Putnam
Global
Income
Trust
Item 1. Report to Stockholders:
- -------------------------------
The following is a copy of the report transmitted to stockholders pursuant
to Rule 30e-1 under the Investment Company Act of 1940:
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
4-30-03
[GRAPHIC OMITTED: AIRPLANE]
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Fellow Shareholder:
We are pleased to report that during the semiannual period ended April
30, 2003, Putnam Global Income Trust turned in strong positive results.
While the fund outperformed its primary benchmark index, it slightly
underperformed its Lipper category average. You will find the details on
page 8. As you will see in the management report that follows, the
fund's favorable outcome was helped by a change in investment policy
instituted a year ago, as well as its currency strategies and country
allocations, along with a small allocation to high-yield bonds.
In its discussion, the management team lays out in detail the strategies
it employed in response to the current market environment and then
discusses some of the individual issues and their contribution to
results. Finally, the management team offers its views on prospects for
the fund as it enters the second half of its fiscal year.
Meanwhile, we would like you to know how much we appreciate your
continued confidence in Putnam, especially as the markets pass through
this difficult period. We are convinced that those who ride out the
current turbulence should eventually be rewarded for their patience.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
June 18, 2003
REPORT FROM FUND MANAGEMENT
* During the semiannual period ended April 30, 2003, Putnam Global
Income Trust's class A shares had total returns of 10.05% at net asset
value (NAV) and 4.80% at maximum public offering price (POP).
* Due to its increased flexibility, the fund at NAV outperformed its
primary benchmark, the Lehman Global Aggregate Bond Index, which
returned 8.50% for the period.
* However, because of its broader diversification, the fund slightly
underperformed the average return for the Lipper Global Income Funds
category, which was 10.24% for the six-month period.
* Index and Lipper results should be compared to fund performance at
net asset value. See the Performance Summary on page 8 for complete fund
performance, comparative performance, and Lipper data.
* The fund's allocation to higher-yielding investments resulted in a
dividend increase in February 2003 to $0.039 for class A shares. Please
see page 6 for details.
* PERFORMANCE COMMENTARY
Global bond markets surged during the first half of the fund's fiscal
reporting period, benefiting from lackluster equity returns,
geopolitical uncertainty, and a global economic environment of slow
growth and generally low inflation. Putnam Global Income Trust continued
to benefit from the change in investment policy that was approved a year
ago. The new policy, discussed in previous reports, allows the fund to
invest in a wider range of high-quality global bonds, including
mortgage-backed securities (MBSs), and other government agency
securities. The fund also benefited from its currency strategies and
country allocations, and its high-yield corporate bond holdings, which
have had exceptional performance over the past six months. The fund
underperformed its Lipper category average primarily because of
management's focus on remaining well diversified and not making any
significant sector or currency bets.
Fund Profile
Putnam Global Income Trust pursues high income by investing in bonds
issued by the U.S. government and foreign governments, U.S. or foreign
corporations, and other high-quality sectors such as mortgage-backed and
asset-backed securities. The fund may be suitable for investors seeking
high current income and asset class diversification from a globally
diversified portfolio of high-quality bonds.
* MARKET OVERVIEW
Despite three years of strong returns, global bond markets continued to
produce solid results over the past six months. Investors remained weary
of poor equity returns and nervous about fragile global economies,
especially as the impact of SARS in Asia, and its effect on global
trade, grew more pronounced. Furthermore, the U.S.-led war with Iraq
cast a shadow of unpredictability over all global capital markets, and
investors sought the relative safety of bonds, which historically have
outperformed equities during periods of high uncertainty. By mid-April
2003, the war with Iraq proved shorter and more decisive than many had
anticipated. Stock markets began to recover, but not at the expense of
bonds, which benefited from renewed investor concerns over sluggish
economic growth around the world.
In the U.S., bonds with higher yields than Treasuries strongly
outperformed the latter. Historically low Treasury yields suggested that
this high-quality sector had little room left for solid returns, and
investors who wanted income and remained leery of the stock market
sought alternative fixed-income investments. European markets benefited
from sluggish growth in core economies such as the United Kingdom,
Germany, and France, which have been hurt by structural problems, such
as high unemployment, high government spending, and a reluctance of the
European Central Bank to cut interest rates. Additionally, European
countries, which have significant exports to Asia, were hurt by the SARS
epidemic in that region.
MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 4/308/03
Bonds
Lehman Global Aggregate Bond Index (broad U.S. bond market) 8.50%
- -----------------------------------------------------------------------
Lehman Aggregate Bond Index (U.S. investment-grade bonds) 4.31%
- -----------------------------------------------------------------------
Lehman Government Bond Index (U.S. government bonds) 3.10%
- -----------------------------------------------------------------------
Citigroup Non-U.S. World Government Bond Index
(intl. govt. bonds) 11.77%
- -----------------------------------------------------------------------
Equities
S&P 500 Index (broad stock market) 4.48%
- -----------------------------------------------------------------------
Citigroup Non-U.S. World Growth PMI Index
(international growth stocks) 2.17%
- -----------------------------------------------------------------------
Citigroup Non-U.S. World Value PMI Index
(international value stocks) 2.73%
- -----------------------------------------------------------------------
These indexes provide an overview of performance in different market
sectors for the six months ended 4/30/03.
* STRATEGY OVERVIEW
During the past six months, we emphasized several geographic and market
sectors that we believed offered particular opportunities. No single
strategy or region caused the fund to perform well; rather the
combination of several diversified sources of returns proved of greatest
value to the portfolio's returns. Specialists on the management team
focused on security selection and diversification within the
mortgage-backed securities (MBSs), asset-backed securities (ABSs),
commercial mortgage-backed securities (CMBSs), and other agency sectors.
We increased the fund's high-yield corporate and investment-grade
corporate weightings early in October 2002, based on our belief that
these sectors were attractively valued, especially in relation to
overvalued, low-yielding Treasuries. After strong performance from
investment-grade corporate bonds, we reduced the fund's weighting in
this sector near the end of the period, while we retained the high-yield
corporate weighting. Our currency strategy called for a continuation of
underweighting the dollar and overweighting the euro and the Australian,
Canadian, and New Zealand dollars.
[GRAPHIC OMITTED: horizontal bar chart TOP COUNTRY WEIGHTINGS COMPARED]
TOP COUNTRY WEIGHTINGS COMPARED*
as of 10/31/02 as of 4/30/03
United States 53.0% 45.1%
Germany 18.0% 14.2%
United Kingdom 3.4% 8.6%
Ireland 0.8% 6.5%
Canada 10.4% 6.4%
Footnote reads:
*This chart shows how the fund's top country weightings have changed over
the last six months. Weightings are shown as a percentage of market value.
Holdings will vary over time.
* HOW FUND SECTOR ALLOCATIONS AFFECTED PERFORMANCE
This was an unusual period for the fund, in the sense that nearly every
sector in the portfolio performed well, while there were no significant
investments that detracted from performance. The fund's solid,
above-average returns reflect a strategy of seeking performance from a
diversified array of high-quality global fixed-income sectors and
markets.
The fund's foreign government bond holdings included significant
weightings in Germany, Canada, and the United Kingdom. These securities
performed well because of lackluster economic growth in these countries,
uncertainty over the war with Iraq, and reluctance from the European
Central Bank to lower interest rates. These factors sent risk-averse
investors in these countries to seek the relative safety of these
high-quality investments.
The fund's MBS, ABS, CMBS, and other structured sectors ("structured"
refers to bonds that are securitized from a stream of interest payments,
such as mortgages or credit cards) all performed well because of the
security selection and diversity of the fund's holdings. These sectors
are highly complicated markets and security selection is a key factor.
For example, some MBSs may be adversely affected by prepayments, which
have risen significantly as homeowners have refinanced. The fund's
management team attempts to avoid these types of securities and seeks
ways to reduce prepayment risk through hedging and other techniques.
High-yield corporate bonds and investment-grade corporate bonds made a
significant contribution because both of these sectors had such strong
returns during the period. Corporate investment-grade bonds were added
early in the period and then reduced before the period's end. This
sector had its strongest performance ever, relative to Treasuries,
during the six-month period. High-yield bonds also performed well, and
we have not reduced this weighting because we believe these securities
still offer value. These two sectors have benefited from a number of
factors. Among the most important has been the decline in default rates.
Although still high by historical standards, corporate defaults have
declined nearly 40% since hitting a peak of 10.81% in January 2002 -- to
a level of 6.94% in March 2003 (according to Moody's). In addition to
lower default rates, companies have been reducing debt and improving
their balance sheets, which has helped boost credit quality for
corporate debt issuers.
The fund's currency strategy, which emphasized the euro, and the
Australian, New Zealand, and Canadian dollars, also made a significant
contribution to performance as these currencies gained in relation to
the U.S. dollar. High projected budget deficits in the United States,
combined with a volatile stock market, weak corporate profits, a surging
trade deficit, and continued threats of terrorist attacks have all made
foreign investors more hesitant about investing in the United States. In
addition, commodity-exporting countries such as Australia (copper, wool)
and Canada (oil, various minerals) have benefited from a global rise in
commodity prices, which has helped boost the currencies of these
nations.
Please note that all sectors discussed in this report are subject to
review in accordance with the fund's investment strategy and may vary in
the future.
[GRAPHIC OMITTED: horizontal bar chart SECTOR WEIGHTINGS AS OF 4/30/03]
SECTOR WEIGHTINGS AS OF 4/30/03*
Government bonds 26.1%
Investment-grade
bonds 26.1%
Asset-backed
securities 17.6%
Mortgage-backed
securities 17.3%
Cash and
other securities 7.2%
Corporate
high-yield bonds 5.7%
Footnote reads:
*Weightings are shown as a percentage of market value. Holdings will vary
over time.
OF SPECIAL INTEREST
* As a result of the change in the fund's benchmark a year ago, the
fund has increased its investments in higher-yielding global
fixed-income securities. These investments enabled the fund to increase
its dividend by 8.33% in February 2003 for class A shares, from $0.036
per share to $0.039 per share. The dividend for other share classes
increased as well.
* THE FUND'S MANAGEMENT TEAM
The fund is managed by the Putnam Core Fixed-Income Team. The members of
this team are Kevin Cronin (Portfolio Leader), D. William Kohli
(Portfolio Member), Carl Bell, Rob Bloemker, Andrea Burke, Steve Horner,
James Prusko, Michael Salm, John Van Tassel, and David Waldman.
THE OUTLOOK FOR YOUR FUND
The following commentary reflects anticipated developments that could
affect your fund over the next six months, as well as your management
team's plans for responding to them.
In our opinion, the remainder of 2003 has the potential to be favorable
for global fixed-income securities. The completion of the war with Iraq
has reduced the level of geopolitical uncertainty that had been
preoccupying investors, who are now focusing on the economy and are
seeking higher yields from their fixed-income investments. We believe
that economic growth in the United States will be slow to moderate for
the rest of 2003 but will not have a "double dip" back into recession.
This should be a positive economic environment for bond sectors with
higher yields than Treasuries, such as MBSs, government agency bonds and
other structured securities, and high-yield corporate bonds.
In Europe, the major economies such as Germany and France continue to be
hampered by long-term structural problems, and there is a possibility
for economic contraction over the next several years. As a result, we
believe that European government bonds will remain attractive to
investors.
In an environment of slow to moderate growth, with potential volatility,
it is paramount that a global fixed-income portfolio be well diversified
across a range of holdings, sectors, and geographic regions. We believe
this fund is properly diversified among global fixed-income sectors and
is well positioned for the coming months.
The views expressed in this report are exclusively those of Putnam
Management. They are not meant as investment advice. International
investing involves certain risks, such as currency fluctuations,
economic instability, and political developments. Mutual funds that
invest in government securities are not guaranteed. Mortgage-backed
securities are subject to prepayment risk.
PERFORMANCE SUMMARY
This section provides information about your fund's performance during
its semiannual period, which ended April 30, 2003. In accordance with
regulatory requirements, we also include performance for the most
current calendar quarter-end. Performance should always be considered in
light of a fund's investment strategy. Past performance does not
indicate future results. More recent returns may be less or more than
those shown. Investment return and principal value will fluctuate and
you may have a gain or a loss when you sell your shares. A profile of
your fund's strategy appears on the first page of this report. See pages
9 and 10 for definitions of some terms used in this section.
