| 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: | (811-07513) |
| Exact name of registrant as specified in charter: | Putnam Funds Trust |
| Address of principal executive offices: | One Post Office Square, Boston, Massachusetts 02109 |
| Name and address of agent for service: | Robert T. Burns, Vice President One Post Office Square Boston, Massachusetts 02109 |
| Copy to: | John W. Gerstmayr, Esq. Ropes & Gray LLP 800 Boylston Street Boston, Massachusetts 02199-3600 |
| Registrant’s telephone number, including area code: | (617) 292-1000 |
| Date of fiscal year end: | February 28, 2014 |
| Date of reporting period: | March 1, 2013 — August 31, 2013 |
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
Retirement Income
Fund Lifestyle 3
Semiannual report
8 | 31 | 13
| Message from the Trustees | 1 | ||
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| About the fund | 2 | ||
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| Performance snapshot | 4 | ||
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| Interview with your fund’s portfolio manager | 5 | ||
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| Your fund’s performance | 12 | ||
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| Your fund’s expenses | 14 | ||
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| Terms and definitions | 16 | ||
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| Other information for shareholders | 17 | ||
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| Trustee approval of management contract | 18 | ||
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| Financial statements | 24 | ||
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Consider these risks before investing: International investing involves currency, economic, and political risks. Emerging-market securities carry illiquidity and volatility risks. Investments in small and/or midsize companies increase the risk of greater price fluctuations. 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 and the risk that they may increase in value less when interest rates decline and decline in value more when interest rates rise. Our allocation of assets among permitted asset categories may hurt performance. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Unlike bonds, funds that invest in bonds have fees and expenses. There is no guarantee that the fund will provide adequate income at and through an investor’s retirement. Stock and bond prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific issuer or industry. You can lose money by investing in the fund.
Message from the Trustees
Dear Fellow Shareholder:
Investors have been digesting a wide array of economic and geopolitical developments in recent months. While economic growth has continued despite the negative impact of the federal budget sequester, the Federal Reserve’s expected tapering of its $85 billion-a-month bond-buying program has prompted greater market volatility, and bond yields have risen substantially.
There is concern that the reduction of Fed purchases will cause long-term interest rates to move higher, running the risk of curtailing the recovery. Already, mortgage rates have jumped and housing market data appear less robust than earlier in the year. Overseas, instability in Egypt and Syria has contributed to higher oil prices, which could undermine the reasonably positive trends in consumer spending. Fortunately, the eurozone posted positive GDP growth in the second calendar quarter after many months of contraction, though the 17-nation currency bloc continues to grapple with significant economic challenges.
While we cannot forecast with precision how economic or geopolitical events will unfold over the coming months, we have confidence that a long-term investment program remains valuable. Putnam’s in-depth fundamental research, active investing, and risk management strategies can serve investors well through changing markets. To address a diverse range of financial goals, Putnam’s investment professionals integrate innovative thinking with traditional and alternative approaches.
We also believe in the importance of relying on the guidance of a professional advisor who can help you develop a financial plan suited to your goals and risk tolerance.
We would like to welcome new shareholders of the fund and to thank you for investing with Putnam. We would also like to extend our thanks to Elizabeth Kennan, who recently retired from the Board of Trustees, for her 20 years of dedicated service.
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 4.00%; had they, returns would have been lower. See pages 5 and 12–14 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 the six-month period are not annualized, but cumulative.
| 4 | Retirement Income Fund Lifestyle 3 |
Interview with your fund’s portfolio manager
Bob, could you review market conditions during the six months ended August 31, 2013?
Continued evidence of a slowly recovering U.S. economy and positive investor sentiment benefited most asset classes in the early months of the period, especially stocks and higher-yielding, credit-sensitive sectors of the fixed-income market. However, the market environment became less hospitable in May, when the U.S. Federal Reserve hinted that it could begin scaling back its stimulus program later in 2013 if economic conditions continued to improve. The debate over the end of quantitative easing [QE] became the focus of markets globally and culminated in June with a statement by Fed Chairman Ben Bernanke on the economically driven prospects for curtailing the Fed’s bond-buying programs. In hindsight, we think this period may have proved to be a critical inflection point for the Fed, the U.S. economy, and global securities markets.
During this time, equity and fixed-income markets diverged considerably. Asset classes that had been buoyed by the massive liquidity created by the Fed’s purchases reversed course. U.S. stocks experienced a significant disruption of the trends seen for most of 2012 and the early months of 2013 but still managed to make gains for the challenging second quarter of 2013 and performed well for the six months ended August 31, 2013. With the exception of emerging markets,
This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 8/31/13. See pages 4 and 12–14 for additional fund performance information. Index descriptions can be found on page 17.
| Retirement Income Fund Lifestyle 3 | 5 |
international equity markets ended the six-month period in positive territory.
Fixed-income investments, however, had a more acute reaction to the Fed’s announcements. Interest rates jumped — causing yield curves to steepen worldwide — and bond prices fell sharply in a relatively short span. Emerging-market bonds were particularly hard hit in the sell-off, as they tend to be dependent on the influx of investment capital. Commodities, which tend to perform well in bull markets and periods of global growth, also struggled as did spread sectors, that is, sectors that typically trade at yields greater than U.S. Treasuries, such as investment-grade bonds and mortgage-backed securities. Global government bonds fell, although not to the same degree as sectors with greater risk.
After the Fed stated that monetary policy would remain highly accommodative until the U.S. economy was back on its feet, the volatility in fixed-income markets eased somewhat, but few bond sectors could reverse the negative tide for the balance of the period. Given their unique ability to bridge both the fixed-income and equity markets, convertible securities were a notable exception and posted solid gains for the six months. High-yield bonds also bounced back somewhat by period-end.
How did Putnam Retirement Income Fund Lifestyle 3 perform in this environment?
The fund’s diversified global approach to investing helped to mute the effects of market volatility. For the six months ended August 31, 2013, the fund generated a positive return that surpassed the negative return of its primary fixed-income benchmark but lagged the performance of its secondary all-equity benchmark.
Allocations are shown as a percentage of the fund’s net assets as of 8/31/13. 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. Allocations also reflect the holdings of one or more of the Putnam Absolute Return Funds. 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, and the use of different classifications of securities for presentation purposes. Holdings and allocations may vary over time.
| 6 | Retirement Income Fund Lifestyle 3 |
Our decision to overweight investments in U.S. equities was a major contributor to performance for the period as was our security selection in that asset class. The fund’s underweight position and security selection in emerging-market debt also aided performance, as these bonds struggled during the period. Security selection within the fund’s international equity sleeve was a slight detractor for the six months.
What are your thoughts about the recent volatility and the future course for U.S. interest rates?
The Fed’s talk of tapering its bond-buying programs has understandably caused unease among bond investors, but yield movements like we have seen since May are rare, especially when the U.S. economy is growing below its capacity and generating little inflationary pressure. Thus, we regard the jump in yields as an overreaction to the statements from Chairman Bernanke.
In our view, the Fed concluded this past spring that the economy was in a much healthier state than when the latest round of QE had begun in late 2012, and that if the pace of improvement continued, it would be prudent to begin tapering its bond-buying program. However, at its September meeting, the central bank decided to wait for further evidence of improvement in economic
This table shows the fund’s top 10 individual holdings and the percentage of the fund’s net assets that each represented as of 8/31/13. Short-term holdings and derivatives, if any, are excluded. Holdings may vary over time.
| Retirement Income Fund Lifestyle 3 | 7 |
growth and the labor market before setting a time frame for tapering.
In short, Fed officials now appear more concerned about the hints of softness in the recent economic data, such as retail sales, and are less impressed with the strong data elsewhere in the U.S. economy. We also think the central bank may be more worried about fiscal issues at the federal level than the financial markets appear to be, given recent market performance.
Are you seeing opportunities in global bonds?
Yes. But while the global environment appears to be relatively stable, it is less solid than that of the United States, in our view. In China, weaker growth and high consumer debt levels have complicated the government’s effort to stimulate domestic demand. China’s attempt to drive its economy away from infrastructure investment toward domestic consumption is, in our view, having ripple effects on other emerging-market countries, particularly those that are commodity-price dependent. In Europe, some of the biggest risks — such as the potential breakup of the European Union and a failure of the euro currency — appear to have subsided as a result of the efforts of eurozone policymakers. Core European economies were somewhat weaker than we expected for much of the period; data near the end of the period from Germany, the Netherlands, and Switzerland were encouraging. Peripheral eurozone economies have performed better than we anticipated, thanks to sharply lower interest rates in those countries.
As for the interest-rate picture abroad, while we believe global rates are likely to move higher over the medium term, we think the degree of increase during May and June
This chart shows how the fund’s top weightings have changed over the past six months. Allocations are represented as a percentage of the fund’s net assets. Allocations also reflect the holdings of one or more of the Putnam Absolute Return Funds. Current period 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, and the use of different classifications of securities for presentation purposes. Holdings and allocations may vary over time.
| 8 | Retirement Income Fund Lifestyle 3 |
was more than the economic environment warranted. Consequently, as noted earlier, we modestly lengthened the portfolio’s duration in June as a tactical play to potentially capitalize on near-term rate declines.
Has your positioning in higher-risk assets changed in light of recent market volatility?
We currently believe risk assets, such as equities and high-yield bonds, offer more attractive total return potential than other interest-rate risk and inflation-sensitive assets, including Treasury Inflation-Protected Securities and commodities. Thus we are favoring continued positioning in risk assets going into the fourth quarter of 2013.
From a global perspective, we consider U.S. and Japanese equities to be among the most promising. Here at home, we believe the broader U.S. economic recovery remains on track and should continue at a moderate pace, as recent data have been a bit better than expected. We also think that the housing recovery will continue, although mortgage rates moved higher during May and June. In our view, home sales are improving because of stronger economic activity and better consumer confidence, not because of mortgage credit. Despite relatively sluggish revenue growth for U.S. businesses, our outlook is constructive for corporate earnings, as we believe the bulk of profitability is the result of structural improvement and could be sustainable over time.
The pro-growth monetary and fiscal changes launched by Japan’s Prime Minister Shinzo Abe have been well received by investors. Abe consolidated his grip on policy in this past July’s election, which should allow him to follow through on instituting deep structural reforms for the Japanese economy. We remain steadfast in our conviction that the country’s structural reform process will create long-term investment opportunities for companies poised to benefit.
A word about derivatives
Derivatives are an increasingly common type of investment instrument, the performance of which is derived from an underlying security, index, currency, or other area of the capital markets. Derivatives employed by the fund’s managers generally serve one of two main purposes: to implement a strategy that may be difficult or more expensive to invest in through traditional securities, or to hedge unwanted risk associated with a particular position.
For example, the fund’s managers might use currency forward contracts to capitalize on an anticipated change in exchange rates between two currencies. This approach would require a significantly smaller outlay of capital than purchasing traditional bonds denominated in the underlying currencies. In another example, the managers may identify a bond that they believe is undervalued relative to its risk of default, but may seek to reduce the interest-rate risk of that bond by using interest-rate swaps, a derivative through which two parties “swap” payments based on the movement of certain rates. In other examples, the managers may use options and futures contracts to hedge against a variety of risks by establishing a combination of long and short exposures to specific equity markets or sectors.
Like any other investment, derivatives may not appreciate in value and may lose money. Derivatives may amplify traditional investment risks through the creation of leverage and may be less liquid than traditional securities. And because derivatives typically represent contractual agreements between two financial institutions, derivatives entail “counterparty risk,” which is the risk that the other party is unable or unwilling to pay. Putnam monitors the counterparty risks we assume. For example, Putnam often enters into collateral agreements that require the counterparties to post collateral on a regular basis to cover their obligations to the fund.
| Retirement Income Fund Lifestyle 3 | 9 |
High-yield corporate bonds have historically tended to do well during periods of moderate economic growth. Fundamentals in the high-yield universe appear strong, and we expect that defaults will hover near historically low levels. Furthermore, as a result of the spring correction, prices of many high-yield bonds have declined to what we believe are attractive levels.
Did derivatives have any significant impact on fund performance for the period?
We employed credit default swaps to hedge credit and market risk and to gain exposure to specific securities or groups of securities. This strategy was successful for the fund during the period.
What should investors expect in the coming months?
At its September meeting, the Fed surprised many observers with its announcement that it was waiting for more evidence of strength in the U.S. economy before it began to unwind its stimulus program. Thus we expect continued volatility in interest rates and yield spreads as investors adjust their expectations about Fed policy and efforts in Washington to resolve the budget crisis and debt ceiling debate. However, when the Fed does begin to taper, we think it is unlikely that rates are going to suddenly spike dramatically higher as they did in May and June of 2013. If yields rise more than economic fundamentals seem to warrant, we may view it as an opportunity to add what we believe are attractively valued securities to the fund and extend duration, or interest-rate sensitivity, of the portfolio.
Thanks, Bob, for your time and for bringing us up to date.
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.
Portfolio Manager Robert J. Kea is Co-Head of Global Asset Allocation at Putnam. He holds an M.B.A. from the Bentley University Graduate School of Business and a B.A. from the University of Massachusetts, Amherst. A CFA charterholder, he joined Putnam in 1989 and has been in the investment industry since 1988.
In addition to Bob, your fund’s portfolio managers are James A. Fetch; Joshua B. Kutin, CFA; Robert J. Schoen; and Jason R. Vaillancourt, CFA.
| 10 | Retirement Income Fund Lifestyle 3 |
IN THE NEWS
At its September meeting, the Federal Open Market Committee surprised investors by delaying the tapering of its $85 billion-a-month bond-buying stimulus program. Declaring that the challenges facing the U.S. economy are diminishing “only gradually,” Fed Chairman Ben Bernanke said the central bank will wait to curtail its quantitative easing program until there is more evidence of a sustained recovery. Bernanke in his comments noted a deceleration of U.S. job growth in the past three months. The bond-buying stimulus program was established in the fall of 2012 to stimulate the economy and employment growth, and is widely credited with buoying equity prices and holding down long-term interest rates. Previously, when the Fed chairman signaled in May 2013 that the Fed’s bond purchases could be scaled back in the final months of this year, the news sent tremors through bond markets and contributed to an abrupt increase in Treasury yields.
| Retirement Income Fund Lifestyle 3 | 11 |
Your fund’s performance
This section shows your fund’s performance, price, and distribution information for periods ended August 31, 2013, the end of the first half of its current fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information 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. 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 and class Y shares are not available to all investors. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.
Fund performance Total return for periods ended 8/31/13
| Class A | Class B | Class C | Class M | Class R | Class Y | |||||
| (inception dates) | (9/13/04) | (9/12/05) | (9/12/05) | (9/12/05) | (9/12/05) | (10/4/05) | ||||
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| Before | After | Before | After | Net | Net | |||||
| sales | sales | Before | After | Before | After | sales | sales | asset | asset | |
| charge | charge | CDSC | CDSC | CDSC | CDSC | charge | charge | value | value | |
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| Life of fund | 51.60% | 45.54% | 41.56% | 41.56% | 41.58% | 41.58% | 45.62% | 40.88% | 48.15% | 54.63% |
| Annual average | 4.75 | 4.27 | 3.95 | 3.95 | 3.95 | 3.95 | 4.28 | 3.90 | 4.48 | 4.98 |
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| 5 years | 26.66 | 21.59 | 21.88 | 19.88 | 21.92 | 21.92 | 24.18 | 20.14 | 24.83 | 28.22 |
| Annual average | 4.84 | 3.99 | 4.04 | 3.69 | 4.04 | 4.04 | 4.43 | 3.74 | 4.53 | 5.10 |
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| 3 years | 21.70 | 16.84 | 18.90 | 15.90 | 18.90 | 18.90 | 20.46 | 16.55 | 20.42 | 22.46 |
| Annual average | 6.77 | 5.32 | 5.94 | 5.04 | 5.94 | 5.94 | 6.40 | 5.24 | 6.39 | 6.99 |
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| 1 year | 7.78 | 3.47 | 6.98 | 1.98 | 6.90 | 5.90 | 7.54 | 4.04 | 7.52 | 8.02 |
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| 6 months | 1.87 | –2.20 | 1.40 | –3.60 | 1.40 | 0.40 | 1.66 | –1.64 | 1.74 | 1.99 |
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Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A and M shares reflect the deduction of the maximum 4.00% and 3.25% sales charge, respectively, 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 1% in the sixth 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 and Y shares have no initial sales charge or CDSC. Performance for class B, C, M, 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.
For a portion of the periods, the fund had expense limitations, without which returns would have been lower.
Class B share performance does not reflect conversion to class A shares.
| 12 | Retirement Income Fund Lifestyle 3 |
Comparative index returns For periods ended 8/31/13
| Barclays U.S. Aggregate | ||
| Bond Index | S&P 500 Index | |
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| Life of fund | 50.05% | 74.91% |
| Annual average | 4.63 | 6.44 |
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| 5 years | 27.19 | 42.35 |
| Annual average | 4.93 | 7.32 |
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| 3 years | 7.93 | 65.98 |
| Annual average | 2.58 | 18.40 |
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| 1 year | –2.47 | 18.70 |
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| 6 months | –2.61 | 8.95 |
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Index results should be compared with fund performance before sales charge, before CDSC, or at net asset value.
Fund price and distribution information For the six-month period ended 8/31/13
| Distributions | Class A | Class B | Class C | Class M | Class R | Class Y | ||
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| Number | 6 | 6 | 6 | 6 | 6 | 6 | ||
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| Income | $0.102 | $0.063 | $0.063 | $0.090 | $0.088 | $0.114 | ||
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| Capital gains | — | — | — | — | — | — | ||
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| Total | $0.102 | $0.063 | $0.063 | $0.090 | $0.088 | $0.114 | ||
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| Before | After | Net | Net | Before | After | Net | Net | |
| sales | sales | asset | asset | sales | sales | asset | asset | |
| Share value | charge | charge | value | value | charge | charge | value | value |
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| 2/28/13 | $10.21 | $10.64 | $10.18 | $10.18 | $10.20 | $10.54 | $10.20 | $10.22 |
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| 8/31/13 | 10.30 | 10.73 | 10.26 | 10.26 | 10.28 | 10.63 | 10.29 | 10.31 |
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| Before | After | Net | Net | Before | After | Net | Net | |
| Current rate | sales | sales | asset | asset | sales | sales | asset | asset |
| (end of period) | charge | charge | value | value | charge | charge | value | value |
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| Current dividend rate 1,2 | 1.98% | 1.90% | 1.17% | 1.17% | 1.75% | 1.69% | 1.75% | 2.21% |
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| Current 30-day SEC yield 3,4 | ||||||||
| (with expense limitation) | N/A | 1.13 | 0.43 | 0.43 | N/A | 0.89 | 0.72 | 1.43 |
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| Current 30-day SEC yield 3,4 | ||||||||
| (without expense limitation) | N/A | 0.49 | –0.24 | –0.24 | N/A | 0.25 | 0.01 | 0.76 |
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The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A and M 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 (4.00% for class A shares and 3.25% for class M shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.
1 Most recent distribution, including any return of capital and excluding capital gains, annualized and divided by share price before or after sales charge at period-end.
