Putnam
Global
Governmental
Income Trust
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
4-30-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
The value of a globally oriented portfolio of fixed-income securities was
clearly demonstrated during the first half of Putnam Global Governmental
Income Trust's fiscal year. During the six months ended April 30, 1999,
the Japanese and emerging Asian economies' markets moved up smartly,
European markets were uninspired, and the U.S. market endured the letdown
of a migration from quality.
While the fund's defensive positioning minimized the negative effects of
the European and U.S. markets, it also moderated the gains made in the
Asian markets. On balance, the fund was able to deliver positive results
during this challenging period.
In the report that begins on the facing page, the management team
discusses the fund's performance during this challenging period and offers
its views on prospects for the fiscal year's second half.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
June 16, 1999
Report from the Fund Managers
D. William Kohli
Jeffrey A. Kaufman
Last fall, as Putnam Global Governmental Income Trust began its 1999
fiscal year, a steady diet of good inflation news, the flight to quality,
and accommodative monetary policy were pushing bond prices into the
overvalued territory. More recently a massive injection of liquidity,
coupled with huge budget deficits, has begun to create economic warming in
Asia outside Japan. This development, in turn, has begun to boost U.S.
exports, arrest the slide in commodity prices, and cause leadership
changes in the stock market. Now global economic stabilization, the strong
U.S. economy, and rising commodity prices, including oil, have raised the
spectre of tighter interest rates, according to Federal Reserve Board
Chairman Alan Greenspan.
Given this environment, it is not surprising that global bond markets
recorded modest overall gains during the first half of your fund's fiscal
year. Performance varied considerably by region. Japan advanced strongly,
European markets were lackluster, and the U.S. bond market lagged. In this
challenging environment, Putnam Global Governmental Income Trust's
defensive structure helped provide value to shareholders.
Total return for 6 months ended 4/30/99
Class A Class B Class M
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------
2.44% -2.43% 2.00% -2.95% 2.25% -1.09%
- ------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods begins on page 6.
[GRAPHIC OMITTED: horizontal bar chart SAMPLE BOND MARKET RETURNS]
SAMPLE BOND MARKET RETURNS
(6 months through 4/30/99 in U.S. dollars)
United Kingdom 0.6%
France -6.6%
Germany -6.8%
United States -1.3%
Argentina 10.4%
Brazil 20.8%
Ecuador 2.4%
Venezuela 32.7%
Russia 29.0%
Footnote reads:
Sources: Salomon Smith Barney and J.P. Morgan Securities, Inc. The fund's
investments in these markets produced returns that may not match those
shown. Past performance is not indicative of future results.
* TREASURIES TUMBLE IN U.S. BOND MARKET
U.S. Treasuries suffered during the fund's semiannual period, falling from
favor as investors shifted away from flight-to-quality positions
established in the summer and fall months of 1998 and driven further down
as a steady drumbeat of reports indicated higher than expected economic
growth. These reports, together with the expected lag effect of late
1998's three Fed interest-rate cuts, make any further interest-rate
reductions unlikely in the near term. These persistent signals of economic
vigor raised concerns about possible interest rate increases by the Fed
with a resulting negative effect on bond prices.
Your fund's holdings in the U.S. spread sectors (mortgage-backed
securities, high-yield bonds, and investment-grade corporates) contributed
to performance, as investors became more accepting of credit risk in
exchange for higher yields. Within the U.S. corporate sector, our emphasis
on the finance and telecommunications industries and the favorable climate
for mergers and acquisitions that has characterized them for some time
contributed to relative returns. In the U.S. mortgage-backed sector, our
emphasis on securities with lower prepayment sensitivity proved rewarding.
The fund's exposure to U.S. Treasuries, however, detracted from returns.
[GRAPHIC OMITTED: horizontal bar chart GEOGRAPHIC BREAKDOWN (4/30/99)]
GEOGRAPHIC BREAKDOWN (4/30/99)*
United States 39.7%
United Kingdom 13.2%
Sweden 9.1%
Germany 7.4%
Netherlands 6.5%
Canada 4.9%
New Zealand 3.9%
Italy 3.2%
Other 15.9%
Footnote reads:
* Based on net assets. Country allocations will vary over time.
* EUROPE BOND MARKET COOLS
After beginning the fiscal period with robust gains, European markets
later cooled as the European Central Bank staunchly resisted political
pressures to ease monetary policy. In addition, the same unwinding of
flight-to-quality positions that weakened U.S. Treasuries affected core
markets. As the period progressed, we turned our attention to some of the
peripheral, non-euro-bloc markets of Europe, adding to attractively
valued, higher-yielding issues from Denmark and Sweden.
"[Fund] manager Bill Kohli's strategy is straightforward. He relies on a
team of macroeconomic forecasters to develop a global outlook and then
positions the portfolio where he sees the most attractive interest rates
and potential for currency appreciation."
-- Morningstar Mutual Funds, February 19, 1999
The euro's decline this year against the U.S. dollar reflects the relative
strength of the U.S. economy versus Europe's as well as anticipated
European interest-rate reductions. We remain bearish on the British pound
based on economic fundamentals and expectations of future interest-rate
cuts by the Bank of England.
We have moderated our inclination toward European markets, though we still
believe the region's economic slowdown allows room for further
interest-rate cuts. Your fund's exposure to the U.K. market during the
period proved somewhat of a negative; however, our shorter-duration stance
in this market limited the damage.
The Euro: New Kid on the Block Beats Out the Dollar
In the first three months of 1999, the euro has replaced the dollar as the
favorite currency of the world's bond issuers. Euro-denominated bond issues
in the first quarter of 1999 were worth $182 billion, 44.6% of the global
total, just ahead of dollar-denominated bonds, which were worth $181 billion,
according to The Economist. In the first quarter of 1998, dollar-denominated
bonds accounted for 46% of the world total, compared with only 36.2%
denominated in the euro's predecessor currencies. Sterling's share of global
bond issues dropped from 9.5% in the first quarter of 1998 to 5.9% this year.
