Putnam
Global
Governmental
Income Trust
SEMIANNUAL REPORT
April 30, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* Returns for Putnam Global Governmental Income Trust's class A shares
at net asset value over the six-month and one-year periods ended April 30,
1997 outpaced returns of the Salomon Brothers World Government Bond Index,
its benchmark. The index returned - 4.50% and 0.75%, respectively, over
the six-month and one-year periods, respectively, while the fund returned
- 1.04% and 4.94% at net asset value over the same periods. Results at
public offering price were - 5.73% and - 0.02%, respectively. Complete
performance information, including results for class B and class M shares,
and over longer periods, begins on page 9.
* "[U]ncertainties about European Monetary Union (EMU) have helped
both the dollar and U.S. bonds in recent months, according to analysts,
and that could continue through the EMU transition."
-- The Wall Street Journal, April 28, 1997
CONTENTS
4 Report from Putnam Management
9 Fund performance summary
12 Portfolio holdings
15 Financial statements
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
(copyright) Karsh, Ottawa
Dear Shareholder:
From the established fixed-income markets of the United States and Western
Europe to the emerging debt markets of Latin America and Southeast Asia,
Putnam Global Governmental Income Trust's managers continually seek out bonds
and other securities of governmental entities whose prospects meet or exceed
the fund's strict investment criteria.
Managing such a globally diversified portfolio demands a broad range of
expertise. I am pleased to announce the appointment of Gail S. Attridge to
your fund's management team. Gail brings to your fund substantial experience
in credit assessment of less-developed countries. Before joining Putnam in
1993, she was with Keystone Custodian Funds, County NatWest Securities Asia,
and Data Resources/McGraw Hill. She has 12 years of investment experience.
In the decade since their introduction, your fund's class A shares have
compiled a solid record of performance, though past performance can never be
taken as a guarantee of future results. In the following report, your fund's
management team discusses performance so far in fiscal 1997 and looks at
prospects for the remainder of the year.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
June 18, 1997
Report from the Fund Managers
D. William Kohli, lead manager
Gail S. Attridge
The market impact of Federal Reserve Board interest-rate activity and
continuing uncertainty surrounding European Monetary Union (EMU) resulted in
modestly negative performance for Putnam Global Governmental Income Trust over
the six months ended April 30, 1997. However, despite the difficulties of the
period, your fund's returns at net asset value surpassed the Salomon Brothers
World Government Bond Index, its principal market benchmark. (Please refer to
the tables on pages 9 and 10 for complete performance information.)
* GLOBAL MARKET HIGHLIGHTS
U.S. economic data were broadly and consistently strong throughout much of the
period. Consequently, after bond prices rose over the period's first three
months, the focus in the U.S. Treasury market then shifted to concern that
continuing robust economic growth would prompt an interest-rate increase by
the Federal Reserve Board. The Fed finally acted on March 25, raising the
target for short-term bank lending rates by a quarter of a percentage point to
5.50%, its first increase in more than two years. Bond prices fell and yields,
which move in the opposite direction, rose in response to this demonstration
of a more restrictive monetary policy. Even though the inflation outlook
elsewhere in the world remained largely benign and an environment of moderate
growth generally prevailed, the impact of the U.S. rate increase -- and the
anticipation building up to it -- was felt across most global bond markets.
In Europe, economic growth was slowed by unusually snowy weather early in
calendar 1997, temporarily masking evidence of recovery in the core markets
such as Germany and France. The slower pace of growth made it appear less
likely that Germany would be able to meet the budget deficit requirements for
participating in a single European currency, which in turn raised the
possibility of an overall delay in EMU implementation. Nevertheless, core
European markets posted modest gains in local-currency terms for the period.
Higher-yielding European markets such as Italy and Sweden, which had
outperformed during most of 1996 by convincing the markets that they might
qualify for EMU, were Europe's worst performers in the first quarter of 1997.
Fortunately, we had anticipated some turmoil in the approach to EMU and had
reduced the fund's exposure to these markets during the second half of the
period. This limited the impact of their underperformance on the portfolio as
a whole.
Japan avoided the influence of the Fed's interest-rate hike. Instead, the
Japanese bond market was preoccupied with the impact of Japan's increased
consumption tax, which went into effect April 1. Part of the Japanese
government's plan to reduce the country's bulging budget deficit by cutting
fiscal spending and raising taxes, the higher consumption tax coincides with
the announcement of major deregulation measures related to land reform and
with renewed pressure on Japan's troubled banking sector. This combination of
factors supported the Japanese government bond (JGB) market, which climbed by
more than 2% in yen terms during the final three months of the period. Your
fund's underweighted position in JGBs detracted from performance somewhat. We
expect to maintain the underweighted position in Japan, however, because the
continued recovery of the Japanese economy could put downward pressure on bond
prices going forward.
