,404
231,600 Maxim Integrated Products, Inc. 9,050,928
790,435 PMC - Sierra, Inc. (NON) 9,690,733
783,650 QLogic Corp. (NON) 33,030,848
239,300 SanDisk Corp. (NON) 13,565,917
571,200 Silicon Laboratories, Inc. (NON) 20,968,752
342,200 Skyworks Solutions, Inc. (NON) 2,912,122
1,130,500 Storage Technology Corp. (NON) 30,116,520
686,100 Vitesse Semiconductor Corp. (NON) 4,425,345
-------------
280,937,329
Energy (1.3%)
- -------------------------------------------------------------------------------------------------------------------
513,200 BJ Services Co. (NON) 17,577,100
365,000 Cooper Cameron Corp. (NON) 17,450,650
123,400 Nabors Industries, Ltd. (NON) 4,417,720
213,500 Smith International, Inc. (NON) 7,651,840
-------------
47,097,310
Entertainment (0.3%)
- -------------------------------------------------------------------------------------------------------------------
700,800 Regal Entertainment Group Class A 12,929,760
Food (0.5%)
- -------------------------------------------------------------------------------------------------------------------
602,600 Dean Foods Co. (NON) 18,035,818
Gaming & Lottery (2.2%)
- -------------------------------------------------------------------------------------------------------------------
523,800 GTECH Holdings Corp. 20,202,966
204,200 Harrah's Entertainment, Inc. 8,913,330
1,862,800 International Game Technology 47,408,260
167,800 MGM Mirage, Inc. (NON) 5,755,540
-------------
82,280,096
Health Care Services (7.2%)
- -------------------------------------------------------------------------------------------------------------------
439,100 AdvancePCS (NON) 16,637,499
197,700 AmerisourceBergen Corp. (SEG) 12,472,893
570,900 Anthem, Inc. (NON) 43,108,659
814,100 Apria Healthcare Group, Inc. (NON) 21,134,036
1,824,500 Caremark Rx, Inc. (NON) 45,648,990
384,500 Express Scripts, Inc. Class A (NON) 25,377,000
102,400 First Health Group Corp. (NON) 2,643,968
730,600 Health Net, Inc. (NON) 25,088,804
331,614 Laboratory Corp. of America Holdings (NON) 10,535,377
220,700 Quest Diagnostics, Inc. (NON) 13,189,032
1,085,800 Steris Corp. (NON) 24,951,684
366,000 Wellpoint Health Networks, Inc. (NON) 30,615,900
-------------
271,403,842
Homebuilding (0.9%)
- -------------------------------------------------------------------------------------------------------------------
82,000 NVR, Inc. (NON) 33,538,000
Household Furniture and Appliances (0.4%)
- -------------------------------------------------------------------------------------------------------------------
223,600 Whirlpool Corp. 14,484,808
Insurance (1.4%)
- -------------------------------------------------------------------------------------------------------------------
663,800 ACE, Ltd. (Bermuda) 21,898,762
141,500 AMBAC Financial Group, Inc. 9,320,605
83,900 Everest Re Group, Ltd. (Barbados) 6,340,323
208,200 First American Corp. 5,030,112
217,900 W.R. Berkley Corp. 11,176,091
-------------
53,765,893
Investment Banking/Brokerage (2.4%)
- -------------------------------------------------------------------------------------------------------------------
107,300 Bear Stearns Co., Inc. (The) 7,189,100
344,488 Legg Mason, Inc. 24,114,160
785,600 SEI Investments Co. 27,464,576
96,500 T Rowe Price Group, Inc. 3,916,935
1,082,000 Waddell & Reed Financial, Inc. 28,467,420
-------------
91,152,191
Leisure (0.1%)
- -------------------------------------------------------------------------------------------------------------------
105,900 Harley-Davidson, Inc. 4,964,592
Lodging/Tourism (0.7%)
- -------------------------------------------------------------------------------------------------------------------
928,900 Royal Caribbean Cruises, Ltd. 27,170,325
Machinery (1.7%)
- -------------------------------------------------------------------------------------------------------------------
499,300 Briggs & Stratton Corp. 27,496,451
605,700 FLIR Systems, Inc. (NON) 16,414,470
509,100 Toro Co. (The) 20,353,818
-------------
64,264,739
Manufacturing (0.8%)
- -------------------------------------------------------------------------------------------------------------------
365,300 Dover Corp. 13,373,633
453,400 IDEX Corp. 16,775,800
-------------
30,149,433
Media (0.9%)
- -------------------------------------------------------------------------------------------------------------------
856,400 InterActiveCorp. (NON) 34,658,508
Medical Technology (6.2%)
- -------------------------------------------------------------------------------------------------------------------
136,600 Apogent Technologies, Inc. (NON) 3,036,618
1,133,700 Biomet, Inc. 33,568,857
471,300 C.R. Bard, Inc. 32,312,328
162,700 Charles River Laboratories International, Inc. (NON) 6,045,932
1,550,700 Cytyc Corp. (NON) 18,329,274
103,591 Guidant Corp. 4,891,567
357,000 Inamed Corp. (NON) 23,704,800
769,000 St. Jude Medical, Inc. (NON) 41,256,850
167,040 Stryker Corp. 12,781,901
664,500 Waters Corp. (NON) 21,071,295
766,400 Zimmer Holdings, Inc. (NON) 36,641,584
-------------
233,641,006
Office Equipment & Supplies (0.1%)
- -------------------------------------------------------------------------------------------------------------------
119,700 Hon Industries, Inc. 3,981,222
Oil & Gas (2.3%)
- -------------------------------------------------------------------------------------------------------------------
109,000 Amerada Hess Corp. 5,119,730
480,600 Burlington Resources, Inc. 22,189,302
205,200 EOG Resources, Inc. 7,957,656
76,200 Kerr-McGee Corp. 3,352,800
449,100 Murphy Oil Corp. 22,176,558
737,500 Noble Corp. (Cayman Islands) (NON) 24,241,625
-------------
85,037,671
Pharmaceuticals (4.1%)
- -------------------------------------------------------------------------------------------------------------------
661,800 Allergan, Inc. 53,261,664
441,950 Barr Laboratories, Inc. (NON) 29,853,723
317,800 Cephalon, Inc. (NON) 15,883,644
132,800 Forest Laboratories, Inc. (NON) 6,358,464
262,600 IVAX Corp. (NON) 4,503,590
1,076,221 King Pharmaceuticals, Inc. (NON) 16,207,888
247,600 Medicis Pharmaceutical Corp. Class A 14,459,840