TOTAL RETURN FOR PERIODS ENDED 4/30/03
Class A Class B Class C Class M
(inception dates) (6/1/87) (2/1/94) (7/26/99) (3/17/95)
NAV POP NAV CDSC NAV CDSC NAV POP
- ------------------------------------------------------------------------------------------------------
6 months 10.05% 4.80% 9.68% 4.68% 9.69% 8.69% 9.87% 6.31%
- ------------------------------------------------------------------------------------------------------
1 year 18.42 12.77 17.53 12.53 17.53 16.53 18.04 14.21
- ------------------------------------------------------------------------------------------------------
5 years 22.40 16.57 18.00 16.13 18.02 18.02 21.10 17.17
Annual average 4.13 3.11 3.36 3.04 3.37 3.37 3.90 3.22
- ------------------------------------------------------------------------------------------------------
10 years 49.87 42.79 39.21 39.21 39.07 39.07 46.02 41.28
Annual average 4.13 3.63 3.36 3.36 3.35 3.35 3.86 3.52
- ------------------------------------------------------------------------------------------------------
Annual average
(life of fund) 7.61 7.28 6.77 6.77 6.81 6.81 7.29 7.07
- ------------------------------------------------------------------------------------------------------
Performance assumes reinvestment of distributions and does not account
for taxes. Returns at public offering price (POP) for class A and M
shares reflect a sales charge of 4.75% and 3.25%, respectively. Class B
share returns reflect the applicable contingent deferred sales charge
(CDSC), which is 5% in the first year, declining to 1% in the sixth
year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the
first year that is eliminated thereafter. Performance for class B, C,
and M shares before their inception is derived from the historical
performance of class A shares, adjusted for the applicable sales charge
(or CDSC) and higher operating expenses for such shares.
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 4/30/03
Lipper Global
Lehman Global Income Funds
Aggregate Bond Index category average*
- -------------------------------------------------------------------------------
6 months 8.50% 10.24%
- -------------------------------------------------------------------------------
1 year 18.69 15.17
- -------------------------------------------------------------------------------
5 years 33.61 27.08
Annual average 5.97 4.79
- -------------------------------------------------------------------------------
10 years 87.51 83.22
Annual average 6.49 6.06
- -------------------------------------------------------------------------------
Annual average
(life of fund) --** 5.74
- -------------------------------------------------------------------------------
*Over the 6-month and 1-, 5-, and 10-year periods ended 4/30/03, there were 94,
87, 64, and 26 funds, respectively, in this Lipper category.
**The benchmark was not in existence at the time of the fund's inception. The
Lehman Global Aggregate Bond Index commenced 12/31/89.
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 4/30/03
Class A Class B Class C Class M
- -----------------------------------------------------------------------------------
Distributions (number) 6 6 6 6
- -----------------------------------------------------------------------------------
Income $0.225 $0.182 $0.184 $0.210
- -----------------------------------------------------------------------------------
Capital gains -- -- -- --
- -----------------------------------------------------------------------------------
Total $0.225 $0.182 $0.184 $0.210
- -----------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- -----------------------------------------------------------------------------------
10/31/02 $11.39 $11.96 $11.36 $11.37 $11.33 $11.71
- -----------------------------------------------------------------------------------
4/30/03 12.30 12.91 12.27 12.28 12.23 12.64
- -----------------------------------------------------------------------------------
Current return (end of period)
- -----------------------------------------------------------------------------------
Current
dividend
rate 1 3.80% 3.63% 3.13% 3.03% 3.63% 3.51%
- -----------------------------------------------------------------------------------
Current 30-day
SEC yield 2 2.89 2.76 2.16 2.16 2.65 2.56
- -----------------------------------------------------------------------------------
1 Most recent distribution, excluding capital gains, annualized and
divided by NAV or POP at end of period.
2 Based only on investment income, calculated using SEC guidelines.
TOTAL RETURN FOR PERIODS ENDED 3/31/03 (most recent calendar quarter)
Class A Class B Class C Class M
(inception dates) (6/1/87) (2/1/94) (7/26/99) (3/17/95)
NAV POP NAV CDSC NAV CDSC NAV POP
- -------------------------------------------------------------------------------------
6 months 7.96% 2.84% 7.59% 2.59% 7.51% 6.51% 7.87% 4.38%
- -------------------------------------------------------------------------------------
1 year 19.79 14.15 18.90 13.90 18.80 17.80 19.41 15.55
- -------------------------------------------------------------------------------------
5 years 22.27 16.47 17.76 15.91 17.76 17.76 20.88 16.92
Annual average 4.10 3.10 3.32 3.00 3.32 3.32 3.86 3.18
- -------------------------------------------------------------------------------------
10 years 50.49 43.37 39.64 39.64 39.60 39.60 46.53 41.79
Annual average 4.17 3.67 3.40 3.40 3.39 3.39 3.89 3.55
- -------------------------------------------------------------------------------------
Annual average
(life of fund) 7.53 7.21 6.69 6.69 6.73 6.73 7.21 6.99
- -------------------------------------------------------------------------------------
Past performance does not indicate future results. More recent returns
may be less or more than those shown. Investment return and principal
value will fluctuate and you may have a gain or a loss when you sell
your shares.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. The
NAV is calculated by dividing the net value of all the fund's assets by
the number of outstanding shares.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 4.75% maximum sales charge for class A
shares and 3.25% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
COMPARATIVE INDEXES
Lehman Global Aggregate Bond Index is an unmanaged index of government
and corporate bonds from around the world.
Lehman Aggregate Bond Index is an unmanaged index used as a general
measure of U.S. fixed-income securities.
Lehman Government Bond Index is an unmanaged index of U.S. Treasury and
agency securities.
Standard & Poor's (S&P) 500 Index is an unmanaged index of common stock
performance.
Citigroup (formerly Salomon Smith Barney) Non-U.S. World Government Bond
Index is an unmanaged index of government bonds from 10 countries.
Citigroup (formerly Salomon Smith Barney) Non-U.S. World Growth PMI
Index is an unmanaged index of those stocks in the Citigroup Non-U.S.
World Index chosen for their growth orientation.
Citigroup (formerly Salomon Smith Barney) Non-U.S. World Value PMI Index
is an unmanaged index of those stocks in the Citigroup Non-U.S. World
Index chosen for their value orientation.
Indexes assume reinvestment of all distributions and do not account for
fees. Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
Lipper Inc. is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper. Lipper category averages reflect
performance trends for funds within a category and are based on results
at net asset value.
A NOTE ABOUT DUPLICATE MAILINGS
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these
materials to customers who share the same address. This change will
automatically apply to all shareholders except those who notify us. If
you would prefer to receive your own copy, please call Putnam at
1-800-225-1581.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or
loss the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios, and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
THE FUND'S PORTFOLIO
April 30, 2003 (Unaudited)
FOREIGN GOVERNMENT BONDS AND NOTES (34.7%) (a)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
CHF 2,900,000 Austria (Republic of) notes Ser. EMTN, 3 3/8s, 2012 $2,257,504
NZD 3,705,000 Canada (Government of) bonds 6 5/8s, 2007 2,145,386
CAD 2,160,000 Canada (Government of) bonds 6s, 2011 1,622,447
CAD 10,360,000 Canada Housing Trust govt. guaranty 5.1s, 2007 (Canada) 7,445,406
DKK 9,640,000 Denmark (Kingdom of) bonds 6s, 2009 1,628,044
USD 1,000,000 Export Development Canada government bonds 4s, 2007 (Canada) 1,045,500
EUR 1,164,250 Germany (Federal Republic of) bonds Ser. 00, 5 1/2s, 2031 1,426,379
EUR 1,290,000 Germany (Federal Republic of) bonds Ser. 94, 6 1/4s, 2024 1,715,024
EUR 18,610,000 Germany (Federal Republic of) bonds Ser. 97, 6s, 2007 22,914,219
CHF 1,900,000 Italy (Republic of) unsub. notes Ser. 11, Tranche 1, 3 1/8s, 2010 1,458,736
NZD 3,620,000 New Zealand (Government of) bonds 6 1/2s, 2013 2,116,410
NZD 8,160,000 New Zealand (Government of) bonds 6s, 2011 4,615,547
NZD 4,610,000 New Zealand (Government of) bonds Ser. 709, 7s, 2009 2,753,210
USD 500,000 Quebec (Province of) notes 5s, 2009 (Canada) 538,044
EUR 970,000 Spain (Kingdom of) bonds 5 3/4s, 2032 1,223,028
SEK 30,640,000 Sweden (Government of) bonds 5 1/2s, 2012 3,971,595
GBP 8,385,000 United Kingdom treasury bonds 7 1/2s, 2006 15,049,219
-------------
Total Foreign Government Bonds and Notes (cost $66,412,079) $73,925,698
CORPORATE BONDS AND NOTES (29.7%) (a)
PRINCIPAL AMOUNT VALUE
Basic Materials (1.1%)
- -------------------------------------------------------------------------------------------------------------------
USD 185,000 Abitibi-Consolidated, Inc. company guaranty 6.95s, 2006 (Canada) $192,022
USD 240,000 Alcoa, Inc. notes 6 1/2s, 2011 272,875
USD 95,000 Avery Dennison Corp. notes 4 7/8s, 2013 96,944
USD 220,000 Dow Chemical Co. (The) notes 5 3/4s, 2009 232,843
EUR 145,000 Huntsman International, LLC sr. sub. notes Ser. EXCH, 10 1/8s, 2009 156,937
EUR 45,000 Ineos Acrylics Finance PLC company guaranty 10 1/4s,
2010 (United Kingdom) 51,466
EUR 75,000 Ineos Group Holdings PLC sr. notes 10 1/2s, 2010 (United Kingdom) 92,179
EUR 210,000 Kappa Beheer BV company guaranty 10 5/8s, 2009 (Netherlands) 250,720
NLG 120,000 Koninklijke Hoogovens NV unsub. notes 6 3/4s, 2004 (Netherlands) 57,721
EUR 345,000 Koninklijke Hoogovens NV unsub. notes 6 3/4s, 2004 (Netherlands) 165,949
EUR 125,000 Kronos International, Inc. bonds 8 7/8s, 2009 (Denmark) 143,659
EUR 150,000 MDP Acquisitions PLC sr. notes Ser. REGS, 10 1/8s, 2012 (Ireland) 180,760
EUR 100,000 Messer Griesheim Holdings AG sr. notes 10 3/8s, 2011 (Germany) 123,686
USD 90,000 Monsanto Co. sr. notes 7 3/8s, 2012 103,466
EUR 115,000 Rhodia SA unsub. Ser. EMTN, 6 1/4s, 2005 (France) 121,901
-------------
2,243,128
Capital Goods (1.4%)
- -------------------------------------------------------------------------------------------------------------------
EUR 75,000 ABB International Finance NV unsecd. notes Ser. EMTN,
5 1/4s, 2004 (Netherland Antilles) 78,413
ITL 115,000,000 ABB International Finance, Ltd. unsub. notes Ser. 0028,
8 1/8s, 2004 (Switzerland) 63,619
EUR 50,000,000 ABB International Finance, Ltd. unsub. notes Ser. 0028, 8 1/8s,
2004 (Switzerland) 27,661
USD 100,000 Allied Waste North America, Inc. company guaranty Ser. B,
8 1/2s, 2008 107,250
USD 35,000 Boeing Co. (The) bonds 6 1/8s, 2033 34,595
GBP 115,000 Bombardier, Inc. bonds 6 1/4s, 2006 (Canada) 164,495
EUR 70,000 Britax Group PLC sr. notes 11 1/4s, 2011 (United Kingdom) 53,112
EUR 70,000 BSN Financing Co. SA company guaranty Ser. EUR, 10 1/4s,
2009 (Luxembourg) 79,668
USD 50,000 CenterPoint Energy Resources Corp. debs. 8.9s, 2006 56,278
EUR 150,000 Crown European Holdings SA sec. sr. notes 10 1/4s, 2011 (France) 174,902
EUR 100,000 Eco-Bat Finance, Ltd. eurobonds 10 1/8s, 2013 (United Kingdom) 116,043
EUR 100,000 Fimep SA notes 11s, 2013 (France) 121,064
DEM 100,000 Impress Metal Packaging Holding NV sr. sub. notes 9 7/8s,
2007 (Netherlands) 57,050
EUR 120,000 Invensys, PLC sr. unsub. notes 5 1/2s, 2005 (United Kingdom) 116,824
USD 60,000 John Deere Capital Corp. notes 3.9s, 2008 61,215
USD 285,000 Lockheed Martin Corp. bonds 8 1/2s, 2029 382,352
GBP 125,000 Luxfer Holdings PLC sr. notes Ser. RG, 10 1/8s, 2009 (United Kingdom) 147,734
EUR 25,000 Manitowoc Co., Inc. (The) company guaranty 10 3/8s, 2011 27,895
USD 370,000 Northrop Grumman Corp. company guaranty 7 1/8s, 2011 433,299
USD 50,000 Parker-Hannifin Corp. notes 4 7/8s, 2013 50,613
USD 75,000 Raytheon Co. bonds 5 3/8s, 2013 77,002
USD 165,000 Raytheon Co. notes 8.2s, 2006 189,441
USD 55,000 Timken Co. notes 5 3/4s, 2010 56,053
USD 185,000 Waste Management, Inc. company guaranty 6 3/8s, 2012 205,526
-------------
2,882,104
Communication Services (2.1%)
- -------------------------------------------------------------------------------------------------------------------
USD 100,000 Ameritech Capital Funding company guaranty 6 1/4s, 2009 110,062
USD 95,000 AT&T Corp. sr. notes FRN 8s, 2031 105,772
USD 125,000 AT&T Corp. sr. notes FRN 7.3s, 2011 137,153
USD 60,000 AT&T Wireless Services, Inc. sr. notes 8 3/4s, 2031 74,714
USD 115,000 AT&T Wireless Services, Inc. sr. notes 7 7/8s, 2011 132,492
USD 90,000 Bellsouth Capital Funding notes 7 3/4s, 2010 109,491
USD 245,000 British Telecommunications PLC bonds 8 7/8s, 2030 (United Kingdom) 325,927
USD 180,000 Cingular Wireless, LLC sr. notes 5 5/8s, 2006 196,196
USD 255,000 Citizens Communications Co. notes 9 1/4s, 2011 322,301
USD 85,000 Citizens Communications Co. sr. notes 6 3/8s, 2004 89,002
GBP 45,000 Colt Telecommunications Group PLC sr. notes 10 1/8s,
2007 (United Kingdom) 59,693
USD 60,000 Crown Castle International Corp. sr. notes 9 3/8s, 2011 58,950
USD 400,000 Deutsche Telekom International Finance BV bonds 8s,
2010 (Netherlands) 482,140
USD 130,000 Energis PLC sr. notes 9 3/4s, 2009 (United Kingdom) (In default) (NON) 650
USD 100,000 France Telecom notes 10s, 2031 (France) 133,012
USD 160,000 France Telecom notes 7 3/4s, 2011 (France) 195,673
USD 40,000 Koninklijke (Royal) KPN NV sr. unsub. notes 8s, 2010 (Netherlands) 47,957
EUR 150,000 PTC International Finance II SA company guaranty 10 7/8s,
2008 (Luxembourg) 185,697
USD 140,000 Sprint Capital Corp. company guaranty 6 7/8s, 2028 129,500
USD 60,000 Sprint Capital Corp. company guaranty 6 1/8s, 2008 61,200
USD 150,000 Telefonica Europe BV company guaranty 7 3/4s, 2010 (Netherlands) 180,478
USD 170,000 Telus Corp. notes 7 1/2s, 2007 (Canada) 188,700
USD 535,000 Verizon Global Funding Corp. notes 7 1/4s, 2010 625,585
USD 45,000 Verizon Wireless, Inc. notes 5 3/8s, 2006 48,597
USD 95,000 Vodafone Group PLC bonds 6 1/4s, 2032 (United Kingdom) 101,289
USD 160,000 Vodafone Group PLC notes 7 3/4s, 2010 (United Kingdom) 193,313
USD 135,000 Voicestream Wireless Corp./Voicestream Wireless Capital Corp.
