a_globalhealthcare.htm

Putnam
Global Health Care
Fund

Annual report
8 | 31 | 15


Message from the Trustees	1

About the fund	2

Performance snapshot	4

Interview with your fund’s portfolio manager	5

Your fund’s performance	11

Your fund’s expenses	14

Terms and definitions	16

Other information for shareholders	17

Important notice regarding Putnam’s privacy policy	18

Trustee approval of management contract	19

Financial statements	24

Federal tax information	48

About the Trustees	49

Officers	51

Consider these risks before investing: International investing involves currency, economic, and political risks. Emerging-market securities carry illiquidity and volatility risks. Investments in small and/or midsize companies increase the risk of greater price fluctuations. The health-care industries may be affected by technological obsolescence, changes in regulatory approval policies for drugs, medical devices or procedures, and changes in governmental and private payment systems. The fund concentrates on a limited group of industries and is non-diversified. Because the fund may invest in fewer issuers, it is vulnerable to common economic forces and may result in greater losses and volatility. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. The use of short selling may result in losses if the securities appreciate in value. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Stock prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific issuer or industry. You can lose money by investing in the fund.

Message from the Trustees

Dear Fellow Shareholder:

A string of negative developments has kept markets on edge in recent months. Greece’s debt crisis flared, oil prices dropped again, and the People’s Bank of China, in an effort to stem a slumping economy, unexpectedly devalued the yuan. The cumulative effect of these events appeared to contribute to a brief correction in global stock markets during late summer.

Through it all, the U.S. economy has remained resilient, which is likely to prompt the Federal Reserve to raise interest rates for the first time in over a decade. If higher interest rates in the U.S. markets attract global capital, regions outside of the United States could experience greater market volatility and constrained growth.

In contrast, central banks in Europe, Japan, and China appear committed, for the foreseeable future, to low-interest-rate policies to foster growth. The different trajectories of central bank policies may be another source of volatility.

Amid changing market conditions, you may find it reassuring to know that Putnam’s portfolio managers have deep experience and research-driven viewpoints that guide their investment decisions. The interview in the following pages provides you with additional insight into current economic and market conditions, as well as a review of your fund’s performance. We also would encourage you to consult with your financial advisor to discuss whether your mix of investments requires any adjustment to stay on track toward your long-term goals.

In closing, we would like to recognize Charles Curtis, who recently retired as a Putnam Trustee, for his 14 years of dedicated service. And, as always, thank you for investing with Putnam.

Interview with your fund’s portfolio manager

Kelsey, how were conditions for investing in health-care stocks for the 12 months ended August 31, 2015?

Health-care stocks were a highlight across global financial markets, extending their multiyear rally and outperforming the broader stock market by a considerable margin. The positive trends that have been in place in the sector for several years continued to boost the performance of health-care stocks during the past 12 months. Again, we saw great progress from companies developing groundbreaking drugs and compounds, with many of those products testing well in clinical trials. Also, many companies in the sector offered positive fundamentals — that is, they had capital to deploy and were financially strong, with solid balance sheets, earnings, and revenue.

How did the fund perform for the period?

The fund delivered a solid return of 16.29% for the period, outperforming its benchmark, the MSCI World Health Care Index, which returned 9.88%. Again for this fiscal year, our stock selection — particularly in biotechnology and pharmaceuticals — was a key contributor to the portfolio’s outperformance.

Could you discuss some stocks that helped fund performance for the period?

The top contributor for the fiscal year was the stock of Receptos, a biopharmaceutical company that specializes in treatments

This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 8/31/15. See pages 4 and 11–13 for additional fund performance information. Index descriptions can be found on page 16.


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for immune disorders. The stock has been a portfolio highlight in the past, due in large part to the company’s key product — currently known as RPC1063 — which had successful Phase 2 trials for the treatment of multiple sclerosis. More recently, the same compound was successful in trials for ulcerative colitis, a bowel disease. We believed the addition of the ulcerative colitis treatment expands the sales potential of the product, particularly because few approved therapies are currently available for patients with that disease. In our view, the market underestimated the profit potential for RPC1063 as well as the appreciation potential of Receptos stock. Also during the period, investors responded positively to the announcement that Receptos would be acquired by Celgene, a biotechnology company, for a significant premium. That acquisition was finalized just before the close of the period, in August 2015.

Also among the top contributors was Auxilium Pharmaceuticals, a small-cap biotechnology company that has built a solid franchise in urology treatments. The stock had been in the portfolio for a while, but its contribution during the period was acquisition-related. In January 2015, the company was acquired by pharmaceutical firm Endo International at a significant premium to Auxilium’s stock price.

Another portfolio highlight was Allergan, a pharmaceutical company that has experienced solid revenue growth, due in part to a strong management team. Formerly known as Actavis, the company changed its name after acquiring Allergan in March 2015. In addition to that acquisition, the company recently announced plans for the divestiture of its generics business to Teva Pharmaceutical Industries — a deal we believe will be beneficial as Allergan redeploys

Allocations are shown as a percentage of the fund’s net assets as of 8/31/15. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the information in the portfolio schedule notes included in the financial statements due to the inclusion of derivative securities, any interest accruals, and the exclusion of as-of trades, if any. Holdings and allocations may vary over time.


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the capital from that sale to more profitable segments of its business. We believe the company can continue to deliver solid financial results, and Allergan was the largest holding in the fund’s portfolio at the close of the period.

What are some holdings that detracted from returns during the period?

Gilead Sciences, a stock that was among the top contributors in the previous fiscal year, was a detractor for this period. A biopharmaceutical company, Gilead has had great success with Sovaldi and Harvoni, its two hepatitis C drugs. When Sovaldi was launched in 2014, its sales results exceeded investor expectations and led to a significant upward revision of earnings expectations for the company. Sales of the newer drug, Harvoni, have also exceeded expectations. Despite Gilead’s continued strong earnings, investors became concerned about pressure to lower the cost of the drugs due to competition from other companies launching hepatitis C treatments. In our view, the drugs’ impressive cure rates, combined with the millions of people who are affected by hepatitis C, mean that the drugs are likely to make a significant contribution to Gilead’s revenue for years to come. We also believe that Gilead stock trades at an attractive valuation, and it remained in the portfolio at the close of the period.

The stock of AstraZeneca, a global biopharmaceutical company, was a drag on the fund’s performance relative to the benchmark. The stock price advanced considerably in

This table shows the fund’s top 10 holdings by percentage of the fund’s net assets as of 8/31/15. Short-term investments and derivatives, if any, are excluded. Holdings may vary over time.


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2014, when it was viewed as a potential acquisition target, and especially when pharmaceutical company Pfizer announced a takeover bid for AstraZeneca. However, when that deal fell through, the stock declined as it lost its “acquisition premium.” More recently, investors have become increasingly concerned about AstraZeneca’s “patent cliff” risk as two of its blockbuster products, Nexium and Crestor, lose their patent protection and face competition from generic versions of the drugs. Although this is a legitimate concern and it may affect earnings, we believe AstraZeneca has a strong pipeline of products in development. We also believe that potential new product launches over the next several years should more than offset any earnings erosion from generic competition. The stock remained in the portfolio at the close of the period.

Another disappointment for the period was the stock of Grifols, a Spain-based diversified health-care company that specializes in working with blood plasma. In 2013, Grifols bought the diagnostics business of Novartis, a Swiss pharmaceutical firm. The costs of this acquisition pressured Grifols’s profit margins more than expected and resulted in downward earnings revisions for the company. In addition, investors worried about pricing pressure for one of Grifols’s key products. We believe these are short-term challenges for a company that has a durable franchise, and the stock remained in the portfolio at the close of the fiscal year.

As we look ahead to a new fiscal year for the fund, what is your outlook for the health-care sector?

Although health-care stocks have delivered strong performance for several years, we believe a number of trends can support continued growth across the sector. Companies of all sizes continue to develop breakthrough drugs and treatments, and

This chart shows how the fund’s top weightings have changed over the past six months. Allocations are shown as a percentage of the fund’s net assets. Current period summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, and the use of different classifications of securities for presentation purposes. Holdings and allocations may vary over time.


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we are seeing impressive levels of innovation. We believe companies are becoming smarter about developing therapies to improve quality of life. In addition, in our view, health-care stocks continued to be attractively priced, considering their long-term growth potential.

