Putnam
Asia Pacific
Growth
Fund
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
9-30-00
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Shareholder:
It is a pleasure to greet you in our new roles as Chairman of the
Trustees and President of the Funds. As you know, both of us have been
members of the Board of Trustees for a number of years -- years during
which the global securities markets, the mutual fund industry, and
Putnam itself have experienced tremendous growth and change.
As we look to the future, we are certain that the changes that lie ahead
will be even more breathtaking in their scope. What will not change is
the Trustees' dedication to serving the best interests of our
shareholders.
We are pleased to announce the appointment of Simon Davis to your fund's
management team shortly after the close of the fund's fiscal year. Simon
joined Putnam earlier this year from Deutsche Asset Management (Japan)
Limited. Prior to that he was associated with Morgan Grenfell & Co.,
Ltd. He has 12 years of investment experience.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
November 15, 2000
REPORT FROM FUND MANAGEMENT
Paul Warren
Carmel Peters
Simon Davis
The economies and businesses of Asia and the Pacific Basin continued to
achieve healthy performance during 2000, but these conditions were only
partially reflected in equity performance for the region. For Putnam
Asia Pacific Growth Fund, strong gains early in the fund's 2000 fiscal
year reversed in recent months as weaker-than-expected results in the
technology and telecommunications sectors, combined with rising energy
prices, led Asian markets lower. However, the adverse conditions that
eroded confidence are generally short-term, in our opinion, and our
long-term outlook for the region remains solid.
Total return for 12 months ended 9/30/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
-----------------------------------------------------------------------
-3.54% -9.07% -4.27% -9.04% -4.24% -5.19% -4.01% -7.34%
-----------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 6.
* PERFORMANCE FOLLOWS FORTUNES OF TECHNOLOGY AND TELECOMMUNICATIONS
While Asian equities have had a tough period since we last reported on
the fund's performance six months ago, we believe that conditions in
Asia are still generally positive. Asian markets offer leading companies
in the technology and telecommunications sectors. These sectors
represent the largest weightings in your fund's portfolio. At the same
time, a host of Asian stocks in other sectors offer the combination of
earnings growth and attractive valuation that we seek in doing our
research and stock selection.
Asia's technology and telecom sectors led the fund to strong gains early
in the fiscal period, then later accounted for much of its negative
performance. We believe that both the early gains and the recent
declines have been excessive relative to the actual performance of the
companies and that overly optimistic expectations early in the period
exacerbated disappointments in subsequent quarters. For example, in the
spring of this year, it became clear that sales of wireless telephone
handsets worldwide would not meet the 500 million level forecast by many
industry analysts. However, growth was still strong, with sales on
course to exceed 400 million, after sales of 300 million in 1999. In the
semiconductor industry, an anticipated shortage of DRAM chips failed to
materialize, but fund holdings such as Samsung Electronics still
achieved solid earnings growth. Although these holdings, as well as
others discussed in this report, were viewed favorably by fund
management at the end of the reporting period, all holdings 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 50.6%
Hong Kong 16.6%
Australia 11.8%
Singapore 5.7%
South Korea 5.1%
Footnote reads:
*Based on net assets as of 9/30/00. Holdings will vary over time.
During episodes of volatility, we took profits on holdings that had
become fully valued and subject to increasing risks. In February, we
sold Softbank and Hikari Tsushin of Japan, and in later months trimmed
positions in Japanese technology equipment makers Murata Manufacturing,
Rohm, and Kyocera. During the summer, we reduced our positions in Taiwan
Semiconductor; United Microelectronics, also of Taiwan; and Samsung of
South Korea, the largest producer of DRAM chips. However, we continue to
hold these stocks because the industry is still growing. Dataquest, a
research firm that tracks the semiconductor industry, predicts the
industry will grow 27% in 2001.
* RESTRUCTURINGS REMAIN IMPORTANT ISSUES IN JAPAN, SOUTH KOREA
Aside from the global technology spending cycle, local conditions, of
course, also influenced the fund's performance. Japan, by far the
region's largest economy, had mixed conditions. On one hand, the economy
grew modestly in the first two quarters of 2000, and there was
improvement in job creation. However, consumer spending has not
increased on a broad front. Corporate restructuring has also not
proceeded as rapidly as we would prefer. Companies have not followed
their restructuring announcements with decisive and timely execution.
"East Asia, with the notable exception of Japan, is actually the world's
fastest growing region. It expanded by about 5% in 1999 and is expected
to grow some 6% this year."
