PUTNAM INVESTORS FUND
N-30D, 2000-09-12
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Putnam
Investors
Fund


ANNUAL REPORT ON PERFORMANCE AND OUTLOOK

7-31-00

[SCALE LOGO OMITTED]

FROM THE TRUSTEES

[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM, III]


Dear Shareholder:

It is a pleasure to greet you in our new roles as Chairman of the
Trustees and President of the Funds. As you know, both of us have been
members of the Board of Trustees for a number of years -- years during
which the global securities markets, the mutual fund industry, and
Putnam itself have experienced tremendous growth and change.

As we look to the future, we are certain that the changes will be
breathtaking in their scope. What will not change is the Trustees'
dedication to serving the best interests of our shareholders.

We welcome the challenges that lie ahead and are confident that Putnam
and your Board will continue to face those challenges successfully as
they have for more than 60 years. We look forward to helping you meet
your financial objectives for many years to come.

Respectfully yours,

/S/ JOHN A. HILL                   /S/ GEORGE PUTNAM, III

John A. Hill                       George Putnam, III
Chairman of the Trustees           President of the Funds
September 20, 2000


REPORT FROM FUND MANAGEMENT

C. Beth Cotner
Manuel Weiss
Richard B. England

In a period marked by significant market volatility, Federal Reserve
Board monetary tightening, and continued robust economic growth, Putnam
Investors Fund turned in a solid performance, outperforming the Standard
& Poor's 500 Index, the fund's primary benchmark, by a healthy margin
(see page 7 for performance details). The fund retained its bias toward
technology-related stocks throughout the period. We define this sector
to include companies that manufacture computer hardware and software
products, Internet infrastructure companies, and telecommunications
firms. Management  continues to believe that despite their recent
volatility, these high-growth companies represent strong earnings growth
potential for many years to come.

Total return for 12 months ended 7/31/00

      Class A          Class B          Class C          Class M
    NAV     POP      NAV    CDSC      NAV    CDSC      NAV     POP
----------------------------------------------------------------------
   17.19%  10.47%   16.34%  11.34%   16.37%  15.37%   16.63%  12.56%
----------------------------------------------------------------------

Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 7.

* TECHNOLOGY STOCKS BOLSTERED FUND'S RETURNS

Though rocked by a severe correction last spring that brought the
technology-laden Nasdaq Composite Index down over 37% from its peak in
March 2000 to its low at the end of May 2000, technology stocks
continued to serve as the primary driver of returns during the fund's
fiscal year. Several technology holdings shared the common
characteristic of being transformed -- through significant market
appreciation -- from mid-capitalization stocks to large-capitalization
stocks.


[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]

TOP INDUSTRY SECTORS*

Communications
equipment              10.7%

Electronics            10.0%

Conglomerates           8.3%

Pharmaceuticals         7.3%

Software                6.5%

Footnote reads:
*Based on net assets as of 7/31/00. Holdings will vary over time.


These securities, which included names such as Qualcomm+ (up 2,200%
during the fiscal year), Veritas Software (up 300%), JDS Uniphase (up
400%), and Corning (up 200%), accounted for much of the fund's
outperformance of the S&P 500. Other well-known large-cap technology
stocks that also experienced strong performance included Sun
Microsystems, Nortel, Applied Materials,+ and EMC, all of which had
returns exceeding 100% in the past 12 months. While these holdings and
others discussed in this report were viewed favorably at the end of the
fiscal period, all holdings are subject to review and adjustment in
accordance with the fund's investment strategy and may well vary in the
future. Furthermore, stocks which experience the kind of short-term
gains discussed here can also experience declines of similar magnitude.

One notable exception to the strong performance of the fund's technology
holdings was Microsoft, which lost roughly 19% of its value during the
period. The decline in Microsoft's stock price was unquestionably
related to the highly publicized federal antitrust trial that may result
in a breakup of the firm. However, the stock was also negatively
affected by deceleration of personal computer sales, which were
responsible for the company missing revenue expectations. Despite
Microsoft's difficulties this year, it remains a core holding in the
fund because we believe its  dominant market position and excellent
management team have the potential to keep the company on track for
strong earnings growth over the long term. Of course, as with all our
holdings, we will continue to monitor closely any developments that
affect the company and the markets in which it competes.

+These securities were sold before the end of the fund's fiscal period.


Another sector that performed well and helped the fund's 12-month
returns was telecommunications, particularly the wireless industry. In
this sector, the fund held companies such as VoiceStream, a U.S.
wireless firm that had a 180% gain during the fiscal year. It recently
agreed to be acquired by Deutsche Telekom. The fund also held Nextel,
another fast-growing wireless provider that gained more than 100% for
the year.

Companies that were leaders in their industries and had a strong global
presence generally outperformed their competitors, and these are
precisely the types of companies we try to target for the portfolio. For
example, the retail sector was strong in the first half of the period
but has been affected this year by higher gasoline prices and generally
slower growth in consumer spending. Nevertheless, fund holdings such as
Kohl's, Wal-Mart, and Home Depot have continued to significantly
outperform their competitors. These three stocks had total returns
exceeding 25% during the period, versus 8% for the retail sector of the
S&P 500 Index. In the financial sector, the fund held industry leaders
such as Morgan Stanley Dean Witter, Merrill Lynch, Northern Trust,
Citigroup, and American Express, all of which outperformed the S&P 500's
financial sector. These companies benefited from the general strength in
the investment banking and asset management businesses in the past year.

"During the fund's fiscal year, companies that were leaders in their
industries and had a strong global presence generally outperformed their
competitors. These are precisely the types of companies we try to target
for the portfolio."

-- C. Beth Cotner, portfolio manager, Putnam Investors Fund


Sectors that did not perform well during the period included basic
materials and the more traditional parts of the telephone industry,
namely, firms that provide local and long-distance  services. Companies
in the basic materials sector were hurt by rising commodity prices and
an inability to pass on higher costs to their customers. The fund was
somewhat exposed to this sector through its holdings in the specialty
chemicals industry such as Praxair, Inc.+ The fund's holdings of more
traditional telephone service providers, which included Sprint Corp. and
Alltel Corp., were hurt by weakness in the consumer long distance
market and, in the case of Sprint, the company's unsuccessful attempt to
merge with WorldCom.

+This security was sold before the end of the fund's fiscal period.


Technology may be down, but it is far from out

The story of the stock market for the past several years has centered
around one major theme: technology. It has become such a central force
in the investment dialogue that it is practically old news. But the
facts are clear. The United States has experienced the longest record
of economic growth in its history, and this growth is continuing without
inflation in large part because of higher productivity brought on by
enormous technological advances.

