Putnam Asia Pacific Growth Fund
ANNUAL REPORT
September 30, 1994
[Logo]
BOSTON * LONDON * TOKYO
<PAGE>
Performance highlights
Morningstar, an independent rating agency, gave the fund's
class A shares its highest ranking of five stars as of 9/30/94.
This rating put the fund in the top 10% of all equity funds
rated.*
Lipper Analytical Services, another industry research firm,
ranked the fund's class A shares in the top 28% of Pacific
region funds for three-year performance and in the top 26%
for one-year performance as of 9/30/94.(+)
Performance should always be considered in light of a fund's
investment strategy. Putnam Asia Pacific Growth Fund is
designed for investors seeking capital appreciation primarily
through common stocks of companies located in Asia and in the
Pacific Basin.
FISCAL 1994 RESULTS AT A GLANCE
<TABLE><CAPTION>
<C> <C> <C> <C>
Class A Class B
Total return: NAV POP NAV CDSC
- ---------------------------------------------------------------
12 months ended 9/30/94
(change in value during
period plus reinvested
distributions) 27.15% 19.89% 26.31% 21.31%
- ---------------------------------------------------------------
Share value: NAV POP NAV
- ---------------------------------------------------------------
9/30/93 $11.55 $12.25 $11.54
9/30/94 14.64 15.53 14.53
- ---------------------------------------------------------------
Capital gains
Distributions: No. Income Long-term Short-term Total
- ---------------------------------------------------------------
Class A 1 -- $0.021 $0.021 $0.042
Class B 1 -- 0.021 0.021 0.042
- ---------------------------------------------------------------
<FN>
Performance data represent past results and will differ for
each share class. Results reflect an expense limitation in
effect during part of the period. Without the expense
limitation, results would have been lower. For performance over
longer periods, see pages 8 and 9. POP assumes 5.75% maximum
sales charge. CDSC assumes 5% maximum contingent deferred sales
charge.
*Morningstar rates funds relative to funds with similar
objectives, based on risk-adjusted medium- and long-term
performance, as applicable, adjusted for sales charges. Rates
are updated monthly. Past performance is not indicative of
future results.
+Lipper rankings vary over time and do not reflect the effects
of sales charges. The fund's class A shares ranked 5 out of
17 and 9 out of 34 for 3- and 1-year performance,
respectively. Past performance is not indicative of future
results.
</TABLE>
<PAGE>
From the Chairman
[PHOTO]
(c) Karsh, Ottawa
Dear Shareholder:
The markets of the Pacific Basin--Japan, Australia, Singapore,
Malaysia, Indonesia, and others--represent substantial growth
opportunities that have become increasingly attractive to U.S.
investors. Although pockets of turbulence are rarely entirely
unexpected in this part of the world, they can be offset by the
fast-paced appreciation potential offered by the region's
markets.
Through careful stock selection and constant monitoring, Fund
Manager David Thomas, who is a seasoned hand at investing in
this part of the world, was able to find investments in these
countries that contributed to the fund's outstanding results
throughout the fiscal year. David also chose to take some
profits from the sale of fund holdings in southeast Asia, and
redeploy the assets into Japan, where he sees the beginning
signs of improvement.
In the report that follows, he looks back on fiscal '94 and
casts an optimistic eye on prospects for fiscal '95.
Respectfully yours,
[Signature]
George Putnam
Chairman of the Trustees
November 9, 1994
<PAGE>
Report from the fund manager
David K. Thomas
For the fiscal year ended September 30, 1994, Putnam Asia
Pacific Growth Fund turned in outstanding double-digit
performance at both net asset value and public offering price -
- - quite a feat, given the volatility that foreign and domestic
markets experienced during the past nine months. Careful stock
selection, timely shifts in country allocations, and years of
investment management experience during bull and bear markets
were key factors in achieving these results.
DIVERSE FORCES AT WORK IN PACIFIC RIM
At the outset of fiscal 1994, we positioned the fund to take
full advantage of the superlative growth opportunities present
in southeast Asia. A great deal of money flowed into the region
as a result of low interest rates worldwide: the Japanese were
substantial investors toward year's end and demand was
particularly noticeable from the U.S. mutual fund industry.
This inflow fueled the performance of markets such as Malaysia,
Hong Kong, Indonesia, and Thailand. The dramatic surge in these
smaller markets represented only the fourth time in the past 20
years that they've posted such outstanding performance; several
more than doubled their year-to-year returns over 1993 as a
whole.
Ironically, the fourth quarter of 1993 was also the only period
in which unusual strength in the smaller markets coincided with
a sharp downturn in the Japanese market as that country
struggled with ongoing economic and governmental crises. The
fund's emphasis on the smaller markets and relatively low
weighting in Japan at that time contributed to your fund's
overall strong performance.
By the end of December, however, we sensed a change in the
wind. Although the economic fundamentals of the smaller
southeast Asian markets remained sound, we believed these
markets were becoming highly speculative and overheated, ripe
for a correction, should U.S. interest rates rise. We believed
the simplest and most defensive move to make was to take
profits in the overextended smaller markets and redirect the
proceeds toward Japan.
ON THE ROAD TO RECOVERY IN JAPAN
At the beginning of fiscal 1994, nearly a third of the fund's
net assets was invested in Japan. We raised this stake to just
over half at midyear, and ended fiscal 1994 with a shade below
half. We did so in the expectation of rebounding corporate
profits and economic recovery, believing that Japan offers
unquantifiable potential for a rebound after four years of
economic stagnation and an underperforming stock market. In the
wake of sharp corrections in the booming southeast Asian
markets during the winter, Japan's stock market had already
begun to benefit from investors shifting assets back into the
country.
The inflow of money from abroad, combined with Japanese
reluctance to invest overseas, fueled a positive liquidity
situation in Japan. We believe Japanese money may tend to
remain close to home for some time after the yen inevitably
peaks. Such an event would signal the onset of better business
conditions for Japanese exporting companies. As a protective
measure, we have hedged some 30% of the fund's Japanese yen
exposure back into the dollar.
DIVERSIFICATION BY COUNTRY*
- -------------------------------
Japan 48.0%
Malaysia 10.9%
Hong Kong 8.9%
Singapore 8.3%
Australia 6.4%
Thailand 3.5%
Indonesia 3.4%
Taiwan 3.0%
Korea 1.1%
United States 1.0%
India 0.9%
Pakistan 0.5%
- -------------------------------
*Based on net assets on 9/30/94
The strength of the yen is encouraging an ongoing restructuring
process in Japanese industry. Our stock-selection efforts are
taking these changes into account. We are focusing primarily on
industrial recovery and cyclical companies that we believe are
successfully exploiting the opportunities created by the new
situation; that is, cost-cutting and the deployment of
manufacturing/production operations overseas. Tsubakimoto
Precision, a leading producer of precision steel balls for the
machine tool industry, is one such company.
