(logo)
Putnam
Premier
Income
Trust
Semiannual
Report
January 31, 1994
(artwork)
For investors seeking
high current income
through asset allocation
across three different
fixed income sectors:
U.S. government,
high-yield and
international securities
A member
of the Putnam
Family of Funds
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Semiannual Report
7 Report of Independent Accountants
8 Portfolio of investments owned
20 Financial statements
31 Fund performance supplement
<PAGE>
How your
fund performed
For periods ended January 31, 1994
Total return* Fund Consumer Price
NAV Market price Index
6 months 7.30% 2.78% 1.24%
1 year 15.29 14.58 2.53
5 years 77.94 61.05 20.73
annualized 12.22 10.00 3.84
Life-of-fund
(since 2/29/88) 92.27 69.88 26.04
annualized 11.68 9.36 3.99
Share data NAV Market price
July 31, 1993 $8.87 $8.250
January 31, 1994 $9.12 $8.125
Distributions
6 months ended Investment Capital
January 31, 1994 Number income gains Total
6 $0.36 -- $0.36
Current returns
at the end of the period NAV Market price
Current dividend rate 7.89% 8.86%
*Performance data represent past results. Investment return, net
asset value and market price will fluctuate so that an investor's
shares, when sold, may be worth more or less than their original
cost.
<PAGE>
Terms you need to know
Total return is the change in value of an investment from the
beginning to the end of a period, assuming the reinvestment of
all distributions. It may be shown at net asset value or at
market price.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not reflecting any sales charge.
Market price is the current trading price of one share of the
fund. Market prices are set by transactions between buyers and
sellers on the New York Stock Exchange.
Current dividend rate is calculated by annualizing the income
portion of the fund's most recent distribution and dividing by
the NAV or market price on the last day of the period.
Please see the fund performance supplement on page 31 for
additional information about performance comparisons.
<PAGE>
From the
Chairman
(photograph of George Putnam)
(c) Karsh, Ottawa
George Putnam
Chairman
of the Trustees
Dear Shareholder:
I am pleased to report that Putnam Premier Income Trust has
provided positive investment returns for the first half of fiscal
year 1994.
Total return performance, based on net asset value and assuming
reinvestment of all distributions, was 7.30% for the six months
ended January 31, 1994. In addition, your fund's 7.89% current
dividend rate at net asset value and 8.86% at the market price at
the end of the period was especially strong, given the current
environment of record-low interest rates.
While the fund's high-yield segment has again led performance
over the international and U.S. government holdings, all three
areas performed well during the period. The U.S. government and
international sectors, in particular, withstood rapidly changing
market conditions. This most recent period has tested the mettle
of your fund's multisector strategy and reconfirmed the fact that
the flexibility inherent in Putnam Premier Income Trust is
capable of delivering attractive returns, even in a rapidly
changing global fixed income market. Of course, there can be no
assurance of the fund's future performance.
In the Report from Putnam Management that follows, your fund's
managers discuss the performance of each of the fund's investment
sectors and offer an outlook for the months to come. I am
confident that their efforts will again prove rewarding in the
coming months.
Respectfully yours,
George Putnam
March 16, 1994
<PAGE>
Report from
Putnam Management
Your fund's strong performance during the six months ended
January 31, 1994, was led by strength in the high-yield corporate
bond sector. In recent months, these securities consistently
outperformed the U.S. government and foreign bond segments of the
taxable fixed-income market. In anticipation of these results, we
remained overweighted in higher-yielding corporates during the
period.
Despite the end of a three-year bond rally in the U.S., these
bonds remain very attractive. While increased corporate earnings
in the early stages of the U.S. economic recovery were chiefly
the result of cost-cutting and improved productivity, many
companies are now showing real improvements in pricing and
volume. The economy exhibited renewed strength in the fourth
quarter, and the corporate sector has reacted to increased,
sustainable demand. For the first time in several years, these
firms have the luxury of price flexibility for their products.
Among the strongest industries in late 1993 and early 1994 are
cyclicals, such as the automobile, steel, and paper industries.
One notable addition to the fund's portfolio is Gaylord Container
Corp., a leading manufacturer of brown paper packaging. Early in
1993, amid relatively cautious sentiment, we predicted a
turnaround in what were then depressed paper prices. In May, we
bought Gaylord's bonds at what we considered attractive prices.
Later in the year, as the economy picked up, so did demand for
Gaylord's products. As a result, these bonds have increased in
value by 35% through the end of the period. Of course, there can
be no assurance that such performance will continue.
We are optimistic about the high-yield sector of the fixed income
market, despite the recent uptick in short-term interest rates
that has roiled other fixed income instruments, and we anticipate
keeping our current allocation for the near term.
A new outlook for mortgages In general, interest rates
(particularly long-term rates) came down over the period. But in
October, for the first time in several years, rates went up
slightly, triggered in part by renewed inflation fears. While
this move may have marked the end of the government bond market
rally, it also signaled that the end is near for the recent flood
of mortgage refinancings. With the fear of prepayments stalled,
investors flocked back to mortgage-backed securities, which
typically pay higher yields than comparable Treasuries.
Consequently, mortgage-backed securities showed improved
performance in the latter part of the period.
From October to December, we increased the fund's mortgage-backed
securities weighting from 20% to 55% and, in January, to a full
62% of the portfolio's U.S. government segment. To make the most
of our new focus on mortgages, we reduced the fund's barbell
strategy, which focused assets on long-term and short-term
securities in anticipation of a flattening yield curve. Because
bonds with coupons of 8% and higher are still experiencing high
levels of prepayment, we concentrated our mortgage investments in
the 6.5% to 7.5% coupon range. As rates rise further we will add
selectively to these holdings, which we believe will enhance the
fund's yield.
Opportunities abroad Several significant events took place during
the six months ended January 31, 1994, contributing to healthy
returns in many markets.
In Europe, the virtual demise of the Exchange Rate Mechanism set
off several bond rallies by allowing central banks in many
countries greater flexibility to lower interest rates at the
expense of devalued currencies. In August, the European
Community's finance ministers and central bankers amended the
Exchange Rate Mechanism to allow for a wider currency trading
range.
Sector allocations (as precentage of net assets)
(bar chart)
Corporate bonds & notes ------------------------39.0%
U.S. gov't and agency obligations --------------------31.9%
Foreign bonds & notes ------------------25.3%
Short-term investments --------------19.5%
Other ---2.0%
In October, Germany's Bundesbank lowered its two key interest
rates by 50 basis points, prompting the central banks of France,
Belgium, the Netherlands, Italy, Austria, Spain, Denmark and
Switzerland to do the same. These economies were in desperate
need of monetary stimulus, with unemployment in Europe hovering
around 11% during the fourth quarter of 1993. Shortly thereafter,
the Bank of England cut its base lending rate for the first time
since January 1993, sending rates in the U.K. to their lowest
level in over 15 years.
While these rate cuts have ignited bond rallies throughout the
continent, the smaller European economies, such as Italy and
Sweden, were the top performers during the period. We anticipate
a continued de-cline in short-term rates in Europe and will
continue to favor Europe's peripheral markets. Given the relative
weakness of most European currencies versus the U.S. dollar, we
have hedged the fund's currency exposures to protect the value of
our holdings.
In Japan, economic woes have helped to create one of the most
favorable bond markets in the world, and at the start of the
period, we were correspondingly bullish. As the Yen gained value
versus the Dollar, our holdings in this area appreciated in
value. We have since lowered our weighting in Japanese bonds to a
more neutral position, taking profits along the way.
A positive outlook In all, we believe the outlook for the fund's
multsector strategy is bright. We expect higher-yielding
corporate bonds in the U.S. to make the most of renewed economic
strength and will maintain an overweighted position there. At the
same time, we expect mortgages to provide a competitive edge
against Treasuries in an environment of stable or rising rates.
<PAGE>
Overseas, we will look to concentrate assets in the smaller
European countries, which we feel are en route to economic
recovery, and will maintain a cautious stance with respect to the
fund's holdings in Japan.
<PAGE>
Putnam
Premier
Income
Trust
Semiannual
Report
For the six months ended January 31, 1994
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam Premier Income Trust
In our opinion, the accompanying statement of assets and
liabilities, including the portfolio of investments owned, and
the related statements of operations and of changes in net assets
and the financial highlights present fairly, in all material
respects, the financial position of Putnam Premier Income Trust
at January 31, 1994, and the results of its operations, the
changes in its net assets, and the financial highlights for the
periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements
in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits, which included confirmation of portfolio positions at
January 31, 1994 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse
Boston, Massachusetts
March 15, 1994
<PAGE>
Portfolio of
investments owned
January 31, 1994
Corporate Bonds and Notes (39.0%)(a)
Principal Amount Value
Recreation (2.8%)
$ 2,500,000 American Casinos Inc.
