Putnam
Asia Pacific
Growth
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
3-31-00
[SCALE LOGO OMITTED]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[COPYRIGHT] Karsh, Ottawa
Dear Shareholder:
The markets continued to provide their share of challenges and
opportunities as your fund closed its books on the first half of fiscal
year 2000. In the following report, the fund's managers discuss
performance for the period and prospects for the months ahead.
This is the last letter to you and the other shareholders of Putnam Asia
Pacific Growth Fund that I will be signing. After more than 30 years as
Chairman of the Trustees and President of the Putnam Funds, the time has
come for me to step aside. In June, John Hill will become Chairman. John
is currently an independent Trustee and has served on the board for the
past 14 years. In addition, my son, George Putnam, III, will take on the
role of President. I am confident that the leadership of the funds will
be in exceptionally strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay
in close touch with the funds. It has been my privilege to serve you.
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
May 17, 2000
Report from the Fund Managers
Paul C. Warren
Carmel Peters
Stocks in Asia and the Pacific Basin continued to appreciate in the
first half of Putnam Asia Pacific Growth Fund's 2000 fiscal year. The
period opened amid a robust rally across the region. Though this trend
gave way in January, your fund still emerged with a strong return for
the overall period and achieved more than double the performance of the
MSCI Pacific Index, the fund's benchmark. The fundamental condition and
outlook for the region remain mostly upbeat. Economic growth is
gathering pace, a growing number of corporations are taking new steps to
enhance their competitiveness, and many companies in the region have
emerged as leaders in the global technology sector.
Total return for 6 months ended 3/31/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- ------------------------------------------------------------------------
32.77% 25.16% 32.23% 27.22% 32.22% 31.22% 32.43% 27.84%
- ------------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 6.
* STRONG RALLY LIFTS FUND BEFORE SUBSIDING
Rapid market movements dominated the past six months. The fourth quarter
of 1999 was especially dramatic because of the speed of the gains and
their global nature. In almost every market, stocks in the technology,
telecommunications, and media sectors surged as investors showed great
confidence in possibilities for computer and telecommunications
technology, and the Internet in particular, to slash business costs and
enhance productivity.
Fortunately for your fund, Japan is a leader in many of the new
technologies associated with the "new economy". Several Japanese stocks
held in the portfolio were among the best performers worldwide, for
example, NTT DoCoMo, a subsidiary of Japan's national telecommunications
company that specializes in wireless telephone service and is the global
leader in technology for transmitting data over wireless devices. Other
Japanese stocks that contributed strong performance included Nikko
Securities, Fuji Machine Manufacturing Company, and Sony. Investors are
impressed with many new Sony products including Playstation 2, which is
set for global release. While these holdings, as well as others
discussed in this report, were viewed favorably at the end of the
period, all are subject to review and adjustment in accordance with the
fund's investment strategy and may vary in the future.
[GRAPHIC OMITTED: horizontal bar chart TOP COUNTRY ALLOCATIONS]
TOP COUNTRY ALLOCATIONS*
Japan 58.7%
Hong Kong 14.7%
Taiwan 8.2%
South Korea 5.9%
Australia 5.6%
Footnote reads:
*Based on net assets as of 3/31/00. Holdings will vary over time.
As occasionally happens in financial markets, the prices of many
high-flying stocks rose faster than earnings, increasing what we call
valuation risk, or the fluctuations that occur when investors question
whether a stock merits its high price. As a result, many stocks,
particularly in Japan, came off their peaks in January and though they
rebounded in February, weakened again in March. As always, we took steps
to limit risk. We sold stocks we considered most vulnerable to
volatility, including Hikari Tsushin, a Japanese technology retailer,
Benesse, an adult education company, and several software companies.
During the period, Japan remained the fund's largest country weighting
by far and was one of the world's best-performing markets. On the
economic front, Japan's economy once again contracted in late 1999 but
is growing again and is likely to accelerate. Although large public debt
looms as a risk, consumer spending is showing some improvement,
especially among the young. The yen remained strong during the six-month
period, which helps other Asian countries by giving them a competitive
cost advantage relative to Japan.
* PORTFOLIO MOVES MADE WITH EYE ON CONTROLLING RISK
Our investment strategy is to constantly compare the growth prospects of
a stock with its risk. We select stocks of growing companies that are
priced below their fundamental worth and are managed in ways that we
believe can help the stock appreciate to its appropriate value.
Conversely we seek to sell stocks that we believe have reached their
full potential.
On a fundamental level, more and more Japanese companies look attractive
to us as they announce restructurings. Many, such as Fujitsu and Nikko
Securities, are following through with genuine reforms, such as cutting
redundant workers and shutting down unprofitable business units. We also
added Nomura Securities, Japan's largest stock brokerage, which is
benefiting from an internal restructuring. As a major investment banker,
Nomura is profiting from advising other Japanese companies undertaking
restructuring. As Japanese investors shift billions out of low-yielding
postal savings accounts and into equity investments, Nomura is likely to
be a prime beneficiary. Finally Nomura will list its research arm --
Nomura Research -- as a separate stock this year, which is likely to
unlock value not yet fully reflected in Nomura's price.
