Putnam World Trust 30 | 06 | 10 Annual report Report and audited financial statements for the year ended 30 June 2010. An Umbrella Unit Trust authorised by the Irish Financial Services Regulatory Authority and established as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003, as amended.
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Putnam World Trust
30 | 06 | 10Annual report
Report and audited financial statements for the year ended 30 June 2010.An Umbrella Unit Trust authorised by the Irish Financial Services Regulatory Authority and established as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003, as amended.
2 Putnam World Trust
Table of contentsContents Page
Background to the Trust 3
Investment Objectives 4
Policies 5
Investment Manager’s Report 6
Total Expense Ratio (TER) (unaudited) 14
Portfolios’ Turnover Ratio (PTR) (unaudited) 14
Statement of Manager’s Responsibilities 15
Report of the Trustee to the Unitholders 15
Independent Auditor’s Report 16
Schedule of Investments
Putnam Asia Pacific (Ex-Japan) Equity Fund 17
Putnam Emerging Markets Equity Fund 20
Putnam Global Core Equity Fund 23
Putnam Global Fixed Income Alpha Fund S1 27
Putnam Global Fixed Income Alpha Fund S2 39
Putnam Global High Yield Bond Fund 53
Putnam Global Liquidity Fund 63
Putnam Total Return Fund 64
Profit and Loss Account 92
Balance Sheet 101
Statement of Changes in Net Assets Attributable to Redeemable Participating Unitholders 110
Notes to the Financial Statements 113
Contents Page
Schedule of Portfolio Changes (unaudited)
Putnam Asia Pacific (Ex-Japan) Equity Fund 145
Putnam Currency Alpha Fund 145
Putnam Emerging Markets Equity Fund 146
Putnam Global Core Equity Fund 146
Putnam Global Fixed Income Alpha Fund S1 147
Putnam Global Fixed Income Alpha Fund S2 147
Putnam Global High Yield Bond Fund 148
Putnam Global Liquidity Fund 148
Putnam Total Return Fund 149
Important Information for German Investors 150
Additional Information for Spanish Investors (unaudited) 151
Organisation 152
This Report includes inter alia information in relation to Putnam Asia Pacific (Ex-Japan) Equity Fund, Putnam Currency Alpha Fund, Putnam Emerging Markets Equity Fund, Putnam Global Core Equity Fund, Putnam Global Fixed Income Alpha Fund S1, Putnam Global Fixed Income Alpha Fund S2 and Putnam Global Liquidity Fund, for which notice for public distribution pursuant to section 132 of the German Investment Act has not been filed with the German Financial Regulator (the BaFin). Units in these Funds will not be publicly marketed to investors who are governed by the German Investment Act.
Putnam World Trust 3
Background to the Trust
Putnam World Trust (“the Trust”) is an umbrella unit trust established as an Undertaking for Collective Investment in Transferable Securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (as amended). The Trust was constituted on 18 February 2000 and commenced operations on 22 February 2000. The Trust converted to UCITS III in 2006. Prior to 2 September 2008, the Trust was known as Putnam World Trust II.
The Trust is an umbrella unit trust comprising Funds in which different classes of Units may be issued from time to time. Each Fund represents interests in a trust comprising a separate and distinct portfolio of investments. The Manager may issue different classes of Units in each Fund. Each Fund will bear its own liabilities and shall not bear the liabilities of any other Fund.
Putnam World Trust Funds (other than Putnam Global Fixed Income Alpha Fund S1, Putnam Global Fixed Income Alpha Fund S2 and Putnam Global Liquidity Fund) are listed on the Irish Stock Exchange.
Putnam Currency Alpha Fund terminated on 4 January 2010.
As of 30 June 2010, the following Funds and Classes of Units are in issue:
Fund Classes of Units currently in issue Base Fund Currency
Putnam Asia Pacific (Ex-Japan) Equity Fund Classes A, B, C, I, M and T US Dollar
Putnam Emerging Markets Equity Fund Classes A, B, C, I, M and T US Dollar
Putnam Global Core Equity Fund Classes A, B, C, I, M and T US Dollar
Putnam Global Fixed Income Alpha Fund S1 Class S Sterling
Putnam Global Fixed Income Alpha Fund S2 Class S Sterling
Putnam Global High Yield Bond Fund Classes A, B, C, E, I and S US Dollar
Putnam Global Liquidity Fund Class P US Dollar
Putnam Total Return Fund Classes A, B, C, M and S US Dollar
For Funds with Class E Units and Class M Units, Units are stated in euro (€) throughout this report.For Funds with Class S Units and Class T Units, Units are stated in sterling (£) throughout this report.
4 Putnam World Trust
Investment Objectives
Putnam Global Fixed Income Alpha Fund S2The Fund’s objective is to achieve an annual total return that exceeds six-month Sterling LIBOR by 2.0% or more, as measured over rolling three year periods.
The Fund proposes to seek to achieve this objective by investing principally and at least two thirds of the Fund’s total assets (after deduction of ancillary liquid assets), in listed transferable securities i.e. in investment grade and non-investment grade government, agency, supranational, corporate and securitised bonds (including commercial paper and convertible bonds), collateralised mortgage obligations, asset-backed and mortgage-backed securities, collateralised securities, securitised loan interests, certificates of deposit and other short-term instruments.
Putnam Global High Yield Bond FundThe Fund seeks high current income. Capital growth is a secondary objective when consistent with the objective of high current income.
The Fund seeks high current income by investing at least two thirds of its total assets (after deduction of ancillary liquid assets) in high-yielding, lower-rated debt securities worldwide such as those rated lower than S&P’s BBB or Moody’s Baa and listed or traded on Recognised Exchanges (including unleveraged freely transferable loan participations securitised and traded on a Recognised Exchange, zero-coupon bond and payment-in-kind bonds) constituting a portfolio which the Investment Advisor believes does not involve undue risk to income or principal.
Putnam Global Liquidity FundThe Fund seeks as high a level of current income as the Investment Advisor believes is consistent with preservation of capital and maintenance of liquidity. The Fund pursues its objectives by investing at least two thirds of its assets (after deduction of ancillary liquid assets) in a portfolio of high-quality U.S. dollar-denominated money market instruments issued by U.S. or non-U.S. issuers. These instruments may be government and/or corporate bonds which are fixed and/or floating rate and rated at least investment grade.
Putnam Total Return FundThe Fund’s investment objective is to provide positive total return, both relative and absolute, throughout varying market conditions. The Fund will seek to achieve its objective by investing its net assets in a diversified multi-asset class portfolio. The portfolio allocation will draw upon various sources to drive the risk/return target of the Fund, including exposure to equities (e.g. U.S., non-U.S. emerging markets, large cap and small cap), fixed income (e.g. U.S., non-U.S. high yield and emerging markets), currencies and alternative assets classes (e.g. REITs or other real estate instruments), treasury inflated protected securities (“TIPS”). The portfolio will also use various overlay techniques (e.g. global asset tactical allocation, currency and index options) in an attempt to add incremental return to the total portfolio.
* Investors should note that this Fund terminated on 4 January 2010.
The assets of each Fund will be invested separately in accordance with the investment objectives and policies of the Fund. Each Fund has its own investment goal and strategy for pursuing it.
Putnam Asia Pacific (Ex-Japan) Equity FundThe investment objective of the Fund is to seek capital appreciation. The Fund seeks its objective by investing at least two thirds of its total assets (after deduction of ancillary liquid assets) in equity securities and equity related securities such as warrants, convertible stocks or preferred stocks issued by Asian and Pacific region (other than Japanese) companies.
Putnam Currency Alpha Fund*The Fund’s investment objective is to earn positive absolute returns over a full market cycle (which is typically 3-5 years) by identifying and exploiting relative mispricings across currencies. The Fund is expected to pursue its objective with a high yet controlled volatility.
Putnam Emerging Markets Equity FundThe Fund’s investment objective is to seek capital appreciation. The Fund seeks its objective by investing at least two thirds of its total assets (after deduction of ancillary liquid assets) in equity securities and equity related securities such as warrants, convertible stocks or preferred stocks issued from developing or “emerging” markets. Emerging markets include countries that are included in the MSCI Emerging Market Free Index, the composition of which may change from time to time. To determine whether a company is based in an emerging market, the Investment Advisor looks at the following factors: where the company’s securities trade, where the company is located or organised, or where the company derives its revenues or profits.
Putnam Global Core Equity FundThe Fund’s investment objective is to seek capital appreciation. The Fund seeks its objective by investing at least two thirds of its total assets (after deduction of ancillary liquid assets) in equity securities and equity related securities such as warrants, convertible stocks or preferred stocks issued worldwide. The Fund will not invest more than 20% of its assets, at the time of purchase, outside of those countries included in the MSCI World Index, the composition of which may change from time to time. Additionally, the Fund will not invest more than 20 percentage points greater than the weighting in the MSCI World Index in securities of emerging market countries, at the time of purchase.
Putnam Global Fixed Income Alpha Fund S1The Fund’s investment objective is to achieve an annual total return that exceeds six-month Sterling LIBOR by 1.0% or more, as measured over rolling three year periods.
The Fund proposes to seek to achieve this objective by investing principally and at least two thirds of its total assets (after deduction of ancillary liquid assets), in investment grade and non-investment grade government, agency, supranational, corporate and securitised bonds (including commercial paper and convertible bonds), collateralised mortgage obligations, asset-backed and mortgage-backed securities, collateralised securities, securitised loan interests, certificates of deposit and other short-term instruments and other similar instruments, as described in more detail below.
The Fund may invest in every major sector of the global fixed-income market. However, the maximum net exposure of the Fund to mortgage-backed and asset-backed securities shall not exceed 75% of the Fund’s net assets.
Putnam World Trust 5
Calculation of Sales ChargesClass A Units, Class M Units and Class T Units may be subject to a sales charge of up to 6.25% of the Net Asset Value per Unit. Alternatively, a contingent deferred sales charge of up to 1% may be charged where Class A Units which are part of a subscription of US$1,000,000 or more are redeemed within nine months of purchase and no initial sales charge has been imposed.
Class B Units and Class C Units are offered without an initial sales charge but a deferred sales charge of up to 4% for Class B Units and 1% for Class C Units may be imposed at the discretion of the Manager based on the length of time the Unitholder has held his or her Units.
There are no initial or deferred sale charges with respect to Class E Units, Class I Units, Class P Units, Class S Units and Class Y Units.
Any sales charges are accounted for before monies come into the Fund.
Financial Derivative InstrumentsThe Manager may, on behalf of each Fund, employ techniques and instruments relating to transferable securities and money market instruments under and in accordance with conditions or requirements imposed by the Financial Regulator. The derivatives used by the Funds may include futures, swaps, swaptions, options, TBA purchases and sales, forward contracts, and contracts for difference, and they may be used for hedging and for investment purposes, including as a substitute for direct investment in securities or to obtain additional exposure beyond that which might be obtained from a traditional securities portfolio, subject always to the restrictions and requirements of the Financial Regulator. Details of the derivatives that may be used are set out in the derivatives risk management process filed with the Financial Regulator. The Funds may also use forward foreign exchange contracts and other currency instruments for hedging or to alter the currency exposure characteristics of transferable securities held by the Funds as an alternative currency exposure management strategy. The techniques and instruments that the Manager may use on behalf of the Trust or any Fund are set out in Appendix II of the Prospectus and, if applicable to a particular Fund, the relevant Supplement.
For the purpose of providing margin or collateral in respect of the application of transactions in techniques and instruments, the Trustee may transfer, mortgage, charge, or encumber any assets or cash forming part of the relevant Fund.
Policies
Distribution PolicyEach Fund has its own specific distribution policy. If the Manager decides to make a distribution, it will be paid at the Manager’s discretion as set out in the relevant prospectus supplement for the Fund. For certain Funds, the Manager will distribute all net investment income of a Fund at least annually and sometimes more frequently, as specified in the relevant supplement. The Manager does not currently intend to make any distributions of realised capital gains, or unrealised capital gains, unless required to meet the distribution requirement for U.K. distributor status or otherwise specified in the prospectus. Distributions shall be made to the Unitholders on record on the date of distribution in accordance with the number of Units held in that particular Fund. The distributions payable to Unitholders will be reinvested in Classes of Units of the relevant Fund unless otherwise requested by the Unitholder.
Distributions are payable to Unitholders who have elected to receive distributions in cash by transfer of funds (any charges being at the expense of the Unitholder) unless the amount of such distribution is US$50 or less or such other amount as determined by the Manager from time to time. Such amount shall not be distributed but shall be retained and reinvested.
The Manager does not currently intend to distribute net investment income with respect to the following Funds and Classes; not all classes listed below are currently in issue, see page 3.
• ClassEUnits,ClassIUnitsandClassYUnitsofPutnamGlobalFixed Income Alpha Fund S1 and Putnam Global Fixed Income Alpha Fund S2;
• ClassAUnits,ClassBUnits,ClassCUnits,ClassEUnits,ClassIUnits, Class M Units and Class Y Units of Putnam Total Return Fund, Putnam Asia Pacific (Ex-Japan) Equity Fund, Putnam Emerging Markets Equity Fund and Putnam Global Core Equity Fund.
If, in the future, it is determined that these Classes will distribute net investment income, the amount to be distributed to Unitholders will be decided upon by the Manager.
Calculation of Net Asset ValueThe net asset value of each Fund will be expressed in the base currency of the relevant Fund and will be calculated on each Dealing Day by ascertaining the value of the assets of the Fund on such Dealing Day and deducting, from such value, the liabilities of the Fund on such Dealing Day. The net asset value per Unit is calculated by dividing the net asset value of the relevant Fund by the number of Units then outstanding for that Fund, or the net asset value of the relevant Fund attributable to the Class of Unit divided by the number of Units in that Class then in issue or deemed to be in issue on such Dealing Day and rounding the result to the nearest unit of currency.
The most recently available net asset value per Unit and the net asset value per Unit per Class on each Dealing Day will be made public at the registered office of the administrator and at the following website address: www.putnam.com (for all investors other than Austrian, French, German or Swiss investors) and/or in any other publication that the Manager may from time to time determine. French investors may consult the third-party website www.europerformance.fr for the net asset value of the Funds registered for public sale in France.
The most recently available net asset value per Unit per Class on each Dealing Day will be made available to Austrian, German and Swiss investors at the following website address: www.fundinfo.com.
6 Putnam World Trust
Investment Manager’s Report
Dear Unitholder:
Volatility returned to global stock markets during the final months of the year ended 30 June 2010. The upward trend in equity markets that began in March 2009 continued into the early months of 2010, but sharply reversed course in May. In many respects, this change was to be expected following the remarkable advance that lasted for more than a year.
If 2009 and the early months of 2010 can be characterised as a rebound from the liquidity crisis, the investment environment for the balance of 2010 is shaping up to be somewhat more difficult, one that requires careful analysis, insight, innovation and expertise. These attributes form the very core of Putnam’s analytical, active-management approach, which seeks to weather short-term periods of market dislocation, while preparing for the expected return of a more positive investing environment.
On the plus side, most fixed-income categories continued to post solid returns amid the equity market correction, but market dynamics changed. As the first half of 2010 progressed, risk aversion returned to the credit markets, leading investors to shift away from bonds with greater perceived credit risk and move assets into U.S. Treasuries. As with equities, Putnam’s active approach to fixed-income management keeps us alert to changing market conditions and enables us to adjust strategies as our market expectations and economic forecasts change.
In other developments, I’m happy to announce that last October, I assumed the role of Head of Global Institutional Management for Putnam. In this expanded role, I will continue to lead Putnam’s international institutional efforts along with managing the firm’s North America institutional business. Global institutional asset management is a key area of focus for Putnam, and I’m extremely pleased to expand the scope of my responsibilities for our clients around the world.
I would like to take this opportunity to welcome new unitholders to the Trust and, on behalf of everyone at Putnam Investments (Ireland) Limited, to thank all of our investors for your continued confidence in the Putnam World Trust family of funds.
Respectfully yours,
Joseph T. Phoenix
Director
Putnam Investments (Ireland) Limited
15 October 2010
Putnam World Trust 7
Total Return* for year ended 30 June 2010
Class A Class B Class C Class E Class I Class M Class P Class S Class TNAV % NAV % CDSC % NAV % CDSC % NAV % NAV % NAV % NAV % NAV % NAV %
Putnam Asia Pacific (Ex-Japan) Equity Fund1 year 19.65 19.03 15.03 19.42 18.42 — 20.73 4.06 — — 7.59Life of Fund (since 30/10/2008)Cumulative 72.90 71.40 68.40 72.20 72.20 — 75.30 60.03 — — 51.51Annualised 38.82 38.10 36.64 38.48 38.48 — 39.97 32.53 — — 28.26Putnam Emerging Markets Equity Fund1 year 17.05 16.38 12.38 16.72 15.72 — 18.46 1.63 — — 5.10Life of Fund (since 30/10/2008)Cumulative 61.30 59.90 56.90 60.60 60.60 — 64.30 48.69 — — 40.24Annualised 33.16 32.47 30.97 32.82 32.82 — 34.64 26.82 — — 22.46Putnam Global Core Equity Fund1 year 3.19 2.52 (1.48) 2.81 1.81 — 3.85 (10.76) — — (7.37)Life of Fund (since 16/10/2008)Cumulative 6.70 5.70 2.70 6.10 6.10 — 8.00 (7.26) — — (12.41)Annualised 3.87 3.30 1.57 3.53 3.53 — 4.61 (4.32) — — (7.47)Putnam Global Fixed Income Alpha Fund S11 year — — — — — — — — — (0.90) —Life of Fund (since 21/02/2008)Cumulative — — — — — — — — — (14.79) —Annualised — — — — — — — — — (6.56) —Putnam Global Fixed Income Alpha Fund S21 year — — — — — — — — — 6.10 —Life of Fund (since 25/02/2008)Cumulative — — — — — — — — — (15.16) —Annualised — — — — — — — — — (6.77) —Putnam Global High Yield Bond Fund†
* Total return is the change in Unit value and assumes reinvestment of all distributions back into the Fund. Performance data represent past results. Past performance may not be a reliable guide to future performance. Investment returns and principal value will fluctuate so an investor’s Units, when sold, may be worth more or less than their original cost. Fund performance data does not take into account any adjustment for taxes payable on reinvested distributions. All performance in this table is based on US Dollar valuations.
** Class I Units of Putnam Total Return Fund were redesignated Class A Units on 10 July 2007. Class A and M Units of Putnam Total Return Fund launched on 30 June 2006. Class B and C Units of Putnam Total Return Fund launched on 10 July 2007. Class S Units of Putnam Total Return Fund launched on 30 November 2006.
† Returns shown for Class C and Class I Units for the periods prior to inception are derived from the historical performance of Class A Units adjusted to reflect the lower operating expenses applicable to such Units. Class C Units launched on 27 February 2004. Class I Units launched on 8 June 2000. Class E Units launched on 23 May 2003. Class S Units launched on 30 January 2004.
Data is historical. Past performance is not a guarantee of future results. More recent returns may be less or more than those shown.
Investment return, net asset value, and market price will fluctuate, and you may have a gain or a loss when you sell your Units. Performance assumes reinvestment of distributions at NAV and does not account for any taxes or sales charges. The payment of any sales charges will reduce performance.
The difference at any one time between the issue price and the redemption price of Fund Units means that the investment should be viewed as medium to long term. For funds with income as an objective, income may fluctuate in accordance with market conditions and taxation arrangements. Changes in the exchange rate may have an adverse effect on the value, price, or income of the Funds.
Class A1 Units have been re-designated Class I Units as of 17 October 2003. Returns shown for Class C and Class I Units for periods prior to inception are derived from the historical performance of Class A Units, adjusted to reflect the different operating expenses applicable to such Units, but not adjusted to reflect the current maximum sales charge.
The Funds are sub-funds of Putnam World Trust, an umbrella unit trust domiciled in Dublin, Ireland. Prior to 22 February 2000, Putnam Global High Yield Bond Fund was domiciled in the Cayman Islands and was subject to lower fees and expenses. The Trust is established as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (as amended).
8 Putnam World Trust
Putnam Currency Alpha Fund
Note to Unitholders: Putnam Currency Alpha Fund terminated operations on 4 January 2010. The commentary below reflects the market environment and activity in the Fund during the first half of the annual period ended 30 June 2010 (i.e., 1 July 2009 to 31 December 2009).
The risk rally that began in March continued throughout the six-month period ending 31 December 2009. Currencies most leveraged to improving global trade, especially commodity-driven and emerging-market currencies, were the best performers. Currencies in countries committed to unconventional policy stimulus measures, most notably U.K. sterling and the U.S. dollar, trailed the pack by substantial margins. The Australian dollar was one of the strongest G10 currencies during the period. Responding to increasing inflation pressures, the Reserve Bank of Australia raised its cash rate target three times between October and the end of the year, from 3.00% to 3.75%, providing strong support for the Australian dollar. The Japanese yen rose on the expected pro-yen policies of Japan’s newly elected government, less leveraged selling of the yen and expected greater flows of repatriated capital back into Japan. The euro appreciated against the U.S. dollar as Eurozone economic data improved, the European Central Bank kept its refinancing rate low and the central bank said it would not adopt further non-traditional stimulus measures. The Canadian dollar rallied vigorously as the continued rebound in risk assets, generalised U.S. dollar weakness and the Bank of Canada’s upwardly revised growth and inflation forecasts made quantitative easing unlikely. Lastly, the Brazilian real was one of the top performers in our emerging-markets foreign exchange universe, buoyed by ample capital inflows, relatively high interest rates and rising commodity prices.
Within this environment, the Fund generated the following results by Unit class: 18.18% (15.71% in euro terms) for Class E Units, 16.53% for Class I Units, and 13.64% (15.75% in sterling terms) for Class S Units, all at net asset value (NAV, or without sales charges). Over this period, the Fund’s benchmark, the 3-Month LIBOR Index, returned 0.16%.
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Asia-Pacific markets posted solid double-digit returns for the year ending 30 June 2010, with the MSCI All-Country Pacific ex. Japan Index — the Fund’s benchmark — returning 20.39% in U.S. dollar terms. However, markets in the region tumbled during May and June, in step with markets worldwide. Emerging-markets equities, including stocks in larger developing economies such as China, held up better during this period than stocks in foreign developed markets, thanks to a stronger pace of economic growth and superior perceived fiscal conditions in some countries.
For the period, the Fund produced the following results by Unit class: 19.65% for Class A Units, 19.03% for Class B Units, 19.42% for Class C Units, 20.73% for Class I Units, 4.06% (19.37% in euro terms) for Class M Units, and 7.59% (18.57% in sterling terms) for Class T Units, all at net asset value (NAV, or without sales charges).
Favourable stock selection in consumer cyclicals and consumer staples drove the Fund’s results. Top-performing consumer cyclicals holdings included: Great Wall Motor, PT Astra International, Daum Communications and 361 Degrees International. Leading consumer staples investments included: PT Gudang Garam, PT Indofood Sukses Makmur, Fraser and Neave and Digital China Holdings. Adverse stock picks in technology, most notably, Sohu.com and Shanda Games, detracted from relative returns.
Looking ahead, although we believe that valuations still appear reasonable, we anticipate a period of uncertainty in Asia-Pacific markets. Following strong loan growth in January, China began to tighten its monetary policy. Year-over-year inflation is likely to pick up in the region, compared with the relatively low rates that were present in early 2009. But we believe inflation may taper off in the second half of 2010 and likely will stay within a manageable range for the full year. Given 2009’s strong returns, investors have taken some profits and reduced their risk exposure. While investors are currently focusing on Europe’s economic woes, we currently believe it is unlikely that Asian economies will be affected, given the region’s supportive fiscal policies and strong corporate balance sheets. We continue to find compelling long-term growth opportunities in Asia and, at period-end, maintained overweight exposure to Indonesia and to the financials sector.
International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. The Fund invests some or all of its assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. The Fund invests in fewer issuers or concentrates its investments by region or sector, and involves more risk than a fund that invests more broadly.
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Putnam Asia Pacific (Ex-Japan) Equity Fund
Putnam World Trust 9
Putnam Global Core Equity Fund
Equity markets worldwide posted solid double-digit returns for the year ending 30 June 2010 before tumbling during the final two months of the period, weighed down by the European debt crisis. Emerging-markets equities held up better during this two-month period than stocks in foreign developed markets, thanks to a stronger pace of economic growth and superior perceived fiscal conditions in some countries. For the year, the MSCI World Index — the Fund’s benchmark — returned 10.20%, in U.S. dollar terms.
