N-CSR 1 a_dynamicassetallequity.htm PUTNAM FUNDS TRUST a_dynamicassetallequity.htm


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: May 31, 2013
Date of reporting period : June 1, 2012 — May 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 Dynamic
Asset Allocation
Equity Fund

Annual report
5 | 31 | 13

Message from the Trustees  1 
Performance snapshot  2 
Interview with your fund’s portfolio manager  3 
Your fund’s performance  8 
Your fund’s expenses  10 
Terms and definitions  12 
Other information for shareholders  13 
Important notice regarding Putnam’s privacy policy  14 
Financial statements  15 
Federal tax information  59 
About the Trustees  60 
Officers  62 

Consider these risks before investing: International investing involves currency, economic, and political risks. Emerging-market securities carry illiquidity and volatility risks. Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Stock prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific issuer or industry. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. You can lose money by investing in the fund.


Message from the Trustees

Dear Fellow Shareholder:

Some steadiness has returned to the investing environment, as many economies around the world are either improving or stabilizing. The U.S. equity market achieved record highs in the second quarter, as the nation’s economy slowly healed. Unemployment, housing, and consumer confidence data in the United States have all improved since the beginning of the year. State finances are faring better as well, although the ultimate consequences of federal budget sequestration on state economies remain to be measured.

Against this backdrop of perceived economic progress, the Federal Reserve indicated that it may taper its monetary-easing and asset-purchasing policies. This posed challenges for markets that had become accustomed to the extraordinary programs put in place by the central bank.

Putnam’s investment teams bring astute analysis of key market and policy-related risks to the task of finding the most attractive opportunities for investors. Integrating new thinking into time-tested strategies may prove particularly beneficial as the economy moves into the next stage of the current recovery. Our fixed-income managers, in particular, are cognizant of the risks of Fed policy changes and actively manage the funds to deal with the impact of the changes. When combined with the guidance of a financial advisor, who can help ensure that your portfolio matches your individual goals and tolerance for risk, we believe Putnam’s emphasis on innovative thinking, active investing, and risk management can serve shareholders well.

We would like to extend a welcome to new shareholders of the fund and to thank you for investing with 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 A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See pages 3 and 8–10 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.

* Putnam Equity Blended Index is administered by Putnam Management and comprises 75% the Russell 3000 Index, 19% the MSCI EAFE Index (ND), and 6% the MSCI Emerging Markets Index (GD).

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Interview with your fund’s portfolio manager


Bob, let’s review conditions in the equity markets during the past 12 months.

During the past 12 months, equity markets delivered strong performance. Corporate earnings grew, although I consider it worth noting that this growth has been partly a result of cost-cutting and other efficiency measures. What investors would typically like to see is more top-line growth, driven by expanding revenue and sales.

Even with the remarkable rise in equities there is an underlying feeling that this bull market is not sustainable. In other words, markets have climbed “a wall of worry.” Economic growth in the United States remains below-trend, and the Federal Reserve continues to be accommodative and stimulative with its asset purchases. While there has been some improvement in the economy, we have still not experienced the kind of traction necessary to justify removing the support of this accommodative policy, in my opinion. The Fed has implied that it will not change its asset-purchasing policy, known as QE3, until the unemployment rate falls below 6.5% or inflation exceeds 2.5%, although some recent public statements have addressed possibilities of tapering policies in the foreseeable future.

Looking more closely at the sequence of events in markets during the period, in the final three months of 2012, U.S. stocks were flat because of pessimism regarding the federal government’s pending fiscal cliff. The market then began to rally in January, even


This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 5/31/13. See pages 2 and 8–10 for additional fund performance information. Index descriptions can be found on page 12.

Dynamic Asset Allocation Equity Fund  3 

 


as higher payroll taxes went into effect. By the end of May, both the Dow Jones Industrial Average and the S&P 500 Index had risen to record-high levels. Japanese stocks also performed strongly during the period, while European stocks, after strong returns in 2012, began to lose momentum.

Putnam Dynamic Asset Allocation Equity Fund’s class A shares returned 28.69% during the 12 months ending May 31, 2013, outperforming the all-equity Russell 3000 Index, its primary benchmark, and finishing slightly better than its secondary benchmark, the Putnam Equity Blended Index, which reflects the fund’s strategic global allocations.

In this environment, what factors contributed to performance?

The fund’s allocation to U.S. equities helped returns, though, as mentioned, much of this advantage occurred in the second half of the period. The U.S. large-cap portion of the portfolio outperformed large-cap market averages. Most of the alpha, or risk-adjusted active return in the portfolio, was gained by stock selection, rather than by taking on much sector risk. A couple of sector positions are worth noting — an overweight to retail was additive, while an underweight to utilities was also helpful. The portfolio’s overweights to technology and its underweight to financials detracted from performance. Individual security selection results were strongest in the energy, transportation, and basic materials sectors. Selection was weakest in media, technology, and consumer durables.

The international portfolio also contributed positively to results. There was little sector risk in the portfolio relative to the benchmarks. Stock selection was strongest in consumer staples, insurance, and utilities. Selection in financials and pharmaceuticals/biotech detracted. There was minimal country risk in the portfolio, and selection was strong


This table shows the fund’s top 10 individual holdings by percentage of the fund’s net assets as of 5/31/13. Short-term holdings and derivatives, if any, are excluded. Holdings may vary over time.

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in all regions, especially Japan, Hong Kong, and Australia.


How do you interpret what is happening in the markets?

The U.S. economy is growing, and it appears that the Fed’s quantitative easing policies are effectively providing stimulus to business activity and liquidity to financial markets. These macroeconomic conditions have given corporations the opportunity to repair their balance sheets in the years since the recession, and they have gone on to rebuild profitability. In fact, we believe corporate earnings offer a great story that often is underappreciated by the skeptics of this rally. Although earnings growth rates have begun to fade from the peak levels earlier in this business cycle, corporations overall are still generating record-level profits. Corporate earnings provide fundamental support to current market levels, in our estimation. Stock valuations in general appear reasonable when compared with long-term historical valuations.

As I mentioned, investors are having trouble believing that the economic recovery is real and stable because growth is below the economy’s long-term trend. Many also question the Fed’s policies, but the evidence suggests that the central bank is on track toward its goal of lowering the unemployment rate. Investor doubts have contributed to the high levels of volatility that we have seen in each year since 2008, and we believe that they can cause volatility again. But in many historical periods, we have also seen

 

 


This chart shows how the fund’s top weightings have changed over the past six months. Allocations are represented as a percentage of the fund’s net assets. 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.

Dynamic Asset Allocation Equity Fund  5 

that stock prices can climb a wall of worry as they have done in the past 12 months. We continue to focus on fundamental conditions as well as negative sentiments when we are analyzing asset classes.

Looking ahead, how is the fund positioned, and what risks do you see?

We continue to favor U.S. stocks because we think the economy is doing well enough to continue supporting risk assets. We are constructive on this market. Equity valuations have moved closer to fair value, but are not overvalued, in our opinion.

We are more bullish on the United States than on Europe, which we believe stands in need of greater budgetary reforms to get its house in order. Still, the major fear of a eurozone meltdown appears to be behind us. With regard to Japan, we see some meaningful reforms taking place in the economy, but will continue to monitor the situation. Within emerging markets, we have seen slower growth, including in China, and we believe that will continue.

Going forward, we expect what we have seen in the recent past — global markets moving gradually higher, punctuated with periodic volatility due to geopolitical events. Within the portfolio, our strategy is to be positioned in a way that controls the volatility of our equity holdings. Barring any unforeseen external shock to the system, we view the situation as having more upside than downside, but it is not going to be a steady march higher.

Thank you, Bob, for your time and insights today.

The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.

A word about derivatives

Derivatives are an increasingly common type of investment instrument, the performance of which is derived from an underlying security, index, currency, or other area of the capital markets. Derivatives employed by the fund’s managers generally serve one of two main purposes: to implement a strategy that may be difficult or more expensive to invest in through traditional securities, or to hedge unwanted risk associated with a particular position.

For example, the fund’s managers might use forward currency contracts to capitalize on an anticipated change in exchange rates between two currencies. This approach would require a significantly smaller outlay of capital than purchasing traditional bonds denominated in the underlying currencies. In another example, the managers may identify a bond that they believe is undervalued relative to its risk of default, but may seek to reduce the interest-rate risk of that bond by using interest-rate swaps, a derivative through which two parties “swap” payments based on the movement of certain rates. In other examples, the managers may use options and futures contracts to hedge against a variety of risks by establishing a combination of long and short exposures to specific equity markets or sectors.

Like any other investment, derivatives may not appreciate in value and may lose money. Derivatives may amplify traditional investment risks through the creation of leverage and may be less liquid than traditional securities. And because derivatives typically represent contractual agreements between two financial institutions, derivatives entail “counterparty risk,” which is the risk that the other party is unable or unwilling to pay. Putnam monitors the counterparty risks we assume. For example, Putnam may enter into collateral agreements that require the counterparties to post collateral on a regular basis to cover their obligations to the fund.

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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.

Your fund’s portfolio managers are James A. Fetch; Robert J. Kea, CFA; Joshua B. Kutin, CFA; Robert J. Schoen; and Jason R. Vaillancourt, CFA.

IN THE NEWS

The World Bank has downgraded its outlook for global economic growth, projecting a somewhat slower expansion in 2013 due to Europe’s deeper-than-expected recession and a recent deceleration in emerging-market economies. In its twice-yearly Global Economic Prospects report, the World Bank forecast that global GDP will increase 2.2% this year, a cut to its January outlook of 2.4%. This pace would constitute an approximate continuation of 2012’s moderate growth pace of 2.3%. The world’s large developing economies, such as Brazil, China, India, and Russia, continue to experience less rapid growth than they did before the 2008 global financial crisis and will likely need to stay focused on structural reforms to maintain expansion. China’s economy, in particular, is decelerating, with experts now anticipating that the world’s second-largest economy could experience its slowest growth rate in 23 years. In its report, the World Bank said debt-related uncertainties surrounding the eurozone and fiscal questions in the United States should have less impact on global economic growth in coming years.

Dynamic Asset Allocation Equity Fund  7 

 


Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended May 31, 2013, the end of its most recent fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information as of the most recent calendar quarter-end and 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 Y shares are not available to all investors. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.

Fund performance Total return for periods ended 5/31/13

  Class A  Class Y 
(inception dates)  (1/23/09)  (1/23/09) 
  Before  After  Net 
  sales  sales  asset 
  charge  charge  value 
Life of fund  111.51%  99.35%  111.46% 
Annual average  18.76  17.15  18.75 
3 years  50.83  42.16  50.80 
Annual average  14.68  12.44  14.67 
1 year  28.69  21.29  28.68 

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A shares reflect the deduction of the maximum 5.75% sales charge levied at the time of purchase. Class Y shares have no initial sales charge or CDSC.

For a portion of the periods, the fund had expense limitations, without which returns would have been lower.

Comparative index returns For periods ended 5/31/13

      Lipper Multi-Cap 
    Putnam Equity  Core Funds 
  Russell 3000 Index  Blended Index  category average* 
Life of fund  122.42%  114.18%  111.51% 
Annual average  20.14  19.10  18.64 
3 years  59.42  52.55  50.81 
Annual average  16.82  15.12  14.61 
1 year  27.88  27.83  27.62 

Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.

* Over the 1-year, 3-year, and life-of-fund periods ended 5/31/13, there were 791, 682, and 610 funds, respectively, in this Lipper category.

8  Dynamic Asset Allocation Equity Fund 

 



Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class Y shares would have been valued at $21,146.

Fund price and distribution information For the 12-month period ended 5/31/13

Distributions  Class A  Class Y 
Number  1  1 
Income  $0.131  $0.131 
Capital gains — Long-term  0.877  0.877 
Capital gains — Short-term  0.054  0.054 
Total  $1.062  $1.062 
  Before  After  Net 
  sales  sales  asset 
Share value  charge  charge  value 
5/31/12  $10.11  $10.73  $10.11 
5/31/13  11.81  12.53  11.81 

The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A shares, if applicable, do not take into account any sales charge levied at the time of purchase. After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (5.75% for class A shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.

Dynamic Asset Allocation Equity Fund  9 

 


Fund performance as of most recent calendar quarter
Total return for periods ended 6/30/13

  Class A  Class Y 
(inception dates)  (1/23/09)  (1/23/09) 
  Before  After  Net 
  sales  sales  asset 
  charge  charge  value 
Life of fund  107.03%  95.13%  106.99% 
Annual average  17.82  16.26  17.81 
3 years  54.47  45.59  54.44 
Annual average  15.60  13.34  15.59 
1 year  21.17  14.20  21.16 

See the discussion following the Fund performance table on page 8 for information about the calculation of fund performance.

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 A  Class Y 
Net expenses for the fiscal year ended 5/31/12*  1.33%**  1.08% 
Total annual operating expenses for the fiscal year ended 5/31/12  2.08%**  1.83% 
Annualized expense ratio for the six-month period ended 5/31/13†  1.06%  1.06% 

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 because it includes an impact of 0.01% in fees and expenses of acquired funds. Expenses are shown as a percentage of average net assets.

* Reflects Putnam Management’s contractual obligation to limit expenses through 9/30/13.

† For the fund’s most recent fiscal half year; may differ from expense ratios based on one-year data in the financial highlights.

** No payments under the fund’s distribution and service (12b-1) plan have been authorized by the Trustees.

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Expenses per $1,000

The following table shows the expenses you would have paid on a $1,000 investment in the fund from December 1, 2012, to May 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 A  Class Y 
Expenses paid per $1,000*†  $5.70  $5.70 
Ending value (after expenses)  $1,157.50  $1,157.40 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 5/31/13. The expense ratio may differ for each share class.

† 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.

Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended May 31, 2013, use the following calculation method. To find the value of your investment on December 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 A  Class Y 
Expenses paid per $1,000*†  $5.34  $5.34 
Ending value (after expenses)  $1,019.65  $1,019.65 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 5/31/13. The expense ratio may differ for each share class.

† 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.

Dynamic Asset Allocation Equity Fund  11 

 


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.

Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures 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.

After sales charge is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge performance figures shown here assume the 5.75% maximum sales charge for class A shares.

Share classes

Class A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class Y shares are not subject to an initial sales charge or CDSC, and carry no 12b-1 fee. They are generally only available to corporate and institutional clients and clients in other approved programs.

Comparative indexes

Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.

BofA 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.