We also believe that the robust merger-and-acquisition activity that has boosted the performance of many stocks is likely to continue, not only in biotechnology and pharmaceuticals, but also in the medical device and HMO subsectors. We believe this consolidation is positive for the health-care sector, as it tends to translate into greater efficiency and more pricing power for a range of products and services.

In terms of risks, one issue we are monitoring carefully is pricing pressure — that is, payers such as insurance companies seeking lower prices to help manage costs for their clients. Pricing pressure can dampen profit margins for health-care companies, and we believe it will garner increasingly more attention as the U.S. presidential election approaches and candidates debate prescription drug affordability. Much depends on who is elected, and any drug price legislation would take some time to be implemented, but we believe that headlines and “noise” around the election could have a negative impact on some health-care stocks in the coming months.

Thank you, Kelsey, for this update and your insights.

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

Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.

Portfolio Manager Kelsey Chen holds a Ph.D. from the University of Texas Medical School, an M.B.A. from the University of Pennsylvania Wharton School of Business, and a B.S. from Wuhan University in Wuhan, China. Kelsey joined Putnam in 2000 and has been in the investment industry since 1999.

In addition to Kelsey, your fund is managed by Isabel Buccellati, who holds graduate and undergraduate degrees in Business Administration from the European Business School in Oestrich-Winkel, Germany. She joined Putnam in 2012 and has been in the investment industry since 1994.


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IN THE NEWS

Collapsing commodity prices caused turbulence in global markets this summer. One of the leading factors pressuring prices was the economic slowdown in China. China remains the world’s second-largest economy and the largest consumer of most commodities, representing about 40% to 50% of global commodity demand. Much of China’s slowdown has been attributed to government efforts to transform the economy by changing the engine of growth from exports to consumer spending. With less need to build new infrastructure, the demand for commodities such as oil, copper, and steel has fallen. As a result, global prices of such commodities have dropped nearly 20% year to date. Furthermore, the price of crude oil is more than 50% below levels seen in 2014, although supply and demand factors outside China have played a significant role in the price movements for this commodity. Global oil supplies surged as North American companies increased production, and the United States emerged as one of the world’s largest producers. Meanwhile, OPEC has continued to maintain last year’s levels of oil production, but demand growth has moderated.


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Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended August 31, 2015, the end of its most recent fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information as of the most recent calendar quarter-end and expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class R and Y shares are not available to all investors. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.

Fund performance Total return for periods ended 8/31/15


	Class A		Class B		Class C		Class M		Class R	Class Y
(inception dates)	(5/28/82)		(3/1/93)		(7/26/99)		(7/3/95)		(1/21/03)	(4/4/00)

	Before	After					Before	After	Net	Net
	sales	sales	Before	After	Before	After	sales	sales	asset	asset
	charge	charge	CDSC	CDSC	CDSC	CDSC	charge	charge	value	value

Annual average
(life of fund)	12.53%	12.33%	12.26%	12.26%	11.69%	11.69%	11.90%	11.78%	12.24%	12.66%

10 years	162.11	147.04	146.79	146.79	143.16	143.16	149.33	140.60	155.63	168.75
Annual average	10.12	9.47	9.45	9.45	9.29	9.29	9.57	9.18	9.84	10.39

5 years	160.94	145.93	151.34	149.34	151.33	151.33	154.48	145.57	157.73	164.25
Annual average	21.15	19.72	20.24	20.05	20.24	20.24	20.54	19.68	20.85	21.45

3 years	105.29	93.48	100.69	97.69	100.69	100.69	102.19	95.11	103.71	106.79
Annual average	27.09	24.61	26.14	25.50	26.14	26.14	26.45	24.96	26.77	27.40

1 year	16.29	9.60	15.42	10.42	15.40	14.40	15.68	11.63	15.99	16.57

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A and M shares reflect the deduction of the maximum 5.75% and 3.50% sales charge, respectively, levied at the time of purchase. Class B share returns after contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 1% in the sixth year, and is eliminated thereafter. Class C share returns after CDSC reflect a 1% CDSC for the first year that is eliminated thereafter. Class R and Y shares have no initial sales charge or CDSC. Performance for class B, C, M, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares, except for class Y shares, for which 12b-1 fees are not applicable.

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

Class B share performance reflects conversion to class A shares after eight years.


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Comparative index returns For periods ended 8/31/15


	MSCI World Health Care Index (ND)

Annual average (life of fund)	—*

10 years	147.21%
Annual average	9.47

5 years	146.19
Annual average	19.74

3 years	78.68
Annual average	21.35

1 year	9.88

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

* The fund’s benchmark, the MSCI World Health Care Index (ND), was introduced on 1/1/01, which post-dates the inception of the fund’s class A shares.

Change in the value of a $10,000 investment ($9,425 after sales charge)
Cumulative total return from 8/31/05 to 8/31/15

Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B and C shares would have been valued at $24,679 and $24,316, respectively, and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares ($9,650 after sales charge) would have been valued at $24,060. A $10,000 investment in the fund’s class R and Y shares would have been valued at $25,563 and $26,875, respectively.


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Fund price and distribution information For the 12-month period ended 8/31/15


Distributions	Class A		Class B	Class C	Class M		Class R	Class Y

Number	1		1	1	1		1	1

Income	$0.306		—	—	$0.057		$0.188	$0.468

Capital gains

Long-term gains	4.091		$4.091	$4.091	4.091		4.091	4.091

Short-term gains	1.685		1.685	1.685	1.685		1.685	1.685

Total	$6.082		$5.776	$5.776	$5.833		$5.964	$6.244

	Before	After	Net	Net	Before	After	Net	Net
	sales	sales	asset	asset	sales	sales	asset	asset
Share value	charge	charge	value	value	charge	charge	value	value

8/31/14	$67.02	$71.11	$50.25	$56.89	$57.97	$60.07	$64.31	$69.96

8/31/15	71.32	75.67	51.75	59.40	60.74	;62.94	68.12	74.75

The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A and M shares, if applicable, do not take into account any sales charge levied at the time of purchase. After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (5.75% for class A shares and 3.50% for class M shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.

Fund performance as of most recent calendar quarter
Total return for periods ended 9/30/15


	Class A		Class B		Class C		Class M		Class R	Class Y
(inception dates)	(5/28/82)		(3/1/93)		(7/26/99)		(7/3/95)		(1/21/03)	(4/4/00)

	Before	After					Before	After	Net	Net
	sales	sales	Before	After	Before	After	sales	sales	asset	asset
	charge	charge	CDSC	CDSC	CDSC	CDSC	charge	charge	value	value

Annual average
(life of fund)	12.22%	12.03%	11.96%	11.96%	11.39%	11.39%	11.60%	11.48%	11.94%	12.36%

10 years	140.56	126.73	126.47	126.47	123.19	123.19	128.86	120.85	134.58	146.65
Annual average	9.17	8.53	8.52	8.52	8.36	8.36	8.63	8.25	8.90	9.45

5 years	121.13	108.41	112.96	110.96	113.01	113.01	115.70	108.15	118.36	123.89
Annual average	17.20	15.82	16.32	16.10	16.33	16.33	16.62	15.79	16.91	17.49

3 years	81.18	70.77	77.14	74.14	77.14	77.14	78.47	72.22	79.81	82.52
Annual average	21.91	19.53	21.00	20.31	21.00	21.00	21.30	19.87	21.60	22.21

1 year	6.21	0.10	5.41	0.71	5.42	4.47	5.69	1.99	5.95	6.48

See the discussion following the fund performance table on page 11 for information about the calculation of fund performance.


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Your fund’s expenses

As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.

Expense ratios


	Class A	Class B	Class C	Class M	Class R	Class Y

Total annual operating expenses
for the fiscal year ended 8/31/14	1.14%	1.89%	1.89%	1.64%	1.39%	0.89%

Annualized expense ratio for
the six-month period ended
8/31/15*	1.09%	1.84%	1.84%	1.59%	1.34%	0.84%

Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report. Expenses are shown as a percentage of average net assets.

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

Expenses per $1,000

The following table shows the expenses you would have paid on a $1,000 investment in the fund from March 1, 2015, to August 31, 2015. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.


	Class A	Class B	Class C	Class M	Class R	Class Y

Expenses paid per $1,000*†	$5.53	$9.31	$9.31	$8.05	$6.79	$4.26

Ending value (after expenses)	$1,011.30	$1,007.60	$1,007.50	$1,008.60	$1,010.10	$1,012.60

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 8/31/15. The expense ratio may differ for each share class.

† Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.


