Putnam
Convertible
Income-Growth
Trust
SEMIANNUAL REPORT
April 30, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "The fund extended its hitting streak in 1995. Besides a successful
early-season move toward high-yielding converts, [fund] managers
[Charles] Pohl and [Hugh] Mullin shifted the fund away from some of
1995's worst areas, such as the retail and paper industries, early in
the year. The fund's overweighting in financials paid off as well. This
fund is a triple-crown contender: it offers investors strong returns,
limited downside volatility, and an attractive yield."
-- Morningstar Mutual Funds analysis, February 2, 1996
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
13 Portfolio holdings
25 Financial statements
[GRAPHIC OMITTED: photo of George
Putnam]
(copyright) Karsh, Ottawa
From the Chairman
Dear Shareholder:
The value-oriented approach to selecting Putnam Convertible Income-
Growth Trust's holdings clearly played a major role in the fund's solid
performance during the first half of fiscal 1996, the six months ended
April 30. Convertibles were also beneficiaries of the strength of the
underlying equities whose performance they often mimic.
Fund managers Hugh Mullin and Charles Pohl once again demonstrated the
positive effect that careful security selection, backed by meticulous
fundamental analysis, can have on a portfolio. Such attributes are
especially beneficial when the markets, the economy, and fiscal
policymakers are sending out a mix of signals.
In their report, which follows, Hugh and Charlie review performance thus
far in fiscal 1996 and discuss your fund's prospects for the second half
and beyond.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
June 19, 1996
Report from the Fund Managers
Hugh H. Mullin, lead manager
Charles G. Pohl
Even the sharp rise in interest rates that jarred the fixed-income
markets in March has not been enough to stop the upward momentum of
convertibles. As their prices were driven higher in tandem with a
stronger equity market, convertible bonds and preferred stocks
demonstrated their appreciation potential as well as their ability to
provide attractive income. By the end of the first half of Putnam
Convertible Income-Growth Trust's fiscal year, it was clear that equity-
sensitive convertibles -- particularly those of smaller and medium-sized
companies -- had provided the most favorable returns.
For the six months ended April 30, 1996, net asset value returns for
class A, class B, and class M shares totaled 13.26%, 12.86%, and 12.88%,
respectively. Returns for class A, class B, and class M shares after
taking into account the maximum applicable sales charges, were 6.78%,
7.86%, and 8.94%, respectively, for the same period. Our success in
identifying attractively valued securities through meticulous
fundamental analysis played a key role in achieving solid performance
during the period.
* FAVORABLE TECHNICALS BOLSTER CONVERTIBLES
In the post-recession period of the early 1990s, many companies tapped
the convertible market for recovery capital needed to restore their
balance sheets to financial health. These companies hoped to improve
their financial condition and growth prospects in order to help their
stock prices regain the value forfeited during the economic downturn.
Convertible bonds provide an attractive financing vehicle under such
conditions. As a result of the built-in equity features they offer,
these securities generally require lower interest payments than
conventional (nonconvertible) bonds.
For many convertible issuers, the strategy has paid off handsomely. In
fact, the strength of the equity market in recent years has allowed many
companies the opportunity to "force" conversion of their bonds -- a
development that has caused the outstanding supply of convertibles to
shrink. A forced conversion occurs when a convertible's underlying stock
has risen to the point that it is more advantageous for holders to
exercise their option to convert the bonds into common shares than to
allow the bonds to be called by the company at a given call price.
While the quantity of convertibles outstanding has diminished since last
fall, demand for these hybrid securities has remained firm. Barring any
major change in stock prices, we believe this favorable supply/demand
dynamic is likely to continue for the remainder of calendar 1996, which
bodes well for the convertible market.
* OPPORTUNITIES SPAN DIVERSE SECTORS
We constantly search the market for inherently sound companies with
attractively valued securities for your fund. This diversified, value-
oriented approach continued to prove successful during the period. For
instance, during the majority of calendar 1995, we avoided many new
issues in the red-hot technology sector. We believed prices of many
technology convertibles had reached overvalued levels as investor fervor
for technology stocks neared a fever pitch. However, as the sector fell
out of favor toward the end of the year, we were able to add several
names selectively at very attractive prices -- increasing the fund's
allocation to the high-tech sector by approximately 5%. This strategy
bore fruit as technology stocks rebounded sharply into 1996.
Since our last report, we have taken profits in a number of the fund's
energy holdings, particularly smaller oil companies that demonstrated
stellar returns during the period. We maintain sizable positions in
convertibles issued in industries such as autos and appliance
manufacturers, cable television and telecommunications, and banks,
savings and loans, and insurance companies. All of the holdings in these
various areas share the positive features of sound fundamentals,
favorable growth potential, and attractive value.
[GRAPHIC OF HORIZONTAL BAR CHART OMITTED: TOP INDUSTRY SECTORS*
Information from chart reads:
Oil & gas 8.4%
Banks 7.7%
Insurance & finance 6.0%
Retail 5.5%
Consumer services 5.3%
*Based on net assets as of 4/30/96. Holdings will vary over time.
* NOTEWORTHY ADDITIONS IN CONSUMER AND SERVICE-RELATED INDUSTRIES
We believe that among the many alternatives presently available in the
convertible bond marketplace, those issued by consumer- and service-
oriented companies offer some of the best values. The convertible bonds
of Lowes Co., owned prior to the start of the fiscal year, are excellent
examples. This home-improvement retailer, which primarily serves rural
communities outside major U.S. metropolitan areas, is currently moving
toward a larger average store size. This shift is intended to expand the
customer base beyond professional contractors to higher-margin
individual buyers.
We added substantially to the fund's holdings when their price became
depressed as a result of reduced profits from lumber sales and investor
concerns surrounding the company's expansion plans. We believe your fund
will gain as Lowes's new strategy allows the company to improve
profitability over time. While the securities of this company, along
with others discussed in this report, were viewed favorably at the end
of the fiscal period, all portfolio holdings are subject to review and
adjustment in accordance with the fund's investment strategy and may
well vary in the future.
WMX Technologies, a waste collection, removal, and recycling company, is
another holding that we expect to profit from strategic change. The
company recently made a commitment to its stockholders to reduce capital
expenditures and turn its attention toward maximizing cash flow.
Management's shift from a growth mentality to that of a mature business
represents a sea change in the way WMX has been run for the past 20
years. We estimate the company's stock will likely advance substantially
as a result of this renewed emphasis on profitability. Your fund should
continue to benefit from WMX's healthy outlook through ownership of both
its convertible debt and common stock.
During the technology selloff of late 1995, we had the opportunity to
purchase a convertible bond issued by Softkey International at bargain
levels. Following this consumer software company's announced plans to
acquire two major competitors, the value of its securities plummeted --
allowing us to add the name at an unusually low price. We believe that
once the new acquisitions are successfully integrated into Softkey's
existing operations, an expanded revenue base and desirable product mix
will likely cause the company's rapid growth to resume. In the meantime,
these bonds are providing a particularly attractive level of current
income.
TOP 10 HOLDINGS
Softkey International, Inc.
Computers and software
Banco Nacional de Mexico
Foreign governmental bond
Eastman Kodak Co.
Diversified imaging, chemicals, and health care products
Rogers Communications
Cable broadcasting
Atlantic Richfield Co.
Oil and gas
Mitsubishi Bank Ltd.
International finance
Baker (J.) Inc.
Footwear retailer
Cellular Communications, Inc.
Cellular telephone services
Freeport McMoRan Copper & Gold Co., Inc.
Metal mining and exploration
Lowes Companies, Inc.
Home improvement retailer
These holdings represent 9.7% of the fund's net assets as of 4/30/96.
Portfolio holdings will vary over time.
* CONSTRUCTIVE OUTLOOK
We anticipate that the remainder of 1996 will be marked by steady but
manageable economic growth and foresee only limited risk of a sharp
increase in inflationary pressures. This scenario should provide a
productive environment for the futures of the companies represented in
your portfolio, though, of course, there can be no guarantees.
The composition of the convertible market, now dominated by companies
seeking capital to expand their businesses rather than to shore up their
balance sheets, has undergone a transformation over the past six years.
