PUTNAM
VISTA
FUND
[GRAPHIC OMITTED:
art work]
ANNUAL REPORT
July 31, 1995
[LOGO:
BOSTON - LONDON - TOKYO]
<PAGE>
PERFORMANCE HIGHLIGHTS
o "Mid-cap stocks have fallen behind the other two sectors [large and small
caps] in only seven of the last 70 years -- and never two years in a row ...
[Mid-caps] are at pretty attractive prices right now. We think they are
poised to outperform."
-- Jennifer K. Silver, Lead Manager, Putnam Vista Fund, quoted in Investor's
Business Daily, August 1, 1995
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FISCAL 1995 RESULTS AT A GLANCE
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CLASS A CLASS B CLASS M
TOTAL RETURN: NAV POP NAV CDSC NAV POP
-----------------------------------------------------------------------------
(change in value during
period plus reinvested
distributions)
12 months ended 7/31/95 31.22% 23.71% 30.19% 25.19% -- --
Life of class M -- -- -- -- 37.63% 32.90%
CLASS A CLASS B CLASS M
SHARE VALUE: NAV POP NAV NAV POP
-----------------------------------------------------------------------------
7/31/94 $7.09 $7.52 $7.03 -- --
12/8/94 -- -- -- $6.73 $6.97
7/31/95 9.23 9.79 9.08 9.19 9.52
CAPITAL GAINS
LONG- SHORT-
DISTRIBUTIONS: NO. INCOME TERM TERM TOTAL
-----------------------------------------------------------------------------
Class A 1 -- $0.055 -- $0.055
Class B 1 -- 0.055 -- 0.055
Class M 1 -- 0.055 -- 0.055
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Performance data represent past results and do not guarantee future results;
performance will differ for each share class. For performance over longer
periods, see pages 8 and 9. POP assumes 5.75% maximum sales charge for class
A shares and 3.50% for class M shares, which became available on 12/1/94.
CDSC assumes a 5% maximum contingent deferred sales charge.
<PAGE>
FROM THE CHAIRMAN
[GRAPHIC OMITTED:
Photo of
George Putnam]
(C) Karsh, Ottawa
Dear Shareholder:
The U.S. stock market enjoyed a robust rise during the first half of 1995. A
relatively low inflation environment, coupled with strong corporate earnings,
helped to propel domestic equities upward. While the rally lost some momentum in
recent weeks, there appears to be room left for growth.
Potential positives for equities could include a stronger dollar, which may
spark foreigners' interest in U.S. securities. Of course, the rebound of the
dollar may negatively affect the performance of larger multinational companies.
Lower interest rates, a possibility in the months ahead, could also be a boon
for stock prices.
In the coming months, a mildly slowing economy may become an increasing concern
for equity investors. In such an environment, growth stocks -- stocks of
companies that can maintain strong earnings -- are often favored. These tend to
be the types of stocks in which Putnam Vista Fund invests.
In the following report, Lead Manager Jennifer Silver reviews the fund's superb
performance during the fiscal year ended July 31, 1995, and presents her outlook
for the months ahead.
Respectfully yours,
/s/ George Putnam
George Putnam
Chairman of the Trustees
September 20, 1995
<PAGE>
REPORT FROM THE FUND MANAGERS
JENNIFER SILVER, LEAD MANAGER
MICHAEL J. MUFSON
ANTHONY C. SANTOSUS
Fueled by a powerful summer rally in mid-capitalization stocks, Putnam Vista
Fund turned in an exceptional performance over the 12 months ended July 31,
1995. The fund's class A shares gained 31.22% at net asset value (NAV) for
the year, with class B shares returning 30.19% at NAV, both substantially
above the Standard & Poor's(R) Midcap 400 Index's 24.49% rise.
Shareholders who patiently endured 1994's sluggish investment environment
should feel vindicated. Indeed, this year's buoyant market is a reminder that
evaluating investment performance requires a long-term perspective.
Furthermore, we believe your fund's strong performance demonstrates the
fundamental long-term benefits of investing in midsize stocks -- those with
market capitalizations of between $300 million and $5 billion.
o STRONG EARNINGS SUPPORT STOCK PRICES
Over the short term, stock-market leadership often shifts among types of
stocks; at times, certain sectors are favored and stocks of varying
capitalization levels capture investor attention. The current market rally
began in late 1994 when investors purchased stocks of larger,
well-established companies, sending the prices of blue-chips sharply upward.
After some months, investors became concerned about the economy's apparent
slowing and began to emphasize earnings growth, bidding up stocks of rapidly
expanding smaller companies -- particularly in the technology sector. This
certainly had a positive effect on your fund. Most significant for your
fund's performance, however, has been the relatively recent acceleration in
the performance of mid-cap stocks.
Indeed, since early summer, many of the midsize companies in which your fund
invests have done extremely well. A number of factors help account for this
renewed strength in mid-caps. Investors
<PAGE>
continue to emphasize the kind of revenue and earnings growth that have been
delivered recently by many midsize companies. Additionally, the
underperformance of mid-caps in 1994 and their unimpressive performance in
early 1995 left prices fairly low, making these stocks appear undervalued.
o TECHNOLOGY: MARKET LEADER, LONG-TERM STORY
Your fund's stellar fiscal 1995 performance was driven in part by the dynamic
technology sector. Many innovative companies in this sector have seen their
revenues, earnings, and market shares increase dramatically, and appear
poised to continue growing well into the next decade. We are optimistic about
the excellent long-term outlook for such companies; however, we remain
vigilant about taking profits in technology stocks.