[GRAPHIC OMITTED: horizontal bar chart GEOGRAPHICAL BREAKDOWN (4/30/97)]
GEOGRAPHICAL BREAKDOWN (4/30/97)*
United States 53.3%
Germany 12.8%
France 11.2%
United Kingdom 7.7%
Sweden 3.7%
Italy 3.3%
Mexico 2.6%
Other 5.4%
Footnote reads:
* Based on total market value of assets as of 4/30/97. Country
allocations will vary over time.
* EMERGING MARKETS' STRONG PERFORMANCE CURTAILED LATE IN PERIOD
Emerging fixed-income markets outperformed most other global markets for
the period as a whole. However, the close synchronization of these markets
with the U.S. Treasury market took its toll late in the period; as the
Fed rate hike sparked a selloff in Treasuries, emerging-market debt
securities declined in turn.
Despite this late-period weakness, we believe the long-term investment
environment in the emerging markets remained positive. Economic fundamentals
(i.e., growth rates, unemployment, and inflation trends), particularly in
Latin America, have continued to strengthen.
The fund's significant weightings in Argentina and Brazil boosted its overall
return. We overweighted Mexico around the middle of the period, then scaled
back our exposure later on; this proved to be the correct strategy, since this
market began to lag in March. We also held a significant position in South
Africa, which also performed well. The fund's holdings in Russia, which has
begun to underperform after a year-long surge in calendar 1996, detracted from
returns. These positions, like all portfolio holdings, are subject to review
and adjustment in accordance with the fund's strategy and may vary in the
future; however, all those still held at the end of the period were viewed
favorably.
We began the period with the fund's emerging-market exposure at approximately
10% of the portfolio. However, given short-term market volatility and reduced
capital flows into emerging markets in the wake of the Fed's actions, we
trimmed the allocation to just under 8% of the portfolio in February and
maintained it near that level to the end of the period.
* DOLLAR EXPOSURE HELPS OVERALL RETURN
The strength of the U.S. dollar was the dominant theme in the currency markets
during the period. In January, the dollar rallied against the deutschemark to
levels not seen in almost three years, and against the yen to levels not seen
in four years. The speed of the dollar's ascent took most of the market by
surprise, especially since 1996 was a period of relatively low volatility in
the currency markets. In late March, the dollar's surge leveled off, and it
ended the period trading in a range near its highs. Given the dollar's
strength, strategies that emphasized dollar exposure helped the fund's overall
return, especially during the first four months of the period.
[GRAPHIC OMITTED: vertical bar chart TOP CURRENCY EXPOSURES (4/30/97)]
TOP CURRENCY EXPOSURES (4/30/97)*
Germany 83.5%
Japan 53.5%
United States 53.3%
France 17.1%
United Kingdom 12.0%
Switzerland 11.5%
Italy 11.0%
Sweden 10.7%
Footnote reads:
* Based on total net assets. Chart reflects all portfolio holdings, including
forward currency contracts. Currency exposures will vary over time.
* DEFENSIVE APPROACH PLANNED IN LIGHT OF INTEREST-RATE UNCERTAINTIES
We continue to anticipate a modest acceleration in global economic growth with
low inflation during 1997, with the possibility of stronger growth in the pace
of U.S. business. Although it is far from certain, concern about rising
wage-inflation pressure in the United States may cause the Fed to boost rates
further by year's end. Japan's moderate recovery may proceed without the
threat of inflation, and given the ongoing woes of the banking sector, no
changes in official monetary policy are expected until the end of the year.
Germany's recovery is taking hold, but the high level of unemployment makes
any change in short-term rates unlikely.
Against this backdrop, our current investment strategy emphasizes a more
defensive position with respect to interest rates. We believe bond yields may
continue to increase across all sectors, particularly given the possibility of
further rate increases by the Fed in coming months. We anticipate increasing
exposure to defensive investments such as mortgage-backed securities when
market opportunities arise. Not only do they offer more attractive yields than
Treasuries, the risk of prepayment, which reduces their appreciation potential
in declining-rate environments, lessens as interest rates rise.*
*Mortgage-backed securities are subject to prepayment risk, which is the
risk that an investor's principal will be returned in full at some point
prior to the security's stated maturity date. Such prepayment may cause
an investor's actual rate of return to differ from the expected rate of
return. Prepayment risk is greatest when interest rates are falling, since
mortgage holders rush to refinance, forcing retirement of the bonds that
back their existing mortgages.
