Putnam
Investors
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
1-31-99
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Putnam Investors Fund's success at delivering attractive risk-adjusted
returns has not gone unnoticed. Morningstar, an independent rating agency,
gave the fund's class A shares its highest rating -- 5 stars -- for
overall performance based on the fund's average annual returns for the 3-,
5-, and 10-year periods ended January 31, 1999. This rating placed the
fund among the top 10% of the 2,859 domestic equity funds rated.*
* "[Putnam Investors Fund] has maintained its standing as a viable option
for those seeking a growth-tilted core holding."
-- Morningstar Mutual Funds, December 18, 1998
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
11 Portfolio holdings
15 Financial statements
* Morningstar ratings reflect risk-adjusted performance through 1/31/99
and are subject to change every month. Morningstar ratings are calculated
from a fund's 3-, 5-, and 10-year returns (with fee adjustments) in excess
of 90-day Treasury bill returns and a risk factor that reflects
performance below 90-day Treasury bill returns. For 3-, 5-, and 10-year
performance, the fund received 5, 5, and 4 stars, respectively. There were
2,859, 1,734, and 741 equity funds rated. 10% of the funds in an
investment category receive 5 stars; the next 22.5% receive 4 stars.
Performance of other share classes will vary. Past performance is not
indicative of future results.
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Astute stock selection, strict adherence to its investment style, and a
friendly equity market combined to give Putnam Investors Fund a healthy
edge at net asset value over the fund's benchmark Standard & Poor's 500(R)
Index at the fiscal year's midpoint on January 31, 1999.
The value of your fund's commitment to a consistent management style that
emphasizes company-by-company research and analysis was demonstrated
during the stock market's sharp drop last August. As a result of some
portfolio changes made early in the period, the fund was advantageously
positioned to take advantage of the rebound that developed soon
thereafter.
In the following report, the managers discuss in detail the fund's
first-half performance and then take a generally optimistic look at
prospects for the fiscal year's second half.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
March 17, 1999
Report from the Fund Managers
C. Beth Cotner
Manuel Weiss Herrero
Richard B. England
The six months ended January 31, 1999, provided investors with a tough
lesson in stock market volatility as major market indexes hit euphoric
highs, fell to sobering lows, and then rose again. Large blue-chip growth
stocks continued to outperform other segments of the market, but were not
without their share of turmoil.
Through it all, Putnam Investors Fund was well positioned to make the most
of the economic and market trends affecting stock prices. The fund's class
A shares provided a 16.77% total return at net asset value for the
semiannual period and 10.09% at public offering price, compared with
15.02% for the Standard & Poor's 500(R) Index, the fund's benchmark. For
the 12 months ended January 31, 1999, the fund's class A shares provided a
remarkable 40.51% total return at net asset value (32.47% at public
offering price). For detailed performance information, including returns
for other share classes, please see pages 8 and 9.
* FUND SEEKS OPPORTUNITY IN VOLATILITY
The Dow Jones Industrial Average fell 512 points on August 31, 1998, after
Russia professed itself unable to make interest payments on its widely
held government bonds and the IMF declined to intervene. These events set
off a financial chain reaction around the world in which investors flocked
to the perceived safety of developed markets and U.S. Treasuries in
particular. Some observers feared that a global recession was in the
offing.
Market drops of this magnitude are always disturbing, but for the
disciplined investor they can create opportunities. During the correction,
we reduced the fund's position in select financial companies and added to
its technology holdings, which were among the hardest hit. Our biggest
move in this area was adding to the fund's existing holdings in America
Online. The Internet-based service company soared an astounding 200%
during the period and was added to S&P 500 Index as the flagship of the
Internet economy.