418,500 Mylan Laboratories, Inc. 14,132,745
-------------
154,661,558
Photography/Imaging (0.6%)
- -------------------------------------------------------------------------------------------------------------------
2,166,600 Xerox Corp. (NON) 23,399,280
Restaurants (2.9%)
- -------------------------------------------------------------------------------------------------------------------
338,100 CBRL Group, Inc. 11,914,644
431,900 Darden Restaurants, Inc. 8,080,849
456,000 Panera Bread Co. (NON) 18,864,720
1,777,300 Starbucks Corp. (NON) 48,573,609
754,600 Yum! Brands, Inc. (NON) 22,585,178
-------------
110,019,000
Retail (8.3%)
- -------------------------------------------------------------------------------------------------------------------
830,600 Abercrombie & Fitch Co. Class A (NON) 26,653,954
407,800 Advance Auto Parts, Inc. (NON) 27,701,854
434,000 AutoZone, Inc. (NON) 36,134,840
839,600 Bed Bath & Beyond, Inc. (NON) 32,484,124
225,000 Best Buy Co., Inc. (NON) 9,821,250
702,500 Family Dollar Stores, Inc. 26,350,775
507,200 Michaels Stores, Inc. 19,582,992
1,252,700 Office Depot, Inc. (NON) 20,794,820
383,600 Rent-A-Center, Inc. (NON) 27,972,112
609,100 Ross Stores, Inc. 27,835,870
1,420,872 Staples, Inc. (NON) 28,616,362
216,561 Talbots, Inc. (The) 7,144,347
259,400 Timberland Co. (The) Class A (NoN) 11,626,308
364,800 TJX Cos., Inc. (The) 7,095,360
-------------
309,814,968
Schools (1.3%)
- -------------------------------------------------------------------------------------------------------------------
477,700 Apollo Group, Inc. Class A (NON) 30,935,852
208,500 Career Education Corp. (NON) 17,388,900
-------------
48,324,752
Semiconductor (2.1%)
- -------------------------------------------------------------------------------------------------------------------
603,517 KLA-Tencor Corp. (NON) 31,171,653
1,476,500 LAM Research Corp. (NON) 32,128,640
433,000 Novellus Systems, Inc. (NON) 15,505,730
-------------
78,806,023
Software (8.9%)
- -------------------------------------------------------------------------------------------------------------------
1,888,400 Adobe Systems, Inc. 61,712,912
381,600 Amdocs, Ltd. (Guernsey) (NON) 7,777,008
238,300 BEA Systems, Inc. (NON) 3,145,560
3,185,600 BMC Software, Inc. (NON) 44,916,960
132,700 Business Objects SA ADR (France) (NON) 3,225,937
208,400 Cognos, Inc. (Canada) (NON) 5,639,304
721,535 Electronic Arts, Inc. (NON) 60,608,940
284,100 Internet Security Systems, Inc. (NON) 3,355,221
91,200 Intuit, Inc. (NON) 3,923,424
1,052,900 Macromedia, Inc. (NON) 21,605,508
920,300 Mercury Interactive Corp. (NON) 36,223,008
217,654 NETIQ Corp. (NON) 2,365,899
323,665 Network Associates, Inc. (NON) 3,657,415
864,800 Symantec Corp. (NON) 40,567,768
103,500 Synopsys, Inc. (NON) 6,469,785
889,271 TIBCO Software, Inc. (NON) 4,775,385
740,532 VERITAS Software Corp. (NON) 22,808,386
-------------
332,778,420
Technology Services (6.4%)
- -------------------------------------------------------------------------------------------------------------------
176,400 Affiliated Computer Services, Inc. Class A (NON) 8,740,620
625,900 CACI International, Inc. Class A (NON) 24,622,906
876,900 Checkfree Corp. (NON) 23,597,379
1,029,900 Cognizant Technology Solutions Corp. (NON) 31,700,322
269,400 Concord EFS, Inc. (NON) 3,666,534
213,800 Convergys Corp. (NON) 3,606,806
1,601,639 Fiserv, Inc. (NON) 62,527,987
1,901,949 SunGard Data Systems, Inc. (NON) 49,907,142
2,230,326 VeriSign, Inc. (NON) 29,774,852
-------------
238,144,548
Telecommunications (1.7%)
- -------------------------------------------------------------------------------------------------------------------
427,400 American Tower Corp. Class A (NON) 3,889,340
1,016,000 CenturyTel, Inc. 34,838,640
627,600 Cincinnati Bell, Inc. (NON) 3,539,664
404,400 Citizens Communications Co. (NON) 4,792,140
621,700 Nextel Communications, Inc. Class A (NON) 11,352,242
365,926 Western Wireless Corp. Class A (NON) 5,360,816
-------------
63,772,842
Textiles (1.5%)
- -------------------------------------------------------------------------------------------------------------------
127,100 Columbia Sportswear Co. (NON) 6,735,029
316,992 Jones Apparel Group, Inc. 9,176,918
304,600 Kellwood Co. 10,006,110
427,100 Mohawk Industries, Inc. (NON) 28,790,809
-------------
54,708,866
Toys (0.8%)
- -------------------------------------------------------------------------------------------------------------------
1,483,800 Mattel, Inc. 28,830,234
Trucks & Parts (0.1%)
- -------------------------------------------------------------------------------------------------------------------
52,400 PACCAR, Inc. 4,045,280
Waste Management (0.4%)
- -------------------------------------------------------------------------------------------------------------------
363,500 Stericycle, Inc. (NON) 16,404,755
-------------
Total Common stocks (cost $3,346,844,162) $3,691,889,672
Short-term investments (6.4%) (a)
Principal amount Value
- -------------------------------------------------------------------------------------------------------------------
$70,211,054 Short-term investments held in Putnam commingled
cash account with yields ranging from 1.00% to 1.24%
and due dates ranging from August 1, 2003 to
September 25, 2003 (d) $70,211,054
168,741,433 Short-term investments held as collateral for loaned
securities with yields ranging from 0.91% to 1.23% and
due dates ranging from August 1, 2003 to
September 19, 2003 (d) 168,680,396
-------------
Total Short-term investments (cost $238,891,450) $238,891,450
- -------------------------------------------------------------------------------------------------------------------
Total Investments (cost $3,585,735,612) $3,930,781,122
- -------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $3,745,231,146.
(NON) Non-income-producing security.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at July
31, 2003.
(d) See Note 1 to the financial statements.
ADR after the name of a foreign holding stands for American
Depositary Receipts, representing ownership of foreign securities on
deposit with a custodian bank.