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 4/30/97, there is no guarantee the fund will continue to hold
these securities in the future. Foreign investments are subject to certain
risks, such as those related to currency fluctuations, political developments,
and economic instability, that are not present with domestic investments.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its 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 4/30/97
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 -1.04% -5.73% -1.42% -6.17% -1.16% -4.41%
- ---------------------------------------------------------------------------
1 year 4.94 -0.02 4.19 -0.69 4.75 1.36
- ---------------------------------------------------------------------------
5 years 39.46 32.86 -- -- -- --
Annual average 6.88 5.85 -- -- -- --
- ---------------------------------------------------------------------------
Life of fund 155.26 143.21 8.11 5.43 22.88 18.89
Annual average 9.91 9.37 2.44 1.65 10.21 8.50
- ---------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 4/30/97
Salomon Bros.
World Govt. Consumer
Bond Index Price Index
- ------------------------------------------------------------------------
6 months -4.50% 1.20%
- ------------------------------------------------------------------------
1 year 0.75 2.50
- ------------------------------------------------------------------------
5 years 47.30 14.84
Annual average 8.06 2.81
- ------------------------------------------------------------------------
Life of class A 123.69 41.64
Annual average 8.46 3.57
- ------------------------------------------------------------------------
Life of class B 19.00 9.58
Annual average 5.51 2.86
- ------------------------------------------------------------------------
Life of class M 5.66 5.81
Annual average 2.68 2.70
- ------------------------------------------------------------------------
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 or,
for class A shares, distribution fees prior to implementation of the class
A distribution plan in 1990. Investment returns and principal value will
fluctuate so that an investor's shares, when sold, may be worth more or
less than their original cost. 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%.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 4/30/97
Class A Class B Class M
- --------------------------------------------------------------------------
Distributions (number) 2 2 2
- --------------------------------------------------------------------------
Income $0.565 $0.512 $0.549
- --------------------------------------------------------------------------
Capital gains -- -- --
- --------------------------------------------------------------------------
Total $0.565 $0.512 $0.549
- --------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- --------------------------------------------------------------------------
10/31/96 $14.49 $15.21 $14.45 $14.44 $14.93
- --------------------------------------------------------------------------
4/30/97 13.78 14.47 13.74 13.73 14.19
- --------------------------------------------------------------------------
Current return
(end of period)
- --------------------------------------------------------------------------
Current dividend1 6.53% 6.22% 5.79% 6.32% 6.12%
- --------------------------------------------------------------------------
Current 30-day SEC yield2 6.58 6.27 5.82 6.53 6.31
- --------------------------------------------------------------------------
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.
TOTAL RETURN FOR PERIODS ENDED 3/31/97
(most recent calendar quarter)
Class A Class B Class M
NAV POP NAV CDSC NAV POP
- --------------------------------------------------------------------------
6 months 1.64% -3.21% 1.26% -3.62% 1.60% -1.73%
- --------------------------------------------------------------------------
1 year 7.54 2.44 6.69 1.69 7.34 3.88
- --------------------------------------------------------------------------
5 years 40.37 33.69 -- -- -- --
Annual average 7.02 5.98 -- -- -- --
- --------------------------------------------------------------------------
Life of fund 156.93 144.79 8.90 6.20 23.77 19.76
Annual average 10.08 9.54 2.74 1.92 11.02 9.24
- --------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns and
principal value will fluctuate so that an investor's shares, when sold,
may be worth more or less than their original cost.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales 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 into 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.
