PUTNAM
GLOBAL
GOVERNMENTAL
INCOME TRUST
[GRAPHIC OMITTED:
art work]
SEMIANNUAL REPORT
April 30, 1995
[LOGO: BOSTON - LONDON - TOKYO]
<PAGE>
PERFORMANCE HIGHLIGHTS
o "International [and global] bond funds have recovered in 1995, a welcome
turnabout after their poor showing last year.... The group's strength
reflects the widespread resurgence of the world's bond markets, nearly all
of which show solid year-to-date gains in local-currency terms."
-- The Value Line Mutual Fund Survey, March 31, 1995*
o "Potential investors shouldn't look at [world bond funds] in isolation.
Rather, these funds should be able to show their merits -- both for high
returns and low risk -- in the context of an entire bond portfolio."
-- Morningstar Mutual Funds, February 17, 1995*
-----------------------------------------------------------------------------
SEMIANNUAL RESULTS AT A GLANCE
-----------------------------------------------------------------------------
CLASS A CLASS B
TOTAL RETURN NAV POP NAV CDSC
-----------------------------------------------------------------------------
(change in value during
period plus reinvested
distributions)
6 months ended 4/30/95 1.22% -3.55% 0.87% -4.02%
CLASS A CLASS B CLASS M
SHARE VALUE NAV POP NAV NAV POP
-----------------------------------------------------------------------------
10/31/94 $13.33 $13.99 $13.31
3/17/95(1) -- -- -- 12.81 13.24
4/30/95 13.03 13.68 13.01 13.03 13.47
DISTRIBUTIONS: NO. INCOME TOTAL
-----------------------------------------------------------------------------
Class A 6 $0.450 $0.450
Class B 6 0.405 0.405
Class M 2 0.145 0.145
CLASS A CLASS B
CURRENT RETURN: NAV POP NAV
-----------------------------------------------------------------------------
End of period
Current dividend rate(2) 6.91% 6.58% 6.18%
Current 30-day SEC yield(3) 7.05 6.71 6.46
-----------------------------------------------------------------------------
Performance data represent past results and will differ for each share class.
For performance over longer periods, see pages 8 and 9. POP assumes 4.75%
maximum sales charge for class A shares and 3.25% for class M shares. CDSC
assumes 5% maximum contingent deferred sales charge. (1)Class M shares
commenced operations on 3/17/95; performance of class M shares is not shown
because of the brevity of the reporting period. (2)Income portion of most
recent distribution, annualized and divided by NAV or POP at end of period.
(3)Based only on investment income, calculated using SEC guidelines.
*Value Line and Morningstar are independent mutual-fund industry research
organizations.
<PAGE>
FROM THE CHAIRMAN
[GRAPHIC OMITTED:
Photo of
George Putnam]
(C) Karsh, Ottawa
Dear Shareholder:
Putnam Global Governmental Income Trust was among the beneficiaries of the
brighter mood that emerged in the world's fixed-income markets during the
opening months of 1995. Led by a sharp rally in U.S. Treasury bonds in January
and February, bonds in other key markets had also registered measurable
improvement by the time the fund's current fiscal year had reached its halfway
mark on April 30, 1995.
The markets of Japan and Germany presented opportunities in March and April as
investors migrated to the higher-quality securities available there. The
economies of both countries typified the slow-growth theme that fueled the
early-1995 global bond market rally. Putnam Management believes continued
slowdown in global economic growth suggests more momentum for upward movement in
bond prices in the months ahead.
I am pleased to report that Jennifer Leichter has joined your fund's management
team. Jennifer has been with Putnam since 1987 and has 11 years of investment
experience. She will oversee the high-yield bond component of the fund's
portfolio.
Respectfully yours,
/s/ George Putnam
George Putnam
Chairman of the Trustees
June 21, 1995
<PAGE>
REPORT FROM THE FUND MANAGERS
D. WILLIAM KOHLI
JONATHAN FRANCIS
MARK SIEGEL
JENNIFER E. LEICHTER
The culmination of a long night's journey into day may be an appropriate
metaphor to characterize the performance of Putnam Global Governmental Income
Trust during the six months ended April 30, 1995. Following calendar 1994's
difficult market environment, your fund -- along with bond markets around the
world -- rebounded convincingly during the semiannual period. We attribute
the fund's improved performance to substantial investments in many advancing
markets and to a somewhat more flexible approach to U.S. dollar currency
hedging.
o U.S. DOLLAR WEAKNESS PROMPTS ADJUSTMENTS TO HEDGING STRATEGY Although bond
markets enjoyed a period of improving performance throughout much of the
period, currency markets were extremely volatile, particularly in March. The
dominant feature was the collapse of the U.S. dollar, which repeatedly hit
historic lows against the Japanese yen, and weakened substantially against
the German deutschemark. A convergence of factors propelled the dollar
downward: the failure of the U.S. Senate to pass a balanced-budget amendment
in early March, concerns about the U.S. role in bailing out the Mexican
economy, and the U.S. Federal Reserve Board's unwillingness to provide at
least temporary support for the dollar by raising interest rates in March.
We began the period convinced that as a result of continued strong economic
growth and higher U.S. interest rates, the dollar had modest upside
potential. However, we recognize that there are periods in which technical
forces in the currency markets can cause foreign exchange levels to deviate
sharply from those anticipated by a longer-term, fundamental strategy.
Consequently, given the dollar's persistent weakness throughout most of the
past six months, we adjusted our dollar-hedging tactics in March by removing
most of the fund's currency hedges on European holdings.
<PAGE>
Although we intermittently increased the fund's foreign-currency exposure
during the period, we have not abandoned our longer-term view that the dollar
is likely to strengthen. In fact, we believe the dollar's weakness is at an
extreme and that it is not likely to weaken significantly from current
levels, although there can be no assurance of this. Accordingly, by the end
of April, we had reinstituted dollar hedges on approximately 10% of the
fund's yen and deutschemark exposures, respectively.
Shareholders should remember that the fund's nondollar returns must always be
translated back into U.S. dollars. Thus, the goal behind our dollar-hedging
activity is to protect the fund's returns on foreign investments by locking
in an exchange rate between the dollar and various foreign currencies. Dollar
hedges benefit the fund when the U.S. dollar is strengthening against foreign
currencies because they prevent losses that would otherwise occur when weaker
currencies are exchanged for stronger dollars. However, if the dollar's
current weakness against major foreign currencies persists, the fund's
relative performance could suffer unless these dollar hedges are removed.
This is because, with dollar hedges in place, any gains derived from stronger
foreign currencies are forfeited.
o BOND MARKET HIGHLIGHTS
Our bond market selection over the past six months exposed the fund to many
improving markets. We continued to hold significant positions in the United
Kingdom, France, the United States, Canada, and Australia. The U.S. Treasury
market was the star performer early in the semiannual period, setting the
tone for strong rallies
[GRAPHIC OMITTED: pie chart "GEOGRAPHICAL BREAKDOWN (4/30/95)*" showing:
United States 11.9%; Italy 14.0%; France 11.4%; United Kingdom 13.3%;
Canada 8.0%; Germany 5.0%; Australia 7.5% and Other 28.9%.
Footnote reads: *Based on net assets. Allocations will vary over time. See
page 18 for complete listing of foreign markets represented in portfolio.]
<PAGE>
in other core markets later in the period. Although we still viewed the U.S.
and other dollar-bloc markets favorably, we began to trim our allocations to
them in February because their outperformance relative to other core markets
did not appear to be sustainable.
In March, we repositioned a portion of the fund's assets into the
strengthening Japanese and German markets. These markets benefited from a
"flight to quality" as investors exited the emerging markets in the wake of
the Mexican currency crisis in December.