* JAPANESE BONDS REBOUND
Japan's bond market started the fiscal year in a decline but rebounded
handsomely toward the end of the reporting period. Concerns about an
impending oversupply of Japanese government bonds receded, as traditional
public-sector buyers reversed earlier decisions to cut back purchases
dramatically. Also weaker than expected economic data prompted further
interest-rate cuts by the Bank of Japan.
The portfolio's underweight position in Japan hindered your fund's
performance, as Japanese government bonds rallied during the period. We
are still bearish on Japan given that market's low-yield levels. The
threat of oversupply, however, seems to have receded, as demand from the
public sector has been renewed and the country's economy remains mired in
recession.
* EMERGING MARKETS BOLSTER PERFORMANCE
Emerging markets rallied broadly during the period. After the devaluation
of its currency in January, Brazil staged a remarkable turnaround. Other
markets such as South Korea and Thailand also benefited, as investors
began accepting risk back into their portfolios. Your fund's exposure to
the resurgent emerging markets bolstered performance during the semiannual
period.
Looking ahead, sluggish global growth, weak commodity prices, and some
country-specific policy dilemmas are near-term concerns in the emerging
markets. The policy orientation in most of these countries, however,
continues to favor market-oriented reforms and external debt service
remains a high priority. We are focusing on those markets that offer
attractive opportunities. We plan to maintain small exposures to
attractive emerging markets including Mexico and Brazil.
* WELL-POSITIONED FOR POSSIBLE BUYING OPPORTUNITIES
In the United States, inflation has been in hibernation for some time but
has lately shown some signs of waking. Import and commodity prices have
bottomed. Corporate profits are looking healthy again partly because of
better economic times abroad. This would be a good excuse for wages to
rise faster, given current labor shortages.
Looking outside the United States, we believe that in the global bond
markets, as in football, a great offense is a good defense. A meaningful
economic slowdown will not come until interest rates move higher. Once
rising rates chill the economic temperature, there will be better buying
opportunities and we will continue to monitor world bond markets to take
full advantage of them as they arise.
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 4/30/99, there is no guarantee the fund will
continue to hold these securities in the future. International investing
involves certain risks, such as currency fluctuations, economic
instability, and political developments. Any government backing only
guarantees that the fund's government-backed holdings will make timely
payments of interest and principal. Mortgage-backed securities may be
subject to prepayment risk.
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 and
U.S. government entities, including supranational issuers. Preservation
of capital and long-term total return are secondary objectives.
TOTAL RETURN FOR PERIODS ENDED 4/30/99
Class A Class B Class M
(inception dates) (6/1/87) (2/1/94) (3/17/95)
NAV POP NAV CDSC NAV POP
- --------------------------------------------------------------------------
6 months 2.44% -2.43% 2.00% -2.95% 2.25% -1.09%
- --------------------------------------------------------------------------
1 year 2.90 -2.00 2.07 -2.74 2.79 -0.54
- --------------------------------------------------------------------------
5 years 26.08 20.09 21.46 19.66 24.35 20.34
Annual average 4.74 3.73 3.96 3.65 4.45 3.77
- --------------------------------------------------------------------------
10 years 104.57 94.79 89.35 89.35 98.85 92.38
Annual average 7.42 6.89 6.59 6.59 7.12 6.76
- --------------------------------------------------------------------------
Life of fund 170.10 157.34 145.19 145.19 160.06 151.56
Annual average 8.70 8.26 7.82 7.82 8.36 8.05
- --------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 4/30/99
Salomon Bros.
World Govt. Consumer
Bond Index price index
- --------------------------------------------------------------------------
6 months -3.35% 1.47%
- --------------------------------------------------------------------------
1 year 8.22 2.28
- --------------------------------------------------------------------------
5 years 40.04 12.75
Annual average 6.97 2.43
- --------------------------------------------------------------------------
10 years 130.16 35.01
Annual average 8.69 3.05
- --------------------------------------------------------------------------
Life of fund 161.46 46.95
Annual average 8.40 3.28
- --------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 4.75% and
3.25% respectively. Class B share returns for the 1-, 5-, and 10-year
(where available) and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their inception
are derived from the historical performance of class A shares, adjusted to
reflect both the initial sales charge or CDSC, if any, currently
applicable to each class and in the case of class B and class M shares,
the higher operating expenses applicable to such shares. All returns
assume reinvestment of distributions at NAV. Investment return and
principal value will fluctuate so that an investor's shares when redeemed
may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 4/30/99
Class A Class B Class M
- ------------------------------------------------------------------------------
Distributions (number) 6 6 6
- ------------------------------------------------------------------------------
Income $0.420 $0.374 $0.404
- ------------------------------------------------------------------------------
Capital gains -- -- --
- ------------------------------------------------------------------------------
Total $0.420 $0.374 $0.404
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------------
10/31/98 $12.82 $13.46 $12.79 $12.77 $13.20
- ------------------------------------------------------------------------------
4/30/99 12.71 13.34 12.67 12.65 13.07
- ------------------------------------------------------------------------------
Current return (end of period)
- ------------------------------------------------------------------------------
Current dividend rate1 6.14% 5.85% 5.40% 5.88% 5.69%
- ------------------------------------------------------------------------------
Current 30-day SEC yield2 4.03 3.84 3.28 3.78 3.66
- ------------------------------------------------------------------------------
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 3/31/99 (most recent calendar quarter)
Class A Class B Class M
(inception dates) (6/1/87) (2/1/94) (3/17/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 5.29% 0.30% 4.84% -0.16% 5.09% 1.65%
- ------------------------------------------------------------------------------
1 year 3.87 -1.06 3.03 -1.83 3.69 0.30
- ------------------------------------------------------------------------------
5 years 24.14 18.26 19.52 17.74 22.39 18.43
Annual average 4.42 3.41 3.63 3.32 4.12 3.44
- ------------------------------------------------------------------------------
10 years 104.52 94.80 89.22 89.22 98.75 92.30
Annual average 7.42 6.90 6.59 6.59 7.11 6.76
- ------------------------------------------------------------------------------
Life of fund 168.30 155.63 143.71 143.71 158.39 149.94
Annual average 8.70 8.26 7.82 7.82 8.36 8.05
- ------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance summary for method of calculation.
