PUTNAM
INVESTORS
FUND
ANNUAL REPORT
July 31, 1995
[LOGO]
BOSTON * LONDON * TOKYO
<PAGE>
PERFORMANCE HIGHLIGHTS
Putnam Investors Fund's total return at net asset value for class A
shares exceeded that of the Standard & Poor's 500(R) Index for the 1-,
3-, and 5-year periods ended July 31, 1995.*
"We must not lose sight of the fact that in the short term we have
some challenges to deal with, and we must be very careful to choose
investments that will benefit from what we consider to be a favorable
long-term environment."
- -- Carol McMullen, lead manager
FISCAL 1995 RESULTS AT A GLANCE
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS M
TOTAL RETURN: NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------------
(change in value during
period plus reinvested
distributions)
12 months ended
7/31/95 27.55% 20.20% 26.46% 21.46% -- --
Life of class M -- -- -- -- 28.29% 23.83%
- ----------------------------------------------------------------------
CLASS A CLASS B CLASS M
Share value: NAV POP NAV NAV POP
- ----------------------------------------------------------------------
7/31/94 $7.85 $8.33 $7.78 -- --
12/2/94 -- -- -- $7.78 $8.06
7/31/95 9.05 9.60 8.88 9.02 9.35
- ----------------------------------------------------------------------
Long-term
Distributions: No. Income capital gains Total
- ----------------------------------------------------------------------
Class A 1 -- $0.734 $0.734
Class B 1 -- 0.734 0.734
Class M 1 -- 0.734 0.734
- ----------------------------------------------------------------------
<FN>
Performance data represent past results, are no assurance of future
results, and will differ for each share class. For performance over
longer periods, see pages 8 and 9. POP assumes 5.75% maximum sales
charge for class A shares and 3.50% for class M shares, which became
effective 12/2/94. CDSC assumes 5% maximum contingent deferred sales
charge.
* The fund's class A share cumulative total returns at net asset
value were 27.55% for 1 year, 57.15% for 3 years, 86.08% for 5
years, and 272.76% for 10 years. S&P 500 total returns were
26.03% for 1 year, 44.08% for 3 years, 83.26% for 5 years, and
305.72% for 10 years.
</TABLE>
<PAGE>
FROM THE CHAIRMAN
[PHOTO OF GEORGE PUTNAM]
(C) KARSH, OTTAWA
DEAR SHAREHOLDER:
THE STOCK MARKET'S ROBUST RISE DURING THE FIRST HALF OF 1995 HAS LED
SOME ANALYSTS TO BRACE FOR A DECLINE AND OTHERS TO ANTICIPATE EVEN
GREATER STRENGTH. WE TAKE MORE OF A MIDDLE VIEW. ALTHOUGH WE THINK THE
PACE OF THE RISE IS PROBABLY UNSUSTAINABLE, WE BELIEVE A MODERATE
SHORT-TERM CORRECTION, FOLLOWED BY A PERIOD OF UNSETTLED PERFORMANCE,
IS A MORE LIKELY DEVELOPMENT.
OUR ASSESSMENT IS BASED ON THE SLOWING ECONOMY'S IMPACT ON CORPORATE
EARNINGS. LOWER INTEREST RATES SHOULD EVENTUALLY STIMULATE THE
ECONOMY, PROBABLY SOME TIME NEXT YEAR. RISING U.S. CORPORATE CASH
FLOWS AND PROFITS OF U.S. CORPORATIONS, AUGMENTED BY FOREIGN
INVESTORS' PURCHASES OF BARGAIN-PRICED U.S. STOCKS, MAY LEAD TO THE
NEXT LEG OF A BULL MARKET.
I AM PLEASED TO ANNOUNCE THE APPOINTMENT OF CAROL MCMULLEN AS LEAD
MANAGER OF PUTNAM INVESTORS FUND. BEFORE JOINING PUTNAM EARLIER THIS
YEAR, CAROL WAS A SENIOR PORTFOLIO MANAGER AT BARING ASSET MANAGEMENT.
SHE HAS 14 YEARS OF INVESTMENT EXPERIENCE. IN THE FOLLOWING REPORT,
CAROL AND HER MANAGEMENT TEAM REVIEW THE FUND'S PERFORMANCE DURING THE
FISCAL YEAR ENDED JULY 31, 1995, AND PRESENT THEIR OUTLOOK FOR THE
FISCAL YEAR AHEAD.
RESPECTFULLY YOURS,
[SIGNATURE]
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
SEPTEMBER 20, 1995
<PAGE>
REPORT FROM THE FUND MANAGERS
CAROL C. MCMULLEN, LEAD MANAGER
DAVID J. SANTOS
HARLAN R. SONDERLING
As one of the more conservative funds in Putnam's growth fund
category, Putnam Investors Fund traditionally favors the stocks of
large-capitalization companies. During the fiscal year ended July 31,
1995, this orientation was particularly fortuitous; the market rally
that began early in calendar 1995 was led by large-cap stocks. As a
result, your fund was able to deliver noteworthy results: total
returns of 27.55% and 26.46% at net asset value for class A and class
B shares, respectively, during the period.
These results compared favorably with the 26.03% rise posted by the
benchmark Standard & Poor's 500 Index for the period. They also
represented a significant improvement from the returns we reported at
the fiscal year's midpoint and provided prompt justification for our
assertion then that we did not believe it wise to abandon
fundamentally sound companies.
