Putnam
Asia Pacific
Fund II
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
2-28-99
[LOGO: BOSTON * LONDON * TOKYO]
The following report contains a list of your fund's portfolio holdings and
complete financial statements for the six months ended 2/28/99. Additional
details, including fund strategy, performance, and manager's outlook, will
be provided in the annual report, which will cover the 12 months ended
8/31/99.
<TABLE>
<CAPTION>
Portfolio of investments owned
February 28, 1999 (Unaudited)
COMMON STOCKS (93.2%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C> <C>
Hong Kong (33.2%)
- --------------------------------------------------------------------------------------------------------------------------
8,000 Asia Satellite Telecommunications Holdings Ltd. $ 12,908
22,000 Cathay Pacific Airways 24,564
10,000 Cheung Kong Infrastructure Holdings (NON) 68,091
10,000 China Light & Power Co. 47,115
25,000 China Telecom Ltd. (NON) 44,372
9,000 Dao Heng Bank Group Ltd. 24,513
16,000 First Pacific Co., Ltd. 9,655
5,000 Hang Seng Bank Ltd. 40,661
23,000 Hong Kong and China Gas Co., Ltd. 26,720
40,000 Hong Kong Telecommunications Ltd. (NON) 67,123
14,000 Hutchison Whampoa, Ltd. (NON) 97,134
7,000 Johnson Electric Holdings Ltd. 18,523
50,000 Leefung -- Asco Printers Holdings Ltd. 8,519
48,000 Legend Holdings Ltd. (NON) 18,743
6,000 Li & Fung Ltd. 10,843
16,000 National Mutual Asia Ltd. 11,359
9,000 New World Development Co. Ltd. 16,555
10,000 Sun Hung Kai Properties Ltd. 68,091
--------------
615,489
India (6.5%)
- --------------------------------------------------------------------------------------------------------------------------
1,000 Bajaj Auto Ltd. 144A GDR 14,363
2,000 BSES Ltd. GDR (NON) 23,750
2,500 Gujarat Ambuja Cements Ltd. GDR 14,375
900 ITC Ltd. GDR 18,000
2,300 Mahanagar Telephone Nigam Ltd. GDR 22,425
2,000 Tata Engineering & Locomotive Co., Ltd. GDR (NON) 8,380
2,000 Videsh Sanchar Nigam Ltd. GDR (NON) 19,150
--------------
120,443
Indonesia (1.8%)
- --------------------------------------------------------------------------------------------------------------------------
1,000 PT Indosat ADR 13,000
1,400 PT Telekomunikasi Indonesia ADR 8,925
15,000 Sampoerna Industries (NON) 11,026
--------------
32,951
Malaysia (4.0%)
- --------------------------------------------------------------------------------------------------------------------------
13,000 Berjaya Sports Toto Berhad 15,447
45,000 IJM Copr. Berhad 22,659
11,000 Jaya Tiasa Holdings Berhad 12,889
6,000 Malakoff Berhard 11,929
21,000 PPB Oil Palms Berhad 12,106
--------------
75,030
Pakistan (0.6%)
- --------------------------------------------------------------------------------------------------------------------------
31,000 Pakistan Telecom Ltd. 144A GDR 10,747
Philippines (3.6%)
- --------------------------------------------------------------------------------------------------------------------------
25,000 Ayala Land, Inc. 7,410
3,800 Bank of the Philippine Islands (NON) 8,961
100,000 Cosmos Bottling Corp. 7,216
70,500 International Container Terminal Services, Inc. (NON) 3,888
3,000 Manila Electric Co. Class B 9,356
500 Philippine Long Distance Telephone Co. ADR 11,662
90,000 SM Prime Holdings Inc. 17,397
--------------
65,890
Singapore (15.6%)
- --------------------------------------------------------------------------------------------------------------------------
5,000 City Developments Ltd. 20,906
3,000 Cycle & Carriage Ltd. 10,976
9,000 Datacraft Asia Ltd. 18,000
3,000 Development Bank of Singapore Ltd. 21,777
6,000 Keppel Corp. 13,937
5,000 Oversea Chinese Banking Corp. 33,391
5,000 Singapore Airlines Ltd. 36,876
2,600 Singapore Press Holdings Ltd. 29,594
10,000 Singapore Tech Engineering 8,595
