Putnam
Investors
Fund
SEMIANNUAL REPORT
January 31, 1998
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* According to Lipper Analytical Services, Putnam Investors Fund's
class A shares ranked 94 out of 846 growth funds, placing it in the top
12% in this category for the 1-year period ended January 31, 1998.*
* "[Putnam Investors Fund's] mix of growth and risk control places
the fund on the cautious side of large growth. It could nicely serve
investors who want a core holding with a growth bent."
-- Morningstar Mutual Funds, February 2, 1998
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
17 Financial statements
*Lipper Analytical Services, an independent research organization, ranks
funds according to total return performance. These rankings vary over time
and do not reflect the effects of sales charges. For periods ended
1/31/98, class A shares ranked 41 out of 322 funds and 49 out of 183
funds, respectively, for 5- and 10-year performance. Class B and class M
shares ranked 116 and 106, respectively, out of 846 funds for 1-year
performance, and 73 and 61, respectively, out of 525 funds for 3-year
performance. Class B and class M shares were not ranked over longer
periods. Past performance is not indicative of future results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
As Putnam Investors Fund began its new fiscal year last August, both domestic
and international equity markets were still strong overall but somewhat
inverted, with old-line conservative stocks outpacing young upstarts. This
turnabout had occurred as investors, growing increasingly cautious about the
durability of the aging global bull market, sought refuge in quality. The
situation was exacerbated when last fall's Asian currency crisis sent the
world's stock markets reeling.
Because of its focus on high-quality growth stocks, your fund continued to
benefit as prices of these stocks rose in response to demand from
safety-conscious investors all over the world. Not as obvious as the positive
current performance -- but potentially more beneficial on a long-term basis --
was the portfolio repositioning that your fund's management team has been able
to accomplish during this somewhat tempestuous interlude.
As the managers explain in greater detail in the following report, their
expectation is that as global market uncertainties work themselves out,
attractive opportunities will present themselves. The management team believes
your fund will be positioned to take full advantage of those investments.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
March 18, 1998
Report from the Fund Managers
C. Beth Cotner, lead manager
Manuel H. Weiss
Richard B. England
Buoyed by the strength of its high-quality growth stocks, Putnam Investors
Fund fared better than many other equity investments during the first half of
fiscal 1998. The stocks held by the fund were barely affected by the market
turmoil set off by last fall's currency crisis in Southeast Asia; many, in
fact, continued to advance as equity investors sought refuge in their relative
safety.
Your fund's class A shares ended the semiannual period on January 31, 1998,
with a total return of 4.50% at net asset value, outpacing the 3.56% return of
the Standard & Poor's 500(registered trademark) Index. Taking sales charges
into account, the shares returned - 1.51%. Performance for other share
classes and over other periods is shown on the tables starting on page 9.
* RETAILING ISSUES DOMINATE PORTFOLIO
Retailing issues represented the fund's largest industry sector going into
fiscal 1998. As signs of trouble in Asia grew more ominous, we increased their
weighting even further as a preemptive move. Our reasoning was that any flight
to quality would target large, established U.S. companies whose business was
essentially domestic and thus insulated from economic disruptions abroad.
Events of the past few months have proved this forecast to be correct.
Concluding that retailing companies fit our criteria admirably, we added to
the fund's holdings in Wal-Mart and drug retailers CVS and Walgreen, among
others. While these holdings, along with others discussed in this report, were
viewed favorably at the end of the fiscal period, all are subject to review
and adjustment in accordance with the fund's investment strategy and may vary
in the future.
We also focused on what we call consumer cyclicals, companies whose fortunes
rise and fall in step with the business cycle. These include retailers like
Home Depot home improvement centers and Masco, a building products supplier.
We established positions in both companies during the period. Consumer
cyclicals also include lodging companies such as Marriott and leisure
companies such as cruise line operator Carnival.
* PHARMACEUTICALS AND PHONES ALSO FIND FAVOR
During the period, we increased the weighting in pharmaceuticals, an industry
sector that includes a number of consistently strong performers currently
benefiting from a steady flow of new products. Even though the proposed merger
of pharmaceutical giants Glaxo Wellcome and SmithKline Beecham appears to have
fallen through, it called dramatic attention to the ongoing trend toward
consolidation in this industry.
