Putnam
Vista
Fund
Item 1. Report to Stockholders:
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The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
1-31-04
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
In recent months we have communicated with you about Putnam's commitment
to establishing high fiduciary standards within the investment
management industry. The firm's efforts took a step forward in January
with a series of initiatives that were outlined in a letter to
shareholders from Putnam President and CEO Ed Haldeman. Among other
things, Putnam is placing voluntary limits on fund expenses and reducing
sales loads. In addition, beginning this spring, shareholder
communications will provide enhanced disclosure, including a comparison
of fund costs with industry averages and a gauge of each fund's relative
risk. They will also disclose the number of shares held by Putnam
employees and discuss how the portfolio management team is compensated.
Another new measure, taking effect April 19, 2004, will impose a 2% fee
on shares that are sold within 5 days of purchase. This redemption fee
demonstrates Putnam's commitment to preventing short-term trading in its
funds, which can be detrimental to shareholders.
These changes serve to advance shareholder interests and provide a
framework to help you make financial decisions. We encourage you to
review the new disclosure as it is implemented and discuss it with your
financial advisor. While we are pleased with this progress, the Trustees
and Putnam are continuing to explore other measures that may provide
greater transparency and enhanced protection for long-term shareholders.
Strong evidence of an economic recovery and improving investor sentiment
sent U.S. stock markets sharply higher during the first half of Putnam
Vista Fund's fiscal year. However, despite achieving solid returns for
the semiannual period ended January 31, 2004, the fund underperformed
both its benchmark index and its Lipper category average. Although poor
stock selection explains some of the underperformance, the management
team thinks many companies in the portfolio are experiencing temporary
setbacks as they adapt to a faster-growth environment. We believe a
patient approach, especially given the management team's recent efforts
to reposition the portfolio, is a worthy endeavor.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
March 17, 2004
Report from Fund Management
Fund highlights
* During the semiannual period ended January 31, 2004, Putnam Vista
Fund's class A shares had a total return of 15.87% at net asset value
(NAV) and 9.27% at public offering price (POP).
* The fund's performance lagged the Russell Midcap Growth Index's return
of 19.88% for the semiannual period. We attribute this underperformance
to differences in composition between the fund and the index, and the
disappointing performance of a few technology and telecommunications
stocks.
* Based on results at NAV, the fund slightly underperformed the average
return of its Lipper category, Mid-Cap Growth Funds, which was 16.28%.
* See the Performance Summary beginning on page 7 for complete fund
performance, comparative index performance, and Lipper data.
Performance commentary
The steadily improving U.S. economy provided a catalyst for rising
equity returns during the six months ended January 31, 2004. Stocks of
companies that languished during 2002 and the first half of 2003 --
especially those that tended to be smaller in size, cyclical, or
undervalued -- experienced the greatest gains. With its focus on
well-established, midsize growth companies, Putnam Vista Fund posted
solid returns for the six months ended January 31, 2004. However, while
the fund's return at NAV marginally trailed its Lipper peer group
average, it did underperform the Russell Midcap Growth Index by a wider
margin. We attribute this underperformance to disappointing earnings
announcements by some companies held by the fund, particularly in the
technology and telecommunications sectors. We believe these setbacks
will be remedied as the economy continues to recover and our
repositioning efforts, as discussed on page 5, take root.
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
The equity rally that began in March 2003, continued through the end of
the reporting period -- albeit with temporary pullbacks in September,
December, and January, when investors paused to assess announcements
about the strength of the U.S. economy and geopolitical events. However,
a steady stream of rising earnings announcements and the unexpectedly
strong 8.2% gross domestic product (GDP) reported for the third quarter
of 2003 -- the biggest jump in 20 years -- provided a tremendous
psychological lift to the equity markets.
The significant improvement in GDP was just one of many encouraging
economic reports. Consumer confidence, business spending, manufacturing,
and employment also registered noteworthy gains. Consumer prices have
been relatively stable, corporate inventories have become lean, and
interest rates have remained at their lowest levels in years. In
December, the Federal Reserve Board sent mixed signals to investors
regarding the direction of interest rates, saying both that deflation
was no longer an immediate threat and that policy accommodation can be
maintained for a considerable period.
In the final months of the reporting period, investor sentiment was
still relatively upbeat, with the expectations that fourth-quarter
profits would meet estimates. Before the midpoint of your fund's fiscal
year on January 31, the Dow Jones Industrial Average, an unmanaged index
of broad market performance that measures large-cap, "blue chip" stocks,
had crossed the critical 10,000 mark -- the first time the index had
scaled that peak in 18 months. Similarly, all major U.S. stocks market
indexes had achieved double-digit returns for calendar 2003, with the
small- and mid-capitalization stock indexes surpassing the gains posted
by large-capitalization stock indexes.
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MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 1/31/04
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Equities
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Russell Midcap Growth Index (midsize-company growth stocks) 19.88%
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S&P 500 Index (broad stock market) 15.23%
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Russell 2000 Index (stocks of small and midsize companies) 22.67%
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MSCI EAFE Index (international stocks) 25.35%
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Bonds
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Lehman Municipal Bond Index (tax-exempt bonds) 5.73%
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Lehman Aggregate Bond Index (broad bond market) 4.49%
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Lehman Global Aggregate Bond Index (international bonds) 9.18%
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These indexes provide an overview of performance in different market
sectors for the six months ended 1/31/04.
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Strategy overview
As noted on page 5, a new management team has been in place since July
2003. By drawing on the expertise of a dedicated team of mid-cap equity
professionals, we have been working to identify the causes of your
fund's underperformance while pursuing and strengthening the sources of
long-term outperformance.
Our strategy has included taking a bottom-up, company-by-company
approach to streamlining the portfolio, rather than a top-down, sector
or investment theme approach. As always, our goal with this bottom-up
approach is to identify the most attractive investment opportunities. We
assess each company's growth prospects and earnings quality in relation
to how its stock is valued, while at the same time considering your
fund's overall risk parameters.
As a result, during the first half of your fund's fiscal year, the
portfolio became more concentrated. It now contains fewer holdings,
reflecting those companies in which we have a particularly high level of
confidence. As we evaluated each holding, we considered whether the
company's outlook had changed, whether its risk profile exceeded the
overall guidelines for the portfolio, whether it was appreciating too
rapidly, and whether it had fallen below what we considered a
top-quintile ranking. Between July 31, 2003, and January 31, 2004, we
reduced the number of stocks in the portfolio from 204 to 127.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY WEIGHTINGS COMPARED]
TOP INDUSTRY WEIGHTINGS COMPARED
as of 7/31/03 as of 1/31/04
Retail 8.3% 10.4%
Electronics 7.5% 9.7%
Software 8.9% 9.4%
Medical technology 6.2% 6.6%
Biotechnology 7.0% 5.4%
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
Some of the fund's most significant contributors to performance also
represented its largest holdings. Capital One Financial, the portfolio's
fourth-largest holding, was one of the best performers for the six-month
period. Despite the intense competition for consumers and the economic
slowdown, Capital One Financial, which markets a variety of consumer
financial products and services, has managed to maintain a very
high-quality portfolio.