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 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 4.75% maximum 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 or C shares and assumes redemption at the end of
the period. Your funds' class B CDSC declines from a 5% maximum during the
first year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies.
Comparative benchmarks
Salomon Brothers World Government Bond Index is an index that tracks the
performance of the 14 government bond markets of Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Italy, Japan, Netherlands,
Spain, Sweden, United Kingdom and the United States. Country eligibility
is determined by market capitalization and investability criteria. 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.
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds. Please
call your financial advisor or Putnam at 1-800-225-1581 to obtain a
prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you invest
or send money.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund [DBL. DAGGER]
Capital Opportunities Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Opportunities Fund [DBL. DAGGER]
OTC & Emerging Growth Fund
Research Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Quality Bond Fund + [DBL. DAGGER]
High Yield Advantage Fund [DBL. DAGGER]
High Yield Total Return Fund
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government
Income Fund
Money Market Fund **
Preferred Income Fund
Strategic Income Fund *
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK] **
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds -- three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Putnam Diversified Income Trust II
+ Formerly Putnam Federal Income Trust
[DBL. DAGGER] Closed to new investors. Some exceptions may apply.
Contact Putnam for details.
[SECTION MARK] Not available in all states.
** An investment in a money market fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
A guide to the financial statements
These sections of the report constitute the fund's financial
statements.
The fund's portfolio lists all the fund's investments and their values as of
the last day of the reporting period. Holdings are organized by asset type
and industry sector, country, or state to show areas of concentration and
diversification.
Statement of assets and liabilities shows how the fund's net assets and share
price is determined. All investment and non-investment assets are added
together. Any unpaid expenses and other liabilities are subtracted from this
total. The result is divided by the number of shares to determine the net
asset value per share, which is calculated separately for each class of
shares. (For funds with preferred shares, the amount subtracted from total
assets includes the net assets allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for the
reporting period. This is determined by adding up all the fund's earnings --
from dividends and interest income -- and subtracting its operating expenses.
This statement also lists any net gain or loss the fund realized on the sales
of its holdings and -- for holdings that remain in the portfolio -- any change
in unrealized gains or losses over the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of the
fund's shares. It lists distributions and their sources (net investment income
or realized capital gains) over the current reporting period and the most
recent fiscal year-end. The distributions listed here may not match the
amounts listed in the Statement of Operations because the distributions are
determined on a tax basis and may be paid in a different period from the one
in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also includes
the current reporting period. For open-ended funds, a separate table is
provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
April 30, 1999 (Unaudited)
FOREIGN GOVERNMENT BONDS AND NOTES (47.9%)(a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUD 6,925,000 Australia (Government of) bonds 8 3/4s, 2008 $ 5,636,782
CAD 16,975,000 Canada (Government of) bonds Ser. WB60,
7 1/4s, 2007 13,224,506
DKK 58,805,000 Denmark (Government of) bonds 4s, 2001 8,493,888
EUR 2,957,137 France (Government of) deb. 6s, 2025 3,630,799
EUR 16,765,261 Germany (Federal Republic of) bonds 7 1/8s, 2003 20,247,523
EUR 4,140,000 Germany (Federal Republic of) bonds Ser. 97,
6 1/2s, 2027 5,435,729
GRD 1,700,900,000 Hellenic Greece (Republic of) bonds 9.2s, 2002 5,840,843
EUR 6,507,346 Italy (Government of) bonds 10 1/2s, 2005 9,542,294
EUR 5,828,206 Italy (Government of) bonds 5 3/4s, 2002 6,690,372
EUR 14,613,991 Netherlands (Government of) bonds Ser. 1, 9s, 2000 16,444,960
EUR 6,847,543 Netherlands (Government of) bonds 7 1/2s, 2023 9,925,240
NZD 11,795,000 New Zealand (Government of) bonds 10s, 2002 7,455,178
NZD 2,755,000 New Zealand (Government of) bonds 8s, 2006 1,758,276
NZD 17,085,000 New Zealand (Government of) bonds 8s, 2004 10,602,968
USD 5,450,000 Ontario (Province of) 6 1/4s, 2008 2,972,441
EUR 2,602,382 Spain (Government of) bonds 6s, 2029 3,164,942
EUR 8,730,000 Spain (Government of) bonds 5.15s, 2009 9,910,593
SEK 30,700,000 Sweden (Government of) 10 1/4s, 2000 3,909,124
SEK 74,900,000 Sweden (Government of) bonds Ser. 1035,
6 3/4s, 2014 10,953,896
SEK 178,100,000 Sweden (Government of) bonds Ser. 1039,
5 1/2s, 2002 22,529,805
SEK 67,000,000 Sweden (Government of) deb. Ser. 1041, 6s, 2005 8,922,395
GBP 680,000 United Kingdom Treasury bonds 8s, 2015 1,509,886
GBP 14,180,000 United Kingdom Treasury bonds 7s, 2002 24,127,518
GBP 17,250,000 United Kingdom Treasury bonds Ser. 85, 9 3/4s, 2002 31,682,618
RUB 41,205,000 U.S. Dollar GKO Pass Through Structured Note
(Issued by Deutsche Bank) The principal at
redemption is linked to the bid price for the
Russian Treasury Bill at maturity date zero %,
1999 (in default) (NON) 50,457
--------------
Total Foreign Government Bonds and Notes
(cost $260,379,478) $ 244,663,033
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (21.6%)(a)
PRINCIPAL AMOUNT VALUE
U.S. Government Agency Mortgage Obligations (4.4%)
- --------------------------------------------------------------------------------------------------------------------------
$ 22,520,000 Federal National Mortgage Association 6.5s, TBA, 5/15/29 $ 22,372,044
U.S. Treasury Obligations (17.2%)
- --------------------------------------------------------------------------------------------------------------------------
11,373,226 Treasury Inflation Index 3.875, January 15, 2009 11,359,010
U.S. Treasury Bonds
18,990,000 6 3/8s, August 15, 2027 20,280,750
8,035,000 5 1/4s, February 15, 2029 7,551,645
U.S. Treasury Notes
8,415,000 6 1/8s, August 15, 2007 8,801,585
19,700,000 4 3/4s, February 15, 2004 19,312,107
21,445,000 4 1/4s, November 15, 2003 20,597,279
--------------
87,902,376
--------------
Total U.S. Government and Agency Obligations
(cost $112,050,358) $ 110,274,420