Telecommunications companies, still benefiting from 1996 deregulation,
continued to thrive. AT&T, with a change in top management that has given it a
new focus, posted a dramatic rise during the period; we took advantage of the
uptick and established a position but hindsight tells us that the rewards
could have been greater had we made the purchase earlier in the period.
However, we expect AT&T's path of positive change to continue. The fund also
benefited from the strong performance of its holdings in Sprint. SBC
Communications was added to the portfolio early in the period as a defensive
move and the fund participated in the stock's hearty rise.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Retail 12.2%
Pharmaceuticals 11.5%
Insurance and finance 10.5%
Computer services and software 9.4%
Banks 7.1%
Footnote reads:
*Based on net assets as of 1/31/98. Holdings will vary over time.
* FINANCIAL, HIGH-TECH STOCKS PROSPER; ENERGY FALTERS
Financial services stocks continued to do well during the first half of the
period and then slowed a bit as the differential between long-term and
short-term interest rates narrowed. Banking and savings and loan institutions,
especially those with large exposures to mortgage lending, lost favor with
investors as concerns arose that the decline in long-term interest rates would
touch off another round of mortgage refinancing. On a selective basis,
however, some stocks in the sector did well. For example, the NationsBank
acquisition of Barnett Banks drove valuations of some regional banks higher.
Several of the fund's banking stocks lost ground during the period but still
possess what we believe to be positive long-term potential. They include Fifth
Third Bancorp, Michigan-based Comerica, and Alabama-based Southtrust. These
regional banks with strong franchises in their respective areas are potential
targets for acquisition, but even if they are not ultimately taken over, we
believe they have attractive prospects.
Your fund's technology holdings also did well as a group during the period.
The main reason for this positive performance is that the sector was heavily
weighted in favor of software companies, which generally performed better than
companies in other areas, particularly semiconductor and hardware
manufacturers. EMC Corp., with its data storage orientation, benefited from
Internet and Year 2000 spending. HBO & Company, serving hospitals and
health-care providers, and Compuware, a provider of software products and
professional services for information technology professionals, also posted
healthy gains.
Energy stocks did not distinguish themselves during the period, primarily
because of oil. Petroleum prices peaked during late summer/early fall and have
declined steadily since then. The economic slowdown in Asia was the major
contributor to oil's lackluster performance; most of the growth in petroleum
demand had been coming from this region. Ongoing uncertainties in the Mideast
add to our view that prospects for oil are not ready to change any time soon.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
General Electric Co.
Conglomerate
Microsoft Corp.
Computer services and software
Pfizer, Inc.
Pharmaceuticals
CVS Corp.
Drug retailing
Warner-Lambert Co.
Pharmaceuticals
Gannett Co., Inc.
Publishing
Bristol-Myers Squibb Co.
Pharmaceuticals
BankAmerica Corp.
Banking
Tyco International Ltd.
Conglomerate
Procter & Gamble Co.
Consumer nondurables
Footnote reads:
These holdings represent 24.4% of the fund's net assets as of 1/31/98.
Portfolio holdings will vary over time.
* OUTLOOK: CONTINUED VOLATILITY IN U.S. EQUITY MARKET
We expect global economic developments to result in continued volatility for
the U.S. stock market in the months immediately ahead. Earnings expectations
for 1998 have declined over the past few months; a continuation of downward
revisions could prove troublesome for many U.S. stocks, yet those companies
that can benefit from the generally favorable domestic economic backdrop will
likely fare well.
We remain committed to identifying those corporations whose earnings growth
can overcome the uncertainties of the economic situation overseas as well as
benefit from the solid growth still evident at home. Our disciplined security
selection process has led us to focus attention on high quality growth
companies within the most attractive economic sectors.
In the consumer sectors, we expect cyclical industries to continue to benefit
from robust U.S. demand. Retailing remains attractive, especially general
merchandise stores that offer value pricing. Lodging and publishing are major
areas of emphasis.
We expect the financial sector to continue benefiting from consolidation
within both the banking and securities industries. Low interest rates and
favorable trends in the quality of consumer debt should further enhance
prospects in this sector.
Health care is likely to benefit from a brisk flow of new product
introductions and favorable demographic trends. We currently find
pharmaceutical companies more attractive than health-services companies.
