FUND SYMBOLS CLASS A CLASS B CLASS C CLASS R CLASS R3 CLASS R4 CLASS R5 CLASS R6 CLASS Y
2065 Fund PCJQX -- PCJRX PCJUX PCJVX PCJWX PCJIX PCJYX PCJSX
2060 Fund PRTFX -- -- PRTRX PAEVX PAEUX PAEWX PEFGX PRTYX
2055 Fund PRRFX -- -- PRRVX PAEOX PAEPX PAESX PREVX PRTLX
2050 Fund PRRJX -- -- PRRKX PADWX PAEHX PAEJX PREUK PRRUX
2045 Fund PRVLX -- -- -- PACGX PACFX PACHX PREKX PRVYX
2040 Fund PRRZX -- -- -- PAAUX PAAYX PABTX PREHX PRZZX
2035 Fund PRRWX -- -- -- PADUX PADSX PADVX PREGX PRRYX
2030 Fund PRRQX -- -- -- PADOX PADNX PADRX PREZX PRRTX
2025 Fund PRROX -- -- -- PADHX PADJX PADKX PRMFX PRRPX
Maturity Fund PRMAX PRMLX PRMCX PRMKX PACKX PACPX PACQX PREWX PRMYX

 

Putnam Sustainable Retirement 2065 Fund*

Putnam Sustainable Retirement 2060 Fund*

Putnam Sustainable Retirement 2055 Fund*

Putnam Sustainable Retirement 2050 Fund*

Putnam Sustainable Retirement 2045 Fund*

Putnam Sustainable Retirement 2040 Fund*

Putnam Sustainable Retirement 2035 Fund*

Putnam Sustainable Retirement 2030 Fund*

Putnam Sustainable Retirement 2025 Fund*

Putnam Sustainable Retirement Maturity Fund*

 

EACH A SERIES OF PUTNAM TARGET DATE FUNDS

 

FORM N-1A

PART B

STATEMENT OF ADDITIONAL INFORMATION (SAI)

 

11/30/23

 

 

This SAI is not a prospectus. If a fund has more than one form of current prospectus, each reference to the prospectus in this SAI includes all of the funds' prospectuses, unless otherwise noted. The SAI should be read together with the applicable prospectus. For a free copy of the funds' annual reports or a prospectus dated 2/10/23, as revised from time to time, call Putnam Investor Services at 1-800-225-1581, visit

I-1 
 

Putnam's website at putnam.com or write Putnam Investments, P.O. Box 219697, Kansas City, MO 64121-9697.

 

Part I of this SAI contains specific information about the funds. Part II includes information about these funds and other Putnam mutual funds, closed-end funds, and exchange-traded funds (collectively, the “Putnam funds”).

*Prior to February 10, 2023, the funds were known as Putnam RetirementReady 2065 Fund, Putnam RetirementReady 2060 Fund, Putnam RetirementReady 2055 Fund, Putnam RetirementReady 2050 Fund, Putnam RetirementReady 2045 Fund, Putnam RetirementReady 2040 Fund, Putnam RetirementReady 2035 Fund, Putnam RetirementReady 2030 Fund, Putnam RetirementReady 2025 Fund, Putnam RetirementReady 2020 Fund and Putnam RetirementReady Maturity Fund, respectively.

Table of Contents

 

PART I

 

 
FUND ORGANIZATION AND CLASSIFICATION I-4
INVESTMENT RESTRICTIONS I-5
DISTRIBUTIONS I-7
CHARGES AND EXPENSES I-7
   
PORTFOLIO MANAGERS I-49
   
SECURITIES LENDING ACTIVITIES I-50
   
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND FINANCIAL  
STATEMENTS I-51

 

 

 

I-2 
 

PART II

HOW TO BUY SHARES II-1
DISTRIBUTION PLANS II-13
MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS II-20
   
INVESTMENT STRATEGIES APPLICABLE TO UNDERLYING FUNDS II-79
TAXES II-81
MANAGEMENT II-96
DETERMINATION OF NET ASSET VALUE II-116
INVESTOR SERVICES II-118
SIGNATURE GUARANTEES II-123
REDEMPTIONS II-123
POLICY ON EXCESSIVE SHORT-TERM TRADING II-124
SHAREHOLDER LIABILITY II-124
DERIVATIVE ACTIONS II-124
DISCLOSURE OF PORTFOLIO INFORMATION II-124
INFORMATION SECURITY RISKS II-128
PROXY VOTING GUIDELINES AND PROCEDURES II-128
VOTING PROXIES OF UNDERLYING FUNDS OF A FUND OF FUNDS II-129
SECURITIES RATINGS II-129
APPENDIX A - PROXY VOTING GUIDELINES OF THE PUTNAM FUNDS II-135
APPENDIX B - FINANCIAL STATEMENTS II-182

 

 

 

I-3 
 

SAI

PART I

FUND ORGANIZATION AND CLASSIFICATION

Each of Putnam Sustainable Retirement 2065 Fund, Putnam Sustainable Retirement 2060 Fund, Putnam Sustainable Retirement 2055 Fund, Putnam Sustainable Retirement 2050 Fund, Putnam Sustainable Retirement 2045 Fund, Putnam Sustainable Retirement 2040 Fund, Putnam Sustainable Retirement 2035 Fund, Putnam Sustainable Retirement 2030 Fund, Putnam Sustainable Retirement 2025 Fund, and Putnam Sustainable Retirement Maturity Fund ("Maturity Fund") is a diversified series of Putnam Target Date Funds, a Massachusetts business trust organized on June 8, 2004 (the “Trust”). A copy of the Trust’s Amended and Restated Agreement and Declaration of Trust (the "Agreement and Declaration of Trust"), which is governed by Massachusetts law, is on file with the Secretary of The Commonwealth of Massachusetts. Prior to February 10, 2023, each fund’s name included “RetirementReady” instead of “Sustainable Retirement”.

The Trust is an open-end management investment company with an unlimited number of authorized shares of beneficial interest. The Trustees may, without shareholder approval, create two or more series of shares representing separate investment portfolios. Any series of shares may be divided without shareholder approval into two or more classes of shares having such preferences and special or relative rights and privileges as the Trustees determine. Each fund offers classes of shares with different sales charges and expenses.

 

Each share has one vote, with fractional shares voting proportionally. Shares of all series and classes will vote together as a single class on all matters except (i) when required by the Investment Company Act of 1940, as amended, or when the Trustees have determined that a matter affects one or more series or classes materially differently, shares are voted by individual series or class; and (ii) when the Trustees determine that such a matter affects only the interests of a particular series or class, then only shareholders of that series or class are entitled to vote. The Trustees may take many actions affecting a fund without shareholder approval, including under certain circumstances merging your fund into another Putnam fund. Shares are freely transferable, are entitled to dividends as declared by the Trustees, and, if a fund were liquidated, would receive the net assets of such fund.

 

 

Each fund may suspend the sale of shares at any time and may refuse any order to purchase shares. Although each fund is not required to hold annual meetings of its shareholders, shareholders holding at least 10% of the outstanding shares entitled to vote have the right to call a meeting to elect or remove Trustees, or to take other actions as provided in the Agreement and Declaration of Trust.

I-4 
 

Information about the Prospectus and SAI

Each fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent, and custodian who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the funds.

 

Under the Trust's Agreement and Declaration of Trust, any claims asserted by a shareholder against or on behalf of the Trust (or its series), including claims against Trustees and Officers, must be brought in courts of The Commonwealth of Massachusetts.

 

 

INVESTMENT RESTRICTIONS

As fundamental investment restrictions, which may not be changed without a vote of a majority of the outstanding voting securities of a fund created under the Trust, each fund may not and will not:

(1) Borrow money in excess of 33 1/3% of the value of its total assets (not including the amount borrowed) at the time the borrowing is made.

(2) Underwrite securities issued by other persons except to the extent that, in connection with the disposition of its portfolio investments, it may be deemed to be an underwriter under certain federal securities laws.

(3) Purchase or sell real estate, although it may purchase securities of issuers which deal in real estate, securities which are secured by interests in real estate, and securities which represent interests in real estate, and it may acquire and dispose of real estate or interests in real estate acquired through the exercise of its rights as a holder of debt obligations secured by real estate or interests therein.

(4) Purchase or sell commodities or commodity contracts, except that the fund may purchase and sell financial futures contracts and options, and may enter into foreign exchange contracts and other financial transactions not involving physical commodities.

(5) Make loans, except by purchase of debt obligations in which the fund may invest consistent with its investment policies (including without limitation debt obligations issued by other Putnam funds), by entering into repurchase agreements, or by lending its portfolio securities.

(6) With respect to 75% of its total assets, invest in securities of any issuer if, immediately after such investment, more than 5% of the total assets of the fund (taken at current value) would be invested in the securities of such issuer; provided that this

I-5 
 

limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities or to securities issued by other investment companies.

 

(7) With respect to 75% of its total assets, acquire more than 10% of the voting securities of any issuer; provided that this limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its agencies or instrumentalities or to securities issued by other investment companies.

(8) Purchase securities (other than securities of the U.S. government, its agencies or instrumentalities) if, as a result of such purchase, more than 25% of the fund’s total assets would be invested in any one industry.

(9) Issue any class of securities which is senior to the fund’s shares of beneficial interest, except for permitted borrowings.

 

The Investment Company Act of 1940, as amended, provides that a “vote of a majority of the outstanding voting securities” of a fund means the affirmative vote of the lesser of (1) more than 50% of the outstanding fund shares, or (2) 67% or more of the shares present at a meeting if more than 50% of the outstanding fund shares are represented at the meeting in person or by proxy.

 

 

For purposes of each fund’s fundamental policy on commodities and commodities contracts (#4 above), at the time of the establishment of the policy, swap contracts on financial instruments or rates were not within the understanding of the terms “commodities” or “commodity contracts,” and notwithstanding any federal legislation or regulatory action by the Commodity Futures Trading Commission (“CFTC”) that subject such swaps to regulation by the CFTC, the fund will not consider such instruments to be commodities or commodity contracts for purposes of this policy.

For purposes of each fund's fundamental policy on industry concentration (#8 above), Putnam Investment Management, LLC ("Putnam Management"), the fund's investment manager, determines the appropriate industry categories and assigns issuers to them, informed by a variety of considerations, including relevant third-party categorization systems. Industry categories and issuer assignments may change over time as industry sectors and issuers evolve. Portfolio allocations shown in shareholder reports and other communications may use broader investment sectors or narrower sub-industry categories.

All percentage limitations on investments will apply at the time of the making of an investment and shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of such investment.

I-6 
 

 

The Trust has filed an election under Rule 18f-1 under the Investment Company Act of 1940, as amended, committing each fund that is a series of the Trust to pay all redemptions of fund shares by a single shareholder during any 90-day period in cash, up to the lesser of (i) $250,000 or (ii) 1% of such fund's net assets measured as of the beginning of such 90-day period.

 

 

DISTRIBUTIONS – Maturity Fund

Each month, Maturity Fund will declare a distribution in an amount equal to its projected net investment income, which will be based upon Putnam Management's projections of dividends to be paid to Maturity Fund by its underlying funds during the period, adjusted for previously over- and under-distributed income, less projected expenses of Maturity Fund to be accrued for the period.

 

CHARGES AND EXPENSES

Management fees

Shareholders of each fund approved a new management contract with Putnam Management effective January 4, 2021 (the “Management Contract”). The substantive terms of the new Management Contract are substantially similar to the terms of your fund’s previous management contract dated August 1, 2009 (the “Previous Management Contract”), except for terms relating to the compensation to be paid by the funds to Putnam Management.

Under the Management Contract, each fund pays a management fee to Putnam Management. The fee for each fund is calculated and paid monthly based on an annual rate and the fund’s average net assets for the month. For Maturity Fund, the annual rate is 0.46%. For each other fund, the annual rate is based on the number of years remaining (determined as of September 30th of each year and applicable through September 30th of the following year) until the date referenced in the fund’s name (the “Target Date”), as set forth below. “Average net assets” means the average of all of the determinations of a fund’s net asset value at the close of business on each business day during each month.

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Fund

Years to Target Date
Annual Rate
  45 0.55%
  44 0.55%
  43 0.55%
2065 Fund 42 0.55%
  41 0.55%
  40 0.54%
  39 0.54%
  38 0.54%
2060 Fund 37 0.54%
  36 0.54%
  35 0.53%
  34 0.53%
  33 0.53%
2055 Fund 32 0.53%
  31 0.53%
  30 0.52%
  29 0.52%
  28 0.52%
2050 Fund 27 0.52%
  26 0.52%
  25 0.51%
  24 0.51%
  23 0.51%
2045 Fund 22 0.51%
  21 0.51%
  20 0.50%
  19 0.50%
  18 0.50%
2040 Fund 17 0.50%
  16 0.50%
  15 0.49%
  14 0.49%
  13 0.49%
2035 Fund 12 0.49%
  11 0.49%
  10 0.48%
  9 0.48%
  8 0.48%
2030 Fund 7 0.48%
  6 0.48%
  5 0.47%
  4 0.47%
  3 0.47%
2025 Fund 2 0.47%
  1 0.47%
  Thereafter 0.47%

 

 

I-8 
 

Under the Previous Management Contract, the funds did not pay a monthly management fee to Putnam Management. Putnam Management received management fees from the underlying funds.

 

For the portion of the 2021 fiscal year beginning August 1, 2020 and ending January 3, 2021 (the day before the effective date of the Management Contract), pursuant to the Previous Management Contract, the funds (other than the 2065 Fund, which was newly created and had not yet commenced operations) did not incur any fees. For the portion of the 2021 fiscal year beginning January 4, 2021 (the effective date of the Management Contract) and ending July 31, 2021 and for the 2022 and 2023 fiscal years, pursuant to the Management Contract, each fund incurred the following fees:

 

 

Fund name Fiscal year/fiscal period Management fee paid Amount of management fee waived Amount management fee would have been without waivers
         
2065 Fund* 2023 $0 $3,100 $3,100
         
  2022 $0 $1,555 $1,555
  2021 $0 $326 $326
         
2060 Fund 2023 $0 $72,952 $72,952
         
  2022 $0 $46,668 $46,668
  2021 $0 $16,234 $16,234
         
2055 Fund 2023 $0 $239,169 $239,169
         
  2022 $0 $218,171 $218,171
  2021 $0 $99,385 $99,385
         
I-9 
 

 

2050 Fund 2023 $0 $473,081 $473,081
         
  2022 $0 $482,828 $482,828
  2021 $0 $249,152 $249,152
         
2045 Fund 2023 $0 $655,847 $655,847
         
  2022 $0 $631,466 $631,466
  2021 $0 $312,610 $312,610
         
2040 Fund 2023 $0 $964,068 $964,068
         
  2022 $0 $990,228 $990,228
  2021 $0 $560,702 $560,702
         
2035 Fund 2023 $0 $925,838 $925,838
         
  2022 $0 $901,717 $901,717
  2021 $0 $472,745 $472,745
         
I-10 
 

 

2030 Fund 2023 $0 $1,121,235 $1,121,235
  2022 $0 $1,182,592 $1,182,592
  2021 $0 $679,001 $679,001
2025 Fund 2023 $0 $952,519 $952,519
  2022 $0 $945,895 $945,895
  2021 $0 $519,517 $519,517
Maturity Fund 2023 $0 $1,024,161 $1,024,161
  2022 $0 $1,277,991 $1,277,991
  2021 $0 $846,760 $846,760

 

 

*Commenced operations on January 4, 2021.

 

 

Fund-specific expense limitation. Putnam Management has contractually agreed to waive fees and/or reimburse expenses of each fund through at least November 30, 2026 (with the exception of 2060 Fund, where the contractual agreement is through November 30, 2033) in an amount equal to the fund's acquired fund fees and expenses (i.e., the fees and expenses incurred by the fund as a result of its investments in the underlying funds). In addition, Putnam Management has contractually agreed to waive fees and/or reimburse expenses of each class of shares of each fund through at least November 30, 2026 (with the exception of 2060 Fund, where the contractual agreement is through November 30, 2033) in an amount sufficient to result in total annual fund operating expenses for class A, B (other than for 2065 Fund, which does not offer class B shares), C, R, R3, R4, R5, R6, and Y shares of the fund (exclusive of payments under the fund’s distribution plans, brokerage, interest, taxes, investment-related expenses, acquired fund fees and expenses, and extraordinary expenses) that equal 0.60%, 0.60%, 0.60%, 0.75%, 0.75%, 0.75%, 0.60%, 0.50%, and 0.60%, respectively, of the fund's average net assets. These obligations may be modified or discontinued only with the approval of the Board of Trustees. Prior to February 10, 2023, Putnam Management had contractually agreed to waive fees and/or reimburse expenses of each class of shares of each fund in an amount sufficient to result in total annual fund operating expenses for class A, B (other than for 2065 Fund, which does not offer class B shares), C, R, R3, R4, R5, R6, and Y shares of the fund (exclusive of payments under the fund’s distribution plans, brokerage, interest, taxes, investment-related expenses, acquired

I-11 
 

fund fees and expenses, and extraordinary expenses) that equal 0.65%, 0.65%, 0.65%, 0.80%, 0.80%, 0.80%, 0.65%, 0.55%, and 0.65%, respectively, of the fund's average net assets. Please see “Management—The Management Contract—General expense limitation” in Part II of this SAI for a description of another expense limitation that may apply to a fund.

 

 

Brokerage commissions

The funds do not pay brokerage commissions on their purchases and sales of the underlying funds.

 

Each fund's portfolio turnover rate for fiscal year 2023 was higher than the portfolio turnover rate for fiscal year 2022 due to portfolio realignment resulting from the repositioning of each fund's investment strategy in February 2023.

 

 

Administrative expense reimbursement

 

The funds did not reimburse Putnam Management for administrative services during fiscal 2023.

 

 

Trustee responsibilities and fees

The Trustees are responsible for generally overseeing the conduct of fund business. Subject to such policies as the Trustees may determine, Putnam Management furnishes a continuing investment program for each fund and makes investment decisions on each fund's behalf. Subject to the control of the Trustees, Putnam Management also manages each fund's other affairs and business.

 

The table below shows the value of each Trustee's holdings in each fund and in all of the funds in the “Putnam funds complex” as of December 31, 2022. The Putnam funds complex is composed of the Putnam mutual funds, closed-end funds, and exchange-traded funds.

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Name of Trustee Dollar range of Putnam Sustainable Retirement Funds shares owned Aggregate dollar range of shares held in all funds in the Putnam funds complex overseen by Trustee
Independent Trustees
Liaquat Ahamed   2025 Fund $1-$10,000 over $100,000
Barbara M. Baumann

2030 Fund $1-$10,000

Maturity Fund $1-$10,000

over $100,000
Katinka Domotorffy   Maturity Fund $1-$10,000 over $100,000
Catharine Bond Hill Maturity Fund $1-$10,000 over $100,000
Kenneth R. Leibler Maturity Fund $1-$10,000 over $100,000
*Jennifer Williams Murphy None $10,001-$50,000
*Marie Pillai None $1-$10,000
George Putnam III

2025 Fund $10,001-$50,000

2055 Fund $1-$10,000

Maturity Fund $10,001-$50,000

over $100,000
Manoj P. Singh Maturity Fund $1-$10,000 over $100,000
Mona K. Sutphen 2035 Fund $1-$10,000 $50,001-$100,000
Interested Trustee
** Robert L. Reynolds 2040 Fund $10,001-$50,000
Maturity Fund $1-$10,000
over $100,000

 

 

*First elected to the Board of Trustees of the Putnam funds effective as of July 1, 2022 (or, for a limited number of Putnam funds, including the series of the Trust, as of a later date).

 

** Trustee who is an "interested person" (as defined in the Investment Company Act of 1940, as amended), of the funds and Putnam Management. Mr. Reynolds is deemed an "interested person" by virtue of his positions as an officer of the funds and Putnam Management. Mr. Reynolds is the President and Chief Executive Officer of Putnam Investments, LLC and President of your fund and each of the other Putnam funds. None of the other Trustees is an "interested person".

 

 

Each Independent Trustee of the funds receives an annual retainer fee and an additional fee for each Trustee meeting attended. Independent Trustees also are reimbursed for expenses they incur relating to their services as Trustees. All of the current Independent Trustees of the funds are Trustees of all the Putnam funds and receive fees for their services.

I-13 
 

The Trustees periodically review their fees to ensure that such fees continue to be appropriate in light of their responsibilities as well as in relation to fees paid to trustees of other mutual fund complexes. The Board Policy and Nominating Committee, which consists solely of Independent Trustees of the funds, estimates that committee and Trustee meeting time, together with the appropriate preparation, requires the equivalent of at least four business days per regular Trustee meeting. The standing committees of the Board of Trustees, and the number of times each committee met during your fund’s most recently completed fiscal year, are shown in the table below:

Audit, Compliance and Risk Committee 12  
     
Board Policy and Nominating Committee 6  
Brokerage Committee 3  
     
Contract Committee 8  
Executive Committee 1  
Investment Oversight Committees    
     
Investment Oversight Committee A 5  
Investment Oversight Committee B 5  
     
Pricing Committee 8  
   
Exchange-Traded Fund Committee* 4

 

 

*For the period 1/1/23-7/31/23

 

The following table shows the year each Trustee was first elected or appointed as a Trustee of the Putnam funds, the fees paid to each Trustee by the funds for fiscal 2023, and the fees paid to each Trustee by all of the Putnam funds for services rendered during calendar year 2022.

 

 

I-14 
 

COMPENSATION TABLE

 


Trustee/Year Elected or Appointed as a Trustee
Aggregate compensation from each series of the Putnam Sustainable Retirement Funds Pension or retirement benefits accrued as part of fund expenses from each series of the Putnam Sustainable Retirement Funds Estimated annual benefits from Putnam funds complex upon retirement(1) Total compensation from Putnam funds complex (2)
Independent Trustees        
Liaquat Ahamed/2012(3) $0 N/A N/A $430,750
         
Ravi Akhoury/2009(4) $0 N/A N/A $209,750
Barbara M. Baumann/2010(3) (5) $0 N/A N/A $373,833
         
Katinka Domotorffy/2012(3) $0 N/A N/A $410,750
Catharine Bond Hill/2017(3) $0 N/A N/A $410,750
Paul L. Joskow/1997(3)(4) $0 $0 $113,417 $209,750
         
Kenneth R. Leibler/2006(6) $0 N/A N/A $470,750
Jennifer Williams Murphy/2022(7) $0 N/A N/A $141,000
Marie Pillai/2022(3)(7) $0 N/A N/A $141,000
George Putnam III/1984(8) $0 $0 $130,333 $375,750
Manoj P. Singh/2017(9) $0 N/A N/A $369,500
         
Mona K. Sutphen/2020 $0 N/A N/A $392,000
Interested Trustee        
         
Robert L. Reynolds/2008(10) N/A N/A N/A N/A

 

 

 

 

(1) Estimated benefits for each Trustee are based on Trustee fee rates for calendar years 2003, 2004 and 2005.

 

 

(2) As of December 31, 2022, there were 92 mutual funds, 4 closed-end funds, and 7 exchange-traded funds in the Putnam funds complex. Messrs. Leibler, Putnam, Singh and Reynolds and Mses. Baumann, Murphy and Pillai were first elected to the Board of Trustees of the exchange-traded funds effective as of January 11, 2023 and, therefore, did not receive any compensation in respect of those funds during the period shown in the table above.

 

 

I-15 
 

(3) Certain Trustees are also owed compensation deferred pursuant to a Trustee Compensation Deferral Plan.

 

 

(4) Mr. Akhoury and Dr. Joskow retired from the Board of Trustees effective June 30, 2022.

 

(5) Includes additional compensation to Ms. Baumann for service as Vice Chair of the Board of Trustees.

(6) Includes additional compensation to Mr. Leibler for service as Chair of the Board of Trustees.

 

(7) Mses. Murphy and Pillai were first elected to the Board of Trustees of the Putnam funds effective as of July 1, 2022 (or, for a limited number of Putnam funds, including the series of the Trust, as of a later date).

