N-CSRS 1 a_multicapcore.htm PUTNAM FUNDS TRUST a_multicapcore.htm


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: 100 Federal Street, Boston, Massachusetts 02110
Name and address of agent for service: Stephen Tate, Vice President
100 Federal Street
Boston, Massachusetts 02110
Copy to:         Bryan Chegwidden, Esq.
Ropes & Gray LLP
1211 Avenue of the Americas
New York, New York 10036
Registrant’s telephone number, including area code: (617) 292-1000
Date of fiscal year end: April 30, 2022
Date of reporting period: May 1, 2021 – October 31, 2021



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:




Message from the Trustees

December 6, 2021

Dear Fellow Shareholder:

In 2021, the stock market had another above-average year. Corporate earnings rose as the economy reopened and stimulus policies helped increase demand. Bonds, on the other hand, had a subpar year amid higher inflation. To respond to inflation risk, in part, the U.S. Federal Reserve has begun to reduce its monthly asset purchases, a program put in place during the Covid-19 pandemic.

Changes and opportunities lie ahead. In November, Congress passed the bipartisan Infrastructure Investment and Jobs Act. It will increase funding for roads, ports, rail, and other projects in the coming decade.

As companies continue to adapt to the pandemic, many of them face new challenges, like rebuilding supply chains, hiring workers, and addressing climate risk. Amid all of it, Putnam’s researchers will be actively looking for potential investments to meet the goals of your fund.

Thank you for investing with Putnam.




No matter what the stock market is doing from year to year, there are always opportunities for those who know how to find them. Portfolio Manager Gerard Sullivan has more than 35 years of investing experience and the flexibility to invest across the entire universe of publicly traded U.S. companies.


The best-performing stocks change from year to year

Sometimes stocks of small, fast-growing companies lead the market. At other times, it may be large undervalued companies. By investing in all types of stocks, the fund may benefit in changing markets, with less volatility than funds with a more narrow focus.


Source: Putnam, as of 12/31/20. Small-cap growth stocks are represented by the Russell 2000® Growth Index, an unmanaged index of those companies in the small-cap Russell 2000 Index chosen for their growth orientation. Small-cap value stocks are represented by the Russell 2000 Value Index, an unmanaged index of those companies in the small-cap Russell 2000 Index chosen for their value orientation. Mid-cap growth stocks are represented by the Russell Midcap® Growth Index, an unmanaged index of those companies in the Russell Midcap Index chosen for their growth orientation. Mid-cap value stocks are represented by the Russell Midcap Value Index, an unmanaged index of those companies in the Russell Midcap Index chosen for their value orientation. Large-cap growth stocks are represented by the Russell 1000® Growth Index, an unmanaged index of those companies in the large-cap Russell 1000 Index chosen for their growth orientation. Large-cap value stocks are represented by the Russell 1000 Value Index, which is an unmanaged index of those companies in the large-cap Russell 1000 Index chosen for their value orientation. You cannot invest directly in an index. Past performance is not a guarantee of future results.

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Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See below and pages 8–9 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.

Returns for periods of less than one year are not annualized.

Lipper peer group average provided by Lipper, a Refinitiv company.


This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 10/31/21. See above and pages 8–9 for additional fund performance information. Index descriptions can be found on page 13.

All Bloomberg indices provided by Bloomberg Index Services Limited.

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How were conditions for stock market investors during the reporting period?

U.S. stocks advanced during the period despite concerns about rising inflation and the spread of the Delta variant of Covid-19, which led to an increase in cases worldwide. Also, several businesses were challenged by cost pressures and shortages in materials, parts, and labor.

Markets were most affected by these concerns in September 2021, when stocks, as measured by the S&P 500 Index, experienced their largest monthly decline since March 2020. However, stocks rebounded considerably in October, the final month of the period. Major indexes reached all-time highs, boosted in part by strong second-quarter 2021 corporate earnings results.

How did the fund perform in this environment?

For the six-month reporting period, the fund returned 8.38%, underperforming its benchmark, the Russell 3000 Index, which returned 9.78%. The fund outperformed its Lipper peer group average for the period, which was 8.00%.

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Allocations are shown as a percentage of the fund’s net assets as of 10/31/21. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.


This table shows the fund’s top 10 holdings by percentage of the fund’s net assets as of 10/31/21. Short-term investments and derivatives, if any, are excluded. Holdings may vary over time.

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Could you provide some examples of stocks that helped fund performance during the period?

The top contributor to performance was technology giant Microsoft. In its most recent earnings announcement, the company’s results beat expectations and management provided a positive outlook for the coming quarter. Most notable has been growth in the company’s cloud computing business, Azure. Microsoft has also demonstrated success and competitive strength in its Office 365 software business and its video game platforms.

Another portfolio highlight was Bank of America. As investors anticipated a rebound in the economy and as bond yields rose, stocks in the financials sector rallied. Bank of America, in our view, is a well-managed company. We believe the stock is inexpensive relative to the company’s earnings growth potential. It offers a solid balance sheet, strong credit, low costs, and attractive online capabilities that we believe will allow it to continue to gain market share.


What were some holdings that detracted from the fund’s performance during the period?

Pulte Homes, one of the largest home construction companies in the United States, was a top detractor from performance for the period. Although demand for new homes has surged, home builders have struggled due to supply chain challenges and labor shortages. Pulte Homes’ revenues have been hurt by delays in manufacturing of building supplies and fulfilling orders.

Our investment in Southwest Airlines also dampened fund performance. During the period, the company faced significant flight cancellation problems due to staffing reductions made during the pandemic. In addition, for the airline industry overall, bookings declined in late summer as concerns mounted over the spread of the Covid-19 Delta variant.


This chart shows the fund’s largest allocation shifts, by percentage, over the past six months. Allocations are shown as a percentage of the fund’s net assets. 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, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.

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What is your outlook for the coming months?

The market has experienced a remarkable rebound since the lows of the pandemic in 2020. Although many stock prices have risen significantly, we believe it is still a good time to be invested in the market. At the same time, it is possible we could see volatility and declines in stock prices. However, it is likely we would view a market pullback as a buying opportunity.

We are also seeing a number of positive trends we believe can continue to drive stocks higher. For example, many consumers have yet to spend the considerable savings they have built up since the onset of the pandemic. At the same time, there remains a lot of pent-up demand for many products and services, which we believe bodes well for businesses. Throughout the pandemic, businesses worked to reduce costs and improve margins. And corporate earnings have been strong despite supply chain disruptions and other challenges for companies. In all market environments, we continue to dig deep in our research of companies, looking for opportunities to take advantage of attractive prices and improving business fundamentals.

Thank you, Jerry, for your time and insights today.

The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.

Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.

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Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended October 31, 2021, 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, R6, and 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 10/31/21

  Annual                 
  average    Annual    Annual    Annual     
  (life of fund)  10 years  average  5 years  average  3 years  average  1 year  6 months 
Class A (9/24/10)                   
Before sales charge  16.54%  368.32%  16.70%  143.65%  19.50%  80.52%  21.76%  49.72%  8.38% 
After sales charge  15.92  341.39  16.01  129.64  18.09  70.14  19.38  41.11  2.15 
Class B (9/24/10)                   
Before CDSC  15.91  341.05  16.00  134.73  18.61  76.50  20.85  48.59  7.98 
After CDSC  15.91  341.05  16.00  132.73  18.41  73.50  20.16  43.59  2.98 
Class C (9/24/10)                   
Before CDSC  15.91  340.92  15.99  134.67  18.60  76.44  20.84  48.61  7.99 
After CDSC  15.91  340.92  15.99  134.67  18.60  76.44  20.84  47.61  6.99 
Class R (9/24/10)                   
Net asset value  16.25  356.66  16.40  140.71  19.21  79.11  21.44  49.34  8.25 
Class R6 (5/22/18)                   
Net asset value  16.86  381.63  17.02  147.63  19.88  82.38  22.18  50.22  8.57 
Class Y (9/24/10)                   
Net asset value  16.83  379.94  16.98  146.76  19.80  81.82  22.05  50.05  8.49 

 

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A shares reflect the deduction of the maximum 5.75% sales charge levied at the time of purchase. Class B share returns after contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 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, R6, and Y shares have no initial sales charge or CDSC. Performance for class R6 shares prior to their inception is derived from the historical performance of class Y shares and has not been adjusted for the lower investor servicing fees applicable to class R6 shares; had it, returns would have been higher.