Portfolio of investments owned
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
FOREIGN GOVERNMENT BONDS AND NOTES (46.6%) *
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUD 5,050,000 Australia (Government of) bonds Ser. 206, 10s, 2006 $ 4,471,087
DKK 30,245,000 Denmark (Government of) bonds 8s, 2006 5,038,537
FRF 61,870,000 France (Government of) Treasury notes 7s, 2000 11,528,967
FRF 78,595,000 France (Government of) notes 5 1/2s, 2001 13,957,760
FRF 127,750,000 France (Government of) Treasury bill 4 1/2s, 1998 22,194,042
DEM 26,395,000 Germany (Federal Republic of) bonds
Ser. 118, 5 1/4s, 2001 15,752,741
DEM 50,000,000 Germany (Federal Republic of) Ser. 121, 4 3/4s, 2001 29,117,510
ITL 24,555,000,000 Italy (Government of) bonds 6 1/4s, 2002 13,943,331
ZAR 26,210,000 South Africa (Republic of) bonds Ser. 153,
13s, 2010 5,231,390
SEK 129,000,000 Sweden (Government of) bonds Ser. 1039,
5 1/2s, 2002 15,901,339
GBP 11,045,000 United Kingdom Treasury bonds 7 1/2s, 2006 18,000,114
GBP 9,100,000 United Kingdom Treasury bonds 6s, 1999 14,521,141
------------
Total Foreign Government Bonds and Notes
(cost $177,026,768) $169,657,959
<CAPTION>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (33.8%) *
PRINCIPAL AMOUNT VALUE
Agency Obligations (15.0%)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 3,350,000 Federal National Mortgage Association 6 7/8s, June 7, 2002 $ 5,352,468
Government National Mortgage Association
15,640,000 8s, TBA, May 16, 2027 15,850,045
33,635,000 7 1/2s, TBA, May 16, 2027 33,340,694
------------
54,543,207
U.S. Treasury Obligations (18.9%)
- ------------------------------------------------------------------------------------------------------------
7,000,000 U.S. Treasury Notes 6 5/8s, April 30, 2022 7,016,380
45,420,000 U.S. Treasury Notes 6 5/8s, March 31, 2027 45,504,935
9,385,000 U.S. Treasury Bonds 6 5/8s, February 15, 2027 9,005,189
7,380,000 U.S. Treasury Notes 6 1/4s, February 15, 2007 7,140,150
------------
68,666,654
------------
Total U.S. Government and Agency Obligations
(cost $122,202,777) $123,209,861
BRADY BONDS (4.1%) * [DIAMOND]
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$7,962,730 Argentina (Republic of) deb. 6.75s, 2005 $ 7,305,805
8,400,000 United Mexican States Ser. D, 6.35156s, 2019 7,439,250
------------
Total Brady Bonds (cost $14,791,917) $ 14,745,055
UNITS (2.2%) * (cost $8,395,600)
NUMBER OF UNITS VALUE
- ------------------------------------------------------------------------------------------------------------
12,015,000 DBR Unity Fund bonds 8s, 2002 (Germany) $ 7,886,320
<CAPTION>
PURCHASED OPTIONS OUTSTANDING (0.6%) EXPIRATION DATE/
CONTRACT AMOUNT STRIKE PRICE VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DEM 33,500,000 German Government Bond July 97
Futures Contracts (Put) DEM 96.75 $ 19,373
ITL 22,200,000,000 Italian Government Bond May 97
Futures Contracts (Put) ITL 122 2,597
JPY 2,300,000,000 Japanese Government Bond May 97
Futures Contracts (Call) JPY 128 9,054
USD 17,100,000 U.S. Dollars in exchange for June 97
Swiss Francs (Call) CHF 1.4555 306,090
USD 49,500,000 U.S. Dollars in exchange for May 97
Deutschemarks (Call) DEM 1.692 1,168,200
USD 17,100,000 U.S. Dollars in exchange for June 97
Deutschemarks (Call) DEM 1.709 288,990
USD 17,100,000 U.S. Dollars in exchange for June 97
Japanese Yen (Call) JPY125.25 229,140
USD 27,600,000 U.S. Treasury Bond (Call) May 97
USD 97.78125 51,750
------------
Total Purchased Options Outstanding
(cost $1,638,924) $ 2,075,194
<CAPTION>
COMMON STOCKS (0.1%) * (cost $403,384)
NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
11,327 PSF Holdings LLC Class A + $ 300,166
<CAPTION>
SHORT-TERM INVESTMENTS (29.0%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 25,000,000 Federal Home Loan Mortgage Corp. for
an effective yield of 5.38%, May 22, 1997 $ 24,921,542
MXP 3,496,833 Mexican Cetes zero %, April 2, 1998 3,613,232
$ 76,981,000 Interest in $492,645,000 joint repurchase
agreement dated April 30, 1997, with
respect to various U.S. Treasury
obligations -- maturity value of
$76,992,611 for an effective yield of 5.43% 76,992,611
------------
Total Short-Term Investments (cost $105,546,573) $105,527,385
- ------------------------------------------------------------------------------------------------------------
Total Investments (cost $430,005,943) *** $423,401,940
- ------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $364,055,413.