Many companies are benefiting from their efforts to become more cost
efficient at the same time that capital spending is increasing.
Cognizant Technology Solutions, which provides customized information
technology services, is reducing costs by outsourcing its design,
development, and support services to workers in India. Best known for
its Norton anti-virus products, Symantec produces a broad range of
network security software for businesses and consumers alike. Protecting
computers from viruses is big business today, and this company is
profiting from growing demand. Agere Systems produces integrated circuit
solutions for applications such as high-density storage, multi-service
networking, wireless data, and personal computer connectivity. We are
very excited about the company's new chip technology, which is being
used in phones for the next generation 2.5G wireless networks.
[GRAPHIC OMITTED: TOP HOLDINGS]
TOP HOLDINGS
1 Symantec Corp.
Software
2 Staples, Inc.
Retail
3 BMC Software, Inc.
Software
4 Capital One Financial Corp.
Consumer finance
5 SanDisk Corp.
Electronics
6 Adobe Systems, Inc.
Software
7 Lexmark International, Inc.
Computers
8 C.R. Bard, Inc.
Medical technology
9 Invitrogen Corp.
Biotechnology
10 Zimmer Holdings, Inc.
Medical technology
Footnote reads:
These holdings represent 17.0% of the fund's net assets as of 1/31/04.
The fund's holdings will change over time.
The field of biotechnology offers many attractive opportunities for
investing in midsize companies. Typically more established and armed
with better cash flow than small start-ups, many midsize biotech
companies often can respond to the need for developing and
commercializing new therapies for treating life-threatening diseases
more quickly than large companies. Despite our expectations, the fund's
biotechnology stocks delivered mixed results. Invitrogen, a top
performer for the fund, provides research products and services to
customers involved in life sciences and gene research. The fund's
investments in Gilead Sciences didn't fare as well due to
lower-than-expected sales and inventory concerns for its HIV/AIDS drug,
Viread. Near term, we expect Gilead's stock price will be under some
pressure but remain confident in the company's long-term growth
potential.
Similarly, we remain upbeat about prospects for the fund's
telecommunications, technology, and retail investments, despite the fact
that a handful of these companies stumbled. One of the biggest
disappointments was long-distance and Internet service provider
CenturyTel. We have reason to be confident in the company's future;
however, as with all the portfolio's holdings, we watch for any factors
that might cause us to reconsider our position. SanDisk designs and
markets flash memory data storage products that are used in a wide range
of electronic systems. We think this company is strategically positioned
to profit from the future growth of consumer electronics. New portfolio
holding Claire's Stores, a mall-based retailer of value-priced fashion
accessories for pre-teens, also turned in disappointing performance, but
we remain confident that prospects will improve if sales pick up.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
The fund's management team
The fund is managed by the Putnam Mid-Cap Growth Team. The members of
the team are Kevin Divney (Portfolio Member) and Paul Marrkand
(Portfolio Member). Both Kevin and Paul joined the Putnam Mid-Cap Growth
Team in July of 2003. Kevin has 16 years of investment industry
experience and Paul has 19 years of investment experience.
OF SPECIAL INTEREST
Putnam introduces a new redemption fee to protect long-term investors in
the funds. For shares purchased on or after April 19, 2004, a 2%
redemption fee will be applied to shares exchanged or sold within 5
calendar days of purchase. The fee applies to all Putnam funds except
money market funds, variable annuity funds, and closed-end funds.
Beginning on April 19, 2004, the 1% redemption fee currently applicable
to international, global, and taxable high-yield funds will be imposed
on shares that are exchanged or redeemed within 6 to 90 days of
purchase. Please see your fund's prospectus for additional information
or talk to your financial advisor.
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.
We believe the past few months have proved to be a transitional period
for both the economy and the fund. For many months now, investors have
pursued small-cap, cyclical, and even the more speculative stocks, which
your fund did not own. In the months ahead, we think investors will
shift their focus to higher-quality assets. This change is likely to be
driven more by a preference for yield, solid balance sheets, and profit
margin growth rather than by any aversion to risk. Furthermore, we
believe the year-long outperformance of cyclical stocks versus defensive
stocks may have run its course.
Given our outlook, we think the fund's revitalized portfolio of midsize
companies is well positioned to respond to an acceleration of economic
growth, especially given the past three years of corporate
belt-tightening and productivity improvements, which have drastically
reduced break-even points. Stronger corporate profitability generates
excess capital for companies to spend, which, in turn, fuels more
economic expansion. By blending the superior growth prospects and the
flexibility of small-cap companies with the diverse markets and
experienced management of mature, large-cap companies, we think the
fund's portfolio of midsize companies is uniquely suited to benefit from
these favorable trends.
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 shows your fund's performance during the first half of its
fiscal year, which ended January 31, 2004. 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. Data represent past performance. Past
performance does not guarantee future results. More recent returns may
be less or more than those shown. Investment return and principal value
will fluctuate and you may have a gain or a loss when you sell your
shares. For the most recent month-end performance, please visit
www.putnaminvestments.com.
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TOTAL RETURN FOR PERIODS ENDED 1/31/04
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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)
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NAV POP NAV CDSC NAV CDSC NAV POP NAV
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6 months 15.87% 9.27% 15.35% 10.35% 15.39% 14.38% 15.55% 11.54% 15.73%
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1 year 38.89 30.95 37.81 32.81 37.78 36.78 38.28 33.51 38.72
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5 years -10.96 -16.05 -14.28 -15.40 -14.22 -14.22 -13.15 -16.17 -11.98
Annual average -2.29 -3.44 -3.03 -3.29 -3.02 -3.02 -2.78 -3.47 -2.52
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10 years 120.30 107.61 104.47 104.47 104.31 104.31 109.82 102.48 115.20
Annual average 8.22 7.58 7.41 7.41 7.41 7.41 7.69 7.31 7.97
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Annual average
(life of fund) 9.73 9.54 8.73 8.73 8.90 8.90 9.01 8.90 9.46
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Performance assumes reinvestment of distributions and does not account
for taxes. Returns at public offering price (POP) for class A and M
shares reflect a sales charge of 5.75% and 3.50%, respectively (which
for class A shares does not reflect a reduction in sales charges that
went into effect on January 28, 2004; if this reduction had been in
place for all periods indicated, returns would have been higher). Class
B share returns reflect the applicable contingent deferred sales charge
(CDSC), which is 5% in the first year, declining to 1% in the sixth
year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the
first year that is eliminated thereafter. Class R share returns have no
initial sales charge or CDSC. Performance for class B, C, M, and R
shares before their inception is derived from the historical performance
of class A shares, adjusted for the applicable sales charge (or CDSC)
and higher operating expenses for such shares.