The technology sector, especially the software and personal computer
industries, offers many appealing opportunities. Both of these industries are
less exposed to the Asian markets than are semiconductors. We are less
sanguine about prospects for the energy, capital goods, and basic industry
sectors.
In our view, cyclical capital goods and basic industry stocks have a
less-than-robust global economic outlook and a poor environment for pricing.
Similarly, though the utility sector attracted investors looking for a safe
haven, earnings growth remains quite modest and generally below the threshold
for our growth discipline.
As your fund moves into the second half of fiscal 1998, we believe it is well
positioned to take advantage of opportunities that we are confident will
inevitably emerge as the markets work their way through the current
uncertainties.
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 1/31/98, 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 1/31/98
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 4.50% -1.51% 4.08% -0.64% 4.24% 0.59%
- ------------------------------------------------------------------------------
1 year 27.61 20.26 26.64 21.64 26.95 22.54
- ------------------------------------------------------------------------------
5 years 152.79 138.20 143.08 141.08 146.65 137.97
Annual average 20.38 18.96 19.44 19.24 19.79 18.93
- ------------------------------------------------------------------------------
10 years 395.26 366.65 354.81 354.81 367.56 351.15
Annual average 17.35 16.65 16.35 16.35 16.68 16.26
- ------------------------------------------------------------------------------
Lifetime
Annual average 10.41 10.32 9.32 9.32 9.61 9.55
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/98
Standard & Poor's* Consumer
500 Index Price Index
- ------------------------------------------------------------------------------
6 months 3.56% 0.69%
- ------------------------------------------------------------------------------
1 year 26.91 1.57
- ------------------------------------------------------------------------------
5 years 152.30 13.32
Annual average 20.34 2.53
- ------------------------------------------------------------------------------
10 years 410.03 39.67
Annual average 17.69 3.40
- ------------------------------------------------------------------------------
Lifetime
Annual average --* 3.09
- ------------------------------------------------------------------------------
* The index did not exist at the time of the fund's inception.
Returns for class A and class M shares reflect the current maximum initial
sales charges of 5.75% and 3.50%, respectively. Class B share returns for
the 1-, 5-, and 10-year and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines 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 expenses 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.
TOTAL RETURN FOR PERIODS ENDED 12/31/97
(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
- ------------------------------------------------------------------------------
6 months 13.02% 6.51% 12.64% 7.64% 12.83% 8.92%
- ------------------------------------------------------------------------------
1 year 34.49 26.78 33.33 28.33 33.82 29.16
- ------------------------------------------------------------------------------
5 years 156.27 141.42 146.25 144.25 150.12 141.30
Annual average 20.71 19.28 19.75 19.55 20.12 19.26
- ------------------------------------------------------------------------------
10 years 397.47 369.01 356.71 356.71 369.58 353.14
Annual average 17.40 16.71 16.40 16.40 16.73 16.31
- ------------------------------------------------------------------------------
Lifetime
Annual average 10.41 10.32 9.32 9.32 9.60 9.55
- ------------------------------------------------------------------------------
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. See first page of
performance section for performance calculation method.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 1/31/98
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income $0.042 $ -- $0.017
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long term 1.031 1.031 1.031
- ------------------------------------------------------------------------------
Short term 0.051 0.051 0.051
- ------------------------------------------------------------------------------
Total $1.124 $1.082 $1.099
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
7/31/97 $11.98 $12.71 $11.62 $11.85 $12.28
- ------------------------------------------------------------------------------
1/31/98 11.36 12.05 10.98 11.22 11.63
- ------------------------------------------------------------------------------
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 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 index of common stocks frequently used
as a general measure of stock market performance. Performance results
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 index and performance of the fund will differ. 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.
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
Global Growth and Income Fund
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
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
* 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.