*** The aggregate identified cost on a tax basis is $432,703,745,
resulting in gross unrealized appreciation and depreciation of $157,130
and $9,458,935, respectively, or net unrealized depreciation of
$9,301,805.
+ Non-income-producing security.
[DIAMOND] Brady Bonds are foreign bonds collateralized by the U.S. Government. The rates
are floating and are the current rates at April 30, 1997.
The rate shown on Floating Rate Bonds and Floating Rate Notes are the current interest rates
shown at April 30, 1997, which are subject to change based on the terms of the security.
TBA after the name of a security represents to be announced securities (Note 1).
Diversification by Country
Distribution of investments by country of issue at April 30, 1997 (as percentage of Market Value):
Argentina 1.7%
Australia 1.1
Denmark 1.2
France 11.2
Germany 12.8
Italy 3.3
Mexico 2.6
South Africa 1.2
Sweden 3.7
United Kingdom 7.7
United States 53.3
Other 0.2
-----
Total 100.0%
=====
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Forward Currency Contracts to Buy at April 30, 1997 (Unaudited)
(aggregate face value $354,639,858)
Aggregate Face Delivery Unrealized
Market Value Value Date Depreciation
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Australian Dollars $ 8,395,554 $ 8,433,387 6/18/97 $ (37,833)
Canadian Dollars 17,327,901 17,821,145 6/18/97 (493,244)
Danish Krone 1,087,408 1,118,167 6/18/97 (30,759)
Deutschemarks 159,797,136 162,938,115 6/18/97 (3,140,979)
Italian Lira 15,791,127 15,875,324 6/18/97 (84,197)
Japanese Yen 101,858,115 106,477,284 6/18/97 (4,619,169)
Spanish Peseta 10,218,481 10,469,425 6/18/97 (250,944)
Swedish Krona 7,649,314 7,884,555 6/18/97 (235,241)
Swiss Francs 20,843,477 21,238,241 6/18/97 (394,764)
Thai Baht 2,382,672 2,384,215 6/18/97 (1,543)
- -----------------------------------------------------------------------------------------
(9,288,673)
- -----------------------------------------------------------------------------------------
Forward Currency Contracts to Sell at April 30, 1997 (Unaudited)
(aggregate face value $293,608,922)
Market Aggregate Face Delivery Unrealized
Value Value Date Appreciation
(Depreciation)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
British Pounds $15,636,121 $15,408,308 6/18/97 $ (227,813)
Canadian Dollars 6,667,160 6,867,086 6/18/97 199,926
Deutschemarks 97,720,539 99,763,215 6/18/97 2,042,676
French Francs 21,425,769 22,124,976 6/18/97 699,207
Italian Lira 12,158,806 12,329,814 6/18/97 171,008
Japanese Yen 92,828,885 97,889,649 6/18/97 5,060,764
Swedish Krona 17,723,069 18,127,428 6/18/97 404,359
Swiss Francs 20,848,161 21,098,446 6/18/97 250,285
- -----------------------------------------------------------------------------------------------
$8,600,412
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
April 30, 1997 (Unaudited)
<S> <C>
Assets
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $430,005,943) (Note 1) $ 423,401,940
- ---------------------------------------------------------------------------------------------------
Cash 82,305
- ---------------------------------------------------------------------------------------------------
Interest and other receivables 4,486,474
- ---------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 430,228
- ---------------------------------------------------------------------------------------------------
Receivable for open forward currency contracts 8,854,877
- ---------------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts 1,799,542
- ---------------------------------------------------------------------------------------------------
Receivable for securities sold 6,984,426
- ---------------------------------------------------------------------------------------------------
Total assets 446,039,792
Liabilities
- ---------------------------------------------------------------------------------------------------
Distributions payable to shareholders 12,347
- ---------------------------------------------------------------------------------------------------
Payable for securities purchased 66,396,629
- ---------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 730,741
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 725,206
- ---------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 48,737
- ---------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 11,171
- ---------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 696
- ---------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 100,520
- ---------------------------------------------------------------------------------------------------
Payable for open forward currency contracts 9,543,138
- ---------------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 4,346,763
- ---------------------------------------------------------------------------------------------------
Other accrued expenses 68,431
- ---------------------------------------------------------------------------------------------------
Total liabilities 81,984,379
- ---------------------------------------------------------------------------------------------------
Net assets $ 364,055,413
Represented by
- ---------------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) 385,251,753
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 1,120,200
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (Note 1) (14,918,349)
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
assets and liabilities in foreign currencies (7,398,191)
- ---------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $ 364,055,413
Computation of net asset value and offering price
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($320,375,186 divided by 23,246,438 shares) $13.78
- ---------------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $13.78)* $14.47
- ---------------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($41,400,898 divided by 3,012,610 shares)** $13.74
- ---------------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($2,279,329 divided by 166,011 shares) $13.73
- ---------------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $13.73)* $14.19
- ---------------------------------------------------------------------------------------------------
* On single retail sales of $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, 1997 (Unaudited)
<S> <C>
Investment income:
- --------------------------------------------------------------------------------------------------
Interest (net of foreign tax of $17,854) $ 11,085,290
- --------------------------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,505,474
- --------------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 387,469
