Putnam
Global
Governmental
Income Trust
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
4-30-00
[SCALE LOGO OMITTED]
FROM THE CHAIRMAN
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[COPYRIGHT] Karsh, Ottawa
Dear Shareholder:
The markets continued to provide their share of challenges and
opportunities as your fund closed its books on the first half of fiscal
year 2000. In the following report, the fund's managers discuss
performance for the period and prospects for the months ahead.
This is the last letter to you and the other shareholders of Putnam
Global Governmental Income Trust that I will be signing. After more
than 30 years as Chairman of the Trustees and President of the Putnam
Funds, the time has come for me to step aside. As of July 1, 2000, John
Hill will become Chairman. John is currently an independent Trustee and
has served on the board for the past 14 years. In addition, my son,
George Putnam, III, will take on the role of President. I am confident
that the leadership of the funds will be in exceptionally strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay
in close touch with the funds. It has been my privilege to serve you.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
June 21, 2000
REPORT FROM THE FUND MANAGERS
D. William Kohli
Jeffrey A. Kaufman
In a challenging environment of rising interest rates and varying bond
market performance around the world, Putnam Global Governmental Income
Trust's six-month return, while disappointing, was in line with the
average of its peer group. Global bond yields have generally risen in
the past six months, with the exception of long-term government yields,
which declined sharply. Since January, several countries -- led by the
influential United States -- have been using surpluses to pay off
long-term debt. This trend has produced a large widening in the yield
difference, or spread, between government bonds and corporate bonds. In
fact, these spreads are now wider than they have been in many years. The
fund benefited from its long-term government bond positions in the U.S.
and Europe. However, its holdings of corporate bonds, mortgage-backed
securities, and government agency bonds were hurt by the widening of
spreads and the rising interest-rate environment.
Total return for 6 months ended 4/30/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
----------------------------------------------------------------------
-3.81% -8.35% -4.19% -8.87% -4.21% -5.14% -3.95% -7.08%
----------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 7.
* GLOBAL ECONOMY CHARACTERIZED BY SOLID GROWTH, GENERALLY RISING INTEREST RATES
The recent semiannual period has been one of strong economic growth in
the United States and solid growth in Europe. Japan experienced slight,
but positive growth as the country continues to cope with anemic
consumer spending and heavy government debt in its struggle to work
itself out of a long and deep recession. In the aggregate, government
buybacks of long-term debt have resulted in a significant reduction in
the supply of long-term government bonds. The major exception was Japan,
which continued to sustain a large budget deficit. Corporate debt
issuance has generally increased in most of the large global economies,
producing an excess of supply in this sector. With the global economic
expansion, we have moved from a macro environment that was
disinflationary to one in which inflation has again become a concern.
[GRAPHIC OMITTED: worm chart YIELD CURVES AT 10/31/99 AND 4/30/00]
YIELD CURVES AT 10/31/99 AND 4/30/00
10/31/99 4/30/00
3
mo. 5.083% 5.813%
6
mo. 5.266% 6.097%
1
yr. 5.406% 6.153%
2
yr. 5.783% 6.672%
5
yr. 5.937% 6.540%
10
yr. 6.020% 6.216%
30
yr. 6.161% 5.963%
Footnote reads:
Source: Bloomberg, Inc.
* INVERSION OF YIELD CURVE WAS A SIGNIFICANT FIRST-QUARTER EVENT FOR U.S. BOND
MARKET
An important event for U.S. bond investors in the first quarter of 2000
was an inversion in the yield curve, which was caused by increasing
short-term interest rates and a sharp decline in the yield on the
30-year Treasury bond. The Federal Reserve Board, in an attempt to slow
economic growth, raised short-term interest rates three times during the
period -- in November, early February, and March. Each increase amounted
to 25 basis points, bringing the federal funds rate to 6.00% by April
30, 2000.
During the period, long-term interest rates declined primarily because
of the federal government's buyback of 30-year Treasury bonds. The
increase in demand caused by these purchases pushed long-term prices up,
bringing yields down. Intermediate-maturity Treasury bonds benefited
somewhat from this trend. If this debt buyback had not occurred, we
believe the yield curve would still be somewhat inverted but not as
dramatically so.
[GRAPHIC OMITTED: horizontal bar chart SAMPLE BOND MARKET RETURNS]
SAMPLE BOND MARKET RETURNS*
(6 months through 4/30/00 in U.S. dollars)
Russia 85.0%
Ecuador 12.1%
Brazil 11.3%
Argentina 8.6%
United States 2.9%
Venezuela 2.8%
United Kingdom -1.3%
Germany -11.7%
France -11.7%
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 no indication of future results.
Historically an inverted yield curve has been viewed as a predictor of a
slowing economy. Under such a scenario, investors buy longer-term bonds
(pushing their yields down) under the assumption that the economy would
slow, which could push yields lower still. In addition, an inverted
yield curve has been viewed as a precursor to a stock market decline.
* DECLINE IN EURO OFFSET BY STRONG PERFORMANCE IN EMERGING-MARKETS SECTOR
The increase in global bond yields (excluding long-term government
bonds) was the primary reason for the decline in the fund's net asset
value, but the fund was also hurt by currency positions in the euro. The
fund had approximately 20% of its holdings in euro-denominated bonds
during the period, and the euro has experienced a sharp decline in value
over the past year.
Emerging markets performed well during the period, as this bond sector
benefited from an inflationary, strong-growth economic environment. In
particular, bonds from Mexico and Russia generally had excellent
returns, although the Russian bond market continues to be affected by
the country's uncertain economic outlook. Russian bond investors began
to feel more hopeful about their country's prospects as the country's
reigns passed into the hands of Vladimir Putin. Mexico, along with much
of the rest of Latin America, experienced a strong turnaround in its
economic fundamentals. Mexico's gross domestic product (GDP) growth has
averaged over 4% since 1996 and is expected to reach 5% in 2000.
Inflation there declined to 13% -- not exceptionally high by
emerging-markets standards. And exports, which are driving much of the
country's growth, continued to increase, financed by direct foreign
investment. The surge in exports resulted in a current account deficit,
but it declined from 3.85% of GDP last year to 2.7% currently.