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/04
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Lipper Mid-Cap
Russell Midcap Growth Funds
Growth Index* category average+
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6 months 19.88% 16.28%
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1 year 48.89 41.74
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5 years 10.78 15.19
Annual average 2.07 2.30
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10 years 147.40 124.59
Annual average 9.48 8.00
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Annual average
(life of fund) -- 8.84
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Index and Lipper results should be compared to fund performance at net
asset value.
* The inception date of the Russell Midcap Growth Index was December 31,
1985.
+ Over the 6-month and 1-, 5-, and 10-year periods ended 1/31/04, there
were 509, 485, 237, and 84 funds, respectively, in this Lipper
category.
PRICE AND DISTRIBUTION* INFORMATION 6 MONTHS ENDED 1/31/04
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Class A Class B Class C Class M Class R
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Share value: NAV POP NAV NAV NAV POP NAV
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7/31/03 $7.12 $7.55 $6.32 $6.89 $6.69 $6.93 $7.12
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1/31/04 8.25 8.71+ 7.29 7.95 7.73 8.01 8.24
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* The fund made no distributions during the period.
+ Reflects a reduction in sales charge that took effect on January 28, 2004.
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TOTAL RETURN FOR PERIODS ENDED 12/31/03 (MOST RECENT CALENDAR QUARTER)
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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)
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NAV POP NAV CDSC NAV CDSC NAV POP NAV
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6 months 15.80% 9.15% 15.33% 10.33% 15.42% 14.42% 15.41% 11.29% 15.65%
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1 year 33.39 25.63 32.40 27.40 32.47 31.47 32.57 28.03 33.22
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5 years -9.74 -14.95 -12.97 -14.12 -13.01 -13.01 -11.89 -14.96 -10.78
Annual average -2.03 -3.19 -2.74 -3.00 -2.75 -2.75 -2.50 -3.19 -2.26
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10 years 118.18 105.61 102.53 102.53 102.51 102.51 107.60 100.45 112.95
Annual average 8.11 7.47 7.31 7.31 7.31 7.31 7.58 7.20 7.85
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Annual average
(life of fund) 9.65 9.47 8.66 8.66 8.83 8.83 8.93 8.82 9.38
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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% (since reduced to 5.25%) maximum
sales charge for class A shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
Class R shares are not subject to an initial sales charges or CDSC and
are available only to certain defined contribution plans.
Comparative indexes
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.
Lehman Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
index of international stocks from Europe, Australasia, and the Far
East.
Russell 2000 Index is an unmanaged index of common stocks that generally
measure performance of small to midsize companies within the Russell
3000 Index.
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.
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.
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. Our proxy voting guidelines and policies are
available on the Putnam Individual Investor Web site,
www.putnaminvestments.com, by calling Putnam's Shareholder Services at
1-800-225-1581, or on the SEC's Web site, www.sec.gov.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or loss
the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment
income ratios, and portfolio turnover in one summary table, reflecting
the five most recent reporting periods. In a semiannual report, the
highlight table also includes the current reporting period. For open-end
funds, a separate table is provided for each share class.
The fund's portfolio
January 31, 2004 (Unaudited)
Common stocks (99.6%) (a)
Number of shares Value
Aerospace and Defense (2.0%)
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303,200 Precision Castparts Corp. $14,186,728
1,175,900 Rockwell Collins, Inc. 38,440,171
654,593 United Defense Industries, Inc.
(NON) 19,179,575
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71,806,474
Automotive (1.1%)
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313,700 Autoliv, Inc. 12,971,495
418,200 Lear Corp. 27,459,012
--------------
40,430,507
Banking (1.2%)
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494,600 Doral Financial Corp. 16,059,662
531,000 Investors Financial Services Corp. 22,004,640
86,018 Zions Bancorp. 5,044,096
--------------
43,108,398
Biotechnology (5.4%)
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451,700 Amylin Pharmaceuticals, Inc. (NON) 8,726,844
973,300 Biogen Idec, Inc. (NON) 41,647,507
329,200 Celgene Corp. (NON) 13,302,972
413,600 Genzyme Corp. (NON) 22,685,960
351,900 Gilead Sciences, Inc. (NON) 19,308,753
679,400 Invitrogen Corp. (NON) 52,313,800
630,700 Neurocrine Biosciences, Inc. (NON) 35,691,313
--------------
193,677,149
Building Materials (0.8%)
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142,600 American Standard Cos., Inc. (NON) 15,144,120
282,400 Vulcan Materials Co. 13,470,480
--------------
28,614,600
Commercial and Consumer Services (1.2%)
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338,400 CDW Corp. 22,990,896
481,800 Choicepoint, Inc. (NON) 18,549,300
--------------
41,540,196
Communications Equipment (2.2%)
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491,400 Advanced Fibre Communications (NON) 11,601,954
1,737,600 Corning, Inc. (NON) 22,449,792
997,100 Foundry Networks, Inc. (NON) 23,760,893
757,600 Juniper Networks, Inc. (NON) 21,887,064
--------------
79,699,703
Computers (3.9%)
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634,400 Lexmark International, Inc. (NON) 52,585,416
2,212,500 Network Appliance, Inc. (NON) 49,471,500
1,271,000 Sun Microsystems, Inc. (NON) 6,749,010
965,400 SunGard Data Systems, Inc. (NON) 30,052,902
--------------
138,858,828
Consumer Finance (2.7%)
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873,600 Capital One Financial Corp. 62,095,488
918,700 Nelnet, Inc. (NON) 21,589,450
1,027,500 Providian Financial Corp. (NON) 14,066,475
--------------
97,751,413
Consumer Goods (2.8%)
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311,700 Alberto-Culver Co. Class B 19,537,356
1,476,600 Dial Corp. (The) 42,230,760
1,462,300 Yankee Candle Co., Inc. (The) (NON) 38,370,752
--------------
100,138,868
Consumer Services (1.1%)
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496,800 Alliance Data Systems Corp. (NON) 15,798,240
467,300 Getty Images, Inc. (Canada) (NON) 23,061,255
--------------
38,859,495
Electronics (9.7%)
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12,754,500 Agere Systems, Inc. Class A (NON) 49,104,825
1,434,000 Altera Corp. (NON) 32,107,260
569,750 Benchmark Electronics, Inc. (NON) 20,032,410
314,300 Celestica, Inc. (Canada) (NON) 5,390,245
727,000 Integrated Circuit Systems, Inc.
