N-CSR 1 a_vistafund.htm PUTNAM VISTA FUND a_vistafund.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: (811- 01561 )

Exact name of registrant as specified in charter: Putnam Vista Fund

Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109

Name and address of agent for service:  Beth S. Mazor, Vice President 
  One Post Office Square 
  Boston, Massachusetts 02109 
 
Copy to:  John W. Gerstmayr, Esq. 
  Ropes & Gray LLP 
  One International Place 
  Boston, Massachusetts 02110 
 
Registrant’s telephone number, including area code:  (617) 292-1000 

Date of fiscal year end: July 31, 2006


Date of reporting period: August 1, 2005—July 31, 2006

 

Item 1. Report to Stockholders:
The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:


What makes Putnam different?


In 1830, Massachusetts Supreme Judicial Court Justice Samuel Putnam established The Prudent Man Rule, a legal foundation for responsible money management.

THE PRUDENT MAN RULE

All that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion. He is to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.


A time-honored tradition
in money management

Since 1937, our values have been rooted in a profound sense of responsibility for the money entrusted to us.

A prudent approach to investing

We use a research-driven team approach to seek consistent, dependable, superior investment results over time, although there is no guarantee a fund will meet its objectives.

Funds for every investment goal

We offer a broad range of mutual funds and other financial products so investors and their financial representatives can build diversified portfolios.

A commitment to doing
what’s right for investors

We have below-average expenses and stringent investor protections, and provide a wealth of information about the Putnam funds.

Industry-leading service

We help investors, along with their financial representatives, make informed investment decisions with confidence.

Putnam
Vista
Fund

7| 31| 06

Annual Report

Message from the Trustees  2 
About the fund  4 
Report from the fund managers  7 
Performance  13 
Expenses  16 
Portfolio turnover  18 
Risk  19 
Your fund’s management  20 
Terms and definitions  23 
Trustee approval of management contract  25 
Other information for shareholders  30 
Financial statements  31 
Federal tax information  55 
Brokerage commissions  56 
About the Trustees  57 
Officers  63 

Cover photograph: Vineyard, Napa County, California © Charles O’Rear

Message from the Trustees

Dear Fellow Shareholder

Over the last three months of your fund’s reporting period, investors were particularly preoccupied with the course of the economy. Beginning in May, a more pessimistic outlook pervaded the markets as leading economic indicators began to warn of slower growth and the Federal Reserve (the Fed) continued its series of interest-rate increases. The resulting correction undercut much of the progress that markets had achieved in the previous three months of the period.

However, we believe that today’s higher interest rates, far from being a threat to global economic fundamentals, are in fact an integral part of them. Economic growth may, indeed, be slowing somewhat as a result of the higher rates, but we consider this a typical development for the middle of an economic cycle, and one that could help provide the basis for a longer and more durable business expansion and a continued healthy investment environment. The recent correction brought valuations back to attractive levels, creating opportunities in a wide array of markets and sectors. Furthermore, since the Fed paused in its tightening cycle shortly after the close of the reporting period, the market atmosphere has gradually become more optimistic. Putnam Investments’ management team, under the leadership of Chief Executive Officer Ed Haldeman, continues to focus on investment performance, and the investment professionals managing your fund have been working to take advantage of the opportunities presented by this environment.

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We would like to take this opportunity to announce the retirement of one of your fund’s Trustees, John Mullin, an independent Trustee of the Putnam funds since 1997. We thank him for his service.

In the following pages, members of your fund’s management team discuss the fund’s performance and strategies for the fiscal period ended July 31, 2006, and provide their outlook for the months ahead. As always, we thank you for your support of the Putnam funds.


Putnam Vista Fund: midsize growth companies
have offered investors compelling opportunities

Despite enduring its share of challenges throughout the past 37 years, over time Putnam Vista Fund has rewarded long-term investors for their persistence, as illustrated in the growth chart below.

There are several key reasons why midsize growth stocks may continue to offer investors compelling opportunities:

First, stocks of midsize companies — also called mid-capitalization or mid-cap stocks —are generally more stable than small-cap stocks. By the time a company’s capitalization qualifies it as mid cap, it is generally large enough to have developed a solid infrastructure, including professional management, a comprehensive business plan, and a mature sales and marketing structure. It has also typically weathered a full economic cycle. These characteristics generally enable midsize companies to offer investors a greater degree of stability than that offered by smaller, less mature companies.

Second, mid-cap stocks generally have greater price inefficiencies than large-cap stocks. While midsize companies may have many of the same business characteristics as large companies, fewer analysts generally follow their stocks. This makes mid-cap stocks less efficiently priced and means that extensive research capabilities, such as those employed by your fund’s management team,



Putnam Vista Fund seeks capital appreciation by investing mainly in midsize companies across a wide range of industry sectors. The fund targets relatively well-established companies that may have higher growth rates than larger, mature companies, but offer a greater degree of stability than smaller, less mature companies. The fund may be appropriate for investors seeking growth of capital and exposure to growth-oriented companies.

Highlights

* For the 12 months ended July 31, 2006, Putnam Vista Fund’s class A shares returned 1.39% without sales charges.

* Over the same period, the fund’s benchmark, the Russell Midcap Growth Index, returned 2.98% .

* The average return for the fund’s Lipper category, Mid-Cap Growth Funds, was 1.97% .

* Additional fund performance, comparative performance, and Lipper data can be found in the performance section beginning on page 13.

Performance

Total return for class A shares for periods ended 7/31/06

Since the fund's inception (6/3/68), average annual return is 9.68% at NAV and 9.53% at POP.

  Average annual return  Cumulative return 
  NAV  POP                            NAV                                POP                    
 
10 years  6.85%  6.28%  93.98%  83.84% 
5 years  2.14  1.05  11.17  5.34 
3 years  12.91  10.93  43.96  36.49 
1 year  1.39  –3.94  1.39  –3.94 

Data is historical. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Returns at NAV do not reflect a sales charge of 5.25% . For the most recent month-end performance, visit www.putnam.com. A short-term trading fee of up to 2% may apply.

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Report from the fund managers

The year in review

Throughout most of your fund’s 2006 fiscal year, the market environment was supportive of growth stocks and our approach to growth investing. However, near the end of the fiscal year, a pronounced market downturn created challenges for the fund. Stock selection in the health-care and consumer cyclicals sectors caused the fund to underperform its benchmark, the Russell Midcap Growth Index, and its Lipper peer group average. Despite this difficult period, we remain committed to the fund’s investment philosophy, which entails investing in what we consider to be well-positioned companies that meet our growth, valuation, and quality criteria.

Market overview

During most of the fund’s 2006 fiscal year, the market rewarded the solid business fundamentals and favorable earnings prospects of many growth-oriented companies. Supported by continuing economic expansion, companies increased their productivity, hired new employees, strengthened their balance sheets, and posted strong earnings results. Small- and mid-cap stocks led a sustained growth-stock rally as market volatility remained relatively moderate. All of this changed in May, when the U.S. equity market corrected and many of the stocks that had advanced the most suffered the greatest declines. Growth stocks around the world echoed this trend, severely reducing the effectiveness of risk-management techniques that rely on diversification across an array of markets and sectors.

Following the sudden and sharp sell-off throughout May and the early part of June, the market remained volatile through July, reflecting investors’ collective concerns about a potential economic slowdown and ongoing geopolitical instability. Despite these concerns, corporate earnings still appear to be on a positive track and corporate balance sheets seem healthy overall. Nevertheless, such disruptions are typical for growth-style investing. Market participants, led by large institutional investors, buy stocks

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based on forecasts of strong earnings momentum and estimates of fundamental value. As more investors accumulate the same stocks, prices are driven up to a level at which investors begin to reassess the risk inherent in their earnings and valuation forecasts. At that point, the collective reaction is often a pronounced sell-off that has the effect of bringing prices back to levels that are more in line with earnings expectations and valuations. Normally, if broader business and economic conditions remain favorable, such price declines are often a relatively short-lived phenomenon. Nevertheless, market volatility has increased and may persist for some time.

Strategy overview

In managing your fund, our goal is to invest in a limited number of stocks in order to better focus our research and analysis on what we consider to be the most attractive opportunities in the mid-cap growth-stock universe. Specifically, we look for high-quality growth companies at favorable valuations. Our stock-selection strategy is based on three fundamental criteria: quality of the company, near-term growth prospects, and a valuation forecast that meets our parameters. The ability to rotate between these criteria gives the fund the advantage of potentially favorable market positioning whether the market is rewarding one, two, or all three of these factors.

Market sector performance

These indexes provide an overview of performance in different market sectors for the
12 months ended 7/31/06.

Equities   
 
Russell Midcap Growth Index (midsize-company growth stocks)  2.98% 
S&P 500 Index (broad stock market)  5.38% 
Russell 2000 Index (small-company stocks)  4.24% 
MSCI EAFE Index (international stocks)  24.01% 
Bonds   
 
Lehman Municipal Bond Index (tax-exempt bonds)  2.54% 
Lehman Aggregate Bond Index (broad bond market)  1.46% 
Lehman Global Aggregate Bond Index (international bonds)  2.07% 

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Although it may not be a key consideration for other growth fund managers, valuation is a central tenet in our investment process. We believe our strategy of holding growth stocks with favorable valuations may help to cushion the volatility of the overall portfolio through changing market environments.

Our approach to valuing companies incorporates both a review of historical financial data and a forward-looking scenario analysis that enables us to examine a range of possible outcomes. We evaluate each company’s ability to generate cash flow relative to its current market price (price-to-free-cash-flow ratio). We also examine the company’s operating profit margin and look for companies that have the potential to expand their margins. We then break companies down into 21 distinct market sectors and rank them in comparison to other companies with similar growth potential, operating margins, competitive environments, and capital requirements. Finally, in order to gauge current market sentiment toward a company, we will consider indicators such as analysts’ earnings forecasts.

Your fund’s holdings

Within the growth style of investing, three market sectors typically have the greatest impact on overall performance: technology, consumer goods, and health care. The fund’s 2006 relative performance


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benefited from our technology holdings, but suffered as a result of declines in certain holdings within consumer cyclicals and health care.

Two of the largest detractors from the fund’s performance during the year were homebuilder NVR and building products and construction services company Building Materials Holding, both found in the consumer cyclicals sector. After performing well early in the fiscal year, both stocks trended downward during the balance of the year as a result of the slowdown in new home construction. We continue to hold NVR because we believe the company’s land-acquisition strategy places it in a stronger competitive position relative to many other firms in the sector. In addition, at its lower price, we believe the stock carries substantially less downside price risk. As for Building Materials Holding, we have been steadily reducing the fund’s exposure.

Health care was another sector that dampened performance during the period. One of the most notable detractors was Kos Pharmaceuticals, a firm that reformulates existing drugs to provide new benefits to patients. The stock underperformed throughout the period due to market concerns about competitive pressures and slower earnings growth. Because of concerns related to the company’s weakening business fundamentals, we eliminated the position.

Amidst the overall solid performance of the fund’s technology holdings, its

Top holdings

This table shows the fund's top holdings, and the percentage of the fund's net assets that each comprised, as of 7/31/06. The fund's holdings will change over time.

Holding (percent of fund's net assets)  Industry 
 
UST, Inc. (2.2%)  Tobacco 
Bear Stearns Cos., Inc. (The) (2.1%)  Investment banking/brokerage 
L-3 Communications Holdings, Inc. (2.0%)  Aerospace and defense 
Sierra Health Services, Inc. (1.9%)  Health-care services 
EOG Resources, Inc. (1.9%)  Oil & gas 
Corporate Executive Board Co. (The) (1.8%)  Commercial and consumer services 
Network Appliance, Inc. (1.8%)  Computers 
Lam Research Corp. (1.7%)  Semiconductor 
American Eagle Outfitters, Inc. (1.7%)  Retail 
Staples, Inc. (1.7%)  Retail 

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position in Websense was a notable laggard during the year. The stock rose sharply during the fiscal year’s first half, but declined over the second half due to concerns about a decline in enterprise capital expenditures. The company produces employee Internet management and Web security software products that enable organizations to reduce the risks associated with malicious Web-transmitted computer code and e-mail communications. In addition, the firm enables companies to analyze and manage employee use of computer resources. We believe the company has a sound business model and is capable of long-term growth so we have maintained the position despite its recent decline.

Reflecting rising oil and natural gas prices and increased drilling and refining activity, several of the fund’s energy holdings were standout performers for the year. Frontier Oil, which specializes in refining heavy crude oil as opposed to light, sweet crude, saw its stock appreciate dramatically over the past 12 months as the company’s earnings exceeded forecasts. The stock was one of the fund’s top overall performers for the year.

