N-Q 1 a_globalhealthcare.htm PUTNAM GLOBAL HEALTH CARE FUND a_globalhealthcare.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY




Investment Company Act file number: (811-03386)
Exact name of registrant as specified in charter: Putnam Global Health Care Fund
Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109
Name and address of agent for service: Robert T. Burns, Vice President
One Post Office Square
Boston, Massachusetts 02109
Copy to:         John W. Gerstmayr, Esq.
Ropes & Gray LLP
800 Boylston Street
Boston, Massachusetts 02199-3600
Registrant’s telephone number, including area code: (617) 292-1000
Date of fiscal year end: August 31, 2013
Date of reporting period: May 31, 2013



Item 1. Schedule of Investments:














Putnam Global Health Care Fund

The fund's portfolio
5/31/13 (Unaudited)
COMMON STOCKS (99.3%)(a)
Shares Value

Biotechnology (17.0%)
Amgen, Inc. 119,335 $11,996,748
Amicus Therapeutics, Inc.(NON) 407,042 1,355,450
Arqule, Inc.(NON) 593,905 1,609,483
Array BioPharma, Inc.(NON) 613,600 3,583,424
BioMarin Pharmaceuticals, Inc.(NON) 177,800 11,148,060
Celgene Corp.(NON) 446,300 55,184,995
Celldex Therapeutics, Inc.(NON) 460,600 5,891,074
ChemoCentryx, Inc.(NON) 180,888 2,443,797
Chimerix, Inc.(NON) 90,251 1,940,397
Clovis Oncology, Inc.(NON) 113,070 4,136,101
Codexis, Inc.(NON) 270,822 622,891
Dendreon Corp.(NON)(S) 685,070 2,740,280
Dyax Corp.(NON) 458,644 1,440,142
Gilead Sciences, Inc.(NON) 533,000 29,037,839
Grifols SA ADR (Spain)(NON) 152,100 4,146,246
Idenix Pharmaceuticals, Inc.(NON)(S) 181,100 858,414
Incyte Corp., Ltd.(NON)(S) 174,300 3,864,231
Merrimack Pharmaceuticals, Inc.(NON) 271,334 1,503,190
Neurocrine Biosciences, Inc.(NON) 142,760 1,845,887
OncoGenex Pharmaceutical, Inc.(NON) 45,200 465,560
Onyx Pharmaceuticals, Inc.(NON) 51,500 4,915,675
Pharmacyclics, Inc.(NON) 30,100 2,758,364
Portola Pharmaceuticals, Inc.(NON) 180,369 3,282,716
Puma Biotechnology, Inc.(NON) 82,536 3,213,126
Quintiles Transnational Corp.(NON) 14,917 656,945
Receptos, Inc.(NON) 225,556 3,579,574
Spectrum Pharmaceuticals, Inc.(S) 207,100 1,700,291
Synta Pharmaceuticals Corp.(NON)(S) 488,795 3,607,307
TESARO, Inc.(NON) 153,399 5,247,780
United Therapeutics Corp.(NON) 45,800 3,044,326
Verastem, Inc.(NON) 355,447 3,398,073
Vertex Pharmaceuticals, Inc.(NON) 207,500 16,664,325

197,882,711
Food and staples retail (2.1%)
CVS Caremark Corp. 416,600 23,987,828

23,987,828
Health-care equipment and supplies (11.6%)
Abbott Laboratories 508,500 18,646,695
Baxter International, Inc. 327,300 23,019,009
Boston Scientific Corp.(NON) 362,500 3,349,500
CareFusion Corp.(NON) 77,900 2,862,825
Covidien PLC 381,200 24,244,320
Elekta AB Class B (Sweden) 288,608 4,398,007
Globus Medical, Inc. Class A(NON) 36,410 531,586
Intuitive Surgical, Inc.(NON) 8,700 4,328,511
Medtronic, Inc. 322,100 16,430,321
St. Jude Medical, Inc. 96,900 4,188,987
Stryker Corp. 125,400 8,325,306
Unilife Corp.(NON)(S) 557,524 1,839,829
West Pharmaceutical Services, Inc. 170,300 11,674,065
Zimmer Holdings, Inc. 138,600 10,881,486

134,720,447
Health-care providers and services (14.4%)
Aetna, Inc. 677,700 40,919,526
AmerisourceBergen Corp. 412,000 22,280,960
Cardinal Health, Inc. 113,860 5,346,866
CIGNA Corp. 293,900 19,955,810
Express Scripts Holding Co.(NON) 391,564 24,323,956
Fresenius Medical Care AG & Co., KGaA (Germany) 76,542 5,205,962
Fresenius Medical Care AG & Co., KGaA ADR (Germany) 42,420 1,433,372
McKesson Corp. 40,324 4,591,291
Quest Diagnostics, Inc. 117,300 7,253,832
Sinopharm Group Co. (China) 310,800 833,057
UnitedHealth Group, Inc. 358,400 22,446,592
WellPoint, Inc. 165,400 12,730,838

