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
1-31-05
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From the Trustees
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John A. Hill and
George Putnam, III
Dear Fellow Shareholder:
During the past several months, Putnam has introduced a number of
reforms for the benefit of shareholders, including increasing the amount
of disclosure for our funds. We are now including additional disclosure
about your fund's management team. Following the Outlook for Your Fund,
we provide manager compensation information that pertains to your fund
and list any changes in your fund's Portfolio Leader and Portfolio
Members during the prior year period, as well as these individuals'
other fund management responsibilities at Putnam. We also show how much
these individuals have invested in the fund (in dollar ranges), and fund
ownership (in dollar ranges) is also shown for the members of Putnam's
Executive Board. In equity fund reports, we now list the largest
brokerage relationships of your fund following the Notes to the
Financial Statements. Finally, on page 19, we provide certain
information about the most recent approval of your fund's management
contract with Putnam by the Trustees.
We are also pleased to announce that three new Trustees have joined your
fund's Board of Trustees. Nominated by your fund's independent Trustees,
these individuals have had outstanding careers as leaders in the
investment management industry. Myra R. Drucker is a Vice Chair of the
Board of Trustees of Sarah Lawrence College and serves as ex-officio
member and past Chair of the New York Stock Exchange (NYSE) Pension
Managers Advisory Committee and as a Trustee of Commonfund, a
not-for-profit asset management firm. Richard B. Worley is Managing
Partner of Permit Capital LLC, an investment management firm. Both Ms.
Drucker and Mr. Worley are independent Trustees (i.e., Trustees who are
not "interested persons" of your fund or its investment advisor).
Charles E. Haldeman, Jr., the third new Trustee, is President and Chief
Executive Officer of Putnam Investments. We also announce the departure
of one of your fund's Trustees, A.J.C. Smith, formerly Chairman of
Putnam Investments and Consultant to Marsh & McLennan Companies, Inc.
In the following pages, your fund's management team discusses
performance, strategy, and its outlook for the remainder of fiscal 2005.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
March 16, 2005
Report from Fund Management
Fund highlights
* For the six months ended January 31, 2005, Putnam Vista Fund's class A
shares had a total return of 15.55% without sales charges and 9.42% with
maximum sales charges reflected.
* The fund's benchmark, the Russell Midcap Growth Index, returned 13.61%
for the semiannual period.
* The average return for the fund's Lipper Category, Mid-Cap Growth
Funds, was 12.65%.
* See the Performance Summary beginning on page 11 for additional fund
performance, comparative performance, and Lipper data.
Performance commentary
Rising corporate profits and steadily improving economic fundamentals
set the stage for a rally across all sectors of the stock market during
the first half of Putnam Vista Fund's fiscal year. Mid-cap stocks turned
in strong performance, outperforming large-cap stocks during the
semiannual period ended January 31, 2005. Based on results at net asset
value (NAV, without sales charges) your fund outperformed both its
benchmark index and the average for its peer group, Lipper Mid-Cap
Growth Funds. We attribute this outperformance to effective stock
picking, founded on a bottom-up, company-by-company research process
that focuses on the growth, quality, and valuation attributes of each
holding. Our decision to overweight a handful of top-performing stocks,
including PacifiCare Health Systems and Sigmatel, proved especially
rewarding.
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TOTAL RETURN FOR
PERIODS ENDED 1/31/05
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Class A
(inception 6/3/68) NAV POP
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6 months 15.55% 9.42%
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1 year 12.61 6.66
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5 years -29.98 -33.67
Annual average -6.88 -7.88
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10 years 165.83 152.02
Annual average 10.27 9.68
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Annual average
(life of fund) 9.80 9.64
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Data is historical. Past performance does not guarantee future results.
More recent returns may be less or more than those shown. Investment
return and principal value will fluctuate and you may have a gain or a
loss when you sell your shares. Performance assumes reinvestment of
distributions and does not account for taxes. Returns at NAV do not
reflect a sales charge of 5.25%. For the most recent month-end
performance, visit www.putnaminvestments.com. A short-term trading fee
of up to 2% may apply.
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 have higher growth rates
than larger, mature companies, but offer a greater degree of stability
than smaller, less mature companies. The fund may be appropriate for
investors seeking growth of capital and exposure to growth-oriented
companies.
Market overview
Throughout the semiannual period, the U.S. economy has been
demonstrating steady growth, and the so-called "jobless recovery" has
nevertheless generated new jobs. Higher food prices and, particularly,
energy prices boosted inflation in the short run but other prices
remained quiescent, sparking hope for declining top-line inflation in
2005.
Corporate profits rose at a double-digit pace for the third year in a
row in 2004. Long-term interest rates trended higher but then eased as
it became clear that neither the bond market nor the Federal Reserve
Board (the Fed) was overly concerned about potential inflation.
Furthermore, the Fed, perceiving that the economy was now healthy again,
set short-term interest rates back on a long, slow journey toward what
it considers normal levels.
By this description, it should have been the best of times for the stock
market. But even as the economic climate was strengthening, a tide of
uncertainty was rising. Iraq, oil, interest rates, politics, and the
fear of a pre-election terrorist attack paralyzed many investors,
starving the stock market of the demand necessary to generate returns in
line with economic improvement.
Later in the fall, some of this uncertainty eased. Oil prices retreated
from new highs established in October, and progressing past the election
with a clear outcome and without a terrorist attack calmed markets. As
is often the case, rather than settling down, the stock market settled
up, logging strong gains in the fourth quarter of 2004.
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MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 1/31/05
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Equities
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Russell Midcap Growth Index (midsize-company growth stocks) 13.61%
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S&P 500 Index (broad stock market) 8.16%
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Russell 2000 Index (small-company stocks) 13.88%
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MSCI EAFE Index (international stocks) 16.68%
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Bonds
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Lehman Municipal Bond Index (tax-exempt bonds) 4.80%
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Lehman Aggregate Bond Index (broad bond market) 3.81%
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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 1/31/05.
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Strategy overview
We think the fund's favorable performance versus its benchmark and peer
group illustrates the advantages of its investment approach, which
blends growth, quality, and valuation criteria simultaneously. At any
given time, any one or all three of these sources of performance can be
in favor within the growth stock universe, and the flexibility to take
advantage of them enables the fund to pursue more consistent excess
returns over time while helping to limit the portfolio's risk exposure.
For instance, in September, pure growth stocks led the market's rally.
Then in November, stocks with attractive valuations surged. In both
cases, the fund's investment approach allowed it to pick up incremental
return. One might almost compare it to juggling, where one, two, or
three of the balls can be in the air at any given moment.
At the end of the semiannual period, on January 31, 2005, the fund held
over 100 midsize companies across some 40 different industries. We
consider these businesses relatively well established and believe they
are likely to increase their sales and earnings at a rapid pace. The
portfolio's exposure to so many different sectors of the economy has the
potential to reduce the detrimental effect of sub-par performance from a
single stock while increasing its range of investment opportunities. The
fund's buy and sell decisions continue to be guided by a disciplined,
systematic investment process that takes a bottom-up, company-by-company
approach to structuring the portfolio, rather than a top-down, sector or
investment theme approach.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY WEIGHTINGS COMPARED]
TOP INDUSTRY WEIGHTINGS COMPARED
as of 7/31/04 as of 1/31/05
Software 10.6% 8.6%
Medical technology 6.4% 8.3%
Retail 11.3% 7.5%
Electronics 8.3% 6.8%
Health-care services 2.6% 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
The fund's multi-pronged approach to selecting midsize companies proved
to be very successful during the first half of fiscal 2005. The
following examples illustrate how our selections among the three
different types of stocks in the portfolio contributed to performance
over this period.
Two of the portfolio's strongest performers were selected primarily
because of their growth characteristics. Both have been seeing
substantial increases in both market share and revenue. SigmaTel enjoys
strong customer loyalty for its proprietary integrated circuits, which
are used in a variety of consumer electronic and computing products,
such as MP3 players and personal computers. This young company's
commitment to providing customers with higher performance, quality
products, and superior customer service were key to its success over the
semiannual period. Network Appliance has also seen strong revenue
growth, resulting in significant appreciation of its stock price since
last September. This company offers highly productive storage solution
software to data-sensitive enterprises at a low cost, thereby helping to
increase employee productivity and, ultimately, their customer's bottom
line.
[GRAPHIC OMITTED: TOP HOLDINGS]
TOP HOLDINGS
(Percent of fund's net assets as of 1/31/05)
1 Linear Technology Corp. (2.8%)
Electronics
2 Citrix Systems, Inc. (1.9%)
Software
3 Adobe Systems, Inc. (1.9%)
Software
4 Veritas Software Corp. (1.8%)
Software
5 WellPoint, Inc. (1.8%)
Health-care services
6 Claire's Stores, Inc. (1.8%)
Retail
7 Autoliv, Inc. (1.7%)
Automotive
8 C.R. Bard, Inc. (1.6%)
Medical technology
9 NVR, Inc. (1.6%)
Homebuilding
10 United Defense
Industries, Inc. (1.6%)
Aerospace and defense
Footnote reads:
The fund's holdings will change over time.
Another technology holding, SanDisk, which partners with companies such as
Toshiba Corporation to deliver flash data storage products, saw its
earnings slow during the six-month period. However, while concerns about
its earning growth are valid, we remain optimistic about the company due
to its track record of innovation in the digital consumer product arena.
Medicis Pharmaceutical, detracted from relative performance as well. This
independent specialty pharmaceutical company lagged the benchmark due to
the market's reaction to its lower-than-expected revenue guidance for
fiscal 2005. Management has since revised their revenue expectations
upward, and the stock is recovering. We think earnings will continue to
grow as a result of the increasing popularity of the company's
prescription brand drugs, most notably its Restylane wrinkle treatment.
Companies that we hold in the portfolio because of our belief in their
overall quality -- rather than strong growth characteristics or
compelling valuations -- have also had substantial impact on
performance. Adobe Systems -- one of the fund's top performers during
the period -- develops, markets, and supports computer software
products, such as Adobe Acrobat, that help users create and manage
graphics and publication files. Adobe is experiencing strong demand for
its niche products, which creates pricing power and contributes to
strong earnings growth. Coach, which designs, produces, and markets
high-end classic leather products, such as handbags, business cases, and
travel accessories, announced a sharp increase in earnings for its
second fiscal quarter ended January 1 compared to the prior year's
second quarter. Not only were the results stronger than analysts'
expectations, but Coach also announced a two-for-one split of the
company's common stock just before the close of the semiannual period.
NVR, one of the nation's largest homebuilding and mortgage banking
companies, is experiencing dynamic revenue growth. Even after four years
of steady growth, the company expects net income for 2005 to exceed 2004
results by 15%.
There were detractors in this category also, however. Apollo Group
provides higher education programs for working adults, and is probably
most well known for its University of Phoenix subsidiary. Private career
colleges and universities came into question as result of a 60 Minutes
story that aired in January, which focused on allegations of misconduct
by a competitor. Apollo's stock suffered as a result of the bad press
even though its record was not called into question. Lexmark
International develops, manufactures, and supplies printing products for
the office and home markets. Recently, its stock suffered over concerns
about price competition from Hewlett Packard. However, we believe that
the strength of Lexmark's product line and its supplies-driven business
model will keep it well positioned for continued growth.