Despite the slowdown in residential construction, building materials manufacturer USG posted outstanding sales and earnings results due primarily to higher prices and record shipments of gypsum wallboard. The company’s stock declined along with most other construction-related names during the final months of the fiscal year, but it still ranked as one of the fund’s best performers; and we trimmed the position to lock in profits.

Finally, Bear Stearns, another key holding, benefited immensely from the strong environment for mergers and acquisitions, as well as high demand for its equity and fixed-income trading services. The stock performed exceptionally well as the firm achieved record earnings.

Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future.

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The outlook for your fund

The following commentary reflects anticipated developments that could affect your fund over the next six months, as well as your management team’s plans for responding to them.

The market volatility that heightened during the final months of the fiscal period remains elevated, but according to our analysis, is still below long-term historical averages. We consider current economic conditions generally favorable and believe that the potential for continuing business growth still exists; however, recent volatility levels and market sentiment have begun to work against it. In our view, Wall Street analysts have shifted from being overly optimistic in their earnings estimates (leading to subsequent downward revisions) to a more pessimistic outlook.

All of this highlights the fact that there is considerable uncertainly as to what sectors will emerge to lead the market during your fund’s 2007 fiscal year. Consequently, we believe the value of our three-pronged approach to seeking out high-quality growth companies at reasonable valuations should keep the fund well positioned to take advantage of the opportunities likely to arise amidst shifting market preferences.

The views expressed in this report are exclusively those of Putnam Management. They are not meant as investment advice.

The fund invests some or all of its assets in small and/or midsize companies. Such investments increase the risk of fluctuations in the value of your investment. Stocks with above-average earnings may be more volatile, especially if earnings do not continue to grow.

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Your fund’s performance

This section shows your fund’s performance for periods ended July 31, 2006, the end of its fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance as of the most recent calendar quarter-end. Performance should always be considered in light of a fund’s investment strategy. Data represents past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. For the most recent month-end performance, please visit www.putnam.com or call Putnam at 1-800-225-1581. Class Y shares are generally only available to corporate and institutional clients. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.

Fund performance

Total return for periods ended 7/31/06

  Class A    Class B    Class C    Class M    Class R  Class Y 
(inception dates)  (6/3/68)    (3/1/93)    (7/26/99)    (12/8/94)    (1/21/03)         (3/28/95) 
  NAV  POP  NAV  CDSC  NAV  CDSC  NAV  POP  NAV  NAV 
 
Annual average                     
(life of fund)  9.68%  9.53%  8.70%  8.70%  8.86%  8.86%  8.97%  8.88%  9.42%  9.77% 
10 years  93.98  83.84  79.84  79.84  80.11  80.11  84.29  78.24  89.61  99.04 
Annual average  6.85  6.28  6.04  6.04  6.06  6.06  6.30  5.95  6.61  7.13 
5 years  11.17  5.34  7.11  5.11  7.18  7.18  8.47  4.98  10.05  12.66 
Annual average  2.14  1.05  1.38  1.00  1.40  1.40  1.64  0.98  1.93  2.41 
3 years  43.96  36.49  40.67  37.66  40.78  40.78  41.70  37.19  42.98  45.11 
Annual average  12.91  10.93  12.05  11.24  12.08  12.08  12.32  11.12  12.66  13.21 
1 year  1.39  –3.94  0.68  –4.32  0.73  –0.27  0.85  –2.47  1.19  1.71 

Performance assumes reinvestment of distributions and does not account for taxes. Returns at public offering price (POP) for class A and M shares reflect a sales charge of 5.25% and 3.25%, respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Class R and Y shares have no initial sales charge or CDSC. Performance for class B, C, M, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares.

A 2% short-term trading fee may be applied to shares exchanged or sold within 5 days of purchase.

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Change in the value of a $10,000 investment ($9,475 after sales charge)

Cumulative total return from 7/31/96 to 7/31/06


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B and class C shares would have been valued at $17,984 and $18,011, respectively, and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $17,824 at public offering price. A $10,000 investment in the fund’s class R and class Y shares would have been valued at $18,961 and $19,904, respectively. See first page of performance section for performance calculation method.

Comparative index returns

For periods ended 7/31/06

    Lipper Mid-Cap 
  Russell Midcap  Growth Funds 
  Growth Index  category average* 
 
Annual average     
(life of fund)  —†  9.11% 
10 years  135.52%  116.91 
Annual average  8.94  7.66 
5 years  30.46  16.98 
Annual average  5.46  2.95 
3 years  48.54  38.90 
Annual average  14.10  11.47 
1 year  2.98  1.97 

Index and Lipper results should be compared to fund performance at net asset value.

† The inception date of the Russell Midcap Growth Index was December 31, 1985.

* Over the 1-, 3-, 5-, and 10-year periods ended 7/31/06, there were 587, 476, 365, and 136 funds, respectively, in this Lipper category.

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Fund price and distribution* information

For the 12-month period ended 7/31/06

Distributions                         Class A  Class B  Class C               Class M                         Class R            Class Y 
Share value:  NAV   POP NAV  NAV  NAV  POP  NAV  NAV 
 
7/31/05  $10.11 $10.67                  $8.83                  $9.63  $9.40          $9.72              $10.06         $10.50          
7/31/06  10.25 10.82          8.89  9.70  9.48  9.80  10.18  10.68 

* The fund made no distributions during the period.

Fund performance for most recent calendar quarter

Total return for periods ended 6/30/06

  Class A    Class B    Class C    Class M    Class R  Class Y 
(inception dates)  (6/3/68)    (3/1/93)    (7/26/99)    (12/8/94)    (1/21/03)  (3/28/95) 
  NAV  POP  NAV  CDSC  NAV  CDSC  NAV  POP  NAV  NAV 
 
Annual average                     
(life of fund)  9.87%  9.71%  8.89%  8.89%  9.04%  9.04%  9.16%  9.06%  9.60%  9.96% 
10 years  87.69  77.90  74.15  74.15  74.12  74.12  78.47  72.62  83.45  92.59 
Annual average  6.50  5.93  5.70  5.70  5.70  5.70  5.96  5.61  6.26  6.77 
5 years  7.00  1.40  3.06  1.06  3.11  3.11  4.37  1.01  5.89  8.45 
Annual average  1.36  0.28  0.60  0.21  0.61  0.61  0.86  0.20  1.15  1.64 
3 years  57.25  49.04  53.67  50.67  53.74  53.74  54.70  49.63  56.23  58.49 
Annual average  16.29  14.23  15.40  14.64  15.42  15.42  15.65  14.38  16.03  16.59 
1 year  14.33  8.28  13.49  8.49  13.48  12.48  13.83  10.09  14.07  14.61 

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Your fund’s expenses

As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. In the most recent six-month period, your fund limited these expenses; had it not done so, expenses would have been higher. Using the information below, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial advisor.

Review your fund’s expenses

The table below shows the expenses you would have paid on a $1,000 investment in Putnam Vista Fund from February 1, 2006, to July 31, 2006. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

  Class A  Class B  Class C  Class M  Class R  Class Y 
Expenses paid per $1,000*  $ 5.04  $ 8.56  $ 8.56  $ 7.39  $ 6.22  $ 3.87 
Ending value (after expenses)  $900.70  $897.10  $897.30  $897.70  $899.30  $902.00 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended 7/31/06. The expense ratio may differ for each share class (see the table at the bottom of the next page). Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year. Does not reflect the effect of a non-recurring reimbursement by Putnam. If this amount had been reflected in the table above, expenses for each share class would have been lower.

Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended July 31, 2006, use the calculation method below. To find the value of your investment on February 1, 2006, go to www.putnam.com and log on to your account. Click on the “Transaction History” tab in your Daily Statement and enter 02/01/2006 in both the “from” and “to” fields. Alternatively, call Putnam at 1-800-225-1581.


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Compare expenses using the SEC’s method

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the table below shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

  Class A  Class B  Class C  Class M  Class R  Class Y 
Expenses paid per $1,000*  $ 5.36  $ 9.10  $ 9.10  $ 7.85  $ 6.61  $ 4.11 
Ending value (after expenses)  $1,019.49  $1,015.77  $1,015.77  $1,017.01  $1,018.25  $1,020.73 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended 7/31/06. The expense ratio may differ for each share class (see the table at the bottom of this page). Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year. Does not reflect the effect of a non-recurring reimbursement by Putnam. If this amount had been reflected in the table above, expenses for each share class would have been lower.

Compare expenses using industry averages

You can also compare your fund’s expenses with the average of its peer group, as defined by Lipper, an independent fund-rating agency that ranks funds relative to others that Lipper considers to have similar investment styles or objectives. The expense ratio for each share class shown below indicates how much of your fund’s net assets have been used to pay ongoing expenses during the period.

  Class A  Class B  Class C  Class M  Class R  Class Y 
 
Your fund's annualized             
expense ratio*  1.07%  1.82%  1.82%  1.57%  1.32%  0.82% 
Average annualized expense             
ratio for Lipper peer group†  1.48%  2.23%  2.23%  1.98%  1.73%  1.23% 

* For the fund’s most recent fiscal half year; may differ from expense ratios based on one-year data in the financial highlights. Does not reflect the effect of a non-recurring reimbursement by Putnam. If this amount had been reflected in the table above, the expense ratio for each share class would have been lower.

† Simple average of the expenses of all front-end load funds in the fund’s Lipper peer group, calculated in accordance with Lipper’s standard method for comparing fund expenses (excluding 12b-1 fees and without giving effect to any expense offset and brokerage service arrangements that may reduce fund expenses). This average reflects each fund’s expenses for its most recent fiscal year available to Lipper as of 6/30/06. To facilitate comparison, Putnam has adjusted this average to reflect the 12b-1 fees carried by each class of shares other than class Y shares, which do not incur 12b-1 fees. The peer group may include funds that are significantly smaller or larger than the fund, which may limit the comparability of the fund’s expenses to the simple average, which typically is higher than the asset-weighted average.

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Your fund’s
portfolio turnover

Putnam funds are actively managed by teams of experts who buy and sell securities based on intensive analysis of companies, industries, economies, and markets. Portfolio turnover is a measure of how often a fund’s managers buy and sell securities for your fund. A portfolio turnover of 100%, for example, means that the managers sold and replaced securities valued at 100% of a fund’s assets within a one-year period. Funds with high turnover may be more likely to generate capital gains and dividends that must be distributed to shareholders as taxable income. High turnover may also cause a fund to pay more brokerage commissions and other transaction costs, which may detract from performance.

Turnover comparisons

Percentage of holdings that change every year

  2006  2005  2004  2003  2002 
 
Putnam Vista Fund  111%  74%  78%  65%  89% 
Lipper Mid-Cap Growth Funds           
category average  118%  115%  130%  140%  170% 

Turnover data for the fund is calculated based on the fund’s fiscal-year period, which ends on July 31. Turnover data for the fund’s Lipper category is calculated based on the average of the turnover of each fund in the category for its fiscal year ended during the indicated year. Fiscal years vary across funds in the Lipper category, which may limit the comparability of the fund’s portfolio turnover rate to the Lipper average. Comparative data for 2006 is based on information available as of 7/31/06.

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Your fund’s risk

This risk comparison is designed to help you understand how your fund compares with other funds. The comparison utilizes a risk measure developed by Morningstar, an independent fund-rating agency. This risk measure is referred to as the fund’s Overall Morningstar Risk.

Your fund’s Overall Morningstar® Risk


Your fund’s Overall Morningstar Risk is shown alongside that of the average fund in its broad asset class, as determined by Morningstar. The risk bar broadens the comparison by translating the fund’s Overall Morningstar Risk into a percentile, which is based on the fund’s ranking among all funds rated by Morningstar as of June 30, 2006. A higher Overall Morningstar Risk generally indicates that a fund’s monthly returns have varied more widely.

Morningstar determines a fund’s Overall Morningstar Risk by assessing variations in the fund’s monthly returns — with an emphasis on downside variations — over 3-, 5-, and 10-year periods, if available. Those measures are weighted and averaged to produce the fund’s Overall Morningstar Risk. The information shown is provided for the fund’s class A shares only; information for other classes may vary. Overall Morningstar Risk is based on historical data and does not indicate future results. Morningstar does not purport to measure the risk associated with a current investment in a fund, either on an absolute basis or on a relative basis. Low Overall Morningstar Risk does not mean that you cannot lose money on an investment in a fund. Copyright 2006 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

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Your fund’s management

Your fund is managed by the members of the Putnam Mid-Cap Growth Team. Kevin Divney is the Portfolio Leader and Brian DeChristopher is a Portfolio Member of your fund. The Portfolio Leader and Portfolio Member coordinate the team’s management of the fund.