For the period, the Fund produced the following results by Unit class: 3.19% for Class A Units, 2.52% for Class B Units, 2.81% for Class C Units, 3.85% for Class I Units, -10.76% (2.40% in euro terms) for Class M Units, and -7.37% (1.95% in sterling terms) for Class T Units, all at net asset value (NAV, or without sales charges).
Stock selection in energy, communication services and basic materials helped relative returns while stock picks in capital goods, conglomerates, technology and financials detracted from results. From a top-down perspective, country allocations modestly boosted returns, in particular an overweight in China and an underweight in Spain. Sector allocations detracted slightly. Top-performing holdings included: Statoil (energy), Ashland (basic materials), Royal Ahold (consumer staples), Baidu (technology) and Coach (consumer staples). Detractors included: L3 Communications (capital goods), Mitsubishi Electric (capital goods), Mitsui (conglomerates), Goldman Sachs (financials) and Microsoft (technology).
We believe economic indicators are extremely depressed, particularly consumer spending and corporate capital spending. On the corporate front, once revenues begin to increase, we believe companies will see dramatic increases in profitability. High unemployment is restraining consumer confidence and, by extension, spending. Productivity per capita, however, is at an all time high, and we therefore believe job growth is likely during the second half of 2010. Relative to the Fund’s benchmark, at period end we held overweights in capital goods, energy and healthcare. Zurich Financial Services and Royal Ahold were our top active overweights. We maintained underweights in consumer staples, financials and utilities. By country, we were overweight in China, Switzerland and Russia, and underweight in Australia, France and Canada.
International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. The Fund invests some or all of its assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations.
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Emerging-markets (EM) equities led all broad-market categories for the year ending 30 June 2010, before stumbling during May and June. However, EM equities held up better during this two-month period than stocks in the United States and foreign developed markets, thanks to a stronger pace of economic growth and superior perceived fiscal conditions in some countries. For the year, the MSCI Emerging Markets Index — the Fund’s benchmark — advanced 23.15% in U.S. dollar terms.
For the period, the Fund produced the following results by Unit class: 17.05% for Class A Units, 16.38% for Class B Units, 16.72% for Class C Units, 18.46% for Class I Units, 1.63% (16.67% in euro terms) for Class M Units, and 5.10% (15.81% in sterling terms) for Class T Units, all at net asset value (NAV, or without sales charges).
Stock selection in capital goods, consumer cyclicals and communication services aided relative results while stock picks in basic materials, energy, financials and technology detracted from performance. From a top-down perspective, country allocations modestly impaired returns, in particular underweights in India, Israel and Thailand, and an overweight in Chile. Sector allocations detracted slightly, most notably underweights in basic materials and consumer staples, and an overweight in technology. Top-performing holdings included: Hyundai Mobis (capital goods), Hyundai Department Store (consumer cyclicals), Bank Rakyat Indonesia (financials), China Construction Bank (financials), and an out-of-benchmark investment in CJO Shopping (consumer cyclicals). Detractors included basic materials companies Mechel, Suzano Bahia Sul Papel e Cel and an out-of-benchmark position in Eurasian Natural Resources. Industrial & Commercial Bank of China (financials) also hampered returns, as did greater-than-benchmark exposure to energy producer Petroleo Brasileiro.
We believe the resiliency and durability of many emerging markets are greater today than in past economic cycles and we are optimistic about the asset class for the long term. When comparing and contrasting the situation in developed markets and emerging markets, there are no real estate or consumer credit bubbles to unwind in emerging markets and there are better corporate, government and bank balance sheets. There is also a younger, faster-growing population. In our view, these differences will translate into more rapid economic growth in emerging markets than in developed markets over the foreseeable future. At period end, our greatest overweights were in China and Brazil. Our outlook for China remains very constructive. Meanwhile, our largest underweights were in India, Taiwan and Korea. From a sector perspective, we were overweight financials and capital goods, and underweight basic materials and consumer staples.
International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. The Fund invests some or all of its assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. The Fund invests in fewer issuers or concentrates its investments by region or sector, and involves more risk than a fund that invests more broadly.
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Putnam Emerging Markets Equity Fund
10 Putnam World Trust
Class S*
Unit value NAV
30/06/2009 £10.25
30/06/2010 10.82
Distributions Number Income Capital gain Total
Class S* 1 £0.3430 — £0.3430
* Values stated in pound sterling.
Global investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. The use of derivatives involves special risks and may result in losses. Funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses.
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Following a broad-based rally across fixed-income sectors in 2009, concerns emerged about the strength of the recovery in 2010, and European markets were thrown into turmoil by mounting sovereign debt worries in some of the smaller, peripheral economies. Despite these growing concerns, bond markets continued to advance, as all spread sectors outperformed U.S. Treasuries through April, on a duration-adjusted basis. (Duration is a key measure of a bond’s or bond portfolio’s sensitivity to interest rate changes.) Risk aversion heightened in May as global equity markets sold off, concerns grew about the outlook for European economies, and the U.S. economic recovery showed signs of slowing. With investors seeking a safe haven, Treasury bond prices rose and securities perceived to be at the higher end of the risk spectrum — such as high-yield bonds and floating-rate bank loans — experienced modest declines during the final months of the period.
For the period, the Fund’s Class S Units returned 8.90% (-0.90% in US dollar terms), at net asset value (NAV, or without sales charges), and the Fund’s benchmark, the 6-Month LIBOR Index, returned 0.60% (in sterling terms).
Prepayment strategies and our investments in mortgage-backed bonds boosted the Fund’s results, while term structure positioning detracted from returns and corporate credit strategies had a neutral impact on performance. Among successful prepayment strategies, collateralised mortgage obligations (CMOs) continued to bounce back as capital markets stabilised. Our focus on interest-only (IO) cash flows proved beneficial for the period amid slower-than-projected prepayment rates. Exposure to commercial mortgage-backed securities (CMBS) was another positive. We kept the Fund’s CMBS holdings concentrated in shorter-dated AAA-rated bonds that we believe have minimal fundamental credit risk. As for term structure, in the United States, the benefit of a flattening-yield-curve bias was overshadowed by the adverse impact of our short-duration stance as interest rates fell across the curve. Outside the U.S., term-structure positioning was a net negative due mainly to our short-duration position as well as an unsuccessful yield-curve strategy in the United Kingdom. Within credit, combinations of cash bonds and synthetic hedges in the investment-grade and high-yield corporate sectors detracted earlier in the period as spreads widened, but aided results during the final three months of the period as spreads tightened.
We believe the U.S. economic recovery will continue, but at a more tempered pace in the absence of fiscal stimulus and as the momentum provided by inventory rebuilding fades. Improved financial market conditions have allowed corporations to raise funds and extend their debt-repayment obligations, while a slowly firming labour market may provide the foundation for stronger consumer spending. A key question is whether Europe’s sovereign debt crisis will threaten this scenario. There is some concern that spill-over effects from Europe’s debt situation could further weaken equity and credit markets and perhaps even trigger the failure of a major European financial institution. While these are plausible threats, we believe they are unlikely to materialise.
Putnam Global Fixed Income Alpha Fund S1
Putnam World Trust 11
Class S*
Unit value NAV
30/06/2009 £9.37
30/06/2010 10.63
Distributions Number Income Capital gain Total
Class S* 1 £0.3260 — £0.3260
* Values stated in pound sterling.
Global investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. The use of derivatives involves special risks and may result in losses. Funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses.
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Putnam Global Fixed Income Alpha Fund S2Following a broad-based rally across fixed-income sectors in 2009, concerns emerged about the strength of the recovery in 2010, and European markets were thrown into turmoil by mounting sovereign debt worries in some of the smaller peripheral economies. Despite these growing concerns, bond markets continued to advance, as all spread sectors outperformed U.S. Treasuries through April, on a duration-adjusted basis. (Duration is a key measure of a bond’s or bond portfolio’s sensitivity to interest rate changes.) Risk aversion heightened in May as global equity markets sold off, concerns grew about the outlook for European economies, and the U.S. economic recovery showed signs of slowing. With investors seeking a safe haven, Treasury bond prices rose and securities perceived to be at the higher end of the risk spectrum — such as high-yield bonds and floating-rate bank loans — experienced modest declines during the final months of the period.
For the period, the Fund’s Class S Units returned 16.93% (6.10% in US dollar terms), at net asset value (NAV, or without sales charges). The Fund’s benchmark, the 6-Month LIBOR Index, returned 0.60% (in sterling terms) during this period.
Prepayment strategies and our investments in mortgage-backed bonds boosted the Fund’s results, while term structure positioning detracted from returns and corporate credit strategies had a neutral impact on performance. Among successful prepayment strategies, collateralised mortgage obligations (CMOs) continued to bounce back as capital markets stabilised. Our focus on interest-only (IO) cash flows proved beneficial for the period amid slower-than-projected prepayment rates. Exposure to commercial mortgage-backed securities (CMBS) was another positive. We kept the Fund’s CMBS holdings concentrated in shorter-dated AAA-rated bonds that we believe have minimal fundamental credit risk. As for term structure, in the United States, the benefit of a flattening-yield-curve bias was overshadowed by the adverse impact of our short-duration stance as interest rates fell across the curve. Outside the U.S., term-structure positioning was a net negative due mainly to our short-duration position as well as an unsuccessful yield-curve strategy in the United Kingdom. Within credit, combinations of cash bonds and synthetic hedges in the investment-grade and high-yield corporate sectors detracted earlier in the period as spreads widened, but aided results during the final three months of the period as spreads tightened.
We believe the U.S. economic recovery will continue, but at a more tempered pace in the absence of fiscal stimulus and as the momentum provided by inventory rebuilding fades. Improved financial market conditions have allowed corporations to raise funds and extend their debt-repayment obligations, while a slowly firming labour market may provide the foundation for stronger consumer spending. A key question is whether Europe’s sovereign debt crisis will threaten this scenario. There is some concern that spill-over effects from Europe’s debt situation could further weaken equity and credit markets and perhaps even trigger the failure of a major European financial institution. While these are plausible threats, we believe they are unlikely to materialise.
12 Putnam World Trust
Following a broad-based rally across fixed-income sectors in 2009, concerns emerged about the strength of the recovery in 2010, and European markets were thrown into turmoil by mounting sovereign debt worries in some of the smaller, peripheral economies. Despite these growing concerns, bond markets continued to advance, as all spread sectors outperformed U.S. Treasuries through April, on a duration-adjusted basis. (Duration is a key measure of a bond’s or bond portfolio’s sensitivity to interest rate changes.) Risk aversion heightened in May as global equity markets sold off, concerns grew about the outlook for European economies, and the U.S. economic recovery showed signs of slowing. With investors seeking a safe haven, Treasury bond prices rose and securities perceived to be at the higher end of the risk spectrum — such as high-yield bonds and floating-rate bank loans — experienced modest declines during the final months of the period.
During the second half of the period, the U.S. government managed a delicate balancing act of winding down policies aimed at fostering market stability and investor confidence without endangering a nascent recovery. Specifically, the Federal Reserve Board’s (the Fed) purchases of mortgage-backed securities and its Term Asset-Backed Securities Loan Facility (TALF) program to revive the loan-securitisation market both ended in March. Despite clear improvement in the economy, challenging headwinds such as high unemployment, depressed home values, and uncertainty regarding deflation remain. The Fed held its target range for overnight lending (the federal funds rate) at zero to 0.25% and indicated that the rate would remain low over the near term. In addition, the central bank began taking steps to reduce liquidity in the financial system. However, soaring fiscal deficits are counteracting the Fed’s moves in this direction.
Reflecting heightened risk-aversion and investors’ flight to Treasuries, Treasury yields declined across the yield curve during the final months of the period. Two-year yields fell 0.43%, 10-year yields dropped 0.86% and 30-year yields declined 0.84% to finish the period yielding 0.609%, 2.935%, and 3.890%, respectively.
For the period, the Fund returned 0.07%. The Fund’s benchmark, the Lipper Institutional Money Market Funds average, returned 0.10% in US dollar terms during this period.
Class P
Unit value NAV
30/06/2009 $1.00
30/06/2010 1.00
Distributions Number Income Capital gain Total
Class P 12 $0.0007 — $0.0007
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Putnam Global Liquidity Fund
High-yield bonds led all fixed-income categories for the 12 months ended 30 June 2010, with the JPMorgan Global High Yield Index advancing 28.19%. During the final months of the period, however, bond investors became more risk averse in light of Euro-region sovereign debt turmoil. Concerns also surfaced that the U.S. economic recovery may be decelerating, as high unemployment, depressed home prices and weakening corporate inventory replenishment created challenging headwinds. Amid this environment, credit spreads widened as investors gravitated toward the perceived safety of U.S. government securities. European economic and sovereign risk moderated in June as Spain successfully refinanced its debt, the International Monetary Fund increased its global growth estimate for 2010, and plans for bank stress tests were announced. In the high-yield market, credit upgrades outweighed downgrades during the period’s second half, and company fundamentals continued to improve. Market access remained strong while market technicals (i.e., the balance of supply and demand) were neutral as inflows were volatile against the backdrop of increasing supply.
For the period, the Fund produced the following results by Unit class: 22.85% for Class A Units, 22.33% for Class B Units, 22.22% for Class C Units, 9.79% (26.05% in euro terms) for Class E Units, 23.84% for Class I Units, and 12.23% (23.66% in sterling terms) for Class S Units, all at net asset value (NAV, or without sales charges). The Fund’s benchmark, the BoA Merrill Lynch Global High Yield Constrained Index, returned 29.11% in US dollar terms during this period.
Positions in healthcare, transportation and housing aided returns, while investments in financials and cable/wireless detracted from performance. The Fund benefited from solid security selection, underweighting Fiat SPA and Ford Motor and overweighting CIT Group and Nortek Holdings.
We believe the U.S. economic recovery will continue, but at a more tempered pace in the absence of fiscal stimulus and as the momentum provided by inventory rebuilding fades. Improved financial market conditions have allowed corporations to raise funds and extend their debt-repayment obligations, while a slowly firming labour market may provide the foundation for stronger consumer spending. A key question is whether Europe’s sovereign debt crisis will threaten this scenario. There is some concern that spill-over effects from Europe’s debt situation could further weaken equity and credit markets and perhaps even trigger the failure of a major European financial institution. While these are plausible threats, we believe they are unlikely to materialise.
Class A Class B Class C Class E* Class I Class S**
Unit value NAV NAV NAV NAV NAV NAV
30/06/2009 $5.66 $5.62 $7.19 €6.52 $2.19 £4.09
30/06/2010 6.35 6.33 8.04 7.33 2.43 4.60
Distributions Number Income Capital gain Total
Class A 12 $0.5698 — $0.5698
Class B 12 0.5160 — 0.5160
Class C 7 0.7436 — 0.7436
Class E* 13 €0.8390 — €0.8390
Class I 13 $0.2749 — $0.2749
Class S** 13 £0.4324 — £0.4324
* Values stated in euro.** Values stated in pound sterling.
International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. Funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses.
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Putnam Global High Yield Bond Fund
Putnam World Trust 13
Class A Class B Class C Class M Class S*
Unit value NAV NAV NAV NAV NAV
30/06/2009 $8.47 $7.63 $7.66 €6.35 £2.43
30/06/2010 10.16 9.10 9.16 7.57 2.80
Distributions Number Income Capital gain Total
Class S* 1 £0.1050 — £0.1050
* Values stated in pound sterling.
Global investing involves certain risks, such as currency fluctuations, economic instability, and political developments. The Fund invests some or all of its assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. Lower rated bonds may offer higher yields in return for more risk. The Fund may have a significant portion of its holdings in bonds. The use of derivatives involves special risks and may result in losses. Mutual funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses. Diversification does not assure a profit or protect against loss. It is possible to lose money in a diversified portfolio.
The views expressed here are exclusively those of Putnam as of 23 July 2010. They are not meant as investment advice. Expectations about future market performance are subject to change.
Equity markets worldwide posted solid double-digit returns for the year ending 30 June 2010 before tumbling during the final two months of the period, weighed down by the European debt crisis. In fixed-income markets, despite growing concerns about the strength of the economic recovery and the European debt situation, all spread sectors outperformed U.S. Treasuries through April, on a duration-adjusted basis. (Duration is a key measure of a bond’s or bond portfolio’s sensitivity to interest rate changes.) Risk aversion heightened in May and investors sought the safe haven of Treasuries. As a result, Treasury bond prices rose and securities perceived to be at the higher end of the risk spectrum — such as high-yield bonds and floating-rate bank loans — experienced modest declines during the final months of the period. In currency markets, the U.S. dollar strengthened significantly against the euro and most other major currencies.
For the period, the Fund produced the following results by Unit class: 19.95% for Class A Units, 19.27% for Class B Units, 19.58% for Class C Units, 3.93% (19.21% in euro terms) for Class M Units, and 8.76% (19.59% in sterling terms) for Class S Units, all at net asset value (NAV, or without sales charges). The Fund’s benchmark, the BoA Merrill Lynch 1-Month USD LIBOR Index, returned 0.26% during this period.
Except for a modest decline in non-U.S. investment-grade bonds, all asset classes in the Fund’s 100-year portfolio recorded gains for the period. Higher-risk assets such as real estate investment trusts, EM equities and commodities were top performers until the final two months of the period, giving way to asset classes with historically lower risk profiles, such as U.S. investment-grade bonds and Treasury Inflation-Protected Securities (TIPS). From a dynamic asset allocation perspective, our tactical underweights in U.S. investment-grade bonds and TIPS detracted from results, but our overweights in high-yield bonds and EM equities and debt aided performance. The Fund’s fixed-income global alpha component helped returns for the period, although our strategic short position in Treasuries dampened this contribution somewhat.
Looking ahead, the slide in equity markets that began in late April appeared to be gathering momentum. In Europe, investors’ worries about sovereign debt are weighing on equity markets. On the positive side, we see opportunities among export-oriented companies positioned to benefit from euro weakness. Overall, however, our near-term outlook for U.S. and European stocks is cautious. Volatility persisted across Asian markets as prospects for China’s economy and property markets, linchpins for the entire region, remained unclear. Despite these uncertainties, we expect China’s economy to remain among the world’s strongest. As for fixed-income markets, we currently favour strategies that do not rely on strong global growth to be effective, specifically short-duration, short-maturity instruments where cash flow is the primary driver of value. In the securitised sectors, we favour three areas: agency inverse interest-only securities, non-agency residential mortgages and top-rated commercial mortgages. Lastly, we believe that currency markets are likely to be without clear direction in the next few months as investors struggle to assess prospects for global economies.
Putnam Total Return Fund
14 Putnam World Trust
Class A Class B Class C Class E Class I Class M Class P Class S Class T
Fund % % % % % % % % %
Putnam Asia Pacific (Ex-Japan) Equity Fund 1.66 2.15 1.94 — 1.15 1.91 — — 1.87
Putnam Global Core Equity Fund 1.89 2.40 2.10 — 1.18 1.92 — — 1.89
Putnam Global Fixed Income Alpha Fund S1 — — — — — — — 1.74 —
Putnam Global Fixed Income Alpha Fund S2 — — — — — — — 1.87 —
Putnam Global High Yield Bond Fund 1.63 2.13 2.03 0.94 0.93 — — 0.93 —
Putnam Global Liquidity Fund — — — — — — 0.17 — —
Putnam Total Return Fund 1.79 2.29 2.04 — — 1.79 — 1.09 —
* The Total Expense Ratio (TER) is calculated as the total operating expenses for each Unit Class of each Fund in the accounting currency of the Fund for the year in question as a percentage of the average assets of the Fund for the year in question.
Average net assets is calculated using figures based on the authorised Fund’s net assets at each calculation of the net asset value. All Funds are valued daily with the exception of Putnam Global Fixed Income Alpha Fund S1 and Putnam Global Fixed Income Alpha Fund S2 which are valued weekly.
As of 30 June 2010 ending net assets, the Performance fees of Putnam Global Fixed Income Alpha Fund S1 and Putnam Global Fixed Income Alpha Fund S2 equalled 2.63% and 1.90% respectively.
Portfolios’ Turnover Ratio (PTR)* (unaudited)The PTR for each of the Funds for the year from 1 July 2009 to 30 June 2010 is presented below:
PTR
Fund %
Putnam Asia Pacific (Ex-Japan) Equity Fund 205
Putnam Emerging Markets Equity Fund 417
Putnam Global Core Equity Fund 271
Putnam Global Fixed Income Alpha Fund S1 1,813
Putnam Global Fixed Income Alpha Fund S2 782
Putnam Global High Yield Bond Fund 171
Putnam Global Liquidity Fund 1,171
Putnam Total Return Fund 428
* Turnover being a Fund’s aggregate value of total cost of securities purchased plus total disposal proceeds of securities sold less the aggregate value of that Fund’s redeemable participating shares’ subscriptions plus redemptions during the reporting period. All values in the turnover calculation are in the functional currency of the respective Fund.
Total Expense Ratio (TER)* (unaudited)The Total Expense Ratio (TER) for each of the Funds for the year ended 30 June 2010 is presented below:
Putnam World Trust 15
Statement of Manager’s Responsibilities
We have enquired into the conduct of the Manager in respect of Putnam World Trust (“the Trust”) for the year ended 30 June 2010, in our capacity as Trustee to the Trust. This report including the opinion has been prepared for and solely for the unitholders in the Trust as a body, in accordance with the Financial Regulator’s UCITS Notice 4, and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown.
Responsibilities of the Trustee Our duties and responsibilities are outlined in the Financial Regulator’s UCITS Notice 4. One of those duties is to enquire into the conduct of the Trust in each annual accounting period and report thereon to the unitholders.
Our report shall state whether, in our opinion, the Trust has been managed in that period in accordance with the provisions of the Trust’s Trust Deed and the UCITS Regulations. It is the overall responsibility of the Manager to comply with these provisions. If the Manager has not so complied, we as Trustee must state why this is the case and outline the steps which we have taken to rectify the situation.
Basis of Trustee OpinionThe Trustee conducts such reviews as it, in its reasonable opinion, considers necessary in order to comply with its duties as outlined in UCITS Notice 4 and to ensure that, in all material respects, the Trust has been managed (i) in accordance with the limitations imposed on its investment and borrowing powers by the provisions of its constitutional documentation and the appropriate regulations and (ii) otherwise in accordance with the Trust’s constitutional documentation and the appropriate regulations.
OpinionIn our opinion, the Trust has been managed during the year, in all material respects:
(i) in accordance with the limitations imposed on the investment and borrowing powers of the Manager and the Trustee by the Trust Deed and by the European Communities (Undertakings for Collective Investment In Transferable Securities) Regulations 2003 (as amended) (“the Regulations”); and
(ii) otherwise in accordance with the provisions of the Trust Deed and the Regulations.
State Street Custodial Services (Ireland) Limited
78 Sir John Rogerson’s Quay
Dublin 2
Ireland
15 October 2010
Report of the Trustee to the Unitholders
The Manager is responsible for the preparation of financial statements, which give a true and fair view of the financial affairs of the Trust and of its results for the year. In preparing those financial statements the Manager is required to:
• select suitable accounting policies and then apply themconsistently;
• prepare the financial statements on the going concern basisunless it is inappropriate to presume that the Trust will continue in operation.
The Manager is responsible for keeping proper books of account which disclose with reasonable accuracy at any time the financial position of the Trust and to enable it to ensure that the financial statements are prepared in accordance with accounting standards generally accepted in Ireland and comply with the Trust Deed and the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (as amended).
The measures taken by the Manager to secure compliance with the Trust’s obligations to keep proper books of account are the use of appropriate systems and procedures and the employment of competent persons. To this end, the directors of the Manager have appointed State Street Fund Services (Ireland) Limited for the purpose of maintaining proper books of account.
The books of account are kept at 78 Sir John Rogerson’s Quay, Dublin 2, Ireland. The Manager is also responsible for safeguarding the assets of the Trust. In this regard it has entrusted the assets of the Trust to a Trustee for safekeeping in accordance with the Trust Deed. The Manager is also responsible for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with laws and regulations.
On behalf of the Manager:
Director:
Director:
15 October 2010
16 Putnam World Trust
Basis of Audit OpinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Manager in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Trust’s Funds’ circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
OpinionIn our opinion the financial statements:
• giveatrueandfairviewinaccordancewithGenerallyAcceptedAccounting Practice in Ireland, of the state of each of the Trust’s Fund’s affairs at 30 June 2010 and of their results for the year then ended; and
• havebeenproperlypreparedinaccordancewiththerequirementsofthe European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (as amended).
We have obtained all the information and explanations we consider necessary for the purposes of our audit. In our opinion proper books of account have been kept by the Manager for the Trust. The Trust’s financial statements are in agreement with the books of account.
PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
Dublin
15 October 2010
Independent Auditors Report to the Unitholders of Putnam World Trust (the “Trust”)We have audited the Trust’s financial statements for the year ended 30 June 2010 which comprise for each of the Trust’s Funds the Balance Sheet, the Profit and Loss Account, the Statement of Changes in Net Assets Attributable to Redeemable Participating Unitholders, the Schedule of Investments and the related notes. These financial statements have been prepared under the accounting policies set out therein. The financial statements of Putnam Currency Alpha Fund were prepared on a termination basis and under the accounting policies set out therein.
Respective Responsibilities of the Manager and the AuditorsThe Manager’s responsibilities for preparing the Annual Report and the financial statements in accordance with applicable Irish law and the accounting standards issued by the Accounting Standards Board and published by the Institute of Chartered Accountants in Ireland (Generally Accepted Accounting Practice in Ireland) are set out in the Statement of Manager’s responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and only for each Fund’s Unitholders as a body and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the financial statements give a true and fair view in accordance with Generally Accepted Accounting Practice in Ireland, and are properly prepared in accordance with Irish statute comprising the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (as amended).
We read the other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatements of material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Independent Auditor’s Report
Putnam World Trust�17
Putnam Asia Pacific (Ex-Japan) Equity Fund
The accompanying notes form an integral part of these financial statements.
Schedule of Investments30 June 2010
Construction
49,000 Asia Cement China Holdings Corporation (China) $23,912 0.55
26,500 BBMG Corporation (China) 27,531 0.64
44,000 China Shanshui Cement Group Limited (China) 19,664 0.45
The accompanying notes form an integral part of these financial statements.
Schedule of Investments cont.
30 June 2010
PURCHASED SWAPTIONS OUTSTANDING (2.80%)
Principal
Amounts
Expiration date/
Strike price
Value
GBP
% of
Fund
$30,112,100 Option on an interest rate swap with Barclays Bank PLC for the right to receive a fixed rate of 3.7375% versus the three month USD-LIBOR-BBA maturing 9 March 2021. Mar-11/3.7375 £1,100,805 0.44
30,112,100 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to receive a fixed rate of 3.665% versus the three month USD-LIBOR-BBA maturing 8 March 2021. Mar-11/3.665 1,010,414 0.40
32,142,600 Option on an interest rate swap with Barclays Bank PLC for the right to receive a fixed rate of 4.065% versus the three month USD-LIBOR-BBA maturing 20 October 2020. Oct-10/4.065 1,778,883 0.72
32,142,600 Option on an interest rate swap with Barclays Bank PLC for the right to pay a fixed rate of 4.065% versus the three month USD-LIBOR-BBA maturing 20 October 2020. Oct-10/4.065 32,879 0.01
17,530,500 Option on an interest rate swap with Barclays Bank PLC for the right to receive a fixed rate of 3.95% versus the three month USD-LIBOR-BBA maturing 21 September 2020. Sep-10/3.95 879,836 0.35
17,530,500 Option on an interest rate swap with Barclays Bank PLC for the right to pay a fixed rate of 3.95% versus the three month USD-LIBOR-BBA maturing 21 September 2020. Sep-10/3.95 11,017 —
25,446,700 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to receive a fixed rate of 3.995% versus the three month USD-LIBOR-BBA maturing 20 September 2020. Sep-10/3.995 1,341,449 0.53
16,964,400 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to receive a fixed rate of 3.965% versus the three month USD-LIBOR-BBA maturing 20 September 2020. Sep-10/3.965 865,488 0.34
25,446,700 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to pay a fixed rate of 3.995% versus the three month USD-LIBOR-BBA maturing 20 September 2020. Sep-10/3.995 13,100 0.01
16,964,400 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to pay a fixed rate of 3.965% versus the three month USD-LIBOR-BBA maturing 20 September 2020. Sep-10/3.965 9,754 —
Total Purchased Swaptions Outstanding £7,043,625 2.80
REPURCHASE AGREEMENTS (4.06%)
Principal
Amount
Coupon
Rate %
Maturity
Date
Value
GBP
% of
Fund
$15,302,000 Repurchase Agreement – Bank of America* 0.01 01/07/2010 £10,230,319 4.06
Total Repurchase Agreements £10,230,319 4.06
* Interest in $15,302,000 joint repurchase agreement dated 30 June 2010 with Bank of America due 1 July 2010 – maturity value of $15,302,004 for an effective yield of 0.01% (collateralised by U.S. Treasury Bills with a coupon rate of 1.75% and a due date of 15 April 2013 valued at $41,420,557).
FOREIGN GOVERNMENT BONDS & NOTES (2.17%)
Principal
Amounts
Coupon
Rate %
Maturity
Dates
Value
GBP
% of
Fund
$1,700,000 Banco Nacional de Desenvolvimento Economico e Social (Brazil) 6.37 16/06/2018 £1,209,009 0.49
780 Federal Republic of Brazil 10.00 01/01/2012 295,874 0.12
441,000 Republic of Argentina 7.00 09/12/2013 258,423 0.10
1,182,000 Republic of Argentina 0.39 08/03/2012 271,842 0.11
1,620,000 Republic of Georgia 7.50 15/04/2013 1,116,882 0.44
700,000 Republic of Hungary 6.25 29/01/2020 464,796 0.18
1,045,000 Republic of Indonesia 7.75 17/01/2038 824,402 0.33
560,000 Republic of Indonesia 6.75 03/10/2014 414,376 0.16
995,000 Republic of Venezuela 1.31 20/04/2011 615,041 0.24
Total Foreign Government Bonds & Notes £5,470,645 2.17
744,000 General Cable Corporation 4.50 15/11/2029 466,321 0.19
675,000 General Growth Properties Incorporated 3.98 15/04/2027 462,561 0.18
Total Convertible Bonds & Notes £1,340,632 0.53
U.S. EQUITIES (0.01%)
Number
of Shares
Value
GBP
% of
Fund
1,194 Nortek Incorporated† £33,527 0.01
Total U.S. Equities £33,527 0.01
Putnam World Trust�31
Putnam Global Fixed Income Alpha Fund S1
The accompanying notes form an integral part of these financial statements.
Schedule of Investments cont.
30 June 2010
WRITTEN SWAPTIONS OUTSTANDING cont.
Expiration date/
Strike price
Contract
value GBP
Value
GBP
% of
Fund
Option on an interest rate swap with Citibank, N.A. for the obligation to pay a fixed rate of 4.52% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.52 36,220,000 £(2,507,008) (1.00)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.46% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.46 38,622,000 (2,552,100) (1.01)
Option on an interest rate swap with Barclays Bank PLC for the obligation to pay a fixed rate of 4.02% versus the three month USD-LIBOR-BBA maturing 28 September 2020. Sep-10/4.02 18,727,500 (1,007,648) (0.40)
Option on an interest rate swap with Barclays Bank PLC for the obligation to receive a fixed rate of 4.7375% versus the three month USD-LIBOR-BBA maturing 9 March 2021. Mar-11/4.7375 30,112,100 (54,557) (0.02)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.665% versus the three month USD-LIBOR-BBA maturing 8 March 2021. Mar-11/4.665 30,112,100 (60,999) (0.02)
Option on an interest rate swap with Barclays Bank PLC for the obligation to receive a fixed rate of 4.02% versus the three month USD-LIBOR-BBA maturing 28 September 2020. Sep-10/4.02 18,727,500 (11,394) —
Total Written Swaptions Outstanding £(15,987,862) (6.35)
† Single broker source priced securities.
SHORT-TERM INVESTMENTS (24.10%)
Principal
Amounts
Effective
Yield
Maturity
Dates
Value
GBP
% of
Fund
$1,200,000 U.S. Treasury Bills 0.32 10/03/2011 £800,507 0.32
2,903,000 U.S. Treasury Bills* 0.27 16/12/2010 1,938,410 0.77
25,000,000 U.S. Treasury Bills* 0.16 26/08/2010 16,709,811 6.64
40,000,000 U.S. Treasury Bills 0.13 29/07/2010 26,739,780 10.62
21,000,000 U.S. Treasury Bills 0.07 22/07/2010 14,039,013 5.58
635,000 U.S. Treasury Bills 0.35 15/07/2010 424,485 0.17
Total Short-Term Investments £60,652,006 24.10
* Security is partly held as collateral by JP Morgan Chase Bank, N.A.
COLLECTIVE INVESTMENTS SCHEMES (1.99%)
Principal
Amount
Value
GBP
% of
Fund
$7,500,000 Putnam World Trust Global Liquidity Fund £5,014,207 1.99
Total Collective Investments Schemes £5,014,207 1.99
Total Value of Investments £342,880,874 136.20
WRITTEN SWAPTIONS OUTSTANDING (-6.35%)
Expiration date/
Strike price
Contract
value GBP
Value
GBP
% of
Fund
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.525% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.525 38,622,000 £(2,672,074) (1.06)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.745% versus the three month USD-LIBOR-BBA maturing 27 July 2021. Jul-11/4.745 57,933,000 (296,973) (0.12)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.745% versus the three month USD-LIBOR-BBA maturing 27 July 2021. Jul-11/4.745 57,933,000 (4,634,121) (1.85)
Option on an interest rate swap with Citibank, N.A. for the obligation to receive a fixed rate of 4.5475% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.5475 18,110,000 (119,260) (0.05)
Option on an interest rate swap with Citibank, N.A. for the obligation to receive a fixed rate of 4.52% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.52 36,220,000 (247,238) (0.10)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.525% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.525 38,622,000 (262,085) (0.10)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.46% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.46 38,622,000 (284,807) (0.11)
Option on an interest rate swap with Citibank, N.A. for the obligation to pay a fixed rate of 4.5475% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.5475 18,110,000 (1,277,598) (0.51)
32�Putnam World Trust
Putnam Global Fixed Income Alpha Fund S1
The accompanying notes form an integral part of these financial statements.
The accompanying notes form an integral part of these financial statements.
Schedule of Investments cont.
30 June 2010
PURCHASED SWAPTIONS OUTSTANDING cont.
Principal
Amounts
Expiration date/
Strike price
Value
GBP
% of
Fund
$34,045,000 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to receive a fixed rate of 3.995% versus the three month USD-LIBOR-BBA maturing 20 September 2020. Sep-10/3.995 £1,794,717 0.37
22,696,600 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to receive a fixed rate of 3.965% versus the three month USD-LIBOR-BBA maturing 20 September 2020. Sep-10/3.965 1,157,933 0.24
34,045,000 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to pay a fixed rate of 3.995% versus the three month USD-LIBOR-BBA maturing 20 September 2020. Sep-10/3.995 17,526 —
22,696,600 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to pay a fixed rate of 3.965% versus the three month USD-LIBOR-BBA maturing 20 September 2020. Sep-10/3.965 13,050 —
Total Purchased Swaptions Outstanding £11,056,045 2.26
REPURCHASE AGREEMENTS (1.82%)
Principal
Amount
Coupon
Rate %
Maturity
Date
Value
GBP
% of
Fund
$13,287,000 Repurchase Agreement – Bank of America* 0.01 01/07/2010 £8,883,169 1.82
Total Repurchase Agreements £8,883,169 1.82
* Interest in $13,287,000 joint repurchase agreement dated 30 June 2010 with Bank of America due 1 July 2010 – maturity value of $13,287,004 for an effective yield of 0.01% (collateralised by U.S. Treasury Bills with a coupon rate of 1.75% & a due date of 15 April 2013 valued at $41,420,557).
COLLECTIVE INVESTMENTS SCHEMES (1.03%)
Principal
Amount
Value
GBP
% of
Fund
$7,550,000 Putnam World Trust Global Liquidity Fund £5,047,635 1.03
Total Collective Investments Schemes £5,047,635 1.03
Total Value of Investments £965,676,314 197.64
TBA SALES COMMITMENTS (-94.04%)
Principal
Amounts
Coupon
Rate %
Maturity
Dates
Value
GBP
% of
Fund
$91,000,000 Federal Home Loan Mortgage Corporation 6.00 01/07/2040 £(66,024,623) (13.51)
54,000,000 Federal Home Loan Mortgage Corporation 6.00 01/06/2040 (39,254,189) (8.03)
1,000,000 Federal National Mortgage Association 6.50 01/07/2040 (732,283) (0.15)
48,000,000 Federal National Mortgage Association 6.00 01/08/2040 (34,733,413) (7.11)
177,000,000 Federal National Mortgage Association 6.00 01/07/2040 (128,347,561) (26.27)
1,000,000 Federal National Mortgage Association 5.50 01/08/2040 (715,778) (0.15)
89,000,000 Federal National Mortgage Association 5.50 01/07/2040 (63,871,595) (13.07)
1,000,000 Federal National Mortgage Association 5.00 01/08/2040 (704,992) (0.14)
174,000,000 Federal National Mortgage Association 5.00 01/07/2040 (123,073,088) (25.19)
1,000,000 Federal National Mortgage Association 4.50 01/07/2040 (692,848) (0.14)
28,500,000 Freddie Mac Discount Notes 0.17 14/07/2010 19,052,817 3.90
Total Commercial Paper £27,072,072 5.54
PURCHASED SWAPTIONS OUTSTANDING (2.26%)
Principal
Amounts
Expiration date/
Strike price
Value
GBP
% of
Fund
$47,858,400 Option on an interest rate swap with Barclays Bank PLC for the right to receive a fixed rate of 3.74% versus the three month USD-LIBOR-BBA maturing 10 November 2020. Nov-10/3.74 £1,806,189 0.37
47,858,400 Option on an interest rate swap with Barclays Bank PLC for the right to pay a fixed rate of 3.74% versus the three month USD-LIBOR-BBA maturing 10 November 2020. Nov-10/3.74 182,059 0.04
65,715,200 Option on an interest rate swap with Barclays Bank PLC for the right to receive a fixed rate of 3.7375% versus the three month USD-LIBOR-BBA maturing 9 March 2021. Mar-11/3.7375 2,402,345 0.49
65,715,200 Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the right to receive a fixed rate of 3.665% versus the three month USD-LIBOR-BBA maturing 8 March 2021. Mar-11/3.665 2,205,078 0.45
29,067,800 Option on an interest rate swap with Barclays Bank PLC for the right to receive a fixed rateof 3.95% versus the three month USD-LIBOR-BBA maturing 21 September 2020. Sep-10/3.95 1,458,880 0.30
29,067,800 Option on an interest rate swap with Barclays Bank PLC for the right to pay a fixed rate of 3.95% versus the three month USD-LIBOR-BBA maturing 21 September 2020. Sep-10/3.95 18,268 —
Putnam World Trust�45
Putnam Global Fixed Income Alpha Fund S2
The accompanying notes form an integral part of these financial statements.
Schedule of Investments cont.
30 June 2010
TBA SALES COMMITMENTS cont.
Principal
Amounts
Coupon
Rate %
Maturity
Dates
Value
GBP
% of
Fund
WRITTEN SWAPTIONS OUTSTANDING cont.
Expiration date/
Strike price
Contract
value GBP
Value
GBP
% of
Fund
Option on an interest rate swap with Citibank, N.A. for the obligation to pay a fixed rate of 4.52% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.52 52,854,000 £(3,658,348) (0.75)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.46% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.46 56,358,000 (3,724,076) (0.76)
Option on an interest rate swap with Barclays Bank PLC for the obligation to pay a fixed rate of 4.02% versus the three month USD-LIBOR-BBA maturing 28 September 2020. Sep-10/4.02 31,348,100 (1,686,709) (0.35)
Option on an interest rate swap with Barclays Bank PLC for the obligation to receive a fixed rate of 5.36% versus the three month USD-LIBOR-BBA maturing 13 February 2025. Feb-15/5.36 8,143,740 (204,226) (0.04)
Option on an interest rate swap with Barclays Bank PLC for the obligation to pay a fixed rate of 5.36% versus the three month USD-LIBOR-BBA maturing 13 February 2025. Feb-15/5.36 8,143,740 (636,145) (0.13)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 5.27% versus the three month USD-LIBOR-BBA maturing 12 February 2025. Feb-15/5.27 23,394,520 (610,792) (0.13)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 5.27% versus the three month USD-LIBOR-BBA maturing 12 February 2025. Feb-15/5.27 23,394,520 (1,742,075) (0.36)
Option on an interest rate swap with Credit Suisse International for the obligation to receive a fixed rate of 5.135% versus the three month USD-LIBOR-BBA maturing 25 September 2023. Sep-13/5.135 150,000,000 (3,107,805) (0.64)
Option on an interest rate swap with Barclays Bank PLC for the obligation to receive a fixed rate of 4.7375% versus the three month USD-LIBOR-BBA maturing 9 March 2021. Mar-11/4.7375 65,715,200 (119,063) (0.02)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.665% versus the three month USD-LIBOR-BBA maturing 8 March 2021. Mar-11/4.665 65,715,200 (133,122) (0.03)
Option on an interest rate swap with Barclays Bank PLC for the obligation to receive a fixed rate of 4.02% versus the three month USD-LIBOR-BBA maturing 28 September 2020. Sep-10/4.02 31,348,100 (19,072) —
Option on an interest rate swap with Credit Suisse International for the obligation to pay a fixed rate of 5.135% versus the three month USD-LIBOR-BBA maturing 25 September 2023. Sep-13/5.135 150,000,000 (11,426,375) (2.34)
Total Written Swaptions Outstanding £(54,714,797) (11.20)
† Single broker source priced securities.
$1,000,000 Federal National Mortgage Association 4.00 01/07/2040 £(677,075) (0.14)
1,000,000 Federal National Mortgage Association 3.50 01/07/2040 (662,920) (0.14)
Total TBA Sales Commitments £(459,490,365) (94.04)
WRITTEN SWAPTIONS OUTSTANDING (-11.20%)
Expiration date/
Strike price
Contract
value GBP
Value
GBP
% of
Fund
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.525% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.525 56,358,000 £(3,899,144) (0.80)
Option on an interest rate swap with Bank of America, N.A. for the obligation to receive a fixed rate of 4.475% versus the three month USD-LIBOR-BBA maturing 19 August 2021. Aug-11/4.475 179,591,000 (1,468,426) (0.30)
Option on an interest rate swap with Bank of America, N.A. for the obligation to pay a fixed rate of 4.475% versus the three month USD-LIBOR-BBA maturing 19 August 2021. Aug-11/4.475 179,591,000 (11,886,685) (2.42)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.745% versus the three month USD-LIBOR-BBA maturing 27 July 2021. Jul-11/4.745 84,537,000 (433,349) (0.09)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.745% versus the three month USD-LIBOR-BBA maturing 27 July 2021. Jul-11/4.745 84,537,000 (6,762,203) (1.38)
Option on an interest rate swap with Citibank, N.A. for the obligation to receive a fixed rate of 4.5475% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.5475 26,427,000 (174,030) (0.04)
Option on an interest rate swap with Citibank, N.A. for the obligation to receive a fixed rate of 4.52% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.52 52,854,000 (360,782) (0.07)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.525% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.525 56,358,000 (382,439) (0.08)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.46% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.46 56,358,000 (415,597) (0.09)
Option on an interest rate swap with Citibank, N.A. for the obligation to pay a fixed rate of 4.5475% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.5475 26,427,000 (1,864,334) (0.38)
46�Putnam World Trust
Putnam Global Fixed Income Alpha Fund S2
The accompanying notes form an integral part of these financial statements.
185,000 University of Michigan 0.20 01/12/2037 185,000 0.56
Total Municipal Bonds & Notes $4,865,000 14.60
U.S. GOVERNMENT AGENCY OBLIGATIONS (0.60%)
Principal
Amount
Coupon
Rate %
Maturity
Date
Value
USD
% of
Fund
$200,000 Federal Farm Credit Bank 0.54 10/08/2010 $200,000 0.60
Total U.S. Government Agency Obligations $200,000 0.60
U.S. TREASURY OBLIGATIONS (1.80%)
Principal
Amount
Coupon
Rate %
Maturity
Date
Value
USD
% of
Fund
$600,000 U.S. Treasury Notes 2.75 31/07/2010 $601,324 1.80
Total U.S. Treasury Obligations $601,324 1.80
ASSET-BACKED COMMERCIAL PAPER (1.50%)
Principal
Amount
Coupon
Rate %
Maturity
Date
Value
USD
% of
Fund
$500,000 Royal Park Investments Funding Corporation (Belgium) 0.30 09/07/2010 $499,967 1.50
Total Asset-Backed Commercial Paper $499,967 1.50
CERTIFICATES OF DEPOSIT (0.90%)
Principal
Amount
Coupon
Rate %
Maturity
Date
Value
USD
% of
Fund
$300,000 Bank of Tokyo-Mitsubishi UFJ (Japan) 0.30 12/07/2010 $300,000 0.90
Total Certificates of Deposit $300,000 0.90
SHORT-TERM INVESTMENTS (44.85%)
Principal
Amounts
Effective
Yield
Maturity
Dates
Value
USD
% of
Fund
$350,000 U.S. Treasury Bills 0.003 05/05/2011 $349,238 1.05 600,000 U.S. Treasury Bills 0.002 07/04/2011 598,875 1.80 1,200,000 U.S. Treasury Bills 0.002 10/03/2011 1,198,345 3.60 600,000 U.S. Treasury Bills 0.002 16/12/2010 599,412 1.80 600,000 U.S. Treasury Bills 0.002 02/12/2010 599,435 1.80 300,000 U.S. Treasury Bills 0.001 23/09/2010 299,913 0.90 600,000 U.S. Treasury Bills 0.001 16/09/2010 599,904 1.80 1,200,000 U.S. Treasury Bills 0.001 09/09/2010 1,199,685 3.60 1,400,000 U.S. Treasury Bills 0.002 26/08/2010 1,399,627 4.20 300,000 U.S. Treasury Bills 0.001 19/08/2010 299,955 0.90 600,000 U.S. Treasury Bills 0.001 12/08/2010 599,954 1.80 1,200,000 U.S. Treasury Bills 0.0005 05/08/2010 1,199,934 3.60 2,400,000 U.S. Treasury Bills 0.001 29/07/2010 2,399,771 7.20 1,800,000 U.S. Treasury Bills 0.001 22/07/2010 1,799,897 5.40 1,800,000 U.S. Treasury Bills 0.004 15/07/2010 1,799,968 5.40
Total Short-Term Investments $14,943,913 44.85
Total Financial Assets at Fair Value through Profit or Loss $33,603,480 100.83
COMMERCIAL PAPER (19.85%)
Principal
Amounts
Coupon
Rate %
Maturity
Dates
Value
USD
% of
Fund
$200,000 Banco Bilbao Vizcaya Argentina SA (Spain) 0.31 16/07/2010 $199,974 0.60
188,000 Bank of Nova Scotia 0.49 02/08/2010 187,916 0.56 777,000 Fannie Mae 0.24 02/08/2010 776,849 2.33 380,000 Fannie Mae 0.24 25/08/2010 379,861 1.14 600,000 Fannie Mae 0.28 15/09/2010 599,645 1.80 600,000 Fannie Mae 0.20 16/08/2010 599,847 1.80 200,000 Federal Farm Credit Bank 0.20 09/07/2010 199,991 0.60 600,000 Federal Home Loan
Mortgage Corporation 0.24 09/09/2010 599,724 1.80 200,000 Federal Home Loan
Mortgage Corporation 0.19 19/07/2010 199,981 0.60 250,000 Freddie Mac 0.25 12/08/2010 249,927 0.75 325,000 Freddie Mac 0.21 03/08/2010 324,934 0.97 300,000 Freddie Mac 0.25 07/09/2010 299,858 0.90 600,000 Freddie Mac 0.21 23/07/2010 599,923 1.80 250,000 Freddie Mac 0.22 14/07/2010 249,980 0.75 250,000 MetLife Short Term Funding,
LLC 0.37 06/07/2010 249,987 0.75 300,000 Nationwide Building Society
(United Kingdom) 0.33 15/07/2010 299,962 0.90 600,000 Nordea North America
Incorporated 0.28 16/07/2010 599,917 1.80
Total Commercial Paper $6,618,276 19.85
REPURCHASE AGREEMENTS (16.73%)
Principal
Amount
Coupon
Rate %
Maturity
Date
Value
USD
% of
Fund
$5,575,000 Repurchase Agreement – Bank of America* 0.01 01/07/2010 $5,575,000 16.73
Total Repurchase Agreements $5,575,000 16.73
* Interest in $5,575,000 joint repurchase agreement dated 30 June 2010 with Bank of America due 1 July 2010 – maturity value of $5,575,002 for an effective yield of 0.01% (collateralised by U.S. Treasury Bills with a coupon rate of 1.75% and a due date of 15 April 2013 valued at $41,420,557).