The fund's third category of holdings, stocks that we purchased because
we believed their prices did not reflect what we considered to be their
fair valuation, also contributed to performance during the period.
PacifiCare Health Systems, one of the nation's largest health-care
services company, was purchased when it was trading at what we
considered a low price relative to its earnings potential. Its
appreciation has been dramatic. In late 2004, the company announced
strong revenue growth, which was driven by premium increases and growth
in its membership. Toro Company, a leading provider of outdoor
maintenance and beautification products for home, recreation, and
commercial landscapes, also had a compelling valuation. Toro continues
to expand its product line of lawnmowers, snow blowers, and other yard
care products, strengthening its growth potential.
Tellabs, which develops and supports wireless and wire line network
solutions in more than 100 countries, was weak and detracted from the
fund's returns. The company lowered expectations about near-term
earnings and its stock price fell as a result. However, we took
advantage of the decline to add to the position, believing that this
company is still undervalued relative to its long-term earnings
potential.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
OF SPECIAL INTEREST
For the six months ended January 31, 2005, Lipper ranked Putnam Vista
Fund in the 17th percentile among Mid-Cap Growth Funds.
Lipper ranked Putnam Vista Fund's class A shares 63/520, 192/272, and
46/104 for the 1-, 5-, and 10-year periods, respectively, as of January
31, 2005, in the Mid-Cap Growth category. Lipper ranks funds (without
sales charges) with similar current investment styles or objectives as
determined by Lipper.
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 expect economic expansion will continue at a more moderate but
still-solid clip in 2005. Consequently, we believe long-term interest
rates are unlikely to remain stuck in 2004's low range, and current
interest-rate levels suggest expectations of a mild, gradual tightening
of rates in the months ahead.
Putnam's forecasting models highlight a number of near-term
vulnerabilities for U.S. stocks in 2005. Chief among these are high
valuations, a remarkably low level of market volatility signaling
investor complacency, and the likelihood of continued tightening by the
Fed. This environment should favor stocks with tangible value over those
that rely on hope and refined accounting techniques for managing balance
sheets and reported profits.
As managers of Putnam Vista Fund, we are aware of such macroeconomic
trends but do not let them guide our buy and sell decisions. We think
such a top-down approach sends us down a less disciplined, more random
path of decision-making. Our multi-pronged, bottom-up research process
is designed to reveal overlooked companies with compelling synergies. We
think our efforts to discern tangible value should uncover growing
companies with reasonable valuations, understandable business models,
and real cash earnings.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. The fund invests
some or all of its assets in small and/or midsize companies. Such
investments increase the risk of greater price fluctuations.
Your fund's management
Your fund is managed by the members of the Putnam Mid-Cap Growth Team.
Kevin Divney and Paul Marrkand are the Portfolio Leaders of your fund.
The Portfolio Leaders coordinate the team's management of the fund.
For a complete listing of the members of the Putnam Mid-Cap Growth Team,
including those who are not Portfolio Leaders or Portfolio Members of
your fund, visit Putnam's Individual Investor Web site at
www.putnaminvestments.com.
Fund ownership
The table below shows how much the fund's current Portfolio Leaders have
invested in the fund (in dollar ranges). Information shown is for the
current and prior year ended January 31.
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FUND PORTFOLIO LEADERS
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$1 - $10,001 - $50,001 - $100,001 - $500,001 - $1,000,001
Year $0 $10,000 $50,000 $100,000 $500,000 $1,000,000 and over
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Kevin Divney 2005 *
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Portfolio Leader 2004 *
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Paul Marrkand 2005 *
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Portfolio Leader 2004 *
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Fund manager compensation
The total 2004 fund manager compensation that is attributable to your
fund is approximately $1,300,000. This amount includes a portion of 2004
compensation paid by Putnam Management to the fund managers listed in
this section for their portfolio management responsibilities, calculated
based on the fund assets they manage as a percentage of the total assets
they manage. The compensation amount also includes a portion of the 2004
compensation paid to the Co-Chief Investment Officers of the team for
their oversight responsibilities, calculated based on the fund assets
they oversee taken as a percentage of the total assets they oversee.
These percentages are determined as of the fund's fiscal period-end. For
personnel who joined Putnam Management during or after 2004, the
calculation reflects annualized 2004 compensation or an estimate of 2005
compensation, as applicable.
Other Putnam funds managed by the Portfolio Leaders
Kevin Divney is also a Portfolio Leader of Putnam New Opportunities
Fund.
Paul Marrkand is also a Portfolio Leader of Putnam New Opportunities
Fund.
Kevin Divney and Paul Marrkand may also manage other accounts and
variable trust funds advised by Putnam Management or an affiliate.
Changes in your fund's Portfolio Leader and Portfolio Members
During the year ended January 31, 2005, Kevin Divney and Paul Marrkand
became Portfolio Leaders of your fund.
Fund ownership
The table below shows how much the members of Putnam's Executive Board
have invested in the fund (in dollar ranges). Information shown is for
the current and prior year ended January 31.
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PUTNAM EXECUTIVE BOARD
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$1 - $10,001 - $50,001 - $100,001
Year $0 $10,000 $50,000 $100,000 and over
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Philippe Bibi 2005 *
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Chief Technology Officer 2004 *
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John Boneparth 2005 *
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Head of Global Institutional Mgmt 2004 *
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Joshua Brooks N/A
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Deputy Head of Investments N/A
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Kevin Cronin 2005 *
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Deputy Head of Investments N/A
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Charles Haldeman, Jr. 2005 *
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President and CEO 2004 *
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Amrit Kanwal 2005 *
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Chief Financial Officer N/A
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Steven Kirchmar 2005 *
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Chief of Operations N/A
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Francis McNamara, III 2005 *
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General Counsel N/A
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Richard Monaghan 2005 *
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Head of Retail Management 2004 *
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Richard Robie, III 2005 *
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Chief Administrative Officer N/A
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Edward Shadek N/A
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Deputy Head of Investments N/A
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N/A indicates the individual joined Putnam's Executive Board after the reporting date.
Performance summary
This section shows your fund's performance during the first half of its
fiscal year, which ended January 31, 2005. 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 represents past performance. Past
performance does not guarantee future results. More recent returns may
be less or more than those shown. Investment return and principal value
will fluctuate and you may have a gain or a loss when you sell your
shares. For the most recent month-end performance, please visit
www.putnaminvestments.com.
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TOTAL RETURN FOR PERIODS ENDED 1/31/05
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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 15.55% 9.42% 15.11% 10.11% 15.16% 14.16% 15.31% 11.31% 15.46%
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1 year 12.61 6.66 11.80 6.80 11.82 10.82 12.03 8.12 12.38
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5 years -29.98 -33.67 -32.54 -33.57 -32.51 -32.51 -31.70 -34.10 -30.71
Annual average -6.88 -7.88 -7.57 -7.85 -7.56 -7.56 -7.34 -8.00 -7.07
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10 years 165.83 152.02 146.77 146.77 146.92 146.92 153.57 144.62 159.52
Annual average 10.27 9.68 9.45 9.45 9.46 9.46 9.75 9.36 10.01
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Annual average
(life of fund) 9.80 9.64 8.81 8.81 8.98 8.98 9.09 8.98 9.54
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Performance assumes reinvestment of distributions and does not account for taxes. Returns at public offering price (POP)
for class A and M shares reflect a sales charge of 5.25% and 3.50%, respectively. Class B share returns reflect the
applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year,
and is eliminated thereafter. Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Class R
shares have no initial sales charge or CDSC. Performance for class B, C, M, and R shares before their inception is
derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and higher
operating expenses for such shares.
A 2% short-term trading fee may be applied to shares exchanged or sold within 5 days of purchase.
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/05
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Lipper Mid-Cap
Russell Midcap Growth Funds
Growth Index* category average+
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6 months 13.61% 12.65%
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1 year 8.80 6.66
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5 years -17.93 -13.16
Annual average -3.88 -3.93
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10 years 178.84 159.21
Annual average 10.80 9.60
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Annual average
(life of fund) -- 9.16
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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 1/31/05, there
were 532, 520, 272, and 104 funds, respectively, in this Lipper
category.
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PRICE AND DISTRIBUTION* INFORMATION 6 MONTHS ENDED 1/31/05
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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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7/31/04 $8.04 $8.49 $7.08 $7.72 $7.51 $7.78 $8.02
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1/31/05 9.29 9.80 8.15 8.89 8.66 8.97 9.26
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* The fund made no distributions during the period.
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TOTAL RETURN FOR PERIODS ENDED 12/31/04 (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 10.59% 4.74% 10.32% 5.32% 10.30% 9.30% 10.34% 6.49% 10.50%
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1 year 18.90 12.69 17.96 12.96 18.03 17.03 18.29 14.18 18.67
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5 years -29.96 -33.64 -32.54 -33.56 -32.51 -32.51 -31.65 -34.04 -30.70
Annual average -6.87 -7.87 -7.57 -7.85 -7.56 -7.56 -7.33 -7.98 -7.07
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10 years 169.57 155.34 150.03 150.03 150.41 150.41 156.54 147.58 163.59
Annual average 10.42 9.83 9.60 9.60 9.61 9.61 9.88 9.49 10.18
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Annual average
(life of fund) 9.89 9.73 8.90 8.90 9.07 9.07 9.18 9.07 9.63
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Understanding your fund's expenses
As a mutual fund investor, you pay ongoing expenses, such as management
fees, distribution fees (12b-1 fees), and other expenses. Using the
information below, you can estimate how these expenses affect your
investment and compare them with the expenses of other funds. You may
also pay one-time transaction expenses, including sales charges (loads)
and redemption fees, which are not shown in this section and would have
resulted in higher total expenses. For more information, see your fund's
prospectus or talk to your financial advisor.
Review your fund's expenses
The table below shows the expenses you would have paid on a $1,000
investment in Putnam Vista Fund from August 1, 2004, to January 31,
2005. It also shows how much a $1,000 investment would be worth at the
close of the period, assuming actual returns and expenses.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 1/31/05
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Class A Class B Class C Class M Class R
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Expenses paid per $1,000* $6.14 $10.19 $10.20 $8.85 $7.49
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Ending value (after expenses) $1,155.50 $1,151.10 $1,151.60 $1,153.10 $1,154.60
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* Expenses for each share class are calculated using the fund's annualized
expense ratio for each class, which represents the ongoing expenses as a
percentage of net assets for the six months ended 1/31/05. The expense ratio may
differ for each share class (see the table at the bottom of the next page).
Expenses are calculated by multiplying the expense ratio by the average account
value for the period; then multiplying the result by the number of days in the
period; and then dividing that result by the number of days in the year.
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended
January 31, 2005, use the calculation method below. To find the value of
your investment on August 1, 2004, go to www.putnaminvestments.com and
log on to your account. Click on the "Transaction History" tab in your
Daily Statement and enter 08/01/2004 in both the "from" and "to" fields.
Alternatively, call Putnam at 1-800-225-1581.
