UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM N-CSR |
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES |
Investment Company Act file number: | (811-07237) |
Exact name of registrant as specified in charter: | Putnam Investment Funds |
Address of principal executive offices: | 100 Federal Street, Boston, Massachusetts 02110 |
Name and address of agent for service: | Stephen Tate, Vice President 100 Federal Street Boston, Massachusetts 02110 |
Copy to: | Bryan Chegwidden, Esq. Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036 |
James E. Thomas, Esq. Ropes & Gray LLP 800 Boylston Street Boston, Massachusetts 02199 |
Registrant’s telephone number, including area code: | (617) 292-1000 |
Date of fiscal year end: | April 30, 2023 |
Date of reporting period: | May 1, 2022 – April 30, 2023 |
Item 1. Report to Stockholders: |
The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: |
Putnam
Sustainable Future
Fund
Annual report
4 | 30 | 23
Message from the Trustees
June 6, 2023
Dear Fellow Shareholder:
Stocks and bonds have generally advanced since the start of the year despite market ups and downs. Inflation has fallen but remains a concern for the Federal Reserve. U.S. interest rates have risen to their highest level since 2007, which is putting pressure on corporate earnings and causing stress in the banking system.
Fortunately, a strong pulse of innovation in the broader economy is gaining investor attention. International markets are becoming increasingly dynamic, in part because China’s economy is reopening after years of pandemic-related restrictions.
While remaining alert to market risks, your investment team is finding new and attractive opportunities across sectors, industries, and global markets. This report offers an update about their efforts in managing your fund.
Thank you for investing with Putnam.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See below and pages 7–9 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.
Before March 21, 2018, the fund was managed with a materially different investment strategy and may have achieved materially different performance results under its current investment strategy from that shown for periods before this date.
Lipper peer group median is provided by Lipper, a Refinitiv company.
* The Putnam Sustainable Future Linked Benchmark represents the performance of the Russell 3000 Value Index through March 20, 2018, and the performance of the Russell Midcap Growth Index thereafter.
This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 4/30/23. See above and pages 7–9 for additional fund performance information. Index descriptions can be found on page 11.
All Bloomberg indices are provided by Bloomberg Index Services Limited.
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How was the investing environment during the reporting period?
Stocks delivered modest gains in a period challenged by many macroeconomic issues. From the start of the period, rising interest rates, supply chain disruptions, the Russia-Ukraine War, and a slowdown in global growth weighed on investor sentiment. One of the biggest headwinds for investors was historically high inflation and the efforts by central banks to tame it. Inflation in the U.S. reached 40-year highs, and in early 2022, the U.S. Federal Reserve began its most rapid series of interest-rate increases since the early 1980s. Along the way, investors feared the Fed’s monetary tightening would push the economy into a recession.
In late 2022, inflation, as measured by the Consumer Price Index, began to show signs of easing. With the prospect of lower interest rates, 2023 began on a bright note and stocks posted solid gains in January. However, recession concerns escalated in February, and new worries emerged in March. The banking industry experienced a scare with the bankruptcies of two U.S. regional banks as well as a Swiss government-engineered takeover of Credit
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Allocations are shown as a percentage of the fund’s net assets as of 4/30/23. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time. Due to rounding, percentages may not equal 100%.
This table shows the fund’s top 10 holdings by percentage of the fund’s net assets as of 4/30/23. Short-term investments and derivatives, if any, are excluded. Holdings may vary over time.
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Suisse by UBS. Despite ongoing issues, stocks posted gains in the final month of the period, as positive earnings reports emerged and investors watched economic data for signals about future economic growth.
How did the fund perform for the 12-month reporting period?
The fund returned –6.56%, lagging its primary benchmark, the Russell Midcap Growth Index, which returned 1.60%.
What were some holdings that contributed to relative performance during the reporting period?
One key contributor was Chipotle Mexican Grill, a fast-casual restaurant chain with a deep commitment to “food with integrity” and sustainable farming practices. The company’s emphasis on high-quality ingredients and sustainable sourcing practices has resonated well with consumers, helping to drive consistent revenue growth and improved operational efficiency. During the period, the company continued to report strong earnings growth, driven by traffic, pricing, menu innovation, and improved store throughput. The company is aligned with our Thriving Planet® theme. We believe the company has a loyal customer base and a compelling value proposition that can continue to fuel strong sales growth and margin expansion in the future.
Another key contributor was NVIDIA, a leading designer of graphic processing units that are used in a variety of end markets, including gaming and data centers. NVIDIA’s core business has experienced accelerating organic growth over the past several years as the firm has broadened its product focus from traditional PC graphics to more complex and faster-growing areas such as artificial intelligence and autonomous driving. The company is aligned with our Thriving Public® theme. Its core strategy of developing solutions for computing-intensive functions that improve efficiency and effectiveness for customers drives NVIDIA’s fundamental success and, in our view, potentially contributes to higher long-term growth.
Could you discuss some holdings that detracted from the fund’s performance during the reporting period?
The top detractor during the period was First Republic, which was aligned with our Thriving Public theme. The company was a leading private bank and wealth management company that provided personalized banking, lending, investment, and trust services to high-net-worth individuals and businesses. We viewed its differentiated service model and strong culture as key to driving customer and employee relationships and providing consistent and above-peer earnings growth. However, we sold out of our position during the recent banking crisis, when increased investor fears and subsequent declines in regional bank stock prices fueled deposit outflows. These events and our updated financial analysis ultimately changed our fundamental view of the company’s long-term prospects.
Another detractor was CrowdStrike, a cloud native security software company that protects endpoints, cloud workloads, identities, and data. The company is aligned with the security and privacy theme within our Thriving Public category. CrowdStrike’s products detect incoming threats to devices, and its cloud-based platform allows companies to better adapt to and predict the quickly changing nature of incoming threats. During the period, the company reported an earnings outlook that was below lofty expectations, which challenged the stock, as did the more general underperformance of highly valued stocks that are affected by rising interest rates. We believe the company’s better technological offering and
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new product innovation has potential to lead to ongoing and durable growth over the long term.
What is your outlook for the months ahead?
We believe that continued stock market volatility is a possibility, and we remain attuned to macroeconomic issues that may affect financial markets. While we take the macroeconomic backdrop into consideration, our investment process is focused on assessing individual company fundamentals across a wide range of operating conditions. When markets are volatile, we aim to identify stocks where short-term price changes are out of sync with longer-term fundamental prospects.
We continue to believe that the key driver of fund performance should be our stock selection, and the fund’s focus on companies that offer solutions to key sustainability challenges remains constant. The investment premise of this focus is that companies that create valuable solutions also have the chance to create businesses with strong financial returns. We remain encouraged by the growing range of businesses and stocks that offer compelling sustainability characteristics, strong fundamentals, and reasonable valuations.
Thank you both for your time and insights today.
The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.
Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.
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Your fund’s performance
This section shows your fund’s performance, price, and distribution information for periods ended April 30, 2023, the end of its most recent fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance as of the most recent calendar quarter-end and expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Before March 21, 2018, the fund was managed with a materially different investment strategy and may have achieved materially different performance results under its current investment strategy from that shown for periods before this date. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class R, R6, and Y shares are not available to all investors.
Annualized fund performance Total return for periods ended 4/30/23
Life of fund | 10 years | 5 years | 3 years | 1 year | |
Class A (11/1/99) | |||||
Before sales charge | 8.96% | 8.49% | 6.78% | 5.41% | –6.56% |
After sales charge | 8.69 | 7.85 | 5.52 | 3.35 | –11.93 |
Class B (1/16/01) | |||||
Before CDSC | 8.79 | 8.08 | 5.99 | 4.62 | –7.25 |
After CDSC | 8.79 | 8.08 | 5.75 | 3.83 | –11.89 |
Class C (1/16/01) | |||||
Before CDSC | 8.69 | 7.85 | 5.99 | 4.63 | –7.28 |
After CDSC | 8.69 | 7.85 | 5.99 | 4.63 | –8.21 |
Class R (4/1/03) | |||||
Net asset value | 8.70 | 8.23 | 6.53 | 5.15 | –6.79 |
Class R6 (5/22/18) | |||||
Net asset value | 9.24 | 8.84 | 7.19 | 5.81 | –6.15 |
Class Y (4/2/02) | |||||
Net asset value | 9.21 | 8.77 | 7.06 | 5.69 | –6.30 |
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A shares reflect the deduction of the maximum 5.75% sales charge, levied at the time of purchase. Class B share returns after contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 2% in the fifth year, and is eliminated thereafter. Class C share returns after CDSC reflect a 1% CDSC for the first year that is eliminated thereafter. Class R, R6, and Y shares have no initial sales charge or CDSC. Performance for class B, C, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares, except for class Y shares, for which 12b-1 fees are not applicable. Performance for class R6 shares prior to their inception is derived from the historical performance of class Y shares and has not been adjusted for the lower investor servicing fees applicable to class R6 shares; had it, returns would have been higher.
