Putnam
Vista
Fund
ANNUAL REPORT
July 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* According to Lipper Analytical Services, Putnam Vista Fund's class A
share total return ranked 18 out of 249 growth funds for the five-year
period ended July 31, 1996, placing the fund in the top 8% in this
category.*
* "Putnam Vista Fund's fast-paced strategy lets it look at the
competition in the rearview mirror. . . . Lead manager Jennifer
Silver has led this fund to its current slot among the top-
performing growth funds in Morningstar's database."+
-- Morningstar Mutual Funds, July 1996
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
14 Portfolio holdings
19 Financial statements
*Lipper Analytical Services, an independent research organization, ranks
funds according to total return performance. Their rankings vary over
time and do not reflect the effects of sales charges. For the one-year
period ended 7/31/96, the fund's class A, class B, and class M shares
ranked 85, 107, and 95, respectively, out of 622 growth funds. Class A
shares ranked 18 out of 161 for 10-year performance. Class B shares
ranked 79 out of 386 for 3-year performance. Class B and class M shares
were not ranked over longer periods.
+Morningstar is an independent research organization, and ratings are
subject to change every month. For the 1-, 5-, and 10-year periods
ended 7/31/96, the fund's class A shares ranked 14 out of 840, 7 out of
320, and 12 out of 198 growth funds, respectively. Performance of other
share classes will vary. Past performance is not indicative of future
results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
Putnam Vista Fund reaped the benefits of a stock market rise that
continued throughout virtually all of the fiscal year ended July 31,
1996. In the final weeks of the period, however, the market delivered a
stern reminder that such advances do not continue without interruption.
The portfolio's commitment to stocks of well-established growth
companies and fund management's carefully chosen investments in industry
sectors that experienced above-average growth allowed the fund not only
to make the most of the rally, but to weather the decline well. The fund
thus was able to close its books on yet another year of solidly positive
performance.
During the period, C. Kim Goodwin joined Jennifer Silver and Anthony
Santosus in the management of your fund. Kim came to Putnam in 1996 as a
senior vice president and portfolio manager. Prior to joining Putnam,
she was a portfolio manager with Mellon Bank and Prudential Mutual
Funds. Kim has nine years of investment experience.
The managers' report covering fiscal 1996 and the outlook for the new
fiscal year begins on the following page.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
September 18, 1996
Report from the Fund Managers
Jennifer Silver, lead manager
C. Kim Goodwin
Anthony C. Santosus
During the fiscal year ended July 31, 1996, Putnam Vista Fund used its
versatility to great advantage. The dramatic stock market rally that
prevailed during the first half of the period wilted over the latter six
months as economic growth slowed and corporate earnings moderated.
Nevertheless, your fund's strategy of diversified investing among well-
established growth companies was able to generate outstanding
performance in both environments.
For the period, your fund's class A shares produced total returns of
16.64% at net asset value and 9.96% at public offering price. Both
figures significantly outpaced the 7.71% return posted by the Standard &
Poor's Midcap 400 Index, the fund's benchmark, as did the results for
class B and class M shares. Complete performance figures appear on pages
9 through 11.
* TECHNOLOGY STOCKS REMAIN STRONG DESPITE SOME VOLATILITY
By the last quarter of calendar 1995, so many companies and individuals
had purchased or replaced computers that demand for new hardware began
to wither. At the same time, individual and corporate consumers began
actively seeking innovative software and other connectivity tools in
order to create networks and simplify Internet access. Shifting a
portion of the portfolio's technology holdings away from hardware-
related companies, such as semiconductor producers, and toward this
newly popular segment allowed the fund to capitalize on these developing
opportunities. Among the portfolio's holdings, several producers of
software and connectivity tools enjoyed impressive earnings during the
period and contributed to the fund's solid results. These included
Ascend Communications, Cascade Communications, Premisys Communications,
and Shiva Corp., producers of networking and Internet-related products.
While these stocks, along with others discussed in this report, were
viewed favorably at the end of the fiscal period, all portfolio holdings
are subject to review and adjustment in accordance with the fund's
investment strategy and may vary in the future.
In general terms, the technology sector experienced considerable
volatility during the period, particularly since January 1996. Your
fund's holdings were not immune to the widespread price fluctuations
that affected individual securities, but the portfolio's diversification
helped to offset any losses with gains in other securities and sectors.
Furthermore, we are not convinced that this cycle of volatility among
technology stocks has come to an end, and we will maintain a balance of
industries in the fund's portfolio to minimize the market risk in this
sector.
* BUSINESS-SERVICE STOCKS PROVIDE STABILITY
Another key element of your fund's success stemmed from our investments
in the business-services industry. Among the key attractions of
investing in business-service providers are the consistent growth and
predictable earnings these companies typically deliver. These attributes
are always beneficial and were especially stabilizing to the portfolio
as economic growth became increasingly volatile during the year, at
times fueling concerns about a possible recession.
Your fund drew substantial benefits from a variety of securities in this
sector. Reynolds & Reynolds (forms and information processing systems)
and Paychex (payroll accounting services) provided stability as market
uncertainty grew. Apollo Group (a private operator of universities) and
Corrections Corp. (a private operator of prisons) delivered the
advantages of a burgeoning trend toward the outsourcing of
administrative services. In temporary human resources, Robert Half
International, a company that provides skilled staffing in professional
services, contributed solid returns. Additionally, the information
processing companies DST Systems, Bisys Group, and Equifax added a boost
to performance.