1st mtge. deb. 12 1/2s,
1998(c) $ 2,925,000
2,090,000 Arizona Charlies Corp.
sub. deb. 12s, 2000(c) 2,079,550
1,520,000 Capitol Queen Corp. sr.
sub. deb. 12s, 2000(c) 1,292,000
2,520,000 Casino America Inc.
1st mtge. deb. 11 1/2s,
2001 2,595,600
4,600,000 Casino Magic Finance
Corp. 1st Mtge. deb.
11 1/2s, 2001(c) 4,818,500
1,975,000 Golden Nugget Finance
Corp. 1st mtge. deb.
Ser. B, 10 5/8s, 2003 1,886,125
3,584,000 Louisiana Casino Cruise
Corp. sr. sub. deb.
11 1/2s, 1998(c) 3,709,440
5,270,000 President Riverboat
Casinos Inc. sr. sub.
notes 11 3/4s, 2001(c) 5,414,925
2,106,000 Trump Castle Funding
Corp. deb. 11 1/2s,
2000(c) 2,106,000
2,475,000 Trump Plaza Funding,
Inc. 1st mtge. notes
10 7/8s, 2001 2,475,000
6,652,000 Trump Taj Mahal deb.
Ser. A, 11.35s, 1999(d) 6,918,080
36,220,220
Cable Television (2.7%)
4,000,000 Adelphia Communications
Corp. notes Ser. B, 9 7/8s,
2005 4,420,000
750,000 Adelphia Communications
Corp. sr. deb. 11 7/8s,
2004 862,500
3,200,000 Adelphia Communications
Corp. sr. notes 12 1/2s,
2002 3,704,000
3,100,000 Cablevision Industries
Corp. sr. notes 10 3/4s,
2002 3,355,750
<PAGE>
1,000,000 Century Communications
Corp. sr. disc. notes
zero %, 2003 472,500
2,425,000 Continental Cablevision,
Inc. sr. deb. 9s, 2008 2,667,500
4,938,000 Falcon Holdings Group,
Inc. sr. sub. notes 11s,
2003(d) 5,481,180
5,650,000 Insight Communications
Co. sr. sub. notes
stepped-coupon 8 1/4s
(11 1/4s, 3/1/96), 2000(e) 5,748,875
4,950,000 Storer Communications,
Inc. sub. deb. 10s, 2003 4,999,500
2,500,000 Summit Communications
Group, Inc. sr. sub. deb.
10 1/2s, 2005 2,693,750
34,405,555
Retail (2.7%)
3,900,000 Bradlees, Inc. sr. sub.
notes 11s, 2002 4,202,250
2,430,000 Brylane L.P. sr. sub.
notes Ser. B, 10s, 2003 2,563,650
5,375,000 County Seat Stores sr.
sub. notes 12s, 2001 5,388,438
4,600,000 Duane Reade Corp. sr.
Ser. B notes 12s, 2002 4,991,000
1,000,000 Eckerd (Jack) Corp.
deb. 11 1/8s, 2001 1,005,000
12,500,000 Loehmanns' Holdings
Inc. sr. sub. notes
10 1/2s, 1997(c) 12,000,000
175,000 Loehmanns' Holdings
Inc. sr. sub. notes
13 3/4s, 1999 177,188
3,595,000 Specialty Retailers, Inc.
sr. sub. notes 11s, 2003 3,702,850
34,030,376
Cellular Communications (2.1%)
3,500,000 Cellular, Inc. sr. sub.
disc. notes stepped-
coupon zero % (11 3/4s,
9/1/98), 2003(e) 2,415,000
6,635,000 Cencall Communications
Corp. sr. disc. notes
stepped-coupon zero %
(10 1/8s, 1/15/99), 2004(e) 4,312,750
4,000,000 Centennial Cellular Corp.
sr. notes 8 7/8s, 2001 4,000,000
11,285,000 Horizon Cellular
Telephone Co. sr. sub.
disc. notes stepped-
coupon zero % (11 3/8s,
10/1/97), 2000(c)(e) 8,238,050
11,000,000 NEXTEL Communications
Inc. sr. disc. notes
stepped-coupon zero %
(11 1/2s, 9/1/98), 2003(e) 7,755,000
26,720,800
Conglomerates (1.9%)
900,000 ADT Ltd. sr. sub. notes
9 1/4s, 2003 931,500
6,150,000 Collins & Aikman Group,
Inc. sr. sub. deb.
11 7/8s, 2001 6,273,000
7,825,000 Haynes International,
Inc. sr. sub. notes
13 1/2s, 1999 7,981,500
918,641 IFINT Diversified Holdings
sub. deb. 12.514s,
1998 (acquired 3/29/93,
cost $918,642)(b) 941,607
5,000,000 Jordan Industries, Inc.
sr. notes 10 3/8s, 2003 5,162,500
2,000,000 MacAndrews & Forbes
Group Inc. deb.
12 1/4s, 1996 2,050,000
23,340,107
Forest Products (1.8%)
4,200,000 Container Corp. of
America sr. notes
9 3/4s, 2003 4,410,000
15,490,000 Gaylord Container Corp.
sr. sub. disc. deb.
stepped-coupon zero %
(12 3/4s, 5/15/96), 2005(e) 13,437,575
1,550,000 Stone Savannah River
Pulp & Paper Corp.
sr. sub. notes 14 1/8s,
2000 1,569,375
3,900,000 Williamhouse Regency
Delaware, Inc. sr. sub.
deb. 11 1/2s, 2005 4,134,000
23,550,950
Health Care (1.8%)
800,000 Abbey Healthcare
Group, Inc. sr. sub.
notes 9 1/2s, 2002 822,000
675,000 American Healthcare
Management Inc. sr.
sub. notes 10s, 2003 708,750
1,957,400 EPIC Healthcare Group,
Inc. jr. sub. bonds 11s,
2003(d) 1,189,121
10,200,000 EPIC Holdings Inc. sr.
notes stepped-coupon
zero % (12s, 3/15/97),
2002(e) 8,160,000
4,973,000 Multicare Cos., Inc. sr.
sub. notes 12 1/2s, 2002 5,868,140
3,500,000 Paracelsus Healthcare
Corp. sr. sub. notes
9 7/8s, 2003 3,613,750
2,240,000 Quorum Health Group,
Inc. sr. sub. notes
11 7/8s, 2002 2,531,200
22,892,961
Motion Picture Distribution (1.6%)
7,500,000 AMC Entertainment, Inc.
sr. sub. notes 12 5/8s,
2002 8,634,375
4,750,000 Act III Theatres sr. sub.
notes 11 7/8s, 2003 5,320,000
1,670,000 Cinemark Mexico notes
12s, 2003(c) 1,657,475
4,500,000 Cinemark USA sr. notes
12s, 2002 5,040,000
20,651,850
Food (1.5%)
3,533,000 Del Monte Corp. sub.
deb. 12 1/4s, 2002(c)(d) 3,722,899
5,750,000 Fresh Del Monte
Produce Corp. sr. notes
10s, 2003(c) 5,577,500
7,500,000 Mafco, Inc. sr. sub. notes
11 7/8s, 2002 7,987,500
4,200,000 Specialty Foods
Acquisition Corp. sr.
secd. disc. deb. zero %
(13%, 8/15/99) 2005(e) 2,226,000
19,513,899
Building Products (1.2%)
750,000 American Standard, Inc.
jr. sub. deb. 12 3/4s, 2003 766,875
7,500,000 American Standard, Inc.
sr. sub. deb. stepped-
coupon zero % (10 1/2s,
6/1/98), 2005(e) 5,175,000
500,000 Nortek Inc. sr. sub. deb.
13 1/2s, 1997 510,000
3,000,000 Snydergeneral Corp. sr.
sub. deb. 14 1/4s, 2000 3,180,000
3,250,000 Southdown, Inc. sr. sub.
notes Ser. B, 14s, 2001 3,778,125
2,000,000 Triangle Pacific Corp.
sr. notes 10 1/2s, 2003 2,120,000
15,530,000
Environmental Control (1.1%)
6,000,000 Envirosource, Inc. sr.
notes 9 3/4s, 2003 6,000,000
<PAGE>
7,815,000 ICF Kaiser International
Inc. sr. sub. notes 12s,
2003 8,088,525
14,088,525
Advertising (1.1%)
5,000,000 Katz Corp. sr. sub.
notes 12 3/4s, 2002 5,587,500
1,115,000 Lamar Advertising Co.
sr. secd. notes 11s, 2003 1,184,688
1,750,000 Outdoor Systems, Inc.
sr. notes 10 3/4s, 2003 1,828,750
5,000,000 Universal Outdoor Inc.
sub. deb. 11s, 2003(c) 5,100,000
13,700,938
Publishing (1.0%)
4,400,000 Affinity Group Inc. sr.
sub. notes 11 1/2s,
2003 4,730,000
12,695,000 Marvel Parent Holdings,
Inc. sr. secd. disc.
notes zero %, 1998 8,632,600
13,362,600
Containers (1.0%)
6,000,000 Anchor Glass Container
Corp. sr. sub. deb.
