- Global bond markets were disrupted in the quarter as bond yields rose sharply due to expectations that the Federal Reserve would scale back its bond-buying program sooner than anticipated. - Within fixed income, mortgage prepayment strategies detracted from performance but rebounded later in the quarter, while term-structure positioning and commercial mortgage-backed securities contributed to results. - In stocks, selection strategies and some currency positions in non-directional strategies hurt returns in the 500 and 700 funds.

1. PUTNAM INVESTMENTS | putnam.com
Key takeaways
•The global investment landscape was disrupted by rising bond yields, as investors
contemplated a scaling back of the U.S. Federal Reserve’s bond-buying program.
•Within fixed income, our mortgage prepayment strategies detracted from
performance but rebounded in June, while our term-structure positioning and
holdings of commercial mortgage-backed securities aided results.
•Stock selection within directional strategies and currency positioning in
non-directional strategies hampered returns in the 500 Fund and 700 Fund.
•We have a generally positive outlook for global economic growth and began
to modestly increase the funds’ risk positioning in U.S. equities and global fixed
income as the quarter concluded.
How did the landscape change in global markets during the
quarter?
There was a significant disruption in the trends we had seen during most of 2012
and into the first quarter of 2013. The positive picture through April darkened
somewhat in May and June. Yields across the world rose from historically low
levels in April to more normal — but still historically low — levels by the end of
June. It was quite a significant pullback across all financial markets and asset
classes. U.S. equities held up better than most other assets.
Bond investors worldwide reacted to improving U.S. economic data by
debating when the Federal Reserve would begin to scale back its stimulative
bond-buying program. These concerns intensified in June, when Fed Chairman
Ben Bernanke announced that the central bank could begin reducing its stimulus
program later in 2013, and end it by mid 2014, sooner than investors expected.
Spread sectors — meaning sectors that trade at a yield premium to U.S.
Treasuries — which had been buoyed by the massive liquidity created by the
Fed’s asset purchases, sold off, with emerging-market [EM] bonds getting hit
particularly hard.
Q2 | 2013 » Putnam Absolute Return Funds Q&A
Absolute return strategies
post mixed results amid rising
bond yields
Portfolio Managers
100 Fund and 300 Fund
D. William Kohli
(industry since 1986)
Michael V. Salm
(industry since 1989)
Kevin F. Murphy
(industry since 1988)
Paul D. Scanlon, CFA
(industry since 1986)
500 Fund and 700 Fund
James A. Fetch
(industry since 1994)
Robert J. Kea, CFA
(industry since 1988)
Joshua B. Kutin, CFA
(industry since 1998)
Robert J. Schoen
(industry since 1990)
Jason R. Vaillancourt, CFA
(industry since 1993)

2. Q2 2013 | Absolute return strategies post mixed results amid rising bond yields
PUTNAM INVESTMENTS | putnam.com 2
What are the differentiators for the absolute
return strategy?
We pursue positive returns with less volatility over time
than traditional investments that expose investors to
greater market risk. What distinguishes our strategy is
the ability to go anywhere and do anything within the
portfolios, which are free of an asset-based benchmark —
that is, we are not required to hold equities or bonds, nor
are we tied to a specific benchmark return. This makes for
a highly flexible strategy that enables us to take advan-
tage of a wide range of tools. We aim to have a balanced
mix of strategies, driven by market returns as well as
strategies uncorrelated to market returns. Moreover, we
possess the ability to alter our strategy, depending on our
view of both risk areas we focus on. If we are bullish on
equity markets or credit markets, we will take a positive
risk exposure. Conversely, when we don’t have a favor-
able view, we can decide not to hold stocks or bonds, or
can take short positions in the portfolios.
One commonality among the funds involves
fixed-income strategies. How did they affect
the funds’ returns during the quarter?
Our term-structure strategies — interest-rate and yield-
curve positioning — proved beneficial, as we generally
took minimal interest-rate risk during a quarter marked
by rising Treasury yields. Additionally, our holdings
of commercial mortgage-backed securities [CMBS]
helped performance, especially earlier in the quarter,
as investors took advantage of attractive spreads and
positive underlying fundamentals in the sector.