[GRAPHIC HORIZONTAL BAR CHART OMITTED: TOP INDUSTRY SECTORS*]
Retail 9.3%
Business services 8.8%
Computer software 7.1%
Pharmaceuticals
and biotechnology 4.6%
Telecommunications
equipment 4.2%
Footnote reads:
Based on net assets as of 7/31/96. Sector allocations wil vary over time.
Because business-service companies typically deliver steady, predictable
growth and earnings, they are rarely among the leaders when the economy
is growing aggressively. However, during times of uncertain economic
growth -- such as exist today -- they can provide a steadying influence
on your portfolio. For this reason, we plan to maintain the fund's
exposure to this sector in the coming months.
* SEGMENTS OF THE HEALTH-CARE SECTOR ADD A BOOST
Another area in which we found lucrative opportunities was health care.
During the first six months of the fiscal year, companies in this sector
gradually emerged from the doldrums that had followed the Clinton
administration's aborted attempt to overhaul the nation's health-care
system. By the beginning of your fund's fiscal year, health maintenance
organizations (HMOs) were becoming more attractive to investors because
of their undervalued prices.
As HMOs prospered early in the period, so did drugstores. Drugstores
typically conduct more pharmacy business through HMOs and other health-
service providers than through sales to the general public, and sales to
these institutional consumers swelled during the period. This increase
in revenues, combined with cost-effective consolidations, gave rise to
solid growth and improved earnings in this industry. For your fund,
Eckerd Corp. contributed robust returns during the period.
By the second half of the period, attractive investment opportunities
among HMOs began to dissipate because of increasingly competitive
pricing and escalating costs. In response, we sold the bulk of the
fund's HMO holdings. However, at the same time, promising investments
emerged elsewhere in the health-care sector. One example was U.S.
Surgical, a medical supply company held by the fund. This company has
endured prolonged restructuring and downsizing in recent years, and is
now enjoying accelerated growth because of the popularity of innovative
medical devices it has developed.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
Halliburton Co.
Oil and gas equipment and services
HFS, Inc.
Lodging
Parametric Technology Corp.
Computer software
TJX Cos., Inc.
Retail apparel
Vons Cos., Inc.
Retail grocery and drug stores
Clear Channel Communications, Inc.
Radio and television stations
U.S. Filter Corp.
Waste treatment equipment
Omnicon Group, Inc.
Advertising
Equifax, Inc.
Information services
Thermo Electron Corp.
Environmental
Footnote reads:
These holdings represent 15.9% of the fund's net assets as of 7/31/96.
Portfolio holdings will vary over time.
The outlook for the remainder of calendar 1996 suggests that current
trends in the health-care sector will continue. If so, we will likely
maintain the fund's exposure to medical-supply and drugstore companies.
On the other hand, we may postpone reinstating investments in HMOs until
sustainable growth returns to this segment of the industry.
* THE CONSUMER SECTOR MAINTAINS ITS APPEAL
In addition to technology, business services, and health care, we
believe attractive mid-cap investment opportunities will continue to
emerge among broadcasting companies. Since the passage of more
permissive telecommunications legislation earlier this year, radio
stations have merged at a rapid pace. This consolidation has yielded
economies of scale, creating worthwhile investment opportunities. Among
the fund's holdings, Clear Channel Communications and Heritage Media
benefited from this trend. In the coming months, we expect this trend to
continue. And if ownership restrictions among television stations are
similarly relaxed, consolidation may spread to this segment of the
broadcasting industry.
Elsewhere, we've found lucrative investment opportunities among
supermarkets such as Safeway and Vons. Both of these holdings offer
exposure to rebounding California markets and may continue to prosper as
that state's economic revival gains momentum.
Overall, our strategy for your fund is to remain diversified across
industries to avoid the risks that come with betting on any one sector.
We strive to keep the portfolio's level of earnings stable by
emphasizing companies with steady earnings streams while still
maintaining exposure to what we see as growth markets.
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 7/31/96, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam Vista Fund is designed for investors seeking capital
appreciation primarily through common stocks.
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 in the fund.
TOTAL RETURN FOR PERIODS ENDED 7/31/96
Class A Class B Class M
(inception date) (6/3/68) (3/1/93) (12/8/94)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
1 year 16.64% 9.96% 15.88% 10.88% 16.37% 12.34%
- -----------------------------------------------------------------------
5 years 122.87 109.92 -- -- -- --
Annual average 17.38 15.99 -- -- -- --
- -----------------------------------------------------------------------
10 years 297.51 274.71 -- -- -- --
Annual average 14.80 14.12 -- -- -- --
- -----------------------------------------------------------------------
Life of class -- -- 62.09 59.09 60.16 54.65
Annual average -- -- 15.17 14.54 33.04 30.24
- -----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/96
Standard
& Poor's(registered trademark) Consumer
Midcap 400 Index Price Index
- ----------------------------------------------------------------------
1 year 7.71% 2.95%
- ----------------------------------------------------------------------
5 years 89.95 15.27
Annual average 13.69 2.88
- ----------------------------------------------------------------------
10 years 271.50 43.38
Annual average 14.02 3.67
- ----------------------------------------------------------------------
Life of class B 46.92 9.71
Annual average 11.90 2.75
- ----------------------------------------------------------------------
Life of class M 34.80 4.88
Annual average 19.84 2.93
- ----------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They 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. Investment returns and net asset
value will fluctuate so that an investor's shares, when sold, may be
worth more or less than their original cost. POP assumes 5.75% maximum
sales charge for class A shares and 3.50% for class M shares. CDSC for
class B shares assumes the applicable sales charge, with the maximum
being 5%.
