| 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 |
| James E. Thomas, Esq. Ropes & Gray LLP 800 Boylston Street Boston, Massachusetts 02199 |
| Registrant’s telephone number, including area code: | (617) 292-1000 |
| Date of fiscal year end: | July 31, 2023 |
| Date of reporting period: | May 25, 2023 (commencement of operations) – July 31, 2023 |
Item 1. Report to Stockholders: |
| The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: | |||
Putnam
Ultra Short MAC
Series
Annual report
7 | 31 | 23
Message from the Trustees
September 11, 2023
Dear Fellow Shareholder:
Stocks have generally advanced through much of 2023. Innovations in technology have attracted strong investor interest, helping that sector rebound and lead the market higher. More broadly, international markets are generally performing well, even though the reopening of China’s economy lacked the dynamism many had anticipated.
Bond markets have been more uneven, with some areas gaining and others down moderately. The U.S. Federal Reserve has continued to lift interest rates, but at a more gradual pace than in 2022. U.S. inflation has eased, while the country’s economic growth has remained positive. Against this backdrop, investors are weighing the impact of high borrowing costs, stress in the banking system, and a weaker housing market.
As active managers, your investment team continues to research attractive opportunities for your fund while monitoring risks. This report offers an update on their efforts.
Thank you for investing with Putnam.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of fund shares assumes reinvestment of distributions and does not account for taxes. The fund return in the bar chart is at net asset value (NAV). See below and pages 7–8 for additional performance information. For a portion of the period, the fund had expense limitations, without which the return would have been lower. The short-term results of a relatively new fund are not necessarily indicative of its long-term prospects. To obtain the most recent month-end performance, please call Putnam at 1-800-225-1581.
This comparison shows your fund’s performance in the context of broad market indexes from 5/25/23 (commencement of fund operations) to 7/31/23. See above and pages 7–8 for additional fund performance information. Index descriptions can be found on page 11.
All Bloomberg indices are provided by Bloomberg Index Services Limited.
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How were market conditions during the reporting period?
Short-term fixed income delivered positive performance amid considerable market volatility. Initially, lingering concerns about the failure of a few regional banks in March 2023, the U.S. debt ceiling, and higher U.S. Treasury rates weighed on investor sentiment. However, a cooler-than-expected inflation reading for May 2023 led to expectations that the Federal Reserve might hold interest rates steady at its June meeting. At that meeting, the Fed skipped an interest-rate hike to allow time to assess the effects of its monetary policy and to potentially avoid tipping the U.S. economy into a recession. Fed policymakers added that two more interest-rate hikes remained a possibility in 2023.
Just before the close of the reporting period, the Fed raised interest rates by 0.25% to a range of 5.25%–5.50%. This represented the Fed’s 11th interest-rate increase since it began its campaign to tame inflation in March 2022. Fed Chair Jerome Powell stated that the central bank would continue to make data-driven decisions on a meeting-by-meeting basis. At the
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Credit qualities are shown as a percentage of the fund’s net assets as of 7/31/23. A bond rated BBB or higher (A-3/SP-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. Ratings may vary over time. Due to rounding, percentages may not equal 100%.
Cash and net other assets, if any, represent the market value weights of cash and derivatives and may show a negative market value as a result of the timing of trade versus settlement date transactions. The fund itself has not been rated by an independent rating agency.
Allocations are shown as a percentage of the fund’s net assets as of 7/31/23. Cash and net other assets, if any, represent the market value weights of cash, derivatives, and other unclassified assets in the portfolio. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time. Due to rounding, percentages may not equal 100%.
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same time, recession fears eased, with many investors embracing a soft-landing narrative.
Yields rose in sync with the Fed’s monetary policy. The yield on the 2-year U.S. Treasury note began the period at 4.50% and peaked at 4.99% on July 6 before falling to 4.88% at period-end. The ICE BofA U.S. Treasury Bill Index, the fund’s benchmark, rose 0.95% during the reporting period.
How did the fund perform in this environment?
For the period from its commencement of operations on May 25, 2023, through July 31, 2023, the fund gained 1.04%, marginally outperforming its benchmark.
What were the drivers of relative performance during the reporting period?
Corporate credit was the largest contributor to the fund’s benchmark-relative performance during the period. The fund benefited from a tightening of short-term corporate credit spreads. [Spreads are the yield advantage credit-sensitive bonds offer over comparable-maturity U.S. Treasuries. Bond prices rise as yield spreads tighten and decline as spreads widen.]
The fund’s allocations to commercial paper also helped benchmark-relative results. We keep a balance of short-maturity commercial paper for liquidity. Commercial paper yields continued to rise. As interest rates increased, we were able to reinvest the maturing paper at higher rates.
What is your near-term outlook for fixed income markets?
Following the Fed’s decision to hike interest rates at its July meeting, we believe future monetary policy decisions will be influenced by incoming economic data. We continue to believe that interest-rate cuts in 2023 are unlikely due to a resilient labor market and sticky core inflation.
In our view, credit spread volatility will likely stay elevated in 2023, as the market continues to digest tighter financial conditions. Current spread levels are well inside typical recessionary levels. As such, we are maintaining a conservative approach and focusing on issuers with strong fundamentals that we believe are appropriately priced for implied Fed activity.
We expect balance sheets for the banking sector to remain stable, particularly within the larger “national champion” banks that dominate that exposure in the fund. We believe most banks will continue to maintain levels of capitalization at or above long-term targets. Meanwhile, current asset quality profiles remain on solid footing, in our view, helping these institutions to weather this potentially more challenging period.
What are the fund’s strategies going forward?
We have positioned the strategy to take advantage of a sustained higher interest-rate environment. The fund holds a meaningful allocation to securities with a floating-rate coupon tied to the Secured Overnight Financing Rate. These securities’ coupons reset periodically to reflect current short-term rates. With that said, given our belief that we are nearing a pause in the Fed’s hiking cycle, the fund’s duration positioning is neutral and ended the period at 0.43 years.
From a credit quality standpoint, the portfolio is focused on investment-grade-rated securities. Within investment-grade corporates, we continue to have a high level of confidence in the creditworthiness of our banking exposure despite the banking turmoil experienced in March 2023. We believe the names the fund owns can hold up well, even in a deteriorating economic environment.
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Overall, Putnam’s Ultra Short MAC Series team is actively monitoring portfolio exposures as market events evolve. We continue to structure the portfolio with capital preservation and liquidity as the primary objectives.
Thank you, Joanne, 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 the period from May 25, 2023 (commencement of fund operations) through July 31, 2023, the end of its 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. The short-term results of a relatively new fund are not necessarily indicative of its long-term prospects. 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 call Putnam at 1-800-225-1581.
Fund performance Total return for the period ended 7/31/23
| Life of fund | |
| (since 5/25/23) | |
| Net asset value | 1.04% |
For a portion of the period, the fund had expense limitations, without which the return would have been lower.
Comparative index returns For the period ended 7/31/23
| Life of fund | |
| (since 5/25/23) | |
| ICE BofA U.S. Treasury Bill Index | 0.95% |
Index result should be compared with fund performance at net asset value.
Past performance does not indicate future results.
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Fund price and distribution information For the period from 5/25/23 (commencement of fund operations) to 7/31/23
| Distributions | |
| Number | 3 |
| Income | $0.105 |
| Capital gains | — |
| Total | $0.105 |
| Share value | Net asset value |
| 5/25/23* | $10.00 |
| 7/31/23 | 10.00 |
| Current rate (end of period) | Net asset value |
| Current dividend rate1 | 5.72% |
| Current 30-day SEC yield | |
| (with expense limitation)2,3 | 5.76 |
| Current 30-day SEC yield | |
| (without expense limitation)3 | –0.87 |
The classification of distributions, if any, is an estimate. Final distribution information will appear on your year-end tax forms.
* Inception date of the fund.
1 Most recent distribution, including any return of capital and excluding capital gains, annualized and divided by share price before or after sales charge at period-end.
2 For a portion of the period, the fund had expense limitations, without which the return would have been lower.
3 Based only on investment income and calculated using the maximum offering price for the fund, in accordance with SEC guidelines.
Fund performance as of most recent calendar quarter Total return for the period ended 6/30/23
| Life of fund | |
| (since 5/25/23) | |
| Net asset value | 0.48% |
See the discussion following the fund performance table on page 7 for information about the calculation of fund performance.
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Your fund’s expenses
As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. In the most recent six-month period, your fund’s expenses were limited; had expenses not been limited, they would have been higher. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.
Expense ratios
| Estimated net expenses for the fiscal year ended 7/31/23*† | 0.00% |
| Estimated total operating expenses for the fiscal year ended 7/31/23* | 0.11% |
| Annualized expense ratio for the period from 5/25/23 (commencement of operations) | |
| to 7/31/23 # | 0.00%‡ |
Estimated 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.
* Based on estimated amounts for the current fiscal year.
† Reflects Putnam Management’s contractual obligation to limit certain fund expenses through at least April 4, 2026. This obligation may be modified or discontinued only with approval of the Board of Trustees.
# Expense ratio is for the fund’s most recent fiscal period. As a result of this, the ratio may differ from the expense ratio in the financial highlights.
‡ Amount represents less than 0.01%.