[GRAPHIC OMITTED: horizontal bar chart GEOGRAPHIC DIVERSIFICATION (4/30/00)]
GEOGRAPHIC DIVERSIFICATION (4/30/00)*
United States 39.7%
United Kingdom 19.1%
Canada 10.1%
Germany 7.3%
Denmark 5.4%
Italy 5.0%
Netherlands 4.4%
Spain 3.6%
New Zealand 1.6%
Russia 1.5%
Footnote reads:
*Based on net assets. Country allocations will vary over time.
* FUND STRATEGY REFLECTS HOPEFUL OUTLOOK FOR EUROPEAN HOLDINGS, EMPHASIS ON
TOTAL RETURN
In order to take advantage of the strong dollar, we kept the fund
overweighted in U.S. and Canadian bonds in comparison to its index
benchmark. We have gradually increased holdings in Europe, as we believe
that the long-term fundamental outlook is positive and that the currency
will recover. We have not made any significant adjustments to the fund's
emerging-markets and high-yield sector weightings during the period.
We believe that the fund's positions in the euro will ultimately prove
rewarding, as Putnam's team of currency analysts are forecasting a
20%-25% increase in the euro during the next 12 months. Although the
euro has declined significantly in the past year and especially in
recent months, Putnam analysts believe it is now at or near a low and
should soon begin to recover. The new currency is extremely undervalued
right now and may stand to gain from the volatility that we are seeing
in the U.S. equity markets. There is a great deal of foreign investment
in U.S. stocks, and continued market volatility could lead foreign
investors to seek greater stability in Europe. This would bolster the
euro. In addition, stronger growth in Europe and somewhat higher
interest rates are expected in the coming year -- both of which would
attract investment.
Expected additions of holdings in Canadian and Australian
dollar-denominated securities during the next 12 to 18 months could also
provide the potential for price appreciation in the fund's holdings
which would be positive for the fund's net asset value. Finally, the
relatively high level of income from the fund's holdings should also
help the fund's total return. Currently the fund is 2.3% invested in
collateralized mortgage obligations, 20.6% in mortgage-backed
securities, 13.8% in high-yield corporate bonds, and 52.8% in foreign
bonds. All of these holdings have attractive yields.
"After a difficult year for bonds in 1999, global bond markets appear poised
to fare better in 2000. Evidence includes stable growth in Europe, excellent
returns from bonds in several emerging markets, and strong U.S. Treasury
performance."
-- D. William Kohli, portfolio manager
* CONTINUED INTEREST-RATE VOLATILITY SEEN IN NEAR TERM; ECONOMIC SLOWING
EXPECTED BY YEAR-END
We expect that the interest-rate volatility that has characterized the
U.S. bond market recently will probably continue until a slower, more
stable rate of economic growth begins to occur. This volatility will
probably carry over to other dollar-denominated countries and may also
affect bond markets in Europe and Latin America. The Fed is clearly
concerned about the rate of growth in the economy and about the
seemingly insatiable consumer appetite for spending. Moreover, there
appears to be a strong link between the stock market's enormous gains
and consumer demand, and until the stock market cools off, the Fed will
probably continue to raise short-term interest rates. Inflation will
likely increase somewhat, though how much is still unclear. Higher
inflation has been expected for some time, but it has not occurred in
the United States because of continued productivity increases driven by
investments in technology.
Putnam's economic analysts are not overly concerned about increases in
inflation, however, as energy and commodity prices have begun to
decline. If the Fed succeeds in bringing about slower growth through
interest-rate increases, yields may begin to decline -- and prices rise
-- toward the end of the year. Obviously the fund would be hurt by
continued weakness in the euro, an increase in global interest rates, or
a major economic downturn in emerging markets. As always, your fund's
managers will continue to monitor global developments and take
appropriate actions if necessary.
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 4/30/00, 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.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 4/30/00
Class A Class B Class C Class M
(inception dates) (6/1/87) (2/1/94) (7/26/99) (3/17/95)
NAV POP NAV CDSC NAV CDSC NAV POP
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months -3.81% -8.35% -4.19% -8.87% -4.21% -5.14% -3.95% -7.08%
------------------------------------------------------------------------------
1 year -6.90 -11.29 -7.56 -11.94 -7.53 -8.40 -7.09 -10.08
------------------------------------------------------------------------------
5 years 18.47 12.84 14.11 12.40 14.14 14.14 16.99 13.17
Annual average 3.45 2.44 2.67 2.36 2.68 2.68 3.19 2..50
------------------------------------------------------------------------------
10 years 77.43 69.03 64.60 64.60 64.58 64.58 72.82 67.21
Annual average 5.90 5.39 5.11 5.11 5.11 5.11 5.62 5.27
------------------------------------------------------------------------------
Life of fund 151.47 139.59 126.66 126.66 128.20 128.20 141.61 133.71
Annual average 7.40 7.00 6.54 6.54 6.60 6.60 7.07 6.80
------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 4/30/00
Salomon Bros.
World Govt. Consumer
Bond Index price index
-------------------------------------------------------
6 months -4.35% 1.84%
-------------------------------------------------------
1 year -3.47 3.01
-------------------------------------------------------
5 years 17.05 12.71
Annual average 3.20 2.42
-------------------------------------------------------
10 years 118.78 32.82
Annual average 8.14 2.88
-------------------------------------------------------
Life of fund 152.40 51.37
Annual average 7.43 3.26
-------------------------------------------------------
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. For
class C shares, returns for periods prior to their inception are derived
from the historical performance of class A shares, adjusted to reflect
both the CDSC currently applicable to class C shares, which is 1% for
the first year and is eliminated thereafter, and the higher operating
expenses applicable to class C 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 4/30/00
Class A Class B Class C Class M
-------------------------------------------------------------------------------
Distributions (number) 6 6 6 6
-------------------------------------------------------------------------------
Income $0.324 $0.279 $0.286 $0.309
-------------------------------------------------------------------------------
Capital gains -- -- -- --
-------------------------------------------------------------------------------
Total $0.324 $0.279 $0.286 $0.309
-------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
-------------------------------------------------------------------------------
10/31/99 $11.91 $12.50 $11.88 $11.91 $11.86 $12.26
-------------------------------------------------------------------------------
4/30/00 11.14 11.70 11.11 11.13 11.09 11.46
-------------------------------------------------------------------------------
Current return (end of period)
-------------------------------------------------------------------------------
Current dividend rate1 5.82% 5.54% 4.97% 5.18% 5.52% 5.34%
-------------------------------------------------------------------------------
Current 30-day SEC yield2 5.61 5.34 4.84 4.85 5.35 5.18
-------------------------------------------------------------------------------
1Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period.