Also during this tumultuous period, we took advantage of depressed prices
to acquire shares of Carnival Corporation. Wall Street analysts had cut
earnings estimates for the company with the idea that stock market
volatility would put a damper on cruise activity. In fact, Carnival
already had bookings for the coming cruise season, and the stock returned
33% for the six-month period. Other purchases made during the market
decline included Sun Microsystems, Charles Schwab, Providian Financial,
and Biogen. For the full six-month period, these stocks gained 136%, 181%,
92%, and 77%, respectively. Although these holdings, as well as 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.
* TECHNOLOGY AND RETAIL PREVAIL
The fund's investment strategy works from the bottom up. We start with a
list of about 5,000 companies, each with market capitalizations of at
least $2 billion, and rank them according to such factors as valuation,
earnings and cash-flow growth, potential earnings surprises, and financial
strength. We apply fundamental research to the remaining companies and
overweight the stocks we select relative to the benchmark S&P 500. The
number of portfolio holdings is limited (85 at the end of January) so each
holding can have a greater impact on performance.
[GRAPHIC OMITTED: TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Retail 16.0%
Telecommunications
and networking 11.9%
Pharmaceuticals
and biotechnology 11.5%
Financial services 9.9%
Computer services
and software 9.6%
Footnote reads:
*Based on net assets as of 1/31/99. Holdings will vary over time.
In recent months, our research has led us to overweight the technology,
retail, cable, and entertainment sectors. Stocks in the technology and
retail sectors provided some of the best performance for the fund during
the period. Tech stocks with ties to the Internet were especially strong,
as were retailers that developed Internet sites. Examples include
Microsoft -- the fund's largest holding -- Wal-Mart, and Costco. These
holdings rose 59%, 36%, and 46%, respectively, during the period.
Size and growth also were important factors in the fund's performance,
since the market rewarded both. Faced with intense competition globally
and operating on already lean budgets, many companies are finding that
only the truly massive will survive. Mergers between rapidly growing
companies continued in dramatic fashion during the period, including an
$80 billion deal between portfolio holding Exxon and Mobil Corporation.
Unlike the sometimes hostile takeovers that characterized the late 1980s
and early 1990s, today's merger is typically between rivals in the same
industry who join together out of necessity to reduce costs or increase
market share. Investors have taken notice, with the market's biggest gains
usually going to the biggest players. For example, the Nasdaq Composite
Index, which gained 39.63% for the year ended December 31, 1998, would
have lost more than 17% without its 10 largest companies.
* STAGE SET FOR CONTINUED GROWTH
At the moment, the economic backdrop for financial markets could hardly be
better. U.S. gross domestic product grew at an annualized rate of 6.1% in
the last quarter of 1998, and yet inflation slowed to less than 1%.
Although layoffs have surged in some sectors of the economy, job growth in
service-related sectors has more than offset declines, bringing the
nation's unemployment rate to a 28-year low of 4.3% in December.
Improved productivity, which rose at a 4.6% annual rate in the last three
months of 1998, is the key to some of the trends taking place in the U.S.
economy. After years of capital investment, the integration of new
technologies is having a profound impact on the way businesses operate and
intersect around the world, in some cases transferring growth from
traditional industries to newer and more productive sectors of the
economy.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Microsoft Corp.
Computer services and software
Wal-Mart Stores, Inc.
Retail
Tyco International Ltd.
Conglomerates
Lucent Technologies, Inc.
Telecommunications and networking
Intel Corp.
Electronics and electrical equipment
MCI WorldCom, Inc.
Telecommunications and networking
Time Warner, Inc.
Entertainment
Warner-Lambert Co.
Pharmaceuticals and biotechnology
General Electric Co.
Conglomerates
IBM Corp.
Computer services and software
Footnote reads:
These holdings represent 29.3% of the fund's net assets as of 1/31/99.
Portfolio holdings will vary over time.
Despite the gains in productivity, real earnings growth is becoming
increasingly difficult to find. Market volatility will likely continue as
investors reward companies that deliver growth and punish those that
disappoint. In the coming months, we will continue to apply our rigorous
selection standards to the companies in the fund's investment universe. We
believe the fund's focus on large blue-chip companies experiencing rapid
growth will continue to benefit investors in 1999.