(NON) 18,720,250
1,156,400 Integrated Device Technology, Inc.
(NON) 21,069,608
522,600 International Rectifier Corp. (NON) 26,443,560
770,300 Intersil Corp. Class A 20,212,672
460,800 Linear Technology Corp. 18,432,000
685,300 Marvell Technology Group, Ltd.
(Bermuda) (NON) 28,508,480
1,076,100 SanDisk Corp. (NON) 58,582,884
461,300 Silicon Laboratories, Inc. (NON) 23,650,851
795,700 Storage Technology Corp. (NON) 23,075,300
--------------
345,330,345
Gaming & Lottery (1.8%)
- -------------------------------------------------------------------------------
453,900 GTECH Holdings Corp. 25,241,379
996,300 International Game Technology 37,321,398
--------------
62,562,777
Health Care Services (4.6%)
- -------------------------------------------------------------------------------
373,500 Anthem, Inc. (NON) 30,544,830
403,200 Apria Healthcare Group, Inc. (NON) 12,277,440
1,553,200 Caremark Rx, Inc. (NON) 41,548,100
1,297,100 Health Net, Inc. (NON) 43,193,430
349,000 WellPoint Health Networks, Inc.
(NON) 36,645,000
--------------
164,208,800
Homebuilding (1.4%)
- -------------------------------------------------------------------------------
112,400 NVR, Inc. (NON) 48,837,800
Household Furniture and Appliances (1.1%)
- -------------------------------------------------------------------------------
492,300 Whirlpool Corp. 37,390,185
Insurance (1.6%)
- -------------------------------------------------------------------------------
325,600 Everest Re Group, Ltd. (Barbados) 27,702,048
778,800 W.R. Berkley Corp. 29,991,588
--------------
57,693,636
Investment Banking/Brokerage (3.7%)
- -------------------------------------------------------------------------------
600,300 Ameritrade Holding Corp. Class A
(NON) 9,514,755
432,800 Bear Stearns Co., Inc. (The) 35,641,080
483,084 Legg Mason, Inc. 42,777,088
419,300 SEI Investments Co. 14,222,656
1,182,500 Waddell & Reed Financial, Inc. 31,383,550
--------------
133,539,129
Leisure (0.7%)
- -------------------------------------------------------------------------------
490,400 Harley-Davidson, Inc. 25,030,016
Machinery (2.1%)
- -------------------------------------------------------------------------------
499,300 Briggs & Stratton Corp. 32,973,772
426,324 FLIR Systems, Inc. (NON) 15,432,929
582,200 Toro Co. (The) 27,712,720
--------------
76,119,421
Manufacturing (1.1%)
- -------------------------------------------------------------------------------
365,300 Dover Corp. 15,094,196
593,200 IDEX Corp. 24,736,440
--------------
39,830,636
Medical Technology (6.6%)
- -------------------------------------------------------------------------------
844,600 Biomet, Inc. 32,652,236
557,400 C.R. Bard, Inc. 52,507,080
1,391,900 Cytyc Corp. (NON) 22,548,780
196,300 Guidant Corp. 12,539,644
698,250 Inamed Corp. (NON) 35,987,805
394,900 St. Jude Medical, Inc. (NON) 28,373,565
671,600 Zimmer Holdings, Inc. (NON) 51,377,400
--------------
235,986,510
Metals (0.5%)
- -------------------------------------------------------------------------------
512,100 Freeport-McMoRan Copper & Gold, Inc.
Class B 18,876,006
Office Equipment & Supplies (1.0%)
- -------------------------------------------------------------------------------
860,717 Hon Industries, Inc. 36,038,221
Oil & Gas (2.8%)
- -------------------------------------------------------------------------------
107,300 Amerada Hess Corp. 6,050,647
381,300 Burlington Resources, Inc. 20,872,362
1,102,500 EOG Resources, Inc. 49,943,250
640,500 Noble Corp. (Cayman Islands) (NON) 23,762,550
--------------
100,628,809
Other (0.1%)
- -------------------------------------------------------------------------------
23,200 Midcap SPDR Trust 2,494,928
28,700 Nasdaq-100 Index Tracking Stock 1,063,909
--------------
3,558,837
Pharmaceuticals (5.0%)
- -------------------------------------------------------------------------------
546,000 Allergan, Inc. 45,236,100
427,000 Barr Pharmaceuticals, Inc. (NON) 32,148,830
93,100 Endo Pharmaceuticals Holdings, Inc.
(NON) 2,013,753
518,300 Eon Labs, Inc. (NON) 29,610,479
841,800 Medicis Pharmaceutical Corp. Class A 30,607,848
1,595,500 Mylan Laboratories, Inc. 38,914,245
--------------
178,531,255
Photography/Imaging (0.4%)
- -------------------------------------------------------------------------------
1,015,638 Lexar Media, Inc. (NON) 14,828,315
Publishing (1.1%)
- -------------------------------------------------------------------------------
1,168,600 Marvel Enterprises, Inc. (NON) 37,663,978
Restaurants (1.4%)
- -------------------------------------------------------------------------------
1,341,000 Starbucks Corp. (NON) 49,295,160
Retail (10.4%)
- -------------------------------------------------------------------------------
830,600 Abercrombie & Fitch Co. Class A
(NON) 21,512,540
1,008,200 Advance Auto Parts, Inc. (NON) 39,239,144
331,300 AutoZone, Inc. (NON) 27,935,216
2,403,000 Claire's Stores, Inc. 43,974,900
371,900 Coach, Inc. (NON) 13,176,417
1,436,100 Dollar General Corp. 31,910,142
523,100 Michaels Stores, Inc. 23,419,187
1,381,000 RadioShack Corp. 44,992,980
567,750 Rent-A-Center, Inc. (NON) 17,696,768
859,000 Ross Stores, Inc. 24,009,050
2,779,400 Staples, Inc. (NON) 73,959,834
203,600 Timberland Co. (The) Class A (NON) 10,143,352
--------------
371,969,530
Schools (1.6%)
- -------------------------------------------------------------------------------
452,900 Apollo Group, Inc. Class A (NON) 33,632,354
478,800 Career Education Corp. (NON) 24,112,368
--------------
57,744,722
Semiconductor (0.7%)
- -------------------------------------------------------------------------------
641,700 Lam Research Corp. (NON) 17,165,475
321,000 Sigmatel, Inc. (NON) 8,025,000
--------------
25,190,475
Software (9.4%)
- -------------------------------------------------------------------------------
1,515,800 Adobe Systems, Inc. 58,297,668
3,404,800 BMC Software, Inc. (NON) (SEG) 67,755,520
516,100 Citrix Systems, Inc. (NON) 10,378,771
434,300 Electronic Arts, Inc. (NON) 20,351,298
604,300 Informatica Corp. (NON) 5,976,527
601,400 Mercury Interactive Corp. (NON) 28,229,716
2,770,300 Siebel Systems, Inc. (NON) 36,928,099
2,001,100 Symantec Corp. (NON) 77,642,679
900,600 VERITAS Software Corp. (NON) 29,593,716
--------------
335,153,994
Technology Services (2.3%)
- -------------------------------------------------------------------------------
451,300 CACI International, Inc. Class A
(NON) 19,960,999
569,170 Cognizant Technology Solutions Corp.