Putnam Asia Pacific Growth Fund's class A shares were ranked in the top
quartile by Lipper for the 5-year period ended March 31, 2000. The fund
ranked in the top 20%, or 7 out of 34 Pacific Region funds that were
ranked.
Past performance is no guarantee of future results. Lipper is an
industry research firm whose rankings are based on total return
performance, vary over time, and do not reflect the effects of sales
charges. Performance of other share classes will vary. The fund was
ranked 7 out of 43 (16%) for the three-year period and 23 out of 58
(39%) for the one-year period. The fund was not ranked over longer
periods.
We also modified positions in Japan to reflect changes in prospects for
different companies. For example, we sold the fund's position in DDI
Corporation, as NTT DoCoMo emerged as the leader in the wireless
Internet products with a proprietary technology that will become a
global standard. NTT DoCoMo's subsidiary, 1Mode, forecast sales of 2
million mobile phones this year, but the actual rate is much higher and
could reach 7 million. We sold Yamanouchi Pharmaceuticals and added
Takeda Chemical Industries, which has more attractive global
partnerships that can aid its future research.
* TECHNOLOGY OFFERS FERTILE FIELD FOR INVESTING
Although technology stocks in Asia have experienced significant
volatility in recent months, we remain confident in the fund's holdings
because our investment decisions are backed by rigorous research. We
believe we are able to identify the leading companies in these
industries -- those that are well managed and focused on profits -- and
we strive to buy them at attractive prices to limit risk. Our research
process also helps us to identify companies in other sectors that stand
to benefit from opportunities made possible by new technologies.
One of the fund's largest holdings in the technology sector is Samsung
Electronics of South Korea. The company is a leader in several
profitable product areas including DRAM semiconductor chips, liquid
crystal display (LCD) screens for computer monitors, and cellular
telephones. With strong demand for computers around the world,
semiconductors including DRAM memory chips have had a tremendous price
recovery and have added to Samsung's profits. LCD screens have huge
growth potential; consumers are likely to prefer them to traditional
monitors because of their graphic quality and compact size. Another
company that is focusing on higher-end products is Hon Hai Precision
Industry in Taiwan. Hon Hai has repositioned itself by adding new
products -- networking components -- to its traditional product line of
personal computer connectors.
"Asia's economic recovery from financial crisis has "exceeded all
expectations," with growth this year likely to reach 6.2 percent for the
second year in succession, according to the Asian Development Bank."
- -- Financial Times, April 26, 2000
We have also identified companies benefiting from outsourcing as large
Asian companies restructure as well as from a large upswing in business
capital expenditures. We favor Japan's Advantest, Fuji Machine, and
Keyence. Taiwan Semiconductor Manufacturing and United Microelectronics
are benefiting from the outsourcing trend. Both make wafers for computer
boards and telecommunication products and are attracting new orders from
larger companies that want to lower their manufacturing costs.
Several fund holdings outside the technology sector are poised to
enhance profits by adding business-to-business (B2B) capabilities,
which should improve efficiency. We favor Hutchison Whampoa, which has a
dominant presence in the port of Hong Kong and can use its unique
knowledge in building its B2B capabilities. The fund also owns Li &
Fung, a Hong Kong trading company that functions as a middleman,
bringing together international retailers with manufacturers in Asia.
The company can realize substantial cost savings as it adds online
capabilities. We added Nippondenso of Japan during the past six months.
This company specializes in electronic automobile components and stands
to attract new orders from U.S. automotive companies that are expanding
their supply network for auto parts from international vendors.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Murata Manufacturing Co., Ltd.
Japan
Electronics
Nikko Securities Co., Ltd.
Japan
Investment banking/brokerage
Sony Corp.
Japan
Consumer cyclicals
NTT DoCoMo
Japan
Telecommunications
NEC Corp.
Japan
Technology
China Telecom Ltd.
Hong Kong
Telecommunications
Nomura Securities Co. Ltd.
Japan
Investment banking/brokerage
Samsung Electronics Co.
South Korea
Electronics
Hutchison Whampoa, Ltd.
Hong Kong
Conglomerate
Kyocera Corp.
Japan
Electronics
These holdings represent 35.0% of the fund's net assets as of 3/31/00.
Portfolio holdings will vary over time.
* HORIZON STILL BRIGHT
As the fund moves into the second half of the fiscal year, our outlook
is quite constructive. Although volatility in the United States
technology sector has had ripple effects in Asia, the fundamental
situation remains solid. Asian economies continue to expand and many
companies, especially those we favor, are being managed in ways that
help them compete in the global economy. While monitoring risks, we
continue to focus on finding stocks with attractive growth prospects.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 3/31/00, there is no guarantee the fund will
continue to hold these securities in the future.
