Putnam
Global
Governmental
Income Trust
SEMIANNUAL REPORT
April 30, 1996
[PUTNAM SALES LOGO]
BOSTON * LONDON * TOKYO
Fund highlights
* For the 12 months ended April 30, 1996, Putnam Global Governmental
Income Trust's class A, class B, and class M shares were ranked 27, 32,
and 29, respectively, out of 150 general world income funds tracked by
Lipper Analytical Services. These rankings placed all three share
classes within the top 22% of all similar funds rated.*
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
13 Portfolio holdings
17 Financial statements
*Lipper is an independent mutual fund research organization. Its
rankings are based on total return performance, vary over time, and do
not reflect the effects of sales charges. The fund's class A shares were
ranked 20 out of 34 general world income funds for 5-year performance
through 4/30/96. Class B and class M shares were not ranked over longer
applicable periods. Past performance is not indicative of future
results.
From the Chairman
[GRAPHIC OMITTED: Photo of George Putnam]]
Dear Shareholder:
Market selection is always one of the key challenges facing the managers
of Putnam Global Governmental Income Trust. This was especially the case
in the environment of lackluster global fixed-income markets that
prevailed throughout the first half of your fund's fiscal year.
In fact, during the six months ended April 30, 1996, it was as important
to decide where not to invest as it was to seek the markets of greatest
potential. Thus a good deal of emphasis on the part of fund management
was devoted to preserving gains and limiting the impact of soft markets
on the fund's results.
In the report that follows, your fund's management team reviews
performance during the semiannual period and looks at prospects for the
second half of fiscal 1996.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
June 19, 1996
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
Report from the fund Managers
D.William Kohli
Joanthon H. Francis
Mark J. Seigel
Jennifer E. Leichter
Putnam Global Governmental Income Trust posted index-beating performance
during the semiannual period ended April 30, 1996. Your fund's six-month
returns of 1.00%, 0.57%, and 2.35% for class A, class B, and class M
shares, respectively, at public offering price (POP), surpassed the -
0.13% return measured by the Salomon Brothers World Government Bond
Index -- the fund's principal performance benchmark. Minimal exposure to
the Japanese bond market, substantial weightings in Europe's higher-
yielding markets, strategic positioning in the emerging markets, and
effective currency management were the primary contributors to your
fund's performance. In addition, by maintaining a relatively neutral
aggregate duration during the period's second half, we mitigated the
impact of broad market weakness.* (Please refer to the tables on pages 9
and 10 for complete performance information.)
* BOND MARKET HIGHLIGHTS
The Japanese bond market, hampered by low yields and an improving
domestic economy, fared poorly throughout much of the period except
during February and March. During February's global-market weakness,
data indicating that Japan's economic recovery was proceeding more
slowly than had been anticipated helped improve investor perceptions of
Japanese bonds. Nevertheless, we are not convinced that the Japanese
government bond market's recent uptick is sustainable and plan to
continue our policy of underweighting Japanese bonds over the near term.
We continued to emphasize European government bonds, particularly those
from some of the higher-yielding markets, such as Sweden, Spain, and
Italy. Investments in these peripheral markets performed well as
investors demonstrated their willingness to tolerate higher risk in
return for higher income. Positive economic fundamentals, including
expectations of lower interest rates and declining inflation, fueled
this outperformance.
In February, we took profits on some of the fund's Italian and Spanish
holdings in order to preserve our gains. We redeployed those assets into
core European markets, such as Germany and Denmark, where we believe
slow economic growth and the possibility of further interest-rate cuts
provides a positive backdrop for bond performance.
Our investments in the United Kingdom proved disappointing over the
period. We expected the U.K. market to rally from its current
undervalued price levels, but uncertainty over the ruling Conservative
Party's future prospects weighed down British bonds. We have,
accordingly, reduced the fund's U.K. exposure.
*Duration is the principal measure of interest-rate sensitivity for a
given portfolio of bonds. The longer the duration, the more sensitive a
portfolio is to a given change in rates. Maintaining a neutral aggregate
duration means that the duration of the fund's portfolio was neither
longer (more aggressive) nor shorter (more defensive) than that of the
fund's benchmark index.
* EMERGING MARKETS: EXCEPTIONAL PERFORMANCE DESPITE PERIODS OF
VOLATILITY
Emerging markets enjoyed exceptional performance throughout much of the
period and contributed significantly to your fund's total return.
Nevertheless, their positive overall performance masked intervals of
volatility on a month-to-month basis. After surging through January, the
markets retreated significantly in February and March before stabilizing
by the period's end.
A substantial portion of the fund's emerging-market holdings are Brady
bonds, which are U.S. dollar-denominated and partially backed by U.S.
Treasury securities. Consequently, the Brady bond market is heavily
influenced by movements in the Treasury market. Thus the U.S. market's
recent decline caused what we view to be a temporary setback in the
Brady bond market.
