Putnam
Vista
Fund
[Artwork]
Annual Report
July 31, 1994
[Putnam Logo]
Boston * London * Tokyo
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PERFORMANCE HIGHLIGHTS
The fund's class A shares have earned Morningstar's ranking of four stars,
out of a possible five, based on risk-adjusted 3-, 5- and 10-year performance
through July 31, 1994, a ranking it has held since November 30, 1992.*
Lipper has ranked the fund's class A shares in the upper 25% of growth funds
based on total return for the 3-, 5- and 10-year periods ended July 31, 1994.+
Performance should always be considered in light of a fund's investment strate-
gy. Putnam Vista Fund is designed for investors seeking capital appreciation
through common stocks selected for above-average growth potential.
FISCAL 1994 RESULTS AT A GLANCE
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Class A Class B
Total return: NAV POP NAV CDSC
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12 months ended 7/31/94
(change in value during
period plus reinvested
distributions) 2.75% -3.21% 1.89% -2.83%
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Share value: NAV POP NAV
7/31/93 $7.47 $7.93 $7.46
7/31/94 7.09 7.52 7.03
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In excess of Paid-in
Distributions: Capital Gains Capital
Class A $0.014 $0.012
Class B $0.014 $0.012
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Capital gains
Long- Short-
No. Income term term Total
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Class A 1 $0.032 $0.384 $0.161 $0.603
Class B 1 0.020 0.384 0.161 0.591
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Performance data represent past results. and will differ for each share class
For performance over longer periods, see pages 8 and 9. POP assumes 5.75% ma-
ximum sales charge. CDSC assumes 5% maximum contingent deferred sales charge.
* Morningstar is an independent research firm that rates funds relative to funds
with similar objectives, based on risk-adjusted performance, as applicable,
and adjusted for sales charges. A four-star rating puts the fund in the top
32.5% of rated funds. Ratings are updated monthly. Past performance is not
indicative of future results.
+ Lipper Analytical Services is an industry research firm whose rankings vary
over time and do not include the effects of sales charges. For periods ended
7/31/94, the fund's class A shares ranked as follows: for 1 year, 258th out
of 430 funds; for 3 years, 36th out of 273 funds; for 5 years, 37th out of
215 funds; and for 10 years, 21st out of 125 funds. Past performance is not
indicative of future results.
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FROM THE CHAIRMAN [Photograph of George Putnam]
* (C) Karsh, Ottawa
Dear Shareholder:
A spirit of guarded optimism lifted the stock market as Putnam Vista Fund
reached the close of its fiscal year on July 31, 1994. Although the upturn came
too late to alter performance results perceptibly, it was the first sign in ma-
ny months that the market recognized the economy's fundamental strength.
It also proved to be short-lived. The uncertainty still clouding the economic
environment has masked some major structural and fundamental changes in corpo-
rate America that have produced attractive investment opportunities. Putnam Ma-
nagement expects a more challenging investment environment as we go forward.
I am pleased to report that Michael Mufson and Anthony Santosus have joined
Jennifer Silver in the management of your fund. Mike came to Putnam in 1993 as
an analyst in the Equity Research Group. Before that, he was an analyst at
Stein Roe & Farnham. He has seven years of investment experience.
Tony has been with Putnam since 1985, first as a performance statistician, la-
ter as a quantitative analyst, investment technologist, and associate portfolio
manager. He has 13 years of investment experience.
Respectfully yours,
George Putnam
Chairman of the Trustees
September 14, 1994
* (C) Copyright
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REPORT FROM THE FUND MANAGERS
JENNIFER SILVER, LEAD MANAGER
MICHAEL J. MUFSON
ANTHONY C. SANTOSUS
The medium-sized growth companies that form the backbone of Putnam Vista Fund's
portfolio were the ones that bore the brunt of the stock market's recent decli-
ne - just as they were in the vanguard of the market's post-recession rise. The
retreat began in February when the Federal Reserve Board imposed the first of
several increases in short-term interest rates. Subsequent increases during the
next three months only hardened investors. resolve to seek a safer haven in the
stocks of large, well-established companies.
As a consequence, your fund, which had turned in an above-average performance
during the first half of fiscal 1994, posted more subdued results for the enti-
re fiscal year ended July 31, 1994. This turnabout underscores the importance
of looking at long-term results when judging your fund's performance (see pages
8 and 9 for more performance information).
MIDCAP STOCKS ON THE BARGAIN COUNTER
Short-term investors and investors more comfortable with relatively stable
stock prices might view the current market environment with trepidation. We
are approaching it as an opportunity, and over the past several months we have
been positioning your fund's portfolio accordingly.
For example, in their flight to the stocks of larger, slower-growing companies,
these volatility-shy investors have left behind some growth stocks whose bar-
gain-basement prices have only enhanced their potential for long-term capital
appreciation. We are seeking out these issues and, when appropriate, adding
them to your fund's holdings.
The rationale behind the fund's current investment strategy is simple. Inves-
ting in the stocks of companies with market capitalizations from $300 million to
$5 billion can offer an attractive combination of benefits. As a generalization,
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"midcap" companies have shown their ability to compete in today's marketplace
but are still in the prime of their growth stages. The market for their stocks
is usually broader than the market for stocks of small-capitalization companies.
However, because these midsized companies often are still developing or adding
to their products and services, they tend to represent more risk than larger,
more mature corporations. While we can't entirely eliminate the risks inherent
in such investing, we have disciplines in place for managing it. For example,
we follow strict guidelines on when to eliminate or trim positions in stocks
that are no longer performing at levels consistent with the fund's investment
objective.
BUILDING THE PORTFOLIO, COMPANY BY COMPANY
In the main, we choose the companies for your portfolio individually, using a
bottom-up approach to portfolio building. Inevitably, however, patterns tend to
emerge. It has become evident, for example, that the impact of health care re-
form is likely to be much less onerous than originally feared.