Portfolio of investments owned
January 31, 1998 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (98.0%) *
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Advertising (0.9%)
- ------------------------------------------------------------------------------------------------------------
472,100 Interpublic Group Cos., Inc. $ 23,162,406
Apparel (0.4%)
- ------------------------------------------------------------------------------------------------------------
268,300 Jones Apparel Group, Inc. + 11,671,050
Banks (7.1%)
- ------------------------------------------------------------------------------------------------------------
848,200 BankAmerica Corp. 60,275,213
314,400 Comerica, Inc. 29,671,500
109,400 Fifth Third Bancorp 8,341,750
471,800 First Chicago NBD Corp. 35,208,075
157,700 Southtrust Corp. 8,900,194
42,100 SunTrust Banks, Inc. 2,915,425
684,200 Washington Mutual, Inc. 43,959,850
--------------
189,272,007
Broadcasting and Cable TV (2.7%)
- ------------------------------------------------------------------------------------------------------------
1,172,100 CBS Corp. 35,089,744
571,600 Tele-Communications Class A + 16,004,800
733,900 Tele-Communications TCI ventures Group Class A + 21,650,058
--------------
72,744,602
Building and Construction (0.9%)
- ------------------------------------------------------------------------------------------------------------
504,500 Masco Corp. 24,846,625
Business Equipment and Services (4.2%)
- ------------------------------------------------------------------------------------------------------------
1,018,600 Compaq Computer Corp. 30,621,663
258,200 Dell Computer Corp. + 25,674,763
877,400 EMC Corp. + 28,570,338
572,600 Pitney Bowes, Inc. 26,268,025
--------------
111,134,789
Computer Services and Software (9.4%)
- ------------------------------------------------------------------------------------------------------------
510,700 BMC Software, Inc. + 34,599,925
819,825 Computer Associates Intl., Inc. 43,604,442
534,500 Compuware Corp. + 20,845,500
801,100 HBO & Co. 41,907,544
471,100 Microsoft Corp. + 70,282,231
430,600 Parametric Technology Corp. + 21,852,950
463,300 PeopleSoft, Inc. + 16,215,500
--------------
249,308,092
Conglomerates (5.6%)
- ------------------------------------------------------------------------------------------------------------
1,204,500 General Electric Co. 93,348,750
1,259,200 Tyco International Ltd. 55,877,000
--------------
149,225,750
Consumer Non Durables (5.5%)
- ------------------------------------------------------------------------------------------------------------
415,700 Colgate Palmolive Co. 30,450,025
429,300 Clorox Co. 32,895,113
515,400 Estee Lauder Cos. Class A 28,314,788
703,700 Procter & Gamble Co. 55,152,488
--------------
146,812,414
Consumer Services (1.3%)
- ------------------------------------------------------------------------------------------------------------
1,029,200 Cendant Corp. + 34,864,150
Electronics and Electrical Equipment (1.0%)
- ------------------------------------------------------------------------------------------------------------
452,200 Emerson Electric Co. 27,358,100
Environmental Control (0.9%)
- ------------------------------------------------------------------------------------------------------------
626,800 USA Waste Services, Inc. + 23,034,900
Food and Beverages (2.6%)
- ------------------------------------------------------------------------------------------------------------
351,500 Campbell Soup Co. 18,805,250
934,400 Coca-Cola Enterprises, Inc. 29,784,000
391,500 Sara Lee Corp. 21,361,219
--------------
69,950,469
Health Care Services (2.3%)
- ------------------------------------------------------------------------------------------------------------
299,900 Cardinal Health, Inc. 23,223,506
1,126,600 HEALTHSOUTH Corp. + 25,278,088
322,700 Quintiles Transnational Corp. + 12,282,769
--------------
60,784,363
Industrial Equipment (0.9%)
- ------------------------------------------------------------------------------------------------------------
610,700 Ingersoll-Rand Co. 24,275,325
Insurance and Finance (10.5%)
