Putnam
Investors
Fund
SEMIANNUAL REPORT
January 31, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Putnam Investors Fund has expanded its long tradition of above-average
performance: for the past 10 years, the fund has outperformed more than 60% of
the growth funds ranked by Lipper Analytical Services. For the ten-year period
ended January 31, 1997, the fund's class A shares ranked 61 out of 165 growth
funds.*
* "With economic growth continuing at a moderate pace, investors have been
attracted to large, blue-chip companies that are gaining market share in
growth industries."
-- C. Beth Cotner, fund manager
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
12 Portfolio holdings
16 Financial statements
*Lipper Analytical Services, an independent research organization, ranks funds
according to total return performance. Their rankings vary over time and do
not reflect the effects of sales charges. For periods ended 1/31/97, class A
shares ranked 229 out of 685, 52 out of 261, and 61 out of 165 for 1-, 5-, and
10-year performance, respectively; class B shares ranked 265 out of 685 for
1-year performance; and class M shares ranked 251 out of 685 for 1-year
performance. Past performance is not indicative of future results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
Putnam Investors Fund was clearly among the beneficiaries of the rise in blue
chip stocks during the six months ended January 31, 1997. The high-quality
stocks of America's largest and strongest companies led the advance as the
market began its recovery from a significant correction at the start of the
fund's new fiscal year last August.
Those stocks, which dominate your fund's portfolio, also benefited from the
state of the U.S. economy. Continued slowing in the rate of economic growth
and the beneficial effect this had on inflation provided an ideal climate for
these securities as investors sought safe havens from a host of political,
economic, and market uncertainties.
Active management, of course, contributed to the positive results. Using
Putnam's extensive research capabilities, your fund's management team
maintained its focus on its company-by-company selection process, as detailed
in the following report.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
March 19, 1997
Report from the Fund Managers
C. Beth Cotner, lead manager
Manuel H. Weiss
David J. Santos
Richard B. England
In the first half of fiscal 1997, shareholders of Putnam Investors Fund
continued to benefit from the strength of the growth-oriented large-company
stocks that fueled the fund's performance through 1996. Our emphasis on such
holdings, referred to as large-cap stocks because of the large capitalization
- -- greater than $2 billion -- behind each stock issue, contributed to gains of
25.10% at net asset value and 17.94% at public offering price for the fund's
class A shares over the 12 months ended January 31, 1997. For the six months
ended January 31, 1997, the fund's class A shares posted total returns of
22.76% at net asset value and 15.74% at public offering price. Additional
performance results for class A shares, as well as performance results for
other share classes, are listed in the performance summary that begins on page
8.
* MARKET RALLY FAVORS TRIED-AND-TRUE INVESTMENT STYLE
Since Putnam Investors Fund's inception in 1925, its conservative strategy has
made it the choice of generations of shareholders. The fund seeks long-term
growth by investing in large-cap stocks of companies with established track
records, ample financial resources, and strong positions within their markets
- -- classic blue-chip stocks. Over time, these stocks are typically less
volatile in price than their small-company counterparts while providing an
attractive level of growth in value.
After last July's market correction, which was fueled by investor concerns
over the prospect of lower-than-expected corporate earnings, the market
quickly returned to its overall upward trend. The Dow Jones Industrial Average
reached one new record after another during the period. Despite this strong
climb in stock market prices, many investors remained wary of possible market
turbulence. They shunned smaller-capitalization stocks, which offer the
potential for substantial gains along with greater potential risk, and favored
investments in the types of large-cap stocks in which your fund invests. This
increased demand helped boost prices of large-cap stocks, and your fund
benefited as a result.
In addition to a favorable level of demand, your fund's portfolio also
benefited from recent announcements of reduced growth in inflation and other
economic indicators. These numbers increased investor optimism that the
Federal Reserve Board would refrain from pushing interest rates higher in an
attempt to stem inflation and, indeed, the Fed left rates unchanged at its
most recent meeting. A rate increase could be expected to have a negative
effect on corporate cash flows and earnings that, in turn, would be likely to
push stock prices lower.
* TECHNOLOGY, HEALTH-CARE, AND FINANCE SECTORS STILL LEAD FUND PERFORMANCE
When constructing your fund's portfolio, we employ a bottom-up investment
approach that combines quantitative screening techniques with fundamental
analysis to identify individual stocks that meet our investment criteria.
While the fund does not target specific industries, our focus on company
fundamentals often leads us to discover strong growth potential within several
companies involved in the same industry sectors. Three such sectors that made
significant contributions to fund performance are computer technology, retail
drug chains, and finance.