[GRAPHIC OMITTED: PIE CHART GEOGRAPHICAL BREAKDOWN
(4/30/96)* showing:
United states 26.1%
Spain 11.7%
Denmark 10.3%
Germany 8.4%
Italy 6.4%
Sweden 6.1%
France 5.9%
Other 25.1%
Footnote reads:
*Based on total market value of 4/30/96. Country allocations will vary
over time.
At the period's end, we had approximately 10% of the fund's portfolio
diversified across a broad group of emerging markets. We remain
committed to emerging markets as a strategic asset class and believe
that our diversified approach may enable the fund to benefit from these
attractive markets' potential returns while helping to control the
special risks intrinsic to this market sector.
* CURRENCY STRATEGY SUCCESSFUL IN LIGHT OF STRENGTHENING DOLLAR
Our successful currency strategy over the period involved overweighting
the dollar relative to its benchmark index. This helped protect the
portfolio's value, as several European currencies declined in value
against the dollar. Near the end of the period, however, the dollar
began to decline somewhat against the Japanese yen and the German
deutschemark, leading us to scale back our dollar exposure.*
In addition, we underweighted the yen and the deutschemark and hedged
several European currencies against each other. This has enabled the
fund to capitalize on currency movements in some of the higher-yielding
markets as they struggle to be eligible for inclusion in the European
Monetary Union.
* EUROPEAN FOCUS LIKELY TO CONTINUE GIVEN SLOW-GROWTH EXPECTATIONS
We anticipate an accelerating pace of economic growth in most countries,
accompanied by stable inflation around the world. Japan's economy has
begun to pick up significantly from 1995's pace. Growth in Europe is
likely to be slower than in other regions, creating the possibility,
albeit not the certainty, of lower European interest rates in the months
ahead. Within such an environment, our investment strategy emphasizes
country and currency exposure, rather than positioning the fund for
anticipated interest-rate movements.
*Returns on the fund's foreign investments must always be translated
back into U.S. dollars. Thus the goal behind our dollar-hedging activity
is to protect the fund's foreign returns by locking in specific exchange
rates between the dollar and the currencies of the foreign countries in
which we invest.
[GRAPHIC OMITTED: TOP CURRENCY EXPOSURES (4/30/96) showing:
German 61.0%
Japan 35.9%
Spain 29.1%
United States 25.2%
Denmark 23.2%
Sweden 13.7%
Footnote reads:
Based on total net assets. Table reflects all portfolio holdings,
including forward currency contracts. Currency exposures will vary over
time.]
Given the potential for stronger U.S. growth and little likelihood of an
interest-rate cut in the near term, the U.S. market has begun to price
in stronger economic growth. At the same time, Europe has priced in
expectations for weak growth. Because of their increasingly attractive
valuations, we have been adding to the fund's dollar-bloc exposure,
including the U.S. and Australian markets, while decreasing exposure to
Europe. Despite Japan's strong showing during the period's second half,
the fund remains underweighted in this market because we are not
convinced that Japanese government bonds offer much relative value. With
Japanese bond yields at such low levels, capital is likely to flow out
of Japan as investors seek better performance from higher-yielding
markets.
In the emerging markets, price movements are likely to be driven more by
real economic performance (i.e., growth, unemployment, and inflation
trends) than by policy and politics. The yield on the 30-year U.S.
Treasury bond will also be a determining factor. With Brady bonds
trading at upward of 9 percentage points above the U.S. long bond, the
yield alone offers investors exceptional performance potential even
without significant price appreciation from current levels.
With regard to currencies, our fundamental outlook for the U.S. dollar
in the medium term remains positive. However, given the recent weakening
of the dollar against several major European currencies, we removed most
of our dollar hedges as the period came to a close. As always, we will
continue to monitor the relative movements of the dollar vis-a-vis other
currencies and plan to restore the hedges when we anticipate a renewed
political commitment to a stronger dollar.
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 4/30/96, there is no guarantee the fund
will continue to hold these securities in the future. Foreign
investments are subject to certain risks, such as currency fluctuations,
economic instability, and political developments, not present with
domestic investments.
Performance summary
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.
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 in the fund.
TOTAL RETURN FOR PERIODS ENDED 4/30/96
Class A Class B Class M
(inception date) (6/1/87) (2/1/94) (3/17/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------
6 months 6.04% 1.00% 5.57% 0.57% 5.81% 2.35%
- ------------------------------------------------------------------
1 year 14.59 9.14 13.69 8.69 14.12 10.39
- ------------------------------------------------------------------
5 years 43.22 36.39 -- -- -- --
Annual average 7.45 6.40 -- -- -- --
- ------------------------------------------------------------------
Life of class 143.24 131.75 3.76 1.02 17.31 13.50
Annual average 10.48 9.88 1.66 0.45 15.18 11.86
- ------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 4/30/96
Salomon Bros.
