Putnam
Vista
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
1-31-99
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Morningstar, an independent rating agency, gave Putnam Vista Fund's
class A shares 4 out of 5 stars for overall performance based on the 3-,
5-, and 10-year returns as of January 31, 1999. Of the 2,859 domestic
equity funds rated, only 22.5% received four stars.*
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
18 Financial statements
* Past performance is not indicative of future results. Morningstar
ratings reflect risk-adjusted performance through 1/31/99 and are subject
to change every month. Morningstar ratings are calculated from a fund's
3-, 5-, and 10-year returns (with fee adjustments) in excess of 90-day
Treasury bill returns and a risk factor that reflects performance below
90-day Treasury bill returns. For 10-year performance, there were 741
funds rated and the fund received 4 stars. For both 3- and 5-year
performance, the fund received 3 stars and there were 2,859 and 1,734
domestic equity funds rated, respectively. 10% of the funds in an
investment category receive 5 stars; the next 22.5% receive 4 stars; the
middle 35% receive 3 stars. Performance of other share classes will vary.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Pundits are making much these days of the number of mutual funds whose
performance has failed to match that of the Standard & Poor's 500(R)
Index. For many funds, including Putnam Vista Fund, there is an entirely
valid reason for the discrepancy. At Putnam, it is called style
consistency. Rather than hopping aimlessly around the entire universe of
stocks in search of quick profits, each fund is managed strictly in the
investment style that has been set for it.
As it happens, in the currently turbulent global equity markets,
risk-averse investors have favored the generally safer stocks of large,
conservative companies. These stocks have led the market, while stocks of
most other companies, including the midsize companies that dominate your
fund's portfolio, have lagged. Given the current environment, fund
management believes your fund's performance for the first half of fiscal
1999 was entirely respectable and remains optimistic about prospects for
the second half.
I am pleased to announce the appointment of Dana F. Clark to your fund's
management team. Dana joined Putnam in 1987 and most recently was an
analyst and portfolio manager in the Mid-cap Growth Equity Group. He has
four years of investment experience.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
March 17, 1999
Report from the Fund Managers
Eric M. Wetlaufer, lead manager
Anthony C. Santosus
Dana F. Clark
Margery C. Parker
The six months ended January 31, 1999, presented investors with a tough
lesson in stock market volatility as major market indexes hit euphoric
highs, fell to sobering lows, and then rose again. During this period,
Putnam Vista Fund benefited not only from the stocks we selected for its
portfolio but also from those we avoided. The fund's performance was
driven by strategic stock selection in sectors such as technology, retail,
telecommunications, and cable television, while we sidestepped the
troubled energy and basic materials industries. For the semiannual period,
the fund's class A shares provided a total return of 10.09% at net asset
value (NAV) and 3.78% at public offering price (POP). For complete
performance information, please refer to the summary that begins on page
9.
One month into your fund's fiscal year, the Dow Jones Industrial Average
plummeted more than 512 points in one day, wiping out the entire year's
gains. After registering its worst quarter in eight years in September,
the Dow began a turnaround that was almost as dramatic as the late-summer
plunge. Finally, after its most volatile year in over a decade, the U.S.
equity market finished 1998 with double-digit returns for the fourth
consecutive year. While mid-cap stocks enjoyed the rebound, which extended
through the end of the semiannual period, your fund continued to be
challenged by investors' preference for large-cap growth stocks over all
other sectors.
* TECHNOLOGY HIGHLIGHTS INCLUDE INTERNET, SOFTWARE, AND STORAGE STOCKS
In the financial markets, 1998 will be remembered in part for the frenzy
surrounding any stock with ".com" in its name. Investors' love affair with
the Internet is not unfounded; the potential of this medium is almost
unfathomable. When selecting stocks for your fund's portfolio, we seek
those of midsize companies with leadership positions and strong business
models. One notable example is Lycos, Inc., one of the fastest-growing
Internet companies. Lycos recently announced a merger agreement with USA
Networks, Inc., which includes the Home Shopping Network (HSN) cable
channel and Ticketmaster Online-CitySearch. The merger is expected to
provide a significant increase in Lycos's household reach and improve its
online commerce capabilities. The Lycos Network is a family of Web sites
including Lycos, Tripod, and Angelfire, which together are visited by more
than 26 million people each month. The sites offer Web searching, chat
rooms, e-mail, online shopping, news, and free personal home pages. Lycos
also has e-commerce agreements with companies such as Barnes & Noble and
licensing agreements with partners including Bertelsmann and Microsoft.
