Putnam
Investors
Fund
SEMIANNUAL REPORT
January 31, 1995
[Graphic - Logo Scales]
B O S T O N * L O N D O N * T O K Y O
<PAGE>
Performance highlights
> "We remain cautiously optimistic that persisting strength in the domestic
economy coupled with robust corporate earnings may bolster equity prices in
the coming months."
-- Brooke Cobb, Fund Manager
> 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.
SEMIANNUAL RESULTS AT A GLANCE
<TABLE>
<CAPTION>
Class A Class B
Total return: NAV POP NAV CDSC
<S> <C> <C> <C> <C> <C>
................................................................................................................
(change
in value
during period plus
reinvested distributions)
6 months ended 1/31/95 1.76% -4.10% 1.25 % -3.32 %
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
1/31/95 7.22 7.66 7.11 7.21 7.47
Distributions: Long-term
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
</TABLE>
Performance data represent past results and will differ for each share class.
For performance over longer periods, see page 8. POP assumes 5.75% maximum
sales charge for class A shares and 3.50% for class M shares. CDSC assumes 5%
maximum contingent deferred sales charge. Performance for class M shares
which became effective 12/2/94 is not shown because of the brevity of the
reporting period. Past performance is no indication of future results.
2
<PAGE>
From the Chairman
[Graphic - Picture of George Putnam]
(c) Karsh, Ottawa
Dear Shareholder:
From a vantage point halfway through Putnam Investors Fund's fiscal 1995, we
look back on an unsettled stock market's attempting to balance the negative
effect of rising interest rates with the positive results of continued
economic strength.
Looking ahead, we see lingering market volatility as investors continue to
take a wait-and-see approach toward equities. The arrival of summer, and the
end of fiscal 1995, may bring a better mood in the stock market as many of
the current uncertainties are resolved. Fund managers Brooke Cobb and David
Santos have already started shifting part of the portfolio toward industry
sectors that have historically done well during the latter stages of a
recovery.
I am pleased to announce that Harlan Sonderling has joined Brooke and Dave in
the management of your fund. Before joining Putnam as an analyst in 1992,
Harlan was director of research at Mutual of America Life Insurance Company
and a portfolio manager and analyst at Dillon Read Capital. He has nine years
of investment experience.
In the report that follows, your fund's management team reviews the fiscal
year to date and discusses plans for the second half of fiscal 1995.
Respectfully yours,
[Graphic - Signature of George Putnam]
George Putnam
Chairman of the Trustees
March 15, 1995
3
<PAGE>
Report from the fund managers
Brooke A. Cobb, lead manager
David J. Santos
Harlan Sonderling
Nineteen-ninety-four was a profoundly frustrating year for many domestic
equity investors. Meaningful returns eluded strategists of all types as the
stock market overreacted to bad news and largely ignored positive
developments. This stagnant market was the result of a struggle between
healthy -- even record -- corporate earnings and rising interest rates.
Ultimately, rising rates helped stifle the performance of domestic stocks.
The last six months have seen the Standard & Poor's 500((r)) Index recover
somewhat, gaining 4.14% through January 31, 1995. However, these gains have
been due primarily to a small number of outperforming sectors, such as
technology and health care; only recently has this improvement begun to
filter into the broader market. Despite exposure to technology companies,
Putnam Investors Fund had a somewhat difficult semiannual period. Under the
weight of residual equity weakness, your fund's class A shares returned 1.76%
at net asset value (NAV). Complete performance details can be found on page
8.
> ECONOMIC STRENGTH HAS ITS DOWNSIDE
During 1994, the American economy sped along at a brisk pace. Quarterly gross
domestic product (GDP) increases were truly impressive, with domestic output
rising more than 4% for the year.
Stock prices, as a whole, did not make any appreciable gains over the year,
however. High bond yields cast a shadow over the markets, with fixed-income
securities' prices suffering from inflationary fears. Inflation concerns --
but not the actual phenomenon itself -- stubbornly persisted all year. The
Federal Reserve Board, concerned that an unrelentingly strong economy would
spark runaway inflation, unleashed successive rounds of interest rate
increases. Rising interest rates make borrowing more expensive, which tends
to hurt consumers and companies, and, ultimately may hold down stock prices.