2 Current dividend rate excludes dividends received from underlying Putnam funds.
3 For a portion of the period, the fund had expense limitations, without which returns would have been lower.
4 Based only on investment income and calculated using the maximum offering price for each share class, in accordance with SEC guidelines.
| Retirement Income Fund Lifestyle 3 | 13 |
Fund performance as of most recent calendar quarter
Total return for periods ended 9/30/13
| Class A | Class B | Class C | Class M | Class R | Class Y | |||||
| (inception dates) | (9/13/04) | (9/12/05) | (9/12/05) | (9/12/05) | (9/12/05) | (10/4/05) | ||||
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| Before | After | Before | After | Net | Net | |||||
| sales | sales | Before | After | Before | After | sales | sales | asset | asset | |
| charge | charge | CDSC | CDSC | CDSC | CDSC | charge | charge | value | value | |
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| Life of fund | 55.38% | 49.17% | 45.02% | 45.02% | 45.18% | 45.18% | 49.23% | 44.38% | 51.82% | 58.66% |
| Annual average | 4.99 | 4.52 | 4.19 | 4.19 | 4.21 | 4.21 | 4.52 | 4.14 | 4.72 | 5.24 |
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| 5 years | 41.29 | 35.64 | 36.03 | 34.03 | 36.20 | 36.20 | 38.60 | 34.09 | 39.24 | 43.15 |
| Annual average | 7.16 | 6.29 | 6.35 | 6.03 | 6.37 | 6.37 | 6.75 | 6.04 | 6.84 | 7.44 |
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| 3 years | 21.37 | 16.52 | 18.72 | 15.72 | 18.83 | 18.83 | 20.29 | 16.38 | 20.22 | 22.37 |
| Annual average | 6.67 | 5.23 | 5.89 | 4.99 | 5.92 | 5.92 | 6.35 | 5.19 | 6.33 | 6.96 |
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| 1 year | 9.04 | 4.68 | 8.14 | 3.14 | 8.25 | 7.25 | 8.70 | 5.16 | 8.79 | 9.39 |
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| 6 months | 2.83 | –1.28 | 2.46 | –2.54 | 2.46 | 1.46 | 2.72 | –0.62 | 2.70 | 3.05 |
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See the discussion following the Fund performance table on page 12 for information about the calculation of fund performance.
Your fund’s expenses
As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. In the most recent six-month period, your fund’s expenses were limited; had expenses not been limited, they would have been higher. 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 M | Class R | Class Y | |
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| Net expenses for the fiscal year | ||||||
| ended 2/28/13* | 1.11% | 1.86% | 1.86% | 1.36% | 1.36% | 0.86% |
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| Total annual operating expenses | ||||||
| for the fiscal year ended 2/28/13 | 1.88% | 2.63% | 2.63% | 2.13% | 2.13% | 1.63% |
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| Annualized expense ratio | ||||||
| for the six-month period | ||||||
| ended 8/31/13† | 1.00% | 1.75% | 1.75% | 1.25% | 1.25% | 0.75% |
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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 because it includes an impact of 0.11% in fees and expenses of acquired funds (including underlying Putnam funds). Expenses are shown as a percentage of average net assets.
* Reflects Putnam Management’s contractual obligation to limit expenses through 6/30/14.
† Excludes the expense ratios of the underlying Putnam funds.
| 14 | Retirement Income Fund Lifestyle 3 |
Expenses per $1,000
The following table shows the expenses you would have paid on a $1,000 investment in the fund from March 1, 2013, to August 31, 2013. 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 M | Class R | Class Y | |
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| Expenses paid per $1,000*† | $5.09 | $8.88 | $8.88 | $6.35 | $6.36 | $3.82 |
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| Ending value (after expenses) | $1,018.70 | $1,014.00 | $1,014.00 | $1,016.60 | $1,017.40 | $1,019.90 |
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* 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 8/31/13. 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; and then dividing that result by the number of days in the year.
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended August 31, 2013, use the following calculation method. To find the value of your investment on March 1, 2013, 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 M | Class R | Class Y | |
|
| ||||||
| Expenses paid per $1,000*† | $5.09 | $8.89 | $8.89 | $6.36 | $6.36 | $3.82 |
|
| ||||||
| Ending value (after expenses) | $1,020.16 | $1,016.38 | $1,016.38 | $1,018.90 | $1,018.90 | $1,021.42 |
|
| ||||||
* 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 8/31/13. 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; and then dividing that result by the number of days in the year.
| Retirement Income Fund Lifestyle 3 | 15 |
Terms and definitions
Important terms
Total return shows how the value of the fund’s shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund.
Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.
After sales charge is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge performance figures shown here assume the 4.00% maximum sales charge for class A shares and 3.25% for class M shares.
Contingent deferred sales charge (CDSC) is generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B CDSC declines over time from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase.
Share classes
Class A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).
Class B shares are not subject to an initial sales charge. They may be subject to a CDSC.
Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC (except on certain redemptions of shares bought without an initial sales charge).
Class R shares are not subject to an initial sales charge or CDSC and are available only to certain defined contribution plans.
Class Y shares are not subject to an initial sales charge or CDSC, and carry no 12b-1 fee. They are generally only available to corporate and institutional clients and clients in other approved programs.
Fixed-income terms
Current rate is the annual rate of return earned from dividends or interest of an investment. Current rate is expressed as a percentage of the price of a security, fund share, or principal investment.
Mortgage-backed security (MBS), also known as a mortgage “pass-through,” is a type of asset-backed security that is secured by a mortgage or collection of mortgages. The following are types of MBSs:
• Agency “pass-through” has its principal and interest backed by a U.S. government agency, such as the Federal National Mortgage Association (Fannie Mae), Government National Mortgage Association (Ginnie Mae), and Federal Home Loan Mortgage Corporation (Freddie Mac).
• Collateralized mortgage obligation (CMO) represents claims to specific cash flows from pools of home mortgages. The streams of principal and interest payments on the mortgages are distributed to the different classes of CMO interests in “tranches.” Each tranche may have different principal balances, coupon rates, prepayment risks, and maturity dates. A CMO is highly sensitive to changes in interest rates and any resulting change in the rate at which homeowners sell their properties, refinance, or otherwise prepay loans. CMOs are subject to prepayment, market, and liquidity risks.
• Interest-only (IO) security is a type of CMO in which the underlying asset is the interest portion of mortgage, Treasury, or bond payments.
• Non-agency residential mortgage-backed security (RMBS) is an MBS not backed by Fannie Mae, Ginnie Mae, or Freddie Mac. One type of RMBS is an Alt-A mortgage-backed security.
• Commercial mortgage-backed security (CMBS) is secured by the loan on a commercial property.
Yield curve is a graph that plots the yields of bonds with equal credit quality against their differing maturity dates, ranging from shortest to longest. It is used as a benchmark for other debt, such as mortgage or bank lending rates.
| 16 | Retirement Income Fund Lifestyle 3 |
Comparative indexes
Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.
BofA Merrill Lynch 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.
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.
Other information for shareholders
Important notice regarding delivery of shareholder documents
In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single 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, and Putnam will begin sending individual copies within 30 days.
Proxy voting
Putnam is committed to managing our mutual 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, 2013, 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.
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-Q. Shareholders may obtain the fund’s Forms N-Q on the SEC’s website at www.sec.gov. In addition, the fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s website or the operation of the Public Reference Room.
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 mutual funds. As of August 31, 2013, Putnam employees had approximately $387,000,000 and the Trustees had approximately $93,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.
| Retirement Income Fund Lifestyle 3 | 17 |
Trustee approval of management contract
General conclusions
The Board of Trustees of the Putnam funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management (“Putnam Management”), the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”), and the sub-advisory contract among Putnam Management, PIL, and another affiliate, The Putnam Advisory Company (“PAC”). The Board of Trustees, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of the Putnam funds (“Independent Trustees”).
At the outset of the review process, members of the Board’s independent staff and independent legal counsel met with representatives of Putnam Management to review the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review and to discuss possible changes in these materials that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2013, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for the Putnam funds and the Independent Trustees.
In May 2013, the Contract Committee met in executive session to discuss and consider its preliminary recommendations with respect to the continuance of the contracts. At the Trustees’ June 20, 2013 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its final recommendations. The Contract Committee then recommended, and the Independent Trustees approved, the continuance of your fund’s management, sub-management and sub-advisory contracts, effective July 1, 2013, subject to certain changes in these contracts noted below. (Because PIL and PAC are affiliates of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL and PAC, the Trustees have not evaluated PIL or PAC as separate entities, and all subsequent references to Putnam Management below should be deemed to include reference to PIL and PAC as necessary or appropriate in the context.)
The Independent Trustees’ approval was based on the following conclusions:
• That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds, and the costs incurred by
| 18 | Retirement Income Fund Lifestyle 3 |
Putnam Management in providing services to the fund, and
• That the fee schedule represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.
These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in previous years. For example, with some minor exceptions, the current fee arrangements in the management contracts for the Putnam funds were implemented at the beginning of 2010 following extensive review and discussion by the Trustees, as well as approval by shareholders.
As noted above, the Trustees considered certain changes to the management contracts of all funds that are organized as series of Putnam Funds Trust, including your fund, that were proposed by Putnam Management in an effort to consolidate the contracts of these funds into three separate contracts based on the structure of each fund’s management fee. The Independent Trustees’ approval of these consolidated management contracts was based on their conclusion that the changes were purely for administrative convenience and would not result in any substantive change to the terms of a fund’s existing management contract with Putnam Management or any reduction in the nature and quality of services provided to your fund.
The Trustees also considered certain administrative revisions to your fund’s sub-management and sub-advisory contracts. Putnam Management recommended that the sub-management contract be revised to reduce the sub-management fee that Putnam Management pays to PIL with respect to the portion of the portfolios of certain funds, but not your fund, that may be allocated to PIL from time to time. Putnam Management also recommended that the sub-advisory contract be revised to reflect the closure of PAC’s Tokyo office and the termination of PAC’s non-discretionary investment adviser’s license with respect to that office. The Independent Trustees’ approval of these recommendations was based on their conclusion that these changes would have no practical effect on Putnam Management’s continued responsibility for the management of these funds or the costs borne by fund shareholders and would not result in any reduction in the nature and quality of services provided to the funds.
Management fee schedules and total expenses
The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. The Trustees also reviewed the total expenses of each Putnam fund, recognizing that in most cases management fees represented the major, but not the sole, determinant of total costs to shareholders.
In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment style, changes in Putnam Management’s operating costs or profitability,
| Retirement Income Fund Lifestyle 3 | 19 |
or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of your fund.
Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with economies of scale in the form of reduced fee levels as assets under management in the Putnam family of funds increase. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of economies of scale between fund shareholders and Putnam Management.
As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to ensure that expenses of the Putnam funds continue to meet competitive standards, the Trustees and Putnam Management have implemented certain expense limitations. These expense limitations were: (i) a contractual expense limitation applicable to all retail open-end funds of 32 basis points on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to all open-end funds of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, investor servicing fees, distribution fees, investment-related expenses, interest, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses). These expense limitations serve in particular to maintain competitive expense levels for funds with large numbers of small shareholder accounts and funds with relatively small net assets. Most funds had sufficiently low expenses that these expense limitations did not apply. However, in the case of your fund, the second of the expense limitations applied during its fiscal year ending in 2012. In addition, Putnam Management has contractually agreed through at least June 30, 2014 to waive fees (and, to the extent necessary, bear other expenses) to the extent that the expenses of your fund (excluding brokerage, interest, taxes, investment-related expenses, extraordinary expenses, payments under the fund’s distribution plans, and acquired fund fees and expenses, but including payments under the fund’s investor servicing and investment management contracts) would exceed an annual rate of 0.75% of the fund’s average net assets. Putnam Management’s support for these expense limitations was an important factor in the Trustees’ decision to approve the continuance of your fund’s management, sub-management and sub-advisory contracts.
The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Lipper Inc. This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fee), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the 5th quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the 4th quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2012 (the first quintile representing the least expensive funds and the fifth quintile the most expensive funds). The fee and expense data reported by Lipper as of December 31, 2012 reflected the most recent fiscal year-end data available in Lipper’s database at that time.
In connection with their review of the management fees and total expenses of the Putnam funds, the Trustees also reviewed the costs of the services provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues,
| 20 | Retirement Income Fund Lifestyle 3 |
expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing of such economies of scale as may exist in the management of the Putnam funds at that time.
The information examined by the Trustees as part of their annual contract review for the Putnam funds has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, and the like. This information included comparisons of those fees with fees charged to the funds, as well as an assessment of the differences in the services provided to these different types of clients. The Trustees observed that the differences in fee rates between institutional clients and mutual funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients may reflect historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its institutional clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.
Investment performance
The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the investment oversight committees of the Trustees, which meet on a regular basis with the funds’ portfolio teams and with the Chief Investment Officer and other senior members of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period.
The Trustees considered that 2012 was a year of strong competitive performance for many of the Putnam funds, with only a relatively small number of exceptions. They noted that this strong performance was exemplified by the fact that the Putnam funds were recognized by Barron’s as the best performing mutual fund complex for 2012 — the second time in four years that Putnam Management has achieved this distinction for the Putnam funds. They also noted, however, the disappointing investment performance of some funds for periods ended December 31, 2012 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to
| Retirement Income Fund Lifestyle 3 | 21 |
improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional actions to address areas of underperformance are warranted.
For purposes of evaluating investment performance, the Trustees generally focus on competitive industry rankings for the one-year, three-year, and five-year periods. For a number of Putnam funds with relatively unique investment mandates, the Trustees evaluated performance based on comparisons of their absolute returns with the returns of selected investment benchmarks or targeted annualized returns. In the case of your fund, the Trustees considered that its class A shares’ return net of fees and expenses was positive for the one-year, three-year and five-year periods ended December 31, 2012. The Trustees did not find any evidence of underperformance that would suggest a need for concern regarding the investment process for your fund. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.)
The Trustees noted, however, that before it was renamed Putnam Retirement Income Fund Lifestyle 3 on June 16, 2011, the fund (as Putnam Income Strategies Fund) did not invest in Putnam Absolute Return 700 Fund. Had your fund done so, its performance may have been different.
The Trustees also considered a number of other changes that Putnam Management had made in recent years in efforts to support and improve fund performance generally. These changes included Putnam Management’s efforts to increase accountability and to reduce complexity in the portfolio management process for the Putnam equity funds by moving generally from a portfolio management team structure to a decision-making process that vests full authority and responsibility with individual portfolio managers and by affirming its commitment to a fundamental-driven approach to investing. The Trustees noted that Putnam Management had also worked to strengthen its fundamental research capabilities by adding new investment personnel to the large-cap equities research team and by bringing U.S. and international research under common leadership. In addition, the Trustees recognized that Putnam Management has adjusted the compensation structure for portfolio managers and research analysts so that only those who achieve top-quartile returns over a rolling three-year basis are eligible for full bonuses.
Brokerage and soft-dollar allocations; investor servicing
The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft dollars generated by these means are used primarily to acquire brokerage and research services that enhance Putnam Management’s investment capabilities and supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft dollars continues to be used to pay fund expenses. The Trustees indicated their continued intent to monitor regulatory and industry developments in this area with the assistance of their Brokerage Committee and also indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking
| 22 | Retirement Income Fund Lifestyle 3 |
best price and execution remains paramount in the portfolio trading process.
Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management, sub-management and sub-advisory contracts, the Trustees reviewed your fund’s investor servicing agreement with Putnam Investor Services, Inc. (“PSERV”) and its distributor’s contracts and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are reasonable in relation to the nature and quality of such services, the fees paid by competitive funds, and the costs incurred by PSERV and PRM, as applicable, in providing such services.
| Retirement Income Fund Lifestyle 3 | 23 |
Financial statements
A guide to financial statements
These sections of the report, as well as the accompanying Notes, constitute the fund’s 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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.
Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.