2Based on investment income, calculated using SEC guidelines.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 3/31/00 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (6/1/87) (2/1/94) (7/26/99) (3/17/95)
NAV POP NAV CDSC NAV CDSC NAV POP
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 months -1.47% -6.16% -1.85% -6.64% -1.88% -2.83% -1.68% -4.87%
-----------------------------------------------------------------------------------
1 year -3.96 -8.50 -4.62 -9.14 -4.72 -5.62 -4.23 -7.31
-----------------------------------------------------------------------------------
5 years 23.91 18.02 19.37 17.58 19.28 19.28 22.47 18.49
Annual average 4.38 3.37 3.60 3.29 3.59 3.59 4.14 3.45
-----------------------------------------------------------------------------------
10 years 82.07 73.39 68.85 68.85 68.69 68.69 77.27 71.56
Annual average 6.18 5.66 5.38 5.38 5.37 5.37 5.89 5.55
-----------------------------------------------------------------------------------
Life of fund 157.69 145.52 132.45 132.45 133.77 133.77 147.46 139.37
Annual average 7.66 7.25 6.80 6.80 6.84 6.84 7.32 7.04
-----------------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. They do not take into account any
adjustment for taxes payable on reinvested distributions. Investment
returns and principal value will fluctuate so that an investor's shares
when sold may be worth more or less than their original cost. See first
page of performance section for performance calculation method.
</TABLE>
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred sales charge.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 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 fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
COMPARATIVE BENCHMARKS
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.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss
for the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that
remain in the portfolio -- any change in unrealized gains or losses over
the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
April 30, 2000 (Unaudited)
FOREIGN GOVERNMENT BONDS AND NOTES (52.8%) (a)
PRINCIPAL AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
USD 1,824,000 Argentina (Republic of) unsub. 11 3/4s, 2009 $ 1,792,080
USD 2,742,000 Brazil (Federal Republic of) notes 14 1/2s, 2009 2,889,520
USD 280,000 Brazil (Federal Republic of) bonds 12 3/4s, 2020 268,464
CAD 390,000 Canada (Government of) bonds Ser. WB60,
7 1/4s, 2007 278,060
CAD 12,780,000 Canada (Government of) bonds 5 1/2s, 2009 8,227,983
CAD 27,540,000 Canada (Government of) bonds Ser. WU42, 5s, 2004 17,721,796
USD 590,000 Colombia (Republic of) bonds 11 3/4s, 2020 500,792
DKK 66,005,000 Denmark (Kingdom of) bonds 6s, 2009 8,238,841
DKK 58,805,000 Denmark (Kingdom of) bonds 4s, 2001 7,112,564
EUR 10,235,000 Germany (Federal Republic of) bonds Ser. 98,
5 5/8s, 2028 9,253,463
EUR 3,335,000 Italy (Government of) bonds 6s, 2000 3,033,668
EUR 13,655,000 Italy (Government of) bonds 4 1/4s, 2009 11,271,695
USD 340,000 Korea (Republic of) unsub. 8 7/8s, 2008 350,608
USD 405,000 Morocco (Government of) bonds Ser. A, 6.844s, 2009 361,463
EUR 2,925,000 Netherlands (Government of) bonds 5 1/2s, 2028 2,587,321
NZD 9,300,000 New Zealand (Government of) bonds Ser. 709,
7s, 2009 4,495,237
USD 480,000 Philippines (Republic of) notes 10 5/8s, 2025 444,624
USD 435,000 Philippines (Republic of) bonds 9 7/8s, 2019 384,453
USD 1,120,000 Russia (Federation of) 144A bonds 12 3/4s, 2028 907,200
USD 1,645,000 Russia (Federation of) unsub. 10s, 2007 1,172,063
USD 7,890,000 Russia (Federation of) deb. FRN 6.91s, 2020
(In default) (NON) 2,159,888
EUR 2,602,382 Spain (Government of) bonds 6s, 2029 2,427,337
EUR 8,730,000 Spain (Government of) bonds 5.15s, 2009 7,738,032
USD 355,000 Turkey (Republic of) sr. unsub. 12 3/8s, 2009 382,513
GBP 11,435,000 United Kingdom Treasury bonds 10s, 2003 19,823,533
GBP 11,430,000 United Kingdom Treasury bonds 7s, 2002 18,040,929
GBP 8,715,000 United Kingdom Treasury bonds 6 3/4s, 2004 14,059,944
USD 975,000 United Mexican States bonds 11 3/8s, 2016 1,101,750
USD 2,940,000 United Mexican States bonds Ser. XW, 10 3/8s, 2009 3,097,290
USD 520,000 Venezuela (Republic of) bonds 9 1/4s, 2027 332,176
----------------
Total Foreign Government Bonds and Notes
(cost $160,405,181) $ 150,455,287
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (25.7%) (a)
PRINCIPAL AMOUNT VALUE
U.S. Government Agency Mortgage Obligations (20.6%)
-------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Association
Pass-Through Certificates
$ 11,135,000 7 1/2s, May 1, 2030 $ 10,896,600
7,130,000 6 1/2s, August 15, 2004 6,932,784
19,675,000 5 1/8s, February 13, 2004 18,313,097
GBP 4,060,000 Fed Home Loan Bank 6 7/8s, June 7, 2002 6,333,004
$ 2,830,000 Federal Home Loan Mortgage Corporation 6 7/8s,
January 15, 2005 2,789,305
14,740,000 Government National Mortgage Association 6s,
TBA, May 1, 2030 13,383,478
----------------
58,648,268
U.S. Treasury Obligations (5.1%)
-------------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes
3,950,000 6 7/8s, May 15, 2006 (SEG) 4,014,188
10,743,611 3 7/8s, January 15, 2009 10,639,506
----------------
14,653,694
----------------
Total U.S. Government and Agency Obligations
(cost $75,251,753) $ 73,301,962
CORPORATE BONDS AND NOTES (13.8%) (a)
PRINCIPAL AMOUNT VALUE
Advertising/Marketing Services (0.3%)
-------------------------------------------------------------------------------------------------------------------
GBP 500,000 TDL Infomedia Group Ltd. 144A sr. sub notes
12 1/8s, 2009 (United Kingdom) $ 777,940
Banking (5.3%)
-------------------------------------------------------------------------------------------------------------------
EUR 3,355,000 Deutsche Bahn Finance BV bonds 4 7/8s, 2009
(Netherlands) 2,821,278
