Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
| | | |
| | Valuation inputs |
| Investments in securities: | Level 1 | Level 2 | Level 3 |
| Common stocks*: | | | |
| Basic materials | $124,940 | $— | $— |
| Capital goods | 335,228 | — | — |
| Communication services | 154,581 | — | — |
| Conglomerates | 35,258 | — | — |
| Consumer cyclicals | 762,381 | — | — |
| Consumer staples | 374,797 | — | — |
| Energy | 150,313 | — | — |
| Financials | 754,290 | — | — |
| Health care | 691,059 | — | — |
| Technology | 1,898,941 | — | — |
| Transportation | 84,312 | — | — |
| Utilities and power | 137,117 | — | — |
| Total common stocks | 5,503,217 | — | — |
| Investment companies | 28,286 | — | — |
| Short-term investments | — | 12,440,517 | — |
| Totals by level | $5,531,503 | $12,440,517 | $— |
|
| | | |
| | Valuation inputs |
| Other financial instruments: | Level 1 | Level 2 | Level 3 |
| Futures contracts | $(6,793) | $— | $— |
| Interest rate swap contracts | — | 4,330 | — |
| Total return swap contracts | — | (169,569) | — |
| Credit default contracts | — | 11,980 | — |
| Totals by level | $(6,793) | $(153,259) | $— |
| * Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation. |
The accompanying notes are an integral part of these financial statements.
| |
26 Income Strategies Portfolio |
Statement of assets and liabilities 2/28/22 (Unaudited)
| |
| ASSETS | |
| Investment in securities, at value (Note 1): | |
| Unaffiliated issuers (identified cost $7,415,809) | $7,631,020 |
| Affiliated issuers (identified cost $1,250,000) (Note 5) | 1,250,000 |
| Repurchase agreements (identified cost $9,091,000) | 9,091,000 |
| Cash | 3,502 |
| Dividends, interest and other receivables | 26,846 |
| Receivable for shares of the fund sold | 54 |
| Receivable for investments sold | 8,224 |
| Receivable from Manager (Note 2) | 16,090 |
| Receivable for variation margin on futures contracts (Note 1) | 2,950 |
| Receivable for variation margin on centrally cleared swap contracts (Note 1) | 9,629 |
| Total assets | 18,039,315 |
| |
| LIABILITIES | |
| Payable for investments purchased | 31,332 |
| Payable for shares of the fund repurchased | 16,165 |
| Payable for custodian fees (Note 2) | 7,185 |
| Payable for Trustee compensation and expenses (Note 2) | 21 |
| Payable for administrative services (Note 2) | 46 |
| Payable for auditing and tax fees | 34,430 |
| Payable for variation margin on futures contracts (Note 1) | 16,328 |
| Payable for variation margin on centrally cleared swap contracts (Note 1) | 12,600 |
| Unrealized depreciation on OTC swap contracts (Note 1) | 131,108 |
| Other accrued expenses | 5,003 |
| Total liabilities | 254,218 |
| | |
| Net assets | $17,785,097 |
| |
| REPRESENTED BY | |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $17,780,717 |
| Total distributable earnings (Note 1) | 4,380 |
| Total — Representing net assets applicable to capital shares outstanding | $17,785,097 |
| |
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| Net asset value, offering price and redemption price per fund share | |
| ($17,785,097 divided by 1,705,497 shares) | $10.43 |
The accompanying notes are an integral part of these financial statements.
|
| Income Strategies Portfolio 27 |
Statement of operations Six months ended 2/28/22 (Unaudited)
| |
| INVESTMENT INCOME | |
| Dividends | $41,350 |
| Interest (including interest income of $3,766 from investments in affiliated issuers) (Note 5) | 5,827 |
| Securities lending (net of expenses) (Notes 1 and 5) | 12 |
| Total investment income | 47,189 |
| |
| EXPENSES | |
| Custodian fees (Note 2) | 8,378 |
| Trustee compensation and expenses (Note 2) | 343 |
| Administrative services (Note 2) | 307 |
| Reports to shareholders | 4,135 |
| Auditing and tax fees | 34,419 |
| Other | 1,266 |
| Fees waived and reimbursed by Manager (Note 2) | (30,335) |
| Total expenses | 18,513 |
| Expense reduction (Note 2) | (199) |
| Net expenses | 18,314 |
| | |
| Net investment income | 28,875 |
| |
| REALIZED AND UNREALIZED GAIN (LOSS) | |
| Net realized gain (loss) on: | |
| Securities from unaffiliated issuers (Notes 1 and 3) | 292,377 |
| Futures contracts (Note 1) | 45,166 |
| Swap contracts (Note 1) | (426,707) |
| Total net realized loss | (89,164) |
| Change in net unrealized appreciation (depreciation) on: | |
| Securities from unaffiliated issuers | (593,948) |
| Futures contracts | 35,592 |
| Swap contracts | (141,471) |
| Total change in net unrealized depreciation | (699,827) |
| | |
| Net loss on investments | (788,991) |
| |
| Net decrease in net assets resulting from operations | $(760,116) |
The accompanying notes are an integral part of these financial statements.