For a portion of the periods, the fund had expense limitations, without which returns would have been lower.
Class B share performance reflects conversion to class A shares after five years.
Class C share performance reflects conversion to class A shares after eight years.
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Comparative annualized index returns For periods ended 4/30/23
Life of fund | 10 years | 5 years | 3 years | 1 year | |
Russell Midcap Growth Index | 7.61% | 10.84% | 8.96% | 9.21% | 1.60% |
Putnam Sustainable Future | |||||
Linked Benchmark* | 7.17 | 9.46 | 8.96 | 9.21 | 1.60 |
Lipper Multi-Cap Growth | |||||
Funds category median† | 6.69 | 11.22 | 9.20 | 8.73 | –1.50 |
Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.
Lipper peer group median is provided by Lipper, a Refinitiv company.
* The Putnam Sustainable Future Linked Benchmark represents the performance of the Russell 3000 Value Index through March 20, 2018, and the performance of the Russell Midcap Growth Index thereafter.
† Over the 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 4/30/23, there were 449, 414, 376, 268, and 86 funds, respectively, in this Lipper category.
Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B and C shares would have been valued at $21,760 and $21,283, respectively, and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class R, R6, and Y shares would have been valued at $22,056, $23,323 and $23,182, respectively.
Fund price and distribution information For the 12-month period ended 4/30/23
Distributions | Class A | Class B | Class C | Class R | Class R6 | Class Y | |
Before | After | Net | Net | Net | Net | Net | |
sales | sales | asset | asset | asset | asset | asset | |
Share value | charge | charge | value | value | value | value | value |
4/30/22 | $17.08 | $18.12 | $14.20 | $14.15 | $16.20 | $17.39 | $17.30 |
4/30/23 | 15.96 | 16.93 | 13.17 | 13.12 | 15.10 | 16.32 | 16.21 |
The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A shares, if applicable, do not take into account any sales charge levied at the time of purchase. After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (5.75% for class A shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.
The fund made no distributions during the period.
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Annualized fund performance as of most recent calendar quarter
Total return for periods ended 3/31/23
Life of fund | 10 years | 5 years | 3 years | 1 year | |
Class A (11/1/99) | |||||
Before sales charge | 9.11% | 8.85% | 7.38% | 11.24% | –15.66% |
After sales charge | 8.84 | 8.20 | 6.11 | 9.06 | –20.51 |
Class B (1/16/01) | |||||
Before CDSC | 8.94 | 8.44 | 6.59 | 10.42 | –16.23 |
After CDSC | 8.94 | 8.44 | 6.36 | 9.60 | –20.42 |
Class C (1/16/01) | |||||
Before CDSC | 8.84 | 8.20 | 6.58 | 10.40 | –16.29 |
After CDSC | 8.84 | 8.20 | 6.58 | 10.40 | –17.13 |
Class R (4/1/03) | |||||
Net asset value | 8.85 | 8.58 | 7.13 | 10.98 | –15.86 |
Class R6 (5/22/18) | |||||
Net asset value | 9.39 | 9.19 | 7.79 | 11.66 | –15.33 |
Class Y (4/2/02) | |||||
Net asset value | 9.36 | 9.13 | 7.66 | 11.54 | –15.42 |
See the discussion following the fund performance table on page 7 for information about the calculation of fund performance.
As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.
Expense ratios
Class A | Class B | Class C | Class R | Class R6 | Class Y | |
Total annual operating expenses for the | ||||||
fiscal year ended 4/30/22 | 1.00% | 1.75% | 1.75% | 1.25% | 0.65% | 0.75% |
Annualized expense ratio for the | ||||||
six-month period ended 4/30/23* | 1.07% | 1.82% | 1.82% | 1.32% | 0.69% | 0.82% |
Fiscal year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.
Expenses are shown as a percentage of average net assets.
* Expense ratios for each class are for the fund’s most recent fiscal half year. As a result of this, ratios may differ from expense ratios based on one-year data in the financial highlights.
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Expenses per $1,000
The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 11/1/22 to 4/30/23. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
Class A | Class B | Class C | Class R | Class R6 | Class Y | |
Expenses paid per $1,000*† | $5.38 | $9.13 | $9.13 | $6.63 | $3.47 | $4.13 |
Ending value (after expenses) | $1,027.70 | $1,024.10 | $1,024.20 | $1,026.50 | $1,030.30 | $1,029.20 |
* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 4/30/23. The expense ratio may differ for each share class.
† Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period (181); and then dividing that result by the number of days in the year (365).
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended 4/30/23, use the following calculation method. To find the value of your investment on 11/1/22, call Putnam at 1-800-225-1581.
Compare expenses using the SEC’s method
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
Class A | Class B | Class C | Class R | Class R6 | Class Y | |
Expenses paid per $1,000*† | $5.36 | $9.10 | $9.10 | $6.61 | $3.46 | $4.11 |
Ending value (after expenses) | $1,019.49 | $1,015.77 | $1,015.77 | $1,018.25 | $1,021.37 | $1,020.73 |
* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 4/30/23. The expense ratio may differ for each share class.
† Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period (181); and then dividing that result by the number of days in the year (365).
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Comparative index definitions
Bloomberg U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed income securities.
ICE BofA (Intercontinental Exchange Bank of America) U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.
Putnam Sustainable Future Linked Benchmark represents the performance of the Russell 3000® Value Index through March 20, 2018, and the performance of the Russell Midcap® Growth Index thereafter.
Russell 3000® Value Index is an unmanaged index of those companies in the Russell 3000® Index chosen for their value orientation.
Russell Midcap® Growth Index is an unmanaged index of those companies in the Russell Midcap® Index chosen for their growth orientation.
S&P 500® Index is an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.
BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approve or endorse this material, or guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, as to the results to be obtained therefrom, and to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.
ICE Data Indices, LLC (“ICE BofA”), used with permission. ICE BofA permits use of the ICE BofA indices and related data on an “as is” basis; makes no warranties regarding same; does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the ICE BofA indices or any data included in, related to, or derived therefrom; assumes no liability in connection with the use of the foregoing; and does not sponsor, endorse, or recommend Putnam Investments, or any of its products or services.
Lipper, a Refinitiv company, is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category medians reflect performance trends for funds within a category.
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Other information for shareholders
Important notice regarding delivery of shareholder documents
In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single notice of internet availability, or a single printed copy, of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581 or, for exchange-traded funds only, 1-833-228-5577. We will begin sending individual copies within 30 days.
Proxy voting
Putnam is committed to managing our funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2022, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581 or, for exchange-traded funds only, 1-833-228-5577.
Fund portfolio holdings
The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.
Trustee and employee fund ownership
Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam funds. As of April 30, 2023, Putnam employees had approximately $467,000,000 and the Trustees had approximately $66,000,000 invested in Putnam funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.
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Audited financial statements
These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, constitute the fund’s audited financial statements.
The fund’s portfolio lists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.
Statement of assets and liabilities shows how the fund’s net assets and share price are determined. All investment and non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)
Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal period.
Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover (not required for money market funds) in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Putnam Investment Funds and Shareholders of
Putnam Sustainable Future Fund:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the fund’s portfolio, of Putnam Sustainable Future Fund (one of the funds constituting Putnam Investment Funds, referred to hereafter as the “Fund”) as of April 30, 2023, the related statement of operations for the year ended April 30, 2023, the statement of changes in net assets for each of the two years in the period ended April 30, 2023, including the related notes, and the financial highlights for each of the three years in the period ended April 30, 2023 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of April 30, 2023, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended April 30, 2023 and the financial highlights for each of the three years in the period ended April 30, 2023 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of the Fund as of and for the year ended April 30, 2020 and the financial highlights for each of the periods ended on or prior to April 30, 2020 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated June 11, 2020 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of April 30, 2023 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 6, 2023
We have served as the auditor of one or more investment companies in the Putnam Investments family of funds since at least 1957. We have not been able to determine the specific year we began serving as auditor.