Since last spring, technology stocks have been in the doldrums. While
dot-com companies were virtually wiped off the map in the Nasdaq plunge
last spring, many large-cap, blue-chip technology companies also
suffered severe stock declines. Most analysts, however, believe that the
current dampening of technology enthusiasm among investors is healthy
and positive and that over the long term, technology stocks will
continue to lead markets -- not just in the United States but around the
globe.

According to David Bowers, Merrill Lynch's chief global strategist, the
decline in the Nasdaq this year represents "a necessary unbundling of
euphoria" because in 1999 "expectations in these stocks got well out of
control."1 In fact, most professional money managers, including those at
Putnam, saw the correction in tech stocks as providing a two-fold
benefit. First, it allowed managers to purchase well-researched stocks
that had been priced in the stratosphere at much more reasonable levels,
and second, it weeded many of the excesses out of the market.

The volatility has underscored another important point for growth stock
investors. When the market takes an unexpected tumble, it pays to be
diversified.

1 Business Week, August 14, 2000


* MARKET VOLATILITY PRESENTED BUYING OPPORTUNITY

We took advantage of the periods of market volatility to acquire
holdings that we believed were attractive but had become too expensive.
For example, during the dramatic technology sell-off in April and May,
we acquired companies in fast-growing  industries like Internet-related
software and data storage.

Through our ongoing analysis, we developed confidence in firms such as
Siebel Systems, Juniper Networks, Brocade, and Broadcom, and we were
able to add these stocks to the portfolio at attractive prices during
the market correction. While it was difficult for many investors to
experience at the time, the selloff provided us with an opportunity to
acquire stocks that we believe have strong potential for growth at
prices that did not reflect their value.

* SOME STRATEGIC CHANGES MADE DURING YEAR

The most dramatic change among the fund's sector weightings was in its
holdings of technology stocks, which increased from approximately 25% to
approximately 35% during the year. This increase occurred primarily
because of market appreciation and the corresponding increase in the
technology weighting of the S&P 500 Index, which the fund tends to
track.


[GRAPHIC OMITTED: TOP 10 HOLDINGS]

TOP 10 HOLDINGS

General Electric Co.
Conglomerates

Tyco International Ltd.
Conglomerates

Cisco Systems, Inc.
Communications equipment

Intel Corp.
Electronics

Viacom, Inc. Class B
Entertainment

Pfizer, Inc.
Pharmaceuticals

Microsoft Corp.
Software

Citigroup, Inc.
Financial

Nortel Networks Corp.
Communications equipment

American International Group, Inc.
Insurance

Footnote reads:
These holdings represent 31.8% of the fund's net assets as of 7/31/00.
Portfolio holdings will vary over time.


Other sector changes that were more strategic in nature included a
decrease in the fund's health-care and financial weightings and a slight
increase in its energy weighting resulting from the rise in oil and gas
prices. We decreased the fund's health-care weighting somewhat because
the industry has been in turmoil for several years as a result of cuts
in Medicare payments, difficulties with new products, and legislative
hurdles for several of the major pharmaceutical firms. After selling
some of the large-cap drug stocks, we put the proceeds into more
promising biotechnology companies such as Amgen and Genentech. In the
financial  sector, we reduced exposure to firms in the banking and
insurance industries because they were hurt by the rise in interest
rates during the past year.

* OUTLOOK FOR LARGE-CAP GROWTH STOCKS REMAINS POSITIVE

We remain optimistic about the prospects for growth stocks in the
foreseeable future. Nevertheless, we anticipate that the market will
probably be affected by the Fed's interest-rate hikes for the next few
quarters as the economy continues to digest the higher cost of capital.
While we believe the Fed is nearing the end of its tightening cycle, we
expect that investors may remain somewhat restrained until it becomes
clear that the Fed has no more rate hikes in the offing.

Currently our analysis shows that in general, large-cap growth companies
are still highly profitable and that the fundamental factors are in
place for a continuation of strong profits through the next several
quarters. In particular, technology-driven productivity gains are
expected to contribute to this continuation of earnings growth. We
believe that if our forecast proves correct, it would have the potential
to provide a solid foundation for the returns of large-cap growth stocks
over the next several years.

The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 7/31/00, 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 of
capital as well as any increased income resulting from this growth.

TOTAL RETURN FOR PERIODS ENDED 7/31/00

                     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
------------------------------------------------------------------------------
1 year           17.19%  10.47%  16.34%  11.34%  16.37%  15.37%  16.63%  12.56%
------------------------------------------------------------------------------
5 years         199.61  182.45  188.59  186.59  188.45  188.45  192.37  182.05
Annual average   24.54   23.08   23.61   23.44   23.60   23.60   23.93   23.05
------------------------------------------------------------------------------
10 years        457.51  425.66  414.92  414.92  416.93  416.93  429.26  410.69
Annual average   18.75   18.05   17.81   17.81   17.85   17.85   18.13   17.71
------------------------------------------------------------------------------
Annual average
(life of fund)   10.81   10.72    9.73    9.73    9.97    9.97   10.01    9.96
------------------------------------------------------------------------------


COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 7/31/00

                               Standard & Poor's        Consumer
                                  500 Index            price index
------------------------------------------------------------------
1 year                               8.97%                3.60%
------------------------------------------------------------------
5 years                            177.11                13.10
Annual average                      22.60                 2.49
------------------------------------------------------------------
10 years                           408.18                32.44
Annual average                      17.65                 2.85
------------------------------------------------------------------
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 and class C share returns for the 1-, 5-,
and 10-year (where available) and life-of-fund periods reflect the
deduction of the applicable contingent deferred sales charge (CDSC),
which for class B is 5% in the first year, declining to 1% in the sixth
year, and eliminated thereafter, and for class C is 1% for the first
year and eliminated thereafter. Returns shown for class B, class C, 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, class C, and class M shares, the higher
operating expenses applicable to such shares. All returns assume
reinvestment of distributions at NAV. Investment return and principal
value will fluctuate so that an investor's shares when redeemed may be
worth more or less than their original cost.

*The Standard & Poor's 500 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 7/31/90

                Fund's class A        S&P 500          Consumer price
Date             shares at POP         Index               index

7/31/90              9,429             10,000             10,000
7/31/91             10,685             11,276             10,445
7/31/92             11,165             12,718             10,775
7/31/93             13,312             13,829             11,074
7/31/94             13,755             14,542             11,380
7/31/95             17,545             18,339             11,710
7/31/96             20,057             21,377             12,055
7/31/97             30,066             32,523             12,316
7/31/98             37,807             38,795             12,523
7/31/99             44,858             46,633             12,784
7/31/00            $52,566            $50,818            $13,244

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 $51,492 and $51,693, 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 $52,926 ($51,069
at public offering price). See first page of performance section for
performance calculation method.


PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 7/31/00

                         Class A     Class B      Class C      Class M
------------------------------------------------------------------------------
Distributions (number)      1           1            1            1
------------------------------------------------------------------------------
Income                      --          --           --           --
------------------------------------------------------------------------------
Capital gains
  Long-term              $0.128      $0.128       $0.128       $0.128
------------------------------------------------------------------------------
  Short-term                --          --           --           --
------------------------------------------------------------------------------
  Total                  $0.128      $0.128       $0.128       $0.128
------------------------------------------------------------------------------
Share value:           NAV     POP     NAV          NAV      NAV     POP
------------------------------------------------------------------------------
7/31/99              $15.78  $16.74  $15.06       $15.77   $15.46  $16.02
------------------------------------------------------------------------------
7/31/00               18.36   19.48   17.39        18.22    17.90   18.55
------------------------------------------------------------------------------

TOTAL RETURN FOR PERIODS ENDED 6/30/00 (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
------------------------------------------------------------------------------
1 year           15.65%   9.01%  14.84%   9.84%  14.83%  13.83%  15.08%  11.04%
------------------------------------------------------------------------------
5 years         219.13  200.68  207.41  205.41  207.59  207.59  211.24  200.44
Annual average   26.12   24.63   25.18   25.02   25.20   25.20   25.49   24.61
------------------------------------------------------------------------------
10 years        462.42  429.98  419.26  419.26  422.04  422.04  433.71  415.16
Annual average   18.85   18.15   17.91   17.91   17.97   17.97   18.23   17.81
------------------------------------------------------------------------------
Annual average
(life of fund)   10.85   10.76    9.76    9.76   10.01   10.01   10.05    9.99
------------------------------------------------------------------------------

Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance section for performance calculation method.


TERMS AND DEFINITIONS

Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.

Class A shares are generally subject to an initial sales charge.

Class B shares may be subject to a sales charge upon redemption.

Class 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 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 the index.

Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.


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 are determined. All investment and noninvestment 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-end 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,
2000, the related statement of operations for the year then ended, and
the statements of changes in net assets and financial highlights for
each of the years or periods in the two-year 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 audits.
The financial highlights for each of the years in the three-year period
ended July 31, 1998 were audited by other auditors whose report dated
September 11, 1998 expressed an unqualified opinion on those
financial highlights.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, 2000, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Putnam Investors Fund as of July 31, 2000, the
results of its operations for the year then ended, changes in its net
assets and financial highlights for each of the years or periods in the
two-year period then ended, in conformity with accounting principles
generally accepted in the United States of America.

                                                     KPMG LLP
Boston, Massachusetts
August 31, 2000


<TABLE>
<CAPTION>


THE FUND'S PORTFOLIO
July 31, 2000

COMMON STOCKS (97.9%) (a)
NUMBER OF SHARES                                                                                              VALUE
<S>                 <C>                                                                          <C>
Advertising and Marketing Services (1.4%)
-------------------------------------------------------------------------------------------------------------------
          3,436,400 Interpublic Group Cos., Inc.                                                   $    137,670,775
            797,800 Omnicom Group, Inc.                                                                  67,813,000
                                                                                                   ----------------
                                                                                                        205,483,775

Banking (2.8%)
-------------------------------------------------------------------------------------------------------------------
          1,012,800 Bank of America Corp.                                                                47,981,400
            624,800 Bank of New York Company, Inc.                                                       29,248,450
          3,184,100 Fifth Third Bancorp                                                                 131,543,131
          4,700,900 Firstar Corp.                                                                        92,842,775
            626,500 Northern Trust Corp.                                                                 46,909,188
            398,100 State Street Corp.                                                                   39,959,288
            601,700 Zions Bancorp                                                                        26,324,375
                                                                                                   ----------------
                                                                                                        414,808,607

Beverage (0.5%)
-------------------------------------------------------------------------------------------------------------------
            833,100 Anheuser-Busch Cos., Inc.                                                            67,064,550

Biotechnology (2.0%)
-------------------------------------------------------------------------------------------------------------------
          2,791,500 Amgen, Inc. (NON)                                                                   181,273,031
            759,800 Genentech, Inc. (NON)                                                               115,584,575
                                                                                                   ----------------
                                                                                                        296,857,606

Broadcasting (2.1%)
-------------------------------------------------------------------------------------------------------------------
          2,724,300 Clear Channel Communications, Inc. (NON)                                            207,557,606
          1,125,300 Echostar Communications Corp., Class A (NON)                                         44,379,019
          2,514,300 General Motors Corp., Class H (NON)                                                  65,057,513
                                                                                                   ----------------
                                                                                                        316,994,138

Cable Television (1.9%)
-------------------------------------------------------------------------------------------------------------------
         12,451,000 AT&T Corp. - Liberty Media Group, Class A (NON)                                     277,034,750

Chemicals (0.3%)
-------------------------------------------------------------------------------------------------------------------
            802,300 Avery Dennison Corp.                                                                 43,524,775

Communications Equipment (10.7%)
-------------------------------------------------------------------------------------------------------------------
            542,500 Brocade Communications Systems (NON)                                                 96,904,063
          8,705,300 Cisco Systems, Inc. (NON)                                                           569,653,069
          1,051,400 Comverse Technology, Inc. (NON)                                                      92,260,350
            647,000 Corning, Inc.                                                                       151,357,563
            189,000 Juniper Networks, Inc. (NON)                                                         26,920,688
          4,038,400 Nokia Oyj ADR (Finland)                                                             178,951,600
          4,924,600 Nortel Networks Corp. (Canada)                                                      366,267,125
          1,582,700 Tellabs, Inc. (NON)                                                                 102,875,500
                                                                                                   ----------------
                                                                                                      1,585,189,958

Computers (5.0%)
-------------------------------------------------------------------------------------------------------------------
          2,629,000 Apple Computer, Inc. (NON)                                                          133,586,063
          3,166,000 EMC Corp. (NON)                                                                     269,505,750
            605,500 Hewlett-Packard Co.                                                                  66,113,031
          2,576,500 Sun Microsystems, Inc. (NON)                                                        271,659,719
                                                                                                   ----------------
                                                                                                        740,864,563