World Govt. Consumer
Bond Index Price Index
- ------------------------------------------------------------------
6 months -0.13% 1.69%
- ------------------------------------------------------------------
1 year 2.97 2.90
- ------------------------------------------------------------------
5 years 64.29 15.61
Annual average 10.43 2.94
- ------------------------------------------------------------------
Life of class A 122.04 38.20
Annual average 9.36 3.69
- ------------------------------------------------------------------
Life of class B 18.12 6.91
Annual average 7.70 3.01
- ------------------------------------------------------------------
Life of class M 4.88 3.24
Annual average 4.49 2.86
- ------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take into
account any adjustment for taxes payable on reinvested distributions.
Investment returns and net asset value will fluctuate so that an
investor's shares, when sold, may be worth more or less than their
original cost. POP assumes 4.75% maximum sales charge for class A shares
and 3.25% for class M shares. CDSC for class B shares assumes the
applicable sales charge, with the maximum being 5%.
TOTAL RETURN FOR PERIODS ENDED 3/31/96
(most recent calendar quarter)
Class A Class B Class M
NAV POP NAV CDSC NAV POP
- ----------------------------------------------------------------------
6 months 5.90% 0.86% 5.55% 0.55% 5.64% 2.18%
- ----------------------------------------------------------------------
1 year 14.88 9.43 14.08 9.08 14.65 10.92
- ----------------------------------------------------------------------
5 years 42.44 35.70 -- -- -- --
Annual average 7.33 6.30 -- -- -- --
- ----------------------------------------------------------------------
Life of class 138.93 127.64 2.07 -0.63 15.31 11.56
Annual average 10.36 9.75 0.95 -0.29 14.68 11.10
- ----------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns
and net asset value will fluctuate so that an investor's shares, when
sold, may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 4/30/96
Distributions: Class A Class B Class M
- ----------------------------------------------------------------------
Number 2 2 2
- ----------------------------------------------------------------------
Income $0.325 $0.281 $0.313
- ----------------------------------------------------------------------
Total $0.325 $0.281 $0.313
- ----------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ----------------------------------------------------------------------
10/31/95 $13.62 $14.30 $13.60 $13.59 $14.05
- ----------------------------------------------------------------------
4/30/96 14.11 14.81 14.07 14.06 14.53
- ----------------------------------------------------------------------
Current returns
- ----------------------------------------------------------------------
End of period
- ----------------------------------------------------------------------
Current dividend rate1 6.38% 6.08% 5.63% 6.29% 6.08%
- ----------------------------------------------------------------------
Current 30-day
SEC yield2 7.64 7.26 6.87 7.37 7.13
- ----------------------------------------------------------------------
1 Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period.
2 Based on investment income, calculated using SEC guidelines.
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 a market-capitalization
weighted benchmark that tracks the performance of government-bond
markets in 14 countries. The index assumes reinvestment of all
distributions and interest payments and does not take in account
brokerage fees or taxes. Securities in the fund do not match those in
the index and performance of the fund will differ. It is not possible to
invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
International New Opportunities Fund
Investors Fund
Natural Resources Fund
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
Intermediate U.S. Government Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds**
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
Lifestage(SM) FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments to help maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
Most conservative investment+
Putnam money market funds:
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts++
* Formerly Putnam Managed Income Fund
** Not available in all states.
+ Relative to above.
++ Not offered by Putnam Investments. Certificates of deposit offer a
fixed rate of return and may be insured up to certain limits by
federal/state agencies. Savings accounts may also be insured up to
certain limits. Please call your financial advisor or Putnam at
1-800-225-1581 to obtain a prospectus for any Putnam fund. It
contains more complete information, including charges and expenses.
Please read it carefully before you invest or send money.