(a) Transferable securities admitted to official stock exchange listing 61.25
(b) Transferable securities other than those admitted to official stock exchange listing or dealt in on another regulated market – repurchase agreement 38.62
(c) Other assets 0.13
Total Assets 100.00
64�Putnam World Trust
Putnam Total Return Fund
The accompanying notes form an integral part of these financial statements.
$2,119,283 Putnam World Trust Global Liquidity Fund $2,119,283 4.48
Total Collective Investment Schemes $2,119,283 4.48
Total Value of Investments $53,027,772 111.99
WRITTEN SWAPTIONS OUTSTANDING (-0.79%)
Expiration date/
Strike price
Contract
value USD
Value
USD
% of
Fund
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.525% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.525 650,000 $(67,265) (0.14)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.745% versus the three month USD-LIBOR-BBA maturing 27 July 2021. Jul-11/4.745 975,000 (7,476) (0.02)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.745% versus the three month USD-LIBOR-BBA maturing 27 July 2021. Jul-11/4.745 975,000 (116,655) (0.24)
Option on an interest rate swap with Citibank, N.A. for the obligation to receive a fixed rate of 4.5475% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.5475 304,500 (2,999) (0.01)
Option on an interest rate swap with Citibank, N.A. for the obligation to receive a fixed rate of 4.52% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.52 609,000 (6,218) (0.01)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.525% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.525 650,000 (6,598) (0.01)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to receive a fixed rate of 4.46% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.46 650,000 (7,170) (0.02)
Option on an interest rate swap with Citibank, N.A. for the obligation to pay a fixed rate of 4.5475% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.5475 304,500 (32,131) (0.07)
$7,307,000 Repurchase Agreement – Bank of America* 0.01 01/07/2010 $7,307,000 15.43
Total Repurchase Agreements $7,307,000 15.43
* Interest in $7,307,000 joint repurchase agreement dated 30 June 2010 with Bank of America due 1 July 2010 – maturity value of $7,307,002 for an effective yield of 0.01% (collateralised by U.S. Treasury Bills with a coupon rate of 1.75% and a due date of 15 April 2013 valued at $41,420,557).
SHORT-TERM INVESTMENTS (30.39%)
Principal
Amounts
Effective
Yield
Maturity
Dates
Value
USD
% of
Fund
$1,889,000 U.S. Treasury Bills 0.2655 16/12/2010 $1,886,643 3.98
1,000,000 U.S. Treasury Bills* 0.0745 05/08/2010 999,928 2.12
2,000,000 U.S. Treasury Bills 0.1255 29/07/2010 1,999,805 4.22
6,500,000 U.S. Treasury Bills 0.0455 22/07/2010 6,499,643 13.73
3,000,000 U.S. Treasury Bills 0.0245 08/07/2010 2,999,986 6.34
Total Short-Term Investments $14,386,005 30.39
* Security is partly held as collateral by JP Morgan Chase Bank, N.A.
MORTGAGE-BACKED SECURITIES cont.
Principal
Amounts
Coupon
Rate %
Maturity
Dates
Value
USD
% of
Fund
WARRANTS (—%)
Number
of Warrants
Expiration
date
Strike
price
Value
USD
% of
Fund
Putnam World Trust�83
Putnam Total Return Fund
The accompanying notes form an integral part of these financial statements.
Schedule of Investments cont.
30 June 2010
Option on an interest rate swap with Citibank, N.A. for the obligation to pay a fixed rate of 4.52% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.52 609,000 $(63,050) (0.13)
Option on an interest rate swap with JPMorgan Chase Bank, N.A. for the obligation to pay a fixed rate of 4.46% versus the three month USD-LIBOR-BBA maturing 26 July 2021. Jul-11/4.46 650,000 (64,244) (0.14)
Total Written Swaptions Outstanding $(373,806) (0.79)
The accompanying notes form an integral part of these fi nancial statements.
92�Putnam World Trust
Putnam Asia Pacifi c (Ex-Japan) Equity Fund
Year ended Year ended
30 June 2010 30 June 2009*
USD USD
Operating Income
Interest Income $ 124 $ 91
Dividend Income 172,673 187,174
Net Realised and Unrealised Gains on Financial Assets and Liabilities at Fair Value through Profi t or Loss 1,280,339 2,187,831
$ 1,453,136 $ 2,375,096
Operating Expenses
Management Fees (Note 7) 64,810 34,309
Custody and Trustee Fees (Note 7) 25,358 13,016
Administrator Fees (Note 7) 24,512 12,091
Auditors’ Fees 22,220 22,176
Professional Fees (Note 10) 214 786
Expense Waiver (Note 7) (46,599) —
$ 90,515 $ 82,378
Operating Profi t $ 1,362,621 $ 2,292,718
Finance Costs
Distributions to holders of redeemable participating Units (7,661) —
Profi t for the Financial Year $ 1,354,960 $ 2,292,718
Non-reclaimable withholding tax (13,945) (12,582)
Adjustment from bid market price to last traded market price (Note 3) (31,673) (1,439)
Increase in Net Assets attributable to redeemable participating Unitholders $ 1,309,342 $ 2,278,697
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders. In arriving at the results for the fi nancial year, all amounts above relate to continuing operations.
* Putnam Asia Pacifi c (Ex-Japan) Equity Fund launched on 30 October 2008.
Profi t and Loss Account
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�93
Putnam Currency Alpha Fund*
Year ended Year ended
30 June 2010 30 June 2009
USD USD
Operating Income
Interest Income $ 1,416 $ 7,144
Net Realised and Unrealised Gains/(Losses) on Financial Assets and Liabilities at Fair Value through Profi t or Loss 419,145 (65,822)
$ 420,561 $ (58,678)
Operating Expenses
Management Fees (Note 7) 9,711 5,722
Performance Fees (Note 7) 63,014 —
Custody and Trustee Fees (Note 7) 4,863 9,124
Administrator Fees (Note 7) 12,289 21,391
Auditors’ Fees 12,962 22,176
Professional Fees (Note 10) 3,188 2,239
Other Expenses 6,898 —
$ 112,925 $ 60,652
Operating Profi t/(Loss) $ 307,636 $ (119,330)
Finance Costs
Lehman Interest Expense (613) —
Increase/(Decrease) in Net Assets attributable to redeemable participating Unitholders $ 307,023 $ (119,330)
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders.
* Putnam Currency Alpha Fund terminated on 4 January 2010.
Profi t and Loss Account
The accompanying notes form an integral part of these fi nancial statements.
94�Putnam World Trust
Putnam Emerging Markets Equity Fund
Year ended Year ended
30 June 2010 30 June 2009*
USD USD
Operating Income
Interest Income $ — $ 146
Dividend Income 134,169 128,415
Net Realised and Unrealised Gains on Financial Assets and Liabilities at Fair Value through Profi t or Loss 1,243,761 1,907,222
$ 1,377,930 $ 2,035,783
Operating Expenses
Management Fees (Note 7) 79,149 34,667
Custody and Trustee Fees (Note 7) 44,447 13,930
Administrator Fees (Note 7) 25,473 11,787
Auditors’ Fees 22,220 22,176
Professional Fees (Note 10) 171 1,206
Other Expenses 84 —
Expense Waiver (Note 7) (60,410) —
$ 111,134 $ 83,766
Operating Profi t $ 1,266,796 $ 1,952,017
Finance Costs
Distributions to holders of redeemable participating Units (1,528) —
Profi t for the Financial Year $ 1,265,268 $ 1,952,017
Non-reclaimable withholding tax (12,626) (10,485)
Adjustment from bid market price to last traded market price (Note 3) (32,458) 9,177
Increase in Net Assets attributable to redeemable participating Unitholders $ 1,220,184 $ 1,950,709
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders. In arriving at the results for the fi nancial year, all amounts above relate to continuing operations.
* Putnam Emerging Markets Equity Fund launched on 30 October 2008.
Profi t and Loss Account
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�95
Putnam Global Core Equity Fund
Year ended Year ended
30 June 2010 30 June 2009*
USD USD
Operating Income
Interest Income $ 156 $ 561
Dividend Income 163,491 114,918
Net Realised and Unrealised Gains on Financial Assets and Liabilities at Fair Value through Profi t or Loss 165,024 118,252
$ 328,671 $ 233,731
Operating Expenses
Management Fees (Note 7) 54,750 30,535
Custody and Trustee Fees (Note 7) 15,866 9,249
Administrator Fees (Note 7) 25,141 11,095
Auditors’ Fees 22,220 22,176
Professional Fees (Note 10) 146 739
Expense Waiver (Note 7) (40,528) —
$ 77,595 $ 73,794
Operating Profi t $ 251,076 $ 159,937
Finance Costs
Distributions to holders of redeemable participating Units (1,708) —
Profi t for the Financial Year $ 249,368 $ 159,937
Non-reclaimable withholding tax (33,159) (19,667)
Adjustment from bid market price to last traded market price (Note 3) (22,283) 5,140
Increase in Net Assets attributable to redeemable participating Unitholders $ 193,926 $ 145,410
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders. In arriving at the results for the fi nancial year, all amounts above relate to continuing operations.
* Putnam Global Core Equity Fund launched on 16 October 2008.
Profi t and Loss Account
The accompanying notes form an integral part of these fi nancial statements.
96�Putnam World Trust
Putnam Global Fixed Income Alpha Fund S1
Year ended Year ended
30 June 2010 30 June 2009
GBP GBP
Operating Income
Interest Income £ 21,111,270 £ 24,756,691
Net Realised and Unrealised Gains/(Losses) on Financial Assets and Liabilities at Fair Value through Profi t or Loss 30,171,105 (17,039,334)
£ 51,282,375 £ 7,717,357
Operating Expenses
Management Fees (Note 7) 957,297 862,738
Performance Fees (Note 7) 6,632,307 —
Custody and Trustee Fees (Note 7) 127,157 108,403
Administrator Fees (Note 7) 370,828 395,526
Auditors’ Fees 61,898 51,815
Professional Fees (Note 10) 8,155 95,502
Other Expenses 281,380 461,613
Expense Waiver (Note 7) (114,195) (262,838)
£ 8,324,827 £ 1,712,759
Operating Profi t £ 42,957,548 £ 6,004,598
Finance Costs
Distributions to holders of redeemable participating Units (15,447,220) —
Profi t for the Financial Year £ 27,510,328 £ 6,004,598
Non-reclaimable withholding tax (8,513) (28,001)
Increase in Net Assets attributable to redeemable participating Unitholders £ 27,501,815 £ 5,976,597
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders. In arriving at the results for the fi nancial year, all amounts above relate to continuing operations.
Profi t and Loss Account
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�97
Putnam Global Fixed Income Alpha Fund S2
Year ended Year ended
30 June 2010 30 June 2009
GBP GBP
Operating Income
Interest Income £ 64,510,830 £ 59,170,096
Net Realised and Unrealised Gains/(Losses) on Financial Assets and Liabilities at Fair Value through Profi t or Loss 52,841,786 (84,663,649)
£ 117,352,616 £ (25,493,553)
Operating Expenses
Management Fees (Note 7) 1,388,992 1,461,453
Performance Fees (Note 7) 9,298,866 —
Custody and Trustee Fees (Note 7) 197,609 176,390
Administrator Fees (Note 7) 438,309 540,081
Auditors’ Fees 61,898 51,815
Professional Fees (Note 10) 8,168 123,812
Other Expenses 341,936 529,511
Expense Waiver (Note 7) (31,487) (237,859)
£ 11,704,291 £ 2,645,203
Operating Profi t/(Loss) £ 105,648,325 £ (28,138,756)
Finance Costs
Distributions to holders of redeemable participating Units (18,931,718) (8,445,909)
Profi t/(Loss) for the Financial Year £ 86,716,607 £ (36,584,665)
Increase/(Decrease) in Net Assets attributable to redeemable participating Unitholders £ 86,590,997 £ (36,640,373)
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders. In arriving at the results for the fi nancial year, all amounts above relate to continuing operations.
Profi t and Loss Account
The accompanying notes form an integral part of these fi nancial statements.
98�Putnam World Trust
Putnam Global High Yield Bond Fund
Year ended Year ended
30 June 2010 30 June 2009
USD USD
Operating Income
Interest Income $ 29,961,900 $ 26,199,043
Dividend Income 211,194 164,643
Net Realised and Unrealised Gains/(Losses) on Financial Assets and Liabilities at Fair Value through Profi t or Loss 30,527,471 (37,580,990)
$ 60,700,565 $ (11,217,304)
Operating Expenses
Management Fees (Note 7) 2,195,316 1,896,566
Custody and Trustee Fees (Note 7) 86,948 57,719
Administrator Fees (Note 7) 539,579 379,876
Auditors’ Fees 35,552 34,970
Professional Fees (Note 10) 4,757 32,141
Other Expenses 193,653 718,616
$ 3,055,805 $ 3,119,888
Operating Profi t/(Loss) $ 57,644,760 $ (14,337,192)
Finance Costs
Distributions to holders of redeemable participating Units (33,520,813) (24,642,004)
Profi t/(Loss) for the Financial Year $ 24,123,947 $ (38,979,196)
Non-reclaimable withholding tax (57,147) (68,826)
Adjustment from bid market price to last traded market price (Note 3) 2,167 1,740
Increase/(Decrease) in Net Assets attributable to redeemable participating Unitholders $ 24,068,967 $ (39,046,282)
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders. In arriving at the results for the fi nancial year, all amounts above relate to continuing operations.
Profi t and Loss Account
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�99
Putnam Global Liquidity Fund
Year ended Year ended
30 June 2010 30 June 2009*
USD USD
Operating Income
Interest Income $ 76,998 $ 344,035
Net Realised and Unrealised Gains/(Losses) on Financial Assets and Liabilities at Fair Value through Profi t or Loss 44 (16,740)
$ 77,042 $ 327,295
Operating Expenses
Custody and Trustee Fees (Note 7) 8,641 6,856
Administrator Fees (Note 7) 47,194 35,184
Auditors’ Fees 22,220 22,176
Professional Fees (Note 10) 302 6,182
Other Expenses 1,848 35,638
Expense Waiver (Note 7) (25,803) (56,672)
$ 54,402 $ 49,364
Operating Profi t $ 22,640 $ 277,931
Finance Costs
Distributions to holders of redeemable participating Units (23,433) (294,755)
(Decrease) in Net Assets attributable to redeemable participating Unitholders $ (793) $ (16,824)
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders. In arriving at the results for the fi nancial year, all amounts above relate to continuing operations.
* Putnam Global Liquidity Fund launched on 22 September 2008.
Profi t and Loss Account
The accompanying notes form an integral part of these fi nancial statements.
100�Putnam World Trust
Putnam Total Return Fund
Year ended Year ended
30 June 2010 30 June 2009
USD USD
Operating Income
Interest Income $ 1,010,410 $ 1,184,027
Dividend Income 353,603 740,691
Net Realised and Unrealised Gains/(Losses) on Financial Assets and Liabilities at Fair Value through Profi t or Loss 4,968,990 (25,697,756)
$ 6,333,003 $ (23,773,038)
Operating Expenses
Management Fees (Note 7) 647,134 809,649
Custody and Trustee Fees (Note 7) 57,969 80,717
Administrator Fees (Note 7) 94,155 88,895
Auditors’ Fees 79,992 76,764
Professional Fees (Note 10) — 15,357
Other Expenses — 78,048
Expense Waiver (Note 7) (101,122) (173,068)
$ 778,128 $ 976,362
Operating Profi t/(Loss) $ 5,554,875 $ (24,749,400)
Finance Costs
Distributions to holders of redeemable participating Units (2,001,870) (839,708)
Profi t/(Loss) for the Financial Year $ 3,553,005 $ (25,589,108)
Adjustment from bid market price to last traded market price (Note 3) (79,250) 94,723
Increase/(Decrease) in Net Assets attributable to redeemable participating Unitholders $ 3,393,471 $ (25,639,450)
There are no recognised gains or losses arising in the year other than the increase/(decrease) in Net Assets attributable to redeemable participating Unitholders. In arriving at the results for the fi nancial year, all amounts above relate to continuing operations.
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�101
Putnam Asia Pacifi c (Ex-Japan) Equity Fund
30 June 2010 30 June 2009
USD USD
Current Assets
Financial Assets at Fair Value through Profi t or Loss $ 4,274,797 $ 7,173,301
Cash at Bank 41,892 158,699
Receivable for Expense Reimbursal 46,599 —
Sales of Investments Awaiting Settlement 24,352 58,238
Dividend Income Receivable 21,254 19,929
Total Assets $ 4,408,894 $ 7,410,167
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement 15,176 65,750
Financial Liabilities at Fair Value through Profi t or Loss 5,612 9,159
Distributions Payable 55 —
Expenses Payable 22,561 25,682
Total Current Liabilities $ 43,404 $ 100,591
Net Assets attributable to redeemable participating Unitholders at bid value $ 4,365,490 $ 7,309,576
Adjustments from bid market value to last traded market value $ (33,112) $ (1,439)
Net Assets attributable to redeemable participating Unitholders $ 4,332,378 $ 7,308,137
Class A
Units in Issue 3,096 1,407
Net Assets 53,538 20,329
Net Asset Value per Unit 17.29* 14.45
Class B
Units in Issue 939 804
Net Assets 16,102 11,583
Net Asset Value per Unit 17.14 14.40
Class C
Units in Issue 100 100
Net Assets 1,722 1,442
Net Asset Value per Unit 17.22 14.42
Class I
Units in Issue 200,163 399,700
Net Assets 3,509,484 5,802,449
Net Asset Value per Unit 17.53 14.52
Class M
Units in Issue 17,061 38,562
Net Assets 353,765 768,427
Net Asset Value per Unit € 16.95 € 14.20
Class T
Units in Issue 16,168 30,497
Net Assets 397,767 703,907
Net Asset Value per Unit £ 16.47 £ 14.02
* Net asset value per unit may not recalculate due to rounding of fractional shares.
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
102�Putnam World Trust
Putnam Currency Alpha Fund*
30 June 2010 30 June 2009
USD USD
Current Assets
Financial Assets at Fair Value through Profi t or Loss $ — $ 2,083,957
Cash at Bank 7,441 1,197
Sales of Investments Awaiting Settlement — 37,214
Interest Income Receivable — 43
Total Assets $ 7,441 $ 2,122,411
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement — 103,581
Financial Liabilities at Fair Value through Profi t or Loss — 127,871
Expenses Payable 7,441 10,279
Total Current Liabilities $ 7,441 $ 241,731
Net Assets attributable to redeemable participating Unitholders $ — $ 1,880,680
Class E
Units in Issue — 68,894
Net Assets — 947,039
Net Asset Value per Unit € — € 9.80
Class I
Units in Issue — 50,000
Net Assets — 478,015
Net Asset Value per Unit — 9.56
Class S
Units in Issue — 28,131
Net Assets — 455,626
Net Asset Value per Unit £ — £ 9.84
* Putnam Currency Alpha Fund terminated on 4 January 2010.
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�103
Putnam Emerging Markets Equity Fund
30 June 2010 30 June 2009
USD USD
Current Assets
Financial Assets at Fair Value through Profi t or Loss $ 4,839,481 $ 7,313,079
Cash at Bank 62,534 146,461
Receivable for Expense Reimbursal 60,410 —
Sales of Investments Awaiting Settlement — 233,160
Subscription of Units Awaiting Settlement — 200,572
Premium Paid on Swap Contracts — 188,906
Dividend Income Receivable 20,040 37,271
Interest Income Receivable 1 11
Total Assets $ 4,982,466 $ 8,119,460
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement 67,662 766,933
Financial Liabilities at Fair Value through Profi t or Loss 4,508 13,033
Distributions Payable 17 —
Expenses Payable 33,505 26,848
Total Current Liabilities $ 105,692 $ 806,814
Net Assets attributable to redeemable participating Unitholders at bid value $ 4,876,774 $ 7,312,646
Adjustments from bid market value to last traded market value $ (23,281) $ 9,177
Net Assets attributable to redeemable participating Unitholders $ 4,853,493 $ 7,321,823
Class A
Units in Issue 11,153 11,101
Net Assets 179,953 152,971
Net Asset Value per Unit 16.13 13.78
Class B
Units in Issue 27,636 16,349
Net Assets 441,798 224,617
Net Asset Value per Unit 15.99 13.74
Class C
Units in Issue 100 100
Net Assets 1,606 1,376
Net Asset Value per Unit 16.06 13.76
Class I
Units in Issue 212,147 399,700
Net Assets 3,485,792 5,545,613
Net Asset Value per Unit 16.43 13.87
Class M
Units in Issue 18,146 38,562
Net Assets 349,605 730,655
Net Asset Value per Unit € 15.75 € 13.50
Class T
Units in Issue 17,204 30,497
Net Assets 394,739 666,591
Net Asset Value per Unit £ 15.35 £ 13.28
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
104�Putnam World Trust
Putnam Global Core Equity Fund
30 June 2010 30 June 2009
USD USD
Current Assets
Financial Assets at Fair Value through Profi t or Loss $ 4,631,858 $ 5,494,900
Cash at Bank 87,741 112,722
Receivable for Expense Reimbursal 40,528 —
Sales of Investments Awaiting Settlement 1,243 24,239
Subscription of Units Awaiting Settlement — 486
Dividend Income Receivable 7,062 13,151
Interest Income Receivable — 17
Total Assets $ 4,768,432 $ 5,645,515
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement 2,167 45,270
Financial Liabilities at Fair Value through Profi t or Loss 37,638 34,927
Distributions Payable 128 —
Expenses Payable 23,859 19,260
Total Current Liabilities $ 63,792 $ 99,457
Net Assets attributable to redeemable participating Unitholders at bid value $ 4,704,640 $ 5,546,058
Adjustments from bid market value to last traded market value $ (17,143) $ 5,140
Net Assets attributable to redeemable participating Unitholders $ 4,687,497 $ 5,551,198
Class A
Units in Issue 17,528 17,024
Net Assets 186,974 176,075
Net Asset Value per Unit 10.67 10.34
Class B
Units in Issue 20,726 21,940
Net Assets 219,141 226,115
Net Asset Value per Unit 10.57 10.31
Class C
Units in Issue 100 100
Net Assets 1,061 1,032
Net Asset Value per Unit 10.61 10.32
Class I
Units in Issue 324,404 399,700
Net Assets 3,503,701 4,155,678
Net Asset Value per Unit 10.80 10.40
Class M
Units in Issue 29,753 37,037
Net Assets 372,517 519,473
Net Asset Value per Unit € 10.24 € 10.00
Class T
Units in Issue 26,802 28,934
Net Assets 404,103 472,825
Net Asset Value per Unit £ 10.09 £ 9.93
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�105
Putnam Global Fixed Income Alpha Fund S1
30 June 2010 30 June 2009
GBP GBP
Current Assets
Financial Assets at Fair Value through Profi t or Loss £ 352,821,370 £ 596,034,967
Cash at Bank — 12,726,161
Sales of Investments Awaiting Settlement 26,732,744 115,493,599
Premium Paid on Swap Contracts 4,558,481 5,277,694
Interest Income Receivable 3,906,316 13,052,256
Total Assets £ 388,018,911 £ 742,584,677
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement 75,253,340 147,289,274
Financial Liabilities at Fair Value through Profi t or Loss 59,029,309 124,273,566
Premium Received on Swap Contracts 931,882 5,813,210
Expenses Payable 445,178 542,998
Payable for Receivable Purchase Agreement (Note 11) — 3,100,433
Bank Overdraft 605,954 —
Total Current Liabilities £ 136,265,663 £ 281,019,481
Net Assets attributable to redeemable participating Unitholders £ 251,753,248 £ 461,565,196
Class S
Units in Issue 23,262,334 45,024,920
Net Assets 251,753,248 461,565,196
Net Asset Value per Unit £ 10.82 £ 10.25
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
106�Putnam World Trust
Putnam Global Fixed Income Alpha Fund S2
30 June 2010 30 June 2009
GBP GBP
Current Assets
Financial Assets at Fair Value through Profi t or Loss £ 986,277,216 £ 2,386,029,667
Sales of Investments Awaiting Settlement 1,162,551,613 1,516,621,275
Premium Paid on Swap Contracts 14,829,634 17,604,359
Receivable for Receivable Purchase Agreement (Note 11) 980,858 3,148,636
Interest Income Receivable 12,618,778 53,534,150
Other Debtors 390 —
Total Assets £ 2,177,258,489 £ 3,976,938,087
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement 1,055,305,346 1,649,401,071
Financial Liabilities at Fair Value through Profi t or Loss 571,633,320 1,655,853,455
Premium Received on Swap Contracts 541,603 7,645,386
Redemption of Units Awaiting Settlement 30,000,000 —
Expenses Payable 578,668 696,448
Bank Overdraft 30,602,973 8,199,090
Total Current Liabilities £ 1,688,661,910 £ 3,321,795,450
Net Assets attributable to redeemable participating Unitholders £ 488,596,579 £ 655,142,637
Class I*
Units in Issue — 272,170
Net Assets — 1,541,889
Net Asset Value per Unit $ — $ 9.36
Class S
Units in Issue 45,980,311 69,791,049
Net Assets 488,596,579 653,600,748
Net Asset Value per Unit £ 10.63 £ 9.37
* Putnam Global Fixed Income Alpha Fund S2 Class I Units were closed on 21 August 2009.
