Item 1. Report to Stockholders:
- -------------------------------
The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
Putnam
Vista
Fund
7 | 31 | 05
Annual Report
[SCALE LOGO OMITTED]
PUTNAM INVESTMENTS
[GRAPHIC OMITTED: VINEYARD]
GROWTH FUNDS
look for stocks of
companies that
have the potential
to grow over time.
What makes Putnam different?
[GRAPHIC OMITTED: FOUNDER]
In 1830, Massachusetts Supreme Judicial Court Justice Samuel Putnam
established The Prudent Man Rule, a legal foundation for responsible money
management.
THE PRUDENT MAN RULE
All that can be required of a trustee to invest is that he shall conduct
himself faithfully and exercise a sound discretion. He is to observe how men
of prudence, discretion, and intelligence manage their own affairs, not in
regard to speculation, but in regard to the permanent disposition of their
funds, considering the probable income, as well as the probable safety of
the capital to be invested.
[GRAPHIC OMITTED: SIGNATURE, JUSTICE SAMUEL PUTNAM 1830]
A time-honored tradition
in money management
Since 1937, our values have been rooted in a profound sense of
responsibility for the money entrusted to us.
A prudent approach to investing
We use a research-driven team approach to seek consistent, dependable,
superior investment results over time, although there is no guarantee a
fund will meet its objectives.
Funds for every investment goal
We offer a broad range of mutual funds and other financial products so
investors and their advisors can build diversified portfolios.
A commitment to doing
what's right for investors
We have below-average expenses and stringent investor protections, and
provide a wealth of information about the Putnam funds.
Industry-leading service
We help investors, along with their financial advisors, make informed
investment decisions with confidence.
Putnam
Vista
Fund
7 | 31 | 05
Annual Report
Message from the Trustees 2
About the fund 4
Report from the fund managers 7
Performance 12
Expenses 15
Portfolio turnover 17
Risk 18
Your fund's management 19
Terms and definitions 22
Trustee approval of management contract 24
Other information for shareholders 29
Financial statements 30
Federal tax information 56
Brokerage commissions 57
About the Trustees 58
Officers 64
Cover photograph: Vineyard, Napa County, California [C] Charles O'Rear
Message from the Trustees
Dear Fellow Shareholder
During the period ended July 31, 2005, the stock market has continued to
show confidence in the strength of the economy and corporate profits, even
as the Federal Reserve Board's more restrictive monetary policy, along
with high energy prices, has begun to influence the performance of bonds
and the pace of expansion. Abroad, stocks have performed even better than
in the United States, despite weaker economic growth in most developed
markets. However, the recent strength of the U.S. dollar against foreign
currencies partially offset the effects of these gains. And in the last
three weeks, investors have just begun to assess the magnitude of
Hurricane Katrina's impact and how it will affect the U.S. economy. Amid
the uncertainties of this environment, the in-depth, professional research
and active management that mutual funds can provide make them an
intelligent choice for today's investors.
We want you to know that Putnam Investments' management team, under the
leadership of Chief Executive Officer Ed Haldeman, continues to focus on
investment performance and remains committed to putting the interests of
shareholders first. In keeping with these goals, we have redesigned and
expanded our shareholder reports to make it easier for you to learn more
about your fund. Furthermore, on page 24 we provide information about the
2005 approval by the Trustees of your fund's management contract with
Putnam.
We would also like to take this opportunity to announce the retirement of
one of your fund's Trustees, Ronald J. Jackson, who has been an
independent Trustee of the Putnam funds since 1996. We thank him for his
service.
In the following pages, members of your fund's management team discuss the
fund's performance, strategies, and their outlook for the months ahead. As
always, we thank you for your support of the Putnam funds.
Respectfully yours,
/S/GEORGE PUTNAM, III
George Putnam, III
President of the Funds
/S/JOHN A. HILL
John A. Hill
Chairman of the Trustees
September 21, 2005
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM, III AND JOHN A. HILL]
Putnam Vista Fund: Midsize growth companies
have offered investors compelling opportunities
Despite enduring its share of challenges throughout the past 37 years,
over time Putnam Vista Fund has rewarded long-term investors for their
persistence. The growth chart below not only illustrates the effectiveness
of the fund's strategies, but it also demonstrates the potential of the
midsize growth stocks it invests in.
There are several key reasons why this type of stock can offer investors
compelling opportunities:
First, stocks of midsize companies -- also called mid-capitalization or
mid-cap stocks -- are more stable than small-cap stocks. By the time a
company's capitalization qualifies it as mid-cap, it is generally large
enough to have developed a solid infrastructure, including professional
management, a comprehensive business plan, and a mature sales and
marketing structure. It has typically weathered a full economic cycle.
These characteristics generally enable midsize companies to offer
investors a greater degree of stability than that offered by smaller, less
mature companies.
Second, mid-cap stocks generally have greater price inefficiencies than
large-cap stocks. While midsize companies may have many of the same business
characteristics as large companies, fewer analysts generally follow their
stocks. This makes mid-cap stocks less efficiently priced and means that
extensive research capabilities, such as those employed by your fund's
management team, can help identify promising midsize companies before the
market recognizes their potential.
Third, midsize companies are frequently candidates for acquisition, which
could have a positive impact on their stock prices. Buyers find the
established business models and well-defined market niches of some midsize
companies appealing.
The fund invests some or all of its assets in small and/or midsize
companies. Such investments increase the risk of greater price
fluctuations.
Attractive growth rates, inefficient pricing, and acquisition potential
are a few reasons to consider mid-cap growth stocks.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
Growth of a $10,000 investment ($9,475 after sales charge) since fund
inception, 6/3/68 through 6/30/05
Plotted on a logarithmic scale so that comparable percentage changes
appear similar
$9,475 $298,424
9.59%
annualized return
at POP
ANNUALIZED TOTAL RETURN PERFORMANCE
Class A shares POP
- -----------------------------------------------------------
Life of fund (inception 6/3/68) 9.59%
- -----------------------------------------------------------
10 years 7.95
- -----------------------------------------------------------
5 years -10.66
- -----------------------------------------------------------
1 year 4.63
[GRAPHICS OMITTED: MAN ON MOON, GAS PUMP, SPACE SHUTTLE, CD, BERLIN WALL,
STOCK EXCHANGE FLOOR, ARMY TANK]
1969
First moon landing
1971
Dow Jones breaks 1000
1973
Oil embargo leads to record high oil prices and gas rationing
1977
President Carter proposes nuclear non-proliferation act
1981
First space shuttle launched
1983
CDs introduced; vinyl record sales begin steep decline
1987
Stock market crashes
1989
Fall of the Berlin Wall
1992
Unemployment hits 9-year high
1995
Dow Jones breaks 5000
2001
Terrorists attack New York and Washington, DC
2003
Iraq War begins
Data is historical. Past performance is not a guarantee of 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,
visit www.putnam.com.
Performance assumes reinvestment of distributions and does not account for
taxes. Returns at public offering price (POP) for class A shares reflect a
sales charge of 5.25%. Returns for other classes of shares may vary. A
short-term trading fee of up to 2% may apply. The period illustrated is
longer than the investment horizon of many investors.
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.
- ------------------------------------------------------------------------------
Highlights
* For the 12 months ended July 31, 2005, Putnam Vista Fund's class A shares
had a total return of 25.75% without sales charges.
* The fund's benchmark, the Russell Midcap Growth Index, returned 25.65%.
* The average return for the fund's Lipper category, Mid-Cap Growth Funds,
was 22.58%
* Additional fund performance, comparative performance, and Lipper data can
be found in the performance section beginning on page 12.
- ------------------------------------------------------------------------------
Performance
Total return for class A shares for periods ended 7/31/05
Since the fund's inception (6/3/68), average annual return is 9.92% at NAV
and 9.76% at POP.
- ------------------------------------------------------------------------
Annualized annual return Cumulative return
NAV POP NAV POP
- ------------------------------------------------------------------------
10 years 8.36% 7.78% 123.16% 111.47%
- ------------------------------------------------------------------------
5 years -7.38 -8.38 -31.86 -35.44
- ------------------------------------------------------------------------
1 year 25.75 19.08 25.75 19.08
- ------------------------------------------------------------------------
Data is historical. Past performance does not guarantee future results.
More recent returns may be less or more than those shown. Investment
return and principal value will fluctuate and you may have a gain or a
loss when you sell your shares. Performance assumes reinvestment of
distributions and does not account for taxes. Returns at NAV do not
reflect a sales charge of 5.25%. For the most recent month-end
performance, visit www.putnam.com. A short-term trading fee of up to 2%
may apply.
Report from the fund managers
The year in review
Stocks of midsize companies participated in the market's rally for the 12
months ended July 31, 2005, posting strong returns and outperforming
large- and small-cap stocks. Given its emphasis on midsize companies that
offer a blend of growth, quality, and value opportunities, Putnam Vista
Fund's performance for the fiscal year reflected this strength. Based on
results at net asset value, your fund was in line with its benchmark index
and outperformed the average for its peer group, Lipper Mid-Cap Growth
Funds. We attribute this outperformance to effective stock selection,
particularly in the technology, health-care, and consumer cyclical
sectors. One aerospace and defense industry holding, which we had
overweighted relative to the benchmark, was especially rewarding,
delivering triple-digit performance for the fiscal year.
Market overview
While we saw a slowing in the pace of the stock market's rally in the
second half of the fund's fiscal year, the state of the U.S. economy
remains strong, in our opinion. The economy grew at a 3.8% pace in the
first quarter of 2005, which was higher than originally estimated. The
second quarter saw gross domestic product (GDP) increase at a rate of
3.4%. Given the strength in the housing sector, we think the economy will
maintain momentum going into the second half of the year.
Overall, while wage growth is still fairly slow and job growth is only
moderate, we believe the job market is moving in the right direction, both
in terms of quality and quantity. With interest rates relatively low, we
think corporate profits should continue to increase at a respectable pace
for the balance of 2005. More importantly, perhaps, is that the current
level of profits is extremely high by historical standards. Indeed, in the
first quarter of 2005, the govern ment's estimate of pre-tax profits was 11%
of GDP -- the highest profit share of output seen in more than 50 years.
This profit output appears to more than justify the current level of the
stock market given low interest rates, low inflation, and low taxes on both
dividends and capital gains.
With the steep rise in the cost of a barrel of oil, fuel prices seem high
given current levels of inventories. What remains to be seen is how
elevated prices will affect U.S. consumption.
Strategy overview
The stocks in your fund's portfolio offer a strategically balanced
combination of growth, quality, and valuation characteristics, which was key
to the strong performance results during the past year. Since any one or all
three of these attributes can be in favor within the growth stock universe
at any given time, maintaining the flexibility to emphasize one over the
others allows the fund to pursue more consistent excess returns over time.
Furthermore, we think this approach helps to insulate the fund from stock
market swings by helping to mitigate negative factors in down markets and to
maximize returns in up markets.
We consider mid-cap stocks a very desirable asset class, because they are
fairly well established but continue to offer rapid growth potential.
Typically, they offer a greater degree of stability than small-cap stocks
and faster growth potential than large-cap stocks. Increased transparency
and better accounting and reporting are helping investors follow this
segment of the stock market with greater ease and understanding.
Our research strategies are designed to discover midsize companies that are
leaders in their businesses with dominant market share or a proprietary
technology. By being early to invest, before the rest of the market
recognizes their potential, we believe we can capture growth appreciation.
The fund's management team employs strict sell discipline to lock in profits
and maintain the appropriate risk profile.
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Market sector performance
These indexes provide an overview of performance in different market
sectors for the 12 months ended 7/31/05.
- ----------------------------------------------------------------------------
Equities
- ----------------------------------------------------------------------------
Russell Midcap Growth Index (midsize-company growth stocks) 25.65%
- ----------------------------------------------------------------------------
S&P 500 Index (broad stock market) 14.05%
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Russell 2000 Index (small-company stocks) 24.78%
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MSCI EAFE Index (international stocks) 21.06%
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Bonds
- ----------------------------------------------------------------------------
Lehman Municipal Bond Index (tax-exempt bonds) 6.36%
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Lehman Aggregate Bond Index (broad bond market) 4.79%
- ----------------------------------------------------------------------------
Lehman Global Aggregate Bond Index (international bonds) 6.67%
Your fund's holdings
United Defense Industries, which makes products for conventional warfare,
was one of the fund's biggest contributors to performance for the fiscal
year. (As noted on page 7 of this report, the stock delivered triple-digit
performance during the period.) We'd purchased the stock based on its
attractive price and the company's high-quality management. The stock
appreciated strongly on its own merits but received an added boost when BAE
Systems announced it would buy the company. We sold the position in March at
a substantial profit. PacifiCare Health Systems, which provides managed care
for employer groups and Medicare beneficiaries, is implementing programs to
boost membership and control costs. These strategies, combined with
management's ability to increase prices, have contri buted to higher
earnings year over year, making this holding another one of the
best-performing stocks in the portfolio.
Three more holdings that blend growth, quality, and valuation potential were
strong performers. NVR, one of the nation's largest homebuilding and
mortgage banking companies, has been able to raise prices that more than
offset increasing material and land costs. Late in July, management
announced a stock repurchase program, which is contributing to the strength
of its stock. As one of the few refiners in the United States, Sunoco is
benefiting from higher oil prices. The company's outlook remains favorable
considering its commitment to investing and growing assets. Sunoco announced
a two-for-one split of the company's common stock just following the close
of the fund's fiscal year. Finally, American Eagle Outfitters, which sells
its own brand of high-quality, stylish, casual clothing, footwear, and
accessories for 15 to 25 year olds, also announced a two-for-one stock split
of its common stock last February. Same-store sales have been very strong,
driving earnings growth higher than expected.
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[GRAPHIC OMITTED: horizontal bar chart COMPARISON OF TOP INDUSTRY WEIGHTINGS]
Comparison of top industry weightings
This chart shows how the fund's top weightings have changed over the last
six months. Weightings are shown as a percentage of net assets. Holdings
will vary over time.
as of 1/31/05 as of 7/31/05
Retail 7.5% 11.5%
- ---------------------------------------------------------------------------
Medical technology 8.3% 8.9%
- ---------------------------------------------------------------------------
Oil and gas 3.7% 7.0%
- ---------------------------------------------------------------------------
Electronics 6.8% 5.7%
- ---------------------------------------------------------------------------
Software 8.6% 5.6%
- ---------------------------------------------------------------------------
While the fund's performance was very positive, there were some
disappointments. Unlike NVR, chemical company Georgia Gulf has been
negatively affected by higher commodity prices. Although the stock is
attractive on a valuation basis, we think the company will be unable to
overcome the higher input costs and have started trimming the position
accordingly. Our decision to overweight Linear Technology was beneficial
when the semiconductor sector began to recover during the fiscal year.
However, our decision to limit the fund's exposure to this volatile industry
and not invest in other semiconductor companies curbed the fund's ability to
participate in the sector's recovery.