-- Business Week, June 26, 2000
For these reasons, we continue to be highly selective with Japanese
equities. We have stayed away from most financial companies, which
continue to suffer from bad loans, and the "old economy" construction
and industrial companies, focusing instead on inno- vative technology
companies such as NTT DoCoMo. This company, a global pioneer in wireless
Internet technology, has signed up nearly 13 million subscribers for its
I-mode service, smashing its sales expectations. I-mode allows
subscribers to send e-mails and access the Internet from their wireless
phones.
Although stocks in South Korea have had a difficult year, we believe
that this market's progress in restructuring stands in contrast to
Japan's slow results. In fact, one of the Korean market's weakest
periods occurred during the summer, when it seemed the government might
not provide financial backing to banks dealing with bad loans. When it
became clear that the government was still committed, the market
stabilized.
* FUND POSITIONED FOR DIVERSIFIED MARKET LEADERSHIP
While maintaining a large technology exposure, we increased the
portfolio's diversification across business sectors and Asian markets
during the period. One sector to which we added meaningfully was
pharmaceuticals. We bought more of stocks we already held, including
Takeda Chemical Industries and Fujisawa Pharmaceutical Company, and
established new positions in Eisai and Sankyo during recent months.
These companies have been achieving solid growth and were still priced
reasonably. Globally, the sector has been a strong performer this year,
because traditionally, drug companies can maintain their growth in spite
of rising interest rates or changing expectations of economic growth.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Sony Corp.
Japan
Consumer cyclicals
Nikko Securities Co., Ltd.
Japan
Financial
NTT DoCoMo, Inc.
Japan
Communication services
Furukawa Electric Co., Ltd.
Japan
Capital goods
Hutchison Whampoa, Ltd.
Hong Kong
Conglomerates
Takeda Chemical Industries
Japan
Health care
News Corp., Ltd. ADR
Australia
Consumer staples
Toyota Motor Corp.
Japan
Consumer cyclicals
Johnson Electric Holdings, Ltd.
Hong Kong
Technology
HSBC Holdings PLC
United Kingdom
Financial
Footnote reads:
These holdings represent 29.5% of the fund's net assets as of 9/30/00.
Portfolio holdings will vary over time.
We have also increased the fund's exposure to Hong Kong, including
Chinese companies listed in Hong Kong, and Australia. After performing
well early in the year, Hong Kong stocks corrected more recently.
However, we are still positive on the market because its currency is
pegged to the U.S. dollar. Should the U.S. Federal Reserve Board reduce
interest rates as the U.S. economy decelerates, stocks in Hong Kong
should benefit.
We have favored Australian shares because of their relative steadiness
amid uncertainty. During the period, we added to the fund's position in
Broken Hill Proprietary, a mining and basic materials company that
derives 40% of its revenues from oil. The stock has benefited from
rising energy prices. Our largest Australian holding was News Corp., the
broadcasting multinational that owns, among other interests, the Fox
network in the United States. News has benefited from continuing
expansion and is expected to realize value for shareholders when it
issues stock for its global communications networks early next year. We
also added several Australian banks, with solid growth and high-quality
loan portfolios.
"East Asia's fundamentals -- a well-educated labor force, good
transportation and communications infrastructure, low taxes, and a
relatively honest government -- make it easier to attain First World
levels of productivity."
-- Fortune, August 14, 2000
* FUNDAMENTAL SITUATION IS CAUSE FOR OPTIMISM
As the fund moves into its 2001 fiscal year, we have several reasons for
optimism. The fund's diversification reflects the expanding array of
growth opportunities in Asia and stock valuations are reasonable.
Economies are growing at a healthy rate. Although we are monitoring the
effects of higher energy prices on the many markets in the region that
import virtually all of their oil, we do not anticipate energy prices
prompting a crisis. The region's leading technology companies have a
solid outlook that, in our opinion, could surprise people. Companies
like the Japanese component manufacturers Rohm, Kyocera, and Murata
should continue to grow strongly as should Sony and Samsung because of
growth in consumer electronics products such as DVD and CD players. Asia
has experienced both excessive optimism and excessive pessimism in the
past 12 months. We think a renewed focus on actual fundamentals will
allow the fund to achieve solid performance in the year ahead.
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 9/30/00, 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.
