PUTNAM
CONVERTIBLE
INCOME-GROWTH
TRUST
[Artwork]
SEMIANNUAL REPORT
April 30, 1995
[Putnam Logo]
Boston * London * Tokyo
<PAGE>
PERFORMANCE HIGHLIGHTS
For the 12 months ended April 30, 1995, the performance of the fund's class A
and class B shares placed third and fifth, respectively, among the 26 converti-
ble securities funds tracked by Lipper Analytical Services, Inc. *
"Because of its success in tracking down value, this fund has been able to offer
strong returns with limited volatility."
-- Morningstar Mutual Funds, April 28, 1995 *
SEMIANNUAL RESULTS AT A GLANCE
CLASS A CLASS B
TOTAL RETURN: NAV POP NAV CDSC
- -------------------------------------------------------------------------------
(change in value during period
plus reinvested distributions)
6 months ended 4/30/95 5.22% -0.81% 4.84% 0.05%
- -------------------------------------------------------------------------------
CLASS A CLASS B CLASS M
SHARE VALUE: NAV POP NAV NAV POP
- -------------------------------------------------------------------------------
10/31/94 $19.09 $20.25$ 19.00 -- --
3/13/951 -- -- -- $17.79 $18.44
4/30/95 18.31 19.43 18.21 18.30 18.96
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CAPITAL GAINS
DISTRIBUTIONS: NO. INCOME LONG-TERM SHORT-TERM TOTAL
- -------------------------------------------------------------------------------
Class A 2 $0.480 $0.868 $0.293 $1.641
Class B 2 0.422 0.868 0.293 1.583
Class M (1) 1 0.231 -- -- 0.231
- -------------------------------------------------------------------------------
CLASS A CLASS B
CURRENT RETURN: NAV POP NAV
- -------------------------------------------------------------------------------
End of period
Current dividend rate (2) 5.24% 4.94% 4.66%
Current 30-day SEC yield (3) 5.16 4.86 4.42
- -------------------------------------------------------------------------------
Performance data represent past results and will differ for each share class.
For performance over longer periods, see pages 8 and 9. POP assumes 5.75% ma-
ximum sales charge for class A shares and 3.50% for class M shares. CDSC assu-
mes 5% maximum contingent deferred sales charge. (1) Class M shares commenced
operations on 3/13/95. Performance for class M shares is not shown because of
the brevity of the reporting period. (2) Income portion of most recent dis-
tribution, annualized and divided by NAV or POP at end of period. (3) Based
only on investment income, calculated using SEC guidelines.
* Lipper rankings are based on total return performance, vary over time and do
not reflect the effects of sales charges. Class A shares ranked 6 out of 19
and 1 out of 3 convertible securities funds for 5- and 10-year performance
through 4/30/95. Class B shares became effective 7/15/93, and thus were not
ranked over longer time periods. Past performance is not indicative of future
results. Lipper Analytical Services and Morningstar are independent industry
research and rating organizations.
<PAGE>
FROM THE CHAIRMAN [Photograph of George Putnam]
*(C) Karsh, Ottawa
DEAR SHAREHOLDER:
STRONG STOCK AND BOND MARKETS AND CONTINUED ECONOMIC GROWTH PROVIDED A GENERALLY
HOSPITABLE INVESTMENT ENVIRONMENT FOR PUTNAM CONVERTIBLE INCOME-GROWTH TRUST DU-
RING THE SIX MONTHS ENDED APRIL 30, 1995. BUSINESS CONTINUED TO MARCH AT A BRISK
STRIDE, THOUGH THE PACE SINCE JANUARY HAS SLOWED CONSIDERABLY FROM CALENDAR 1994
LEVELS.
INVESTORS TOOK THIS MODERATION AS A SIGN THAT THE ECONOMY WAS RESPONDING FAVORA-
BLY TO THE FEDERAL RESERVE BOARD'S ATTEMPTS TO REIN IN GROWTH TO A SUSTAINABLE
RATE. THE CONSENSUS IN THE MARKETS SEEMS TO BE THAT THE FED'S SERIES OF INTE-
REST-RATE INCREASES MAY BE NEAR AN END.
IN THE REPORT THAT FOLLOWS, FUND MANAGERS HUGH MULLIN AND CHARLES POHL RELATE
YOUR FUND'S PERFORMANCE DURING THE FIRST HALF OF FISCAL 1995 TO THIS MARKET AND
ECONOMIC SETTING. THEN THEY PROVIDE A GLIMPSE OF WHAT THEY BELIEVE MAY LIE IN
STORE FOR THE REMAINING MONTHS.
RESPECTFULLY YOURS,
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
JUNE 21, 1995
*(C) Copyright
<PAGE>
REPORT FROM THE FUND MANAGERS
HUGH H. MULLIN, LEAD MANAGER
CHARLES G. POHL
The six months ended April 30, 1995, marked another period of strong performance
for Putnam Convertible Income-Growth Trust as the fund's class A shares finished
the period with a total return at net asset value of 5.22%. While this result
did not surpass the Standard & Poor's *(R) 500 Index -- a benchmark for common
stock performance -- it did exceed the Merrill Lynch All-Convertible Index,
which measured a return of 5.18% over the semiannual period. We attribute the
fund's solid results largely to securities acquired at favorable prices that ha-
ve advanced nicely during calendar 1995's market rally.
VALUE-PRICED PURCHASES PAY OFF AS MARKETS RALLY
Throughout most of calendar 1994, rising interest rates and investors' panic
produced widespread and indiscriminate selling in the convertible market. Conse-
quently, by the year's fourth quarter, convertible prices had fallen to bargain
levels, especially among the high-yield and small-capitalization sectors of the
market.
Given our value-oriented approach to security selection, we capitalized on this
window of opportunity and accelerated our buying activity during late 1994. We
expanded the fund's small-capitalization holdings, which are sensitive to stock-
market performance, and also increased the fund's allocation to high-yielding
convertibles, which are more sensitive to interest rates and bond-market perfor-
mance.
With the across-the-board advance in domestic financial markets through April
30, 1995, the investments we made in late 1994 have paid off handsomely. U.S.
stock and bond markets have rallied impressively, responding to investors' be-
liefs that the economy was finally beginning to slow and that the Federal Reser-
ve Board may be nearing the end of its rate-tightening agenda. Convertibles li-
kewise moved ahead as the ascending market tide buoyed both the stock and bond
components of these hybrid securities.
Along with the market's recovery from 1994's depressed levels, the technical
(or, supply and demand) condition of the converti-
*(R) Registered mark
<PAGE>
ble market has also worked in the fund's favor. A stronger economy has enabled
corporations to improve their revenues and cash flows. Many companies have opted
to use some of this excess cash to redeem their outstanding convertibles prior
to maturity. Moreover, the convertible new-issue market has been sluggish over
the past six to nine months. Consequently, the supply of convertibles has been
shrinking, creating some degree of scarcity value. Meanwhile, in light of fall-
ing stock and bond yields, demand for higher-yielding convertibles appears to be
increasing. Overall, the technical condition of the convertible market has pro-
vided a welcome additional boost to performance during the semiannual period.
LEADING INDUSTRY SECTORS AND STANDOUT HOLDINGS
The best-performing industry sectors represented in the fund over the past six
months were financial services, consumer nondurables -- especially health-care-
related companies -- energy, and technology.
[Line Chart - Page 5]
FIVE-YEAR PERFORMANCE COMPARISON
(4/30/90 TO 4/30/95)
LEHMAN
CORPORATE
FUND @ NAV S&P 500 BOND INDEX FUND @ POP
4/30/90 0.00 0.00 0.00 0.00
7/31/90 4.67 8.63 6.09 -1.36
10/31/90 -14.39 -6.37 5.35 -19.32
1/31/91 -0.65 6.93 10.42 -6.38
4/30/91 9.81 17.57 15.17 3.48
7/31/91 13.43 22.53 17.63 6.89
10/31/91 19.05 25.00 23.93 12.18
1/31/92 26.53 31.15 27.62 19.23
4/30/92 32.07 34.08 28.93 24.46
7/31/92 37.02 38.17 37.43 29.12
10/31/92 40.66 37.41 37.69 32.55
1/31/93 51.36 45.01 43.73 42.64
4/30/93 57.04 46.44 48.69 47.98
7/31/93 62.81 50.17 53.58 53.42
10/31/93 71.25 57.86 58.57 61.38
1/31/94 76.56 63.59 60.60 66.38
4/30/94 67.75 54.24 50.39 58.08
7/31/94 71.24 57.96 53.24 61.37
10/31/94 74.39 63.97 50.21 64.34
1/31/95 70.65 64.49 54.42 60.81
4/30/95 83.59 81.10 62.39 72.91
Chart compares Putnam Convertible Income-Growth Trust's cumulative total return
for class A shares at net asset value with the performance of the stock and bond
markets as represented by the S&P 500 Index and the Lehman Bros. Corporate Bond
Index. The chart depicts how the fund's disciplined, long-term investment
approach has enabled it to outperform its major performance benchmarks over the
past five years. Results for the five years ended 4/30/95 are shown at quarterly
intervals. Indexes are unmanaged, assume reinvestment of distributions, and do
not reflect fund performance. POP (Public Offering Price) performance results
reflect the maximum 5.75% sales charge for class A shares. Past performance is
not indicative of future results. Please see page 8 for further details.