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 1/31/99, 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 1/31/99
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 16.77% 10.09% 16.26% 11.26% 16.42% 12.33%
- ------------------------------------------------------------------------------
1 year 40.51 32.47 39.45 34.45 39.77 34.84
- ------------------------------------------------------------------------------
5 years 198.87 181.82 187.75 185.75 191.39 181.10
Annual average 24.48 23.03 23.54 23.37 23.85 22.96
- ------------------------------------------------------------------------------
10 years 514.71 479.51 465.90 465.90 481.51 461.30
Annual average 19.91 19.21 18.93 18.93 19.25 18.83
- ------------------------------------------------------------------------------
Annual average
(Life of fund) 10.78 10.69 9.69 9.69 9.97 9.92
- ------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/99
Standard &
Poor's 500 Consumer
Index Price Index
- ------------------------------------------------------------------------------
6 months 15.02% 0.86%
- ------------------------------------------------------------------------------
1 year 32.49 1.86
- ------------------------------------------------------------------------------
5 years 196.13 12.59
Annual average 24.25 2.40
- ------------------------------------------------------------------------------
10 years 462.67 35.92
Annual average 18.86 3.12
- ------------------------------------------------------------------------------
Annual average
(Life of fund) --* 3.07
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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
(where available) 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. 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.
*The index did not exist at the time of the fund's inception.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 1/31/99
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 1 1 1
- ------------------------------------------------------------------------------
Income -- -- --
- ------------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------------
Long-term 0.382 0.382 0.382
- ------------------------------------------------------------------------------
Short-term -- -- --
- ------------------------------------------------------------------------------
Total $0.382 $0.382 $0.382
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
7/31/98 $13.67 $14.50 $13.17 $13.47 $13.96
- ------------------------------------------------------------------------------
1/31/99 15.53 16.48 14.88 15.25 15.80
- ------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 12/31/98
(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 10.30% 3.98% 9.87% 4.87% 10.01% 6.19%
- ------------------------------------------------------------------------------
1 year 35.52 27.68 34.43 29.43 34.76 30.08
- ------------------------------------------------------------------------------
5 years 194.64 177.63 183.04 181.04 187.36 177.22
Annual average 24.12 22.66 23.13 22.96 23.51 22.62
- ------------------------------------------------------------------------------
10 years 527.23 491.39 476.89 476.89 493.44 472.82
Annual average 20.16 19.45 19.15 19.15 19.49 19.07
- ------------------------------------------------------------------------------
Annual average
(Life of fund) 10.72 10.63 9.63 9.63 9.91 9.86
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance section for performance calculation method.
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 unmanaged index of common stocks
frequently used as a general measure of stock market performance. The
index assumes reinvestment of all distributions and interest payments and
does 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.