Expenses per $1,000
The following table shows the expenses you would have paid on a $1,000 investment in the fund from 5/25/23 (commencement of operations) to 7/31/23. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
| Expenses paid per $1,000*† | $0.00 |
| Ending value (after expenses) | $1,010.40 |
* Expenses for the fund are calculated using the fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of average net assets for the period from 5/25/23 (commencement of operations) to 7/31/23.
† 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 (68); 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 period 5/25/23 (commencement of operations) to 7/31/23, use the following calculation method. To find the value of your investment on 5/25/23, 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.
| Expenses paid per $1,000*† | $0.00 |
| Ending value (after expenses) | $1,024.79 |
* Expenses for the fund are calculated using the fund’s annualized expense ratio, which represents the ongoing expenses as a percentage of average net assets for the period from 5/25/23 (commencement of operations) to 7/31/23.
† Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period (181); and then dividing that result by the number of days in the year (365).
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Comparative index definitions
Bloomberg U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed income securities.
ICE BofA (Intercontinental Exchange Bank of America) U.S. Treasury Bill Index is an unmanaged index that tracks the performance of U.S. dollar-denominated U.S. Treasury bills publicly issued in the U.S. domestic market. Qualifying securities must have a remaining term of at least one month to final maturity and a minimum amount outstanding of $1 billion.
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.
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Other information for shareholders
Important notice regarding delivery of shareholder documents
In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single notice of internet availability, or a single printed copy, of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581 or, for exchange-traded funds only, 1-833-228-5577. We will begin sending individual copies within 30 days.
Proxy voting
Putnam is committed to managing our funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2023, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581 or, for exchange-traded funds only, 1-833-228-5577.
Fund portfolio holdings
The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.
Trustee and employee fund ownership
Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam funds. As of July 31, 2023, Putnam employees had approximately $504,000,000 and the Trustees had approximately $70,000,000 invested in Putnam funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.
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 May 2023. 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 2022 through December 2022. The report included a description of the annual liquidity assessment of the fund that Putnam performed in November 2022. 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. Putnam concluded that the program has been operating effectively and adequately to ensure compliance with Rule 22e-4.
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Important notice regarding Putnam’s privacy policy
In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ names, addresses, Social Security numbers, and dates of birth. Using this information, we are able to maintain accurate records of accounts and transactions.
It is our policy to protect the confidentiality of our shareholder information, whether or not a shareholder currently owns shares of our funds. In particular, it is our policy not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use.
Under certain circumstances, we must share account information with outside vendors who provide services to us, such as mailings and proxy solicitations. In these cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. Finally, it is our policy to share account information with your financial representative, if you’ve listed one on your Putnam account.
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Trustee approval of management contracts
Consideration of your fund’s initial management and sub-management contracts
In January 2023, the Board of Trustees of your fund, including all of the 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 mutual funds, closed-end funds and exchange-traded funds (collectively, the “funds”) (the “Independent Trustees”) approved 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, which consists solely of Independent Trustees, requested and evaluated all information it deemed reasonably necessary under the circumstances in connection with its approval of your fund’s management contract and sub-management contract. In November 2022, December 2022 and January 2023, the Contract Committee and the Board met with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided and other information developed with the assistance of the Board’s independent counsel and independent staff. The Independent Trustees also took into consideration the Contract Committee’s review and consideration of the other Putnam funds’ management and sub-management contracts and related information over the course of several months leading up to their June 2022 meeting.
On January 26, 2023, the Contract Committee recommended, and on January 27, 2023, the Independent Trustees approved, your fund’s management and sub-management contracts. (Because PIL is an affiliate of Putnam Management and Putnam Management remained fully responsible for all services provided by PIL, the Trustees did not attempt to evaluate PIL as a separate entity, and all subsequent references to Putnam Management throughout the discussion of the Trustees’ consideration of your fund’s initial management and sub-management contracts 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 proposed fee schedule for your fund would represent reasonable compensation in light of the nature and quality of the services to be 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 proposed fee schedule would represent an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at anticipated future 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.
Management fee schedules and total expenses
The Trustees considered that the proposed fund would not pay a management fee to Putnam Management. The Trustees noted that the fund would be part of separately managed account (“SMA”) investment programs, and that Putnam Management would be compensated directly or indirectly by wrap program sponsors or wrap program clients for SMA advisory services.
In addition, the Trustees focused on the competitiveness of your fund’s projected total expense ratio. In order to support the effort to have fund expenses of the Putnam funds continue to meet evolving competitive standards, the Trustees and Putnam Management have implemented certain expense limitations. These expense limitations attempt to maintain competitive expense levels for the funds. At the time the Trustees approved your fund’s management and sub-management contracts, Putnam Management had agreed to waive fees and/or reimburse expenses of your fund to the extent that expenses of the fund
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(excluding payments under the fund’s distribution plans, investor servicing fees, brokerage, interest, taxes, investment-related expenses, extraordinary expenses and acquired fund fees and expenses) would exceed an annual rate of 0.00% of its average net assets through at least November 30, 2026. Putnam Management’s support for this expense limitation arrangement was an important factor in the Trustees’ decision to approve your fund’s management and sub-management contracts.
The information examined by the Trustees in connection with their contract review for your fund included information regarding fees charged by Putnam Management to certain of their 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
Because your fund was not yet operational, the Trustees were not able to consider your fund’s performance before their initial approval of your fund’s management and sub-management contracts.
Brokerage and soft-dollar allocations
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 the 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.
Consideration of your fund’s new and interim management and sub-management contracts
At their meeting on June 23, 2023, the Board of Trustees of your fund, including all of the Independent Trustees, approved, subject to approval by your fund’s shareholders, a new management contract with Putnam Management and a new sub-management contract between Putnam Management and its affiliate, PIL (collectively, the “New Management Contracts”). The Trustees considered the proposed New Management Contracts in connection with the planned acquisition of Putnam U.S. Holdings I, LLC (“Putnam Holdings”) by a subsidiary of Franklin Resources, Inc. (“Franklin Templeton”). The Trustees considered that, on May 31, 2023, Franklin Templeton and Great-West Lifeco Inc., the parent company of Putnam Holdings, announced that they had entered into a definitive agreement for a subsidiary of Franklin Templeton to acquire Putnam Holdings in a stock and cash transaction (the “Transaction”). The Trustees noted that Putnam Holdings was the parent company of Putnam Management and PIL. The Trustees were advised that the Transaction would result in a “change of control” of Putnam Management and PIL and would cause your fund’s current Management Contract with Putnam Management and Sub-Management Contract with PIL (collectively, the “Current Management Contracts”) to terminate in accordance with the 1940 Act. The Trustees considered that the New Management Contracts would take effect upon the closing of the Transaction, which was expected to occur in the fourth quarter of 2023.
In addition to the New Management Contracts, the Trustees also approved interim management and sub-management contracts with Putnam Management and PIL, respectively (the “Interim Management Contracts”), which would take effect in the event that for any reason shareholder approval of a New Management Contract was not received by the time of the Transaction closing. The Trustees considered that each Interim Management Contract that became effective would remain in effect until shareholders approved the proposed New Management Contract, or until 150 days elapse after the closing of the Transaction, whichever occurred first. The considerations and conclusions discussed in connection with the Trustees’ consideration of the New Management Contracts and the continuance of your fund’s Current Management Contracts also apply to the Trustees’ consideration of the Interim Management Contracts, supplemented by consideration of the terms, nature and reason for any Interim Management Contract.
The Independent Trustees met with their independent legal counsel, as defined in Rule 0 – 1(a)(6) under the 1940 Act (their “independent legal counsel”), and representatives of Putnam Management and its parent company, Power Corporation of Canada, to discuss the potential Transaction, including the timing and structure of the Transaction and its implications for Putnam Management and the funds, during their regular meeting on November 18, 2022, and the full Board of Trustees further discussed these matters
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with representatives of Putnam Management at its regular meeting on December 15, 2022. At a special meeting on December 20, 2022, the full Board of Trustees met with representatives of Putnam Management, Power Corporation of Canada and Franklin Templeton to further discuss the potential Transaction, including Franklin Templeton’s strategic plans for Putnam Management’s asset management business and the funds, potential sources of synergy between Franklin Templeton and Putnam Management, potential areas of partnership between Power Corporation of Canada and Franklin Templeton, Franklin Templeton’s distribution capabilities, Franklin Templeton’s existing service provider relationships and Franklin Templeton’s recent acquisitions of other asset management firms.
In order to assist the Independent Trustees in their consideration of the New Management Contracts and other anticipated impacts of the Transaction on the funds and their shareholders, independent legal counsel for the Independent Trustees furnished an initial information request to Franklin Templeton (the “Initial Franklin Request”). At a special meeting of the full Board of Trustees held on January 25, 2023, representatives of Franklin Templeton addressed the firm’s responses to the Initial Franklin Request. At the meeting, representatives of Franklin Templeton discussed, among other things, the business and financial condition of Franklin Templeton and its affiliates, Franklin Templeton’s U.S. registered fund operations, its recent acquisition history, Franklin Templeton’s intentions regarding the operation of Putnam Management and the funds following the completion of the potential Transaction and expected benefits to the funds and Putnam Management that might result from the Transaction.