sr. disc. notes stepped-coupon zero % (11 7/8s, 11/15/04), 2009 (STP) 128,250
-------------
4,423,794
Conglomerates (--%)
- -------------------------------------------------------------------------------------------------------------------
USD 90,000 Tyco International Group SA company guaranty 6 3/4s,
2011 (Luxembourg) 90,000
Consumer Cyclicals (1.7%)
- -------------------------------------------------------------------------------------------------------------------
GBP 75,000 American Standard, Inc. company guaranty Ser. L, 8 1/4s, 2009 127,476
EUR 125,000 CB Bus AB sr. sub. notes 11s, 2010 (Sweden) 111,580
USD 210,000 Cendant Corp. notes 6 1/4s, 2010 222,435
USD 95,000 Cendant Corp. sr. notes 7 3/8s, 2013 105,346
USD 170,000 DaimlerChrysler NA Holding Corp. company guaranty 7.2s, 2009 192,842
USD 105,000 DaimlerChrysler NA Holding Corp. company guaranty Ser. D,
3.4s, 2004 106,898
EUR 90,000 Dana Corp. sr. notes 9s, 2011 103,435
USD 125,000 Deluxe Corp. notes 5s, 2012 128,127
DEM 6,892 Derby Cycle Corp. (The) sr. notes 9 3/8s, 2008 (In default) (NON) 79
USD 165,000 Federated Department Stores sr. notes 8 1/2s, 2010 198,102
USD 180,000 Ford Motor Co. notes 7.45s, 2031 160,206
USD 360,000 Ford Motor Credit Corp. notes 7 7/8s, 2010 372,766
EUR 35,000 Goodyear Tire & Rubber sr. unsub. notes 6 3/8s, 2005 33,390
EUR 170,000 Grohe Holding sr. notes 11 1/2s, 2010 (Germany) 210,646
GBP 100,000 Independent News Finance PLC company guaranty 9 1/4s,
2005 (United Kingdom) 156,783
EUR 100,000 Kaufman & Broad SA Ser. REGS, 8 3/4s, 2009 (France) 117,159
EUR 130,000 Lear Corp. sr. notes 8 1/8s, 2008 156,658
USD 80,000 Lennar Corp. notes 5.95s, 2013 84,853
USD 115,000 Levi Strauss & Co. 144A sr. notes 12 1/4s, 2012 96,600
USD 90,000 Masco Corp. notes 6 3/4s, 2006 99,961
USD 205,000 Pulte Homes, Inc. company guaranty 7 7/8s, 2011 239,360
USD 40,000 Visteon Corp. sr. notes 8 1/4s, 2010 41,571
GBP 100,000 Woolworths Group PLC sr. notes Ser. REGS, 8 3/4s,
2006 (United Kingdom) 164,055
GBP 140,000 Yell Finance B.V. sr. notes Ser. GBP, 10 3/4s, 2011 (Netherlands) 249,032
USD 120,000 Yell Finance B.V. sr. disc. notes stepped-coupon zero %
(13 1/2s, 8/1/06), 2011 (Netherlands) (STP) 95,700
-------------
3,575,060
Consumer Staples (2.5%)
- -------------------------------------------------------------------------------------------------------------------
EUR 80,000 Ahold Finance USA, Inc. company guaranty Ser. EMTN, 6 3/8s, 2005 74,982
USD 75,000 AOL Time Warner, Inc. notes 6 3/4s, 2011 81,427
USD 195,000 AOL Time Warner, Inc. notes 5 5/8s, 2005 205,386
USD 145,000 AT&T Corp. - Liberty Media Group debs. 8 1/4s, 2030 165,245
GBP 50,000 Big Food Group PLC sr. notes Ser. REGS, 9 3/4s,
2012 (United Kingdom) 71,919
EUR 130,000 Brake Bros. Finance, PLC sr. notes Ser. REGS, 11 1/2s,
2011 (United Kingdom) 151,581
GBP 40,000 Canandaigua Brand sr. notes Ser. CEUR, 8 1/2s, 2009 66,165
USD 150,000 Clear Channel Communications, Inc. sr. notes 5 3/4s, 2013 156,982
USD 340,000 Comcast Corp. company guaranty 5.85s, 2010 361,188
USD 110,000 ConAgra, Inc. notes 7 7/8s, 2010 133,521
USD 195,000 ConAgra, Inc. notes 6s, 2006 213,248
USD 280,000 Cox Enterprises, Inc. 144A notes 8s, 2007 318,845
USD 79,355 CVS Corp. 144A pass-through certificates 6.117s, 2013 86,060
USD 105,000 Diageo PLC notes 3 1/2s, 2007 (United Kingdom) 106,177
USD 120,000 Echostar DBS Corp. sr. notes 9 1/8s, 2009 134,400
GBP 95,000 EMI Group PLC company guaranty FRN 8 1/4s, 2008 (United Kingdom) 143,934
USD 65,000 Fred Meyer Inc. Holding Co. company guaranty 7.45s, 2008 74,374
USD 105,000 Johnson (SC) & Son, Inc. 144A bonds 5 3/4s, 2033 103,808
EUR 100,000 Kamps AG sr. notes Ser. REGS, 8 1/2s, 2009 (Germany) 118,442
USD 85,000 Kroger Co. company guaranty 6.8s, 2011 94,599
USD 55,000 Liberty Media Corp. debs. 8 1/2s, 2029 64,253
USD 250,000 News America Holdings, Inc. company guaranty 9 1/4s, 2013 319,304
USD 130,000 News America Holdings, Inc. company guaranty 7 3/8s, 2008 148,276
USD 100,000 News America, Inc. 144A bonds 6.55s, 2033 101,571
USD 40,000 News America, Inc. 144A notes 4 3/4s, 2010 38,434
USD 75,000 Premier International Foods PLC sr. notes 12s, 2009 (United Kingdom) 82,500
EUR 105,000 ProSiebenSat.1 Media AG sr. notes Ser. REGS, 11 1/4s, 2009 (Germany) 120,674
GBP 200,000 RHM Finance, Ltd. bonds stepped-coupon Ser. B1, 11 1/2s
(17 1/4s, 2/28/11), 2011 (Cayman Islands) (STP) 274,890
USD 120,000 Safeway, Inc. notes 7 1/2s, 2009 138,855
EUR 270,000 Sola International, Inc. sr. notes Ser. EUR, 11s, 2008 322,355
USD 145,000 Time Warner, Inc. notes 8.18s, 2007 165,127
USD 160,000 TM Group Holdings sr. notes 11s, 2008 (United Kingdom) 169,600
USD 155,000 Tyson Foods, Inc. notes 8 1/4s, 2011 179,793
USD 55,000 Tyson Foods, Inc. notes 7 1/4s, 2006 59,754
USD 70,000 Unilever Capital Corp. bonds 5.9s, 2032 73,748
EUR 120,000 United Biscuits Finance company guaranty 10 5/8s,
2011 (United Kingdom) 151,302
EUR 90,000 Vivendi Universal, SA sr. notes Ser. REGS, 9 1/2s, 2010 (France) 112,473
-------------
5,385,192
Energy (0.4%)
- -------------------------------------------------------------------------------------------------------------------
USD 390,000 Amerada Hess Corp. notes 7 1/8s, 2033 428,516
USD 60,000 Bluewater Finance, Ltd. 144A sr. notes 10 1/4s, 2012 61,800
EUR 125,000 Preem Holdings AB sec. notes 10 5/8s, 2011 (Sweden) 136,686
USD 170,000 Transocean Sedco Forex, Inc. notes 6 5/8s, 2011 193,096
-------------
820,098
Financial (15.4%)
- -------------------------------------------------------------------------------------------------------------------
USD 90,000 Allfirst Financial Inc. sub. notes 7.2s, 2007 102,328
USD 100,000 Allstate Corp. debs. 6 3/4s, 2018 113,012
USD 80,000 American Express Co. notes 5 1/2s, 2006 87,097
USD 740,000 ASIF Global Financing 144A notes 3.85s, 2007 757,454
EUR 4,500,000 Bank Nederlandse Gemeenten notes 4 5/8s, 2012 (Netherlands) 5,176,754
USD 85,000 Bank of New York Co., Inc. (The) sr. sub. notes FRN 3.4s, 2013 83,963
EUR 1,500,000 Bayerische Landesbank bonds Ser. 5, 5 1/4s, 2009 (Germany) 1,821,822
USD 35,000 Bear Stearns Cos., Inc. (The) notes 3s, 2006 35,620
USD 225,000 Boston Properties, Inc. 144A notes 6 1/4s, 2013 (R) 237,113
USD 95,000 CIT Group, Inc. sr. notes 5 1/2s, 2007 100,414
USD 270,000 CIT Group, Inc. sr. notes Ser. MTN, 6 7/8s, 2009 294,935
USD 150,000 Citigroup, Inc. debs. 6 5/8s, 2028 169,113
USD 630,000 Citigroup, Inc. sub. notes 7 1/4s, 2010 746,858
USD 170,000 Countrywide Home Loans, Inc. company guaranty Ser. J, 5 1/4s, 2004 176,663
EUR 12,300,000 Depfa ACS Bank sr. sec. public loan notes 3 1/4s, 2008 (Ireland) 13,669,443
USD 250,000 EOP Operating LP sr. notes 6 3/4s, 2008 280,193
USD 120,000 Executive Risk Capital Trust company guaranty Class B, 8.675s, 2027 137,267
USD 325,000 First Chicago NBD Corp. sub. notes 6 3/8s, 2009 374,513
USD 50,000 General Electric Capital Corp. notes Ser. A, 6 3/4s, 2032 57,859
USD 410,000 General Electric Capital Corp. notes Ser. A, 4 5/8s, 2009 429,657
USD 335,000 General Electric Capital Corp. notes Ser. A, 3.667s, 2006 341,291
USD 250,000 Goldman Sachs Group, Inc. (The) notes 6 1/8s, 2033 255,694
USD 250,000 Goldman Sachs Group, Inc. (The) notes 5 1/2s, 2014 260,776
USD 125,000 Goldman Sachs Group, Inc. (The) notes 4 1/8s, 2008 128,961
USD 100,000 Hospitality Properties Trust notes 6 3/4s, 2013 103,850
USD 125,000 Household Finance Corp. notes 6 3/8s, 2012 138,000
USD 120,000 HRPT Properties Trust notes 6 1/2s, 2013 (R) 127,475
USD 80,000 HSBC Capital Funding LP 144A bank guaranty FRN 9.547s, 2049 103,248
USD 300,000 HSBC Holdings PLC sub. notes Ser. (a), 5 1/4s, 2012 (United Kingdom) 313,724
USD 175,000 John Hancock Financial Svcs. Inc. sr. notes 5 5/8s, 2008 187,915
USD 2,959,600 JP Morgan HYDI 144A notes 8 3/4s, 2007 3,196,368
USD 270,000 JPMorgan Chase & Co. sr. notes 3 5/8s, 2008 271,037
USD 255,000 JPMorgan Chase & Co. sub. notes 5 3/4s, 2013 270,942
USD 475,000 Lehman Brothers Holdings, Inc. notes 4s, 2008 485,161
USD 310,000 Mack-Cali Realty LP notes 7 3/4s, 2011 (R) 360,590
USD 150,000 Merrill Lynch & Co., Inc. notes Ser. B, 7.08s, 2005 165,931
USD 90,000 Metlife, Inc. debs. 3.911s, 2005 93,275
USD 115,000 Morgan Stanley Tracers notes 4 1/4s, 2010 114,371
USD 515,000 NationsBank Corp. sub. notes 6 1/2s, 2006 569,717
USD 35,000 Nationwide Financial Services, Inc. notes 5 5/8s, 2015 35,586
USD 60,000 Nationwide Mutual Insurance Co. 144A notes 8 1/4s, 2031 68,961
USD 115,000 Principal Life Global Funding I 144A sec. notes 5 1/4s, 2013 117,533
USD 150,000 Prudential Funding, LLC 144A notes Ser. MTN, 6.6s, 2008 169,585
