Putnam
Vista
Fund
ANNUAL REPORT
July 31, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "[T]he fund is consistent in devoting most assets to mid-caps,
whereas other funds in the category have strayed into blue-chip
stocks, which have been market darlings for the last 12 months. This
even-keeled strategy has kept the fund away from performance extremes.
. . . The fund's proprietary stock selection model has successfully
directed management to stocks with earnings-surprise potential."
-- Morningstar Mutual Funds, May 23, 1997
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
18 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
As the extraordinary resiliency of the current bull market in
large-capitalization stocks continued, Putnam Vista Fund's focus on
medium-capitalization stocks, which have provided rewarding results over the
long term, became something of a handicap. Your fund's performance for the 12
months ended July 31, 1997, is respectable but falls short of the expectations
fostered by the ongoing strength of large-capitalization stocks.
Two changes have been made within your fund's management team since our last
report to you. Carol McMullen, Chief Investment Officer of Putnam's Core
Growth Equity Group is lead manager following the departure of Jennifer
Silver. Carol joined Putnam in 1995, was previously with Baring Asset
Management and Citicorp Investment Management and has over 17 years of
investment experience.
Although C. Kim Goodwin, a recent addition, has also departed, Anthony
Santosus, a team member since 1994 and David Santos, who has been with Putnam
for 11 years, remain co-managers with Carol. They are supported by seven
dedicated analysts as well as the 40 who comprise our Global Research
department. We are confident that the combined expertise of these
professionals will ensure continuity of the fund's management style.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
September 18, 1997
Report from the Fund Managers
Carol McMullen, lead manager
Anthony C. Santosus
David J. Santos
The stock market sprinted ahead at a steady pace, setting one market high
after another during the 12 months ended July 31, 1997. The rising tide, which
pushed the widely followed Dow Jones Industrial Average from one new high to
another, was driven by rosy economic growth and low inflation.
Large-capitalization stocks were steady performers throughout the period, with
small- and medium-cap stocks joining the rally by mid spring.
Putnam Vista Fund, which focuses primarily on medium-size growth companies,
consequently lagged behind the benchmark indexes for much of the year and yet
delivered strong absolute results for the full year: class A shares were up
36.25% at net asset value (28.39% at public offering price) for this fiscal
year. Complete performance information, including results for other share
classes, appears on pages 9 through 10.
* RECORD-SETTING PACE ON WALL STREET
The fund's fiscal year encapsulated one of the most astounding bull markets in
history. The Dow passed the milestone 6000 mark in October and topped 7000 in
February. Incredibly, five months later -- just before the close of the fund's
fiscal year -- this market indicator crossed the 8000 barrier. In addition,
the technology-laden NASDAQ Composite Index surged during the last quarter of
fiscal '97. Stock investors were clearly pleased with the breadth and pace of
economic growth.
Two factors that fueled the rise in stock prices were corporate profits and
low inflation, both of which consistently exceeded investors' expectations
over the period. In addition, a forward-looking Federal Reserve Board, with
Alan Greenspan at its helm, fostered steady growth and remains vigilant for
warning signs of inflation. The Fed's increase in short-term interest rates in
March was a temporary bump; investors acknowledged that this near-term
adjustment was necessary to keep the economy robust over the longer term. The
stock market's rally was further strengthened by Washington's summer
deficit-reduction package, which included a decrease in the capital gains tax.
Given such a rapid advance in such a short time, Chairman Greenspan has warned
about "excessive optimism" and "irrational exuberance" on several occasions.
Such advice is worth heeding, and as always, we ask our shareholders to temper
their expectations.
* MARKET'S ADVANCE LED BY LARGE-CAPITALIZATION STOCKS; MID-CAPS JOIN RALLY IN
LATE SPRING
For the first three quarters of the fiscal year, large-cap stocks outperformed
their small and medium-size counterparts. The economy's strong performance in
late 1996 and early 1997, while favorable for corporate profits, raised
concerns over inflation and the possibility of interest-rate increases by the
Fed -- an environment that encouraged investors to seek the security of
large-company stocks. By late spring, however, with the outlook for inflation
and growth moderating, investor enthusiasm for smaller companies began to
return, and prices rebounded from their April lows.