|
| 28 Income Strategies Portfolio |
Statement of changes in net assets
| | |
| INCREASE IN NET ASSETS | Six months ended 2/28/22* | Year ended 8/30/21 |
| Operations | | |
| Net investment income | $28,875 | $56,957 |
| Net realized gain (loss) on investments | (89,164) | 772,181 |
| Change in net unrealized appreciation (depreciation) | | |
| of investments | (699,827) | 486,243 |
| Net increase (decrease) in net assets resulting | | |
| from operations | (760,116) | 1,315,381 |
| Distributions to shareholders (Note 1): | | |
| From ordinary income | | |
| Net investment income | (109,771) | (298,428) |
| Net realized short-term gain on investments | (501,348) | — |
| From net realized long-term gain on investments | (179,182) | — |
| Increase from capital share transactions (Note 4) | 4,013,410 | 2,597,307 |
| Total increase in net assets | 2,462,993 | 3,614,260 |
| |
| NET ASSETS | | |
| Beginning of period | 15,322,104 | 11,707,844 |
| End of period | $17,785,097 | $15,322,104 |
* Unaudited.
The accompanying notes are an integral part of these financial statements.
|
| Income Strategies Portfolio 29 |
Financial highlights (For a common share outstanding throughout the period)
| | | | | | | | | | | | | |
| | INVESTMENT OPERATIONS | | | LESS DISTRIBUTIONS | | | | RATIOS AND SUPPLEMENTAL DATA | |
| | | | | | | | | | | | Ratio | Ratio of net | |
| | Net asset | | Net realized | | | | | | | | of expenses | investment | |
| | value, | | and unrealized | Total from | From net | From | | Net asset | Total return | Net assets, | to average | income (loss) | Portfolio |
| | beginning | Net investment | gain (loss) | investment | investment | net realized gain | Total | value, end | at net asset | end of period | net assets | to average | turnover |
| Period ended | of period | income (loss)a | on investments | operations | income | on investments | distributions | of period | value (%)b | (in thousands) | (%)c,d | net assets (%)d | (%) |
| Fund | | | | | | | | | | | | | |
| February 28, 2022** | $11.28 | .02 | (.43) | (.41) | (.06) | (.38) | (.44) | $10.43 | (3.79)* | $17,785 | .10* | .16* | 65* |
| August 31, 2021 | 10.49 | .04 | .96 | 1.00 | (.21) | — | (.21) | 11.28 | 9.68 | 15,322 | .20 | .40 | 144 |
| August 31, 2020† | 10.00 | .05 | .44 | .49 | —e | — | —e | 10.49 | 4.94* | 11,708 | .13* | .53* | 54* |
* Not annualized.
** Unaudited.
† For the period December 31, 2019 (commencement of operations) to August 31, 2020.
a Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.
b Total return assumes dividend reinvestment.
c Includes amounts paid through expense offset arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.
d Reflects an involuntary contractual expense limitation in effect during the period. As a result of such limitation, the expenses of the fund reflect a reduction of the following amounts (Note 2):
| | | | |
| | Percentage of average net assets | | | |
| February 28, 2022 | 0.16% | | | |
| August 31, 2021 | 0.93 | | | |
| August 31, 2020 | 2.45 | | | |
e Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
| |
| 30 Income Strategies Portfolio | Income Strategies Portfolio 31 |
Notes to financial statements 2/28/22 (Unaudited)
Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from September 1, 2021 through February 28, 2022.