 

(8) Includes additional compensation to Mr. Putnam for service as Chair of the Contract Committee.

 

(9) Includes additional compensation to Mr. Singh for service as Chair of the Audit, Compliance and Risk Committee.

 

(10) Mr. Reynolds is an "interested person" of the funds and Putnam Management.

 

 

Under a retirement plan for Trustees of Putnam funds (the "Plan"), each Trustee who retires with at least five years of service as a Trustee of the funds is entitled to receive an annual retirement benefit equal to one-half of the average annual attendance and retainer fees paid to such Trustee for calendar years 2003, 2004 and 2005. This 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. A death benefit, also available under the Plan, ensures that the Trustee and his or her beneficiaries will receive benefit payments for the lesser of an aggregate period of (i) ten years, or (ii) such Trustee's total years of service.

The Plan Administrator (currently the Board Policy and Nominating Committee) may terminate or amend the Plan at any time, but no termination or amendment will result in a reduction in the amount of benefits (i) currently being paid to a Trustee at the time of such termination or amendment, or (ii) to which a current Trustee would have been entitled had he or she retired immediately prior to such termination or amendment. The Trustees have terminated the Plan with respect to any Trustee first elected to the Board after 2003.

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For additional information concerning the Trustees, see "Management" in Part II of this SAI.

Share ownership

 

At October 31, 2023, the officers and Trustees of the funds as a group owned less than 1% of the outstanding shares of each class of the funds, except class R6 shares of the 2065 Fund and 2025 Fund, of which they owned 48.74% and 13.92%, respectively, and, except as noted below, no person owned of record or to the knowledge of the funds beneficially 5% or more of any class of shares of the fund.

 

 

2065 Fund

 

Class

Shareholder name

and address

Percentage

owned

     
A

PAGE'S TREE

SIMPLE IRA PLAN

E SERVICE

A/C Jeffrey C Page

738 Wolf Den Rd.

Brooklyn, CT 06234-1418

28.03%
A

WJP INC

SIMPLE IRA PLAN

A/C Alyssa L. Oplinger

512 Valley Rd.

Hegins, PA 17938-9185

7.10%
A

NICHOLAS M DELPORTE

ROTH IRA PLAN

3708 Pheasant Dr.

Rolling Mdws, IL 60008-2635

5.72%
C

TYSON VU

Sep Plan A/C Thai Vu

P/G Of Tyson Vu

P.O. Box 1502

Cordova, AK 99574-1502

44.94%
C

BROCKTON PUBLIC SCHOOL

403(B) PLAN

A/C Susan A. Devaney

15 Cape Cod Ln.

Canton, MA 02021-3605

22.25%

 

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2065 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

C

PAGE'S TREE

SIMPLE IRA PLAN

E SERVICE

A/C Jeffrey C Page

738 Wolf Den Rd.

Brooklyn, CT 06234-1418

18.75%
C

ISHCORP ENTERPRISES INC.

SIMPLE IRA PLAN

A/C Nicholas Tsutsui

79 S Peak

Laguna Niguel, CA 92677-2903

9.94%
     
R

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
R3

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
R4

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
     
R6

GREAT WEST TRUST COMPANY LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

94.62%
R6

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

5.38%
Y

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%

 

 

I-18 
 

 

2060 Fund

 

Class

Shareholder name

and address

Percentage

owned

B

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
     
C

CONNOR B. TRYON

2502 Los Alamos Ct.

Las Cruces, NM 88011-1657

22.40%
C

JUAN M. LEON-ESTRADA

IRA ROLLOVER PLAN

14154 W Stanislaus Ave.

Kerman, CA 93630-2119

10.63%
C

CHRISTOPHER CHRISTIAN

SEP IRA Plan

A/C Christopher Christian

48 Patches Ln.

Pell City, AL 35128-7268

9.97%
C

LUIS ORTIZ

SEP IRA PLAN

A/C Luis Ortiz

3204 Cove Rd

Pennsauken, NJ 08109-2537

8.45%
C

ANNETTE M. HUBBERT

ROTH IRA PLAN

303 Sunny Hill Rd

Middleberg, PA 17842-9432

5.22%
C

KIRKER GLASS, INC.

SIMPLE IRA PLAN

A/C Francisco Matute

14550 Polo Ct.

Victorville, CA 92394-7613

5.12%
     
R

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
I-19 
 

 

2060 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
R3

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

76.91%
R3

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

17.85%
R3

FIIOC FBO

CB RICHARD ELLIS NE PARTNERS LP

401K RETIREMENT PLAN

100 Magellan Way

Covington, KY 41015-1987

5.24%
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

87.15%
R4

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

12.85%
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
R6

EMPOWER TRUST COMPANY, LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

95.50%
Y

EMPOWER TRUST COMPANY, LLC

Great West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.88%

 

 

 

I-20 
 

 

2055 Fund

 

 

Class

Shareholder name

and address

Percentage

owned

     
A

NATIONAL FINANCIAL SERVICES, LLC

FBO its customers

499 Washington Blvd.

Jersey City, NJ 07310

15.58%
B

TIMOTHY J. MACLAUGHLIN, JR

21 Poulin Drive

Lancaster, MA 01523

41.74%

B

ALEXIS PETERSEN

8242 S Festive Way

West Jordan, UT 84088

23.96%
B

KEALEY GILL

ROTH IRA PLAN

P.O. Box 57794

Salt Lake City, UT 84157-0794

6.82%
B

BRANDON M HAMMOND

IRA PLAN

205 Appomattox Dr.

Simpsonville, SC 29681-3356

6.73%
C

GRAND FORKS PUBLIC SCH DIST 1

403(B) PLAN

A/C Alison Cherney

18460 Hoffman Ave.

Brookfield, WI 53045-3448

9.25%
C

ABILITY A/C & REFRIGERATION INC

SIMPLE IRA PLAN

A/C Ryan B Foertschbeck

3546 Miller Rd.

Street, MD 21154-1305

7.83%
C

SYSTEMATIC ASIAN LEADERSHIP

A/C Nathan Clifton

P.O. Box 38405

Charlotte, NC 28272

6.62%
I-21 
 

2055 Fund (cont.)

 

 

Class

Shareholder name

and address

Percentage

owned

C

TOTAL TOOLING CONCEPTS

SIMPLE IRA PLAN

A/C Dustin Cronkright

2771 Fieldstone Ct. SW

Wyoming, MI 49418-9304

6.53%
C

COMPRESSOR ENERGY SERVICES LLC

SIMPLE IRA PLAN

A/C Scott L Mills

8 Cilley Brook Ln.

Hebron, NH 03241-4351

6.17%
C

CHAMPAIGN COMM UNIT SCH DIST 4

403(B) PLAN

A/C John W Frazier

406 E Grove Ave.

Rantoul, IL 61866-2427

5.61%
C

SOUTH MOUNTAIN COMMUNITY CHURCH

403(B) PLAN

A/C Trevor S Lovell

628 N Canvasback Dr.

Lehi, UT 84043-4680

5.22%
R

MATRIX TRUST COMPANY

MISSISSIPPI COAST TRANSPORTATION AU

717 17th St, STE 1300

Denver, CO 80202

45.19%
R

MATRIX TRUST COMPANY

MILLWRIGHT HOLDINGS LLC 401(K)

717 17th St. Ste 1300

Denver, CO 80202-3304

36.48%
R

MATRIX TRUST COMPANY

JOURNEY PAYROLL RETIREMENT TRUST

717 17th St. Ste 1300

Denver, CO 80202-3304

18.25%
R3

ASCENSUS TRUST COMPANY

CPACKET NETWORKS INC

P.O. Box 10758

Fargo, ND 58106-0758

22.38%
I-22 
 

 

2055 Fund (cont.)

 

 

Class

Shareholder name

and address

Percentage

owned

R3

ASCENSUS TRUST COMPANY

ADVANTAGE HEALTH SYSTEMS 401(K) PLAN

P.O. Box 10758

Fargo, ND 58106-0758

14.06%
R3

ASCENSUS TRUST COMPANY

JUDICIAL REPORTING AND TYPING SERVICES

1300 Enterprise Dr.

De Pere, WI 54115-4934

9.06%

R3

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

7.95%
R3

ASCENSUS TRUST COMPANY

MONTROY ANDERSON 401K 690694

P.O. Box 10758

Fargo, ND 58106-0758

7.40%
R3

FIIOC FBO

CB RICHARD ELLIS NE PARTNERS LP

401K Retirement Plan

100 Magellan Way

Covington, KY 41015-1987

5.97%
R3

ASCENSUS TRUST COMPANY

ALTAVIZ 401(K) PLAN

P.O. Box 10758

Fargo, ND 58106-0758

5.08%
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

96.22%
     
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
I-23 
 

 

 

2055 Fund (cont.)

 

 

Class

Shareholder name

and address

Percentage

owned

R6

GREAT WEST TRUST COMPANY LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

95.79%
Y

EMPOWER TRUST COMPANY, LLC

Great West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.70%

 

 

2050 Fund

 

Class

Shareholder name

and address

Percentage

owned

     
A

NATIONAL FINANCIAL SERVICES, LLC

FBO its customers

499 Washington Blvd.

Jersey City, NJ 07310

13.28%
A

JUNENOIRE FONTE

IRA PLAN

8 Riversedge Dr

Milford, NH 03055-8900

6.24%
B

NATIONAL FINANCIAL SERVICES, LLC

FBO its customers

499 Washington Blvd.

Jersey City, NJ 07310

63.33%
B

SHANNON M GENDAY

IRA ROLLOVER PLAN

11596 Claymont Cir

Windermere, FL 34786-5329

7.05%

 

 

I-24 
 

2050 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
B

MILFORD PUBLIC SCHOOLS

403(B) PLAN

A/C Johanna K Roy

8 Reagan Rd

Milford, MA 01757-2269

7.03%
C

CANTON PUBLIC SCHOOLS

403(B) PLAN

A/C Julie A. Foley

787 Sea St.

Quincy, MA 02169-3421

8.92%
C

LPL FINANCIAL

ATTN: Lindsay O’Toole

4707 Executive Drive

San Diego, CA 92121-3091

6.80%
C

AMEBA MARKETING INC

SIMPLE IRA PLAN

A/C Lauren A Avallone

8 Lori Rd

Monmouth Bch, NJ 07750-1012

6.67%
C

BLACK TALON SECURITY LLC

SIMPLE IRA PLAN

A/C Joshua Hyman

840 Broken Sound Pkwy Nw Apt 108

Boca Raton, FL 33487-3714

6.07%
C

AMERICAN ENTERPRISE INVESTMENT SERVICES

707 2nd Ave. S

Minneapolis, MN 55402-2405

5.45%
R

MATRIX TRUST COMPANY

MILLWRIGHT HOLDINGS LLC 401(K)

717 17th St. Ste 1300

Denver, CO 80202-3304

85.46%
R

ASCENSUS TRUST COMPANY

VANTAGE TECHNOLOGIES USA 401(K) PLAN

P.O. Box 10758

Fargo, ND 58106-0758

9.77%
     
I-25 
 

2050 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
R3

ASCENSUS TRUST COMPANY

CPACKET NETWORKS INC

P.O. Box 10758

Fargo, ND 58106-0758

34.80%
R3

ASCENSUS TRUST COMPANY

ADVANTAGE HEALTH SYSTEMS 401(K) PLAN

P.O. Box 10758

Fargo, ND 58106-0758

19.76%
R3

ASCENSUS TRUST COMPANY

ALTAVIZ 401(K) PLAN

P.O. Box 10758

Fargo, ND 58106-0758

9.43%

R3

ASCENSUS TRUST COMPANY

HAMAGUCHI & ASSOCIATES 401K

P.O. Box 10758

Fargo, ND 58106-0758

6.15%
R3

MATRIX TRUST COMPANY CUST FBO

HARFORD REFRIGERATION CO INC

717 17th St. STE 1300

Denver, CO 80202-3304

5.09%
R3

NFS LLC FBO STATE STREET BANK TR

FBO Various Retirement Plans

499 Washington Blvd

Jersey City, NJ 07310-1995

5.03%
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

72.12%
R4

MATRIX TRUST COMPANY

C&H EXCAVATION, LLC 401(K) PLAN

717 17th St. Ste 1300

Denver, CO 80202-3304

22.51%
R4

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

5.37%

 

I-26 
 

 

2050 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
     
R6

GREAT-WEST TRUST CO LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

96.48%
Y

EMPOWER TRUST COMPANY, LLC

Great-West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.57%

 

 

2045 Fund

 

Class

Shareholder name

and address

Percentage

owned

     
A

NATIONAL FINANCIAL SERVICES, LLC

FBO its customers

499 Washington Blvd.

Jersey City, NJ 07310

16.11%
B

KRISTEN M. HUG

24597 Country Road

Archbold, OH 43502

41.63%
B

LATTER AND BLUM

SEP IRA PLAN

A/C Gregory S Jeanfreau

3121 Fortin St.

New Orleans, LA 70119-280

11.57%

 

I-27 
 

2045 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
B

NATIONAL FINANCIAL SERVICES, LLC

FBO its customers

499 Washington Blvd.

Jersey City, NJ 07310

8.97%
B

SPENCE G MCDONALD

ROTH IRA CONVERSION PLAN

4318 S 900 E

Salt Lake City, UT 84124-2408

7.95%
B

LPL FINANCIAL

ATTN: Lindsay O’Toole

4707 Executive Drive

San Diego, CA 92121-3091

6.28%
C

PITTSFIELD PUBLIC SCHOOLS

403(B) PLAN

A/C Mary Jane Laferriere

337 Hungerford St.

Pittsfield, MA 01201-7812

22.33%
C

BRIDGEWATER-RAYNHAM REG SCHOOL DISTRICT 403(B) PLAN

A/C Katelyn O. Carreau

413 Country Club Way

Kingston, MA 02364-4108

8.88%
C

LEWISTON PORTER FCU

A/C Kenneth Stadler

14 Hobart Street

Buffalo, NY 14206-2921

7.02%
C

CHARLES H SCHLOTTMAN

IRA ROLLOVER PLAN

1385 SE 72nd Ave.

Hillsboro, OR 97123-6006

6.05%
R

MATRIX TRUST COMPANY

JOURNEY PAYROLL RETIREMENT TRUST

717 17th St, STE 1300

Denver, CO 80202

85.64%

 

I-28 
 

2045 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
R

MATRIX TRUST COMPANY

MISSISSIPPI COAST TRANSPORTATION AU

717 17th St, STE 1300

Denver, CO 80202

14.36%
R3

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

27.46%
R3

ASCENSUS TRUST COMPANY

CPACKET NETWORKS INC 690515

P.O. Box 10758

Fargo, ND 58106-0758

12.82%
R3

ASCENSUS TRUST COMPANY

LAJF 401K RET PLAN

P.O. Box 10758

Fargo, ND 58106-0758

9.41%
R3

MATRIX TRUST COMPANY11.00

HARKER MELLINGER LLC

717 17th St., STE 1300

Denver, CO 80202

7.44%
R3

ASCENSUS TRUST COMPANY

ADVANTAGE HEALTH SYSTEMS

401(K) PLAN

P.O. Box 10758

Fargo, ND 58106-0758

5.99%
R3

ASCENSUS TRUST COMPANY

THE ARROW ASPHALT & ENGINEERING 401K

P.O. Box 10758

Fargo, ND 58106-0758

5.18%
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

91.74%

 

I-29 
 

2045 Fund (cont.)

 

 

Class

Shareholder name

and address

Percentage

owned

     
R4

ASCENSUS TRUST COMPANY

COLONIAL INSTRUMENTS, INC. 401(K) P

1300 Enterprise Dr.

De Pere, WI 54115-4934

8.04%
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
R6

GREAT WEST TRUST COMPANY LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

97.36%
Y

EMPOWER TRUST COMPANY, LLC

Great-West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.97%

 

 

2040 Fund

 

Class

Shareholder name

and address

Percentage

owned

     
A

NATIONAL FINANCIAL SERVICES LLC

FBO its customers

499 Washington Blvd.

Jersey City, NJ 07310

9.44%
A

PERSHING LLC

1 Pershing Plaza

Jersey City, NJ 07399

7.09%
B

MATTHEW KOHUT

84 Winfried Drive

Merrick, NY 11566

28.78%

 

 

I-30 
 

2040 Fund (cont.)

 

 

Class

Shareholder name

and address

Percentage

owned

     


B

CHRIS A. BURGEI

IRA Plan

16696 Road 27

Fort Jennings, OH 45844-8850

15.03%
B

TRN FINANCIAL LLC

A/C Toby R Leboeuf

1710 Lake Charlotte Lane

Richmond, TX 77406-8094

13.58%
B

TRN FINANCIAL LLC

A/C Nicole H Leboeuf

1710 Lake Charlotte Lane

Richmond, TX 77406-8094

10.42%
C

CATHERINE PEWITT

SEP IRA Plan

A/C Catherine B Pewitt

1913 Winnsboro Rd.

Birmingham, AL 35213-1743

 

11.59%
C

LPL FINANCIAL

ATTN: Lindsay O’Toole

4707 Executive Drive

San Diego, CA 92121-3091

7.11%
C

CHARLES SCHWAB & CO INC

Special Custody Account

FBO Their Customers

211 Main Street

San Francisco, CA 94105-1905

6.31%
C

TRINA VOSTERS

IRA Rollover Plan

819 Marquette St.

Menasha, WI 54952-2829

5.61%

 

I-31 
 

2040 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
R

ASCENSUS TRUST COMPANY

JOYCE & MCFARLAND LLP RETIREMENT TR

P.O. Box 10758

Fargo, ND 58106-0758

57.35%
R

MATRIX TRUST COMPANY

JOURNEY PAYROLL RETIREMENT TRUST

717 17th St., STE 1300

Denver, CO 80202

39.20%
R3

ASCENSUS TRUST COMPANY FBO

CPACKET NETWORKS INC 690515

P.O. Box 10758

Fargo, ND 58106-0758

35.96%
R3

ASCENSUS TRUST COMPANY FBO

DIAMONDHEAD URGENT CARE LLC 401K

1300 Enterprise Dr.

De Pere, WI 54115-4934

13.55%
R3

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

10.96%
R3

ASCENSUS TRUST COMPANY FBO

RKA CIVIL ENGINEERS, INC 401(K)

P.O. Box 10758

Fargo, ND 58106-0758

10.58%
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

97.75%
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%

 

I-32 
 

 

2040 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
R6

GREAT WEST TRUST COMPANY LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

97.67%
Y

EMPOWER TRUST COMPANY, LLC

Great-West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.75%

 

 

2035 Fund

 

 

Class

Shareholder name

and address

Percentage

owned

     

A

PERSHING LLC

1 Pershing Plaza

Jersey City, NJ 07399

13.56%

B

TAUNTON PUBLIC SCHOOL 403(B) PLAN

A/C Matthew J Kelly

120 Church St.

West Roxbury, MA 02132-1053

25.69%
B

KAHLE & ASSOCIATES CPAS LLC

SIMPLE IRA PLAN

A/C Scott L Kahle

113 Riverview Dr.

Kalida, OH 45853-2008

18.92%
B

NATICK PUBLIC SCHOOLS

403(B) PLAN

A/C Marnie Musante

13 Arthur St.

Natick, MA 01760-2817

12.08%

 

I-33 
 

2035 Fund (cont.)

 

 

Class

Shareholder name

and address

Percentage

owned

     
B

STACIE CARPENTER

IRA ROLLOVER PLAN

3776 W Fontana Way Unit J108

South Jordan, UT 84095-5574

8.60%
B

NATIONAL FINANCIAL SERVICES LLC

FBO its customers

499 Washington Blvd.

Jersey City, NJ 07310

5.89%
B

JONATHAN C CANTRELL

ROTH IRA PLAN

5527 Preserve Pt.

Flowery Br, GA 30542-6111

5.39%
C

ROCKWOOD SCHOOL DISTRICT

403(B) PLAN

A/C Debbie Lucken

18530 Sassafras Point Dr.

Glencoe, MO 63038-1122

14.78%
C

CANDACE L. SMITH

10 Dead End Road

Lebanon, PA 17046

9.44%
C

TAUNTON PUBLIC SCHOOLS

403(B) PLAN

A/C Christine M Strawbridge

22 Partridge Circle

Taunton, MA 02780-1278

6.99%
C

TOWN OF COHASSET PUBLIC SCHOOLS

403(B) PLAN

A/C David Vinton

127 South St.

Hanson, MA 02341-2059

6.14%
R

ASCENSUS TRUST COMPANY

PREMIER TOOL, INC.