- -------------------------------------------------------------------------------
Top holdings
This table shows the fund's top holdings, and the percentage of the fund's
net assets that each comprised, as of 7/31/05. The fund's holdings will
change over time.
- -------------------------------------------------------------------------------
Holding (percent of fund's
net assets) Industry
- -------------------------------------------------------------------------------
Burlington Resources, Inc. (2.2%) Oil and gas
- -------------------------------------------------------------------------------
Genzyme Corp. (2.2%) Biotechnology
- -------------------------------------------------------------------------------
Staples, Inc. (2.1%) Retail
- -------------------------------------------------------------------------------
Sunoco, Inc. (2.0%) Oil and gas
- -------------------------------------------------------------------------------
Linear Technology Corp. (1.9%) Electronics
- -------------------------------------------------------------------------------
Black & Decker Manufacturing Co. (1.9%) Consumer cyclicals
- -------------------------------------------------------------------------------
Apple Computer, Inc. (1.8%) Computers
- -------------------------------------------------------------------------------
Claire's Stores, Inc. (1.7%) Retail
- -------------------------------------------------------------------------------
American Eagle Outfitters, Inc. (1.7%) Retail
- -------------------------------------------------------------------------------
BJ Services Co. (1.7%) Energy
- -------------------------------------------------------------------------------
Perhaps the biggest drawback for the year was our decision to underweight
Apple Computer. Apple continues to lead the industry in innovation with
products like its next-generation Mighty Mouse and continues to spearhead
the digital music revolution with its iPod portable music players and iTunes
online music stores. While we were optimistic about Apple's growth
prospects, we thought the stock was expensive and limited the fund's
exposure. In hindsight, we underestimated the company's growth potential.
Given Apple's tremendous growth, the company's market capitalization has
risen substantially, placing it outside the realm of your fund's investment
universe of mid-cap stocks.
Please note that all holdings discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
- -------------------------------------------------------------------------------
The outlook for your fund
The following commentary reflects anticipated developments that could
affect your fund over the next six months, as well as your management
team's plans for responding to them.
As the fund enters a new fiscal year, we believe the U.S. economy is in
good shape. Economic growth appears solid, unemployment has fallen,
profits are high and still growing, and inflation is relatively low.
Appreciation in the housing and commodities markets, as well as the
relative stability of the bond market, have diverted many investors,
reducing cash inflows into the stock market and contributing to a general
lack of retail interest. In our opinion, this trend has pushed prices in
the bond, commodity, and housing markets to unreasonable extremes, and we
think it will be more of a challenge to achieve gains in each of these
areas going forward. As investors reassess valuation opportunities and
risks, they may recalibrate their portfolios toward more undervalued
investment opportunities in the stock market.
After a multi-year rally in value stocks, we think growth stocks are
beginning to look more affordable relative to value stocks. And mid-cap
growth stocks, with their favorable risk/return profile, offer attractive
valuations. This, we think, will be key to their growth potential over the
next fiscal year, as it has been in the year just past.
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 performance
This section shows your fund's performance during its fiscal year, which
ended July 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.putnam.com.
- ----------------------------------------------------------------------------------------------------------
Fund performance
Total return for periods ended 7/31/05
- ----------------------------------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
(inception dates) (6/3/68) (3/1/93) (7/26/99) (12/8/94) (1/21/03)
- ----------------------------------------------------------------------------------------------------------
NAV POP NAV CDSC NAV CDSC NAV POP NAV
- ----------------------------------------------------------------------------------------------------------
Annual average
(life of fund) 9.92% 9.76% 8.92% 8.92% 9.09% 9.09% 9.20% 9.10% 9.65%
- ----------------------------------------------------------------------------------------------------------
10 years 123.16 111.47 107.00 107.00 107.07 107.07 112.65 105.28 117.95
Annual average 8.36 7.78 7.55 7.55 7.55 7.55 7.84 7.46 8.10
- ----------------------------------------------------------------------------------------------------------
5 years -31.86 -35.44 -34.37 -35.37 -34.38 -34.38 -33.48 -35.82 -32.61
Annual average -7.38 -8.38 -8.08 -8.36 -8.08 -8.08 -7.83 -8.49 -7.59
- ----------------------------------------------------------------------------------------------------------
1 year 25.75 19.08 24.72 19.72 24.74 23.74 25.17 20.82 25.44
- ----------------------------------------------------------------------------------------------------------
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 (which for class M
shares does not reflect a reduction in sales charges that went into effect
on April 1, 2005; if this reduction had been in place for all periods
indicated, returns would have been higher). Class B share returns reflect
the applicable contingent deferred sales charge (CDSC), which is 5% in the
first year, declining to 1% in the sixth year, and is eliminated thereafter.
Class C shares reflect a 1% CDSC the first year that is eliminated
thereafter. Class R 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.
- -------------------------------------------------------------------------
Change in the value of a $10,000 investment ($9,475 after sales charge)
Cumulative total return from 7/31/95 to 7/31/05
Putnam
Vista
Fund
class A shares Russell Midcap
at POP Growth Index
7/31/95 9,475 10,000
7/31/96 11,053 10,725
7/31/97 15,060 14,982
7/31/98 17,605 16,230
7/31/99 20,259 19,751
7/31/00 31,034 28,394
7/31/01 19,286 19,361
7/31/02 13,178 13,808
7/31/03 14,893 17,005
7/31/04 16,817 19,520
7/31/05 $21,147 $24,528
Past performance does not indicate future results. At the end of the same
time period, a $10,000 investment in the fund's class B and class C shares
would have been valued at $20,700 and $20,707, respectively, and no
contingent deferred sales charges would apply. A $10,000 investment in the
fund's class M shares would have been valued at $21,265 ($20,528 at public
offering price). A $10,000 investment in the fund's class R shares would
have been valued at $21,795. See first page of performance section for
performance calculation method.
- -------------------------------------------------------------------------
Comparative index returns
For periods ended 7/31/05
- -------------------------------------------------------------------------
Lipper Mid-Cap
Russell Midcap Growth Funds
Growth Index* category average+
- -------------------------------------------------------------------------
Annual average
(life of fund) -- 9.27%
- -------------------------------------------------------------------------
10 years 145.28% 125.03
Annual average 9.39 8.06
- -------------------------------------------------------------------------
5 years -13.62 -10.58
Annual average -2.89 -3.18
- -------------------------------------------------------------------------
1 year 25.65 22.58
- -------------------------------------------------------------------------
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 1-, 5-, and 10-year periods ended 7/31/05 there were 532,
317, and 115 funds, respectively, in this Lipper category.
- -------------------------------------------------------------------------------
Fund price and distribution* information
For the 12-month period ended 7/31/05
- -------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
- -------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP NAV
- -------------------------------------------------------------------------------
7/31/04 $8.04 $8.49 $7.08 $7.72 $7.51 $7.78 $8.02
- -------------------------------------------------------------------------------
7/31/05 10.11 10.67 8.83 9.63 9.40 9.72+ 10.06
- -------------------------------------------------------------------------------
* The fund made no distributions during the period.
+ Reflects a reduction in sales charges that took effect on April 1, 2005.
- -----------------------------------------------------------------------------------------------------------
Fund performance for most recent calendar quarter
Total return for periods ended 6/30/05
- -----------------------------------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
(inception dates) (6/3/68) (3/1/93) (7/26/99) (12/8/94) (1/21/03)
- -----------------------------------------------------------------------------------------------------------
NAV POP NAV CDSC NAV CDSC NAV POP NAV
- -----------------------------------------------------------------------------------------------------------
Annual average
(life of fund) 9.75% 9.59% 8.76% 8.76% 8.93% 8.93% 9.04% 8.93% 9.49%
- -----------------------------------------------------------------------------------------------------------
10 years 126.66 114.83 110.33 110.33 110.34 110.34 115.72 108.13 121.63
Annual average 8.53 7.95 7.72 7.72 7.72 7.72 7.99 7.61 8.28
- -----------------------------------------------------------------------------------------------------------
5 years -39.94 -43.10 -42.13 -43.01 -42.12 -42.12 -41.43 -43.48 -40.56
Annual average -9.69 -10.66 -10.36 -10.64 -10.36 -10.36 -10.15 -10.78 -9.88
- -----------------------------------------------------------------------------------------------------------
1 year 10.48 4.63 9.79 4.79 9.70 8.70 9.84 6.01 10.27
- -----------------------------------------------------------------------------------------------------------
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 February 1, 2005, to July 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.
- -------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
- -------------------------------------------------------------------------------
Expenses paid per $1,000* $5.49 $9.35 $9.35 $8.07 $6.78
- -------------------------------------------------------------------------------
Ending value
(after expenses) $1,088.30 $1,083.40 $1,083.20 $1,085.50 $1,086.40
- -------------------------------------------------------------------------------
* 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 7/31/05. 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 July
31, 2005, use the calculation method below. To find the value of your
investment on February 1, 2005, go to www.putnam.com and log on to your
account. Click on the "Transaction History" tab in your Daily Statement
and enter 02/01/2005 in both the "from" and "to" fields. Alternatively,
call Putnam at 1-800-225-1581.
- ----------------------------------------------------------------------------
How to calculate the expenses you paid
- ----------------------------------------------------------------------------
Total
Value of your Expenses paid = expenses
investment on 2/1/05 [DIV] $1,000 x per $1,000 paid
- ----------------------------------------------------------------------------
Example Based on a $10,000 investment in class A shares of your fund.
- ----------------------------------------------------------------------------
$10,000 [DIV] $1,000 x $5.49 (see table above) = $54.90
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Compare expenses using the SEC's method
The Securities and Exchange Commission (SEC) has established guidelines to
help investors assess fund expenses. Per these guidelines, the table below
shows your fund's expenses based on a $1,000 investment, assuming a
hypothetical 5% annualized return. You can use this information to compare
the ongoing expenses (but not transaction expenses or total costs) of
investing in the fund with those of other funds. All mutual fund
shareholder reports will provide this information to help you make this
comparison. Please note that you cannot use this information to estimate
your actual ending account balance and expenses paid during the period.
- ------------------------------------------------------------------------------
Class A Class B Class C Class M Class R
- ------------------------------------------------------------------------------
Expenses paid per
$1,000* $5.31 $9.05 $9.05 $7.80 $6.56
- ------------------------------------------------------------------------------
Ending value (after
expenses) $1,019.54 $1,015.82 $1,015.82 $1,017.06 $1,018.30
- ------------------------------------------------------------------------------
* 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 7/31/05.
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.
- ----------------------------------------------------------------------------
Compare expenses using industry averages
You can also compare your fund's expenses with the average of its peer
group, as defined by Lipper, an independent fund-rating agency that ranks
funds relative to others that Lipper considers to have similar investment
styles or objectives. The expense ratio for each share class shown below
indicates how much of your fund's net assets have been used to pay ongoing
expenses during the period.
- ----------------------------------------------------------------------------
Class A Class B Class C Class M Class R
- ----------------------------------------------------------------------------
Your fund's annualized
expense ratio+ 1.06% 1.81% 1.81% 1.56% 1.31%
- ----------------------------------------------------------------------------
Average annualized expense
ratio for Lipper peer group++ 1.52% 2.27% 2.27% 2.02% 1.77%
- ----------------------------------------------------------------------------
+ For the fund's most recent fiscal half year; may differ from expense
ratios based on one-year data in the financial highlights.
++ Simple average of the expenses of all front-end load funds in the fund's
Lipper peer group, calculated in accordance with Lipper's standard method
for comparing fund expenses (excluding 12b-1 fees and without giving effect
to any expense offset and brokerage service arrangements that may reduce
fund expenses). This average reflects each fund's expenses for its most
recent fiscal year available to Lipper as of 6/30/05. 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 smaller or larger than the fund, which may limit the
comparability of the fund's expenses to the simple average, which typically
is higher than the asset-weighted average.
Your fund's portfolio turnover
Putnam funds are actively managed by teams of experts who buy and sell
securities based on intensive analysis of companies, industries,
economies, and markets. Portfolio turnover is a measure of how often a
fund's managers buy and sell securities for your fund. A portfolio
turnover of 100%, for example, means that the managers sold and replaced
securities valued at 100% of a fund's assets within a one-year period.
Funds with high turnover may be more likely to generate capital gains and
dividends that must be distributed to shareholders as taxable income. High
turnover may also cause a fund to pay more brokerage commissions and other
transaction costs, which may detract from performance.
- ----------------------------------------------------------------------------
Turnover comparisons
Percentage of holdings that change every year
- ----------------------------------------------------------------------------
2005 2004 2003 2002 2001
- ----------------------------------------------------------------------------
Putnam Vista Fund 74% 78% 65% 89% 109%
- ----------------------------------------------------------------------------
Lipper Mid-Cap Growth
Funds category average 131% 131% 141% 172% 170%
- ----------------------------------------------------------------------------
Turnover data for the fund is calculated based on the fund's fiscal-year
period, which ends on July 31. Turnover data for the fund's Lipper category
is calculated based on the average of the turnover of each fund in the
category for its fiscal year ended during the indicated year. Fiscal years
vary across funds in the Lipper category, which may limit the comparability
of the fund's portfolio turnover rate to the Lipper average. Comparative
data for 2005 is based on information available as of 6/30/05.
Your fund's risk
This risk comparison is designed to help you understand how your fund
compares with other funds. The comparison utilizes a risk measure
developed by Morningstar, an independent fund-rating agency. This risk
measure is referred to as the fund's Overall Morningstar Risk.
- ----------------------------------------------------------------------------
Your fund's Overall Morningstar Risk
Your fund's Overall Morningstar Risk is shown alongside that of the
average fund in its broad asset class, as determined by Morningstar. The
risk bar broadens the comparison by translating the fund's Overall
Morningstar Risk into a percentile, which is based on the fund's ranking
among all funds rated by Morningstar as of June 30, 2005. A higher Overall
Morningstar Risk generally indicates that a fund's monthly returns have
varied more widely.
[GRAPHIC OMITTED: chart MORNINGSTAR RISK]
Fund's Overall
Morningstar Risk 5.97
U.S. stock
fund average 3.10
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.
Your fund's management
Your fund is managed by the members of the Putnam Mid-Cap Growth Team.
Kevin Divney is the Portfolio Leader and Brian DeChristopher is a
Portfolio Member of your fund. The Portfolio Leader and Portfolio Member
coordinate the team's management of the fund.
For a complete listing of the members of the Putnam Mid-Cap Growth Team,
including those who are not Portfolio Leaders or Portfolio Members of your
fund, visit Putnam's Individual Investor Web site at www.putnam.com.
- ----------------------------------------------------------------------------
Fund ownership by the Portfolio Leaders and Portfolio Member
The table below shows how much the fund's current Portfolio Leader and
Portfolio Member have invested in the fund (in dollar ranges). Information
shown is as of July 31, 2005, and July 31, 2004.