Futures contracts outstanding at July 31, 2003
Market Aggregate Expiration Unrealized
value face value date depreciation
- ------------------------------------------------------------------------------
S&P 500 Index
(Long) $47,239,075 $47,652,986 Sep-03 $(413,911)
- ------------------------------------------------------------------------------
Statement of assets and liabilities
July 31, 2003
Assets
- -------------------------------------------------------------------------------------------
Investments in securities, at value, including $163,530,956
of securities on loan (identified cost $3,585,735,612) (Note 1) $3,930,781,122
- -------------------------------------------------------------------------------------------
Cash 1,184
- -------------------------------------------------------------------------------------------
Dividends, interest and other receivables 569,969
- -------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 4,676,389
- -------------------------------------------------------------------------------------------
Receivable for securities sold 76,104,233
- -------------------------------------------------------------------------------------------
Receivable for variation margin (Note 1) 128,925
- -------------------------------------------------------------------------------------------
Total assets 4,012,261,822
- -------------------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------------------
Payable for securities purchased 75,423,567
- -------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 14,754,409
- -------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 4,622,276
- -------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,527,326
- -------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 275,030
- -------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,809
- -------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,279,634
- -------------------------------------------------------------------------------------------
Collateral on securities loaned, at value (Note 1) 168,680,396
- -------------------------------------------------------------------------------------------
Other accrued expenses 465,229
- -------------------------------------------------------------------------------------------
Total liabilities 267,030,676
- -------------------------------------------------------------------------------------------
Net assets $3,745,231,146
Represented by
- -------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $8,367,220,600
- -------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (Note 1) (4,966,621,053)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 344,631,599
- -------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares
outstanding $3,745,231,146
Computation of net asset value and offering price
- -------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,238,709,110 divided by 314,253,211 shares) $7.12
- -------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $7.12)* $7.55
- -------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($842,635,022 divided by 133,322,336 shares)** $6.32
- -------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($48,585,374 divided by 7,049,531 shares)** $6.89
- -------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($60,956,625 divided by 9,111,802 shares) $6.69
- -------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $6.69)* $6.93
- -------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class R share
($1,160 divided by 163 shares) $7.12
- -------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($554,343,855 divided by 75,279,204 shares) $7.36
- -------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
Statement of operations
Year ended July 31, 2003
Investment income:
- -------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $26,845) $18,035,350
- -------------------------------------------------------------------------------------------
Interest 603,996
- -------------------------------------------------------------------------------------------
Securities lending 531,294
- -------------------------------------------------------------------------------------------
Total investment income 19,170,640
Expenses:
- -------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 18,189,297
- -------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 9,049,091
- -------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 94,242
- -------------------------------------------------------------------------------------------
Administrative services (Note 2) 42,392
- -------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 5,664,840
- -------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 8,056,639
- -------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 462,604
- -------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 459,462
- -------------------------------------------------------------------------------------------
Distribution fees -- Class R (Note 2) 3
- -------------------------------------------------------------------------------------------
Other 3,420,478
- -------------------------------------------------------------------------------------------
Total expenses 45,439,048
- -------------------------------------------------------------------------------------------
Expense reduction (Note 2) (984,575)
- -------------------------------------------------------------------------------------------
Net expenses 44,454,473
- -------------------------------------------------------------------------------------------
Net investment loss (25,283,833)
- -------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (722,430,169)
- -------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (2,338,585)
- -------------------------------------------------------------------------------------------
Net realized gain on written options (Notes 1 and 3) 4,112,756
- -------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 55
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures
contracts during the year 1,137,530,132
- -------------------------------------------------------------------------------------------
Net gain on investments 416,874,189
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $391,590,356
- -------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets
Year ended July 31
Decrease in net assets 2003 2002
- -------------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------------
Net investment loss $(25,283,833) $(43,281,625)
- -------------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency
transactions (720,655,943) (1,948,494,415)
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,137,530,132 (215,468,044)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 391,590,356 (2,207,244,084)
- -------------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (850,746,890) (1,116,071,730)
- -------------------------------------------------------------------------------------------------------
Total decrease in net assets (459,156,534) (3,323,315,814)
- -------------------------------------------------------------------------------------------------------
Net assets
- -------------------------------------------------------------------------------------------------------
Beginning of year 4,204,387,680 7,527,703,494
- -------------------------------------------------------------------------------------------------------
End of year $3,745,231,146 $4,204,387,680
- -------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------
Per-share Year ended July 31
operating performance 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $6.30 $9.22 $19.10 $14.30 $13.49
- ------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------
Net investment loss (a) (.03) (.04) (.06) (.09) (.05)
- ------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .85 (2.88) (6.00) 7.18 1.89
- -------------------------------------------------------------------------------------------------
Total from
investment operations .82 (2.92) (6.06) 7.09 1.84
- ------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (3.81) (2.29) (1.03)
- ------------------------------------------------------------------------------------------------
From return of capital -- -- (.01) -- --
- ------------------------------------------------------------------------------------------------
Total distributions -- -- (3.82) (2.29) (1.03)
- ------------------------------------------------------------------------------------------------
Net asset value,
end of period $7.12 $6.30 $9.22 $19.10 $14.30
- ------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 13.02 (31.67) (37.86) 53.19 15.08
- ------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,238,709 $2,563,995 $4,614,523 $6,763,532 $3,672,460
- ------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.09 1.00 .89 .87 .94
- ------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.54) (.56) (.47) (.51) (.41)
- ------------------------------------------------------------------------------------------------
Portfolio turnover (%) 64.83 89.19 109.13 115.31 155.40
- ------------------------------------------------------------------------------------------------
(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).
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------
Per-share Year ended July 31
operating performance 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $5.63 $8.30 $17.73 $13.51 $12.89
- ------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------
Net investment loss (a) (.07) (.09) (.15) (.21) (.14)
- ------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .76 (2.58) (5.46) 6.72 1.79
- ------------------------------------------------------------------------------------------------
Total from
investment operations: .69 (2.67) (5.61) 6.51 1.65
- ------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (3.81) (2.29) (1.03)
- ------------------------------------------------------------------------------------------------
From return of capital -- -- (.01) -- --
- ------------------------------------------------------------------------------------------------
Total distributions -- -- (3.82) (2.29) (1.03)
- ------------------------------------------------------------------------------------------------
Net asset value,
end of period $6.32 $5.63 $8.30 $17.73 $13.51
- ------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 12.26 (32.17) (38.31) 51.89 14.27
- ------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $842,635 $913,467 $1,776,848 $2,880,568 $1,768,766
- ------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.84 1.75 1.64 1.62 1.69
- ------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.29) (1.31) (1.22) (1.26) (1.16)
- ------------------------------------------------------------------------------------------------
Portfolio turnover (%) 64.83 89.19 109.13 115.31 155.40
- ------------------------------------------------------------------------------------------------
(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).