<TABLE>
<CAPTION>
Portfolio of investments owned
January 31, 1999 (Unaudited)
COMMON STOCKS (98.8%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Banks (1.4%)
- --------------------------------------------------------------------------------------------------------------------------
760,700 Fifth Third Bancorp $ 52,060,406
17,600 Northern Trust Corp. 1,523,500
1,276,600 Wells Fargo Co. 44,601,213
--------------
98,185,119
Broadcasting and Cable TV (2.8%)
- --------------------------------------------------------------------------------------------------------------------------
1,746,100 Tele-Communications, Inc. Class A (NON) 119,716,981
2,991,300 Tele-Communications TCI Ventures Group Class A (NON) 81,512,925
--------------
201,229,906
Business Equipment and Services (4.4%)
- --------------------------------------------------------------------------------------------------------------------------
810,800 Cisco Systems, Inc. (NON) 90,454,875
1,337,400 EMC Corp. (NON) 145,609,425
838,700 Dell Computer Corp. (NON) 83,870,000
--------------
319,934,300
Computer Services and Software (9.6%)
- --------------------------------------------------------------------------------------------------------------------------
608,900 3Com Corp. (NON) 28,618,300
178,250 BMC Software, Inc. (NON) 8,322,047
946,800 Computer Sciences Corp. (NON) 64,914,975
741,800 Compuware Corp. (NON) 49,144,250
37,800 Comverse Technology, Inc. (NON) 3,175,200
977,500 IBM Corp. 179,126,875
1,761,000 Microsoft Corp. (NON) 308,175,000
521,400 Sun Microsystems, Inc. (NON) 58,266,450
--------------
699,743,097
Conglomerates (7.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,744,100 General Electric Co. 182,912,488
903,400 Pitney Bowes, Inc. 62,165,213
3,036,500 Tyco International Ltd. 234,000,281
615,000 United Technologies Corp. 73,454,063
--------------
552,532,045
Consumer Non Durables (1.9%)
- --------------------------------------------------------------------------------------------------------------------------
369,200 Clorox Co. 46,196,150
12,100 Colgate-Palmolive Co. 973,294
750,600 Estee Lauder Cos. Class A 61,596,113
666,900 Philip Morris Cos., Inc. 31,344,300
--------------
140,109,857
Consumer Services (2.2%)
- --------------------------------------------------------------------------------------------------------------------------
167,100 Amazon.com, Inc. (NON) 19,540,256
253,200 America Online, Inc. (NON) 44,484,075
1,242,600 Interpublic Group Cos. Inc. 98,320,725
--------------
162,345,056
Electronics and Electrical Equipment (3.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,431,400 Intel Corp. 201,737,938
678,800 Micron Technology, Inc. (NON) 53,031,250
--------------
254,769,188
Entertainment (5.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,876,900 Carnival Corp. Class A 92,085,406
2,998,300 Time Warner, Inc. 187,393,750
1,393,100 Viacom, Inc. Class B (NON) 118,413,500
--------------
397,892,656
Environmental Control (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,595,800 Waste Management, Inc. 79,690,263
Financial Services (9.9%)
- --------------------------------------------------------------------------------------------------------------------------
393,600 American Express Co. 40,491,600
611,700 American General Corp. 43,621,856
818,400 Associates First Capital Corp. 33,196,350
321,200 Charter One Financial, Inc. 8,993,600
894,000 Citigroup, Inc. 50,119,875
971,400 Comerica, Inc. 60,651,788
1,734,800 Federal Home Loan Mortgage Corp. 107,557,600
969,332 Firstar Corp. 85,482,966
3,163,500 MBNA Corp. 88,380,281
479,800 Merrill Lynch & Co., Inc. 36,464,800
631,600 Morgan Stanley, Dean Witter, Discover and Co. 54,830,775
667,765 Providian Financial Corp. 67,319,059
610,300 Schwab (Charles) Corp. 42,911,719
--------------
720,022,269
Food and Beverages (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
814,000 Sara Lee Corp. 20,757,000
535,600 The Quaker Oats Co. 29,792,750
--------------
50,549,750
Health Care Services (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