9 7/8s, 2008 6,390,000
6,000,000 Ivex Packaging Corp.
sr. sub. notes 12 1/2s,
2002 6,600,000
12,990,000
Specialty Consumer Products (1.0%)
6,575,000 Equitable Bag Co. sr.
notes 12 3/8s, 2002(f) 4,734,000
7,920,000 Playtex Family Products
Corp. sr. sub. notes 9s,
2003 8,058,600
12,792,600
Food Chains (1.0%)
1,000,000 Grand Union Capital
Corp. sr. notes stepped-
coupon zero % (15s,
7/15/99), 2004(c)(e) 440,000
7,750,000 Grand Union Co. sr. sub.
notes 12 1/4s, 2002 8,176,250
1,020,000 Megafoods Stores Inc.
sr. notes 10 1/4s, 2000 1,025,100
3,825,000 Southland Corp. 1st
priority sr. sub. deb.
5s, 2003 2,840,063
12,481,413
<PAGE>
Agriculture (1.0%)
4,931,000 PMI Holdings Corp. sub.
disc. deb. stepped-
coupon zero % (11 1/2s,
9/1/00), 2005(e) 2,638,085
4,155,000 Premium Standard
Farms deb. zero %,
2003(c)(g) 3,088,256
6,123,698 Premium Standard
Farms sr. secd. notes
12s, 2000(c) 6,429,883
12,156,224
Electronics (0.9%)
5,500,000 Ampex Group, Inc. sr.
notes 13 1/4s, 1996(f) 1,045,000
7,075,000 Amphenol Corp. sr.
sub. notes 12 3/4s, 2002 8,171,625
5,175,000 International Semi-Tech
Corp. sr. secd. disc.
notes stepped-
coupon zero % (11 1/2s,
8/15/00), 2003(e) 2,742,750
11,959,375
Electric Utilities (0.9%)
3,000,000 Midland Funding Corp.
II deb. Ser. A, 11 3/4s,
2005 3,315,000
6,550,000 Midland Funding Corp.
II deb. Ser. B, 13 1/4s,
2006 7,663,500
10,978,500
Insurance (0.7%)
1,000,000 American Annuity
Group, Inc. sr. notes
9 1/2s, 2001 1,027,500
1,200,000 Bankers Life Holdings
sr. sub. deb. Ser. A,
13s, 2002(c) 1,476,000
3,600,000 Reliance Group
Holdings sr. notes
9s, 2000 3,663,000
3,200,000 Reliance Group
Holdings sr. sub.
notes 9 3/4s, 2003 3,368,000
9,534,500
Textiles (0.7%)
237,000 Foamex (L.P.) Capital
Corp. sr. secd. notes
9 1/2s, 2000 247,665
5,000,000 Foamex (L.P.) Capital
Corp. sr. sub. deb.
11 7/8s, 2004 5,575,000
<PAGE>
3,500,000 Westpoint Stevens,
Inc. sr. sub. deb.
9 3/8s, 2005 3,640,000
9,462,665
Restaurants (0.7%)
800,000 American Restaurant
Group, Inc. sr. secd.
notes 12s, 1998 812,000
7,875,000 Flagstar Corp. sr. sub.
deb. 11 1/4s, 2004 8,190,000
9,002,000
Oil and Gas (0.6%)
6,200,000 Maxus Energy Corp.
global notes 9 3/8s,
2003 6,200,000
1,575,000 TransTexas Gas Corp.
sr. secd. notes 10 1/2s,
2000 1,677,375
7,877,375
Chemicals (0.6%)
1,150,000 Arcadian Partners L.P.
sr. notes Ser. B, 10 3/4s,
2005 1,229,063
6,000,000 G-I Holdings Inc. sr.
notes zero %, 1998(c) 3,960,000
2,600,000 Harris Chemical Corp.
sr. secd. disc. notes
stepped-coupon
zero % (10 1/4s,
1/15/96), 2001(e) 2,262,000
7,451,063
Metals and Mining (0.6%)
1,250,000 Horsehead Industries,
Inc. sr. sub. ext. reset
notes 13 1/2s, 1994 1,250,000
6,750,000 Horsehead Industries,
Inc. sub. notes 14s,
1999 6,142,500
7,392,500
Communications (0.5%)
10,200,000 Panamsat L.P. sr. sub.
notes stepped-coupon
zero % (11 3/8s,
8/1/98), 2003(e) 6,961,500
Broadcasting (0.5%)
4,450,000 Argyle TV Operations
sr. sub. notes 9 7/8s,
2003 4,516,750
1,700,000 SFX Broadcasting sr.
sub. notes 11 3/8s, 2000 1,816,875
6,333,625<PAGE>
Shipping (0.5%)
5,750,000 Viking Star Shipping
1st pfd. mtge. notes
9 5/8s, 2003 6,023,125
Consumer Services (0.5%)
2,300,000 Solon Automated
Services, Inc. notes
12 3/4s, 2001 2,570,250
3,000,000 Solon Automated
Services, Inc. sr. sub.
deb. 13 3/4s, 2002 3,390,000
5,960,250
Real Estate (0.5%)
5,800,000 Scotsman Group Inc.
sr. secd. notes 9 1/2s,
2000 5,930,500
Automotive Parts (0.4%)
4,900,000 Key Plastics Corp. sr.
notes 14s, 1999 5,757,500
School Busses (0.4%)
5,250,000 Blue Bird Acquisition
Corp. sr. sub. deb.
Ser. B, 11 3/4s, 2002 5,722,500
Medical Supplies (0.4%)
5,515,000 Wright Medical
Technology Inc. sr.
secd. notes Ser. B,
10 3/4s, 2000 5,570,150
Apparel (0.4%)
5,250,000 Guess, Inc. sr. sub.
notes 10s, 2003(c) 5,565,000
Airlines (0.4%)
4,320,000 USAir, Inc. pass thru
certif. 10 3/8s, 2013 4,506,300
Steel (0.3%)
3,425,000 WCI Steel Inc. sr. notes
10 1/2s, 2002(c) 3,630,500
Financial Services (0.3%)
2,995,000 Comdata Network, Inc.
sr. notes 12 1/2s, 1999 3,309,475
Banks (0.3%)
3,125,000 Chevy Chase Savings
Bank Inc. sub. deb.
9 1/4s, 2005 3,281,250
Lodging (0.2%)
2,500,000 Red Roof Inns sr. notes
9 5/8s, 2003(c) 2,593,750
Aluminum (0.2%)
2,250,000 Kaiser Aluminum &
Chemical Corp. sr.
sub. notes 12 3/4s, 2003 2,469,375
<PAGE>
Computers (0.1%)
13,744,000 DR Holdings Inc. sr.