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The fund’s portfolio 4/30/23 | ||
COMMON STOCKS (97.9%)* | Shares | Value |
Biotechnology (5.4%) | ||
Ascendis Pharma A/S ADR (Denmark) † | 24,400 | $1,707,024 |
Compass Pathways PLC ADR (United Kingdom) † | 160,600 | 1,288,012 |
Exact Sciences Corp. † | 77,600 | 4,971,832 |
Regeneron Pharmaceuticals, Inc. † | 8,500 | 6,815,215 |
Rocket Pharmaceuticals, Inc. † | 111,325 | 1,994,944 |
Sarepta Therapeutics, Inc. † | 13,300 | 1,632,841 |
Twist Bioscience Corp. † | 70,925 | 885,144 |
19,295,012 | ||
Capital markets (2.1%) | ||
MSCI, Inc. | 15,100 | 7,284,995 |
7,284,995 | ||
Chemicals (4.8%) | ||
DSM-Firmenich AG (Switzerland) † | 45,499 | 5,954,076 |
Ginkgo Bioworks Holdings, Inc. † | 560,939 | 684,346 |
Ginkgo Bioworks Holdings, Inc. † | 168,300 | 205,326 |
Ingevity Corp. † | 69,500 | 4,985,930 |
Koninklijke DSM NV (Netherlands) | 469 | 61,445 |
Novozymes A/S Class B (Denmark) | 98,341 | 5,120,954 |
17,012,077 | ||
Commercial services and supplies (5.3%) | ||
Casella Waste Systems, Inc. Class A † | 87,100 | 7,751,900 |
Cintas Corp. | 24,000 | 10,938,480 |
18,690,380 | ||
Construction and engineering (1.4%) | ||
Quanta Services, Inc. | 28,500 | 4,834,740 |
4,834,740 | ||
Consumer staples distribution and retail (2.2%) | ||
Sprouts Farmers Market, Inc. † | 225,700 | 7,822,762 |
7,822,762 | ||
Diversified telecommunication services (1.8%) | ||
Liberty Global PLC Class C (United Kingdom) † | 312,100 | 6,348,114 |
6,348,114 | ||
Electric utilities (1.7%) | ||
Constellation Energy Corp. | 61,700 | 4,775,580 |
NextEra Energy, Inc. | 17,000 | 1,302,710 |
6,078,290 | ||
Electrical equipment (1.2%) | ||
Regal Rexnord Corp. | 31,600 | 4,113,056 |
4,113,056 | ||
Electronic equipment, instruments, and components (1.2%) | ||
Trimble Inc. † | 88,900 | 4,187,190 |
4,187,190 | ||
Financial services (3.6%) | ||
Eurazeo SE (France) | 85,422 | 6,103,616 |
Mastercard, Inc. Class A | 17,700 | 6,726,531 |
12,830,147 |
Sustainable Future Fund 15 |
COMMON STOCKS (97.9%)* cont. | Shares | Value |
Food products (0.6%) | ||
McCormick & Co., Inc. (non-voting shares) | 25,100 | $2,205,035 |
2,205,035 | ||
Health care equipment and supplies (7.2%) | ||
Cooper Cos., Inc. (The) | 21,300 | 8,124,885 |
Dexcom, Inc. † | 97,800 | 11,867,052 |
IDEXX Laboratories, Inc. † | 12,000 | 5,905,920 |
25,897,857 | ||
Health care providers and services (1.5%) | ||
HealthEquity, Inc. † | 96,250 | 5,144,563 |
5,144,563 | ||
Health care technology (2.1%) | ||
Veeva Systems, Inc. Class A † | 41,200 | 7,378,096 |
7,378,096 | ||
Hotels, restaurants, and leisure (5.7%) | ||
Chipotle Mexican Grill, Inc. † | 7,500 | 15,507,147 |
Vail Resorts, Inc. | 19,100 | 4,593,932 |
20,101,079 | ||
Interactive media and services (1.6%) | ||
Pinterest, Inc. Class A † | 239,200 | 5,501,600 |
5,501,600 | ||
IT Services (2.1%) | ||
Gartner, Inc. † | 24,400 | 7,380,024 |
7,380,024 | ||
Life sciences tools and services (6.5%) | ||
Bio-Rad Laboratories, Inc. Class A † | 15,800 | 7,122,482 |
Danaher Corp. | 26,200 | 6,207,042 |
Thermo Fisher Scientific, Inc. | 17,900 | 9,932,710 |
23,262,234 | ||
Machinery (2.0%) | ||
Federal Signal Corp. | 136,600 | 7,018,508 |
7,018,508 | ||
Mortgage real estate investment trusts (REITs) (1.4%) | ||
Hannon Armstrong Sustainable Infrastructure Capital, Inc. R | 179,700 | 5,099,886 |
5,099,886 | ||
Pharmaceuticals (1.7%) | ||
Zoetis, Inc. | 33,900 | 5,958,942 |
5,958,942 | ||
Professional services (3.6%) | ||
Bureau Veritas SA (France) | 178,580 | 5,147,665 |
Ceridian HCM Holding, Inc. † | 66,200 | 4,202,376 |
Planet Labs PBC † | 830,100 | 3,386,808 |
12,736,849 | ||
Semiconductors and semiconductor equipment (5.5%) | ||
Applied Materials, Inc. | 42,900 | 4,848,987 |
ASML Holding NV (NY Reg Shares) (Netherlands) | 9,100 | 5,795,426 |
NVIDIA Corp. | 20,300 | 5,633,047 |
SolarEdge Technologies, Inc. (Israel) † | 10,700 | 3,056,241 |
19,333,701 |
16 Sustainable Future Fund |
COMMON STOCKS (97.9%)* cont. | Shares | Value |
Software (18.9%) | ||
Adobe, Inc. † | 20,300 | $7,664,468 |
Atlassian Corp. Class A † | 26,300 | 3,883,458 |
Cadence Design Systems, Inc. † | 54,300 | 11,373,135 |
CrowdStrike Holdings, Inc. Class A † | 55,500 | 6,662,775 |
Dynatrace, Inc. † | 144,327 | 6,102,146 |
Palo Alto Networks, Inc. † | 43,200 | 7,882,272 |
Roper Technologies, Inc. | 17,400 | 7,913,172 |
ServiceNow, Inc. † | 14,700 | 6,753,474 |
Verra Mobility Corp. † | 357,300 | 6,056,235 |
Zscaler, Inc. † | 33,800 | 3,045,380 |
67,336,515 | ||
Specialized REITs (0.8%) | ||
Weyerhaeuser Co. R | 95,300 | 2,850,423 |
2,850,423 | ||
Specialty retail (0.5%) | ||
Ulta Beauty, Inc. † | 3,200 | 1,764,576 |
1,764,576 | ||
Textiles, apparel, and luxury goods (4.1%) | ||
Levi Strauss & Co. Class A | 385,700 | 5,577,222 |
Lululemon Athletica, Inc. (Canada) † | 23,245 | 8,831,473 |
14,408,695 | ||
Trading companies and distributors (1.4%) | ||
Core & Main, Inc. Class A † | 190,300 | 4,959,218 |
4,959,218 | ||
Total common stocks (cost $298,081,424) | $346,834,564 | |
SHORT-TERM INVESTMENTS (2.2%)* | Principal amount/ shares | Value | |
Putnam Short Term Investment Fund Class P 4.98% L | Shares | 6,488,678 | $6,488,678 |
U.S. Treasury Bills 4.474%, 5/23/23 ∆ | $1,200,000 | 1,196,948 | |
U.S. Treasury Bills 4.451%, 5/30/23 ∆ | 100,000 | 99,669 | |
Total short-term investments (cost $7,785,114) | $7,785,295 | ||
TOTAL INVESTMENTS | ||
Total investments (cost $305,866,538) | $354,619,859 | |
Key to holding’s abbreviations | |||
ADR | American Depository Receipts: Represents ownership of foreign securities on deposit with a custodian bank. | ||
Notes to the fund’s portfolio | |||
Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from May 1, 2022 through April 30, 2023 (the reporting period). Within the following notes to the portfolio, 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 “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures. | |||
* | Percentages indicated are based on net assets of $354,231,500. | ||
† | This security is non-income-producing. | ||
∆ | This security, in part or in entirety, was pledged and segregated with the custodian for collateral on certain derivative contracts at the close of the reporting period. Collateral at period end totaled $1,104,696 and is included in Investments in securities on the Statement of assets and liabilities (Notes 1 and 8). |
Sustainable Future Fund 17 |
L | Affiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period. | ||
R | Real Estate Investment Trust. | ||
Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity. | |||
FORWARD CURRENCY CONTRACTS at 4/30/23 (aggregate face value $49,216,436) | ||||||
Counterparty | Currency | Contract type* | Delivery date | Value | Aggregate face value | Unrealized appreciation/ (depreciation) |
Bank of America N.A. | ||||||
Canadian Dollar | Sell | 7/19/23 | $494,099 | $498,467 | $4,368 | |