- ------------------------------------------------------------------------------------------------------------
613,100 American Express Co. 51,308,806
372,000 American International Group, Inc. 41,036,250
116,500 Associates First Capital Corp. 7,922,000
671,400 Conseco, Inc. 30,716,550
516,800 Franklin Resources, Inc. 23,159,100
1,448,900 MBNA Corp. 45,006,456
481,300 Morgan Stanley, Dean Witter, Discover and Co. 28,095,888
1,097,200 Travelers Group, Inc. 54,311,400
--------------
281,556,450
Lodging (2.5%)
- ------------------------------------------------------------------------------------------------------------
512,900 Carnival Corp. Class A 28,626,231
525,700 Marriott International, Inc. 36,339,013
--------------
64,965,244
Oil and Gas (2.2%)
- ------------------------------------------------------------------------------------------------------------
655,800 Exxon Corp. 38,897,138
308,500 Mobil Corp. 21,016,563
--------------
59,913,701
Oil Services (3.2%)
- ------------------------------------------------------------------------------------------------------------
797,000 Halliburton Co. 35,815,188
658,000 Schlumberger Ltd. 48,486,375
--------------
84,301,563
Pharmaceuticals (11.5%)
- ------------------------------------------------------------------------------------------------------------
607,900 Bristol-Myers Squibb Co. 60,600,031
356,800 Lilly (Eli) & Co. 24,084,000
390,200 Merck & Co., Inc. 45,750,950
833,300 Pfizer, Inc. 68,278,519
640,800 Schering-Plough Corp. 46,377,900
420,900 Warner-Lambert Co. 63,345,450
--------------
308,436,850
Publishing (2.3%)
- ------------------------------------------------------------------------------------------------------------
1,017,800 Gannett Co., Inc. 61,576,900
Real Estate (0.7%)
- ------------------------------------------------------------------------------------------------------------
361,200 Starwood Lodging Trust (R) 19,640,250
Retail (12.2%)
- ------------------------------------------------------------------------------------------------------------
472,400 CompUSA, Inc. + 14,614,875
562,300 Consolidated Stores Corp. + 23,124,588
849,200 Costco Companies, Inc. + 36,834,050
968,100 CVS Corp. 63,471,056
483,800 Dayton Hudson Corp. 34,803,363
342,900 Home Depot, Inc. (The) 20,681,156
305,300 Safeway, Inc. + 20,283,369
869,500 TJX Cos., Inc. (The) 29,454,313
1,312,300 Wal-Mart Stores, Inc. 52,327,963
950,400 Walgreen Co. 31,482,000
--------------
327,076,733
Telecommunications and Networking (4.0%)
- ------------------------------------------------------------------------------------------------------------
348,800 Lucent Technologies, Inc. 30,868,800
858,300 Sprint Corp. 50,961,563
464,000 Tellabs, Inc. 23,751,000
--------------
105,581,363
Transportation (0.7%)
- ------------------------------------------------------------------------------------------------------------
150,400 AMR Corp. + 18,988,000
Utilities (2.5%)
- ------------------------------------------------------------------------------------------------------------
647,100 American Telephone & Telegraph Co. 40,524,638
351,100 SBC Communications, Inc. 27,298,025
--------------
67,822,663
--------------
Total Common Stocks (cost $2,021,531,969) $2,618,304,759
SHORT-TERM INVESTMENTS (1.2%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$15,000,000 Federal National Mortgage Association effective yield
of 5.595%, March 20, 1998. $ 14,888,084
18,480,000 Interest in $750,000,000 joint repurchase agreement
dated January 30, 1998 with Goldman, Sachs & Co.
due February 2, 1998 with respect to various
U.S. Treasury obligations -- maturity value
of $18,488,609 for an effective yield of 5.59% 18,485,739
--------------
Total Short-Term Investments (Cost $33,373,823) $ 33,373,823
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $2,054,905,792) *** $2,651,678,582
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $2,674,232,774.
*** The aggregate identified cost on a tax basis is $2,055,310,359, resulting in gross unrealized
appreciation and depreciation of $602,317,616 and $5,949,393, respectively, or net unrealized
appreciation of $596,368,223.
+ Non-income-producing security.