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS C
- ----------------------------------------------------------------------------------------------------
For the period
July 26, 1999+
Per-share Year ended July 31 to July 31
operating performance 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $6.14 $9.05 $18.95 $14.30 $14.54
- ----------------------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------------------
Net investment loss (a) (.08) (.10) (.15) (.24) -- (d)
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .83 (2.81) (5.93) 7.18 (.24)
- ----------------------------------------------------------------------------------------------------
Total from
investment operations .75 (2.91) (6.08) 6.94 (.24)
- ----------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (3.81) (2.29) --
- ----------------------------------------------------------------------------------------------------
From return of capital -- -- (.01) -- --
- ----------------------------------------------------------------------------------------------------
Total distributions -- -- (3.82) (2.29) --
- ----------------------------------------------------------------------------------------------------
Net asset value,
end of period $6.89 $6.14 $9.05 $18.95 $14.30
- ----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 12.22 (32.15) (38.33) 52.03 (1.65)*
- ----------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $48,585 $52,939 $115,495 $91,914 $364
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.84 1.75 1.64 1.62 .01*
- ----------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.29) (1.31) (1.20) (1.24) (.01)*
- ----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 64.83 89.19 109.13 115.31 155.40
- ----------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment loss has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
(d) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS M
- -------------------------------------------------------------------------------------------------
Per-share Year ended July 31
operating performance 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $5.95 $8.74 $18.40 $13.92 $13.22
- -------------------------------------------------------------------------------------------------
Investment operations:
- -------------------------------------------------------------------------------------------------
Net investment loss (a) (.06) (.08) (.13) (.17) (.12)
- -------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .80 (2.71) (5.71) 6.94 1.85
- -------------------------------------------------------------------------------------------------
Total from investment operations .74 (2.79) (5.84) 6.77 1.73
- -------------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (3.81) (2.29) (1.03)
- -------------------------------------------------------------------------------------------------
From return of capital -- -- (.01) -- --
- -------------------------------------------------------------------------------------------------
Total distributions -- -- (3.82) (2.29) (1.03)
- -------------------------------------------------------------------------------------------------
Net asset value,
end of period $6.69 $5.95 $8.74 $18.40 $13.92
- -------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 12.44 (31.92) (38.15) 52.26 14.53
- -------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $60,957 $73,816 $142,887 $241,432 $150,573
- -------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.59 1.50 1.39 1.37 1.44
- -------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.04) (1.06) (.97) (1.01) (.91)
- -------------------------------------------------------------------------------------------------
Portfolio turnover (%) 64.83 89.19 109.13 115.31 155.40
- -------------------------------------------------------------------------------------------------
(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).
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS R
- ----------------------------------------------
For the period
January 21,
2003+
Per-share to July 31
operating performance 2003
- ----------------------------------------------
Net asset value,
beginning of period $6.14
- ----------------------------------------------
Investment operations:
- ----------------------------------------------
Net investment loss (a) (.03)
- ----------------------------------------------
Net realized and unrealized
gain on investments 1.01
- ----------------------------------------------
Total from
investment operations .98
- ----------------------------------------------
Net asset value,
end of period $7.12
- ----------------------------------------------
Total return at
net asset value (%)(b) 15.96*
- ----------------------------------------------
Ratios and supplemental data
- ----------------------------------------------
Net assets, end of period
(in thousands) $1
- ----------------------------------------------
Ratio of expenses to
average net assets (%)(c) .71*
- ----------------------------------------------
Ratio of net investment loss
to average net assets (%) (.42)*
- ----------------------------------------------
Portfolio turnover (%) 64.83
- ----------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment loss has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service
arrangements (Note 2).
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS Y
- ------------------------------------------------------------------------------------------------
Per-share Year ended July 31
operating performance 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $6.50 $9.48 $19.48 $14.52 $13.64
- ------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------
Net investment loss (a) (.02) (.03) (.03) (.05) (.02)
- ------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .88 (2.95) (6.15) 7.30 1.93
- ------------------------------------------------------------------------------------------------
Total from
investment operations .86 (2.98) (6.18) 7.25 1.91
- ------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- (3.81) (2.29) (1.03)
- ------------------------------------------------------------------------------------------------
From return of capital -- -- (.01) -- --
- ------------------------------------------------------------------------------------------------
Total distributions -- -- (3.82) (2.29) (1.03)
- ------------------------------------------------------------------------------------------------
Net asset value,
end of period $7.36 $6.50 $9.48 $19.48 $14.52
- ------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 13.23 (31.43) (37.71) 53.51 15.44
- ------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $554,344 $600,170 $877,950 $1,027,892 $572,191
- ------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .84 .75 .64 .62 .69
- ------------------------------------------------------------------------------------------------
Ratio of net investment
loss to average net assets (%) (.28) (.32) (.21) (.26) (.17)
- ------------------------------------------------------------------------------------------------
Portfolio turnover (%) 64.83 89.19 109.13 115.31 155.40
- ------------------------------------------------------------------------------------------------
(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).
The accompanying notes are an integral part of these financial statements.
Notes to financial statements
July 31, 2003
Note 1
Significant accounting policies
Putnam Vista Fund (the "fund") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The fund seeks capital appreciation by investing
primarily in common stocks selected for above-average growth potential
and that involves certain risks. The fund may also trade securities for
short-term profits.
The fund offers class A, class B, class C, class M, class R and class Y
shares. The fund began offering class R shares on January 21, 2003.
Class A shares are sold with a maximum front-end sales charge of 5.75%.
Class B shares, which convert to class A shares after approximately
eight years, do not pay a front-end sales charge but pay a higher
ongoing distribution fee than class A, class M and class R shares, and
are subject to a contingent deferred sales charge, if those shares are
redeemed within six years of purchase. Class C shares are subject to the
same fees and expenses as class B shares, except that class C shares
have a one-year 1.00% contingent deferred sales charge and do not
convert to class A shares. Class M shares are sold with a maximum front
end sales charge of 3.50% and pay an ongoing distribution fee that is
higher than class A and Class R shares but lower than class B and class
C shares. Class R shares are sold without a front end sales charge and
pay an ongoing distribution fee that is higher than class A shares, but
lower than class B, class C and class M shares. Class R shares are
offered to qualified employee-benefit plans. Class Y shares, which are
sold at net asset value, are generally subject to the same expenses as
class A, class B, class C, class M and class R shares, but do not bear a
distribution fee. Class Y shares are sold to certain eligible purchasers
including certain defined contribution plans (including corporate IRAs),
bank trust departments and trust companies.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if the fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with 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. For foreign investments,
if trading or events occurring in other markets after the close of the
principal exchange in which the foreign investments are traded are expected
to materially affect the value of the investments, then those investments
are valued, taking into consideration these events, at their fair value
following procedures approved by the Trustees. Securities quoted in foreign
currencies are translated into U.S. dollars at the current exchange rate.