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�107
Putnam Global High Yield Bond Fund
30 June 2010 30 June 2009
USD USD
Current Assets
Financial Assets at Fair Value through Profi t or Loss $ 277,905,176 $ 272,516,719
Cash at Bank 354,686 190,271
Sales of Investments Awaiting Settlement 1,493,498 2,643,994
Subscription of Units Awaiting Settlement 25,397 11,148
Dividend Income Receivable 818 1,065
Interest Income Receivable 5,540,693 5,574,621
Receivable for Receivable Purchase Agreement (Note 11) 406 1,462
Total Assets $ 285,320,674 $ 280,939,280
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement 1,838,704 2,231,310
Financial Liabilities at Fair Value through Profi t or Loss 108,934 447,954
Distributions Payable 92,520 125,645
Expenses Payable 869,033 886,315
Total Current Liabilities $ 2,909,191 $ 3,691,224
Net Assets attributable to redeemable participating Unitholders at bid value $ 282,411,483 $ 277,248,056
Adjustments from bid market value to last traded market value $ 3,907 $ 1,740
Net Assets attributable to redeemable participating Unitholders $ 282,415,390 $ 277,249,796
Class A
Units in Issue 1,128,620 959,815
Net Assets 7,166,393 5,436,352
Net Asset Value per Unit 6.35 5.66
Class B
Units in Issue 783,675 795,944
Net Assets 4,957,323 4,475,293
Net Asset Value per Unit 6.33 5.62
Class C
Units in Issue 120,159 14,394
Net Assets 965,633 103,469
Net Asset Value per Unit 8.04 7.19
Class E
Units in Issue 86,375 85,157
Net Assets 773,681 779,313
Net Asset Value per Unit € 7.33 € 6.52
Class I
Units in Issue 85,952,535 121,170,699
Net Assets 209,075,738 265,908,635
Net Asset Value per Unit 2.43 2.19
Class S
Units in Issue 8,659,060 81,283
Net Assets 59,476,622 546,734
Net Asset Value per Unit £ 4.60 £ 4.09
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
108�Putnam World Trust
Putnam Global Liquidity Fund
30 June 2010 30 June 2009
USD USD
Current Assets
Financial Assets at Fair Value through Profi t or Loss $ 33,603,480 $ 32,400,095
Cash at Bank 842 441
Subscription of Units Awaiting Settlement — 1,506
Expenses Prepaid 35,408 108,716
Interest Income Receivable 8,083 20,548
Total Assets $ 33,647,813 $ 32,531,306
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement 299,969 —
Redemption of Units Awaiting Settlement — 1,163
Distributions Payable 1,738 9,275
Expenses Payable 18,314 12,528
Total Current Liabilities $ 320,021 $ 22,966
Net Assets attributable to redeemable participating Unitholders $ 33,327,792 $ 32,508,340
Class P
Units in Issue 33,345,339 32,525,095
Net Assets 33,327,792 32,508,340
Net Asset Value per Unit 1.00 1.00
Balance Sheet
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�109
Putnam Total Return Fund
30 June 2010 30 June 2009
USD USD
Current Assets
Financial Assets at Fair Value through Profi t or Loss $ 54,721,391 $ 49,856,821
Cash at Bank 14,327 911,624
Sales of Investments Awaiting Settlement 430,346 7,122,958
Subscription of Units Awaiting Settlement 52,922 —
Premium Paid on Swap Contracts 449,418 6,402,798
Dividend Income Receivable 54,174 46,113
Interest Income Receivable 271,509 946,995
Receivable for Receivable Purchase Agreements (Note 11) 557,377 71,426
Total Assets $ 56,551,464 $ 65,358,735
Creditors
(amounts falling due within one year)
Purchase of Investments Awaiting Settlement 4,160,506 18,717,684
Payable for Receivable Purchase Agreement (Note 11) — 143,719
Financial Liabilities at Fair Value through Profi t or Loss 2,980,226 7,720,942
Premium Received on Swap Contracts 392,705 1,023,116
Redemption of Units Awaiting Settlement 1,385,650 —
Expenses Payable 251,091 388,316
Distributions Payable 139 —
Total Current Liabilities $ 9,170,317 $ 27,993,777
Net Assets attributable to redeemable participating Unitholders at bid value $ 47,381,147 $ 37,364,958
Adjustments from bid market value to last traded market value $ (32,342) $ 46,908
Net Assets attributable to redeemable participating Unitholders $ 47,348,805 $ 37,411,866
Class A
Units in Issue 2,984,182 2,541,090
Net Assets 30,315,345 21,524,969
Net Asset Value per Unit 10.16 8.47
Class B
Units in Issue 273,059 305,227
Net Assets 2,485,461 2,327,962
Net Asset Value per Unit 9.10 7.63
Class C
Units in Issue 461,167 358,860
Net Assets 4,225,282 2,747,934
Net Asset Value per Unit 9.16 7.66
Class M
Units in Issue 1,072,542 1,172,876
Net Assets 9,928,093 10,447,544
Net Asset Value per Unit € 7.57 € 6.35
Class S
Units in Issue 94,272 90,829
Net Assets 394,624 363,457
Net Asset Value per Unit £ 2.80 £ 2.43
The accompanying notes form an integral part of these fi nancial statements.
110�Putnam World Trust
Statement of Changes in Net Assets Attributable to Redeemable Participating UnitholdersPutnam Asia Pacifi c (Ex-Japan) Equity Fund
Year ended Year ended
30 June 2010 30 June 2009*
USD USD
Net Assets attributable to redeemable participating Unitholders at beginning of year $ 7,308,137 $ —
Increase in Net Assets attributable to redeemable participating Unitholders from operations 1,309,342 2,278,697
Net (Decrease)/Increase in Net Assets resulting from Unit Transactions (4,285,101) 5,029,440
(Decrease)/Increase in Net Assets (2,975,759) 7,308,137
Net Assets attributable to redeemable participating Unitholders at end of year $ 4,332,378 $ 7,308,137
* Putnam Asia Pacifi c (Ex-Japan) Equity Fund launched on 30 October 2008.
Putnam Currency Alpha Fund*
Year ended Year ended
30 June 2010 30 June 2009
USD USD
Net Assets attributable to redeemable participating Unitholders at beginning of year $ 1,880,680 $ —
Increase/(Decrease) in Net Assets attributable to redeemable participating Unitholders from operations 307,023 (119,330)
Net (Decrease)/Increase in Net Assets resulting from Unit Transactions (2,187,703) 2,000,010
(Decrease)/Increase in Net Assets (1,880,680) 1,880,680
Net Assets attributable to redeemable participating Unitholders at end of year $ — $ 1,880,680
* Putnam Currency Alpha Fund terminated on 4 January 2010.
Putnam Emerging Markets Equity Fund
Year ended Year ended
30 June 2010 30 June 2009*
USD USD
Net Assets attributable to redeemable participating Unitholders at beginning of year $ 7,321,823 $ —
Increase in Net Assets attributable to redeemable participating Unitholders from operations 1,220,184 1,950,709
Net (Decrease)/Increase in Net Assets resulting from Unit Transactions (3,688,514) 5,371,114
(Decrease)/Increase in Net Assets (2,468,330) 7,321,823
Net Assets attributable to redeemable participating Unitholders at end of year $ 4,853,493 $ 7,321,823
* Putnam Emerging Markets Equity Fund launched on 30 October 2008.
The accompanying notes form an integral part of these fi nancial statements.
Putnam World Trust�111
Statement of Changes in Net Assets Attributable to Redeemable Participating UnitholdersPutnam Global Core Equity Fund
Year ended Year ended
30 June 2010 30 June 2009*
USD USD
Net Assets attributable to redeemable participating Unitholders at beginning of year $ 5,551,198 $ —
Increase in Net Assets attributable to redeemable participating Unitholders from operations 193,926 145,410
Net (Decrease)/Increase in Net Assets resulting from Unit Transactions (1,057,627) 5,405,788
(Decrease)/Increase in Net Assets (863,701) 5,551,198
Net Assets attributable to redeemable participating Unitholders at end of year $ 4,687,497 $ 5,551,198
* Putnam Global Core Equity Fund launched on 16 October 2008.
Putnam Global Fixed Income Alpha Fund S1
Year ended Year ended
30 June 2010 30 June 2009
GBP GBP
Net Assets attributable to redeemable participating Unitholders at beginning of year £ 461,565,196 £ 455,371,943
Increase in Net Assets attributable to redeemable participating Unitholders from operations 27,501,815 5,976,597
Net (Decrease)/Increase in Net Assets resulting from Unit Transactions (237,313,763) 216,656
(Decrease)/Increase in Net Assets (209,811,948) 6,193,253
Net Assets attributable to redeemable participating Unitholders at end of year £ 251,753,248 £ 461,565,196
Putnam Global Fixed Income Alpha Fund S2
Year ended Year ended
30 June 2010 30 June 2009
GBP GBP
Net Assets attributable to redeemable participating Unitholders at beginning of year £ 655,142,637 £ 669,159,073
Increase/(Decrease) in Net Assets attributable to redeemable participating Unitholders from operations 86,590,997 (36,640,373)
Net (Decrease)/Increase in Net Assets resulting from Unit Transactions (253,137,055) 22,623,937
(Decrease) in Net Assets (166,546,058) (14,016,436)
Net Assets attributable to redeemable participating Unitholders at end of year £ 488,596,579 £ 655,142,637
The accompanying notes form an integral part of these fi nancial statements.
112�Putnam World Trust
Statement of Changes in Net Assets Attributable to Redeemable Participating Unitholders
Putnam Total Return Fund
Year ended Year ended
30 June 2010 30 June 2009
USD USD
Net Assets attributable to redeemable participating Unitholders at beginning of year $ 37,411,866 $ 122,521,556
Increase/(Decrease) in Net Assets attributable to redeemable participating Unitholders from operations 3,393,471 (25,639,450)
Net Increase/(Decrease) in Net Assets resulting from Unit Transactions 6,543,468 (59,470,240)
Increase/(Decrease) in Net Assets 9,936,939 (85,109,690)
Net Assets attributable to redeemable participating Unitholders at end of year $ 47,348,805 $ 37,411,866
Putnam Global Liquidity Fund
Year ended Year ended
30 June 2010 30 June 2009*
USD USD
Net Assets attributable to redeemable participating Unitholders at beginning of year $ 32,508,340 $ —
(Decrease) in Net Assets attributable to redeemable participating Unitholders from operations (793) (16,824)
Net Increase in Net Assets resulting from Unit Transactions 820,245 32,525,164
Increase in Net Assets 819,452 32,508,340
Net Assets attributable to redeemable participating Unitholders at end of year $ 33,327,792 $ 32,508,340
* Putnam Global Liquidity Fund launched on 22 September 2008.
Putnam Global High Yield Bond Fund
Year ended Year ended
30 June 2010 30 June 2009
USD USD
Net Assets attributable to redeemable participating Unitholders at beginning of year $ 277,249,796 $ 280,288,240
Increase/(Decrease) in Net Assets attributable to redeemable participating Unitholders from operations 24,068,967 (39,046,282)
Net (Decrease)/Increase in Net Assets resulting from Unit Transactions (18,903,373) 36,007,838
Increase/(Decrease) in Net Assets 5,165,594 (3,038,444)
Net Assets attributable to redeemable participating Unitholders at end of year $ 282,415,390 $ 277,249,796
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 113
1. Basis of Presentation
i) Basis of accountingThe financial statements have been prepared under the historical cost convention as modified to include investments at fair value by the revaluation of financial assets and financial liabilities held at fair value through profit or loss. The financial statements of any Funds which terminated during the year have been prepared on a termination basis.
The financial statements have been prepared in accordance with accounting standards generally accepted in Ireland and in accordance with the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2003, (as amended). Accounting standards generally accepted in Ireland in preparing financial statements giving a true and fair view are those issued by the Accounting Standards Board and published by the Institute of Chartered Accountants in Ireland.
The Trust has availed of the exemption available to open-ended investment funds under Financial Reporting Standard No. 1 (Revised) “Cash Flow Statement” not to prepare a cash flow statement.
ii) Critical accounting estimates and assumptionsManagement makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are outlined below.
Fair value of derivative financial instrumentsThe Trust may, from time to time, hold financial instruments that are not quoted in active markets, such as over-the-counter derivatives. Fair values of such instruments are determined by using valuation techniques. Where valuation techniques are used to determine fair value they are validated and periodically reviewed by experienced personnel at Putnam Investments (Ireland) Limited, (the “Manager”) or its affiliates, independent of the party that created them. The prices used at the period end which have been sourced from a single broker source are the best estimates of fair value as at the year end date. However, there is a degree of uncertainty in respect of these prices. It may not always be possible to close out the positions at the stated mark with the given counterparty. The Directors believe that the values arrived at are reasonable and prudent, however actual results may differ from these estimates and the differences could be material.
All the Trust’s financial assets and financial liabilities are held for the purpose of being traded.
2. Accounting PoliciesSignificant accounting policies adopted by the Trust are as follows:
A) Investmentsi) Valuation of Investments
Investments are reported at fair value. The fair value of financial instruments traded in active markets (such as publicly traded derivatives and trading securities) is based on current bid prices for listed equities, quoted bid prices for long fixed-income positions and offer prices for short positions at the balance sheet date. Where any of the investments are not listed on Recognised Stock Exchanges such securities shall be valued at their probable realisation value as determined by the Manager or its delegate, each of them being approved by the Trustee as a competent person for such purpose.
ClassificationThe Trust classifies its investments in debt and equity securities, and related derivatives, as financial assets or financial liabilities at fair value through profit or loss. These financial assets and financial liabilities are classified as held for trading or designated by the Trust’s Manager at fair value through profit or loss at inception.
Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Trust’s documented investment strategy. The Trust’s policy is for the Investment Advisor to evaluate the information about these financial assets on a fair value basis together with other related financial information.
Fair value estimationThe fair value of financial instruments traded in active markets is based upon market prices at the balance sheet date. When the Trust holds derivatives with offsetting market risks, it uses mid market prices as a basis for establishing fair values for the offsetting risk positions and applies this mid price to the net open position, as appropriate.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Trust uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Valuation techniques used include the use of comparable recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.
Certain securities may be valued on the basis of a price provided by a single broker. Single broker priced securities are highlighted in the Schedule of Investments by the † symbol. Some Funds may invest in securities with contractual cash flows, such as asset backed securities, collateralised mortgage obligations and commercial mortgage backed securities, including securities backed by sub-prime mortgage loans. The value, liquidity and related income of these securities are sensitive to changes in economic conditions, including real estate values, delinquencies and/or defaults, and may be adversely affected by shifts in the market’s perception of the issuers and changes in interest rates.
Notes to the Financial Statements as at 30 June 2010
114 Putnam World Trust
FuturesFutures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The Funds 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”. For open futures, changes in the value of the contract are recognised as unrealised Profits or losses by “marking-to-market” the value of the contract at the Balance Sheet date. Unrealised gains or losses on open futures contracts are shown in the Schedules of Investments of each relevant Fund and as appropriate, on the Balance Sheet as part of financial assets and liabilities at fair value through profit or loss.
OptionsThe Funds may purchase and sell (write) call and put options on securities, securities indices and foreign currencies traded in the over-the-counter market.
When the Funds write a covered call or a put option a premium is received by the Funds. An amount equal to the premium is subsequently marked-to-market to reflect the fair value of the option written, which is reported as a liability on the Balance Sheet for each relevant Fund. The difference between the premium amount and the fair value reported on the Balance Sheet gives rise to an unrealised gain/(loss). When Funds purchase a call or a put option a premium is paid by the Funds. The premium on purchased put options exercised is subtracted from the proceeds of the sale of the underlying security or foreign currency in determining the realised gain or loss. The premium on purchased call options exercised is included in determining initial fair value of the securities or foreign currency purchased. Premiums paid from the purchase of options which expire unexercised are treated as realised losses. The premium is subsequently marked-to-market to reflect the fair value of the option purchased, which is reported as an asset on the Balance Sheet for each relevant Fund.
The options are valued at close of business on the dealing day at the settlement price as provided by the counterparty/broker and the values are independently verified, at a minimum, weekly. In the event of it being impossible or incorrect to carry out a valuation of a specific investment in accordance with the valuation rules, or if such valuation is not representative of a security’s fair market value, the Directors of the Manager or their delegate are entitled to use other generally recognised valuation methods in order to reach a proper valuation of that specific instrument, provided that such method of valuation has been approved by the Trustee.
If an option which the Funds have written either expires on its stipulated expiration date or the Funds enter into a closing purchase transaction, the Funds realise a gain (or loss, if the cost of a closing purchase transaction exceeds the premium received when the option was sold) without regard to any unrealised gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which the Funds have written is exercised, the Funds realise a capital gain or loss from the sale of the underlying security, and the proceeds from such sale are increased by the premium originally received. When a put option which the Funds have written is exercised, the amount of the premium originally received will reduce the cost of the security which the Funds purchase upon exercise of the option.
Total Return Swap ContractsThe Funds may enter into total return swap contracts, which are arrangements to exchange a market linked return for a periodic payment, both based on a notional principal amount to help enhance the Funds’ return and manage the Funds’ exposure to credit risk. To the extent that the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Funds will receive a payment from or make a payment to the counterparty. Total return swap contracts are marked to market daily based upon quotations from market makers and the change, if any, is recorded as an unrealised gain or loss. Payments received or made are recorded as realised gains or losses. Certain total return swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract. Total return swap contracts outstanding at year end, if any, are listed after the Funds’ Schedules of Investments. Outstanding contracts at year end are indicative of the volume of activity during the year.
Interest Rate Swap ContractsThe Funds may enter into interest rate swap contracts, which are arrangements between two parties to exchange cash flows based on a notional principal amount, to manage the Funds’ exposure to interest rates. An interest rate swap can be purchased or sold with an upfront premium. An upfront payment received by the Funds is recorded as a liability on the Funds’ books. An upfront payment made by the Funds is recorded as an asset on the Funds’ books. Interest rate swap contracts are marked to market daily based upon quotations from an independent pricing service or market makers and the change, if any, is recorded as an unrealised gain or loss. Payments received or made are recorded as realised gains or losses. Certain interest rate swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract. Interest rate swap contracts outstanding at year end, if any, are listed after the Funds’ Schedules of Investments. Outstanding contracts at period end are indicative of the volume of activity during the year.
Credit Default Swap ContractsThe Fund may enter into credit default contracts to provide a measure of protection against risk of loss following a default, or other credit event in respect of issuers within an underlying index or a single issuer, or to gain credit exposure to an underlying index or issuer. In a credit default contract, the protection buyer typically makes an up front payment and a periodic stream of payments to a counterparty, the protection seller, in exchange for the right to receive a contingent payment upon the occurrence of a credit event on the reference obligation or all other equally ranked obligations of the reference entity. Credit events are contract specific but may
2. Accounting Policies cont.
A) Investments cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 115
include bankruptcy, failure to pay, restructuring and obligation acceleration. An upfront payment by a Fund, as the protection seller, is recorded as a liability on the Fund’s books. An upfront payment made by the Fund, as the protection buyer, is recorded as an asset on the Fund’s books. Periodic payments received or paid by the Fund are recorded as realised gains or losses. The credit default contracts are marked to market daily based upon quotations from an independent pricing service or market makers and the change, if any, is recorded as an unrealised gain or loss. Upon the occurrence of a credit event, the difference between the par value and market value of the reference obligation, net of any proportional amount of the upfront payment, is recorded as a realised gain or loss.
In addition to bearing the risk that the credit event will occur, the Fund could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index or the possibility that a Fund may be unable to close out its position at the same time or at the same price as if it had purchased the underlying reference obligations. In certain circumstances, the Fund may enter into offsetting credit default contracts which would mitigate their risk of loss. Risks of loss may exceed amounts recognised on the Balance Sheet. The Fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the contract. This risk may be mitigated by having a master netting arrangement between the Fund and the counterparty. Where the Funds are sellers of protection, the maximum potential amount of future payments the Funds may be required to make is equal to the notional amount of the relevant credit default contract. Credit default contracts outstanding, including their respective notional amounts at year end, if any, are listed after the Fund’s Schedule of Investments. Outstanding contracts at year end are indicative of the volume of activity during the year.
SwaptionsThis instrument combines the features of two other financial instruments, namely an option and a swap. A swaption involves writing/purchasing options to enter into a swap. Swaptions are priced using the standard Black pricing model where the inputs required are the term of the option, the price and volatility of the underlying instrument (the swap), the strike price of the option and the risk free rate of return (yield curve).
A Fund records an unrealised gain (loss) for the amount expected to be received or paid under the swaption agreement if the agreement was terminated on the Balance Sheet date and is recorded as under financial assets at fair value through profit or loss on the Fund’s Balance Sheet and Schedule of Investments.
When a Fund writes a swaption, a premium is received by the Fund and the swaption is initially recognised at the amount of the premium. The swaption is subsequently marked-to-market to reflect the fair value of the swaption written, which is reported as a liability on that Fund’s Balance Sheet. The difference between the premium received and the fair value reported on the Balance Sheet gives rise to an unrealised gain (loss). When a swaption which a Fund has written is exercised, the amount of the premium originally received will offset the cost of the swap upon exercise of the option in arriving at the movement in unrealised gain or loss to be included in the profit and loss account. Premiums received on swaptions written which expire unexercised are treated as realised gains.
When a Fund purchases a swaption, a premium is paid by that Fund and the swaption is initially recognised at the amount of the premium. The swaption is subsequently marked-to-market to reflect the fair value of the swaption purchased, which is reported as an asset on the Fund’s Balance Sheet. When a swaption which a Fund holds is exercised, the amount of the premium originally paid will offset the cost of the swap upon exercise of the option in arriving at the movement in unrealised gain or loss to be included in the profit and loss account. Premiums paid from the purchase of swaptions which expire unexercised are treated as realised losses.
TBA Purchase Commitments (to be announced)Certain Funds may enter into “TBA” (To Be Announced) purchase commitments to purchase securities for a fixed unit price at a future date beyond customary settlement time. Although the unit price has been established, the principal value has not been finalised.
The Funds hold, and maintain until settlement date, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or the Funds may enter into offsetting contracts for the forward sale of other securities they own.
Income on the securities will not be earned until settlement date. TBA purchase commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to settlement date, the risk of which is in addition to the risk of decline in the value of the Funds’ other assets.
Unsettled TBA purchase commitments are valued at the current market value of the underlying securities, according to the procedures described under “Valuation of Investments” above.
Although the Funds may enter into TBA purchase commitments with the intention of acquiring securities for their portfolios or for delivery pursuant to options contracts they have entered into, the Funds may dispose of a commitment prior to settlement if the Investment Advisor deems it appropriate to do so.
TBAs are accounted for in line with the accounting policy for the underlying instruments.
TBA Sales CommitmentsCertain Funds may enter into TBA sale commitments to hedge their portfolio positions or to sell mortgage-backed securities they own under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date.
During the time a TBA sale commitment is outstanding, equivalent deliverable securities, or an offsetting TBA purchase commitment deliverable on or before the sale commitment date, are held as “cover” for the transaction.
2. Accounting Policies cont.
A) Investments cont. Credit Default Swap Contracts cont.
Notes to the Financial Statements as at 30 June 2010
116 Putnam World Trust
Unsettled TBA sale commitments are valued at the current market value of the underlying securities, generally according to the procedures described under the “Valuation of Investments” above. The contract is marked to market daily and the change in market value is recorded by the Funds as an unrealised gain or loss. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the Funds realise a gain or loss. If the Funds deliver securities under the commitment, the Funds realise a gain or loss from the sale of the securities based upon the unit price established at the date the commitment was entered into.
Repurchase AgreementsSecurities purchased under the agreements to resell are valued at notional value plus accrued interest. Interest rates vary for each repurchase agreement and are set at the initiation of the agreement. Interest earned under such agreements is accounted for on an accruals basis.
Investments in Investment CompaniesInvestments in Investment Companies are valued at fair value at the latest available unaudited net asset value for the shares obtained from the relevant administrator. The changes in the daily net asset value of these shares is recognised as part of “Net unrealised gains or losses on financial assets at fair value through profit or loss” as part of the profit and loss account.