<TABLE>
<CAPTION>
Portfolio of investments owned
April 30, 1996 (Unaudited)
<S> <C> <C> <C>
FOREIGN GOVERNMENT BONDS AND NOTES (60.2%) *
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
AUD 26,340,000 Australia (Government of) bonds 9s, 2004 $ 21,086,624
CAD 8,222,000 Canada (Government of) deb. 9s, 2004 6,513,462
DKK 117,830,000 Denmark (Government of) bonds 9s, 2000 22,308,881
DKK 53,665,000 Denmark (Government of) bonds 8s, 2003 9,706,049
DKK 38,695,000 Denmark (Government of) deb. 7s, 2004 6,546,368
FRF 60,280,000 France (Government of) Treasury Bills 7 3/4s, 2000 12,695,739
FRF 48,195,000 France (Government of ) Treasury Bills 5 3/4s, 1998 9,540,243
DEM 9,445,000 Germany (Federal Republic of) bonds 6 1/4s, 2024 5,529,773
ITL 20,280,000,000 Italy (Government of) bonds 10 1/2s, 2005 13,674,554
IT 15,330,000,000 Italy (Government of) deb. 10 1/2s, 2000 10,304,433
USD 3,501,000 Morocco (Kingdom of) participation notes 6.594s, 200 2,511,968
USD 1,374,000 Panama (Republic of) FRN 6.629s, 2002 1,269,233
USD 9,201,000 Russia (Government of) non-performing loans + 3,680,400
ESP 2,459,900,000 Spain (Government of) bonds 12 1/4s, 2000 21,762,883
ESP 923,500,000 Spain (Government of) bonds 10.15s, 2006 7,702,119
ESP 1,850,000,000 Spain (Government of) bond 8.4s, 2001 14,495,823
SEK 139,800,000 Sweden (Government of) bonds 10 1/4s, 2000 22,660,864
DEM 36,955,000 Treuhandanstalt (Germany Federal Republic of) 7 1/8S, 2003 25,736,561
GBP 6,535,000 United Kingdom Treasury bonds 9s, 2012 10,484,140
GBP 3,180,000 United Kingdom Treasury bonds 8s, 2000 4,899,709
--------------
Total Foreign Government Bonds and Notes (cost $232,966,235) $233,109,826
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (18.8%) *
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
$5,000,000 U.S. Treasury Bonds , 6s, February 15, 2026 $4,442,950
U.S. Treasury Notes
13,525,000 7 1/2s, February 15, 2005 14,237,227
11,850,000 6 3/8s, March 31, 2001 11,827,722
45,005,000 5 7/8s, November 15, 2005 42,445,116
--------------
Total U.S. Government and Agency Obligations (cost $75,741,202) $72,953,015
BRADY BONDS (10.3%) *
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
$9,566,000 Argentina (Republic of) bonds 6.563s, 2023 $6,600,540
8,004,000 Argentina (Republic of) bonds 5 1/4s, 2023 4,362,180
3,284,760 Brazil (Republic of) FRN 6 3/8s,, 2001 3,009,661
9,517,000 Brazil (Republic of) FRN 6 1/2s, 2006 7,232,920
1,719,072 Brazil (Republic of) bonds 4 1/2s, 2014 1,033,592
2,655,000 Ecuador (Government of) FRN 6.063s, 2025 1,490,119
1,213,000 Philippines (Central Bank of) bonds 6 1/4s, 2017 956,754
2,185,000 Poland (Government of) disc FRN 6.438s, 2024 2,029,319
349,000 United Mexican States Ser. C, FRB 6.609s, 2019 280,945
7,281,000 United Mexican States Ser. A, FRB 6.398s, 2019 5,861,205
7,682,000 United Mexican States Ser. B, FRB 6 1/4s, 2019 5,079,723
3,000,000 Venezuela (Republic of) FRN 6.563s, 2007 1,957,500
--------------
Total Brady Bonds (cost $36,883,570) $39,894,458
CORPORATE BONDS AND NOTES (0.4%) *
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
$500,000 PSF Finance (L.P.) sr. notes 12s, 2000(acquired 3/15/95, cost $525,000)(In Default)+++ $350,000
2,000,000 Rogers Cablesystem bonds 9.65s, 2014 (Canada) 1,255,325
--------------
Total Corporate Bonds and Notes (cost $2,038,020) $1,605,325
COMMON STOCKS (cost $150,594) (--%)*
NUMBER OF SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
7,070 Grand Union Co. (acquired various dates from 12/02/94 to 10/10/99 cost $150,594)+++ $44,188
PURCHASED CALL OPTIONS OUTSTANDING (cost $267,260) (0.1%) * EXPIRATION DATE/
CONTRACT AMOUNT STRIKE PRICE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
$32,200,000 Swiss Francs In Exchange For U.S. Dolllars May 96/$1.23 $405,720
SHORT-TERM INVESTMENTS (6.8%) *
PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------------------------------
$1,445,385 Federal National Mortgage Assn. effective yield of 5.16s, July 3, 1996 $14,853,800
746,746 Federal Home Loan Bank effective yield of 4.99s, May 13, 1996 5,927,645
U.S. Dollar Certificate of Deposit, (Issued by
J.P. Morgan Securities , Inc. The principal at
redemption is linked to the bid price for the
Polish Treasury Bill, at maturity multiplied by
the change in the spot rate of the Polish Zloty
from issue date to maturity date.)