P.O. Box 10758

Fargo, ND 58106-0758

48.40%

 

I-34 
 

 

2035 Fund (cont.)

 

 

Class

Shareholder name

and address

Percentage

owned

     
R

ASCENSUS TRUST COMPANY

GARTNER ANESTHESIA PLLC 401K

P.O. Box 10758

Fargo, ND 58106-0758

40.39%
R

MATRIX TRUST COMPANY

MISSISSIPPI COAST TRANSPORTATION AU

717 17th St, STE 1300

Denver, CO 80202

10.71%
R3

ASCENSUS TRUST COMPANY

CPACKET NETWORKS INC 690515

P.O. Box 10758

Fargo, ND 58106-0758

25.86%
R3

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

18.66%
R3

ASCENSUS TRUST COMPANY

GRAIN TO GLASS LLC 401K PLAN

P.O. Box 10758

Fargo, ND 58106-0758

9.28%
R3

ASCENSUS TRUST COMPANY

B & H OIL COMPANY INC. 401K PS PLAN

P.O. Box 10758

Fargo, ND 58106-0758

6.28%
R3

ASCENSUS TRUST COMPANY

RKA CIVIL ENGINEERS, INC 401(K)

P.O. Box 10758

Fargo, ND 58106-0758

6.23%

 

I-35 
 

2035 Fund (cont.)

 

 

Class

Shareholder name

and address

Percentage

owned

     
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

96.92%
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
R6

GREAT WEST TRUST COMPANY LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

91.61%
R6

EMPOWER TRUST COMPANY, LLC

Putnam Deferred Compensation Plans

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

6.85%
Y

EMPOWER TRUST COMPANY, LLC

Great-West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.50%

 

 

2030 Fund

 

 

Class

Shareholder name

and address

Percentage

owned

     
A

PERSHING LLC

1 Pershing Plaza

Jersey City, NJ 07399

7.08%
B

ISLIP UNION FREE SCHOOL DISTRICT

403(B) PLAN

A/C Jason Vitale

121 Monell Ave.

Islip, NY 11751-4309

17.61%

 

I-36 
 

 

2030 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
B

CONSTANCE L DUFFY

ROTH IRA PLAN

593 Kelsey St.

Middletown, CT 06457-5130

8.23%
B

INDIAN PRAIRIE CUSD 204

403(B) PLAN

A/C Elizabeth W Beedles

2058 Pine Creek Dr.

Aurora, IL 60503-4647

8.05%
B

RIVERVIEW CENTER INC

403(B) PLAN

A/C Catherine A McDermott

1115 Center Pl.

Dubuque, IA 52001-6123

7.25%
B

CROWN FEED & SUPPLY INC

SIMPLE IRA PLAN

A/C Thomas P Wilson

609 W 700 S

Hebron, IN 46341-8877

7.08%
B

CITY OF WORCESTER

403(B) PLAN

A/C Colleen E Murray

15 Wetherell St.

Worcester, MA 01602-2644

6.74%
B

RUTHANN DEMILLE

ROTH IRA CONVERSION PLAN

4556 W 5570 S

Kearns, UT 84118-5523

6.64%
B

PETER C HAGSTROM

ROTH IRA PLAN

593 Kelsey St.

Middletown, CT 06457-5130

6.17%

 

I-37 
 

2030 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
B

SUZANNE J KILNER

ROTH IRA PLAN

6743 Ferri Circle

Port Orange, FL 32128-6036

5.76%

C

BEAVERCREEK CITY SCHOOLS

A/C Nicola Moorhead

2389 Brown Bark Drive

Beavercreek, OH 45431-2686

13.76%

C

JOSEPH M MARTINEZ

IRA ROLLOVER PLAN

5089 W Athens Ave.

Fresno, CA 93722-2306

7.77%
C

BEAVERCREEK CITY SCHOOLS

403(B) PLAN

A/C Staci Auer

3848 Mesquite Dr.

Beavercreek, OH 45440-3498

7.73%
C

AMERICAN ENTERPRISE INVESTMENT SVC

707 2nd Ave. S

Minneapolis, MN 55402-2405

7.09%
R

ASCENSUS TRUST COMPANY

VANTAGE TECHNOLOGIES USA 401(K) PLAN

P.O. Box 10758

Fargo, ND 58106-0758

88.90%
R

MATRIX TRUST COMPANY

MISSISSIPPI COAST TRANSPORTATION AU

717 17TH St. STE 1300

Denver, CO 80202-3304

10.97%
R3

ASCENSUS TRUST COMPANY

MICHAEL T GOLDFARB PC PROFIT S

P.O. Box 10758

Fargo, ND 58106-0758

15.45%

 

I-38 
 

2030 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
R3

MATRIX TRUST COMPANY CUST FBO

THE MARTIN LUTHER SCHOOL 403(B)

717 17TH St. STE 1300

Denver, CO 80202-3304

12.06%
R3

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

9.70%
R3

ASCENSUS TRUST COMPANY

ISRG RET PLAN

P.O. Box 10758

Fargo, ND 58106-0758

9.56%
R3

ASCENSUS TRUST COMPANY

CPACKET NETWORKS INC

P.O. Box 10758

Fargo, ND 58106-0758

9.13%
R3

ASCENSUS TRUST COMPANY

FTS EMPLOYEES. RETIREMENT PLAN

P.O. Box 10758

Fargo, ND 58106-0758

8.52%
R3

ASCENSUS TRUST COMPANY

B & H OIL COMPANY INC. 401K PS PLAN

P.O. Box 10758

Fargo, ND 58106-0758

6.65%
R3

ASCENSUS TRUST COMPANY

ADVANTAGE HEALTH SYSTEMS 401(K) PLAN

P.O. Box 10758

Fargo, ND 58106-0758

6.07%
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

98.60%
     
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
I-39 
 

2030 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     

R6

GREAT WEST TRUST COMPANY LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

94.08%
Y

EMPOWER TRUST COMPANY, LLC

Great-West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.81%

 

 

2025 Fund

 

Class

Shareholder name

and address

Percentage

owned

     
A

PERSHING LLC

1 Pershing Plaza

Jersey City, NJ 07399

10.25%
B

KENNEYVILLE SCHOOL DISTRICT #20

403(B) PLAN

215 Rush St.

Roselle, IL 60172-2224

26.82%
B

LITTLE PEOPLES DAY CARE 403(B) PLAN

238 Lincoln St.

Blackstone, MA 01504-1203

12.91%
B

MONTVILLE CT BOE

403(B) PLAN

A/C Deborah Piacenza

945 Vauxhall Street Ext.

Quaker Hill, CT 06375-1037

11.58%
B

GALENA UNIT DISTRICT 120

403(B) PLAN

A/C Lydia M Nowak

905 Addington Ct Unit 202

Venice, FL 34293-2328

10.71%

 

I-40 
 

2025 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
 B

SHIRLEY M OTT

IRA PLAN

317 Herman St.

York, PA 17404-3428

8.88%
B

TAUNTON PUBLIC SCHOOLS

403(B) PLAN

A/C Donna Gavin

63 Malbone St.

Lakeville, MA 02347-2255

6.94%
B

BRENDA M WRIGHT

ROTH IRA PLAN

54 Appletree Lane

Sewell, NJ 08080-3022

6.93%
C

BEAVERCREEK CITY SCHOOLS

403(B) PLAN

A/C Deron J. Schwieterman

2623 Roanoke Avenue

Oakwood, OH 45419-1354

12.98%
C

SUPPORTIVE SERVICES CORPORATION

403(B) PLAN

A/C Anita J Wolniewicz

6 In The Woods Lane

West Seneca, NY 14224-4545

5.25%
C

MANCHESTER LOCAL SCHOOLS

403(B) PLAN

A/C Goldie P Foore

12990 Clinton Rd

Doylestown, OH 44230-1521

5.18%
C

PERSHING LLC

1 Pershing Plaza

Jersey City, NJ 07399

5.03%
R

ASCENSUS TRUST COMPANY

MR. APPLIANCE RET PLAN

P.O. Box 10758

Fargo, ND 58106-0758

84.08%

 

I-41 
 

2025 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     

 R

MATRIX TRUST COMPANY

DISABLED RESOURCE SERVICES

717 17th Street, Suite 1300

Denver, CO 80202-3304

11.06%
R3

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

28.55%
R3

MATRIX TRUST COMPANY

HARKER MELLINGER LLC

717 17th Street, Suite 1300

Denver, CO 80202-3304

10.84%

R3

ASCENSUS TRUST COMPANY

INSIGHT FAMILY EYE CARE PC RETIREMENT

P.O. Box 10758

Fargo, ND 58106-0758

6.81%
R3

ASCENSUS TRUST COMPANY

CPACKET NETWORKS INC

P.O. Box 10758

Fargo, ND 58106-0758

6.49%
R3

ASCENSUS TRUST COMPANY

GSAVISION CONSULTING

P.O. Box 10758

Fargo, ND 58106-0758

5.71%
R3

ASCENSUS TRUST COMPANY

CREATIVE MANAGEMENT INC

P.O. Box 10758

Fargo, ND 58106-0758

5.27%
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

98.89%
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
I-42 
 

2025 Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

R6

GREAT WEST TRUST COMPANY LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

96.35%
Y

EMPOWER TRUST COMPANY, LLC

Great-West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.61%

 

 

Maturity Fund

 

Class

Shareholder name

and address

Percentage

owned

     
A

PERSHING LLC

1 Pershing Plaza

Jersey City, NJ 07399

15.03%
B

DONNA M MEDEIROS

IRA ROLLOVER PLAN

343 Lafayette St.

Somerset, MA 02726-3456

15.08%
B

CRAIG T WORREL

IRA ROLLOVER PLAN

909 Mechanic St.

Emporia, KS 66801-2958

13.29%
B

CITY OF WORCESTER

403(B) PLAN

A/C Deidre M Shea

2 Woodside Dr.

Shrewsbury, MA 01545-7733

13.01%
B

ROSEDALE MANOR

403(B) PLAN

A/C David A Boyer

2483 Kremers Lane

Villa Hills, KY 41017-1164

7.99%

 

I-43 
 

 

Maturity Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
B

ELSA C CONLU

ROTH IRA PLAN

787 Craigmark Ct.

Henderson, NV 89002-6580

5.73%
C

FAIRFIELD BOARD OF EDUCATION

403(B) PLAN

A/C Eileen Frankel

9 Katy Lane

Norwalk, CT 06851-5901

21.08%
C

LPL FINANCIAL

ATTN: Lindsay O’Toole

4707 Executive Drive

San Diego, CA 92121-3091

21.02%
C

ANGELA E WHISNEY

IRA ROLLOVER PLAN

49396 770th St.

Jackson, MN 56143-3806

12.40%
C

ROSEDALE MANOR

403(B) PLAN

A/C David A Boyer

2483 Kremers Lane

Villa Hills, KY 41017-1164

9.15%
R

ASCENSUS TRUST COMPANY

WILLIAM A. HELLER, P.A. SOLOK

P.O. Box 10577

Fargo, ND 58106-0577

85.31%
R

MATRIX TRUST COMPANY

JOURNEY PAYROLL RETIREMENT TRUST

717 17th St, STE 1300

Denver, CO 80202

11.75%
R3

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

32.76%

 

I-44 
 

Maturity Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
R3

ASCENSUS TRUST COMPANY FBO

RKA CIVIL ENGINEERS, INC 401(K)

P.O. Box 10577

Fargo, ND 58106-0577

12.66%
R3

ASCENSUS TRUST COMPANY FBO

JAMES DALTON 401(K)

P.O. Box 10577

Fargo, ND 58106-0577

12.33%
R3

ASCENSUS TRUST COMPANY FBO

STUART KARTEN DESIGN, INC CASH OR D

P.O. Box 10577

Fargo, ND 58106-0577

5.75%
R3

ASCENSUS TRUST COMPANY FBO

FTS EMPLOYEES. RETIREMENT PLAN

P.O. Box 10577

Fargo, ND 58106-0577

5.03%
R4

EMPOWER TRUST COMPANY, LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

80.00%
R4

MATRIX TRUST COMPANY CUST FBO

C&H EXCAVATION, LLC 401(K) PLAN

717 17th St, STE 1300

Denver, CO 80202

10.11%
R4

ASCENSUS TRUST COMPANY FBO

BROKERAGE PROFESSIONALS INC

P.O. Box 10577

Fargo, ND 58106-0577

9.36%
R5

PUTNAM INVESTMENTS, LLC

100 Federal Street

Boston, MA 02110

100.00%
R6

GREAT-WEST TRUST CO LLC

The Putnam Retirement Plan

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

88.37%

 

I-45 
 

Maturity Fund (cont.)

 

Class

Shareholder name

and address

Percentage

owned

     
R6

GREAT-WEST TRUST CO LLC

Employee Benefits Clients

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

7.84%
Y

EMPOWER TRUST COMPANY, LLC

Great-West IRA Advantage

8515 E. Orchard Road 2T2

Greenwood Village, CO 80111-5002

99.49%

 

 

Distribution fees

 

During fiscal 2023, each fund paid the following 12b-1 fees to Putnam Retail Management:

 

 

Fund name Class A Class B Class C Class R Class R3
           
2065 Fund $308 N/A $2,174 $51 $26
2060 Fund $2,881 $153 $2,885 $79 $115
2055 Fund $12,666 $508 $6,043 $263 $6,940
2050 Fund $17,496 $918 $9,267 $1,704 $4,365
2045 Fund $29,425 $3,727 $7,364 $269 $7,105
2040 Fund $39,262 $2,866 $8,188 $738 $8,248
2035 Fund $53,029 $1,682 $11,251 $2,582 $12,635
2030 Fund $56,945 $1,454 $8,217 $1,992 $13,886
2025 Fund $58,048 $1,563 $14,846 $3,059 $8,565
Maturity Fund $60,623 $1,312 $9,366 $2,860 $4,078

 

 

 

 

I-46 
 

 

Class A sales charges and contingent deferred sales charges

Putnam Retail Management received sales charges with respect to class A shares in the following amounts during the periods indicated:

 

Fund name Fiscal year Total front-end sales charges Sales charges retained by Putnam Retail Management after dealer concessions Contingent deferred sales charges
         
2065 Fund* 2023 $2,225 $397 $49
         
  2022 $1,401 $305 $0
  2021 $490 $196 $0
         
2060 Fund 2023 $13,957 $2,373 $54
         
  2022 $9,062 $1,730 $18
  2021 $10,131 $2,263 $0
         
2055 Fund 2023 $23,977 $6,559 $102
         
  2022 $24,536 $6,278 $147
  2021 $18,695 $4,375 $92
         
2050 Fund 2023 $20,163 $5,054 $102
         
  2022 $26,115 $6,467 $152
  2021 $27,716 $6,561 $99
         
I-47 
 

 

Fund name Fiscal year Total front-end sales charges Sales charges retained by Putnam Retail Management after dealer concessions Contingent deferred sales charges
         
2045 Fund 2023 $21,447 $5,340 $119
         
  2022 $22,800 $5,839 $106
  2021 $33,188 $10,239 $83
         
2040 Fund 2023 $27,078 $8,750 $0
         
  2022 $25,719 $6,068 $74
  2021 $23,693 $4,862 $16
         
2035 Fund 2023 $32,827 $9,814 $0
         
  2022 $34,075 $9,123 $0
  2021 $35,453 $10,404 $137
         
2030 Fund 2023 $32,224 $10,300 $4
         
  2022 $30,114 $7,876 $50
  2021 $35,036 $11,104 $32
         
2025 Fund 2023 $16,989 $4,071 $29
         
  2022 $29,058 $8,865 $4,623
  2021 $31,051 $10,648 $11
         
I-48 
 

 

Fund name Fiscal year Total front-end sales charges Sales charges retained by Putnam Retail Management after dealer concessions Contingent deferred sales charges
         
Maturity Fund 2023 $3,978 $1,340 $0
         
  2022 $6,423 $1,688 $4
  2021 $8,132 $2,870 $9

 

 

 

* Commenced operations on January 4, 2021.

 

 

 

Class B contingent deferred sales charges

Putnam Retail Management received contingent deferred sales charges upon redemptions of class B shares in the following amounts during the periods indicated:

 

Fund name Fiscal year

Contingent deferred

sales charges

     
2065 Fund* 2023 N/A
     
  2022 N/A
  2021 N/A
     
2060 Fund 2023 $0
     
  2022 $0
  2021 $0
     
I-49 
 

 

Fund name Fiscal year

Contingent deferred

sales charges

     
2055 Fund 2023 $0
     
  2022 $1
  2021 $0
     
2050 Fund 2023 $0
     
  2022 $127
  2021 $38
     
2045 Fund 2023 $2
     
  2022 $7
  2021 $20
     
2040 Fund 2023 $0
     
  2022 $0
  2021 $85
     
2035 Fund 2023 $12
     
  2022 $0
  2021 $3
     
2030 Fund 2023 $3
     
  2022 $0
  2021 $367
     
2025 Fund 2023 $16
     
  2022 $18
  2021 $27
     
I-50 
 

 

Fund name Fiscal year

Contingent deferred

sales charges

     
Maturity Fund 2023 $5
     
  2022 $24
  2021 $567

 

 

 

* Commenced operations on January 4, 2021. The fund does not offer class B shares.

 

 

Class C contingent deferred sales charges

 

Putnam Retail Management received contingent deferred sales charges upon redemptions of class C shares in the following amounts during the periods indicated:

Fund name Fiscal year

Contingent deferred

sales charges

     
2065 Fund* 2023 $0
     
  2022 $0
  2021 $0
     
2060 Fund 2023 $29
     
  2022 $25
  2021 $112
     
2055 Fund 2023 $31
     
  2022 $115
  2021 $114
     
2050 Fund 2023 $35
     
  2022 $4
  2021 $48
     
I-51 
 

 

Fund name Fiscal year

Contingent deferred

sales charges

     
2045 Fund 2023 $2
     
  2022 $52
  2021 $91
     
2040 Fund 2023 $160
     
  2022 $65
  2021 $187
     
2035 Fund 2023 $68
     
  2022 $211
  2021 $153
     
2030 Fund 2023 $38
     
  2022 $435
  2021 $151
     
2025 Fund 2023 $28
     
  2022 $194
  2021 $3
     
Maturity Fund 2023 $0
     
  2022 $61
  2021 $50

 

 

 

*Commenced operations on January 4, 2021.

 

 

 

I-52 
 

Investor servicing fees

 

 

 

During the 2023 fiscal year, each fund incurred the following fees for investor servicing provided by Putnam Investor Services, Inc.

 

2065 Fund $581
2060 Fund $15,348
2055 Fund $56,849
2050 Fund $109,502
2045 Fund $158,214
2040 Fund $236,465
2035 Fund $232,470
2030 Fund $289,768
2025 Fund $252,806
Maturity Fund $279,188

 

 

 

PORTFOLIO MANAGERS

Other accounts managed

 

The following table shows the number and approximate assets of other investment accounts (or portions of investment accounts) that each fund's portfolio managers managed as of the funds’ most recent fiscal year-end. The other accounts may include accounts for which the individuals were not designated as a portfolio manager. Unless noted, none of the other accounts pays a fee based on the account's performance.

 

I-53 
 

 

 

Portfolio

managers

Other SEC-registered open-end and closed-end funds Other accounts that pool assets from more than one client Other accounts (including separate accounts, managed account programs and single-sponsor defined contribution plan offerings)
  Number of accounts Assets Number of accounts Assets Number of accounts Assets
             
Robert Schoen 27 $6,898,600,000 49 $5,542,900,000 4 $19,500,000
Brett Goldstein 27 $6,898,600,000 49 $5,542,900,000 1 $1,500,000
Adrian Chan 27 $6,898,600,000 44 $5,528,600,000 4 $17,900,000
James Fetch 27 $6,898,600,000 49 $5,542,900,000 1 $100,000

 

See “Management—Portfolio Transactions—Potential conflicts of interest in managing multiple accounts” in Part II of this SAI for information on how Putnam Management addresses potential conflicts of interest resulting from an individual’s management of more than one account.

 

 

Compensation of portfolio managers

Portfolio managers are evaluated and compensated across the group of specified products they manage, in part, based on their performance relative to peers or performance ahead of the applicable benchmark, depending on the product, based on a blend of 3-year and 5-year performance or, if shorter, over the life of the fund. In addition, evaluations take into account individual contributions and a subjective component.

 

Each portfolio manager is assigned an industry-competitive incentive compensation target consistent with this goal and evaluation framework. Actual incentive compensation may be higher or lower than the target, based on individual, group, and subjective performance, and may also reflect the performance of Putnam as a firm.

 

Incentive compensation includes a cash bonus and may also include grants of deferred stock or deferred cash. In addition to incentive compensation, portfolio managers receive fixed annual salaries typically based on level of responsibility and experience.

 

 

For these funds, Putnam evaluates performance based on the performance of the underlying funds.

I-54 
 

 

 

 

Ownership of securities

As of the end of the funds’ last fiscal year, the portfolio managers of the funds owned no shares of the funds, including investments by immediate family members and amounts invested through retirement and deferred compensation plans.

 

SECURITIES LENDING ACTIVITIES

The funds did not participate in any securities lending activities during the most recent fiscal year.

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND FINANCIAL STATEMENTS

PricewaterhouseCoopers LLP, 101 Seaport Boulevard, Boston, Massachusetts 02210, is the funds' independent registered public accounting firm providing audit services, tax return review and other tax consulting services and assistance and consultation in connection with the review of various Securities and Exchange Commission filings. The Report of Independent Registered Public Accounting Firm, financial highlights and financial statements included in the funds' Annual Report for the funds' most recent fiscal year are included as Appendix B to this SAI. The financial highlights included in the prospectus and this SAI and the financial statements included in this SAI (which is incorporated by reference into the prospectus) have been so included in reliance upon the Report of Independent Registered Public Accounting Firm, given on their authority as experts in auditing and accounting.

 

I-55 
 

THE PUTNAM FUNDS

STATEMENT OF ADDITIONAL INFORMATION (“SAI”)

PART II

 

 

HOW TO BUY SHARES

 

Each prospectus of a fund (a “prospectus”) describes briefly how investors may buy shares of the fund and identifies the share classes offered by that prospectus. For a fund that offers multiple classes of shares, the investment performance of the classes will vary because of different sales charges and expenses. This section of the SAI contains more information on how to buy shares. For more information, including your eligibility to purchase certain classes of shares, contact your investment dealer or Putnam Investor Services, Inc., the funds’ investor servicing agent (“Putnam Investor Services”), at 1-800-225-1581. Investors who purchase shares at net asset value through employer-sponsored retirement plans (including, for example, 401(k) plans, employer-sponsored 403(b) plans, and 457 plans, as well as “non-qualified” deferred compensation plans) should also consult their employer for information about the extent to which the matters described in this section and in the sections that follow apply to them.

 

Except as set forth below, the fund does not accept new accounts or additional investments (including by way of exchange from another fund) into existing accounts held in the name of persons or entities that do not have both a residential or business address within the United States (including APO/FPO addresses) and a valid U.S. tax identification number. Any existing account that is updated to reflect a non-U.S. address will also be restricted from making additional investments. Individuals resident in the European Economic Area (“EEA”), in particular, should take note that the fund’s shares are not offered for sale in the EEA.

 

Non-U.S. institutional clients may invest in a fund, provided that the client is acting for its own account and is not a financial institution (e.g., a broker-dealer purchasing shares on behalf of its customers), and has provided Putnam with documentation (i) that is appropriate to the type of entity seeking to establish the account and (ii) sufficient to enable Putnam Investor Services to determine that the investment would not violate any applicable securities laws or regulations, including non-U.S. laws and regulations. Non-U.S. employees of Putnam, its parent company, Power Corporation of Canada (“Power”), subsidiaries and affiliates of Power, and certain related entities, and the immediate family members of such employees may invest in a fund during the term of employment of the employee, subject to applicable law and certain procedural requirements.

 

In addition, class M shares are only available (1) to certain employer-sponsored retirement plans investing in George Putnam Balanced Fund and (2) for Putnam Diversified Income Trust, Putnam High Yield Fund, and Putnam Income Fund for public offering in Japan through certain Japanese registered broker-dealers with whom Putnam Retail Management Limited Partnership has an agreement. All other class M shares of the Putnam open-end mutual funds (“Putnam Funds”) were converted into class A shares effective November 25, 2019, except that class M shares of Putnam Global Income Trust and Putnam Mortgage Securities Fund held in Japan were liquidated effective December 9, 2019.

 

In addition, shares of Putnam Ultra Short MAC Series are only available to “wrap” account clients (“eligible investors”) where Putnam Management has an agreement to serve as investment adviser to the wrap program sponsor (typically a registered investment adviser or broker-dealer) or directly to the wrap account clients of the wrap program sponsor.

 

In addition, the fund does not accept new accounts or additional investments (including by way of exchange from another fund) into existing accounts by entities that Putnam Investor Services has reason to believe are involved in the sale or distribution of marijuana, even if such sale or distribution is licensed by a state.

 

November 30, 2023 II-1   
 

General Information

 

The fund is currently making a continuous offering of its shares. The fund receives the entire net asset value of shares sold. The fund will accept unconditional orders for shares to be executed at the current offering price based on the net asset value per share next determined after the order is placed. In the case of class A shares, class M shares and class N shares, the offering price is the net asset value plus the applicable sales charge, if any. (The offering price is thus calculable by dividing the net asset value by 100% minus the sales charge, expressed as a percentage.) No sales charge is included in the offering price of other classes of shares. In the case of orders for purchase of shares placed through dealers, the offering price will be based on the net asset value determined on the day the order is placed, but only if the dealer or a registered transfer agent or registered clearing agent receives the order, together with all required identifying information, before the close of regular trading on the New York Stock Exchange (the “NYSE”). If the dealer or registered transfer agent or registered clearing agent receives the order after the close of the NYSE, the price will be based on the net asset value next determined. If funds for the purchase of shares are sent directly to Putnam Investor Services, they will be invested at the offering price based on the net asset value next determined after all required identifying information has been collected. Payment for shares of the fund must be in U.S. dollars; if made by check, the check must be drawn on a U.S. bank.

Initial purchases are subject to the minimums stated in the prospectus, except that (i) individual investments under certain employer-sponsored retirement plans or Tax Qualified Retirement Plans may be lower, and (ii) the minimum investment is waived for investors participating in systematic investment plans or military allotment plans. Information about these plans is available from investment dealers or Putnam Investor Services. Currently Putnam is waiving the minimum for all initial purchases, but reserves the right to reject initial purchases under the minimum in the future, except as noted in the first sentence of this paragraph.

 

Systematic investment plan. As a convenience to investors, shares (other than shares of Putnam Multi-Asset Income Fund and shares of Putnam Ultra Short MAC Series) may be purchased through a systematic investment plan. Pre-authorized periodic (e.g., monthly, quarterly, semi-annually, or annually) bank drafts for a fixed amount ($200,000 or less) are used to purchase fund shares at the applicable offering price next determined after Putnam Retail Management Limited Partnership (“Putnam Retail Management”) receives the proceeds from the draft. A shareholder may choose any day of the month for these investments; however, if the selected date falls on a weekend or holiday, the investment will be processed on the next business day. For February, April, June, September and November, if the selected date does not occur (the 29th, 30th, or 31st, as applicable), the investment will be processed the prior business day. Further information and application forms are available from the investment dealers or from Putnam Retail Management.