sub. deb. 15 1/2s,
2002(d)(f) 1,821,080
Home Furnishings (0.1%)
1,000,000 Simmons Mattress
Corp. deb. 8s,
2003(c)(d) 972,500
Total Corporate
Bonds and Notes
(cost $479,222,600) $ 498,495,376
U.S. Government and Agency Obligations (31.9%)(a)
Principal Amount Value
Federal National
Mortgage Association
$ 21,907,000 10s, November 25, 2019 $ 23,317,263
29,630,000 7s, TBA, February 1,
2024(h) 30,380,009
7,500,000 6 1/2s, TBA, March 14,
2024(h) 7,551,563
18,715,000 6 1/2s, TBA, February 1,
2024(h) 18,767,636
4,355,000 6s, TBA, February 14,
2009(h) 4,364,527
Government National
Mortgage Association
1,816,170 9 1/2s with various due
dates to April 15, 2021 1,974,497
286,298 8s, with various due dates
to December 15, 2003 305,621
18,000,000 7 1/2s, TBA,
February 15, 2024(h) 18,826,875
18,636,911 7 1/2s, with various due
dates to December 15,
2023 19,499,359
18,000,000 7 1/2s, TBA, February 14,
2009(h) 19,051,875
53,394,633 7s, TBA, February 15,
2024(h) 54,896,357
23,700,000 6 1/2s, TBA, February 15,
2024(h) 23,788,875
31,020,349 6 1/2s, with various due
dates to January 15, 2024 31,136,644
10,455,000 U.S. Treasury Notes 5 1/4s,
July 31, 1998 10,592,222
32,000,000 U.S. Treasury Notes 5 1/8s,
December 31, 1998 32,140,000
6,500,000 U.S. Treasury Notes 5 1/8s,
November 30, 1998 6,532,500
14,400,000 U.S. Treasury Notes 5 3/4s,
October 31, 1997 14,917,500
38,115,000 U.S. Treasury Notes 5s,
January 31, 1999 38,055,540
39,270,000 U.S. Treasury Notes 6s,
November 30, 1997 41,000,334
39,445,000 U.S. Treasury Stripped
Principal Payment
Coupon Securities
zero %, August 15,
2020 6,730,303
32,300,000 U.S. Treasury Stripped
Principal Payment
Coupon Securities
zero %, February 15,
2020 5,672,688
Total U.S. Government
and Agency Obligations
(cost $406,824,344) $ 409,502,188
Foreign Bonds and Notes (22.0%)(a)(i)
Principal Amount Value
A $ 15,410,000 Australia (Government
of) bonds 7 1/2s, 2005 $ 11,827,175
DKK 86,300,000 Denmark (Government
of) bonds 9s, 2000 15,156,438
FM 61,000,000 Finland (Republic of)
notes 11s, 1999 13,572,500
FM 11,000,000 Finland (Republic of)
notes 10 3/4s, 2002 2,564,375
FF 98,400,000 France (Government
of) OAT 8 1/2s, 2023 21,525,000
ECU 8,473,000 France Treasury bonds
8 1/4s, 2022 11,486,211
ECU 5,935,000 France (Government
of) BTAN 7 1/4s, 1998 7,103,453
FF 38,800,000 France (Government
of) Balladurs 6s, 1997 6,765,750
ITL 13,900,000,000 Italy (Government of)
BTPS 11 1/2s, 1996 8,696,188
ITL 4,200,000,000 Italy (Government of)
bonds 111/2s, 2003 2,905,875
ECU 530,000 Italy (Government of)
notes 91/4s, 2011 715,831
ITL 26,300,000,000 Italy (Government of)
bonds 9s, 1998 16,092,313
JPY 1,032,600,000 Japan (Government of)
BTPS 51/2s, 2013 10,422,806
JPY 1,321,000,000 Japan (Government of)
bonds 4.9s, 2003 13,036,619
JPY 1,216,000,000 Japan (Government of)
bonds 4.9s, 2009 11,544,400
<PAGE>
JPY 1,158,000,000 Japan (Government of)
bonds 4.7s, 2014 10,689,788
ECU 9,500,000 Mexico (Government of)
bonds 6 1/4s, 2019 7,849,375
NLG 48,765,000 Netherlands (Government
of) bonds 7 1/2s, 2023 29,441,869
ZAL 15,900,000 South Africa Escom
bonds 11s, 2008 3,239,625
SEK 18,600,000 Statens Bostads 11s,
1999 2,766,750
SEK 39,400,000 Sweden (Government
of) bonds 10 1/4s, 2003 6,205,500
SEK 18,200,000 Sweden (Government
of) bonds 11s, 1999 2,775,500
SEK 82,700,000 Sweden (Government
of) bonds 6s, 2005 9,820,625
GBP60,000 United Kingdom
Treasury bonds
10 1/4s, 1999 109,088
GBP 14,500,000 United Kingdom
Treasury bonds
8 1/2s, 2007 25,773,750
GBP 3,160,000 United Kingdom
Treasury bonds 8s,
2003 5,356,200
ECU 7,005,000 United Kingdom
Treasury bonds
9 1/8s, 2001 9,281,625
GBP 6,515,000 United Kingdom
Treasury bonds 9s,
2008 12,105,684
GBP 655,000 United Kingdom
Treasury bonds
3 1/2s, 2049 532,188
A $ 3,305,000 Victoria Treasury bonds
8 1/4s, 2003 2,594,425
Total Foreign Bonds
and Notes
(cost $274,817,676) $ 281,956,926
Yankee Bonds and Notes (3.3%)(a)
Principal Amount Value
$ 17,400,000 Argentina (Government
of) bonds 4s, 2023 $ 12,180,000
8,750,000 Argentina (Government
of) bonds 4s, 2023 7,612,500
3,300,000 Argentina Bocon bonds
zero %, 2002 2,862,750
1,465,000 Banco de Galicia Inc.
global notes 9s, 2003 1,498,878
2,000,000 Banco Nacional bonds
8s, 2003 2,070,000
<PAGE>
7,425,000 Brazil (Government of)
bonds 8 3/4s, 2001 6,394,781
1,095,000 Eletson Holdings, Inc.
1st pfd. mtge. notes
9 1/4s, 2003 1,133,325
4,000,000 Venezuela (Government
of) bonds variable rate
note 4.3521s, 2007 2,780,000
1,000,000 Venezuela (Government
of) bonds 6 3/4s, 2020 718,750
8,000,000 Venezuela (Government
of) bonds Ser. A, 6s, 2007 5,940,000
Total Yankee Bonds
and Notes
(cost $39,523,635) $ 43,190,984
Common Stocks (0.5%)(a)
Number of Shares Value
368 CDK Holding Corp.
rights (acquired
10/31/1988, cost
$20,643)(b) $ 11,776
116,043 Charter Medical Corp. 2,828,548
39,091 Computervision Corp.
(acquired 8/24/1992;
cost $351,820)(b) 109,944
37,304 Grand Casinos, Inc. 1,072,490
14,481 Kendall International, Inc. 724,050
1,658 PMI Holdings Corp. 116,060
776 Premium Holdings L.P.(c) 77,600
78,643 SPI Holdings Inc. Class B 668,466
324,788 Solon Automated Services,
Inc. (acquired 6/18/1992,
cost $193,950)(b) 202,993
46 Southland Corp. 247
63,000 Specialty Foods Corp. 110,250
12,509 Taj Mahal Holding
Corp. Class A 275,198
20,000 Triangle Pacific Corp. 340,000
Total Common Stocks
(cost $3,338,368) $ 6,537,622
Asset-Backed Securities (0.3%)(a) (cost $3,871,513)
Principal Amount Value
$ 3,880,000 First Deposit Master
Trust Ser. 93-2A,
5 3/4s, 2001 $ 3,952,750
Convertible Preferred Stocks (0.3%)(a) (cost $3,316,500)
Number of Shares Value
66,330 Conseco, Inc. Ser. D,
$3.25 cv. pfd. $ 3,913,470
<PAGE>
Units (0.2%)(a)(c)
Number of units Value
13,760 Premium Standard
Farms exch.
units 12 1/2s, 2000 1,444,800
280,000 Page Mart Inc. sr. disc.
notes stepped-coupon
zero % (12 1/4s,
11/1/98), 2003(e) 1,708,000
Total units
(cost $2,915,048) $ 3,152,800
Collateralized Mortgage Obligations (0.2%)(a)
Principal Amount Value
$ 73,909 Federal National
Mortgage Association
Interest Only Strips
1,071s, 2008(j) $ 517,367
2,716,423 Federal National
Mortgage Association
Interest Only Strips
SMBS Trust Ser. 5-2,
7 1/2s, 2007(j) 628,173
1,949,559 Prudential Home
Mortgage Securities
Co. Ser. 92-39 A1,
5.15s, 2007 1,949,559
Total Collateralized
Mortgage Obligations
(cost $4,592,998) $ 3,095,099
Warrants (0.2%)(a)(f)
Number of Expiration
Warrants Date Value
95,000 Becker Gaming
Corp.(c) 11/15/00 $ 237,500
609 CDK Holding Corp.
Class A (acquired
10/31/88, cost
$34,165)(b) 7/7/99 19,488
652 CDK Holding Corp.
Class B (acquired
10/31/88, cost
$18,269)(b) 7/7/99 19,560
8,223 Casino America Inc. 11/15/96 75,547
27,600 Casino Magic Finance
Corp. 10/14/96 82,800
18,558 Cinemark Mexico 8/1/03 171,662
237,130 Gaylord Container Corp. 7/31/96 1,244,933
31,620 President Riverboat
Casinos 9/15/96 94,860
<PAGE>
60,000 Southdown, Inc.