TOTAL RETURN FOR PERIODS ENDED 9/30/00
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
------------------------------------------------------------------------------
1 year -3.54% -9.07% -4.27% -9.04% -4.24% -5.19% -4.01% -7.34%
------------------------------------------------------------------------------
5 years 18.00 11.21 13.80 11.91 13.71 13.71 15.29 11.27
Annual average 3.37 2.15 2.62 2.28 2.60 2.60 2.89 2.16
------------------------------------------------------------------------------
Life of fund 93.62 82.56 79.91 79.91 80.31 80.31 83.93 77.48
Annual average 7.12 6.46 6.30 6.30 6.33 6.33 6.55 6.15
------------------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 9/30/00
MSCI Consumer
Pacific Index price index
-------------------------------------------------------------------
1 year -1.37% 3.46%
-------------------------------------------------------------------
5 years -2.21 13.32
Annual average -0.45 2.53
-------------------------------------------------------------------
Life of fund 15.26 28.78
Annual average 1.49 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 10-year,
if available, 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. Performance data reflect an expense
limitation currently or previously in effect, without which total
returns would have been lower.
[GRAPHIC OMITTED: worm chart GROWTH OF A $10,000 INVESTMENT]
GROWTH OF A $10,000 INVESTMENT
Cumulative total return of a $10,000 investment since 2/20/91
Fund's class A MSCI Pacific Consumer price
Date shares at POP Index index
2/20/91 9,425 10,000 10,000
9/30/91 8,879 9,558 10,178
9/30/92 8,978 8,070 10,482
9/30/93 12,692 11,329 10,764
9/30/94 16,139 12,318 11,083
9/30/95 15,471 11,786 11,365
9/30/96 16,248 12,149 11,706
9/30/97 16,813 10,590 11,966
9/30/98 11,018 6,827 12,136
9/30/99 18,927 11,686 12,448
9/30/00 $18,256 $11,526 $12,878
Footnote reads:
Past performance is no assurance of future results. At the end of the
same time period, a $10,000 investment in the fund's class B and class C
shares would have been valued at $17,991 and $18,031, respectively and
no contingent deferred sales charges would apply; a $10,000 investment
in the fund's class M shares would have been valued at $18,393 ($17,748
at public offering price). See first page of performance section for
performance calculation method.
PRICE AND DISTRIBUTION INFORMATION 12 MONTHS ENDED 9/30/00
Class A Class B Class C Class M
--------------------------------------------------------------------------
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
--------------------------------------------------------------------------
9/30/00 12.91 13.70 12.59 12.82 12.75 13.21
--------------------------------------------------------------------------
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. The index assumes reinvestment
of all distributions and interest payments and does not take into
account brokerage fees or taxes. Securities in the fund do not match
those in the index 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.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report, preceded by the Report of independent
accountants, 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.
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders
Putnam Asia Pacific Growth Fund
We have audited the accompanying statement of assets and liabilities of
Putnam Asia Pacific Growth Fund, including the fund's portfolio, as of
September 30, 2000, and the related statement of operations for the year
then ended, statements of changes in net assets for each of the years in
the two-year period then ended and financial highlights for each of the
years or periods in the two-year period then ended. 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. The
financial highlights for each of the years in the three-year period
ended September 30, 1998 were audited by other auditors whose report
dated November 10, 1998 expressed an unqualified opinion on those
financial highlights.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform our 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, 2000 by correspondence with the custodian. 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, 2000, the results of its operations, changes in its net assets and
financial highlights for each of the years or periods described above,
in conformity with accounting principles generally accepted in the
United States of America.