14	Global Health Care Fund

Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended August 31, 2015, use the following calculation method. To find the value of your investment on March 1, 2015, call Putnam at 1-800-225-1581.

Compare expenses using the SEC’s method

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.


	Class A	Class B	Class C	Class M	Class R	Class Y

Expenses paid per $1,000*†	$5.55	$9.35	$9.35	$8.08	$6.82	$4.28

Ending value (after expenses)	$1,019.71	$1,015.93	$1,015.93	$1,017.19	$1,018.45	$1,020.97

† Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year.


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Terms and definitions

Important terms

Total return shows how the value of the fund’s shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund.

Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

After sales charge is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge performance figures shown here assume the 5.75% maximum sales charge for class A shares and 3.50% for class M shares.

Contingent deferred sales charge (CDSC) is generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B CDSC declines over time from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase.

Share classes

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

Class B shares are not subject to an initial sales charge and may be subject to a CDSC.

Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.

Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class R shares are not subject to an initial sales charge or CDSC and are available only to employer-sponsored retirement plans.

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

Comparative indexes

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

BofA Merrill Lynch U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.

MSCI World Health Care Index (ND) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets in the health-care sector.

S&P 500 Index is an unmanaged index of common stock performance.

Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.


16	Global Health Care Fund

Other information for shareholders

Proxy voting

Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2015, are available in the Individual Investors section of putnam.com, and on the Securities and Exchange Commission (SEC) website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Form N-Q on the SEC’s website at www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s website or the operation of the Public Reference Room.

Trustee and employee fund ownership

Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of August 31, 2015, Putnam employees had approximately $492,000,000 and the Trustees had approximately $137,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.


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Important notice regarding Putnam’s privacy policy

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

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

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


18	Global Health Care Fund

Trustee approval of management contract

General conclusions

The Board of Trustees of The Putnam Funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management, LLC (“Putnam Management”), the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”), and the sub-advisory contract among Putnam Management, PIL, and another affiliate, The Putnam Advisory Company (“PAC”). The Board, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of The Putnam Funds (“Independent Trustees”).

At the outset of the review process, members of the Board’s independent staff and independent legal counsel met with representatives of Putnam Management to review the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review and to discuss possible changes in these materials that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management and its affiliates furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2015, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided, as well as supplemental information provided in response to additional requests made by the Contract Committee. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for The Putnam Funds and the Independent Trustees.

In May 2015, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the continuance of the contracts. At the Trustees’ June 19, 2015 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial, performance and other data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its recommendations. The Contract Committee then recommended, and the Independent Trustees approved, the continuance of your fund’s management, sub-management and sub-advisory contracts, effective July 1, 2015. (Because PIL and PAC are affiliates of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL and PAC, the Trustees have not attempted to evaluate PIL or PAC as separate entities, and all subsequent references to Putnam Management below should be deemed to include reference to PIL and PAC as necessary or appropriate in the context.)

The Independent Trustees’ approval was based on the following conclusions:

• That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the


Global Health Care Fund	19

fees paid by competitive funds, the costs incurred by Putnam Management in providing services to the fund, and the continued application of certain reductions and waivers noted below; and

• That the fee schedule in effect for your fund represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.

These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in previous years. For example, with some minor exceptions, the funds’ current fee arrangements were implemented at the beginning of 2010 following extensive review by the Contract Committee and discussions with representatives of Putnam Management, as well as approval by shareholders.

Management fee schedules and total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. The Trustees also reviewed the total expenses of each Putnam fund, recognizing that in most cases management fees represented the major, but not the sole, determinant of total costs to shareholders.

In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment style, changes in Putnam Management’s operating costs or profitability, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of your fund.

Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with economies of scale in the form of reduced fee levels as assets under management in the Putnam family of funds increase. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of economies of scale between fund shareholders and Putnam Management.

As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to support the effort to have fund expenses meet competitive standards, the Trustees and Putnam Management have implemented certain expense limitations. These expense limitations were: (i) a contractual expense limitation applicable to all retail open-end funds of 32 basis points on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to your fund and all but two of the other open-end funds of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, distribution fees, investor servicing fees, investment-related expenses, interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses). These expense limitations attempt to maintain

20 Global Health Care Fund

competitive expense levels for funds with large numbers of small shareholder accounts and funds with relatively small net assets. Most funds, including your fund, had sufficiently low expenses that these expense limitations were not operative. Putnam Management’s support for these expense limitation arrangements was an important factor in the Trustees’ decision to approve the continuance of your fund’s management, sub-management and sub-advisory contracts.

The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Lipper Inc. (“Lipper”). This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fee), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the first quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the second quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2014 (the first quintile representing the least expensive funds and the fifth quintile the most expensive funds). The fee and expense data reported by Lipper as of December 31, 2014 reflected the most recent fiscal year-end data available in Lipper’s database at that time.

In connection with their review of fund management fees and total expenses, the Trustees also reviewed the costs of the services provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing of such economies of scale as may exist in the management of the Putnam funds at that time.

The information examined by the Trustees as part of their annual contract review for the Putnam funds has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, and the like. This information included comparisons of those fees with fees charged to the Putnam funds, as well as an assessment of the differences in the services provided to these different types of clients. The Trustees observed that the differences in fee rates between institutional clients and mutual funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients may reflect historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its institutional clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.


Global Health Care Fund	21

Investment performance

The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the investment oversight committees of the Trustees, which meet on a regular basis with the funds’ portfolio teams and with the Chief Investment Officer and other senior members of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period.

The Trustees considered that 2014 was a year of strong competitive performance for many of the Putnam funds, with generally strong results for the U.S. equity, money market and global asset allocation funds, but relatively mixed results for the international and global equity and fixed income funds. They noted that the longer-term performance of the Putnam funds continued to be strong, exemplified by the fact that the Putnam funds were recognized by Barron’s as the sixth-best performing mutual fund complex for the five-year period ended December 31, 2014. They also noted, however, the disappointing investment performance of some funds for periods ended December 31, 2014 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional actions to address areas of underperformance are warranted.

For purposes of evaluating investment performance, the Trustees generally focus on competitive industry rankings for the one-year, three-year and five-year periods. For a number of Putnam funds with relatively unique investment mandates for which meaningful competitive performance rankings are not considered to be available, the Trustees evaluated performance based on comparisons of fund returns with the returns of selected investment benchmarks. In the case of your fund, the Trustees considered information about your fund’s total return and its performance relative to its benchmark over the one-year, three-year and five-year periods ended December 31, 2014. Your fund’s class A shares’ gross return was positive and exceeded the return of its benchmark over the one-year, three-year and five-year periods. The Trustees noted that your fund significantly outperformed its benchmark over the one-year and three-year periods and that Putnam Management considered the fund’s investment results over these periods to have been exemplary. The Trustees did not find any evidence that would suggest a need for concern regarding the investment process for your fund. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.) The Trustees also considered Putnam Management’s continued efforts to support fund performance through initiatives including structuring compensation for portfolio managers and research analysts to enhance accountability for fund performance, emphasizing accountability in the portfolio management process, and affirming its commitment to a fundamental-driven approach to investing.

22 Global Health Care Fund

The Trustees noted further that Putnam Management continued to strengthen its fundamental research capabilities by adding new investment personnel.

Brokerage and soft-dollar allocations; investor servicing

The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft dollars generated by these means are used primarily to acquire brokerage and research services that enhance Putnam Management’s investment capabilities and supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft dollars continues to be used to pay fund expenses. The Trustees indicated their continued intent to monitor regulatory and industry developments in this area with the assistance of their Brokerage Committee and also indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.

Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management, sub-management and sub-advisory contracts, the Trustees reviewed your fund’s investor servicing agreement with Putnam Investor Services, Inc. (“PSERV”) and its distributor’s contracts and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are reasonable in relation to the nature and quality of such services, the fees paid by competitive funds, and the costs incurred by PSERV and PRM, as applicable, in providing such services.


Global Health Care Fund	23

Financial statements

These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, constitute the fund’s financial statements.

The fund’s portfolio lists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.

Statement of assets and liabilities shows how the fund’s net assets and share price are determined. All investment and non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)

Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal year.

Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned.

Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.