803,000 Cardinal Health, Inc. 59,371,813
1,519,100 IMS Health Inc. 55,637,038
--------------
115,008,851
Insurance and Finance (2.7%)
- --------------------------------------------------------------------------------------------------------------------------
357,600 Aflac Inc. 15,332,100
1,735,022 American International Group, Inc. 178,598,827
--------------
193,930,927
Medical Supplies and Devices (2.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,572,997 Mckesson HBOC, Inc. 118,171,400
626,444 Medtronic, Inc. 49,919,756
--------------
168,091,156
Oil and Gas (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,695,400 Exxon Corp. 119,419,738
Pharmaceuticals and Biotechnology (11.5%)
- --------------------------------------------------------------------------------------------------------------------------
149,700 Amgen Inc. (NON) 19,133,531
418,200 Biogen, Inc. (NON) 41,088,150
201,600 Bristol-Myers Squibb Co. 25,842,600
556,700 Centocor, Inc. (NON) 23,416,194
1,323,700 Lilly (Eli) & Co. 124,014,144
1,140,800 Pfizer, Inc. 146,735,400
1,090,109 Pharmacia & Upjohn, Inc. 62,681,268
637,300 Quintiles Transnational Corp. (NON) 32,980,375
3,109,900 Schering-Plough Corp. 169,489,550
2,591,600 Warner-Lambert Co. 187,081,125
--------------
832,462,337
Retail (16.0%)
- --------------------------------------------------------------------------------------------------------------------------
335,800 Best Buy Co., Inc. (NON) 30,473,850
1,766,300 Costco Companies, Inc. (NON) 146,382,113
3,093,200 CVS Corp. 169,352,700
660,300 Gap, Inc. (The) 42,383,006
2,124,200 Home Depot, Inc. (The) 128,248,575
541,500 Kroger Co. (NON) 34,385,250
2,057,300 Safeway, Inc. (NON) 115,465,963
3,203,300 TJX Cos., Inc. (The) 94,697,556
843,500 Tricon Global Restaurants, Inc. (NON) 40,118,969
2,738,500 Wal-Mart Stores, Inc. 235,511,000
1,971,800 Walgreen Co. 123,237,500
--------------
1,160,256,482
Telecommunications and Networking (11.9%)
- --------------------------------------------------------------------------------------------------------------------------
688,100 Airtouch Communications, Inc. (NON) 66,444,656
816,300 Ascend Communications, Inc. (NON) 71,273,194
951,100 General Instrument Corp. (NON) 33,764,050
1,934,200 Lucent Technologies, Inc. 217,718,388
2,456,700 MCI WorldCom, Inc. (NON) 195,921,825
2,157,700 SBC Communications, Inc. 116,515,800
1,402,700 Sprint Corp. 117,650,982
557,300 Tellabs, Inc. (NON) 47,788,475
--------------
867,077,370
Utilities (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,072,300 Peco Energy Co. 40,948,456
--------------
Total Common Stocks (cost $4,994,458,817) $7,174,198,823
SHORT-TERM INVESTMENTS (3.7%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$50,000,000 Delaware Funding Corp. effective yield of 5.22%,
February 16, 1999 $ 49,899,375
32,390,000 Metlife Funding Corp. effective yield of 4.81%,
February 26, 1999 32,281,808
50,000,000 National Australia Funding effective yield of 5.17%,
February 2, 1999 49,993,264
61,765,000 Interest in $500,000,000 joint tri-party repurchase
agreement dated January 29, 1999 with Lehman
Brothers Inc., due February 1, 1999 with respect
to various U.S. Treasury obligations -- maturity
value of $61,789,191 for an effective yield of 4.70% 61,765,000
78,076,000 Interest in $580,000,000 joint repurchase agreement
dated January 29, 1999 with Morgan (J.P.) & Co., Inc.
due February 1, 1999 with respect to various U.S.
Treasury obligations -- maturity value of $78,106,580
for an effective yield of 4.70% 78,076,000
--------------
Total Short-Term Investments (cost $272,015,447) $ 272,015,447
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $5,266,474,264) (b) $7,446,214,270
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $7,262,156,930.
(b) The aggregate identified cost on a tax basis is $5,267,989,562, resulting in gross unrealized appreciation and
depreciation of $2,203,141,028 and $24,916,320, respectively, or net unrealized appreciation of $2,178,224,708.