On the software side of the technology sector, Intuit, Inc. was one of the
fund's stronger holdings. Intuit provides software that enables households
and small businesses to automate financial tasks such as bill paying,
reconciling bank accounts, and maintaining budgets. Its products include
Quicken, the leading personal finance software; TurboTax, the best-selling
tax preparation software; and QuickBooks, the most popular small-business
accounting software. Intuit plans to enhance its growth prospects by
taking its products online. The company began this process with the
introduction of Quicken.com, a leading Web site that offers financial
news, information, and tools, including insurance, mortgage, investment,
and tax preparation services. The revenue from Quicken.com is projected to
exceed revenue from Quicken software in the company's next fiscal year.
[GRAPHIC OMITTED: TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Computer services
and software 15.5%
Retail 9.8%
Electronics and
electrical equipment 8.4%
Pharmaceuticals and
biotechnology 6.1%
Business equipment
and services 5.3%
Footnote reads:
*Based on net assets as of 1/31/99. Holdings will vary over time.
As computer systems worldwide become increasingly complex and require more
space for storing data, companies such as VERITAS Software Corp. have
exhibited explosive growth. Over the past decade, VERITAS, another of your
fund's technology holdings, has grown to become one of the largest
memory-management software firms in the United States. The company's
products guard computer networks against data loss from crashes and
errors, speed data recovery after failures, and manage corporate storage.
VERITAS has made its name by partnering with such technological
heavyweights as Hewlett-Packard, Microsoft, and Sun Microsystems, all of
which have licensed and embedded VERITAS products in their operating
systems. While these holdings, along with others discussed in this report,
were viewed favorably at the end of the fiscal period, all are subject to
review and adjustment in accordance with the fund's investment strategy
and may vary in the future.
* TELECOM, CABLE, AND RETAIL ARE STRONG; HEALTH CARE WEAKENS
Also contributing to performance during the period were stocks in the
booming telecommunications industry. Qwest Communications, for example,
builds fiber-optic networks for traditional telecommunications services as
well as Internet-based data, voice, and image communications. The company
has constructed an impressive, technologically advanced network that
included the installation of 15,000 miles of cable around the United
States. Qwest has also partnered with Microsoft Corp. to provide
Internet-related services. Another highlight was the stock of Cincinnati
Bell, a telephone and digital wireless services company that recently spun
off two of its divisions into a separate company, Convergys.
A number of companies in the cable television industry have benefited from
the introduction of broadband technology to provide consumers with
telephone and Internet access through cable modems. One such company in
the fund's portfolio during the period was Cablevision Systems Corp., a
cable company with nearly 3 million subscribers in the New York, Boston,
and Cleveland metropolitan areas. Cablevision is also becoming a leading
provider of entertainment and informational programs as well as live
events. In the fund's retail sector, stocks of discount retailers such as
Family Dollar Stores and TJX Companies were among the strongest
performers. These companies have grabbed market share from traditional
department stores by offering better values to consumers.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Micron Technology, Inc.
Semiconductors
Cintas Corp.
Business services
Estee Lauder Companies, Inc., Class A
Cosmetics
Qwest Communications International, Inc.
Telecommunications
Computer Sciences Corp.
Computer services and software
Gateway 2000, Inc.
Computer services and software
Lexmark International Group, Inc., Class A
Computer services and software
American Power Conversion Corp.
Electronics and electrical equipment
Providian Financial Corp.
Financial services
McGraw-Hill, Inc.
Publishing
Footnote reads:
These holdings represent 16.5% of the fund's net assets as of 1/31/99.
Portfolio holdings will vary over time.
Our stock selection in the financial and health-care portions of the
portfolio was not as effective as it was in other sectors over this
period. Companies in the financial services industry were hit hard by the
global economic crisis and the stocks in the fund's portfolio have not
recovered as fast as other financial services stocks. In health care, the
fund's medical device and equipment stocks performed well, but their
strength was offset by weak performance from health-care services
holdings. A difficult regulatory environment, ongoing concerns about
Medicare spending cuts, and rising health-care costs continue to put
pressure on health-care services companies, such as HMOs and physician
practice management companies.