[GRAPHIC WORM CHART OMITTED: GROWTH OF A $10,000 INVESTMENT]
Caption reads: Cumulative total return of a $10,000 investment
since 7/31/86
Starting value Ending Total
$9,425 Fund's class A shares at POP $37,471
$10,000 S&P Midcap 400 Index $37,150
$10,000 Consumer Price Index $14,338
(plot points for 10-year total return mountain chart)
Date/year Fund at POP S&P Midcap 400 Index CPI
- --------- ------------ ---------------------- ------
7/31/86 9,425 10,000 10,000
7/31/87 12,901 12,259 10,393
7/31/88 11,430 11,294 10,822
7/31/89 14,265 14,991 11,361
7/31/90 14,714 15,975 11,909
7/31/91 16,813 19,558 12,438
7/31/92 19,917 22,948 12,831
7/31/93 23,828 26,759 13,187
7/31/94 24,484 27,703 13,553
7/31/95 32,127 34,491 13,927
7/31/96 37,471 37,150 14,338
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 $16,209 on 7/31/96 ($15,909 with a
redemption at the end of the period). A $10,000 investment in
the fund's class M shares at inception on 12/8/94 would have
been valued at $16,016 at net asset value on 7/31/96 ($15,465
at public offering price).
PRICE AND DISTRIBUTION INFORMATION
12 months ended 7/31/96
Class A Class B Class M
- -----------------------------------------------------------------------
Distributions (number) 1 1 1
- -----------------------------------------------------------------------
Capital gains
- -----------------------------------------------------------------------
Long-term $0.582 $0.582 $0.582
- -----------------------------------------------------------------------
Short-term 0.275 0.275 0.275
- -----------------------------------------------------------------------
Total $0.857 $0.857 $0.857
- -----------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- -----------------------------------------------------------------------
7/31/95 $9.23 $9.79 $9.08 $9.19 $9.52
- -----------------------------------------------------------------------
7/31/96 9.79 10.39 9.55 9.72 10.07
- -----------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 6/30/96
(most recent calendar quarter)
Class A Class B Class M
(inception date) (6/3/68) (3/1/93) (12/8/94)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
1 year 38.07% 30.14% 37.07% 32.07% 37.59% 32.75%
- -----------------------------------------------------------------------
5 years 156.31 141.73 -- -- -- --
Annual average 20.71 19.31 -- -- -- --
- -----------------------------------------------------------------------
10 years 311.85 288.20 -- -- -- --
Annual average 15.21 14.53 -- -- -- --
- -----------------------------------------------------------------------
Life of class -- -- 77.37 74.37 75.16 69.13
Annual average -- -- 18.78 18.17 43.23 40.05
- -----------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns
and net asset value will fluctuate so that an investor's shares, when
sold, may be worth more or less than their original cost.
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.
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.
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.
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.
COMPARATIVE BENCHMARKS
Standard & Poor's Midcap 400 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, and performance of the fund will differ. It is not possible to
invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Report of independent accountants
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, 1996, 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, 1996 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 17, 1996
<TABLE>
<CAPTION>
Portfolio of investments owned
July 31, 1996
<S> <C> <C> <C>
COMMON STOCKS (95.3%) *
NUMBER OF SHARES VALUE
Advertising (2.6%)
- ---------------------------------------------------------------------------------------------------------------------
476,700 Heritage Media Corp. Class A + 18,889,238
666,900 Omnicom Group, Inc. 27,009,450
---------------
45,898,688
Apparel (2.2%)
- ---------------------------------------------------------------------------------------------------------------------
354,300 Gucci Group (Italy) + 20,106,525
83,600 St. John Knits, Inc. 3,302,200
308,500 Tommy Hilfiger Corp. + 15,656,375
---------------
39,065,100
Banks (2.6%)
- ---------------------------------------------------------------------------------------------------------------------
140,500 Bank of Boston Corp. 7,446,500
189,300 Northern Trust Corp. 11,192,363
359,600 State Street Boston Corp. 18,069,900
251,300 Washington Mutual, Inc. 9,141,038
---------------
45,849,801
Broadcasting (1.5%)
- ---------------------------------------------------------------------------------------------------------------------
345,400 Clear Channel Communications, Inc. + 27,502,475
Building Products (1.0%)
- ---------------------------------------------------------------------------------------------------------------------
408,700 Sherwin Williams Co. 18,493,675
Business Services (8.8%)
- ---------------------------------------------------------------------------------------------------------------------
474,900 Bisys Group, Inc. (The) + 14,484,450
483,550 Corporate Express, Inc. + 18,072,681
509,400 DST Systems, Inc. + 14,517,900
1,010,200 Equifax, Inc. 25,381,275