Short-term investments having remaining maturities of 60 days or less are
valued at amortized cost, which approximates fair value. Other investments,
including 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 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 issuers 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) Security transactions and related investment income Security
transactions are recorded on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis. Interest income is recorded on the accrual
basis. Dividend income is recognized on the ex-dividend date except that
certain dividends from foreign securities are recognized as soon as the
fund is informed of the ex-dividend date. Non-cash dividends, if any,
are recorded at the fair market value of the securities received.
D) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized
appreciation and depreciation of assets and liabilities in foreign
currencies arise from changes in the value of open forward currency
contracts and assets and liabilities other than investments at the
period end, resulting from changes in the exchange rate. Investments in
foreign securities involve certain risks, including those related to
economic instability, unfavorable political developments, and currency
fluctuations, not present with domestic investments.
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. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. 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.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The fund and the broker
agree to exchange an amount of cash equal to the daily fluctuation in
the value of the futures contract. Such receipts or payments are known
as "variation margin." Exchange traded options are valued at the last
sale price, or if no sales are reported, the last bid price for
purchased options and the last ask price for written options. Options
traded over-the-counter are valued using prices supplied by dealers.
Futures and written option contracts outstanding at period end 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 July 31, 2003, the value of
securities loaned amounted to $163,530,956. The fund received cash
collateral of $168,680,396, which is pooled with collateral of other
Putnam funds into 30 issuers of high grade short-term investments.
G) Line of credit During the period, the fund was entered into a
committed line of credit with certain banks. The line of credit
agreement included restrictions that the fund maintain an asset coverage
ratio of at least 300% and borrowings must not exceed prospectus
limitations. For the year ended July 31, 2003, the fund had no
borrowings against the line of credit. Effective August 6, 2003, the
fund will no longer participate in a committed line of credit.
H) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At July 31, 2003, the fund had a capital loss carryover of
$4,575,812,651 available to the extent allowed by tax law to offset
future capital gains,if any. The amount of the carryover and the
expiration dates are:
Loss Carryover Expiration
- -------------------------------
$3,125,838,888 July 31, 2010
1,449,973,763 July 31, 2011
Pursuant to federal income tax regulations applicable to regulated
investment companies, the fund has elected to defer to its fiscal year
ending July 31, 2004 $373,420,532 of losses recognized during the period
November 1, 2002 to July 31, 2003.
I) 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.
These differences include temporary and permanent differences of losses on
wash sale transactions, post-October loss deferrals, realized and unrealized
gains and losses on certain futures contracts, net operating loss and
redemption-in-kind. 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. For the
year ended July 31, 2003, the fund reclassified $25,283,833 to decrease
accumulated net investment loss and $43,370,314 to decrease paid-in-capital,
with a decrease to accumulated net realized losses of $18,086,481.
The tax basis components of distributable earnings and the federal tax
cost as of period end were as follows:
Unrealized appreciation $572,537,098
Unrealized depreciation (245,293,368)
---------------
Net unrealized appreciation 327,243,730
Capital loss carryforward (4,575,812,651)
Post October loss (373,420,532)
Cost for federal income
tax purposes $3,603,537,392
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.
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. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
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 year ended July 31, 2003, the
fund's expenses were reduced by $984,575 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $3,901 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B, class C, class M and class R shares pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Retail Management, a wholly-owned subsidiary of Putnam,
LLC and Putnam Retail Management GP, Inc., for services provided and
expenses incurred by it in distributing shares of the fund. The Plans
provide for payments by the fund to Putnam Retail Management at an annual
rate 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 year ended July 31, 2003, Putnam Retail Management, acting as
underwriter, received net commissions of $212,828 and $5,408 from the
sale of class A and class M shares, respectively, and received
$1,370,070 and $5,212 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 year ended July 31,
2003, Putnam Retail Management, acting as underwriter received $9,501
and no monies on class A and class M redemptions, respectively.
Note 3
Purchases and sales of securities
During the year ended July 31, 2003, cost of purchases and proceeds from
sales of investment securities other than short-term investments
aggregated $2,355,052,834 and $3,232,612,880, respectively. There were
no purchases and sales of U.S. government obligations.
Written option transactions during the period are summarized as follows:
Contract Premiums
Amounts Received
- ---------------------------------------------------------------------------
Written options
outstanding at
beginning of year -- $--
- ---------------------------------------------------------------------------
Options opened 8,067,323 5,326,534
Options exercised (2,125,413) (1,186,076)
Options expired (5,041,885) (3,664,877)
Options closed (900,025) (475,581)
- ---------------------------------------------------------------------------
Written options
outstanding at
end of year -- $--
- ---------------------------------------------------------------------------
Note 4
Capital shares
At July 31, 2003, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended July 31, 2003
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 75,877,055 $474,088,284
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
75,877,055 474,088,284
Shares repurchased (168,379,521) (1,046,048,714)
- ---------------------------------------------------------------------------
Net decrease (92,502,466) $(571,960,430)
- ---------------------------------------------------------------------------
Year ended July 31, 2002
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 112,834,820 $896,435,706
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
112,834,820 896,435,706
Shares repurchased (206,647,660) (1,595,857,852)
- ---------------------------------------------------------------------------
Net decrease (93,812,840) $(699,422,146)
- ---------------------------------------------------------------------------
Year ended July 31, 2003
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 12,333,720 $68,942,791
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
12,333,720 68,942,791
Shares repurchased (41,126,720) (224,436,568)
- ---------------------------------------------------------------------------
Net decrease (28,793,000) $(155,493,777)
- ---------------------------------------------------------------------------
Year ended July 31, 2002
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 22,611,211 $162,518,897
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
22,611,211 162,518,897
Shares repurchased (74,543,301) (517,324,456)
- ---------------------------------------------------------------------------
Net decrease (51,932,090) $(354,805,559)
- ---------------------------------------------------------------------------
Year ended July 31, 2003
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 1,608,766 $9,758,427