Technology is a broad heading that encompasses diverse types of companies.
Over the period, your fund focused on manufacturers of communications
equipment. The anticipated convergence of cable television and long-distance
telephone operations has forced regional Bell companies and cable companies
to make massive investments in infrastructure. It may take some time for
these companies to profit substantially from their outlays. However, the
stocks of equipment manufacturers are benefiting now from infrastructural
upgrades -- consequently, so is your fund.
[GRAPHIC OMITTED: line chart MIDCAP STOCKS VERSUS THE MARKET 1989-1995
Y-axis reads (top to bottom) 120 to 0 in decrements of 20
X-axis reads (left to right) 1989 through 1995 in yearly increments
A solid black line represents S&P Midcap 400, ranging from 0 to 100.21
(see plot points below: "S&P Midcap 400")
A solid white line represents S&P 500, ranging from 0 to 62.41
(see plot points below: "S&P 500")
Year S&P Midcap 400 S&P 500
1989 0.00 0.00
1990 3.36 2.91
1991 23.17 12.06
1992 41.44 22.58
1993 61.61 29.49
1994 64.00 32.42
1995 100.21 62.41
Caption reads:
Chart compares the change in the prices of stocks of midsize companies
(market capitalizations from $300 million to $5 billion) with the stock
market at large between 7/31/89 and 7/31/95. Sources: S&P 500 Index, S&P
Midcap Index. Indexes are unmanaged; performance and holdings in the indexes
will differ from the holdings of the fund.]
<PAGE>
The fund's communications equipment holdings include DSC Communications,
which manufactures digital telephone switching systems, which we consider a
major growth niche as telephone and cable companies scramble to go digital.
General Instruments is another successful supplier of communications
equipment. Tellabs Inc. is a voice and data communications equipment maker
whose revenues continue to climb. Nokia Corp. is a globally competitive
telecommunications equipment and cellular phone manufacturer.
Another strong sector was broadcasting. Clear Channel Communications, an
operator and owner of television and radio stations, enjoyed strong earnings
growth over the period. Clear Channel has made aggressive moves to acquire
and boost the revenues of underperforming television and radio stations.
Clear Channel, Renaissance Communications, and Comcast Corp. -- other media
operators in the fund's portfolio -- may further benefit from less stringent
government communications regulations.
o BUSINESS SERVICES, REGIONAL BANKS BOOST FUND
Strong results from holdings in the business services sector also contributed
to the fund's solid performance. Holdings include Equifax, which provides
risk-management services to financial institutions, an increasingly important
business niche; Ceridian Corp, a payroll processing outsourcer, another
growth area; and Omnicom Group, an international advertising agency with
PepsiCo as a major client.
The fund's positioning in the robust financial sector has also proved
rewarding. Over the past several months, regional bank stocks have done very
well, catalyzed in part by rampant takeover speculation. Indeed, Midlantic
Bank, one of the fund's larger regional bank holdings, was taken over by PNC
Financial in July.
The occasional takeover is one of the benefits of your fund's mid-cap
emphasis. In such transactions, suitors often bid up share prices, to the
benefit of existing stockholders. During fiscal 1995, two other portfolio
holdings were the subjects of takeovers. First Financial Management, one of
the fund's larger holdings at the time, was acquired by First Data Corp. and
ALC Communications was acquired by Frontier Corp.
<PAGE>
-------------------------------------------------------------------
TOP 10 HOLDINGS (7/31/95)
-------------------------------------------------------------------
NOKIA CORP. ADR
Telecommunications equipment; cellular phones
-------------------------------------------------------------------
DSC COMMUNICATIONS CORP.
Domestic and international telecommunications equipment
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TERADYNE INC.
Electronics and systems and software
-------------------------------------------------------------------
CERIDIAN CORP.
Technology-based payroll management
-------------------------------------------------------------------
LSI LOGIC CORP.
Manufacturer of integrated circuits
-------------------------------------------------------------------
OMNICOM GROUP
Operates advertising agencies
-------------------------------------------------------------------
COMCAST CORP.
Domestic and international cable and telecommunications
-------------------------------------------------------------------
APPLIED MATERIALS INC.
Produces silicon wafer circuits
-------------------------------------------------------------------
LCI INTERNATIONAL INC.
Long-distance telecommunications
-------------------------------------------------------------------
EQUIFAX INC.
Provides information services to business
-------------------------------------------------------------------
These holdings represent 15.1% of the fund's net assets. Portfolio
holdings will vary over time.
Another sector in the fund's portfolio, health care, had a mixed year. We
trimmed many of the fund's health maintenance organization (HMO) holdings
months ago -- triggered by our strict sell discipline. Nevertheless, the fund
still owned some HMO shares during a sharp selloff, which slightly dampened
fund performance. On the positive side, Teva Pharmaceuticals has been quite
successful in gaining FDA approval for its generic drugs and may witness
strong revenue growth this year if its bioengineered product for the
treatment of multiple sclerosis is approved.
o MID-CAPS REMAIN A COMPELLING CHOICE
We believe mid-cap stocks continue to provide excellent opportunities for
long-term growth, coupled with less historical volatility than smaller
stocks. Currently, the sector appears attractive, as earnings remain strong
and valuations appear reasonable. We expect this positive climate to persist
over the near term, and we have positioned the portfolio to take advantage of
current strengths. Over the longer term, we will continue to emphasize
mid-cap companies with strong growth potential, sound management, and
attractive valuations -- companies we anticipate will be sound performers
over time.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed
favorably as of 7/31/95, there is no guarantee the fund will continue to hold
these securities in the future.