For a portion of the periods, the fund had expense limitations, without which returns would have been lower.

Class B and C share performance reflects conversion to class A shares after eight years.

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Comparative index returns For periods ended 10/31/21

  Annual                 
  average    Annual    Annual    Annual     
  (life of fund)  10 years  average  5 years  average  3 years  average  1 year  6 months 
Russell 3000 Index  15.54%  344.86%  16.10%  137.73%  18.91%  79.88%  21.62%  43.90%  9.78% 
Lipper Multi-Cap                   
Core Funds category  13.58  284.38  14.25  115.67  16.46  68.65  18.86  40.48  8.00 
average*                   

 

Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.

Lipper peer group average provided by Lipper, a Refinitiv company.

* Over the 6-month, 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 10/31/21, there were 675, 653, 595, 516, 349, and 326 funds, respectively, in this Lipper category.

Fund price and distribution information For the six-month period ended 10/31/21

Distributions  Class A  Class B  Class C  Class R  Class R6  Class Y 
  Before  After  Net  Net  Net  Net  Net 
  sales  sales  asset  asset  asset  asset  asset 
Share value  charge  charge  value  value  value  value  value 
4/30/21  $34.95  $37.08  $33.73  $33.65  $34.77  $35.24  $35.22 
10/31/21  37.88  40.19  36.42  36.34  37.64  38.26  38.21 

 

The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A shares, if applicable, do not take into account any sales charge levied at the time of purchase. After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (5.75% for class A shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.

The fund made no distributions during the period.

Fund performance as of most recent calendar quarter Total return for periods ended 9/30/21

  Annual                 
  average    Annual    Annual    Annual     
  (life of fund)  10 years  average  5 years  average  3 years  average  1 year  6 months 
Class A (9/24/10)                   
Before sales charge  16.01%  395.92%  17.37%  126.73%  17.79%  56.91%  16.20%  36.94%  7.04% 
After sales charge  15.39  367.40  16.67  113.69  16.40  47.89  13.93  29.07  0.89 
Class B (9/24/10)                   
Before CDSC  15.38  367.01  16.66  118.33  16.90  53.46  15.35  35.94  6.64 
After CDSC  15.38  367.01  16.66  116.33  16.69  50.46  14.59  30.94  1.64 
Class C (9/24/10)                   
Before CDSC  15.38  366.79  16.66  118.36  16.91  53.45  15.34  35.94  6.65 
After CDSC  15.38  366.79  16.66  118.36  16.91  53.45  15.34  34.94  5.65 
Class R (9/24/10)                   
Net asset value  15.73  383.88  17.08  123.96  17.50  55.76  15.92  36.62  6.92 
Class R6 (5/22/18)                   
Net asset value  16.34  410.25  17.70  130.27  18.15  58.56  16.61  37.45  7.22 
Class Y (9/24/10)                   
Net asset value  16.30  408.55  17.66  129.50  18.07  58.10  16.50  37.32  7.17 

 

See the discussion following the fund performance table on page 8 for information about the calculation of fund performance.

Multi-Cap Core Fund 9 

 


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. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.

Expense ratios

  Class A  Class B  Class C  Class R  Class R6  Class Y 
Total annual operating expenses for the             
fiscal year ended 4/30/21  0.98%  1.73%  1.73%  1.23%  0.63%  0.73% 
Annualized expense ratio for the             
six-month period ended 10/31/21  0.96%  1.71%  1.71%  1.21%  0.62%  0.71% 

 

Fiscal year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.

Expenses are shown as a percentage of average net assets.

Expenses per $1,000

The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 5/1/21 to 10/31/21. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

  Class A  Class B  Class C  Class R  Class R6  Class Y 
Expenses paid per $1,000*†  $5.04  $8.96  $8.96  $6.35  $3.26  $3.73 
Ending value (after expenses)  $1,083.80  $1,079.80  $1,079.90  $1,082.50  $1,085.70  $1,084.90 

 

* 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 10/31/21. 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 (184); and then dividing that result by the number of days in the year (365).

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Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended 10/31/21, use the following calculation method. To find the value of your investment on 5/1/21, call Putnam at 1-800-225-1581.


Compare expenses using the SEC’s method

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.

  Class A  Class B  Class C  Class R  Class R6  Class Y 
Expenses paid per $1,000*†  $4.89  $8.69  $8.69  $6.16  $3.16  $3.62 
Ending value (after expenses)  $1,020.37  $1,016.59  $1,016.59  $1,019.11  $1,022.08  $1,021.63 

 

* 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 10/31/21. 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 (184); and then dividing that result by the number of days in the year (365).

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Consider these risks before investing

Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions; investor sentiment and market perceptions; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry, or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings.

Our investment techniques, analyses, and judgments may not produce the outcome we intend. The investments we select for the fund may not perform as well as other securities that we do not select for the fund. We, or the fund’s other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.

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. They 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 5.75% maximum sales charge for class A 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 closed to new investments and are only available by exchange from another Putnam fund or through dividend and/or capital gains reinvestment. They are not subject to an initial sales charge and 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 R shares are not subject to an initial sales charge or CDSC and are only available to employer-sponsored retirement plans.

Class R6 shares are not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are generally only available to employer-sponsored retirement plans, corporate and institutional clients, and clients in other approved programs.

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.

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Comparative indexes

Bloomberg U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.

ICE BofA (Intercontinental Exchange Bank of America) U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.

Russell 3000® Index is an unmanaged index of the 3,000 largest U.S. companies.

S&P 500® Index is an unmanaged index of common stock performance.

Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.

BLOOMBERG®  is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approve or endorse this material, or guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, as to the results to be obtained therefrom, and to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

ICE Data Indices, LLC (“ICE BofA”), used with permission. ICE BofA permits use of the ICE BofA indices and related data on an “as is” basis; makes no warranties regarding same; does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the ICE BofA indices or any data included in, related to, or derived therefrom; assumes no liability in connection with the use of the foregoing; and does not sponsor, endorse, or recommend Putnam Investments, or any of its products or services.

Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.

Lipper, a Refinitiv company, is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.

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Other information for shareholders

Important notice regarding delivery of shareholder documents

In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single notice of internet availability, or a single printed copy, of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, 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, 2021, 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-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.

Prior to its use of Form N-PORT, the fund filed its complete schedule of its portfolio holdings with the SEC on Form N-Q, which is available online at www.sec.gov.

Trustee and employee fund ownership

Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of October 31, 2021, Putnam employees had approximately $584,000,000 and the Trustees had approximately $82,000,000 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.

Liquidity risk management program

Putnam, as the administrator of the fund’s liquidity risk management program (appointed by the Board of Trustees), presented the most recent annual report on the program to the Trustees in April 2021. The report covered the structure of the program, including the program documents and related policies and procedures adopted to comply with Rule 22e-4 under the Investment Company Act of 1940, and reviewed the operation of the program from January 2020 through December 2020. The report included a description of the annual liquidity assessment of the fund that Putnam performed in November 2020. The report noted that there were no material compliance exceptions identified under Rule 22e-4 during the period. The report included a review of the governance of the program and the methodology for classification of the fund’s investments. The report also included a discussion of liquidity monitoring during the period, including during the market liquidity challenges caused by the Covid-19 pandemic, and the impact those challenges had on the liquidity of the fund’s investments. Putnam concluded that the program has been operating effectively and adequately to ensure compliance with Rule 22e-4.

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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, LLC (“Putnam Management”) and the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”). The Board, 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 considered any possible changes to the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review and, as applicable, identified those changes to Putnam Management. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management and its affiliates 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 2021, 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 2021, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the continuance of the contracts. At the Trustees’ June 2021 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial, performance and other 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 recommendations. The Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management and sub-management contracts, effective July 1, 2021. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not attempted to evaluate PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL 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, the costs incurred by Putnam Management in providing services to the fund and the application of certain reductions and waivers noted below; and

• That the fee schedule in effect for your fund represented an appropriate sharing between fund shareholders and Putnam Management of any 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 certain exceptions primarily involving newly launched or repositioned funds, the current

Multi-Cap Core Fund 15 

 


fee arrangements under the vast majority of the funds’ management contracts were first implemented at the beginning of 2010 following extensive review by the Contract Committee and discussions with representatives of Putnam Management, as well as approval by shareholders.