USD 50,000 Sovereign Bank sub. notes 5 1/8s, 2013 49,875
USD 85,000 State Street Capital Trust II FRN 1.869s, 2008 84,979
USD 40,000 Travelers Property Casualty Corp. 144A notes 3 3/4s, 2008 40,196
-------------
32,907,119
Government (2.0%)
- -------------------------------------------------------------------------------------------------------------------
CHF 700,000 European Investment Bank supranational bank bonds 3 1/2s,
2014 (Supra-Nation) 542,075
EUR 1,500,000 Norddeutsche Landesbank Girozentrale bonds Ser. 7, 5 3/4s,
2010 (Germany) 1,877,891
CHF 2,375,000 Oesterreichische Postsparkasse AG foreign government guaranty
Ser. EMTN, 3 1/4s, 2011 (Austria) 1,845,315
-------------
4,265,281
Health Care (0.7%)
- -------------------------------------------------------------------------------------------------------------------
USD 15,000 American Home Products Corp. FRN 6.7s, 2011 17,223
USD 190,000 American Home Products Corp. notes 7.9s, 2005 209,432
USD 50,000 Baxter International, Inc. 144A notes 4 5/8s, 2015 49,198
USD 75,000 Bayer Corp. 144A FRB 6.2s, 2008 79,528
EUR 90,000 Fresenius Finance BV company guaranty, 7 3/4s, 2009 (Netherlands) 104,439
EUR 160,000 Fresenius Medical company guaranty Ser. EUR, 7 3/8s, 2011 176,743
USD 70,000 HCA, Inc. notes 6 1/4s, 2013 72,264
USD 100,000 HCA, Inc. sr. notes 7 7/8s, 2011 112,547
EUR 160,000 NYCO Holdings sr. notes 11 1/2s, 2013 (Denmark) 181,206
DEM 560,000 Sirona Dental Systems sr. unsub. notes Ser. REGS, 9 1/8s,
2008 (Luxembourg) 325,869
USD 100,000 Tenet Healthcare Corp. notes 7 3/8s, 2013 98,750
-------------
1,427,199
Technology (0.2%)
- -------------------------------------------------------------------------------------------------------------------
USD 60,000 Fiserv, Inc. 144A notes 4s, 2008 60,886
USD 60,000 Hewlett-Packard Co. notes 3 5/8s, 2008 60,042
USD 170,000 IBM Canada Credit 144A company guaranty 3 3/4s, 2007 (Canada) 171,595
EUR 170,000 Xerox Capital Europe PLC company guaranty Ser. EMTN,
5 1/4s, 2004 (United Kingdom) 186,177
-------------
478,700
Transportation (0.6%)
- -------------------------------------------------------------------------------------------------------------------
EUR 140,000 CHC Helicopter Corp. company guaranty 11 3/4s, 2007 (Canada) 172,692
USD 250,000 CSX Corp. notes 6 1/4s, 2008 279,339
USD 205,000 CSX Corp. notes 4 7/8s, 2009 211,135
EUR 200,000 Fixed-Link Finance BV sec. notes FRN Ser. B2-X, 7.85s,
2009 (Netherlands) 201,179
USD 85,000 Norfolk Southern Corp. sr. notes 7 1/4s, 2031 99,425
USD 75,000 Stena AB sr. notes 9 5/8s, 2012 (Sweden) 82,500
USD 295,000 Union Pacific Corp. notes 6 5/8s, 2008 332,618
-------------
1,378,888
Utilities & Power (1.6%)
- -------------------------------------------------------------------------------------------------------------------
USD 40,000 AEP Texas Central Co. 144A notes 5 1/2s, 2013 41,686
USD 155,000 Alabama Power Co. sr. notes Ser. S, 5 7/8s, 2022 163,248
USD 20,000 American Electric Power Co., Inc. notes Ser. A, 6 1/8s, 2006 21,600
GBP 125,000 Avon Energy Partners Holding FRB 7 1/8s, 2006 (United Kingdom) 173,804
USD 345,000 Constellation Energy Group, Inc. sr. notes 6 1/8s, 2009 381,123
USD 20,000 DTE Energy Co. sr. notes 6 3/8s, 2033 20,611
USD 70,000 Duke Energy Field Services, LLC notes 8 1/8s, 2030 85,742
USD 10,000 Duke Energy Field Services, LLC notes 7 7/8s, 2010 11,684
USD 90,000 Duke Energy Field Services, LLC notes 5 3/4s, 2006 94,927
USD 175,000 Exelon Corp. sr. notes 6 3/4s, 2011 197,323
USD 70,000 Exelon Generation Co., LLC sr. notes 6.95s, 2011 78,470
USD 65,000 Florida Power Corp. 1st mtge. 4.8s, 2013 66,116
USD 120,000 Georgia Power Co. sr. notes Ser. G, 6.2s, 2006 132,131
USD 80,000 KeySpan Corp. notes 7 5/8s, 2010 96,619
USD 40,000 National Fuel Gas Co. notes 5 1/4s, 2013 40,429
USD 265,000 National Rural Utilities Cooperative Finance Corp. notes 6s, 2006 290,967
USD 50,000 National Rural Utilities Cooperative Finance Corp. notes 3 7/8s, 2008 50,883
USD 35,000 National Rural Utilities Cooperative Finance Corp. notes 3s, 2006 35,510
USD 185,000 Nisource Finance Corp. company guaranty 7 1/2s, 2003 190,763
USD 85,000 Northern States Power Co. mtge. Ser. B, 8s, 2012 105,152
USD 215,000 Oncor Electric Delivery Co. sec. notes 6 3/8s, 2012 240,486
USD 100,000 PP&L Capital Funding, Inc. company guaranty Ser. D, 8 3/8s, 2007 116,352
USD 50,000 Progress Energy, Inc. sr. notes 6 3/4s, 2006 55,152
USD 95,000 PSEG Power, LLC company guaranty 6.95s, 2012 108,389
USD 170,000 Public Service Electric & Gas Co. 1st mtge. FRN 6 3/8s, 2008 189,985
USD 150,000 Public Services Co. of Colorado sr. notes Ser. A, 6 7/8s, 2009 169,052
USD 130,000 Sempra Energy notes 7.95s, 2010 154,660
USD 100,000 Virginia Electric & Power Co. sr. notes 4 3/4s, 2013 101,298
USD 144,746 York Power Funding 144A notes 12s, 2007 (Cayman Islands)
(In default) (NON) 101,322
-------------
3,515,484
-------------
Total Corporate Bonds and Notes (cost $60,249,816) $63,392,047
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (13.7%) (a)
PRINCIPAL AMOUNT VALUE
U.S. Government and Agency Mortgage Obligations (12.0%)
- -------------------------------------------------------------------------------------------------------------------
$6,000,000 Federal Home Loan Mortgage Corporation TBA, 4 1/2s, May 1, 2018 $6,075,000
23,608 Federal National Mortgage Association Pass-Through Certificates 6s,
September 1, 2032 24,601
Federal National Mortgage Association TBA
434,685 6 1/2s, May 1, 2032 454,110
6,000,000 4 1/2s, May 1, 2018 6,071,250
Government National Mortgage Association Pass-Through Certificates
4,189,188 6 1/2s, with due dates from March 15, 2029 to August 15, 2032 4,406,618
168,248 6s, with due dates from April 15, 2026 to March 15, 2028 176,651
7,931,000 Government National Mortgage Association TBA, 6s, May 1, 2033 8,290,369
-------------
25,498,599
U.S. Treasury Obligations (1.7%)
- -------------------------------------------------------------------------------------------------------------------
11,170,000 U.S. Treasury Strip zero %, November 15, 2024 3,635,444
-------------
Total U.S. Government and Agency Obligations (cost $28,868,757) $29,134,043
COLLATERALIZED MORTGAGE OBLIGATIONS (11.5%) (a)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
$129,545 Arc Net Interest Margin Trust Ser. 02-5A, Class A, 7 3/4s, 2032 $128,711
Asset Securitization Corp.
318,300 Ser. 97-MD7, Class A1B, 7.41s, 2030 357,021
1,479,214 Ser. 95-MD4, Class A1, 7.1s, 2029 1,625,621
375,000 Ser. 96-MD6, Class A1C, 7.04s, 2029 415,898
223,120 Banc of America Commercial Mortgage, Inc. Ser. 00-2, Class A1,
7.02s, 2032 248,399
1,518,800 Bear Stearns Commercial Mortgage Securitization Corp. Ser. 02-TOP8,
Class X2, Interest Only (IO), 2.337s, 2038 176,341
717,608 Chase Manhattan Bank-First Union National Ser. 99-1, Class A1,
7.134s, 2031 792,819
340,000 Commercial Mortgage Acceptance Corp. Ser. 97-ML1, Class A3,
6.57s, 2007 374,903
$545,000 CS First Boston Mortgage Securities Corp. Ser. 98-C1, Class A1B,
6.48s, 2008 615,156
8,047,000 CS First Boston Mortgage Securities Corp. 144A Ser. 01-CK1,
Class ACP, IO, 1.03s, 2035 362,115
352,954 DLJ Commercial Mortgage Corp. Ser. 00-CKP1, Class A1A, 6.93s, 2009 390,408
Fannie Mae
1,226,794 Ser. 02-W4, Class A5, 7 1/2s, 2042 1,351,716
590,900 Ser. 01-T10, Class A2, 7 1/2s, 2041 651,070
563,881 Ser. 02-T4, Class A3, 7 1/2s, 2041 621,300
222,479 Ser. 02-T6, Class A2, 7 1/2s, 2041 245,134
411,885 Ser. 01-T12, Class A2, 7 1/2s, 2041 453,826
674,845 Ser. 01-T7, Class A1, 7 1/2s, 2041 743,563
72,563 Ser. 99-T2, Class A1, 7 1/2s, 2039 79,952
500,254 Ser. 00-T6, Class A1, 7 1/2s, 2030 551,194
36,422 Ser. 02-W3, Class A5, 7 1/2s, 2028 40,131
219,440 Ser. 02-T18, Class A3, 7s, 2042 238,467
2,113,968 Ser. 02-T16, Class A2, 7s, 2042 2,297,262
479,410 Ser. 329, Class 2, IO, 5.5s, 2032 99,627
4,162,235 Ser. 03-22, IO, 6s, 2033 694,573
68,646,694 Ser. 02-26, IO, 0.245s, 2048 471,946
219,500 Federal Home Loan Mortgage Corp. Structured Pass-Through
Securities Ser. T-42, Class A5, 7 1/2s, 2042 241,851
225,000 FFCA Secured Lending Corp. Ser. 99-1A, Class C1, 7.59s, 2025 222,115
1,805,000 First Union National Bank Commercial Mortgage 144A Ser. 02-C1, IO,
1.205s, 2034 105,248
342,470 First Union-Lehman Brothers Commercial Mortgage Trust II Ser. 97-C1,
Class A2, 7.3s, 2029 355,031
Freddie Mac
51,426 Ser. 2355, Class WI, IO, 6.5s, 2026 380
600,846 Ser. 2422, Class IB, IO, 6.5s, 2028 12,205
1,935,892 Ser. 2579, Class DI, IO, 5.5s, 2023 339,205
621,900 Ser. 2553, Class IJ, IO, 0.527s, 2020 56,554
GMAC Commercial Mortgage Securities, Inc.