24 Global Health Care Fund

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of
Putnam Global Health Care Fund:

In our opinion, the accompanying statement of assets and liabilities, including the portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam Global Health Care Fund (the “fund”) at August 31, 2015, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at August 31, 2015 by correspondence with the custodian, brokers, and transfer agent, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 7, 2015

Global Health Care Fund 25

The fund’s portfolio 8/31/15


COMMON STOCKS (97.9%)*	Shares	Value

Biotechnology (29.7%)
Acceleron Pharma, Inc. †	112,700	$3,266,046

Adaptimmune Therapeutics PLC ADR (United Kingdom) †	46,385	508,380

Alkermes PLC †	91,200	5,431,872

AMAG Pharmaceuticals, Inc. † ^S	77,140	4,824,336

Amgen, Inc.	442,235	67,122,428

Amicus Therapeutics, Inc. †	655,772	9,430,001

Anacor Pharmaceuticals, Inc. †	72,800	9,493,848

Applied Genetic Technologies Corp. † ^S	302,159	4,964,472

Bellicum Pharmaceuticals, Inc. † ^S	22,759	388,269

BioCryst Pharmaceuticals, Inc. †	179,500	2,089,380

Biogen, Inc. †	130,100	38,678,730

BioMarin Pharmaceutical, Inc. †	223,000	28,820,520

Blueprint Medicines Corp. †	89,500	2,448,720

Catabasis Pharmaceuticals, Inc. †	108,575	1,236,669

Celgene Corp. †	785,500	92,751,840

Cellectis SA ADR (France) † ^S	36,062	1,234,042

ChemoCentryx, Inc. † ^S	180,888	1,190,243

Chiasma, Inc. †	74,200	1,926,232

China Biologic Products, Inc. (China) †	21,989	2,085,437

Cidara Therapeutics, Inc. † ^S	90,120	1,282,408

Circassia Pharmaceuticals PLC (United Kingdom) †	242,993	1,276,150

Conatus Pharmaceuticals, Inc. † ^S	171,528	674,105

Concert Pharmaceuticals, Inc. † ^S	146,831	2,287,627

FivePrime Therapeutics, Inc. †	401,997	7,666,083

Gilead Sciences, Inc.	1,032,800	108,516,296

Global Blood Therapeutics, Inc. †	38,873	1,923,825

Grifols SA ADR (Spain) ^S	246,500	7,466,485

Immune Design Corp. † ^S	206,302	3,288,454

Inovio Pharmaceuticals, Inc. † ^S	146,000	1,093,540

Insmed, Inc. †	216,900	5,301,036

Keryx Biopharmaceuticals, Inc. † S	603,100	3,727,158

Kindred Biosciences, Inc. †	135,406	801,604

Kite Pharma, Inc. † ^S	42,000	2,233,140

Medivation, Inc. †	88,900	7,828,534

Merrimack Pharmaceuticals, Inc. † ^S	520,434	5,251,179

Neuralstem, Inc. † ^S	491,038	716,915

OncoGenex Pharmaceutical, Inc. †	45,200	131,532

Portola Pharmaceuticals, Inc. †	180,369	8,506,202

PTC Therapeutics, Inc. † ^S	198,149	7,567,310

Retrophin, Inc. †	429,919	11,788,379

Sorrento Therapeutics, Inc. † ^S	189,300	2,400,324

TESARO, Inc. † ^S	467,399	24,061,701

Tokai Pharmaceuticals, Inc. † ^S	61,000	720,410

Trevena, Inc. †	450,443	2,702,658

Trillium Therapeutics, Inc. (Canada) †	90,132	1,403,355

Ultragenyx Pharmaceutical, Inc. †	58,406	6,519,278

26 Global Health Care Fund


COMMON STOCKS (97.9%)* cont.	Shares	Value

Biotechnology cont.
uniQure NV (Netherlands) †	266,683	$7,144,438

Verastem, Inc. † ^S	355,447	2,164,672

Vertex Pharmaceuticals, Inc. †	164,700	21,002,544

Vitae Pharmaceuticals, Inc. †	126,353	980,499

536,319,306
Food and staples retail (2.4%)
CVS Health Corp.	416,600	42,659,840

42,659,840
Health-care equipment and supplies (6.1%)
Abbott Laboratories	81,100	3,673,019

Antares Pharma, Inc. † ^S	650,400	1,170,720

Baxter International, Inc.	174,400	6,705,680

Boston Scientific Corp. †	713,000	11,935,620

C.R. Bard, Inc.	95,600	18,526,324

Cooper Cos., Inc. (The)	30,500	4,953,810

Edwards Lifesciences Corp. †	38,100	5,367,528

Innocoll AG ADR (Ireland) †	316,155	4,024,653

Medtronic PLC	440,800	31,865,432

OraSure Technologies, Inc. †	200,000	1,080,000

Sientra, Inc. †	66,817	1,589,576

Unilife Corp. † ^S	557,524	680,179

Zimmer Biomet Holdings, Inc.	153,100	15,855,036

Zosano Pharma Corp. † ^S	361,038	2,924,408

110,351,985
Health-care providers and services (9.8%)
Aetna, Inc.	259,100	29,672,132

AmerisourceBergen Corp.	156,100	15,616,244

Anthem, Inc.	124,400	17,546,620

China Pioneer Pharma Holdings, Ltd. (China)	2,017,000	851,038

Cigna Corp.	228,700	32,198,673

Diplomat Pharmacy, Inc. † ^S	60,852	2,403,045

Express Scripts Holding Co. †	428,464	35,819,590

Fresenius Medical Care AG & Co., KGaA (Germany)	70,936	5,434,815

HCA Holdings, Inc. †	114,000	9,874,680

Sinopharm Group Co. (China)	310,800	1,177,022

UnitedHealth Group, Inc.	182,600	21,126,820

Universal Health Services, Inc. Class B	28,600	3,922,204

175,642,883
Health-care technology (—%)
HTG Molecular Diagnostics, Inc. † ^S	84,092	485,211


Life sciences tools and services (1.9%)		485,211
Agilent Technologies, Inc.	334,800	12,156,588

Morphosys AG (Germany) †	8,476	598,655

Thermo Fisher Scientific, Inc.	170,500	21,375,585

34,130,828
Personal products (0.1%)
Synutra International, Inc. †	350,824	1,754,120

		1,754,120


Global Health Care Fund	27


COMMON STOCKS (97.9%)* cont.	Shares	Value

Pharmaceuticals (47.9%)
AbbVie, Inc.	791,300	$49,385,032

Achaogen, Inc. † ^S	111,627	770,226

Aerie Pharmaceuticals, Inc. †	288,936	4,568,078

Allergan PLC †	425,546	129,255,342

Aspen Pharmacare Holdings, Ltd. (South Africa)	230,928	5,932,725

Assembly Biosciences, Inc. †	333,669	4,574,602

Astellas Pharma, Inc. (Japan)	1,689,700	25,087,310

AstraZeneca PLC (United Kingdom)	690,259	43,133,411

Bayer AG (Germany)	193,827	26,307,734

Bristol-Myers Squibb Co.	1,022,800	60,825,916

Carbylan Therapeutics, Inc. † ^S	540,676	2,935,871

Cempra, Inc. †	271,257	9,331,241

Corium International, Inc. † ^S	292,706	2,929,987

Eli Lilly & Co.	575,000	47,351,250

Endo International PLC †	162,316	12,498,332

Flex Pharma, Inc. † ^S	15,541	186,958

GlaxoSmithKline PLC (United Kingdom)	892,498	18,283,757

Glenmark Pharmaceuticals, Ltd. (India) †	298,302	5,182,086

Hua Han Bio-Pharmaceutical Holdings, Ltd. (China) ^S	9,439,200	1,205,774

Jazz Pharmaceuticals PLC †	20,600	3,477,692

Johnson & Johnson	439,300	41,285,414

Marinus Pharmaceuticals, Inc. † ^S	271,007	3,639,624

Medicines Co. (The) †	177,800	7,289,800

Merck & Co., Inc.	794,400	42,778,440

Mylan NV †	484,500	24,026,355

Neos Therapeutics, Inc. †	193,821	5,190,526

Novartis AG (Switzerland)	490,377	47,931,476

Perrigo Co. PLC	187,700	34,343,469

Pfizer, Inc.	991,940	31,960,307

Roche Holding AG-Genusschein (Switzerland)	95,913	26,019,040

Sanofi (France)	608,746	59,861,217

Shionogi & Co., Ltd. (Japan)	309,900	12,167,476

Shire PLC (United Kingdom)	326,769	25,243,375

Sihuan Pharmaceutical Holdings Group, Ltd. (China) ^F	3,856,000	2,194,174

Tetraphase Pharmaceuticals, Inc. †	67,621	2,935,428

Teva Pharmaceutical Industries, Ltd. ADR (Israel)	293,665	18,914,963

UCB SA (Belgium)	83,204	6,274,461

Zoetis, Inc.	374,856	16,819,789

ZS Pharma, Inc. † ^S	19,435	994,295

		863,092,953

Total common stocks (cost $1,102,883,639)		$1,764,437,126

28 Global Health Care Fund


PREFERRED STOCKS (0.4%)*	Shares	Value

CytomX Therapeutics, Inc. Ser. D, zero % (acquired 6/12/15, cost
$8,116,008) † ΔΔ F	54,711,461	$7,304,418