(Line Chart)
MIDCAP STOCKS VERSUS BROADER MARKET
% change since 7/31/90
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1990 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Midcap Stocks 1.00 .89 .84 .81 .88 .93
Stock Market 1.00 .91 .86 .85 .90 .93
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1991 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Midcap Stocks 1.01 1.10 1.14 1.15 1.19 1.13 1.19 1.23 1.23 1.27 1.23 1.37
Stock Market .97 1.03 1.05 1.05 1.09 1.04 1.09 1.11 1.09 1.10 1.05 1.17
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1992 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Midcap Stocks 1.39 1.41 1.36 1.34 1.35 1.31 1.37 1.33 1.35 1.38 1.45 1.50
Stock Market 1.15 1.16 1.13 1.17 1.17 1.15 1.19 1.16 1.17 1.18 1.21 1.22
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1993 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Midcap Stocks 1.52 1.49 1.54 1.50 1.56 1.57 1.56 1.62 1.64 1.64 1.60 1.68
Stock Market 1.23 1.24 1.27 1.24 1.26 1.27 1.26 1.30 1.29 1.31 1.30 1.31
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1994 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Midcap Stocks 1.71 1.68 1.60 1.61 1.59 1.54 1.59
Stock Market 1.35 1.31 1.25 1.27 1.28 1.25 1.29
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Chart compares the volatility in the prices of stocks of medium-sized companies
(market capitalizations from $300 million to $5 billion) with that of the stock
market at large between July 31, 1990, and July 31, 1994. Sources: S&P 500 In-
dex, S&P Midcap Index. The chart is not indicative of the past or future perfor-
mance of the fund.
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Furthermore, we believe the companies most likely to succeed in the emerging
health care environment are those with an emphasis on managed care and cost
containment. We have focused, therefore, on companies in these areas as we have
increased holdings in the portfolio's health care sector.
We have also restructured the portfolio's financial services sector. Shifting
away from large banks and insurance companies, we have moved more assets into
smaller regional banks with strong earnings prospects and low-cost credit card
companies. We believe the latter will be gaining market share as increasing num-
bers of consumers begin using cards and existing cardholders step up their cre-
dit purchases.
THREE COMPANIES WITH ATTRACTIVE POTENTIAL
Here are three companies that typify the attributes we seek when selecting in-
vestments for your fund's portfolio. Although we viewed them favorably as of Ju-
ly 31, 1994, there is no assurance the fund will continue to hold them in the
future. The views expressed about the companies are exclusively those of Putnam
Management and should not be taken as investment advice.
Manpower, Inc., is a temporary help company with significant foreign exposure,
especially in France. Business should pick up as foreign economies work their
way out of recession and companies engage temporary help before adding to or
rebuilding their permanent employee bases. We expect the company's earnings to
exceed Wall Street's current projections.
Morrison Restaurants, Inc., is now ready to accelerate its growth rate, having
recently sold off some of its less profitable operations. Ruby Tuesdays, a divi-
sion with more than 200 restaurants, appears poised to show the most significant
expansion.
Sunbeam-Oster, Inc., manufactures outdoor, specialty, and small household appli-
ances. We expect its sales to expand as the economy continues to improve. It has
strong management and solid financials. Because the company is not widely follo-
wed by Wall Street analysts, its virtues are often overlooked. Sooner or later,
when investors discover this stock.s potential, your fund stands to be rewarded
for its early entry and patience.
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TOP 10 HOLDINGS*
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First Interstate Bancorp.
Banking, commercial lending, bank card operations
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Premark International, Inc.
Product labels include Tupperware, West Bend, Hobart, Precor
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Hercules, Inc.
Producer of diversified chemicals and aerospace products
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General Motors Corp. (class E shares)
Data processing and communications services
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Crestar Financial Corp.
Banking, insurance, discount brokerage, investment counseling
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Southern New England Telecommunications Corp.
Telephone services, communications equipment sales and leasing
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Avon Products, Inc.
World.s leading marketer of beauty care products, fashion jewelry
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MCN Corp.
Natural gas distribution, development, exploration, and production
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Praxair, Inc.
Producer of industrial gases, wear- and corrosion-resistant coatings
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Lowes Cos., Inc.
Discount retailer of building materials and home center products
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* These holdings represent 17.3% of the fund's net assets as of 7/31/94. Port-
folio holdings are subject to change.
POSITIONING FOR FUTURE GROWTH
The Fed underscored its resolve to keep inflation under control by increasing
short-term interest rates again shortly after the close of the fiscal year. Over
the next few months, as the economic indicators persuade the Fed's governors
that the economy is not growing too fast and the stock market demonstrates that
it has put inflation fears behind, we believe the upward pressure on interest
rates will abate.
Meanwhile, we will continue our search for attractively priced stocks of medium-
sized companies with sound financials, effective management, and above-average
earnings growth potential to include in your fund's portfolio. While future re-
sults can never be assured, we believe this period of restrained stock market
performance will ultimately be viewed as a window of opportunity for those seek-
ing long-term growth. We believe your fund is well positioned to take maximum
advantage of this situation.
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PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's performance.
Total return shows how the value of the fund's shares changed over time, assum-
ing you held the shares through the entire period and reinvested all distribu-
tions back into the fund. We show total return in two ways: on a cumulative
long-term basis and on average how the fund might have grown each year over va-
rying periods. For comparative purposes, we show how the fund performed relati-
ve to appropriate indices and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 7/31/94
Standard & S&P
Class A Class B Poor's *(R) Midcap
NAV POP NAV CDSC 500 Index Index
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1 year 2.75% -3.21% 1.89% -2.83% 5.19% 3.53%
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5 years 71.64 61.77 -- -- 54.69 84.79
Annual average 11.41 10.10 -- -- 9.12 13.07
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10 years 331.53 306.64 -- -- 326.18 401.62
Annual average 15.74 15.06 -- -- 15.60 17.50
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Life of class (3/1/93) 7.44 3.49 7.80 9.55
Annual average 5.18 2.44 5.43 6.64
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TOTAL RETURN FOR PERIODS ENDED 6/30/94
(most recent calendar quarter)
Class A Class B
NAV POP NAV CDSC
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1 year 0.24% -5.50% -0.64% -5.23%
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5 years 77.10 66.94 -- --
Annual average 12.11 10.79 -- --
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10 years 315.33 291.42 -- --
Annual average 15.30 14.62 -- --
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Life of class (3/1/93) -- -- 4.07 0.25
Annual average -- -- 3.05 0.19
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Fund performance data do not take into account any adjustment for taxes payable
on reinvested distributions or, for class A shares, distribution fees prior to
implementation of the class A distribution plan in 1990. Effective 3/1/93 the
fund began offering class B shares. Performance of share classes will differ.