MARKET'S RISE CAME ON STRONG FUNDAMENTALS
While we did not forecast a decline in the stock market this year, we
have been surprised by the magnitude of its rise. What is positive
about the advance is that it has come from corporate earnings growth
that exceeded expectations.
Corporate profits grew about 20% in the first quarter of calendar
1995, and another 18% in the second quarter. We believe they will grow
10% to 12% in the third quarter. To us, this means that while the
market is fairly valued on a price/earnings basis, it is not
overvalued.
On the fiscal and monetary policy side, we believe the Federal Reserve
Board will continue to ease credit somewhat over the next few months.
On balance, we regard this as a positive factor for the market, both
psychologically and because of the potential for sustainable economic
growth.
<PAGE>
TECHNOLOGY, LARGE-CAPS WERE KEY CONTRIBUTORS
Your fund tends to concentrate on stocks of large companies (those of
companies with market capitalizations greater than $5 billion) and
midsize companies ($1 billion to $5 billion capitalizations). When our
research indicated that large-company stocks were undervalued relative
to small and midsize companies, we tilted the portfolio toward large
companies.
Despite an overweighting in market-leading industries, we have kept
the portfolio broadly diversified. However, our concentrations in
certain market-leading industries were heavier than the S&P 500
weightings, notably those in technology and finance. Technology, in
fact, was almost twice as heavily weighted in the fund than in the
benchmark index throughout the period, with the greatest emphasis on
semiconductors, computers, and telecommunications.
Financial stocks rose as interest rates fell. We also concluded that
some major financial sectors were undervalued, including big money-
center banks and certain types of transaction- oriented companies such
as credit card operators.
The dollar's continued weakness also enhanced the fund's results.
Companies with products priced in U.S. dollars benefited from the
imbalance in currency exchange rates, since their goods were less
expensive abroad. Many established blue-chip multinational U.S.-based
corporations fit this profile and were among your fund's holdings
during the period.
[BAR CHART]
TOP INDUSTRY SECTORS*
- --------------------------------------------------------------------
Insurance and finance 11.3%
Electronics and electrical equipment 10.4%
Retail 7.9%
Pharmaceuticals 6.6%
Business equipment and services 6.1%
*Based on net assets on 7/31/95. Portfolio holdings will vary over
time.
<PAGE>
CONSUMER GOODS REACQUIRED, UTILITIES AVOIDED
During fiscal 1995, we began moving back into classic consumer-
oriented multinational growth companies. Among them were health-care-
related stocks like Johnson & Johnson, Pfizer, and Baxter; food
companies like Sara Lee; and consumer-product companies like Procter &
Gamble and Premark. Besides benefiting from their size and global
positioning, these companies had begun showing earnings in excess of
forecasts after several years of performing below the market's
expectations. By the fiscal year's midpoint, the portfolio was
weighted approximately in line with the S&P 500 in these sectors.
What the fund does not own is as important as what it does own.
Because utilities as a group do not currently fit the growth-investing
profile, your fund is underweighted in them as a matter of course.
Throughout fiscal 1995, however, we kept them at an even lower level
than usual and consequently were able to minimize the impact of their
poor performance on the portfolio. In our opinion, this extreme
underweighting was a plus in terms of overall performance.
A LOOK AT SOME OF YOUR FUND'S HOLDINGS
High technology -- Motorola, Texas Instruments, Intel and Microsoft
may be major beneficiaries of the current global information-age
revolution. We acquired Microsoft on weakness caused by excessive and,
in our view, misplaced concerns over Windows 95.
"Re-engineered" -- Fluor and Deere remain significant portfolio
holdings. These construction-oriented companies should be
beneficiaries of infrastructure building in emerging nations.
Aerospace and defense -- Boeing, Lockheed, and McDonnell Douglas have
undergone dramatic restructuring in the face of the sharp decline in
defense spending. The belt-tightening leaves them well equipped to
benefit from the rise in commercial aircraft orders and consolidation
in the defense business.
OUTLOOK: CAUTIOUS OPTIMISM GOING INTO FISCAL '96
We believe it is unrealistic to assume that the market will remain as
exuberant as it has been thus far in 1995. There will likely be some
profit-taking after the long market runup.
<PAGE>
TOP 10 HOLDINGS (7/31/95)
- --------------------------------------------------------------------
IBM CORPORATION
Computer hardware, applications, and systems software
- --------------------------------------------------------------------
JOHNSON & JOHNSON
Drugs, medical and dental products, consumer products
- --------------------------------------------------------------------
PHILIP MORRIS COMPANIES, INC.
Leading tobacco, food processing, and brewing company
- --------------------------------------------------------------------
PEPSICO, INC.
Beverage and snack food producer, restaurant franchisor
- --------------------------------------------------------------------
CITICORP
Largest U.S. bank, worldwide banking and financial services
- --------------------------------------------------------------------
MOBIL CORPORATION
Worldwide integrated petroleum and chemical company
- --------------------------------------------------------------------
BRITISH PETROLEUM CO., PLC, ADR
Major oil and natural gas operator in the U.S. and Europe
- --------------------------------------------------------------------
MOTOROLA, INC.
Cellular phones, paging systems, semiconductors, two-way radios
- --------------------------------------------------------------------
BANKAMERICA CORP.
Banking and financial services in U.S. and international markets
- --------------------------------------------------------------------
CAPITAL CITIES/ABC, INC.
Television and cable broadcasting, publishing
- --------------------------------------------------------------------
These holdings represent 18.0% of the fund's net assets. Portfolio
holdings will vary over time.