Conversely, our mortgage prepayment strategies
hurt the funds' results overall for the quarter. As the
quarter began, given the uncertainty about Fed policy,
the pace of home refinancing, and that interest rates
are still at low levels, our holdings of collateralized
mortgage obligations [CMOs] significantly underper-
formed. However, the sector rebounded nicely in June,
as interest rates continued to rise. With the increase in
interest rates, interest-only [IO] CMOs did particularly
well, because higher rates led to slower prepayments of
the mortgages underlying the securities.
Our holdings of high-yield bonds had a neutral
impact on performance, as positive results in April were
fully offset by poor returns in May and June. High-yield
corporate credit was hampered more by capital flows
and by the technical supply and demand dynamics
in the sector, than by any breakdown in fundamental
support. In fact, the fundamental backdrop for high-
yield bonds remained solid; issuers are in reasonably
good financial shape and the default rate remained low
at quarter-end. Moreover, high-yield bonds have histori-
cally tended to do well during periods of moderate
economic growth.
The 500 Fund and 700 Fund can invest
outside the fixed-income universe. What were
the drivers of performance in those funds?
We experienced a pullback in performance in the
portfolios as a result of both our directional and non-
directional strategies. Among directional strategies,
stock selection that worked quite well in 2012 and into
the first part of 2013 gave back gains during the quarter.
In non-directional strategies, a number of currency
positions that worked well in the first quarter also did
not perform well in the second quarter.
What is your outlook for the bond markets?
Investors have adjusted their expectations about when
the Fed may begin to wind down quantitative easing.
Consequently, while rates rose significantly during the
quarter, we think it’s unlikely that they are going to
move substantially higher until the Fed moves closer
to actually ending quantitative easing. As a result, we
believe the environment for corporate credit and other
risk-based fixed-income categories may continue to be
favorable. That said, if spreads rise more than economic
fundamentals seem to warrant, we will view that as a
window of opportunity to try and capitalize on attrac-
tively valued securities.
How are the portfolios positioned for the
coming quarter?
In the 500 Fund and 700 Fund, we continue to manage
the blend of non-directional strategies and strategies
tied to market direction. We are beginning to have a
more sanguine view of equity markets, and specifically
to the idea of adding exposure to U.S. equities.
Regarding the fixed-income positioning across all
four funds, following the liquidity-driven sell-off in
various spread sectors, we added back non-agency
residential mortgage-backed securities [RMBS] and
high-yield bonds, seeking to benefit from the improved
relative value in these sectors. In the 100 Fund and 300
Fund, we increased our allocations in peripheral Euro-
pean government bonds, specifically in Italy, Spain, and
Greece. In addition to the improved economic backdrop
in these countries, we think these bonds offer favorable
technical characteristics versus the bond markets in
many developing nations.

3. Q2 2013 | Absolute return strategies post mixed results amid rising bond yields
PUTNAM INVESTMENTS | putnam.com 3
Fund symbols
Absolute Return 100 Fund® Absolute Return 300 Fund® Absolute Return 500 Fund® Absolute Return 700 Fund®
Class A PARTX PTRNX PJMDX PDMAX
Class B PARPX PTRBX PJMBX PDMBX
Class C PARQX PTRGX PJMCX PDMCX
Class M PARZX PZARX PJMMX PDMMX
Class R PRARX PTRKX PJMRX PDMRX
Class Y PARYX PYTRX PJMYX PDMYX
Annualized total return performance as of June 30, 2013
Class A shares
(inception
12/23/08)
Absolute Return
100 Fund
Absolute Return
300 Fund
Absolute Return
500 Fund
Absolute Return
700 Fund
BofA Merrill Lynch
U.S. Treasury Bill
Index
Before
sales
charge
After
sales
charge
Before
sales
charge
After
sales
charge
Before
sales
charge
After
sales
charge
Before
sales
charge
After
sales
charge
Last quarter 0.29% -0.71% -0.19% -1.18% -2.25% -7.87% -2.87% -8.45% 0.03%
1 year 2.24 1.22 5.34 4.29 2.53 -3.36 3.06 -2.87 0.13
3 years 0.89 0.55 1.88 1.54 3.90 1.87 4.61 2.57 0.14
Life of fund 1.54 1.32 3.16 2.95 4.57 3.21 5.97 4.59 0.18
Total expense ratio 0.65% 0.82% 1.17% 1.31%
What you pay 0.65% 0.82% 1.15% 1.31%
Returns for periods less than one year are not annualized.