Performance data represent past results. Investment returns and net asset value
will fluctuate so an investor.s shares, when sold, may be worth more or less
than their original cost.
STANDARD & POOR'S 500 INDEX is an unmanaged list of common stocks that is fre-
quently used as a general measure of stock market performance. STANDARD & POOR'S
MIDCAP INDEX is an unmanaged, market-weighted list of 400 medium-sized compa-
nies, each affecting the index in proportion to its market value. The indices
assume reinvestment of all distributions and do not take into account brokerage
commissions or other costs. The fund's portfolio contains securities that do not
match those in the indices.
* (R) Regitered Mark
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(Line Chart)
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 7/31/84
Fund at POP S & P 500 S & P Midcap
7/31/84 $ 9,425 $ 10,000 $ 10,000
7/31/85 12,728 13,239 13,924
7/31/86 15,655 16,990 18,108
7/31/87 21,426 23,676 22,198
7/31/88 18,983 20,904 20,450
7/31/89 23,692 27,550 27,146
7/31/90 24,438 29,308 28,926
7/31/91 27,954 33,059 35,415
7/31/92 33,079 37,278 41,553
7/31/93 39,574 40,516 48,455
7/31/94 40,663 42,618 50,163
Past performance is no assurance of future results. A $10,000 investment in
the fund's class B shares at 3/1/93 would have grown to $10,744 by 7/31/94
($10,349 with redemption at the end of the period).
TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any liabi-
lities, divided by the number of outstanding shares, not including any initial
or contingent deferred sales charges.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share plus the maxi-
mum sales charge levied at the time of purchase. POP performance figures shown
here assume the maximum 5.75% sales charge.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the
redemption of shares and assumes redemption at the end of the period. Your
fund's CDSC on class B shares declines from a 5% maximum during the first year
to 1% during the sixth year. After the sixth year, the CDSC on class B shares no
longer applies.
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LIFE CYCLE INVESTING
As we move through life, our investment needs change. As these needs change, so
does the way we allocate our assets. Here are some basic rules for setting up
and maintaining an investment program and some examples of how assets might be
allocated.
DETERMINE YOUR INVESTMENT OBJECTIVES.
Objectives may include a new home, college education expenses, or retirement.
EVALUATE YOUR RISK TOLERANCE.
Generally, risk tolerance is higher for younger investors with longer timelines
and lower for older investors who may depend on their investment for current in-
come.
ALLOCATE YOUR INVESTABLE SAVINGS.
Your investment advisor will help you determine how much of your investable do-
llars should be allocated to each investment category.
CHOOSE THE APPROPRIATE PUTNAM FUNDS.
Using Putnam's free exchange privilege, you can adjust your own Putnam portfolio
of funds as your financial needs change - without a service fee.*
Look at the facing page for some ways you can allocate your assets, then turn
the page to see how the Putnam Fund Selector *(TM) can help you make your choi-
ces.
* Putnam reserves the right to change or terminate the exchange privilege. In
some cases, a sales charge may apply. See prospectus for details.
* (TM) Trademark
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(4 Pie Charts)
FOUR WAYS TO ALLOCATE ASSETS
SEEKING MAXIMUM GROWTH
Risk tolerance:
Generally investors with a higher risk tolerance (often in their 20s and early
30s.)
30% - 40% Growth and income
40% - 50% Growth
5% - 20% Income or tax-free income
SEEKING GROWTH AND SOME INCOME
Risk tolerance:
Generally investors with a high to moderate risk tolerance (often in their late
30s and early 40s)
40% - 50% Growth and income
30% - 40% Growth
10% - 30% Income or tax-free income
SEEKING INCOME AND SOME GROWTH
WITH PROTECTION AGAINST INFLATION
Risk tolerance:
Generally investors with a moderate risk tolerance (often in their late 40s and
50s.)
30% - 40% Growth and income
10% - 20% Growth
25% - 60% Income or tax-free income
SEEKING HIGH CURRENT INCOME AND
PROTECTION AGAINST INFLATION
Risk tolerance:
Generally investors with a moderate to low risk tolerance (often over 60 and
retired)
20% - 30% Growth and income
5% - 10% Growth
40% - 70% Income or tax-free income
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THE PUTNAM FUND SELECTOR *(TM)
The Putnam Fund Selector shows the many opportunities for investors within every
investment strategy. All investors should first accumulate a base of conservati-
ve, cash-equivalent investments. Then, with the help of your investment advisor,
diversify your portfolio by investing in the Putnam Family of Funds.
(Pyramid Graphic)
Risk/Reward
PUTNAM GROWTH FUNDS
PUTNAM GROWTH AND INCOME FUNDS
PUTNAM INCOME OR TAX-FREE FUNDS
MOST CONSERVATIVE INVESTMENTS
* (TM) Trademark
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PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund Diversified Equity Trust
Europe Growth Fund Global Growth Fund
Health Sciences Trust Investors Fund
Natural Resources Fund * New Opportunities Fund
OTC Emerging Growth Fund Overseas Growth Fund
Vista Fund Voyager Fund
PUTNAM GROWTH AND INCOME FUNDS
Convertible Income-Growth Trust Dividend Growth Fund
Equity Income Fund The George Putnam Fund of Boston
The Putnam Fund for Growth and Income Managed Income Trust
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund American Government Income Fund
Balanced Government Fund Corporate Asset Trust
Diversified Income Trust Federal Income Trust
Global Governmental Income Trust High Yield Advantage Fund
High Yield Trust Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE INCOME FUNDS
Intermediate Tax Exempt Fund Municipal Income Fund
Tax Exempt Income Fund Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds +
Arizona, California, Florida, Massachusetts, Michigan,
Minnesota, New Jersey, New York, Ohio, and Pennsylvania
LIFESTAGE (SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments to help
maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE INVESTMENTS ++
Putnam money market funds:
Money Market Fund +++
California Tax Exempt Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs AND SAVINGS ACCOUNTS **
* Formerly Energy-Resources Trust.