Corporate profits growth, which remains high after four years of
business recovery, is almost certain to slow.
We're also a bit concerned that blue-chip stocks may be becoming
overvalued relative to their small and midcap counterparts. While the
former did well for the fund in fiscal 1995, we think they're becoming
stretched. Since we believe the market advance still has a way to go,
as does the economic recovery, we do not think any near-term
volatility will spell the end of the bull market, nor do we believe it
will be a precursor to a recession.
As we lay the groundwork for our strategy in fiscal 1996, we're
gradually moving the portfolio further away from large companies and
toward those of medium size. Because of the prospect that lower
interest rates will add another dash of impetus to economic growth,
we're adding growth companies that tend to do well in the latter
stages of a recovery.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described
holdings were viewed favorably as of 7/31/95, there is no guarantee
the fund will continue to hold these securities in the future.
<PAGE>
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's
performance. 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 back into the fund. We show
total return in two ways: on a cumulative long-term basis and on
average how the fund might have grown each year over varying periods.
Performance should always be considered in light of a fund's
investment strategy. Putnam Investors Fund is designed for investors
seeking long-term growth through quality common stocks, as well as any
increased income resulting from this growth.
TOTAL RETURN FOR PERIODS ENDED 7/31/95
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS M
NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------------
1 year 27.55% 20.20% 26.46% 21.46% -- --
- ----------------------------------------------------------------------
5 years 86.08 75.45 -- -- -- --
Annual average 13.22 11.90 -- -- -- --
- ----------------------------------------------------------------------
10 years 272.76 251.47 -- -- -- --
Annual average 14.06 13.39 -- -- -- --
- ----------------------------------------------------------------------
Life of class B -- -- 38.47 35.47 -- --
Annual average -- -- 14.40 13.37 -- --
- ----------------------------------------------------------------------
Life of class M -- -- -- -- 28.29% 23.83%
- ----------------------------------------------------------------------
</TABLE>
TOTAL RETURN FOR PERIODS ENDED 6/30/95
(most recent calendar quarter)
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A CLASS B CLASS M
NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------------
1 year 25.28% 18.01% 24.28% 19.28% -- --
- ----------------------------------------------------------------------
5 years 76.24 66.07 -- -- -- --
Annual average 12.00 10.68 -- -- -- --
- ----------------------------------------------------------------------
10 years 252.97 232.66 -- -- -- --
Annual average 13.44 12.77 -- -- -- --
- ----------------------------------------------------------------------
Life of class B -- -- 32.24 29.24 -- --
Annual average -- -- 12.74 11.64 -- --
- ----------------------------------------------------------------------
Life of class M -- -- -- -- 22.60% 18.34%
- ----------------------------------------------------------------------
<FN>
Fund performance data do not take into account any adjustment for
taxes payable on reinvested distributions or, for class A shares,
distribution fees prior to implementation of the class A distribution
plan in 1990. Effective 3/1/93, the fund began offering class B shares
and on 12/2/94, class M shares. Performance of share classes will
differ. Performance data represent past results and are no indication
of future performance. Investment returns and net asset value will
fluctuate so an investor's shares, when sold, may be worth more or
less than their original cost.
</TABLE>
<PAGE>
[MOUNTAIN CHART]
GROWTH OF A $10,000 INVESTMENT
- ----------------------------------------------------------------------
Date POP S&P 500 Index CPI
O85 $9,429 $10,000 $10,000
O86 $12,018 $12,833 $10,158
O87 $15,753 $17,884 $10,557
O88 $13,449 $15,790 $10,993
O89 $17,124 $20,810 $11,540
O90 $18,889 $22,138 $12,096
O91 $21,404 $24,971 $12,635
O92 $22,366 $28,158 $13,033
O93 $26,668 $30,605 $13,395
O94 $27,556 $32,192 $13,766
O95 $35,147 $40,572 $14,147
Past performance is no assurance of future results. A $10,000
investment in the fundOs class B shares at inception on 3/1/93 would
have been valued at $13,847 on 7/31/95 ($13,547 with a redemption at
the end of the period). A $10,000 investment in the fund's class M
shares at inception on 12/2/94 would have been value at $12,829 at
NAV and $12,383 at POP.
TERMS AND DEFINITIONS
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus
any liabilities, divided by the number of outstanding shares, not
including any initial or contingent deferred sales charge.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share plus
the maximum sales charge levied at the time of purchase. POP
performance figures shown here assume the maximum 5.75% sales charge
for class A shares and 3.50% for class M shares.
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
CLASS M SHARES have a lower initial sales charge and a higher 12b-1
fee than class A shares and no sales charge on redemption.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the
time of the redemption of class B shares and assumes redemption at the
end of the period. Your fund's CDSC declines from a 5% maximum during
the first year to 1% during the sixth year. After the sixth year, the
CDSC no longer applies.
COMPARATIVE INDEX RETURNS FOR PERIOD ENDED 7/31/95
<TABLE><CAPTION>
<S> <C> <C>
S&P 500 CPI
- ----------------------------------------------------------------------
1 year 26.03% 2.76%
- ----------------------------------------------------------------------
5 years 83.26 16.95
Annual average 12.88 3.18
- ----------------------------------------------------------------------
10 years 305.72 41.47
Annual average 15.03 3.53
- ----------------------------------------------------------------------
Life of class B 36.28 6.57
Annual average 13.65 2.66
- ----------------------------------------------------------------------
Life of class M 27.74 1.87
- ----------------------------------------------------------------------
</TABLE>
COMPARATIVE BENCHMARKS
STANDARD & POOR'S 500 INDEX is an unmanaged list of common stocks that
is frequently used as a general measure of stock market performance.