- --------------------------------------------------------------------------------------------------
$1 - $10,001 - $50,001 - $100,001 - $500,001 - $1,000,001
Year $0 $10,000 $50,000 $100,000 $500,000 $1,000,000 and over
- --------------------------------------------------------------------------------------------------
Kevin Divney 2005 *
- --------------------------------------------------------------------------------------------------
Portfolio Leader 2004 *
- --------------------------------------------------------------------------------------------------
Brian DeChristopher 2005 *
- --------------------------------------------------------------------------------------------------
Portfolio Member N/A
- --------------------------------------------------------------------------------------------------
N/A indicates the individual was not a Portfolio Leader or Portfolio Member as of 7/31/04.
- ----------------------------------------------------------------------------
Fund manager compensation
The total 2004 fund manager compensation that is attributable to your fund
is approximately $720,000. 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 taken as a percentage of the total assets they
manage. The compensation amount also includes a portion of the 2004
compensation paid to the Chief Investment Officer of the team for his
oversight responsibilities, calculated based on the fund assets he oversees
taken as a percentage of the total assets he oversees. This amount does not
include compensation of other personnel involved in research, trading,
administration, systems, compliance, or fund operations; nor does it include
non-compensation costs. These percentages are determined as of the fund's
fiscal period-end. For personnel who joined Putnam Management during or
after 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.
Brian DeChristopher is also a Portfolio Member of Putnam New Opportunities
Fund.
Kevin Divney and Brian DeChristopher may also manage other accounts and
variable trust funds advised by Putnam Management or an affiliate.
- ----------------------------------------------------------------------------
Changes in your fund's Portfolio Leader and Portfolio Members
During the year ended July 31, 2005, Kevin Divney became a Portfolio
Leader of your fund. In addition, Brian DeChristopher became a Portfolio
Member of your fund following the departure of Portfolio Leader Paul
Marrkand from your fund's management team.
- ----------------------------------------------------------------------------
Fund ownership by Putnam's Executive Board
The table below shows how much the members of Putnam's Executive Board
have invested in the fund (in dollar ranges). Information shown is as of
July 31, 2005, and July 31, 2004.
- --------------------------------------------------------------------------------------
$1 - $10,001 - $50,001 - $100,001
Year $0 $10,000 $50,000 $100,000 and over
- --------------------------------------------------------------------------------------
Philippe Bibi 2005 *
- --------------------------------------------------------------------------------------
Chief Technology Officer 2004 *
- --------------------------------------------------------------------------------------
Joshua Brooks 2005 *
- --------------------------------------------------------------------------------------
Deputy Head of
Investments N/A
- --------------------------------------------------------------------------------------
William Connolly N/A
- --------------------------------------------------------------------------------------
Head of Retail
Management N/A
- --------------------------------------------------------------------------------------
Kevin Cronin 2005 *
- --------------------------------------------------------------------------------------
Head of Investments 2004 *
- --------------------------------------------------------------------------------------
Charles Haldeman, Jr. 2005 *
- --------------------------------------------------------------------------------------
President and CEO 2004 *
- --------------------------------------------------------------------------------------
Amrit Kanwal 2005 *
- --------------------------------------------------------------------------------------
Chief Financial Officer 2004 *
- --------------------------------------------------------------------------------------
Steven Krichmar 2005 *
- --------------------------------------------------------------------------------------
Chief of Operations 2004 *
- --------------------------------------------------------------------------------------
Francis McNamara, III 2005 *
- --------------------------------------------------------------------------------------
General Counsel 2004 *
- --------------------------------------------------------------------------------------
Richard Robie, III 2005 *
- --------------------------------------------------------------------------------------
Chief Administrative
Officer 2004 *
- --------------------------------------------------------------------------------------
Edward Shadek 2005 *
- --------------------------------------------------------------------------------------
Deputy Head of
Investments N/A
- --------------------------------------------------------------------------------------
Sandra Whiston N/A
- --------------------------------------------------------------------------------------
Head of Institutional
Management N/A
- --------------------------------------------------------------------------------------
N/A indicates the individual became a member of Putnam's Executive Board
after the reporting date.
Terms and definitions
- ----------------------------------------------------------------------------
Important terms
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. NAV
is calculated by dividing the net assets of each class of shares by the
number of outstanding shares in the class.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 5.25% maximum sales charge for class A
shares and 3.50% for class M shares (since reduced to 3.25%).
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B or C shares and assumes redemption at the end of
the period. Your fund's class B CDSC declines from a 5% maximum during the
first year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies. The CDSC for class C shares is 1% for one year after
purchase.
- ----------------------------------------------------------------------------
Share classes
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares bought
without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are subject
to a contingent deferred sales charge only if the shares are redeemed
during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
Class R shares are not subject to an initial sales charge or CDSC and are
available only to certain defined contribution plans.
- ----------------------------------------------------------------------------
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 total return 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 your fund's management contract with Putnam Management. In
this regard, the Board of Trustees, with the assistance of its Contract
Committee consisting solely of Trustees who are not "interested persons"
(as such term is defined in the Investment Company Act of 1940, as
amended) of the Putnam funds (the "Independent Trustees"), requests and
evaluates all information it deems reasonably necessary under the
circumstances. Over the course of several months beginning in March and
ending in June 2005, the Contract Committee met five times to consider the
information provided by Putnam Management and other information developed
with the assistance of the Board's independent counsel and independent
staff. The Contract Committee reviewed and discussed key aspects of this
information with all of the Independent Trustees. Upon completion of this
review, the Contract Committee recommended and the Independent Trustees
approved the continuance of your fund's management contract, effective
July 1, 2005.
This approval was based on the following conclusions:
* That the fee schedule currently in effect for your fund represents
reasonable compensation in light of the nature and quality of the services
being provided to the fund, the fees paid by competitive funds and the
costs incurred by Putnam Management in providing such services, and
* That such fee schedule represents an appropriate sharing between fund
shareholders and Putnam Management of such economies of scale as may exist
in the management of the fund at current asset levels.
These conclusions were based on a comprehensive consideration of all
information provided to the Trustees and were not the result of any single
factor. Some of the factors that figured particularly in the Trustees'
deliberations and how the Trustees considered these factors are described
below, although individual Trustees may have evaluated the information
presented differently, giving different weights to various factors. It is
also important to recognize that the fee arrangements for your fund and
the other Putnam funds are the result of many years of review and
discussion between the Independent Trustees and Putnam Management, that
certain aspects of such arrangements may receive greater scrutiny in some
years than others, and that the Trustees' conclusions may be based, in
part, on their consideration of these same arrangements in prior years.
- ------------------------------------------------------------------------------
Model fee schedules and categories; total expenses
The Trustees' review of the management fees and total expenses of the
Putnam funds focused on three major themes:
* Consistency. The Trustees, working in cooperation with Putnam Management,
have 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 family of funds and
compares favorably with fees paid by competitive funds sponsored by other
investment advisers. Under this approach, each Putnam fund is assigned to
one of several fee categories based on a combination of factors, including
competitive fees and perceived difficulty of management, and a common fee
schedule is implemented for all funds in a given fee category. The Trustees
reviewed the model fee schedule currently in effect for your fund, including
fee levels and breakpoints, and the assignment of the fund to a particular
fee category under this structure. ("Breakpoints" refer to reductions in fee
rates that apply to additional assets once specified asset levels are
reached.) The Trustees concluded that no changes should be made in the
fund's current fee schedule at this time.
* Competitiveness. The Trustees also reviewed comparative fee and expense
information for competitive funds, which indicated that, in a custom peer
group of competitive funds selected by Lipper Inc., your fund ranked in
the 13th percentile in management fees and in the 13th percentile in total
expenses (less any applicable 12b-1 fees) as of December 31, 2004 (the
first percentile being the least expensive funds and the 100th percentile
being the most expensive funds). (Because the fund's custom peer group is
smaller than the fund's broad Lipper Inc. peer group, this expense
comparison may differ from the Lipper peer expense information found
elsewhere in this report.) The Trustees noted that expense ratios for a
number of Putnam funds, which show the percentage of fund assets used to
pay for management and administrative services, distribution (12b-1) fees
and other expenses, had been increasing recently as a result of declining
net assets and the natural operation of fee breakpoints. They noted that
such expense ratio increases were currently being controlled by expense
limitations implemented in January 2004 and which Putnam Management, in
consultation with the Contract Committee, has committed to maintain at
least through 2006. The Trustees expressed their intention to monitor this
information closely to ensure that fees and expenses of the Putnam funds
continue to meet evolving competitive standards.
* Economies of scale. The Trustees concluded that the fee schedule currently
in effect for your fund represents an appropriate sharing of economies of
scale at current asset levels. Your fund currently has the benefit of
breakpoints in its management fee that provide shareholders with significant
economies of scale, which means that the effective management fee rate of a
fund (as a percentage of fund assets) declines as a fund grows in size and
crosses specified asset thresholds. The Trustees examined the existing
breakpoint structure of the Putnam funds' management fees in light of
competitive industry practices. The Trustees considered various possible
modifications to the Putnam Funds' current breakpoint structure, but
ultimately concluded that the current breakpoint structure continues to
serve the interests of fund shareholders. Accordingly, the Trustees continue
to believe that the fee schedules currently in effect for the funds
represent an appropriate sharing of economies of scale at current asset
levels. The Trustees noted that significant redemptions in many Putnam
funds, together with significant changes in the cost structure of Putnam
Management, have altered the economics of Putnam Management's business in
significant ways. In view of these changes, the Trustees intend to consider
whether a greater sharing of the economies of scale by fund shareholders
would be appropriate if and when aggregate assets in the Putnam funds begin
to experience meaningful growth.
In connection with their review of the management fees and total expenses
of the Putnam funds, the Trustees also reviewed the costs of the services
to be provided and profits to be realized by Putnam Management and its
affiliates from the relationship with the funds. This information included
trends in revenues, expenses and profitability of Putnam Management and
its affiliates relating to the investment management and distribution
services provided to the funds. In this regard, the Trustees also reviewed
an analysis of Putnam Management's revenues, expenses and profitability
with respect to the funds' management contracts, allocated on a
fund-by-fund basis.
- ------------------------------------------------------------------------------
Investment performance
The quality of the investment process provided by Putnam Management
represented a major factor in the Trustees' evaluation of the quality of
services provided by Putnam Management under your fund's management
contract. The Trustees were assisted in their review of the funds'
investment process and performance by the work of the Investment Oversight
Committees of the Trustees, which meet on a regular monthly basis with the
funds' portfolio teams throughout the year. The Trustees concluded that
Putnam Management generally provides a high quality investment process -
as measured by the experience and skills of the individuals assigned to
the management of fund portfolios, the resources made available to such
personnel, and in general the ability of Putnam Management to attract and
retain high-quality personnel - but also recognize that this does not
guarantee favorable investment results for every fund in every time
period. The Trustees considered the investment performance of each fund
over multiple time periods and considered information comparing the fund's
performance with various benchmarks and with the performance of
competitive funds. The Trustees noted the satisfactory investment
performance of many Putnam funds. They also noted the disappointing
investment performance of certain funds in recent years and continued to
discuss with senior management of Putnam Management the factors
contributing to such underperformance and actions being taken to improve
performance. The Trustees recognized that, in recent years, Putnam
Management has made significant changes in its investment personnel and
processes and in the fund product line to address areas of
underperformance. The Trustees indicated their intention to continue to
monitor performance trends to assess the effectiveness of these changes
and to evaluate whether additional remedial changes are warranted.
In the case of your fund, the Trustees considered that your fund's Class A
share performance at net asset value was in the following percentiles of
its Lipper Inc. peer group for the one-, three- and five-year periods
ended December 31, 2004 (the first percentile being the best performing
funds and the 100th percentile being the worst performing funds):
One-year period Three-year period Five-year period
- -----------------------------------------------------------------------------
12th 54th 76th
(Because of the passage of time, these performance results may differ from
the performance results for more recent periods shown elsewhere in this
report.) The Trustees noted the disappointing performance for your fund
for the five-year period ended December 31, 2004. In this regard, the
Trustees considered that over the last year, Putnam Management has
clarified the fund's investment philosophy and made changes to the
investment team. In addition, the fund has adopted a redesigned investment
process which incorporates a blend of quantitative techniques and
fundamental analysis.
As a general matter, the Trustees believe that cooperative efforts between
the Trustees and Putnam Management represent the most effective way to
address investment performance problems. The Trustees believe that
investors in the Putnam funds have, in effect, placed their trust in the
Putnam organization, under the oversight of the funds' Trustees, to make
appropriate decisions regarding the management of the funds. Based on the
responsiveness of Putnam Management in the recent past to Trustee concerns
about investment performance, the Trustees believe that it is preferable
to seek change within Putnam Management to address performance
shortcomings. In the Trustees' view, the alternative of terminating a
management contract and engaging a new investment adviser for an
underperforming fund would entail significant disruptions and would not
provide any greater assurance of improved investment performance.
- -----------------------------------------------------------------------------
Brokerage and soft-dollar allocations; other benefits
The Trustees considered various potential benefits that Putnam Management
may receive in connection with the services it provides under the management
contract with your fund. These include principally benefits related to
brokerage and soft-dollar allocations, whereby a portion of the commissions
paid by a fund for brokerage is earmarked to pay for research services that
may be utilized by a fund's investment adviser. The Trustees believe that
soft-dollar credits and other potential benefits associated with the
allocation of fund brokerage, which pertains mainly to funds investing in
equity securities, represent assets of the funds that should be used for the
benefit of fund shareholders. This area has been marked by significant
change in recent years. In July 2003, acting upon the Contract Committee's
recommendation, the Trustees directed that allocations of brokerage to
reward firms that sell fund shares be discontinued no later than December
31, 2003. In addition, commencing in 2004, the allocation of brokerage
commissions by Putnam Management to acquire research services from
third-party service providers has been significantly reduced, and continues
at a modest level only to acquire research that is customarily not available
for cash. The Trustees will continue to monitor the allocation of the funds'
brokerage to ensure that the principle of "best price and execution" remains
paramount in the portfolio trading process.
The Trustees' annual review of your fund's management contract also
included the review of its distributor's contract and distribution plan
with Putnam Retail Management Limited Partnership and the custodian
agreement and investor servicing agreement with Putnam Fiduciary Trust
Company, all of which provide benefits to affiliates of Putnam Management.
- -----------------------------------------------------------------------------
Comparison of retail and institutional fee schedules
The information examined by the Trustees as part of their annual contract
review has included for many years information regarding fees charged by
Putnam Management and its affiliates to institutional clients such as
defined benefit pension plans, college endowments, etc. This information
included comparison of such fees with fees charged to the funds, as well
as a detailed assessment of the differences in the services provided to
these two types of clients. The Trustees observed, in this regard, that
the differences in fee rates between institutional clients and the mutual
funds are by no means uniform when examined by individual asset sectors,
suggesting that differences in the pricing of investment management
services to these types of clients reflect to a substantial degree
historical competitive forces operating in separate market places. The
Trustees considered the fact that fee rates across all asset sectors are
higher on average for mutual funds than for institutional clients, as well
as the differences between the services that Putnam Management provides to
the Putnam funds and those that it provides to institutional clients of
the firm, but have not relied on such comparisons to any significant
extent in concluding that the management fees paid by your fund are
reasonable.
