Putnam
Investors
Fund
ANNUAL REPORT
July 31, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "Putnam Investors Fund's lead manager Beth Cotner and her
associates screen a universe of large-cap stocks for positive
earnings surprises, as well as some sort of competitive edge, such as
a dominant market position, a well-capitalized balance sheet, or a
strong brand name."
-- Morningstar Mutual Funds, April 11, 1997
* "The U.S. keeps gaining ground in the global economy not just
because its stock market is booming but also because many of its
companies dominate the world's fastest-growing industries."
-- BusinessWeek, July 7, 1997
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
13 Portfolio holdings
17 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The returns for Putnam Investors Fund for the fiscal year just ended
leave us in somewhat of a quandary, albeit a pleasant one. On the one
hand, we are tempted to radiate unrestrained enthusiasm, for gains of
this magnitude do not come along every year. On the other hand, we are
compelled by reason and logic to caution that an encore of similar
dimension might be an overly optimistic expectation, especially for a
portfolio of your fund's relatively conservative charter.
While an agreeable market environment had much to do with the outcome,
the thoughtful management of the fund played an unmistakable role. Not
only have your fund's managers taken good advantage of current
opportunities, but they have also tried to anticipate upcoming scenarios
and positioned the portfolio accordingly.
In the following report, your fund's managers discuss their strategies
during fiscal 1997 and comment on the outlook for fiscal 1998.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
September 17, 1997
Report from the Fund Managers
C. Beth Cotner, lead manager
Manuel H. Weiss
David J. Santos
Richard B. England
For investors in the U.S. stock market during the past 12 months, good things
came in large packages. Although over this time period, small-company stocks,
as measured by the Russell 2000 Index, provided investors with an impressive
total return of 33.39%, the Standard & Poor's 500(registered trademark) Index,
weighted in favor of large-company stocks, provided a breathtaking total
return of 52.11%. Putnam Investors Fund's focus on large-cap stocks -- those
companies with capitalizations greater than $2 billion -- contributed to your
fund's impressive gains of 49.91% at net asset value and 41.34% at public
offering price for the fund's class A shares over the 12 months ended July 31,
1997. 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.
* U.S. STOCKS CONTINUE UPWARD TREND
After leaving interest rates unchanged for more than two years, the Federal
Reserve Board raised short-term interest rates by a quarter of a percentage
point in late March. A rate increase normally would be expected to have a
negative effect on corporate cash flows and earnings that, in turn, would be
likely to push stock prices lower. However, after the March increase, interest
rates and inflation appeared to be under control. Bond markets responded
favorably and the stock market continued its overall upward trend.
During this period, many investors were attracted to the large-cap stocks in
which your fund typically invests. One reason investors favor these blue chips
is that quarter after quarter, year after year, these companies have delivered
consistent growth. This accounts for the special appeal of consumer
powerhouses such as Microsoft Corp. and Procter & Gamble Co. -- both holdings
in your fund's portfolio -- whose businesses are arguably insulated from many
of the ups and downs in the economy. 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.
Many of today's large-company stocks, including the ones held in the fund's
portfolio, are also exhibiting significant strength in their fundamental
businesses. They are dominating the marketplace just as they are dominating
the stock market. They have slimmed down their work forces, cut billions in
corporate overhead, and invested heavily in productivity-enhancing technology.
All this has produced an earnings surge that enabled large companies to
virtually eclipse their smaller counterparts. In the first quarter of 1997,
the 50 biggest companies in the S&P 500 saw their per-share earnings jump by
23.9% over the same period of a year earlier.
* FINANCE, TECHNOLOGY, AND HEALTH CARE HELP PROPEL FUND PERFORMANCE
Putnam's focus on company fundamentals often leads us to discover strong
growth potential within several companies involved in the same industry
sectors. The sectors that contributed most favorably to the fund's performance
during the past 12 months were finance, computer technology, and health care.