+ Not available in all states.
++ Relative to above.
+++ Formerly Daily Dividend Trust.
** Not offered by Putnam Investments. Certificates of deposit offer a fixed ra-
te of return and may be insured, up to certain limits, by federal/state a-
gencies. Savings accounts may also be insured up to certain limits.
Please call your financial advisor or Putnam to obtain a prospectus for any
Putnam fund. It contains more complete information, including charges and
expenses. Please read it carefully before you invest or send money.
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REPORT OF INDEPENDENT ACCOUNTANTS
For the Fiscal Year Ended July 31, 1994
To the Trustees and Shareholders of
Putnam Vista Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments owned, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all ma-
terial respects, the financial position of Putnam Vista Fund (the "fund") at Ju-
ly 31, 1994, and the results of its operations, the changes in its net assets
and the financial highlights for the periods indicated, in conformity with gene-
rally accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the responsibi-
lity of the fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of investments owned at July 31, 1994 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
September 14, 1994
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PORTFOLIO OF INVESTMENTS OWNED
July 31, 1994
COMMON STOCKS (92.7%)(a)
NUMBER OF SHARES VALUE
BANKS (12.0%)
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307,100 Bank South Corp. $ 6,103,612
163,200 Baybanks, Inc. 10,159,200
284,900 Crestar Financial Corp. 13,497,137
307,700 First Bank Systems, Inc. 11,231,050
129,900 First Fidelity Bancorp (New Jersey) 6,072,825
211,700 First Interstate Bancorp 15,903,962
286,100 Signet Banking Corp. 11,551,287
278,800 State Street Boston Corp. 10,698,950
326,000 Union Planters Corp. 8,272,250
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93,490,273
BUSINESS SERVICES (8.8%)
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205,500 First Financial Management Corp. 11,456,625
407,200 General Motors Corp. Class E 14,353,800
393,500 Manpower, Inc. 9,444,000
290,500 Olsten Corp. (The) 9,804,375
348,650 Paychex, Inc. 11,679,775
491,400 Reynolds & Reynolds Co. Class A 12,039,300
--------------
68,777,875
HEALTH CARE (7.9%)
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394,400 Health Care & Retirement Corp. (b) 9,810,700
609,500 Owens & Minor, Inc. Holding Co. 9,142,500
187,700 Oxford Health Plan 10,980,450
260,450 U.S. Healthcare Inc. 9,864,543
245,600 United Healthcare Corp. 11,174,800
232,500 Value Health, Inc. 10,462,500
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61,435,493
RETAIL (6.0%)
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205,400 AnnTaylor (b) 8,447,075
228,700 Gymboree Corp. (b) 9,376,700
334,800 Lowe.s Cos., Inc. 12,052,800
250,100 Starbucks Corp. (b) 7,252,900
288,600 Talbots, Inc. 9,415,575
--------------
46,545,050
COMPUTER SOFTWARE (5.7%)
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383,850 CUC International, Inc. 11,563,481
34,600 Cerner Corp. (b) 1,245,600
427,600 Cisco Systems, Inc. (b) 8,979,600
399,800 Network General Corp. (b) 6,446,775
249,900 Oracle Systems Corp. (b) 9,558,675
341,800 Wellfleet Communications, Inc. (b) 6,878,725
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44,672,856
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COMMON STOCKS
NUMBER OF SHARES VALUE
CHEMICALS (4.7%)
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137,000 Hercules Inc. $ 14,624,750
328,300 Mallinckrodt Group, Inc. 10,013,150
536,000 Praxair, Inc. 12,060,000
--------------
36,697,900
TELEPHONE SERVICES (3.9%)
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283,300 ALC Communications Corp. (b) 9,171,837
202,000 Newbridge Networks Corp. (b) 8,471,375
375,600 Southern New England Telecommunications Corp. 12,911,250
--------------
30,554,462
COMPUTERS (3.8%)
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234,300 Compaq Computer Corp. (b) 7,409,737
691,500 EMC Corp. (b) 10,286,062
460,600 Silicon Graphics, Inc. (b) 10,881,675
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28,577,474
HOUSEHOLD PRODUCTS (3.1%)
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354,400 Premark International, Inc. 14,840,500
426,800 Sunbeam-Oster, Inc. 9,016,150
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23,856,650
RESTAURANTS (2.8%)
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361,400 Brinker International, Inc. (b) 8,086,325
189,400 Morrison Restaurants, Inc. 4,190,475
625,300 Wendy.s International, Inc. 9,613,987
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21,890,787
OIL AND GAS (2.7%)
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179,500 Anadarko Petroleum Corp. 8,593,562
307,300 MCN Corp. 12,253,589
--------------
20,847,151
AUTOMOTIVE PARTS (2.4%)
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235,600 Magna International, Inc. Class A 9,777,400
242,300 Varity Corp. 9,086,250
--------------
18,863,650
INSURANCE (2.3%)
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257,400 Equitable of Iowa Cos. 9,073,350
160,700 SAFECO Corp. 8,898,762
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17,972,112
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COMMON STOCKS
NUMBER OF SHARES VALUE
CABLE TELEVISION (2.3%)
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631,100 Comcast Corp. Special Class A $ 10,492,039
316,500 Liberty Media Corp. Class A (b) 7,081,689
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17,573,728
BUSINESS EQUIPMENT (2.2%)
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520,350 Office Depot, Inc. (b) 10,992,395
172,500 Tandy Corp. 6,447,188
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17,439,583
CONSTRUCTION EQUIPMENT (2.2%)
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250,200 Applied Materials, Inc. (b) 11,196,450
148,500 Foster Wheeler Corporation 6,107,063
