Q4 | 2011

Putnam Absolute Return Funds

Absolutely for all kinds of investors.

Targeting positive returns above inflation over three years with reduced volatility. Putnam Absolute Return 100 Fund An alternative to short-term securities Putnam Absolute Return 300 Fund An alternative to bond funds Putnam Absolute Return 500 Fund An alternative to balanced funds Putnam Absolute Return 700 Fund An alternative to stock funds

Putnam Absolute Return Funds pursue steady return targets in all kinds of markets.
70% These funds performed with less volatility
S&P 500 Index 55.65%

Why choose an absolute return strategy?

Traditional low-volatility investments earn low returns.
Trying to reduce volatility by shifting to a low-return investment may not help you reach your financial goals, while a higher return investment could be highly volatile.
Years to recover losses based on projected rates of return -10% -20%
0.5% return 21.00 years 44.75 71.25 102.25 138.75 2% return 5.25 years 11.25 17.75 25.50 34.75 4% return 2.75 years 5.50 9.00 12.75 17.25 6% return 1.75 years 3.75 6.00 8.50 11.50 8% return 1.25 years 2.75 4.50 6.50 8.75 10% return 1.00 year(s) 2.25 3.50 5.25 7.00

even when stocks fell.

60% December 23, 2008 (inception) through December 31, 2011. 50%

Cumulative performance of class A shares before sales charge

Barclays Capital Aggregate 22.04%

Absolute Return 700 19.08%

40%
Absolute Return 500

-30% -40% -50%

30%
12/31/083/6/09 The S&P 500 fell 24% as the recession deepened.

13.54%

Absolute Return 300

20%

6.74%

Absolute Return 100

This hypothetical illustration shows how many years it would take to recover from losses of different given magnitudes at varying rates of returns. The illustration is based on mathematical principles and assumes monthly compounding. It is not meant as a forecast of future events or as a statement that prior markets may be duplicated. Recovery periods are rounded to the nearest quarter of a year.

10%

3.26%

Treasury Bills

0%
4/30/107/2/10 The S&P 500 fell 13% during Greeces sovereign debt crisis. 9/30/102/10/11 The Barclays Capital U.S. Aggregate Bond Index fell 2.5% as U.S. interest rates rose. 8/8/11 Stocks fell 6.6% in one day after the U.S. debt downgrade.

0.65%

Absolute return funds can add a new dimension to a portfolio.

Absolute return funds are different. They can adapt to any market environment by pursuing global opportunities and progressive risk management.
Absolute return funds Traditional bond funds Traditional balanced funds U.S. stock funds International stock funds

-10%

12/23/08

2009

2010

2011

Annualized performance for the periods ended December 31, 2011

1 yr Class A shares FebMarAprMayJun Jul Aug SeptOctNov09 before sales (inception 12/23/08) charge Absolute Return 100 Fund Absolute Return 300 Fund Absolute Return 500 Fund Absolute Return 700 Fund BofA Merrill Lynch U.S. Treasury Bill Index Barclays Capital U.S. Aggregate Bond Index S&P 500 Index -1.91% -4.37 0.61 0.51 0.14 7.84 2.11 1 yr 3 yrs 3 yrs Life Life after sales before sales after sales before sales after sales charge charge charge charge charge Sharpe ratio 0.72% 0.74 Standard deviation 1.37% 2.84 Expense ratio 1.00% 1.08 1.46 1.64 What you pay 0.68% 0.88 1.18 1.39

Absolute flexibility Free to change holdings rather than follow one market or asset class. Defines positive return targets Pursues targeted returns above inflation over a market cycle. Available strategies U.S. bonds U.S. stocks Foreign bonds Foreign stocks Emerging markets Commodities Hedging strategies REITs Cash All funds involve different levels of risk, have different fees and expenses, and have different objectives that you should consider before investing. See the funds prospectus for complete details.

