| UNITED STATES SECURITIES AND EXCHANGE COMMISSION | ||
| Washington, D.C. 20549 | ||
FORM N-CSR | ||
| CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES | ||
| Investment Company Act file number: | (811-07513) |
| Exact name of registrant as specified in charter: | Putnam Funds Trust |
| Address of principal executive offices: | One Post Office Square, Boston, Massachusetts 02109 |
| Name and address of agent for service: | Robert T. Burns, Vice President One Post Office Square Boston, Massachusetts 02109 |
| Copy to: | John W. Gerstmayr, Esq. Ropes & Gray LLP 800 Boylston Street Boston, Massachusetts 02199-3600 |
| Registrant’s telephone number, including area code: | (617) 292-1000 |
| Date of fiscal year end: | September 30, 2013 |
| Date of reporting period: | October 1, 2012 — March 31, 2013 |
Item 1. Report to Stockholders: |
| The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: | |||
Putnam
Money Market
Liquidity Fund
Semiannual report
3 | 31 | 13
| Message from the Trustees | 1 | ||
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| Performance snapshot | 2 | ||
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| Interview with your fund’s portfolio managers | 3 | ||
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| Your fund’s performance | 8 | ||
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| Your fund’s expenses | 9 | ||
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| Terms and definitions | 11 | ||
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| Other information for shareholders | 12 | ||
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| Financial statements | 13 | ||
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Consider these risks before investing: Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, deterioration in the credit quality of issuers whose securities the fund holds or an increase in interest rates may impair the value of your investment, and it is possible to lose money by investing in this fund. The values of money market investments usually rise and fall in response to changes in interest rates. Although the fund only buys high quality investments, investments backed by a letter of credit have the risk that the provider of the letter of credit will not be able to fulfill its obligations to the issuer.
Message from the Trustees
Dear Fellow Shareholder:
Many macroeconomic risks to global growth have diminished in recent months. A widespread financial collapse in Europe, an economic hard landing in China, and significant fallout from budget sequestration and the fiscal cliff in the United States have not come to pass. While these risks have not entirely dissipated, U.S. equity markets have managed to achieve record highs in the first quarter, recouping all of their losses from the 2008 financial crisis.
In the United States, corporate profits and balance sheets are strong. The Federal Reserve has pledged to keep interest rates at historic lows until the nation’s employment situation meaningfully improves. The U.S. housing market, a significant driver of GDP, has been steadily rebounding. And while the federal budget battle is not yet resolved, the markets appear to believe that Washington lawmakers will eventually reach a resolution.
At Putnam, our investment team employs a measured, balanced approach to managing risk while pursuing returns. It is also important to rely on the guidance of your financial advisor, who can help ensure that your portfolio matches your individual goals and tolerance for risk.
We would like to extend a welcome to new shareholders of the fund and to thank all of our investors for your continued confidence in Putnam.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class P shares assumes reinvestment of distributions. Class P shares do not bear an initial sales charge. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. Yield reflects current performance more closely than total return. Due to market volatility, current performance may be higher or lower than performance shown. See pages 3 and 8–9 for additional performance information. To obtain the most recent month-end performance, please call Putnam at 1-800-225-1581.
* Returns for the six-month period are not annualized, but cumulative.
| 2 | Money Market Liquidity Fund |
Interview with your fund’s portfolio managers
How would you characterize the market environment for the six months ended March 31, 2013?
Joanne: The financial markets saw broad improvement, as fears waned over the prospect of the eurozone’s demise and economic data suggested that China’s economy was beginning to reaccelerate. U.S. economic growth, bolstered by a recovering housing market, continued to show more strength, and corporations posted healthy profits. Japan also experienced a jolt of new life this past December in the wake of national elections and the installation of new political leadership, which raised hopes that an area marked by protracted economic and market weakness would see improvement. Economic weakness in Latin America, most notably in Brazil, and the Cyprus banking crisis did cause some unease in the final months of the reporting period, but investors were decidedly in a more upbeat mood.
How did Putnam Money Market Liquidity Fund perform in this environment?
Jonathan: With the Federal Reserve’s efforts to stimulate economic growth by holding the benchmark federal funds rate near 0%, where it has remained since December 2008, there was limited volatility across the money market sectors. Thus, Putnam Money Market Liquidity Fund delivered performance that was generally in line with this interest-rate environment and the average return for its
This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 3/31/13. See pages 2 and 8–9 for additional fund performance information. Index descriptions can be found on page 11.
| Money Market Liquidity Fund | 3 |
Lipper peer group for the six months ended March 31, 2013. At period-end, the fund’s weighted average days to maturity stood at 48.71 days.
Could you bring us up to date with regard to the Securities and Exchange Commission’s [SEC’s] efforts to improve the functioning of the money markets?
Joanne: The SEC strongly believes that retail and institutional money market funds still remain a concern with regard to the stability of the financial system. Regulators feel that the amendments to Rule 2a-7 under the Investment Company Act of 1940 that were implemented three years ago did not go far enough to avoid major market disruptions, such as we saw in September 2008, when the value of the Reserve Primary Fund’s shares fell below $1.00 and precipitated a surge in money market redemptions.