EUR 2,295,000 Bayerishche Handelsbank Ser.1190, FRN, 3.694s, 2001
(Germany) 2,084,465
$ 750,000 GS Escrow Corp. sr. notes 7 1/8s, 2005 668,768
170,000 Hanvit Bank 144A sub. notes 11 3/4s, 2010 (Korea) 167,238
EUR 8,310,000 Hypothekenbank in Essen AG 144A jumbo brief Ser. 524,
4 1/4s, 2002 (Germany) 7,482,852
EUR 2,185,000 Hypothekenbank in Essen AG 144A Ser. 538, FRN,
3.903s, 2009 (Germany) 1,984,695
----------------
15,209,296
Building Materials (0.3%)
-------------------------------------------------------------------------------------------------------------------
EUR 500,000 American Standard, Inc. company guaranty 7 1/8s, 2006 450,005
EUR 1,000,000 Geberit International, Inc. company guaranty 10 1/8s, 2007
(Luxembourg) 520,593
----------------
970,598
Cable Television (0.4%)
-------------------------------------------------------------------------------------------------------------------
$ 250,000 Charter Communications Holdings LLC sr. notes 8 5/8s, 2009 218,125
GBP 250,000 NTL Inc. sr. unsub. Ser. B, 9 1/2s, 2008 366,660
$ 130,000 TeleWest Communications Plc sr. disc. notes zero %
(9 1/4s, 4/15/04), 2009 (United Kingdom) (STP) 76,700
EUR 750,000 United Pan-Europe N.V. 144A sr. notes 10 7/8s, 2009
(Netherlands) 637,506
----------------
1,298,991
Chemicals (0.3%)
-------------------------------------------------------------------------------------------------------------------
EUR 500,000 Huntsman ICI Chemicals Inc. sr. sub. notes 10 1/8s, 2009 479,550
$ 250,000 Ineos Acrylics Finance bonds 10 1/4s, 2010
(United Kingdom) 233,525
----------------
713,075
Computers (0.2%)
-------------------------------------------------------------------------------------------------------------------
500,000 Unisys Corp. sr. notes 7 7/8s, 2008 478,750
Consumer Finance (--%)
-------------------------------------------------------------------------------------------------------------------
220,000 Contifinancial Corp. sr. notes 7 1/2s, 2002 22,000
Consumer Goods (--%)
-------------------------------------------------------------------------------------------------------------------
50,000 Revlon Consumer Products sr. notes 9s, 2006 36,000
80,000 Revlon Consumer Products sr. sub. notes 8 5/8s, 2008 38,800
----------------
74,800
Consumer Services (0.2%)
-------------------------------------------------------------------------------------------------------------------
500,000 Pierce Leahy Corp. sr. sub. notes 11 1/8s, 2006 513,750
Electric Utilities (0.2%)
-------------------------------------------------------------------------------------------------------------------
500,000 CILCORP, Inc. sr. notes 8.7s, 2009 495,952
Energy (0.1%)
-------------------------------------------------------------------------------------------------------------------
280,000 RBF Finance Co. company guaranty 11s, 2006 296,800
Entertainment (0.1%)
-------------------------------------------------------------------------------------------------------------------
150,000 Premier Parks, Inc. sr. notes 9 3/4s, 2007 142,500
Financial (1.4%)
-------------------------------------------------------------------------------------------------------------------
EUR 9,025,000 DSL Finance NV bonds 5 3/4s, 2009 (Netherlands) 4,173,985
Gaming & Lottery (0.1%)
-------------------------------------------------------------------------------------------------------------------
$ 170,000 Hollywood Casino Corp. company guaranty 11 1/4s, 2007 172,125
Health Care (0.1%)
-------------------------------------------------------------------------------------------------------------------
250,000 Columbia/HCA Healthcare Corp. notes 7 1/4s, 2008 222,500
Manufacturing (0.2%)
-------------------------------------------------------------------------------------------------------------------
500,000 Celestica International Ltd. 144A sr. sub. notes 10 1/2s, 2006
(Canada) 520,000
Metals (0.2%)
-------------------------------------------------------------------------------------------------------------------
270,000 AK Steel Corp. company guaranty 7 7/8s, 2009 245,700
250,000 WCI Steel, Inc. sr. notes Ser. B, 10s, 2004 245,000
----------------
490,700
Oil & Gas (0.1%)
-------------------------------------------------------------------------------------------------------------------
250,000 Gulf Canada Resources Ltd. sr. sub. notes 9 5/8s, 2005
(Canada) 253,750
Paper & Forest Products (0.7%)
-------------------------------------------------------------------------------------------------------------------
EUR 500,000 BSN Financing Co. 144A company guaranty 10 1/4s, 2009
(Luxembourg) 477,278
EUR 500,000 Clondalkin Ind. sr. notes 10 5/8s, 2010 (United Kingdom) 472,732
EUR 500,000 Kappa Beheer BV company guaranty 10 5/8s, 2009
(Netherlands) 482,959
$ 200,000 Riverwood International Corp. company guaranty
10 7/8s, 2008 190,000
500,000 Tembec Industries, Inc. company guaranty 8 5/8s, 2009
(Canada) 492,500
----------------
2,115,469
Pharmaceuticals (--%)
-------------------------------------------------------------------------------------------------------------------
170,000 ICN Pharmaceuticals, Inc. 144A sr. notes 9 1/4s, 2005 161,925
Power Producers (0.4%)
-------------------------------------------------------------------------------------------------------------------
500,000 Calpine Corp. sr. notes 7 7/8s, 2008 472,500
500,000 Midland Funding II Corp. deb. Ser. A, 11 3/4s, 2005 537,645
180,000 York Power Funding 144A notes 12s, 2007
(Cayman Islands) 176,400
----------------
1,186,545
Retail (0.2%)
-------------------------------------------------------------------------------------------------------------------
500,000 Southland Corp. sr. sub. deb. 5s, 2003 437,500
Technology Services (0.1%)
-------------------------------------------------------------------------------------------------------------------