The Board of Trustees actively monitored developments with respect to the potential Transaction throughout the period leading up to the public announcement of a final sale agreement on May 31, 2023. The Independent Trustees met to discuss these matters at their regular meetings on January 27, April 20 and May 19, 2023. The full Board of Trustees also discussed developments at their regular meeting on February 23, 2023. Following the public announcement of the Transaction on May 31, 2023, independent legal counsel for the Independent Trustees furnished a supplemental information request (the “Supplemental Franklin Request”) to Frank-lin Templeton. At the Board of Trustees’ regular in-person meeting held on June 22–23, 2023, representatives of Putnam Management and Power Corporation of Canada provided further information regarding, among other matters, the final terms of the Transaction and efforts undertaken to retain Putnam employees. The Contract Committee of the Board of Trustees also met on June 22, 2023 to discuss Franklin Templeton’s responses to the Supplemental Franklin Request. Mr. Reynolds, the only Trustee affiliated with Putnam Management, participated in portions of these meetings to provide the perspective of the Putnam organization, but did not otherwise participate in the deliberations of the Independent Trustees or the Contract Committee regarding the potential Transaction.
After the presentations and after reviewing the written materials provided, the Independent Trustees met at their in-person meeting on June 23, 2023 to consider the New Management Contracts for each fund, proposed to become effective upon the closing of the Transaction, and the filing of a preliminary proxy statement. At this meeting and throughout the process, the Independent Trustees also received advice from their independent legal counsel regarding their responsibilities in evaluating the potential Transaction and the New Management Contracts. The Independent Trustees reviewed the terms of the proposed New Management Contracts and the differences between the New Management Contracts and the Current Management Contracts. They noted that the terms of the proposed New Management Contracts were substantially identical to the Current Management Contracts, except for certain changes designed largely to address differences among various of the existing contracts, which had been developed and implemented at different times in the past.
In considering the approval of the proposed New Management Contracts, the Board of Trustees took into account a number of factors, including:1
(i) Franklin Templeton’s and Putnam Management’s belief that the Transaction would not adversely affect the funds or their shareholders and their belief that the Transaction was likely to
1All subsequent references to Putnam Management describing the Board of Trustees’ considerations should be deemed to include references to PIL as necessary or appropriate in the context.
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result in certain benefits (described below) for the funds and their shareholders;
(ii) That Franklin Templeton did not intend to make any material change in Putnam Management’s senior investment professionals (other than certain changes related to reporting structure and organization of personnel discussed below), including the portfolio managers of the funds, or to the firm’s operating locations as a result of the Transaction;
(iii) That Franklin Templeton intended for Putnam Management’s equity investment professionals to continue to operate largely independently from Franklin Templeton, reporting to Franklin Templeton’s Head of Public Markets following the Transaction;
(iv) That, while Putnam Management’s organizational structure was not expected to change immediately following the Transaction, Franklin Templeton intended to revise Putnam Management’s reporting structure in order to include Putnam Management’s fixed income investment professionals in Franklin Templeton’s fixed income group and to include Putnam Management’s Global Asset Allocation (“GAA”) investment professionals in Franklin Templeton’s investment solutions group, with both Franklin Templeton groups reporting to Franklin Templeton’s Head of Public Markets;
(v) Franklin Templeton’s expectation that there would not be any changes in the investment objectives, strategies or portfolio holdings of the funds as a result of the Transaction;
(vi) That neither Franklin Templeton nor Putnam Management had any current plans to propose changes to the funds’ existing management fees or expense limitations, or current plans to make changes to the funds’ existing distribution arrangements;
(vii) Franklin Templeton’s and Putnam Management’s representations that, following the Transaction, there was not expected to be any diminution in the nature, quality and extent of services provided to the funds and their shareholders by Putnam Management and PIL, including compliance and other non-advisory services;
(viii) That Franklin Templeton did not currently plan to change the branding of the funds or to change the lineup of funds in connection with the Transaction but would continue to evaluate how best to position the funds in the market;
(ix) The possible benefits accruing to the funds and their shareholders as a result of the Transaction, including:
a. That the scale of Franklin Templeton’s investment operations platform would increase the investment and operational resources available to the funds;
b. That the Putnam open-end funds would benefit from Franklin Templeton’s large retail and institutional global distribution capabilities and significant network of intermediary relationships, which may provide additional opportunities for the funds to increase assets and reduce expenses by spreading expenses over a larger asset base; and
c. Potential benefits to shareholders of the Putnam open-end funds that could result from the alignment of certain fund features and shareholder benefits with those of other funds sponsored by Franklin Templeton and its affiliates and access to a broader array of investment opportunities;
(x) The financial strength, reputation, experience and resources of Franklin Templeton and its investment advisory subsidiaries;
(xi) Franklin Templeton’s expectation that the Transaction would not impact the capabilities or responsibilities of Putnam Management’s Investment Division (other than any impact related to reporting structure changes for Putnam Management’s equity, fixed income and GAA investment groups and to including Putnam Management’s fixed income and GAA investment professionals in existing Franklin Templeton investment groups, as discussed above) and that any changes to the Investment Division over the longer term would be made in order to achieve perceived operational efficiencies or improvements to the portfolio management process;
(xii) Franklin Templeton’s commitment to maintaining competitive compensation arrangements to allow Putnam Management to continue to attract and retain highly qualified personnel and Putnam Management’s and Franklin Templeton’s efforts to retain personnel, including efforts implemented since the Transaction was announced;
(xiii) That the current senior management teams at Putnam Management and Power Corporation of Canada had indicated their strong support of the Transaction and that Putnam Management had
| Ultra Short MAC Series 17 |
recommended that the Board of Trustees approve the New Management Contracts; and
(xiv) Putnam Management’s and Great-West Lifeco Inc.’s commitment to bear all expenses incurred by the funds in connection with the Transaction, including all costs associated with the proxy solicitation in connection with seeking shareholder approval of the New Management Contracts.
Finally, in considering the proposed New Management Contracts, the Board of Trustees also took into account their concurrent deliberations and conclusions, as described below, in connection with their annual review of the funds’ Current Management Contracts and the approval of their continuance, effective July 1, 2023, and the extensive materials that they had reviewed in connection with that review process.
Based upon the foregoing considerations, on June 23, 2023, the Board of Trustees, including all of the Independent Trustees, unanimously approved the proposed New Management Contracts and determined to recommend their approval to the shareholders of the funds.
General conclusions — Current Management Contracts
The Board of Trustees 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 Management and the sub-management contract with respect to your fund between Putnam Management and PIL. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees did not attempt to evaluate PIL as a separate entity.) The Board of Trustees, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Independent Trustees.
At the outset of the review process, members of the Board of Trustees’ 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 2023, 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 of Trustees’ independent staff and by independent legal counsel for the funds and the Independent Trustees.
At the Board of Trustees’ June 2023 meeting, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the continuance of the contracts. At that meeting, the Contract Committee also 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 recommended, and the Independent Trustees approved, the continuance of your fund’s Current Management Contracts, effective July 1, 2023, and the approval of your fund’s New Management Contracts and Interim Management Contracts, as discussed above.
The Independent Trustees’ approvals were 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,
| 18 Ultra Short MAC Series |
giving different weights to various factors. The Trustees also took into account their concurrent deliberations and conclusions, and the materials that they had reviewed, in connection with their approval on June 23, 2023 of the Interim Management Contracts and the New Management Contracts, which had been proposed in light of the Transaction (which would cause the fund’s Current Management Contracts to terminate in accordance with applicable law or the terms of each contract).
Management fee schedules and total expenses
The Trustees reviewed the management fee schedules in effect for all funds, including fee levels and any breakpoints. The Trustees considered that your fund does not pay a management fee to Putnam Management. The Trustees also noted that the fund is part of SMA investment programs, and that Putnam Management is compensated directly or indirectly by wrap program sponsors or wrap program clients for SMA advisory services.
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 mutual funds and each of the exchange-traded funds have implemented so-called “all-in” or unitary 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 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. In order to support the effort to have fund expenses of the Putnam funds continue to meet evolving competitive standards, the Trustees and Putnam Management have implemented certain expense limitations. These expense limitations attempt to maintain competitive expense levels for the funds. In the case of your fund, Putnam Management has contractually agreed to waive fees and/or reimburse expenses of your fund to the extent that expenses of the fund (excluding payments under the fund’s distribution plans, investor servicing fees, brokerage, interest, taxes, investment-related expenses, extraordinary expenses and acquired fund fees and expenses) would exceed an annual rate of 0.00% of its average net assets through at least November 30, 2026. Putnam Management’s commitment to this expense limitation arrangement, which was intended to support an effort to have the mutual fund expenses meet competitive standards, was an important factor in the Trustees’ decision to approve your fund’s New Management Contracts and Interim Management Contracts and the continuance of your fund’s Current Management Contracts.
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, as applicable. 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 (as applicable) the funds’ management, distribution and investor servicing contracts. For each fund (not including your fund, which was not operational in 2022), the analysis presented information about revenues, expenses and profitability in 2022 for each of the applicable 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 each of the funds 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 funds at that time.