<PAGE>
Computer-systems manufacturer Unisys, the fund's second largest holding as of
April 30, benefited from the recently completed sale of its defense subsidiary
to Loral Corp. As a result of the sale, Unisys realized over $800 million in
cash, which enhances its ability to repay debt and significantly improves its
overall financial condition. The company's $3.75 convertible preferred stock
issue -- which had declined in value by nearly 40% during 1994 -- rose on the
news of the sale and continues to provide the fund with a current yield in ex-
cess of 9%.
In the energy sector, the fund's investment in Occidental Petroleum's converti-
ble preferred stock strengthened as the rebound in crude oil prices piqued in-
vestors. interest in the securities of large, integrated oil companies. The com-
pany has implemented a cost-cutting program, and, after several years of promi-
ses, appears finally to be focused on reducing debt. Occidental's chemical divi-
sion has also boosted the company's fortunes by its ability to pass through pri-
ce increases in a stronger economy while controlling its raw materials costs.
One standout in the financial services sector was Aegon, a Netherlands-based
life insurance company with extensive operations in the United States. In our
view, the solid performance of Aegon's convertible bonds reflects the caliber
of the company's able management and its continuing record of strong earnings
growth.
The fund's convertible holdings weren't the only contributors to its strong per-
formance over the semiannual period. Many of the fund's common stock investments
also advanced. One noteworthy performer in this category was Eastman Kodak. Ko-
dak's new management, led by former Motorola CEO George Fisher, has reinvigora-
ted the company by selling non-core businesses, focusing resources on its key
imaging technology, and paying down debt.
The fund's investments in the automobile industry failed to meet our expecta-
tions over the period. Auto sales are beginning to slow as consumer demand
appears to be waning in the later stages of the economic recovery. The prices
of both the fund's convertible and common stock holdings reflected these decli-
ning fundamentals.
VALUE SEEN AMONG CONSUMER-ORIENTED COMPANIES
During the next several months, we will likely continue to increase the fund's
exposure to consumer nondurables -- industries such as health care and pharma-
ceuticals -- and other
<PAGE>
TOP 10 HOLDINGS (4/30/95)
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TIME WARNER, INC. 8.75% CONVERTIBLE
Global media and entertainment
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UNISYS CORP. $3.75 CONVERTIBLE PFD.
Computer systems and related products and services
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SFP PIPELINE HOLDINGS INC. 9.67% VARIABLE RATE CONVERTIBLE
Common carrier, gasoline pipelines
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ROGERS COMMUNICATIONS 2% CONVERTIBLE
Cable broadcasting
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EASTMAN KODAK CO. COMMON STOCK
Diversified imaging, chemicals, and healthcare products
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LIBERTY PROPERTY TRUST 8.00% CONVERTIBLE
Real estate investment trust .office and industrial properties
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USF&G CORP. $4.10 CONVERTIBLE PFD.
Property-casualty and life insurance
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CELLULAR COMMUNICATIONS, INC. 0.00% CONVERTIBLE
Cellular telephone services
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ATLANTIC RICHFIELD CO. $2.23 CONVERTIBLE PFD.
Oil, natural gas, and chemicals production
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COMCAST CORP. 1.125% CONVERTIBLE
Cable broadcasting
- -------------------------------------------------------------------------------
These holdings represent 12.3% of the fund's net assets. Portfolio holdings
will vary over time.
consumer-oriented companies, such as retailers. In our
opinion, retailing securities have been performing as if an economic recession
were imminent, with the prices of both stocks and convertibles moving to extre-
mely depressed levels. As value investors, we frequently find ourselves taking
a somewhat contrarian approach to the market. In the case of retailers, we be-
lieve a contrarian approach is warranted, given the attractive prices at which
their securities are currently trading.
Financial markets have moved ahead dramatically thus far in 1995, with longer-
term interest rates down sharply, and stock and bond prices up substantially.
Our near-term outlook, therefore, is somewhat cautious and we are taking profits
on positions that have reached our target price levels. However, over the long
term -- which is the time frame upon which we base nearly all of our management
decisions -- we believe the outlook for the convertible market is favorable. Our
corresponding strategic goal is to keep the fund fully invested and to continue
our disciplined process of selecting securities that we believe offer long-term,
fundamental value.
The views expressed here are exclusively those of Putnam Management. They are
not meant as investment advice. Although the described holdings were viewed fa-
vorably as of 4/30/95, there is no guarantee the fund will continue to hold the-
se securities in the future.
<PAGE>
PERFORMANCE SUMMARY
This section provides, at a glance, information about your fund's performance.
Total return shows how the value of the fund's shares changed over time, assum-
ing you held the shares through the entire period and reinvested all distribu-
tions back into the fund. We show total return in two ways: on a cumulative
long-term basis and on average how the fund might have grown each year over
varying periods.
Performance should always be considered in light of a fund's investment strate-
gy. Putnam Convertible Income-Growth Trust is designed for investors seeking cu-
rrent income and capital appreciation mainly through bonds and preferred stocks
convertible into common stock, with capital conservation as a secondary objecti-
ve.
TOTAL RETURN FOR PERIODS ENDED 4/30/95
S&P LEHMAN BROS.
CLASS A CLASS B 500 CORPORATE
NAV POP NAV CDSC INDEX BOND INDEX
- -------------------------------------------------------------------------------
6 months 5.22% -0.81% 4.84% 0.05% 10.45% 8.11%
- -------------------------------------------------------------------------------
1 year 9.39 3.09 8.60 3.74 17.42 7.98
- -------------------------------------------------------------------------------
5 years 83.49 72.91 -- -- 81.11 62.39
Annual average 12.91 11.57 -- -- 12.61 10.18
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10 years 193.32 176.42 -- -- 295.95 181.60
Annual average 11.36 10.70 -- -- 14.75 10.91
- -------------------------------------------------------------------------------
Life of class B -- -- 11.64 7.91 20.31 6.50
Annual average -- -- 6.35 4.35 10.88 3.58
- -------------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 3/31/95
(most recent calendar quarter)
Class A Class B
NAV POP NAV CDSC
- -------------------------------------------------------------------------------
1 year 6.27% 0.16% 5.44% 0.72%
- -------------------------------------------------------------------------------
5 years 75.47 65.38 -- --
Annual average 11.90 10.59 -- --
- -------------------------------------------------------------------------------
10 years 188.19 171.54 -- --
Annual average 11.17 10.51 -- --
- -------------------------------------------------------------------------------
Life of class B -- -- 9.50 5.84
Annual average -- -- 5.45 3.37
- -------------------------------------------------------------------------------
Fund performance data do not take into account any adjustment for taxes payable
on reinvested distributions. The fund began offering what are now known as class
A shares on 6/29/72. Effective 7/15/93, the fund began offering class B shares,
and on 3/13/95, class M shares. Performance for class M shares is not shown be-
cause of the brevity of the reporting period. Performance data represent past
results and will differ for each share class. Investment returns and principal
value will fluctuate so an investor's shares, when sold, may be worth more or
less than their original cost.
<PAGE>
TERMS AND DEFINITIONS
CLASS A SHARES are generally subject to an initial sales charge.
CLASS B SHARES may be subject to a sales charge upon redemption.
CLASS M SHARES have a lower initial sales charge and a higher 12b-1 fee than
class A shares and no sales charge on redemption.
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus any liabili-
ties, divided by the number of outstanding shares, not including any initial or
contingent deferred sales charge.
PUBLIC OFFERING PRICE (POP) is the price of a mutual fund share plus the maximum
sales charge levied at the time of purchase. POP performance figures shown here
assume the maximum 5.75% sales charge for class A shares and 3.50% for class M
shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the
redemption of class B shares and assumes redemption at the end of the period.
Your fund's CDSC declines from a 5% maximum during the first year to 1% during
the sixth year. After the sixth year, the CDSC no longer applies.
COMPARATIVE BENCHMARKS
STANDARD & POOR'S 500 INDEX is an unmanaged list of common stocks that is fre-
quently used as a general measure of stock market performance.
LEHMAN BROTHERS CORPORATE BOND INDEX is an unmanaged list of corporate bonds.