We remain optimistic about medium-size companies for several reasons. First,
mid-cap stocks, technology stocks in particular, are dependent to a greater
extent on product cycles and the desire on the part of their customers to
increase productivity. Second, the federal budget legislation included a
reduction in the capital gains tax from 28% to 20%, thus improving the
after-tax return for growth stocks. Finally, having survived their smaller,
start-up phase, many medium-size companies are poised for rapid growth. Your
fund's commitment to diversification across many sectors, we believe, holds
the key to uncovering the companies with above-average growth potential
and the promise of becoming tomorrow's large-cap leaders.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Retail 9.4%
Computer services and software 8.6%
Health care services 6.7%
Business services 6.3%
Medical supplies and devices 4.8%
Footnote reads:
*Based on net assets as of 7/31/97. Holdings will vary over time.
* TECHNOLOGY HOLDINGS STRENGTHEN LATE IN PERIOD
Although volatility throughout the technology industry continued well into the
second half of the fiscal year, two sectors -- semiconductors and computer
software -- made notable contributions to the fund's performance.
Semiconductor stocks, such as Analog Devices, which was sold at a profit
before the year's end, performed better than expected as new orders picked up
and a feared correction in the industry failed to materialize.
Many of the fund's computer software holdings are geared toward the business
community with an emphasis on products that increase productivity. Peoplesoft,
Inc. is one holding that is leading the transition from mainframe systems to
new client server-based systems.
While a heavy presence of technology stocks benefited the fund, some holdings
proved disappointing. For example, Picturetel Corp. (video conferencing)
failed to meet our growth targets when product deliveries fell behind
schedule. In addition, the networking equipment industry fell short of
expectations. Spending for infrastructure didn't materialize as anticipated,
resulting in subpar performance for several holdings.
The year 2000 issue -- or Y2K -- continues to present some of the most dynamic
opportunities within the technology and business services industries.
Companies around the world are struggling to prevent the loss of essential
data, applications, and even hardware within systems that are not equipped to
digest dates after December 31, 1999. Each company faces a unique set of
challenges that must be addressed from a business as well as a technological
viewpoint.
In most cases, however, the response is to reprogram existing systems, to
replace outdated software and hardware, or to customize a solution that
combines both approaches. Viasoft, Inc., a fund holding, is at the forefront
of this once-in-a-millennium opportunity. While these holdings, 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.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS*
TJX Cos., Inc. (The)
Retail
Coca-Cola Enterprises, Inc.
Food and beverages
Omnicom Group, Inc.
Advertising
Equifax, Inc.
Business services
Finova Group, Inc.
Financial services
AES Corp.
Independent power producer
HEALTHSOUTH Corp.
Health-care services
Rite Aid Corp.
Retail
Clear Channel Communications, Inc.
Broadcasting
Northern Trust Corp.
Banks
Footnote reads:
These holdings represent 16.2% of the fund's assets as of 7/31/97.
Portfolio holdings will vary over time.
* SOLID ECONOMIC GROWTH BENEFITS CONSUMER-RELATED INDUSTRIES
Consumer cyclical stocks, which include companies whose profits are tied to
the strength of the economy, were big winners during the year. Specialty
retailing stocks have enjoyed a steady comeback with Bed, Bath & Beyond (which
we have since sold at a profit), Borders Group, and Pier 1 Imports among the
portfolio's better performers. Higher employment and consumer confidence
levels coupled with well-managed inventory levels have led to improving profit
margins for stores like Consolidated Stores Corp. and The TJX Cos., Inc. --
the parent company of TJ Maxx.
Food and drug retailers have done well. Supermarkets are lowering their cost
of operations by utilizing new technologies that lead to more efficient
inventory management and stronger merchandising. As a result of their
partnerships with health maintenance organization (HMOs) that direct patients
to preferred vendors, drugstore chains are prospering from an increased flow
of customers. Coupled with improved merchandising, profitability is increasing
for holdings such as Rite Aid Stores.
In the consumer nondurable area, radio broadcasting is benefiting from the
passage of the Telecommunications Act of 1996, which allowed a single operator
to own several stations in a large metropolitan area. As a result, radio
operators are spreading the cost of programming across multiple stations to
reduce expenses. Clear Channel Communications, Inc. and Evergreen Media Corp.
have been steady performers, gaining market share and increasing advertising
revenues.
Finally, a presence in several subsectors within the health-care industry --
HMOs, acute services, and elderly care -- contributed to fund performance.
Oxford Health Plans, Inc. is a well-managed HMO gaining a larger market share
in New York by successfully targeting the growing elderly population. As
hospitals rein in costs by reducing hospital stays, Healthsouth Corp. is
capturing an increasing share of the outpatient rehabilitation health-care
market.