Early in the semiannual period, we began to focus on technology companies
whose products we expected would experience increased demand following major
Microsoft upgrades. This included Intel, whose faster processing chips are
needed to run the upgraded software and operating systems for
market-dominating Windows-based machines; Compaq, a leader in the manufacture
of personal computers; Microsoft itself; and other software solutions firms.
These stocks were among the portfolio's top performers as the period drew to a
close. While these stocks, along with others discussed in this report, were
viewed favorably at the end of the fiscal period, all portfolio holdings are
subject to review and adjustment in accordance with the fund's investment
strategy and may vary in the future.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS*]
TOP INDUSTRY SECTORS*
Insurance and finance 14.7%
Pharmaceuticals 8.8%
Consumer nondurables 8.2%
Retail 7.9%
Computer services and software 7.8%
Footnote reads:
*Based on net assets as of 1/31/97. Sector allocations will vary over time.
Retail drugstores represented a strong subsector within the health-care
industry for the fund during the period. The sector is well positioned to
benefit from an aging population that relies increasingly on prescription
medication -- recent nationwide demographics show that the average 65-year-old
maintains 10 prescriptions. Agreements between managed-care providers and
drugstore chains also point to growth potential for theses outlets. Walgreen's
is the prescription sales leader among drugstores, a position that may soon be
overtaken by CVS through its acquisition of Revco. During the period, all
three companies were represented in the fund's portfolio.
Insurance companies such as Travelers and money-center banks such as
BankAmerica continue to play an important role in the financial sector
holdings of the fund's portfolio. Our greater emphasis, however, has been on
credit card issuers and related companies. The stocks of these companies have
traditionally sold at a discount to, or below the relative value of, other
financial stocks, but valuations are on the upswing, thanks in part to rapid
earnings growth. Credit-related holdings during the period included MBNA, the
leading independent card issuer in the United States; American Express; and
Citicorp. Sears, the retailing giant, also gains a substantial portion of its
earnings from its credit card operation.
* CAUTIOUS OUTLOOK EMPHASIZES FOCUS ON STOCK SELECTION
While the Fed has taken no action on interest rates for the past two years,
consumer interest rates have been inching up in recent months. The final
quarter of calendar 1996 also showed strong gross domestic product (GDP)
growth of 4.7%. Although inflation appears under control and the GDP surge
appears temporary, the Fed may eventually feel compelled to curb any potential
overheating of the economy by raising rates.
TOP 10 HOLDINGS
General Elctric Co.
Conglomerate
Gillette Co.
Consumer nondurables
Intel Corp.
Technology components
Merck & Co.
Pharmaceuticals
Microsoft Corp.
Computer services and software
Pfizer, Inc.
Pharmacuticals
Citicorp
Insurance and finance
Eastman Kodak Co.
Photography
Sears, Roebuck & Co.
Retail
Honeywell, Inc.
Conglomerate
Footnote reads:
These holdings represent 22.9% of the fund's assets as of 1/31/97. Portfolio
holdings will vary overtime.
Such a scenario, combined with investors' fears of an overvalued market, could
lead to stock market growth at lower levels than have prevailed over the past
two years. Given this outlook, our stock-selection process -- which is
designed to identify those companies offering attractive long-term growth
prospects regardless of market conditions -- becomes increasingly more
important. We expect no significant changes in the fund's sector weightings
over the near term and will continue to seek companies with positive earnings
growth and solid fundamentals, the qualities that have given the fund its
solid track record for more than 70 years.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed
favorably as of 1/31/97, there is no guarantee the fund will continue to hold
these securities in the future.
Performance summary
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.
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 in the fund.
TOTAL RETURN FOR PERIODS ENDED 1/31/97
Class A Class B Class M
(inception date) (12/1/25) (3/1/93) (12/2/94)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 22.76% 15.74% 22.35% 17.35% 22.57% 18.24%
- ------------------------------------------------------------------------------
1 year 25.10 17.94 24.17 19.17 24.51 20.17
- ------------------------------------------------------------------------------
5 years 119.22 106.63 -- -- -- --
Annual average 17.00 15.62 -- -- -- --
- ------------------------------------------------------------------------------
10 years 263.73 242.79 -- -- -- --
Annual average 13.78 13.11 -- -- -- --
- ------------------------------------------------------------------------------
Life of class -- -- 92.16 89.16 78.79 72.58
Annual average -- -- 18.13 17.66 30.70 28.59
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/97
Standard & Poors Consumer
500 Index Price Index
- ------------------------------------------------------------------------------
6 months 24.13% 1.34%
- ------------------------------------------------------------------------------
1 year 26.33 3.04
- ------------------------------------------------------------------------------
5 years 119.41 15.21
Annual average 17.01 2.87
- ------------------------------------------------------------------------------
10 years 287.63 43.08
Annual average 14.51 3.65
- ------------------------------------------------------------------------------
Life of class B 96.01 11.18
Annual average 18.71 2.74
- ------------------------------------------------------------------------------
Life of class M 82.31 6.28
Annual average 31.86 2.85
- ------------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take into
account any adjustment for taxes payable on reinvested distributions.
