THE PUTNAM FUND FOR GROWTH AND INCOME
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1995 , AS REVISED MAY 1, 1995
This Statement of Additional Information is not a Prospectus and
is only authorized for distribution when accompanied or preceded
by the Prospectus of the Fund dated March 1, 1995, as revised
from time to time. This Statement contains information which may
be useful to investors but which is not included in the
Prospectus. If the Fund has more than one form of current
Prospectus, each reference to the Prospectus in this Statement
shall include all the Fund's Prospectuses, unless otherwise
noted. The Statement should be read together with the applicable
Prospectus. Investors may obtain a free copy of the applicable
Prospectus from Putnam Investor Services, Mailing address: P.O.
Box 41203, Providence, RI 02940-1203.
Part I of this Statement contains specific information about the
Fund. Part II includes information about the Fund and the other
Putnam funds.
<PAGE>
TABLE OF CONTENTS
PART I
INVESTMENT RESTRICTIONS OF THE FUND . . . . . . . . . . . . . .I-3
FUND CHARGES AND EXPENSES . . . . . . . . . . . . . . . . . . .I-6
INVESTMENT PERFORMANCE OF THE FUND. . . . . . . . . . . . . . I-10
ADDITIONAL OFFICERS OF THE FUND . . . . . . . . . . . . . . . I-20
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS. . . . . . . I-21
SECURITIES RATINGS. . . . . . . . . . . . . . . . . . . . . . I-22
PART II
MISCELLANEOUS INVESTMENT PRACTICES. . . . . . . . . . . . . . II-1
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-22
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . .II-27
DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . . . . .II-36
HOW TO BUY SHARES . . . . . . . . . . . . . . . . . . . . . .II-38
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . .II-49
INVESTOR SERVICES . . . . . . . . . . . . . . . . . . II- 49
SIGNATURE GUARANTEES. . . . . . . . . . . . . . . . . II- 55
SUSPENSION OF REDEMPTIONS . . . . . . . . . . . . . . II- 55
SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . II- 55
STANDARD PERFORMANCE MEASURES . . . . . . . . . . . . II- 56
COMPARISON OF PORTFOLIO PERFORMANCE . . . . . . . . . II- 57
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . II- 62
<PAGE>
THE PUTNAM FUND FOR GROWTH AND INCOME
STATEMENT OF ADDITIONAL INFORMATION
PART I
INVESTMENT RESTRICTIONS OF THE FUND
The Fund may not and will not:
(1) Purchase any security (except certain government securities)
if more than 5% of the value of the Fund's total net assets would
be invested in that security.
(2) Invest in securities of an issuer which, together with any
predecessor, has been in operation for less than three years, and
in equity securities of issuers for which market quotations are
not readily available (but excluding restricted securities
limited by restriction 6 below) if, as a result, more than 5% of
the Fund's net assets would then be invested in such securities.
(3) Borrow money in excess of 10% of its net assets (taken at
current value) and then only as a temporary measure for
extraordinary or emergency reasons and not for investment
purposes. (The Fund may borrow only from banks and immediately
after any such borrowing there must be an asset coverage (total
assets of the Fund including the amount borrowed less liabilities
other than such borrowings) of at least 300% of the amount of all
borrowings. In the event that, due to market decline or other
reasons, such asset coverage should at any time fall below 300%,
the Fund is required within three days not including Sundays and
holidays to reduce the amount of its borrowings to the extent
necessary to cause the asset coverage of such borrowings to be at
least 300%. If this should happen, the Fund may have to sell
securities at a time when it would be disadvantageous to do so.)
(4) Invest in any securities of any company, if to the knowledge
of the Fund officers and Trustees of the Fund and officers and
directors of Putnam Management who individually own more than
0.5% of the shares or securities of that company together own
more than 5%.
(5) Engage in margin transactions or short sales (but it may
make margin payments in connection with financial futures
contracts and related options).
(6) Purchase any security the disposition of which is restricted
under federal securities laws if as a result more than 15% of the
Fund's net assets, taken at current value, would be invested in
such securities, excluding restricted securities that have been
determined by the Trustees of the Fund (or the person designated
by them to make such determinations) to be readily marketable.
(7) Purchase any security if the Fund would then own more than
10% of the outstanding voting securities of any one issuer.