* CONSTRUCTIVE OUTLOOK FOR MID-CAP SECTOR
Looking ahead, we're optimistic about the state of the U.S. economy, which
is characterized by a low interest-rate environment and few signs of
inflation. While our outlook is constructive, we have not ruled out the
prospect of more volatility during the second half of the fiscal year. We
expect the greatest strength in the mid-cap growth sector to be from
companies with a domestic focus and minimal Asian/Latin American earnings
exposure. Regardless of market conditions, your fund's investment strategy
remains constant: the systematic selection of high-quality growth stocks
with strong long-term growth potential.
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 1/31/99, 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 midsize 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 1/31/99
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 10.09% 3.78% 9.70% 4.70% 9.84% 5.99%
- ------------------------------------------------------------------------------
1 year 29.14 21.73 28.20 23.20 28.50 24.01
- ------------------------------------------------------------------------------
5 years 147.41 133.17 138.52 136.52 141.59 133.14
Annual average 19.86 18.45 18.99 18.79 19.29 18.45
- ------------------------------------------------------------------------------
10 years 421.98 391.97 382.51 382.51 394.61 377.30
Annual average 17.97 17.27 17.05 17.05 17.33 16.92
- ------------------------------------------------------------------------------
Annual average
(life of fund) 11.82 11.61 10.78 10.78 11.06 10.93
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/99
Standard &
Poor's Midcap Russell Midcap Consumer
400 Index Growth Index Price Index
- ------------------------------------------------------------------------------
6 months 9.63% 13.38% 0.86%
- ------------------------------------------------------------------------------
1 year 16.70 23.62 1.86
- ------------------------------------------------------------------------------
5 years 122.67 123.33 12.59
Annual average 17.37 17.44 2.40
- ------------------------------------------------------------------------------
10 years 425.13 379.58 35.92
Annual average 18.04 16.98 3.12
- ------------------------------------------------------------------------------
Annual average
(life of fund) --* --* 5.23
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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
(where available) 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 or 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. 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 index did not exist at the time of the fund's inception.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 1/31/99
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term 1.028 1.028 1.028
- ------------------------------------------------------------------------------
Short-term -- -- --
- ------------------------------------------------------------------------------
Total $1.028 $1.028 $1.028
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
7/31/98 $13.49 $14.31 $12.89 $13.22 $13.70
- ------------------------------------------------------------------------------
1/31/99 13.68 14.51 12.97 13.35 13.83
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 12/31/98
(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
- ------------------------------------------------------------------------------
6 months 2.22% -3.67% 1.80% -2.87% 1.90% -1.64%
- ------------------------------------------------------------------------------
1 year 19.53 12.70 18.60 13.60 18.94 14.80
- ------------------------------------------------------------------------------
5 years 141.73 127.79 132.72 130.72 135.62 127.49
Annual average 19.31 17.90 18.40 18.20 18.70 17.87
- ------------------------------------------------------------------------------
10 years 436.66 405.80 395.70 395.70 408.03 390.25
Annual average 18.30 17.60 17.36 17.36 17.65 17.23
- ------------------------------------------------------------------------------
Annual average
(life of fund) 11.69 11.47 10.64 10.64 10.92 10.79
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. 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 5.75% maximum 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 the stocks of 400 medium-sized companies, each affecting the index in
proportion to market value.
Russell Midcap Growth Index* measures the performance of those Russell
Midcap companies with higher price-to-book ratios and higher forecasted
growth rates.
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 in 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.
WELCOME TO
www.putnaminv.com
Now you can use your PC to get up-to-date information about your funds,
learn more about investing and retirement planning, and access market
news and economic outlooks from Putnam.
VISIT PUTNAM'S SITE ON THE WORLD WIDE WEB FOR:
*the benefits of investing with Putnam
*Putnam's money management philosophy
*complete fund information, daily pricing and long-term performance
*your current account value, portfolio value and transaction history
*the latest on new funds and other Putnam news
You can also read Putnam economist Dr. Robert Goodman's commentary and
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Internet service provider.
New features will be added to the site regularly.