Other information for shareholders
- -----------------------------------------------------------------------------
Putnam's policy on confidentiality
In order to conduct business with our shareholders, we must obtain certain
personal information such as account holders' addresses, telephone
numbers, Social Security numbers, and the names of their financial
advisors. We use this information to assign an account number and to help
us maintain accurate records of transactions and account balances. It is
our policy to protect the confidentiality of your information, whether or
not you currently own shares of our funds, and in particular, not to sell
information about you or your accounts to outside marketing firms. We have
safeguards in place designed to prevent unauthorized access to our
computer systems and procedures to protect personal information from
unauthorized use. Under certain circumstances, we share this information
with outside vendors who provide services to us, such as mailing and proxy
solicitation. In those cases, the service providers enter into
confidentiality agreements with us, and we provide only the information
necessary to process transactions and perform other services related to
your account. We may also share this information with our Putnam
affiliates to service your account or provide you with information about
other Putnam products or services. It is also our policy to share account
information with your financial advisor, if you've listed one on your
Putnam account. If you would like clarification about our confidentiality
policies or have any questions or concerns, please don't hesitate to
contact us at 1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00
p.m., or Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time.
- -----------------------------------------------------------------------------
Proxy voting
Putnam is committed to managing our mutual funds in the best interests of
our shareholders. The Putnam funds' proxy voting guidelines and
procedures, as well as information regarding how your fund voted proxies
relating to portfolio securities during the 12-month period ended June 30,
2005, are available on the Putnam Individual Investor Web site,
www.putnam.com/individual, and on the SEC's Web site, www.sec.gov. If you
have questions about finding forms on the SEC's Web site, you may call the
SEC at 1-800-SEC-0330. You may also obtain the Putnam funds' proxy voting
guidelines and procedures at no charge by calling Putnam's Shareholder
Services at 1-800-225-1581.
- -----------------------------------------------------------------------------
Fund portfolio holdings
The fund will file a complete schedule of its portfolio holdings with the
SEC for the first and third quarters of each fiscal year on Form N-Q.
Shareholders may obtain the fund's Forms N-Q on the SEC's Web site at
www.sec.gov. In addition, the fund's Forms N-Q may be reviewed and copied
at the SEC's public reference room in Washington, D.C. You may call the
SEC at 1-800-SEC-0330 for information about the SEC's Web site or the
operation of the public reference room.
Financial statements
- -----------------------------------------------------------------------------
A guide to financial statements
These sections of the report, as well as the accompanying Notes, preceded
by the Report of Independent Registered Public Accounting Firm, constitute
the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss. This
is done by first adding up all the fund's earnings -- from dividends and
interest income -- and subtracting its operating expenses to determine net
investment income (or loss). Then, any net gain or loss the fund realized
on the sales of its holdings -- as well as any unrealized gains or losses
over the period -- is added to or subtracted from the net investment result
to determine the fund's net gain or loss for the fiscal year.
Statement of changes in net assets shows how the fund's net assets were
affected by 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.
Report of Independent Registered Public Accounting Firm
The Trustees and Shareholders of Putnam Vista Fund:
We have audited the accompanying statement of assets and liabilities of
Putnam Vista Fund, including the fund's portfolio, as of July 31, 2005,
and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years
or periods in the period then ended. These financial statements and
financial highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform our audit to obtain reasonable assurance
about whether the financial statements and financial highlights are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
July 31, 2005 by correspondence with the custodian and brokers or by
other appropriate auditing procedures. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Putnam Vista Fund as of July 31, 2005, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of
the five years or periods in the period then ended, in conformity with
U.S. generally accepted accounting principles.
/S/ KPMG LLP
Boston, Massachusetts
September 13, 2005
The fund's portfolio 7/31/05
- ----------------------------------------------------------------------------------------------------
COMMON STOCKS (96.2%)*
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Shares Value
- ----------------------------------------------------------------------------------------------------
Aerospace and Defense (1.2%)
L-3 Communications Holdings, Inc. 384,800 $30,102,904
Precision Castparts Corp. 47,800 4,301,044
34,403,948
- ----------------------------------------------------------------------------------------------------
Banking (0.5%)
Commerce Bancorp, Inc. (S) 449,500 15,251,535
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Biotechnology (2.8%)
Celgene Corp. + (S) 205,100 9,814,035
Genzyme Corp. + 841,100 62,586,251
IDEXX Laboratories, Inc. + (S) 113,600 7,209,056
79,609,342
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Broadcasting (1.0%)
XM Satellite Radio Holdings, Inc. Class A + (S) 827,500 29,483,825
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Building Materials (1.5%)
Vulcan Materials Co. 591,600 41,553,984
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Chemicals (0.1%)
Georgia Gulf Corp. 115,200 3,655,296
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Commercial and Consumer Services (1.2%)
Corporate Executive Board Co. (The) (S) 331,700 26,761,556
West Corp. + (S) 209,100 8,361,909
35,123,465
- ----------------------------------------------------------------------------------------------------
Communications Equipment (1.6%)
Harris Corp. 412,700 15,298,789
Scientific-Atlanta, Inc. 572,700 22,048,950
Tellabs, Inc. + (S) 791,900 7,697,268
45,045,007
- ----------------------------------------------------------------------------------------------------
Computers (4.2%)
Apple Computer, Inc. + 1,195,900 51,005,135
Logitech International SA ADR (Switzerland) + (S) 294,588 11,477,148
NAVTEQ Corp. + (S) 422,000 18,555,340
Network Appliance, Inc. + (S) 1,018,300 25,976,833
Take-Two Interactive Software, Inc. + (S) 586,100 14,423,921
121,438,377
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Conglomerates (0.3%)
AMETEK, Inc. (S) 210,300 8,664,360
- ----------------------------------------------------------------------------------------------------
Consumer Cyclicals (2.7%)
Black & Decker Manufacturing Co. (S) 601,100 54,285,341
Harman International Industries, Inc. (S) 261,600 22,484,520
76,769,861
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Consumer Finance (2.5%)
Capital One Financial Corp. (S) 119,400 9,850,500
Nelnet, Inc. Class A + (S) 1,081,800 41,054,310
Providian Financial Corp. + 1,148,100 21,699,090
72,603,900
- ----------------------------------------------------------------------------------------------------
Consumer Goods (0.9%)
Scotts Co. (The) Class A + (S) 95,700 7,502,880
Yankee Candle Co., Inc. (The) (S) 582,600 17,652,780
25,155,660
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Consumer Services (1.9%)
Alliance Data Systems Corp. + (S) 405,000 17,240,850
Getty Images, Inc. + (S) 448,100 36,184,075
53,424,925
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Containers (0.2%)
Ball Corp. 183,700 6,971,415
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Electronics (5.7%)
Altera Corp. + 573,100 12,533,697
Amphenol Corp. Class A 528,300 23,530,482
Linear Technology Corp. (S) 1,415,000 54,986,900
National Semiconductor Corp. (S) 994,500 24,574,095
SanDisk Corp. + (S) 1,091,800 36,924,676
Silicon Laboratories, Inc. + (S) 345,600 10,115,712
162,665,562
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Energy (1.7%)
BJ Services Co. (S) 798,700 48,712,713
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Entertainment (0.7%)
Pixar, Inc. + (S) 482,800 20,765,228
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Financial (1.1%)
Moody's Corp. (S) 687,300 32,516,163
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Forest Products and Packaging (0.7%)
Louisiana-Pacific Corp. (S) 730,000 19,578,600
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Gaming & Lottery (0.5%)
GTECH Holdings Corp. 447,630 13,410,995
- ----------------------------------------------------------------------------------------------------
Health Care Services (5.4%)
Coventry Health Care, Inc. + (S) 409,500 28,963,935
Kindred Healthcare, Inc. + (S) 416,300 15,294,862
Laboratory Corp. of America Holdings + (S) 866,200 43,890,354
McKesson Corp. 217,900 9,805,500
PacifiCare Health Systems, Inc. + 237,500 18,097,500
Quest Diagnostics, Inc. 289,800 14,878,332
Sierra Health Services, Inc. + (S) 253,600 17,102,784
WellPoint, Inc. + 91,700 6,486,858
154,520,125
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Homebuilding (2.4%)
NVR, Inc. + 50,800 47,650,400
Toll Brothers, Inc. + (S) 373,000 20,671,660
68,322,060
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Insurance (1.5%)
Everest Re Group, Ltd. (Barbados) 148,000 14,415,200
W.R. Berkley Corp. (S) 759,750 28,437,443
42,852,643
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Investment Banking/Brokerage (1.6%)
Bear Stearns Cos., Inc. (The) 462,400 47,215,664
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Machinery (2.2%)
Cummins, Inc. (S) 338,300 28,904,352
JLG Industries, Inc. (S) 296,000 9,276,640
Terex Corp. + 525,800 25,459,236
63,640,228
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Manufacturing (1.6%)
Graco, Inc. (S) 516,600 19,749,618
IDEX Corp. 608,700 26,588,016
46,337,634
- ----------------------------------------------------------------------------------------------------
Media (0.1%)
Dolby Laboratories, Inc. Class A + 229,750 4,372,143
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Medical Technology (8.9%)
C.R. Bard, Inc. 630,700 42,124,453
Charles River Laboratories International, Inc. + 621,100 30,247,570
Dade Behring Holdings, Inc. (S) 340,300 25,794,740
Edwards Lifesciences Corp. + 993,600 45,576,432
Kinetic Concepts, Inc. + (S) 225,600 13,529,232
Respironics, Inc. + 824,000 31,229,600
St. Jude Medical, Inc. + 498,200 23,619,662
Varian Medical Systems, Inc. + (S) 1,082,600 42,502,876
254,624,565
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Metals (1.1%)
Phelps Dodge Corp. (S) 297,200 31,636,940
- ----------------------------------------------------------------------------------------------------
Oil & Gas (7.0%)
Amerada Hess Corp. 328,100 38,669,866
Burlington Resources, Inc. (S) 993,900 63,718,928
Newfield Exploration Co. + (S) 925,000 39,303,250
Sunoco, Inc. (S) 468,100 58,854,213
200,546,257
- ----------------------------------------------------------------------------------------------------
Pharmaceuticals (1.9%)
Allergan, Inc. (S) 165,200 14,763,924
Barr Pharmaceuticals, Inc. + 361,800 17,156,556
Cephalon, Inc. + (S) 114,500 4,797,550
Kos Pharmaceuticals, Inc. + 235,700 16,852,550
53,570,580
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Publishing (0.7%)
Marvel Enterprises, Inc. + (S) 1,088,700 21,109,893
- ----------------------------------------------------------------------------------------------------
Restaurants (0.7%)
Darden Restaurants, Inc. (S) 600,800 20,847,760
- ----------------------------------------------------------------------------------------------------
Retail (11.5%)
Abercrombie & Fitch Co. Class A 475,500 34,259,775
American Eagle Outfitters, Inc. (S) 1,482,000 48,831,900
AutoZone, Inc. + (S) 200,400 19,526,976
Claire's Stores, Inc. (S) 1,922,000 48,838,020
Coach, Inc. + 910,600 31,971,166
Michaels Stores, Inc. 1,166,300 47,818,300
Staples, Inc. 2,599,750 59,196,308
Timberland Co. (The) Class A + 484,700 16,179,286
Toro Co. (The) (S) 298,500 12,011,640
Whole Foods Market, Inc. (S) 93,200 12,722,732
331,356,103
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Schools (1.1%)
Apollo Group, Inc. Class A + (S) 234,000 17,585,100
Career Education Corp. + (S) 113,600 4,406,544
Strayer Education, Inc. (S) 114,640 11,284,015
33,275,659
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Semiconductor (0.8%)
Lam Research Corp. + (S) 638,400 18,162,480
Sigmatel, Inc. + (S) 162,500 3,254,875
21,417,355
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Shipping (3.0%)
CNF Transportation, Inc. (S) 740,200 38,186,918
Overseas Shipholding Group (S) 766,600 47,567,530
85,754,448
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Software (5.6%)
Adobe Systems, Inc. (S) 1,178,300 34,924,812
BMC Software, Inc. + # 1,640,800 31,322,872
Citrix Systems, Inc. + (S) 1,659,400 39,543,502
McAfee, Inc. + (S) 1,066,100 33,475,540
Mercury Interactive Corp. + (S) 326,700 12,862,179
Websense, Inc. + (S) 165,300 8,238,552
160,367,457
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Technology Services (3.5%)
Acxiom Corp. 368,800 7,435,008
Equifax, Inc. (S) 910,600 33,145,840
Fair Isaac Corp. 1,161,300 43,699,719
VeriSign, Inc. + (S) 679,400 17,875,014
102,155,581
- ----------------------------------------------------------------------------------------------------
Textiles (0.3%)
VF Corp. (S) 149,100 8,802,864
- ----------------------------------------------------------------------------------------------------
Tobacco (1.1%)
UST, Inc. (S) 680,400 31,312,008
- ----------------------------------------------------------------------------------------------------
Trucks & Parts (1.2%)
Autoliv, Inc. (Sweden) 766,800 34,160,940
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Total common stocks (cost $2,331,888,009) $2,765,003,068
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SHORT-TERM INVESTMENTS (15.7%) *
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Principal Amount/Shares Value
- ----------------------------------------------------------------------------------------------------
Short-term investments held as collateral for loaned
securities with yields ranging from 2.30% to 3.46%
and due dates ranging from August 1, 2005 to
August 17, 2005 (d) $340,957,466 $340,852,074
Putnam Prime Money Market Fund (e) 110,941,388 110,941,388
- ----------------------------------------------------------------------------------------------------
Total short-term investments (cost $451,793,462) $451,793,462
- ----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
- ----------------------------------------------------------------------------------------------------
Total investments (cost $2,783,681,471) $3,216,796,530
* Percentages indicated are based on net assets of $2,873,826,121.
+ Non-income-producing security.
(S) Securities on loan, in part or in entirety, at July 31, 2005.
# A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at
July 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.
At July 31, 2005, liquid assets totaling $100,142,090 have been designated
as collateral for open futures contracts.