16,000 Singapore Telecommunications, Ltd. 22,764
3,600 United Overseas Bank Ltd. 21,115
12,000 Venture Manufacturing Ltd. 50,523
--------------
288,454
South Korea (13.9%)
- --------------------------------------------------------------------------------------------------------------------------
70 Hanjin Heavy Industries 286
2,440 Hankook Tire Manufacturing Co. 10,039
400 Hankuk Glass Industry Co. Ltd. (NON) 7,526
2,000 Hanwha Chemical Corp. 9,407
1,300 Housing & Commercial Bank GDR (NON) 20,151
200 Korea Chemical Co. Ltd. (NON) 9,325
2,100 Korea Electric Power Corp. (NON) 49,646
300 Korea Telecom Corp. (NON) 8,834
135 LG Information & Communication 3,931
240 Pohang Iron & Steel Company, Ltd. (NON) 12,651
1,145 Samsung Electronics Co. (NON) 80,735
36 Samsung Fire & Marine Insurance 11,485
600 Samsung Securities Co. Ltd. 13,669
300 Sansung Electro-Mechanics Co. (NON) 5,718
1,339 SK Telecom Co., Ltd. ADR 13,557
--------------
256,960
Taiwan (9.4%)
- --------------------------------------------------------------------------------------------------------------------------
400 Ase Test Limited (NON) 16,250
1,000 Asustek Computer, Inc. GDR (NON) 8,350
23,000 Bank Sinopac (NON) 9,992
4,000 Cathay Life Insurance Co., Ltd. 13,261
30,000 Four Seasons Mercantile Holdings 9,778
2,000 Hon Hai Precision Industry (NON) 9,688
5,000 Nien Hsing Textile Corp., Ltd. (NON) 9,158
2,000 Pacific Electrical Wire & Cable (NON) 1,090
6,000 President Chain Store Corp. 16,621
1,568 Siliconware Precision Industries Co. GDR (NON) 18,973
19,000 Taiwan Semiconductor Manufacturing Co. (NON) 50,908
800 Windbond Electronics Corp. 144A GDR 10,720
--------------
174,789
Thailand (3.4%)
- --------------------------------------------------------------------------------------------------------------------------
1,200 Advanced Info Service Public Co., Ltd. 8,356
5,000 Bangkok Bank Public Co., Ltd. 8,436
4,000 Electricity Generating Public Co. Ltd. (NON) 8,677
10,300 Land and House Public Co. Ltd. (NON) 5,793
900 PTT Exploration & Production PLC (NON) 5,881
800 Siam Cement Public Company Ltd. (The) (NON) 16,540
5,000 Thai Farmers Bank Public Co. 8,369
--------------
62,052
United Kingdom (1.2%)
- --------------------------------------------------------------------------------------------------------------------------
800 HSBC Holdings PLC 22,512
--------------
Total Common Stocks (cost $1,498,942) $ 1,725,317
SHORT-TERM INVESTMENTS (6.4%) (a)
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------------
$58,000 Interest in $307,131,000 joint repurchase agreement dated
February 26, 1999 with Merrill Lynch, Pierce, Fenner and
Smith, Inc. due March 1, 1999 with respect to various
U.S. Treasury obligations -- maturity value of $58,023
for an effective yield of 4.74% $ 58,000
60,000 Interest in $310,913,000 joint repurchase agreement dated
February 26, 1999 with Warburg Securities due
March 1, 1999 with respect to various U.S. Treasury
obligations -- maturity value of $60,024 for an effective
yield of 4.74% 60,000
--------------
Total Short-Term Investments (cost $118,000) $ 118,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $1,616,942) (b) $ 1,843,317
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $1,850,909.
(b) The aggregate identified cost on a tax basis is $1,616,942, resulting in gross unrealized appreciation and
depreciation of $315,508 and $89,133, respectively, or net unrealized appreciation of $226,375.
(NON) Non-income-producing security.
144A after the name of a security represents those exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
ADR or GDR after the name of a foreign holding stands for American Depository Receipts or Global Depository
Receipts, representing ownership of foreign securities on deposit with a domestic custodian bank.