167,322,062
Life sciences tools and services (3.6%)
Agilent Technologies, Inc. 182,600 8,299,170
Illumina, Inc.(NON) 49,200 3,459,744
Life Technologies Corp.(NON) 62,100 4,601,610
Sequenom, Inc.(NON)(S) 284,000 1,175,760
Thermo Fisher Scientific, Inc. 270,600 23,893,980

41,430,264
Personal products (0.1%)
Synutra International, Inc.(NON) 350,824 1,648,873

1,648,873
Pharmaceuticals (50.5%)
AbbVie, Inc. 957,800 40,888,482
Actavis, Inc.(NON) 322,300 39,736,367
Allergan, Inc. 161,000 16,017,890
Astellas Pharma, Inc. (Japan) 322,500 16,486,281
Auxilium Pharmaceuticals, Inc.(NON) 1,354,000 20,201,680
Bayer AG (Germany) 193,827 20,849,866
Cempra, Inc.(NON) 271,257 2,180,906
Daiichi Sankyo Co., Ltd. (Japan) 261,000 4,299,989
Eli Lilly & Co. 902,300 47,966,268
GlaxoSmithKline PLC (United Kingdom) 1,808,772 46,883,855
Hi-Tech Pharmacal Co., Inc. 17,100 546,516
Hospira, Inc.(NON) 60,400 2,094,672
Johnson & Johnson 832,600 70,088,268
Merck & Co., Inc. 819,000 38,247,300
Merck KGaA (Germany) 122,033 19,314,173
Mitsubishi Tanabe Pharma Corp. (Japan) 209,600 2,659,022
Novartis AG (Switzerland) 401,368 28,760,318
Pernix Therapeutics Holdings(NON) 117,145 422,893
Pfizer, Inc. 2,112,701 57,528,848
Roche Holding AG-Genusschein (Switzerland) 95,913 23,732,742
Sanofi (France) 550,686 57,912,507
Sanofi CVR (France)(NON) 1,134,262 2,121,070
Shire PLC (United Kingdom) 203,577 6,693,261
Sihuan Pharmaceutical Holdings Group, Ltd. (China) 1,928,000 1,171,092
Teva Pharmaceutical Industries, Ltd. ADR (Israel) 361,465 13,807,963
Warner Chilcott PLC Class A 312,200 5,994,240
Zoetis, Inc.(NON)(S) 24,800 793,600

587,400,069

Total common stocks (cost $776,613,498) $1,154,392,254

CONVERTIBLE BONDS AND NOTES (0.2%)(a)
Principal amount Value

Auxilium Pharmaceuticals, Inc. cv. sr. unsec. notes 1 1/2s, 2018 $2,134,000 $2,029,968

Total convertible bonds and notes (cost $2,134,000) $2,029,968

SHORT-TERM INVESTMENTS (1.9%)(a)
Principal amount/shares Value

Putnam Cash Collateral Pool, LLC 0.16%(d) 14,897,150 $14,897,150
Putnam Short Term Investment Fund 0.01%(AFF) 3,292,433 3,292,433
SSgA Prime Money Market Fund 0.03%(P) 1,590,000 1,590,000
U.S. Treasury Bills with an effective yield of 0.10%, May 1, 2014(SEGSF) $392,000 391,549
U.S. Treasury Bills with effective yields ranging from 0.09% to 0.11%, April 3, 2014(SEGSF) 1,255,000 1,253,835
U.S. Treasury Bills with effective yields ranging from 0.14% to 0.15%, March 6, 2014(SEGSF) 867,000 866,336
U.S. Treasury Bills with an effective yield of 0.14%, February 6, 2014(SEGSF) 143,000 142,911

Total short-term investments (cost $22,433,995) $22,434,214

TOTAL INVESTMENTS

Total investments (cost $801,181,493)(b) $1,178,856,436














FORWARD CURRENCY CONTRACTS at 5/31/13 (aggregate face value $117,701,342) (Unaudited)


Unrealized
Contract Delivery Aggregate appreciation/
Counterparty Currency type date Value face value (depreciation)

Bank of America N.A.
Euro Buy 6/19/13 $31,190,838 $31,159,376 $31,462
Citibank, N.A.
British Pound Buy 6/19/13 27,198,267 26,866,998 331,269
Danish Krone Buy 6/19/13 14,539,498 14,567,754 (28,256)
Credit Suisse International
Japanese Yen Buy 8/22/13 15,247,806 15,750,904 (503,098)
HSBC Bank USA, National Association
Australian Dollar Buy 7/17/13 15,287,714 16,537,338 (1,249,624)
JPMorgan Chase Bank N.A.
Swiss Franc Buy 6/19/13 12,649,973 12,818,972 (168,999)