MSCI EAFE Index (ND) is an unmanaged index of equity securities from developed countries in Western Europe, the Far East, and Australasia.

Putnam Equity Blended Index is an unmanaged index representing global stock market performance, and comprises 75% the Russell 3000 Index, 19% the MSCI EAFE Index (ND), and 6% the MSCI Emerging Markets Index (GD).

Russell 3000 Index is an unmanaged index of the 3,000 largest U.S. companies.

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.

12  Dynamic Asset Allocation Equity Fund 

 


Other information for shareholders

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 Securities and Exchange Commission (SEC) 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 May 31, 2013, Putnam employees had approximately $385,000,000 and the Trustees had approximately $92,000,000 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.

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Important notice regarding Putnam’s privacy policy

In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ names, addresses, Social Security numbers, and dates of birth. Using this information, we are able to maintain accurate records of accounts and transactions.

It is our policy to protect the confidentiality of our shareholder information, whether or not a shareholder currently owns shares of our funds. In particular, it is our policy not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use.

Under certain circumstances, we must share account information with outside vendors who provide services to us, such as mailings and proxy solicitations. In these cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. Finally, it is our policy to share account information with your financial representative, if you’ve listed one on your Putnam account.

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Financial statements

These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, 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 year.

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.

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.

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Report of Independent Registered Public Accounting Firm

To the Trustees of Putnam Funds Trust and Shareholders of
Putnam Dynamic Asset Allocation Equity Fund:

In our opinion, the accompanying statement of assets and liabilities, including the portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam Dynamic Asset Allocation Equity Fund (the “fund”) at May 31, 2013, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at May 31, 2013 by correspondence with the custodian, brokers, and transfer agent, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
July 9, 2013

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The fund’s portfolio 5/31/13     
  
COMMON STOCKS (92.6%)*  Shares  Value 
 
Advertising and marketing services (0.1%)     
Liquidity Services, Inc. †  112  $4,481 
Nu Skin Enterprises, Inc. Class A  118  6,938 
ReachLocal, Inc. †  285  3,962 
ValueClick, Inc. †  243  6,401 
    21,782 
Aerospace and defense (2.9%)     
Alliant Techsystems, Inc.  80  6,282 
Boeing Co. (The)  2,650  262,402 
European Aeronautic Defence and Space Co. NV (France)  728  41,446 
General Dynamics Corp.  1,335  102,929 
HEICO Corp.  63  3,187 
Lockheed Martin Corp.  1,084  114,720 
Northrop Grumman Corp.  1,119  92,194 
Raytheon Co.  1,444  96,228 
    719,388 
Agriculture (0.1%)     
Andersons, Inc. (The)  61  3,107 
Archer Daniels-Midland Co.  104  3,352 
First Resources, Ltd. (Singapore)  4,000  6,008 
GrainCorp, Ltd. Class A (Australia)  187  2,264 
S&W Seed Co. †  401  3,465 
    18,196 
Airlines (0.7%)     
Aeroflot — Russian Airlines OJSC (Russia) †  4,311  7,005 
Alaska Air Group, Inc. †  64  3,636 
Copa Holdings SA Class A (Panama)  51  6,697 
Delta Air Lines, Inc. †  4,273  76,957 
International Consolidated Airlines Group SA (Spain) †  3,890  16,329 
SkyWest, Inc.  286  4,013 
Southwest Airlines Co.  3,947  55,929 
Turk Hava Yollari Anonim Ortakligi (THY) (Turkey) †  2,987  13,812 
    184,378 
Automotive (1.1%)     
Bayerische Motoren Werke (BMW) AG (Germany)  174  16,635 
Daihatsu Motor Co., Ltd. (Japan)  1,000  21,237 
Fuji Heavy Industries, Ltd. (Japan)  1,000  22,457 
Hino Motors, Ltd. (Japan)  1,000  14,211 
Isuzu Motors, Ltd. (Japan)  4,000  29,860 
Kia Motors Corp. (South Korea)  278  14,454 
Lear Corp.  621  37,248 
Localiza Rent a Car SA (Brazil)  559  8,535 
Maruti Suzuki India, Ltd. (India)  222  6,310 
Mills Estruturas e Servicos de Engenharia SA (Brazil)  442  7,211 
Mitsubishi Motors Corp. (Japan) †  13,000  20,037 
Navistar International Corp. †  145  5,201 
Scania AB Class B (Sweden)  794  17,625 
Suzuki Motor Corp. (Japan)  1,000  24,344 

 

Dynamic Asset Allocation Equity Fund  17 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Automotive cont.     
Tata Motors, Ltd. (India)  3,580  $19,701 
Toyota Motor Corp. (Japan)  200  11,798 
    276,864 
Banking (7.2%)     
Access National Corp.  168  2,172 
Associated Banc-Corp.  1,626  25,057 
Australia & New Zealand Banking Group, Ltd. (Australia)  611  15,936 
Banco Bilbao Vizcaya Argentaria SA (BBVA) (Spain)  1,549  14,522 
Banco Latinoamericano de Exportaciones SA Class E (Panama)  382  8,759 
Banco Santander Central Hispano SA (Spain)  2,822  20,272 
Bangkok Bank PCL NVDR (Thailand)  1,900  12,870 
Bank Mandiri (Persero) Tbk PT (Indonesia)  16,500  16,373 
Bank of Kentucky Financial Corp.  102  2,647 
Bank of Yokohama, Ltd. (The) (Japan)  3,000  14,701 
Barclays PLC (United Kingdom)  8,853  42,361 
BofI Holding, Inc. †  270  12,641 
Cardinal Financial Corp.  318  4,815 
China Construction Bank Corp. (China)  30,000  24,249 
CIMB Group Holdings Berhad (Malaysia)  5,100  13,712 
Citizens & Northern Corp.  200  3,900 
City National Corp.  425  26,673 
Commonwealth Bank of Australia (Australia)  790  50,044 
Credicorp, Ltd. (Peru)  82  11,285 
Credit Agricole SA (France) †  1,940  18,204 
Credit Suisse Group (Switzerland)  441  13,079 
DBS Group Holdings, Ltd. (Singapore)  1,000  13,534 
Eagle Bancorp, Inc. †  180  4,050 
East West Bancorp, Inc.  262  6,901 
Erste Group Bank AG (Czech Republic)  256  8,123 
Fifth Third Bancorp  5,646  102,756 
Financial Institutions, Inc.  210  4,097 
First Community Bancshares Inc.  206  3,137 
FirstMerit Corp.  252  4,755 
Flushing Financial Corp.  224  3,501 
Grupo Financiero Banorte SAB de CV (Mexico)  2,579  16,487 
Hang Seng Bank, Ltd. (Hong Kong)  1,200  19,280 
Hanmi Financial Corp. †  429  6,752 
Heartland Financial USA, Inc.  137  3,732 
Heritage Financial Group, Inc.  199  2,844 
HSBC Holdings, PLC (United Kingdom)  4,755  52,086 
ICICI Bank, Ltd. (India)  410  8,379 
Industrial and Commercial Bank of China, Ltd. (China)  32,000  22,384 
Itau Unibanco Holding SA ADR (Preference) (Brazil)  1,540  23,154 
Jammu & Kashmir Bank, Ltd. (India)  460  9,978 
Joyo Bank, Ltd. (The) (Japan)  3,000  14,899 
JPMorgan Chase & Co.  7,698  420,234 
MainSource Financial Group, Inc.  315  4,379 
Mitsubishi UFJ Financial Group (MUFG), Inc. (Japan)  3,700  21,850 

 

18  Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Banking cont.     
Northern Trust Corp.  1,127  $65,535 
OFG Bancorp (Puerto Rico)  200  3,556 
Pacific Premier Bancorp, Inc. †  210  2,480 
Peoples Bancorp, Inc.  199  3,988 
PNC Financial Services Group, Inc.  1,977  141,632 
Popular, Inc. (Puerto Rico) †  1,134  34,020 
Republic Bancorp, Inc. Class A  127  3,024 
Resona Holdings, Inc. (Japan)  5,700  25,308 
Sberbank of Russia ADR (Russia)  2,078  25,047 
Siam Commercial Bank PCL (Thailand)  1,400  8,023 
Skandinaviska Enskilda Banken AB (Sweden)  1,590  16,499 
Standard Chartered PLC (United Kingdom)  536  12,325 
State Street Corp.  1,960  129,713 
Sumitomo Mitsui Financial Group, Inc. (Japan)  400  15,657 
Swedbank AB Class A (Sweden)  767  18,165 
Synovus Financial Corp.  7,596  20,813 
Toronto-Dominion Bank (Canada)  551  44,548 
Turkiye Halk Bankasi AS (Turkey)  1,163  12,369 
Walker & Dunlop, Inc. †  249  4,724 
Washington Banking Co.  250  3,410 
Wells Fargo & Co.  1,672  67,800 
Westpac Banking Corp. (Australia)  708  19,017 
    1,809,217 
Basic materials (0.1%)     
Sumitomo Metal Mining Co., Ltd. (Japan)  1,000  12,593 
    12,593 
Beverage (0.8%)     
Anheuser-Busch InBev NV (Belgium)  221  20,372 
Coca-Cola Co. (The)  1,032  41,270 
Companhia de Bebidas das Americas (AmBev) ADR     
(Preference) (Brazil)  303  11,535 
Constellation Brands, Inc. Class A †  668  35,411 
Diageo PLC (United Kingdom)  568  16,815 
Fomento Economico Mexicano SAB de CV ADR (Mexico)  71  7,710 
Heineken Holding NV (Netherlands)  368  21,721 
Molson Coors Brewing Co. Class B  585  28,905 
SABMiller PLC (United Kingdom)  308  15,492 
SABMiller PLC (United Kingdom)  123  6,246 
    205,477 
Biotechnology (1.6%)     
Aegerion Pharmaceuticals, Inc. †  41  2,986 
Amgen, Inc.  1,880  188,996 
Auxilium Pharmaceuticals, Inc. †  129  1,925 
BioMarin Pharmaceuticals, Inc. †  44  2,759 
Celgene Corp. †  1,205  148,997 
Cubist Pharmaceuticals, Inc. †  183  10,056 
Exact Sciences Corp. †  227  2,551 
Lexicon Pharmaceuticals, Inc. †  620  1,482 
Medicines Co. (The) †  132  4,252 

 

Dynamic Asset Allocation Equity Fund  19 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Biotechnology cont.     
NewLink Genetics Corp. †  185  $3,017 
PDL BioPharma, Inc.  528  4,356 
RTI Biologics, Inc. †  673  2,726 
Spectrum Pharmaceuticals, Inc.  284  2,332 
United Therapeutics Corp. †  343  22,799 
    399,234 
Broadcasting (0.2%)     
Belo Corp. Class A  1,502  16,852 
Grupo Televisa, S.A.B ADR (Mexico)  409  10,667 
ITV PLC (United Kingdom)  7,966  15,809 
Sinclair Broadcast Group, Inc. Class A  433  11,704 
    55,032 
Cable television (1.5%)     
Comcast Corp. Class A  6,819  273,782 
DISH Network Corp. Class A  1,085  41,816 
HSN, Inc.  52  2,958 
IAC/InterActiveCorp.  1,167  56,576 
    375,132 
Capital goods (—%)     
Great Lakes Dredge & Dock Corp.  379  3,146 
Stoneridge, Inc. †  490  5,493 
    8,639 
Chemicals (3.1%)     
Agrium, Inc. (Canada)  24  2,217 
American Vanguard Corp.  133  4,051 
Axiall Corp.  436  18,813 
BASF SE (Germany)  528  51,593 
Cambrex Corp. †  503  6,921 
CF Industries Holdings, Inc.  258  49,268 
Chemtura Corp. †  515  11,809 
Cytec Industries, Inc.  233  16,653 
Eastman Chemical Co.  619  44,395 
Huntsman Corp.  904  17,583 
Innophos Holdings, Inc.  153  7,739 
Innospec, Inc.  155  6,360 
Intrepid Potash, Inc.  61  1,146 
Koppers Holdings, Inc.  114  4,693 
Kraton Performance Polymers, Inc. †  155  3,215 
Landec Corp. †  382  5,363 
LSB Industries, Inc. †  459  15,500 
LyondellBasell Industries NV Class A  1,154  76,914 
Minerals Technologies, Inc.  59  2,513 
Monsanto Co.  1,656  166,660 
Mosaic Co. (The)  38  2,311 
Nitto Denko Corp. (Japan)  500  29,852 
OM Group, Inc. †  139  4,078 
Potash Corp. of Saskatchewan, Inc. (Canada)  115  4,832 
PPG Industries, Inc.  451  69,278 
Sherwin-Williams Co. (The)  329  62,026 
Syngenta AG (Switzerland)  62  24,329 

 

20   Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Chemicals cont.     
Tronox, Ltd. Class A  126  $2,908 
Valspar Corp.  410  29,385 
W.R. Grace & Co. †  358  30,255 
    772,660 
Coal (0.1%)     
Alpha Natural Resources, Inc. †  1,313  8,771 
Peabody Energy Corp.  1,206  23,722 
    32,493 
Commercial and consumer services (2.0%)     
ADT Corp. (The)  1,122  45,542 
Alfa SAB de CV (Mexico)  3,090  7,315 
Babcock International Group PLC (United Kingdom)  962  16,884 
Barloworld, Ltd. (South Africa)  669  5,765 
Booz Allen Hamilton Holding Corp.  258  4,500 
Bureau Veritas SA (France)  135  15,650 
Compass Group PLC (United Kingdom)  1,177  15,448 
Corporate Executive Board Co. (The)  52  3,182 
Deluxe Corp.  289  10,809 
Expedia, Inc.  517  29,707 
Experian Group, Ltd. (United Kingdom)  904  16,600 
Global Cash Access Holdings, Inc. †  432  2,851 
Green Dot Corp. Class A †  181  3,253 
Haci Omer Sabanci Holding AS (Turkey)  1,571  10,009 
Hana Tour Service, Inc. (South Korea)  151  9,579 
Harbinger Group, Inc. †  402  3,465 
HMS Holdings Corp. †  114  2,839 
MAXIMUS, Inc.  35  2,612 
McGraw-Hill Cos., Inc. (The)  1,242  67,751 
Priceline.com, Inc. †  190  152,747 
Randstad Holding NV (Netherlands)  159  6,746 
Total Systems Services, Inc.  2,312  54,355 
URS Corp.  458  22,186 
    509,795 
Communications equipment (1.1%)     
Cisco Systems, Inc.  10,946  263,580 
Plantronics, Inc.  87  4,019 
RF Micro Devices, Inc. †  1,757  9,699 
    277,298 
Computers (3.6%)     
3D Systems Corp. †  56  2,717 
Actuate Corp. †  1,080  7,290 
Anixter International, Inc. †  57  4,374 
Apple, Inc.  1,257  565,247 
Aspen Technology, Inc. †  184  5,634 
Bottomline Technologies, Inc. †  107  2,956 
Brocade Communications Systems, Inc. †  4,487  24,364 
Commvault Systems, Inc. †  86  6,020 
Cornerstone OnDemand, Inc. †  87  3,536 
EMC Corp. †  4,895  121,200 
Gemalto NV (Netherlands)  170  14,274 

