N-CSR 1 a_retirementready.htm PUTNAM RETIREMENT READY FUNDS a_retirementready.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: (811- 21598 )

Exact name of registrant as specified in charter: Putnam RetirementReady Funds

Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109

Name and address of agent for service:  Beth S. Mazor, Vice President 
  One Post Office Square 
  Boston, Massachusetts 02109 
 
Copy to:  John W. Gerstmayr, Esq. 
  Ropes & Gray LLP 
  One International Place 
  Boston, Massachusetts 02110 
 
Registrant’s telephone number, including area code:  (617) 292-1000 

Date of fiscal year end: July 31, 2006


Date of reporting period: August 1, 2005—July 31, 2006

 

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:


What makes Putnam different?


In 1830, Massachusetts Supreme Judicial Court Justice Samuel Putnam established The Prudent Man Rule, a legal foundation for responsible money management.

THE PRUDENT MAN RULE

All that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion. He is to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.


A time-honored tradition in money management

Since 1937, our values have been rooted in a profound sense of responsibility for the money entrusted to us.

A prudent approach to investing

We use a research-driven team approach to seek consistent, dependable, superior investment results over time, although there is no guarantee a fund will meet its objectives.

Funds for every investment goal

We offer a broad range of mutual funds and other financial products so investors and their financial representatives can build diversified portfolios.

A commitment to doing what’s right for investors

We have below-average expenses and stringent investor protections, and provide a wealth of information about the Putnam funds.

Industry-leading service

We help investors, along with their financial representatives, make informed investment decisions with confidence.

Putnam
RetirementReady®
Funds

7| 31| 06
Annual Report

Message from the Trustees  2 
About the fund  4 
Report from the fund managers  7 
Performance  13 
Expenses  26 
Your fund’s management  30 
Terms and definitions  33 
Trustee approval of management contract  35 
Other information for shareholders  42 
Financial statements  43 
Federal tax information  112 
Brokerage commissions  113 
About the Trustees  114 
Officers  120 

Message from the Trustees

Dear Fellow Shareholder

Over the last three months of your fund’s reporting period, investors were particularly preoccupied with the course of the economy. Beginning in May, a more pessimistic outlook pervaded the markets as leading economic indicators began to warn of slower growth and the Federal Reserve (the Fed) continued its series of interest-rate increases. The resulting correction undercut much of the progress that markets had achieved in the previous three months of the period.

However, we believe that today’s higher interest rates, far from being a threat to global economic fundamentals, are in fact an integral part of them. Economic growth may, indeed, be slowing somewhat as a result of the higher rates, but we consider this a typical development for the middle of an economic cycle, and one that could help provide the basis for a longer and more durable business expansion and a continued healthy investment environment. The recent correction brought valuations back to attractive levels, creating opportunities in a wide array of markets and sectors. Furthermore, since the Fed paused in its tightening cycle shortly after the close of the reporting period, the market atmosphere has gradually become more optimistic. Putnam Investments’ management team, under the leadership of Chief Executive Officer Ed Haldeman, continues to focus on investment performance, and the investment professionals managing your fund have been working to take advantage of the opportunities presented by this environment.

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We would like to take this opportunity to announce the retirement of one of your fund’s Trustees, John Mullin, an independent Trustee of the Putnam funds since 1997. We thank him for his service.

In the following pages, members of your fund’s management team discuss the fund’s performance and strategies for the fiscal period ended July 31, 2006, and provide their outlook for the months ahead. As always, we thank you for your support of the Putnam funds.


Putnam RetirementReady Funds: offering one-step
diversification that adjusts automatically over time

Unpredictable markets and the demands of a busy life can make it a challenge to monitor your retirement investments. Using a mix of investments can help you reduce risk and increase your exposure to opportunities in different markets — but it adds to the challenge of keeping your portfolio on track. Putnam RetirementReady Funds provide a one-step approach to investment diversification that gradually shifts toward a more conservative strategy to keep your risk exposure appropriate to your investment time horizon.

Each RetirementReady Fund invests in a combination of Putnam mutual funds to provide you with exposure to a variety of asset classes and investment styles.

The RetirementReady Funds also have different target dates, indicating when investors expect to retire or otherwise begin withdrawing assets. The funds focus more heavily on aggressive, higher-risk investments when their target dates are far off, and emphasize more conservative, lower-risk investments when their target dates are near. Each fund’s asset allocation generally changes annually to become more conservative over time. The RetirementReady Maturity Fund, which has a constant allocation focused primarily on bonds and money market instruments, is designed for investors who are already retired or who expect to use the invested assets in the near future.


While diversification can help protect your returns from excessive volatility, it can’t protect against market losses. However, by choosing a RetirementReady Fund based on the year you plan to start withdrawing assets — typically in retirement — you can get the advantages of diversification and pursue maximum returns while seeking to maintain a level of risk you are comfortable with — all in one convenient investment.

The funds invest in international investments, which involve risks such as currency fluctuations, economic instability, and political developments. The funds invest some or all of their assets in small and/or midsize companies. Such investments increase the risk of greater price fluctuations. The use of derivatives in some funds involves special risks and may result in losses.The funds also have a signifi-cant portion of their assets in bonds. Mutual funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds have more exposure to interest-rate risk than short-term bonds. Lower-rated bonds may offer higher yields in return for more risk. Unlike bonds, bond funds have ongoing fees and expenses. Please see the prospectus for additional information about investment strategies and related risks of the underlying funds.

Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. Although Putnam Money Market Fund seeks to maintain a constant share price of $1.00, it is possible to lose money by investing in the fund.


Putnam RetirementReady Funds (with the exception of the Maturity Fund) seek to provide a combination of capital appreciation and current income. The further away the fund’s target date, the greater the emphasis on capital appreciation; the closer the target date, the more emphasis is placed on current income. The Maturity Fund seeks as high a rate of current income as Putnam Management believes is consistent with preservation of capital, and this objective remains constant over time.

Performance

Total return for class A shares for periods ended 7/31/06

  2050  2045  2040  2035  2030 
  NAV  POP  NAV  POP  NAV  POP  NAV  POP  NAV  POP 
 
Life of fund  16.40%  10.29%  20.95%  14.61%  20.67%  14.33%  19.45%  13.18%  18.45%  12.23% 
Annual average  12.86  8.11  11.44  8.08  11.30  7.93  10.66  7.31  10.13  6.79 
1 year  7.07  1.45  7.50  1.86  7.38  1.75  6.87  1.27  6.57  0.99 
  2025  2020  2015  2010  Maturity Fund 
  NAV  POP  NAV  POP  NAV  POP  NAV  POP  NAV  POP 
 
Life of fund  17.37%  11.21%  14.73%  8.71%  11.90%  6.02%  8.23%  2.54%  6.05%  0.46% 
Annual average  9.55  6.24  8.14  4.87  6.61  3.39  4.61  1.44  3.40  0.26 
 
1 year  6.19  0.62  4.86  -0.65  3.71  –1.74  2.54  –2.85  1.82  –3.53 

Data is historical. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate and you may have a gain or a loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Returns at NAV do not reflect a sales charge of 5.25% . For the most recent month-end performance, visit www.putnam.com. For a portion of the period, these funds limited expenses, without which returns would have been lower. A short-term trading fee of up to 2% may apply. With the exception of the 2050 Fund (inception: 5/2/05), the inception date of all share classes of the RetirementReady Funds is 11/1/04.

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Report from the fund managers

The year in review

Although performance across most asset classes declined in the final months of the Putnam RetirementReady Funds’ fiscal year, Putnam Management believes that this trend indicates an important transition. It appears that we are moving from the low-interest-rate, benign investment landscape of the past three years into a more volatile environment that may be likely to produce more modest gains. Virtually every asset class has benefited from supportive fiscal and monetary policies that key governments and central banks had put in place by early 2003. The globalization of capital markets allowed the boost from these policies to continue, even as the Fed began gradually tightening interest rates in June 2004. Accommodation in monetary policy is now being withdrawn worldwide. Significantly, the recent strengthening of the Japanese yen has made capital from Japan more expensive, and has marked a turning point in the buoying influence of reflationary policies (i.e., policies designed to boost economic activity by making money and credit more available). Many of the major performance patterns that characterized the period — such as better performance of non-U.S. stock markets relative to U.S. equities and of emerging markets over developed markets, as well as natural-resource-oriented themes driven by surging demand from economies such as China’s — reflected the continued geographic rebalancing of global economic activity.

Market overview: Equities

U.S. equity markets progressed despite a series of negative developments during the fiscal year, including a destructive hurricane season, continuing interest-rate increases, and the surging price of oil. Counterbalancing these negative forces were strong corporate profits and robust economic growth. Most U.S. equity asset classes recorded modest, single-digit gains during the funds’ fiscal year. Perhaps the most widely watched market indicator, the S&P 500 Index,

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gained 5.38% over the period. In general, smaller-capitalization stocks modestly lagged their large-cap counterparts, and value stocks significantly outperformed growth stocks. Among sectors, stocks of energy-related companies were top performers, fueled by record profits and expectations for continued strength amid strong demand and limited supply.

International equity markets delivered substantially stronger results than U.S. equity markets. Most non-U.S. markets posted double-digit gains, led by a reinvigorated market in Japan, which has been benefiting from an improving domestic economy as well as from strong growth in neighboring China. The pace of economic activity in Europe heightened, and brisk merger-and-acquisitions activity continued to lift equities there. Also, corporate earnings through the first quarter of 2006 were extremely robust, which helped drive impressive advances across most European markets. Emerging markets, supported by industrial and energy commodity prices, capital inflows, and investor appetite for risk, posted spectacular returns. However, equity markets across the board corrected in the period’s final three months, as investors became concerned about rising interest rates, high oil prices, and the effect that a weaker U.S. dollar could have on exporting countries.

Market sector performance

These indexes provide an overview of performance in different market sectors for the 12 months ended 7/31/06.

Equities   
S&P 500 Index (broad stock market)  5.38% 
MSCI EAFE Index (international stocks)  24.01% 
Russell 1000 Index (large-company stocks)  5.23% 
Russell 2000 Index (small-company stocks)  4.24% 
Bonds   
Lehman Aggregate Bond Index (broad bond market)  1.46% 
Lehman Credit Index (corporate bonds)  0.38% 
JP Morgan Developed High Yield Index (high-yield corporate bonds)  4.48% 

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Market overview: Fixed income

During the funds’ fiscal year, the U.S. investment-grade fixed-income market eked out a small gain in a difficult environment for bonds. Continued robust economic growth prompted the Fed to raise its key interest rate, the federal funds rate, eight times in an effort to thwart the heightened inflationary pressures that often accompany growth. As interest rates rose, bond prices fell.

The investment-grade bond market outside the United States fared somewhat better, though this market was subject to the same forces that held back higher-rated U.S. bonds, namely, strong economic growth and rising interest rates. The European Central Bank (ECB) raised interest rates three times during the funds’ fiscal year to ward off infla-tionary pressures. Significantly, the Bank of Japan raised its policy rate for the first time in six years.

The global high-yield bond market outpaced its investment-grade counterpart, as economic growth contributed to solid fundamentals among issuers and investor demand for higher yields remained strong. However, this market came under pressure toward period-end due to worries about increasing supply and growing investor risk aversion.

Similarly, emerging-market debt rallied during the first three quarters of the fiscal year as prices of industrial and energy commodities remained positive for emerging-market exporters, fundamentals stayed strong, seasonal factors were supportive, and strategic inflows to the asset class were steady.

However, rising core interest rates in the world’s largest economies and geopolitical turmoil led to sizeable losses for this asset class during the funds’ fourth fiscal quarter.

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The outlook for your fund

The following commentary reflects anticipated developments that could affect your fund over the next six months, as well as your management team’s plans for responding to them.

Recent equity market performance has been consistent with what our market forecasters expect for the foreseeable future: higher volatility and lower returns. The tailwind from market-friendly central-bank policies is now shifting to a headwind. Japan’s recent rate increase was particularly significant. Although interest rates in Japan are still very low in nominal terms, another such increase would lift Japanese rates to their highest level in a decade. Yet the current equity environment is not without its opportunities. We believe the recent market correction has removed much of the speculative excess evident earlier this year, restoring some value to many stock markets, both emerging and developed. Furthermore, we believe that the ongoing process of global economic rebalancing should continue to boost natural-resource-oriented investments as competition for constrained resources intensifies.

It also seems likely that fixed-income market performance will continue to be strongly influenced by central bank policy. In the United States, we believe that the Fed’s tightening cycle is nearing an end and that domestic growth will slow modestly during the end of 2006 and into 2007. This should positively affect U.S. investment-grade bonds. Although European and Japanese central banks are somewhat behind the United States in their monetary tightening, they may not need to be as aggressive given the global impact of the Fed’s actions. Outside the investment-grade arena, we believe that the rally in high-yield bonds may be in its final stages. Although emerging-market debt has been affected negatively by the global interest-rate cycle, the impact has been muted somewhat by continued strength of emerging-market economies due, in part, to their commodity orientation and to the strength of commodity prices.

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

The underlying Putnam funds can invest in international investments, which involve risks such as currency fluctuations, economic instability, and political developments. The underlying Putnam funds can invest some or all of their assets in small and/or midsize companies and such investments increase the risk of greater fluctuation in the value of your investment. The use of derivatives in some funds involves special risks and may result in losses.

The underlying Putnam funds can also have a significant portion of their holdings in bonds. Mutual funds that invest in bonds are subject to certain risks, including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds have more exposure to interest-rate risk than short-term bonds. Lower-rated bonds may offer higher yields in return for more risk. Unlike bonds, bond funds have ongoing fees and expenses. These risks apply to any underlying Putnam fund with a significant portion of its assets invested in bonds. Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. Although the fund seeks to maintain a constant share price of $1.00, it is possible to lose money by investing in the fund.

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Composition of the funds’

Underlying investments

Each Putnam RetirementReady Fund invests, to varying degrees, in a variety of Putnam mutual funds. This section describes the goals and strategies of the underlying Putnam funds.

Putnam Voyager Fund

The fund seeks capital appreciation by investing primarily in growth stocks of midsize and large U.S. companies. Growth stocks are issued by companies that Putnam believes are fast-growing and whose earnings Putnam believes are likely to increase over time. Growth in earnings may lead to an increase in the price of the stock. The fund invests mainly in midsize and large companies, although it can invest in companies of any size.

The Putnam Fund for Growth and Income

The fund seeks capital growth and current income by investing primarily in common stocks of large U.S. companies, with a focus on value stocks that offer the potential for capital growth, current income, or both. Value stocks are stocks that Putnam believes are currently undervalued by the market. The fund’s management team looks for companies undergoing positive change. If the team is correct and other investors recognize the value of the company, the price of the stock may rise.

Putnam Capital Opportunities Fund

The fund seeks long-term growth of capital by investing primarily in common stocks of small and midsize U.S. companies that Putnam believes have favorable investment potential. For example, the fund may purchase stocks of companies whose stock price is lower than the value Putnam places on the company. The fund may also consider other factors that Putnam believes will cause the stock price to rise.

Putnam International Equity Fund

The fund seeks capital appreciation by investing primarily in common stocks of companies outside the United States that Putnam believes have favorable investment potential. For example, the fund may purchase stocks of companies whose stock price is lower than the value Putnam places on the company. The fund may also consider other factors that Putnam believes will cause the stock price to rise. The fund invests mainly in midsize and large companies,

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although it can invest in companies of any size. Although the fund emphasizes investments in developed countries, it may also invest in companies located in emerging markets.

Putnam Income Fund

The fund seeks high current income consistent with what Putnam believes to be prudent risk. The fund invests mainly in bonds that are obligations of companies and governments worldwide denominated in U.S. dollars, are either investment-grade or below investment-grade (sometimes referred to as “junk bonds”), and have intermediate-to long-term maturities (three years or longer).

Putnam Money Market Fund

The fund seeks as high a rate of current income as Putnam Management believes is consistent with preservation of capital and maintenance of liquidity. The fund invests mainly in instruments that are high quality and have short-term maturity.

Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. Although the fund seeks to maintain a constant share price of $1.00, it is possible to lose money by investing in the fund.

Allocations by fund as of 7/31/06

Percentages based on market value. Portfolio composition will vary over time. Due to rounding, percentages may not equal 100%.

