Putnam
Convertible
Income-Growth
Trust
[Graphic Omitted: Artwork]
ANNUAL REPORT
October 31, 1995
[Logo: BOSTON * LONDON * TOKYO]
Fund highlights
* Putnam Convertible's diversified, value-oriented approach has
continued to show its merits in 1995. . . . year-to-date returns are
superior to those of more than 70% of its rivals.
-- Morningstar Mutual Funds analysis, September 15, 1995
* Even more than in the straight bond or stock markets, small investors
are better off betting on the convertibles and preferred markets through
mutual funds that offer the benefits of diversification and the research
capability to track these markets.
-- Fortune, September 18, 1995
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
12 Portfolio holdings
23 Financial statements
From the Chairman
[Graphic Omitted: photo of George Putnam]
(C) Karsh, Ottawa
Dear Shareholder:
Everyone loves a bargain, and Putnam Convertible Income-Growth Trust's
managers are no exception. In the opening months of fiscal 1995, as the
year-long declines in the stock and bond markets ground slowly to a
halt, fund managers Hugh Mullin and Charles Pohl positioned your fund
more aggressively by purchasing a variety of attractively priced
convertibles. The fund benefited handsomely as a result, as the
subsequent sharp rally in the financial markets boosted the value of
their acquisitions.
Hugh and Charlie also took profits in holdings of companies in certain
industries they believed would be hit hardest by the slowing economy and
diverted funds to issues with what they considered better prospects in
the emerging economic environment.
All in all, as they explain in greater detail in the report that
follows, they were pleased with the fund's results in fiscal 1995 and
believe the prevailing moderate economic growth and benign inflation
provide a favorable backdrop for convertible investing in fiscal 1996.
Respectfully yours,
/s/George Putnam
- ----------------
George Putnam
Chairman of the Trustees
December 20, 1995
Report from the Fund Managers
Hugh H. Mullin, lead manager
Charles G. Pohl
So far in calendar 1995, investors have witnessed one of the strongest
equity markets in recent memory, fueled by declining interest rates and
relatively strong corporate profitability. Your fund took full advantage
of the market's good fortunes, recording a total return for class A
shares of 14.38% at net asset value for the fiscal year ended October
31, 1995. Although these results lag the 15.51% return of the Merrill
Lynch All-Convertible Index for the period, the fund handily
outperformed the 12.00% average total return of the 35 convertible funds
tracked by Lipper Analytical Services, Inc. We attribute this solid
performance to the fund's hallmark combination of sound fundamental
analysis and superior sector and security selection.
* FUND CAPITALIZES ON LAST YEAR'S BUYING OPPORTUNITY
The market downturn of late calendar 1994 offered us an ideal
opportunity to add a number of new securities to the portfolio at
bargain prices. We targeted our purchases toward smaller company names
that we believed were most undervalued by the marketplace. This approach
allowed us to increase the fund's exposure to both small-capitalization
growth companies, whose prices are sensitive to stock market
performance, and high-yield convertibles, whose values respond more to
movements in interest rates and the bond market.
These newly acquired holdings proved their value as the domestic
financial markets rebounded dramatically throughout calendar 1995.
Prices of convertibles rose as both the stock and bond characteristics
of these hybrid securities responded favorably to moderating inflation
and lower interest rates.
During the first five months of this year, convertibles issued by large-
capitalization companies were the strongest performers, their prices
rising in tandem with advancing blue chip stocks. Nevertheless, our
valuation strategy began to bear fruit over the second half of the year
as small-capitalization convertibles began to outperform their larger-
cap brethren.
* PROFITS FUNNELED INTO NONDURABLES
Your fund's allocation to various sectors of the convertible market is
the net result of detailed analysis of individual companies and their
securities. Following this "bottom-up" formula, we took profits on the
fund's holdings in the metals and mining, paper, and chemical industries
as these holdings reached full valuation early in the fund's fiscal
year. However, we also maintained exposure to a variety of other
industries that remained attractively priced, including select
situations in the aerospace, building, and transportation industries.
The fund benefited from exposure to several of 1995's "hot" market
sectors early in the game. We were able to capture exceptional gains as
securities in the energy and technology sectors outperformed during the
first quarter of calendar 1995. In addition, we realized significant
profits in several airline and railroad holdings following the
transportation sector's big run.
Proceeds from these sales were shifted primarily into consumer-oriented
nondurable industries and financial services such as banks, insurance
companies, and savings and loan institutions. Securities in these
sectors, along with those in the technology industry, proved to be the
best performing holdings in the fund over the 12 months ended October
31, 1995.
[Graphic Omitted: horizontal bar chart TOP INDUSTRY SECTORS* showing:
Oil & gas 8.8%
Banks 7.5%
Insurance & finance 7.2%
Consumer service 6.4%
Retail 5.5%
Footnote reads:
(bullet)Based on net assets on 10/31/95.]
TOP 10 HOLDINGS (10/31/95)*
Federated Department Stores
Retail store chains
Banco Nacional De Mexico SA
Foreign governmental bond
Cellular Communications, Inc.
Cellular telephone services
Rogers Communications
Cable broadcasting
Eastman Kodak Co.
Diversified imaging, chemicals and healthcare products
Unisys Corp.
Computer systems, related products and services
Baker (J.) Inc.
Footwear retailer
ADT Operations Inc.
Home security systems
Sterling Software, Inc.
Computer software
Philip Morris Cos., Inc.
Domestic food processing, alcohol, tobacco
Footnote reads:
These holdings represent 9.76% of the fund's net assets. Portfolio
holdings will vary in future.
* CONSUMER-ORIENTED COMPANIES PROVIDE VALUE
Our analysis shows that service sector companies currently offer some of
the best values in the present marketplace, allowing the fund to profit
from changing consumer trends. One example of such a company is Boston
Market (formerly Boston Chicken). Its well-run, rapidly growing
restaurant niche business is thriving despite industry difficulties. We
first purchased this convertible for your fund at a double-digit yield
when the company's stock suffered a decline during the market sell-off
of late 1994. Since then, the company's stock price has recovered and
the convertibles have appreciated substantially.
Also noteworthy are the convertibles issued by ADT Corp., whose major
business is home security systems. The company's earnings are poised to
expand in response to a major balance sheet restructuring and a renewed
focus on its core business. ADT is an astutely managed, low-cost
provider in an industry with very favorable dynamics, and we consider it
one of our more promising recent additions to the portfolio.
The stock of Eastman Kodak represents a common equity holding that has
performed well for your fund. The positive cultural changes and improved
efficiencies achieved under the direction of former Motorola CEO George
Fisher have revitalized the company. Moreover, we consider the stock
price to be currently undervalued at 13.5 times estimated 1996 earnings,
a relatively low multiple in the present market.
Another favorite holding that has performed well over the past year is
Occidental Petroleum Corp., an oil company that also runs a large
chemical operation. The company's recent strategy of liquidating assets
and paying down its debt has resulted in substantially improved free
cash flow and a healthier balance sheet. Your fund has benefited from
the improved growth prospects of "Oxy Pete" through ownership of both
the company's common stock and convertible preferred stock.
* OUTLOOK GUARDEDLY OPTIMISTIC
The prevailing moderate pace of economic growth and benign interest rate
environment provide a favorable backdrop for convertible investing.
Although the market is currently not as undervalued as it was at the end
of calendar 1994, we believe attractive opportunities still exist,
particularly in the financial services area and broad consumer sectors.
In recent months, we have experienced a similar pattern to that seen in
the sizzling market of late 1993, when aggressively priced new-issue
convertibles came to market at a rapid pace. However, this time the
corrective action of the market at large has reined in convertible
pricing to reasonable levels. The supply of attractive issues is
expected to remain firm as growing, small- to medium-sized companies
turn to the convertible market to raise capital for expansion. We will
monitor these new issues -- as well as the secondary market, of course -
- - to identify those with the best combination of attractive pricing and
total return potential.