So be sure to bookmark us at
http://www.putnaminv.com
<TABLE>
<CAPTION>
Portfolio of investments owned
January 31, 1999 (Unaudited)
COMMON STOCKS (94.5%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Advertising (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,101,400 Omnicom Group, Inc. $ 70,489,600
Apparel (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
393,900 Tommy Hilfiger Corp. (NON) 27,769,950
Banks (4.7%)
- --------------------------------------------------------------------------------------------------------------------------
554,228 Firstar Corp. 48,875,982
1,343,200 Greenpoint Finanacial Corp. 43,989,800
71,428 M & T Bank Corp. 35,714,000
944,500 Northern Trust Corp. 81,758,281
1,092,200 Zions Bancorp 63,347,600
--------------
273,685,663
Basic Industrial Products (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
1,109,800 Danaher Corp. 59,374,300
Broadcasting (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
1,151,350 Chancellor Media Corp. (NON) 66,202,625
677,000 Clear Channel Communications, Inc. (NON) 41,889,375
378,100 Entercom Communications Corp. (NON) 11,721,100
--------------
119,813,100
Business Equipment and Services (5.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,372,740 Cintas Corp. 104,414,036
1,890,700 Convergys Corp. (NON) 34,032,600
1,702,650 Fiserv, Inc. (NON) 83,323,434
1,439,800 Herman Miller, Inc. 27,266,213
1,245,400 Paychex, Inc. 60,635,413
--------------
309,671,696
Cable Television (5.0%)
- --------------------------------------------------------------------------------------------------------------------------
985,300 Cablevision Systems Corp. Class A (NON) 66,384,588
1,270,600 Comcast Corp. Class A 86,380,947
1,282,600 Tele-Comm Liberty Media Group, Inc. Class A (NON) 68,619,100
2,670,100 Tele-Communications TCI Ventures Group Class A (NON) 72,760,225
--------------
294,144,860
Cellular Communications (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
269,400 Cellular Communications International, Inc. (NON) 21,535,163
Computer Services and Software (15.5%)
- --------------------------------------------------------------------------------------------------------------------------
882,300 Aspect Development, Inc. (NON) 25,476,413
137,000 BMC Software, Inc. (NON) 6,396,188
819,900 Cadence Design Systems, Inc. (NON) 26,236,800
652,900 Citrix Systems, Inc. (NON) 59,169,063
1,446,000 Computer Sciences Corp. (NON) 99,141,375
858,440 Comverse Technology, Inc. (NON) 72,108,960
1,180,200 Gateway 2000, Inc. (NON) 91,170,450
458,700 Infoseek Corp. (NON) 35,893,275
792,500 Intuit, Inc. (NON) 72,117,500
873,400 Legato Systems, Inc. (NON) 52,731,525
789,500 Lexmark International Group, Inc. Class A (NON) 89,312,188
330,900 Lycos, Inc. (NON) 45,333,300
3,057,700 Parametric Technology Corp. (NON) 39,941,206
1,240,300 Sterling Commerce, Inc. (NON) 53,255,381
1,653,500 SunGard Data Systems Inc. (NON) 59,319,313
964,100 VERITAS Software Corp. (NON) 80,622,863
--------------
908,225,800
Consumer Durable Goods (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
2,037,400 Furniture Brands International, Inc. (NON) 47,878,900
Consumer Products (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
541,000 Dial Corp. (The) 14,776,063
Cosmetics (1.8%)
- --------------------------------------------------------------------------------------------------------------------------
1,271,700 Estee Lauder Cos. Class A 104,358,881
Educational Services (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
848,775 Apollo Group, Inc. Class A (NON) 23,235,216
Electric Utilities (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
519,700 Florida Progress Corp. 21,632,513
471,100 IPALCO Enterprises, Inc. 23,525,556
--------------
45,158,069
Electronics and Electrical Equipment (8.4%)
- --------------------------------------------------------------------------------------------------------------------------
1,735,800 American Power Conversion Corp. (NON) 88,742,775
888,700 Jabil Circuit, Inc. (NON) 63,486,506
1,432,400 Micron Technology, Inc. (NON) 111,906,250
678,500 Molex Inc. 20,142,969
758,700 SCI Systems, Inc. (NON) 41,728,500
1,611,200 Seagate Technology, Inc. (NON) 65,555,700
551,800 Solectron Corp. (NON) 49,144,688
549,700 Waters Corp. (NON) 50,022,700
--------------
490,730,088
Financial Services (4.2%)
- --------------------------------------------------------------------------------------------------------------------------
375,900 Capital One Financial Corp. 49,759,763
1,208,300 Finova Group, Inc. 72,800,075
870,750 Providian Financial Corp. 87,782,484
484,600 State Street Corp. 34,648,900
--------------
244,991,222
Food and Beverages (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
898,000 U.S. Foodservice (NON) 47,145,000
Gas Pipelines (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
951,300 Coastal Corp. 28,360,631
Healthcare Services (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,188,600 Henry Schein, Inc. (NON) 49,995,488
490,300 Omnicare, Inc. 15,015,438
--------------
65,010,926
Information Systems (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,506,100 Quantum Corp. (NON) 36,052,269