Total $(1,587,246)













Key to holding's abbreviations
ADR American Depository Receipts: represents ownership of foreign securities on deposit with a custodian bank
CVR Contingent Value Rights
Notes to the fund's portfolio
Unless noted otherwise, the notes to the fund's portfolio are for the close of the fund's reporting period, which ran from September 1, 2012 through May 31, 2013 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund's manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter.
(a) Percentages indicated are based on net assets of $1,162,258,413.
(b) The aggregate identified cost on a tax basis is $802,360,428, resulting in gross unrealized appreciation and depreciation of $430,524,267 and $54,028,259, respectively, or net unrealized appreciation of $376,496,008.
(NON) Non-income-producing security.
(AFF) Affiliated company. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period. Transactions during the period with Putnam Money Market Liquidity Fund and Putnam Short Term Investment Fund, which are under common ownership and control, were as follows:
Name of affiliate Market value at the beginning of the reporting period Purchase cost Sale proceeds Investment income Market value at the end of the reporting period

Putnam Money Market Liquidity Fund * $8,189,259 $80,877,229 $89,066,488 $9,562 $—
Putnam Short Term Investment Fund * 44,171,056 40,878,623 1,832 3,292,433
Totals $8,189,259 $125,048,285 $129,945,111 $11,394 $3,292,433
* Management fees charged to Putnam Money Market Liquidity Fund and Putnam Short Term Investment Fund have been waived by Putnam Management.
(SEGSF) This security, in part or in entirety, was pledged and segregated with the custodian for collateral on certain derivative contracts at the close of the reporting period.
(d) Affiliated company. The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. At the close of the reporting period, the value of securities loaned amounted to $14,210,856.
The fund received cash collateral of $14,897,150, which is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. The rate quoted in the security description is the annualized 7-day yield at the close of the reporting period.
(P) Security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivatives contracts. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
(S) Security on loan, in part or in entirety, at the close of the reporting period.
At the close of the reporting period, the fund maintained liquid assets totaling $1,767,712 to cover certain derivatives contracts.
DIVERSIFICATION BY COUNTRY ⌂
Distribution of investments by country of risk at the close of the reporting period, excluding collateral received, if any (as a percentage of Portfolio Value):
United States 76.5%
France 5.1
United Kingdom 4.6
Switzerland 4.5
Germany 4.0
Japan 2.0
Israel 1.2
Other 2.1

Total 100.0%
Methodology differs from that used for purposes of complying with the fund’s policy regarding investments in securities of foreign issuers, as discussed further in the fund’s prospectus.
Security valuation: Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under ASC 820. If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.
Investments in open-end investment companies (excluding exchange traded funds), if any, which can be classified as Level 1 or Level 2 securities, are based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.
Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.
To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security's fair value, the security will be valued at fair value by Putnam Management. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.
Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
Forward currency contracts: The fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts were used to hedge foreign exchange risk.
The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in market value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position.
For the fund's average contract amount on forward currency contracts, see the appropriate table at the end of these footnotes.
Master agreements: The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and with respect to those amounts which can be sold or repledged, are presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund's future derivative activity.
At the close of the reporting period, the fund had a net liability position of $1,921,721 on open derivative contracts subject to the Master Agreements. Collateral posted by the fund for these agreements totaled $2,225,061.













ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:
Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:

Valuation inputs

Investments in securities: Level 1 Level 2 Level 3
Common stocks:
    Consumer staples $25,636,701 $— $—
    Health care 889,555,421 239,200,132
Total common stocks 915,192,122 239,200,132
Convertible bonds and notes 2,029,968
Short-term investments 4,882,433 17,551,781



Totals by level $920,074,555 $258,781,881 $—



Valuation inputs

Other financial instruments: Level 1 Level 2 Level 3


Forward currency contracts $— $(1,587,246) $—



Totals by level $— $(1,587,246) $—


Market Values of Derivative Instruments as of the close of the reporting period
Asset derivatives Liability derivatives

Derivatives not accounted for as hedging instruments under ASC 815 Market value Market value
Foreign exchange contracts $362,731 $1,949,977


Total $362,731 $1,949,977


The average volume of activity for the reporting period for any derivative type that was held at the close of the period is listed below and was as follows:
Forward currency contracts (contract amount) $119,500,000

For additional information regarding the fund please see the fund's most recent annual or semiannual shareholder report filed on the Securities and Exchange Commission's Web site, www.sec.gov, or visit Putnam's Individual Investor Web site at www.putnaminvestments.com



Item 2. Controls and Procedures:
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

(b) Changes in internal control over financial reporting: Not applicable
Item 3. Exhibits:
Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

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

Putnam Global Health Care Fund
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer
Date: July 26, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title):
/s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer
Date: July 26, 2013

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