For a complete listing of the members of the Putnam Mid-Cap Growth Team, including those who are not Portfolio Leaders or Portfolio Members of your fund, visit Putnam’s Individual Investor Web site at www.putnam.com.

Investment team fund ownership

The table below shows how much the fund’s current Portfolio Leader and Portfolio Member have invested in the fund and in all Putnam mutual funds (in dollar ranges). Information shown is as of July 31, 2006, and July 31, 2005.


Trustee and Putnam employee fund ownership

As of July 31, 2006, all of the Trustees on the Board of the Putnam funds owned fund shares. The table below shows the approximate value of investments in the fund and all Putnam funds as of that date by the Trustees and Putnam employees. These amounts include investments by the Trustees’ and employees’ immediate family members and investments through retirement and deferred compensation plans.

    Total assets in 
  Assets in the fund  all Putnam funds 
 
Trustees  $ 813,000  $ 87,000,000 
Putnam employees  $13,915,000  $409,000,000 

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Fund manager compensation

The total 2005 fund manager compensation that is attributable to your fund is approximately $1,200,000. This amount includes a portion of 2005 compensation paid by Putnam Management to the fund managers listed in this section for their portfolio management responsibilities, calculated based on the fund assets they manage taken as a percentage of the total assets they manage. The compensation amount also includes a portion of the 2005 compensation paid to the Chief Investment Officer of the team for his oversight responsibilities, calculated based on the fund assets he oversees taken as a percentage of the total assets he oversees. This amount does not include compensation of other personnel involved in research, trading, administration, systems, compliance, or fund operations; nor does it include non-compensation costs. These percentages are determined as of the fund’s fiscal period-end. For personnel who joined Putnam Management during or after 2005, the calculation reflects annualized 2005 compensation or an estimate of 2006 compensation, as applicable.

Other Putnam funds managed by the Portfolio Leaders

Kevin Divney is also a Portfolio Leader of Putnam New Opportunities Fund.

Brian DeChristopher is also a Portfolio Member of Putnam New Opportunities Fund.

Kevin Divney and Brian DeChristopher may also manage other accounts and variable trust funds advised by Putnam Management or an affiliate.

Changes in your fund’s Portfolio Leader and Portfolio Members

Your fund’s Portfolio Leader and Portfolio Member did not change during the year ended July 31, 2006.

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Putnam fund ownership by Putnam’s Executive Board

The table below shows how much the members of Putnam’s Executive Board have invested in all Putnam mutual funds (in dollar ranges). Information shown is as of July 31, 2006, and July 31, 2005.

    $1 –  $10,001 –  $50,001 –  $100,001 –  $500,001 – $1,000,001 
                                                Year          $0                   $10,000             $50,000           $100,000          $500,000           $1,000,000       and over 
Philippe Bibi  2006          *
 
Chief Technology Officer  2005          *
Joshua Brooks  2006          *
Deputy Head of Investments  2005          *
 
William Connolly  2006          *
 
Head of Retail Management  N/A           
Kevin Cronin  2006          *
Head of Investments  2005          *
 
Charles Haldeman, Jr.  2006          *
 
 
President and CEO  2005          *
Amrit Kanwal  2006          *
Chief Financial Officer  2005          *
 
Steven Krichmar  2006          *
 
Chief of Operations  2005          *
Francis McNamara, III  2006          *
General Counsel  2005          *
 
Richard Robie, III  2006          *
 
Chief Administrative Officer  2005          *
Edward Shadek  2006          *
Deputy Head of Investments  2005          *
 
Sandra Whiston  2006          *
 
Head of Institutional Management  N/A           

N/A indicates the individual was not a member of Putnam’s Executive Board as of 7/31/05.

22

Terms and definitions

Important terms

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.

Net asset value (NAV) is the price, or value, of one share of a mutual fund, without a sales charge. NAVs fluctuate with market conditions. NAV is calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

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 5.25% maximum sales charge for class A shares and 3.25% for class M shares.

Contingent deferred sales charge (CDSC) is generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B 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. The CDSC for class C shares is 1% for one year after purchase.

Share classes

Class A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class B shares are not subject to an initial sales charge. They may be subject to a CDSC. Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.

Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class R shares are not subject to an initial sales charge or CDSC and are available only to certain defined contribution plans.

Class Y shares are not subject to an initial sales charge or CDSC, and carry no 12b-1 fee. They are only available to eligible purchasers, including eligible defined contribution plans or corporate IRAs.

23

Comparative indexes

Lehman Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.

Lehman Global Aggregate Bond Index is an unmanaged index of global investment-grade fixed-income securities.

Lehman Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds.

Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged index of equity securities from developed countries in Western Europe, the Far East, and Australasia.

Russell 2000 Index is an unmanaged index of the 2,000 smallest companies in the Russell 3000 Index.

Russell Midcap Growth Index is an unmanaged index of those companies in the Russell Midcap Index chosen for their growth orientation.

S&P 500 Index is an unmanaged index of common stock performance.

Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.

Lipper is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.

24

Trustee approval of
management contract

General conclusions

The Board of Trustees of the Putnam funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Management. In this regard, the Board of Trustees, with the assistance of its Contract Committee consisting solely of Trustees who are not “interested persons” (as such term is defined in the Investment Company Act of 1940, as amended) of the Putnam funds (the “Independent Trustees”), requests and evaluates all information it deems reasonably necessary under the circumstances. Over the course of several months ending in June 2006, the Contract Committee met four times to consider the information provided by Putnam Management and other information developed with the assistance of the Board’s independent counsel and independent staff. The Contract Committee reviewed and discussed key aspects of this information with all of the Independent Trustees. Upon completion of this review, the Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management contract, effective July 1, 2006.

This approval was based on the following conclusions:

* That the fee schedule in effect for your fund represents reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds and the costs incurred by Putnam Management in providing such services, and

* That such fee schedule represents an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.

These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the fee arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that certain aspects of such arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements in prior years.

25

Management fee schedules and categories; total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints, and the assignment of funds to particular fee categories. In reviewing fees and expenses, the Trustees generally focused their attention on material changes in circumstances — for example, changes in a fund’s size or investment style, changes in Putnam Management’s operating costs, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of your fund, which had been carefully developed over the years, re-examined on many occasions and adjusted where appropriate. The Trustees focused on two areas of particular interest, as discussed further below:

* Competitiveness. The Trustees reviewed comparative fee and expense information for competitive funds, which indicated that, in a custom peer group of competitive funds selected by Lipper Inc., your fund ranked in the 14th percentile in management fees and in the 7th percentile in total expenses (less any applicable 12b-1 fees) as of December 31, 2005 (the first percentile being the least expensive funds and the 100th percentile being the most expensive funds). (Because the fund’s custom peer group is smaller than the fund’s broad Lipper Inc. peer group, this expense information may differ from the Lipper peer expense information found elsewhere in this report.) The Trustees noted that expense ratios for a number of Putnam funds, which show the percentage of fund assets used to pay for management and administrative services, distribution (12b-1) fees and other expenses, had been increasing recently as a result of declining net assets and the natural operation of fee breakpoints.

The Trustees noted that the expense ratio increases described above were currently being controlled by expense limitations implemented in January 2004 and which Putnam Management, in consultation with the Contract Committee, has committed to maintain at least through 2007. These expense limitations give effect to a commitment by Putnam Management that the expense ratio of each open-end fund would be no higher than the average expense ratio of the competitive funds included in the fund’s relevant Lipper universe (exclusive of any applicable 12b-1 charges in each case). The Trustees observed that this commitment to limit fund expenses has served shareholders well since its inception. In order to ensure that the expenses of the Putnam funds continue to meet evolving competitive standards, the Trustees requested, and Putnam Management agreed, to implement an additional expense limitation for certain funds for the twelve months beginning January 1, 2007 equal to the average expense ratio (exclusive of 12b-1 charges) of a custom peer group of competitive funds selected by Lipper based on the size of the fund. This additional expense limitation will be applied to those open-end funds that had above-average expense ratios (exclusive of 12b-1 charges) based on the Lipper custom peer group data for the period ended December 31, 2005. This additional expense limitation will not be applied to your fund.

26

* Economies of scale. Your fund currently has the benefit of breakpoints in its management fee that provide shareholders with significant economies of scale, which means that the effective management fee rate of a fund (as a percentage of fund assets) declines as a fund grows in size and crosses specified asset thresholds. Conversely, as a fund shrinks in size — as has been the case for many Putnam funds in recent years — these breakpoints result in increasing fee levels. In recent years, the Trustees have examined the operation of the existing breakpoint structure during periods of both growth and decline in asset levels. The Trustees concluded that the fee schedules in effect for the funds represented an appropriate sharing of economies of scale at current asset levels. In reaching this conclusion, the Trustees considered the Contract Committee’s stated intent to continue to work with Putnam Management to plan for an eventual resumption in the growth of assets, including a study of potential economies that might be produced under various growth assumptions.

In connection with their review of the management fees and total expenses of the Putnam funds, the Trustees also reviewed the costs of the services to be provided and profits to be realized by Putnam Management and its affiliates from the relationship with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability with respect to the funds’ management contracts, allocated on a fund-by-fund basis. Because many of the costs incurred by Putnam Management in managing the funds are not readily identifiable to particular funds, the Trustees observed that the methodology for allocating costs is an important factor in evaluating Putnam Management’s costs and profitability, both as to the Putnam funds in the aggregate and as to individual funds. The Trustees reviewed Putnam Management’s cost allocation methodology with the assistance of independent consultants and concluded that this methodology was reasonable and well-considered.

Investment performance

The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the Investment Process Committee of the Trustees and the Investment Oversight Committee of the Trustees, which meet on a regular monthly basis with the funds’ portfolio teams throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — as measured by the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to such personnel, and in general the ability of Putnam Management to attract and retain high-quality personnel — but also recognize that this does not guarantee favorable investment results for every fund in every time period. The Trustees considered the investment performance of each fund over multiple time periods

27

and considered information comparing each fund’s performance with various benchmarks and with the performance of competitive funds.

The Trustees noted the satisfactory investment performance of many Putnam funds. They also noted the disappointing investment performance of certain funds in recent years and discussed with senior management of Putnam Management the factors contributing to such underperfor-mance and actions being taken to improve performance. The Trustees recognized that, in recent years, Putnam Management has made significant changes in its investment personnel and processes and in the fund product line to address areas of underperformance. In particular, they noted the important contributions of Putnam Management’s leadership in attracting, retaining and supporting high-quality investment professionals and in systematically implementing an investment process that seeks to merge the best features of fundamental and quantitative analysis. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these changes and to evaluate whether additional changes to address areas of underperformance are warranted.

In the case of your fund, the Trustees considered that your fund’s class A share cumulative total return performance at net asset value was in the following percentiles of its Lipper Inc. peer group (Lipper Mid-Cap Growth Funds) for the one-, three- and five-year periods ended March 31, 2006 (the first percentile being the best performing funds and the 100th percentile being the worst performing funds):

One-year period  Three-year period  Five-year period 
54th  23rd  63rd 

(Because of the passage of time, these performance results may differ from the performance results for more recent periods shown elsewhere in this report. Over the one-, three- and five-year periods ended March 31, 2006, there were 556, 460, and 353 funds, respectively, in your fund’s Lipper peer group.* Past performance is no guarantee of future performance.)

As a general matter, the Trustees concluded that cooperative efforts between the Trustees and Putnam Management represent the most effective way to address investment performance problems. The Trustees noted that investors in the Putnam funds have, in effect, placed their trust in the Putnam organization, under the oversight of the funds’ Trustees, to make appropriate decisions regarding the management of the funds. Based on the responsiveness of Putnam Management in the recent past to Trustee concerns about investment performance, the Trustees concluded that it is preferable to seek change within Putnam Management to address performance shortcomings. In the Trustees’ view, the alternative of terminating a

* The percentile rankings for your fund’s class A share annualized total return performance in the Lipper Mid-Cap Growth Funds category for the one-, five- and ten-year periods ended June 30, 2006, were 35th, 69th, and 65th, respectively. Over the one-, five- and ten-year periods ended June 30, 2006, the fund ranked 196th out of 572, 248th out of 360, and 87th out of 134 funds, respectively. Note that this more recent information was not available when the Trustees approved the continuance of your fund’s management contract.

28

management contract and engaging a new investment adviser for an underperforming fund would entail significant disruptions and would not provide any greater assurance of improved investment performance.

Brokerage and soft-dollar allocations; other benefits

The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage and soft-dollar allocations, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that may be useful to Putnam Management in managing the assets of the fund and of other clients. The Trustees indicated their continued intent to monitor the potential benefits associated with the allocation of fund brokerage to ensure that the principle of seeking “best price and execution” remains paramount in the portfolio trading process.

