Putnam
Investors
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
1-31-00
[SCALE LOGO OMITTED]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The markets continued to provide their share of challenges and
opportunities as your fund closed its books on the first half of fiscal
2000. In the following report, the fund's managers discuss performance for
the period and prospects for the months ahead.
This is the last letter to you and the other shareholders of Putnam
Investors Fund that I will be signing. After more than 30 years as
Chairman of the Trustees and President of the Putnam Funds, the time has
come for me to step aside. In June, John Hill will become Chairman. John
is currently an independent Trustee and has served on the board for the
past 14 years. In addition, my son, George Putnam, III, will take on the
role of President. I am confident that the leadership of the funds will be
in exceptionally strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay in
close touch with the funds. It has been my privilege to serve you.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
March 15, 2000
Report from the Fund Managers
C. Beth Cotner
Manuel Weiss
Richard B. England
In spite of a brief shift toward value stocks, the large-capitalization
stocks that have led the market for some time continued to exercise their
dominance over the past six months. Since Putnam Investors Fund focuses
primarily on large-cap stocks, this environment has been a particularly
favorable one for the fund.
While the size of the companies at the market's forefront has remained
virtually the same, sector leadership has changed dramatically. Starting
in July, technology stocks surged forward and remained the top-performing
sector -- by a wide margin -- throughout the semiannual period. With
substantial technology holdings, your fund was well positioned to benefit
from the sector's outperformance during the six months ended January 31,
2000.
Total return for 6 months ended 1/31/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- ---------------------------------------------------------------------------
14.70% 8.12% 14.34% 9.34% 14.39% 13.39% 14.48% 10.48%
- ---------------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods and explanation of performance calculation
methods begin on page 6.
* ECONOMY, STOCK MARKET MARCH ON; INTEREST RATES RISE
January marked the 106th consecutive month of growth for the U.S. economy,
matching the record for the nation's longest expansion. During the fourth
quarter of 1999, the gross domestic product (GDP) advanced at an
annualized rate of 5.8%, after growing at a 5.7% rate in the third
quarter. Also during the fourth quarter, the gross domestic purchases
component of GDP, which the Department of Commerce monitors as a gauge of
inflation, jumped to its highest level since early 1996.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Electronics 9.8%
Retail 8.6%
Software 7.1%
Conglomerates 7.0%
Pharmaceuticals 6.2%
Footnote reads:
*Based on net assets as of 1/31/00. Holdings will vary over time.
As the semiannual period drew to a close, inflationary pressures began to
rise. For example, the Department of Labor reported that its employment
cost index, which tracks wage and benefit costs across the country, rose
1.1% during the fourth quarter. This was well above the 0.9% estimate that
most analysts had estimated. To keep inflation in check, the Federal
Reserve Board raised short-term interest rates three times from June
through February, just after the period's close, essentially taking back
its three 1998 interest-rate cuts.
"[T]here is still enormous opportunity in U.S. stocks for investors who latch
on to powerful forces of change in our country."
- -- Jim Griffith, Fortune, December 20, 1999
For the stock market, rising rates meant dampened performance until
October, when the market staged an impressive rally that continued through
January 2000. The technology sector had the biggest gains by far, although
energy, capital goods, and basic materials also shared in the performance
pie. Nevertheless, performance in each of these areas remains concentrated
in a handful of stocks, primarily those of large-capitalization companies.
At the same time, stock valuations are high, supported by surging
corporate earnings and the accelerating economy.
* TECHNOLOGY SPENDING DRIVES ECONOMIC GROWTH
The outperformance in technology stocks comes as no surprise to analysts
who have been tracking the economy closely. While consumers have done
their fair share of spending to keep the economy rolling, technology
spending has been the chief driver of growth. During the 1990s, U.S.
companies poured $2 trillion into computers, software, and other
technological products. In 1999 alone, company spending on technology grew
22% to $510 billion, accounting for more than 40% of all business
investment during the year. Many companies highlighted Y2K preparedness as
a nonrecurring event that required significant technology commitments.
However, some of that spending was actually unrelated to Y2K issues and
instead was used to make companies even more competitive and productive.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Microsoft Corp.
Software
General Electric Co.
Conglomerate
Tyco International Ltd.