KPMG LLP
Boston, Massachusetts
November 1, 2000
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
September 30, 2000
COMMON STOCKS (97.3%) (a)
NUMBER OF SHARES VALUE
<S> <C> <C>
Australia (11.8%)
-------------------------------------------------------------------------------------------------------------------
400,480 Austar United Communications, Ltd. (NON) $ 899,636
945,948 Australia & New Zealand Banking Group, Ltd. 6,799,913
57,300 Brambles Industries, Ltd. 1,496,825
790,860 Broken Hill Proprietary Co., Ltd. 8,197,972
535,012 Cable & Wireless Optus, Ltd. (NON) 1,160,146
431,600 Commonwealth Bank of Australia 6,448,052
488,200 Foster's Brewing Group Ltd. 1,136,329
165,279 News Corp., Ltd. 2,326,104
199,519 News Corp., Ltd. ADR 11,185,534
291,149 Publishing & Broadcasting, Ltd. 2,111,826
1,025,800 Westpac Banking Corp., Ltd. 7,079,636
150,786 Woodside Petroleum, Ltd. 1,117,792
378,100 Woolworths Ltd. 1,380,264
-------------
51,340,029
Hong Kong (16.6%)
-------------------------------------------------------------------------------------------------------------------
734,000 Cheung Kong Holdings, Ltd. 8,872,921
1,127,100 China Telecom, Ltd. (NON) 7,481,040
775,500 CLP Holdings, Ltd. 3,481,281
2,090,000 Hang Lung Development Co., Ltd. 2,104,288
347,000 Henderson Land Development Co., Ltd. (R) 1,789,142
1,661,000 Hong Kong and China Gas Co., Ltd. 2,077,129
713,500 Hong Kong Electric Holdings, Ltd. 2,205,465
916,300 Hutchison Whampoa, Ltd. 12,163,742
4,297,000 Johnson Electric Holdings, Ltd. 9,231,438
2,276,000 Legend Holdings, Ltd. 2,160,196
3,726,000 Li & Fung, Ltd. 7,861,364
48,861 Pacific Century CyberWorks Ltd. (NON) 55,149
7,628,000 PetroChina Co., Ltd. 1,555,597
520,000 Sun Hung Kai Properties, Ltd. 4,902,074
707,000 Swire Pacific, Ltd. 4,407,018
831,000 Wharf Holdings, Ltd. 1,700,008
-------------
72,047,852
Japan (50.6%)
-------------------------------------------------------------------------------------------------------------------
6,000 Aiful Corp. 577,617
308,000 Asahi Chemical Industry Co. Ltd. (NON) 1,838,934
198,000 Asahi Glass Co., Ltd. 2,025,271
83,000 Cannon, Inc. 3,680,181
212,000 Denso Corp. 4,935,481
115,000 Eisai Co., Ltd. 3,630,010
140,000 Fujisawa Pharmaceutical Co. 5,157,827
330,000 Fujitsu Ltd. 7,667,315
495,000 Furukawa Electric Co., Ltd. 13,677,451
58,000 Hitachi Information Systems, Ltd. 2,330,093
83,000 Honda Motor Co., Ltd. (NON) 3,057,854
104,000 INES Corp. 1,714,561
14,600 Keyence Corp 5,054,522
220,000 Kirin Brewery Co., Ltd. 2,260,483
25,900 Kyocera Corp. 3,955,846
16,000 Matsushita Communication Industrial Co., Ltd. 2,163,843
531,000 Mitsubishi Chemical Corporation 1,843,238
269,000 Mitsubishi Trust and Banking Corporation (The) 2,213,654
28,600 Murata Manufacturing Co., Ltd. 3,944,645
204,000 NEC Corp. 4,635,934
1,925,000 Nikko Securities Co., Ltd. 17,106,359
31,500 Nintendo Co., Ltd. 5,752,985
611 Nippon Telegraph and Telephone Corp. 5,995,187
15,220 Nippon Television Network Corp. 8,749,070
299,000 Nippon Yusen Kabushiki Kaisha (NON) 1,516,727
36,300 Nissin Food Products Co., Ltd. 897,167
210,000 Nomura Securities Co., Ltd. 4,568,176
517 NTT DoCoMo, Inc. 14,835,694
15,200 Rohm Co., Ltd. 4,166,176
654,000 Sakura Bank Ltd. 4,879,422
37,900 SANIX, Inc. (NON) 2,420,716
106,000 Sankyo Co, Ltd. 2,359,808
76,000 Seven-Eleven Japan Co., Ltd. 4,418,032
116,000 Shiseido Co., Ltd. 1,441,007
177,100 Sony Corp. 17,967,379
413,000 Sumitomo Corp. 3,585,985
182,000 Sumitomo Electric Industries, Ltd. 3,141,998
179,000 Takeda Chemical Industries 11,830,603
617,000 Teijin, Ltd. 2,570,120
64,100 THK Co., Ltd. 2,492,080
34,700 Tokyo Electron, Ltd. 3,147,829
248,000 Toppan Printing Co. Ltd. (NON) 2,398,963