(8) Voluntarily pledge, mortgage, charge or hypothecate or
otherwise encumber in excess of 10% of its net assets in
connection with borrowings permitted by restriction 3 above.
(9) Invest for the purpose of exercising control or management.
(10) Make loans, except by purchases of securities of
corporations or associations and certain government securities,
by entry into repurchase agreements with respect to not more than
25% of its total assets, or through the lending of its portfolio
securities with respect to not more than 25% of its total assets.
(11) Concentrate more than 25% of the Fund's assets in any one
industry.
(12) Invest in real estate, commodities, or commodity contracts
except that it may purchase or sell financial futures contracts
and options thereon.
(13) Act as an underwriter except to the extent that, in
connection with the disposition of its portfolio securities, it
may be deemed to be an underwriter under certain federal
securities laws.
Investment restrictions 1-10 (other than restriction 6) above are
incorporated in the Fund's Agreement and Declaration of Trust and
consequently cannot be changed without an affirmative vote of the
holders of an absolute majority of the outstanding shares of the
Fund. Investment restrictions 11-13 are fundamental policies of
the Fund and cannot be changed without a "vote of a majority of
the outstanding voting securities" of the Fund.
The Trustees may not deal with the Fund as principal in the
purchase or sale of securities, or borrow money or property from
the Fund.
<PAGE>
IT IS CONTRARY TO THE FUND'S PRESENT POLICY, WHICH MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL, TO:
(1) Engage in puts, calls, straddles, spreads or any combination
thereof, except that the Fund may buy and sell put and call
options (and any combination therefor) on securities, on
financial futures contracts, and on securities indices.
(2) Buy or sell oil, gas, or other mineral leases, rights or
royalty contracts.
(3) Invest in (a) securities which at the time of such
investment are not readily marketable, (b) securities restricted
as to resale (excluding securities determined by the Trustees of
the Fund (or the person designated by the Trustees of the Fund to
make such determinations) to be readily marketable), and (c)
repurchase agreements maturing in more than seven days, if, as a
result, more than 15% of the Fund's net assets (taken at current
value) would be invested in securities described in (a), (b) and
(c) above.
(4) Invest in warrants if, as a result, such investments (valued
at the lower cost or market) would exceed 5% of the value of the
Fund's net assets; provided that not more than 2% of the Fund's
net assets may be invested in warrants not listed on the New York
or American Stock Exchanges.
(5) Invest in securities of any other registered open-end
investment companies, except as they may be acquired as part of a
merger or consolidation or acquisition of assets or by purchases
in the open market involving only customary brokers' commissions.
Although certain of the Fund's fundamental investment
restrictions permit the Fund to borrow money to a limited extent,
the Fund does not currently intend to do so and did not do so
last year.
The Fund has undertaken to a state securities authority that
the Fund will not purchase or sell real property (including
limited partnership interests in real property, but excluding
readily marketable interests in real estate investment trusts or
readily marketable securities of companies which invest in real
estate), except that the Fund may (a) purchase or sell real
estate used principally for its own office space, (b) purchase or
sell securities that are secured by interests in real estate or
(c) acquire real estate through then exercise of its rights as a
holder of obligations secured by real estate or interests therein
or sell real estate so acquired.
-------------------------
All percentage limitations on investments will apply at the time
of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of the Fund means
the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares
are represented at the meeting in person or by proxy.
FUND CHARGES AND EXPENSES
MANAGEMENT FEES
Under a Management Contract dated January 1, 1995, the Fund pays
a quarterly fee to Putnam Management based on the average net
assets of the Fund, as determined at the close of each business
day during the quarter, at an annual rate of 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, 0.390% of the next $5 billion and 0.380% of any excess
thereafter. For its 1992, 1993 and 1994 fiscal years (pursuant
to a management contract dated July 11, 1991, under which the
management fee payable to Putnam Management was paid at an annual
rate of 0.65% of the first $500 million of average net assets,
0.55% of the next $500 million, 0.50% of the next $500 million
and 0.45% of any amount over $1.5 billion), the Fund incurred
fees of $15,917,206, $25,777,982 and $38,730,186, respectively.