(NON) 30,752,255
1,814,700 VeriSign, Inc. (NON) 31,720,956
--------------
82,434,210
Telecommunications (0.5%)
- -------------------------------------------------------------------------------
653,800 CenturyTel, Inc. 17,260,320
Textiles (1.8%)
- -------------------------------------------------------------------------------
689,800 Kellwood Co. 28,150,738
499,700 Mohawk Industries, Inc. (NON) 34,769,126
--------------
62,919,864
Toys (1.3%)
- -------------------------------------------------------------------------------
2,504,300 Mattel, Inc. 47,356,313
Waste Management (0.5%)
- -------------------------------------------------------------------------------
397,100 Stericycle, Inc. (NON) 17,551,820
--------------
Total Common stocks (cost $2,973,092,821) $3,558,016,715
Short-term investments (10.3%) (a)
Principal amount Value
- -------------------------------------------------------------------------------
$332,822,016 Short-term investments held as collateral
for loaned securities with yields ranging
from 1.00% to 1.05%, due February 2, 2004
(d) $332,802,754
36,951,153 Short-term investments held in
Putnam commingled cash account with
yields ranging from 0.85% to 1.13%
and due dates ranging from February
2, 2004 to March 30, 2004 (d) 36,951,153
--------------
Total Short-term investments (cost $369,753,907) $369,753,907
- -------------------------------------------------------------------------------
Total Investments (cost $3,342,846,728) $3,927,770,622
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $3,573,784,475.
(NON) Non-income-producing security.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at January
31, 2004.
(d) See Note 1 to the financial statements.
Futures contracts outstanding at January 31, 2004 (Unaudited)
Aggregate Expiration Unrealized
Value face value date depreciation
- ------------------------------------------------------------------------------------------------------
S&P 500 Index (Long) $6,214,450 $6,292,467 Mar-04 $(78,017)
- ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities
January 31, 2004 (Unaudited)
Assets
- -------------------------------------------------------------------------------
Investments in securities, at value, including $325,004,114
of securities on loan (identified cost $3,342,846,728)
(Note 1) $3,927,770,622
- -------------------------------------------------------------------------------
Cash 3,411,287
- -------------------------------------------------------------------------------
Dividends, interest and other receivables 665,419
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 3,699,555
- -------------------------------------------------------------------------------
Receivable for securities sold 84,739,865
- -------------------------------------------------------------------------------
Total assets 4,020,286,748
Liabilities
- -------------------------------------------------------------------------------
Payable for variation margin (Note 1) 5,954
- -------------------------------------------------------------------------------
Payable for securities purchased 36,956,704
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 68,783,488
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 4,648,704
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,413,853
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 291,544
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,852
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,227,658
- -------------------------------------------------------------------------------
Collateral on securities loaned, at value (Note 1) 332,802,754
- -------------------------------------------------------------------------------
Other accrued expenses 368,762
- -------------------------------------------------------------------------------
Total liabilities 446,502,273
- -------------------------------------------------------------------------------
Net assets $3,573,784,475
Represented by
- -------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $7,636,766,316
- -------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (14,237,989)
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (4,633,589,729)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 584,845,877
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $3,573,784,475
- -------------------------------------------------------------------------------
Computation of net asset value and offering price
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,103,410,384 divided by 254,937,676 shares) $8.25
- -------------------------------------------------------------------------------
Offering price per class A share (100/94.75 of $8.25)* $8.71
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($819,636,521 divided by 112,396,188 shares)** $7.29
- -------------------------------------------------------------------------------
Net asset value and offering price per class C share
($42,830,019 divided by 5,385,970 shares)** $7.95
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($51,397,615 divided by 6,650,300 shares) $7.73
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $7.73)* $8.01
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class R share ($2,286 divided by 277 shares) $8.24
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class Y share ($556,507,650 divided by 65,169,501 shares) $8.54
- -------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
Statement of operations
Six months ended January 31, 2004 (Unaudited)
Investment income:
- -------------------------------------------------------------------------------
Dividends (net of foreign tax of $3,854) $7,621,187
- -------------------------------------------------------------------------------
Interest 148,932
- -------------------------------------------------------------------------------
Securities lending 255,719
- -------------------------------------------------------------------------------
Total investment income 8,025,838
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 9,486,367
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 5,654,761
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 36,027
- -------------------------------------------------------------------------------
Administrative services (Note 2) 18,597
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,840,920
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 4,298,108
- -------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 240,132
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 219,137
- -------------------------------------------------------------------------------
Distribution fees -- Class R (Note 2) 3
- -------------------------------------------------------------------------------
Other 486,769
- -------------------------------------------------------------------------------
Non-recurring costs (Note 5) 78,913
- -------------------------------------------------------------------------------
Costs assumed by Manager (Note 5) (78,913)
- -------------------------------------------------------------------------------
Total expenses 23,280,821
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (1,016,994)
- -------------------------------------------------------------------------------
Net expenses 22,263,827
- -------------------------------------------------------------------------------
Net investment loss (14,237,989)
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 332,432,549
- -------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 598,775
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures
contracts during the period 240,214,278
- -------------------------------------------------------------------------------
Net gain on investments 573,245,602
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $559,007,613
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets
Six months ended Year ended
January 31 July 31
Decrease in net assets 2004* 2003
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment loss $(14,237,989) $(25,283,833)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments 333,031,324 (720,655,943)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 240,214,278 1,137,530,132
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 559,007,613 391,590,356
- -------------------------------------------------------------------------------
Decrease from capital share transactions
(Note 4) (730,454,284) (850,746,890)
- -------------------------------------------------------------------------------
Total decrease in net assets (171,446,671) (459,156,534)
Net assets
- -------------------------------------------------------------------------------
Beginning of period 3,745,231,146 4,204,387,680
- -------------------------------------------------------------------------------
End of period (including accumulated net
investment loss of $14,237,989 and $--,
respectively) $3,573,784,475 $3,745,231,146
- -------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
January 31
Per-share (Unaudited) Year ended July 31
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.12 $6.30 $9.22 $19.10 $14.30 $13.49
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.02) (.03) (.04) (.06) (.09) (.05)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.15 .85 (2.88) (6.00) 7.18 1.89
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.13 .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 $8.25 $7.12 $6.30 $9.22 $19.10 $14.30
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.87* 13.02 (31.67) (37.86) 53.19 15.08
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,103,410 $2,238,709 $2,563,995 $4,614,523 $6,763,532 $3,672,460
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .54* 1.09 1.00 .89 .87 .94