4
<PAGE>
> RESEARCH-BACKED STOCK SELECTION HELPS
HIGHLIGHT POTENTIAL STRENGTHS
As they did in the broader market, technology companies proved a bright spot
for your fund (the portfolio did not have significant exposure to the buoyant
health care equities). Companies in the fund's portfolio, such as DSC
Communications, Computer Associates International, Inc., Computer Sciences
Corp., and Motorola Inc., all did very well over the period. These and other
networking, software, and telecommunications issues may continue their robust
performance in the coming months.
In spite of this period's moderate difficulties -- in our opinion, due
primarily to the effects of rising interest rates -- we expect to maintain
many of the portfolio's positions. We do not think it is wise to abandon
fundamentally sound companies. Keep in mind that your fund's portfolio
holdings are selected only after extensive research. Thus, we will continue
to hold companies that we initially selected because of their strong
prospects. We will keep the portfolio well diversified across a variety of
sectors, with an added emphasis on attractively valued financial services
companies. Among the portfolio holdings we believe bear watching this year
are the retailer Tandy Corp., with its increasingly strong earnings, as well
as Philip Morris, Xerox, and Johnson & Johnson, which have all announced
potentially beneficial restructuring plans.
[Graphic - Bar Chart]
TOP INDUSTRY SECTORS 1/31/95*
Insurance and finance - 13.3%
Health care - 11.2%
Business equipment & services - 7.2%
Retail - 6.4%
Consumer non durables - 6.0%
[End Bar Chart]
*Based on net assets on 1/31/95. Portfolio holdings will vary over time.
5
<PAGE>
> A STRONGER YEAR FOR EQUITIES?
Recent positive developments may herald an improving environment for
equities. Many companies have embarked on substantial stock buyback
campaigns. Our research indicates that the S&P 100(R) is somewhat
overcapitalized; such stock buybacks, if enacted, can mop up excessive
outstanding shares. IBM, Wells Fargo and Co., Reebok International, Premark
International, Philip Morris Cos., Inc., Coca-Cola Co., and Traveler's are
some of the well-known corporations that have announced plans to repurchase
their own shares. We also are heartened by the increasing number of insiders
who have bought stock in their own companies. This action generally indicates
a fundamental confidence by those running businesses that equities may return
to more dynamic performance.
Other current trends also seem to favor stocks. Even as the United States
appears to be entering a mature phase in the business cycle, other countries
are finally shrugging off recession. Strength in Europe and Asia is sparking
demand for American exports; such international desire for U.S. goods could
prolong domestic economic expansion. America's current political climate,
which seems to favor business and investors, could also be a boon to stocks.
> THE COMING MONTHS
Ultimately, a perceptibly slowing economy will be the strongest argument
against further interest rate increases. If the February 2, 1995, increase
proves to be among the last, we believe the domestic economy has a good
chance of achieving a vaunted "soft landing." Under this scenario, higher
interest rates would slow GDP growth to a more sustainable level. Bond yields
could fall and inflationary fears could recede, fostering a generally
positive environment for stocks.
6
<PAGE>
TOP 10 HOLDINGS (1/31/95)
Johnson & Johnson
Health care/personal products company $18,018,750
AT&T Co.
Leading telecommunications company $16,209,375
Xerox Corp.
Photocopying machines, office equipment $15,859,375
Coca-Cola Co.
World's largest soft-drink company $14,962,500
Philip Morris Cos., Inc.
Domestic food processing, alcohol, and tobacco $14,310,000
Mobil Corp.
Worldwide petroleum and chemicals company $14,251,875
Procter & Gamble Co.
Leading marketer of household/personal products $14,028,750
McDonnell Douglas Corp.
Aircraft/defense concern $13,800,000
Motorola International, Inc.
Cellular communications $13,598,750
British Petroleum Co. Plc
Crude oil and natural gas enterprise $13,584,375
These holdings represent 18.7% of the fund's net assets. Portfolio holdings
will vary over time.
During relatively difficult periods such as this one, equity investors should
remind themselves why they participate in the stock market. Historically,
stocks have outperformed all other types of investments, and we remain
fundamentally confident about equities in the months ahead.
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 January 31, 1995, there is no guarantee the fund will
continue to hold these securities in the future.
