-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VDCN9Pg8nlmyvUBeHIPI6m4Ka8MhiPhXJKkljNxnZWG6G8uUpZ5Y+5yDOB5paJQS hx4AmYBGMOkYje/t6BM8pQ== 0000928816-99-000090.txt : 19990420 0000928816-99-000090.hdr.sgml : 19990420 ACCESSION NUMBER: 0000928816-99-000090 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990419 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM FUNDS TRUST CENTRAL INDEX KEY: 0001005942 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07513 FILM NUMBER: 99596550 BUSINESS ADDRESS: STREET 1: ONE POST STREET 2: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921010 MAIL ADDRESS: STREET 1: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 N-30D 1 PUTNAM ASIA PACIFIC FUND II Putnam Asia Pacific Fund II SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK 2-28-99 [LOGO: BOSTON * LONDON * TOKYO] The following report contains a list of your fund's portfolio holdings and complete financial statements for the six months ended 2/28/99. Additional details, including fund strategy, performance, and manager's outlook, will be provided in the annual report, which will cover the 12 months ended 8/31/99.
Portfolio of investments owned February 28, 1999 (Unaudited) COMMON STOCKS (93.2%) (a) NUMBER OF SHARES VALUE Hong Kong (33.2%) - -------------------------------------------------------------------------------------------------------------------------- 8,000 Asia Satellite Telecommunications Holdings Ltd. $ 12,908 22,000 Cathay Pacific Airways 24,564 10,000 Cheung Kong Infrastructure Holdings (NON) 68,091 10,000 China Light & Power Co. 47,115 25,000 China Telecom Ltd. (NON) 44,372 9,000 Dao Heng Bank Group Ltd. 24,513 16,000 First Pacific Co., Ltd. 9,655 5,000 Hang Seng Bank Ltd. 40,661 23,000 Hong Kong and China Gas Co., Ltd. 26,720 40,000 Hong Kong Telecommunications Ltd. (NON) 67,123 14,000 Hutchison Whampoa, Ltd. (NON) 97,134 7,000 Johnson Electric Holdings Ltd. 18,523 50,000 Leefung -- Asco Printers Holdings Ltd. 8,519 48,000 Legend Holdings Ltd. (NON) 18,743 6,000 Li & Fung Ltd. 10,843 16,000 National Mutual Asia Ltd. 11,359 9,000 New World Development Co. Ltd. 16,555 10,000 Sun Hung Kai Properties Ltd. 68,091 -------------- 615,489 India (6.5%) - -------------------------------------------------------------------------------------------------------------------------- 1,000 Bajaj Auto Ltd. 144A GDR 14,363 2,000 BSES Ltd. GDR (NON) 23,750 2,500 Gujarat Ambuja Cements Ltd. GDR 14,375 900 ITC Ltd. GDR 18,000 2,300 Mahanagar Telephone Nigam Ltd. GDR 22,425 2,000 Tata Engineering & Locomotive Co., Ltd. GDR (NON) 8,380 2,000 Videsh Sanchar Nigam Ltd. GDR (NON) 19,150 -------------- 120,443 Indonesia (1.8%) - -------------------------------------------------------------------------------------------------------------------------- 1,000 PT Indosat ADR 13,000 1,400 PT Telekomunikasi Indonesia ADR 8,925 15,000 Sampoerna Industries (NON) 11,026 -------------- 32,951 Malaysia (4.0%) - -------------------------------------------------------------------------------------------------------------------------- 13,000 Berjaya Sports Toto Berhad 15,447 45,000 IJM Copr. Berhad 22,659 11,000 Jaya Tiasa Holdings Berhad 12,889 6,000 Malakoff Berhard 11,929 21,000 PPB Oil Palms Berhad 12,106 -------------- 75,030 Pakistan (0.6%) - -------------------------------------------------------------------------------------------------------------------------- 31,000 Pakistan Telecom Ltd. 144A GDR 10,747 Philippines (3.6%) - -------------------------------------------------------------------------------------------------------------------------- 25,000 Ayala Land, Inc. 7,410 3,800 Bank of the Philippine Islands (NON) 8,961 100,000 Cosmos Bottling Corp. 7,216 70,500 International Container Terminal Services, Inc. (NON) 3,888 3,000 Manila Electric Co. Class B 9,356 500 Philippine Long Distance Telephone Co. ADR 11,662 90,000 SM Prime Holdings Inc. 17,397 -------------- 65,890 Singapore (15.6%) - -------------------------------------------------------------------------------------------------------------------------- 5,000 City Developments Ltd. 20,906 3,000 Cycle & Carriage Ltd. 10,976 9,000 Datacraft Asia Ltd. 18,000 3,000 Development Bank of Singapore Ltd. 21,777 6,000 Keppel Corp. 13,937 5,000 Oversea Chinese Banking Corp. 33,391 5,000 Singapore Airlines Ltd. 36,876 2,600 Singapore Press Holdings Ltd. 29,594 10,000 Singapore Tech Engineering 8,595 16,000 Singapore Telecommunications, Ltd. 22,764 3,600 United Overseas Bank Ltd. 21,115 12,000 Venture Manufacturing Ltd. 50,523 -------------- 288,454 South Korea (13.9%) - -------------------------------------------------------------------------------------------------------------------------- 70 Hanjin Heavy Industries 286 2,440 Hankook Tire Manufacturing Co. 10,039 400 Hankuk Glass Industry Co. Ltd. (NON) 7,526 2,000 Hanwha Chemical Corp. 9,407 1,300 Housing & Commercial Bank GDR (NON) 20,151 200 Korea Chemical Co. Ltd. (NON) 9,325 2,100 Korea Electric Power Corp. (NON) 49,646 300 Korea Telecom Corp. (NON) 8,834 135 LG Information & Communication 3,931 240 Pohang Iron & Steel Company, Ltd. (NON) 12,651 1,145 Samsung Electronics Co. (NON) 80,735 36 Samsung Fire & Marine Insurance 11,485 600 Samsung Securities Co. Ltd. 13,669 300 Sansung Electro-Mechanics Co. (NON) 5,718 1,339 SK Telecom Co., Ltd. ADR 13,557 -------------- 256,960 Taiwan (9.4%) - -------------------------------------------------------------------------------------------------------------------------- 400 Ase Test Limited (NON) 16,250 1,000 Asustek Computer, Inc. GDR (NON) 8,350 23,000 Bank Sinopac (NON) 9,992 4,000 Cathay Life Insurance Co., Ltd. 13,261 30,000 Four Seasons Mercantile Holdings 9,778 2,000 Hon Hai Precision Industry (NON) 9,688 5,000 Nien Hsing Textile Corp., Ltd. (NON) 9,158 2,000 Pacific Electrical Wire & Cable (NON) 1,090 6,000 President Chain Store Corp. 16,621 1,568 Siliconware Precision Industries Co. GDR (NON) 18,973 19,000 Taiwan Semiconductor Manufacturing Co. (NON) 50,908 800 Windbond Electronics Corp. 144A GDR 10,720 -------------- 174,789 Thailand (3.4%) - -------------------------------------------------------------------------------------------------------------------------- 1,200 Advanced Info Service Public Co., Ltd. 8,356 5,000 Bangkok Bank Public Co., Ltd. 8,436 4,000 Electricity Generating Public Co. Ltd. (NON) 8,677 10,300 Land and House Public Co. Ltd. (NON) 5,793 900 PTT Exploration & Production PLC (NON) 5,881 800 Siam Cement Public Company Ltd. (The) (NON) 16,540 5,000 Thai Farmers Bank Public Co. 8,369 -------------- 62,052 United Kingdom (1.2%) - -------------------------------------------------------------------------------------------------------------------------- 800 HSBC Holdings PLC 22,512 -------------- Total Common Stocks (cost $1,498,942) $ 1,725,317 SHORT-TERM INVESTMENTS (6.4%) (a) PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------------------------------------------------- $58,000 Interest in $307,131,000 joint repurchase agreement dated February 26, 1999 with Merrill Lynch, Pierce, Fenner and Smith, Inc. due March 1, 1999 with respect to various U.S. Treasury obligations -- maturity value of $58,023 for an effective yield of 4.74% $ 58,000 60,000 Interest in $310,913,000 joint repurchase agreement dated February 26, 1999 with Warburg Securities due March 1, 1999 with respect to various U.S. Treasury obligations -- maturity value of $60,024 for an effective yield of 4.74% 60,000 -------------- Total Short-Term Investments (cost $118,000) $ 118,000 - -------------------------------------------------------------------------------------------------------------------------- Total Investments (cost $1,616,942) (b) $ 1,843,317 - -------------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $1,850,909. (b) The aggregate identified cost on a tax basis is $1,616,942, resulting in gross unrealized appreciation and depreciation of $315,508 and $89,133, respectively, or net unrealized appreciation of $226,375. (NON) Non-income-producing security. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. ADR or GDR after the name of a foreign holding stands for American Depository Receipts or Global Depository Receipts, representing ownership of foreign securities on deposit with a domestic custodian bank. The fund had the following industry group concentrations greater than 10% at February 28, 1999 (as a percentage of net assets): Electronics and electrical equipment 14.7% Telecommunications 12.6% Insurance and finance 14.6 Real Estate 11.0 The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities February 28, 1999 (Unaudited) Assets - ----------------------------------------------------------------------------------------------- Investments in securities, at value (identified cost $1,616,942) (Note 1) $1,843,317 - ----------------------------------------------------------------------------------------------- Cash 6,481 - ----------------------------------------------------------------------------------------------- Foreign currency (cost $23,947) 24,126 - ----------------------------------------------------------------------------------------------- Dividends receivable 3,756 - ----------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 582 - ----------------------------------------------------------------------------------------------- Receivable for securities sold 97,128 - ----------------------------------------------------------------------------------------------- Total assets 1,975,390 Liabilities - ----------------------------------------------------------------------------------------------- Payable for securities purchased 109,263 - ----------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 764 - ----------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 327 - ----------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 148 - ----------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 7 - ----------------------------------------------------------------------------------------------- Other accrued expenses 13,972 - ----------------------------------------------------------------------------------------------- Total liabilities 124,481 - ----------------------------------------------------------------------------------------------- Net assets $1,850,909 Represented by - ----------------------------------------------------------------------------------------------- Paid-in capital (Notes 1, 4 and 5) $2,194,709 - ----------------------------------------------------------------------------------------------- Distributions in excess of net investment income (Note 1) (12,370) - ----------------------------------------------------------------------------------------------- Accumulated net realized loss on