* MIDSIZE COMPANIES MAY HAVE THEIR DAY
Just following the close of the fiscal period, investor sentiment for large,
blue-chip stocks soured in the wake of a series of disappointing earnings
reports. As investors re-evaluate their large-cap holdings, we believe they
may turn to midsize companies as their earnings growth rates improve. Having
survived their smaller, start-up phase, medium-sized companies are poised for
rapid growth. Your fund's commitment to diversification across many sectors,
we believe, holds the key to uncovering the companies with above market growth
potential and the promise of becoming tomorrow's large-cap leaders.
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 7/31/97, there is no guarantee the fund will continue to hold
these securities in the future. The fund invests all or a portion of its
assets in small to medium-size companies. Such investments increase the risk
of greater price fluctuations.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Vista Fund is designed for investors seeking capital appreciation
primarily through common stocks.
TOTAL RETURN FOR PERIODS ENDED 7/31/97
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 36.25% 28.39% 35.14% 30.14% 35.35% 30.65%
- ------------------------------------------------------------------------------
5 years 156.34 141.70 147.04 145.04 149.84 141.17
Annual average 20.72 19.30 19.83 19.63 20.10 19.25
- ------------------------------------------------------------------------------
10 years 295.91 272.97 264.43 264.43 273.28 260.15
Annual average 14.75 14.07 13.81 13.81 14.08 13.67
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/97
Standard
& Poor's Consumer
Midcap 400 Index Price Index
- ------------------------------------------------------------------------------
1 year 45.36% 2.23%
- ------------------------------------------------------------------------------
5 years 135.45 14.23
Annual average 18.68 2.70
- ------------------------------------------------------------------------------
10 years 341.80 41.04
Annual average 16.01 3.50
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% for class A shares and 3.50% for class M shares.
One-, five-, and ten-year (when available) and life-of-fund returns for
class B shares reflect the applicable contingent deferred sales charges
(CDSC), which is 5% in the first year, declines each year to 1% in the
sixth year, and is eliminated thereafter. Returns shown for class B and
class M shares for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect both the
initial sales charge or CDSC, if any, currently applicable to each class
and, in the case of class B and class M shares, the higher operating costs
applicable to such shares. All returns assume reinvestment of
distributions at NAV and represent past performance; they do not guarantee
future results. Investment return and principal value will fluctuate so
that an investor's shares when redeemed may be worth more or less than
their original cost.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
Cumulative total return of a $10,000 investment since 7/31/97
S&P MidCap 400 Index $44,180
Fund's class A shares at POP $37,297
Consumer Price Index $14,104
Fund's class A S&P Consumer
shares MidCap 400 Price
at POP Index Index
-------------- ---------- --------
7/31/87 9425 10000 10000
7/31/88 8350 9223 10413
7/31/89 10421 12264 10931
7/31/90 10749 13058 11459
7/31/91 12283 15986 11968
7/31/92 14550 18764 12346
7/31/93 17407 21890 12689
7/31/94 17886 22657 13040
7/31/95 23469 28210 13401
7/31/96 27374 30393 13796
7/31/97 37297 44180 14104
Footnote reads:
Past performance is no assurance of future results. At the end of the
same time period, a $10,000 investment in the fund's class B shares
would have been valued at $36,443 and no contingent deferred sales
charges would apply; a $10,000 investment in the fund's class M shares
would have been valued at $37,328 ($36,015 at public offering price).