BROKERAGE COMMISSIONS
During fiscal 1992, 1993 and 1994, the Fund incurred brokerage
commissions aggregating $3,382,960, $11,628,610 and $13,898,577,
respectively, on agency transactions. In fiscal 1992, 1993 and
1994, the Fund incurred underwriting commissions aggregating
$11,026,060, $6,531,113 and $5,552,648, respectively, on
underwritten transactions. In fiscal 1994, Putnam Management, on
behalf of the Fund, placed agency and underwritten transactions
having an approximate aggregate dollar value of $7,584,533,455
(62.8% of the Fund's agency and underwritten transactions, on
which approximately $12,222,744 of commissions were paid) with
brokers and dealers to recognize research, statistical and
quotation services Putnam Management considered to be
particularly useful to it and its affiliates.
ADMINISTRATIVE EXPENSE REIMBURSEMENT
The Fund reimbursed Putnam Management $83,309 for administrative
services in fiscal 1994, including $76,265 for the compensation
of certain officers of the Fund and their staff and contributions
to the Putnam Investments, Inc. Profit Sharing Retirement Plan
for their benefit.
TRUSTEE FEES
The Fund pays each Trustee a fee for his or her services. Each
Trustee also receives fees for serving as Trustee of other Putnam
funds. The Trustees periodically review their fees to assure
that such fees continue to be appropriate in light of their
responsibilities as well as in relation to fees paid to trustees
of other mutual fund complexes. The Trustees meet monthly over a
two-day period, except in August. The Compensation Committee,
which consists solely of Trustees not affiliated with Putnam
Management and is responsible for recommending Trustee
compensation, estimates that Committee and Trustee meeting time
together with appropriate preparation requires the equivalent of
at least three business days per Trustee meeting. The fees paid
to each Trustee by the Fund and by all of the Putnam funds are
shown below:
<PAGE>
RETIREMENT
YEAR FIRST BENEFITS TOTAL
ELECTED AS AGGREGATE ACCRUED AS COMPENSATION
A TRUSTEE OF COMPENSATION PART OF FUND'S FROM ALL
TRUSTEES THE PUTNAM FUNDS FROM THE FUND* EXPENSES PUTNAM FUNDS**
- --------------------------------------------------------------------------------
Jameson A. Baxter 1994 $8,878 $0 $135,850
Hans H. Estin 1972 10,457 0 141,850
John A. Hill 1985 10,581 0 143,850
Elizabeth T. Kennan 1992 10,382 0 141,850
Lawrence J. Lasser 1992 10,457 0 141,850
Robert E. Patterson 1984 10,729 0 144,850
Donald S. Perkins 1982 10,242 0 139,850
William F. Pounds 1971 10,584 0 143,850
George Putnam 1957 10,457 0 141,850
George Putnam, III 1984 10,457 0 141,850
A.J.C. Smith 1986 10,033 0 137,850
W. Nicholas Thorndike 1992 10,729 0 144,850
- ------------------------------------------------------------------------
* Reflects amounts paid by the Fund for its fiscal year ended October
31, 1994. Includes an annual retainer and, in the case of all
Trustees other than Messrs.
Lasser and Putnam, an attendance fee for each meeting attended.
** Reflects total payments received from all Putnam funds in the most
recent calendar year. As of December 31, 1994, there were 86
funds in the Putnam family.
<PAGE>
The Fund's Trustees have approved Retirement Guidelines for
Trustees of the Putnam funds. There guidelines provide generally
that a Trustee who retires after reaching age 72 and who has at
least 10 years of continuous service will be eligible to receive
a retirement benefit from each Putnam fund for which he or she
served as a Trustee. The amount and form of such benefit is
subject to determination annually by the Trustees and, unless
otherwise determined by the Trustees, will be an annual cash
benefit payable for life equal to one-half of the Trustee
retainer fees paid by the Fund at the time of retirement.
Several retired Trustees are currently receiving benefits
pursuant to the Guidelines and it is anticipated that the current
Trustees of the Fund will receive similar benefits upon their
retirement. A Trustee who retired in the most recent calendar
year and was eligible to receive benefits under these Guidelines
would have received an annual benefit of $60,425, based upon the
aggregate retainer fees paid by the Putnam funds for such year.
The Trustees of the Fund reserve the right to amend or terminate
such Guidelines and the related payments at any time, and may
modify or waive the foregoing eligibility requirements when
deemed appropriate.
For additional information concerning the Fund's Trustees, see
"Management of the Fund" in Part II of this Statement of
Additional Information.