EMERGING MARKETS SUPPORT GROWTH POTENTIAL OF CERTAIN ISSUES
Despite a recent surge of new issues within the newly emerging
markets, we have remained highly selective. Only a few
companies met our criteria for addition to the fund's
portfolio. Hocheng, a leading manufacturer of sanitary ware in
Taiwan, was one of them. We believe the company will benefit
from already existing relationships with Taiwanese real estate
development and construction companies and from increasing
housing development in Asia.
By installing power lines and communications in India, KEC
International stands to benefit from the increased growth of
the Indian economy and the ongoing need for electric power.
CSL Limited, a pharmaceutical company in Australia, was
recently returned to the private sector. The company currently
supplies blood plasma to the Australian government and will
soon be offering plasma to the smaller southeast Asian markets.
KEEPING AN EYE ON THE BIG PICTURE
We will continue to search for quality companies showing above-
average earnings characteristics in the major markets of the
Pacific region. Japan's politics remain unsettled, though
politics have typically had little long-term influence on the
markets, given the strong centrist consensus of the Japanese
public. The privatization of Japan Telecom and Japan Tobacco,
along with a considerable volume of convertible issues, have
recently choked the Japanese market and will likely hamper
progress over the short term. However, we remain confident in
our outlook for a Japanese recovery and currently see no reason
to alter the fund's current weighting in that country.
TOP 10 HOLDINGS (9/30/94)
- ---------------------------------------------------------------
Hocheng Group Corp.
Taiwan; manufacturer of sanitary ware
- ---------------------------------------------------------------
Maruichi Steel Tube
Japan; manufacturer of welded steel pipe
- ---------------------------------------------------------------
Industrial Finance Corp.
Thailand; bank for the finance of industry
- ---------------------------------------------------------------
Omron Corp.
Japan; top maker of electrical control components
- ---------------------------------------------------------------
Mitsubishi Motors Corp.
Japan; major auto manufacturer
- ---------------------------------------------------------------
PT Hm. Sampoerna Indust. For. Registered
Indonesia; producer of hand-rolled clove cigarettes
- ---------------------------------------------------------------
East Japan Railway Co.
Japan; largest privatized railway company
- ---------------------------------------------------------------
Sony Corp.
Japan; major consumer electronics manufacturer
- ---------------------------------------------------------------
CSK Corp.
Japan; information services, computer software
- ---------------------------------------------------------------
Secom Co.
Japan; large security company
- ---------------------------------------------------------------
These holdings represent 13.0% of the fund's net assets.
Portfolio holdings are subject to change.
For the most part--except perhaps for Hong Kong which has been
overshadowed by rising inflation in China and a decline in
property values from overextended levels -- there has been no
deterioration in the economic fundamentals of the smaller
markets. They're continuing to thrive. Our long-term outlook
for the region remains favorable and we are on the lookout to
increase the fund's southeast Asian holdings once again should
future setbacks produce attractive prices.
The views expressed throughout the report are exclusively those
of Putnam Management. They are not meant as investment advice.
Although the described holdings were viewed favorably as of
September 30, 1994, there is no guarantee that the fund will
continue to hold these securities in the future. International
investing involves certain risks, such as currency fluctuations
and political developments.
<PAGE>
Performance summary
This section provides, at a glance, information about your
fund's performance. Total return shows how the value of the
fund's shares changed over time, assuming you held the shares
through the entire period and reinvested all distributions back
into the fund. We show total return in two ways: on a
cumulative long-term basis and on average how the fund might
have grown each year over varying periods. For comparative
purposes, we show how the fund performed relative to
appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 9/30/94
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C>
MSCI
CLASS A CLASS B PACIFIC
NAV POP NAV CDSC Index CPI
- --------------------------------------------------------------------
1 year 27.15% 19.89% 26.31% 21.31% 8.73% 2.96%
3 years 81.76 71.36 -- -- 28.88 8.89
Annual average 22.04 19.67 -- -- 8.82 2.88
Life of class A 71.17 61.39 -- -- 23.18 10.83
Annual average 16.05 14.18 -- -- 5.99 2.89
Life of class B -- -- 34.22 30.22 12.26 3.61
Annual average -- -- 24.76 21.96 9.06 2.70
- --------------------------------------------------------------------
<FN>
The fund began operations on 2/20/91 offering shares now known
as class A. Effective 6/1/93 the fund began offering class B
shares. Performance data represent past results and will differ
for each share class. Investment returns reflect an expense
limitation in effect during part of the period. Without the
expense limitation, results would have been lower. Investment
returns and net asset value will fluctuate so an investor's
shares, when sold, may be worth more or less than their
original cost.
</TABLE>
COMPARATIVE BENCHMARKS
Morgan Stanley Capital International (MSCI) Pacific Index is an
unmanaged list of approximately 418 equity securities
originating in the Pacific Basin and listed on the exchanges of
Australia, New Zealand, Japan, Hong Kong, and
Singapore/Malaysia, with all values expressed in U.S. dollars.
Performance of the index reflects changes in market price and
reinvestment of distributions net of witholding taxes. The
fund's portfolio contains securities that differ from those in
the indexes. Investment in the fund is subject to special
international risks, such as currency fluctuations and
political developments.
Consumer Price Index (CPI) is a commonly used measure of
inflation; it does not represent an investment return.
GROWTH OF A $10,000 INVESTMENT
[MOUNTAIN CHART]
Plot Points:
FundOs MSCI Consumer
Class A Pacific Price
Date/Year shares at POP Index Index
- --------------------------------------------------------------
2/20/91 9425 10000 10000
9/30/91 8879 9558 10178
9/30/92 8978 8070 10482
9/30/93 12692 11329 10764
9/30/94 16139 12318 11083
- --------------------------------------------------------------
Past performance is no assurance of future results. A $10,000
investment in the fund's class B shares at inception on 6/1/93
would have been valued at $13,422 on 9/30/94 ($13,022 with a
redemption at the end of the period).
TERMS AND DEFINITIONS
Class A shares are generally subject to an initial sales
charge.
Class B shares may be subject to a sales charge upon
redemption.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not including any initial or contingent deferred sales
charge.
Public offering price (POP) is the price of a mutual fund share
plus the maximum sales charge levied at the time of purchase.
POP performance figures shown here assume the maximum 5.75%
sales charge.
Contingent deferred sales charge (CDSC) is a charge applied at
the time of the redemption of class B shares CDSC performance
data shown here assumes redemption at the end of the period.