272,600 Toyota Motor Corp. 10,774,803
10,500 Trend Micro Inc. (NON) 1,410,303
44,500 Yamada Denki Co., Ltd. 4,514,672
-------------
219,306,021
Malaysia (0.7%)
-------------------------------------------------------------------------------------------------------------------
1,465,000 Public Bank Berhad 1,087,184
484,000 Tanjong Public, Ltd. 999,842
393,000 Telekom Malaysia Berhad 1,034,211
-------------
3,121,237
Singapore (5.8%)
-------------------------------------------------------------------------------------------------------------------
387,200 Chartered Semiconductor Manufacturing (NON) 2,470,353
246,000 City Developments Ltd. 1,201,862
358,000 DBS Group Holdings Ltd. 3,950,799
749,400 Oversea-Chinese Banking Corp., Ltd. 4,738,131
346,000 Singapore Airlines, Ltd. 3,281,412
166,000 Singapore Press Holdings, Ltd. 2,490,286
702,500 Venture Manufacturing, Ltd. 6,783,538
-------------
24,916,381
South Korea (5.1%)
-------------------------------------------------------------------------------------------------------------------
15,640 Cheil Communications, Inc. 1,318,529
109,000 Hyundai Motor Co., Ltd. 1,417,489
247,000 Korea Electric Power Corp. 6,446,368
83,300 Korea Telecom Corp. ADR 2,800,963
20,500 Pohang Iron & Steel Company, Ltd. 1,548,899
27,927 Samsung Electronics Co. 5,059,421
5,000 SK Telecom Co., Ltd. 1,219,750
92,200 SK Telecom Co., Ltd. ADR 2,362,625
-------------
22,174,044
Taiwan (4.1%)
-------------------------------------------------------------------------------------------------------------------
243,400 Advanced Semiconductor Engineering, Inc. (NON) 1,612,525
88,898 ASE Test Limited (NON) 1,866,858
397,880 Hon Hai Precision Industry 2,617,799
641,535 President Chain Store Corp. 2,028,488
1,500,116 Taiwan Semiconductor Manufacturing Co., Ltd. 4,982,819
1,579,000 United Microelectronics Corp. 3,378,889
91,815 Winbond Electronics Corp. GDR (NON) 1,388,702
-------------
17,876,080
Thailand (0.5%)
-------------------------------------------------------------------------------------------------------------------
136,000 Advanced Info Service Public Co., Ltd. (NON) 1,148,115
1,665,000 TelecomAsia Corporation Public Co., Ltd. (NON) 1,115,396
-------------
2,263,511
United Kingdom (2.1%)
-------------------------------------------------------------------------------------------------------------------
646,000 HSBC Holdings PLC 9,031,257
-------------
Total Common Stocks (cost $353,642,421) $ 422,076,412
<CAPTION>
UNITS (0.2%) (a) (cost $564,499)
NUMBER OF UNITS VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
1,160 Nippon Television Network Corp. call warrants
zero %, (exp. 8/6/01) (Issued by Lehman Brothers
Finance S.A.) (Japan) $ 667,685
<CAPTION>
SHORT-TERM INVESTMENTS (3.0%) (a) (cost $13,140,000)
PRINCIPAL AMOUNT VALUE
<S> <C> <C>
-------------------------------------------------------------------------------------------------------------------
$ 13,140,000 Interest in $800,000,000 joint repurchase agreement dated
September 29, 2000 with Warburg Securities due
October 2, 2000 with respect to various U.S. Treasury
obligations -- maturity value of $13,147,282 for an effective
yield of 6.65% $ 13,140,000
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $367,346,920) (b) $ 435,884,097
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $433,705,002.
(b) The aggregate identified cost on a tax basis is $384,148,351,
resulting in gross unrealized appreciation and depreciation of
$77,463,671 and $25,727,925, respectively, or net unrealized
appreciation of $51,735,746.
(NON) Non-income-producing security.
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.
(R) Real Estate Investment Trust.