 

Reinvestment of distributions. Distributions to be reinvested are reinvested without a sales charge in shares of any Putnam Fund the shareholder is eligible to invest in under the shareholder's account as of the ex-dividend date using the net asset value determined on that date, and are credited to a shareholder's account on the payment date. Dividends for Putnam money market funds are credited to a shareholder's account on the payment date. Distributions for all other funds that declare a distribution daily are reinvested without a sales charge as of the last day of the period for which distributions are paid using the net asset value determined on that date, and are credited to a shareholder's account on the payment date.

 

Purchasing shares with securities (“in-kind” purchases). In addition to cash, the fund will consider accepting securities as payment for fund shares at the applicable net asset value. Generally, the fund will only consider accepting securities to increase its holdings in a portfolio security, or if Putnam Investment Management, LLC (“Putnam Management”) determines that the offered securities are a suitable investment for the fund and in a sufficient amount for efficient management.

 

November 30, 2023 II-2   
 

While no minimum has been established, it is expected that the fund would not accept securities with a value of less than $100,000 per issue as payment for shares. The fund may reject in whole or in part any or all offers to pay for purchases of fund shares with securities, may require partial payment in cash for such purchases to provide funds for applicable sales charges, and may discontinue accepting securities as payment for fund shares at any time without notice. The fund will value accepted securities in the manner described in the section "Determination of Net Asset Value" for valuing shares of the fund. The fund will only accept securities that are delivered in proper form. The fund will not accept certain securities, for example, options or restricted securities, as payment for shares. The acceptance of securities by certain funds in exchange for fund shares is subject to additional requirements. For federal income tax purposes, a purchase of fund shares with securities will be treated as a sale or exchange of such securities on which the investor will generally realize a taxable gain or loss. The processing of a purchase of fund shares with securities involves certain delays while the fund considers the suitability of such securities and while other requirements are satisfied. For information regarding procedures for payment in securities, contact Putnam Retail Management. Investors should not send securities to the fund except when authorized to do so and in accordance with specific instructions received from Putnam Retail Management.

 

Sales Charges and Other Share Class Features

 

This section describes certain key features of share classes offered to retail investors and retirement plans that do not purchase shares at net asset value. Much of this information addresses the sales charges, including initial sales charges and contingent deferred sales charges (“CDSCs”) imposed on the different share classes and various commission payments made by Putnam to dealers and other financial intermediaries facilitating shareholders’ investments. This information supplements the descriptions of these share classes and payments included in the prospectus.

Initial sales charges, dealer commissions and CDSCs on shares sold outside the United States may differ from those applied to U.S. sales.

Initial sales charges for class A, class M and class N shares. The offering price of class A, class M and class N shares is the net asset value plus a sales charge that varies depending on the size of your purchase (calculable as described above). The fund receives the net asset value. The tables below indicate the sales charges applicable to purchases of class A, class M and class N shares of the funds by style category.

 

The sales charge for class A, class M and class N shares is allocated between your investment dealer and Putnam Retail Management as shown in the tables below, except when Putnam Retail Management, in its discretion, allocates the entire amount to your investment dealer.

 

The underwriter's commission, or dealer reallowance, is the sales charge shown in the prospectus less any applicable dealer discount. Putnam Retail Management will give dealers ten days' notice of any changes in the dealer discount.

 

Putnam Retail Management retains the entire sales charge on any retail sales made by it. The Putnam Funds require that a broker-dealer be associated with every account (a “broker-dealer of record”). In instances where the registered account owner has not designated a broker-dealer of record, Putnam Retail Management will be defaulted as the broker-dealer of record for the account. Putnam Retail Management is not a full-service broker-dealer, and does not provide investment advice. As default broker-dealer of record, Putnam Retail Management will not be able to provide services that are typically offered by a brokerage firm, such as assisting with financial planning or providing recommendations, or otherwise assisting with investment decisions. Where Putnam Retail Management is listed as the default broker-dealer of record for an account, it will receive all applicable sales charges and service fees associated with the account.

 

November 30, 2023 II-3   
 

For purchases of class A shares by retail investors that qualify for the highest sales charge breakpoint described in the prospectus, and certain Employer-Sponsored Retirement Plans approved by Putnam Retail Management, Putnam Retail Management pays commissions on sales during the one-year period beginning with the date of the initial purchase qualifying for that breakpoint. Each subsequent one-year measuring period for these purposes begins with the first qualifying purchase following the end of the prior period. For all funds, except for purchases of Putnam Short Duration Bond Fund on or after January 1, 2021, these commissions are paid at the rate of 1.00% of the amount of qualifying purchases up to $4 million, 0.50% of the next $46 million of qualifying purchases and 0.25% of qualifying purchases thereafter. For purchases of Putnam Short Duration Bond Fund on or after January 1, 2021, these commissions are paid at the rate of 0.75% of the amount of qualifying purchases up to $4 million, 0.50% of the next $46 million of qualifying purchases and 0.25% of qualifying purchases thereafter.

 

For purchases of class N shares over $250,000, Putnam Retail Management pays commissions on sales during the one-year period beginning with the date of the initial purchase. Each subsequent one-year measuring period for these purposes begins with the first qualifying purchase following the end of the prior period. Commissions for these purchases are paid at the rate of 0.25% of the amount of qualifying purchases up to $4 million, 0.15% of the next $46 million of qualifying purchases and 0.10% of qualifying purchases thereafter.

 

 

For Growth Funds, Blend Funds, Value Funds, Asset Allocation Funds (excluding George Putnam Balanced Fund and Putnam Multi-Asset Income Fund), Global Sector Funds, the Putnam Retirement Advantage Funds (excluding Putnam Retirement Advantage Maturity Fund) and the Putnam Sustainable Retirement Funds (excluding Putnam Sustainable Retirement Maturity Fund) only:

 

 

  CLASS A    

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price    
Under 50,000 5.75% 5.00%    
50,000 but under 100,000 4.50 3.75    
100,000 but under 250,000 3.50 2.75    
250,000 but under 500,000 2.50 2.00    
500,000 but under 1,000,000 2.00 1.75    
1,000,000 and above NONE NONE    

 

November 30, 2023 II-4   
 

For Putnam Retirement Advantage Maturity Fund, Putnam Sustainable Retirement Maturity Fund, Taxable Income Funds (except for Putnam Core Bond Fund, Money Market Funds, Putnam Floating Rate Income Fund, Putnam Ultra Short Duration Income Fund, Putnam Diversified Income Trust, Putnam High Yield Fund, Putnam Income Fund, and Putnam Short Duration Bond Fund), and for purchases of Tax-Exempt Funds (except for Putnam Short-Term Municipal Income Fund) prior to July 1, 2022:

 

  CLASS A    

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price    
Under 50,000 4.00% 3.50%    
50,000 but under 100,000 4.00 3.50    
100,000 but under 250,000 3.25 2.75    
250,000 but under 500,000 2.50 2.00    
500,000 and above NONE NONE    

 

 

For purchases of Tax-Exempt Funds (except for Putnam Short-Term Municipal Income Fund and Putnam Strategic Intermediate Municipal Fund) on or after July 1, 2022 and for purchases of Putnam Multi-Asset Income Fund and Putnam Core Bond Fund:

 

  CLASS A    

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price    
Under 50,000 4.00% 3.50%    
50,000 but under 100,000 3.25 2.75    
100,000 but under 250,000 2.50 2.00    
250,000 and above NONE NONE    
       
         

 

For Putnam Floating Rate Income Fund only:

 

  CLASS A    

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price    
Under 100,000 2.25% 2.00%    
100,000 but under 250,000 1.75% 1.50%    
250,000 but under 500,000 1.25% 1.00%    
500,000 and above NONE NONE    

 

 

November 30, 2023 II-5   
 

For purchases of Putnam Short-Term Municipal Income Fund, purchases of Putnam Strategic Intermediate Municipal Fund only on or after July 1, 2022, and purchases of Putnam Short Duration Bond Fund only prior to January 1, 2021:

 

  CLASS A    

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price    
Under 100,000 2.25% 2.00%    
100,000 but under 250,000 1.25% 1.00%    
250,000 and above NONE NONE    

 

 

For purchases of Putnam Short Duration Bond Fund on or after January 1, 2021:

 

 

  CLASS A    

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price    
Under 100,000 2.25% 2.00%    
100,000 – 249,999 1.25% 1.00%    
250,000 and above NONE NONE    

 

 

For George Putnam Balanced Fund only:

 

  CLASS A CLASS M

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price
Under 50,000 5.75% 5.00% 3.50% 3.00%
50,000 but under 100,000 4.50 3.75 2.50 2.00
100,000 but under 250,000 3.50 2.75 1.50 1.00
250,000 but under 500,000 2.50 2.00 1.00 1.00
500,000 but under 1,000,000 2.00 1.75 1.00 1.00
1,000,000 and above NONE NONE N/A N/A

 

 

November 30, 2023 II-6   
 

For Putnam Diversified Income Trust, Putnam High Yield Fund and Putnam Income Fund only:

 

  CLASS A CLASS M

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price

 

 

 

Sales charge as a percentage of offering price

Amount of sales charge reallowed to dealers as a percentage of offering price
Under 50,000 4.00% 3.50% 3.25% 3.00%
50,000 but under 100,000 4.00 3.50 2.25 2.00
100,000 but under 250,000 3.25 2.75 1.25 1.00
250,000 but under 500,000 2.50 2.00 1.00 1.00
500,000 and above NONE NONE N/A* N/A*

 

*The funds will not accept purchase orders for class M shares (other than by employer-sponsored retirement plans) where the total of the current purchase, plus existing account balances that are eligible to be linked under a right of accumulation (as described below) is $500,000 or more.

For all Putnam Funds that offer class N shares:

 

  CLASS N    

 

 

 

 

 

Amount of transaction at offering price ($)

 

 

 

 

Sales charge as a percentage of offering price

 

 

Amount of sales charge reallowed to dealers as a percentage of offering price

   
Under 50,000 1.50% 1.25%    
50,000 but under 100,000 1.25% 1.00%    
100,000 but under 250,000 1.00% 0.75%    
250,000 and above NONE NONE    

 

Purchases of class A and class N shares without an initial sales charge. Class A shares of any Putnam Fund (other than Putnam Short Duration Bond Fund, Putnam Ultra Short Duration Income Fund, Putnam Short-Term Municipal Income Fund, Putnam Government Money Market Fund, and Putnam Money Market Fund) purchased by retail investors that are not subject to an initial sales charge (in accordance with the schedules stated above) are subject to a CDSC of 1.00% if redeemed before the first day of the month in which the twelve-month anniversary of that purchase occurs. Class A shares of Putnam Short Duration Bond Fund purchased prior to January 1, 2021 and class A shares of Putnam Short-Term Municipal Income Fund purchased by retail investors that are not subject to an initial sales charge (in accordance with the schedules stated above) are subject to a CDSC of 1.00% if redeemed before the first day of the month in which the nine-month anniversary of that purchase occurs. Class A shares of Putnam Short Duration Bond Fund purchased on or after January 1, 2021 by retail investors that are not subject to an initial sales charge (in accordance with the schedules stated above) are subject to a CDSC of 0.75% if redeemed before the first day of the month in which the nine-month anniversary of that purchase occurs. Class A shares of Putnam Ultra Short Duration Income Fund, Putnam Money Market Fund and Putnam Government Money Market Fund purchased by retail investors by exchanging shares from another Putnam Fund that were not subject to an initial sales charge (in accordance with the schedules stated above) are subject to a CDSC of 1.00% if redeemed before the first day of the month in which the twelve-month anniversary of the original purchase occurs. Class N shares of any Putnam Fund purchased by retail investors that are not subject to an initial sales charge (in accordance with the schedules stated above) are subject to a CDSC of 0.25% if redeemed before the first day of the month in which the nine-month anniversary of that purchase occurs.

November 30, 2023 II-7   
 

 

The CDSC assessed on redemptions of fewer than all of an investor's class A shares or class N shares subject to a CDSC will be based on the amount of the redemption minus the amount of any appreciation on the investor's CDSC-subject shares since the purchase of such shares. The CDSC assessed on full redemptions of CDSC-subject shares will be based on the lower of the shares' cost and current NAV. Class A shares that are exchanged between Putnam Funds will maintain the CDSC time period for the fund in which the initial purchase was made. Putnam Retail Management will retain any CDSC imposed on redemptions of such shares to compensate it for the up-front commissions paid to financial intermediaries for such share sales.

 

Purchases of class A shares for rollover IRAs. Purchases of class A shares for a Putnam Rollover IRA or a rollover IRA of a Putnam affiliate, from a retirement plan for which an affiliate of Putnam Management or a business partner of such affiliate is the administrator, including subsequent contributions, are not subject to an initial sales charge or CDSC.

 

Commission payments and CDSCs for class B and class C shares. Except in the case of Putnam Money Market Fund, Putnam Government Money Market Fund and Putnam Ultra Short Duration Income Fund, Putnam Retail Management will pay a 4% commission on sales of class B shares of the fund only to those financial intermediaries who have entered into service agreements with Putnam Retail Management. For tax-exempt funds, this commission includes a 0.20% pre-paid service fee (except for Putnam Tax-Free High Yield Fund and Putnam Strategic Intermediate Municipal Fund, each of which has a 0.25% pre-paid service fee). For Putnam Floating Rate Income Fund, Putnam Short Duration Bond Fund, and Putnam Core Bond Fund, Putnam Retail Management will pay a 1.00% commission to financial intermediaries selling class B shares of the fund.

 

Except in the case of Putnam Money Market Fund, Putnam Government Money Market Fund and Putnam Ultra Short Duration Income Fund, Putnam Retail Management pays financial intermediaries a 1.00% commission on sales of class C shares of a fund.

 

Putnam Retail Management will retain any CDSC imposed on redemptions of class B and class C shares to compensate it for the cost of paying the up-front commissions paid to financial intermediaries for class B or class C share sales.

 

Conversion of class B shares into class A shares. Class B shares will automatically convert to class A shares during the month eight years after the purchase date (for Putnam Small Cap Value Fund, during the month six years after the purchase date, and for Putnam Sustainable Future Fund, during the month five years after the purchase date). Class B shares acquired by exchanging class B shares of another Putnam Fund will convert to class A shares based on the time of the initial purchase, and the holding period of the fund of initial purchase will apply. Any CDSC for such shares will be calculated using the schedule of the fund into or from which shares have been exchanged that would result in the highest CDSC applicable to such shares. Class B shares acquired through reinvestment of distributions will convert to class A shares based on the date of the initial purchase to which such shares relate. For this purpose, class B shares acquired through reinvestment of distributions will be attributed to particular purchases of class B shares in accordance with such procedures as the Trustees may determine from time to time. The conversion of class B shares to class A shares is subject to the condition that such conversions will not constitute taxable events for federal tax purposes. Shareholders should consult with their tax advisers regarding the state and local tax consequences of the conversion of class B shares to class A shares, or any other exchange or conversion of shares. Average annual total return performance information for class B shares shown in the fund's prospectus assumes conversion to class A shares after the applicable period described in the fund’s prospectus.

 

Conversion of class C shares into class A shares. Class C shares will automatically convert to class A shares during the month eight years after the purchase date, provided that Putnam Investor Services, or the financial intermediary through which a shareholder purchased class C shares has records verifying that the class C shares have been held for at least eight years, and that class A shares are available for purchase by residents in the shareholder’s jurisdiction. In certain cases, records verifying that the class C shares have been held for at

November 30, 2023 II-8   
 

least eight years may not be available (for example, participant level share lot aging may not be tracked by group retirement plan recordkeeping platforms through which class C shares of the fund are held in an omnibus account). If such records are unavailable, Putnam Investor Services or the relevant financial intermediary may not effect the conversion or may effect the conversion on a different schedule determined by Putnam Investor Services or the financial intermediary, which may be shorter or longer than eight years. Class C shares acquired by exchanging class C shares of another Putnam Fund will convert to class A shares based on the time of the initial purchase. Any CDSC for such shares will be calculated using the schedule of the fund into or from which shares have been exchanged that would result in the highest CDSC applicable to such shares. Class C shares acquired through reinvestment of distributions will convert to class A shares based on the date of the initial purchase to which such shares relate. For this purpose, class C shares acquired through reinvestment of distributions will be attributed to particular purchases of class C shares in accordance with such procedures as the Trustees may determine from time to time. The conversion of class C shares to class A shares is subject to the condition that such conversions will not constitute taxable events for federal tax purposes. Shareholders should consult with their tax advisers regarding the state and local tax consequences of the conversion of class C shares to class A shares, or any other exchange or conversion of shares. Prior to March 1, 2021, class C shares converted to class A shares after ten years.

 

Sales without sales charges or contingent deferred sales charges

 

In addition to the categories of investors eligible to purchase fund shares without a sales charge or CDSC set forth in the fund’s prospectus, in connection with settlements reached between certain firms and the Financial Industry Regulatory Authority (“FINRA”) and/or Securities and Exchange Commission (the “SEC”) regarding sales of class B and class C shares in excess of certain dollar thresholds, the fund will permit shareholders who are clients of these firms (and applicable affiliates of such firms) to redeem class B and class C shares of the fund and concurrently purchase class A shares (in an amount to be determined by the dealer of record and Putnam Retail Management in accordance with the terms of the applicable settlement) without paying a sales charge.

 

The fund may issue its shares at net asset value without an initial sales charge or a CDSC in connection with the acquisition of substantially all of the securities owned by other investment companies or personal holding companies. The CDSC will be waived on redemptions to pay premiums for insurance under Putnam’s insured investor program.

 

In the case of certain sales charge waivers described in the prospectus to (i) current and former Trustees of the fund, their family members, business and personal associates; current and former employees of Putnam Management and certain current and former corporate affiliates, their family members, business and personal associates; employer-sponsored retirement plans for the foregoing; and partnerships, trusts or other entities in which any of the foregoing has a substantial interest and (ii) shareholders reinvesting the proceeds from a Putnam Corporate IRA Plan distribution into a nonretirement plan account, the availability of shares at NAV has been determined to be appropriate because involvement by Putnam Retail Management and other brokers in purchases by these investors is typically minimal.

 

As described in the prospectus, specific sales charge waivers may be available through your particular financial intermediary. Please see the prospectus for additional information about financial intermediary-specific waivers.

 

Application of CDSC to Systematic Withdrawal Plans (“SWP”). The SWP provisions relating to CDSC waivers described below do not apply to customers purchasing shares of the fund through a Specified Intermediary, unless otherwise specified in the Appendix to the fund’s prospectus. Please refer to the Appendix to the fund’s prospectus for the SWP provisions that are applicable to each Specified Intermediary.

 

November 30, 2023 II-9   
 

Investors who set up a SWP for a share account (see "INVESTOR SERVICES — Plans Available to Shareholders -- Systematic Withdrawal Plan") may withdraw through the SWP up to 12% of the net asset value of the account (calculated as set forth below) each year without incurring any CDSC. Shares not subject to a CDSC (such as shares representing reinvestment of distributions) will be redeemed first and will count toward the 12% limitation. If there are insufficient shares not subject to a CDSC, shares subject to the lowest CDSC liability will be redeemed next until the 12% limit is reached. The 12% figure is calculated on a pro rata basis at the time of the first payment made pursuant to an SWP and recalculated thereafter on a pro rata basis at the time of each SWP payment. Therefore, shareholders who have chosen an SWP based on a percentage of the net asset value of their account of up to 12% will be able to receive SWP payments without incurring a CDSC. However, shareholders who have chosen a specific dollar amount (for example, $100 per month from the fund that pays income distributions monthly) for their periodic SWP payment should be aware that the amount of that payment not subject to a CDSC may vary over time depending on the net asset value of their account. For example, if the net asset value of the account is $10,000 at the time of payment, the shareholder will receive $100 free of the CDSC (12% of $10,000 divided by 12 monthly payments). However, if at the time of the next payment the net asset value of the account has fallen to $9,400, the shareholder will receive $94 free of any CDSC (12% of $9,400 divided by 12 monthly payments) and $6 subject to the lowest applicable CDSC. This SWP privilege may be revised or terminated at any time.

 

Other exceptions to application of CDSC. For purposes of the waiver categories set forth in subparagraphs (ii) – (iv) of the fund’s prospectus under the sub-section Additional reductions and waivers of sales charges – Class A, Class B and Class C shares, shares not subject to a CDSC are redeemed first in determining whether the CDSC applies to each redemption.

 

For purposes of the waiver categories set forth in subparagraph (v) of the fund’s prospectus under the sub-section Additional reductions and waivers of sales charges – Class A, Class B and Class C shares, Benefit Payments currently include, without limitation, (1) distributions from an IRA due to death or post-purchase disability, (2) a return of excess contributions to an IRA or 401(k) plan, and (3) distributions from retirement plans qualified under Section 401(a) of the Code or from a 403(b) plan due to death, disability, retirement or separation from service. These waivers may be changed at any time.

 

Ways to Reduce Initial Sales Charges—Class A, Class M and Class N Shares

 

There are several ways in which an investor may obtain reduced sales charges on purchases of class A shares, class M shares and class N shares. These provisions may be altered or discontinued at any time. The breakpoint discounts described below do not apply to customers purchasing shares of the fund through any of the financial intermediaries specified in the Appendix to the fund’s prospectus (each, a “Specified Intermediary”). Please refer to the Appendix to the fund’s prospectus for the breakpoint discounts that are applicable to each Specified Intermediary.

 

Right of accumulation. A purchaser of class A shares, class M shares or class N shares may qualify for a right of accumulation discount by combining all current purchases by such person with the value of certain other shares of any class of Putnam Funds already owned. The applicable sales charge is based on the total of:

 

(i) the investor's current purchase(s); and

 

(ii) the higher of (x) the maximum offering price (at the close of business on the previous day) or (y) the initial value of total purchases (less the value of shares redeemed on the applicable redemption date) of:

 

November 30, 2023 II-10   
 
  (a) all shares held in accounts registered to the investor and other accounts eligible to be linked to the investor’s accounts (as described below) in all of the Putnam Funds (except closed-end and money market funds, unless acquired as described in (b) below); and
  (b) any shares of money market funds acquired by exchange from other Putnam Funds.

 

For shares held on December 31, 2007, the initial value will be the value of those shares at the maximum offering price on that date.

 

The following persons may qualify for a right of accumulation discount:

 

(i) an individual, or a "company" as defined in Section 2(a)(8) of the Investment Company Act of 1940, as amended (the “1940 Act”) (which includes corporations which are corporate affiliates of each other);

 

(ii) an individual, his or her spouse and their children who were under age 21 at the time of the investor’s initial purchase, as well as any individual with an account registered under the same last name and same address as the individual, purchasing for his, her or their own account;

 

(iii) a trustee or other fiduciary purchasing for a single trust estate or single fiduciary account (including a pension, profit-sharing, or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code and Simplified Employer Pension Plans (SEPs) created pursuant to Section 408(k) of the Code);

 

(iv) tax-exempt organizations qualifying under Section 501(c)(3) of the Code, (not including tax-exempt organizations qualifying under Section 403(b)(7) (a "403(b) plan") of the Code; and

 

(v) employer-sponsored retirement plans of a single employer or of affiliated employers, other than 403(b) plans.

 

A combined purchase currently may also include shares of any class of other continuously offered Putnam Funds (other than money market funds, Putnam Multi-Asset Income Fund, and class A shares of Putnam Ultra Short Duration Income Fund) purchased at the same time, if the dealer places the order for such shares directly with Putnam Retail Management.

 

For individual investors, Putnam Investor Services automatically links accounts the registrations of which are under the same last name and address. Account types eligible to be linked for the purpose of qualifying for a right of accumulation discount include the following (in each case as registered to the investor, his or her spouse and his or her children who were under the age of 21 at the time of the investor’s initial purchase):

 

  (i) individual accounts;
  (ii) joint accounts;
  (iii) accounts established as part of a plan established pursuant to Section 403(b) of the Code (“403(b) plans”) or an IRA other than a SIMPLE IRA, SARSEP or SEP IRA;
  (iv) shares owned through accounts in the name of the investor’s (or spouse’s or child’s) dealer or other financial intermediary (with documentation identifying to the satisfaction of Putnam Investor Services the beneficial ownership of such shares); and
  (v) accounts established as part of a Section 529 college savings plan managed by Putnam Management.
November 30, 2023 II-11   
 

Shares owned by a plan participant as part of an employer-sponsored retirement plan of a single employer or of affiliated employers (other than 403(b) plans) or a single fiduciary account opened by a trustee or other fiduciary (including a pension, profit-sharing, or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code) are not eligible for linking to other accounts attributable to such person to qualify for the right of accumulation discount, although all current purchases made by each such plan may be combined with existing aggregate balances of such plan in Putnam Funds for purposes of determining the sales charge applicable to shares purchased at such time by the plan.