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 10/31/95, there is no guarantee the fund
will continue to hold these securities in the future.
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, assuming you held the shares through the entire
period and reinvested all distributions in the fund.
Performance should always be considered in light of a fund's investment
strategy. Putnam Convertible Income-Growth Trust is designed for
investors seeking current income and capital appreciation mainly through
bonds and preferred stocks convertible into common stock, with capital
conservation as a secondary objective.
TOTAL RETURN FOR PERIODS ENDED 10/31/95
Class A Class B Class M
(6/29/72) (7/15/93) (3/13/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
1 year 14.38% 7.83% 13.54% 8.54% -- --
- ------------------------------------------------------------------------
5 years 132.98 119.58 -- -- -- --
Annual average 18.43 17.04 -- -- -- --
- ------------------------------------------------------------------------
10 years 193.75 176.85 -- -- -- --
Annual average 11.38 10.72 -- -- -- --
- ------------------------------------------------------------------------
Life of class -- -- 20.91 17.94 12.99% 9.01%
Annual average -- -- 8.60 7.44 -- --
- ------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/95
S&P 500 Lehman Bros. Corporate
Index Bond Index
- ------------------------------------------------------------------------
1 year 26.41% 18.79%
- ------------------------------------------------------------------------
5 years 121.29 69.50
Annual average 17.22 11.13
- ------------------------------------------------------------------------
10 years 320.70 176.65
Annual average 15.45 10.71
- ------------------------------------------------------------------------
Life of class B 37.45 17.13
Annual average 14.61 7.01
- ------------------------------------------------------------------------
Life of class M 21.28 12.32
- ------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Fund performance data
do not take into account any adjustment for taxes payable on reinvested
distributions or for payments under the fund's class A distribution plan
prior to its implementation. Investment returns and principal value will
fluctuate so that an investor's shares, when sold, may be worth more or
less than their original cost. POP assumes 5.75% maximum sales charge
for class A shares and 3.50% for class M shares. CDSC for class B shares
assumes 5% maximum contingent deferred sales charge.
[Graphic Omitted: worm chart GROWTH OF A $10,000 INVESTMENT)
Y-axis reads (top to bottom) $45,000 to $0 in $5,000 decrements
X-axis reads (left to right) 10/85 to 10/95 in one year increments
A solid black line represents Fund's Class A shares at POP
ranging from $9,425 to $27,671
A solid white line represents S&P's 500 Index
ranging from $10,000 to $42,070
A solid gray line represents Lehman Bros. Corporate Bond Index
ranging from $10,000 to $27,665
Class A S&P 500 Lehman Bros.
------- ------- ------------
10/85 $9,425 $10,000 $10,000
10/86 11,739 13,319 12,063
10/87 10,917 14,171 12,297
10/88 12,380 16,262 13,927
10/89 14,224 20,548 15,654
10/90 11,883 19,011 16,322
10/91 16,523 25,364 19,196
10/92 19,524 27,887 21,330
10/93 23,769 32,045 24,562
10/94 24,205 33,281 23,290
10/95 27,671 42,070 27,665
Cumulative total return of a $10,000
investment since 10/31/85
S&P Index $42,070
Fund's Class A
shares at POP $27,671
Lehman Bros. Corporate
Bond Index $27,665
Footnote reads:
Past performance is no assurance of future results. A $10,000 investment
in the fund's class B shares at inception on 7/15/93 would have been
valued at $12,091 on 10/31/95 ($11,794 with a redemption at the end of
the period). A $10,000 investment in the fund's class M shares at
inception on 3/13/95 would have been valued at $11,299 at net asset
value on 10/31/95 ($10,901 at the maximum applicable 3.50% sales
charge).
PRICE AND DISTRIBUTION INFORMATION
12 months ended 10/31/95
Class A Class B Class M
- ------------------------------------------------------------------------
Distributions:
- ------------------------------------------------------------------------
No. 4 4 3
- ------------------------------------------------------------------------
Income $0.960 $0.840 $0.699
- ------------------------------------------------------------------------
Capital gains
- ------------------------------------------------------------------------
Long-term 0.868 0.868 0.000
- ------------------------------------------------------------------------
Short-term 0.293 0.293 0.000
- ------------------------------------------------------------------------
Total 2.121 2.001 0.699
- ------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------
10/31/94 $19.09 $20.25 $19.00 -- --
- ------------------------------------------------------------------------
3/13/95 -- -- -- $17.79 $18.44
(inception of class M shares)
- ------------------------------------------------------------------------
10/31/95 19.42 20.60 19.30 19.37 20.07
- ------------------------------------------------------------------------
Current return NAV POP NAV NAV POP
- ------------------------------------------------------------------------
End of period
- ------------------------------------------------------------------------
Current dividend rate1 4.94% 4.66% 4.31% 4.77% 4.60%
- ------------------------------------------------------------------------
Current 30-day SEC yield2 4.77 4.49 3.98 4.24 4.09
- ------------------------------------------------------------------------
1 Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period.
2 Based only on investment income, calculated using SEC guidelines.
TOTAL RETURN FOR PERIODS ENDED 9/30/95
(most recent calendar quarter)
Class A Class B Class M
(6/29/72) (7/15/93) (3/13/95)
NAV POP NAV CDSC NAV POP
- ------------------------------------------------------------------------
[S] [C] [C] [C] [C] [C] [C]
1 year 16.26% 9.56% 15.54% 10.54% -- --
- ------------------------------------------------------------------------
5 years 122.03 109.34 -- -- --
Annual average 17.30 15.92 -- -- -- --
- ------------------------------------------------------------------------
10 years 206.47 188.82 -- -- -- --
Annual average 11.85 11.19 -- -- -- --
- ------------------------------------------------------------------------
Life of class -- -- 23.22 20.22 15.03% 10.98%
Annual average -- -- 9.91 8.69 -- --
- ------------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. Investment returns
and principal value will fluctuate so that an investor's shares, when
sold, may be worth more or less than their original cost.
TERMS AND DEFINITIONS
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 the 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 purchase. POP performance figures 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 when class B
shares are redeemed and assumes redemption at the end of the fiscal
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.
Standard & Poor's 500 Index is an unmanaged list of large-capitalization
common stocks and is frequently used as a general gauge of stock market
performance.
Lehman Brothers Corporate Bond Index is an unmanaged list of corporate
bonds.
These indexes assume reinvestment of all 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. It is not
possible to invest directly in an index.
Report of independent accountants
For the Year Ended October 31, 1995
To the Trustees and Shareholders of
Putnam Convertible Income-Growth Trust
We have audited the accompanying statement of assets and liabilities of
Putnam Convertible Income-Growth Trust , including the portfolio of
investments owned, as of October 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the
financial highlights for each of the periods indicated therein. These
financial statements and financial highlights are the responsibility of
the fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 1995, by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Putnam Convertible Income-Growth Trust as of
October 31, 1995, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
December 15, 1995
<TABLE>
Portfolio of investments owned
October 31, 1995
<CAPTION>
CONVERTIBLE BONDS AND NOTES (43.4%)*
PRINCIPAL AMOUNT VALUE
Aerospace and Defense (0.9%)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 1,850,000 Diagnostic Retrieval Systems 144A cv. sr. sub. notes, 9s, 2003 $ 1,850,000
3,250,000 Rohr Industries, Inc. cv. sub. deb., 7s, 2012 2,730,000
3,050,000 UNC Inc. cv. sub. deb., 7 1/2s, 2006 2,767,875
----------------
7,347,875
Automotive (0.7%)
- ------------------------------------------------------------------------------------------------------------
4,500,000 Magna International cv. sub. deb., 5s, 2002 4,567,500
1,750,000 Mascotech, Inc. cv. sub. deb., 4 1/2s, 2003 1,340,938
----------------
5,908,438
Banks (2.0%)
- ------------------------------------------------------------------------------------------------------------
11,000,000 Banco Nacional De Mexico SA cv. bonds, 7s, 1999 (Mexico) 8,580,000
1,750,000 Banco Nationale Mexico (Bahamas) 144A cv. company
guaranty, 7s, 1999 1,365,000
6,500,000 Mitsubishi Bank Ltd. International Finance (Bermuda) cv.