EUR 250,000 Exodus Communications, Inc. 144A sr. notes 10 3/4s, 2009 230,116
Telecommunications (1.3%)
-------------------------------------------------------------------------------------------------------------------
$ 140,000 Call-Net Enterprises, Inc. sr. disc. notes stepped-coupon
zero % (8.94s, 8/15/03), 2008 (Canada) (STP) 64,400
630,000 Carrier1 Intl. S.A. sr. notes Ser. B, 13 1/4s, 2009
(Luxembourg) 630,000
CAD 1,000,000 Clearnet Communications, Inc. sr. disc. notes
stepped-coupon zero % (10 3/4s, 2/15/04), 2009
(Canada) (STP) 395,083
$ 180,000 Flag Ltd. 144A sr. notes 8 1/4s, 2008 (Bermuda) 160,200
EUR 200,000 Global Telesystems 144A bonds 10 1/2s, 2006 160,911
EUR 250,000 Hermes Europe Railtel 144A 10 3/8s, 2006 (Netherlands) 206,820
$ 500,000 Metromedia Fiber Network, Inc. sr. notes 10s, 2009 434,095
330,000 Nextel Communications, Inc. sr. notes 9 3/8s, 2009 312,675
GBP 500,000 Orange PLC sr. notes 8 5/8s, 2008 (United Kingdom) 791,520
500,000 RSL Communications, Ltd. company guaranty,
stepped-coupon zero % (10 1/8s, 3/1/03), 2008 (STP) 270,000
EUR 750,000 RSL Communications PLC bonds stepped-coupon zero %
(10s, 3/15/03), 2008 (STP) 186,507
EUR 1,000,000 Viatel, Inc. sr. disc. notes stepped-coupon zero %
(12.4s, 4/15/03), 2008 (STP) 246,352
----------------
3,858,563
Telephone (1.3%)
-------------------------------------------------------------------------------------------------------------------
EUR 200,000 Colt Telecommunications Group Plc cv. notes 7 5/8s, 2009 171,365
EUR 1,000,000 Completel Europe NV bonds 14s, 2010 (Netherlands) 909,100
EUR 500,000 Esat Telecom Group Plc sr. unsub. notes 11 7/8s, 2009
(Ireland) 572,733
$ 200,000 Jazztel PLC 144A 13 1/4s, 2009 182,275
750,000 Microcell Telecommunications sr. disc. notes
stepped-coupon Ser. B, zero % (14s, 12/1/01), 2006
(Canada) (STP) 675,000
EUR 500,000 Tele1 Europe BV 144A sr notes 11 7/8s, 2009 456,823
$ 700,000 Versatel Telecom B.V. sr. notes 13 1/4s, 2008 (Netherlands) 710,500
----------------
3,677,796
Water Utilities (0.3%)
-------------------------------------------------------------------------------------------------------------------
GBP 500,000 Azurix Corp. sr. notes 10 3/8s, 2007 779,880
----------------
Total Corporate Bonds and Notes (cost $43,958,744) $ 39,275,306
BRADY BONDS (1.9%) (a)
PRINCIPAL AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------
$ 945,000 Argentina (Republic of) govt. guaranty 6s, 2023 $ 660,366
3,521,833 Brazil (Federal Republic of) bonds 8s, 2014 (POR) 2,522,689
135,000 Bulgaria (Government of) deb. Ser. PDI, FRB 7.063s, 2011 101,920
455,000 Bulgaria (Government of) Ser. A, FRB 7.063s, 2024 348,075
1,095,000 Bulgaria (Government of) Ser. A, FLIRB 2 3/4s, 2012 761,025
571,425 Venezuela (Republic of) deb. Ser. DL, FRB 7s, 2007 447,140
740,000 Venezuela (Republic of) deb. Ser. W-A, 6 3/4s, 2020 515,262
----------------
Total Brady Bonds (cost $5,517,329) $ 5,356,477
COLLATERALIZED MORTGAGE OBLIGATIONS (2.3%) (cost $6,549,266) (a)
PRINCIPAL AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------
$ 4,200,000 Residential Mortgage Securities Ser 8, Class M, FRB,
7.202s, 2038 $ 6,414,106
WARRANTS (0.2%) (a) (NON) EXPIRATION
NUMBER OF WARRANTS DATE VALUE
-------------------------------------------------------------------------------------------------------------------
586 Network Plus Corp. 2/19/09 $ 293,000
90 R&B Falcon Corp. 144A 5/1/09 31,500
50 Telehub Communications Corp. 7/31/05 25
225 Versatel Telecom B. V. 144A (Netherlands) 5/15/08 110,250
----------------
Total Warrants (cost $27,848) $ 434,775
COMMON STOCKS (--%) (a) (cost$ 403,384)
NUMBER OF SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
11,327 PSF Holdings LLC Class A (NON) $ 113,270
PREFERRED STOCKS (--%) (a) (cost $90,502)
NUMBER OF SHARES VALUE
-------------------------------------------------------------------------------------------------------------------
99 R&B Falcon Corp. $13.875 pfd. $ 105,930
PURCHASED OPTIONS OUTSTANDING (--%) (a) (cost $17,501)
EXPIRATION DATE
CONTRACT AMOUNT STRIKE PRICE VALUE
-------------------------------------------------------------------------------------------------------------------
$ 6,226,000 Euro Bond Future Contract (Call) May2000/94 $ 3,396
SHORT-TERM INVESTMENTS (7.9%) (a)
PRINCIPAL AMOUNT VALUE
-------------------------------------------------------------------------------------------------------------------
$ 5,884,000 Thunder Bay Funding, Inc effective yield of 6.07%,
May 15, 2000 $ 5,870,110
8,631,000 Interest in $662,705,000 joint repurchase agreement dated
April 28, 2000 with S.B.C. Warburg, Inc. due May 1, 2000,
with respect to various U.S. Treasury obligations -- maturity
value of $8,635,107 for an effective yield of 5.71% 8,631,000
8,000,000 Interest in $434,310,000 joint repurchase agreement dated
April 28, 2000 with Salomon, Smith Barney Inc. due
May 1, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $8,003,807 for an effective
yield of 5.71% 8,000,000
----------------
Total Short-Term Investments (cost $22,501,110) $ 22,501,110
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $314,722,618) (b) $ 297,961,619
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $284,908,745.
(b) The aggregate identified cost on a tax basis is $317,924,548,
resulting in gross unrealized appreciation and depreciation of
$2,051,499 and $22,014,428, respectively, or net unrealized depreciation
of $19,962,929.
(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.
(POR) A portion of the income will be received in additional securities.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at April
30, 2000.
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).
The rates shown on Floating Rate Notes (FRN) are the current
interest rates shown at April 30, 2000, which are subject to change
based on the terms of the security.