509,400 Gartner Group Inc. Class A + 16,619,175
162,100 Norrell Corp.+ 4,498,275
390,362 Paychex, Inc. 17,859,062
562,100 Primark Corp. + 15,176,700
650,600 Robert Half International, Inc. + 18,379,450
455,200 Viking Office Products, Inc. + 13,428,400
---------------
158,417,368
Chemicals (1.1%)
- ---------------------------------------------------------------------------------------------------------------------
492,100 Praxair, Inc. 18,884,338
Computer Equipment (1.2%)
- ---------------------------------------------------------------------------------------------------------------------
483,500 Symbol Technologies, Inc. + 21,153,125
Computer Services (2.9%)
- ---------------------------------------------------------------------------------------------------------------------
686,800 Cambridge Technology Partners, Inc. + 18,028,500
500,800 Reynolds & Reynolds Co. Class A 24,226,200
284,700 Sterling Commerce, Inc. + 9,003,638
---------------
51,258,338
Computer Software (7.1%)
- ---------------------------------------------------------------------------------------------------------------------
192,600 Business Objects S.A., ADR (France) + 3,707,550
487,300 Citrix Systems, Inc. + 18,395,575
260,900 Electronics for Imaging, Inc. + 15,197,425
412,375 McAfee Associates, Inc. + 20,721,844
319,400 Medic Computer Systems, Inc.+ 12,776,000
708,000 Parametric Technology Corp. + 29,470,500
301,400 PeopleSoft, Inc. + 20,363,332
184,200 Viasoft, Inc. + 6,999,600
---------------
127,631,826
Correctional Facilities (0.5%)
- ---------------------------------------------------------------------------------------------------------------------
303,100 Corrections Corp.+ 9,396,100
Cosmetics (1.1%)
- ---------------------------------------------------------------------------------------------------------------------
518,300 Estee Lauder Cos. Class A 19,954,550
Education (0.8%)
- ---------------------------------------------------------------------------------------------------------------------
506,025 Apollo Group, Inc. Class A+ 13,915,688
Electric Utilities (1.3%)
- ---------------------------------------------------------------------------------------------------------------------
910,100 Calenergy, Inc. + 23,890,125
Electronics (2.4%)
- ---------------------------------------------------------------------------------------------------------------------
647,600 BMC Industries, Inc. 17,728,050
253,300 Perkin-Elmer Corp. 13,234,925
449,000 Waters Corp. + 12,572,000
---------------
43,534,975
Environmental (1.4%)
- ---------------------------------------------------------------------------------------------------------------------
660,550 Thermo Electron Corp. + 24,688,056
Environmental Control (3.4%)
- ---------------------------------------------------------------------------------------------------------------------
368,400 Sanifill, Inc. + 15,610,950
1,256,250 U.S. Filter Corp. + 27,166,406
708,000 United Waste Systems, Inc. + 18,319,500
---------------
61,096,856
Financial Services (2.3%)
- ---------------------------------------------------------------------------------------------------------------------
380,700 Advanta Corp. Class A 18,083,250
457,600 Finova Group, Inc. 22,651,200
---------------
40,734,450
Food and Beverages (1.2%)
- ---------------------------------------------------------------------------------------------------------------------
248,900 Coca-Cola Enterprises, Inc. 8,773,725
556,000 Whitman Corp. 12,440,500
---------------
21,214,225
Funeral/Cemetery Services (0.9%)
- ---------------------------------------------------------------------------------------------------------------------
634,650 Stewart Enterprises, Inc. Class A 16,818,225
Gaming (0.9%)
- ---------------------------------------------------------------------------------------------------------------------
716,400 Mirage Resorts, Inc. + 16,119,000
HMOs (0.6%)
- ---------------------------------------------------------------------------------------------------------------------
325,200 Oxford Health Plans Inc.+ 11,219,400
Health Care Services (3.0%)
- ---------------------------------------------------------------------------------------------------------------------
336,700 Cardinal Health, Inc. 23,400,650
932,600 Omnicare, Inc. 21,799,525
659,400 Physician Reliance Network, Inc. + 8,901,900
---------------
54,102,075
Household Products (1.0%)
- ---------------------------------------------------------------------------------------------------------------------
733,900 First Brands Corp. 17,521,863
Insurance (1.6%)
- ---------------------------------------------------------------------------------------------------------------------
403,800 CapMAC Holdings, Inc. 11,710,200
284,700 Unum Corp. 17,366,700
---------------
29,076,900
Lodging (1.8%)
- ---------------------------------------------------------------------------------------------------------------------
550,900 HFS, Inc. + 33,054,000
Machinery (0.8%)
- ---------------------------------------------------------------------------------------------------------------------
309,800 Case Corp. 13,708,650
Medical Supplies and Devices (3.6%)
- ---------------------------------------------------------------------------------------------------------------------