Danish Krone | Sell | 6/21/23 | 2,402,099 | 2,326,319 | (75,780) | |
Euro | Sell | 6/21/23 | 5,760,165 | 5,562,216 | (197,949) | |
Barclays Bank PLC | ||||||
British Pound | Sell | 6/21/23 | 1,987,458 | 1,892,264 | (95,194) | |
Euro | Sell | 6/21/23 | 2,139,247 | 2,065,900 | (73,347) | |
Citibank, N.A. | ||||||
Danish Krone | Buy | 6/21/23 | 1,233,599 | 1,222,118 | 11,481 | |
Israeli Shekel | Sell | 7/19/23 | 1,525,576 | 1,550,546 | 24,970 | |
HSBC Bank USA, National Association | ||||||
British Pound | Sell | 6/21/23 | 3,617,883 | 3,443,972 | (173,911) | |
Canadian Dollar | Sell | 7/19/23 | 713,945 | 720,236 | 6,291 | |
Danish Krone | Sell | 6/21/23 | 1,947,159 | 1,885,622 | (61,537) | |
Euro | Sell | 6/21/23 | 6,111,549 | 5,873,890 | (237,659) | |
Israeli Shekel | Sell | 7/19/23 | 1,026,124 | 1,043,619 | 17,495 | |
Swedish Krona | Buy | 6/21/23 | 1,143,824 | 1,119,153 | 24,671 | |
JPMorgan Chase Bank N.A. | ||||||
Euro | Sell | 6/21/23 | 1,094,817 | 1,057,051 | (37,766) | |
Morgan Stanley & Co. International PLC | ||||||
British Pound | Sell | 6/21/23 | 564,736 | 537,454 | (27,282) | |
Canadian Dollar | Sell | 7/19/23 | 1,529,238 | 1,542,712 | 13,474 | |
Danish Krone | Sell | 6/21/23 | 2,256,178 | 2,184,685 | (71,493) | |
Euro | Buy | 6/21/23 | 705,863 | 847,871 | (142,008) | |
Israeli Shekel | Sell | 7/19/23 | 33,216 | 33,783 | 567 | |
Swiss Franc | Sell | 6/21/23 | 6,029,788 | 6,035,735 | 5,947 | |
NatWest Markets PLC | ||||||
British Pound | Buy | 6/21/23 | 1,433,038 | 1,414,828 | 18,210 | |
Danish Krone | Sell | 6/21/23 | 1,302,763 | 1,261,628 | (41,135) | |
State Street Bank and Trust Co. | ||||||
British Pound | Sell | 6/21/23 | 2,610,316 | 2,484,674 | (125,642) | |
Canadian Dollar | Sell | 7/19/23 | 733,017 | 739,411 | 6,394 | |
Euro | Sell | 6/21/23 | 1,939,466 | 1,872,282 | (67,184) | |
Unrealized appreciation | 133,868 | |||||
Unrealized (depreciation) | (1,427,887) | |||||
Total | $(1,294,019) | |||||
* The exchange currency for all contracts listed is the United States Dollar. | ||||||
18 Sustainable Future Fund |
ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:
Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:
Valuation inputs | |||
Investments in securities: | Level 1 | Level 2 | Level 3 |
Common stocks*: | |||
Communication services | $11,849,714 | $— | $— |
Consumer discretionary | 36,274,350 | — | — |
Consumer staples | 10,027,797 | — | — |
Financials | 19,111,412 | 6,103,616 | — |
Health care | 86,936,704 | — | — |
Industrials | 47,205,086 | 5,147,665 | — |
Information technology | 98,237,430 | — | — |
Materials | 11,829,678 | 5,182,399 | — |
Real estate | 2,850,423 | — | — |
Utilities | 6,078,290 | — | — |
Total common stocks | 330,400,884 | 16,433,680 | — |
Short-term investments | — | 7,785,295 | — |
Totals by level | $330,400,884 | $24,218,975 | $— |
Valuation inputs | |||
Other financial instruments: | Level 1 | Level 2 | Level 3 |
Forward currency contracts | $— | $(1,294,019) | $— |
Totals by level | $— | $(1,294,019) | $— |
* 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.
Sustainable Future Fund 19 |
Statement of assets and liabilities 4/30/23
ASSETS | |
Investment in securities, at value (Notes 1 and 8): | |
Unaffiliated issuers (identified cost $299,377,860) | $348,131,181 |
Affiliated issuers (identified cost $6,488,678) (Note 5) | 6,488,678 |
Foreign currency (cost $256) (Note 1) | 259 |
Dividends, interest and other receivables | 262,600 |
Foreign tax reclaim | 151,729 |
Receivable for shares of the fund sold | 167,689 |
Receivable for investments sold | 2,923,833 |
Unrealized appreciation on forward currency contracts (Note 1) | 133,868 |
Prepaid assets | 54,171 |
Total assets | 358,314,008 |
LIABILITIES | |
Payable for investments purchased | 1,760,189 |
Payable for shares of the fund repurchased | 363,508 |
Payable for compensation of Manager (Note 2) | 162,130 |
Payable for custodian fees (Note 2) | 11,247 |
Payable for investor servicing fees (Note 2) | 101,073 |
Payable for Trustee compensation and expenses (Note 2) | 89,830 |
Payable for administrative services (Note 2) | 2,095 |
Payable for distribution fees (Note 2) | 63,595 |
Unrealized depreciation on forward currency contracts (Note 1) | 1,427,887 |
Other accrued expenses | 100,954 |
Total liabilities | 4,082,508 |
Net assets | $354,231,500 |
REPRESENTED BY | |
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $341,109,701 |
Total distributable earnings (Note 1) | 13,121,799 |
Total — Representing net assets applicable to capital shares outstanding | $354,231,500 |
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
Net asset value and redemption price per class A share | |
($267,881,034 divided by 16,779,744 shares) | $15.96 |
Offering price per class A share (100/94.25 of $15.96)* | $16.93 |
Net asset value and offering price per class B share ($78,975 divided by 5,996 shares)** | $13.17 |
Net asset value and offering price per class C share ($6,231,730 divided by 474,971 shares)** | $13.12 |
Net asset value, offering price and redemption price per class R share | |
($6,510,881 divided by 431,221 shares) | $15.10 |
Net asset value, offering price and redemption price per class R6 share | |
($21,136,046 divided by 1,295,378 shares) | $16.32 |
Net asset value, offering price and redemption price per class Y share | |
($52,392,834 divided by 3,233,039 shares) | $16.21 |
* On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
20 Sustainable Future Fund |
Statement of operations Year ended 4/30/23
INVESTMENT INCOME | |
Dividends (net of foreign tax of $131,350) | $2,254,111 |
Interest (including interest income of $308,755 from investments in affiliated issuers) (Note 5) | 333,364 |
Securities lending (net of expenses) (Notes 1 and 5) | 10,661 |
Total investment income | 2,598,136 |
EXPENSES | |
Compensation of Manager (Note 2) | 2,028,874 |
Investor servicing fees (Note 2) | 632,104 |
Custodian fees (Note 2) | 22,788 |
Trustee compensation and expenses (Note 2) | 15,865 |
Distribution fees (Note 2) | 814,529 |
Administrative services (Note 2) | 12,116 |
Other | 252,982 |
Total expenses | 3,779,258 |
Expense reduction (Note 2) | (3,138) |
Net expenses | 3,776,120 |
Net investment loss | (1,177,984) |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on: | |
Securities from unaffiliated issuers (Notes 1 and 3) | (29,262,833) |
Foreign currency transactions (Note 1) | 3,700 |
Forward currency contracts (Note 1) | 1,726,615 |
Total net realized loss | (27,532,518) |
Change in net unrealized appreciation (depreciation) on: | |
Securities from unaffiliated issuers | 2,661,345 |
Assets and liabilities in foreign currencies | 4,899 |
Forward currency contracts | (1,825,640) |
Total change in net unrealized appreciation | 840,604 |
Net loss on investments | (26,691,914) |
Net decrease in net assets resulting from operations | $(27,869,898) |
The accompanying notes are an integral part of these financial statements.