International investing involves certain risks, such as currency
fluctuations, economic instability, and political developments. Funds
investing in a single region may be subject to more volatility than
funds investing in a diverse group of regions.
Performance Summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
Asia Pacific Growth Fund is designed for investors seeking capital
appreciation through common stocks and other securities of Asian or
Pacific Basin companies.
<TABLE>
TOTAL RETURN FOR PERIODS ENDED 3/31/00
<CAPTION>
Class A Class B Class C Class M
(inception dates) (2/20/91) (6/1/93) (7/26/99) (2/1/95)
NAV POP NAV CDSC NAV CDSC NAV POP
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
6 months 32.77% 25.16% 32.23% 27.22% 32.22% 31.22% 32.43% 27.84%
- ----------------------------------------------------------------------------------------
1 year* 79.28 68.97 77.92 72.92 78.05 77.05 78.58 72.32
- ----------------------------------------------------------------------------------------
5 years 71.39 61.47 65.21 63.21 65.15 65.15 67.35 61.44
Annual average 11.38 10.06 10.56 10.29 10.55 10.55 10.85 10.05
- ----------------------------------------------------------------------------------------
Life of fund 166.51 151.29 148.50 148.50 148.95 148.95 153.75 144.85
Annual average 11.36 10.64 10.51 10.51 10.53 10.53 10.76 10.33
- ----------------------------------------------------------------------------------------
* Returns were achieved during favorable market conditions that may not be sustainable.
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/00
MSCI Consumer
Pacific Index price index
- -------------------------------------------------------------------------
6 months 15.61% 2.03%
- -------------------------------------------------------------------------
1 year 41.12 3.69
- -------------------------------------------------------------------------
5 years 14.40 13.15
Annual average 2.73 2.50
- -------------------------------------------------------------------------
Life of fund 35.10 27.00
Annual average 3.37 2.67
- -------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 5.75% and
3.50%, respectively. Class B share returns for the 1-, 5-, and
life-of-fund periods reflect the applicable contingent deferred sales
charge (CDSC), which is 5% in the first year, declines to 1% in the
sixth year, and is eliminated thereafter. Returns shown for class B and
class M shares for periods prior to their inception are derived from the
historical performance of class A shares, adjusted to reflect both the
initial sales charge or CDSC, if any, currently applicable to each class
and in the case of class B and class M shares the higher operating
expenses applicable to such shares. For class C shares, returns for
periods prior to their inception are derived from the historical
performance of class A shares, adjusted to reflect both the CDSC
currently applicable to class C shares, which is 1% for the first year
and is eliminated thereafter, and the higher operating expenses
applicable to class C shares. All returns assume reinvestment of
distributions at NAV. Investment return and principal value will
fluctuate so that an investor's shares when redeemed may be worth more
or less than their original cost.
<TABLE>
<CAPTION>
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 3/31/00
Class A Class B Class C Class M
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Distributions (number) 1 1 1 1
- -----------------------------------------------------------------------------------
Income $0.130 $0.059 $0.114 $0.083
- -----------------------------------------------------------------------------------
Capital gains -- -- -- --
- -----------------------------------------------------------------------------------
Total $0.130 $0.059 $0.114 $0.083
- -----------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- -----------------------------------------------------------------------------------
9/30/99 $13.49 $14.31 $13.20 $13.48 $13.35 $13.83
- -----------------------------------------------------------------------------------
3/31/00 17.77 18.85 17.39 17.70 17.59 18.23
- -----------------------------------------------------------------------------------
</TABLE>
Terms and definitions
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
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 5.75% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
Comparative benchmarks
Morgan Stanley Capital International (MSCI) Pacific Index is an index of
equity securities issued by companies located in five Asian countries.
All values are expressed in U.S. dollars. Securities indexes assume
reinvestment of all distributions and interest payments and do not take
in account brokerage fees or taxes. Securities in the fund do not match
those in the indexes and performance of the fund will differ. It is not
possible to invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Welcome to www.putnaminv.com
Now you can use your PC to get up-to-date information about your funds,
learn more about investing and retirement planning, and access market
news and economic outlooks from Putnam.