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 7/31/05
- --------------------------------------------------------------------------------------------
Number of Expiration Unrealized
contracts Value date appreciation
- --------------------------------------------------------------------------------------------
Russell 2000 Index Mini (Long) 951 $64,877,220 Sep-05 $1,407,368
S&P 500 Index (Long) 114 35,248,800 Sep-05 596,733
- --------------------------------------------------------------------------------------------
Total $2,004,101
The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities 7/31/05
- -----------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------
Investment in securities, at value, including $330,141,562
of securities on loan (Note 1):
Unaffiliated issuers (identified cost $2,672,740,083) $3,105,855,142
Affiliated issuers (identified cost $110,941,388) (Note 5) 110,941,388
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Dividends, interest and other receivables 1,595,225
- -----------------------------------------------------------------------------
Receivable for shares of the fund sold 2,058,654
- -----------------------------------------------------------------------------
Receivable for securities sold 37,996,271
- -----------------------------------------------------------------------------
Total assets 3,258,446,680
- -----------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------
Payable for variation margin (Note 1) 607,464
- -----------------------------------------------------------------------------
Payable for securities purchased 24,948,292
- -----------------------------------------------------------------------------
Payable for shares of the fund repurchased 12,046,882
- -----------------------------------------------------------------------------
Payable for compensation of Manager (Notes 2 and 5) 3,592,403
- -----------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,074,065
- -----------------------------------------------------------------------------
Payable for Trustee compensation and expenses (Note 2) 381,614
- -----------------------------------------------------------------------------
Payable for administrative services (Note 2) 3,654
- -----------------------------------------------------------------------------
Payable for distribution fees (Note 2) 928,642
- -----------------------------------------------------------------------------
Collateral on securities loaned, at value (Note 1) 340,852,074
- -----------------------------------------------------------------------------
Other accrued expenses 185,469
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Total liabilities 384,620,559
- -----------------------------------------------------------------------------
Net assets $2,873,826,121
- -----------------------------------------------------------------------------
REPRESENTED BY
- -----------------------------------------------------------------------------
Paid-in capital (Unlimited shares authorized)
(Notes 1 and 4) $6,315,586,984
- -----------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (3,876,880,023)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investments 435,119,160
- -----------------------------------------------------------------------------
Total -- Representing net assets applicable to capital
shares outstanding $2,873,826,121
- -----------------------------------------------------------------------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- -----------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,996,475,361 divided by 197,559,116 shares) $10.11
- -----------------------------------------------------------------------------
Offering price per class A share
(100/94.75 of $10.11)* $10.67
- -----------------------------------------------------------------------------
Net asset value and offering price per class B share
($539,589,078 divided by 61,099,044 shares)** $8.83
- -----------------------------------------------------------------------------
Net asset value and offering price per class C share
($38,881,326 divided by 4,037,116 shares)** $9.63
- -----------------------------------------------------------------------------
Net asset value and redemption price per class M share
($41,068,389 divided by 4,371,251 shares) $9.40
- -----------------------------------------------------------------------------
Offering price per class M share
(100/96.75 of $9.40)* $9.72
- -----------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class R share ($247,524 divided by 24,611 shares) $10.06
- -----------------------------------------------------------------------------
Net asset value, offering price and redemption price per
class Y share ($257,564,443 divided by 24,532,001 shares) $10.50
- -----------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
Statement of operations Year ended 7/31/05
- -----------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------
Dividends (net of foreign tax of $25,650) $13,040,860
- -----------------------------------------------------------------------------
Interest (including interest income of $374,408 from
investments in affiliated issuers) (Note 5) 421,699
- -----------------------------------------------------------------------------
Securities lending 555,231
- -----------------------------------------------------------------------------
Other income (Note 6) 1,011,756
- -----------------------------------------------------------------------------
Total investment income 15,029,546
- -----------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------
Compensation of Manager (Note 2) 14,497,561
- -----------------------------------------------------------------------------
Investor servicing fees (Note 2) 8,447,113
- -----------------------------------------------------------------------------
Custodian fees (Note 2) 314,789
- -----------------------------------------------------------------------------
Trustee compensation and expenses (Note 2) 107,827
- -----------------------------------------------------------------------------
Administrative services (Note 2) 76,700
- -----------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 4,730,362
- -----------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 6,082,331
- -----------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 379,574
- -----------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 316,930
- -----------------------------------------------------------------------------
Distribution fees -- Class R (Note 2) 717
- -----------------------------------------------------------------------------
Other 581,240
- -----------------------------------------------------------------------------
Non-recurring costs (Notes 2 and 6) 106,860
- -----------------------------------------------------------------------------
Costs assumed by Manager (Notes 2 and 6) (106,860)
- -----------------------------------------------------------------------------
Fees waived and reimbursed by Manager (Note 5) (23,568)
- -----------------------------------------------------------------------------
Total expenses 35,511,576
- -----------------------------------------------------------------------------
Expense reduction (Note 2) (1,607,079)
- -----------------------------------------------------------------------------
Net expenses 33,904,497
- -----------------------------------------------------------------------------
Net investment loss (18,874,951)
- -----------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 380,428,108
- -----------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 4,547,020
- -----------------------------------------------------------------------------
Net unrealized appreciation of investments and futures
contracts during the year 277,335,986
- -----------------------------------------------------------------------------
Net gain on investments 662,311,114
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations $643,436,163
The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets
- -----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- -----------------------------------------------------------------------------
Year ended Year ended
7/31/05 7/31/04
- -----------------------------------------------------------------------------
Operations:
Net investment loss $(18,874,951) $(26,608,833)
- -----------------------------------------------------------------------------
Net realized gain on investments 384,975,128 704,765,902
- -----------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 277,335,986 (186,848,425)
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 643,436,163 491,308,644
- -----------------------------------------------------------------------------
Redemption fees (Note 1) 9,823 16,602
- -----------------------------------------------------------------------------
Decrease from capital share transactions
(Note 4) (581,589,475) (1,424,586,782)
- -----------------------------------------------------------------------------
Total increase (decrease) in net assets 61,856,511 (933,261,536)
- -----------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------
Beginning of year 2,811,969,610 3,745,231,146
- -----------------------------------------------------------------------------
End of year $2,873,826,121 $2,811,969,610
The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period)
CLASS A
- -----------------------------------------------------------------------------------------------------------
PER-SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------
Year ended
7/31/05 7/31/04 7/31/03 7/31/02 7/31/01
- -----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.04 $7.12 $6.30 $9.22 $19.10
- -----------------------------------------------------------------------------------------------------------
Investment operations:
Net investment loss (a) (.05) (d,f) (.05) (d) (.03) (.04) (.06)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.12 .97 .85 (2.88) (6.00)
- -----------------------------------------------------------------------------------------------------------
Total from
investment operations 2.07 .92 .82 (2.92) (6.06)
- -----------------------------------------------------------------------------------------------------------
Less distributions:
From net realized gain
on investments -- -- -- -- (3.81)
- -----------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01)
- -----------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82)
- -----------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- --
- -----------------------------------------------------------------------------------------------------------
Net asset value,
end of period $10.11 $8.04 $7.12 $6.30 $9.22
- -----------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 25.75 12.92 13.02 (31.67) (37.86)
- -----------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,996,475 $1,798,906 $2,238,709 $2,563,995 $4,614,523
- -----------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.10 (d) 1.08 (d) 1.09 1.00 .89
- -----------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.51) (d,f) (.60) (d) (.54) (.56) (.47)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 73.81 77.95 64.83 89.19 109.13
(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 July 31, 2005 and
July 31, 2004 reflect a reduction of less than 0.01% of average net assets
for class A shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to less than $0.01 per share and 0.04% of average net assets for
class A shares (Note 6).
The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period)
CLASS B
- -----------------------------------------------------------------------------------------------------------
PER-SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------
Year ended
7/31/05 7/31/04 7/31/03 7/31/02 7/31/01
- -----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.08 $6.32 $5.63 $8.30 $17.73
- -----------------------------------------------------------------------------------------------------------
Investment operations:
Net investment loss (a) (.10) (d,f) (.10) (d) (.07) (.09) (.15)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.85 .86 .76 (2.58) (5.46)
- -----------------------------------------------------------------------------------------------------------
Total from
investment operations 1.75 .76 .69 (2.67) (5.61)
- -----------------------------------------------------------------------------------------------------------
Less distributions:
From net realized gain
on investments -- -- -- -- (3.81)
- -----------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01)
- -----------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82)
- -----------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- --
- -----------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.83 $7.08 $6.32 $5.63 $8.30
- -----------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 24.72 12.03 12.26 (32.17) (38.31)
- -----------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $539,589 $674,172 $842,635 $913,467 $1,776,848
- -----------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.85 (d) 1.83 (d) 1.84 1.75 1.64
- -----------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.27) (d,f) (1.35) (d) (1.29) (1.31) (1.22)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 73.81 77.95 64.83 89.19 109.13
(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 July 31, 2005 and
July 31, 2004 reflect a reduction of less than 0.01% of average net assets
for class B shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to less than $0.01 per share and 0.03% of average net assets for
class B shares (Note 6).
The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period)
CLASS C
- -----------------------------------------------------------------------------------------------------------
PER-SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------
Year ended
7/31/05 7/31/04 7/31/03 7/31/02 7/31/01
- -----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.72 $6.89 $6.14 $9.05 $18.95
- -----------------------------------------------------------------------------------------------------------
Investment operations:
Net investment loss (a) (.11) (d,f) (.10) (d) (.08) (.10) (.15)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.02 .93 .83 (2.81) (5.93)
- -----------------------------------------------------------------------------------------------------------
Total from
investment operations 1.91 .83 .75 (2.91) (6.08)
- -----------------------------------------------------------------------------------------------------------
Less distributions:
From net realized gain
on investments -- -- -- -- (3.81)
- -----------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01)
- -----------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82)
- -----------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- --
- -----------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.63 $7.72 $6.89 $6.14 $9.05
- -----------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 24.74 12.05 12.22 (32.15) (38.33)
- -----------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $38,881 $36,770 $48,585 $52,939 $115,495
- -----------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.85 (d) 1.83 (d) 1.84 1.75 1.64
- -----------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.26) (d,f) (1.35) (d) (1.29) (1.31) (1.20)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 73.81 77.95 64.83 89.19 109.13
(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 July 31, 2005 and
July 31, 2004 reflect a reduction of less than 0.01% of average net assets
for class C shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to less than $0.01 per share and 0.04% of average net assets for
class C shares (Note 6).
The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period)
CLASS M
- -----------------------------------------------------------------------------------------------------------
PER-SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------
Year ended
7/31/05 7/31/04 7/31/03 7/31/02 7/31/01
- -----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.51 $6.69 $5.95 $8.74 $18.40
- -----------------------------------------------------------------------------------------------------------
Investment operations:
Net investment loss (a) (.08) (d,f) (.08) (d) (.06) (.08) (.13)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.97 .90 .80 (2.71) (5.71)
- -----------------------------------------------------------------------------------------------------------
Total from
investment operations 1.89 .82 .74 (2.79) (5.84)
- -----------------------------------------------------------------------------------------------------------
Less distributions:
From net realized gain
on investments -- -- -- -- (3.81)
- -----------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01)
- -----------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82)
- -----------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- --
- -----------------------------------------------------------------------------------------------------------
Net asset value,
end of period $9.40 $7.51 $6.69 $5.95 $8.74
- -----------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 25.17 12.26 12.44 (31.92) (38.15)
- -----------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $41,068 $44,375 $60,957 $73,816 $142,887
- -----------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.60 (d) 1.58 (d) 1.59 1.50 1.39
- -----------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (1.01) (d,f) (1.10) (d) (1.04) (1.06) (.97)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 73.81 77.95 64.83 89.19 109.13
(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 July 31, 2005 and
July 31, 2004 reflect a reduction of less than 0.01% of average net assets
for class M shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to less than $0.01 per share and 0.03% of average net assets for
class M shares (Note 6).
The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period)
CLASS R
- -----------------------------------------------------------------------------------------------------------
PER-SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------
Year ended Year ended Period
7/31/05 7/31/04 1/21/03+-7/31/03
- -----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.02 $7.12 $6.14
- -----------------------------------------------------------------------------------------------------------
Investment operations:
Net investment loss (a) (.07) (d,f) (.06) (d) (.03)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.11 .96 1.01
- -----------------------------------------------------------------------------------------------------------
Total from
investment operations 2.04 .90 .98
- -----------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) --
- -----------------------------------------------------------------------------------------------------------
Net asset value,
end of period $10.06 $8.02 $7.12
- -----------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 25.44 12.64 15.96 *
- -----------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $248 $37 $1
- -----------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.35 (d) 1.33 (d) .71 *
- -----------------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.73) (d,f) (.88) (d) (.42) *
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 73.81 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
July 31, 2005 and July 31, 2004 reflect a reduction of less than 0.01% of
average net assets for class R shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to less than $0.01 per share and 0.05% of average net assets for
class R shares (Note 6).
The accompanying notes are an integral part of these financial statements.
Financial highlights (For a common share outstanding throughout the period)
CLASS Y
- -----------------------------------------------------------------------------------------------------------
PER-SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------
Year ended
7/31/05 7/31/04 7/31/03 7/31/02 7/31/01
- -----------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $8.33 $7.36 $6.50 $9.48 $19.48
- -----------------------------------------------------------------------------------------------------------
Investment operations:
Net investment loss (a) (.02) (d,f) (.03) (d) (.02) (.03) (.03)
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 2.19 1.00 .88 (2.95) (6.15)
- -----------------------------------------------------------------------------------------------------------
Total from
investment operations 2.17 .97 .86 (2.98) (6.18)
- -----------------------------------------------------------------------------------------------------------
Less distributions:
From net realized gain
on investments -- -- -- -- (3.81)
- -----------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01)
- -----------------------------------------------------------------------------------------------------------
Total distributions -- -- -- -- (3.82)
- -----------------------------------------------------------------------------------------------------------
Redemption fees -- (e) -- (e) -- -- --
- -----------------------------------------------------------------------------------------------------------
Net asset value,
end of period $10.50 $8.33 $7.36 $6.50 $9.48
- -----------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 26.05 13.18 13.23 (31.43) (37.71)
- -----------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $257,564 $257,709 $554,344 $600,170 $877,950
- -----------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .85 (d) .83 (d) .84 .75 .64
- -----------------------------------------------------------------------------------------------------------
Ratio of net investment
loss to average net assets (%) (.26) (d,f) (.35) (d) (.28) (.32) (.21)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 73.81 77.95 64.83 89.19 109.13
(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 July 31, 2005 and
July 31, 2004 reflect a reduction of less than 0.01% of average net assets
for class Y shares (Note 5).
(e) Amount represents less than $0.01 per share.
(f) Reflects a non-recurring accrual related to Putnam Management's
settlement with the SEC regarding brokerage allocation practices, which
amounted to less than $0.01 per share and 0.04% of average net assets for
class Y shares (Note 6).
The accompanying notes are an integral part of these financial statements.
Notes to financial statements 7/31/05
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 and class M shares are sold with a maximum front-end sales
charge of 5.25% and 3.25%, respectively, and do not pay a contingent
deferred sales charge. Prior to April 1, 2005, the maximum front-end sales
charge for class M shares was 3.50%. Class B shares, which convert to
class A shares after approximately eight years, do not pay a front-end
sales charge and are subject to a contingent deferred sales charge, if
those shares are redeemed within six years of purchase. Class C shares are
subject to the same fees 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 R shares, which are offered to qualified
employee-benefit plans are sold without a front-end sales charge or a
contingent deferred sales charge. The expenses for class A, class B, class
C, class M and class R shares may differ based on each class' distribution
fee, which is identified in Note 2. Class Y shares, which are sold at net
asset value, are generally subject to the same expenses as class A, class
B, class C, class M and class R shares, but do not bear a distribution
fee. Class Y shares are sold to certain eligible purchasers including
certain defined contribution plans (including corporate IRAs), bank trust
departments and trust companies.