(acquired 10/31/91,
cost $180,000)(b) 11/1/96 667,500
2,271 Wright Medical
Technology Inc. 6/30/03 227,088
Total Warrants
(cost $1,925,708) $ 2,840,938
Preferred Stocks (0.2%)(a)(b)
Number of shares Value
66,735 Playtex Family Products
Corp. $0.14 jr. pfd.
(acquired 4/10/92,
cost $105,108) $ 133,470
1,048,394 Playtex Family Products
Corp. Ser. B, $3.50,
pfd. (acquired 4/1/92,
cost $1,651,221) 2,096,788
Total Preferred Stocks
(cost $1,756,329) $ 2,230,258
Call Options On Foreign Currency (0.1%)(a)(i)
Expiration Date/
Currency Strike Price Value
DM 46,425,000 Deutschemarks
2/23/94 DM 1.73 $ 287,835
JPY36,220,000 Japanese Yen
2/24/94 JPY109.0 528,812
Total Call Options
On Foreign Currency
(cost $779,946) $ 816,647
Call Options On Foreign Bonds (--%)(a)(i)
Expiration Date/
Principal Amount Strike Price Value
FF466,400 France (Government
of) Treasury bonds
4/22/94 FF20.11 $ 409,732
JPY 1,436,000 Japan (Government
of) bonds
3/3/94 JPY116.27 574
JPY 715,000 Japan (Government
of) bonds
3/3/94 JPY117.08 72
JPY 1,136,000 Japan (Government of)
bonds 4/7/94 JPY124.79 114
JPY 2,168,200 Japan (Government
of) bonds
3/14/94 JPY124.79 1,951
Total Call Options On
Foreign Bonds
(cost $906,933) $ 412,443
Short-Term Investments (19.5%)(a)
Principal Amount Value
$ 20,000,000 AES Barbers PT 3.07s,
February 9, 1994 $ 19,986,356
15,000,000 Corporate Asset Funding
Co. Inc. 3.07s,
April 4, 1994 14,920,691
15,000,000 Federal Farm Credit
Bank 3.17s, February 4,
1994 14,996,037
10,000,000 Federal Home Loan
Banks 3.17s,
February 3, 1994 9,997,441
15,000,000 Ford Motor Credit Co.
3.13s, March 8, 1994 14,954,353
10,000,000 General Electric Capital
Corp. 3.2s, February 8,
1994 9,993,778
15,000,000 General Electric Capital
Corp. 3.07s, March 22,
1994 14,937,321
GRD 700,000,000 Greece Treasury bills
zero %, May 17, 1994(i) 2,655,625
GRD 1,340,000,000 Greece Treasury bills
zero %, May 31, 1994(i) 5,041,750
15,000,000 Heller Financial, Inc.
3.03s, March 10, 1994 14,953,288
15,000,000 Household Finance
Corp. 3.15s,
February 1, 1994 15,000,000
IDR 6,600,000,000 Indonesia (Government
of) bonds 10s,
February 3, 1994(i) 3,118,500
20,000,000 Lehman Brothers
Holdings Inc. 3.05s,
February 4, 1994 19,994,916
20,000,000 Merrill Lynch & Co.
Inc. 3.1s, March 9, 1994 19,938,000
15,000,000 Merrill Lynch & Co. Inc.
3.08s, February 16, 1994 14,980,750
MXP 11,100,000 Mexican cetes zero %,
December 8, 1994(i) 3,260,625
15,000,000 Preferred Receivables
Funding Corp. 3.04s,
February 4, 1994 14,996,200
15,000,000 Smith Barney Shearson
3.05s, February 16,
1994 14,980,825
<PAGE>
21,168,000 Interest in $21,168,000
repurchase agreement
dated January 31, 1994
with Bankers Trust
Co., Inc. due February 1,
1994 with respect to
various U.S. Treasury
obligations--maturity
value of $21,169,870
for an effective yield
of 3.18% 21,169,870
Total Short-Term
Investments
(cost $249,822,440) $ 249,876,326
Total Investments (cost
$1,473,614,038)(k) $ 1,509,973,827
(a) Percentages indicated are based on total net assets of
$1,284,257,808, which correspond to a net asset value per share
of $9.12.
(b) Restricted, excluding 144A securities, as to public resale.
At the date of acquisition, these securities were valued at cost.
There were no outstanding unrestricted securities of the same
class as those held. Total market value of restricted securities
owned at January 31, 1994 was $4,203,126 or 0.3% of net assets.
(c) Security 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. As of January 31, 1994 these securities
amounted to $90,265,128 or 7.0% of net assets.
(d) Income may be received in cash or additional securities at
the discretion of the issuer.
(e) The interest rate and date shown parenthetically represent
the new interest rate to be paid and the date the fund will begin
accruing this rate.
(f) Non-income-producing security.
(g) A portion of this securities, having a value of $1,000,155 or
.08% of net assets, has been purchased on a "forward commitment"
basis -- that is, the Fund has agreed to take delivery of and
make payment for such securities beyond the settlement time of
five business days after the trade date and subsequent to January
31, 1994. The purchase price and interest rate of such securities
are fixed at the trade date, although the fund does not earn any
interest on such securities until the settlement date.
(h) TBA's are mortgage backed securities traded under delayed
delivery commitments settling after January 31, 1994. Although
the unit price for the trades has been established, the principal
amount has not been finalized. However, the amount of the
commitments will not fluctuate more than 2.0% from the principal
amount. Income on the securities will not be earned until
settlement date. The cost of TBA purchases at January 31, 1994
was $176,054,872.<PAGE>
TBA Sale Commitments at January 31, 1994
(proceeds receivable $42,213,880)
PrincipalDelivery Coupon Market
Agency Amount Month Rate Value
FNMA $ 4,355,000 Feb./94 6% $ 4,364,526
GNMA 36,000,000 Feb./94 7 1/2% 37,878,750
$42,243,276
(i) Foreign currency-denominated. Market value is translated at
the current exchange rate.
(j) Interest Only (IO) Strips represent the right to receive the
monthly interest payments on an underlying pool of mortgage
loans. Payments of principal on the pool reduce the nominal value
of the IO holder.
(k) The aggregate identified cost on a tax basis is
$1,474,056,502, resulting in a gross unrealized appreciation and
depreciation of $53,140,559 and $17,223,234, respectively, or net
unrealized appreciation of $35,917,325.
The rates shown on Variable Rate Notes are the current interest
rates at January 31, 1994, which are subject to change based on
the terms of the security.