Insurance (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
679,400 AFLAC Inc. 29,129,275
1,061,400 Hartford Financial Services Group 55,126,463
249,500 National Commerce Bancorporation 5,099,156
--------------
89,354,894
Medical Supplies and Devices (2.7%)
- --------------------------------------------------------------------------------------------------------------------------
751,300 AmeriSource Health Corp. Class A (NON) 58,225,750
1,726,100 Bergen Brunswig Corp. Class A 48,330,800
1,328,700 Biomet, Inc. 48,663,638
--------------
155,220,188
Networking Equipment (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
747,800 Network Appliance, Inc. (NON) 39,633,400
1,163,100 3Com Corp. (NON) 54,665,700
--------------
94,299,100
Oil Services (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,210,300 Baker Hughes, Inc. 20,423,813
1,034,300 Burlington Resources Inc. 31,287,575
789,100 Cooper Cameron Corp. (NON) 18,445,213
741,700 Smith International, Inc. (NON) 18,774,281
--------------
88,930,882
Packaging and Containers (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
523,800 Sealed Air Corp. (NON) 27,794,138
Pharmaceuticals and Biotechnology (6.1%)
- --------------------------------------------------------------------------------------------------------------------------
738,400 Agouron Pharmaceuticals, Inc. (NON) 43,796,350
954,800 Elan Corp. PLC ADR (Ireland) (NON) 64,449,000
1,193,200 IDEXX Laboratories, Inc. (NON) 31,023,200
813,900 Millennium Pharmaceuticals, Inc. (NON) 30,902,766
491,200 Perkin-Elmer Corp. (The) 46,694,700
1,109,600 Quintiles Transnational Corp. (NON) 57,421,800
1,521,900 Watson Pharmaceuticals, Inc. (NON) 83,133,788
--------------
357,421,604
Publishing (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
806,800 McGraw-Hill, Inc. 87,235,250
Recreation (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
1,003,600 Royal Caribbean Cruises Ltd. 39,893,100
1,575,600 Starwood Hotels & Resorts Worldwide, Inc. 39,390,000
--------------
79,283,100
Restaurants (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
1,222,400 Tricon Global Restaurants, Inc. (NON) 58,140,400
Retail (9.8%)
- --------------------------------------------------------------------------------------------------------------------------
372,000 Abercrombie & Fitch Co. Class A (NON) 28,458,000
1,660,000 Bed Bath & Beyond, Inc. (NON) 53,120,000
430,500 Best Buy Co., Inc. (NON) 39,067,875
731,600 Costco Companies, Inc. (NON) 60,631,350
4,400,300 Family Dollar Stores, Inc. 82,505,625
1,113,300 Fred Meyer, Inc. (NON) 69,581,250
1,313,800 Linens 'N Things, Inc. (NON) 48,446,375
2,186,000 Office Depot, Inc. (NON) 75,963,500
1,496,700 Staples, Inc. (NON) 42,843,038
2,509,100 TJX Cos., Inc. (The) 74,175,269
--------------
574,792,282
Semiconductors (5.0%)
- --------------------------------------------------------------------------------------------------------------------------
905,400 Analog Devices, Inc. (NON) 26,935,650
864,100 KLA Tencor Corp. (NON) 49,901,775
374,100 Linear Technology Corp. 38,064,675
645,400 Maxim Integrated Products Inc. (NON) 33,197,773
575,400 Novellus Systems, Inc. (NON) 42,076,125
796,000 Teradyne, Inc. (NON) 52,436,500
589,000 Xilinx, Inc. (NON) 48,887,000
--------------
291,499,498
Telecommunications (3.9%)
- --------------------------------------------------------------------------------------------------------------------------
732,600 Cox Communications, Inc. (NON) 52,655,625
2,173,000 General Instrument Corp. (NON) 77,141,500
1,661,400 Qwest Communications International, Inc. (NON) 99,580,163
--------------
229,377,288
Telephone Services (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,890,700 Cincinnati Bell, Inc. 38,404,844
Textiles (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
1,468,460 Mohawk Industries, Inc. (NON) 56,535,710
2,254,000 Westpoint Stevens, Inc. (NON) 59,942,313
--------------
116,478,023
--------------
Total Common Stocks (cost $4,027,908,264) $5,520,638,888
SHORT-TERM INVESTMENTS (4.2%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$ 2,899,000 A1 Credit Corporation for an effective yield of 4.82%,
February 1, 1999 $ 2,897,836
25,000,000 Corporate Asset Funding Co. for an effective yield of
5.22%, February 17, 1999 24,942,000
24,700,000 Corporate Receivables Corporation for an effective
yield of 4.82%, April 14, 1999 24,428,819
50,000,000 Federal Home Loan Mortgage for an effective yield
of 4.75%, March 31, 1999 49,600,111
25,000,000 Ford Motor Credit Corporation for an effective yield
of 4.81%, February 26, 1999 24,916,493
30,000,000 USAA Capital Corp. for an effective yield of 4.80%,
February 8, 1999 29,972,000
90,000,000 Interest in $580,000,000 joint repurchase agreement
dated January 29, 1999 with Morgan (J. P.) & Co.,
Inc. due February 1, 1999 with respect to various
U.S. Treasury obligations -- maturity value of
$90,035,250 for an effective yield of 4.70% 90,000,000
--------------
Total Short-Term Investments (cost $246,790,332) $ 246,757,259
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $4,274,698,596) (b) $5,767,396,147
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $5,842,058,385.