  The Putnam  Putnam Capital  Putnam  Putnam  Putnam  Putnam 
  Fund for Growth  Opportunities  International  Voyager  Income  Money Market 
RetirementReady Fund  and Income  Fund  Equity Fund  Fund  Fund  Fund 
 
2050 Fund  25.2%  14.7%  30.6%  24.5%  4.1%  1.0% 
2045 Fund  25.2%  14.7%  30.6%  24.5%  4.1%  1.0% 
2040 Fund  24.2%  13.7%  29.5%  23.5%  6.1%  3.0% 
2035 Fund  24.1%  12.7%  26.5%  22.5%  10.2%  4.0% 
2030 Fund  22.1%  11.7%  25.4%  21.5%  14.3%  5.0% 
2025 Fund  21.1%  10.7%  23.4%  20.5%  16.3%  8.1% 
2020 Fund  20.1%  9.7%  16.2%  19.5%  24.4%  10.1% 
2015 Fund  17.0%  9.7%  9.1%  16.5%  31.5%  16.1% 
2010 Fund  12.0%  5.8%  3.0%  11.6%  41.4%  26.1% 
Maturity Fund  10.0%  4.8%  —  9.7%  45.4%  30.1% 

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Your fund’s performance

This section shows your fund’s performance for periods ended July 31, 2006, the end of its fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance as of the most recent calendar quarter-end. Performance should always be considered in light of a fund’s investment strategy. Data represents past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. For the most recent month-end performance, please visit www.putnam.com or call Putnam at 1-800-225-1581. Class Y shares are generally only available to corporate and institutional clients. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.

Fund performance                 
Total return for periods ended 7/31/06               
 
  Class A    Class B    Class C    Class M    Class R  Class Y 
(inception dates)  (11/1/04)    (11/1/04)    (11/1/04)    (11/1/04)    (11/1/04)  (11/1/04) 
  NAV  POP  NAV  CDSC  NAV  CDSC  NAV  POP  NAV  NAV 
2050 Fund*                     
Life of fund  16.40%  10.29%  15.30%  11.30%  15.32%  15.32%  15.64%  11.89%  15.98%  16.74% 
Annual average  12.86  8.11  12.01  8.90  12.02  12.02  12.27  9.36  12.53  13.12 
1 year  7.07  1.45  6.26  1.26  6.29  5.29  6.52  3.07  6.75  7.34 
2045 Fund†                     
Life of fund  20.95  14.61  19.37  15.37  19.38  19.38  19.91  16.01  20.48  21.48 
Annual average  11.44  8.08  10.61  8.49  10.62  10.62  10.90  8.83  11.20  11.72 
1 year  7.50  1.86  6.71  1.71  6.70  5.70  6.97  3.49  7.26  7.77 
2040 Fund†                     
Life of fund  20.67  14.33  19.10  15.10  19.13  19.13  19.63  15.74  20.20  21.20 
Annual average  11.30  7.93  10.47  8.34  10.49  10.49  10.75  8.68  11.05  11.58 
1 year  7.38  1.75  6.58  1.58  6.60  5.60  6.85  3.39  7.13  7.66 
2035 Fund                     
Life of fund  19.45  13.18  17.91  13.91  17.97  17.97  18.42  14.57  18.80  19.98 
Annual average  10.66  7.31  9.84  7.70  9.87  9.87  10.11  8.06  10.31  10.93 
1 year  6.87  1.27  6.08  1.08  6.13  5.13  6.35  2.89  6.48  7.16 
2030 Fund                     
Life of fund  18.45  12.23  16.91  12.91  16.90  16.90  17.42  13.60  17.93  18.96 
Annual average  10.13  6.79  9.31  7.16  9.30  9.30  9.58  7.53  9.85  10.40 
1 year  6.57  0.99  5.77  0.77  5.77  4.77  6.03  2.58  6.29  6.84 
2025 Fund                     
Life of fund  17.37  11.21  15.85  11.85  15.83  15.83  16.36  12.58  16.85  17.89 
Annual average  9.55  6.24  8.74  6.59  8.73  8.73  9.02  6.98  9.28  9.83 
1 year  6.19  0.62  5.40  0.40  5.41  4.41  5.66  2.23  5.93  6.47 

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Fund performance (Continued)

Total return for periods ended 7/31/06

  Class A    Class B    Class C    Class M    Class R  Class Y 
(inception dates)  (11/1/04)    (11/1/04)    (11/1/04)    (11/1/04)    (11/1/04)  (11/1/04) 
  NAV  POP  NAV  CDSC  NAV  CDSC  NAV  POP  NAV  NAV 
2020 Fund                     
Life of fund  14.73%  8.71%  13.22%  9.22%  13.21%  13.21%  13.72%  10.02%  14.31%  15.22% 
Annual average  8.14  4.87  7.33  5.15  7.32  7.32  7.60  5.59  7.92  8.41 
1 year  4.86  –0.65  4.08  –0.91  4.06  3.07  4.34  0.93  4.62  5.13 
2015 Fund                     
Life of fund  11.90  6.02  10.46  6.46  10.47  10.47  10.95  7.35  11.53  12.39 
Annual average  6.61  3.39  5.83  3.63  5.84  5.84  6.10  4.12  6.41  6.88 
1 year  3.71  –1.74  2.95  –1.91  2.93  1.96  3.19  –0.16  3.51  3.97 
2010 Fund                     
Life of fund  8.23  2.54  6.84  2.84  6.85  6.85  7.32  3.84  7.83  8.72 
Annual average  4.61  1.44  3.84  1.61  3.85  3.85  4.11  2.17  4.39  4.88 
1 year  2.54  –2.85  1.78  –3.14  1.78  0.80  2.03  –1.28  2.30  2.79 
Maturity Fund                     
Life of fund  6.05  0.46  4.65  0.65  4.71  4.71  5.14  1.71  5.59  6.51 
Annual average  3.40  0.26  2.62  0.37  2.66  2.66  2.90  0.97  3.15  3.66 
1 year  1.82  –3.53  1.06  –3.81  1.09  0.11  1.33  –1.96  1.56  2.07 

Performance assumes reinvestment of distributions and does not account for taxes. Returns at public offering price (POP) for class A and M shares reflect a sales charge of 5.25% and 3.25%, respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Class R and Y shares have no initial sales charge or CDSC.

During the period, these funds limited expenses, without which returns would have been lower. A 2% short-term trading fee may be applied to shares exchanged or sold within 5 days of purchase.

* The inception date of Putnam RetirementReady 2050 Fund is 5/2/05, for all share classes.

† Because no class R shares of the fund were outstanding on 12/20/05 and 12/21/05, class R performance for the period from 12/19/05 to 12/21/05 is based on class A performance, adjusted for the applicable sales charge and the higher operating expenses for class R shares.

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Change in the value of a $10,000 investment ($9,475 after sales charge)

Cumulative total return from 5/2/05 to 7/31/06


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $11,130 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $11,532 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $11,189 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $11,598 and $11,674, respectively. See first page of performance section for performance calculation method.

Cumulative total return from 11/1/04 to 7/31/06


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $11,537 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $11,938 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $11,601 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $12,048 and $12,148, respectively. See first page of performance section for performance calculation method.

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Change in the value of a $10,000 investment ($9,475 after sales charge)

Cumulative total return from 11/1/04 to 7/31/06


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $11,510 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $11,913 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $11,574 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $12,020 and $12,120, respectively. See first page of performance section for performance calculation method.


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $11,391 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $11,797 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $11,457 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $11,880 and $11,998, respectively. See first page of performance section for performance calculation method.

16

Change in the value of a $10,000 investment ($9,475 after sales charge)

Cumulative total return from 11/1/04 to 7/31/06


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $11,291 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $11,690 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $11,360 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $11,793 and $11,896, respectively. See first page of performance section for performance calculation method.


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $11,185 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $11,583 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $11,258 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $11,685 and $11,789, respectively. See first page of performance section for performance calculation method.

17

Change in the value of a $10,000 investment ($9,475 after sales charge)

Cumulative total return from 11/1/04 to 7/31/06


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $10,922 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $11,321 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $11,002 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $11,431 and $11,522, respectively. See first page of performance section for performance calculation method.


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $10,646 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $11,047 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $10,735 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $11,153 and $11,239, respectively. See first page of performance section for performance calculation method.

18

Change in the value of a $10,000 investment ($9,475 after sales charge)

Cumulative total return from 11/1/04 to 7/31/06


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $10,284 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $10,685 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $10,384 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $10,783 and $10,872, respectively. See first page of performance section for performance calculation method.


Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B would have been valued at $10,065 with the contingent deferred sales charges. A $10,000 investment in the fund’s class C shares would have been valued at $10,471 and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares would have been valued at $10,171 at public offering price. A $10,000 investment in the fund’s class R and Y shares would have been valued at $10,559 and $10,651, respectively. See first page of performance section for performance calculation method.

19

Comparative index returns

For periods ended 7/31/06

  S&P 500  Lehman Aggregate 
  Index  Bond Index 
 
Life of fund*  16.64%  3.18% 
Annual average  9.17  1.80 
1 year  5.38  1.46 

Index results should be compared to fund performance at net asset value.

* Life-of-fund period begins at 11/1/04, the inception date of all the Putnam RetirementReady Funds with the exception of the 2050 Fund (inception: 5/2/05).

Fund price and distribution information

For the 12-month period ended 7/31/06

2050 Fund             
Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 
Number  1  1  1  1  1  1 
Income  $0.803  $0.524  $0.504  $0.591  $0.665  $0.842 
Capital gains             
Long-term  —  —  —  —  —  — 
Short-term  0.931  0.931  0.931  0.931  0.931  0.931 
Total  $1.734  $1.455  $1.435  $1.522  $1.596  $1.773 
Share value:  NAV   POP NAV  NAV  NAV   POP NAV  NAV 
7/31/05  $54.36 $57.37    $54.25  $54.25  $54.28 $56.10  $54.32  $54.38 
7/31/06  56.44 59.57  56.18  56.21  56.28 58.17    56.37  56.57 
 
2045 Fund             
Distributions  Class A  Class B  Class C  Class M  Class R†  Class Y 
Number  1  1  1  1  —  1 
Income  $1.200  $0.910  $0.630  $0.807  —  $1.329 
Capital gains             
Long-term  —  —  —  —  —  — 
Short-term  2.516  2.516  2.516  2.516  —  2.516 
Total  $3.716  $3.426  $3.146  $3.323  —  $3.845 
Share value:  NAV   POP NAV  NAV  NAV   POP NAV  NAV 
 
7/31/05  $70.75 $74.67    $68.83  $68.84  $68.94 $71.26  $69.06  $76.88 
7/31/06  72.28 76.28  69.98  70.27  70.38 72.74  73.67  78.94 

20

Fund price and distribution information (Continued)     

For the 12-month period ended 7/31/06  		       
 
2040 Fund             
Distributions  Class A  Class B  Class C  Class M  Class R†  Class Y 
Number  1  1  1  1  —  1 
Income  $1.179  $0.798  $0.643  $0.834  —  $1.312 
Capital gains             
Long-term  —  —  —  —  —  — 
Short-term  2.686  2.686  2.686  2.686  —  2.686 
Total  $3.865  $3.484  $3.329  $3.520  —  $3.998 
Share value:  NAV  POP  NAV  NAV  NAV   POP NAV  NAV 
 
7/31/05  $70.81 $74.73    $68.82  $68.83  $68.88 $71.19  $69.04  $76.67 
7/31/06  72.11 76.11    69.82  70.00  70.03 72.38  73.56  78.47 
 
2035 Fund             
Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 
Number  1  1  1  1  1  1 
Income  $1.250  $1.081  $0.734  $0.970  —  $1.389 
Capital gains             
Long-term  0.017  0.017  0.017  0.017  0.017  0.017 
Short-term  2.628  2.628  2.628  2.628  2.628  2.628 
Total  $3.895  $3.726  $3.379  $3.615  $2.645  $4.034 
Share value:  NAV   POP  NAV  NAV  NAV   POP  NAV  NAV 
 
7/31/05  $69.50 $73.35  $67.35  $67.41  $67.47   $69.74 $67.61  $75.37 
7/31/06  70.33 74.23    67.68  68.13  68.10 70.39    69.31  76.67 
 
2030 Fund             
Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 
Number  1  1  1  1  1  1 
Income  $1.279  $0.976  $1.097  $1.052  $1.334  $1.416 
Capital gains             
Long-term  0.023  0.023  0.023  0.023  0.023  0.023 
Short-term  2.346  2.346  2.346  2.346  2.346  2.346 
Total  $3.648  $3.345  $3.466  $3.421  $3.703  $3.785 
Share value:  NAV  POP  NAV  NAV  NAV  POP   NAV  NAV 
 
7/31/05  $68.65   $72.45 $67.07  $67.06  $67.14 $69.40    $67.27  $73.90 
7/31/06  69.46   73.31  67.56  67.43  67.73 70.01    67.75  75.11 

21

Fund price and distribution information (Continued)     
For the 12-month period ended 7/31/06         
 
 
2025 Fund             
Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 
Number  1  1  1  1  1  1 
Income  $1.362  $1.087  $0.981  $1.103  $1.290  $1.511 
Capital gains             
Long-term  0.003  0.003  0.003  0.003  0.003  0.003 
Short-term  2.335  2.335  2.335  2.335  2.335  2.335 
Total  $3.700  $3.425  $3.319  $3.441  $3.628  $3.849 
Share value:  NAV   POP NAV  NAV  NAV  POP  NAV  NAV 
 
7/31/05  $72.26   $76.26 $69.94  $70.00  $70.06 $72.41  $70.21  $72.50 
7/31/06  72.98 77.02  70.26  70.43  70.55 72.92    70.70  73.28 
 
2020 Fund             
Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 
Number  1  1  1  1  1  1 
Income  $1.333  $1.099  $1.000  $1.152  $1.434  $1.467 
Capital gains             
Long-term  0.004  0.004  0.004  0.004  0.004  0.004 
Short-term  1.707  1.707  1.707  1.707  1.707  1.707 
Total  $3.044  $2.810  $2.711  $2.863  $3.145  $3.178 
Share value:  NAV  POP  NAV  NAV  NAV  POP   NAV  NAV 
 
7/31/05  $66.06   $69.72 $64.94  $64.97  $65.05 $67.24    $65.23  $70.54 
7/31/06  66.20 69.87    64.77  64.89  64.99 67.17  65.08  70.95 
 
2015 Fund             
Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 
Number  1  1  1  1  1  1 
Income  $1.602  $1.398  $1.392  $1.390  $1.686  $1.750 
Capital gains             
Long-term  0.003  0.003  0.003  0.003  0.003  0.003 
Short-term  2.430  2.430  2.430  2.430  2.430  2.430 
Total  $4.035  $3.831  $3.825  $3.823  $4.119  $4.183 
Share value:  NAV  POP   NAV  NAV  NAV POP  NAV  NAV 
 
7/31/05  $67.28 $71.01  $66.27  $66.25  $66.38 $68.61    $66.54  $67.48 
7/31/06  65.72 69.36  64.39  64.37  64.67 66.84  64.74  65.95 

22

Fund price and distribution information (Continued)     
For the 12-month period ended 7/31/06         
 
  2010 Fund             
  Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 
  Number  1  1  1  1  1  1 
  Income  $1.520  $1.045  $1.346  $1.446  $1.600  $1.651 
  Capital gains             
  Long-term  0.015  0.015  0.015  0.015  0.015  0.015 
  Short-term  1.000  1.000  1.000  1.000  1.000  1.000 
  Total  $2.535  $2.060  $2.361  $2.461  $2.615  $2.666 
  Share value:  NAV   POP NAV  NAV  NAV   POP NAV  NAV 
 
  7/31/05  $59.72 $63.03  $58.59  $58.62  $58.73 $60.70  $58.83  $62.35 
  7/31/06  58.69 61.94  57.57  57.30  57.46 59.39  57.56  61.41 
 
  Maturity Fund             
  Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 
  Number  12  12  12  12  12  12 
  Income  $1.827  $1.393  $1.395  $1.557  $1.708  $1.969 
  Capital gains             
  Long-term  —  —  —  —  —  — 
  Short-term  0.749  0.749  0.749  0.749  0.749  0.749 
  Total  $2.576  $2.142  $2.144  $2.306  $2.457  $2.718 
  Share value:  NAV  POP  NAV  NAV  NAV   POP NAV  NAV 
 
  7/31/05  $57.51 $60.70  $57.54  $57.56  $57.54 $59.47    $57.56  $57.65 
  7/31/06  55.97 59.07    56.01  56.04  55.99 57.87    55.99  56.11 
 
†  No class R shares were outstanding on the applicable distribution record date.     