--------------
17,303,513
TRUCKING (2.0%)
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339,500 TNT Freightways Corp. 8,402,625
288,200 Werner Enterprises, Inc. 7,493,200
--------------
15,895,825
COSMETICS (1.6%)
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222,100 Avon Products, Inc. 12,576,412
FINANCIAL SERVICES (1.5%)
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234,600 First USA, Inc. 7,859,100
92,900 Sunamerica, Inc. 4,215,337
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12,074,437
HOME FURNISHINGS (1.5%)
- -------------------------------------------------------------------------------
323,100 Leggett & Platt, Inc. 11,914,312
RECREATION (1.5%)
- -------------------------------------------------------------------------------
243,800 Brunswick Corp. 5,820,725
318,900 Mirage Resorts, Inc. 5,859,787
--------------
11,680,512
BROADCASTING (1.4%)
- -------------------------------------------------------------------------------
23,700 CBS Inc. 7,394,400
83,100 Clear Channel Communications, Inc. 3,843,375
--------------
11,237,775
CELLULAR BROADCASTING (1.4%)
- -------------------------------------------------------------------------------
430,400 DSC Communications Corp. (b) 10,544,800
GAS PIPELINES (1.3%)
- -------------------------------------------------------------------------------
316,500 Williams Cos., Inc. 10,325,814
<PAGE>
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
PHARMACEUTICALS (1.3%)
- -------------------------------------------------------------------------------
359,800 Teva Pharmaceutical Industries Ltd. ADR (c) $ 10,074,400
COMBINED UTILITIES (1.3%)
- -------------------------------------------------------------------------------
437,200 CMS Energy Corp. 9,891,650
ELECTRICAL EQUIPMENT (1.2%)
- -------------------------------------------------------------------------------
142,500 Grainger (W.W.), Inc. 9,511,875
ETHICAL PHARMACEUTICALS (1.1%)
- -------------------------------------------------------------------------------
243,400 Elan Corp., PLC ADR (c) 8,306,025
ELECTRONICS (0.9%)
- -------------------------------------------------------------------------------
196,350 Micron Technology, Inc. 7,338,581
FREIGHT (0.9%)
- -------------------------------------------------------------------------------
254,300 Airborne Freight Corp. 6,802,525
MACHINERY (0.6%)
- -------------------------------------------------------------------------------
129,900 Stewart & Stevenson Services, Inc. 5,033,625
LODGING (0.4%)
- -------------------------------------------------------------------------------
94,350 Promus Cos., Inc. 2,736,150
--------------
TOTAL COMMON STOCKS (COST $677,074,446) $722,443,275
SHORT-TERM INVESTMENTS (6.7%)(a)
PRINCIPAL AMOUNT VALUE
$10,800,000 Federal Home Loan Mortgage Corp. 4.21s,
August 1, 1994 $ 10,800,000
10,000,000 Ford Motor Credit Co. 4.25s, August 8, 1994 9,991,736
10,000,000 Sears Roebuck Accept. Corp. 4.33s, August 12, 1994 9,986,770
21,752,000 Interest in $530,000,000 joint repurchase agreement
dated July 29, 1994 with Bankers Trust Co. due August
1, 1994 with respect to various U.S. Treasury obliga-
tions -- maturity value of $21,759,613 for an effec-
tive yield of 4.20% 21,759,613
--------------
TOTAL SHORT-TERM INVESTMENTS (COST $52,538,119) $ 52,538,119
--------------
TOTAL INVESTMENTS (COST $729,612,565) (d) $774,981,394
(a) Percentages indicated are based on total net assets of $779,406,781, which
correspond to a net asset value per class A and class B share of $7.09 and
$7.03, respectively.
(b) Non-income-producing security.
(c) Securities whose value is determined or significantly influenced by trading
on exchanges not in the United States or Canada. ADR after the name of a fo-
reign holding stands for American Depository Receipt, representing foreign
securities on deposit with a domestic custodian bank.
(d) The aggregate identified cost for federal income tax purposes is
$730,613,047, resulting in gross unrealized appreciation and depreciation
of $79,370,903 and $35,002,556, respectively, or net unrealized appreciation
of $44,368,347.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1994
ASSETS
- -------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $729,612,565) (Note 1) $774,981,394
Cash 845
Dividends and interest receivable 388,369
Receivable for shares of the fund sold 2,235,629
Receivable for securities sold 16,838,265
Prepaid expenses 25,333
- -------------------------------------------------------------------------------
TOTAL ASSETS 794,469,835
LIABILITIES
Payable for securities purchased 12,517,333
Payable for shares of the fund repurchased 550,382
Payable for compensation of Manager (Note 2) 1,163,167
Payable for administrative services (Note 2) 5,232
Payable for investor servicing and custodian fees (Note 2) 359,350
Payable for distribution fees (Note 2) 242,801
Other accrued expenses 224,789
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 15,063,054
- -------------------------------------------------------------------------------
NET ASSETS $779,406,781
REPRESENTED BY
- -------------------------------------------------------------------------------
Paid-in capital (Notes 1, 4 and 5) $735,046,058
Undistributed net investment income (Notes 1 and 5) 0
Accumulated net realized loss on investment transactions
(Notes 1 and 5) (1,008,106)
Net unrealized appreciation of investments 45,368,829
- -------------------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO
CAPITAL SHARES OUTSTANDING $779,406,781
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- -------------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($646,810,856 divided by 91,217,427 shares) $7.09
Offering price per class A shares (100/94.25 of $7.09) * $7.52
Net asset value and offering price of class B shares
($132,595,925 divided by 18,863,663 shares) + $7.03
- -------------------------------------------------------------------------------
* 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.