Your fund's CDSC declines from a 5% maximum during the first
year to 1% during the sixth year. After the sixth year, the
CDSC no longer applies.
<PAGE>
Life cycle investing
As we move through life, our investment needs change. As these
needs change, so does the way we allocate our assets. Here are
some basic rules for setting up and maintaining an investment
program and some examples of how assets might be allocated.
DETERMINE YOUR INVESTMENT OBJECTIVES.
Objectives may include a new home, college education expenses,
or retirement.
EVALUATE YOUR RISK TOLERANCE.
Generally, risk tolerance is higher for younger investors with
longer timelines and lower for older investors who may depend
on their investment for current income.
ALLOCATE YOUR INVESTABLE SAVINGS.
Your investment advisor will help you determine how much of
your investable dollars should be allocated to each investment
category.
CHOOSE THE APPROPRIATE PUTNAM FUNDS.
Using Putnam's free exchange privilege, you can adjust your own
Putnam portfolio of funds as your financial needs change --
without a service fee.*
Look at the facing page for some ways you can allocate your
assets, then turn the page to see how the Putnam Fund
Selector(TM) can help you make your choices.
*Putnam reserves the right to change or terminate the exchange
privilege. In some cases, a sales charge may apply. See
prospectus for details.
<PAGE>
Four ways to allocate assets
Your investment advisor can help you determine your objectives,
evaluate your risk tolerance, and develop a long-term financial
plan. These sample portfolios can help you diversify your
portfolio within the Putnam Family of Funds. These
illustrations are not intended as investment advice.
[PIE CHARTS]
SEEKING MAXIMUM GROWTH
30% D 40% Growth and income
40% D 50% Growth
5% D 20% Income or tax-free income
Risk tolerance: Generally investors with a higher risk
tolerance (often in their 20s and early 30s.)
SEEKING GROWTH AND SOME INCOME
40% D 50% Growth and income
30% D 40% Growth
10% D 30% Income or tax-free income
Risk tolerance: Generally investors with a high to moderate
risk tolerance (often in their late 30s and early 40s.)
SEEKING INCOME AND SOME GROWTH
WITH PROTECTION AGAINST INFLATION
30% D 40% Growth and income
25% D 60% Income or tax-free income
10% D 20% Growth
Risk tolerance: Generally investors with a moderate risk
tolerance (often in their late 40s and early 50s.)
SEEKING HIGH CURRENT INCOME AND
PROTECTION AGAINST INFLATION
20% D 30% Growth and income
5% D 10% Growth
40% D 70% Income or tax-free income
Risk tolerance: Generally investors with a low risk tolerance
(often over 60 and retired.)
The Putnam Fund Selector(TM)
The Putnam Fund Selector(TM) shows the many opportunities for
investors within every investment strategy. All investors
should first accumulate a base of conservative, cash-equivalent
investments. Then, with the help of your investment advisor,
diversify your portfolio by investing in the Putnam Family of
Funds.
[Pyramid Artwork]
<PAGE>
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
Investors Fund
Natural Resources Fund*
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
PUTNAM GROWTH AND INCOME FUNDS
Convertible Income-Growth Trust
Dividend Growth Fund
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Managed Income Trust
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
Adjustable Rate U.S. Government Fund
American Government Income Fund
Balanced Government Fund
Corporate Asset Trust
Diversified Income Trust
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE FUNDS
Intermediate Tax Exempt Fund
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free funds+
Arizona, California, Florida, Massachusetts, Michigan,
Minnesota, New Jersey, New York, Ohio, and Pennsylvania
LIFESTAGE(SM) FUNDS
Putnam Asset Allocation Funds -- three investment portfolios
that spread your money across a variety of stocks, bonds, and
money market investments to help maximize your return and
reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE INVESTMENTS++
Putnam money market funds:
Money Market Fund(S)
Tax Exempt Money Market Fund
California Tax Exempt Money Market Fund
New York Tax Exempt Money Market Fund
CDs and savings accounts**
* Formerly Energy-Resources Trust.
+ Not available in all states.
++ Relative to above.
(S) Formerly Daily Dividend Trust.
** Not offered by Putnam Investments. Certificates of deposit
offer a fixed rate of return and may be insured, up to
certain limits, by federal/state agencies. Savings
accounts may also be insured up to certain limits.
Please call your financial advisor or Putnam to obtain a
prospectus for any Putnam fund. It contains more complete
information, including charges and expenses. Read it carefully
before you invest or send money.
<PAGE>
Report of independent accountants
for the year ended September 30, 1994
To the Trustees and Shareholders of
Putnam Asia Pacific Growth Fund
We have audited the accompanying statement of assets and
liabilities of Putnam Asia Pacific Growth Fund, including the
portfolio of investments owned, as of September 30, 1994, the
related statement of operations for the year then ended, and
the statement of changes in net assets and the "Financial
Highlights" for each of the periods indicated therein. These
financial statements and "Financial Highlights" are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and
"Financial Highlights" based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and "Financial Highlights" are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of September 30, 1994, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and "Financial
Highlights" referred to above present fairly, in all material
respects, the financial position of Putnam Asia Pacific Growth
Fund as of September 30, 1994, the results of its operations
for the year then ended, and the changes in its net assets and
the "Financial Highlights" for each of the periods indicated
therein, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
November 10, 1994
<PAGE>
Portfolio of investments owned
September 30, 1994
<TABLE><CAPTION>
COMMON STOCKS (94.2%)(a)
NUMBER OF SHARES VALUE
<C> <S> <C>
Japan (46.4%)(b)
- ---------------------------------------------------------------
130,000 Best Denki Co. Ltd. $2,098,889
158,000 Bridgestone Corp. 2,471,246
89,000 CSK Corp. 3,071,443
160,000 Dai Nippon Printing Co., Ltd. 2,890,016
200,000 Daiwa Securities Ltd. 2,926,340
70,000 Denny's Japan Co. Ltd. 2,592,331
650 East Japan Railway Co. 3,181,130
60,000 Eidensha Co. Ltd. 871,848
290,000 Fujitsu, Ltd. 3,043,405
57,000 Futaba Industrial Co., Ltd. 2,950,656
46,000 Glory Ltd. 1,485,368
31,000 Hirose Electric Co. Ltd. 1,939,456
58,000 Ito Yokado Ltd. 3,096,063