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HOW TO CALCULATE THE EXPENSES YOU PAID
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Total
Value of your Expenses paid expenses
investment on 8/1/04 [DIV] $1,000 x per $1,000 = paid
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Example Based on a $10,000 investment in class A shares of your fund.
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$10,000 [DIV] $1,000 x $6.14 (see table above) = $61.40
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Comparing your fund's expenses with those of other funds
Using the SEC's method to compare expenses
The Securities and Exchange Commission (SEC) has established guidelines
to help investors assess fund expenses. Per these guidelines, the table
below shows your fund's expenses based on a $1,000 investment, assuming
a hypothetical 5% annualized return. You can use this information to
compare the ongoing expenses (but not transaction expenses or total
costs) of investing in the fund with those of other funds. All mutual
fund shareholder reports will provide this information to help you make
this comparison. Please note that you cannot use this information to
estimate your actual ending account balance and expenses paid during the
period.
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EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return for the 6 months ended 1/31/05
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Class A Class B Class C Class M Class R
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Expenses paid per $1,000* $5.75 $9.55 $9.55 $8.29 $7.02
- -----------------------------------------------------------------------------------
Ending value (after expenses) $1,019.51 $1,015.73 $1,015.73 $1,016.99 $1,018.25
- -----------------------------------------------------------------------------------
* Expenses for each share class are calculated using the fund's annualized
expense ratio for each class, which represents the ongoing expenses as a
percentage of net assets for the six months ended 1/31/05. The expense ratio may
differ for each share class (see the table at the bottom of this page). Expenses
are calculated by multiplying the expense ratio by the average account value for
the period; then multiplying the result by the number of days in the period; and
then dividing that result by the number of days in the year.
Using industry averages to compare expenses
You can also compare your fund's expenses with industry averages, as
determined by Lipper, an independent fund-rating agency that ranks funds
relative to others that Lipper considers to have similar investment
styles or objectives. The expense ratio for each share class shown below
indicates how much of your fund's net assets have been used to pay
ongoing expenses during the period.
- ------------------------------------------------------------------------------
EXPENSE RATIO COMPARISONS USING ANNUALIZED DATA
- ------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
- ------------------------------------------------------------------------------
Your fund's annualized
expense ratio 1.13% 1.88% 1.88% 1.63% 1.38%
- ------------------------------------------------------------------------------
Average annualized expense
ratio for Lipper peer
group+ 1.56% 2.31% 2.31% 2.06% 1.81%
- ------------------------------------------------------------------------------
+ Average of the expenses of front-end load funds viewed by Lipper as
having the same investment classification or objective as the fund, as of
12/31/04, calculated in accordance with Lipper's standard reporting
methodology for comparing expenses within a given universe (excluding
12b-1 fees and without giving effect to any expense offset and brokerage
service arrangements that may reduce fund expenses). To facilitate
comparison, Putnam has adjusted this average to reflect the 12b-1 fees
carried by each class of shares. The peer group may include funds that are
significantly larger or smaller than the fund, which may limit the
comparability of the fund's expenses to the Lipper average.
Understanding your fund's portfolio turnover
Putnam funds are actively managed by teams of experts who buy and sell
securities based on intensive analysis of companies, industries,
economies, and markets. Portfolio turnover is a measure of how often a
fund's managers buy and sell securities for your fund. A portfolio
turnover of 100%, for example, means that the managers sold and replaced
securities valued at 100% of a fund's assets within a one-year period.
Funds with high turnover may be more likely to generate capital gains
and dividends that must be distributed to shareholders as taxable
income. High turnover may also cause a fund to pay more brokerage
commissions and other transaction costs, which may detract from
performance. You can use the table below to compare your fund's turnover
with the average turnover for funds in its Lipper category.
- ------------------------------------------------------------------------------
TURNOVER COMPARISONS
percentage of holdings that change every year
- ------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------
Putnam Vista Fund 78% 65% 89% 109% 115%
- ------------------------------------------------------------------------------
Lipper Mid-Cap Growth
Funds category average 154% 165% 180% 171% 152%
- ------------------------------------------------------------------------------
Turnover data for the fund is calculated based on the fund's fiscal-year
period, which ends on July 31. Turnover data for the fund's Lipper
category is calculated based on the average of the turnover of each fund
in the category for its fiscal year ended during the indicated year.
Fiscal years vary across funds in the Lipper category, which may limit
the comparability of the fund's portfolio turnover rate to the Lipper
average. Comparative data for 2004 is based on information available as
of 12/31/04.
Risk comparison
As part of new initiatives to enhance disclosure, we are including a
risk comparison to help you understand how your fund compares with other
funds. The comparison utilizes a risk measure developed by Morningstar,
an independent fund-rating agency. This risk measure is referred to as
the fund's Overall Morningstar Risk.
Your fund's Overall Morningstar Risk is shown alongside that of the
average fund in its broad asset class, as determined by Morningstar. The
risk bar broadens the comparison by translating the fund's Overall
Morningstar Risk into a percentile, which is based on the fund's ranking
among all funds rated by Morningstar as of December 31, 2004. A higher
Overall Morningstar Risk generally indicates that a fund's monthly
returns have varied more widely.
[GRAPHIC OMITTED: chart MORNINGSTAR [REGISTRATION MARK] RISK]
MORNINGSTAR [REGISTRATION MARK] RISK
Fund's Overall
Morningstar Risk 6.50
U.S. stock
fund average 3.36
0% INCREASING RISK 100%
Morningstar determines a fund's Overall Morningstar Risk by assessing
variations in the fund's monthly returns -- with an emphasis on downside
variations -- over 3-, 5-, and 10-year periods, if available. Those
measures are weighted and averaged to produce the fund's Overall
Morningstar Risk. The information shown is provided for the fund's class
A shares only; information for other classes may vary. Overall
Morningstar Risk is based on historical data and does not indicate
future results. Morningstar does not purport to measure the risk
associated with a current investment in a fund, either on an absolute
basis or on a relative basis. Low Overall Morningstar Risk does not mean
that you cannot lose money on an investment in a fund. Copyright 2004
Morningstar, Inc. All Rights Reserved. The information contained herein
(1) is proprietary to Morningstar and/or its content providers; (2) may
not be copied or distributed; and (3) is not warranted to be accurate,
complete, or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this
information.
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. NAV
is calculated by dividing the net assets of each class of shares by the
number of outstanding shares in the class.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 5.25% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
Class R shares are not subject to an initial sales charge or CDSC and
are available only to certain defined contribution plans.
Comparative indexes
Lehman Aggregate Bond Index is an unmanaged index of U.S.
investment-grade fixed-income securities.
Lehman Global Aggregate Bond Index is an unmanaged index of global
investment-grade fixed-income securities.
Lehman Municipal Bond Index is an unmanaged index of long-term
fixed-rate investment-grade tax-exempt bonds.
Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged
index of equity securities from developed countries in Western Europe,
the Far East, and Australasia.
Russell 2000 Index is an unmanaged index of the 2,000 smallest companies
in the Russell 3000 Index.
Russell Midcap Growth Index is an unmanaged index of those companies in
the Russell Midcap Index chosen for their growth orientation.
S&P 500 Index is an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for
fees. Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
Lipper is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
Trustee approval of management contract
General conclusions
The Board of Trustees of the Putnam funds oversees the management of
each fund and, as required by law, determines annually whether to
approve the continuance of each fund's management contract with Putnam
Management. In this regard the Board of Trustees, with the assistance of
its Contract Committee consisting solely of Independent Trustees,
requests and evaluates all information it deems reasonably necessary in
the circumstances. Over the course of several months beginning in March
and ending in June of 2004, the Contract Committee reviewed the
information provided by Putnam Management and other information
developed with the assistance of the Board's independent counsel and
independent staff. The Contract Committee reviewed and discussed key
aspects of this information with all of the Independent Trustees. Upon
completion of this review, the Contract Committee recommended and the
Independent Trustees approved the continuance of your fund's contract,
effective July 1, 2004.
This approval was based on the following conclusions:
* That the fee schedule currently in effect for your fund represents
reasonable compensation in light of the nature and quality of the
services being provided to the fund, the fees paid by competitive funds
and the costs incurred by Putnam Management in providing such service,
and
* That such fee schedule represents an appropriate sharing between fund
shareholders and Putnam Management of such economies of scale as may
exist in the management of the fund at current asset levels.
These conclusions were based on a comprehensive consideration of all
information provided to the Trustees and were not the result of any
single factor. Some of the factors that figured particularly in the
Trustees' deliberations are described below.
Model fee schedules and categories; total expenses
The Trustees, working in cooperation with Putnam Management, have
developed and implemented a series of model fee schedules for the Putnam
funds designed to ensure that each fund's management fee is consistent
with the fees for similar funds in the Putnam complex and compares
favorably with fees paid by competitive funds sponsored by other advisors.
The Trustees reviewed the model fee schedule currently in effect for the
fund, including fee levels and breakpoints, and the assignment of the fund
to a particular fee category under this structure. The Trustees also
reviewed comparative fee and expense information for competitive funds.
The Trustees concluded that no changes should be made in the fund's
current fee schedule at this time. The Trustees noted that expense ratios
for a number of Putnam funds had been increasing recently as a result of
declining net assets and the natural operation of fee breakpoints. They
noted that such expense ratio increases were currently being controlled by
expense limitations implemented in January 2004. They also noted that the
competitive landscape regarding mutual fund fees may be changing as a
result of fee reductions accepted by various other fund groups in
connection with recent regulatory settlements and greater focus on fees
and expenses in the mutual fund industry generally. The Trustees indicated
an intention to monitor these developments closely.
Economies of scale
As noted above, the Trustees concluded that the fee schedule currently
in effect for your fund represents an appropriate sharing of economies
of scale at current asset levels. The Trustees indicated their intention
to continue their ongoing consideration of economies of scale and in
particular to consider further the possible operation of such economies
in the event that a significant recovery in the equity markets or net
fund sales were to raise asset levels substantially above current
levels. In this regard, the Trustees noted that they had reviewed data
relating to the substantial increase in asset levels of the Putnam funds
that occurred during the years leading up to the market peak in 2000,
the subsequent decline in assets and the resulting impact on revenues
and expenses of Putnam Management. The Trustees also noted that recent
declines in net assets in many Putnam funds, together with significant
changes in the cost structure of Putnam Management have altered the
economics of Putnam Management's business in significant ways. The
Trustees concluded that they would monitor these changes carefully and
evaluate the resulting impact on Putnam Management's economics and the
sharing of economies of scale between the parties.
Investment performance
The quality of the investment process provided by Putnam Management
represented a major factor in the Trustees' evaluation of the quality of
services provided by Putnam Management under the Management Contracts.
The Trustees recognized that a high quality investment process -- as
measured by the experience and skills of the individuals assigned to the
management of fund portfolios, the resources made available to such
personnel, and in general the ability of Putnam Management to attract
and retain high-quality personnel -- does not guarantee favorable
investment results for every fund in every time period. The Trustees
considered the investment performance of each fund over multiple time
periods and considered information comparing the fund's performance with
various benchmarks and with the performance of competitive funds. The
Trustees noted the satisfactory investment performance of many Putnam
funds.