- --------------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 18,123
- --------------------------------------------------------------------------------------------------
Administrative services (Note 2) 4,025
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 415,290
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 207,719
- --------------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 5,315
- --------------------------------------------------------------------------------------------------
Report to shareholders 17,208
- --------------------------------------------------------------------------------------------------
Registration fees 100
- --------------------------------------------------------------------------------------------------
Auditing 25,951
- --------------------------------------------------------------------------------------------------
Legal 3,978
- --------------------------------------------------------------------------------------------------
Other 12,690
- --------------------------------------------------------------------------------------------------
Total expenses 2,603,342
- --------------------------------------------------------------------------------------------------
Expense reduction (Note 2) (157,453)
- --------------------------------------------------------------------------------------------------
Net expenses 2,445,889
- --------------------------------------------------------------------------------------------------
Net investment income 8,639,401
- --------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 1,839,980
- --------------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 3,602,170
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the period (970,010)
- --------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the period (17,095,645)
- --------------------------------------------------------------------------------------------------
Net loss on investments (12,623,505)
- --------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $ (3,984,104)
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
April 30 October 31
1997* 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in net assets
- ----------------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income $ 8,639,401 $ 22,795,829
- ----------------------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 5,442,150 18,644,680
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
and assets and liabilities in foreign currency (18,065,655) 4,075,700
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (3,984,104) 45,516,209
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income
Class A (13,166,399) (19,095,421)
- ----------------------------------------------------------------------------------------------------------------------
Class B (1,491,298) (1,769,324)
- ----------------------------------------------------------------------------------------------------------------------
Class M (80,976) (70,261)
- ----------------------------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (3,345,379) (36,352,691)
- ----------------------------------------------------------------------------------------------------------------------
Total decrease in net assets (22,068,156) (11,771,488)
Net assets
- ----------------------------------------------------------------------------------------------------------------------
Beginning of period 386,123,569 397,895,057
- ----------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment of
$1,120,200 and $7,219,472, respectively) 364,055,413 386,123,569
- ----------------------------------------------------------------------------------------------------------------------
* Unaudited.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share April 30
operating performance (Unaudited) Year ended October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $14.49 $13.62 $13.33 $15.25 $15.98 $15.70
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .33 (c) .83 (c) 1.00 .97 1.07 1.07
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.47) .82 .19 (1.84) .44 .56
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.14) 1.65 1.19 (.87) 1.51 1.63
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.57) (.78) (.62) (.10) (.98) (1.17)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- -- (.50) --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- (.28) (.80) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- (.15) (.76) (.18)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.57) (.78) (.90) (1.05) (2.24) (1.35)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.78 $14.49 $13.62 $13.33 $15.25 $15.98
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (1.04) * 12.46 9.38 (5.93) 10.44 10.93
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $320,375 $343,125 $366,476 $461,506 $554,963 $437,006
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .65 * 1.32 1.34 1.27 1.27 1.46
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.32 * 5.93 7.19 6.57 6.12 6.77
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 207.93 * 429.38 300.66 359.88 444.28 406.70
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended October 31, 1995, and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios exclude these
amounts (Note 2).
(c) Per share net investment income has been deternimed on the basis of the weighted average
number of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share April 30 Feb. 1, 1994+
operating performance (Unaudited) Year ended October 31 to October 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $14.45 $13.60 $13.31 $15.38
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .28 (c) .72 (c) .77 .64
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.48) .81 .33 (2.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.20) 1.53 1.10 (1.46)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.51) (.68) (.55) (.14)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- (.26) (.47)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.51) (.68) (.81) (.61)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.74 $14.45 $13.60 $13.31
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (1.42) * 11.57 8.63 (9.52) *
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $41,401 $41,106 $30,910 $22,387
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.02 * 2.07 2.09 1.49 *
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.94 * 5.13 6.59 4.76 *
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 207.93 * 429.38 300.66 359.88
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended October 31, 1995, and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios exclude these
amounts (Note 2).