The information examined by the Trustees in connection with their annual contract review for the funds included information regarding services provided and fees charged by Putnam Management and its affiliates to other clients,
| Ultra Short MAC Series 19 |
including collective investment trusts offered in the defined contribution and defined benefit retirement plan markets, sub-advised mutual funds, private funds sponsored by affiliates of Putnam Management, model-only separately managed accounts and Putnam Management’s manager-traded separately managed account programs. 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 funds, as well as an assessment of the differences in the services provided to these clients as compared to the services provided to the funds. The Trustees observed that the differences in fee rates between these clients and the 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 1940 Act-registered funds than for other clients, and the Trustees also considered the differences between the services that Putnam Management provides to the 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, peer-relative and benchmark-relative Putnam fund performance was generally encouraging in 2022 against a backdrop of volatile equity and fixed income markets, driven by factors such as Russia’s invasion of Ukraine, increased tensions with China, disruptions in energy markets and broader supply chains, rising inflation and the significant tightening of monetary policy by the Board of Governors of the Federal Reserve in an effort to combat inflation. The Trustees further noted that, in the face of these numerous economic headwinds, corporate earnings and employment data had been generally robust throughout 2022. For the one-year period ended December 31, 2022, the Trustees noted that the Putnam funds, on an asset-weighted basis, ranked in the 41st percentile of their peers as determined by Lipper Inc. (“Lipper”) and, on an asset-weighted-basis, outperformed their benchmarks by 1.3% gross of fees over the one-year period. The Committee also noted that the funds’ aggregate performance over longer-term periods continued to be strong, with the funds, on an asset-weighted basis, ranking in the 34th, 27th and 22nd percentiles of their Lipper peers over the three-year, five-year and ten-year periods ended December 31, 2022, respectively. The Trustees further noted that the funds, in the aggregate, outperformed their benchmarks on a gross basis for each of the three-year, five-year and ten-year periods. The Trustees also considered the Morningstar Inc. ratings assigned to the funds and that 40 funds were rated four or five stars at the end of 2022, which represented an increase of 15 funds year-over-year. The Trustees also considered that seven funds were five-star rated at the end of 2022, which was a year-over-year decrease of two funds, and that 83% of the funds’ aggregate assets were in four- or five-star rated funds at year end.
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, as reported in the Barron’s/Lipper Fund Families survey (the “Survey”). The Trustees noted that the Survey ranks mutual fund companies based on their performance across a variety of asset types, and that The Putnam Fund complex had performed exceptionally well in
| 20 Ultra Short MAC Series |
2022. In this regard, the Trustees considered that the funds had ranked 9th out of 49 fund companies, 3rd out of 49 fund companies and 2nd out of 47 fund companies for the one-year, five-year and ten-year periods, respectively. The Trustees also noted that The Putnam Fund complex had been the only fund family to rank in the top ten in all three time periods. They also noted, however, the disappointing investment performance of some Putnam funds for periods ended December 31, 2022 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and, where relevant, actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor the performance of those funds.
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. Because your fund was not yet operational during the time periods considered by the Trustees, the Trustees did not consider your fund’s recent performance in connection with their consideration of your fund’s management and sub-management contracts.
The Trustees also 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.
Brokerage and soft-dollar allocations
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 funds’ brokerage in order to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.
| Ultra Short MAC Series 21 |
Audited financial statements
These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, constitute the fund’s audited financial statements.
The fund’s portfolio lists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.
Statement of assets and liabilities shows how the fund’s net assets and share price are determined. All investment and non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)
Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal period.
Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover (not required for money market funds) in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.
| 22 Ultra Short MAC Series |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Putnam Funds Trust and Shareholders of
Putnam Ultra Short MAC Series:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the fund’s portfolio, of Putnam Ultra Short MAC Series (one of the funds constituting Putnam Funds Trust, referred to hereafter as the “Fund”) as of July 31, 2023, and the related statements of operations and changes in net assets, including the related notes, and the financial highlights for the period May 25, 2023 (commencement of operations) through July 31, 2023 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2023, and the results of its operations, changes in its net assets and the financial highlights for the period May 25, 2023 (commencement of operations) through July 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of July 31, 2023 by correspondence with the custodian and transfer agent. We believe that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 11, 2023
We have served as the auditor of one or more investment companies in the Putnam Investments family of funds since at least 1957. We have not been able to determine the specific year we began serving as auditor.
| Ultra Short MAC Series 23 |
| The fund’s portfolio 7/31/23 | ||
| CORPORATE BONDS AND NOTES (79.5%)* | Principal amount |
Value | ||
| Banking (48.5%) | ||||
| Australia and New Zealand Banking Group, Ltd. 144A sr. unsec. notes 4.829%, 2/3/25 (Australia) | $250,000 | $247,754 | ||
| Banco Bilbao Vizcaya Argentaria SA sr. unsec. unsub. FRN 5.862%, 9/14/26 (Spain) | 200,000 | 198,195 | ||
| Bank of America Corp. sr. unsec. unsub. FRN Ser. MTN, 3.458%, 3/15/25 | 250,000 | 245,995 | ||
| Bank of Montreal sr. unsec. unsub. FRN Ser. MTN, (US SOFR Compounded Index + 0.32%), 5.598%, 7/9/24 (Canada) | 100,000 | 99,623 | ||
| Bank of New York Mellon Corp. (The) sr. unsec. unsub. FRN (US SOFR + 0.20%), 5.52%, 10/25/24 | 250,000 | 248,511 | ||
| Bank of Nova Scotia (The) sr. unsec. unsub. FRN (US SOFR + 0.26%), 5.478%, 9/15/23 (Canada) | 100,000 | 99,995 | ||
| Banque Federative du Credit Mutuel SA 144A sr. unsec. FRN (US SOFR Compounded Index + 0.41%), 5.51%, 2/4/25 (France) | 223,000 | 221,419 | ||
| Barclays PLC sr. unsec. unsub. FRN 1.007%, 12/10/24 (United Kingdom) | 200,000 | 196,212 | ||
| BNP Paribas SA 144A sr. unsec. unsub. notes 3.80%, 1/10/24 (France) | 200,000 | 197,968 | ||
| BPCE SA 144A sr. unsec. FRN (ICE LIBOR USD 3 Month + 1.24%), 6.78%, 9/12/23 (France) | 250,000 | 250,176 | ||
| Citigroup, Inc. sr. unsec. unsub. FRN (US SOFR + 1.37%), 6.537%, 5/24/25 | 178,000 | 178,892 | ||
| Citigroup, Inc. sr. unsec. unsub. FRN 4.14%, 5/24/25 | 98,000 | 96,749 | ||
| Danske Bank A/S 144A sr. unsec. unsub. FRN (ICE LIBOR USD 3 Month + 1.06%), 6.60%, 9/12/23 (Denmark) | 200,000 | 200,161 | ||
| DNB Bank ASA 144A sr. unsec. FRN 5.896%, 10/9/26 (Norway) | 200,000 | 200,223 | ||
| Fifth Third Bancorp sr. unsec. notes 3.65%, 1/25/24 | 100,000 | 98,883 | ||
| ING Groep NV sr. unsec. notes 4.10%, 10/2/23 (Netherlands) | 200,000 | 199,271 | ||
| JPMorgan Chase & Co. sr. unsec. unsub. FRN 3.22%, 3/1/25 | 15,000 | 14,764 | ||
| Mizuho Financial Group, Inc. sr. unsec. unsub. FRN (ICE LIBOR USD 3 Month + 1.00%), 6.54%, 9/11/24 (Japan) | 200,000 | 200,095 | ||
| National Bank of Canada company guaranty sr. unsec. FRN 3.75%, 6/9/25 (Canada) | 250,000 | 244,950 | ||
| NatWest Group PLC sr. unsec. unsub. FRN 4.269%, 3/22/25 (United Kingdom) | 200,000 | 197,544 | ||
| PNC Financial Services Group, Inc. (The) sr. unsec. unsub. FRN 5.812%, 6/12/26 | 25,000 | 25,012 | ||