OWNERSHIP OF FUND SHARES
At January 31, 1995 the officers and Trustees of the Fund as a
group owned less than 1% of the outstanding shares of any class
of shares of the Fund, and to the knowledge of the Fund no person
owned of record or beneficially 5% or more of the shares of any
class of the Fund. No Class M shares were outstanding at January
31, 1995.
CLASS A SALES CHARGES, CONTINGENT DEFERRED SALES CHARGE AND 12B-1
FEES
During fiscal 1992, 1993 and 1994 Putnam Mutual Funds received
$30,071,354, $40,123,448 and $31,537,167, respectively, in sales
charges on sales of Class A shares of the Fund, of which it
retained $4,638,675, $6,134,303 and $4,601,244, respectively,
after allowance of dealer concessions. During fiscal 1992 and
1993, Putnam Mutual Funds did not receive any contingent deferred
sales charges upon redemptions of Class A shares of the Fund.
During fiscal 1994, Putnam Mutual Funds received $32,697 in
contingent deferred sales charges upon redemptions of Class A
shares of the Fund. During fiscal 1994, the Fund incurred
$13,918,470 in 12b-1 fees to Putnam Mutual Funds pursuant to the
Fund's Class A Distribution Plan.
<PAGE>
CLASS B CONTINGENT DEFERRED SALES CHARGES AND 12B-1 FEES
During fiscal 1992, 1993 and 1994, Putnam Mutual Funds received
$75,596, $1,189,897 and $4,993,651, respectively, in contingent
deferred sales charges upon redemptions of Class B shares of the
Fund. During fiscal 1994, the Fund incurred $26,416,693 in 12b-1
fees to Putnam Mutual Funds pursuant to the Fund's Class B
Distribution Plan.
INVESTOR SERVICING, CUSTODY FEES AND EXPENSES
During the 1994 fiscal year, the Fund incurred $13,457,241 in
fees and out-of-pocket expenses for investor servicing and
custody services provided by Putnam Fiduciary Trust Company.
INVESTMENT PERFORMANCE OF THE FUND
STANDARD PERFORMANCE MEASURES
The yield for Class A shares for the thirty-day period ended
October 31, 1994 was 3.02%. The average annual total return
(compounded annually) for Class A shares for the one-, five- and
ten-year periods ended October 31, 1994 was -3.17%, 9.26%, and
13.74%, respectively, adjusted to reflect deduction of the
maximum sales charge of 5.75%. The yield for Class B shares for
the thirty-day period ended October 31, 1994 was 2.46%. The
average annual total return (compounded annually) for Class B
shares for the one-year period ended October 31, 1994 and for the
life of the class through October 31, 1994 was -2.77% and 8.03%,
respectively, adjusted to reflect the deduction of the applicable
contingent deferred sales charge. The maximum contingent
deferred sales charge is 5.0%. The yield for the thirty-day
period ended October 31, 1994 for Class Y shares was 3.46%. The
cumulative total return for Class Y shares for the life of the
class through October 31, 1994 was 5.49%. Investment performance
is adjusted to reflect deduction of the maximum sales charge of
5.75%. See "Other Information" below for the inception date of
each class. No Class M shares were outstanding at October 31,
1994. See "Standard Performance Measures" in Part II of this
Statement for information on how the Fund's investment return is
calculated.
PERFORMANCE RATINGS
For the 1994 fiscal year, the Class A shares were ranked 159 of
329 growth and income funds by Lipper Analytical Services, Inc.
and 141 of 323 growth and current income funds by
CDA/Wiesenberger's Management Results. As of the end of the
fiscal year, Class A shares were given a 4-star rating (out of 5
stars) by Morningstar, Inc. For the 1994 fiscal year, the Class
B shares of the Fund were ranked 193 of 329 growth and income
funds by Lipper Analytical Services, Inc. and 167 of 323 growth
and current income funds by CDA/Wiesenberger's Management
Results. As of the end of the fiscal year, Class B shares were
not rated by Morningstar, Inc. For the 1994 fiscal year, the
Class Y shares were not ranked or rated. No Class M shares were
outstanding during fiscal 1994. See "Comparison of Portfolio
Performance" in Part II of this Statement for information about
how these rankings and ratings are determined. Past performance
is no guarantee of future results.