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
1,608,766 9,758,427
Shares repurchased (3,174,446) (18,991,642)
- ---------------------------------------------------------------------------
Net decrease (1,565,680) $(9,233,215)
- ---------------------------------------------------------------------------
Year ended July 31, 2002
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 4,962,010 $39,787,877
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
4,962,010 39,787,877
Shares repurchased (9,109,559) (71,584,149)
- ---------------------------------------------------------------------------
Net decrease (4,147,549) $(31,796,272)
- ---------------------------------------------------------------------------
Year ended July 31, 2003
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 2,402,812 $14,150,563
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
2,402,812 14,150,563
Shares repurchased (5,699,095) (32,973,607)
- ---------------------------------------------------------------------------
Net decrease (3,296,283) $(18,823,044)
- ---------------------------------------------------------------------------
Year ended July 31, 2002
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 3,466,256 $25,961,827
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
3,466,256 25,961,827
Shares repurchased (7,403,664) (54,276,279)
- ---------------------------------------------------------------------------
Net decrease (3,937,408) $(28,314,452)
- ---------------------------------------------------------------------------
For the period from January 21, 2003
(commencement of operations) to
July 31, 2003
- ---------------------------------------------------------------------------
Class R Shares Amount
- ---------------------------------------------------------------------------
Shares sold 163 $1,000
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
163 1,000
Shares repurchased -- --
- ---------------------------------------------------------------------------
Net increase 163 $1,000
- ---------------------------------------------------------------------------
Year ended July 31, 2003
- ---------------------------------------------------------------------------
Class Y Shares Amount
- ---------------------------------------------------------------------------
Shares sold 35,408,061 $231,850,897
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
35,408,061 231,850,897
Shares repurchased (52,472,281) (327,088,321)
- ---------------------------------------------------------------------------
Net decrease (17,064,220) $(95,237,424)
- ---------------------------------------------------------------------------
Year ended July 31, 2002
- ---------------------------------------------------------------------------
Class Y Shares Amount
- ---------------------------------------------------------------------------
Shares sold 44,757,491 $355,840,953
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
44,757,491 355,840,953
Shares repurchased (45,009,273) (357,574,254)
- ---------------------------------------------------------------------------
Net decrease (251,782) $(1,733,301)
- ---------------------------------------------------------------------------
At July 31, 2003, Putnam Investments, LLC owned 163 class R shares of
the fund (100% of class R shares outstanding), valued at $1,160.
Federal tax information
(Unaudited)
The Form 1099 you receive in January 2004 will show the tax status of
all distributions paid to your account in calendar 2003.
About the Trustees
Jameson A. Baxter (9/6/43), Trustee since 1994
President, Baxter Associates, Inc. (a consulting and private investments
firm)
Director of ASHTA Chemicals, Inc., Banta Corporation (a printing and digital
imaging firm), Ryerson Tull, Inc. (a steel service corporation), Advocate
Health Care, and the National Center for Nonprofit Boards. Chairman Emeritus
of the Board of Trustees, Mount Holyoke College. Until 2002, Mrs. Baxter was
a director of Intermatic Corporation, a manufacturer of energy control
products. Also held various positions in investment banking and corporate
finance, including Vice President and principal of the Regency Group and
Vice President and consultant to First Boston Corp.
Charles B. Curtis (4/27/40), Trustee since 2001
President and Chief Operating Officer, Nuclear Threat Initiative (a private
foundation dealing with national security issues), also serves as Senior
Advisor to the United Nations Foundation
Member of the Council on Foreign Relations and the Trustee Advisory Council
of the Applied Physics Laboratory at Johns Hopkins University. Until 2003,
Mr. Curtis was a member of the Electric Power Research Institute Advisory
Council, and the University of Chicago Board of Governors for Argonne
National Laboratory. Prior to 2002, Mr. Curtis was a member of the Board of
Directors of the Gas Technology Institute and the Board of Directors of the
Environment and Natural Resources Program Steering Committee, John F.
Kennedy School of Government, Harvard University. Until 2001, Mr. Curtis was
a Member of the Department of Defense's Policy Board and Director of EG&G
Technical Services, Inc. (fossil energy research and development support).
Prior to May 1997, Mr. Curtis was Deputy Secretary of Energy. He served as
Chairman of the Federal Energy Regulatory Commission from 1977 to 1987 and
has held positions on the staff of the U.S. House of Representatives, the
U.S. Treasury Department, and the Securities and Exchange Commission. Mr.
Curtis is also a lawyer with over 15 years of experience.
John A. Hill (1/31/42), Trustee since 1985 and Chairman since 2000
Vice-Chairman and Managing Director, First Reserve Corporation (a registered
investment advisor investing in companies in the world-wide energy industry
on behalf of institutional investors)
Director of Devon Energy Corporation (formerly known as Snyder Oil
Corporation), TransMontaigne Oil Company, Continuum Health Partners of New
York, Sarah Lawrence College, and various private compa nies owned by First
Reserve Corporation. Trustee of TH Lee, Putnam Investment Trust (a
closed-end investment company). Prior to acquiring First Reserve in 1983,
Mr. Hill held executive positions with several advisory firms and various
positions with the federal government, including Associate Director of the
Office of Manage ment and Budget and Deputy Director of the Federal Energy
Administration.
Ronald J. Jackson (12/17/43), Trustee since 1996
Private investor
Former Chairman, President, and Chief Executive Officer of Fisher-Price,
Inc. (a toy manufacturer). Previously served as President and Chief
Executive Officer of Stride-Rite, Inc. and Kenner Parker Toys. Also held
financial and marketing positions with General Mills, Parker Brothers, and
Talbots. President of the Kathleen and Ronald J. Jackson Foundation
(charitable trust). Member of the Board of Overseers of WGBH (public
television and radio). Member of the Board of Overseers of the Peabody Essex
Museum.
Paul L. Joskow (6/30/47), Trustee since 1997
Elizabeth and James Killian Professor of Economics and Management and
Director of the Center for Energy and Environmental Policy Research,
Massachusetts Institute of Technology
Director, National Grid Transco (formerly National Grid Group, a UK-based
holding company with interests in electric and gas transmission and
distribution and telecommunications infrastructure), and the Whitehead
Institute for Biomedical Research (a non-profit research institution).
President of the Yale University Council. Prior to February 2002, March
2000, and September 1998, Dr. Joskow was a Director of State Farm Indemnity
Company (an automobile insurance company), Director of New England Electric
System (a public utility holding company) and a consultant to National
Economic Research Associates, respectively.
Elizabeth T. Kennan (2/25/38), Trustee since 1992
Chairman, Cambus-Kenneth Bloodstock (a limited liability company involved in
thoroughbred horse breeding and farming), President Emeritus of Mount
Holyoke College
Director, Northeast Utilities, and Talbots (a distributor of women's
apparel). Trustee of Centre College. Prior to 2001, Dr. Kennan was a member
of the Oversight Committee of Folger Shakespeare Library. Prior to September
2000, June 2000, and November 1999, Dr. Kennan was a Director of Chastain
Real Estate, Bell Atlantic, and Kentucky Home Life Insurance, respectively.