guaranteed notes, 3s, 2002 (Japan) 6,743,750
----------------
16,688,750
Basic Industrial Products (1.4%)
- ------------------------------------------------------------------------------------------------------------
840,000 Agco Corp. cv. sub. deb., 6 1/2s, 2008 2,956,800
3,700,000 SKF Corp. 144A cv. zero%, 2002 (Sweden) 2,812,768
2,500,000 Thermo Electron Corp. cv. deb., 5s, 2001 3,787,500
1,590,000 Titan Wheel International Inc. cv. sub. deb., 4 3/4s, 2000 1,955,700
----------------
11,512,768
Broadcasting (0.4%)
- ------------------------------------------------------------------------------------------------------------
3,100,000 International Cabletel Inc. 144A cv. sub. deb., 7 1/4s, 2005 3,534,000
Building and Construction (0.6%)
- ------------------------------------------------------------------------------------------------------------
3,000,000 Empresas Ica Sociedad ADS cv. sub. deb., 5s, 2004 (Mexico) 1,605,000
1,500,000 Falcon Homes cv. sub. deb., 7 1/4s, 1999 1,275,000
1,805,000 U.S. Home Corp. cv. deb., 4 7/8s, 2005 1,624,500
----------------------
4,504,500
Business Equipment and Services (2.3%)
- ------------------------------------------------------------------------------------------------------------
5,250,000 Conner Peripherals Inc. cv. sub. deb., 6 1/2s, 2002 5,085,938
1,550,000 Danka Business Systems 144A cv. sub. notes, 6 3/4s, 2002
(United Kingdom) 2,046,000
6,000,000 Maxtor Corp. cv. sub. deb., 5 3/4s, 2012 4,110,000
9,600,000 Unisys Corp. cv. sub. notes, 8 1/4s, 2000 7,920,000
----------------------
19,161,938
CONVERTIBLE BONDS AND NOTES
PRINCIPAL AMOUNT VALUE
Computer Services & Software (0.8%)
- ------------------------------------------------------------------------------------------------------------
$ 4,200,000 Sterling Software, Inc. cv. sub. deb., 5 3/4s, 2003 $ 6,903,750
Computers (0.2%)
- ------------------------------------------------------------------------------------------------------------
1,165,000 EMC Corp. cv. sub. notes, 4 1/4s, 2001 1,170,825
Conglomerates (0.8%)
- ------------------------------------------------------------------------------------------------------------
2,000,000 Alfa S.A. 144A cv. sub notes, 8s, 2000 1,915,000
1,200,000 Dart & Kraft Inc. 144A cv. unsub. deb., 7 3/4s, 1998 2,748,000
1,500,000 Samsung Heavy Industries cv. deb., 1/2s, 2009 1,680,000
----------------------
6,343,000
Consumer Durable Goods (0.4%)
- ------------------------------------------------------------------------------------------------------------
8,000,000 Whirlpool Corp. cv. deb. LYON (Liquid Yield Option Notes), zero%, 201 3,200,000
Consumer Non Durables (2.1%)
- ------------------------------------------------------------------------------------------------------------
2,750,000 Bell Sports Corp. cv. sub. deb., 4 1/4s, 2000 2,041,875
11,500,000 Coleman Worldwide Corp. cv. sr. sec. notes LYON, zero%, 2013 3,392,500
1,455,000 Dibrell Brothers, Inc. cv. sub. deb., 7 3/4s, 2006 1,629,600
2,000,000 Dixie Yarns, Inc. cv. deb., 7s, 2012 1,545,000
3,050,000 Fieldcrest Cannon, Inc. cv. sub. deb., 6s, 2012 2,440,000
400,000 Interface, Inc. sinking fund cv. deb., 8s, 2013 413,000
8,045,000 Standard Commercial Corp. cv. sub. deb., 7 1/4s, 2007 5,872,850
----------------------
17,334,825
Consumer Services (5.9%)
- ------------------------------------------------------------------------------------------------------------
16,000,000 ADT Operations Inc. cv. sub. notes, zero%, 2010 7,200,000
15,100,000 Boston Market Inc. cv. notes LYON, zero%, 2015 4,379,000
1,400,000 CML Group, Inc. cv. jr. sub. deb., 5 1/2s, 2003 1,099,000
6,245,000 CML Group, Inc. 144A cv. jr. sub. deb., 5 1/2s, 2003 4,808,650
12,750,000 Comcast Corp. cv. notes, 1 1/8s, 2007 6,279,375
1,500,000 Comcast Corp. cv. sub. deb. stepped-coupon, 3 3/8s, (5 1/2s, 9/9/97),
2005 (STP) 1,432,500
20,150,000 Hollinger, Inc. cv. LYON, zero%, 2013 6,120,563
2,050,000 National Education Corp. cv. sub. deb., 6 1/2s, 2011 1,445,250
5,500,000 News America Holdings Inc. LYON, zero%, 2013 2,413,125
7,530,000 Pharmaceutical Marketing Services Inc. 144A cv.
deb., 6 1/4s, 2003 6,024,000
280,000 Pharmaceutical Marketing Services Inc. cv. notes, 6 1/4s, 2003 218,400
5,200,200 Time-Warner, Inc. cv. deb., 8 3/4s, 2015 5,414,708
2,780,000 WMS Industries, Inc. cv. deb., 5 3/4s, 2002 2,512,425
----------------------
49,346,996
Electronics and Electrical Equipment (1.8%)
- ------------------------------------------------------------------------------------------------------------
3,000,000 Magnetek, Inc. cv. deb., 8s, 2001 2,790,000
3,115,000 Motorola Inc. cv. sub. deb. LYON, zero%, 2013 2,492,000
4,745,000 Richardson Electronics Ltd. cv. sub. deb., 7 1/4s, 2006 3,920,556
2,500,000 Siemens Capital Corp. Guaranty, 8s, 2002 3,331,250
3,285,000 Solectron Corp. cv. sub. LYON, zero%, 2012 2,759,400
----------------------
15,293,206
CONVERTIBLE BONDS AND NOTES
PRINCIPAL AMOUNT VALUE
Electronic Components and Instruments (0.6%)
- ------------------------------------------------------------------------------------------------------------
$ 1,410,000 Thermo Instrument Systems Inc. cv. deb., 3 3/4s, 2000 $ 2,030,400
1,700,000 Thermo Optek Corp. 144A cv. bonds, 5s, 2000 1,751,000
1,295,000 Thermo Quest Corp. cv. co. guaranty, 5s, 2000 1,346,800
----------------------
5,128,200
Environmental Control (1.4%)
- ------------------------------------------------------------------------------------------------------------
2,300,000 Enclean, Inc. cv. sub. deb., 7 1/2s, 2001 2,400,383
2,500,000 OHM Corp. cv. sub. deb., 8s, 2006 2,281,250
1,460,000 U.S. Filter Corp. 144A cv. sub. notes, 6s, 2005 1,540,300
6,378,000 WMX Technologies, Inc. cv. sub. notes, 2s, 2005 5,325,630
----------------------
11,547,563
Food (0.5%)
- ------------------------------------------------------------------------------------------------------------
3,500,000 Chiquita Brands International cv. deb., 7s, 2001 3,150,000
1,000,000 Chiquita Brands International, Inc. 144A cv. sub. deb., 7s, 2001 900,000
----------------------
4,050,000
Food and Beverages (0.5%)
- ------------------------------------------------------------------------------------------------------------
4,000,000 Grand Metropolitan PLC cv. unsub. deb., 6 1/2s, 2000
(United Kingdom) 4,520,000
Health Care (2.4%)
- ------------------------------------------------------------------------------------------------------------
4,600,000 Cabot Medical Corp. cv. deb., 7 1/2s, 1999 4,628,750
2,740,000 Careline, Inc. cv. sr. sub. notes, 8s, 2001 2,966,050
8,205,000 Quantum Health Resources, Inc. cv. sub. deb., 4 3/4s, 2000 6,379,388
6,500,000 Theratx Inc. cv. sub. notes, 8s, 2002 6,045,000
----------------------
20,019,188
Hospital Management and Medical Services (1.2%)
- ------------------------------------------------------------------------------------------------------------