Management fee schedules and total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with reduced fee levels as assets under management in the Putnam family of funds increase. 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 fund shareholders. (Two funds have implemented so-called “all-in” management fees covering substantially all routine fund operating costs.) 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 strategy, changes in Putnam Management’s operating costs or profitability, 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 indicate that changes to the management fee schedule for your fund would be appropriate at this time.

As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. The Trustees and Putnam Management and the funds’ investor servicing agent, Putnam Investor Services, Inc. (“PSERV”), have implemented expense limitations that were in effect during your fund’s fiscal year ending in 2020. These expense limitations were: (i) a contractual expense limitation applicable to specified open-end funds, including your fund, of 25 basis points on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to specified open-end funds, including your fund, of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, distribution fees, investor servicing fees, investment-related expenses, interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses). These expense limitations attempt to maintain competitive expense levels for the funds. Most funds, including your fund, had sufficiently low expenses that these expense limitations were not operative during their fiscal years ending in 2020. PSERV has agreed to maintain the 25 basis point investor servicing expense limitation until at least August 31, 2022 and Putnam Management has agreed to maintain the 20 basis point “other expenses” limitation until at least August 30, 2022. Putnam Management and PSERV’s commitment to these expense limitation arrangements, which were intended to support an effort to have fund expenses meet competitive standards, was an important factor in the Trustees’ decision to approve the continuance of your fund’s management and sub-management contracts.

The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Broadridge Financial Solutions, Inc. (“Broadridge”). This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fees), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the second 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 third quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2020. The first quintile represents the least expensive funds and the fifth quintile the most expensive funds. The fee and expense data reported by Broadridge as of December 31, 2020 reflected the most recent fiscal year-end data available in Broadridge’s database at that time.

In connection with their review of fund management fees and total expenses, 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, 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 the revenues, expenses and profitability of Putnam Management and its affiliates, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution and investor servicing contracts. For each fund, the analysis presented

16 Multi-Cap Core Fund 

 


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 for the Putnam funds, including the fee schedule for your fund, represented reasonable compensation for the services being provided and represented an appropriate sharing between fund shareholders and Putnam Management of any economies of scale as may exist in the management of the Putnam funds at that time.

The information examined by the Trustees in connection with their annual contract review for the Putnam funds included information regarding services provided and fees charged by Putnam Management and its affiliates to other clients, including defined benefit pension and profit-sharing plans, sub-advised mutual funds, private funds sponsored by affiliates of Putnam Management, model-only separately managed accounts and Putnam Management’s newly launched exchange-traded funds. This information included, in cases where a product’s investment strategy corresponds with a fund’s strategy, comparisons of those fees with fees charged to the Putnam funds, as well as an assessment of the differences in the services provided to these clients as compared to the services provided to the Putnam funds. The Trustees observed that the differences in fee rates between these clients and the Putnam 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, among other things, historical competitive forces operating in separate marketplaces. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for other clients, and the Trustees also considered the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its other 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 Putnam Management’s investment process and performance by the work of the investment oversight committees of the Trustees and the full Board of Trustees, which meet on a regular basis with individual portfolio managers and with senior management 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, in the aggregate, The Putnam Funds generally performed well in 2020, which Putnam Management characterized as a challenging year with significant volatility and varied market dynamics. On an asset-weighted basis, the Putnam funds ranked in the second quartile of their peers as determined by Lipper Inc. (“Lipper”) for the year ended December 31, 2020 and, on an asset-weighted-basis, delivered a gross return that was 2.3% ahead of their benchmarks in 2020. In addition to the performance of the individual Putnam funds, the Trustees considered, as they had in prior years, the performance of The Putnam Fund complex versus competitor fund complexes. In this regard, the Trustees observed that The Putnam Funds’ relative performance, as reported in the Barron’s/Lipper Fund Families survey, continued to be exceptionally strong over the long term, with The Putnam Funds ranking as the 3rd best performing mutual fund complex out of 44 complexes for the ten-year period, with 2020 marking the fourth consecutive year that The Putnam Funds have ranked in the top ten fund complexes for the ten-year period. The Trustees noted that The Putnam Funds’ performance was solid over the one- and five-year periods, with The Putnam Funds ranking 22nd out of 53 complexes and 14th out of 50 complexes, respectively. In addition to the Barron’s/Lipper Fund Families Survey, the Trustees also considered the funds’ ratings assigned by Morningstar Inc., noting that 26 of the funds were four- or five-star rated at the end of 2020 (representing an increase of four funds year-over-year) and that this included seven funds that had achieved a five-star rating (representing an increase of two funds year-over-year). They also noted, however, the disappointing investment

Multi-Cap Core Fund 17 

 


performance of some funds for periods ended December 31, 2020 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor closely the performance of those funds and evaluate whether additional actions to address areas of underperformance may be warranted.

For purposes of the Trustees’ evaluation of the Putnam funds’ investment performance, the Trustees generally focus on a competitive industry ranking of each fund’s total net return over a one-year, three-year and five-year period. For a number of Putnam funds with relatively unique investment mandates for which Putnam Management informed the Trustees that meaningful competitive performance rankings are not considered to be available, the Trustees evaluated performance based on their total gross and net returns and comparisons of those returns to the returns of selected investment benchmarks. In the case of your fund, the Trustees considered that its class A share cumulative total return performance at net asset value was in the following quartiles of its Lipper peer group (Lipper Multi-Cap Core Funds) for the one-year, three-year and five-year periods ended December 31, 2020 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):

One-year period  2nd 
Three-year period  2nd 
Five-year period  1st 

 

Over the one-year, three-year and five-year periods ended December 31, 2020, there were 660, 593 and 514 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.) The Trustees considered Putnam Management’s continued efforts to support fund performance through certain initiatives, including structuring compensation for portfolio managers to enhance accountability for fund performance, emphasizing accountability in the portfolio management process and affirming its commitment to a fundamental-driven approach to investing. The Trustees noted further that Putnam Management had made selective hires and internal promotions in 2020 to strengthen its investment team.

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 predominantly to acquire brokerage and research services (including third-party research and market data) that enhance Putnam Management’s investment capabilities and supplement Putnam Management’s internal research efforts. The Trustees indicated their continued intent to monitor regulatory and industry developments in this area with the assistance of their Brokerage Committee. In addition, with the assistance of their Brokerage Committee, the Trustees indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking 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 and sub-management contracts, the Trustees reviewed your fund’s investor servicing agreement with PSERV and its distributor’s contract 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 fair and 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. Furthermore, the Trustees were of the view that the investor services provided by PSERV were required for the operation of the funds, and that they were of a quality at least equal to those provided by other providers.

18 Multi-Cap Core Fund 

 


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 period.

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.

Multi-Cap Core Fund 19 

 


The fund’s portfolio 10/31/21 (Unaudited)
COMMON STOCKS (90.3%)* Shares Value
Aerospace and defense (1.9%)
Northrop Grumman Corp. 91,468 $32,674,199
Raytheon Technologies Corp. 404,064 35,905,127
68,579,326
Airlines (0.8%)
Southwest Airlines Co. † S 596,103 28,183,750
28,183,750
Auto components (0.9%)
Magna International, Inc. (Canada) 393,102 31,959,193
31,959,193
Banks (5.2%)
Bank of America Corp. 2,696,042 128,816,887
Citigroup, Inc. 569,816 39,408,475
KeyCorp S 743,621 17,304,061
185,529,423
Beverages (1.1%)
Coca-Cola Co. (The) 471,665 26,587,756
Molson Coors Beverage Co. Class B S 286,818 12,645,806
39,233,562
Biotechnology (2.4%)
AbbVie, Inc. 375,052 43,007,213
Amgen, Inc. 182,888 37,852,329
Lucid Diagnostics, Inc. † 230,480 2,297,886
Vor BioPharma, Inc. † S 41,396 651,159
83,808,587
Capital markets (4.1%)
Apollo Global Management, Inc. 192,464 14,810,105
Goldman Sachs Group, Inc. (The) 114,276 47,235,985
KKR & Co., Inc. 449,188 35,786,808
Morgan Stanley 272,924 28,051,129
P10, Inc. Class A † 46,104 576,300
Raymond James Financial, Inc. 182,053 17,948,605
144,408,932
Chemicals (0.5%)
Eastman Chemical Co. 172,119 17,905,540
17,905,540
Communications equipment (1.4%)
Cisco Systems, Inc./California 886,157 49,598,207
49,598,207
Construction materials (0.3%)
Summit Materials, Inc. Class A † 251,172 8,954,282
8,954,282
Containers and packaging (0.4%)
Avery Dennison Corp. 58,183 12,667,603
12,667,603
Distributors (0.2%)
LKQ Corp. † 157,668 8,684,353
8,684,353