Last year, the SEC laid out three proposals to further reform the money market sector. They included imposing a floating net asset value [NAV] on money market funds, meaning that funds would no longer rely upon amortized cost pricing and would convert to a mark-to-market model as used in other mutual funds. The second proposal would require money market funds to maintain a capital buffer, which would be funded either by the fund’s advisor injecting capital into the fund or the fund withholding earnings from investors in order to build a cushion over time. The third proposal would require funds to hold back a stated percentage of any redemption being made, which would be returned after a period of time.
These proposals were tabled in August 2012 as the SEC did not have the necessary votes to pass the measures. In addition to being expensive and difficult to implement, there was some debate as to whether these solutions would adequately reduce the propensity of institutional money market fund investors to withdraw their investments
Allocations are represented as a percentage of the portfolio market value. Current period summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, and the use of different classifications of securities for presentation purposes. Holdings and allocations may vary over time.
| 4 | Money Market Liquidity Fund |
in a financial crisis. Subsequently, as a result of the Dodd-Frank Financial Reform Act, the Financial Stability Oversight Council [FSOC] was created in part to recommend financial reforms and encourage the SEC to adopt those reforms. Another option that was recently introduced by regulators would impose redemption fees at times of market stress to limit shareholder redemptions. At some point this year, new regulations —initiated by either the SEC or FSOC — may be enacted. We’ll continue to closely monitor developments and their impact on our shareholders.
What was your strategy to capture income in such a low-rate environment?
Jonathan: The fund’s overall strategy remains focused on pursuing stability and liquidity by investing in commercial paper, repurchase agreements, and U.S. Treasury securities. We continue to feel positive about several issuers and selectively added to the fund’s credit exposure by investing in corporate notes issued by entities in Canada, Australia, Japan, and the more economically viable Nordic countries in northern Europe. In addition, we increased the fund’s exposure to repurchase agreements collateralized by U.S. government agency mortgage-backed securities. The repurchase agreements we enter into are typically executed with what we believe are high-quality counterparties, and are collateralized by agency mortgage-backed securities and investment-grade corporate bonds. These agreements offered attractive yields during the period due to increased
This chart shows how the fund’s top weightings have changed over the past six months. Allocations are represented as a percentage of the portfolio market value. Current period summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, and the use of different classifications of securities for presentation purposes. Holdings and allocations may vary over time.
| Money Market Liquidity Fund | 5 |
supply and the Fed’s “Operation Twist,” a large-scale fixed-income asset purchase program designed to keep downward pressure on longer-term interest rates to provide economic stimulus. While Operation Twist has ended, rates offered by repurchase agreements have remained competitive, as the supply of available collateral increased in advance of tax receipts. As always, we will be diligent in our fundamental credit research process in an effort to avoid exposure to securities that might pose a risk to the fund.
Which fund holdings exemplified your strategy during the period?
Joanne: We think that the underlying bank fundamentals continue to improve and, accordingly, have invested in what we believe are large, creditworthy banks, such as Toronto-Dominion Bank, Commonwealth Bank of Australia, and Nordea Bank. We believe asset-quality measures are showing improving trends and profits are being retained to help build capital. In our opinion, these positive developments are somewhat offset by the banks’ underlying revenue weakness with soft loan demand, pressured interest margins, and ongoing regulatory pressure on fee business. Given the ongoing sovereign debt stress in Europe, we have limited the fund’s exposure to the eurozone.
We continue to find attractive opportunities in the first-tier corporate and asset-backed commercial paper [ABCP] market. The ABCP issuers that we consider safe and appropriate investments for the fund must be backed by diverse, high-quality financial assets, such as trade receivables, commercial loans, auto loans, mortgage loans, and other asset types. These issuers must maintain ample third-party structural support and have strong management and sponsorship. Thunder Bay Funding and Jupiter Securitization exemplify our strategy in this sector.
Are U.S. interest rates likely to remain “range-bound”?
Jonathan: In our opinion, it appears likely that short-term interest rates will remain in a range for the near future until we see evidence of a shift in Fed monetary policy. In September 2012, the Federal Reserve launched “QE3,” a bond-buying program authorized to purchase up to $40 billion of agency mortgage-backed securities per month. Not long after, in December, the Fed replaced the expiring “Operation Twist” with an additional unlimited round of easing, targeting up to $45 billion worth of intermediate- and longer-term Treasuries per month — with no apparent intent of stopping so long as inflation remains below 2.5% and unemployment stays above 6.5%. These kinds of explicit targets are rare coming from the Fed and, we believe, provide some welcome insight as to when the Fed is likely to begin shifting to a more neutral monetary stance. With the March 2012 unemployment rate at 7.6%, we believe a near-term change by the Fed is unlikely.
Given the challenges of a low-interest-rate environment, we will continue to maintain the fund’s conservative positioning with a bias toward safety and liquidity, as we search for income further out on the money market yield curve.
Thank you, Joanne and Jonathan, for bringing us up to date.
The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.
Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.
| 6 | Money Market Liquidity Fund |
Portfolio Manager Joanne M. Driscoll has an M.B.A. from the Northeastern College of Business Administration and a B.S. from Westfield State College. A CFA charterholder, Joanne joined Putnam in 1995 and has been in the investment industry since 1992.
Portfolio Manager Jonathan M. Topper has a B.A. from Northeastern University. He has been in the investment industry since he joined Putnam in 1990.