With the expectation that growth prospects will improve in a consolidating
industry, we have increased the fund's exposure to financial stocks. In fact,
as of the close of your fund's fiscal period, 5 of the fund's top 10 holdings
were in the financial sector, including Washington Mutual, Inc., BankAmerica
Corp., American Express Co., Travelers Group Inc., and Citicorp.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Insurance and finance 10.6%
Retail 10.4%
Banks 9.8%
Pharmaceuticals 9.8%
Computer services and software 9.5%
Footnote reads:
*Based on net assets as of 7/31/97. Holdings will vary over time.
Washington Mutual is an example of a portfolio holding with some potential to
benefit from the consolidation trend taking place in the financial sector.
This thrift is experiencing high growth by buying other savings and loans,
cutting costs, and merging those acquisitions into its existing holdings.
Another continuing trend that should benefit many of the fund's financial
holdings is the increasing focus today's aging baby boomers are placing on
retirement planning. We believe portfolio holdings such as Travelers, which
owns Smith Barney, and American Express, with its IDS mutual funds and
advisory division, should provide growth opportunities for the fund as more
and more boomers approach age 50. Travelers was recently added to the select
group of 30 blue-chip companies that make up the Dow Jones Industrial Average.
The company also was ranked fifth on the BusinessWeek 50, a list of
S&P 500 companies that are deemed the "new corporate elite" because of their
strong performance.
Within the broader technology sector, the industries that performed well
during the fund's fiscal 1997 period were semiconductor equipment, networking,
and software. One example of an outstanding portfolio holding in this sector
is computer software giant Microsoft Corp. This large and closely followed
company has displayed a rapid growth rate that is exceeding most analysts'
expectations. Much of its success is driven by its Windows NT workstation
product, which is devouring competitors in the network software area.
Microsoft has switched from being a company completely focused on the PC
market to a broad-based technology and communications company. The company may
be entering its next growth phase as it attempts to expand in new businesses
such as consumer entertainment and broadcasting.
In the health-care sector, health maintenance organizations (HMOs) and drug
stocks were strong performers. One outstanding portfolio holding was
Warner-Lambert Co., a manufacturer of pharmaceuticals, consumer health-care
products, and confectionery products. Recent approval of a new cholesterol
drug has dramatically enhanced the company's long-term prospects.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
General Electric Co.
Conglomerate
Microsoft Corp.
Computer services and software
Washington Mutual, Inc.
Banks, savings and loans
BankAmerica Corp.
Banks, savings and loans
American Express Co.
Insurane and finance
Procter & Gamble Co.
Consumer nondurables
Travelers Group Inc.
Insurance and finance
Gannett Co., Inc.
Publishing
CVS Corp.
Retail
Citicorp
Banks
Footnote reads:
These holdings represent 22.9% of the fund's assets as of 7/31/97.
Portfolio holdings will vary over time.
* CONSTRUCTIVE OUTLOOK FOR LARGE-CAP STOCKS AND YOUR FUND
Putnam Management believes the future looks constructive for U.S.
large-capitalization stocks. American industry is more competitive in global
markets than ever before. Costs have come down dramatically as a result of
major restructurings, and U.S. exports are much higher than just 10 years ago.
At the same time, the leading edge of the baby-boom generation is now between
the ages of 45 and 55, typically the peak savings years. As this group
continues to shore up its money for future needs, Putnam Management would
expect the flow of funds from individuals into equities to increase, which
could provide price support for the types of securities held by your fund.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed
favorably as of 7/31/97, there is no guarantee the fund will continue to hold
these securities in the future.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Investors Fund is designed for investors seeking long-term growth through
quality common stocks as well as any increased income resulting from this
growth.
TOTAL RETURN FOR PERIODS ENDED 7/31/97
Class A Class B Class M
(inception date) (12/1/25) (3/1/93) (12/2/94)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
1 year 49.91% 41.34% 48.87% 43.87% 49.28% 44.00%
- ------------------------------------------------------------------------------
5 years 169.30 153.90 158.80 158.26 162.66 153.48
Annual average 21.91 20.48 20.95 20.90 21.31 20.44
- ------------------------------------------------------------------------------
10 years 282.35 260.24 250.76 250.76 260.46 247.88
Annual average 14.35 13.67 13.37 13.37 13.68 13.28
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/97
Standard & Poor's Consumer
500 Index Price Index
- ------------------------------------------------------------------------------
1 year 52.11% 2.23%
- ------------------------------------------------------------------------------
5 years 155.27 14.23
Annual average 20.62 2.70
- ------------------------------------------------------------------------------
10 years 302.62 41.04
Annual average 14.94 3.50
- ------------------------------------------------------------------------------
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% for class A shares and 3.50% for class M shares.