23

Fund performance for most recent calendar quarter       
Total return for periods ended 6/30/06               
 
  Class A    Class B    Class C    Class M    Class R  Class Y 
(inception dates)  (11/1/04)    (11/1/04)    (11/1/04)    (11/1/04)    (11/1/04)  (11/1/04) 
  NAV  POP  NAV  CDSC  NAV  CDSC  NAV  POP  NAV  NAV 
2050 Fund*                     
Life of fund  17.47%  11.31%  16.45%  12.45%  16.47%  16.47%  16.75%  12.96%  17.09%  17.80% 
Annual average  14.76  9.60  13.91  10.56  13.93  13.93  14.16  10.98  14.44  15.04 
1 year  12.24  6.35  11.39  6.39  11.41  10.41  11.63  8.00  11.89  12.51 
2045 Fund†                     
Life of fund  22.08  15.67  20.55  16.55  20.55  20.55  21.07  17.14  21.63  22.57 
Annual average  12.69  9.11  11.85  9.61  11.85  11.85  12.14  9.94  12.45  12.97 
1 year  12.67  6.75  11.84  6.84  11.83  10.83  12.13  8.48  12.42  12.96 
2040 Fund†                     
Life of fund  21.69  15.30  20.17  16.17  20.21  20.21  20.67  16.75  21.24  22.19 
Annual average  12.48  8.90  11.64  9.39  11.66  11.66  11.91  9.72  12.23  12.76 
1 year  12.43  6.52  11.56  6.56  11.57  10.57  11.84  8.21  12.16  12.68 
2035 Fund                     
Life of fund  20.35  14.03  18.86  14.86  18.92  18.92  19.36  15.48  19.73  20.84 
Annual average  11.74  8.18  10.90  8.65  10.94  10.94  11.18  9.00  11.39  12.01 
1 year  11.53  5.67  10.70  5.70  10.75  9.75  10.98  7.37  11.12  11.82 
2030 Fund                     
Life of fund  19.22  12.96  17.73  13.73  17.74  17.74  18.22  14.38  18.70  19.69 
Annual average  11.11  7.57  10.27  8.01  10.28  10.28  10.55  8.38  10.81  11.37 
1 year  10.83  5.01  9.98  4.98  10.00  9.00  10.27  6.68  10.51  11.09 
2025 Fund                     
Life of fund  18.01  11.82  16.55  12.55  16.54  16.54  17.05  13.25  17.52  18.51 
Annual average  10.43  6.92  9.61  7.34  9.60  9.60  9.89  7.74  10.15  10.71 
1 year  10.09  4.32  9.27  4.27  9.26  8.26  9.54  5.99  9.81  10.37 
2020 Fund                     
Life of fund  15.25  9.20  13.80  9.80  13.79  13.79  14.28  10.56  14.85  15.71 
Annual average  8.87  5.41  8.05  5.76  8.05  8.05  8.32  6.20  8.65  9.13 
1 year  8.20  2.52  7.37  2.37  7.37  6.37  7.64  4.14  7.95  8.44 
2015 Fund                     
Life of fund  12.24  6.34  10.87  6.87  10.88  10.88  11.34  7.73  11.91  12.72 
Annual average  7.16  3.75  6.38  4.06  6.38  6.38  6.65  4.56  6.97  7.44 
1 year  6.25  0.67  5.46  0.49  5.47  4.47  5.73  2.30  6.04  6.53 

24

Fund performance for most recent calendar quarter (Continued)   
Total return for periods ended 6/30/06               
 
  Class A    Class B    Class C    Class M    Class R  Class Y 
(inception dates)  (11/1/04)    (11/1/04)    (11/1/04)    (11/1/04)    (11/1/04)  (11/1/04) 
2010 Fund                     
Life of fund  8.16%  2.47%  6.83%  2.83%  6.83%  6.83%  7.29%  3.81%  7.77%  8.60% 
Annual average  4.81  1.47  4.04  1.69  4.04  4.04  4.31  2.27  4.58  5.07 
1 year  3.73  –1.71  2.95  –2.02  2.95  1.96  3.23  –0.13  3.50  3.98 
Maturity Fund                     
Life of fund  5.82  0.25  4.49  0.49  4.55  4.55  4.97  1.54  5.41  6.27 
Annual average  3.45  0.15  2.67  0.29  2.70  2.70  2.95  0.92  3.21  3.71 
1 year  2.31  –3.08  1.54  –3.36  1.58  0.60  1.81  –1.49  2.07  2.58 

* The inception date of Putnam RetirementReady 2050 Fund is 5/2/05, for all share classes.

† Because no class R shares of the fund were outstanding on 12/20/05 and 12/21/05, class R performance for the period from 12/19/05 to 12/21/05 is based on class A performance, adjusted for the applicable sales charge and the higher operating expenses for class R shares.

25

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 limited these expenses; had it not done so, expenses would have been higher. Using the information below, 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. Expense information also does not include the fees and expenses of the underlying Putnam mutual funds in which the RetirementReady Funds invest. For more information, see your fund’s prospectus or talk to your financial advisor.

Review your fund’s expenses

The first table in this section shows the expenses you would have paid on a $1,000 investment in each of the RetirementReady Funds from February 1, 2006, to July 31, 2006. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses. You may use the information in this table to estimate the expenses that you paid over the period. Simply divide your account value by $1,000, and then multiply the result by the number in the first line (“Expenses paid per $1,000”) for the class of shares you own.

  Class A  Class B  Class C  Class M  Class R  Class Y 
2050 Fund  shares  shares  shares  shares  shares  shares 
 
Expenses paid per $1,000*  $   1.68   $   5.37   $   5.37   $   4.14   $   2.91   $   0.44  
Ending value (after expenses)  $990.20  $986.30  $986.50  $987.50  $988.40  $991.20 
2045 Fund                         
Expenses paid per $1,000*  $   1.68   $   5.37   $   5.37   $   4.14   $   2.91   $   0.44  
Ending value (after expenses)  $990.40  $986.70  $986.80  $987.90  $989.40  $991.70 
2040 Fund                         
Expenses paid per $1,000*  $   1.68   $   5.37   $   5.37   $   4.14   $   2.91   $   0.44  
Ending value (after expenses)  $991.40  $987.80  $988.00  $989.10  $990.30  $992.60 
2035 Fund                         
Expenses paid per $1,000*  $   1.68   $   5.37   $   5.37   $   4.14   $   2.91   $   0.44  
Ending value (after expenses)  $991.50  $987.90  $988.40  $989.20  $990.30  $992.90 
2030 Fund                         
Expenses paid per $1,000*  $   1.68   $   5.38   $   5.38   $   4.14   $   2.91   $   0.44  
Ending value (after expenses)  $992.40  $988.90  $988.90  $990.10  $991.40  $993.80 
2025 Fund                         
Expenses paid per $1,000*  $   1.68   $   5.38   $   5.38   $   4.15   $   2.91   $   0.45  
Ending value (after expenses)  $993.30  $989.70  $989.70  $991.00  $992.00  $994.70 
2020 Fund                         
Expenses paid per $1,000*  $   1.68   $   5.37   $   5.37   $   4.14   $   2.91   $   0.44  
Ending value (after expenses)  $991.70  $988.10  $988.10  $989.20  $990.60  $993.00 

26

Review your fund’s expenses (Continued)       
 
  Class A  Class B  Class C  Class M  Class R  Class Y 
2015 Fund  shares  shares  shares  shares  shares  shares 
 
Expenses paid per $1,000*  $ 1.68  $ 5.37  $ 5.37  $ 4.14  $ 2.91  $ 0.44 
Ending value (after expenses)  $992.20  $988.50  $988.70  $989.80  $991.30  $993.40 
2010 Fund             
Expenses paid per $1,000*  $ 1.68  $ 5.39  $ 5.39  $ 4.15  $ 2.92  $ 0.45 
Ending value (after expenses)  $996.60  $992.90  $992.90  $994.10  $995.30  $997.90 
Maturity Fund             
Expenses paid per $1,000*  $ 1.68  $ 5.39  $ 5.39  $ 4.16  $ 2.92  $ 0.45 
Ending value (after expenses)  $997.80  $994.10  $994.30  $995.40  $996.60  $999.20 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended 7/31/06. The expense ratio may differ for each share class (see the next table in this section). Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.

† During the six months ended 7/31/06, your fund limited its expenses; had it not done so, expenses would have been higher.


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

  Class A  Class B  Class C  Class M  Class R  Class Y 
2050 Fund  shares  shares  shares  shares  shares  shares 
 
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 
2045 Fund             
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 

27

Compare expenses using the SEC’s method (Continued)     
 
  Class A  Class B  Class C  Class M  Class R  Class Y 
2040 Fund  shares  shares  shares  shares  shares  shares 
 
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 
2035 Fund             
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 
2030 Fund             
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 
2025 Fund             
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 
2020 Fund             
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 
2015 Fund             
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 

28

Compare expenses using the SEC’s method (Continued)     
 
  Class A  Class B  Class C  Class M  Class R  Class Y 
2010 Fund  shares  shares  shares  shares  shares  shares 
 
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 
Maturity Fund             
Expenses paid per $1,000*  $ 1.71  $ 5.46  $ 5.46  $ 4.21  $ 2.96  $ 0.45 
Ending value (after expenses)  $1,023.11  $1,019.39  $1,019.39  $1,020.63  $1,021.87  $1,024.35 
Annualized expense ratio  0.34%  1.09%  1.09%  0.84%  0.59%  0.09% 
Lipper peer group             
Avg. expense ratio**  0.31%  1.06%  1.06%  0.81%  0.56%  0.06% 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of net assets for the six months ended 7/31/06. The expense ratio may differ for each share class. Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.

** The funds joined their current Lipper peer groups on April 18, 2006. The new Lipper category for each fund is specified in the table below. The peer group may include funds that are significantly larger than the fund, which may limit the comparability of the fund’s expenses to the simple average, which is typically higher than the asset-weighted average.

Putnam RetirementReady Fund  New Lipper category 
RetirementReady 2050 Fund  Mixed-Asset Target 2030+ 
RetirementReady 2040 Fund  Mixed-Asset Target 2030+ 
RetirementReady 2035 Fund  Mixed-Asset Target 2030+ 
RetirementReady 2030 Fund  Mixed-Asset Target 2030 
RetirementReady 2025 Fund  Mixed-Asset Target 2030 
RetirementReady 2020 Fund  Mixed-Asset Target 2020 
RetirementReady 2015 Fund  Mixed-Asset Target 2020 
RetirementReady 2010 Fund  Mixed-Asset Target 2010 
RetirementReady Maturity Fund  Mixed-Asset Target Allocation Conservative 

29

Your fund’s management

Your fund is managed by the members of the Global Asset Allocation Team. Jeffrey Knight is the Portfolio Leader, and Robert Kea and Robert Schoen are Portfolio Members. The Portfolio Leader and Portfolio Members coordinate the team’s management of the fund.

For a complete listing of the members of the Global Asset Allocation Team, including those who are not Portfolio Leaders or Portfolio Members of your fund, visit Putnam’s Individual Investor Web site at www.putnam.com.

Investment team fund ownership

The funds’ Portfolio Leader and Portfolio Members each invest in one or more of the six mutual funds that underlie the Putnam RetirementReady Funds. The table below shows how much the funds’ current Portfolio Leader and Portfolio Members have invested in all Putnam mutual funds (in dollar ranges). Information shown is as of July 31, 2006, and July 31, 2005.

* Total assets in all Putnam funds             
    $1 –  $10,001 –  $50,001 –  $100,001 –  $500,001 –  $1,000,001 
  Year   $0 $10,000  $50,000  $100,000  $500,000  $1,000,000  and over 
Jeffrey Knight  2006            * 
Portfolio Leader  2005            * 
Robert Kea  2006        *     
Portfolio Member  2005        *     
Robert Schoen  2006        *     
Portfolio Member  2005        *     

Trustee and Putnam employee fund ownership

As of July 31, 2006, all of the Trustees on the Board of the Putnam funds owned shares of at least one of the RetirementReady Funds, and all of the Trustees owned shares of all six Putnam mutual funds that underlie the RetirementReady Funds. The table below shows the approximate value of investments in the RetirementReady Funds and all Putnam funds as of that date by the Trustees and Putnam employees. These amounts include investments by the Trustees’ and employees’ immediate family members and investments through retirement and deferred compensation plans.

    Total assets in 
  Assets in the funds  all Putnam funds 
 
Trustees  $ 156,000  $ 87,000,000 
Putnam employees  $3,448,000  $409,000,000 

30

Fund manager compensation

The total 2005 fund manager compensation that is attributable to the RetirementReady Funds is approximately $330,000. This amount includes a portion of 2005 compensation paid by Putnam Management to the fund managers listed in this section for their portfolio management responsibilities, calculated based on the fund assets they manage taken as a percentage of the total assets they manage. The compensation amount also includes a portion of the 2005 compensation paid to the Chief Investment Officer of the team for his oversight responsibilities, calculated based on the fund assets he oversees taken as a percentage of the total assets he oversees. This amount does not include compensation of other personnel involved in research, trading, administration, systems, compliance, or fund operations; nor does it include non-compensation costs. These percentages are determined as of the funds’ fiscal period-end. For personnel who joined Putnam Management during or after 2005, the calculation reflects annualized 2005 compensation or an estimate of 2006 compensation, as applicable.

Other Putnam funds managed by the Portfolio Leader and Portfolio Members

Jeffrey Knight is also a Portfolio Leader of the Putnam Asset Allocation Funds: Growth, Balanced, and Conservative Portfolios, a Portfolio Leader of Putnam Income Strategies Fund, and a Portfolio Member of The George Putnam Fund of Boston.

Robert Kea and Robert Schoen are also Portfolio Members of the Putnam Asset Allocation Funds: Growth, Balanced, and Conservative Portfolios, as well as Putnam Income Strategies Fund.

Jeffrey Knight, Robert Kea, and Robert Schoen may also manage other accounts and variable trust funds advised by Putnam Management or an affiliate.

Changes in the funds’ Portfolio Leader and Portfolio Members

During the year ended July 31, 2006, Portfolio Member Bruce MacDonald left the funds’ management team.

31

Putnam fund ownership by Putnam’s Executive Board

The table below shows how much the members of Putnam’s Executive Board have invested in all Putnam mutual funds (in dollar ranges). Information shown is as of July 31, 2006, and July 31, 2005.

    $1 –  $10,001 –  $50,001 –  $100,001 –  $500,001 – $1,000,001
  Year   $0 $10,000  $50,000  $100,000  $500,000  $1,000,000 and over
Philippe Bibi  2006          * 
Chief Technology Officer  2005          * 
Joshua Brooks  2006          * 
Deputy Head of Investments  2005          * 
William Connolly  2006          * 
Head of Retail Management  N/A           
Kevin Cronin  2006          * 
Head of Investments  2005          * 
Charles Haldeman, Jr.  2006          * 
President and CEO  2005          * 
Amrit Kanwal  2006          *  
Chief Financial Officer  2005          *  
Steven Krichmar  2006          *  
Chief of Operations  2005          * 
Francis McNamara, III  2006          * 
General Counsel  2005          * 
Richard Robie, III  2006          *  
Chief Administrative Officer  2005          *  
Edward Shadek  2006          * 
Deputy Head of Investments  2005          * 
Sandra Whiston  2006          *  
Head of Institutional Management  N/A           
N/A indicates the individual was not a member of Putnam’s Executive Board as of 7/31/05.     

32

Terms and definitions

Important terms

Total return shows how the value of the fund’s shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund.

Net asset value (NAV) is the price, or value, of one share of a mutual fund, without a sales charge. NAVs fluctuate with market conditions. NAV is calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

Public offering price (POP) is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. POP performance figures shown here assume the 5.25% maximum sales charge for class A shares and 3.25% for class M shares.

Contingent deferred sales charge (CDSC) is generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase.

Share classes

Class A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class B shares are not subject to an initial sales charge. They may be subject to a CDSC.

Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.

Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class R shares are not subject to an initial sales charge or CDSC and are available only to certain defined contribution plans.

Class Y shares are not subject to an initial sales charge or CDSC, and carry no 12b-1 fee. They are only available to eligible purchasers, including eligible defined contribution plans or corporate IRAs.

33

Comparative indexes

JP Morgan Developed High Yield Index is an unmanaged index of high-yield fixed-income securities issued in developed countries.

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

Lehman Credit Index is an unmanaged index of investment-grade corporate bonds.

Morgan Stanley Capital International (MSCI) EAFE Index is an unmanaged index of equity securities from developed countries in Western Europe, the Far East, and Australasia.

Russell 1000 Index is an unmanaged index of the 1,000 largest companies in the Russell 3000 Index.