The resulting market is characterized by a greater number of smaller
companies and tends to respond more to movements in stock prices than to
fluctuations in interest rates. In light of these changes, we believe
adherence to our value-oriented approach will remain crucial in
achieving favorable returns for our shareholders over the remainder of
fiscal 1996.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 4/30/96, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
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.
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.
TOTAL RETURN FOR PERIODS ENDED 4/30/96
Class A Class B Class M
(inception date) (6/29/72) (7/15/93) (3/13/95)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
6 months 13.26% 6.78% 12.86% 7.86% 12.88% 8.94%
- -----------------------------------------------------------------------
1 year 23.13 16.03 22.22 17.22 22.32 18.06
- -----------------------------------------------------------------------
5 years 105.75 93.88 -- -- -- --
Annual
average 15.52 14.16 -- -- -- --
- -----------------------------------------------------------------------
10 years 176.13 160.25 -- -- -- --
Annual
average 10.69 10.04 -- -- -- --
- -----------------------------------------------------------------------
Life of
class -- -- 36.45 33.45 27.54 23.04
Annual
average -- -- 11.74 10.86 23.78 19.95
- -----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 4/30/96
S&P 500 Lehman Bros. Corporate
Index Bond Index
- -----------------------------------------------------------------------
6 months 13.75% 0.08%
- -----------------------------------------------------------------------
1 year 30.13 9.65
- -----------------------------------------------------------------------
5 years 100.47 55.18
Annual average 14.92 9.18
- -----------------------------------------------------------------------
10 years 278.35 140.36
Annual average 14.23 9.16
- -----------------------------------------------------------------------
Life of class B 56.11 16.38
Annual average 17.24 5.67
- -----------------------------------------------------------------------
Life of class M 38.29 12.41
Annual average 32.89 10.52
- -----------------------------------------------------------------------
Performance data represent past results and are not indicative of future
performance. They 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 net asset 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.
TOTAL RETURN FOR PERIODS ENDED 3/31/96
(most recent calendar quarter)
(inception Class A Class B Class M
date) (6/29/72) (7/15/93) (3/13/95)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
6 months 9.11% 2.82% 8.63% 3.63% 8.78% 4.94%
- -----------------------------------------------------------------------
1 year 23.17 16.06 22.25 17.25 22.41 18.13
- -----------------------------------------------------------------------
5 years 104.77 93.03 -- -- -- --
Annual
average 15.41 14.06 -- -- -- --
- -----------------------------------------------------------------------
10 years 171.13 155.51 -- -- -- --
Annual
average 10.49 9.84 -- -- -- --
- -----------------------------------------------------------------------
Life of
class -- -- 33.86 30.86 25.12 20.71
Annual
average -- -- 11.36 10.43 23.80 19.64
- -----------------------------------------------------------------------
Performance data represent past results and are not indicative of future
performance. They 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 net asset value will fluctuate so that an investor's shares,
whom sold, may be worth more or less than their original cost.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 4/30/96
Class A Class B Class M
- -----------------------------------------------------------------------
Distributions (number) 2 2 2
- -----------------------------------------------------------------------
Income $0.498 $0.430 $0.461
- -----------------------------------------------------------------------
Capital gains
- -----------------------------------------------------------------------
Long-term 0.448 0.448 0.448
- -----------------------------------------------------------------------
Short-term 0.266 0.266 0.266
- -----------------------------------------------------------------------
Total $1.212 $1.144 $1.175
- -----------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- -----------------------------------------------------------------------
10/31/95 $19.42 $20.60 $19.30 $19.37 $20.07
- -----------------------------------------------------------------------
4/30/96 20.69 21.95 20.55 20.60 21.35
- -----------------------------------------------------------------------
Current return NAV POP NAV NAV POP
- -----------------------------------------------------------------------
End of period
- -----------------------------------------------------------------------
Current dividend rate1 4.64% 4.37% 4.01% 4.39% 4.23%
- -----------------------------------------------------------------------
Current 30-day SEC yield2 4.44 4.18 3.70 3.96 3.82
- -----------------------------------------------------------------------
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.
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 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 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 and
performance of the fund will differ. It is not possible to invest
directly in an index.
A Putnam perspective on risk and reward
You've probably been told how important it is to understand the
relationship between an investment's potential rewards and its
accompanying risks. Given the cautionary nature of such
instructions, it may take most investors a while to realize that risk
has a positive side.
Every risk signals a potential reward. Selecting only those investments
that offer the greatest degree of security generally leads to only
modest rewards. Furthermore, even insured or guaranteed investments may
be subject to changes in their rates of return or, in some cases, in
their principal values. Experienced investors know that no investment is
truly risk free and are therefore willing to take on some measure of
risk in order to increase their potential gains.
The greater the risk, the greater the potential reward. Accepting an
appropriate level of investment risk can give you a better chance of
outpacing inflation over time and seeking to maximize your investment's
return. How much risk? Your financial advisor's feedback and your time
horizon can make all the difference in determining how much risk is
compatible with your investment goals and your peace of mind.
* FITTING YOUR FUND SELECTION TO YOUR RISK TOLERANCE
How do you find the right balance between investment risks and their
potential rewards? It's helpful to understand the types of risks that
can apply to different types of investments, and to look at your own
portfolio with this perspective.
For short-term goals, your first priority may be managing market risk.
Longer-term investors may be more concerned with inflation risk. And all
income-oriented investors should consider interest-rate, credit, and
prepayment risks carefully. Within each of Putnam's four investment
categories, you can select funds with differing levels of risk and
reward potential to customize your portfolio.
This list covers only the most general types of risks; however, each
investment will also have its own specific risks. You will find a more
detailed discussion of these risk considerations in each fund's
prospectus.
* A RUNDOWN OF RISK TYPES
MARKET RISK - Most important for stock funds, but relevant to all funds,
this is a measure of how sensitive a fund's holdings are to changes in
general market conditions. Remember, though, that securities that lose
value quickly in market declines may also show the strongest gains in
more favorable environments.
INTEREST-RATE RISK - Since bond prices fall as interest rates rise, this
type of risk is a particular concern for fixed-income inves-
tors. However, interest-rate increases can also have a substantial
negative effect on the stock market.
INFLATION RISK - If your investments cannot keep pace with inflation,
your money will begin to lose its purchasing power. Stock investments
are generally considered among the best ways of addressing inflation
risk over the long term.
CREDIT AND PREPAYMENT RISK - Credit risk is the concern that the
security's issuer will not be able to meet its payment, while prepayment
risk involves the premature payoff of a loan, with a resulting loss of
interest income. Professional management and in-depth research are
invaluable in managing both these risks.
LIQUIDITY RISK - `Not all investments can be readily converted into cash
at their perceived market values. Liquidity risk can affect the price of
securities held in the fund's portfolio and, thus, the fund's share
prices.
<TABLE>
<CAPTION>
Portfolio of investments owned
April 30, 1996 (Unaudited)
CONVERTIBLE BONDS AND NOTES (46.3%) *
PRINCIPAL AMOUNT VALUE
<S> <C> <C> <C>
Aerospace and Defense (0.8%)
- ------------------------------------------------------------------------------------------------------------------
$1,850,000 Diagnostic Retrieval Systems 144A cv. sr. sub. notes 9s, 2003 $1,979,500
3,750,000 Rohr Industries, Inc. cv. sub. deb. 7s, 2012 3,262,500
3,050,000 UNC Inc. cv. sub. deb. 7 1/2s, 2006 2,638,250
------------
7,880,250
Automotive (2.0%)
- ------------------------------------------------------------------------------------------------------------------
7,240,000 Exide Corp. 144A cv. sr. sub. notes 2.9s, 2005 4,380,200
7,500,000 Magna International cv. sub. deb. 5s, 2002 7,725,000
3,000,000 Mascotech, Inc. cv. sub. deb. 4 1/2s, 2003 2,280,000
JPY 400,000 Toyota Motor Corp. cv. deb. 1.2s, 1998 (Japan) 4,676,191
------------
19,061,391
Banks (2.5%)
- ------------------------------------------------------------------------------------------------------------------
$11,355,000 Banco Nacional de Mexico SA cv. bonds 7s, 1999 (Mexico) 10,105,950
1,750,000 Banco Nacional de Mexico 144A cv.
