Putnam
Vista
Fund
SEMIANNUAL REPORT
January 31, 1998
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "In today's more volatile market, we're looking for well-valued,
high-quality companies with predictable and sustainable earnings growth
over the next three to five years. Putnam Vista Fund's approach is
designed to capture the best of growth investing without taking on
excessive risk."
-- Eric Wetlaufer, fund manager
* "Investors who want growth exposure with less stress might find
that this fund suits them."
-- Morningstar Mutual Funds, October 10, 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 Putnam Vista Fund began its new fiscal year last August, both domestic and
international equity markets were still strong overall but somewhat inverted
with old-line conservative stocks outpacing young upstarts. This turnabout had
occurred as investors, growing increasingly cautious about the durability of
the aging global bull market, opted for quality over growth.
The inversion became even further exaggerated when last fall's Asian currency
crisis sent the world's stock markets reeling and even more equity investors
scrambling for safe havens. Because of its focus on stocks with potentially
stronger growth but also a tendency toward greater volatility, your fund was
among the many whose performance lagged that of the broad market in this
unsettled environment.
I am pleased to report the addition of Eric Wetlaufer and Margery C. Parker to
the fund's management team. Eric and Margery both joined Putnam in 1997. Eric
was formerly with Cadence Capital Management and The Boston Company. He has 12
years of investment experience. Margery was a portfolio manager with Keystone
Investments and Moseley Capital Management. She has 18 years of investment
management experience.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
March 18, 1998
Report from the Fund Managers
Eric Wetlaufer
Anthony C. Santosus
David J. Santos
Margery Parker
In a market clearly smitten with value stocks -- that is, out-of-favor stocks
selling at prices below their true value -- a pure growth fund such as Putnam
Vista Fund had its work cut out for it. Growth stocks, which achieve higher
stock prices through rapid earnings growth over time, struggled throughout the
six months ended January 31, 1998, while the Standard & Poor's(registered
trademark)/BARRA 400 Value Index generated a 9.47% return. Over this
semiannual period, total return for your fund's class A shares -- a loss of
0.35% at NAV ( - 6.05% at POP) edged ahead of results for the Standard &
Poor's/BARRA 400 Growth Index, which produced a return of - 0.74% but lagged
behind its designated benchmark, the Standard & Poor's Midcap 400 Index, which
returned 4.47%. Additional performance details, including definitions of all
three indexes, begin on page 9.
* ASIAN CRISIS HALTS RALLY IN MID-CAP STOCKS
The start of the fund's fiscal year on August 1, 1997, coincided with the
beginning of a short-lived rally in stocks of small and midsize companies. In
the wake of disappointing earnings announcements among several high-profile
companies, investors began flocking to the undervalued world of smaller
stocks. Strong economic fundamentals, namely falling interest rates, tame
inflation, and solid economic growth, also added to the lure of these
companies.
Stock prices continued to climb until late October, when turmoil throughout
Asia's struggling economies and its impact on world currency markets sparked a
record selloff in the U.S. stock market. The Dow Jones Industrial Average lost
nearly 900 points in three days before investors put aside their anxieties and
resumed buying. While the market rebounded within weeks of the correction,
Federal Reserve Board Chairman Alan Greenspan called the decline a "salutary
event" if it ended up slowing the economy's growth and cooling the market's
exuberance. Market observers interpreted his comments as a sign that U.S.
interest rates were unlikely to rise at any time soon. However, it was the
large-cap stocks that leapt to the quickest recovery. A flight-to-safety and
big-is-beautiful mentality prevailed until the closing weeks of the period,
when smaller-cap stocks finally joined the rally.
* SECTOR STRATEGY: PARTICIPATING IN GROWTH OF U.S. ECONOMY
Despite the stock market's ups and downs this year, the U.S. economy remains
in healthy shape. With interest rates low, inflation practically nonexistent,
and economic growth solid, it comes as no surprise that stocks have been
flourishing. And while the spillover of the Asian crisis has cast a shadow
over corporate earnings for later this year, several sectors within your
fund's portfolio had exceptionally strong performance.
Consumer cyclical stocks, which typically rise in periods of robust growth,
were among the fund's most noteworthy holdings. Retail stocks, such as Pier 1
Imports, are benefiting from steady consumer spending. One of the fund's
largest holdings, this retailer is steadily increasing same-store sales as
well as its stores' square footage, resulting in rapidly growing revenues.