Conglomerates (8.3%)
-------------------------------------------------------------------------------------------------------------------
         12,070,600 General Electric Co.                                                                620,881,475
         11,363,800 Tyco International, Ltd.                                                            607,963,300
                                                                                                   ----------------
                                                                                                      1,228,844,775

Consumer Goods (2.7%)
-------------------------------------------------------------------------------------------------------------------
            912,000 Avon Products, Inc.                                                                  36,195,000
          1,997,000 Colgate-Palmolive Co.                                                               111,207,938
          2,618,500 Estee Lauder Cos., Class A                                                          115,214,000
          2,492,500 Kimberly-Clark Corp.                                                                143,162,969
                                                                                                   ----------------
                                                                                                        405,779,907

Distribution (0.5%)
-------------------------------------------------------------------------------------------------------------------
          1,697,400 SYSCO Corp.                                                                          66,835,125

Electronics (10.0%)
-------------------------------------------------------------------------------------------------------------------
            327,500 Broadcom Corp. (NON)                                                                 73,441,875
          8,058,600 Intel Corp.                                                                         537,911,550
          1,712,100 JDS Uniphase Corp. (NON)                                                            202,241,813
          2,087,700 Linear Technology Corp.                                                             115,345,425
          1,407,500 LSI Logic Corp. (NON)                                                                47,679,063
            395,400 PMC-Sierra, Inc. (NON)                                                               76,633,463
          1,886,200 SCI Systems, Inc. (NON)                                                              86,529,425
          3,232,700 Texas Instruments, Inc.                                                             189,719,081
          2,009,800 Xilinx, Inc. (NON)                                                                  150,860,613
                                                                                                   ----------------
                                                                                                      1,480,362,308

Entertainment (3.3%)
-------------------------------------------------------------------------------------------------------------------
          7,454,767 Viacom, Inc., Class B (NON)                                                         494,344,237

Financial (3.9%)
-------------------------------------------------------------------------------------------------------------------
          3,550,200 American Express Co.                                                                201,251,963
          5,375,500 Citigroup, Inc.                                                                     379,308,719
                                                                                                   ----------------
                                                                                                        580,560,682

Health Care Services (1.4%)
-------------------------------------------------------------------------------------------------------------------
          1,570,800 Baxter International, Inc.                                                          122,129,700
            830,300 CIGNA Corp.                                                                          82,926,213
                                                                                                   ----------------
                                                                                                        205,055,913

Insurance (2.3%)
-------------------------------------------------------------------------------------------------------------------
          3,871,950 American International Group, Inc.                                                  339,521,616

Investment Banking/Brokerage (2.6%)
-------------------------------------------------------------------------------------------------------------------
            715,500 Merrill Lynch & Co., Inc.                                                            92,478,375
          1,525,100 Morgan Stanley, Dean Witter & Co.                                                   139,165,375
          4,471,950 Schwab (Charles) Corp.                                                              161,549,194
                                                                                                   ----------------
                                                                                                        393,192,944

Media (1.4%)
-------------------------------------------------------------------------------------------------------------------
          2,751,200 Time Warner, Inc.                                                                   210,982,650

Medical Technology (1.4%)
-------------------------------------------------------------------------------------------------------------------
          1,541,900 Allergan, Inc.                                                                      103,210,931
          1,167,300 PE Corp.-PE Biosystems Group                                                        101,773,969
                                                                                                   ----------------
                                                                                                        204,984,900

Natural Gas Utilities (1.9%)
-------------------------------------------------------------------------------------------------------------------
          3,770,700 Enron Corp.                                                                         277,617,788

Oil & Gas (4.2%)
-------------------------------------------------------------------------------------------------------------------
          1,669,500 Anadarko Petroleum Corp.                                                             79,822,969
          1,466,300 Apache Corp.                                                                         72,948,425
          5,289,800 Conoco, Inc., Class A                                                               118,359,275
          2,752,800 Exxon Mobil Corp.                                                                   220,224,000
          2,301,000 Royal Dutch Petroleum Co. ADR (Netherlands)                                         134,033,250
                                                                                                   ----------------
                                                                                                        625,387,919

Paper & Forest Products (0.3%)
-------------------------------------------------------------------------------------------------------------------
            937,100 Sealed Air Corp. (NON)                                                               47,206,413

Pharmaceuticals (7.3%)
-------------------------------------------------------------------------------------------------------------------
          2,366,500 American Home Products Corp.                                                        125,572,406
          1,719,900 Lilly (Eli) & Co.                                                                   178,654,613
          9,621,050 Pfizer, Inc.                                                                        414,907,781
          2,121,300 Pharmacia Corp.                                                                     116,141,175
          5,908,800 Schering-Plough Corp.                                                               255,186,300
                                                                                                   ----------------
                                                                                                      1,090,462,275

Retail (5.9%)
-------------------------------------------------------------------------------------------------------------------
          1,375,800 CVS Corp.                                                                            54,258,113
          5,280,600 Home Depot, Inc. (The)                                                              273,271,050
          1,160,600 Kohls Corp. (NON)                                                                    65,864,050
          2,693,800 RadioShack Corp.                                                                    151,862,975
          3,350,300 TJX Cos., Inc. (The)                                                                 56,117,525
          4,859,000 Wal-Mart Stores, Inc.                                                               266,941,313
                                                                                                   ----------------
                                                                                                        868,315,026

Semiconductor Production Equipment (1.8%)
-------------------------------------------------------------------------------------------------------------------
          2,393,200 Applied Materials, Inc. (NON)                                                       181,584,050
          1,444,000 Teradyne, Inc. (NON)                                                                 91,513,500
                                                                                                   ----------------
                                                                                                        273,097,550

Software (6.5%)
-------------------------------------------------------------------------------------------------------------------
          1,128,700 BEA Systems, Inc. (NON)                                                              48,604,644
            750,800 I2 Technologies, Inc. (NON)                                                          97,416,300
          5,575,600 Microsoft Corp. (NON) (SEG)                                                         389,246,575
          2,322,900 Oracle Corp. (NON)                                                                  174,653,044
            577,800 Siebel Systems, Inc. (NON)                                                           83,781,000
          1,714,900 VERITAS Software Corp. (NON)                                                        174,812,619
                                                                                                   ----------------
                                                                                                        968,514,182

Technology Services (0.8%)
-------------------------------------------------------------------------------------------------------------------
          2,302,700 America Online, Inc. (NON)                                                          122,762,694