 

Dynamic Asset Allocation Equity Fund  21 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Computers cont.     
HCL Technologies, Ltd. (India)  789  $10,378 
Infoblox, Inc. †  133  3,236 
Ixia †  135  2,122 
Lexmark International, Inc. Class A  808  24,652 
MTS Systems Corp.  93  5,613 
Netscout Systems, Inc. †  176  4,286 
Polycom, Inc. †  452  5,121 
Procera Networks, Inc. †  232  3,424 
Quantum Corp. †  2,584  4,005 
Riverbed Technology, Inc. †  1,153  17,825 
Silicon Graphics International Corp. †  156  2,356 
SS&C Technologies Holdings, Inc. †  167  5,282 
Verint Systems, Inc. †  113  3,793 
Western Digital Corp.  894  56,608 
    906,313 
Conglomerates (1.7%)     
AMETEK, Inc.  1,219  52,600 
Danaher Corp.  2,293  141,753 
General Electric Co.  5,658  131,945 
Marubeni Corp. (Japan)  1,000  6,935 
Siemens AG (Germany)  318  33,798 
Tyco International, Ltd.  2,139  72,320 
    439,351 
Construction (0.7%)     
Chicago Bridge & Iron Co., NV  580  36,714 
China Liansu Group Holdings, Ltd. (China)  17,000  9,680 
China National Building Material Co., Ltd. (China)  4,000  4,263 
China Shanshui Cement Group, Ltd. (China)  15,000  7,780 
China Singyes Solar Technologies Holdings, Ltd. (China)  13,000  14,213 
Eagle Materials, Inc.  50  3,688 
Fortune Brands Home & Security, Inc. †  935  39,532 
Gamuda Bhd (Malaysia)  5,700  8,740 
Koninklijke Boskalis Westminster NV (Netherlands)  355  14,061 
PT Indocement Tunggal Prakarsa Tbk (Indonesia)  2,000  4,837 
Trex Co., Inc. †  172  9,558 
Wendel SA (France)  140  15,367 
    168,433 
Consumer (0.3%)     
Blyth, Inc.  276  3,867 
Jarden Corp. †  746  34,749 
Swatch Group AG (The) (Switzerland)  28  15,895 
Swatch Group AG (The) (Switzerland)  152  14,911 
    69,422 
Consumer finance (0.6%)     
DFC Global Corp. †  642  9,566 
Discover Financial Services  2,124  100,699 
Encore Capital Group, Inc. †  186  6,635 
Nationstar Mortgage Holdings, Inc. †  73  2,972 
Nelnet, Inc. Class A  194  7,578 
Ocwen Financial Corp. †  116  4,962 

 

22   Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Consumer finance cont.     
PHH Corp. †  176  $3,548 
Portfolio Recovery Associates, Inc. †  67  10,202 
Samsung Card Co., Ltd. (South Korea)  300  9,924 
Walter Investment Management Corp. †  126  4,588 
World Acceptance Corp. †  43  3,971 
    164,645 
Consumer goods (2.2%)     
Colgate-Palmolive Co.  1,448  83,752 
Kao Corp. (Japan)  300  9,318 
L’Oreal SA (France)  158  26,487 
Prestige Brands Holdings, Inc. †  231  6,789 
Procter & Gamble Co. (The)  4,999  383,723 
Reckitt Benckiser Group PLC (United Kingdom)  493  35,173 
    545,242 
Consumer services (0.4%)     
Angie’s List, Inc. †  94  2,205 
Avis Budget Group, Inc. †  399  13,231 
DeNA Co., Ltd. (Japan)  300  6,329 
Geo Group, Inc. (The)  250  8,705 
Liberty Interactive Corp. Class A †  2,731  61,311 
OpenTable, Inc. †  43  2,868 
TrueBlue, Inc. †  745  17,537 
    112,186 
Containers (0.1%)     
Ball Corp.  670  28,917 
    28,917 
Distribution (0.1%)     
Beacon Roofing Supply, Inc. †  195  8,038 
Core-Mark Holding Co., Inc.  91  5,386 
MWI Veterinary Supply, Inc. †  20  2,430 
Spartan Stores, Inc.  165  2,932 
United Natural Foods, Inc. †  59  3,122 
    21,908 
Electric utilities (1.6%)     
AES Corp.  3,206  39,113 
American Electric Power Co., Inc.  1,929  88,387 
Chubu Electric Power Co., Inc. (Japan)  400  5,193 
CMS Energy Corp.  723  19,485 
Enel SpA (Italy)  4,513  16,999 
Entergy Corp.  795  54,760 
GDF Suez (France)  812  16,378 
Kansai Electric Power, Inc. (Japan)  2,600  30,743 
PG&E Corp.  1,431  64,266 
Power Grid Corp. of India, Ltd. (India)  4,555  9,137 
PPL Corp.  865  25,691 
Red Electrica Corporacion SA (Spain)  423  22,385 
Tenaga Nasional Bhd (Malaysia)  3,900  10,392 
    402,929 
Electrical equipment (0.1%)     
ABB, Ltd. (Switzerland)  1,021  22,232 
    22,232 

 

Dynamic Asset Allocation Equity Fund  23 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Electronics (2.0%)     
Acacia Research Corp.  96  $2,400 
Asustek Computer, Inc. (Taiwan)  1,000  10,972 
Avnet, Inc. †  834  28,489 
Broadcom Corp. Class A  1,669  59,934 
Casetek Holdings, Ltd. (Taiwan) †  2,000  10,934 
China Automation Group, Ltd. (China)  25,000  6,181 
EnerSys †  212  10,564 
FEI Co.  89  6,409 
First Solar, Inc. †  54  2,937 
GenMark Diagnostics, Inc. †  199  2,965 
Hon Hai Precision Industry Co., Ltd. (Taiwan)  7,820  19,894 
Integrated Silicon Solutions, Inc. †  663  7,174 
L-3 Communications Holdings, Inc.  507  43,141 
Marvell Technology Group, Ltd.  2,769  30,016 
Mentor Graphics Corp.  508  9,647 
Microsemi Corp. †  134  2,939 
NEC Corp. (Japan) †  13,000  30,206 
NVIDIA Corp.  2,656  38,485 
Omnivision Technologies, Inc. †  298  5,504 
Rockwell Automation, Inc.  686  60,382 
Samsung Electronics Co., Ltd. (South Korea)  58  78,217 
Semtech Corp. †  131  4,787 
Silicon Image, Inc. †  862  5,250 
SK Hynix, Inc. (South Korea) †  740  20,782 
Sparton Corp. †  189  3,141 
Tripod Technology Corp. (Taiwan)  2,440  5,588 
    506,938 
Energy (oil field) (1.3%)     
Helix Energy Solutions Group, Inc. †  543  12,956 
Key Energy Services, Inc. †  845  5,476 
Oceaneering International, Inc.  500  36,240 
Oil States International, Inc. †  281  27,679 
Schlumberger, Ltd.  3,423  249,982 
    332,333 
Energy (other) (—%)     
FutureFuel Corp.  589  8,234 
    8,234 
Engineering and construction (0.7%)     
Aecom Technology Corp. †  697  21,461 
China Railway Group, Ltd. (China)  24,000  12,332 
CTCI Corp. (Taiwan)  3,000  6,153 
Daelim Industrial Co., Ltd. (South Korea)  148  12,410 
JGC Corp. (Japan)  1,000  33,372 
KBR, Inc.  861  31,082 
McDermott International, Inc. †  1,268  12,109 
Singapore Technologies Engineering, Ltd. (Singapore)  6,000  19,107 
Vinci SA (France)  355  17,980 
    166,006 

 

24   Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Entertainment (0.1%)     
Carmike Cinemas, Inc. †  240  $4,253 
CJ CGV Co., Ltd. (South Korea)  157  7,534 
Six Flags Entertainment Corp.  28  2,088 
TiVo, Inc. †  193  2,497 
Town Sports International Holdings, Inc.  366  4,033 
VOXX International Corp. †  591  6,572 
    26,977 
Environmental (0.1%)     
Beijing Enterprises Water Group, Ltd. (China)  40,000  15,071 
Coway Co., Ltd. (South Korea)  370  18,095 
    33,166 
Financial (0.7%)     
3i Group PLC (United Kingdom)  2,959  15,113 
BM&F Bovespa SA (Brazil)  1,460  9,468 
CIT Group, Inc. †  1,404  64,696 
CoreLogic, Inc. †  1,723  45,143 
Credit Acceptance Corp. †  56  6,376 
Nasdaq OMX Group, Inc. (The)  1,145  36,022 
WageWorks, Inc. †  142  4,114 
    180,932 
Food (1.8%)     
Ajinomoto Co., Inc. (Japan)  1,000  13,741 
Associated British Foods PLC (United Kingdom)  734  20,038 
Bunge, Ltd.  18  1,253 
Calbee, Inc. (Japan)  200  19,204 
Carrefour SA (France)  593  17,270 
Chaoda Modern Agriculture Holdings, Ltd. (China) † F  2,000  129 
Cia Brasileira de Distribuicao Grupo Pao de Acucar ADR     
(Preference) (Brazil)  91  4,474 
Distribuidora Internacional de Alimentacion SA (Spain)  1,617  12,579 
General Mills, Inc.  1,858  87,475 
Hain Celestial Group, Inc. (The) †  44  2,931 
Ingredion, Inc.  32  2,180 
JM Smucker Co. (The)  408  41,192 
Kraft Foods Group, Inc.  1,719  94,768 
Magnit OJSC (Russia)  53  11,876 
Nestle SA (Switzerland)  881  58,134 
Pinnacle Foods, Inc. †  185  4,544 
Sao Martinho SA (Brazil)  530  6,788 
Shoprite Holdings, Ltd. (South Africa)  896  15,673 
Suedzucker AG (Germany)  414  14,076 
Tesco PLC (United Kingdom)  1,391  7,676 
Unilever PLC (United Kingdom)  521  21,900 
    457,901 
Forest products and packaging (0.3%)     
Bemis Co., Inc.  493  19,301 
Buckeye Technologies, Inc.  82  3,056 
Domtar Corp. (Canada)  189  13,697 
KapStone Paper and Packaging Corp.  203  5,889 

 

Dynamic Asset Allocation Equity Fund  25 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Forest products and packaging cont.     
Louisiana-Pacific Corp. †  157  $2,758 
Packaging Corp. of America  450  22,050 
    66,751 
Gaming and lottery (—%)     
OPAP SA (Greece)  1,272  10,497 
    10,497 
Health-care services (2.9%)     
Amedisys, Inc. †  342  4,213 
AmerisourceBergen Corp.  1,662  89,881 
AmSurg Corp. †  134  4,761 
Bio-Reference Labs, Inc. †  54  1,666 
Centene Corp. †  41  2,030 
Chemed Corp.  111  7,772 
CIGNA Corp.  1,749  118,757 
Community Health Systems, Inc.  106  5,106 
Computer Programs & Systems, Inc.  36  1,803 
Diagnosticos da America SA (Brazil)  1,038  5,413 
HCA Holdings, Inc.  1,235  48,239 
Health Net, Inc. †  127  4,047 
HealthSouth Corp. †  259  7,586 
Magellan Health Services, Inc. †  48  2,616 
McKesson Corp.  1,326  150,978 
MedAssets, Inc. †  392  6,429 
Omega Healthcare Investors, Inc. R  351  11,376 
Pharmacyclics, Inc. †  61  5,590 
Providence Service Corp. (The) †  494  13,022 
Sinopharm Group Co. (China)  2,800  7,505 
Suzuken Co., Ltd. (Japan)  300  9,546 
Triple-S Management Corp. Class B (Puerto Rico) †  102  2,159 
Ventas, Inc. R  896  63,948 
WellCare Health Plans, Inc. †  200  10,428 
WellPoint, Inc.  1,924  148,090 
    732,961 
Homebuilding (0.2%)     
PulteGroup, Inc. †  2,003  43,245 
Ryland Group, Inc. (The)  253  11,456 
    54,701 
Household furniture and appliances (0.1%)     
La-Z-Boy, Inc.  563  10,399 
Select Comfort Corp. †  145  3,218 
Tempur-Pedic International, Inc. †  74  3,129 
    16,746 
Industrial (—%)     
Hyundai Development Co. (South Korea)  260  6,165 
    6,165 
Insurance (4.0%)     
Ageas (Belgium)  565  20,563 
AIA Group, Ltd. (Hong Kong)  4,800  21,183 
Alleghany Corp. †  129  50,310 
Allianz SE (Germany)  187  28,900 
Allied World Assurance Co. Holdings AG  432  38,625 

 