Russell 2000 Index is an unmanaged index of the 2,000 smallest companies in the Russell 3000 Index.

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.

34

Trustee approval of
management contract

General conclusions

The Board of Trustees of the Putnam funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Management. In this regard, the Board of Trustees, with the assistance of its Contract Committee consisting solely of Trustees who are not “interested persons” (as such term is defined in the Investment Company Act of 1940, as amended) of the Putnam funds (the “Independent Trustees”), requests and evaluates all information it deems reasonably necessary under the circumstances. Over the course of several months ending in June 2006, the Contract Committee met four times to consider the information provided by Putnam Management and other information developed with the assistance of the Board’s independent counsel and independent staff. The Contract Committee reviewed and discussed key aspects of this information with all of the Independent Trustees. Upon completion of this review, the Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management contract, effective July 1, 2006.

This approval was based on the following conclusions:

* That the fee schedule in effect for your fund represents reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds and the costs incurred by Putnam Management in providing such services, and

* That such fee schedule represents an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.

These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the fee arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that certain aspects of such arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of these same arrangements in prior years.

35

Management fee schedules and categories; total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints, and the assignment of funds to particular fee categories. In reviewing fees and expenses, the Trustees generally focused their attention on material changes in circumstances — for example, changes in a fund’s size or investment style, changes in Putnam Management’s operating costs, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not warrant changes to the management fee structure of your fund, which had been carefully developed over the years, re-examined on many occasions and adjusted where appropriate. The Trustees focused on two areas of particular interest, as discussed further below:

* Competitiveness. The Trustees reviewed comparative fee and expense information for competitive funds, which indicated that, in a custom peer group of competitive funds selected by Lipper Inc., each Putnam RetirementReady Fund ranked in the 1st percentile in management fees and in the following percentiles in total expenses (less any applicable 12b-1 fees) as of December 31, 2005 (the first percentile being the least expensive funds and the 100th percentile being the most expensive funds).

  Total Expenses 
  (percentile) 
Putnam RetirementReady Maturity Fund  20th 
Putnam RetirementReady 2010 Fund  20th 
Putnam RetirementReady 2015 Fund  21st 
Putnam RetirementReady 2020 Fund  17th 
Putnam RetirementReady 2025 Fund  13th 
Putnam RetirementReady 2030 Fund  13th 
Putnam RetirementReady 2035 Fund  13th 
Putnam RetirementReady 2040 Fund  17th 
Putnam RetirementReady 2045 Fund  17th 
Putnam RetirementReady 2050 Fund  13th 

(The comparative fee and expense information for each Putnam RetirementReady Fund excludes the fees and expenses of the underlying Putnam funds in which a Putnam RetirementReady Fund invests, as well as the fees and expenses of the underlying funds in which other funds in the Lipper peer group invest. In addition, because each Putnam RetirementReady Fund’s custom peer group is different than the RetirementReady Fund’s broad Lipper peer group, this expense information may differ from the Lipper peer expense information found elsewhere in this report.) The Trustees noted that expense ratios for a number of Putnam funds, which show the percentage of fund assets used to pay for management and administrative services, distribution (12b-1) fees and other expenses, had been increasing recently as a result of declining net assets and the natural operation of fee breakpoints.

36

The Trustees noted that the expense ratio increases described above were currently being controlled by expense limitations implemented in January 2004 and which Putnam Management, in consultation with the Contract Committee, has committed to maintain at least through 2007. These expense limitations give effect to a commitment by Putnam Management that the expense ratio of each open-end fund would be no higher than the average expense ratio of the competitive funds included in the fund’s relevant Lipper universe (exclusive of any applicable 12b-1 charges in each case). The Trustees observed that this commitment to limit fund expenses has served shareholders well since its inception. In order to ensure that the expenses of the Putnam funds continue to meet evolving competitive standards, the Trustees requested, and Putnam Management agreed, to implement an additional expense limitation for certain funds for the twelve months beginning January 1, 2007 equal to the average expense ratio (exclusive of 12b-1 charges) of a custom peer group of competitive funds selected by Lipper based on the size of the fund. This additional expense limitation will be applied to those open-end funds that had above-average expense ratios (exclusive of 12b-1 charges) based on the Lipper custom peer group data for the period ended December 31, 2005. This additional expense limitation will not be applied to your fund.

* Economies of scale. In recent years, the Trustees have examined the operation of the existing breakpoint structure during periods of both growth and decline in asset levels. (A “breakpoint” is a reduction in fee rates that applies to additional assets once specified asset levels are reached.) The Trustees concluded that the fee schedules in effect for the funds represented an appropriate sharing of economies of scale at current asset levels. In reaching this conclusion, the Trustees considered the Contract Committee’s stated intent to continue to work with Putnam Management to plan for an eventual resumption in the growth of assets, including a study of potential economies that might be produced under various growth assumptions.

In connection with their review of the management fees and total expenses of the Putnam funds, the Trustees also reviewed the costs of the services to be provided and profits to be realized by Putnam Management and its affiliates from the relationship with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability with respect to the funds’ management contracts, allocated on a fund-by-fund basis. Because many of the costs incurred by Putnam Management in managing the funds are not readily identifiable to particular funds, the Trustees observed that the methodology for allocating costs is an important factor in evaluating Putnam Management’s costs and profitability, both as to the Putnam funds in the aggregate and as to individual funds. The Trustees reviewed Putnam Management’s cost allocation methodology with the assistance of independent consultants and concluded that this methodology was reasonable and well-considered.

37

Investment performance

The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the Investment Process Committee of the Trustees and the Investment Oversight Committee of the Trustees, which meet on a regular monthly basis with the funds’ portfolio teams throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — as measured by the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to such personnel, and in general the ability of Putnam Management to attract and retain high-quality personnel — but also recognize that this does not guarantee favorable investment results for every fund in every time period. The Trustees considered the investment performance of each fund over multiple time periods and considered information comparing each fund’s performance with various benchmarks and with the performance of competitive funds.

The Trustees noted the satisfactory investment performance of many Putnam funds. They also noted the disappointing investment performance of certain funds in recent years and discussed with senior management of Putnam Management the factors contributing to such underperfor-mance and actions being taken to improve performance. The Trustees recognized that, in recent years, Putnam Management has made significant changes in its investment personnel and processes and in the fund product line to address areas of underperformance. In particular, they noted the important contributions of Putnam Management’s leadership in attracting, retaining and supporting high-quality investment professionals and in systematically implementing an investment process that seeks to merge the best features of fundamental and quantitative analysis. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these changes and to evaluate whether additional changes to address areas of underperformance are warranted.

In the case of the Putnam RetirementReady Funds, the Trustees considered the Lipper peer group percentile rankings of each fund’s class A share cumulative total return performance results at net asset value for the one-year period ended December 31, 2005. This information is shown in the following table. (Because of the passage of time, these performance results may differ from the performance results for more recent periods shown elsewhere in this report.) Where applicable, the table also shows the number of funds in the peer groups for the period; this number is indicated in parentheses following the percentile. Note that the first percentile denotes the best-performing funds and the 100th percentile denotes the worst-performing funds.

See page 41 for more recent Lipper performance ranking information for the funds. Past performance is no guarantee of future results.

38

  One-year period rank (# of funds in category) 
Putnam RetirementReady Maturity Fund   
Lipper Income Funds  58th (265) 
Putnam RetirementReady 2010 Fund   
Lipper Income Funds  26th (265) 
Putnam RetirementReady 2015 Fund   
Lipper Balanced Funds  38th (650) 
Putnam RetirementReady 2020 Fund   
Lipper Multi-Cap Core Funds  60th (828) 
Putnam RetirementReady 2025 Fund   
Lipper Multi-Cap Core Funds  47th (828) 
Putnam RetirementReady 2030 Fund   
Lipper Multi-Cap Core Funds  39th (828) 
Putnam RetirementReady 2035 Fund   
Lipper Multi-Cap Core Funds  33rd (828) 
Putnam RetirementReady 2040 Fund   
Lipper Multi-Cap Core Funds  29th (828) 
Putnam RetirementReady 2045 Fund   
Lipper Multi-Cap Core Funds  29th (828) 
Putnam RetirementReady 2050 Fund   
Lipper Multi-Cap Core Funds  N/A 

As a general matter, the Trustees concluded that cooperative efforts between the Trustees and Putnam Management represent the most effective way to address investment performance problems. The Trustees noted that investors in the Putnam funds have, in effect, placed their trust in the Putnam organization, under the oversight of the funds’ Trustees, to make appropriate decisions regarding the management of the funds. Based on the responsiveness of Putnam Management in the recent past to Trustee concerns about investment performance, the Trustees concluded that it is preferable to seek change within Putnam Management to address performance shortcomings. In the Trustees’ view, the alternative of terminating a management contract and engaging a new investment adviser for an underperforming fund would entail significant disruptions and would not provide any greater assurance of improved investment performance.

39

Brokerage and soft-dollar allocations; other benefits

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 and soft-dollar allocations, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that may be useful to Putnam Management in managing the assets of the fund and of other clients. The Trustees indicated their continued intent to monitor the potential benefits associated with the allocation of fund brokerage to ensure that the principle of seeking “best price and execution” remains paramount in the portfolio trading process.

The Trustees’ annual review of your fund’s management contract also included the review of its distributor’s contract and distribution plan with Putnam Retail Management Limited Partnership and the custodian agreement and investor servicing agreement with Putnam Fiduciary Trust Company, all of which provide benefits to affiliates of Putnam Management.

Comparison of retail and institutional fee schedules

The information examined by the Trustees as part of their annual contract review has included for many years information regarding fees charged by Putnam Management and its affiliates to institutional clients such as defined benefit pension plans, college endowments, etc. This information included comparison of such fees with fees charged to the funds, as well as a detailed assessment of the differences in the services provided to these two types of clients. The Trustees observed, in this regard, that the differences in fee rates between institutional clients and the mutual funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients reflect to a substantial degree historical competitive forces operating in separate market places. The Trustees considered the fact that fee rates across all asset sectors are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to institutional clients of the firm, but did not rely on such comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.

40

More recent peer group rankings

More recent Lipper percentile rankings are shown for the funds in the following table. Note that this information was not available to the Trustees when they approved the continuance of each fund’s management contract. The table shows the Lipper peer group percentile rankings of each fund’s class A share total return performance results. These rankings were determined on an annualized basis and are for the one-year period ended on the most recent calendar quarter (June 30, 2006). Where applicable, the table also shows the fund’s rank among the total number of funds in its peer group for the one-year period; this information is indicated in parentheses following the percentile. Note that the first percentile denotes the best-performing funds and the 100th percentile denotes the worst-performing funds. Also please note that, unrelated to the Trustees’ approval of the continuance of your fund’s management contract, Lipper reassigned the funds to new peer groups on April 18, 2006, which will be used for comparative purposes going forward.

 

                                                                                                                                                                  One-year period rank (# of funds in category)
_______________________________________________________________________________________________________________
Putnam RetirementReady Maturity Fund   
Lipper Mixed-Asset Target Allocation Conservative Funds  72nd (294) 
Putnam RetirementReady 2010 Fund   
Lipper Mixed-Asset Target 2010 Funds  82nd (53) 
Putnam RetirementReady 2015 Fund   
Lipper Mixed-Asset Target 2020 Funds  69th (69) 
Putnam RetirementReady 2020 Fund   
Lipper Mixed-Asset Target 2020 Funds  46th (69) 
Putnam RetirementReady 2025 Fund   
Lipper Mixed-Asset Target 2030 Funds  50th (60) 
Putnam RetirementReady 2030 Fund   
Lipper Mixed-Asset Target 2030 Funds  25th (60) 
Putnam RetirementReady 2035 Fund   
Lipper Mixed-Asset Target 2030+ Funds  52nd (84) 
Putnam RetirementReady 2040 Fund   
Lipper Mixed-Asset Target 2030+ Funds  15th (84) 
Putnam RetirementReady 2045 Fund   
Lipper Mixed-Asset Target 2030+ Funds  6th (84) 
Putnam RetirementReady 2050 Fund   
Lipper Mixed-Asset Target 2030+ Funds  23rd (84) 

41

Other information
for shareholders

Putnam’s policy on confidentiality

In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ addresses, telephone numbers, Social Security numbers, and the names of their financial advisors. We use this information to assign an account number and to help us maintain accurate records of transactions and account balances. It is our policy to protect the confidentiality of your information, whether or not you currently own shares of our funds, and in particular, 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 share this information with outside vendors who provide services to us, such as mailing and proxy solicitation. In those 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. We may also share this information with our Putnam affiliates to service your account or provide you with information about other Putnam products or services. It is also our policy to share account information with your financial advisor, if you’ve listed one on your Putnam account. If you would like clarification about our confidentiality policies or have any questions or concerns, please don’t hesitate to contact us at 1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time.

Proxy voting

Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2006, are available on the Putnam Individual Investor Web site, www.putnam.com/individual, and on the SEC’s Web site, www.sec.gov. If you have questions about finding forms on the SEC’s Web site, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Forms N-Q on the SEC’s Web site at www.sec.gov. In addition, the fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s Web site or the operation of the Public Reference Room.

42

Financial statements

A guide to 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 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 noninvestment 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 year.

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 in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period.

43

Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of
Putnam RetirementReady Funds:

In our opinion, the accompanying statements of assets and liabilities, including the funds’ portfolios, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial positions of each of the Putnam RetirementReady Funds (the “trust”) at July 31, 2006, and the results of each of their operations, the changes in each of their net assets and their financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the trust’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at July 31, 2006, by correspondence with the transfer agent, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
September 15, 2006

44

The funds’ portfolios 7/31/06       
 
 
2050 Fund       
EQUITY FUNDS* 95.0%  Shares    Value 
 
Putnam Capital Opportunities Fund (Class Y)  48,869  $  582,024 
Putnam Fund for Growth and Income (Class Y)  49,371    997,280 
Putnam International Equity Fund (Class Y)  41,298    1,210,864 
Putnam Voyager Fund (Class Y)  57,894    969,147 
Total Equity Funds (cost $3,819,755)    $  3,759,315 
 
FIXED INCOME FUNDS* 5.1%  Shares    Value 
 
Putnam Income Fund (Class Y)  24,250  $  161,506 
Putnam Money Market Fund (Class A)  38,702    38,702 
Total Fixed Income Funds (cost $200,955)    $  200,208 
TOTAL INVESTMENTS       
Total Investments (cost $4,020,710)    $  3,959,523 
* Percentages indicated are based on net assets of $3,957,476.       
 
2045 Fund       
EQUITY FUNDS* 95.0%  Shares    Value 
 
Putnam Capital Opportunities Fund (Class Y)  315,681  $  3,759,764 
Putnam Fund for Growth and Income (Class Y)  319,229    6,448,423 
Putnam International Equity Fund (Class Y)  266,865    7,824,485 
Putnam Voyager Fund (Class Y)  374,046    6,261,525 
Total Equity Funds (cost $23,907,180)      $24,294,197 
 
FIXED INCOME FUNDS* 5.0%  Shares    Value 
 
Putnam Income Fund (Class Y)  156,966  $  1,045,396 
Putnam Money Market Fund (Class A)  250,025    250,025 
Total Fixed Income Funds (cost $1,312,812)    $  1,295,421 
TOTAL INVESTMENTS       
Total Investments (cost $25,219,992)      $25,589,618 


* Percentages indicated are based on net assets of $25,579,534.  		     

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

45

The funds’ portfolios 7/31/06 (Continued)       
 
 
2040 Fund       
EQUITY FUNDS* 90.9%  Shares    Value 
 
Putnam Capital Opportunities Fund (Class Y)  397,953  $  4,739,624 
Putnam Fund for Growth and Income (Class Y)  413,853    8,359,831 
Putnam International Equity Fund (Class Y)  348,339    10,213,305 
Putnam Voyager Fund (Class Y)  485,022    8,119,262 
Total Equity Funds (cost $30,854,981)      $31,432,022
 
FIXED INCOME FUNDS* 9.1%  Shares    Value 
 
Putnam Income Fund (Class Y)  317,955  $  2,117,582 
Putnam Money Market Fund (Class A)  1,039,254    1,039,254 
Total Fixed Income Funds (cost $3,190,256)    $  3,156,836 
TOTAL INVESTMENTS       
Total Investments (cost $34,045,237)      $34,588,858

* Percentages indicated are based on net assets of $34,574,341.  		     
 