Conglomerate
Cisco Systems, Inc.
Communications equipment
Motorola, Inc.
Electronics
The Home Depot, Inc.
Retail
Intel Corp.
Electronics
Citigroup, Inc.
Financial
Sprint Corp.
Telecommunications
Wal-Mart Stores, Inc.
Retail
Footnote reads:
These holdings represent 28.6% of the fund's net assets as of 1/31/00.
Portfolio holdings will vary over time.
Even more impressive is what technology has done for the rest of the
economy. Technological advances have helped accelerate the productivity of
U.S. workers for the first time in a generation. Since 1996, productivity
has grown an average of 2.6% per year. This is up sharply from the 1.4%
average annual increase that occurred from 1974 to 1995.
* DIVERSIFIED PORTFOLIO REMAINS INTACT
As a relatively conservative equity investment, the fund maintains a
widely diversified portfolio. Of course, we are free to concentrate assets
in various economic sectors in order to enhance performance. Over the past
six months, we have maintained an overweight position in the
top-performing technology sector, and this has certainly boosted returns.
The fund's technology position has been widely diversified itself, with
holdings in semiconductors, software, personal computers, semiconductor
equipment manufacturers, telecommunications equipment makers, and
component hardware manufacturers among others.
Sometimes maintaining style discipline means trimming your star performers
When QUALCOMM sold off some of its unprofitable business lines, we established
a small position in the then relatively unknown company. Later, when litigation
between the company and a key competitor was settled, we doubled the fund's
holdings. Along the way, the stock's price surged upward along with QUALCOMM's
ascent to leadership in wireless technology. In recent months, with a 2600%
gain in the stock, we started selling off part of the position. It is not easy
to sell such a successful investment; however, there are some valid reasons for
doing so. The decision has to do with maintaining portfolio balance and
adjusting the level of risk in the portfolio. Just as individual investors
must rebalance their holdings from time to time, the fund must do the same in
order to remain true to its stated investment style.
Biotechnology was another strong area for the fund over the period. The
value of three holdings, Immunex, Amgen, and Genentech, rose more than 40%
during the fourth quarter of 1999. All well-managed companies with strong
products and solid earnings growth, the three benefited from increased
investor interest in the biotechnology area. Previously health-care
investors had focused most of their attention on large-capitalization
pharmaceutical stocks, but these stocks have fallen on hard times recently
because of an unfavorable political climate, disappointing products, and
low earnings growth relative to the high-flying tech stocks. By
comparison, many biotechnology stocks offered superior products, higher
earnings growth rates, and few political liabilities. While these
holdings, along with others discussed in this report, were viewed
favorably at the end of the period, all are subject to review and
adjustment in accordance with the fund's investment strategy and may vary
in the future.
Within a disappointing retail environment, the fund held some of the
stronger performers. For example, the fund's Home Depot position gained
65% during 1999. Americans continue to remodel and renovate their homes in
record numbers, and Home Depot has responded by adding many new stores. At
the same time, the company's same-store sales increased 10% over the year,
while its main competitor, Hechinger's, parent company of HQ and Builders
Square, filed for bankruptcy.
Burgeoning economic activity has kept the pace of mergers and acquisitions
quite high. During the semiannual period, several fund holdings benefited
from this activity. In the entertainment/broadcasting sector, the fund
held both Viacom and CBS. Both stocks rose solidly after these companies
announced their merger. The fund also owns both Time-Warner and America
Online as well as Sprint and, until shortly before the end of the period,
MCI WorldCom. Both pairs announced merger plans during the period, pushing
up their stock prices. Another fund holding, Warner-Lambert, has agreed to
merge with Pfizer, creating the world's largest drug company, and
Warner-Lambert's stock has risen significantly.
* OUTLOOK: OPPORTUNITY AMID VOLATILITY
With the Fed vigilant against any uptick in inflation, interest rates are
likely to continue rising over the short term. While this may precipitate
additional market volatility, experienced long-term investors understand
that such an environment often produces opportunity. Indeed, we are
confident that our rigorous company-by-company research and analysis,
along with the fund's focus on large blue-chip companies experiencing
rapid growth will continue to reward investors as 2000 unfolds.