The Trustees’ annual review of your fund’s management contract also included the review of its distributor’s contract and distribution plan with Putnam Retail Management Limited Partnership and the custodian agreement and investor servicing agreement with Putnam Fiduciary Trust Company, all of which provide benefits to affiliates of Putnam Management.

Comparison of retail and institutional fee schedules

The information examined by the Trustees as part of their annual contract review has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, etc. This information included comparison of such fees with fees charged to the funds, as well as a detailed assessment of the differences in the services provided to these two types of clients. The Trustees observed, in this regard, that the differences in fee rates between institutional clients and the mutual funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients reflect to a substantial degree historical competitive forces operating in separate market places. The Trustees considered the fact that fee rates across all asset sectors are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to institutional clients of the firm, but did not rely on such comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.

29

Other information
for shareholders

Putnam’s policy on confidentiality

In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ addresses, telephone numbers, Social Security numbers, and the names of their financial advisors. We use this information to assign an account number and to help us maintain accurate records of transactions and account balances. It is our policy to protect the confidentiality of your information, whether or not you currently own shares of our funds, and in particular, not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use. Under certain circumstances, we share this information with outside vendors who provide services to us, such as mailing and proxy solicitation. In those cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. We may also share this information with our Putnam affiliates to service your account or provide you with information about other Putnam products or services. It is also our policy to share account information with your financial advisor, if you’ve listed one on your Putnam account. If you would like clarification about our confidentiality policies or have any questions or concerns, please don’t hesitate to contact us at 1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time.

Proxy voting

Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2006, are available on the Putnam Individual Investor Web site, www.putnam.com/individual, and on the SEC’s Web site, www.sec.gov. If you have questions about finding forms on the SEC’s Web site, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Forms N-Q on the SEC’s Web site at www.sec.gov. In addition, the fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s Web site or the operation of the Public Reference Room.

30

Financial statements

A guide to financial statements
These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, constitute the fund’s financial statements.

The fund’s portfolio lists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.

Statement of assets and liabilities shows how the fund’s net assets and share price are determined. All investment and noninvestment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)

Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal year.

Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned.

Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period.

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Report of Independent Registered
Public Accounting Firm

The Board of Trustees and Shareholders
Putnam Vista Fund:

We have audited the accompanying statement of assets and liabilities of Putnam Vista Fund, including the fund’s portfolio, as of July 31, 2006, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years or periods in the period then ended. These financial statements and financial highlights are the responsibility of the fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2006, by correspondence with the custodian and brokers or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Putnam Vista Fund as of July 31, 2006, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years or periods in the period then ended, in conformity with U.S. generally accepted accounting principles.


Boston, Massachusetts
September 11, 2006

32

The fund’s portfolio 7/31/06       
 
 
 
COMMON STOCKS (100.0%)*       
  Shares    Value 
  
Aerospace and Defense (2.4%)       
L-3 Communications Holdings, Inc.  658,028  $  48,463,762 
Precision Castparts Corp.  176,800    10,546,120 
      59,009,882 
 
Airlines (1.3%)       
Southwest Airlines Co.  1,788,000    32,166,120 
 
Automotive (0.6%)       
Oshkosh Truck Corp.  357,333    15,322,439 
 
Banking (1.2%)       
Unibanco-Uniao de Bancos Brasileiros SA ADR       
(Brazil) (S)  412,400    28,608,188 
 
Beverage (0.7%)       
Hansen Natural Corp. † (S)  377,200    17,347,428 
 
Biotechnology (1.9%)       
Celgene Corp. †  213,300    10,214,937 
Genzyme Corp. †  506,900    34,611,132 
      44,826,069 
 
Building Materials (0.7%)       
Building Materials Holding Corp. (S)  749,800    16,068,214 
 
Cable Television (0.2%)       
Echostar Communications Corp. Class A †  115,200    4,037,760 
 
Commercial and Consumer Services (4.0%)       
Alliance Data Systems Corp. † (S)  380,900    19,547,788 
Corporate Executive Board Co. (The) (S)  471,724    44,342,056 
Monster Worldwide, Inc. †  496,600    19,864,000 
Paychex, Inc.  386,600    13,213,988 
      96,967,832 
 
Communications Equipment (1.4%)       
F5 Networks, Inc. † (S)  359,700    16,668,498 
Harris Corp. (S)  393,700    17,933,035 
      34,601,533 
 
Computers (4.9%)       
Autodesk, Inc. †  782,500    26,691,075 
EMC Corp. †  281,400    2,856,210 
Emulex Corp. † (S)  934,763    13,918,621 
Lexmark International, Inc. Class A † (S)  595,400    32,181,370 
Network Appliance, Inc. † (S)  1,453,800    43,163,322 
      118,810,598 

33

COMMON STOCKS (100.0%)* continued       
 
  Shares    Value 
 
Construction (0.5%)       
Eagle Materials, Inc. (S)  325,300  $  11,697,788 
 
Consumer Cyclicals (0.7%)       
Harman International Industries, Inc.  196,887    15,790,337 
 
Consumer Finance (1.3%)       
Accredited Home Lenders Holding Co. † (S)  380,500    17,248,065 
Nelnet, Inc. Class A † (S)  495,576    15,199,316 
      32,447,381 
 
Consumer Goods (1.0%)       
Newell Rubbermaid, Inc. (S)  897,800    23,666,008 
 
Consumer Services (1.2%)       
Getty Images, Inc. †  102,500    4,781,625 
Labor Ready, Inc. †  594,215    9,691,647 
Nutri/System, Inc. † (S)  263,900    13,965,588 
      28,438,860 
 
Electrical Equipment (1.5%)       
WESCO International, Inc. † (S)  635,100    36,994,575 
 
Electronics (2.7%)       
Altera Corp. † (S)  562,500    9,736,875 
Analog Devices, Inc.  336,400    10,875,812 
Freescale Semiconductor, Inc. Class B †  490,000    13,974,800 
Micron Technology, Inc. †  842,300    13,131,457 
NVIDIA Corp. † (S)  567,900    12,567,627 
Omnivision Technologies, Inc. †  264,300    5,021,700 
      65,308,271 
 
Energy (3.4%)       
BJ Services Co.  396,900    14,395,563 
Grey Wolf, Inc. † (S)  4,817,500    36,902,050 
Rowan Cos., Inc.  924,900    31,326,363 
      82,623,976 
 
Entertainment (0.9%)       
Dreamworks Animation SKG, Inc. Class A † (S)  432,329    9,052,969 
Polycom, Inc. † (S)  593,600    13,177,920 
      22,230,889 
 
Financial (1.5%)       
Assurant, Inc. (S)  203,600    9,807,412 
Moody’s Corp.  488,500    26,808,880 
      36,616,292 
 
Food (1.1%)       
Campbell Soup Co.  615,500    22,576,540 
McCormick & Co., Inc.  83,100    2,913,486 
      25,490,026 

34

COMMON STOCKS (100.0%)* continued       
  Shares    Value 
 
Gaming & Lottery (1.5%)       
GTECH Holdings Corp.  174,700  $  5,885,643 
International Game Technology  786,800    30,417,688 
      36,303,331 
 
Health Care Services (6.6%)       
Coventry Health Care, Inc. †  568,800    29,975,760 
Express Scripts, Inc. †  51,245    3,947,402 
Humana, Inc. † (S)  546,500    30,565,745 
Laboratory Corp. of America Holdings †  103,400    6,661,028 
McKesson Corp.  479,900    24,182,161 
Pediatrix Medical Group, Inc. †  420,000    17,808,000 
Sierra Health Services, Inc. †  1,077,830    46,540,699 
      159,680,795 
 
Homebuilding (1.0%)       
NVR, Inc. †  51,341    25,413,795 
 
Insurance (1.4%)       
W.R. Berkley Corp. (S)  935,625    33,682,500 
 
Investment Banking/Brokerage (2.3%)       
Bear Stearns Cos., Inc. (The) (S)  357,195    50,675,255 
Legg Mason, Inc. (S)  66,630    5,561,606 
      56,236,861 
 
Leisure (0.9%)       
Harley-Davidson, Inc.  252,500    14,392,500 
Thor Industries, Inc. (S)  179,500    7,689,780 
      22,082,280 
 
Lodging/Tourism (1.1%)       
Choice Hotels International, Inc. (S)  606,100    25,831,982 
 
Machinery (4.4%)       
Cummins, Inc. (S)  199,400    23,329,800 
JLG Industries, Inc.  826,600    14,961,460 
Joy Global, Inc.  50,300    1,887,256 
Manitowoc Co., Inc. (The)  145,000    5,692,700 
MSC Industrial Direct Co., Inc. Class A  643,309    26,523,630 
Parker-Hannifin Corp.  34,000    2,456,160 
Terex Corp. †  498,880    22,369,779 
Wabtec Corp.  338,700    8,995,872 
      106,216,657 
 
Manufacturing (4.4%)       
Actuant Corp. Class A (S)  370,303    16,297,035 
Dover Corp.  373,809    17,621,356 
Freightcar America, Inc. (S)  190,100    10,200,766 
Graco, Inc. (S)  838,575    32,947,612 

35

COMMON STOCKS (100.0%)* continued       
  Shares    Value 
 
Manufacturing continued       
IDEX Corp.  410,200  $  17,823,190 
Roper Industries, Inc.  269,871    12,198,169 
      107,088,128 
 
Medical Technology (5.5%)       
C.R. Bard, Inc. (S)  542,900    38,529,613 
Dade Behring Holdings, Inc. (S)  209,700    8,541,081 
Hologic, Inc. † (S)  312,500    14,034,375 
Kinetic Concepts, Inc. †  885,100    39,440,056 
Respironics, Inc. †  468,700    16,676,346 
Varian Medical Systems, Inc. †  337,200    15,281,904 
      132,503,375 
 
Metals (1.6%)       
Freeport-McMoRan Copper & Gold, Inc. Class B (S)  554,600    30,258,976 
IPSCO, Inc. (Canada) (S)  100,100    9,420,411 
      39,679,387 
 
Oil & Gas (3.4%)       
EOG Resources, Inc.  608,000    45,083,200 
Frontier Oil Corp.  876,800    30,907,200 
Helmerich & Payne, Inc.  227,300    6,291,664 
      82,282,064 
 
Pharmaceuticals (2.9%)       
Barr Pharmaceuticals, Inc. †  507,800    25,268,128 
Endo Pharmaceuticals Holdings, Inc. †  965,099    29,985,626 
Hospira, Inc. †  215,193    9,401,782 
Medicis Pharmaceutical Corp. Class A (S)  220,000    6,063,200 
      70,718,736 
 
Power Producers (0.3%)       
AES Corp. (The) †  413,700    8,216,082 
 
Publishing (0.2%)       
Marvel Entertainment, Inc. † (S)  259,351    4,585,326 
 
Real Estate (0.7%)       
CB Richard Ellis Group, Inc. Class A †  762,600    17,943,978 
 
Restaurants (1.5%)       
Darden Restaurants, Inc.  1,097,739    37,103,578 
 
Retail (8.2%)       
American Eagle Outfitters, Inc.  1,283,315    42,169,731 
AnnTaylor Stores Corp. †  489,500    20,098,870 
Barnes & Noble, Inc. (S)  150,267    5,036,950 
Bed Bath & Beyond, Inc. †  153,800    5,149,224 
Claire’s Stores, Inc. (S)  1,221,152    30,565,435 
Dress Barn, Inc. † (S)  158,200    3,413,956 

36

COMMON STOCKS (100.0%)* continued       
  Shares    Value 
 
Retail continued       
Guess ?, Inc. † (S)  772,358  $  32,902,451 
Skechers U.S.A., Inc. Class A †  352,500    7,688,025 
Staples, Inc.  1,920,174    41,514,162 
Toro Co. (The) (S)  242,033    10,022,587 
      198,561,391 
 
Schools (1.7%)       
Apollo Group, Inc. Class A † (S)  850,700    40,255,124 
 
Semiconductor (2.1%)       
Lam Research Corp. †  1,014,235    42,182,034 
Maxim Integrated Products, Inc.  301,100    8,846,318 
      51,028,352 
 
Software (4.3%)       
BMC Software, Inc. †  880,845    20,629,390 
Citrix Systems, Inc. †  483,450    15,359,207 
McAfee, Inc. †  1,360,728    29,323,688 
Red Hat, Inc. †  435,200    10,305,536 
Websense, Inc. †  1,561,900    29,285,625 
      104,903,446 
 