 

To obtain the right of accumulation discount on a purchase through an investment dealer, when each purchase is made the investor or dealer must provide Putnam Retail Management with sufficient information to verify that the purchase qualifies for the privilege or discount. The shareholder must furnish this information to Putnam Investor Services when making direct cash investments. Sales charge discounts under a right of accumulation apply only to current purchases. No credit for right of accumulation purposes is given for any higher sales charge paid with respect to previous purchases for the investor’s account or any linked accounts.

 

Statement of Intention. Investors may also obtain the reduced sales charges for class A, class M or class N shares shown in the prospectus for investments of a particular amount by means of a written Statement of Intention (also referred to as a Letter of Intention), which expresses the investor's intention to invest that amount (including certain "credits," as described below) within a period of 13 months in shares of any class of the fund or any other continuously offered Putnam Fund (excluding Putnam money market funds, Putnam Multi-Asset Income Fund, and Putnam Ultra Short Duration Income Fund), including through an account established as part of a Section 529 college savings plan managed by Putnam Management. Each purchase of class A shares, class M shares or class N shares under a Statement of Intention will be made at the lesser of (i) the offering price applicable at the time of such purchase and (ii) the offering price applicable on the date the Statement of Intention is executed to a single transaction of the total dollar amount indicated in the Statement of Intention.

 

An investor may receive a credit toward the amount indicated in the Statement of Intention equal to the maximum offering price as of the close of business on the previous day of all shares he or she owns, or which are eligible to be linked for purposes of the right of accumulation described above, on the date of the Statement of Intention which are eligible for purchase under a Statement of Intention (plus any shares of money market funds and Putnam Ultra Short Duration Income Fund acquired by exchange of such eligible shares, and any class N shares of Putnam Ultra Short Duration Income Fund). Investors do not receive credit for shares purchased by the reinvestment of distributions. Investors qualifying for the "combined purchase privilege" (see above) may purchase shares under a single Statement of Intention.

 

The Statement of Intention is not a binding obligation upon the investor to purchase the full amount indicated. The minimum initial investment under a Statement of Intention is 5% of such amount, and must be invested immediately. Class A shares, class M shares or class N shares purchased with the first 5% of such amount will be held in escrow to secure payment of the higher sales charge applicable to the shares actually purchased if the full amount indicated is not purchased. When the full amount indicated has been purchased, the escrow will be released. If an investor desires to redeem escrowed shares before the full amount has been purchased, the shares will be released from escrow only if the investor pays the sales charge that, without regard to the Statement of Intention, would apply to the total investment made to date.

 

If an investor purchases more than the dollar amount indicated on the Statement of Intention and qualifies for a further reduced sales charge, the sales charge will be adjusted for the entire amount purchased at the end of the 13-month period, upon recovery by Putnam Retail Management from the investor's dealer of its portion of the sales charge adjustment. Once received from the dealer, which may take a period of time or may never occur, the sales charge adjustment will be used to purchase additional shares at the then current offering price applicable to the actual amount of the aggregate purchases. These additional shares will not be considered as part of the total investment for the purpose of determining the applicable sales charge pursuant to the

November 30, 2023 II-12   
 

Statement of Intention. No sales charge adjustment will be made unless and until the investor's dealer returns to Putnam Retail Management any excess commissions previously received.

 

If an investor purchases less than the dollar amount indicated on the Statement of Intention within the 13-month period, the sales charge will be adjusted upward for the entire amount purchased at the end of the 13-month period. This adjustment will be made by redeeming shares from the account to cover the additional sales charge, the proceeds of which will be paid to the investor's dealer and Putnam Retail Management. Putnam Retail Management will make a corresponding downward adjustment to the amount of the reallowance payable to the dealer with respect to purchases made prior to the investor’s failure to fulfill the conditions of the Statement of Intention. If the account exceeds an amount that would otherwise qualify for a reduced sales charge, that reduced sales charge will be applied. Adjustments to sales charges and dealer reallowances will not be made in the case of the shareholder’s death prior to the expiration of the 13-month period.

 

Statements of Intention are not available for certain employer-sponsored retirement plans.

 

Statement of Intention forms may be obtained from Putnam Retail Management or from investment dealers. In addition, shareholders may complete the applicable portion of the fund’s standard account application. Interested investors should read the Statement of Intention carefully.

 

DISTRIBUTION PLANS

 

If the fund or a class of shares of the fund has adopted a distribution (12b-1) plan, the prospectus describes the principal features of the plan. This SAI contains additional information which may be of interest to investors.

 

Continuance of a plan is subject to annual approval by a vote of the Trustees, including a majority of the Trustees who are not interested persons of the fund and who have no direct or indirect interest in the plan or related arrangements (the "Qualified Trustees"), cast in person at a meeting called for that purpose. All material amendments to a plan must be likewise approved by the Trustees and the Qualified Trustees. No plan may be amended in order to increase materially the costs which the fund may bear for distribution pursuant to such plan without also being approved by a majority of the outstanding voting securities of the fund or the relevant class of the fund, as the case may be. A plan terminates automatically in the event of its assignment and may be terminated without penalty, at any time, by a vote of a majority of the Qualified Trustees or by a vote of a majority of the outstanding voting securities of the fund or the relevant class of the fund, as the case may be.

 

The fund makes payments under each plan to Putnam Retail Management to compensate Putnam Retail Management for services provided and expenses incurred by it for purposes of promoting the sale of the relevant class of shares, reducing redemptions of shares or maintaining or improving services provided to shareholders by Putnam Retail Management and investment dealers.

 

Putnam Retail Management compensates qualifying dealers (including, for this purpose, certain financial institutions) for sales of shares and the maintenance of shareholder accounts.

Putnam Retail Management may suspend or modify its payments to dealers. The payments are also subject to the continuation of the relevant distribution plan, the terms of the service agreements between the dealers and Putnam Retail Management and any applicable limits imposed by FINRA. Unless noted below or where Putnam Retail Management and the applicable dealer have agreed otherwise, these payments commence in the first year after purchase.

 

Financial institutions receiving payments from Putnam Retail Management as described above may be required to comply with various state and federal regulatory requirements, including among others those regulating the activities of securities brokers or dealers.

 

November 30, 2023 II-13   
 

Except as otherwise agreed between Putnam Retail Management and a dealer, for purposes of determining the amounts payable to dealers for shareholder accounts for which such dealers are designated as the dealer of record, "average net asset value" means the product of (i) the average daily share balance in such account(s) and (ii) the average daily net asset value of the relevant class of shares over the quarter.

 

Class A shares:

 

Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at up to the annual rates set forth below (as a percentage of the average net asset value of class A shares for which such dealers are designated the dealer of record) except as described below. No payments are made during the first year after purchase on shares purchased at net asset value by shareholders that invest at least the amount required to be eligible for the highest sales charge breakpoint as disclosed in the fund’s prospectus, unless, in the case of dealers of record for an employer-sponsored retirement plan investing at least $1 million, where such dealer has agreed to a reduced sales commission. In addition, no payments are made during the first year after purchase for shares purchased prior to April 1, 2017 where PRM has paid a commission as described above in “Commissions on Sales to Employee Retirement Plans.”

 

Rate* Fund
Effective July 1, 2020:
0.25% All funds currently making payments under a class A distribution plan, except for those listed below
0.10% Putnam Ultra Short Duration Income Fund
0.00%

Putnam Government Money Market Fund

Putnam Money Market Fund

Prior to July 1, 2020:
0.25% All funds currently making payments under a class A distribution plan, except for those listed below

0.20% for shares purchased before 3/21/05;

0.25% for shares purchased on or after 3/21/05**

Putnam Tax-Free High Yield Fund

0.20% for shares purchased before 4/1/05;

0.25% for shares purchased on or after 4/1/05

Putnam Strategic Intermediate Municipal Fund
0.20% for shares purchased on or before 12/31/89; 0.25% for shares purchased after 12/31/89

Putnam Convertible Securities Fund

George Putnam Balanced Fund

Putnam Focused International Equity Fund

Putnam Global Health Care Fund

0.20% for shares purchased on or before 3/31/90; 0.25% for shares purchased after 3/31/90 Putnam Mortgage Securities Fund

0.20% for shares purchased on or before 1/1/90;

0.25% for shares purchased after 1/1/90

Putnam Large Cap Value Fund
0.20% for shares purchased on or before 3/31/91; 0.25% for shares purchased after 3/31/91; Putnam Income Fund
0.10% Putnam Ultra Short Duration Income Fund

0.20% for shares purchased after 3/6/92 but before 4/1/05;

0.25% for shares purchased on or after 4/1/05

Putnam Minnesota Tax Exempt Income Fund

Putnam Ohio Tax Exempt Income Fund

November 30, 2023 II-14   
 

 

0.15% for shares purchased on or before 5/11/92; 0.20% for shares purchased after 5/11/92 but before 4/1/05;

0.25% for shares purchased on or after 4/1/05

Putnam Massachusetts Tax Exempt Income Fund

0.15% for shares purchased on or before 12/31/92; 0.20% for shares purchased after 12/31/92 but before 4/1/05;

0.25% for shares purchased on or after 4/1/05

Putnam California Tax Exempt Income Fund

Putnam New Jersey Tax Exempt Income Fund

Putnam New York Tax Exempt Income Fund

Putnam Tax Exempt Income Fund

0.15% for shares purchased on or before 7/8/93; 0.20% for shares purchased after 7/8/93 but before 4/1/05;

0.25% for shares purchased on or after 4/1/05

Putnam Pennsylvania Tax Exempt Income Fund
0.00%

Putnam Government Money Market Fund

Putnam Money Market Fund

 

*For purposes of this table, shares are deemed to be purchased on date of settlement (i.e., once purchased and paid for). Shares issued in connection with dividend reinvestments are considered to be purchased on the date of their issuance, not the issuance of the original shares.

 

**Shares of Putnam Tax-Free High Yield Fund issued in connection with the merger of Putnam Municipal Income Fund into that fund pay a commission at the annual rate of 0.20% or 0.25%, based on the date of the original purchase of the shareholder’s corresponding shares of Putnam Municipal Income Fund, as set forth below: 0.20% for shares purchased on or before 5/7/92; 0.25% for shares purchased after 5/7/92.

 

Class B shares:

 

Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at the annual rates set forth below (as a percentage of the average net asset value of class B shares for which such dealers are designated the dealer of record).

 

Rate Fund
0.25% All funds currently making payments under a class B distribution plan, except for those listed below
0.25%, except that the first years’ service fees of 0.25% are prepaid at time of sale

Putnam Strategic Intermediate Municipal Fund

Putnam Tax-Free High Yield Fund

0.20%, except that the first years’ service fees of 0.20% are prepaid at time of sale

Putnam California Tax Exempt Income Fund

Putnam Massachusetts Tax Exempt Income Fund

Putnam Minnesota Tax Exempt Income Fund

Putnam New Jersey Tax Exempt Income Fund

Putnam New York Tax Exempt Income Fund

Putnam Ohio Tax Exempt Income Fund

Putnam Pennsylvania Tax Exempt Income Fund

Putnam Tax Exempt Income Fund

0.00%

Putnam Government Money Market Fund

Putnam Money Market Fund

Putnam Ultra Short Duration Income Fund

November 30, 2023 II-15   
 

Class C shares:

 

Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at the annual rates set forth below (as a percentage of the average net asset value of class C shares for which such dealers are designated the dealer of record). No payments are made during the first year after purchase unless the shares were initially purchased without a CDSC, except that payments for Putnam Money Market Fund, Putnam Government Money Market Fund and Putnam Ultra Short Duration Income Fund will be made beginning in the first year.

 

Rate Fund
1.00% All funds currently making payments under a class C distribution plan, except for those listed below
0.50%

Putnam Government Money Market Fund *

Putnam Money Market Fund*

Putnam Ultra Short Duration Income Fund

 

* Putnam Money Market Fund and Putnam Government Money Market Fund limit the 12b-1 fees payable by class C shares to 0.00% of the average net asset value of class C shares for which such dealers are designated the dealer of record.

 

Different rates may apply to shares sold outside the United States.

 

Class M shares:

 

Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at the annual rates set forth below (as a percentage of the average net asset value of class M shares for which such dealers are designated the dealer of record).

 

Rate Fund
0.65% George Putnam Balanced Fund
0.40% Putnam Diversified Income Trust, Putnam High Yield Fund and Putnam Income Fund

 

Putnam Retail Management’s payments to dealers for plans investing in class M shares for which such dealers are designated the dealer of record may equal up to the annual rate of 0.75% of the average net asset value of such class M shares for George Putnam Balanced Fund and up to the annual rate of 0.50% of the average net asset value of such class M shares for Putnam Diversified Income Trust, Putnam Global Income Trust, Putnam High Yield Fund, Putnam Income Fund, and Putnam Mortgage Securities Fund.

 

Different rates may apply to shares sold outside the United States.

 

November 30, 2023 II-16   
 

Class N shares:

 

Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at the annual rate set forth below (as a percentage of the average net asset value of class N shares for which such dealers are designated the dealer of record).

 

Rate Fund
0.25% All funds currently making payments under a class N distribution plan

 

Class R shares:

 

Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at up to the annual rate set forth below (as a percentage of the average net asset value of class R shares for which such dealers are designated the dealer of record). No payments are made to dealers during the first year after purchase, with respect to shares purchased before April 1, 2017, if Putnam Retail Management paid a commission to the dealer at purchase as described above in “Commissions on Sales to Employee Retirement Plans.”

 

Rate Fund
0.50%

All funds currently making payments under a class R distribution plan*

 

 

* Putnam Money Market Fund and Putnam Government Money Market Fund limit the 12b-1 fees payable by class R shares to 0.00% of the average net asset value of class R shares for which such dealers are designated the dealer of record.

 

A portion of the class R distribution fee payable to dealers may be paid to third parties who provide services to plans investing in class R shares, and participants in such plans.

 

Class R3 shares:

 

Putnam Retail Management makes quarterly (or in certain cases monthly) payments to dealers at up to the annual rate set forth below (as a percentage of the average net asset value of class R3 shares for which such dealers are designated the dealer of record).

 

Rate Fund
0.25% All funds currently making payments under a class R3 distribution plan

 

 

A portion of the class R3 distribution fee payable to dealers may be paid to third parties who provide services to plans investing in class R3 shares and participants in such plans.

 

 

Additional Dealer Payments

 

As described earlier in this section, dealers may receive different commissions, sales charge reallowances and other payments with respect to sales of different classes of shares of the funds. These payments may include

November 30, 2023 II-17   
 

servicing payments to retirement plan administrators and other institutions up to the same levels as described above. For purposes of this section the term “dealer” includes any broker, dealer, bank, bank trust department, registered investment advisor, financial planner, retirement plan administrator and any other institution having a selling, services, or any similar agreement with Putnam Retail Management or one of its affiliates.

 

Putnam Retail Management and its affiliates pay additional compensation to selected dealers under the categories described below. These categories are not mutually exclusive, and a single dealer may receive payments under all categories. These payments may create an incentive for a dealer firm or its representatives to recommend or offer shares of the fund or other Putnam Funds to its customers. These additional payments are made pursuant to agreements with dealers and do not change the price paid by investors for the purchase of a share or the amount a fund will receive as proceeds from such sales or the distribution (12b-1) fees and the expenses paid by the fund as shown under the heading “Fees and Expenses” in the prospectus.

 

Marketing Support Payments. Putnam Retail Management and its affiliates make payments to certain dealers for marketing support services. These payments are individually negotiated with each dealer firm, taking into account the marketing support services provided by the dealer, including business planning assistance, educating dealer personnel about the Putnam Funds and shareholder financial planning needs, placement on the dealer’s preferred or recommended fund company list, access to sales meetings, sales representatives and management representatives of the dealer, market data, as well as the size of the dealer’s relationship with Putnam Retail Management. Putnam Retail Management and its affiliates compensate dealers differently depending upon, among other factors, the level and/or type of marketing support provided by the dealer. Payments are generally based on one or more of the following factors: average net assets of Putnam’s retail mutual funds attributable to that dealer, gross or net sales of Putnam’s retail mutual funds attributable to that dealer, reimbursement of ticket charges (fees that a dealer firm charges its representatives for effecting transactions in fund shares) or a negotiated lump sum payment for services rendered. In addition, payments typically apply to retail sales and assets, but may not, in certain situations, apply to other specific types of sales or assets, such as to retirement plans or fee-based advisory programs.

 

Although the total of marketing support payments made to dealers in any year may vary, on average, the aggregate payments are not expected, on an annual basis, to exceed 0.085% of the average assets of Putnam’s retail mutual funds attributable to the dealers.

 

The following dealers (and such dealers’ respective affiliates) received marketing support payments from Putnam Retail Management and its affiliates during the calendar year ended December 31, 2022:

 

American Enterprise Investment Services Inc. Merrill Lynch, Pierce, Fenner & Smith, Inc.
Ascensus, Inc. Morgan Stanley Smith Barney LLC
Avantax Investment Services, Inc. OneAmerica Securities, Inc.
AXA Advisors, LLC Principal Life Insurance Company
Cambridge Investment Research, Inc. Raymond James & Associates, Inc.
Cetera Advisor Networks LLC Raymond James Financial Services, Inc.
Cetera Advisors LLC RBC Capital Markets, LLC
Cetera Financial Specialists LLC Resources Investment Advisors, LLC
Cetera Investment Services LLC Retirement Plan Advisory Group
Citigroup Global Markets Inc. Royal Alliance Associates
Commonwealth Equity Services SagePoint Financial, Inc.
Empower Annuity Insurance Company of America Securities America, Inc.
First Allied Securities, Inc. Stifel, Nicolaus & Company, Incorporated
FSC Securities Corporation Teachers Insurance and Annuity Association of America
HUB International Limited Transamerica Retirement Solutions, LLC
J.P. Morgan Securities LLC Triad Advisors, LLC
November 30, 2023 II-18   
 

 

Janney Montgomery Scott LLC UBS Financial Services, Inc.
John Hancock Retirement Plan Services, LLC Vanguard Marketing Corporation
Kestra Investment Services, LLC Voya Financial Advisors, Inc.
Lincoln Financial Advisors Corp. Wells Fargo Clearing Services, LLC
Lincoln Financial Distributors, Inc. Woodbury Financial Services, Inc
Lincoln Financial Securities Corporation XPonential Growth Solutions
LPL Financial LLC  

 

Additional dealers may receive marketing support payments in 2023 and in future years. Any additions, modifications or deletions to the list of dealers identified above that have occurred since December 31, 2022 are not reflected. You can ask your dealer about any payments it receives from Putnam Retail Management and its affiliates.

 

Program Servicing Payments. Putnam Retail Management and its affiliates also make payments to certain dealers that sell Putnam Fund shares through dealer platforms and other investment programs to compensate dealers for a variety of services they provide. A dealer may perform program services itself or may arrange with a third party to perform program services. In addition to shareholder recordkeeping, reporting, or transaction processing, program services may include services rendered in connection with dealer platform development and maintenance, fund/investment selection and monitoring, or other similar services. Payments by Putnam Retail Management and its affiliates for program servicing support to any one dealer are not expected, with certain limited exceptions, to exceed 0.20% of the total assets in the program on an annual basis. In addition, Putnam Retail Management and its affiliates make one-time or annual payments to selected dealers receiving program servicing payments in reimbursement of printing costs for literature for shareholders, account maintenance fees or fees for establishment of Putnam Funds on the dealer’s system. The amounts of these payments may, but will not normally (except in cases where the aggregate assets in the program are small), cause the aggregate amount of the program servicing payments to such dealer on an annual basis to exceed the amounts set forth above.

 

The following dealers (and such dealers’ respective affiliates) received program servicing payments from Putnam Retail Management and its affiliates during the calendar year ended December 31, 2022:

 

Charles Schwab & Co., Inc. RBC Capital Markets, LLC
Empower Financial Services, Inc. TD Ameritrade, Inc.
Merrill Lynch, Pierce, Fenner & Smith, Inc. TD Ameritrade Clearing, Inc.
National Financial Services LLC Transamerica Advisors Life Insurance Company
Pershing LLC  

 

Additional or different dealers may also receive program servicing payments in 2023 and in future years. Any additions, modifications or deletions to the list of dealers identified above that have occurred since December 31, 2022 are not reflected. You can ask your dealer about any payments it receives from Putnam Retail Management and its affiliates.

 

Other Payments. From time to time, Putnam Retail Management, at its expense, may provide additional compensation to dealers which sell or arrange for the sale of shares of the fund to the extent not prohibited by laws or the rules of any self-regulatory agency, such as FINRA. Such compensation provided by Putnam Retail Management may include financial assistance to dealers that enables Putnam Retail Management to participate in and/or present at dealer-sponsored conferences or seminars, sales or training programs for invited registered representatives and other dealer employees, dealer entertainment, and other dealer-sponsored events, and travel expenses, including lodging incurred by registered representatives and other employees in connection with prospecting, retention and due diligence trips. Putnam Retail Management makes payments for entertainment events it deems appropriate, subject to Putnam Retail Management’s internal guidelines and applicable law. These payments may vary upon the nature of the event.

November 30, 2023 II-19   
 

 

Sub-accounting payments. Certain dealers or other financial intermediaries also receive payments from Putnam Investor Services or its affiliates in recognition of sub-accounting or other services they provide to shareholders or plan participants who invest in the fund or other Putnam Funds through their retirement plan. The amount paid for these services varies depending on the share class selected and by dealer or other financial intermediary, and may also take into account the extent to which the services provided by the dealer replace services that Putnam Investor Services or its affiliates would otherwise have to provide. Payments in respect of class R3 and class R4 shares are generally made at an annual rate of up to 0.25% of a fund’s average net assets attributable to such class of shares held by a dealer or other financial intermediary. Payments in respect of class R5 shares are generally made at an annual rate of up to 0.10% of a fund’s average net assets attributable to class R5 shares held by a dealer or other financial intermediary, except that an annual rate of up to 0.07% of a fund’s average net assets attributable to class R5 shares held by a dealer or other financial intermediary applies to Putnam Dynamic Asset Allocation Conservative Fund, Putnam Global Income Trust, Putnam Income Fund and Putnam Ultra Short Duration Income Fund. There are no such payments in respect of class R6 shares. Payments for other classes vary. See the discussion under the heading “MANAGEMENT – Investor Servicing Agent” for more details.

 

You can ask your dealer for information about payments it receives from Putnam Retail Management or its affiliates and the services it provides for those payments.

 

MISCELLANEOUS INVESTMENTS, INVESTMENT PRACTICES AND RISKS

 

 

As noted in the prospectus, in addition to the main investment strategies and the principal risks described in the prospectus, the fund may employ other investment practices and may be subject to other risks, which are described below. Because the following is a combined description of investment strategies of all of the Putnam Funds, certain matters described herein may not apply to your fund (including those investment strategies identified under the heading Investment Strategies Applicable to Underlying Funds, which apply only to the underlying Putnam Management-sponsored exchange-traded funds in which the Putnam Sustainable Retirement Funds invest (“underlying funds”). Unless a strategy or policy described below is specifically prohibited or limited by the investment restrictions discussed in the fund’s prospectus or in this SAI, or by applicable law, the fund (and the underlying funds) may engage in each of the practices described below without limit, except as otherwise noted below. This section contains information on the investments and investment practices listed below. With respect to funds for which Putnam Investments Limited (“PIL”) and/or The Putnam Advisory Company, LLC (“PAC”) serve as sub-adviser (as described in the fund’s prospectus), references to Putnam Management in this section include PIL and PAC, as appropriate.