FebMarAprMayJun JulAug OctNov10 Sept

-2.85% -5.34 -5.18 -5.30 1.07% 2.19 4.32 5.99 0.21 6.77 14.11 0.73% 1.85 2.29 3.92 1.07% 2.18 4.29 5.95 0.22 6.81 15.77

0.74% 1.85 2.27

FebMarAprMayJun JulAug Sept

1.03 4.10 5.01 0.06 2.78 18.70 3.89 1.18 2.00 2.40 0.75

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or a loss when you sell your shares. The class A share performance shown assumes reinvestment of distributions and does not account for taxes. What you pay reflects Putnam Managements decision to contractually limit expenses through 2/29/12. After-sales-charge returns reflect a maximum load of 5.75% for Putnam Absolute Return 500 Fund and 700 Fund and 1.00% for Putnam Absolute Return 100 Fund and 300 Fund. A short-term trading fee of 1% may apply to redemptions or exchanges from certain funds within the time period specified in the funds prospectus. To obtain the most recent month-end performance, visit putnam.com. The BofA Merrill Lynch U.S. Treasury Bill Index is an unmanaged index that tracks the performance of U.S. dollar denominated U.S. Treasury bills publicly issued in the U.S. domestic market. The S&P 500 Index is an unmanaged index of common stock performance. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities. You cannot invest directly in an index. The Sharpe ratio is a measure of historical adjusted performance calculated by dividing the funds return minus the risk-free rate (Citigroup 30-day T-bill) by the standard deviation of the funds return. The higher the ratio, the better the funds return per unit of risk. Standard deviation measures how widely a set of values varies from the mean. For the Absolute Return Funds, it is a historical measure of the variability of return earned by an investment portfolio since inception.

Putnam Absolute Return Funds offer five distinct features.

Putnam Absolute Return 100 Fund
Seeks to outperform Treasury bills by 1% An alternative to short-term securities

1
Global opportunities
U.S. government bonds Mortgage-backed securities (MBS) Commercial MBS Asset-backed securities Investment-grade corporate bonds Global high-yield bonds Cash equivalents Foreign currencies International bonds Options, futures, forward, and swap contracts

2
Progressive risk management
Diversification strategies that combine investments with uncorrelated sources of returns can help stabilize performance. Fixed-income securities with short-term maturities can make the funds less sensitive to liquidity and pricing risks. Cash investments on a tactical basis help protect the funds from losses and minimize portfolio volatility. Hedging strategies, including use of options contracts, can be employed to limit downside volatility and guard the funds from market declines. Futures and swap contracts and other modern tools can isolate and mitigate specific risks, such as interest-rate risk or default risk.

3
Ultimate flexibility
Indifferent to market benchmarks and rankings Can adjust risk levels based on attractiveness of market opportunities Free to invest globally, not tied to a single market Can diversify outside the U.S. dollar Focused entirely on return targets and maintaining low volatility Freed from a standard asset allocation, can adjust allocations based on conditions Can have exposure to many different currencies

4
Experienced portfolio management
5 portfolio managers averaging 22 years of investment experience Backed by research of over 70 specialists across global fixed-income sectors Careful portfolio construction process integrates multiple strategies Emphasis on fundamental analysis of total return potential 12 years of experience managing absolute return strategies for institutions

5
Shareholderfriendly fee structure
Fee adjustment based on performance vs. target

+/0.04%

Putnam Absolute Return 300 Fund

Weve taken an investing concept that has worked for institutional and high-net-worth investors, and brought it to the retail investor.
Robert L. Reynolds President and CEO Putnam Investments

Seeks to outperform Treasury bills by 3%

An alternative to bond funds

+/0.12%

Putnam Absolute Return 500 Fund

Seeks to outperform Treasury bills by 5% An alternative to balanced funds

Global investment-grade bonds Global high-yield bonds Cash equivalents Treasury inflation-protected securities (TIPS) U.S. stocks International stocks Emerging-market stocks Commodities Real estate investment trusts (REITs) Foreign currencies Options, futures, forward, and swap contracts

5 global asset allocation portfolio managers averaging 21 years of investment experience Backed by research of 14 global asset allocation specialists Actively monitor global markets and asset classes for short-, medium-, and long-term trends Fundamental research emphasis informed by quantitative analysis 5 years of experience managing absolute return strategies for institutions