IN THE NEWS
The economic outlook for major industrialized nations is slowly improving, with the United States and Japan leading the way, according to a recent report by the Organisation for Economic Co-operation and Development (OECD). Economic expansion is also taking place in most major countries around the world, including the 17-nation eurozone, where Germany’s economy is growing and stabilization is occurring in Italy and France. Growth also is solidifying in Japan, whose new government has launched efforts to bring the country’s long-stagnant economy back to life through various stimulus efforts, and growth is picking up in China, where an economic hard landing has been avoided. The OECD sees growth weakening in India and normal, “around trend” growth taking place in Russia, Brazil, and the United Kingdom. Meanwhile, the World Trade Organization (WTO) has cut its overall 2013 forecast for global trade volume growth to 3.3% from 4.5%. Global trade grew by 2% in 2012, the second-worst figure since this economic statistic began to be tracked in 1981, according to the WTO. The worst trade figure came in 2009 during the global economic crisis.
| Money Market Liquidity Fund | 7 |
Your fund’s performance
This section shows your fund’s performance, price, and distribution information for periods ended March 31, 2013, the end of the first half of its current fiscal year. In accordance with regulatory requirements for mutual funds, we also include expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class P shares are only available to other Putnam funds and other accounts managed by Putnam Management or its affiliates. See the Terms and Definitions section in this report for definitions of the share class offered by your fund.
Fund performance Total return for periods ended 3/31/13
| Class P | |
| (inception date) | (4/13/09) |
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| Net asset value | |
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| Life of fund | 0.62% |
| Annual average | 0.16 |
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| 3 years | 0.37 |
| Annual average | 0.12 |
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| 1 year | 0.13 |
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| 6 months | 0.07 |
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| Current yield (end of period)* | Net asset value |
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| Current 7-day yield | 0.12% |
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Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Class P shares do not carry an initial sales charge or a contingent deferred sales charge (CDSC).
* The 7-day yield is the most common gauge for measuring money market mutual fund performance. Yield reflects current performance more closely than total return.
For a portion of the periods, the fund had expense limitations, without which returns and yields would have been lower.
Comparative Lipper returns For periods ended 3/31/13
| Lipper Institutional Money Market Funds | |
| category average* | |
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| Life of fund | 0.33% |
| Annual average | 0.08 |
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| 3 years | 0.18 |
| Annual average | 0.06 |
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| 1 year | 0.06 |
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| 6 months | 0.02 |
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Lipper results should be compared to fund performance at net asset value.
* Over the 6-month, 1-year, 3-year, and life-of-fund periods ended 3/31/13, there were 300, 295, 276, and 266 funds, respectively, in this Lipper category.
| 8 | Money Market Liquidity Fund |
Fund distribution information For the six-month period ended 3/31/13
| Distributions | Class P |
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| Number | 6 |
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| Income | $0.000665 |
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| Capital gains | — |
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| Total | $0.000665 |
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The classification of distributions, if any, is an estimate. Final distribution information will appear on your year-end tax forms.
Your fund’s expenses
As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. In the most recent six-month period, your fund’s expenses were limited; had expenses not been limited, they would have been higher. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.
Expense ratios
| Class P | |
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| Net expenses for the fiscal year ended 9/30/12* | 0.03% |
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| Total annual operating expenses for the fiscal year ended 9/30/12 | 0.28% |
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| Annualized expense ratio for the six-month period ended 3/31/13 | 0.04% |
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Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report. Expenses are shown as a percentage of average net assets.
* Reflects Putnam Management’s contractual obligation to limit expenses through 1/30/14.
Expenses per $1,000
The following table shows the expenses you would have paid on a $1,000 investment in the fund from October 1, 2012, to March 31, 2013. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
| Class P | |
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| Expenses paid per $1,000*† | $0.20 |
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| Ending value (after expenses) | $1,000.70 |
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* Expenses are calculated using the fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of average net assets for the six months ended 3/31/13.
† Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.
| Money Market Liquidity Fund | 9 |
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended March 31, 2013, use the following calculation method. To find the value of your investment on October 1, 2012, call Putnam at 1-800-225-1581.
Compare expenses using the SEC’s method
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
| Class P | |
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| Expenses paid per $1,000*† | $0.20 |
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| Ending value (after expenses) | $1,024.73 |
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* Expenses are calculated using the fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of average net assets for the six months ended 3/31/13.
† Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.
| 10 | Money Market Liquidity Fund |
Terms and definitions
Important terms
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.
Net asset value (NAV) is the price, or value, of one share of a mutual fund, without a sales charge. Net asset values fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.
Current yield is the annual rate of return earned from dividends or interest of an investment. Current yield is expressed as a percentage of the price of a security, fund share, or principal investment.
Share classes
Class P shares require no minimum initial investment amount and no minimum subsequent investment amount. There is no initial or deferred sales charge. They bear no management fee and are available only to other Putnam funds.
Comparative indexes
Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.
BofA (Bank of America) Merrill Lynch U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.
S&P 500 Index is an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.
Lipper is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.
| Money Market Liquidity Fund | 11 |
Other information for shareholders
Important notice regarding delivery of shareholder documents
In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.
Proxy voting
Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2012, are available in the Individual Investors section of putnam.com, and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Forms N-Q on the SEC’s website at www.sec.gov. In addition, the fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s website or the operation of the Public Reference Room.