 

 

Bank Loans, Loan Participations, and Assignments Market Risk
Borrowing and Other Forms of Leverage Master Limited Partnerships (MLPs)
Collateralized Debt and Loan Obligations Money Market Instruments
Commodities and Commodity-Related Investments Mortgage-backed and Asset-backed Securities
Derivatives Options on Securities
ESG Considerations Preferred Stocks and Convertible Securities
Exchange-Traded Notes Private Placements and Restricted Securities
Floating Rate and Variable Rate Demand Notes Real Estate Investment Trusts (REITs)
Foreign Currency Transactions Redeemable Securities
Foreign Investments and Related Risks Repurchase Agreements
Forward Commitments and Dollar Rolls Securities Loans
Futures Contracts and Related Options Securities of Other Investment Companies
Hybrid Instruments Short Sales
Illiquid Investments Short-Term Trading
Inflation-Protected Securities Special Purpose Acquisition Companies
November 30, 2023 II-20   
 

 

Initial Public Offerings (IPOs) Structured Investments
Interfund Borrowing and Lending Swap Agreements
Inverse Floaters Tax-exempt Securities
Legal and Regulatory Risk Relating to Investment Strategy Temporary Defensive Strategies
London Interbank Offered Rate (LIBOR) Warrants
Lower-rated Securities Zero-coupon and Payment-in-kind Bonds

 

Bank Loans, Loan Participations, and Assignments

 

The fund may invest in bank loans. Bank loans are typically senior debt obligations of borrowers (issuers) and, as such, are considered to hold a senior position in the capital structure of the borrower. These may include loans that hold the most senior position, that hold an equal ranking with other senior debt, or loans that are, in the judgment of Putnam Management, in the category of senior debt of the borrower. This capital structure position generally gives the holders of these loans a priority claim on some or all of the borrower’s assets in the event of a default. Many loans are either partially or fully secured by the assets of the borrower, and some impose restrictive covenants which must be met by the borrower, although these covenants have become less common, and the terms of covenants have eroded, in recent years. Loans are typically made by a syndicate of banks, represented by an agent bank which has negotiated and structured the loan and which is responsible generally for collecting interest, principal, and other amounts from the borrower on its own behalf and on behalf of the other lending institutions in the syndicate, and for enforcing its and their other rights against the borrower. Each of the lending institutions, including the agent bank, lends to the borrower a portion of the total amount of the loan, and retains the corresponding interest in the loan.

 

By purchasing a loan, the fund acquires some or all of the interest of a bank or other lending institution in a loan to a particular borrower. The fund may acquire a loan interest directly by acting as a member of the original lending syndicate. The fund may also invest in a loan in other ways, including through novations, assignments and participating interests. In a novation, the fund assumes all of the rights of a lending institution in a loan, including the right to receive payments of principal and interest and other amounts directly from the borrower and to enforce its rights as a lender directly against the borrower. The fund assumes the position of a co-lender with other syndicate members. In an assignment, the fund purchases a portion of a lender’s interest in a loan. In this case, the fund may be required generally to rely upon the assigning bank to demand payment and enforce its rights against the borrower, but would otherwise be entitled to all of such bank’s rights in the loan. The fund may also purchase a participating interest in a portion of the rights of a lending institution in a loan. Participation interests typically result in a contractual relationship only with the lending institution, not with the borrower. In such case, the fund will be entitled to receive payments of principal, interest and premium, if any, but will not generally be entitled to enforce its rights directly against the agent bank or the borrower, and must rely for that purpose on the lending institution. In addition, with a participation interest, the fund generally will have no rights of set-off against the borrower, and the fund may not directly benefit from the collateral supporting the loan in which it has purchased the participation.

 

The fund’s ability to receive payments of principal and interest and other amounts in connection with loan interests held by it will depend primarily on the financial condition of the borrower (and, in some cases, the lending institution from which it purchases the loan). Adverse changes in the creditworthiness of the borrower may affect the borrower’s ability to pay principal and interest, and borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed. The value of collateral, if any, securing a loan can decline, or may be insufficient to meet the borrower’s obligations or difficult to liquidate. In addition, the fund’s access to collateral may be limited by bankruptcy or other insolvency laws. The failure by the fund to receive scheduled interest or principal payments on a loan would adversely affect the income of the fund and would likely reduce the value of its assets, which would be reflected in a reduction in the fund’s net asset value. Banks and other lending institutions generally perform a credit analysis of the borrower before originating a loan or participating in a lending syndicate. In selecting the loan interests in which the fund will invest, however, Putnam Management will not rely solely on that credit analysis, but will perform its own investment analysis of the borrowers. Putnam Management’s analysis may

November 30, 2023 II-21   
 

include consideration of the borrower’s financial strength and managerial experience, debt coverage, additional borrowing requirements or debt maturity schedules, changing financial conditions, and responsiveness to changes in business conditions and interest rates. Putnam Management will generally not have access to non-public information to which other investors in syndicated loans may have access. Because loans in which the fund may invest are not generally rated by independent credit rating agencies, a decision by the fund to invest in a particular loan will depend almost exclusively on Putnam Management’s, and the original lending institution’s, credit analysis of the borrower. Investments in loans may be of any quality, including “distressed” loans, and will be subject to the fund’s credit quality policy. The loans in which the fund may invest include those that pay fixed rates of interest and those that pay floating rates – i.e., rates that adjust periodically based on a known lending rate, such as a bank’s prime rate. To the extent an applicable interest rate is based on LIBOR, the fund will be exposed to certain additional risks. See “London Interbank Offered Rate (LIBOR)” below for more information.

 

The fund will in many cases be required to rely upon the lending institution from which it purchases the loan interest to collect and pass on to the fund such payments and to enforce the fund’s rights under the loan. This may subject the fund to greater delays, expenses, and risks than if the fund could enforce its rights directly against the borrower. For example, an insolvency, bankruptcy or reorganization of the lending institution may delay or prevent the fund from receiving principal, interest and other amounts with respect to the underlying loan. When the fund is required to rely upon a lending institution to pay to the fund principal, interest and other amounts received by it, Putnam Management will also evaluate the creditworthiness of the lending institution.

 

The borrower of a loan in which the fund holds an interest may, either at its own election or pursuant to terms of the loan documentation, prepay amounts of the loan from time to time. The rate of such prepayments may be affected by, among other things, general business and economic conditions, as well as the financial status of the borrower. Prepayment would cause the actual duration of a loan to be shorter than its stated maturity. There is no assurance that the fund will be able to reinvest the proceeds of any loan prepayment at the same interest rate or on the same terms as those of the original loan.

 

Corporate loans in which the fund may invest are generally made to finance internal growth, mergers, acquisitions, stock repurchases, leveraged buy-outs and other corporate activities. A significant portion of the corporate loan interests purchased by the fund may represent interests in loans made to finance highly leveraged corporate acquisitions, known as “leveraged buy-out” transactions, leveraged recapitalization loans and other types of acquisition financing. The highly leveraged capital structure of the borrowers in such transactions may make such loans especially vulnerable to adverse changes in economic or market conditions.

 

The market for bank loans may not be highly liquid. In addition, loan interests generally are subject to restrictions on transfer, and only limited opportunities may exist to sell such interests in secondary markets. As a result, the fund may be unable to sell loan interests at a time when it may otherwise be desirable to do so or may be able to sell them only at a price that is less than their fair market value. The fund may hold investments in loans for a very short period of time when opportunities to resell the investments that Putnam Management believes are attractive arise.

 

Certain of the loan interests acquired by the fund may involve letters of credit, revolving credit facilities, or other standby financing commitments obligating the fund to make additional loans upon demand by the borrower pursuant to the terms specified in the loan documentation. This obligation may have the effect of requiring the fund to increase its investment in a borrower at a time when it would not otherwise have done so. To the extent that the fund is committed to make additional loans under the loan documentation, it will at all times set aside on its books liquid assets in an amount sufficient to meet such commitments.

 

Certain of the loan interests acquired by the fund may also involve loans made in foreign (i.e., non-U.S.) currencies. The fund’s investment in such interests would involve the risks of currency fluctuations described in this SAI with respect to investments in the foreign securities.

 

November 30, 2023 II-22   
 

With respect to its management of investments in bank loans, Putnam Management will normally seek to avoid receiving material, non-public information (“Confidential Information”) about the issuers of bank loans being considered for acquisition by the fund or held in the fund’s portfolio. In many instances, borrowers may offer to furnish Confidential Information to prospective investors, and to holders, of the issuer’s loans. Putnam Management’s decision not to receive Confidential Information may place Putnam Management at a disadvantage relative to other investors in loans (which could have an adverse effect on the price the fund pays or receives when buying or selling loans). Also, in instances where holders of loans are asked to grant amendments, waivers or consent, Putnam Management’s ability to assess their significance or desirability may be adversely affected. For these and other reasons, it is possible that Putnam Management’s decision not to receive Confidential Information under normal circumstances could adversely affect the fund’s investment performance.

 

Notwithstanding its intention generally not to receive material, non-public information with respect to its management of investments in loans, Putnam Management may from time to time come into possession of material, non-public information about the issuers of loan interests that may be held in the fund’s portfolio. Possession of such information may in some instances occur despite Putnam Management’s efforts to avoid such possession, but in other instances Putnam Management may choose to receive such information (for example, in connection with participation in a creditors’ committee with respect to a financially distressed issuer). As, and to the extent, required by applicable law, Putnam Management’s ability to trade in these loan interests for the account of the fund could potentially be limited by its possession of such information. Such limitations on Putnam Management’s ability to trade could have an adverse effect on the fund by, for example, preventing the fund from selling a loan interest that is experiencing a material decline in value. In some instances, these trading restrictions could continue in effect for a substantial period of time.

 

In some instances, other accounts managed by Putnam Management or an affiliate may hold other securities issued by borrowers in whose loans the fund may hold an interest. These other securities may include, for example, debt securities that are subordinate to the loan interests held in the fund’s portfolio, convertible debt or common or preferred equity securities. In certain circumstances, such as if the credit quality of the issuer deteriorates, the interests of holders of these other securities may conflict with the interests of the holders of the issuer’s loans. In such cases, Putnam Management may owe conflicting fiduciary duties to the fund and other client accounts. Putnam Management will endeavor to carry out its obligations to all of its clients (including the fund) to the fullest extent possible, recognizing that in some cases certain clients may achieve a lower economic return, as a result of these conflicting client interests, than if Putnam Management’s client accounts collectively held only a single category of the issuer’s securities.

 

The settlement period (the period between the execution of the trade and the delivery of cash to the purchaser) for some bank loan transactions may be significantly longer than the settlement period for other investments, and in some cases longer than seven days. Requirements to obtain the consent of the borrower and/or agent can delay or impede the fund’s ability to sell bank loan interests and can adversely affect the price that can be obtained. It is possible that sale proceeds from bank loan transactions will not be available to meet redemption obligations, in which case the fund may be required to utilize other sources to meet the redemption obligations, such as cash balances or proceeds from the sale of its more liquid investments or investments with shorter settlement periods.

 

Some loan interests may not be considered “securities” for certain purposes under the federal securities laws, and, as a result, purchasers, such as the fund, may not be entitled to rely on the anti-fraud protections of the federal securities laws.

 

If legislation or federal or state regulators impose additional requirements or restrictions on the ability of financial institutions to make loans that are considered highly leveraged transactions, the availability of bank loans for investment by a fund may be adversely affected. In addition, such requirements or restrictions could reduce or eliminate sources of financing for certain borrowers. This would increase the risk of default. If legislation or federal or state regulators require financial institutions to dispose of bank loans that are

November 30, 2023 II-23   
 

considered highly leveraged transactions or subject such bank loans to increased regulatory scrutiny, financial institutions may determine to sell such bank loans. If a fund attempts to sell a bank loan at a time when a financial institution is engaging in such a sale, the price a fund could get for the bank loan may be adversely affected.

 

Borrowing and Other Forms of Leverage

 

The fund may borrow money to the extent permitted by its investment policies and restrictions and by Section 18 of the 1940 Act. When the fund borrows money, it must pay interest and other fees, which will reduce the fund’s returns if such costs exceed the returns on the portfolio securities purchased or retained with such borrowings. In addition, if the fund makes additional investments while borrowings are outstanding, this may be considered a form of leverage.

 

 

Each Putnam Fund (other than the Putnam Retirement Advantage Funds, Putnam Sustainable Retirement Funds, and Putnam Short Term Investment Fund) participates in a committed line of credit provided by State Street Bank and Trust Company and JP Morgan Chase Bank N.A. and an uncommitted line of credit provided by State Street Bank and Trust Company. These lines of credit are intended to provide a temporary source of cash in extraordinary or emergency circumstances, such as unexpected shareholder redemption requests. The fund may pay a commitment or other fee to maintain a line of credit, in addition to the stated interest rate. Each participating fund in the committed line of credit is required to maintain a specified asset coverage ratio.

 

 

Leveraging tends to exaggerate the effect of any increase or decrease in the value of the fund’s holding. When the fund borrows money or otherwise leverages its portfolio, the value of an investment in the fund will be more volatile and other investment risks will tend to be compounded. Leveraging also may require that the fund liquidate portfolio securities when it may not be advantageous to do so to satisfy its obligations. Leveraging may expose the fund to losses in excess of the amounts invested. Furthermore, if the fund uses leverage through purchasing derivative instruments, the fund has the risk that losses may exceed the net assets of the fund.

 

Collateralized Debt and Loan Obligations.

 

The fund may invest in collateralized debt obligations (“CDOs”). CDOs are types of asset-backed securitized instruments and include collateralized loan obligations (“CLOs”) and other similarly structured securities. Although certain CDOs may benefit from credit enhancement in the form of a senior-subordinate structure, overcollateralization or bond insurance, such enhancement may not always be present, and may fail to protect a fund against the risk of loss on default of the collateral. CDOs may charge management and administrative fees, which are in addition to those of a fund. CDOs may be less liquid than other types of securities.

 

The risks of an investment in a CDO largely depend on the type of underlying collateral securities and the tranche in which a fund invests. CDOs are subject to the typical risks associated with debt instruments and fixed income and/or asset-backed securities discussed elsewhere in the prospectus and in this SAI, including interest rate risk (which may be exacerbated if the interest rate payable on a structured financing changes based on multiples of changes in interest rates or inversely to changes in interest rates), prepayment risk, credit risk (including adverse credit spread moves), liquidity risk and market risk. CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments and one or more tranches may be subject to up to 100% loss of invested capital; (ii) the possibility that the quality of the collateral may decline in value or default, due to factors such as the availability of any credit enhancement, the level and timing of payments and recoveries on and the characteristics of the underlying receivables, loans, or other assets that are being securitized, remoteness of those assets from the originator or transferor, the adequacy of and ability to realize upon any related collateral, and the capability of the servicer of the securitized assets (particularly where the underlying collateral in a loan

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portfolio is not individually assessed prior to purchase); (iii) market and illiquidity risks affecting the price of a structured finance investment, if required to be sold, at the time of sale; and (iv) if the particular structured product is invested in a security in which a fund is also invested, this would tend to increase the fund’s overall exposure to the credit of the issuer of such securities, at least on an absolute, if not on a relative basis. In addition, due to the complex nature of a CDO, an investment in a CDO may not perform as expected. An investment in a CDO also is subject to the risk that the issuer and the investors may interpret the terms of the instrument differently, giving rise to disputes.

 

A CLO is an obligation of a trust or other special purpose vehicle typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. CLOs may charge management and other administrative fees. Payments of principal and interest are passed through to investors in a CLO and divided into several tranches of rated debt securities, which vary in risk and yield, and typically at least one tranche of unrated subordinated securities, which may be debt or equity (“CLO Securities”). CLO Securities generally receive some variation of principal and/or interest installments and, with the exception of certain subordinated securities, bear different interest rates. If there are defaults or if a CLO’s collateral otherwise underperforms, scheduled payments to senior tranches typically take priority over less senior tranches.

 

CLO Securities may be privately placed and thus subject to restrictions on transfer to meet securities law and other legal requirements. In the event that any fund does not satisfy certain of the applicable transfer restrictions at any time that it holds CLO Securities, it may be forced to sell the related CLO Securities and may suffer a loss on sale. CLO Securities may be considered illiquid investments in the event there is no secondary market for the CLO Securities. CLOs are also subject to the same risks associated with CDOs, as described above.

 

Commodities and Commodity-Related Investments

 

Some funds may gain exposure to commodity markets by investing in physical commodities or commodity-related instruments directly or indirectly. Such instruments include, but are not limited to, futures contracts, swaps, options, forward contracts, and structured notes and equities, debt securities, convertible securities, and warrants of issuers in commodity-related industries.

Commodity prices can be extremely volatile and may be directly or indirectly affected by many factors, including changes in overall market movements, real or perceived inflationary trends, commodity index volatility, changes in interest rates or currency exchange rates, population growth and changing demographics, war, and factors affecting a particular industry or commodity, such as drought, floods, or other weather conditions or natural disasters, livestock disease, trade embargoes, economic sanctions, competition from substitute products, transportation bottlenecks or shortages, insufficient storage capacity, fluctuations in supply and demand, tariffs, and international regulatory, political, and economic developments (e.g., regime changes and changes in economic activity levels). In addition, some commodities are subject to limited pricing flexibility because of supply and demand factors, and others are subject to broad price fluctuations as a result of the volatility of prices for certain raw materials and the instability of supplies of other materials. In addition, certain commodities (and related derivatives) are susceptible to negative prices due to factors such as supply surpluses caused by global events.

Actions of and changes in governments, and political and economic instability, in commodity-producing and -exporting countries may affect the production and marketing of commodities. In addition, commodity-related industries throughout the world are subject to greater political, environmental, and other governmental regulation than many other industries. Changes in government policies and the need for regulatory approvals may adversely affect the products and services of companies in the commodities industries. For example, the exploration, development, and distribution of coal, oil, and gas in the United States are subject to significant federal and state regulation, which may affect rates of return on coal, oil, and gas and the kinds of services that the federal and state governments may offer to companies in those industries. In addition, compliance with

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environmental and other safety regulations has caused many companies in commodity-related industries to incur production delays and significant costs. Government regulation also may impede the development of new technologies. The effect of future regulations affecting commodity-related industries cannot be predicted.

 

The value of commodity-related derivatives fluctuates based on changes in the values of the underlying commodity, commodity index, futures contract, or other economic variable to which they are related. Additionally, economic leverage will increase the volatility of these instruments as they may result in gains or losses greater than the amount invested in the instrument. See “Derivatives,” “Forward Commitments and Dollar Rolls,” “Futures Contracts and Related Options,” “Hybrid Instruments,” “Short Sales,” “Structured Investments,” “Swap Agreements” and “Warrants” herein for more information on the fund’s investments in derivatives, including commodity-related derivatives such as swap agreements, commodity futures contracts, and options on commodity futures contracts.

 

In order for a fund to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) the fund must derive at least 90 percent of its gross income each taxable year from certain sources of “qualifying income” specified in the Code. See the “Taxes” sections for more information.

 

Derivatives

 

Certain of the instruments in which the fund may invest, such as futures contracts, certain foreign currency transactions, options, warrants, hybrid instruments, forward contracts, swap agreements and structured investments, are considered to be “derivatives.” Derivatives are financial instruments whose value depends upon, or is derived from, the value or other attributes of one or more underlying investments, pools of investments, indexes or currencies. Investments in derivatives may be applied toward meeting a requirement to invest in a particular kind of investment if the derivatives have economic characteristics similar to that investment.

 

The value of derivatives may move in unexpected ways due to unanticipated market movements, the use of leverage, imperfect correlation between the derivative instrument and the reference asset, or other factors, especially in unusual market conditions, and volatility in the value of derivatives could adversely impact the fund’s returns, obligations and exposures. Derivatives may be difficult to value and may increase the fund’s transactions costs. The successful use of derivatives depends on the ability to manage these sophisticated instruments. There is no assurance that the fund’s use of derivative instruments will enable the fund to achieve its investment objective or that Putnam Management will be able to predict correctly the direction of securities prices, interest rates, currency exchange rates and other economic factors.

 

The fund’s use of derivatives may cause the fund to recognize higher amounts of short-term capital gains, which are generally taxed to individual shareholders at ordinary income tax rates, and higher amounts of ordinary income, and more generally may affect the timing, character and amount of a fund’s distributions to shareholders. The fund’s use of commodity-linked derivatives can be limited by the fund’s intention to qualify as a “regulated investment company” under the Code or bear adversely on the fund’s ability to so qualify, as discussed in “Taxes” below.

 

The fund’s use of certain derivatives may in some cases involve forms of financial leverage, which means they provide the fund with investment exposure greater than the value of the fund’s investment in the derivatives. The use of leverage involves risk and may increase the volatility of the fund’s net asset value.

 

In its use of derivatives, the fund may take both long positions (the values of which move in the same direction as the prices of the underlying investments, pools of investments, indexes or currencies), and short positions (the values of which move in the opposite direction from the prices of the underlying investments, pools of investments indexes or currencies). Short positions may involve greater risks than long positions, as the risk of loss may be theoretically unlimited (unlike a long position, in which the risk of loss may be limited to the

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amount invested). The fund may use derivatives that combine “long” and “short” positions in order to capture the difference between underlying investments, pools of investments, indexes or currencies.

 

Some derivatives transactions are required to be centrally cleared and others are available for voluntary clearing. A party to a cleared derivatives transaction is subject to the credit and counterparty risk of the clearing house and the clearing member through which it holds its cleared position. Credit risk of market participants with respect to derivatives that are centrally cleared is concentrated in a few clearing houses, and it is not clear how an insolvency proceeding of a clearing house would be conducted and what impact an insolvency of a clearing house would have on the financial system or on the fund’s ability to exercise remedies. Also, the fund is subject to risk if it enters into a derivatives transaction that is required to be cleared, and no clearing member is willing or able to clear the transaction on the fund’s behalf.

 

Some derivative contracts may be privately negotiated in the over-the-counter market. These contracts also involve exposure to credit risk, since contract performance depends in part on the financial condition of the counterparty, and counterparty risk, since the counterparty may be unable or unwilling to perform its obligations under the contract for reasons unrelated to its financial condition, such as operational issues, business interruptions or contract disputes. If a privately negotiated over-the-counter contract calls for payments by the fund, the fund must be prepared to make the payments when due. If a counterparty’s creditworthiness declines or the counterparty is otherwise unable or unwilling to perform its obligations under the contract, the fund may not receive payments owed under the contract, or the payments may be delayed and the value of the agreements with the counterparty may decline, potentially resulting in losses to the fund.

 

Derivatives also are subject to the risk that the fund may be delayed or prevented from recovering margin or other amounts deposited with a clearinghouse, futures commission merchant or other counterparty. If the fund has insufficient cash, it may have to sell securities to meet margin requirements at a time when it may be disadvantageous to do so.

 

Other risks arise from the potential inability to terminate or sell derivatives positions. Derivatives may be subject to liquidity risk due to the fund’s obligation to make payments of margin, collateral, or settlement payments to counterparties. A liquid secondary market may not always exist for the fund’s derivatives positions. In fact, certain over-the-counter instruments may be considered illiquid, and it may not be possible for the fund to liquidate a derivative position at an advantageous time or price, which may result in significant losses.

 

Legislation and regulation of derivatives in the U.S. and other countries, including margin, clearing, trading and reporting requirements, and leveraging and position limits, may make derivatives more costly and/or less liquid, limit the availability of certain types of derivatives, cause the Fund to change its use of derivatives, or otherwise adversely affect a Fund’s use of derivatives.

 

Further information about these instruments and the risks involved in their use is included elsewhere in the prospectus and in this SAI.

 

Combined Positions

 

A fund may purchase and write options in combination with each other, or in combination with futures or forward contracts, options on futures contracts, indexed securities, swap agreements or other derivative instruments, to adjust the risk and return characteristics of its overall position. For example, a fund may purchase a put option and write a call option on the same underlying instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.