354,000 Guidant Corp. 17,965,500
423,100 IDEXX Laboratories, Inc. + 16,395,125
695,100 Mentor Corp. 19,462,800
301,400 U.S. Surgical Corp. 10,322,950
---------------
64,146,375
Networking Equipment (3.8%)
- ---------------------------------------------------------------------------------------------------------------------
276,300 Ascend Communications, Inc. + 13,400,550
294,900 Cascade Communications Corp. + 18,136,350
424,200 Cisco Systems, Inc. + 21,952,350
278,700 Shiva Corp. + 14,422,725
---------------
67,911,975
Patient Care (3.5%)
- ---------------------------------------------------------------------------------------------------------------------
485,600 American Medical Response + 16,085,500
453,300 Genesis Health Ventures, Inc. + 11,389,163
660,300 Health Care & Retirement Corp. + 15,682,125
945,475 Health Management Assoc., Inc. + 19,027,684
---------------
62,184,472
Oil and Gas (2.6%)
- ---------------------------------------------------------------------------------------------------------------------
423,100 Camco International, Inc. 13,697,863
645,900 Halliburton Co. 33,667,538
---------------
47,365,401
Paging (0.9%)
- ---------------------------------------------------------------------------------------------------------------------
828,900 Paging Network, Inc. + 15,956,325
Pharmaceuticals and Biotechnology (4.6%)
- ---------------------------------------------------------------------------------------------------------------------
388,500 Biochem Pharmaceutical, Inc. + 11,606,438
416,900 Elan Corp. PLC ADR (Ireland) + 24,492,875
776,435 ICN Pharmaceuticals, Inc. 16,305,135
526,300 Interneuron Pharmaceuticals, Inc. + 14,210,100
232,500 Quintiles Transnational Corp. + 16,216,875
---------------
82,831,423
Publishing (1.6%)
- ---------------------------------------------------------------------------------------------------------------------
466,200 Belo (A.H.) Corp. 18,764,550
202,600 Harcourt General, Inc. 9,699,475
---------------
28,464,025
Railroads (1.0%)
- ---------------------------------------------------------------------------------------------------------------------
595,700 Wisconsin Central Transportation Corp. + 18,615,625
Restaurants (0.7%)
- ---------------------------------------------------------------------------------------------------------------------
492,100 Boston Chicken, Inc. + 13,040,650
Retail (9.3%)
- ---------------------------------------------------------------------------------------------------------------------
410,800 Bed Bath & Beyond, Inc. + 9,037,600
680,600 Consolidated Stores Corp. + 22,459,800
925,300 Eckerd Corp. + 20,587,925
474,900 Nine West Group, Inc. + 22,973,288
440,300 Safeway, Inc. + 15,850,800
1,105,150 Staples, Inc. + 18,373,119
975,600 TJX Cos., Inc. (The) 29,389,950
701,000 Vons Cos., Inc. + 27,777,125
---------------
166,449,607
Savings and Loans (1.6%)
- ---------------------------------------------------------------------------------------------------------------------
405,800 Charter One Financial, Inc. 15,014,600
405,100 TCF Financial Corp. 13,975,950
---------------
28,990,550
Telecommunication (1.9%)
- ---------------------------------------------------------------------------------------------------------------------
630,300 LCI International, Inc. + 19,066,575
638,900 Octel Communications Corp. + 15,014,150
---------------
34,080,725
Telecommunication Equipment (4.2%)
- ---------------------------------------------------------------------------------------------------------------------
303,200 Adtran, Inc. + 18,419,400
100,500 Diana Corp. + 2,587,875
189,900 Pairgain Technologies, Inc. + 10,539,450
345,400 Picturetel Corp. + 12,261,700
336,700 Premisys Communications, Inc. + 10,185,175
371,300 Tellabs, Inc. + 22,185,175
---------------
76,178,775
---------------
Total Common Stocks (cost $1,448,770,288) $ 1,710,415,800
Short-Term Investments (4.5%) *
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------
$20,000,000 Federal Home Loan Bank effective yield of 5.345%, September 4, 1996 $ 19,899,038
25,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.50%, August 1, 1996 25,000,000
1,100,000 Federal Home Loan Mortgage Corp. effective yield of 5.26%, September 3,1996 1,094,696
34,832,000 Interest in $500,000,000 joint repurchase agreement dated July 31,1996 with
Lehman Brothers Inc. due August 1, 1996 with respect to various U.S.Treasury
obligations---maturity value of $34,837,467 for an effective yield of of 5.65% 34,837,467
---------------
Total Short-Term Investments (cost $80,831,201) $ 80,831,201
- ---------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,529,601,489)*** $ 1,791,247,001
- ---------------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $1,794,286,951
+ Non-income-producing security.
*** The aggregate identified cost on a tax basis is $1,530,288,235, resulting in gross unrealized appreciation and
depreciation of $332,395,184 and $71,436,418, respectively, or net unrealized appreciation of $260,958,766.
ADR, after the name of a foreign holding stands for American Depository Receipts,
representing ownership of foreign securities on deposit with a domestic custodian bank.