20 Multi-Cap Core Fund


COMMON STOCKS (90.3%)* cont. Shares Value
Diversified financial services (3.1%)
Berkshire Hathaway, Inc. Class B † 220,792 $63,369,512
FirstMark Horizon Acquisition Corp. Class A † S 412,176 4,080,542
Pershing Square Tontine Holdings, Ltd. Class A † 1,325,470 26,323,834
Senior Connect Acquisition Corp. I Class A † 909,766 8,906,609
Switchback Energy (acquired 5/12/21, cost $4,113,650) (Private) † ∆∆ F P1 411,365 3,713,392
Switchback II Corp. Class A † S 518,111 5,196,653
111,590,542
Diversified telecommunication services (1.0%)
AT&T, Inc. 546,985 13,816,841
Liberty Global PLC Class A (United Kingdom) † 772,750 22,208,835
36,025,676
Electric utilities (2.0%)
Exelon Corp. 503,479 26,780,048
NRG Energy, Inc. 602,279 24,024,909
PG&E Corp. † 1,851,655 21,479,198
72,284,155
Entertainment (1.0%)
Universal Music Group NV (Netherlands) 121,602 3,530,463
Walt Disney Co. (The) † 192,854 32,605,826
36,136,289
Equity real estate investment trusts (REITs) (1.8%)
Armada Hoffler Properties, Inc. R 970,846 13,310,299
Boston Properties, Inc. R 96,483 10,964,328
Gaming and Leisure Properties, Inc. R 708,093 34,335,430
Vornado Realty Trust R 117,521 5,009,920
63,619,977
Food and staples retail (1.6%)
Walmart, Inc. 390,781 58,390,497
58,390,497
Health-care equipment and supplies (0.6%)
Medtronic PLC 148,848 17,840,921
Nyxoah SA (Belgium) † 183,630 4,599,932
22,440,853
Health-care providers and services (4.6%)
Cigna Corp. 77,520 16,559,047
CVS Health Corp. 237,603 21,213,196
HCA Healthcare, Inc. 80,261 20,102,170
McKesson Corp. 112,353 23,355,942
Tenet Healthcare Corp. † 335,062 24,010,543
UnitedHealth Group, Inc. 128,969 59,386,355
164,627,253
Hotels, restaurants, and leisure (0.3%)
Chuy’s Holdings, Inc. † 174,323 5,083,259
Kura Sushi USA, Inc. Class A † S 104,308 4,441,435
9,524,694
Household durables (1.1%)
HC Brillant Services GmbH (acquired 8/2/13, cost $32) (Private) (Germany) † ∆∆ F 48 —
PulteGroup, Inc. 786,603 37,819,872
37,819,872


Multi-Cap Core Fund 21


COMMON STOCKS (90.3%)* cont. Shares Value
Household products (0.8%)
Procter & Gamble Co. (The) 193,151 $27,618,661
27,618,661
Industrial conglomerates (1.2%)
Honeywell International, Inc. 201,199 43,986,125
43,986,125
Insurance (1.3%)
Arch Capital Group, Ltd. † 474,421 19,840,286
Assured Guaranty, Ltd. 456,543 25,374,660
45,214,946
Interactive media and services (6.0%)
Alphabet, Inc. Class C † 49,031 145,397,018
Facebook, Inc. Class A † 210,374 68,070,715
213,467,733
Internet and direct marketing retail (3.5%)
Amazon.com, Inc. † 37,378 126,054,689
126,054,689
IT Services (2.1%)
Mastercard, Inc. Class A 144,968 48,639,663
PayPal Holdings, Inc. † 110,368 25,670,493
74,310,156
Machinery (1.3%)
Aris Water Solution, Inc. Class A † 177,815 2,430,731
Deere & Co. 33,633 11,512,912
Otis Worldwide Corp. 402,834 32,351,599
46,295,242
Media (1.0%)
Comcast Corp. Class A 676,690 34,802,167
34,802,167
Metals and mining (1.2%)
Freeport-McMoRan, Inc. (Indonesia) 600,128 22,636,828
Nucor Corp. 181,412 20,254,650
42,891,478
Mortgage real estate investment trusts (REITs) (0.2%)
Starwood Property Trust, Inc. R 316,370 8,057,944
8,057,944
Multiline retail (1.7%)
Target Corp. 238,915 62,027,112
62,027,112
Oil, gas, and consumable fuels (1.8%)
Comstock Resources, Inc. † 652,119 6,436,415
ConocoPhillips 288,921 21,521,725
Enterprise Products Partners LP 1,070,420 24,277,126
Phillips 66 144,376 10,796,437
63,031,703
Personal products (—%)
Better Choice Co., Inc. † 173,024 671,333
671,333


22 Multi-Cap Core Fund



COMMON STOCKS (90.3%)* cont. Shares Value
Pharmaceuticals (2.4%)
Eli Lilly and Co. 121,663 $30,994,866
Johnson & Johnson 323,217 52,645,585
83,640,451
Real estate management and development (0.9%)
CBRE Group, Inc. Class A † 314,782 32,762,511
32,762,511
Road and rail (1.4%)
Union Pacific Corp. 213,324 51,496,414
51,496,414
Semiconductors and semiconductor equipment (3.1%)
Intel Corp. 532,910 26,112,590
Lam Research Corp. 85,689 48,291,750
Micron Technology, Inc. 240,421 16,613,091
Texas Instruments, Inc. 110,128 20,646,797
111,664,228
Software (12.6%)
Adobe, Inc. † 37,149 24,160,224
Citrix Systems, Inc. 64,308 6,091,897
Dynatrace, Inc. † 310,305 23,272,875
Microsoft Corp. 874,555 290,019,925
NCR Corp. † 386,662 15,288,615
Oracle Corp. 601,001 57,660,036
RingCentral, Inc. Class A † 18,353 4,474,094
Salesforce.com, Inc. † 67,440 20,211,094
Upland Software, Inc. † 92,708 3,093,666
444,272,426
Specialty retail (3.0%)
Best Buy Co., Inc. 249,946 30,553,399
Lowe’s Cos., Inc. 329,162 76,964,659
107,518,058
Technology hardware, storage, and peripherals (6.8%)
Apple, Inc. 1,609,331 241,077,784
241,077,784
Tobacco (0.6%)
Altria Group, Inc. 451,887 19,932,736
19,932,736
Trading companies and distributors (1.1%)
Karat Packaging, Inc. † 411,735 9,362,854
United Rentals, Inc. † 82,368 31,226,532
40,589,386
Total common stocks (cost $1,663,367,455) $3,213,355,849

INVESTMENT COMPANIES (2.1%)* Shares Value
Consumer Staples Select Sector SPDR Fund 320,078 $22,805,558
Health Care Select Sector SPDR Fund S 390,179 52,213,754
Total investment companies (cost $73,031,816) $75,019,312


Multi-Cap Core Fund 23



CONVERTIBLE BONDS AND NOTES (0.3%)* Principal
amount		 Value
Penn National Gaming, Inc. cv. sr. unsec. notes 2.75%, 5/15/26   $3,761,000 $11,850,629
Total convertible bonds and notes (cost $3,761,000) $11,850,629

UNITS (0.2%)* Units Value
COVA Acquisition Corp. † 728,239 $7,296,955
Total units (cost $7,282,390) $7,296,955

SHORT-TERM INVESTMENTS (9.2%)* Principal amount/
shares		 Value
Putnam Cash Collateral Pool, LLC 0.08% d Shares 72,052,522 $72,052,522
Putnam Short Term Investment Fund Class P 0.09% L Shares 242,569,454 242,569,454
U.S. Treasury Bills 0.058%, 4/7/22 # $304,000 303,924
U.S. Treasury Bills 0.052%, 3/24/22 # 5,200,000 5,198,774
U.S. Treasury Bills 0.039%, 4/21/22 # 2,500,000 2,499,258
U.S. Treasury Bills 0.038%, 3/10/22 # 4,600,000 4,599,011
Total short-term investments (cost $327,223,771) $327,222,943