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results.
Share price, principal value, and return will vary, and you may have a gain or a loss when you sell your shares. Performance
of class A shares after sales charge assumes reinvestment of distributions and does not account for taxes. After-sales-
charge returns reflect a maximum 1.00% load for Putnam Absolute Return 100 Fund and Putnam Absolute Return 300
Fund, and a maximum 5.75% load for Putnam Absolute Return 500 Fund and Putnam Absolute Return 700 Fund. For a
portion of the periods, the funds had expense limitations, without which returns would have been lower. “What you pay”
reflects Putnam Management’s decision to contractually limit expenses through June 30, 2014. To obtain the most recent
month-end performance, visit putnam.com.
The BofA Merrill Lynch U.S. Treasury Bill Index is an unmanaged index that tracks the performance of U.S. dollar
denominated U.S. Treasury bills publicly issued in the U.S. domestic market. Qualifying securities must have a remaining
term of at least one month to final maturity and a minimum amount outstanding of $1 billion. You cannot invest directly
in an index.

4. Q2 2013 | Absolute return strategies post mixed results amid rising bond yields
The views and opinions expressed are those of the portfolio managers as of June 30, 2013, are subject to change with
market conditions, and are not meant as investment advice. All performance and economic information is historical and is
not indicative of future results.
The funds are not intended to outperform stocks and bonds during strong market rallies.
Consider these risks before investing: Our allocation of assets among permitted asset categories may hurt perfor-
mance. The prices of stocks and bonds in the funds' portfolio may fall or fail to rise over extended periods of time for a
variety of reasons, including both general financial market conditions and factors related to a specific issuer or industry.
Our active trading strategy may lose money or not earn a return sufficient to cover associated trading and other costs.
Our use of leverage obtained through derivatives increases these risks by increasing investment exposure. Bond invest-
ments are subject to interest-rate risk, which means the prices of the funds' bond investments are likely to fall if interest
rates rise. Bond investments also are subject to credit risk, which is the risk that the issuer of the bond may default on
payment of interest or principal. Interest-rate risk is generally greater for longer-term bonds, and credit risk is gener-
ally greater for below-investment-grade bonds, which may be considered speculative. Unlike bonds, funds that invest
in bonds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that
invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. Inter-
national investing involves certain risks, such as currency fluctuations, economic instability, and political developments.
Additional risks may be associated with emerging-market securities, including illiquidity and volatility. Our use of deriva-
tives may increase these risks by increasing investment exposure (which may be considered leverage) or, in the case of
many over-the-counter instruments, because of the potential inability to terminate or sell derivatives positions and the
potential failure of the other party to the instrument to meet its obligations. The funds may not achieve their goal, and
they are not intended to be a complete investment program. The funds' effort to produce lower volatility returns may
not be successful and may make it more difficult at times for the funds to achieve their targeted return. In addition, under
certain market conditions, the funds may accept greater volatility than would typically be the case, in order to seek their
targeted return. For the 500 Fund and 700 Fund, these risks also apply: REITs involve the risks of real estate investing,
including declining property values. Commodities involve the risks of changes in market, political, regulatory, and natural
conditions. Additional risks are listed in the funds’ prospectus. You can lose money by investing in the funds.
Request a prospectus or summary prospectus from your financial representative or by calling 1-800-225-1581.
The prospectus includes investment objectives, risks, fees, expenses, and other information that you should read
and consider carefully before investing.
Putnam Retail Management | One Post Office Square | Boston, MA 02109 | putnam.com EO146 281764 7/13