84,000 Kaisha Ltd. 2,576,792
90,000 Kokuyo Co. Ltd. 2,370,330
300,000 Komatsu, Ltd. 2,730,570
185,000 Kurimoto, Ltd 2,202,832
120,000 Kurita Water Ltd. 3,184,668
230,000 Maeda Corp. 2,552,977
160,000 Marui Co., Ltd. 2,776,992
200,000 Maruichi Steel Tube Ltd. 3,895,060
142,000 Matsushita Electric Ind. Ltd. 2,263,977
205,000 Mitsubishi Cable Ind. Ltd. 1,543,199
340,000 Mitsubishi Motors Corp. 3,190,730
300,000 Mitsui & Co. 2,555,010
180,000 Mitsui Fudosan Co., Ltd. 2,052,468
66,000 Murata Manufacturing Co. Ltd. 2,550,755
191,200 Nippon Denwa Shisetsu Co., Ltd. 2,874,749
300 Nippon Telegraph and Telephone Corp. 2,663,976
150,000 Nippondenso Co., Ltd. 3,027,240
300,000 Nok Corp. 2,694,240
200,000 Omron Corp. 3,471,240
41,500 Promise 2,596,369
280,000 Rengo Co., Ltd. 2,401,616
30,000 Sangetsu Co., Ltd. 1,011,099
45,000 Secom Co. Ord. 3,065,085
55,000 SMC Corp. 2,758,327
53,000 Sony Corp. 3,080,524
150,000 Takuma Co. Ltd. 2,754,795
310,000 Toho Bank Ltd. 2,339,849
220,000 Tokio Marine & Fire Insurance Co. Ltd. 2,619,584
105,000 Tokyo Style Co. Ltd. Ord. 1,875,384
394,000 Toray Industries, Inc. 3,061,341
87,000 Toyo Seikan Kaisha Ltd. 2,703,934
130,000 Tsubakimoto Precision Prods. Ltd. 2,216,955
24,000 Tsuken Corp. 1,971,720
20,000 Wako Securities Co. Ltd. 195,964
140,000 Yamaguchi Bank, Ltd. (The) 2,514,638
------------
120,963,180
Malaysia (10.8%)(b)
- ---------------------------------------------------------------
250,000 Carlsberg Brewery of Malaysia 1,053,450
795,000 Development & Commercial Bank 2,140,299
250,000 Edaran Otomobil Nasional 1,687,474
270,000 Genting Berhad 2,422,953
653,750 George Kent 1,874,759
482,000 Hong Leong Industries 2,426,002
250,000 Kian Joo Can Factory 1,316,825
415,000 Leader Universal 2,380,233
540,000 Maruichi Malaysia Steel Tube 1,769,796
750,000 Public Bank 1,697,250
780,000 Sime Darby Berhad 2,252,016
458,500 SungeiWay Holdings 1,806,811
302,000 Telekom Malaysia Berhad 2,368,405
700,000 The New Straits Times Press 2,813,090
------------
28,009,363
Hong Kong (8.9%)(b)
- ---------------------------------------------------------------
468,000 Cheung Kong Holdings Ltd. 2,277,382
530,000 Guoco Group Ltd. 2,613,430
274,884 HSBC Holdings PLC 3,068,420
300,000 Hong Kong Land Holdings Ltd. 741,600
550,000 Hutchison Whampoa, Ltd. 2,598,145
300,000 Hysan Development Co., Ltd. 838,650
268,248 Jardine Matheson Holdings Ltd. 2,273,965
300,000 Swire Pacific Ltd. Class A 2,349,000
605,000 Tai Cheung Holdings 833,872
1,200,000 Varitronix International Ltd. 1,894,680
600,000 Wharf (Holdings) Ltd. 2,415,000
6,000,000 Yue Yuen Ind. Hldgs. 1,351,200
------------
23,255,344
Singapore (8.3%)(b)
- ---------------------------------------------------------------
378,000 Clipsal Industries (Holdings) Ltd. 2,438,100
300,000 Cycle & Carriage Ltd. 2,569,980
152,250 Development Bank of Singapore 1,602,096
61,000 Focal Finance Ltd. 121,793
1,452,000 Informatics Holdings Ltd. 1,234,055
200,000 Keppel Corp. 1,618,880
240,000 Singapore Airlines Ltd. 2,347,392
872,000 Singapore Ind. Leasing 717,569
150,000 Singapore Press 2,630,685
221,125 United Overseas Bank Ltd. 2,222,439
22,112 United Overseas Bank Rights 112,609
1,450,000 United Overseas Land Ltd. Ord. 2,572,300
537,000 Venture Manufacturing Ltd. 1,318,496
------------
21,506,394
Australia (6.4%)(b)
- ---------------------------------------------------------------
300,000 Amcor, Ltd. 1,971,900
230,000 Brambles Industries, Ltd. 2,332,361
1,988,000 Burswood Property Trust 1,971,897
160,000 CRA Ltd. 2,250,208
1,300,000 CSL Limited Ord. 2,501,850
1,010,000 MIM Holdings Ltd. 2,041,008
260,471 News Corporation Ltd. 1,652,298
333,000 Western Mining Holdings, Ltd. 1,939,858
------------
16,661,380
Thailand (3.5%)(b)
- ---------------------------------------------------------------
1,500,000 Industrial Finance Corp. 3,724,500
2,250,000 Ruam Pattana Fund (For) 1,531,800
1,150,000 Sinpinyo Fund 5 Foreign 1,013,265
365,000 Thai Farmers Bank Public Co. 2,879,668
------------
9,149,233
Indonesia (3.4%)(b)
- ---------------------------------------------------------------
116,500 Bank Bali Foreign Register 331,967
500,000 Bank Nisp 712,350
1,153,000 Indonesia Fund 1,939,923
750,000 PT HM Sampoerna Indust. for Registered 3,188,475
900,000 Pt Astra International Foreign
Registered 1,985,490
420,000 Smart Corp.-PT Sinar Mas Agro
for Registered 709,380
------------
8,867,585
Taiwan (3.0%)(b)
- ---------------------------------------------------------------
127,520 Hocheng Group Corp. Gdr 144A(c)(d) 3,953,120
60,000 Yageo Taiwan Gdr 144A(c)(d) 1,290,000
148,000 Tung Ho Steel Gdr 144A(c)(d) 2,479,000
------------
7,722,120
Korea (1.1%)(b)
- ---------------------------------------------------------------
1,540 Seoul Access Trust 2,733,500
------------
United States (1.0%)
- ---------------------------------------------------------------
80,000 AFLAC Inc. 2,730,000
India (0.9%)(b)
- ---------------------------------------------------------------
262,500 KEC International Ltd. 2,343,941
Pakistan (.5%)(b)
- ---------------------------------------------------------------
6,585 Pakistan Telecomm Ltd. 144A Gds(c)(d) 1,257,735
- ---------------------------------------------------------------
Total Common Stock (cost $228,436,211)$245,199,775
- ---------------------------------------------------------------
</TABLE>
<TABLE><CAPTION>
<C> <S> <C> <C>
WARRANTS (1.7%)(b)(c) EXPIRATION
NUMBER OF WARRANTS DATE VALUE
- ---------------------------------------------------------------
Japan (1.6%)
- ---------------------------------------------------------------
1,800 Kawasaki Heavy 8/9/95 $517,500
750 Maeda Corp. 2/5/97 1,401,563
4,500 Senko Co., LTD. 12/9/97 555,858
750 Tsurumi Manufacturing 11/15/96 764,063
600 Yodogawa Steel Works Ltd. 12/10/97 1,027,500
----------
4,266,484
Malaysia (0.1%)
- ---------------------------------------------------------------
130,750 George Kent Warrants 1/17/99 160,182
105,000 Pilecon Tsr Warrant 7/6/99 87,255
----------
247,437
Singapore (--%)
- ---------------------------------------------------------------
11,600 Clipsal Industries (Holdings) Ltd.8/12/98 26,216
Hong Kong (--%)
- ---------------------------------------------------------------
80 Luks Industrial Co. Ltd. 6/30/96 3
- ---------------------------------------------------------------
Total Warrants (cost $4,877,461) $4,540,140
- ---------------------------------------------------------------
Total Investments (cost $233,313,672)(e)$249,739,915
- ---------------------------------------------------------------
<FN>
(a) Percentages indicated are based on total net assets of
$260,437,387, which correspond to a net asset value per
class A and class B share of $14.64 and $14.53,
respectively.