CORPORATE BONDS AND NOTES (20.8%) (a)
PRINCIPAL AMOUNT VALUE
Airlines (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
$ 1,000,000 Canadian Airlines Corp. sr. sec. notes 10s, 2005 (Canada) $ 725,000
Automotive (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,250,000 Exide Holding Europe 144A bonds 9 1/8s, 2004 (France) 682,945
750,000 Navistar International Corp. sr. notes Ser. B, 8s, 2008 774,375
--------------
1,457,320
Banks (5.7%)
- --------------------------------------------------------------------------------------------------------------------------
4,955,000 Depfa Bank notes 3 3/4s, 2009 5,061,528
3,280,000 Fuji JGB Inv. LLC 144A FLIRB 9.67s, 2049 (Japan) 3,066,800
1,000,000 GS Escrow Corp. sr. notes 7 1/8s, 2005 980,550
3,915,000 Hypothebk In Essen P/p 144A 4s, 2009 4,088,223
8,395,000 International American Development Bank notes 5 3/4s, 2004 4,618,265
DEM 9,811,900 Kreditanstalt Fuer Wiederauf bonds 5s,
2009 (Germany) 11,082,745
--------------
28,898,111
Basic Industrial Products (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
$ 1,500,000 Geberit International AG sr. sub. notes 10 1/8s, 2007 925,019
750,000 Owens-Illinois, Inc. sr. notes 8.1s, 2007 779,333
--------------
1,704,352
Broadcasting (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 Fox/Liberty Networks LLC sr. notes 8 7/8s, 2007 818,438
750,000 Sinclair Broadcast Group, Inc. company guaranty 9s, 2007 761,250
1,900,000 Telewest Communications PLC deb. stepped-coupon 11s,
2007 (United Kingdom) 1,710,000
--------------
3,289,688
Business Services (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 Pierce Leahy Corp. sr. sub. notes 11 1/8s, 2006 834,375
Cable Television (1.6%)
- --------------------------------------------------------------------------------------------------------------------------
220,000 Adelphia Communications Corp. sr. notes 7 7/8s, 2009 219,725
110,000 Century Communications Corp. sr. notes 8 7/8s, 2007 114,950
130,000 Century Communications Corp. sr. notes 8 3/4s, 2007 135,200
380,000 Charter Communications Holdings LLC 144A sr. notes
8 5/8s, 2009 389,500
1,000,000 Comcast Corp. sr. sub. notes 9 1/2s, 2008 1,054,300
750,000 CSC Holdings, Inc. sr. notes 7 1/4s, 2008 759,803
2,500,000 Diamond Cable Communications Co. Company guaranty 10s,
2008 (United Kingdom) 4,253,794
130,000 TeleWest Communications PLC 144A sr. disc. notes
stepped-coupon zero %, (9 1/4, 4/15/04) 2009 (STP) 88,075
2,000,000 United International Holdings sr. disc. notes stepped-coupon
Ser. B, zero % (10 3/4s, 2/15/03), 2008 (STP) 1,370,000
--------------
8,385,347
Cellular Communications (0.9%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 Cencall Communications Corp. sr. disc. notes
10 1/8s, 2004 780,000
1,500,000 Clearnet Communications, Inc. sr. disc. notes stepped-coupon
zero % (11 3/4s, 08/13/02), 2007 (Canada) (STP) 745,731
680,000 MetroNet Communications Corp. sr. disc. stepped-coupon
notes zero % (9.95s, 6/15/03), 2008 (Canada) (STP) 527,000
410,000 NEXTEL Communications, Inc. sr. disc. notes stepped-coupon
zero % (10.65s, 9/15/02), 2007 (STP) 319,800
1,250,000 Orange PLC sr. notes 8 5/8s, 2008 (United Kingdom) 2,162,094
--------------
4,534,625
Computer Services (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 Unisys Corp. sr. notes 7 7/8s, 2008 785,625
Consumer Durable Goods (--%)
- --------------------------------------------------------------------------------------------------------------------------
30,000 Iron Age Corp. company guaranty 9 7/8s, 2008 21,900
Electric Utilities (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,000,000 Midland Funding Corp. deb. Ser. A, 11 3/4s, 2005 1,132,360
180,000 York Power Funding 144A notes 12s, 2007 (Cayman Islands) 180,900
--------------
1,313,260
Electronics (0.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,250,000 Celestica International Ltd. 144A sr. sub. notes 10 1/2s,
2006 (Canada) 1,387,500
1,000,000 Metromedia Fiber Network, Inc. 144A sr. notes 10s, 2008 1,075,000
--------------
2,462,500
Energy-related (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 Calpine Corp. sr. notes 7 7/8s, 2008 757,500
Entertainment (--%)
- --------------------------------------------------------------------------------------------------------------------------
200,000 ITT Corp. notes 6 3/4s, 2005 187,780
Financial Services (5.4%)
- --------------------------------------------------------------------------------------------------------------------------
30,000 Contifinancial Corp. sr. notes 8 1/8s, 2008 22,800
220,000 Contifinancial Corp. sr. notes 7 1/2s, 2002 173,800
9,025,000 DSL Finance Nv bonds 5 3/4s, 2009 (Netherlands) 5,444,535
8,455,000 LCR Finance bonds 4 1/2s, 2028 (United Kingdom) 12,619,159
280,000 RBF Finance 144A company guaranty 11s, 2006 292,600
60,900,000 Realkredit Danmark bonds 7s, 2029 (Denmark) 8,857,189
--------------
27,410,083
Food Chains (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 Southland Corp. sr. sub. deb. 5s, 2003 668,438
Gaming (0.1%)
- --------------------------------------------------------------------------------------------------------------------------
500,000 Argosy Gaming Co. company guaranty 13 1/4s, 2004 566,250
120,000 Mohegan Tribal Gaming, Auth. 144A sr. notes 8 1/8s, 2006 122,400
--------------
688,650
Health Care (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
30,000 Columbia/HCA Healthcare Corp. deb. 8.36s, 2024 28,435
40,000 Columbia/HCA Healthcare Corp. notes 7.69s, 2025 32,908
60,000 Columbia/HCA Healthcare Corp. notes 7 1/4s, 2008 54,445
160,000 Columbia/HCA Healthcare Corp. med term notes notes
6.63s, 2045 151,163
80,000 Tenet Healthcare Corp. 144A sr. sub. notes 8 1/8s, 2008 78,400
920,000 Tenet Healthcare Corp.144A sr. notes 7 5/8s, 2008 897,000
--------------
1,242,351
Lodging (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 HMH Properties, Inc. company guaranty Ser. B, 7 7/8s, 2008 723,750
750,000 Host Marriott Travel Plaza sr. notes Ser. B, 9 1/2s, 2005 785,625
--------------
1,509,375
Manufacturing (--%)
- --------------------------------------------------------------------------------------------------------------------------
50,000 Applied Power Inc. sr. sub. notes 8 3/4s, 2009 51,250
Metals and Mining (0.4%)
- --------------------------------------------------------------------------------------------------------------------------
270,000 AK Steel Corp. 144A sr. notes 7 7/8s, 2009 269,325
1,000,000 National Steel Corp. 144A 1st mtge. Ser. B, 9 7/8s, 2009 1,052,500
750,000 P & L Coal Holdings Corp. company guaranty Ser. B, 9
5/8s, 2008 780,000
--------------
2,101,825
Oil and Gas (0.3%)
- --------------------------------------------------------------------------------------------------------------------------
1,250,000 Gulf Canada Resources Ltd. sr. sub. notes 9 5/8s,
2005 (Canada) 1,278,125
10,000 Transamerican Energy sr. disc. notes stepped-coupon Ser. B,
zero % (13s, 6/15/99), 2002 (STP) 1,500