The fund had the following industry group concentrations greater
than 10% at September 30, 2000 (as a percentage of net assets):
Financial 20.5%
Consumer cyclicals 16.9
Technology 16.8
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $367,346,920) (Note 1) $435,884,097
-------------------------------------------------------------------------------------------
Cash 514
-------------------------------------------------------------------------------------------
Foreign currency (cost $8,289,682) 7,990,721
-------------------------------------------------------------------------------------------
Interest, dividends and other receivables 960,808
-------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 14,164,712
-------------------------------------------------------------------------------------------
Receivable for securities sold 8,547,712
-------------------------------------------------------------------------------------------
Total assets 467,548,564
Liabilities
-------------------------------------------------------------------------------------------
Payable for securities purchased 12,690,525
-------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 19,456,233
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 962,820
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 291,484
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 28,576
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,482
-------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 329,145
-------------------------------------------------------------------------------------------
Other accrued expenses 82,297
-------------------------------------------------------------------------------------------
Total liabilities 33,843,562
-------------------------------------------------------------------------------------------
Net assets $433,705,002
Represented by
-------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $483,619,963
-------------------------------------------------------------------------------------------
Distributions in excess of net investment income (Note 1) (11,065,846)
-------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (107,068,570)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and assets
and liabilities in foreign currencies 68,219,455
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $433,705,002
Computation of net asset value and offering price
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($232,355,055 divided by 17,993,845 shares) $12.91
-------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $12.91)* $13.70
-------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($179,385,314 divided by 14,243,835 shares)** $12.59
-------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($11,039,639 divided by 861,078 shares)** $12.82
-------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($10,924,994 divided by 856,697 shares) $12.75
-------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $12.75)* $13.21
-------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended September 30, 2000
<S> <C>
Investment income:
-------------------------------------------------------------------------------------------
Dividends (net foreign tax of $415,691) $ 4,406,742
-------------------------------------------------------------------------------------------
Interest 354,608
-------------------------------------------------------------------------------------------
Total investment income 4,761,350
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 4,497,520
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,600,532
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 16,081
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 10,854
-------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 736,950
-------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 2,493,822
-------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 122,451
-------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 120,979
-------------------------------------------------------------------------------------------
Other 326,473
-------------------------------------------------------------------------------------------
Total expenses 9,925,662
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (315,244)
-------------------------------------------------------------------------------------------
Net expenses 9,610,418
-------------------------------------------------------------------------------------------
Net investment loss (4,849,068)
-------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 81,770,140
-------------------------------------------------------------------------------------------
Net realized loss on foreign currency transactions (Note 1) (1,082,181)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in
foreign currencies during the year (290,998)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the year (67,614,350)
-------------------------------------------------------------------------------------------
Net gain on investments 12,782,611
-------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 7,933,543
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year ended September 30
---------------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment loss $ (4,849,068) $ (1,598,860)
--------------------------------------------------------------------------------------------------
Net realized gain on investments and
foreign currency transactions 80,687,959 23,881,770
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
and assets and liabilities in foreign currencies (67,905,348) 153,873,480
--------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 7,933,543 176,156,390
--------------------------------------------------------------------------------------------------
Distributions to shareholders:
--------------------------------------------------------------------------------------------------
From net investment income
Class A (2,586,921) (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)
--------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (56,799,311) (9,649,628)
--------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (52,649,093) 139,556,437
Net assets
--------------------------------------------------------------------------------------------------
Beginning of year 486,354,095 346,797,658
--------------------------------------------------------------------------------------------------
End of year (including distributions in excess
of net investment income of $11,065,846, and
$9,984,028, respectively) $433,705,002 $486,354,095
--------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS A
-----------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended September 30
-----------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.49 $8.83 $13.58 $13.63 $13.58
-----------------------------------------------------------------------------------------------------
Investment operations
-----------------------------------------------------------------------------------------------------
Net investment income (loss)(c) (.08) (.01) .11 .05 .03
-----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.37) 5.79 (4.77) .41 .63
-----------------------------------------------------------------------------------------------------
Total from
investment operations (.45) 5.78 (4.66) .46 .66
-----------------------------------------------------------------------------------------------------
Less distributions:
-----------------------------------------------------------------------------------------------------
From net
investment income (.13) (1.11) (.09) (.43) (.60)
-----------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.01) -- (.08) --
-----------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (.01)
-----------------------------------------------------------------------------------------------------
Total distributions (.13) (1.12) (.09) (.51) (.61)
-----------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.91 $13.49 $8.83 $13.58 $13.63
-----------------------------------------------------------------------------------------------------
Ratios and supplemental data
-----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (3.54) 71.79 (34.47) 3.47 5.02
-----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $232,355 $248,255 $240,978 $515,107 $223,307
-----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.38 1.46 1.46 1.50 1.54
-----------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.49) (.14) 1.05 .40 .20
-----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 150.42 183.18 128.25 89.77 72.68
-----------------------------------------------------------------------------------------------------
+ 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.