1,445,385 zero %, April 16, 1997 1,184,490
746,746 zero %, May 9, 1996 687,977
513,196 zero %, December 19, 1996 427,492
223,039 zero %, August 1, 1996 202,319
3,010,000 Interest in $500,000,000 joint repurchase agreement
dated April 30, 1996 with Lehman Brothers Inc. due
May 1, 1996 with respect to various U.S. Treasury
obligations -- maturity value of $3,010,447 for an
effective yield of 5.35% $3,010,447
--------------
Total Short-Term investments (cost $27,405,995) $26,294,170
- ---------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $375,452,876)*** $374,306,702
- ---------------------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $387,395,958
+ Non-income producing security.
++ Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held at April 30,
1996 was $394,188 or less than 1.0% of net assets.
*** The aggregate identified cost on a tax basis is $378,576,476, resulting in gross unrealized appreciation and depreciation of
$2,935,296 and $7,205,070, respectively, or net unrealized depreciation of $4,269,774.
144A after the name of a security represents those 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.
The rate shown on (FRN) Floating Rate Notes are the current interest rates shown at April 30, 1996, which are subject to
change based on the terms of the security.
- ---------------------------------------------------------------------------------------------------------------------------
Forward Cross Currency Contracts Outstanding at April 30, 1996
(aggregate face value $20,123,307)
<S> <C> <C> <C> <C> <C>
Unrealized
Currency Market Currency Market Delivery Appreciation/
Purchased Value Sold Value Date (Depreciation)
- ---------------------------------------------------------------------------------------------------------------------------
British Pounds $10,070,184 Deutschemarks $10,082,805 6/12/96 $(12,621)
Danish Krone 9,523,959 Deutschemarks 9,466,590 6/12/96 57,369
- ---------------------------------------------------------------------------------------------------------------------------
$44,748
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Forward Currency Contracts to Buy Outstanding at April 30, 1996
(aggregate face value $226,751,517)
<S> <C> <C> <C> <C>
Unrealized
Aggregate Face Delivery Appreciation/
Market Value Value Date (Depreciation)
- ---------------------------------------------------------------------------------------------------------------------------
Deutschemarks $ 95,941,326 $ 98,195,731 6/12/96 $(2,254,405)
British Pounds 2,959,163 2,974,104 6/12/96 (14,941)
Canadian Dollars 10,285,263 10,276,900 6/12/96 8,363
French Francs 3,078,385 3,174,908 6/12/96 (96,523)
Italian Lira 316,787 315,160 6/12/96 1,627
Japanese Yen 107,255,792 105,732,011 6/12/96 1,523,781
Swedish Krona 6,037,925 6,082,703 6/12/96 (44,778)
- ---------------------------------------------------------------------------------------------------------------------------
$ (876,876)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Forward Currency Contracts to Sell Outstanding at April 30, 1996
(aggregate face value $240,827,621)
<S> <C> <C> <C> <C>
Unrealized
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
- ---------------------------------------------------------------------------------------------------------------------------
Australian Dollars $16,341,216 $16,151,785 6/12/96 $ (189,431)
Canadian Dollars 9,247,328 9,139,054 6/12/96 (108,274)
Deutschemarks 606,563 613,605 4/16/97 7,042
Deutschemarks 326,465 341,279 5/7/96 14,814
Deutschemarks 88,369,271 91,473,893 6/12/96 3,104,622
Deutschemarks 98,140 101,397 7/31/96 3,257
Deutschemarks 192,937 206,188 12/18/96 13,251
Danish Krone 20,966,895 21,714,644 6/12/96 747,749
Spanish Peseta 34,835,032 35,511,164 6/12/96 676,132
Italian Lira 8,915,105 8,856,687 6/12/96 (58,418)
Japanese Yen 31,846,638 31,851,489 6/12/96 4,851
Swedish Krona 24,552,904 24,866,436 6/12/96 313,532
- ---------------------------------------------------------------------------------------------------------------------------
$4,529,127
- ---------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
April 30,1996 (Unaudited)
<S> <C>
Assets
- --------------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $375,452,876) (Note 1) $374,306,702
- --------------------------------------------------------------------------------------------------------
Foreign currency (cost $921,309) 956,298
- --------------------------------------------------------------------------------------------------------
Cash 504
- --------------------------------------------------------------------------------------------------------
Dividends, interest and other receivables 8,636,260
- --------------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 325,815
- --------------------------------------------------------------------------------------------------------
Receivable for securities sold 1,586,477
- --------------------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts 677,989
- --------------------------------------------------------------------------------------------------------
Receivable for open forrward currency contracts 6,476,390
- --------------------------------------------------------------------------------------------------------
Total assets 392,966,435
Liabilities
- --------------------------------------------------------------------------------------------------------
Distributions payable to shareholders 10,584
- --------------------------------------------------------------------------------------------------------
Payable for securities purchased 620,877
- --------------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,042,135
- --------------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 775,073
- --------------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 241
- --------------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 773
- --------------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 100,959
- --------------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 174,432
- --------------------------------------------------------------------------------------------------------
Payable for open forward currency contracts 2,779,391
- --------------------------------------------------------------------------------------------------------
Other accrued expenses 66,012
- --------------------------------------------------------------------------------------------------------
Total liabilities 5,570,477
- --------------------------------------------------------------------------------------------------------
Net assets $387,395,958
Represented by
- --------------------------------------------------------------------------------------------------------
Paid-in-capital (Notes 1 and 4) $400,383,893
- --------------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 5,224,589
- --------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (Note 1) (20,664,835)
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 2,452,311
- --------------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding 387,395,958
Computation of net asset value and offering price
- --------------------------------------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($351,233,870 divided by 24,898,274 shares) $14.11
- --------------------------------------------------------------------------------------------------------
Offering price per Class A share (100/95.25 of $14.11)* $14.81