| 24 | Retirement Income Fund Lifestyle 3 |
The fund’s portfolio 8/31/13 (Unaudited)
| COMMON STOCKS (30.6%)* | Shares | Value |
|
| ||
| Banking (1.8%) | ||
| Associated Banc-Corp. | 176 | $2,807 |
|
| ||
| Banco Santander Central Hispano SA (Spain) | 1,515 | 10,692 |
|
| ||
| Banque Cantonale Vaudoise (BCV) (Switzerland) | 14 | 7,501 |
|
| ||
| Bendigo and Adelaide Bank, Ltd. (Australia) | 983 | 8,811 |
|
| ||
| CaixaBank SA (Spain) | 2,976 | 11,052 |
|
| ||
| City National Corp. | 50 | 3,274 |
|
| ||
| Commonwealth Bank of Australia (Australia) | 269 | 17,333 |
|
| ||
| Fifth Third Bancorp | 661 | 12,090 |
|
| ||
| HSBC Holdings PLC (United Kingdom) | 2,622 | 27,468 |
|
| ||
| JPMorgan Chase & Co. | 891 | 45,022 |
|
| ||
| Natixis (France) | 3,402 | 14,658 |
|
| ||
| Northern Trust Corp. | 129 | 7,078 |
|
| ||
| PNC Financial Services Group, Inc. | 231 | 16,694 |
|
| ||
| Popular, Inc. (Puerto Rico) † | 113 | 3,510 |
|
| ||
| Resona Holdings, Inc. (Japan) | 2,400 | 11,393 |
|
| ||
| State Street Corp. | 225 | 15,012 |
|
| ||
| Sumitomo Mitsui Financial Group, Inc. (Japan) | 200 | 8,851 |
|
| ||
| Svenska Handelsbanken AB Class A (Sweden) | 603 | 25,877 |
|
| ||
| Toronto-Dominion Bank (Canada) | 61 | 5,217 |
|
| ||
| Wells Fargo & Co. | 191 | 7,846 |
|
| ||
| Westpac Banking Corp. (Australia) | 1,053 | 29,196 |
|
| ||
| Wing Hang Bank, Ltd. (Hong Kong) | 1,000 | 9,637 |
|
| ||
| 301,019 | ||
| Basic materials (1.2%) | ||
| Asahi Kasei Corp. (Japan) | 2,000 | 14,635 |
|
| ||
| Axiall Corp. | 32 | 1,281 |
|
| ||
| BASF SE (Germany) | 202 | 17,655 |
|
| ||
| Bemis Co., Inc. | 58 | 2,308 |
|
| ||
| BHP Billiton, Ltd. (Australia) | 310 | 9,813 |
|
| ||
| CF Industries Holdings, Inc. | 31 | 5,901 |
|
| ||
| Chicago Bridge & Iron Co., NV | 69 | 4,128 |
|
| ||
| Cytec Industries, Inc. | 31 | 2,318 |
|
| ||
| Domtar Corp. (Canada) | 23 | 1,518 |
|
| ||
| Eastman Chemical Co. | 70 | 5,320 |
|
| ||
| Evraz PLC (United Kingdom) | 4,615 | 8,940 |
|
| ||
| Fletcher Building, Ltd. (New Zealand) | 2,393 | 16,154 |
|
| ||
| Fortune Brands Home & Security, Inc. | 104 | 3,831 |
|
| ||
| Huntsman Corp. | 106 | 1,855 |
|
| ||
| LyondellBasell Industries NV Class A | 133 | 9,330 |
|
| ||
| Mitsubishi Chemical Holdings Corp. (Japan) | 2,500 | 11,711 |
|
| ||
| Monsanto Co. | 186 | 18,208 |
|
| ||
| Packaging Corp. of America | 53 | 2,811 |
|
| ||
| PPG Industries, Inc. | 54 | 8,435 |
|
| ||
| Rio Tinto PLC (United Kingdom) | 474 | 21,398 |
|
| ||
| Sherwin-Williams Co. (The) | 41 | 7,068 |
|
| ||
| Stora Enso OYJ Class R (Finland) | 1,674 | 12,932 |
|
| ||
| Valspar Corp. | 49 | 3,046 |
|
| ||
| Retirement Income Fund Lifestyle 3 | 25 |
| COMMON STOCKS (30.6%)* cont. | Shares | Value |
|
| ||
| Basic materials cont. | ||
| voestalpine AG (Austria) | 165 | $7,060 |
|
| ||
| W.R. Grace & Co. † | 42 | 3,375 |
|
| ||
| 201,031 | ||
| Capital goods (1.3%) | ||
| ABB, Ltd. (Switzerland) | 568 | 12,148 |
|
| ||
| Aecom Technology Corp. † | 82 | 2,389 |
|
| ||
| Avery Dennison Corp. | 73 | 3,121 |
|
| ||
| BAE Systems PLC (United Kingdom) | 4,901 | 33,046 |
|
| ||
| Ball Corp. | 78 | 3,465 |
|
| ||
| Boeing Co. (The) | 308 | 32,007 |
|
| ||
| Canon, Inc. (Japan) | 400 | 11,986 |
|
| ||
| Cummins, Inc. | 97 | 11,950 |
|
| ||
| Delphi Automotive PLC (United Kingdom) | 184 | 10,124 |
|
| ||
| General Dynamics Corp. | 157 | 13,070 |
|
| ||
| Ingersoll-Rand PLC | 157 | 9,285 |
|
| ||
| KBR, Inc. | 101 | 3,016 |
|
| ||
| Leggett & Platt, Inc. | 105 | 3,037 |
|
| ||
| Lockheed Martin Corp. | 126 | 15,425 |
|
| ||
| McDermott International, Inc. † | 149 | 1,118 |
|
| ||
| Northrop Grumman Corp. | 129 | 11,903 |
|
| ||
| Raytheon Co. | 166 | 12,518 |
|
| ||
| Staples, Inc. | 416 | 5,787 |
|
| ||
| Terex Corp. † | 81 | 2,349 |
|
| ||
| Vinci SA (France) | 392 | 20,242 |
|
| ||
| WABCO Holdings, Inc. † | 50 | 3,900 |
|
| ||
| 221,886 | ||
| Communication services (1.3%) | ||
| AT&T, Inc. | 317 | 10,724 |
|
| ||
| Belgacom SA (Belgium) | 583 | 13,946 |
|
| ||
| Bezeq The Israeli Telecommunication Corp., Ltd. (Israel) | 5,113 | 8,334 |
|
| ||
| Comcast Corp. Class A | 789 | 33,209 |
|
| ||
| Deutsche Telekom AG (Germany) | 1,627 | 20,841 |
|
| ||
| DISH Network Corp. Class A | 127 | 5,710 |
|
| ||
| IAC/InterActiveCorp. | 132 | 6,480 |
|
| ||
| Koninklijke (Royal) KPN NV (Netherlands) † | 708 | 2,068 |
|
| ||
| NTT DoCoMo, Inc. (Japan) | 10 | 15,980 |
|
| ||
| Orange (France) | 1,482 | 15,035 |
|
| ||
| Telecom Corp. of New Zealand, Ltd. (New Zealand) | 6,967 | 12,202 |
|
| ||
| Telstra Corp., Ltd. (Australia) | 2,028 | 8,820 |
|
| ||
| TW telecom, inc. † | 119 | 3,406 |
|
| ||
| Verizon Communications, Inc. | 748 | 35,440 |
|
| ||
| Vodafone Group PLC (United Kingdom) | 4,488 | 14,345 |
|
| ||
| 206,540 | ||
| Conglomerates (0.4%) | ||
| AMETEK, Inc. | 138 | 5,923 |
|
| ||
| Bouygues SA (France) | 598 | 18,704 |
|
| ||
| Danaher Corp. | 266 | 17,428 |
|
| ||
| General Electric Co. | 654 | 15,134 |
|
| ||
| Tyco International, Ltd. | 251 | 8,293 |
|
| ||
| 65,482 | ||
| 26 | Retirement Income Fund Lifestyle 3 |
| COMMON STOCKS (30.6%)* cont. | Shares | Value |
|
| ||
| Consumer cyclicals (3.4%) | ||
| Adecco SA (Switzerland) | 350 | $22,043 |
|
| ||
| ADT Corp. (The) † | 132 | 5,258 |
|
| ||
| Advance Auto Parts, Inc. | 50 | 4,004 |
|
| ||
| American Eagle Outfitters, Inc. | 141 | 2,040 |
|
| ||
| Asahi Glass Co., Ltd. (Japan) | 2,000 | 11,662 |
|
| ||
| Bayerische Motoren Werke (BMW) AG (Germany) | 230 | 21,671 |
|
| ||
| Bed Bath & Beyond, Inc. † | 127 | 9,365 |
|
| ||
| Big Lots, Inc. † | 61 | 2,161 |
|
| ||
| Chico’s FAS, Inc. | 137 | 2,137 |
|
| ||
| Coach, Inc. | 149 | 7,869 |
|
| ||
| CST Brands, Inc. † | 26 | 767 |
|
| ||
| Dai Nippon Printing Co., Ltd. (Japan) | 2,000 | 19,362 |
|
| ||
| Daihatsu Motor Co., Ltd. (Japan) | 1,000 | 18,644 |
|
| ||
| Daimler AG (Registered Shares) (Germany) | 141 | 9,675 |
|
| ||
| Daito Trust Construction Co., Ltd. (Japan) | 200 | 18,251 |
|
| ||
| Dillards, Inc. Class A | 28 | 2,135 |
|
| ||
| Expedia, Inc. | 62 | 2,899 |
|
| ||
| Foot Locker, Inc. | 106 | 3,413 |
|
| ||
| Gannett Co., Inc. | 174 | 4,192 |
|
| ||
| Gap, Inc. (The) | 175 | 7,077 |
|
| ||
| Geberit International AG (Switzerland) | 36 | 8,760 |
|
| ||
| Home Depot, Inc. (The) | 460 | 34,265 |
|
| ||
| Host Hotels & Resorts, Inc. R | 3,941 | 67,115 |
|
| ||
| Hugo Boss AG (Germany) | 122 | 14,862 |
|
| ||
| Jarden Corp. † | 87 | 3,737 |
|
| ||
| Lear Corp. | 73 | 5,019 |
|
| ||
| Lowe’s Cos., Inc. | 502 | 23,002 |
|
| ||
| Macy’s, Inc. | 212 | 9,419 |
|
| ||
| McGraw-Hill Cos., Inc. (The) | 146 | 8,522 |
|
| ||
| Next PLC (United Kingdom) | 315 | 23,890 |
|
| ||
| O’Reilly Automotive, Inc. † | 70 | 8,590 |
|
| ||
| PetSmart, Inc. | 68 | 4,789 |
|
| ||
| Priceline.com, Inc. † | 24 | 22,525 |
|
| ||
| PulteGroup, Inc. | 234 | 3,601 |
|
| ||
| Reed Elsevier PLC (United Kingdom) | 1,355 | 16,620 |
|
| ||
| Ryman Hospitality Properties R | 736 | 24,317 |
|
| ||
| SJM Holdings, Ltd. (Hong Kong) | 5,000 | 12,809 |
|
| ||
| Swire Pacific, Ltd. Class A (Hong Kong) | 2,000 | 22,844 |
|
| ||
| TABCORP Holdings, Ltd. (Australia) | 7,102 | 20,308 |
|
| ||
| TJX Cos., Inc. (The) | 329 | 17,345 |
|
| ||
| Total Systems Services, Inc. | 270 | 7,471 |
|
| ||
| Trump Entertainment Resorts, Inc. † | 6 | 12 |
|
| ||
| URS Corp. | 55 | 2,724 |
|
| ||
| Wal-Mart Stores, Inc. | 28 | 2,043 |
|
| ||
| Wyndham Worldwide Corp. | 91 | 5,402 |
|
| ||
| Wynn Resorts, Ltd. | 50 | 7,052 |
|
| ||
| 551,668 | ||
| Retirement Income Fund Lifestyle 3 | 27 |
| COMMON STOCKS (30.6%)* cont. | Shares | Value |
|
| ||
| Consumer finance (0.1%) | ||
| Discover Financial Services | 248 | $11,718 |
|
| ||
| 11,718 | ||
| Consumer staples (2.8%) | ||
| British American Tobacco (BAT) PLC (United Kingdom) | 351 | 17,705 |
|
| ||
| Coca-Cola Co. (The) | 121 | 4,620 |
|
| ||
| Colgate-Palmolive Co. | 174 | 10,052 |
|
| ||
| Constellation Brands, Inc. Class A † | 78 | 4,232 |
|
| ||
| Corrections Corp. of America | 1,133 | 37,321 |
|
| ||
| Costco Wholesale Corp. | 97 | 10,851 |
|
| ||
| CVS Caremark Corp. | 367 | 21,304 |
|
| ||
| General Mills, Inc. | 217 | 10,702 |
|
| ||
| Geo Group, Inc. (The) | 953 | 29,743 |
|
| ||
| ITOCHU Corp. (Japan) | 1,100 | 12,393 |
|
| ||
| Japan Tobacco, Inc. (Japan) | 300 | 10,112 |
|
| ||
| JM Smucker Co. (The) | 47 | 4,989 |
|
| ||
| Kao Corp. (Japan) | 300 | 8,727 |
|
| ||
| Kirin Holdings Co., Ltd. (Japan) | 1,000 | 13,655 |
|
| ||
| Kraft Foods Group, Inc. | 197 | 10,199 |
|
| ||
| Liberty Interactive Corp. Class A † | 320 | 7,226 |
|
| ||
| Lorillard, Inc. | 310 | 13,113 |
|
| ||
| Metcash, Ltd. (Australia) | 1,773 | 5,118 |
|
| ||
| Metro AG (Germany) | 596 | 21,882 |
|
| ||
| Molson Coors Brewing Co. Class B | 65 | 3,171 |
|
| ||
| Nestle SA (Switzerland) | 218 | 14,304 |
|
| ||
| Philip Morris International, Inc. | 403 | 33,626 |
|
| ||
| Procter & Gamble Co. (The) | 577 | 44,943 |
|
| ||
| Reckitt Benckiser Group PLC (United Kingdom) | 92 | 6,252 |
|
| ||
| Robert Half International, Inc. | 96 | 3,386 |
|
| ||
| Sumitomo Corp. (Japan) | 600 | 7,568 |
|
| ||
| Swedish Match AB (Sweden) | 451 | 15,747 |
|
| ||
| Tesco PLC (United Kingdom) | 3,484 | 19,791 |
|
| ||
| Unilever NV ADR (Netherlands) | 612 | 22,992 |
|
| ||
| Unilever PLC (United Kingdom) | 211 | 8,041 |
|
| ||
| Walgreen Co. | 279 | 13,412 |
|
| ||
| Woolworths, Ltd. (Australia) | 352 | 11,162 |
|
| ||
| 458,339 | ||
| Energy (2.1%) | ||
| Alpha Natural Resources, Inc. † | 154 | 936 |
|
| ||
| BP PLC (United Kingdom) | 5,084 | 35,155 |
|
| ||
| Cabot Oil & Gas Corp. | 196 | 7,669 |
|
| ||
| Chevron Corp. | 113 | 13,609 |
|
| ||
| ConocoPhillips | 416 | 27,581 |
|
| ||
| Cosmo Oil Co., Ltd. (Japan) † | 6,000 | 12,366 |
|
| ||
| Exxon Mobil Corp. | 410 | 35,736 |
|
| ||
| Helmerich & Payne, Inc. | 55 | 3,467 |
|
| ||
| HollyFrontier Corp. | 101 | 4,492 |
|
| ||
| Marathon Petroleum Corp. | 142 | 10,296 |
|
| ||
| Occidental Petroleum Corp. | 276 | 24,346 |
|
| ||
| Oceaneering International, Inc. | 59 | 4,577 |
|
| ||
| 28 | Retirement Income Fund Lifestyle 3 |
| COMMON STOCKS (30.6%)* cont. | Shares | Value |
|
| ||
| Energy cont. | ||
| Oil States International, Inc. † | 36 | $3,212 |
|
| ||
| ONEOK, Inc. | 114 | 5,864 |
|
| ||
| Peabody Energy Corp. | 139 | 2,391 |
|
| ||
| Phillips 66 | 235 | 13,419 |
|
| ||
| Royal Dutch Shell PLC Class A (United Kingdom) | 972 | 31,444 |
|
| ||
| Royal Dutch Shell PLC Class B (United Kingdom) | 413 | 13,908 |
|
| ||
| Schlumberger, Ltd. | 398 | 32,214 |
|
| ||
| Seadrill, Ltd. (Norway) | 275 | 12,690 |
|
| ||
| Tesoro Corp. | 78 | 3,595 |
|
| ||
| TonenGeneral Sekiyu KK (Japan) | 2,000 | 18,116 |
|
| ||
| Total SA (France) | 435 | 24,098 |
|
| ||
| Valero Energy Corp. | 236 | 8,385 |
|
| ||
| 349,566 | ||
| Financial (0.1%) | ||
| CIT Group, Inc. † | 160 | 7,659 |
|
| ||
| CoreLogic, Inc. † | 202 | 5,191 |
|
| ||
| Nasdaq OMX Group, Inc. (The) | 135 | 4,031 |
|
| ||
| 16,881 | ||
| Health care (2.9%) | ||
| AbbVie, Inc. | 362 | 15,425 |
|
| ||
| AmerisourceBergen Corp. | 190 | 10,815 |
|
| ||
| Amgen, Inc. | 218 | 23,749 |
|
| ||
| AstraZeneca PLC (United Kingdom) | 477 | 23,492 |
|
| ||
| Bristol-Myers Squibb Co. | 496 | 20,678 |
|
| ||
| Celgene Corp. † | 141 | 19,737 |
|
| ||
| CIGNA Corp. | 204 | 16,053 |
|
| ||
| Eli Lilly & Co. | 304 | 15,626 |
|
| ||
| GlaxoSmithKline PLC (United Kingdom) | 697 | 17,774 |
|
| ||
| HCA Holdings, Inc. | 145 | 5,538 |
|
| ||
| Johnson & Johnson | 145 | 12,529 |
|
| ||
| McKesson Corp. | 154 | 18,697 |
|
| ||
| Merck & Co., Inc. | 72 | 3,405 |
|
| ||
| Novartis AG (Switzerland) | 314 | 22,897 |
|
| ||
| Omega Healthcare Investors, Inc. R | 380 | 10,792 |
|
| ||
| Orion OYJ Class B (Finland) | 518 | 12,001 |
|
| ||
| Pfizer, Inc. | 1,588 | 44,797 |
|
| ||
| Roche Holding AG-Genusschein (Switzerland) | 79 | 19,706 |
|
| ||
| Sabra Health Care REIT, Inc. R | 394 | 8,711 |
|
| ||
| Salix Pharmaceuticals, Ltd. † | 46 | 3,079 |
|
| ||
| Sanofi (France) | 219 | 21,039 |
|
| ||
| St. Jude Medical, Inc. | 238 | 11,998 |
|
| ||
| Takeda Pharmaceutical Co., Ltd. (Japan) | 600 | 27,176 |
|
| ||
| United Therapeutics Corp. † | 42 | 2,978 |
|
| ||
| Ventas, Inc. R | 918 | 57,155 |
|
| ||
| Warner Chilcott PLC Class A | 363 | 7,786 |
|
| ||
| WellPoint, Inc. | 222 | 18,901 |
|
| ||
| Zimmer Holdings, Inc. | 130 | 10,282 |
|
| ||
| 482,816 | ||
| Retirement Income Fund Lifestyle 3 | 29 |
| COMMON STOCKS (30.6%)* cont. | Shares | Value |
|
| ||
| Insurance (1.1%) | ||
| Alleghany Corp. † | 16 | $6,193 |
|
| ||
| Allied World Assurance Co. Holdings AG | 44 | 4,036 |
|
| ||
| American Financial Group, Inc. | 87 | 4,483 |
|
| ||
| American International Group, Inc. † | 434 | 20,164 |
|
| ||
| AMP, Ltd. (Australia) | 3,592 | 15,071 |
|
| ||
| Aon PLC | 230 | 15,267 |
|
| ||
| Aviva PLC (United Kingdom) | 2,608 | 15,633 |
|
| ||
| Axis Capital Holdings, Ltd. | 107 | 4,600 |
|
| ||
| Baloise Holding AG (Switzerland) | 89 | 9,422 |
|
| ||
| Berkshire Hathaway, Inc. Class B † | 65 | 7,229 |
|
| ||
| CNP Assurances (France) | 1,194 | 21,114 |
|
| ||
| Fidelity National Financial, Inc. Class A | 202 | 4,789 |
|
| ||
| Genworth Financial, Inc. Class A † | 494 | 5,829 |
|
| ||
| PartnerRe, Ltd. | 60 | 5,229 |
|
| ||
| Protective Life Corp. | 89 | 3,719 |
|
| ||
| RSA Insurance Group PLC (United Kingdom) | 7,880 | 14,483 |
|
| ||
| Tryg A/S (Denmark) | 98 | 8,341 |
|
| ||
| Validus Holdings, Ltd. | 104 | 3,599 |
|
| ||
| Zurich Insurance Group AG (Switzerland) | 42 | 10,454 |
|
| ||
| 179,655 | ||
| Investment banking/Brokerage (0.4%) | ||
| Eaton Vance Corp. | 111 | 4,279 |
|
| ||
| Goldman Sachs Group, Inc. (The) | 179 | 27,231 |
|
| ||
| Investment AB Kinnevik Class B (Sweden) | 1,081 | 33,764 |
|
| ||
| 65,274 | ||
| Real estate (8.3%) | ||
| Alexandria Real Estate Equities, Inc. R | 554 | 34,165 |
|
| ||
| American Campus Communities, Inc. R | 69 | 2,298 |
|
| ||
| American Capital Agency Corp. R | 138 | 3,141 |
|
| ||
| Apartment Investment & Management Co. Class A R | 1,251 | 34,440 |
|
| ||
| AvalonBay Communities, Inc. R | 318 | 39,400 |
|
| ||
| Boston Properties, LP R | 384 | 39,360 |
|
| ||
| Camden Property Trust R | 101 | 6,241 |
|
| ||
| CapLease, Inc. R | 1,512 | 12,867 |
|
| ||
| Chimera Investment Corp. R | 507 | 1,491 |
|
| ||
| Colonial Properties Trust R | 1,323 | 29,225 |
|
| ||
| DDR Corp. R | 97 | 1,505 |
|
| ||
| Digital Realty Trust, Inc. R | 228 | 12,677 |
|
| ||
| Douglas Emmett, Inc. R | 907 | 20,952 |
|
| ||
| Duke Realty Corp. R | 285 | 4,158 |
|
| ||
| DuPont Fabros Technology, Inc. R | 1,164 | 26,528 |
|
| ||