(b) The aggregate identified cost on a tax basis is $4,274,884,788, resulting in gross unrealized appreciation and
depreciation of $1,586,201,337 and $93,689,978 respectively, or net unrealized appreciation of $1,492,511,359.
(NON) Non-income-producing security.
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, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $4,274,698,596) (Note 1) $ 5,767,396,147
- -----------------------------------------------------------------------------------------------
Cash 401,759
- -----------------------------------------------------------------------------------------------
Dividends, interest and other receivables 348,970
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 8,916,779
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 155,505,189
- -----------------------------------------------------------------------------------------------
Total assets 5,932,568,844
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 72,325,491
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 8,468,790
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 6,345,813
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 666,286
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 46,198
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,784
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 2,273,792
- -----------------------------------------------------------------------------------------------
Other accrued expenses 381,305
- -----------------------------------------------------------------------------------------------
Total liabilities 90,510,459
- -----------------------------------------------------------------------------------------------
Net assets $5,842,058,385
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $ 4,192,938,867
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (14,418,791)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 170,840,758
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,492,697,551
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $5,842,058,385
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($3,632,271,081 divided by 265,508,693 shares) $13.68
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $13.68)* $14.51
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,738,716,430 divided by 134,096,761 shares)** $12.97
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($142,136,528 divided by 10,650,539 shares) $13.35
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $13.35)* $13.83
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($328,934,346 divided by 23,727,421 shares) $13.86
- -----------------------------------------------------------------------------------------------
* 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, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends $ 9,065,061
- -----------------------------------------------------------------------------------------------
Interest 5,226,312
- -----------------------------------------------------------------------------------------------
Total investment income 14,291,373
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 11,994,404
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 4,473,147
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 46,953
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 16,836
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 3,840,273
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 7,421,948
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 453,429
- -----------------------------------------------------------------------------------------------
Reports to shareholders 72,469
- -----------------------------------------------------------------------------------------------
Registration fees 280,419
- -----------------------------------------------------------------------------------------------
Auditing 36,765
- -----------------------------------------------------------------------------------------------
Legal 20,796
- -----------------------------------------------------------------------------------------------
Postage 304,170
- -----------------------------------------------------------------------------------------------
Other 170,273
- -----------------------------------------------------------------------------------------------
Total expenses 29,131,882
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (421,718)
- -----------------------------------------------------------------------------------------------
Net expenses 28,710,164
- -----------------------------------------------------------------------------------------------
Net investment loss (14,418,791)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 171,027,941
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 370,419,055
- -----------------------------------------------------------------------------------------------
Net gain on investments 541,446,996
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $527,028,205
- -----------------------------------------------------------------------------------------------
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
1999* 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (14,418,791) $ (28,250,857)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments 171,027,941 631,850,032
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 370,419,055 127,375,274
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 527,028,205 730,974,449
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (249,823,981) (207,841,199)
- ---------------------------------------------------------------------------------------------------------------
Class B (127,245,344) (102,991,533)
- ---------------------------------------------------------------------------------------------------------------
Class M (10,115,176) (8,092,094)
- ---------------------------------------------------------------------------------------------------------------
Class Y (21,564,737) (18,662,362)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 441,338,559 716,470,714
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 559,617,526 1,109,857,975
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 5,282,440,859 4,172,582,884