Technology Services (2.9%)       
Equifax, Inc.  786,200    25,378,536 
Fair Isaac Corp.  928,200    31,354,596 
Global Payments, Inc.  307,772    13,092,621 
      69,825,753 
 
Textiles (2.0%)       
Coach, Inc. †  1,025,900    29,453,589 
Gymboree Corp. (The) † (S)  223,100    7,478,312 
Phillips-Van Heusen Corp. (S)  319,600    11,355,388 
      48,287,289 
 
Tobacco (2.2%)       
UST, Inc. (S)  1,047,000    52,925,850 
 
Transportation Services (1.8%)       
C.H. Robinson Worldwide, Inc. (S)  736,939    33,737,067 
Expeditors International of Washington, Inc.  220,100    10,007,947 
      43,745,014 
 
Total common stocks (cost $2,428,857,694)    $  2,424,171,540 

37

SHORT-TERM INVESTMENTS (14.7%)*         
    Principal amount    Value 
 
Interest in $521,000,000 joint tri-party repurchase         
agreement dated July 31, 2006 with UBS         
Securities, LLC MTG due August 1, 2006 with respect         
to various U.S. Government obligations — maturity         
value of $8,702,276 for an effective yield of 5.28%         
(collateralized by Fannie Mae securities         
with yields ranging from 4.00% to 8.00% and due         
dates ranging from January 1, 2007 to July 1, 2036         
and Freddie Mac securities with yields ranging from         
3.5% to 12% and due dates ranging from January 1,         
2007 to July 1, 2036, valued at $531,422,424)  $  8,701,000  $  8,701,000 
Short-term investments held as collateral for loaned         
securities with yields ranging from 5.27% to 5.44%         
and due dates ranging from August 1, 2006 to         
August 23, 2006 (d)    348,597,743    348,477,847 
 
Total short-term investments (cost $357,178,847)      $  357,178,847 
 
 
TOTAL INVESTMENTS         
Total investments (cost $2,786,036,541)      $  2,781,350,387 

* Percentages indicated are based on net assets of $2,424,801,117.

† Non-income-producing security.

(S) Securities on loan, in part or in entirety, at July 31, 2006.

(d) See Note 1 to the financial statements.

ADR after the name of a foreign holding stands for American Depository Receipts, representing ownership of foreign securities on deposit with a custodian bank.

The accompanying notes are an integral part of these financial statements.

38

Statement of assets and liabilities 7/31/06

ASSETS   
 
Investment in securities, at value, including $337,834,964 of securities on loan (Note 1):   
Unaffiliated issuers (identified cost $2,786,036,541)  $ 2,781,350,387 
Cash  657 
Dividends, interest and other receivables  1,110,875 
Receivable for shares of the fund sold  2,223,140 
Receivable for securities sold  14,571,700 
Total assets  2,799,256,759 
 
LIABILITIES   
 
Payable for securities purchased  14,423,469 
Payable for shares of the fund repurchased  6,083,462 
Payable for compensation of Manager (Notes 2 and 5)  3,380,421 
Payable for investor servicing and custodian fees (Note 2)  527,296 
Payable for Trustee compensation and expenses (Note 2)  401,952 
Payable for administrative services (Note 2)  3,611 
Payable for distribution fees (Note 2)  757,886 
Collateral on securities loaned, at value (Note 1)  348,477,847 
Other accrued expenses  399,698 
Total liabilities  374,455,642 
Net assets  $ 2,424,801,117 
 
REPRESENTED BY   
 
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)  $ 5,808,633,395 
Accumulated net realized loss on investments (Note 1)  (3,379,146,124) 
Net unrealized depreciation of investments  (4,686,154) 
Total — Representing net assets applicable to capital shares outstanding  $ 2,424,801,117 

(Continued on next page)

39

Statement of assets and liabilities (Continued)

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE   
 
Net asset value and redemption price per class A share   
($1,773,482,875 divided by 173,005,133 shares)  $10.25 
Offering price per class A share   
(100/94.75 of $10.25)*  $10.82 
Net asset value and offering price per class B share   
($369,959,055 divided by 41,607,330 shares)**  $8.89 
Net asset value and offering price per class C share   
($37,905,552 divided by 3,908,902 shares)**  $9.70 
Net asset value and redemption price per class M share   
($28,988,890 divided by 3,056,598 shares)  $9.48 
Offering price per class M share   
(100/96.75 of $9.48)*  $9.80 
Net asset value, offering price and redemption price per class R share   
($825,811 divided by 81,127 shares)  $10.18 
Net asset value, offering price and redemption price per class Y share   
($213,638,934 divided by 20,008,699 shares)  $10.68 

* On single retail sales of less than $50,000. On sales of $50,000 or more 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.

40

Statement of operations Year ended 7/31/06

INVESTMENT INCOME   
 
Dividends (net of foreign tax of $72,053)  $ 20,507,493 
Interest (including interest income of $1,134,272   
from investments in affiliated issuers) (Note 5)  1,248,149 
Securities lending  594,843 
Total investment income  22,350,485 
 
EXPENSES   
 
Compensation of Manager (Note 2)  14,136,336 
Investor servicing fees (Note 2)  7,285,460 
Custodian fees (Note 2)  292,982 
Trustee compensation and expenses (Note 2)  103,461 
Administrative services (Note 2)  54,519 
Distribution fees — Class A (Note 2)  4,905,677 
Distribution fees — Class B (Note 2)  4,741,081 
Distribution fees — Class C (Note 2)  403,551 
Distribution fees — Class M (Note 2)  272,294 
Distribution fees — Class R (Note 2)  2,738 
Other  758,138 
Non-recurring costs (Notes 2 and 6)  39,461 
Costs assumed by Manager (Notes 2 and 6)  (39,461) 
Fees waived and reimbursed by Manager or affiliate (Notes 5 and 6)  (2,163,340) 
Total expenses  30,792,897 
Expense reduction (Note 2)  (1,356,557) 
Net expenses  29,436,340 
Net investment loss  (7,085,855) 
Net realized gain on investments (Notes 1 and 3)  498,087,058 
Net realized loss on futures contracts (Note 1)  (353,159) 
Net unrealized depreciation of investments   
and futures contracts during the year  (439,805,314) 
Net gain on investments  57,928,585 
Net increase in net assets resulting from operations  $ 50,842,730 

The accompanying notes are an integral part of these financial statements.

41

Statement of changes in net assets

INCREASE (DECREASE) IN NET ASSETS     
  Year ended  Year ended 
  7/31/06  7/31/05 
Operations:     
Net investment loss  $ (7,085,855)  $ (18,874,951) 
Net realized gain on investments  497,733,899  384,975,128 
Net unrealized appreciation (depreciation) of investments  (439,805,314)  277,335,986 
Net increase in net assets resulting from operations  50,842,730  643,436,163 
Redemption fees (Note 1)  8,298  9,823 
Decrease from capital share transactions (Note 4)  (499,876,032)  (581,589,475) 
Total increase (decrease) in net assets  (449,025,004)  61,856,511 
 
NET ASSETS     
 
Beginning of year  2,873,826,121  2,811,969,610 
End of year  $2,424,801,117  $2,873,826,121 

The accompanying notes are an integral part of these financial statements.

42

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43

Financial highlights (For a common share outstanding throughout the period)

INVESTMENT OPERATIONS:              RATIOS AND SUPPLEMENTAL DATA:   
      Net        Total      Ratio of net   
  Net asset    realized and  Total    Net asset  return  Net  Ratio of  investment   
  value,  Net  unrealized  from    value,  at net  assets,  expenses to  income (loss)    Portfolio   
  beginning      investment        gain (loss) on    investment    Redemption   end          asset  end of period  average net    to average  turnover 
Period ended  of period  income (loss)(a)  investments  operations  fees  of period  value (%)(b)    (in thousands)     assets (%)(c)  net assets (%)  (%) 
 
CLASS A                       
July 31, 2006  $10.11  (.01)(d,e)  .15  .14  —(f )  $10.25  1.39(e)  $1,773,483  .99(d,e)  (.13)(d,e)  110.50 
July 31, 2005  8.04  (.05)(d,g)  2.12  2.07  —(f )   10.11  25.75  1,996,475  1.10(d)  (.51)(d,g)  73.81 
July 31, 2004  7.12  (.05)(d)  .97  .92  —(f)   8.04  12.92  1,798,906  1.08(d)  (.60)(d)  77.95 
July 31, 2003  6.30  (.03)  .85  .82  —  7.12  13.02  2,238,709  1.09  (.54)  64.83 
July 31, 2002  9.22  (.04)  (2.88)  (2.92)  —  6.30  (31.67)  2,563,995  1.00  (.56)  89.19 
 
CLASS B                       
July 31, 2006  $8.83  (.08)(d,e)  .14  .06  —(f )   $8.89  .68(e)  $369,959  1.74(d,e)  (.88)(d,e)  110.50 
July 31, 2005  7.08  (.10)(d,g)  1.85  1.75  —(f )   8.83  24.72  539,589  1.85(d)  (1.27)(d,g)  73.81 
July 31, 2004  6.32  (.10)(d)  .86  .76  —(f )  7.08  12.03  674,172  1.83(d)  (1.35)(d)  77.95 
July 31, 2003  5.63  (.07)  .76  .69  —  6.32  12.26  842,635  1.84  (1.29)  64.83 
July 31, 2002  8.30  (.09)  (2.58)  (2.67)  —  5.63  (32.17)  913,467  1.75  (1.31)  89.19 
 
CLASS C                       
July 31, 2006  $9.63  (.09)(d,e)  .16  .07  —(f )   $9.70  .73(e)  $37,906  1.74(d,e)  (.88)(d,e)  110.50 
July 31, 2005  7.72  (.11)(d,g)  2.02  1.91  —(f )  9.63  24.74  38,881  1.85(d)  (1.26)(d,g)  73.81 
July 31, 2004  6.89  (.10)(d)  .93  .83  —(f )  7.72  12.05  36,770  1.83(d)  (1.35)(d)  77.95 
July 31, 2003  6.14  (.08)  .83  .75  —  6.89  12.22  48,585  1.84  (1.29)  64.83 
July 31, 2002  9.05  (.10)  (2.81)  (2.91)  —  6.14  (32.15)  52,939  1.75  (1.31)  89.19 
 
CLASS M                       
July 31, 2006  $9.40  (.06)(d,e)  .14  .08  —(f )  $9.48  .85(e)  $28,989  1.49(d,e)  (.63)(d,e)  110.50 
July 31, 2005  7.51  (.08)(d,g)  1.97  1.89  —(f )  9.40  25.17  41,068  1.60(d)  (1.01)(d,g)  73.81 
July 31, 2004  6.69  (.08)(d)  .90  .82  —(f)   7.51  12.26  44,375  1.58(d)  (1.10)(d)  77.95 
July 31, 2003  5.95  (.06)  .80  .74  —  6.69  12.44  60,957  1.59  (1.04)  64.83 
July 31, 2002  8.74  (.08)  (2.71)  (2.79)  —  5.95  (31.92)  73,816  1.50  (1.06)  89.19 
 
CLASS R                       
July 31, 2006  $10.06  (.04)(d,e)  .16  .12  —(f )  $10.18  1.19(e)  $826  1.24(d,e)  (.35)(d,e)  110.50 
July 31, 2005  8.02  (.07)(d,g)  2.11  2.04  —(f)   10.06  25.44  248  1.35(d)  (.73)(d,g)  73.81 
July 31, 2004  7.12  (.06)(d)  .96  .90  —(f )  8.02  12.64  37  1.33(d)  (.88)(d)  77.95 
July 31, 2003†  6.14  (.03)  1.01  .98  —  7.12  15.96*  1  .71*  (.42)*  64.83 
 
CLASS Y                       
July 31, 2006  $10.50  .01(d,e)  .17  .18  —(f )  $10.68  1.71(e)  $213,639  .74(d,e)  .12(d,e)  110.50 
July 31, 2005  8.33  (.02)(d,g)  2.19  2.17  —(f )  10.50  26.05  257,564  .85(d)  (.26)(d,g)  73.81 
July 31, 2004  7.36  (.03)(d)  1.00  .97  —(f )  8.33  13.18  257,709  .83(d)  (.35)(d)  77.95 
July 31, 2003  6.50  (.02)  .88  .86  —  7.36  13.23  554,344  .84  (.28)  64.83 
July 31, 2002  9.48  (.03)  (2.95)  (2.98)  —  6.50  (31.43)  600,170  .75  (.32)  89.19 

See notes to financial highlights at the end of this section.

The accompanying notes are an integral part of these financial statements.

44  45 

Financial highlights (Continued)

* Not annualized.

† For the period January 21, 2003 (commencement of operations) to July 31, 2003.

(a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.

