Putnam
Investors
Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
7-31-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
In rather rapid succession, equity investors have recently been subjected
to two distinct turns in the stock market. Shifting away from its narrow
growth-oriented bias, the market first experienced a rally in
value-oriented and cyclical stocks, then, more recently, it encountered a
healthy broadening that should greatly expand Putnam Investors Fund's
stock selection opportunities.
Earlier, when the market favored the large-company stocks in which it
invests, your fund was clearly among the major beneficiaries. The market's
shift to value and cyclical stocks in mid April took some of the wind out
of the fund's sails, returning it to its more conservative growth profile.
The fund's management team expects that in the months ahead performance
will be more in line with its historical average.
While this prospect may disappoint shareholders who became accustomed to
headier returns, those who have invested in the fund out of a desire for
stable growth over time should appreciate the heightened prospect of
achieving this goal in the broader equity market now emerging.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
September 15, 1999
Report from the Fund Managers
C. Beth Cotner
Manuel Weiss Herrero
Richard B. England
Although a handful of large-capitalization stocks had ruled the stock
market for some time, an expanding global economy and investors' shift to
more undervalued stocks upset the apple cart of growth investors toward
the end of your fund's fiscal year. Since Putnam Investors Fund focuses
primarily on large-cap stocks, the broadening of the market that occurred
in April and May -- as well as a subsequent rise in interest rates --
detracted from performance toward the end of fiscal 1999.
Nevertheless, for the 12 months ended July 31, 1999, the fund maintained a
strong position. The fund's benchmark, the Standard & Poor's 500 Index,
also epitomized the improvement in a wider range of stocks, as the
performance of that index eased to a one-year return of 20.22% over the
same period.
Total return for 12 months ended 7/31/99
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- ------------------------------------------------------------------
18.65% 11.86% 17.67% 12.67% 17.69% 16.69% 18.02% 13.88%
- ------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods begins on page 6.
* POSITIONING FUND FOR BROADER STOCK MARKET
The market's shift toward more value-oriented companies in April and May
was somewhat destabilizing for growth-oriented investors. However, it
could turn out to be an exceptionally healthy development in the long run.
In the more narrow market of the past couple of years, performance was
concentrated in a few large-company stocks. Now, with a greater number of
companies exhibiting the potential for strong earnings growth, your
management team has a more abundant selection of candidates from which to
choose. In fact, as its track record shows, this fund has had the ability
to adapt itself to a variety of markets.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Retail 12.9%
Insurance
and finance 12.2%
Telecommunications 11.2%
Conglomerates 10.8%
Pharmaceuticals 8.7%
Footnote reads:
*Based on net assets as of 7/31/99. Holdings will vary over time.
Morningstar gave Putnam Investors Fund's class A shares 4 out of 5 stars for
3-year performance as of June 30, 1999. This rating put the fund among the
22.5% of the 3,092 domestic equity funds rated.
Past performance is not indicative of future results. Morningstar ratings
reflect risk-adjusted performance through 6/30/99 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 the 5-year performance, the fund received 5 stars. There were
1,923 domestic equity funds rated. For the 10-year performance, the fund
received 4 stars. There were 746 domestic equity funds rated. The top 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.
Many of the stocks that have benefited recently from the shift to value
stocks -- those within basic industries and commodity-related companies --
do not meet our criteria for earnings growth or have the potential for
positive earnings estimate revisions. Oil prices have risen somewhat over
the past few months, but we have observed little or no increase in prices
of other commodities that would translate to future earnings growth in
these areas.
Consequently, we are keeping the fund well positioned in the areas that
offer the most opportunities to find larger, growing companies. The broad
and diverse sector of technology still offers such an opportunity. Thanks
to the global growth of the Internet and the rapidly rising demand for
quick and seamless communication of data, the once-distinct lines dividing
technology-related industries are now blurring. Personal computer,
semiconductor, software, cable, cellular, data communications, and
telecommunications equipment companies are all benefiting today as diverse
industries converge to address the needs of consumers and businesses. The
growth of the Internet is truly global and it puts significant pressure on
both corporations and individuals everywhere to increase their spending on
equipment, ranging from PCs to telecommunications infrastructure.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Microsoft Corp.
Computer services and software
Tyco International Ltd.
Conglomerates
General Electric Co.
Conglomerates
Lucent Technologies, Inc.
Telecommunications
Time Warner, Inc.
Entertainment
IBM Corp.
Computer equipment
SBC Communications, Inc.