The views expressed here are exclusively those of Putnam Management. They
are not meant as investment advice. Although the described holdings were
viewed favorably as of 1/31/00, 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.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 1/31/00
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
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months 14.70% 8.12% 14.34% 9.34% 14.39% 13.39% 14.48% 10.48%
- -------------------------------------------------------------------------------------------
1 year 16.54 9.83 15.72 10.72 15.71 14.71 16.06 12.02
- -------------------------------------------------------------------------------------------
5 years 267.57 246.46 254.21 252.21 254.24 254.24 259.03 246.53
Annual average 29.74 28.21 28.78 28.64 28.78 28.78 29.13 28.22
- -------------------------------------------------------------------------------------------
10 years 514.19 478.84 467.12 467.12 470.00 470.00 483.06 462.60
Annual average 19.90 19.19 18.95 18.95 19.01 19.01 19.28 18.86
- -------------------------------------------------------------------------------------------
Annual average
(Life of fund) 10.85 10.76 9.77 9.77 10.02 10.02 10.05 10.00
- -------------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 1/31/00
Standard & Poor's Consumer
500 Index price index
- ----------------------------------------------------------------------------
6 months 5.59% 1.44%
- ----------------------------------------------------------------------------
1 year 10.35 2.67
- ----------------------------------------------------------------------------
5 years 225.05 12.28
Annual average 26.59 2.34
- ----------------------------------------------------------------------------
10 years 442.42 32.73
Annual average 18.43 2.87
- ----------------------------------------------------------------------------
Annual average
(Life of fund) 13.50 3.32
- ----------------------------------------------------------------------------
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
deduction of 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.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 1/31/00
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
- -------------------------------------------------------------------------------
1/31/00 17.97 19.07 17.09 17.91 17.57 18.21
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 12/31/99 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (12/1/25) (3/1/93) (7/26/99) (12/2/94)
NAV POP NAV CDSC NAV CDSC NAV POP
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months 18.62% 11.81% 18.28% 13.28% 18.24% 17.24% 18.36% 14.21%
- -------------------------------------------------------------------------------------------
1 year 30.14 22.69 29.28 24.28 29.28 28.28 29.58 25.03
- -------------------------------------------------------------------------------------------
5 years 296.10 273.11 281.38 279.38 281.70 281.70 286.49 272.91
Annual average 31.69 30.13 30.70 30.56 30.72 30.72 31.05 30.11
- -------------------------------------------------------------------------------------------
10 years 509.54 474.81 462.65 462.65 465.78 465.78 478.51 458.17
Annual average 19.81 19.11 18.86 18.86 18.92 18.92 19.19 18.76
- -------------------------------------------------------------------------------------------
Annual average
(Life of fund) 10.96 10.87 9.88 9.88 10.13 10.13 10.16 10.11
- -------------------------------------------------------------------------------------------
</TABLE>
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 Composite Stock Price Index is an index of common
stocks frequently used as a general measure of stock market performance.
Securities indexes assume reinvestment of all distributions and interest
payments and do not take into account brokerage fees or taxes. Securities
in the fund do not match those in the indexes and performance of the fund
will differ. It is not possible to invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
A guide to the financial statements
These sections of the report 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.