One-, five-, and ten-year (when available) and life-of-fund returns for
class B shares reflect the applicable contingent deferred sales charges
(CDSC), which is 5% in the first year, declines each year to 1% in the
sixth year, and is eliminated thereafter. Returns shown for class B and
class M shares for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect both the
initial sales charge or CDSC, if any, currently applicable to each class
and, in the case of class B and class M shares, the higher operating costs
applicable to such shares. All returns assume reinvestment of
distributions at NAV and represent past performance; they do not guarantee
future results. Investment return and principal value will fluctuate so
that an investor's shares when redeemed may be worth more or less than
their original cost.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
Cumulative total return of a $10,000 investment since 7/31/87
S&P Index $40,262
Consumer Price Index $14,104
Fund's class A shares at POP $36,024
Fund's class A shares Consumer
at POP S&P Index Price Index
--------------------- --------- -----------
7/31/87 9425 10000 10000
7/31/88 8044 8832 10413
7/31/89 10242 11650 10931
7/31/90 11298 12402 11459
7/31/91 12803 13989 11968
7/31/92 13377 15773 12346
7/31/93 15951 17129 12689
7/31/94 16482 18013 13040
7/31/95 21023 22709 13401
7/31/96 24032 26468 13796
7/31/97 36024 40262 14104
Past performance is no assurance of future results. At the end of the same time
period, a $10,000 investemnt in the fund's class B shares would have been
valued at $35,076 andno contingent deferred sales charges would apply; a $10,000
investment in the fund's class M shares would have been valued at $36,046
($34,788 at public offering price). See first page of performance section for
performance calculation method.
PRICE AND DISTRIBUTION INFORMATION
12 months ended 7/31/97
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
- ------------------------------------------------------------------------------
7/31/97 11.98 12.71 11.62 11.85 12.28
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 6/30/97
(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
- ------------------------------------------------------------------------------
1 year 30.66% 23.16% 29.60% 24.60% 30.06% 25.54%
- ------------------------------------------------------------------------------
5 years 156.87 142.14 146.64 146.13 150.30 141.50
Annual average 20.77 19.35 19.79 19.74 20.14 19.28
- ------------------------------------------------------------------------------
10 years 266.14 245.00 235.47 235.47 244.88 232.75
Annual average 13.86 13.18 12.87 12.87 13.18 12.77
- ------------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns and
net asset value will fluctuate so that an investor's shares, when sold,
may be worth more or less than their original cost.
TERMS AND DEFINITIONS
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.
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 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.
Russell 2000 Index is an unmanaged list of common stocks that is
frequently used as a measure of the performance of small company stocks.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities 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 Total Return Fund
High Yield Trust +
Income Fund
Money Market 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 Exempt Money Market 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
State tax-free money market funds [SECTION MARK]
California, New York
LIFESTAGE[SERVICE MARK] 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
* Formerly Overseas Growth Fund
+ Closed to new investors. Some exceptions may apply. Contact
Putnam for details.
[DBL. DAGGER] Formerly OTC Emerging Growth Fund
[SECTION MARK] Not available in all states.
** 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.
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.