Telephone services
Wal-Mart Stores, Inc.
Retail
Sprint Corp.
Telephone services
Motorola, Inc.
Semiconductors
Footnote reads:
These holdings represent 27.4% of the fund's net assets as of 7/31/99.
Portfolio holdings will vary over time.
For example, there has been an explosion in worldwide demand for cellular
and data communications services. One of the primary beneficiaries of that
demand is Lucent Technologies. This former subsidiary of AT&T is the
dominant player in communications equipment and has consistently exceeded
analysts' earnings growth forecasts over time. Recently the company has
been quite acquisitive, making five deals in about a month and a half.
These strategic acquisitions included Ascend Communications in June and
router-maker Xedia following the close of the fund's fiscal year. While
these holdings, along with others discussed in this report, were viewed
favorably at the end of the period, all are subject to review and
adjustment in accordance with the fund's investment strategy and may vary
in the future.
* STRONG CONSUMER SPENDING PROMPTS RETAIL EMPHASIS
Credited with providing the sole engine of demand in the world during the
emerging-markets crisis of last year, U.S. consumers continued to open
their wallets and spend. Retail sales growth has been on an almost
unencumbered upswing since last year. In fact, retail sales in July had
year-on-year growth of 9.1%.
We targeted discount retailers known for convenience and value such as
Wal-Mart and Home Depot. Wal-Mart, in particular, remained a key
investment for the fund. The company continued to improve its return on
capital (a key measure of how effectively a company uses shareholders'
investments) and maintained its dominance of discount retailing. Wal-Mart
has also been successful in expanding to new formats as well as taking on
an international venture in the United Kingdom.
Capitalizing on the growth of the Internet
The Internet is bringing fundamental changes in both the way people communicate
and the way goods and services are bought and sold around the world. We have
positioned the fund in growing industries that are benefiting now and should
continue to capitalize on the growth of the Internet. Through intensive
fundamental research, we have identified not only technology companies but
those involved in telecommunications, cable, financial services, and retail
that owe much of their present growth to connections with the Internet and
e-commerce. For example, the convergence of voice, data, and video through
cable and phone lines has created the primary battleground for
telecommunications and cable companies today. The growth of the Internet has
also created an explosion in the volume of data moving through communications
networks (data traffic has now surpassed voice traffic), forcing
telecommunications companies to increase continually the capacity of their
networks and seek more advanced switching technology. Your fund is taking
advantage of this trend through positions in technology and telecommunications
companies as well as in industries such as retail and financial services that
are expanding their business over the Internet.
Another strong performing retail holding was Best Buy. This consumer
electronics company has grown from near bankruptcy a few years ago to a
dominant industry player today. One factor driving Best Buy's growth has
been the success of the digital video disc, or DVD, player. According to
the August 8, 1999, edition of The New York Times, DVD players have
reached 4.5% market penetration in three years, a much quicker pace than
the launch of CDs 16 years ago, making DVDs among the most successful
consumer electronics product launches in history.
* UNDERPERFORMANCE OF DRUG STOCKS COULD CHANGE IN TIME
Pharmaceutical stocks have been caught between a rock and a hard place
this year based on two fairly short-term factors weighing on the market.
Many of the top-selling drugs on the market today will soon be losing
their patent protection. Additionally potential Medicare/Medicaid reform
advanced by the Clinton administration relating to prescription benefits
made investors nervous about their drug stock holdings. Both factors,
especially in a more hostile environment for growth stocks, lowered the
earnings expectations for many of these stocks.
We remain underweight in pharmaceutical and health-care stocks relative to
the fund's benchmark. However, while many pharmaceutical and health-care
stocks have been afflicted by these short-term concerns, we believe the
long-term case for investing in this area remains intact. The aging of the
populations of the world's industrialized nations will continue, thus
keeping the potential demand for pharmaceuticals and health-care products
high. This constant demand, combined with still decent fundamentals,
should eventually lead investors back to the health-care industries.
* OUTLOOK REMAINS POSITIVE DESPITE INTEREST-RATE WORRIES
A string of stronger-than-expected economic data recently caused the
financial markets to remain fixated on worries about higher interest rates
and the potential for inflation. As rates have moved up from the
artificially low levels they hit last year and the Federal Reserve Board
raised short-term interest rates, growth stocks as well as interest-rate
sensitive areas such as financial stocks were hurt.