7
<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. For comparative purposes, we show how
the fund performed relative to appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 1/31/95
<TABLE>
<CAPTION>
Class A Class B Standard &
Poor's 500
NAV POP NAV CDSC Index CPI
<S> <C> <C> <C> <C> <C> <C>
6 months 1.76% -4.10 % 1.25% -3.32% 4.14% 1.28%
1 year -5.24 -10.65 -6.00 -10.24 0.55 2.80
5 years 67.10 57.48 -- -- 66.70 17.98
Annual average 10.81 9.51 -- -- 10.76 3.36
10 years 218.58 200.17 -- -- 263.87 42.46
Annual average 12.28 11.62 -- -- 13.79 3.60
Life of class 10.87 7.45 12.61 5.03
Annual average 5.52 3.82 6.38 2.59
</TABLE>
TOTAL RETURN FOR PERIODS ENDED 12/31/94
(most recent calendar quarter)
<TABLE>
<CAPTION>
Class A Class B
NAV POP NAV CDSC
<S> <C> <C> <C> <C>
1 year -3.19 -8.78 -4.06 -8.39
5 years 53.89 45.12 -- --
Annual average 9.00 7.73 -- --
10 years 244.51 224.71 -- --
Annual average 13.17 12.50 -- --
Life of class B -- -- 9.78 6.40
Annual average -- -- 5.23 3.45
</TABLE>
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 12/1/94, class M
shares. Performance of share classes will differ; class M share performance
is not shown here because of the brevity of the reporting period. Performance
data represent past results. 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. Past performance is not indicative of future results.
8
<PAGE>
TERMS AND DEFINITIONS
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales charge and a higher 12b-1 fee than
class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including any
initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance figures
shown here assume the maximum 5.75% sales charge for class A shares and 3.50%
for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of class B shares and assumes redemption at the end of the
period. Your fund's CDSC declines from a 5% maximum during the first year to
1% during the sixth year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
Standard & Poor's 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.
9
<PAGE>
A Putnam perspective on risk and reward
You've probably been told how important it is to understand the relationship
between an investment's potential rewards and its accompanying risks. Given
the cautionary nature of such instructions, it may take most investors a
while to realize that risk has a positive side.
Every risk signals a potential reward. Selecting only those investments that
offer the greatest degree of security generally leads to only modest rewards.
Furthermore, even insured or guaranteed investments may be subject to changes
in their rates of return or, in some cases, in their principal values.
Experienced investors know that no investment is truly risk free and are
therefore willing to take on some measure of risk in order to increase their
potential gains.
The greater the risk, the greater the potential reward.
Accepting an appropriate level of investment risk can give you a better
chance of outpacing inflation over time and seeking to maximize your
investment's return. How much risk? Your financial
> A RUNDOWN OF RISK TYPES
MARKET RISK Most important for stock funds, but relevant to all funds, this
is a measure of how sensitive a fund's holdings are to changes in general
market conditions. Remember, though, that securities that lose value quickly
in market declines may also show the strongest gains in more favorable
environments.
INTEREST-RATE RISK Since bond prices fall as interest rates rise, this type
of risk is a particular concern for fixed-income investors. However,
interest-rate increases can also have a substantial negative effect on the
stock market.
INFLATION RISK If your investments cannot keep pace with inflation, your
money will begin to lose its purchasing power. Stock investments are
generally considered among the best ways of addressing inflation risk over
the long term.
10
<PAGE>
advisor's feedback and your time horizon can make all the difference in
determining how much risk is compatible with your investment goals and your
peace of mind.
> FITTING YOUR FUND SELECTION TO YOUR
RISK TOLERANCE
How do you find the right balance between investment risks and their
potential rewards. It's helpful to understand the types of risks that can
apply to different types of investments, and to look at your own portfolio
with this perspective.
For short-term goals, your first priority may be managing market risk.
Longer-term investors may be more concerned with inflation risk. And all
income-oriented investors should consider interest- rate, credit, and
prepayment risks carefully. Within each of Putnam's four investment
categories, you can select funds with differing levels of risk and reward
potential to customize your portfolio.
CREDIT AND PREPAYMENT RISK Credit risk is the concern that the security's
issuer will not be able to meet its payment, while prepayment risk involves
the premature payoff of a loan, with a resulting loss of interest income.
Professional management and in-depth research are invaluable in managing both
these risks.