(b) Securities whose values are determined or significantly
influenced by trading on exchanges not in the United
States or Canada.
(c) Non-income-producing security.
(d) Securities 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.
At September 30, 1994, these securities amounted to
$8,979,855 or 3.4% of net assets.
(e) The aggregate identified cost for federal income tax
purposes is $233,313,672, resulting in gross unrealized
appreciation and depreciation of $25,784,999 and
$9,358,756, respectively, or net unrealized appreciation
of $16,426,243.
</TABLE>
Forward Currency Contracts Outstanding (at September 30, 1994)
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------
Aggregate
Market Face Delivery Unrealized
Value Value Date Appreciation
- ----------------------------------------------------------------------
Japanese Yen (Sell)$35,962,772 $36,081,205 2/22/95 $118,433
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
Statement of assets and liabilities
September 30, 1994
<TABLE><CAPTION>
<S> <C>
Assets
- ---------------------------------------------------------------
Investments in securities, at value
(identified cost $233,313,672) (Note 1) $249,739,915
Cash 8,945,704
Receivable for securities sold 2,542,821
Receivable for shares of the fund sold 2,864,963
Dividends and other receivables 435,078
Receivable for open forward currency contract 118,433
Unamortized organization expenses (Note 1) 4,137
Total assets 264,651,051
Liabilities
- ---------------------------------------------------------------
Payable for securities purchased $2,438,140
Payable for compensation of Manager (Note 2) 994,593
Payable for shares of the fund repurchased 326,143
Payable for investor servicing and custodian (Note 2) 154,566
Payable for compensation of Trustees (Note 2) 1,458
Payable for administrative services (Note 2) 2,518
Payable for distribution fees (Note 2)
Class A 88,575
Class B 88,745
Other accrued expenses 118,926
Total liabilities 4,213,664
Net assets $260,437,387
Represented by
- ---------------------------------------------------------------
Paid-in capital (Notes 4 and 5) $236,159,283
Distributions in excess of net
investment income (Note 5) (244,274)
Accumulated net realized gain on
investment transactions (Note 5) 7,976,802
Net unrealized foreign currency translation gain 900
Net unrealized appreciation of investments 16,544,676
Total -- Representing net assets applicable
to capital shares outstanding $260,437,387
Computation of net asset value and offering price
Net asset value and redemption price
of class A shares ($149,486,322 divided by
10,210,305 shares) $14.64
Offering price per share (100/94.25 of $14.64)* $15.53
Net asset value and offering price of
class B shares ($110,951,065 divided by
7,634,927 shares)+ $14.53
<FN>
*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 sales charge.<px;;10>The accompanying notes
are an integral part of these financial statements.
</TABLE>
<PAGE>
Statement of operations
Year ended September 30, 1994
<TABLE><CAPTION>
<S> <C>
Investment income:
- ---------------------------------------------------------------
Dividends (net of foreign tax of $258,848) $2,204,488
Interest 303,973
Total investment income $2,508,461
Expenses:
- ---------------------------------------------------------------
Compensation of Manager (Note 2) $1,285,524
Investor servicing and custodian fees (Note 2) 536,797
Reports to shareholders 29,965
Compensation of Trustees (Note 2) 14,239
Administrative services (Note 2) 10,835
Auditing 45,579
Registration fees 69,017
Legal 16,458
Postage 43,472
Amortization of organization expenses (Note 1) 2,988
Other expenses 9,472
Distribution fees (Note 2)
Class A 263,098
Class B 624,236
Total expenses 2,951,680
Net loss on investment transactions (443,219)
Net realized gain on investments (Notes 1 and 3) 8,350,448
Net realized foreign currency
translation losses (Note 1) (123)
Net realized gain on forward currency contracts 133,491
Net unrealized foreign currency
translation gains during the year 1,003
Net unrealized appreciation of investments and
forward currency contracts during the year 14,493,680
Net gain on investments 22,978,499
Net increase in net assets resulting
from operations $22,535,280
</TABLE>
<PAGE>
Statement of changes in net assets
<TABLE><CAPTION>
<S> <C> <C>
Year ended September 30
------------------------
1994 1993
- ---------------------------------------------------------------
Increase in net assets
Operations:
Net investment loss $(443,219) $(41,679)
Net realized gain on investments 8,350,448 285,014
Net realized gain (loss) on foreign
currency translation (123) 229
Net realized gain (loss) on forward
currency contracts 133,491 (73,054)
Net unrealized foreign currency
translation gains 1,003 33
Net unrealized appreciation of
investments and
forward currency contracts 14,493,680 1,951,659
Net increase in net assets
resulting from operations 22,535,280 2,122,202
Distributions to Shareholders from
Net realized gain on investments:
Class A (201,104) --
Class B (93,170) --
Increase from capital share
transactions (Note 4) 204,145,161 29,380,823
Total increase in net assets 226,386,167 31,503,025
Net assets
Beginning of year 34,051,220 2,548,195
End of year (including distributions
in excess of
and accumulated net investment loss
of $244,274 and $36,226, respectively)$260,437,387 $34,051,220
</TABLE>
<PAGE>
Financial Highlights
(For a share outstanding throughout the period)
<TABLE><CAPTION>
<S> <C> <C>
For the period
June 1, 1993
(commencement of
Year ended operations) to
September 30 September 30
------------- ----------------
1994 1993+
--------------------------------
Class B
- ---------------------------------------------------------------
Net Asset Value, Beginning of Period $11.54 $10.86
- ---------------------------------------------------------------
Investment Activities
Net Investment Income (Loss) (.03) (.02)
Net Realized and Unrealized Gain
(Loss) on Investments 3.06 .70
- ---------------------------------------------------------------
Total from Investment Operations 3.03 .68
- ---------------------------------------------------------------
Less Distributions from:
Net Investment Income -- --
Net Realized Gain on Investments (.04) --
- ---------------------------------------------------------------
Total Distributions (.04) --
- ---------------------------------------------------------------
Net Asset Value, End of Period $14.53 $11.54
- ---------------------------------------------------------------
Total Investment Return at
- ---------------------------------------------------------------
Net Asset Value (%)(b) 26.31 6.26(c)
- ---------------------------------------------------------------
Net Assets, End of Period
(in thousands) $110,951 $9,901
- ---------------------------------------------------------------
Ratio of Expenses to Average
- ---------------------------------------------------------------
Net Assets (%) 2.27(d) .86(c)