<TABLE>
<CAPTION>
The fund's portfolio
January 31, 2000 (Unaudited)
COMMON STOCKS (99.5%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Aerospace and Defense (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,823,200 United Technologies Corp. $ 96,515,650
Banking (3.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,665,800 Fifth Third Bancorp 110,567,475
2,226,100 First Security Corp. 57,600,338
5,962,900 Firstar Corp. 142,364,238
614,000 Northern Trust Corp. 37,070,250
2,050,400 Wells Fargo Co. 82,016,000
775,800 Zions Bancorp 45,869,175
--------------
475,487,476
Beverage (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
935,000 Anheuser-Busch Cos., Inc. 63,112,500
Biotechnology (2.6%)
- --------------------------------------------------------------------------------------------------------------------------
2,464,600 Amgen, Inc. (NON) 156,964,213
714,700 Biogen, Inc. (NON) 61,642,875
392,500 Genentech, Inc. (NON) 55,146,250
560,500 Immunex Corp. (NON) 73,285,375
--------------
347,038,713
Broadcasting (2.4%)
- --------------------------------------------------------------------------------------------------------------------------
2,330,200 CBS Corp. (NON) 135,879,788
2,088,600 Clear Channel Communications, Inc. (NON) 180,402,825
--------------
316,282,613
Cable Television (3.0%)
- --------------------------------------------------------------------------------------------------------------------------
5,606,700 AT&T Corp. 286,642,538
2,307,100 Comcast Corp. Class A (NON) 106,126,600
--------------
392,769,138
Chemicals (1.1%)
- --------------------------------------------------------------------------------------------------------------------------
994,900 Avery Dennison Corp. 67,404,475
1,853,200 Praxair, Inc. 75,170,425
--------------
142,574,900
Communications Equipment (5.7%)
- --------------------------------------------------------------------------------------------------------------------------
3,321,600 Cisco Systems, Inc. (NON) 363,715,200
705,600 Comverse Technology, Inc. (NON) 101,165,400
727,000 Corning, Inc. 112,139,750
1,349,600 QUALCOMM, Inc. (NON) 171,399,200
--------------
748,419,550
Computers (6.0%)
- --------------------------------------------------------------------------------------------------------------------------
1,314,500 Apple Computer, Inc. (NON) 136,379,375
2,779,000 Dell Computer Corp. 106,817,813
1,479,400 EMC Corp. (NON) 157,556,100
936,600 Gateway, Inc. (NON) 57,308,213
631,100 Lexmark International Group, Inc. Class A (NON) 59,481,175
3,505,000 Sun Microsystems, Inc. (NON) 275,361,563
--------------
792,904,239
Conglomerates (7.0%)
- --------------------------------------------------------------------------------------------------------------------------
3,750,100 General Electric Co. 500,169,588
9,919,900 Tyco International Ltd. 424,075,725
--------------
924,245,313
Consumer Goods (2.5%)
- --------------------------------------------------------------------------------------------------------------------------
2,053,900 Colgate-Palmolive Co. 121,693,575
2,435,700 Estee Lauder Cos. Class A 124,525,163
1,382,300 Kimberly-Clark Corp. 85,616,206
--------------
331,834,944
Consumer Services (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
3,124,400 Interpublic Group Cos., Inc. 143,722,400
668,500 Omnicom Group, Inc. 62,630,094
--------------
206,352,494
Distribution (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
1,495,500 SYSCO Corp. 53,183,719
Electrical Equipment (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
650,400 Rockwell International Corp. 32,154,150
Electronics (9.8%)
- --------------------------------------------------------------------------------------------------------------------------
3,260,700 Intel Corp. 322,605,506
935,300 JDS Uniphase Corp. 190,742,744
571,500 Linear Technology Corp. 54,113,906
2,525,600 Motorola, Inc. 345,375,800
1,994,200 Solectron Corp. 144,828,775
1,294,000 Texas Instruments, Inc. 139,590,250
2,033,500 Xilinx, Inc. 93,032,625
--------------
1,290,289,606
Entertainment (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
4,133,200 Viacom, Inc. Class B (NON) 228,875,950
Financial (4.8%)
- --------------------------------------------------------------------------------------------------------------------------
991,200 American Express Co. 163,362,150
1,403,700 Capital One Financial Corp. 57,551,700
5,502,500 Citigroup, Inc. 316,049,844