- --------------------------------------------------------------------------------------------------------
Net asset value and offering price of class B shares
($35,038,141 divided by 2,490,096 shares)** $14.07
- --------------------------------------------------------------------------------------------------------
Net asset value and redemption price of class M shares
($1,123,947 divided by 79,934 shares) $14.06
- --------------------------------------------------------------------------------------------------------
Offering price per Class M share (100/96.75 of $14.06)* $14.53
- --------------------------------------------------------------------------------------------------------
* 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 April 30,1996 (Unaudited)
<S> <C>
Investment Income
- --------------------------------------------------------------------------------------------------------
Interest (net of foreign tax of $167,631) $14,663,189
- --------------------------------------------------------------------------------------------------------
Dividends 14,156
- --------------------------------------------------------------------------------------------------------
Total investment income 14,677,345
Expenses:
- --------------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,584,026
- --------------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 424,564
- --------------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 10,132
- --------------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 450,321
- --------------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 167,634
- --------------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 2,198
- --------------------------------------------------------------------------------------------------------
Administrative services (Note 2) 4,636
- --------------------------------------------------------------------------------------------------------
Auditing 26,205
- --------------------------------------------------------------------------------------------------------
Legal 2,916
- --------------------------------------------------------------------------------------------------------
Registration fees 225
- --------------------------------------------------------------------------------------------------------
Other 4,481
- --------------------------------------------------------------------------------------------------------
Total expenses 2,677,338
- --------------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (87,872)
- --------------------------------------------------------------------------------------------------------
Net expenses 2,589,466
- --------------------------------------------------------------------------------------------------------
Net investment income 12,087,879
- --------------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 9,816,216
- --------------------------------------------------------------------------------------------------------
Net realized gain on written options (Notes 1 and 3) 148,135
- --------------------------------------------------------------------------------------------------------
Net realized gain on forward currency contracts and foreign
currency translation (Note 1) 5,135,132
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation on forward currency contracts and foreign
currency translation during the period 7,027,359
- --------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and written options
during the period (11,166,812)
- --------------------------------------------------------------------------------------------------------
Net gain on investments 10,960,030
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $23,047,909
- --------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
<C> <S> <S>
Six months ended Year ended
April 30 October 31
1996* 1995
- --------------------------------------------------------------------------------------------------------
Decrease in net assets
- --------------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------------
Net investment income $ 12,087,879 $ 30,301,284
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions 15,099,483 (14,477,198)
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
transactions and assets and liabilities in foreign currencies (4,139,453) 19,742,989
- --------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 23,047,909 35,567,075
- --------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- --------------------------------------------------------------------------------------------------------
From net investment income
Class A (8,284,861) (18,227,414)
- --------------------------------------------------------------------------------------------------------
Class B (675,183) (1,110,752)
- --------------------------------------------------------------------------------------------------------
Class M (21,195) (9,838)
- --------------------------------------------------------------------------------------------------------
From return of capital
Class A -- (8,449,809)
- --------------------------------------------------------------------------------------------------------
Class B -- (514,919)
- --------------------------------------------------------------------------------------------------------
Class M -- (4,560)
- --------------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (24,565,769) (93,246,935)
- --------------------------------------------------------------------------------------------------------
Total decrease in net assets (10,499,099) (85,997,152)
- --------------------------------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------------------------------
Beginning of period 397,895,057 483,892,209
- --------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $5,224,589 and $2,117,949, respectively) $387,395,958 $397,895,057
- --------------------------------------------------------------------------------------------------------
* Unaudited.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
<C> <C> <C>
For the period
March 17, 1995
Six months (commencement
ended of operations) to
-------------------------------------------------------------------------------------------------------
April 30 October 31
- --------------------------------------------------------------------------------------------------------
1996* 1995
- --------------------------------------------------------------------------------------------------------
Class M
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $13.59 $12.81
- --------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------
Net investment income .37 .49
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .41 .88
- --------------------------------------------------------------------------------------------------------
Total from investment operations .78 1.37
- --------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- --------------------------------------------------------------------------------------------------------
From net investment income (.31) (.40)
- --------------------------------------------------------------------------------------------------------
In excess of net investment income -- --
- --------------------------------------------------------------------------------------------------------
Return of capital -- (.19)
- --------------------------------------------------------------------------------------------------------