(NON) Non-income-producing security.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $5,266,474,264) (Note 1) $7,446,214,270
- -----------------------------------------------------------------------------------------------
Cash 379
- -----------------------------------------------------------------------------------------------
Dividends and interest receivable 1,835,797
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 55,146,443
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 66,594,615
- -----------------------------------------------------------------------------------------------
Total assets 7,569,791,504
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 288,301,605
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 8,319,928
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 7,147,304
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 575,817
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 31,354
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,860
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 2,588,948
- -----------------------------------------------------------------------------------------------
Other accrued expenses 666,758
- -----------------------------------------------------------------------------------------------
Total liabilities 307,634,574
- -----------------------------------------------------------------------------------------------
Net assets $7,262,156,930
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $5,152,970,060
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (6,019,774)
- -----------------------------------------------------------------------------------------------
Distributions in excess of gains on investments (Note 1) (64,533,362)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 2,179,740,006
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $7,262,156,930
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($4,757,914,544 divided by 306,400,632 shares) $15.53
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $15.53)* $16.48
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($1,995,304,893 divided by 134,124,413 shares)** $14.88
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($150,350,666 divided by 9,859,729 shares) $15.25
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $15.25)* $15.80
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($358,586,827 divided by 23,029,703 shares) $15.57
- -----------------------------------------------------------------------------------------------
* 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, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $6,017) $ 16,506,731
- -----------------------------------------------------------------------------------------------
Interest 5,044,188
- -----------------------------------------------------------------------------------------------
Total investment income 21,550,919
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 12,593,683
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 3,126,988
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 34,333
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 17,195
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 4,446,680
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 6,655,561
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 401,640
- -----------------------------------------------------------------------------------------------
Reports to shareholders 107,628
- -----------------------------------------------------------------------------------------------
Registration fees 20,248
- -----------------------------------------------------------------------------------------------
Auditing 49,920
- -----------------------------------------------------------------------------------------------
Legal 11,996
- -----------------------------------------------------------------------------------------------
Postage 203,645
- -----------------------------------------------------------------------------------------------
Other 285,044
- -----------------------------------------------------------------------------------------------
Total expenses 27,954,561
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (383,868)
- -----------------------------------------------------------------------------------------------
Net expenses 27,570,693
- -----------------------------------------------------------------------------------------------
Net investment loss (6,019,774)
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (67,095,852)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 1,100,241,749
- -----------------------------------------------------------------------------------------------
Net gain on investments 1,033,145,897
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,027,126,123
- -----------------------------------------------------------------------------------------------
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
1999* 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (6,019,774) $ (2,966,193)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (67,095,852) 209,328,907
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,100,241,749 479,663,245
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,027,126,123 686,025,959
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A -- (6,775,789)
- ---------------------------------------------------------------------------------------------------------------
Class B -- --
- ---------------------------------------------------------------------------------------------------------------
Class M -- (54,508)
- ---------------------------------------------------------------------------------------------------------------
Class Y -- (485,625)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (104,424,052) (168,375,876)
- ---------------------------------------------------------------------------------------------------------------
Class B (43,010,115) (34,003,255)
- ---------------------------------------------------------------------------------------------------------------
Class M (3,293,050) (3,482,791)
- ---------------------------------------------------------------------------------------------------------------
Class Y (5,993,204) (7,724,838)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 1,909,210,733 1,847,295,828
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 2,779,616,435 2,312,419,105
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 4,482,540,495 2,170,121,390
- ---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net investment
loss of $6,019,774 and $--, respectively) $7,262,156,930 $4,482,540,495
- ---------------------------------------------------------------------------------------------------------------
* 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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.67 $11.98 $9.07 $9.05 $7.85 $8.87
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income --(c) --(c) .05(c) .06 .08 .06
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.24 2.81 4.08 1.17 1.85 .26
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.24 2.81 4.13 1.23 1.93 .32
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- (.04) (.05) (.09) -- (.05)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.38) (1.08) (1.17) (1.12) (.73) (1.29)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (1.12) (1.22) (1.21) (.73) (1.34)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $15.53 $13.67 $11.98 $9.07 $9.05 $7.85
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 16.77* 25.75 49.91 14.32 27.55 3.33
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $4,757,915 $3,209,986 $1,819,333 $1,104,264 $956,830 $786,118
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .44* .95 1.00 1.03 .99 .99
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.02)* .03 .50 .69 1.03 .88
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 38.77* 59.14 95.17 128.21 96.75 100.16
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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 with PFTC and brokerage service
arrangements. Prior period ratios exclude these amounts. (Note 2.)