<PAGE>
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,
assuming you held the shares through the entire period and reinvested all
distributions 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 varying periods.
Performance should always be considered in light of a fund's investment
strategy. Putnam Vista Fund is designed for investors seeking long-term growth
through quality common stocks, as well as any increased income resulting from
this growth.
TOTAL RETURN FOR PERIODS ENDED 7/31/95
CLASS A CLASS B CLASS M
NAV POP NAV CDSC NAV POP
- --------------------------------------------------------------------------------
1 year 31.22% 23.71% 30.19% 25.19% -- --
- --------------------------------------------------------------------------------
5 years 118.34 105.64 -- -- -- --
Annual average 16.90 15.51 -- -- -- --
- --------------------------------------------------------------------------------
10 years 319.22 295.19 -- -- -- --
Annual average 15.41 14.73 -- -- -- --
- --------------------------------------------------------------------------------
Life of class B -- -- 39.88 36.88 -- --
Annual average -- -- 14.87 13.85 -- --
- --------------------------------------------------------------------------------
Life of class M -- -- -- -- 37.63% 32.90%
- --------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 6/30/95
(most recent calendar quarter)
CLASS A CLASS B CLASS M
NAV POP NAV CDSC NAV POP
- --------------------------------------------------------------------------------
1 year 25.15% 17.94% 24.34% 19.34% -- --
- --------------------------------------------------------------------------------
5 years 99.93 88.40 -- -- -- --
Annual average 14.86 13.51
- --------------------------------------------------------------------------------
10 years 293.45 270.78 -- -- -- --
Annual average 14.68 14.00 -- -- -- --
- --------------------------------------------------------------------------------
Life of class B -- -- 29.40 26.40 -- --
Annual average -- -- 11.70 10.58 -- --
- --------------------------------------------------------------------------------
Life of class M -- -- -- -- 27.30% 22.92%
- --------------------------------------------------------------------------------
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 and on 12/1/94, class M 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.
<PAGE>
[GRAPHIC OMITTED: line chart GROWTH OF A $10,000 INVESTMENT
Legend reads:
Cumulative total return of a $10,000 investment since 7/31/85
Y-axis reads (top to bottom) $41,400 to 9,400 in $2,000 decrements
X-axis reads (left to right) 8/1/85, then 7/31/86 through 7/31/95 in
one year increments
A solid black line represents Funds class A shares at POP, ranging from $9,425
to $39,519 (see plot points below: "Class A Shares")
A solid white line represents S&P 500 Index, ranging from $10,000 to $40,572
(see plot points below: "S&P 500 Index")
A solid gray line represents Consumer Price Index, ranging from $10,000 to
$14,147 (see plot points below: "Consumer Price Index")
Date Class A Shares S&P 500 Index Consumer Price Index
8/01/85 $ 9,425 $10,000 $10,000
7/31/86 11,595 12,833 10,158
7/31/87 15,870 17,884 10,557
7/31/88 14,060 15,790 10,993
7/31/89 17,548 20,811 11,540
7/31/90 18,100 22,138 12,096
7/31/91 20,682 24,972 12,635
7/31/92 24,501 28,158 13,033
7/31/93 29,311 30,605 13,395
7/31/94 30,118 32,192 13,766
7/31/95 39,519 40,572 14,147
Caption reads:
Past performance is no assurance of future results. A $10,000 investment in
the fund's class B shares at inception on 3/1/93 would have been valued at
$13,988 on 7/31/95 ($13,688 with a redemption at the end of the period). A
$10,000 investment in the fund's class M shares at inception on 12/1/94 would
have been valued at $13,763 at NAV, and $13,290 at POP on 7/31/95.]
TERMS AND DEFINITIONS
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including any
initial or contingent deferred sales charge.
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 maximum 5.75% sales charge for class A shares and 3.50% for class M
shares.
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
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.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the
redemption of class B shares and assumes redemption at the end of the period.
Your fund's 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.
<PAGE>
COMPARATIVE INDEX RETURNS FOR PERIOD ENDED 7/31/95
STANDARD & POOR'S CONSUMER PRICE
500 INDEX INDEX
- ------------------------------------------------------------------------
1 year 26.03% 2.76%
- ------------------------------------------------------------------------
3 years 83.26 16.95
Annual average 12.88 3.18
- ------------------------------------------------------------------------
10 years 305.72 41.47
Annual average 15.03 3.53
- ------------------------------------------------------------------------
Life of class B 36.28 6.57
Annual average 13.65 2.66
- ------------------------------------------------------------------------
Life of class M 27.74 1.87
- ------------------------------------------------------------------------
COMPARATIVE BENCHMARKS
STANDARD & POOR'S 500 INDEX is an unmanaged list of common stocks that is
frequently used as a general measure of stock market performance. The index
assumes reinvestment of all distributions and does not take into account
brokerage commissions or other costs. The fund's portfolio contains securities
that do not match those in the index.
STANDARD & POOR'S 400 MIDCAP INDEX is an unmanaged, market-weighted list of 400
medium-sized companies, each affecting the index in proportion to market value.