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.30)* (.54) (.56) (.47) (.51) (.41)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.17* 64.83 89.19 109.13 115.31 155.40
- ---------------------------------------------------------------------------------------------------------------------------------
* 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 B
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
January 31
Per-share (Unaudited) Year ended July 31
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $6.32 $5.63 $8.30 $17.73 $13.51 $12.89
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.05) (.07) (.09) (.15) (.21) (.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.02 .76 (2.58) (5.46) 6.72 1.79
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .97 .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 $7.29 $6.32 $5.63 $8.30 $17.73 $13.51
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.35* 12.26 (32.17) (38.31) 51.89 14.27
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $819,637 $842,635 $913,467 $1,776,848 $2,880,568 $1,768,766
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .91* 1.84 1.75 1.64 1.62 1.69
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.67)* (1.29) (1.31) (1.22) (1.26) (1.16)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.17* 64.83 89.19 109.13 115.31 155.40
- ---------------------------------------------------------------------------------------------------------------------------------
* 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 C
- ---------------------------------------------------------------------------------------------------------------------------
Six months For the
ended period
January 31 July 26, 1999+
Per-share (Unaudited) Year ended July 31 to July 31
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $6.89 $6.14 $9.05 $18.95 $14.30 $14.54
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.05) (.08) (.10) (.15) (.24) -- (d)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.11 .83 (2.81) (5.93) 7.18 (.24)
- ---------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.06 .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 $7.95 $6.89 $6.14 $9.05 $18.95 $14.30
- ---------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.39* 12.22 (32.15) (38.33) 52.03 (1.65)*
- ---------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $42,830 $48,585 $52,939 $115,495 $91,914 $364
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .91* 1.84 1.75 1.64 1.62 .01*
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.68)* (1.29) (1.31) (1.20) (1.24) (.01)*
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.17* 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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
January 31
Per-share (Unaudited) Year ended July 31
operating performance 2004 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $6.69 $5.95 $8.74 $18.40 $13.92 $13.22
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.04) (.06) (.08) (.13) (.17) (.12)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.08 .80 (2.71) (5.71) 6.94 1.85
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.04 .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 $7.73 $6.69 $5.95 $8.74 $18.40 $13.92
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.55* 12.44 (31.92) (38.15) 52.26 14.53
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $51,398 $60,957 $73,816 $142,887 $241,432 $150,573
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .79* 1.59 1.50 1.39 1.37 1.44
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.55)* (1.04) (1.06) (.97) (1.01) (.91)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.17* 64.83 89.19 109.13 115.31 155.40
- ------------------------------------------------------------------------------------------------------------------------------------
* 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 R
- ---------------------------------------------------------------------------------------------------------------------------------
Six months For the
ended period
January 31 January 21, 2003+
Per-share (Unaudited) to July 31
operating performance 2004 2003
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.12 $6.14
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.03) (.03)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.15 1.01
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.12 .98
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.24 $7.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.73* 15.96*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2 $1
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .66* .71*
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.42)* (.42)*
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.17* 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.
(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
- ---------------------------------------------------------------------------------------------------------------------------------
Six months
ended
January 31
Per-share (Unaudited) Year ended July 31
operating performance 2004 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.36 $6.50 $9.48 $19.48 $14.52 $13.64
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.01) (.02) (.03) (.03) (.05) (.02)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.19 .88 (2.95) (6.15) 7.30 1.93
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.18 .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 $8.54 $7.36 $6.50 $9.48 $19.48 $14.52
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 16.03* 13.23 (31.43) (37.71) 53.51 15.44
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $556,508 $554,344 $600,170 $877,950 $1,027,892 $572,191
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .41* .84 .75 .64 .62 .69
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment
loss to average net assets (%) (.17)* (.28) (.32) (.21) (.26) (.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.17* 64.83 89.19 109.13 115.31 155.40
- ---------------------------------------------------------------------------------------------------------------------------------
* 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.
(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
January 31, 2004 (Unaudited)
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. Class A shares are sold with a maximum front-end sales charge of
5.25%. Prior to January 28, 2004, the maximum front-end sales charge for
class A shares was 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.
Effective April 19, 2004, a 2.00% redemption fee may apply to any shares
that are redeemed (either by selling or exchanging into another fund)
within 5 days of purchase.
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.
Many securities markets and exchanges outside the U.S. close prior to
the close of the New York Stock Exchange and, therefore, the closing
prices for securities in such markets or on such exchanges may not fully
reflect events that occur after such close but before the close of the
New York Stock Exchange. Accordingly, on certain days, the fund will
fair value foreign securities taking into account multiple factors,
including movements in the U.S. securities markets. The number of days
on which fair value prices will be used will depend on market activity
and it is possible that fair value prices will be used by the fund to a
significant extent. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. Short-term
investments having remaining maturities of 60 days or less are valued at
amortized cost, which approximates fair value. Other investments,
including 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, if any,
are listed after the fund's portfolio.
F) Security lending The fund may lend securities, through its agents, to
qualified borrowers in order to earn additional income. The loans are
collateralized by cash and/or securities in an amount at least equal to
the market value of the securities loaned. The market value of
securities loaned is determined daily and any additional required
collateral is allocated to the fund on the next business day. The risk
of borrower default will be borne by the fund's agents; the fund will
bear the risk of loss with respect to the investment of the cash
collateral. Income from securities lending is included in investment
income on the Statement of operations. At January 31, 2004, the value of
securities loaned amounted to $325,004,114. The fund received cash
collateral of $332,802,754, which is pooled with collateral of other
Putnam funds into 9 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 would maintain an asset
coverage ratio of at least 300% and that borrowings would not exceed
prospectus limitations. For the period ended August 6, 2003, the fund
had no borrowings against the line of credit. Effective August 6, 2003,
the fund no longer participated 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 net capital gain, 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.
The aggregate identified cost on a tax basis is $3,360,648,508,
resulting in gross unrealized appreciation and depreciation of
$666,494,772 and $99,372,658, respectively, or net unrealized
appreciation of $567,122,114.
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. Reclassifications are made to the fund's capital
accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on the following annual rates: 0.65% of the first $500 million
of average net assets, 0.55% of the next $500 million, 0.50% of the next
$500 million, 0.45% of the next $5 billion, 0.425% of the next $5
billion, 0.405% of the next $5 billion, 0.39% of the next $5 billion and
0.38% thereafter.