After seeing the tremendous rally in the Japanese bond market continue
through March and into April, we reduced the fund's investment there by about
10%. We took profits on Japanese government bond positions and redeployed the
assets into various European and dollar-bloc markets that we believe are
likely to outperform Japan going forward.
By April, the performance of the higher-yielding peripheral European markets
had begun to improve. Our principal exposures in these markets were in Italy,
Sweden, and Spain, with Italy posting the best results. All three markets
benefited from the perception that the dollar was beginning to stabilize
against the German deutschemark. Dollar-mark stability typically causes other
European currencies to stabilize against the deutschemark which, in turn,
allows other European bonds to perform better relative to the bellwether
German bond market.
o EMERGING MARKETS RECOVER AFTER RECENT DOWNTURN
Emerging fixed-income markets performed poorly for much of the semiannual
period. Fallout from the devaluation of the Mexican peso drove bond prices
lower, and market sentiment was generally negative. Many global investors
shunned the emerging markets in favor of developed core markets such as the
U.S., Germany, and Japan. We likewise scaled back our overall allocation to
emerging markets during January and February, eliminating Mexican and
Argentine holdings. By mid-March, however, given the exceptional values
created by the wave of selling, we began rebuilding Latin American positions.
Our timing proved advantageous as emerging fixed-income markets rallied
dramatically in April. The J.P. Morgan
<PAGE>
- ---------------------------------------------
TOP 10 HOLDINGS (4/30/95)
- ---------------------------------------------
U.S. TREASURY BONDS, 7.625%, 3/15/2025
- ---------------------------------------------
GOVERNMENT OF FRANCE OAT, 8.50%, 2002
- ---------------------------------------------
GOVERNMENT OF ITALY, 9.25%, 2011
- ---------------------------------------------
UNITED KINGDOM TREASURY BONDS, 8.00%, 2009
- ---------------------------------------------
UNITED KINGDOM TREASURY BONDS, 9.75%, 2002
- ---------------------------------------------
GOVERNMENT OF ITALY, 8.50%, 2004
- ---------------------------------------------
GOVERNMENT OF NETHERLANDS, 7.50%, 2023
- ---------------------------------------------
GOVERNMENT OF ITALY, 8.50%, 1999
- ---------------------------------------------
EUROPEAN INVESTMENT BANK, 10.50%, 1999
- ---------------------------------------------
REPUBLIC OF GERMANY, 6.25%, 2024
- ---------------------------------------------
These holdings represent 21.4% of the fund's net assets.
Portfolio holdings will vary over time.
Emerging Markets Bond Index rose 10.7% for the month as the sense of panic
over Mexico and other Latin American markets subsided.
o CONTINUING SUPPORT EXPECTED FOR BONDS SHOULD ECONOMIC GROWTH SLOW
Evidence is mounting that global economic growth is likely to slow through
1995 and into 1996. Leading economic indicators have peaked in Europe and in
the U.S., although the pace of slowdown in the United States remains
uncertain. Consequently, while there can be no guarantees, the overall
environment for global bonds appears to be quite positive.
Against this economic backdrop, we anticipate that the core markets will
likely continue to perform well, and believe that Europe's higher-yielding
markets -- Italy, Sweden, and others -- have the potential to excel. We plan
to remain active participants in these markets and will continue to diversify
assets among what we believe are the best opportunities available around the
world.
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 4/30/95, there is no guarantee the fund will continue to hold
these securities in the future.
<PAGE>
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's performance.
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 back into the fund. We show total return in two ways: on a
cumulative long-term basis and on average how the fund might have grown each
year over varying periods.
Performance should always be considered in light of a fund's investment
strategy. Putnam Global Governmental Income Trust is designed for investors
seeking high current income by investing principally in debt securities of
foreign or U.S. governmental entities, including supranational issuers.
Preservation of capital and long-term total return are secondary objectives.
TOTAL RETURN FOR PERIODS ENDED 4/30/95
SALOMON BROS. CONSUMER
CLASS A CLASS B WORLD GOVT. PRICE
NAV POP NAV CDSC BOND INDEX INDEX
- --------------------------------------------------------------------------------
6 months 1.22% -3.55% 0.87% -4.02% 11.74% 1.61%
- --------------------------------------------------------------------------------
1 year -0.91 -5.61 -1.60 -6.23 15.50 3.05
- --------------------------------------------------------------------------------
5 years 49.78 42.69 -- -- 86.91 17.84
Annual average 8.42 7.37 -- -- 13.33 3.34
- --------------------------------------------------------------------------------
Life of class A 112.27 102.25 -- -- 115.64 34.31
Annual average 9.97 9.30 -- -- 10.20 3.79
- --------------------------------------------------------------------------------
Life of class B -- -- -8.73 -12.11 14.71 3.90
Annual average -- -- -7.05 -9.81 11.68 3.11
- --------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 3/31/95
(most recent calendar quarter)
CLASS A CLASS B
NAV POP NAV CDSC
- --------------------------------------------------------------------------------
1 year -3.77 -8.33 -4.50 -9.00
- --------------------------------------------------------------------------------
5 years 46.94 39.94 -- --
Annual average 8.00 6.95 -- --
- --------------------------------------------------------------------------------
Life of class A 107.97 98.15 -- --
Annual average 9.80 9.13 -- --
- --------------------------------------------------------------------------------
Life of class B -- -- -10.53 -13.86
Annual average -- -- -9.07 -11.97
- --------------------------------------------------------------------------------
Fund performance data do not take into account any adjustment for taxes payable
on reinvested distributions. The fund began operations on 6/1/87, offering
shares now known as class A. Class B shares commenced operations on 2/1/94 and
class M shares on 3/17/95. Performance of class M shares is not shown due to the
brevity of the reporting period. Performance data represent past results and
will differ for each share class. Investment returns and principal value will
fluctuate so an investor's shares, when sold, may be worth more or less than
their original cost.
<PAGE>
TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
CLASS M SHARES have a lower initial sales charge and a higher 12b-1 fee than
class A shares and no sales charge on redemption.
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including any
initial or contingent deferred sales charge.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share plus the maximum
sales charge levied at the time of purchase. POP performance figures shown here
assume the maximum 4.75% sales charge for class A shares and 3.25% for class M
shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the
redemption of class B shares and assumes redemption at the end of the period.
Your fund's CDSC declines from a 5% maximum during the first year to 1% during
the sixth year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX is an unmanaged list of bonds
issued by 10 countries. It does not take into account brokerage commissions or
other costs. Securities in the fund do not match those in the index and may pose
different risks.
CONSUMER PRICE INDEX is a commonly used measure of inflation. It does not
represent an investment return.
<PAGE>
RELATIVE RISK/REWARD POTENTIAL OF PUTNAM FUNDS
These illustrations provide a simplified guide to the risk/reward potential for
funds within each category of the Putnam Family of Funds and are not intended as
investment advice. Your investment advisor can help you evaluate your risk
tolerance.
These rankings are relative only to Putnam funds and should not be compared to
other investments. There is no guarantee that one Putnam fund will be less
volatile than another, since each fund has its own investment risks. That's why
it is essential to read the fund's prospectus before investing.