Telecommunications (4.3%)
-------------------------------------------------------------------------------------------------------------------
            352,100 ALLTEL Corp.                                                                         21,698,163
          2,999,700 Nextel Communications, Inc., Class A (NON)                                          167,795,719
          2,445,500 Sprint Corp. (PCS Group) (NON)                                                      135,113,875
          3,419,600 Sprint Corp.                                                                        121,823,250
            346,800 TyCom, Ltd. (Bermuda) (NON)                                                          11,812,875
          3,194,600 Vodafone Group PLC ADR (United Kingdom)                                             137,767,125
            350,754 VoiceStream Wireless Corp. (NON)                                                     44,984,201
                                                                                                   ----------------
                                                                                                        640,995,208

Transportation Services (0.4%)
-------------------------------------------------------------------------------------------------------------------
          1,006,117 United Parcel Service, Inc., Class B                                                 59,109,374
                                                                                                   ----------------
                    Total Common Stocks (cost $10,679,725,159)                                     $ 14,531,756,208

SHORT-TERM INVESTMENTS (2.0%) (a)
PRINCIPAL AMOUNT                                                                                              VALUE
-------------------------------------------------------------------------------------------------------------------
        $50,000,000 Merrill Lynch & Co., Inc., effective yield of 6.50%,
                    August 3, 2000                                                                 $     49,981,944
         40,430,000 Metlife Funding, Inc., effective yield of 6.50%,
                    August 21, 2000                                                                      40,284,003
         50,000,000 Old Line Funding Corp., effective yield of 6.53%,
                    August 15, 2000                                                                      49,873,028
         39,312,000 Preferred Receivables Funding Corp., effective yield of 6.51%,
                    August 25, 2000                                                                      39,141,386
         74,619,000 Interest in $625,000,000 joint repurchase agreement
                    dated July 31, 2000 with Morgan (J.P.) & Co., Inc. due
                    August 1, 2000 with respect to various U.S. Treasury
                    obligations -- maturity value of $74,632,639 for an
                    effective yield of 6.58%                                                             74,619,000
         49,031,000 Interest in $500,000,000 joint tri-party repurchase
                    agreement dated July 31, 2000 with Lehman Brothers,
                    Inc. due August 1, 2000 with respect to various
                    U.S. Treasury obligations -- maturity value of
                    $49,039,962 for an effective yield of 6.58%                                          49,031,000
                                                                                                   ----------------
                    Total Short-Term Investments (cost $302,930,361)                               $    302,930,361
-------------------------------------------------------------------------------------------------------------------
                    Total Investments (cost $10,982,655,520) (b)                                   $ 14,834,686,569
-------------------------------------------------------------------------------------------------------------------

  (a) Percentages indicated are based on net assets of $14,839,282,581.

  (b) The aggregate identified cost on a tax basis is $11,018,219,290,
      resulting in gross unrealized appreciation and depreciation of
      $4,325,781,888 and $509,314,609, respectively, or net unrealized
      appreciation of $3,816,467,279.

(NON) Non-income-producing security.

(SEG) A portion of this security was pledged and segregated with the
      custodian to cover margin requirements for futures contracts at July 31,
      2000.

      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.

-----------------------------------------------------------------------------
Futures Contracts Outstanding at July 31, 2000
                                  Aggregate Face     Expiration   Unrealized
                  Total Value         Value             Date     Depreciation
-----------------------------------------------------------------------------
S&P 500 Index
(Long)           $192,812,600      $198,769,092        Sep-00    $(5,956,492)
-----------------------------------------------------------------------------

</TABLE>


<TABLE>
<CAPTION>

STATEMENT OF ASSETS AND LIABILITIES
July 31, 2000
<S>                                                                       <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $10,982,655,520) (Note 1)                                  $14,834,686,569
-------------------------------------------------------------------------------------------
Cash                                                                             30,328,467
-------------------------------------------------------------------------------------------
Foreign currency (cost $1,079)                                                        1,074
-------------------------------------------------------------------------------------------
Dividends, interest, and other receivables                                        1,756,983
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold                                           34,977,121
-------------------------------------------------------------------------------------------
Receivable for securities sold                                                   90,987,796
-------------------------------------------------------------------------------------------
Receivable for variation margin                                                     924,600
-------------------------------------------------------------------------------------------
Total assets                                                                 14,993,662,610

Liabilities
-------------------------------------------------------------------------------------------
Payable for securities purchased                                                108,633,897
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased                                       19,274,105
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2)                                     16,386,551
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2)                        2,623,009
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2)                                        51,831
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2)                                          3,284
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2)                                            6,199,212
-------------------------------------------------------------------------------------------
Other accrued expenses                                                            1,208,140
-------------------------------------------------------------------------------------------
Total liabilities                                                               154,380,029
-------------------------------------------------------------------------------------------
Net assets                                                                  $14,839,282,581

Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4)                                             $10,805,167,655
-------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1)                                          188,040,374
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies                                             3,846,074,552
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding                                                  $14,839,282,581

Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($8,432,176,728 divided by 459,354,135 shares)                                       $18.36
-------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $18.36)*                              $19.48
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($4,631,442,177 divided by 266,390,855 shares)**                                     $17.39
-------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($151,702,449 divided by 8,323,897 shares)**                                         $18.22
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($279,184,969 divided by 15,598,213 shares)                                          $17.90
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $17.90)*                              $18.55
-------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($1,344,776,258 divided by 72,770,937 shares)                                        $18.48
-------------------------------------------------------------------------------------------

    * 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, 2000
<S>                                                                         <C>
Investment income:
-------------------------------------------------------------------------------------------
Dividends (net of foreign tax of $427,335)                                   $   66,072,194
-------------------------------------------------------------------------------------------
Interest                                                                         11,232,231
-------------------------------------------------------------------------------------------
Total investment income                                                          77,304,425

Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2)                                                 57,830,167
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2)                                   17,220,452
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2)                                                    84,311
-------------------------------------------------------------------------------------------
Administrative services (Note 2)                                                     40,716
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2)                                            18,748,731
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2)                                            39,988,592
-------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2)                                               696,429
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2)                                             1,866,263
-------------------------------------------------------------------------------------------
Other                                                                             4,380,694
-------------------------------------------------------------------------------------------
Total expenses                                                                  140,856,355
-------------------------------------------------------------------------------------------
Expense reduction (Note 2)                                                       (2,187,719)
-------------------------------------------------------------------------------------------
Net expenses                                                                    138,668,636
-------------------------------------------------------------------------------------------
Net investment loss                                                             (61,364,211)
-------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3)                                185,229,400
-------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1)                                  23,502,945
-------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1)                              (8)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities
in foreign currencies during the year                                                    (5)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
futures contracts during the year                                             1,670,549,205
-------------------------------------------------------------------------------------------
Net gain on investments                                                       1,879,281,537
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations                         $1,817,917,326
-------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.