Putnam Income Strategies Portfolio (the fund) is a diversified series of Putnam Asset Allocation Funds (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The goal of the fund is to seek total return consistent with preservation of capital. Total return is composed of capital appreciation and income. The fund invests mainly in fixed-income investments, including U.S. and foreign government obligations, corporate obligations and securitized debt instruments (such as mortgage-backed investments) of any credit quality. The fund also invests, to a lesser extent, in equity securities (growth or value stocks or both) of U.S. and foreign companies of any size. The fund also makes other types of investments, such as investments in real estate investment trusts and convertible securities. The fund has a strategic, or typical, allocation between equity and fixed-income investments. Using qualitative analysis and quantitative models and techniques, Putnam Management adjusts portfolio allocations from time to time within a certain range to try to optimize the fund’s performance consistent with its goal. The strategic allocation and the range of allowable allocation for the fund is shown below:
| | |
| Class | Strategic Allocation | Range |
| Equity | 25% | 5–50% |
| Fixed-Income | 75% | 50–95% |
Putnam Management may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell equity investments and may also consider, among other factors, credit, interest rate and prepayment risks, as well as general market conditions, when deciding whether to buy or sell fixed-income investments. The fund typically uses derivatives to a significant extent, such as futures, options, certain foreign currency transactions, warrants and swap contracts, for both hedging and non-hedging purposes and may also use derivatives and debt instruments with terms determined by reference to a particular commodity or to all or portions of a commodities index.
The fund’s shares are sold without a front-end sales charge and are not subject to a contingent deferred sales charge. The fund’s shares are only available to Putnam fund of funds. Shares of the fund are sold at net asset value.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.
The 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 fund.
Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Note 1: Significant accounting policies
The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
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| 32 Income Strategies Portfolio |
Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.
Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.
Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.
Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.
Many securities markets and exchanges outside the U.S. close prior to the scheduled close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value certain foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. The foreign equity securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.
To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.
To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
Joint trading account Pursuant to an exemptive order from the SEC, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Management. These balances may be invested in issues of short-term investments having maturities of up to 90 days.
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| Income Strategies Portfolio 33 |
Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the fair value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements, which totaled $9,272,820 at the end of the reporting period, is held at the counterparty’s custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.
Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.
Interest income, net of any applicable withholding taxes, if any, and including amortization and accretion of premiums and discounts on debt securities, is recorded on the accrual basis. Dividend income, net of any applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.
Futures contracts The fund uses futures contracts to manage exposure to market risk and to equitize cash.
The potential risk to the fund is that the change in value of futures contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”
Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Interest rate swap contracts The fund entered into OTC and/or centrally cleared interest rate swap contracts, which are arrangements between two parties to exchange cash flows based on a notional principal amount, to hedge interest rate risk, to gain exposure on interest rates and to hedge prepayment risk.
An OTC and centrally cleared interest rate swap can be purchased or sold with an upfront premium. For OTC interest rate swap contracts, an upfront payment received by the fund is recorded as a liability on the fund’s books. An upfront payment made by the fund is recorded as an asset on the fund’s books. OTC and centrally cleared interest rate swap contracts are marked to market daily based upon quotations from an independent pricing service or market makers. Any change is recorded as an unrealized gain or loss on OTC interest rate swaps. Daily fluctuations in the value of centrally cleared interest rate swaps are settled through a central clearing agent and are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Payments, including upfront premiums, received or made are recorded as realized gains or losses at the reset date or the closing of the contract. Certain OTC and centrally cleared interest rate swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract.
The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or if the counterparty defaults, in the case of OTC interest rate contracts, or the central clearing agency or a clearing member defaults, in the case of centrally cleared interest rate swap contracts, on its respective obligation to perform under the contract. The fund’s maximum risk of loss from counterparty risk or central clearing risk is the fair value of the contract. This risk may be mitigated for OTC interest rate swap contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared interest rate swap contracts through the daily exchange of variation margin. There is minimal counterparty risk with respect to centrally cleared interest rate swap contracts due to the clearinghouse guarantee fund and other resources that are available in the event of a clearing member default. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities.
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| 34 Income Strategies Portfolio |
OTC and centrally cleared interest rate swap contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
Total return swap contracts The fund entered into OTC and/or centrally cleared total return swap contracts, which are arrangements to exchange a market-linked return for a periodic payment, both based on a notional principal amount, to hedge sector exposure, to manage exposure to specific sectors or industries, to manage exposure to specific securities, to gain exposure to a basket of securities, to gain exposure to specific markets or countries and to gain exposure to specific sectors or industries.