(d) Distributions from net investment income amounted to less than
$.01 per share.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS B
-----------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended September 30
-----------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.20 $8.68 $13.34 $13.41 $13.37
-----------------------------------------------------------------------------------------------------
Investment operations
-----------------------------------------------------------------------------------------------------
Net investment income (loss)(c) (.19) (.10) .03 (.06) (.07)
-----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.36) 5.70 (4.69) .41 .63
-----------------------------------------------------------------------------------------------------
Total from
investment operations (.55) 5.60 (4.66) .35 .56
-----------------------------------------------------------------------------------------------------
Less distributions:
-----------------------------------------------------------------------------------------------------
From net
investment income (.06) (1.07) -- (.36) (.51)
-----------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.01) -- (.06) --
-----------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (.01)
-----------------------------------------------------------------------------------------------------
Total distributions (.06) (1.08) -- (.42) (.52)
-----------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.59 $13.20 $8.68 $13.34 $13.41
-----------------------------------------------------------------------------------------------------
Ratios and supplemental data
-----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (4.27) 70.58 (34.93) 2.66 4.33
-----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $179,385 $221,291 $100,331 $199,036 $225,241
-----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 2.13 2.21 2.21 2.25 2.30
-----------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (1.25) (.91) .32 (.45) (.55)
-----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 150.42 183.18 128.25 89.77 72.68
-----------------------------------------------------------------------------------------------------
+ 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.
(d) Distributions from net investment income amounted to less than
$.01 per share.
</TABLE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS C
--------------------------------------------------------------
For the period
Per-share Year ended July 26, 1999+
operating performance Sept. 30 to Sept. 30
--------------------------------------------------------------
2000 1999
--------------------------------------------------------------
Net asset value,
beginning of period $13.48 $12.15
--------------------------------------------------------------
Investment operations
--------------------------------------------------------------
Net investment income (loss)(c) (.17) (.02)
--------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.38) 1.35
--------------------------------------------------------------
Total from
investment operations (.55) 1.33
--------------------------------------------------------------
Less distributions:
--------------------------------------------------------------
From net
investment income (.11) --
--------------------------------------------------------------
In excess of net
investment income -- --
--------------------------------------------------------------
In excess of net realized
gain on investments -- --
--------------------------------------------------------------
Total distributions (.11) --
--------------------------------------------------------------
Net asset value,
end of period $12.82 $13.48
--------------------------------------------------------------
Ratios and supplemental data
--------------------------------------------------------------
Total return at
net asset value (%)(a) (4.24) 10.95*
--------------------------------------------------------------
Net assets, end of period
(in thousands) $11,040 $2,308
--------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 2.13 .41*
--------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (1.07) (.19)*
--------------------------------------------------------------
Portfolio turnover (%) 150.42 183.18
--------------------------------------------------------------
+ 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.
(d) Distributions from net investment income amounted to less than
$.01 per share.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
CLASS M
-----------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended September 30
-----------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $13.35 $8.78 $13.46 $13.54 $13.53
-----------------------------------------------------------------------------------------------------
Investment operations
-----------------------------------------------------------------------------------------------------
Net investment income (loss)(c) (.16) (.08) .06 (.02) (.03)
-----------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.36) 5.76 (4.74) .41 .63
-----------------------------------------------------------------------------------------------------
Total from
investment operations (.52) 5.68 (4.68) .39 .60
-----------------------------------------------------------------------------------------------------
Less distributions:
-----------------------------------------------------------------------------------------------------
From net
investment income (.08) (1.10) --(d) (.40) (.58)
-----------------------------------------------------------------------------------------------------
In excess of net
investment income -- (.01) -- (.07) --
-----------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- (.01)
-----------------------------------------------------------------------------------------------------
Total distributions (.08) (1.11) -- (.47) (.59)
-----------------------------------------------------------------------------------------------------
Net asset value,
end of period $12.75 $13.35 $8.78 $13.46 $13.54
-----------------------------------------------------------------------------------------------------
Ratios and supplemental data
-----------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) (4.01) 70.88 (34.75) 2.93 4.65
-----------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $10,925 $14,500 $5,488 $10,304 $9,144
-----------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.88 1.96 1.96 2.00 2.06
-----------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (1.05) (.69) .57 (.17) (.24)
-----------------------------------------------------------------------------------------------------
Portfolio turnover (%) 150.42 183.18 128.25 89.77 72.68
-----------------------------------------------------------------------------------------------------
+ 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.