VISIT PUTNAM'S SITE ON THE WORLD WIDE WEB FOR:
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New features will be added to the site regularly. So be sure to bookmark us at
http://www.putnaminv.com
A guide to the financial statements
These sections of the report constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss
for the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that
remain in the portfolio -- any change in unrealized gains or losses over
the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
March 31, 2000 (Unaudited)
COMMON STOCKS (99.6%) (a)
NUMBER OF SHARES VALUE
<S> <C>
Australia (5.6%)
- ----------------------------------------------------------------------------------------------------------------------------
505,180 Austar United Communications Ltd. $ 2,597,118
456,960 Broken Hill Proprietary Co., Ltd. 4,952,181
1,133,712 Cable & Wireless Optus Ltd. (NON) 4,544,870
328,700 Cable & Wireless Optus Ltd. 144A (NON) 1,317,706
218,019 News Corp. Ltd. ADR 12,263,569
239,979 News Corp. Ltd. 3,355,470
392,849 Publishing and Broadcasting Ltd. 3,338,245
743,000 Westpac Banking Corp. 4,654,238
----------------
37,023,397
Hong Kong (14.7%)
- ----------------------------------------------------------------------------------------------------------------------------
54,000 Asia Satellite Telecommunications Holdings Ltd. 211,520
2,088,800 Cable & Wireless HKT Ltd. 5,472,487
1,055,000 Cheung Kong Holdings 15,784,691
2,465,100 China Telecom Ltd. (NON) 21,607,022
31,100 China.com Corp. (NON) 2,519,100
634,000 Citic Pacific Ltd. 3,843,164
8,956,000 e-New Media Co. Ltd. (NON) 2,904,245
900,000 Hutchison Whampoa, Ltd. 16,239,646
1,088,500 Johnson Electric Holdings Ltd. 7,443,990
1,840,000 Legend Holdings Ltd. 2,871,123
2,510,000 Li & Fung Ltd. 11,636,936
650,000 Sun Hung Kai Properties Ltd. 5,634,752
326,000 Sunevision Holdings, Ltd. 144A (NON) 544,275
5,150 Sunevision Holdings, Ltd. (NON) 8,598
----------------
96,721,549
India (0.1%)
- ----------------------------------------------------------------------------------------------------------------------------
40,500 SSI, Ltd 144A GDR 556,875
Japan (58.2%)
- ----------------------------------------------------------------------------------------------------------------------------
66,800 Advantest Corp. 14,218,736
80 Ariake Japan Co. Ltd. 4,415
147,900 BODYSONIC Co., Ltd. (NON) 3,265,156
47,100 Data Communication Systems Co., Ltd. 3,156,257
204,000 Eisai Co. Ltd. 5,390,446
14,790 Fancl Corp. 2,424,306
103,400 Fuji Machine Manufacturing Co., Ltd. 7,706,770
106,000 Fujisawa Pharmaceutical Co. 3,727,655
507,000 Fujitsu Ltd. 15,600,762
654,000 Furukawa Electric Co., Ltd. 11,020,318
40,000 Hitachi Information Systems, Ltd. 2,074,827
300 Hoshiden Corp. 15,004
234,000 INES Corp. 4,640,227
28,000 Itoen, Ltd. 3,391,619
35,300 Kadokawa Shoten Publishing Co., Ltd. 8,396,552
10 KDD Corp. 844
17,200 Keyence Corp 6,888,737
55,800 Kojima Co Ltd. 1,610,716
94,200 Kyocera Corp. 15,790,485
29,000 Matsushita Communication Industrial Co., Ltd. 5,354,108
50 Meiji Seika Kaisha Ltd. 350
318,000 Mitsubishi Trust and Banking Corp. 2,957,273
152,000 Murata Manufacturing Co. Ltd. 37,046,010
732,000 NEC Corp. 21,666,113
2,108,000 Nikko Securities Co. Ltd. 31,999,922
35,600 Nintendo Co. Ltd. 6,277,034
747 Nippon Telegraph and Telephone Corp. 11,894,207
15,220 Nippon Television Network Corp. 10,838,507
227,000 Nippondenso Co., Ltd. 5,421,657
515,000 Nomura Securities Co. Ltd. 16,853,082
604 NTT DoCoMo 24,839,699
27,900 Rohm Co. Ltd. 9,729,706
49,950 SANIX Inc. 3,449,707
63,000 Seven-Eleven Japan Co., Ltd. 7,261,893
124,500 Sharp Corp. 2,669,508
336,000 Shiseido Co., Ltd. 4,578,685
7,000 Softbank Corp. 6,256,716
197,400 Sony Corp. 27,960,340
431,023 Sumitomo Corp. 5,237,790
118,000 Taiyo Yuden Co., Ltd. 7,642,278
137,000 Takeda Chemical Industries 9,769,464
64,100 THK Co., Ltd. 2,955,475
98,900 Toyota Motor Corp. 5,187,975
62,000 Yamada Denki 6,298,720
----------------
383,470,051
Malaysia (1.0%)
- ----------------------------------------------------------------------------------------------------------------------------