(b) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

(c) Includes amounts paid through expense offset and brokerage service arrangements (Note 2).

(d) Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Market Fund during the period. As a result of such waivers, the expenses of each class, as a percentage of its net assets, reflect a reduction of the following amounts (Note 5):

  7/31/06  7/31/05  7/31/04 
Class A  <0.01%  <0.01%  <0.01% 
Class B  <0.01  <0.01  <0.01 
Class C  <0.01  <0.01  <0.01 
Class M  <0.01  <0.01  <0.01 
Class R  <0.01  <0.01  <0.01 
Class Y  <0.01  <0.01  <0.01 

(e) Reflects a non-recurring reimbursement from Putnam Investments relating to the calculation of certain amounts paid by the fund to Putnam in previous years for transfer agent services, which amounted to the following amounts for the period ended July 31, 2006 (Note 6):

    Percentage of 
  Per share  net assets 
Class A  $0.01  0.08% 
Class B  0.01  0.08 
Class C  0.01  0.08 
Class M  0.01  0.08 
Class R  0.01  0.11 
Class Y  0.01  0.08 

(f) Amount represents less than $0.01 per share.

(g) Reflects a non-recurring accrual related to Putnam Management’s settlement with the SEC regarding brokerage allocation practices, which amounted to the following amounts (Note 6):

    Percentage of 
  Per share  net assets 
Class A  $<0.01  0.04% 
Class B  <0.01  0.03 
Class C  <0.01  0.04 
Class M  <0.01  0.03 
Class R  <0.01  0.05 
Class Y  <0.01  0.04 

The accompanying notes are an integral part of these financial statements.

46

Notes to financial statements 7/31/06

Note 1: Significant accounting policies

Putnam Vista Fund (the “fund”), a Massachusetts business trust, 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.

The fund offers class A, class B, class C, class M, class R and class Y shares. Class A and class M shares are sold with a maximum front-end sales charge of 5.25% and 3.25%, respectively, and generally do not pay a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge and are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class R shares, which are offered to qualified employee-benefit plans, are sold without a front-end sales charge or a contingent deferred sales charge. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, class M and class R shares, but do not bear a distribution fee. Class Y shares are sold to certain eligible purchasers including certain defined contribution plans (including corporate IRAs), bank trust departments and trust companies.

A 2.00% redemption fee may apply to any shares that are redeemed (either by selling or exchanging into another fund) within 5 days of purchase. The redemption fee is accounted for as an addition to paid-in-capital.

The redemption fee discussed above will be replaced, effective October 2, 2006, by a 1.00% redemption fee on any shares purchased on or after such date that are redeemed (either by selling or exchanging into another fund) within 7 days of purchase.

Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if the fund were liquidated. In addition, the Trustees declare separate dividends on each class of shares.

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund expects the risk of material loss to be remote.

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 accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

A) Security valuation Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets. If no sales are reported — as in the case of some securities traded over-the-counter — a security is valued at its last reported bid price. Many securities markets and exchanges outside

47

the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors, including movements in the U.S. securities markets. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate. Other investments, including certain restricted securities, are valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security at a given point in time and does not reflect an actual market price, which may be different by a material amount.

B) Joint trading account Pursuant to an exemptive order from the Securities and Exchange Commission, the fund may transfer uninvested cash balances, including cash collateral received under security lending arrangements, into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Investment Management, LLC (“Putnam Management”), the fund’s manager, an indirect wholly-owned subsidiary of Putnam, LLC. These balances may be invested in issues of high-grade short-term investments having maturities of up to 397 days for collateral received under security lending arrangements and up to 90 days for other cash investments.

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 coun-terparty. 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 recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.

Interest income is recorded on the accrual basis. Dividend income, net of applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair market value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain when the amounts are conclusively determined. All premiums/discounts are amortized/accreted on a yield-to-maturity basis.

E) Futures and options contracts The fund may use futures and options contracts to hedge against changes in the values of securities the fund owns or expects to purchase, or for other investment purposes. The fund may also write options on swaps or securities it owns or in which it may invest to increase its current returns.

The potential risk to the fund is that the change in value of futures and options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, or if the counterparty to the contract is unable to perform. Risks may exceed

48

amounts recognized on the statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.

Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.” Exchange traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. Options traded over-the-counter are valued using prices supplied by dealers. Futures and written option contracts outstanding at period end, if any, are listed after the fund’s portfolio.

F) Security lending The fund may lend securities, through its agents, to qualified borrowers in order to earn additional income. The loans are collateralized by cash and/or securities in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agents; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the statement of operations. At July 31, 2006, the value of securities loaned amounted to $337,834,964. The fund received cash collateral of $348,477,847 which is pooled with collateral of other Putnam funds into 24 issues of high grade short-term investments.

G) 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 of 1986 (the “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 Code, 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.

At July 31, 2006, the fund had a capital loss carryover of $3,378,389,692 available to the extent allowed by the Code to offset future net capital gain, if any. The amount of the carryover and the expiration dates are:

Loss Carryover  Expiration 
 
$1,928,415,930  July 31, 2010 
1,449,973,762  July 31, 2011 

H) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, 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. The difference includes temporary and permanent difference on net operating loss. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended July 31, 2006, the fund reclassified $7,085,855 to decrease undistributed net investment loss and $7,085,855 to decrease paid-in-capital.

The tax basis components of distributable earnings and the federal tax cost as of July 31, 2006, were as follows:

49

Unrealized appreciation  $ 193,388,949 
Unrealized depreciation  (198,831,533) 
  ———————— 
Net unrealized depreciation  (5,442,584) 
Capital loss carryforward  (3,378,389,692) 
Cost for federal income   
tax purposes  $ 2,786,792,971 

Note 2: Management fee, administrative
services and other transactions
Putnam Management is paid for management and investment advisory services 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.

Putnam Management has agreed to waive fees and reimburse expenses of the fund through July 31, 2007 to the extent necessary to ensure that the fund’s expenses do not exceed the simple average of the expenses of all front-end load funds viewed by Lipper Inc. as having the same investment classification or objective as the fund. The expense reimbursement is based on a comparison of the fund’s expenses with the average annualized operating expenses of the funds in its Lipper peer group for each calendar quarter during the fund’s last fiscal year, excluding 12b-1 fees and without giving effect to any expense offset and brokerage service arrangements that may reduce fund expenses. For the year ended July 31, 2006, Putnam Management did not waive any of its management fee from the fund.

For the year ended July 31, 2006, Putnam Management has assumed $39,461 of legal, shareholder servicing and communication, audit and Trustee fees incurred by the fund in connection with certain legal and regulatory matters (including those described in Note 6).

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, LLC. PFTC receives fees for custody services based on the fund’s asset level, the number of its security holdings and transaction volumes. Putnam Investor Services, a division of PFTC, provides investor servicing agent functions to the fund. Putnam Investor Services receives fees for investor servicing based on the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund. During the year ended July 31, 2006, the fund incurred $7,578,442 for these services.

The fund has entered into an arrangement with PFTC whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the fund’s expenses. The fund also reduced expenses through brokerage service arrangements. For the year ended July 31, 2006, the fund’s expenses were reduced by $1,356,557 under these arrangements.

Each independent Trustee of the fund receives an annual Trustee fee, of which $755, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees receive additional fees for attendance at certain committee meetings, industry seminars and for certain compliance-related matters. Trustees also are reimbursed for expenses they incur relating to their services as Trustees. George Putnam, III, who is not an independent Trustee, also receives the foregoing fees for his services as Trustee.

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 invested in certain Putnam funds until distribution in accordance with the Deferral Plan.

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The fund has adopted an unfunded noncontributory defined benefit pension plan (the “Pension Plan”) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. Pension expense for the fund is included in Trustee compensation and expenses in the statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

The fund has adopted distribution plans (the “Plans”) with respect to its class A, class B, class C, class M and class R shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management, a wholly-owned subsidiary of Putnam, LLC and Putnam Retail Management GP, Inc., for services provided and expenses incurred in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Retail Management at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, 0.75% and 0.50% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively.

For the year ended July 31, 2006, Putnam Retail Management, acting as underwriter, received net commissions of $85,802 and $1,402 from the sale of class A and class M shares, respectively, and received $523,079 and $2,191 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1.00% and 0.65% is assessed on certain redemptions of class A and class M shares, respectively. For the year ended July 31, 2006, Putnam Retail Management, acting as underwriter, received $472 and no monies on class A and class M redemptions, respectively.

Note 3: Purchases and sales of securities

During the year ended July 31, 2006, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $3,011,315,380 and $3,411,559,469, respectively. There were no purchases or sales of U.S. government securities.

Note 4: Capital shares

At July 31, 2006, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:

CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  31,915,275  $ 343,796,425 
Shares issued     
in connection     
with reinvestment     
of distributions  —  — 
  31,915,275  343,796,425 
Shares     
repurchased  (56,469,258)  (600,251,599) 
Net decrease  (24,553,983)  $(256,455,174) 
 
Year ended 7/31/05:     
Shares sold  43,148,995  $ 391,321,488 
Shares issued     
in connection     
with reinvestment     
of distributions  —  — 
  43,148,995  391,321,488 
Shares     
repurchased  (69,418,110)  (625,358,357) 
Net decrease  (26,269,115)  $(234,036,869) 

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CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  3,425,408  $ 32,106,894 
Shares issued     
in connection     
with reinvestment     
of distributions  —  — 
  3,425,408  32,106,894 
Shares     
repurchased  (22,917,122)  (212,597,965) 
Net decrease  (19,491,714)  $(180,491,071) 
 
Year ended 7/31/05:     
Shares sold  5,448,263  $ 43,249,540 
Shares issued     
in connection     
with reinvestment     
of distributions  —  — 
  5,448,263  43,249,540 
Shares     
repurchased  (39,615,569)  (313,250,306) 
Net decrease  (34,167,306)  $(270,000,766) 
 
CLASS C  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  837,263  $ 8,540,324 
Shares issued     
in connection     
with reinvestment     
of distributions  —  — 
  837,263  8,540,324 
Shares     
repurchased  (965,477)  (9,828,062) 
Net decrease  (128,214)  $ (1,287,738) 
 
Year ended 7/31/05:     
Shares sold  728,734  $ 6,374,583 
Shares issued     
in connection     
with reinvestment     
of distributions  —  — 
  728,734  6,374,583 
Shares     
repurchased  (1,456,256)  (12,604,284) 
Net decrease  (727,522)  $ (6,229,701) 

CLASS M  Shares  Amount                     
 
Year ended 7/31/06:       
Shares sold  409,846  $ 4,104,606 
Shares issued       
in connection       
with reinvestment       
of distributions  —  — 
  409,846  4,104,606 
Shares       
repurchased  (1,724,499)  (17,083,657) 
Net decrease  (1,314,653)  $(12,979,051) 
 
Year ended 7/31/05:       
Shares sold  863,745  $ 7,233,467 
Shares issued       
in connection       
with reinvestment       
of distributions  —  — 
  863,745  7,233,467 
Shares       
repurchased  (2,401,790)  (20,044,225) 
Net decrease  (1,538,045)  $(12,810,758) 
 
CLASS R  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  105,027  $1,119,635 
Shares issued       
in connection       
with reinvestment       
of distributions  —  — 
  105,027  1,119,635 
Shares       
repurchased  (48,511)  (551,680) 
Net increase  56,516  $ 567,955  
 
Year ended 7/31/05:       
Shares sold  25,574  $ 229,101  
Shares issued       
in connection       
with reinvestment       
of distributions  —  — 
  25,574  229,101 
Shares       
repurchased  (5,609)  (50,632) 
Net increase  19,965  $  178,469 

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CLASS Y  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  5,407,159  $ 60,290,791 
Shares issued     
in connection     
with reinvestment     
of distributions  —  — 
  5,407,159  60,290,791 
Shares     
repurchased  (9,930,461)  (109,521,744) 
Net decrease  (4,523,302)  $ (49,230,953) 
 
Year ended 7/31/05:     
Shares sold  8,151,981  $ 75,401,917 
Shares issued     
in connection     
with reinvestment     
of distributions  —  — 
  8,151,981  75,401,917 
Shares     
repurchased  (14,563,230)  (134,091,767) 
Net decrease  (6,411,249)  $ (58,689,850) 

Note 5: Investment in Putnam Prime
Money Market Fund

Pursuant to an exemptive order from the Securities and Exchange Commission, the fund invests in Putnam Prime Money Market Fund, an open-end management investment company managed by Putnam Management. Management fees paid by the fund are reduced by an amount equal to the management and administrative services fees paid by Putnam Prime Money Market Fund with respect to assets invested by the fund in Putnam Prime Money Market Fund. For the year ended July 31, 2006, management fees paid were reduced by $34,462 relating to the fund’s investment in Putnam Prime Money Market Fund. Income distributions earned by the fund are recorded as income in the statement of operations and totaled $1,134,272 for the year ended July 31, 2006. During the year ended July 31, 2006, cost of purchases and cost of sales of investments in Putnam Prime Money Market Fund aggregated $564,283,809 and $675,225,197, respectively.