Investment returns and principal value will fluctuate so that an
investor's shares, when sold, may be worth more or less than their
original cost. POP assumes 5.75% maximum sales charge for class A shares
and 3.50% for class M shares. CDSC for class B shares assumes the
applicable sales charge, with the maximum being 5%.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 1/31/97
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income $0.054 $0.013 $0.034
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term 1.006 1.006 1.006
- ------------------------------------------------------------------------------
Short-term 0.164 0.164 0.164
- ------------------------------------------------------------------------------
Total $1.224 $1.183 $1.204
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
7/31/96 $9.07 $9.62 $8.85 $9.00 $9.33
- ------------------------------------------------------------------------------
1/31/97 9.81 10.41 9.55 9.73 10.08
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 12/31/96
(most recent calendar quarter)
Class A Class B Class M
(inception date) (12/1/25) (3/1/93) (12/2/94)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 9.80% 3.50% 9.48% 4.65% 9.66% 5.85%
- ------------------------------------------------------------------------------
1 year 21.40 14.36 20.49 15.49 20.78 16.57
- ------------------------------------------------------------------------------
5 years 105.59 93.78 -- -- -- --
Annual average 15.50 14.15 -- -- -- --
- ------------------------------------------------------------------------------
10 years 284.70 262.55 -- -- -- --
Annual average 14.42 13.75 -- -- -- --
- ------------------------------------------------------------------------------
Life of class -- -- 80.70 77.70 67.94 62.11
Annual average -- -- 16.66 16.15 28.31 26.15
- ------------------------------------------------------------------------------
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. It is not
possible to invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
*Securities indexes assume reinvestment of all distributions and
interest payments and do not take in account brokerage fees or taxes.
Securities in the fund do not match those in the indexes and performance
of the fund will differ. It is not possible to invest directly in an
index.
WELCOME TO
www.putnaminv.com
Now you can get up-to-date information about your funds, learn more
about investing and retirement planning, and access market news and
an economic outlook from Putnam experts -- with just a few clicks of
the mouse!
VISIT PUTNAM'S NEW SITE ON THE WORLD WIDE WEB TO FIND OUT:
* the benefits of investing with Putnam
* Putnam's money management philosophy
* daily fund pricing and long-term fund performance
* how to tell if your retirement savings plan is on track
* how quickly money can accumulate in a tax-deferred investment
You can also read Dr. Robert Goodman's economic commentary and
Putnam's Capital Markets Forum outlook, search for a particular
Putnam fund by name or objective . . . and much more.
The site can be accessed through any of the major online services
(America Online, CompuServe, Prodigy) that offer web access. Of
course, you can also access it via Netscape and an independent
Internet service provider.
New features will be added to the site on an ongoing basis. So,
visit us at http://www.putnaminv.com -- often!