Report of independent accountants
For the fiscal year ended July 31, 1997
To the Trustees and Shareholders of
Putnam Investors Fund
We have audited the accompanying statement of assets and liabilities of Putnam
Investors Fund, including the portfolio of investments owned, as of July 31,
1997, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of July 31, 1997, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Putnam Investors Fund as of July 31, 1997, the results of its operations for
the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
September 12, 1997
Portfolio of investments owned
July 31, 1997
<TABLE>
<CAPTION>
COMMON STOCKS (97.2%) *
NUMBER OF SHARES VALUE
Advertising (0.3%)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
152,400 Interpublic Group Cos. Inc. $ 6,819,900
Banks (9.8%)
- ------------------------------------------------------------------------------------------------------------
401,200 Banc One Corp. 22,517,350
667,000 BankAmerica Corp. 50,358,500
532,600 Barnett Banks, Inc. 30,324,913
314,900 Citicorp 42,747,675
216,700 Comerica, Inc. 16,387,938
738,400 Washington Mutual, Inc. 51,041,900
--------------
213,378,276
Basic Industrial Products (0.5%)
- ------------------------------------------------------------------------------------------------------------
227,900 American Standard Companies, Inc. + 11,323,781
Broadcasting (0.7%)
- ------------------------------------------------------------------------------------------------------------
643,700 Westinghouse Electric Corp. 15,489,031
Building and Construction (0.5%)
- ------------------------------------------------------------------------------------------------------------
324,100 Sherwin Williams Co. 10,391,456
Chemicals (1.3%)
- ------------------------------------------------------------------------------------------------------------
492,700 Praxair, Inc. 27,160,088
Computer Equipment (3.8%)
- ------------------------------------------------------------------------------------------------------------
472,500 Compaq Computer Corp. 26,991,563
158,800 Dell Computer Corp. 13,577,400
457,800 EMC Corp. + 23,118,900
267,000 Hewlett-Packard Co. 18,706,680
--------------
82,394,543
Computer Services and Software (9.5%)
- ------------------------------------------------------------------------------------------------------------
439,800 BMC Software, Inc. 26,497,950
513,350 Computer Associates Intl., Inc. 34,939,884
189,500 Compuware Corp. 11,725,313
323,500 HBO & Co. 25,030,813
437,600 Microsoft Corp. 61,920,400
356,700 Parametric Technology Corp. + 17,478,300
493,900 PeopleSoft, Inc. 28,893,150
--------------
206,485,810
Conglomerates (9.2%)
- ------------------------------------------------------------------------------------------------------------
916,700 General Electric Co. 64,340,881
499,800 Honeywell, Inc. 37,328,813
470,800 Textron, Inc. 32,985,425
501,400 Tyco International Ltd. 40,613,400
285,900 United Technologies Corp. 24,176,419
--------------
199,444,938
Consumer Non Durables (5.8%)
- ------------------------------------------------------------------------------------------------------------
188,500 Avon Products, Inc. 13,678,031
166,700 Clorox Co. 23,275,488
252,900 Gillette Co. 25,037,100
326,300 Liz Claiborne, Inc. 15,621,613
313,400 Procter & Gamble Co. 47,675,975
--------------
125,288,207
Consumer Services (0.4%)
- ------------------------------------------------------------------------------------------------------------
264,300 Service Corp. International 8,986,200
Environmental Control (0.5%)
- ------------------------------------------------------------------------------------------------------------
406,400 Republic Industries, Inc. + 10,007,600
Food and Beverages (3.6%)
- ------------------------------------------------------------------------------------------------------------
310,800 Campbell Soup Co. 16,122,750
339,600 Coca-Cola Co. 23,517,300
311,100 ConAgra, Inc. 21,874,219
386,100 Sara Lee Corp. 16,916,006
--------------
78,430,275
Health Care Services (2.7%)
- ------------------------------------------------------------------------------------------------------------