(R) Real Estate Investment Trust.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31, 1998 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $2,054,905,792) (Note 1) $2,651,678,582
- ---------------------------------------------------------------------------------------------------
Cash 3,877,299
- ---------------------------------------------------------------------------------------------------
Dividends and other receivables 1,407,126
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 15,683,280
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 27,640,127
- ---------------------------------------------------------------------------------------------------
Total assets 2,700,286,414
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 542,052
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 9,291,252
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 11,378,783
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 3,189,467
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 559,345
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 27,949
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 5,091
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 796,492
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 263,209
- ---------------------------------------------------------------------------------------------------
Total liabilities 26,053,640
- ---------------------------------------------------------------------------------------------------
Net assets $2,674,232,774
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $2,024,289,385
- ---------------------------------------------------------------------------------------------------
Distribution in excess of net investment income (Note 1) (1,877,878)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 55,048,477
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 596,772,790
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $2,674,232,774
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,105,548,806 divided by 185,362,280 shares) $11.36
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $11.36)* $12.05
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($422,574,190 divided by 38,495,079 shares)** $10.98
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($44,954,548 divided by 4,007,201 shares) $11.22
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $11.22)* $11.63
- ---------------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($101,155,230 divided by 8,903,790 shares) $11.36
- ---------------------------------------------------------------------------------------------------
* 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, 1998 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $4,945) $ 9,854,433
- --------------------------------------------------------------------------------------------------
Interest 1,852,197
- --------------------------------------------------------------------------------------------------
Total investment income 11,706,630
Expenses:
Compensation of Manager (Note 2) 6,128,846
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 2,008,944
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 16,600
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 13,652
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,357,850
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,745,365
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 133,531
- --------------------------------------------------------------------------------------------------
Reports to shareholders 61,853
- --------------------------------------------------------------------------------------------------
Registration fees 54,704
- --------------------------------------------------------------------------------------------------
Auditing 27,764
- --------------------------------------------------------------------------------------------------
Legal 10,555
- --------------------------------------------------------------------------------------------------
Postage 62,742
- --------------------------------------------------------------------------------------------------
Other 51,353
- --------------------------------------------------------------------------------------------------
Total expenses 12,673,759
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (271,845)
- --------------------------------------------------------------------------------------------------
Net expenses 12,401,914
- --------------------------------------------------------------------------------------------------
Net investment loss (695,284)
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 108,677,720
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (3,062,222)
- --------------------------------------------------------------------------------------------------
Net gain on investments 105,615,498
- --------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $104,920,214
- --------------------------------------------------------------------------------------------------
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
1998* 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (695,284) $ 6,612,842
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 108,677,720 212,527,952
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments (3,062,222) 439,344,863
- ----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 104,920,214 658,485,657
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income
Class A (6,775,789) (6,835,610)
- ----------------------------------------------------------------------------------------------------------------------
Class B -- (187,272)
- ----------------------------------------------------------------------------------------------------------------------
Class M (54,502) (32,178)
- ----------------------------------------------------------------------------------------------------------------------
Class Y (485,625) --
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (168,375,876) (148,104,876)
- ----------------------------------------------------------------------------------------------------------------------
Class B (34,003,255) (16,854,480)
- ----------------------------------------------------------------------------------------------------------------------
Class M (3,482,791) (1,107,312)
- ----------------------------------------------------------------------------------------------------------------------
Class Y (7,724,838) --
- ----------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 620,093,846 485,465,399
- ----------------------------------------------------------------------------------------------------------------------
Total increase in net assets 504,111,384 970,829,328
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 2,170,121,390 1,199,292,062
- ----------------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of and undistributed net
investment income of $1,877,878 and $6,133,322, respectively) $2,674,232,774 $2,170,121,390
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited
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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share January 31
operating performance (Unaudited) Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.98 $9.07 $9.05 $7.85 $8.87 $8.57
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income --(d) .05(d) .06 .08 .06 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .50 4.08 1.17 1.85 .26 1.45
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .50 4.13 1.23 1.93 .32 1.53
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.04) (.05) (.09) -- (.05) (.04)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- -- -- (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.08) (1.17) (1.12) (.73) (1.29) (1.16)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.12) (1.22) (1.21) (.73) (1.34) (1.23)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.36 $11.98 $9.07 $9.05 $7.85 $8.87
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.50* 49.91 14.32 27.55 3.33 19.24
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,105,549 $1,819,333 $1,104,264 $956,830 $786,118 $804,731
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .49* 1.00 1.03 .99 .99 .90
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .03* .50 .69 1.03 .88 .84
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 31.57* 95.17 128.21 96.75 100.16 134.14
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0493 $.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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 March 1, 1993+
operating performance (Unaudited) Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.62 $8.85 $8.88 $7.78 $8.85 $8.32