</TABLE>


<TABLE>
<CAPTION>

STATEMENT OF CHANGES IN NET ASSETS

                                                                          Year ended July 31
                                                                 ---------------------------------
                                                                             2000             1999
--------------------------------------------------------------------------------------------------
<S>                                                             <C>              <C>
Increase in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment loss                                              $    (61,364,211) $   (24,424,448)
--------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions                                         208,732,337       71,709,481
--------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies                        1,670,549,200    1,096,027,095
--------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations                1,817,917,326    1,143,312,128
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
  From net realized gain on investments
   Class A                                                            (51,663,796)    (104,260,696)
--------------------------------------------------------------------------------------------------
   Class B                                                            (28,722,167)     (42,895,379)
--------------------------------------------------------------------------------------------------
   Class C                                                               (265,072)              --
--------------------------------------------------------------------------------------------------
   Class M                                                             (1,775,117)      (3,292,652)
--------------------------------------------------------------------------------------------------
   Class Y                                                             (8,059,252)      (5,993,204)
--------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4)                   2,996,687,010    4,645,752,957
--------------------------------------------------------------------------------------------------
Total increase in net assets                                        4,724,118,932    5,632,623,154

Net assets
--------------------------------------------------------------------------------------------------
Beginning of year                                                  10,115,163,649    4,482,540,495
--------------------------------------------------------------------------------------------------
End of year                                                       $14,839,282,581  $10,115,163,649
--------------------------------------------------------------------------------------------------

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
------------------------------------------------------------------------------------------------
                                        2000         1999         1998         1997         1996
------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>          <C>          <C>
Net asset value,
beginning of period                   $15.78       $13.67       $11.98        $9.07        $9.05
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income (loss)            (.04)(c)     (.02)(c)       --(c)(d)    .05(c)       .06
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments                     2.75         2.51         2.81         4.08         1.17
------------------------------------------------------------------------------------------------
Total from
investment operations                   2.71         2.49         2.81         4.13         1.23
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income                         --           --         (.04)        (.05)        (.09)
------------------------------------------------------------------------------------------------
From net realized gain
on investments                          (.13)        (.38)       (1.08)       (1.17)       (1.12)
------------------------------------------------------------------------------------------------
Total distributions                     (.13)        (.38)       (1.12)       (1.22)       (1.21)
------------------------------------------------------------------------------------------------
Net asset value,
end of period                         $18.36       $15.78       $13.67       $11.98        $9.07
------------------------------------------------------------------------------------------------

Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                 17.19        18.65        25.75        49.91        14.32
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                    $8,432,177   $6,130,543   $3,209,986   $1,819,333   $1,104,264
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                .86          .89          .95         1.00         1.03
------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%)        (.25)        (.14)         .03          .50          .69
------------------------------------------------------------------------------------------------
Portfolio turnover (%)                 65.38        74.73        59.14        95.17       128.21
------------------------------------------------------------------------------------------------

    + Commencement of operations.

    * Not annualized.

  (a) Total return assumes dividend reinvestment and does not reflect
      the effect of sales charges.

  (b) Includes amounts paid through expense offset arrangements and
      brokerage service arrangements. (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 (loss) was less than $0.01 per share.

  (e) Ratio of net investment loss to average net assets was less than (0.01%).

</TABLE>



<TABLE>
<CAPTION>

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

CLASS B
------------------------------------------------------------------------------------------------
Per-share
operating performance                                      Year ended July 31
------------------------------------------------------------------------------------------------
                                        2000         1999         1998         1997         1996
------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>          <C>          <C>
Net asset value,
beginning of period                   $15.06       $13.17       $11.62        $8.85        $8.88
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment loss                     (.17)(c)     (.13)(c)     (.09)(c)     (.03)(c)       --(d)
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments                     2.63         2.40         2.72         3.98         1.13
------------------------------------------------------------------------------------------------
Total from
investment operations                   2.46         2.27         2.63         3.95         1.13
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income                         --           --           --         (.01)        (.04)
------------------------------------------------------------------------------------------------
From net realized gain
on investments                          (.13)        (.38)       (1.08)       (1.17)       (1.12)
------------------------------------------------------------------------------------------------
Total distributions                     (.13)        (.38)       (1.08)       (1.18)       (1.16)
------------------------------------------------------------------------------------------------
Net asset value,
end of period                         $17.39       $15.06       $13.17       $11.62        $8.85
------------------------------------------------------------------------------------------------

Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                 16.34        17.67        24.84        48.87        13.42
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                    $4,631,442   $3,028,807     $979,603     $303,089      $89,378
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)               1.61         1.64         1.70         1.75         1.77
------------------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%)              (1.00)        (.90)        (.74)        (.26)        (.09)
------------------------------------------------------------------------------------------------
Portfolio turnover (%)                 65.38        74.73        59.14        95.17       128.21
------------------------------------------------------------------------------------------------

    + Commencement of operations.

    * Not annualized.

  (a) Total return assumes dividend reinvestment and does not reflect
      the effect of sales charges.

  (b) Includes amounts paid through expense offset arrangements and
      brokerage service arrangements. (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 (loss) was less than $0.01 per share.

  (e) Ratio of net investment loss to average net assets was less than (0.01%).

</TABLE>



<TABLE>
<CAPTION>

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

CLASS C
--------------------------------------------------------------------
                                                     For the period
Per-share                            Year ended      July 26, 1999+
operating performance                 July 31          to July 31
--------------------------------------------------------------------
                                        2000              1999
--------------------------------------------------------------------
<S>                                  <C>               <C>
Net asset value,
beginning of period                   $15.77            $16.08
--------------------------------------------------------------------
Investment operations
--------------------------------------------------------------------
Net investment loss (c)                 (.19)               --(d)
--------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments              2.77              (.31)
--------------------------------------------------------------------
Total from
investment operations                   2.58              (.31)
--------------------------------------------------------------------
Less distributions:
--------------------------------------------------------------------
From net
investment income                         --                --
--------------------------------------------------------------------
From net realized gain
on investments                          (.13)               --
--------------------------------------------------------------------
Total distributions                     (.13)               --
--------------------------------------------------------------------
Net asset value,
end of period                         $18.22            $15.77
--------------------------------------------------------------------

Ratios and supplemental data
--------------------------------------------------------------------
Total return at
net asset value  (%)(a)                16.37             (1.93)*
--------------------------------------------------------------------
Net assets, end of period
(in thousands)                      $151,702            $1,534
--------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)               1.61               .03*
--------------------------------------------------------------------
Ratio of net investment
loss to average net assets (%)         (1.04)             (.01)*
--------------------------------------------------------------------
Portfolio turnover (%)                 65.38             74.73
--------------------------------------------------------------------

    + Commencement of operations.