4,500,000 Integrated Health Services cv. sr. sub. deb, 5 3/4s, 2001 4,297,500
3,270,000 Integrated Health Services, Inc. cv. sub. deb., 6s, 2003 3,204,600
3,185,000 Sun Healthcare Group Inc. 144A cv. sub., 6s, 2004 2,619,663
----------------------
10,121,763
Insurance and Finance (2.7%)
- ------------------------------------------------------------------------------------------------------------
3,800,000 Aegon NV 144A cv. deb., 4 3/4s, 2004 5,187,000
5,000,000 NAC Re Corp. cv. deb., 5 1/4s, 2002 4,950,000
5,000,000 Old Republic International Corp. cv. sub. deb., 5 3/4s, 2002 5,612,500
1,990,000 Trenwick Group, Inc. cv. deb., 6s, 1999 2,116,863
8,000,000 USF&G Corp. cv. sub. notes, zero %, 2009 4,540,000
----------------------
22,406,363
Medical Supplies (0.2%)
- ------------------------------------------------------------------------------------------------------------
1,250,000 Benson Eyecare Corp. cv. sub. notes, 8s, 2001 1,562,500
CONVERTIBLE BONDS AND NOTES
PRINCIPAL AMOUNT VALUE
Metals and Mining (0.8%)
- ------------------------------------------------------------------------------------------------------------
$ 3,379,500 Quanex Corp. cv. sub. deb., 6.88s, 2007 $ 3,100,691
3,360,000 Teck Corp. cv. sub. deb., 3 3/4s, 2006 3,225,600
----------------------
6,326,291
Oil and Gas (2.0%)
- ------------------------------------------------------------------------------------------------------------
4,000,000 Apache Corp. 144A cv. sub. deb., 6s, 2002 4,255,000
2,900,000 Cross Timbers Oil Co. cv. deb., 5 1/4s, 2003 2,486,750
2,000,000 Pennzoil Co. cv. sub. deb., 6 1/2s, 2003 2,320,000
2,295,000 Pogo Producing Co. sub. notes, 5 1/2s, 2004 2,444,175
2,500,000 Seacor Holdings. cv. sub. deb., 6s, 2003 2,575,000
3,500,000 Wainoco Oil Corp. cv. sub. deb., 7 3/4s, 2014 2,887,500
----------------------
16,968,425
Oil and Gas Pipelines (0.7%)
- ------------- --------------------------------------------------------------------------------------------
5,000,000 SFP Pipeline Holdings Inc. cv. variable rate exch.
deb., 11.16s, 2010(PIK) 6,200,000
Pharmaceuticals (1.5%)
- ------------- --------------------------------------------------------------------------------------------
7,115,000 Alza Corp. cv. sub. notes LYON, zero%, 2014 2,668,125
12,630,000 Roche Holdings, Inc. cv. unsub. deb. LYON, zero%, 2010
(Switzerland) 5,241,450
5,425,000 Sandoz Capital Ltd. 144A cv. company guaranty, 2s, 2002
(British Virgin Islands) 4,760,438
----------------------
12,670,013
REIT's (1.5%)
- ------------- --------------------------------------------------------------------------------------------
1,850,000 Alexander Haagen Properties cv. sub. deb., Ser. A, 7 1/2s, 2001 1,507,750
3,080,000 Camden Property Trust cv. sub. deb., 7.33s, 2001 2,899,050
6,400,000 Liberty Property Trust cv. sub. deb., 8s, 2001 6,560,000
2,250,000 Malan Realty Investors cv. sub. notes, 9 1/2s, 2004 1,878,750
----------------------
12,845,550
Restaurants (0.2%)
- ------------- --------------------------------------------------------------------------------------------
2,800,000 Flagstar Corp. cv. jr. sub., 10s, 2014 1,788,500
Retail (4.0%)
- ------------- --------------------------------------------------------------------------------------------
9,610,000 Baker (J.) Inc. cv. deb., 7s, 2002 7,303,600
10,650,000 Federated Department Stores cv. deb., 9.72s, 2004 10,595,992
3,750,000 Food Lion, Inc. 144A cv. deb., 5s, 2003 3,637,500
3,450,000 Ingles Markets, Inc. cv. sub. deb., 10s, 2008 3,506,063
2,375,000 Lowes Companies Inc. cv. deb., 3s, 2003 2,570,938
3,965,000 Michaels Stores, Inc. cv. sub. notes stepped-coupon, 4 3/4s,
(6 3/4s, 1/15/96), 2003(STP) 3,137,306
4,500,000 Office Depot Inc. cv. notes LYON, zero%, 2008 2,964,375
----------------------
33,715,774
CONVERTIBLE BONDS AND NOTES
PRINCIPAL AMOUNT VALUE
Telecommunication (2.3%)
- ------------------------------------------------------------------------------------------------------------
$ 10,500,000 Cellular Communications, Inc. 144A cv. sub. deb. zero % 1999 $ 8,662,500
17,000,000 Rogers Communications cv. deb., 2s, 2005 (Canada) 8,606,250
6,000,000 U S Cellular Corp. cv. notes LYON, zero%, 2015 2,130,000
----------------------
19,398,750
Transportation (0.6%)
- ------------------------------------------------------------------------------------------------------------
3,395,000 Alaska Air Group cv. deb., 6 1/2s, 2005 3,199,788
1,500,000 Hudson General Corp. cv. sub. deb., 7s, 2011 1,387,500
----------------------
4,587,288
----------------------
Total Convertible Bonds and Notes $ 362,107,039
(cost $345,482,280)
COMMON STOCKS (26.8%)*
NUMBER OF SHARES VALUE
Aerospace and Defense (0.4%)
- ------------------------------------------------------------------------------------------------------------
35,000 Lockheed Martin Corp. $ 2,384,375
20,000 Northrop Grumman Corp. 1,145,000
----------------------
3,529,375
Automotive (0.4%)
- ------------------------------------------------------------------------------------------------------------
54,535 Chrysler Corp. 2,815,369
20,000 General Motors Corp. 875,000
----------------------
3,690,369
Banks (2.1%)
- ------------------------------------------------------------------------------------------------------------
40,000 BankAmerica Corp. 2,300,000
50,000 Comerica, Inc. 1,681,250
40,000 CoreStates Financial Corp. 1,455,000
25,000 First Bank System, Inc. 1,243,750
110,000 Fleet Financial Group, Inc. 4,262,500
44,500 Keycorp 1,501,875
27,000 Lincoln National Corp. 1,204,875
60,000 National City Corp. 1,852,500
80,000 PNC Bank Corp. 2,100,000
----------------------
17,601,750
Basic Industrial Products (0.8%)
- ------------------------------------------------------------------------------------------------------------
65,000 Ball Corp. 1,795,625
13,000 Deere (John) & Co. 1,161,875
50,000 General Signal Corp. 1,593,750
60,000 Harnischfeger Industries, Inc. 1,890,000
----------------------
6,441,250
Business Services (0.9%)
- ------------------------------------------------------------------------------------------------------------
40,000 Dun & Bradstreet Corp. 2,390,000
20,000 IBM Corp. 1,945,000
25,000 Xerox Corp. 3,243,750
----------------------
7,578,750
COMMON STOCKS
NUMBER OF SHARES VALUE
Chemicals (1.1%)
- ------------------------------------------------------------------------------------------------------------
20,000 Dow Chemical Co. $ 1,372,500
35,000 du Pont (E.I.) de Nemours & Co., Ltd. 2,183,125
20,000 Grace (W.R.) & Co. 1,115,000
34,175 Lubrizol Corp. 982,531
35,000 Union Carbide Corp. 1,325,625
65,000 Witco Chemical Corp. 1,836,250
----------------------
8,815,031
Conglomerates (1.4%)
- ------------------------------------------------------------------------------------------------------------
21,000 ITT Corp. 2,572,500
25,000 Johnson Controls Inc. 1,456,250
60,000 Ogden Corp. 1,365,000
38,000 TRW, Inc. 2,498,500
40,000 Tenneco Inc. 1,755,000