We believe the inflation outlook remains benign and that the market will
begin again to recognize the strong fundamentals of many of the stocks
that have sold off recently. That said, we do not anticipate a return to a
market based on the performance of a handful of stocks. The strong
corporate earnings in the second quarter and the potential for solid
earnings in the third quarter provide further evidence of a broadening of
the market. It is in this type of market that we believe the comprehensive
stock-by-stock fundamental research we employ has an opportunity to shine.
The views expressed here are exclusively those of Putnam Management. They
are not meant as investment advice. Although the described holdings were
viewed favorably as of 7/31/99, 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.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 7/31/99
Class A Class B Class C Class M
(inception dates) (12/1/25) (3/1/93) (7/26/99) (12/2/94)
NAV POP NAV CDSC NAV CDSC NAV POP
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year 18.65% 11.86% 17.67% 12.67% 17.69% 16.69% 18.02% 13.88%
- ---------------------------------------------------------------------------------
5 years 226.12 207.32 213.69 211.68 213.97 213.97 218.32 207.00
Annual average 26.67 25.18 25.69 25.53 25.71 25.71 26.06 25.15
- ---------------------------------------------------------------------------------
10 years 424.78 394.74 383.62 383.62 386.57 386.57 397.23 379.89
Annual average 18.03 17.34 17.07 17.07 17.14 17.14 17.40 16.98
- ---------------------------------------------------------------------------------
Annual average
(Life of fund) 10.72 10.64 9.64 9.64 9.89 9.89 9.92 9.87
- ---------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/99
Standard & Poor's Consumer
500 Index price index
- -------------------------------------------------------------------------
1 year 20.22% 2.14%
- -------------------------------------------------------------------------
5 years 220.68 12.33
Annual average 26.25 2.35
- -------------------------------------------------------------------------
10 years 396.64 34.00
Annual average 17.39 2.97
- -------------------------------------------------------------------------
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-, 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. For class C shares, returns for
periods prior to their inception are derived from the historical
performance of class A shares, adjusted to reflect both the CDSC currently
applicable to class C shares, which is 1% for the first year and is
eliminated thereafter, and the higher operating expenses applicable to
class C 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.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 7/31/89
Fund's class A Standard & Poor's Consumer price
Date shares at POP 500 Index index
7/31/89 9,425 10,000 10,000
7/31/90 10,399 10,650 10,482
7/31/91 11,784 12,009 10,949
7/31/92 12,313 13,545 11,294
7/31/93 14,682 14,727 11,608
7/31/94 15,171 15,487 11,929
7/31/95 19,350 19,531 12,259
7/31/96 22,120 22,767 12,621
7/31/97 33,160 34,637 12,902
7/31/98 41,698 41,317 13,119
7/31/99 $49,474 $49,664 $13,400
Footnote reads:
Past performance is no assurance of future results. At the end of the same
time period, a $10,000 investment in the fund's class B or class C shares
would have been valued at $48,362 and $48,657, respectively and no
contingent deferred sales charges would apply; a $10,000 investment in the
fund's class M shares would have been valued at $49,723 ($47,989 at public
offering price). See first page of performance section for performance
calculation method.
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 7/31/99
Class A Class B Class C 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 NAV POP
- ------------------------------------------------------------------------------
7/31/98 $13.67 $14.50 $13.17 $-- $13.47 $13.96
- ------------------------------------------------------------------------------
7/26/99* -- -- -- 16.08 -- --
- ------------------------------------------------------------------------------
7/31/99 15.78 16.74 15.06 15.77 15.46 16.02
- ------------------------------------------------------------------------------
*Inception date of class C shares.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 6/30/99 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (12/1/25) (3/1/93) (7/26/99) (12/2/94)
NAV POP NAV CDSC NAV CDSC NAV POP
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year 21.02% 14.08% 20.08% 15.08% 20.15% 19.15% 20.44% 16.25%
- --------------------------------------------------------------------------------------
5 years 245.72 225.66 232.67 230.67 232.88 232.88 237.22 225.31
Annual average 28.16 26.63 27.18 27.02 27.19 27.19 27.52 26.61
- --------------------------------------------------------------------------------------
10 years 488.59 454.72 442.03 442.03 445.69 445.69 457.64 438.21
Annual average 19.39 18.69 18.41 18.41 18.49 18.49 18.75 18.33
- --------------------------------------------------------------------------------------
Annual average
(Life of fund) 10.78 10.69 9.70 9.70 9.95 9.95 19.98 9.93
- --------------------------------------------------------------------------------------
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.