Sustainable Future Fund 21 |
Statement of changes in net assets
DECREASE IN NET ASSETS | Year ended 4/30/23 | Year ended 4/30/22 |
Operations | ||
Net investment loss | $(1,177,984) | $(3,499,539) |
Net realized gain (loss) on investments | ||
and foreign currency transactions | (27,532,518) | 41,019,558 |
Change in net unrealized appreciation (depreciation) | ||
of investments and assets and liabilities in foreign currencies | 840,604 | (186,096,851) |
Net decrease in net assets resulting from operations | (27,869,898) | (148,576,832) |
Distributions to shareholders (Note 1): | ||
From ordinary income | ||
Net realized short-term gain on investments | ||
Class A | — | (12,391,715) |
Class B | — | (9,985) |
Class C | — | (398,834) |
Class R | — | (314,958) |
Class R6 | — | (939,169) |
Class Y | — | (2,235,518) |
From net realized long-term gain on investments | ||
Class A | — | (51,594,910) |
Class B | — | (41,572) |
Class C | — | (1,660,609) |
Class R | — | (1,311,376) |
Class R6 | — | (3,910,382) |
Class Y | — | (9,307,939) |
Increase (decrease) from capital share transactions (Note 4) | (31,093,035) | 24,267,017 |
Total decrease in net assets | (58,962,933) | (208,426,782) |
NET ASSETS | ||
Beginning of year | 413,194,433 | 621,621,215 |
End of year | $354,231,500 | $413,194,433 |
The accompanying notes are an integral part of these financial statements.
22 Sustainable Future Fund |
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Sustainable Future Fund 23 |
Financial highlights
(For a common share outstanding throughout the period)
INVESTMENT OPERATIONS | LESS DISTRIBUTIONS | RATIOS AND SUPPLEMENTAL DATA | |||||||||||
Ratio of net | |||||||||||||
Net asset | Net realized | Ratio | investment | ||||||||||
value, | and unrealized | Total from | From net | From | Net asset | Total return | Net assets, | of expenses | income (loss) | Portfolio | |||
beginning | Net investment | gain (loss) | investment | investment | net realized gain | Total | value, end | at net asset | end of period | to average | to average | turnover | |
Period ended | of period | income (loss)a | on investments | operations | income | on investments | distributions | of period | value (%)b | (in thousands) | net assets (%)c | net assets (%) | (%) |
Class A | |||||||||||||
April 30, 2023 | $17.08 | (.06) | (1.06) | (1.12) | — | — | — | $15.96 | (6.56) | $267,881 | 1.06 | (.36) | 43 |
April 30, 2022 | 26.82 | (.15) | (5.87) | (6.02) | — | (3.72) | (3.72) | 17.08 | (25.87) | 323,726 | 1.00 | (.63) | 50 |
April 30, 2021 | 17.52 | (.10) | 11.92 | 11.82 | — | (2.52) | (2.52) | 26.82 | 69.07 | 481,902 | 1.02 | (.43) | 43 |
April 30, 2020 | 17.45 | (.03) | .59 | .56 | (.01) | (.48) | (.49) | 17.52 | 3.15 | 311,058 | 1.07 | (.18) | 72 |
April 30, 2019 | 19.58 | .10 | 2.23 | 2.33 | (.23) | (4.23) | (4.46) | 17.45 | 14.92 | 324,312 | 1.09 | .51 | 31 |
Class B | |||||||||||||
April 30, 2023 | $14.20 | (.14) | (.89) | (1.03) | — | — | — | $13.17 | (7.25) | $79 | 1.81 | (1.10) | 43 |
April 30, 2022 | 23.09 | (.29) | (4.88) | (5.17) | — | (3.72) | (3.72) | 14.20 | (26.41) | 199 | 1.75 | (1.38) | 50 |
April 30, 2021 | 15.43 | (.25) | 10.43 | 10.18 | — | (2.52) | (2.52) | 23.09 | 67.75 | 358 | 1.77 | (1.19) | 43 |
April 30, 2020 | 15.53 | (.14) | .52 | .38 | — | (.48) | (.48) | 15.43 | 2.39 | 146 | 1.82 | (.91) | 72 |
April 30, 2019 | 17.92 | (.04) | 2.00 | 1.96 | (.12) | (4.23) | (4.35) | 15.53 | 14.08 | 216 | 1.84 | (.26) | 31 |
Class C | |||||||||||||
April 30, 2023 | $14.15 | (.14) | (.89) | (1.03) | — | — | — | $13.12 | (7.28) | $6,232 | 1.81 | (1.10) | 43 |
April 30, 2022 | 23.02 | (.29) | (4.86) | (5.15) | — | (3.72) | (3.72) | 14.15 | (26.40) | 8,581 | 1.75 | (1.38) | 50 |
April 30, 2021 | 15.38 | (.24) | 10.40 | 10.16 | — | (2.52) | (2.52) | 23.02 | 67.84 | 14,396 | 1.77 | (1.17) | 43 |
April 30, 2020 | 15.48 | (.14) | .52 | .38 | — | (.48) | (.48) | 15.38 | 2.40 | 11,503 | 1.82 | (.92) | 72 |
April 30, 2019 | 17.80 | (.03) | 1.98 | 1.95 | (.04) | (4.23) | (4.27) | 15.48 | 14.04 | 14,027 | 1.84 | (.20) | 31 |
Class R | |||||||||||||
April 30, 2023 | $16.20 | (.09) | (1.01) | (1.10) | — | — | — | $15.10 | (6.79) | $6,511 | 1.31 | (.61) | 43 |
April 30, 2022 | 25.69 | (.21) | (5.56) | (5.77) | — | (3.72) | (3.72) | 16.20 | (26.05) | 7,931 | 1.25 | (.88) | 50 |
April 30, 2021 | 16.89 | (.16) | 11.48 | 11.32 | — | (2.52) | (2.52) | 25.69 | 68.68 | 11,470 | 1.27 | (.68) | 43 |
April 30, 2020 | 16.87 | (.07) | .57 | .50 | — | (.48) | (.48) | 16.89 | 2.92 | 8,318 | 1.32 | (.43) | 72 |
April 30, 2019 | 19.06 | .05 | 2.16 | 2.21 | (.17) | (4.23) | (4.40) | 16.87 | 14.64 | 9,841 | 1.34 | .29 | 31 |
Class R6 | |||||||||||||
April 30, 2023 | $17.39 | —d | (1.07) | (1.07) | — | — | — | $16.32 | (6.15) | $21,136 | .68 | .02 | 43 |
April 30, 2022 | 27.15 | (.07) | (5.97) | (6.04) | — | (3.72) | (3.72) | 17.39 | (25.62) | 23,724 | .65 | (.28) | 50 |
April 30, 2021 | 17.65 | (.02) | 12.04 | 12.02 | — | (2.52) | (2.52) | 27.15 | 69.72 | 30,380 | .66 | (.09) | 43 |
April 30, 2020 | 17.58 | .03 | .60 | .63 | (.08) | (.48) | (.56) | 17.65 | 3.51 | 15,191 | .68 | .19 | 72 |
April 30, 2019 # | 20.59 | .14 | 1.35 | 1.49 | (.27) | (4.23) | (4.50) | 17.58 | 10.17* | 13,953 | .66* | .78* | 31 |
Class Y | |||||||||||||
April 30, 2023 | $17.30 | (.02) | (1.07) | (1.09) | — | — | — | $16.21 | (6.30) | $52,393 | .81 | (.11) | 43 |
April 30, 2022 | 27.05 | (.10) | (5.93) | (6.03) | — | (3.72) | (3.72) | 17.30 | (25.68) | 49,034 | .75 | (.38) | 50 |
April 30, 2021 | 17.61 | (.04) | 12.00 | 11.96 | — | (2.52) | (2.52) | 27.05 | 69.53 | 83,115 | .77 | (.17) | 43 |
April 30, 2020 | 17.54 | .01 | .59 | .60 | (.05) | (.48) | (.53) | 17.61 | 3.38 | 41,056 | .82 | .06 | 72 |
April 30, 2019 | 19.66 | .15 | 2.24 | 2.39 | (.28) | (4.23) | (4.51) | 17.54 | 15.23 | 32,539 | .84 | .79 | 31 |
See notes to financial highlights at the end of this section.
The accompanying notes are an integral part of these financial statements.
24 Sustainable Future Fund | Sustainable Future Fund 25 |
Financial highlights cont.
Before March 21, 2018, the fund was managed with a materially different investment strategy and may have achieved materially different performance results under its current investment strategy from that shown for periods before that date.
* Not annualized.