25,000 United Technologies Corp. 2,218,750
----------------------
11,866,000
Consumer Non Durables (2.1%)
- ------------------------------------------------------------------------------------------------------------
50,000 American Brands, Inc. 2,143,750
40,600 Avon Products, Inc. 2,887,675
20,000 Clorox Co. 1,435,000
34,000 Kimberly-Clark Corp. 2,469,250
80,000 Philip Morris Cos., Inc. 6,760,000
80,000 Universal Corp. 1,680,000
----------------------
17,375,675
Electronics and Electrical Equipment (0.7%)
- ------------------------------------------------------------------------------------------------------------
40,000 Eaton Corp. 2,050,000
25,000 Emerson Electric Co. 1,781,250
33,000 General Electric Co. 2,087,250
----------------------
5,918,500
Environmental Control (0.3%)
- ------------------------------------------------------------------------------------------------------------
100,000 WMX Technologies, Inc. 2,812,500
Food and Beverages (1.5%)
- ------------------------------------------------------------------------------------------------------------
29,100 Anheuser-Busch Cos., Inc. 1,920,600
50,000 Brown Forman Corp. 1,906,250
62,328 ConAgra, Inc. 2,407,410
50,000 Heinz (H.J.) Co. 2,325,000
80,000 Sara Lee Corp. 2,350,000
60,000 Whitman Corporation 1,275,000
----------------------
12,184,260
Forest Products (0.3%)
- ------------------------------------------------------------------------------------------------------------
25,000 Potlatch Corp. 1,053,125
40,000 Weyerhaeuser Co. 1,765,000
----------------------
2,818,125
COMMON STOCKS
NUMBER OF SHARES VALUE
Health Care (0.4%)
- ------------------------------------------------------------------------------------------------------------
90,000 Baxter International, Inc. $ 3,476,250
Insurance and Finance (2.3%)
- ------------------------------------------------------------------------------------------------------------
40,000 AON Corp. 1,645,000
40,000 Aetna Life & Casualty Co. 2,815,000
25,000 American Express Co. 1,015,625
47,000 Bankers Trust New York Corp. 2,996,250
45,000 Beneficial Corp. 2,205,000
18,000 CIGNA Corp. 1,784,250
17,000 Federal National Mortgage Association 1,782,875
52,000 Morgan (J.P.) & Co., Inc. 4,010,500
8,200 SAFECO Corp. 526,338
----------------------
18,780,838
Metals and Mining (0.6%)
- ------------------------------------------------------------------------------------------------------------
8,335 Freeport McMoran, Inc. 311,508
51,250 Freeport-McMoRan Copper & Gold Co., Inc. Class A 1,172,344
155,106 Freeport-McMoRan Copper & Gold Co., Inc. Class B 3,528,662
----------------------
5,012,514
Oil and Gas (2.9%)
- ------------------------------------------------------------------------------------------------------------
42,857 Amoco Corp. 2,737,491
15,000 Atlantic Richfield Co. 1,601,250
25,000 British Petroleum PLC ADR (United Kingdom) 2,206,250
40,000 Enron Corp. 1,375,000
45,000 Exxon Corp. 3,436,875
100,000 Occidental Petroleum Corp. 2,150,000
35,000 Panhandle Eastern Corp. 883,750
35,000 Phillips Petroleum Co. 1,128,750
30,000 Questar Corp. 903,750
25,000 Royal Dutch Petroleum Co. PLC ADR (Netherlands) 3,071,875
40,000 Sonat, Inc. 1,150,000
30,000 Texaco, Inc. 2,043,750
50,000 Ultramar Corp. 1,218,750
----------------------
23,907,491
Pharmaceuticals (1.7%)
- ------------------------------------------------------------------------------------------------------------
30,000 American Home Products Corp. 2,658,750
40,000 Bristol-Myers Squibb Co. 3,050,000
12,000 Lilly (Eli) & Co. 1,159,500
35,000 Smithkline Beecham PLC ADR (United Kingdom) 1,815,625
60,000 Upjohn Co. 3,045,000
30,000 Warner-Lambert Co. 2,553,750
----------------------
14,282,625
Photography (1.3%)
- ------------------------------------------------------------------------------------------------------------
131,844 Eastman Kodak Co. 8,256,731
50,000 Polaroid Corp. 2,137,500
----------------------
10,394,231
COMMON STOCKS
NUMBER OF SHARES VALUE
Publishing (0.3%)
- ------------------------------------------------------------------------------------------------------------
25,000 McGraw-Hill, Inc. $ 2,046,875
Real Estate (0.5%)
- ------------------------------------------------------------------------------------------------------------
100,000 LTC Properties, Inc. 1,450,000
55,000 National Health Investors, Inc. 1,650,000
100,000 South West Property Trust, Inc. 1,212,500
----------------------
4,312,500
Retail (1.5%)
- ------------------------------------------------------------------------------------------------------------
27,000 Dayton Hudson Corporation 1,856,250
200,000 K mart Corp. 1,625,000
50,000 May Department Stores Co. 1,962,500
50,000 Melville Corporation 1,600,000
40,000 Penney (J.C.) Co., Inc. 1,685,000
65,000 Rite Aid Corp. 1,755,000
50,000 Sears, Roebuck & Co. 1,700,000
----------------------
12,183,750
Transportation (0.7%)
- ------------------------------------------------------------------------------------------------------------
25,000 Conrail, Inc. 1,718,750
15,000 Norfolk Southern Corp. 1,158,750
80,000 Ryder System, Inc. 1,930,000
20,000 Union Pacific Corp. 1,307,500
----------------------
6,115,000
Utilities (2.6%)
- ------------------------------------------------------------------------------------------------------------
25,000 Airtouch Communications, Inc.(NON) 712,500
38,000 American Telephone & Telegraph Co. 2,432,000
26,900 Bell Atlantic Corp. 1,711,513
50,000 Central Maine Power Co. 693,750
35,805 Cinergy Corp. 1,015,967
20,000 Houston Industries, Inc. 927,500
53,000 Northeast Utilities Co. 1,311,750
50,000 NYNEX Corp. 2,350,000
45,000 Public Service Co. of Colorado 1,535,625
40,000 Public Service Enterprise Group, Inc. 1,175,000
30,000 SBC Communications, Inc. 1,676,250
60,000 SCE Corp. 1,020,000
60,000 Sprint Corp. 2,310,000
40,000 Texas Utilities Electric Co. 1,470,000
35,000 US West, Inc. 1,666,875
----------------------
22,008,730
----------------------
Total Common Stocks (cost $192,124,569) $ 223,152,389
CONVERTIBLE PREFERRED STOCKS (21.8%)*
NUMBER OF SHARES VALUE
Aerospace and Defense (0.4%)
- ------------------------------------------------------------------------------------------------------------
70,000 Kaman Corp., $3.25 cv. pfd. $ 3,342,500
CONVERTIBLE PREFERRED STOCKS
NUMBER OF SHARES VALUE
Automotive (1.6%)
- ------------------------------------------------------------------------------------------------------------
64,875 Federal Mogul Corp., $3.875 cv. pfd. $ 3,665,438
62,500 Ford Motor Co., $4.2 dep. shs. cv. pfd., Ser. A 5,875,000
55,000 General Motor Corp., $3.25 dep. shs. cv. pfd. 3,685,000
----------------------
13,225,438
Banks (3.4%)
- ------------------------------------------------------------------------------------------------------------
17,500 Citicorp, $5.375 cv. pfd., Ser. 13 3,110,625
29,000 First Bank System, Inc., $3.5625 cv. pfd., Ser. 91-A 2,490,375