| PNC Financial Services Group, Inc. (The) sr. unsec. unsub. FRN 4.758%, 1/26/27 | 28,000 | 27,511 | ||
| Royal Bank of Canada sr. unsec. unsub. FRN (US SOFR Compounded Index + 0.36%), 5.695%, 7/29/24 (Canada) | 200,000 | 199,363 | ||
| Societe Generale SA 144A sr. unsec. notes 4.25%, 9/14/23 (France) | 200,000 | 199,391 | ||
| State Street Corp. sr. unsec. unsub. notes 5.104%, 5/18/26 | 40,000 | 39,693 | ||
24 Ultra Short MAC Series | |
| CORPORATE BONDS AND NOTES (79.5%)* cont. | Principal amount |
Value | ||
| Banking cont. | ||||
| Sumitomo Mitsui Financial Group, Inc. sr. unsec. FRN (CME Term SOFR 3 Month + 1.06%), 6.372%, 10/16/23 (Japan) | $100,000 | $100,112 | ||
| Toronto-Dominion Bank (The) sr. unsec. FRN (US SOFR + 0.36%), 5.539%, 3/4/24 (Canada) | 100,000 | 99,865 | ||
| Toronto-Dominion Bank (The) sr. unsec. notes 5.103%, 1/9/26 (Canada) | 100,000 | 99,704 | ||
| UBS Group AG 144A sr. unsec. FRN 4.49%, 8/5/25 (Switzerland) | 200,000 | 196,242 | ||
| Wells Fargo & Co. sr. unsec. unsub. FRN Ser. MTN, (US SOFR + 1.32%), 6.64%, 4/25/26 | 230,000 | 231,942 | ||
| Westpac Banking Corp. sr. unsec. unsub. FRN (US SOFR + 0.30%), 5.445%, 11/18/24 (Australia) | 100,000 | 99,771 | ||
| 4,955,986 | ||||
| Capital goods (2.9%) | ||||
| Boeing Co. (The) sr. unsec. notes 2.80%, 3/1/24 | 100,000 | 98,035 | ||
| Daimler Trucks Finance North America, LLC 144A company guaranty sr. unsec. FRN (US SOFR + 0.75%), 5.968%, 12/13/24 | 200,000 | 199,692 | ||
| 297,727 | ||||
| Communication services (2.0%) | ||||
| Sprint Corp. company guaranty sr. unsec. sub. notes 7.875%, 9/15/23 | 200,000 | 200,166 | ||
| 200,166 | ||||
| Consumer cyclicals (2.0%) | ||||
| BMW US Capital, LLC 144A company guaranty sr. unsec. FRN (US SOFR Compounded Index + 0.84%), 6.108%, 4/1/25 | 102,000 | 102,269 | ||
| BMW US Capital, LLC 144A company guaranty sr. unsec. FRN (US SOFR Compounded Index + 0.38%), 5.506%, 8/12/24 | 100,000 | 100,065 | ||
| 202,334 | ||||
| Consumer finance (5.2%) | ||||
| AerCap Ireland Capital DAC/AerCap Global Aviation Trust company guaranty sr. unsec. notes 1.65%, 10/29/24 (Ireland) | 150,000 | 141,736 | ||
| Air Lease Corp. sr. unsec. notes 0.80%, 8/18/24 | 100,000 | 94,788 | ||
| Air Lease Corp. sr. unsec. notes Ser. MTN, 4.25%, 2/1/24 | 100,000 | 99,135 | ||
| Capital One Financial Corp. sr. unsec. unsub. notes 3.75%, 4/24/24 | 100,000 | 98,310 | ||
| General Motors Financial Co., Inc. sr. unsec. notes 1.70%, 8/18/23 | 100,000 | 99,799 | ||
| 533,768 | ||||
| Consumer staples (2.0%) | ||||
| Conagra Brands, Inc. sr. unsec. unsub. notes 0.50%, 8/11/23 | 100,000 | 99,864 | ||
| General Mills, Inc. sr. unsec. unsub. FRN (CME Term SOFR 3 Month + 1.27%), 6.58%, 10/17/23 | 100,000 | 100,063 | ||
| 199,927 | ||||
Ultra Short MAC Series 25 | |
| CORPORATE BONDS AND NOTES (79.5%)* cont. | Principal amount |
Value | ||
| Health care (1.9%) | ||||
| Gilead Sciences, Inc. sr. unsec. notes 0.75%, 9/29/23 | $100,000 | $99,232 | ||
| Stryker Corp. sr. unsec. notes 0.60%, 12/1/23 | 100,000 | 98,183 | ||
| 197,415 | ||||
| Insurance (4.1%) | ||||
| Athene Global Funding 144A FRN (US SOFR Compounded Index + 0.56%), 5.705%, 8/19/24 | 125,000 | 123,210 | ||
| Athene Global Funding 144A sr. FRN (US SOFR Compounded Index + 0.70%), 5.859%, 5/24/24 | 100,000 | 99,079 | ||
| Pacific Life Global Funding II 144A company guaranty sr. notes 0.50%, 9/23/23 | 100,000 | 99,235 | ||
| Principal Life Global Funding II 144A FRN (US SOFR + 0.38%), 5.535%, 8/23/24 | 100,000 | 99,827 | ||
| 421,351 | ||||
| Investment banking/Brokerage (1.0%) | ||||
| Deutsche Bank AG sr. unsec. unsub. notes 3.70%, 5/30/24 (Germany) | 100,000 | 97,931 | ||
| 97,931 | ||||
| Real estate (3.9%) | ||||
| Public Storage sr. unsec. FRN (US SOFR Compounded Index + 0.60%), 5.927%, 7/25/25 R | 100,000 | 100,092 | ||
| Public Storage sr. unsec. FRN (US SOFR + 0.47%), 5.786%, 4/23/24 | 100,000 | 100,002 | ||
| Realty Income Corp. sr. unsec. unsub. notes 5.05%, 1/13/26 R | 100,000 | 99,328 | ||
| Realty Income Corp. sr. unsec. unsub. notes 3.875%, 7/15/24 R | 100,000 | 98,127 | ||
| 397,549 | ||||
| Technology (1.9%) | ||||
| Hewlett Packard Enterprise Co. sr. unsec. notes 5.90%, 10/1/24 | 100,000 | 99,995 | ||
| VMware, Inc. sr. unsec. notes 1.00%, 8/15/24 | 100,000 | 95,128 | ||
| 195,123 | ||||
| Utilities and power (4.1%) | ||||
| American Electric Power Co., Inc. jr. unsec. sub. notes 2.031%, 3/15/24 | 130,000 | 126,886 | ||
| Dominion Energy, Inc. sr. unsec. unsub. FRN Ser. D, (ICE LIBOR USD 3 Month + 0.53%), 6.082%, 9/15/23 |
94,000 | 94,004 | ||
| Enbridge, Inc. company guaranty sr. unsec. notes 5.969%, 3/8/26 (Canada) | 100,000 | 99,917 | ||
| Kinder Morgan, Inc. 144A company guaranty sr. unsec. notes 5.625%, 11/15/23 | 100,000 | 99,911 | ||
| 420,718 | ||||
| Total corporate bonds and notes (cost $8,117,625) | $8,119,995 | |||
| COMMERCIAL PAPER (16.1%)* | Yield (%) | Maturity date |
Principal amount |
Value |
| American Honda Finance Corp. | 5.468 | 8/7/23 | $150,000 | $149,841 |
| Energy Transfer LP | 6.001 | 8/1/23 | 250,000 | 249,960 |
| Humana, Inc. | 5.530 | 8/1/23 | 250,000 | 249,960 |
| PPG Industries, Inc. | 5.416 | 8/7/23 | 250,000 | 249,735 |
26 Ultra Short MAC Series | |
| COMMERCIAL PAPER (16.1%)* cont. | Yield (%) | Maturity date |
Principal amount |
Value |
| Suncor Energy, Inc. (Canada) | 5.525 | 8/17/23 | $250,000 | $249,355 |
| Thermo Fisher Scientific, Inc. | 5.603 | 8/18/23 | 250,000 | 249,318 |
| UDR, Inc. | 5.475 | 8/10/23 | 250,000 | 249,621 |
| Total commercial paper (cost $1,648,034) | $1,647,790 | |||
| ASSET-BACKED SECURITIES (2.3%)* | Principal amount |
Value | ||
| Ford Credit Auto Owner Trust Ser. 22-C, Class A2A, 4.52%, 4/15/25 | $108,776 | $108,372 | ||
| GM Financial Consumer Automobile Receivables Trust Ser. 22-2, Class A3, 3.10%, 2/16/27 | 103,000 | 99,831 | ||
| Tesla Auto Lease Trust 144A Ser. 23-A, Class A2, 5.86%, 8/20/25 | 25,000 | 24,983 | ||
| Total asset-backed securities (cost $233,060) | $233,186 | |||
| CERTIFICATES OF DEPOSIT (1.0%)* | Yield (%) | Maturity date |
Principal amount |
Value |
| Credit Agricole Corporate and Investment Bank/ New York (France) |
5.670 | 12/1/23 | $100,000 | $99,979 |
| Total certificates of deposit (cost $100,000) | $99,979 | |||
| SHORT-TERM INVESTMENTS (0.3%)* | Shares | Value |
| Putnam Short Term Investment Fund Class P 5.39% L | 26,089 | $26,089 |
| Total short-term investments (cost $26,089) | $26,089 | |
| TOTAL INVESTMENTS | ||
| Total investments (cost $10,124,808) | $10,127,039 | |
| Key to holding’s abbreviations | |||
| CME | Chicago Mercantile Exchange | ||
| DAC | Designated Activity Company | ||
| FRN | Floating Rate Notes: The rate shown is the current interest rate or yield at the close of the reporting period. Rates may be subject to a cap or floor. For certain securities, the rate may represent a fixed rate currently in place at the close of the reporting period. | ||
| ICE | Intercontinental Exchange | ||
| LIBOR | London Interbank Offered Rate | ||
| MTN | Medium Term Notes | ||
| SOFR | Secured Overnight Financing Rate | ||
| 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 25, 2023 (commencement of operations) through July 31, 2023 (the reporting period). Within the following notes to the portfolio, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures. | |||
| * | Percentages indicated are based on net assets of $10,207,922. | ||
| L | Affiliated company (Note 6). 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. | ||
| Debt obligations are considered secured unless otherwise indicated. | |||
Ultra Short MAC Series 27 | |
| 144A after the name of an issuer represents securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. | |||
| The dates shown on debt obligations are the original maturity dates. | |||
| DIVERSIFICATION BY COUNTRY | ||||
| Distribution of investments by country of risk at the close of the reporting period, excluding collateral received, if any (as a percentage of Portfolio Value): | ||||
| United States | 56.2% | Denmark | 2.0% | |
| Canada | 11.8 | Netherlands | 2.0 | |
| France | 9.5 | Spain | 1.9 | |
| United Kingdom | 3.9 | Switzerland | 1.9 | |
| Australia | 3.4 | Ireland | 1.4 | |
| Japan | 3.0 | Germany | 1.0 | |
| Norway | 2.0 | Total | 100.0% | |
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 |
| Asset-backed securities | $— | $233,186 | $— |
| Certificates of deposit | — | 99,979 | — |
| Commercial paper | — | 1,647,790 | — |
| Corporate bonds and notes | — | 8,119,995 | — |
| Short-term investments | — | 26,089 | — |
| Totals by level | $— | $10,127,039 | $— |
The accompanying notes are an integral part of these financial statements.
