Multi-Asset Absolute Return Fund Semi-Annual Report
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Putnam Multi-Asset Absolute Return Fund Semiannual report 4 | 30 | 21 Absolute return funds are designed for a wide range of investors and pursue positive returns with less volatility over time than more traditional funds. FUND SYMBOL CLASS A PDMAX Putnam Multi-Asset Absolute Return Fund Semiannual report 4 | 30 | 21 Message from the Trustees 1 Interview with your fund’s portfolio manager 3 Your fund’s performance 9 Your fund’s expenses 11 Consider these risks before investing 13 Terms and definitions 14 Other information for shareholders 16 Financial statements 17 Message from the Trustees June 10, 2021 Dear Fellow Shareholder: With summer at hand, it’s worth asking whether the economy has returned to normal. More than half of the 50 states have lifted pandemic-related restrictions. First-quarter growth in U.S. gross domestic product was 6%, reflecting a return nearly to pre-pandemic levels of economic output. The global economy is a different story. Beyond our shores, many nations lag the United States in vaccination rates and business activity. While there are reasons to feel some relief, it’s important to recognize what may be a new normal. The pandemic is not in the past, and many of the changes precipitated by it could last. During this time, dynamic, well-managed companies have adapted to seize new, more sustainable growth opportunities. Putnam’s active philosophy is well suited to this time. Putnam’s investment teams are analyzing companies, industries, consumers, and even governments. They try to understand the fundamentals of what has stayed the same and what has changed to uncover valuable investment insights or potential risks. Thank you for investing with Putnam. Respectfully yours, Robert L. Reynolds Kenneth R. Leibler President and Chief Executive Officer Chair, Board of Trustees Putnam Investments Performance history as of 4/30/21 Annualized total return (%) comparison The fund — class A shares before sales charge Fund’s benchmark Putnam Multi-Asset Absolute Return Fund (PDMAX) ICE BofA U.S. Treasury Bill Index 2.72 1.50 1.02 1.20 0.58 0.66 0.12 0.00 0.05 LIFE OF FUND 10 YEARS 5 YEARS 3 YEARS 1 YEAR 6 MONTHS (since 12/23/08) –0.09 –2.37 –3.76 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 9–10 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. Returns for periods less than one year are cumulative. Recent broad market index and fund performance U.S. stocks (S&P 500 Index) 28.85% Fund’s benchmark (ICE BofA U.S. Treasury Bill Index) 0.05% Putnam Multi-Asset Absolute Return Fund (class A shares before sales charge) 0.00% U.S. bonds (Bloomberg Barclays U.S. Aggregate Bond Index) –1.52% This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 4/30/21. See above and pages 9–10 for additional fund performance information. Index descriptions can be found on page 15. All Bloomberg Barclays indices provided by Bloomberg Index Services Limited. 2 Multi-Asset Absolute Return Fund Interview with your fund’s portfolio manager Interview with your fund’s portfolio manager Performance history as of 4/30/21 Jason Vaillancourt discusses the global investing environment and fund performance Annualized total return (%) comparison The fund — class A shares before sales charge Fund’s benchmark for the six-month period ended April 30, 2021, Putnam Multi-Asset Absolute Return Fund (PDMAX) ICE BofA U.S. Treasury Bill Index as well as his outlook for the fund. 2.72 1.50 1.02 1.20 0.58 0.66 0.12 0.00 0.05 LIFE OF FUND 10 YEARS 5 YEARS 3 YEARS 1 YEAR 6 MONTHS (since 12/23/08) –0.09 –2.37 How did stocks perform during the period? –3.76 A number of factors drove positive perfor- mance for stocks over the period. Record Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. fiscal and monetary stimulus, distribution of 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 the world’s first Covid-19 vaccines, and signs bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See below and pages 9–10 of global economic recovery contributed to Jason R. Vaillancourt, CFA for additional performance information. For a portion of the periods, the fund had expense limitations, without which investor optimism. returns would have been