--------------
1,279,625
Packaging and Containers (--%)
- --------------------------------------------------------------------------------------------------------------------------
170,000 Packaging Corp. 144A sr. sub. notes 9 5/8s, 2009 175,100
Paper and Forest Products (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
1,000,000 Pacifica Papers, Inc. 144A sr. notes 10s, 2009 (Canada) 1,040,000
750,000 Riverwood International Corp. company guaranty
10 1/4s, 2006 780,000
1,000,000 Tembec Industries, Inc. company guaranty 8 5/8s,
2009 (Canada) 1,035,000
--------------
2,855,000
Pharmaceuticals (--%)
- --------------------------------------------------------------------------------------------------------------------------
170,000 ICN Pharmaceuticals, Inc. 144A sr. notes 9 1/4s, 2005 175,525
Retail (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 Fred Meyer, Inc. company guaranty 7.45s, 2008 786,225
Shipping (--%)
- --------------------------------------------------------------------------------------------------------------------------
10,000 Johnstown America Industries, Inc. company guaranty Ser. C,
11 3/4s, 2005 10,850
Telecommunications (1.5%)
- --------------------------------------------------------------------------------------------------------------------------
2,090,000 Colt Telecommunications Group PLC sr. notes 8 7/8s, 2007
(United Kingdom) 1,198,609
1,000,000 Esprit Teleom Group PLC sr. notes 11s, 2008
(United Kingdom) 589,632
30,000 Hermes Europe Railtel 144A sr. notes 11 1/2s, 2007
(Netherlands) 32,850
1,070,000 Microcell Telecommunications sr. disc. notes stepped-coupon
Ser. B, zero % (14s, 12/1/01), 2006 (Canada) (STP) 898,800
1,250,000 Microcell Telecommunications Inc. sr. disc. notes, stepped-coupon
Ser. B, zero % (11 1/8s, 10/15/02), 2007 (Canada) (STP) 565,727
170,000 NorthEast Optic Network, Inc. sr. notes 12 3/4s, 2008 179,350
GBP 1,250,000 NTL Inc. sr. unsub. Ser. B, 9 1/2s, 2008 2,051,274
$ 1,000,000 Qwest Communications International, Inc. sr. disc. notes
stepped-coupon zero % (9.47s, 10/15/02), 2007 (STP) 815,280
1,000,000 RSL Communications PLC bonds stepped-coupon zero %
(10s, 3/15/03), 2008 (STP) 351,615
50,000 Telehub Communications Corp. company guaranty
stepped-coupon zero % (13 7/8s, 7/31/02), 2005 (STP) 34,500
750,000 Time Warner Telecom Inc. sr. notes 9 3/4s, 2008 810,000
--------------
7,527,637
Telephone Services (0.7%)
- --------------------------------------------------------------------------------------------------------------------------
1,100,000 Call-Net Enterprises Inc. sr. notes 8s, 2008 (Canada) 1,061,500
230,000 Call-Net Enterprises, Inc. sr. disc. notes stepped-coupon zero %
(8.94s, 8/15/03), 2008 (Canada) (STP) 149,500
180,000 Flag Ltd. 144A sr. notes 8 1/4s, 2008 (Bermuda) 178,650
950,000 Versatel Telecom sr. notes 13 1/4s, 2008 (Netherlands) 1,026,000
3,000,000 Viatel, Inc. sr. disc. notes stepped-coupon zero %
(12.4s, 4/15/03), 2008 (STP) 1,054,846
--------------
3,470,496
Utilities (0.2%)
- --------------------------------------------------------------------------------------------------------------------------
750,000 CMS Energy Corp. pass through certificates 7s, 2005 731,445
360,000 Public Service Co. of New Mexico sr. notes Ser. A, 7.1s, 2005 360,774
--------------
1,092,219
--------------
Total Corporate Bonds and Notes (cost $106,515,720) $ 106,402,032
BRADY BONDS (5.9%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$ 4,900,000 Argentina (Republic of) bonds 11 3/4s, 2009 $ 5,071,500
5,495,000 Brazil (Government of) disc. bonds FRB 6.125s, 2024 3,599,225
12,825,355 Brazil (Government of) stepped-coupon zero%,
(8s, 4/30/00), 2014 (STP) 8,849,495
3,265,000 United Mexican States bonds 10 3/8s, 2009 3,493,550
11,560,000 United Mexican States bonds Ser. B, 6 1/4s, 2019 9,147,428
--------------
Total Brady Bonds (cost $29,202,791) $ 30,161,198
PURCHASED OPTIONS OUTSTANDING (2.4%) (a) (cost $9,502,057)
CONTRACT EXPIRATION DATE/
AMOUNT STRIKE PRICE VALUE
- --------------------------------------------------------------------------------------------------------------------------
7,200,000 U.S. Dollars in exchange for
Japanese Yen (Call) May 99/
115 JBY $ 12,145,814
UNITS (0.4%)(a)
NUMBER OF UNITS VALUE
- --------------------------------------------------------------------------------------------------------------------------
1,000,000 Jazztel 144A units, 14s, 2009 $ 1,073,870
1,130,000 Network Plus Corp. units pfd. 13 1/4s, 2009 1,158,250
--------------
Total Units (cost $2,259,629) $ 2,232,120
PREFERRED STOCKS (0.2%) (a)
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------------
1,500 Fresenius Medical Capital Trust II company guaranty
7.875% pfd. (Germany) $ 860,105
90 R& B Falcon Corp. 13.875% pfd. 94,275
33,806 TCR Holding Corp.Class E zero %, pfd. 1,893
--------------
Total Preferred Stocks (cost $952,082) $ 956,273
COMMON STOCKS (--%) (a) (cost $403,384)
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------------
11,327 PSF Holdings LLC Class A (NON) $ 141,588
WARRANTS (--%) (a) (NON) EXPIRATION
NUMBER OF WARRANTS DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
50 Telehub Communications Corp. 7/31/05 $ 250
950 Versatel Teleco 144A 5/15/08 66,500
--------------
Total Warrants (cost $19,250) $ 66,750
SHORT-TERM INVESTMENTS (4.4%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$15,000,000 Eureka Securitization effective yield of 4.82s, May 17, 1999 $ 14,967,867
7,568,000 Interest in $292,698,000 joint repurchase agreement dated
April 30, 1999 with Warburg Securities due May 3, 1999
with respect to various U.S. Treasury obligations -- maturity
value of $7,571,071, for an effective yield of 4.87% 7,568,000
--------------
Total Short-Term Investments (cost $22,535,867) $ 22,535,867
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $543,820,616) (b) $ 529,579,095
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $510,320,752.
(b) The aggregate identified cost on a tax basis is $547,241,886, resulting in gross unrealized appreciation and
depreciation of $17,347,336 and $35,010,127, respectively, or net unrealized depreciation of $17,662,791.
(NON) Non-income-producing security.
(STP) The interest or dividend rate and date shown parenthetically represent the new interest or dividend rate to be paid
and the date the fund will begin receiving interest or dividend income at this rate.
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.
TBA after the name of a security represents to be announced securities (Note 1).
FLIRB represents Front Loaded Interest Reduction Bond.
The rates shown on Floating Rate Bonds (FRB) and Floating Rate Notes (FRN) are the current interest rates shown at
April 30, 1999, which are subject to change based on the terms of the security.
DIVERSIFICATION BY COUNTRY (Unaudited)
Distribution of investments by country of issue at April 30, 1999: (as percentage of Market Value)
Australia 1.1%
Brazil 2.4
Canada 4.7