Furthermore, management's decision to de-emphasize apparel and expand into
bed, bath, and furniture lines is proving rewarding. Interestingly this
company sources more than half of its inventory from Asia, and with prices
falling there, lower purchasing costs are likely to impact profits favorably.
While this stock, along with others discussed in this report, was 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: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Retail 12.4%
Financial services 8.4%
Banks 5.9%
Computer services 5.1%
Pharmaceuticals and biotechnology 4.7%
Footnote reads:
*Based on net assets as of 1/31/98. Holdings will vary over time.
Broadcasting is another industry sector basking in the glow of a strong
economy. The Telecommunications Act of 1996, which relaxed regulations on
radio station ownership, created opportunities for companies like Chancellor
Media, Clear Channel Communications, and Sinclair Broadcasting -- all fund
holdings -- to purchase more radio stations within a single market. By
spreading the cost of programming across more stations, corporate
profitability is climbing.
In the aftermath of the October correction, we have steadily increased the
fund's weighting in financial companies in an effort to benefit from the
steady-to-lower interest rate environment as well as from their defensive
qualities. Since this sector is one of the most fragmented in the country,
merger and acquisition activity continues to be one of the most important
forces shaping it. First of America Bank and Summit Bankcorp are two holdings
that were targeted as takeover candidates during the period. We are also
focusing on fee-based banks, such as Northern Trust Corp. and State Street
Corp. These banks derive a significant portion of revenues from their master
trust and asset management business -- a more stable, predictable source of
earnings than interest spread income. Capital One Financial, a consumer
finance company, represents a third strategy within this sector and is
enjoying strong revenue growth as it expands its credit-card business.
Several holdings within the health-care universe also contributed to
performance. We're emphasizing segment leaders, such as Omnicare -- a
distributor of pharmaceuticals and provider of services to nursing homes. This
company has created a valuable niche for itself, compiling and analyzing a
large database of drug usage patterns by the elderly and infirm and selling
that information back to drug companies. Another health-care company had a
negative impact on returns. Oxford Health Plans suffered a sudden reversal of
fortune, catching all of Wall Street off guard with an announcement that it
failed to bill customers, pay providers, and keep track of costs accurately.
While we sold the fund's position immediately following the announcement, the
sudden drop in the company's stock price adversely affected the fund's net
asset value.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Costco Companies, Inc.
Retail
The TJX Companies, Inc.
Retail
Teleport Communications Group, Inc. Class A
Wireless communications
Omnicom Group, Inc.
Advertising
Clear Channel Communications, Inc.
Broadcasting
Coca-Cola Enterprises, Inc.
Food and beverages
America Online, Inc.
Computer services and software
Pier I Imports, Inc.
Retail
Northern Trust Corp.
Banks
Rite Aid Corp.
Retail
Footnote reads:
These holdings represent 16.0% of the fund's assets as of 1/31/98.
Portfolio holdings will vary over time.
Technology proved to be the most disappointing sector within the portfolio,
largely because of its perceived exposure to Asia and a potential slowdown in
the personal computer industry. Semiconductor capital equipment providers
National Semiconductor and KLA Tencor Corp. were particularly hard hit because
Asia is such a large buyer in this market. While we eliminated the fund's
positions in these companies, the news is not all bad. Technology is still the
fastest growing sector of the U.S. economy. Going forward, it will be
important to be even more selective, targeting only those companies with
predictable and sustainable earnings, such as Compuware and EMC -- two
holdings benefiting from businesses' need to manage large amounts of
information.
* BUCKLE UP FOR GROWTH WITH MORE VOLATILITY AHEAD
While the stock market's volatility is likely to continue for the balance of
the fiscal year, many observers expect corporate profit growth will be
respectable in 1998, although not of the magnitude seen during the last three
years. Consequently we have positioned the fund to be slightly less
aggressive, favoring financial and health-care stocks and reducing its
technology weighting in order to steer a smoother course over the second half
of fiscal 1998. We remain confident that our preference for the larger,
high-quality, and more liquid midsize companies will be key to maintaining
earnings momentum in this more challenging stock market.