</TABLE>
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 C shares are not subject to an initial sales charge and are subject
to a contingent deferred sales charge only if the shares are redeemed
during the first year.
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 5.75% maximum 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 or C shares and assumes redemption at the end of
the period. Your fund's class B 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. The CDSC for class C shares is 1% for one year after
purchase.
Comparative benchmarks
Standard & Poor's 500 Composite Stock Price Index is an index of common
stocks frequently used as a general measure of stock market performance.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take into account brokerage fees or taxes. Securities
in the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Welcome to www.putnaminv.com
Now you can use your PC to get up-to-date information about your funds, learn
more about investing and retirement planning, and access market news and
economic outlooks from Putnam.
VISIT PUTNAM'S SITE ON THE WORLD WIDE WEB FOR:
* the benefits of investing with Putnam
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New features will be added to the site regularly. So be sure to bookmark us
at http://www.putnaminv.com
A guide to the financial statements
These sections of the report, preceded by the Report of independent
accountants, constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price is determined. All investment and non-investment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for
the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that remain
in the portfolio -- any change in unrealized gains or losses over the
period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of
the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed here
may not match the sources listed in the Statement of operations because
the distributions are determined on a tax basis and may be paid in a
different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-ended funds, a separate
table is provided for each share class.
Report of independent accountants
The Board of Trustees and Shareholders of
Putnam Investors Fund
We have audited the accompanying statement of assets and liabilities of
Putnam Investors Fund, including the fund's portfolio, as of July 31,
1999, and the related statement of operations, statement of changes in net
assets and financial highlights for the year or period then ended. These
financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audit.
The statement of changes in net assets for the year or periods ended July
31, 1998 and the financial highlights for each of the years in the
four-year period ended July 31, 1998 were audited by other auditors whose
report dated September 11, 1998 expressed an unqualified opinion on that
financial statement and those financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of July 31, 1999 by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Putnam Investors Fund as of July 31, 1999, the results of its
operations, changes in its net assets and financial highlights for the
year or period then ended, in conformity with generally accepted
accounting principles.
KPMG LLP
Boston, Massachusetts
September 8, 1999
<TABLE>
<CAPTION>
The fund's portfolio
July 31, 1999
COMMON STOCKS (99.4%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Advertising (1.3%)
- --------------------------------------------------------------------------------------------------------------------------
3,242,400 Interpublic Group Cos. Inc. $ 136,180,800
Banks (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,069,000 Bank of America Corp. 70,954,875
299,000 Northern Trust Corp. 26,013,000
1,787,000 Wells Fargo Co. 69,693,000
---------------
166,660,875
Broadcasting (1.0%)
- --------------------------------------------------------------------------------------------------------------------------
657,800 Clear Channel Communications, Inc. 45,758,213
1,366,000 Comcast Corp. Class A (NON) 52,591,000
---------------
98,349,213
Cable TV (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,696,000 MediaOne Group Inc.(NON) 122,748,000
Chemicals (0.8%)
- --------------------------------------------------------------------------------------------------------------------------
1,692,000 Praxair, Inc. 78,043,500
Computer Equipment (7.2%)
- --------------------------------------------------------------------------------------------------------------------------
965,000 Apple Computer, Inc. (NON) 53,738,438
1,391,000 EMC Corp. (NON) 84,242,438
1,043,000 Hewlett-Packard Co. 109,189,063
1,759,000 IBM Corp. 221,084,313
606,200 Lexmark International Group, Inc. Class A (NON) 38,190,600
1,553,800 Solectron Corp. 100,122,988
1,806,500 Sun Microsystems, Inc. (NON) 122,616,188
---------------
729,184,028
Computer Services and Software (5.6%)
- --------------------------------------------------------------------------------------------------------------------------
326,000 CMGI, Inc. (NON) 30,053,125
737,600 Comverse Technology, Inc. (NON) 55,734,900
4,883,300 Microsoft Corp. (NON) 419,048,181
1,648,000 Unisys Corp. (NON) 67,259,000
---------------
572,095,206
Conglomerates (10.8%)
- --------------------------------------------------------------------------------------------------------------------------
987,700 Allied-Signal, Inc. 63,891,844