2,090,000 Public Bank Berhad 2,200,058
520,000 Resorts World Berhad 1,724,256
590,000 Telekom Malaysia 2,422,169
----------------
6,346,483
New Zealand (0.1%)
- ----------------------------------------------------------------------------------------------------------------------------
785,100 Carter Holt Harvey Ltd. 678,119
Singapore (4.1%)
- ----------------------------------------------------------------------------------------------------------------------------
319,200 Chartered Semiconductor Manufacturing (NON) 3,022,233
221,000 Datacraft Asia Ltd. 2,066,350
627,400 Oversea-Chinese Banking Corp. Ltd. 3,886,873
124,000 Singapore Press Holdings Ltd. 1,978,492
24,300 St. Assembly Test Services Ltd. ADR (NON) 1,178,550
133,200 St. Assembly Test Services, Ltd. (NON) 657,826
1,010,500 Venture Manufacturing Ltd. 13,878,872
----------------
26,669,196
South Korea (5.9%)
- ----------------------------------------------------------------------------------------------------------------------------
61,340 Korea Telecom Corp. (NON) 2,683,625
20,500 Pohang Iron & Steel Company, Ltd. 2,005,438
101,600 Pohang Iron & Steel Company, Ltd. ADR 2,794,000
266,500 Samsung Corp. 3,581,471
54,177 Samsung Electronics Co. 16,423,701
85,200 Samsung Electro-Mechanics Co. (NON) 5,952,434
136,700 SK Telecom Co., Ltd. ADR 5,331,300
----------------
38,771,969
Taiwan (8.2%)
- ----------------------------------------------------------------------------------------------------------------------------
130,698 ASE Test Limited (NON) 3,790,242
1,958,400 Far Eastern Textile Ltd. 4,061,198
24,700 GigaMedia Ltd. (NON) 1,339,975
912,600 Hon Hai Precision Industry 10,603,943
480,260 President Chain Store Corp. 2,244,797
1,152,000 Siliconware Precision Industries Co. GDR 2,578,539
64,900 Synnex Technology International Corp. 2,052,463
2,130,060 Taiwan Semiconductor Manufacturing Co. 14,373,348
1,983,450 United Microelectronics Corp. 7,703,986
98,100 Winbond Electronics Corp. GDR (NON) 2,881,688
82,900 Winbond Electronics Corp. GDR 144A (NON) 2,435,188
----------------
54,065,367
Thailand (0.8%)
- ----------------------------------------------------------------------------------------------------------------------------
98,000 Advanced Info Service Public Co., Ltd. (NON) 1,475,826
1,187,000 TelecomAsia Corporation Public Co. Ltd. (NON) 1,960,040
502,400 Total Access Communication Public Co. Ltd. 1,607,681
----------------
5,043,547
United Kingdom (0.9%)
- ----------------------------------------------------------------------------------------------------------------------------
527,200 HSBC Holdings Plc 6,161,331
----------------
Total Common Stocks (cost $410,199,480) $ 655,507,884
UNITS (0.5%) (a)
NUMBER OF UNITS VALUE
- ----------------------------------------------------------------------------------------------------------------------------
56,000 Tokyo Broadcasting System, Inc. Structured Note
(Issued by UBS AG) 3.15%, 2000 (Japan) $ 2,226,997
580 Nippon Television Networks Structured Note
(Issued by Lehman Brothers) Exp. 8/4/00 (Japan) 800,829
----------------
Total Units (cost $2,193,423) $ 3,027,826
SHORT-TERM INVESTMENTS (0.3%) (a) (cost $1,785,000)
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------
$ 1,785,000 Interest in $754,202,000 joint repurchase agreement dated
March 31, 2000 with Morgan (J.P.) & Co., Inc. due
April 3, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $1,785,906 for an effective
yield of 6.09% $ 1,785,000
- ----------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $414,177,903) (b) $ 660,320,710
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $658,383,097.
(b) The aggregate identified cost on a tax basis is $431,398,499,
resulting in gross unrealized appreciation and depreciation of
$243,793,380 and $14,871,169, respectively, or net unrealized
appreciation of $228,922,211.
(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
Depositary Receipts or Global Depositary Receipts respectively,
representing ownership of foreign securities on deposit with a
domestic custodian bank.