MERRILL LYNCH ALL-CONVERTIBLE INDEX is an unmanaged list of convertible securi-
ties.
All indexes assume reinvestment of distributions and do not take into account
brokerage commissions or other costs. The fund's portfolio contains securities
that do not match those in the indexes.
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
April 30, 1995 (Unaudited)
CONVERTIBLE BONDS AND NOTES (32.7%)*
PRINCIPAL AMOUNT VALUE
AEROSPACE AND DEFENSE (0.3%)
- -------------------------------------------------------------------------------
$ 2,000,000 GenCorp, Inc. cv. sub. deb. 8s, 2002 $ 1,992,500
150,000 UNC Inc. cv. sub. deb. 7 1/2s, 2006 125,250
--------------
2,117,750
AUTOMOTIVE (0.5%)
- -------------------------------------------------------------------------------
1,000,000 Arvin Industries, Inc. cv. deb. 7 1/2s, 2014 977,500
1,750,000 Mascotech, Inc. cv. sub. deb. 4 1/2s, 2003 1,209,688
1,590,000 Titan Wheel International Inc. cv. sub. deb.
4 3/4s, 2000 1,941,788
--------------
4,128,976
BASIC INDUSTRIAL PRODUCTS (0.5%)
- -------------------------------------------------------------------------------
500,000 Albany International Corp. Ser. US, cv. deb.
5 1/4s, 2002 465,000
2,951,000 Cooper Industries, Inc. cv. sub. 7.05s, 2015 3,054,285
--------------
3,519,285
BUILDING AND CONSTRUCTION (0.7%)
- -------------------------------------------------------------------------------
3,000,000 Empresas Ica Sociedad ADS cv. sub. deb. 5s, 2004 1,380,000
1,500,000 Falcon Homes cv. sub. deb. 7 1/4s, 1999 1,365,000
1,200,000 Medusa Corp. cv. deb. 6s, 2003 1,143,000
1,805,000 U.S. Home Corp. cv. deb. 4 7/8s, 2005 1,268,013
--------------
5,156,013
BUSINESS EQUIPMENT AND SERVICES (2.9%)
- -------------------------------------------------------------------------------
5,250,000 Conner Peripherals Inc. cv. sub. deb. 6 1/2s, 2002 4,101,563
1,550,000 Danka Business Systems 144A cv. sub. notes
6 3/4s, 2002 1,728,250
2,950,000 Data General Corp. cv. sub. deb. 7 3/4s, 2001 2,489,063
1,165,000 EMC Corp. cv. sub. notes 4 1/4s, 2001 1,319,363
6,000,000 Maxtor Corp. cv. sub. deb. 5 3/4s, 2012 3,180,000
1,000,000 Seagate Technology Inc. cv. sub. deb. 6 3/4s, 2012 942,500
3,100,000 Sterling Software, Inc. cv. deb. 5 3/4s, 2003 3,953,500
4,250,000 Unisys Corp. cv. sub. notes 8 1/4s, 2000 4,675,000
--------------
22,389,239
COMPUTER SERVICES AND SOFTWARE (0.1%)
- -------------------------------------------------------------------------------
450,000 MacNeal-Schwendler cv. sub. deb. 7 7/8s, 2004 488,250
COMPUTERS (0.1%)
- -------------------------------------------------------------------------------
1,000,000 Synoptics Communications Inc. 144A cv. sub. deb.
5 1/4s, 2003 876,250
<PAGE>
CONVERTIBLE BONDS AND NOTES (continued)*
PRINCIPAL AMOUNT VALUE
CONSUMER DURABLE GOODS (0.4%)
- -------------------------------------------------------------------------------
$ 8,000,000 Whirlpool Corp. Cv. Liquid Yield Option Note
(LYON), zero %, 2011 $ 3,240,000
CONSUMER NON DURABLES (2.6%)
- -------------------------------------------------------------------------------
1,250,000 Bell Sports Corp. cv. sub. deb. 4 1/4s, 2000 914,063
11,500,000 Coleman Worldwide Corp. cv. sr. sec. notes LYON
zero %, 2013 3,335,000
3,295,000 Dibrell Brothers, Inc. cv. sub. deb. 7 3/4s, 2006 3,892,219
2,000,000 Dixie Yarns, Inc. cv. sub. deb. 7s, 2012 1,380,000
2,550,000 Fieldcrest Cannon, Inc. cv. sub. deb. 6s, 2012 1,938,000
1,300,000 Interface, Inc. sinking fund cv. deb. 8s, 2013 1,283,750
3,480,000 L.A. Gear, Inc. cv. sub. deb. 7 3/4s, 2002 1,866,150
7,445,000 Standard Commercial Corp. cv. sub. deb. 7 1/4s, 2007 5,527,913
--------------
20,137,095
CONSUMER SERVICES (6.4%)
- -------------------------------------------------------------------------------
5,500,000 Boston Chicken Inc. cv. sub. deb. 4 1/2s, 2004 4,585,625
10,500,000 Cellular Communications, Inc. cv. sub. deb., zero %,
1999 144A 8,190,000
1,370,000 Cellular Communications, Inc. of Puerto Rico cv. sub.
deb. 8 1/4s, 2000 2,690,338
18,250,000 Comcast Corp. cv. notes 1 1/8s, 2007 7,573,750
3,000,000 Comcast Corp. cv. sub. deb. stepped-coupon 3 3/8s,
(5 1/2s, 9/9/97), 2005 ++ 2,490,000
15,650,000 Hollinger, Inc. LYON notes zero %, 2013 4,616,750
2,050,000 National Education Corp. cv. sub. deb. 6 1/2s, 2011 1,158,250
5,500,000 News America Holdings Inc. cv. LYON zero %, 2013 2,378,750
9,484,000 Time-Warner, Inc. cv. deb. 8 3/4s, 2015 9,507,710
13,500,000 Time-Warner, Inc. cv. deb. LYON zero %, 2012 4,370,625
1,530,000 WMS Industries, Inc. cv. deb. 5 3/4s, 2002 1,346,400
--------------
48,908,198
ELECTRONICS AND ELECTRICAL EQUIPMENT (1.5%)
- -------------------------------------------------------------------------------
1,500,000 M/A-Com. Inc. cv. sub. deb. 9 1/4s, 2006 1,501,875
1,500,000 Magnetek, Inc. cv. deb. 8s, 2001 1,565,625
3,615,000 Motorola Inc. cv. deb. LYON zero %, 2013 2,611,838
500,000 Network Equipment Technologies Inc. cv. sub. deb.
7 1/4s, 2014 440,000
4,745,000 Richardson Electronics Ltd. cv. sub. deb. 7 1/4s, 2006 3,748,550
3,285,000 Solectron Corp. cv. sub. LYON zero %, 2012 2,003,850
--------------
11,871,738
ENVIRONMENTAL CONTROL (1.6%)
- -------------------------------------------------------------------------------
2,300,000 Enclean, Inc. cv. sub. deb. 7 1/4s, 2001 2,307,188
2,500,000 OHM Corp. cv. sub. deb. 8s, 2006 2,146,875
6,378,791 WMX Technologies, Inc. cv. 2s, 2005 5,182,768
8,000,000 Waste Management, Inc. cv. sub. LYON zero %, 2012 2,935,000
--------------
12,571,831
<PAGE>
CONVERTIBLE BONDS AND NOTES (continued)*
PRINCIPAL AMOUNT VALUE
FOOD AND BEVERAGES (0.6%)
- -------------------------------------------------------------------------------
$ 3,300,000 Flagstar Corp. cv. jr. sub. deb. 10s, 2014 $ 2,380,125
1,450,000 Wendy's International, Inc. cv. deb. 7s, 2006 2,091,625
--------------
4,471,750
FOREST PRODUCTS (0.4%)
- -------------------------------------------------------------------------------
2,230,000 Riverwood International Corp. sub. notes 6 3/4s, 2003 3,021,650
HEALTH CARE (3.0%)
- -------------------------------------------------------------------------------
7,115,000 Alza Corp. cv. sub. notes LYON, zero %, 2014 2,614,763
4,600,000 Cabot Medical Corp. cv. deb. 7 1/2s, 1999 4,278,000
3,240,000 Careline, Inc. 144A cv. sr. sub. notes 8s, 2001 2,875,500
4,150,000 Integrated Health Services, Inc. cv. sub. deb. 6s, 2003 4,756,938
3,715,000 Quantum Health Resources Inc. cv. deb. 4 3/4s, 2000 2,990,575
1,750,000 Summit Health Ltd. cv. sub. notes 7 1/2s, 2003 2,585,625
3,000,000 Theratx Inc. cv. sub. 8s, 2002 2,730,000
--------------
22,831,401
INSURANCE AND FINANCE (2.2%)
- -------------------------------------------------------------------------------
1,500,000 Alexander & Alexander Services, Inc. cv. sub. deb.