Prior to 1995, Dr. Kennan was a Trustee of Notre Dame University. For 12
years, she was on the faculty of Catholic University.
John H. Mullin, III (6/15/41), Trustee since 1997
Chairman and CEO of Ridgeway Farm (a limited liability company engaged in
timber and farming)
Director Alex. Brown Realty, Inc., Sonoco Products, Inc. (a packaging
company), The Liberty Corporation (a company engaged in the broadcasting
industry), and Progress Energy, Inc. (a utility company, formerly known as
Carolina Power & Light). Trustee Emeritus of Washington & Lee University.
Prior to October 1997, January 1998, and May 2001, Mr. Mullin was a Director
of Dillon, Read & Co. Inc., The Ryland Group, Inc., and Graphic Packaging
International Corp., respectively.
Robert E. Patterson (3/15/45), Trustee since 1984
Senior Partner of Cabot Properties, L.P. and Chairman of Cabot
Properties, Inc.
Chairman of the Joslin Diabetes Center, Trustee of SEA Education
Association, and Director of Brandywine Trust Company (a trust company).
Prior to February 1998, Mr. Patterson was Executive Vice President and
Director of Acquisitions of Cabot Partners Limited Partnership. Prior to
December 2001, Mr. Patterson was President and Trustee of Cabot Industrial
Trust (publicly traded real estate investment trust). Prior to 1990, Mr.
Patterson was Executive Vice President of Cabot, Cabot & Forbes Realty
Advisors, the predecessor of Cabot Partners, and prior to that was Senior
Vice President of the Beal Companies.
W. Thomas Stephens (9/2/42), Trustee since 1997
Corporate Director
Director of Xcel Energy Incorporated (public utility company), TransCanada
Pipelines, Norske Canada, Inc. (paper manufacturer), and Qwest
Communications (communications company). Until 2003, Mr. Stephens was a
Director of Mail-Well, a printing and envelope company. Prior to July 2001
and October 1999, Mr. Stephens was Chairman of Mail-Well and
MacMillan-Bloedel (forest products company). Prior to 1996, Mr. Stephens was
Chairman and Chief Executive Officer of Johns Manville.
W. Nicholas Thorndike (3/28/33), Trustee since 1992
Director of various corporations and charitable organizations, including
Courier Corporation (a book manufacturer and publisher) and Providence
Journal Co. (a newspaper publisher)
Trustee of Northeastern University and Honorary Trustee of Massachusetts
General Hospital. Prior to September 2000, April 2000, and December 2001,
Mr. Thorndike was a Director of Bradley Real Estate, Inc., a Trustee of
Eastern Utilities Associates, and a Trustee of Cabot Industrial Trust,
respec tively. Previously served as Chairman of the Board and managing
partner of Wellington Management/Thorndike Doran Paine & Lewis, and Chairman
and Director of Ivest Fund.
Lawrence J. Lasser* (11/1/42), Trustee since 1992 and Vice President
since 1981
President and Chief Executive Officer of Putnam Investments and Putnam
Management
Director of Marsh & McLennan Companies, Inc. and the United Way of
Massachusetts Bay. Member of the Board of Governors of the Investment
Company Institute, Trustee of the Museum of Fine Arts, Boston, a Trustee and
Member of the Finance and Executive Committees of Beth Israel Deaconess
Medical Center, Boston, and a Member of the CareGroup Board of Managers
Investment Committee, the Council on Foreign Relations, and the Commercial
Club of Boston.
George Putnam, III* (8/10/51), Trustee since 1984 and President since
2000
President, New Generation Research, Inc. (a publisher of financial advisory
and other research services relating to bankrupt and distressed companies)
and New Generation Advisers, Inc. (a registered investment adviser)
Director of The Boston Family Office, L.L.C. (registered investment
advisor), Trustee of St. Mark's School, and Trustee of Shore Country Day
School. Until 2002, Mr. Putnam was a Trustee of the SEA Education
Association. Previously, Mr. Putnam was an attorney with the firm of Dechert
Price & Rhoads.
A.J.C. Smith* (4/13/34), Trustee since 1986
Director of Marsh & McLennan Companies, Inc.
Director of Trident Corp. (a limited partnership with over 30 institutional
investors). Trustee of the Carnegie Hall Society, the Educational
Broadcasting Corporation and the National Museums of Scotland. Chairman of
the Central Park Conservancy. Member of the Board of Overseers of the Joan
and Sanford I. Weill Graduate School of Medical Sciences of Cornell
University. Fellow of the Faculty of Actuaries in Edinburgh, the Canadian
Institute of Actuaries, and the Conference of Actuaries. Associate of the
Society of Actuaries. Member of the American Actuaries, the International
Actuarial Association and the International Association of Consulting
Actuaries. Prior to May 2000 and November 1999, Mr. Smith was Chairman and
CEO, respectively, of Marsh & McLennan Companies, Inc.
The address of each Trustee is One Post Office Square, Boston, MA
02109.
As of July 31, 2003, there were 104 Putnam Funds.
Each Trustee serves for an indefinite term, until his or her resignation,
death, or removal.
* Trustees who are or may be deemed to be "interested persons" (as defined
in the Investment Company Act of 1940) of the fund, Putnam Management,
Putnam Retail Management or Marsh & McLennan Companies, Inc., the parent
company of Putnam, LLC and its affiliated companies. Messrs. Putnam, III,
Lasser and Smith are deemed "interested persons" by virtue of their
positions as officers or shareholders of the fund or Putnam Management,
Putnam Retail Management or Marsh & McLennan Companies, Inc. George Putnam,
III is the President of your fund and each of the other Putnam funds.
Lawrence J. Lasser is the President and Chief Executive Officer of Putnam
Investments and Putnam Management. Mr. Lasser and Mr. Smith serve as
Directors of Marsh & McLennan Companies, Inc.