26   Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Insurance cont.     
American Equity Investment Life Holding Co.  402  $6,512 
American Financial Group, Inc.  742  36,032 
American International Group, Inc. †  3,762  167,259 
Amtrust Financial Services, Inc.  97  3,204 
Aon PLC  1,959  124,730 
Assicurazioni Generali SpA (Italy)  887  16,527 
AXA SA (France)  1,100  22,156 
Axis Capital Holdings, Ltd.  911  39,683 
Berkshire Hathaway, Inc. Class B †  549  62,624 
China Pacific Insurance (Group) Co., Ltd. (China)  1,800  6,028 
CNO Financial Group, Inc.  428  5,282 
Fidelity National Financial, Inc. Class A  1,782  46,884 
Genworth Financial, Inc. Class A †  6,181  66,817 
Insurance Australia Group, Ltd. (Australia)  4,494  24,247 
Maiden Holdings, Ltd. (Bermuda)  351  3,749 
Muenchener Rueckversicherungs AG (Germany)  98  18,345 
PartnerRe, Ltd.  509  46,141 
Ping An Insurance (Group) Co. of China, Ltd. (China)  1,000  7,330 
Porto Seguro SA (Brazil)  419  5,200 
Protective Life Corp.  913  35,315 
Prudential PLC (United Kingdom)  1,397  23,545 
Security National Financial Corp. Class A †  256  1,828 
Standard Life PLC (United Kingdom)  3,026  17,793 
Stewart Information Services Corp.  308  8,529 
Symetra Financial Corp.  351  4,900 
Validus Holdings, Ltd.  889  32,102 
    992,343 
Investment banking/Brokerage (1.4%)     
Deutsche Bank AG (Germany)  478  22,357 
Eaton Vance Corp.  941  39,061 
Goldman Sachs Group, Inc. (The)  1,544  250,252 
Greenhill & Co., Inc.  88  4,383 
Investor AB Class B (Sweden)  526  15,073 
UBS AG (Switzerland)  1,076  18,715 
Virtus Investment Partners, Inc. †  33  7,651 
    357,492 
Leisure (—%)     
Brunswick Corp.  116  3,894 
    3,894 
Lodging/Tourism (0.8%)     
Grand Korea Leisure Co., Ltd. (South Korea)  200  6,494 
Home Inns & Hotels Management, Inc. ADR (China) †  259  7,508 
Hotel Shilla Co., Ltd. (South Korea)  182  9,991 
Kangwon Land, Inc. (South Korea)  460  14,126 
Marcus Corp.  397  5,101 
MGM China Holdings, Ltd. (Hong Kong)  8,800  23,459 
SJM Holdings, Ltd. (Hong Kong)  8,000  21,766 
Wyndham Worldwide Corp.  799  46,438 
Wynn Resorts, Ltd.  407  55,307 
    190,190 

 

Dynamic Asset Allocation Equity Fund  27 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Machinery (1.0%)     
AGCO Corp.  69  $3,827 
Altra Holdings, Inc.  320  9,219 
Chart Industries, Inc. †  120  11,674 
CNH Global NV  59  2,558 
Cummins, Inc.  825  98,695 
Deere & Co.  40  3,484 
DXP Enterprises, Inc. †  63  3,721 
Franklin Electric Co., Inc.  220  7,438 
Gardner Denver, Inc.  305  23,028 
Hyster-Yale Materials Holdings, Inc.  29  1,792 
Hyster-Yale Materials Holdings, Inc. Class B F  28  1,730 
IHI Corp. (Japan)  4,000  14,679 
Kadant, Inc.  181  5,416 
Kawasaki Heavy Industries, Ltd. (Japan)  5,000  16,851 
Lindsay Corp.  29  2,356 
NACCO Industries, Inc. Class A  29  1,625 
Schindler Holding AG (Switzerland)  133  19,330 
Terex Corp. †  689  24,714 
    252,137 
Manufacturing (0.7%)     
AZZ, Inc.  106  4,397 
Chase Corp.  166  3,279 
Generac Holdings, Inc.  193  7,817 
Greenbrier Companies, Inc. †  396  9,286 
Hartalega Holdings Bhd (Malaysia)  3,100  5,500 
IMI PLC (United Kingdom)  1,127  22,043 
Ingersoll-Rand PLC  1,375  79,104 
Leggett & Platt, Inc.  894  28,608 
Standex International Corp.  85  4,434 
TriMas Corp. †  358  11,546 
Valmont Industries, Inc.  29  4,418 
    180,432 
Media (0.1%)     
Demand Media, Inc. †  159  1,363 
Naspers, Ltd. Class N (South Africa)  198  14,548 
    15,911 
Medical technology (1.2%)     
Accuray, Inc. †  654  3,512 
Alere, Inc. †  412  10,539 
Align Technology, Inc. †  94  3,361 
Coloplast A/S Class B (Denmark)  440  25,022 
Conmed Corp.  280  9,220 
CSL, Ltd. (Australia)  324  18,367 
Cyberonics, Inc. †  44  2,099 
Globus Medical, Inc. Class A †  197  2,876 
Greatbatch, Inc. †  358  11,531 
Haemonetics Corp. †  107  4,417 
Hill-Rom Holdings, Inc.  213  7,696 
Insulet Corp. †  119  3,553 

 

28   Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
  
Medical technology cont.     
Nx Stage Medical, Inc. †  153  $2,134 
St. Jude Medical, Inc.  2,032  87,843 
STAAR Surgical Co. †  568  5,055 
Steris Corp.  97  4,398 
TearLab Corp. †  211  2,220 
Trinity Biotech PLC ADR (Ireland)  169  2,963 
Zimmer Holdings, Inc.  1,140  89,501 
    296,307 
Metals (0.7%)     
Assa Abloy AB Class B (Sweden)  477  19,016 
BHP Billiton PLC (United Kingdom)  617  17,855 
BHP Billiton, Ltd. (Australia)  1,048  34,153 
Evraz PLC (United Kingdom)  6,349  12,947 
Horsehead Holding Corp. † S  596  6,860 
L.B. Foster Co. Class A  60  2,659 
MMG, Ltd. (Australia) †  24,000  6,550 
NN, Inc. †  424  3,926 
Rio Tinto PLC (United Kingdom)  595  25,672 
Rio Tinto, Ltd. (Australia)  317  16,452 
Sung Kwang Bend Co., Ltd. (South Korea)  381  9,343 
Vale SA ADR (Preference) (Brazil)  330  4,448 
Vale SA ADR (Brazil)  185  2,664 
voestalpine AG (Austria)  547  17,963 
    180,508 
Natural gas utilities (0.4%)     
Kinder Morgan, Inc.  1,820  69,124 
UGI Corp.  631  24,098 
    93,222 
Office equipment and supplies (0.3%)     
Avery Dennison Corp.  616  26,796 
Staples, Inc.  3,691  55,365 
    82,161 
Oil and gas (7.3%)     
BP PLC (United Kingdom)  6,781  48,537 
Cabot Oil & Gas Corp.  870  61,213 
Cairn India, Ltd. (India)  1,990  10,003 
Caltex Australia, Ltd. (Australia)  1,076  22,930 
Chevron Corp.  978  120,050 
CNOOC, Ltd. (China)  14,000  24,617 
ConocoPhillips  3,613  221,621 
CVR Energy, Inc. (Escrow) F  236  — 
Delek US Holdings, Inc.  149  5,368 
Dragon Oil PLC (Turkmenistan)  953  9,022 
ENI SpA (Italy)  964  21,798 
EPL Oil & Gas, Inc. †  280  8,526 
Exxon Mobil Corp.  3,532  319,540 
Ezion Holdings, Ltd. (Singapore)  6,000  10,781 
Gulfport Energy Corp. †  68  3,243 
Helmerich & Payne, Inc.  457  28,215 
HollyFrontier Corp.  851  42,125 

 

Dynamic Asset Allocation Equity Fund   29 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Oil and gas cont.     
Kodiak Oil & Gas Corp. †  464  $4,074 
Lukoil OAO ADR (Russia)  378  22,271 
Marathon Petroleum Corp.  1,205  99,413 
Occidental Petroleum Corp.  2,379  219,035 
ONEOK, Inc.  973  43,921 
Pacific Rubiales Energy Corp. (Colombia)  612  12,928 
Petroleo Brasileiro SA ADR (Preference) (Brazil)  979  18,249 
Petroleo Brasileiro SA ADR (Brazil)  249  4,425 
Phillips 66  2,035  135,470 
Repsol YPF SA (Spain)  641  14,357 
Rosetta Resources, Inc. †  65  3,046 
Royal Dutch Shell PLC Class A (United Kingdom)  1,002  33,276 
Royal Dutch Shell PLC Class B (United Kingdom)  922  31,854 
Statoil ASA (Norway)  881  19,936 
Stone Energy Corp. †  185  4,164 
Surgutneftegas OAO (Russia) (Preference) †  17,178  10,488 
Swift Energy Co. †  245  3,322 
Tesoro Corp.  824  50,800 
Total SA (France)  543  26,932 
Unit Corp. †  86  3,885 
Vaalco Energy, Inc. †  1,006  6,157 
Valero Energy Corp.  2,013  81,788 
W&T Offshore, Inc.  186  2,742 
Western Refining, Inc.  237  7,909 
    1,818,031 
Pharmaceuticals (5.7%)     
AbbVie, Inc.  2,943  125,636 
ACADIA Pharmaceuticals, Inc. †  152  2,139 
Array BioPharma, Inc. †  464  2,710 
AstraZeneca PLC (United Kingdom)  452  23,059 
Bayer AG (Germany)  323  34,745 
Bristol-Myers Squibb Co.  4,279  196,877 
Eli Lilly & Co.  2,624  139,492 
Endo Health Solutions, Inc. †  170  6,171 
Gentium SpA ADR (Italy) †  156  1,309 
GlaxoSmithKline PLC (United Kingdom)  1,298  33,645 
Glenmark Pharmaceuticals, Ltd. (India) †  989  10,314 
Hi-Tech Pharmacal Co., Inc.  65  2,077 
Jazz Pharmaceuticals PLC †  265  18,012 
Johnson & Johnson  1,227  103,289 
Merck & Co., Inc.  605  28,254 
Novartis AG (Switzerland)  433  31,027 
Novo Nordisk A/S Class B (Denmark)  230  36,924 
Orion OYJ Class B (Finland)  582  14,311 
Otsuka Holdings Company, Ltd. (Japan)  900  28,624 
Pfizer, Inc.  13,699  373,024 
PharMerica Corp. †  272  4,246 
Questcor Pharmaceuticals, Inc.  154  5,262 

 

30   Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
  
Pharmaceuticals cont.     
Roche Holding AG-Genusschein (Switzerland)  257  $63,592 
Salix Pharmaceuticals, Ltd. †  400  24,268 
Sanofi (France)  311  32,706 
Santarus, Inc. †  144  3,207 
ViroPharma, Inc. †  385  10,588 
Warner Chilcott PLC Class A  3,085  59,232 
    1,414,740 
Photography/Imaging (0.1%)     
Konica Minolta Holdings, Inc. (Japan)  2,000  14,301 
    14,301 
Publishing (0.1%)     
Gannett Co., Inc.  1,506  32,379 
    32,379 
Railroads (0.1%)     
Central Japan Railway Co. (Japan)  300  32,727 
    32,727 
Real estate (3.1%)     
AG Mortgage Investment Trust, Inc. R  97  2,220 
Agree Realty Corp. R  182  6,066 
Aliansce Shopping Centers SA (Brazil)  679  6,848 
American Capital Agency Corp. R  1,183  30,521 
Arlington Asset Investment Corp. Class A  117  3,189 
ARMOUR Residential REIT, Inc. R  525  2,709 
Ashford Hospitality Trust, Inc. R  622  8,217 
AvalonBay Communities, Inc. R  315  41,788 
BR Properties SA (Brazil)  806  7,771 
CBL & Associates Properties, Inc. R  626  14,392 
Chimera Investment Corp. R  4,331  13,210 
China Overseas Grand Oceans Group, Ltd. (China)  7,000  10,089 
China Overseas Land & Investment, Ltd. (China)  3,000  8,796 
CYS Investments, Inc. R  323  3,320 
Dexus Property Group (Australia) R  16,502  17,260 
Direcional Engenharia SA (Brazil)  1,364  10,062 
Dynex Capital, Inc. R  484  4,922 
EPR Properties R  62  3,250 
Federal Realty Investment Trust R  243  26,183 
First Industrial Realty Trust R  205  3,462 
Glimcher Realty Trust R  394  4,602 
Hammerson PLC (United Kingdom) R  1,257  9,755 
Hatteras Financial Corp. R  447  11,542 
Health Care REIT, Inc. R  850  57,826 
HFF, Inc. Class A  589  11,079 
Invesco Mortgage Capital, Inc. R  156  2,909 
Investors Real Estate Trust R  469  4,221 
iStar Financial, Inc. † R  386  4,597 
Jones Lang LaSalle, Inc.  31  2,847 
Lexington Realty Trust R  901  11,344 
LSR Group OJSC GDR (Russia)  1,328  4,810 
LTC Properties, Inc. R  221  9,196 
Macquarie Mexico Real Estate Management SA de CV (Mexico) R  3,035  7,522 

 

Dynamic Asset Allocation Equity Fund  31 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Real estate cont.     
MFA Financial, Inc. R  532  $4,671 
National Health Investors, Inc. R  137  8,531 
One Liberty Properties, Inc. R  214  5,660 
PS Business Parks, Inc. R  65  4,960 
Public Storage R  445  67,551 
Select Income REIT R  356  9,694 
Simon Property Group, Inc. R  814  135,482 
St. Joe Co. (The) †  546  11,149 
Starwood Property Trust, Inc. R  119  3,019 
Summit Hotel Properties, Inc. R  575  5,675 
Sun Communities, Inc. R  96  4,797 
Surya Semesta Internusa Tbk PT (Indonesia)  41,000  6,911 
Tanger Factory Outlet Centers R  406  13,999 
Tokyu Land Corp. (Japan)  3,000  27,255 
Universal Health Realty Income Trust R  48  2,168 
Vornado Realty Trust R  603  48,210 
Westfield Group (Australia)  1,364  14,935 
Wheelock and Co., Ltd. (Hong Kong)  5,000  27,849 
    769,041 
Regional Bells (0.4%)     
AT&T, Inc.  2,702  94,543 
    94,543 
Restaurants (0.1%)     
AFC Enterprises †  294  10,719 
Brinker International, Inc.  251  9,842 
Domino’s Pizza, Inc.  48  2,845 
Fiesta Restaurant Group, Inc. †  90  3,201 
Papa John’s International, Inc. †  85  5,477 
    32,084 
Retail (7.4%)     
Adidas AG (Germany)  139  15,093 
Advance Auto Parts, Inc.  431  35,135 
American Eagle Outfitters, Inc.  1,279  25,311 
ANN, Inc. †  240  7,363 
Bed Bath & Beyond, Inc. †  1,085  74,051 
Big Lots, Inc. †  728  24,788 
BR Malls Participacoes SA (Brazil)  1,003  10,237 
Buckle, Inc. (The)  76  4,064 
Chico’s FAS, Inc.  1,164  21,022 
Cie Financiere Richemont SA (Switzerland)  149  13,096 
Coach, Inc.  1,273  74,165 
Compagnie Financiere Richemont SA (Switzerland)  1,268  11,255 
Costco Wholesale Corp.  806  88,394 
CP ALL PCL (Thailand)  9,200  13,067 
Crocs, Inc. †  193  3,405 
CST Brands, Inc. †  223  6,777 
CVS Caremark Corp.  3,163  182,126 
Deckers Outdoor Corp. †  45  2,416 
Destination Maternity Corp.  340  8,469 