A 2.00% redemption fee may apply to any shares that are redeemed (either
by selling or exchanging into another fund) within 5 days of purchase. The
redemption fee is accounted for as an addition to paid-in-capital. 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.
In the normal course of business, the fund enters into contracts that may
include agreements to indemnify another party under given circumstances.
The fund's maximum exposure under these arrangements is unknown as this
would involve future claims that may be, but have not yet been, made
against the fund. However, the fund expects the risk of material loss to
be remote.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with accounting
principles generally accepted in the United States of America and requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities in the financial statements and the
reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those
estimates.
A) Security valuation Investments for which market quotations are readily
available are valued at the last reported sales price on their principal
exchange, or official closing price for certain markets. If no sales are
reported -- as in the case of some securities traded over-the-counter -- a
security is valued at its last reported bid price. Many securities markets
and exchanges outside the U.S. close prior to the close of the New York
Stock Exchange and therefore the closing prices for securities in such
markets or on such exchanges may not fully reflect events that occur after
such close but before the close of the New York Stock Exchange. Accordingly,
on certain days, the fund will fair value foreign securities taking into
account multiple factors, including movements in the U.S. securities
markets. The number of days on which fair value prices will be used will
depend on market activity and it is possible that fair value prices will be
used by the fund to a significant extent. Securities quoted in foreign
currencies are translated into U.S. dollars at the current exchange rate.
Short-term investments having remaining maturities of 60 days or less are
valued at amortized cost, which approximates fair value. Other investments,
including certain restricted securities, are valued at fair value following
procedures approved by the Trustees. Such valuations and procedures are
reviewed periodically by the Trustees
B) Joint trading account Pursuant to an exemptive order from the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances, including cash collateral received under security lending
arrangements, into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam 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 July 31, 2005, the value of securities loaned amounted to
$330,141,562. The fund received cash collateral of $340,852,074, which is
pooled with collateral of other Putnam funds into 26 issues of high-grade,
short-term investments.
G) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code of 1986 (the "Code") applicable to
regulated investment companies. It is also the intention of the fund to
distribute an amount sufficient to avoid imposition of any excise tax
under Section 4982 of the Code, as amended. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held nor for excise tax on income and capital
gains.
At July 31, 2005, the fund had a capital loss carryover of $3,874,200,109
available to the extent allowed by the Code to offset future net capital
gain, if any. The amount of the carryover and the expiration dates are:
- ----------------------------------------------
Loss Carryover Expiration
- ----------------------------------------------
$2,424,226,347 July 31, 2010
- ----------------------------------------------
1,449,973,762 July 31, 2011
- ----------------------------------------------
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. These differences include temporary and permanent differences
of losses on wash sale transactions, realized gains and losses on certain
futures contracts and net operating loss. Reclassifications are made to
the fund's capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. For the year ended July 31, 2005, the fund reclassified
$18,874,951 to decrease accumulated net investment loss and $18,874,951 to
decrease paid-in-capital.
The tax basis components of distributable earnings and the federal tax
cost as of period end were as follows:
Unrealized appreciation $476,025,728
Unrealized depreciation (43,586,481)
----------------
Net unrealized appreciation 432,439,247
Capital loss carryforward (3,874,200,109)
Cost for federal income tax
purposes $2,784,357,283
Note 2: Management fee, administrative services and other transactions
Putnam Management is paid for management and investment advisory services
quarterly based on the average net assets of the fund. Such fee is based
on the following annual rates: 0.65% of the first $500 million of average
net assets, 0.55% of the next $500 million, 0.50% of the next $500
million, 0.45% of the next $5 billion, 0.425% of the next $5 billion,
0.405% of the next $5 billion, 0.39% of the next $5 billion and 0.38%
thereafter.
Putnam Management has agreed to waive fees and reimburse expenses of the
fund through July 31, 2006, to the extent necessary to ensure that the
fund's expenses do not exceed the simple average of the expenses of all
front-end load funds viewed by Lipper Inc. as having the same investment
classification or objective as the fund. The expense reimbursement is
based on a comparison of the fund's expenses with the average annualized
operating expenses of the funds in its Lipper peer group for each calendar
quarter during the fund's last fiscal year, excluding 12b-1 fees and
without giving effect to any expense offset and brokerage service
arrangements that may reduce fund expenses. For the year ended July 31,
2005, Putnam Management did not waive any of its management fee from the
fund.
For the period ended July 31, 2005, Putnam Management has assumed $106,860
of legal, shareholder servicing and communication, audit and Trustee fees
incurred by the fund in connection with certain legal and regulatory
matters (including those described in Note 6).
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company ("PFTC"), a subsidiary of Putnam, LLC. PFTC receives fees
for custody services based on the fund's asset level, the number of its
security holdings and transaction volumes. Putnam Investor Services, a
division of PFTC, provides investor servicing agent functions to the fund.
Putnam Investor Services receives fees for investor servicing based on the
number of shareholder accounts in the fund and the level of defined
contribution plan assets in the fund. During the year ended July 31, 2005,
the fund paid PFTC $8,703,878 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 year ended July 31, 2005, the
fund's expenses were reduced by $1,607,079 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $686, 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. George
Putnam III, who is not an independent Trustee, also receives the foregoing
fees for his services as Trustee.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. 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 year ended July 31, 2005, Putnam Retail Management, acting as
underwriter, received net commissions of $84,439 and $996 from the sale of
class A and class M shares, respectively, and received $895,651 and $2,695
in contingent deferred sales charges from redemptions of class B and class
C shares, respectively. A deferred sales charge of up to 1.00% and 0.65%
is assessed on certain redemptions of class A and class M shares,
respectively. For the year ended July 31, 2005, Putnam Retail Management,
acting as underwriter, received $2,734 and no monies on class A and class
M redemptions, respectively.
Note 3: Purchases and sales of securities
During the year ended July 31, 2005, cost of purchases and proceeds from
sales of investment securities other than short-term investments
aggregated $2,077,398,113 and $2,772,815,674, respectively. There were no
purchases or sales of U.S. government securities.
Note 4: Capital shares
At July 31, 2005, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
- -------------------------------------------------------------------------
CLASS A Shares Amount
- -------------------------------------------------------------------------
Year ended 7/31/05:
Shares sold 43,148,995 $391,321,488
- -------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -------------------------------------------------------------------------
43,148,995 391,321,488
- -------------------------------------------------------------------------
Shares repurchased (69,418,110) (625,358,357)
- -------------------------------------------------------------------------
Net decrease (26,269,115) $(234,036,869)
Year ended 7/31/04:
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)
- -------------------------------------------------------------------------
Class B Shares Amount
- -------------------------------------------------------------------------
Year ended 7/31/05:
Shares sold 5,448,263 $43,249,540
- -------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -------------------------------------------------------------------------
5,448,263 43,249,540
- -------------------------------------------------------------------------
Shares repurchased (39,615,569) (313,250,306)
- -------------------------------------------------------------------------
Net decrease (34,167,306) $(270,000,766)
Year ended 7/31/04:
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)
- -------------------------------------------------------------------------
Class C Shares Amount
- -------------------------------------------------------------------------
Year ended 7/31/05:
Shares sold 728,734 $6,374,583
- -------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -------------------------------------------------------------------------
728,734 6,374,583
- -------------------------------------------------------------------------
Shares repurchased (1,456,256) (12,604,284)
- -------------------------------------------------------------------------
Net decrease (727,522) $(6,229,701)
Year ended 7/31/04:
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)
- -------------------------------------------------------------------------
Class M Shares Amount
- -------------------------------------------------------------------------
Year ended 7/31/05:
Shares sold 863,745 $7,233,467
- -------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -------------------------------------------------------------------------
863,745 7,233,467
- -------------------------------------------------------------------------
Shares repurchased (2,401,790) (20,044,225)
- -------------------------------------------------------------------------
Net decrease (1,538,045) $(12,810,758)
Year ended 7/31/04:
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)
- -------------------------------------------------------------------------
Class R Shares Amount
- -------------------------------------------------------------------------
Year ended 7/31/05:
Shares sold 25,574 $229,101
- -------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -------------------------------------------------------------------------
25,574 229,101
- -------------------------------------------------------------------------
Shares repurchased (5,609) (50,632)
- -------------------------------------------------------------------------
Net increase 19,965 $178,469
Year ended 7/31/04:
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
- -------------------------------------------------------------------------
Class Y Shares Amount
- -------------------------------------------------------------------------
Year ended 7/31/05:
Shares sold 8,151,981 $75,401,917
- -------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -------------------------------------------------------------------------
8,151,981 75,401,917
- -------------------------------------------------------------------------
Shares repurchased (14,563,230) (134,091,767)
- -------------------------------------------------------------------------
Net decrease (6,411,249) $(58,689,850)
Year ended 7/31/04:
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 and administrative services fees paid by Putnam Prime Money
Market Fund with respect to assets invested by the fund in Putnam Prime
Money Market Fund. For the year ended July 31, 2005, management fees paid
were reduced by $23,568 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 $374,408 for the year
ended July 31, 2005. During the year ended July 31, 2005, cost of
purchases and cost of sales of investments in Putnam Prime Money Market
Fund aggregated $509,364,823 and $428,147,725, respectively.
Note 6: Regulatory matters and litigation
Putnam Management has entered into agreements with the Securities and
Exchange Commission and the Massachusetts Securities Division settling
charges connected with excessive short-term trading by Putnam employees
and, in the case of the charges brought by the Massachusetts Securities
Division, by participants in some Putnam-administered 401(k) plans.
Pursuant to these settlement agreements, Putnam Management will pay a
total of $193.5 million in penalties and restitution, with $153.5 million
being paid to 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 following approval of the plan
by the SEC and the Massachusetts Securities Division.
The Securities and Exchange Commission's and Massachusetts Securities
Division's allegations and related matters also serve as the general basis
for numerous lawsuits, including purported class action lawsuits filed
against Putnam Management and certain related parties, including certain
Putnam funds. Putnam Management will bear any costs incurred by Putnam
funds in connection with these lawsuits. Putnam Management believes that
the likelihood that the pending private lawsuits and purported class
action lawsuits will have a material adverse financial impact on the fund
is remote, and the pending actions are not likely to materially affect its
ability to provide investment management services to its clients,
including the Putnam funds.
On March 23, 2005, Putnam Management entered into a settlement with the
Securities and Exchange Commission resolving its inquiry into Putnam
Management's alleged failure to fully and effectively disclose a former
brokerage allocation practice to the Board of Trustees and shareholders of
the Putnam Funds. This practice, which Putnam Management ceased as of
January 1, 2004, involved allocating a portion of the brokerage on mutual
fund portfolio transactions to certain broker-dealers who sold shares of
Putnam mutual funds. Under the settlement order, Putnam Management has
paid a civil penalty of $40 million and disgorgement of $1 to the
Securities and Exchange Commission. Of these amounts, $1,011,756 has been
allocated for distribution to the fund pursuant to a plan approved by the
Securities and Exchange Commission and is included in Other income on the
Statement of operations. As part of the settlement, Putnam Management
neither admitted nor denied any wrongdoing.
Putnam Investments has recorded a charge of $30 million for the estimated
cost, excluding interest, that it believes will be necessary to address
issues relating to the calculation of certain amounts paid by the Putnam
mutual funds in previous years. The previous payments were cost
reimbursements by the Putnam funds to Putnam for transfer agent services
relating to defined contribution operations. Putnam currently anticipates
that any payments made by Putnam related to this issue will be paid to the
Putnam funds. Review of this issue is ongoing.
Putnam Management and Putnam Retail Management are named as defendants in
a civil suit in which the plaintiffs allege that the management and
distribution fees paid by certain Putnam funds were excessive and seek
recovery under the Investment Company Act of 1940. Putnam Management and
Putnam Retail Management have contested the plaintiffs' claims and the
matter is currently pending in the U.S. District Court for the District of
Massachusetts. Based on currently available information, Putnam Management
believes that this action is without merit and that it is unlikely to have
a material effect on Putnam Management's and Putnam Retail Management's
ability to provide services to their clients, including the fund.
Federal tax information (Unaudited)
The Form 1099 you receive in January 2006 will show the tax status of all
distributions paid to your account in calendar 2005.
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 July 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
38% of the total brokerage commissions paid for the year ended July 31,
2005.
Commissions paid to the next 10 firms together represented approximately
36% of the total brokerage commissions paid during the period. These firms
are (in alphabetical order) Bank of America, Bear Stearns & Company, CIBC
World Markets, Credit Suisse First Boston, Deutsche Bank Securities,
Lazard Freres & Co., Lehman Brothers, Morgan Stanley Dean Witter, RBC
Capital Markets, and UBS Warburg.
Additional information about brokerage commissions is available on the
Securities and Exchange Commission (SEC) Web site at www.sec.gov. Putnam
funds disclose commissions by firm to the SEC in semiannual filings on
form N-SAR.
About the Trustees
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Jameson A. Baxter (9/6/43), Trustee since 1994
Ms. Baxter is the President of Baxter Associates, Inc., a private
investment firm that she founded in 1986.
Ms. Baxter serves as a Director of ASHTA Chemicals, Inc., Banta
Corporation (a printing and digital imaging firm), Ryerson Tull, Inc. (a
steel service corporation), the Mutual Fund Directors Forum, Advocate
Health Care and BoardSource, formerly the National Center for Nonprofit
Boards. She is Chairman Emeritus of the Board of Trustees, Mount Holyoke
College, having served as Chairman for five years and as a board member
for thirteen years. Until 2002, Ms. Baxter was a Director of Intermatic
Corporation (a manufacturer of energy control products).
Ms. Baxter has held various positions in investment banking and corporate
finance, including Vice President and Principal of the Regency Group, and
Vice President of and Consultant to First Boston Corporation. She is a
graduate of Mount Holyoke College.
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Charles B. Curtis (4/27/40), Trustee since 2001
Mr. Curtis is President and Chief Operating Officer of the Nuclear Threat
Initiative (a private foundation dealing with national security issues)
and serves as Senior Advisor to the United Nations Foundation.
Mr. Curtis is a member of the Council on Foreign Relations and the Trustee
Advisory Council of the Applied Physics Laboratory, Johns Hopkins
University. Until 2003, Mr. Curtis was a member of the Electric Power
Research Institute Advisory Council and the University of Chicago Board of
Governors for Argonne National Laboratory. Prior to 2002, Mr. Curtis was a
Member of the Board of Directors of the Gas Technology Institute and the
Board of Directors of the Environment and Natural Resources Program
Steering Committee, John F. Kennedy School of Government, Harvard
University. Until 2001, Mr. Curtis was a member of the Department of
Defense Policy Board and Director of EG&G Technical Services, Inc. (a
fossil energy research and development support company).