Trustee and employee fund ownership
Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of March 31, 2013, Putnam employees had approximately $377,000,000 and the Trustees had approximately $90,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.
| 12 | Money Market Liquidity Fund |
Financial statements
A guide to financial statements
These sections of the report, as well as the accompanying Notes, 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 non-investment 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 liquidation preference of preferred shares.)
Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal period.
Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, 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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.
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 highlights table also includes the current reporting period.
| Money Market Liquidity Fund | 13 |
The fund’s portfolio 3/31/13 (Unaudited)
| Principal | ||
| REPURCHASE AGREEMENTS (27.6%)* | amount | Value |
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| Interest in $43,000,000 joint tri-party term repurchase agreement dated | ||
| 3/22/13 with JPMorgan Securities, Inc. due 4/22/13 — maturity value | ||
| of $17,504,219 for an effective yield of 0.28% (collateralized by various | ||
| corporate bonds and notes with coupon rates ranging from zero % to 8.375% | ||
| and due dates ranging from 10/1/13 to 10/13/59, valued at $45,154,016) | $17,500,000 | $17,500,000 |
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| Interest in $77,700,000 joint tri-party repurchase agreement dated | ||
| 3/28/13 with Credit Suisse Securities (USA) due 4/1/13 — maturity value | ||
| of $19,650,568 for an effective yield of 0.26% (collateralized by various | ||
| mortgage backed securities, foreign government bonds and various | ||
| corporate bonds and notes with coupon rates ranging from 0.631% | ||
| to 11.375% and due dates ranging from 3/7/14 to 12/15/47, valued | ||
| at $81,261,284) | 19,650,000 | 19,650,000 |
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| Interest in $461,568,000 joint tri-party repurchase agreement dated | ||
| 3/28/13 with RBC Capital Markets due 4/1/13 — maturity value of | ||
| $85,487,090 for an effective yield of 0.22% (collateralized by various | ||
| mortgage backed securities with coupon rates ranging from 3.50% to 4.00% | ||
| and due dates ranging from 1/1/42 to 5/1/42, valued at $470,802,237) | 85,485,000 | 85,485,000 |
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| Interest in $47,845,000 joint tri-party term repurchase agreement dated | ||
| 3/7/13 with Merrill Lynch & Co., Inc. due 6/5/13 — maturity value of | ||
| $9,204,370 for an effective yield of 0.19% (collateralized by various | ||
| U.S. Treasury Notes with a coupon rate of 0.25% and due dates ranging from | ||
| 12/15/14 to 2/15/15, valued at $48,802,795) | 9,200,000 | 9,200,000 |
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| Interest in $100,000,000 joint tri-party term repurchase agreement dated | ||
| 3/28/13 with JPMorgan Securities, Inc. due 4/4/13 — maturity value | ||
| of $25,500,645 for an effective yield of 0.13% (collateralized by various | ||
| mortgage backed securities with coupon rates ranging from 3.00% to 4.00% | ||
| and due dates ranging from 2/1/27 to 1/1/43, valued at $102,000,786) | 25,500,000 | 25,500,000 |
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| Interest in $315,000,000 joint tri-party term repurchase agreement dated | ||
| 3/27/13 with Citigroup Global Markets, Inc. due 4/3/13 — maturity value | ||
| of $108,502,110 for an effective yield of 0.10% (collateralized by various | ||
| mortgage backed securities with coupon rates ranging from 2.779% to 4.50% | ||
| and due dates ranging from 12/1/20 to 2/1/43, valued at $321,612,966) | 108,500,000 | 108,500,000 |
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| Interest in $127,600,000 joint tri-party term repurchase agreement dated | ||
| 3/26/13 with Merrill Lynch & Co., Inc. due 4/2/13 — maturity value of | ||
| $49,500,963 for an effective yield of 0.10% (collateralized by a U.S. Treasury | ||
| Note with a coupon rate of 4.125% and a due date of 5/15/15, valued | ||
| at $130,152,068) | 49,500,000 | 49,500,000 |
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| Interest in $108,500,000 tri-party term repurchase agreement dated | ||
| 3/27/13 with Barclays Capital, Inc. due 4/3/13 — maturity value of | ||
| $108,501,899 for an effective yield of 0.09% (collateralized by various | ||
| mortgage backed securities with coupon rates ranging from 2.50% to 7.00% | ||
| and due dates ranging from 07/1/22 to 04/01/43, valued at $110,670,000) | 108,500,000 | 108,500,000 |
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| Total repurchase agreements (cost $423,835,000) | $423,835,000 | |
| 14 | Money Market Liquidity Fund |
| Maturity | Principal | |||
| U.S. GOVERNMENT AGENCY OBLIGATIONS (29.8%)* | Yield (%) | date | amount | Value |
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| Federal Farm Credit Bank unsec. discount notes | 0.170 | 6/14/13 | $35,163,000 | $35,150,712 |