11s, 2007 1,520,063
1,500,000 Midlantic Corp. cv. sub. deb. 8 1/4s, 2010 1,535,625
5,000,000 NAC Re Corp. cv. deb. 5 1/4s, 2002 4,287,500
5,000,000 Old Republic International Corp. cv. sub. deb.
5 3/4s, 2002 5,350,000
1,335,000 Re Capital Inc. cv. deb. 5 1/2s, 2000 1,430,119
2,715,000 Trenwick Group, Inc. cv. deb. 6s, 1999 2,735,363
--------------
16,858,670
MEDICAL SUPPLIES (0.1%)
- -------------------------------------------------------------------------------
625,000 Benson Eyecare Corp. cv. sub. notes 8s, 2001 782,813
METALS AND MINING (0.2%)
- -------------------------------------------------------------------------------
5,000,000 Freeport-McMoRan Copper & Gold Co., Inc.
cv. sub. deb. zero %, 2006 1,837,500
OIL AND GAS (2.0%)
- -------------------------------------------------------------------------------
2,900,000 Cross Timbers Oil Co. cv. deb. 5 1/4s, 2003 2,468,625
3,000,000 Pennzoil Co. cv. deb. 4 3/4s, 2003 2,820,000
2,000,000 Pennzoil Co. cv. sub. deb. 6 1/2s, 2003 2,345,000
2,295,000 Pogo Producing Co. sub. notes 5 1/2s, 2004 2,593,350
2,500,000 Seacor Holdings cv. sub. deb. 6s, 2003 2,396,875
3,500,000 Wainoco Oil Corp. cv. sub. deb. 7 3/4s, 2014 3,088,750
--------------
15,712,600
REAL ESTATE (1.6%)
- -------------------------------------------------------------------------------
1,250,000 Alexander Haagen Properties Ser. A, cv. sub. deb.
7 1/2s, 2001 1,021,875
3,080,000 Camden Property Trust cv. sub. deb. 7.33s, 2001 2,783,550
8,750,000 Liberty Property Trust cv. sub. deb. 8s, 2001 8,400,000
--------------
12,205,425
<PAGE>
CONVERTIBLE BONDS AND NOTES (continued)*
PRINCIPAL AMOUNT VALUE
RETAIL (3.4%)
- -------------------------------------------------------------------------------
3,665,000 Baker (J.) Inc. cv. deb. 7s, 2002 $ 3,536,725
5,300,000 Federated Department Stores cv. deb. zero %
(6s 2/15/95) 2004 ++ 5,335,500
3,750,000 Food Lion, Inc. 144A cv. deb. 5s, 2003 3,459,375
3,350,000 Ingles Markets, Inc. cv. sub. deb. 10s, 2008 3,488,188
1,250,000 Kroger Co. cv. deb. 6 3/8s, 1999 1,710,938
2,375,000 Lowes Companies Inc. cv. deb. 3s, 2003 2,749,063
3,150,000 Michaels Stores, Inc. cv. sub. notes 4.75s,
(6.75s, 1/15/96), 1/12/23 ++ 3,094,875
4,500,000 Office Depot Inc. cv. notes LYON zero %, 2008 2,622,418
--------------
25,997,082
TRANSPORTATION (1.6%)
- -------------------------------------------------------------------------------
1,500,000 Hudson General Corp. cv. sub. deb. 7s, 2011 1,119,375
9,000,000 SFP Pipeline Holdings Inc. cv. variable rate exch.
deb. 9.67s, 2010 11,520,000
--------------
12,639,375
--------------
TOTAL CONVERTIBLE BONDS AND NOTES
(cost $258,600,864) $251,762,891
COMMON STOCKS (26.1%)*
NUMBER OF SHARES VALUE
AEROSPACE AND DEFENSE (0.3%)
- -------------------------------------------------------------------------------
25,000 Boeing Co. $ 1,375,000
20,000 Northrop Grumman Corp. 992,500
--------------
2,367,500
AUTOMOTIVE (0.1%)
- -------------------------------------------------------------------------------
20,000 General Motors Corp. 902,500
BASIC INDUSTRIAL PRODUCTS (0.4%)
- -------------------------------------------------------------------------------
30,000 Ball Corp. 1,027,500
13,000 Deere (John) & Co. 1,066,000
30,000 General Signal Corp. 1,113,750
--------------
3,207,250
BUSINESS EQUIPMENT AND SERVICES (0.8%)
- -------------------------------------------------------------------------------
30,000 IBM Corp. 2,842,500
25,000 Xerox Corp. 3,078,125
--------------
5,920,625
CHEMICALS (1.3%)
- -------------------------------------------------------------------------------
25,000 Dow Chemical Co. 1,737,500
24,000 du Pont (E.I.) de Nemours & Co., Ltd. 1,581,000
20,000 Grace (W.R.) & Co. 1,072,500
34,175 Lubrizol Corp. 1,191,853
20,000 Olin Corp. 1,117,500
40,000 Union Carbide Corp. 1,280,000
65,000 Witco Chemical Corp. 1,860,625
--------------
9,840,978
<PAGE>
COMMON STOCKS (continued)*
NUMBER OF SHARES VALUE
CONGLOMERATES (1.3%)
- -------------------------------------------------------------------------------
21,000 ITT Corp. $ 2,194,500
25,000 Johnson Controls, Inc. 1,356,250
60,000 Ogden Corp. 1,222,500
38,000 TRW, Inc. 2,826,250
20,000 Tenneco, Inc. 917,500
20,000 United Technologies Corp. 1,462,500
--------------
9,979,500
CONSUMER DURABLE GOODS (0.3%)
- -------------------------------------------------------------------------------
55,000 Brunswick Corp. 1,175,625
70,000 Maytag Corp. 1,207,500
--------------
2,383,125
CONSUMER NON DURABLES (2.1%)
- -------------------------------------------------------------------------------
40,000 American Brands, Inc. 1,620,000
46,000 Avon Products, Inc. 2,909,500
20,000 Clorox Co. 1,175,000
20,000 Colgate-Palmolive Co. 1,405,000
34,000 Kimberly-Clark Corp. 1,925,250
80,000 Philip Morris Cos., Inc. 5,420,000
60,000 Universal Corp. 1,372,500
--------------
15,827,250
CONSUMER SERVICES (0.7%)
- -------------------------------------------------------------------------------
40,000 Dun & Bradstreet Corp. 2,085,000
20,000 Knight-Ridder, Inc. 1,085,000
25,000 McGraw-Hill, Inc. 1,865,625
--------------
5,035,625
ELECTRONICS AND ELECTRICAL EQUIPMENT (0.5%)
- -------------------------------------------------------------------------------
15,000 Emerson Electric Co. 1,008,750
52,000 General Electric Co. 2,912,000
--------------
3,920,750
ENVIRONMENTAL CONTROL (0.2%)
- -------------------------------------------------------------------------------
50,000 WMX Technologies, Inc. 1,362,500
FOOD AND BEVERAGES (1.3%)
- -------------------------------------------------------------------------------
27,000 Anheuser-Busch Cos., Inc. 1,569,375
50,000 Brown Forman Corp. Class B 1,650,000
19,300 CPC International Inc. 1,131,463
30,000 Heinz (H.J.) Co. 36,780 1,260,000
28,500 Nabisco Holdings Corp. Class A 794,438
25,000 Nestle S.A. (Registered) ADR (Switzerland) 1,206,250
25,000 PepsiCo, Inc. 1,040,625
60,000 Sara Lee Corp. 1,672,500
--------------
10,324,651
<PAGE>
COMMON STOCKS (continued)*
NUMBER OF SHARES VALUE
FOREST PRODUCTS (0.5%)
- -------------------------------------------------------------------------------
25,000 Potlatch Corp. $ 1,065,625
24,000 Union Camp Corp. 1,203,000
40,000 Weyerhaeuser Co. 1,680,000
--------------
3,948,625
HEALTH CARE (1.6%)
- -------------------------------------------------------------------------------
30,000 American Home Products Corp. 2,313,750
80,000 Baxter International, Inc. 2,780,000
25,000 Bristol-Myers Squibb Co. 1,628,125
12,000 Lilly (Eli) & Co. 897,000
35,000 Smithkline Beecham PLC ADR 1,360,625
40,000 Upjohn Co. 1,450,000
25,000 Warner-Lambert Co. 1,993,750
--------------
12,423,250
INSURANCE AND FINANCE (4.1%)
- -------------------------------------------------------------------------------
40,000 AON Corp. 1,475,000
30,000 Aetna Life & Casualty Co. 1,710,000
35,000 American Express Co. 1,216,250
35,000 BankAmerica Corp. 32,190 1,732,500
42,000 Bankers Trust New York Corp. 2,278,500
45,000 Beneficial Corp. 1,833,750
18,000 CIGNA Corp. 1,307,250
50,000 Comerica, Inc. 1,437,500
60,000 CoreStates Financial Corp. 1,957,500
17,000 Federal National Mortgage Association 1,500,250
25,000 First Bank System, Inc. 1,012,500
20,000 First Fidelity Bancorp 965,000
40,000 Fleet Financial Group, Inc. 1,310,000
27,000 Lincoln National Corp. 1,100,250
52,000 Morgan (J.P.) & Co., Inc. 3,412,500
60,000 National City Corp. 1,642,500