3,258,300 General Electric Co. 355,154,700
1,447,000 Pitney Bowes, Inc. 92,065,375
4,014,300 Tyco International Ltd. 392,146,931
2,832,300 United Technologies Corp. 188,879,006
---------------
1,092,137,856
Consumer Non Durables (2.9%)
- --------------------------------------------------------------------------------------------------------------------------
537,000 Clorox Co. 60,144,000
2,020,800 Colgate-Palmolive Co. 99,777,000
2,371,800 Estee Lauder Cos. Class A 112,808,738
427,000 Nike, Inc. 22,204,000
---------------
294,933,738
Consumer Services (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
666,000 America Online, Inc. (NON) 63,353,250
Electronics and Electrical Equipment (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
405,000 Honeywell, Inc. 48,524,063
729,100 Texas Instruments, Inc. 104,990,400
---------------
153,514,463
Entertainment (4.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,707,000 Carnival Corp. Class A 79,268,813
3,242,300 Time Warner, Inc. 233,445,600
3,598,500 Viacom, Inc. Class B (NON) 150,912,094
---------------
463,626,507
Insurance and Finance (12.2%)
- --------------------------------------------------------------------------------------------------------------------------
984,300 AFLAC, Inc. 45,646,913
1,121,600 American Express Co. 147,770,800
947,000 American General Corp. 73,274,125
1,762,000 American International Group, Inc. 204,612,250
1,240,600 Capital One Financial Corp. 57,532,825
4,337,100 Citigroup, Inc. 193,272,019
803,000 Comerica, Inc. 44,566,500
1,173,000 Fifth Third Bancorp 76,318,313
1,179,000 First Security Corp. 29,843,438
4,480,400 Firstar Corp. 116,770,425
514,000 Lincoln National Corp. 25,700,000
672,000 Morgan Stanley, Dean Witter, Discover and Co. 60,564,000
814,000 Providian Financial Corp. 74,074,000
1,624,400 Schwab (Charles) Corp. 71,575,125
179,000 Zions Bancorp 10,382,000
---------------
1,231,902,733
Medical Supplies and Devices (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
641,000 Bausch & Lomb, Inc. 46,031,813
Oil and Gas (3.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,502,000 Conoco, Inc. 39,145,875
1,616,000 Enron Corp. 137,663,000
2,181,500 Exxon Corp. 173,156,563
---------------
349,965,438
Packaging and Containers (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
638,000 Sealed Air Corp. (NON) 40,991,500
Paper and Forest Products (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
751,600 Weyerhaeuser Co. 48,619,125
Pharmaceuticals (8.7%)
- --------------------------------------------------------------------------------------------------------------------------
452,100 Allergan, Inc. 42,723,450
1,926,500 American Home Products Corp. 98,251,500
1,019,000 Amgen Inc. (NON) 78,335,625
1,046,000 Biogen, Inc. (NON) 71,977,875
272,900 Immunex Corp. (NON) 30,803,588
1,250,000 Johnson & Johnson 115,156,250
1,902,000 Pharmacia & Upjohn, Inc. 102,351,375
3,954,700 Schering-Plough Corp. 193,780,300
2,184,000 Warner-Lambert Co. 144,144,000
---------------
877,523,963
Retail (12.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,016,000 Best Buy Co., Inc. (NON) 75,819,000
1,071,400 Circuit City Stores, Inc. 50,623,650
1,918,300 Costco Companies, Inc. (NON) 143,392,925
2,885,300 CVS Corp. 143,543,675
963,000 Dayton Hudson Corp. 62,294,063
1,583,000 Gap, Inc. (The) 74,005,250
2,638,000 Home Depot, Inc. (The) 168,337,375
2,080,400 Safeway, Inc. (NON) 112,081,550
1,399,300 Staples, Inc. 40,404,788
3,308,000 TJX Cos., Inc. (The) 109,370,750
5,165,000 Wal-Mart Stores, Inc. 218,221,250
3,617,500 Walgreen Co. 102,420,469
---------------
1,300,514,745
Semiconductors (2.0%)
- --------------------------------------------------------------------------------------------------------------------------
2,246,000 Motorola, Inc. 204,947,500
Telecommunications (11.2%)
- --------------------------------------------------------------------------------------------------------------------------
1,184,300 ALLTEL Corp. 85,047,544
2,900,700 Cisco Systems, Inc. (NON) 180,205,988
4,511,200 Lucent Technologies, Inc. 293,509,950
2,306,000 MCI WorldCom, Inc. (NON) 190,245,000
1,157,500 Nokia Oyj Corp. ADR (Finland) 98,459,844
658,000 QUALCOMM, Inc. (NON) 102,648,000
1,420,200 Tellabs, Inc. (NON) 87,431,063
457,000 Vodafone AirTouch PLC (United Kingdom) 96,198,500
---------------
1,133,745,889
Telephone Services (7.5%)
- --------------------------------------------------------------------------------------------------------------------------
4,690,000 AT&T Corp. 173,530,000
2,138,600 BellSouth Corp. 102,652,800
3,865,600 SBC Communications, Inc. 221,064,000
4,054,500 Sprint Corp. 209,566,969
874,000 Sprint PCS 52,986,250
---------------
759,800,019
Transportation (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
969,000 FDX Corp. (NON) 43,423,302
814,000 Union Pacific Corp. 44,210,375
---------------
87,633,677
---------------
Total Common Stocks (cost $7,876,978,486) $10,052,503,838
SHORT-TERM INVESTMENTS (0.9%) (a) (cost $88,444,000)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$88,444,000 Interest in $600,000,000 joint tri-party repurchase
agreement dated July 30, 1999, with Goldman
Sachs & Co. due August 2, 1999, with respect to
various U.S. Treasury obligations -- maturity value
of $88,481,220 for an effective yield of 5.05% $ 88,444,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $7,965,422,486) (b) $10,140,947,838
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $10,115,163,649.