To the extent that the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the fund will receive a payment from or make a payment to the counterparty. OTC and/or centrally cleared total return swap contracts are marked to market daily based upon quotations from an independent pricing service or market maker. Any change is recorded as an unrealized gain or loss on OTC total return swaps. Daily fluctuations in the value of centrally cleared total return swaps are settled through a central clearing agent and are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Payments received or made are recorded as realized gains or losses. Certain OTC and/or centrally cleared total return swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. The fund’s maximum risk of loss from counterparty risk or central clearing risk is the fair value of the contract. This risk may be mitigated for OTC total return swap contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared total return swap contracts through the daily exchange of variation margin. There is minimal counterparty risk with respect to centrally cleared total return swap contracts due to the clearinghouse guarantee fund and other resources that are available in the event of a clearing member default. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities.
OTC and/or centrally cleared total return swap contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
Credit default contracts The fund entered into OTC and/or centrally cleared credit default contracts to hedge credit risk, to hedge market risk and to gain exposure on individual names and/or baskets of securities.
In OTC and centrally cleared credit default contracts, the protection buyer typically makes a periodic stream of payments to a counterparty, the protection seller, in exchange for the right to receive a contingent payment upon the occurrence of a credit event on the reference obligation or all other equally ranked obligations of the reference entity. Credit events are contract specific but may include bankruptcy, failure to pay, restructuring and obligation acceleration. For OTC credit default contracts, an upfront payment received by the fund is recorded as a liability on the fund’s books. An upfront payment made by the fund is recorded as an asset on the fund’s books. Centrally cleared credit default contracts provide the same rights to the protection buyer and seller except the payments between parties, including upfront premiums, are settled through a central clearing agent through variation margin payments. Upfront and periodic payments received or paid by the fund for OTC and centrally cleared credit default contracts are recorded as realized gains or losses at the reset date or close of the contract. The OTC and centrally cleared credit default contracts are marked to market daily based upon quotations from an independent pricing service or market makers. Any change in value of OTC credit default contracts is recorded as an unrealized gain or loss. Daily fluctuations in the value of centrally cleared credit default contracts are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Upon the occurrence of a credit event, the difference between the par value and fair value of the reference obligation, net of any proportional amount of the upfront payment, is recorded as a realized gain or loss.
In addition to bearing the risk that the credit event will occur, the fund could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index or the possibility that the fund may be unable to close out its position at the same time or at the same price as if it had purchased the underlying reference obligations. In certain circumstances, the fund may enter into offsetting OTC and centrally cleared credit default contracts which would mitigate its risk of loss. Risks of loss may exceed amounts recognized on the Statement of assets and liabilities. The fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the contract. This risk may be mitigated for OTC credit default contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared credit default contracts through the daily exchange of variation margin. Counterparty risk is further mitigated with respect to centrally cleared credit default swap contracts due to the clearinghouse
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| Income Strategies Portfolio 35 |
guarantee fund and other resources that are available in the event of a clearing member default. Where the fund is a seller of protection, the maximum potential amount of future payments the fund may be required to make is equal to the notional amount.
OTC and centrally cleared credit default contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements that govern OTC derivative and foreign exchange contracts and Master Securities Forward Transaction Agreements that govern transactions involving mortgage-backed and other asset-backed securities that may result in delayed delivery (Master Agreements) with certain counterparties entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral pledged to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, are presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
With respect to ISDA Master Agreements, termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term or short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.
At the close of the reporting period, the fund had a net liability position of $131,108 on open derivative contracts subject to the Master Agreements. Collateral pledged by the fund at period end for these agreements totaled $251,875 and may include amounts related to unsettled agreements.
Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The remaining maturities of the securities lending transactions are considered overnight and continuous. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending, net of expenses, is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund had no securities out on loan.
Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.
Lines of credit The fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 million unsecured uncommitted line of credit, both provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to 1.25% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate for the committed line of credit and 1.30% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based
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| 36 Income Strategies Portfolio |
on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.
Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior periods remains subject to examination by the Internal Revenue Service.
Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The aggregate identified cost on a tax basis is $17,740,634, resulting in gross unrealized appreciation and depreciation of $536,785 and $465,451, respectively, or net unrealized appreciation of $71,334.
Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations.
Expenses of the Trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the Trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund.
Note 2: Management fee, administrative services and other transactions
The fund does not pay Putnam Management a management fee.
Putnam Management has contractually agreed, through December 30, 2022, to waive fees and/or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were reduced by $30,335 as a result of this limit.
Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.
The Putnam Advisory Company, LLC (PAC), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund, as designated from time to time by Putnam Management or PIL. PAC did not manage any portion of the assets of the fund during the reporting period. If Putnam Management or PIL were to engage the services of PAC, Putnam Management or PIL, as applicable, would pay a quarterly sub-advisory fee to PAC for its services at the annual rate of 0.35% of the average net assets of the portion of the fund’s assets for which PAC is engaged as sub-adviser.
The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.
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| Income Strategies Portfolio 37 |
Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
The fund has entered into expense offset arrangements with State Street whereby State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $199 under the expense offset arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $14, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
Note 3: Purchases and sales of securities
During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:
| | |
| | Cost of purchases | Proceeds from sales |
| Investments in securities (Long-term) | $4,563,494 | $3,645,914 |
| U.S. government securities (Long-term) | — | — |
| Total | $4,563,494 | $3,645,914 |
The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.
Note 4: Capital shares
At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions, including, if applicable, direct exchanges pursuant to share conversions, in capital shares were as follows:
| | | | |
| | SIX MONTHS ENDED 2/28/22 | YEAR ENDED 8/31/21 |
| Fund | Shares | Amount | Shares | Amount |
| Shares sold | 706,975 | $7,810,750 | 1,486,056 | $15,945,660 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 73,039 | 790,301 | 28,054 | 298,428 |
| | 780,014 | 8,601,051 | 1,514,110 | 16,244,088 |
| Shares repurchased | (433,323) | (4,587,641) | (1,271,255) | (13,646,781) |
| Net increase | 346,691 | $4,013,410 | 242,855 | $2,597,307 |
At the close of the reporting period, the Putnam Retirement Advantage Funds owned 100% of the outstanding shares of the fund.
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| 38 Income Strategies Portfolio |
Note 5: Affiliated transactions
Transactions during the reporting period with any company which is under common ownership or control were as follows:
| | | | | |
| | | | | | Shares |
| | | | | | outstanding |
| | | | | | and fair |
| | Fair value as | Purchase | Sale | Investment | value as |
| Name of affiliate | of 8/31/21 | cost | proceeds | income | of 2/28/22 |
| Short-term investments | | | | | |
| Putnam Cash Collateral | | | | | |
| Pool, LLC* | $— | $911,140 | $911,140 | $7 | $— |
| Putnam Short Term | | | | | |
| Investment Fund** | 9,893,170 | 1,250,000 | 9,893,170 | 3,766 | 1,250,000 |
| Total Short-term | | | | | |
| investments | $9,893,170 | $2,161,140 | $10,804,310 | $3,773 | $1,250,000 |
* No management fees are charged to Putnam Cash Collateral Pool, LLC (Note 1). Investment income shown is included in securities lending income on the Statement of operations. There were no realized or unrealized gains or losses during the period.
** Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.
Note 6: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations. The fund may invest in higher-yielding, lower-rated bonds that may have a higher rate of default.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced its intention to cease compelling banks to provide the quotations needed to sustain LIBOR after 2021. ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative basis at the end of 2021 and is expected to cease publication of a majority of U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. LIBOR has historically been a common benchmark interest rate index used to make adjustments to variable-rate loans. It is used throughout global banking and financial industries to determine interest rates for a variety of financial instruments and borrowing arrangements. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Various financial industry groups have been planning for the transition away from LIBOR, but there are obstacles to converting certain longer-term securities and transactions to new reference rates. Markets are developing slowly and questions around liquidity in these rates and how to appropriately adjust these rates to mitigate any economic value transfer at the time of transition remain a significant concern. Neither the effect of the transition process nor its ultimate success can yet be known. The transition process might lead to increased volatility and illiquidity in markets that rely on LIBOR to determine interest rates. It could also lead to a reduction in the value of some LIBOR-based investments and reduce the effectiveness of related transactions, such as hedges. While some LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, not all may have such provisions and there may be significant uncertainty regarding the effectiveness of any such alternative methodologies. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur at any time.