company guaranty 7s, 1999 (Bahamas) 1,557,500
7,500,000 Mitsubishi Bank Ltd. International Finance cv.
guaranteed notes 3s, 2002 (Japan) 8,662,500
5,000,000 Sumitomo Bank Ltd. cv. deb. 3 1/8s, 2004 (Japan) 4,400,000
------------
24,725,950
Basic Industrial Products (1.5%)
- ------------------------------------------------------------------------------------------------------------------
480,000 Agco Corp. cv. sub. deb. 6 1/2s, 2008 1,910,400
3,700,000 SKF Corp. 144A cv. deb. zero %, 2002 (Sweden) 2,796,800
1,000,000 Thermo Electron Corp. cv. deb. 5s, 2001 2,010,000
4,000,000 Thermo Electron Corp. 144A cv. sub. deb. 4 1/4s, 2003 4,860,000
1,590,000 Titan Wheel International Inc. cv. sub. deb. 4 3/4s, 2000 2,114,700
1,270,000 Trimas Corp. cv. sub. deb. 5s, 2003 1,390,650
------------
15,082,550
Broadcasting (0.4%)
- ------------------------------------------------------------------------------------------------------------------
3,100,000 International Cabletel Inc. 144A cv. sub. deb. 7 1/4s, 2005 3,689,000
Building and Construction (0.6%)
- ------------------------------------------------------------------------------------------------------------------
1,140,000 Continental Homes Holding cv. sub. notes 6 7/8s, 2002 1,285,350
3,000,000 Empresas Ica Sociedad ADS cv. sub. deb. 5s, 2004(Mexico) 1,908,750
1,500,000 Falcon Homes cv. sub. deb. 7 1/4s, 1999 1,260,000
1,805,000 U.S. Home Corp. cv. deb. 4 7/8s, 2005 1,606,450
------------
6,060,550
Business Equipment and Services (3.0%)
- ------------------------------------------------------------------------------------------------------------------
$2,300,000 Career Horizons Inc., cv. bonds 7s, 2002 $4,922,000
5,250,000 Conner Peripherals, Inc. cv. sub. deb. 6 1/2s, 2002 5,932,500
1,550,000 Danka Business Systems 144A cv. sub. notes 6 3/4s,
2002 (United Kingdom) 2,693,125
6,000,000 Maxtor Corp. cv. sub. deb. 5 3/4s, 2012 4,380,000
4,800,000 U.S. Office Products Co. cv. sub. notes 5 1/2s, 2001 6,504,000
4,500,000 Unisys Corp. cv. sub. notes 8 1/4s, 2000 4,201,875
------------
28,633,500
Computers (2.0%)
- ------------------------------------------------------------------------------------------------------------------
1,165,000 EMC Corp. cv. sub. notes 4 1/4s, 2001 1,331,013
4,325,000 Safeguard Scientifics, Inc. 144A cv. sub. notes 6s, 2006 5,325,156
14,300,000 Softkey International, Inc. 144A cv. sr. notes 5 1/2s, 2000 12,494,625
------------
19,150,794
Conglomerates (0.7%)
- ------------------------------------------------------------------------------------------------------------------
1,250,000 Alfa S.A. 144A cv. sub. notes 8s, 2000(Austria) 1,300,000
1,400,000 Dart & Kraft Inc. 144A cv. unsub. deb. 7 3/4s, 1998 3,710,000
1,500,000 Samsung Heavy Industries cv. deb. 1/2s, 2009 1,563,750
------------
6,573,750
Consumer Durables (0.7%)
- ------------------------------------------------------------------------------------------------------------------
15,000,000 Whirpool Corp. cv. Liquid Yield Option Notes (LYON)
zero %, 2011 6,637,500
Consumer Non Durables (1.7%)
- ------------------------------------------------------------------------------------------------------------------
2,750,000 Bell Sports Corp. cv. sub. deb. 4 1/4s, 2000 1,876,875
13,000,000 Coleman Worldwide Corp. cv. sr. sec. LYON zero %, 2013 4,712,500
2,000,000 Dixie Yarns, Inc. cv. deb. 7s, 2012 1,460,000
3,050,000 Fieldcrest Cannon, Inc. cv. sub. deb. 6s, 2012 2,424,750
8,045,000 Standard Commercial Corp. cv. sub. deb. 7 1/4s, 2007 5,591,275
------------
16,065,400
Consumer Services (4.7%)
- ------------------------------------------------------------------------------------------------------------------
14,800,000 ADT Operations Inc. cv. sub. notes zero %, 2010 7,622,000
13,350,000 Boston Chicken, Inc. cv. LYON zero %, 2015 3,988,313
3,905,000 CML Group, Inc. 144A cv. jr. deb. 5 1/2s, 2003 2,421,100
12,750,000 Comcast Corp. cv. notes 1 1/8s, 2007 6,104,063
1,500,000 Comcast Corp. cv. sub. deb. stepped-coupon 3 3/8s,
(5 1/2s, 9/9/97), 2005 ++ 1,378,125
20,150,000 Hollinger, Inc. cv. LYON zero %, 2013 6,448,000
7,735,000 Marriot Intl. 144A cv. notes zero %, 2011 4,099,550
2,050,000 National Education Corp. cv. sub. deb. 6 1/2s, 2011 1,681,000
5,500,000 News America Holdings Inc. cv. LYON zero %, 2013 2,722,500
280,000 Pharmaceutical Marketing Services Inc. cv. notes
6 1/4s, 2003 224,000
5,700,000 Pharmaceutical Marketing Services Inc.144A cv. deb.
6 1/4s, 2003 4,588,500
4,630,000 WMS Industries, Inc. cv. deb. 5 3/4s, 2002 4,219,088
------------
45,496,239
Electronics and Electrical Equipment (2.5%)
- ------------------------------------------------------------------------------------------------------------------
$2,250,000 Altera Corp. 144A cv. sub. notes 5 3/4s, 2002 $2,733,750
5,550,000 Magnetek, Inc. cv. deb. 8s, 2001 5,328,000
4,115,000 Motorola Inc. cv. sub. LYON zero %, 2013 3,230,275
4,745,000 Richardson Electronics Ltd. cv. sub. deb.