 

32   Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Retail cont.     
Dillards, Inc. Class A  230  $21,222 
Foot Locker, Inc.  895  30,716 
Francesca’s Holdings Corp. †  124  3,540 
GameStop Corp. Class A  167  5,538 
Gap, Inc. (The)  1,547  62,731 
Genesco, Inc. †  117  7,907 
Home Depot, Inc. (The)  3,957  311,258 
KAR Auction Services, Inc.  257  6,027 
Koninklijke Ahold NV (Netherlands)  927  14,977 
Lowe’s Cos., Inc.  4,334  182,505 
Lumber Liquidators Holdings, Inc. †  32  2,628 
Macy’s, Inc.  1,823  88,124 
Matahari Department Store Tbk PT (Indonesia) †  5,500  7,300 
Next PLC (United Kingdom)  515  35,954 
O’Reilly Automotive, Inc. †  580  63,168 
PetSmart, Inc.  574  38,745 
Pier 1 Imports, Inc.  100  2,319 
Sonic Automotive, Inc. Class A  877  19,969 
Tile Shop Holdings, Inc. †  188  4,813 
TJX Cos., Inc. (The)  2,843  143,884 
USANA Health Sciences, Inc. †  39  2,734 
Wal-Mart Stores, Inc.  376  28,140 
Walgreen Co.  2,424  115,770 
Woolworths, Ltd. (Australia)  739  23,197 
    1,843,400 
Schools (0.1%)     
Bright Horizons Family Solutions, Inc. †  127  4,578 
Grand Canyon Education, Inc. †  162  5,203 
ITT Educational Services, Inc. †  635  15,221 
    25,002 
Semiconductor (0.6%)     
ASML Holding NV (Netherlands)  246  20,284 
Cypress Semiconductor Corp. †  1,575  17,703 
Entegris, Inc. †  540  5,627 
Lam Research Corp. †  827  38,687 
Magnachip Semiconductor Corp. (South Korea) †  207  3,830 
Photronics, Inc. †  533  4,067 
Rudolph Technologies, Inc. †  425  5,211 
Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan)  6,000  21,825 
Teradyne, Inc. †  1,551  27,825 
Ultra Clean Holdings, Inc. †  475  2,760 
    147,819 
Shipping (0.3%)     
Aegean Marine Petroleum Network, Inc. (Greece)  809  7,863 
Con-way, Inc.  295  11,216 
Quality Distribution, Inc. †  506  4,610 
Swift Transportation Co. †  680  11,451 
Wabtec Corp.  287  31,573 
    66,713 

 

Dynamic Asset Allocation Equity Fund  33 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Software (3.8%)     
BMC Software, Inc. †  1,550  $70,207 
Changyou.com, Ltd. ADR (China)  299  9,194 
IntraLinks Holdings, Inc. †  565  3,469 
Manhattan Associates, Inc. †  93  6,978 
Mantech International Corp. Class A  253  6,854 
Microsoft Corp.  10,212  356,195 
MicroStrategy, Inc. Class A †  22  2,013 
NTT Data Corp. (Japan)  3  10,057 
Oracle Corp.  9,503  320,821 
Oracle Corp. Japan (Japan)  300  11,813 
PTC, Inc. †  165  4,143 
QLIK Technologies, Inc. †  90  2,768 
Rovi Corp. †  463  11,945 
Safeguard Scientifics, Inc. †  244  3,850 
SAP AG (Germany) †  138  10,511 
SciQuest, Inc. †  92  2,111 
Symantec Corp. †  4,788  107,203 
Tencent Holdings, Ltd. (China)  200  7,899 
TIBCO Software, Inc. †  142  3,029 
Ultimate Software Group, Inc. †  78  8,681 
    959,741 
Staffing (0.2%)     
Barrett Business Services, Inc.  135  7,875 
On Assignment, Inc. †  211  5,494 
Robert Half International, Inc.  813  28,260 
    41,629 
Technology (0.1%)     
CACI International, Inc. Class A †  58  3,720 
Softbank Corp. (Japan)  400  20,007 
    23,727 
Technology services (2.7%)     
Accenture PLC Class A  2,665  218,823 
Acxiom Corp. †  382  8,400 
AOL, Inc. †  1,514  52,475 
Cap Gemini SA (France)  313  15,138 
CSG Systems International, Inc. †  82  1,774 
Google, Inc. Class A †  264  229,787 
IBM Corp.  535  111,291 
NIC, Inc.  145  2,424 
Perficient, Inc. †  274  3,452 
Sourcefire, Inc. †  65  3,637 
Tyler Technologies, Inc. †  92  6,349 
Unisys Corp. †  127  2,623 
XO Group, Inc. †  360  3,722 
Yandex NV Class A (Russia) †  506  13,743 
    673,638 
Telecommunications (1.0%)     
America Movil SAB de CV ADR Ser. L (Mexico)  331  6,590 
Arris Group, Inc. †  165  2,496 
Aruba Networks, Inc. †  114  1,703 

 

34   Dynamic Asset Allocation Equity Fund 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
  
Telecommunications cont.     
BroadSoft, Inc. †  36  $998 
BT Group PLC (United Kingdom)  4,112  18,773 
CalAmp Corp. †  337  4,438 
EchoStar Corp. Class A †  695  27,598 
France Telecom SA (France)  1,361  13,829 
InterDigital, Inc.  21  966 
InterXion Holding NV (Netherlands) †  156  4,282 
KCell JSC ADR (Kazakhstan) †  464  7,471 
Loral Space & Communications, Inc.  75  4,517 
Mobile Telesystems OJSC (Russia) †  1,600  12,763 
NeuStar, Inc. Class A †  137  6,639 
NTT DoCoMo, Inc. (Japan)  11  16,249 
Tele2 AB (Redemption Shares) (Sweden) † F  689  2,913 
Tele2 AB Class B (Sweden)  836  10,446 
Telefonica SA (Spain)  1,211  16,585 
Telekomunikasi Indonesia Persero Tbk PT (Indonesia)  12,500  14,028 
Telenor ASA (Norway)  767  16,051 
Telstra Corp., Ltd. (Australia)  4,295  19,428 
Turkcell Iletisim Hizmetleri AS (Turkey) †  1,945  12,001 
USA Mobility, Inc.  236  3,181 
Vodafone Group PLC (United Kingdom)  6,059  17,559 
    241,504 
Telephone (1.5%)     
Deutsche Telekom AG (Germany) †  1,380  15,773 
Telefonica Brasil SA ADR (Brazil)  289  7,141 
tw telecom, inc. †  1,014  28,929 
Verizon Communications, Inc.  6,482  314,246 
    366,089 
Textiles (0.1%)     
G&K Services, Inc. Class A  90  4,348 
Perry Ellis International, Inc.  309  6,523 
Top Glove Corp. Bhd (Malaysia)  2,900  5,964 
    16,835 
Tire and rubber (0.2%)     
Cie Generale des Etablissements Michelin (France)  201  17,461 
Continental AG (Germany)  131  17,281 
Cooper Tire & Rubber Co.  419  10,827 
    45,569 
Tobacco (1.9%)     
British American Tobacco (BAT) PLC (United Kingdom)  371  20,376 
Japan Tobacco, Inc. (Japan)  700  23,709 
Lorillard, Inc.  2,582  109,580 
Philip Morris International, Inc.  3,473  315,730 
    469,395 
Toys (0.1%)     
Namco Bandai Holdings, Inc. (Japan)  900  14,519 
    14,519 
Transportation (0.1%)     
Bangkok Expressway PCL (Thailand)  7,300  9,585 
Jaypee Infratech, Ltd. (India) †  5,312  3,098 
TAL International Group, Inc. †  205  8,663 
    21,346 

 

Dynamic Asset Allocation Equity Fund  35 

 


COMMON STOCKS (92.6%)* cont.  Shares  Value 
 
Transportation services (0.1%)     
ComfortDelgro Corp., Ltd. (Singapore)  9,000  $13,267 
TAV Havalimanlari Holding AS (Turkey) †  1,262  7,923 
Universal Truckload Services, Inc. †  205  5,238 
    26,428 
Trucks and parts (0.6%)     
Delphi Automotive PLC (United Kingdom)  1,753  85,564 
Hyundai Mobis Co., Ltd. (South Korea)  63  15,799 
Miller Industries, Inc.  215  3,520 
Standard Motor Products, Inc.  316  10,681 
WABCO Holdings, Inc. †  389  29,338 
    144,902 
Waste Management (—%)     
China Everbright Intl., Ltd. (China)  9,000  7,248 
    7,248 
Water Utilities (0.1%)     
United Utilities Group PLC (United Kingdom)  1,443  16,460 
    16,460 
 
Total common stocks (cost $18,046,836)    $23,164,471 
 
INVESTMENT COMPANIES (4.1%)*  Shares  Value 
 
SPDR S&P 500 ETF Trust  5,810  $948,424 
SPDR S&P Midcap 400 ETF Trust  344  74,270 
Total investment companies (cost $842,777)    $1,022,694 
 
 
UNITS (—%)*  Units  Value 
 
Grupo BTG Pactual zero % (Brazil)  667  $10,236 
Total units (cost $10,978)    $10,236 

 

PURCHASED EQUITY OPTIONS  Expiration date/  Contract   
OUTSTANDING (—%)*  strike price  amount  Value 
 
MSCI Daily Total Return Net Emerging Markets       
Index (Put)  Jun-13/$400.43  298  $1,522 
Total purchased equity options outstanding (cost $1,846)    $1,522 

 

SHORT-TERM INVESTMENTS (4.4%)*  Principal amount/shares  Value 
  
Putnam Short Term Investment Fund 0.01% L  929,346  $929,346 
Putnam Cash Collateral Pool, LLC 0.16% d  6,125  6,125 
U.S. Treasury Bills with effective yields ranging from 0.10%     
to 0.11%, April 3, 2014 #  $19,000  18,982 
U.S. Treasury Bills with effective yields ranging from 0.12%     
to 0.13%, March 6, 2014 #  86,000  85,931 
U.S. Treasury Bills with an effective yield of 0.13%,     
January 9, 2014 #  49,000  48,974 
Total short-term investments (cost $1,089,332)    $1,089,358 
 
TOTAL INVESTMENTS     
 
Total investments (cost $19,991,769)    $25,288,281 

 

36   Dynamic Asset Allocation Equity Fund 

 


Key to holding’s abbreviations 
 
ADR  American Depository Receipts: represents ownership of foreign securities on deposit with a 
  custodian bank 
ETF  Exchange Traded Fund 
GDR  Global Depository Receipts: represents ownership of foreign securities on deposit with a custodian bank 
JSC  Joint Stock Company 
NVDR Non-voting Depository Receipt  
OAO  Open Joint Stock Company 
OJSC  Open Joint Stock Company 
SPDR  S&P Depository Receipts 

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 June 1, 2012 through May 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 $25,026,151.

† Non-income-producing security.

# This security, in part or in entirety, was pledged and segregated with the broker to cover margin requirements for futures contracts at the close of the reporting period. 

 d Affiliated company. See Note 1 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

F Is valued at fair value following procedures approved by the Trustees. Securities may be classified as Level 2 or Level 3 for ASC 820 based on the securities’ valuation inputs. At the close of the reporting period, fair value pricing was also used for certain foreign securities in the portfolio (Note 1).

L Affiliated company (Note 6). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

R Real Estate Investment Trust.

S Security on loan, in part or in entirety, at the close of the reporting period (Note 1).

At the close of the reporting period, the fund maintained liquid assets totaling $141,890 to cover certain derivatives contracts.

DIVERSIFICATION BY COUNTRY 
Distribution of investments by country of risk at the close of the reporting period, excluding collateral received, if any (as a percentage of Portfolio Value):
 
United States  81.3%  South Korea  0.9% 
United Kingdom  3.2  China  0.8 
Japan  2.7  Brazil  0.6 
Switzerland  1.2  Spain  0.5 
France  1.2  Other  5.4 
Australia  1.1  Total  100.0% 
  
Germany  1.1     
  

 

Dynamic Asset Allocation Equity Fund  37 

 


FORWARD CURRENCY CONTRACTS at 5/31/13 (aggregate face value $9,922,375)     
 
            Unrealized 
    Contract  Delivery    Aggregate  appreciation/ 
Counterparty  Currency  type  date  Value  face value  (depreciation) 
Bank of America N.A.           
  British Pound  Buy  6/19/13  $1,519  $1,556  $(37) 
  Canadian Dollar  Sell  7/17/13  393,710  400,822  7,112 
  Chilean Peso  Buy  7/17/13  1,839  3,240  (1,401) 
  Euro  Buy  6/19/13  262,310  262,871  (561) 
  Japanese Yen  Sell  8/22/13  40,624  41,783  1,159 
  Peruvian New Sol  Buy  7/17/13  36,108  38,268  (2,160) 
  Peruvian New Sol  Sell  7/17/13  36,108  37,474  1,366 
  Swedish Krona  Buy  6/19/13  188,539  192,796  (4,257) 
  Swiss Franc  Sell  6/19/13  18,199  18,537  338 
Barclays Bank PLC           
  Australian Dollar  Sell  7/17/13  11,736  11,837  101 
  Brazilian Real  Sell  7/17/13  11,528  9,959  (1,569) 
  British Pound  Buy  6/19/13  87,812  86,029  1,783 
  Canadian Dollar  Sell  7/17/13  6,552  5,972  (580) 
  Chilean Peso  Sell  7/17/13  11,580  10,477  (1,103) 
  Euro  Buy  6/19/13  406,205  405,995  210 
  Hong Kong Dollar  Buy  8/22/13  25,361  25,370  (9) 
  Indonesian Rupiah  Sell  8/22/13  2,939  2,445  (494) 
  Japanese Yen  Sell  8/22/13  241,554  245,322  3,768 
  Malaysian Ringgit  Sell  8/22/13  5,744  4,859  (885) 
  Mexican Peso  Buy  7/17/13  1,676  2,991  (1,315) 
  New Taiwan Dollar  Buy  8/22/13  9,207  9,345  (138) 
  Norwegian Krone  Sell  6/19/13  75,853  76,065  212 
  Polish Zloty  Buy  6/19/13  8,443  8,801  (358) 
  Russian Ruble  Buy  6/19/13  3,083  3,196  (113) 
  Singapore Dollar  Sell  8/22/13  3,481  3,570  89 
  Swedish Krona  Sell  6/19/13  128,953  131,443  2,490 
  Swiss Franc  Buy  6/19/13  118,816  120,696  (1,880) 
  Turkish Lira  Buy  6/19/13  4,743  4,973  (230) 
Citibank, N.A.             
  Australian Dollar  Sell  7/17/13  90,450  96,110  5,660 
  Brazilian Real  Sell  7/17/13  17,916  16,282  (1,634) 
  British Pound  Buy  6/19/13  87,053  85,384  1,669 
  Canadian Dollar  Buy  7/17/13  12,141  12,844  (703) 
  Danish Krone  Sell  6/19/13  4,760  4,770  10 
  Euro  Buy  6/19/13  52,513  52,169  344 
  Japanese Yen  Sell  8/22/13  166,666  173,178  6,512 
  Singapore Dollar  Buy  8/22/13  37,424  38,388  (964) 
  South African Rand  Buy  7/17/13  7,566  7,609  (43) 
  Swedish Krona  Sell  6/19/13  25,220  25,545  325 
  Swiss Franc  Sell  6/19/13  24,997  25,739  742 
  Thai Baht  Sell  8/22/13  2,763  2,178  (585) 
  Turkish Lira  Buy  6/19/13  3,677  4,060  (383) 

 

38   Dynamic Asset Allocation Equity Fund 

 


FORWARD CURRENCY CONTRACTS at 5/31/13 (aggregate face value $9,922,375) cont.   
   