They also noted the disappointing investment performance of certain
funds in recent years and continued to discuss with senior management of
Putnam Management the factors contributing to such under-performance and
actions being taken to improve performance. The Trustees recognized
that, in recent years, Putnam Management has made significant changes in
its investment personnel and processes and in the fund product line in
an effort to address areas of underperformance. The Trustees indicated
their intention to continue to monitor performance trends to assess the
effectiveness of these changes and to evaluate whether additional
remedial changes are warranted. As a general matter, the Trustees
concluded that consultation between the Trustees and Putnam Management
represents the most effective way to address investment performance
problems. The Trustees believe that investors in the Putnam funds and
their financial advisors have, as a general matter, effectively placed
their trust in the Putnam organization, under the supervision of the
funds' Trustees, to make appropriate decisions regarding the management
of the funds. The Trustees believe that the termination of the
Management Contract and engagement of a new investment adviser for
under-performing funds, with all the attendant disruptions, would not
serve the interests of fund shareholders at this time and would not
necessarily provide any greater assurance of improved investment
performance.
Brokerage and soft-dollar allocations; other benefits
The Trustees considered various potential benefits that Putnam
Management may receive in connection with the services it provides under
the Management Contract with your fund. These include principally
benefits related to brokerage and soft-dollar allocations, which pertain
mainly to funds investing in equity securities. The Trustees believe
that soft-dollar credits and other potential benefits associated with
the allocation of fund brokerage represent assets of the funds that
should be used for the benefit of fund shareholders. The Trustees noted
recent trends in the allocation of fund brokerage, including commission
costs, the allocation of brokerage to firms that provide research
services to Putnam Management, and the sources and application of
available soft-dollar credits. Effective December 31, 2003, reflecting a
decision made by the Trustees earlier that year, Putnam Management
ceased allocating brokerage in connection with the sale of fund shares.
In addition, in preparing its budget for commission allocations in 2004,
Putnam Management voluntarily reduced substantially the allocation of
brokerage commissions to acquire research services from third-party
service providers. In light of evolving best practices in the mutual
fund industry, the Trustees concluded that this practice should be
further curtailed and possibly eliminated in the near future. The
Trustees indicated that they would continue to monitor the allocation of
the funds' brokerage to ensure that the principle of "best price and
execution" remains paramount in the portfolio trading process.
Comparison of retail and institutional fee schedules
The information examined by the Trustees as part of the annual contract
reviews included information regarding fees charged by Putnam Management
and its affiliates to institutional clients such as defined benefit
pension plans and college endowments. This information included
comparison of such fees with fees charged to the Putnam funds, as well
as a detailed assessment of the differences in the services provided to
these two types of clients. The Trustees devoted special attention to
these issues and reviewed recent articles by critics of mutual fund
fees, articles by the ICI defending such fee differences, and relevant
guidance provided by decisions of the courts. The Trustees observed, in
this regard, that the differences in fee rates between institutional
clients and mutual funds are by no means uniform when examined by
individual asset sectors, suggesting that differences in the pricing of
investment management services to these types of clients reflects to a
substantial degree historical competitive forces operating in separate
market places. In reaching their conclusions, the Trustees considered
the fact that fee rates across all asset sectors are higher on average
for mutual funds than for institutional clients, and also considered the
differences between the services that Putnam provides to the Putnam
funds and those that it provides to institutional clients of the firm.
Settlement of regulatory charges related to market timing
Finally, in reaching their conclusions, the Trustees considered all
matters pertinent to the administrative charges filed against Putnam
Management by the SEC and the Commonwealth of Massachusetts in October
2003 relating to market timing, the firm's settlement of those charges,
and the conclusions and recommendations of the Trustees' Audit and
Pricing Committee based on its review of these matters. The Trustees
considered the actions taken by the owner of Putnam Management and its
new senior management to terminate or discipline the individuals
involved, to implement new compliance systems, to indemnify the funds
against all costs and liabilities related to these matters, and
otherwise to ensure that the interests of the funds and their
shareholders are fully protected. The Trustees noted that, in addition
to the settlements of the regulatory charges which will provide
comprehensive restitution for any losses suffered by shareholders, the
new senior management of Putnam Management has moved aggressively to
control expense ratios of funds affected by market timing, to reduce
charges to new investors, to improve disclosure of fees and expenses,
and to emphasize the paramount role of investment performance in
achieving shareholders' investment goals.
Other information for shareholders
A note about duplicate mailings
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
Proxy voting
Putnam is committed to managing our mutual funds in the best interests
of our shareholders. The Putnam funds' proxy voting guidelines and
procedures, as well as information regarding how your fund voted proxies
relating to portfolio securities during the 12-month period ended June
30, 2004, are available on the Putnam Individual Investor Web site,
www.putnaminvestments.com/individual, and on the SEC's Web site,
www.sec.gov. If you have questions about finding forms on the SEC's Web
site, you may call the SEC at 1-800-SEC-0330. You may also obtain the
Putnam funds' proxy voting guidelines and procedures at no charge by
calling Putnam's Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
For periods ending on or after July 9, 2004, the fund will file a
complete schedule of its portfolio holdings with the SEC for the first
and third quarters of each fiscal year on Form N-Q. Shareholders may
obtain the fund's Forms N-Q on the SEC's Web site at www.sec.gov. In
addition, the fund's Forms N-Q may be reviewed and copied at the SEC's
public reference room in Washington, D.C. You may call the SEC at
1-800-SEC-0330 for information about the SEC's Web site or the operation
of the public reference room.
A guide to the financial statements
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or loss
the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by the fund's net investment gain or loss, by distributions to
shareholders, and by changes in the number of the fund's shares. It
lists distributions and their sources (net investment income or realized
capital gains) over the current reporting period and the most recent
fiscal year-end. The distributions listed here may not match the sources
listed in the Statement of operations because the distributions are
determined on a tax basis and may be paid in a different period from the
one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment
income ratios, and portfolio turnover in one summary table, reflecting
the five most recent reporting periods. In a semiannual report, the
highlight table also includes the current reporting period. For open-end
funds, a separate table is provided for each share class.
The fund's portfolio
January 31, 2005 (Unaudited)
Common stocks (99.7%) (a)
Number of shares Value
Aerospace and Defense (1.6%)
- -------------------------------------------------------------------------------
954,600 United Defense Industries, Inc. $45,753,978
Automotive (1.7%)
- -------------------------------------------------------------------------------
1,052,800 Autoliv, Inc. (S) 49,639,520
Banking (1.2%)
- -------------------------------------------------------------------------------
288,500 Commerce Bancorp, Inc. (S) 16,600,290
395,000 Doral Financial Corp. (S) 17,083,750
--------------
33,684,040
Basic Materials (1.2%)
- -------------------------------------------------------------------------------
641,200 Vulcan Materials Co. 36,214,976
Biotechnology (1.8%)
- -------------------------------------------------------------------------------
638,300 Genzyme Corp. (NON) (S) 37,155,443
246,100 IDEXX Laboratories, Inc. (NON) (S) 14,276,261
--------------
51,431,704
Broadcasting (0.6%)
- -------------------------------------------------------------------------------
543,100 XM Satellite Radio Holdings, Inc.
Class A (NON) (S) 17,330,321
Chemicals (0.9%)
- -------------------------------------------------------------------------------
497,900 Georgia Gulf Corp. 25,462,606
Commercial and Consumer Services (1.4%)
- -------------------------------------------------------------------------------
348,300 Corporate Executive Board Co. (The)
(S) 22,256,370
95,900 Strayer Education, Inc. (S) 10,294,865
258,000 West Corp. (NON) (S) 8,614,620
--------------
41,165,855
Communications Equipment (2.5%)
- -------------------------------------------------------------------------------
441,100 Harris Corp. (S) 28,570,047
660,700 Scientific-Atlanta, Inc. (S) 20,025,817
3,238,300 Tellabs, Inc. (NON) (S) 23,056,696
--------------
71,652,560
Computers (4.9%)
- -------------------------------------------------------------------------------
430,000 Apple Computer, Inc. (NON) 33,067,000
413,900 Lexmark International, Inc. (NON)
(S) 34,498,565
132,020 Logitech International SA ADR
(Switzerland) (NON) (S) 8,132,432
376,300 NAVTEQ Corp. (NON) (S) 14,408,527
1,275,600 Network Appliance, Inc. (NON) 40,615,104
333,400 Take-Two Interactive Software, Inc.
(NON) (S) 11,752,350
--------------
142,473,978
Conglomerates (1.6%)
- -------------------------------------------------------------------------------
453,500 AMETEK, Inc. (S) 17,323,700
209,600 Harman International Industries,
Inc. 25,497,840
27,300 ITT Industries, Inc. (S) 2,328,417
--------------
45,149,957
Consumer Cyclicals (0.9%)
- -------------------------------------------------------------------------------
300,700 Black & Decker Manufacturing Co. (S) 24,777,680
Consumer Finance (3.7%)
- -------------------------------------------------------------------------------
529,100 Capital One Financial Corp. (S) 41,417,948
1,081,800 Nelnet, Inc. Class A (NON) (S) 32,670,360
1,908,400 Providian Financial Corp. (NON) (S) 31,832,112
--------------
105,920,420
Consumer Goods (3.1%)
- -------------------------------------------------------------------------------
509,913 Alberto-Culver Co. 27,662,780
223,500 Energizer Holdings, Inc. (NON) 12,652,335
248,600 Scotts Co. (The) Class A (NON) (S) 16,894,856
1,012,200 Yankee Candle Co., Inc. (The) (NON) 33,159,672
--------------
90,369,643
Consumer Services (1.6%)
- -------------------------------------------------------------------------------
234,000 Alliance Data Systems Corp. (NON) 10,160,280
505,800 Getty Images, Inc. (NON) (S) 35,254,260
--------------
45,414,540
Containers (1.3%)
- -------------------------------------------------------------------------------
851,500 Ball Corp. 36,376,080
Distributors (0.3%)
- -------------------------------------------------------------------------------
279,100 Hughes Supply, Inc. (S) 8,479,058
Electronics (6.8%)
- -------------------------------------------------------------------------------
303,800 Amphenol Corp. Class A 11,948,454
873,600 ATI Technologies, Inc. (Canada)
(NON) (S) 15,139,488
2,108,700 Linear Technology Corp. (S) 79,582,338
1,776,400 SanDisk Corp. (NON) (S) 43,877,080
1,432,800 Storage Technology Corp. (NON) (S) 45,118,872
--------------
195,666,232
Energy (1.1%)
- -------------------------------------------------------------------------------
692,600 BJ Services Co. (S) 33,279,430
Entertainment (0.2%)
- -------------------------------------------------------------------------------
84,600 Pixar, Inc. (NON) (S) 7,374,582
Financial (1.2%)
- -------------------------------------------------------------------------------
38,300 Chicago Mercantile Exchange (The) 8,215,350
329,200 Moody's Corp. (S) 27,580,376
--------------
35,795,726
Forest Products and Packaging (0.8%)
- -------------------------------------------------------------------------------
895,800 Louisiana-Pacific Corp. (S) 22,932,480
Gaming & Lottery (0.9%)
- -------------------------------------------------------------------------------
260,900 Harrah's Entertainment, Inc. (S) 16,499,316
156,100 Mandalay Resort Group (S) 11,020,660
--------------
27,519,976
Health Care Services (5.4%)
- -------------------------------------------------------------------------------
375,400 Coventry Health Care, Inc. (NON) (S) 21,360,260
849,500 Laboratory Corp. of America Holdings
(NON) 40,648,575
688,100 PacifiCare Health Systems, Inc.