Forward Cross Currency Contracts Outstanding at January 31, 1994
(Aggregate Face Value $5,767,565)
In Unrealized
MarketExchange Market Delivery Appreciation/
Contracts Value For Value Date (Depreciation)
Deutschemarks Italian
(Sell)$2,894,500 Lira $2,892,794 3/28/94 (1,706)
Deutschemarks Italian
(Sell) 2,884,000 Lira 2,905,842 3/31/94 21,842
$20,136
Diversification of Foreign Bonds and Notes
at January 31, 1994 (as a percentage of net assets):
United Kingdom 4.1%
France 3.7
Japan 3.6
Netherlands 2.3
Italy 2.2
Argentina 1.8
Sweden 1.7
Finland 1.3
Denmark 1.2
Australia 1.1
Venezuala 0.7
Mexico 0.6
Brazil 0.5
South Africa 0.3
Spain 0.2
Forward Currency Contracts Outstanding
at January 31, 1994
Unrealized
Market Aggregate Delivery Appreciation/
Value Face Value Date (Depreciation)
Australian
Dollars
(Sell) $ 6,165,690 $6,169,170 2/11/94 $ 3,480
Canadian
Dollars
(Buy) 16,827,552 17,099,367 3/21/94 (271,815)
Canadian
Dollars
(Buy) 9,014,400 9,149,563 3/24/94 (135,163)
Canadian
Dollars
(Buy) 9,011,160 9,134,784 4/25/94 (123,624)
Deutschemarks
(Buy) 16,072,000 16,018,307 4/5/94 53,693
Deutschemarks
(Buy) 15,785,000 15,799,785 4/5/94 (14,785)
Deutschemarks
(Sell) 2,594,250 2,634,660 2/9/94 40,410
Deutschemarks
(Sell) 7,494,500 7,554,187 2/9/94 59,687
Deutschemarks
(Sell) 33,919,850 34,172,714 4/7/94 252,864
Deutschemarks
(Sell) 23,300,340 23,502,171 4/8/94 201,831
Deutschemarks
(Sell) 2,582,550 2,605,034 4/8/94 22,484
Deutschemarks
(Sell) 24,910,290 25,137,541 4/6/94 227,251
Deutschemarks
(Sell) 6,599,850 6,576,690 4/8/94 (23,160)
Deutschemarks
(Sell) 17,612,590 17,544,862 4/14/94 (67,728)
Deutschemarks
(Sell) 16,485,270 16,415,032 4/11/94 (70,238)
Deutschemarks
(Sell) 5,042,750 5,016,302 3/14/94 (26,448)
Deutschemarks
(Sell) 5,173,200 5,102,475 3/18/94 (70,725)
Unrealized
Market Aggregate Delivery Appreciation/
Value Face Value Date (Depreciation)
Japanese Yen
(Sell) 8,769,170 8,863,959 2/24/94 94,789
Japanese Yen
(Sell) 3,561,560 3,556,639 3/15/94 (4,921)
Japanese Yen
(Sell) 9,122,770 9,122,826 3/15/94 56
Japanese Yen
(Sell) 4,423,390 4,379,362 3/17/94 (44,028)
Japanese Yen
(Sell) 8,209,760 8,037,133 4/19/94 (172,627)
Japanese Yen
(Sell) 4,613,090 4,524,990 4/25/94 (88,100)
Japanese Yen
(Sell) 8,304,340 8,249,313 4/28/94 (55,027)
$(211,844)
Written Call Options on Foreign Currency
(Premiums received $120,705)
Expiration Date/
Currency Strike Price Value
DM46,425,000 Deutschemarks 2/23/94 DM 1.70 $74,280
<PAGE>
<TABLE>
<CAPTIONS>
Statement of
assets and liabilities
January 31, 1994
<S> <C> <C>
Assets
Investments in securities, at value (identified cost
$1,473,614,038) (Note 1) $1,509,973,827
Interest and other receivables 19,618,958
Receivable for securities sold 158,473,696
Receivable for open forward currency contracts 978,387
Receivable for closed forward currency contracts 3,206,279
Total assets 1,692,251,147
Liabilities
Payable to subcustodian bank (Note 2) $ 54,671
Payable for securities purchased 351,511,247
Distributions payable to shareholders 8,423,309
Payable for compensation of Manager (Note 2) 2,177,289
Payable for administrative services (Note 2) 2,035
Payable for compensation of Trustees (Note 2) 441
Payable for investor servicing and custodian fees (Note 2) 197,813
Payable for open forward currency contracts 1,170,095
Payable for closed forward currency contracts 1,831,722
Other accrued expenses 307,161
Written options outstanding, at value (premiums received
$120,705) (Note 1) 74,280
TBA sale commitment, at value (proceeds receivable
$42,213,880) (Note 1) 42,243,276
Total liabilities 407,993,339
Net assets $1,284,257,808
<PAGE>
Represented by
Paid-in capital (Note 4) $1,201,885,456
Undistributed net investment income 11,347,655
Accumulated net realized gain on investment transactions 34,839,587
Net unrealized appreciation of investments, options, foreign
currency, forward currency contracts, and TBA sale commitments 36,185,110
Total -- Representing net assets applicable to capital
shares outstanding $1,284,257,808
Computation of net asset value
Net asset value per share ($1,284,257,808
divided by 140,759,960 shares) $9.12
/TABLE
<PAGE>
<TABLE>
<CAPTIONS>
Statement of
operations
Six months ended January 31, 1994
<S> <C> <C>
Investment income:
Interest (net of foreign tax of $189,066) $50,286,082
Dividends 107,786
Total investment income 50,393,868
Expenses:
Compensation of Manager (Note 2) $4,345,221
Investor servicing and custodian fees (Note 2) 502,782
Compensation of Trustees (Note 2) 19,396
Reports to shareholders 20,147
Auditing 21,453
Legal 15,743
Postage 101,246
Exchange listing fees 58,530
Other 7,525
Total expenses 5,092,043
Net investment income 45,301,825
Net realized gain on investments (Notes 1 and 3) 40,597,075
Net realized gain on options (Notes 1 and 3) 1,169,095
Net realized loss on forward currency contracts (Notes 1 and 3) (5,985,264)
Net realized loss on foreign currency (Note 1) (67,956)
Net realized gain on futures contracts (Notes 1 and 3) 50,259
Net unrealized appreciation of investments, options, foreign
currency, forward currency contracts, and TBA sale commitments
during the period 4,673,540
Net gain on investment transactions 40,436,749
Net increase in net assets resulting from operations $85,738,574
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
changes in net assets
Six months ended Year ended
January 31 July 31
1994 1993
<S> <C> <C>
Increase in net assets
Operations:
Net investment income $ 45,301,825 $ 99,314,124
Net realized gain on investments 40,597,075 50,869,464
Net realized gain (loss) on options 1,169,095 (1,125,653)
Net realized gain (loss) on forward currency contracts (5,985,264)48,082,868
Net realized loss on foreign currency (67,956) (287,099)
Net realized gain on futures contracts 50,259 --
Net unrealized foreign currency translation gain -- 3,283
Net unrealized appreciation (depreciation) of investments,
options, futures, foreign currency, forward currency
contracts, and TBA sale commitments 4,673,540 (36,667,997)
Net increase in net assets resulting from operations 85,738,574160,188,990
Distributions to shareholders from:
Net investment income (50,673,524) (99,314,124)
Excess of net investment income (Note 1) -- (9,060,214)
Shares issued in connection with reinvestment of distributions -- 2,420,552
Total increase in net assets 35,065,050 54,235,204
Net assets
Beginning of period 1,249,192,758 1,194,957,554
End of period $1,284,257,808 $1,249,192,758
Number of fund shares
Shares outstanding at beginning of period 140,759,960 140,475,959
Shares issued in connection with reinvestment of distributions -- 284,001
Shares outstanding at end of period 140,759,960 140,759,960
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights*
(For a share outstanding
throughout the period)
For the period
February 29, 1988
Six months (commencement
ended of operations) to
January 31 Year ended July 31 July 31
1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $8.87 $8.51 $7.90 $8.20 $8.98 $8.95 $9.35
Investment Operations
Net Investment Income .32 .71 .75 .75 .75 .85 .35
Net Realized and
Unrealized Gain (Loss)
on Investments .29 .42 .73 (.14) (.46) .33 (.37)
Total from
Investment operations .61 1.13 1.48 .61 .29 1.18 (.02)
Less Distributions from: (a)
Net Investment Income (.36) (.71) (.75) (.75) (.75) (.88) (.33)
In Excess of Net
Investment Income -- (.06) -- -- -- -- --
Net Realized Gain on Investments -- -- -- -- (.02) (.27) (.05)
Paid-in Capital -- -- (.12) (.18) (.30) -- --
Total Distributions (.36) (.77) (.87) (.93) (1.07) (1.15) (.38)
Increase in Net Asset Value from
Shares Repurchased(b) -- -- -- .02 -- -- --
Net Asset Value,
End of Period $9.12 $8.87 $8.51 $7.90 $8.20 $8.98 $8.95
<PAGE>
Total Investment Return
at Net Asset Value (%)(c)14.60(d) 14.28 19.85 9.38 4.65 14.00 .60(d)
Total Investment Return
at Market Value (%)(c) 5.56(d) 8.69 27.42 23.50 (14.04) 12.14 .62(d)
Market Value,
End of Period $8.13 $8.25 $8.88 $7.75 $7.13 $9.50 $9.63
Net Assets, End of Period
(in thousands) $1,284,258 $1,249,193 $1,194,958 $1,106,772 $1,169,007 $1,278,922$1,255,520
Ratio of Expenses to
Average Net Assets (%) .80(d) .84 .88 1.06 1.02 .99 .95(d)
Ratio of Net Investment Income
to Average Net Assets (%) 7.10(d) 8.14 9.05 9.41 9.03 9.54 9.11(d)
Portfolio Turnover (%) 153.19(e) 250.65 203.27 350.45 165.97 249.07 41.74(e)
*Financial Highlights for periods ended through July 31, 1992 have been restated to conform with requirements issued by
the SEC in December 1992.
(a)See Note 1 to Financial Statements.
(b)See Note 4 to Financial Statements.
(c)Total investment return assumes dividend reinvestment.
(d)Annualized.
(e)Not annualized.
/TABLE
<PAGE>
Notes to
financial statements
January 31, 1994
Note 1 Significant accounting policies
The Fund is registered under the Investment Company Act of 1940,
as amended, as a non-diversified, closed-end management
investment company. The Fund's investment objective is to seek
high current income by allocating its investments among the U.S.
government sector, high yield sector and international sector of
the fixed income securities market.