          Unrealized 
  Contract  Delivery    Aggregate  appreciation/ 
Counterparty   Currency  type  date  Value  face value  (depreciation) 
Credit Suisse International           
Australian Dollar  Buy  7/17/13  $48,850  $54,138  $(5,288) 
Brazilian Real  Sell  7/17/13  8,842  7,450  (1,392) 
British Pound  Buy  6/19/13  276,047  273,093  2,954 
Canadian Dollar  Sell  7/17/13  1,060  321  (739) 
Chilean Peso  Sell  7/17/13  14,333  13,616  (717) 
Chinese Yuan  Sell  8/22/13  7,357  7,423  66 
Czech Koruna  Buy  6/19/13  13,384  13,499  (115) 
Czech Koruna  Sell  6/19/13  13,384  13,525  141 
Euro  Sell  6/19/13  9,749  10,073  324 
Hungarian Forint  Sell  6/19/13  599  658  59 
Indonesian Rupiah  Buy  8/22/13  2,935  3,050  (115) 
Japanese Yen  Buy  8/22/13  557,742  573,874  (16,132) 
Mexican Peso  Buy  7/17/13  13,227  14,454  (1,227) 
Norwegian Krone  Buy  6/19/13  109,607  111,014  (1,407) 
Philippine Peso  Sell  8/22/13  4,188  3,863  (325) 
Polish Zloty  Buy  6/19/13  12,999  13,324  (325) 
Polish Zloty  Sell  6/19/13  12,999  13,360  361 
Russian Ruble  Sell  6/19/13  1,909  1,244  (665) 
South African Rand  Sell  7/17/13  13,374  14,140  766 
Swedish Krona  Sell  6/19/13  25,371  24,511  (860) 
Swiss Franc  Buy  6/19/13  60,558  60,538  20 
Turkish Lira  Buy  6/19/13  2,878  3,229  (351) 
Deutsche Bank AG           
Australian Dollar  Sell  7/17/13  33,489  33,559  70 
Brazilian Real  Buy  7/17/13  1,713  3,165  (1,452) 
British Pound  Buy  6/19/13  58,643  57,152  1,491 
Canadian Dollar  Buy  7/17/13  146,846  149,276  (2,430) 
Euro  Sell  6/19/13  18,717  18,732  15 
Japanese Yen  Sell  8/22/13  11,601  13,197  1,596 
Mexican Peso  Buy  7/17/13  16,205  17,235  (1,030) 
Norwegian Krone  Buy  6/19/13  35,849  36,314  (465) 
Polish Zloty  Buy  6/19/13  5,224  5,508  (284) 
Swedish Krona  Sell  6/19/13  25,205  25,012  (193) 
Swiss Franc  Buy  6/19/13  4,811  5,008  (197) 
Turkish Lira  Buy  6/19/13  8,367  8,620  (253) 
Goldman Sachs International           
British Pound  Buy  6/19/13  27,194  26,512  682 
Canadian Dollar  Sell  7/17/13  23,896  23,486  (410) 
Euro  Sell  6/19/13  49,785  50,059  274 
Japanese Yen  Buy  8/22/13  234,195  240,160  (5,965) 
Norwegian Krone  Buy  6/19/13  16,724  16,819  (95) 

 

Dynamic Asset Allocation Equity Fund    39 

 


FORWARD CURRENCY CONTRACTS at 5/31/13 (aggregate face value $9,922,375) cont.   
 
          Unrealized 
  Contract  Delivery    Aggregate  appreciation/ 
Counterparty  Currency  type  date  Value  face value  (depreciation) 
HSBC Bank USA, National Association         
Australian Dollar  Sell  7/17/13  $19,369  $18,750  $(619) 
British Pound  Sell  6/19/13  112,121  111,604  (517) 
Canadian Dollar  Sell  7/17/13  23,125  23,031  (94) 
Euro  Buy  6/19/13  170,280  170,149  131 
Indian Rupee  Sell  8/22/13  1,616  935  (681) 
Japanese Yen  Sell  8/22/13  88,050  91,930  3,880 
Norwegian Krone  Buy  6/19/13  161,209  163,280  (2,071) 
Philippine Peso  Buy  8/22/13  4,365  4,817  (452) 
Russian Ruble  Buy  6/19/13  478  1,205  (727) 
South African Rand  Buy  7/17/13  7,566  7,610  (44) 
Swiss Franc  Buy  6/19/13  62,127  62,832  (705) 
Swiss Franc  Sell  6/19/13  62,127  62,927  800 
Thai Baht  Sell  8/22/13  888  616  (272) 
Turkish Lira  Sell  6/19/13  2,451  1,932  (519) 
JPMorgan Chase Bank N.A.           
Australian Dollar  Buy  7/17/13  214,198  233,518  (19,320) 
Brazilian Real  Buy  7/17/13  17,454  19,198  (1,744) 
British Pound  Buy  6/19/13  108,626  107,329  1,297 
Canadian Dollar  Buy  7/17/13  99,343  102,188  (2,845) 
Chilean Peso  Buy  7/17/13  13,460  14,861  (1,401) 
Chinese Yuan  Buy  8/22/13  8,019  7,965  54 
Euro  Sell  6/19/13  519,031  518,914  (117) 
Hungarian Forint  Sell  6/19/13  640  686  46 
Japanese Yen  Sell  8/22/13  128,978  136,911  7,933 
Malaysian Ringgit  Buy  8/22/13  3,883  4,284  (401) 
Mexican Peso  Buy  7/17/13  2,315  3,044  (729) 
New Taiwan Dollar  Buy  8/22/13  5,346  5,440  (94) 
Norwegian Krone  Sell  6/19/13  189,053  191,135  2,082 
Polish Zloty  Buy  6/19/13  5,011  5,143  (132) 
Russian Ruble  Sell  6/19/13  1,462  1,360  (102) 
Swedish Krona  Sell  6/19/13  54,922  55,661  739 
Swiss Franc  Sell  6/19/13  13,492  14,516  1,024 
Turkish Lira  Sell  6/19/13  3,464  3,295  (169) 
Royal Bank of Scotland PLC (The)           
Euro  Buy  6/19/13  79,551  79,562  (11) 
Euro  Sell  6/19/13  79,551  79,143  (408) 
Japanese Yen  Buy  8/22/13  111,086  114,771  (3,685) 
State Street Bank and Trust Co.           
Australian Dollar  Buy  7/17/13  42,840  46,207  (3,367) 
Brazilian Real  Buy  7/17/13  19,305  20,720  (1,415) 
British Pound  Sell  6/19/13  113,791  112,695  (1,096) 
Canadian Dollar  Buy  7/17/13  82,191  84,570  (2,379) 

 

40   Dynamic Asset Allocation Equity Fund 

 


FORWARD CURRENCY CONTRACTS at 5/31/13 (aggregate face value $9,922,375) cont.   
 
            Unrealized 
    Contract  Delivery    Aggregate  appreciation/ 
Counterparty  Currency  type  date  Value  face value  (depreciation) 
State Street Bank and Trust Co. cont.           
  Chilean Peso  Buy  7/17/13  $11,733  $13,096  $(1,363) 
  Colombian Peso  Sell  7/17/13  2,381  1,539  (842) 
  Czech Koruna  Buy  6/19/13  1,551  1,568  (17) 
  Czech Koruna  Sell  6/19/13  1,551  1,557  6 
  Euro  Buy  6/19/13  231,114  232,116  (1,002) 
  Hungarian Forint  Sell  6/19/13  589  678  89 
  Japanese Yen  Sell  8/22/13  15,035  15,860  825 
  Mexican Peso  Buy  7/17/13  4,879  6,195  (1,316) 
  Norwegian Krone  Sell  6/19/13  99,440  100,781  1,341 
  Polish Zloty  Buy  6/19/13  1,093  1,305  (212) 
  Swedish Krona  Sell  6/19/13  23,500  24,997  1,497 
  Swiss Franc  Sell  6/19/13  17,572  17,734  162 
  Turkish Lira  Sell  6/19/13  5,329  5,211  (118) 
UBS AG             
  Australian Dollar  Sell  7/17/13  53,907  55,144  1,237 
  British Pound  Buy  6/19/13  53,174  53,609  (435) 
  Canadian Dollar  Sell  7/17/13  344,182  350,131  5,949 
  Chilean Peso  Sell  7/17/13  3,326  2,109  (1,217) 
  Czech Koruna  Buy  6/19/13  9,301  9,402  (101) 
  Czech Koruna  Sell  6/19/13  9,301  9,334  33 
  Euro  Sell  6/19/13  361,358  362,204  846 
  Hungarian Forint  Sell  6/19/13  502  600  98 
  Japanese Yen  Sell  8/22/13  73,621  76,354  2,733 
  Mexican Peso  Buy  7/17/13  4,863  5,952  (1,089) 
  New Taiwan Dollar  Buy  8/22/13  5,965  6,065  (100) 
  Norwegian Krone  Buy  6/19/13  121,631  123,206  (1,575) 
  Philippine Peso  Sell  8/22/13  2,550  2,205  (345) 
  Russian Ruble  Sell  6/19/13  1,577  1,442  (135) 
  Swedish Krona  Buy  6/19/13  180,102  184,981  (4,879) 
  Swiss Franc  Sell  6/19/13  90,680  91,399  719 
  Turkish Lira  Sell  6/19/13  9,858  9,641  (217) 
WestPac Banking Corp.           
  Australian Dollar  Buy  7/17/13  147,601  160,439  (12,838) 
  British Pound  Sell  6/19/13  295,645  292,116  (3,529) 
  Canadian Dollar  Buy  7/17/13  197,240  201,457  (4,217) 
  Euro  Buy  6/19/13  121,146  121,145  1 
  Japanese Yen  Buy  8/22/13  13,247  11,229  2,018 
  Mexican Peso  Buy  7/17/13  12,564  13,681  (1,117) 
Total            $(68,365) 

 

Dynamic Asset Allocation Equity Fund  41 

 


FUTURES CONTRACTS OUTSTANDING at 5/31/13       
 
        Unrealized 
  Number of    Expiration  appreciation/ 
  contracts  Value  date  (depreciation) 
Euro STOXX 50 Index (Short)  2  $72,110  Jun-13  $(2,239) 
S&P 500 Index E-Mini (Long)  5  407,250  Jun-13  24,203 
S&P 500 Index E-Mini (Short)  5  407,250  Jun-13  (17,630) 
SPI 200 Index (Long)  4  472,113  Jun-13  (25,747) 
Total        $(21,413) 
   

 

WRITTEN EQUITY OPTIONS OUTSTANDING at 5/31/13 (premiums $1,160)     
 
  Expiration date/  Contract   
  strike price  amount  Value 
 
MSCI Daily Total Return Net Emerging Markets       
Index (Call)  Jun-13/$442.57  $147  $31 
MSCI Daily Total Return Net Emerging Markets       
Index (Put)  Jun-13/358.27  298  249 
Total      $280 

 

42   Dynamic Asset Allocation Equity Fund 

 


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 
Common stocks:       
Basic materials  $853,610  $365,531  $— 
Capital goods  1,343,850  307,543  — 
Communication services  896,162  178,193  2,913 
Conglomerates  398,618  40,733  — 
Consumer cyclicals  2,169,012  608,303  — 
Consumer staples  1,897,390  440,503  129 
Energy  1,894,777  296,314  — 
Financials  3,286,988  986,682  — 
Health care  2,473,855  369,387  — 
Technology  3,184,788  324,987  — 
Transportation  244,436  87,156  — 
Utilities and power  384,924  127,687  — 
Total common stocks  19,028,410  4,133,019  3,042 
 
Investment companies  $1,022,694  $—  $— 
Purchased equity options outstanding  —  1,522  — 
Units  10,236  —  — 
Short-term investments  929,346  160,012  — 
Totals by level  $20,990,686  $4,294,553  $3,042 
 
    Valuation inputs   
Other financial instruments:  Level 1  Level 2  Level 3 
Forward currency contracts  $—  $(68,365)  $— 
Futures contracts  (21,413)  —  — 
Written equity options outstanding  —  (280)  — 
Totals by level  $(21,413)  $(68,645)  $— 

At the start and close of the reporting period, Level 3 investments in securities were not considered a significant portion of the fund’s portfolio.

The accompanying notes are an integral part of these financial statements.