2035 Fund       
EQUITY FUNDS* 85.8%  Shares    Value 
 
Putnam Capital Opportunities Fund (Class Y)  625,017  $  7,443,955 
Putnam Fund for Growth and Income (Class Y)  700,137    14,142,770 
Putnam International Equity Fund (Class Y)  528,392    15,492,442 
Putnam Voyager Fund (Class Y)  786,185    13,160,737 
Total Equity Funds (cost $48,953,913)      $50,239,904 
 
FIXED INCOME FUNDS* 14.2%  Shares    Value 
 
Putnam Income Fund (Class Y)  896,472  $  5,970,506 
Putnam Money Market Fund (Class A)  2,354,501    2,354,501 
Total Fixed Income Funds (cost $8,430,983)    $  8,325,007 
TOTAL INVESTMENTS       
Total Investments (cost $57,384,896)      $58,564,911 

* Percentages indicated are based on net assets of $58,540,221.  		     

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

46

The funds’ portfolios 7/31/06 (Continued)       
 
 
2030 Fund       
EQUITY FUNDS* 80.7%  Shares    Value 
 
Putnam Capital Opportunities Fund (Class Y)  883,241  $  10,519,410 
Putnam Fund for Growth and Income (Class Y)  982,628    19,849,087 
Putnam International Equity Fund (Class Y)  777,952    22,809,532 
Putnam Voyager Fund (Class Y)  1,151,275    19,272,331 
Total Equity Funds (cost $70,120,847)    $  72,450,360 
 
FIXED INCOME FUNDS* 19.3%  Shares    Value 
 
Putnam Income Fund (Class Y)  1,921,751  $  12,798,866 
Putnam Money Market Fund (Class A)  4,516,603    4,516,603 
Total Fixed Income Funds (cost $17,559,398)    $  17,315,469 
TOTAL INVESTMENTS       
Total Investments (cost $87,680,245)    $  89,765,829 
* Percentages indicated are based on net assets of $89,729,015.       
 
2025 Fund       
EQUITY FUNDS* 75.7%  Shares    Value 
 
Putnam Capital Opportunities Fund (Class Y)  1,105,923  $  13,171,539 
Putnam Fund for Growth and Income (Class Y)  1,281,219    25,880,621 
Putnam International Equity Fund (Class Y)  977,573    28,662,427 
Putnam Voyager Fund (Class Y)  1,501,113    25,128,633 
Total Equity Funds (cost $89,496,387)    $  92,843,220 
 
FIXED INCOME FUNDS* 24.3%  Shares    Value 
 
Putnam Income Fund (Class Y)  3,000,368  $  19,982,453 
Putnam Money Market Fund (Class A)  9,898,963    9,898,963 
Total Fixed Income Funds (cost $30,319,912)    $  29,881,416 
TOTAL INVESTMENTS       
Total Investments (cost $119,816,299)    $ 122,724,636 

* Percentages indicated are based on net assets of $122,675,337.  		     

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

47

The funds’ portfolios 7/31/06 (Continued)       
 
 
2020 Fund       
EQUITY FUNDS* 65.5%  Shares    Value 
 
Putnam Capital Opportunities Fund (Class Y)  1,275,898  $  15,195,946 
Putnam Fund for Growth and Income (Class Y)  1,549,060    31,290,997 
Putnam International Equity Fund (Class Y)  863,216    25,309,496 
Putnam Voyager Fund (Class Y)  1,814,397    30,373,009 
Total Equity Funds (cost $99,766,949)    $  102,169,448 
 
FIXED INCOME FUNDS* 34.5%  Shares    Value 
 
Putnam Income Fund (Class Y)  5,715,311  $  38,063,974 
Putnam Money Market Fund (Class A)  15,725,566    15,725,566 
Total Fixed Income Funds (cost $54,576,897)    $  53,789,540 
TOTAL INVESTMENTS       
Total Investments (cost $154,343,846)    $  155,958,988

* Percentages indicated are based on net assets of $155,895,735.  		     
 
2015 Fund       
EQUITY FUNDS* 52.4%  Shares    Value 
 
Putnam Capital Opportunities Fund (Class Y)  1,064,498  $  12,678,168 
Putnam Fund for Growth and Income (Class Y)  1,098,350    22,186,662 
Putnam International Equity Fund (Class Y)  405,164    11,879,417 
Putnam Voyager Fund (Class Y)  1,286,718    21,539,666 
Total Equity Funds (cost $67,172,850)    $  68,283,913 
 
FIXED INCOME FUNDS* 47.6%  Shares    Value 
 
Putnam Income Fund (Class Y)  6,155,707  $  40,997,010 
Putnam Money Market Fund (Class A)  21,012,090    21,012,090 
Total Fixed Income Funds (cost $62,893,521)    $  62,009,100 
TOTAL INVESTMENTS       
Total Investments (cost $130,066,371)    $ 130,293,013 

* Percentages indicated are based on net assets of $130,264,097.  		     

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

48

The funds’ portfolios 7/31/06 (Continued)     
 
 
2010 Fund     
EQUITY FUNDS* 32.4%  Shares  Value 
 
Putnam Capital Opportunities Fund (Class Y)  422,525  $ 5,032,279 
Putnam Fund for Growth and Income (Class Y)  512,934  10,361,278 
Putnam International Equity Fund (Class Y)  89,321  2,618,889 
Putnam Voyager Fund (Class Y)  600,857  10,058,348 
Total Equity Funds (cost $27,973,309)    $28,070,794 
 
FIXED INCOME FUNDS* 67.6%  Shares  Value 
 
Putnam Income Fund (Class Y)  5,387,097  $35,878,065 
Putnam Money Market Fund (Class A)  22,610,379  22,610,379 
Total Fixed Income Funds (cost $59,247,326)    $58,488,444 
TOTAL INVESTMENTS     
Total Investments (cost $87,220,635)    $86,559,238 

* Percentages indicated are based on net assets of $86,526,148.  		   
 
Maturity Fund     
EQUITY FUNDS* 24.5%  Shares  Value 
 
Putnam Capital Opportunities Fund (Class Y)  183,701  $ 2,187,867 
Putnam Fund for Growth and Income (Class Y)  223,132  4,507,277 
Putnam International Equity Fund (Class Y)  —  — 
Putnam Voyager Fund (Class Y)  261,235  4,373,078 
Total Equity Funds (cost $11,204,586)    $11,068,222 
 
FIXED INCOME FUNDS* 75.5%  Shares  Value 
 
Putnam Income Fund (Class Y)  3,086,852  $20,558,436 
Putnam Money Market Fund (Class A)  13,617,619  13,617,619 
Total Fixed Income Funds (cost $34,642,607)    $34,176,055 
TOTAL INVESTMENTS     
Total Investments (cost $45,847,193)    $45,244,277 

* Percentages indicated are based on net assets of $45,224,493.  		   

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

49

Statement of assets and liabilities 7/31/06     
 
 
ASSETS  2050 Fund  2045 Fund 
 
Investments in affiliated underlying Putnam Funds, at value (Notes 1 and 6)  $3,959,523  $25,589,618 
Interest receivable  161  1,062 
Receivable for shares of the fund sold  7,150  83,943 
Receivable for securities sold  2,737  27,500 
Receivable from Manager (Note 2)  703  1,868 
Cash  —  86 
Total assets  3,970,274  25,704,077 
 
LIABILITIES     
Payable for shares of the fund redeemed  2,737  27,500 
Payable for securities purchased  7,306  84,973 
Payable for compensation of Manager (Note 2)  299  2,046 
Payable for distribution fees (Note 2)  620  3,170 
Other accrued expenses  1,836  6,854 
Total liabilities  12,798  124,543 
Net assets  $3,957,476  $25,579,534 
 
REPRESENTED BY     
Paid-in-capital (unlimited shares authorized) (Notes 1 and 4)  $3,932,233  $24,210,387 
Undistributed net investment income (Note 1)  3,567  23,791 
Accumulated net realized gain on investments (Note 1)  82,863  975,730 
Net unrealized appreciation (depreciation) of investments  (61,187)  369,626 
Total — Representing net assets applicable to capital outstanding  $3,957,476  $25,579,534 
 
(Continued on next page)     

50

Statement of assets and liabilities 7/31/06 (Continued)

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE  2050 Fund  2045 Fund 
 
Computation of net asset value and offering price Class A     
Net Assets  $2,852,305  $15,085,120 
Number of shares outstanding  50,540  208,699 
Net asset value  $56.44  $72.28 
Offering price per class A share (front-end sales charge of 5.25%)  $59.57  $76.28 
Computation of net asset value Class B     
Net Assets  $44,869  $81,050 
Number of shares outstanding  799  1,158 
Net asset value  $56.18  $69.98 
Computation of net asset value Class C     
Net Assets  $1,153  $9,421 
Number of shares outstanding  21  134 
Net asset value  $56.21  $70.27 
Computation of net asset value Class M     
Net Assets  $3,074  $7,676 
Number of shares outstanding  55  109 
Net asset value  $56.28  $70.38 
Offering price per class M share (front-end sales charge of 3.25%)  $58.17  $72.74 
Computation of net asset value Class R     
Net Assets  $9,535  $18,619 
Number of shares outstanding  169  253 
Net asset value  $56.37  $73.67 
Computation of net asset value Class Y     
Net Assets  $1,046,540  $10,377,648 
Number of shares outstanding  18,500  131,462 
Net asset value  $56.57  $78.94 
Cost of investments (Note 1)  $4,020,710  $25,219,992 

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

51

Statement of assets and liabilities 7/31/06 (Continued)   
 
 
ASSETS  2040 Fund  2035 Fund 
 
Investments in affiliated underlying Putnam Funds, at value (Notes 1 and 6)  $34,588,858  $58,564,911 
Interest receivable  4,312  9,811 
Receivable for shares of the fund sold  322,890  201,980 
Receivable for securities sold  19,237  91,211 
Receivable from Manager (Note 2)  1,903  2,029 
Cash  76  58 
Total assets  34,937,276  58,870,000 
 
LIABILITIES     
Payable for shares of the fund redeemed  19,237  91,211 
Payable for securities purchased  326,817  211,466 
Payable for compensation of Manager (Note 2)  2,734  4,672 
Payable for distribution fees (Note 2)  4,558  6,747 
Other accrued expenses  9,589  15,683 
Total liabilities  362,935  329,779 
Net assets  $34,574,341  $58,540,221 
 
REPRESENTED BY     
Paid-in-capital (unlimited shares authorized) (Notes 1 and 4)  $32,636,477  $54,795,551 
Undistributed net investment income (Note 1)  70,989  188,487 
Accumulated net realized gain on investments (Note 1)  1,323,254  2,376,168 
Net unrealized appreciation of investments  543,621  1,180,015 
Total— Representing net assets applicable to capital outstanding  $34,574,341  $58,540,221 
 
(Continued on next page)     

52

Statement of assets and liabilities 7/31/06 (Continued)   
 
 
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE  2040 Fund  2035 Fund 
 
Computation of net asset value and offering price Class A     
Net Assets  $21,828,949  $31,512,871 
Number of shares outstanding  302,709  448,058 
Net asset value  $72.11  $70.33 
Offering price per class A share (front-end sales charge of 5.25%)  $76.11  $74.23 
Computation of net asset value Class B     
Net Assets  $127,146  $307,899 
Number of shares outstanding  1,821  4,549 
Net asset value  $69.82  $67.68 
Computation of net asset value Class C     
Net Assets  $1,918  $7,054 
Number of shares outstanding  27  104 
Net asset value  $70.00  $68.13 
Computation of net asset value Class M     
Net Assets  $22,769  $37,175 
Number of shares outstanding  325  546 
Net asset value  $70.03  $68.10 
Offering price per class M share (front-end sales charge of 3.25%)  $72.38  $70.39 
Computation of net asset value Class R     
Net Assets  $45,736  $25,495 
Number of shares outstanding  622  368 
Net asset value  $73.56  $69.31 
Computation of net asset value Class Y     
Net Assets  $12,547,823  $26,649,727 
Number of shares outstanding  159,902  347,607 
Net asset value  $78.47  $76.67 
Cost of investments (Note 1)  $34,045,237  $57,384,896 

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

53

Statement of assets and liabilities 7/31/06 (Continued)   
 
 
ASSETS  2030 Fund  2025 Fund 
 
Investments in affiliated underlying Putnam Funds, at value (Notes 1 and 6)  $89,765,829  $122,724,636 
Interest receivable  18,842  41,162 
Receivable for shares of the fund sold  160,392  235,593 
Receivable for securities sold  169,943  70,546 
Receivable from Manager (Note 2)  1,764  3,148 
Cash  57  — 
Total assets  90,116,827  123,075,085 
 
LIABILITIES     
Payable to subcustodian  —  57 
Payable for shares of the fund redeemed  169,943  70,546 
Payable for securities purchased  178,455  275,384 
Payable for compensation of Manager (Note 2)  7,208  9,863 
Payable for distribution fees (Note 2)  10,137  13,503 
Other accrued expenses  22,069  30,395 
Total liabilities  387,812  399,748 
Net assets  $89,729,015  $122,675,337 
 
REPRESENTED BY     
Paid-in-capital (unlimited shares authorized) (Notes 1 and 4)  $83,887,342  $113,812,282 
Undistributed net investment income (Note 1)  400,912  699,063 
Accumulated net realized gain on investments (Note 1)  3,355,177  5,255,655 
Net unrealized appreciation of investments  2,085,584  2,908,337 
Total — Representing net assets applicable to capital outstanding  $89,729,015  $122,675,337 
 
(Continued on next page)     

54

Statement of assets and liabilities 7/31/06 (Continued)   
 
 
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE  2030 Fund  2025 Fund 
 
Computation of net asset value and offering price Class A     
Net Assets  $46,152,900  $61,670,316 
Number of shares outstanding  664,432  845,077 
Net asset value  $69.46  $72.98 
Offering price per class A share (front-end sales charge of 5.25%)  $73.31  $77.02 
Computation of net asset value Class B     
Net Assets  $301,538  $716,514 
Number of shares outstanding  4,463  10,198 
Net asset value  $67.56  $70.26 
Computation of net asset value Class C     
Net Assets  $43,000  $103,446 
Number of shares outstanding  638  1,469 
Net asset value  $67.43  $70.43 
Computation of net asset value Class M     
Net Assets  $603,994  $264,499 
Number of shares outstanding  8,918  3,749 
Net asset value  $67.73  $70.55 
Offering price per class M share (front-end sales charge of 3.25%)  $70.01  $72.92 
Computation of net asset value Class R     
Net Assets  $80,517  $110,598 
Number of shares outstanding  1,188  1,564 
Net asset value  $67.75  $70.70 
Computation of net asset value Class Y     
Net Assets  $42,547,066  $59,809,964 
Number of shares outstanding  566,468  816,237 
Net asset value  $75.11  $73.28 
Cost of investments (Note 1)  $87,680,245  $119,816,299 

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

55

Statement of assets and liabilities 7/31/06 (Continued)   
 
 
ASSETS  2020 Fund  2015 Fund 
 
Investments in affiliated underlying Putnam Funds, at value (Notes 1 and 6)  $155,958,988  $130,293,013 
Interest receivable  65,832  87,510 
Receivable for shares of the fund sold  311,170  322,926 
Receivable for securities sold  262,101  23,538 
Receivable from Manager (Note 2)  2,611  3,154 
Total assets  156,600,702  130,730,141 
 
LIABILITIES     
Payable to subcustodian  58  76 
Payable for shares of the fund redeemed  262,101  23,538 
Payable for securities purchased  374,732  386,724 
Payable for compensation of Manager (Note 2)  12,671  10,577 
Payable for distribution fees (Note 2)  17,740  14,201 
Other accrued expenses  37,665  30,928 
Total liabilities  704,967  466,044 
Net assets  $155,895,735  $130,264,097 
 
REPRESENTED BY     
Paid-in-capital (unlimited shares authorized) (Notes 1 and 4)  $147,887,139  $124,442,638 
Undistributed net investment income (Note 1)  1,240,367  1,430,044 
Accumulated net realized gain on investments (Note 1)  5,153,087  4,164,773 
Net unrealized appreciation of investments  1,615,142  226,642 
Total — Representing net assets applicable to capital outstanding  $155,895,735  $130,264,097 
 
(Continued on next page)     

56

Statement of assets and liabilities 7/31/06 (Continued)   
 