DIVERSIFICATION BY COUNTRY
Distribution of investments by country of issue at April 30, 2000:
(as percentage of Market Value)
Brazil 1.9%
Canada 9.6
Denmark 5.2
Germany 7.0
Italy 4.8
Mexico 1.4
Netherlands 4.2
New Zealand 1.5
Russia 1.4
Spain 3.4
United Kingdom 18.2
United States 38.0
Other 3.4
-------
Total 100.0%
=======
------------------------------------------------------------------------------
Forward Currency Contracts to Buy at April 30, 2000 (Unaudited)
(aggregate face value $574,489,838)
Unrealized
Aggregate Face Delivery Appreciation/
Market Value Value Date (Depreciation)
------------------------------------------------------------------------------
Australian Dollar $ 23,931,568 $ 25,258,885 6/21/00 $ (1,327,317)
Euro Dollar 174,940,171 193,274,663 6/21/00 (18,334,492)
Japanese Yen 336,664,451 349,541,580 6/21/00 (12,877,129)
Korean Won 813,785 805,080 8/14/00 8,705
Korean Won 813,785 811,067 8/16/00 2,718
Korean Won 1,353,689 1,353,944 10/18/00 (255)
Swiss Franc 1,549,451 1,611,721 6/21/00 (62,270)
Swedish Krona 1,790,909 1,832,898 6/21/00 (41,989)
------------------------------------------------------------------------------
$(32,632,029)
------------------------------------------------------------------------------
Forward Currency Contracts to Sell at April 30, 2000 (Unaudited)
(aggregate face value $619,763,562)
Aggregate Face Delivery Unrealized
Market Value Value Date Appreciation
------------------------------------------------------------------------------
British Pound $ 64,308,032 $ 66,862,915 6/21/00 $ 2,554,883
Canadian Dollar 17,284,471 17,484,253 6/21/00 199,782
Danish Krone 14,167,589 15,357,926 6/21/00 1,190,337
Euro Dollar 168,500,288 186,810,884 6/21/00 18,310,596
Japanese Yen 316,717,447 328,475,950 6/21/00 11,758,503
New Zealand Dollar 4,633,361 4,771,634 6/21/00 138,273
------------------------------------------------------------------------------
$ 34,152,374
------------------------------------------------------------------------------
Futures Contracts Outstanding at April 30, 2000 (Unaudited)
Unrealized
Aggregate Face Expiration Appreciation/
Total Value Value Date (Depreciation)
------------------------------------------------------------------------------
Euro-Bund (short) $ 381,931 $ 375,411 Jun-00 $ (6,520)
Euro 3 month (long) 136,323,413 136,717,147 Sep-00 (393,734)
Euro 3 month (short) 24,773,175 24,841,499 Sep-00 68,324
Gilt (short) 10,764,206 10,578,823 Jun-00 (185,383)
U.S Treasury Bond
20 yr (long) 8,400,938 8,080,604 Jun-00 320,334
U.S. Treasury Notes
10 yr (short) 18,615,000 18,361,945 Jun-00 (253,055)
------------------------------------------------------------------------------
$(450,034)
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000 (Unaudited)
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $314,722,618) (Note 1) $297,961,619
-------------------------------------------------------------------------------------------
Cash 2,769,038
-------------------------------------------------------------------------------------------
Foreign currency (cost $1,882,062) 1,580,298
-------------------------------------------------------------------------------------------
Interest and other receivables 3,766,838
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 57,919
-------------------------------------------------------------------------------------------
Receivable for securities sold 27,836,368
-------------------------------------------------------------------------------------------
Receivable for open forward currency contracts 34,170,854
-------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts 1,227,135
-------------------------------------------------------------------------------------------
Total assets 369,370,069
Liabilities
-------------------------------------------------------------------------------------------
Payable for variation margin 194,955
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 7,754
-------------------------------------------------------------------------------------------
Payable for securities purchased 47,761,553
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 313,191
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 528,718
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 54,134
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 26,587
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 561
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 109,854
-------------------------------------------------------------------------------------------
Payable for open forward currency contracts 32,650,509
-------------------------------------------------------------------------------------------
Payable for closed forward currency contracts 2,772,568
-------------------------------------------------------------------------------------------
Other accrued expenses 40,940
-------------------------------------------------------------------------------------------
Total liabilities 84,461,324
-------------------------------------------------------------------------------------------
Net assets $284,908,745
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $370,602,978
-------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (103,309)
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (Note 1) (69,296,469)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
assets and liabilities in foreign currencies (16,294,455)
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $284,908,745
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($103,532,850 divided by 9,296,713 shares) $11.14
-------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $11.14)* $11.70
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($24,742,669 divided by 2,227,676 shares)** $11.11
-------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($191,221 divided by 17,188 shares)** $11.13
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($156,442,005 divided by 14,109,510 shares) $11.09
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $11.09)* $11.46
-------------------------------------------------------------------------------------------
* 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, 2000 (Unaudited)
<S> <C>
Investment income:
-------------------------------------------------------------------------------------------
Interest (net of foreign tax of $10,334) $ 10,891,097
-------------------------------------------------------------------------------------------
Dividends 7,021
-------------------------------------------------------------------------------------------
Total investment income 10,898,118
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 1,136,061
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 201,678
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 9,235
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 3,324
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 145,370
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 136,186
-------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 509
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 451,464
-------------------------------------------------------------------------------------------
Reports to shareholders 119,457
-------------------------------------------------------------------------------------------
Auditing 31,413
-------------------------------------------------------------------------------------------
Legal 14,054
-------------------------------------------------------------------------------------------
Postage 8,018
-------------------------------------------------------------------------------------------
Other 12,391
-------------------------------------------------------------------------------------------
Total expenses 2,269,160
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (15,703)
-------------------------------------------------------------------------------------------
Net expenses 2,253,457
-------------------------------------------------------------------------------------------
Net investment income 8,644,661
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (8,418,055)
-------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (305,516)
-------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (5,763,983)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in
foreign currencies during the period 840,030
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and
futures contracts during the period (7,869,863)
-------------------------------------------------------------------------------------------
Net loss on investments (21,517,387)
-------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(12,872,726)
-------------------------------------------------------------------------------------------
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
2000* 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 8,644,661 $ 22,554,117
--------------------------------------------------------------------------------------------------
Net realized loss on investments and
foreign currency transactions (14,487,554) (1,835,168)
--------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments
and assets and liabilities in foreign currencies (7,029,833) (26,405,168)
--------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (12,872,726) (5,686,219)
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net investment income
Class A (3,251,461) (10,609,623)
--------------------------------------------------------------------------------------------------
Class B (657,517) (1,489,382)
--------------------------------------------------------------------------------------------------
Class C (2,635) (419)
--------------------------------------------------------------------------------------------------
Class M (4,847,156) (10,454,693)
--------------------------------------------------------------------------------------------------
In excess of net investment income
Class A -- (1,754,541)
--------------------------------------------------------------------------------------------------
Class B -- (246,303)