(NON) (S) 42,338,793
433,400 WellPoint, Inc. (NON) 52,658,100
--------------
157,005,728
Homebuilding (1.6%)
- -------------------------------------------------------------------------------
58,400 NVR, Inc. (NON) 46,209,000
Household Furniture and Appliances (0.9%)
- -------------------------------------------------------------------------------
402,100 Whirlpool Corp. (S) 27,447,346
Insurance (1.7%)
- -------------------------------------------------------------------------------
249,600 Everest Re Group, Ltd. (Bermuda) (S) 21,690,240
575,300 W.R. Berkley Corp. (S) 27,441,810
--------------
49,132,050
Investment Banking/Brokerage (1.5%)
- -------------------------------------------------------------------------------
444,800 Bear Stearns Cos., Inc. (The) (S) 44,951,488
Leisure (1.0%)
- -------------------------------------------------------------------------------
464,400 Harley-Davidson, Inc. (S) 27,915,084
Machinery (2.9%)
- -------------------------------------------------------------------------------
995,900 Terex Corp. (NON) 42,873,495
496,900 Toro Co. (The) 41,366,925
--------------
84,240,420
Manufacturing (1.3%)
- -------------------------------------------------------------------------------
493,600 Graco, Inc. 17,596,840
545,100 IDEX Corp. (S) 21,013,605
--------------
38,610,445
Medical Technology (8.3%)
- -------------------------------------------------------------------------------
644,800 Biomet, Inc. 27,391,104
703,000 C.R. Bard, Inc. 47,663,400
831,700 Charles River Laboratories
International, Inc. (NON) (S) 39,405,946
306,600 Dade Behring Holdings, Inc. (NON) 17,522,190
696,900 Edwards Lifesciences Corp. (NON) (S) 28,363,830
531,600 Gen-Probe, Inc. (NON) (S) 25,947,396
48,400 Inamed Corp. (NON) (S) 3,349,280
376,200 Respironics, Inc. (NON) 21,781,980
725,800 Varian Medical Systems, Inc. (NON) 27,384,434
--------------
238,809,560
Oil & Gas (3.7%)
- -------------------------------------------------------------------------------
444,800 Amerada Hess Corp. (S) 38,541,920
403,100 Burlington Resources, Inc. 17,619,501
318,000 Newfield Exploration Co. (NON) 19,461,600
295,200 Pogo Producing Co. (S) 12,554,856
205,300 Sunoco, Inc. (S) 17,961,697
--------------
106,139,574
Pharmaceuticals (3.1%)
- -------------------------------------------------------------------------------
572,400 Barr Pharmaceuticals, Inc. (NON) 27,217,620
678,600 Cephalon, Inc. (NON) (S) 33,387,120
796,000 Medicis Pharmaceutical Corp. Class A
(S) 28,735,600
--------------
89,340,340
Publishing (0.5%)
- -------------------------------------------------------------------------------
743,600 Marvel Enterprises, Inc. (NON) (S) 13,280,696
Restaurants (1.7%)
- -------------------------------------------------------------------------------
846,900 Darden Restaurants, Inc. (S) 25,034,364
433,800 Starbucks Corp. (NON) 23,425,200
--------------
48,459,564
Retail (7.5%)
- -------------------------------------------------------------------------------
292,100 Abercrombie & Fitch Co. Class A 14,640,052
931,650 Aeropostale, Inc. (NON) (S) 25,890,554
368,000 American Eagle Outfitters, Inc. 18,694,400
2,515,900 Claire's Stores, Inc. (S) 51,903,017
530,900 Coach, Inc. (NON) 29,783,490
135,500 Fossil, Inc. (NON) (S) 3,780,450
683,200 Michaels Stores, Inc. (S) 21,008,400
247,100 PETCO Animal Supplies, Inc. (NON) 9,382,387
1,309,200 Staples, Inc. 42,863,208
--------------
217,945,958
Schools (1.1%)
- -------------------------------------------------------------------------------
409,600 Apollo Group, Inc. Class A (NON) (S) 32,026,624
Semiconductor (1.7%)
- -------------------------------------------------------------------------------
656,900 Lam Research Corp. (NON) (S) 17,578,644
782,000 SigmaTel, Inc. (NON) 30,818,620
--------------
48,397,264
Shipping (1.8%)
- -------------------------------------------------------------------------------
740,200 CNF Transportation, Inc. (S) 34,722,782
317,500 Overseas Shipholding Group 17,719,675
--------------
52,442,457
Software (8.6%)
- -------------------------------------------------------------------------------
957,800 Adobe Systems, Inc. 54,498,820
2,675,700 BMC Software, Inc. (NON) (S) (SEG) 45,032,031
2,558,200 Citrix Systems, Inc. (NON) (S) 54,873,390
274,100 McAfee, Inc. (NON) 7,085,485
1,029,900 Siebel Systems, Inc. (NON) 8,970,429
653,000 Symantec Corp. (NON) 15,247,550
2,069,600 Veritas Software Corp. (NON) (S) 53,230,112
172,850 Zebra Technology Corp. (NON) (S) 8,803,251
--------------
247,741,068
Technology Services (3.1%)
- -------------------------------------------------------------------------------
647,800 Acxiom Corp. (S) 14,951,224
674,600 Equifax, Inc. 19,091,180
1,154,500 Fair Isaac Corp. 39,887,974
295,600 Ingram Micro, Inc. Class A (NON) 5,462,688
393,400 VeriSign, Inc. (NON) 10,165,456
--------------
89,558,522
Tobacco (1.0%)
- -------------------------------------------------------------------------------
588,700 UST, Inc. 29,823,542
--------------
Total Common stocks
(cost $2,488,130,278) $2,883,342,072
Short-term investments (16.2%) (a)
Principal amount Value
- -------------------------------------------------------------------------------
$456,538,752 Short-term investments held as
collateral for loaned securities
with yields ranging from 2.29% to
2.65% and due dates ranging from
February 1, 2005 to March 22,
2005 (d) $456,309,851
10,776,369 Putnam Prime Money Market Fund (e) 10,776,369
--------------
Total Short-term investments
(cost $467,086,220) $467,086,220
- -------------------------------------------------------------------------------
Total Investments
(cost $2,955,216,498) $3,350,428,292
- -------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $2,890,590,151.
(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, 2005.
(S) Securities on loan, in part or in entirety, at January 31, 2005.
(d) See Note 1 to the financial statements.
(e) See Note 5 to the financial statements regarding investments in
Putnam Prime Money Market Fund.
ADR after the name of a foreign holding stands for American Depositary
Receipts, representing ownership of foreign securities on deposit with a
custodian bank.
Futures contracts outstanding at January 31, 2005 (Unaudited)
Aggregate Expiration Unrealized
Value face value date appreciation
- ------------------------------------------------------------------------------
S&P 500 Index (Long) $2,363,400 $2,342,030 Mar-05 $21,370
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities
January 31, 2005 (Unaudited)
Assets
- -------------------------------------------------------------------------------
Investment in securities, at value, including $443,876,409 of securities
on loan (Note 1):
- -------------------------------------------------------------------------------
Unaffiliated issuers (identified cost $2,944,440,129) $3,339,651,923
- -------------------------------------------------------------------------------
Affiliated issuers (identified cost $10,776,369) (Note 5) 10,776,369
- -------------------------------------------------------------------------------
Dividends, interest and other receivables 501,158
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 3,842,525
- -------------------------------------------------------------------------------
Receivable for securities sold 29,555,634
- -------------------------------------------------------------------------------
Receivable for variation margin (Note 1) 31,284
- -------------------------------------------------------------------------------
Total assets 3,384,358,893
Liabilities
- -------------------------------------------------------------------------------
Payable for securities purchased 22,546,548
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 8,633,709
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Notes 2 and 5) 3,753,637
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 609,530
- -------------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 341,246
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 9,352
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,004,975
- -------------------------------------------------------------------------------
Collateral on securities loaned, at value (Note 1) 456,309,851
- -------------------------------------------------------------------------------
Other accrued expenses 559,894
- -------------------------------------------------------------------------------
Total liabilities 493,768,742
- -------------------------------------------------------------------------------
Net assets $2,890,590,151
Represented by
- -------------------------------------------------------------------------------
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) $6,585,452,350
- -------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (11,365,921)
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (4,078,729,442)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 395,233,164
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $2,890,590,151
Computation of net asset value and offering price
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,934,048,647 divided by 208,098,334 shares) $9.29
- -------------------------------------------------------------------------------
Offering price per class A share (100/94.75 of $9.29)* $9.80
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($623,758,702 divided by 76,510,539 shares)** $8.15
- -------------------------------------------------------------------------------
Net asset value and offering price per class C share
($39,349,186 divided by 4,426,070 shares)** $8.89
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($42,167,570 divided by 4,867,948 shares) $8.66
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $8.66)* $8.97
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class R share ($159,051 divided by 17,176 shares) $9.26
- -------------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class Y share ($251,106,995 divided by 26,037,928 shares) $9.64
- -------------------------------------------------------------------------------
* 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, 2005 (Unaudited)
Investment income:
- -------------------------------------------------------------------------------
Dividends (net of foreign tax of $25,650) $5,701,057
- -------------------------------------------------------------------------------
Interest (including interest income of $204,294 from
investments in affiliated issuers) (Note 5) 231,937
- -------------------------------------------------------------------------------
Securities lending 164,598
- -------------------------------------------------------------------------------
Total investment income 6,097,592
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 7,323,079
- -------------------------------------------------------------------------------
Investor servicing fees (Note 2) 4,487,658
- -------------------------------------------------------------------------------
Custodian fees (Note 2) 176,277
- -------------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 36,708
- -------------------------------------------------------------------------------
Administrative services (Note 2) 41,120
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,334,565
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 3,279,952
- -------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 189,756
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 165,912
- -------------------------------------------------------------------------------
Distribution fees -- Class R (Note 2) 234
- -------------------------------------------------------------------------------
Other 595,510
- -------------------------------------------------------------------------------
Non-recurring costs (Notes 2 and 6) 100,747
- -------------------------------------------------------------------------------
Costs assumed by Manager (Notes 2 and 6) (100,747)
- -------------------------------------------------------------------------------
Fees waived and reimbursed by Manager (Note 5) (12,788)
- -------------------------------------------------------------------------------
Total expenses 18,617,983
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (1,154,470)
- -------------------------------------------------------------------------------
Net expenses 17,463,513
- -------------------------------------------------------------------------------
Net investment loss (11,365,921)
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 179,928,089
- -------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 3,197,620
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures
contracts during the period 237,449,990
- -------------------------------------------------------------------------------
Net gain on investments 420,575,699
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $409,209,778
- -------------------------------------------------------------------------------
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
Increase (decrease) in net assets 2005* 2004
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment loss $(11,365,921) $(26,608,833)
- -------------------------------------------------------------------------------
Net realized gain on investments 183,125,709 704,765,902
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 237,449,990 (186,848,425)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 409,209,778 491,308,644
- -------------------------------------------------------------------------------
Redemption fees (Note 1) 19,588 16,602
- -------------------------------------------------------------------------------
Decrease from capital share transactions
(Note 4) (330,608,825) (1,424,586,782)
- -------------------------------------------------------------------------------
Total increase (decrease) in net assets 78,620,541 (933,261,536)
Net assets
- -------------------------------------------------------------------------------
Beginning of period 2,811,969,610 3,745,231,146
- -------------------------------------------------------------------------------
End of period (including accumulated net
investment loss of $11,365,921 and $-- ,
respectively) $2,890,590,151 $2,811,969,610
- -------------------------------------------------------------------------------
* 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 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.04 $7.12 $6.30 $9.22 $19.10 $14.30
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.03)(d) (.05)(d) (.03) (.04) (.06) (.09)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.28 .97 .85 (2.88) (6.00) 7.18
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.25 .92 .82 (2.92) (6.06) 7.09
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (3.81) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.29 $8.04 $7.12 $6.30 $9.22 $19.10
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.55* 12.92 13.02 (31.67) (37.86) 53.19
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,934,049 $1,798,906 $2,238,709 $2,563,995 $4,614,523 $6,763,532
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .57*(d) 1.08 (d) 1.09 1.00 .89 .87
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.32)*(d) (.60)(d) (.54) (.56) (.47) (.51)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.01* 77.95 64.83 89.19 109.13 115.31
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding
during the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period.