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| Federal Home Loan Bank unsec. notes | 0.172 | 9/20/13 | 28,000,000 | 27,999,341 |
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| Federal Home Loan Bank unsec. discount notes | 0.110 | 7/24/13 | 10,500,000 | 10,496,342 |
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| Federal Home Loan Bank unsec. discount notes | 0.165 | 5/8/13 | 25,000,000 | 24,995,760 |
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| Federal Home Loan Bank unsec. discount notes | 0.125 | 4/24/13 | 24,500,000 | 24,498,043 |
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| ||||
| Federal Home Loan Mortgage Corp. unsec. | ||||
| discount notes | 0.135 | 7/1/13 | 36,583,000 | 36,570,516 |
|
| ||||
| Federal Home Loan Mortgage Corp. unsec. | ||||
| discount notes | 0.155 | 5/6/13 | 20,000,000 | 19,996,986 |
|
| ||||
| Federal Home Loan Mortgage Corp. unsec. | ||||
| discount notes | 0.149 | 4/15/13 | 60,843,000 | 60,839,480 |
|
| ||||
| Federal Home Loan Mortgage Corp. unsec. discount | ||||
| notes Ser. RB | 0.140 | 10/10/13 | 21,930,000 | 21,913,626 |
|
| ||||
| Federal National Mortgage Association unsec. | ||||
| discount notes | 0.135 | 7/3/13 | 49,650,000 | 49,632,685 |
|
| ||||
| Federal National Mortgage Association unsec. | ||||
| discount notes | 0.141 | 6/26/13 | 34,066,000 | 34,054,573 |
|
| ||||
| Federal National Mortgage Association unsec. | ||||
| discount notes | 0.157 | 4/10/13 | 63,100,000 | 63,097,522 |
|
| ||||
| Federal National Mortgage Association unsec. | ||||
| discount notes | 0.150 | 4/3/13 | 49,500,000 | 49,499,588 |
|
| ||||
| Total U.S. Government Agency Obligations (cost $458,745,174) | $458,745,174 | |||
| Maturity | Principal | |||
| U.S. TREASURY OBLIGATIONS (24.5%)* | Yield (%) | date | amount | Value |
|
| ||||
| U.S. Treasury Bills | 0.208 | 10/17/13 | $39,100,000 | $39,071,460 |
|
| ||||
| U.S. Treasury Bills | 0.122 | 7/25/13 | 42,725,000 | 42,708,622 |
|
| ||||
| U.S. Treasury Bills | 0.155 | 5/2/13 | 91,500,000 | 91,487,860 |
|
| ||||
| U.S. Treasury Bills | 0.142 | 4/4/13 | 50,000,000 | 49,999,417 |
|
| ||||
| U.S. Treasury Notes k | 3.500 | 5/31/13 | 47,000,000 | 47,256,375 |
|
| ||||
| U.S. Treasury Notes k | 2.750 | 10/31/13 | 50,000,000 | 50,744,361 |
|
| ||||
| U.S. Treasury Notes k | 0.625 | 4/30/13 | 30,000,000 | 30,011,218 |
|
| ||||
| U.S. Treasury Notes k | 0.375 | 7/31/13 | 25,000,000 | 25,015,085 |
|
| ||||
| Total U.S. treasury obligations (cost $376,294,398) | $376,294,398 | |||
| Maturity | Principal | |||
| ASSET-BACKED COMMERCIAL PAPER (9.9%)* | Yield (%) | date | amount | Value |
|
| ||||
| Chariot Funding, LLC 144A | 0.150 | 4/11/13 | $17,000,000 | $16,999,292 |
|
| ||||
| Gotham Funding Corp. (Japan) | 0.190 | 4/1/13 | 15,000,000 | 15,000,000 |
|
| ||||
| Jupiter Securitization Co., LLC | 0.150 | 4/18/13 | 10,000,000 | 9,999,292 |
|
| ||||
| Liberty Street Funding, LLC (Canada) | 0.160 | 4/1/13 | 15,000,000 | 15,000,000 |
|
| ||||
| Old Line Funding, LLC | 0.150 | 4/17/13 | 15,000,000 | 14,999,000 |
|
| ||||
| Straight-A Funding, LLC 144A Ser. 1 | 0.190 | 4/19/13 | 17,300,000 | 17,298,357 |
|
| ||||
| Straight-A Funding, LLC 144A Ser. 1 | 0.190 | 4/17/13 | 36,300,000 | 36,296,935 |
|
| ||||
| Thunder Bay Funding, LLC | 0.160 | 4/15/13 | 17,000,000 | 16,998,942 |
|
| ||||
| Variable Funding Capital Co., LLC | 0.140 | 4/11/13 | 10,000,000 | 9,999,611 |
|
| ||||
| Total asset-backed commercial paper (cost $152,591,429) | $152,591,429 | |||
| Money Market Liquidity Fund | 15 |
| Maturity | Principal | |||
| COMMERCIAL PAPER (5.9%)* | Yield (%) | date | amount | Value |
|
| ||||
| Bank of Montreal (Canada) | 0.180 | 4/4/13 | $15,000,000 | $14,999,775 |
|
| ||||
| Canada (Government of) (Canada) | 0.170 | 12/2/13 | 15,000,000 | 14,982,646 |
|
| ||||
| Commonwealth Bank of Australia (Australia) | 0.140 | 4/26/13 | 15,000,000 | 14,998,542 |
|
| ||||
| HSBC USA, Inc. (United Kingdom) | 0.140 | 4/5/13 | 15,000,000 | 14,999,767 |
|
| ||||
| Roche Holdings, Inc. (Switzerland) | 0.110 | 4/15/13 | 15,000,000 | 14,999,357 |
|
| ||||
| Toronto-Dominion Holdings (USA), Inc. (Canada) | 0.140 | 4/1/13 | 15,000,000 | 15,000,000 |
|
| ||||
| Total commercial paper (cost $89,980,087) | $89,980,087 | |||
| Interest | Maturity | Principal | ||
| CERTIFICATES OF DEPOSIT (2.3%)* | rate (%) | date | amount | Value |
|
| ||||
| DnB Bank ASA/New York (Norway) | 0.160 | 4/5/13 | $15,600,000 | $15,600,121 |
|
| ||||
| Nordea Bank Finland PLC/New York | 0.160 | 4/3/13 | 4,800,000 | 4,800,024 |
|
| ||||
| Svenska Handelsbanken/New York, NY (Sweden) | 0.175 | 4/23/13 | 15,000,000 | 15,000,000 |
|
| ||||
| Total certificates of deposit (cost $35,400,145) | $35,400,145 | |||
| TOTAL INVESTMENTS | ||||
|
| ||||
| Total investments (cost $1,536,846,233) | $1,536,846,233 | |||
Notes to the fund’s portfolio
Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from October 1, 2012 through March 31, 2013 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures and references to “OTC”, if any, represent over-the-counter.