--------------------------------------------------------------------------------------------------
Class C -- (69)
--------------------------------------------------------------------------------------------------
Class M -- (1,728,919)
--------------------------------------------------------------------------------------------------
From return of capital
Class A -- (1,602,595)
--------------------------------------------------------------------------------------------------
Class B -- (224,973)
--------------------------------------------------------------------------------------------------
Class C -- (63)
--------------------------------------------------------------------------------------------------
Class M -- (1,579,192)
--------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (57,848,001) (103,730,719)
--------------------------------------------------------------------------------------------------
Total decrease in net assets (79,479,496) (139,107,710)
Net assets
--------------------------------------------------------------------------------------------------
Beginning of period 364,388,241 503,495,951
--------------------------------------------------------------------------------------------------
End of period (including distributions in excess
of net investment income and undistributed net
investment income of $103,309 and $10,799, respectively) $284,908,745 $364,388,241
--------------------------------------------------------------------------------------------------
* 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
-------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.91 $12.82 $13.94 $14.49 $13.62 $13.33
-------------------------------------------------------------------------------------------------------------
Investment operations
-------------------------------------------------------------------------------------------------------------
Net investment income .32(c) .62(c) .77(c) .71(c) .83(c) 1.00
-------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.77) (.72) (.95) (.24) .82 .19
-------------------------------------------------------------------------------------------------------------
Total from
investment operations (.45) (.10) (.18) .47 1.65 1.19
-------------------------------------------------------------------------------------------------------------
Less distributions:
-------------------------------------------------------------------------------------------------------------
From net
investment income (.32) (.62) (.47) (.59) (.78) (.62)
-------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.10) -- (.43) -- --
-------------------------------------------------------------------------------------------------------------
From return of capital -- (.09) (.47) -- -- (.28)
-------------------------------------------------------------------------------------------------------------
Total distributions (.32) (.81) (.94) (1.02) (.78) (.90)
-------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.14 $11.91 $12.82 $13.94 $14.49 $13.62
-------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
-------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (3.81)* (0.85) (1.14) 3.38 12.46 9.38
-------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $103,533 $132,600 $253,611 $316,837 $343,125 $366,476
-------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .60* 1.21 1.26 1.29 1.32 1.34
-------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.75* 5.02 5.90 4.90 5.93 7.19
-------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 131.05* 290.27 561.48 638.66 429.38 300.66
-------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (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
Per-share April 30
operating performance (Unaudited) Year ended October 31
-------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.88 $12.79 $13.90 $14.45 $13.60 $13.31
-------------------------------------------------------------------------------------------------------------
Investment operations
-------------------------------------------------------------------------------------------------------------
Net investment income .27(c) .55(c) .67(c) .59(c) .72(c) .77
-------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.76) (.74) (.94) (.23) .81 .33
-------------------------------------------------------------------------------------------------------------
Total from
investment operations (.49) (.19) (.27) .36 1.53 1.10
-------------------------------------------------------------------------------------------------------------
Less distributions:
-------------------------------------------------------------------------------------------------------------
From net
investment income (.28) (.55) (.42) (.52) (.68) (.55)
-------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.09) -- (.39) -- --
-------------------------------------------------------------------------------------------------------------
From return of capital -- (.08) (.42) -- -- (.26)
-------------------------------------------------------------------------------------------------------------
Total distributions (.28) (.72) (.84) (.91) (.68) (.81)
-------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.11 $11.88 $12.79 $13.90 $14.45 $13.60
-------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
-------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (4.19)* (1.58) (1.87) 2.62 11.57 8.63
-------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $24,743 $30,310 $36,017 $41,322 $41,106 $30,910
-------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .97* 1.96 2.01 2.04 2.07 2.09
-------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.38* 4.26 5.17 4.22 5.13 6.59
-------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 131.05* 290.27 561.48 638.66 429.38 300.66
-------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (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>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS C
------------------------------------------------------------------
Six months
ended For the period
Per-share April 30 July 26, 1999+
operating performance (Unaudited) to October 31
------------------------------------------------------------------
2000 1999
------------------------------------------------------------------
Net asset value,
beginning of period $11.91 $12.05
------------------------------------------------------------------
Investment operations
------------------------------------------------------------------
Net investment income (c) .29 .14
------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.78) (.10)
------------------------------------------------------------------
Total from
investment operations (.49) .04
------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------
From net
investment income (.29) (.14)
------------------------------------------------------------------
In excess of net
investment income -- (.02)
------------------------------------------------------------------
From return of capital -- (.02)
------------------------------------------------------------------
Total distributions (.29) (.18)
------------------------------------------------------------------
Net asset value,
end of period $11.13 $11.91
------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------
Total return at
net asset value (%)(a) (4.21)* .37*
------------------------------------------------------------------
Net assets, end of period
(in thousands) $191 $50
------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .97* .53*
------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.53* 1.29*
------------------------------------------------------------------
Portfolio turnover (%) 131.05* 290.27
------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (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>
<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
------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.86 $12.77 $13.89 $14.44 $13.59 $12.81
------------------------------------------------------------------------------------------------------------------
Investment operations
------------------------------------------------------------------------------------------------------------------
Net investment income .30(c) .59(c) .76(c) .66(c) .77(c) .49
------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.76) (.72) (.95) (.23) .83 .88
------------------------------------------------------------------------------------------------------------------
Total from
investment operations (.46) (.13) (.19) .43 1.60 1.37
------------------------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------------------------
From net
investment income (.31) (.59) (.46) (.56) (.75) (.40)
------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.10) -- (.42) -- --
------------------------------------------------------------------------------------------------------------------
From return of capital -- (.09) (.47) -- -- (.19)
------------------------------------------------------------------------------------------------------------------
Total distributions (.31) (.78) (.93) (.98) (.75) (.59)
------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $11.09 $11.86 $12.77 $13.89 $14.44 $13.59
------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (3.95)* (1.10) (1.28) 3.15 12.14 10.87*
------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $156,442 $201,429 $213,868 $2,506 $1,892 $509
------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .72* 1.46 1.51 1.54 1.58 .96*
------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.62* 4.76 5.55 4.74 5.52 4.78*
------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 131.05* 290.27 561.48 638.66 429.38 300.66
------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (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, 2000 (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, class C 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 C shares are subject to the same fees and expenses as
class B shares, except that class C shares have a one-year 1.00%
contingent deferred sales charge and do not convert to class A shares.