As a result of such waivers, the expenses of the fund for the periods ended January 31, 2005 and July 31, 2004 reflect a
reduction of less than 0.01% of average net assets for class A shares (Note 5).
(e) Amount represents less than $0.01 per share.
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 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.08 $6.32 $5.63 $8.30 $17.73 $13.51
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.05)(d) (.10)(d) (.07) (.09) (.15) (.21)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.12 .86 .76 (2.58) (5.46) 6.72
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.07 .76 .69 (2.67) (5.61) 6.51
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (3.81) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.15 $7.08 $6.32 $5.63 $8.30 $17.73
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.11* 12.03 12.26 (32.17) (38.31) 51.89
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $623,759 $674,172 $842,635 $913,467 $1,776,848 $2,880,568
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .95*(d) 1.83 (d) 1.84 1.75 1.64 1.62
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.69)*(d) (1.35)(d) (1.29) (1.31) (1.22) (1.26)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.01* 77.95 64.83 89.19 109.13 115.31
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during
the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period.
As a result of such waivers, the expenses of the fund for the periods ended January 31, 2005 and July 31, 2004 reflect a
reduction of less than 0.01% of average net assets for class B shares (Note 5).
(e) Amount represents less than $0.01 per share.
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
ended
January 31
Per-share (Unaudited) Year ended July 31
operating performance 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.72 $6.89 $6.14 $9.05 $18.95 $14.30
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.06)(d) (.10)(d) (.08) (.10) (.15) (.24)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.23 .93 .83 (2.81) (5.93) 7.18
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.17 .83 .75 (2.91) (6.08) 6.94
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (3.81) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.89 $7.72 $6.89 $6.14 $9.05 $18.95
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.16* 12.05 12.22 (32.15) (38.33) 52.03
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $39,349 $36,770 $48,585 $52,939 $115,495 $91,914
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .95*(d) 1.83 (d) 1.84 1.75 1.64 1.62
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.69)*(d) (1.35)(d) (1.29) (1.31) (1.20) (1.24)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.01* 77.95 64.83 89.19 109.13 115.31
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during
the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period.
As a result of such waivers, the expenses of the fund for the periods ended January 31, 2005 and July 31, 2004 reflect a
reduction of less than 0.01% of average net assets for class C shares (Note 5).
(e) Amount represents less than $0.01 per share.
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 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.51 $6.69 $5.95 $8.74 $18.40 $13.92
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.05)(d) (.08)(d) (.06) (.08) (.13) (.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.20 .90 .80 (2.71) (5.71) 6.94
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.15 .82 .74 (2.79) (5.84) 6.77
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (3.81) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.66 $7.51 $6.69 $5.95 $8.74 $18.40
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.31* 12.26 12.44 (31.92) (38.15) 52.26
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $42,168 $44,375 $60,957 $73,816 $142,887 $241,432
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .82*(d) 1.58 (d) 1.59 1.50 1.39 1.37
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.57)*(d) (1.10)(d) (1.04) (1.06) (.97) (1.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.01* 77.95 64.83 89.19 109.13 115.31
- ---------------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment loss has been determined on the basis of the weighted average number of shares outstanding during
the period.
(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).
(d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period.
As a result of such waivers, the expenses of the fund for the periods ended January 31, 2005 and July 31, 2004 reflect a
reduction of less than 0.01% of average net assets for class M shares (Note 5).
(e) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
Financial highlights
(For a common share outstanding throughout the period)
CLASS R
- ---------------------------------------------------------------------------------------------
Six months For the
ended Year period
Jan. 31 ended Jan. 21, 2003+
Per-share (Unaudited) July 31 to July 31
operating performance 2005 2004 2003
- ---------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.02 $7.12 $6.14
- ---------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------
Net investment loss (a) (.04)(d) (.06)(d) (.03)
- ---------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.28 .96 1.01
- ---------------------------------------------------------------------------------------------
Total from
investment operations 1.24 .90 .98
- ---------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) --
- ---------------------------------------------------------------------------------------------
Net asset value,
end of period $9.26 $8.02 $7.12
- ---------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.46* 12.64 15.96*
- ---------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $159 $37 $1
- ---------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .70*(d) 1.33 (d) .71*
- ---------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.45)*(d) (.88)(d) (.42)*
- ---------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.01* 77.95 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).
(d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime
Money Market Fund during the period. As a result of such waivers, the expenses of the
fund for the periods ended January 31, 2005 and July 31, 2004 reflect a reduction of less
than 0.01% of average net assets for class R shares (Note 5).
(e) Amount represents less than $0.01 per share.
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 2005 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.33 $7.36 $6.50 $9.48 $19.48 $14.52
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment loss (a) (.02)(d) (.03)(d) (.02) (.03) (.03) (.05)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.33 1.00 .88 (2.95) (6.15) 7.30
- ---------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.31 .97 .86 (2.98) (6.18) 7.25
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- (3.81) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82) (2.29)
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.64 $8.33 $7.36 $6.50 $9.48 $19.48
- ---------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 15.73* 13.18 13.23 (31.43) (37.71) 53.51
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $251,107 $257,709 $554,344 $600,170 $877,950 $1,027,892
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .45*(d) .83 (d) .84 .75 .64 .62
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment
loss to average net assets (%) (.19)*(d) (.35)(d) (.28) (.32) (.21) (.26)
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 41.01* 77.95 64.83 89.19 109.13 115.31
- ---------------------------------------------------------------------------------------------------------------------------------
* 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).
(d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period.
As a result of such waivers, the expenses of the fund for the periods ended January 31, 2005 and July 31, 2004 reflect a
reduction of less than 0.01% of average net assets for class Y shares (Note 5).
(e) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
Notes to financial statements
January 31, 2005 (Unaudited)
Note 1
Significant accounting policies
Putnam Vista Fund (the "fund"), a Massachusetts business trust, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The fund seeks
capital appreciation by investing primarily in common stocks selected
for above-average growth potential. 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%. 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 (May 3, 2004 for defined contribution plans
administered by Putnam), a 2.00% redemption fee may apply to any shares
that are redeemed (either by selling or exchanging into another fund)
within 5 days of purchase. The redemption fee is accounted for as an
addition to paid-in-capital. Prior year redemption fee balances have
been reclassified to conform with current year financial statement
presentation.
Investment income, realized and unrealized gains and losses and expenses
of the fund are borne pro-rata based on the relative net assets of each
class to the total net assets of the fund, except that each class bears
expenses unique to that class (including the distribution fees
applicable to such classes). Each class votes as a class only with
respect to its own distribution plan or other matters on which a class
vote is required by law or determined by the Trustees. Shares of each
class would receive their pro-rata share of the net assets of the fund,
if the fund were liquidated. In addition, the Trustees declare separate
dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are valued at the last reported sales price on their principal
exchange, or official closing price for certain markets. If no sales are
reported -- as in the case of some securities traded over-the-counter -- a
security is valued at its last reported bid price. Many securities markets
and exchanges outside the U.S. close prior to the close of the New York
Stock Exchange and therefore the closing prices for securities in such
markets or on such exchanges may not fully reflect events that occur after
such close but before the close of the New York Stock Exchange.
Accordingly, on certain days, the fund will fair value foreign securities
taking into account multiple factors, including movements in the U.S.
securities markets. The number of days on which fair value prices will be
used will depend on market activity and it is possible that fair value
prices will be used by the fund to a significant extent. Securities quoted
in foreign currencies are translated into U.S. dollars at the current
exchange rate. Short-term investments having remaining maturities of 60
days or less are valued at amortized cost, which approximates fair value.
Other investments, including certain restricted securities, are valued at
fair value following procedures approved by the Trustees. Such valuations
and procedures are reviewed periodically by the Trustees.
B) Joint trading account Pursuant to an exemptive order from the
Securities and Exchange Commission ("SEC"), the fund may transfer
uninvested cash balances, including cash collateral received under
security lending arrangements, into a joint trading account along with
the cash of other registered investment companies and certain other
accounts managed by Putnam Investment Management, LLC ("Putnam
Management"), the fund's manager, an indirect wholly-owned subsidiary of
Putnam, LLC. These balances may be invested in issues of high-grade
short-term investments having maturities of up to 397 days for
collateral received under security lending arrangements and up to 90
days for other cash investments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Collateral for certain tri-party repurchase agreements is held at the
counterparty's custodian in a segregated account for the benefit of the
fund and the counterparty. Putnam Management is responsible for
determining that the value of these underlying securities is at all
times at least equal to the resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are recorded on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income, net
of applicable withholding taxes, is recognized on the ex-dividend date
except that certain dividends from foreign securities are recognized as
soon as the fund is informed of the ex-dividend date. Non-cash
dividends, if any, are recorded at the fair market value of the
securities received.
E) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. Risks may exceed amounts recognized on the statement
of assets and liabilities. When the contract is closed, the fund records
a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities. If a written call
option is exercised, the premium originally received is recorded as an
addition to sales proceeds. If a written put option is exercised, the
premium originally received is recorded as a reduction to the cost of
investments.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The fund and the broker
agree to exchange an amount of cash equal to the daily fluctuation in the
value of the futures contract. Such receipts or payments are known as
"variation margin." Exchange traded options are valued at the last sale
price, or if no sales are reported, the last bid price for purchased
options and the last ask price for written options. Options traded
over-the-counter are valued using prices supplied by dealers. Futures and
written option contracts outstanding at period end, if any, are listed
after the fund's portfolio.