- ---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss of $14,418,791 and $--, respectively) $5,842,058,385 $5,282,440,859
- ---------------------------------------------------------------------------------------------------------------
* 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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.49 $12.52 $9.79 $9.23 $7.09 $7.47
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02)(c) (.05)(c) (.03)(c) (.03) .02 .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.24 1.98 3.43 1.45 2.18 .21
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.22 1.93 3.40 1.42 2.20 .22
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.03) (.96) (.67) (.86) (.06) (.55)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.03) (.96) (.67) (.86) (.06) (.60)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.68 $13.49 $12.52 $9.79 $9.23 $7.09
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 10.09* 16.90 36.25 16.64 31.22 2.75
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,632,271 $3,279,628 $2,626,464 $1,220,639 $859,403 $646,811
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .48* .98 1.04 1.10 1.07 1.09
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.18)* (.38) (.25) (.29) .26 .29
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.06* 110.60 82.91 106.58 114.51 93.86
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share January 31
operating performance (Unaudited) Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.89 $12.09 $9.55 $9.08 $7.03 $7.46
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.06)(c) (.14)(c) (.11)(c) (.10)(c) (.03) .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.17 1.90 3.32 1.43 2.14 .15
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.11 1.76 3.21 1.33 2.11 .16
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- -- (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.03) (.96) (.67) (.86) (.06) (.55)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.03) (.96) (.67) (.86) (.06) (.59)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.97 $12.89 $12.09 $9.55 $9.08 $7.03
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 9.70* 16.05 35.14 15.88 30.19 1.89
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,738,716 $1,585,961 $1,212,589 $488,085 $258,522 $132,596
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .86* 1.73 1.79 1.81 1.82 1.87
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.56)* (1.13) (.99) (1.03) (.51) (.53)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.06* 110.60 82.91 106.58 114.51 93.86
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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.
</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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.22 $12.34 $9.72 $9.19 $6.73
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.05)(c) (.11)(c) (.08)(c) (.08)(c) (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.21 1.95 3.37 1.47 2.53
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.16 1.84 3.29 1.39 2.52
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.03) (.96) (.67) (.86) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.03) (.96) (.67) (.86) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.35 $13.22 $12.34 $9.72 $9.19
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 9.84* 16.38 35.35 16.37 37.63*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $142,137 $128,259 $90,788 $22,232 $3,148
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .73* 1.48 1.54 1.54 1.06*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.43)* (.88) (.73) (.82) (.31)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.06* 110.60 82.91 106.58 114.51
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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.
</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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.64 $12.61 $9.84 $9.24 $7.83
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.01)(c) (.02)(c) -- (c) -- .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.26 2.01 3.44 1.46 1.40
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.25 1.99 3.44 1.46 1.41
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.03) (.96) (.67) (.86) --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.03) (.96) (.67) (.86) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.86 $13.64 $12.61 $9.84 $9.24
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 10.28* 17.26 36.49 17.07 18.01*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $328,934 $288,593 $242,742 $63,330 $42,717
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (b) .36* .73 .79 .81 .29*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.06)* (.13) .02 (.01) .10*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.06* 110.60 82.91 106.58 114.51
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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.
</TABLE>
Notes to financial statements
January 31, 1999 (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 $150 million in a
combination of Putnam Funds and other accounts managed by affiliates of
Putnam 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 consistently
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 sales 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. 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 six months
ended January 31, 1999, 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 wholly-owned 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, 1999, fund expenses were reduced by
$421,718 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.
Each Trustee of the fund receives an annual Trustee fee, of which $3,490
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 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 six months ended January 31, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $450,076 and $16,728
from the sale of class A and class M shares, respectively and $1,101,786
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, 1999, Putnam Mutual
Funds Corp., acting as underwriter received $33,355 on class A
redemptions.