    * Not annualized.

  (a) Total return assumes dividend reinvestment and does not reflect
      the effect of sales charges.

  (b) Includes amounts paid through expense offset arrangements and
      brokerage service arrangements. (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 (loss) was less than $0.01 per share.

  (e) Ratio of net investment loss to average net assets was less than (0.01%).

</TABLE>



<TABLE>
<CAPTION>

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)

CLASS M
------------------------------------------------------------------------------------------------
Per-share
operating performance                                      Year ended July 31
------------------------------------------------------------------------------------------------
                                        2000         1999         1998         1997         1996
------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>          <C>          <C>
Net asset value,
beginning of period                   $15.46       $13.47       $11.85        $9.00        $9.02
------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------
Net investment income (loss)            (.13)(c)     (.09)(c)     (.06)(c)       --(c)(d)    .05
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments                     2.70         2.46         2.78         4.05         1.12
------------------------------------------------------------------------------------------------
Total from
investment operations                   2.57         2.37         2.72         4.05         1.17
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net
investment income                         --           --         (.02)        (.03)        (.07)
------------------------------------------------------------------------------------------------
From net realized gain
on investments                          (.13)        (.38)       (1.08)       (1.17)       (1.12)
------------------------------------------------------------------------------------------------
Total distributions                     (.13)        (.38)       (1.10)       (1.20)       (1.19)
------------------------------------------------------------------------------------------------
Net asset value,
end of period                         $17.90       $15.46       $13.47       $11.85        $9.00
------------------------------------------------------------------------------------------------

Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a)                 16.63        18.02        25.14        49.28        13.70
------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                      $279,185     $199,806      $87,730      $27,384       $5,650
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)               1.36         1.39         1.45         1.50         1.51
------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%)        (.75)        (.64)        (.48)        (.02)         .16
------------------------------------------------------------------------------------------------
Portfolio turnover (%)                 65.38        74.73        59.14        95.17       128.21
------------------------------------------------------------------------------------------------

    + Commencement of operations.

    * Not annualized.

  (a) Total return assumes dividend reinvestment and does not reflect
      the effect of sales charges.

  (b) Includes amounts paid through expense offset arrangements and
      brokerage service arrangements. (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 (loss) was less than $0.01 per share.

  (e) Ratio of net investment loss to average net assets was less than (0.01%).

</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
-------------------------------------------------------------------------------------------
                                        2000         1999         1998            1997
-------------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>             <C>
Net asset value,
beginning of period                   $15.84       $13.70       $11.99           $9.26
-------------------------------------------------------------------------------------------
Investment operations
-------------------------------------------------------------------------------------------
Net investment income (loss)(c)           --(d)       .01          .03             .04
-------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments                     2.77         2.51         2.83            2.69
-------------------------------------------------------------------------------------------
Total from
investment operations                   2.77         2.52         2.86            2.73
-------------------------------------------------------------------------------------------
Less distributions:
-------------------------------------------------------------------------------------------
From net
investment income                         --           --         (.07)             --
-------------------------------------------------------------------------------------------
From net realized gain
on investments                          (.13)        (.38)       (1.08)             --
-------------------------------------------------------------------------------------------
Total distributions                     (.13)        (.38)       (1.15)             --
-------------------------------------------------------------------------------------------
Net asset value,
end of period                         $18.48       $15.84       $13.70          $11.99
-------------------------------------------------------------------------------------------

Ratios and supplemental data
-------------------------------------------------------------------------------------------
Total return at
net asset value  (%)(a)                17.50        18.83        26.20           29.48*
-------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands)                    $1,344,776     $754,474     $205,222         $20,314
-------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)                .61          .64          .70             .42*
-------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%)          --(e)       .09          .27             .37*
-------------------------------------------------------------------------------------------
Portfolio turnover (%)                 65.38        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) Includes amounts paid through expense offset arrangements and
      brokerage service arrangements. (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 (loss) was less than $0.01 per share.

  (e) Ratio of net investment loss to average net assets was less than (0.01%).

</TABLE>


NOTES TO FINANCIAL STATEMENTS
July 31, 2000

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.
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 and class C 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 of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reporting period. 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 on its principal exchange, 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, including
restricted securities, are stated at 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) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies and the difference between the amount
of investment income and foreign withholding taxes recorded on the
fund's books and the U.S. dollar equivalent amounts actually received or
paid. Net unrealized appreciation and depreciation of assets and
liabilities in foreign currencies arise from changes in the value of
open forward currency contracts and assets and liabilities other than
investments at the period end, resulting from changes in the exchange
rate. Investments in foreign securities involve certain risks, including
those related to economic instability, unfavorable political
developments, and currency fluctuations, not present with domestic
investments.

F) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.

The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.

Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.

G) 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, 2000, the fund had no borrowings against the line of credit.

H) 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.

I) 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, foreign currency gains
and losses, unrealized gains and losses on certain futures contracts 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, 2000, the fund reclassified $61,364,211 to decrease
paid-in-capital, with a decrease to accumulated net investment losses of
$61,364,211. The calculation of net investment income per share in the
financial highlight 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.
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, and 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, 2000, fund expenses were reduced by
$2,187,719 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 $5,083
has been allocated to the fund and an additional fee for each Trustees
meeting attended. 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 Retail Management, Inc. a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Retail Management, Inc. 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, 2000, Putnam Retail Management, Inc. acting
as underwriter received net commissions of $5,262,954 and $150,739 from
the sale of class A and class M shares, respectively, and received
$6,742,279 and $27,011 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, 2000, Putnam Retail Management, Inc.
acting as underwriter received $112,127 on class A redemptions.

Note 3
Purchases and sale of securities

During the year ended July 31, 2000, cost of purchases and proceeds from
sales of investment securities other than short-term investments
aggregated $10,874,894,479 and $8,257,375,397 respectively. There were
no purchases and sales of U.S. government obligations.