1,175,100 Providian Financial Corp. 99,149,063
--------------
636,112,757
Insurance (2.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,297,300 American General Corp. 79,702,869
2,364,000 American International Group, Inc. 246,151,500
766,000 Lincoln National Corp. 28,294,125
--------------
354,148,494
Media (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
2,610,200 Time Warner, Inc. 208,652,863
Medical Technology (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
924,200 Allergan, Inc. 52,679,400
658,400 Bausch & Lomb, Inc. 40,820,800
--------------
93,500,200
Oil & Gas (5.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,387,500 Burlington Resources, Inc. 44,486,719
4,539,800 Conoco, Inc. 105,834,088
3,866,200 Enron Corp. 260,726,863
2,488,000 Exxon Mobil Corp. 207,748,000
1,992,100 Royal Dutch Petroleum Co. PLC ADR (Netherlands) 109,690,006
--------------
728,485,676
Paper & Forest Products (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
1,367,600 Sealed Air Corp. (NON) 76,756,550
824,100 Weyerhaeuser Co. 47,282,738
--------------
124,039,288
Pharmaceuticals (6.2%)
- --------------------------------------------------------------------------------------------------------------------------
2,351,600 Bristol-Myers Squibb Co. 155,205,600
2,155,800 Johnson & Johnson 185,533,538
5,009,700 Schering-Plough Corp. 220,426,800
2,655,500 Warner-Lambert Co. 252,106,531
--------------
813,272,469
Retail (8.6%)
- --------------------------------------------------------------------------------------------------------------------------
825,100 Amazon.com, Inc. 53,270,519
1,863,800 CVS Corp. 65,116,513
5,769,300 Home Depot, Inc. (The) 326,686,613
2,543,800 Tandy Corp. 124,328,225
1,879,600 Target Corp. 124,171,075
9,191,200 TJX Cos., Inc. (The) 149,931,450
5,304,300 Wal-Mart Stores, Inc. 290,410,425
----------
1,133,914,820
Semiconductor (1.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,196,600 Applied Materials, Inc. (NON) 164,233,350
775,900 Conexant Systems, Inc. (NON) 65,563,550
----------
229,796,900
Software (7.1%)
- --------------------------------------------------------------------------------------------------------------------------
1,514,500 BMC Software, Inc. (NON) 57,361,688
5,905,200 Microsoft Corp. (NON) 577,971,450
3,607,600 Oracle Corp. (NON) 180,210,894
794,600 VERITAS Software Corp. (NON) 115,912,275
--------------
931,456,307
Technology Services (2.9%)
- --------------------------------------------------------------------------------------------------------------------------
3,398,700 America Online, Inc. (NON) 193,513,481
1,267,800 Electronic Data Systems Corp. 85,734,975
313,500 Yahoo!, Inc. (NON) 100,966,594
--------------
380,215,050
Telecommunications (5.3%)
- --------------------------------------------------------------------------------------------------------------------------
772,800 Global Crossing Ltd. (NON) 39,219,600
1,277,500 NEXTEL Communications, Inc. Class A (NON) 135,894,063
459,300 Omnipoint Corp. (NON) 47,106,956
4,706,600 Sprint Corp. 304,458,178
1,048,100 Sprint PCS (NON) 115,356,506
426,200 VoiceStream Wireless Corp. (NON) 50,025,225
--------------
692,060,528
Telephone (2.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,684,200 ALLTEL Corp. 112,420,350
1,341,900 Nokia Corp. ADR (Finland) 245,567,700
---------------
357,988,050
---------------
Total Common Stocks (cost $9,676,160,493) $13,125,684,357
SHORT-TERM INVESTMENTS (1.3%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$50,765,000 Federal Home Loan Mortgage Corp., effective yield
of 5.76%, February 10, 2000 $ 50,691,898
25,542,000 Park Avenue Receivables, effective yield of 5.65%,
February 8, 2000 25,513,939
97,726,000 Interest in $525,429,000 joint repurchase agreement
dated January 31, 2000 with Morgan (J.P.) & Co.
due February 1, 2000 with respect to various U.S.
Treasury obligations -- maturity value of $97,741,419
for an effective yield of 5.68% 97,726,000
---------------
Total Short-Term Investments (cost $173,931,837) $ 173,931,837
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $9,850,092,330) (b) $13,299,616,194
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $13,189,380,350.
(b) The aggregate identified cost on a tax basis is $9,869,832,644, resulting in gross unrealized appreciation and
depreciation of $3,846,502,909 and $416,719,359, respectively, or net unrealized appreciation of $3,429,783,550.
(NON) Non-income-producing security.