lower. To obtain the most recent month-end performance, visit putnam.com. Portfolio Manager Market momentum was periodically disrupted Returns for periods less than one year are cumulative. Jason is Co-Head of Global Asset Allocation. He has an M.B.A. from the Booth by concerns over a rising number of new School of Business, University of Chicago, Covid-19 variants, a global sell-off of tech- Recent broad market index and fund performance and a B.S. from Northeastern University. nology stocks, and delays in the vaccine supply Jason joined Putnam in 1999 and has been chain. Extended pandemic lockdowns in in the investment industry since 1993. U.S. stocks the United Kingdom and Europe also rattled 28.85% (S&P 500 Index) Brett S. Goldstein, CFA, James A. Fetch, investor confidence. and Robert J. Schoen are also Portfolio Fund’s benchmark Managers of the fund. U.S. President Biden’s $1.9 trillion American (ICE BofA U.S. Treasury Bill Index) 0.05% Rescue Plan, signed in early March 2021, helped Putnam Multi-Asset Absolute Return Fund boost investor sentiment. For the six-month 0.00% (class A shares before sales charge) reporting period, the S&P 500 Index, a broad U.S. bonds measure of stocks, posted a return of 28.85%. (Bloomberg Barclays U.S. Aggregate Bond Index) –1.52% How did bonds and commodities perform This comparison shows your fund’s performance in the context of broad market indexes for the six months during the period? ended 4/30/21. See above and pages 9–10 for additional fund performance information. Index descriptions can be found on page 15. Stimulus-fueled growth, accommodative monetary policy, and inflation expectations All Bloomberg Barclays indices provided by Bloomberg Index Services Limited. drove yields on all but very short-term govern- ment debt higher during the period. Many investors were concerned that inflationary Multi-Asset Absolute Return Fund 3 Portfolio composition Agency pass-throughs 22.6% U.S. stocks 22.4% Commercial mortgage- backed securities 15.5% Commodities 15.5% Agency collateralized mortgage obligations 6.6% Emerging-market stocks 3.4% Residential MBS (non-agency) 1.3% Asset-backed securities 1.2% International stocks 1.1% Emerging-market bonds –7.6% U.S. Treasury/agency –14.0% Cash and net other assets 32.0% Allocations are shown as a percentage of the fund’s net assets as of 4/30/21. 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 use of different classifications of securities for presentation purposes, and rounding. Allocations may not total 100% because the table includes the notional value of certain derivatives (the economic value for purposes of calculating periodic payment obligations), in addition to the market value of securities. Holdings and allocations may vary over time. Negative weights may result from timing differences between trade and settlement dates of securities, such as TBAs, or from the use of derivatives. pressures would eventually cause the Federal plan, which is expected to stimulate signif- Reserve [Fed] to raise short-term interest rates icant demand for metal, lumber, and sooner than expected. The rate-sensitive other commodities. Bloomberg Barclays U.S. Aggregate Bond Index, a measure of investment-grade corporate How did Putnam Multi-Asset Absolute bonds, reported a loss of 1.52% for the Return Fund perform for the period? six-month period. The yield on the benchmark The fund’s class A shares reported a return of 10-year U.S. Treasury note rose to 1.65% on 0.00% compared with a return of 0.05% for the April 30, 2021, from 0.87% at the beginning of fund’s benchmark, the ICE BofA U.S. Treasury the reporting period. Bill Index. Commodity prices surged during the period on the expectation that widespread admin- Before we discuss performance, can you istration of vaccines would bring about a provide an overview of the fund’s strategies? sooner-than-anticipated return to global travel. Our investment approach for the fund seeks Additionally, investors were encouraged by to achieve risk-and-return characteristics President Biden’s infrastructure spending by dynamically allocating assets using a 4 Multi-Asset Absolute Return Fund combination of directional [market sensitive] In our view, the combination and non-directional [market neutral] strategies.