490,000 Ser. 97-C2, Class A2, 6.55s, 2029 520,111
9,505,221 Ser. 99-C1, Class X, IO, 0.845s, 2033 307,435
GMAC Commercial Mortgage Securities, Inc. 144A
475,000 Ser. 02-C2, Class X2, IO, 1.7s, 2038 34,086
1,425,000 Ser. 02-C1, Class X2, IO, 1.133s, 2039 76,451
331,000 IStar Asset Receivables Trust Ser. 02-1A, Class E, 2.573s, 2020 330,599
JP Morgan Chase Commercial Mortgage Securities Corp. 144A
1,621,600 Ser. 02-C2, Class X2, IO, 1.305s, 2034 91,722
1,260,000 Ser. 02-C1, Class X2, IO, 1.71s, 2037 100,414
363,430 JP Morgan Commercial Mortgage Finance Corp. Ser. 00-C9, Class A1,
7.59s, 2032 398,865
665,745 LB Commercial Conduit Mortgage Trust Ser. 96-C2, Class A, 7.481s, 2026 702,361
LB-UBS Commercial Mortgage Trust
738,572 Ser. 00-C3, Class A1, 7.95s, 2009 837,238
581,332 Ser. 00-C4, Class A1, 7.18s, 2009 653,220
4,293,200 LB-UBS Commercial Mortgage Trust 144A Ser. 02-C4, Class XCP, IO,
1.695s, 2035 339,237
Merrill Lynch Mortgage Investors, Inc.
287,631 Ser. 99-C1, Class A1, 7.37s, 2031 312,135
337,727 Ser. 97-C1, Class A2, 7.03s, 2029 342,510
2,070,000 Merrill Lynch Mortgage Trust 144A Ser. 02-MW1, Class XP, IO,
1.915s, 2034 153,067
389,219 Morgan Stanley Capital I Ser. 98-CF1, Class A1, 6.33s, 2007 412,207
122,000 Morgan Stanley Dean Witter Capital I FRN Ser. 2002-NC5,
Class B2, 4.57s, 2032 103,294
1,404,000 Nomura Asset Securities Corp. Ser. 96-MD5, Class A1B, 7.12s, 2039 1,550,226
2,589,893 Prudential Mortgage Capital Funding, LLC 144A IO, 0.117s, 2034 103,041
1,000,000 Strategic Hotel Capital, Inc. 144A Ser. 03-1, Class H, 3.441s, 2013 1,000,000
Structured Asset Securities Corp.
100,000 FRN Ser. 03-AM1, Class B1, 4.81s, 2033 90,500
123,000 FRN Ser. 02-HF2, Class M3, 3.32s, 2032 104,608
2,663,182 Ser. 02-HF1, Class A, IO, 6s, 2005 130,000
448,623 TIAA Retail Commercial Mortgage Trust Ser. 99-1, Class A, 7.17s, 2032 494,131
-------------
Total Collateralized Mortgage Obligations (cost $24,545,871) $24,547,200
ASSET-BACKED SECURITIES (6.0%) (a)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
Ameriquest Mortgage Securities, Inc.
$122,000 FRN Ser. 02-4, Class M4, 5.055s, 2033 $103,406
126,000 FRN Ser. 03-1, Class M4, 4.4s, 2033 103,265
253,000 FRN Ser. 03-2, Class M4, 4.4s, 2033 207,359
126,000 FRN Ser. 02-C, Class M2, 3.67s, 2032 103,169
Amortizing Residential Collateral Trust
205,000 FRN Ser. 02-BC6, Class M2, 2.52s, 2032 197,977
122,000 FRN Ser. 02-BC7, Class B3, 3.32s, 2032 103,395
2,412,455 Ser. 02-BC1, Class A, IO, 6s, 2005 134,378
2,217,273 Ser. 02-BC3, Class A, IO, 6s, 2005 122,587
2,331,818 Ser. 02-BC4, Class A, IO, 6s, 2004 103,060
2,082,273 Ser. 02-BC6, Class A, IO, 6s, 2004 112,232
266,558 AQ Finance NIM Trust Ser. 03-N1, Class Note, 9.37s, 2033 266,552
445,908 AQ Finance NIM Trust 144A Ser. 03-N2, Class Note, 9.3s, 2033 445,908
Asset Backed Funding Certificates
96,025 Ser. 02-NC1, Class N1, 8.84s, 2032 95,545
42,000 FRN Ser. 03-WF1, Class M4, 4.57s, 2032 38,153
137,000 FRN Ser. 03-WF1, Class M3, 4.37s, 2032 137,000
Asset Backed Securities Corp. Home Equity Loan Trust
116,000 FRN Ser. 03-HE1, Class M4, 5.81s, 2033 103,453
246,000 FRN Ser. 03-HE2, Class M4, 5.15s, 2033 247,648
188,000 FRN Ser. 02-HE2, Class M2, 2.44s, 2032 182,889
376,000 Bank One Issuance Trust FRN Ser. 02-C1, Class C1, 2.27s, 2009 373,988
Bayview Financial Acquisition Trust
205,000 Ser. 02-CA, Class A, IO, 7.15s, 2004 13,581
12,254,000 Ser. 03-X, Class A1, IO, 1.52s, 2006 208,701
CDC Mortgage Capital Trust
121,000 FRN Ser. 02-HE3, Class B2, 5.32s, 2033 104,060
1,202,583 Ser. 02-HE2, Class A, IO, 5.25s, 2005 88,394
125,000 FRN Ser. 03-HE1, Class B2, 5.07s, 2033 103,863
Chase Funding Net Interest Margin
30,708 Ser. 02-1, Class Note, 8 1/2s, 2035 30,567
128,256 Ser. 02-2, Class Note, 8 1/2s, 2035 127,768
16,152 Ser. 02-C1, Class Note, 8 1/2s, 2035 16,073
Chase Funding Net Interest Margin 144A
152,649 Ser. 03-1A, Class Note, 8 3/4s, 2004 152,588
312,000 Ser. 03-2A, Class Note, 8 3/4s, 2035 310,830
64,558 Ser. 02-3, Class Note, 8 1/2s, 2035 64,371
Conseco Finance Securitizations Corp.
423,000 Ser. 00-2, Class A4, 8.48s, 2021 447,712
565,429 Ser. 02-2, Class A, IO, 8.5s, 2033 181,744
Conseco Finance Securitizations Corp.
1,263,167 Ser. 02-C, Class AF, IO, 7.5s, 2032 110,923
715,982 Ser. 02-C, Class AV, IO, 7.5s, 2032 64,529
CS First Boston Mortgage Securities Corp.
121,000 FRN Ser. 02-3, Class B2, 4.57s, 2033 103,648
211,000 FRN Ser. 02-1, Class M2, 2.72s, 2032 196,289
120,000 FRN Ser. 02-2, Class M2, 2.67s, 2032 117,705
1,275,000 Green Tree Financial Corp. Ser. 99-5, Class A5, 7.86s, 2031 1,150,796
476,109 Greenpoint Manufactured Housing Ser. 00-3, Class IA, 8.45s, 2031 476,704
67,000 GSAMP Trust FRN Ser. 03-FM1, Class B3, 5.83s, 2033 62,511
48,917 Home Equity Asset Trust Ser. 02-1N, Class A, 8s, 2032 47,694
312,000 Home Equity Asset Trust 144A Ser. 02-5N, Class A, 8s, 2033 306,540
300,000 LNR CDO, Ltd. Ser. 02-1A, Class FFL, 4.589s, 2037 272,647
252,000 Long Beach Asset Holdings Corp. 144A Ser. 03-2, Class N1, 7.627s, 2033 252,000
2,700,000 Long Beach Mortgage Loan Trust Ser. 03-1, Class S2, IO, 4.25s, 2004 129,722
65,000 Mastr Asset Backed Securities Trust FRN Ser. 03-OPT1, Class MV5,
4.82s, 2032 55,555
216,000 Merrill Lynch Mortgage Investors, Inc. FRN Ser. 03-WMC1, Class B2,
4.32s, 2033 183,836
Morgan Stanley Capital I
1,200,000 FRN Ser. 03-NC3, Class B3, 5.07s, 2033 1,037,524
107,000 FRN Ser. 02-NC6, Class B2, 5.07s, 2032 96,597
120,000 Ser. 02-HE3, Class B2, 6s, 2032 102,772
Morgan Stanley Dean Witter Capital I
119,000 FRN Ser. 02-AM3, Class B2, 5.07s, 2033 103,478
121,000 FRN Ser. 03-NC2, Class B2, 5.07s, 2033 103,704
124,000 FRN Ser. 03-NC1, Class B2, 4.32s, 2032 103,169
111,000 FRN Ser. 01-NC3, Class B1, 3.77s, 2031 102,313
130,000 FRN Ser. 02-AM2, Class B1, 3.57s, 2032 112,140
111,000 FRN Ser. 01-AM1, Class B1, 3.52s, 2032 103,380
305,000 FRN Ser. 02-HE1, Class B1, 3.12s, 2032 282,388
118,000 Option One Mortgage Loan Trust FRN Ser. 03-3, Class M6, 4.83s, 2033 102,589
102,900 Option One Mortgage Securities Corp. NIM Trust 144A Ser. 03-2B,
Class N1, 7.63s, 2033 (Cayman Islands) 102,900
250,655 Pass-Through Amortizing Credit Card Trust Ser. 02-1A, Class A3FL,
4.32s, 2012 249,715
2,844,444 Residential Asset Mortgage Products, Inc. Ser. 02-RZ3, Class A, IO,
5.75s, 2005 194,222
980,000 Residential Asset Securities Corp. Ser. 02-KS6, Class A, IO, 4.5s, 2005 39,075
297,884 Sasco Arc Net Interest Margin Notes 144A Ser. 03-BC2A, Class A,
7 3/4s, 2033 297,018
Structured Asset Investment Loan Trust
108,000 Ser. 03-BC2, Class B, 7s, 2033 103,039
5,002,000 Ser. 03-BC2, Class A, IO, 6s, 2005 378,805
114,000 FRN Ser. 03-BC3, Class B, 4.815s, 2033 104,346
291,000 Ser. 03-BC1, Class M3, 4.305s, 2033 285,395
188,000 TIAA Commercial Real Estate Securitization FRN Ser. 02-1A, Class III,
7.6s, 2037 204,018
-------------
Total Asset-Backed Securities (cost $13,145,768) $12,771,902
CONVERTIBLE BONDS AND NOTES (0.2%) (a)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
EUR 30,000 Colt Telecommunications Group PLC cv. bonds 2s,
2006 (United Kingdom) $22,428
EUR 120,000 Colt Telecommunications Group PLC cv. notes 2s,
2007 (United Kingdom) 88,371
USD 100,000 Fiat Finance Lux, Ltd. SA cv. company guaranty 3 1/4s,
2007 (Luxembourg) 94,500
EUR 30,000 Getronics NV cv. sub. bonds 0.25s, 2005 (Netherlands) 28,118
EUR 85,000 Getronics NV cv. sub. bonds 0.25s, 2004 (Netherlands) 89,674
EUR 135,000 Modern Times Group AB cv. sub. bonds 5 1/2s, 2006 (Sweden) 134,063
USD 75,000 Tower Automotive, Inc. cv. sub. notes 5s, 2004 68,344
-------------
Total Convertible Bonds and Notes (cost $498,410) $525,498
COMMON STOCKS (0.1%) (a)
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
202,065 Contifinancial Corp. Liquidating Trust Units $4,041
1,167 Jasper Energy 144A (NON) 73
113 PSF Group Holdings, Inc. 144A Class A (NON) 198,223
239 York Research Corp. 144A (NON) 15
-------------
Total Common Stocks (cost $515,228 ) $202,352
WARRANTS (--%) (a) (NON) (cost $4,500) EXPIRATION
NUMBER OF WARRANTS DATE VALUE
- -------------------------------------------------------------------------------------------------------------------
225 Versatel Telecom NV (Netherlands) 5/15/08 $1
SHORT-TERM INVESTMENTS (12.2%) (a)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
$25,443,333 Short-term investments held in Putnam commingled cash account
with yields ranging from 1.18% to 2.625% and due dates ranging
from May 1, 2003 to June 16, 2003 (d) $25,443,333
655,000 U.S. Treasury Bill zero %, May 8, 2003 (SEG) 654,854
-------------
Total Short-Term Investments (cost $26,098,187) $26,098,187
- -------------------------------------------------------------------------------------------------------------------
Total Investments (cost $220,338,616) $230,596,928
- -------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $213,177,317.