Total preferred stocks (cost $8,116,008)		$7,304,418


CONVERTIBLE PREFERRED STOCKS (0.2%)*	Shares	Value

Ovid Therapeutics, Inc. 144A Ser. B, 8.00% (acquired 8/10/15,
cost $4,307,309) (Private) † ΔΔ F	691,382	$3,876,579

Total convertible preferred stocks (cost $4,307,310)		$3,876,579


*WARRANTS (—%) †**	Expiration	Strike
	date	price	Warrants	Value

Neuralstem, Inc. Ser. J (acquired 1/14/14,
cost $0.25) ΔΔ F	1/3/19	$3.64	245,519	$—

Total warrants (cost $—)				$—


SHORT-TERM INVESTMENTS (4.5%)*	Principal amount/shares		Value

Putnam Cash Collateral Pool, LLC 0.26% ^d	Shares	53,065,437	$53,065,437

Putnam Short Term Investment Fund 0.13% ^L	Shares	25,416,593	25,416,593

SSgA Prime Money Market Fund Class N 0.06% ^P	Shares	1,350,000	1,350,000

U.S. Treasury Bills 0.00%, October 8, 2015 Δ		$390,000	390,000

U.S. Treasury Bills 0.01%, October 1, 2015 Δ		594,000	593,994

U.S. Treasury Bills 0.02%, October 15, 2015 Δ		70,000	69,999

U.S. Treasury Bills 0.02%, October 22, 2015 Δ		150,000	149,996

U.S. Treasury Bills 0.04%, September 17, 2015 Δ		116,000	115,998

U.S. Treasury Bills 0.19%, February 18, 2016 Δ		171,000	170,833

Total short-term investments (cost $81,322,865)			$81,322,850


TOTAL INVESTMENTS

Total investments (cost $1,196,629,822)			$1,856,940,973


Key to holding’s abbreviations
ADR	American Depository Receipts: represents ownership of foreign securities on deposit with a custodian bank

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, 2014 through August 31, 2015 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures and references to “OTC”, if any, represent over-the-counter.

* Percentages indicated are based on net assets of $1,803,122,873.

† This security is non-income-producing.

ΔΔ This security is restricted with regard to public resale. The total fair value of this security and any other restricted securities (excluding 144A securities), if any, held at the close of the reporting period was $11,180,997, or 0.6% of net assets.

Δ 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.

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

Global Health Care Fund 29

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

^LAffiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

^PThis security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period (Note 1).

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

At the close of the reporting period, the fund maintained liquid assets totaling $1,016,912 to cover certain derivative contracts.

Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.

Debt obligations are considered secured unless otherwise indicated.

144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

The dates shown on debt obligations are the original maturity dates.

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	80.2%	Germany	1.8%

United Kingdom	4.9	Israel	1.0

Switzerland	4.1	Other	2.5

France	3.4	Total	100.0%

Japan	2.1

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.


FORWARD CURRENCY CONTRACTS at 8/31/15 (aggregate face value $76,227,049)

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

Bank of America N.A.
Euro	Buy	9/16/15	$26,932,203	$26,350,638	$581,565

Citibank, N.A.
Danish Krone	Buy	9/16/15	12,540,239	12,479,713	60,526

Credit Suisse International
Japanese Yen	Buy	11/18/15	12,644,164	12,352,619	291,545

HSBC Bank USA, National Association
Australian Dollar	Buy	10/21/15	11,374,102	12,202,636	(828,534)

JPMorgan Chase Bank N.A.
Swiss Franc	Buy	9/16/15	12,517,610	12,841,443	(323,833)

Total					$(218,731)

30 Global Health Care Fund

ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

Level 1: Valuations based on quoted prices for identical securities in active markets.

Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:


	Valuation inputs

Investments in securities:	Level 1	Level 2	Level 3

Common stocks*:

Consumer staples	$44,413,960	$—	$—

Health care	1,451,532,176	268,490,990	—

Total common stocks	1,495,946,136	268,490,990	—

Convertible preferred stocks	$—	$—	$3,876,579

Preferred stocks	—	—	7,304,418

Warrants	—	—	—

Short-term investments	26,766,593	54,556,257	—

Totals by level	$1,522,712,729	$323,047,247	$11,180,997

	Valuation inputs

Other financial instruments:	Level 1	Level 2	Level 3

Forward currency contracts	$—	$(218,731)	$—

Totals by level	$—	$(218,731)	$—

* Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation.

During the reporting period, transfers within the fair value hierarchy, if any, (other than certain transfers involving non-U.S. equity securities as described in Note 1) did not represent, in the aggregate, more than 1% of the fund’s net assets measured as of the end of the period. Transfers are accounted for using the end of period pricing valuation method.

At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio.

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


Global Health Care Fund	31

Statement of assets and liabilities 8/31/15


ASSETS

Investment in securities, at value, including $49,444,322 of securities on loan (Note 1):
Unaffiliated issuers (identified cost $1,118,147,792)	$1,778,458,943
Affiliated issuers (identified cost $78,482,030) (Notes 1 and 5)	78,482,030

Cash	4,579,200

Dividends, interest and other receivables	3,617,785

Receivable for shares of the fund sold	2,376,901

Receivable for investments sold	8,203,132

Unrealized appreciation on forward currency contracts (Note 1)	933,636

Prepaid assets	32,471

Total assets	1,876,684,098

LIABILITIES

Payable for investments purchased	12,803,603

Payable for shares of the fund repurchased	1,997,588

Payable for compensation of Manager (Note 2)	993,322

Payable for custodian fees (Note 2)	19,346

Payable for investor servicing fees (Note 2)	584,577

Payable for Trustee compensation and expenses (Note 2)	467,737

Payable for administrative services (Note 2)	6,392

Payable for distribution fees (Note 2)	839,504

Unrealized depreciation on forward currency contracts (Note 1)	1,152,367

Collateral on securities loaned, at value (Note 1)	53,065,437

Collateral on certain derivative contracts, at value (Note 1)	1,350,000

Other accrued expenses	281,352

Total liabilities	73,561,225

Net assets	$1,803,122,873


REPRESENTED BY

Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)	$938,960,518

Undistributed net investment income (Note 1)	279,258

Accumulated net realized gain on investments and foreign currency transactions (Note 1)	203,862,791

Net unrealized appreciation of investments and assets and liabilities in foreign currencies	660,020,306

Total — Representing net assets applicable to capital shares outstanding	$1,803,122,873

(Continued on next page)

32 Global Health Care Fund

Statement of assets and liabilities (Continued)


COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE

Net asset value and redemption price per class A share
($1,590,624,008 divided by 22,303,519 shares)	$71.32

Offering price per class A share (100/94.25 of $71.32)*	$75.67

Net asset value and offering price per class B share ($40,640,044 divided by 785,367 shares)**	$51.75

Net asset value and offering price per class C share ($72,938,770 divided by 1,227,874 shares)**	$59.40

Net asset value and redemption price per class M share ($16,013,809 divided by 263,626 shares)	$60.74

Offering price per class M share (100/96.50 of $60.74)*	$62.94

Net asset value, offering price and redemption price per class R share
($8,349,858 divided by 122,583 shares)	$68.12

Net asset value, offering price and redemption price per class Y share
($74,556,384 divided by 997,403 shares)	$74.75

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

** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

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


Global Health Care Fund	33

Statement of operations Year ended 8/31/15


INVESTMENT INCOME

Dividends (net of foreign tax of $824,160)	$20,732,387

Interest (including interest income of $24,001 from investments in affiliated issuers) (Note 5)	37,269