Effective January 28, 2004, Putnam Management has agreed to limit its
compensation (and, to the extent necessary, bear other expenses) through
December 31, 2004, to the extent that the fund's net expenses, as a
percentage of average net assets, exceed the average expense ratio for
the fund's Lipper peer group of front-end load funds.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam, LLC. Putnam
Investor Services, a division of PFTC, provides investor servicing agent
functions to the fund. During the six months ended January 31, 2004, the
fund paid PFTC $4,545,525 for these services.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. The fund also reduced expenses through
brokerage service arrangements. For the six months ended, January 31,
2004, the fund's expenses were reduced by $1,016,994 under these
arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $3,986 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Trustee compensation and expenses in the
Statement of operations. Accrued pension liability is included in
Payable for Trustee compensation and expenses in the Statement of assets
and liabilities.
The 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 six months ended January 31, 2004, Putnam Retail Management,
acting as underwriter, received net commissions of $112,436 and $1,715
from the sale of class A and class M shares, respectively, and received
$1,213,973 and $4,034 in contingent deferred sales charges from
redemptions of class B and class C shares, respectively. A deferred
sales charge of up to 1.00% and 0.65% is assessed on certain redemptions
of class A and class M shares, respectively. For the six months ended
January 31, 2004, Putnam Retail Management, acting as underwriter,
received $8,204 and no monies on class A and class M redemptions,
respectively.
Note 3
Purchases and sales of securities
During the six months ended January 31, 2004, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $1,546,097,459 and $2,250,916,659, respectively.
There were no purchases and sales of U.S. government securities.
Note 4
Capital shares
At January 31, 2004, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended January 31, 2004
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 28,385,379 $219,462,361
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
28,385,379 219,462,361
Shares repurchased (87,700,914) (687,543,584)
- ----------------------------------------------------------------
Net decrease (59,315,535) $(468,081,223)
- ----------------------------------------------------------------
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)
- ----------------------------------------------------------------
Six months ended January 31, 2004
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 6,519,891 $44,771,092
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
6,519,891 44,771,092
Shares repurchased (27,446,039) (191,017,446)
- ----------------------------------------------------------------
Net decrease (20,926,148) $(146,246,354)
- ----------------------------------------------------------------
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)
- ----------------------------------------------------------------
Six months ended January 31, 2004
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 641,101 $4,761,343
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
641,101 4,761,343
Shares repurchased (2,304,662) (17,510,116)
- ----------------------------------------------------------------
Net decrease (1,663,561) $(12,748,773)
- ----------------------------------------------------------------
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)
- ----------------------------------------------------------------
Six months ended January 31, 2004
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 776,217 $5,647,385
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
776,217 5,647,385
Shares repurchased (3,237,719) (23,594,793)
- ----------------------------------------------------------------
Net decrease (2,461,502) $(17,947,408)
- ----------------------------------------------------------------
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)
- ----------------------------------------------------------------
Six months ended January 31, 2004
- ----------------------------------------------------------------
Class R Shares Amount
- ----------------------------------------------------------------
Shares sold 114 $959
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
114 959
Shares repurchased -- --
- ----------------------------------------------------------------
Net increase 114 $959
- ----------------------------------------------------------------
For the period 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
- ----------------------------------------------------------------
Six months ended January 31, 2004
- ----------------------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------------------
Shares sold 13,349,845 $106,672,272
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
13,349,845 106,672,272
Shares repurchased (23,459,548) (192,103,757)
- ----------------------------------------------------------------
Net decrease (10,109,703) $(85,431,485)
- ----------------------------------------------------------------
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)
- ----------------------------------------------------------------
At January 31, 2004, Putnam, LLC owned 163 class R shares of the fund
(58.8% of class R shares outstanding), valued at $1,343.
Note 5
Regulatory matters and litigation
On November 13, 2003, Putnam Management agreed to entry of an order by
the Securities and Exchange Commission in partial resolution of
administrative and cease-and-desist proceedings initiated by the SEC on
October 28, 2003 in connection with alleged excessive short-term trading
by at least six Putnam Management investment professionals. The SEC's
findings reflect that four of those employees engaged in such trading in
funds over which they had investment decision-making responsibility and
had access to non-public information regarding, among other things,
current portfolio holdings and valuations. The six individuals are no
longer employed by Putnam Management. Under the order, Putnam Management
will make restitution for losses attributable to excessive short-term
trading by Putnam employees, institute new employee trading restrictions
and enhanced employee trading compliance, retain an independent
compliance consultant, and take other remedial actions. Putnam
Management neither admitted nor denied the order's findings, which
included findings that Putnam Management willfully violated provisions
of the federal securities laws. A civil monetary penalty and other
monetary relief, if any, will be determined at a later date. If a
hearing is necessary to determine the amounts of such penalty or other
relief, Putnam Management will be precluded from arguing that it did not
violate the federal securities laws in the manner described in the SEC
order, the findings set forth in the SEC order will be accepted as true
by the hearing officer and additional evidence may be presented. Putnam
Management, and not the investors in any Putnam fund, will bear all
costs, including restitution, civil penalties and associated legal fees.
Administrative proceedings instituted by the Commonwealth of
Massachusetts on October 28, 2003 against Putnam Management in
connection with alleged market-timing activities by Putnam employees and
by participants in some Putnam-administered 401(k) plans are pending.
Putnam Management has committed to make complete restitution for any
losses suffered by Putnam shareholders as a result of any improper
market-timing activities by Putnam employees or within
Putnam-administered 401(k) plans.
The SEC's and Commonwealth's allegations and related matters also serve
as the general basis for numerous lawsuits, including purported class
action lawsuits filed against Putnam Management and certain related
parties, including certain Putnam funds. Putnam Management has agreed to
bear any costs incurred by Putnam funds in connection with these
lawsuits. Based on currently available information, Putnam Management
believes that the likelihood that the pending private lawsuits and
purported class action lawsuits will have a material adverse financial
impact on the fund is remote, and the pending actions are not likely to
materially affect its ability to provide investment management services
to its clients, including the Putnam funds.
For the period ended January 31, 2004, Putnam Management has assumed
$78,913 of legal, shareholder servicing and communication, audit, and
Trustee fees incurred by the fund in connection with these matters.
Review of these matters by counsel for Putnam Management and by separate
independent counsel for the Putnam funds and their independent Trustees
is continuing. In addition, Marsh & McLennan Companies, Inc., Putnam
Management's parent company, has engaged counsel to conduct a separate
review of Putnam Management's policies and controls related to
short-term trading. The fund may experience increased redemptions as a
result of these matters, which could result in increased transaction
costs and operating expenses.