 
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE  2020 Fund  2015 Fund 
 
Computation of net asset value and offering price Class A     
Net Assets  $81,231,556  $66,032,503 
Number of shares outstanding  1,227,109  1,004,762 
Net asset value  $66.20  $65.72 
Offering price per class A share (front-end sales charge of 5.25%)  $69.87  $69.36 
Computation of net asset value Class B     
Net Assets  $543,113  $371,668 
Number of shares outstanding  8,386  5,772 
Net asset value  $64.77  $64.39 
Computation of net asset value Class C     
Net Assets  $108,696  $230,583 
Number of shares outstanding  1,675  3,582 
Net asset value  $64.89  $64.37 
Computation of net asset value Class M     
Net Assets  $534,823  $138,873 
Number of shares outstanding  8,229  2,147 
Net asset value  $64.99  $64.67 
Offering price per class M share (front-end sales charge of 3.25%)  $67.17  $66.84 
Computation of net asset value Class R     
Net Assets  $102,174  $3,652 
Number of shares outstanding  1,570  56 
Net asset value  $65.08  $64.74 
Computation of net asset value Class Y     
Net Assets  $73,375,373  $63,486,818 
Number of shares outstanding  1,034,251  962,658 
Net asset value  $70.95  $65.95 
Cost of investments (Note 1)  $154,343,846  $130,066,371 

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

57

Statement of assets and liabilities 7/31/06 (Continued)   
 
 
ASSETS  2010 Fund  Maturity Fund 
 
Investments in affiliated underlying Putnam Funds, at value (Notes 1 and 6)  $86,559,238  $45,244,277 
Interest receivable  94,149  57,583 
Receivable for shares of the fund sold  425,037  109,922 
Receivable for securities sold  30,209  29,056 
Receivable from Manager (Note 2)  2,779  — 
Cash  —  121,829 
Total assets  87,111,412  45,562,667 
 
LIABILITIES     
Payable to subcustodian  86  — 
Payable for shares of the fund redeemed  30,209  29,056 
Payable for securities purchased  516,183  165,740 
Payable for compensation of Manager (Note 2)  7,082  4,030 
Payable for distribution fees (Note 2)  9,625  6,676 
Distributions payable to shareholders  —  121,835 
Other accrued expenses  22,079  10,837 
Total liabilities  585,264  338,174 
Net assets  $86,526,148  $45,224,493 
 
REPRESENTED BY     
Paid-in-capital (unlimited shares authorized) (Notes 1 and 4)  $84,162,156  $45,424,607 
Undistributed net investment income (Note 1)  1,393,304  50,188 
Accumulated net realized gain on investments (Note 1)  1,632,085  352,614 
Net unrealized depreciation of investments  (661,397)  (602,916) 
Total — Representing net assets applicable to capital outstanding  $86,526,148  $45,224,493 
 
(Continued on next page)     

58

Statement of assets and liabilities 7/31/06 (Continued)   
 
 
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE  2010 Fund  Maturity Fund 
 
Computation of net asset value and offering price Class A     
Net Assets  $44,579,469  $31,206,115 
Number of shares outstanding  759,534  557,548 
Net asset value  $58.69  $55.97 
Offering price per class A share (front-end sales charge of 5.25%)  $61.94  $59.07 
Computation of net asset value Class B     
Net Assets  $227,749  $137,961 
Number of shares outstanding  3,956  2,463 
Net asset value  $57.57  $56.01 
Computation of net asset value Class C     
Net Assets  $36,451  $1,047 
Number of shares outstanding  636  19 
Net asset value  $57.30  $56.04 
Computation of net asset value Class M     
Net Assets  $124,163  $75,324 
Number of shares outstanding  2,161  1,345 
Net asset value  $57.46  $55.99 
Offering price per class M share (front-end sales charge of 3.25%)  $59.39  $57.87 
Computation of net asset value Class R     
Net Assets  $80,321  $48,144 
Number of shares outstanding  1,395  860 
Net asset value  $57.56  $55.99 
Computation of net asset value Class Y     
Net Assets  $41,477,995  $13,755,902 
Number of shares outstanding  675,466  245,179 
Net asset value  $61.41  $56.11 
Cost of investments (Note 1)  $87,220,635  $45,847,193 

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

59

Statement of operations     
For the year ended 7/31/06     
 
INVESTMENT INCOME  2050 Fund  2045 Fund 
 
Income distributions from underlying Putnam Funds  $ 22,230  $ 298,039 
 
EXPENSES (NOTE 2)     
Compensation of Manager  924  10,076 
Distribution fees — Class A  3,395  28,525 
Distribution fees — Class B  397  381 
Distribution fees — Class C  25  95 
Distribution fees — Class M  24  61 
Distribution fees — Class R  15  17 
Audit fees  388  4,242 
Registration fees  375  986 
Reports to shareholder  1,840  2,857 
Other fees  175  269 
Amortization of offering costs (Note 1)  57,574  21,928 
Fees waived and reimbursed by Manager  (59,547)  (21,020) 
Total expenses  5,585  48,417 
Net investment income  16,645  249,622 
Net realized gain on sale of underlying Putnam fund shares  75,292  806,186 
Capital gain distributions from underlying Putnam fund shares  27,154  457,020 
Net unrealized depreciation of underlying Putnam fund shares     
during the year  (72,415)  (335,452) 
Net gain on investments  30,031  927,754 
Net increase in net assets resulting from operations  $ 46,676  $1,177,376 

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

60

Statement of operations (Continued)     
For the year ended 7/31/06     
 
INVESTMENT INCOME  2040 Fund  2035 Fund 
 
Income distributions from underlying Putnam Funds  $ 421,407  $ 857,980 
 
EXPENSES (NOTE 2)     
Compensation of Manager  13,417  24,645 
Distribution fees — Class A  41,260  65,345 
Distribution fees — Class B  690  1,984 
Distribution fees — Class C  14  25 
Distribution fees — Class M  110  222 
Distribution fees — Class R  80  41 
Audit fees  5,647  10,376 
Registration fees  1,388  1,700 
Reports to shareholder  4,332  6,695 
Other fees  418  613 
Amortization of offering costs (Note 1)  21,928  21,928 
Fees waived and reimbursed by Manager  (21,394)  (18,549) 
Total expenses  67,890  115,025 
Net investment income  353,517  742,955 
Net realized gain on sale of underlying Putnam fund shares  1,163,038  2,179,718 
Capital gain distributions from underlying Putnam fund shares  613,934  1,092,449 
Net unrealized depreciation of underlying Putnam fund shares     
during the year  (538,066)  (1,048,506) 
Net gain on investments  1,238,906  2,223,661 
Net increase in net assets resulting from operations  $1,592,423  $ 2,966,616 

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

61

Statement of operations (Continued)     
For the year ended 7/31/06     
 
INVESTMENT INCOME  2030 Fund  2025 Fund 
 
Income distributions from underlying Putnam Funds  $ 1,471,497  $ 2,308,660 
 
EXPENSES (NOTE 2)     
Compensation of Manager  38,753  56,255 
Distribution fees — Class A  95,311  136,984 
Distribution fees — Class B  2,897  4,233 
Distribution fees — Class C  366  788 
Distribution fees — Class M  1,424  1,645 
Distribution fees — Class R  252  29 
Audit fees  16,322  23,697 
Registration fees  1,980  1,271 
Reports to shareholder  7,731  10,192 
Other fees  688  978 
Amortization of offering costs (Note 1)  21,928  21,928 
Fees waived and reimbursed by Manager  (13,443)  (6,684) 
Total expenses  174,209  251,316 
Net investment income  1,297,288  2,057,344 
Net realized gain on sale of underlying Putnam fund shares  3,030,883  5,267,612 
Capital gain distributions from underlying Putnam fund shares  1,658,092  2,294,479 
Net unrealized depreciation of underlying Putnam fund shares     
during the year  (1,426,516)  (2,964,957) 
Net gain on investments  3,262,459  4,597,134 
Net increase in net assets resulting from operations  $ 4,559,747  $ 6,654,478 

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

62

Statement of operations (Continued)     
For the year ended 7/31/06     
 
INVESTMENT INCOME  2020 Fund  2015 Fund 
 
Income distributions from underlying Putnam Funds  $ 3,089,168  $ 3,248,813 
 
EXPENSES (NOTE 2)     
Compensation of Manager  67,982  62,086 
Distribution fees — Class A  167,809  147,897 
Distribution fees — Class B  3,528  2,867 
Distribution fees — Class C  866  1,478 
Distribution fees — Class M  2,921  1,077 
Distribution fees — Class R  282  57 
Audit fees  28,623  26,169 
Registration fees  3,763  14 
Other fees  11,163  9,813 
Amortization of offering costs (Note 1)  21,928  21,928 
Fees waived and reimbursed by Manager  (3,757)  (3,154) 
Total expenses  305,108  270,232 
Net investment income  2,784,060  2,978,581 
Net realized gain on sale of underlying Putnam fund shares  4,589,083  5,170,437 
Capital gain distributions from underlying Putnam fund shares  2,426,270  2,061,980 
Net unrealized depreciation of underlying Putnam fund shares     
during the year  (3,925,439)  (5,734,750) 
Net gain on investments  3,089,914  1,497,667 
Net increase in net assets resulting from operations  $ 5,873,974  $ 4,476,248 

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

63

Statement of operations (Continued)     
For the year ended 7/31/06     
 
INVESTMENT INCOME  2010 Fund  Maturity Fund 
 
Income distributions from underlying Putnam funds  $ 2,651,867  $ 1,539,118 
 
EXPENSES (NOTE 2)     
Compensation of Manager  41,762  22,658 
Distribution fees — Class A  105,168  73,128 
Distribution fees — Class B  1,502  1,205 
Distribution fees — Class C  342  10 
Distribution fees — Class M  818  115 
Distribution fees — Class R  346  16 
Audit fees  17,594  9,555 
Registration fees  519  5 
Other fees  9,115  2,951 
Amortization of offering costs (Note 1)  21,928  32,863 
Fees waived and reimbursed by Manager  (12,026)  (23,796) 
Total expenses  187,068  118,710 
Net investment income  2,464,799  1,420,408 
Net realized gain on sale of underlying Putnam fund shares  1,447,604  322,479 
Capital gain distributions from underlying Putnam fund shares  1,007,022  404,373 
Net unrealized depreciation of underlying Putnam fund shares     
during the year  (2,804,430)  (1,309,034) 
Net loss on investments  (349,804)  (582,182) 
Net increase in net assets resulting from operations  $ 2,114,995  $ 838,226 

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

64

Statement of changes in net assets       
 
2050 Fund       
INCREASE IN NET ASSETS       
  For the year ended 
  7/31/06    7/31/05* 
 
Operations:       
Net investment income (loss)  $ 16,645  $  (50) 
Net realized gain on underlying Putnam fund shares  102,446    2,909 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (72,415)    11,228 
Net increase in net assets resulting from operations  46,676    14,087 
Distributions to shareholders (Note 1)       
From net investment income       
Class A  (12,282)    — 
Class B  (331)    — 
Class C  (39)    — 
Class M  (35)    — 
Class R  (13)    — 
Class Y  (4,084)    — 
From net realized short-term gain on investments       
Class A  (14,240)    — 
Class B  (588)    — 
Class C  (73)    — 
Class M  (55)    — 
Class R  (19)    — 
Class Y  (4,516)    — 
Redemption fees (Note 1)  77    — 
Increase from capital share transactions (Note 4)  3,499,920    432,991 
Total increase in net assets  3,510,398    447,078 
 
NET ASSETS       
Beginning of year (Note 5)  447,078    — 
End of year  $3,957,476    $447,078
Undistributed net investment income, end of year  $ 3,567    $ 130

* Commencement of operations May 2, 2005.

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

65

Statement of changes in net assets (Continued)   
 
2045 Fund     
INCREASE IN NET ASSETS     
  For the year ended 
  7/31/06  7/31/05* 
 
Operations:     
Net investment income  $ 249,622  $ 63,447 
Net realized gain on underlying Putnam fund shares  1,263,206  352,834 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (335,452)  705,078 
Net increase in net assets resulting from operations  1,177,376  1,121,359 
Distributions to shareholders (Note 1)     
From net investment income     
Class A  (166,913)  (26,219) 
Class B  (218)  (8) 
Class C  (78)  (8) 
Class M  (87)  (9) 
Class R  —  (9) 
Class Y  (126,139)  (33,627) 
From net realized short-term gain on investments     
Class A  (349,962)  — 
Class B  (603)  — 
Class C  (314)  — 
Class M  (271)  — 
Class R  —  — 
Class Y  (238,800)  — 
Redemption fees (Note 1)  401  — 
Increase from capital share transactions (Note 4)  9,186,199  15,037,464 
Total increase in net assets  9,480,591  16,098,943 
 
NET ASSETS     
Beginning of year (Note 5)  16,098,943  — 
End of year  $25,579,534  $16,098,943 
Undistributed net investment income, end of year  $ 23,791  $ 13,433 

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.

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

66

Statement of changes in net assets (Continued)   
 
2040 Fund     
INCREASE IN NET ASSETS     
  For the year ended 
  7/31/06  7/31/05* 
 
Operations:     
Net investment income  $ 353,517  $ 97,884 
Net realized gain on underlying Putnam fund shares  1,776,972  450,225 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (538,066)  1,081,687 
Net increase in net assets resulting from operations  1,592,423  1,629,796 
Distributions to shareholders (Note 1)     
From net investment income     
Class A  (234,538)  (40,513) 
Class B  (483)  (7) 
Class C  (10)  (7) 
Class M  (131)  (48) 
Class R  —  (8) 
Class Y  (146,479)  (44,746) 
From net realized short-term gain on investments     
Class A  (534,325)  — 
Class B  (1,625)  — 
Class C  (43)  — 
Class M  (423)  — 
Class R  —  — 
Class Y  (299,882)  — 
Redemption fees (Note 1)  368  1,976 
Increase from capital share transactions (Note 4)  12,936,322  19,716,724 
Total increase in net assets  13,311,174  21,263,167 
 
NET ASSETS     
Beginning of year (Note 5)  21,263,167  — 
End of year  $34,574,341  $21,263,167 
Undistributed net investment income, end of year  $ 70,989  $ 26,478 

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.  		   

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

67

Statement of changes in net assets (Continued)

2035 Fund     
INCREASE IN NET ASSETS     
  For the year ended 
  7/31/06  7/31/05* 
 
Operations:     
Net investment income  $ 742,955  $ 238,444 
Net realized gain on underlying Putnam fund shares  3,272,167  791,457 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (1,048,506)  2,228,521 
Net increase in net assets resulting from operations  2,966,616  3,258,422 
Distributions to shareholders (Note 1)     
From net investment income     
Class A  (415,033)  (70,869) 
Class B  (2,451)  (86) 
Class C  (12)  (7) 
Class M  (327)  (21) 
Class R  —  (7) 
Class Y  (359,130)  (98,944) 
From net realized short-term gain on investments     
Class A  (872,564)  — 
Class B  (5,959)  — 
Class C  (43)  — 
Class M  (885)  — 
Class R  (6)  — 
Class Y  (679,478)  — 
From net realized long-term gain on investments     
Class A  (5,644)  — 
Class B  (39)  — 
Class C  —  — 
Class M  (6)  — 
Class R  —  — 
Class Y  (4,395)  — 
Redemption fees (Note 1)  5  — 
Increase from capital share transactions (Note 4)  15,826,585  39,004,499 
Total increase in net assets  16,447,234  42,092,987 
 
NET ASSETS     
Beginning of year (Note 5)  42,092,987  — 
End of year  $58,540,221  $42,092,987 
Undistributed net investment income, end of year  $ 188,487  $ 94,887 

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.

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

68

Statement of changes in net assets (Continued)

2030 Fund     
INCREASE IN NET ASSETS     
  For the year ended 
  7/31/06  7/31/05* 
 
Operations:     
Net investment income  $ 1,297,288  $ 412,763 
Net realized gain on underlying Putnam fund shares  4,688,975  1,147,493 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (1,426,516)  3,512,100 
Net increase in net assets resulting from operations  4,559,747  5,072,356 
Distributions to shareholders (Note 1)     
From net investment income     
Class A  (645,707)  (98,122) 
Class B  (4,028)  (6) 
Class C  (639)  (6) 
Class M  (779)  (19) 
Class R  (844)  (6) 
Class Y  (651,675)  (140,095) 
From net realized short-term gain on investments     
Class A  (1,184,385)  — 
Class B  (9,681)  — 
Class C  (1,367)  — 
Class M  (1,738)  — 
Class R  (1,482)  — 
Class Y  (1,079,684)  — 
From net realized long-term gain on investments     
Class A  (11,612)  — 
Class B  (95)  — 
Class C  (13)  — 
Class M  (17)  — 
Class R  (15)  — 
Class Y  (10,585)  — 
Redemption fees (Note 1)  920  — 
Increase from capital share transactions (Note 4)  18,421,092  65,517,500 
Total increase in net assets  19,377,413  70,351,602 
 
NET ASSETS     
Beginning of year (Note 5)  70,351,602  — 
End of year  $89,729,015  $70,351,602 
Undistributed net investment income, end of year  $ 400,912  $ 212,753 

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.