The index assumes reinvestment of all distributions and does not take
into account brokerage commissions or other costs. The fund's
portfolio contains securities that do not match those in the index.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
for the year ended July 31, 1995
TO THE TRUSTEES AND SHAREHOLDERS OF
PUTNAM INVESTORS FUND
We have audited the accompanying statement of assets and liabilities
of Putnam Investors Fund, including the portfolio of investments
owned, as of July 31, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the "Financial
Highlights" for each of the periods indicated therein. 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 generally accepted auditing
standards. Those standards require that we plan and perform the 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, 1995, by
correspondence with the custodian and brokers. 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 Investors Funds as of July 31, 1995, and
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 periods indicated therein,
in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
September 14, 1995
PORTFOLIO OF INVESTMENTS OWNED
July 31, 1995
<TABLE><CAPTION>
<S> <C> <C>
COMMON STOCKS (95.8%)*
NUMBER OF SHARES VALUE
AEROSPACE AND DEFENSE(3.0%)
- ----------------------------------------------------------------------
186,400 Boeing Co. $ 12,488,800
159,900 Lockheed Martin Corp. 10,053,713
92,200 McDonnell Douglas Corp. 7,618,025
-------------
30,160,538
AUTOMOTIVE (3.1%)
- ----------------------------------------------------------------------
197,100 General Motors Corp. 9,608,625
227,300 General Motors Corp. Class H 9,660,250
260,700 Magna International, Inc. Class A 11,992,200
-------------
31,261,075
BASIC INDUSTRIAL PRODUCTS (3.1%)
- ----------------------------------------------------------------------
141,400 Caterpillar, Inc. 9,951,025
166,100 Deere (John) & Co. 14,928,238
88,700 Sundstrand Corp. 5,931,813
-------------
30,811,076
BROADCASTING (3.8%)
- ----------------------------------------------------------------------
141,200 Capital Cities/ABC, Inc. 16,485,100
490,000 Tele-Communications Inc. Class A+ 12,250,000
193,100 Viacom, Inc. Class B+ 9,799,825
-------------
38,534,925
BUILDING AND CONSTRUCTION (1.0%)
- ----------------------------------------------------------------------
180,000 Fluor Corp. 10,170,000
BUSINESS EQUIPMENT AND SERVICES (6.1%)
- ----------------------------------------------------------------------
172,900 Cabletron Systems, Inc.+ 8,990,800
203,700 DSC Communications Corp.+ 10,948,875
172,000 General Motors Corp. Class E 7,568,000
180,000 IBM Corp. 19,597,500
52,800 Silicon Graphics, Inc.+ 2,217,600
104,800 Xerox Corp. 12,484,300
-------------
61,807,075
CHEMICALS (1.4%)
- ----------------------------------------------------------------------
210,000 du Pont (E.I.) de Nemours & Co., Ltd. 14,070,000
COMPUTER SERVICES AND SOFTWARE (5.0%)
- ----------------------------------------------------------------------
103,100 3Com Corp.+ 7,635,844
143,300 Cisco Systems, Inc.+ 7,988,975
171,000 Computer Associates Intl., Inc. 12,547,125
129,300 Microsoft Corp.+ 11,701,650
238,300 Oracle Systems Corp.+ 9,978,813
-------------
49,852,407
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
CONGLOMERATES (2.3%)
- ----------------------------------------------------------------------
260,000 Allied-Signal, Inc. $ 12,155,000
385,000 Sara Lee Corp. 11,020,625
-------------
23,175,625
CONSUMER DURABLE GOODS (1.3%)
- ----------------------------------------------------------------------
418,300 Black & Decker Manufacturing Co. 13,228,738
CONSUMER NON DURABLES (5.5%)
- ----------------------------------------------------------------------
262,900 Philip Morris Cos., Inc. 18,830,213
185,000 Premark International, Inc. 9,781,875
190,000 Procter & Gamble Co. 13,086,250
290,000 Scott Paper Co. 13,303,750
-------------
55,002,088
CONSUMER SERVICES (2.3%)
- ----------------------------------------------------------------------
238,650 CUC International, Inc.+ 7,189,331
295,000 Marriott International, Inc. 10,693,750
156,600 Mirage Resorts, Inc.+ 4,874,175
-------------
22,757,256
ELECTRONICS AND ELECTRICAL EQUIPMENT (10.4%)
- ----------------------------------------------------------------------
70,400 Applied Materials, Inc.+ 7,286,400
155,000 Emerson Electric Co. 10,966,250
240,000 General Electric Co. 14,160,000
250,000 General Instrument Corp. New+ 9,218,750
165,200 Hewlett-Packard Co. 12,864,950
227,600 Intel Corp. 14,794,000
153,000 LSI Logic Corp.+ 7,152,750
230,000 Motorola, Inc. 17,623,750
67,500 Texas Instruments, Inc. 10,546,875
-------------
104,613,725