OTHER PERFORMANCE INFORMATION
The tables below show total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment
in one share of the Fund during the life of the Fund. This was a
period of fluctuating security prices. The tables do not project
the future performance of the Fund. No Class M shares were
outstanding during these periods.
<TABLE>
CLASS A SHARES
CUMULATIVE
MAXIMUM DISTRIBUTIONS NET ASSET VALUE
OFFERING NET ASSET VALUE ------------------- AT YEAR-END
FISCAL PRICE AT ------------------ FROM FROM WITH ALL
YEAR BEGINNING BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
ENDED OF YEAR OF YEAR YEAR INCOME GAINS REINVESTED
- -----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
10/31/58 (1) $ 3.53 $ 3.33 $ 4.40 $ .047 $ .067 $ 4.52
10/31/59 4.67 4.40 5.64 .060 .233 6.10
10/31/60 5.98 5.64 6.50 .060 .100 7.20
10/31/61 6.90 6.50 9.78 .050 .060 10.96
10/31/62 10.38 9.78 7.11 .100 ---- 8.08
10/31/63 7.54 7.11 8.83 .120 ---- 10.17
10/31/64 9.37 8.83 9.65 .140 .120 11.42
10/31/65 10.24 9.65 11.34 .150 .420 14.11
10/31/66 12.03 11.34 10.28 .080 ---- 12.87
10/31/67 10.91 10.28 14.66 .150 .390 19.27
10/31/68 15.55 14.66 14.24 .130 1.790 21.51
10/31/69 15.11 14.24 11.97 .180 1.650 20.59
10/31/70 12.70 11.97 8.70 .290 1.010 16.92
10/31/71 9.23 8.70 10.18 .300 ---- 20.45
10/31/72 10.80 10.18 12.53 .160 ---- 25.54
10/31/73 13.29 12.53 11.44 .200 .610 24.94
10/31/74 12.14 11.44 7.88 .300 .375 18.40
10/31/75 8.36 7.88 9.28 .305 ---- 22.48
10/31/76 9.85 9.28 10.48 .250 ---- 26.07
10/31/77 11.12 10.48 10.15 .280 .415 26.97
10/31/78 10.77 10.15 10.63 .420 .350 30.42
10/31/79 11.28 10.63 11.21 .525 .660 35.76
10/31/80 11.89 11.21 13.94 .545 .925 50.13
10/31/81 14.79 13.94 11.30 .715 2.080 50.54
10/31/82 11.99 11.30 11.31 .700 1.130 60.43
</TABLE>
<PAGE>
<TABLE>
CATIVE
MAXIMUM DISTRIBUTIONS NET ASSET VALUE
OFFERING NET ASSET VALUE ------------------- AT YEAR-END
FISCAL PRICE AT ------------------ FROM FROM WITH ALL
YEAR BEGINNING BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
NDED OF YEAR OF YEAR YEAR INCOME GAINS REINVESTED
- ----------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
10/31/83 12.00 11.31 12.76 .60 .56 75.11
10/31/84(2) 13.54 12.76 10.85 .48 2.17 80.51
10/31/85 11.51 10.85 11.74 .61 .39 95.29
10/31/86 12.46 11.74 13.79 .65 1.13 129.01
10/31/87 14.63 13.79 11.86 .65 1.93 133.06
10/31/88 12.58 11.86 11.37 .675 1.475 157.28
10/31/89 12.06 11.37 12.65 .60 .209 187.39
10/31/90 13.42 12.65 10.87 .62 .75 179.94
10/31/91 11.53 10.87 12.82 .62 .43 231.61
10/31/92 13.60 12.82 12.92 .54 .485 253.69
10/31/93 13.71 12.92 14.26 .51 .459 301.27
10/31/94 15.13 14.26 13.65 .43 .543 309.53
------- -------
Total distributions $13.242 $22.916
(1) Investment operations began November 6, 1957.
(2) Prior to October 5, 1984, the Fund's investment objective was "capital growth with
current income" as a secondary consideration.