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 1/31/98, there is no guarantee the fund will continue to hold
these securities in the future. This fund invests all or a portion of its
assets in small to medium-sized 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 1/31/98
Class A Class B Class M
(inception date) (6/3/68) (3/1/93) (12/8/94)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months -0.35% -6.05% -0.70% -5.26% -0.52% -4.02%
- ------------------------------------------------------------------------------
1 year 12.71 6.18 11.89 6.89 12.11 8.16
- ------------------------------------------------------------------------------
5 years 123.69 110.78 115.70 113.70 118.18 110.48
Annual average 17.47 16.08 16.62 16.40 16.89 16.05
- ------------------------------------------------------------------------------
10 years 377.25 349.81 340.01 340.01 351.18 335.39
Annual average 16.92 16.23 15.97 15.97 16.26 15.85
- ------------------------------------------------------------------------------
Annual average
(life of fund) 11.28 11.06 10.24 10.24 10.51 10.38
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/98
Standard & Poor's[registered tradmark] Consumer
Midcap 400 Index * Price Index
- ------------------------------------------------------------------------------
6 months 4.47% 0.69%
- ------------------------------------------------------------------------------
1 year 25.04 1.57
- ------------------------------------------------------------------------------
5 years 119.75 13.32
Annual average 17.06 2.53
- ------------------------------------------------------------------------------
10 years 455.51 39.67
Annual average 18.70 3.40
- ------------------------------------------------------------------------------
Annual average
(life of fund) -- 5.34
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% and 3.50%, respectively. Class B share returns for
the 1-, 5-, and 10-year and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines 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 expenses 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.
*The inception date of the index is January 31, 1981, after the inception
date of the fund, so no life of fund comparison is possible.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 1/31/98
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term $0.918 $0.918 $0.918
- ------------------------------------------------------------------------------
Short-term 0.039 0.039 0.039
- ------------------------------------------------------------------------------
Total $0.957 $0.957 $0.957
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
7/31/97 $12.52 $13.28 $12.09 $12.34 $12.79
- ------------------------------------------------------------------------------
1/31/98 11.50 12.20 11.03 11.30 11.71
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 12/31/97
(most recent calendar quarter)
Class A Class B Class M
(6/3/68) (3/1/93) (12/8/94)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 11.50% 5.13% 11.09% 6.09% 11.12% 7.26%
- ------------------------------------------------------------------------------
1 year 23.23 16.12 22.26 17.26 22.51 18.16
- ------------------------------------------------------------------------------
5 years 137.51 123.73 128.80 126.80 131.73 123.62
Annual average 18.89 17.47 18.00 17.80 18.30 17.46
- ------------------------------------------------------------------------------
10 years 415.20 385.57 374.78 374.78 386.58 369.55
Annual average 17.81 17.12 16.86 16.86 17.14 16.73
- ------------------------------------------------------------------------------
Life of class
Annual average 11.43 11.21 10.38 10.38 10.66 10.53
- ------------------------------------------------------------------------------
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 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.
Standard & Poor's/Barra 400 Value Index* is a capitalization-weighted
index of the common stocks within the S&P Midcap 400 index with price
multiples lower than the index average. This index is
capitalization-weighted, meaning that each stock has an impact in
proportion to its market value.
Standard & Poor's/Barra 400 Growth Index* is a capitalization-weighted
index of the common stocks within the S&P Midcap 400 index with price
multiples higher than the index average. This index is
capitalization-weighted, meaning that each stock has an impact in
proportion to its market value.
Consumer Price Index (CPI ) is a commonly used measure of inflation; it
does not represent an investment return.
*Securities indexes assume reinvestment of all distributions and interest
payments and do not take into account brokerage fees or taxes. Securities
in the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund *
International New Opportunities Fund
Investors Fund
New Opportunities Fund +
OTC & Emerging Growth Fund [DBL. DAGGER]
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund +
High Yield Total Return Fund
High Yield Trust +
Income Fund
Money Market Fund **
Intermediate U.S. Government
Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK]
California, New York
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Overseas Growth Fund
+ Closed to new investors. Some exceptions may apply. Contact Putnam
for details.
[DBL. DAGGER] Formerly OTC Emerging Growth Fund
[SECTION MARK] Not available in all states.
** An investment in a money market fund is neither insured nor
guaranteed by the U.S. government. These funds are managed to maintain a
price of $1.00 per share, although there is no assurance that this price
will be maintained in the future.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you
invest or send money.