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

69

Statement of changes in net assets (Continued)

2025 Fund         
INCREASE IN NET ASSETS         
    For the year ended 
    7/31/06    7/31/05* 
 
Operations:         
Net investment income  $  2,057,344  $  762,161 
Net realized gain on underlying Putnam fund shares    7,562,091    1,265,064 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (2,964,957)    5,873,294 
Net increase in net assets resulting from operations    6,654,478    7,900,519 
Distributions to shareholders (Note 1)         
From net investment income         
Class A    (980,942)    (156,581) 
Class B    (4,935)    (79) 
Class C    (705)    (5) 
Class M    (3,000)    (210) 
Class R    (37)    (6) 
Class Y    (1,051,074)    (242,685) 
From net realized short-term gain on investments         
Class A    (1,681,714)    — 
Class B    (10,597)    — 
Class C    (1,682)    — 
Class M    (6,352)    — 
Class R    (70)    — 
Class Y    (1,624,261)    — 
From net realized long-term gain on investments         
Class A    (2,161)    — 
Class B    (14)    — 
Class C    (2)    — 
Class M    (8)    — 
Class R    —    — 
Class Y    (2,087)    — 
Redemption fees (Note 1)    821    860 
Increase from capital share transactions (Note 4)    11,762,047    102,125,819 
Total increase in net assets    13,047,705    109,627,632
 
NET ASSETS         
Beginning of year (Note 5)    109,627,632   — 
End of year    $122,675,337   $109,627,632 
Undistributed net investment income, end of year    $699,063    $420,251 

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.

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

70

Statement of changes in net assets (Continued)

2020 Fund         
INCREASE IN NET ASSETS         
    For the year ended 
    7/31/06  7/31/05*    
 
Operations:         
Net investment income  $  2,784,060  $944,731    
Net realized gain on underlying Putnam fund shares    7,015,353  1,390,724   
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (3,925,439)  5,540,581   
Net increase in net assets resulting from operations    5,873,974  7,876,036   
Distributions to shareholders (Note 1)         
From net investment income         
Class A    (1,169,602)  (155,610)   
Class B    (5,464)  (90)   
Class C    (1,091)  (14)    
Class M    (6,518)  (151)    
Class R    (1,096)  (5)   
Class Y    (1,260,545)  (232,313)  
From net realized short-term gain on investments         
Class A    (1,497,711)  —   
Class B    (8,487)  —   
Class C    (1,862)  —   
Class M    (9,658)  —   
Class R    (1,305)  —   
Class Y    (1,466,727)  —  
From net realized long-term gain on investments         
Class A    (3,510)  —   
Class B    (20)  —   
Class C    (4)  —   
Class M    (23)  —  
Class R    (3)  —   
Class Y    (3,437)  — 
Redemption fees (Note 1)    353  — 
Increase from capital share transactions (Note 4)    35,018,689  112,951,929 
Total increase in net assets    35,455,953  120,439,782 
 
NET ASSETS         
Beginning of year (Note 5)    120,439,782  —  
End of year    $155,895,735 $120,439,782 
Undistributed net investment income, end of year  $  1,240,367  $   618,822  

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.

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

71

Statement of changes in net assets (Continued)

2015 Fund       
INCREASE (DECREASE) IN NET ASSETS       
    For the year ended 
    7/31/06  7/31/05* 
 
Operations:       
Net investment income  $  2,978,581  $ 1,350,566 
Net realized gain on underlying Putnam fund shares    7,232,417  1,191,425 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (5,734,750)  5,961,392 
Net increase in net assets resulting from operations    4,476,248  8,503,383 
Distributions to shareholders (Note 1)       
From net investment income       
Class A    (1,340,947)  (151,730) 
Class B    (3,935)  (23) 
Class C    (2,633)  (46) 
Class M    (3,386)  (71) 
Class R    (720)  (4) 
Class Y    (1,424,368)  (288,518) 
From net realized short-term gain on investments       
Class A    (2,034,022)  — 
Class B    (6,839)  — 
Class C    (4,596)  — 
Class M    (5,918)  — 
Class R    (1,037)  — 
Class Y    (1,977,837)  — 
From net realized long-term gain on investments       
Class A    (2,511)  — 
Class B    (8)  — 
Class C    (6)  — 
Class M    (7)  — 
Class R    (1)  — 
Class Y    (2,442)  — 
Redemption fees (Note 1)    36  — 
Increase (decrease) from capital share transactions (Note 4)    (8,359,668)  132,895,703 
Total increase (decrease) in net assets    (10,694,597)  140,958,694 
 
NET ASSETS       
Beginning of year (Note 5)    140,958,694  — 
End of year    $130,264,097  $140,958,694 
Undistributed net investment income, end of year  $  1,430,044  $ 981,679 

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.

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

72

Statement of changes in net assets (Continued)

2010 Fund     
INCREASE IN NET ASSETS     
  For the year ended 
  7/31/06  7/31/05* 
 
Operations:     
Net investment income  $ 2,464,799  $ 1,009,849 
Net realized gain on underlying Putnam fund shares  2,454,626  584,207 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares  (2,804,430)  2,143,033 
Net increase in net assets resulting from operations  2,114,995  3,737,089 
Distributions to shareholders (Note 1)     
From net investment income     
Class A  (1,011,730)  (100,806) 
Class B  (1,365)  (9) 
Class C  (720)  (5) 
Class M  (2,636)  (3) 
Class R  (2,459)  (3) 
Class Y  (1,004,002)  (134,208) 
From net realized short-term gain on investments     
Class A  (665,612)  — 
Class B  (1,306)  — 
Class C  (535)  — 
Class M  (1,823)  — 
Class R  (1,537)  — 
Class Y  (608,118)  — 
From net realized long-term gain on investments     
Class A  (9,984)  — 
Class B  (20)  — 
Class C  (8)  — 
Class M  (27)  — 
Class R  (23)  — 
Class Y  (9,122)  — 
Redemption fees (Note 1)  1,403  — 
Increase from capital share transactions (Note 4)  3,792,860  80,435,862 
Total increase in net assets  2,588,231  83,937,917 
 
NET ASSETS     
Beginning of year (Note 5)  83,937,917  — 
End of year  $86,526,148  $83,937,917 
Undistributed net investment income, end of year  $ 1,393,304  $ 827,162 

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.

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

73

Statement of changes in net assets (Continued)

Maturity Fund       
INCREASE (DECREASE) IN NET ASSETS       
    For the year ended 
    7/31/06  7/31/05* 
 
Operations:       
Net investment income  $  1,420,408   $ 615,875 
Net realized gain on underlying Putnam fund shares    726,852  242,186 
Net unrealized appreciation (depreciation) on underlying Putnam fund shares    (1,309,034)  706,118 
Net increase in net assets resulting from operations    838,226  1,564,179 
Distributions to shareholders (Note 1)       
From net investment income       
Class A    (946,095)  (240,377) 
Class B    (2,943)  (888) 
Class C    (26)  (8) 
Class M    (416)  (17) 
Class R    (183)  (12) 
Class Y    (536,359)  (347,085) 
From net realized short-term gain on investments       
Class A    (384,904)  — 
Class B    (1,631)  — 
Class C    (13)  — 
Class M    (40)  — 
Class R    (13)  — 
Class Y    (186,875)  — 
Redemption fees (Note 1)    445  — 
Increase (decrease) from capital share transactions (Note 4)    (1,202,495)  46,572,023 
Total increase (decrease) in net assets    (2,423,322)  47,547,815 
 
NET ASSETS       
Beginning of year (Note 5)    47,647,815  100,000 
End of year    $45,224,493 $47,647,815 
Undistributed net investment income, end of year  $  50,188  $ 62,166 

* For the period November 1, 2004 (commencement of operations) to July 31, 2005.

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

This page left blank intentionally.

75

Financial highlights  (For a common share outstanding throughout the period)                   
 
INVESTMENT OPERATIONS:        LESS DISTRIBUTIONS:          RATIOS AND SUPPLEMENTAL DATA:   
      Net              Total      Ratio of net   
  Net asset    realized and  Total  From  From      Net asset  return  Net  Ratio of  investment   
  value,  Net  unrealized  from  net  net realized      value,  at net  assets, expenses to    income (loss)  Portfolio 
  beginning  investment  gain (loss) on  investment  investment  gain on  Total  Redemption  end  asset  end of period average net  to average  turnover 
Period ended  of period  income (loss)(a)(f )   investments  operations  income  investments  distributions  fees  of period  value (%)(b)   (in thousands)  assets (%)(c)(d)  net assets (%)(d)(f )  (%) 
  
Putnam RetirementReady 2050 Fund                         
CLASS A                             
July 31, 2006  $54.36  .48  3.33  3.81  (.80)  (.93)  (1.73)  —(e)  $56.44  7.07  $2,852  .35  .86  96.90 
July 31, 2005**  50.00  (.01)  4.37  4.36  —  —  —  —  54.36  8.72*  274  .09*  (.02)*  24.76* 
 
CLASS B                             
July 31, 2006  $54.25  .24  3.14  3.38  (.52)  (.93)  (1.45)  —(e)  $56.18  6.26  $45  1.10  .43  96.90 
July 31, 2005**  50.00  (.08)  4.33  4.25  —  —  —  —  54.25  8.50*  31  .28*  (.16)*  24.76* 
 
CLASS C                             
July 31, 2006  $54.25  .73  2.66  3.39  (.50)  (.93)  (1.43)  —(e)  $56.21  6.29  $1  1.10  1.31  96.90 
July 31, 2005**  50.00  (.08)  4.33  4.25  —  —  —  —  54.25  8.50*  4  .28*  (.16)*  24.76* 
 
CLASS M                             
July 31, 2006  $54.28  .45  3.07  3.52  (.59)  (.93)  (1.52)  —(e)  $56.28  6.52  $3  .85  .78  96.90 
July 31, 2005**  50.00  (.05)  4.33  4.28  —  —  —  —  54.28  8.56*  3  .22*  (.09)*  24.76* 
 
CLASS R                             
July 31, 2006  $54.32  .22  3.43  3.65  (.67)  (.93)  (1.60)  —(e)  $56.37  6.75  $10  .60  .40  96.90 
July 31, 2005**  50.00  (.02)  4.34  4.32  —  —  —  —  54.32  8.64*  1  .15*  (.04)*  24.76* 
 
CLASS Y                             
July 31, 2006  $54.38  .62  3.34  3.96  (.84)  (.93)  (1.77)  —(e)  $56.57  7.34  $1,047  .10  1.09  96.90 
July 31, 2005**  50.00  .03  4.35  4.38  —  —  —  —  54.38  8.76*  134  .03*  .05*  24.76* 
 
Putnam RetirementReady 2045 Fund                         
CLASS A                             
July 31, 2006  $70.75  .83  4.42  5.25  (1.20)  (2.52)  (3.72)  —(e)  $72.28  7.50  $15,085  .35  1.14  55.76 
July 31, 2005***  63.42  .28  7.63  7.91  (.58)  —  (.58)  —  70.75  12.51*  8,136  .26*  .41*  42.17* 
 
CLASS B                             
July 31, 2006  $68.83  (.01)  4.59  4.58  (.91)  (2.52)  (3.43)  —(e)  $69.98  6.71  $81  1.10  (.01)  55.76 
July 31, 2005***  62.00  (.24)  7.58  7.34  (.51)  —  (.51)  —  68.83  11.87*  17  .82*  (.37)*  42.17* 
 
CLASS C                             
July 31, 2006  $68.84  .32  4.26  4.58  (.63)  (2.52)  (3.15)  —(e)  $70.27  6.70  $9  1.10  .46  55.76 
July 31, 2005***  62.00  (.26)  7.61  7.35  (.51)  —  (.51)  —  68.84  11.89*  10  .82*  (.39)*  42.17* 
 
CLASS M                             
July 31, 2006  $68.94  .51  4.26  4.77  (.81)  (2.52)  (3.33)  —(e)  $70.38  6.97  $8  .85  .72  55.76 
July 31, 2005***  62.00  (.06)  7.54  7.48  (.54)  —  (.54)  —  68.94  12.09*  9  .64*  (.09)*  42.17* 
 
CLASS R                             
July 31, 2006(1)  $72.20  (.06)  1.53  1.47  —  —  —  —(e)  $73.67  2.04*  $19  .36*  (.09)*  55.76* 
December 19, 2005(2)  69.06  1.48  1.66  3.14  —  —  —  —  72.20  4.55*  —  .23*  2.12*  36.08* 
July 31, 2005***  62.00  .30  7.32  7.62  (.56)  —  (.56)  —  69.06  12.33*  1  .45*  .45*  42.17* 
 
CLASS Y                             
July 31, 2006  $76.88  1.09  4.82  5.91  (1.33)  (2.52)  (3.85)  —(e)  $78.94  7.77  $10,378  .10  1.37  55.76 
July 31, 2005***  68.76  .46  8.26  8.72  (.60)  —  (.60)  —  76.88  12.72*  7,926  .07*  .63*  42.17* 
 
 
See page 86 for Notes to Financial Highlights.                         
 
The accompanying notes are an integral part of these financial statements.                       

76                                                                                                                                                                                                77

Financial highlights  (For a common share outstanding throughout the period) (Continued)                 
 
INVESTMENT OPERATIONS:        LESS DISTRIBUTIONS:          RATIOS AND SUPPLEMENTAL DATA:   
      Net              Total      Ratio of net   
  Net asset    realized and  Total  From  From      Net asset  return  Net  Ratio of  investment   
  value,  Net  unrealized  from  net  net realized      value,  at net  assets, expenses to  income (loss)  Portfolio 
  beginning  investment  gain (loss) on  investment  investment  gain on  Total  Redemption  end  asset  end of period average net  to average  turnover 
Period ended  of period  income (loss)(a)(f ) investments  operations  income  investments  distributions  fees  of period  value (%)(b)   (in thousands) assets (%)(c) (d)   net assets (%)(d)(f )  (%) 
  
Putnam RetirementReady 2040 Fund                         
CLASS A                             
July 31, 2006  $70.81  .89  4.28  5.17  (1.18)  (2.69)  (3.87)  —(e)  $72.11  7.38  $21,829  .35  1.24  54.52 
July 31, 2005***  63.50  .32  7.51  7.83  (.52)  —  (.52)  —(e)  70.81  12.37 *  12,230  .26*  .48*  39.79* 
 
CLASS B                             
July 31, 2006  $68.82  .15  4.34  4.49  (.80)  (2.69)  (3.49)  —(e)  $69.82  6.58  $127  1.10  .22  54.52 
July 31, 2005***  62.00  (.25)  7.52  7.27  (.45)  —  (.45)  —(e)  68.82  11.75 *  37  .82*  (.38)*  39.79* 
 
CLASS C                             
July 31, 2006  $68.83  .32  4.18  4.50  (.64)  (2.69)  (3.33)  —(e)  $70.00  6.60  $2  1.10  .46  54.52 
July 31, 2005***  62.00  .06  7.22  7.28  (.45)  —  (.45)  —(e)  68.83  11.77 *  1  .82*  .09*  39.79* 
 
CLASS M                             
July 31, 2006  $68.88  .45  4.22  4.67  (.83)  (2.69)  (3.52)  —(e)  $70.03  6.85  $23  .85  .64  54.52 
July 31, 2005***  62.00  .07  7.33  7.40  (.52)  —  (.52)  —(e)  68.88  11.96*  11  .64*  .11*  39.79* 
 
CLASS R                             
July 31, 2006(1)  $72.11  .04  1.41  1.45  —  —  —  —(e)  $73.56  2.01*  $46  .36*  .05*  54.52* 
December 19, 2005(2)  69.04  1.47  1.60  3.07  —  —  —  —  72.11  4.45*  —  .23*  2.10*  39.73* 
July 31, 2005***  62.00  .31  7.23  7.54  (.50)  —  (.50)  —(e)  69.04  12.20*  1  .45*  .47*  39.79* 
 
CLASS Y                             
July 31, 2006  $76.67  1.15  4.65  5.80  (1.31)  (2.69)  (4.00)  —(e)  $78.47  7.66  $12,548  .10  1.46  54.52 
July 31, 2005***  68.61  .50  8.10  8.60  (.54)  —  (.54)  —(e)  76.67  12.58*  8,983  .07*  .68*  39.79* 
 
Putnam RetirementReady 2035 Fund                         
CLASS A                             
July 31, 2006  $69.50  1.00  3.73  4.73  (1.25)  (2.65)  (3.90)  —(e)  $70.33  6.87  $31,513  .35  1.41  51.70 
July 31, 2005***  62.61  .38  6.96  7.34  (.45)  —  (.45)  —  69.50  11.76*  21,274  .26*  .58*  36.45* 
 
CLASS B                             
July 31, 2006  $67.35  .38  3.68  4.06  (1.08)  (2.65)  (3.73)  —(e)  $67.68  6.08  $308  1.10  .55  51.70 
July 31, 2005***  61.00  (.08)  6.87  6.79  (.44)  —  (.44)  —  67.35  11.15*  67  .82*  (.13)*  36.45* 
 
CLASS C                             
July 31, 2006  $67.41  .18  3.92  4.10  (.73)  (2.65)  (3.38)  —(e)  $68.13  6.13  $7  1.10  .26  51.70 
July 31, 2005***  61.00  .10  6.69  6.79  (.38)  —  (.38)  —  67.41  11.15*  1  .82*  .15*  36.45* 
 
CLASS M                             
July 31, 2006  $67.47  .56  3.69  4.25  (.97)  (2.65)  (3.62)  —(e)  $68.10  6.35  $37  .85  .82  51.70 
July 31, 2005***  61.00  (.01)  6.92  6.91  (.44)  —  (.44)  —  67.47  11.35*  20  .64*  (.02)*  36.45* 
 
CLASS R                             
July 31, 2006  $67.61  .65  3.70  4.35  —  (2.65)  (2.65)  —(e)  $69.31  6.48  $25  .60  .96  51.70 
July 31, 2005***  61.00  .35  6.70  7.05  (.44)  —  (.44)  —  67.61  11.58 *  1  .45*  .52*  36.45* 
 
CLASS Y                             
July 31, 2006  $75.37  1.25  4.09  5.34  (1.39)  (2.65)  (4.04)  —(e)  $76.67  7.16  $26,650  .10  1.63  51.70 
July 31, 2005***  67.76  .56  7.52  8.08  (.47)  —  (.47)  —  75.37  11.96*  20,730  .07 *  .77*  36.45* 
 
 
See page 86 for Notes to Financial Highlights.                         
 