LIQUIDITY RISK Not all investments can be readily converted into cash at
their perceived market values. Liquidity risk can affect the price of
securities held in the fund's portfolio and, thus, the fund's share prices.
This list covers only the most general types of risks; however, each
investment will also have its own specific risks. You will find a more
detailed discussion of these risk considerations in each fund's prospectus.
11
<PAGE>
Putnam Family of Funds
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
Investors Fund
Natural Resources Fund*
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
PUTNAM GROWTH AND
INCOME FUNDS
Convertible Income-Growth Trust
Dividend Growth Fund
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Managed Income Trust
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Balanced Government Fund
Corporate Asset Trust
Diversified Income Trust
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
U.S. Government Income Trust
Please call your financial advisor or Putnam to
obtain a prospectus for any Putnam fund. It contains
more complete information, including charges and expenses. Please read it
carefully before you invest or send money.
PUTNAM TAX-FREE
INCOME FUNDS
Intermediate Tax Exempt Fund
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds+
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey,
New York, Ohio, and
Pennsylvania
LIFESTAGE(SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments to help
maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS++
Putnam money market funds:
Money Market Fund (section)
California Tax Exempt Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts**
*Formerly Energy-Resources Trust.
+Not available in all states.
++Relative to above.
(section) Formerly Daily Dividend Trust.
**Not offered by Putnam Investments. Certificates of deposit offer a fixed
rate of return and may be insured, up to certain limits, by federal/state
agencies. Savings accounts may also be insured up to certain limits.
12
<PAGE>
Portfolio of investments owned
January 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Common Stocks (93.9%)(*)
Number of Shares Value
Aerospace and Defense (2.4%)
115,000 Boeing Co. $ 5,117,500
276,000 McDonnell Douglas Corp. 13,800,000
------------
18,917,500
Automotive (1.2%)
260,700 Magna International, Inc. A 9,385,200
Basic Industrial Products (4.1%)
445,000 Black & Decker Manufacturing Co. 10,680,000
250,000 Caterpillar Inc. 12,875,000
123,600 Deere (John) & Co. 8,806,500
------------
32,361,500
Broadcasting (2.8%)
200,000 CBS Inc. 11,675,000
490,000 Tele-Communications, Inc. Class A+ 10,412,500
------------
22,087,500
Business Equipment and Services (7.2%)
215,000 Computer Associates International, Inc. 10,723,125
230,000 Computer Sciences Corp.+ 11,068,750
290,000 EMC Corp.+ 5,401,250
165,000 IBM Corp. 11,900,625
55,800 Sybase, Inc.+ 2,427,300
145,000 Xerox Corp. 15,859,375
------------
57,380,425
Chemicals (3.5%)
150,000 Dow Chemical Co. 9,356,250
165,000 du Pont (E.I.) de Nemours & Co., Ltd. 8,786,250
147,100 PPG Industries Inc. 5,166,888
160,800 Union Carbide Corp. 4,100,400
------------
27,409,788
Communications (4.1%)
325,000 American Telephone & Telegraph Co. 16,209,375
260,000 DSC Communications Corp.+ 8,352,500
140,000 Ericsson (L. M.) Telephone Co. ADR, Class B 7,542,500
------------
32,104,375
Conglomerates (1.2%)
260,000 Allied-Signal Inc. 9,295,000
13
<PAGE>
Common Stocks
Number of Shares Value
Consumer Non Durables (6.0%)
44,900 Gillette Co. (The) $ 3,451,688
255,000 Lowes Cos., Inc. 9,371,250
240,000 Philip Morris Cos., Inc. 14,310,000