Portfolio of investments owned
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (95.7%) *
NUMBER OF SHARES VALUE
Advertising (1.6%)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1,771,000 Omnicom Group, Inc. $ 71,836,188
Apparel (1.1%)
- ------------------------------------------------------------------------------------------------------------
1,076,300 Jones Apparel Group, Inc. + 46,819,050
Appliances (0.9%)
- ------------------------------------------------------------------------------------------------------------
994,300 Sunbeam Corp. 37,721,256
Banks (6.0%)
- ------------------------------------------------------------------------------------------------------------
824,500 Firstar Corp. 32,000,906
819,600 Mercantile Bancorpation, Inc. 41,389,800
968,300 Northern Trust Corp. 65,239,213
250,500 Southtrust Corp. 14,137,594
1,025,100 State Street Corp. 57,405,600
1,010,600 Summit Bancorp 50,530,000
--------------
260,703,113
Basic Industrial Products (0.7%)
- ------------------------------------------------------------------------------------------------------------
513,600 Danaher Corp. 32,421,000
Broadcasting (4.1%)
- ------------------------------------------------------------------------------------------------------------
1,870,800 Chancellor Media Corp. + 64,308,750
932,200 Clear Channel Communications, Inc. + 71,779,400
902,500 Sinclair Broadcast Group, Inc. Class A + 42,643,125
--------------
178,731,275
Business Services (4.1%)
- ------------------------------------------------------------------------------------------------------------
1,423,700 Accustaff, Inc. + 36,660,275
891,800 Fiserv, Inc. + 46,262,125
806,600 Herman Miller, Inc. 46,681,975
1,314,550 Robert Half International, Inc. + 50,774,494
--------------
180,378,869
Cable Television (2.1%)
- ------------------------------------------------------------------------------------------------------------
1,409,300 Comcast Corp. Class A 44,128,706
1,626,400 Tele-Communications TCI ventures Group Class A + 47,978,800
--------------
92,107,506
Computer Equipment (2.0%)
- ------------------------------------------------------------------------------------------------------------
261,700 Dell Computer Corp. + 26,022,794
1,825,400 EMC Corp. + 59,439,588
--------------
85,462,382
Computer Services and Software (1.5%)
- ------------------------------------------------------------------------------------------------------------
682,600 America Online, Inc. + 65,316,288
Computer Software (6.1%)
- ------------------------------------------------------------------------------------------------------------
833,800 BMC Software, Inc. + 56,489,950
1,697,100 Cadence Design Systems, Inc. + 47,518,800
1,312,700 Compuware Corp. + 51,195,300
1,269,300 PeopleSoft, Inc. + 44,425,500
1,164,900 VERITAS Software Corp. + 57,225,713
363,500 Viasoft, Inc. + 10,973,156
--------------
267,828,419
Containers (0.2%)
- ------------------------------------------------------------------------------------------------------------
193,200 Continental Can Co., Inc.+[SECTION MARK] 7,341,600
Educational Services (1.1%)
- ------------------------------------------------------------------------------------------------------------
1,029,450 Apollo Group, Inc. Class A + 46,582,613
Electronic Components (2.1%)
- ------------------------------------------------------------------------------------------------------------
136,625 Molex, Inc. 3,723,031
925,400 SCI Systems, Inc. + 40,254,900
1,071,900 Solectron Corp. + 46,359,675
--------------
90,337,606
Electronics and Electrical Equipment (1.2%)
- ------------------------------------------------------------------------------------------------------------
1,087,400 Diebold, Inc. 54,098,150
Environmental Control (0.9%)
- ------------------------------------------------------------------------------------------------------------
1,020,092 USA Waste Services, Inc. + 37,488,381
Financial Services (6.0%)
- ------------------------------------------------------------------------------------------------------------
818,000 Capital One Financial Corp. 53,272,250
1,136,500 Finova Group, Inc. 58,103,563
1,087,600 Franklin Resources, Inc. 48,738,075
1,028,800 Providian Financial Corp. 50,282,600
1,252,400 SunAmerica, Inc. 50,330,825
--------------
260,727,313
Food and Beverages (3.4%)
- ------------------------------------------------------------------------------------------------------------
2,070,300 Coca-Cola Enterprises, Inc. 65,990,813
1,723,300 International Home Foods, Inc. + 45,559,744
599,400 Suiza Foods Corp. + 36,525,938
--------------
148,076,495
Gas Pipelines (1.1%)
- ------------------------------------------------------------------------------------------------------------
1,625,200 Williams Cos., Inc. 46,318,200
Health Care Services (4.2%)
- ------------------------------------------------------------------------------------------------------------
930,200 Health Care & Retirement Corp. + 36,917,313
1,998,862 Health Management Assoc., Inc. + 47,847,759
2,335,200 HEALTHSOUTH Corp. + 52,396,050
1,633,600 Omnicare, Inc. 46,966,000
--------------
184,127,122
Household Products (1.2%)
- ------------------------------------------------------------------------------------------------------------
694,200 Clorox Co. 53,193,075
Independent Power Producer (1.4%)
- ------------------------------------------------------------------------------------------------------------
1,442,500 AES Corp. + 61,757,031
Insurance and Finance (3.2%)
- ------------------------------------------------------------------------------------------------------------
809,350 AON Corp. 45,171,736
484,700 Hartford Financial Services Group 43,623,000
1,228,200 Reliastar Financial Corp. 50,970,300
--------------
139,765,036
Lodging (0.9%)