PUTNAM GROWTH FUNDS
[GRAPHIC OMITTED: showing "Lower Risk / Lower Reward Potential" to
"Higher Risk / Higher Reward Potential" of the following funds:
Investors; Diversified Equity(1); Global Growth(1); Vista; Natural Resources;
Health Sciences; Voyager; Overseas Growth(1); Europe Growth(1);
New Opportunities(2); OTC Emerging Growth(2); Asia Pacific Growth(1)]
PUTNAM GROWTH AND INCOME FUNDS
[GRAPHIC OMITTED: showing "Lower Risk / Lower Reward Potential" to
"Higher Risk / Higher Reward Potential" of the following funds:
Balanced Retirement; Utilities Growth and Income; George Putnam; Convertible
Income-Growth; Equity Income; Fund for Growth and Income; Putnam Growth and
Income Fund II; Dividend Growth]
PUTNAM INCOME FUNDS
[GRAPHIC OMITTED: showing "Lower Risk / Lower Reward Potential" to
"Higher Risk / Higher Reward Potential" of the following funds:
Money Market(4); Adjustable Rate U.S. Gov't.(3); Intermediate U.S. Gov't.(3);
U.S. Gov't. Income(3); American Gov't. Income(3); Federal Income(3);
Diversified Income(1),(3),(5); Income; Preferred Income; Global Gov't.(1),(5);
High Yield(5); High Yield Advantage(5)]
PUTNAM TAX-FREE FUNDS(6)
[GRAPHIC OMITTED: showing "Lower Risk / Lower Reward Potential" to
"Higher Risk / Higher Reward Potential" of the following funds:
Tax Exempt Money Market(4); Intermediate Tax Exempt; Tax-Free Insured(7);
Tax Exempt Income; Single-state tax-free funds*; Municipal Income;
Tax-Free High Yield(5)]
<PAGE>
LIFESTAGE(SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that spread your
money across a variety of stocks, bonds, and money market investments. The
three portfolios are:
o PUTNAM ASSET ALLOCATION: BALANCED PORTFOLIO
o PUTNAM ASSET ALLOCATION: CONSERVATIVE PORTFOLIO
o PUTNAM ASSET ALLOCATION: GROWTH PORTFOLIO
Please call your financial advisor -- or Putnam at 1-800-225-1581 -- to
obtain a prospectus for any Putnam fund. The prospectus contains more
complete information, including risk considerations, charges, and expenses.
Read it carefully before you invest or send money.
(1) Foreign investments are subject to certain risks, such as currency
fluctuations and political developments, that are not present with domestic
investments.
(2) This fund invests all or a portion of its assets in small to medium-sized
companies, which increases the risk of price fluctuations.
(3) While U.S. government backing of individual securities does not insure your
principal, which will fluctuate, it does guarantee that the fund's
government-backed holdings will make timely payments of interest and
principal.
(4) The fund is managed to maintain a steady price of $1.00 per share, although
there is no assurance this price can be maintained in the future.
(5) The lower credit ratings of high-yield corporate and municipal bonds reflect
a greater possibility that adverse changes in the economy or their issuers
may affect their ability to pay principal and interest on the bonds.
(6) Income may be subject to state and local taxes. Capital gains, if any, are
taxable for federal and, in most cases, state purposes.
(7) Bond insurance does not guarantee principal or protect against changes in
market price.
* State tax-free funds available for Arizona, California, Florida,
Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, and
Pennsylvania. Not available in all states.
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS OWNED
April 30, 1995 (Unaudited)
FOREIGN BONDS AND NOTES (73.1%)<F1>
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------
<C> <C> <S> <C>
AUD 17,615,000 Australia (Government of) bonds 7 1/2s, 2005 $ 10,998,366
AUD 9,480,000 Australia (Government of) bonds 13s, 2000 7,909,875
USD 2,488,000 Bulgaria Floating Rate Bond (FRB) 6.063s, 2011 979,650
CAD 13,750,000 Canada (Government of) deb. 9s, 2004 10,553,125
CAD 13,845,000 Canada (Government of) bonds 6 1/2, 2004 9,016,556
DKK 5,260,000 Denmark (Government of) bonds 7s, 2024 759,412
DKK 24,005,000 Denmark (Government of) bonds 9s, 2000 4,545,946
USD 4,715,000 Ecuador (Government of) Floating Rate Note (FRN)
7.25s, 2025 2,339,819
UKS 8,500,000 European Invest Bank bonds 10 1/2s, 1999 14,513,750
FRF 148,590,000 France (Government of) OAT deb. 8 1/2s, 2002 31,482,506
FRF 53,510,000 France (Government of) deb. 7s, 1999 10,702,000
FRF 205,440,000 France (Government of) strip zero %, 2019 5,392,800
DEM 22,715,000 Germany (Republic of) bonds 6 1/4s, 2024 13,742,575
DEM 9,700,000 Germany (Republic of) bonds 7 3/8s, 2005 7,147,687
IDR 1,031,000 Indonesia (Government of) bonds 9 3/4s, 2001 924,034
ITL 43,000,000,000 Italy (Government of) bonds 8 1/2s, 2004 19,968,125
ITL 29,080,000,000 Italy (Government of) notes 8 1/2s, 1999 15,321,525
ECU 18,300,000 Italy (Government of) notes 9 1/4s, 2011 23,229,563
MAD 2,625,000 Morocco (Government of) notes 4 1/2s, 1999 1,607,813
NLG 29,250,000 Netherlands (Government of) deb. 7 1/2s, 2023 18,500,625
CAD 16,580,000 Ontario (Province of) bonds 9 1/2s, 2022 12,808,050
MXP 180,000 Petroleos Mexicanos 144A med. term notes 6 1/8s, 1996 167,400
PLZ 3,671,000 Poland (Government of) FRN 6.8125s, 2024 2,546,756
USD 1,436,000 Poland (Government of) deb. 3 1/4s, 2014 671,330
AUD 10,000,000 Queensland Treasury bonds 8s, 1999 6,925,000
CAD 2,000,000 Rogers Cablesystem 9.65s, 2014 1,237,500
ZAL 1,044,000 South Africa (Government of) 9 5/8s, 1999 1,034,865
SEK 63,000,000 Sweden (Kingdom of) bonds 10 1/4s, 2000 8,505,000
THB 18,000,000 Thailand (IFC of) FRN 8s, 1996 720,000
UKS 2,995,000 United Kindom Treasury bonds 8s, 2015 4,670,328
UKS 4,520,000 United Kingdom Government Guarantee
(Gilt Stock) 9 1/2s, 2004 7,729,200
UKS 13,895,000 United Kingdom Treasury bonds 8s, 2009 21,598,041
UKS 12,570,000 United Kingdom Treasury bonds 9 3/4s, 2002 21,573,263
AUD 8,090,000 Victoria Treasury bonds 8 1/4s, 2003 5,344,456
------------
TOTAL FOREIGN BONDS AND NOTES
(cost $310,710,202) $305,166,941
<CAPTION>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (7.7%)<F1> (cost $31,635,849)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C>
$31,250,000 U.S. Treasury Bonds 7 5/8s, 15, 2025 $ 32,314,453
<PAGE>
CORPORATE BONDS AND NOTES (3.2%)<F1>
PRINCIPAL AMOUNT VALUE
AGRICULTURE (0.1%)
- --------------------------------------------------------------------------------------------
$ 500,000 PSF Finance (L.P.) sr. notes 12s, 2000 $ 521,250
BROADCASTING (0.3%)
- --------------------------------------------------------------------------------------------
750,000 New City Broadcasting Corp. sr. sub. notes 11 3/8s, 2003 701,250
150,000 Outlet Broadcasting, Inc. sr. sub. notes 10 7/8s, 2003 152,625
250,000 SFX Broadcasting, Inc. sr. sub. notes 11 3/8s, 2000 255,000
------------
1,108,875
BUILDING AND CONSTRUCTION (0.2%)
- --------------------------------------------------------------------------------------------
700,000 Presley Co. sr. notes 12 1/2s, 2001 595,000
250,000 Schuller Intl Corp. bonds 10 7/8s, 2004 267,500
------------
862,500
CABLE TELEVISION (0.3%)
- --------------------------------------------------------------------------------------------
250,000 Cablevision Industries Corp. sr. notes 10 3/4s, 2002 266,250
100,000 Cablevision Systems Corp. sr. sub. reset deb. 10 3/4s, 2004 104,000
450,000 Century Communications Corp. sr. sub. deb. 11 7/8s, 2003 476,438
300,000 Continental Cablevision, Inc. sr. deb. 9s, 2008 297,750
------------
1,144,438
CELLULAR COMMUNICATIONS (0.2%)
- --------------------------------------------------------------------------------------------