ENVIRONMENTAL CONTROL (1.2%)
- ----------------------------------------------------------------------
305,000 Browning-Ferris Industries, Inc. 11,780,625
FOOD AND BEVERAGES (4.2%)
- ----------------------------------------------------------------------
185,000 Coca-Cola Co. 12,186,875
3,500 IBP, Inc. 163,625
137,500 Kellogg Co. 9,882,813
395,000 PepsiCo, Inc. 18,515,625
35,400 Pioneer Hi-Bred International, Inc. 1,495,650
-------------
42,244,588
HEALTH CARE (2.4%)
- ----------------------------------------------------------------------
402,100 Baxter International, Inc. 14,978,225
195,000 Columbia/HCA Healthcare Corp. 9,555,000
-------------
24,533,225
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
INSURANCE AND FINANCE (11.3%)
- ----------------------------------------------------------------------
210,100 American General Corp. $ 7,642,381
135,000 American International Group, Inc. 10,125,000
311,600 BankAmerica Corp. 16,826,400
190,000 Barnett Banks, Inc. 10,545,000
110,000 CIGNA Corp. 8,868,750
295,000 Citicorp 18,400,625
255,000 Dean Witter Discover & Co. 12,877,500
146,400 Federal National Mortgage Assn. 13,706,700
310,000 Travelers Group Inc. 14,686,250
-------------
113,678,606
METALS AND MINING (2.4%)
- ----------------------------------------------------------------------
455,600 Freeport-McMoRan Copper & Gold Co., Inc. Class A 12,130,350
228,900 Nucor Corp. 12,303,375
-------------
24,433,725
OIL AND GAS (5.5%)
- ----------------------------------------------------------------------
195,000 British Petroleum Co. PLC ADR 17,696,250
260,000 Enron Corp. 9,035,000
185,000 Mobil Corp. 18,083,750
326,200 Total Corp. ADR 10,152,975
-------------
54,967,975
PHARMACEUTICALS (6.6%)
- ----------------------------------------------------------------------
107,100 Amgen, Inc.+ 9,116,888
265,000 Johnson & Johnson 19,013,750
270,000 Pfizer, Inc. 13,635,000
324,200 Smithkline Beecham PLC ADR 14,589,000
120,000 Warner-Lambert Co. 10,080,000
-------------
66,434,638
PHOTOGRAPHY (1.3%)
- ----------------------------------------------------------------------
225,000 Eastman Kodak Co. 12,965,625
RETAIL (7.9%)
- ----------------------------------------------------------------------
95,800 Circuit City, Stores Inc. 3,556,575
520,000 Federated Department Stores Inc. (Del)+ 14,755,000
298,900 Lowe's Cos., Inc. 11,021,938
415,000 Office Depot, Inc.+ 12,190,625
377,900 Rite Aid Corp. 10,722,913
219,700 Sears, Roebuck & Co. 7,167,713
235,000 Tandy Corp. 13,953,125
116,700 Walgreen Co. 6,039,225
-------------
79,407,114
TELECOMMUNICATIONS (1.2%)
- ----------------------------------------------------------------------
495,000 MCI Communications Corp. 11,880,000
<PAGE>
COMMON STOCKS
NUMBER OF SHARES VALUE
TRANSPORTATION (1.1%)
- ----------------------------------------------------------------------
165,400 Burlington Northern Inc. 11,453,950
UTILITIES (2.4%)
- ----------------------------------------------------------------------
213,000 Ameritech Corp. New $ 10,303,875
170,500 Bell Atlantic Corp. 9,761,125
209,900 MCN Corp. 3,988,100
-------------
24,053,100
- ----------------------------------------------------------------------
TOTAL COMMON STOCKS (cost $748,230,001) $963,277,699
- ----------------------------------------------------------------------
SHORT-TERM INVESTMENTS (4.0%)*
PRINCIPAL AMOUNT VALUE
$20,000,000 Corporate Asset Funding Corp. 5.65s,
October 11, 1995 $ 19,777,139
6,000,000 Federal National Mortgage Assn. 5.68s,
September 8, 1995 5,964,027
14,926,000 Interest in $672,198,000 repurchase
agreement dated July 31, 1995 with
Morgan (J.P.) & Co., Inc. due
August 1, 1995 with respect to
various U.S. Treasury obligations --
maturity value of $14,928,405 or an
effective yield of 5.8% 14,928,405
- ----------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(cost $40,669,571) $ 40,669,571
- ----------------------------------------------------------------------
INVESTMENTS (cost $788,899,572)*** $1,003,947,270
- ----------------------------------------------------------------------
<FN>
* Percentages indicated are based on net assets of $1,005,609,461,
which correspond to a net asset value per class A share, class B
share and class M share of $ 9.05, $8.88, and $9.02,
respectively.
+ Non-income-producing security.
*** The aggregate identified cost for federal income tax purposes is
$789,094,946, resulting in gross unrealized appreciation and
depreciation of $230,152,776 and $15,300,452, respectively, or
net unrealized appreciation of $214,852,324.
ADR after the name of a foreign holding stands for American
Depository Receipt representing ownership of foreign securities
on deposit with a domestic custodian bank.