28 Ultra Short MAC Series | |
Statement of assets and liabilities 7/31/23
| ASSETS | |
| Investment in securities, at value (Note 1): | |
| Unaffiliated issuers (identified cost $10,098,719) | $10,100,950 |
| Affiliated issuers (identified cost $26,089) (Note 6) | 26,089 |
| Interest receivable | 80,499 |
| Receivable from Manager (Note 2) | 102,415 |
| Unamortized offering costs (Note 1) | 151,555 |
| Prepaid assets | 54 |
| Total assets | 10,461,562 |
| LIABILITIES | |
| Payable for custodian fees (Note 2) | 3,106 |
| Payable for administrative services (Note 2) | 16 |
| Payable for auditing and tax fees | 56,253 |
| Payable for offering costs (Note 1) | 186,254 |
| Distributions payable to shareholders | 18 |
| Other accrued expenses | 7,993 |
| Total liabilities | 253,640 |
| Net assets | $10,207,922 |
| REPRESENTED BY | |
| Paid-in capital (Unlimited shares authorized) (Notes 1, 4 and 5) | $10,205,535 |
| Total distributable earnings (Note 1) | 2,387 |
| Total — Representing net assets applicable to capital shares outstanding | $10,207,922 |
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| Net asset value, offering price and redemption price per share | |
| ($10,207,922 divided by 1,020,558 shares) | $10.00 |
The accompanying notes are an integral part of these financial statements.
| Ultra Short MAC Series 29 |
Statement of operations For the period 5/25/23 (commencement of operations) to 7/31/23
| INVESTMENT INCOME | |
| Interest (including interest income of $3,970 from investments in affiliated issuers) (Note 6) | $106,598 |
| Total investment income | 106,598 |
| EXPENSES | |
| Custodian fees (Note 2) | 3,106 |
| Trustee compensation and expenses (Note 2) | 70 |
| Administrative services (Note 2) | 49 |
| Amortization of offering costs (Note 1) | 34,699 |
| Reports to shareholders | 6,882 |
| Auditing and tax fees | 56,253 |
| Other | 1,356 |
| Fees waived and reimbursed by Manager (Note 2) | (102,415) |
| Total expenses | — |
| Net investment income | 106,598 |
| REALIZED AND UNREALIZED GAIN (LOSS) | |
| Net realized gain (loss) on: | |
| Securities from unaffiliated issuers (Notes 1 and 3) | (146) |
| Total net realized loss | (146) |
| Change in net unrealized appreciation (depreciation) on: | |
| Securities from unaffiliated issuers | 2,231 |
| Total change in net unrealized appreciation | 2,231 |
| Net gain on investments | 2,085 |
| Net increase in net assets resulting from operations | $108,683 |
The accompanying notes are an integral part of these financial statements.
| 30 Ultra Short MAC Series |
Statement of changes in net assets
| For the period | ||
| 5/25/23 | ||
| (commencement of | ||
| operations) to | ||
| INCREASE IN NET ASSETS | 7/31/23 | |
| Operations | ||
| Net investment income | $106,598 | |
| Net realized loss on investments | (146) | |
| Change in net unrealized appreciation of investments | 2,231 | |
| Net increase in net assets resulting from operations | 108,683 | |
| Distributions to shareholders (Note 1): | ||
| From ordinary income | ||
| Net investment income | (106,296) | |
| Increase from capital share transactions (Note 4) | 205,535 | |
| Total increase in net assets | 207,922 | |
| NET ASSETS | ||
| Beginning of period (Note 5) | 10,000,000 | |
| End of period | $10,207,922 | |
The accompanying notes are an integral part of these financial statements.
| Ultra Short MAC Series 31 |
Financial highlights
(For a common share outstanding throughout the period)
| PER-SHARE OPERATING PERFORMANCE | |
| For the period 5/25/23 | |
| (commencement of | |
| operations) to 7/31/23 | |
| Net asset value, beginning of period | $10.00 |
| Investment operations: | |
| Net investment income (loss) | .11 |
| Net realized and unrealized | |
| gain (loss) on investments | —d |
| Total from investment operations | .11 |
| Less distributions: | |
| From net investment income | (.11) |
| From net realized gain on investments | — |
| Total distributions | (.11) |
| Net asset value, end of period | $10.00 |
| Total return at net asset value (%)a | 1.04* |
| RATIOS AND SUPPLEMENTAL DATA | |
| Net assets, end of period | |
| (in thousands) | $10,208 |
| Ratio of expenses to average | |
| net assets (%)b,c | — * |
| Ratio of net investment income | |
| (loss) to average net assets (%)c | 1.05* |
| Portfolio turnover (%) | 6* |
* Not annualized.
a Total return assumes dividend reinvestment.
b Includes amounts paid through expense offset arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.
c Reflects an involuntary contractual expense limitation in effect during the period. As a result of such limitation, the expenses of the fund reflect a reduction of 1.01% as a percentage of average net assets. (Note 2)
d Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
| 32 Ultra Short MAC Series |
Notes to financial statements 7/31/23
Unless otherwise noted, the “reporting period” represents the period from May 25, 2023 (commencement of operations) through July 31, 2023. The following table defines commonly used references within the Notes to financial statements:
| References to | Represent |
| Putnam Management | Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned |
| subsidiary of Putnam Investments, LLC | |
| State Street | State Street Bank and Trust Company |
| JPMorgan | JPMorgan Chase Bank, N.A. |
| PIL | Putnam Investments Limited, an affiliate of Putnam Management |
Putnam Ultra Short MAC Series (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 as high a rate of current income as Putnam Management believes is consistent with preservation of capital and maintenance of liquidity.
The fund was established exclusively for use within separately managed accounts (“SMAs”). The fund is used in combination with selected individual securities to implement the SMA’s investment program.
The fund invests in a diversified portfolio of fixed income securities comprised of short duration, investment-grade money market and other fixed income securities. The fund’s investments may include obligations of the U.S. government, its agencies and instrumentalities, which are backed by the full faith and credit of the United States (e.g., U.S. Treasury bonds and Ginnie Mae mortgage-backed bonds) or by only the credit of a federal agency or government-sponsored entity (e.g., Fannie Mae or Freddie Mac mortgage-backed bonds), domestic corporate debt obligations, taxable municipal debt securities, securitized debt instruments (such as mortgage-and asset-backed securities), repurchase agreements, certificates of deposit, bankers acceptances, commercial paper (including asset-backed commercial paper), time deposits, Yankee Eurodollar securities and other money market instruments. The fund may also invest in U.S. dollar-denominated foreign securities of these types. Under normal circumstances, the effective duration of the fund’s portfolio will generally not be greater than one year. Effective duration provides a measure of a fund’s interest-rate sensitivity. The longer a fund’s duration, the more sensitive the fund is to shifts in interest rates. Under normal circumstances, the dollar-weighted average portfolio maturity of the fund is not expected to exceed four years. Putnam Management may consider, among other factors, credit, interest rate and prepayment risks, as well as general market conditions, when deciding whether to buy or sell investments.
The fund’s shares are sold without a front-end sales charge and generally are not subject to a contingent deferred sales charge. Shares of the fund are sold at net asset value. Shares of the fund may be purchased only by and on behalf of “wrap” account clients (“eligible investors”) where Putnam Management has an agreement to serve as investment adviser to the wrap program sponsor (typically a registered investment adviser or broker-dealer) or directly to the wrap account clients of the wrap program sponsor. The fund intends to redeem shares held by or on behalf of a shareholder who ceases to be an eligible investor as described above, and each eligible investor, by purchasing shares, agrees to any such redemption. There is no minimum investment amount for initial investments or subsequent investments. Eligible investors may purchase shares or sell their shares back to the fund (based on instructions from their wrap program sponsor to the broker-dealer who executes trades for their managed account) on any day the New York Stock Exchange (“NYSE”) is open. Purchase and redemption orders are processed at the net asset value next calculated after the order is received on behalf of the eligible investor each day the NYSE is open.
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.
| Ultra Short MAC Series 33 |
Under the Trust’s Amended and Restated Agreement and Declaration of Trust, any claims asserted by a shareholder against or on behalf of the Trust (or its series), 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.