Class M shares are sold with a maximum front-end sales charge of 3.25%
and pay an ongoing distribution fee that is higher than class A but
lower than class B and class C 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 that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reporting period. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sales price on its principle exchange, 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. Other
investments, including restricted securities, are stated at fair value
following procedures approved by the Trustees.
Market quotations are not considered to be readily available for certain
debt obligations; such investments are stated at fair value on the basis
of valuations furnished by a pricing service or dealers, approved by the
Trustees, which determine valuations for normal institutional-size
trading units of such securities using methods based on market
transactions for comparable securities and variable relationships
between securities that are generally recognized by institutional
traders.
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). Gains or losses on securities sold are determined
on the identified cost basis.
Interest income is recorded on the accrual basis. Discounts on zero
coupon bonds, original issue discount bonds, and stepped-coupon bonds
are accreted according to the yield-to-maturity basis. Any premium
resulting from the purchase of zero coupon bonds, original issue
discount bonds, and stepped-coupon 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. Investments in foreign securities involve certain risks, including
those related to economic instability, unfavorable political
developments, and currency fluctuations, not present with domestic
investments.
F) 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
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.
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 .01% 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.
Although the fund will generally enter into TBA purchase commitments
with the intention of acquiring securities for their portfolio or for
delivery pursuant to options contracts it has entered
into, the fund may dispose of a commitment prior to settlement if Putnam
Management deems it appropriate to do so.
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, 2000, 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, 1999, the fund had a capital loss carryover of
approximately $51,889,000 available to offset future capital gains, if
any. The amount of the carryover and the expiration dates are:
Loss Carryover Expiration
-------------- ------------------
$5,449,000 October 31, 2003
24,813,000 October 31, 2006
21,627,000 October 31, 2007
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: 0.70% of the
first $500 million of average net assets, 0.60% of the next $500
million, 0.55% of the next $500 million, 0.50% of the next $5 billion,
0.475% of the next $5 billion, 0.455% of the next $5 billion, 0.44% of
the next $5 billion and 0.43% 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, 2000, fund expenses were reduced by
$15,703 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 $768
has been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fee payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C and class M shares pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00%, 1.00% and 1.00% of the average net assets attributable to class
A, class B, class C, and class M shares, respectively. The Trustees have
approved payment by the fund to an annual rate of 0.25%, 1.00%, 1.00%
and 0.50% of the average net assets attributable to class A, class B,
class C and class M shares, respectively.
For the six months ended April 30, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $4,082 and $3,312 from
the sale of class A and class M shares, respectively and $29,126 and no
monies in contingent deferred sales charges from redemptions of class B
and class C shares, respectively. A deferred sales charge of up to 1% is
assessed on certain redemptions of class A shares. For the six months
ended April 30, 2000, Putnam Mutual Funds Corp., acting as underwriter
received $14 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended April 30, 2000, cost of purchases and
proceeds from sales of investment securities other than U.S. government
obligations and short-term investments aggregated $292,474,467 and
$308,783,876, respectively. Purchases and sales of U.S. government
obligations aggregated $103,036,241 and $153,747,531, respectively.
Note 4
Capital shares
At April 30, 2000, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended April 30, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 467,262 $ 5,397,788
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 209,050 2,413,962
---------------------------------------------------------------------------
676,312 7,811,750
Shares
repurchased (2,510,367) (29,083,165)
---------------------------------------------------------------------------
Net decrease (1,834,055) $(21,271,415)
---------------------------------------------------------------------------
Year ended October 31, 1999
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 3,598,128 $ 46,357,753
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 912,781 10,387,268
---------------------------------------------------------------------------
4,510,909 56,745,021
Shares
repurchased (13,162,037) (161,767,035)
---------------------------------------------------------------------------
Net decrease (8,651,128) $(105,022,014)
---------------------------------------------------------------------------
Six months ended April 30, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 221,600 $ 2,571,127
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 48,691 560,793
---------------------------------------------------------------------------
270,291 3,131,920
Shares
repurchased (593,790) (6,879,122)
---------------------------------------------------------------------------
Net decrease (323,499) $(3,747,202)
---------------------------------------------------------------------------
Year ended October 31, 1999
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 1,129,520 $14,123,183
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 133,852 1,657,295
---------------------------------------------------------------------------
1,263,372 15,780,478
Shares
repurchased (1,529,059) (18,951,466)
---------------------------------------------------------------------------
Net decrease (265,687) $(3,170,988)
---------------------------------------------------------------------------
Six months ended April 30, 2000
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 14,605 $167,610
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 189 2,164
---------------------------------------------------------------------------
14,794 169,774
Shares
repurchased (1,770) (20,342)
---------------------------------------------------------------------------
Net increase 13,024 $149,432
---------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations)
to October 31, 1999
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 4,149 $49,506
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 27 317
---------------------------------------------------------------------------
4,176 49,823
Shares
repurchased (12) (146)
---------------------------------------------------------------------------
Net increase 4,164 $49,677
---------------------------------------------------------------------------
Six months ended April 30, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 125,905 $ 1,457,623
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,758 31,695
---------------------------------------------------------------------------
128,663 1,489,318
Shares
repurchased (3,001,126) (34,468,134)
---------------------------------------------------------------------------
Net decrease (2,872,463) $(32,978,816)
---------------------------------------------------------------------------
Year ended October 31, 1999
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 6,132,742 $77,444,771
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8,333 103,041
---------------------------------------------------------------------------
6,141,075 77,547,812
Shares
repurchased (5,912,852) (73,135,206)
---------------------------------------------------------------------------
Net increase 228,223 $ 4,412,606
---------------------------------------------------------------------------
FUND INFORMATION
WEB SITE
www.putnaminv.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
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
This report is for the information of shareholders of Putnam 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
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA031-61443 041/220/906 6/00