</TABLE>
<PAGE>
STATEMENT OF ASSETS AND LIABLITIES
July 31, 1995
<TABLE>
<S> <C>
ASSETS
- ----------------------------------------------------------------------
Investments in securities, at value
(identified cost $788,899,572) (Note 1) $1,003,947,270
- ----------------------------------------------------------------------
Cash 243
- ----------------------------------------------------------------------
Dividends and other receivables 832,582
- ----------------------------------------------------------------------
Receivable for securities sold 19,286,721
- ----------------------------------------------------------------------
Receivable for shares of the fund sold 503,761
- ----------------------------------------------------------------------
TOTAL ASSETS $1,024,570,577
LIABILITIES
- ----------------------------------------------------------------------
Payable for securities purchased $15,871,227
- ----------------------------------------------------------------------
Payable for shares of the fund repurchased 458,632
- ----------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,436,312
- ----------------------------------------------------------------------
Payable for administrative services (Note 2) 1,333
- ----------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 910
- ----------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 349,227
- ----------------------------------------------------------------------
Payable for distribution fees (Note 2) 241,556
- ----------------------------------------------------------------------
Other accrued expenses 601,919
- ----------------------------------------------------------------------
TOTAL LIABILITIES 18,961,116
- ----------------------------------------------------------------------
NET ASSETS $1,005,609,461
- ----------------------------------------------------------------------
REPRESENTED BY
- ----------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $733,524,200
- ----------------------------------------------------------------------
Undistributed net investment income (Note 1) 8,443,259
- ----------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 48,594,304
- ----------------------------------------------------------------------
Net unrealized appreciation of investments 215,047,698
- ----------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO
CAPITAL SHARES OUTSTANDING $1,005,609,461
- ----------------------------------------------------------------------
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- ----------------------------------------------------------------------
Net asset value and redemption price of class A shares
($956,829,971 divided by 105,770,153 shares) $9.05
- ----------------------------------------------------------------------
Offering price per share (100/94.25 of $9.05)* $9.60
- ----------------------------------------------------------------------
Net asset value and offering price of class B shares
($47,906,108 divided by 5,394,454 shares)** $8.88
- ----------------------------------------------------------------------
Net asset value and redemption price of class M shares
($873,382 divided by 96,836 shares.) $9.02
- ----------------------------------------------------------------------
Offering price per share (100/96.50 of $9.02)* $9.35
- ----------------------------------------------------------------------
<FN>
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
Year ended July 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------
Dividends (net of foreign tax of $123,684) $14,800,897
- ----------------------------------------------------------------------
Interest 2,372,652
- ----------------------------------------------------------------------
TOTAL INVESTMENT INCOME 17,173,549
EXPENSES:
- ----------------------------------------------------------------------
Compensation of Manager (Note 2) 5,188,292
- ----------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 824,440
- ----------------------------------------------------------------------
Compensation of Trustees (Note 2) 26,191
- ----------------------------------------------------------------------
Auditing 34,866
- ----------------------------------------------------------------------
Legal 22,645
- ----------------------------------------------------------------------
Postage 71,897
- ----------------------------------------------------------------------
Reports to shareholders 84,549
- ----------------------------------------------------------------------
Administrative services (Note 2) 15,654
- ----------------------------------------------------------------------
Distribution fees -- class A (Note 2) 2,057,853
- ----------------------------------------------------------------------
Distribution fees -- class B (Note 2) 302,666
- ----------------------------------------------------------------------
Distribution fees -- class M (Note 2) 1,643
- ----------------------------------------------------------------------
Registration fees 8,326
- ----------------------------------------------------------------------
Other 22,928
- ----------------------------------------------------------------------
TOTAL EXPENSES 8,661,950
- ----------------------------------------------------------------------
NET INVESTMENT INCOME 8,511,599
- ----------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 62,213,631
- ----------------------------------------------------------------------
Net unrealized appreciation of investments during the year 144,813,070
- ----------------------------------------------------------------------
NET GAIN ON INVESTMENTS 207,026,701
- ----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $215,538,300
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE><CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31
-----------------------------------
1995 1994
- ----------------------------------------------------------------------
INCREASE (DECREASE) NET ASSETS
- ----------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------
Net investment income $8,511,599 $7,221,081
- ----------------------------------------------------------------------
Net realized gain on investments 62,213,631 81,316,015
- ----------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments 144,813,070 (62,307,377)
- ----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 215,538,300 26,229,719
- ----------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------
From net investment income
- ----------------------------------------------------------------------
Class A -- (4,369,792)
- ----------------------------------------------------------------------
Class B -- (32,475)
- ----------------------------------------------------------------------
From net realized gain on investments:
- ----------------------------------------------------------------------
Class A (71,933,078) (112,980,631)
- ----------------------------------------------------------------------
Class B (2,296,405) (984,230)
- ----------------------------------------------------------------------
Class M (3,411) --
- ----------------------------------------------------------------------
Increase from capital share
transactions (Note 4) 57,153,414 89,767,566
- ----------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS198,458,820 (2,369,843)
NET ASSETS
- ----------------------------------------------------------------------
Beginning of year 807,150,641 809,520,484
- ----------------------------------------------------------------------
END OF YEAR (including undistributed
net investment income of $8,443,259
and $0, respectively) $1,005,609,461 $807,150,641
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE><CAPTION>
<S> <C> <C>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
FOR THE PERIOD
DECEMBER 2, 1994
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31 YEAR ENDED JULY 31
------------------ --------------------
1995 1995 1994
- ----------------------------------------------------------------------
CLASS M CLASS B
- ----------------------------------------------------------------------