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, 2005, the value of
securities loaned amounted to $443,876,409. The fund received cash
collateral of $456,309,851 which is pooled with collateral of other
Putnam funds into 25 issuers of high grade short-term investments.
G) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code of 1986 (the "Code") applicable
to regulated investment companies. It is also the intention of the fund
to distribute an amount sufficient to avoid imposition of any excise tax
under Section 4982 of the Code, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
At July 31, 2004, the fund had a capital loss carryover of
$4,259,952,470 available to the extent allowed by the Code to offset
future net capital gain, if any. The amount of the carryover and the
expiration dates are:
Loss Carryover Expiration
- --------------------------------
$2,809,978,708 July 31, 2010
1,449,973,762 July 31, 2011
The aggregate identified cost on a tax basis is $2,957,119,177,
resulting in gross unrealized appreciation and depreciation of
$454,890,563 and $61,581,448, respectively, or net unrealized
appreciation of $393,309,115.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Distributions from capital gains, if any, are recorded on the
ex-dividend date and paid at least annually. The amount and character of
income and gains to be distributed are determined in accordance with
income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the fund's capital
accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on the following annual rates: 0.65% of the first $500 million
of average net assets, 0.55% of the next $500 million, 0.50% of the next
$500 million, 0.45% of the next $5 billion, 0.425% of the next $5
billion, 0.405% of the next $5 billion, 0.39% of the next $5 billion and
0.38% thereafter.
Putnam Management has agreed to waive fees and reimburse expenses of the
fund through July 31, 2005 to the extent necessary to ensure that the
fund's expenses do not exceed the average expenses of the front-end load
funds viewed by Lipper Inc. as having the same investment classification
or objective as the fund. The expense reimbursement is based on a
comparison of the fund's expenses with the average annualized operating
expenses of the funds in its Lipper peer group for each calendar quarter
during the fund's last fiscal year, excluding 12b-1 fees and without
giving effect to any expense offset and brokerage service arrangements
that may reduce fund expenses. For the period ended January 31, 2005,
Putnam Management did not waive any of its management fee from the fund.
For the period ended January 31, 2005, Putnam Management has assumed
$100,747 of legal, shareholder servicing and communication, audit and
Trustee fees incurred by the fund in connection with certain legal and
regulatory matters (including those described in Note 6).
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company ("PFTC"), a subsidiary of Putnam, LLC. Putnam
Investor Services, a division of PFTC, provides investor servicing agent
functions to the fund. During the six months ended January 31, 2005, the
fund paid PFTC $4,609,697 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 January 31, 2005, the
fund's expenses were reduced by $1,154,470 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $3,862, as a quarterly retainer, has been allocated to the fund,
and an additional fee for each Trustees meeting attended. Trustees
receive additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Trustee compensation and expenses in the
statement of operations. Accrued pension liability is included in
Payable for Trustee compensation and expenses in the statement of assets
and liabilities. The Trustees have terminated the Pension Plan with
respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C, class M and class R shares pursuant to
Rule 12b-1 under the Investment Company Act of 1940. The purpose of the
Plans is to compensate Putnam Retail Management, a wholly-owned
subsidiary of Putnam, LLC and Putnam Retail Management GP, Inc., for
services provided and expenses incurred in distributing shares of the
fund. The Plans provide for payments by the fund to Putnam Retail
Management at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and
1.00% of the average net assets attributable to class A, class B, class
C, class M and class R shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, 0.75% and
0.50% of the average net assets attributable to class A, class B, class
C, class M and class R shares, respectively.
For the six months ended January 31, 2005, Putnam Retail Management,
acting as underwriter, received net commissions of $38,875 and $994 from
the sale of class A and class M shares, respectively, and received
$473,380 and $1,292 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, 2005, Putnam
Retail Management, acting as underwriter, received $887 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, 2005, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $1,161,862,846 and $1,500,791,449, respectively.
There were no purchases or sales of U.S. government securities.
Note 4
Capital shares
At January 31, 2005, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended January 31, 2005
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 22,361,422 $194,885,902
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
22,361,422 194,885,902
Shares repurchased (38,091,319) (329,040,677)
- ----------------------------------------------------------------
Net decrease (15,729,897) $(134,154,775)
- ----------------------------------------------------------------
Year ended July 31, 2004
- ----------------------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------------------
Shares sold 52,144,719 $416,220,764
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
52,144,719 416,220,764
Shares repurchased (142,569,699) (1,144,772,918)
- ----------------------------------------------------------------
Net decrease (90,424,980) $(728,552,154)
- ----------------------------------------------------------------
Six months ended January 31, 2005
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 3,022,027 $23,183,698
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
3,022,027 23,183,698
Shares repurchased (21,777,838) (165,521,075)
- ----------------------------------------------------------------
Net decrease (18,755,811) $(142,337,377)
- ----------------------------------------------------------------
Year ended July 31, 2004
- ----------------------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------------------
Shares sold 10,824,391 $76,296,741
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
10,824,391 76,296,741
Shares repurchased (48,880,377) (347,469,092)
- ----------------------------------------------------------------
Net decrease (38,055,986) $(271,172,351)
- ----------------------------------------------------------------
Six months ended January 31, 2005
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 391,993 $3,338,771
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
391,993 3,338,771
Shares repurchased (730,561) (6,065,049)
- ----------------------------------------------------------------
Net decrease (338,568) $(2,726,278)
- ----------------------------------------------------------------
Year ended July 31, 2004
- ----------------------------------------------------------------
Class C Shares Amount
- ----------------------------------------------------------------
Shares sold 1,135,519 $8,737,768
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
1,135,519 8,737,768
Shares repurchased (3,420,412) (26,426,629)
- ----------------------------------------------------------------
Net decrease (2,284,893) $(17,688,861)
- ----------------------------------------------------------------
Six months ended January 31, 2005
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 507,810 $4,092,730
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
507,810 4,092,730
Shares repurchased (1,549,158) (12,550,148)
- ----------------------------------------------------------------
Net decrease (1,041,348) $(8,457,418)
- ----------------------------------------------------------------
Year ended July 31, 2004
- ----------------------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------------------
Shares sold 1,363,679 $10,215,569
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
1,363,679 10,215,569
Shares repurchased (4,566,185) (33,951,154)
- ----------------------------------------------------------------
Net decrease (3,202,506) $(23,735,585)
- ----------------------------------------------------------------
Six months ended January 31, 2005
- ----------------------------------------------------------------
Class R Shares Amount
- ----------------------------------------------------------------
Shares sold 14,013 $120,107
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
14,013 120,107
Shares repurchased (1,483) (12,090)
- ----------------------------------------------------------------
Net increase 12,530 $108,017
- ----------------------------------------------------------------
Year ended July 31, 2004
- ----------------------------------------------------------------
Class R Shares Amount
- ----------------------------------------------------------------
Shares sold 4,485 $35,969
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
4,485 35,969
Shares repurchased (2) (15)
- ----------------------------------------------------------------
Net increase 4,483 $35,954
- ----------------------------------------------------------------
Six months ended January 31, 2005
- ----------------------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------------------
Shares sold 4,331,775 $38,337,329
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
4,331,775 38,337,329
Shares repurchased (9,237,097) (81,378,323)
- ----------------------------------------------------------------
Net decrease (4,905,322) $(43,040,994)
- ----------------------------------------------------------------
Year ended July 31, 2004
- ----------------------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------------------
Shares sold 20,502,623 $168,424,554
- ----------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions -- --
- ----------------------------------------------------------------
20,502,623 168,424,554
Shares repurchased (64,838,577) (551,898,339)
- ----------------------------------------------------------------
Net decrease (44,335,954) $(383,473,785)
- ----------------------------------------------------------------
Note 5
Investment in Putnam
Prime Money Market Fund
Pursuant to an exemptive order from the Securities and Exchange
Commission, the fund invests in Putnam Prime Money Market Fund, an
open-end management investment company managed by Putnam Management.
Management fees paid by the fund are reduced by an amount equal to the
management fees paid by Putnam Prime Money Market Fund with respect to
assets invested by the fund in Putnam Prime Money Market Fund. For the
period ended January 31, 2005, management fees paid were reduced by
$12,788 relating to the fund's investment in Putnam Prime Money Market
Fund. Income distributions earned by the fund are recorded as income in
the statement of operations and totaled $204,294 for the period ended
January 31, 2005.
Note 6
Regulatory matters and litigation
Putnam Management has entered into agreements with the Securities and
Exchange Commission and the Massachusetts Securities Division settling
charges connected with excessive short-term trading by Putnam employees
and, in the case of the charges brought by the Massachusetts Securities
Division, by participants in some Putnam-administered 401(k) plans.
Pursuant to these settlement agreements, Putnam Management will pay a
total of $193.5 million in penalties and restitution, with $153.5
million being paid to shareholders and the funds. The restitution amount
will be allocated to shareholders pursuant to a plan developed by an
independent consultant, with payments to shareholders currently expected
by the end of the summer.
The SEC's and Massachusetts Securities Division's allegations and
related matters also serve as the general basis for numerous lawsuits,
including purported class action lawsuits filed against Putnam
Management and certain related parties, including certain Putnam funds.
Putnam Management will bear any costs incurred by Putnam funds in
connection with these lawsuits. Putnam Management believes that the
likelihood that the pending private lawsuits and purported class action
lawsuits will have a material adverse financial impact on the fund is
remote, and the pending actions are not likely to materially affect its
ability to provide investment management services to its clients,
including the Putnam funds.
In connection with its investigation of certain brokerage matters, the
staff of the Philadelphia district office of the SEC has raised the
question whether, in years prior to 2004, Putnam Management fully and
effectively disclosed its practices relating to the allocation of
brokerage on mutual fund portfolio transactions to broker-dealers who
sold shares of the funds. Putnam Management ceased directing brokerage
to broker-dealers in connection with the sale of fund shares as of
January 1, 2004. Putnam Management and the Philadelphia office
negotiated an offer of settlement under which Putnam Management would
pay a civil penalty in the amount of $40 million and disgorgement in the
amount of $1, and the total amount would be distributed to certain
Putnam funds. The offer of settlement is subject to final documentation
and approval by the Commissioners and the staff of the SEC. Discussions
with the staff with respect to the offer of settlement are ongoing.
Results of November 11, 2004
and January 10, 2005
shareholder meetings
(Unaudited)
A special meeting of shareholders of the fund was held on November 11,
2004. At that meeting consideration of certain proposals was adjourned
to a final meeting held on January 10, 2005.