Note 3
Purchase and sales of securities
During the six months ended January 31, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$3,552,148,759 and $3,600,135,769, 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, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 45,498,425 $558,386,331
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 19,740,151 237,079,257
- -----------------------------------------------------------------------------
65,238,576 795,465,588
Shares
repurchased (42,832,263) (524,621,185)
- -----------------------------------------------------------------------------
Net increase 22,406,313 $270,844,403
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 100,554,869 $1,276,496,212
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 17,501,153 197,237,962
- -----------------------------------------------------------------------------
118,056,022 1,473,734,174
Shares
repurchased (84,813,029) (1,073,796,615)
- -----------------------------------------------------------------------------
Net increase 33,242,993 $ 399,937,559
- -----------------------------------------------------------------------------
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 16,134,812 $187,426,478
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 10,324,667 117,597,842
- -----------------------------------------------------------------------------
26,459,479 305,024,320
Shares
repurchased (15,398,108) (178,524,607)
- -----------------------------------------------------------------------------
Net increase 11,061,371 $126,499,713
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 35,912,944 $440,380,182
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8,790,956 95,118,377
- -----------------------------------------------------------------------------
44,703,900 535,498,559
Shares
repurchased (21,992,849) (269,973,540)
- -----------------------------------------------------------------------------
Net increase 22,711,051 $265,525,019
- -----------------------------------------------------------------------------
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,134,185 $ 25,539,021
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 839,245 9,835,946
- -----------------------------------------------------------------------------
2,973,430 35,374,967
Shares
repurchased (2,024,368) (24,323,212)
- -----------------------------------------------------------------------------
Net increase 949,062 $ 11,051,755
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,570,124 $57,200,814
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 686,370 7,605,041
- -----------------------------------------------------------------------------
5,256,494 64,805,855
Shares
repurchased (2,911,068) (36,613,684)
- -----------------------------------------------------------------------------
Net increase 2,345,426 $28,192,171
- -----------------------------------------------------------------------------
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,665,768 $ 59,138,919
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,771,958 21,564,737
- -----------------------------------------------------------------------------
6,437,726 80,703,656
Shares
repurchased (3,867,470) (47,760,968)
- -----------------------------------------------------------------------------
Net increase 2,570,256 $ 32,942,688
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 6,182,440 $ 79,819,359
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,640,121 18,662,362
- -----------------------------------------------------------------------------
7,822,561 98,481,721
Shares
repurchased (5,909,265) (75,665,756)
- -----------------------------------------------------------------------------
Net increase 1,913,296 $ 22,815,965
- -----------------------------------------------------------------------------
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities 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 [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
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
Global Governmental Income Trust
High Quality Bond Fund +
High Yield Advantage Fund [DBL. DAGGER]
High Yield Total Return Fund
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic 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
LIFESTAGE SM 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 Putnam Diversified Income Trust II
+ Formerly Putnam Federal Income Trust
[DBL. DAGGER] Closed to new investors. Some exceptions may apply.
Contact Putnam for details.
[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.
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
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
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
Vice President
Eric M. Wetlaufer
Vice President and Fund Manager
Anthony C. Santosus
Vice President and Fund Manager
Dana F. Clark
Vice President and Fund Manager
Margery C. Parker
Vice President and Fund Manager
Richard A. Monaghan
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
www.putnaminv.com
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
SA015-49952 006/317/515/ 3/99
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- --------------------------------------------------------------------------
Putnam Vista Fund
Supplement to Semiannual Report dated 1/31/99
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
$150 million or more in one or more of Putnam's funds or private accounts.
Performance of class Y shares, which incur neither a front-end load,
distribution fee, nor contingent deferred sales charge, will differ from
performance of class A, B, and M shares, which are discussed more
extensively in the annual report.
SEMIANNUAL RESULTS AT A GLANCE
- --------------------------------------------------------------------------
Total return
for periods ended 1/31/99 NAV
6 months 10.20%
1 year 29.35
5 years 150.05
Annual average 20.12
10 years 427.55
Annual average 18.10
Life of fund (since class A inception, 6/3/68) 3007.85
Annual average 11.86
- --------------------------------------------------------------------------
Share value: NAV
7/31/98 $13.64
1/31/99 $13.86
- --------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $0.000 $1.028 $1.028
- --------------------------------------------------------------------------
Please note that past performance does not indicate future results.
Returns shown for class Y shares for periods prior to their inception are
derived from the historical performance of class A shares, adjusted to
reflect the initial sales charge currently applicable to class A shares.
These returns have not been adjusted to reflect differences in operating
expenses which, for class Y shares, are lower than the operating expenses
applicable to class A shares. All returns assume reinvestment of
distributions at net asset value. Performance data reflects an expense
limitation previously in effect. Without the expense limitation, total
returns would have been lower. Investment return and principal value will
fluctuate so your shares, when redeemed, may be worth more or less than
their original cost. See full report for information on comparative
benchmarks. If you have questions, please consult your fund prospectus or
call Putnam toll free at 1-800-752-9894.