* Percentages indicated are based on net assets of $1,537,594,806.
k The rates shown are the current interest rates at the close of the reporting period.
144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The dates shown on debt obligations are the original maturity dates.
ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:
Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:
| Valuation inputs | ||||
|
| ||||
| Investments in securities: | Level 1 | Level 2 | Level 3 | |
|
| ||||
| Asset-backed commercial paper | $— | $152,591,429 | $— | |
|
| ||||
| Certificates of deposit | — | 35,400,145 | — | |
|
| ||||
| Commercial paper | — | 89,980,087 | — | |
|
| ||||
| Repurchase agreements | — | 423,835,000 | — | |
|
| ||||
| U.S. Government Agency Obligations | — | 458,745,174 | — | |
|
| ||||
| U.S. Treasury Obligations | — | 376,294,398 | — | |
|
| ||||
| Totals by level | $— | $1,536,846,233 | $— | |
The accompanying notes are an integral part of these financial statements.
| 16 | Money Market Liquidity Fund |
Statement of assets and liabilities 3/31/13 (Unaudited)
| ASSETS | |
|
| |
| Investment in securities, at value (Note 1): | |
| Unaffiliated issuers (at amortized cost) | $ 1,113,011,233 |
| Repurchase agreements (identified cost $423,835,000) | 423,835,000 |
|
| |
| Cash | 732 |
|
| |
| Interest and other receivables | 1,427,969 |
|
| |
| Total assets | 1,538,274,934 |
| LIABILITIES | |
|
| |
| Payable for custodian fees (Note 2) | 11,122 |
|
| |
| Payable for investor servicing fees (Note 2) | 44,773 |
|
| |
| Payable for Trustee compensation and expenses (Note 2) | 345,011 |
|
| |
| Payable for administrative services (Note 2) | 17,768 |
|
| |
| Payable for auditing and tax fees | 36,909 |
|
| |
| Payable for legal fee | 48,248 |
|
| |
| Distributions payable to shareholders | 171,276 |
|
| |
| Other accrued expenses | 5,021 |
|
| |
| Total liabilities | 680,128 |
| Net assets | $1,537,594,806 |
|
| |
| REPRESENTED BY | |
|
| |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $1,537,570,789 |
|
| |
| Distributions in excess of net investment income (Note 1) | (31,799) |
|
| |
| Accumulated net realized gain on investments (Note 1) | 55,816 |
|
| |
| Total — Representing net assets applicable to capital shares outstanding | $1,537,594,806 |
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
|
| |
| Net asset value, offering price and redemption price per class P share | |
| ($1,537,594,806 divided by 1,537,570,789 shares) | $1.00 |
|
| |
The accompanying notes are an integral part of these financial statements.
| Money Market Liquidity Fund | 17 |
Statement of operations Six months ended 3/31/13 (Unaudited)
| INVESTMENT INCOME | $3,208,805 |
|
| |
| EXPENSES | |
|
| |
| Compensation of Manager (Note 2) | 4,702,302 |
|
| |
| Investor servicing fees (Note 2) | 186,876 |
|
| |
| Custodian fees (Note 2) | 22,316 |
|
| |
| Trustee compensation and expenses (Note 2) | 203,239 |
|
| |
| Administrative services (Note 2) | 73,552 |
|
| |
| Other | 222,950 |
|
| |
| Fees waived and reimbursed by Manager (Note 2) | (4,702,302) |
|
| |
| Total expenses | 708,933 |
| Expense reduction (Note 2) | (160) |
|
| |
| Net expenses | 708,773 |
| Net investment income | 2,500,032 |
|
| |
| Net realized gain on investments (Notes 1 and 3) | 23,273 |
|
| |
| Net gain on investments | 23,273 |
| Net increase in net assets resulting from operations | $2,523,305 |
|
| |
The accompanying notes are an integral part of these financial statements.