7 1/4s, 2006 3,956,144
2,500,000 Siemens Capital Corp. Co. cv. guaranty
8s, 2002 (Germany) 3,450,000
4,000,000 Texas Instruments cv. sub. deb. 2 3/4s, 2002 5,500,000
------------
24,198,169
Electronic Components and Instruments (1.1%)
- ------------------------------------------------------------------------------------------------------------------
1,215,000 Thermo Instruments Systems Inc. cv. deb. 3 3/4s, 2000 2,405,700
1,700,000 Thermo Optek Corp. 144A cv. bonds 5s, 2000 1,887,000
1,295,000 Thermo Quest Corp. cv. co. guaranty 5s, 2000 1,437,450
4,620,000 Xilinx, Inc. 144A cv. sub. notes 5 1/4s, 2002 4,550,700
------------
10,280,850
Environmental Control (2.3%)
- ------------------------------------------------------------------------------------------------------------------
2,300,000 Enclean, Inc. cv. sub. deb. 7 1/2s, 2001 2,331,324
3,100,000 OHM Corp. cv. sub. deb. 8s, 2006 2,693,125
3,940,000 Thermo Terratech Inc. cv. sub. deb. 144A 4 5/8s,
2003## 4,137,000
4,460,000 U.S. Filter Corp. 144A cv. sub. notes 6s, 2005 5,641,900
1,000,000 U.S. Filter Corp. cv. sub. deb. 5s, 2000 1,495,000
6,378,000 WMX Technologies, Inc. cv. sub. notes 2s, 2005 6,090,990
------------
22,389,339
Food (0.4%)
- ------------------------------------------------------------------------------------------------------------------
2,500,000 Chiquita Brands International cv. deb. 7s, 2001 2,200,000
2,400,000 Chiquita Brands International 144A cv. sub. 7s, 2001 2,112,000
------------
4,312,000
Food and Beverages (0.2%)
- ------------------------------------------------------------------------------------------------------------------
2,000,000 Grand Metropolitan PLC cv. unsub. deb. 6 1/2s,
2000 (United Kingdom) 2,205,000
Health Care (3.2%)
- ------------------------------------------------------------------------------------------------------------------
4,000,000 Beverly Enterprises cv. sub. deb. 5 1/2s, 2018 4,070,000
2,740,000 Careline, Inc. cv. sr. sub. notes 8s, 2001 3,034,550
2,860,000 Emeritus Corp. 144A cv. sub. deb. 6 1/4s, 2006 3,103,100
8,345,000 Quantum Health Resources, Inc. cv. deb. 4 3/4s, 2000 6,822,038
3,500,000 Tenet Healthcare Corp. cv. sub. notes 6s, 2005 3,762,500
1,738,000 Theratx Inc., cv. sub. deb. 8s, 2002 1,648,928
6,500,000 Theratx Inc. cv. sub. notes 8s, 2002 6,175,000
2,545,000 US Diagnostic Laboratories, Inc. 144A cv. sub. deb. 9s, 2003 2,684,975
------------
31,301,091
Hospital Management and Medical Services (1.2%)
- ------------------------------------------------------------------------------------------------------------------
$3,270,000 Integrated Health Services, Inc. cv. sub. deb. 6s, 2003 $3,302,700
4,500,000 Integrated Health Services, Inc. cv. sr. sub. deb 5 3/4s, 2001 4,646,250
4,040,000 Sun Healthcare Group Inc. 144A cv. sub. 6s, 2004 3,605,700
------------
11,554,650
Insurance and Finance (1.6%)
- ------------------------------------------------------------------------------------------------------------------
5,000,000 NAC Re Corp. cv. deb. 5 1/4s, 2002 4,900,000
3,140,000 Pioneer Financial Services, Inc., cv. sub. notes 6 1/2s, 2003 3,116,450
1,990,000 Trenwick Group, Inc. cv. deb. 6s, 1999 2,149,200
9,000,000 USF&G Corp. cv. sub. notes zero %, 2009 5,163,750
------------
15,329,400
Medical Supplies (0.3%)
- ------------------------------------------------------------------------------------------------------------------
1,250,000 Benson Eyecare Corp. cv. sub. notes 8s, 2001 1,375,000
2,000,000 Phoenix Shannon 144A cv. sr. sub. notes 9 1/2s, 2000 1,922,500
------------
3,297,500
Metals and Mining (0.6%)
- ------------------------------------------------------------------------------------------------------------------
2,739,500 Quanex Corp. cv. sub. deb. 6.88s, 2007 2,629,920
3,360,000 Teck Corp. cv. sub. deb. 3 3/4s, 2006 (Canada) 3,628,800
------------
6,258,720
Oil and Gas (2.0%)
- ------------------------------------------------------------------------------------------------------------------
3,000,000 Apache Corp. 144A cv. sub. deb. 6s, 2002 3,345,000
3,270,000 Cross Timbers Oil Co. cv. deb. 5 1/4s, 2003 3,196,425
2,400,000 Pennzoil Co. cv. sub. deb. 6 1/2s, 2003 3,360,000
915,000 Pogo Producing Co. cv. sub. notes 5 1/2s, 2004 1,564,650
3,170,000 Pride Petroleum Services, Inc. cv. sub. deb. 6 1/4s, 2006 4,715,375
1,000,000 Seacor Holdings. cv. sub. deb. 6s, 2003 1,625,000
2,500,000 Wainoco Oil Corp. cv. sub. deb. 7 3/4s, 2014 2,056,250
------------
19,862,700
Oil and Gas Pipelines (0.7%)
- ------------------------------------------------------------------------------------------------------------------
5,000,000 SFP Pipeline Holdings Inc. cv. variable rate exch.
deb. 11.16s, 2010++++ 6,450,000
Pharmaceuticals (1.7%)
- ------------------------------------------------------------------------------------------------------------------
3,615,000 Alza Corp. cv. sub. LYON zero %, 2014 1,563,488
1,885,000 Nabi, Inc. 144A cv. sub. notes 6 1/2s, 2003 2,064,075
16,330,000 Roche Holdings, Inc. cv. unsub. LYON zero%,
2010 (Switzerland) 7,185,200
5,425,000 Sandoz Capital BVI Ltd. 144A cv. company
guaranty 2s, 2002 (Switzerland) 5,777,625
------------
16,590,388
Publishing (0.2%)
- ------------------------------------------------------------------------------------------------------------------
2,000,000 Thomas Nelson, Inc., 144A cv. sub. notes 5 3/4s, 1999 1,970,000
Real Estate (1.6%)
- ------------------------------------------------------------------------------------------------------------------
1,850,000 Alexander Haagen Properties, Ser. A, cv. sub. deb.
7 1/2s, 2001(R) $1,572,500
3,080,000 Camden Property Trust cv. sub. deb. 7.33s, 2001(R) 3,072,300
1,410,000 LTC Properties, Inc. cv. sub. deb. 7 3/4s, 2002 1,388,850
5,400,000 Liberty Property Trust cv. sub. deb. 8s, 2001(R) 5,670,000
3,750,000 Malan Realty Investors cv. sub. notes 9 1/2s, 2004(R) 3,356,250
------------
15,059,900
Restaurants (0.1%)
- ------------------------------------------------------------------------------------------------------------------
1,300,000 Flagstar Corp. cv. jr. sub. deb. 10s, 2014 728,000
Retail (3.5%)
- ------------------------------------------------------------------------------------------------------------------
10,325,000 Baker (J.) Inc. cv. deb. 7s, 2002 8,621,375
2,800,000 Ingles Markets, Inc. cv. sub. deb. 10s, 2008 3,290,000
6,625,000 Lowes Companies Inc. cv. deb. 3s, 2003 8,256,406
3,965,000 Michaels Stores, Inc. cv. sub. notes 6 3/4s, 2003 3,429,725
4,500,000 Office Depot Inc. cv. LYON zero %, 2008 2,739,375
1,000,000 Pier 1 Imports, Inc., cv. sub. notes 6 7/8s, 2002 1,190,000
8,200,000 Rite Aid Corp. cv. deb. zero %, 2006 4,264,000
2,350,000 Staples Inc., 144A cv. sub. deb. 4 1/2s, 2000 2,499,813
------------
34,290,694
Telecommunications (1.9%)
- ------------------------------------------------------------------------------------------------------------------
10,500,000 Cellular Communications, Inc.,
144A cv. sub. deb. zero %, 1999 8,347,500
17,000,000 Rogers Communications cv. deb. 2s, 2005 (Canada) 9,180,000
1,000,000 Tele Communications Intl. cv. sub. deb. 4 1/2s, 2006 942,500
------------
18,470,000
Transportation (0.6%)
- ------------------------------------------------------------------------------------------------------------------
GBP 3,300,000 British Airport Authority 144A cv. bonds
5 3/4s, 2006 (United Kingdom) 5,378,022
------------
Total Convertible Bonds and Notes (cost $418,599,523) $448,983,297
COMMON STOCKS (27.0%)*
NUMBER OF SHARES VALUE
Aerospace and Defense (0.3%)
- ------------------------------------------------------------------------------------------------------------------
35,000 Lockheed Martin Corp. $2,821,875
Automotive (1.3%)
- ------------------------------------------------------------------------------------------------------------------
54,535 Chrysler Corp. 3,422,071
60,000 Ford Motor Co. 2,152,500