The index assumes reinvestment of all distributions and does not take into
account brokerage commissions or other costs. The fund's portfolio contains
securities that do not match those in the index.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it does not
represent an investment return.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
For the fiscal year ended July 31, 1995
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
material respects, the financial position of Putnam Vista Fund (the "fund") at
July 31, 1995, and the results of its operations, the changes in its net assets
and the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility 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, 1995 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 15, 1995
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
July 31, 1995
<TABLE>
<CAPTION>
COMMON STOCKS (92.7%)*
NUMBER OF SHARES VALUE
ADVERTISING (1.5%)
- ----------------------------------------------------------------------------------------------
<C> <S> <C>
288,800 Omnicom Group $ 17,436,300
AEROSPACE (0.7%)
- ----------------------------------------------------------------------------------------------
115,900 Sundstrand Corp. 7,750,813
APPAREL (0.5%)
- ----------------------------------------------------------------------------------------------
198,200 Tommy Hilfiger Corp. + 6,268,075
AUTOMOTIVE PARTS (0.8%)
- ----------------------------------------------------------------------------------------------
198,700 Varity Corp. + 9,314,063
BANKS (7.8%)
- ----------------------------------------------------------------------------------------------
294,800 Bank of Boston Corp. 12,786,950
246,700 Bank of New York Company, Inc. 9,898,838
134,400 Baybanks, Inc. 10,995,600
260,300 Crestar Financial Corp. 13,405,450
356,400 First Bank System, Inc. 15,458,850
294,700 Midlantic Corp., Inc. 14,035,088
22,900 Star Banc Corp. 1,156,450
370,400 UJB Financial Corp. 13,010,300
--------------
90,747,526
BROADCASTING (3.1%)
- ----------------------------------------------------------------------------------------------
161,700 Clear Channel Communications, Inc. + 10,813,688
294,800 Heritage Media Corp. Class A + 8,475,500
406,500 New World Communications Group, Inc. + 8,790,563
212,600 Renaissance Communications Corp. + 8,131,950
--------------
36,211,701
BUSINESS SERVICES (10.5%)
- ----------------------------------------------------------------------------------------------
90,300 Alco Standard Corp. 7,348,163
507,425 CUC International, Inc. + 15,286,178
439,600 Ceridian Corp. + 18,188,450
516,650 Corporate Express, Inc. + 13,109,994
422,700 Equifax, Inc. 16,221,113
93,500 First Financial Management Corp. 8,181,250
241,700 Gartner Group Inc. Class A + 7,432,275
337,600 National Data Corp. 8,608,800
381,975 Paychex, Inc. 14,228,560
408,300 Reynolds & Reynolds Co. Class A 12,912,488
--------------
121,517,271
CABLE & WIRELESS (2.5%)
- ----------------------------------------------------------------------------------------------
838,400 Comcast Corp. Special Class A 16,977,600
314,600 Paging Network, Inc. + 12,426,700
--------------
29,404,300
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
COMPUTER SOFTWARE (3.4%)
- ----------------------------------------------------------------------------------------------
222,800 Cognex Corp. + $ 11,195,700
234,700 Parametric Technology Corp. + 13,201,875
60,600 PeopleSoft, Inc. + 4,332,900
284,600 Sierra On-Line, Inc. + 10,387,900
--------------
39,118,375
COMPUTERS (1.8%)
- ----------------------------------------------------------------------------------------------
76,900 Silicon Graphics, Inc. + 3,229,800
335,400 Symbol Technologies, Inc. + 12,787,125
74,300 Zebra Technologies Corp. + 4,662,325
--------------
20,679,250
CONSUMER DURABLE GOODS (1.5%)
- ----------------------------------------------------------------------------------------------
199,100 Harman International Industries, Inc. 7,839,563
176,900 Premark International, Inc. 9,353,588
--------------
17,193,151
ELECTRONICS AND ELECTRICAL EQUIPMENT (7.5%)
- ----------------------------------------------------------------------------------------------
213,700 Amphenol Corp. Class A + 5,796,613
160,900 Applied Materials, Inc. + 16,653,150
377,000 LSI Logic Corp. + 17,624,750
185,700 Micron Technology, Inc. 11,606,250
101,400 Seagate Technology, Inc. + 4,499,625
278,300 Tencor Instruments + 12,245,200
225,500 Teradyne, Inc. 18,462,813
--------------
86,888,401
ENVIRONMENTAL CONTROL (1.0%)
- ----------------------------------------------------------------------------------------------
231,700 Safety-Kleen Corp. 3,620,313
222,200 United Waste Systems, Inc. + 8,388,050
--------------
12,008,363
FINANCIAL SERVICES (2.5%)
- ----------------------------------------------------------------------------------------------
169,500 First USA, Inc. 7,733,438
260,000 Greentree Financial Corp. 14,072,500
378,500 Mercury Finance Co. 7,475,375
--------------
29,281,313
FOOD AND BEVERAGES (2.6%)
- ----------------------------------------------------------------------------------------------
211,800 Canandaigua Wine Co. Class A + 9,266,250
256,200 Dole Food Co. 8,166,375
29,100 IBP, Inc. 1,360,425
275,300 Pioneer Hi-Bred International, Inc. 11,631,425
--------------
30,424,475
FUNERAL/CEMETERY SERVICES (0.8%)
- ----------------------------------------------------------------------------------------------
285,800 Stewart Enterprises, Inc. Class A 9,324,225
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
GAMING (1.7%)
- ----------------------------------------------------------------------------------------------
365,900 Circus Circus Enterprises, Inc. + $ 10,885,525
295,700 Mirage Resorts, Inc. + 9,203,663
--------------
20,089,188
HMOS (0.9%)
- ----------------------------------------------------------------------------------------------