Note 4
Capital shares

At July 31, 2000, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:

                                                  Year ended July 31, 2000
---------------------------------------------------------------------------
Class A                                         Shares              Amount
---------------------------------------------------------------------------
Shares sold                                193,417,379      $3,446,246,660
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions                                2,704,800          48,253,015
---------------------------------------------------------------------------
                                           196,122,179       3,494,499,675

Shares
repurchased                               (125,381,372)     (2,205,449,663)
---------------------------------------------------------------------------
Net increase                                70,740,807      $1,289,050,012
---------------------------------------------------------------------------

                                                  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, 2000
---------------------------------------------------------------------------
Class B                                         Shares              Amount
---------------------------------------------------------------------------
Shares sold                                120,787,142      $2,033,928,150
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions                                1,554,026          26,387,564
---------------------------------------------------------------------------
                                           122,341,168       2,060,315,714

Shares
repurchased                                (57,118,111)       (969,206,258)
---------------------------------------------------------------------------
Net increase                                65,223,057      $1,091,109,456
---------------------------------------------------------------------------

                                                  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, 2000
---------------------------------------------------------------------------
Class C                                         Shares              Amount
---------------------------------------------------------------------------
Shares sold                                  8,904,434        $159,297,578
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions                                   12,893             229,374
---------------------------------------------------------------------------
                                             8,917,327         159,526,952

Shares
repurchased                                   (690,664)        (12,394,197)
---------------------------------------------------------------------------
Net increase                                 8,226,663        $147,132,755
---------------------------------------------------------------------------

                                              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, 2000
---------------------------------------------------------------------------
Class M                                         Shares              Amount
---------------------------------------------------------------------------
Shares sold                                  7,047,466        $122,014,995
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions                                   96,486           1,683,662
---------------------------------------------------------------------------
                                             7,143,952         123,698,657

Shares
repurchased                                 (4,470,093)        (77,459,416)
---------------------------------------------------------------------------
Net increase                                 2,673,859        $ 46,239,241
---------------------------------------------------------------------------

                                                  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, 2000
---------------------------------------------------------------------------
Class Y                                         Shares              Amount
---------------------------------------------------------------------------
Shares sold                                 52,662,763        $916,564,096
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions                                  449,485           8,059,252
---------------------------------------------------------------------------
                                            53,112,248         924,623,348

Shares
repurchased                                (27,976,330)       (501,467,802)
---------------------------------------------------------------------------
Net increase                                25,135,918        $423,155,546
---------------------------------------------------------------------------

                                                  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
---------------------------------------------------------------------------


FEDERAL TAX INFORMATION
(Unaudited)

Pursuant to Section 852 of the Internal Revenue Code, as amended, the
Fund hereby designates $218,599,287 as capital gain, for its taxable
year ended July 31, 2000.

The Form 1099 you receive in January 2001 will show the tax status of
all distributions paid to your account in calendar 2000.


This page left intentionally blank.


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
Capital Opportunities Fund
Europe Growth Fund
Global Equity Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Century Growth Fund
New Opportunities Fund
OTC & Emerging Growth Fund
Research Fund
Tax Smart Equity Fund
Technology Fund
Vista Fund
Voyager Fund
Voyager Fund II

GROWTH AND INCOME FUNDS

Balanced Fund
Balanced Retirement Fund
Classic Equity 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
International Growth and Income Fund
New Value Fund
Small Cap 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 Growth and Income Fund 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.putnaminvestments.com.


OUR COMMITMENT TO QUALITY SERVICE

* CHOOSE AWARD-WINNING SERVICE

Putnam has won the DALBAR Award for Service nine times in the past ten years
and has won the Intermediary Service Award for advisors all three years in
which it has been given.*

* HELP YOUR INVESTMENTS GROW

Set up a systematic program for investing with as little as $25 a month from a
Putnam money market fund or from your checking or savings account.+

* SWITCH FUNDS EASILY

Within the same class of shares, you can move money from one account to another
without a service charge. (This privilege is subject to change or termination.)

* ACCESS YOUR MONEY QUICKLY

You can get checks sent regularly or redeem shares any business day at the
then-current net asset value, which may be more or less than the original cost
of the shares.

For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a helpful
Putnam representative. To learn more about Putnam, visit our Web site.
www.putnaminvestments.com

To make an additional investment in this or any other Putnam fund, contact
your financial advisor or call our toll-free number.

1-800-225-1581

*DALBAR, Inc., an independent research firm, presents the awards to financial
 services firms that provide consistently excellent service.

+Regular investing, of course, does not guarantee a profit or protect against
 a loss in a declining market.


WELCOME TO WWW.PUTNAMINVESTMENTS.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

* Putnam's money management philosophy

* complete fund information, daily pricing and long-term performance

* your current account value, portfolio value and transaction history

* the latest on new funds and other Putnam news

You can also read Putnam economist Dr. Robert Goodman's commentary and
Putnam's Capital Markets outlook, search for a particular fund by name or
objective, use our glossary to decode investment terms . . . and much more.

The site can be accessed through any of the major online services (America
Online, CompuServe, Prodigy) that offer web access. Of course, you can also
access it via Netscape or Microsoft Internet Explorer, using an independent
Internet service provider.

New features will be added to the site regularly. So be sure
to bookmark us at http://www.putnaminvestments.com


FUND INFORMATION

WEB SITE

www.putnaminvestments.com

INVESTMENT MANAGER

Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109

MARKETING SERVICES

Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109

CUSTODIAN

Putnam Fiduciary Trust Company

LEGAL COUNSEL

Ropes & Gray

INDEPENDENT ACCOUNTANTS

KPMG LLP

TRUSTEES

John A. Hill, 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, III
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

Stephen Oristaglio
Vice President

C. Beth Cotner
Vice President and Fund Manager

Manuel Weiss
Vice President and Fund Manager

Richard B. England
Vice President and Fund Manager

Richard A. Monaghan
Vice President

Richard G. Leibovitch
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 and
Putnam Quarterly Ranking 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.putnaminvestments.com.

Not FDIC Insured, May Lose Value, No Bank Guarantee


[LOGO OMITTED]

PUTNAM INVESTMENTS

The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109

---------------------
PRST STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------

For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com


AN012-63669  003/307/385/2DB  9/00




PUTNAM INVESTMENTS                                     [SCALE LOGO OMITTED]
---------------------------------------------------------------------------
Putnam Investors Fund
Supplement to Annual Report dated 7/31/00

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 7/31/00                            NAV

1 year                                              17.50%
5 years                                            202.21
Annual average                                      24.76
10 years                                           462.34
Annual average                                      18.85
Life of fund (since class A inception, 12/1/25)
Annual average                                      10.82

Share value:                                         NAV
7/31/99                                            $15.84
7/31/00                                            $18.48
---------------------------------------------------------------------------
Distributions:        No.      Income       Capital gains      Total
7/31/99 - 7/31/00      1       $0.000           0.128         $0.128
---------------------------------------------------------------------------
Please note that past performance does not indicate future results. More
recent returns may be more or less than those shown. 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.




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