Beginning in January 2020, global financial markets have experienced, and may continue to experience, significant volatility resulting from the spread of a virus known as Covid–19. The outbreak of Covid–19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand, and general market uncertainty. The effects of Covid–19 have adversely affected, and may continue to adversely affect, the
|
| Income Strategies Portfolio 39 |
global economy, the economies of certain nations, and individual issuers, all of which may negatively impact the fund’s performance.
Note 7: Summary of derivative activity
The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:
| |
| Futures contracts (number of contracts) | 20 |
| Centrally cleared interest rate swap contracts (notional) | $230,000 |
| OTC total return swap contracts (notional) | $11,800,000 |
| Centrally cleared total return swap contracts (notional) | $880,000 |
| Centrally cleared credit default contracts (notional) | $81,000 |
The following is a summary of the fair value of derivative instruments as of the close of the reporting period:
| | | | |
| Fair value of derivative instruments as of the close of the reporting period | |
| | ASSET DERIVATIVES | LIABILITY DERIVATIVES |
| Derivatives not | | | | |
| accounted for as | Statement of | | Statement of | |
| hedging instruments | assets and | | assets and | |
| under ASC 815 | liabilities location | Fair value | liabilities location | Fair value |
| | Receivables, Net assets — | | | |
| Credit contracts | Unrealized appreciation | $11,980* | Payables | $— |
| | Receivables, Net assets — | | Payables, Net assets — | |
| Equity contracts | Unrealized appreciation | 48,296* | Unrealized depreciation | 180,056* |
| | Receivables, Net assets — | | Payables, Net assets — | |
| Interest rate contracts | Unrealized appreciation | 4,330* | Unrealized depreciation | 44,602* |
| Total | | $64,606 | | $224,658 |
* Includes cumulative appreciation/depreciation of futures contracts and/or centrally cleared swaps as reported in the fund’s portfolio. Only current day’s variation margin is reported within the Statement of assets and liabilities.
The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):
| | | |
| Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments | |
| Derivatives not accounted for as hedging | | | |
| instruments under ASC 815 | Futures | Swaps | Total |
| Equity contracts | $(11,767) | $(398,496) | $(410,263) |
| Interest rate contracts | 56,933 | (28,211) | $28,722 |
| Total | $45,166 | $(426,707) | $(381,541) |
| | | |
| Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) | |
| on investments | | | |
| Derivatives not accounted for as hedging | | | |
| instruments under ASC 815 | Futures | Swaps | Total |
| Credit contracts | $— | $(3,727) | $(3,727) |
| Equity contracts | 36,818 | (127,146) | $(90,328) |
| Interest rate contracts | (1,226) | (10,598) | $(11,824) |
| Total | $35,592 | $(141,471) | $(105,879) |
|
| 40 Income Strategies Portfolio |
Note 8: Offsetting of financial and derivative assets and liabilities
The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.
| | | | | |
| | | Barclays | | | | |
| | | Capital, Inc. | | BofA | | | |
| | | (clearing | | Securities, | | | JPMorgan | |
| | | broker) | | Inc. | | Citibank, N.A. | | Securities LLC | | Total |
| Assets: | | | | | |
| Centrally cleared interest rate | $— | $— | $— | $— | $— |
| swap contracts§ | | | | | |
| OTC Total return swap contracts*# | — | — | — | — | — |
| Centrally cleared total return | 9,629 | — | — | — | 9,629 |
| swap contracts§ | | | | | |
| Centrally cleared credit default | — | — | — | — | — |
| contracts§ | | | | | |
| Futures contracts§ | — | 2,950 | — | — | 2,950 |
| Repurchase agreements** | — | 9,091,000 | — | — | 9,091,000 |
| Total Assets | $9,629 | $9,093,950 | $— | $— | $9,103,579 |
| Liabilities: | | | | | |
| Centrally cleared interest rate | $6,034 | $— | $— | $— | $6,034 |
| swap contracts§ | | | | | |
| OTC Total return swap contracts*# | — | — | 131,108 | — | 131,108 |
| Centrally cleared total return | 6,104 | — | — | — | 6,104 |
| swap contracts§ | | | | | |
| Centrally cleared credit default | 462 | — | — | — | 462 |
| contracts§ | | | | | |
| Futures contracts§ | — | 10,414 | — | 5,914 | 16,328 |
| Total Liabilities | $12,600 | $10,414 | $131,108 | $5,914 | $160,036 |
| Total Financial and Derivative | $(2,971) | $9,083,536 | $(131,108) | $(5,914) | $8,943,543 |
| Net Assets | | | | | |
| Total collateral received (pledged)†## | $— | $9,083,536 | $(131,108) | $— | |
| Net amount | $(2,971) | $— | $— | $(5,914) | |
| Controlled collateral received (including | | | | | |
| TBA commitments)** | $— | $— | $— | $— | $— |
| Uncontrolled collateral received | $— | $9,272,820 | $— | $— | $9,272,820 |
| Collateral (pledged) (including TBA | | | | | |
| commitments)** | $— | $— | $(251,875) | $— | $(251,875) |
* Excludes premiums, if any. Included in unrealized appreciation and depreciation on OTC swap contracts on the Statement of assets and liabilities.