The accompanying note are an intregal part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Statement of assets and liabilities
July 31, 1996
Assets
- ---------------------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $1,529,601,489) (Note 1) $1,791,247,001
- ---------------------------------------------------------------------------------------------------------------
Cash 73
- ---------------------------------------------------------------------------------------------------------------
Dividends and other receivables 183,193
- ---------------------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 13,058,989
- ---------------------------------------------------------------------------------------------------------------
Receivable for securities sold 3,084,897
- ---------------------------------------------------------------------------------------------------------------
Other assets 25,333
- ---------------------------------------------------------------------------------------------------------------
Total assets 1,807,599,486
Liabilities
- ---------------------------------------------------------------------------------------------------------------
Payable for securities purchased 7,146,383
- ---------------------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,344,349
- ---------------------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 2,505,293
- ---------------------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 892,885
- ---------------------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 5,313
- ---------------------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,039
- ---------------------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 688,035
- ---------------------------------------------------------------------------------------------------------------
Other accrued expenses 728,238
- ---------------------------------------------------------------------------------------------------------------
Total liabilities 13,312,535
- ---------------------------------------------------------------------------------------------------------------
Net assets $1,794,286,951
Represented by
- ---------------------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,413,234,685
- ---------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 119,406,754
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 261,645,512
- ---------------------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $1,794,286,951
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A shares
($1,220,639,083 divided by 124,632,030 shares) $9.79
- ---------------------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $9.79)* $10.39
- ---------------------------------------------------------------------------------------------------------------
Net asset value and offering price per class B shares
($488,085,015 divided by 51,128,655 shares)** $9.55
- ---------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M shares
($22,232,418 divided by 2,288,392 shares) $9.72
- ---------------------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $9.72)* $10.07
- ---------------------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price of class Y shares
($63,330,435 divided by 6,435,476 shares) $9.84
- ---------------------------------------------------------------------------------------------------------------
* 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 intregral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended July 31, 1996
<S> <C>
Investment Income:
- ----------------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $39,694) $6,134,541
- ----------------------------------------------------------------------------------------------------------
Interest 5,114,276
- ----------------------------------------------------------------------------------------------------------
Total investment income 11,248,817
Expenses:
- ----------------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 8,346,339
- ----------------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 3,006,781
- ----------------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 37,366
- ----------------------------------------------------------------------------------------------------------
Administrative services (Note 2) 24,952
- ----------------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,612,200
- ----------------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 3,686,125
- ----------------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 80,537
- ----------------------------------------------------------------------------------------------------------
Reports to shareholders 144,536
- ----------------------------------------------------------------------------------------------------------
Registration fees 190,618
- ----------------------------------------------------------------------------------------------------------
Auditing 48,414
- ----------------------------------------------------------------------------------------------------------
Legal 27,493
- ----------------------------------------------------------------------------------------------------------
Postage 479,886
- ----------------------------------------------------------------------------------------------------------
Other 49,928
- ----------------------------------------------------------------------------------------------------------
Total expenses 18,735,175
- ----------------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (575,122)
- ----------------------------------------------------------------------------------------------------------
Net expenses 18,160,053
- ----------------------------------------------------------------------------------------------------------
Net investment loss (6,911,236)
- ----------------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 201,058,618
- ----------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 100,906
- ----------------------------------------------------------------------------------------------------------
Net gain on investments 201,159,524
- ----------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $194,248,288
- ----------------------------------------------------------------------------------------------------------
The accompanying notes are an intregral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended July 31
-----------------------------------
1996 1995
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Increase in net assets
- ------------------------------------------------------------------------------------------------------------------------------
Operations:
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $(6,911,236) $972,604
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 201,058,618 49,546,498
- ------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 100,906 216,175,777
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 194,248,288 266,694,879
- ------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (84,321,794) (5,157,873)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (28,584,576) (1,221,982)
- ------------------------------------------------------------------------------------------------------------------------------
Class M (657,462) (322)
- ------------------------------------------------------------------------------------------------------------------------------
Class Y (4,307,615) --
- ------------------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 554,119,174 124,069,453
- ------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 630,496,015 384,384,155
- ------------------------------------------------------------------------------------------------------------------------------
Net assets
- ------------------------------------------------------------------------------------------------------------------------------
Beginning of year 1,163,790,936 779,406,781
- ------------------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment income of
$0 and of $914,647, respectively) $1,794,286,951 $1,163,790,936
- ------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an intregral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
March 28, 1995
Year (commencement Year
ended of operations) to ended
July 31 July 31 July 31
------------------------------------------------------
1996 1995 1996
------------------------------------------------------
Class Y Class M
------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.24 $7.83 $9.19
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) -- .01 (.08)(d)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.46 1.40 1.47
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.46 1.41 1.39
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.86) -- (.86)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Paid-in capital -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.86) -- (.86)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.84 $9.24 $9.72
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 17.07 18.01 (c) 16.37
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $63,330 $42,717 $22,232
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b) .81 .29 (c) 1.54
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) (.01) .10 (c) (.82)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 106.58 114.51 106.58
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
December 8, 1994
(commencement
of operations) to
July 31 Year ended July 31
------------------------------------------------------
1995 1996 1995
------------------------------------------------------
Class M Class B
------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $6.73 $9.08 $7.03
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.01) (.10)(d) (.03)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.53 1.43 2.14
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.52 1.33 2.11
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.06) (.86) (.06)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Paid-in capital -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.06) (.86) (.06)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.19 $9.55 $9.08
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 37.63(c) 15.88 30.19
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $3,148 $488,085 $258,522
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) (b) 1.06(c) 1.81 1.82
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) (.31)(c) (1.03) (.51)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 114.51 106.58 114.51
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
March 1, 1993
(commencement
of operations) to
July 31 Year ended July 31
------------------------------------------------------
1994 1993 1996
------------------------------------------------------
Class B
------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $7.46 $7.12 $9.23
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .01 (.01) (.03)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .15 .40 1.45
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .16 .39 1.42
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.02) (.05) --
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.55) -- (.86)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments (.01) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Paid-in capital (.01) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.59) (.05) (.86)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.03 $7.46 $9.79
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 1.89 5.45(c) 16.64
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $132,596 $20,722 $1,220,639
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b) 1.87 .72(c) 1.10
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) (.53) (.07)(c) (.29)
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 93.86 120.57 106.58
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
Year ended July 31
------------------------------------------------------
1995 1994 1993
------------------------------------------------------
Class A
------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $7.09 $7.47 $7.59
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02 .01 .07
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.18 .21 1.28
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.20 .22 1.35
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income -- (.03) (.12)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.06) (.55) (1.35)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net realized gain on investments -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------
Paid-in capital -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.06) (.60) (1.47)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.23 $7.09 $7.47
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 31.22 2.75 19.63
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $859,403 $646,811 $439,722
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) (b) 1.07 1.09 .96
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) .26 .29 1.08
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 114.51 93.86 120.57
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
Year ended July 31
----------
1992
----------
<S> <C>
Net asset value, beginning of period $6.97
- ---------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------
Net investment income (loss) .14
- ---------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.07
- ---------------------------------------------------------------------------------
Total from investment operations 1.21
- ---------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------
From net investment income (.19)
- ---------------------------------------------------------------------------------
From net realized gain on investments (.40)
- ---------------------------------------------------------------------------------
In excess of net realized gain on investments --
- ---------------------------------------------------------------------------------
Paid-in capital --
- ---------------------------------------------------------------------------------
Total distributions (.59)
- ---------------------------------------------------------------------------------
Net asset value, end of period $7.59
- ---------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 18.46
- ---------------------------------------------------------------------------------
Net assets, end of period (in thousands) $336,360
- ---------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) (b) .96
- ---------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) 1.92
- ---------------------------------------------------------------------------------
Portfolio turnover (%) 143.92
- ---------------------------------------------------------------------------------
(a) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) The ratio of expenses to average net assets for the year ended July 31, 1996
includes amounts paid through expense offset and brokerage service arrangments.