(c) 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
Per-share January 31
operating performance (Unaudited) Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.17 $11.62 $8.85 $8.88 $7.78 $8.85
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.05)(c) (.09)(c) (.03)(c) -- .01 .03
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.14 2.72 3.98 1.13 1.82 .21
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.09 2.63 3.95 1.13 1.83 .24
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- (.01) (.04) -- (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.38) (1.08) (1.17) (1.12) (.73) (1.29)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (1.08) (1.18) (1.16) (.73) (1.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $14.88 $13.17 $11.62 $8.85 $8.88 $7.78
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 16.26* 24.84 48.87 13.42 26.46 2.38
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,995,305 $979,603 $303,089 $89,378 $47,906 $21,033
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .82* 1.70 1.75 1.77 1.75 1.77
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.40)* (.74) (.26) (.09) .22 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 38.77* 59.14 95.17 128.21 96.75 100.16
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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 with PFTC and brokerage service
arrangements. Prior period ratios exclude these amounts. (Note 2.)
(c) 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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.47 $11.85 $9.00 $9.02 $7.78
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.04)(c) (.06)(c) --(c) .05 .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.20 2.78 4.05 1.12 1.96
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.16 2.72 4.05 1.17 1.97
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- (.02) (.03) (.07) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.38) (1.08) (1.17) (1.12) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (1.10) (1.20) (1.19) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $15.25 $13.47 $11.85 $9.00 $9.02
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 16.42* 25.14 49.28 13.70 28.29*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $150,351 $87,730 $27,384 $5,650 $873
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .69* 1.45 1.50 1.51 1.56*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.27)* (.48) (.02) .16 .29*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 38.77* 59.14 95.17 128.21 96.75
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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 with PFTC and brokerage service
arrangements. Prior period ratios exclude these amounts. (Note 2.)
(c) 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 Year ended Jan. 7,1997+
operating performance (Unaudited) July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $13.70 $11.99 $9.26
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .01(c) .03(c) .04(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.24 2.83 2.69
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.25 2.86 2.73
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- (.07) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.38) (1.08) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (1.15) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $15.57 $13.70 $11.99
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 16.81* 26.20 29.48*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $358,587 $205,222 $20,314
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .32* .70 .42*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .10* .27 .37*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 38.77* 59.14 95.17
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total 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 with PFTC and brokerage service
arrangements. Prior period ratios exclude these amounts. (Note 2.)
(c) 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, 1999 (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 are subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class M
shares are sold with a maximum front end sales charge of 3.50% and pay an
ongoing distribution fee that is 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 $150 million in a
combination of Putnam Funds and other 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 that 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 sales 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. 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 six months
ended January 31, 1999, 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, 1999, fund expenses were reduced by
$383,868 under expense offset arrangements with PFTC and brokerage service
arrangements. 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 $3,790
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 have approved payment by the fund at an annual
rate of 0.25%, 1.00%, and 0.75%, of the average net assets attributable to
class A, class B, and class M shares, respectively.
For the six months ended January 31, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $2,098,680 and $92,314
from the sale of class A and class M shares, respectively and received
$1,051,190 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, 1999,
Putnam Mutual Funds Corp., acting as underwriter received $49,732 on class
A redemptions.