Denmark 1.6
Germany 7.1
Greece 1.1
Italy 3.1
Japan 2.9
Mexico 2.4
Netherlands 6.2
New Zealand 3.7
Spain 2.5
Sweden 8.8
United Kingdom 12.7
United States 38.2
Other 1.5
-----
Total 100.0%
=====
- -------------------------------------------------------------------------------
Forward Currency Contracts to Buy at April 30, 1999 (Unaudited)
(aggregate face value $576,626,656)
Unrealized
Aggregate Face Delivery Appreciation/
Market Value Value Date (Depreciation)
- -------------------------------------------------------------------------------
Australian Dollars $ 6,348,022 $ 6,019,920 6/16/99 $ 328,102
Canadian Dollar 299,956 287,089 6/16/99 12,867
Danish Krone 2,469,027 2,562,061 6/16/99 (93,034)
Euro Dollars 268,938,537 277,238,278 6/16/99 (8,299,741)
Japanese Yen 298,167,828 290,519,308 6/16/99 7,648,520
- -------------------------------------------------------------------------------
$ (403,286)
- -------------------------------------------------------------------------------
Forward Currency Contracts to Sell at April 30, 1999 (Unaudited)
(aggregate face value $672,346,853)
Unrealized
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
- -------------------------------------------------------------------------------
British Pounds $ 75,909,282 $ 76,005,783 6/16/99 $ 96,501
Canadian Dollar 1,009,958 966,635 6/16/99 (43,323)
Euro Dollars 280,629,215 289,982,680 6/16/99 9,353,465
Greek Drachma 3,384,944 3,349,895 6/16/99 (35,049)
Japanese Yen 264,182,236 257,691,220 6/16/99 (6,491,016)
New Zealand Dollar 11,374,031 10,663,923 6/16/99 (710,108)
Swedish Krona 33,172,567 33,686,717 6/16/99 514,150
- -------------------------------------------------------------------------------
$2,684,620
- -------------------------------------------------------------------------------
Futures Contracts Outstanding at April 30, 1999 (Unaudited)
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
- -------------------------------------------------------------------------------
Euro Dollar
90 Day (Long) $59,275,000 $59,332,750 Sep-99 $ (57,750)
U.S. Treasury Bond
20yr. (Long) 12,018,750 12,325,650 Jun-99 (306,900)
U.S. Treasury Bond
5yr. (Long) 50,013,281 50,023,034 Jun-99 (9,753)
U.S. Treasury Bond
5yr. (Long) 47,636,640 47,901,944 Sep-99 (265,304)
- -------------------------------------------------------------------------------
$(639,707)
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
April 30, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $543,820,616) (Note 1) $529,579,095
- -----------------------------------------------------------------------------------------------
Cash 28,926
- -----------------------------------------------------------------------------------------------
Foreign currency (cost $930,433) 885,813
- -----------------------------------------------------------------------------------------------
Interest and other receivables 9,771,896
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 358,435
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 2,291,768
- -----------------------------------------------------------------------------------------------
Receivable for variation margin 146,296
- -----------------------------------------------------------------------------------------------
Receivable for open forward currency contracts 18,083,517
- -----------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts 980,557
- -----------------------------------------------------------------------------------------------
Total assets 562,126,303
Liabilities
- -----------------------------------------------------------------------------------------------
Distributions payable to shareholders 7,642
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 33,574,358
- -----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 548,943
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 992,973
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 89,648
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 17,618
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 3,363
- -----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 175,181
- -----------------------------------------------------------------------------------------------
Payable for open forward currency contracts 15,802,183
- -----------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 543,874
- -----------------------------------------------------------------------------------------------
Other accrued expenses 49,768
- -----------------------------------------------------------------------------------------------
Total liabilities 51,805,551
- -----------------------------------------------------------------------------------------------
Net assets $510,320,752
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $547,256,451
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (19,720,740)
- -----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (Note 1) (4,909,781)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
assets and liabilities in foreign currencies (12,305,178)
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $510,320,752
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($240,305,470 divided by 18,912,271 shares) $12.71
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $12.71)* $13.34
- -----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($35,282,896 divided by 2,785,008 shares)** $12.67
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($234,732,386 divided by 18,558,417 shares) $12.65
- -----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $12.65)* $13.07
- -----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group
sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended April 30, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Interest (net of foreign tax $181,237) $15,527,407
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 2,002,550
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 411,356
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 9,945
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 5,267
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 306,137
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 176,568
- -----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 553,334
- -----------------------------------------------------------------------------------------------
Reports to shareholders 15,197
- -----------------------------------------------------------------------------------------------
Auditing 20,343
- -----------------------------------------------------------------------------------------------
Other 279
- -----------------------------------------------------------------------------------------------
Total expenses 3,500,976
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (10,476)
- -----------------------------------------------------------------------------------------------
Net expenses 3,490,500