Prior period ratios exclude these amounts (Note 2)
(c) Not annualized.
(d) Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.
</TABLE>
Notes to financial statements
July 31, 1996
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. Class A
shares are sold with a maximum front-end sales charge of 5.75%. Class B
shares, which convert to class A shares after approximately eight years,
do not pay a front-end sales charge but pay a higher ongoing
distribution fee than class A 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 an ongoing distribution fee that is higher than class A
shares but lower than class B 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 holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies followed
by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
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. 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. ("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.
Putnam Management is responsible for determining that the value of these
underlying securities is at all times at least equal to the resale
price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed).
Interest income is recorded on the accrual basis. 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
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held and for 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 the 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. These
differences include treatment of net operating loss.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations. For the year ended July 31,
1996, the fund reclassified $5,996,589 to decrease accummulated net
investment loss, with a decrease to accumulated net realized gain on
investments of $5,996,589. The calculation of net investment income per
share in the financial highlights table excludes these adjustments.
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. 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 by the
amount of certain brokerage commissions and fees (less expenses)
received by affiliates of Putnam Management on the fund's portfolio
transactions.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the year ended July 31, 1996, fund expenses were reduced by $575,122
under expense offset arrangements with PFTC and brokerage and service
arrangements. Investor servicing and custodian fees reported in the
Statement of operations exclude these credits. The fund could have
invested a portion of the assets utilized in connection with the expense
offset arrangements in an income producing asset if it had not entered
into such arrangements.
Trustees of the fund receive an annual Trustees fee of $2,600 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
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.
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, 1996, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $1,021,865 and $38,786 from the
sale of class A and class M shares, respectively, and $400,627 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. For the year ended July 31, 1996, Putnam Mutual Funds
Corp., acting as underwriter received $10,428 on class A redemptions.
Note 3
Purchase and sales of securities
During the year ended July 31, 1996, purchases and sales of investment
securities other than short-term investments aggregated $1,897,176,213
and $1,485,660,400, respectively. There were no purchases and sales of
U.S. government obligations. 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, 1996, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
July 31, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 58,619,707 $576,076,854
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 9,126,187 78,485,159
- ----------------------------------------------------
67,745,894 654,562,013
Shares
repurchased (36,229,166) (352,601,385)
- ----------------------------------------------------
Net increase 31,516,728 $301,960,628
- ----------------------------------------------------
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, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 29,966,996 $288,819,739
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,127,846 26,336,480
- ----------------------------------------------------
33,094,842 315,156,219
Shares
repurchased (10,440,472) (99,513,466)
- ----------------------------------------------------
Net increase 22,654,370 $215,642,753
- ----------------------------------------------------
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
- ----------------------------------------------------
Year ended
July 31, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 2,967,129 $29,187,299
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 74,406 636,171
- ----------------------------------------------------
3,041,535 29,823,470
Shares
repurchased (1,095,748) (10,746,643)
- ----------------------------------------------------
Net increase 1,945,787 $19,076,827
- ----------------------------------------------------
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
- ----------------------------------------------------
Year ended
July 31, 1996
- ----------------------------------------------------
Class Y Shares Amount
- ----------------------------------------------------
Shares sold 3,075,803 $30,261,120
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 499,144 4,307,615
- ----------------------------------------------------
3,574,947 34,568,735
Shares
repurchased (1,761,063) (17,129,769)
- ----------------------------------------------------
Net increase 1,813,884 $17,438,966
- ----------------------------------------------------
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 $.582 per share (or if different, the amount necessary to
offset net capital gain earned by the fund) for all classes of shares as
capital gain dividends for its taxable year ended July 31, 1996.
The Form 1099 you receive in January 1997 will show the tax status of
all distributions paid to your account in calendar 1996.
Results of July 31, 1996 shareholder meeting
(Unaudited)
An annual meeting of shareholders of the fund was held on
July 31, 1996. At the meeting, each of the nominees for Trustees was
elected, as follows:
Votes for Votes withheld
- ------------------------------------------------------------------------
Jameson Adkins Baxter 98,525,416 1,798,961
Hans H. Estin 98,549,306 1,775,071
John A. Hill 98,588,111 1,736,266
R.J. Jackson 98,521,531 1,802,846
Elizabeth T. Kennan 98,465,054 1,859,323
Lawrence J. Lasser 98,555,482 1,768,895
Robert E. Patterson 98,579,353 1,745,024
Donald S. Perkins 98,550,522 1,773,855
William F. Pounds 98,581,702 1,742,675
George Putnam 98,524,365 1,800,012
George Putnam, III 98,485,922 1,838,455
E. Shapiro 98,279,192 2,045,185
A.J.C. Smith 98,551,260 1,773,117
W. Nicholas Thorndike 98,504,071 1,820,306
A proposal to ratify Price Waterhouse LLP as auditors for the fund was
approved as follows: 96,237,941 votes for, and 1,337,565 votes against,
with 2,748,871 abstentions and non-broker votes.