106,200 Oxford Health Plan 5,482,575
195,300 Sierra Health Services + 5,175,450
--------------
10,658,025
INSURANCE (0.9%)
- ----------------------------------------------------------------------------------------------
224,100 The PMI Group, Inc. + 10,420,650
LODGING (2.9%)
- ----------------------------------------------------------------------------------------------
348,600 Hospitality Franchise Systems, Inc. 15,338,400
314,550 La Quinta Inns, Inc. 8,846,719
455,400 Red Lion Hotels, Inc. + 9,677,250
--------------
33,862,369
MACHINERY (1.0%)
- ----------------------------------------------------------------------------------------------
313,400 Harnischfeger Industries, Inc. 11,752,500
MEDICAL EQUIPMENT (1.0%)
- ----------------------------------------------------------------------------------------------
316,424 Boston Scientific Corp. + 11,549,476
NETWORKING (1.8%)
- ----------------------------------------------------------------------------------------------
190,500 3Com Corp. + 14,108,906
208,700 Network General Corp. 7,095,800
--------------
21,204,706
PATIENT CARE (3.5%)
- ----------------------------------------------------------------------------------------------
325,200 American Medical Response 9,268,200
405,400 Health Care & Retirement Corp. + 12,972,800
322,500 Health Management Assoc., Inc. + 10,360,313
266,000 Integrated Health Services, Inc. 8,578,500
--------------
41,179,813
PHARMACEUTICALS AND BIOTECHNOLOGY (1.5%)
- ----------------------------------------------------------------------------------------------
11,800 ICN Pharmaceuticals, Inc. 231,575
282,300 IDEXX Laboratories, Inc. + 8,680,725
212,200 Teva Pharmaceutical Industries Ltd. ADR (Germany) 8,421,688
--------------
17,333,988
PUBLISHING (2.3%)
- ----------------------------------------------------------------------------------------------
348,600 Dow Jones & Co., Inc. 12,375,300
324,900 Harcourt General, Inc. 14,620,500
--------------
26,995,800
REIT'S (0.4%)
- ----------------------------------------------------------------------------------------------
171,400 Storage USA, Inc. 4,927,750
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
RESTAURANTS (1.6%)
- ----------------------------------------------------------------------------------------------
212,700 Applebee's International, Inc. $ 6,008,775
359,800 Outback Steakhouse, Inc. + 12,548,025
--------------
18,556,800
RETAIL (10.5%)
- ----------------------------------------------------------------------------------------------
372,200 Bed Bath & Beyond, Inc. + 11,538,200
268,800 CompUSA, Inc. + 9,307,200
302,075 Dollar General Corp. 10,195,031
253,900 Eckerd Corp. + 8,410,438
272,500 General Nutrition Companies, Inc. + 9,741,875
304,700 Lowe's Cos., Inc. 11,235,813
272,750 Office Depot, Inc. + 8,012,031
337,970 Revco D.S., Inc. + 7,139,616
208,200 Safeway, Inc. 7,963,650
504,300 Staples, Inc. 11,346,750
227,500 Sunglass Hut International + 9,213,750
140,900 Talbots, Inc. 5,812,125
200,800 Tandy Corp. 11,922,500
--------------
121,838,979
SAVINGS AND LOANS (1.7%)
- ----------------------------------------------------------------------------------------------
616,500 Ahmanson (H.F.) & Co. 13,794,188
212,600 Charter One Financial, Inc. 5,501,025
--------------
19,295,213
TELECOMMUNICATION (2.9%)
- ----------------------------------------------------------------------------------------------
123,800 ALC Communications Corp. + 6,545,925
474,500 LCI International, Inc. + 16,251,625
302,200 Southern New England Telecommunications Corp. 10,350,350
--------------
33,147,900
TELECOMMUNICATION EQUIPMENT (7.4%)
- ----------------------------------------------------------------------------------------------
183,400 Andrew Corp. 10,889,375
126,400 Ascend Communications, Inc. + 9,164,000
353,000 DSC Communications Corp. + 18,973,750
421,000 General Instrument Corp. New + 15,524,375
333,500 Scientific Atlanta, Inc. 7,170,250
153,900 Stratacom, Inc. + 8,349,075
135,800 Tellabs, Inc. + 6,043,100
71,100 U.S. Robotics Corp. + 10,345,050
--------------
86,458,975
TRANSPORTATION (0.9%)
- ----------------------------------------------------------------------------------------------
174,779 Fritz Companies, Inc. + 10,530,435
UTILITIES (1.3%)
- ----------------------------------------------------------------------------------------------
431,100 CMS Energy Corp. 10,777,500
232,900 MCN Corp. 4,425,100
--------------
15,202,600
- ----------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (cost $825,281,335) $1,078,572,769
- ----------------------------------------------------------------------------------------------
<PAGE>
PREFERRED STOCKS (1.6%)* (cost $11,116,778)
NUMBER OF SHARES VALUE
- ----------------------------------------------------------------------------------------------
294,600 Nokia Corp. ADR (Finland) $ 19,369,950
SHORT-TERM INVESTMENTS (9.2%)*
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------------------------
$15,000,000 Bell Atlantic Financial Services, Inc. 5.72s, August 7, 1995 $ 14,985,700
44,115,000 Federal Home Loan Mortgage Corp. 5.59s,
October 12, 1995 43,621,794
15,000,000 Federal Home Loan Mortgage Corp. 5.6s,
September 8, 1995 14,916,000
20,000,000 Metropolitan Life Funding, 5.73s, August 31, 1995 19,904,499
13,283,000 Interest in $672,198,000 joint repurchase agreement dated
July 31, 1995 with Morgan (J.P.) & Co., Inc. due August 1, 1995
with respect to various U.S. Treasury obligations -- maturity
value of $13,285,140 for an effective yield of 5.80% 13,285,140
- ----------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (cost $106,713,133) $ 106,713,133
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $943,111,246) *** $1,204,655,852
- ----------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $1,163,790,936, which correspond to a
net asset value for class A, class B, class M and class Y shares of $9.23, $9.08, $9.19 and
$9.24, respectively.