<TABLE>
<CAPTION>
Portfolio of investments owned
January 31, 1997 (Unaudited)
COMMON STOCKS (97.1%) *
NUMBER OF SHARES VALUE
<S> <C> <C>
Aerospace and Defense (1.9%)
- ---------------------------------------------------------------------------------------------------------
289,300 Boeing Co. $ 30,991,263
Basic Industrial Products (0.7%)
- ---------------------------------------------------------------------------------------------------------
229,000 Case Corp. 12,137,000
Building and Construction (1.3%)
- ---------------------------------------------------------------------------------------------------------
132,800 Armstrong World Industries, Inc. 9,428,800
219,500 Sherwin Williams Co. 12,182,250
--------------
21,611,050
Business Equipment and Services (1.3%)
- ---------------------------------------------------------------------------------------------------------
124,200 Computer Sciences Corp. + 8,787,150
282,600 Ikon Office Solutions, Inc. 12,469,725
--------------
21,256,875
Chemicals (4.6%)
- ---------------------------------------------------------------------------------------------------------
264,200 du Pont (E.I.) de Nemours & Co., Ltd. 28,962,925
577,200 Monsanto Co. 21,861,450
501,400 Praxair, Inc. 23,252,425
--------------
74,076,800
Computer Equipment (1.2%)
- ---------------------------------------------------------------------------------------------------------
218,800 Compaq Computer Corp. + 19,008,250
Computer Services and Software (7.8%)
- ---------------------------------------------------------------------------------------------------------
177,300 BMC Software, Inc. 7,690,388
549,750 Computer Associates Intl., Inc. 24,944,906
366,000 EMC Corp. + 13,862,250
264,200 HBO & Co. 16,545,525
373,300 Microsoft Corp. + 38,076,600
189,700 Parametric Technology Corp. + 10,955,175
262,200 PeopleSoft, Inc. + 14,289,900
--------------
126,364,744
Conglomerates (7.3%)
- ---------------------------------------------------------------------------------------------------------
415,300 General Electric Co. 42,775,900
442,400 Honeywell, Inc. 31,908,100
198,500 Textron, Inc. 19,328,938
340,100 United Technologies Corp. 23,721,975
--------------
117,734,913
Consumer Non Durables (8.2%)
- ---------------------------------------------------------------------------------------------------------
319,100 Avon Products, Inc. 20,023,525
131,000 Clorox Co. 15,539,875
514,200 Gillette Co. 41,907,300
311,700 Liz Claiborne, Inc. 13,130,363
383,500 Nike, Inc. Class B 26,030,063
138,200 Philip Morris Cos., Inc. 16,428,525
--------------
133,059,651
Consumer Services (2.4%)
- ---------------------------------------------------------------------------------------------------------
114,500 HFS, Inc. + 8,015,000
321,100 Marriott International, Inc. 17,058,438
487,100 Service Corp. International 14,125,900
--------------
39,199,338
Energy-Related ( 7.0%)
- ---------------------------------------------------------------------------------------------------------
353,700 Baker Hughes Inc. 13,794,300
168,700 British Petroleum Co. PLC ADR (United Kingdom) 23,892,138
52,700 Enron Corp. 2,173,875
247,300 Halliburton Co. 17,898,338
121,800 Mobil Corp. 15,986,250
177,500 Schlumberger Ltd. 19,724,688
393,000 Sonat, Inc. 20,927,250
--------------
114,396,839
Entertainment (1.3%)
- ---------------------------------------------------------------------------------------------------------
286,600 Disney (Walt) Productions, Inc. 20,993,450
Food and Beverages (1.1%)
- ---------------------------------------------------------------------------------------------------------
208,000 Campbell Soup Co. 17,264,000
Health Care (2.8%)
- ---------------------------------------------------------------------------------------------------------
295,100 Cardinal Health, Inc. 18,480,638
339,400 Healthsouth Rehabilitation Corp. + 14,806,325
224,300 Oxford Health Plans Inc. + 12,196,313
--------------
45,483,276
Insurance and Finance (14.7%)
- ---------------------------------------------------------------------------------------------------------
297,400 American Express Co. 18,550,325
136,300 American International Group, Inc. 16,509,338
258,100 Bank of Boston Corp. 18,389,625
272,400 BankAmerica Corp. 30,406,650
441,700 Barnett Banks, Inc. 19,434,800
172,800 Chase Manhattan Corp. 15,984,000
296,700 Citicorp 34,528,463
391,600 Federal National Mortgage Association 15,468,200
238,450 Franklin Resources, Inc. 12,995,525
134,800 Household International, Inc. 13,362,050
512,750 MBNA Corp. 17,689,875
477,433 Travelers Group Inc. 25,005,553
--------------
238,324,404
Medical Supplies and Devices (3.5%)
- ---------------------------------------------------------------------------------------------------------
533,200 Abbott Laboratories 28,992,750
159,000 Medtronic, Inc. 10,891,500
411,200 U.S. Surgical Corp. 16,499,400
--------------
56,383,650
Pharmaceuticals (8.8%)
- ---------------------------------------------------------------------------------------------------------
372,600 Johnson & Johnson 21,471,075
212,100 Lilly (Eli) & Co. 18,479,213
423,400 Merck & Co., Inc. 38,423,550
389,600 Pfizer, Inc. 36,184,100
349,700 Warner-Lambert Co. 28,150,850
--------------
142,708,788
Photography (2.1%)
- ---------------------------------------------------------------------------------------------------------
384,100 Eastman Kodak Co. 33,320,675
Publishing (2.0%)
- ---------------------------------------------------------------------------------------------------------
210,700 Gannett Co., Inc. 16,144,888
231,000 Harcourt General, Inc. 10,452,750
148,600 Tribune Co. 5,683,950
--------------
32,281,588
Retail (7.9%)
- ---------------------------------------------------------------------------------------------------------
226,300 CompUSA, Inc. + 4,639,150
393,000 CVS Corp. 16,997,250
432,300 Dayton Hudson Corp. 16,265,288
174,100 Lowe's Cos., Inc. 5,767,063
178,900 Revco D.S., Inc. + 6,708,750
371,300 Safeway, Inc. + 17,729,575
688,400 Sears, Roebuck & Co. 33,043,200
343,300 TJX Cos., Inc. (The) 13,646,175
343,500 Walgreen Co. 14,126,438
--------------
128,922,889
Technology -- Components (3.6%)
- ---------------------------------------------------------------------------------------------------------
239,800 Intel Corp. 38,907,550
255,400 Texas Instruments, Inc. 20,016,975
--------------
58,924,525
Telecommunications and Networking (5.1%)
- ---------------------------------------------------------------------------------------------------------
106,400 Ascend Communications, Inc. + 7,408,100
256,800 Cascade Communications Corp. + 10,207,800
393,000 Cisco Systems, Inc. + 27,411,750
137,500 Cincinnati Bell, Inc. 8,507,813
483,700 Sprint Corp. 19,710,775
229,000 Tellabs, Inc. + 9,431,929
--------------
82,678,167
Utilities (0.5%)
- ---------------------------------------------------------------------------------------------------------
166,000 Duke Power Co. 7,781,250
--------------
Total Common Stocks (cost $1,243,281,106) $1,574,903,385
SHORT-TERM INVESTMENTS (3.6%) *(cost $58,062,966)
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------
58,054,000 Interest in $667,115,000 joint repurchase agreement
dated January 31, 1997 with UBS Securities due
February 3, 1997 with with respect to various
U.S. Treasury obligations -- maturity value of
$58,080,898 for an effective yield of 5.56% $ 58,062,966