investments and foreign currency transactions (Note 1) (558,409) - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments and assets and liabilities in foreign currencies 226,979 - ----------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $1,850,909 Computation of net asset value and offering price - ----------------------------------------------------------------------------------------------- Net asset value and redemption price per class A share ($1,850,909 divided by 260,479 shares) $7.11 - ----------------------------------------------------------------------------------------------- Offering price per class A share (100/94.25 of $7.11)* $7.54 - ----------------------------------------------------------------------------------------------- * On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced The accompanying notes are an integral part of these financial statements.
Statement of operations Six months ended February 28, 1999 (Unaudited) Investment income: - ----------------------------------------------------------------------------------------------- Dividends (net of foreign tax $1,468) $ 15,324 - ----------------------------------------------------------------------------------------------- Interest 478 - ----------------------------------------------------------------------------------------------- Total investment income 15,802 Expenses: - ----------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 8,757 - ----------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 1,677 - ----------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 1,031 - ----------------------------------------------------------------------------------------------- Administrative services (Note 2) 20 - ----------------------------------------------------------------------------------------------- Reports to shareholders 1,017 - ----------------------------------------------------------------------------------------------- Auditing 10,719 - ----------------------------------------------------------------------------------------------- Legal 1,229 - ----------------------------------------------------------------------------------------------- Fees waived and reimbursed by manager (Note 2) (10,001) - ----------------------------------------------------------------------------------------------- Total expenses 14,449 - ----------------------------------------------------------------------------------------------- Expense reduction (Note 2) (1,154) - ----------------------------------------------------------------------------------------------- Net expenses 13,295 - ----------------------------------------------------------------------------------------------- Net investment income 2,507 - ----------------------------------------------------------------------------------------------- Net realized loss on investments (Notes 1 and 3) (45,970) - ----------------------------------------------------------------------------------------------- Net realized loss on foreign currency transactions (Note 1) (8,464) - ----------------------------------------------------------------------------------------------- Net unrealized depreciation of assets and liabilities in foreign currencies during the period (Note 1) (1,670) - ----------------------------------------------------------------------------------------------- Net unrealized appreciation of investments during the period 566,030 - ----------------------------------------------------------------------------------------------- Net gain on investments 509,926 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $512,433 - ----------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets For the period March 23, 1998 Six months ended (commencement February 28 of operations) 1999* to August 31, 1998 - -------------------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets - -------------------------------------------------------------------------------------------------------------------- Operations: - -------------------------------------------------------------------------------------------------------------------- Net investment income $ 2,507 $ 18,006 - -------------------------------------------------------------------------------------------------------------------- Net realized loss on investments and foreign currency transactions (54,434) (508,833) - -------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) of investments and assets and liabilities in foreign currencies 564,360 (337,381) - -------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 512,433 (828,208) - -------------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - -------------------------------------------------------------------------------------------------------------------- From net investment income (28,025) -- - -------------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 35,794 158,915 - -------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 520,202 (669,293) Net assets - -------------------------------------------------------------------------------------------------------------------- Beginning of period (Note 5) 1,330,707 2,000,000 - -------------------------------------------------------------------------------------------------------------------- End of period (including distributions in excess of net investment income and undistributed net investment