225,000 Premark International, Inc. 9,253,125
165,000 Scott Paper Co. 11,446,875
------------
47,832,938
Consumer Services (4.1%)
360,000 Marriott International, Inc. 10,890,000
215,000 Procter & Gamble Co. 14,028,750
210,000 Reebok International Limited 7,980,000
------------
32,898,750
Electronics and Electrical Equipment (2.6%)
155,000 Emerson Electric Co. 9,765,000
185,000 General Instrument Corp. 5,041,250
265,000 Scientific Atlanta, Inc. 5,333,125
------------
20,139,375
Energy-Related (6.9%)
175,000 British Petroleum Co. PLC ADR+ 13,584,375
330,000 Enron Corp. 9,611,250
235,000 Fluor Corp. 10,868,750
375,000 MCN Corp. 6,609,375
165,000 Mobil Corp. 14,251,875
------------
54,925,625
Environmental Control (1.3%)
340,000 Browning-Ferris Industries, Inc. 10,540,000
Food and Beverages (5.5%)
285,000 Coca-Cola Co. 14,962,500
320,000 ConAgra, Inc. 9,880,000
235,000 PepsiCo, Inc. 8,665,625
385,000 Sara Lee Corp. 10,154,375
------------
43,662,500
Forest Products (0.1%)
14,200 International Paper Co. 1,009,975
Health Care (11.2%)
137,500 Amgen, Inc. + 8,748,437
245,000 Columbia/HCA Healthcare Corp. 9,830,625
400,000 Humana, Inc. + 9,150,000
310,000 Johnson & Johnson 18,018,750
135,000 Pfizer, Inc. 11,036,250
245,000 U.S. Healthcare Inc. 11,208,750
213,400 United Healthcare Corp. 10,349,900
140,000 Warner-Lambert Co. 10,920,000
------------
89,262,712
14
<PAGE>
Common Stocks
Number of Shares Value
Insurance and Finance (13.3%)
305,000 American Express Co. $ 9,607,500
90,000 American International Group, Inc. 9,371,250
230,000 BankAmerica Corp. 9,918,750
125,000 CIGNA Corp. 8,453,125
275,000 Citicorp 11,171,875
210,000 Dean Witter, Discover & Co. 7,848,750
100,000 Federal National Mortgage Assn. 7,150,000
425,000 MBNA Corp. 10,837,500
245,000 NationsBank Corp. 11,392,500
340,000 Travelers, Inc. 12,537,500
50,000 Wells Fargo & Co. 7,356,250
------------
105,645,000
Metals and Mining (1.0%)
155,000 Phelps Dodge Corp. 8,118,125
Photography (1.5%)
250,000 Eastman Kodak Co. 12,250,000
Retail (6.4%)
520,000 Federated Department Stores+ 9,815,000
415,000 Office Depot, Inc.+ 10,790,000
205,000 Pep Boys-Manny Moe & Jack 6,688,125
345,000 Rite Aid Corp. 8,668,125
150,000 Tandy Corp. 6,637,500
176,100 Walgreen Co. 8,364,750
------------
50,963,500
Technology (7.5%)
190,000 Applied Materials, Inc.+ 7,315,000
85,000 Intel Corp. 5,896,875
145,000 LSI Logic Corp. 6,162,500
230,000 Motorola, Inc. 13,598,750
190,000 Oracle Systems Corp.+ 8,098,750
262,900 Silicon Graphics Inc.+ 8,215,625
145,000 Texas Instruments, Inc. 10,005,000
------------
59,292,500
------------
Total Common Stocks
(cost $686,482,572) $745,482,288
15
<PAGE>
Short-Term Investments (4.9%)*
Principal Amount Value
$20,000,000 Morgan (J.P.) & Co. Inc. 5.80s, February 21,
1995 $ 19,929,355
19,333,000 Interest in $605,000,000 joint repurchase
agreement dated January 31, 1995 with Goldman
Sachs & Co due February 1, 1995 with respect to
various U.S. Treasury obligations--maturity
value of $19,336,072 for an effective yield of
5.72% 19,336,072
------------
Total Short-Term Investments
(cost $39,265,427) $ 39,265,427
Total Investments
(cost $725,747,999)*** $784,747,715
<FN>
* Percentages indicated are based on net assets of $794,004,436, which
correspond to a net asset value per class A share, class B share and class M
share of $ 7.22, $7.11, and $7.21, respectively.
*** The aggregate identified cost on a tax basis is $726,011,712, resulting
in gross unrealized appreciation and depreciation of $92,297,579 and
$33,561,549, respectively, or net unrealized appreciation of $58,736,030.
+ Non-income-producing security.