- ---------------------------------------------------------------------------------------------------------
Total Investments (cost $1,301,344,072) *** $1,632,966,351
- ---------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $1,622,326,179.
*** The aggregate identified cost on a tax basis is $1,301,647,492
resulting in gross unrealized appreciation and depreciation of
$347,817,249 and $16,498,390, respectively, or net unrealized
appreciation of $331,318,859.
+ Non-income-producing security.
ADR after the name of a foreign holding stands for American
Depository Receipts, representing ownership of foreign securities on
deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31, 1997 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,301,344,072) (Note 1) $1,632,966,351
- ---------------------------------------------------------------------------------------------------
Cash 36,254
- ---------------------------------------------------------------------------------------------------
Dividends receivable 1,073,361
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 9,084,182
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 21,751,494
- ---------------------------------------------------------------------------------------------------
Total assets 1,664,911,642
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 542,052
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 38,048,552
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 896,554
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 2,154,817
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 344,281
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 7,521
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 438,586
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 153,100
- ---------------------------------------------------------------------------------------------------
Total liabilities 42,585,463
- ---------------------------------------------------------------------------------------------------
Net Assets $1,622,326,179
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $1,230,827,099
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 2,512,907
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment (Note 1) 57,363,894
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 331,622,279
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $1,622,326,179
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,430,875,057 divided by 145,835,978 shares) $9.81
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $9.81)* $10.41
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($179,031,999 divided by 18,744,725 shares)** $9.55
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($12,315,518 divided by 1,266,128 shares) $9.73
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $9.73)* $10.08
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($103,605 divided by 10,560 shares) $9.81
- ---------------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended January 31, 1997 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $49,020) $ 8,778,002
- --------------------------------------------------------------------------------------------------
Interest 1,840,733
- --------------------------------------------------------------------------------------------------
Total investment income 10,618,735
- --------------------------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 4,073,833
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,075,043
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 19,585
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 11,077
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 1,606,900
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 646,236
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 30,645
- --------------------------------------------------------------------------------------------------
Reports to shareholders 69,454
- --------------------------------------------------------------------------------------------------
Registration fees 21,077
- --------------------------------------------------------------------------------------------------
Auditing 27,301
- --------------------------------------------------------------------------------------------------
Legal 9,974
- --------------------------------------------------------------------------------------------------
Postage 146,339
- --------------------------------------------------------------------------------------------------
Other 11,695
- --------------------------------------------------------------------------------------------------
Total expenses 7,749,159
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (122,851)
- --------------------------------------------------------------------------------------------------
Net expenses 7,626,308
- --------------------------------------------------------------------------------------------------
Net investment income 2,992,427
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 109,934,329
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 171,132,130
- --------------------------------------------------------------------------------------------------
Net gain on investments 281,066,459
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $284,058,886
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
January 31 July 31
1997* 1996
- --------------------------------------------------------------------------------------------------------
Increase in net assets
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------------
Net investment income $ 2,992,427 $ 7,316,081
- --------------------------------------------------------------------------------------------------------
Net realized gain on investments 109,934,329 191,105,305
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments 171,132,130 (54,557,549)
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 284,058,886 143,863,837
- --------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- --------------------------------------------------------------------------------------------------------
From net investment income
Class A (6,835,610) (8,965,954)
- --------------------------------------------------------------------------------------------------------
Class B (187,272) (268,401)
- --------------------------------------------------------------------------------------------------------
Class M (32,178) (17,785)
- --------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (148,104,876) (118,598,143)
- --------------------------------------------------------------------------------------------------------
Class B (16,854,480) (7,315,560)
- --------------------------------------------------------------------------------------------------------
Class M (1,107,312) (289,673)
- --------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 312,096,959 185,274,280
- --------------------------------------------------------------------------------------------------------
Total increase in net assets 423,034,117 193,682,601
- --------------------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------------
Beginning of period 1,199,292,062 1,005,609,461
- --------------------------------------------------------------------------------------------------------
End of period (including undistributed