The fund had the following industry group concentrations greater than 10% at February 28, 1999 (as a
percentage of net assets):
Electronics and electrical equipment 14.7% Telecommunications 12.6%
Insurance and finance 14.6 Real Estate 11.0
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
February 28, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $1,616,942) (Note 1) $1,843,317
- -----------------------------------------------------------------------------------------------
Cash 6,481
- -----------------------------------------------------------------------------------------------
Foreign currency (cost $23,947) 24,126
- -----------------------------------------------------------------------------------------------
Dividends receivable 3,756
- -----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 582
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 97,128
- -----------------------------------------------------------------------------------------------
Total assets 1,975,390
Liabilities
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 109,263
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 764
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 327
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 148
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 7
- -----------------------------------------------------------------------------------------------
Other accrued expenses 13,972
- -----------------------------------------------------------------------------------------------
Total liabilities 124,481
- -----------------------------------------------------------------------------------------------
Net assets $1,850,909
Represented by
- -----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1, 4 and 5) $2,194,709
- -----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (12,370)
- -----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (Note 1) (558,409)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets and
liabilities in foreign currencies 226,979
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $1,850,909
Computation of net asset value and offering price
- -----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($1,850,909 divided by 260,479 shares) $7.11
- -----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $7.11)* $7.54
- -----------------------------------------------------------------------------------------------
* 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
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended February 28, 1999 (Unaudited)
<S> <C>
Investment income:
- -----------------------------------------------------------------------------------------------
Dividends (net of foreign tax $1,468) $ 15,324
- -----------------------------------------------------------------------------------------------
Interest 478
- -----------------------------------------------------------------------------------------------
Total investment income 15,802
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 8,757
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,677
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,031
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 20
- -----------------------------------------------------------------------------------------------
Reports to shareholders 1,017
- -----------------------------------------------------------------------------------------------
Auditing 10,719
- -----------------------------------------------------------------------------------------------
Legal 1,229
- -----------------------------------------------------------------------------------------------
Fees waived and reimbursed by manager (Note 2) (10,001)
- -----------------------------------------------------------------------------------------------
Total expenses 14,449
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (1,154)
- -----------------------------------------------------------------------------------------------
Net expenses 13,295
- -----------------------------------------------------------------------------------------------
Net investment income 2,507
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (45,970)
- -----------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (8,464)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the period (Note 1) (1,670)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 566,030
- -----------------------------------------------------------------------------------------------
Net gain on investments 509,926
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $512,433
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
For the period
March 23, 1998
Six months ended (commencement
February 28 of operations)
1999* to August 31, 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- --------------------------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,507 $ 18,006
- --------------------------------------------------------------------------------------------------------------------
Net realized loss on investments and
foreign currency transactions (54,434) (508,833)
- --------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
and assets and liabilities in foreign currencies 564,360 (337,381)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 512,433 (828,208)
- --------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- --------------------------------------------------------------------------------------------------------------------
From net investment income (28,025) --
- --------------------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 35,794 158,915
- --------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 520,202 (669,293)
Net assets
- --------------------------------------------------------------------------------------------------------------------
Beginning of period (Note 5) 1,330,707 2,000,000
- --------------------------------------------------------------------------------------------------------------------
End of period (including distributions in excess
of net investment income and undistributed
net investment income of $12,370 and
$13,148, respectively) $1,850,909 $1,330,707
- --------------------------------------------------------------------------------------------------------------------
*Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share February 28 March 23, 1998+
operating performance (Unaudited) to August 31
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $5.23 $8.50
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (c)(d) .01 .06
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain on investments 1.98 (3.33)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.99 (3.27)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income (.11) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.11) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $7.11 $5.23
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 37.97* (38.47)*
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,851 $1,331
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(d) .82* .73*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(d) .14* .99*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 120.87* 202.60*
- ------------------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average
number of shares outstanding during the period.
(d) Reflects an expense limitation in effect during the period. As a result of such limitation, expenses for the
fund reflect a reduction of $.04 and $.07 per share for the periods ended February 28, 1999 and
August 31, 1998, respectively. (see Note 2)
</TABLE>
Notes to financial statements
February 28, 1999 (Unaudited)
Note 1
Significant accounting policies
Putnam Asia Pacific Fund II (The "fund") is a series of Putnam Funds Trust
("the trust") which is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment
company. The fund seeks long term capital appreciation by investing
primarily in common stocks and other securities of companies located in
Asia and in the Pacific Basin.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are readily
available are stated at market value, which is determined using the last
reported sale price on the principal market in which the securities are
traded, or, if no sales are reported -- as in the case of some securities
traded over-the-counter -- the last reported bid price. Short-term
investments having remaining maturities of 60 days or less are stated at
amortized cost, which approximates market value, and other investments are
stated at fair value following procedures approved by the Trustees.
Securities quoted in foreign currencies are translated into U.S. dollars
at the current exchange rate.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other
registered investment companies and certain other accounts managed by
Putnam Investment Management, Inc. ("Putnam Management"), the fund's
Manager, a wholly-owned subsidiary of Putnam Investments, Inc. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the market
value of which at the time of purchase is required to be in an amount at
least equal to the resale price, including accrued interest. Collateral
for certain tri-party repurchase agreements is held at the counterparty's
custodian in a segregated account for the benefit of the fund and the
counterparty. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to the
resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy or
sell is executed). Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as the fund is
informed of the ex-dividend date.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The fund
does not isolate that portion of realized or unrealized gains or losses
resulting from changes in the foreign exchange rate on investments from
fluctuations arising from changes in the market prices of the securities.
Such 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 exchange gains or losses on closed
forward currency contracts, disposition of foreign currencies and the
difference between the amount of investment income and foreign withholding
taxes recorded on the fund's books and the U.S. dollar equivalent amounts
actually received or paid. Net unrealized 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.