# For the period May 22, 2018 (commencement of operations) to April 30, 2019.
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 and does not reflect the effect of sales charges.
c Includes amounts paid through expense offset and/or brokerage/service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.
d Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
26 Sustainable Future Fund |
Notes to financial statements 4/30/23
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. Additionally, references to “OTC”, if any, represent over-the-counter and references to “ESG”, if any, represent environmental, social and governance. Unless otherwise noted, the “reporting period” represents the period from May 1, 2022 through April 30, 2023.
Putnam Sustainable Future Fund (the fund) is a diversified series of Putnam Investment 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 long-term capital appreciation. The fund invests mainly in common stocks of U.S. companies of any size, with a focus on companies whose products and services Putnam Management believes provide solutions that directly contribute to sustainable social, environmental and economic development (Solutions Companies). Stocks of this type of company are typically, but not always, considered to be growth stocks. Growth stocks are stocks of companies whose revenues, earnings, or cash flows are expected to grow faster than those of similar firms, and whose business growth and other characteristics may lead to an increase in stock price. Putnam Management may consider, among other factors, a company’s impact on sustainable environmental, social and economic development (as described below), valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments. The fund may also invest in non-U.S. companies.
Putnam Management’s approach to sustainable investing incorporates fundamental research together with consideration of sustainable environmental, social and economic development impact. Putnam Management believes that companies whose products and services produce positive environmental, social and economic development impact also often demonstrate potential for strong financial growth. Under normal circumstances, the fund invests at least 80% of the value of its net assets in securities that meet Putnam Management’s sustainability criteria. These criteria are based on a proprietary sustainability solutions map that links to the United Nations Sustainable Development Goals (SDGs). In applying these criteria, Putnam Management will assign each company a proprietary environmental, social and/or corporate governance (ESG) rating ranging from 1 to 4 (1 indicating the highest (best) ESG rating and 4 indicating the lowest (worst) ESG rating). In order to meet Putnam Management’s sustainability criteria for purposes of this investment policy, a company must be rated 2 or 1 by us. This policy is non-fundamental and may be changed only after 60 days’ notice to shareholders. In selecting each investment, Putnam Management considers the extent to which a company’s products or services may provide solutions to forward-looking sustainability needs, creating positive impact in environmental, social and economic development areas. Environmental impacts may include, for example, reduction of carbon emissions and improved water quality. Social impacts may include, for example, improvements in employee well-being, supplier standards, or access to products, information, or security. Economic development impacts may include, for example, stakeholder analysis and shared value approaches to business practices, access to economic opportunity, or improvements in operational effectiveness or efficiency.
The fund offers the following share classes. The expenses for each class of shares may differ based on the distribution and investor servicing fees of each class, which are identified in Note 2.
Share class | Sales charge | Contingent deferred sales charge | Conversion feature |
1.00% on certain redemptions of shares | |||
Class A | Up to 5.75% | bought with no initial sales charge | None |
Converts to class A shares | |||
Class B* | None | 5.00% phased out over five years | after 5 years |
Converts to class A shares | |||
Class C | None | 1.00% eliminated after one year | after 8 years |
Class R† | None | None | None |
Class R6† | None | None | None |
Class Y† | None | None | None |
* Purchases of class B shares are closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment.
† Not available to all investors.
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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.
Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.
Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.
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
28 Sustainable Future Fund |
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. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.
To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.
To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.
Interest income, net of any applicable withholding taxes, if any, is recorded on the accrual basis. Amortization and accretion of premiums and discounts on debt securities, if any, 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.
Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.
Forward currency contracts The fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to hedge foreign exchange risk.
The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts
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are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities.
Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral 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, is presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.
At the close of the reporting period, the fund had a net liability position of $1,330,470 on open derivative contracts subject to the Master Agreements. Collateral pledged by the fund at period end for these agreements totaled $1,104,696 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 $320 million syndicated unsecured committed line of credit, provided by State Street ($160 million) and JPMorgan Chase Bank, N.A. ($160 million), and a $235.5 million unsecured uncommitted line of credit, provided by State Street. Prior to May 2, 2023, the fund participated, along with other Putnam funds, in a $100 million ($317.5 million prior to October 14, 2022) 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 and a $75,000 fee has been paid by the participating funds to State Street as agent of the syndicated committed line of credit. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allocated to the
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participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.
Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.
Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred for an unlimited period and the carry forwards will retain their character as either short-term or long-term capital losses. At April 30, 2023, the fund had the following capital loss carryovers available, to the extent allowed by the Code, to offset future net capital gain, if any:
Loss carryover | ||
Short-term | Long-term | Total |
$29,357,716 | $— | $29,357,716 |
Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer $3,529,834 to its fiscal year ending April 30, 2024 of late year ordinary losses ((i) ordinary losses recognized between January 1, 2023 and April 30, 2023, and (ii) specified ordinary and currency losses recognized between November 1, 2022 and April 30, 2023).
Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences include temporary and/or permanent differences from losses on wash sale transactions, foreign currency gains and losses, nontaxable dividends and late year loss deferrals. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. At the close of the reporting period, the fund reclassified $1,642,425 to decrease accumulated net investment loss and $1,642,425 to increase accumulated net realized loss.
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 tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:
Unrealized appreciation | $76,812,018 |
Unrealized depreciation | (30,798,805) |
Net unrealized appreciation | 46,013,213 |
Capital loss carryforward | (29,357,716) |
Late year ordinary loss deferral | (3,529,834) |
Cost for federal income tax purposes | $307,312,627 |
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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 pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:
0.710% | of the first $5 billion, | 0.510% | of the next $50 billion, | |
0.660% | of the next $5 billion, | 0.490% | of the next $50 billion, | |
0.610% | of the next $10 billion, | 0.480% | of the next $100 billion and | |
0.560% | of the next $10 billion, | 0.475% | of any excess thereafter. |
For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.551% of the fund’s average net assets.
Putnam Management has contractually agreed, through August 30, 2023, 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 not reduced as a result of this limit.
Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. 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 0.25% (prior to July 1, 2022, the annual rate was 0.35%) of the average net assets of the portion of the fund managed by PIL.
The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class R and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribution account (retail account) of the fund; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts.
Class R6 shares paid a monthly fee based on the average net assets of class R6 shares at an annual rate of 0.05%.
During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:
Class A | $507,054 | Class R6 | 10,720 | |
Class B | 256 | Class Y | 88,897 | |
Class C | 12,540 | Total | $632,104 | |
Class R | 12,637 |
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The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $3,138 under the expense offset arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $322, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the Plans) with respect to the following share classes pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (Maximum %) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (Approved %) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:
Maximum % | Approved % | Amount | |
Class A | 0.35% | 0.25% | $707,770 |
Class B | 1.00% | 1.00% | 1,428 |
Class C | 1.00% | 1.00% | 70,041 |
Class R | 1.00% | 0.50% | 35,290 |
Total | $814,529 |
For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $15,955 from the sale of class A shares and received $14 and $143 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $66 on class A redemptions.
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) | $154,711,504 | $183,618,501 |
U.S. government securities (Long-term) | — | — |
Total | $154,711,504 | $183,618,501 |
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.