</TABLE>
<PAGE>
<TABLE>
PERCENTAGE CHANGES DURING LIFE OF CLASS A SHARES
THE PUTNAM FUND FOR GROWTH AND INCOME
-------------------------------------
MAXIMUM NET ASSET STANDARD &
OFFERING VALUE TO POOR'S 500 DOW
PRICE TO NET NET ASSET COMPOSITE STOCK JONES CONSUMER
FISCAL ASSET VALUE VALUE PRICE INDEX INDUSTRIALS PRICE INDEX
YEAR CUMULA- CUMULA- CUMULA- CUMULA- CUMULA-
ENDED ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/58(1) ---% +27.7% ---% +35.6% ---% +30.0% ---% +28.8% ---% +2.1%
10/31/59 +27.2 +72.4 +35.0 +83.1 +15.7 +50.4 +22.9 +58.4 +1.7 +3.9
10/31/60 +11.1 +103.4 +18.0 +116.0 -3.9 +44.5 -7.2 +47.1 +1.4 +5.3
10/31/61 +43.6 +209.7 +52.3 +228.9 +32.5 +91.5 +25.3 +84.3 +0.7 +6.0
10/31/62 -30.5 +128.3 -26.3 +142.5 -14.9 +63.1 -13.2 +60.1 +1.3 +7.4
10/31/63 +18.7 +187.4 +25.9 +205.2 +35.3 +120.6 +32.5 +112.1 +1.3 +8.8
10/31/64 +5.8 +222.7 +12.3 +242.7 +18.2 +160.8 +19.7 +153.8 +1.0 +9.9
10/31/65 +16.4 +298.5 +23.5 +323.2 +12.3 +192.9 +13.9 +189.0 +1.9 +12.0
10/31/66 -14.0 +263.5 -8.8 +286.0 -10.3 +162.9 -13.1 +151.2 +3.8 +16.3
10/31/67 +41.1 +444.3 +49.8 +478.0 +21.0 +218.0 +13.2 +184.4 +2.4 +19.1
10/31/68 +5.2 +507.5 +11.6 +545.2 +13.6 +261.3 +12.0 +218.6 +4.7 +24.7
10/31/69 -9.8 +481.7 -4.2 +517.8 -2.9 +250.7 -6.7 +197.4 +5.7 +31.8
10/31/70 -22.6 +378.0 -17.8 +407.6 -11.1 +211.8 -7.9 +173.8 +5.6 +39.2
10/31/71 +14.0 +477.8 +20.9 +513.6 +16.8 +264.2 +15.0 +214.9 +3.8 +44.5
10/31/72 +17.7 +621.4 +24.9 +666.2 +21.9 +343.9 +17.8 +270.9 +3.4 +49.5
10/31/73 -8.0 +604.4 -2.4 +648.1 -0.0 +343.7 +3.7 +284.6 +7.8 +61.1
10/31/74 -30.5 +419.8 -26.2 +452.1 -28.8 +216.2 -26.9 +181.1 +12.1 +80.6
10/31/75 +15.2 +535.1 +22.2 +574.5 +26.1 +298.6 +32.2 +271.6 +7.4 +94.0
10/31/76 +9.2 +636.3 +15.9 +682.0 +20.1 +378.5 +20.2 +346.6 +5.5 +104.6
10/31/77 -2.5 +661.8 +3.5 +709.0 -6.2 +349.0 -11.0 +297.5 +6.4 +117.7
10/31/78 +6.3 +759.2 +12.8 +812.5 +6.3 +377.2 +2.6 +307.7 +8.9 +137.1
</TABLE>
<PAGE>
<TABLE>
PERCENTAGE CHANGES DURING LIFE OF CLASS A SHARES
THE PUTNAM FUND FOR GROWTH AND INCOME
-----------------------------------------
MAXIMUM NET ASSET STANDARD &
OFFERING VALUE TO POOR'S 500 DOW
PRICE TO NET NET ASSET COMPOSITE STOCK JONES CONSUMER
FISCAL ASSET VALUE VALUE PRICE INDEX INDUSTRIALS PRICE INDEX
YEAR CUMULA- CUMULA- CUMULA- CUMULA- CUMULA-
ENDED ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/79 +10.8% +910.2% +17.6% +972.8% +15.3% +450.2% +9.4% +345.9% +12.1% +165.7%
10/31/80 +32.2 +1316.1 +40.2 +1403.9 +32.1 +627.0 +20.7 +438.0 +12.8 +199.7
10/31/81 -5.0 +1327.6 +0.8 +1416.2 +0.6 +630.9 -2.2 +426.2 +10.1 +230.0
10/31/82 +12.7 +1607.0 +19.6 +1712.9 +16.3 +750.3 +24.1 +553.2 +5.1 +247.0