Securities lending (Note 1)	1,183,733

Total investment income	21,953,389

EXPENSES

Compensation of Manager (Note 2)	10,714,347

Investor servicing fees (Note 2)	3,278,921

Custodian fees (Note 2)	49,642

Trustee compensation and expenses (Note 2)	66,687

Distribution fees (Note 2)	4,971,342

Administrative services (Note 2)	43,310

Other	548,188

Total expenses	19,672,437

Expense reduction (Note 2)	(23,020)

Net expenses	19,649,417

Net investment income	2,303,972


Net realized gain on investments (Notes 1 and 3)	237,246,918

Net realized loss on foreign currency transactions (Note 1)	(15,347,647)

Net unrealized appreciation of assets and liabilities in foreign currencies during the year	1,952,867

Net unrealized appreciation of investments during the year	15,996,758

Net gain on investments	239,848,896

Net increase in net assets resulting from operations	$242,152,868

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

34 Global Health Care Fund

Statement of changes in net assets


INCREASE IN NET ASSETS	Year ended 8/31/15	Year ended 8/31/14

Operations:
Net investment income	$2,303,972	$5,978,496

Net realized gain on investments
and foreign currency transactions	221,899,271	152,889,694

Net unrealized appreciation of investments and assets
and liabilities in foreign currencies	17,949,625	247,463,922

Net increase in net assets resulting from operations	242,152,868	406,332,112

Distributions to shareholders (Note 1):
From ordinary income
Net investment income

Class A	(6,277,921)	(4,190,426)

Class B	—	—

Class C	—	—

Class M	(14,570)	—

Class R	(17,781)	(8,002)

Class Y	(327,769)	(189,598)

Net realized short-term gain on investments

Class A	(34,569,261)	(36,890,203)

Class B	(1,097,874)	(1,255,203)

Class C	(1,186,017)	(977,923)

Class M	(430,714)	(436,335)

Class R	(159,364)	(140,257)

Class Y	(1,180,109)	(1,016,740)

From net realized long-term gain on investments
Class A	(83,930,473)	(82,647,302)

Class B	(2,665,520)	(2,812,107)

Class C	(2,879,523)	(2,190,898)

Class M	(1,045,728)	(977,547)

Class R	(386,919)	(314,227)

Class Y	(2,865,178)	(2,277,864)

Increase from capital share transactions (Note 4)	190,407,185	42,500,227

Total increase in net assets	$293,525,332	$312,507,707

NET ASSETS

Beginning of year	1,509,597,541	1,197,089,834

End of year (including undistributed net investment income
of $279,258 and $8,248,764, respectively)	$1,803,122,873	$1,509,597,541

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

Global Health Care Fund 35

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


INVESTMENT OPERATIONS:					LESS DISTRIBUTIONS:							RATIOS AND SUPPLEMENTAL DATA:

														Ratio
	Net asset		Net realized										Ratio	of net investment
	value,		and unrealized	Total from	From	From					Total return	Net assets,	of expenses	income (loss)
	beginning	Net investment	gain (loss)	investment	net investment	net realized gain	Total	Redemption	Non-recurring	Net asset value,	at net asset	end of period	to average	to average	Portfolio
Period ended	of period	income (loss) ^a	on investments	operations	income	on investments	distributions	fees	reimbursements	end of period	value (%) ^c	(in thousands)	net assets (%) ^d	net assets (%)	turnover (%)

Class A
August 31, 2015	$67.02	.12	10.27	10.39	(.31)	(5.78)	(6.09)	—	—	$71.32	16.29	$1,590,624	1.10	.17	20
August 31, 2014	55.14	.28	17.95	18.23	(.22)	(6.13)	(6.35)	—	—	67.02	35.30	1,374,677	1.14	.47	22
August 31, 2013	45.03	.40	12.65	13.05	—	(2.94)	(2.94)	— ^b	—	55.14	30.48	1,099,241	1.21	.80	30
August 31, 2012	44.32	.36	5.55	5.91	(.99)	(4.22)	(5.21)	— ^b	.01 ^e	45.03	15.34	923,021	1.28	.85	25
August 31, 2011	42.86	.28	4.10	4.38	—	(2.95)	(2.95)	— ^b	.03 ^f,g	44.32	10.20	916,644	1.26	.59	35

Class B
August 31, 2015	$50.25	(.31)	7.59	7.28	—	(5.78)	(5.78)	—	—	$51.75	15.42	$40,640	1.85	(.58)	20
August 31, 2014	42.85	(.13)	13.66	13.53	—	(6.13)	(6.13)	—	—	50.25	34.28	33,532	1.89	(.28)	22
August 31, 2013	35.87	.02	9.90	9.92	—	(2.94)	(2.94)	— ^b	—	42.85	29.48	29,588	1.96	.05	30
August 31, 2012	36.28	.03	4.43	4.46	(.66)	(4.22)	(4.88)	— ^b	.01 ^e	35.87	14.51	26,017	2.03	.09	25
August 31, 2011	35.82	(.07)	3.45	3.38	—	(2.95)	(2.95)	— ^b	.03 ^f,g	36.28	9.37	31,192	2.01	(.18)	35

Class C
August 31, 2015	$56.89	(.34)	8.63	8.29	—	(5.78)	(5.78)	—	—	$59.40	15.40	$72,939	1.85	(.57)	20
August 31, 2014	47.79	(.14)	15.37	15.23	—	(6.13)	(6.13)	—	—	56.89	34.30	35,165	1.89	(.27)	22
August 31, 2013	39.68	.02	11.03	11.05	—	(2.94)	(2.94)	— ^b	—	47.79	29.50	23,851	1.96	.05	30
August 31, 2012	39.64	.04	4.90	4.94	(.69)	(4.22)	(4.91)	— ^b	.01 ^e	39.68	14.50	17,562	2.03	.10	25
August 31, 2011	38.89	(.07)	3.74	3.67	—	(2.95)	(2.95)	— ^b	.03^f,g	39.64	9.38	17,156	2.01	(.16)	35

Class M
August 31, 2015	$57.97	(.20)	8.81	8.61	(.06)	(5.78)	(5.84)	—	—	$60.74	15.68	$16,014	1.60	(.33)	20
August 31, 2014	48.48	(.01)	15.63	15.62	—	(6.13)	(6.13)	—	—	57.97	34.64	14,205	1.64	(.02)	22
August 31, 2013	40.12	.13	11.17	11.30	—	(2.94)	(2.94)	— ^b	—	48.48	29.81	10,741	1.71	.30	30
August 31, 2012	40.03	.13	4.95	5.08	(.78)	(4.22)	(5.00)	— ^b	.01 ^e	40.12	14.77	9,518	1.78	.35	25
August 31, 2011	39.15	.04	3.76	3.80	—	(2.95)	(2.95)	— ^b	.03 ^f,g	40.03	9.66	9,754	1.76	.09	35

Class R
August 31, 2015	$64.31	(.05)	9.83	9.78	(.19)	(5.78)	(5.97)	—	—	$68.12	15.99	$8,350	1.35	(.07)	20
August 31, 2014	53.16	.13	17.26	17.39	(.11)	(6.13)	(6.24)	—	—	64.31	34.98	5,578	1.39	.23	22
August 31, 2013	43.63	.26	12.21	12.47	—	(2.94)	(2.94)	— ^b	—	53.16	30.11	3,754	1.46	.54	30
August 31, 2012	43.11	.26	5.38	5.64	(.91)	(4.22)	(5.13)	— ^b	.01 ^e	43.63	15.09	3,046	1.53	.63	25
August 31, 2011	41.86	.17	4.00	4.17	—	(2.95)	(2.95)	— ^b	.03 ^f,g	43.11	9.93	2,123	1.51	.37	35

Class Y
August 31, 2015	$69.96	.32	10.72	11.04	(.47)	(5.78)	(6.25)	—	—	$74.75	16.57	$74,556	.85	.42	20
August 31, 2014	57.30	.46	18.68	19.14	(.35)	(6.13)	(6.48)	—	—	69.96	35.64	46,440	.89	.74	22
August 31, 2013	46.58	.55	13.11	13.66	—	(2.94)	(2.94)	— ^b	—	57.30	30.79	29,916	.96	1.05	30
August 31, 2012	45.68	.48	5.74	6.22	(1.11)	(4.22)	(5.33)	— ^b	.01 ^e	46.58	15.64	20,913	1.03	1.11	25
August 31, 2011	43.98	.41	4.21	4.62	—	(2.95)	(2.95)	— ^b	.03 ^f,g	45.68	10.50	19,853	1.01	.85	35

See notes to financial highlights at the end of this section.