71,000 General Motors Corp. 3,851,750
38,000 TRW, Inc. 3,567,250
------------
12,993,571
Banks (3.2%)
- ------------------------------------------------------------------------------------------------------------------
59,000 Banc One Corp. 2,050,250
40,000 BankAmerica Corp. 3,030,000
51,000 Bankers Trust New York Corp. 3,538,125
30,000 Comerica, Inc. 1,305,000
65,000 CoreStates Financial Corp. 2,535,000
110,000 Fleet Financial Group, Inc. 4,730,000
63,000 Keycorp 2,433,375
52,000 Morgan (J.P.) & Co., Inc. 4,374,500
60,000 National City Corp. 2,212,500
27,000 NationsBank Corp. 2,153,250
90,000 PNC Bank Corp. 2,722,500
------------
31,084,500
Basic Industrial Products (0.5%)
- ------------------------------------------------------------------------------------------------------------------
65,000 Ball Corp. 2,023,125
40,000 General Signal Corp. 1,520,000
25,000 Minnesota Mining & Manufacturing Co. 1,643,750
------------
5,186,875
Business Equipment and Services (0.9%)
- ------------------------------------------------------------------------------------------------------------------
44,000 Deluxe Corp. 1,540,000
36,000 Dun & Bradstreet Corp. 2,191,500
23,000 IBM Corp. 2,472,500
16,000 Xerox Corp. 2,344,000
------------
8,548,000
Chemicals (1.0%)
- ------------------------------------------------------------------------------------------------------------------
20,000 Dow Chemical Co. 1,777,500
35,000 du Pont (E.I.) de Nemours & Co., Ltd. 2,813,125
3,000 Hoechst AG (Germany) 1,009,595
34,175 Lubrizol Corp. 991,075
25,000 Union Carbide Corp. 1,137,500
65,000 Witco Chemical Corp. 2,218,125
------------
9,946,920
Conglomerates (1.0%)
- ------------------------------------------------------------------------------------------------------------------
72,000 Corning, Inc. 2,502,000
70,000 ITT Industries, Inc. + 1,925,000
44,999 Tenneco Inc. 2,469,320
25,000 United Technologies Corp. 2,762,500
------------
9,658,820
Consumer Durable Goods (0.2%)
- ------------------------------------------------------------------------------------------------------------------
30,000 Whirlpool Corp. 1,803,750
Consumer Non Durables (1.9%)
- ------------------------------------------------------------------------------------------------------------------
50,000 American Brands, Inc. 2,081,250
25,000 Avon Products, Inc. 2,221,875
20,000 Clorox Co. 1,652,500
32,000 Kimberly-Clark Corp. $2,324,000
67,000 Philip Morris Cos., Inc. 6,038,375
60,000 RJR Nabisco Holdings Corp. + 1,792,500
80,000 Universal Corp. 1,920,000
------------
18,030,500
Electronics and Electrical Equipment (1.1%)
- ------------------------------------------------------------------------------------------------------------------
40,000 Eaton Corp. 2,420,000
20,000 Emerson Electric Co. 1,672,500
20,000 General Electric Co. 1,550,000
43,000 Intel Corp. 2,913,250
36,000 Texas Instruments, Inc. 2,034,000
------------
10,589,750
Environmental Control (0.4%)
- ------------------------------------------------------------------------------------------------------------------
100,000 WMX Technologies, Inc. 3,475,000
Food and Beverages (1.2%)
- ------------------------------------------------------------------------------------------------------------------
30,000 Anheuser-Busch Cos., Inc. 2,013,750
50,000 Brown Forman Corp. Class B 1,975,000
39,000 General Mills, Inc. 2,164,500
65,000 Heinz (H.J.) Co. 2,201,875
70,000 Sara Lee Corp. 2,170,000
60,000 Whitman Corp. 1,515,000
------------
12,040,125
Forest Products (0.5%)
- ------------------------------------------------------------------------------------------------------------------
50,000 Chesapeake Corp. 1,443,750
65,000 Weyerhaeuser Co. 3,217,500
------------
4,661,250
Health Care (0.4%)
- ------------------------------------------------------------------------------------------------------------------
90,000 Baxter International, Inc. 3,982,500
Insurance and Finance (2.2%)
- ------------------------------------------------------------------------------------------------------------------
50,000 American General Corp. 1,756,250
40,000 AON Corp. 2,145,000
50,000 Beneficial Corp. 2,762,500
18,000 CIGNA Corp. 2,040,750
68,000 Federal National Mortgage Association 2,082,500
27,000 Lincoln National Corp. 1,302,750
50,000 Norwest Corp. 1,806,250
145,121 Old Republic International Corp. 4,788,993
160,000 USF&G Corp. 2,540,000
------------
21,224,993
Metals and Mining (0.3%)
- ------------------------------------------------------------------------------------------------------------------
51,250 Freeport-McMoRan Copper & Gold Co., Inc. Class A $1,620,781
35,086 Freeport-McMoRan Copper & Gold Co., Inc. Class B 1,153,452
------------
2,774,233
Paper and Forest Products (0.2%)
- ------------------------------------------------------------------------------------------------------------------
38,000 Temple Inland, Inc. 1,843,000
Oil and Gas (2.4%)
- ------------------------------------------------------------------------------------------------------------------
66,857 Amoco Corp. 4,880,561
15,000 Atlantic Richfield Co. 1,766,250
22,000 British Petroleum PLC ADR (United Kingdom) 2,403,500
37,000 Exxon Corp. 3,145,000
100,000 Occidental Petroleum Corp. 2,575,000
30,000 Questar Corp. 1,050,000
50,000 Repsol S.A. ADS (Spain) 1,850,000
22,000 Royal Dutch Petroleum Co. PLC ADR (Netherlands) 3,151,500
65,000 Total Corp. ADR (France) 2,226,250
------------
23,048,061
Pharmaceuticals (1.2%)
- ------------------------------------------------------------------------------------------------------------------
30,000 American Home Products Corp. 3,165,000
30,000 Bristol-Myers Squibb Co. 2,467,500
77,000 Pharmacia & Upjohn, Inc. 2,945,250
30,000 Warner-Lambert Co. 3,352,500
------------
11,930,250
Photography (1.3%)
- ------------------------------------------------------------------------------------------------------------------
131,844 Eastman Kodak Co. 10,086,066
50,000 Polaroid Corp. 2,250,000
------------
12,336,066
Publishing (0.5%)
- ------------------------------------------------------------------------------------------------------------------
50,000 McGraw-Hill, Inc. 2,206,250
62,800 Times Mirror Co. Class A 2,676,850
------------
4,883,100
Real Estate (0.2%)
- ------------------------------------------------------------------------------------------------------------------
100,000 LTC Properties, Inc. 1,537,500
Retail (2.0%)
- ------------------------------------------------------------------------------------------------------------------
50,000 Dayton Hudson Corp. 4,775,000
300,000 K mart Corp. 3,037,500
50,000 May Department Stores Co. 2,550,000
56,100 Melville Corp. 2,180,888
47,000 Penney (J.C.) Co., Inc. 2,326,500
76,000 Rite Aid Corp. 2,251,500
50,000 Sears, Roebuck & Co. 2,493,750
------------
19,615,138
Transportation (0.8%)
- ------------------------------------------------------------------------------------------------------------------
72,100 Canadian National Railway Co. (Canada) $1,369,900
25,000 Conrail, Inc. 1,743,750
15,000 Norfolk Southern Corp. 1,260,000
80,000 Ryder System, Inc. 2,330,000
20,000 Union Pacific Corp. 1,362,500
------------
8,066,150
Utilities (2.0%)
- ------------------------------------------------------------------------------------------------------------------
46,000 Bell Atlantic Corp. 2,990,000
15,300 Central & South West Corp. 416,925
35,805 Cinergy Corp. 1,038,345
60,000 Edison International 960,000
47,000 GTE Corp. 2,038,625
53,000 Northeast Utilities Co. 841,375
50,000 NYNEX Corp. 2,456,250
40,000 Potomac Electric Power Co. 995,000
35,000 Public Service Co. of Colorado 1,159,375
40,000 Public Service Enterprise Group, Inc. 1,045,000
43,000 SBC Communications, Inc. 2,150,000
54,000 Sprint Corp. 2,274,750
20,000 Texas Utilities Electric Co. 805,000
------------
19,170,645
------------
Total Common Stocks (cost $206,017,697) $261,252,572