500,000 NEXTEL Communications, Inc. sr. disc. notes stepped-
coupon zero % (11 1/2s, 9/1/98), 2003 <F2> 276,250
250,000 NEXTEL Communications, Inc. sr. disc. notes stepped-
coupon zero % (9 3/4s, 2/15/99), 2004 <F2> 121,875
500,000 Pricecellular Wire 144A sr. disc. notes stepped
coupon zero % (14s, 11/15/97), 2001 <F2> 385,000
------------
783,125
CHEMICALS (0.2%)
- --------------------------------------------------------------------------------------------
1,000,000 G-I Holdings, Inc. sr. notes zero %, 1998 680,000
150,000 Harris Chemical sr. secd. disc. notes stepped-coupon
zero % (10 1/4s, 1/15/96), 2001 <F2> 136,500
------------
816,500
CONTAINERS (0.1%)
- --------------------------------------------------------------------------------------------
500,000 Ivex Packaging Corp. sr. sub. notes 12 1/2s, 2002 532,500
ELECTRIC UTILITIES (0.1%)
- --------------------------------------------------------------------------------------------
500,000 Midland Funding Corp. II deb. Ser. A, 11 3/4s, 2005 502,500
ELECTRONICS (--%)
- --------------------------------------------------------------------------------------------
250,000 International Semi-Tech. Corp. sr. disc. notes stepped-
coupon zero % (11 1/2s, 8/15/00), 2003 <F2> 120,000
ENTERTAINMENT (0.1%)
- --------------------------------------------------------------------------------------------
500,000 Viacom International, Inc. sub. deb. 8s, 2006 462,500
FINANCIAL SERVICES (0.1%)
- --------------------------------------------------------------------------------------------
200,000 Delaware Management Holdings, Inc. sr. notes Ser. B,
10 1/4s, 2004 223,000
<PAGE>
CORPORATE BONDS AND NOTES
PRINCIPAL AMOUNT VALUE
FOOD (0.2%)
- --------------------------------------------------------------------------------------------
$ 750,000 Fresh Del Monte Produce Corp. sr. notes, Ser. B 10s, 2003 $ 622,500
FOOD CHAINS (--%)
- --------------------------------------------------------------------------------------------
400,000 Grand Union Co. sr. sub. notes 12 1/4s, 2002 (in default) <F3> 134,000
FOREST PRODUCTS (0.2%)
- --------------------------------------------------------------------------------------------
250,000 Container Corp. of America sr. notes Ser. A, 11 1/4s, 2004 267,500
150,000 Gaylord Container Corp. sr. sub. disc. deb. stepped-coupon
zero % (12 3/4s, 5/15/96), 2005 <F2> 144,188
250,000 Stone Container Corp. deb. sr. sub. notes 11 1/2s, 1999 260,000
250,000 Stone Container Corp. sr. sub. notes 10 3/4s, 1997 256,875
------------
928,563
HEALTH CARE (0.3%)
- --------------------------------------------------------------------------------------------
250,000 Healthtrust, Inc. sub. notes 10 1/4s, 2004 280,625
500,000 McGaw, Inc. sr. notes 10 3/8s, 1999 515,000
100,000 National Medical Enterprises Inc. sr. notes 10 1/8s, 2005 104,250
250,000 Ornda Healthcorp sr. sub. notes 12 1/4s, 2002 272,500
100,000 Paracelsus Healthcare Corp. sr. sub. notes 9 7/8s, 2003 99,000
------------
1,271,375
INSURANCE (0.1%)
- --------------------------------------------------------------------------------------------
50,000 American Life Holding Co. sr. sub. notes 11 1/4s, 2004 51,500
300,000 Penn Corp. Financial Group sr. sub. notes 9 1/4s, 2003 288,750
------------
340,250
OIL AND GAS (0.2%)
- --------------------------------------------------------------------------------------------
95,000 Flores & Rucks, Inc. sr. notes 13 1/2s, 2004 103,550
1,000,000 Triton Energy sr. sub. disc. notes stepped-coupon zero %
(9 3/4s, 12/15/96), 2000 <F2> 840,000
------------
943,550
PIPELINES (0.1%)
- --------------------------------------------------------------------------------------------
250,000 OPI International senior note 12 7/8s, 2002 275,000
PUBLISHING (--%)
- --------------------------------------------------------------------------------------------
250,000 General Media Corp. sr. secd. notes 10 5/8s, 2000 207,500
RECREATION (0.3%)
- --------------------------------------------------------------------------------------------
250,000 Casino America Inc. 1st mtge. deb. 11 1/2s, 2001 248,125
600,000 Great Bay Property Funding Corp. 1st. mtge. 10 7/8s, 2004 513,000
225,000 Louisiana Casino Cruises Corp. 144A 1st. mtge.
11 1/2s, 1998 200,250
150,000 Stratosphere Corp. 1st mtge 14 1/4s, 2002 152,625
------------
1,114,000
RETAIL (0.1%)
- --------------------------------------------------------------------------------------------
400,000 Loehmanns' Holdings, Inc. sr. sub. notes 13 3/4s, 1999 390,000
150,000 Southland Corp. deb. Ser. A, 4 1/2s, 2004 100,500
------------
490,500
------------
TOTAL CORPORATE BONDS AND NOTES
(cost $13,420,132) $ 13,404,426
<PAGE>
YANKEE BONDS AND NOTES (3.0%)<F1>
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------
$12,750,000 Argentina (Republic of) FRN 4s, 2023 $ 5,546,250
8,661,130 Brazil (Government of) bonds 8 3/4s, 2001 6,560,806
250,000 Maxus Energy Corp. global notes 9 7/8s, 2002 230,625
------------
TOTAL YANKEE BONDS AND NOTES (cost $11,782,814) $ 12,337,681
BRADY BONDS (2.3%)<F1>
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------
$ 4,355,000 Argentina (Republic of) FRN, Ser. L 4.313s, 2023 $ 2,515,012
2,480,000 Bulgaria (Government of) disc. 7.563s, 2024 1,168,700
11,410,000 Mexican (Government of) bonds 6 1/4s, 2019 5,975,988
------------
TOTAL BRADY BONDS (cost $8,934,120) $ 9,659,700
<CAPTION>
CALL OPTIONS PURCHASED (FUTURE CONTRACTS) (0.8%)<F1> (cost $1,221,188)
EXPIRATION DATE/
CONTRACT AMOUNT STRIKE PRICE VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C>
JPY 2,432,300 Japanese 10YR Future MAY 95/104 $ 3,579,373
<CAPTION>
EUROBONDS (0.5%)<F1>
- --------------------------------------------------------------------------------------------
<C> <S> <C>
$ 1,009,000 Essar Gujarat Ltd. 144A deb. FRB 8.025s, 1999 $ 1,003,955
945,000 Petroleo Brasileiro S.A. FRN 9.275s, 1998 888,300
------------
TOTAL EUROBONDS (cost $1,959,743) $ 1,892,255
PREFERRED STOCKS (0.1%)<F1> (cost $207,000)
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------
2,000 First Nationwide Bank $11.50, pfd. $ 209,500
<CAPTION>
WARRANTS (--%)<F1><F3>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C>
250 General Media Corp. 144A 12/31/00 $ 2,500
6,622 President Riverboat Casinos, Inc. 9/30/99 26,488
------------
TOTAL WARRANTS (cost $25,945) $ 28,988
<CAPTION>
SHORT-TERM INVESTMENTS (7.6%)<F1>
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C>
$10,000,000 Federal National Mortgage Assn. 5.86s, May 23, 1995 $ 9,964,189
MXN 1,500,000 Mexican Tesobono bonds zero %, August 3, 1995 1,392,188
MXN 2,000,000 Mexican Tesobono bonds zero %, October 19, 1995 1,741,250
1,356,359 Poland Zloty Certificate of Deposit zero %
October 20, 1995 1,191,900
17,423,000 Interest in $485,809,000 joint repurchase agreement
dated April 28, 1995 with Morgan (J.P.) Co. Inc., due
May 1, 1995 with respect to various U.S Treasury
Bonds -- maturity value of $17,431,566 for an
effective yield of 5.9% 17,431,566
------------
TOTAL SHORT-TERM INVESTMENTS (cost $31,865,751) $ 31,721,093
- --------------------------------------------------------------------------------------------
Total Investments (cost $411,762,744) <F4> $410,314,410
- --------------------------------------------------------------------------------------------
<PAGE>
<FN>
<F1> Percentages indicated are based on net assets of $417,547,519, which correspond to a net
asset value for class A, class B and class M shares of $13.03, $13.01 and $13.03,
respectively.