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


36 Global Health Care Fund	Global Health Care Fund	37

Financial highlights (Continued)

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

^bAmount represents less than $0.01 per share. c Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

^dIncludes amounts paid through expense offset and brokerage service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.

^eReflects a non-recurring reimbursement pursuant to a settlement between the Securities and Exchange Commission (the SEC) and Canadian Imperial Holdings, Inc./CIBC World Markets Corp. which amounted to $0.01 per share outstanding on November 29, 2011.

^fReflects a non-recurring reimbursement related to restitution amounts in connection with a distribution plan approved by the SEC which amounted to $0.03 per share outstanding on July 21, 2011. Also reflects a non-recurring reimbursement related to short-term trading related lawsuits, which amounted to less than $0.01 per share outstanding on May 11, 2011.

^gReflects a non-recurring reimbursement pursuant to a settlement between the SEC and Zurich Capital Markets, Inc., which amounted to less than $0.01 per share outstanding as of December 21, 2010.

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

38 Global Health Care Fund

Notes to financial statements 8/31/15

Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from September 1, 2014 through August 31, 2015.

Putnam Global Health Care Fund (the fund) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as a non-diversified open-end management investment company. The goal of the fund is to seek capital appreciation. Concentrating in the health care industries, the fund invests mainly in common stocks (growth or value stocks or both) of large and midsize companies worldwide that Putnam Management believes have favorable investment potential. Potential investments include companies that manufacture health care supplies or provide health care-related services, and companies in the research, development, production and marketing of pharmaceuticals and biotechnology products. The fund may purchase stocks of companies with stock prices that reflect a value lower than that which Putnam Management places on the company. Putnam Management may also consider other factors that it believes will cause the stock price to rise. Putnam Management may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments.

The fund offers class A, class B, class C, class M, class R and class Y shares. Class A and class M shares are sold with a maximum front-end sales charge of 5.75% and 3.50%, respectively, and generally do not pay a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge and are subject to a contingent deferred sales charge if those shares are redeemed within six years of purchase. Class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class R shares, which are not available to all investors, are sold at net asset value. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, class M and class R shares, but do not bear a distribution fee. Class Y shares are not available to all investors.

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.

Note 1: Significant accounting policies

The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.

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

Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.

Global Health Care Fund 39

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

Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued 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.

Market quotations are not considered to be readily available for certain debt obligations and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value, and are classified as Level 2 securities.

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 in accordance with policies and procedures approved by the Trustees. 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, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

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

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

All premiums/discounts are amortized/accreted on a yield-to-maturity basis.

Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the

40 Global Health Care Fund

fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on closed forward currency contracts, disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.

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

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

Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.

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, is 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 $1,152,367 on open derivative contracts subject to the Master Agreements. Collateral posted by the fund at period end for these agreements totaled $1,120,846 and may include amounts related to unsettled agreements.

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


Global Health Care Fund	41

charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $53,065,437 and the value of securities loaned amounted to $49,444,322.

Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.

Lines of credit The fund participates, along with other Putnam funds, in a $392.5 million syndicated unsecured committed line of credit provided by State Street ($292.5 million) and Northern Trust Company ($100 million) and a $235.5 million unsecured uncommitted line of credit provided by State Street. Prior to September 24, 2015 the fund participated in a $392.5 million unsecured committed line of credit provided by State Street and the same unsecured uncommitted line of credit. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to the higher of (1) the Federal Funds rate and (2) the overnight LIBOR (the Federal Funds rate prior to September 24, 2015) plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.16% (0.11% Prior to September 24, 2015) per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.

Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.

The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

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

Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

These differences include temporary and/or permanent differences from foreign currency gains and losses, from straddle loss deferrals, and from net operating loss. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. At the close of the reporting period, the fund reclassified $3,635,437 to decrease undistributed net investment income and $3,635,437 to increase accumulated net realized gain.

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


Unrealized appreciation	$709,654,025
Unrealized depreciation	(49,367,694)

Net unrealized appreciation	660,286,331
Undistributed long-term gain	175,143,829
Undistributed short-term gain	28,910,899
Cost for federal income tax purposes	$1,196,654,642

42 Global Health Care Fund

Note 2: Management fee, administrative services and other transactions

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


0.780%	of the first $5 billion,	0.580%	of the next $50 billion,

0.730%	of the next $5 billion,	0.560%	of the next $50 billion,

0.680%	of the next $10 billion,	0.550%	of the next $100 billion and

0.630%	of the next $10 billion,	0.545%	of any excess thereafter.

Putnam Management has contractually agreed, through December 30, 2016, to waive fees or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.

Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.

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

The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.

Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing that included (1) a per account fee for each direct and underlying non-defined contribution account (“retail account”) of the fund and each of the other funds in its specified category, which was totaled and then allocated to each fund in the category based on its average daily net assets; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) for the portion of the fund’s fiscal year beginning after January 1, 2015, a specified rate based on the average net assets in retail accounts. Putnam Investor Services has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts will not exceed an annual rate of 0.320% of the fund’s average assets attributable to such accounts. During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:


Class A	$2,946,743	Class R	14,038

Class B	71,545	Class Y	114,834

Class C	100,952	Total	$3,278,921

Class M	30,809

The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the fund’s expenses were reduced by $2,452 under the expense offset arrangements and by $20,568 under the brokerage/ service arrangements.

Global Health Care Fund 43

Each Independent Trustee of the fund receives an annual Trustee fee, of which $1,058, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.

The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

The fund has adopted distribution plans (the Plans) with respect to its class A, class B, class C, class M and class R shares pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, 0.75% and 0.50% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively. During the reporting period, the class specific expenses related to distribution fees were as follows:


Class A	$3,896,681	Class M	122,141

Class B	378,567	Class R	37,245

Class C	536,708	Total	$4,971,342

For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $307,864 and $3,023 from the sale of class A and class M shares, respectively, and received $12,695 and $1,381 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.

A deferred sales charge of up to 1.00% and 0.65% is assessed on certain redemptions of class A and class M shares, respectively. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $13 and no monies on class A and class M redemptions, respectively.

Note 3: Purchases and sales of securities

During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:


	Cost of purchases	Proceeds from sales

Investments in securities (Long-term)	$464,115,349	$345,419,715

U.S. government securities (Long-term)	—	—

Total	$464,115,349	$345,419,715

44 Global Health Care Fund

Note 4: Capital shares

At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:


	Year ended 8/31/15		Year ended 8/31/14

Class A	Shares	Amount	Shares	Amount

Shares sold	2,339,932	$168,851,284	910,359	$54,130,255

Shares issued in connection with
reinvestment of distributions	1,734,367	113,739,780	2,004,813	112,469,982

	4,074,299	282,591,064	2,915,172	166,600,237

Shares repurchased	(2,281,866)	(163,376,857)	(2,339,811)	(139,562,958)

Net increase	1,792,433	$119,214,207	575,361	$27,037,279


	Year ended 8/31/15		Year ended 8/31/14

Class B	Shares	Amount	Shares	Amount

Shares sold	227,289	$12,013,227	114,866	$5,199,288

Shares issued in connection with
reinvestment of distributions	73,725	3,526,282	90,173	3,812,518

	301,014	15,539,509	205,039	9,011,806

Shares repurchased	(182,925)	(9,540,940)	(228,278)	(10,274,469)

Net increase (decrease)	118,089	$5,998,569	(23,239)	$(1,262,663)


	Year ended 8/31/15		Year ended 8/31/14

Class C	Shares	Amount	Shares	Amount

Shares sold	662,318	$40,101,641	143,835	$7,360,944

Shares issued in connection with
reinvestment of distributions	67,240	3,692,164	59,068	2,827,015

	729,558	43,793,805	202,903	10,187,959

Shares repurchased	(119,842)	(7,161,324)	(83,838)	(4,279,159)

Net increase	609,716	$36,632,481	119,065	$5,908,800


	Year ended 8/31/15		Year ended 8/31/14

Class M	Shares	Amount	Shares	Amount

Shares sold	45,262	$2,730,095	24,584	$1,259,341

Shares issued in connection with
reinvestment of distributions	24,124	1,352,158	26,208	1,276,065

	69,386	4,082,253	50,792	2,535,406

Shares repurchased	(50,818)	(3,124,320)	(27,279)	(1,430,694)

Net increase	18,568	$957,933	23,513	$1,104,712


	Year ended 8/31/15		Year ended 8/31/14

Class R	Shares	Amount	Shares	Amount

Shares sold	61,848	$4,232,175	37,219	$2,136,001

Shares issued in connection with
reinvestment of distributions	8,591	539,076	7,607	410,156