<PAGE>
<PAGE>
STATEMENT OF OPERATIONS
Year ended July 31 1994
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
- -------------------------------------------------------------------------------
Dividends (net of foreign tax of $12,519) $ 6,439,885
- -------------------------------------------------------------------------------
Interest 2,162,428
- -------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 8,602,313
- -------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 3,944,002
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 965,601
- -------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 21,932
- -------------------------------------------------------------------------------
Reports to shareholders 82,380
- -------------------------------------------------------------------------------
Auditing 27,692
- -------------------------------------------------------------------------------
Legal 21,206
- -------------------------------------------------------------------------------
Postage 75,887
- -------------------------------------------------------------------------------
Registration fees 106,424
- -------------------------------------------------------------------------------
Administrative services (Note 2) 10,611
- -------------------------------------------------------------------------------
Distribution fees -- class A (Note 2) 1,378,514
- -------------------------------------------------------------------------------
Distribution fees -- class B (Note 2) 765,623
- -------------------------------------------------------------------------------
Other 18,028
- -------------------------------------------------------------------------------
TOTAL EXPENSES 7,417,900
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,184,413
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 16,596,788
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments during the year (17,409,528)
- -------------------------------------------------------------------------------
NET LOSS ON INVESTMENT TRANSACTIONS (812,740)
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $371,673
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
Year ended July 31
1994 1993
- -------------------------------------------------------------------------------
INCREASE IN NET ASSETS
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income $ 1,184,413 $ 4,100,606
- -------------------------------------------------------------------------------
Net realized gain on investments 16,596,788 29,587,510
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments (17,409,528) 34,206,444
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 371,673 67,894,560
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME:
Class A (2,090,147) (6,107,509)
- -------------------------------------------------------------------------------
Class B (155,041) (71,615)
- -------------------------------------------------------------------------------
NET REALIZED GAIN ON INVESTMENTS:
Class A (34,779,110) (59,280,919)
- -------------------------------------------------------------------------------
Class B (4,184,211) --
- -------------------------------------------------------------------------------
IN EXCESS OF NET REALIZED GAIN ON INVESTMENTS
Class A (873,069) --
- -------------------------------------------------------------------------------
Class B (105,037) --
- -------------------------------------------------------------------------------
PAID-IN CAPITAL
Class A (744,062) --
- -------------------------------------------------------------------------------
Class B (89,517) --
- -------------------------------------------------------------------------------
Increase from capital share transactions
(Note 4) 361,610,769 121,649,984
- -------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 318,962,248 124,084,501
- -------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------
Beginning of year 460,444,533 336,360,032
- -------------------------------------------------------------------------------
END OF YEAR (including undistributed
net investment income of $0 and
$1,646,402, respectively) $779,406,781 $460,444,533
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
March 31, 1993
(commencement
Year ended of operations)
July 31 to July 31*
1994 1993 1994 1993 1992
- ---------------------------------------------------------------------------------------------------
Class B
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $7.46 $7.12 $7.47 $7.59 $6.97
- ---------------------------------------------------------------------------------------------------
Investment operations:
Net investment income (loss) .01 (.01) .01 .07 .14
- ---------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .15 .40 .21 1.28 1.07
- ---------------------------------------------------------------------------------------------------
Total from investment operations .16 .39 .22 1.35 1.21
- ---------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (loss) (.02) (.05) (.03) (.12) (.19)
- ---------------------------------------------------------------------------------------------------
From net realized gain
on investments (.55) -- (.55) (1.35) (.40)
- ---------------------------------------------------------------------------------------------------
In excess of net
realized gains (.01) -- (.01) -- --
- ---------------------------------------------------------------------------------------------------
Paid-in capital (.01) -- (.01) -- --
- ---------------------------------------------------------------------------------------------------
Total distributions (.59) (.05) (.60) (1.47) (.59)
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $7.03 $7.46 $7.09 $7.47 $7.59
- ---------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (a) 1.89 5.45 (b) 2.75 19.63 18.46
- ---------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $132,596 $20,722 $646,811 $439,722 $336,360
- ---------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) 1.87 .72 (b) 1.09 .96 .96
- ---------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) (.53) (.07)(b) .29 1.08 1.92
- ---------------------------------------------------------------------------------------------------
Portfolio Turnover (%) 93.86 120.57 93.86 120.57 143.92
- ---------------------------------------------------------------------------------------------------
<FN>
* Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
(a) Total Investment Return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Not annualized.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
(For a share outstanding throughout the period)
Eight months
Year ended July 31 ended July 31
1991 1990 1989 1988 1987 1986 1985
- -----------------------------------------------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $6.48 $7.05 $5.86 $7.64 $6.74 $5.87 $4.62
- -----------------------------------------------------------------------------------------------------------------------------------
Investment operations:
Net investment income (loss) .17 .21 .23 .16 .13 .20 .11
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .68 (.01) 1.19 (.99) 1.93 1.06 1.15
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .85 .20 1.42 (.83) 2.06 1.26 1.26
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (loss) (.10) (.18) (.23) (.19) (.21) (.20) (.01)
- -----------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.26) (.59) -- (.76) (.95) (.19) --
- -----------------------------------------------------------------------------------------------------------------------------------
In excess of net
realized gains -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Paid-in capital -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (.36) (.77) (.23) (.95) (1.16) (.39) (.01)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $6.97 $6.48 $7.05 $5.86 $7.64 $6.74 $5.87
- -----------------------------------------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (a) 14.27 3.15 24.81 (11.40) 36.86 23.00 27.37(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $287,712 $256,897 $269,392 $249,453 $282,661 $197,912 $178,071
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) .99 .92 .93 1.06 1.05 1.02 .70(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.73 3.10 3.55 2.75 2.28 3.34 2.03(b)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover (%) 75.89 46.94 69.34 87.45 117.26 276.61 200.46(b)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
July 31, 1994
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. The fund seeks capital
appreciation by investing primarily in common stocks selected for above-average
growth potential and that involve certain risks. The fund may also trade securi-
ties for short-term profits.
The fund offers both class A and class B shares. Class A shares are sold with a
maximum front-end sales charge of 5.75%. Class B shares do not pay a front-end
sales charge, but pay a higher ongoing distribution fee than class A shares, and
may be subject to a contingent deferred sales charge if those shares are redeem-
ed within six years of purchase. Expenses of the fund are borne pro-rata by the
holders of both classes of shares, except that each class bears expenses unique
to that class (including the distribution fees applicable to such class). Each
class votes as a class with respect to its own distribution plan or other ma-
tters 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 di-
vidends on each class of shares.