ADR after the name of a foreign holding stands for American Depositary Receipts, representing ownership of foreign
securities on deposit with a domestic custodian bank.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
January 31, 2000 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $9,850,092,330) (Note 1) $13,299,616,194
- -----------------------------------------------------------------------------------------------
Foreign currency (cost $1,063) 1,086
- -----------------------------------------------------------------------------------------------
Dividends, interest, and other receivables 2,822,062
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 57,790,983
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 24,479,134
- -----------------------------------------------------------------------------------------------
Total assets 13,384,709,459
Liabilities
- -----------------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 523,548
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 152,593,224
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 20,699,502
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 14,265,428
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 1,308,253
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 48,885
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 3,350
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 5,330,558
- -----------------------------------------------------------------------------------------------
Other accrued expenses 556,361
- -----------------------------------------------------------------------------------------------
Total liabilities 195,329,109
- -----------------------------------------------------------------------------------------------
Net assets $13,189,380,350
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $ 9,461,243,651
- -----------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (26,327,916)
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and
foreign currency transactions (Note 1) 304,940,728
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currency 3,449,523,887
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $13,189,380,350
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($7,628,219,941 divided by 424,399,178 shares) $17.97
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $17.97)* $19.07
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($4,095,410,705 divided by 239,673,292 shares)** $17.09
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($62,607,983 divided by 3,495,487 shares)** $17.91
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($255,144,285 divided by 14,521,486 shares) $17.57
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $17.57)* $18.21
- -----------------------------------------------------------------------------------------------
Net asset value, offering price and redemption price per class Y share
($1,147,997,436 divided by 63,520,120 shares) $18.07
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended January 31, 2000 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends $ 30,143,612
- -----------------------------------------------------------------------------------------------
Interest 5,072,685
- -----------------------------------------------------------------------------------------------
Total investment income 35,216,297
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 25,932,437
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 7,650,608
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 49,434
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 20,960
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 8,451,427
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 17,644,268
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 131,256
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 848,842
- -----------------------------------------------------------------------------------------------
Reports to shareholders 85,977
- -----------------------------------------------------------------------------------------------
Registration fees 351,921
- -----------------------------------------------------------------------------------------------
Auditing 27,262
- -----------------------------------------------------------------------------------------------
Legal 34,737
- -----------------------------------------------------------------------------------------------
Postage 458,634
- -----------------------------------------------------------------------------------------------
Other 677,903
- -----------------------------------------------------------------------------------------------
Total expenses 62,365,666
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (821,453)
- -----------------------------------------------------------------------------------------------
Net expenses 61,544,213
- -----------------------------------------------------------------------------------------------
Net investment loss (26,327,916)
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 310,813,641
- -----------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 14,798,040
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency contracts (Note 1) 21,724
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities
in foreign currencies during the period 23
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 1,273,998,512
- -----------------------------------------------------------------------------------------------
Net gain on investments 1,599,631,940
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,573,304,024
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
January 31 July 31
2000* 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment loss $ (26,327,916) $ (24,424,448)
- ---------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 325,633,405 71,709,481
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 1,273,998,535 1,096,027,095
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,573,304,024 1,143,312,128
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A (51,664,010) (104,260,696)
- ---------------------------------------------------------------------------------------------------------------
Class B (28,723,256) (42,895,379)
- ---------------------------------------------------------------------------------------------------------------
Class C (265,095) --
- ---------------------------------------------------------------------------------------------------------------
Class M (1,774,931) (3,292,652)
- ---------------------------------------------------------------------------------------------------------------
Class Y (8,058,826) (5,993,204)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 1,591,398,795 4,645,752,957
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 3,074,216,701 5,632,623,154
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 10,115,163,649 4,482,540,495
- ---------------------------------------------------------------------------------------------------------------
End of period (including accumulated net
investment loss of $26,327,916 and $--,
respectively) $13,189,380,350 $10,115,163,649
- ---------------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share January 31
operating performance (Unaudited) Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $15.78 $13.67 $11.98 $9.07 $9.05 $7.85
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.02)(c) (.02)(c) --(c) .05(c) .06 .08
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.34 2.51 2.81 4.08 1.17 1.85
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.32 2.49 2.81 4.13 1.23 1.93
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- (.04) (.05) (.09) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.13) (.38) (1.08) (1.17) (1.12) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.13) (.38) (1.12) (1.22) (1.21) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.97 $15.78 $13.67 $11.98 $9.07 $9.05
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 14.70* 18.65 25.75 49.91 14.32 27.55