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ESG Considerations

 

A fund may integrate environmental, social, or governance (“ESG”) considerations into its research process and/or investment decision-making. Putnam Management believes that ESG considerations, like other, more traditional subjects of investment analysis such as market position, growth prospects, and business strategy, have the potential to impact risk and returns. The relevance and materiality of ESG considerations in a fund’s process will differ from strategy to strategy, from sector to sector, and from portfolio manager to portfolio manager, and, in some cases (such as where Putnam Management lacks relevant ESG data), ESG considerations may not represent a material component of a fund’s investment process. Other than in the case of Putnam Sustainable Future Fund, Putnam Sustainable Leaders Fund and the Putnam Sustainable Retirement Funds, the consideration of ESG factors as part of a fund’s investment process does not mean that a fund pursues a specific “ESG” or “sustainable” investment strategy, and, depending on the fund, Putnam Management may sometimes make investment decisions other than on the basis of relevant ESG considerations.

 

Exchange-Traded Notes

 

The fund may invest in exchange-traded notes (“ETNs”). An ETN is a type of senior, unsecured, unsubordinated debt security whose returns are linked to the performance of a particular market index or other reference assets less applicable fees and expenses. ETNs are listed on an exchange and traded in the secondary market. Investors may hold the ETN until maturity, at which time the issuer is obligated to pay a return linked to the performance of the relevant market index less applicable fees and expenses. ETNs typically do not make periodic interest payments and principal typically is not protected.

 

The market value of an ETN may be influenced by, among other things, time to maturity, level of supply and demand of the ETN, economic, legal, political or geographic events that affect the reference assets, volatility and lack of liquidity in the reference assets, changes in the applicable interest rates, the current performance of the market index to which the ETN is linked, and the credit rating of the ETN issuer. The market value of an ETN may differ from the performance of the applicable market index, and there may be times when an ETN trades at a premium or discount. This difference in price may be due to the fact that the supply and demand in the market for ETNs at any point in time is not always identical to the supply and demand in the market for the securities underlying the market index that the ETN seeks to track. A change in the issuer’s credit rating may also impact the value of an ETN despite the underlying market index remaining unchanged.

 

ETNs are also subject to tax risk. No assurance can be given that the Internal Revenue Service (the “IRS”) will accept, or a court will uphold, how the fund characterizes and treats ETNs for tax purposes.

 

An ETN that is tied to a specific market index may not be able to replicate and maintain exactly the composition and relative weighting of securities, commodities or other components in the applicable market index. ETNs also incur certain expenses not incurred by their applicable market index, and the fund would bear a proportionate share of any fees and expenses borne by the ETN in which it invests.

 

The fund’s ability to sell its ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN may be listed on an exchange, the issuer may not be required to maintain the listing, and there can be no assurance that a secondary market will exist for an ETN. Some ETNs that use leverage in an effort to amplify the returns of an underlying market index can, at times, be relatively illiquid and may therefore be difficult to purchase or sell at a fair price. Leveraged ETNs may offer the potential for greater return, but the potential for loss and speed at which losses can be realized also are greater. The extent of the fund’s investment in commodity-linked ETNs, if any, is limited by tax considerations. For more information regarding the tax treatment of commodity-linked ETNs, please see “Taxes” below.

 

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ETNs are generally similar to structured investments and hybrid instruments. For discussion of these investments and the risks generally associated with them, see “Hybrid Instruments” and “Structured Investments” in this SAI.

 

Floating Rate and Variable Rate Demand Notes

 

The fund may purchase taxable or tax-exempt floating rate and variable rate demand notes for short-term cash management or other investment purposes. Floating rate and variable rate demand notes are debt instruments that provide for periodic adjustments in the interest rate. The interest rate on these instruments may be reset daily, weekly or on some other reset period and may have a floor or ceiling on interest rate changes. The interest rate of a floating rate instrument may be based on a known lending rate, such as a bank’s prime rate, and is reset whenever such rate is adjusted. The interest rate on a variable rate demand note is reset at specified intervals at a market rate. To the extent an applicable interest rate is based on LIBOR, the fund will be exposed to certain additional risks. See “London Interbank Offered Rate (LIBOR)” below for more information.

 

Interest rate adjustments are designed to help stabilize the instrument’s price or maintain a fixed spread to a predetermined benchmark. While this feature may protect against a decline in the instrument’s market price when interest rates or benchmark rates rise, it lowers the fund’s income when interest rates or benchmark rates fall. The fund’s income from its floating rate and variable rate investments also may increase if interest rates rise. Floating rate and variable rate obligations are less effective than fixed rate instruments at locking in a particular yield. Nevertheless, such obligations may fluctuate in value in response to interest rate changes if there is a delay between changes in market interest rates and the interest reset date for the obligation, or for other reasons.

 

The fund’s ability to receive payments of principal and interest and other amounts in connection with loans held by it will depend primarily on the financial condition of the issuer. The failure by the fund to receive scheduled interest or principal payments on a loan would adversely affect the income of the fund and would likely reduce the value of its assets, which would be reflected in a reduction in the fund’s NAV.

 

Floating rate and variable rate demand notes and bonds may have a stated maturity in excess of one year, but may have features that permit a holder to demand payment of principal plus accrued interest upon a specified number of days’ notice. Frequently, such obligations are secured by letters of credit or other credit support arrangements provided by banks. If these obligations are not secured by letters of credit or other credit support arrangements, the fund’s right to demand payment will be dependent on the ability of the issuer to pay principal and interest on demand. In addition, these obligations frequently are not rated by credit rating agencies and may involve heightened risk of default by the issuer. The issuer of such obligations normally has a corresponding right, after a given period, to prepay in its discretion the outstanding principal of the obligation plus accrued interest upon a specific number of days notice to the holders. There is no assurance that the fund will be able to reinvest the proceeds of any prepayment at the same interest rate or on the same terms as those of the original instrument.

 

The absence of an active secondary market for floating rate and variable rate demand notes could make it difficult for the fund to dispose of the instruments, and the fund could suffer a loss if the issuer defaults or during periods in which the fund is not entitled to exercise its demand rights. When a reliable trading market for the floating rate and variable rate instruments held by the fund does not exist and the fund may not demand payment of the principal amount of such instruments within seven days, the instruments may be deemed illiquid and therefore subject to the fund’s limitation on investments in illiquid securities.

 

Foreign Currency Transactions

The fund may engage in foreign currency exchange transactions, including purchasing and selling foreign currency, foreign currency options, foreign currency forward contracts and foreign currency futures contracts and related options. The fund may engage in these transactions for a variety of reasons, including to manage the exposure to foreign currencies inherent in the fund’s investments, to increase its returns, and to offset some

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of the costs of hedging transactions. Foreign currency transactions involve costs, and, if unsuccessful, may reduce the fund’s return.

Generally, the fund may engage in both “transaction hedging” and “position hedging” (e.g., the sale of forward currency with respect to portfolio security positions). The fund may also engage in foreign currency transactions for non-hedging purposes, subject to applicable law. When it engages in transaction hedging, the fund enters into foreign currency transactions with respect to specific receivables or payables, generally arising in connection with the fund’s purchase or sale of portfolio securities. The fund will engage in transaction hedging when it desires to “lock in” the U.S. dollar price of a security it has agreed to purchase or sell, or the U.S. dollar equivalent of a dividend or interest payment in a foreign currency. By transaction hedging, the fund will attempt to protect itself against a possible loss resulting from an adverse change in the relationship between the U.S. dollar and the applicable foreign currency during the period between the date on which the security is purchased or sold, or on which the dividend or interest payment is earned, and the date on which such payments are made or received. The fund may also engage in position hedging, in which the fund enters into foreign currency transactions on a particular currency with respect to portfolio positions denominated or quoted in that currency. By position hedging, the fund attempts to protect against a decline in the value relative to the U.S. dollar of the currencies in which its portfolio securities are denominated or quoted (or an increase in the value of the currency in which securities the fund intends to buy are denominated or quoted). While such a transaction would generally offset both positive and negative currency fluctuations, such currency transactions would not offset changes in security values caused by other factors.

The fund may purchase or sell a foreign currency on a spot (i.e., cash) basis at the prevailing spot rate in connection with the settlement of transactions in portfolio securities denominated in that foreign currency or for other hedging or non-hedging purposes. If conditions warrant, for hedging or non-hedging purposes, the fund may also enter into contracts to purchase or sell foreign currencies at a future date (“forward contracts”) and purchase and sell foreign currency futures contracts. The fund may also purchase or sell exchange-listed and over-the-counter call and put options on foreign currency futures contracts and on foreign currencies.

A foreign currency futures contract is a standardized exchange-traded contract for the future delivery of a specified amount of a foreign currency at a price set at the time of the contract. Foreign currency futures contracts traded in the United States are designed by and traded on exchanges regulated by the Commodity Futures Trading Commission (the “CFTC”), such as the Chicago Mercantile Exchange, and have margin requirements.

A foreign currency forward contract is a negotiated agreement to exchange currency at a future time, which may be any fixed number of days from the date of the contract as agreed by the parties, at a price set at the time of the contract. The contract price may be higher or lower than the current spot rate. In the case of a cancelable forward contract, the holder has the unilateral right to cancel the contract at maturity by paying a specified fee. Forward foreign currency exchange contracts differ from foreign currency futures contracts in certain respects. For example, the maturity date of a forward contract may be any fixed number of days from the date of the contract agreed upon by the parties, rather than a predetermined date in a given month. Forward contracts may be in any amount agreed upon by the parties rather than predetermined amounts. In addition, forward contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers, so that no intermediary is required. A forward contract generally has no deposit requirement, and no commissions are charged at any stage for trades.

At the maturity of a forward or futures contract, the fund either may accept or make delivery of the currency specified in the contract or otherwise settle the contract, or at or prior to maturity enter into a closing transaction involving the purchase or sale of an offsetting contract. Closing transactions with respect to forward contracts are usually effected with the currency trader who is a party to the original forward contract. Closing transactions with respect to futures contracts may be effected only on a commodities exchange or board of trade which provides a market in such contracts; a clearing corporation associated with the exchange assumes responsibility for closing out such contracts.

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Positions in foreign currency futures contracts and related options may be closed out only on an exchange or board of trade that provides a market in such contracts or options. Although the fund intends to purchase or sell foreign currency futures contracts and related options only on exchanges or boards of trade where there appears to be an active market, there is no assurance that a market on an exchange or board of trade will exist for any particular contract or at any particular time. In such event, it may not be possible to close a futures or related option position and, in the event of adverse price movements, the fund would continue to be required to make daily cash payments of variation margin on its futures positions.

The precise matching of the amounts of foreign currency exchange transactions and the value of the portfolio securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the dates the currency exchange transactions are entered into and the dates they mature. It is also impossible to forecast with precision the market value of portfolio securities at the expiration or maturity of a forward or futures contract. Accordingly, it may be necessary for the fund to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security or securities being hedged is less than the amount of foreign currency the fund is obligated to deliver and a decision is made to sell the security or securities and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security or securities if the market value of such security or securities exceeds the amount of foreign currency the fund is obligated to deliver.

As noted above, the fund may purchase or sell exchange-listed and over-the-counter call and put options on foreign currency futures contracts and on foreign currencies. A put option on a futures contract gives the fund the right to assume a short position in the futures contract until or at the expiration of the option. A put option on a currency gives the fund the right to sell the currency at an exercise price until or at the expiration of the option. A call option on a futures contract gives the fund the right to assume a long position in the futures contract until or at the expiration of the option. A call option on a currency gives the fund the right to purchase the currency at the exercise price until or at the expiration of the option.

Options on foreign currencies operate similarly to options on securities, and are traded primarily in the over-the-counter market, although options on foreign currencies are also listed on several exchanges. Options are traded not only on the currencies of individual nations, but also on the euro, the joint currency of most countries in the European Union.

The fund will only purchase or write foreign currency options when Putnam Management believes that a liquid secondary market exists for such options. There can be no assurance that a liquid secondary market will exist for a particular option at any specific time. Options on foreign currencies may be affected by all of those factors which influence foreign exchange rates and investments generally.

The fund’s currency hedging transactions may call for the delivery of one foreign currency in exchange for another foreign currency and may at times not involve currencies in which its portfolio securities are then denominated. Putnam Management will engage in such “cross hedging” activities when it believes that such transactions provide significant hedging opportunities for the fund. Cross hedging transactions by the fund involve the risk of imperfect correlation between changes in the values of the currencies to which such transactions relate and changes in the value of the currency or other asset or liability which is the subject of the hedge.

Transaction and position hedging do not eliminate fluctuations in the underlying prices of the securities that the fund owns or intends to purchase or sell. They simply establish a rate of exchange which one can achieve at some future point in time. Additionally, although these techniques tend to minimize the risk of loss due to a decline in the value of the hedged currency, they involve costs to the fund and tend to limit any potential gain which might result from the increase in value of such currency.

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The fund may also engage in non-hedging currency transactions. For example, Putnam Management may believe that exposure to a currency is in the fund’s best interest but that securities denominated in that currency are unattractive. In this situation, the fund may purchase a currency forward contract or option in order to increase its exposure to the currency.

In addition, the fund may seek to increase its current return or to offset some of the costs of hedging against fluctuations in current exchange rates by writing covered call options and covered put options on foreign currencies. The fund receives a premium from writing a call or put option, which increases the fund’s current return if the option expires unexercised or is closed out at a net profit. The fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction in which it purchases an option having the same terms as the option written.

The value of any currency, including U.S. dollars and foreign currencies, may be affected by complex political and economic factors applicable to the issuing country. In addition, the exchange rates of foreign currencies (and therefore the values of foreign currency options, forward contracts and futures contracts and related options) may be affected significantly, fixed, or supported directly or indirectly by U.S. and foreign government actions. Government intervention may increase risks involved in purchasing or selling foreign currency options, forward contracts and futures contracts and related options, since exchange rates may not be free to fluctuate in response to other market forces. The value of a foreign currency option, forward contract or futures contract or related option reflects the value of an exchange rate, which in turn reflects relative values of two currencies -- the U.S. dollar and the foreign currency in question. Although foreign exchange dealers do not charge a fee for currency conversion, they do realize a profit based on the difference (the “spread”) between prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the fund at one rate, while offering a lesser rate of exchange should the fund desire to resell that currency to the dealer. Because foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the exercise of foreign currency options, forward contracts and futures contracts, the fund may be disadvantaged by having to deal in an odd-lot market for the underlying foreign currencies in connection with options at prices that are less favorable than for round lots. Foreign governmental restrictions or taxes could result in adverse changes in the cost of acquiring or disposing of foreign currencies.

There is no systematic reporting of last sale information for foreign currencies and there is no regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Available quotation information is generally representative of very large round-lot transactions in the interbank market and thus may not reflect exchange rates for smaller odd-lot transactions (less than $1 million) where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market. To the extent that options markets are closed while the markets for the underlying currencies remain open, significant price and rate movements may take place in the underlying markets that cannot be reflected in the options markets.

Numerous regulatory changes related to foreign currency transactions are expected to occur over time and could materially and adversely affect the ability of the fund to enter into foreign currency transactions or could increase the cost of foreign currency transactions. In the future, additional foreign currency transactions may be required to be subject to initial as well as variation margin requirements. Foreign currency transactions that are not centrally cleared are subject to the creditworthiness of the counterparty to the foreign currency transaction (usually large commercial banks), and their values may decline substantially if the counterparty’s creditworthiness deteriorates. In a cleared foreign currency transaction, performance of the transaction will be effected by a central clearinghouse rather than by the original counterparty to the transaction. Foreign currency transactions that are centrally cleared will be subject to the creditworthiness of the clearing member and the clearing organization involved in the transaction.

The decision as to whether and to what extent the fund will engage in foreign currency exchange transactions will depend on a number of factors, including prevailing market conditions, the composition of the fund’s portfolio and the availability of suitable transactions. There can be no assurance that suitable foreign currency

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transactions will be available for the fund at any time or that the fund will engage in foreign currency exchange transactions at any time or under any circumstances even if suitable transactions are available to it.

Successful use of currency management strategies will depend on Putnam Management’s skill in analyzing currency values. Currency management strategies may increase the volatility of the fund’s returns and could result in significant losses to the fund if currencies do not perform as Putnam Management anticipates. There is no assurance that Putnam Management’s use of currency management strategies will be advantageous to the fund or that it will hedge at appropriate times.

 

Foreign Investments and Related Risks

 

Foreign securities are normally denominated and traded in foreign currencies. As a result, the value of the fund’s foreign investments and the value of its shares may be affected favorably or unfavorably by changes in currency exchange rates relative to the U.S. dollar. In addition, the fund is required to compute and distribute its income in U.S. dollars. Therefore, if the exchange rate for a foreign currency declines after a fund’s income has been earned and translated into U.S. dollars (but before payment), the fund could be required to liquidate portfolio securities to make such distributions. Similarly, if an exchange rate declines between the time a fund incurs expenses in U.S. dollars and the time such expenses are paid, the amount of such currency required to be converted into U.S. dollars in order to pay such expenses in U.S. dollars will be greater than the equivalent amount in any such currency of such expenses at the time they were incurred.

 

There may be less information publicly available about a foreign issuer than about a U.S. issuer, and foreign issuers may not be subject to accounting, auditing, custody, disclosure and financial reporting standards and practices comparable to those in the United States. In addition, there may be less (or less effective) regulation of exchanges, brokers and listed companies in some foreign countries. The securities of some foreign issuers are less liquid and at times more volatile than securities of comparable U.S. issuers. Foreign brokerage commissions, custodial expenses and other fees are also generally higher than in the United States.

 

Foreign settlement procedures and trade regulations may be more complex and involve certain risks (such as delay in payment or delivery of securities or in the recovery of the fund’s assets held abroad) and expenses not present in the settlement of investments in U.S. markets. For example, settlement of transactions involving foreign securities or foreign currencies (see below) may occur within a foreign country, and the fund may accept or make delivery of the underlying securities or currency in conformity with any applicable U.S. or foreign restrictions or regulations, and may pay fees, taxes or charges associated with such delivery. In addition, local market holidays or other factors may extend the time for settlement of purchases and sales of the Fund’s investments in securities that trade on foreign markets. Such investments may also involve the risk that an entity involved in the settlement may not meet its obligations. Extended settlement cycles or other delays in settlement may increase the fund’s liquidity risk and require the fund to employ alternative methods (e.g., through borrowings) to satisfy redemption requests during periods of large redemption activity in Fund shares.

 

In addition, foreign securities may be subject to the risk of nationalization or expropriation of assets, imposition of economic sanctions or embargoes (whether imposed by the United States or another country or other governmental or non-governmental organization), currency exchange controls, foreign withholding or other taxes or restrictions on the repatriation of foreign currency, confiscatory taxation, political, social or financial instability and diplomatic developments which could affect the value of the fund’s investments in certain foreign countries. Such actions could result in the devaluation of a country’s currency or a decline in the value and liquidity of securities of issuers in that country. In some cases (including in the case of sanctions), such actions also could result in a freeze on an issuer’s securities which would prevent the fund from selling securities it holds. Governments of many countries have exercised and continue to exercise substantial influence over many aspects of the private sector through the ownership or control of many companies, including some of the largest in these countries. As a result, government actions in the future could have a significant effect on economic conditions which may adversely affect prices of certain portfolio securities. There is also generally less government supervision and regulation of stock exchanges, brokers, and

November 30, 2023 II-33   
 

listed companies than in the United States. Moreover, foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. Dividends or interest on, or proceeds from the sale of, foreign securities may be subject to foreign withholding or other taxes, and special U.S. tax considerations may apply.

 

Note on MSCI indices. Due to the potential for foreign withholding taxes, MSCI, Inc. (MSCI) publishes two versions of its indices reflecting the reinvestment of dividends using two different methodologies: gross dividends and net dividends. While both versions reflect reinvested dividends, they differ with respect to the manner in which taxes associated with dividend payments are treated. In calculating the net dividends version, MSCI incorporates reinvested dividends applying the withholding tax rate applicable to foreign non-resident institutional investors that do not benefit from double taxation treaties. Putnam Management believes that the net dividends version of MSCI indices better reflects the returns U.S. investors might expect were they to invest directly in the component securities of an MSCI index.

 

Many foreign countries are heavily dependent upon exports, particularly to developed countries, and, accordingly, have been and may continue to be adversely affected by trade barriers, managed adjustments in relative currency values, and other protectionist measures imposed or negotiated by the United States and other countries with which they trade. These economies also have been and may continue to be negatively impacted by economic conditions in the United States and other trading partners, which can lower the demand for goods produced in those countries.

 

Legal remedies available to investors in certain foreign countries may be more limited than those available with respect to investments in the United States or in other foreign countries. The laws of some foreign countries may limit the fund’s ability to invest in securities of certain issuers organized under the laws of those foreign countries. These restrictions may take the form of prior governmental approval requirements, limits on the amount or type of securities held by foreigners and limits on the types of companies in which foreigners may invest (e.g., limits on investment in certain industries). Some countries also limit the investment of foreign persons to only a specific class of securities of an issuer that may have less advantageous terms or rights or preferences than securities of the issuer available for purchase by domestic parties (and such securities may be less liquid than other classes of securities of an issuer), or may directly limit foreign investors’ rights (such as voting rights). Although securities subject to such restrictions may be marketable abroad, they may be less liquid than foreign securities of the same class that are not subject to such restrictions. Foreign laws may also impact the availability of derivatives or hedging techniques relating to a foreign country’s government securities. In each of these situations, the funds’ ability to invest significantly in desired issuers, or the terms of such investments, could be negatively impacted as a result of the relevant legal restriction. Sanctions imposed by the United States government on other countries or persons or issuers operating in such countries could restrict the fund’s ability to buy affected securities or to sell any affected securities it has previously purchased, which may subject the fund to greater risk of loss in those securities. Foreign countries may have reporting requirements with respect to the ownership of securities, and those reporting requirements may be subject to interpretation or change without prior notice to investors. No assurance can be given that the fund will satisfy applicable foreign reporting requirements at all times.

 

For purposes of some foreign holding limits or disclosure thresholds, all positions owned or controlled by the same person or entity, even if in different accounts, may be aggregated for purposes of determining whether the applicable limits or thresholds have been exceeded. Thus, even if the fund does not intend to exceed applicable limits, it is possible that different clients managed by Putnam Management and its affiliates (including separate affiliates owned by Power Corporation of Canada outside the Putnam Investments group) may be aggregated for this purpose. These limits may adversely affect the fund’s ability to invest in the applicable security.

 

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The risks described above, including the risks of nationalization or expropriation of assets, typically are increased in connection with investments in developing countries, also known as “emerging markets.” For example, political and economic structures in these countries may be in their infancy and developing rapidly, and such countries may lack the social, political and economic stability characteristic of more developed countries. In such a dynamic environment, there can be no assurance that any or all of these capital markets will present viable investment opportunities for the fund. Certain of these countries have in the past failed to recognize private property rights and have at times nationalized and expropriated the assets of private companies. In such an event, it is possible that the fund could lose the entire value of its investments in the affected market. High rates of inflation or currency devaluations may adversely affect the economies and securities markets of such countries. In addition, the economies of certain developing or emerging market countries may be dependent on a single industry or limited group of industries, which may increase the risks described above and make those countries particularly vulnerable to global economic and market changes. Investments in emerging markets may be considered speculative.

 

The currencies of certain emerging market countries have experienced devaluations relative to the U.S. dollar, and future devaluations may adversely affect the value of assets denominated in such currencies. Many emerging market countries have experienced substantial, and in some periods extremely high, rates of inflation for many years, and future inflation may adversely affect the economies and securities markets of such countries. When debt and similar obligations issued by foreign issuers are denominated in a currency (e.g., the U.S. dollar or the Euro) other than the local currency of the issuer, the subsequent strengthening of the non-local currency against the local currency will generally increase the burden of repayment on the issuer and may increase significantly the risk of default by the issuer.