- ---------------------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (%) (.73)(d) (.25)(c)
- ---------------------------------------------------------------
Portfolio Turnover (%) 65.02 79.78
- ---------------------------------------------------------------
<PAGE>
<C> <C> <C> <C>
For the period
February 20, 1991
(commencement
of operations)
Year ended September 30 to September 30
- ---------------------------------------------------------------
1994 1993 1992 1991
- ---------------------------------------------------------------
Class A
- ---------------------------------------------------------------
$11.55 $8.17 $8.08 $8.58
- ---------------------------------------------------------------
.04 (.03) (.01)(a) .02(a)
3.09 3.41 .10 (.52)
- ---------------------------------------------------------------
3.13 3.38 .09 (.50)
- ---------------------------------------------------------------
-- -- -- --
(.04) -- -- --
- ---------------------------------------------------------------
(.04) -- -- --
- ---------------------------------------------------------------
$14.64 $11.55 $8.17 $8.08
- ---------------------------------------------------------------
27.15 41.37 1.11 (5.83)(c)
- ---------------------------------------------------------------
$149,486 $24,150 $2,548 $2,084
- ---------------------------------------------------------------
1.53(d) 2.03 1.88(a) 1.38(a)(c)
- ---------------------------------------------------------------
.01(d) (.54) (.06)(a) .28(a)(c)
- ---------------------------------------------------------------
65.02 79.78 95.67 47.11(c)
- ---------------------------------------------------------------
<FN>
+ Per share net investment income (loss) has been determined
on the basis of the weighted average number of shares
outstanding during the period.
(a) Reflects an expense limitation in effect during the
period. As a result of such limitation, expenses of the
fund for the periods ended September 30 , 1991 and 1992,
reflect a per share reduction of approximately $0.08 and
$0.01, respectively. See Note 2.
(b) Total investment return assumes dividend reinvestment and
does not reflect the effect of sales charges.
(c) Not annualized.
(d) See Note 2.
</TABLE>
<PAGE>
Notes to financial statements
September 30, 1994
Note 1
Significant accounting policies
The fund is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management
investment company. The fund seeks capital appreciation by
investing primarily in common stocks and other securities of
companies located in Asia and in the Pacific Basin.
The fund offers both class A and class B shares. The fund
commenced its public offering of class B shares on June 1,
1993. Class A shares are sold with a maximum front-end sales
charge of 5.75%. Class B shares do not pay a front-end sales
charge, but pay a higher ongoing distribution fee than class A
shares, and are subject to a contingent deferred sales charge
if those shares are redeemed within six years of purchase.
Expenses of the fund are borne pro-rata by the holders of both
classes of shares, except that each class bears expenses unique
to that class (including the distribution fees applicable to
such class), and votes as a class only with respect to its own
distribution plan or other matters on which a class vote is
required by law or determined by the Trustees. Shares of each
class would receive their pro-rata share of the net assets of
the fund, if the fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its
financial statements. The policies are in conformity with
generally accepted accounting principles.
A Security valuation--Investments for which market quotations
are readily available are stated at market value, which is
determined using the last reported sale price 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, except that certain
U.S. government obligations are stated at the mean between the
last reported bid and asked prices. 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. (See Section E of Note 1 with respect
to the valuation of options and forward currency contracts.)
Securities quoted in foreign currencies are translated into
U.S. dollars at the current exchange rate. Gains and losses
that arise from changes in exchange rates are not segregated
from gains and losses that arise from changes in market prices
of investments. The effects on net investment income arising
from changes in exchange rates are also not segregated.
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 and certain other accounts of other
registered investment companies managed by Putnam Investment
Management Inc., (Putnam Management), the fund's Manager, a
wholly-owned subsidiary of Putnam Investments, Inc. 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 an amount at least equal to the
resale price, including accrued interest. The fund's Manager is
responsible for determining that the value of these underlying
securities is at all times at least equal to the resale price,
including accrued interest.
D Security transactions and related investment income--Security
transactions are accounted for on the trade date (date the
order to buy or sell is executed). Interest income is recorded
on the accrual basis and dividend income is recorded on the ex-
dividend date, except that certain dividends from foreign
securities are recorded as soon as the fund is informed of the
ex-dividend date.
E Option accounting principles--The premium paid by the fund
for the purchase of a call or put option is included in the
fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked- to-market" to reflect the current
market value of the option. If an option the fund has purchased
expires on the stipulated expiration date, the fund realizes a
loss in the amount of the cost of the option. If the fund
enters into a closing sale transaction, the fund realizes a
gain or loss, depending on whether the proceeds from the
closing sale transaction are greater or less than the cost of
the option. If the fund exercises a purchased call option, the
cost of the security or currency acquired by exercising the
call is increased by the premium paid to buy the call. If the
fund exercises a put option, it realizes a gain or loss from
the sale of the underlying security or currency and the
proceeds from such sale are decreased by the premium originally
paid.
Options on foreign currencies
The fund writes and purchases put and call options on foreign
currencies. The accounting principle and risks involved are
similar to those described above relating to options on
securities. The amount of potential loss to the fund upon
exercise of a written call option is the value (in U.S.
dollars) of the currency sold, converted at the spot price,
less the value of U.S. dollars received in exchange. The amount
of potential loss to the fund upon exercise of a written put
option is the value (in U.S. dollars) of the currency received
converted at the spot price, less the value of the U.S. dollars
paid in exchange.