+ Non-income-producing security.
*** The aggregate identified cost for federal income tax purposes is $944,650,303,
resulting in gross unrealized appreciation and depreciation of $265,006,349 and $5,000,800,
respectively, or net unrealized appreciation of $260,005,549.
ADR after the name of a foreign holding stands for American Depository Receipt,
representing ownership of foreign securities on deposit with a domestic custodian bank.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1995
<TABLE>
ASSETS
- ----------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value
(identified cost $943,111,246) (Note 1) $1,204,655,852
- ----------------------------------------------------------------------------------------------
Cash 462
- ----------------------------------------------------------------------------------------------
Dividends and interest receivable 418,271
- ----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 4,669,829
- ----------------------------------------------------------------------------------------------
Receivable for securities sold 29,656,753
- ----------------------------------------------------------------------------------------------
Other assets 25,470
- ----------------------------------------------------------------------------------------------
TOTAL ASSETS 1,239,426,637
LIABILITIES
- ----------------------------------------------------------------------------------------------
Payable for securities purchased 69,264,706
- ----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 3,697,024
- ----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,547,528
- ----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,284
- ----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 552,149
- ----------------------------------------------------------------------------------------------
Payable for Trustees 339
- ----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 389,677
- ----------------------------------------------------------------------------------------------
Other accrued expenses 181,994
- ----------------------------------------------------------------------------------------------
TOTAL LIABILITIES 75,635,701
- ----------------------------------------------------------------------------------------------
NET ASSETS $1,163,790,936
REPRESENTED BY
- ----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $ 859,115,511
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 914,647
- ----------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions (Note 1) 42,216,172
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 261,544,606
- ----------------------------------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO CAPITAL SHARES OUTSTANDING $1,163,790,936
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($859,403,056 divided by 93,115,302 shares) $9.23
- ----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $9.23)* $9.79
- ----------------------------------------------------------------------------------------------
Net asset value and offering price of class B shares
($258,522,401 divided by 28,474,285 shares)** $9.08
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price of class M shares
($3,148,433 divided by 342,605 shares) $9.19
- ----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $9.19)* $9.52
- ----------------------------------------------------------------------------------------------
Net asset value, offering and redemption price of class Y shares
($42,717,046 divided by 4,621,592 shares) $9.24
- ----------------------------------------------------------------------------------------------
*On single retail sales of less than $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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF OPERATIONS
Year ended July 31, 1995
<TABLE>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------
<S> <C>
Dividends (net of foreign tax of $19,998) $ 8,493,948
- ----------------------------------------------------------------------------------------------
Interest 3,340,132
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 11,834,080
EXPENSES:
- ----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 5,415,742
- ----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,521,147
- ----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 26,567
- ----------------------------------------------------------------------------------------------
Reports to shareholders 122,744
- ----------------------------------------------------------------------------------------------
Auditing 41,721
- ----------------------------------------------------------------------------------------------
Legal 23,572
- ----------------------------------------------------------------------------------------------
Postage 64,494
- ----------------------------------------------------------------------------------------------
Registration fees 42,842
- ----------------------------------------------------------------------------------------------
Administrative services (Note 2) 19,879
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 1,770,716
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,770,220
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 5,168
- ----------------------------------------------------------------------------------------------
OTHER 36,664
- ----------------------------------------------------------------------------------------------
TOTAL EXPENSES 10,861,476
- ----------------------------------------------------------------------------------------------
Net investment income 972,604
- ----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 49,546,498
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 216,175,777
- ----------------------------------------------------------------------------------------------
NET GAIN ON INVESTMENT TRANSACTIONS 265,722,275
- ----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 266,694,879
- ----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JULY 31 JULY 31
1995 1994
- --------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
- --------------------------------------------------------------------------------------------
OPERATIONS:
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 972,604 $ 1,184,413
- --------------------------------------------------------------------------------------------
Net realized gain on investments 49,546,498 16,596,788
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments 216,175,777 (17,409,528)
- --------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 266,694,879 371,673
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
- --------------------------------------------------------------------------------------------
From net investment income
- --------------------------------------------------------------------------------------------
Class A -- (2,090,147)
- --------------------------------------------------------------------------------------------
Class B -- (155,041)
- --------------------------------------------------------------------------------------------
From net realized gain on investments
- --------------------------------------------------------------------------------------------
Class A (5,157,873) (34,779,110)
- --------------------------------------------------------------------------------------------
Class B (1,221,982) (4,184,211)
- --------------------------------------------------------------------------------------------
Class M (322) --
- --------------------------------------------------------------------------------------------
In excess of net realized gain on investments
- --------------------------------------------------------------------------------------------
Class A -- (873,069)
- --------------------------------------------------------------------------------------------
Class B -- (105,037)
- --------------------------------------------------------------------------------------------
From paid-in capital
- --------------------------------------------------------------------------------------------
Class A -- (744,062)
- --------------------------------------------------------------------------------------------
Class B -- (89,517)
- --------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 124,069,453 361,610,769
- --------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 384,384,155 318,962,248
NET ASSETS
- --------------------------------------------------------------------------------------------
Beginning of year 779,406,781 460,444,533