The following is a summary of significant accounting policies consistently fo-
llowed by the fund in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles.
A) SECURITY VALUATION Investments for which market quotations are readily avail-
able are stated at market value, which is determined using the last reported sa-
le price, or, if no sales are reported -- as in the case of some securities tra-
ded over-the-counter -- the last reported bid price. Short-term investments ha-
ving remaining maturities of 60 days or less are stated at amortized cost, which
approximates market value, and other investments are stated at fair value fo-
llowing procedures approved by the Trustees.
B) JOINT TRADING ACCOUNT Pursuant to an exemptive order issued by the Securities
and Exchange Commission, the fund may transfer uninvested cash balances into a
joint trading account, along with the cash of other registered investment compa-
nies managed by Putnam Investment Management, Inc. (Putnam Management), the
fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc., and cer-
tain other accounts. These balances may be invested in one or more repurchase
agreements and/or short-term money market instruments.
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. The fund's Manager 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.
<PAGE>
<PAGE>
D) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security transactions are
accounted for on the trade date (date the order to buy or sell is executed). In-
terest income is recorded on the accrual basis and dividend income is recorded
on the ex-dividend date, except that certain dividends from foreign securities
are recorded as soon as the fund is informed of the ex-dividend date.
E) FEDERAL TAXES It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the In-
ternal Revenue Code applicable to regulated investment companies. It is also the
intention of the fund to distribute an amount sufficient to avoid imposition of
any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefo-
re, no provision has been made for federal taxes on income, capital gains or un-
realized appreciation on securities held and excise tax on income and capital
gains.
F) DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded by
the fund on the ex-dividend date.
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 treatment of dividend income
and losses on wash sales transactions. 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, 1994, the fund reclassified $7,624 to decrease un-
distributed net investment income and $7,624 to increase paid-in capital.
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management, for management and investment advisory servi-
ces is paid quarterly based on the average net assets of the fund for the quar-
ter. 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, and 0.45% of any amount over $1.5 billion, subject to reduction in
any year to the extent that expenses (exclusive of brokerage, interest, taxes
and distribution fees) of the fund exceed 2.5% of the first $30 million of ave-
rage net assets, 2.0% of the next $70 million and 1.5% of any amount over $100
million and by the amount of certain brokerage commissions and fees (less expen-
ses) received by affiliates of the Manager on the fund's portfolio transac-
tions.
The fund also reimburses the Manager for the compensation and related expenses
of certain officers of the fund and their staff who provide
<PAGE>
<PAGE>
administrative services to the fund. The aggregate amount of all such reimbur-
sements is determined annually by the Trustees. For the year ended July 31,
1994, the fund paid $10,611 for these services.
Trustees of the fund receive an annual Trustee's fee of $1,530 and an additional
fee for each Trustees' meeting attended. Trustees who are not interested persons
of the Manager and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust
Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing
agent functions are provided by Putnam Investor Services, a division of PFTC.
Fees paid for these investor servicing and custodial functions for the year
ended July 31, 1994 amounted to $965,601.
Investor servicing and custodian fees reported in the Statement of operations
for the year ended July 31, 1994 have been reduced by credits allowed by PFTC.
The Fund has adopted a distribution plan with respect to its class A shares
(the "Class A Plan") pursuant to Rule 12b-1 under the Investment Company Act
of 1940. The purpose of the Class A Plan is to compensate Putnam Mutual Funds
Corp., a wholly-owned subsidiary of Putnam Investments Inc., for services pro-
vided and expenses incurred by it in distributing class A shares. The Trustees
have approved payment by the fund to Putnam Mutual Funds Corp. at an annual rate
of 0.25% of average net assets attributable to class A shares. For the year
ended July 31, 1994, the Fund paid Putnam Mutual Funds Corp. distribution fees
of $1,378,514 for class A shares.
During the year ended July 31, 1994, Putnam Mutual Funds Corp., acting as an un-
derwriter, received net commissions of $348,616 from the sale of class A shares
of the fund.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of
class A shares purchased as part of an investment of $1 million or more. For the
year ended July 31, 1994, Putnam Mutual Funds Corp., acting as underwriter, re-
ceived $7,341 on class A redemptions.
The Fund has adopted a separate distribution plan with respect to its class B
shares (the "Class B Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940. The purpose of the Class B Plan is to compensate Putnam Mutual
Funds Corp. for services provided and expenses incurred by it in distributing
class B shares. The Class B Plan provides for payments by the fund to Putnam Mu-
tual Funds Corp. at an annual rate of 1.00% of the Fund's average net assets
attributable to class B shares. For the year ended July 31, 1994, the Fund paid
Putnam Mutual Funds Corp. distribution fees of $765,623 for class B shares.
Putnam Mutual Funds Corp., acting as an underwriter, also receives the proceeds
of the contingent deferred sales charges levied on class B share redemptions
within six years of
<PAGE>
<PAGE>
purchase. The charge is based on declining rates, which begin at 5.0% of the net
asset value of the redeemed shares. Putnam Mututal Funds Corp. received $108,999
in contingent deferred sales charges from such redemptions for the year ended
July 31, 1994.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the year ended July 31, 1994, purchases and sales of investment securi-
ties other than U.S. government obligations and short-term investments aggrega-
ted $846,231,437 and $526,212,274, respectively. There were no purchases or sa-
les of U.S. government obligations during the year. In determining the net gain
or loss on securities sold, the cost of securities has been determined on the
identified cost basis.