See first page of performance section for performance calculation method.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 7/31/97
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term $0.606 $0.606 $0.606
- ------------------------------------------------------------------------------
Short-term 0.066 0.066 0.066
- ------------------------------------------------------------------------------
Total $0.672 $0.672 $0.672
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
7/31/96 $9.79 $10.39 $9.55 $9.72 $10.07
- ------------------------------------------------------------------------------
7/31/97 12.52 13.28 12.09 12.34 12.79
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 6/30/97
(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 14.90% 8.32% 14.00% 9.00% 14.34% 10.29%
- ------------------------------------------------------------------------------
5 years 146.89 132.80 137.74 135.74 140.96 132.54
Annual average 19.81 18.41 18.91 18.71 19.23 18.39
- ------------------------------------------------------------------------------
10 years 283.83 261.46 253.17 253.17 262.33 249.38
Annual average 14.40 13.71 13.45 13.45 13.74 13.33
- ------------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns and
principal value will fluctuate so that an investor's shares, when sold,
may be worth more or less than their original cost. See first page of
performance section for performance calculation method.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
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 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 and 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, 1997, 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, 1997 by correspondence with the
custodian and the application of alternative auditing procedures where
investments purchased were not received by the custodian, provide a reasonable
basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
September 16, 1997
Portfolio of investments owned
July 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS (98.6%) *
NUMBER OF SHARES VALUE
Advertising (1.7%)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1,015,600 Omnicom Group, Inc. $ 70,901,575
Apparel (1.0%)
- ------------------------------------------------------------------------------------------------------------
775,200 Jones Apparel Group, Inc. 40,261,950
Appliances (0.9%)
- ------------------------------------------------------------------------------------------------------------
873,300 Leggett & Platt, Inc. 39,625,988
Banks (4.5%)
- ------------------------------------------------------------------------------------------------------------
858,400 First of America Bank Corp. 47,641,200
756,800 Greenpoint Financial Corp. 49,854,200
417,300 Mercantile Bancorpation, Inc. 29,445,731
1,073,000 Northern Trust Corp. 59,015,000
--------------
185,956,131
Broadcasting (2.5%)
- ------------------------------------------------------------------------------------------------------------
949,000 Clear Channel Communications, Inc. 59,075,250
599,200 Evergreen Media Corp. Class A 27,563,200
414,200 Jacor Communications, Inc. + 17,758,825
--------------
104,397,275
Building and Construction (0.8%)
- ------------------------------------------------------------------------------------------------------------
1,028,500 Sherwin Williams Co. 32,976,281
Business Services (6.3%)
- ------------------------------------------------------------------------------------------------------------
1,526,600 Accustaff, Inc. + 41,599,850
1,998,000 Equifax, Inc. 67,807,125
419,400 Gartner Group Inc. Class A, + 11,900,475
331,800 Herman Miller, Inc. 16,465,575
916,800 Norrell Corp. 28,993,800
1,277,543 Paychex, Inc. 51,580,799
808,200 Robert Half International, Inc. + 44,501,513
--------------
262,849,137
Chemicals (1.0%)
- ------------------------------------------------------------------------------------------------------------
731,000 Praxair, Inc. 40,296,375
Computer Equipment (1.1%)
- ------------------------------------------------------------------------------------------------------------
892,700 EMC Corp. + 45,081,350
Computer Services and Software (8.6%)
- ------------------------------------------------------------------------------------------------------------
872,200 BMC Software, Inc. 52,550,050
685,700 Electronics for Imaging, Inc. 37,713,500
705,100 Fiserv, Inc. + 33,844,800
1,318,200 Gateway 2000, Inc. 50,338,763
563,425 McAfee Associates, Inc. 36,728,267
915,200 Parametric Technology Corp. + 44,844,800
917,400 PeopleSoft, Inc. 53,667,900
743,900 Sterling Commerce, Inc. + 28,035,731
363,500 Viasoft, Inc. 21,991,750
--------------
359,715,561
Consumer Services (0.6%)
- ------------------------------------------------------------------------------------------------------------
549,300 Hillenbrand Industries, Inc. 25,199,138
Cosmetics (0.7%)
- ------------------------------------------------------------------------------------------------------------
608,100 Estee Lauder Cos. Class A 28,010,606
Educational Services (1.0%)
- ------------------------------------------------------------------------------------------------------------
1,125,550 Apollo Group, Inc. Class A + 41,786,044
Electronics and Electrical Equipment (2.9%)
- ------------------------------------------------------------------------------------------------------------
1,087,400 Diebold, Inc. 54,641,850
336,400 Honeywell, Inc. 25,124,875
349,900 SCI Systems, Inc. + 27,795,181
380,150 Symbol Technologies, Inc. 12,331,116
--------------
119,893,022
Environmental Control (3.0%)
- ------------------------------------------------------------------------------------------------------------
1,591,700 U.S. Filter Corp. + 48,049,444
821,500 United Waste Systems, Inc. + 35,119,125
1,041,480 USA Waste Services, Inc. + 41,984,663
--------------
125,153,232
Financial Services (4.6%)
- ------------------------------------------------------------------------------------------------------------
765,600 CapMAC Holdings Inc. 21,341,100
737,400 Finova Group, Inc. 66,550,350
837,000 State Street Corp. 46,924,313
963,800 SunAmerica, Inc. 58,309,900
--------------
193,125,663
Food and Beverages (2.0%)
- ------------------------------------------------------------------------------------------------------------
2,661,300 Coca-Cola Enterprises, Inc. 82,666,631
Gas Pipelines (0.9%)
- ------------------------------------------------------------------------------------------------------------