 

In addition, unanticipated political or social developments may affect the value of investments in emerging markets and the availability of additional investments in these markets. The small size, limited trading volume and relative inexperience of the securities markets in these countries may make investments in securities traded in emerging markets illiquid and more volatile than investments in securities traded in more developed countries, and the fund may be required to establish special custodial or other arrangements before making investments in securities traded in emerging markets. There may be little financial or accounting information available with respect to issuers of emerging market securities, and it may be difficult as a result to assess the value or prospects of an investment in such securities. In certain countries with emerging capital markets, reporting standards vary widely. As a result, traditional investment measurements used in the United States, such as price/earnings ratios, may not be applicable.

 

Practices in relation to settlement of securities transactions in emerging markets involve higher risks than those in developed markets, in part because the fund may need to use brokers and counterparties that are less well capitalized, and custody and registration of assets in some countries may be unreliable. The possibility of fraud, negligence, undue influence being exerted by the issuer, or refusal to recognize ownership exists in some emerging markets, and, along with other factors, could result in ownership registration being completely lost. The fund would absorb any loss resulting from such registration problems and may have no successful claim for compensation.

 

American Depositary Receipts (“ADRs”) as well as other “hybrid” forms of ADRs, including European Depositary Receipts (“EDRs”) and Global Depositary Receipts (“GDRs”), are certificates evidencing ownership of shares of a foreign issuer. These certificates are issued by depository banks and generally trade on an established market in the United States or elsewhere. The underlying shares are held in trust by a custodian bank or similar financial institution in the issuer’s home country. The depository bank may not have physical custody of the underlying securities at all times and may charge fees for various services, including forwarding dividends and interest and corporate actions. ADRs are alternatives to directly purchasing the underlying foreign securities in their national markets and currencies. However, ADRs continue to be subject to many of the risks associated with investing in foreign securities.

 

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Certain of the foregoing risks may also apply to some extent to securities of U.S. issuers that are denominated in foreign currencies or that are traded in foreign markets, or securities of U.S. issuers having significant foreign operations or other exposure to foreign markets. If the fund invests in securities issued by foreign issuers, the fund may be subject to the risks described above even if all of the fund’s investments are denominated in U.S. dollars, especially with respect to issuers whose revenues are principally earned in a foreign currency but whose debt obligations have been issued in U.S. dollars or other hard currencies.

 

Investing through Stock Connect. The fund may, directly or indirectly (through, for example, participation notes or other types of equity-linked notes), purchase shares in mainland China-based companies that trade on Chinese stock exchanges such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange (“China A-Shares”) through the Shanghai-Hong Kong Stock Connect (“Stock Connect”), or that may be available in the future through additional stock connect programs, a mutual market access program designed to, among other things, enable foreign investment in the People’s Republic of China (“PRC”) via brokers in Hong Kong.

 

There are significant risks inherent in investing in China A-Shares through Stock Connect. The underdeveloped state of PRC’s investment and banking systems subjects the settlement, clearing, and registration of China A-Shares transactions to heightened risks. Stock Connect can only operate when both PRC and Hong Kong markets are open for trading and when banking services are available in both markets on the corresponding settlement days. As such, if either or both markets are closed on a U.S. trading day, the fund may not be able to dispose of its China A-Shares in a timely manner, which could adversely affect the fund’s performance. Because Stock Connect is relatively new, its effects on the market for trading China A-shares are uncertain. In addition, the trading, settlement and information technology (“IT”) systems required to operate Stock Connect are relatively new and continuing to evolve. In the event that the relevant systems do not function properly, trading through Stock Connect could be disrupted.

 

PRC regulations require that, in order to sell its China A-Shares, the fund must pre-deliver the China A-Shares to a broker. If the China A-Shares are not in the broker’s possession before the market opens on the day of sale, the sell order will be rejected. This requirement could also limit the fund’s ability to dispose of its China A-Shares purchased through Stock Connect in a timely manner. Additionally, Stock Connect is subject to daily quota limitations on purchases of China A Shares. Once the daily quota is reached, orders to purchase additional China A-Shares through Stock Connect will be rejected. The fund’s investment in China A-Shares may only be traded through Stock Connect and is not otherwise transferable. Stock Connect utilizes an omnibus clearing structure, and the fund’s shares will be registered in its custodian’s name on the Central Clearing and Settlement System. This may limit the ability of Putnam Management to effectively manage the fund, and may expose the fund to the credit risk of its custodian or to greater risk of expropriation. Investment in China A-Shares through Stock Connect may be available only through a single broker that is an affiliate of the fund’s custodian, which may affect the quality of execution provided by such broker. Stock Connect restrictions could also limit the ability of the fund to sell its China A-Shares in a timely manner, or to sell them at all. Further, different fees, costs and taxes are imposed on foreign investors acquiring China A-Shares acquired through Stock Connect, and these fees, costs and taxes may be higher than comparable fees, costs and taxes imposed on owners of other securities providing similar investment exposure.

 

Stock Connect trades are settled in Renminbi (“RMB”), the official currency of PRC, and investors must have timely access to a reliable supply of RMB in Hong Kong, which cannot be guaranteed.

 

Investing through Bond Connect: Chinese debt instruments trade on the China Interbank Bond Market (“CIBM”) and may be purchased through a market access program that is designed to, among other things, enable foreign investment in the PRC (“Bond Connect”). There are significant risks inherent in investing in Chinese debt instruments, similar to the risks of investing in other fixed-income securities in emerging markets. The prices of debt instruments traded on the CIBM may fluctuate significantly due to low trading volume and potential lack of liquidity. The rules to access debt instruments that trade on the CIBM through Bond Connect are relatively new and subject to change, which may adversely affect the fund’s ability to invest in these instruments and to enforce its rights as a beneficial owner of these instruments. Trading through Bond

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Connect is subject to a number of restrictions that may affect the fund’s investments and returns. In addition, securities offered through Bond Connect may lose their eligibility for trading through the program at any time. If Bond Connect securities lose their eligibility for trading through the program, they may be sold but can no longer be purchased through Bond Connect. There can be no assurance as to the program’s continued existence or whether future developments regarding the program may restrict or adversely affect the fund’s investments or returns.

 

Investments made through Bond Connect are subject to order, clearance and settlement procedures that are relatively untested in China, which could pose risks to the fund. CIBM does not support all trading strategies (such as short selling) and investments in Chinese debt instruments that trade on the CIBM are subject to the risks of suspension of trading without cause or notice, trade failure or trade rejection and default of securities depositories and counterparties. Furthermore, Chinese debt instruments purchased via Bond Connect will be held via a book entry omnibus account in the name of the Hong Kong Monetary Authority Central Money Markets Unit (“CMU”) maintained with a China-based depository (either the China Central Depository & Clearing Co. (“CDCC”) or the Shanghai Clearing House (“SCH”)). The fund’s ownership interest in these Chinese debt instruments will not be reflected directly in book entry with CSDCC or SCH and will instead only be reflected on the books of the fund’s Hong Kong sub-custodian. Therefore, the fund’s ability to enforce its rights as a bondholder may depend on CMU’s ability or willingness as record-holder of the bonds to enforce the fund’s rights as a bondholder. Additionally, the omnibus manner in which Chinese debt instruments are held could expose the fund to the credit risk of the relevant securities depositories and the fund’s Hong Kong sub-custodian. While the fund holds a beneficial interest in the instruments it acquires through Bond Connect, the mechanisms that beneficial owners may use to enforce their rights are untested. In addition, courts in China have limited experience in applying the concept of beneficial ownership. Moreover, Chinese debt instruments acquired through Bond Connect generally may not be sold, purchased or otherwise transferred other than through Bond Connect in accordance with applicable rules.

 

The fund’s investments in Chinese debt instruments acquired through Bond Connect are generally subject to a number of regulations and restrictions, including Chinese securities regulations and listing rules, loss recovery limitations and disclosure of interest reporting obligations. The fund will not benefit from access to Hong Kong investor compensation funds, which are set up to protect against defaults of trades, when investing through Bond Connect.

 

Bond Connect can only operate when both China and Hong Kong markets are open for trading and when banking services are available in both markets on the corresponding settlement days. In addition, the trading, settlement and IT systems required for non-Chinese investors in Bond Connect are relatively new. In the event of systems malfunctions or extreme market conditions, trading via Bond Connect could be disrupted. The rules applicable to taxation of Chinese debt instruments acquired through Bond Connect remain subject to further clarification. Uncertainties in the Chinese tax rules governing taxation of income and gains from investments via Bond Connect could result in unexpected tax liabilities for the fund, which may negatively affect investment returns for shareholder.

 

Bond Connect trades are settled in RMB, and investors must have timely access to a reliable supply of RMB in Hong Kong, which cannot be guaranteed.

 

Forward Commitments and Dollar Rolls

 

The fund may enter into contracts to purchase securities for a fixed price at a future date beyond customary settlement time (“forward commitments”). In the case of to-be-announced (“TBA”) purchase commitments, the unit price and the estimated principal amount are established when the fund enters into a contract, with the actual principal amount being within a specified range of the estimate. Forward commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of decline in the value of the fund’s other assets. Where such purchases are made through dealers, the fund relies on the dealer to consummate the

November 30, 2023 II-37   
 

sale. The dealer’s failure to do so may result in the loss to the fund of an advantageous yield or price. Although the fund will generally enter into forward commitments with the intention of acquiring securities for its portfolio or for delivery pursuant to options contracts it has entered into, the fund may dispose of a commitment prior to settlement if Putnam Management deems it appropriate to do so. The fund may realize short-term profits or losses upon the sale of forward commitments.

 

The fund may enter into TBA sale commitments to hedge its portfolio positions, to sell securities it owns under delayed delivery arrangements, or to take a short position in mortgage-backed securities. Proceeds of TBA sale commitments are not received until the contractual settlement date. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, the fund realizes a gain or loss on the commitment without regard to any unrealized gain or loss on the underlying security. If the fund delivers securities under the commitment, the fund realizes a gain or loss from the sale of the securities based upon the unit price established at the date the commitment was entered into.

 

The fund may enter into dollar roll transactions (generally using TBAs) in which it sells a fixed income security for delivery in the current month and simultaneously contracts to purchase similar securities (for example, same type, coupon and maturity) at an agreed upon future time. By engaging in a dollar roll transaction, the fund foregoes principal and interest paid on the security that is sold while the dollar roll is outstanding, but receives the difference between the current sales price and the forward price for the future purchase. In addition, the fund may reinvest the cash proceeds of the sale while the dollar roll is outstanding in an effort to enhance returns. The reinvestment of such proceeds may be considered a form of investment leverage and may increase the fund’s risk and volatility. If the income and capital gains from the investment of the cash from the initial sale do not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the dollar roll, the use of this technique will result in a lower return than would have been realized without the use of the dollar rolls. The fund accounts for dollar rolls as purchases and sales.

 

Purchases of securities on a forward commitment basis may involve more risk than other types of purchases. The obligation to purchase securities on a specified future date involves the risk that the market value of the securities that the fund is obligated to purchase may decline below the purchase price. In addition, when entering into a forward commitment transaction, the fund will rely on the other party to consummate the transaction. In the event that the other party files for bankruptcy, becomes insolvent or defaults on its obligation, the fund may be adversely affected. For example, the other party’s failure to complete the transaction may result in the loss to the fund of an advantageous yield or price. See also "Legal and Regulatory Risks Relating to Investment Strategy" below.

 

Futures Contracts and Related Options

 

Subject to applicable law, the fund may invest in futures contracts and related options for hedging and non-hedging purposes, such as to manage the effective duration of the fund’s portfolio or as a substitute for direct investment. A futures contract sale creates an obligation by the seller to sell the type of financial instrument or other asset called for in the contract in a specified month for a stated price. A futures contract purchase creates an obligation by the purchaser to buy the type of financial instrument or other asset called for in the contract in a specified month at a stated price. The specific assets bought or sold, respectively, at settlement date may not be determined until on or near that date. The determination is made in accordance with the rules of the exchange on which the futures contract sale or purchase was made. Futures contracts are traded in the United States only on commodity exchanges or boards of trade -- known as “contract markets” -- approved for such trading by the CFTC, and must be executed through a futures commission merchant (brokerage firm) which is a member of the relevant contract market. Examples of futures contracts that the fund may use include, without limitation, U.S. Treasury futures, index futures, corporate or municipal bond futures, U.S. Government agency futures, interest rate futures, commodities futures, futures contracts on sovereign debt, and Eurodollar futures. In addition, as described elsewhere in this SAI, the fund may use foreign currency futures.

 

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The value of a futures contract tends to increase and decrease in tandem with the value of its underlying asset. Therefore, purchasing futures contracts will tend to increase the fund’s exposure to positive and negative price fluctuations in the underlying asset, much as if it had purchased the underlying asset directly. When the fund sells a futures contract, by contrast, the value of its futures position will tend to move in a direction contrary to the market for the underlying asset. Selling futures contracts, therefore, will tend to offset both positive and negative market price changes, much as if the underlying asset had been sold.

 

When the fund enters into a futures contract, the fund is required to deliver to the futures broker an amount of liquid assets known as “initial margin.” The nature of initial margin in futures transactions is different from that of margin in security transactions in that futures contract margin does not involve the borrowing of funds to finance the transactions. Rather, initial margin is similar to a performance bond or good faith deposit in that it is returned to the fund upon termination of the futures contract, assuming all contractual obligations have been satisfied. Initial margin requirements are established by the exchanges on which futures contracts trade and by the fund’s broker and may, from time to time, change. Futures contracts also involve brokerage costs. Subsequent payments, called “variation margin” or “maintenance margin,” to and from the broker are made on a daily basis as the value of the futures contract fluctuates, a process known as “marking to the market.” For example, if the fund purchases a futures contract on an underlying security and the price of that security rises, the value of the futures contract will increase and the fund will receive from the broker a variation margin payment based on that increase in value. Conversely, if the price of the underlying security declines, the value of the futures contract will decrease and the fund will be required to make a variation margin payment to the broker based on that decrease in value. Upon the closing of a futures contract, the fund will receive or be required to pay additional cash based on a final determinations of variation margin.

 

Although futures contracts by their terms may call for actual delivery or acceptance of commodities or securities, in most cases the contracts are closed out before the settlement date without the making or taking of delivery. Many futures contracts, such as index futures and futures based on the volatility or variance experienced by an index do not call for actual delivery or acceptance of commodities or securities, but instead require cash settlement of the futures contract on the settlement date specified in the contract. Such contracts may also be closed out before the settlement date. The fund may close some or all of its futures positions at any time prior to their expiration. Closing out a futures contract sale is effected by purchasing a futures contract for the same aggregate amount of the specific type of financial instrument or commodity with the same settlement date. If the price of the initial sale of the futures contract exceeds the price of the offsetting purchase, the seller is paid the difference and realizes a gain. Conversely, if the price of the offsetting purchase exceeds the price of the initial sale, the seller realizes a loss. If the fund is unable to enter into a closing transaction, the amount of the fund’s theoretical loss is unlimited. The closing out of a futures contract purchase is effected by the purchaser’s entering into a futures contract sale. If the offsetting sale price exceeds the purchase price, the purchaser realizes a gain, and if the purchase price exceeds the offsetting sale price, he realizes a loss. Such closing transactions involve additional commission costs.

 

A portion of any capital gains from futures contracts in which the fund invests directly will be treated for federal income tax purposes as short-term capital gains that, when distributed to taxable shareholders, will be taxable as ordinary income. The fund’s investments in futures may cause the fund to recognize income without receiving cash with which to make the distributions necessary to qualify and be eligible for treatment as a regulated investment company and avoid a fund-level tax. The fund may therefore need to liquidate other investments, including when it is not advantageous to do so, to meet its distribution requirement.

 

With respect to each Putnam Fund, Putnam Management has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act ( “CEA”) pursuant to Rule 4.5 under the CEA (the “exclusion”) promulgated by the CFTC. Accordingly, Putnam Management (with respect to these funds) is not subject to registration or regulation as a “commodity pool operator” under the CEA. To remain eligible for the exclusion, each of these funds will be limited in its ability to use certain financial instruments regulated under the CEA (“commodity interests”), including futures, options on futures and certain swaps. In the event that Putnam Management believes that a fund’s investments in commodity interests exceed the

November 30, 2023 II-39   
 

thresholds set forth in the exclusion, Putnam Management may be required to register as a “commodity pool operator” with the CFTC with respect to that fund. Putnam Management’s eligibility to claim the exclusion with respect to a fund will be based upon, among other things, the level and scope of the fund’s investment in commodity interests, the purposes of such investments and the manner in which the fund holds out its use of commodity interests. A fund’s ability to invest in commodity interests is limited by Putnam Management’s intention to operate the fund in a manner that would permit Putnam Management to continue to claim the exclusion under Rule 4.5, which may adversely affect the fund’s total return. In the event the fund’s investments in commodity interests require Putnam Management to register with the CFTC as a commodity pool operator with respect to a fund, the fund’s expenses may increase, adversely affecting that fund’s total return, and the commodity pool operators (“CPOs”) of any shareholders that are pooled investment vehicles may be unable to rely on certain CPO registration exemptions.

 

Index futures. An index futures contract is a contract to buy or sell units of an index at a specified future date at a price agreed upon when the contract is made. Entering into a contract to buy units of an index is commonly referred to as buying or purchasing a contract or holding a long position in the index. Entering into a contract to sell units of an index is commonly referred to as selling a contract or holding a short position. A unit is the current value of the index. The fund may enter into stock index futures contracts, debt index futures contracts, or other index futures contracts appropriate to its objective(s). The fund may also purchase and sell options on index futures contracts.

 

For example, the Standard & Poor’s 500 Composite Stock Price Index (“S&P 500”) is composed of 500 selected U.S. common stocks. The S&P 500 assigns relative weightings to the common stocks that comprise the index, and the value of the index fluctuates with changes in the market values of those common stocks. The stock index futures contract specifies that no delivery of the actual stocks making up the index will take place. Instead, settlement in cash must occur upon the termination of the contract, with the settlement being the difference between the contract price and the actual level of the stock index at the expiration of the contract. For example, if the fund enters into a futures contract to buy 250 units of the S&P 500 at a specified future date at a contract price of $150 and the S&P 500 is at $154 on that future date, the fund will gain $1,000 (250 units x gain of $4). If the fund enters into a futures contract to sell 250 units of the stock index at a specified future date at a contract price of $150 and the S&P 500 is at $152 on that future date, the fund will lose $500 (250 units x loss of $2).

 

Options on futures contracts. The fund may purchase and write call and put options on futures contracts it may buy or sell and enter into closing transactions with respect to such options to terminate existing positions. Options on futures contracts possess many of the same characteristics as options on securities and indices. An option on a futures contract gives the holder the right, in return for the premium paid to assume a long position (call) or short position (put) in a futures contract at a specified exercise price at any time during the period of the option (in the case of an American-style option) or on the expiration date (in the case of European-style option). After selling a put or call option on a futures contract, the fund will be required to deposit initial margin and variation margin as described above for futures contracts.

 

When a call option on a futures contract is exercised, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. When a put option on a futures contract is exercised, the holder acquires a short position in the futures contract and the writer is assigned the opposite long position. When an option is exercised, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer’s futures margin account, which represents the amount by which the market price of the futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the future. If an option is exercised on the last trading day prior to its expiration date, the settlement will be made entirely in cash equal to the difference between the exercise price of the option and the closing level of the underlying asset on which the future is based on the expiration date. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid. The holder or writer of an option on a futures contract may

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terminate its position by selling or purchasing an offsetting option on the same financial instrument (subject to the availability of a liquid market).

 

The fund may use options on futures contracts in lieu of purchasing or writing options directly on the underlying assets or purchasing and writing the underlying futures contracts. For example, to hedge against a possible decrease in the value of its portfolio securities, the fund may purchase put options or write call options on futures contracts rather than selling futures contracts. Similarly, the fund may purchase call options or write put options on futures contracts as a substitute for the purchase of futures contracts to hedge against a possible increase in the price of securities that the fund expects to purchase. Such options generally operate in the same manner, and involve the same risks, as options purchased or written directly on the underlying investments. As an alternative to purchasing or writing call and put options on index futures, the fund may purchase and write call and put options on the underlying indices themselves. Such options would be used in a manner identical to the use of options on index futures.

 

Compared to the purchase or sale of futures contracts, the purchase of call or put options on futures contracts generally involves less potential risk to the fund because the maximum amount at risk is the premium paid for the options (plus transaction costs). However, there may be circumstances when the purchase of a call or put option on a futures contract would result in a loss to the fund when the purchase or sale of a futures contract would not (or would result in a smaller loss), such as when there is no movement in the prices of the hedged investments.

 

The writing of an option on a futures contract involves risks similar to those relating to the purchase or sale of futures contracts (which are described below). In addition, by writing a call option, the fund becomes obligated to sell a futures contract if the option is exercised, which may have a value higher than the exercise price. Similarly, by writing a put option, the fund becomes obligated to purchase a futures contract if the option is exercised, which may have a value lower than the exercise price. The writing of an option on a futures contract generates a premium, which may partially offset an increase (in the case of a written call option) or decrease (in the case of a written put option) in the value of the underlying futures contract. However, the loss incurred by the fund in writing options on futures contracts is potentially unlimited and may exceed the amount of the premium received. The fund will also incur transaction costs in connection with the writing of options on futures contracts.

 

Risks of transactions in futures contracts and related options. Successful use of futures contracts and options on futures contracts by the fund is subject to Putnam Management’s ability to predict movements in various factors affecting securities markets (or markets for other assets), including interest rates and market movements, and, in the case of index futures and futures based on the volatility or variance experienced by an index, Putnam Management’s ability to predict the future level of the index or the future volatility or variance experienced by an index. For example, it is possible that, where the fund has sold futures contracts to hedge its portfolio against a decline in the market, the index on which the futures contracts are written may advance and the value of securities held in the fund’s portfolio, which may differ from those that comprise the index, may decline. If this occurred, the fund would lose money on the futures contracts and experience a decline in value in its portfolio securities. It is also possible that, if the fund has hedged against the possibility of a decline in the market adversely affecting securities held in its portfolio and securities prices increase instead, the fund will lose part or all of the benefit of the increased value of those securities it has hedged because it will have offsetting losses in its futures positions.

 

The use of futures and options strategies also involves the risk of imperfect correlation among movements in the prices of the securities or other assets underlying the futures contracts and options purchased and sold by the fund, of the options and futures contracts themselves, and, in the case of hedging transactions, of the securities which are the subject of a hedge. In addition to the possibility that there may be an imperfect correlation, or no correlation at all, between movements in the futures contracts used by the fund and the portion of the portfolio being hedged, the prices of futures contracts may not correlate perfectly with movements in the underlying asset due to certain market distortions. First, all participants in the futures market

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are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the expected relationship between the underlying asset and futures markets. Second, margin requirements in the futures market are less onerous than margin requirements in the securities market, and as a result the futures market may attract more speculators than the securities market does. Increased participation by speculators in the futures market may also cause temporary price distortions. Due to the possibility of price distortions in the futures market and also because of the imperfect correlation between movements in the underlying asset and movements in the prices of related futures, even a correct forecast of general market trends by Putnam Management may still not result in a profitable position. In addition, in the case of hedging transactions, an incorrect correlation could result in a loss on both the hedged securities in the fund and the hedging transactions, so that the portfolio return might have been greater had hedging not been attempted.

 

The risk of a position in a futures contract may be very large compared to the relatively low level of margin a fund is required to deposit. In many cases, a relatively small price movement in a futures contract may result in immediate and substantial loss or gain to the fund relative to the size of a required margin deposit. In addition, if the fund has insufficient cash, it may have to sell securities to meet daily variation margin requirements at a time when it is disadvantageous to do so. The fund will be required to post margin with its futures commission merchant in connection with its transactions in futures contracts. In the event of an insolvency of the futures commission merchant, the fund may not be able to recover all (or any) of the margin it has posted with the futures commission merchant, or to realize the value of any increase in the price of its positions. The fund also may be delayed or prevented from recovering margin or other amounts deposited with a futures commission merchant or futures clearinghouse.

 

There is no assurance that higher than anticipated trading activity or other unforeseen events might not, at times result in the institution by