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 certain U.S. government
obligations are stated at the mean between the 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, including restricted securities, are stated at
fair value following procedures approved by the Trustees. Market
quotations are not considered to be readily available for
long-term corporate bonds and notes; such investments are stated
at fair value on the basis of valuations furnished by a pricing
service, approved by the Trustees, which determines valuations
for normal, institutional-size trading units of such securities
using methods based on market transactions for comparable
securities and various relationships between securities which are
generally recognized by institutional traders. See Section F of
Note 1 with respect to valuation of options, futures and forward
currency contracts.
B) TBA purchase commitments The Fund may enter into "TBA" (to be
announced) purchase commitments to purchase securities for a
fixed unit price at a future date beyond customary settlement
time. Although the unit price has been established, the principal
value has not been finalized. However, the amount of the
commitment will not fluctuate more than 2.0% from the principal
amount. The Fund holds, and maintains until the settlement date,
cash or high-grade debt obligations in an amount sufficient to
meet the purchase price, or the Fund enters into offsetting
contracts for the forward sale of other securities it owns. TBA
purchase commitments may be considered securities in themselves,
and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in
addition to the risk of decline in the value of the Fund's other
assets. Unsettled TBA purchase commitments are valued at the
current market value of the underlying securities, generally
according to the procedures described under "Security valuation"
above.
Although the Fund will generally enter into TBA purchase
commitments with the intention of acquiring securities for its
portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to
settlement if the Fund Manager deems it appropriate to do so.
TBA sale commitments The Fund may enter into TBA sale commitments
to hedge its portfolio positions or to sell mortgage-backed
securities it owns under delayed delivery arrangements. Proceeds
of TBA sale commitments are not received until the contractual
settlement date. During the time a TBA sale commitment is
outstanding, equivalent deliverable securities, or an offsetting
TBA purchase commitment deliverable on or before the sale
commitment date, are held as "cover" for the transaction.
Unsettled TBA sale commitments are valued at the current market
value of the underlying securities, generally according to the
procedures described under "Security valuation" above. The
contract is "marked-to-market" daily and the change in market
value is recorded by the Fund as an unrealized gain or loss. If
the TBA sale commitment is closed through the acquisition of an
offsetting purchase commitment, the Fund realizes a gain or loss
on the commitment without regard to any unrealized gain or loss
on the underlying security. If the Fund delivers securities under
the commitment, the Fund realizes a gain or loss from the sale of
the securities based upon the unit price established at the date
the commitment was entered into.
C) 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.
D) Repurchase agreements The Fund, or any joint trading account,
through its custodian, receives delivery of the underlying
securities, the market value of which at the time of purchase is
required to be in an amount at least equal to the resale price,
including accrued interest. The Fund's Manager is responsible for
determining that the value of these underlying securities is at
all times at least equal to the resale price, including accrued
interest.
E) 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.
Discount on zero coupon bonds, original issue discount bonds and
step-up bonds is accreted according to the effective yield
method. Certain securities held by the Fund pay interest in the
form of additional securities; interest on such securities is
recorded on the accrual basis at the lower of the coupon rate or
market value of the securities to be received, and is allocated
to the cost of the securities received on the payment date.
Foreign currency-denominated receivables and payables are
"marked-to-market" using the current exchange rate. The
fluctuation between the original exchange rate and the current
exchange rate is recorded as unrealized translation gain or loss.
Upon receipt or payment, the Fund realizes a gain or loss on
foreign currency amounting to the difference between the original
value and the ending value of the receivable or payable. Foreign
currency gains and losses related to interest receivable are
reported as part of interest income.
F) Option accounting principles When the Fund writes a call or
put option, an amount equal to the premium received by the Fund
is included in the Fund's "Statement of Assets and Liabilities"
as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the
current market value of the option written. The current market
value of an option is the last sale price or, in the absence of a
sale, the last offering price. If an option expires on its
stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain or loss if the
cost of a closing purchase transaction exceeds the premium
received when the option was written without regard to any
unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written
call option is exercised, the Fund realizes a gain or loss from
the sale of the underlying security and the proceeds of the sale
are increased by the premium originally received. If a written
put option is exercised, the amount of the premium originally
received reduces the cost of the security which the Fund
purchases upon exercise of the option.
The Fund writes covered call options; that is, options for which
it holds the underlying security or its equivalent. Accordingly,
the risk in writing a call option is that the Fund relinquishes
the opportunity to profit if the market price of the underlying
security increases and the option is exercised. In writing a put
option, the Fund assumes the risk of incurring a loss if the
market price of the underlying security decreases and the option
is exercised.
<PAGE>
The premium paid by the Fund for the purchase of a call or put
option is included in the Fund's "Statement of Assets and
Liabilities" as an investment and subsequently "marked-to-market"
to reflect the current market value of the option. If an option
which the Fund has purchased expires on the stipulated expiration
date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the
Fund realizes a gain or loss, depending on whether the proceeds
from the closing sale transaction are greater or less than the
cost of the option. If the Fund exercises a call option, the cost
of the security acquired by exercising the call is increased by
the premium paid to buy the call. If the Fund exercises a put
option, it realizes a gain or loss from the sale of the
underlying security and the proceeds from such sale are decreased
by the premium originally paid.
Options on foreign currencies The Fund writes and purchases put
and call options on foreign currencies. The accounting principles
and risks involved are similar to those described above relating
to options on securities. The amount of potential loss to the
Fund upon exercise of a written call option is the value (in U.S.
dollars) of the currency sold, converted at the spot price, less
the value of the U.S. dollars received in exchange. The amount of
potential loss to the Fund upon exercise of a written put option
is the value (in U.S. dollars) of the currency received converted
at the spot price, less the value of the U.S. dollars paid in
exchange.
Futures A futures contract is an agreement between two parties to
buy or sell a security at a set price on a future date. Upon
entering into such a contract the Fund is required to pledge to
the broker an amount of cash or U.S. government securities equal
to the minimum ``initial margin'' requirements of the exchange.
Pursuant to the contract, the Fund agrees to receive from or pay
to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as
"variation margin," and are recorded by the Fund as unrealized
gains or losses. 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 potential risk to the Fund is that the
change in value of the underlying securities may not correspond
to the change in value of the futures contracts.
Forward currency contracts A forward currency contract is an
agreement between two parties to buy or sell a currency at a set
price on a future date. 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 by the Fund 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
maximum potential loss from forward currency contracts is the
aggregate face value in U.S. dollars at the time the contract was
opened; however, management believes the likelihood of such a
loss to be remote.
G) Federal taxes It is the policy of the Fund to distribute all
of its income within the prescribed time and otherwise comply
with the provisions of the 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 of securities
held and excise tax on income and capital gains.
At July 31, 1993, the Fund had a capital loss carryover of
approximately $34,111,064 which may be available to offset
realized capital gains. This amount will expire July 31, 1999. In
order to provide more level distributions, the Fund may at times
pay distributions from net realized short-term gains that could
have been retained by the Fund and offset by the capital loss
carryover. In such circumstances the Fund would lose the benefit
of the carryover.
H) Distributions to shareholders Distributions to shareholders
are recorded by the Fund on the ex-dividend date. At certain
times, the Fund may pay distributions at a level rate even
though, as a result of market conditions or investment decisions,
the Fund may not achieve projected investment results for a given
period. Based on investment results for the year July 31, 1993,
$0.06 of per share distributions has been designated as
distributions from excess of net investment income, and relates
to a permanent tax difference of foreign currency gains. Also,
based on investment results for the year ended July 31, 1992,
$0.12 of per share distributions has been designated as
distributions from paid-in capital for financial reporting
purposes.
Note 2 Management fee, administrative services, and other
transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average weekly
net assets of the Fund. Such fee is based on the following annual
rates: 0.75% of the first $500 million of average weekly net
assets, 0.65% of the next $500 million, 0.60% of the next $500
million and 0.55% of any amount over $1.5 billion.
The Fund also reimburses the Manager 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. For the six months ended January 31, 1994, the Fund did
not incur expenses for these services.
Trustees of the Fund receive an annual Trustee's fee of $2,440
and an additional fee for each Trustees' meeting attended.
Trustees who are not interested persons of the Manager and who
serve on committees of the Trustees receive additional fees for
attendance at certain committee meetings.
Custodial functions for the Fund's assets are being provided to
the Fund 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.
Fees paid for these investor servicing and custodial functions
for the six months ended January 31, 1994, amounted to $502,782.
Investor servicing and custodian fees reported in the Statement
of operations for the six months ended January 31, 1994 have been
reduced by credits allowed by PFTC.
As part of the custodian contract between PFTC and its
subcustodian bank, the subcustodian has a lien on the securities
of the Fund to the extent permitted by the Fund's investment
restrictions to cover any advances made to the Fund. At January
31, 1994, the payable to custodian represents the amount due for
cash advanced for the settlement of a security purchased.