(d) Distributions from net investment income amounted to less than
$.01 per share.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
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 companies
located in Asia and in the Pacific Basin.
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.
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. Non-cash dividends, if any, are recorded at the fair
market value of the securities received.
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 year ended
September 30, 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, 2000, the fund had a capital loss carryover of
approximately $101,333,000 available to offset future capital gains, if
any, which will expire on 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. These differences include temporary and permanent
differences of losses on wash sale transactions, foreign currency gains
and losses, realized gains and losses on passive foreign investment
companies, and unrealized gains and losses on passive foreign investment
companies. 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, 2000, the fund reclassified $7,550,575 to decrease
distributions in excess of net investment income and $2,665,700 to
decrease paid-in-capital, with an increase to accumulated net realized
losses of $4,884,875. The calculation of net investment income per share
in the financial highlights table excludes these adjustments.
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.
Under the subcustodian contract between the subcustodian bank and PFTC,
the subcustodian bank has a lien on the securities of the fund to the
extent permitted by the fund's investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund.
For the year ended September 30, 2000, fund expenses were reduced by
$315,244 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 $1,040
has been allocated to the fund, and an additional fee for each Trustees
meeting attended. Trustees receive additional fees for attendance at
certain committee meetings. The fund has adopted a Trustee Fee Deferral
Plan (the "Deferral Plan") which allows the Trustees to defer the
receipt of all or a portion of Trustees Fees payable on or after July 1,
1995. The deferred fees remain invested in certain Putnam funds until
distribution in accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C and class M shares pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Retail Management, Inc., 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 Retail Management, Inc. 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 year ended September 30, 2000, Putnam Retail Management, Inc.,
acting as underwriter received net commissions of $209,044 and $8,376
from the sale of class A and class M shares, respectively, and received
$502,079 and $13,452 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 year ended September 30, 2000, Putnam Retail Management,
Inc., acting as underwriter received $5,940 on class A redemptions.
Note 3
Purchases and sales of securities
During the year ended September 30, 2000, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $843,081,542 and $903,137,499, respectively. There were no
purchases and sales of U.S. government obligations.
Note 4
Capital shares
At September 30, 2000, there was an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Year ended September 30, 2000
---------------------------------------------------------------------------
Class A Shares Amount
---------------------------------------------------------------------------
Shares sold 63,204,762 $958,303,558
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 142,316 2,339,346
---------------------------------------------------------------------------
63,347,078 960,642,904
Shares
repurchased (63,753,966) (984,560,514)
---------------------------------------------------------------------------
Net decrease (406,888) $(23,917,610)
---------------------------------------------------------------------------
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)
---------------------------------------------------------------------------
Year ended September 30, 2000
---------------------------------------------------------------------------
Class B Shares Amount
---------------------------------------------------------------------------
Shares sold 10,384,074 $159,533,155
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 55,644 896,987
---------------------------------------------------------------------------
10,439,718 160,430,142
Shares
repurchased (12,966,457) (200,457,909)
---------------------------------------------------------------------------
Net decrease (2,526,739) $(40,027,767)
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Year ended September 30, 2000
---------------------------------------------------------------------------
Class C Shares Amount
---------------------------------------------------------------------------
Shares sold 3,789,923 $58,196,914
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,996 32,759
---------------------------------------------------------------------------
3,791,919 58,229,673
Shares
repurchased (3,102,101) (46,252,302)
---------------------------------------------------------------------------
Net increase 689,818 $11,977,371
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
Year ended September 30, 2000
---------------------------------------------------------------------------
Class M Shares Amount
---------------------------------------------------------------------------
Shares sold 2,740,202 $41,333,295
---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 5,427 88,412
---------------------------------------------------------------------------
2,745,629 41,421,707
Shares
repurchased (2,975,383) (46,253,012)
---------------------------------------------------------------------------
Net decrease (229,754) $(4,831,305)
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
FEDERAL TAX INFORMATION
(Unaudited)
The Form 1099 you receive in January 2001 will show the tax status of
all distributions paid to your account in calendar 2000.
FUND INFORMATION
WEB SITE
www.putnaminvestments.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
KPMG LLP
TRUSTEES
John A. Hill, 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, III
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
Simon Davis
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
and Putnam's Quarterly Ranking 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.putnaminvestments.com.
Not FDIC Insured, May Lose Value, No Bank Guarantee
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
---------------------
PRST STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
AN001-65455 844/193/470 11/00