Services for shareholders
Investor services
Help your investment grow Set up a program for systematic investing with
as little as $25 a month from a Putnam fund or from your own savings or
checking account. (Regular investing does not guarantee a profit or
protect against loss in a declining market.)
Switch funds easily* You can move money from one Putnam fund to another
within the same class of shares without a service charge.
Access your money easily You can have checks sent regularly or redeem
shares any business day at the then-current net asset value, which may
be more or less than the original cost of the shares. Class B and class
C shares carry a sales charge that is applied to certain withdrawals.
How to buy additional shares You may buy shares through your financial
advisor or directly from Putnam. To open an account by mail, send a
check made payable to the name of the fund along with a completed fund
application. To add to an existing account, complete the investment slip
found at the top of your Confirmation of Activity statement and return
it with a check payable to your fund.
For more information
Visit www.putnaminvestments.com A secure section of our Web site
contains complete information on your account, including balances and
transactions, updated daily. You may also conduct transactions, such as
exchanges, additional investments, and address changes. Log on today to
get your password.
Use our toll-free number 1-800-225-1581 Ask a helpful Putnam
representative or your financial advisor for details about any of these
or other services, or see your prospectus.
* This privilege is subject to change or termination. An exchange of
funds may result in a taxable event. Certain funds have imposed a 1%
redemption fee on total assets redeemed or exchanged within 90 days of
purchase. See a prospectus for details. For shares purchased on or after
April 19, 2004, a 2% redemption fee will be applied to shares exchanged
or sold within 5 days of purchase.
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds.
Investors should consider the investment objective, risks, charges, and
expenses of a fund before investing. For a prospectus containing this
and other information for any Putnam fund or product, call your
financial advisor at 1-800-225-1581 and ask for a prospectus. Please
read the prospectus carefully before investing.
Growth Funds
Discovery Growth Fund
Growth Opportunities Fund
Health Sciences Trust
International New Opportunities Fund*
New Opportunities Fund
OTC & Emerging Growth Fund
Small Cap Growth Fund
Vista Fund
Voyager Fund
Blend Funds
Capital Appreciation Fund
Capital Opportunities Fund
Europe Equity Fund*
Global Equity Fund*
Global Natural Resources Fund*
International Capital Opportunities Fund*
International Equity Fund*
Investors Fund
Research Fund
Tax Smart Equity Fund
Utilities Growth and Income Fund
Value Funds
Classic Equity Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
International Growth and Income Fund*
Mid Cap Value Fund
New Value Fund
Small Cap Value Fund+
Income Funds
American Government Income Fund
Diversified Income Trust
Global Income Trust*
High Yield Advantage Fund+*
High Yield Trust*
Income Fund
Intermediate U.S. Government Income Fund
Money Market Fund++
U.S. Government Income Trust
Tax-free Income Funds
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund++
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
Asset Allocation Funds
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* A 1% redemption fee on total assets redeemed or exchanged within 90
days of purchase may be imposed for all share classes of these funds.
+ Closed to new investors.
++ An investment in a money market fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share,
it is possible to lose money by investing in the fund.
For shares purchased on or after April 19, 2004, a 2% redemption fee
will be applied to shares exchanged or sold within 5 days of purchase.
Check your account balances and the most recent month-end performance at
www.putnaminvestments.com.
Fund information
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary Trust Company
Legal Counsel
Ropes & Gray LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
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
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 and BSA Compliance Officer
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, the most recent copy of Putnam's Quarterly
Performance Summary, and Putnam's Quarterly Ranking Summary. For more
recent performance, please visit www.putnaminvestments.com. Investors
should consider the investment objective, risks, charges, and expenses
of a fund, which are described in its prospectus. For more information
or to request a prospectus, call 1-800-225-1581 toll free. Please read
the prospectus carefully before investing. The fund's Statement of
Additional Information contains additional information about the fund's
Trustees and is available without charge upon request by calling
1-800-225-1581.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
Call 1-800-225-1581 or visit our Web site
www.putnaminvestments.com.
SA015-211468 006/317/515/376 3/04
Not FDIC Insured May Lose Value No Bank Guarantee
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
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Putnam Vista Fund
Supplement to Semiannual Report dated 1/31/04
The following information has been prepared to provide class Y
shareholders with a performance overview specific to their holdings.
Class Y shares are offered exclusively to clients that meet the
eligibility requirements specified in the fund's prospectus for such
shares. Performance of class Y shares, which do not incur a front-end
load, a distribution fee, or a contingent deferred sales charge, will
differ from the performance of class A, B, C, M, and R shares, which are
discussed more extensively in the semiannual report.
RESULTS AT A GLANCE
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Total return for periods ended 1/31/04
NAV
6 months 16.03%
1 year 39.09
5 years -9.76
Annual average -2.03
10 years 125.65
Annual average 8.48
Life of fund (since class A inception, 6/3/68)
Annual average 9.80
Share value: NAV
7/31/03 $7.36
1/31/04 $8.54
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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:
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Not applicable
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Items 5-6. [Reserved]
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Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed End
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Management Investment Companies: Not applicable
--------------------------------
Item 8. [Reserved]
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Item 9. Submission of Matters to a Vote of Security Holders:
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Not applicable
Item 10. Controls and Procedures:
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(a) The registrant's principal executive officer and principal financial
officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report on Form N-CSR, that the design and
operation of such procedures are generally 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.
Although such officers reached the conclusion expressed in the
preceding paragraph, they are aware of matters that raise concerns
with respect to controls, each of which arose in connection with the
administration of 401(k) plans by Putnam Fiduciary Trust Company.
The first matter, which occurred in early 2001, involved the willful
circumvention of controls by certain Putnam employees in connection
with the correction of operational errors with respect to a 401(k)
client's investment in certain Putnam Funds, which led to losses in
five Putnam Funds (not including the registrant). Such officers
became aware of this matter in February 2004. The second matter,
which occurred in 2002, involved the willful circumvention by
certain Putnam employees of policies and procedures in connection
with the payment of Putnam corporate expenses. Such officers did
not learn that this matter involved a Putnam Fund until January
2004. Putnam has made restitution to the affected Funds,
implemented a number of personnel changes, including senior
personnel, begun to implement changes in procedures to address these
items and informed the SEC, the Funds' Trustees and independent
auditors. An internal investigation and review of procedures and
controls are currently ongoing.
In reaching the conclusion expressed herein, the registrant's
principal executive officer and principal financial officer
considered a number of factors, including the nature of the matters
described above, when the matters occurred, the individuals
involved, personnel changes that have occurred since these matters
occurred, the results to date of the current ongoing investigation
and the overall quality of controls at Putnam at this time.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
- ------------------
(a) Not applicable
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act of 2002
are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
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: April 1, 2004
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/Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: April 1, 2004
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: April 1, 2004