54,500 First Chicago Corp., $2.875 cv. pfd., Ser. B 3,515,250
65,000 National City Corp., $4 cv. pfd. 4,793,750
19,025 Peoples Bank, $4.25 cv. pfd., Ser. A 2,263,975
40,000 RCSB Financial, Inc., $1.75 cv. pfd. 1,410,000
45,000 Roosevelt Financial Group, $3.25 cv. pfd. 2,778,750
76,200 Southern National Corp., $1.6875 cv. pfd., Ser. A 2,914,650
29,800 Sovereign Bancorp Inc., $3.13 cv. pfd. 1,687,425
78,350 Union Planters Corp., $2 cv. pfd., Ser. E 2,977,300
----------------------
27,942,100
Building and Construction (0.3%)
- ------------------------------------------------------------------------------------------------------------
71,450 Southdown, Inc., $2.875 cv. pfd. 2,715,100
Business Equipment (0.3%)
- ------------------------------------------------------------------------------------------------------------
40,000 Storage Technology Corp., $3.25 cv. pfd. 2,300,000
Business Equipment and Services (0.3%)
- ------------------------------------------------------------------------------------------------------------
32,000 Alco Standard Corp., $5.03 cv. pfd. 2,736,000
Conglomerates (0.6%)
- ------------------------------------------------------------------------------------------------------------
115,000 Corning, Inc., $3 cv. pfd. 5,175,000
Consumer Non Durables (0.8%)
- ------------------------------------------------------------------------------------------------------------
94,475 Fieldcrest Cannon $3 dep. cv. pfd., Ser. A 4,345,850
332,500 RJR Nabisco Holdings $0.6012 sr. cv. pfd., Ser. C 2,078,125
----------------------
6,423,975
Consumer Services (0.5%)
- ------------------------------------------------------------------------------------------------------------
64,500 Service Corp.International $6.25 cv. pfd. 4,547,250
Electronics and Electrical Equipment (0.3%)
- ------------------------------------------------------------------------------------------------------------
196,500 Westinghouse Electric Corp. 144A, $1.3 cv. pfd., Ser. C 2,775,563
Energy Related (0.4%)
- ------------------------------------------------------------------------------------------------------------
51,750 Diamond Shamrock, Inc. 144A, $2.5 cv. pfd. 2,930,344
8,000 Maxus Energy Corp., $4 cv. pfd. 348,000
----------------------
3,278,344
CONVERTIBLE PREFERRED STOCKS
NUMBER OF SHARES VALUE
Entertainment (0.2%)
- ------------------------------------------------------------------------------------------------------------
114,000 Bally Entertainment Corp., $8.5 cv. pfd. $ 1,268,250
Food (0.7%)
- ------------------------------------------------------------------------------------------------------------
120,000 Chiquita Brands International Inc., $5.75 cv. pfd. 6,030,000
Health Care (0.5%)
- ------------------------------------------------------------------------------------------------------------
80,000 Beverly Enterprises Inc., $2.75 cv. pfd. 4,080,000
Health Maintenance Organizations (0.4%)
- ------------------------------------------------------------------------------------------------------------
145,000 FHP International Corp., $1.25 cv. pfd., Ser. A 3,443,750
Insurance and Finance (2.2%)
- ------------------------------------------------------------------------------------------------------------
66,800 Allstate Corp., $2.3 cv. pfd. 2,905,800
109,000 American General Delaware Corp., $3 cv. pfd. 5,640,750
56,825 Penncorp Financial Group Inc., $6.75 cv. pfd. 3,423,706
55,600 St Paul Capital LLC, $3 cv. pfd. 3,002,400
73,000 USF&G Corp., $4.10 cv. pfd, Ser. A 3,650,000
----------------------
18,622,656
Metals and Mining (2.2%)
- ------------------------------------------------------------------------------------------------------------
30,166 Alumax, Inc., $4 cv. pfd., Ser. A 3,710,418
64,225 Amax Gold, Inc., $3.75 cv. pfd., Ser. B 3,034,631
18,820 Armco, Inc., $3.625 cv. pfd. 962,173
200,000 Freeport-McMoRan Copper Co., Inc., stepped-coupon $1.25
($1.75, 8/1/96) (STP) 4,775,000
99,900 Pittston Mineral Corp., $6.25 cv. pfd. 3,496,500
60,000 WHX Corp., $3.25 cv. pfd., Ser. A 2,647,500
----------------------
18,626,222
Oil and Gas (3.9%)
- ------------------------------------------------------------------------------------------------------------
57,500 Ashland, Inc., $3.125 cv. pfd. 3,148,125
230,681 Atlantic Ritchfield Co., $2.23 cv. pfd. 5,161,487
60,000 Lomak Petroleum, Inc. 144A $4.0625 cv. pfd. 1,500,000
40,085 McDermott International, Inc. 144A, $2.875 cum. cv. pfd., Ser. C 1,458,092
116,800 Occidental Petroleum Corp. 144A, $3.875 cv. pfd. 6,497,000
95,000 Parker & Parsley Petro. 144A, $3.125 cv. pfd. 4,132,500
75,520 Santa Fe Energy Resources, Inc., $1.4 cv. pfd. 1,368,800
56,825 Tejas Gas Corp., $2.65 cv. pfd. 2,613,950
82,000 Unocal Corp. 144A, $3.5 cv. pfd. 4,243,500
71,000 Western Gas Resources Inc., $2.625 cv. pfd. 2,547,125
----------------------
32,670,579
Oil Service (0.6%)
- ------------------------------------------------------------------------------------------------------------
65,000 Grant Geophysical, Inc., $2.4375 cv. pfd. 991,250
85,500 Noble Drilling Corp., $1.5 cv. pfd. 2,126,813
56,300 Reading & Bates Corp., $1.625 cv. pfd. 1,956,425
----------------------
5,074,488
CONVERTIBLE PREFERRED STOCKS
NUMBER OF SHARES VALUE
REIT's (1.4%)
- ------------------------------------------------------------------------------------------------------------
63,500 Oasis Residential, Inc., $2.25 cv. pfd., Ser. A $ 1,603,375
195,000 Security Capital Pacific Trust, $1.75 cv. pfd., Ser. A 4,631,250
67,950 Rouse Co., $3.25 cv. pfd., Ser. A 3,660,806
74,490 Tanger Factory Outlet Centers, $1.575 cv. pfd. 1,564,290
----------------------
11,459,721
Transportation (0.5%)
- ------------------------------------------------------------------------------------------------------------
31,500 Burlington Northern Santa Fe, $3.125 cv. pfd., Ser. A 2,803,500
20,000 Sea Containers Ltd., $4 cv. pfd. 962,500
----------------------
3,766,000
Utilities (0.3%)
- ------------------------------------------------------------------------------------------------------------
45,000 Philippine Long Distance Telephone Co., $7 cv. pfd., Ser. III 2,385,000
Total Convertible Preferred Stock (cost $178,855,604) 181,887,936
SHORT-TERM INVESTMENTS (6.7%)*
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------
$ 10,000,000 Federal Home Loan Bank 5.6s, January 22, 1996 $9,873,356
43,373,000 Interest in $357,916,000 joint repurchase agreement
dated October 31, 1995 with Lehman Brothers Inc., due
November 1, 1995 with respect to various U.S. Treasury
obligations - maturity value of $43,380,060 for an effective
yield of 5.86%. 43,380,060
3,000,000 Penney (J.C.) Funding Corp. 5.74s, November 16, 1995 2,992,825
----------------------
Total Short-Term Investments (cost $56,246,241) $ 56,246,241
----------------------
Total Investments (cost $772,708,694)*** $ 823,393,605
- ------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $833,707,949.