| Equity Lifestyle Properties, Inc. R | 866 | 30,094 |
|
| ||
| Equity Residential Trust R | 1,485 | 77,057 |
|
| ||
| Essex Property Trust, Inc. R | 40 | 5,732 |
|
| ||
| Federal Realty Investment Trust R | 310 | 30,166 |
|
| ||
| General Growth Properties R | 2,721 | 52,189 |
|
| ||
| Government Properties Income Trust R | 1,122 | 26,232 |
|
| ||
| Hatteras Financial Corp. R | 53 | 970 |
|
| ||
| 30 | Retirement Income Fund Lifestyle 3 |
| COMMON STOCKS (30.6%)* cont. | Shares | Value |
|
| ||
| Real estate cont. | ||
| HCP, Inc. R | 1,251 | $50,953 |
|
| ||
| Health Care REIT, Inc. R | 779 | 47,862 |
|
| ||
| Inland Real Estate Corp. R | 2,784 | 27,311 |
|
| ||
| Kimco Realty Corp. R | 2,540 | 50,876 |
|
| ||
| Liberty Property Trust R | 1,104 | 38,198 |
|
| ||
| Macerich Co. (The) R | 258 | 14,520 |
|
| ||
| Medical Properties Trust, Inc. R | 2,093 | 24,174 |
|
| ||
| Piedmont Office Realty Trust, Inc. Class A R | 1,795 | 30,838 |
|
| ||
| Post Properties, Inc. R | 663 | 29,987 |
|
| ||
| Prologis, Inc. R | 1,610 | 56,736 |
|
| ||
| Public Storage R | 722 | 110,228 |
|
| ||
| Realty Income Corp. R | 366 | 14,457 |
|
| ||
| Regency Centers Corp. R | 809 | 38,468 |
|
| ||
| Senior Housing Properties Trust R | 151 | 3,435 |
|
| ||
| Simon Property Group, Inc. R | 1,117 | 162,669 |
|
| ||
| SL Green Realty Corp. R | 155 | 13,514 |
|
| ||
| STAG Industrial, Inc. R | 690 | 13,800 |
|
| ||
| Stockland (Units) (Australia) R | 4,747 | 15,676 |
|
| ||
| Tanger Factory Outlet Centers R | 47 | 1,450 |
|
| ||
| Taubman Centers, Inc. R | 580 | 39,098 |
|
| ||
| UDR, Inc. R | 311 | 7,025 |
|
| ||
| Vornado Realty Trust R | 920 | 74,796 |
|
| ||
| 1,356,959 | ||
| Technology (2.2%) | ||
| Accenture PLC Class A S | 309 | 22,325 |
|
| ||
| AOL, Inc. † | 178 | 5,862 |
|
| ||
| Apple, Inc. | 146 | 71,109 |
|
| ||
| Avnet, Inc. † | 92 | 3,548 |
|
| ||
| BMC Software, Inc. † | 177 | 8,142 |
|
| ||
| Broadcom Corp. Class A | 195 | 4,926 |
|
| ||
| Brocade Communications Systems, Inc. † | 412 | 3,049 |
|
| ||
| Cap Gemini (France) | 160 | 8,763 |
|
| ||
| Cisco Systems, Inc. | 1,262 | 29,417 |
|
| ||
| EMC Corp. | 566 | 14,591 |
|
| ||
| Google, Inc. Class A † | 34 | 28,795 |
|
| ||
| IBM Corp. | 64 | 11,665 |
|
| ||
| L-3 Communications Holdings, Inc. | 60 | 5,420 |
|
| ||
| Lam Research Corp. † | 97 | 4,527 |
|
| ||
| Lexmark International, Inc. Class A | 82 | 2,801 |
|
| ||
| Marvell Technology Group, Ltd. | 324 | 3,924 |
|
| ||
| Microsoft Corp. | 1,182 | 39,479 |
|
| ||
| Nokia OYJ (Finland) † | 3,153 | 12,193 |
|
| ||
| NVIDIA Corp. | 311 | 4,587 |
|
| ||
| Oracle Corp. | 1,095 | 34,887 |
|
| ||
| Riverbed Technology, Inc. † | 135 | 2,084 |
|
| ||
| Rockwell Automation, Inc. | 78 | 7,584 |
|
| ||
| Symantec Corp. | 551 | 14,111 |
|
| ||
| Retirement Income Fund Lifestyle 3 | 31 |
| COMMON STOCKS (30.6%)* cont. | Shares | Value |
|
| ||
| Technology cont. | ||
| Teradyne, Inc. † | 151 | $2,318 |
|
| ||
| Western Digital Corp. | 105 | 6,510 |
|
| ||
| 352,617 | ||
| Transportation (0.5%) | ||
| ComfortDelgro Corp., Ltd. (Singapore) | 7,000 | 10,080 |
|
| ||
| Delta Air Lines, Inc. † | 500 | 9,865 |
|
| ||
| Deutsche Post AG (Germany) | 399 | 11,528 |
|
| ||
| Japan Airlines Co., Ltd. (Japan) UR | 300 | 15,842 |
|
| ||
| Southwest Airlines Co. | 461 | 5,905 |
|
| ||
| Sydney Airport (Australia) | 4,818 | 16,165 |
|
| ||
| Wabtec Corp. | 72 | 4,213 |
|
| ||
| Yangzijiang Shipbuilding Holdings, Ltd. (China) | 10,000 | 7,358 |
|
| ||
| 80,956 | ||
| Utilities and power (0.7%) | ||
| AES Corp. | 376 | 4,779 |
|
| ||
| American Electric Power Co., Inc. | 221 | 9,459 |
|
| ||
| Chubu Electric Power Co., Inc. (Japan) | 800 | 9,950 |
|
| ||
| CMS Energy Corp. | 87 | 2,308 |
|
| ||
| Enel SpA (Italy) | 3,280 | 10,846 |
|
| ||
| Energias de Portugal (EDP) SA (Portugal) | 1,985 | 7,015 |
|
| ||
| Entergy Corp. | 94 | 5,944 |
|
| ||
| Hokuriku Electric Power Co. (Japan) | 1,000 | 13,178 |
|
| ||
| Kinder Morgan, Inc. | 213 | 8,079 |
|
| ||
| PG&E Corp. | 167 | 6,907 |
|
| ||
| PPL Corp. | 96 | 2,947 |
|
| ||
| Red Electrica Corporacion SA (Spain) | 257 | 13,330 |
|
| ||
| RWE AG (Preference) (Germany) | 389 | 10,568 |
|
| ||
| Snam SpA (Italy) | 2,412 | 11,285 |
|
| ||
| UGI Corp. | 74 | 2,901 |
|
| ||
| 119,496 | ||
| Total common stocks (cost $4,590,261) | $5,021,903 | |
| INVESTMENT COMPANIES (10.5%)* | Shares | Value |
|
| ||
| Putnam Absolute Return 700 Fund Class Y ††† | 128,162 | $1,534,102 |
|
| ||
| SPDR S&P 500 ETF Trust | 1,014 | 165,941 |
|
| ||
| SPDR S&P Midcap 400 ETF Trust | 105 | 22,621 |
|
| ||
| Total investment companies (cost $1,686,506) | $1,722,664 | |
| CONVERTIBLE PREFERRED STOCKS (7.8%)* | Shares | Value |
|
| ||
| Basic materials (0.5%) | ||
| ArcelorMittal Ser. MTUS, $1.50 cv. pfd. (France) | 1,315 | $27,339 |
|
| ||
| Smurfit-Stone Container Corp. (Escrow) zero % cv. pfd. F | 1,775 | 18 |
|
| ||
| Weyerhaeuser Co. Ser. A, $3.188 cv. pfd.† R | 950 | 50,766 |
|
| ||
| 78,123 | ||
| Capital goods (0.4%) | ||
| United Technologies Corp. $3.75 cv. pfd. | 1,150 | 71,427 |
|
| ||
| 71,427 | ||
| 32 | Retirement Income Fund Lifestyle 3 |
| CONVERTIBLE PREFERRED STOCKS (7.8%)* cont. | Shares | Value |
|
| ||
| Communication services (0.3%) | ||
| Cincinnati Bell, Inc. Ser. B, $3.378 cum. cv. pfd. | 800 | $34,464 |
|
| ||
| Iridium Communications, Inc. 144A $7.00 cv. pfd. | 135 | 13,053 |
|
| ||
| 47,517 | ||
| Consumer cyclicals (1.1%) | ||
| FelCor Lodging Trust, Inc. Ser. A, $0.488 cum. cv. pfd. R | 1,505 | 34,570 |
|
| ||
| General Motors Co. Ser. B, $2.375 cv. pfd. | 1,220 | 59,246 |
|
| ||
| Interpublic Group of Cos, Inc. (The) Ser. B, 5.25% cv. pfd. | 31 | 39,796 |
|
| ||
| Stanley Black & Decker, Inc. $4.75 cv. pfd. | 335 | 45,269 |
|
| ||
| 178,881 | ||
| Consumer staples (0.2%) | ||
| Bunge, Ltd. $4.875 cv. pfd. | 200 | 21,000 |
|
| ||
| Post Holdings, Inc. 144A $3.75 cv. pfd. | 183 | 19,764 |
|
| ||
| 40,764 | ||
| Energy (0.6%) | ||
| Chesapeake Energy Corp. 144A 5.75% cv. pfd. | 60 | 66,075 |
|
| ||
| Halcon Resources Corp. cv. pfd. Ser. A, 5.75% † | 34 | 32,640 |
|
| ||
| 98,715 | ||
| Financials (2.8%) | ||
| Alexandria Real Estate Equities, Inc. Ser. D, $1.75 cv. pfd. R | 1,375 | 34,461 |
|
| ||
| AMG Capital Trust II $2.575 cv. pfd. | 1,085 | 62,048 |
|
| ||
| Bank of America Corp. Ser. L, 7.25% cv. pfd. | 87 | 93,960 |
|
| ||
| EPR Properties Ser. C, $1.44 cv. pfd. | 1,170 | 25,082 |
|
| ||
| Health Care REIT, Inc. Ser. I, $3.25 cv. pfd. R | 615 | 35,459 |
|
| ||
| Huntington Bancshares Ser. A, 8.50% cv. pfd. | 33 | 41,085 |
|
| ||
| MetLife, Inc. $3.75 cv. pfd. | 976 | 53,387 |
|
| ||
| OFG Bancorp cv. pfd. Ser. C, 8.75% (Puerto Rico) | 20 | 32,720 |
|
| ||
| Wells Fargo & Co. Ser. L, 7.50% cv. pfd. | 55 | 62,288 |
|
| ||
| Wintrust Financial Corp. $3.75 cv. pfd. | 400 | 22,120 |
|
| ||
| 462,610 | ||
| Health care (0.2%) | ||
| HealthSouth Corp. Ser. A, 6.50% cv. pfd. | 22 | 27,363 |
|
| ||
| 27,363 | ||
| Technology (0.1%) | ||
| Unisys Corp. Ser. A, 6.25% cv. pfd. | 260 | 17,761 |
|
| ||
| 17,761 | ||
| Transportation (0.5%) | ||
| Continental Financial Trust II $3.00 cv. pfd. | 510 | 22,058 |
|
| ||
| Genesee & Wyoming, Inc. $5.00 cv. pfd. | 192 | 23,328 |
|
| ||
| Swift Mandatory Common Exchange Security Trust 144A 6.00% cv. pfd. | 2,375 | 35,340 |
|
| ||
| 80,726 | ||
| Utilities and power (1.1%) | ||
| AES Trust III $3.375 cv. pfd. | 700 | 35,241 |
|
| ||
| Dominion Resources, Inc. Ser. A, $3.063 cv. pfd. † | 539 | 27,613 |
|
| ||
| El Paso Energy Capital Trust I $2.375 cv. pfd. | 965 | 56,664 |
|
| ||
| NextEra Energy, Inc. $2.799 cv. pfd. | 390 | 21,567 |
|
| ||
| PPL Corp. $4.375 cv. pfd. | 600 | 32,148 |
|
| ||
| 173,233 | ||
| Total convertible preferred stocks (cost $1,141,898) | $1,277,120 | |
| Retirement Income Fund Lifestyle 3 | 33 |
| CONVERTIBLE BONDS AND NOTES (7.7%)* | Principal amount | Value |
|
| ||
| Basic materials (0.1%) | ||
| U.S. Steel Corp. cv. sr. unsec. notes 4s, 2014 | $19,000 | $19,392 |
|
| ||
| 19,392 | ||
| Capital goods (0.5%) | ||
| Covanta Holding Corp. cv. sr. unsec. notes 3 1/4s, 2014 | 18,000 | 24,345 |
|
| ||
| General Cable Corp. cv. unsec. sub. notes stepped-coupon | ||
| 4 1/2s (2 1/4s, 11/15/19) 2029 †† | 25,000 | 27,391 |
|
| ||
| Owens-Brockway Glass Container, Inc. 144A cv. company | ||
| guaranty sr. unsec. notes 3s, 2015 | 22,000 | 22,660 |
|
| ||
| 74,396 | ||
| Communication services (0.3%) | ||
| Clearwire Communications, LLC/Clearwire Finance, Inc. 144A | ||
| cv. company guaranty sr. unsec. notes 8 1/4s, 2040 | 6,000 | 6,638 |
|
| ||
| Leap Wireless International, Inc. cv. sr. unsec. notes 4 1/2s, 2014 | 15,000 | 15,300 |
|
| ||
| Level 3 Communications, Inc. cv. sr. unsec. unsub. notes | ||
| 6 1/2s, 2016 | 23,000 | 31,898 |
|
| ||
| Powerwave Technologies, Inc. cv. sr. unsec. sub. notes 3 7/8s, | ||
| 2027 (In default) † | 38,000 | 190 |
|
| ||
| 54,026 | ||
| Consumer cyclicals (1.9%) | ||
| Callaway Golf Co. cv. sr. unsec. bonds 3 3/4s, 2019 | 21,000 | 23,061 |
|
| ||
| CBIZ, Inc. 144A cv. sr. sub. notes 4 7/8s, 2015 | 12,000 | 13,410 |
|
| ||
| Ford Motor Co. cv. sr. unsec. notes 4 1/4s, 2016 | 30,000 | 57,300 |
|
| ||
| Forest City Enterprises, Inc. cv. sr. unsec. notes 4 1/4s, 2018 | 20,000 | 21,675 |
|
| ||
| Forestar Group, Inc. cv. sr. unsec. unsub. notes 3 3/4s, 2020 | 11,000 | 12,100 |
|
| ||
| Liberty Interactive, LLC cv. sr. unsec. unsub. notes 3 1/2s, 2031 | 63,000 | 32,248 |
|
| ||
| Liberty Interactive, LLC 144A cv. sr. unsec. unsub. notes | ||
| 0 3/4s, 2043 | 28,000 | 30,416 |
|
| ||
| M/I Homes, Inc. cv. company guaranty sr. sub. notes 3s, 2018 | 13,000 | 12,740 |
|
| ||
| MGM Resorts International Co. cv. company guaranty sr. unsec. | ||
| notes 4 1/4s, 2015 | 44,000 | 52,305 |
|
| ||
| TRW Automotive, Inc. cv. company guaranty sr. unsec. notes | ||
| 3 1/2s, 2015 | 5,000 | 11,847 |
|
| ||
| XM Satellite Radio, Inc. 144A cv. company guaranty sr. unsec. | ||
| sub. notes 7s, 2014 | 19,000 | 38,143 |
|
| ||
| 305,245 | ||
| Consumer staples (0.3%) | ||
| Rite Aid Corp. cv. sr. unsec. unsub. notes 8 1/2s, 2015 | 15,000 | 23,597 |
|
| ||
| Vector Group Ltd. cv. sr. unsec. FRN notes 2 1/2s, 2019 | 25,000 | 29,035 |
|
| ||
| 52,632 | ||
| Energy (0.9%) | ||
| Chesapeake Energy Corp. cv. company guaranty sr. unsec. | ||
| notes 2 1/4s, 2038 | 68,000 | 61,625 |
|
| ||
| Cobalt International Energy, Inc. cv. sr. unsec. unsub. notes | ||
| 2 5/8s, 2019 | 12,000 | 12,390 |
|
| ||
| Goodrich Petroleum Corp. cv. sr. unsec. unsub. notes 5s, 2029 | 23,000 | 24,596 |
|
| ||
| Hornbeck Offshore Services, Inc. cv. company guaranty sr. | ||
| unsec. notes 1 1/2s, 2019 | 16,000 | 19,790 |
|
| ||
| Trico Marine Services, Inc. cv. sr. unsec. debs. 3s, 2027 | ||
| (In default) † | 15,000 | 113 |
|
| ||
| Vantage Drilling Co. cv. sr. unsec. unsub. notes 7 7/8s, 2042 | 20,000 | 22,450 |
|
| ||
| 140,964 | ||
| 34 | Retirement Income Fund Lifestyle 3 |
| CONVERTIBLE BONDS AND NOTES (7.7%)* cont. | Principal amount | Value |
|
| ||
| Financials (1.0%) | ||
| Ares Capital Corp. cv. sr. unsec. notes 5 3/4s, 2016 | $32,000 | $34,560 |
|
| ||
| DFC Global Corp. 144A cv. sr. unsec. unsub. notes 3 1/4s, 2017 | 5,000 | 4,603 |
|
| ||
| Hercules Technology Growth Capital, Inc. cv. sr. unsec. | ||
| notes 6s, 2016 | 16,000 | 19,790 |
|
| ||
| Jefferies Group, LLC cv. sr. unsec. notes 3 7/8s, 2029 | 25,000 | 26,234 |
|
| ||
| Morgans Hotel Group Co. cv. sr. sub. notes 2 3/8s, 2014 R | 13,000 | 12,756 |
|
| ||
| PHH Corp. cv. sr. unsec. notes 4s, 2014 | 31,000 | 32,821 |
|
| ||
| RAIT Financial Trust cv. sr. unsec. unsub. notes 7s, 2031 R | 13,000 | 14,129 |
|
| ||
| Starwood Property Trust, Inc. cv. sr. unsec. unsub. | ||
| notes 4s, 2019 | 19,000 | 19,784 |
|
| ||
| 164,677 | ||
| Health care (0.9%) | ||
| Accuray, Inc. cv. sr. unsec. notes 3 3/4s, 2016 | 21,000 | 20,987 |
|
| ||
| Alere, Inc. cv. sr. unsec. sub. notes 3s, 2016 | 14,000 | 14,718 |
|
| ||
| Auxilium Pharmaceuticals, Inc. cv. sr. unsec. notes 1 1/2s, 2018 | 7,000 | 7,096 |
|
| ||
| China Medical Technologies, Inc. cv. sr. unsec. bonds Ser. CMT, | ||
| 4s, 2014 (China) (In default) † F | 25,000 | 2,000 |
|
| ||
| China Medical Technologies, Inc. 144A cv. sr. unsec. notes | ||
| 6 1/4s, 2016 (China) (In default) † F | 14,000 | 980 |
|
| ||
| Cubist Pharmaceuticals, Inc. cv. sr. unsec. notes 2 1/2s, 2017 | 4,000 | 8,943 |
|
| ||
| Endo Pharmaceuticals Holdings, Inc. cv. sr. unsec. sub. notes | ||
| 1 3/4s, 2015 | 5,000 | 7,244 |
|
| ||
| Hologic, Inc. cv. sr. unsec. unsub. notes stepped-coupon 2s (0s, | ||
| 3/1/18) 2042 †† | 38,000 | 38,950 |
|
| ||
| Insulet Corp. cv. sr. unsec. notes 3 3/4s, 2016 | 5,000 | 6,813 |
|
| ||
| Opko Health, Inc. 144A cv. sr. unsec. notes 3s, 2033 | 11,000 | 14,403 |
|
| ||
| Teleflex, Inc. cv. sr. unsec. sub. notes 3 7/8s, 2017 | 21,000 | 28,219 |
|
| ||
| Volcano Corp. cv. sr. unsec. unsub. notes 1 3/4s, 2017 | 7,000 | 6,851 |
|
| ||
| 157,204 | ||
| Technology (1.8%) | ||
| Advanced Micro Devices, Inc. cv. sr. unsec. notes 6s, 2015 | 26,000 | 26,780 |
|
| ||
| Ciena, Inc. cv. sr. unsec. notes 4s, 2020 | 16,000 | 21,120 |
|
| ||
| Intel Corp. cv. jr. sub. notes 3 1/4s, 2039 | 15,000 | 18,000 |
|
| ||
| Micron Technology, Inc. 144A cv. sr. unsec. notes 1 5/8s, 2033 | 57,000 | 78,981 |
|
| ||
| ON Semiconductor Corp. cv. company guaranty sr. unsec. sub. | ||
| notes Ser. B, 2 5/8s, 2026 | 15,000 | 16,247 |
|
| ||
| Safeguard Scientifics, Inc. 144A cv. sr. unsec. notes 5 1/4s, 2018 | 51,000 | 53,933 |
|
| ||
| TeleCommunication Systems, Inc. cv. sr. unsec. notes | ||
| 7 3/4s, 2018 | 47,000 | 46,648 |
|
| ||
| TTM Technologies, Inc. cv. sr. unsec. notes 3 1/4s, 2015 | 17,000 | 17,340 |
|
| ||
| Vishay Intertechnology, Inc. 144A cv. sr. unsec. notes | ||
| 2 1/4s, 2041 | 18,000 | 14,783 |
|
| ||
| 293,832 | ||
| Total convertible bonds and notes (cost $1,193,070) | $1,262,368 | |
| Retirement Income Fund Lifestyle 3 | 35 |
| CORPORATE BONDS AND NOTES (5.2%)* | Principal amount | Value |
|
| ||
| Basic materials (0.1%) | ||
| Celanese US Holdings, LLC sr. notes 5 7/8s, 2021 (Germany) | $5,000 | $5,125 |
|
| ||
| Eastman Chemical Co. sr. unsec. notes 4.8s, 2042 | 5,000 | 4,771 |
|
| ||
| LYB International Finance BV sr. unsec. unsub. notes 4s, | ||
| 2023 (Netherlands) | 5,000 | 4,935 |
|
| ||
| 14,831 | ||
| Capital goods (0.1%) | ||
| Legrand France SA sr. unsec. unsub. debs 8 1/2s, 2025 (France) | 10,000 | 12,414 |
|
| ||
| 12,414 | ||
| Communication services (0.7%) | ||
| American Tower Corp. sr. unsec. notes 7s, 2017 R | 5,000 | 5,690 |
|
| ||
| AT&T, Inc. company guaranty sr. notes 2 5/8s, 2022 | 3,000 | 2,678 |