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.
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. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.
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.
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, which has been designated as valuation designee pursuant to Rule 2a–5 under the Investment Company Act of 1940, 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. Certain securities may be valued on the basis of a price provided by a single source. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.
Interest income, net of any applicable withholding taxes, if any, is recorded on the accrual basis. Amortization and accretion of premiums and discounts on debt securities, if any, is recorded on the accrual basis.
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
| 34 Ultra Short MAC Series |
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.
Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains.
Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred for an unlimited period and the carry forwards will retain their character as either short-term or long-term capital losses. At July 31, 2023, the fund had the following capital loss carryovers available, to the extent allowed by the Code, to offset future net capital gain, if any:
| Loss carryover | ||
| Short-term | Long-term | Total |
| $146 | $— | $146 |
Distributions to shareholders Income dividends are recorded daily by the fund and are paid monthly. 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. For the reporting period, there were no material temporary or permanent differences. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. At the close of the reporting period, the fund required no such reclassifications.
Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:
| Unrealized appreciation | $6,754 |
| Unrealized depreciation | (4,523) |
| Net unrealized appreciation | 2,231 |
| Undistributed ordinary income | 320 |
| Capital loss carryforward | (146) |
| Cost for federal income tax purposes | $10,124,808 |
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.
Offering costs The offering costs of $186,254 are being fully amortized on a straight-line basis over a twelve-month period. The fund will reimburse Putnam Management for the payment of these expenses.
Note 2: Management fee, administrative services and other transactions
Under the fund’s management contract, the fund does not pay a management fee to Putnam Management.
Putnam Management has contractually agreed to waive fees (and, to the extent necessary, bear other expenses) of the fund through April 4, 2026, to the extent that total expenses of the fund (excluding brokerage, interest, taxes, investor servicing fees, investment-related expenses, extraordinary expenses, and acquired fund fees and expenses) would exceed an annual rate of 0.00% of the fund’s average net assets. During the reporting period, the fund’s expenses were reduced by $102,415 as a result of this limit.
| Ultra Short MAC Series 35 |
Putnam Management may from time to time voluntarily undertake to waive fees and/or reimburse certain fund expenses in order to enhance the annualized net yield for the fund. Any such waiver or reimbursement would be voluntary and may be modified or discontinued by Putnam Management at any time without notice. For the reporting period, Putnam Management did not waive any fees from the fund.
PIL 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 0.20% of the average net assets of the portion of the fund managed by PIL.
The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. The fund does not pay investor servicing fees to Putnam Investor Services, Inc.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $9, 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.
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) | $5,404,289 | $215,750 |
| U.S. government securities (Long-term) | — | — |
| Total | $5,404,289 | $215,750 |
| 36 Ultra Short MAC Series |
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:
| FOR THE PERIOD FROM 5/25/23 | ||
| (COMMENCEMENT OF OPERATIONS) TO 7/31/23 | ||
| Shares | Amount | |
| Shares sold | 10,100 | $101,007 |
| Shares issued in connection with reinvestment of distributions | 10,633 | 106,278 |
| 20,733 | 207,285 | |
| Shares repurchased | (175) | (1,750) |
| Net increase | 20,558 | $205,535 |
At the close of the reporting period, Putnam Investments, LLC owned 1,010,538 shares of the fund (99.0% of shares outstanding), valued at $10,105,380.
Note 5: Initial capitalization and offering of shares
The fund was established as a series of the Trust on December 15, 2022. Prior to May 25, 2023, the fund had no operations other than those related to organizational matters, including the initial capital contribution of $10,000,000 by Putnam Investments, LLC and issuance of 1,000,000 shares.
Note 6: Affiliated transactions
Transactions during the reporting period with any company which is under common ownership or control were as follows:
| Shares | |||||
| Fair value as | outstanding | ||||
| of 5/25/23 | and fair | ||||
| (commencement | Purchase | Sale | Investment | value as | |
| Name of affiliate | of operations) | cost | proceeds | income | of 7/31/23 |
| Short-term investments | |||||
| Putnam Short Term | |||||
| Investment Fund* | $— | $6,909,983 | $6,883,894 | $3,970 | $26,089 |
| Total Short-term | |||||
| investments | $— | $6,909,983 | $6,883,894 | $3,970 | $26,089 |
* 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 7: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations. The fund may invest a significant portion of its assets in securitized debt instruments, including mortgage-backed and asset-backed investments. The yields and values of these investments are sensitive to changes in interest rates, the rate of principal payments on the underlying assets and the market’s perception of the issuers. The market for these investments may be volatile and limited, which may make them difficult to buy or sell.
| Ultra Short MAC Series 37 |
On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced its intention to cease compelling banks to provide the quotations needed to sustain LIBOR after 2021. ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative basis at the end of 2021 and ceased publication of a majority of U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. LIBOR has historically been a common benchmark interest rate index used to make adjustments to variable-rate loans. It is used throughout global banking and financial industries to determine interest rates for a variety of financial instruments and borrowing arrangements. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Various financial industry groups have been planning for the transition away from LIBOR, but there are obstacles to converting certain longer-term securities and transactions to new reference rates. Markets are developing slowly and questions around liquidity in these rates and how to appropriately adjust these rates to mitigate any economic value transfer at the time of transition remain a significant concern. Neither the effect of the transition process nor its ultimate success can yet be known. The transition process might lead to increased volatility and illiquidity in markets that rely on LIBOR to determine interest rates. It could also lead to a reduction in the value of some LIBOR-based investments and reduce the effectiveness of related transactions, such as hedges. While some LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, not all may have such provisions and there may be significant uncertainty regarding the effectiveness of any such alternative methodologies. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur at any time.
Note 8: Of special note
On May 31, 2023, Franklin Resources, Inc. (“Franklin Resources”) and Great-West Lifeco Inc., the parent company of Putnam U.S. Holdings I, LLC (“Putnam Holdings”), announced that they have entered into a definitive agreement for a subsidiary of Franklin Resources to acquire Putnam Holdings in a stock and cash transaction.
As part of this transaction, Putnam Management, a wholly-owned subsidiary of Putnam Holdings and investment manager to the Putnam family of funds (the “Putnam Funds”), would become an indirect wholly-owned subsidiary of Franklin Resources.
The transaction is subject to customary closing conditions, including receipt of applicable regulatory approvals. Subject to such approvals and the satisfaction of these conditions, the transaction is currently expected to be consummated in the fourth quarter of 2023.
Under the Investment Company Act of 1940, as amended, consummation of the transaction will result in the automatic termination of the investment management contract between each Putnam Fund and Putnam Management and any related sub-management and sub-advisory contracts, where applicable. In anticipation of this automatic termination, on June 23, 2023, the Board of Trustees of the Putnam Funds approved a new investment management contract between each Putnam Fund and Putnam Management (and new sub-management and sub-advisory contracts, if applicable), which will be presented to the shareholders of each Putnam Fund for their approval at shareholder meetings currently expected to occur in October 2023. Proxy solicitation materials related to these meetings have been made available to shareholders that held shares of the fund at the close of business on July 24, 2023.
| 38 Ultra Short MAC Series |
Federal tax information (Unaudited)
The Form 1099 that will be mailed to you in January 2024 will show the tax status of all distributions paid to your account in calendar 2023.
| Ultra Short MAC Series 39 |
| 40 Ultra Short MAC Series |
* Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund and Putnam Investments. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.
The address of each Trustee is 100 Federal Street, Boston, MA 02110.
As of July 31, 2023, there were 89 mutual funds, 4 closed-end funds, and 12 exchange-traded funds in the Putnam funds complex. Each Trustee serves as Trustee of all funds in the Putnam funds complex.
Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.
| Ultra Short MAC Series 41 |
Officers
In addition to Robert L. Reynolds, the other officers of the fund are shown below:
| James F. Clark (Born 1974) | Alan G. McCormack (Born 1964) |
| Vice President and Chief Compliance Officer | Vice President and Derivatives Risk Manager |
| Since 2016 | Since 2022 |
| Chief Compliance Officer and Chief Risk Officer, | Head of Quantitative Equities and Risk, |
| Putnam Investments, and Chief Compliance Officer, | Putnam Investments |
| Putnam Management | |
| Denere P. Poulack (Born 1968) | |
| Michael J. Higgins (Born 1976) | Assistant Vice President, Assistant Clerk, |
| Vice President, Treasurer, and Clerk | and Assistant Treasurer |
| Since 2010 | Since 2004 |
| Jonathan S. Horwitz (Born 1955) | Janet C. Smith (Born 1965) |
| Executive Vice President, Principal Executive Officer, | Vice President, Principal Financial Officer, Principal |
| and Compliance Liaison | Accounting Officer, and Assistant Treasurer |
| Since 2004 | Since 2007 |
| Head of Fund Administration Services, | |
| Richard T. Kircher (Born 1962) | Putnam Investments and Putnam Management |
| Vice President and BSA Compliance Officer | |
| Since 2019 | Stephen J. Tate (Born 1974) |
| Assistant Director, Operational Compliance, Putnam | Vice President and Chief Legal Officer |
| Investments and Putnam Retail Management | Since 2021 |
| General Counsel, Putnam Investments, | |
| Martin Lemaire (Born 1984) | Putnam Management, and Putnam Retail Management |
| Vice President and Derivatives Risk Manager | |
| Since 2022 | Mark C. Trenchard (Born 1962) |
| Risk Manager and Risk Analyst, Putnam Investments | Vice President |
| Since 2002 | |
| Susan G. Malloy (Born 1957) | Director of Operational Compliance, Putnam |
| Vice President and Assistant Treasurer | Investments and Putnam Retail Management |
| Since 2007 | |
| Head of Accounting and Middle Office Services, | |
| Putnam Investments and Putnam Management | |
The principal occupations of the officers for the past five years have been with the employers as shown above, although in some cases they have held different positions with such employers. The address of each officer is 100 Federal Street, Boston, MA 02110.