(NON) Non-income producing security.
(STP) The interest rate shown parenthetically represents the next interest rate to be paid and the date the
fund will begin accruing this rate.
(PIK) Interest may be received in cash or additional securities at the discretion of the issuer.
(b) The aggregate identified cost for federal income tax purposes is $772,653,805, resulting in gross
unrealized appreciation and depreciation of $82,864,062 and $32,124,262 respectively, or net
unrealized appreciation of $50,739,800.
ADR or ADS after the name of a foreign holding stands for American Depository Receipt and
American Depository Shares, respectively, representing foreign securities on deposit with a domestic
custodian bank.
144A after the name of a security represents those exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
<CAPTION>
Putnam Convertible Income-Growth Trust
Statement of assets and liabilities
October 31, 1995
<S> <C>
Assets
- --------------------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost $772,708,694) (Note 1) $ 823,393,605
- --------------------------------------------------------------------------------------------------------
Cash 302,239
- --------------------------------------------------------------------------------------------------------
Dividends, interest and other receivables 6,689,450
- --------------------------------------------------------------------------------------------------------
Receivable for securities sold 25,221,879
- --------------------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 847,944
- --------------------------------------------------------------------------------------------------------
Total assets 856,455,117
Liabilities
- --------------------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,057,461
- --------------------------------------------------------------------------------------------------------
Payable for securities purchased 19,901,932
- --------------------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,296,500
- --------------------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,263
- --------------------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 553
- --------------------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 182,603
- --------------------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 228,641
- --------------------------------------------------------------------------------------------------------
Other accrued expenses 78,215
- --------------------------------------------------------------------------------------------------------
Total liabilities 22,747,168
- --------------------------------------------------------------------------------------------------------
Net assets $ 833,707,949
Represented by
- --------------------------------------------------------------------------------------------------------
Paid-in-capital (Notes 1 and 4) $ 741,406,643
- --------------------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 109,501,119
- --------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments (Notes 1 and 3) 30,666,277
- --------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 50,684,910
- --------------------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares outstanding $ 932,258,949
Computation of net asset value and offering price
- --------------------------------------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($756,645,442 divided by 38,971,272 shares) $19.42
- --------------------------------------------------------------------------------------------------------
Offering price per Class A share (100/94.25 of $19.42)* $20.60
- --------------------------------------------------------------------------------------------------------
Net asset value and offering price of class B shares
($75,309,141 divided by 3,902,809 shares)** $19.30
- --------------------------------------------------------------------------------------------------------
Net asset value and redemption price of class M shares
($1,753,366 divided by 90,543 shares) $19.37
- --------------------------------------------------------------------------------------------------------
Offering price per Class M share (100/96.50 of $19.37)* $20.07
- --------------------------------------------------------------------------------------------------------
*On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Year Ended October 31, 1995
<S> <C>
Investment Income:
- -----------------------------------------------------------------------------------
Interest $ 24,460,302
- -----------------------------------------------------------------------------------
Dividends (net of foreign tax of $52,164) 19,885,629
- -----------------------------------------------------------------------------------
Total investment income 44,345,931
Expenses:
- -----------------------------------------------------------------------------------
Compensation of Manager (Note 2) 5,131,646
- -----------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,338,469
- -----------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 24,151
- -----------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 1,805,368
- -----------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 506,776
- -----------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 4,147
- -----------------------------------------------------------------------------------
Administrative services (Note 2) 15,476
- -----------------------------------------------------------------------------------
Auditing 26,031
- -----------------------------------------------------------------------------------
Reports to shareholders 85,976
- -----------------------------------------------------------------------------------
Legal 22,283
- -----------------------------------------------------------------------------------
Postage 117,761
- -----------------------------------------------------------------------------------
Registration Fees 5,763
- -----------------------------------------------------------------------------------
Other expenses 257,124
- -----------------------------------------------------------------------------------
Total expenses 9,340,971
- -----------------------------------------------------------------------------------
Expense reduction (Note 2) (518,578)
- -----------------------------------------------------------------------------------
Net expense 8,822,393
- -----------------------------------------------------------------------------------
Net investment income 35,523,538
- -----------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 31,193,122
- -----------------------------------------------------------------------------------
Net unrealized appreciation of investments during the year 37,340,783
- -----------------------------------------------------------------------------------
Net gain on investments 68,533,905
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 104,057,443
- -----------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Year ended October 31
--------------------------------------
<S> <C> <C>
1995 1994
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets
- -------------------------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------------------------
Net investment income $ 35,523,538 $ 29,762,366
- -------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 31,193,122 46,186,880
- -------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation(depreciation) of investments 37,340,783 (63,310,458)
- -------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 104,057,443 12,638,788
- -------------------------------------------------------------------------------------------------------------------
Distributions:
- -------------------------------------------------------------------------------------------------------------------
From net investment income
- -------------------------------------------------------------------------------------------------------------------
Class A (36,798,209) (26,305,107)
- -------------------------------------------------------------------------------------------------------------------
Class B (2,264,082) (686,066)
- -------------------------------------------------------------------------------------------------------------------
Class M (28,669) --
- -------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
- -------------------------------------------------------------------------------------------------------------------
Class A (42,106,385) (31,369,489)
- -------------------------------------------------------------------------------------------------------------------
Class B (2,126,191) (510,511)
- -------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 83,596,336 63,202,221
- -------------------------------------------------------------------------------------------------------------------
Total increase in net assets 104,330,243 16,969,836
- -------------------------------------------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------------------------------------------
Beginning of year 729,377,706 712,407,870
- -------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $10,950,119 and $14,316,064, respectively) $ 833,707,949 $ 729,377,706
- -------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<TABLE>
Financial highlights
(For a share outstanding throughout the period)
<CAPTION>
March 13, 1995 July 15,1993
(commencement commencement
of operations ) to operations) to
October 31 Year ended October 31 October 31
1995 1995 1994 1993
Class M Class B
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $17.79 $19.00 $20.35 $19.53
- -------------------------------------------------------------------------------------------------------------------
Investment operations
- -------------------------------------------------------------------------------------------------------------------
Net investment income .64 .69 .74 .23
- -------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.64 1.61 (.55) .82
- -------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.28 2.30 .19 1.05
- -------------------------------------------------------------------------------------------------------------------
Less distributions
- -------------------------------------------------------------------------------------------------------------------
From net investment income (.70) (.84) (.66) (.23)
- -------------------------------------------------------------------------------------------------------------------
From net realized gain on investments -- (1.16) (.88) --
- -------------------------------------------------------------------------------------------------------------------
Total distributions (.70) (2.00) (1.54) (.23)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $19.37 $19.30 $19.00 $20.35
- -------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%) (a) 12.99(b) 13.54 1.00 5.43(b)
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,753 $75,309 $31,432 $4,439
- -------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.04(b) 1.91 1.71 .52(b)
- -------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 2.89(b) 3.92 3.58 .91(b)
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 69.52 69.52 48.37 66.63
- -------------------------------------------------------------------------------------------------------------------
Financial highlights (continued)
(For a share outstanding throughout the period)
<CAPTION>
Year ended October 31
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $19.09 $20.38 $17.60 $15.78 $12.12
- -------------------------------------------------------------------------------------------------------------------------------
Investment operations
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income .85 .81 .87 .89 .88
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.60 (.46) 2.87 1.89 3.74
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.45 .35 3.74 2.78 4.62
- -------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income (.96) (.74) (.96) (.96) (.96)
- -------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (1.16) (.90) -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.12) (1.64) (.96) (.96) (.96)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $19.42 $19.09 $20.38 $17.60 $15.78
- -------------------------------------------------------------------------------------------------------------------------------
Total investment return at net asset value (%) (a) 14.38 1.84 21.74 18.16 39.05
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $756,645 $697,946 $707,969 $599,866 $570,752
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%)(c) 1.16 .96 .96 1.11 1.15
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 4.64 4.16 4.55 5.32 6.07
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 69.52 48.37 66.63 59.89 78.72
- -------------------------------------------------------------------------------------------------------------------------------
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Not annualized.