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $7,628,220 $6,130,543 $3,209,986 $1,819,333 $1,104,264 $956,830
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .43* .89 .95 1.00 1.03 .99
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.12)* (.14) .03 .50 .69 1.03
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.44* 74.73 59.14 95.17 128.21 96.75
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter includes amounts paid through
expense offset arrangements and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) Net investment income was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share January 31
operating performance (Unaudited) Year ended July 31
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $15.06 $13.17 $11.62 $8.85 $8.88 $7.78
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.08)(c) (.13)(c) (.09)(c) (.03)(c) -- .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.24 2.40 2.72 3.98 1.13 1.82
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.16 2.27 2.63 3.95 1.13 1.83
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- -- (.01) (.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.13) (.38) (1.08) (1.17) (1.12) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.13) (.38) (1.08) (1.18) (1.16) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.09 $15.06 $13.17 $11.62 $8.85 $8.88
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 14.34* 17.67 24.84 48.87 13.42 26.46
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $4,095,411 $3,028,807 $979,603 $303,089 $89,378 $47,906
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .81* 1.64 1.70 1.75 1.77 1.75
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.49)* (.90) (.74) (.26) (.09) .22
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.44* 74.73 59.14 95.17 128.21 96.75
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter includes amounts paid through
expense offset arrangements and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) Net investment income was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 July 26, 1999+
operating performance (Unaudited) to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $15.77 $16.08
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.09)(c) --(c)(d)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.36 (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.27 (.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.13) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.13) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.91 $15.77
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 14.39* (1.93)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $62,608 $1,534
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .81* .03*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.52)* (.01)*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.44* 74.73
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter includes amounts paid through
expense offset arrangements and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) Net investment income was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 December 2, 1994+
operating performance (Unaudited) Year ended July 31 to July 31
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $15.46 $13.47 $11.85 $9.00 $9.02 $7.78
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.06)(c) (.09)(c) (.06)(c) --(c) .05 .01
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.30 2.46 2.78 4.05 1.12 1.96
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.24 2.37 2.72 4.05 1.17 1.97
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- (.02) (.03) (.07) --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments (.13) (.38) (1.08) (1.17) (1.12) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.13) (.38) (1.10) (1.20) (1.19) (.73)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.57 $15.46 $13.47 $11.85 $9.00 $9.02
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 14.48* 18.02 25.14 49.28 13.70 28.29*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $255,144 $199,806 $87,730 $27,384 $5,650 $873
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .68* 1.39 1.45 1.50 1.51 1.56*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.37)* (.64) (.48) (.02) .16 .29*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.44* 74.73 59.14 95.17 128.21 96.75
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter includes amounts paid through
expense offset arrangements and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) Net investment income was less than $0.01 per share.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS Y
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share January 31 Jan. 7, 1997+
operating performance (Unaudited) 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) .01(c) .03(c) .04(c)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 2.36 2.51 2.83 2.69
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 2.36 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 $18.07 $15.84 $13.70 $11.99
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 14.89* 18.83 26.20 29.48*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,147,997 $754,474 $205,222 $20,314
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .31* .64 .70 .42*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) 0.00* .09 .27 .37*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.44* 74.73 59.14 95.17
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended July 31, 1996 and thereafter includes amounts paid through
expense offset arrangements and brokerage service arrangements. Prior period ratios exclude these amounts. (Note 2)
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding
during the period.
(d) Net investment income was less than $0.01 per share.
</TABLE>
Notes to financial statements
January 31, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam Investors Fund (the "fund") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The fund seeks long-term growth of capital and any
increased income that results from this growth by investing mainly in a
portfolio consisting of quality growth 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 six months
ended January 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.
Reclassifications are made to the fund's capital accounts to reflect
income and gains available for distribution (or available capital loss
carryovers) under income tax regulations.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management for management and investment advisory
services is paid quarterly based on the average net assets of the fund for
the quarter. Such fee is based on the following annual rates: 0.65% of the
first $500 million of average net assets, 0.55% of the next $500 million,
0.50% of the next $500 million, 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.
Under the subcustodian contract between the subcustodian bank and PFTC,
the subcustodian bank has a lien on the securities of the fund to the
extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At January 31, 2000, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
For the six months ended January 31, 2000, fund expenses were reduced by
$821,453 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 $5,023
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 Mutual Funds Corp., a wholly-owned subsidiary of Putnam
Investments Inc., for services provided and expenses incurred by it in
distributing shares of the fund. The Plans provide for payments by the
fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%, 1.00%,
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 six months ended January 31, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $2,350,847 and $72,026
from the sale of class A and class M shares, respectively, and received
$3,110,635 and $3,009 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 six months ended January 31, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received $59,280 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended January 31, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $5,282,494,833 and $3,794,169,915, respectively.