(b) The aggregate identified cost on a tax basis is $7,985,162,823 resulting in gross unrealized appreciation and
depreciation of $2,342,215,277 and $186,430,262, respectively, or net unrealized appreciation of $2,155,785,015.
(NON) Non-income-producing security.
ADR after the name of a foreign holding stands for American Depositary Receipts representing ownership of foreign
securities on deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
July 31, 1999
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $7,965,422,486) (Note 1) $10,140,947,838
- -----------------------------------------------------------------------------------------------
Cash 181
- -----------------------------------------------------------------------------------------------
Dividends, interest, and other receivables 3,918,956
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 42,345,363
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 16,177,719
- -----------------------------------------------------------------------------------------------
Total assets 10,203,390,057
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 47,427,377
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 21,941,245
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 11,244,764
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,751,035
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 91,596
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 13,039
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 4,101,934
- -----------------------------------------------------------------------------------------------
Other accrued expenses 1,655,418
- -----------------------------------------------------------------------------------------------
Total liabilities 88,226,408
- -----------------------------------------------------------------------------------------------
Net assets $10,115,163,649
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $ 7,869,844,856
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 69,793,441
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 2,175,525,352
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $10,115,163,649
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($6,130,542,884 divided by 388,613,328 shares) $15.78
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $15.78)* $16.74
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($3,028,807,248 divided by 201,167,798 shares)** $15.06
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($1,533,563 divided by 97,234 shares)** $15.77
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($199,805,786 divided by 12,924,354 shares) $15.46
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $15.46)* $16.02
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($754,474,168 divided by 47,635,019 shares) $15.84
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year ended July 31, 1999
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $6,017) $ 41,592,500
- -----------------------------------------------------------------------------------------------
Interest 9,561,150
- -----------------------------------------------------------------------------------------------
Total investment income 51,153,650
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 32,921,759
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 8,830,922
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 69,381
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 37,153
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 11,268,629
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 19,490,832
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 100
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 1,070,126
- -----------------------------------------------------------------------------------------------
Reports to shareholders 268,139
- -----------------------------------------------------------------------------------------------
Registration fees 1,227,589
- -----------------------------------------------------------------------------------------------
Auditing 55,632
- -----------------------------------------------------------------------------------------------
Legal 42,122
- -----------------------------------------------------------------------------------------------
Postage 638,560
- -----------------------------------------------------------------------------------------------
Other 604,875
- -----------------------------------------------------------------------------------------------
Total expenses 76,525,819
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (947,721)
- -----------------------------------------------------------------------------------------------
Net expenses 75,578,098
- -----------------------------------------------------------------------------------------------
Net investment loss (24,424,448)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 71,709,481
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 1,096,027,095
- -----------------------------------------------------------------------------------------------
Net gain on investments 1,167,736,576
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,143,312,128
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended July 31
-------------------------------
1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (24,424,448) $ (2,966,193)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments 71,709,481 209,328,907
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,096,027,095 479,663,245
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,143,312,128 686,025,959
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A -- (6,775,789)
- ---------------------------------------------------------------------------------------------------------------
Class M -- (54,508)
- ---------------------------------------------------------------------------------------------------------------
Class Y -- (485,625)
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (104,260,696) (168,375,876)
- ---------------------------------------------------------------------------------------------------------------
Class B (42,895,379) (34,003,255)
- ---------------------------------------------------------------------------------------------------------------
Class M (3,292,652) (3,482,791)
- ---------------------------------------------------------------------------------------------------------------
Class Y (5,993,204) (7,724,838)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 4,645,752,957 1,847,295,828
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 5,632,623,154 2,312,419,105
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of year 4,482,540,495 2,170,121,390
- ---------------------------------------------------------------------------------------------------------------
End of year $10,115,163,649 $4,482,540,495
- ---------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.67 $11.98 $9.07 $9.05 $7.85
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02)(c) --(c) .05(c) .06 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.51 2.81 4.08 1.17 1.85
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.49 2.81 4.13 1.23 1.93
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- (.04) (.05) (.09) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.38) (1.08) (1.17) (1.12) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (1.12) (1.22) (1.21) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $15.78 $13.67 $11.98 $9.07 $9.05
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 18.65 25.75 49.91 14.32 27.55
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $6,130,543 $3,209,986 $1,819,333 $1,104,264 $956,830
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .89 .95 1.00 1.03 .99
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.14) .03 .50 .69 1.03
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.73 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 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.