The fund had the following industry group concentration greater
than 10% at March 31, 2000 (as a percentage of net assets):
Electronics 30.5%
- --------------------------------------------------------------------------
Forward Currency Contracts to Sell at March 31, 2000 (Unaudited)
Market Aggregate Face Delivery Unrealized
Value Value Date Depreciation
- --------------------------------------------------------------------------
Japanese Yen $23,126,98 $22,022,833 9/6/2000 $(1,104,148)
- --------------------------------------------------------------------------
* The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of assets and liabilities
March 31, 2000 (Unaudited)
<S> <C>
Assets
- ----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $414,177,903) (Note 1) $660,320,710
- ----------------------------------------------------------------------------------------------
Cash 585,466
- ----------------------------------------------------------------------------------------------
Foreign currency 24,845
- ----------------------------------------------------------------------------------------------
Interest, dividends and other receivables 933,140
- ----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 12,557,238
- ----------------------------------------------------------------------------------------------
Receivable for securities sold 18,487,970
- ----------------------------------------------------------------------------------------------
Total assets 692,909,369
Liabilities
- ----------------------------------------------------------------------------------------------
Payable for securities purchased 21,502,097
- ----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 9,814,063
- ----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,310,033
- ----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 218,233
- ----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 24,876
- ----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,597
- ----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 516,681
- ----------------------------------------------------------------------------------------------
Payable for open forward currency contracts 1,104,148
- ----------------------------------------------------------------------------------------------
Other accrued expenses 33,544
- ----------------------------------------------------------------------------------------------
Total liabilities 34,526,272
- ----------------------------------------------------------------------------------------------
Net assets $658,383,097
Represented by
- ----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $544,467,593
- ----------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (17,309,948)
- ----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (113,946,902)
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and
assets and liabilities in foreign currencies 245,172,354
- ----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $658,383,097
Computation of net asset value and offering price
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($332,829,710 divided by 18,733,782 shares) $17.77
- ----------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $17.77)* $18.85
- ----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($286,788,270 divided by 16,490,961 shares)** $17.39
- ----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($20,212,556 divided by 1,141,745 shares)** $17.70
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($18,552,561 divided by 1,055,004 shares) $17.59
- ----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $17.59)* $18.23
- ----------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of operations
Six months ended March 31, 2000 (Unaudited)
Investment income:
- ----------------------------------------------------------------------------------------------
<S> <C>
Dividends (net foreign tax of $153,101) $ 1,609,804
- ----------------------------------------------------------------------------------------------
Interest 158,528
- ----------------------------------------------------------------------------------------------
Total investment income 1,768,332
Expenses:
- ----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 2,477,098
- ----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 883,223
- ----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 1,459
- ----------------------------------------------------------------------------------------------
Administrative services (Note 2) 5,903
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 407,617
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,405,272
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 50,003
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 72,406
- ----------------------------------------------------------------------------------------------
Reports to shareholders 15,464
- ----------------------------------------------------------------------------------------------
Registration fees 44
- ----------------------------------------------------------------------------------------------
Auditing 15,555
- ----------------------------------------------------------------------------------------------
Legal 4,573
- ----------------------------------------------------------------------------------------------
Postage 26,685
- ----------------------------------------------------------------------------------------------
Other 65,277
- ----------------------------------------------------------------------------------------------
Total expenses 5,430,579
- ----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (118,997)
- ----------------------------------------------------------------------------------------------
Net expenses 5,311,582
- ----------------------------------------------------------------------------------------------
Net investment loss (3,543,250)
- ----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 69,145,586
- ----------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (220,834)
- ----------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the period (943,729)
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments during the period 109,991,280
- ----------------------------------------------------------------------------------------------
Net gain on investments 177,972,303
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $174,429,053
- ----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
March 31 September 30
2000* 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- -------------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------------
Net investment loss $(3,543,250) $(1,598,860)
- -------------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 68,924,752 23,881,770
- -------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 109,047,551 153,873,480
- -------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 174,429,053 176,156,390
- -------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- -------------------------------------------------------------------------------------------------------
From net investment income
Class A (2,586,266) (13,528,305)
- -------------------------------------------------------------------------------------------------------
Class B (1,051,311) (12,499,068)
- -------------------------------------------------------------------------------------------------------
Class C (42,443) --
- -------------------------------------------------------------------------------------------------------
Class M (102,650) (706,133)
- -------------------------------------------------------------------------------------------------------
In excess of net investment income
Class A -- (109,720)
- -------------------------------------------------------------------------------------------------------
Class B -- (101,372)
- -------------------------------------------------------------------------------------------------------
Class M -- (5,727)
- -------------------------------------------------------------------------------------------------------
Increase (decrease) from capital share transactions (Note 4) 1,382,619 (9,649,628)
- -------------------------------------------------------------------------------------------------------
Total increase in net assets 172,029,002 139,556,437
Net assets
- -------------------------------------------------------------------------------------------------------
Beginning of period 486,354,095 346,797,658
- -------------------------------------------------------------------------------------------------------
End of period (including distributions in excess
of net investment income of $17,309,948,
and $9,984,028, respectively) $658,383,097 $486,354,095
- -------------------------------------------------------------------------------------------------------
* Unaudited
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share March 31
operating performance (Unaudited) Year ended September 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.49 $8.83 $13.58 $13.63 $13.58 $14.64