From net realized gain on investments -- --
- --------------------------------------------------------------------------------------------------------
Total distributions (.31) (.59)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.06 $13.59
- --------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 5.81(b) 10.87(b)
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,124 $509
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) .77(b) .96(b)
- --------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 2.90(b) 4.78(b)
- --------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 161.19(b) 300.66
- --------------------------------------------------------------------------------------------------------
Financial highlights (continued)
(For a share outstanding throughout the period)
<S> <C> <C> <C>
For the period
February 1, 1994
Six months (commencement
ended Year ended of operations) to
April 30 October 31 October 31
- ---------------------------------------------------------------------------------------------------------------------
1996* 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
Class B
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $13.60 $13.31 $15.38
- ---------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------
Net investment income .36 .77 .64
- ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .39 .33 (2.10)
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations .75 1.10 (1.46)
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------
From net investment income (.28) (.55) (.14)
- ---------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Return of capital -- (.26) (.47)
- ---------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (.28) (.81) (.61)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.07 $13.60 $13.31
- ---------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 5.57(b) 8.63 (9.52)(b)
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $35,038 $30,910 $22,387
- ---------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.01(b) 2.09 1.49(b)
- ---------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 2.69(b) 6.59 4.76(b)
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 161.19(b) 300.66 359.88
- ---------------------------------------------------------------------------------------------------------------------
Financial highlights (continued)
(For a share outstanding throughout the period)
<C> <C> <C> <C> <C> <C> <C>
Six months
ended
April 30 Year ended October 31
- ---------------------------------------------------------------------------------------------------------------------------------
1996* 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
Class A
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $13.62 $13.33 $15.25 $15.98 $15.70 $15.95
- ---------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .45 1.00 .97 1.07 1.07 1.24
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments .37 .19 (1.84) .44 .56 .58
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .82 1.19 (.87) 1.51 1.63 1.82
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income (.33) (.62) (.10) (.98) (1.17) (1.24)
- ---------------------------------------------------------------------------------------------------------------------------------
In excess of net investment income -- -- -- (.50) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Return of capital -- (.28) (.80) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- -- (.15) (.76) (.18) (.83)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (.33) (.90) (1.05) (2.24) (1.35) (2.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.11 $13.62 $13.33 $15.25 $15.98 $15.70
- ---------------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%)(a) 6.04(b) 9.38 (5.93) 10.44 10.93 12.39
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $351,234 $366,476 $461,506 $554,963 $437,006 $343,333
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) . 64(b) 1.34 1.27 1.27 1.46 1.48
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 3.07(b) 7.19 6.57 6.12 6.77 7.97
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 161.19(b) 300.66 359.88 444.28 406.70 313.87
- ---------------------------------------------------------------------------------------------------------------------------------
* Unaudited.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Not annualized.
(c) The ratio of expenses to average net assets for the periods ended October 31, 1995, and thereafter, includes amounts paid
through expense offset arrangements. Prior period ratios exclude these amounts (See Note 2)
</TABLE>
Notes to financial statements
April 30, 1996 (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. Class A shares are
sold with a maximum front-end sales charge of 4.75 %. Class B shares,
which convert to class A shares after approximately eight years, do not
pay a front-end sales charge, but pay a higher ongoing distribution fee
than class A shares, and are subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class
M shares are sold with a maximum front-end sales charge of 3.25% and
pay an ongoing distribution fee that is lower than class B shares and
higher than class A 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). 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 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 preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported 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.
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 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.
Putnam Management is responsible for determining that the value of these
underlying securities is at all times at least equal to the resale
price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis
and 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. Discounts on zero coupon
bonds, original issue, and stepped-coupon bonds are accreted according
to the effective yield method.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, 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 fluctuations are included with the net realized
and unrealized gain or loss on investments. Net realized gains and
losses on foreign currency transactions represent net 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
gains and losses on foreign currency transactions 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.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the
value of a currency in which securities a fund intends to buy are
denominated, when a fund holds cash reserves and short-term
investments). The U.S. dollar value of forward currency contracts is
determined using forward currency exchange rates supplied by a quotation
service. 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 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 fund could be
exposed to risk if the value of the currency changes unfavorably, if the
counterparties to the contracts are unable to meet the terms of their
contracts or if the fund is unable to enter into a closing position.
G) 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 which it invests 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. 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.
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. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held and for excise tax on income
and capital gains.