359,666 USF&G Corp. 5,305,074
4,000 Wells Fargo & Co. 663,500
--------------
31,859,824
METALS AND MINING (1.1%)
- -------------------------------------------------------------------------------
406,250 Freeport-McMoRan Copper & Gold Co., Inc. 7,160,156
51,250 Freeport-McMoRan Copper & Gold Co., Inc. Class A 1,069,844
--------------
8,230,000
OIL AND GAS (2.8%)
- -------------------------------------------------------------------------------
10,000 Atlantic Richfield Co. 1,145,000
20,000 British Petroleum Co., PLC ADR 1,722,500
20,000 Chevron, Inc. 947,500
50,000 Dresser Industries, Inc. 1,093,750
45,000 Exxon Corp. 3,133,125
21,000 Imperial Oil Ltd. 750,750
60,000 Occidental Petroleum Corp. 1,380,000
29,300 Pennzoil Co. 1,432,038
35,000 Phillips Petroleum Co. 1,225,000
20,000 Royal Dutch Petroleum Co. PLC ADR 2,480,000
<PAGE>
COMMON STOCKS (continued)*
NUMBER OF SHARES VALUE
OIL AND GAS (Continued)
- -------------------------------------------------------------------------------
50,000 Sonat, Inc. $ 1,518,750
30,000 Texaco, Inc. 2,051,250
50,000 Ultramar Corp. 1,306,250
40,000 Unocal Corp. 1,150,000
--------------
21,335,913
PHOTOGRAPHY (1.1%)
- -------------------------------------------------------------------------------
148,744 Eastman Kodak Co. 8,552,780
REAL ESTATE (0.5%)
- -------------------------------------------------------------------------------
100,000 LTC Properties, Inc. 1,300,000
55,000 National Health Investors, Inc. 1,443,750
100,000 South West Property Trust, Inc. 1,187,500
--------------
3,931,250
RETAIL (1.1%)
- -------------------------------------------------------------------------------
27,000 Dayton Hudson Corporation 1,812,375
100,000 K Mart Corp. 1,387,500
50,000 May Department Stores Co. 1,812,500
40,000 Penney (J.C.) Co., Inc. 1,750,000
65,000 Rite Aid Corp. 1,511,250
10,000 Sears, Roebuck & Co. 542,500
--------------
8,816,125
TELECOMMUNICATIONS (0.1%)
- -------------------------------------------------------------------------------
25,000 Airtouch Communications, Inc. + 671,875
TRANSPORTATION (1.5%)
- -------------------------------------------------------------------------------
25,000 Conrail, Inc. 1,365,625
185,000 Consolidated Freightways, Inc. 4,717,500
512,022 Greyhound Lines, Inc. + 1,408,061
20,000 Illinois Central Corp. 702,500
15,000 Norfolk Southern Corp. 1,010,625
40,000 Union Pacific Corp. 2,195,000
--------------
11,399,311
UTILITIES (2.4%)
- -------------------------------------------------------------------------------
38,000 American Telephone & Telegraph Corp. 1,928,500
25,000 Bell Atlantic Corp. 1,371,875
35,805 Cinergy Corp. 899,601
36,000 GTE Corp. 1,228,500
20,000 Houston Industries, Inc. 790,000
50,000 NYNEX Corp. 2,043,750
53,000 Northeast Utilities 1,159,375
45,000 Public Service Co. of Colorado 1,355,625
60,000 SCE Corp. 1,005,000
75,000 Sprint Corp. 2,475,000
20,000 Telefonos de Mexico S.A., Ser. L, ADR (Mexico) 605,000
40,000 Texas Utilities Co. 1,305,000
50,000 US WEST, Inc. 2,068,750
--------------
18,235,976
--------------
TOTAL COMMON STOCKS (cost $175,616,745) $200,477,183
<PAGE>
COVERTIBLE PREFERRED STOCKS (24.9%)*
NUMBER OF SHARES VALUE
AEROSPACE AND DEFENSE (0.2%)
- -------------------------------------------------------------------------------
35,000 Kaman Corp. $3.25 cv. pfd. $ 1,820,000
AUTOMOTIVE (0.8%)
- -------------------------------------------------------------------------------
12,950 Chrysler Corp. 144A Ser. A, $4.625 dep. shs. cv. pfd. 1,550,762
56,500 Ford Motor Co. Ser. A, $4.20, cv. pfd. 4,979,063
--------------
6,529,825
BASIC INDUSTRIAL PRODUCTS (0.4%)
- -------------------------------------------------------------------------------
43,200 AGCO Corp. $1.625, cv. pfd. 3,013,200
BUILDING AND CONSTRUCTION (0.4%)
- -------------------------------------------------------------------------------
71,450 Southdown, Inc. $2.875 cv. pfd. 2,813,344
BUSINESS EQUIPMENT AND SERVICES (1.6%)
- -------------------------------------------------------------------------------
307,300 Unisys Corp. Ser. A, $3.75 cv. pfd. 12,292,000
CONGLOMERATES (0.7%)
- -------------------------------------------------------------------------------
100,000 Corning, Inc. $3.00 cv. pfd. 5,150,000
CONSUMER NON DURABLES (0.8%)
- -------------------------------------------------------------------------------
76,975 Fieldcrest Cannon, Inc. 144A $3.00, cv. pfd. 3,598,581
432,500 RJR Nabisco Holdings Ser. C $0.6012 sr. cv. pfd. 2,595,000
--------------
6,193,581
CONSUMER SERVICES (0.5%)
- -------------------------------------------------------------------------------
64,500 Service Corp. International $6.25 cv. pfd. 3,579,750
ELECTRONICS AND ELECTRICAL EQUIPMENT (0.6%)
- -------------------------------------------------------------------------------
40,000 Storage Technology Corp. $3.25 cv. pfd. 2,055,000
196,500 Westinghouse Electric Corp. 144A Ser. C,
$1.30 cv. pfd. 2,947,500
--------------
5,002,500
ENERGY-RELATED (0.7%)
- -------------------------------------------------------------------------------
51,750 Diamond Shamrock, Inc. 144A $2.50 cv. pfd. 2,878,594
8,000 Maxus Energy Corp. $4.00 cv. pfd. 312,000
85,500 Noble Drilling Corp. $1.50 cv. pfd. 1,950,469
--------------
5,141,063
FOOD AND BEVERAGES (1.3%)
- -------------------------------------------------------------------------------
145,000 Chiquita Brands International Inc. $5.75 cv. pfd. 6,216,875
103,100 Conagra, Inc. $1.6875 cv. pfd. 3,518,288
--------------
9,735,163
HEALTH CARE (0.6%)
- -------------------------------------------------------------------------------
80,000 Beverly Enterprises, Inc. $2.75 cv. pfd. 4,620,000
<PAGE>
COVERTIBLE PREFERRED STOCKS (continued)*
NUMBER OF SHARES VALUE
INSURANCE AND FINANCE (4.9%)
- -------------------------------------------------------------------------------
106,800 Allstate Corp. $2.30 cv. pfd. $ 3,858,150
18,000 Chemical Banking Corp. $5.00 cv. pfd. 1,433,250
30,000 Citicorp Ser. 13, $5.375 cv. pfd. 3,825,000
61,000 First Bank System, Inc. Ser. 91-A, $3.5625, cv. pfd. 4,292,875
105,000 First Chicago Corp. Ser. B, $2.875 cv. pfd. 5,748,750
25,000 National City Corp. $4.00 cv. pfd. 1,662,500
30,125 Peoples Bank Ser. A, $4.25 cv. pfd. 2,684,891
75,000 Republic New York Corp. $3.375, cv. pfd. 3,937,500
45,000 Roosevelt Financial Group $3.25 cv. pfd. 2,835,000
76,200 Southern National Corp. Ser A, $1.6875 cv. pfd. 2,333,625
62,000 USF&G Corp. Ser. A, $4.10 cv. pfd. 2,921,750
78,350 Union Planters Corp. Ser. E, $2.00 cv. pfd. 2,409,263
--------------
37,942,554
METALS AND MINING (3.5%)
- -------------------------------------------------------------------------------
35,166 Alumax, Inc. Ser. A, $4.00 cv. pfd. 4,237,503
41,425 Amax Gold, Inc. Ser. B, $3.75 cv. pfd. 1,988,400
65,000 Armco, Inc. $3.625 cv. pfd. 3,445,000
25,000 Bethlehem Steel Corp. $5.00 cum. cv. pfd. 1,265,625
13,333 Cyprus Amax Minerals Ser. A, $4.00 cv. pfd. 819,980
200,000 Freeport-McMoRan Copper & Gold Co., Inc. $1.25,
($1.75, 8/1/96) dep. shs. cv. pfd. ++ 4,300,000
151,050 Kaiser Aluminum Corp. Prides $0.97 cv. pfd. 1,661,550
87,700 Pittston Mineral Corp. Ser. C, $3.125, cv. pfd. 2,806,400
135,180 Quanex Corp. $1.72 cv. pfd. 3,058,448
20,000 Reynolds Metals Co. $3.31 cv. pfd. 965,000
60,000 WHX Corp. Ser. A, $3.25 cv. pfd. 2,550,000
--------------
27,097,906
OIL AND GAS (4.9%)