net investment income of $2,512,907
and $6,575,540, respectively.) $1,622,326,179 $1,199,292,062
- --------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
For the period
January 7,1997
(commencement Six months
of operations) to ended Year
January 31 January 31 ended
(unaudited) (unaudited) July 31
--------------------------------------------------------------------
1997 1997 1996
--------------------------------------------------------------------
Class Y Class M
--------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.26 $9.00 $9.02
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02(d) --(d) .05
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments .53 1.93 1.12
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .55 1.93 1.17
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income -- (.03) (.07)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (1.17) (1.12)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions -- (1.20) (1.19)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.81 $9.73 $9.00
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 5.94* 22.57* 13.70
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $104 $12,316 $5,650
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b) .05* .76 * 1.51
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) .05* (.01)* .16
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 52.98* 52.98* 128.21
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (c) $.0521 $.0521
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial hghlights (continued)
(For a share outstanding throughout the period)
For the period
December 2, 1994 Six months
(commencement ended
of operations) to January 31
July 31 (unaudited) Year ended July 31
--------------------------------------------------------------------
1995 1997 1996
--------------------------------------------------------------------
Class M Class B
--------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $7.78 $8.85 $8.88
- ----------------------------------------------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .01 (.01)(d) --
- ----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1.96 1.89 1.13
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.97 1.88 1.13
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------------
From net investment income -- (.01) (.04)
- ----------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.73) (1.17) (1.12)
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions (.73) (1.18) (1.16)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.02 $9.55 $8.85
- ----------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 28.29* 22.35* 13.42
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $873 $179,032 $89,378
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b) 1.56* .89* 1.77
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) .29* (.13)* (.09)
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 96.75 52.98* 128.21
- ----------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (c) $.0521
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
For the period
March 1, 1993
(commencement
of operations) to
Year ended July 31 July 31
--------------------------------------------------------------------
1995 1994 1993
--------------------------------------------------------------------
Class B
--------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $7.78 $8.85 $8.32
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .01 .03 (.03)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1.82 .21 .61
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.83 .24 .58
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income -- (.02) --
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- (.05)
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (.73) (1.29) --
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (.73) (1.31) (.05)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.88 $7.78 $8.85
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 26.46 2.38 6.96*
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $47,906 $21,033 $4,789
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b) 1.75 1.77 .73*
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) .22 .08 (.12)*
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 96.75 100.16 134.14
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (c)
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
Six months
ended
January 31
(unaudited) Year Ended July 31
--------------------------------------------------------------------
1997 1996 1995
--------------------------------------------------------------------
Class A
--------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.07 $9.05 $7.85
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .02(d) .06 .08
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1.94 1.17 1.85
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.96 1.23 1.93
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.05) (.09) --
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (1.17) (1.12) (.73)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (1.22) (1.21) (.73)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.81 $9.07 $9.05
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 22.76* 14.32 27.55
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,430,875 $1,104,264 $956,830
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b) .51* 1.03 .99
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) .25* .69 1.03
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 52.98* 128.21 96.75
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (c) $.0521
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (continued)
(For a share outstanding throughout the period)
Year ended July 31
--------------------------------------------------------------------
1994 1993 1992
--------------------------------------------------------------------
Class A
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $8.87 $8.57 $9.20
- ---------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .06 .08 .12
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments .26 1.45 .21
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations .32 1.53 .33
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------
From net investment income (.05) (.04) (.15)
- ---------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- (.03) --
- ---------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (1.29) (1.16) (.81)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (1.34) (1.23) (.96)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.85 $8.87 $8.57
- ---------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 3.33 19.24 4.49
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $786,118 $804,731 $714,479
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(b) .99 .90 .94
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (%) .88 .84 1.33
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 100.16 134.14 100.26
- ---------------------------------------------------------------------------------------------------------------------------
Average commission rate paid (c)
- ---------------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter, includes
amounts paid through expense offset arrangements. Prior period ratios exclude these amounts. (Note 2.)