|
| ||
| Clearwire Communications, LLC/Clearwire Finance, Inc. 144A | ||
| company guaranty sr. notes 12s, 2017 | 22,000 | 25,410 |
|
| ||
| Comcast Corp. company guaranty sr. unsec. unsub. notes | ||
| 6.95s, 2037 | 5,000 | 6,291 |
|
| ||
| Crown Castle Towers, LLC 144A company guaranty sr. notes | ||
| 4.883s, 2020 | 5,000 | 5,268 |
|
| ||
| Koninklijke (Royal) KPN NV sr. unsec. unsub. bonds 8 3/8s, | ||
| 2030 (Netherlands) | 5,000 | 6,438 |
|
| ||
| NII Capital Corp. company guaranty sr. unsec. unsub. notes 10s, | ||
| 2016 (Mexico) | 5,000 | 4,888 |
|
| ||
| Orange sr. unsec. unsub. notes 4 1/8s, 2021 (France) | 3,000 | 3,001 |
|
| ||
| Qwest Corp. sr. unsec. notes 6 3/4s, 2021 | 4,000 | 4,292 |
|
| ||
| SBA Tower Trust 144A company guaranty sr. notes 5.101s, 2017 | 10,000 | 10,832 |
|
| ||
| Sprint Capital Corp. company guaranty 6 7/8s, 2028 | 40,000 | 36,100 |
|
| ||
| Telefonica Emisiones SAU company guaranty sr. unsec. notes | ||
| 5.462s, 2021 (Spain) | 5,000 | 5,111 |
|
| ||
| Time Warner Cable, Inc. company guaranty sr. notes 7.3s, 2038 | 5,000 | 5,220 |
|
| ||
| 121,219 | ||
| Consumer cyclicals (0.3%) | ||
| ADT Corp. (The) sr. unsec. unsub. notes 4 7/8s, 2042 | 2,000 | 1,462 |
|
| ||
| ADT Corp. (The) sr. unsec. unsub. notes 3 1/2s, 2022 | 3,000 | 2,509 |
|
| ||
| Affinion Group, Inc. company guaranty sr. unsec. sub. notes | ||
| 11 1/2s, 2015 | 5,000 | 4,313 |
|
| ||
| American Media, Inc. 144A notes 13 1/2s, 2018 | 320 | 327 |
|
| ||
| Bon-Ton Department Stores, Inc. (The) company guaranty notes | ||
| 10 5/8s, 2017 | 2,000 | 2,000 |
|
| ||
| Choice Hotels International, Inc. company guaranty sr. unsec. | ||
| unsub. notes 5.7s, 2020 | 5,000 | 5,206 |
|
| ||
| DIRECTV Holdings, LLC/DIRECTV Financing Co., Inc. company | ||
| guaranty sr. unsec. notes 6.35s, 2040 | 2,000 | 1,981 |
|
| ||
| Ford Motor Co. sr. unsec. unsub. notes 7.4s, 2046 | 5,000 | 5,956 |
|
| ||
| Host Hotels & Resorts LP company guaranty sr. unsec. unsub. | ||
| notes Ser. Q, 6 3/4s, 2016 R | 2,000 | 2,028 |
|
| ||
| Liberty Interactive, LLC sr. unsec. unsub. notes 8 1/4s, 2030 | 5,000 | 5,275 |
|
| ||
| Macy’s Retail Holdings, Inc. company guaranty sr. unsec. notes | ||
| 6.65s, 2024 | 1,000 | 1,163 |
|
| ||
| Michaels Stores, Inc. company guaranty notes 11 3/8s, 2016 | 3,000 | 3,101 |
|
| ||
| News America, Inc. company guaranty sr. unsec. unsub. | ||
| notes 6.2s, 2034 | 5,000 | 5,367 |
|
| ||
| 36 | Retirement Income Fund Lifestyle 3 |
| CORPORATE BONDS AND NOTES (5.2%)* cont. | Principal amount | Value |
|
| ||
| Consumer cyclicals cont. | ||
| Time Warner, Inc. company guaranty sr. unsec. bonds 7.7s, 2032 | $5,000 | $6,324 |
|
| ||
| Travelport, LLC/Travelport Holdings, Inc. 144A company | ||
| guaranty sr. unsec. unsub. notes 13 7/8s, 2016 ‡‡ | 5,750 | 6,009 |
|
| ||
| 53,021 | ||
| Consumer staples (0.4%) | ||
| Altria Group, Inc. company guaranty sr. unsec. notes | ||
| 9 1/4s, 2019 | 2,000 | 2,625 |
|
| ||
| Altria Group, Inc. company guaranty sr. unsec. unsub. notes | ||
| 2.85s, 2022 | 5,000 | 4,499 |
|
| ||
| Constellation Brands, Inc. company guaranty sr. unsec. unsub. | ||
| notes 7 1/4s, 2016 | 10,000 | 11,313 |
|
| ||
| Darden Restaurants, Inc. sr. unsec. unsub. notes 6.8s, 2037 | 10,000 | 10,621 |
|
| ||
| Kraft Foods Group, Inc. sr. unsec. unsub. notes 5s, 2042 | 5,000 | 4,906 |
|
| ||
| McDonald’s Corp. sr. unsec. notes 5.7s, 2039 | 15,000 | 17,695 |
|
| ||
| United Rentals North America, Inc. company guaranty sr. unsec. | ||
| unsub. notes 9 1/4s, 2019 | 10,000 | 11,213 |
|
| ||
| 62,872 | ||
| Energy (0.5%) | ||
| Access Midstream Partners LP/ACMP Finance Corp. company | ||
| guaranty sr. unsec. notes 5 7/8s, 2021 | 3,000 | 3,083 |
|
| ||
| Anadarko Finance Co. company guaranty sr. unsec. unsub. | ||
| notes Ser. B, 7 1/2s, 2031 | 5,000 | 6,254 |
|
| ||
| BP Capital Markets PLC company guaranty sr. unsec. unsub. | ||
| notes 4 1/2s, 2020 (United Kingdom) | 5,000 | 5,334 |
|
| ||
| Chesapeake Energy Corp. company guaranty notes | ||
| 6 1/2s, 2017 | 15,000 | 16,500 |
|
| ||
| DCP Midstream, LLC 144A sr. unsec. notes 5.35s, 2020 | 5,000 | 5,276 |
|
| ||
| Peabody Energy Corp. company guaranty sr. unsec. notes | ||
| 7 3/8s, 2016 | 10,000 | 11,175 |
|
| ||
| Petrobras International Finance Co. company guaranty sr. unsec. | ||
| notes 3 7/8s, 2016 (Brazil) | 5,000 | 5,131 |
|
| ||
| Spectra Energy Capital, LLC company guaranty sr. unsec. unsub. | ||
| notes 6.2s, 2018 | 5,000 | 5,675 |
|
| ||
| Weatherford Bermuda company guaranty sr. unsec. notes | ||
| 9 7/8s, 2039 (Bermuda) | 10,000 | 13,509 |
|
| ||
| Williams Cos., Inc. (The) notes 8 3/4s, 2032 | 7,000 | 8,695 |
|
| ||
| Williams Cos., Inc. (The) notes 7 3/4s, 2031 | 2,000 | 2,287 |
|
| ||
| 82,919 | ||
| Financials (0.8%) | ||
| Bank of America Corp. sr. unsec. unsub. notes 6 1/2s, 2016 | 10,000 | 11,277 |
|
| ||
| Bear Stearns Cos., Inc. (The) sr. unsec. notes 7 1/4s, 2018 | 15,000 | 17,832 |
|
| ||
| Camden Property Trust sr. unsec. notes 4 7/8s, 2023 R | 5,000 | 5,211 |
|
| ||
| Citigroup, Inc. sr. unsec. notes 8 1/2s, 2019 | 2,000 | 2,535 |
|
| ||
| DDR Corp. sr. unsec. unsub. notes 7 7/8s, 2020 R | 5,000 | 6,069 |
|
| ||
| General Electric Capital Corp. sr. unsec. notes 6 3/4s, 2032 | 5,000 | 5,991 |
|
| ||
| Genworth Financial, Inc. sr. unsec. unsub. notes 7 5/8s, 2021 | 5,000 | 5,836 |
|
| ||
| Goldman Sachs Group, Inc. (The) sr. notes 7 1/2s, 2019 | 5,000 | 5,966 |
|
| ||
| Hartford Financial Services Group, Inc. (The) jr. unsec. sub. debs. | ||
| FRB bonds 8 1/8s, 2038 | 5,000 | 5,675 |
|
| ||
| International Lease Finance Corp. sr. unsec. notes 6 1/4s, 2019 | 5,000 | 5,163 |
|
| ||
| Retirement Income Fund Lifestyle 3 | 37 |
| CORPORATE BONDS AND NOTES (5.2%)* cont. | Principal amount | Value |
|
| ||
| Financials cont. | ||
| Liberty Mutual Group, Inc. 144A company guaranty jr. unsec. | ||
| sub. FRN notes 7s, 2037 | $5,000 | $5,075 |
|
| ||
| Massachusetts Mutual Life Insurance Co. 144A notes | ||
| 8 7/8s, 2039 | 5,000 | 7,258 |
|
| ||
| MPT Operating Partnership LP/MPT Finance Corp. company | ||
| guaranty sr. unsec. notes 6 7/8s, 2021 R | 5,000 | 5,263 |
|
| ||
| Royal Bank of Scotland PLC (The) sr. sub. FRN notes 9 1/2s, | ||
| 2022 (United Kingdom) | 5,000 | 5,659 |
|
| ||
| State Street Capital Trust IV company guaranty jr. unsec. sub. | ||
| FRB bonds 1.273s, 2037 | 15,000 | 12,119 |
|
| ||
| Tanger Properties, LP sr. unsec. notes 6 1/8s, 2020 R | 5,000 | 5,766 |
|
| ||
| Willis Group Holdings, PLC company guaranty sr. unsec. unsub. | ||
| notes 5 3/4s, 2021 | 10,000 | 10,738 |
|
| ||
| 123,433 | ||
| Health care (0.2%) | ||
| Aetna, Inc. sr. unsec. notes 6 1/2s, 2018 | 5,000 | 5,884 |
|
| ||
| Fresenius Medical Care US Finance II, Inc. 144A company | ||
| guaranty sr. unsec. notes 5 5/8s, 2019 | 2,000 | 2,060 |
|
| ||
| Service Corp. International/US sr. unsec. unsub. notes | ||
| 6 3/4s, 2016 | 25,000 | 27,031 |
|
| ||
| Surgical Care Affiliates, Inc. 144A sr. sub. notes 10s, 2017 | 5,000 | 5,175 |
|
| ||
| 40,150 | ||
| Technology (0.2%) | ||
| Ceridian Corp. company guaranty sr. unsec. notes | ||
| 12 1/4s, 2015 ‡‡ | 3,000 | 3,045 |
|
| ||
| Ceridian Corp. sr. unsec. notes 11 1/4s, 2015 | 5,000 | 5,063 |
|
| ||
| Freescale Semiconductor, Inc. company guaranty sr. unsec. | ||
| notes 10 3/4s, 2020 | 3,000 | 3,315 |
|
| ||
| Jazz Technologies, Inc. company guaranty sr. unsec. | ||
| notes 8s, 2015 | 16,000 | 14,880 |
|
| ||
| 26,303 | ||
| Transportation (—%) | ||
| CSX Corp. sr. unsec. unsub. notes 4 3/4s, 2042 | 5,000 | 4,806 |
|
| ||
| 4,806 | ||
| Utilities and power (1.9%) | ||
| AES Corp. (VA) sr. unsec. unsub. notes 8s, 2017 | 15,000 | 17,250 |
|
| ||
| Atmos Energy Corp. sr. unsec. sub. notes 8 1/2s, 2019 | 5,000 | 6,393 |
|
| ||
| CMS Energy Corp. sr. unsec. notes 8 3/4s, 2019 | 5,000 | 6,399 |
|
| ||
| Colorado Interstate Gas Co., LLC debs. 6.85s, 2037 | 100,000 | 111,980 |
|
| ||
| Dominion Resources, Inc. sr. unsec. unsub. notes | ||
| Ser. 07-A, 6s, 2017 | 5,000 | 5,743 |
|
| ||
| Dynegy Holdings Escrow, LLC escrow bonds 7 3/4s, 2019 | 25,000 | 31 |
|
| ||
| El Paso Natural Gas Co. sr. unsec. unsub. bonds 8 3/8s, 2032 | 5,000 | 6,560 |
|
| ||
| El Paso, LLC sr. notes Ser. GMTN, 7 3/4s, 2032 | 5,000 | 5,248 |
|
| ||
| Electricite de France SA 144A sr. unsec. notes 6.95s, | ||
| 2039 (France) | 5,000 | 6,100 |
|
| ||
| Energy Future Intermediate Holding Co., LLC/EFIH Finance, Inc. | ||
| 144A sr. notes 10s, 2020 | 68,000 | 71,485 |
|
| ||
| FirstEnergy Corp. sr. unsec. unsub. notes 4 1/4s, 2023 | 6,000 | 5,450 |
|
| ||
| Iberdrola International BV company guaranty sr. unsec. unsub. | ||
| notes 6 3/4s, 2036 (Spain) | 5,000 | 5,298 |
|
| ||
| 38 | Retirement Income Fund Lifestyle 3 |
| CORPORATE BONDS AND NOTES (5.2%)* cont. | Principal amount | Value |
|
| ||
| Utilities and power cont. | ||
| PPL WEM Holdings PLC 144A sr. unsec. notes 5 3/8s, 2021 | ||
| (United Kingdom) | $15,000 | $16,144 |
|
| ||
| PSEG Power, LLC company guaranty sr. unsec. notes | ||
| 5.32s, 2016 | 4,000 | 4,425 |
|
| ||
| Puget Sound Energy, Inc. jr. sub. FRN notes Ser. A, 6.974s, 2067 | 5,000 | 5,225 |
|
| ||
| Texas-New Mexico Power Co. 144A 1st mtge. bonds Ser. A, | ||
| 9 1/2s, 2019 | 5,000 | 6,526 |
|
| ||
| Trans-Canada Pipelines, Ltd. jr. unsec. sub. FRN notes 6.35s, | ||
| 2067 (Canada) | 10,000 | 10,400 |
|
| ||
| Westar Energy, Inc. 1st mtge. bonds 8 5/8s, 2018 | 15,000 | 19,333 |
|
| ||
| Wisconsin Energy Corp. jr. unsec. sub. FRN notes 6 1/4s, 2067 | 5,000 | 5,176 |
|
| ||
| 315,166 | ||
| Total corporate bonds and notes (cost $801,790) | $857,134 | |
| U.S. TREASURY OBLIGATIONS (3.5%)* | Principal amount | Value |
|
| ||
| U.S. Treasury Bonds 2 7/8s, May 15, 2043 | $50,000 | $42,563 |
|
| ||
| U.S. Treasury Notes | ||
| 3 1/2s, February 15, 2018 | 48,000 | 52,345 |
| 3 1/8s, October 31, 2016 | 75,000 | 80,279 |
| 2 5/8s, April 30, 2016 | 10,000 | 10,522 |
| 1 3/4s, May 15, 2023 | 140,000 | 128,037 |
| 1 5/8s, November 15, 2022 | 30,000 | 27,392 |
| 1s, August 31, 2016 | 140,000 | 140,861 |
| 5/8s, April 30, 2018 | 100,000 | 96,090 |
|
| ||
| Total U.S. treasury obligations (cost $589,525) | $578,089 | |
| MORTGAGE-BACKED SECURITIES (0.6%)* | Principal amount | Value |
|
| ||
| Banc of America Commercial Mortgage Trust | ||
| Ser. 06-5, Class A3, 5.39s, 2047 | $11,000 | $11,275 |
| FRB Ser. 05-1, Class A4, 5.346s, 2042 | 8,401 | 8,768 |
|
| ||
| Bear Stearns Commercial Mortgage Securities, Inc. Ser. 03-T12, | ||
| Class A4, 4.68s, 2039 | 2,782 | 2,782 |
|
| ||
| Credit Suisse Mortgage Capital Certificates FRB Ser. 07-C4, | ||
| Class A2, 5.954s, 2039 | 5,709 | 5,723 |
|
| ||
| CS First Boston Mortgage Securities Corp. 144A Ser. 03-C3, | ||
| Class AX, IO, 1.51s, 2038 | 12,015 | — |
|
| ||
| GE Commercial Mortgage Corporation Trust Ser. 05-C2, | ||
| Class A3, 4.839s, 2043 | 587 | 588 |
|
| ||
| JPMorgan Chase Commercial Mortgage Securities Corp. | ||
| Ser. 08-C2, Class ASB, 6 1/8s, 2051 | 8,247 | 8,895 |
| FRB Ser. 07-LD11, Class A2, 5.988s, 2049 | 10,685 | 10,707 |
| Ser. 07-LD12, Class A2, 5.827s, 2051 | 4,603 | 4,649 |
| Ser. 07-LDPX, Class A3S, 5.317s, 2049 | 11,453 | 11,498 |
| Ser. 04-CB8, Class B, 4 1/2s, 2039 | 10,000 | 10,148 |
|
| ||
| LB Commercial Conduit Mortgage Trust 144A Ser. 98-C4, | ||
| Class J, 5.6s, 2035 | 2,000 | 2,177 |
|
| ||
| LB-UBS Commercial Mortgage Trust FRB Ser. 07-C6, Class A4, | ||
| 5.858s, 2040 | 10,000 | 10,937 |
|
| ||
| Retirement Income Fund Lifestyle 3 | 39 |
| MORTGAGE-BACKED SECURITIES (0.6%)* cont. | Principal amount | Value | ||
|
| ||||
| LB-UBS Commercial Mortgage Trust 144A Ser. 05-C2, | ||||
| Class XCL, IO, 0 1/2s, 2040 | $229,457 | $910 | ||
|
| ||||
| Merrill Lynch Mortgage Trust FRB Ser. 07-C1, Class A2, | ||||
| 5.941s, 2050 | 3,375 | 3,431 | ||
|
| ||||
| Wachovia Bank Commercial Mortgage Trust Ser. 07-C34, | ||||
| Class A2, 5.569s, 2046 | 10,979 | 11,034 | ||
|
| ||||
| Total mortgage-backed securities (cost $103,808) | $103,522 | |||
| UNITS (0.2%)* | Units | Value | ||
|
| ||||
| Ashland, Inc. cv. jr. unsec. sub. debs. units 6 1/2s, 2029 | 45,000 | $40,500 | ||
|
| ||||
| Total units (cost $41,682) | $40,500 | |||
| MUNICIPAL BONDS AND NOTES (0.2%)* | Principal amount | Value | ||
|
| ||||
| CA State G.O. Bonds (Build America Bonds), 7 1/2s, 4/1/34 | $10,000 | $12,647 | ||
|
| ||||
| North TX, Thruway Auth. Rev. Bonds (Build America Bonds), | ||||
| 6.718s, 1/1/49 | 10,000 | 11,980 | ||
|
| ||||
| OH State U. Rev. Bonds (Build America Bonds), 4.91s, 6/1/40 | 5,000 | 5,052 | ||
|
| ||||
| Total municipal bonds and notes (cost $25,067) | $29,679 | |||
| PREFERRED STOCKS (0.1%)* | Shares | Value | ||
|
| ||||
| Ally Financial, Inc. 144A 7.00% cum. pfd. | 10 | $9,357 | ||
|
| ||||
| GMAC Capital Trust I Ser. 2, $2.031 cum. pfd. | 275 | 7,290 | ||
|
| ||||
| Total preferred stocks (cost $15,146) | $16,647 | |||
| WARRANTS (—%)*† | Expiration | Strike | ||
| date | price | Warrants | Value | |
|
| ||||
| Tower Semiconductor, Ltd. 144A (Israel) F | 6/30/15 | $0.01 | 6,345 | $— |
|
| ||||
| Total warrants (cost $1,269) | $— | |||
| SHORT-TERM INVESTMENTS (33.9%)* | Principal amount/shares | Value | ||
|
| ||||
| Putnam Short Term Investment Fund 0.07% L | 5,084,437 | $5,084,437 | ||
|
| ||||
| Putnam Cash Collateral Pool, LLC 0.12% d | 14,850 | 14,850 | ||
|
| ||||
| SSgA Prime Money Market Fund 0.01% P | 210,000 | 210,000 | ||
|
| ||||
| U.S. Treasury Bills with effective yields ranging from 0.08% | ||||
| to 0.09%, February 6, 2014 # | $250,000 | 249,944 | ||
|
| ||||
| Total short-term investments (cost $5,559,194) | $5,559,231 | |||
| TOTAL INVESTMENTS | ||||
|
| ||||
| Total investments (cost $15,749,216) | $16,468,857 | |||
| 40 | Retirement Income Fund Lifestyle 3 |
Key to holding’s currency abbreviations
| EUR | Euro |
| USD / $ | United States Dollar |
Key to holding’s abbreviations
| ADR | American Depository Receipts: represents ownership of foreign securities on deposit with a custodian bank |
| ETF | Exchange Traded Fund |
| FRB | Floating Rate Bonds: the rate shown is the current interest rate at the close of the reporting period |
| FRN | Floating Rate Notes: the rate shown is the current interest rate at the close of the reporting period |
| GMTN | Global Medium Term Notes |
| G.O. | Bonds General Obligation Bonds |
| IO | Interest Only |
| SPDR | S&P Depository Receipts |
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 March 1, 2013 through August 31, 2013 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures and references to “OTC”, if any, represent over-the-counter.