- -------------------------------------------------------------------------------
97,500 Ashland, Inc. $3.125 cv. pfd. 5,801,250
253,081 Atlantic Ritchfield Co. $2.23 cv. pfd. 6,516,836
65,000 Grant Geophysical, Inc. $2.4375 cv. pfd. 942,500
40,085 McDermott International, Inc. 144A Ser. C, $2.875
cum. cv. pfd. 1,838,899
116,800 Occidental Petroleum Corp. 144A $3.875 cv. pfd. 6,351,000
95,000 Parker & Parsley Petro. 144A $3.125 cv. pfd. 4,429,375
56,300 Reading & Bates Corp. $1.625 cv. pfd. 1,513,063
75,520 Santa Fe Energy Resources, Inc. $1.40 cv. pfd. 1,406,560
45,825 Tejas Gas Corp. $2.65 cv. pfd. 2,142,319
77,000 Unocal Corp. $3.50, cv. pfd. 4,158,000
71,000 Western Gas Resources Inc. $2.625 cv. pfd. 2,547,125
--------------
37,646,927
REAL ESTATE (1.2%)
- -------------------------------------------------------------------------------
67,950 Rouse Co. Ser. A, $3.25 cv. pfd. 3,210,638
195,000 Security Capital Pacific Trust Ser. A, $1.75 cv. pfd. 4,387,500
82,190 Tanger Factory Outlet Centers $1.575 cv. pfd. 1,664,348
--------------
9,262,486
<PAGE>
COVERTIBLE PREFERRED STOCKS (continued)*
NUMBER OF SHARES VALUE
TELECOMMUNICATIONS (0.4%)
- -------------------------------------------------------------------------------
85,000 Sprint Corp. $8.25 cv. pfd. $ 2,847,500
TRANSPORTATION (0.8%)
- -------------------------------------------------------------------------------
79,500 Burlington Northern, Inc. Ser. A, $3.125, cum. cv. pfd. 5,147,625
20,000 Sea Containers Ltd. $4.00 cv. pfd. 855,000
--------------
6,002,625
UTILITIES (0.6%)
- -------------------------------------------------------------------------------
80,000 Philippine Long District Telephone Co.
$7.00 cv. pfd. (Phillipines) 4,720,000
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS (cost $190,601,254) $191,410,424
EUROBONDS (6.4%)
PRINCIPAL AMOUNT VALUE
$ 3,800,000 Aegon NV 144A cv. deb. 4 3/4s, 2004 $ 4,379,500
4,000,000 Apache Corp. 144A cv. sub. deb. 6s, 2002 4,320,000
7,500,000 Banamex cv. deb. 7s, 1999 4,875,000
5,945,000 CML Group, Inc. 144A cv. deb. 5 1/2s, 2003 4,339,850
3,500,000 Chiquita Brands International Inc. cv. sub. 7s, 2001 2,992,500
1,050,000 Chubb Corp. cv. deb. 6s, 1998 1,089,375
600,000 Dart & Kraft Inc. cv. deb. 7 3/4s, 1998 1,438,500
4,000,000 Grand Metropolitan PLC cv. unsub. 6 1/2s, 2000 4,300,000
750,000 Hanson America Inc. 144A euro. cv. sr. notes
2.39s, 2001 570,938
1,200,000 Industrial Credit & Investor India Ltd. 144A cv. deb.
2 1/2s, 2000 900,000
3,100,000 International Cabletel Inc. 144A cv. deb.
7 1/4s, 2005 3,092,250
3,000,000 International Paper Co. cv. deb. 5 3/4s, 2002 3,360,000
6,220,000 Pharmaceutical Marketing Services Inc. cv. deb.
144A 6 1/4s, 2003 4,136,300
280,000 Pharmaceutical Marketing Services Inc. cv. notes
6 1/4s, 2003 189,000
2,500,000 Siemens Capital Corp. Co. Guaranty 8s, 2002 3,293,750
1,500,000 Telekom Malaysia 144A cv. deb.4s, 2004 1,278,750
2,500,000 Thermo Electron Corp. cv. deb. 5s, 2001 3,112,500
1,410,000 Thermo Instrument Systems Inc. cv. deb.
3 3/4s, 2000 1,565,100
--------------
TOTAL EUROBONDS (cost $46,896,957) $ 49,233,313
YANKEE BONDS AND NOTES (3.2%)*
PRINCIPAL AMOUNT VALUE
$ 4,250,000 Amoco Canada Petroleum Co. cv. deb. 7 3/8s, 2013 $ 5,312,500
12,630,000 Roche Holdings, Inc. cv. unsub. LYON zero %, 2010 4,728,356
9,700,000 Rogers Communications Inc. cv. LYON, zero %, 2013 3,225,250
10,500,000 Rogers Communications cv. deb. 2s, 2005 5,473,125
3,700,000 SKF Corp. 144A cv. LYON, zero %, 2002 2,680,188
3,360,000 Teck Corp. cv. sub. deb. 3 3/4s, 2006 3,045,000
--------------
TOTAL YANKEE BONDS AND NOTES (cost $23,997,300) $ 24,464,419
<PAGE>
SHORT-TERM INVESTMENTS (7.3%)*
PRINCIPAL AMOUNT VALUE
$20,000,000 Federal Home Loan Banks 5.91s, May 8, 1995 $ 19,888,367
20,000,000 USAA Capital Corp. 5.92s, May 15, 1995 19,880,267
16,118,000 Interest in $485,809,000 joint repurchase agreement
dated April 28, 1995 with Morgan (J.P.) & Co., due
May 1, 1995 with respect to various U.S Treasury
Bonds -- maturity value of $ 16,125,925 for an
effective yield of 5.9% 16,125,925
--------------
TOTAL SHORT-TERM INVESTMENTS (cost $55,911,033) $ 55,894,559
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS (cost $751,624,153) $773,242,789
- -------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $768,673,457, which corres-
pond to a net asset value of class A, class B and class M shares of $18.31,
$18.21 and $18.30 respectively.
+ Non-income-producing security.
++ The interest rate and date shown parenthetically represent the new interest
rate to be paid and the date the fund will begin receiving interest at this
rate.
^^ Income may be received in cash or additional securities at the discretion
of the issuer.
*** The aggregate identified cost on a tax cost basis is $752,709,100, resul-
ting in gross unrealized appreciation and depreciation of $74,607,070 and
$54,073,381, respectively, or net unrealized appreciation of $20,533,689.
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 re-
sold in transactions exempt from registration, normally to qualified insti-
tutional buyers.
ADS after the name of a foreign holding stands for American Depository Sha-
res representing foreign securities on deposit with a domestic custodian
bank.
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (Unaudited)
ASSETS
- -------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $751,624,153) (Note 1) $773,242,789
Cash 424
Dividends, interest and other receivables 6,526,773
Receivable for shares of the fund sold 13,087,613
- -------------------------------------------------------------------------------
TOTAL ASSETS $792,857,599
LIABILITIES
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 766,796
Payable for securities purchased 22,208,850
Payable for compensation of Manager (Note 2) 730,922
Payable for administrative services (Note 2) 1,374
Payable for compensation of Trustees (Note 2) 269
Payable for investor servicing and custodian fees (Note 2) 202,152
Payable for distribution fees (Note 2) 184,710
Other accrued expenses 89,069
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 24,184,142
- -------------------------------------------------------------------------------
NET ASSETS $768,673,457
REPRESENTED BY
- -------------------------------------------------------------------------------
Paid-in capital (Notes 1and 4) $722,839,499
Undistributed net investment income (Note 1) 12,407,750
Accumulated net realized gain on investment transactions (Note 1) 11,807,572
Net unrealized appreciation of investments and futures contracts 21,618,636
- -------------------------------------------------------------------------------
TOTAL -- REPRESENTING NET ASSETS APPLICABLE TO
CAPITAL SHARES OUTSTANDING $768,673,457
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
- -------------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($720,446,417 divided by 39,344,823 shares) $18.31
Offering price per class A share (100/94.25 of $18.31) * $19.43
Net asset value and offering price of class B shares
($48,038,357 divided by 2,637,929 shares) + $18.21
Net asset value and redemption price of class M shares
($188,683 divided by 10,311 shares) $18.30
Offering price per share (100/96.50 of $18.30) $18.96
- -------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000 or more and
on group sales the offering price is reduced.
+ Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF OPERATIONS
Six months ended April 30, 1995 (Unaudited)
INVESTMENT INCOME:
- -------------------------------------------------------------------------------
Interest $10,909,565
- -------------------------------------------------------------------------------
Dividends (net of foreign tax of $6,635) 9,960,530
- -------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 20,870,095
- -------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 2,216,984
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 426,686
- -------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 11,450
- -------------------------------------------------------------------------------
Auditing 13,500
- -------------------------------------------------------------------------------
Reports to shareholders 40,854
- -------------------------------------------------------------------------------
Legal 10,355
- -------------------------------------------------------------------------------
Postage 40,481
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 848,436
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 187,878
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 115
- -------------------------------------------------------------------------------
Administrative services (Note 2) 7,776
- -------------------------------------------------------------------------------
Registration fees 3,507
- -------------------------------------------------------------------------------
Other expenses 21,756
- -------------------------------------------------------------------------------
TOTAL EXPENSES 3,829,778
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME 17,040,317
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 12,206,605
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments and
- -------------------------------------------------------------------------------
options during the period 8,274,508
- -------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS AND OPTIONS 20,481,113
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $37,521,430
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
APRIL 30 OCTOBER 31
1995* 1994
- -------------------------------------------------------------------------------
INCREASE IN NET ASSETS
- -------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------
Net investment income $ 17,040,317 $ 29,762,366
- -------------------------------------------------------------------------------
Net realized gain on investments 12,206,605 46,186,880
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)
of investments and option 8,274,508 (63,310,458)
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 37,521,430 12,638,788
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- Class A (18,061,337) (26,305,107)
- -------------------------------------------------------------------------------
Net investment income -- Class B (886,350) (686,066)
- -------------------------------------------------------------------------------
Net investment income -- Class M (944) --
- -------------------------------------------------------------------------------
Net realized gain on investments -- Class A (42,106,385) (31,369,489)
- -------------------------------------------------------------------------------
Net realized gain on investments -- Class B (2,126,191) (510,511)
- -------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 64,955,528 63,202,221
- -------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 39,295,751 16,969,836
- -------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------
Beginning of year 729,377,706 712,407,870
- -------------------------------------------------------------------------------
END OF YEAR (including undistributed net
investment income of $12,407,750 and
$14,316,064, respectively) $768,673,457 $729,377,706
- -------------------------------------------------------------------------------
* Unaudited.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
MARCH 13, 1995 JULY 15, 1993
(COMMENCEMENT SIX MONTHS (COMMENCEMENT SIX MONTHS
OF OPERATIONS) TO ENDED YEAR ENDED OF OPERATIONS) TO ENDED
APRIL 30 APRIL 30 OCTOBER 31 OCTOBER 31 APRIL 30 YEAR ENDED OCTOBER 31
1995+ 1995+ 1994 1993 1995+ 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS M CLASS B CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $17.79 $19.00 $20.35 $19.53 $19.09 $20.38 $17.60
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .10* .42 .74 .23 .44 .81 .87
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments .64 .37 (.55) .82 .42 (.46) 2.87
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS .74 .79 .191 .05 .86 .35 3.74
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (a) (.23) (.42) (.66) (.23) (.48) (.74) (.96)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments -- (1.16) (.88) -- (1.16) (.90) --
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.23) (1.58) (1.54) (.23) (1.64) (1.64) (.96)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $18.30 $18.21 $19.00 $20.35 18.31 $19.09 $20.38
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE (%) (b) 4.21(c) 4.84(c) 1.00 5.43(c) 5.22(c) 1.84 21.74
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(in thousands) $189 $48,038 $31,432 $4,439 $720,446 $697,946 $707,969
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) .72(c) .89(c) 1.71 .52(c) .51(c) .96 .96
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.62(c) 2.02(c) 3.58 .91(c) 2.38(c) 4.16 4.55
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 34.30 34.30 48.37 66.63 34.30 48.37 66.63
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Per share net investment income has been determined on the basis of weighted average number of shares outstanding during the
period.
+ Unaudited.
(a) $0.017 of distributions from net investment income for the year ended October 31, 1990 represents return of capital for federal
income tax purposes.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(c) Not annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (Continued)
(For a share outstanding throughout the period)
YEAR ENDED OCTOBER 31
1992 1991 1990 1989 1988 1987 1986
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $15.78 $12.12 $15.56 $14.42 $14.24 $16.44 $14.43
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPERATIONS
Net investment income .89 .88 .95 .97 .88 .86 .93
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 1.89 3.74 (3.35) 1.13 .87 (1.83) 2.47
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.78 4.62 (2.40) 2.10 1.75 (.97) 3.40
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income (a) (.96) (.96) (1.04) (.96) (.96) (.96) (.95)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments -- -- -- -- (.61) (.27) (.44)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.96) (.96) (1.04) (.96) (1.57) (1.23) (1.39)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $17.60 $15.78 $12.12 $15.56 $14.42 $14.24 $16.44
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT
NET ASSET VALUE (%) (b) 18.16 39.05 (16.46) 14.90 13.40 (7.00) 24.55
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(in thousands) $599,866 $570,752 $528,648 $820,609 $950,280 $1,070,783 $825,562
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%) 1.11 1.15 1.12 .93 .92 .84 .83
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.32 6.07 6.37 6.32 6.12 4.91 5.54
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 59.89 78.72 60.03 49.44 115.87 87.45 77.51
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1995 (Unaudited)
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. The fund seeks current
income and capital appreciation by investing primarily in bonds and preferred
stocks convertible into common stock with capital preservation as a secondary
objective.
The fund offers class A, class B and class M shares. The fund commenced its pu-
blic offering of class M shares on March 13, 1995. Class A shares are sold with
a maximum front-end sales charge of 5.75%. Class B shares do not pay a front-end
sales charge, but pay a higher ongoing distribution fee than class A shares, and
may be subject to a contingent deferred sales charge, if those shares are re-
deemed within six years of purchase. Class M shares are sold with a maximum
front-end sales charge of 3.50% and pay a distribution fee that is higher than
class A shares. In addition, the Trustees declare separate dividends on each
class of 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 (in-
cluding the distribution fees applicable to such class). Each class votes as a
class only with respect to its own distribution plan or other matters on which
a class vote is required by law or determined by the Trustees. Shares of each
class would receive their pro-rata share of the net assets of the fund, if the
fund were liquidated. In addition, the Trustees declare separate dividends on
each class of shares.
The following is a summary of significant accounting policies consistently fo-
llowed by the fund in the preparation of its financial statements. The policies
are in conformity with generally accepted accounting principles.
A) SECURITY VALUATION Investments for which market quotations are readily avail-
able are stated at market value, which is determined using the last reported sa-
le price, or, if no sales are reported -- as in the case of some securities tra-
ded over-the-counter -- the last reported bid price, except that U.S. government
obligations are stated at the mean between the last reported bid and asked pri-
ces. 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 va-
lue, and other investments are stated at fair value following procedures appro-
ved by the Trustees.
B) JOINT TRADING ACCOUNT Pursuant to an exemptive order issued by the Securities
and Exchange Commission the fund may transfer uninvested cash balances into a
joint trading account. The order permits the fund's cash balance to be deposited
into a single joint account along with the cash of other registered investment
companies managed by Putnam Investment Management, Inc. (Putnam Management), the
fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc., and cer-
tain accounts of other affiliates of the fund. These balances may be invested in
one or more repurchased agreements and/or short-term money market instruments.
<PAGE>
C) REPURCHASE AGREEMENTS The fund, or any joint trading account, through its
custodian, receives delivery of the underlying securities, the market value of
which at the time of purchase is required to be in an amount at least equal to
the resale price, including accrued interest. The fund's Manager is responsible
for determining that the value of these underlying securities is at all times at
least equal to the resale price, including accrued interest.
D) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Security transactions are
accounted for on the trade date (date the order to buy or sell is executed). In-
terest income is recorded on the accrual basis and dividend income is recorded
on the ex-dividend date, except that certain dividends from foreign securities
are recorded as soon as the fund is informed of the ex-dividend date.