<F2> The interest rate and date shown parenthetically represent the new interest rate to be
paid and the date the fund will begin receiving interest at this rate.
<F3> Non-income-producing security.
<F4> The aggregate identified cost on a tax cost basis is $412,538,432, resulting in gross
unrealized appreciation and depreciation of 541,798 and $2,765,820, respectively, or
net unrealized depreciation of $2,224,022.
144A after the name of a security represents those securities exempt from registration
under Rule 144A of the Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified institutional buyers.
</FN>
<CAPTION>
FORWARD CURRENCY CONTRACTS OUTSTANDING at April 30, 1995
UNREALIZED
AGGREGATE DELIVERY APPRECIATION/
MARKET VALUE FACE VALUE DATE (DEPRECIATION)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Australian Dollars (Buy) $ 4,351,800 $ 4,390,200 6/21/95 $ (38,400)
Australian Dollars (Sell) 1,541,475 1,576,856 6/19/95 35,381
Australian Dollars (Sell) 11,261,835 11,522,655 6/19/95 260,820
Australian Dollars (Sell) 11,261,835 11,516,135 6/19/95 254,300
Australian Dollars (Sell) 5,296,880 5,270,965 6/14/95 (25,915)
Australian Dollars (Sell) 1,233,520 1,229,525 6/14/95 (3,995)
British Pounds (Buy) 19,327,200 18,793,800 5/15/95 533,400
British Pounds (Sell) 1,448,640 1,450,593 6/14/95 1,953
British Pounds (Sell) 30,095,780 30,205,549 6/21/95 109,769
Canadian Dollars (Sell) 2,057,720 2,006,809 6/21/95 (50,911)
Danish Krona (Sell) 4,679,250 4,710,359 6/14/95 31,109
Danish Krona (Sell) 774,370 773,120 6/19/95 (1,250)
Deutschemarks (Buy) 16,152,640 15,546,568 5/8/95 606,072
Deutschemarks (Buy) 144,320 144,713 5/22/95 (393)
Deutschemarks (Sell) 9,666,760 9,480,584 5/15/95 (186,176)
Deutschemarks (Sell) 31,669,460 31,408,743 5/15/95 (260,717)
Deutschemarks (Sell) 2,672,510 2,624,672 6/14/95 (47,838)
Deutschemarks (Sell) 22,507,680 22,217,475 5/15/95 (290,205)
Deutschemarks (Sell) 22,495,882 22,495,882 6/16/95 --
Deutschemarks (Sell) 5,922,860 5,939,102 6/14/95 16,242
Duetschemarks (Buy) 19,074,000 18,670,438 6/21/95 403,562
Duetschemarks (Buy) 30,235,040 30,988,580 5/22/95 (753,540)
European Currency (Buy) 1,322,000 1,333,100 6/21/95 (11,100)
French Francs (Buy) 1,257,980 1,249,426 5/9/95 8,554
French Francs (Sell) 3,956,550 3,913,335 5/9/95 (43,215)
French Francs (Sell) 16,220,250 16,134,068 6/8/95 (86,182)
French Francs (Sell) 1,865,760 1,842,838 5/16/95 (22,922)
French Francs (Sell) 18,337,440 18,656,947 6/21/95 319,507
French Francs (Sell) 14,127,520 14,317,949 6/21/95 190,429
French Francs (Sell) 11,030,800 11,304,709 6/21/95 273,909
Italian Lira (Sell) 368,156 358,402 6/14/95 (9,754)
<PAGE>
FORWARD CURRENCY CONTRACTS OUTSTANDING at April 30, 1995 (continued)
UNREALIZED
AGGREGATE DELIVERY APPRECIATION/
MARKET VALUE FACE VALUE DATE (DEPRECIATION)
- --------------------------------------------------------------------------------------------
Japanese Yen (Buy) $ 6,071,730 $ 6,101,960 6/21/95 $ (30,230)
Japanese Yen (Buy) 10,362,818 10,903,603 6/14/95 (540,785)
Japanese Yen (Buy) 21,407,400 18,990,598 5/8/95 2,416,802
Japanese Yen (Buy) 7,888,650 7,749,207 6/14/95 139,443
Japanese Yen (Sell) 9,872,518 9,325,528 5/9/95 (546,990)
Japanese Yen (Sell) 5,976,250 5,680,527 6/14/95 (295,723)
Japanese Yen (Sell) 13,219,658 13,323,713 6/1/95 104,055
Netherlands Guilders (Sell) 18,710,800 18,283,841 6/21/95 (426,959)
Netherlands Guilders (Buy) 387,000 391,722 6/14/95 (4,722)
Spanish Pesetas (Buy) 9,933,603 9,642,521 6/21/95 291,082
Swedish Krona (Sell) 9,309,090 9,218,655 6/21/95 (90,435)
-----------
$ 2,228,032
<CAPTION>
FORWARD CROSS CURRENCY CONTRACTS OUTSTANDING at April 30, 1995
(aggregate face value $145,572,958)
IN UNREALIZED
MARKET EXCHANGE MARKET DELIVERY APPRECIATION/
CONTRACTS VALUE FOR VALUE DATE (DEPRECIATION)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
British Pounds (Buy) $19,281,600 Deutschemarks $19,382,552 6/14/95 $ (100,952)
British Pounds (Sell) 36,481,170 Deutschemarks 35,767,966 6/14/95 (713,204)
Deutschemarks (Sell) 30,361,800 French Francs 29,752,300 6/1/95 (609,580)
Deutschemarks (Buy) 10,484,950 Italian Lira 11,126,910 5/22/95 (641,960)
Deutschemarks (Buy) 10,811,440 Spanish Peseta 10,882,559 6/21/95 (71,039)
Deutschemarks (Sell) 4,923,200 Swedish Krona 4,997,490 6/12/95 74,290
Deutschemarks (Sell) 11,804,841 French Francs 11,804,841 6/21/95 --
Deutschemarks (Buy) 20,858,420 Swiss Francs 20,858,420 6/21/95 --
-----------
$(2,062,445)
<CAPTION>
WRITTEN CALL OPTIONS ON FOREIGN CURRENCIES
(Premium received $691,433)
EXPIRATION DATE/
CONTRACT AMOUNT STRIKE PRICE VALUE
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C>
$36,975,000 U.S. Dollars in exchange for Deutschemarks May 95/1.404 $802,350
</TABLE>
<PAGE>
DIVERSIFICATION OF FOREIGN BONDS AND NOTES
held at April 30, 1995 (as a percentage of net assets):
1 Italy 14.0%
2 United Kingdom 13.3
3 France 11.4
4 Canada 8.0
5 Australia 7.5
6 Germany 5.0
7 Netherlands 4.4
8 Multi-National 3.5
9 Sweden 2.0
10 Argentina 1.9
11 Brazil 1.8
12 Mexico 1.5
13 Denmark 1.3
14 Poland 0.8
15 Ecuador 0.6
16 Bulgaria 0.5
17 Morocco 0.4
18 South Africa 0.3
19 India 0.2
20 Indonesia 0.2
21 Thailand 0.2
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (Unaudited)
ASSETS
- -------------------------------------------------------------------------------
Investments, at value (identified cost $411,762,744) (Note 1) $410,314,410
- -------------------------------------------------------------------------------
Foreign currency (cost $835,024) 811,626
- -------------------------------------------------------------------------------
Cash 502
- -------------------------------------------------------------------------------
Interest and other receivables 9,322,565
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 797,531
- -------------------------------------------------------------------------------
Receivable for securities sold 7,104,646
- -------------------------------------------------------------------------------
Receivable for open forward currency contracts (Note 1) 6,070,679
- -------------------------------------------------------------------------------
Receivable for closed forward currency contracts 8,428,871
- -------------------------------------------------------------------------------
TOTAL ASSETS 442,850,830
LIABILITIES
- -------------------------------------------------------------------------------
Payable for securities purchased 7,967,338
- -------------------------------------------------------------------------------
Written options outstanding at value (premium received $691,433) 802,358
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,417,949
- -------------------------------------------------------------------------------
Distributions payable to shareholders 11,600
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 820,326
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 933
- -------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 156,191
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 103,176
- -------------------------------------------------------------------------------
Payable for open forward currency contracts (Note 1) 5,905,092
- -------------------------------------------------------------------------------
Payable for closed forward currency contracts 8,054,575
- -------------------------------------------------------------------------------
Payable for variation margin on open futures 8,680
- -------------------------------------------------------------------------------
Other accrued expenses 55,093
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 25,303,311
- -------------------------------------------------------------------------------
NET ASSETS $417,547,519
REPRESENTED BY
- -------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $472,006,861
- -------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 1,701,835
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments, options,
futures contracts and foreign currency translation (Note 1) (54,805,872)
- -------------------------------------------------------------------------------
Net unrealized depreciation of investments, written options,
futures contracts, forward currency contracts and foreign
currency translation (1,355,305)
- -------------------------------------------------------------------------------
TOTAL--REPRESENTING NET ASSETS APPLICABLE TO CAPITAL
SHARES OUTSTANDING $417,547,519
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($391,825,585 divided by 30,062,400 shares) $13.03
- -------------------------------------------------------------------------------
Offering price per share (100/95.25 of $13.03)* $13.68
- -------------------------------------------------------------------------------
Net asset value and offering price of class B shares
($25,590,805 divided by 1,966,598 shares)** $13.01
- -------------------------------------------------------------------------------
Net asset value and redemption price of class M shares
($131,129 divided by 10,065 shares) $13.03
- -------------------------------------------------------------------------------
Offering price per share (100/96.75 of $13.03)* $13.47
- -------------------------------------------------------------------------------
