Putnam Absolute Return 100 and 300 Funds: Q3 2011 Portfolio Manager Commentary

By Putnam Investments on November 14, 2011

We want to engage investors and the investment community in a conversation about absolute return investing. So we welcome your feedback! Please read our guidelines for comments in the About section. Comments are moderated and are published at our discretion. Opinions expressed by other readers are theirs alone and do not necessarily represent the views of Putnam Investments or its management.

The views and opinions expressed are those of the Putnam Investments, are subject to change with market conditions, and are not meant as investment advice.

Putnam Absolute Return Funds pursue a positive return that exceeds the rate of inflation, as reflected by Treasury bills, over a period of three-years with less volatility than general securities markets.

Consider these risks before investing in Putnam Absolute Return Funds: Asset allocation decisions may not always be correct and may adversely affect fund performance. The use of leverage through derivatives may magnify this risk. Leverage and derivatives carry other risks that may result in losses, including the effects of unexpected market shifts and/or the potential illiquidity of certain derivatives. International investments carry risks of volatile currencies, economies, and governments, and emerging-market securities can be illiquid. Bonds are affected by changes in interest rates, credit conditions, and inflation. As interest rates rise, prices of bonds fall. Long-term bonds are more sensitive to interest-rate risk than short-term bonds, while lower-rated bonds may offer higher yields in return for more risk. Unlike bonds, bond funds have ongoing fees and expenses. For the Putnam Absolute Return 500 Fund and Putnam Absolute Return 700 Fund, these risks also apply: Stocks of small and/or midsize companies increase the risk of greater price fluctuations. 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.

The funds are not intended to outperform stocks and bonds during strong market rallies.

Investors should carefully consider the investment objectives, 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, visit the prospectus section of putnam.com, call your financial representative, or call Putnam at 1-800-225-1581. Please read the prospectus carefully before investing.

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