ADR after the name of a foreign holding stands for American Depository
Receipt, representing ownership of a foreign security on deposit with a
domestic custodian bank.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
Statement of assets and liabilities
January 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments in securities, at value (identified cost $725,747,999)
(Note 1) $ 784,747,715
Dividends and other receivables 1,069,245
Receivable for securities sold 18,524,605
Receivable for shares of the fund sold 764,430
------------
Total assets 805,105,995
Liabilities
Payable to the custodian (Note 2) $ 731
Payable for securities purchased 7,261,920
Payable for shares of the fund repurchased 1,624,223
Payable for compensation of Manager (Note 2) 1,228,336
Payable for administrative services (Note 2) 7,726
Payable for compensation of Trustees (Note 2) 1,480
Payable for investor servicing and custodian fees (Note 2) 168,286
Payable for distribution fees (Note 2) 186,061
Other accrued expenses 622,796
Total liabilities 11,101,559
------------
Net assets $ 794,004,436
Represented by
Paid-in capital (Note 4) $ 724,730,972
Undistributed net investment income (Note 1) 4,654,856
Accumulated net realized gain on investments 5,618,891
Net unrealized appreciation of investments 58,999,717
------------
Total--Representing net assets applicable to capital shares
outstanding $ 794,004,436
Computation of net asset value and offering price
Net asset value and redemption price of class A shares
($768,810,476 divided by 106,541,105 shares) $7.22
Offering price per share (100/94.25 of $7.22)* $7.66
Net asset value and offering price of class B shares
($25,092,084 divided by 3,529,924 shares)** $7.11
Net asset value and redemption price of class M shares
($101,876 divided by 14,125 shares) $7.21
Offering price per share (100/96.5 of $7.21) $7.47
</TABLE>
* On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
Statement of operations
Six months ended January 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Investment income:
Dividends (net of foreign tax of $47,930) $ 7,753,045
Interest 920,516
------------
Total investment income $ 8,673,561
Expenses:
Compensation of Manager (Note 2) $ 2,487,378
Investor servicing and custodian fees (Note 2) 292,019
Compensation of Trustees (Note 2) 14,682
Auditing 22,557
Legal 8,961
Reports to shareholders 44,058
Administrative services (Note 2) 6,277
Distribution fees--class A (Note 2) 986,874
Distribution fees--class B (Note 2) 117,538
Distribution fees--class M (Note 2) 75
Registration fees 23,859
Other 14,428
------------
otal expenses 4,018,706
------------
Net investment income 4,654,855
Net realized gain on investments (Notes 1 and 3) 19,249,193
Net unrealized depreciation of investments during the period (11,234,911)
------------
Net gain on investments 8,014,282
------------
Net increase in net assets resulting from operations $ 12,669,137
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
Statement of changes in net assets
<TABLE>
<CAPTION>
Six months ended Year ended
January 31* July 31
1995 1994
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income $ 4,654,855 $ 7,221,081
Net realized gain on investments 19,249,193 81,316,015
Net unrealized depreciation of investments (11,234,911) (62,307,377)
------------ ------------
Net increase in net assets resulting from operations 12,669,137 26,229,719
Distributions to shareholders:
From net investment income
Class A -- (4,369,792)
Class B -- (32,475)
Class M -- --
From net realized gain on investments
Class A (71,940,283) (112,980,631)
Class B (2,300,176) (984,230)
Class M (3,410) --
Increase from capital share transactions (Note 4) 48,428,527 89,767,566
------------ ------------
Total decrease in net assets (13,146,205) (2,369,843)
Net assets
Beginning of period/year 807,150,641 809,520,484
------------ ------------
End of period/year (including undistributed net investment income
of $4,654,856 and $0, respectively) $794,004,436 $ 807,150,641
</TABLE>
*Unaudited
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
Financial Highlights
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For the period
December 2, 1994 March 1, 1993
(commencement of Six months (commencement
operations) to ended Year ended of operations) to
January 31* January 31* July 31 July 31
Class M Class B
1995 1995 1994 1993
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 7.78 $ 7.78 $ 8.85 $ 8.32
Investment Operations
Net Investment Income (Loss) -- .01 .03 (.03)
Net Realized and Unrealized Gain
(Loss) on Investments .16 .05 .21 .61
Total from Investment Operations .16 .06 .24 .58
Distributions to Shareholders
From Net Investment Income -- -- (.02) --
In Excess of Net Investment Income -- -- -- (.05)
From Net Realized Gain on
Investments (.73) (.73) (1.29) --
Total Distributions (.73) (.73) (1.31) (.05)
Net Asset Value, End of Period $ 7.21 $ 7.11 $ 7.78 $ 8.85
Total Investment
Return at Net Asset
Value (%)(b) 2.55(a) 1.25(a) 2.38 6.96(a)
Net Assets, End of Period (in
thousands) $102 $25,092 $21,033 $4,789
Ratio of Expenses to Average Net
assets (%) .25(a) .88(a) 1.77 .73(a)
Ratio of Net Investment Income
(Loss) to Average Net Assets (%) .08(a) .20(a) .08 (.12)(a)
Portfolio Turnover (%) 54.44(a) 54.44(a) 100.16 134.14(a)
</TABLE>
* Unaudited
(a) Not annualized.