* 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.
<PAGE>
STATEMENT OF OPERATIONS
Six months ended April 30, 1995 (Unaudited)
INTEREST INCOME (net of foreign tax of $296,227) $18,916,319
- -------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,742,441
- -------------------------------------------------------------------------------
Investor servicing fees and custodian fees (Note 2) 370,680
- -------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 10,512
- -------------------------------------------------------------------------------
Auditing 22,055
- -------------------------------------------------------------------------------
Legal 7,420
- -------------------------------------------------------------------------------
Administrative services (Note 2) 3,326
- -------------------------------------------------------------------------------
Distribution fees-- Class A (Note 2) 515,966
- -------------------------------------------------------------------------------
Distribution fees-- Class B (Note 2) 117,694
- -------------------------------------------------------------------------------
Distribution fees-- Class M (Note 2) 41
- -------------------------------------------------------------------------------
Other 119,712
- -------------------------------------------------------------------------------
TOTAL EXPENSES 2,909,847
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME 16,006,472
- -------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (8,371,924)
- -------------------------------------------------------------------------------
Net realized loss on options (Notes 1 and 3) (3,125,635)
- -------------------------------------------------------------------------------
Net realized gain on futures contracts (Notes 1 and 3) 107,968
- -------------------------------------------------------------------------------
Net realized loss on forward currency contracts and foreign
currency translation (Notes 1 and 3) (12,492,953)
- -------------------------------------------------------------------------------
Net unrealized appreciation on forward currency contracts
and foreign currency translation during the period 981,368
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments, written options
and futures contracts during the period 10,814,552
- -------------------------------------------------------------------------------
NET LOSS ON INVESTMENT TRANSACTIONS (12,086,624)
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,919,848
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30 OCTOBER 31
1995* 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C>
DECREASE IN NET ASSETS
- -----------------------------------------------------------------------------------------
OPERATIONS:
- -----------------------------------------------------------------------------------------
Net investment income $ 16,006,472 $ 35,302,209
- -----------------------------------------------------------------------------------------
Net realized loss on investments, options,
futures contracts, forward currency contracts
and foreign currency translation (23,882,544) (62,054,115)
- -----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments,
written options, futures contracts, forward currency
contracts and foreign currency translation 11,795,920 (7,696,746)
- -----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS 3,919,848 (34,448,652)
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
- -----------------------------------------------------------------------------------------
From net investment income
- -----------------------------------------------------------------------------------------
Class A (14,357,901) (1,716,766)
- -----------------------------------------------------------------------------------------
Class B (746,576) (141,353)
- -----------------------------------------------------------------------------------------
Class M (848) --
- -----------------------------------------------------------------------------------------
Return of capital:
- -----------------------------------------------------------------------------------------
Class A -- (31,434,912)
- -----------------------------------------------------------------------------------------
Class B -- (611,290)
- -----------------------------------------------------------------------------------------
From net realized gain on investments
- -----------------------------------------------------------------------------------------
Class A -- (5,552,161)
- -----------------------------------------------------------------------------------------
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS
(NOTE 4) (55,159,213) 2,834,450
- -----------------------------------------------------------------------------------------
TOTAL DECREASE IN NET ASSETS (66,344,690) (71,070,684)
- -----------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------
Beginning of period 483,892,209 554,962,893
- -----------------------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment
income of $1,701,835 and $800,688, respectively) $417,547,519 $483,892,209
- -----------------------------------------------------------------------------------------
*Unaudited
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
FOR THE PERIOD FOR THE PERIOD
MARCH 17, 1995 FEBRUARY 1, 1994 SIX
(COMMENCEMENT OF SIX MONTHS (COMMENCEMENT OF MONTHS
OPERATIONS) TO ENDED OPERATIONS TO ENDED
APRIL 30 APRIL 30 OCTOBER 31 APRIL 30
- -----------------------------------------------------------------------------------------------------------
1995<F1><F2> 1995<F1> 1994 1995<F1>
- -----------------------------------------------------------------------------------------------------------
CLASS M CLASS B CLASS A
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.81 $13.31 $15.38 $13.33
- -----------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------
Net investment income .14 .40 .64 .48
- -----------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments .23 (.29) (2.10) (.33)
- -----------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .37 .11 (1.46) .15
- -----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
- -----------------------------------------------------------------------------------------------------------
Net investment income (.15) (.41) (.14) (.45)
- -----------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- --
- -----------------------------------------------------------------------------------------------------------
Return of capital -- -- (.47) --
- -----------------------------------------------------------------------------------------------------------
Net realized gain on investments -- -- -- --
- -----------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.15) (.41) (.61) (.45)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.03 $13.01 $13.31 $13.03
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE (%) <F4> 2.87<F5> 0.87<F5> (9.52)<F5> 1.22<F5>
- -----------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (in thousands) $131 $25,595 $22,387 $391,822
- -----------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) .46<F5> 1.10<F5> 1.49<F5> .71<F5>
- -----------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets (%) 1.40<F5> 3.42<F5> 4.76<F5> 3.66<F5>
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 183.53<F5> 183.53<F5> 359.88 183.53<F5>
- -----------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
FINANCIAL HIGHLIGHTS [continued]
(For a share outstanding throughout the year) [continued]
FOR THE PERIOD
JUNE 1, 1987
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
OCTOBER 31 OCTOBER 31
- -----------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $15.25 $15.98 $15.70 $15.95 $14.78 $16.22 $14.35 $14.12
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income .97 1.07 1.07 1.24 1.29 1.46 1.61 .59<F3>
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments (1.84) .44 .56 .58 1.44 (1.02) 1.82 .16
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (.87) 1.51 1.63 1.82 2.73 .44 3.43 .75
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (.10) (.98) (1.17) (1.24) (1.35) (1.58) (1.54) (.52)
- -----------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- (.50) -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Return of capital (.80) -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments (.15) (.76) (.18) (.83) (.21) (.30) (.02) --
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (1.05) (2.24) (1.35) (2.07) (1.56) (1.88) (1.56) (.52)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.33 $15.25 $15.98 $15.70 $15.95 $14.78 $16.22 $14.35
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT NET ASSET
VALUE (%) <F4> (5.93) 10.44 10.93 12.39 19.59 2.87 24.78 5.42<F5>
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (in thousands) $461,506 $554,963 $437,006 $343,333 $180,941 $163,699 $115,554 $50,999
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) 1.27 1.27 1.46 1.48 1.58 1.62 1.66 .58<F5>
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets (%) 6.57 6.12 6.77 7.97 8.50 9.35 10.04 4.19<F5>
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 359.88 444.28 406.70 313.87 498.27 386.73 249.27 34.96<F5>
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Unaudited.