Cash and Other Liquid AssetsCash and other liquid assets will be valued at their face value with interest accrued, where applicable, at the close of the regular trading session of the New York Stock Exchange (“NYSE”).
Accounting for Investments Recognition/derecognition
Purchases and sales of investments are recognised on the day the transaction takes place. Investments are derecognised when the rights to receive cash flows from the investments have expired or the Trust has transferred substantially all risks and rewards of ownership.
MeasurementFinancial assets and financial liabilities at fair value through profit or loss are initially recognised at fair value. Transaction costs are expensed in the profit and loss account. Subsequent to initial recognition, all financial assets and financial liabilities at fair value through profit or loss are measured at fair value in accordance with the policies above. Gains and losses arising from changes in the fair value of the financial assets of liabilities at fair value through profit or loss category are presented in the profit and loss account in the year in which they arise.
Net gains/(losses) on investment activitiesIn respect of each instrument type classified as financial instruments at fair value through profit or loss, the movement in unrealised gains/(losses) since the prior year end and realised gains/(losses) are included in net realised and unrealised gains/(losses) on financial assets and liabilities at fair value through profit or loss.
Realised gains and losses on investment transactions are calculated using the average cost method.
CollateralThe Fund’s assets may be pledged as collateral to, and held by the counterparty and brokers for open futures and swap contracts.
Collateral is recognised on the date the relevant Fund becomes a party to the contractual provisions.
B) Income and Expenses from Investmentsi) Dividend Income
Dividend income arising on the underlying equity investments of the Trust is credited to the profit and loss account on the date on which the relevant securities are listed as “ex-dividend”. Income is accounted for gross of any non reclaimable/irrecoverable withholding taxes and net of any tax credits. The withholding tax is shown separately in the profit and loss account.
ii) Bond InterestBond interest is recognised as income of the Trust on an effective interest basis. The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Trust estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses.
iii) Interest IncomeIncome arising on the underlying investments of the Trust is recognised as income of the Trust on an effective interest basis. Bank interest is recognised on an accruals basis.
iv) ExpensesEach Fund shall pay all of its expenses and such proportion of the Trust’s expenses as is allocated to that Fund based on the average net asset value of the Fund when the expense is accrued. The costs and gains or (losses) of any currency hedging transactions will be attributable to the relevant Class. To the extent that expenses are attributable to a specific Class of a Fund, that Class shall bear such expenses. All expenses are accrued on a daily basis.
2. Accounting Policies cont.
A) Investments cont. TBA Sales Commitments cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 117
C) Foreign Exchange Translationi) Functional and Presentation Currency
Items included in the Trust’s financial statements are measured and reported using the currency of the primary economic environment in which it operates (“the functional currency”). The Board of Directors of the Manager considers U.S. Dollars as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions for all Funds other than Putnam Global Fixed Income Alpha Fund S1 and Putnam Global Fixed Income Alpha Fund S2. The US Dollar is the currency in which each Fund (other than Putnam Global Fixed Income Alpha Fund S1 and Putnam Global Fixed Income Alpha Fund S2) measures its performance and reports its results, as well as the currency in which it receives subscriptions from its investors. For Putnam Global Fixed Income Alpha Fund S1 and Putnam Global Fixed Income Alpha Fund S2, the functional currency is Sterling.
Assets and liabilities, including net assets attributable to holders of redeemable participating units, are translated at the closing rate at each balance sheet date. Exchange differences arising between the rate of translation of subscriptions and redemptions are also attributed to the holders of redeemable participating units.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account.
ii) Forward Foreign Exchange ContractsThe Trust may enter into various types of forward currency contracts including Euro and Sterling Class level hedging, foreign security hedging and security transaction level hedging. The unrealised gain or loss on open forward foreign exchange contracts is calculated by reference to the difference between the contracted rate and the rate to close out the contract. Realised gains or losses include net gains on contracts, which have been settled or offset by other contracts. For foreign security hedges and security transaction level hedges, realised and unrealised gains and losses are allocated at the Fund level. For Euro and Sterling Class level hedges, these realised and unrealised gains and losses are allocated solely to the Euro and Sterling Unit Classes. While the Trust will attempt to hedge against the US Dollar to Euro and Sterling currency exposure, there can be no guarantee that the value of the Euro and Sterling Classes will not be affected by the value of the Euro and Sterling relative to the US Dollar.
D) Redeemable Participating Unitsi) Redeemable participating units are redeemable at the Unitholder’s option and are classified as financial liabilities. The participating
unit can be put back to the Trust at any time for cash equal to a proportionate unit of the Trust’s net asset value. The participating unit is carried at the redemption amount that is payable at the Balance Sheet date if the Unitholder exercised his/her right to put the unit back to the Trust.
If the number of Units in a Fund falling to be redeemed on any Dealing Day is equal to 10% or more of the total number of Units in issue or deemed to be in issue in that Fund on such Dealing Day, the Manager may in its discretion refuse to redeem any Units in that Fund in excess of 10% of the total number of Units in issue or deemed to be in issue in that Fund as aforesaid and, if the Manager so refuses, upon notification to the relevant Unitholders, the requests for redemption of Units in that Fund on such Dealing Day shall be reduced rateably and the Units in that Fund to which each request relates which are not redeemed by reason of such refusal shall be treated as if a request for redemption had been made in respect of each subsequent Dealing Day until all the Units in that Fund to which the original request related have been redeemed provided, however, that the Manager may at its discretion, redeem in full the Units of smaller redemption requests (that represent 1% or less of Units in issue or deemed to be in issue) rather than including them in the pro rata calculation with the larger redemption requests received on such Dealing Day. Redemption requests will be dealt with fairly in accordance with the above.
ii) Distributions payable to holders of redeemable unitsProposed distributions to holders of redeemable units are recognised in the profit and loss account when the Trust incurs a legal or constructive obligation to pay such a distribution. The distribution on these redeemable units is recognised in the profit and loss account as a finance cost. During the year certain Funds and classes of the Trust were granted UK distributor status by HM Revenue & Customs for the year ending 30 June 2009. A similar application will be made for the current year. There was no change in the nature of the Trust’s business during the year.
E) Other Receivables and Payablesi) Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables are recognised initially at fair value plus transaction costs that are directly attributable to their acquisition origination. They are subsequently measured at amortised cost.
ii) PayablesPayables are recognised initially at fair value and subsequently stated at amortised cost.
iii) Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
2. Accounting Policies cont.
Notes to the Financial Statements as at 30 June 2010
118 Putnam World Trust
F) Bank OverdraftsUnder the Trust Deed between the Trust and State Street Custodial Services (Ireland) Limited, the custodian bank has a lien on the securities of each Fund to the extent permitted by that Fund’s investment restrictions to cover any advances made by the custodian bank for the settlement of securities purchased by the Fund. At the close of the reporting period, the payable to the custodian bank represents the amount due for cash advanced for the settlement of securities purchased.
3. Number of Units in Issue and Net Assets Attributable to Redeemable Participating Unitholders Each of the units entitles the holder to participate equally on a pro rata basis in the profits and dividends of the Funds attributable to such Class of units and to attend and vote at meetings of the Fund represented by those units. No class of units confers on the holder thereof any preferential or pre-emptive rights or any rights to participate in the profits and dividends of any other class of units or any voting rights in relation to matters relating solely to any other class of units. Each unit represents an undivided beneficial interest in the relevant Fund.
The return on an investment in the Fund will depend solely upon the investment performance of the assets in the Fund and the increase or decrease (as the case may be) in the net asset value of the units. The amount payable to a unitholder in respect of each unit upon liquidation of the relevant Fund will equal the net asset value per unit of that Fund.
In accordance with the provisions of the Trust’s Trust Deed listed investments and investments with prices quoted in over-the-counter markets or by market makers are generally stated at the last traded price (for listed equities) or bid price (for fixed income securities) on the valuation day for the purpose of determining net asset value per unit for subscriptions and redemptions and for various fee calculations.
However, as stated in note 2A(i), the accounting policy of the Funds for the purpose of compliance with FRS 26 and for reporting purpose is to value its investments at the relevant bid or offer market prices on the Balance Sheet date.
As at 30 June 2010, the difference between the valuation stated in the financial statements of investments and the valuation methodology indicated in the Trust’s Trust Deed, results in a (decrease)/increase in value of investments of US$(101,971) (2009: US$61,526). Net assets attributable to unitholders represent a liability on the Balance Sheet, carried at the redemption amount that would be payable at the Balance Sheet date if the unitholder exercised the right to redeem his/her units to the Trust. Consequently, the differences described above adjust the carrying amount of the net assets attributable to unitholders and are recognised in the profit and loss account. The amount expensed for the year ended 30 June 2010 was US$163,497 (2009: US$41,503). The cumulative differences are included as “Adjustments from bid market value to last traded market value” on the Balance Sheet.
Number of Units
Putnam Asia Pacific (Ex-Japan) Equity Fund 30 June 2010 30 June 2009
Class A UnitsBalance at beginning of year 1,407 —
Issued during year 1,689 1,407
Balance at end of year 3,096 1,407
Class B Units
Balance at beginning of year 804 —
Issued during year 135 804
Balance at end of year 939 804
Class C Units
Balance at beginning of year 100 —
Issued during year — 100
Balance at end of year 100 100
Class I Units
Balance at beginning of year 399,700 —
Issued during year — 399,700
Redeemed during year (199,537) —
Balance at end of year 200,163 399,700
Class M Units
Balance at beginning of year 38,562 —
Issued during year — 38,562
Redeemed during year (21,501) —
Balance at end of year 17,061 38,562
Class T Units
Balance at beginning of year 30,497 —
Issued during year — 30,497
Reinvested during year 285 —
Redeemed during year (14,614) —
Balance at end of year 16,168 30,497
All classes in Putnam Asia Pacific (Ex-Japan) Equity Fund launched on 30 October 2008 and were issued with an initial issue price of 10 in their respective currencies.
2. Accounting Policies cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 119
Putnam Currency Alpha Fund* 30 June 2010 30 June 2009
Class E Units
Balance at beginning of period 68,894 —
Issued during period — 68,894
Redeemed during period (68,894) —
Balance at end of period — 68,894
Class I Units
Balance at beginning of period 50,000 —
Issued during period — 50,000
Redeemed during period (50,000) —
Balance at end of period — 50,000
Class S Units
Balance at beginning of period 28,131 —
Issued during period — 28,131
Redeemed during period (28,131) —
Balance at end of period — 28,131
All classes in Putnam Currency Alpha Fund launched on 4 September 2008 and were issued with an initial issue price of 10 in their respective currencies. The Fund terminated on 4 January 2010.
Putnam Emerging Markets Equity Fund 30 June 2010 30 June 2009
Class A Units
Balance at beginning of year 11,101 —
Issued during year 1,554 11,101
Redeemed during year (1,502) —
Balance at end of year 11,153 11,101
Class B Units Balance at beginning of year 16,349 —
Issued during year 11,287 16,349
Balance at end of year 27,636 16,349
Class C Units
Balance at beginning of year 100 —
Issued during year — 100
Balance at end of year 100 100
Class I Units Balance at beginning of year 399,700 —
Issued during year — 399,700
Redeemed during year (187,553) —
Balance at end of year 212,147 399,700
Class M Units
Balance at beginning of year 38,562 —
Issued during year — 38,562
Redeemed during year (20,416) —
Balance at end of year 18,146 38,562
Class T Units
Balance at beginning of year 30,497 —
Issued during year — 30,497
Reinvested during year 60 —
Redeemed during year (13,353) —
Balance at end of year 17,204 30,497
All classes in Putnam Emerging Markets Equity Fund launched on 30 October 2008 and were issued with an initial issue price of 10 in their respective currencies.
3. Number of Units in Issue and Net Assets Attributable to Redeemable Participating Unitholders cont.Number of Units cont.
Notes to the Financial Statements as at 30 June 2010
120 Putnam World Trust
Putnam Global Core Equity Fund 30 June 2010 30 June 2009
Class A Units
Balance at beginning of year 17,024 —
Issued during year 4,411 17,024
Redeemed during year (3,907) —
Balance at end of year 17,528 17,024
Class B Units
Balance at beginning of year 21,940 —
Issued during year 613 21,940
Redeemed during year (1,827) —
Balance at end of year 20,726 21,940
Class C Units
Balance at beginning of year 100 —
Issued during year — 100
Balance at end of year 100 100
Class I Units
Balance at beginning of year 399,700 —
Issued during year — 399,700
Redeemed during year (75,296) —
Balance at end of year 324,404 399,700
Class M Units
Balance at beginning of year 37,037 —
Issued during year — 37,037
Redeemed during year (7,284) —
Balance at end of year 29,753 37,037
Class T Units Balance at beginning of year 28,934 —
Issued during year — 28,934
Reinvested during year 90 —
Redeemed during year (2,222) —
Balance at end of year 26,802 28,934
All classes in Putnam Global Core Equity Fund launched on 16 October 2008 and were issued with an initial issue price of 10 in their respective currencies.
Putnam Global Fixed Income Alpha Fund S1 30 June 2010 30 June 2009
Class S Units
Balance at beginning of year 45,024,920 45,002,431
Issued during year 22,087 22,489
Reinvested during year 1,426,336 —
Redeemed during year (23,211,009) —
Balance at end of year 23,262,334 45,024,920
3. Number of Units in Issue and Net Assets Attributable to Redeemable Participating Unitholders cont.Number of Units cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 121
Putnam Global Fixed Income Alpha Fund S2 30 June 2010 30 June 2009
Class I Units*
Balance at beginning of year 272,170 500,000
Redeemed during year (272,170) (227,830)
Balance at end of year — 272,170
Class S Units
Balance at beginning of year 69,791,049 66,661,983
Issued during year 636,672 1,925,945
Reinvested during year 578,226 1,203,121
Redeemed during year (25,025,636) —
Balance at end of year 45,980,311 69,791,049
* Putnam Global Fixed Income Alpha Fund S2 Class I Units were closed on 21 August 2009.
Putnam Global High Yield Bond Fund 30 June 2010 30 June 2009
Class A Units
Balance at beginning of year 959,815 540,356
Issued during year 642,288 879,240
Reinvested during year 62,212 61,973
Redeemed during year (535,695) (521,754)
Balance at end of year 1,128,620 959,815
Class B Units Balance at beginning of year 795,944 1,003,663
Issued during year 70,309 368,422
Reinvested during year 37,063 47,018
Redeemed during year (119,641) (623,159)
Balance at end of year 783,675 795,944
Class C Units
Balance at beginning of year 14,394 59,172
Issued during year 115,796 8,395
Reinvested during year 2,466 819
Redeemed during year (12,497) (53,992)
Balance at end of year 120,159 14,394
Class E Units
Balance at beginning of year 85,157 76,706
Issued during year 32,832 200
Reinvested during year 7,838 8,451
Redeemed during year (39,452) (200)
Balance at end of year 86,375 85,157
Class I Units
Balance at beginning of year 121,170,699 103,430,646
Issued during year 31,721,825 5,632,365
Reinvested during year 11,207,771 12,107,705
Redeemed during year (78,147,760) (17)
Balance at end of year 85,952,535 121,170,699
Class S Units
Balance at beginning of year 81,283 73,994
Issued during year 8,386,894 —
Reinvested during year 631,171 7,289
Redeemed during year (440,288) —
Balance at end of year 8,659,060 81,283
3. Number of Units in Issue and Net Assets Attributable to Redeemable Participating Unitholders cont.Number of Units cont.
Notes to the Financial Statements as at 30 June 2010
122 Putnam World Trust
Putnam Global Liquidity Fund 30 June 2010 30 June 2009*
Class P Units
Balance at beginning of year 32,525,095 —
Issued during year 20,967,789 56,873,875
Reinvested during year 475 2,152
Redeemed during year (20,148,020) (24,350,932)
Balance at end of year 33,345,339 32,525,095
* Putnam Global Liquidity Fund launched on 22 September 2008. Class P Units were issued with an initial issue price of $1.00.
Putnam Total Return Fund 30 June 2010 30 June 2009
Class A Units
Balance at beginning of year 2,541,090 4,717,394
Issued during year 1,413,706 1,289,046
Reinvested during year — 29,274
Redeemed during year (970,614) (3,494,624)
Balance at end of year 2,984,182 2,541,090
Class B Units
Balance at beginning of year 305,227 54,906
Issued during year 2,710 340,748
Reinvested during year — 240
Redeemed during year (34,878) (90,667)
Balance at end of year 273,059 305,227
Class C Units
Balance at beginning of year 358,860 311,282
Issued during year 187,677 286,520
Reinvested during year — 1,127
Redeemed during year (85,370) (240,069)
Balance at end of year 461,167 358,860
Class M Units
Balance at beginning of year 1,172,876 5,325,787
Issued during year 259,195 1,710,682
Reinvested during year — 28,988
Redeemed during year (359,529) (5,892,581)
Balance at end of year 1,072,542 1,172,876
Class S Units Balance at beginning of year 90,829 58,880
Reinvested during year 3,443 38,349
Redeemed during year — (6,400)
Balance at end of year 94,272 90,829
3. Number of Units in Issue and Net Assets Attributable to Redeemable Participating Unitholders cont.Number of Units cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 123
4. Current and Prior Year NAV DetailsPutnam Asia Pacific (Ex-Japan) Equity Fund 30 June 2010 30 June 2009 USD USD
Total Net Asset Value $ 4,332,378 $ 7,308,137
Class A
Units in Issue 3,096 1,407
Net Asset Value per Unit 17.29 14.45
Class B
Units in Issue 939 804
Net Asset Value per Unit 17.14 14.40
Class C
Units in Issue 100 100
Net Asset Value per Unit 17.22 14.42
Class I
Units in Issue 200,163 399,700
Net Asset Value per Unit 17.53 14. 52
Class M
Units in Issue 17,061 38,562
Net Asset Value per Unit € 16.95 € 14.20
Class T
Units in Issue 16,168 30,497
Net Asset Value per Unit £ 16.47 £ 14.02
Putnam Currency Alpha Fund* 30 June 2010 30 June 2009 USD USD
Total Net Asset Value $ — $ 1,880,680
Class E Units in Issue — 68,894
Net Asset Value per Unit € — € 9.80
Class I Units in Issue — 50,000
Net Asset Value per Unit — 9.56
Class S Units in Issue — 28,131
Net Asset Value per Unit £ — £ 9.84
* Putnam Currency Alpha Fund terminated on 4 January 2010.
Notes to the Financial Statements as at 30 June 2010
124 Putnam World Trust
Putnam Emerging Markets Equity Fund 30 June 2010 30 June 2009 USD USD
Total Net Asset Value $ 4,853,493 $ 7,321,823
Class A
Units in Issue 11,153 11,101
Net Asset Value per Unit 16.13 13.78
Class B
Units in Issue 27,636 16,349
Net Asset Value per Unit 15.99 13.74
Class C
Units in Issue 100 100
Net Asset Value per Unit 16.06 13.76
Class I Units in Issue 212,147 399,700
Net Asset Value per Unit 16.43 13.87
Class M Units in Issue 18,146 38,562
Net Asset Value per Unit € 15.75 € 13.50
Class T Units in Issue 17,204 30,497
Net Asset Value per Unit £ 15.35 £ 13.28
Putnam Global Core Equity Fund 30 June 2010 30 June 2009 USD USD
Total Net Asset Value $ 4,687,497 $ 5,551,198
Class A
Units in Issue 17,528 17,024
Net Asset Value per Unit 10.67 10.34
Class B
Units in Issue 20,726 21,940
Net Asset Value per Unit 10.57 10.31
Class C
Units in Issue 100 100
Net Asset Value per Unit 10.61 10.32
Class I
Units in Issue 324,404 399,700
Net Asset Value per Unit 10.80 10.40
Class M
Units in Issue 29,753 37,037
Net Asset Value per Unit € 10.24 € 10.00
Class T
Units in Issue 26,802 28,934
Net Asset Value per Unit £ 10.09 £ 9.93
4. Current and Prior Year NAV Details cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 125
Putnam Global Fixed Income Alpha Fund S1 30 June 2010 30 June 2009 30 June 2008 GBP GBP GBP
Total Net Asset Value £ 251,753,248 £ 461,565,196 £ 455,371,943
Class S
Units in Issue 23,262,334 45,024,920 45,002,431
Net Asset Value per Unit £ 10.82 £ 10.25 £ 10.12
Putnam Global Fixed Income Alpha Fund S2 30 June 2010 30 June 2009 30 June 2008 GBP GBP GBP
Total Net Asset Value £ 488,596,579 £ 655,142,637 £ 669,159,073
Class I*
Units in Issue — 272,170 500,000
Net Asset Value per Unit $ — $ 9.36 $ 9.83
Class S
Units in Issue 45,980,311 69,791,049 66,661,983
Net Asset Value per Unit £ 10.63 £ 9.37 £ 10.00
* Putnam Global Fixed Income Alpha Fund S2 Class I Units were closed on 21 August 2009.
Putnam Global High Yield Bond Fund 30 June 2010 30 June 2009 30 June 2008 USD USD USD
Total Net Asset Value $ 282,415,390 $ 277,249,796 $ 280,288,240
Class A Units in Issue 1,128,620 959,815 540,356
Net Asset Value per Unit 6.35 5.66 6.65
Class B Units in Issue 783,675 795,944 1,003,663
Net Asset Value per Unit 6.33 5.62 6.58
Class C
Units in Issue 120,159 14,394 59,172
Net Asset Value per Unit 8.04 7.19 7.90
Class E
Units in Issue 86,375 85,157 76,706
Net Asset Value per Unit € 7.33 € 6.52 € 7.61
Class I
Units in Issue 85,952,535 121,170,699 103,430,646
Net Asset Value per Unit 2.43 2.19 2.59
Class S
Units in Issue 8,659,060 81,283 73,994
Net Asset Value per Unit £ 4.60 £ 4.09 £ 4.67
Putnam Global Liquidity Fund 30 June 2010 30 June 2009 USD USD
Total Net Asset Value $ 33,327,792 $ 32,508,340
Class P
Units in Issue 33,345,339 32,525,095
Net Asset Value per Unit 1.00 1.00
4. Current and Prior Year NAV Details cont.
Notes to the Financial Statements as at 30 June 2010
126 Putnam World Trust
Putnam Total Return Fund 30 June 2010 30 June 2009 30 June 2008 USD USD USD
Total Net Asset Value $ 47,348,805 $ 37,411,866 $ 122,521,556
Class A
Units in Issue 2,984,182 2,541,090 4,717,394
Net Asset Value per Unit 10.16 8.47 10.08
Class B
Units in Issue 273,059 305,227 54,906
Net Asset Value per Unit 9.10 7.63 9.02
Class C
Units in Issue 461,167 358,860 311,282
Net Asset Value per Unit 9.16 7.66 9.04
Class M Units in Issue 1,072,542 1,172,876 5,325,787
Net Asset Value per Unit € 7.57 € 6.35 € 7.67
Class S Units in Issue 94,272 90,829 58,880
Net Asset Value per Unit £ 2.80 £ 2.43 £ 4.93
5. Risks Associated with Financial InstrumentsAs defined in FRS 29 Financial Instruments, the reporting standard, risk can be separated into the following components: market risk (which includes market price risk, foreign currency risk, interest rate risk), liquidity risk and credit or default risk. The Trust’s risk management process consists of a multi-layered and cross functional review that provides a system of checks and balances. The Investment Advisor performs reviews at least monthly and agrees on policies for managing each of these risks and they are summarised below. The Board of Directors of the Manager of the Trust receives monthly reporting on risk matters and reviews the risk management process on an annual basis. These policies have remained substantially unchanged since the beginning of the year to which these financial statements relate.
a) Market price riskMarket price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the Trust might suffer through holding market positions in the face of price movements caused by factors specific to the individual investment or factors affecting all instruments traded in the market. The Investment Advisor considers the asset allocation of the portfolios in order to minimise the risk associated with particular countries or industry sectors whilst continuing to follow the Trust’s investment objectives.
The Investment Advisor measures both the Fund’s total risk as well as its risk of underperformance versus its stated benchmark (also referred to as active risk or tracking error “TE”).
The market risk exposure for each Fund as at 30 June 2010 is equivalent to the fair values of investments held, as reflected in each Fund’s Schedule of Investments.
Aggregate Value at riskThe Investment Advisor considers the asset allocation of the portfolios in order to seek to minimise the risk associated with particular countries or industry sectors whilst continuing to follow the Trust’s investment objectives. The Value at Risk (VaR) risk measure estimates the potential loss in pre-taxation profit over a given holding period for a specified confidence level. The VaR methodology is a statistically defined, probability-based approach that takes into account market volatilities as well as risk diversification by recognising off setting positions and correlations between products and markets. Risks can be measured consistently across all markets and products, and risk measures can be aggregated to arrive at a single risk number.