** Included with Investments in securities on the Statement of assets and liabilities.
† Additional collateral may be required from certain brokers based on individual agreements.
# Covered by master netting agreement (Note 1).
## Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.
§ Includes current day’s variation margin only as reported on the Statement of assets and liabilities, which is not collateralized. Cumulative appreciation/(depreciation) for futures contracts and centrally cleared swap contracts is represented in the tables listed after the fund’s portfolio. Collateral pledged for initial margin on futures contracts and centrally cleared swap contracts, which is not included in the table above, amounted to $127,923 and $40,978, respectively.
|
| Income Strategies Portfolio 41 |
Note 9: New accounting pronouncements
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020–04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in ASU 2020–04 provide optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of LIBOR and other interbank-offered based reference rates as of the end of 2021. The discontinuation of LIBOR was subsequently extended to June 30, 2023. ASU 2020–04 is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. Management expects that the adoption of the guidance will not have a material impact on the fund’s financial statements.
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| 42 Income Strategies Portfolio |
Putnam family of funds
The following is a list of Putnam’s open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, contact your financial advisor or call Putnam Investor Services at 1-800-225-1581. Please read the prospectus carefully before investing.
| |
| Blend | Income |
| Emerging Markets Equity Fund | Convertible Securities Fund |
| Focused Equity Fund | Diversified Income Trust |
| Focused International Equity Fund | Floating Rate Income Fund |
| International Capital Opportunities Fund | Global Income Trust |
| International Equity Fund | Government Money Market Fund* |
| Multi-Cap Core Fund | High Yield Fund |
| Research Fund | Income Fund |
| | Money Market Fund† |
| Global Sector | Mortgage Opportunities Fund |
| Global Health Care Fund | Mortgage Securities Fund |
| Global Technology Fund | Short Duration Bond Fund |
| | Ultra Short Duration Income Fund |
| Growth | |
| Growth Opportunities Fund | Tax-free Income |
| Small Cap Growth Fund | Intermediate-Term Municipal Income Fund |
| Sustainable Future Fund | Short-Term Municipal Income Fund |
| Sustainable Leaders Fund | Strategic Intermediate Municipal Fund |
| | Tax Exempt Income Fund |
| Value | Tax-Free High Yield Fund |
| International Value Fund | |
| Large Cap Value Fund | State tax-free income funds:‡ |
| Small Cap Value Fund | California, Massachusetts, Minnesota, |
| | New Jersey, New York, Ohio, and Pennsylvania |
|
| Income Strategies Portfolio 43 |
| |
| Absolute Return | Asset Allocation (cont.) |
| Fixed Income Absolute Return Fund | Putnam Retirement Advantage Maturity Fund |
| Multi-Asset Absolute Return Fund | Putnam Retirement Advantage 2065 Fund |
| | Putnam Retirement Advantage 2060 Fund |
| Putnam PanAgora§ | Putnam Retirement Advantage 2055 Fund |
| Putnam PanAgora Risk Parity Fund | Putnam Retirement Advantage 2050 Fund |
| | Putnam Retirement Advantage 2045 Fund |
| Asset Allocation | Putnam Retirement Advantage 2040 Fund |
| Dynamic Risk Allocation Fund | Putnam Retirement Advantage 2035 Fund |
| George Putnam Balanced Fund | Putnam Retirement Advantage 2030 Fund |
| | Putnam Retirement Advantage 2025 Fund |
| Dynamic Asset Allocation Balanced Fund | |
| Dynamic Asset Allocation Conservative Fund | RetirementReady® Maturity Fund |
| Dynamic Asset Allocation Growth Fund | RetirementReady® 2065 Fund |
| | RetirementReady® 2060 Fund |
| | RetirementReady® 2055 Fund |
| | RetirementReady® 2050 Fund |
| | RetirementReady® 2045 Fund |
| | RetirementReady® 2040 Fund |
| | RetirementReady® 2035 Fund |
| | RetirementReady® 2030 Fund |
| | RetirementReady® 2025 Fund |
* You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
† You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
‡ Not available in all states.