254,400 Cardinal Health, Inc. 15,836,400
985,200 HEALTHSOUTH Corp. 26,107,800
207,800 Oxford Health Plans Inc. + 17,468,188
--------------
59,412,388
Insurance and Finance (10.6%)
- ------------------------------------------------------------------------------------------------------------
572,200 American Express Co. 47,921,750
310,050 American International Group, Inc. 33,020,325
583,800 Conseco Inc. 23,789,850
228,150 Franklin Resources, Inc. 19,378,491
910,950 MBNA Corp. 40,992,750
218,300 MGIC Investment Corp. 11,474,394
160,000 Morgan Stanley, Dean Witter, Discover and Co. 8,370,000
615,133 Travelers Group Inc. 44,251,130
--------------
229,198,690
Lodging (1.9%)
- ------------------------------------------------------------------------------------------------------------
357,500 Carnival Corp. Class A 15,059,688
385,800 Marriott International, Inc. 26,523,750
--------------
41,583,438
Medical Supplies and Devices (0.9%)
- ------------------------------------------------------------------------------------------------------------
505,700 U.S. Surgical Corp. 18,774,113
Oil and Gas (2.9%)
- ------------------------------------------------------------------------------------------------------------
482,700 Exxon Corp. 31,013,475
263,000 Mobil Corp. 20,119,500
245,900 Sonat, Inc. 12,264,263
--------------
63,397,238
Oil Services (3.2%)
- ------------------------------------------------------------------------------------------------------------
741,800 Halliburton Co. 34,122,800
472,100 Schlumberger Ltd. 36,056,638
--------------
70,179,438
Pharmaceuticals (9.8%)
- ------------------------------------------------------------------------------------------------------------
559,900 Abbott Laboratories 36,638,456
504,300 Bristol-Myers Squibb Co. 39,556,031
221,700 Lilly (Eli) & Co. 25,052,100
405,200 Merck & Co., Inc. 42,115,475
710,800 Pfizer, Inc. 42,381,450
184,700 Warner-Lambert Co. 25,800,281
--------------
211,543,793
Publishing (2.0%)
- ------------------------------------------------------------------------------------------------------------
437,000 Gannett Co., Inc. 43,399,563
Retail (10.4%)
- ------------------------------------------------------------------------------------------------------------
457,625 Consolidated Stores Corp. 18,419,406
734,100 Costco Companies, Inc. + 27,804,038
762,067 CVS Corp. 43,342,561
442,200 Dayton Hudson Corp. 28,577,175
445,700 Safeway, Inc. + 23,872,806
833,600 TJX Cos., Inc. (The) 24,903,800
447,200 Walgreen Co. 25,266,800
879,800 Wal-Mart Stores, Inc. 33,047,488
--------------
225,234,074
Semiconductors (3.6%)
- ------------------------------------------------------------------------------------------------------------
204,800 Applied Materials, Inc. + 18,816,000
259,400 Intel Corp. 23,816,163
444,700 Motorola, Inc. 35,714,969
--------------
78,347,132
Telecommunications and Networking (3.3%)
- ------------------------------------------------------------------------------------------------------------
253,300 Lucent Technologies, Inc. 21,514,669
683,700 Sprint Corp. 33,843,150
278,100 Tellabs, Inc. 16,651,238
--------------
72,009,057
--------------
Total Common Stocks (cost $1,508,844,017) $2,108,679,029
SHORT-TERM INVESTMENTS (3.4%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$ 25,000,000 Federal National Mortgage Association effective yield
of 5.46%, September 8, 1997. $ 24,855,916
48,335,000 Interest in $204,956,000 joint repurchase agreement
dated July 31, 1997 with UBS Securities due
August 1, 1997 with respect to various U.S. Treasury
obligations -- maturity value of $48,342,734 for an
effective yield of 5.76%. 48,342,734
--------------
Total Short-Term Investments (cost $73,198,650) $ 73,198,650
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,582,042,667) *** $2,181,877,679
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $2,170,121,390.
*** The aggregate identified cost on a tax basis is $1,582,447,281,
resulting in gross unrealized appreciation and depreciation of
$602,317,570 and $2,887,172, respectively, or net unrealized
appreciation of $599,430,398.