Given the interdependencies between market variables, the Trust also estimates the VaR or threshold loss that is not expected to be exceeded at the 99th percentile confidence level over a 1-day horizon. The Investment Advisor uses a proprietary multi-factor model to estimate the active risk (also referred to as tracking error) from which VaR estimates can be analytically derived. The VaR estimates presented below are point-in-time and vary over time as a function of market and portfolio composition changes.
Given its reliance on historical data, VaR is most effective in estimating risk exposures in markets in which there are no sudden fundamental changes or sudden shifts in market conditions. An inherent limitation of VaR is that the distribution of past changes in market risk factors may not produce accurate predictions of future risk. Different VaR methodologies and distributional assumptions could produce a materially different VaR. Moreover, VaR calculated for a one-day time horizon does not fully capture the market risk of positions that cannot be liquidated or off set with hedges within one day. Changes in VaR between reporting periods are generally due to changes in levels of exposure, volatilities and/or correlations among asset classes.
The table overleaf shows the VaR of each Fund, its stated benchmark (if applicable) as well as the ratio between the two measures (also referred to as relative VaR) for Funds in issue as of 30 June 2010 and 30 June 2009.
4. Current and Prior Year NAV Details cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 127
Fund VaR Portfolio % Benchmark % Ratio
Putnam Asia Pacific (Ex-Japan) Equity Fund 30-Jun-10 4.45 4.32 1.03
30-Jun-09 4.86 5.09 0.95
Putnam Emerging Markets Equity Fund 30-Jun-10 4.77 4.58 1.04
30-Jun-09 5.13 5.30 0.97
Putnam Global Core Equity Fund 30-Jun-10 3.91 3.67 1.07
30-Jun-09 4.58 4.44 1.03
Putnam Global Fixed Income Alpha Fund S1 30-Jun-10 2.11 N/A N/A
30-Jun-09 1.90 N/A N/A
Putnam Global Fixed Income Alpha Fund S2 30-Jun-10 1.99 N/A N/A
30-Jun-09 2.13 N/A N/A
Putnam Global High Yield Bond Fund 30-Jun-10 2.84 2.45 1.16
30-Jun-09 2.31 2.67 0.87
Putnam Total Return Fund 30-Jun-10 2.27 2.03 1.11
30-Jun-09 2.23 2.59 0.87
Certain Funds only report their portfolio VaR. The VaR is tracked against a limit of 5% and uses a cash equivalent benchmark, therefore, the ratio is not relevant.
b) Foreign currency riskCurrency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The risk arises on financial instruments that are denominated in a currency other than the functional currency in which they are measured. A substantial proportion of each Fund’s assets are held in currencies other than the base currency with the result that the Funds’ Balance Sheets can be significantly affected by currency movements.
Certain Class level hedges as included in the analysis of the Portfolio of Investments are entered into in order to hedge the value of the Euro, Pound Sterling, and US Dollar Unit Classes and are not included in the analysis below.
Putnam Asia Pacific (Ex-Japan) Equity Fund 2010
Non-Monetary Assets
Monetary Assets Total
Currency USD USD USD
Australian Dollar 793,575 5,968 799,543
British Pound 17,585 6 17,591
Euro — 648 648
Hong Kong Dollar 1,515,088 15,455 1,530,543
Indian Rupee 27,001 580 27,581
Indonesian Rupiah 253,634 1,488 255,122
Malaysian Ringgit 17,836 — 17,836
Singapore Dollar 253,476 2,258 255,734
South Korean Won 633,245 2,040 635,285
Taiwan Dollar 490,274 19,885 510,159
Thailand Baht 57,334 — 57,334
Total 4,059,048 48,328 4,107,376
Putnam Emerging Markets Equity Fund2010
Non-Monetary Assets
Monetary Assets Total
Currency USD USD USD
Brazilian Cruzeiro 189,653 577 190,230
British Pound 44,861 — 44,861
Egyptian Pound 33,566 20 33,586
Euro — 4 4
Hong Kong Dollar 1,074,266 10,197 1,084,463
Indian Rupee 164,028 1,530 165,558
Indonesian Rupiah 127,378 1,149 128,527
Malaysian Ringgit 48,184 — 48,184
Mexican Peso 111,877 3 111,880
South African Rand 282,326 — 282,326
Putnam Emerging Markets Equity Fund cont.2010
Non-Monetary Assets
Monetary Assets Total
Currency USD USD USD
South Korean Won 528,584 884 529,468
Taiwan Dollar 337,396 33,199 370,595
Turkish Lira 109,130 — 109,130
United Arab Emirates Dirham — 42 42
Total 3,051,249 47,605 3,098,854
Putnam Global Core Equity Fund2010
Non-Monetary Assets
Monetary Assets Total
Currency USD USD USD
Australian Dollar 13,284 162,055 175,339
British Pound 266,294 24,041 290,335
Canadian Dollar 70,503 183,413 253,916
Danish Krone — 21,480 21,480
Euro 621,156 4,378 625,534
Hong Kong Dollar 112,405 (56,888) 55,517
Israeli Shekel — 19,263 19,263
Japanese Yen 472,673 15,338 488,011
New Zealand Dollar — 2,475 2,475
Norwegian Krone 105,216 (99,428) 5,788
Singapore Dollar 9,859 26,840 36,699
South African Rand 53,452 — 53,452
South Korean Won — — —
Swedish Krona — 67,340 67,340
Swiss Franc 284,742 (117,758) 166,984
Taiwan Dollar 88,999 — 88,999
Total 2,098,583 252,549 2,351,132
5. Risks Associated with Financial Instruments cont.
a) Market price risk cont.
Notes to the Financial Statements as at 30 June 2010
128 Putnam World Trust
Putnam Total Return Fund2010
Non-Monetary Assets
Monetary Assets Total
Currency USD USD USD
Australian Dollar 321,674 2,321,041 2,642,715
Brazilian Cruzeiro — 340,215.00 340,215
British Pound 679,823 (1,446,716) (766,893)
Canadian Dollar 35,727 (1,429,745) (1,394,018)
Chilean Peso — (129,650) (129,650)
Czech Koruna — (499,218) (499,218)
Danish Krone 53,243 14,074 67,317
Euro 1,115,967 491,374 1,607,341
Hong Kong Dollar 108,704 (71,072) 37,632
Hungarian Forint — 230,513 230,513
Japanese Yen 941,260 3,310,654 4,251,914
Malaysian Ringgit — 36,405 36,405
Mexican Peso — (6,037) (6,037)
New Zealand Dollar 9,624 (159,312) (149,688)
Norwegian Krone 93,547 360,414 453,961
Polish Zloty — (24,159) (24,159)
Singapore Dollar 121,107 (317,008) (195,901)
South African Rand — (669) (669)
South Korean Won 12,613 1,725 14,338
Swedish Krona 66,735 781,892 848,627
Swiss Franc 157,432 178,284.00 335,716
Taiwan Dollar 9,829 50,168 59,997
Turkish Lira — 680,610.00 680,610
Total 3,727,285 4,713,783 8,441,068
5. Risks Associated with Financial Instruments cont.
b) Foreign currency risk cont.
Putnam Global Fixed Income Alpha Fund S12010
Non-Monetary Assets
Monetary Assets Total
Currency GBP GBP GBP
Australian Dollar — (29,430) (29,430)
Brazilian Cruzeiro — 279,178 279,178
Euro — 1,386,749 1,386,749
Japanese Yen — 345 345
US Dollar 4,985,207 262,774,414 267,759,621
Total 4,985,207 264,411,256 269,396,463
Putnam Global Fixed Income Alpha Fund S22010
Non-Monetary Assets
Monetary Assets Total
Currency GBP GBP GBP
Australian Dollar — (85,090) (85,090)
Brazilian Cruzeiro — 4,351,623 4,351,623
Euro — 3,330,441 3,330,441
Japanese Yen — 1,058 1,058
US Dollar 5,146,363 137,636,013 142,782,376
Total 5,146,363 145,234,045 150,380,408
Putnam Global High Yield Bond Fund2010
Non-Monetary Assets
Monetary Assets Total
Currency USD USD USD
British Pound — 29,651 29,651
Euro — (400,108) (400,108)
Total — (370,457) (370,457)
c) Fair valuation hierarchyThe amendment to FRS 29 “Improving Disclosures about Financial Instruments”, effective 1 January 2009, requires the Trust to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
The fair value hierarchy of inputs is summarised in the three broad levels listed below.
• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
• Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes ‘observable’ requires significant judgement by the Investment Advisor. The Investment Advisor considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The following tables analyse within the fair value hierarchy each Fund’s financial assets (by security type) measured at fair value at 30 June 2010:
Notes to the Financial Statements as at 30 June 2010
Level 3 ReconciliationThe following table presents the movement in Level 3 instruments for the year ended 30 June 2010 by class of investment type.
Putnam Global High Yield Bond Fund
Total USD
Opening balance 116
Gains and losses recognised in profit and loss —
Purchases —
Sales —
Transfers out of Level 3 —
Transfers into Level 3 400
Closing balance 516
5. Risks Associated with Financial Instruments cont.
c) Fair valuation hierarchy cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 133
Investments whose values are based on quoted market prices in active markets, and therefore classified within Level 1, include active listed equities, collective investment schemes and futures contracts. The Funds do not adjust the quoted price for these instruments.
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include listed bonds, collective investment schemes, preferred stocks, short-term investments, OTC financial derivative instruments, exchange-traded derivatives, ITG fair-valued equities and over-the-counter derivatives. As Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently. The investments classified as Level 3 are made up of equity investments and corporate bonds. As observable prices are not available for these securities, the Funds have used valuation techniques to derive the fair value.
d) Interest rate riskInterest rate risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk arises on financial instruments whose fair value or future cash flows are affected by changes in interest rates. Short-term securities are less sensitive to interest rate changes than longer-term securities, but they also usually offer lower yields. The Funds invest in both fixed rate and floating rate securities.
Total liabilities (75,499) (146,539) (3,625,047) (24,146,692) (27,993,777)
Total Net Assets at bid value 37,364,958
e) Liquidity risk This is the risk that the Trust will encounter difficulty in meeting obligations associated with financial liabilities. The Trust’s assets comprise mainly readily realisable securities. The main liability of the Trust is the redemption of any units that investors wish to sell.
The Trust’s financial instruments may include investments in certain investments such as OTC derivative contracts, which are not traded in an organised public market and may be illiquid. As a result, the Trust may not be able to promptly liquidate some of its investments in these instruments at an amount close to its fair value in order to meet its liquidity requirements or to respond to specific events such as deterioration in the credit worthiness of any particular issuer. Market Value amounts are presented in the Schedule of Investments to indicate the extent of the Trust’s involvement in such instruments.
5. Risks Associated with Financial Instruments cont.
d) Interest rate risk cont.
Notes to the Financial Statements as at 30 June 2010
138 Putnam World Trust
The trading volumes of stocks and fixed income securities held by each Fund are generally sufficient to satisfy liquidity requirements when necessary. However, to minimise or mitigate the effect of liquidity risk where deemed necessary, the Investment Advisor could either reposition the portfolio or adjust the allocation to obtain a higher concentration of more liquid securities.
The table below analyses the Trust’s financial liabilities into relevant maturity groupings based on the remaining period of the balance sheet date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows.
Financial Liabilities at Fair Value through Profit or Loss 738,853 225,439 2,015,934 644,158 212,042 6,864,742
Accrued expenses 251,091 — — 388,316 — —
Other liabilities 5,939,000 — — 19,884,519 — —
Redeemable participating Units at bid value 9,476,229 37,904,918 — 7,472,992 29,891,966 —
Total Financial Liabilities 16,405,173 38,130,357 2,015,934 28,389,985 30,104,008 6,864,742
5. Risks Associated with Financial Instruments cont.
e) Liquidity risk cont.
Notes to the Financial Statements as at 30 June 2010
140 Putnam World Trust
The Trust will be exposed to a credit risk on parties with whom it trades and will also bear the risk of settlement default. The Trust seeks to minimise concentration of credit risk by undertaking transactions with a large number of counterparties on recognised and reputable exchanges and the over-the-counter market.
It is the Funds’ policy to take custody of securities purchased under repurchase agreements on a daily basis to protect the Funds in the event the securities are not repurchased by the counterparty. The Funds will generally obtain additional collateral if the market value of the underlying securities is less than the obligation to repurchase plus any accrued interest. In the event of default on the obligation to repurchase, the Funds have the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realisation and or retention of the collateral or proceeds may be subject to legal proceedings.
Risks associated with derivative contracts involve the possibility that the counterparty to the contract may default on its obligation to perform. The Funds could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. The Funds’ maximum risk of loss from failure of a counterparty, is the fair value of the contract. This risk may be mitigated by having a master netting arrangement between the Funds and the counterparty. Risk of loss may exceed amounts recognised on the Balance Sheet. Market Value amounts are presented in the Schedule of Investments to indicate the extent of the Trust’s involvement in such instruments. The table below outlines the credit ratings of each applicable Fund’s bond investments.
30 June 2010
Quality BreakdownPutnam Global Fixed Income
Alpha Fund S1 Putnam Global Fixed Income
Alpha Fund S2 Putnam Global
High Yield Bond FundPutnam Global Liquidity Fund
Putnam Total Return Fund
A-1+ — — — 76.27% —
A-1 — — — 1.79% —
AAA 83.19% 59.38% 0.93% — 48.90%
AA 1.77% 0.32% — — 0.42%
A 4.85% 1.64% — — 1.82%
BBB 21.05% 10.73% 7.68% — 5.28%
BB 6.27% 5.46% 30.02% — 4.67%
B 3.87% 6.86% 42.55% — 9.32%
CCC 4.77% 6.24% 15.41% — —
CC 1.04% 2.03% 0.01% — —
C — — — — —
CAA — — — — 5.27%
CA — — — — 1.16%
C — — — — 0.36%
D — — 0.25% — —
NR (26.81%) 7.34% 3.15% 21.94% 22.80%
100.00% 100.00% 100.00% 100.00% 100.00%
30 June 2009
Quality BreakdownPutnam Global Fixed Income
Alpha Fund S1 Putnam Global Fixed Income
Alpha Fund S2 Putnam Global
High Yield Bond FundPutnam Global Liquidity Fund
Putnam Total Return Fund
A-1+ — — — 64.19% —
A-1 — — — 8.06% —
AAA 59.62% 70.55% 1.81% — 54.37%
AA 2.27% 0.86% — — 2.47%
A 4.01% 1.76% 0.37% — 3.25%
BBB 16.42% 10.25% 8.93% — 17.14%
BB 5.78% 6.11% 41.63% — 9.13%
B 3.61% 6.27% 32.38% — 7.79%
CCC and below 1.10% 2.61% 14.43% — 5.85%
NR 7.19% 1.59% 0.45% 27.75% —
100.00% 100.00% 100.00% 100.00% 100.00%
6. TaxationUnder current law and practice Putnam World Trust qualifies as an investment undertaking as defined in Section 739B of the Taxes Consolidation Act, 1997, as amended. On that basis, it is not chargeable to Irish tax on its income or gains.
However, Irish tax may arise on the happening of a “chargeable event”. A chargeable event includes any distribution payments to unitholders, any encashment, redemption, cancellation or transfer of units and the holding of units at the end of each eight year period beginning with the acquisition of such units.
5. Risks Associated with Financial Instruments cont.
f) Credit risk
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 141
No Irish tax will arise on the Trust in respect of chargeable events in respect of:
a) a unitholder who is neither Irish resident nor ordinarily resident in Ireland for tax purposes, at the time of the chargeable event, provided appropriate valid declarations in accordance with the provisions of the Taxes Consolidation Act, 1997, as amended, are held by the Trust; and
b) certain exempted Irish tax resident unitholders who have provided the Trust with the necessary signed statutory declarations.
Dividends, interest and capital gains (if any) received on investments made by the Trust may be subject to withholding taxes imposed by the country from which the investment income/gains are received and such taxes may not be recoverable by the Trust or its unitholders.
7. FeesThe fees of the Manager, the Investment Advisor (if applicable), the Administrator and the Trustee are borne individually by each of the Funds.
Management fees At 30 June 2010 the Manager was entitled to receive a fee out of the assets of each Fund at the annual rate below out of which the Manager will pay the Investment Advisor a fee for the investment advisory services provided by the Investment Advisor. Such fees shall accrue daily and be payable monthly in arrears. During the year, certain changes were made to the management fees for Putnam Global Fixed Income Alpha Fund S2 (see Note 13).
Management fees as of 30 June 2010 (as a % of net assets)
Unit Classes
Retail Institutional
Fund A B C M T E I S Y
Putnam Asia Pacific (Ex-Japan) Equity Fund 1.50% 2.00% 1.75% 1.50% 1.50% 0.80% 0.80% 0.80% 0.80%
Putnam Total Return Fund 1.50% 2.00% 1.75% 1.50% 1.50% 0.80% 0.80% 0.80% 0.80%
* Putnam Currency Alpha Fund terminated on 4 January 2010.** Class P Units of Putnam Global Liquidity Fund will pay no management fees.*** The management fee for Class E, I, S and Y Units of Putnam Global Fixed Income Alpha Fund S2 was lowered from 0.25% to 0.20%.
The Manager has currently agreed to cap the non-management fee expenses at 0.30% for all Classes of Units of Putnam Asia Pacific (Ex-Japan) Equity Fund, Putnam Emerging Markets Equity Fund, Putnam Global Core Equity Fund and Putnam Total Return Fund; 0.20% for all Classes of Units of Putnam Global Fixed Income Alpha Fund S1 and Putnam Global Fixed Income Alpha Fund S2; and at an annual rate between 0.12% and 0.20% for Putnam Global Liquidity Fund. The Manager may terminate these caps at any time. They are currently expected to continue through 30 June 2011 and may be extended at the Manager’s discretion.
During the year ended 30 June 2010 the Manager waived/or reimbursed the following management fees:
Fund 30/06/2010 30/06/2009
Putnam Asia Pacific (Ex-Japan) Equity Fund $ 46,599 —
Putnam Emerging Markets Equity Fund $ 60,410 —
Putnam Global Core Equity Fund $ 40,528 —
Putnam Global Fixed Income Alpha Fund S1 £ 114,195 £ 262,838
Putnam Global Fixed Income Alpha Fund S2 £ 31,487 £ 237,859
Putnam Global High Yield Bond Fund — —
Putnam Global Liquidity Fund $ 25,803 $ 56,672
Putnam Total Return Fund $ 101,122 $ 173,068
Performance feeThe Manager will be entitled to receive a Performance Fee out of the assets of the Fund allocated to each Class of Unit a portion of which will be payable to the Investment Advisor. The Performance Fee will be calculated on a Unit-by-Unit basis so that each Unit is charged a Performance Fee which equates precisely with that Unit’s performance.
The Performance Fee will be payable to the Manager for each Class of Unit at a rate equal to 20% of the “Excess Return” (as defined in the Prospectus) during the Calculation Period, if any, achieved by that Class. If the respective Class of Unit experiences no Excess Return, following payment of the Performance Fee in any previous period, the Manager will retain all Performance Fees previously paid for that Class of Units but no further Performance Fee will be charged until additional “Excess Return” is achieved by the relevant Class of Units. The calculation of the Performance Fee, if any, payable to the Manager in any period, shall be subject to the verification of the Trustee. The Performance Fee shall accrue on each Dealing Day and accordingly the Net Asset Value will be adjusted to reflect such fee. Notwithstanding the foregoing, any accrued Performance Fee referable to Units repurchased prior to the end of the relevant period shall be retained by the Manager following such repurchase.
The Manager or Investment Advisor may from time to time voluntarily undertake to waive fees and/or reimburse certain fund expenses. Any such waiver or reimbursement would be voluntary and may be modified or discontinued by the Manager or Investment Advisor at any time without notice.
6. Taxation cont.
Notes to the Financial Statements as at 30 June 2010
142 Putnam World Trust
Only Putnam Currency Alpha Fund, Putnam Global Fixed Income Alpha Fund S1 and Putnam Global Fixed Income Alpha Fund S2 are subject to performance fees. During the year ended 30 June 2010 the following performance fees were earned:
Fund 30/06/2010 30/06/2009
Putnam Currency Alpha Fund* € 63,014 —
Putnam Global Fixed Income Alpha Fund S1 £ 6,632,307 —
Putnam Global Fixed Income Alpha Fund S2 £ 9,298,866 —
* Putnam Currency Alpha Fund terminated on 4 January 2010.
Trustee, transfer agent and administrator feesThe Administrator and the Trustee together are entitled to receive, out of the assets of each Fund, an annual administration fee not to exceed 0.40% of the average Net Asset Value of each Fund calculated on the last Dealing Day of each month, (plus VAT if any thereon), subject to a per-annum minimum administration fee of $70,000 assessed at the aggregate umbrella level. The Trustee shall be entitled to receive out of the assets of each Fund an annual safekeeping fee not to exceed 0.50% of the average Net Asset Value of each Fund. The Administrator and the Trustee shall also be entitled to be paid any transaction charges and expenses and the Sub-Custodian fees which shall be at normal commercial rates. The “Average Net Asset Value” shall refer to the average monthly Net Asset Value of each Fund. The Administrator shall pay the fees of the Transfer Agent, Citi Fund Services (Ireland), Limited, out of its own fee and the Transfer Agent shall not receive a fee out of the assets of the Trust.
Sub-investment advisorThe Investment Advisor has entered into a sub-investment advisory agreement with Putnam Investments Limited, an affiliate of The Putnam Advisory Company, LLC. Putnam Investments Limited has its principal office at Cassini House, 57-59 St. James’s Street, London SW1A 1WLD and is a company organised under the laws of England and Wales (the “Sub-investment advisor”). The Sub-investment advisor is licensed as an investment manager by the Financial Services Authority of the United Kingdom and is registered under the United States Investment Advisers Act of 1940, as amended. The Sub-investment advisor acted as sub-investment advisor for Putnam Global High Yield Bond Fund during the year. The fees of the Sub-investment advisor are being paid out of the fees of the Investment Advisor.
8. Soft Commission Arrangements During the year there were soft dollar transactions in the Funds. Soft dollar transactions occurred when the Investment Advisor used certain investment research services which assisted in the management of the Funds’ portfolio investments, which were paid for by certain brokers. These services could include, for example, research and analysis of the relative merits of individual shares or markets. In return, the Investment Advisor placed a proportion of business with these brokers including transactions relating to the Fund’s investments. The Investment Advisor has satisfied itself that it obtained best execution on behalf of the Funds and that these arrangements were to the benefit of the Funds.
9. Master Agreements Each Fund is a party to ISDA (International Swap and Derivatives Association, Inc.) Master Agreements (“Master Agreements”) with certain counterparties that govern over the counter 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. 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.
10. Related Party TransactionsThe Manager and the Investment Advisor are related parties under FRS 8 “Related Party Transactions”. The Investment Advisor is paid by the Manager. Fees charged by these parties and the amount due at the year end are shown in the profit and loss account and the Balance Sheet, respectively.
During the year, the Trust incurred a fee of US$49,481 relating to legal fees provided by Dillon Eustace (30 June 2009: US$204,298). David Dillon as a director of the Manager had an interest in this fee in his capacity as a partner of Dillon Eustace. The Manager is not aware of any other transactions with connected persons during the year, other than those disclosed in these financial statements.
The following Funds have invested in the Putnam Global Liquidity Fund:
Fund Name % of Global Liquidity Owned
Putnam Emerging Markets Equity Fund 0.51
Putnam Global Core Equity Fund 0.07
Putnam Global Fixed Income Alpha Fund S1 22.50
Putnam Global Fixed Income Alpha Fund S2 22.65
Putnam Global High Yield Bond Fund 4.09
Putnam Total Return Fund 6.36
7. Fees cont.
Notes to the Financial Statements as at 30 June 2010
Putnam World Trust 143
The Manager and the Investment Advisor are related parties under FRS 8 “Related Party Transactions”. The Investment Advisor is paid by the Manager. Fees charged by these parties and the amount due at the year end are shown in the profit and loss account and the Balance Sheet, respectively.
During the year ended 30 June 2010, certain Inter-Fund trades were conducted between Putnam World Trust Funds.
Certain Funds have Unitholders who hold in excess of 20% of the net assets of those Funds.
11. Transactions Relating to Bankruptcy of Lehman Brothers Special Financing Inc. (“LBSF”) and Lehman Brothers Inc. (“LBI”)
On 15 September 2008, the Funds listed below terminated their outstanding derivative contracts (forward foreign currency exchange contracts, interest rate swaps, credit default swaps, total return swaps and swaptions) with LBSF in connection with the bankruptcy filing of LBSF’s parent company, Lehman Brothers Holdings, Inc.
