March - Putnam Investments

More documents

Recommendations

Info

of the fund positions us to take advantage ofpotential opportunities that may arise.U.S. corporate earnings have continued totrend higher, although revenue growth formany companies has been less robust thanwe’d like to see. We believe fundamentalsremain conducive to further growth incorporate earnings, but we also observe thatearnings are growing at a slower pace thanmight be expected in the current state of theeconomic expansion.Given the slow pace of the U.S. economicrecovery, the Fed has indicated its intentionto keep short-term interest rates near zerofor the foreseeable future. The accommodativepolicy of the Fed — and other majorcentral banks around the world — should alsosupport equity prices. Likewise, we believecredit-sensitive assets such as high-yieldbonds may continue to advance, albeit notas strongly as they did in 2013. Even thoughinterest rates have been holding in a fairlynarrow range recently, our longer-termoutlook is for rising interest rates, which webelieve will continue to cast a long shadowover interest-rate-sensitive assets.Thank you, Bob, for bringing us up to date.The views expressed in this report are exclusivelythose of Putnam Management andare subject to change. They are not meant asinvestment advice.Please note that the holdings discussed inthis report may not have been held by thefund for the entire period. Portfolio compositionis subject to review in accordance withthe fund’s investment strategy and may varyin the future. Current and future portfolioholdings are subject to risk.Portfolio Manager Robert J. Kea, CFA,is Co-Head of Global Asset Allocation atPutnam. He holds an M.B.A. from the BentleyABOUT DERIVATIVESDerivatives are an increasingly commontype of investment instrument, the performanceof which is derived from an underlyingsecurity, index, currency, or other areaof the capital markets. Derivatives employedby the fund’s managers generally serveone of two main purposes: to implementa strategy that may be difficult or moreexpensive to invest in through traditionalsecurities, or to hedge unwanted riskassociated with a particular position.For example, the fund’s managers mightuse currency forward contracts to capitalizeon an anticipated change in exchange ratesbetween two currencies. This approachwould require a significantly smaller outlayof capital than purchasing traditional bondsdenominated in the underlying currencies.In another example, the managers may identifya bond that they believe is undervaluedrelative to its risk of default, but may seekto reduce the interest-rate risk of that bondby using interest-rate swaps, a derivativethrough which two parties “swap” paymentsbased on the movement of certain rates.In other examples, the managers may useoptions and futures contracts to hedgeagainst a variety of risks by establishinga combination of long and short exposuresto specific equity markets or sectors.Like any other investment, derivatives maynot appreciate in value and may lose money.Derivatives may amplify traditional investmentrisks through the creation of leverageand may be less liquid than traditionalsecurities. And because derivatives typicallyrepresent contractual agreements betweentwo financial institutions, derivatives entail“counterparty risk,” which is the risk thatthe other party is unable or unwilling to pay.Putnam monitors the counterparty riskswe assume. For example, Putnam oftenenters into collateral agreements thatrequire the counterparties to post collateralon a regular basis to cover their obligationsto the fund.Dynamic Asset Allocation Growth Fund 9
University Graduate School of Business anda B.A. from the University of Massachusetts,Amherst. He joined Putnam in 1989 and hasbeen in the investment industry since 1988.In addition to Bob, your fund’s portfoliomanagers are James A. Fetch;Joshua B. Kutin, CFA; Robert J. Schoen;and Jason R. Vaillancourt, CFA.IN THE NEWSA worldwide economic recovery is underway — with the United States at thehelm — but it may not be smooth sailing.The International Monetary Fund (IMF)raised its global growth forecast for 2014 to3.6% from 3.0% in 2013. Even with the mostacute threats diminished, the IMF’s “WorldEconomic Outlook” characterized the globalrecovery as somewhat fragile. Among thekey downside risks cited by the IMF is thedanger of low inflation. Other challengesinclude high unemployment, elevated sovereigndebt levels, geopolitical risks, financialsector reforms, and emerging-marketconcerns. The United States, according tothe IMF, is pulling other economies along,thanks to an accommodative central bank, arecovering real estate sector, and expandinghousehold wealth. The IMF predicted thatgrowth in the eurozone this year wouldhit 1.2%, as a reduction in the pace of fiscaltightening adds to GDP. Japan should seegrowth from private investment and exports,but the economy may decelerate due totightening fiscal policy, including a recentconsumption tax rate hike. Meanwhile,emerging-market economies continue tostruggle, but should improve as advancedeconomies purchase more imports. Lastly,China’s growth should continue at a rate ofabout 7.5% in 2014–2015 as its leaders seekto place the country on a steadier growthpath and to slow credit without causing theeconomy to stall.10 Dynamic Asset Allocation Growth Fund
Page 2 and 3: Putnam DynamicAsset AllocationGrowt
Page 4 and 5: Putnam Dynamic Asset Allocation Gro
Page 6 and 7: Interview withyour fund’sportfoli
Page 8 and 9: “The U.S. economy has been stucki
Page 12 and 13: Your fund’s performanceThis secti
Page 14 and 15: Your fund’s expensesAs a mutual f
Page 16 and 17: Terms and definitionsImportant term
Page 18 and 19: Trustee approval of management cont
Page 20 and 21: necessary or desirable for the comi
Page 22 and 23: fees and total expenses (excluding
Page 24 and 25: of their Brokerage Committee and al
Page 26 and 27: The fund’s portfolio 3/31/14 (Una
Page 28 and 29: COMMON STOCKS (60.9%)* cont. Shares
Page 46 and 47: CORPORATE BONDS AND NOTES (13.9%)*
Page 60 and 61:
CORPORATE BONDS AND NOTES (13.9%)*
Page 62 and 63:
Page 64 and 65:
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
MORTGAGE-BACKED SECURITIES (2.8%)*
Page 78 and 79:
MORTGAGE-BACKED SECURITIES (2.8%)*
Page 80 and 81:
FOREIGN GOVERNMENT AND AGENCYBONDS
Page 82 and 83:
Key to holding’s currency abbrevi
Page 84 and 85:
FORWARD CURRENCY CONTRACTS at 3/31/
Page 86 and 87:
FORWARD CURRENCY CONTRACTS at 3/31/
Page 88 and 89:
CENTRALLY CLEARED INTEREST RATE SWA
Page 90 and 91:
OTC TOTAL RETURN SWAP CONTRACTS OUT
Page 92 and 93:
OTC CREDIT DEFAULT CONTRACTS OUTSTA
Page 94 and 95:
Valuation inputsOther financial ins
Page 96 and 97:
Statement of assets and liabilities
Page 98 and 99:
Statement of changes in net assetsI
Page 100 and 101:
Financial highlights (Continued)Rat
Page 102 and 103:
securities under Accounting Standar
Page 104 and 105:
Futures contracts are valued at the
Page 106 and 107:
the other party may elect to termin
Page 108 and 109:
Note 2: Management fee, administrat
Page 110 and 111:
Note 3: Purchases and sales of secu
Page 112 and 113:
At the close of the reporting perio
Page 114 and 115:
The following is a summary of reali
Page 116 and 117:
Shareholder meeting results (Unaudi
Page 118 and 119:
Absolute ReturnAbsolute Return 100
Page 120 and 121:
Putnam’s commitmentto confidentia
Page 122:
This report is for the information
show all

March - Putnam Investments

Create successful ePaper yourself

Delete template?

Save as template?