(b) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
20
<PAGE>
<TABLE>
<CAPTION>
Six months
ended
January 31* Year ended July 31
Class A
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
$7.85 $ 8.87 $ 8.57 $ 9.20 $ 8.75 $ 8.73
.04 .06 .08 .12 .15 .22
.06 .26 1.45 .21 .89 .63
.10 .32 1.53 .33 1.04 .85
-- (.05) (.04) (.15) (.17) (.29)
-- -- (.03) -- -- --
(.73) (1.29) (1.16) (.81) (.42) (.54)
(.73) (1.34) (1.23) (.96) (.59) (.83)
$ 7.22 $ 7.85 $ 8.87 $ 8.57 $ 9.20 $ 8.75
1.76(a) 3.33 19.24 4.49 13.32 10.31
$768,810 $786,118 $804,731 $714,479 $739,775 $704,189
.50(a) .99 .90 .94 .89 .81
.59(a) .88 .84 1.33 1.78 2.42
54.44(a) 100.16 134.14 100.26 58.30 51.47
</TABLE>
21
<PAGE>
Financial Highlights (contd.,)
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
Seven months Year ended
ended July 31 December 31
Class A
1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $6.93 $ 6.59 $11.62 $ 11.90 $ 9.84
Investment Operations
Net Investment Income (Loss) .17 .13 .15 .23 .25
Net Realized and Unrealized Gain
(Loss) on Investments 1.71 .36 .57 1.46 2.52
Total from Investment Operations 1.88 .49 .72 1.69 2.77
Distributions to Shareholders
From Net Investment Income (.08) (.15) (.27) (.20) (.20)
In Excess of Net Investment Income -- -- -- -- --
From Net Realized Gain in
Investments -- -- (5.48) (1.77) (.51)
Total Distributions (.08) (.15) (5.75) (1.97) (.71)
Net Asset Value, End of Period $ 8.73 $ 6.93 $ 6.59 $ 11.62 $11.90
Total Investment
Return at Net Asset
Value (%)(b) 27.27(a) 7.48 4.00 15.74 29.20
Net Assets, End of Period (in
thousands) $699,176 $609,631 $765,538 $969,073 $1,075,052
Ratio of Expenses to Average Net
Assets (%) .46(a) .68 .61 .49 .51
Ratio of Net Investment Income
(Loss) to Average Net Assets (%) 2.13(a) 1.84 1.48 2.00 2.33
Portfolio Turnover (%) 31.96(a) 82.20 83.57 119.59 79.25
</TABLE>
* Unaudited
(a) Not annualized.
(b) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
22
<PAGE>
Notes to financial statements
January 31, 1995 (Unaudited)
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 1, 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. In addition, the Trustees declare separate dividends on each class of
shares. 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. All other expenses of the
fund are borne pro-rata by the holders of each class of shares. Shares of
each class would receive their pro- rata share of the net assets of the fund
if the fund were liquidated.
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.
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. The fund's Manager is
responsible for determining that the value of these underlying
23
<PAGE>
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.
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.
Reclassifications are made to the fund's capital accounts to reflect income
and gains available for distribution (or available capital loss carryovers)
under income tax regulations.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management for management and investment advisory
services is paid quarterly based on the average net assets of the fund 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 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 the Manager on the fund's portfolio transactions.
The fund also reimburses the Manager 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 $1,480 and an
additional fee for each Trustees' meetings attended. Trustees who are not
interested persons of the Manager 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 six months ended January 31, 1995, have been reduced by credits
allowed by PFTC.