(c) The ratio of expenses to average net assets for the period ended October 31, 1995 includes amounts paid through
brokerage service and expense offset arrangements. Prior period ratios exclude these amounts (See Note 2)
</TABLE>
Notes to financial statements
October 31, 1995
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. 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 are subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class
M shares are sold with a maximum front-end sales charge of 3.50% and pay
an ongoing distribution fee that is lower than class B shares and higher
than class A shares. Expenses of the fund are borne pro-rata by the
holders of each class of shares, except that each class bears expenses
unique to that class (including the distribution fees applicable to such
class). Each class votes as a class only with respect to its own
distribution plan or other matters on which a class vote is required by
law or determined by the Trustees. Shares of each class would receive
their pro-rata share of the net assets of the fund, if the fund were
liquidated. In addition, the Trustees declare separate dividends on each
class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The policies are in conformity with generally accepted
accounting principles.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported -- as in the
case of some securities traded over-the-counter -- the last reported bid
price, except that U.S. government obligations are stated at the mean
between the last reported bid and asked prices. Securities quoted in
foreign currencies are translated into U.S. dollars at the current
exchange rate. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates market
value, and other investments are stated at fair value following
procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Management, Inc. ("Putnam Management"), the fund's
Manager, a wholly-owned subsidiary of Putnam Investments, Inc. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Putnam Management is responsible for determining that the value of these
underlying securities is at all times at least equal to the resale
price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis
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, stepped-coupon bonds, and payment in kind
bonds is accreted according to the effective yield method.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, 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 fluctuations are included with the net realized
and unrealized gain or loss on investments. Net realized gains and
losses on foreign currency transactions represent net exchange gains or
losses on closed forward currency contracts, disposition of foreign
currencies and the difference between the amount of investment income
and foreign withholding taxes recorded on the fund's books and the U.S.
dollar equivalent amounts actually received or paid. Net unrealized
gains and losses on foreign currency transactions arise from changes in
the value of open forward currency contracts and assets and liabilities
other than investments at the period end, resulting from changes in the
exchange rate.
F) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income or capital gains or unrealized
appreciation on securities held and for excise tax on income and capital
gains.
G) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid annually. The amount and character of income and gains to be
distributed are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences include treatment of market discount and non-taxable
dividends. 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.
For the year ended October 31, 1995, the fund reclassified $201,478 to
increase undistributed net investment income and $73,665 to decrease
paid-in-capital, with a decrease to accumulated net realized gains of
$127,813. The calculation of net investment income per share in the
financial highlights table excludes these adjustments.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Investment Management, Inc., the fund's Manager,
a wholly-owned subsidiary of Putnam Investments, Inc., for management
and investment 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 $1.5 billion, subject, under current law,
to reduction, in any year to the extent that expenses (exclusive 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 portfolio transactions.
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $1,530 and an
additional fee for each Trustees' meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
During the year ended October 31, 1995, the fund adopted a Trustee Fee
Deferral Plan (the "Plan") which allows the Trustees to defer the
receipt of all or a portion of Trustees fees payable on or after July 1,
1995. The deferred fees remain in the fund and are invested in the fund
or in other Putnam funds until distribution in accordance with the Plan.
Custodial functions for the funds 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 year ended October 31, 1995, fund expenses were reduced by
$518,578 under expense offset and brokerage service arrangements with
PFTC. Investor servicing and custodian fees reported in the Statement of
operations exclude these credits. The fund could have invested a portion
of the assets utilized in connection with the offset arrangement in an
income-producing asset if it had not entered into such arrangements.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00% and 1.00% of the average net assets attributable to class A, class
B and class M shares, respectively. The Trustees have approved payment
by the fund at an annual rate of 0.25%, 1.00% and 0.75% of the average
net assets attributable to class A, class B and class M shares,
respectively.
For the year ended October 31, 1995, Putnam Mutual Funds Corp., acting
as underwriter received net commissions of $195,008 and $4,391 from the
sale of class A and class M shares, respectively and received $82,202 in
contingent deferred sales charges from redemptions of class B shares. A
deferred sales charge of up to 1% is assessed on certain redemptions of
class A shares. For the year ended October 31, 1995, Putnam Mutual Funds
Corp., acting as underwriter received $1,008 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended October 31, 1995, purchases and sales of
investment securities other than U.S. government obligations and short-
term investments aggregated $535,616,857 and $497,333,740, respectively.
There were no purchases 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 October 31, 1995, there was an unlimited number of shares of
beneficial interest authorized.
Year ended October 31, 1995
Class A Shares Amount
- ----------------------------------------------------
Shares sold 4,766,671 $87,884,467
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,881,585 68,270,063
- ----------------------------------------------------
8,648,256 156,154,530
Shares
repurchased (6,229,598) (116,013,292)
- ----------------------------------------------------
Net increase 2,418,658 $40,141,238
- ----------------------------------------------------
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
- ----------------------------------------------------
Year ended October 31, 1995
Class B Shares Amount
- ----------------------------------------------------
Shares sold 2,743,660 $51,118,308
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 188,683 3,340,889
- ----------------------------------------------------
2,932,343 54,459,197
Shares
repurchased (683,424) (12,747,189)
- ----------------------------------------------------
Net increase 2,248,919 $41,712,008
- ----------------------------------------------------
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
October 31, 1995
Class M Shares Amount
- ----------------------------------------------------
Shares sold 115,560 $2,231,842
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,279 24,919
- ----------------------------------------------------
116,839 2,256,761
- ----------------------------------------------------
Shares
repurchased (26,296) (513,671)
- ----------------------------------------------------
Net increase 90,543 $1,743,090
- ----------------------------------------------------
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. In 1994, over 80,000 tests of 55 shareholder
service components demonstrated that Putnam outperformed the industry
standard in every category.
* HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market 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 the
original cost of the shares.
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 representative.
* 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.
Federal tax information
(Unaudited)
Pursuant to Section 852 of the Internal Revenue Code, the fund hereby
designates $0.87 per share (or if different, the amount necessary to
offset net capital gain earned by the fund) for all share classes as
capital gain dividends for its taxable year ended October 31, 1995.
The fund has designated 41.66% of the distributions from net investment
income as qualifying for the dividends received deductions for
corporations.
The Form 1099 you receive in January 1996 will show the tax status of
all distributions paid to your account in calendar 1995.
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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
Thomas V. Reilly
Vice President
Hugh H. Mullin
Vice President and Fund Manager
Charles G. Pohl
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
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 accompanied by the current prospectus, which gives details
of sales charges, investment objectives, and operating policies of the
fund, and the most recent copy of Putnam's Quarterly Performance
Summary. For more information, or to request a prospectus, call toll
free: 1-800-225-1581.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, are not insured by the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board
or any other agency, and involve risk, including the possible loss of
principal amount invested.
[Logo: Putnam Investments]
The Putnam Funds
One Post Office Square
Boston Massachusetts, 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
21696-008/223/920 12/95