income of $12,370 and $13,148, respectively) $1,850,909 $1,330,707 - -------------------------------------------------------------------------------------------------------------------- *Unaudited The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) - ------------------------------------------------------------------------------------------------------------------------------------ Six months ended For the period Per-share February 28 March 23, 1998+ operating performance (Unaudited) to August 31 - ------------------------------------------------------------------------------------------------------------------------------------ 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $5.23 $8.50 - ------------------------------------------------------------------------------------------------------------------------------------ Investment operations - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income (c)(d) .01 .06 - ------------------------------------------------------------------------------------------------------------------------------------ Net realized and unrealized gain on investments 1.98 (3.33) - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations 1.99 (3.27) - ------------------------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------------------------ From net investment income (.11) -- - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.11) -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $7.11 $5.23 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) 37.97* (38.47)* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $1,851 $1,331 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b)(d) .82* .73* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%)(d) .14* .99* - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover (%) 120.87* 202.60* - ------------------------------------------------------------------------------------------------------------------------------------ + Commencement of operations. * Not annualized. (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). (c) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. (d) Reflects an expense limitation in effect during the period. As a result of such limitation, expenses for the fund reflect a reduction of $.04 and $.07 per share for the periods ended February 28, 1999 and August 31, 1998, respectively. (see Note 2)
Notes to financial statements February 28, 1999 (Unaudited) Note 1 Significant accounting policies Putnam Asia Pacific Fund II (The "fund") is a series of Putnam Funds Trust ("the trust") which is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks long term capital appreciation by investing primarily in common stocks and other securities of companies located in Asia and in the Pacific Basin. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with generally accepted accounting principles and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates. A) Security valuation Investments for which market quotations are readily available are stated at market value, which is determined using the last reported sale price on the principal market in which the securities are traded, or, if no sales are reported -- as in the case of some securities traded over-the-counter -- the last reported bid price. Short-term investments having remaining maturities of 60 days or less are stated at amortized cost, which approximates market value, and other investments are stated at fair value following procedures approved by the Trustees. Securities quoted in foreign currencies are translated into U.S. dollars at the current exchange rate. B) Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Investment Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recorded as soon as the fund is informed of the ex-dividend date. E) Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market value of foreign securities, currency holdings, and other assets and liabilities are recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when accrued or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net exchange gains or losses on closed forward currency contracts, disposition of foreign currencies and the difference between the amount of investment income and foreign withholding taxes recorded on the fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate. F) Line of credit The fund has entered into a committed line of credit with certain banks. This line of credit agreement includes restrictions that the fund maintain an asset coverage ratio of at least 300% and borrowings must not exceed prospectus limitations. For the six months ended February 28, 1999, the fund had no borrowings against the line of credit. G) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. H) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Capital gain distributions, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences include temporary and permanent differences of losses on wash sale transactions, foreign currency gains and losses and market to market gains and losses. Reclassifications are made to the fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. I) Expenses of the trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund. Note 2 Management fee, administrative services and other transactions Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 1.00% of the first $500 million of average net assets, 0.90% of the next $500 million, 0.85% of the next $500 million, 0.80% of the next $5 billion, 0.775% of the next $5 billion, 0.755% of the next $5 billion, 0.74% of the next $5 billion, 0.73% thereafter. Putnam Management has agreed to limit its compensation (and, to the extent necessary, bear other expenses) through July 31, 1999, to the extent that expenses of the fund (exclusive of brokerage commissions, interest, taxes, deferred organizational and extraordinary expense, credits from Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. and payments under the Trust's distribution plan) would exceed an annual rate of 1.65% of the fund's average net assets. The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by PFTC. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the six months ended February 28, 1999, fund expenses were reduced by $1,154 under expense offset arrangements with PFTC and brokerage service arrangements. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Each Trustee of the fund receives an annual Trustee fee, of which $100 has been allocated to the fund and an additional fee for each Trustee's meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain in the fund and are invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. The fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plan is to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments, Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plan provides for payment by the fund to Putnam Mutual Funds Corp. at an annual rate of up to 0.35% of the fund's average net assets. The fund is not currently making any payments pursuant to the plan. For the six months ended February 28, 1999, Putnam Mutual Funds Corp., acting as underwriter received no net commissions from the sale of shares of the fund. A deferred sales charge of up to 1% is assessed on certain redemptions of shares. For the six months ended February 28, 1999, Putnam Mutual Funds Corp., acting as underwriter received no monies on redemptions. Note 3 Purchase and sales of securities During the six months ended February 28, 1999, purchases and sales of investment securities other than short-term investments aggregated $2,135,987 and $2,017,786, respectively. There were no purchases and sales of U.S. government obligations. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At February 28, 1999, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows: For the six months ended February 28, 1999 - ----------------------------------------------------------------------------- Class A Shares Amount - ----------------------------------------------------------------------------- Shares sold 10,137 $67,578 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,792 28,025 - ----------------------------------------------------------------------------- 13,929 95,603 Shares repurchased (8,129) (59,809) - ----------------------------------------------------------------------------- Net increase 5,800 $35,794 - ----------------------------------------------------------------------------- For the period March 23, 1998 (commencement of operations) to August 31, 1998 - ----------------------------------------------------------------------------- Class A Shares Amount - ----------------------------------------------------------------------------- Shares sold 104,744 $659,238 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions -- -- - ----------------------------------------------------------------------------- 104,744 659,238 Shares repurchased (85,359) (500,323) - ----------------------------------------------------------------------------- Net increase 19,385 $158,915 - ----------------------------------------------------------------------------- Note 5 Initial capitalization and offering of shares The fund was established as a Massachusetts business trust on January 22, 1996. During the period January 22, 1996 to March 23, 1998, the fund had no operations other than those related to organizational matters, including the initial capital contribution of $2,000,000 and the issuance of 235,294 shares to Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments, Inc. on March 20, 1998. At February 28, 1999, Putnam Investments, Inc. owned 247,129 shares of the fund (94.87% of class shares outstanding), valued at $1,757,087. Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman John A. Hill, Vice Chairman Jameson Adkins Baxter Hans H. Estin Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President John J. Morgan, Jr. Vice President Carmel Peters Vice President and Fund Manager Paul C. Warren Vice President and Fund Manager Richard A. Monaghan Vice President John R. Verani Vice President Beverly Marcus Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam Asia Pacific Fund II. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives, and operating policies of the fund, and the most recent copy of Putnam's Quarterly Performance Summary. For more information or to request a prospectus, call toll free: 1-800-225-1581. You can also learn more at Putnam Investments' website: http://www.putnaminv.com. Shares of mutual funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution; are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency; and involve risk, including the possible loss of the principal amount invested. 51088-2IB 4/99 -----END PRIVACY-ENHANCED MESSAGE-----