- ------------------------------------------------------------------------------------------------------------
597,200 Marriott International, Inc. 41,281,450
Managed Health Care (0.5%)
- ------------------------------------------------------------------------------------------------------------
460,600 Wellpoint Health Networks, Inc. + 22,569,400
Medical Supplies and Devices (4.0%)
- ------------------------------------------------------------------------------------------------------------
179,700 Arterial Vascular Engineering, Inc. + 13,207,950
701,600 Gulf South Medical Supply, Inc. + 22,363,500
660,900 Henry Schein, Inc. + 21,809,700
1,256,400 McKesson Corp. 60,150,150
591,700 Sofamor Danek Group, Inc. + 37,055,213
595,800 Stryker Corp. 22,007,363
--------------
176,593,876
Oil Services (3.9%)
- ------------------------------------------------------------------------------------------------------------
1,085,300 Dresser Industries, Inc. 38,799,475
1,240,000 ENSCO International, Inc. 33,635,000
1,169,000 Global Marine, Inc. + 26,813,938
531,400 Smith International, Inc. + 26,370,725
723,600 Western Atlas, Inc. + 45,089,325
--------------
170,708,463
Pharmaceuticals and Biotechnology (4.7%)
- ------------------------------------------------------------------------------------------------------------
1,367,900 Biochem Pharmaceutical, Inc. 28,041,950
971,200 Dura Pharmaceuticals, Inc. + 38,544,500
855,300 Elan Corp. PLC ADR (Ireland) + 44,422,144
870,600 ICN Pharmaceuticals, Inc. 44,727,075
1,142,100 Quintiles Transnational Corp. + 43,471,181
228,200 Rexall Sundown, Inc. + 7,887,163
--------------
207,094,013
Publishing (1.9%)
- ------------------------------------------------------------------------------------------------------------
1,053,500 Belo (A.H.) Corp. 56,559,781
431,500 Central Newspapers, Inc. Class A 27,723,875
--------------
84,283,656
Recreation (1.5%)
- ------------------------------------------------------------------------------------------------------------
1,060,400 Harley-Davidson, Inc. 26,642,550
783,300 Royal Caribbean Cruises Ltd. 41,025,338
--------------
67,667,888
Restaurants (0.9%)
- ------------------------------------------------------------------------------------------------------------
1,095,400 Starbucks Corp. + 40,050,563
Retail (12.4%)
- ------------------------------------------------------------------------------------------------------------
1,737,100 Borders Group, Inc. 56,021,475
1,858,800 Costco Companies, Inc. + 80,625,450
682,700 CVS Corp. 44,759,519
1,533,800 Fred Meyer, Inc. + 56,558,875
794,100 Kohls Corp. + 55,090,688
692,300 Payless Shoesource, Inc. + 45,042,769
2,791,650 Pier 1 Imports, Inc. 65,254,819
1,034,600 Rite Aid Corp. 64,597,838
2,231,700 TJX Cos., Inc. (The) 75,598,838
--------------
543,550,271
Savings and Loans (2.5%)
- ------------------------------------------------------------------------------------------------------------
932,400 Ahmanson (H.F.) & Co. 54,370,575
799,900 Greenpoint Financial Corp. 55,393,075
--------------
109,763,650
Semiconductors (2.8%)
- ------------------------------------------------------------------------------------------------------------
385,400 Linear Technology Corp. 25,532,750
1,231,600 Maxim Integrated Products, Inc. + 42,644,150
749,800 Micron Technology, Inc. + 25,961,825
737,900 Xilinx, Inc. + 27,994,081
--------------
122,132,806
Telecommunications (2.7%)
- ------------------------------------------------------------------------------------------------------------
1,306,300 Teleport Communications Group, Inc. Class A + 72,907,869
843,700 Tellabs, Inc. + 43,186,894
--------------
116,094,763
Textiles (0.8%)
- ------------------------------------------------------------------------------------------------------------
711,000 Westpoint Stevens, Inc. + 34,172,438
--------------
Total Common Stocks (cost $3,370,467,670) $4,185,101,205
SHORT-TERM INVESTMENTS (4.7%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$25,000,000 Federal Home Loan Mortgage Corp. effective yield of 5.59%,
March 6, 1998 $ 24,868,014
25,000,000 Federal National Mortgage Association effective yield of 5.64%,
February 18, 1998 24,929,500
25,000,000 General Electric Capital Corp. effective yield of 5.75%,
February 23, 1998 24,908,161
13,000,000 Interest in $750,000,000 joint repurchase agreement
dated January 30, 1998 with Goldman, Sachs & Co. due
February 2, 1998 with respect to various U.S. Treasury
obligations -- maturity value of $13,006,056 for an
effective yield of 5.59% 13,004,137
119,712,000 Interest in $330,712,000 joint repurchase agreement
dated January 30, 1998 with Morgan (J.P.) & Co. Inc.
due February 2, 1998 with respect to various U.S. Treasury
obligations -- maturity value of $119,767,566 for an
effective yield of 5.57% 119,749,044
--------------
Total Short-Term Investments (cost $207,458,856) $ 207,458,856
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $3,577,926,526)*** $4,392,560,061
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $4,371,018,164.
*** The aggregate identified cost on a tax basis is $3,581,547,904,
resulting in gross unrealized appreciation and depreciation of
$893,831,031 and $82,818,874 respectively, or net unrealized
appreciation of $811,012,157.
+ Non-income-producing security.
[SECTION MARK] Affiliated companies (Note 5).
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
January 31, 1998 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $3,577,926,526) (Note 1) $4,392,560,061
- ---------------------------------------------------------------------------------------------------
Cash 63,712
- ---------------------------------------------------------------------------------------------------
Dividends and other receivables 1,183,688
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 7,389,019