815,100 Williams Cos., Inc. 37,290,825
Health Care Services (6.7%)
- ------------------------------------------------------------------------------------------------------------
819,600 Genesis Health Ventures, Inc. + 27,763,950
930,200 Health Care & Retirement Corp. + 33,254,650
1,332,575 Health Management Assoc., Inc. + 42,559,114
2,335,200 HEALTHSOUTH Corp. 61,882,800
298,700 Multicare Companies Inc. + 8,176,913
1,843,600 Omnicare, Inc. 54,270,975
608,100 Oxford Health Plans Inc. + 51,118,406
--------------
279,026,808
Household Products (1.0%)
- ------------------------------------------------------------------------------------------------------------
310,500 Clorox Co. 43,353,563
Independent Power Producer (2.4%)
- ------------------------------------------------------------------------------------------------------------
784,400 AES Corp. + 61,967,600
968,200 CalEnergy, Inc. + 39,030,563
--------------
100,998,163
Insurance and Finance (3.1%)
- ------------------------------------------------------------------------------------------------------------
730,350 AON Corp. 40,899,600
472,200 Hartford Financial Services Group 41,140,425
614,100 Reliastar Financial Corp. 47,093,794
--------------
129,133,819
Lodging (1.0%)
- ------------------------------------------------------------------------------------------------------------
582,200 Marriott International, Inc. 40,026,250
Medical Management Services (0.5%)
- ------------------------------------------------------------------------------------------------------------
698,600 Phycor, Inc. + 23,403,100
Medical Supplies and Devices (4.8%)
- ------------------------------------------------------------------------------------------------------------
238,300 Cardinal Health, Inc. 14,834,175
551,200 Guidant Corp. 50,297,000
628,200 McKesson Corp. 54,457,088
1,369,200 Stryker Corp. 53,398,800
736,700 U.S. Surgical Corp. 27,349,988
--------------
200,337,051
Networking Equipment (1.3%)
- ------------------------------------------------------------------------------------------------------------
782,700 ADC Telecommunications Inc. 31,601,513
404,620 Ascend Communications, Inc. + 22,001,213
--------------
53,602,726
Oil Services (4.0%)
- ------------------------------------------------------------------------------------------------------------
1,063,300 Dresser Industries, Inc. 44,392,775
1,397,200 Global Marine, Inc. + 39,994,850
751,800 Halliburton Co. 34,582,800
606,300 Western Atlas, Inc. + 48,238,744
--------------
167,209,169
Oil and Gas (0.9%)
- ------------------------------------------------------------------------------------------------------------
1,164,400 Tosco Corp. 36,460,275
Pharmaceuticals and Biotechnology (4.0%)
- ------------------------------------------------------------------------------------------------------------
1,241,900 Biochem Pharmaceutical, Inc. 35,859,863
1,171,400 Dura Pharmaceuticals, Inc. + 45,684,600
912,100 Elan Corp. PLC ADR (Ireland) 43,324,750
595,100 Quintiles Transnational Corp. + 44,855,663
--------------
169,724,876
Publishing (2.1%)
- ------------------------------------------------------------------------------------------------------------
1,028,500 Belo (A.H.) Corp. 45,768,250
459,300 Central Newspapers, Inc. Class A 32,064,881
211,100 Harcourt General, Inc. 9,974,475
--------------
87,807,606
REIT's (Real Estate Investment Trust) (0.5%)
- ------------------------------------------------------------------------------------------------------------
472,200 Redwood Trust, Inc.[REGISTER MARK] 19,714,350
Recreation (2.3%)
- ------------------------------------------------------------------------------------------------------------
1,288,300 Callaway Golf Co. 45,090,500
949,500 Harley-Davidson, Inc. 50,560,875
--------------
95,651,375
Restaurants (0.5%)
- ------------------------------------------------------------------------------------------------------------
692,200 Cracker Barrel Old Country Store, Inc. 19,814,225
Retail (9.4%)
- ------------------------------------------------------------------------------------------------------------
1,895,300 Borders Group, Inc. 48,330,150
1,423,918 Consolidated Stores Corp. 57,312,700
1,472,500 Costco Companies, Inc. + 55,770,938
533,800 Payless Shoesource, Inc. + 32,828,700
2,920,650 Pier 1 Imports, Inc. [SECTION MARK] 51,476,456
1,164,400 Rite Aid Corp. 60,476,025
2,847,000 TJX Cos., Inc. (The) 85,054,125
--------------
391,249,094
Savings and Loans (2.1%)
- ------------------------------------------------------------------------------------------------------------
780,000 Ahmanson (H.F.) & Co. 41,486,250
763,515 Charter One Financial, Inc. 44,236,150
--------------
85,722,400
Semiconductors (3.2%)
- ------------------------------------------------------------------------------------------------------------
756,800 KLA-Tencor Corp. + 45,833,700
1,183,800 LSI Logic Corp. + 37,363,688
1,122,900 Teradyne, Inc. + 52,495,575
--------------
135,692,963
Supermarkets (0.8%)
- ------------------------------------------------------------------------------------------------------------
1,371,400 American Stores Co. 34,627,850
Telecommunications (2.1%)
- ------------------------------------------------------------------------------------------------------------
1,344,800 Cincinnati Bell, Inc. 40,344,000
824,200 Tellabs, Inc. 49,348,975
--------------
89,692,975
Textiles (0.6%)
- ------------------------------------------------------------------------------------------------------------
692,200 Westpoint Stevens, Inc. + 26,390,125
Wireless Communications (1.2%)
- ------------------------------------------------------------------------------------------------------------
1,248,500 Teleport Communications Group Inc. Class A + 49,159,679
--------------
Total Common Stocks (cost $3,119,082,004) $4,113,985,226
SHORT-TERM INVESTMENTS (2.2%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$25,000,000 Corporate Receivables Corp. effective yield of
5.54%, September 17,1997 $ 24,819,181
25,000,000 Ford Motor Credit Corp effective yield of 5.58%,
August 25, 1997 24,907,000
42,236,000 Interest in $204,956,000 joint repurchase
agreement dated July 31, 1997 with UBS
Securities due August 1, 1997 with respect
to various U.S. Treasury obligations--maturity
value of $42,242,758 for an effective
yield of 5.76%. 42,242,758
--------------
Total Short-term Investments (cost $91,968,939) $ 91,968,939
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $3,211,050,943) *** 4,205,954,165