As at the time of preparing these financial statements, the Trust has filed proofs of claim with respect to amounts owing from LBSF. These submissions have been completed consistent with the relevant agreements with LBSF, as interpreted by the Investment Advisor and as reviewed by the Manager.
The net realisable value recorded at 30 June 2010 may differ from the amounts ultimately realised due to the inherent uncertainties in any estimation process, including various potential challenges which could be made in the administration and bankruptcy proceedings, such as challenges other than from LBSF and its affiliates to the Trust’s rights of termination and offset and the expected treatment of the non-segregated securities.
On 26 September 2008, certain Funds entered into Receivable Purchase Agreements (the “Agreements”) with other Funds of the Trust. Under the Agreements, certain Funds (each a “Seller”) sold to certain other Funds (each a “Purchaser”) the Seller’s right to receive net payments from LBSF in connection with certain terminated derivatives transactions (the “Receivable”), in each case in exchange for an initial payment by the Purchaser plus (or minus) additional amounts based on the applicable Purchaser’s ultimate realised gain (or loss) on the Receivable. The Receivable was subtracted from the Seller’s net receivable from LBSF and was used to offset the Purchaser’s net payable to LBSF.
Seller Purchaser Amount sold to Purchaser
Putnam Global Fixed Income Alpha Fund S2 Putnam Global Fixed Income Alpha Fund S1 $ 8,143
Putnam Global Fixed Income Alpha Fund S1 19,503,698
Putnam Total Return Fund 533,545
Putnam Global High Yield Bond Fund Putnam Global Fixed Income Alpha Fund S1 4,121
Putnam Global Total Return Fund 1,553
Putnam International (Non U.S. Core) Equity Fund Putnam Global Fixed Income Alpha Fund S1 10,306
Putnam Global Growth Fund 15,322
Putnam Total Return Fund Putnam Global Fixed Income Alpha Fund S1 277,153
In June 2010, each Purchaser and Seller agreed upon the ultimate realised gain on the Receivable and each Purchaser paid to the applicable Seller the agreed upon amount owing to the Seller under the Agreements.
As at 30 June 2010, each respective Purchaser has paid to the Sellers the following in accordance with the terms of the Agreements and each respective Fund, has paid the following to LBSF (including interest) in complete satisfaction of the respective Fund’s obligations under the terminated contracts.
Fund Name Gross Liabilty to LBSF
Receivable from LBSF Netted under Agreements
Final Amount Received from Seller
or (Paid by Purchaser)
Amount paid to LBSF
Putnam Global Fixed Income Alpha Fund S1 $ (19,803,421) $ — $ (5,971,128) $ (4,405,759)
Putnam Global Fixed Income Alpha Fund S2 — 20,045,386 6,044,084 —
Putnam Global Growth Fund* (15,322) — (4,621) (3,557)
Putnam Global High Yield Bond Fund — 5,674 1,711 —
Putnam International (Non U.S. Core) Equity Fund** — 25,628 7,728 —
Putnam Total Return Fund (535,098) — (161,342) (115,550)
Putnam Total Return Fund — 277,153 83,567 —
* Putnam Global Growth Fund terminated on 10 June 2009.** Putnam International (Non U.S. Core) Equity Fund terminated on 10 June 2009.
Each Purchaser has written down its remaining net receivables from LBSF (i.e., after application of the Agreements) by 55.70% as at 30 June 2010, reflecting the Investment Advisor’s then current estimate of likely recovery from LBSF in bankruptcy. The following table shows amounts owed by LBSF to each Purchaser.
Fund Name Net Receivable from LBSF before Writedown Net Receivable from LBSF after Writedown
Putnam Global Fixed Income Alpha Fund S2 $ 2,215,441 $ 980,858
Putnam Global High Yield Bond Fund 916 406
Putnam International (Non U.S. Core) Equity Fund 4,139 1,833
Putnam Total Return Fund 1,258,188 557,377
* Putnam International (Non U.S. Core) Equity Fund terminated on 10 June 2009.
10. Related Party Transactions cont.
Notes to the Financial Statements as at 30 June 2010
144 Putnam World Trust
All “To Be Announced” (“TBA”) receivable positions on each Fund were written down by 92.5%, based on the Investment Advisor’s then current estimate of the likely recovery from LBSF in bankruptcy, as an unrealised loss within net loss on investment activities recognised in the profit and loss account. The remaining receivable continues to be included as a “Receivable from LBSF” and is disclosed in the Balance Sheet within the lines “Sales of Investments Awaiting Settlement and Purchases of Sales Awaiting Settlement”. All Collateralised Mortgage Obligations positions that were open as at the date of LBSF’s bankruptcy fi ling were written down by 92.5%, based on the Investment Advisor’s then current estimate of the likely recovery from LBSF in bankruptcy, as an unrealised loss within net loss on investment activities recognised in the profit and loss account.
12. Foreign ExchangeThe exchange rates ruling at 30 June 2010 were: The exchange rates ruling at 30 June 2009 were:
Currency Vs. USD Rate Vs. GBP Rate Currency Vs. USD Rate Vs. GBP Rate
Australian Dollar 1.18378 1.77064 Australian Dollar 1.23885 2.03927
Brazilian Real 1.79953 2.69165 Brazilian Real 1.95880 3.22438
British Pound 0.66856 1.00000 British Pound 0.60750 1.00000
Canadian Dollar 1.06295 1.58991 Canadian Dollar 1.16160 1.91211
United States Dollar 1.00000 1.49575 United States Dollar 1.00000 1.64610
13. Significant Events during the YearFrom 1 December 2009 the following changes were made to the Trust:
The management fee for Class E, I, S and Y Units of Putnam Global Fixed Income Alpha Fund S2 was lowered from 0.25% to 0.20%.
Amendments were made to the “Investment Objectives, Policy and Guidelines” of Putnam Global Fixed Income Alpha Fund S1, Putnam Global Fixed Income Alpha Fund S2 and Putnam Currency Alpha Fund.
Effective 1 December 2009 the Manager agreed to cap the non-management fee expenses at 0.30% for all Classes of Units of Putnam Asia Pacific (Ex-Japan) Equity Fund, Putnam Emerging Markets Equity Fund and Putnam Global Core Equity Fund. The Manager may terminate these caps at any time. They are currently expected to continue through 30 June 2011 and may be extended at the Manager’s discretion.
Amendments were made to paragraphs 3.4 and 3.7 of the “Investment and Borrowing Restrictions” of the Trust.
A copy of the Prospectus is available upon request from the Administrator.
Putnam Currency Alpha Fund terminated on 4 January 2010.
14. Subsequent EventsMr. Keith E. Thomas was appointed as a Director of the Manager on 19 August 2010.
15. Availability of Portfolio InformationUnitholders may obtain information about certain Funds’ portfolio holdings from time to time by contacting the Manager. Portfolio holdings information will only be provided for legitimate purposes as determined by the Manager, and will be subject to a reasonable delay intended to protect the Funds.
16. Approval of the Financial StatementsThe Financial Statements were approved by the Directors on 15 October 2010.
11. Transactions Relating to Bankruptcy of Lehman Brothers Special Financing Inc. (“LBSF”) and Lehman Brothers Inc. (“LBI”) cont.
Putnam World Trust 145
Putnam Asia Pacific (Ex-Japan) Equity FundSchedule of Portfolio Changes (unaudited)for the year ended 30 June 2010
Largest Purchases Principal Amount Cost USD
152,000 Perusahaan Gas Negara PT 547,319,868
198,500 Indofood Sukses 521,456,212
20,000 Indo Tambangraya Megah PT 446,733,506
29,000 Gudang Garam TBK PT 445,272,917
13,000 Indocement Tunggal Prakarsa 190,076,754
282,500 Ciputra Development 178,765,151
1,511 LG Electronics Incorporated 177,111,848
3,500 Astra International Incorporated 123,177,425
1,480 C.J. Home Shopping Company Limited 119,111,475
14,000 Bank Rakyat Indonesia 114,580,162
1,845 Daum Communications Corporation 100,572,698
4,000 Hynix Semiconductor Incorporated 88,528,443
10,000 Telekomunikasi TBK 81,650,728
994 Daelim Industrial Company 79,468,376
143 Shinsegae Company Limited 78,768,240
2,400 Dongbu Insurance Company Limited 78,648,233
1,810 Shinhan Financial Group Company Limited 77,866,411
2,190 LG Display Company Limited 71,847,718
469 Hyundai Mobis 68,724,367
1,229 KB Financial Group Incorporated 66,985,841
Largest Sales No. of Shares Proceeds USD
28,500 Astra International Incorporated 1,016,252,262
129,000 Bank Rakyat Indonesia 970,958,302
68,000 Telekomunikasi TBK 582,081,417
20,000 Indo Tambangraya Megah PT 580,751,394
665,500 Ciputra Development 461,368,389
14,500 Gudang Garam TBK PT 373,471,277
99,500 Indofood Sukses 360,907,552
86,500 Perusahaan Gas Negara PT 326,215,627
407 Samsung Electronics Company Limited 305,415,270
1,328 LG Electronics Incorporated 147,031,437
2,597 KB Financial Group Incorporated 128,434,248
1,438 Daum Communications Corporation 101,013,682
198 Posco Limited 98,412,355
559 SK Telecommunications 96,424,694
1,243 C.J. Home Shopping Company Limited 95,066,238
1,322 KT&G Corporation 91,633,563
114 Amorepacific Corporation 91,573,161
1,255 LG Corporation 90,288,694
2,190 LG Display Company Limited 86,687,424
2,960 LG Fashion Corporation 82,613,221
Putnam Currency Alpha Fund
Schedule of Portfolio Changes (unaudited)for the year ended 30 June 2010
Largest Purchases Principal Amount Cost USD
590,000 Federal Home Loan Discount Notes 07/10/2009 589,847
490,000 Federal Home Loan Discount Notes 09/12/2009 489,927
450,000 Federal Home Loan Discount Notes 07/08/2009 449,973
400,000 Federal Home Loan Mortgage Corporation 02/02/2010 399,957
400,000 Federal Home Loan Discount Notes 03/02/2010 399,956
350,000 Federal Home Loan Discount Notes 11/09/2009 349,966
350,000 Freddie Mac Discount Notes 14/12/2009 349,854
300,000 Federal Home Loan Discount Notes 20/07/2009 299,987
300,000 Fannie Mae Discount Notes 04/02/2010 299,971
300,000 Fannie Mae Discount Notes 19/10/2009 299,966
300,000 Federal Home Loan Discount Notes 25/11/2009 299,963
300,000 Federal Home Loan Discount Notes 09/02/2010 299,956
300,000 Fannie Mae Discount Notes 17/12/2009 299,941
300,000 Fannie Mae Discount Notes 20/10/2009 299,939
296,000 Fannie Mae Discount Notes 25/01/2010 295,976
250,000 Federal Home Loan Discount Notes 10/08/2009 249,975
250,000 Federal Home Loan Discount Notes 14/08/2009 249,971
245,000 Fannie Mae Discount Notes 15/09/2009 244,958
225,000 Fannie Mae Discount Notes 05/02/2010 224,977
200,000 Federal Home Loan Mortgage Corporation 28/07/2009 199,975
Largest Sales No. of Shares Proceeds USD
400,000 Federal Home Loan Mortgage Corporation 02/02/2010 399,996
400,000 Federal Home Loan Discount Notes 03/02/2010 399,992
300,000 Fannie Mae Discount Notes 04/02/2010 299,996
300,000 Federal Home Loan Discount Notes 09/02/2010 299,995
296,000 Fannie Mae Discount Notes 25/01/2010 296,000
250,000 Federal Home Loan Discount Notes 07/10/2009 249,963
225,000 Fannie Mae Discount Notes 05/02/2010 224,997
150,000 Putnam World Trust Global Liquidity Fund (Class P) 150,000
100,000 Federal Home Loan Mortgage Corporation 21/09/2009 99,983
146 Putnam World Trust
Putnam Emerging Markets Equity Fund
Schedule of Portfolio Changes (unaudited)for the year ended 30 June 2010
Largest Purchases Principal Amount Cost USD
261,000 Indofood Sukses 688,601,834
99,000 Perusahaan Perkebunan London Sumatra Indones PT 612,708,545
26,000 Indo Tambangraya Megah PT 576,384,157
78,000 XL Axiata TBK 273,247,779
54,000 Bank Mandiri 252,986,078
4,980 Shinhan Financial Group Company Limited 208,382,179
1,057 Hyundai Mobis 166,794,977
4,030 Dongbu Insurance Company Limited 150,320,088
1,293 LG Electronics Incorporated 149,907,587
1,864 C.J. Home Shopping Company Limited 145,622,580
3,500 Korea Investment Holdings Company 138,139,085
2,524 Daum Communications Corporation 135,929,977
218 Posco Limited 111,801,739
561 Korea Zinc Company Limited 110,820,068
13,000 Bank Rakyat Indonesia 99,588,660
5,480 LG Dacom Corporation 95,969,924
119 Samsung Electronics Company Limited 93,332,250
1,182 Samsung Techwin Company Limited 90,964,932
6,930 Heerim Architects & Planners Company Limited 80,292,294
2,040 LG Display Company Limited 77,477,744
Largest Sales No. of Shares Proceeds USD
33,000 Astra International Incorporated 1,164,692,780
133,000 Bank Rakyat Indonesia 1,008,149,672
261,000 Indofood Sukses 981,760,643
26,000 Indo Tambangraya Megah PT 744,003,657
99,000 Perusahaan Perkebunan London Sumatra Indones PT 731,396,875
158,000 Bank Mandiri 715,836,736
392 Samsung Electronics Company Limited 297,941,093
351 Posco Limited 180,557,467
5,040 Hana Financial Group Incorporated 177,366,795
2,524 Daum Communications Corporation 176,585,842
2,269 LG Corporation 176,283,241
1,504 Hyundai Department Store Company Limited 156,394,238
2,049 KT&G Corporation 143,146,472
1,864 C.J. Home Shopping Company Limited 139,907,852
172 Amorepacific Corporation 136,458,603
4,030 Dongbu Insurance Company Limited 127,296,558
755 Hyundai Mobis 121,677,382
1,182 Samsung Techwin Company Limited 115,297,746
3,500 Korea Investment Holdings Company 111,257,693
5,480 LG Dacom Corporation 105,280,007
Putnam Global Core Equity Fund
Schedule of Portfolio Changes (unaudited)for the year ended 30 June 2010
Largest Purchases Principal Amount Cost USD
485 LG Electronics Incorporated 56,288,130
17,000 Mitsubishi Electric Corporation 13,488,259
5,000 Aisin Seiki Company Limited 12,352,971
5,800 Mitsui & Company Limited 8,748,653
13,000 Seino Holdings Company Limited 8,399,217
10,000 Fujitsu Limited 6,187,060
108,000 AU Optronics Corporation 4,037,047
3,000 Sumitomo Metal Mining Company Limited 3,929,273
1,700 Mitsubishi Corporation 3,748,298
1,000 Canon Incorporated 3,681,472
600 East Japan Railway Company 3,313,047
800 Astellas Pharma Incorporated 2,356,616
3,100 Nissan Motor Company Limited 2,270,107
14 Dai-Ichi Life Insurance 1,960,000
270 Orix Corporation 1,729,433
40,000 Compal Electronics Incorporated 1,617,285
6,900 PTT PLC 1,575,186
500 Yamato Kogyo Company Limited 1,428,213
500 Sumitomo Mitsui Financial Group 1,402,000
74,000 Macronix International Company Limited 1,325,286
Largest Sales No. of Shares Proceeds USD
1,600 LG Display Company Limited 62,154,675
485 LG Electronics Incorporated 53,933,011
7,100 Tokyo Steel Manufacturing Company Limited 7,978,509
9,100 Leopalace21 Corporation 7,855,235
1,800 Astellas Pharma Incorporated 6,306,154
10,000 Seino Holdings Company Limited 6,127,548
10,000 Fujitsu Limited 5,717,712
770 Orix Corporation 4,921,778
200 Nintendo Company Limited 4,339,250
6 Inpex Corporation 4,282,432
1,700 Mitsubishi Corporation 4,179,069
1,000 Canon Incorporated 3,807,049
3,000 Sumitomo Metal Mining Company Limited 3,735,626
Schedule of Portfolio Changes (unaudited)for the year ended 30 June 2010
Largest Purchases Principal Amount Cost USD
17,000,000 Japan-115 (20 Yr issue) 2.20% 20/12/2029 17,187,657
12,000 Fujitsu Limited 7,493,992
4,700 Mitsui & Company Limited 6,341,313
5,944,600 U.S. Treasury Bill 22/07/2010 5,944,071
7,000 Asahi Glass Company Limited 5,757,176
7,000 Mitsubishi Electric Corporation 5,151,476
2,000 Toyo Suisan Kaisha Limited 4,938,955
18,000 Mitsui Chemicals Incorporated 4,776,735
15,000 Hitachi Limited 4,661,816
1,900 Hitachi Chemical Company Limited 3,828,827
29,170 SPDR S&P 500 ETF Trust 3,214,278
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/07/2040 3,211,740
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/01/2040 3,184,094
2,999,701 Federal National Mortgage Association 5.50% 01/11/2038 3,183,776
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/03/2040 3,173,333
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/06/2040 3,172,365
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/05/2040 3,156,438
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/04/2040 3,155,969
3,000,000 Federal National Mortgage Association 5.50% 01/04/2040 3,155,969
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/12/2039 3,153,146
Largest Sales No. of Shares Proceeds USD
37,786,300 Japan Government CPI Linked 1.40% 10/06/2018 34,671,510
17,000,000 Japan-115 (20 Yr issue) 2.20% 20/12/2029 17,268,956
3,000 Suzuki Motor Corporation 6,701,382
17,000 Hitachi Limited 5,564,808
2,200 Tokyo Electric Power Company 5,307,398
16 NTT Data Corporation 5,115,711
2,000 KAO Corporation 4,373,676
14,000 NEC Corporation 3,465,319
2,300 Bridgestone Corporation 3,445,765
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/06/2040 3,223,341
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/12/2039 3,193,693
2,999,702 Federal National Mortgage Association 5.50% 01/08/2039 3,184,970
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/01/2040 3,184,094
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/05/2040 3,178,469
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/11/2039 3,164,065
3,000,000 Federal National Mortgage Association 5.50% 01/04/2040 3,162,180
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/03/2040 3,159,271
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/10/2039 3,156,740
2,999,701 Federal National Mortgage Association 5.50% 01/11/2038 3,156,240
3,000,000 Federal National Mortgage Association (TBA) 5.50% 01/04/2040 3,155,969
150 Putnam World Trust
1. J.P. Morgan AG, Junghofstraße 14, 60311 Frankfurt am Main, Germany, has assumed the function of the Paying and Information Agent in the Federal Republic of Germany (“Paying Agent”).
2. Exchange requests for Units (which may be publicly distributed in Germany) and redemption requests for the Units can be submitted to the Paying Agent. Upon request, the redemption proceeds, distributions or other payments, if any, to the Unitholders are paid via the Paying Agent.
3. The Prospectus, the Simplified Prospectus, the Amended and Restated Trust Deed, the Semi-Annual and Annual Reports shall be obtained free of charge and the material documents described in the Prospectus in the section “Material Contracts” can be obtained free of charge at the offices of the Paying Agent. Further Unitholder information, if any, is available at the Paying Agent.
4. The Net Asset Value per Unit of each Fund, the purchase and redemption prices as well as the interim profit and the aggregate amount of income deemed to be received by the holder for the foreign investment units are available on any Business Day at the offices of the Paying Agent.
5. The purchase and redemption prices and the interim profit of each Fund shall be published on www.fundinfo.com. Further information for investors, if any, shall be sent to Uniholders by way of letters.
Important Information for German Investors
Putnam World Trust 151
Additional Information for Spanish Investors (unaudited)
The UCITS was created on 18 February 2000 as an umbrella unit trust established as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003, as amended and is registered in the CNMV’s Register from 13/09/2001, with number 249.Management Company: Putnam Investments (Ireland) LimitedRegistered office: 1 North Wall Quay, Dublin 1, IrelandManagement Company Website: www.putnam.comTrustee: State Street Custodial Services (Ireland); Rating A1/A2, 78 Sir John Rogerson’s Quay, Dublin 2, Ireland
1. General Data: Number of Unitholders
June 2010 June 2009
182 198
2. Minimum Investment Amount
Class Minimum Initial Subscription Minimum Subsequent Subscription
A None None
B None None
C None None
E €10,000,000 €25,000
I $10,000,000 $25,000
M None None
S £10,000,000 £25,000
T None None
Y ¥1 billion ¥25,000
3. Cash Average Return
2010 2009 Accumulated 2010 Accumulated 2009
Cash Average Return 0.11% 0.78% 0.11% 0.87%
4. UCITS Performance and Synthetic TER
Period
Extreme Performance
Synthetic TER Minimum % Maximum %
2nd Quarter (2010) (3.49) 3.83 N/A
1st Quarter (2010) (2.95) (1.89) N/A
4th Quarter (2009) (2.65) 2.48 N/A
3rd Quarter (2009) (2.64) 2.96 N/A
Accumulated 2009 (8.69) 7.46 N/A
Accumulated 2008 (3.71) 1.74 N/A
Accumulated 2007 (3.95) 1.03 N/A
5. Related Party Transactions and Other Information
Event YES NO
Major unit-holder existence (more than 20% net assets) X
Transactions (purchase or sale of instruments) where the Trustee has acted as counterparty X
Investment in financial instruments issued or guaranteed by an entity of the same (ManCo or Trustee) group1 X
Investments in financial instruments which counterparty has been any entity belonging to the ManCo or Trustee Group X
Soft Commissions X
1 Reflects Trustee group. ManCo and Trustee are not affiliated.
152 Putnam World Trust
Manager:Putnam Investments (Ireland) Limited®
Registered Office of the Manager:Citi Fund Services (Ireland), Limited1 North Wall QuayDublin 1Ireland
Directors of the Manager:David Dillon (Ireland)F. Peter Ferrelli (U.S.)Joseph T. Phoenix (U.S.)Keith E. Thomas (U.K.) (appointed 19 August 2010)Wyndham Williams (Ireland)Christopher C. Thompson (U.S.) (resigned 14 March 2010)
Investment Advisor:The Putnam Advisory Company, LLCOne Post Office SquareBoston, Massachusetts 02109United States of America
Trustee:State Street Custodial Services (Ireland) Limited78 Sir John Rogerson’s QuayDublin 2Ireland
Administrator:State Street Fund Services (Ireland) Limited78 Sir John Rogerson’s QuayDublin 2Ireland
Transfer Agent:Citi Fund Services (Ireland), Limited1 North Wall QuayDublin 1Ireland
Legal Advisors:Dillon Eustace33 Sir John Rogerson’s QuayDublin 2Ireland
Representative in Switzerland*:Fortis Foreign Fund Services AGSelnaustrasse 168002 ZürichSwitzerland
Paying Agent in Switzerland:BNP Paribas (Suisse) S.A.Place de Hollande 2CH-1204 GeneveSwitzerland
Paying and Information Agent in Austria:Erste Bank der Oesterreichischen Sparkassen AG Graben 21A-1010 WienAustria
Paying and Information Agent in Germany*:J.P. Morgan AGJunghofstrasse 1460311 Frankfurt am MainGermany
Paying and Information Agent in Sweden:SKANDINAVISKA ENSKILDA BANKEN ABSEB Merchant BankingSecurities ServicesGlobal Funds, RA6Rissenleden 110SE-106 40 StockholmSweden
Organisation
* The management regulations, the prospectus, the simplified prospectus, the unaudited semiannual reports, as well as the audited annual reports, can be obtained free of charge from the paying agent and information office in Germany and from the Representative in Switzerland. A copy of the list of changes in the portfolio during the reference period may be obtained free of charge at the custodian or paying agents, at the paying and information agent in Germany, and at the Representative in Switzerland.
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Putnam Investments (Ireland) Limited®
1 North Wall Quay
Dublin 1
Ireland
Authorised and regulated
by the Financial Regulator.
Putnam Investments Limited®
Cassini House
57-59 St. James’s Street
London SW1A1LD
United Kingdom
Tel: +44 (0)20-7907-8200
Authorised and regulated
by the Financial Services Authority.
Putnam Investments Limited®
Niederlassung Deutschland
Siemensstrasse 8
D-63263 Neu-Isenburg
Germany
Tel: +49 (0)6102 56059-0
www.putnam.com
This Web site is not intended for use by investors in certain jurisdictions. Please refer to the Prospectus.