10/31/83 +17.2 +2021.7 +24.3 +2153.3 +27.9 +987.4 +29.5 +745.8 +2.9 +256.9
10/31/84 +1.0 +2174.3 +7.2 +2315.4 +6.3 +1055.9 +3.5 +775.2 +4.3 +272.1
10/31/85 +11.6 +2591.9 +18.4 +2758.8 +19.3 +1279.5 +19.4 +945.1 +3.2 +284.1
10/31/86 +27.6 +3544.4 +35.4 +3770.4 +33.2 +1736.7 +42.0 +1383.7 +1.5 +289.8
10/31/87 -2.8 +3658.7 +3.1 +3891.8 +6.4 +1853.8 +9.5 +1524.6 +4.5 +307.4
10/31/88 +11.4 +4342.8 +18.2 +4618.3 +14.8 +2143.7 +11.9 +1717.2 +4.3 +324.7
10/31/89 +12.3 +5193.6 +19.2 +5521.8 +26.3 +2733.1 +28.3 +2231.7 +4.5 +343.8
10/31/90 -9.5 +4983.1 -4.0 +5298.3 -7.5 +2520.1 -4.1 +2135.3 +6.3 +371.7
10/31/91 +21.3 +6442.6 +28.7 +6848.2 +33.5 +3397.9 +30.0 +2806.2 +2.9 +385.5
10/31/92 +3.3 +7066.4 +9.5 +7510.8 +9.9 +3745.2 +8.3 +3048.2 +3.2 +401.1
10/31/93 +11.9 +8410.4 +18.8 +8938.0 +14.9 +4317.7 +17.0 +3590.9 +2.8 +414.9
10/31/94 -3.2 +8643.8 +2.7 +9185.9 +3.9 +4558.5 +9.2 +3936.1 +2.6 +428.3
(1) Investment operations began November 6, 1957.
</TABLE>
<PAGE>
<TABLE>
CLASS B SHARES
CUMULATIVE
DISTRIBUTIONS NET ASSET VALUE
NET ASSET VALUE ------------------- AT YEAR-END
FISCAL ------------------ FROM FROM WITH ALL
YEAR BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
ENDED OF YEAR YEAR INCOME GAINS REINVESTED
- -----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
10/31/92 (1) 12.69 12.88 0.249 --- 13.13
10/31/93 12.88 14.18 0.440 0.459 15.47
10/31/94 14.18 13.56 0.340 0.543 15.79
------ ------
Total distributions $1.029 $1.002
(1) Class B shares were offered beginning April 27, 1992.
</TABLE>
<PAGE>
<TABLE>
PERCENTAGE CHANGES DURING LIFE OF CLASS B SHARES
THE PUTNAM FUND
FOR GROWTH AND INCOME
-----------------------
NET ASSET STANDARD &
VALUE TO POOR'S 500 DOW
NET ASSET COMPOSITE STOCK JONES CONSUMER
FISCAL VALUE PRICE INDEX INDUSTRIALS PRICE INDEX
YEAR CUMULA- CUMULA- CUMULA- CUMULA-
ENDED ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/92 (1) --- +3.5% --- +2.5% --- -2.4% --- +1.7%
10/31/93 +17.9% +21.95 +14.9% +17.7 +17.0% +14.1 +2.8% +4.4
10/31/94 +2.0 +24.40 +3.9 +24.2 +9.2 +25.1 +2.6 +7.2
(1) Class B shares were offered beginning April 27, 1992.
</TABLE>
<PAGE>
<TABLE>
CLASS Y SHARES
CUMULATIVE
DISTRIBUTIONS NET ASSET VALUE
NET ASSET VALUE ------------------- AT YEAR-END
FISCAL ----------------- FROM FROM WITH ALL
YEAR BEGINNING END OF INVESTMENT CAPITAL DISTRIBUTIONS
ENDED OF YEAR YEAR INCOME GAINS REINVESTED
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
10/31/94 (1) $13.06 $13.67 $0.108 $--- $13.78
------ ------- -------
Total distributions $0.108 $--- $13.78
(1) Class Y shares were offered beginning June 15, 1994.