(c) Per share net investment income has been deternimed on the basis of the weighted average
number of shares outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share April 30 Year ended Mar. 17, 1995+
operating performance (Unaudited) October 31 to Oct. 31
- ------------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $14.44 $13.59 $12.81
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .31 (c) .77 (c) .49
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.47) .83 .88
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.16) 1.60 1.37
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.55) (.75) (.40)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- -- (.19)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.55) (.75) (.59)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $13.73 $14.44 $13.59
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment return
at net asset value (%)(a) (1.16) * 12.14 10.87 *
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,279 $1,892 $509
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .77 * 1.58 .96 *
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.19 * 5.52 4.78 *
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 207.93 * 429.38 300.66
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended October 31, 1995, and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios exclude these
amounts (Note 2).
(c) Per share net investment income has been deternimed on the basis of the weighted average
number of shares outstanding during the period.
</TABLE>
Notes to financial statements
April 30, 1997 (Unaudited)
Note 1
Significant accounting policies
Putnam Global Governmental Income Trust (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 debt securities of foreign or U.S. governmental entities,
including supranational issuers. 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. Securities
quoted in foreign currencies are translated into U.S. dollars at the current
exchange rate. 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 and certain other accounts managed by Putnam Investment
Management, Inc. ("Putnam Management"), the fund's manager, a wholly-owned
subsidiary of Putnam Investments, Inc.. 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. 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 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 appreciation and depreciation of
assets and liabilities in foreign currencies arise from changes in the value
of open forward currency contracts and assets and liabilities other than
investments at the period end, resulting from changes in the exchange rate.
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) Federal taxes It is the policy of the fund to distribute all of its taxable
income within the prescribed time and otherwise comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986, as amended. Therefore, no provision has been made for federal taxes
on income, capital gains or unrealized appreciation on securities held nor for
excise tax on income and capital gains.
At October 31, 1996, the fund had a capital loss carryover of approximately
$17,662,000 available to offset future capital gains, if any. The amount of
the carryover and the expiration dates are:
Loss Carryover Expiration
-------------- ----------------
11,156,000 October 31, 2002
6,506,000 October 31, 2003
H) TBA purchase commitments The fund may enter into "TBA" (to be announced)
purchase commitments to purchase securities for a fixed unit price at a future
date beyond customary settlement time. Although the unit price hasa been
established, the principal value has not been finalized. However, the amount
of the commitments will not fluctuate more than 1.0% from the principal
amount. The fund holds, and maintains until settlement date, cash or
high-grade debt obligations in an amount sufficient to meet the purchase
price, or the fund may enter into offsetting contracts for the forward sale of
other securities it owns. Income on the securities will not be earned until
settlement date. TBA purchase commitments may be considered securities in
themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in the value of the fund's other assets. Unsettled TBA
purchase commitments are valued at ther current market value of the underlying
securities, according to the procedures described under "Security valuation"
above.
Although the fund will generally enter into TBA purchase commitments with the
intention of acquiring securities for their portfolio or for delivery pursuant
to options contracts it has entered into, the fund may dispose of a commitment
prior to settlement if Putnam Manage-ment deems it appropriate to do so.
I) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date. Capital
gain distributions, if any, are recorded on the ex-dividend date and paid at
least annually. The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Reclassifications are made to the
fund's capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund. 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, 0.60% of the next $5 billion, 0.575% of the next $5 billion, 0.555%
of the next $5 billion, 0.54% of the next $5 billion and 0.53% of any excess
thereafter. Prior to February 20, 1997, any amount over $1.5 billion was based
on a rate of 0.60%.
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.
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, 1997, fund expenses were reduced by
$157,453 under expense offset arrangements with PFTC. Investor servicing and
custodian fees reported in the Statement of operations exclude these credits.
The fund could have invested a portion of the assets utilized in connection
with the expense offset arrangements in an income producing asset if it had
not entered into such arrangements.