(NON) Non-income-producing security.
(STP) The interest rate and date shown parenthetically represent the new
interest rate to be paid and the date the fund will begin accruing
interest at this rate.
(SEG) This security was pledged and segregated with the custodian to
cover margin requirements for futures contracts at April 30, 2003.
(R) Real Estate Investment Trust.
(d) See Note 1 to the financial statements.
144A after the name of a security represents those exempt from
registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
TBA after the name of a security represents to be announced
securities (Note 1).
The rates shown on Floating Rate Bonds (FRB) and Floating Rate
Notes (FRN) are the current interest rates shown at April 30, 2003,
which are subject to change based on the terms of the security.
DIVERSIFICATION BY COUNTRY
Distribution of investments by country of issue at April 30, 2003: (as a percentage of Market Value)
Austria 1.8%
Canada 5.9
Denmark 0.8
Germany 13.2
Ireland 6.0
Italy 0.6
Netherlands 3.1
New Zealand 4.1
Spain 0.5
Sweden 1.9
United Kingdom 8.0
United States 41.8
Other 12.3
-----
Total 100.0%
- ------------------------------------------------------------------------------
Forward Currency Contracts to Buy at April 30, 2003 (Unaudited)
(aggregate face value $81,870,852)
Unrealized
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
- ------------------------------------------------------------------------------
Australian Dollars $8,643,267 $8,287,407 6/18/03 $355,860
British Pounds 13,103,481 12,906,972 6/18/03 196,509
Canadian Dollars 3,327,615 3,229,738 6/18/03 97,877
Euro 10,375,785 10,022,537 6/18/03 353,248
Japanese Yen 37,247,435 37,787,776 6/18/03 (540,341)
Korean Won 2,352,891 2,357,124 6/18/03 (4,233)
New Zealand
Dollars 917,220 918,772 6/18/03 (1,552)
Norwegian Krone 2,494,979 2,445,098 6/18/03 49,881
Swedish Krona 688,384 655,088 6/18/03 33,296
Swiss Francs 3,302,857 3,260,340 6/18/03 42,517
- ------------------------------------------------------------------------------
$583,062
- ------------------------------------------------------------------------------
Forward Currency Contracts to Sell at April 30, 2003 (Unaudited)
(aggregate face value $53,985,699)
Unrealized
Market Aggregate Face Delivery Appreciation/
Value Value Date (Depreciation)
- ------------------------------------------------------------------------------
Australian Dollars $589,641 $561,251 6/18/03 $(28,390)
British Pounds 14,751,810 14,534,653 6/18/03 (217,157)
Canadian Dollars 1,703,249 1,645,575 6/18/03 (57,674)
Danish Krone 673,065 653,684 6/18/03 (19,381)
Euro 8,277,148 8,029,325 6/18/03 (247,823)
Japanese Yen 3,495,009 3,486,424 6/18/03 (8,585)
New Zealand
Dollars 12,531,847 12,531,440 6/18/03 (407)
Norwegian Krone 2,130,281 2,066,238 6/18/03 (64,043)
Swedish Krona 1,117,799 1,086,093 6/18/03 (31,706)
Swiss Francs 9,380,204 9,391,016 6/18/03 10,812
- ------------------------------------------------------------------------------
$(664,354)
- ------------------------------------------------------------------------------
Futures Contracts Outstanding at April 30, 2003 (Unaudited)
Unrealized
Market Aggregate Face Expiration Appreciation/
Value Value Date (Depreciation)
- ------------------------------------------------------------------------------
Euro 90 day (Long) $3,211,813 $3,095,518 Sep-03 $116,295
Euro 90 day
(Short) 3,210,838 3,116,045 Jun-03 (94,793)
Euro-Bobl 5 yr
(Long) 6,485,074 6,530,006 Jun-03 (44,932)
Euro-Bund 10 yr
(Short) 5,508,035 5,467,432 Jun-03 (40,603)
Japanese
Government Bond
10 yr (Long) 13,242,620 13,144,327 Jun-03 98,293
U.S. Treasury Bond
20 yr (Long) 4,105,125 4,044,140 Jun-03 60,985
U.S. Treasury Note
5 yr (Short) 3,640,000 3,622,266 Jun-03 (17,734)
U.S. Treasury Note
10 yr (Short) 29,011,500 28,929,199 Jun-03 (82,301)
- ------------------------------------------------------------------------------
$(4,790)
- ------------------------------------------------------------------------------
TBA Sale Commitments Outstanding at April 30, 2003 (Unaudited)
(proceeds receivable $6,063,969)
Principal Settlement Market
Agency Amount Date Value
- ------------------------------------------------------------------------------
FNMA, 4 1/2s, May
1, 2018 $6,000,000 5/19/03 $6,071,250
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Credit Default Contracts Outstanding at April 30, 2003 (Unaudited)
(premiums received $543,117)
Notional Market
Amount Value
- ------------------------------------------------------------------------------
Agreement with
JPMorgan Chase
Bank effective
October 8, 2002,
maturing on
October 2, 2007,
to receive a
premium equal to
4.691% times the
notional amount.
For each credit
default event
related to one of
the 100 issues
within the JECI
100 Float,
10/2/07 Bond
Index, the fund
makes a payment
of the
proportional
notional amount
times the
difference
between the par
value and the
then-market value
of the defaulted
issue. $2,850,000 $67,735
Agreement with
JPMorgan Chase
Bank effective
July 3, 2002,
maturing on March
28, 2007, to
receive a premium
equal to 4.156%
times the
notional amount.
For each credit
default event
related to one of
the 100 issues
within the JECI
100 Float,
3/28/07 Bond
Index, the fund
makes a payment
of the
proportional
notional amount
times the
difference
between the par
value and the
then-market value
of the defaulted
issue. 3,000,000 100,422
Agreement with
JPMorgan Chase
Bank effective
July 19, 2002,
maturing on March
28, 2007, to
receive a premium
equal to 4.062%
times the
notional amount.
For each credit
default event
related to one of
the 100 issues
within the JECI
100 Float,
3/28/07 Bond
Index, the fund
makes a payment
of the
proportional
notional amount
times the
difference
between the par
value and the
then-market value
of the defaulted
issue. 2,000,000 66,948
Agreement with
JPMorgan Chase
Bank effective
September 27,
2002, maturing on
March 28, 2007,
to receive a
premium equal to
5.218% times the
notional amount.
For each credit
default event
related to one of
the 100 issues
within the JECI
100 Float,
3/28/07 Bond
Index, the fund
makes a payment
of the
proportional
notional amount
times the
difference
between the par
value and the
then-market value
of the defaulted
issue. 3,900,000 130,548
- ------------------------------------------------------------------------------
$365,653
- ------------------------------------------------------------------------------
Swap Contracts Outstanding at April 30, 2003 (Unaudited)
Unrealized
Notional Termination Appreciation/
Amount Date (Depreciation)
- ------------------------------------------------------------------------------
Agreement with
Goldman Sachs
Capital Markets,
L.P. dated
February 12, 2003
to pay quarterly
the notional
amount multiplied
by the three
month CAD-BA-CDOR
and receive
semiannually the
notional amount
multiplied by
3.5076%. CAD 16,802,500 2/14/05 $687,992
Agreement with
Goldman Sachs
Capital Markets,
L.P. dated
November 8, 2002
to pay at
maturity the
notional amount
multiplied by the
six month
USD-LIBOR-BBA
plus a specified
spread and
receive (pay) at
maturity the
notional amount
multiplied by the
change in net
asset value of
the ishares GS
InvesTop
Corporate Bond
Fund. $1,516,314 5/13/03 61,771
Agreement with
Goldman Sachs
Capital Markets,
L.P. dated
February 12, 2003
to receive
quarterly the
notional amount
multiplied by the
three month
USD-LIBOR-BBA and
pay semiannually
the notional
amount multiplied
by 1.59%. 11,000,000 2/14/05 (56,100)
Agreement with
Merrill Lynch
Capital Services,
Inc. dated
September 27,
2002 to receive
semiannually the
notional amount
multiplied by the
six month
JPY-LIBOR-BBA and
pay monthly the
notional amount
multiplied by
0.399%. JPY 1,135,000,00 10/1/07 212,847
Agreement with
Lehman Brothers
Special
Financing, Inc.
dated May 31,
2002 to receive
(pay) monthly the
notional amount
multiplied by the
return of the
Lehman Brothers
U.S. Credit Index
and pay monthly
the notional
amount multiplied
by the one month
USD-LIBOR-BBA
adjusted by a
specified spread. $5,495,780 6/1/03 75,232
- ------------------------------------------------------------------------------
$981,742
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2003 (Unaudited)
Assets
- -------------------------------------------------------------------------------------------
Investments in securities, at value (identified cost
$220,338,616) (Note 1) $230,596,928
- -------------------------------------------------------------------------------------------
Cash 260,751
- -------------------------------------------------------------------------------------------
Foreign currency (cost $1,459,986) (Note 1) 1,526,068
- -------------------------------------------------------------------------------------------
Dividends, interest and other receivables 2,819,083
- -------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 869,812
- -------------------------------------------------------------------------------------------
Receivable for securities sold 6,853,360
- -------------------------------------------------------------------------------------------
Receivable for open forward currency contracts (Note 1) 1,150,695
- -------------------------------------------------------------------------------------------
Receivable for closed forward currency contracts (Note 1) 256,076
- -------------------------------------------------------------------------------------------
Receivable for open swap contracts (Note 1) 1,037,842
- -------------------------------------------------------------------------------------------
Total assets 245,370,615
Liabilities
- -------------------------------------------------------------------------------------------
Payable for variation margin (Note 1) 122,682
- -------------------------------------------------------------------------------------------
Payable for securities purchased 21,932,460
- -------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 663,457
- -------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 347,921
- -------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 50,867
- -------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 50,951
- -------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 860
- -------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 76,289
- -------------------------------------------------------------------------------------------
Payable for open forward currency contracts (Note 1) 1,231,987
- -------------------------------------------------------------------------------------------
Payable for closed forward currency contracts (Note 1) 1,169,927
- -------------------------------------------------------------------------------------------
Credit default contracts outstanding, at value (premiums
received $543,117) (Note 1) 365,653
- -------------------------------------------------------------------------------------------
TBA sale commitments, at value (proceeds receivable $6,063,969)
(Note 1) 6,071,250
- -------------------------------------------------------------------------------------------
Payable for open swap contracts (Note 1) 56,100
- -------------------------------------------------------------------------------------------
Other accrued expenses 52,894
- -------------------------------------------------------------------------------------------
Total liabilities 32,193,298
- -------------------------------------------------------------------------------------------
Net assets $213,177,317
Represented by
- -------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $259,010,631
- -------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 1,524,338
- -------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (Note 1) (57,687,018)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 10,329,366
- -------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to capital shares
outstanding $213,177,317
Computation of net asset value and offering price
- -------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($130,739,945 divided by 10,625,399 shares) $12.30
- -------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $12.30)* $12.91
- -------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($40,228,715 divided by 3,279,605 shares)** $12.27
- -------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($1,904,471 divided by 155,095 shares)** $12.28
- -------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($40,304,186 divided by 3,294,302 shares) $12.23
- -------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $12.23)* $12.64
- -------------------------------------------------------------------------------------------
* 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.