<F2> Per share net investment income has been determined on the basis of the weighted average number of shares outstanding
during the period.
<F3> Reflects an expense limitation applicable during the period. As a result of such limitation, expenses of the fund for
the period ended October 31, 1987 reflect a reduction of $0.05 per share. See Note 2.
<F4> Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
<F5> Not annualized.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1995 (Unaudited)
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940, as amended, as
a non-diversified, open-end management investment company. The fund seeks high
current income by investing principally in a portfolio of governmental or
supranational debt securities denominated in any currency, and to a lesser
extent, in other debt and equity securities. The fund's secondary objectives are
preservation of capital and long-term total return, consistent with high current
income.
The fund offers class A, class B and class M shares. The fund commenced its
public offering of class M shares on March 17, 1995. Class A shares are sold
with a maximum front-end sales charge of 4.75%. Class B shares do not pay a
front-end sales charge, but pay a higher ongoing distribution fee than class A
shares, and may be subject to a con tingent deferred sales charge, if those
shares are redeemed within six years of purchase. Class M shares are sold with a
maximum front end sales charge of 3.25%, and an ongoing distribution fee that is
higher than class A and lower than class B shares. 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) and 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 should receive their pro-rata share of the
net assets of the fund, if the fund were liquidated. In addition, the Trustees
declare separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A SECURITY VALUATION Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price, or, if no sales are reported -- as in the case of some
securities traded over-the-counter -- the last reported bid price, except that
certain U.S. government obligations are stated at the mean between the bid and
asked prices. Short-term investments having remaining maturities of 60 days or
less are stated at amortized cost which approximates market value, and other
investments are stated at fair value following procedures approved by the
Trustees.
Securities quoted in foreign currencies are translated into U.S. dollars at the
current exchange rate. Gains and losses that arise from changes in exchange
rates are not segregated from gains and losses that arise from changes in market
prices of investments. The effects on net investment income arising from changes
in exchange rates are also not segregated.
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. The order permits the fund's cash balance to be deposited
into a single joint account along with the cash of other
<PAGE>
registered investment companies managed by Putnam Investment Management, Inc.
(Putnam Management), the fund's Manager, a wholly-owned subsidiary of Putnam
Investments, Inc., and certain other accounts. 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. The fund's Manager is responsible
for determining that the value of these underlying securities is at all times at
least equal to the resale price, including accrued interest.
D SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security transactions are
accounted for on the trade date (date the order to buy or sell is executed).
Interest income is recorded on the accrual basis.
Foreign currency-denominated receivables and payables are "marked-to-market"
using the current exchange rate. The fluctuation between the original exchange
rate and the current exchange rate is recorded as unrealized translation gain or
loss. Upon receipt or payment, the fund realizes a gain or loss on foreign
currency amounting to the difference between the original value and the ending
value of the receivable or payable. Foreign currency gains and losses related to
interest receivable are reported as part of interest income.
E OPTION ACCOUNTING PRINCIPLES When the fund writes a call or put option, an
amount equal to the premium received by the fund is included in the fund's
"Statement of assets and liabilities" as an asset and an equivalent liability.
The amount of the liability is subsequently "marked-to-market" to reflect the
current market value of the option written. The current market value of an
option is the last sale price or, in the absence of a sale, the last offering
price, except that certain options on U.S. government obligations are stated at
fair value on the basis of valuations furnished by a pricing service approved by
the Trustees. If an option expires on its stipulated expiration date, or if the
fund enters into a closing purchase transaction, the fund realizes a gain (or
loss if the cost of a closing purchase transaction exceeds the premium received
when the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, the fund realizes a gain or
loss from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the amount of the premium originally received reduces the cost of the
security which the fund purchases upon exercise of the option.
The fund writes covered call options; that is, options for which it holds the
underlying security or its equivalent. Accordingly, the risk in writing a call
option is that the fund relinquishes the opportunity to profit if the market
price of the underlying security increases and the option is exercised. In
writing a put option, the fund assumes the risk of incurring a loss if the
market price of the underlying security decreases and the option is exercised.
The premium paid by the fund for the purchase of a call or put option is
included in the fund's "Statement of assets and liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option the fund has purchased expires on the stipulated expiration
date, the fund realizes a loss in the amount of the cost of the option. If the
fund enters into a closing sale transaction, the fund realizes a gain or loss,
depending on whether proceeds from the closing sale transaction are greater or
less than the cost of the option. If the
<PAGE>
fund exercises a call option, the cost of the securities acquired by exercising
the call is increased by the premium paid to buy the call. If the fund exercises
a put option, it realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale are decreased by the premium originally
paid.
OPTIONS ON FOREIGN CURRENCIES The fund writes and purchases put and call options
on foreign currencies. The accounting principles and risks involved are similar
to those described above relating to options on securities. The amount of
potential loss to the fund upon exercise of a written call option is the value
(in U.S. dollars) of the currency sold, converted at the spot price, less the
value of the U.S. dollars received in exchange. The amount of potential loss to
the fund upon exercise of a written put option is the value (in U.S. dollars) of
the currency received converted at the spot price, less the value of the U.S.
dollars paid in exchange.
FORWARD CURRENCY CONTRACTS A forward currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the contract will fluctuate with changes in currency exchange
rates. The contract is marked-to-market daily and the change in market value is
recorded by the fund as an unrealized gain or loss. 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. The maximum potential loss from such contracts is the aggregate face
value in U.S. dollars at the time the contract was opened.
FUTURES The fund may purchase and sell financial futures contracts to hedge
against changes in the values of tax-exempt municipal securities the fund owns
or expects to purchase.
A futures contract is an agreement between two parties to buy or sell units of a
particular index or a certain amount of a U.S. Government security at a set
price on a future date.
Upon entering into such a contract the fund is required to pledge to the broker
an amount of cash or securities equal to the minimum "initial margin"
requirements of the futures. Pursuant to the contract, the fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known as
"variation margin" and are recorded by the fund as unrealized gains or losses.