* Percentages indicated are based on net assets of $16,400,375.
† Non-income-producing security.
†† The interest rate and date shown parenthetically represent the new interest rate to be paid and the date the fund will begin accruing interest at this rate.
‡‡ Income may be received in cash or additional securities at the discretion of the issuer.
††† Affiliated company (Note 5).
# This security, in part or in entirety, was pledged and segregated with the broker to cover margin requirements for futures contracts at the close of the reporting period.
d Affiliated company. See Note 1 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.
F Is valued at fair value following procedures approved by the Trustees. Securities may be classified as Level 2 or Level 3 for ASC 820 based on the securities’ valuation inputs. At the close of the reporting period, fair value pricing was also used for certain foreign securities in the portfolio (Note 1).
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.
P Security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivatives contracts. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period (Note 1).
R Real Estate Investment Trust.
S Security on loan, in part or in entirety, at the close of the reporting period (Note 1).
UR At the reporting period end, 100 shares owned by the fund were not formally entered on the company’s shareholder register, due to local restrictions on foreign ownership. While the fund has full title to these unregistered shares, these shares do not carry voting rights and, until 2014, are not eligible for receipt of dividends.
At the close of the reporting period, the fund maintained liquid assets totaling $3,883,670 to cover certain derivatives contracts.
Debt obligations are considered secured unless otherwise indicated.
144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The dates shown on debt obligations are the original maturity dates.
| Retirement Income Fund Lifestyle 3 | 41 |
FORWARD CURRENCY CONTRACTS at 8/31/13 (aggregate face value $526,420) (Unaudited)
| Unrealized | ||||||
| Contract | Delivery | Aggregate | appreciation/ | |||
| Counterparty | Currency | type | date | Value | face value | (depreciation) |
|
| ||||||
| Bank of America N.A. | ||||||
| British Pound | Sell | 9/18/13 | $155 | $189 | $34 | |
|
| ||||||
| Euro | Buy | 9/18/13 | 37,801 | 36,728 | 1,073 | |
|
| ||||||
| Barclays Bank PLC | ||||||
| British Pound | Sell | 9/18/13 | 3,099 | 3,072 | (27) | |
|
| ||||||
| Hong Kong Dollar | Buy | 11/20/13 | 155 | 155 | — | |
|
| ||||||
| Japanese Yen | Buy | 11/20/13 | 4,312 | 4,268 | 44 | |
|
| ||||||
| Japanese Yen | Sell | 11/20/13 | 4,312 | 4,383 | 71 | |
|
| ||||||
| Singapore Dollar | Buy | 11/20/13 | 8,232 | 8,227 | 5 | |
|
| ||||||
| Swedish Krona | Sell | 9/18/13 | 14,752 | 14,881 | 129 | |
|
| ||||||
| Swiss Franc | Buy | 9/18/13 | 15,800 | 15,555 | 245 | |
|
| ||||||
| Citibank, N.A. | ||||||
| Australian Dollar | Sell | 10/18/13 | 9,230 | 9,543 | 313 | |
|
| ||||||
| Danish Krone | Buy | 9/18/13 | 10,897 | 10,793 | 104 | |
|
| ||||||
| Euro | Buy | 9/18/13 | 11,763 | 11,578 | 185 | |
|
| ||||||
| Euro | Sell | 9/18/13 | 11,763 | 11,721 | (42) | |
|
| ||||||
| Japanese Yen | Buy | 11/20/13 | 27,132 | 26,812 | 320 | |
|
| ||||||
| Credit Suisse International | ||||||
| Euro | Sell | 9/18/13 | 132 | 271 | 139 | |
|
| ||||||
| Japanese Yen | Buy | 11/20/13 | 6,605 | 6,547 | 58 | |
|
| ||||||
| Japanese Yen | Sell | 11/20/13 | 6,605 | 6,641 | 36 | |
|
| ||||||
| New Zealand Dollar | Sell | 10/18/13 | 26,196 | 26,395 | 199 | |
|
| ||||||
| Norwegian Krone | Buy | 9/18/13 | 1,437 | 1,811 | (374) | |
|
| ||||||
| Swedish Krona | Sell | 9/18/13 | 272 | 274 | 2 | |
|
| ||||||
| Swiss Franc | Buy | 9/18/13 | 3,117 | 3,059 | 58 | |
|
| ||||||
| Swiss Franc | Sell | 9/18/13 | 3,117 | 3,069 | (48) | |
|
| ||||||
| Deutsche Bank AG | ||||||
| Euro | Buy | 9/18/13 | 4,229 | 4,118 | 111 | |
|
| ||||||
| Euro | Sell | 9/18/13 | 4,229 | 4,241 | 12 | |
|
| ||||||
| HSBC Bank USA, National Association | ||||||
| Australian Dollar | Sell | 10/18/13 | 2,663 | 2,772 | 109 | |
|
| ||||||
| Euro | Buy | 9/18/13 | 61,327 | 61,494 | (167) | |
|
| ||||||
| Euro | Sell | 9/18/13 | 61,327 | 60,750 | (577) | |
|
| ||||||
| JPMorgan Chase Bank N.A. | ||||||
| Australian Dollar | Sell | 10/18/13 | 20,944 | 21,652 | 708 | |
|
| ||||||
| British Pound | Buy | 9/18/13 | 14,411 | 14,327 | 84 | |
|
| ||||||
| British Pound | Sell | 9/18/13 | 14,411 | 14,133 | (278) | |
|
| ||||||
| Euro | Buy | 9/18/13 | 3,569 | 3,578 | (9) | |
|
| ||||||
| Euro | Sell | 9/18/13 | 3,569 | 3,536 | (33) | |
|
| ||||||
| Japanese Yen | Buy | 11/20/13 | 10,306 | 10,201 | 105 | |
|
| ||||||
| Singapore Dollar | Buy | 11/20/13 | 7,683 | 7,678 | 5 | |
|
| ||||||
| Swedish Krona | Sell | 9/18/13 | 3,816 | 3,850 | 34 | |
|
| ||||||
| Swiss Franc | Buy | 9/18/13 | 1,182 | 1,171 | 11 | |
|
| ||||||
| 42 | Retirement Income Fund Lifestyle 3 |
FORWARD CURRENCY CONTRACTS at 8/31/13 (aggregate face value $526,420) (Unaudited) cont.
| Unrealized | ||||||
| Contract | Delivery | Aggregate | appreciation/ | |||
| Counterparty | Currency | type | date | Value | face value | (depreciation) |
|
| ||||||
| State Street Bank and Trust Co. | ||||||
| Australian Dollar | Buy | 10/18/13 | $3,816 | $3,936 | $(120) | |
|
| ||||||
| Australian Dollar | Sell | 10/18/13 | 3,816 | 3,934 | 118 | |
|
| ||||||
| Euro | Buy | 9/18/13 | 7,402 | 7,415 | (13) | |
|
| ||||||
| Euro | Sell | 9/18/13 | 7,402 | 7,284 | (118) | |
|
| ||||||
| Israeli Shekel | Buy | 10/18/13 | 1,843 | 1,839 | 4 | |
|
| ||||||
| Japanese Yen | Buy | 11/20/13 | 911 | 900 | 11 | |
|
| ||||||
| Japanese Yen | Sell | 11/20/13 | 911 | 909 | (2) | |
|
| ||||||
| Swedish Krona | Sell | 9/18/13 | 3,515 | 3,545 | 30 | |
|
| ||||||
| UBS AG | ||||||
| British Pound | Buy | 9/18/13 | 12,861 | 12,623 | 238 | |
|
| ||||||
| British Pound | Sell | 9/18/13 | 12,861 | 12,742 | (119) | |
|
| ||||||
| Euro | Buy | 9/18/13 | 11,895 | 11,790 | 105 | |
|
| ||||||
| Euro | Sell | 9/18/13 | 11,895 | 11,891 | (4) | |
|
| ||||||
| Norwegian Krone | Buy | 9/18/13 | 9,799 | 10,090 | (291) | |
|
| ||||||
| Norwegian Krone | Sell | 9/18/13 | 9,799 | 10,278 | 479 | |
|
| ||||||
| WestPac Banking Corp. | ||||||
| British Pound | Buy | 9/18/13 | 930 | 942 | (12) | |
|
| ||||||
| Japanese Yen | Buy | 11/20/13 | 6,931 | 6,829 | 102 | |
|
| ||||||
| Total | $3,047 | |||||
FUTURES CONTRACTS OUTSTANDING at 8/31/13 (Unaudited)
| Number of | Expiration | Unrealized | |||
| contracts | Value | date | appreciation | ||
|
| |||||
| U.S. Treasury Note 5 yr (Long) | 1 | $119,680 | Dec-13 | $350 | |
|
| |||||
| Total | $350 | ||||
| Retirement Income Fund Lifestyle 3 | 43 |
OTC CREDIT DEFAULT CONTRACTS OUTSTANDING at 8/31/13 (Unaudited)
| Upfront | Fixed payments | |||||||
| premium | Termi- | received | Unrealized | |||||
| Swap counterparty/ | received | Notional | nation | (paid) by fund | appreciation/ | |||
| Referenced debt* | Rating*** | (paid)** | amount | date | per annum | (depreciation) | ||
|
| ||||||||
| Deutsche Bank AG | ||||||||
| Virgin Media | BBB–/P | $— | EUR | 10,000 | 9/20/13 | 477 bp | $162 | |
| Finance PLC, | ||||||||
| 8 3/4%, 4/15/14 | ||||||||
|
| ||||||||
| JPMorgan Chase Bank N.A. | ||||||||
| EM Series 15 Version | BBB–/P | (200,000) | $1,600,000 | 6/20/16 | 500 bp | (114,533) | ||
| 1 Index | ||||||||
|
| ||||||||
| NA HY Series 20 | BBB–/P | (71,219) | 2,150,000 | 6/20/18 | 500 bp | 33,913 | ||
| Index | ||||||||
|
| ||||||||
| Total | $(271,219) | $(80,458) | ||||||
* Payments related to the referenced debt are made upon a credit default event.
** Upfront premium is based on the difference between the original spread on issue and the market spread on day of execution.
*** Ratings are presented for credit default contracts in which the fund has sold protection on the underlying referenced debt. Ratings for an underlying index represent the average of the ratings of all the securities included in that index. The Moody’s, Standard & Poor’s or Fitch ratings are believed to be the most recent ratings available at August 31, 2013. Securities rated by Putnam are indicated by “/P.”
| 44 | Retirement Income Fund Lifestyle 3 |
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*: | ||||||
|
| ||||||
| Basic materials | $148,718 | $52,313 | $— | |||
|
| ||||||
| Capital goods | 209,900 | 11,986 | — | |||
|
| ||||||
| Communication services | 169,538 | 37,002 | — | |||
|
| ||||||
| Conglomerates | 65,482 | — | — | |||
|
| ||||||
| Consumer cyclicals | 427,776 | 123,892 | — | |||
|
| ||||||
| Consumer staples | 389,604 | 68,735 | — | |||
|
| ||||||
| Energy | 319,084 | 30,482 | — | |||
|
| ||||||
| Financials | 1,815,538 | 115,968 | — | |||
|
| ||||||
| Health care | 455,640 | 27,176 | — | |||
|
| ||||||
| Technology | 352,617 | — | — | |||
|
| ||||||
| Transportation | 31,511 | 49,445 | — | |||
|
| ||||||
| Utilities and power | 96,368 | 23,128 | — | |||
|
| ||||||
| Total common stocks | 4,481,776 | 540,127 | — | |||
| Convertible bonds and notes | — | 1,259,388 | 2,980 | |||
|
| ||||||
| Convertible preferred stocks | 99,040 | 1,178,062 | 18 | |||
|
| ||||||
| Corporate bonds and notes | — | 857,134 | — | |||
|
| ||||||
| Investment companies | 1,722,664 | — | — | |||
|
| ||||||
| Mortgage-backed securities | — | 103,522 | — | |||
|
| ||||||
| Municipal bonds and notes | — | 29,679 | — | |||
|
| ||||||
| Preferred stocks | — | 16,647 | — | |||
|
| ||||||
| U.S. treasury obligations | — | 578,089 | — | |||
|
| ||||||
| Units | — | 40,500 | — | |||
|
| ||||||
| Warrants | — | — | — | |||
|
| ||||||
| Short-term investments | 5,294,437 | 264,794 | — | |||
|
| ||||||
| Totals by level | $11,597,917 | $4,867,942 | $2,998 | |||
| Valuation inputs | ||||||
|
| ||||||
| Other financial instruments: | Level 1 | Level 2 | Level 3 | |||
|
| ||||||
| Forward currency contracts | $— | $3,047 | $— | |||
|
| ||||||
| Futures contracts | 350 | — | — | |||
|
| ||||||
| Credit default contracts | — | 190,761 | — | |||
|
| ||||||
| Totals by level | $350 | $193,808 | $— | |||
* Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation.
At the start and close of the reporting period, Level 3 investments in securities were not considered a significant portion of the fund’s portfolio.
The accompanying notes are an integral part of these financial statements.
| Retirement Income Fund Lifestyle 3 | 45 |
Statement of assets and liabilities 8/31/13 (Unaudited)
| ASSETS | |
|
| |
| Investment in securities, at value, including $14,450 of securities on loan (Note 1): | |
| Unaffiliated issuers (identified cost $9,145,715) | $9,835,468 |
| Affiliated issuers (identified cost $6,603,501) (Notes 1 and 5) | 6,633,389 |
|
| |
| Foreign currency (cost $612) (Note 1) | 612 |
|
| |
| Dividends, interest and other receivables | 58,742 |
|
| |
| Receivable for shares of the fund sold | 967 |
|
| |
| Receivable for investments sold | 3,111 |
|
| |
| Receivable from Manager (Note 2) | 17,950 |
|
| |
| Unrealized appreciation on forward currency contracts (Note 1) | 5,281 |
|
| |
| Unrealized appreciation on OTC swap contracts (Note 1) | 34,075 |
|
| |
| Premium paid on OTC swap contracts (Note 1) | 271,219 |
|
| |
| Total assets | 16,860,814 |
| LIABILITIES | |
|
| |
| Payable to custodian | 23,212 |
|
| |
| Payable for investments purchased | 37 |
|
| |
| Payable for custodian fees (Note 2) | 4,759 |
|
| |
| Payable for investor servicing fees (Note 2) | 3,706 |
|
| |
| Payable for Trustee compensation and expenses (Note 2) | 30,196 |
|
| |
| Payable for administrative services (Note 2) | 32 |
|
| |
| Payable for distribution fees (Note 2) | 8,078 |
|
| |
| Payable for auditing and tax fees | 37,249 |
|
| |
| Payable for variation margin (Note 1) | 8 |
|
| |
| Unrealized depreciation on OTC swap contracts (Note 1) | 114,533 |
|
| |
| Unrealized depreciation on forward currency contracts (Note 1) | 2,234 |
|
| |
| Collateral on securities loaned, at value (Note 1) | 14,850 |
|
| |
| Collateral on certain derivative contracts, at value (Note 1) | 210,000 |
|
| |
| Other accrued expenses | 11,545 |
|
| |
| Total liabilities | 460,439 |
| Net assets | $16,400,375 |
|
| |
| REPRESENTED BY | |
|
| |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $28,325,620 |
|
| |
| Undistributed net investment income (Note 1) | 162,765 |
|
| |
| Accumulated net realized loss on investments and foreign currency transactions (Note 1) | (12,730,442) |
|
| |
| Net unrealized appreciation of investments and assets and liabilities in foreign currencies | 642,432 |
|
| |
| Total — Representing net assets applicable to capital shares outstanding | $16,400,375 |
(Continued on next page)
| 46 | Retirement Income Fund Lifestyle 3 |
Statement of assets and liabilities (Continued)
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
|
| |
| Net asset value and redemption price per class A share ($11,201,398 divided by 1,087,921 shares) | $10.30 |
|
| |
| Offering price per class A share (100/96.00 of $10.30)* | $10.73 |
|
| |
| Net asset value and offering price per class B share ($812,577 divided by 79,192 shares)** | $10.26 |
|
| |
| Net asset value and offering price per class C share ($2,693,679 divided by 262,494 shares)** | $10.26 |
|
| |
| Net asset value and redemption price per class M share ($500,923 divided by 48,731 shares) | $10.28 |
|
| |
| Offering price per class M share (100/96.75 of $10.28)† | $10.63 |
|
| |
| Net asset value, offering price and redemption price per class R share | |
| ($3,687 divided by 358 shares)†† | $10.29 |
|
| |
| Net asset value, offering price and redemption price per class Y share | |
| ($1,188,111 divided by 115,220 shares) | $10.31 |
|
| |
* On single retail sales of less than $100,000. On sales of $100,000 or more the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
† On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.
†† Net asset value may not recalculate due to rounding of fractional shares.