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $4,172,582,884.
*** The aggregate identified cost on a tax basis is $3,214,672,321,
resulting in gross unrealized appreciation and depreciation of
$1,010,264,149 and $18,982,305, respectively, or net unrealized
appreciation of $991,281,844.
+ Non-income-producing security.
[SECTION MARK] Affiliated Companies (Note 5)
[REGISTER MARK] Real Estate Investment Trust.
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 notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
July 31, 1997
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $3,211,050,943) (Note 1) $4,205,954,165
- ---------------------------------------------------------------------------------------------------
Cash 289
- ---------------------------------------------------------------------------------------------------
Dividends and interest receivable 955,286
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 12,089,334
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 84,526,507
- ---------------------------------------------------------------------------------------------------
Other assets 25,333
- ---------------------------------------------------------------------------------------------------
Total assets 4,303,550,914
Liabilities
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 116,559,713
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 6,169,936
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 4,631,236
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,177,215
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 27,022
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 3,000
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,578,707
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 821,201
- ---------------------------------------------------------------------------------------------------
Total liabilities 130,968,030
- ---------------------------------------------------------------------------------------------------
Net assets 4,172,582,884
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $3,035,462,976
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment (Note 1) 142,216,686
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 994,903,222
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $4,172,582,884
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,626,463,924 divided by 209,859,387 shares) $12.52
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $12.52)* $13.28
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,212,588,999 divided by 100,324,339 shares)** $12.09
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($90,787,884 divided by 7,356,051 shares) $12.34
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $12.34)* $12.79
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($242,742,077 divided by 19,243,869 shares) $12.61
- ---------------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended July 31, 1997
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (including dividend income of $144,472
from investments in affiliated issuers) (Note 5) $ 14,320,672
- --------------------------------------------------------------------------------------------------
Interest 7,625,369
- --------------------------------------------------------------------------------------------------
Total investment income 21,946,041
Expenses:
Compensation of Manager (Note 2) 14,799,986
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 6,708,632
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 74,044
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 34,226
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 4,594,380
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 8,357,720
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 403,970
- --------------------------------------------------------------------------------------------------
Reports to shareholders 283,885
- --------------------------------------------------------------------------------------------------
Registration fees 433,044
- --------------------------------------------------------------------------------------------------
Auditing 31,631
- --------------------------------------------------------------------------------------------------
Legal 39,361
- --------------------------------------------------------------------------------------------------
Postage 395,394
- --------------------------------------------------------------------------------------------------
Other 46,071
- --------------------------------------------------------------------------------------------------
Total expenses 36,202,344
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,047,892)
- --------------------------------------------------------------------------------------------------
Net expenses 35,154,452
- --------------------------------------------------------------------------------------------------
Net investment loss (13,208,411)
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1, 3 and 5)
(including realized loss of $14,511,294 on sales of
investments in affiliated issuers) 183,810,148
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 733,257,710
- --------------------------------------------------------------------------------------------------
Net gain on investments 917,067,858
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $903,859,447
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year Ended July 31
----------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment loss $ (13,208,411) $ (6,911,236)
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 183,810,148 201,058,618
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 733,257,710 100,906
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 903,859,447 194,248,288
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (99,903,117) (84,321,794)
- ----------------------------------------------------------------------------------------------------------------------
Class B (47,494,537) (28,584,576)
- ----------------------------------------------------------------------------------------------------------------------
Class M (2,886,800) (657,462)
- ----------------------------------------------------------------------------------------------------------------------
Class Y (10,720,433) (4,307,615)
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 1,635,441,373 554,119,174
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 2,378,295,933 630,496,015