(c) Average commission rate paid on security trades is required for fiscal periods beginning on or after September 1, 1995.
(d) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding during the period.
</TABLE>
Notes to financial statements
January 31, 1997 (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, class M and class Y shares. The fund
began offering class Y shares on January 7, 1997. Class A shares are
sold with a maximum front-end sales charge of 5.75%. Class B shares,
which convert to class A shares after approximately eight years, do not
pay a front-end sales charge but pay a higher ongoing distribution fee
than class A shares, and may be subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class
M shares are sold with a maximum front end sales charge of 3.50% and pay
an ongoing distribution fee that is higher than class A shares but lower
than class B shares. Class Y shares, which are sold at net asset value,
are generally subject to the same expenses as class A, class B and class
M shares, but do not bear a distribution fee. Class Y shares are sold to
defined contribution plans that invest at least $250 million in a
combination of Putnam Funds and other certain accounts managed by
affiliates of Putnam Investment Management, Inc. ("Putnam Management"),
the fund's Manager, a wholly-owned subsidiary of Putnam Investments,
Inc.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if 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 preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported -- as in the
case of some securities traded over-the-counter -- the last reported bid
price. Short-term investments having remaining maturities of 60 days or
less are stated at amortized cost, which approximates market value.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Management. These balances may be invested in one or more
repurchase agreements and/or short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Putnam Management is responsible for determining that the value of these
underlying securities is at all times at least equal to the resale
price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed).
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date.
E) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held and for excise tax on income and capital
gains.
F) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid at least annually. The amount and character of income and gains
to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or available
capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management for management and investment advisory
services is paid quarterly based on the average net assets of the fund
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, 0.45% of the next $5 billion,
0.425% of the next $5 billion, 0.405% of the next $5 billion, 0.39% of
the next $5 billion and 0.38% of any excess over $21.5 billion. Prior to
November 20, 1996, any amount over $1.5 billion was based on 0.45%.
The fund 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.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended January 31, 1997, fund expenses were reduced by
$122,851 under expense offset arrangements with PFTC. Investor servicing
and custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested a portion of the assets utilized
in connection with the expense offset arrangements in an income
producing asset if it had not entered into such arrangements.
Trustees of the fund receive an annual Trustees fee of $1,530 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Plan") which
allows the Trustees to defer the receipt of all or a portion of Trustees
Fees payable on or after July 1, 1995. The deferred fees remain in the
fund and are invested in the fund or in other Putnam funds until
distribution in accordance with the Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00% and 1.00% of the average net assets attributable to class A, class
B and class M shares, respectively. The Trustees have approved payment
by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average
net assets attributable to class A, class B and class M shares
respectively.
For the six months ended January 31, 1997, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $197,784 and $7,332
from the sale of class A and class M shares, respectively and $78,447 in
contingent deferred sales charges from redemptions of class B shares. A
deferred sales charge of up to 1% is assessed on certain redemptions of
class A shares. For the six months ended January 31, 1997, Putnam Mutual
Funds Corp., acting as underwriter received $2,173 on class A
redemptions.
Note 3
Purchases and sales of securities
During the six months ended January 31, 1997, purchases and sales of
investment securities other than short-term investments aggregated
$847,055,439 and $711,156,135, respectively. There were no purchases and
sales of U.S. government obligations. In determining the net gain or
loss on securities sold, the cost of securities has been determined on
the identified cost basis.