The accompanying notes are an integral part of these financial statements.
| Retirement Income Fund Lifestyle 3 | 47 |
Statement of operations Six months ended 8/31/13 (Unaudited)
| INVESTMENT INCOME | |
|
| |
| Dividends (net of foreign tax of $4,508) | $144,689 |
|
| |
| Interest (including interest income of $1,144 from investments in affiliated issuers) (Note 5) | 61,172 |
|
| |
| Securities lending (Note 1) | 2 |
|
| |
| Total investment income | 205,863 |
| EXPENSES | |
|
| |
| Compensation of Manager (Note 2) | 40,216 |
|
| |
| Investor servicing fees (Note 2) | 10,992 |
|
| |
| Custodian fees (Note 2) | 10,591 |
|
| |
| Trustee compensation and expenses (Note 2) | 559 |
|
| |
| Distribution fees (Note 2) | 33,212 |
|
| |
| Administrative services (Note 2) | 179 |
|
| |
| Reports to shareholders | 13,771 |
|
| |
| Auditing and tax fees | 36,479 |
|
| |
| Other | 1,827 |
|
| |
| Fees waived and reimbursed by Manager (Note 2) | (51,775) |
|
| |
| Total expenses | 96,051 |
| Expense reduction (Note 2) | (15) |
|
| |
| Net expenses | 96,036 |
| Net investment income | 109,827 |
|
| |
| Net realized gain on investments (Notes 1 and 3) | 265,503 |
|
| |
| Net realized gain on swap contracts (Note 1) | 153,560 |
|
| |
| Net realized loss on futures contracts (Note 1) | (10,894) |
|
| |
| Net realized gain on foreign currency transactions (Note 1) | 4,658 |
|
| |
| Net unrealized appreciation of assets and liabilities in foreign currencies during the period | 1,623 |
|
| |
| Net unrealized depreciation of investments, futures contracts and swap contracts | |
| during the period | (234,203) |
|
| |
| Net gain on investments | 180,247 |
| Net increase in net assets resulting from operations | $290,074 |
|
| |
The accompanying notes are an integral part of these financial statements.
| 48 | Retirement Income Fund Lifestyle 3 |
Statement of changes in net assets
| DECREASE IN NET ASSETS | Six months ended 8/31/13* | Year ended 2/28/13 |
|
| ||
| Operations: | ||
| Net investment income | $109,827 | $254,907 |
|
| ||
| Net realized gain on investments | ||
| and foreign currency transactions | 412,827 | 902,330 |
|
| ||
| Net unrealized appreciation (depreciation) of investments | ||
| and assets and liabilities in foreign currencies | (232,580) | 214,644 |
|
| ||
| Net increase in net assets resulting from operations | 290,074 | 1,371,881 |
|
| ||
| Distributions to shareholders (Note 1): | ||
| From ordinary income | ||
| Net investment income | ||
|
| ||
| Class A | (110,232) | (235,897) |
|
| ||
| Class B | (4,996) | (11,810) |
|
| ||
| Class C | (16,081) | (34,176) |
|
| ||
| Class M | (4,423) | (9,015) |
|
| ||
| Class R | (39) | (40) |
|
| ||
| Class Y | (13,543) | (31,489) |
|
| ||
| Decrease from capital share transactions (Note 4) | (155,118) | (1,948,399) |
|
| ||
| Total decrease in net assets | (14,358) | (898,945) |
| NET ASSETS | ||
|
| ||
| Beginning of period | 16,414,733 | 17,313,678 |
|
| ||
| End of period (including undistributed net investment | ||
| income of $162,765 and $202,252, respectively) | $16,400,375 | $16,414,733 |
|
| ||
* Unaudited
The accompanying notes are an integral part of these financial statements.
| Retirement Income Fund Lifestyle 3 | 49 |
Financial highlights (For a common share outstanding throughout the period)
| INVESTMENT OPERATIONS: | LESS DISTRIBUTIONS: | RATIOS AND SUPPLEMENTAL DATA: | |||||||||||
|
| |||||||||||||
| Ratio of net | |||||||||||||
| Ratio | investment | ||||||||||||
| Net asset | Net realized | of expenses | income (loss) | ||||||||||
| value, | and unrealized | Total from | From | Net asset | Total return | Net assets, | to average | to average | Portfolio | ||||
| beginning | Net investment | gain (loss) | investment | net investment | Total | Redemption | value, end | at net asset | end of period | net assets | net assets | turnover | |
| Period ended | of period | income (loss) a | on investments | operations | income | distributions | fees | of period | value (%) b | (in thousands) | (%) c,d | (%) d | (%) |
|
| |||||||||||||
| Class A | |||||||||||||
| August 31, 2013 ** | $10.21 | .08 | .11 | .19 | (.10) | (.10) | — | $10.30 | 1.87 * | $11,201 | .50*e | .74 * | 19 * |
| February 28, 2013 | 9.58 | .16 | .67 | .83 | (.20) | (.20) | — | 10.21 | 8.83 | 10,782 | 1.00 e | 1.69 | 45 |
| February 29, 2012 | 9.76 | .20 | (.11) | .09 | (.27) | (.27) | — | 9.58 | 1.04 | 12,145 | 1.04 e | 2.10 | 92 |
| February 28, 2011 | 9.00 | .25 | .76 | 1.01 | (.25) | (.25) | — f | 9.76 | 11.45 | 14,224 | .97 | 2.65 | 72 |
| February 28, 2010 | 6.69 | .36 | 2.54 | 2.90 | (.59) | (.59) | — f | 9.00 | 44.22 | 13,694 | .75 | 4.31 | 93 g |
| February 28, 2009 | 10.42 | .45 | (3.49) | (3.04) | (.69) | (.69) | — f | 6.69 | (30.00) | 9,116 | .74 | 4.92 | 145 g |
|
| |||||||||||||
| Class B | |||||||||||||
| August 31, 2013 ** | $10.18 | .04 | .10 | .14 | (.06) | (.06) | — | $10.26 | 1.40 * | $813 | .88 *e | .36 * | 19 * |
| February 28, 2013 | 9.54 | .09 | .68 | .77 | (.13) | (.13) | — | 10.18 | 8.12 | 812 | 1.75 e | .94 | 45 |
| February 29, 2012 | 9.72 | .13 | (.11) | .02 | (.20) | (.20) | — | 9.54 | .26 | 965 | 1.79 e | 1.36 | 92 |
| February 28, 2011 | 8.97 | .17 | .77 | .94 | (.19) | (.19) | — f | 9.72 | 10.58 | 1,180 | 1.72 | 1.87 | 72 |
| February 28, 2010 | 6.67 | .30 | 2.52 | 2.82 | (.52) | (.52) | — f | 8.97 | 43.13 | 846 | 1.50 | 3.69 | 93 g |
| February 28, 2009 | 10.39 | .38 | (3.48) | (3.10) | (.62) | (.62) | — f | 6.67 | (30.55) | 876 | 1.49 | 4.14 | 145 g |
|
| |||||||||||||
| Class C | |||||||||||||
| August 31, 2013 ** | $10.18 | .04 | .10 | .14 | (.06) | (.06) | — | $10.26 | 1.40 * | $2,694 | .88 *e | .36 * | 19 * |
| February 28, 2013 | 9.55 | .09 | .67 | .76 | (.13) | (.13) | — | 10.18 | 8.03 | 2,715 | 1.75 e | .90 | 45 |
| February 29, 2012 | 9.72 | .13 | (.10) | .03 | (.20) | (.20) | — | 9.55 | .35 | 2,352 | 1.79 e | 1.33 | 92 |
| February 28, 2011 | 8.97 | .18 | .76 | .94 | (.19) | (.19) | — f | 9.72 | 10.56 | 3,120 | 1.72 | 1.90 | 72 |
| February 28, 2010 | 6.67 | .29 | 2.54 | 2.83 | (.53) | (.53) | — f | 8.97 | 43.15 | 2,940 | 1.50 | 3.55 | 93 g |
| February 28, 2009 | 10.40 | .38 | (3.49) | (3.11) | (.62) | (.62) | — f | 6.67 | (30.60) | 2,159 | 1.49 | 4.22 | 145 g |
|
| |||||||||||||
| Class M | |||||||||||||
| August 31, 2013 ** | $10.20 | .06 | .11 | .17 | (.09) | (.09) | — | $10.28 | 1.66 * | $501 | .63 *e | .61 * | 19 * |
| February 28, 2013 | 9.56 | .14 | .68 | .82 | (.18) | (.18) | — | 10.20 | 8.68 | 507 | 1.25 e | 1.41 | 45 |
| February 29, 2012 | 9.74 | .16 | (.10) | .06 | (.24) | (.24) | — | 9.56 | .70 | 465 | 1.37 e | 1.71 | 92 |
| February 28, 2011 | 8.98 | .20 | .77 | .97 | (.21) | (.21) | — f | 9.74 | 10.90 | 445 | 1.47 | 2.17 | 72 |
| February 28, 2010 | 6.68 | .31 | 2.53 | 2.84 | (.54) | (.54) | — f | 8.98 | 43.41 | 388 | 1.25 | 3.68 | 93 g |
| February 28, 2009 | 10.40 | .41 | (3.48) | (3.07) | (.65) | (.65) | — f | 6.68 | (30.33) | 95 | 1.24 | 4.41 | 145 g |
|
| |||||||||||||
| Class R | |||||||||||||
| August 31, 2013 ** | $10.20 | .06 | .12 | .18 | (.09) | (.09) | — | $10.29 | 1.74 * | $4 | .63 *e | .58 * | 19 * |
| February 28, 2013 | 9.59 | .10 | .69 | .79 | (.18) | (.18) | — | 10.20 | 8.35 | 4 | 1.25 e | 1.14 | 45 |
| February 29, 2012 | 9.77 | .18 | (.11) | .07 | (.25) | (.25) | — | 9.59 | .77 | 1 | 1.29 e | 1.87 | 92 |
| February 28, 2011 | 9.01 | .22 | .77 | .99 | (.23) | (.23) | — f | 9.77 | 11.15 | 1 | 1.22 | 2.40 | 72 |
| February 28, 2010 | 6.69 | .34 | 2.55 | 2.89 | (.57) | (.57) | — f | 9.01 | 44.04 | 1 | 1.00 | 4.07 | 93 g |
| February 28, 2009 | 10.43 | .43 | (3.50) | (3.07) | (.67) | (.67) | — f | 6.69 | (30.24) | 1 | .99 | 4.68 | 145 g |
|
| |||||||||||||
| Class Y | |||||||||||||
| August 31, 2013 ** | $10.22 | .09 | .11 | .20 | (.11) | (.11) | — | $10.31 | 1.99 * | $1,188 | .38 *e | .86 * | 19 * |
| February 28, 2013 | 9.59 | .18 | .68 | .86 | (.23) | (.23) | — | 10.22 | 9.08 | 1,595 | .75 e | 1.86 | 45 |
| February 29, 2012 | 9.77 | .23 | (.11) | .12 | (.30) | (.30) | — | 9.59 | 1.30 | 1,386 | .79 e | 2.38 | 92 |
| February 28, 2011 | 9.01 | .27 | .77 | 1.04 | (.28) | (.28) | — f | 9.77 | 11.73 | 1,555 | .72 | 2.90 | 72 |
| February 28, 2010 | 6.70 | .45 | 2.47 | 2.92 | (.61) | (.61) | — f | 9.01 | 44.53 | 1,474 | .50 | 5.71 | 93 g |
| February 28, 2009 | 10.43 | .47 | (3.49) | (3.02) | (.71) | (.71) | — f | 6.70 | (29.81) | 21,393 | .49 | 5.20 | 145 g |
|
| |||||||||||||
See notes to financial highlights at the end of this section.
The accompanying notes are an integral part of these financial statements.
| 50 | Retirement Income Fund Lifestyle 3 | Retirement Income Fund Lifestyle 3 | 51 |
Financial highlights (Continued)
* Not annualized.
** Unaudited.
a Per share net investment income 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 (Note 2).
d Reflects an involuntary contractual expense limitation in effect during the period. For periods prior to February 28, 2010, certain fund expenses were waived in connection with the fund’s investment in Putnam Prime Money Market Fund. As a result of such limitations and/or waivers, the expenses of each class reflect a reduction of the following amounts (Note 2):
| Percentage of | |
| average net assets | |
|
| |
| August 31, 2013 | 0.31% |
|
| |
| February 28, 2013 | 0.77 |
|
| |
| February 29, 2012 | 0.80 |
|
| |
| February 28, 2011 | 0.82 |
|
| |
| February 28, 2010 | 1.12 |
|
| |
| February 28, 2009 | 0.99 |
|
| |
e Expense ratios do not include expenses of the underlying fund.
f Amount represents less than $0.01 per share.
g Portfolio turnover excludes TBA purchase and sale transactions.
The accompanying notes are an integral part of these financial statements.
| 52 | Retirement Income Fund Lifestyle 3 |
Notes to financial statements 8/31/13 (Unaudited)
Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from March 1, 2013 through August 31, 2013.
Putnam Retirement Income Fund Lifestyle 3 (the fund) is a diversified series of Putnam Funds Trust (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The investment objective of the fund is to seek current income consistent with what Putnam Management believes to be prudent risk. The fund’s secondary objective is capital appreciation. The fund invests mainly in a combination of bonds and common stocks of U.S. and non-U.S. companies and in Putnam Absolute Return 700 Fund, which is a Putnam mutual fund Putnam Management refers to as the underlying fund. The fund may invest without limit in bonds that are either investment-grade or below investment-grade in quality (sometimes referred to as “junk bonds”) and have short- to long-term maturities. The fund also invests in other fixed-income securities, such as mortgage-backed investments, and invests in money market securities or affiliated money market or short-term investment funds for cash management. The fund also invests, to a lesser extent, in equity securities (growth or value stocks or both) of companies of any size. Putnam Management may consider, among other factors, credit, interest rate and prepayment risks, as well as general market conditions, when deciding whether to buy or sell fixed-income investments, and, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell equity investments. Putnam Management may also select other investments that do not fall within these asset classes.
The fund offers class A, class B, class C, class M, class R and class Y shares. Class A and class M shares are sold with a maximum front-end sales charge of 4.00% and 3.25%, respectively, and generally do not pay a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge and are subject to a contingent deferred sales charge if those shares are redeemed within six years of purchase. Class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class R shares, which are not available to all investors, are sold at net asset value. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, class M and class R shares, but do not bear a distribution fee. Class Y shares are not available to all investors.
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.
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 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
| Retirement Income Fund Lifestyle 3 | 53 |
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 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 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 close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These 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 and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.
Such valuations and procedures are reviewed periodically by the Trustees. Certain securities may be valued on the basis of a price provided by a single source. 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, 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 market 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. All premiums/discounts are amortized/accreted on a yield-to-maturity basis.
Stripped securities The fund may invest in stripped securities which represent a participation in securities that may be structured in classes with rights to receive different portions of the interest and principal. Interest-only securities receive all of the interest and principal-only securities receive all of the principal. If the interest-only securities experience greater than anticipated prepayments of principal, the fund may fail to recoup fully its initial investment in these securities. Conversely, principal-only securities increase in value if prepayments are greater than anticipated and decline if prepayments are slower than anticipated. The market value of these securities is highly sensitive to changes in interest rates.
| 54 | Retirement Income Fund Lifestyle 3 |
Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The market 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 closed forward currency contracts, 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 open forward currency contracts and assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.
Futures contracts The fund uses futures contracts to manage exposure to market risk, to hedge prepayment risk, to hedge interest rate risk, to gain exposure to interest rates and to equitize cash.
The potential risk to the fund is that the change in value of futures contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”
Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.
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 and to gain exposure on currency.
The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in market 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 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.
Credit default contracts The fund entered into OTC credit default contracts to hedge credit risk, to hedge market risk and to gain exposure on individual names and/or baskets of securities.
In an OTC credit default contract, the protection buyer typically makes an upfront payment and a periodic stream of payments to a counterparty, the protection seller, in exchange for the right to receive a contingent payment upon the occurrence of a credit event on the reference obligation or all other equally ranked obligations of the reference entity. Credit events are contract specific but may include bankruptcy, failure to pay, restructuring and obligation acceleration. An upfront payment received by the fund is recorded as a liability on the fund’s books. An upfront payment made by the fund is recorded as an asset on the fund’s books. Periodic payments received or paid by the fund are recorded as realized gains or losses. The OTC credit default contracts are marked to market daily based upon quotations from an independent pricing service or market makers and the change, if any, is recorded as an unrealized gain or loss. Upon the occurrence of a credit event, the difference between the par value and market value of the reference obligation, net of any proportional amount of the upfront payment, is recorded as a realized gain or loss.
| Retirement Income Fund Lifestyle 3 | 55 |
In addition to bearing the risk that the credit event will occur, the fund could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index or the possibility that the fund may be unable to close out its position at the same time or at the same price as if it had purchased the underlying reference obligations. In certain circumstances, the fund may enter into offsetting OTC credit default contracts which would mitigate its risk of loss. Risks of loss may exceed amounts recognized on the Statement of assets and liabilities. The fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the contract. This risk may be mitigated by having a master netting arrangement between the fund and the counterparty. Where the fund is a seller of protection, the maximum potential amount of future payments the fund may be required to make is equal to the notional amount of the relevant OTC credit default contract.
OTC credit default contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (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 posted to the fund is held in a segregated account by the fund’s custodian and with respect to those amounts which can be sold or repledged, are presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
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 $725 on open derivative contracts subject to the Master Agreements. There was no collateral posted by the fund for these 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 market value of the securities loaned. The market value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. 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 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 value of securities loaned amounted to $14,450 and the fund received cash collateral of $14,850.
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.
Line of credit The fund participates, along with other Putnam funds, in a $315 million unsecured committed line of credit and a $185 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 the Federal Funds rate
| 56 | Retirement Income Fund Lifestyle 3 |
plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.02% of the committed line of credit and $50,000 for the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.11% per annum on any unutilized portion of the committed line of credit is allocated to the 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.
At February 28, 2013, the fund had a capital loss carryover of $13,112,103 available to the extent allowed by the Code to offset future net capital gain, if any. The amounts of the carryovers and the expiration dates are:
| Loss carryover | |||
|
| |||
| Short-term | Long-term | Total | Expiration |
|
| |||
| $2,637,607 | N/A | $2,637,607 | February 28, 2017 |
|
| |||
| 10,474,496 | N/A | 10,474,496 | February 28, 2018 |
|
| |||
Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred will be required to be utilized prior to the losses incurred in pre-enactment tax years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
The aggregate identified cost on a tax basis is $15,779,435, resulting in gross unrealized appreciation and depreciation of $1,088,069 and $398,647, respectively, or net unrealized appreciation of $689,422.
Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations.
Expenses of the Trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the Trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund.
| Retirement Income Fund Lifestyle 3 | 57 |
Note 2: Management fee, administrative services and other transactions
The fund pays Putnam Management a management fee, computed and paid monthly, (based on the fund’s average net assets, excluding assets that are invested in other Putnam funds that charge a management fee) at annual rates that may vary based on the average of the aggregate net assets of most open-end funds, as defined in the fund’s management contract, sponsored by Putnam Management. Such annual rates may vary as follows:
| 0.680% | of the first $5 billion, | 0.480% | of the next $50 billion, | |
|
|
| |||
| 0.630% | of the next $5 billion, | 0.460% | of the next $50 billion, | |
|
|
| |||
| 0.580% | of the next $10 billion, | 0.450% | of the next $100 billion and | |
|
|
| |||
| 0.530% | of the next $10 billion, | 0.445% | of any excess thereafter. | |
|
|
| |||
Putnam Management has agreed to waive fees (and, to the extent necessary, bear other expenses) of the fund through June 30, 2014, to the extent that expenses of the fund (excluding brokerage, interest, taxes, investment-related expenses, such as borrowing costs, payments under distribution plans, and extraordinary expenses and acquired fund fees and expenses) would exceed an annual rate of 0.75% of the fund’s average net assets. During the reporting period, the fund’s expenses were reduced by $3,615 as a result of this limit.