CONVERTIBLE PREFERRED STOCKS (21.3%)*
NUMBER OF SHARES VALUE
Aerospace and Defense (0.4%)
- ------------------------------------------------------------------------------------------------------------------
70,000 Kaman Corp., $3.25 cv. pfd. $3,517,500
Automotive (1.0%)
- ------------------------------------------------------------------------------------------------------------------
72,250 Federal Mogul Corp., $3.875 cv. pfd. 4,208,563
44,500 Ford Motor Co. Ser. A, $4.20 dep. shs. cv. pfd. 5,162,000
------------
9,370,563
Banks (2.0%)
- ------------------------------------------------------------------------------------------------------------------
47,100 Banc One Ser. C, $3.50 cv. pfd. 3,155,700
54,500 First Chicago Corp., Ser. B, $2.875 cv. pfd. 3,828,625
31,500 Matewan Bancshares, Inc., Ser. A, $1.875 cv. pfd. 795,375
40,000 RCSB Financial, Inc., $1.75 cv. pfd. 1,485,000
45,000 Roosevelt Financial Group $3.25 cv. pfd. 3,296,250
66,450 Sovereign Bancorp Inc., $3.13 cv. pfd. 3,987,000
78,350 Union Planters Corp., Ser. E, $2.00 cv. pfd. 3,036,063
------------
19,584,013
Basic Industrial Products (0.5%)
- ------------------------------------------------------------------------------------------------------------------
86,450 4,927,650
Broadcasting (0.2%)
- ------------------------------------------------------------------------------------------------------------------
215,000 Triathlon Broadcasting Co., $0.945 cv. pfd. $2,311,250
Building and Construction (0.3%)
- ------------------------------------------------------------------------------------------------------------------
58,800 Southdown, Inc., $2.875 cv. pfd. 2,726,850
Business Equipment and Services (0.3%)
- ------------------------------------------------------------------------------------------------------------------
32,000 Alco Standard Corp., $5.03 cv. pfd. 3,168,000
Coal (0.4%)
- ------------------------------------------------------------------------------------------------------------------
113,500 Pittston Mineral Corp., 144A $3.125 dep. shs. cv. pfd. 4,199,500
Computers (0.6%)
- ------------------------------------------------------------------------------------------------------------------
110,500 Wang Laboratories, Inc., 144A, Ser. B, $3.25 cv. pfd. 6,077,500
Conglomerates (1.3%)
- ------------------------------------------------------------------------------------------------------------------
380,000 Cooper Industries, Inc., $0.81 cv. pfd. 6,555,000
115,000 Corning, Inc., $3.00 cv. pfd. 6,095,000
------------
12,650,000
Consumer Non Durables (1.1%)
- ------------------------------------------------------------------------------------------------------------------
156,000 Amway Japan Ltd. (AJL), $1.44 cv. pfd. (Japan) 3,471,000
94,475 Fieldcrest Cannon Ser. A, $3.00 dep. cv. pfd. 4,393,088
472,500 RJR Nabisco Holdings, Ser. C, $ 0.6012 sr. cv. pfd. 2,835,000
------------
10,699,088
Consumer Services (0.6%)
- ------------------------------------------------------------------------------------------------------------------
64,500 Service Corp. Intl., $6.25 cv. pfd. 5,708,250
Electronics and Electrical Equipment (0.3%)
- ------------------------------------------------------------------------------------------------------------------
42,100 Elsag Bailey Process Automation N.V. $2.75 cv. pfd.
(Netherlands) 1,831,350
65,400 Westinghouse Electric Corp., 144A Ser. C, $1.30 cv. pfd 1,152,675
------------
2,984,025
Energy Related (0.3%)
- ------------------------------------------------------------------------------------------------------------------
45,000 Calenergy Capital Trust 144A $3.125 cv. pfd. 2,430,000
Entertainment (0.4%)
- ------------------------------------------------------------------------------------------------------------------
67,770 Station Casinos, Inc., $3.50 cv. pfd. 3,617,224
Food (0.4%)
- ------------------------------------------------------------------------------------------------------------------
85,000 Chiquita Brands International Inc., $5.75 cv. pfd. 3,995,000
Health Maintenance Organizations (0.4%)
- ------------------------------------------------------------------------------------------------------------------
145,000 FHP International Corp., Ser. A, $ 1.25 cv. pfd. 3,969,375
Insurance and Finance (2.2%)
- ------------------------------------------------------------------------------------------------------------------
1,000,000 AON Corp., $3.125 cv. pfd. 6,575,000
124,000 American General Delaware Corp., $3.00 cv. pfd. 6,386,000
95,600 St. Paul Capital LLC, $3.00 cv. pfd. 5,162,400
73,000 USF&G Corp., Ser. A, $4.10 cv. pfd. 3,677,375
------------
21,800,775
Metals and Mining (2.4%)
- ------------------------------------------------------------------------------------------------------------------
38,866 Alumax, Inc., Ser. A, $4.00, cv. pfd. 5,431,524
57,125 Amax Gold, Inc., Ser. A, $3.75 cv. pfd. 3,056,188
18,820 Armco, Inc., $3.625, cv. pfd. 950,410
52,000 Cyprus Amax Minerals, Ser. A, $4.00 cv. pfd. 3,107,000
292,300 Freeport-McMoRan Copper Co. Inc., stepped-coupon
$1.25 cv. pfd. ($1.75, 8/1/96)++ 8,294,013
60,000 WHX Corp., $3.25 cv. pfd. 2,737,500
------------
23,576,635
Oil and Gas (4.0%)
- ------------------------------------------------------------------------------------------------------------------
57,500 Ashland, Inc., $3.125 cv. pfd. 3,787,813
310,181 Atlantic Richfield Co., $2.23 cv. pfd. 8,762,635
29,900 Diamond Shamrock, Inc., 144A $2.50 cv. pfd. 1,950,975
65,000 Grant Geophysical, Inc., $2.4375 cv. pfd. 1,259,375
60,000 Lomak Petroleum, Inc., 144A $4.0625 cv. pfd. 2,340,000
8,000 Maxus Energy Corp., $4.00 cv. pfd. 346,000
40,085 McDermott International, Inc., 144A Ser. C, $2.875
cum. cv. pfd. 1,613,421
44,900 Noble Drilling Corp., $1.50 cv. pfd. 1,666,913
116,800 Occidental Petroleum Corp., 144A $3.875 cv. pfd. 7,241,600
75,520 Santa Fe Energy Resources, Inc., $1.40 cv. pfd. 1,576,480
80,125 Tejas Gas Corp., $2.65 cv. pfd. 3,846,000
82,000 Unocal Corp., 144A $3.50 cv. pfd. 4,551,000
------------
38,942,212
Real Estate (1.3%)
- ------------------------------------------------------------------------------------------------------------------
63,500 Oasis Residential, Inc., Ser. A $2.25 cv. pfd.(R) 1,666,875
67,950 Rouse Co., Ser. A $3.25 cv. pfd.(R) 3,737,250
195,000 Security Capital Pacific Trust $1.75 cv. pfd.(R) 4,996,875
74,490 Tanger Factory Outlet Centers $1.575 cv. pfd.(R) 1,638,750
------------
12,039,750
Savings and Loan (0.3%)
- ------------------------------------------------------------------------------------------------------------------
50,000 Ahmanson (H.F.) & Co., $3.00 cv. pfd. 2,800,000
Telecommunications (0.4%)
- ------------------------------------------------------------------------------------------------------------------
77,000 Tele-Communications (TCI Group) Ser. A, $1.75 cv. pfd. 3,599,750
Utilities (0.2%)
- ------------------------------------------------------------------------------------------------------------------
45,000 Philippine Long Distance Telephone Co., $7.00 cv. pfd. $2,272,500
------------
Total Convertible Preferred Stocks (cost $191,907,609) $206,967,410
SHORT-TERM INVESTMENTS (5.3%) *
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------
$10,000,000 Ciesco L.P. effective yield of 5.32%, May 10, 1996 $9,986,700
15,000,000 Federal Home Loan Mortgage Corp. effective yield of
5.18%, May 29, 1996 14,939,567
26,806,000 Interest in $500,000,000 repurchase agreement dated
April 30, 1996 with Lehman Brothers, Inc. due
May 1, 1996 with respect to various U.S. Treasury
obligations -- maturity value of $26,809,984
for an effective yield of 5.35% 26,809,984
------------
Total Short-Term Investments (cost $ 51,736,251) $51,736,251
------------
Total investments (cost $868,261,080)*** $968,939,530
- --------------------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $ 970,257,833.