Note 3 Purchases and sales of securities
During the six months ended January 31, 1994, purchases and sales
of investment securities other than U.S. government obligations
and short-term investments aggregated $793,927,715 and
$877,717,917 respectively. Purchases and sales of U.S. government
obligations aggregated $1,042,255,070 and $987,586,152,
respectively. In determining the net gain or loss on securities
sold, the cost of securities has been determined on the
identified cost basis.
Written option transactions on foreign currencies during the
period are summarized as follows:
Premiums
Received
Options written $ 294,335
Options closed (173,630)
Written options outstanding at
end of period $ 120,705
<PAGE>
Purchased option transactions on foreign currencies during the
period are summarized as follows:
Cost
Options outstanding at beginning
of period $ 174,845
Options purchased 1,583,574
1,758,419
Options sold (523,895)
Options expired (454,578)
Purchased options outstanding
at end of period $ 779,946
Purchased option transactions on investments during the period
are summarized as follows:
Number of
Contracts Cost
Options outstanding at
beginning of period 892 $ 1,291,334
Options purchased 287,367 5,139,580
288,259 6,430,914
Options exercised (21,400) (321,000)
Options sold (81,537) (3,428,265)
Options expired (179,400) (1,774,716)
Purchased options outstanding
at end of period 5,922 $ 906,933
Sales of Forward Currency Contracts
Aggregate Face Value
Contracts outstanding at
beginning of period $ 225,670,904
Contracts opened 1,039,091,315
1,264,762,219
Contracts closed (1,059,829,594)
Open at end of period $ 204,932,625
Transactions in forward currency contracts during the period are
summarized as follows:
Purchases of Forward Currency Contracts
Aggregate
Face Value
Contracts opened at beginning of period $ 136,726,160
Contracts opened 399,296,085
Contracts closed (468,820,439)
Open at end of period $ 67,201,806
<PAGE>
Transactions in futures contracts during the period are
summarized as follows:
Purchases of Futures Contracts
Number of Aggregate
Contracts Face Value
Contracts opened 1,444 $ 168,308,531
Contracts closed (1,444) (168,308,531)
Open at end of period -- $ --
Note 4 Share Repurchase Program
The Trustees have authorized the Fund to repurchase up to
7,000,000 of its shares in the open market. Repurchases will only
be made when the Fund's shares are trading at less than net asset
value and at such times and amounts as are believed to be in the
best interests of the Fund's shareholders. Any repurchases of
shares will have the effect of increasing the net asset value per
share of remaining shares outstanding.
There were no repurchased shares for six months ended January 31,
1994 or the year ended July 31, 1993.
Note 5 Reclassification of Capital Account
Effective August 1, 1994, Putnam Premier Income Trust has adopted
the provisions of Statement of Position 93-2 "Determination,
Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment
Companies (SOP)." The purpose of this SOP is to report the
accumulated net investment income (loss) and accumulated net
realized gain (loss) accounts in such a manner as to approximate
amounts available for future distributions (or to offset future
realized capital gains) and to achieve uniformity in the
presentation of distributions by investment companies.
As a result of the SOP, the Fund has reclassified $393,759 to
decrease accumulated net realized gain, $25,779,568 to increase
undistributed net investment income, with a decrease of
$25,385,809 to additional paid-in capital. These adjustments
represent the cumulative amounts necessary to report these
balances through July 31, 1993, the close of the Fund's most
recent fiscal year-end, for financial reporting and tax purposes.
<PAGE>
<TABLE>
<CAPTION>
Selected
Quarterly Data
(Unaudited)
Three months ended
January 31 October 31 July 31 April 30 January 31 October 31
1994 1993 1993 1993 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Total investment income
Total $ 24,250,083 $ 26,143,785 $ 25,981,131 $ 27,987,768 $ 28,792,611 $ 26,784,842
Per share $ .13 $ .23 $ .19 $ .20 $ .20 $ .19
Net investment income
Total $ 21,661,183 $ 23,640,642 $ 23,324,165 $ 25,145,261 $ 26,600,505 $ 24,244,193
Per share $ .11 $ .21 $ .17 $ .18 $ .19 $ .17
Net realized and
unrealized gain (loss)
on investments
Total $ 21,610,985 $ 18,825,764 $ 17,225,488 $ 21,188,007 $ 18,080,924 $ 4,380,447
Per share $ .19 $ .10 $ .11 $ .15 $ .13 $ .03
Net increase in net
assets resulting
from operations
Total $ 43,272,168 $ 42,466,406 $ 40,549,653 $ 46,333,268 $ 44,681,429 $ 28,624,640
Per share $ .30 $ .31 $ .28 $ .33 $ .32 $ .20
Net assets at end of period
Total $1,284,257,808 $1,266,322,899 $1,249,192,758 $1,235,035,237 $1,215,094,378 $1,196,805,389
Per share $ 9.12 $ 9.00 $ 8.87 $ 8.77 $ 8.63 $ 8.50
<PAGE>
July 31 April 30 January 31 October 31
1992 1992 1992 1991
Total investment income
Total $ 29,022,010 $ 26,398,555 $ 29,999,286 $ 29,925,698
Per share $ .21 $ .18 $ .22 $ .21
Net investment income
Total $ 26,434,136 $ 23,808,477 $ 27,538,316 $ 27,349,299
Per share $ .19 $ .17 $ .20 $ .19
Net realized and
unrealized gain (loss)
on investments
Total $ 32,963,334 $ (3,697,380) $ 25,236,517 $ 47,689,082
Per share $ .24 $ (.02) $ .16 $ .35
Net increase
in net assets resulting
from operations
Total $ 59,397,470 $ 20,111,097 $ 52,774,833 $ 75,038,381
Per share $ .43 $ .15 $ .36 $ .54
Net assets at end of period
Total $1,194,957,554 $1,183,253,996 $1,173,623,589 $1,151,329,460
Per share $ 8.51 $ 8.30 $ 8.37 $ 8.22
/TABLE
<PAGE>
Dividend Policy
It is the Fund's dividend policy to pay monthly distributions
from net investment income and any net realized short-term gains
(including gains from options and futures transactions).
Long-term capital gains are distributed at least annually. In an
effort to maintain a more stable level of distributions, the
Fund's monthly distribution rate will be based on Putnam
Management's projections of the net investment income and net
realized short-term capital gains that the Fund is likely to earn
over the long term.
At the time of each distribution, shareholders are furnished
Putnam Management's current estimate of the sources of such
distribution. These estimates are subject to adjustment depending
on investment results for the Fund's entire fiscal year. Final
information regarding such matters is furnished to shareholders
in the Fund's annual reports and in tax information provided
following the end of each calendar year.
Fund
performance
supplement
Putnam Premier Income Trust is a portfolio managed for high
current income through investments among the U.S. government
sector, high yield sector and international sector of the fixed
income securities market. The fund invests in lower-rated,
high-yielding securities, which pose a greater risk to principal
than higher-rated securities. High-yield securities are rated
lower than investment-grade securities because there is a greater
possibility that negative changes in the issuer's financial
condition, or in general economic conditions, may hinder the
issuer's ability to pay principal and interest on securities.
The Consumer Price Index is a commonly used measure of inflation;
it does not represent investment return.
Fund performance data do not take into account any adjustment
made for taxes payable on reinvested distributions.
The fund performance supplement has been prepared by Putnam
Management to provide additional information about the fund and
the indexes used for performance comparisons. The information is
not part of the portfolio of investments owned or the financial
statements.
<PAGE>
Putnam
Premier
Income
Trust
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
Investor servicing agent
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
1-800-634-1587
Custodians
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
Independent accountants
Price Waterhouse
Putnam Investor Services
has received the DALBAR
award each year since the
award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components,
Putnam outperformed
the industry standard
in every category.
MPI-11149<PAGE>
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
Gary N. Coburn
Vice President
Rosemary H. Thomsen
Vice President
and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul O'Neil
Vice President
John D. Hughes
Vice President
and Treasurer
Beverly Marcus
Clerk and
Assistant Treasurer
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,
A.J.C. Smith, W. Nicholas Thorndike
Call 1-800-634-1587 weekdays from 9 a.m. to 5 p.m. Eastern time
for up-to-date information about the fund's NAV or to request
Putnam's quarterly Closed-End Fund Commentary.
<PAGE>
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- -----------------
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
- ------------------
<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS:
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g, the name of the fund) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(5) Bullet points and similar graphic signals are omitted.
(6) Page numbering is different.
(7) "JPY" has been used to indicate the Japanese Yen, "GBP" has
been used to indicate the British Pound.