F) 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
borrowings must not exceed prospectus limitations. For the six months
ended February 28, 1999, the fund had no borrowings against the line of
credit.
G) 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.
H) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Capital gain distributions, if any, are recorded on the ex-dividend date
and paid 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. These
differences include temporary and permanent differences of losses on wash
sale transactions, foreign currency gains and losses and market to market
gains and losses. 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.
I) Expenses of the trust Expenses directly charged or attributable to any
fund will be paid from the assets of that fund. Generally, expenses of the
trust will be allocated among and charged to the assets of each fund on a
basis that the Trustees deem fair and equitable, which may be based on the
relative assets of each fund or the nature of the services performed and
relative applicability to each fund.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 1.00% of the first $500
million of average net assets, 0.90% of the next $500 million, 0.85% of
the next $500 million, 0.80% of the next $5 billion, 0.775% of the next $5
billion, 0.755% of the next $5 billion, 0.74% of the next $5 billion,
0.73% thereafter.
Putnam Management has agreed to limit its compensation (and, to the extent
necessary, bear other expenses) through July 31, 1999, to the extent that
expenses of the fund (exclusive of brokerage commissions, interest, taxes,
deferred organizational and extraordinary expense, credits from Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
and payments under the Trust's distribution plan) would exceed an annual
rate of 1.65% of the fund's average net assets.
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 PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended February 28, 1999, fund expenses were reduced by
$1,154 under expense offset arrangements with PFTC and brokerage service
arrangements. Investor servicing and custodian fees reported in the
Statement of operations exclude these credits. The fund could have
invested a portion of the assets utilized in connection with the expense
offset arrangements in an income producing asset if it had not entered
into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $100 has
been allocated to the fund and an additional fee for each Trustee's
meeting attended. Trustees who are not interested persons of Putnam
Management and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
The fund 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
in the fund and are 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 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 a distribution plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The purpose of the Plan is
to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments, Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plan provides for payment by
the fund to Putnam Mutual Funds Corp. at an annual rate of up to 0.35% of
the fund's average net assets. The fund is not currently making any
payments pursuant to the plan.
For the six months ended February 28, 1999, Putnam Mutual Funds Corp.,
acting as underwriter received no net commissions from the sale of shares
of the fund. A deferred sales charge of up to 1% is assessed on certain
redemptions of shares. For the six months ended February 28, 1999, Putnam
Mutual Funds Corp., acting as underwriter received no monies on
redemptions.
Note 3
Purchase and sales of securities
During the six months ended February 28, 1999, purchases and sales of
investment securities other than short-term investments aggregated
$2,135,987 and $2,017,786, respectively. There were no purchases and sales
of U.S. government obligations. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
Note 4
Capital shares
At February 28, 1999, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
For the six months ended
February 28, 1999
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 10,137 $67,578
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 3,792 28,025
- -----------------------------------------------------------------------------
13,929 95,603
Shares
repurchased (8,129) (59,809)
- -----------------------------------------------------------------------------
Net increase 5,800 $35,794
- -----------------------------------------------------------------------------
For the period March 23, 1998
(commencement of operations)
to August 31, 1998
- -----------------------------------------------------------------------------
Class A Shares Amount
- -----------------------------------------------------------------------------
Shares sold 104,744 $659,238
- -----------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- -----------------------------------------------------------------------------
104,744 659,238
Shares
repurchased (85,359) (500,323)
- -----------------------------------------------------------------------------
Net increase 19,385 $158,915
- -----------------------------------------------------------------------------
Note 5
Initial capitalization and
offering of shares
The fund was established as a Massachusetts business trust on January 22,
1996. During the period January 22, 1996 to March 23, 1998, the fund had
no operations other than those related to organizational matters,
including the initial capital contribution of $2,000,000 and the issuance
of 235,294 shares to Putnam Mutual Funds Corp., a wholly-owned subsidiary
of Putnam Investments, Inc. on March 20, 1998.
At February 28, 1999, Putnam Investments, Inc. owned 247,129 shares of the
fund (94.87% of class shares outstanding), valued at $1,757,087.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
John J. Morgan, Jr.
Vice President
Carmel Peters
Vice President and Fund Manager
Paul C. Warren
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Asia Pacific
Fund II. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales
charges, investment objectives, and operating policies of the fund, and
the most recent copy of Putnam's Quarterly Performance Summary. For more
information or to request a prospectus, call toll free: 1-800-225-1581.
You can also learn more at Putnam Investments' website:
http://www.putnaminv.com.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution; are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any
other agency; and involve risk, including the possible loss of the
principal amount invested.
51088-2IB 4/99