Discount on zero coupon bonds and stepped-coupon bonds is accreted according to
the effective yield method. Certain securities held by the fund pay interest in
the form of additional securities; interest on such securities is recorded on
the accrual basis at the lower of the coupon rate or market value of the securi-
ties to be received, and is allocated to the cost of the securities received on
the payment date.
E) FEDERAL TAXES It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the In-
ternal 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. Therefo-
re, no provision has been made for federal taxes on income, capital gains or un-
realized appreciation of securities held and excise tax on income and capital
gains.
F) DISTRIBUTIONS TO SHAREHOLDERS Distributions to shareholders are recorded by
the fund on the ex-dividend date. The amount and character of income and gains
to be distributed are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These differences in-
clude the treatment of non-taxable dividends and wash sales. 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 regu-
lations.
NOTE 2
MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS
Compensation of Putnam Management, the fund's Manager, for management and inves-
tment advisory services is paid quarterly based on the average net assets of the
fund for the quarter. Such fee is based on the following annual rates: 0.65% of
the first $500 million of average net assets, 0.55% of the next $500 million,
0.50% of the next $500 million and 0.45% of any amount over $5 billion, subject,
under current law, to reduction , in any year to the extent that expenses (ex-
clusive of brokerage, interest and taxes) of the fund exceed 2.5% of the first
$30 million of average net assets, 2.0% of the next $70 million and 1.5% of any
amount over $100 million and by the amount of certain brokerage commissions and
fees (less expenses) received by affiliates of the Manager on the fund's portfo-
lio transactions.
<PAGE>
The fund also reimburses the Manager for the compensation and related expenses
of certain officers of the fund and their staff who provide administrative ser-
vices to the fund. The aggregate amount of all such reimbursements is determined
annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $1,500 and an additional
fee for each Trustees' meeting attended. Trustees who are not interested persons
of the Manager and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
Custodial functions for the fund are provided by Putnam Fiduciary Trust Company
(PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing agent func-
tions are provided by Putnam Investor Services, a division of PFTC.
Investor servicing and custodian fees reported in the Statement of operations
for the six months ended April 30, 1995, have been reduced by credits allowed
by PFTC.
The fund has adopted distribution plans (the "Plans") with respect to its class
A, class B and class M shares pursuant to Rule 12B-1 under the Investment Compa-
ny 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 provi-
ded and expenses incurred by it in distributing shares of the fund. The Trustees
have approved payment by the fund at an annual rate of .20%, .85% and .50%of the
average net assets attributable to class A, class B and class M shares, respec-
tively.
For the six months ended April 30, 1995, Putnam Mutual Funds Corp., acting as
underwriter received net commissions of $779 and $317 from the sale of class A
and class M shares, respectively, and $39,070 in contingent deferred sales char-
ges from redemptions of class B shares. A deferred sales charge of up to 1% is
assessed on certain redemptions of class A shares purchased as part of an in-
vestment of $1 million or more. For the six months ended April 30, 1995, Putnam
Mutual Funds Corp., acting as underwriter received $79,154 on class A redemp-
tions.
NOTE 3
PURCHASES AND SALES OF SECURITIES
During the six months ended April 30, 1995, purchases and sales of investment
securities other than U.S. government obligations and short-term investments
aggregated $ 266,359,806 and $ 217,684,685, respectively. There were no purcha-
ses or sales of U.S. government obligations during the year. In determining the
net gain or loss on securities sold, the cost of securities has been determined
on the identified cost basis.
NOTE 4
CAPITAL SHARES
At April 30, 1995, there was an unlimited number of shares of beneficial inte-
rest authorized, divided into three classes, designated class A, class B and
class M capital stock. Transactions in capital shares were as follows:
<PAGE>
SIX MONTHS ENDED
APRIL 30, 1995
CLASS A SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 2,645,196 $46,937,994
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 3,067,208 52,493,558
- -------------------------------------------------------------------------------
5,712,404 99,431,553
- -------------------------------------------------------------------------------
Shares repurchased (2,920,195) (52,054,293)
- -------------------------------------------------------------------------------
NET INCREASE 2,792,209 $47,377,260
- -------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1994
CLASS A SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 4,188,443 $81,687,225
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 2,532,365 48,925,153
- -------------------------------------------------------------------------------
6,720,808 130,612,378
- -------------------------------------------------------------------------------
Shares repurchased (4,900,211) (95,396,464)
- -------------------------------------------------------------------------------
NET INCREASE 1,820,597 $35,215,914
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
APRIL 30, 1995
CLASS B SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 1,113,270 $19,778,476
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 134,295 2,289,818
- -------------------------------------------------------------------------------
1,247,565 22,068,294
- -------------------------------------------------------------------------------
Shares repurchased (263,526) (4,675,274)
- -------------------------------------------------------------------------------
NET INCREASE 984,039 $17,393,020
- -------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, 1994
CLASS B SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 1,817,330 $35,252,070
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 46,690 896,897
- -------------------------------------------------------------------------------
1,864,020 36,148,967
- -------------------------------------------------------------------------------
Shares repurchased (428,280) (8,162,660)
- -------------------------------------------------------------------------------
NET INCREASE 1,435,740 $27,986,307
- -------------------------------------------------------------------------------
MARCH 13, 1995
(COMMENCEMENT OF OPERATIONS) TO
APRIL 30, 1995
CLASS M SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 10,258 $184,141
- -------------------------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions 53 1,107
- -------------------------------------------------------------------------------
10,311 185,248
- -------------------------------------------------------------------------------
Shares repurchased -- --
- -------------------------------------------------------------------------------
Net increase 10,311 $185,248
- -------------------------------------------------------------------------------
<PAGE>
OUR COMMITMENT TO QUALITY SERVICE
CHOOSE AWARD WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested Service Seal for the
past five years, through 1994. DALBAR, an independent research firm, ran more
than 10,000 tests of 38 shareholder service components. In every category, Put-
nam outperformed the industry standard.
HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month from a
Putnam fund or from your checking or savings account. *
SWITCH FUNDS EASILY.
You can move money from one account to another with the same class of shares
without a service charge. (This privilege is subject to change or termination.)
ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business day at the then-
current net asset value, which may be more or less than their original cost.
For details about any of these or other services, contact your financial advisor
or call the toll-free number shown below and speak with a helpful Putnam repre-
sentative.
To make an additional investment in this or any other Putnam fund, contact your
financial advisor or call our toll-free number:
1-800-225-1581.
* Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market. Investors should consider their ability to con-
tinue purchasing shares during periods of low price levels.
<PAGE>
FUND INFORMATION
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman William F. Pounds, Vice Chairman
Jameson Adkins Baxter Hans H. Estin
John A. Hill Elizabeth T. Kennan
Lawrence J. Lasser Robert E. Patterson
Donald S. Perkins George Putnam, III
Eli Shapiro A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam Charles E. Porter
President Executive Vice President
Patricia C. Flaherty Lawrence J. Lasser
Senior Vice President Vice President
Gordon H. Silver Peter Carman
Vice President Vice President
Brett C. Browchuk Thomas V. Reilly
Vice President Vice President
Hugh Mullin Charles Pohl
Vice President and Fund Manager Vice President and Fund Manager
William N. Shiebler John R. Verani
Vice President Vice President
Paul M. O.Neil John D. Hughes
Vice President Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Convertible Income-
Growth Trust. It may also be used as sales literature when preceded or accompa-
nied by the current prospectus, which gives details of sales charges, investment
objectives and operating policies of the fund, and the most recent copy of Put-
nam's Quarterly Performance Summary. For more information, or to request a pros-
pectus, call toll free:
1-800-225-1581.
SHARES OF MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR EN-
DORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT IN-
SURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
<PAGE>
---------------
PUTNAM INVESTMENTS Bulk Rate
U.S. Postage
THE PUTNAM FUNDS PAID
One Post Office Square Putnam
Boston, Massachusetts 02109 Investments
---------------
18343-008/223
<PAGE>
<PAGE>
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EDGAR-FILED TEXTS:
(1) Boldface typeface is displayed with capital letters, italic typeface is
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(2) Because the printed page breaks are not reflected, certain tabular and
columnar headings and symbols are displayed differently in this filing.
(3) Bullet points and similar graphic signals are omitted.
(4) Page numbering has been omitted.
(5) The trademark symbol has been replaced by (TM)
(6) The copyright symbol has been replaced by (C)
(7) The registered mark symbol has been replaced by (R)
(8) The dagger symbol has been replaced by +
(9) The double dagger symbol has been replaced by ++
(10) The 2 double daggers symbol has been replaced by ^^
(11) The section symbol has been replaced by +++