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of year 1,794,286,951 1,163,790,936
- ----------------------------------------------------------------------------------------------------------------------
End of year 4,172,582,884 1,794,286,951
- ----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.79 $9.23 $7.09 $7.47 $7.59
- ------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.03)(c) (.03) .02 .01 .07
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.43 1.45 2.18 .21 1.28
- ------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 3.40 1.42 2.20 .22 1.35
- ------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- (.03) (.12)
- ------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.67) (.86) (.06) (.55) (1.35)
- ------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (.67) (.86) (.06) (.60) (1.47)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.52 $9.79 $9.23 $7.09 $7.47
- ------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 36.25 16.64 31.22 2.75 19.63
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,626,464 $1,220,639 $859,403 $646,811 $439,722
- ------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) 1.04 1.10 1.07 1.09 .96
- ------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.25) (.29) .26 .29 1.08
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 82.91 106.58 114.51 93.86 120.57
- ------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0499
- ------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(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 and thereafter,
includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(d) Average commission rate paid on security trades is required for fiscal periods beginning on or
after September 1, 1995.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------
For the period
Per-share March 1, 1993+
operating performance Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.55 $9.08 $7.03 $7.46 $7.12
- ------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.11)(c) (.10)(c) (.03) .01 (.01)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.32 1.43 2.14 .15 .40
- ------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 3.21 1.33 2.11 .16 .39
- ------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- (.02) (.05)
- ------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.67) (.86) (.06) (.55) --
- ------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (.67) (.86) (.06) (.59) (.05)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.09 $9.55 $9.08 $7.03 $7.46
- ------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 35.14 15.88 30.19 1.89 5.45*
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,212,589 $488,085 $258,522 $132,596 $20,722
- ------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) 1.79 1.81 1.82 1.87 .72*
- ------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.99) (1.03) (.51) (.53) (.07)*
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 82.91 106.58 114.51 93.86 120.57
- ------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0499
- ------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(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 and thereafter,
includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(d) Average commission rate paid on security trades is required for fiscal periods beginning on or
after September 1, 1995.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Dec. 8, 1994+
operating performance Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $9.72 $9.19 $6.73
- ------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.08)(c) (.08)(c) (.01)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.37 1.47 2.53
- ------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 3.29 1.39 2.52
- ------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- --
- ------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.67) (.86) (.06)
- ------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- --
- ------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (.67) (.86) (.06)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.34 $9.72 $9.19
- ------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 35.35 16.37 37.63*
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $90,788 $22,232 $3,148
- ------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) 1.54 1.54 1.06*
- ------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.73) (.82) (.31)*
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 82.91 106.58 114.51
- ------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0499
- ------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(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 and thereafter,
includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(d) Average commission rate paid on security trades is required for fiscal periods beginning on or
after September 1, 1995.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- ------------------------------------------------------------------------------------------------------------------------
For the period
Per-share March 28, 1995+
operating performance Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $9.84 $9.24 $7.83
- ------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) --(c) -- .01
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.44 1.46 1.40
- ------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 3.44 1.46 1.41
- ------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- --
- ------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.67) (.86) --
- ------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- --
- ------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (.67) (.86) --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.61 $9.84 $9.24
- ------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 36.49 17.07 18.01*
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $242,742 $63,330 $42,717
- ------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .79 .81 .29*
- ------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .02 (.01) .10*
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 82.91 106.58 114.51
- ------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0499
- ------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(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 and thereafter,
includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(d) Average commission rate paid on security trades is required for fiscal periods beginning on or
after September 1, 1995.