STATEMENT OF OPERATIONS
Six months ended April 30, 2003 (Unaudited)
Investment income:
- -------------------------------------------------------------------------------------------
Interest $4,759,576
- -------------------------------------------------------------------------------------------
Dividends 111,364
- -------------------------------------------------------------------------------------------
Total investment income 4,870,940
Expenses:
- -------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 665,654
- -------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 228,141
- -------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 8,697
- -------------------------------------------------------------------------------------------
Administrative services (Note 2) 5,229
- -------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 141,652
- -------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 172,545
- -------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 7,004
- -------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 102,213
- -------------------------------------------------------------------------------------------
Other 92,795
- -------------------------------------------------------------------------------------------
Total expenses 1,423,930
- -------------------------------------------------------------------------------------------
Expense reduction (Note 2) (6,577)
- -------------------------------------------------------------------------------------------
Net expenses 1,417,353
- -------------------------------------------------------------------------------------------
Net investment income 3,453,587
- -------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 8,975,215
- -------------------------------------------------------------------------------------------
Net realized gain on swap contracts (Note 1) 194,440
- -------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (1,448,505)
- -------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (2,096,339)
- -------------------------------------------------------------------------------------------
Net realized loss on credit default contracts (Note 1) (255,295)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of assets and liabilities in foreign
currencies during the period 528,293
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investments, futures contracts, swap contracts,
credit default contracts and TBA sale commitments during the period 8,179,088
- -------------------------------------------------------------------------------------------
Net gain on investments 14,076,897
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $17,530,484
- -------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS
Six months ended Year ended
April 30 October 31
2003* 2002
- -------------------------------------------------------------------------------------------------------
Increase in net assets
- -------------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------------
Net investment income $3,453,587 $6,183,273
- -------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign
currency transactions 5,369,516 (431,418)
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments
and assets and liabilities in foreign currencies 8,707,381 5,116,376
- -------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 17,530,484 10,868,231
- -------------------------------------------------------------------------------------------------------
Distributions to shareholders: (Note 1)
- -------------------------------------------------------------------------------------------------------
From net investment income
Class A (2,171,924) (3,643,051)
- -------------------------------------------------------------------------------------------------------
Class B (539,681) (707,597)
- -------------------------------------------------------------------------------------------------------
Class C (22,744) (21,828)
- -------------------------------------------------------------------------------------------------------
Class M (727,246) (1,900,708)
- -------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 25,735,935 15,664,754
- -------------------------------------------------------------------------------------------------------
Total increase in net assets 39,804,824 20,259,801
Net assets
- -------------------------------------------------------------------------------------------------------
Beginning of period 173,372,493 153,112,692
- -------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income
of $1,524,338 and $1,532,346, respectively) $213,177,317 $173,372,493
- -------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share April 30
operating performance (Unaudited) Year ended October 31
- ------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.39 $10.97 $10.77 $11.91 $12.82 $13.94
- ------------------------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------------------------
Net investment income (a) .23 .46 .58 .63 .62 .77
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .91 .43 .23 (1.12) (.72) (.95)
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.14 .89 .81 (.49) (.10) (.18)
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income (.23) (.47) (.16) -- (.72) (.47)
- ------------------------------------------------------------------------------------------------------------------
From return of capital -- -- (.45) (.65) (.09) (.47)
- ------------------------------------------------------------------------------------------------------------------
Total distributions (.23) (.47) (.61) (.65) (.81) (.94)
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.30 $11.39 $10.97 $10.77 $11.91 $12.82
- ------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 10.05* 8.35 7.63 (4.24) (.85) (1.14)
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $130,740 $99,140 $82,093 $91,173 $132,600 $253,611
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .65* 1.29 1.24 1.19 1.21 1.26
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.89* 4.21 5.32 5.57 5.02 5.90
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 102.80* 331.06 (d) 292.73 (d) 301.44 290.27 561.48
- ------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) Portfolio turnover excludes certain treasury note transactions
executed in connection with a short-term trading strategy.
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share April 30
operating performance (Unaudited) Year ended October 31
- ------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.36 $10.94 $10.74 $11.88 $12.79 $13.90
- ------------------------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------------------------
Net investment income (a) .18 .38 .50 .54 .55 .67
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .91 .43 .22 (1.12) (.74) (.94)
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.09 .81 .72 (.58) (.19) (.27)
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income (.18) (.39) (.13) -- (.64) (.42)
- ------------------------------------------------------------------------------------------------------------------
From return of capital -- -- (.39) (.56) (.08) (.42)
- ------------------------------------------------------------------------------------------------------------------
Total distributions (.18) (.39) (.52) (.56) (.72) (.84)
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.27 $11.36 $10.94 $10.74 $11.88 $12.79
- ------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 9.68* 7.60 6.85 (4.98) (1.58) (1.87)
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $40,229 $29,498 $18,123 $21,293 $30,310 $36,017
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.02* 2.04 1.99 1.94 1.96 2.01
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.51* 3.33 4.58 4.83 4.26 5.17
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 102.80* 331.06 (d) 292.73 (d) 301.44 290.27 561.48
- ------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) Portfolio turnover excludes certain treasury note transactions
executed in connection with a short-term trading strategy.
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS C
- -----------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share April 30 July 26, 1999+
operating performance (Unaudited) Year ended October 31 to October 31
- -----------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.37 $10.96 $10.75 $11.91 $12.05
- -----------------------------------------------------------------------------------------------------
Investment operations:
- -----------------------------------------------------------------------------------------------------
Net investment income (a) .18 .37 .49 .55 .14
- -----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .91 .43 .24 (1.14) (.10)
- -----------------------------------------------------------------------------------------------------
Total from
investment operations 1.09 .80 .73 (.59) .04
- -----------------------------------------------------------------------------------------------------
Less distributions:
- -----------------------------------------------------------------------------------------------------
From net
investment income (.18) (.39) (.13) -- (.16)
- -----------------------------------------------------------------------------------------------------
From return of capital -- -- (.39) (.57) (.02)
- -----------------------------------------------------------------------------------------------------
Total distributions (.18) (.39) (.52) (.57) (.18)
- -----------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.28 $11.37 $10.96 $10.75 $11.91
- -----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 9.69* 7.48 6.94 (5.07) .37*
- -----------------------------------------------------------------------------------------------------
Ratios and supplemental data
- -----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,904 $1,048 $415 $298 $50
- -----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.02* 2.04 1.99 1.94 .53*
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.49* 3.22 4.52 4.93 1.29*
- -----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 102.80* 331.06 (d) 292.73 (d) 301.44 290.27
- -----------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized
(a) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) Portfolio turnover excludes certain treasury note transactions
executed in connection with a short-term trading strategy.
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share April 30
operating performance (Unaudited) Year ended October 31
- ------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $11.33 $10.91 $10.72 $11.86 $12.77 $13.89
- ------------------------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------------------------
Net investment income (a) .21 .44 .57 .60 .59 .76
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .90 .42 .20 (1.12) (.72) (.95)
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.11 .86 .77 (.52) (.13) (.19)
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income (.21) (.44) (.15) -- (.69) (.46)
- ------------------------------------------------------------------------------------------------------------------
From return of capital -- -- (.43) (.62) (.09) (.47)
- ------------------------------------------------------------------------------------------------------------------
Total distributions (.21) (.44) (.58) (.62) (.78) (.93)
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.23 $11.33 $10.91 $10.72 $11.86 $12.77
- ------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 9.87* 8.16 7.31 (4.49) (1.10) (1.28)
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $40,304 $43,686 $52,481 $107,329 $201,429 $213,868
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .77* 1.54 1.49 1.44 1.46 1.51
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 1.79* 4.02 5.18 5.31 4.76 5.55
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 102.80* 331.06 (d) 292.73 (d) 301.44 290.27 561.48
- ------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income has been determined on the basis
of the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements (Note 2).
(d) Portfolio turnover excludes certain treasury note transactions
executed in connection with a short-term trading strategy.
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
Note 1
Significant accounting policies
Putnam Global Income Trust (the "fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified,
open-end management investment company. The fund seeks high current
income by investing primarily in debt securities of foreign or U.S.
government entities, including supranational issuers. The fund's
secondary objectives are preservation of capital and long-term total
return but only to extent that these are consistent with high current
income.
The fund offers class A, class B, class C and class M shares. Class A
shares are sold with a maximum front-end sales charge of 4.75%. Class B
shares, which convert to class A shares after approximately eight years,
do not pay a front-end sales charge but pay a higher ongoing
distribution fee than class A and class M shares, and are subject to a
contingent deferred sales charge, if those shares are redeemed within
six years of purchase. Class C shares are subject to the same fees and
expenses as class B shares, except that class C shares have a one-year
1.00% contingent deferred sales charge and do not convert to class A
shares. Class M shares are sold with a maximum front-end sales charge of
3.25% and pay an ongoing distribution fee that is higher than class A
shares but lower than class B and class C shares.
A redemption fee of 1.00%, which is retained by the fund, may apply to
shares of any class redeemed (either by selling or exchanging to another
fund) within 90 days of purchase.
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 fund may be subject to certain risks associated with
international investing such as currency fluctuations, economic
instability and political developments. The preparation of financial
statements is in conformity with accounting principles generally
accepted in the United States of America and requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and the reported amounts of
increases and decreases in net assets from operations during the
reporting period. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are valued at the last reported sales price on its
principal exchange, or official closing price for certain markets. If no
sales are reported -- as in the case of some securities traded
over-the-counter -- a security is valued at its last reported bid price.
Market quotations are not considered to be readily available for certain
debt obligations; such investments are valued at market value on the
basis of valuations furnished by an independent pricing service or
dealers, approved by the Trustees. Such services or dealers determine
valuations for normal institutional-size trading units of such
securities using methods based on market transactions for comparable
securities and various relationships, generally recognized by
institutional traders, between securities. For foreign investments, if
trading or events occurring in other markets after the close of the
principal exchange in which the securities are traded are expected to
materially affect the value of the investments, then those investments
are valued, taking into consideration these events, at their fair value
following procedures approved by the Trustees. 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 valued at amortized cost, which approximates fair
value. Other investments, including restricted securities, are valued at
fair value following procedures approved by the Trustees.
B) Joint trading account The fund may transfer uninvested cash balances,
including cash collateral received under security lending arrangements,
into a joint trading account along with the cash of other registered
investment companies and certain other accounts managed by Putnam
Investment Management, LLC ("Putnam Management"), the fund's manager, an
indirect wholly-owned subsidiary of Putnam, LLC. These balances may be
invested in issuers of high-grade short-term investments having
maturities of up to 397 days for collateral received under security
lending arrangements and up to 90 days for other cash investments.
C) Security transactions and related investment income Security
transactions are recorded on the trade date (date the order to buy or
sell is executed). Gains or losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income is
recognized on the ex-dividend date. Non-cash dividends, if any, are
recorded at the fair market value of the securities received. All
premiums/discounts are amortized/accreted on a yield-to-maturity basis.
D) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies, currency gains and losses realized
between the trade and settlement dates on securities transactions and
the difference between the amount of investment income and foreign
withholding taxes recorded on the fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized
appreciation and depreciation of assets and liabilities in foreign
currencies arise from changes in the value of open forward currency
contracts and assets and liabilities other than investments at the
period end, resulting from changes in the exchange rate. Investments in
foreign securities involve certain risks, including those related to
economic instability, unfavorable political developments, and currency
fluctuations, not present with domestic investments.
E) Forward currency contracts The fund may buy and sell forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date. These contracts are used to
protect against a decline in value relative to the U.S. dollar of the
currencies in which its portfolio securities are denominated or quoted
(or an increase in the value of a currency in which securities a fund
intends to buy are denominated, when a fund holds cash reserves and
short term investments). The U.S. dollar value of forward currency
contracts is determined using current forward currency exchange rates
supplied by a quotation service. The market value of the contract will
fluctuate with changes in currency exchange rates. The contract is
marked to market daily and the change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. The fund could be exposed to risk if the value of the currency
changes unfavorably, if the counterparties to the contracts are unable
to meet the terms of their contracts or if the fund is unable to enter
into a closing position. Forward currency contracts outstanding at
period end are listed after The fund's portfolio.
F) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The fund and the broker
agree to exchange an amount of cash equal to the daily fluctuation in
the value of the futures contract. Such receipts or payments are known
as "variation margin." Exchange traded options are valued at the last
sale price, or if no sales are reported, the last bid price for
purchased options and the last ask price for written options.
Options traded over-the-counter are valued using prices supplied by
dealers. Futures and written option contracts outstanding at period end
are listed after The fund's portfolio.
G) Total return swap contracts The fund may engage in total return swap
contracts, which are arrangements to exchange a market linked return for
an interest payment, both based on a notional principal amount. To the
extent that the total return of the security or index underlying the
transaction exceeds or falls short of the offsetting interest rate
obligation, the fund will receive a payment from or make a payment to
the counterparty, respectively. Total return swap contracts are marked
to market daily based upon quotations from market makers and the change,
if any, is recorded as unrealized gain or loss. Payments received or
made at the end of the measurement period are recorded as realized gains
or losses. The fund could be exposed to credit or market risk due to
unfavorable changes in the fluctuation of interest rates or in the price
of the underlying security or index, the possibility that there is no
liquid market for these agreements or that the counterparty may default
on its obligation to perform. Total return swap contracts outstanding at
period end are listed after The fund's portfolio.