Note 4
Capital shares
At January 31, 1997, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended
January 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 24,891,805 $ 244,480,674
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 14,833,193 134,537,019
- ------------------------------------------------------------
39,724,998 379,017,693
Shares
repurchased (15,648,371) (155,353,492)
- ------------------------------------------------------------
Net increase 24,076,627 $ 223,664,201
- ------------------------------------------------------------
Year ended
July 31, 1996
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 29,556,382 $ 268,906,499
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 12,717,866 109,244,237
- ------------------------------------------------------------
42,274,248 378,150,736
Shares
repurchased (26,285,050) (239,532,583)
- ------------------------------------------------------------
Net increase 15,989,198 $ 138,618,153
- ------------------------------------------------------------
Six months ended
January 31, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 11,397,288 $109,634,394
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,786,175 15,789,785
- ------------------------------------------------------------
13,183,463 125,424,179
Shares
repurchased (4,533,434) (43,324,549)
- ------------------------------------------------------------
Net increase 8,650,029 $ 82,099,630
- ------------------------------------------------------------
Year ended
July 31, 1996
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 7,908,988 $ 70,762,441
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 848,006 7,148,690
- ------------------------------------------------------------
8,756,994 77,911,131
Shares
repurchased (4,056,752) (36,084,392)
- ------------------------------------------------------------
Net increase 4,700,242 $ 41,826,739
- ------------------------------------------------------------
Six months ended
January 31, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 729,271 $7,163,732
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 122,565 1,103,086
- ------------------------------------------------------------
851,836 8,266,818
Shares
repurchased (213,199) (2,033,313)
- ------------------------------------------------------------
Net increase 638,637 $6,233,505
- ------------------------------------------------------------
Year ended
July 31, 1996
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 821,240 $7,445,792
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 34,478 301,527
- ------------------------------------------------------------
855,718 7,747,319
Shares
repurchased (325,063) (2,917,931)
- ------------------------------------------------------------
Net increase 530,655 $4,829,388
- ------------------------------------------------------------
For the period
January 7, 1997
(commencement
of operations)
to January 31, 1997
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 10,622 $100,196
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ------------------------------------------------------------
10,622 100,196
Shares repurchased (62) (573)
- ------------------------------------------------------------
Net increase 10,560 $ 99,623
- ------------------------------------------------------------
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund *
Health Sciences Trust
International Growth Fund +
International New Opportunities Fund
Investors Fund
New Opportunities Fund
OTC & Emerging Growth Fund [DBL. DAGGER]
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
Intermediate U.S. Government
Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio and Pennsylvania
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds-three investment portfolios that
spread your money across a variety of stocks, bonds, and money
market investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS **
Putnam money market funds: ++
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts [2 DBL. DAGGERS]
* Formerly Natural Resources Fund
+ Formerly Overseas Growth Fund
[DBL. DAGGER] Formerly OTC Emerging Growth Fund
[SECTION MARK] Not available in all states.
** Relative to above.
++ An investment in a money market fund is neither insured
nor guaranteed by the U.S. government. These funds are
managed to maintain a price of $1.00 per share,
although there is no assurance that this price will be
maintained in the future.
[2 DBL. DAGGERS] 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. Please call your financial advisor or Putnam
at 1-800-225-1581 to obtain a prospectus for any Putnam
fund. It contains more complete information, including
charges and expenses. Please read it carefully before
you invest or send money.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
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
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
John J. Morgan
Vice President
C. Beth Cotner
Vice President and Fund Manager
Manuel H. Weiss
Vice President and Fund Manager
David J. Santos
Vice President and Fund Manager
Richard B. England
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
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. You can also learn more at Putnam
Investments' website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, are not insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency,
and involve risk, including the possible loss of principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- --------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- --------------------
31258-003/307/385 3/97
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ------------------------------------------------------------------------
Putnam Investors Fund
Supplement to Semiannual Report dated 1/31/97
The following information has been prepared to provide class Y
shareholders with a performance overview specific to their holdings.
Class Y shares are offered exclusively to defined contribution plans
investing $250 million or more in one or more of Putnam's funds or
private accounts. Performance of class Y shares, which incur neither a
front-end load, distribution fee, nor contingent deferred sales charge,
will differ from performance of class A, B, and M shares, which are
discussed more extensively in the semiannual report.
SEMIANNUAL RESULTS AT A GLANCE
- ------------------------------------------------------------------------
Total return: NAV
Six months ended 1/31/97 N/A
One year ended 1/31/97 N/A
Life of class (since 1/7/97) 5.94%
Annual average N/A
- ------------------------------------------------------------------------
Share value: NAV
1/7/97 $9.26
1/31/97 9.81
- ------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
0 $0.0000 $0.0000 $0.0000
- ------------------------------------------------------------------------
Current return (end of period) Total
N/A
- ------------------------------------------------------------------------
Please note that past performance does not indicate future results.
Investment return and principal value will fluctuate so your shares,
when redeemed, may be worth more or less than their original cost. See
full report for information on comparative benchmarks. If you have
questions, please consult your fund prospectus or call Putnam toll free
at 1-800-752-9894.