There were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At January 31, 2000, there was an unlimited number of shares of beneficial
interested authorized. Transactions in capital shares were as follows:
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 94,129,812 $1,600,826,893
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,704,609 48,249,626
- -----------------------------------------------------------------------------
96,834,421 1,649,076,519
Shares
repurchased (61,048,571) (1,012,628,069)
- -----------------------------------------------------------------------------
Net increase 35,785,850 $ 636,448,450
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 62,433,694 $1,005,678,557
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,554,063 26,388,193
- -----------------------------------------------------------------------------
63,987,757 1,032,066,750
Shares
repurchased (25,482,263) (410,647,367)
- -----------------------------------------------------------------------------
Net increase 38,505,494 $ 621,419,383
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class C Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,605,415 $61,379,645
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 12,895 229,397
- -----------------------------------------------------------------------------
3,618,310 61,609,042
Shares
repurchased (220,057) (3,664,349)
- -----------------------------------------------------------------------------
Net increase 3,398,253 $57,944,693
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,618,017 $59,671,792
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 96,475 1,683,476
- -----------------------------------------------------------------------------
3,714,492 61,355,268
Shares
repurchased (2,117,360) (34,996,039)
- -----------------------------------------------------------------------------
Net increase 1,597,132 $26,359,229
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Six months ended January 31, 2000
- -----------------------------------------------------------------------------
Class Y Shares Amount
- -----------------------------------------------------------------------------
Shares sold 28,761,539 $468,397,092
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 449,451 8,058,826
- -----------------------------------------------------------------------------
29,210,990 476,455,918
Shares
repurchased (13,325,889) (227,228,878)
- -----------------------------------------------------------------------------
Net increase 15,885,101 $249,227,040
- -----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------
Fund information
WEB SITE
www.putnaminv.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
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
John R. Verani
Vice President
This report is for the information of shareholders of Putnam Investors
Fund. It may also be used as sales literature when preceded or accompanied
by the current prospectus, which gives details of sales charges,
investment objectives, and operating policies of the fund, and the most
recent copy of Putnam's Quarterly Performance Summary. For more
information or to request a prospectus, call toll free: 1-800-225-1581.
You can also learn more at Putnam Investments' Web site: www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA012-58987 003/307/385 3/00
PUTNAM INVESTMENTS [SCALE LOGO OMITTED]
- -----------------------------------------------------------------------------
Putnam Investors Fund
Supplement to Semiannual Report dated 1/31/00
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 $250 million or
more in one or more of Putnam's funds or private accounts. Performance of
class Y shares, which incur neither a front-end load, distribution fee, nor
contingent deferred sales charge, will differ from performance of class A,
class B, and class M shares, which are discussed more extensively in the
semiannual report.
SEMIANNUAL RESULTS AT A GLANCE
- -----------------------------------------------------------------------------
Total return
for periods ended 1/31/00 NAV
6 months 14.89%
1 year 16.88
Five years 270.40
Annual average 29.94
10 years 518.92
Annual average 20.00
Life of fund (since class A inception, 12/1/25)
Annual average 10.86
Share value: NAV
7/31/99 $15.84
1/31/00 $18.07
- -----------------------------------------------------------------------------
Distributions: No. Income Capital gains Total
1 -- $0.128 $0.128
- -----------------------------------------------------------------------------
Please note that past performance does not indicate future results. Returns
shown for class Y shares for periods prior to their inception are derived
from the historical performance of class A shares, adjusted to reflect the
initial sales charge currently applicable to class A shares. These returns
have not been adjusted to reflect differences in operating expenses which,
for class Y shares, are lower than the operating expenses applicable to class
A shares. All returns assume reinvestment of distributions at net asset
value. Investment return and principal value will fluctuate so your shares,
when redeemed, may be worth more or less than their original cost. See full
report for information on comparative benchmarks. If you have questions,
please consult your fund prospectus or call Putnam toll free at 1-800-752-9894.