A proposal to amend the fund's fundamental investment restriction with
respect to diversification of investments was approved as follows:
83,127,093 votes for, and 7,942,265 votes against, with 9,255,020
abstentions and non-broker votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in the securities of a single issuer was approved
as follows: 81,787,743 votes for, and 8,728,425 votes against, with
9,808,211 abstentions and non-broker votes.
A proposal to amend the fund's fundamental investment restriction with
respect to making loans through purchases of debt obligations,
repurchase agreements and securities loans was approved as follows:
78,468,784 votes for, and 11,580,003 votes against, with 10,275,588
abstentions and non-broker votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in real estate was approved as follows:
80,932,988 votes for, and 9,752,302 votes against, with 9,639,086
abstentions and non-broker votes.
A proposal to amend the fund's fundamental investment restriction with
respect to concentration of its assets was approved as follows:
83,645,191 votes for, and 6,980,082 votes against, with 9,699,105
abstentions and non-broker votes.
A proposal to amend the fund's fundamental investment restriction with
respect to investments in commodities or commodity contracts was
approved as follows: 79,104,888 votes for, and 11,494,431 votes against,
with 9,725,056 abstentions and non-broker votes.
A proposal to amend the fund's fundamental investment restriction with
respect to underwriting was approved as follows: 81,220,670 votes for,
and 8,678,272 votes against, with 10,425,431 abstentions and non-broker
votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in issuers that have been in operation for
less than three years was approved as follows: 81,841,041 votes for, and
8,580,135 votes against, with 9,903,199 abstentions and non-broker
votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in securities of issuers in which management
of the fund or Putnam Investment Management, Inc. owns securities was
approved as follows: 80,652,864 votes for, and 9,536,491 votes against,
with 10,135,021 abstentions and non-broker votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to margin transactions was approved as follows: 77,658,078
votes for, and 12,468,479 votes against, with 10,791,821 abstentions and
non-broker votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to short sales was approved as follows: 78,692,150 votes
for, and 11,329,598 votes against, with 10,302,626 abstentions and non-
broker votes.
A proposal to eliminate the fund's fundamental investment restriction
which limits the fund's ability to pledge assets was approved as
follows: 78,214,397 votes for, and 11,895,275 votes against, with
10,214,706 abstentions and non-broker votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to invest to gain control of a company's management was
approved as follows: 80,305,400 votes for, and 9,953,098 votes against,
with 10,065,835 abstentions and non-broker votes.
A proposal to eliminate the fund's fundamental investment restrictions
with respect to investment in illiquid securities was approved as
follows: 77,092,082 votes for, and 12,816,193 votes against, with
10,416,097 abstentions and non-broker votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to investments in certain oil, gas an mineral interests was
approved as follows: 80,087,800 votes for, and 10,237,268 votes against,
with 9,999,306 abstentions and non-broker votes.
A proposal to eliminate the fund's fundamental investment restriction
with respect to option transactions was approved as follows: 79,165,401
votes for, and 10,959,050 votes against, with 10,199,925 abstentions and
non-broker votes.
All tabulations are rounded to nearest whole number.
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investor Services has won the DALBAR Quality Tested Service Seal
for the past six years. In 1995, over 146,000 tests of 56 shareholder
service components demonstrated that Putnam outperformed the industry
standard in every category.
* HELP YOUR INVESTMENT GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market 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 the
original cost of the shares.
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 representative.
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.
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
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
Jennifer Silver
Vice President and Fund Manager
Anthony C. Santosus
Vice President and Fund Manager
C. Kim Goodwin
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
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. 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.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- -------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- -------------------
27082-006/317/515 9/96
PUTNAM INVESTMENTS [LOGO]
- -----------------------------------------------------------------------------
Putnam Vista Fund
Supplement to Annual Report dated July 31, 1996
The following information has been prepared to provide class Y shareholders
with a performance overview specific to their holdings. Class Y shares are
offered exclusively to defined contribution plans investing $250 million or
more in one or more of Putnam's funds or private accounts. Performance of
class Y shares, which incur neither a front-end load, distribution fee, nor
contingent deferred sales charge, will differ from performance of class A,
B, and M shares, which are discussed more extensively in the annual report.
ANNUAL RESULTS AT A GLANCE
- -----------------------------------------------------------------------------
Total return: NAV
One year ended 7/31/96 17.07%
Life of class (since 3/28/95) 38.15
Annual average 27.05
- -----------------------------------------------------------------------------
Share value: NAV
7/31/95 $9.24
7/31/96 9.84
- -----------------------------------------------------------------------------
Distributions: No. LT Capital Gains ST Capital gains Total
1 $0.582 $0.275 $0.857
- -----------------------------------------------------------------------------
Please note that past performance does not indicate future results. Investment
return and principal value will fluctuate so your shares, when redeemed, may be
worth more or less than their original cost. See full report for information on
comparative benchmarks. If you have questions, please consult your fund
prospectus or call Putnam toll free at 1-800-752-9894.