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 105,006,240
- ---------------------------------------------------------------------------------------------------
Other assets 25,333
- ---------------------------------------------------------------------------------------------------
Total assets 4,506,228,053
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 39,601
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 120,691,614
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 5,460,029
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 5,379,207
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,534,887
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 27,830
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 11,674
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,741,465
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 323,582
- ---------------------------------------------------------------------------------------------------
Total liabilities 135,209,889
- ---------------------------------------------------------------------------------------------------
Net assets $4,371,018,164
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $3,590,266,728
- ---------------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (12,595,447)
- ---------------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on investments (Note 1) (21,286,652)
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 814,633,535
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $4,371,018,164
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,721,185,637 divided by 236,593,691 shares) $11.50
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $11.50)* $12.20
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,301,758,275 divided by 118,017,125 shares)** $11.03
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($105,203,325 divided by 9,310,932 shares) $11.30
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $11.30)* $11.71
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($242,870,927 divided by 20,909,948 shares) $11.62
- ---------------------------------------------------------------------------------------------------
* 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
Six months ended January 31, 1998 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (including dividend income of $191,618 from investments
in affiliated issuers) (Note 5) $ 10,126,980
- --------------------------------------------------------------------------------------------------
Interest 3,495,569
- --------------------------------------------------------------------------------------------------
Total investment income 13,622,549
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 10,673,085
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 5,277,415
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 33,258
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 26,317
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 3,394,496
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 6,415,940
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 386,787
- --------------------------------------------------------------------------------------------------
Reports to shareholders 58,044
- --------------------------------------------------------------------------------------------------
Registration fees 210,327
- --------------------------------------------------------------------------------------------------
Auditing 53,895
- --------------------------------------------------------------------------------------------------
Legal 20,920
- --------------------------------------------------------------------------------------------------
Postage 75,607
- --------------------------------------------------------------------------------------------------
Other 165,661
- --------------------------------------------------------------------------------------------------
Total expenses 26,791,752
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (573,756)
- --------------------------------------------------------------------------------------------------
Net expenses 26,217,996
- --------------------------------------------------------------------------------------------------
Net investment loss (12,595,447)
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (including realized gain of $3,109,911
on sales of investments in affiliated issuers) (Notes 1, 3 and 5) 174,086,059
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (180,269,687)
- --------------------------------------------------------------------------------------------------
Net loss on investments (6,183,628)
- --------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(18,779,075)
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
January 31 July 31
1998* 1997
--------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment loss $ (12,595,447) $ (13,208,411)
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 174,086,059 183,810,148
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (180,269,687) 733,257,710
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (18,779,075) 903,859,447
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (207,841,199) (99,903,117)
- ----------------------------------------------------------------------------------------------------------------------
Class B (102,991,533) (47,494,537)
- ----------------------------------------------------------------------------------------------------------------------
Class M (8,092,095) (2,886,800)
- ----------------------------------------------------------------------------------------------------------------------
Class Y (18,664,570) (10,720,433)
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 554,803,752 1,635,441,373
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 198,435,280 2,378,295,933