Note 6: Regulatory matters and litigation

Putnam Management has entered into agreements with the Securities and Exchange Commission and the Massachusetts Securities Division settling charges connected with excessive short-term trading by Putnam employees and, in the case of the charges brought by the Massachusetts Securities Division, by participants in some Putnam-administered 401(k) plans. Pursuant to these settlement agreements, Putnam Management will pay a total of $193.5 million in penalties and restitution, with $153.5 million being paid to certain open-end funds and their shareholders. The amount will be allocated to shareholders and funds pursuant to a plan developed by an independent consultant, and will be paid following approval of the plan by the SEC and the Massachusetts Securities Division.

The Securities and Exchange Commission’s and Massachusetts Securities Division’s allegations and related matters also serve as the general basis for numerous lawsuits, including purported class action lawsuits filed against Putnam Management and certain related parties, including certain Putnam funds. Putnam Management will bear any costs incurred by Putnam funds in connection with these lawsuits. Putnam Management believes that the likelihood that the pending private lawsuits and purported class action lawsuits will have a material adverse financial impact on the fund is remote, and the pending actions are not likely to materially affect its ability to provide investment management services to its clients, including the Putnam funds.

Pursuant to a settlement with the Securities and Exchange Commission relating to Putnam Management’s brokerage allocation practices, on October 13, 2005 the fund received $1,011,756 in proceeds paid by Putnam Management. The fund had accrued a receivable for this amount in the prior fiscal year.

During the period, the fund received $2,128,878 from Putnam to address issues relating to the calculation of certain amounts paid by the Putnam

53

mutual funds to Putnam for transfer agent services. This amount is included in Fees waived and reimbursed by Manager or affiliate on the Statement of operations. Review of this matter is ongoing and the amount received by the fund may be adjusted in the future. Such adjustment is not expected to be material.

Putnam Management and Putnam Retail Management are named as defendants in a civil suit in which the plaintiffs allege that the management and distribution fees paid by certain Putnam funds were excessive and seek recovery under the Investment Company Act of 1940. Putnam Management and Putnam Retail Management have contested the plaintiffs’ claims and the matter is currently pending in the U.S. District Court for the District of Massachusetts. Based on currently available information, Putnam Management believes that this action is without merit and that it is unlikely to have a material effect on Putnam Management’s and Putnam Retail Management’s ability to provide services to their clients, including the fund.

Note 7: New accounting pronouncement

In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (the “Interpretation”). The Interpretation prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken by a filer in the filer’s tax return. The Interpretation will become effective for fiscal years beginning after December 15, 2006 but will also apply to tax positions reflected in the fund’s financial statements as of that date. No determination has been made whether the adoption of the Interpretation will require the fund to make any adjustments to its net assets or have any other effect on the fund’s financial statements.

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Federal tax information
(Unaudited)

The Form 1099 you receive in January 2007 will show the tax status of all distributions paid to your account in calendar 2006.

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Brokerage commissions
(Unaudited)

Brokerage commissions are paid to firms that execute trades on behalf of your fund. When choosing these firms, Putnam is required by law to seek the best execution of the trades, taking all relevant factors into consideration, including expected quality of execution and commission rate. Listed below are the largest relationships based upon brokerage commissions for your fund and the other funds in Putnam’s U.S. Small- and Mid-Cap group for the year ended July 31, 2006. The other Putnam mutual funds in this group are Putnam Capital Opportunities Fund, Putnam Discovery Growth Fund, Putnam Mid Cap Value Fund, Putnam New Opportunities Fund, Putnam OTC & Emerging Growth Fund, Putnam Small Cap Growth Fund, Putnam Small Cap Value Fund, Putnam VT Capital Opportunities Fund, Putnam VT Discovery Growth Fund, Putnam VT Mid Cap Value Fund, Putnam VT New Opportunities Fund, Putnam VT OTC & Emerging Growth Fund, Putnam VT Small Cap Value Fund, and Putnam VT Vista Fund.

The top five firms that received brokerage commissions for trades executed for the U.S. Small-and Mid-Cap group are (in descending order) Citigroup Global Markets, Goldman Sachs, Lehman Brothers, Credit Suisse First Boston, and Bear Stearns & Company. Commissions paid to these firms together represented approximately 37% of the total brokerage commissions paid for the year ended July 31, 2006.

Commissions paid to the next 10 firms together represented approximately 38% of the total brokerage commissions paid during the period. These firms are (in alphabetical order) Bank of America, CIBC World Markets, Deutsche Bank Securities, JP Morgan Clearing, Merrill Lynch, Morgan Stanley Dean Witter, RBC Capital Markets, SG Cowen, UBS Warburg, and Wachovia Securities.

Additional information about brokerage commissions is available on the Securities and Exchange Commission (SEC) Web site at www.sec.gov. Putnam funds disclose commissions by firm to the SEC in semiannual filings on Form N-SAR.

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About the Trustees

Jameson A. Baxter (Born 1943), Trustee since 1994, Vice Chairman since 2005

Ms. Baxter is the President of Baxter Associates, Inc., a private investment firm that she founded in 1986.

Ms. Baxter serves as a Director of ASHTA Chemicals, Inc., Banta Corporation (a printing and digital imaging firm), Ryerson Tull, Inc. (a steel service corporation), the Mutual Fund Directors Forum, Advocate Health Care and BoardSource, formerly the National Center for Nonprofit Boards. She is Chairman Emeritus of the Board of Trustees, Mount Holyoke College, having served as Chairman for five years and as a board member for thirteen years. Until 2002, Ms. Baxter was a Director of Intermatic Corporation (a manufacturer of energy control products).

Ms. Baxter has held various positions in investment banking and corporate finance, including Vice President and Principal of the Regency Group, and Vice President of and Consultant to First Boston Corporation. She is a graduate of Mount Holyoke College.

Charles B. Curtis (Born 1940), Trustee since 2001

Mr. Curtis is President and Chief Operating Officer of the Nuclear Threat Initiative (a private foundation dealing with national security issues) and serves as Senior Advisor to the United Nations Foundation.

Mr. Curtis is a member of the Council on Foreign Relations and the Trustee Advisory Council of the Applied Physics Laboratory, Johns Hopkins University. Until 2003, Mr. Curtis was a member of the Electric Power Research Institute Advisory Council and the University of Chicago Board of Governors for Argonne National Laboratory. Prior to 2002, Mr. Curtis was a Member of the Board of Directors of the Gas Technology Institute and the Board of Directors of the Environment and Natural Resources Program Steering Committee, John F. Kennedy School of Government, Harvard University. Until 2001, Mr. Curtis was a member of the Department of Defense Policy Board and Director of EG&G Technical Services, Inc. (a fossil energy research and development support company).

From August 1997 to December 1999, Mr. Curtis was a Partner at Hogan & Hartson L.L.P., a Washington, D.C. law firm. Prior to May 1997, Mr. Curtis was Deputy Secretary of Energy and Under Secretary of the U.S. Department of Energy. He served as Chairman of the Federal Energy Regulatory Commission from 1977 to 1981 and has held positions on the staff of the U.S. House of Representatives, the U.S. Treasury Department, and the SEC.

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Myra R. Drucker (Born 1948), Trustee since 2004

Ms. Drucker is Chair of the Board of Trustees of Commonfund (a not-for-profit firm specializing in asset management for educational endowments and foundations), Vice Chair of the Board of Trustees of Sarah Lawrence College, and a member of the Investment Committee of the Kresge Foundation (a charitable trust). She is also a director of New York Stock Exchange LLC, a wholly-owned subsidiary of the publicly-traded NYSE Group, Inc. She is an advisor to Hamilton Lane LLC and RCM Capital Management (investment management firms).

Ms. Drucker is an ex-officio member of the New York Stock Exchange (NYSE) Pension Managers Advisory Committee, having served as Chair for seven years and a member of the Executive Committee of the Committee on Investment of Employee Benefit Assets.

Until August 31, 2004, Ms. Drucker was Managing Director and a member of the Board of Directors of General Motors Asset Management and Chief Investment Officer of General Motors Trust Bank. Ms. Drucker also served as a member of the NYSE Corporate Accountability and Listing Standards Committee and the NYSE/NASD IPO Advisory Committee.

Prior to joining General Motors Asset Management in 2001, Ms. Drucker held various executive positions in the investment management industry. Ms. Drucker served as Chief Investment Officer of Xerox Corporation (a technology and service company in the document industry), where she was responsible for the investment of the company’s pension assets. Ms. Drucker was also Staff Vice President and Director of Trust Investments for International Paper (a paper, paper distribution, packaging and forest products company) and previously served as Manager of Trust Investments for Xerox Corporation. Ms. Drucker received a B.A. degree in Literature and Psychology from Sarah Lawrence College and pursued graduate studies in economics, statistics and portfolio theory at Temple University.

John A. Hill (Born 1942), Trustee since 1985 and Chairman since 2000

Mr. Hill is Vice Chairman of First Reserve Corporation, a private equity buyout firm that specializes in energy investments in the diversified worldwide energy industry.

Mr. Hill is a Director of Devon Energy Corporation, TransMontaigne Oil Company and various private companies controlled by First Reserve Corporation, as well as Chairman of TH Lee, Putnam Investment Trust (a closed-end investment company advised by an affiliate of Putnam Management). He is also a Trustee of Sarah Lawrence College. Until 2005, he was a Director of Continuum Health Partners of New York.

Prior to acquiring First Reserve Corporation in 1983, Mr. Hill held executive positions in investment banking and investment management with several firms and with the federal government, including Deputy Associate Director of the Office of Management and Budget and Deputy

58

Director of the Federal Energy Administration. He is active in various business associations, including the Economic Club of New York, and lectures on energy issues in the United States and Europe. Mr. Hill holds a B.A. degree in Economics from Southern Methodist University and pursued graduate studies there as a Woodrow Wilson Fellow.

Paul L. Joskow (Born 1947), Trustee since 1997

Dr. Joskow is the Elizabeth and James Killian Professor of Economics and Management, and Director of the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology.

Dr. Joskow serves as a Director of National Grid plc (a UK-based holding company with interests in electric and gas transmission and distribution and telecommunications infrastructure) and TransCanada Corporation (an energy company focused on natural gas transmission and power services). He also serves on the Board of Overseers of the Boston Symphony Orchestra. Prior to February 2005, he served on the board of the Whitehead Institute for Biomedical Research (a non-profit research institution) and has been President of the Yale University Council since 1993. Prior to February 2002, he was a Director of State Farm Indemnity Company (an automobile insurance company), and, prior to March 2000, he was a Director of New England Electric System (a public utility holding company).

Dr. Joskow has published five books and numerous articles on topics in industrial organization, government regulation of industry, and competition policy. He is active in industry restructuring, environmental, energy, competition and privatization policies — serving as an advisor to governments and corporations worldwide. Dr. Joskow holds a Ph.D. and M. Phil from Yale University and a B.A. from Cornell University.

Elizabeth T. Kennan (Born 1938), Trustee since 1992

Dr. Kennan is a Partner of Cambus-Kenneth Farm (thoroughbred horse and cattle breeding). She is President Emeritus of Mount Holyoke College.

Dr. Kennan served as Chairman and is now Lead Director of Northeast Utilities. Until 2005, she was a Director of Talbots, Inc. She has served as Director on a number of other boards, including Bell Atlantic, Chastain Real Estate, Shawmut Bank, Berkshire Life Insurance and Kentucky Home Life Insurance. She is a Trustee of the National Trust for Historic Preservation, of Centre College and of Midway College in Midway, Kentucky. Until 2006, she was a member of The Trustees of Reservations. Dr. Kennan has served on the oversight committee of the Folger Shakespeare Library, as President of Five Colleges Incorporated, as a Trustee of Notre Dame University and is active in various educational and civic associations.

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As a member of the faculty of Catholic University for twelve years, until 1978, Dr. Kennan directed the post-doctoral program in Patristic and Medieval Studies, taught history and published numerous articles. Dr. Kennan holds a Ph.D. from the University of Washington in Seattle, an M.S. from St. Hilda’s College at Oxford University and an A.B. from Mount Holyoke College. She holds several honorary doctorates.

Robert E. Patterson (Born 1945), Trustee since 1984

Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman of Cabot Properties, Inc. (a private equity firm investing in commercial real estate).