Trustees of the fund receive an annual Trustees fee of $1,030 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of the
Trustees receive additional fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "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 certain Putnam funds until distribution in accordance with the Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan
covering all Trustees of the Fund who have served as Trustee for at least five
years. Benefits under the plan are equal to 50% of the Trustee's average total
retainer and meeting fees for the three years preceding retirement. Pension
expense for the fund is included in Trustee fees in the Statement of
operations. Accrued pension liability is included in Payable for compensation
of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B 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, 1997, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $22,403 and $577 from the sale of
class A and class M shares, respectively and $37,061 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, 1997, Putnam Mutual Funds Corp., acting as underwriter
received $580 on class A redemptions.
Note 3
Purchase and sales of securities
During the six months ended April 30, 1997, purchases and sales of investment
securities other than U.S. government obligations and short-term investments
aggregated $403,667,272 and $409,211,873, respectively. Purchases and sales of
U.S. government obligations aggregated $301,093,991 and $285,675,560,
respectively. In determining the net gain or loss on securities sold, the cost
of securities has been determined on the identified cost basis.
Note 4
Capital shares
At April 30, 1997, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
April 30, 1997
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 2,653,702 $37,909,166
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 725,442 10,207,870
- ------------------------------------------------------------
3,379,144 48,117,036
Shares
repurchased (3,804,959) (54,362,184)
- ------------------------------------------------------------
Net decrease (425,815) $(6,245,148)
- ------------------------------------------------------------
Year ended
October 31, 1996
- ------------------------------------------------------------
Class A Shares Amount
- ------------------------------------------------------------
Shares sold 4,861,140 $68,523,418
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,039,954 14,416,219
- ------------------------------------------------------------
5,901,094 82,939,637
Shares
repurchased (9,134,287) (128,468,462)
- ------------------------------------------------------------
Net decrease (3,233,193) $(45,528,825)
- ------------------------------------------------------------
Six months ended
April 30, 1997
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 874,161 $12,399,686
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 84,042 1,180,472
- ------------------------------------------------------------
958,203 13,580,158
Shares
repurchased (789,601) (11,177,058)
- ------------------------------------------------------------
Net increase 168,602 $2,403,100
- ------------------------------------------------------------
Year ended
October 31, 1996
- ------------------------------------------------------------
Class B Shares Amount
- ------------------------------------------------------------
Shares sold 2,002,326 $28,059,178
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 103,798 1,437,147
- ------------------------------------------------------------
2,106,124 29,496,325
Shares
repurchased (1,535,743) (21,630,414)
- ------------------------------------------------------------
Net increase 570,381 $7,865,911
- ------------------------------------------------------------
Six months ended
April 30, 1997
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 64,252 $908,082
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 5,176 72,547
- ------------------------------------------------------------
69,428 980,629
Shares
repurchased (34,419) (483,960)
- ------------------------------------------------------------
Net increase 35,009 $496,669
- ------------------------------------------------------------
Year ended
October 31, 1996
- ------------------------------------------------------------
Class M Shares Amount
- ------------------------------------------------------------
Shares sold 133,470 $1,874,460
- ------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,710 65,154
- ------------------------------------------------------------
138,180 1,939,614
Shares
repurchased (44,620) (629,391)
- ------------------------------------------------------------
Net increase 93,560 $1,310,223
- ------------------------------------------------------------
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund *
Health Sciences Trust
International Growth Fund +
International New Opportunities Fund
Investors Fund
New Opportunities Fund
OTC & Emerging Growth Fund [DBL. DAGGER]
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
International Growth and Income Fund
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 [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
LIFESTAGESM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
MOST CONSERVATIVE INVESTMENTS **
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 [2 DBL. DAGGERS]
* Formerly Natural Resources Fund
+ Formerly Overseas Growth Fund
[DBL. DAGGER] Formerly OTC Emerging Growth Fund
[SECTION MARK] Not available in all states.
** Relative to above.
++ An investment in a money market fund is neither insured nor
guaranteed by the U.S. government. These funds are managed to maintain a
price of $1.00 per share, although there is no assurance that this price
will be maintained in the future.
[2 DBL. DAGGERS] 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.
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
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
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
William J. Curtin
Vice President
Alan J. Bankart
Vice President
D. William Kohli
Vice President and Fund Manager
Gail S. Attridge
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 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. You
can also learn more at Putnam Investments' website: http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, are not insured by the Federal Deposit
Insurance Corporation (FDIC), the Federal Reserve Board or any other agency,
and involve risk, including the possible loss of principal amount invested.
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Bulk Rate
U.S. Postage
PAID
Putnam
Investments
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33881-041/220/906 6/97