The fund has adopted a distribution plan with respect to class A shares (the
"Class A Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940. The purpose of the Class A Plan is to compensate Putnam
24
<PAGE>
Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments, Inc.,
for services provided and expenses incurred by it in distributing class A
shares. The Trustees have approved payment by the fund to Putnam Mutual Funds
Corp., at an annual rate of 0.25% of the fund's average net assets
attributable to class A shares.
During the six months ended January 31, 1995, Putnam Mutual Funds Corp.,
acting as the underwriter, received net commissions of $39,019 from the sale
of class A shares of the fund.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of
class A shares repurchased as part of an investment of $1 million or more.
For the six months ended January 31, 1995, Putnam Mutual Funds Corp., acting
as the underwriter, received $11,335 contingent deferred sales charge on such
redemptions.
The fund has adopted a separate distribution plan with respect to its class B
shares (the "Class B Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The purpose of the Class B Plan is to compensate Putnam
Mutual Funds Corp. for services provided and expenses incurred by it in
distributing class B shares. The Class B Plan provides for payments by the
Fund to Putnam Mutual Funds Corp., at an annual rate of 1.00% of the fund's
average net assets attributable to class B shares.
Putnam Mutual Funds Corp. also receives the proceeds of the contingent
deferred sales charge on its class B share redemptions within six years of
purchase. The charge is based on declining rates, which begin at 5.00% of the
net asset value of the redeemed shares. For the six months ended January 31,
1995, Putnam Mutual Funds Corp., acting as the underwriter, received $20,776
contingent deferred sales charges from redemptions.
On December 1, 1994, the fund adopted a separate distribution plan with
respect to its class M shares (the "Class M Plan") pursuant to rule 12b-1
under the Investment Company Act of 1940. The purpose of the Class M Plan is
to compensate Putnam Mutual Funds Corp., for services provided and expenses
incurred by it in distributing class M shares. The Trustees have approved
payment to Putnam Mutual Funds Corp. at an annual rate of 0.75% of the fund's
average net assets attributable to class M shares.
For the period December 1, 1994 (commencement of operations) to January 31,
1995 Putnam Mutual Funds Corp., acting as an underwriter, received $321
commissions from the sales of class M shares of the fund.
Note 3
Purchases and sales of securities
During the six months ended January 31, 1995, purchases and sales of
investment securities other than short- term investments aggregated
$416,212,911 and $429,021,310, 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 January 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:
25
<PAGE>
<TABLE>
<CAPTION>
Six months ended Year ended
January 31, 1995 July 31, 1994
Class A Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 6,315,044 $ 47,788,298 15,965,560 $ 134,134,981
Shares issued in connection
with reinvestment of
distributions 8,901,327 61,420,119 12,359,923 98,632,189
15,216,371 109,208,417 28,325,483 232,767,170
Shares repurchased (8,756,974) (66,888,188) (18,934,053) (160,594,096)
Portion represented by
undistributed net investment
income -- -- -- --
Net increase 6,459,397 $ 42,320,229 9,391,430 $ 72,173,074
</TABLE>
<TABLE>
<CAPTION>
Six months ended Year ended
January 31, 1995 July 31, 1994
Class B Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 1,421,670 $10,661,445 3,759,392 $ 31,677,177
Shares issued in connection
with reinvestment of
distributions 314,699 2,139,950 117,975 939,081
1,736,369 12,801,395 3,877,367 32,616,258
Shares repurchased (910,627) (6,796,382) (1,714,371) (15,021,766)
Net increase 825,742 $ 6,005,013 2,162,996 $ 17,594,492
</TABLE>
December 1, 1994
(commencement
of operations) to
January 31, 1995
Class M Shares Amount
Shares sold 14,125 $103,285
Shares issued in
connection with
reinvestment of
distributions -- --
14,125 103,285
Shares repurchased -- --
Net increase 14,125 $103,285
26
<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
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
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
John J. Morgan
Vice President
Brooke Cobb
Vice President and Fund Manager
David J. Santos
Vice President and Fund Manager
Harlan 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.
27
<PAGE>
[Graphic - Putnam Investments Logo]
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
003/307-16916
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS:
(1) Bold and italic typefaces are displayed in normal type.
(2) Headers (e.g., the name of the fund) are omitted.
(3) Certain tabular and columnar headings and symbols are displayed
differently in this filing.
(4) Bullet points and similar graphic signals are omitted.
(5) Page numbering is omitted.
(6) Trademark symbol replaced with (TM)