From August 1997 to December 1999, Mr. Curtis was a Partner at Hogan &
Hartson L.L.P., a Washington, D.C. law firm. Prior to May 1997, Mr. Curtis
was Deputy Secretary of Energy. He served as Chairman of the Federal
Energy Regulatory Commission from 1977 to 1981 and has held positions on
the staff of the U.S. House of Representatives, the U.S. Treasury
Department, and the SEC.
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Myra R. Drucker (1/16/48), Trustee since 2004
Ms. Drucker is a Vice Chair of the Board of Trustees of Sarah Lawrence
College, a Trustee of Commonfund (a not-for-profit firm specializing in
asset management for educational endowments and foundations) and a member
of the Investment Committee of the Kresge Foundation (a charitable trust).
Ms. Drucker is an ex-officio member of the New York Stock Exchange (NYSE)
Pension Managers Advisory Committee, having served as Chair for seven
years and a member of the Executive Committee of the Committee on
Investment of Employee Benefit Assets. She is Chair of the Advisory Board
of Hamilton Lane Advisors (an investment management firm) and a member of
the Advisory Board of RCM (an investment management firm). Until August
31, 2004, Ms. Drucker was Managing Director and a member of the Board of
Directors of General Motors Asset Management and Chief Investment Officer
of General Motors Trust Bank. Ms. Drucker also served as a member of the
NYSE Corporate Accountability and Listing Standards Committee and the
NYSE/NASD IPO Advisory Committee.
Prior to joining General Motors Asset Management in 2001, Ms. Drucker held
various executive positions in the investment management industry. Ms.
Drucker served as Chief Investment Officer of Xerox Corporation (a
technology and service company in the document industry), where she was
responsible for the investment of the company's pension assets. Ms.
Drucker was also Staff Vice President and Director of Trust Investments
for International Paper (a paper, paper distribution, packaging and forest
products company) and previously served as Manager of Trust Investments
for Xerox Corporation. Ms. Drucker received a B.A. degree in Literature
and Psychology from Sarah Lawrence College and pursued graduate studies in
economics, statistics and portfolio theory at Temple University.
- -----------------------------------------------------------------------------
John A. Hill (1/31/42), Trustee since 1985 and Chairman since 2000
Mr. Hill is Vice Chairman of First Reserve Corporation, a private equity
buyout firm that specializes in energy investments in the diversified
worldwide energy industry.
Mr. Hill is a Director of Devon Energy Corporation, TransMontaigne Oil
Company and various private companies controlled by First Reserve
Corporation, as well as Chairman of TH Lee, Putnam Investment Trust (a
closed-end investment company advised by an affiliate of Putnam
Management). He is also a Trustee of Sarah Lawrence College. Until 2005,
he was a Director of Continuum Health Partners of New York.
Prior to acquiring First Reserve Corporation in 1983, Mr. Hill held
executive positions in investment banking and investment management with
several firms and with the federal government, including Deputy Associate
Director of the Office of Management and Budget and Deputy Director of the
Federal Energy Administration. He is active in various business associations,
including the Economic Club of New York, and lectures on energy issues in
the United States and Europe. Mr. Hill holds a B.A. degree in Economics from
Southern Methodist University and pursued graduate studies there as a Woodrow
Wilson Fellow.
- -----------------------------------------------------------------------------
Paul L. Joskow (6/30/47), Trustee since 1997
Dr. Joskow is the Elizabeth and James Killian Professor of Economics and
Management, and Director of the Center for Energy and Environmental Policy
Research at the Massachusetts Institute of Technology.
Dr. Joskow serves as a Director of National Grid plc (a UK-based holding
company with interests in electric and gas transmission and distribution
and telecommunications infrastructure) and TransCanada Corporation (an
energy company focused on natural gas transmission and power services). He
also serves on the Board of Overseers of the Boston Symphony Orchestra.
Prior to February 2005, he served on the board of the Whitehead Institute
for Biomedical Research (a non-profit research institution) and has been
President of the Yale University Council since 1993. Prior to February
2002, he was a Director of State Farm Indemnity Company (an automobile
insurance company), and, prior to March 2000, he was a Director of New
England Electric System (a public utility holding company).
Dr. Joskow has published five books and numerous articles on topics in
industrial organization, government regulation of industry, and
competition policy. He is active in industry restructuring, environmental,
energy, competition and privatization policies -- serving as an advisor to
governments and corporations worldwide. Dr. Joskow holds a Ph.D. and M.
Phil from Yale University and a B.A. from Cornell University.
- -----------------------------------------------------------------------------
Elizabeth T. Kennan (2/25/38), Trustee since 1992
Dr. Kennan is a Partner of Cambus-Kenneth Farm (thoroughbred horse and
cattle breeding). She is President Emeritus of Mount Holyoke College.
Dr. Kennan served as Chairman and is now Lead Director of Northeast
Utilities. Until 2005, she was a Director of Talbots, Inc. She has served
as Director on a number of other boards, including Bell Atlantic, Chastain
Real Estate, Shawmut Bank, Berkshire Life Insurance and Kentucky Home Life
Insurance. She is a Trustee of the National Trust for Historic
Preservation, of Centre College and of Midway College in Midway, Kentucky.
She is also a member of The Trustees of Reservations. Dr. Kennan has
served on the oversight committee of the Folger Shakespeare Library, as
President of Five Colleges Incorporated, as a Trustee of Notre Dame
University and is active in various educational and civic associations.
As a member of the faculty of Catholic University for twelve years, until
1978, Dr. Kennan directed the post-doctoral program in Patristic and
Medieval Studies, taught history and published numerous articles. Dr.
Kennan holds a Ph.D. from the University of Washington in Seattle, an M.S.
from St. Hilda's College at Oxford University and an A.B. from Mount
Holyoke College. She holds several honorary doctorates.
- -----------------------------------------------------------------------------
John H. Mullin, III (6/15/41), Trustee since 1997
Mr. Mullin is the Chairman and CEO of Ridgeway Farm (a limited liability
company engaged in timber and farming).
Mr. Mullin serves as a Director of The Liberty Corporation (a broadcasting
company), Progress Energy, Inc. (a utility company, formerly known as
Carolina Power & Light) and Sonoco Products, Inc. (a packaging company).
Mr. Mullin is Trustee Emeritus of The National Humanities Center and
Washington & Lee University, where he served as Chairman of the Investment
Committee. Prior to May 2001, he was a Director of Graphic Packaging
International Corp. Prior to February 2004, he was a Director of Alex
Brown Realty, Inc.
Mr. Mullin is also a past Director of Adolph Coors Company; ACX
Technologies, Inc.; Crystal Brands, Inc.; Dillon, Read & Co., Inc.;
Fisher-Price, Inc.; and The Ryland Group, Inc. Mr. Mullin is a graduate of
Washington & Lee University and The Wharton Graduate School, University of
Pennsylvania.
- -----------------------------------------------------------------------------
Robert E. Patterson (3/15/45), Trustee since 1984
Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman of
Cabot Properties, Inc. (a private equity firm investing in commercial real
estate).
Mr. Patterson serves as Chairman Emeritus and Trustee of the Joslin
Diabetes Center and as a Director of Brandywine Trust Group, LLC. Prior to
June 2003, he was a Trustee of Sea Education Association. Prior to
December 2001, he was President and Trustee of Cabot Industrial Trust
(a publicly traded real estate investment trust). Prior to February 1998,
he was Executive Vice President and Director of Acquisitions of Cabot
Partners Limited Partnership (a registered investment adviser involved in
institutional real estate investments). Prior to 1990, he served as
Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, Inc.
(the predecessor company of Cabot Partners).
Mr. Patterson practiced law and held various positions in state government
and was the founding Executive Director of the Massachusetts Industrial
Finance Agency. Mr. Patterson is a graduate of Harvard College and Harvard
Law School.
- -----------------------------------------------------------------------------
W. Thomas Stephens (9/2/42), Trustee since 1997
Mr. Stephens is Chairman and Chief Executive Officer of Boise Cascade,
L.L.C. (a paper, forest products and timberland assets company).
Mr. Stephens serves as a Director of TransCanada Pipelines Limited. Until
2004, Mr. Stephens was a Director of Xcel Energy Incorporated (a public
utility company), Qwest Communications, and Norske Canada, Inc. (a paper
manufacturer). Until 2003, Mr. Stephens was a Director of Mail-Well, Inc.
(a diversified printing company). He served as Chairman of Mail-Well until
2001 and as CEO of MacMillan-Bloedel, Ltd. (a forest products company)
until 1999.
Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of
Johns Manville Corporation. He holds B.S. and M.S. degrees from the
University of Arkansas.
- -----------------------------------------------------------------------------
Richard B. Worley (11/15/45), Trustee since 2004
Mr. Worley is Managing Partner of Permit Capital LLC, an investment
management firm.
Mr. Worley serves on the Executive Committee of the University of
Pennsylvania Medical Center, is a Trustee of The Robert Wood Johnson
Foundation (a philanthropic organization devoted to health care issues)
and is a Director of The Colonial Williamsburg Foundation (a historical
preservation organization). Mr. Worley also serves on the investment
committees of Mount Holyoke College and World Wildlife Fund (a wildlife
conservation organization).
Prior to joining Permit Capital LLC in 2002, Mr. Worley served as Chief
Strategic Officer of Morgan Stanley Investment Management. He previously
served as President, Chief Executive Officer and Chief Investment Officer
of Morgan Stanley Dean Witter Investment Management and as a Managing
Director of Morgan Stanley, a financial services firm. Mr. Worley also was
the Chairman of Miller Anderson & Sherrerd, an investment management firm.
Mr. Worley holds a B.S. degree from University of Tennessee and pursued
graduate studies in economics at the University of Texas.
- -----------------------------------------------------------------------------
Charles E. Haldeman, Jr.* (10/29/48), Trustee since 2004
Mr. Haldeman is President and Chief Executive Officer of Putnam, LLC
("Putnam Investments"). He is a member of Putnam Investments' Executive
Board of Directors and Advisory Council. Prior to November 2003, Mr.
Haldeman served as Co-Head of Putnam Investments' Investment Division.
Prior to joining Putnam Investments in 2002, Mr. Haldeman held executive
positions in the investment management industry. He previously served as
Chief Executive Officer of Delaware Investments and President & Chief
Operating Officer of United Asset Management. Mr. Haldeman was also a
partner and director of Cooke & Bieler, Inc. (an investment management
firm).
Mr. Haldeman currently serves as a Trustee of Dartmouth College and as
Emeritus Trustee of Abington Memorial Hospital. He is a graduate of
Dartmouth College, Harvard Law School and Harvard Business School. Mr.
Haldeman is also a Chartered Financial Analyst (CFA) charterholder.
- -----------------------------------------------------------------------------
George Putnam, III* (8/10/51), Trustee since 1984 and President since 2000
Mr. Putnam is President of New Generation Research, Inc. (a publisher of
financial advisory and other research services), and of New Generation
Advisers, Inc. (a registered investment advisor to private funds). Mr.
Putnam founded the New Generation companies in 1986.
Mr. Putnam is a Director of The Boston Family Office, LLC (a registered
investment adviser). He is a Trustee of St. Mark's School and Shore
Country Day School, and until 2002 was a Trustee of the Sea Education
Association.
Mr. Putnam previously worked as an attorney with the law firm of Dechert
LLP (formerly known as Dechert Price & Rhoads) in Philadelphia. He is a
graduate of Harvard College, Harvard Business School and Harvard Law
School.
The address of each Trustee is One Post Office Square, Boston, MA 02109.
As of July 31, 2005, there were 108 Putnam Funds. All Trustees serve as
Trustees of all Putnam funds.
Each Trustee serves for an indefinite term, until his or her resignation,
retirement at age 72, death, or removal.
* Trustees who are or may be deemed to be "interested persons" (as defined
in the Investment Company Act of 1940) of the fund, Putnam Management,
Putnam Retail Management, or Marsh & McLennan Companies, Inc., the parent
company of Putnam, LLC and its affiliated companies. Messrs. Haldeman and
Putnam, III are deemed "interested persons" by virtue of their positions as
officers of the fund, Putnam Management or Putnam Retail Management and as
shareholders of Marsh & McLennan Companies, Inc. Mr. Putnam, III is the
President of your fund and each of the other Putnam funds. Mr. Haldeman is
President and Chief Executive Officer of Putnam Investments.
Officers
In addition to George Putnam, III, the other officers of the fund are
shown below:
Charles E. Porter (7/26/38)
Executive Vice President, Associate Treasurer
and Principal Executive Officer
Since 1989
Jonathan S. Horwitz (6/4/55)
Senior Vice President and Treasurer
Since 2004
Prior to 2004, Managing Director,
Putnam Investments
Steven D. Krichmar (6/27/58)
Vice President and Principal Financial Officer
Since 2002
Senior Managing Director, Putnam
Investments. Prior to July 2001, Partner,
PricewaterhouseCoopers LLP
Michael T. Healy (1/24/58)
Assistant Treasurer and Principal
Accounting Officer
Since 2000
Managing Director, Putnam Investments
Beth S. Mazor (4/6/58)
Vice President
Since 2002
Senior Vice President, Putnam Investments
Daniel T. Gallagher (2/27/62)
Senior Vice President, Staff Counsel
and Compliance Liaison
Since 2004
Prior to 2004, Associate, Ropes & Gray LLP;
prior to 2000, Law Clerk, Massachusetts
Supreme Judicial Court
Francis J. McNamara, III (8/19/55)
Vice President and Chief Legal Officer
Since 2004
Senior Managing Director, Putnam
Investments, Putnam Management
and Putnam Retail Management. Prior
to 2004, General Counsel, State Street
Research & Management Company
James P. Pappas (2/24/53)
Vice President
Since 2004
Managing Director, Putnam Investments
and Putnam Management. During 2002,
Chief Operating Officer, Atalanta/Sosnoff
Management Corporation; prior to 2001,
President and Chief Executive Officer,
UAM Investment Services, Inc.
Richard S. Robie, III (3/30/60)
Vice President
Since 2004
Senior Managing Director, Putnam
Investments, Putnam Management
and Putnam Retail Management. Prior
to 2003, Senior Vice President, United
Asset Management Corporation
Charles A. Ruys de Perez (10/17/57)
Vice President and Chief Compliance Officer
Since 2004
Managing Director, Putnam Investments
Mark C. Trenchard (6/5/62)
Vice President and BSA Compliance Officer
Since 2002
Senior Vice President, Putnam Investments
Judith Cohen (6/7/45)
Vice President, Clerk and Assistant Treasurer
Since 1993
Wanda M. McManus (1/4/47)
Vice President, Senior Associate Treasurer
and Assistant Clerk
Since 2005
Nancy T. Florek (6/13/57)
Vice President, Assistant Clerk,
Assistant Treasurer and Proxy Manager
Since 2005
The address of each Officer is One Post Office Square, Boston, MA 02109.