*** The aggregate identified cost on a tax basis is $868,441,928, resulting
in gross unrealized appreciation and depreciation of $121,944,706 and $21,447,104,
respectively, or net unrealized appreciation of $100,497,602.
+ Non-income-producing security.
++ The interest rate and dividend date shown parenthetically represent the new
interest and dividend rate to be paid and the date the fund will begin receiving
interest or dividends at this rate.
++++ Income may be received in cash or additional securities at the discretion of the issuer.
## When-issued securities (Note 1).
(R) Real Estate Investment Trust.
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.
ADR or ADS after the name of a foreign holding stands for American Depository Receipts
or American Depository Shares, respectively, representing ownership of foreign securities
on deposit with a domestic custodian bank.
- --------------------------------------------------------------------------------------------
<CAPTION>
Forward Currency Contracts to Sell at April 30, 1996
(Aggregate face value $4,180,150)
Unrealized
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen $4,161,186 $4,042,341 1/28/98 $(118,845)
Japanese Yen 47,342 45,962 1/28/97 (1,380)
Japanese Yen 46,270 44,885 7/29/96 (1,385)
Japanese Yen 46,264 46,962 7/28/97 698
- --------------------------------------------------------------------------------------------
$(120,912)
- --------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
April 30, 1996 (Unaudited)
<S> <C>
Assets
- ----------------------------------------------------------------------------
Investments in securities, at value
(identified cost $868,261,080)(Note 1) $968,939,530
- ----------------------------------------------------------------------------
Cash 2,914,016
- ----------------------------------------------------------------------------
Dividends and interest receivable 7,019,910
- ----------------------------------------------------------------------------
Receivable for shares of the fund sold 1,276,391
- ----------------------------------------------------------------------------
Receivable for securities sold 7,481,986
- ----------------------------------------------------------------------------
Receivable for open forward currency contracts 698
- ----------------------------------------------------------------------------
Total assets 987,632,531
Liabilities
- ----------------------------------------------------------------------------
Payable for securities purchased 14,905,341
- ----------------------------------------------------------------------------
Payable for shares of the fund repurchased 353,042
- ----------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,390,512
- ----------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 244,387
- ----------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 2,408
- ----------------------------------------------------------------------------
Payable for administrative services (Note 2) 1,176
- ----------------------------------------------------------------------------
Payable for distribution fees (Note 2) 266,536
- ----------------------------------------------------------------------------
Payable for open forward currency contracts 121,610
- ----------------------------------------------------------------------------
Other accrued expenses 89,686
- ----------------------------------------------------------------------------
Total liabilities 17,374,698
- ----------------------------------------------------------------------------
Net assets $970,257,833
Represented by
- ----------------------------------------------------------------------------
Paid-in-capital (Notes 1 and 4) 819,073,668
- ----------------------------------------------------------------------------
Undistributed net investment income (Note 1) 6,947,231
- ----------------------------------------------------------------------------
Accumulated net realized gain on investments (Note 1) 43,679,397
- ----------------------------------------------------------------------------
Net unrealized appreciation of investments
and assets and liabilities in foreign currencies 100,557,537
- ----------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $970,257,833
Computation of net asset value and offering price
- ----------------------------------------------------------------------------
Net asset value and redemption price of class A shares
($854,684,224 divided by 41,306,718 shares) $20.69
- ----------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $20.69)* $21.95
- ----------------------------------------------------------------------------
Net asset value and offering price of class B shares
($110,317,499 divided by 5,368,917 shares)** $20.55
- ----------------------------------------------------------------------------
Net asset value and redemption price of class M shares
($5,256,110 divided by 255,156 shares) $20.60
- ----------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $20.60)* $21.35
- ----------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended April 30, 1996 (Unaudited)
<S> <C>
Investment Income
- ----------------------------------------------------------------------------
Interest $13,773,673
- ----------------------------------------------------------------------------
Dividends (net of foreign tax of $17,606) 9,010,979
- ----------------------------------------------------------------------------
Total investment income 22,784,652
Expenses:
- ----------------------------------------------------------------------------
Compensation of Manager (Note 2) 2,718,966
- ----------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 774,584
- ----------------------------------------------------------------------------
Compensation of Trustees (Note 2) 13,454
- ----------------------------------------------------------------------------
Administrative services (Note 2) 7,030
- ----------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 1,004,814
- ----------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 463,425
- ----------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 11,991
- ----------------------------------------------------------------------------
Reports to shareholders 40,968
- ----------------------------------------------------------------------------
Registration fees 225
- ----------------------------------------------------------------------------
Auditing 16,419
- ----------------------------------------------------------------------------
Legal 7,251
- ----------------------------------------------------------------------------
Postage 51,999
- ----------------------------------------------------------------------------
Other 7,470
- ----------------------------------------------------------------------------
Total expenses 5,118,596
- ----------------------------------------------------------------------------
Expense reduction (Note 2) (186,950)
- ----------------------------------------------------------------------------
Net expenses 4,931,646
- ----------------------------------------------------------------------------
Net investment income 17,853,006
- ----------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 43,847,506
- ----------------------------------------------------------------------------
Net unrealized depreciation on forward currency contracts du (120,912)
- ----------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 49,993,539
- ----------------------------------------------------------------------------
Net gain on investments 93,720,133
- ----------------------------------------------------------------------------
Net increase in net assets resulting from operations $111,573,139
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
April 30 October 31
1996* 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Increase in net assets
- ---------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------
Net investment income $17,853,006 $35,523,538
- ---------------------------------------------------------------------------------------------
Net realized gain on investments 43,847,506 31,193,122
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation of investment
and assets and liabilities in foreign currencies 49,872,627 37,340,783
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 111,573,139 104,057,443
- ---------------------------------------------------------------------------------------------
Distributions to shareholders
- ---------------------------------------------------------------------------------------------
From net investment income:
Class A (19,799,616) (36,798,209)
- ---------------------------------------------------------------------------------------------
Class B (1,980,163) (2,264,082)
- ---------------------------------------------------------------------------------------------
Class M (76,115) (28,669)
- ---------------------------------------------------------------------------------------------
From net realized gain on investments:
Class A (27,734,872) (42,106,385)
- ---------------------------------------------------------------------------------------------
Class B (3,018,957) (2,126,191)
- ---------------------------------------------------------------------------------------------
Class M (80,557) --
- ---------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 77,667,025 83,596,336
- ---------------------------------------------------------------------------------------------
Total increase in net assets 136,549,884 104,330,243
- ---------------------------------------------------------------------------------------------
Net assets
- ---------------------------------------------------------------------------------------------
Beginning of period 833,707,949 729,377,706
- ---------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $6,947,231 and $10,950,119, respectively) $970,257,833 $833,707,949
- ---------------------------------------------------------------------------------------------
*Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
March 13, 1995
Six months (commencement Six months Year
ended of operations) ended ended
April 30 October 31 April 30 October 31
- --------------------------------------------------------------------------------------------
1996*+ 1995 1996*+ 1995
- --------------------------------------------------------------------------------------------
Class M
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $19.37 $17.79 $19.30 $19.00
- -------------------------------------------------------------------------------------------
Investment operations
- -------------------------------------------------------------------------------------------
Net investment income 0.36 .64 .33 .69
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 2.04 1.64 2.06 1.61
- -------------------------------------------------------------------------------------------
Total from investment operations 2.40 2.28 2.39 2.30
- -------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------
From net investment income (.46) (.70) (.43) (.84)
- -------------------------------------------------------------------------------------------
From net realized gain
on investments (.71) -- (.71) (1.16)
- -------------------------------------------------------------------------------------------
Total distributions (1.17) (.70) (1.14) (2.00)
- -------------------------------------------------------------------------------------------
Net asset value, end of period $20.60 $19.37 $20.55 $19.30
- -------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (a) 12.88(b) 12.99(b) 12.86(b) 13.54
- -------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $5,256 $1,753 $110,317 $75,309
- -------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) .75(b) 1.04(b) .88(b) 1.91
- -------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.86(b) 2.89(b) 1.61(b) 3.92
- -------------------------------------------------------------------------------------------
Portfolio turnover (%) 29.15(b) 69.52 29.15(b) 69.52
- -------------------------------------------------------------------------------------------
Average commission
rate paid (d) 0.0568 -- 0.0568 --
- -------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (Continued)