Putnam Management has also contractually agreed, through June 30, 2014, to waive fees 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, that do not represent the fund’s investments in other Putnam funds, other than Putnam Money Market Liquidity Fund and Putnam Short Term Investment Fund, over such fiscal year-to-date period. During the reporting period, the fund’s expenses were reduced by $48,160 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. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.
The Putnam Advisory Company, LLC (PAC), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund, as designated from time to time by Putnam Management or PIL. Putnam Management or PIL, as applicable, pays a quarterly sub-advisory fee to PAC for its services at the annual rate of 0.35% of the average net assets of the portion of the fund’s assets for which PAC is engaged as sub-adviser.
The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.
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 based on the fund’s retail asset level, the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund. Investor servicing fees will not exceed an annual rate of 0.32% of the fund’s average net assets. During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:
| Class A | $7,491 | Class R | 3 | |
|
|
| |||
| Class B | 548 | Class Y | 837 | |
|
|
| |||
| Class C | 1,773 | Total | $10,992 | |
|
|
| |||
| Class M | 340 | |||
|
|
||||
| 58 | Retirement Income Fund Lifestyle 3 |
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. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the fund’s expenses were reduced by $8 under the expense offset arrangements and by $7 under the brokerage/service arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of which $11, 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 its class A, class B, class C, class M and class R shares 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 for payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.25%, 1.00%, 1.00%, 0.50% and 0.50% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively. During the reporting period, the class specific expenses related to distribution fees were as follows:
| Class A | $14,265 | Class M | 1,294 | |
|
|
| |||
| Class B | 4,170 | Class R | 11 | |
|
|
| |||
| Class C | 13,472 | Total | $33,212 | |
|
|
| |||
For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $355 and $2 from the sale of class A and class M shares, respectively, and received $67 and no monies in contingent deferred sales charges from redemptions of class B and class C shares, respectively.
A deferred sales charge of up to 1.00% and 0.40% is assessed on certain redemptions of class A and class M shares, respectively. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $6 and no monies on class A and class M redemptions, respectively.
Note 3: Purchases and sales of securities
During the reporting period, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $2,146,841 and $2,706,116, respectively. These figures include the cost of purchases and proceeds from sales of long-term U.S. government securities of $481,063 and $450,951, respectively.
| Retirement Income Fund Lifestyle 3 | 59 |
Note 4: Capital shares
At the close of the reporting period, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
| Six months ended 8/31/13 | Year ended 2/28/13 | |||
|
| ||||
| Class A | Shares | Amount | Shares | Amount |
|
| ||||
| Shares sold | 114,264 | $1,191,378 | 94,588 | $923,796 |
|
| ||||
| Shares issued in connection with | ||||
| reinvestment of distributions | 9,797 | 102,078 | 21,565 | 209,981 |
|
| ||||
| 124,061 | 1,293,456 | 116,153 | 1,133,777 | |
|
| ||||
| Shares repurchased | (92,080) | (965,341) | (328,268) | (3,204,494) |
|
| ||||
| Net increase (decrease) | 31,981 | $328,115 | (212,115) | $(2,070,717) |
|
| ||||
| Six months ended 8/31/13 | Year ended 2/28/13 | |||
|
| ||||
| Class B | Shares | Amount | Shares | Amount |
|
| ||||
| Shares sold | 6,184 | $64,201 | 4,003 | $38,303 |
|
| ||||
| Shares issued in connection with | ||||
| reinvestment of distributions | 446 | 4,628 | 1,037 | 10,061 |
|
| ||||
| 6,630 | 68,829 | 5,040 | 48,364 | |
|
| ||||
| Shares repurchased | (7,265) | (75,315) | (26,285) | (256,672) |
|
| ||||
| Net decrease | (635) | $(6,486) | (21,245) | $(208,308) |
|
| ||||
| Six months ended 8/31/13 | Year ended 2/28/13 | |||
|
| ||||
| Class C | Shares | Amount | Shares | Amount |
|
| ||||
| Shares sold | 19,239 | $198,130 | 48,511 | $475,662 |
|
| ||||
| Shares issued in connection with | ||||
| reinvestment of distributions | 1,462 | 15,183 | 3,199 | 31,106 |
|
| ||||
| 20,701 | 213,313 | 51,710 | 506,768 | |
|
| ||||
| Shares repurchased | (24,938) | (259,261) | (31,301) | (307,916) |
|
| ||||
| Net increase (decrease) | (4,237) | $(45,948) | 20,409 | $198,852 |
|
| ||||
| Six months ended 8/31/13 | Year ended 2/28/13 | |||
|
| ||||
| Class M | Shares | Amount | Shares | Amount |
|
| ||||
| Shares sold | 103 | $1,092 | 2,160 | $20,710 |
|
| ||||
| Shares issued in connection with | ||||
| reinvestment of distributions | 425 | 4,423 | 926 | 9,015 |
|
| ||||
| 528 | 5,515 | 3,086 | 29,725 | |
|
| ||||
| Shares repurchased | (1,514) | (15,758) | (1,970) | (19,200) |
|
| ||||
| Net increase (decrease) | (986) | $(10,243) | 1,116 | $10,525 |
|
| ||||
| Six months ended 8/31/13 | Year ended 2/28/13 | |||
|
| ||||
| Class R | Shares | Amount | Shares | Amount |
|
| ||||
| Shares sold | 469 | $5,007 | 226 | $2,221 |
|
| ||||
| Shares issued in connection with | ||||
| reinvestment of distributions | 4 | 39 | 4 | 40 |
|
| ||||
| 473 | 5,046 | 230 | 2,261 | |
|
| ||||
| Shares repurchased | (471) | (4,840) | (2) | (17) |
|
| ||||
| Net increase | 2 | $206 | 228 | $2,244 |
|
| ||||
| 60 | Retirement Income Fund Lifestyle 3 |
| Six months ended 8/31/13 | Year ended 2/28/13 | |||
|
| ||||
| Class Y | Shares | Amount | Shares | Amount |
|
| ||||
| Shares sold | 407 | $4,251 | 74,964 | $739,877 |
|
| ||||
| Shares issued in connection with | ||||
| reinvestment of distributions | 1,137 | 11,861 | 2,366 | 23,290 |
|
| ||||
| 1,544 | 16,112 | 77,330 | 763,167 | |
|
| ||||
| Shares repurchased | (42,293) | (436,874) | (65,832) | (644,162) |
|
| ||||
| Net increase (decrease) | (40,749) | $(420,762) | 11,498 | $119,005 |
|
| ||||
At the close of the reporting period, Putnam Investments, LLC owned the following shares of the fund:
| Value at the end of the | |||
| Shares owned | Percentage of ownership | reporting period | |
|
| |||
| Class M | 130 | 0.30% | $1,336 |
|
| |||
| Class R | 131 | 36.6 | 1,348 |
|
| |||
Note 5: Transactions with affiliated issuers
Transactions during the reporting period with a company which are under common ownership or control, or with companies in which the fund owned at least 5% of the voting securities, were as follows:
| Market value at | Market value | ||||
| the beginning | at the end of | ||||
| of the reporting | Investment | the reporting | |||
| Name of affiliates | period | Purchase cost | Sale proceeds | income | period |
|
| |||||
| Putnam Short Term | |||||
| Investment Fund* | $3,802,441 | $2,145,154 | $863,158 | $1,144 | $5,084,437 |
|
| |||||
| Putnam Absolute Return | |||||
| 700 Fund Class Y | 1,562,387 | 155,601 | 186,045 | — | 1,534,102 |
|
| |||||
| Totals | $5,364,828 | $2,300,755 | $1,049,203 | $1,144 | $6,618,539 |
|
| |||||
* Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management.
Note 6: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations. The fund may invest a significant portion of its assets in securitized debt instruments, including mortgage-backed and asset-backed investments. The yields and values of these investments are sensitive to changes in interest rates, the rate of principal payments on the underlying assets and the market’s perception of the issuers. The market for these investments may be volatile and limited, which may make them difficult to buy or sell.
| Retirement Income Fund Lifestyle 3 | 61 |
Note 7: Summary of derivative activity
The average volume of activity for the reporting period for any derivative type that was held during the period is listed below and was as follows:
| Futures contracts (number of contracts) | 2 |
|
| |
| Forward currency contracts (contract amount) | $710,000 |
|
| |
| OTC credit default swap contracts (notional) | $3,800,000 |
|
| |
| Warrants (number of warrants) | 6,000 |
|
| |
The following is a summary of the market values of derivative instruments as of the close of the reporting period:
Market values 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 | Market value | liabilities location | Market value |
|
| ||||
| Credit contracts | Receivables | $190,761 | Payables | $— |
|
| ||||
| Foreign | ||||
| exchange contracts | Receivables | 5,281 | Payables | 2,234 |
|
| ||||
| Receivables, Net | ||||
| assets — Unrealized | ||||
| Interest rate contracts | appreciation | 350* | Payables | — |
|
| ||||
| Total | $196,392 | $2,234 | ||
|
| ||||
* Includes cumulative appreciation/depreciation of futures contracts as reported in the fund’s portfolio. Only current day’s variation margin is reported within the Statement of assets and liabilities.
The following is a summary of realized and change in unrealized gains or losses of derivative instruments on the Statement of operations for the reporting period (see Note 1):
Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments
| Derivatives not accounted for | Forward | |||
| as hedging instruments under | currency | |||
| ASC 815 | Futures | contracts | Swaps | Total |
|
| ||||
| Credit contracts | $— | $— | $153,560 | $153,560 |
|
| ||||
| Foreign exchange contracts | — | 5,051 | — | $5,051 |
|
| ||||
| Interest rate contracts | (10,894) | — | — | $(10,894) |
|
| ||||
| Total | $(10,894) | $5,051 | $153,560 | $147,717 |
|
| ||||
Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) on investments
| Derivatives not accounted | Forward | ||||
| for as hedging instruments | currency | ||||
| under ASC 815 | Warrants | Futures | contracts | Swaps | Total |
|
| |||||
| Credit contracts | $— | $— | $— | $(74,013) | $(74,013) |
|
| |||||
| Foreign | |||||
| exchange contracts | — | — | 1,472 | — | $1,472 |
|
| |||||
| Equity contracts | (110) | — | — | — | $(110) |
|
| |||||
| Interest rate contracts | — | (433) | — | — | $(433) |
|
| |||||
| Total | $(110) | $(433) | $1,472 | $(74,013) | $(73,084) |
|
| |||||
| 62 | Retirement Income Fund Lifestyle 3 |
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| Retirement Income Fund Lifestyle 3 | 63 |
Note 8: Offsetting of financial and derivative assets and liabilities
The following table summarizes any derivatives, repurchase agreements, reverse repurchase agreements, securities lending and borrowing transactions, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement.
| Bank of America N.A. | Barclays Bank PLC | Citibank, N.A. | Credit Suisse International | Deutsche Bank AG | Goldman Sachs Bank USA | HSBC Bank USA, National Association | JPMorgan Chase Bank N.A. | Merrill Lynch, Pierce, Fenner & Smith, Inc. | State Street Bank and Trust Co. | UBS AG | WestPac Banking Corp. | Total | ||||||||||||||
|
| ||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||
| OTC Credit default swap contracts*# | $— | $— | $— | $— | $162 | $— | $— | $190,599 | $— | $— | $— | $— | $190,761 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Forward currency contracts# | 1,107 | 494 | 922 | 492 | 123 | — | 109 | 947 | — | 163 | 822 | 102 | 5,281 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Securities on loan** | — | — | — | — | — | 14,450 | — | — | — | — | — | — | 14,450 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Total Assets | $1,107 | $494 | $922 | $492 | $285 | $14,450 | $109 | $191,546 | $— | $163 | $822 | $102 | $210,492 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||
| Futures contracts*** | — | — | — | — | — | — | — | — | 8 | — | — | — | 8 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Forward currency contracts# | — | 27 | 42 | 422 | — | — | 744 | 320 | — | 253 | 414 | 12 | 2,234 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Total Liabilities | $— | $27 | $42 | $422 | $— | $— | $744 | $320 | $8 | $253 | $414 | $12 | $2,242 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Total Financial and Derivative Net Assets | $1,107 | $467 | $880 | $70 | $285 | $14,450 | $(635) | $191,226 | $(8) | $(90) | $408 | $90 | $208,250 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Total collateral received (pledged)##† | $— | $— | $— | $— | $— | $14,450 | $— | $191,226 | $— | $— | $— | $— | $205,676 | |||||||||||||
|
| ||||||||||||||||||||||||||
| Net amount | $1,107 | $467 | $880 | $70 | $285 | $— | $(635) | $— | $(8) | $(90) | $408 | $90 | $2,574 | |||||||||||||
|
| ||||||||||||||||||||||||||
*Excludes premiums. Included in unrealized appreciation and depreciation on OTC swap contracts on the Statement of assets and liabilities.
**Included with Investments in securities on the Statement of assets and liabilities
†Additional collateral may be required from certain brokers based on individual agreements.
#Covered by master netting agreement.
***Includes current day’s variation margin only as reported on the Statement of assets and liabilities, which is not collateralized. Cumulative appreciation/(depreciation) for futures contracts and centrally cleared swap contracts is represented in the tables listed after the fund’s portfolio.
##Any over-collateralization of total financial and derivative net assets is not shown.
| 64 | Retirement Income Fund Lifestyle 3 | Retirement Income Fund Lifestyle 3 | 65 |
The Putnam family of funds
The following is a list of Putnam’s open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial advisor at 1-800-225-1581 and ask for a prospectus. Please read the prospectus carefully before investing.
| Growth | International Value Fund |
| Growth Opportunities Fund | Multi-Cap Value Fund |
| International Growth Fund | Small Cap Value Fund |
| Multi-Cap Growth Fund | |
| Small Cap Growth Fund | Income |
| Voyager Fund | American Government Income Fund |
| Diversified Income Trust | |
| Blend | Emerging Markets Income Fund |
| Asia Pacific Equity Fund | Floating Rate Income Fund |
| Capital Opportunities Fund | Global Income Trust |
| Capital Spectrum Fund | High Yield Advantage Fund |
| Emerging Markets Equity Fund | High Yield Trust |
| Equity Spectrum Fund | Income Fund |
| Europe Equity Fund | Money Market Fund* |
| Global Equity Fund | Short Duration Income Fund |
| International Capital Opportunities Fund | U.S. Government Income Trust |
| International Equity Fund | |
| Investors Fund | Tax-free income |
| Low Volatility Equity Fund | AMT-Free Municipal Fund |
| Multi-Cap Core Fund | Intermediate-Term Municipal Income Fund |
| Research Fund | Short-Term Municipal Income Fund |
| Strategic Volatility Equity Fund | Tax Exempt Income Fund |
| Tax Exempt Money Market Fund* | |
| Value | Tax-Free High Yield Fund |
| Convertible Securities Fund | |
| Equity Income Fund | State tax-free income funds: |
| George Putnam Balanced Fund | Arizona, California, Massachusetts, Michigan, |
| Global Dividend Fund | Minnesota, New Jersey, New York, Ohio, |
| The Putnam Fund for Growth and Income | and Pennsylvania. |
* An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.
| 66 | Retirement Income Fund Lifestyle 3 |
| Absolute Return | Putnam RetirementReady® Funds — portfolios |
| Absolute Return 100 Fund® | with automatically adjusting allocations to |
| Absolute Return 300 Fund® | stocks, bonds, and money market instruments, |
| Absolute Return 500 Fund® | becoming more conservative over time. |
| Absolute Return 700 Fund® | |
| RetirementReady 2055 Fund | |
| Global Sector | RetirementReady 2050 Fund |
| Global Consumer Fund | RetirementReady 2045 Fund |
| Global Energy Fund | RetirementReady 2040 Fund |
| Global Financials Fund | RetirementReady 2035 Fund |
| Global Health Care Fund | RetirementReady 2030 Fund |
| Global Industrials Fund | RetirementReady 2025 Fund |
| Global Natural Resources Fund | RetirementReady 2020 Fund |
| Global Sector Fund | RetirementReady 2015 Fund |
| Global Technology Fund | |
| Global Telecommunications Fund | Putnam Retirement Income Lifestyle |
| Global Utilities Fund | Funds — portfolios with managed |
| allocations to stocks, bonds, and money | |
| Asset Allocation | market investments to generate |
| Putnam Global Asset Allocation Funds — | retirement income. |
| portfolios with allocations to stocks, bonds, | |
| and money market instruments that are | Retirement Income Fund Lifestyle 1 |
| adjusted dynamically within specified ranges | Retirement Income Fund Lifestyle 2 |
| as market conditions change. | Retirement Income Fund Lifestyle 3 |
| Dynamic Asset Allocation Balanced Fund | |
| Dynamic Asset Allocation | |
| Conservative Fund | |
| Dynamic Asset Allocation Growth Fund | |
| Dynamic Risk Allocation Fund |
Check your account balances and the most recent month-end performance in the Individual Investors section at putnam.com.
| Retirement Income Fund Lifestyle 3 | 67 |
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 Ask a helpful Putnam representative or your financial advisor for details about any of these or other services, or see your prospectus.
| 68 | Retirement Income Fund Lifestyle 3 |
Fund information
Founded over 75 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 over 100 funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.
| Investment Manager | Trustees | Robert R. Leveille |
| Putnam Investment | Jameson A. Baxter, Chair | Vice President and |
| Management, LLC | Liaquat Ahamed | Chief Compliance Officer |
| One Post Office Square | Ravi Akhoury | |
| Boston, MA 02109 | Barbara M. Baumann | Michael J. Higgins |
| Charles B. Curtis | Vice President, Treasurer, | |
| Investment Sub-Manager | Robert J. Darretta | and Clerk |
| Putnam Investments Limited | Katinka Domotorffy | |
| 57–59 St James’s Street | John A. Hill | Janet C. Smith |
| London, England SW1A 1LD | Paul L. Joskow | Vice President, |
| Kenneth R. Leibler | Principal Accounting Officer, | |
| Investment Sub-Advisor | Robert E. Patterson | and Assistant Treasurer |
| The Putnam Advisory | George Putnam, III | |
| Company, LLC | Robert L. Reynolds | Susan G. Malloy |
| One Post Office Square | W. Thomas Stephens | Vice President and |
| Boston, MA 02109 | Assistant Treasurer | |
| Officers | ||
| Marketing Services | Robert L. Reynolds | James P. Pappas |
| Putnam Retail Management | President | Vice President |
| One Post Office Square | ||
| Boston, MA 02109 | Jonathan S. Horwitz | Mark C. Trenchard |
| Executive Vice President, | Vice President and | |
| Custodian | Principal Executive Officer, and | BSA Compliance Officer |
| State Street Bank | Compliance Liaison | |
| and Trust Company | Nancy E. Florek | |
| Steven D. Krichmar | Vice President, Director of | |
| Legal Counsel | Vice President and | Proxy Voting and Corporate |
| Ropes & Gray LLP | Principal Financial Officer | Governance, Assistant Clerk, |
| and Associate Treasurer | ||
| Robert T. Burns | ||
| Vice President and | ||
| Chief Legal Officer |
This report is for the information of shareholders of Putnam Retirement Income Fund Lifestyle 3. 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: |
| Not applicable |
| Item 3. Audit Committee Financial Expert: |
| Not applicable |
| Item 4. Principal Accountant Fees and Services: |
| Not applicable |
| 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. Exhibits: |
| (a)(1) Not applicable |
| (a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith. |
| (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. |
| Putnam Funds Trust |
| By (Signature and Title): |
| /s/Janet C. Smith Janet C. Smith Principal Accounting Officer |
| Date: October 29, 2013 |
| 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: October 29, 2013 |
| By (Signature and Title): |
| /s/Steven D. Krichmar Steven D. Krichmar Principal Financial Officer |
| Date: October 29, 2013 |