Dynamic Asset Allocation Equity Fund   43 

 


Statement of assets and liabilities 5/31/13   
 
ASSETS   
Investment in securities, at value, including $5,755 of securities on loan (Note 1):   
Unaffiliated issuers (identified cost $19,056,298)  $24,352,810 
Affiliated issuers (identified cost $935,471) (Notes 1 and 6)  935,471 
Cash  12,000 
Foreign currency (cost $13,841) (Note 1)  13,270 
Dividends, interest and other receivables  60,168 
Receivable for shares of the fund sold  565 
Receivable for investments sold  98,339 
Receivable from Manager (Note 2)  15,461 
Unrealized appreciation on forward currency contracts (Note 1)  78,249 
Total assets  25,566,333 
 
LIABILITIES   
Payable for investments purchased  220,956 
Payable for shares of the fund repurchased  28,152 
Payable for custodian fees (Note 2)  26,955 
Payable for investor servicing fees (Note 2)  9,989 
Payable for Trustee compensation and expenses (Note 2)  2,684 
Payable for administrative services (Note 2)  44 
Payable for variation margin (Note 1)  6,188 
Collateral on securities loaned, at value (Note 1)  6,125 
Unrealized depreciation on forward currency contracts (Note 1)  146,614 
Written options outstanding, at value (premiums $1,160) (Notes 1 and 3)  280 
Other accrued expenses  92,195 
Total liabilities  540,182 
 
Net assets  $25,026,151 
 
REPRESENTED BY   
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)  $18,527,711 
Undistributed net investment income (Note 1)  148,151 
Accumulated net realized gain on investments and foreign currency transactions (Note 1)  1,145,771 
Net unrealized appreciation of investments and assets and liabilities in foreign currencies  5,204,518 
Total — Representing net assets applicable to capital shares outstanding  $25,026,151 
 
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE   
Net asset value and redemption price per class A share ($32,684 divided by 2,768 shares)  $11.81 
Offering price per class A share (100/94.25 of $11.81)*  $12.53 
Net asset value, offering price and redemption price per class Y share   
($24,993,467 divided by 2,116,182 shares)  $11.81 

* On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced

The accompanying notes are an integral part of these financial statements.

44   Dynamic Asset Allocation Equity Fund 

 


Statement of operations Year ended 5/31/13   
 
INVESTMENT INCOME   
Dividends (net of foreign tax of $12,819)  $532,191 
Interest (including interest income of $645 from investments in affiliated issuers) (Note 6)  956 
Securities lending (Note 1)  4 
Total investment income  533,151 
 
EXPENSES   
Compensation of Manager (Note 2)  129,537 
Investor servicing fees (Note 2)  54,751 
Custodian fees (Note 2)  90,125 
Trustee compensation and expenses (Note 2)  1,898 
Administrative services (Note 2)  615 
Reports to shareholders  19,562 
Auditing and tax fees  91,740 
Other  2,466 
Fees waived and reimbursed by Manager (Note 2)  (163,295) 
Total expenses  227,399 
 
Expense reduction (Note 2)  (1,359) 
Net expenses  226,040 
 
Net investment income  307,111 
 
Net realized gain on investments (Notes 1 and 3)  1,304,347 
Net realized gain on futures contracts (Note 1)  255,541 
Net realized gain on foreign currency transactions (Note 1)  8,507 
Net unrealized depreciation of assets and liabilities in foreign currencies during the year  (7,211) 
Net unrealized appreciation of investments and futures contracts during the year  3,546,851 
Net gain on investments  5,108,035 
 
Net increase in net assets resulting from operations  $5,415,146 

The accompanying notes are an integral part of these financial statements.

Dynamic Asset Allocation Equity Fund   45 

 


Statement of changes in net assets     
 
INCREASE (DECREASE) IN NET ASSETS  Year ended 5/31/13  Year ended 5/31/12 
Operations:     
Net investment income  $307,111  $278,607 
Net realized gain on investments     
and foreign currency transactions  1,568,395  1,537,485 
Net unrealized appreciation (depreciation) of investments     
and assets and liabilities in foreign currencies  3,539,640  (5,384,488) 
Net increase (decrease) in net assets resulting     
from operations  5,415,146  (3,568,396) 
Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income     
Class A  (329)  — 
Class Y  (237,066)  — 
Net realized short-term gain on investments     
Class A  (135)  (1,354) 
Class Y  (97,641)  (950,609) 
From net realized long-term gain on investments     
Class A  (2,205)  (1,611) 
Class Y  (1,585,741)  (1,113,394) 
Increase (decrease) from capital share transactions (Note 4)  2,807,535  (9,265,753) 
Total increase (decrease) in net assets  6,299,564  (14,901,117) 
 
NET ASSETS     
Beginning of year  18,726,587  33,627,704 
End of year (including undistributed net investment income     
of $148,151 and $63,248, respectively)  $25,026,151  $18,726,587 

 

The accompanying notes are an integral part of these financial statements.

46   Dynamic Asset Allocation Equity Fund 

 

 

 

 

 


 

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Dynamic Asset Allocation Equity Fund   47 

 


Financial highlights (For a common share outstanding throughout the period)

INVESTMENT OPERATIONS:          LESS DISTRIBUTIONS:          RATIOS AND SUPPLEMENTAL DATA:   
                        Ratio of net   
                      Ratio  investment   
  Net asset    Net realized                of expenses  income (loss)   
  value,    and unrealized  Total from  From  From  Total  Net asset  Total return  Net assets,  to average  to average  Portfolio 
  beginning  Net investment  gain (loss)  investment  net investment  net realized gain  distribu-  value, end  at net asset  end of period  net assets  net assets  turnover 
Period ended  of period  income (loss)a   on investments  operations  income  on investments  tions  of period  value (%) b  (in thousands)  (%) c,d  (%) d  (%) 
Class A                           
May 31, 2013  $10.11  .16  2.60  2.76  (.13)  (.93)  (1.06)  $11.81  28.69  $33  1.06  1.42  73 
May 31, 2012  12.28  .13  (1.12)  (.99)  —  (1.18)  (1.18)  10.11  (7.40)  28  1.07  1.20  82 
May 31, 2011  11.53  .10  2.79  2.89  (.30)  (1.84)  (2.14)  12.28  26.57  31  1.06  .86  110 
May 31, 2010  11.85  .10  2.09  2.19  (.96)  (1.55)  (2.51)  11.53  18.34  23  1.05  .82  103 
May 31, 2009†  10.00  .06  1.79  1.85  —  —  —  11.85  18.50*  15  .40*  .61*  46* 
Class Y                           
May 31, 2013  $10.11  .16  2.60  2.76  (.13)  (.93)  (1.06)  $11.81  28.68  $24,993  1.06  1.43  73 
May 31, 2012  12.28  .13  (1.12)  (.99)  —  (1.18)  (1.18)  10.11  (7.41)  18,698  1.07  1.20  82 
May 31, 2011  11.53  .11  2.78  2.89  (.30)  (1.84)  (2.14)  12.28  26.57  33,597  1.06  .87  110 
May 31, 2010  11.85  .10  2.09  2.19  (.96)  (1.55)  (2.51)  11.53  18.34  33,803  1.05  .78  103 
May 31, 2009†  10.00  .06  1.79  1.85  —  —  —  11.85  18.50*  38,262  .40*  .61*  46* 

* Not annualized.

† For the period January 23, 2009 (commencement of operations) to May 31, 2009.

a Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.

b Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

c Includes amounts paid through expense offset and brokerage/service arrangements (Note 2).

d Reflects an involuntary contractual expense limitation in effect during the period. As a result of such limitation, the expenses of each class reflect a reduction of the following amounts (Note 2):

  Percentage of 
  average net assets 
May 31, 2013  0.76% 
May 31, 2012  0.75 
May 31, 2011  0.49 
May 31, 2010  0.41 
May 31, 2009  0.30 

The accompanying notes are an integral part of these financial statements.

48   Dynamic Asset Allocation Equity Fund  Dynamic Asset Allocation Equity Fund   49 

 


Notes to financial statements 5/31/13

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 June 1, 2012 through May 31, 2013.

Putnam Dynamic Asset Allocation Equity 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 investment objective of the fund is to seek long term growth by investing mainly in common stocks of midsized and large companies (growth or value stock or both) worldwide. While Putnam Management typically allocates approximately 75% of the fund’s assets to investments in U.S. companies, and 25% of the fund’s assets to investments in international companies, these allocations may vary. The fund invests mainly in developed countries, but may invest in emerging markets.

The fund offers class A and class Y shares. Class A shares are sold with a maximum front-end sales charge of 5.75%, and generally do not pay a contingent deferred sales charge. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, but do not bear a distribution fee. Class Y shares are generally only available to corporate and institutional clients and clients in other approved programs. As of the end of the reporting period, all of the class Y shares are held by the Putnam RetirementReady 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.

For shares purchased before June 24, 2013, a 1.00% redemption fee may apply on shares that are redeemed (either by selling or exchanging into another fund) within 7 days of purchase. The redemption fee is accounted for as an addition to paid-in-capital. No redemption fee will apply to shares purchased on or after June 24, 2013.

Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.

Security valuation Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.

Investments in open-end investment companies (excluding exchange traded funds), if any, which can be classified as Level 1 or Level 2 securities, are based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.

Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors including movements in the

50   Dynamic Asset Allocation Equity Fund 

 


U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.

To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.

Interest income, net of any applicable withholding taxes, is recorded on the accrual basis. Dividend income, net of any applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair market value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain. All premiums/discounts are amortized/ accreted on a yield-to-maturity basis.

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 is 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 earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on closed forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions 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.

Options contracts The fund uses options contracts to hedge market risk.

The potential risk to the fund is that the change in value of options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.

Exchange traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. OTC traded options are valued using prices supplied by dealers. Forward premium swap option contracts include premiums that do not settle until the expiration date of the contract. The delayed settlement of the premiums are factored into the daily valuation of the option contracts.

  Dynamic Asset Allocation Equity Fund  51 

 


Written option contracts outstanding at period end, if any, are listed after the fund’s portfolio. For the fund’s average contract amount, see Note 5.

Futures contracts The fund uses futures contracts to manage exposure to market risk and to equitize cash.

The potential risk to the fund is that the change in value of futures contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”

Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio. For the fund’s average number of contracts, see Note 5.

Forward currency contracts The fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to hedge foreign exchange risk.

The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in market value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities.

Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio. For the fund’s average contract amount, see Note 5.

Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and with respect to those amounts which can be sold or repledged, are presented in the fund’s portfolio.

Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.

Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.

At the close of the reporting period, the fund had a net liability position of $81,154 on open derivative contracts subject to the Master Agreements. There was no collateral posted by the fund for these agreements.

52   Dynamic Asset Allocation Equity Fund 

 


Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the value of securities loaned amounted to $5,755 and the fund received cash collateral of $6,125.

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 borrow from or 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.

Line of credit The fund participates, along with other Putnam funds, in a $315 million unsecured committed line of credit and a $185 million unsecured uncommitted line of credit, both provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to the Federal Funds rate plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.02% of the committed line of credit and $50,000 for the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.11% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.

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 fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.

Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, 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/or permanent differences from losses on wash sales transactions, foreign currency gains and losses, unrealized gains and losses on passive foreign investment companies, and straddle loss deferrals. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the reporting period ended, the fund reclassified $15,187 to increase undistributed net investment income, $1,681 to decrease paid-in-capital and $13,506 to decrease accumulated net realized gain.

  Dynamic Asset Allocation Equity Fund  53 

 


The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:

Unrealized appreciation  $5,553,545 
Unrealized depreciation  (337,182) 
Net unrealized appreciation  5,216,363 
Undistributed ordinary income  93,247 
Undistributed long-term gain  908,004 
Undistributed short-term gain  454,993 
Cost for federal income tax purposes  $20,071,918 

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 a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of most open-end funds, as defined in the fund’s management contract, sponsored by Putnam Management. Such annual rates may vary as follows:

0.750%  of the first $5 billion,  0.550%  of the next $50 billion, 
0.700%  of the next $5 billion,  0.530%  of the next $50 billion, 
0.650%  of the next $10 billion,  0.520%  of the next $100 billion and 
0.600%  of the next $10 billion,  0.515%  of any excess thereafter. 

Putnam Management has contractually agreed, through June 30, 2014, 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 reduced by $163,295 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 0.35% of the average net assets of the portion of the fund managed by PIL.

The Putnam Advisory Company, LLC (PAC), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund, as designated from time to time by Putnam Management or PIL. Putnam Management or PIL, as applicable, pays a quarterly sub-advisory fee to PAC for its services at the annual rate of 0.35% of the average net assets of the portion of the fund’s assets for which PAC is engaged as sub-adviser.

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. received fees for investor servicing based on the fund’s retail asset level, the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund.

54   Dynamic Asset Allocation Equity Fund 

 


Investor servicing fees will not exceed an annual rate of 0.32% of the fund’s average net assets. During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:

Class A  $77 
Class Y  54,674 
Total  $54,751 

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. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the fund’s expenses were reduced by $38 under the expense offset arrangements and by $1,321 under the brokerage/ service arrangements.

Each independent Trustee of the fund receives an annual Trustee fee, of which $17, 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.

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 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 Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, for services provided and expenses incurred in distributing shares of the fund. The Plan provides for payment by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to 0.35% of the average net assets attributable to class A shares. The Trustees currently have not approved payments under the Plan.

A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received no money on class A redemptions.

Note 3: Purchases and sales of securities

During the reporting period, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $16,298,196 and $14,997,789, respectively. There were no purchases or proceeds from sales of long-term U.S. government securities.

Written option transactions during the reporting period are summarized as follows:

  Written equity option  Written equity 
  number of contracts  option premiums 
Written options outstanding     
at beginning of the reporting period  —  $— 
Options opened  445  1,160 
Options exercised  —  — 
Options expired  —  — 
Options closed  —  — 
Written options outstanding     
at end of the reporting period  445  $1,160 

 

Dynamic Asset Allocation Equity Fund   55 

 


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 were as follows:

  Year ended 5/31/13  Year ended 5/31/12 
Class A  Shares  Amount  Shares  Amount 
Shares sold  —  $—  —  $— 
Shares issued in connection with         
reinvestment of distributions  256  2,669  311  2,965 
  256  2,669  311  2,965 
Shares repurchased  (290)  (3,277)  (2)  (15) 
Net increase (decrease)  (34)  $(608)  309  $2,950 
 
  Year ended 5/31/13  Year ended 5/31/12 
Class Y  Shares  Amount  Shares  Amount 
Shares sold  1,665,364  $18,604,592  857,458  $9,180,776 
Shares issued in connection with         
reinvestment of distributions  183,599  1,920,448  218,185  2,064,003 
  1,848,963  20,525,040  1,075,643  11,244,779 
Shares repurchased  (1,582,129)  (17,716,897)  (1,962,161)  (20,513,482) 
Net increase (decrease)  266,834  $2,808,143  (886,518)  $(9,268,703) 

At the close of the reporting period, Putnam Investments, LLC owned the following class shares of the fund:

  Shares owned  Percentage of ownership  Value 
Class A  1,791  64.7%  $21,152 

 

Note 5: Summary of derivative activity

The average volume of activity for the reporting period for any derivative type that was held during the period is listed below and was as follows:

Purchased equity option contracts (number of contracts)  70 
Written equity option contracts (number of contracts)  100 
Futures contracts (number of contracts)  20 
Forward currency contracts (contract amount)  $21,000,000 

 

56   Dynamic Asset Allocation Equity Fund 

 


The following is a summary of the market values of derivative instruments as of the close of the reporting period:

Market values of derivative instruments as of the close of the reporting period

  Asset derivatives  Liability derivatives 
Derivatives not         
accounted for as  Statement of    Statement of   
hedging instruments  assets and    assets and   
under ASC 815  liabilities location  Market value  liabilities location  Market value 
Foreign exchange         
contracts  Receivables  $78,249  Payables  $146,614 
  Investments,       
  Receivables, Net    Payables, Net   
  assets  — Unrealized    assets  — Unrealized   
Equity contracts  appreciation  25,725*  depreciation  45,896* 
Total    $103,974    $192,510 

* Includes cumulative appreciation/depreciation of futures contracts as reported in the fund’s portfolio. Only current day’s variation margin is reported within the Statement of assets and liabilities.