NOTE 4
CAPITAL SHARES
At July 31, 1994, there was an unlimited number of shares of beneficial interest
authorized, divided into two classes, class A and class B capital shares. Tran-
sactions in capital shares were as follows:
Year ended July 31, 1994
CLASS A Shares Amount
- -------------------------------------------------------------------------------
Shares sold 44,771,194 $334,559,255
Shares issued in connection with
reinvestment of distributions 4,800,018 35,040,145
- -------------------------------------------------------------------------------
49,571,212 369,599,400
- -------------------------------------------------------------------------------
Shares repurchased (17,194,066) (128,263,645)
- -------------------------------------------------------------------------------
NET INCREASE 32,377,146 $241,335,755
- -------------------------------------------------------------------------------
Year ended July 31, 1993
CLASS A Shares Amount
- -------------------------------------------------------------------------------
Shares sold 19,894,210 $145,612,132
Shares issued in connection with
reinvestment of distributions 8,718,792 59,759,452
- -------------------------------------------------------------------------------
28,613,002 205,371,584
- -------------------------------------------------------------------------------
Shares repurchased (14,103,366) (103,990,990)
- -------------------------------------------------------------------------------
NET INCREASE 14,509,636 $101,380,594
- -------------------------------------------------------------------------------
Year ended July 31, 1994
CLASS B Shares Amount
- -------------------------------------------------------------------------------
Shares sold 17,289,985 $129,073,493
Shares issued in connection with
reinvestment of distributions 554,917 4,039,793
- -------------------------------------------------------------------------------
17,844,902 133,113,286
- -------------------------------------------------------------------------------
Shares repurchased (1,759,586) (12,838,272)
- -------------------------------------------------------------------------------
NET INCREASE 16,085,316 $120,275,014
- -------------------------------------------------------------------------------
March 31, 1993
(commencement of operations)
to July 31, 1993
CLASS B Shares Amount
- -------------------------------------------------------------------------------
Shares sold 2,837,406 $20,704,725
Shares issued in connection with
reinvestment of distributions 9,769 70,043
- -------------------------------------------------------------------------------
2,847,175 20,774,768
- -------------------------------------------------------------------------------
Shares repurchased (68,828) (505,378)
- -------------------------------------------------------------------------------
NET INCREASE 2,778,347 $20,269,390
- -------------------------------------------------------------------------------
<PAGE>
<PAGE>
NOTE 5
Effective August 1, 1993, Putnam Vista Fund adopted the provisions of Statement
of Position 93-2 "Determination, Disclosure and Financial Statement Presentation
of Income, Capital Gain and Return of Capital Distributions by Investment Compa-
nies" (SOP). The purpose of this SOP is to report the accumulated net investment
income (loss) and accumulated net realized gain (loss) accounts in such a manner
as to approximate amounts available for future tax distributions (or to offset
future realized capital gains), and to achieve uniformity in the presentation of
distributions by investment companies.
As a result of the SOP, the fund has reclassified $578,003 to decrease undistri-
buted net investment income, $6,977,903 to increase accumulated net realized
gain and $6,399,900 to decrease paid-in capital. These reclassifications repre-
sent the cumulative amounts necessary to report these balances through July 31,
1993.
These reclassifications, which have no impact on the total net asset value of
the fund, are attributable to amounts which are treated differently in the com-
putation of distributable income and capital gains under federal income tax ru-
les and regulations versus generally accepted accounting principles.
<PAGE>
<PAGE>
FEDERAL TAX INFORMATION
For federal income tax purposes, distributions from investment income and short-
term capital gains totaling $0.07 per share constitute "dividend income." The
fund has designated $0.603 and $0.591 for class A and class B, respectively of
the "dividend income" of $0.603 and $0.591 for class A and class B, respectively
as qualifying for the dividends received deduction for corporations.
Of the total distributions made, $0.384 was classified as long-term capital gain
for class A and class B, whether received in cash or additional fund shares, and
regardless of how long you had owned your shares before the distribution was ma-
de.
The Form 1099 you will receive in January 1995 will show you the tax status of
all distributions paid to your account in calendar 1994.
If you are a shareholder in an IRA or other tax-sheltered retirement plan, this
statement is for information only and will serve as a record of distributions
reinvested in your account during the fiscal year. Money invested in these plans
is not subject to federal income tax until you withdraw it.
As required by law, your Fund reports to the Internal Revenue Service the amount
of distributions paid to each shareholder.
<PAGE>
<PAGE>
OUR COMMITMENT TO QUALITY SERVICE
CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested Service Seal every
year since the award.s 1990 inception. DALBAR, an independent research firm,
ran more than 10,000 tests of 38 shareholder service components. In every cate-
gory, Putnam outperformed the industry standard.
HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month from a
Putnam fund or from your checking or savings account. *
SWITCH FUNDS EASILY.
You can move money from one account to another with the same class of shares
without a service charge. (This privilege is subject to change or termination.)
ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business day at the then-
current net asset value, which may be more or less than their original cost.
For details about any of these or other services, contact your financial advisor
or call the toll-free number shown below and speak with a helpful Putnam repre-
sentative.
To make an additional investment in this or any other Putnam fund, contact your
financial advisor or call our toll-free number:
1-800-225-1581.
* Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market. Investors should consider their ability to con-
tinue purchasing shares during periods of low price levels.
<PAGE>
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
TRUSTEES
George Putnam, Chairman William F. Pounds, Vice Chairman
Jameson Adkins Baxter Hans H. Estin
John A. Hill Elizabeth T. Kennan
Lawrence J. Lasser Robert E. Patterson
Donald S. Perkins George Putnam, III
A.J.C. Smith W. Nicholas Thorndike
OFFICERS
George Putnam Charles E. Porter
President Executive Vice President
Patricia C. Flaherty Lawrence J. Lasser
Senior Vice President Vice President
Gordon H. Silver John J. Morgan
Vice President Vice President
Jennifer Silver Michael J. Mufson
Vice President and Fund Manager Vice President and Fund Manager
Anthony C. Santosus William N. Shiebler
Vice President and Fund Manager Vice President
John R. Verani Paul M. O.Neil
Vice President Vice President
John D. Hughes Beverly Marcus
Vice President and Treasurer Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Vista Fund. It may
also be used as sales literature when preceded or accompanied by the current
prospectus, which gives details of sales charges, investment objectives and
operating policies of the fund, and the most recent copy of Putnam's Quarterly
Performance Summary.
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PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Bulk Rate
U.S. Postage
Paid
Putnam
Investments
006/317-13756
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