</TABLE>
<PAGE>
<TABLE>
PERCENTAGE CHANGES DURING LIFE OF CLASS Y SHARES
THE PUTNAM FUND
FOR GROWTH AND INCOME
-----------------------
NET ASSET STANDARD &
VALUE TO POOR'S 500 DOW
NET ASSET COMPOSITE STOCK JONES CONSUMER
FISCAL VALUE PRICE INDEX INDUSTRIALS PRICE INDEX
YEAR CUMULA- CUMULA- CUMULA- CUMULA-
ENDED ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE ANNUAL TIVE
- ----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/94 (1) --% 2.28% --% 6.31% --% 7.65% --% 1.43%
(1) Class Y shares were offered beginning June 15, 1994.
</TABLE>
<PAGE>
The tables are not adjusted for any payments under the Fund's
Class A Distribution Plan prior to its implementation in fiscal
1990 or taxes payable on reinvested distributions or for any
contingent deferred sales charges which would be applied upon
redemption of Class B shares. The total values for the Fund as
of the end of each period reflect reinvestment of all
distributions and all changes in net asset value.
Standard & Poor's 500 Composite Stock Price Index and the Dow
Jones Industrial Average of 30 stocks are unmanaged lists of
common stocks frequently used as general measures of stock market
performance. Standard & Poor's performance figures reflect
changes of market prices and reinvestment of all regular cash
dividends but are not adjusted for commissions or other costs.
Dow Jones's performance figures reflect changes of market prices
and reinvestment of all distributions but are not adjusted for
commissions or other costs. Because the Fund is a managed
portfolio investing in income-producing common stocks, the
securities it owns will not match those in the indices.
The Consumer Price Index, prepared by the U.S. Bureau of Labor
Statistics, is a commonly used measure of the rate of inflation.
The index shows the average change in the cost of selected
consumer goods and services and does not represent a return on an
investment vehicle.
ADDITIONAL OFFICERS OF THE FUND
In addition to the persons listed as officers of the Fund in Part
II of this Statement, the following persons are also officers of
the Fund. Officers of Putnam Management hold the same offices in
Putnam Management's parent company, Putnam Investments, Inc.
PETER CARMAN, Vice President. Senior Managing Director of Putnam
Management. Prior to August 1, 1993, Mr. Carman was Chief
Investment Officer, Chairman of the U.S. Equity Investment Policy
Committee and a Director of Sanford C. Bernstein & Company, Inc.
JAMES F. GIBLIN, Vice President. Senior Vice President of Putnam
Management Inc. Prior to April, 1993, Mr. Giblin was Managing
Director-Head of Equity Investments at CIGNA Corp. Investments.
DAVID L. KING, Vice President. Senior Vice President of Putnam
Management.
ANTHONY I. KREISEL, Vice President. Senior Vice President of
Putnam Management. Vice President, Putnam Fiduciary Trust
Company.
THOMAS V. REILLY, Vice President. Managing Director of Putnam
Management. Vice President of certain of the Putnam funds.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110, are
the Fund's independent accountants, providing audit services, tax
return review and other tax consulting services and assistance
and consultation in connection with the review of various
Securities and Exchange Commission filings. The Report of
Independent Accountants and financial statements included in the
Fund's Annual Report for the fiscal year ended October 31, 1994,
filed electronically on December 27, 1994 (811-781), are
incorporated by reference into this Statement of Additional
Information. The financial highlights in the Prospectus and the
financial statements incorporated by reference into the
Prospectus and the Statement of Additional Information have been
so included and incorporated in reliance upon the report of the
independent accountants, given on their authority as experts in
auditing and accounting.
<PAGE>
SECURITIES RATINGS
THE RATING SERVICES' DESCRIPTIONS OF CORPORATE BONDS ARE:
MOODY'S INVESTORS SERVICE, INC.:
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt-edge". Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa -- Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what
are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger
than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which suggest
a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default
or have other marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds
and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
STANDARD & POOR'S CORPORATION:
AAA -- Debt rated AAA has the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is
extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only
in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB-B-CCC-CC-C -- Debt rated BB,B,CCC,CC and C is regarded, on
balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. While such debt
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D - Bonds rated D are in payment default. The D rating category
is used when interest payments or principal payments are not made
on the date due even if the applicable grace period has not
expired, unless Standard & Poor's believes that such payments
will be made during such grace period. The D rating also will be
used on the filing of a bankruptcy petition if debt service
payments are jeopardized.