+ Non-income-producing security.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
July 31, 1997
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,582,042,667) (Note 1) $2,181,877,679
- ---------------------------------------------------------------------------------------------------
Cash 1,830,054
- ---------------------------------------------------------------------------------------------------
Dividends and interest receivable 2,043,076
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 9,275,894
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 2,769,325
- ---------------------------------------------------------------------------------------------------
Total assets 2,197,796,028
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 542,052
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 17,657,161
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 5,561,964
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 2,598,831
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 410,281
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 27,958
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,749
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 624,388
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 250,254
- ---------------------------------------------------------------------------------------------------
Total liabilities 27,674,638
- ---------------------------------------------------------------------------------------------------
Net assets $2,170,121,390
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) 1,404,195,539
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 6,133,322
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment (Note 1) 159,957,517
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 599,835,012
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $2,170,121,390
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,819,333,437 divided by 151,847,177 shares) $11.98
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $11.98)* $12.71
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($303,089,038 divided by 26,088,986 shares)** $11.62
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($27,384,462 divided by 2,310,985 shares) $11.85
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $11.85)* $12.28
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($20,314,453 divided by 1,694,051 shares) $11.99
- ---------------------------------------------------------------------------------------------------
* 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
Year ended July 31, 1997
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $110,339) $ 19,595,508
- --------------------------------------------------------------------------------------------------
Interest 3,881,630
- --------------------------------------------------------------------------------------------------
Total investment income 23,477,138
- --------------------------------------------------------------------------------------------------
Expenses:
Compensation of Manager (Note 2) 8,893,729
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 2,517,045
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 52,922
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 21,295
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 3,494,637
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,737,605
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 91,994
- --------------------------------------------------------------------------------------------------
Reports to shareholders 96,918
- --------------------------------------------------------------------------------------------------
Registration fees 83,443
- --------------------------------------------------------------------------------------------------
Auditing 47,815
- --------------------------------------------------------------------------------------------------
Legal 23,257
- --------------------------------------------------------------------------------------------------
Postage 224,004
- --------------------------------------------------------------------------------------------------
Other 25,827
- --------------------------------------------------------------------------------------------------
Total expenses 17,310,491
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (446,195)
- --------------------------------------------------------------------------------------------------
Net expenses 16,864,296
- --------------------------------------------------------------------------------------------------
Net investment income 6,612,842
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 212,527,952
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 439,344,863
- --------------------------------------------------------------------------------------------------
Net gain on investments 651,872,815
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $658,485,657
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended July 31
--------------------------------
1997 1996
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Increase in net assets
- --------------------------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------------------------
Net investment income $ 6,612,842 $ 7,316,081
- --------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 212,527,952 191,105,305
- --------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments 439,344,863 (54,557,549)
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 658,485,657 143,863,837
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) 485,465,399 185,274,280
- --------------------------------------------------------------------------------------------------------------------
Total increase in net assets 970,829,328 193,682,601
Net assets
- --------------------------------------------------------------------------------------------------------------------
Beginning of year 1,199,292,062 1,005,609,461
- --------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $6,133,322 and $6,575,540, respectively) $2,170,121,390 $1,199,292,062
- --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- --------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended July 31
- --------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.07 $9.05 $7.85 $8.87 $8.57
- --------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .05(d) .06 .08 .06 .08
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.08 1.17 1.85 .26 1.45
- --------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.13 1.23 1.93 .32 1.53
- --------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------
From net
investment income (.05) (.09) -- (.05) (.04)
- --------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- -- (.03)
- --------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.17) (1.12) (.73) (1.29) (1.16)
- --------------------------------------------------------------------------------------------------------------------
Total distributions (1.22) (1.21) (.73) (1.34) (1.23)
- --------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.98 $9.07 $9.05 $7.85 $8.87
- --------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 49.91 14.32 27.55 3.33 19.24
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,819,333 $1,104,264 $956,830 $786,118 $804,731
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.00 1.03 .99 .99 .90
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .50 .69 1.03 .88 .84
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 95.17 128.21 96.75 100.16 134.14
- --------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0498
- --------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* 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>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- --------------------------------------------------------------------------------------------------------------------
For the period
Per-share March 1, 1993+
operating performance Year ended July 31 to July 31
- --------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.85 $8.88 $7.78 $8.85 $8.32
- --------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.03)(d) -- .01 .03 (.03)
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 3.98 1.13 1.82 .21 .61
- --------------------------------------------------------------------------------------------------------------------
Total from
investment operations 3.95 1.13 1.83 .24 .58
- --------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------