| 18 | Money Market Liquidity Fund |
Statement of changes in net assets
| INCREASE (DECREASE) IN NET ASSETS | Six months ended 3/31/13* | Year ended 9/30/12 |
|
| ||
| Operations: | ||
| Net investment income | $2,500,032 | $4,740,670 |
|
| ||
| Net realized gain on investments | 23,273 | 32,544 |
|
| ||
| Net increase in net assets resulting from operations | 2,523,305 | 4,773,214 |
|
| ||
| Distributions to shareholders (Note 1): | ||
| From ordinary income | ||
| Net investment income | ||
|
| ||
| Class P | (2,554,115) | (4,722,645) |
|
| ||
| Increase (decrease) from capital share transactions (Note 4) | (3,098,176,283) | 816,295,354 |
|
| ||
| Total increase (decrease) in net assets | (3,098,207,093) | 816,345,923 |
| NET ASSETS | ||
|
| ||
| Beginning of period | 4,635,801,899 | 3,819,455,976 |
|
| ||
| End of period (including distributions in excess of net | ||
| investment income of $31,799 and undistributed net | ||
| investment income of $22,284, respectively) | $1,537,594,806 | $4,635,801,899 |
|
| ||
* Unaudited
The accompanying notes are an integral part of these financial statements.
| Money Market Liquidity Fund | 19 |
Financial highlights (For a common share outstanding throughout the period)
| INVESTMENT OPERATIONS: | LESS DISTRIBUTIONS: | RATIOS AND SUPPLEMENTAL DATA: | |||||||||
|
| |||||||||||
| Ratio of net | |||||||||||
| investment | |||||||||||
| income | |||||||||||
| (loss) | |||||||||||
| Net asset value, | Net realized | Total from | From | Total | Net assets, | Ratio of expenses | to average | ||||
| beginning | Net investment | gain (loss) | investment | net investment | distribu- | Net asset value, | Total return at net | end of period | to average | net assets | |
| Period ended | of period | income (loss) | on investments | operations | income | tions | end of period | asset value (%) a | (in thousands) | net assets (%)b,c | (%)c |
|
| |||||||||||
| Class P | |||||||||||
| March 31, 2013** | $1.00 | .0006 | —d | .0006 | (.0007) | (.0007) | $1.00 | .07* | $1,537,595 | .02* | .07* |
| September 30, 2012 | 1.00 | .0010 | —d | .0010 | (.0010) | (.0010) | 1.00 | .10 | 4,635,802 | .03 | .10 |
| September 30, 2011 | 1.00 | .0011 | —d | .0011 | (.0011) | (.0011) | 1.00 | .11 | 3,819,456 | .03 | .11 |
| September 30, 2010 | 1.00 | .0020 | —d | .0020 | (.0019) | (.0019) | 1.00 | .19 | 5,594,202 | .05 | .19 |
| September 30, 2009† | 1.00 | .0014 | —d | .0014 | (.0015) | (.0015) | 1.00 | .15* | 2,851,686 | .03* | .14* |
|
| |||||||||||
* Not annualized.
** Unaudited.
† For the period April 13, 2009 (commencement of operations) to September 30, 2009.
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 Reflects an involuntary contractual waiver of the funds management fee in effect during the period. As a result of such waiver, the management fee reflects a reduction of the following amounts (Note 2):
| Percentage of | |
| average net assets | |
|
| |
| March 31, 2013 | 0.12% |
|
| |
| September 30, 2012 | 0.25 |
|
| |
| September 30, 2011 | 0.25 |
|
| |
| September 30, 2010 | 0.25 |
|
| |
| September 30, 2009 | 0.12 |
|
| |
d Amount represents less than $0.0001 per share.
The accompanying notes are an integral part of these financial statements.
| 20 | Money Market Liquidity Fund | Money Market Liquidity Fund | 21 |
Notes to financial statements 3/31/13 (Unaudited)
Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from October 1, 2012 through March 31, 2013.
Putnam Money Market Liquidity Fund (the fund) is a diversified series of Putnam Funds Trust (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The fund seeks as high a rate of current income as Putnam Management believes is consistent with preservation of capital and maintenance of liquidity. The fund invests mainly in money market instruments that are high quality and have short-term maturities. The fund invests significantly in certificates of deposit, commercial paper (including asset-backed commercial paper), U.S. government debt and repurchase agreements, corporate obligations and bankers acceptances.
The fund offers class P shares, which are sold without a front-end sales charge and generally are not subject to a contingent deferred sales charge. Class P shares are only available to other Putnam funds.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.
Note 1: Significant accounting policies
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 accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
Security valuation The valuation of the fund’s portfolio instruments is determined by means of the amortized cost method (which approximates market value) as set forth in Rule 2a–7 under the Investment Company Act of 1940. The amortized cost of an instrument is determined by valuing it at its original cost and thereafter amortizing any discount or premium from its face value at a constant rate until maturity and is generally categorized as a Level 2 security.
Joint trading account Pursuant to an exemptive order from the SEC, 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 Management. These balances may be invested in issues of short-term investments having maturities of up to 90 days.
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. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.
Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Interest income is recorded on the accrual basis. Premiums and discounts from purchases of short-term investments are amortized/accreted at a constant rate until maturity. Gains or losses on securities sold are determined on the identified cost basis.
Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.
| 22 | Money Market Liquidity Fund |
Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the 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 Code.
The fund is subject to the provisions of Accounting Standards Codification ASC 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. 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. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
The aggregate identified cost on a financial reporting and tax basis is the same.
Distributions to shareholders Income dividends are recorded daily by the fund and are paid monthly. Distributions from capital gains, if any, are 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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. 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.
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
The fund pays Putnam Management for management and investment advisory services monthly based on the average net assets of the fund. Such fee is based on the annual rate of 0.25% of the average net assets of the fund. Putnam Management has agreed to waive its management fee from the fund through January 30, 2014. During the reporting period, the fund waived $4,702,302 as a result of this waiver.