Forward currency contracts
A forward currency contract is an agreement between two parties
to buy and sell a currency at a set price on a future date. The
market value of the contract will fluctuate with changes in
currency exchange rates. The contract is "marked-to-market"
daily and the change in the market value is recorded by the
fund as an unrealized gain or loss. When the contract is
closed, the fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was
opened and the value at the time it was closed. The maximum
potential loss from forward currency contracts is the aggregate
face value of U.S. dollars at the time the contract was opened,
however, management believes the likelihood of such a loss is
remote.
F Federal taxes--It is the policy of the fund to distribute all
of its income within the prescribed time and otherwise comply
with the provisions of the Internal Revenue Code applicable to
regulated investment companies. It is also the intention of the
fund to distribute an amount sufficient to avoid imposition of
any excise tax under Section 4982 of the Internal Revenue Code
of 1986. Therefore, no provision has been made for federal
taxes on income, capital gains or unrealized appreciation of
securities held and excise tax on income and capital gains.
G Distributions to shareholders--Distributions to shareholders
are recorded by the fund on the ex-dividend date.
The amount and character of income and gains to be distributed
are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
differences include treatment of organizational expense and
treatment of certain gains and losses on foreign currency
transactions. Reclassifications are made to the fund's capital
accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax
regulations. For the year ended September 30, 1994, the fund
reclassified $276,903 to decrease distributions in excess of
net investment income, $274,417 to decrease accumulated net
realized gain on investments and $2,486 to decrease paid-in
capital.
H Unamortized organization expenses--Expenses incurred by the
fund in connection with its organization, its registration with
the Securities and Exchange Commission and with various states
and the initial public offering of its shares were $14,777.
These expenses are being amortized on a straight-line basis
over a five-year period.
I Foreign currency translation--The accounting records of the
fund are maintained in U.S. dollars. Investment securities and
other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at prevailing rates of
exchange at period end. Purchases and sales of securities,
income receipts, and expense payments are translated into U.S.
dollars at the prevailing exchange rate on the respective dates
of transactions.
Effective October 1, 1993, the fund adopted Statement of
Position (SOP) 93-4: Foreign Currency Accounting and Financial
Statement Presentation for Investment Companies. In accordance
with this SOP, reported net realized gains and losses on
foreign currency transactions represent net gains and losses
from sales and maturities of forward currency contracts,
disposition of foreign currencies, currency gains and losses
realized between the trade and settlement date on securities
transactions and the difference between the amount of net
investment income accrued and the U.S. dollar amount actually
received. Further, as permitted under the SOP, the effects of
changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations
from the effects of changes in market prices of those
securities, but are included with the net realized and
unrealized gain or loss on investments.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, the fund's Manager, a wholly-
owned subsidiary of Putnam Investments, Inc., for management
and investment advisory services is paid quarterly based on the
average net assets of the fund for the quarter. Such fee is at
an annual rate of 0.80% of the first $500 million of average
net assets, 0.70% of the next $500 million, 0.65% of the next
$500 million and 0.60% of any amount over $1.5 billion. The fee
is subject to reduction in any year to the extent that expenses
(exclusive of distribution fees, brokerage, interest and taxes)
of the fund exceed 2.5% of the first $30 million of average net
assets, 2% of the next $70 million and 1.5% of any amount over
$100 million and by the amount of certain brokerage commissions
and fees (less expenses) received by affiliates of the Manager
on the fund's portfolio transactions.
Until December 1, 1993, the Manager had voluntarily agreed to
reduce its compensation and to the extent necessary, absorb
certain fund expenses, to the extent that expenses of the fund
exceed 1.90% of average net assets. The fund's expenses subject
to this limitation are exclusive of brokerage, interest, taxes,
deferred organizational and extraordinary expenses, and
payments required under the fund's Distribution Plan. This
limitation is accomplished by a reduction of the compensation
payable under the management contract to the Manager and, if
necessary, payment of additional fund expenses by the Manager.
The fund also reimburses the Manager for the compensation and
related expenses of certain officers of the fund and their
staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined
annually by the Trustees. For the year ended September 30,
1994, the fund incurred $10,835 for these services.
Trustees of the fund receive an annual Trustee's fee of $1,010
and an additional fee for each Trustees' meeting attended.
Trustees who are not interested persons of the Manager and who
serve on committees of the Trustees receive additional fees for
attendance at certain committee meetings.
Custodial functions for the fund are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are
provided by Putnam Investor Services, a division of Putnam
Fiduciary Trust Company (PFTC). Fees paid for these investor
servicing and custodial functions for the year ended September
30, 1994, amounted to $536,797.
Investor servicing and custodian fees reported in the Statement
of operations for the year ended September 30, 1994 have been
reduced by credits allowed by PFTC, and such credits amounted
to $211,625.
The fund has adopted a distribution plan with respect to its
class A shares (the "Class A Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the
Class A Plan is to compensate Putnam Mutual Funds Corp.
(formerly known as Putnam Financial Services, Inc.), a wholly-
owned subsidiary of Putnam Investments Inc., for services
provided and expenses incurred by it in distributing class A
shares. The Trustees have approved payment by the fund to
Putnam Mutual Funds Corp. at an annual rate of 0.25% of the
fund's average net assets attributable to class A shares. For
the year ended September 30, 1994, the fund paid $263,098 in
distribution fees for class A shares.
During the year ended September 30, 1994, Putnam Mutual Funds
Corp., acting as an underwriter, received net commissions of
$361,348 from the sale of class A shares of the fund.
A deferred sales charge of up to 1% is assessed on certain
redemptions of class A shares purchased as part of an
investment of $1 million or more. For the year ended September
30, 1994, Putnam Mutual Funds Corp., acting as underwriter,
received $16,986 on deferred sales charges on class A
redemptions.
The fund has adopted a distribution plan with respect to its
class B shares (the "Class B Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of Class
B Plan is to compensate Putnam Mutual Funds Corp., for services
provided and expenses incurred by it in distributing class B
shares. The trustees have approved payments by the fund to
Putnam Mutual Funds Corp. at an annual rate of 1.00% of the
fund's average net assets attributable to class B shares. For
the year ended September 30, 1994, the fund paid Putnam Mutual
Funds Corp. distribution fees of $624,236 for class B shares.
Putnam Mutual Funds Corp. also receives the proceeds on the
contingent deferred sales charges on its class B share
redemptions within six years of purchase. The charge is based
on declining rates, which begin at 5% of the net asset value of
the redeemed shares. Putnam Mutual Funds
Corp. received contingent deferred sales charges of $87,911
from redemptions during the year ended September 30, 1994.