(d) Net investment income was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.17 $11.62 $8.85 $8.88 $7.78
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.13)(c) (.09)(c) (.03)(c) -- .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.40 2.72 3.98 1.13 1.82
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.27 2.63 3.95 1.13 1.83
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- (.01) (.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.38) (1.08) (1.17) (1.12) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.38) (1.08) (1.18) (1.16) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $15.06 $13.17 $11.62 $8.85 $8.88
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 17.67 24.84 48.87 13.42 26.46
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,028,807 $979,603 $303,089 $89,378 $47,906
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.64 1.70 1.75 1.77 1.75
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.90) (.74) (.26) (.09) .22
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.73 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 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.
(d) Net investment income was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share July 26, 1999+
operating performance to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value,
beginning of period $16.08
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) --(c)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $15.77
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (1.93)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,534
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .03*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.01)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.73
- ------------------------------------------------------------------------------------------------------------------------------------
+ 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 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.
(d) Net investment income was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Dec. 2, 1994+
operating performance Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
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) (.09)(c) (.06)(c) --(c) .05 .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.46 2.78 4.05 1.12 1.96
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.37 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 $15.46 $13.47 $11.85 $9.00 $9.02
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 18.02 25.14 49.28 13.70 28.29*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $199,806 $87,730 $27,384 $5,650 $873
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.39 1.45 1.50 1.51 1.56*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.64) (.48) (.02) .16 .29*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.73 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 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.
(d) Net investment income was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- ------------------------------------------------------------------------------------------------------------------------------------
For the period
Per-share Jan. 7, 1997+
operating performance Year ended 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 (loss) .01(c) .03(c) .04(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.51 2.83 2.69
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.52 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 $15.84 $13.70 $11.99
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 18.83 26.20 29.48*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $754,474 $205,222 $20,314
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .64 .70 .42*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) .09 .27 .37*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 74.73 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 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.
(d) Net investment income was less than $0.01 per share.
</TABLE>
Notes to financial statements
July 31, 1999
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 C, class M and class Y shares. The
fund began offering class C shares on July 26, 1999. 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 C shares are
subject to the same fees and expenses as class B shares, except that class
C shares have a one-year 1.00% contingent deferred sales charge and do not
convert to class A shares. 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, class C 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. Other
investments are stated a fair value following procedures approved by the
Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other
registered investment companies 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). Gains or losses on securities sold are determined on
the identified cost basis.
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 year ended July
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. These
differences include temporary and permanent differences of losses on wash
sale transactions and net operating loss. Reclassifications are made to
the fund's capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. For the year ended July 31, 1999, the fund reclassified
$24,424,448 to decrease undistributed net investment loss and $19,667,428
to decrease paid-in-capital with a decrease to accumulated net realized
gains of $4,757,020. The calculation of net investment income per share in
the financial highlights table excludes these adjustments.
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 year ended July 31, 1999, fund expenses were reduced by $947,721
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 $4,351
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
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 a 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, class C 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. 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%, 1.00% and 1.00% of the average net assets attributable to
class A, class B, class C, and class M shares, respectively. The Trustees
have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%
and 0.75% of the average net assets attributable to class A, class B,
class C and class M shares, respectively.