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 4,172,582,884 1,794,286,951
- ----------------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss of $12,595,447 and $--, respectively) $4,371,018,164 $4,172,582,884
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited
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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share January 31
operating performance (Unaudited) Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.52 $9.79 $9.23 $7.09 $7.47 $7.59
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02) (.03)(c) (.03) .02 .01 .07
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.04) 3.43 1.45 2.18 .21 1.28
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.06) 3.40 1.42 2.20 .22 1.35
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- (.03) (.12)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.96) (.67) (.86) (.06) (.55) (1.35)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.96) (.67) (.86) (.06) (.60) (1.47)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.50 $12.52 $9.79 $9.23 $7.09 $7.47
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (0.35)* 36.25 16.64 31.22 2.75 19.63
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,721,186 $2,626,464 $1,220,639 $859,403 $646,811 $439,722
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .51 * 1.04 1.10 1.07 1.09 .96
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.18)* (.25) (.29) .26 .29 1.08
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 52.44 * 82.91 106.58 114.51 93.86 120.57
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0483 $.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 (loss) 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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 March 1, 1993+
operating performance (Unaudited) Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.09 $9.55 $9.08 $7.03 $7.46 $7.12
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.06) (.11)(c) (.10)(c) (.03) .01 (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.04) 3.32 1.43 2.14 .15 .40
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.10) 3.21 1.33 2.11 .16 .39
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- (.02) (.05)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.96) (.67) (.86) (.06) (.55) --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- (.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.96) (.67) (.86) (.06) (.59) (.05)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.03 $12.09 $9.55 $9.08 $7.03 $7.46
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (0.70)* 35.14 15.88 30.19 1.89 5.45 *
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,301,758 $1,212,589 $488,085 $258,522 $132,596 $20,722
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .88 * 1.79 1.81 1.82 1.87 .72 *
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.56)* (.99) (1.03) (.51) (.53) (.07)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 52.44 * 82.91 106.58 114.51 93.86 120.57
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0483 $.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 (loss) 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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 Dec. 8, 1994+
operating performance (Unaudited) Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $12.34 $9.72 $9.19 $6.73
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.05) (.08)(c) (.08)(c) (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.03) 3.37 1.47 2.53
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.08) 3.29 1.39 2.52
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.96) (.67) (.86) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.96) (.67) (.86) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.30 $12.34 $9.72 $9.19
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (0.52)* 35.35 16.37 37.63 *
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $105,203 $90,788 $22,232 $3,148
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .76 * 1.54 1.54 1.06 *
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.43)* (.73) (.82) (.31)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 52.44 * 82.91 106.58 114.51
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0483 $.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 (loss) 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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 March 28, 1995+
operating performance (Unaudited) Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $12.61 $9.84 $9.24 $7.83
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.01) -- (c) -- .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.02) 3.44 1.46 1.40
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.03) 3.44 1.46 1.41
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.96) (.67) (.86) --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.96) (.67) (.86) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.62 $12.61 $9.84 $9.24
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (0.10)* 36.49 17.07 18.01 *
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $242,871 $242,742 $63,330 $42,717
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .38 * .79 .81 .29 *
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.06)* .02 (.01) .10 *
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 52.44 * 82.91 106.58 114.51
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (d) $.0483 $.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 (loss) 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
January 31, 1998 (Unaudited)
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 Investment Management, Inc. ("Putnam
Management"), the fund's Manager, a wholly-owned subsidiary of Putnam
Investments, Inc..