- --------------------------------------------------------------------------------------------
END OF YEAR (including undistributed net investment
income of $914,647 and $0, respectively) $1,163,790,936 $779,406,781
- --------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<CAPTION>
MARCH 28, 1995 DECEMBER 8 1994
(COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) TO OF OPERATIONS) TO
JULY 31 JULY 31
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1995
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS Y CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $7.83 $6.73
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .01 (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 1.40 2.53
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.41 2.52
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income (loss) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on
investments -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in capital -- --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS -- (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.24 $9.19
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE (%)<F2> 18.01<F3> 37.63<F3>
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (in thousands) $42,717 $3,148
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets (%) .29<F3> 1.06<F3>
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average net assets (%) .10<F3> (.31)<F3>
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 114.51 114.51
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS [continued]
(For a share outstanding throughout the period) [continued]
<CAPTION>
MARCH 1, 1993
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED JULY 31 JULY 31<F1> YEAR ENDED JULY 31
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $7.03 $7.46 $7.12 $7.09 $7.47 $7.59 $6.97 $6.48
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.03) .01 (.01) .02 .01 .07 .14 .17
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 2.14 .15 .40 2.18 .21 1.28 1.07 .68
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.11 .16 .39 2.20 .22 1.35 1.21 .85
- ------------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income (loss) -- (.02) (.05) -- (.03) (.12) (.19) (.10)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.06) (.55) -- (.06) (.55) (1.35) (.40) (.26)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on
investments -- (.01) -- -- (.01) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in capital -- (.01) -- -- (.01) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.06) (.59) (.05) (.06) (.60) (1.47) (.59) (.36)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.08 $7.03 $7.46 $9.23 $7.09 $7.47 $7.59 $6.97
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE (%)<F2> 30.19 1.89 5.45<F3> 31.22 2.75 19.63 18.46 14.27
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (in thousands) $258,522 $132,596 $20,722 $859,403 $646,811 $439,722 $336,360 $287,712
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets (%) 1.82 1.87 .72<F3> 1.07 1.09 .96 .96 .99
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average net assets (%) (.51) (.53) (.07)<F3> .26 .29 1.08 1.92 2.73
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 114.51 93.86 120.57 114.51 93.86 120.57 143.92 75.89
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Per share net investment income has been determined on the basis of the weighted average number of shares outstanding
during the period.
<F2> Total Investment Return assumes dividend reinvestment and does not reflect the effect of sales charges.
<F3> Not annualized.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
July 31, 1995
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
securities for short-term profits.
The fund offers class A, class B, class M and class Y shares. The fund commenced
its public offering of class M and class Y shares on December 1, 1994 and March
28, 1995, respectively. 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 redeemed within six years
of purchase. Class M shares are sold with a maximum front end sales charge of
3.50% and pay a distribution fee that is lower than class B shares and higher
than class A shares. Class Y shares, which are sold at net asset value, are
generally subject to the same expenses as class A shares, class B shares, and
class M shares, but do not bear a distribution fee. Class Y shares are sold to
defined contribution plans that initially invest at least $250 million in a
combination of Putnam Funds. Expenses of the fund are borne pro-rata by the
shareholders of each class of shares, except that each class bears expenses
unique to that class (including the distribution fees applicable to such class).
Each class votes as a class only with respect to its own distribution plan or
other matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the net
assets of the fund, if the fund were liquidated. In addition, the Trustees
declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A SECURITY VALUATION Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or, if no sales are reported -- as in the case of some
securities traded over-the-counter -- the last reported bid price, except that
certain U.S. government obligations are stated at the mean between the bid and
asked prices. Short-term investments having remaining maturities of 60 days or
less are stated at amortized cost, which approximates market value, and other
investments are stated at fair value following 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
companies managed by Putnam Investment Management, Inc.
<PAGE>
(Putnam Management), the fund's Manager, a wholly-owned subsidiary of Putnam
Investments, Inc., and certain 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.
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).
Interest 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
Internal Revenue Code applicable to regulated investment companies. It is also
the intention of the fund to distribute an amount sufficient to avoid imposition
of any excise tax under Section 4982 of the Internal Revenue Code of 1986.
Therefore, no provision has been made for federal taxes on income, capital gains
or unrealized appreciation of securities held and excise tax on income and
capital gains.
F DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date. Capital gain
distributions, if any, are recorded on ex-dividend date and paid 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. The differences include treatment of non taxable
dividends 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 regulation.
For the year ended July 31, 1995 the fund reclassified $57,957 to decrease
undistributed net investment income and $57,957 to increase accumulated net
realized gain.
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund for the
quarter. 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, under
current law, to reduction in any year to the extent that expenses (exclusive of
brokerage, interest, taxes, credits allowed by PFTC and distribution fees) of
the fund exceed 2.5% of the first $30 million of average 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 expenses)
<PAGE>
received by affiliates of the Manager on the fund's portfolio transactions.
The fund also reimburses the Manager 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.
Trustees of the fund receive an annual Trustee's fee of $1,640 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.
During the year ended July 31, 1995, the fund adopted a Trustee Fee Deferral
Plan (the "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 in the fund and are invested in the fund or in other Putnam funds until
distribution in accordance with the Plan.
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.
Investor servicing and custodian fees reported in the Statement of Operations
for the year ended July 31, 1995 have been reduced by credits allowed by PFTC.
The fund has adopted distribution plans (the "Plans") with respect to its class
A, class B and class M shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual
Funds Corp., a wholly-owned subsidiary of Putnam Investments Inc., for services
provided and expenses incurred by it in distributing shares of the fund. The
Plans provide for payments by the fund to Putnam Mutual Funds Corp. at an annual
rate up to 0.35%, 1.00% and 1.00% of the average net assets attributable to
class A, class B and class M shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average
net assets attributable to class A, class B and class M shares, respectively.