	70,439	4,771,251	44,826	2,546,157

Shares repurchased	(34,598)	(2,387,886)	(28,700)	(1,642,200)

Net increase	35,841	$2,383,365	16,126	$903,957

Global Health Care Fund 45


	Year ended 8/31/15		Year ended 8/31/14

Class Y	Shares	Amount	Shares	Amount

Shares sold	558,003	$42,292,106	228,388	$14,360,312

Shares issued in connection with
reinvestment of distributions	57,228	3,927,003	53,883	3,150,023

	615,231	46,219,109	282,271	17,510,335

Shares repurchased	(281,642)	(20,998,479)	(140,552)	(8,702,193)

Net increase	333,589	$25,220,630	141,719	$8,808,142

Note 5: Affiliated transactions

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


	Fair value at the				Fair value at
	beginning of				the end of
	the reporting			Investment	the reporting
Name of affiliate	period	Purchase cost	Sale proceeds	income	period

Putnam Short Term
Investment Fund*	$3,544,710	$318,771,742	$296,899,859	$24,001	$25,416,593

Totals	$3,544,710	$318,771,742	$296,899,859	$24,001	$25,416,593

* Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management.

Note 6: Market, credit and other risks

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations. The fund concentrates a majority of its investments in the health care sector, which involves more risk than a fund that invests more broadly.

Note 7: Summary of derivative activity

The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was as follows based on an average of the holdings at the end of each fiscal quarter:


Forward currency contracts (contract amount)	$78,900,000

Warrants (number of warrants)	250,000

The following is a summary of the fair value of derivative instruments as of the close of the reporting period:

Fair value of derivative instruments as of the close of the reporting period


	Asset derivatives		Liability derivatives

Derivatives not
accounted for as	Statement of		Statement of
hedging instruments	assets and		assets and
under ASC 815	liabilities location	Fair value	liabilities location	Fair value

Foreign exchange
contracts	Receivables	933,636	Payables	1,152,367

Total		$933,636		$1,152,367

46 Global Health Care Fund

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

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


Derivatives not accounted for as hedging	Forward currency
instruments under ASC 815	contracts	Total

Foreign exchange contracts	$(15,134,967)	$(15,134,967)

Total	$(15,134,967)	$(15,134,967)

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


Derivatives not accounted for as hedging		Forward currency
instruments under ASC 815	Warrants	contracts	Total

Foreign exchange contracts	$—	$2,003,174	$2,003,174

Equity contracts	(105,573)	—	$(105,573)

Total	$(105,573)	$2,003,174	$1,897,601

Note 8: Offsetting of financial and derivative assets and liabilities

The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.


	Bank of America N.A.	Citibank, N.A.	Credit Suisse International	HSBC Bank USA, National Association	JPMorgan Chase Bank N.A.	Total

Assets:

Forward currency contracts^#	$581,565	$60,526	$291,545	$—	$—	$933,636

Total Assets	$581,565	$60,526	$291,545	$—	$—	$933,636

Liabilities:

Forward currency contracts^#	—	—	—	828,534	323,833	1,152,367

Total Liabilities	$—	$—	$—	$828,534	$323,833	$1,152,367

Total Financial and Derivative Net Assets	$581,565	$60,526	$291,545	$(828,534)	$(323,833)	$(218,731)

Total collateral received (pledged)†^##	$581,565	$60,000	$291,545	$(828,534)	$(270,846)

Net amount	$—	$526	$—	$—	$(52,987)

†Additional collateral may be required from certain brokers based on individual agreements.

^#Covered by master netting agreement (Note 1).

^##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.

Global Health Care Fund 47

Federal tax information (Unaudited)

Pursuant to §852 of the Internal Revenue Code, as amended, the fund hereby designates $211,840,457 as a capital gain dividend with respect to the taxable year ended August 31, 2015, or, if subsequently determined to be different, the net capital gain of such year.

The fund designated 35.83% of ordinary income distributions as qualifying for the dividends received deduction for corporations.

For the reporting period, the fund hereby designates 65.06%, or the maximum amount allowable, of its taxable ordinary income distributions as qualified dividends taxed at the individual net capital gain rates.

For the reporting period, pursuant to §871(k) of the Internal Revenue Code, the fund hereby designates $17,923 of distributions paid as qualifying to be taxed as interest-related dividends.

The Form 1099 that will be mailed to you in January 2016 will show the tax status of all distributions paid to your account in calendar 2015.

48 Global Health Care Fund

Officers

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


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

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


Global Health Care Fund	51

Services for shareholders

Investor services

Systematic investment plan Tell us how much you wish to invest regularly — weekly, semimonthly, or monthly — and the amount you choose will be transferred automatically from your checking or savings account. There’s no additional fee for this service, and you can suspend it at any time. This plan may be a great way to save for college expenses or to plan for your retirement.

Please note that regular investing does not guarantee a profit or protect against loss in a declining market. Before arranging a systematic investment plan, consider your financial ability to continue making purchases in periods when prices are low.

Systematic exchange You can make regular transfers from one Putnam fund to another Putnam fund. There are no additional fees for this service, and you can cancel or change your options at any time.

Dividends PLUS You can choose to have the dividend distributions from one of your Putnam funds automatically reinvested in another Putnam fund at no additional charge.

Free exchange privilege You can exchange money between Putnam funds free of charge, as long as they are the same class of shares. A signature guarantee is required if you are exchanging more than $500,000. The fund reserves the right to revise or terminate the exchange privilege.

Reinstatement privilege If you’ve sold Putnam shares or received a check for a dividend or capital gain, you may reinvest the proceeds with Putnam within 90 days of the transaction and they will be reinvested at the fund’s current net asset value — with no sales charge. However, reinstatement of class B shares may have special tax consequences. Ask your financial or tax representative for details.

Check-writing service You have ready access to many Putnam accounts. It’s as simple as writing a check, and there are no special fees or service charges. For more information about the check-writing service, call Putnam or visit our website.

Dollar cost averaging When you’re investing for long-term goals, it’s time, not timing, that counts. Investing on a systematic basis is a better strategy than trying to figure out when the markets will go up or down. This means investing the same amount of money regularly over a long period. This method of investing is called dollar cost averaging. When a fund’s share price declines, your investment dollars buy more shares at lower prices. When it increases, they buy fewer shares. Over time, you will pay a lower average price per share.

For more information

Visit the Individual Investors section at putnam.com A secure section of our website contains complete information on your account, including balances and transactions, updated daily. You may also conduct transactions, such as exchanges, additional investments, and address changes. Log on today to get your password.

Call us toll free at 1-800-225-1581 Ask a helpful Putnam representative or your financial advisor for details about any of these or other services, or see your prospectus.

52 Global Health Care Fund

Fund information

Founded over 75 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.


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

This report is for the information of shareholders of Putnam Global Health Care Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.


Fiscal year ended	Audit Fees	Audit-Related Fees	Tax Fees	All Other Fees


August 31, 2015	$90,568	$ —	$10,344	$ —
August 31, 2014	$88,075	$ —	$10,121	$ —


Fiscal year ended	Audit-Related Fees	Tax Fees	All Other Fees	Total Non-Audit Fees


August 31, 2015	$ —	$679,676	$ —	$ —

August 31, 2014	$ —	$576,174	$ —	$ —


	CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES


	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:	Bryan Chegwidden, Esq. Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036


	Registrant’s telephone number, including area code:	(617) 292-1000


	Date of reporting period :	September 1, 2014 — August 31, 2015


	The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:


	The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor:


	For the fiscal years ended August 31, 2015 and August 31, 2014, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $690,020 and $586,295 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund.


	UNITED STATES SECURITIES AND EXCHANGE COMMISSION


	FORM N-CSR


	Item 1. Report to Stockholders:


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


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


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


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


	The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.


	Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies:


	Item 8. Portfolio Managers of Closed-End Investment Companies


	Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:


	Item 10. Submission of Matters to a Vote of Security Holders:


	(b) Changes in internal control over financial reporting: Not applicable


	(a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith.


	(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.


	(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith.


	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.


	/s/ Janet C. Smith Janet C. Smith Principal Accounting Officer


	/s/ Jonathan S. Horwitz Jonathan S. Horwitz Principal Executive Officer


	/s/ Steven D. Krichmar Steven D. Krichmar Principal Financial Officer