For the year ended July 31, 1999, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $5,576,307 and $225,860 from the
sale of class A and class M shares, respectively and received $3,200,446
and no monies, in contingent deferred sales charges from redemptions of
class B and class C shares, respectively. A deferred sales charge of up to
1% is assessed on certain redemptions of class A shares. For the year
ended July 31, 1999, Putnam Mutual Funds Corp., acting as underwriter
received $73,528 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended July 31, 1999, cost of purchases and proceeds from
sales of investment securities other than short-term investments
aggregated $9,600,202,728 and $5,059,410,020, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
Capital shares
At July 31, 1999, there was an unlimited number of shares of beneficial
interested authorized. Transactions in capital shares were as follows:
Year ended July 31, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 227,890,520 $3,343,124,532
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 6,980,256 95,768,476
- -----------------------------------------------------------------------------
234,870,776 3,438,893,008
Shares
repurchased (81,142,762) (1,175,251,446)
- -----------------------------------------------------------------------------
Net increase 153,728,014 $2,263,641,562
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Year ended July 31, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 162,085,094 $2,264,875,301
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,020,268 39,747,015
- -----------------------------------------------------------------------------
165,105,362 2,304,622,316
Shares
repurchased (38,333,322) (530,804,650)
- -----------------------------------------------------------------------------
Net increase 126,772,040 $1,773,817,666
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations) to
July 31, 1999
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 97,234 $1,554,619
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
97,234 1,554,619
Shares
repurchased -- --
- -----------------------------------------------------------------------------
Net increase 97,234 $1,554,619
- -----------------------------------------------------------------------------
Year ended July 31, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 9,707,455 $138,662,967
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 234,487 3,163,233
- -----------------------------------------------------------------------------
9,941,942 141,826,200
Shares
repurchased (3,530,485) (50,575,552)
- -----------------------------------------------------------------------------
Net increase 6,411,457 $ 91,250,648
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Year ended July 31, 1999
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 45,409,117 $702,920,564
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 435,553 5,993,204
- -----------------------------------------------------------------------------
45,844,670 708,913,768
Shares
repurchased (13,193,453) (193,425,306)
- -----------------------------------------------------------------------------
Net increase 32,651,217 $515,488,462
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Note 5
Change in independent accountants
Based on the recommendation of the Audit Committee of the fund, the Board
of Trustees has determined not to retain PricewaterhouseCoopers LLP as
this fund's independent auditor and voted to appoint KPMG LLP for the
fund's fiscal year ended July 31, 1999. During the two most recent fiscal
years, PricewaterhouseCoopers LLP audit reports contained no adverse
opinion or disclaimer of opinion; nor were its reports qualified or
modified as to uncertainty, audit scope, or accounting principle. Further,
in connection with its audits for the two most recent fiscal years and
through July 14, 1999, there were no disagreements between the fund and
PricewaterhouseCoopers LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure,
which if not resolved to the satisfaction of PricewaterhouseCoopers LLP
would have caused it to make reference to the disagreements in its report
on the financial statements for such years.
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Fund
hereby designates $89,934,520 as capital gain, for its taxable year ended
July 31, 1999.
The Form 1099 you receive in January 2000 will show the tax status of all
distributions paid to your account in calendar 1999.
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds. 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.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities 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 [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
Vista Fund
Voyager Fund
Voyager Fund II
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
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund *
U.S. Government Income Trust
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
ASSET ALLOCATION 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 Putnam Diversified Income Trust II
[DBL. DAGGER] Closed to new investors. Some exceptions may apply. Contact
Putnam for details.
[SECTION MARK] Not available in all states.
** An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
Fund information
WEB SITE
www.putnaminv.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
KPMG LLP
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
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
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
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' Web site: 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
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
AN012-54541/003/307/385/2DB
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- ----------------------------------------------------------------------------
Putnam Investors Fund
Supplement to Annual Report dated 7/31/99
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, C, and M shares, which are discussed more extensively in the annual
report.
ANNUAL RESULTS AT A GLANCE
- ----------------------------------------------------------------------------
Total return
for periods ended 7/31/99 NAV
1 year 18.83%
5 years 228.06
Annual average 26.82
10 years 427.90
Annual average 18.10
Annual average (Life of fund since class A inception, 12/1/25) 10.73
Share value: NAV
7/31/98 $13.70
7/31/99 $15.84
- ----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 $-- 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. 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.