Mr. Patterson serves as Chairman Emeritus and Trustee of the Joslin Diabetes Center and as a Director of Brandywine Trust Group, LLC. Prior to June 2003, he was a Trustee of Sea Education Association. Prior to December 2001, he was President and Trustee of Cabot Industrial Trust (a publicly traded real estate investment trust). Prior to February 1998, he was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership (a registered investment adviser involved in institutional real estate investments). Prior to 1990, he served as Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, Inc. (the predecessor company of Cabot Partners).

Mr. Patterson practiced law and held various positions in state government and was the founding Executive Director of the Massachusetts Industrial Finance Agency. Mr. Patterson is a graduate of Harvard College and Harvard Law School.

W. Thomas Stephens (Born 1942), Trustee since 1997

Mr. Stephens is Chairman and Chief Executive Officer of Boise Cascade, L.L.C. (a paper, forest products and timberland assets company).

Until 2005, Mr. Stephens was a director of TransCanadaPipelines, Ltd. Until 2004, Mr. Stephens was a Director of Xcel Energy Incorporated (a public utility company), Qwest Communications, and Norske Canada, Inc. (a paper manufacturer). Until 2003, Mr. Stephens was a Director of Mail-Well, Inc. (a diversified printing company). He served as Chairman of Mail-Well until 2001 and as CEO of MacMillan-Bloedel, Ltd. (a forest products company) until 1999.

Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of Johns Manville Corporation. He holds B.S. and M.S. degrees from the University of Arkansas.

60

Richard B. Worley (Born 1945), Trustee since 2004

Mr. Worley is Managing Partner of Permit Capital LLC, an investment management firm.

Mr. Worley serves on the Executive Committee of the University of Pennsylvania Medical Center, is a Trustee of The Robert Wood Johnson Foundation (a philanthropic organization devoted to health care issues) and is a Director of The Colonial Williamsburg Foundation (a historical preservation organization). Mr. Worley also serves on the investment committees of Mount Holyoke College and World Wildlife Fund (a wildlife conservation organization).

Prior to joining Permit Capital LLC in 2002, Mr. Worley served as Chief Strategic Officer of Morgan Stanley Investment Management. He previously served as President, Chief Executive Officer and Chief Investment Officer of Morgan Stanley Dean Witter Investment Management and as a Managing Director of Morgan Stanley, a financial services firm. Mr. Worley also was the Chairman of Miller Anderson & Sherrerd, an investment management firm.

Mr. Worley holds a B.S. degree from University of Tennessee and pursued graduate studies in economics at the University of Texas.

Charles E. Haldeman, Jr.* (Born 1948), Trustee since 2004

Mr. Haldeman is President and Chief Executive Officer of Putnam, LLC (“Putnam Investments”). He is a member of Putnam Investments’ Executive Board of Directors and Advisory Council. Prior to November 2003, Mr. Haldeman served as Co-Head of Putnam Investments’ Investment Division.

Prior to joining Putnam Investments in 2002, Mr. Haldeman held executive positions in the investment management industry. He previously served as Chief Executive Officer of Delaware Investments and President & Chief Operating Officer of United Asset Management. Mr. Haldeman was also a partner and director of Cooke & Bieler, Inc. (an investment management firm).

Mr. Haldeman currently serves on the Board of Governors of the Investment Company Institute and as a Trustee of Dartmouth College, and he is a member of the Partners HealthCare Systems Investment Committee. He is a graduate of Dartmouth College, Harvard Law School and Harvard Business School. Mr. Haldeman is also a Chartered Financial Analyst (CFA) charterholder.

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George Putnam, III* (Born 1951), Trustee since 1984 and President since 2000

Mr. Putnam is President of New Generation Research, Inc. (a publisher of financial advisory and other research services), and of New Generation Advisers, Inc. (a registered investment advisor to private funds).

Mr. Putnam founded the New Generation companies in 1986. Mr. Putnam is a Director of The Boston Family Office, LLC (a registered investment adviser). He is a Trustee of St. Mark’s School and Shore Country Day School, and until 2002 was a Trustee of the Sea Education Association.

Mr. Putnam previously worked as an attorney with the law firm of Dechert LLP (formerly known as Dechert Price & Rhoads) in Philadelphia. He is a graduate of Harvard College, Harvard Business School and Harvard Law School.

The address of each Trustee is One Post Office Square, Boston, MA 02109.

As of July 31, 2006, there were 108 Putnam Funds. All Trustees serve as Trustees of all Putnam funds.

Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 72, death, or removal.

* Trustees who are or may be deemed to be “interested persons” (as defined in the Investment Company Act of 1940) of the fund, Putnam Management, Putnam Retail Management, or Marsh & McLennan Companies, Inc., the parent company of Putnam, LLC and its affiliated companies. Messrs. Haldeman and Putnam, III are deemed “interested persons” by virtue of their positions as officers of the fund, Putnam Management or Putnam Retail Management and as shareholders of Marsh & McLennan Companies, Inc. Mr. Putnam, III is the President of your fund and each of the other Putnam funds. Mr. Haldeman is President and Chief Executive Officer of Putnam Investments.

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Officers

In addition to George Putnam, III, the other officers of the fund are shown below:

Charles E. Porter (Born 1938)  Richard S. Robie, III (Born 1960) 
Executive Vice President, Associate Treasurer,  Vice President 
Compliance Liaison and Principal  Since 2004 
Executive Officer 
Since 1989  Senior Managing Director, Putnam 
Investments, Putnam Management 
Jonathan S. Horwitz (Born 1955)  and Putnam Retail Management. Prior 
Senior Vice President and Treasurer  to 2003, Senior Vice President, United 
Since 2004  Asset Management Corporation 
Prior to 2004, Managing Director, 
Francis J. McNamara, III (Born 1955) 
Putnam Investments  Vice President and Chief Legal Officer 
Since 2004 
Steven D. Krichmar (Born 1958) 
Vice President and Principal Financial Officer  Senior Managing Director, Putnam 
Since 2002  Investments, Putnam Management 
and Putnam Retail Management. Prior 
Senior Managing Director, Putnam  to 2004, General Counsel, State Street 
Investments. Prior to July 2001, Partner,  Research & Management Company 
PricewaterhouseCoopers LLP 
Charles A. Ruys de Perez (Born 1957) 
Michael T. Healy (Born 1958)  Vice President and Chief Compliance Officer 
Assistant Treasurer and Principal  Since 2004 
Accounting Officer 
Since 2000  Managing Director, Putnam Investments 

Managing Director, Putnam Investments  Mark C. Trenchard (Born 1962) 
Vice President and BSA Compliance Officer 
Beth S. Mazor (Born 1958)  Since 2002 
Vice President 
Since 2002 Managing Director, Putnam Investments 
Managing Director, Putnam Investments  Judith Cohen (Born 1945) 
Vice President, Clerk and Assistant Treasurer 
James P. Pappas (Born 1953)  Since 1993 
Vice President 
Since 2004  Wanda M. McManus (Born 1947) 
Vice President, Senior Associate Treasurer 
Managing Director, Putnam Investments  and Assistant Clerk 
and Putnam Management. During 2002,  Since 2005 
Chief Operating Officer, Atalanta/Sosnoff 
Management Corporation; prior to 2001,  Nancy E. Florek (Born 1957) 
President and Chief Executive Officer,  Vice President, Assistant Clerk, 
UAM Investment Services, Inc.  Assistant Treasurer and Proxy Manager 
Since 2005 
 

The address of each Officer is One Post Office Square, Boston, MA 02109.

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Fund information

Founded over 65 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 mutual funds in growth, value, blend, fixed income, and international.

Investment Manager  George Putnam, III  Francis J. McNamara, III 
Putnam Investment  W. Thomas Stephens  Vice President and 
Management, LLC  Richard B. Worley  Chief Legal Officer 
One Post Office Square 
Boston, MA 02109  Officers  Charles A. Ruys de Perez 
George Putnam, III  Vice President and 
President  Chief Compliance Officer 
Marketing Services 
Putnam Retail Management  Charles E. Porter  Mark C. Trenchard 
One Post Office Square  Executive Vice President,  Vice President and 
Boston, MA 02109  Associate Treasurer,  BSA Compliance Officer 
Compliance Liaison and 
Custodian  Principal Executive Officer  Judith Cohen 
Putnam Fiduciary  Vice President, Clerk and 
Trust Company  Jonathan S. Horwitz  Assistant Treasurer 
Senior Vice President 
Legal Counsel  and Treasurer  Wanda M. McManus 
Ropes & Gray LLP  Vice President, Senior Associate 
Steven D. Krichmar  Treasurer and Assistant Clerk 
Independent Registered  Vice President and 
Public Accounting Firm  Principal Financial Officer  Nancy E. Florek 
KPMG LLP  Vice President, Assistant Clerk, 
Michael T. Healy 
Trustees  Assistant Treasurer and  Assistant Treasurer and 
John A. Hill, Chairman  Principal Accounting Officer  Proxy Manager 
Jameson Adkins Baxter,   
Vice Chairman  Beth S. Mazor 
Charles B. Curtis  Vice President   
Myra R. Drucker   
Charles E. Haldeman, Jr.  James P. Pappas   
Paul L. Joskow  Vice President   
Elizabeth T. Kennan   
Robert E. Patterson  Richard S. Robie, III 
Vice President   
 

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, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit www.putnam.com. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.

64


Item 2. Code of Ethics:

(a) The fund’s principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund's investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers.

(c) None

Item 3. Audit Committee Financial Expert:

The Funds' Audit and Compliance Committee is comprised solely of Trustees who are "independent" (as such term has been defined by the Securities and Exchange Commission ("SEC") in regulations implementing Section 407 of the Sarbanes-Oxley Act (the "Regulations")). The Trustees believe that each of the members of the Audit and Compliance Committee also possess a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualify them for service on the Committee. In addition, the Trustees have determined that all members of the Funds' Audit and Compliance Committee meet the financial literacy requirements of the New York Stock Exchange's rules and that Mr. Patterson, Mr. Stephens and Mr. Hill qualify as "audit committee financial experts" (as such term has been defined by the Regulations) based on their review of their pertinent experience and education. Certain other Trustees, although not on the Audit and Compliance Committee, would also qualify as "audit committee financial experts." The SEC has stated that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit and Compliance Committee and the Board of Trustees in the absence of such designation or identification.

Item 4. Principal Accountant Fees and Services:

The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor:

Fiscal         
year  Audit  Audit-Related  Tax  All Other 
ended  Fees  Fees  Fees  Fees 
 
July 31, 2006  $53,310*  $--  $3,050  $1,716 
July 31, 2005  $30,978  $--  $2,778  $ - 

* Includes fees of $20,960 and $ - billed by the fund’s independent auditor to the fund for audit procedures necessitated by regulatory and litigation matters for the fiscal years ended July 31, 2006 and July 31, 2005, respectively. These fees were reimbursed to the fund by Putnam Investment Management, LLC (“Putnam Management”).

For the fiscal years ended July 31, 2006 and July 31, 2005, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $4,766 and $ 2,778 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund.

Audit Fees represent fees billed for the fund’s last two fiscal years.

Audit-Related Fees represent fees billed in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation.

Tax Fees represent fees billed in the fund’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities.

All Other Fees represent fees billed for services relating to the review of expense allocation methodology.

Pre-Approval Policies of the Audit and Compliance Committee. The Audit and Compliance Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds’ independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures.

The Audit and Compliance Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds’ independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one.

The following table presents fees billed by the fund’s independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.

Fiscal  Audit-    All  Total 
year  Related  Tax  Other  Non-Audit 
ended  Fees  Fees  Fees  Fees 
July 31,         
2006  $ -  $ -  $ -  $ - 
July         
30, 2005  $ -  $ -  $ -  $ - 

Item 5. Audit Committee of Listed Registrants

Not applicable

Item 6. Schedule of Investments:

The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.

Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management
Investment Companies:

Not applicable

Item 8. Portfolio Managers of Closed-End Investment Companies

Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and
Affiliated Purchasers:

Not applicable

Item 10. Submission of Matters to a Vote of Security Holders:

Not applicable

Item 11. Controls and Procedures:

(a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

(b) Changes in internal control over financial reporting: Not applicable

Item 12. Exhibits:

(a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith.

(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Putnam Vista Fund

By (Signature and Title):

/s/Michael T. Healy
Michael T. Healy
Principal Accounting Officer

Date: September 28, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title):

/s/Charles E. Porter
Charles E. Porter
Principal Executive Officer

Date: September 28, 2006

By (Signature and Title):

/s/Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Date: September 28, 2006