At October 31, 1995, the fund had a capital loss carryover of
approximately $35,418,000 available to offset future capital gains, if
any. The amount of the carryover and the expiration dates are:
Loss Carryover Expiration
- ------------------ ------------------
$28,912,000 October 31, 2002
6,506,000 October 31, 2003
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 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. Such fee is based on the following annual rates: 0.80% of the
first $500 million of the 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, under current law, to reduction in any year by the
amount of certain brokerage commissions and fees (less expenses)
received by affiliates of Putnam Management on the fund's portfolio
transactions.
The fund reimburses Putnam Management 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 Trustees fee of $1,050 and an
additional fee for each Trustee's meeting attended. Trustees who are
not interested persons of Putnam Management and who serve on committees
of the Trustees receive additional fees for attendance at certain
committee meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows
the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund
and are invested in the fund or in other Putnam funds until distribution
in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended April 30, 1996, fund expenses were reduced by
$87,872 under expense offset arrangements with PFTC arrangements.
Investor servicing and custodian fees reported in the Statement of
operations exclude these credits. The fund could have invested a
portion of these assets utilized in connection with the expense offset
arrangements in an income producing asset if it had not entered into
such arrangements.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments, Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments
by the fund to Putnam Mutual Funds Corp. at an annual rate up to
0.35%,1.00% and 1.00% of the average net assets attributable to class A,
class B and class M shares, respectively. The Trustees have approved
payment by the fund at an annual rate of 0.25%, 1.00% and 0.50% of the
average net assets attributable to class A, class B and class M shares,
respectively.
For the six months ended April 30, 1996, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $16,496 and $773 from
the sale of class A and class M shares, respectively and received
$42,486 in contingent deferred sales charges from redemptions of class B
shares. A deferred sales charge of up to 1% is assessed on certain
redemptions of class A shares. For the six months ended April 30, 1996,
Putnam Mutual Funds Corp., acting as underwriter received $1,083 on
class A redemptions.
Note 3
Purchase and salesof securities
During the six months ended April 30, 1996, purchases and sales of
investment securities other than U.S. government obligations and short-
term investments aggregated $476,981,578 and $489,968,564,
respectively. Purchases and sales of U.S. government obligations
aggregated $122,710,209 and $109,440,247 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 during the period are summarized as follows:
Contract Premiums
Amounts Received
- ----------------------------------------------------
Contracts
outstanding
at beginning
of period $ 34,450,000 $ 148,135
- ----------------------------------------------------
Options
expired (34, 450,000) (148,135)
- ----------------------------------------------------
Written
options
outstanding
at end of
period $ -- $ --
- ----------------------------------------------------
Note 4
Capital shares
At April 30, 1996, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended
April 30, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 2,436,100 $34,314,987
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 446,669 6,189,242
- ----------------------------------------------------
2,882,769 40,504,229
Shares
repurchased (4,889,941) (68,666,090)
- ----------------------------------------------------
Net decrease (2,007,172) $(28,161,861)
- ----------------------------------------------------
Year ended
October 31, 1995
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 3,675,721 $48,666,295
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,486,907 19,506,341
- ----------------------------------------------------
5,162,628 68,172,636
Shares
repurchased (12,878,253) (169,764,839)
- ----------------------------------------------------
Net decrease (7,715,625) $(101,592,203)
- ----------------------------------------------------
Six months ended
April 30, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 631,682 $ 8,833,678
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 39,488 546,076
- ----------------------------------------------------
671,170 9,379,754
Shares
repurchased (454,701) (6,381,832)
- ----------------------------------------------------
Net increase 216,469 $2,997,922
- ----------------------------------------------------
Year ended
October 31, 1995
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 1,183,419 $ 15,684,905
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 99,884 1,312,528
- ----------------------------------------------------
1,283,303 16,997,433
Shares
repurchased (691,375) (9,154,571)
- ----------------------------------------------------
Net increase 591,928 $ 7,842,862
- ----------------------------------------------------
Six months ended
April 30, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 53,461 $ 752,373
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,453 20,079
- ----------------------------------------------------
54,914 772,452
Shares
repurchased (12,422) (174,282)
- ----------------------------------------------------
Net increase 42,492 $ 598,170
- ----------------------------------------------------
For the period March 17, 1995
(commencement of operations)
to October 31, 1995
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 41,248 $ 554,013
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 996 13,312
- ----------------------------------------------------
42,244 567,325
Shares
repurchased (4,802) (64,919)
- ----------------------------------------------------
Net increase 37,442 $ 502,406
- ----------------------------------------------------
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
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
Gary N. Coburn
Vice President
D. William Kohli
Vice President and Fund Manager
Jonathan H. Francis
Vice President and Fund Manager
Mark J. Siegel
Vice President and Fund Manager
Jennifer E. Leichter
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
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.
PUTNAM INVESTMENTS
The Putnam Funds
One Post office Square
Boston Massachucetts 02109
25117-041/220/906 6/96
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