Services for shareholders
- -----------------------------------------------------------------------------
Investor services
Help your investment grow Set up a program for systematic investing with
as little as $25 a month from a Putnam fund or from your own savings or
checking account. (Regular investing does not guarantee a profit or
protect against loss in a declining market.)
Switch funds easily* You can move money from one Putnam fund to another
within the same class of shares without a service charge.
Access your money easily You can have checks sent regularly or redeem
shares any business day at the then-current net asset value, which may be
more or less than the original cost of the shares. Class B and class C
shares carry a sales charge that is applied to certain withdrawals.
How to buy additional shares You may buy shares through your financial
advisor or directly from Putnam. To open an account by mail, send a check
made payable to the name of the fund along with a completed fund
application. To add to an existing account, complete the investment slip
found at the top of your Confirmation of Activity statement and return it
with a check payable to your fund.
- -----------------------------------------------------------------------------
For more information
Visit www.putnam.com A secure section of our Web site contains complete
information on your account, including balances and transactions, updated
daily. You may also conduct transactions, such as exchanges, additional
investments, and address changes. Log on today to get your password.
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.
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[S]
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.
[S] 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.
Tax-free Income Funds
AMT-Free Insured Municipal Fund**
Tax Exempt Income Fund
Tax Exempt Money Market Fund
Tax-Free High Yield Fund
State tax-free income funds:
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio, and Pennsylvania
Asset Allocation Portfolios
Putnam Asset Allocation Portfolios--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
Putnam RetirementReady[R] Funds
Putnam RetirementReady Funds -- ten 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 ten funds:
Putnam RetirementReady 2050 Fund
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 may be applied
to shares exchanged or sold within 5 days of purchase.
Check your account balances and the most recent month-end performance at
www.putnam.com.
Fund information
Founded over 65 years ago, Putnam Investments was built around the concept
that a balance between risk and reward is the hallmark of a well-rounded
financial program. We manage over 100 mutual funds in growth, value,
blend, fixed income, and international.
Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109
Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109
Custodian
Putnam Fiduciary
Trust Company
Legal Counsel
Ropes & Gray LLP
Independent Registered
Public Accounting Firm
KPMG LLP
Trustees
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Myra R. Drucker
Charles E. Haldeman, Jr.
Paul L. Joskow
Elizabeth T. Kennan
John H. Mullin, III
Robert E. Patterson
George Putnam, III
W. Thomas Stephens
Richard B. Worley
Officers
George Putnam, III
President
Charles E. Porter
Executive Vice President,
Associate Treasurer and
Principal Executive Officer
Jonathan S. Horwitz
Senior Vice President
and Treasurer
Steven D. Krichmar
Vice President and
Principal Financial Officer
Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer
Beth S. Mazor
Vice President
Daniel T. Gallagher
Senior Vice President,
Staff Counsel and
Compliance Liaison
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
Vice President, Clerk and
Assistant Treasurer
Wanda M. McManus
Vice President, Senior Associate
Treasurer and Assistant Clerk
Nancy T. Florek
Vice President, Assistant Clerk,
Assistant Treasurer and Proxy Manager
This report is for the information of shareholders of Putnam Vista Fund.
It may also be used as sales literature when preceded or accompanied by
the current prospectus, the most recent copy of Putnam's Quarterly
Performance Summary, and Putnam's Quarterly Ranking Summary. For more
recent performance, please visit www.putnam.com. Investors should
carefully consider the investment objective, risks, charges, and expenses
of a fund, which are described in its prospectus. For this and other
information or to request a prospectus, call 1-800-225-1581 toll free.
Please read the prospectus carefully before investing. The fund's
Statement of Additional Information contains additional information about
the fund's Trustees and is available without charge upon request by
calling 1-800-225-1581.
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[LOGO OMITTED]
PUTNAM INVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
www.putnam.com
1-800-225-1581
Founded in 1937, Putnam Investments began with the principle
that a balance between risk and reward is the mark of
a well-rounded financial program. Today, we manage money
with a focus on seeking consistent results over time. This
balanced approach continues to underscore everything we do.
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
[GRAPHIC OMITTED: SCALE]
Not FDIC Insured May Lose Value No Bank Guarentee
AN015 226700 9/05
[PUTNAM INVESTMENTS]
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Putnam Vista Fund
Supplement to Annual Report dated 7/31/05
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 annual report.
RESULTS AT A GLANCE
- ------------------------------------------------------------------------------
Total return for periods ended 7/31/05
NAV
Life of fund (since class A inception, 6/3/68)
Annual average 10.00%
10 years 129.09
Annual average 8.64
5 years -31.01
Annual average -7.15
1 year 26.05
Share value: NAV
7/31/04 $8.33
7/31/05 $10.50
- ------------------------------------------------------------------------------
Distributions *
* The fund made no distributions during the period
- ------------------------------------------------------------------------------
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 15-16 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 7/31/05
Class Y
Expenses paid per $1,000* $4.20
Ending value (after expenses) $1,089.20
- ------------------------------------------------------------------------------
EXPENSES AND VALUE OF A $1,000 INVESTMENT
assuming a hypothetical 5% annualized return for the 6 months ended 7/31/05
Class Y
Expenses paid per $1,000* $4.06
Ending value (after expenses) $1,020.78
- ------------------------------------------------------------------------------
EXPENSE RATIO COMPARISON USING ANNUALIZED DATA
Your fund's annualized expense ratio + 0.81%
Average annualized expense ratio for Lipper peer group ++ 1.27%
+ For the fund's most recent fiscal half year; may differ from expense
ratios based on one-year data in financial highlights.
++ 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:
- -----------------------
(a) All officers of the Fund, including its principal executive, financial and
accounting officers, are employees of Putnam Investment Management, LLC,
the Fund's investment manager. As such they are subject to a comprehensive
Code of Ethics adopted and administered by Putnam Investments which is
designed to protect the interests of the firm and its clients. The Fund
has adopted a Code of Ethics which incorporates the Code of Ethics of
Putnam Investments with respect to all of its officers and Trustees who are
employees of Putnam Investment Management, LLC. For this reason, the Fund
has not adopted a separate code of ethics governing its principal
executive, financial and accounting officers.
(c) In July 2004, Putnam Investment Management, LLC, the Fund's investment
manager, Putnam Retail Management Limited Partnership, the Fund's principal
underwriter, and Putnam Investments Limited, the sub-manager for a portion
of the assets of certain funds as determined by Putnam Management from time
to time, adopted several amendments to their Code of Ethics. Some of these
amendments were adopted as a result of Putnam Investment Management's
partial settlement order with the SEC on November 13, 2003. Insofar as such
Code of Ethics applies to the Fund's principal executive officer, principal
financial officer and principal accounting officer, the amendments provided
for the following: (i) a 90-day blackout period for all shares of Putnam
open-end funds (except for money market funds) purchased or sold (including
exchanges into or out of a fund) by Putnam employees and certain family
members; (ii) a one-year holding period for all access persons that operates
in the same manner as the 90-day rule; (iii) delivery by Putnam employees to
the Code of Ethics Administrator of both quarterly account statements for
all brokerage accounts (irrespective of activity in the accounts) and
account statements for any Putnam funds not held at Putnam or for any funds
sub-advised by Putnam; (iv) a prohibition of Putnam employees from making
more than 25 trades in individual securities in their personal accounts in
any given quarter; (v) the extension of the existing prohibition of access
persons from a purchase and sale or sale and purchase of an individual
security within 60 days to include trading based on tax-lot election; (vi)
the inclusion of trades in Marsh & McLennan Companies, Inc. (ultimate parent
company of Putnam Investment Management) securities in pre-clearance and
reporting requirements; (vii) a prohibition of limit and good-until-canceled
orders as inconsistent with the requirements of daily pre-clearance; (viii)
new limits and procedures for accounts managed by outside managers and
brokers, in order for trading in such accounts to be exempt from
pre-clearance requirements; (ix) a new gift and entertainment policy that
imposes a reporting obligation on all meals and entertainment and new limits
on non-meal entertainment; (x) a number of alternatives for the reporting of
irregular activity.
In December 2004, additional amendments to the Code of Ethics were adopted.
Insofar as such Code of Ethics applies to the Fund's principal executive
officer, principal financial officer and principal accounting officer, the
amendments provided for the following: (i) implementation of minimum
monetary sanctions for violations of the Code; (ii) expansion of the
definition of "access person" under the Code include all Putnam employees
with access to non-public information regarding Putnam-managed mutual fund
portfolio holdings; (iii) lengthening the period during which access persons
are required to complete quarterly reports; (iv) reducing the maximum number
of trades than can be made by Putnam employees in their personal accounts in
any calendar quarter from 25 trades to 10 trades; and (v) lengthening the
required holding period for securities by access persons from 60 days to 90
days.
In March 2005, additional amendments to the Code of Ethics were adopted,
that went into effect on April 1, 2005. Insofar as such Code of Ethics
applies to the Fund's principal executive officer, principal financial
officer and principal accounting officer, the amendments (i) prohibit Putnam
employees and their immediate family members from having any direct or
indirect personal financial interest in companies that do business with
Putnam (excluding investment holdings in public companies that are not
material to the employee), unless such interest is disclosed and approved by
the Code of Ethics Officer; (ii) prohibit Putnam employees from using Putnam
assets, letterhead or other resources in making political or campaign
contributions, solicitations or endorsements;(iii) require Putnam employees
to obtain pre-clearance of personal political or campaign contributions or
other gifts to government officials or political candidates in certain
jurisdictions and to officials or candidates with whom Putnam has or is
seeking to establish a business relationship and (iv) require Putnam
employees to obtain pre-approval from Putnam's Director of Government
Relations prior to engaging in lobbying activities.
In July 2005, additional amendments to the Code of Ethics were adopted.
Insofar as such Code of Ethics applies to the Fund's principal executive
officer, principal financial officer and principal accounting officer, the
amendments provided for an exception to the standard 90-day holding period
(one year, in the case of employees deemed to be "access persons" under the
Code) for shares of Putnam mutual funds in the case of redemptions from an
employee's account in a college savings plan qualified under Section 529 of
the Internal Revenue Code. Under this exception, an employee may, without
penalty under the Code, make "qualified redemptions" of shares from such an
account less than 90 days (or one year, as applicable) after purchase.
"Qualified redemptions" include redemptions for higher education purposes
for the account beneficiary and redemptions made upon death or disability.
The July 2005 amendments also provide that an employee may, for purposes of
the rule limiting the number of trades per calendar quarter in an employee's
personal account to a maximum of 10, count all trades of the same security
in the same direction (all buys or all sells) over a period of five
consecutive business days as a single trade.
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
The Funds' Audit and Pricing Committee is comprised solely of Trustees
who are "independent" (as such term has been defined by the Securities
and Exchange Commission ("SEC") in regulations implementing Section 407
of the Sarbanes-Oxley Act (the "Regulations")). The Trustees believe
that each of the members of the Audit and Pricing Committee also possess
a combination of knowledge and experience with respect to financial
accounting matters, as well as other attributes, that qualify them for
service on the Committee. In addition, the Trustees have determined
that all members of the Funds' Audit and Pricing Committee meet the
financial literacy requirements of the New York Stock Exchange's rules
and that Mr. Patterson, Mr. Stephens and Mr. Worley qualify as "audit
committee financial experts" (as such term has been defined by the
Regulations) based on their review of their pertinent experience and
education. Certain other Trustees, although not on the Audit and Pricing
Committee, would also qualify as "audit committee financial experts."
The SEC has stated that the designation or identification of a person as
an audit committee financial expert pursuant to this Item 3 of Form N-CSR
does not impose on such person any duties, obligations or liability that
are greater than the duties, obligations and liability imposed on such
person as a member of the Audit and Pricing Committee and the Board of
Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
The following table presents fees billed in each of the last two fiscal
years for services rendered to the fund by the fund's independent
auditors:
Audit Audit-Related Tax All Other
Fiscal year ended Fees Fees Fees Fees
- ----------------- ---------- ------------- ------- ---------
July 31, 2005 $ 30,978 $ - $ 2,778 $ -
July 31, 2004 $ 39,634* $ - $ 2,750 $ 693
* Includes fees of $ 8,384 by the fund's independent auditor to the fund
for audit procedures necessitated by regulatory and litigation matters
for the fiscal year ended July 31, 2004, . These fees were reimbursed
to the fund by Putnam.
For the fiscal years ended July 31, 2005 and July 31, 2004, the fund's
independent auditors billed aggregate non-audit fees in the amounts of $
2,778 and $ 3,443 respectively, to the fund, Putnam Management and any
entity controlling, controlled by or under common control with Putnam
Management that provides ongoing services to the fund.
Audit Fees represents fees billed for the fund's last two fiscal years.
Audit-Related Fees represents fees billed in the fund's last two fiscal
years for services traditionally performed by the fund's auditor,
including accounting consultation for proposed transactions or
concerning financial accounting and reporting standards and other audit
or attest services not required by statute or regulation.
Tax Fees represent fees billed in the fund's last two fiscal years for
tax compliance, tax planning and tax advice services. Tax planning and
tax advice services include assistance with tax audits, employee benefit
plans and requests for rulings or technical advice from taxing
authorities.
All Other Fees Fees represent fees billed for services relating to
interfund trading.
Pre-Approval Policies of the Audit and Pricing Committee. The Audit and
Pricing Committee of the Putnam funds has determined that, as a matter
of policy, all work performed for the funds by the funds' independent
auditors will be pre-approved by the Committee and will generally not be
subject to pre-approval procedures.
Under certain circumstances, the Audit and Pricing Committee believes
that it may be appropriate for Putnam Investment Management, LLC
("Putnam Management") and certain of its affiliates to engage the
services of the funds' independent auditors, but only after prior
approval by the Committee. Such requests are required to be submitted
in writing to the Committee and explain, among other things, the nature
of the proposed engagement, the estimated fees, and why this work must
be performed by that particular audit firm. The Committee will review
the proposed engagement at its next meeting.
Since May 6, 2003, all work performed by the independent auditors for
the funds, Putnam Management and any entity controlling, controlled by
or under common control with Putnam Management that provides ongoing
services to the fund was pre-approved by the Committee or a member of
the Committee pursuant to the pre-approval policies discussed above.
Prior to that date, the Committee had a general policy to pre-approve
the independent auditor's engagements for non-audit services with the
funds, Putnam Management and any entity controlling, controlled by or
under common control with Putnam Management that provides ongoing
services to the fund.
The following table presents fees billed by the fund's principal auditor
for services required to be approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X.
Audit-Related Tax All Other Total Non-
Fiscal year ended Fees Fees Fees Audit Fees
- ----------------- ------------- ---- --------- ----------
July 31, 2005 $-- $-- $-- $--
July 31, 2004 $-- $-- $-- $--
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) The Code of Ethics of The Putnam Funds, which incorporates the
Code of Ethics of Putnam Investments, is filed herewith.
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act
of 2002 are filed herewith.
SIGNATURES
- ---------------------
Pursuant to the requirements of the Securities Exchange Act of 1934
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: September 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: September 28, 2005
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: September 28, 2005