Officers
In addition to George Putnam, III, the other officers of the fund
are shown below:
Charles E. Porter (7/26/38)
Executive Vice President, Treasurer and
Principal Financial Officer
Since 1989
Managing Director, Putnam Investments
and Putnam Management
Patricia C. Flaherty (12/1/46)
Senior Vice President
Since 1993
Senior Vice President, Putnam Investments
and Putnam Management
Karnig H. Durgarian (1/13/56)
Vice President and Principal Executive Officer
Since 2002
Senior Managing Director, Putnam Investments
Steven D. Krichmar (6/27/58)
Vice President and Principal Financial Officer
Since 2002
Managing Director, Putnam Investments. Prior to
July 2001, Partner, PricewaterhouseCoopers LLP
Michael T. Healy (1/24/58)
Assistant Treasurer and Principal
Accounting Officer
Since 2000
Managing Director, Putnam Investments
Beth S. Mazor (4/6/58)
Vice President
Since 2002
Senior Vice President, Putnam Investments
Gordon H. Silver (7/3/47)
Vice President
Since 1990
Senior Managing Director, Putnam Investments,
Putnam Management and Putnam Retail
Management
Mark C. Trenchard (6/5/62)
Vice President
Since 2002
Senior Vice President, Putnam Investments
William H. Woolverton (1/17/51)
Vice President and Chief Legal Officer
Since 2003
Managing Director, Putnam Investments,
Putnam Management and Putnam Retail
Management
Judith Cohen (6/7/45)
Clerk and Assistant Treasurer
Since 1993
Clerk and Assistant Treasurer, The Putnam Funds
The address of each Officer is One Post Office Square,
Boston, MA 02109.
Fund information
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition and
practice since 1830. Founded over 65 years ago, Putnam Investments was built
around the concept that a balance between risk and reward is the hallmark of
a well-rounded financial program. We presently manage over 100 mutual funds
in growth, value, blend, fixed income, and international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary Trust Company
Legal Counsel
Ropes & Gray LLP
Independent Auditors
KPMG LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President, Treasurer and Principal Financial Officer
Patricia C. Flaherty
Senior Vice President
Karnig H. Durgarian
Vice President and Principal Executive Officer
Steven D. Krichmar
Vice President and Principal Financial Officer
Michael T. Healy
Assistant Treasurer and Principal Accounting Officer
Beth S. Mazor
Vice President
Gordon H. Silver
Vice President
Mark C. Trenchard
Vice President
William H. Woolverton
Vice President and Chief Legal Officer
Judith Cohen
Clerk and Assistant Treasurer
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, which gives details of sales charges, investment
objectives, and operating policies of the fund, and the most recent copy
of Putnam's Quarterly Performance Summary and Putnam's Quarterly Ranking
Summary. For more information or to request a prospectus, call toll
free: 1-800-225-1581. The fund's Statement of Additional Information
contains additional information about the fund's Trustees and is
available without charge upon request by calling 1-800-225-1581.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
Call 1-800-225-1581 or visit our Web site www.putnaminvestments.com.
AN015-203371 006/317/515/376 9/03
Not FDIC Insured, May Lose Value, No Bank Guarantee
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ----------------------------------------------------------------------------
Putnam Vista Fund
Supplement to Annual Report dated 7/31/03
The following information has been prepared to provide class Y shareholders
with a performance overview specific to their holdings. Class Y shares are
offered exclusively to clients that meet the eligibility requirements
specified in the fund's prospectus for such shares. Performance of class Y
shares, which do not incur a front-end load, a distribution fee, or a
contingent deferred sales charge, will differ from the performance of class
A, B, C, M, and R shares, which are discussed more extensively in the annual
report.
RESULTS AT A GLANCE
- ----------------------------------------------------------------------------
Total return for periods ended 7/31/03
NAV
1 year 13.23%
5 years -14.30
Annual average -3.04
10 years 116.74
Annual average 8.04
Life of fund (since class A inception, 6/3/68)
Annual average 9.48
Share value: NAV
7/31/02 $6.50
7/31/03 $7.36
- ----------------------------------------------------------------------------
Distributions: The fund did not make any distributions during this period.
- ----------------------------------------------------------------------------
Please note that past performance is not indicative of future results. More
recent returns may be more or less than those shown. Returns shown for class
Y shares for periods prior to their inception are derived from the
historical performance of class A shares, and are not adjusted to reflect
the initial sales charge currently applicable to class A shares. These
returns have not been adjusted to reflect differences in operating expenses
which, for class Y shares, typically are lower than the operating expenses
applicable to class A shares. All returns assume reinvestment of
distributions at net asset value. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than
their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or
call Putnam toll free at 1-800-752-9894.
Item 2. Code of Ethics:
- -----------------------
All officers of the Fund, including its principal executive, financial and
accounting officers, are employees of Putnam Investment Management, LLC,
the Fund's investment manager. As such they are subject to a comprehensive
Code of Ethics adopted and administered by Putnam Investments which is
designed to protect the interests of the firm and its clients. The Fund
has adopted a Code of Ethics which incorporates the Code of Ethics of
Putnam Investments with respect to all of its officers and Trustees who are
employees of Putnam Investment Management, LLC. For this reason, the Fund
has not adopted a separate code of ethics governing its principal
executive, financial and accounting officers.
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
The Funds' Audit and Pricing Committee is comprised solely of Trustees
who are "independent" (as such term has been defined by the Securities
and Exchange Commission ("SEC") in regulations implementing Section 407
of the Sarbanes-Oxley Act (the "Regulations")). The Trustees believe
that each of the members of the Audit and Pricing Committee also possess
a combination of knowledge and experience with respect to financial
accounting matters, as well as other attributes, that qualify them for
service on the Committee. In addition, the Trustees have determined
that all members of the Funds' Audit and Pricing Committee meet the
financial literacy requirements of the New York Stock Exchange's rules
and that Mr. Patterson and Mr. Stephens qualify as "audit committee
financial experts" (as such term has been defined by the Regulations)
based on their review of their pertinent experience and education.
Certain other Trustees, although not on the Audit and Pricing Committee,
would also qualify as "audit committee financial experts." The SEC has
stated that the designation or identification of a person as an audit
committee financial expert pursuant to this Item 3 of Form N-CSR does
not impose on such person any duties, obligations or liability that are
greater than the duties, obligations and liability imposed on such
person as a member of the Audit and Pricing Committee and the Board of
Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Items 5-6. [Reserved]
- ---------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. [Reserved]
- ------------------
Item 9. Controls and Procedures:
- --------------------------------
(a) The registrant's principal executive officer and principal financial
officers 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
on Form N-CSR, that the design and operation of such procedures are
effective to provide reasonable assurance that information required to
be disclosed by the investment company in the reports that it files or
submits under the Securities Exchange Act of 1934 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 10. Exhibits:
- ------------------
(a) The Code of Ethics of The Putnam Funds, which incorporates the
Code of Ethics of Putnam Investments, is filed herewith.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act of 2002
are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: September 26, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
an 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/Karnig H. Durgarian
---------------------------
Karnig H. Durgarian
Principal Executive Officer
Date: September 26, 2003
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Financial Officer
Date: September 26, 2003
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: September 26, 2003