Note 3
Purchases and sales of securities
During the six months ended January 31, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$3,773,809,528 and $1,976,731,156, 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, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 103,377,631 $1,395,180,728
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,979,667 95,760,429
- -----------------------------------------------------------------------------
110,357,298 1,490,941,157
Shares
repurchased (38,841,980) (514,726,118)
- -----------------------------------------------------------------------------
Net increase 71,515,318 $ 976,215,039
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 122,394,661 $1,539,582,978
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 14,027,328 154,581,227
- -----------------------------------------------------------------------------
136,421,989 1,694,164,205
Shares
repurchased (53,383,852) (663,072,935)
- -----------------------------------------------------------------------------
Net increase 83,038,137 $1,031,091,270
- -----------------------------------------------------------------------------
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 74,252,843 $952,089,603
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,020,069 39,744,397
- -----------------------------------------------------------------------------
77,272,912 991,834,000
Shares
repurchased (17,544,257) (221,102,273)
- -----------------------------------------------------------------------------
Net increase 59,728,655 $770,731,727
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 61,119,641 $758,948,399
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,960,851 31,562,411
- -----------------------------------------------------------------------------
64,080,492 790,510,810
Shares
repurchased (15,773,720) (192,044,194)
- -----------------------------------------------------------------------------
Net increase 48,306,772 $598,466,616
- -----------------------------------------------------------------------------
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,528,895 $59,318,666
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 234,453 3,162,771
- -----------------------------------------------------------------------------
4,763,348 62,481,437
Shares
repurchased (1,416,516) (18,287,037)
- -----------------------------------------------------------------------------
Net increase 3,346,832 $44,194,400
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 5,396,575 $67,527,386
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 311,465 3,392,053
- -----------------------------------------------------------------------------
5,708,040 70,919,439
Shares
repurchased (1,506,128) (18,706,416)
- -----------------------------------------------------------------------------
Net increase 4,201,912 $52,213,023
- -----------------------------------------------------------------------------
Six months ended
January 31, 1999
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 14,265,927 $202,967,661
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 435,552 5,993,204
- -----------------------------------------------------------------------------
14,701,479 208,960,865
Shares
repurchased (6,655,578) (90,891,298)
- -----------------------------------------------------------------------------
Net increase 8,045,901 $118,069,567
- -----------------------------------------------------------------------------
Year ended
July 31, 1998
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 16,062,424 $201,821,553
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 745,728 8,210,463
- -----------------------------------------------------------------------------
16,808,152 210,032,016
Shares
repurchased (3,518,401) (44,507,097)
- -----------------------------------------------------------------------------
Net increase 13,289,751 $165,524,919
- -----------------------------------------------------------------------------
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
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
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
C. Beth Cotner
Vice President and Fund Manager
Manuel Weiss Herrero
Vice President and Fund Manager
Richard B. England
Vice President and Fund Manager
Richard A. Monaghan
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.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
www.putnaminv.com
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
SA012 49942-003/307/385 3/99
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- --------------------------------------------------------------------------
Putnam Investors Fund
Supplement to Semiannual Report dated 1/31/99
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
$150 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 annual report.
ANNUAL RESULTS AT A GLANCE
- --------------------------------------------------------------------------
Total return
for periods ended 1/31/99 NAV
6 months 16.81%
1 year 40.87
5 years 200.28
Annual average 24.60
10 years 517.62
Annual average 19.97
Life of fund
Annual average (since class A inception, 12/1/25) 10.78
- --------------------------------------------------------------------------
Share value: NAV
7/31/98 $13.70
1/31/99 $15.57
- --------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $0.000 0.382 $0.382
- --------------------------------------------------------------------------
Please note that past performance does not indicate future results.
Returns shown for class Y shares for periods prior to their inception are
derived from the historical performance of class A shares, adjusted to
reflect the initial sales charge currently applicable to class A shares.
These returns have not been adjusted to reflect differences in operating
expenses which, for class Y shares, are lower than the operating expenses
applicable to class A shares. All returns assume reinvestment of
distributions at net asset value. Performance data reflects an expense
limitation previously in effect. Without the expense limitation, total
returns would have been lower. 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.