For the year ended July 31, 1995, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $318,917 from the sale of class A shares
and $5,652 for the sale of class M shares. There was $376,476 in contingent
deferred sales charges from redemptions of class B shares. A deferred sales
charge of up to 1% 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, 1995, Putnam Mutual Funds Corp., acting as underwriter received $8,762
on class A redemptions.
<PAGE>
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the year ended July 31, 1995, purchases and sales of investment
securities other than U.S. government obligations and short-term investments
aggregated $1,072,957,912 and $961,301,547, respectively. There were no
purchases or sales of U.S. government obligations during the period. 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, 1995, there was an unlimited number of shares of beneficial interest
authorized, divided into three classes, class A, class B, class M and class Y
capital shares. Transactions in capital shares were as follows:
YEAR ENDED JULY 31
1995
- -----------------------------------------------------------------------------
CLASS A SHARES AMOUNT
- -----------------------------------------------------------------------------
Shares sold 28,898,970 $221,037,781
- -----------------------------------------------------------------------------
Shares issued in connection
with reinvestment of distributions 693,411 4,819,179
- -----------------------------------------------------------------------------
29,592,381 225,856,960
- -----------------------------------------------------------------------------
Shares repurchased (27,694,506) (213,117,464)
- -----------------------------------------------------------------------------
NET INCREASE 1,897,875 $ 12,739,496
- -----------------------------------------------------------------------------
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
1995
- -----------------------------------------------------------------------------
CLASS B SHARES AMOUNT
- -----------------------------------------------------------------------------
Shares sold 15,020,047 $113,538,226
- -----------------------------------------------------------------------------
Shares issued in connection
with reinvestment of distributions 163,723 1,124,785
- -----------------------------------------------------------------------------
15,183,770 114,663,011
- -----------------------------------------------------------------------------
Shares repurchased (5,573,148) (42,071,973)
- -----------------------------------------------------------------------------
NET INCREASE 9,610,622 $ 72,591,038
- -----------------------------------------------------------------------------
<PAGE>
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
- -----------------------------------------------------------------------------
DECEMBER 8, 1994
(COMMENCEMENT OF
OPERATIONS) TO
JULY 31
1995
- -----------------------------------------------------------------------------
CLASS M SHARES AMOUNT
- -----------------------------------------------------------------------------
Shares sold 394,997 $ 3,133,513
- -----------------------------------------------------------------------------
Shares issued in connection
with reinvestment of distributions 44 307
- -----------------------------------------------------------------------------
395,041 3,133,820
- -----------------------------------------------------------------------------
Shares repurchased (52,436) (406,029)
- -----------------------------------------------------------------------------
NET INCREASE 342,605 $ 2,727,791
- -----------------------------------------------------------------------------
MARCH 28, 1995
(COMMENCEMENT OF
OPERATIONS) TO
JULY 31
1995
- -----------------------------------------------------------------------------
CLASS Y SHARES AMOUNT
- -----------------------------------------------------------------------------
Shares sold 8,556,775 $ 66,694,577
- -----------------------------------------------------------------------------
Shares issued in connection
with reinvestment of distributions -- --
- -----------------------------------------------------------------------------
8,556,775 66,694,577
- -----------------------------------------------------------------------------
Shares repurchased (3,935,183) (30,683,449)
- -----------------------------------------------------------------------------
NET INCREASE 4,621,592 $ 36,011,128
- -----------------------------------------------------------------------------
FEDERAL TAX INFORMATION
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, the fund hereby designates
$.055 per share (or if different, the amount necessary to offset net capital
gain earned by the fund) for share classes A, B, and M as capital gain dividends
for its taxable year ended July 31, 1995.
The form 1099 you receive in January 1996 will show you the tax status of all
distributions paid to your account in calendar 1995.
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER OFFICERS
Putnam Investment George Putnam
Management, Inc. President
One Post Office Square
Boston, MA 02109 Charles E. Porter
Executive Vice President
MARKETING SERVICES
Putnam Mutual Funds Corp. Patricia C. Flaherty
One Post Office Square Senior Vice President
Boston, MA 02109
Lawrence J. Lasser
CUSTODIAN Vice President
Putnam Fiduciary Trust Company
Gordon H. Silver
LEGAL COUNSEL Vice President
Ropes & Gray
John J. Morgan
INDEPENDENT ACCOUNTANTS Vice President
Price Waterhouse LLP
Jennifer K. Silver
TRUSTEES Vice President and Fund Manager
George Putnam, Chairman
Michael J. Mufson
William F. Pounds, Vice Chairman Vice President and Fund Manager
Jameson Adkins Baxter Anthony C. Santosus
Vice President and Fund Manager
Hans H. Estin
William N. Shiebler
John A. Hill Vice President
Elizabeth T. Kennan John R. Verani
Vice President
Lawrence J. Lasser
Paul M. O'Neil
Robert E. Patterson Vice President
Donald S. Perkins John D. Hughes
Vice President and Treasurer
George Putnam, III
Beverly Marcus
Eli Shapiro Clerk and Assistant Treasurer
A.J.C. Smith
W. Nicholas Thorndike
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. For more information, or to request a prospectus, call toll
free 1-800-225-1581.
SHARES OF MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY,
AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
<PAGE>
[LOGO: PUTNAM INVESTMENTS] ------------
Bulk Rate
THE PUTNAM FUNDS U.S. Postage
One Post Office Square PAID
Boston, Massachusetts 02109 Putnam
Investments
------------
19843-006/317/515