H) Interest rate swap contracts The fund may enter into interest rate
swap contracts, which are arrangements between two parties to exchange
cash flows based on a notional principal amount, to manage the fund's
exposure to interest rates. Interest rate swap contracts are marked to
market daily based upon quotations from market makers and the change, if
any, is recorded as unrealized gain or loss. Payments made or received
are recognized as part of interest income. A portion of the payments
received or made upon early termination are recognized as realized gain
or loss. The fund could be exposed to credit or market risk due to
unfavorable changes in the fluctuation of interest rates or if the
counterparty defaults on its obligation to perform. Interest rate swap
contracts outstanding at period end are listed after The fund's
portfolio.
I) Credit default contracts The fund may enter into credit default
contracts where one party, the protection buyer, makes an upfront
payment to a counter party, the protection seller, in exchange for the
right to receive a contingent payment as a result of a credit event
related to a specified security or index. The upfront payment received
by the fund, as the protection seller, is recorded as a liability on the
fund's books. The credit default contracts are marked to market daily
based upon quotations from market makers and the change, if any, is
recorded as unrealized gain or loss. Payments received or made as a
result of a credit event or termination of the contract are recognized,
net of a proportional amount of the upfront payment, as realized gains
or losses. In addition to bearing the risk that the credit event will
occur, the fund could be exposed to market risk due to unfavorable
changes in interest rates or in the price of the underlying security or
index, the possibility that the fund may be unable to close out its
position at the same time or at the same price as if it had purchased
comparable publicly traded securities or that the counterparty may
default on its obligation to perform. Credit default contracts
outstanding at period end are listed after The fund's portfolio.
J) TBA purchase commitments The fund may enter into "TBA" (to be
announced) commitments to purchase securities for a fixed unit price at
a future date beyond customary settlement time. Although the unit price
has been established, the principal value has not been finalized.
However, the amount of the commitments will not significantly differ
from the principal amount. The fund holds, and maintains until
settlement date, cash or high-grade debt obligations in an amount
sufficient to meet the purchase price, or the fund may enter into
offsetting contracts for the forward sale of other securities it owns.
Income on the securities will not be earned until settlement date. TBA
purchase commitments may be considered securities themselves, and
involve a risk of loss if the value of the security to be purchased
declines prior to the settlement date, which risk is in addition to the
risk of decline in the value of the fund's other assets. Unsettled TBA
purchase commitments are valued at the current market value of the
underlying securities, according to the procedures described under
"Security valuation" above.
Although the fund will generally enter into TBA purchase commitments
with the intention of acquiring securities for its portfolio or for
delivery pursuant to options contracts it has entered into, the fund may
dispose of a commitment prior to settlement if Putnam Management deems
it appropriate to do so.
K) 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. If the fund delivers securities under the
commitment, the fund realizes a gain or a loss from the sale of the
securities based upon the unit price established at the date the
commitment was entered into. TBA sale commitments outstanding at period
end are listed after The fund's portfolio.
L) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and that
borrowings not exceed prospectus limitations. For the six months ended
April 30, 2003, the fund had no borrowings against the line of credit.
M) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At October 31, 2002, the fund had a capital loss carryover of
approximately $64,143,000 available to the extent allowed by tax law to
offset future net capital gains, if any. The amount of the carryover and
the expiration dates are:
Loss Carryover Expiration
- -------------- ------------------
$5,449,000 October 31, 2003
24,813,000 October 31, 2006
21,627,000 October 31, 2007
7,904,000 October 31, 2008
1,114,000 October 31, 2009
3,236,000 October 31, 2010
The aggregate identified cost on a tax basis is $220,356,306, resulting
in gross unrealized appreciation and depreciation of $11,860,834 and
$1,620,212, respectively, or net unrealized appreciation of $10,240,622.
N) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Distributions from capital gains, if any, are recorded on the
ex-dividend date and paid at least annually. The amount and character of
income and gains to be distributed are determined in accordance with
income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the fund's capital
accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative services
and other transactions
Putnam Management is paid for management and investment advisory
services quarterly based on the average net assets of the fund. Such fee
is based on the following annual rates: 0.70% of the first $500 million
of average net assets, 0.60% of the next $500 million, 0.55% of the next
$500 million, 0.50% of the next $5 billion, 0.475% of
the next $5 billion, 0.455% of the next $5 billion, 0.44% of the next $5
billion and 0.43% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam,
LLC. Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. For the six months ended April 30, 2003,
the fund's expenses were reduced by $6,577 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $829 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan"),
which allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C and class M shares pursuant to rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Retail Management, a wholly-owned subsidiary of
Putnam, LLC and Putnam Retail Management GP, 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 Retail Management at an
annual rate of up to 0.35%, 1.00%, 1.00% and 1.00% of the average net
assets attributable to class A, class B, class C and class M shares,
respectively. The Trustees have approved payment by the fund at the
annual rates of 0.25%, 1.00%, 1.00% and 0.50% of the average net assets
attributable to class A, class B, class C and class M shares,
respectively.
For the six months ended April 30, 2003, Putnam Retail Management,
acting as underwriter, received net commissions of $15,831 and $6,005
from the sale of class A and class M shares, respectively, and received
$29,269 and $120 in contingent deferred sales charges from redemptions
of class B and class C shares, respectively. A deferred sales charge of
up to 1.00% and 0.40% is assessed on certain redemptions of class A and
class M shares, respectively. For the six months ended April 30, 2003,
Putnam Retail Management, acting as underwriter, received $594 and no
monies on class A and class M redemptions, respectively.
Note 3
Purchases and sales of securities
During the six months ended April 30, 2003, cost of purchases and
proceeds from sales of investment securities other than U.S. government
obligations and short-term investments aggregated $176,817,722 and
$144,039,889, respectively. Purchases and sales of U.S. government
obligations aggregated $18,332,877 and $20,227,907, respectively.
Note 4
Capital shares
At April 30, 2003, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended April 30, 2003
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 3,713,170 $44,612,817
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 156,199 1,888,130
- ---------------------------------------------------------------------------
3,869,369 46,500,947
Shares repurchased (1,946,951) (23,222,701)
- ---------------------------------------------------------------------------
Net increase 1,922,418 $23,278,246
- ---------------------------------------------------------------------------
Year ended October 31, 2002
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 5,226,622 $58,921,703
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 265,299 2,908,955
- ---------------------------------------------------------------------------
5,491,921 61,830,658
Shares repurchased (4,271,642) (47,742,878)
- ---------------------------------------------------------------------------
Net increase 1,220,279 $14,087,780
- ---------------------------------------------------------------------------
Six months ended April 30, 2003
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 1,378,354 $16,521,183
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 39,318 466,798
- ---------------------------------------------------------------------------
1,417,672 16,987,981
Shares repurchased (735,702) (8,725,032)
- ---------------------------------------------------------------------------
Net increase 681,970 $8,262,949
- ---------------------------------------------------------------------------
Year ended October 31, 2002
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 3,662,327 $41,402,642
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 55,775 613,233
- ---------------------------------------------------------------------------
3,718,102 42,015,875
Shares repurchased (2,776,726) (30,819,441)
- ---------------------------------------------------------------------------
Net increase 941,376 $11,196,434
- ---------------------------------------------------------------------------
Six months ended April 30, 2003
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 142,777 $1,728,007
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 1,706 20,299
- ---------------------------------------------------------------------------
144,483 1,748,306
Shares repurchased (81,509) (964,559)
- ---------------------------------------------------------------------------
Net increase 62,974 $783,747
- ---------------------------------------------------------------------------
Year ended October 31, 2002
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 269,900 $3,061,725
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 1,698 18,309
- ---------------------------------------------------------------------------
271,598 3,080,034
Shares repurchased (217,386) (2,454,930)
- ---------------------------------------------------------------------------
Net increase 54,212 $625,104
- ---------------------------------------------------------------------------
Six months ended April 30, 2003
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 305,940 $3,680,306
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 2,352 27,863
- ---------------------------------------------------------------------------
308,292 3,708,169
Shares repurchased (870,453) (10,297,176)
- ---------------------------------------------------------------------------
Net decrease (562,161) $(6,589,007)
- ---------------------------------------------------------------------------
Year ended October 31, 2002
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 725,415 $8,042,132
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions 4,205 46,552
- ---------------------------------------------------------------------------
729,620 8,088,684
Shares repurchased (1,681,546) (18,333,248)
- ---------------------------------------------------------------------------
Net decrease (951,926) $(10,244,564)
- ---------------------------------------------------------------------------
THE PUTNAM FAMILY OF FUNDS
The following is a complete list of Putnam's open-end mutual funds.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you
invest or send money.
GROWTH FUNDS
Discovery Growth Fund
Growth Opportunities Fund
Health Sciences Trust
International New Opportunities Fund
New Opportunities Fund
OTC & Emerging Growth Fund
Small Cap Growth Fund
Vista Fund
Voyager Fund
BLEND FUNDS
Capital Appreciation Fund
Capital Opportunities Fund
Europe Equity Fund
Global Equity Fund
Global Natural Resources Fund
International Capital Opportunities Fund
International Equity Fund
Investors Fund
Research Fund
Tax Smart Equity Fund
Utilities Growth and Income Fund
VALUE FUNDS
Classic Equity Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
International Growth and Income Fund
Mid Cap Value Fund
New Value Fund
Small Cap Value Fund *
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Income Trust
High Yield Advantage Fund *
High Yield Trust
Income Fund
Intermediate U.S. Government Income Fund
Money Market Fund +
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund +
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds +
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Closed to new investors.
+ An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share,
it is possible to lose money by investing in the fund.
Check your account balances and current performance at
www.putnaminvestments.com.
FUND INFORMATION
ABOUT PUTNAM INVESTMENTS
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition
and practice since 1830. Founded over 65 years ago, Putnam Investments
was built around the concept that a balance between risk and reward is
the hallmark of a well-rounded financial program. We presently manage
over 100 mutual funds in growth, value, blend, fixed income, and
international.
INVESTMENT MANAGER
Putnam Investment Management, LLC
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam, III
President
Charles E. Porter
Executive Vice President, Treasurer and
Principal Financial Officer
Patricia C. Flaherty
Senior Vice President
Karnig H. Durgarian
Vice President and
Principal Executive Officer
Steven D. Krichmar
Vice President and
Principal Financial Officer
Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer
Brett C. Browchuk
Vice President
Charles E. Haldeman, Jr.
Vice President
Lawrence J. Lasser
Vice President
Beth S. Mazor
Vice President
Richard A. Monaghan
Vice President
Stephen M. Oristaglio
Vice President
Gordon H. Silver
Vice President
Mark C. Trenchard
Vice President
Kevin M. Cronin
Vice President
Judith Cohen
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Global
Income Trust. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales
charges, investment objectives, and operating policies of the fund, and
the most recent copy of Putnam's Quarterly Performance Summary and
Putnam's Quarterly Ranking Summary. For more information or to request a
prospectus, call toll free: 1-800-225-1581. The fund's Statement of
Additional Information contains additional information about the fund's
Trustees and is available without charge upon request by calling
1-800-225-1581.
Visit www.putnaminvestments.com or call a representative at 1-800-225-1581.
NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
SA031-88643 041/220/2MW/906 6/03
Item 2. Code of Ethics:
- -----------------------
Not applicable
Item 3. Audit Committee Financial Expert:
- -----------------------------------------
Not applicable
Item 4. Principal Accountant Fees and Services:
- -----------------------------------------------
Not applicable
Items 5-6. [Reserved]
- ---------------------
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed End
- -------------------------------------------------------------------------
Management Investment Companies: Not applicable
--------------------------------
Item 8. [Reserved]
- ------------------
Item 9. Controls and Procedures:
- --------------------------------
The registrant's principal executive officer and principal financial
officers have concluded, based on their evaluation of the effectiveness
of the design and operation of the registrant's disclosure controls and
procedures as of a date within 90 days of the filing date of this report
on Form N-CSR, that the design and operation of such procedures are
effective to provide reasonable assurance that information required to
be disclosed by the investment company in the reports that it files or
submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized, and reported within the time periods specified in
the Commission's rules and forms.
There have been no significant changes in the registrant's internal
controls subsequent to the date of their evaluation.
Item 10. Exhibits:
- ------------------
(a) Not applicable
(b) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2
under the Investment Company Act of 1940, as amended, and the officer
certifications as required by Section 906 of the Sarbanes-Oxley Act of 2002
are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NAME OF REGISTRANT
By (Signature and Title): /s/Michael T. Healy
--------------------------
Michael T. Healy
Principal Accounting Officer
Date: June 24, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
an the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By (Signature and Title): /s/Karnig H. Durgarian
---------------------------
Karnig H. Durgarian
Principal Executive Officer
Date: June 24, 2003
By (Signature and Title): /s/Charles E. Porter
---------------------------
Charles E. Porter
Principal Financial Officer
Date: June 24, 2003
By (Signature and Title): /s/Steven D. Krichmar
---------------------------
Steven D. Krichmar
Principal Financial Officer
Date: June 24, 2003