Net asset value, beginning of period $7.78 $7.78 $8.85
- ----------------------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income (loss) .01 .01 .03
Net realized and unrealized
gain on investments 1.96 1.82 .21
- ----------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.97 1.83 .24
- ----------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -- -- (.02)
In excess of net investment income -- -- --
From net realized gain on investments (.73) (.73) (1.29)
- ----------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.73) (.73) (1.31)
- ----------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.02 $8.88 $7.78
- ----------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE (%)(b) 28.29(a) 26.46 2.38
- ----------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(in thousands) $873 $47,906 $21,033
- ----------------------------------------------------------------------
Ratio of expenses to average
net assets (%) 1.56(a) 1.75 1.77
- ----------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .29(a) .22 .08
- ----------------------------------------------------------------------
Portfolio turnover (%) 96.75 96.75 100.16
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE><CAPTION>
<C> <C> <C> <C> <C> <C>
FOR THE PERIOD
MARCH 1, 1993
(COMMENCEMENT
OF OPERATIONS) TO
JULY 31 YEAR ENDED JULY 31
- ----------------------------------------------------------------------
1993 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------
CLASS B CLASS A
- ----------------------------------------------------------------------
$8.32 $7.85 $8.87 $8.57 $9.20 $8.75
- ----------------------------------------------------------------------
(.03) .08 .06 .08 .12 .15
.61 1.85 .26 1.45 .21 .89
- ----------------------------------------------------------------------
.58 1.93 .32 1.53 .33 1.04
- ----------------------------------------------------------------------
-- -- (.05) (.04) (.15) (.17)
(.05) -- -- (.03) -- --
-- (.73) (1.29) (1.16) (.81) (.42)
- ----------------------------------------------------------------------
(.05) (.73) (1.34) (1.23) (.96) (.59)
- ----------------------------------------------------------------------
$8.85 $9.05 $7.85 $8.87 $8.57 $9.20
- ----------------------------------------------------------------------
6.96(a) 27.55 3.33 19.24 4.49 13.32
- ----------------------------------------------------------------------
$4,789 $956,830 $786,118 $804,731 $714,479 $739,775
- ----------------------------------------------------------------------
.73(a) .99 .99 .90 .94 .89
- ----------------------------------------------------------------------
(.12)(a) 1.03 .88 .84 1.33 1.78
- ----------------------------------------------------------------------
134.14 96.75 100.16 134.14 100.26 58.30
- ----------------------------------------------------------------------
<FN>
(a) Not annualized.
(b) Total investment return assumes dividend reinvestment and does
not reflect the effect of sales charges.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
July 31, 1995
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The
fund seeks long-term growth of capital and any increased income that
results from this growth by investing primarily in a portfolio
consisting of quality common stocks.
The fund offers class A, class B and class M shares. The fund
commenced its public offering of class M shares on December 2, 1994.
Class A shares are sold with a maximum front-end sales charge of
5.75%. Class B shares do not pay a front-end sales charge, but pay a
higher ongoing distribution fee than class A shares, and are subject
to a contingent deferred sales charge if those shares are redeemed
within six years of purchase. Class M shares are sold with a maximum
front-end sales charge of 3.50% and pay an ongoing distribution fee
that is lower than class B shares and higher than class A shares.
Expenses of the fund are borne pro-rata by the holders of each class
of shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class) and 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.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles.
<PAGE>
A SECURITY VALUATION Investments for which market quotations are
readily available are stated at market value, which is determined
using the last reported sale price, or, if no sales are reported -- as
in the case of some securities traded over-the-counter -- the last
reported bid price, except that certain U.S. government obligations
are stated at the mean between the last reported bid and asked prices.
Short-term investments having remaining maturities of 60 days or less
are stated at amortized cost, which approximates market value, and
other investments are stated at fair value following procedures
approved by the Trustees.
B JOINT TRADING ACCOUNT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account, along with the cash of
other registered investment companies managed by Putnam Investment
Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-
owned subsidiary of Putnam Investments, Inc., and certain other
accounts. These balances may be invested in one or more repurchase
agreements and/or short-term money market instruments.
C REPURCHASE AGREEMENTS The fund, or any joint trading account,
through its custodian, receives delivery of the underlying securities,
the market value of which at the time of purchase is required to be an
amount at least equal to the resale price, including accrued interest.
Putnam Management is responsible for determining that the value of
these underlying securities is at all times at least equal to the
resale price, including accrued interest.
D SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security
transactions are accounted for on the trade date (date the order to
buy or sell is executed). Interest income is recorded on the accrual
basis and dividend income is recorded on the ex-dividend date, except
that certain dividends from foreign securities are recorded as soon as
the fund is informed of the ex-dividend date.
<PAGE>
E FEDERAL TAXES It is the policy of the fund to distribute all of
its income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to
distribute an amount sufficient to avoid imposition of any excise tax
under Section 4982 of the Internal Revenue Code of 1986. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation of securities held and excise tax on income
and capital gains.
F DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are
recorded by the fund on the ex- dividend date. 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 differences include treatment of
losses on wash sale transactions and non-taxable dividends.
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,
1995, the fund reclassified $68,340 to decrease undistributed net
investment income and $68,340 to increase paid-in capital. The
calculation of net investment income per share in the financial
highlights excludes these adjustments.
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management for management and investment
advisory services is paid quarterly based on the average net assets of
the fund for the quarter. 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, and 0.45% of
any amount over $1.5 billion, subject under current law to reduction
in any year to the extent that expenses (exclusive of distribution
fees, brokerage, interest and taxes) of the fund exceed 2.5% of the
first $30
<PAGE>
million of average net assets, 2.0% of the next $70 million and 1.5%
of any amount over $100 million and by the amount of certain brokerage
commissions and fees (less expenses) received by affiliates of Putnam
Management on the fund's portfolio transactions.
The fund also reimburses Putnam Management for the compensation and
related expenses of certain officers of the fund and their staff who
provide administrative services to the fund. The aggregate amount of
all such reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $1,510 and an
additional fee for each Trustees' meetings attended. Trustees who are
not interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance at
certain committee meetings.