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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:
YEAR ENDED 4/30/23 | YEAR ENDED 4/30/22 | |||
Class A | Shares | Amount | Shares | Amount |
Shares sold | 459,975 | $7,331,228 | 820,252 | $20,336,860 |
Shares issued in connection with | ||||
reinvestment of distributions | — | — | 2,749,462 | 62,412,782 |
459,975 | 7,331,228 | 3,569,714 | 82,749,642 | |
Shares repurchased | (2,631,223) | (41,679,620) | (2,584,239) | (62,077,878) |
Net increase (decrease) | (2,171,248) | $(34,348,392) | 985,475 | $20,671,764 |
YEAR ENDED 4/30/23 | YEAR ENDED 4/30/22 | |||
Class B | Shares | Amount | Shares | Amount |
Shares sold | 759 | $9,864 | 602 | $14,003 |
Shares issued in connection with | ||||
reinvestment of distributions | — | — | 2,724 | 51,557 |
759 | 9,864 | 3,326 | 65,560 | |
Shares repurchased | (8,756) | (117,448) | (4,831) | (94,918) |
Net decrease | (7,997) | $(107,584) | (1,505) | $(29,358) |
YEAR ENDED 4/30/23 | YEAR ENDED 4/30/22 | |||
Class C | Shares | Amount | Shares | Amount |
Shares sold | 66,950 | $871,334 | 75,932 | $1,572,338 |
Shares issued in connection with | ||||
reinvestment of distributions | — | — | 108,638 | 2,048,916 |
66,950 | 871,334 | 184,570 | 3,621,254 | |
Shares repurchased | (198,625) | (2,629,965) | (203,273) | (4,200,138) |
Net decrease | (131,675) | $(1,758,631) | (18,703) | $(578,884) |
YEAR ENDED 4/30/23 | YEAR ENDED 4/30/22 | |||
Class R | Shares | Amount | Shares | Amount |
Shares sold | 55,936 | $831,836 | 63,389 | $1,475,602 |
Shares issued in connection with | ||||
reinvestment of distributions | — | — | 75,217 | 1,620,931 |
55,936 | 831,836 | 138,606 | 3,096,533 | |
Shares repurchased | (114,407) | (1,689,184) | (95,424) | (2,231,854) |
Net increase (decrease) | (58,471) | $(857,348) | 43,182 | $864,679 |
34 Sustainable Future Fund |
YEAR ENDED 4/30/23 | YEAR ENDED 4/30/22 | |||
Class R6 | Shares | Amount | Shares | Amount |
Shares sold | 320,115 | $5,193,057 | 487,425 | $12,490,851 |
Shares issued in connection with | ||||
reinvestment of distributions | — | — | 210,119 | 4,849,551 |
320,115 | 5,193,057 | 697,544 | 17,340,402 | |
Shares repurchased | (388,734) | (6,314,035) | (452,429) | (10,335,781) |
Net increase (decrease) | (68,619) | $(1,120,978) | 245,115 | $7,004,621 |
YEAR ENDED 4/30/23 | YEAR ENDED 4/30/22 | |||
Class Y | Shares | Amount | Shares | Amount |
Shares sold | 1,454,296 | $24,006,383 | 944,636 | $23,732,272 |
Shares issued in connection with | ||||
reinvestment of distributions | — | — | 492,281 | 11,307,693 |
1,454,296 | 24,006,383 | 1,436,917 | 35,039,965 | |
Shares repurchased | (1,056,059) | (16,906,485) | (1,674,807) | (38,705,770) |
Net increase (decrease) | 398,237 | $7,099,898 | (237,890) | $(3,665,805) |
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 4/30/22 | cost | proceeds | income | of 4/30/23 |
Short-term investments | |||||
Putnam Cash Collateral | |||||
Pool, LLC* | $22,663,155 | $27,642,730 | $50,305,885 | $35,622 | $— |
Putnam Short Term | |||||
Investment Fund** | 7,615,020 | 86,110,585 | 87,236,927 | 308,755 | 6,488,678 |
Total Short-term | |||||
investments | $30,278,175 | $113,753,315 | $137,542,812 | $344,377 | $6,488,678 |
* 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.
Sustainable Future Fund 35 |
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.
Investing with a focus on companies that exhibit a commitment to sustainable business practices may result in the fund investing in certain types of companies, industries or sectors that the market may not favor. In evaluating an investment opportunity, Putnam Management may make investment decisions based on information and data that is incomplete or inaccurate. Due to changes in the products or services of the companies and issuers in which the fund invests, the fund may temporarily hold securities that are inconsistent with its sustainable investment criteria.
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:
Forward currency contracts (contract amount) | $55,100,000 |
The following is a summary of the fair value of derivative instruments as of the close of the reporting period:
Fair value of derivative instruments as of the close of the reporting period | ||||
ASSET DERIVATIVES | LIABILITY DERIVATIVES | |||
Derivatives not | ||||
accounted for as | Statement of | Statement of | ||
hedging instruments | assets and | assets and | ||
under ASC 815 | liabilities location | Fair value | liabilities location | Fair value |
Foreign exchange | ||||
contracts | Receivables | $133,868 | Payables | $1,427,887 |
Total | $133,868 | $1,427,887 |
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 | Forward currency | |
hedging instruments under ASC 815 | contracts | Total |
Foreign exchange contracts | $1,726,615 | $1,726,615 |
Total | $1,726,615 | $1,726,615 |
Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) | ||
on investments | ||
Derivatives not accounted for as | Forward currency | |
hedging instruments under ASC 815 | contracts | Total |
Foreign exchange contracts | $(1,825,640) | $(1,825,640) |
Total | $(1,825,640) | $(1,825,640) |
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Sustainable Future Fund 37 |
Note 8: Offsetting of financial and derivative assets and liabilities
The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.
Bank of America N.A. | Barclays Bank PLC | Citibank, N.A. | HSBC Bank USA, National Association | JPMorgan Chase Bank N.A. | Morgan Stanley & Co. International PLC | NatWest Markets PLC | State Street Bank and Trust Co. | Total | |
Assets: | |||||||||
Forward currency contracts# | $4,368 | $— | $36,451 | $48,457 | $— | $19,988 | $18,210 | 6,394 | $133,868 |
Total Assets | $4,368 | $— | $36,451 | $48,457 | $— | $19,988 | $18,210 | $6,394 | $133,868 |
Liabilities: | |||||||||
Forward currency contracts# | 273,729 | 168,541 | — | 473,107 | 37,766 | 240,783 | 41,135 | 192,826 | 1,427,887 |
Total Liabilities | $273,729 | $168,541 | $— | $473,107 | $37,766 | $240,783 | $41,135 | $192,826 | $1,427,887 |
Total Financial and Derivative Net Assets | $(269,361) | $(168,541) | $36,451 | $(424,650) | $(37,766) | $(220,795) | $(22,925) | $(186,432) | $(1,294,019) |
Total collateral received (pledged)†## | $(243,292) | $(131,617) | $— | $(386,875) | $— | $(220,795) | $— | $(120,649) | |
Net amount | $(26,069) | $(36,924) | $36,451 | $(37,775) | $(37,766) | $— | $(22,925) | $(65,783) | |
Controlled collateral received (including TBA commitments)** | $— | $— | $— | $— | $— | $— | $— | $— | $— |
Uncontrolled collateral received | $— | $— | $— | $— | $— | $— | $— | $— | $— |
Collateral (pledged) (including TBA commitments)** | $(243,292) | $(131,617) | $— | $(386,875) | $— | $(222,263) | $— | $(120,649) | $(1,104,696) |
** 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.
Note 9: Subsequent event
On May 31, 2023, Franklin Resources, Inc. (“Franklin Resources”) and Great-West Lifeco Inc., the parent company of Putnam U.S. Holdings I, LLC (“Putnam Holdings”), announced that they have entered into a definitive agreement for a subsidiary of Franklin Resources to acquire Putnam Holdings in a stock and cash transaction.
As part of this transaction, Putnam Management, a wholly owned subsidiary of Putnam Holdings and investment manager to the Putnam family of funds (the “Putnam Funds”), would become an indirect wholly owned subsidiary of Franklin Resources.
The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals. Subject to such approvals and the satisfaction of these conditions, the transaction is currently expected to be consummated in the fourth quarter of 2023.
Under the Investment Company Act of 1940, as amended, consummation of the transaction will result in the automatic termination of the investment management contract between each Putnam Fund and Putnam Management and any related sub-management and sub-advisory contracts, where applicable. Therefore, the Board of Trustees of the Putnam Funds will be asked to approve a new investment management contract between each Putnam Fund and Putnam Management (and new sub-management and sub-advisory contracts, if applicable). If approved by the Board of Trustees, the new investment management contract will be presented to the shareholders of each Putnam Fund for their approval.
38 Sustainable Future Fund | Sustainable Future Fund 39 |
Federal tax information (Unaudited)
The Form 1099 that will be mailed to you in January 2024 will show the tax status of all distributions paid to your account in calendar 2023.
40 Sustainable Future Fund |
Sustainable Future Fund 41 |
* Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund and Putnam Investments. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.
The address of each Trustee is 100 Federal Street, Boston, MA 02110.
As of April 30, 2023, there were 88 mutual funds, 4 closed-end funds, and 12 exchange-traded funds in the Putnam funds complex. Each Trustee serves as Trustee of all funds in the Putnam funds complex.
Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.