- -----------------------------------------------------------------------------------------------
Net investment income 12,036,907
- -----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 2,858,164
- -----------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (243,995)
- -----------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions 26,158,817
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the period (13,525,538)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
futures contracts during the period (15,920,186)
- -----------------------------------------------------------------------------------------------
Net loss on investments (672,738)
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $11,364,169
- -----------------------------------------------------------------------------------------------
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
1999* 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 12,036,907 $ 30,708,121
- ---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and
foreign currency transactions 28,772,986 (50,800,739)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investments and assets and liabilities in foreign currencies (29,445,724) 13,268,044
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 11,364,169 (6,824,574)
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income
Class A (8,076,805) (9,890,406)
- ---------------------------------------------------------------------------------------------------------------
Class B (1,040,744) (1,207,442)
- ---------------------------------------------------------------------------------------------------------------
Class M (7,089,749) (8,427,540)
- ---------------------------------------------------------------------------------------------------------------
From return of capital
Class A -- (9,983,386)
- ---------------------------------------------------------------------------------------------------------------
Class B -- (1,218,794)
- ---------------------------------------------------------------------------------------------------------------
Class M -- (8,506,768)
- ---------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 11,667,930 188,890,353
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 6,824,801 142,831,443
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 503,495,951 360,664,508
- ---------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess of
net investment income of $19,720,740 and
$15,550,349, respectively) $510,320,752 $503,495,951
- ---------------------------------------------------------------------------------------------------------------
* 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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.82 $13.94 $14.49 $13.62 $13.33 $15.25
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .32(c) .77(c) .71(c) .83(c) 1.00 .97
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.01) (.95) (.24) .82 .19 (1.84)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .31 (.18) .47 1.65 1.19 (.87)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.42) (.47) (.59) (.78) (.62) (.10)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- (.43) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- (.47) -- -- (.28) (.80)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- (.15)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.42) (.94) (1.02) (.78) (.90) (1.05)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.71 $12.82 $13.94 $14.49 $13.62 $13.33
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.44* (1.14) 3.38 12.46 9.38 (5.93)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $240,305 $253,611 $316,837 $343,125 $366,476 $461,506
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .61* 1.26 1.29 1.32 1.34 1.27
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.46* 5.90 4.90 5.93 7.19 6.57
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 149.14* 561.48 638.66 429.38 300.66 359.88
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended 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 determined 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
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.79 $13.90 $14.45 $13.60 $13.31 $15.38
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .27(c) .67(c) .59(c) .72(c) .77 .64
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.02) (.94) (.23) .81 .33 (2.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .25 (.27) .36 1.53 1.10 (1.46)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.37) (.42) (.52) (.68) (.55) (.14)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- (.39) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- (.42) -- -- (.26) (.47)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.37) (.84) (.91) (.68) (.81) (.61)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.67 $12.79 $13.90 $14.45 $13.60 $13.31
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.00* (1.87) 2.62 11.57 8.63 (9.52)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $35,283 $36,017 $41,322 $41,106 $30,910 $22,387
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .99* 2.01 2.04 2.07 2.09 1.49*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.09* 5.17 4.22 5.13 6.59 4.76*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 149.14* 561.48 638.66 429.38 300.66 359.88
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended 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 determined 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 Mar. 17, 1995+
operating performance (Unaudited) Year ended October 31 to Oct. 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $12.77 $13.89 $14.44 $13.59 $12.81
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .30(c) .76(c) .66(c) .77(c) .49
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.02) (.95) (.23) .83 .88
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .28 (.19) .43 1.60 1.37
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net
investment income (.40) (.46) (.56) (.75) (.40)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- (.42) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
From return of capital -- (.47) -- -- (.19)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.40) (.93) (.98) (.75) (.59)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.65 $12.77 $13.89 $14.44 $13.59
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.25* (1.28) 3.15 12.14 10.87*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $234,732 $213,868 $2,506 $1,892 $509
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .74* 1.51 1.54 1.58 .96*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2..33* 5.55 4.74 5.52 4.78*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 149.14* 561.48 638.66 429.38 300.66
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the period ended 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 determined on the basis of the weighted average number of shares outstanding
during the period.