| 42 Ultra Short MAC Series |
Putnam family of funds
The following is a list of Putnam’s open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, contact your financial advisor or call Putnam Investor Services at 1-800-225-1581. Please read the prospectus carefully before investing.
| Blend | Income |
| Core Equity Fund | Convertible Securities Fund |
| Emerging Markets Equity Fund | Core Bond Fund |
| Focused Equity Fund | Diversified Income Trust |
| Focused International Equity Fund | Floating Rate Income Fund |
| International Capital Opportunities Fund | Global Income Trust |
| International Equity Fund | Government Money Market Fund* |
| Research Fund | High Yield Fund |
| Income Fund | |
| Global Sector | Money Market Fund† |
| Global Health Care Fund | Mortgage Opportunities Fund |
| Global Technology Fund | Mortgage Securities Fund |
| Short Duration Bond Fund | |
| Growth | Ultra Short Duration Income Fund |
| Large Cap Growth Fund | |
| Small Cap Growth Fund | Tax-free Income |
| Sustainable Future Fund | Intermediate-Term Municipal Income Fund |
| Sustainable Leaders Fund | Short-Term Municipal Income Fund |
| Strategic Intermediate Municipal Fund | |
| Value | Tax Exempt Income Fund |
| International Value Fund | Tax-Free High Yield Fund |
| Large Cap Value Fund | |
| Small Cap Value Fund | State tax-free income funds:‡ |
| California, Massachusetts, Minnesota, | |
| New Jersey, New York, Ohio, and Pennsylvania |
| Ultra Short MAC Series 43 |
| Asset Allocation | Asset Allocation (cont.) |
| George Putnam Balanced Fund | Retirement Advantage Maturity Fund |
| Retirement Advantage 2065 Fund | |
| Dynamic Asset Allocation Balanced Fund | Retirement Advantage 2060 Fund |
| Dynamic Asset Allocation Conservative Fund | Retirement Advantage 2055 Fund |
| Dynamic Asset Allocation Growth Fund | Retirement Advantage 2050 Fund |
| Retirement Advantage 2045 Fund | |
| Multi-Asset Income Fund | Retirement Advantage 2040 Fund |
| Retirement Advantage 2035 Fund | |
| Retirement Advantage 2030 Fund | |
| Retirement Advantage 2025 Fund | |
| Sustainable Retirement Maturity Fund | |
| Sustainable Retirement 2065 Fund | |
| Sustainable Retirement 2060 Fund | |
| Sustainable Retirement 2055 Fund | |
| Sustainable Retirement 2050 Fund | |
| Sustainable Retirement 2045 Fund | |
| Sustainable Retirement 2040 Fund | |
| Sustainable Retirement 2035 Fund | |
| Sustainable Retirement 2030 Fund | |
| Sustainable Retirement 2025 Fund |
* You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
† You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
‡ Not available in all states.
Check your account balances and the most recent month-end performance in the Individual Investors section at putnam.com.
| 44 Ultra Short MAC Series |
Fund information
Founded over 85 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage funds across income, value, blend, growth, sustainable, and asset allocation categories.
| Investment Manager | Trustees | Richard T. Kircher |
| Putnam Investment | Kenneth R. Leibler, Chair | Vice President and |
| Management, LLC | Barbara M. Baumann, Vice Chair | BSA Compliance Officer |
| 100 Federal Street | Liaquat Ahamed | |
| Boston, MA 02110 | Katinka Domotorffy | Martin Lemaire |
| Catharine Bond Hill | Vice President and | |
| Investment Sub-Advisor | Jennifer Williams Murphy | Derivatives Risk Manager |
| Putnam Investments Limited | Marie Pillai | |
| 16 St James’s Street | George Putnam III | Susan G. Malloy |
| London, England SW1A 1ER | Robert L. Reynolds | Vice President and |
| Manoj P. Singh | Assistant Treasurer | |
| Marketing Services | Mona K. Sutphen | |
| Putnam Retail Management | Alan G. McCormack | |
| Limited Partnership | Officers | Vice President and |
| 100 Federal Street | Robert L. Reynolds | Derivatives Risk Manager |
| Boston, MA 02110 | President | |
| Denere P. Poulack | ||
| Custodian | James F. Clark | Assistant Vice President, |
| State Street Bank | Vice President and | Assistant Clerk, and |
| and Trust Company | Chief Compliance Officer | Assistant Treasurer |
| Legal Counsel | Michael J. Higgins | Janet C. Smith |
| Ropes & Gray LLP | Vice President, Treasurer, | Vice President, |
| and Clerk | Principal Financial Officer, | |
| Independent Registered | Principal Accounting Officer, | |
| Public Accounting Firm | Jonathan S. Horwitz | and Assistant Treasurer |
| PricewaterhouseCoopers LLP | Executive Vice President, | |
| Principal Executive Officer, | Stephen J. Tate | |
| and Compliance Liaison | Vice President and | |
| Chief Legal Officer | ||
| Mark C. Trenchard | ||
| Vice President |
This report is for the information of shareholders of Putnam Ultra Short MAC Series. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.
| Item 2. Code of Ethics: |
| (a) The fund’s principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund’s investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers. |
| (c) In January 2023, the Code of Ethics of Putnam Investments and Code of Ethics of Putnam Funds were amended. The key changes to the Putnam Investments Code of Ethics are as follows: (i) Prohibition on investments in a single stock ETFs and (ii) Revision to the 7-day blackout rule for Analysts. The key change to the Putnam Funds Code of Ethics was that the provisions of the Code of Ethics for employees of PanAgora Asset Management, inc. and any of its subsidiaries are excluded from the Putnam Funds’ Code of Ethics. |
| Item 3. Audit Committee Financial Expert: |
| The Funds’ Audit, Compliance and Risk Committee is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Trustees believe that each member of the Audit, Compliance and Risk Committee also possesses a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualifies him or her for service on the Committee. In addition, the Trustees have determined that each of Dr. Hill, Ms. Murphy and Mr. Singh qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education.The SEC has stated, and the funds’ amended and restated agreement and Declaration of Trust provides, that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit, Compliance and Risk Committee and the Board of Trustees in the absence of such designation or identification. |
| Item 4. Principal Accountant Fees and Services: |
| The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor: |
| Fiscal year ended | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | |
| July 31, 2023* | $48,743 | $ — | $7,482 | $ — | |
| * | For the period May 25, 2023 (commencement of operations) to July 31, 2023 |
| For the fiscal year ended July 31, 2023 the fund’s independent auditor billed aggregate non-audit fees in the amounts of $249,225 to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund. |
| Audit Fees represent fees billed for the fund’s last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements. |
| Audit-Related Fees represent fees billed in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation. |
| Tax Fees represent fees billed in the fund’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities. |
| Pre-Approval Policies of the Audit, Compliance and Risk Committee. The Audit, Compliance and Risk Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds’ independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures. |
| The Audit, Compliance and Risk Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds’ independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm. |
| The following table presents fees billed by the fund’s independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2–01 of Regulation S-X. |
| Fiscal year ended | Audit-Related Fees | Tax Fees | All Other Fees | Total Non-Audit Fees | |
| July 31, 2023* | $ — | $241,743 | $ — | $ — | |
| * | For the period May 25, 2023 (commencement of operations) to July 31, 2023 |
| Item 5. Audit Committee of Listed Registrants |
| Not applicable |
| Item 6. Schedule of Investments: |
| The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. |
| Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
| Not applicable |
| Item 8. Portfolio Managers of Closed-End Investment Companies |
| Not Applicable |
| Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
| Not applicable |
| Item 10. Submission of Matters to a Vote of Security Holders: |
| Not applicable |
| Item 11. Controls and Procedures: |
| (a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. |
| (b) Changes in internal control over financial reporting: Not applicable |
| Item 12. Disclosures of Securities Lending Activities for Closed-End Management Investment Companies: |
| Not Applicable |
| Item 13. Exhibits: |
| (a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith |
| (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. |
| SIGNATURES |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
| Putnam Funds Trust |
| By (Signature and Title): |
| /s/ Janet C. Smith Janet C. Smith Principal Accounting Officer |
| Date: September 25, 2023 |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
| By (Signature and Title): |
| /s/ Jonathan S. Horwitz Jonathan S. Horwitz Principal Executive Officer |
| Date: September 25, 2023 |
| By (Signature and Title): |
| /s/ Janet C. Smith Janet C. Smith Principal Financial Officer |
| Date: September 25, 2023 |