From net
investment income (.01) (.04) -- (.02) --
- --------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- -- (.05)
- --------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.17) (1.12) (.73) (1.29) --
- --------------------------------------------------------------------------------------------------------------------
Total distributions (1.18) (1.16) (.73) (1.31) (.05)
- --------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.62 $8.85 $8.88 $7.78 $8.85
- --------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 48.87 13.42 26.46 2.38 6.96*
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $303,089 $89,378 $47,906 $21,033 $4,789
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.75 1.77 1.75 1.77 .73*
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.26) (.09) .22 .08 (.12)*
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 95.17 128.21 96.75 100.16 134.14
- --------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0498
- --------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* 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>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- --------------------------------------------------------------------------------------------------------------------
For the period
Per-share Dec. 2, 1994+
operating performance Year ended July 31 to July 31
- --------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $9.00 $9.02 $7.78
- --------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) --(d) .05 .01
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 4.05 1.12 1.96
- --------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.05 1.17 1.97
- --------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------
From net
investment income (.03) (.07) --
- --------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- --
- --------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.17) (1.12) (.73)
- --------------------------------------------------------------------------------------------------------------------
Total distributions (1.20) (1.19) (.73)
- --------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.85 $9.00 $9.02
- --------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 49.28 13.70 28.29*
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $27,384 $5,650 $873
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.50 1.51 1.56*
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.02) .16 .29*
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 95.17 128.21 96.75
- --------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0498
- --------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* 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>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- --------------------------------------------------------------------------------------------------------------------
For the period
Per-share Jan. 7,1997+
operating performance to July 31
- --------------------------------------------------------------------------------------------------------------------
1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $9.26
- --------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .04(d)
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.69
- --------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.73
- --------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------
From net
investment income --
- --------------------------------------------------------------------------------------------------------------------
In excess of net
investment income --
- --------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments --
- --------------------------------------------------------------------------------------------------------------------
Total distributions --
- --------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.99
- --------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 29.48*
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $20,314
- --------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .42*
- --------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .37*
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 95.17
- --------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0498
- --------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* 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
July 31, 1997
Note 1
Significant accounting policies
Putnam Investors Fund (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. For the year ended July 31, 1997, the fund
required no such reclassifications.
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%
thereafter. 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 year ended July 31, 1997, fund expenses were reduced by $446,195 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 certain 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 year ended July 31, 1997, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $480,876 and $25,456 from the sale of
class A and class M shares, respectively and received $236,426 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 year ended July 31, 1997, Putnam Mutual Funds Corp., acting as underwriter
received $27,030 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended July 31, 1997, purchases and sales of investment
securities other than short-term investments aggregated $1,745,396,882 and
$1,446,526,232, 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 July 31, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Year ended
July 31, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 68,117,416 $693,486,107
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 14,830,829 134,515,580
- ------------------------------------------------------------
82,948,245 828,001,687
Shares
repurchased (52,860,419) (534,953,595)
- ------------------------------------------------------------
Net increase 30,087,826 $293,048,092
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Year ended
July 31, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 29,752,337 $293,036,292
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,786,799 15,795,307
- ------------------------------------------------------------
31,539,136 308,831,599
Shares
repurchased (15,544,846) (150,298,849)
- ------------------------------------------------------------
Net increase 15,994,290 $158,532,750
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Year ended
July 31, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 2,296,780 $23,465,908
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 122,472 1,102,248
- ------------------------------------------------------------
2,419,252 24,568,156
Shares
repurchased (735,758) (7,211,871)
- ------------------------------------------------------------
Net increase 1,683,494 $17,356,285
- ------------------------------------------------------------
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
July 31, 1997
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 1,860,809 $18,408,636
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ------------------------------------------------------------
1,860,809 18,408,636
Shares
repurchased (166,758) (1,880,364)
- ------------------------------------------------------------
Net increase 1,694,051 $16,528,272
- ------------------------------------------------------------
Federal tax information
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund
hereby designates $1.006 per share (or if different, the amount necessary
to offset net capital gain earned by the Fund) (for all classes of shares)
as capital gain dividends for its taxable year ended July 31, 1997.
The fund has designated 100% of the distributions from net investment income
as qualifying for the dividends received deduction for corporations.
The Form 1099 you receive in January 1998 will show the tax status of all
distributions paid to your account in calendar 1997.
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Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
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
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
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.
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PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
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Bulk Rate
U.S. Postage
PAID
Putnam
Investments
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AN012 35885-003/307/385/2DB 9/97