TOTAL INVESTMENTS
Total investments (cost $2,074,666,432) $3,634,745,688

Key to holding’s abbreviations
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 May 1, 2021 through October 31, 2021 (the reporting period). Within the following notes to the portfolio, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures.
* Percentages indicated are based on net assets of $3,557,534,455.
† This security is non-income-producing.
∆∆ This security is restricted with regard to public resale. The total fair value of this security and any other restricted securities (excluding 144A securities), if any, held at the close of the reporting period was $3,713,392, or 0.1% of net assets.
# 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. Collateral at period end totaled $12,479,224 and is included in Investments in securities on the Statement of assets and liabilities (Notes 1 and 8).
d Affiliated company. See Notes 1 and 5 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 This security is valued by Putnam Management at fair value following procedures approved by the Trustees. Securities are classified as Level 3 for ASC 820 based on the securities’ valuation inputs (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.
R Real Estate Investment Trust.
S Security on loan, in part or in entirety, at the close of the reporting period (Note 1).
P1 The investment is an irrevocable commitment made in a private investment transaction to purchase shares of a special purpose acquisition corporation upon consummation of a merger or other identified acquisition transaction in the aggregate amount of $4,113,650, the deferred settlement of which is included as a payable as a purchase of delayed delivery securities.


24 Multi-Cap Core Fund



Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.
Debt obligations are considered secured unless otherwise indicated.
The dates shown on debt obligations are the original maturity dates.

FUTURES CONTRACTS OUTSTANDING at 10/31/21 (Unaudited)
Number of
contracts		 Notional
amount		 Value Expiration
date		 Unrealized
appreciation/
(depreciation)
Russell 2000 Index E-Mini (Long) 992 $113,940,674 $113,846,880 Dec-21 $2,528,335
S&P 500 Index E-Mini (Long) 500 115,134,500 114,925,000 Dec-21 2,597,862
Unrealized appreciation 5,126,197
Unrealized (depreciation) —
Total $5,126,197


Multi-Cap Core Fund 25


ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

Level 1: Valuations based on quoted prices for identical securities in active markets.

Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:

Valuation inputs
Investments in securities: Level 1 Level 2 Level 3
Common stocks*:
Communication services $320,431,865 $— $—
Consumer discretionary 383,587,971 — —
Consumer staples 145,846,789 — —
Energy 63,031,703 — —
Financials 491,088,395 — 3,713,392
Health care 354,517,144 — —
Industrials 279,130,243 — —
Information technology 920,922,801 — —
Materials 82,418,903 — —
Real estate 96,382,488 — —
Utilities 72,284,155 — —
Total common stocks 3,209,642,457 — 3,713,392
Convertible bonds and notes — 11,850,629 —
Investment companies 75,019,312 — —
Units 7,296,955 — —
Short-term investments — 327,222,943 —
Totals by level $3,291,958,724 $339,073,572 $3,713,392
Valuation inputs
Other financial instruments: Level 1 Level 2 Level 3
Futures contracts $5,126,197 $— $—
Totals by level $5,126,197 $— $—
* 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 represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio.


The accompanying notes are an integral part of these financial statements.


26 Multi-Cap Core Fund


Statement of assets and liabilities 10/31/21 (Unaudited)

ASSETS   
Investment in securities, at value, including $70,854,931 of securities on loan (Note 1):   
Unaffiliated issuers (identified cost $1,760,044,456)  $3,320,123,712 
Affiliated issuers (identified cost $314,621,976) (Notes 1 and 5)  314,621,976 
Foreign currency (cost $8,410) (Note 1)  8,365 
Dividends, interest and other receivables  3,609,703 
Receivable for shares of the fund sold  3,398,147 
Receivable for variation margin on futures contracts (Note 1)  247,448 
Prepaid assets  90,976 
Total assets  3,642,100,327 
 
LIABILITIES   
Payable for investments purchased  2,464,169 
Payable for purchases of delayed delivery securities (Note 1)  4,113,650 
Payable for shares of the fund repurchased  1,773,425 
Payable for compensation of Manager (Note 2)  1,643,489 
Payable for custodian fees (Note 2)  8,642 
Payable for investor servicing fees (Note 2)  772,043 
Payable for Trustee compensation and expenses (Note 2)  830,333 
Payable for administrative services (Note 2)  4,655 
Payable for distribution fees (Note 2)  681,762 
Collateral on securities loaned, at value (Note 1)  72,052,522 
Other accrued expenses  221,182 
Total liabilities  84,565,872 
 
Net assets  $3,557,534,455 
 
REPRESENTED BY   
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)  $1,615,614,476 
Total distributable earnings (Note 1)  1,941,919,979 
Total — Representing net assets applicable to capital shares outstanding  $3,557,534,455 
 
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE   
Net asset value and redemption price per class A share   
($2,497,683,973 divided by 65,944,593 shares)  $37.88 
Offering price per class A share (100/94.25 of $37.88)*  $40.19 
Net asset value and offering price per class B share ($28,339,284 divided by 778,168 shares)**  $36.42 
Net asset value and offering price per class C share ($165,475,489 divided by 4,554,023 shares)**  $36.34 
Net asset value, offering price and redemption price per class R share   
($4,781,310 divided by 127,035 shares)  $37.64 
Net asset value, offering price and redemption price per class R6 share   
($64,135,819 divided by 1,676,414 shares)  $38.26 
Net asset value, offering price and redemption price per class Y share   
($797,118,580 divided by 20,859,218 shares)  $38.21 

 

*On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.

**Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

The accompanying notes are an integral part of these financial statements.

Multi-Cap Core Fund 27 

 


Statement of operations Six months ended 10/31/21 (Unaudited)

INVESTMENT INCOME   
Dividends (net of foreign tax of $52,900)  $22,616,329 
Interest (including interest income of $94,328 from investments in affiliated issuers) (Note 5)  147,993 
Securities lending (net of expenses) (Notes 1 and 5)  67,380 
Total investment income  22,831,702 
 
EXPENSES   
Compensation of Manager (Note 2)  9,192,483 
Investor servicing fees (Note 2)  2,283,306 
Custodian fees (Note 2)  22,552 
Trustee compensation and expenses (Note 2)  60,238 
Distribution fees (Note 2)  4,032,617 
Administrative services (Note 2)  29,599 
Other  336,348 
Total expenses  15,957,143 
Expense reduction (Note 2)  (2,487) 
Net expenses  15,954,656 
 
Net investment income  6,877,046 
 
REALIZED AND UNREALIZED GAIN (LOSS)   
Net realized gain on:   
Securities from unaffiliated issuers (Notes 1 and 3)  113,814,634 
Foreign currency transactions (Note 1)  976 
Futures contracts (Note 1)  11,175,528 
Written options (Note 1)  723,690 
Total net realized gain  125,714,828 
Change in net unrealized appreciation (depreciation) on:   
Securities from unaffiliated issuers  139,977,625 
Assets and liabilities in foreign currencies  (147) 
Futures contracts  797,830 
Total change in net unrealized appreciation  140,775,308 
 
Net gain on investments  266,490,136 
 
Net increase in net assets resulting from operations  $273,367,182 

 

The accompanying notes are an integral part of these financial statements.

28 Multi-Cap Core Fund 

 


Statement of changes in net assets

INCREASE IN NET ASSETS  Six months ended 10/31/21*  Year ended 4/30/21 
Operations     
Net investment income  $6,877,046  $18,051,943 
Net realized gain on investments     
and foreign currency transactions  125,714,828  236,657,862 
Change in net unrealized appreciation of investments     
and assets and liabilities in foreign currencies  140,775,308  954,243,760 
Net increase in net assets resulting from operations  273,367,182  1,208,953,565 
Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income     
Class A  —  (17,229,544) 
Class B  —  (38,728) 
Class C  —  (251,437) 
Class R  —  (15,435) 
Class R6  —  (474,431) 
Class Y  —  (5,523,382) 
From net realized long-term gain on investments     
Class A  —  (26,712,472) 
Class B  —  (418,686) 
Class C  —  (2,139,889) 
Class R  —  (41,435) 
Class R6  —  (540,662) 
Class Y  —  (6,882,718) 
Increase (decrease) from capital share transactions (Note 4)  69,640,779  (140,512,216) 
Total increase in net assets  343,007,961  1,008,172,530 
 
NET ASSETS     
Beginning of period  3,214,526,494  2,206,353,964 
End of period  $3,557,534,455  $3,214,526,494 

 

*Unaudited.