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.06)(c) (.01)(c) .11(c) .05(c) .03(c) .02
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4.47 5.79 (4.77) .41 .63 (.63)
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.41 5.78 (4.66) .46 .66 (.61)
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.13) (1.11) (.09) (.43) (.60) (.04)
- --------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.01) -- (.08) -- --
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- (.41)
- --------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (.01) --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.13) (1.12) (.09) (.51) (.61) (.45)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.77 $13.49 $8.83 $13.58 $13.63 $13.58
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 32.77* 71.79 (34.47) 3.47 5.02 (4.14)
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $332,830 $248,255 $240,978 $515,107 $223,307 $158,773
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .68* 1.46 1.46 1.50 1.54 1.55
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.38)* (.14) 1.05 .40 .20 .14
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 79.15* 183.18 128.25 89.77 72.68 91.13
- --------------------------------------------------------------------------------------------------------------------------
+ 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 and brokerage service arrangements (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share March 31
operating performance (Unaudited) Year ended September 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.20 $8.68 $13.34 $13.41 $13.37 $14.53
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.12)(c) (.10)(c) .03(c) (.06)(c) (.07)(c) (.07)
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4.37 5.70 (4.69) .41 .63 (.64)
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.25 5.60 (4.66) .35 .56 (.71)
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.06) (1.07) -- (.36) (.51) (.04)
- --------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.01) -- (.06) -- --
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- (.41)
- --------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (.01) --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.06) (1.08) -- (.42) (.52) (.45)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.39 $13.20 $8.68 $13.34 $13.41 $13.37
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 32.23* 70.58 (34.93) 2.66 4.33 (4.88)
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $286,788 $221,291 $100,331 $199,036 $225,241 $144,514
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.05* 2.21 2.21 2.25 2.30 2.31
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.75)* (.91) .32 (.45) (.55) (.62)
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 79.15* 183.18 128.25 89.77 72.68 91.13
- --------------------------------------------------------------------------------------------------------------------------
+ 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 and brokerage service arrangements (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 July 26, 1999+
operating performance (Unaudited) to Sept. 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $13.48 $12.15
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.13)(c) (.02)(c)
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4.46 1.35
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.33 1.33
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.11) --
- --------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- --
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- --
- --------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.11) --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.70 $13.48
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 32.22* 10.95*
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $20,212 $2,308
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.05* .41*
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.75)* (.19)*
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 79.15* 183.18
- --------------------------------------------------------------------------------------------------------------------------
+ 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 and brokerage service arrangements (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding during the period.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 Feb. 1, 1995+
operating performance (Unaudited) Year ended September 30 to Sept. 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.35 $8.78 $13.46 $13.54 $13.53 $12.41
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.10)(c) (.08)(c) .06(c) (.02)(c) (.03)(c) (.01)
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4.42 5.76 (4.74) .41 .63 1.13
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations 4.32 5.68 (4.68) .39 .60 1.12
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.08) (1.10) --(d) (.40) (.58) --
- --------------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.01) -- (.07) -- --
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (.01) --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.08) (1.11) -- (.47) (.59) --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $17.59 $13.35 $8.78 $13.46 $13.54 $13.53
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 32.43* 70.88 (34.75) 2.93 4.65 9.03*
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $18,553 $14,500 $5,488 $10,304 $9,144 $2,829
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .93* 1.96 1.96 2.00 2.06 2.09*
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.64)* (.69) .57 (.17) (.24) (.45)*
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 79.15* 183.18 128.25 89.77 72.68 91.13
- --------------------------------------------------------------------------------------------------------------------------
+ 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 and brokerage service arrangements (Note 2).
(c) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares
outstanding during the period.
</TABLE>
Notes to financial statements
March 31, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam Asia Pacific Growth Fund (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 Asian or
Pacific Basin countries.
The fund offers class A, class B, class C and class M shares. Class A
shares are sold with a maximum front-end sales charge of 5.75%. Class B
shares, which convert to class A shares after approximately eight years,
do not pay a front-end sales charge but pay a higher ongoing
distribution fee than class A shares, and are subject to a contingent
deferred sales charge, if those shares are redeemed within six years of
purchase. Class C shares are subject to the same fees and expenses as
class B shares, except that class C shares have a one-year 1.00%
contingent deferred sales charge and do not convert to class A shares.
Class M shares are sold with a maximum front end sales charge of 3.50%
and pay an ongoing distribution fee that is higher than class A shares
but lower than class B and class C shares.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if that fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reporting period. Actual results could differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sales price on its principal exchange, 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. Other
investments, including restricted securities, are stated at fair value
following procedures approved by the Trustees. (See Section F of Note 1
with respect to the valuation of forward currency contracts.)
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). Gains or losses on securities sold are determined
on the identified cost basis.
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 realized
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. Investments in foreign securities involve certain risks, including
those related to economic instability, unfavorable political
developments, and currency fluctuations, not present with domestic
investments.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date, to protect against a decline
in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the
value of a currency in which securities a fund intends to buy are
denominated, when a fund holds cash reserves and short-term
investments). The U.S. dollar value of forward currency contracts is
determined using current forward currency exchange rates supplied by a
quotation service. The market value of the contract will fluctuate with
changes in currency exchange rates. The contract is "marked to market"
daily and the change in market value is recorded as an unrealized gain
or loss. When the contract is closed, the fund records a realized gain
or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. The fund
could be exposed to risk if the value of the currency changes
unfavorably, if the counterparties to the contracts are unable to meet
the terms of their contracts or if the fund is unable to enter into a
closing position.