42 Sustainable Future Fund |
Officers
In addition to Robert L. Reynolds, the other officers of the fund are shown below:
James F. Clark (Born 1974) | Alan G. McCormack (Born 1964) |
Vice President and Chief Compliance Officer | Vice President and Derivatives Risk Manager |
Since 2016 | Since 2022 |
Chief Compliance Officer and Chief Risk Officer, | Head of Quantitative Equities and Risk, |
Putnam Investments, and Chief Compliance Officer, | Putnam Investments |
Putnam Management | |
Denere P. Poulack (Born 1968) | |
Michael J. Higgins (Born 1976) | Assistant Vice President, Assistant Clerk, |
Vice President, Treasurer, and Clerk | and Assistant Treasurer |
Since 2010 | Since 2004 |
Jonathan S. Horwitz (Born 1955) | Janet C. Smith (Born 1965) |
Executive Vice President, Principal Executive Officer, | Vice President, Principal Financial Officer, Principal |
and Compliance Liaison | Accounting Officer, and Assistant Treasurer |
Since 2004 | Since 2007 |
Head of Fund Administration Services, | |
Richard T. Kircher (Born 1962) | Putnam Investments and Putnam Management |
Vice President and BSA Compliance Officer | |
Since 2019 | Stephen J. Tate (Born 1974) |
Assistant Director, Operational Compliance, Putnam | Vice President and Chief Legal Officer |
Investments and Putnam Retail Management | Since 2021 |
General Counsel, Putnam Investments, | |
Martin Lemaire (Born 1984) | Putnam Management, and Putnam Retail Management |
Vice President and Derivatives Risk Manager | |
Since 2022 | Mark C. Trenchard (Born 1962) |
Risk Manager and Risk Analyst, Putnam Investments | Vice President |
Since 2002 | |
Susan G. Malloy (Born 1957) | Director of Operational Compliance, Putnam |
Vice President and Assistant Treasurer | Investments and Putnam Retail Management |
Since 2007 | |
Head of Accounting and Middle Office Services, | |
Putnam Investments and Putnam Management |
The principal occupations of the officers for the past five years have been with the employers as shown above, although in some cases they have held different positions with such employers. The address of each officer is 100 Federal Street, Boston, MA 02110.
Sustainable Future Fund 43 |
Services for shareholders
Investor services
Systematic investment plan Tell us how much you wish to invest regularly — weekly, semimonthly, or monthly — and the amount you choose will be transferred automatically from your checking or savings account. There’s no additional fee for this service, and you can suspend it at any time. This plan may be a great way to save for college expenses or to plan for your retirement.
Please note that regular investing does not guarantee a profit or protect against loss in a declining market. Before arranging a systematic investment plan, consider your financial ability to continue making purchases in periods when prices are low.
Systematic exchange You can make regular transfers from one Putnam fund to another Putnam fund. There are no additional fees for this service, and you can cancel or change your options at any time.
Dividends PLUS You can choose to have the dividend distributions from one of your Putnam funds automatically reinvested in another Putnam fund at no additional charge.
Free exchange privilege You can exchange money between Putnam funds free of charge, as long as they are the same class of shares. A signature guarantee is required if you are exchanging more than $500,000. The fund reserves the right to revise or terminate the exchange privilege.
Reinstatement privilege If you’ve sold Putnam shares or received a check for a dividend or capital gain, you may reinvest the proceeds with Putnam within 90 days of the transaction and they will be reinvested at the fund’s current net asset value — with no sales charge. However, reinstatement of class B shares may have special tax consequences. Ask your financial or tax representative for details.
Check-writing service You have ready access to many Putnam accounts. It’s as simple as writing a check, and there are no special fees or service charges. For more information about the check-writing service, call Putnam or visit our website.
Dollar cost averaging When you’re investing for long-term goals, it’s time, not timing, that counts. Investing on a systematic basis is a better strategy than trying to figure out when the markets will go up or down. This means investing the same amount of money regularly over a long period. This method of investing is called dollar cost averaging. When a fund’s share price declines, your investment dollars buy more shares at lower prices. When it increases, they buy fewer shares. Over time, you will pay a lower average price per share.
For more information
Visit the Individual Investors section at putnam.com A secure section of our website contains complete information on your account, including balances and transactions, updated daily. You may also conduct transactions, such as exchanges, additional investments, and address changes. Log on today to get your password.
Call us toll free at 1-800-225-1581 or, for exchange-traded funds only, 1-833-228-5577 Ask a helpful Putnam representative or your financial advisor for details about any of these or other services, or see your prospectus.
44 Sustainable Future Fund |
Fund information
Founded over 85 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, and asset allocation categories.
Investment Manager | Trustees | Richard T. Kircher |
Putnam Investment | Kenneth R. Leibler, Chair | Vice President and |
Management, LLC | Barbara M. Baumann, Vice Chair | BSA Compliance Officer |
100 Federal Street | Liaquat Ahamed | |
Boston, MA 02110 | Katinka Domotorffy | Martin Lemaire |
Catharine Bond Hill | Vice President and | |
Investment Sub-Advisor | Jennifer Williams Murphy | Derivatives Risk Manager |
Putnam Investments Limited | Marie Pillai | |
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 | |
Marketing Services | Mona K. Sutphen | |
Putnam Retail Management | Alan G. McCormack | |
Limited Partnership | Officers | Vice President and |
100 Federal Street | Robert L. Reynolds | Derivatives Risk Manager |
Boston, MA 02110 | President | |
Denere P. Poulack | ||
Custodian | James F. Clark | Assistant Vice President, |
State Street Bank | Vice President, Chief Compliance | Assistant Clerk, and |
and Trust Company | Officer, and Chief Risk Officer | Assistant Treasurer |
Legal Counsel | Michael J. Higgins | Janet C. Smith |
Ropes & Gray LLP | Vice President, Treasurer, | Vice President, |
and Clerk | Principal Financial Officer, | |
Independent Registered Public | Principal Accounting Officer, | |
Accounting Firm | Jonathan S. Horwitz | and Assistant Treasurer |
PricewaterhouseCoopers LLP | Executive Vice President, | |
Principal Executive Officer, | Stephen J. Tate | |
and Compliance Liaison | Vice President and | |
Chief Legal Officer | ||
Mark C. Trenchard | ||
Vice President |
This report is for the information of shareholders of Putnam Sustainable Future Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.
Item 2. Code of Ethics: |
(a) The fund’s principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund’s investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers. |
(c) In January 2023, the Code of Ethics of Putnam Investments and Code of Ethics of Putnam Funds were amended. The key changes to the Putnam Investments Code of Ethics are as follows: (i) Prohibition on investments in a single stock ETFs and (ii) Revision to the 7-day blackout rule for Analysts. The key change to the Putnam Funds Code of Ethics was that the provisions of the Code of Ethics for employees of PanAgora Asset Management, inc. and any of its subsidiaries are excluded from the Putnam Funds’ Code of Ethics. |
Item 3. Audit Committee Financial Expert: |
The Funds’ Audit, Compliance and Risk Committee is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Trustees believe that each member of the Audit, Compliance and Risk Committee also possesses a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualifies him or her for service on the Committee. In addition, the Trustees have determined that each of Dr. Hill, Ms. Murphy and Mr. Singh qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education.The SEC has stated, and the funds’ amended and restated agreement and Declaration of Trust provides, that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit, Compliance and Risk Committee and the Board of Trustees in the absence of such designation or identification. |
Item 4. Principal Accountant Fees and Services: |
The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor: |
Fiscal year ended | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | |
April 30, 2023 | $57,060 | $ — | $6,312 | $ — | |
April 30, 2022 | $54,276 | $ — | $5,382 | $ — |
For the fiscal years ended April 30, 2023 and April 30, 2022, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $248,323 and $334,333 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund. |
Audit Fees represent fees billed for the fund’s last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements. |
Audit-Related Fees represent fees billed in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation. |
Tax Fees represent fees billed in the fund’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities. |
Pre-Approval Policies of the Audit, Compliance and Risk Committee. The Audit, Compliance and Risk Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds’ independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures. |
The Audit, Compliance and Risk Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds’ independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm. |
The following table presents fees billed by the fund’s independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2–01 of Regulation S-X. |
Fiscal year ended | Audit-Related Fees | Tax Fees | All Other Fees | Total Non-Audit Fees | |
April 30, 2023 | $ — | $242,011 | $ — | $ — | |
April 30, 2022 | $ — | $328,951 | $ — | $ — |
Item 5. Audit Committee of Listed Registrants |
Not applicable |
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: |
Not applicable |
Item 8. Portfolio Managers of Closed-End Investment Companies |
Not Applicable |
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
Not applicable |
Item 10. Submission of Matters to a Vote of Security Holders: |
Not applicable |
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 Management Investment Companies: |
Not Applicable |
Item 13. Exhibits: |
(a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith. |
(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. |
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
Putnam Investment Funds |
By (Signature and Title): |
/s/ Janet C. Smith Janet C. Smith Principal Accounting Officer |
Date: June 28, 2023 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
By (Signature and Title): |
/s/ Jonathan S. Horwitz Jonathan S. Horwitz Principal Executive Officer |
Date: June 28, 2023 |
By (Signature and Title): |
/s/ Janet C. Smith Janet C. Smith Principal Financial Officer |
Date: June 28, 2023 |