The accompanying notes are an integral part of these financial statements.

Multi-Cap Core Fund 29 

 


Financial highlights (For a common share outstanding throughout the period)

  INVESTMENT OPERATIONS LESS DISTRIBUTIONS RATIOS AND SUPPLEMENTAL DATA
                        Ratio of net   
  Net asset    Net realized                Ratio  investment   
  value,    and unrealized  Total from  From net  From net    Net asset  Total return  Net assets,  of expenses  income (loss)  Portfolio 
  beginning  Net investment  gain (loss)  investment  investment  realized gain  Total  value, end  at net asset  end of period  to average  to average  turnover 
Period ended­  of period­  income (loss)a  on investments­  operations­  income­  on investments­  distributions  of period­  value (%)b  (in thousands)  neta ssets (%)c  net assets (%)  (%) 
Class A                           
October 31, 2021**   $34.95­  .07­  2.86­  2.93­  —­  —­  —­  $37.88­  8.38*  $2,497,684­  .48*  .20*  9* 
April 30, 2021­  22.64­  .19­  12.78­  12.97­  (.26)  (.40)  (.66)  34.95­  57.85­  2,338,484­  .98­  .68­  46­ 
April 30, 2020  24.11­  .25­  (.54)  (.29)  (.21)  (.97)  (1.18)  22.64­  (1.62)  1,583,575­  1.00­  1.04­  26­ 
April 30, 2019  22.66­  .21­  1.73­  1.94­  —­  (.49)  (.49)  24.11­  8.66­  1,746,453­  1.03­d  .91­  41­ 
April 30, 2018  20.17­  .18­  2.88­  3.06­  (.24)  (.33)  (.57)  22.66­  15.22­  172,995­  1.06­e  .80­  80­ 
April 30, 2017  16.65­  .18­  3.52­  3.70­  (.18)  —­  (.18)  20.17­  22.28­  138,053­  1.05­  1.01­  76­ 
Class B                           
October 31, 2021**   $33.73­  (.06)  2.75­  2.69­  —­  —­  —­  $36.42­  7.98*  $28,339­  .86*  (.18)*  9* 
April 30, 2021­  21.87­  (.01)  12.31­  12.30­  (.04)  (.40)  (.44)  33.73­  56.61­  30,911­  1.73­  (.04)  46­ 
April 30, 2020  23.30­  .07­  (.52)  (.45)  (.01)  (.97)  (.98)  21.87­  (2.30)  27,496­  1.75­  .30­  26­ 
April 30, 2019  22.09­  .04­  1.66­  1.70­  —­  (.49)  (.49)  23.30­  7.79­  38,063­  1.78­d  .19­  41­ 
April 30, 2018  19.68­  .01­  2.81­  2.82­  (.08)  (.33)  (.41)  22.09­  14.41­  16,059­  1.81­e  .05­  80­ 
April 30, 2017  16.28­  .04­  3.43­  3.47­  (.07)  —­  (.07)  19.68­  21.31­  14,546­  1.80­  .22­  76­ 
Class C                           
October 31, 2021**   $33.65­  (.06)  2.75­  2.69­  —­  —­  —­  $36.34­  7.99*  $165,475­  .86*  (.18)*  9* 
April 30, 2021­  21.83­  (.01)  12.28­  12.27­  (.05)  (.40)  (.45)  33.65­  56.59­  163,875­  1.73­  (.05)  46­ 
April 30, 2020  23.27­  .07­  (.52)  (.45)  (.02)  (.97)  (.99)  21.83­  (2.30)  136,476­  1.75­  .30­  26­ 
April 30, 2019  22.06­  .05­  1.65­  1.70­  —­  (.49)  (.49)  23.27­  7.80­  172,982­  1.78­d  .21­  41­ 
April 30, 2018  19.65­  .01­  2.81­  2.82­  (.08)  (.33)  (.41)  22.06­  14.41­  129,480­  1.81­e  .05­  80­ 
April 30, 2017  16.23­  .04­  3.42­  3.46­  (.04)  —­  (.04)  19.65­  21.35­  113,298­  1.80­  .24­  76­ 
Class R                           
October 31, 2021**   $34.77­  .03­  2.84­  2.87­  —­  —­  —­  $37.64­  8.25*  $4,781­  .61*  .07*  9* 
April 30, 2021­  22.50­  .13­  12.69­  12.82­  (.15)  (.40)  (.55)  34.77­  57.45­  3,796­  1.23­  .45­  46­ 
April 30, 2020  23.96­  .19­  (.55)  (.36)  (.13)  (.97)  (1.10)  22.50­  (1.89)  3,043­  1.25­  .80­  26­ 
April 30, 2019  22.58­  .16­  1.71­  1.87­  —­  (.49)  (.49)  23.96­  8.38­  4,395­  1.28­d  .69­  41­ 
April 30, 2018  20.10­  .12­  2.88­  3.00­  (.19)  (.33)  (.52)  22.58­  15.00­  2,334­  1.31­e  .53­  80­ 
April 30, 2017  16.61­  .13­  3.50­  3.63­  (.14)  —­  (.14)  20.10­  21.89­  1,868­  1.30­  .72­  76­ 
Class R6                           
October 31, 2021**   $35.24­  .13­  2.89­  3.02­  —­  —­  —­  $38.26­  8.57*  $64,136­  .31*  .37*  9* 
April 30, 2021­  22.82­  .29­  12.88­  13.17­  (.35)  (.40)  (.75)  35.24­  58.37­  51,886­  .63­  1.03­  46­ 
April 30, 2020  24.28­  .34­  (.53)  (.19)  (.30)  (.97)  (1.27)  22.82­  (1.23)  35,151­  .63­  1.40­  26­ 
April 30, 2019 †­  23.57­  .28­  .92­  1.20­  —­  (.49)  (.49)  24.28­  5.19 *  39,959­  .62*d  1.23*  41­ 
Class Y                           
October 31, 2021**   $35.22­  .12­  2.87­  2.99­  —­  —­  —­  $38.21­  8.49*  $797,119­  .35*  .32*  9* 
April 30, 2021­  22.80­  .26­  12.88­  13.14­  (.32)  (.40)  (.72)  35.22­  58.26­  625,574­  .73­  .93­  46­ 
April 30, 2020  24.26­  .32­  (.54)  (.22)  (.27)  (.97)  (1.24)  22.80­  (1.35)  420,613­  .75­  1.30­  26­ 
April 30, 2019  22.75­  .28­  1.72­  2.00­  —­  (.49)  (.49)  24.26­  8.90­  548,746­  .78­d  1.20­  41­ 
April 30, 2018  20.24­  .24­  2.89­  3.13­  (.29)  (.33)  (.62)  22.75­  15.54­  319,118­  .81­e  1.11­  80­ 
April 30, 2017  16.71­  .22­  3.54­  3.76­  (.23)  —­  (.23)  20.24­  22.58­  306,524­  .80­  1.19­  76­ 

 

See notes to financial highlights at the end of this section.

The accompanying notes are an integral part of these financial statements.

30 Multi-Cap Core Fund  Multi-Cap Core Fund 31 

 


Financial highlights cont.

* Not annualized.

** Unaudited.

† For the period May 22, 2018 (commencement of operations) to April 30, 2019.

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 brokerage/service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.

d Includes one-time merger costs of 0.01% as a percentage of average net assets.

e Includes one-time merger costs of 0.04% as a percentage of average net assets.

The accompanying notes are an integral part of these financial statements.

32 Multi-Cap Core Fund 

 


Notes to financial statements 10/31/21 (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 May 1, 2021 through October 31, 2021.

Putnam Multi-Cap Core Fund (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 goal of the fund is to seek capital appreciation. The fund invests mainly in common stocks (growth or value stocks or both) of U.S. companies of any size that Putnam Management believes have favorable investment potential. For example, the fund may purchase stocks of companies with stock prices that reflect a value lower than that which Putnam Management places on the company. Putnam Management may also consider other factors that it believes will cause the stock price to rise. Putnam Management may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments.