(For a share outstanding throughout the period)
July 15, 1993
Year (commencement Six months
ended of operations) ended
October 31 October 31 April 30
- --------------------------------------------------------------------------------------------
1994 1993 1996* 1995
- --------------------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $20.35 $19.53 $19.42 $19.09
- --------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------
Net investment income .74 .23 .40 .85
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments (.55) .82 2.08 1.60
- --------------------------------------------------------------------------------------------
Total from investment operations .19 1.05 2.48 2.45
- --------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------
From net investment income (.66) (.23) (.50) (.96)
- --------------------------------------------------------------------------------------------
From net realized gain
on investments (.88) -- (.71) (1.16)
- --------------------------------------------------------------------------------------------
Total distributions (1.54) (.23) (1.21) (2.12)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $19.00 $20.35 $20.69 $19.42
- --------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (a) 1.00 5.43(b) 13.26(b) 14.38
- --------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $31,432 $4,439 $854,684 $756,645
- --------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) 1.71 .52(b) .53(b) 1.16
- --------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 3.58 .91(b) 2.03(b) 4.64
- --------------------------------------------------------------------------------------------
Portfolio turnover (%) 48.37 66.63 29.15(b) 69.52
- --------------------------------------------------------------------------------------------
Average commission
rate paid (d) -- -- 0.0568 --
- --------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (Continued)
(For a share outstanding throughout the period)
Year ended October 31
- -------------------------------------------------------------------------------------------
1994 1993 1992 1991
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $20.38 $17.60 $15.78 $12.12
- -------------------------------------------------------------------------------------------
Investment operations
- -------------------------------------------------------------------------------------------
Net investment income .81 .87 .89 .88
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments (.46) 2.87 1.89 3.74
- -------------------------------------------------------------------------------------------
Total from investment operations .35 3.74 2.78 4.62
- -------------------------------------------------------------------------------------------
Less distributions:
- -------------------------------------------------------------------------------------------
From net investment income (.74) (.96) (.96) (.96)
- -------------------------------------------------------------------------------------------
From net realized gain
on investments (.90) -- -- --
- -------------------------------------------------------------------------------------------
Total distributions (1.64) (.96) (.96) (.96)
- -------------------------------------------------------------------------------------------
Net asset value, end of period $19.09 $20.38 $17.60 $15.78
- -------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (a) 1.84 21.74 18.16 39.05
- -------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $697,946 $707,969 $599,866 $570,752
- -------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) 0.96 0.96 1.11 1.15
- -------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 4.16 4.55 5.32 6.07
- -------------------------------------------------------------------------------------------
Portfolio turnover (%) 48.37 66.63 59.89 78.72
- -------------------------------------------------------------------------------------------
Average commission
rate paid (d) -- -- -- --
- -------------------------------------------------------------------------------------------
* Unaudited
+ Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.
(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 periods ended October 31, 1995 and
thereafter, includes amounts paid through expense offset and brokerage service arrangements.
Prior period ratios exclude these amounts. (Note 2).
(d) Average commission rate paid is presented for fiscal periods beginning on or after September
1, 1995 in conformance with requirements issued by the SEC.
</TABLE>
Notes to financial statements
April 30, 1996 (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. Class A shares are
sold with a maximum front-end sales charge of 5.75%. Class B shares,
which convert to class A shares after approximately six years, do not
pay a front-end sales charge, but pay a higher ongoing distribution fee
than class A shares, and are subject to a contingent deferred sales
charge, if those shares are redeemed within six years of purchase. Class
M shares are sold with a maximum front-end sales charge of 3.50% 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 preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sale price, or, if no sales are reported -- as in the
case of some securities traded over-the-counter -- the last reported bid
price. Securities quoted in foreign currencies are translated into U.S.
dollars at the current exchange rate. Short-term investments having
remaining maturities of 60 days or less are stated at amortized cost,
which approximates market value, and other investments are stated at
fair value following procedures approved by the Trustees.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies managed by Putnam Investment Management,
Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. and certain other accounts. 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 resale price, including accrued interest.
Putnam Management is responsible for determining that the value of these
underlying securities is at all times at least equal to the resale
price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the fund is
informed of the ex-dividend date. Discounts on zero coupon bonds,
stepped-coupon bonds and payment in kind bonds are accreted according to
the effective yield method.
Securities purchased or sold on a when-issued or delay delivery basis
may be settled a month or more after the trade date; interest income is
not accrued until settlement date. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty
does not perform under the contract.
E) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are demoninated or quoted (or an increase in the
value of a currency in which securities a fund intends to buy are
denominated, when a fund holds cash reserves and short-term
investments). The U.S. dollar value of forward currency contracts is
determined using forward currency exchange rates supplied by a quotation
service. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is "marked to market" daily and
the change in market value is recorded as an unrealized gain or loss.
When the contract is closed, the fund records a realized gain or loss
equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed. The fund could be
exposed to risk if the value of the currency changes unfavorably, if the
counterparties to the contracts are unable to meet the terms of their
contracts or if the fund is unable to enter into a closing position.
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, 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 by the fund 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. Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or available
capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, for managment and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 0.65% of the first $500
million, 0.55% of the next $500 million, 0.50% of the next $500 million,
0.45% of the next $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 excess over
$100 million and by the amount of certain brokerage commissions and fees
(less expenses) received by affiliates of Putnam Management 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 Trustees fee of $1,510 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund 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 fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended April 30, 1996, fund expenses were reduced by
$186,950 under expense offset arrangements with PFTC and brokerage
service arrangements. Investor servicing and custodian fees reported in
the Statement of operations exclude these credits. The fund could have
invested a portion of these assets utilized in connection with the
expense offset arrangements 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 0.25%,
1.00% and 0.75% 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 six months ended April 30, 1996, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $153,664 and $6,295
from the sale of class A and class M shares, respectively and received
$60,971 in contingent deferred sales charges from redemptions of class B
shares. A deferred sales charge of up to 1% is assessed on certain
redemptions of class A shares. For the six months ended April 30, 1996,
Putnam Mutual Funds Corp., acting as underwriter received $784,202 on
class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended April 30, 1996, purchases and sales of
investment securities other than short-term investments aggregated
$302,391,605 and $247,985,801, respectively. There were no purchases and
sales of U.S. government obligations. 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, 1996, there was an unlimited number of shares of beneficial
interest authorized.
Six months ended
April 30, 1996
- ----------------------------------------
Class A Shares Amount
- ----------------------------------------
Shares sold 4,289,208 $84,812,063
- ----------------------------------------
Shares issued in
connection with
reinvestment of
distributions 845,031 16,646,754
- ----------------------------------------
5,134,239 101,458,817
Shares
repurchased (2,798,793) (56,087,157)
- ----------------------------------------
Net increase 2,335,446 $45,371,660
- ----------------------------------------
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 (6,229,599) (116,013,292)
- ----------------------------------------
Net increase 2,418,657 $40,141,238
- ----------------------------------------
Six months ended
April 30, 1996
- ----------------------------------------
Class B Shares Amount
- ----------------------------------------
Shares sold 1,814,470 $35,960,820
- ----------------------------------------
Shares issued in
connection with
reinvestment of
distributions 78,706 1,544,016
- ----------------------------------------
1,893,176 37,504,836
Shares
repurchased (427,068) (8,489,187)
- ----------------------------------------
Net increase 1,466,108 $29,015,649
- ----------------------------------------
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 (683,425) (12,747,189)
- ----------------------------------------
Net increase 2,248,918 $41,712,008
- ----------------------------------------
Six months ended
April 30, 1996
- ----------------------------------------
Class M Shares Amount
- ----------------------------------------
Shares sold 184,465 $3,679,694
- ----------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,236 64,133
- ----------------------------------------
187,701 3,743,827
Shares
repurchased (23,088) (464,111)
- ----------------------------------------
Net increase 164,613 $3,279,716
- ----------------------------------------
March 1, 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 six years. In 1995, over 146,000 tests of 56 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.
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
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
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
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
the principal amount invested.
- ------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- -------------------
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
25114/008/223/920 6/96