G) 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 March 31, 2000, the fund had no borrowings against the line of
credit.
H) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At September 30, 1999, the fund had a capital loss carryover of
approximately $179,363,000 available to offset future capital gains, if
any. The amount of the carryover and the expiration dates are:
Loss Carryover Expiration
- -------------- ------------------
$21,694,000 September 30, 2004
6,385,000 September 30, 2005
41,190,000 September 30, 2006
110,094,000 September 30, 2007
I) 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. Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or available
capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative services
and other transactions
Compensation of Putnam Management, for 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: 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, 0.60% of the next $5 billion,
0.575% of the next $5 billion, 0.555% of the next $5 billion, 0.54% of
the next $5 billion and 0.53% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
For the six months ended March 31, 2000, fund expenses were reduced by
$118,997 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 $1,121
has been allocated to the fund, and an additional fee for each Trustees
meeting attended. Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C and class M shares pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00%, 1.00% and 1.00% of the average net assets attributable to class
A, class B, class C and class M shares, respectively. The Trustees have
approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%
and 0.75% of the average net assets attributable to class A, class B,
class C and class M shares respectively.
For the six months ended March 31, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $147,673 and $6,316
from the sale of class A and class M shares, respectively, and received
$247,413 and $3,075 in contingent deferred sales charges from
redemptions of class B and class C shares, respectively. A deferred
sales charge of up to 1% is assessed on certain redemptions of class A
shares. For the six months ended March 31, 2000, Putnam Mutual Funds
Corp., acting as underwriter received $3,578 on class A redemptions.
Note 3
Purchase and sale of securities
During the six months ended March 31, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $503,271,407 and $494,523,608, respectively.
There were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At March 31, 2000, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 31,826,771 $512,467,028
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 142,276 2,338,691
- ---------------------------------------------------------------------------
31,969,047 514,805,719
Shares
repurchased (31,635,998) (520,285,449)
- ---------------------------------------------------------------------------
Net increase
(decrease) 333,049 $(5,479,730)
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 59,365,607 $638,284,289
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,316,540 11,848,859
- ---------------------------------------------------------------------------
60,682,147 650,133,148
Shares
repurchased (69,576,374) (724,586,710)
- ---------------------------------------------------------------------------
Net decrease (8,894,227) $(74,453,562)
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 7,885,379 $124,348,957
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 55,644 896,986
- ---------------------------------------------------------------------------
7,941,023 125,245,943
Shares
repurchased (8,220,636) (133,277,017)
- ---------------------------------------------------------------------------
Net decrease (279,613) $(8,031,074)
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 14,238,409 $159,559,326
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,235,747 10,948,718
- ---------------------------------------------------------------------------
15,474,156 170,508,044
Shares
repurchased (10,265,946) (112,205,552)
- ---------------------------------------------------------------------------
Net increase 5,208,210 $58,302,492
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 1,537,279 $25,890,125
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,996 32,759
- ---------------------------------------------------------------------------
1,539,275 25,922,884
Shares
repurchased (568,790) (9,494,170)
- ---------------------------------------------------------------------------
Net increase 970,485 $16,428,714
- ---------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations)
to September 30, 1999
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 178,127 $2,352,451
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions -- --
- ---------------------------------------------------------------------------
178,127 2,352,451
Shares
repurchased (6,867) (91,458)
- ---------------------------------------------------------------------------
Net increase 171,260 $2,260,993
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 1,514,413 $24,407,962
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 5,427 88,412
- ---------------------------------------------------------------------------
1,519,840 24,496,374
Shares
repurchased (1,551,287) (26,031,665)
- ---------------------------------------------------------------------------
Net decrease (31,447) $(1,535,291)
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 3,124,523 $33,844,735
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 67,917 607,179
- ---------------------------------------------------------------------------
3,192,440 34,451,914
Shares
repurchased (2,730,963) (30,211,465)
- ---------------------------------------------------------------------------
Net increase 461,477 $4,240,449
- ---------------------------------------------------------------------------
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you
invest or send money.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Capital Opportunities Fund
Europe Growth Fund
Global Equity Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Century Growth Fund
New Opportunities Fund
OTC & Emerging Growth Fund
Research Fund
Tax Smart Equity Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Small Cap Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government Income Fund
Money Market Fund**
Preferred Income Fund
Strategic Income Fund*
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK] **
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Putnam Diversified Income Trust II
[DBL. DAGGER] Closed to new investors. Some exceptions may apply. Contact
Putnam for details.
[SECTION MARK] Not available in all states.
** An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
Fund information
WEB SITE
www.putnaminv.com
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
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
Justin M. Scott
Vice President
Paul C. Warren
Vice President and Fund Manager
Carmel Peters
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
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.
You can also learn more at Putnam Investments' Web site: 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.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA001-60354 844/193/470 5/00