+/0.20%

Putnam Absolute Return 700 Fund

Seeks to outperform Treasury bills by 7% An alternative to stock funds

+/0.28%

Each fund seeks to outperform inflation, as measured by the BofA Merrill Lynch U.S. Treasury Bill Index, by a targeted amount. While Treasury bills are backed by the U.S. government, investments in mutual funds are not. Class A shares include a maximum initial sales charge of 1.00% for the 100 Fund and 300 Fund, and 5.75% for the 500 Fund and 700 Fund. A short-term trading fee of 1% may apply to redemptions or exchanges from certain funds within the time period specified in the funds prospectus.

Consider these risks before you invest: Our allocation of assets among permitted asset categories may hurt performance. Funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-

market securities, including illiquidity and volatility. The use of derivatives involves additional risks, such as the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. For the 500 Fund and 700 Fund, these risks also apply: REITs involve the risks of real estate investing, including declining property values. Commodities involve the risks of changes in market, political, regulatory, and natural conditions. Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Additional risks are listed in the funds prospectus.

Four ways to use Putnam Absolute Return Funds.

1
For investors re-entering the markets
Investors who have stayed on the sidelines may find these funds more attractive than cash because of their return targets and tools to help hedge against inflation.

2
As the core of a diversified portfolio
With a focus on seeking consistent results, our funds are designed to anchor any portfolio. They offer diversification by investment philosophy, to go along with diversification by asset class or market.

3
As a complement to relative return funds
Relative return funds try to outperform a benchmark with traditional tools. Absolute return funds pursue consistent, positive return targets over time with less volatility, using modern and traditional tools.

4
For retirement investments
Because the funds focus on consistent positive return targets, they may be an appropriate choice for IRA investors, for retirement plan participants, and for investors in retirement.

Example: Place assets in the absolute return fund with the most suitable return target.

Example: Move part of a portfolio into the absolute return fund with the appropriate return target: 700 Fund for early-career investors, 500 Fund for mid-career investors, and 300 Fund for late-career investors.

Example: Allocate a portion of assets to the absolute return fund with the appropriate return target, to seek to lower the portfolios overall volatility.

Example: Devote a segment of a retirement portfolio to the 500 Fund or 300 Fund to seek to outperform inflation, and pair this with income-generating investments.

Talk to your financial representative about how Putnam Absolute Return Funds might diversify your portfolio for todays markets. For more information on these funds, visit putnam.com/absolutereturn.

Absolutely for all kinds of investors.

QUOTRON SYMBOL S

Putnam Absolute Return 100 Fund

Class A: PARTX Class B: PARPX Class C: PARQX Class M: PARZX Class R: PRARX Class Y: PARYX

Putnam Absolute Return 500 Fund

Class A: PJMDX Class B: PJMBX Class C: PJMCX Class M: PJMMX Class R: PJMRX Class Y: PJMYX

A BALANCED APPROACH
Since 1937, when George Putnam created a diverse mix of stocks and bonds in a single, professionally managed portfolio, Putnam has championed the balanced approach.

Putnam Absolute Return 300 Fund

Class A: PTRNX Class B: PTRBX Class C: PTRGX Class M: PZARX Class R: PTRKX Class Y: PYTRX

Putnam Absolute Return 700 Fund

Class A: PDMAX Class B: PDMBX Class C: PDMCX Class M: PDMMX Class R: PDMRX Class Y: PDMYX

A WORLD OF INVESTING
Today, we offer investors a world of equity, fixedincome, multi-asset, and absolute-return portfolios to suit a range of financial goals.

Request a prospectus or summary prospectus from your financial representative or by calling Putnam at 18002251581. The prospectus includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing.

A COMMITMENT TO EXCELLENCE
Our portfolio managers seek superior results over time, backed by original, fundamental research on a global scale. We believe in the value of experienced financial advice, in providing exemplary service, and in putting clients first in all we do.

One Post Office Square Boston, MA 02109 18002251581

Putnam Retail Management

FB5142734402/12

putnam.com