November 11, 2004 meeting
At the meeting, each of the nominees for Trustees was elected as
follows:
Votes Votes
For Withheld
- ----------------------------------------------------------------
Jameson A. Baxter 181,188,896 10,977,726
Charles B. Curtis 181,167,026 10,999,596
Myra R. Drucker 181,125,123 11,041,499
Charles E. Haldeman, Jr. 179,365,425 12,801,197
John A. Hill 181,260,797 10,905,825
Ronald J. Jackson 181,237,347 10,929,275
Paul L. Joskow 181,151,834 11,014,788
Elizabeth T. Kennan 181,105,000 11,061,622
John H. Mullin, III 181,130,930 11,035,692
Robert E. Patterson 181,195,962 10,970,660
George Putnam, III 181,072,902 11,093,720
A.J.C. Smith* 180,894,277 11,272,345
W. Thomas Stephens 181,250,490 10,916,132
Richard B. Worley 181,289,016 10,877,606
A proposal to amend the fund's fundamental investment restriction with
respect to diversification of investments to enhance the fund's ability to
invest in registered investment companies such as Putnam Prime Money
Market Fund was approved as follows:
Votes Votes
For Against Abstentions
- ------------------------------------------------------------------------------
139,557,508 6,657,044 45,952,070
January 10, 2005 meeting
A proposal to amend the fund's fundamental investment restriction with
respect to borrowing to allow the fund the investment flexibility
permitted by the Investment Company Act was defeated as follows:
Votes Votes
For Against Abstentions
- ------------------------------------------------------------------------------
128,627,311 15,248,297 53,790,139
A proposal to amend the fund's fundamental investment restriction with
respect to making loans to enhance the fund's ability to participate in an
interfund borrowing and lending program was defeated as follows:
Votes Votes
For Against Abstentions
- ------------------------------------------------------------------------------
129,418,673 14,409,330 53,837,744
A proposal to amend the fund's Agreement and Declaration of Trust to
permit the fund to satisfy redemption requests other than in cash was
defeated as follows:
Votes Votes
For Against Abstentions
- ------------------------------------------------------------------------------
133,596,841 13,643,071 50,425,835
* Mr. Smith resigned from the Board of Trustees on January 14, 2005.
All tabulations are rounded to nearest whole number.
Brokerage commissions
(Unaudited)
Brokerage commissions are paid to firms that execute trades on behalf of
your fund. When choosing these firms, Putnam is required by law to seek
the best execution of the trades, taking all relevant factors into
consideration, including expected quality of execution and commission
rate. Listed below are the largest relationships based upon brokerage
commissions for your fund and the other funds in Putnam's U.S. Small- and
Mid-Cap group for the year ended January 31, 2005. The other Putnam mutual
funds in this group are Putnam Capital Opportunities Fund, Putnam
Discovery Growth Fund, Putnam Mid Cap Value Fund, Putnam New Opportunities
Fund, Putnam OTC & Emerging Growth Fund, Putnam Small Cap Growth Fund,
Putnam Small Cap Value Fund, Putnam VT Capital Opportunities Fund, Putnam
VT Discovery Growth Fund, Putnam VT Mid Cap Value Fund, Putnam VT New
Opportunities Fund, Putnam VT OTC & Emerging Growth Fund, Putnam VT Small
Cap Value Fund, and Putnam VT Vista Fund.
The top five firms that received brokerage commissions for trades executed
for the U.S. Small- and Mid-Cap group are (in descending order) Citigroup
Global Markets, Goldman Sachs, JP Morgan Clearing, Merrill Lynch, and SG
Cowen. Commissions paid to these firms together represented approximately
36% of the total brokerage commissions paid for the year ended January 31,
2005.
Commissions paid to the next 10 firms together represented approximately
38% of the total brokerage commissions paid during the period. These firms
are (in alphabetical order) Bank of America, Bear Stearns & Co., Credit
Suisse First Boston, Deutsche Bank Securities, Lazard Freres & Co., Lehman
Brothers, Morgan Stanley Dean Witter, RBC Capital Markets, UBS Warburg,
and Wachovia Securities.
Additional information about brokerage commissions is available on the
Securities and Exchange Commission (SEC) Web site at www.sec.gov. Putnam
funds disclose commissions by firm to the SEC in semiannual filings on
form N-SAR.
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds.
Investors should carefully consider the investment objective, risks,
charges, and expenses of a fund before investing. For a prospectus
containing this and other information for any Putnam fund or product, call
your financial advisor at 1-800-225-1581 and ask for a prospectus. Please
read the prospectus carefully before investing.
Growth Funds
Discovery Growth Fund
Growth Opportunities Fund
Health Sciences Trust
International New Opportunities Fund*
New Opportunities Fund
OTC & Emerging Growth Fund
Small Cap Growth Fund
Vista Fund
Voyager Fund
Blend Funds
Capital Appreciation Fund
Capital Opportunities Fund
Europe Equity Fund*
Global Equity Fund*
Global Natural Resources Fund*
International Capital
Opportunities Fund*
International Equity Fund*
Investors Fund
Research Fund
Tax Smart Equity Fund
Utilities Growth and Income Fund
Value Funds
Classic Equity Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth
and Income
International Growth and Income Fund*
Mid Cap Value Fund
New Value Fund
Small Cap Value Fund+
Income Funds
American Government Income Fund
Diversified Income Trust
Floating Rate Income Fund
Global Income Trust*
High Yield Advantage Fund*+
High Yield Trust*
Income Fund
Limited Duration Government
Income Fund++
Money Market Fund [SECTION MARK]
U.S. Government Income Trust
* A 1% redemption fee on total assets redeemed or exchanged
between 6 and 90 days of purchase may be imposed for all
share classes of these funds.
+ Closed to new investors.
++ Formerly Putnam Intermediate U.S. Government Income Fund.
[SECTION MARK] An investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to
preserve your investment at $1.00 per share, it is possible
to lose money by investing in the fund.
The Putnam family of funds
Tax-free Income Funds
AMT-Free Insured Municipal Fund**
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund [SECTION MARK]
Tax-Free High Yield Fund
State tax-free income funds:
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio, and Pennsylvania
Asset Allocation Portfolios
Putnam Asset Allocation Portfolios--three investment portfolios that
spread your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
Putnam RetirementReady [REGISTRATION MARK] Funds
Putnam RetirementReady Funds -- nine investment portfolios that offer
diversification among stocks, bonds, and money market instruments and
adjust to become more conservative over time based on a target date for
withdrawing assets.
The nine portfolios:
Putnam RetirementReady 2045 Fund
Putnam RetirementReady 2040 Fund
Putnam RetirementReady 2035 Fund
Putnam RetirementReady 2030 Fund
Putnam RetirementReady 2025 Fund
Putnam RetirementReady 2020 Fund
Putnam RetirementReady 2015 Fund
Putnam RetirementReady 2010 Fund
Putnam RetirementReady Maturity Fund
** Formerly Putnam Tax-Free Insured Fund.
With the exception of money market funds, a 2%
redemption fee will be applied to shares exchanged
or sold within 5 days of purchase.
Check your account balances and the most recent
month-end performance at www.putnaminvestments.com.
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. In addition, a 2% redemption fee will be
applied to shares exchanged or sold within 5 days of purchase, and certain
funds have imposed a 1% redemption fee on total assets redeemed or
exchanged between 6 and 90 days of purchase.
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
Myra R. Drucker
Charles E. Haldeman, Jr.
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
George Putnam, III
W. Thomas Stephens
Richard B. Worley
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President,
Associate Treasurer and
Principal Executive Officer
Jonathan S. Horwitz
Senior Vice President
and Treasurer
Steven D. Krichmar
Vice President and
Principal Financial Officer
Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer
Daniel T. Gallagher
Vice President and Legal and
Compliance Liaison Officer
Beth S. Mazor
Vice President
James P. Pappas
Vice President
Richard S. Robie, III
Vice President
Mark C. Trenchard
Vice President and
BSA Compliance Officer
Francis J. McNamara, III
Vice President and
Chief Legal Officer
Charles A. Ruys de Perez
Vice President and
Chief Compliance Officer
Judith Cohen
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam 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 carefully consider the investment objective, risks, charges, and
expenses of a fund, which are described in its prospectus. For this and
other information or to request a prospectus, call 1-800-225-1581 toll
free. Please read the prospectus carefully before investing. The fund's
Statement of Additional Information contains additional information
about the fund's Trustees and is available without charge upon request
by calling 1-800-225-1581.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
Call 1-800-225-1581 or visit our Web site
www.putnaminvestments.com.
SA015-220210 3/05
Not FDIC Insured May Lose Value No Bank Guarantee
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ----------------------------------------------------------------------------
Putnam Vista Fund
Supplement to Semiannual Report dated 1/31/05
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
- ----------------------------------------------------------------------------
Total return for periods ended 1/31/05
NAV
6 months 15.73%
1 year 12.88
5 years -29.09
Annual average -6.64
10 years 172.95
Annual average 10.56
Life of fund (since class A inception, 6/3/68)
Annual average 9.88
Share value: NAV
7/31/04 $8.33
1/31/05 $9.64
- ----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
-- -- -- --
- ----------------------------------------------------------------------------
Data represents past performance. Past performance does not guarantee
future results. More recent returns may be less or more than those shown.
Investment return and principal value will fluctuate and you may have a
gain or a loss when you sell your shares. For the most recent month-end
performance, please visit www.putnaminvestments.com.
Performance assumes reinvestment of distributions and does not account for
taxes. Returns shown for class Y shares for periods prior to their
inception (3/28/95) 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. Returns have not been adjusted to reflect
differences in operating expenses which, for class Y shares, are lower than
the operating expenses applicable to class A shares. 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.
A short-term trading fee of up to 2% may apply.
Please see pages 13-14 of the accompanying shareholder report for a
discussion of the information appearing in the tables below:
- ----------------------------------------------------------------------------
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming actual returns for the 6 months ended 1/31/05
Class Y
Expenses paid per $1,000* $4.79
Ending value (after expenses) $1,157.30
- ----------------------------------------------------------------------------
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return
for the 6 months ended 1/31/05
Class Y
Expenses paid per $1,000* $4.48
Ending value (after expenses) $1,020.77
- ----------------------------------------------------------------------------
EXPENSE RATIO COMPARISON USING ANNUALIZED DATA
Your fund's annualized expense ratio 0.88%
Average annualized expense ratio for Lipper peer group + 1.31%
+ For class Y shares, Putnam has adjusted the Lipper total expense average
to reflect that class Y shares do not incur 12b-1 fees.
- ----------------------------------------------------------------------------
Item 2. Code of Ethics:
- -----------------------
Not applicable
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Item 5. Audit Committee: Not applicable
- -------------------------
Item 6. Schedule of Investments: Not applicable
- --------------------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. Purchases of Equity Securities by Closed-End Management Investment
- --------------------------------------------------------------------------
Companies and Affiliated Purchasers: Not applicable
------------------------------------
Item 9. Submission of Matters to a Vote of Security Holders:
- ------------------------------------------------------------
Not applicable
Item 10. Controls and Procedures:
- ---------------------------------
(a) The registrant's principal executive officer and principal
financial officer have concluded, based on their evaluation of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as of a date within 90 days of
the filing date of this report, that the design and operation of
such procedures are generally effective to provide reasonable
assurance that information required to be disclosed by the registrant
in this report is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms.
(b) Changes in internal control over financial reporting:
Not applicable
Item 11. Exhibits:
- ------------------
(a) Not applicable
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act
of 2002 are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: March 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Executive Officer
Date: March 28, 2005
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: March 28, 2005