Custodial functions for the fund are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
Investor servicing and custodian fees reported in the Statement of
operations for the year ended July 31, 1995, have been reduced by
credits allowed by PFTC. These credits amounted to $598,232.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares (The class M shares Plan was
adopted on December 2, 1994) pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred
by it in distributing shares of the fund. The Plans provide for
payments by the fund to Putnam Mutual Funds Corp. at an annual rate up
to 0.35%, 1.00% and 1.00% of the average net assets attributable to
class A, class B and class M shares, respectively. The Trustees have
approved payment by the fund at an annual rate of 0.25%, 1.00% and
0.75% of the average net assets attributable to class A, class B and
class M shares, respectively.
For the year ended July 31, 1995, Putnam Mutual Funds Corp., acting as
<PAGE>
underwriter received net commissions of $85,201 from the sale of class
A shares and $2,647 for the sale of class M shares. There were $57,572
in contingent deferred sales charges from redemptions of class B
shares. A deferred sales charge of up to 1% is assessed on certain
redemptions of class A shares purchased as part of an investment of $1
million or more. For the year ended July 31, 1995, Putnam Mutual Funds
Corp., acting as underwriter received $12,761 on such class A
redemptions.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the year ended July 31, 1995, purchases and sales of investment
securities other than short-term investments aggregated $782,852,557
and $788,040,514, respectively. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
NOTE 4
CAPITAL SHARES
At July 31, 1995, there was an unlimited number of shares of
beneficial interest authorized divided into three classes, class A,
class B and class M capital stock. Transactions in capital shares were
as follows:
<TABLE><CAPTION>
<S> <C> <C>
YEAR ENDED JULY 31
- ----------------------------------------------------------------------
1995
- ----------------------------------------------------------------------
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 16,107,622 $126,498,124
Shares issued in connection with
reinvestment of distributions 8,899,073 61,404,571
- ----------------------------------------------------------------------
25,006,695 187,902,695
- ----------------------------------------------------------------------
Shares repurchased (19,318,250) (152,210,023)
- ----------------------------------------------------------------------
NET INCREASE 5,688,445 $35,692,672
- ----------------------------------------------------------------------
YEAR ENDED JULY 31
- ----------------------------------------------------------------------
1994
- ----------------------------------------------------------------------
CLASS A SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 15,965,560 $134,134,981
Shares issued in connection with
reinvestment of distributions 12,359,923 98,632,189
- ----------------------------------------------------------------------
28,325,483 232,767,170
- ----------------------------------------------------------------------
Shares repurchased (18,934,053) (160,594,096)
- ----------------------------------------------------------------------
NET INCREASE 9,391,430 $72,173,074
- ----------------------------------------------------------------------
<PAGE>
YEAR ENDED JULY 31
- ----------------------------------------------------------------------
1995
- ----------------------------------------------------------------------
CLASS B SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 4,383,126 $34,049,532
Shares issued in connection with
reinvestment of distributions 314,401 2,137,928
- ----------------------------------------------------------------------
4,697,527 36,187,460
- ----------------------------------------------------------------------
Shares repurchased (2,007,255) (15,512,101)
- ----------------------------------------------------------------------
NET INCREASE 2,690,272 $20,675,359
- ----------------------------------------------------------------------
YEAR ENDED JULY 31
- ----------------------------------------------------------------------
1994
- ----------------------------------------------------------------------
CLASS B SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 3,759,392 $31,677,177
Shares issued in connection with
reinvestment of distributions 117,975 939,081
- ----------------------------------------------------------------------
3,877,367 32,616,258
- ----------------------------------------------------------------------
Shares repurchased (1,714,371) (15,021,766)
- ----------------------------------------------------------------------
NET INCREASE 2,162,996 $17,594,492
- ----------------------------------------------------------------------
DECEMBER 2, 1994
(COMMENCEMENT
OF OPERATIONS)
TO JULY 31
- ----------------------------------------------------------------------
1995
- ----------------------------------------------------------------------
CLASS M SHARES AMOUNT
- ----------------------------------------------------------------------
Shares sold 131,458 $1,070,749
Shares issued in connection with
reinvestment of distributions -- --
- ----------------------------------------------------------------------
131,458 1,070,749
- ----------------------------------------------------------------------
Shares repurchased (34,622) (285,366)
- ----------------------------------------------------------------------
NET INCREASE 96,836 $785,383
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
FEDERAL TAX INFORMATION
Pursuant to Section 852 of the Internal Revenue Code, the fund hereby
designates $0.734 per share (or if different, the amount necessary to
offset net capital gains earned by the fund) for all share classes as
capital gain dividends for its taxable year ended July 31, 1995.
The Form 1099 you receive in January 1996 will show the tax status of
all distributions paid to your account in calendar 1995.
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Bret C. Browchuk
Vice President
Carol C. McMullen
Vice President and Fund Manager
David J. Santos
Vice President and Fund Manager
Harlan R. Sonderling
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Investors
Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales
charges, investment objectives, and operating policies of the fund and
the most recent copy of Putnam's Quarterly Performance Summary. For
more information or to request a prospectus, call toll free 1-800-225-
1581.
SHARES OF MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
<PAGE>
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
19854-003/307/385
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Italic typefaces is displayed in normal type.
(3) Boldface type is displayed in capital letters.
(4) Headers (e.g. the names of the fund) and footers (e.g. page
numbers and OThe accompanying notes are an integral part of these
financial statementsO) are omitted.
(5) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(6) Bullet points and similar graphic symbols are omitted.
(7) Page numbering is different.