Note 3
Purchases and sales of securities
During the year ended September 30, 1994, purchases and sales
of investment securities other than short-term investments
aggregated $294,063,290 and $95,896,316, respectively. In
determining the net gain or loss on securities sold, the cost
of securities has been determined on the identified cost basis.
Transactions in forward currency contracts during the year are
summarized as follows:
<TABLE><CAPTION>
<S> <C>
Sales of
Forward Currency Contracts
- ---------------------------------------------------------------
Aggregate
Face Value
- ---------------------------------------------------------------
Contracts opened $81,264,139
- ---------------------------------------------------------------
Contracts closed (45,182,934)
- ---------------------------------------------------------------
Open at end of year $36,081,205
- ---------------------------------------------------------------
</TABLE>
Note 4
Capital shares
At September 30, 1994, there was an unlimited number of shares
of beneficial interest authorized. Transactions in capital
shares were as follows:
<TABLE><CAPTION>
<S> <C> <C>
Year ended September 30
- ---------------------------------------------------------------
1994
- ---------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------
Shares sold 15,491,392 $213,580,560
Shares issued in connection
with reinvestment of
distributions 14,011 187,312
- ---------------------------------------------------------------
15,505,403 213,767,872
- ---------------------------------------------------------------
Shares repurchased (7,385,357) (103,138,353)
- ---------------------------------------------------------------
Net increase 8,120,046 $110,629,519
- ---------------------------------------------------------------
Year ended September 30
- ---------------------------------------------------------------
1993
- ---------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------
Shares sold 2,239,308 $24,888,619
Shares issued in connection
with reinvestment of
distributions -- --
- ---------------------------------------------------------------
2,239,308 24,888,619
- ---------------------------------------------------------------
Shares repurchased (460,756) (5,131,406)
- ---------------------------------------------------------------
Net increase 1,778,552 $19,757,213
- ---------------------------------------------------------------
Year ended September 30
- ---------------------------------------------------------------
1994
- ---------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------
Shares sold 8,671,210 $120,131,536
- ---------------------------------------------------------------
Shares issued in connection
with reinvestment of
distributions 6,090 81,248
- ---------------------------------------------------------------
8,677,300 120,212,784
- ---------------------------------------------------------------
Shares repurchased (1,900,231) (26,697,142)
- ---------------------------------------------------------------
Net increase 6,777,069 $93,515,642
- ---------------------------------------------------------------
June 1, 1993
(commencement of
operations) to
September 30
- ---------------------------------------------------------------
1993
- ---------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------
Shares sold 879,318 $9,865,269
- ---------------------------------------------------------------
Shares issued in connection with
reinvestment of distributions -- --
- ---------------------------------------------------------------
879,318 9,865,269
- ---------------------------------------------------------------
Shares repurchased (21,461) (241,659)
- ---------------------------------------------------------------
Net increase 857,857 $9,623,610
- ---------------------------------------------------------------
</TABLE>
Note 5
Reclassification of Capital Accounts
Effective October 1, 1993, Putnam Asia Pacific Growth Fund has
adopted the provisions of the AICPA Statement of Position (SOP)
93-2 "Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital
Distributions, by Investment Companies (SOP)." The purpose of
this SOP is to report the undistributed net investment income
(accumulated (loss) and accumulated net realized gain (loss)
accounts in such a manner as to approximate amounts available
for future distributions (or to offset future realized taxable
capital gains) and to achieve uniformity in the presentation of
distributions by investment companies.
As a result of the SOP, the Fund <bx;5>has reclassified $41,732
to increase accumulated net investment loss $63,065 to increase
accumulated net realized gain and $21,333 to decrease paid-in
capital.
These adjustments represent the cumulative amounts necessary to
report these balances through September 30, 1993, the close of
the Fund's prior fiscal year-end for financial reporting and
tax purposes. These adjustments have no impact to the total net
assets of the Fund.
Federal tax information
For federal income tax purposes, distributions from net
investment income and short-term capital gains totaling $0.026
per share for the year ended September 30, 1994, constitute
"dividend income". The fund has designated distributions of
$0.005 per share as long term capital gain dividends.
The Form 1099 you receive in January 1995 will show the tax
status of all distributions paid to your account in calendar
1994.
If you are a shareholder in an IRA or other tax-sheltered
retirement plan, this statement is for information only and
will serve as a record of distributions reinvested in your
account during the fiscal year. Money invested in these plans
generally is not subject to federal income tax until you
withdraw it.
As required by law, your Fund reports to the Internal Revenue
Service on a calendar year basis the amount of distributions
paid to each shareholder.
The fund has elected under Section 853 of the Internal Revenue
Code to pass through to its shareholders the opportunity to
claim a foreign tax credit or deduction. Therefore, you will be
deemed to have received in your December 1994 dividend the
allocable amount of foreign taxes and to have paid those taxed
directly. When you file your federal tax return (Form 1040),
you may claim the amount of foreign taxes paid either as a
foreign tax credit or as an itemized deduction but not both. A
foreign tax credit will generally result in a direct reduction
in your U.S. tax liability, subject to the limitations of
Section 904 of the Code. The amount of your foreign tax credit
will be reflected on the Form 1099 that you will receive after
December 31, 1994. During the year ended September 30, 1994,
the fund earned $2,767,309 from foreign countries and paid
$258,848 in taxes to those foreign countries.
<PAGE>
Our commitment to quality service
CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested
Service Seal every year since the award's 1990 inception.
DALBAR, an independent research firm, ran more than 10,000
tests of 38 shareholder service components. In every category,
Putnam outperformed the industry standard.
HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25
a month from a Putnam fund or from your checking or savings
account.*
SWITCH FUNDS EASILY.
You can move money from one account to another with the same
class of shares without a service charge. (This privilege is
subject to change or termination.)
ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business
day at the then-current net asset value, which may be more or
less than their original cost.
For details about any of these or other services, contact your
financial advisor or call the toll-free number shown below and
speak with a helpful Putnam representative.
To make an additional investment in this or any other Putnam
fund, contact your financial advisor or call our toll-free
number: 1-800-225-1581.
*Regular investing, of course, does not guarantee a profit or
protect against a loss in a declining market. Investors
should consider their ability to continue purchasing shares
during periods of low price levels.
<PAGE>
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Anthony W. Regan
Vice President
Peter Carman
Vice President
Brett C. Browchuk
Vice President
David K. Thomas
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam
Asia Pacific Growth Fund. 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.
<PAGE>
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
844/193-14797
<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal
type.
(3) Headers (e.g. the names of the fund) and footers (e.g.
page numbers and OThe accompanying notes are an integral
part of these financial statementsO) are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(5) Bullet points and similar graphic symbols are omitted.
(6) Page Numbering is different.