</TABLE>
Notes to financial statements
April 30, 1999 (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 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. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to the
resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date. Discounts on zero
coupon bonds, original issue discount bonds, stepped-coupon bonds and
payment in kind bonds are accreted according to the yield-to-maturity
method. Any premium resulting from the purchase of zero coupon bonds,
original issue discount bonds, stepped-coupon bonds and payment in kind
bonds are amortized on a yield-to-maturity basis.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The fund
does not isolate that portion of realized or unrealized gains or losses
resulting from changes in the foreign exchange rate on investments from
fluctuations arising from changes in the market prices of the securities.
Such gains and losses are included with the net realized and unrealized
gain or loss on investments. Net realized gains and losses on foreign
currency transactions represent net realized exchange gains or losses on
closed forward currency contracts, disposition of foreign currencies and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized appreciation
and depreciation of assets and liabilities in foreign currencies arise
from changes in the value of open forward currency contracts and assets
and liabilities other than investments at the period end, resulting from
changes in the exchange rate.
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
current 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 in which it may invest to increase its current returns.
The potential risk to the fund is that the change in value of futures and
options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of
the underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparty to the contract is unable to
perform. When the contract is closed, the fund records a realized gain or
loss equal to the difference between the value of the ontract at the time
it was opened and the value at the time it was closed. Realized gains and
losses on purchased options are included in realized gains and losses on
investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices supplied
by dealers.
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 has 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 the
current market value of the underlying securities, according to the
procedures described under "Security valuation" above.
I) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended April 30, 1999, the fund had no borrowings against the line of
credit.
J) 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, 1998, the fund had a capital loss carryover of
approximately $30,261,000 available to offset future capital gains, if
any. The amount of the carryover and the expiration dates are:
Loss Carryover Expiration
- -------------- ----------------
$5,448,000 October 31, 2003
24,813,000 October 31, 2006
K) 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% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended April 30, 1999, fund expenses were reduced by
$10,476 under expense offset arrangements with PFTC and brokerage service
arrangements. Investor servicing and custodian fees reported in the
Statement of operations exclude these credits. The fund could have
invested a portion of the assets utilized in connection with the expense
offset arrangements in an income producing asset if it had not entered
into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $870 has
been allocated to the fund, 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 "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
in the fund and are invested in certain Putnam funds until distribution in
accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of Trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to its
class A, class B 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 to 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, 1999, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $6,015 and $147,041 from the
sale of class A and class M shares, respectively and $36,726 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, 1999, Putnam Mutual Funds
Corp., acting as underwriter received $2,090 on class A redemptions.
Note 3
Purchase and sales of securities
During the six months ended April 30, 1999, purchases and sales of
investment securities other than U.S. government obligations and
short-term investments aggregated $603,482,838 and $592,294,959,
respectively. Purchases and sales of U.S. government obligations
aggregated $148,959,945 and $127,040,442, 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, 1999, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended April 30, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 2,594,534 $ 34,174,774
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 521,362 5,665,541
- -----------------------------------------------------------------------------
3,115,896 39,840,315
Shares
repurchased (3,985,521) (51,072,604)
- -----------------------------------------------------------------------------
Net decrease (869,625) $(11,232,289)
- -----------------------------------------------------------------------------
Year ended October 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 3,478,314 $ 45,389,551
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,232,502 16,052,340
- -----------------------------------------------------------------------------
4,710,816 61,441,891
Shares
repurchased (7,653,407) (100,251,624)
- -----------------------------------------------------------------------------
Net decrease (2,942,591) $(38,809,733)
- -----------------------------------------------------------------------------
Six months ended April 30, 1999
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 670,193 $8,558,893
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 68,949 879,193
- -----------------------------------------------------------------------------
739,142 9,438,086
Shares
repurchased (770,996) (9,815,569)
- -----------------------------------------------------------------------------
Net decrease (31,854) $ (377,483)
- -----------------------------------------------------------------------------
Year ended October 31, 1998
- -----------------------------------------------------------------------------
Class B Shares Amount
- -----------------------------------------------------------------------------
Shares sold 1,505,220 $19,607,542
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 153,614 1,994,786
- -----------------------------------------------------------------------------
1,658,834 21,602,328
Shares
repurchased (1,814,622) (23,589,537)
- -----------------------------------------------------------------------------
Net decrease (155,788) $(1,987,209)
- -----------------------------------------------------------------------------
Six months ended April 30, 1999
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 4,643,262 $59,437,177
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,315 54,906
- -----------------------------------------------------------------------------
4,647,577 59,492,083
Shares
repurchased (2,842,910) (36,214,381)
- -----------------------------------------------------------------------------
Net increase 1,804,667 $23,277,702
- -----------------------------------------------------------------------------
Year ended October 31, 1998
- -----------------------------------------------------------------------------
Class M Shares Amount
- -----------------------------------------------------------------------------
Shares sold 25,255,616 $338,237,961
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 10,841 140,813
- -----------------------------------------------------------------------------
25,266,457 338,378,774
Shares
repurchased (8,693,157) (108,691,479)
- -----------------------------------------------------------------------------
Net increase 16,573,300 $229,687,295
- -----------------------------------------------------------------------------
Welcome to www.putnaminv.com
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Fund information
WEB SITE
www.putnaminv.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Edward H. D'Alelio
Vice President
D. William Kohli
Vice President and Fund Manager
Jeffrey A. Kaufman
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
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.
You can also learn more at Putnam Investments' Web site: www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
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For account balances, economic forecasts, and the latest on Putnam funds,
visit
www.putnaminv.com
SA031-52505 041/220/906 6/99