The following is a summary of realized and change in unrealized gains or losses of derivative instruments on the Statement of operations for the reporting period (see Note 1):

Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments

Derivatives not accounted for as hedging    Forward currency   
instruments under ASC 815  Futures  contracts  Total 
Foreign exchange contracts  $—  $8,428  $8,428 
Equity contracts  255,541  —  $255,541 
Total  $255,541  $8,428  $263,969 

Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) on investments

Derivatives not accounted for      Forward   
as hedging instruments under      currency   
ASC 815  Options  Futures  contracts  Total 
Foreign exchange contracts  $—  $—  $(6,643)  $(6,643) 
Equity contracts  556  (81,816)  —  $(81,260) 
Total  $556  $(81,816)  $(6,643)  $(87,903) 

Note 6: Transactions with affiliated issuers

Transactions during the reporting period with Putnam Money Market Liquidity Fund and Putnam Short Term Investment Fund, which are under common ownership and control, were as follows:

  Market value at        Market value 
  the beginning        at the end of 
  of the reporting      Investment  the reporting 
Name of affiliates  period  Purchase cost  Sale proceeds  income  period 
Putnam Money Market           
Liquidity Fund*  $658,914  $2,027,204  $2,686,118  $505  $— 
Putnam Short Term           
Investment Fund*  —  1,999,615  1,070,269  140  929,346 
Totals  $658,914  $4,026,819  $3,756,387  $645  $929,346 

* Management fees charged to Putnam Money Market Liquidity Fund and Putnam Short Term Investment Fund have been waived by Putnam Management.

Dynamic Asset Allocation Equity Fund  57 

 


Note 7: 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 8: New accounting pronouncement

In January 2013, ASU 2013–01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities,” amended ASU No. 2011–11, “Disclosures about Offsetting Assets and Liabilities.” The ASUs 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 ASUs 2013–01 and 2011–11 and their impact, if any, on the fund’s financial statements.

58   Dynamic Asset Allocation Equity Fund 

 


Federal tax information (Unaudited)

Pursuant to §852 of the Internal Revenue Code, as amended, the fund hereby designates $1,005,925 as a capital gain dividend with respect to the taxable year ended May 31, 2013, or, if subsequently determined to be different, the net capital gain of such year.

The fund designated 38.11% of ordinary income distributions as qualifying for the dividends received deduction for corporations.

For the reporting period ended, the fund hereby designates 53.74%, or the maximum amount allowable, of its taxable ordinary income distributions as qualified dividends taxed at the individual net capital gain rates.

The Form 1099 that will be mailed to you in January 2014 will show the tax status of all distributions paid to your account in calendar 2013.

Dynamic Asset Allocation Equity Fund   59 

 


About the Trustees

Independent Trustees


60   Dynamic Asset Allocation Equity Fund 

 



* Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund, Putnam Management, and Putnam Retail Management. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.

The address of each Trustee is One Post Office Square, Boston, MA 02109.

As of May 31, 2013, there were 116 Putnam funds. All Trustees serve as Trustees of all Putnam funds.

Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.

Dynamic Asset Allocation Equity Fund  61 

 


Officers

In addition to Robert L. Reynolds, the other officers of the fund are shown below:

Jonathan S. Horwitz (Born 1955)  Janet C. Smith (Born 1965) 
Executive Vice President, Principal Executive  Vice President, Principal Accounting Officer, 
Officer, and Compliance Liaison  and Assistant Treasurer 
Since 2004  Since 2007 
  Director of Fund Administration Services, 
Steven D. Krichmar (Born 1958)  Putnam Investments and Putnam Management 
Vice President and Principal Financial Officer 
Since 2002  Susan G. Malloy (Born 1957) 
Chief of Operations, Putnam Investments and  Vice President and Assistant Treasurer 
Putnam Management  Since 2007 
  Director of Accounting & Control Services, 
Robert T. Burns (Born 1961)  Putnam Investments and Putnam Management 
Vice President and Chief Legal Officer 
Since 2011  James P. Pappas (Born 1953) 
General Counsel, Putnam Investments, Putnam  Vice President 
Management, and Putnam Retail Management  Since 2004 
  Director of Trustee Relations, 
Robert R. Leveille (Born 1969)  Putnam Investments and Putnam Management 
Vice President and Chief Compliance Officer   
Since 2007  Mark C. Trenchard (Born 1962) 
Chief Compliance Officer, Putnam Investments,  Vice President and BSA Compliance Officer 
Putnam Management, and Putnam Retail  Since 2002 
Management  Director of Operational Compliance, 
  Putnam Investments and Putnam 
Michael J. Higgins (Born 1976)  Retail Management 
Vice President, Treasurer, and Clerk   
Since 2010  Nancy E. Florek (Born 1957) 
Manager of Finance, Dunkin’ Brands (2008–  Vice President, Director of Proxy Voting and 
2010); Senior Financial Analyst, Old Mutual Asset  Corporate Governance, Assistant Clerk, and 
Management (2007–2008); Senior Financial  Associate Treasurer 
Analyst, Putnam Investments (1999–2007)  Since 2000 

The principal occupations of the officers for the past five years have been with the employers as shown above although in some cases, they have held different positions with such employers. The address of each Officer is One Post Office Square, Boston, MA 02109.

62   Dynamic Asset Allocation Equity Fund 

 


The Putnam family of funds

The following is a list of Putnam’s open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial advisor at 1-800-225-1581 and ask for a prospectus. Please read the prospectus carefully before investing.

Growth  International Value Fund 
Growth Opportunities Fund  Multi-Cap Value Fund 
International Growth Fund  Small Cap Value Fund 
Multi-Cap Growth Fund   
Small Cap Growth Fund  Income 
Voyager Fund  American Government Income Fund 
  Diversified Income Trust 
Blend  Emerging Markets Income Fund 
Asia Pacific Equity Fund  Floating Rate Income Fund 
Capital Opportunities Fund  Global Income Trust 
Capital Spectrum Fund  High Yield Advantage Fund 
Emerging Markets Equity Fund  High Yield Trust 
Equity Spectrum Fund  Income Fund 
Europe Equity Fund  Money Market Fund* 
Global Equity Fund  Short Duration Income Fund 
International Capital Opportunities Fund  U.S. Government Income Trust 
International Equity Fund   
Investors Fund  Tax-free income 
Low Volatility Equity Fund  AMT-Free Municipal Fund 
Multi-Cap Core Fund  Intermediate-Term Municipal Income Fund 
Research Fund  Short-Term Municipal Income Fund 
Strategic Volatility Equity Fund  Tax Exempt Income Fund 
  Tax Exempt Money Market Fund* 
Value  Tax-Free High Yield Fund 
Convertible Securities Fund   
Equity Income Fund  State tax-free income funds: 
George Putnam Balanced Fund  Arizona, California, Massachusetts, Michigan, 
Global Dividend Fund  Minnesota, New Jersey, New York, Ohio, 
The Putnam Fund for Growth and Income  and Pennsylvania. 
 

* An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

Dynamic Asset Allocation Equity Fund   63 

 


Absolute Return  Putnam RetirementReady® Funds — portfolios 
Absolute Return 100 Fund®  with automatically adjusting allocations to 
Absolute Return 300 Fund®  stocks, bonds, and money market instruments, 
Absolute Return 500 Fund®  becoming more conservative over time. 
Absolute Return 700 Fund®   
  RetirementReady 2055 Fund 
Global Sector  RetirementReady 2050 Fund 
Global Consumer Fund  RetirementReady 2045 Fund 
Global Energy Fund  RetirementReady 2040 Fund 
Global Financials Fund  RetirementReady 2035 Fund 
Global Health Care Fund  RetirementReady 2030 Fund 
Global Industrials Fund  RetirementReady 2025 Fund 
Global Natural Resources Fund  RetirementReady 2020 Fund 
Global Sector Fund  RetirementReady 2015 Fund 
Global Technology Fund   
Global Telecommunications Fund  Putnam Retirement Income Lifestyle 
Global Utilities Fund  Funds — portfolios with managed 
  allocations to stocks, bonds, and money 
Asset Allocation  market investments to generate 
Putnam Global Asset Allocation Funds —  retirement income. 
portfolios with allocations to stocks, bonds,   
and money market instruments that are  Retirement Income Fund Lifestyle 1 
adjusted dynamically within specified ranges  Retirement Income Fund Lifestyle 2 
as market conditions change.  Retirement Income Fund Lifestyle 3 
 
Dynamic Asset Allocation Balanced Fund   
Dynamic Asset Allocation   
Conservative Fund   
Dynamic Asset Allocation Growth Fund   
Dynamic Risk Allocation Fund   

A short-term trading fee of 1% may apply to redemptions or exchanges from certain funds within the time period specified in the fund's prospectus.

Check your account balances and the most recent month-end performance in the Individual Investors section at putnam.com.

64   Dynamic Asset Allocation Equity 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 T. Burns 
Putnam Investment  Jameson A. Baxter, Chair  Vice President and 
Management, LLC  Liaquat Ahamed  Chief Legal Officer 
One Post Office Square  Ravi Akhoury   
Boston, MA 02109  Barbara M. Baumann  Robert R. Leveille 
  Charles B. Curtis  Vice President and 
Investment Sub-Manager  Robert J. Darretta  Chief Compliance Officer 
Putnam Investments Limited  Katinka Domotorffy   
57–59 St James’s Street  John A. Hill   Michael J. Higgins 
London, England SW1A 1LD   Paul L. Joskow  Vice President, Treasurer,  
  Elizabeth T. Kennan   and Clerk 
Investment Sub-Advisor  Kenneth R. Leibler   
The Putnam Advisory  Robert E. Patterson  Janet C. Smith 
Company, LLC  George Putnam, III  Vice President, 
One Post Office Square  Robert L. Reynolds  Principal Accounting Officer, 
Boston, MA 02109  W. Thomas Stephens  and Assistant Treasurer 
     
Marketing Services  Officers   Susan G. Malloy 
Putnam Retail Management  Robert L. Reynolds  Vice President and 
One Post Office Square  President  Assistant Treasurer 
Boston, MA 02109   
  Jonathan S. Horwitz   James P. Pappas 
Custodian  Executive Vice President,  Vice President 
State Street Bank  Principal Executive Officer, and   
and Trust Company  Compliance Liaison  Mark C. Trenchard 
     Vice President and 
Legal Counsel  Steven D. Krichmar  BSA Compliance Officer 
Ropes & Gray LLP  Vice President and   
  Principal Financial Officer  Nancy E. Florek 
Independent Registered  Vice President, Director of 
Public Accounting Firm    Proxy Voting and Corporate 
PricewaterhouseCoopers LLP    Governance, Assistant Clerk, 
    and Associate Treasurer 

This report is for the information of shareholders of Putnam Dynamic Asset Allocation Equity 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:
(a) The fund’s principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund’s investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers.

(c) In May 2008, the Code of Ethics of Putnam Investment Management, LLC was updated in its entirety to include the amendments adopted in August 2007 as well as a several additional technical, administrative and non-substantive changes. In May of 2009, the Code of Ethics of Putnam Investment Management, LLC was amended to reflect that all employees will now be subject to a 90-day blackout restriction on holding Putnam open-end funds, except for portfolio managers and their supervisors (and each of their immediate family members), who will be subject to a one-year blackout restriction on the funds that they manage or supervise. In June 2010, the Code of Ethics of Putnam Investments was updated in its entirety to include the amendments adopted in May of 2009 and to change certain rules and limits contained in the Code of Ethics. In addition, the updated Code of Ethics included numerous technical, administrative and non-substantive changes, which were intended primarily to make the document easier to navigate and understand. In July 2011, the Code of Ethics of Putnam Investments was updated to reflect several technical, administrative and non-substantive changes resulting from changes in employee titles.

Item 3. Audit Committee Financial Expert:
The Funds’ Audit and Compliance Committee is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Trustees believe that each of the members of the Audit and Compliance Committee also possess a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualify them for service on the Committee. In addition, the Trustees have determined that each of Mr. Leibler, Mr. Hill, Mr. Darretta and Ms. Baumann qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education. The SEC has stated that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit and Compliance Committee and the Board of Trustees in the absence of such designation or identification.

Item 4. Principal Accountant Fees and Services:
The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor:


Fiscal year ended Audit Fees Audit-Related Fees Tax Fees All Other Fees
May 31, 2013 $73,558 $-- $11,870 $ —
May 31, 2012 $75,260 $-- $14,922 $39

For the fiscal years ended May 31, 2013 and May 31, 2012, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $159,370 and $107,713 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund.

Audit Fees represent fees billed for the fund’s last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements.

Audit-Related Fees represent fees billed in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation.

Tax Fees represent fees billed in the fund’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities.

All Other Fees represent fees billed for services relating to an analysis of fund profitability

Pre-Approval Policies of the Audit and Compliance Committee. The Audit and Compliance Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds’ independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures.

The Audit and Compliance Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds’ independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm.

The following table presents fees billed by the fund’s independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.


Fiscal year ended Audit-Related Fees Tax Fees All Other Fees Total Non-Audit Fees
May 31, 2013 $ — $147,500 $ — $ —
May 31, 2012 $ — $76,005 $ — $ —

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) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith.

(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.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Putnam Funds Trust
By (Signature and Title):
/s/Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: July 26, 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: July 26, 2013
By (Signature and Title):
/s/Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Date: July 26, 2013