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.04)(d) (.03)(d) -- .01 .03 (.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .48 3.98 1.13 1.82 .21 .61
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .44 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 (1.08) (1.17) (1.12) (.73) (1.29) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.08) (1.18) (1.16) (.73) (1.31) (.05)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $10.98 $11.62 $8.85 $8.88 $7.78 $8.85
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.08* 48.87 13.42 26.46 2.38 6.96*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $422,574 $303,089 $89,378 $47,906 $21,033 $4,789
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .87* 1.75 1.77 1.75 1.77 .73*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.35)* (.26) (.09) .22 .08 (.12)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 31.57* 95.17 128.21 96.75 100.16 134.14
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0493 $.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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 Dec. 2, 1994+
operating performance (Unaudited) Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $11.85 $9.00 $9.02 $7.78
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.03)(d) --(d) .05 .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .50 4.05 1.12 1.96
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .47 4.05 1.17 1.97
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.02) (.03) (.07) --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.08) (1.17) (1.12) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.10) (1.20) (1.19) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.22 $11.85 $9.00 $9.02
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.24* 49.28 13.70 28.29*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $44,955 $27,384 $5,650 $873
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .74* 1.50 1.51 1.56*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.22)* (.02) .16 .29*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 31.57* 95.17 128.21 96.75
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0493 $.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
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 Jan. 7,1997+
operating performance (Unaudited) to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $11.99 $9.26
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .02(d) .04(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments .50 2.69
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .52 2.73
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.07) --
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (1.08) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.15) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.36 $11.99
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) 4.64* 29.48*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $101,155 $20,314
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .37* .42*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .17* .37*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 31.57* 95.17
- ------------------------------------------------------------------------------------------------------------------------------------
Average commission
rate paid (c) $.0493 $.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
January 31, 1998 (Unaudited)
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. 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 shares and class B 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) Line of credit The fund has entered into a committed line of credit with
certain banks. This line of credit agreement includes restrictions that the
fund maintain an asset coverage ratio of at least 300% and borrowings must not
exceed prospectus limitations. For the period ended January 31, 1998, the fund
had no borrowings against the line of credit.
F) 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, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
G) 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%
thereafter.
The fund reimburses Putnam Management an allocated amount 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 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, 1998, fund expenses were reduced by
$271,845 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.
Each Trustee of the fund receives an annual Trustee fee, of which $1,730 has
been allocated to the fund, 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 "Deferral 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
Deferral 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 currently limit payment by the fund to 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, 1998, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $472,457 and $19,573 from the sale
of class A and class M shares, respectively and received $216,461 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, 1998, Putnam Mutual Funds
Corp., acting as underwriter received $26,197 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended January 31, 1998, purchases and sales of
investment securities other than short-term investments aggregated
$1,112,692,234 and $708,682,051, 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, 1998, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 48,071,157 $557,160,703
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 14,024,346 154,548,367
- ------------------------------------------------------------
62,095,503 711,709,070
Shares
repurchased (28,580,400) (334,907,899)
- ------------------------------------------------------------
Net increase 33,515,103 $376,801,171
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 16,044,478 $180,890,674
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,963,275 31,588,242
- ------------------------------------------------------------
19,007,753 212,478,916
Shares
repurchased (6,601,660) (74,104,082)
- ------------------------------------------------------------
Net increase 12,406,093 $138,374,834
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 1,953,950 $22,686,676
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 313,246 3,411,448
- ------------------------------------------------------------
2,267,196 26,098,124
Shares
repurchased (570,980) (6,566,347)
- ------------------------------------------------------------
Net increase 1,696,216 $19,531,777
- ------------------------------------------------------------
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
- ------------------------------------------------------------
Six months ended
January 31, 1998
- ------------------------------------------------------------
Class Y Shares Amount
- ------------------------------------------------------------
Shares sold 7,585,632 $90,253,659
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 745,728 8,210,463
- ------------------------------------------------------------
8,331,360 98,464,122
Shares
repurchased (1,121,621) (13,078,058)
- ------------------------------------------------------------
Net increase 7,209,739 $85,386,064
- ------------------------------------------------------------
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
- ------------------------------------------------------------
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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
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
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, Jr.
Vice President
Daniel L. Miller
Vice President
C. Beth Cotner
Vice President and Fund Manager
Manuel H. Weiss
Vice President and Fund Manager
Richard B. England
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
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 the 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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SA012 40531-003/307/385 3/98
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
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Putnam Investors Fund
Supplement to Semiannual Report dated 1/31/98
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
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Total return for periods ended 1/31/98: NAV
6 months 4.64%
1 year 27.90
Five years 153.35
Annual average 20.43
10 years 396.37
Annual average 17.38
Life of fund (since class A inception, 12/1/25)
Annual average 10.41
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Share value: NAV
7/31/97 $11.99
1/31/98 $11.36
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Distributions: No. Income Capital gains Total
1 $0.068 $1.082 1.150
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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.