The fund offers class A, class B, class C, class R, class R6 and class Y shares. Purchases of class B shares are closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class A shares generally are not subject to a contingent deferred sales charge, and class R, class R6 and class Y shares are not subject to a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, are not subject to 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 are subject to a one-year 1.00% contingent deferred sales charge and generally convert to class A shares after approximately eight years. 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 and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class R6 and class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C and class R shares, but do not bear a distribution fee, and in the case of class R6 shares, bear a lower investor servicing fee, which is identified in Note 2. Class R6 and 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.

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

Note 1: Significant accounting policies

The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.

Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined

Multi-Cap Core Fund 33 

 


by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.

Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.

Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.

Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.

Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.

Many securities markets and exchanges outside the U.S. close prior to the scheduled close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value certain foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. The foreign equity securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.

To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

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.

34 Multi-Cap Core Fund 

 


Interest income, net of any applicable withholding taxes, if any, and including amortization and accretion of premiums and discounts on debt securities, is recorded on the accrual basis. Dividend income, net of any applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.

Securities purchased or sold on a delayed delivery basis may be settled at a future date beyond customary settlement time; interest income is accrued based on the terms of the securities. Losses may arise due to changes in the fair value of the underlying securities or if the counterparty does not perform under the contract.

Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.

Options contracts The fund uses options contracts to manage downside risks.

The potential risk to the fund is that the change in value of options 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. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.

Exchange-traded options are valued at the last sale price or, if no sales are reported, the last bid price for purchased options and the last ask price for written options. OTC traded options are valued using prices supplied by dealers.

Options on swaps are similar to options on securities except that the premium paid or received is to buy or grant the right to enter into a previously agreed upon interest rate or credit default contract. Forward premium swap option contracts include premiums that have extended settlement dates. The delayed settlement of the premiums is factored into the daily valuation of the option contracts. In the case of interest rate cap and floor contracts, in return for a premium, ongoing payments between two parties are based on interest rates exceeding a specified rate, in the case of a cap contract, or falling below a specified rate in the case of a floor contract.

Written option contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Futures contracts The fund uses futures contracts 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.”

Multi-Cap Core Fund 35 

 


Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral pledged to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio.

Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.

Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.

At the close of the reporting period, the fund did not have a net liability position on open derivative contracts subject to the Master Agreements.

Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The remaining maturities of the securities lending transactions are considered overnight and continuous. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending, net of expenses, is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $72,052,522 and the value of securities loaned amounted to $70,854,931.

Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.

Lines of credit The fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 million unsecured uncommitted line of credit, both provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to 1.25% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate for the committed line of credit and 1.30% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based 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.

36 Multi-Cap Core Fund 

 


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.

Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The aggregate identified cost on a tax basis is $2,076,942,736, resulting in gross unrealized appreciation and depreciation of $1,576,369,906 and $13,440,757, respectively, or net unrealized appreciation of $1,562,929,149.

Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations.

Expenses of the Trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the Trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund.

Note 2: Management fee, administrative services and other transactions

The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:

0.710%  of the first $5 billion,  0.510%  of the next $50 billion, 
0.660%  of the next $5 billion,  0.490%  of the next $50 billion, 
0.610%  of the next $10 billion,  0.480%  of the next $100 billion and 
0.560%  of the next $10 billion,  0.475%  of any excess thereafter. 

 

For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.272% of the fund’s average net assets.

Putnam Management has contractually agreed, through August 30, 2022, to waive fees and/or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.

Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.

Multi-Cap Core Fund 37 

 


The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.

Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class R and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribution account (retail account) of the fund; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts.

Class R6 shares paid a monthly fee based on the average net assets of class R6 shares at an annual rate of 0.05%.

During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:

Class A  $1,649,504  Class R6  14,276 
Class B  20,097  Class Y  483,353 
Class C  113,316  Total  $2,283,306 
Class R  2,760     

 

The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $2,487 under the expense offset arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $2,197, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.

The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

The fund has adopted distribution plans (the Plans) with respect to the following share classes pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (Maximum %) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (Approved %) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:

  Maximum %  Approved %  Amount 
Class A  0.35%  0.25%  $3,039,421 
Class B  1.00%  1.00%  148,063 
Class C  1.00%  1.00%  834,957 
Class R  1.00%  0.50%  10,176 
Total      $4,032,617 

 

38 Multi-Cap Core Fund 

 


For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $104,340 from the sale of class A shares and received $1,021 and $677 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.

A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $61 on class A redemptions.

Note 3: Purchases and sales of securities

During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:

  Cost of purchases  Proceeds from sales 
Investments in securities (Long-term)  $317,070,726  $294,141,822 
U.S. government securities (Long-term)  —  — 
Total  $317,070,726  $294,141,822 

 

The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.

Note 4: Capital shares

At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions, including, if applicable, direct exchanges pursuant to share conversions, in capital shares were as follows:

  SIX MONTHS ENDED 10/31/21  YEAR ENDED 4/30/21 
Class A  Shares  Amount  Shares  Amount 
Shares sold  1,608,087  $58,102,912  2,716,189  $79,322,539 
Shares issued in connection with         
reinvestment of distributions  —  —  1,409,572  41,159,518 
  1,608,087  58,102,912  4,125,761  120,482,057 
Shares repurchased  (2,576,378)  (93,563,061)  (7,149,032)  (200,966,683) 
Net decrease  (968,291)  $(35,460,149)  (3,023,271)  $(80,484,626) 
 
  SIX MONTHS ENDED 10/31/21  YEAR ENDED 4/30/21 
Class B  Shares  Amount  Shares  Amount 
Shares sold  4,483  $154,648  9,661  $276,855 
Shares issued in connection with         
reinvestment of distributions  —  —  15,948  450,855 
  4,483  154,648  25,609  727,710 
Shares repurchased  (142,732)  (4,977,159)  (366,670)  (9,959,975) 
Net decrease  (138,249)  $(4,822,511)  (341,061)  $(9,232,265) 

 

Multi-Cap Core Fund 39 

 


  SIX MONTHS ENDED 10/31/21  YEAR ENDED 4/30/21 
Class C  Shares  Amount  Shares  Amount 
Shares sold  356,878  $12,329,499  458,655  $12,892,161 
Shares issued in connection with         
reinvestment of distributions  —  —  82,782  2,335,289 
  356,878  12,329,499  541,437  15,227,450 
Shares repurchased  (672,217)  (23,350,844)  (1,925,205)  (52,275,378) 
Net decrease  (315,339)  $(11,021,345)  (1,383,768)  $(37,047,928) 
 
  SIX MONTHS ENDED 10/31/21  YEAR ENDED 4/30/21 
Class R  Shares  Amount  Shares  Amount 
Shares sold  21,653  $793,243  15,114  $441,512 
Shares issued in connection with         
reinvestment of distributions  —  —  1,955  56,864 
  21,653  793,243  17,069  498,376 
Shares repurchased  (3,790)  (137,072)  (43,118)  (1,145,877) 
Net increase (decrease)  17,863  $656,171  (26,049)  $(647,501) 
 
  SIX MONTHS ENDED 10/31/21  YEAR ENDED 4/30/21 
Class R6  Shares  Amount  Shares  Amount 
Shares sold  323,654  $11,896,659  237,854  $7,346,149 
Shares issued in connection with         
reinvestment of distributions  —  —  34,296  1,008,633 
  323,654  11,896,659  272,150  8,354,782 
Shares repurchased  (119,572)  (4,334,792)  (340,248)  (9,314,392) 
Net increase (decrease)  204,082  $7,561,867  (68,098)  $(959,610) 
 
  SIX MONTHS ENDED 10/31/21  YEAR ENDED 4/30/21 
Class Y  Shares  Amount  Shares  Amount 
Shares sold  4,489,812  $163,702,190  3,585,123  $107,997,851 
Shares issued in connection with         
reinvestment of distributions  —  —  394,144  11,587,826 
  4,489,812  163,702,190  3,979,267  119,585,677 
Shares repurchased  (1,394,452)  (50,975,444)  (4,660,015)  (131,725,963) 
Net increase (decrease)  3,095,360  $112,726,746  (680,748)  $(12,140,286) 

 

40 Multi-Cap Core Fund 

 


Note 5: Affiliated transactions

Transactions during the reporting period with any company which is under common ownership or control were as follows:

          Shares 
          outstanding 
          and fair 
  Fair value as  Purchase  Sale  Investment  value as 
Name of affiliate  of 4/30/21  cost  proceeds  income  of 10/31/21 
Short-term investments           
Putnam Cash Collateral           
Pool, LLC*  $27,571,769  $541,424,057  $496,943,304  $19,185  $72,052,522 
Putnam Short Term           
Investment Fund**  174,470,337  214,908,411  146,809,294  94,328  242,569,454 
Total Short-term           
investments  $202,042,106  $756,332,468  $643,752,598  $113,513  $314,621,976 

 

* No management fees are charged to Putnam Cash Collateral Pool, LLC (Note 1).Investment income shown is included in securities lending income on the Statement of operations. There were no realized or unrealized gains or losses during the period.

** Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.

Note 6: Market, credit and other risks

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.

Beginning in January 2020, global financial markets have experienced, and may continue to experience, significant volatility resulting from the spread of a virus known as Covid–19. The outbreak of Covid–19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand, and general market uncertainty. The effects of Covid–19 have adversely affected, and may continue to adversely affect, the global economy, the economies of certain nations, and individual issuers, all of which may negatively impact the fund’s performance.

Note 7: Summary of derivative activity

The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:

Written equity option contracts (contract amount)  $18,000 
Futures contracts (number of contracts)  1,000 
Warrants (number of warrants)  —* 

 

* For the reporting period, there were no holdings at the end of each fiscal quarter and the transactions were considered minimal.

Multi-Cap Core Fund 41 

 


The following is a summary of the fair value of derivative instruments as of the close of the reporting period:

Fair value of derivative instruments as of the close of the reporting period   
  ASSET DERIVATIVES LIABILITY DERIVATIVES
Derivatives not         
accounted for as  Statement of    Statement of   
hedging instruments  assets and    assets and   
under ASC 815  liabilities location  Fair value  liabilities location  Fair value 
  Receivables, Net       
  assets — Unrealized       
Equity contracts  appreciation  $5,126,197*  Payables  $— 
Total    $5,126,197    $— 

 

* 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 in the Statement of operations for the reporting period (Note 1):

Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments   
Derivatives not         
accounted for as         
hedging instruments         
under ASC 815  Warrants  Options  Futures  Total 
Equity contracts  $1,298  $723,690  $11,175,528  $11,900,516 
Total  $1,298  $723,690  $11,175,528  $11,900,516 
 
Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) 
on investments         
Derivatives not accounted for as         
hedging instruments under ASC 815  Futures    Total 
Equity contracts    $797,830    $797,830 
Total    $797,830    $797,830 

 

42 Multi-Cap Core Fund 

 


Note 8: Offsetting of financial and derivative assets and liabilities

The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.

  BofA Securities, Inc.  Total 
Assets:     
Futures contracts§  $247,448  $247,448 
Total Assets  $247,448  $247,448 
Liabilities:     
Futures contracts§  —  — 
Total Liabilities  $—  $— 
Total Financial and Derivative Net Assets  $247,448  $247,448 
Total collateral received (pledged)†##  $—   
Net amount  $247,448   
Controlled collateral received (including     
TBA commitments)**  $—  $— 
Uncontrolled collateral received  $—  $— 
Collateral (pledged) (including TBA commitments)**  $—  $— 

 

** Included with Investments in securities on the Statement of assets and liabilities.

† Additional collateral may be required from certain brokers based on individual agreements.

##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.

§ Includes current day’s variation margin only as reported on the Statement of assets and liabilities, which is not collateralized. Cumulative appreciation/(depreciation) for futures contracts is represented in the tables listed after the fund’s portfolio. Collateral pledged for initial margin on futures contracts, which is not included in the table above, amounted to $12,479,224.

Multi-Cap Core Fund 43 

 


Services for shareholders

Investor services

Systematic investment plan Tell us how much you wish to invest regularly — weekly, semimonthly, or monthly — and the amount you choose will be transferred automatically from your checking or savings account. There’s no additional fee for this service, and you can suspend it at any time. This plan may be a great way to save for college expenses or to plan for your retirement.

Please note that regular investing does not guarantee a profit or protect against loss in a declining market. Before arranging a systematic investment plan, consider your financial ability to continue making purchases in periods when prices are low.

Systematic exchange You can make regular transfers from one Putnam fund to another Putnam fund. There are no additional fees for this service, and you can cancel or change your options at any time.

Dividends PLUS You can choose to have the dividend distributions from one of your Putnam funds automatically reinvested in another Putnam fund at no additional charge.

Free exchange privilege You can exchange money between Putnam funds free of charge, as long as they are the same class of shares. A signature guarantee is required if you are exchanging more than $500,000. The fund reserves the right to revise or terminate the exchange privilege.

Reinstatement privilege If you’ve sold Putnam shares or received a check for a dividend or capital gain, you may reinvest the proceeds with Putnam within 90 days of the transaction and they will be reinvested at the fund’s current net asset value — with no sales charge. However, reinstatement of class B shares may have special tax consequences. Ask your financial or tax representative for details.

Check-writing service You have ready access to many Putnam accounts. It’s as simple as writing a check, and there are no special fees or service charges. For more information about the check-writing service, call Putnam or visit our website.

Dollar cost averaging When you’re investing for long-term goals, it’s time, not timing, that counts. Investing on a systematic basis is a better strategy than trying to figure out when the markets will go up or down. This means investing the same amount of money regularly over a long period. This method of investing is called dollar cost averaging. When a fund’s share price declines, your investment dollars buy more shares at lower prices. When it increases, they buy fewer shares. Over time, you will pay a lower average price per share.

For more information

Visit the Individual Investors section at putnam.com A secure section of our website contains complete information on your account, including balances and transactions, updated daily. You may also conduct transactions, such as exchanges, additional investments, and address changes. Log on today to get your password.

Call us toll free at 1-800-225-1581 Ask a helpful Putnam representative or your financial advisor for details about any of these or other services, or see your prospectus.

44 Multi-Cap Core Fund 

 


Fund information

Founded over 80 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage funds across income, value, blend, growth, sustainable, asset allocation, absolute return, and global sector categories.

Investment Manager  Trustees  Jonathan S. Horwitz 
Putnam Investment  Kenneth R. Leibler, Chair  Executive Vice President, 
Management, LLC  Liaquat Ahamed  Principal Executive Officer, 
100 Federal Street  Ravi Akhoury  and Compliance Liaison 
Boston, MA 02110  Barbara M. Baumann   
  Katinka Domotorffy  Richard T. Kircher 
Investment Sub-Advisor  Catharine Bond Hill  Vice President and BSA 
Putnam Investments Limited  Paul L. Joskow  Compliance Officer 
16 St James’s Street  George Putnam, III   
London, England SW1A 1ER  Robert L. Reynolds  Susan G. Malloy 
  Manoj P. Singh  Vice President and 
Marketing Services  Mona K. Sutphen  Assistant Treasurer 
Putnam Retail Management     
Limited Partnership  Officers  Denere P. Poulack 
100 Federal Street  Robert L. Reynolds  Assistant Vice President, 
Boston, MA 02110  President  Assistant Clerk, and 
    Assistant Treasurer 
Custodian  James F. Clark   
State Street Bank  Vice President, Chief Compliance  Janet C. Smith 
and Trust Company  Officer, and Chief Risk Officer  Vice President, 
    Principal Financial Officer, 
Legal Counsel  Nancy E. Florek  Principal Accounting Officer, 
Ropes & Gray LLP  Vice President, Director of  and Assistant Treasurer 
  Proxy Voting and Corporate   
  Governance, Assistant Clerk,  Stephen J. Tate 
  and Assistant Treasurer  Vice President and 
    Chief Legal Officer 
  Michael J. Higgins   
  Vice President, Treasurer,  Mark C. Trenchard 
  and Clerk  Vice President 

 

This report is for the information of shareholders of Putnam Multi-Cap Core Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.



Item 2. Code of Ethics:
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 180 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

(b) Changes in internal control over financial reporting: Not applicable

Item 12. Disclosures of Securities Lending Activities for Closed-End Investment Companies:
Not Applicable

Item 13. 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.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Putnam Funds Trust
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: December 28, 2021
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: December 28, 2021
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer

Date: December 28, 2021