</TABLE>
Notes to financial statements
July 31, 1997
Note 1
Significant accounting policies
Putnam Vista Fund (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 are 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
invest at least $250 million in a combination of Putnam funds and other
accounts managed by affiliates of Putnam Management.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears certain 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 and certain other accounts managed by Putnam Investment
Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc.. 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 nor 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 at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. This difference includes treatment
of net operating losses, and losses on wash sale transactions.
Reclassifications are made to the fund's capital accounts to reflect income
and gains available for distribution (or available capital loss carryovers)
under income tax regulations. For the year ended July 31, 1997, the fund
reclassified $13,208,411 to decrease undistributed net investment losses and
$13,213,082 to decrease paid-in-capital, with an increase to accumulated net
realized gains on investments of $4,671. 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, 0.45% of the next $5 billion, 0.425% of the next $5 billion, 0.405%
of the next $5 billion, 0.39% of the next $5 billion and 0.38% thereafter.
Prior to November 20, 1996, any amount over $1.5 billion was based on 0.45%.
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, 1997, fund expenses were reduced by $1,047,892
under expense offset arrangements with PFTC and brokerage 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 $2,750 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 has 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 certain Putnam funds until distribution in accordance with the Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
Trustee for at least five years. Benefits under the Pension Plan are equal to
50% of the Trustee's average total retainer and meeting fees for the three
years preceding retirement. Pension expense for the fund is included in
Compensation of trustees in the Statement of operations. Accrued pension
liability is included in Payable for compensation of Trustees in the Statement
of assets and liabilities.
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, 1997, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $2,174,005 and $88,240 from the sale
of class A and class M shares, respectively and $1,074,003 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, 1997, Putnam Mutual Funds Corp., acting as underwriter
received $40,749 on class A redemptions.
Note 3
Purchase and sales of securities
During the year ended July 31, 1997, purchases and sales of investment
securities other than short-term investments aggregated $3,773,429,182 and
$2,286,925,261, 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, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
July 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 195,270,165 $2,134,263,770
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 9,086,548 93,315,278
- ------------------------------------------------------------
204,356,713 2,227,579,048
Shares
repurchased (119,129,356) (1,303,118,595)
- ------------------------------------------------------------
Net increase 85,227,357 $ 924,460,453
- ------------------------------------------------------------
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, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 63,364,159 $668,893,241
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,399,637 43,820,796
- ------------------------------------------------------------
67,763,796 712,714,037
Shares
repurchased (18,568,112) (194,402,982)
- ------------------------------------------------------------
Net increase 49,195,684 $518,311,055
- ------------------------------------------------------------
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, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 7,745,533 $83,758,963
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 271,933 2,762,887
- ------------------------------------------------------------
8,017,466 86,521,850
Shares
repurchased (2,949,807) (31,754,150)
- ------------------------------------------------------------
Net increase 5,067,659 $54,767,700
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Year ended
July 31, 1997
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 17,847,266 $193,641,549
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,037,848 10,720,433
- ------------------------------------------------------------
18,885,114 204,361,982
Shares
repurchased (6,076,721) (66,459,817)
- ------------------------------------------------------------
Net increase 12,808,393 $137,902,165
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Note 5
Transactions with Affiliated Companies
Transactions during the period with companies in which the fund owns at
least 5% of the voting securities were as follows:
Purchase Sales Dividend Market
Affiliates cost cost Income Value
- --------------------------------------------------------------------------------
Name of affiliate
- --------------------------------------------------------------------------------
Pier 1 Imports $37,990,856 $ 2,636,255 $144,472 $51,476,456
Telespectrum
World Wide 27,223,792 27,223,792 -- --
- --------------------------------------------------------------------------------
Totals $65,214,648 $29,860,047 $144,472 $51,476,456
- --------------------------------------------------------------------------------
Federal tax information
(Unaudited)
Persuant to section 852 of the Internal Revenue Code, the fund
hereby designates $0.606 per share (or if different, the amount
necessary to offset net capital gain earned by the fund) [for all
share classes] as capital gain dividends for its taxable year
ended July 31, 1997.
The Form 1099 you receive in January 1998 will show the tax
status of all distributions paid to your account in calendar 1997.
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
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
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Carol McMullen
Vice President and Fund Manager
Anthony C. Santosus
Vice President and Fund Manager
David J. Santos
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 PutnamVista 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. You can also learn more at Putnam Investments'
website: http://www.putnaminv.com.
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.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------------
AN015-35892-006/317/515/376 9/97