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 and certain other accounts managed by Putnam Management.
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) Line of credit The fund has entered into a committed line of credit with
certain banks. This line of credit agreement includes restrictions that the
fund maintain an asset coverage ratio of at least 300% and borrowings must not
exceed prospectus limitations. For the period ended January 31, 1998, the fund
had no borrowings against the line of credit.
F) 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, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
G) 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. 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.
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.
The fund reimburses Putnam Management an allocated amount for the compensation
and related expenses of certain officers of the fund and their staff who
provide administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a division
of PFTC.
For the six months ended January 31, 1998, fund expenses were reduced by
$573,756 under expense offset arrangements with PFTC and brokerage services
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.
Each Trustee of the fund receives an annual Trustee fee, of which $3,210 has
been allocated to the fund, 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 "Deferral Plan") which
allows the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund and are
invested in certain Putnam funds until distribution in accordance with the
Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
(the "Pension Plan") covering all Trustees of the fund who have served as
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 currently limit payment by the fund to 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 six months ended January 31, 1998, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $633,819 and $25,528 from the sale
of class A and class M shares, respectively and received $775,726 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 six months ended January 31, 1998, Putnam Mutual Funds
Corp., acting as underwriter received $47,546 on class A redemptions.
Note 3
Purchase and sales of securities
During the six months ended January 31, 1998, purchases and sales of
investment securities other than short-term investments aggregated
$2,267,752,298 and $2,190,046,575, 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 January 31, 1998, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 62,287,610 $765,865,606
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 17,499,390 197,218,081
- ------------------------------------------------------------
79,787,000 963,083,687
Shares
repurchased (53,052,696) (652,428,079)
- ------------------------------------------------------------
Net increase 26,734,304 $310,655,608
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 19,232,443 $228,017,802
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8,792,253 95,132,414
- ------------------------------------------------------------
28,024,696 323,150,216
Shares
repurchased (10,331,910) (121,412,774)
- ------------------------------------------------------------
Net increase 17,692,786 $201,737,442
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 2,832,688 $34,605,576
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 684,983 7,589,669
- ------------------------------------------------------------
3,517,671 42,195,245
Shares
repurchased (1,562,790) (19,099,380)
- ------------------------------------------------------------
Net increase 1,954,881 $23,095,865
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 3,129,630 $38,874,243
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,640,121 18,664,570
- ------------------------------------------------------------
4,769,751 57,538,813
Shares
repurchased (3,103,672) (38,223,976)
- ------------------------------------------------------------
Net increase 1,666,079 $19,314,837
- ------------------------------------------------------------
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
- ------------------------------------------------------------
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:
<TABLE>
<CAPTION>
Purchase Sales Dividend Market
Affiliates cost cost Income Value
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Name of affiliate
- --------------------------------------------------------------------------------------------------
Continental Can Co., Inc. $ 7,388,432 $ -- $ -- $ 7,341,600
Pier 1 Imports 4,670,847 3,929,730 191,618 65,254,819
- --------------------------------------------------------------------------------------------------
Totals $12,059,279 $3,929,730 $191,618 $72,596,419
- --------------------------------------------------------------------------------------------------
</TABLE>
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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
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
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
John J. Morgan, Jr.
Vice President
Carol McMullen
Vice President
Eric Wetlaufer
Vice President and Fund Manager
Anthony C. Santosus
Vice President and Fund Manager
David J. Santos
Vice President and Fund Manager
Margery Parker
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
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. 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 the 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
- --------------------
SA015-40521 006/317/515 3/98
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ------------------------------------------------------------------------
Putnam Vista Fund
Supplement to Semiannual Report dated January 31, 1998
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 semiannual report.
SEMIANNUAL RESULTS AT A GLANCE
- ------------------------------------------------------------------------
Total return for periods ended [1/31/98]: NAV
6 months -0.10%
1 year 12.98
Five years 125.71
Annual average 17.68
10 years 381.54
Annual average 17.02
Life of fund (since class A inception, 6/3/68)
Annual average 11.31
- ------------------------------------------------------------------------
Share value: NAV
7/31/97 $12.61
1/31/98 $11.62
- ------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 0 Short term 0.039 Long term 0.918 0.957
- ------------------------------------------------------------------------
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
accompanying shareholder 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.