Putnam Management has contractually agreed, through June 30, 2013, to waive fees or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.
Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.40% of the average net assets of the portion of the fund managed by PIL.
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 State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. was paid a monthly fee for investor servicing at an annual rate of 0.01% of the fund’s average net assets. The amounts incurred for investor servicing agent functions during the reporting period are included in Investor servicing fees in the Statement of operations.
The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $160 under the expense offset arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of which $3,223, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
| Money Market Liquidity Fund | 23 |
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 and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
The fund has not adopted a distribution plan (the Plan) pursuant to Rule 12b–1 under the Investment Company Act of 1940.
Note 3: Purchases and sales of securities
During the reporting period, cost of purchases and proceeds from sales (including maturities) of investment securities (all short-term obligations) aggregated $169,171,456,085 and $172,269,430,055, respectively.
Note 4: Capital shares
At the close of the reporting period, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares at a constant net asset value of $1.00 per share were as follows:
| Class P | Six months ended 3/31/13 | Year ended 9/30/12 |
|
| ||
| Shares sold | 3,231,937,402 | 9,057,619,090 |
|
| ||
| Shares issued in connection with | ||
| reinvestment of distributions | — | — |
|
| ||
| 3,231,937,402 | 9,057,619,090 | |
|
| ||
| Shares repurchased | (6,330,113,685)* | (8,241,323,736) |
|
| ||
| Net increase (decrease) | (3,098,176,283) | 816,295,354 |
|
| ||
* In March 2013, Putnam Money Market Liquidity Fund was replaced with Putnam Short Term Investment Fund as the primary cash sweep vehicle for most Putnam Funds.
Note 5: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default.
Note 6: New accounting pronouncement
In January 2013, ASU 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” replaced ASU No. 2011-11 “Disclosures about Offsetting Assets and Liabilities”. The updates create new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of assets and liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods. Putnam Management is currently evaluating the application of ASU 2013-01 and its impact, if any, on the fund’s financial statements.
| 24 | Money Market Liquidity Fund |
Fund information
Founded over 75 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.
| Investment Manager | Trustees | Robert R. Leveille |
| Putnam Investment | Jameson A. Baxter, Chair | Vice President and |
| Management, LLC | Liaquat Ahamed | Chief Compliance Officer |
| One Post Office Square | Ravi Akhoury | |
| Boston, MA 02109 | Barbara M. Baumann | Michael J. Higgins |
| Charles B. Curtis | Vice President and Treasurer | |
| Investment Sub-Manager | Robert J. Darretta | |
| Putnam Investments Limited | Katinka Domotorffy | Janet C. Smith |
| 57–59 St James’s Street | John A. Hill | Vice President, |
| London, England SW1A 1LD | Paul L. Joskow | Principal Accounting Officer, |
| Elizabeth T. Kennan | and Assistant Treasurer | |
| Marketing Services | Kenneth R. Leibler | |
| Putnam Retail Management | Robert E. Patterson | Susan G. Malloy |
| One Post Office Square | George Putnam, III | Vice President and |
| Boston, MA 02109 | Robert L. Reynolds | Assistant Treasurer |
| W. Thomas Stephens | ||
| Custodian | James P. Pappas | |
| State Street Bank | Officers | Vice President |
| and Trust Company | Robert L. Reynolds | |
| President | Mark C. Trenchard | |
| Legal Counsel | Vice President and | |
| Ropes & Gray LLP | Jonathan S. Horwitz | BSA Compliance Officer |
| Executive Vice President, | ||
| Principal Executive Officer, and | Judith Cohen | |
| Compliance Liaison | Vice President, Clerk, and | |
| Associate Treasurer | ||
| Steven D. Krichmar | ||
| Vice President and | Nancy E. Florek | |
| Principal Financial Officer | Vice President, Proxy | |
| Manager, Assistant Clerk, and | ||
| Robert T. Burns | Associate Treasurer | |
| Vice President and | ||
| Chief Legal Officer |
This report is for the information of shareholders of Putnam Money Market Liquidity Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.
| Item 2. Code of Ethics: |
| Not applicable |
| Item 3. Audit Committee Financial Expert: |
| Not applicable |
| Item 4. Principal Accountant Fees and Services: |
| Not applicable |
| Item 5. Audit Committee of Listed Registrants |
| Not applicable |
| Item 6. Schedule of Investments: |
| The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. |
| Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
| Not applicable |
| Item 8. Portfolio Managers of Closed-End Investment Companies |
| Not Applicable |
| Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
| Not applicable |
| Item 10. Submission of Matters to a Vote of Security Holders: |
| Not applicable |
| Item 11. Controls and Procedures: |
| (a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. |
| (b) Changes in internal control over financial reporting: Not applicable |
| Item 12. Exhibits: |
| (a)(1) Not applicable |
| (a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith. |
| (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. |
| Putnam Funds Trust |
| By (Signature and Title): |
| /s/Janet C. Smith Janet C. Smith Principal Accounting Officer |
| Date: May 24, 2013 |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
| By (Signature and Title): |
| /s/Jonathan S. Horwitz Jonathan S. Horwitz Principal Executive Officer |
| Date: May 24, 2013 |
| By (Signature and Title): |
| /s/Steven D. Krichmar Steven D. Krichmar Principal Financial Officer |
| Date: May 24, 2013 |