§ Sub-advised by PanAgora Asset Management.
Check your account balances and the most recent month-end performance in the Individual Investors section at putnam.com.
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| 44 Income Strategies Portfolio |
Fund information
Founded over 80 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage funds across income, value, blend, growth, sustainable, asset allocation, absolute return, and global sector categories.
| | |
| Investment Manager | Trustees | Richard T. Kircher |
| Putnam Investment | Kenneth R. Leibler, Chair | Vice President and BSA |
| Management, LLC | Liaquat Ahamed | Compliance Officer |
| 100 Federal Street | Ravi Akhoury | |
| Boston, MA 02110 | Barbara M. Baumann | Martin Lemaire |
| | Katinka Domotorffy | Vice President and |
| Investment Sub-Advisors | Catharine Bond Hill | Derivatives Risk Manager |
| Putnam Investments Limited | Paul L. Joskow | |
| 16 St James’s Street | George Putnam, III | Susan G. Malloy |
| London, England SW1A 1ER | Robert L. Reynolds | Vice President and |
| | Manoj P. Singh | Assistant Treasurer |
| The Putnam Advisory Company, LLC | Mona K. Sutphen | |
| 100 Federal Street | | Alan G. McCormack |
| Boston, MA 02110 | Officers | Vice President and |
| | Robert L. Reynolds | Derivatives Risk Manager |
| Marketing Services | President | |
| Putnam Retail Management | | Denere P. Poulack |
| Limited Partnership | James F. Clark | Assistant Vice President, |
| 100 Federal Street | Vice President, Chief Compliance | Assistant Clerk, and |
| Boston, MA 02110 | Officer, and Chief Risk Officer | Assistant Treasurer |
| | | |
| Custodian | Nancy E. Florek | Janet C. Smith |
| State Street Bank | Vice President, Director of | Vice President, |
| and Trust Company | Proxy Voting and Corporate | Principal Financial Officer, |
| Governance, Assistant Clerk, | Principal Accounting Officer, |
| Legal Counsel | and Assistant Treasurer | and Assistant Treasurer |
| Ropes & Gray LLP | | |
| | Michael J. Higgins | Stephen J. Tate |
| | Vice President, Treasurer, | Vice President and |
| | and Clerk | Chief Legal Officer |
| | | |
| | Jonathan S. Horwitz | Mark C. Trenchard |
| | Executive Vice President, | Vice President |
| Principal Executive Officer, | |
| | and Compliance Liaison | |
This report is for the information of shareholders of Putnam Income Strategies Portfolio. It may also be used as sales literature when preceded or accompanied by the current PPM, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, call Putnam toll free at 1-800-225-1581. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus or PPM. For this and other information or to request a PPM, call 1-800-225-1581 toll free. Please read the PPM carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.
| |
| Item 3. Audit Committee Financial Expert: |
| |
| Item 4. Principal Accountant Fees and Services: |
| |
| Item 5. Audit Committee of Listed Registrants |
| |
| Item 6. Schedule of Investments: |
| |
| The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. |
| |
| Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
| |
| Item 8. Portfolio Managers of Closed-End Investment Companies |
| |
| Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
| |
| Item 10. Submission of Matters to a Vote of Security Holders: |
| |
| Item 11. Controls and Procedures: |
| |
| (a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. |
| |
| (b) Changes in internal control over financial reporting: Not applicable |
| |
| Item 12. Disclosures of Securities Lending Activities for Closed-End Investment Companies: |
| |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
| |
| Putnam Asset Allocation Funds |
| |
| By (Signature and Title): |
| |
| /s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer
|
| |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
| |
| By (Signature and Title): |
| |
| /s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer
|
| |
| By (Signature and Title): |
| |
| /s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer
|