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.
The potential risk to the fund is that the change in value of futures contracts
primarily corresponds with the value of underlying instruments which may not
correspond to the change in value of the hedged instruments. In addition, there
is a risk that the fund may not be able to close out its futures positions due
to an illiquid secondary market.
F FEDERAL TAXES It is the policy of the fund to distribute all of its 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. Therefore, no provision has been made for federal taxes on income, capital
gains or unrealized
<PAGE>
appreciation of securities held and excise tax on income and capital gains.
At October 31, 1994, the fund had approximately $28,920,201 in capital loss
carryovers available to offset future realized capital gains, if any. The fund
may at times continue to pay taxable distributions from a net realized
short-term gain which could have been retained by the fund and offset by a
capital loss carryforward available to the fund. In such circumstances the fund
would lose the benefit of such a loss carryforward.
LOSS CARRYOVER EXPIRATION
- ----------------------------------
$28,920,201 October 31, 2002
G DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded by
the fund on the ex-dividend date.
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: 0.80% of the first
$500 million of average net assets, 0.70% of the next $500 million, 0.65% of the
next $500 million and .0.60% of any amount over $1.5 billion, subject to
reduction in any year to the extent that expenses (exclusive of brokerage,
interest and taxes) of the fund exceed 2.5% of the first $30 million of average
net assets, 2.0% of the next $70 million and 1.5% of any amount over $100
million, and by the amount of certain brokerage commissions and fees (less
expenses) received by affiliates of the Manager on the fund's portfolio
transactions.
The fund also reimburses the Manager 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.
Trustees of the fund receive an annual Trustee's fee of $1,120 and an additional
fee for each Trustees' meeting attended. Trustees who are not interested persons
of the Manager and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
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.
Investor servicing and custodian fees reported in the Statement of operations
for the six months ended April 30, 1995 have been reduced by credits allowed by
PFTC.
The fund has adopted distribution plans (the "Plans") with respect to its class
A shares, class B shares 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 Trustees have approved payment by the fund at an annual rate of 0.25%,
1.00% and 0.50% of the average net assets attributable to class A, class B and
class M shares respectively.
For the six months ended April 30, 1995, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $23,542 and $176 from the sale of
<PAGE>
class A and class M shares and $33,605 in contingent deferred sales charges from
redemptions of class B shares. A deferred sales charge of up to 1% is assessed
on certain redemptions of class A shares purchased as part of an investment of
$1 million or more. For the six months ended April 30, 1995, Putnam Mutual Funds
Corp., acting as underwriter received $13,181 on class A redemptions.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the six months ended April 30, 1995, purchases and sales of investment
securities other than U.S. gov ernment obligations and short-term investments
aggregated $735,825,889 and $802,686,093, respectively. Purchases and sales of
U.S. government obligations and short-term investments aggregated $1,268,558,417
and $1,273,957,695, respectively. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the identified
cost basis.
Written option transactions on foreign currencies during the period are sum
marized as follows:
CONTRACT PREMIUMS
AMOUNT RECEIVED
- ------------------------------------------------------------------------------
Options outstanding at beginning of period 65,407,000 $ 137,187
- ------------------------------------------------------------------------------
Options written 182,779,000 2,844,014
- ------------------------------------------------------------------------------
Options closed (211,211,000) (2,289,768)
- ------------------------------------------------------------------------------
WRITTEN OPTIONS OUTSTANDING AT END OF PERIOD 36,975,000 $ 691,433
- ------------------------------------------------------------------------------
NOTE 4
CAPITAL SHARES
At April 30, 1995, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
SIX MONTHS ENDED APRIL 30 YEAR ENDED OCTOBER 31
1995 1994
- ------------------------------------------------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 1,886,113 $ 24,382,703 9,595,670 $140,467,719
- ------------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 810,822 10,427,447 1,887,452 26,856,105
- ------------------------------------------------------------------------------
2,696,935 34,810,150 11,483,122 167,323,824
- ------------------------------------------------------------------------------
Shares repurchased (7,255,606) (93,797,843) (13,251,878) (188,605,364)
- ------------------------------------------------------------------------------
NET DECREASE (4,558,671) $(58,987,693) (1,768,756) $(21,281,540)
- ------------------------------------------------------------------------------
<PAGE>
FROM FEBRUARY 1, 1994
(COMMENCEMENT OF
OPERATIONS) TO
SIX MONTHS ENDED APRIL 30 OCTOBER 31
1995 1994
- ------------------------------------------------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 533,818 $ 6,905,174 2,439,453 $ 34,493,046
- ------------------------------------------------------------------------------
Shares issued in
connection with
reinvestment
of distributions 47,037 603,722 45,301 615,670
- ------------------------------------------------------------------------------
580,855 7,508,896 2,484,754 35,108,716
- ------------------------------------------------------------------------------
Shares repurchased (295,956) (3,810,948) (803,055) (10,992,726)
- ------------------------------------------------------------------------------
NET INCREASE 284,899 $ 3,697,948 16,816,699 $ 24,115,990
- ------------------------------------------------------------------------------
FROM MARCH 17, 1995
(COMMENCEMENT OF
OPERATIONS) TO
APRIL 30
1995
- ------------------------------------------------------------------------------
CLASS M SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 10,010 $129,831
- ------------------------------------------------------------------------------
Shares issued in connection with reinvestment
of distributions 55 701
- ------------------------------------------------------------------------------
10,065 130,532
Shares repurchased -- --
- ------------------------------------------------------------------------------
NET INCREASE 10,065 $130,532
- ------------------------------------------------------------------------------
<PAGE>
OUR COMMITMENT TO QUALITY SERVICE
o CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested Service Seal every
year since the award's 1990 inception. DALBAR, an independent research firm,
ran more than 10,000 tests of 38 shareholder service components. In every
category, Putnam outperformed the industry standard.
o HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month from
a Putnam money market fund or from your checking or savings account.*
o SWITCH FUNDS EASILY.
You can move money from one account to another within the same class of
shares without a service charge. (This privilege is subject to change or
termination.)
o ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business day at the
then-current net asset value, which may be more or less than the original
cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a helpful
Putnam representative.
o To make an additional investment in this or any other Putnam fund, contact
your financial advisor or call our toll-free number: 1-800-225-1581.
*Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market.
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER OFFICERS
Putnam Investment George Putnam
Management, Inc. President
One Post Office Square
Boston, MA 02109 Charles E. Porter
Executive Vice President
MARKETING SERVICES
Putnam Mutual Funds Corp. Patricia C. Flaherty
One Post Office Square Senior Vice President
Boston, MA 02109
Lawrence J. Lasser
CUSTODIAN Vice President
Putnam Fiduciary Trust Company
Gordon H. Silver
LEGAL COUNSEL Vice President
Ropes & Gray
Gary N. Coburn
TRUSTEES Vice President
George Putnam, Chairman
James E. Erickson
William F. Pounds, Vice Chairman Vice President
Jameson Adkins Baxter Blake Anderson
Vice President
Hans H. Estin
D. William Kohli
John A. Hill Vice President and Fund Manager
Elizabeth T. Kennan Jonathan Francis
Vice President and Fund Manager
Lawrence J. Lasser
Mark Siegel
Robert E. Patterson Vice President and Fund Manager
Donald S. Perkins Jennifer E. Leichter
Vice President and Fund Manager
George Putnam, III
William N. Shiebler
Eli Shapiro Vice President
A.J.C. Smith John R. Verani
Vice President
W. Nicholas Thorndike
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Global Governmental
Income Trust. 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.
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 PRINCIPAL AMOUNT INVESTED.
<PAGE>
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THE PUTNAM FUNDS U.S. Postage
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Boston, Massachusetts 02109 Putnam
Investments
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