 
The accompanying notes are an integral part of these financial statements.                       

78                                                                                                                                                                                                     79

Financial highlights  (For a common share outstanding throughout the period) (Continued)                 
 
INVESTMENT OPERATIONS:        LESS DISTRIBUTIONS:          RATIOS AND SUPPLEMENTAL DATA:   
      Net              Total      Ratio of net   
  Net asset    realized and  Total  From  From      Net asset  return  Net  Ratio of  investment   
  value,  Net  unrealized  from  net  net realized      value,  at net  assets,   expenses to income (loss)  Portfolio 
  beginning  investment  gain (loss) on  investment  investment  gain on  Total  Redemption  end  asset  end of period  average net  to average  turnover 
Period ended  of period  income (loss)(a)(f ) investments  operations  income  investments  distributions  fees  of period  value (%)(b)   (in thousands) assets (%)(c) (d)   net assets (%)(d)(f )  (%) 
  
Putnam RetirementReady 2030 Fund                         
CLASS A                             
July 31, 2006  $68.65  1.10  3.36  4.46  (1.28)  (2.37)  (3.65)  —(e)  $69.46  6.57  $46,153  .35  1.57  48.81 
July 31, 2005***  62.16  .44  6.47  6.91  (.42)  —  (.42)  —  68.65  11.14*  32,720  .26*  .66*  34.59* 
 
CLASS B                             
July 31, 2006  $67.07  .59  3.25  3.84  (.98)  (2.37)  (3.35)  —(e)  $67.56  5.77  $302  1.10  .86  48.81 
July 31, 2005***  61.00  (.13)  6.55  6.42  (.35)  —  (.35)  —  67.07  10.54*  225  .82*  (.20)*  34.59* 
 
CLASS C                             
July 31, 2006  $67.06  .64  3.20  3.84  (1.10)  (2.37)  (3.47)  —(e)  $67.43  5.77  $43  1.10  .95  48.81 
July 31, 2005***  61.00  (.06)  6.47  6.41  (.35)  —  (.35)  —  67.06  10.52*  22  .82*  (.10)*  34.59* 
 
CLASS M                             
July 31, 2006  $67.14  .37  3.64  4.01  (1.05)  (2.37)  (3.42)  —(e)  $67.73  6.03  $604  .85  .54  48.81 
July 31, 2005***  61.00  .02  6.52  6.54  (.40)  —  (.40)  —  67.14  10.74*  43  .64*  .03*  34.59* 
 
CLASS R                             
July 31, 2006  $67.27  .87  3.31  4.18  (1.33)  (2.37)  (3.70)  —(e)  $67.75  6.29  $81  .60  1.28  48.81 
July 31, 2005***  61.00  .39  6.28  6.67  (.40)  —  (.40)  —  67.27  10.96*  1  .45*  .58*  34.59* 
 
CLASS Y                             
July 31, 2006  $73.90  1.35  3.65  5.00  (1.42)  (2.37)  (3.79)  —(e)  $75.11  6.84  $42,547  .10  1.79  48.81 
July 31, 2005***  66.78  .57  6.99  7.56  (.44)  —  (.44)  —  73.90  11.35*  37,340  .07 *  .81*  34.59* 
 
Putnam RetirementReady 2025 Fund                         
CLASS A                             
July 31, 2006  $72.26  1.27  3.15  4.42  (1.36)  (2.34)  (3.70)  —(e)  $72.98  6.19  $61,670  .35  1.74  53.14 
July 31, 2005***  65.75  .52  6.39  6.91  (.40)  —  (.40)  —(e)  72.26  10.53*  48,529  .26*  .75*  25.48* 
 
CLASS B                             
July 31, 2006  $69.94  .59  3.16  3.75  (1.09)  (2.34)  (3.43)  —(e)  $70.26  5.40  $717  1.10  .84  53.14 
July 31, 2005***  64.00  (.05)  6.38  6.33  (.39)  —  (.39)  —(e)  69.94  9.91*  211  .82*  (.08)*  25.48* 
 
CLASS C                             
July 31, 2006  $70.00  .53  3.22  3.75  (.98)  (2.34)  (3.32)  —(e)  $70.43  5.41  $103  1.10  .74  53.14 
July 31, 2005***  64.00  (.04)  6.36  6.32  (.32)  —  (.32)  —(e)  70.00  9.89*  45  .82*  (.05)*  25.48* 
 
CLASS M                             
July 31, 2006  $70.06  .84  3.09  3.93  (1.10)  (2.34)  (3.44)  —(e)  $70.55  5.66  $264  .85  1.19  53.14 
July 31, 2005***  64.00  .11  6.35  6.46  (.40)  —  (.40)  —(e)  70.06  10.12*  173  .64*  .17*  25.48* 
 
CLASS R                             
July 31, 2006  $70.21  .65  3.47  4.12  (1.29)  (2.34)  (3.63)  —(e)  $70.70  5.93  $111  .60  .97  53.14 
July 31, 2005***  64.00  .42  6.17  6.59  (.38)  —  (.38)  —(e)  70.21  10.31*  1  .45*  .64*  25.48* 
 
CLASS Y                             
July 31, 2006  $72.50  1.42  3.21  4.63  (1.51)  (2.34)  (3.85)  —(e)  $73.28  6.47  $59,810  .10  1.93  53.14 
July 31, 2005***  65.87  .63  6.42  7.05  (.42)  —  (.42)  —(e)  72.50  10.72*  60,668  .07*  .90*  25.48* 
 
See page 86 for Notes to Financial Highlights.                         
 
The accompanying notes are an integral part of these financial statements.                       

80                                                                                                                                                                                                         81

Financial highlights  (For a common share outstanding throughout the period) (Continued)                 
 
INVESTMENT OPERATIONS:        LESS DISTRIBUTIONS:          RATIOS AND SUPPLEMENTAL DATA:   
      Net              Total      Ratio of net   
  Net asset    realized and  Total  From  From      Net asset  return  Net  Ratio of  investment   
  value,  Net  unrealized  from  net  net realized      value,  at net  assets, expenses to  income (loss)  Portfolio 
  beginning  investment  gain (loss) on  investment  investment  gain on  Total  Redemption  end  asset  end of period  average net  to average  turnover 
Period ended  of period  income (loss)(a)(f )  investments   operations  income  investments  distributions  fees  of period  value (%)(b)   (in thousands)  assets (%)(c) (d)   net assets (%)(d)(f ) (%) 
  
Putnam RetirementReady 2020 Fund                         
CLASS A                             
July 31, 2006  $66.06  1.28  1.90  3.18  (1.33)  (1.71)  (3.04)  —(e)  $66.20  4.86  $81,232  .35  1.93  46.91 
July 31, 2005***  60.69  .54  5.16  5.70  (.33)  —  (.33)  —  66.06  9.41*  53,180  .26*  .85*  30.16* 
 
CLASS B                             
July 31, 2006  $64.94  .77  1.87  2.64  (1.10)  (1.71)  (2.81)  —(e)  $64.77  4.08  $543  1.10  1.18  46.91 
July 31, 2005***  60.00  .08  5.18  5.26  (.32)  —  (.32)  —  64.94  8.79*  241  .82*  .12*  30.16* 
 
CLASS C                             
July 31, 2006  $64.97  .76  1.87  2.63  (1.00)  (1.71)  (2.71)  —(e)  $64.89  4.06  $109  1.10  1.16  46.91 
July 31, 2005***  60.00  .08  5.19  5.27  (.30)  —  (.30)  —  64.97  8.79*  61  .82*  .12*  30.16* 
 
CLASS M                             
July 31, 2006  $65.05  .97  1.83  2.80  (1.15)  (1.71)  (2.86)  —(e)  $64.99  4.34  $535  .85  1.49  46.91 
July 31, 2005***  60.00  .19  5.20  5.39  (.34)  —  (.34)  —  65.05  9.00*  276  .64*  .30*  30.16* 
 
CLASS R                             
July 31, 2006  $65.23  1.18  1.81  2.99  (1.43)  (1.71)  (3.14)  —(e)  $65.08  4.62  $102  .60  1.81  46.91 
July 31, 2005***  60.00  .44  5.10  5.54  (.31)  —  (.31)  —  65.23  9.25*  1  .45*  .71*  30.16* 
 
CLASS Y                             
July 31, 2006  $70.54  1.56  2.03  3.59  (1.47)  (1.71)  (3.18)  —(e)  $70.95  5.13  $73,375  .10  2.18  46.91 
July 31, 2005***  64.69  .68  5.52  6.20  (.35)  —  (.35)  —  70.54  9.60*  66,682  .07*  1.01*  30.16* 
 
Putnam RetirementReady 2015 Fund                         
CLASS A                             
July 31, 2006  $67.28  1.54  .93  2.47  (1.60)  (2.43)  (4.03)  —(e)  $65.72  3.71  $66,033  .35  2.31  62.70 
July 31, 2005***  62.62  .66  4.28  4.94  (.28)  —  (.28)  —  67.28  7.90*  56,457  .26*  1.01*  26.37* 
 
CLASS B                             
July 31, 2006  $66.27  .95  1.00  1.95  (1.40)  (2.43)  (3.83)  —(e)  $64.39  2.95  $372  1.10  1.46  62.70 
July 31, 2005***  62.00  .22  4.30  4.52  (.25)  —  (.25)  —  66.27  7.30*  165  .82*  .35*  26.37* 
 
CLASS C                             
July 31, 2006  $66.25  1.01  .93  1.94  (1.39)  (2.43)  (3.82)  —(e)  $64.37  2.93  $231  1.10  1.56  62.70 
July 31, 2005***  62.00  .25  4.28  4.53  (.28)  —  (.28)  —  66.25  7.32*  90  .82*  .38*  26.37* 
 
CLASS M                             
July 31, 2006  $66.38  1.24  .87  2.11  (1.39)  (2.43)  (3.82)  —(e)  $64.67  3.19  $139  .85  1.89  62.70 
July 31, 2005***  62.00  .35  4.30  4.65  (.27)  —  (.27)  —  66.38  7.52*  142  .64*  .54*  26.37* 
 
CLASS R                             
July 31, 2006  $66.54  1.82  .50  2.32  (1.69)  (2.43)  (4.12)  —(e)  $64.74  3.51  $4  .60  2.82  62.70 
July 31, 2005***  62.00  .55  4.25  4.80  (.26)  —  (.26)  —  66.54  7.75*  1  .45*  .84*  26.37* 
 
CLASS Y                             
July 31, 2006  67.48  1.67  .98  2.65  (1.75)  (2.43)  (4.18)  —(e)  $65.95  3.97  $63,487  .10  2.49  62.70 
July 31, 2005***  62.71  .77  4.30  5.07  (.30)  —  (.30)  —  67.48  8.10*  84,103  .07*  1.18*  26.37* 
 
See page 86 for Notes to Financial Highlights.                         
 
The accompanying notes are an integral part of these financial statements.                       

82                                                                                                                                                                                                       83

Financial highlights  (For a common share outstanding throughout the period) (Continued)                 
 
INVESTMENT OPERATIONS:        LESS DISTRIBUTIONS:          RATIOS AND SUPPLEMENTAL DATA:   
      Net              Total      Ratio of net   
  Net asset    realized and  Total  From  From      Net asset  return  Net  Ratio of  investment   
  value,  Net  unrealized  from  net  net realized      value,  at net  assets, expenses to  income (loss)  Portfolio 
  beginning  investment  gain (loss) on  investment  investment  gain on  Total  Redemption  end  asset  end of period  average net  to average  turnover 
Period ended  of period  income (loss)(a)(f ) investments  operations  income  investments  distributions  fees  of period  value (%)(b)   (in thousands) assets (%)(c) (d)   net assets (%)(d)(f )  (%) 
  
Putnam RetirementReady 2010 Fund                         
CLASS A                             
July 31, 2006  $59.72  1.68  (.17)  1.51  (1.52)  (1.02)  (2.54)  —(e)  $58.69  2.54  $44,579  .34  2.84  61.79 
July 31, 2005***  56.79  .73  2.42  3.15  (.22)  —  (.22)  —  59.72  5.55*  39,291  .26*  1.26*  33.53* 
 
CLASS B                             
July 31, 2006  $58.59  1.20  (.15)  1.05  (1.05)  (1.02)  (2.07)  —(e)  $57.57  1.78  $228  1.09  2.08  61.79 
July 31, 2005***  56.00  .37  2.42  2.79  (.20)  —  (.20)  —  58.59  4.98*  84  .82*  .65*  33.53* 
 
CLASS C                             
July 31, 2006  $58.62  1.23  (.18)  1.05  (1.35)  (1.02)  (2.37)  —(e)  $57.30  1.78  $36  1.09  2.12  61.79 
July 31, 2005***  56.00  .41  2.38  2.79  (.17)  —  (.17)  —  58.62  4.98*  15  .82*  .71*  33.53* 
 
CLASS M                             
July 31, 2006  $58.73  1.38  (.18)  1.20  (1.45)  (1.02)  (2.47)  —(e)  $57.46  2.03  $124  .84  2.39  61.79 
July 31, 2005***  56.00  .56  2.34  2.90  (.17)  —  (.17)  —  58.73  5.19*  55  .64*  .97*  33.53* 
 
CLASS R                             
July 31, 2006  $58.83  1.60  (.25)  1.35  (1.60)  (1.02)  (2.62)  —(e)  $57.56  2.30  $80  .59  2.80  61.79 
July 31, 2005***  56.00  .59  2.43  3.02  (.19)  —  (.19)  —  58.83  5.41*  1  .45*  1.06*  33.53* 
 
CLASS Y                             
July 31, 2006  $62.35  1.90  (.17)  1.73  (1.65)  (1.02)  (2.67)  —(e)  $61.41  2.79  $41,478  .09  3.07  61.79 
July 31, 2005***  59.18  .86  2.54  3.40  (.23)  —  (.23)  —  62.35  5.76*  44,492  .07*  1.42*  33.53* 
 
Putnam RetirementReady Maturity Fund                         
CLASS A                             
July 31, 2006  $57.51  1.74  (.70)  1.04  (1.83)  (.75)  (2.58)  —(e)  $55.97  1.82  $31,206  .35  3.07  61.89 
July 31, 2005***  55.96  .80  1.50  2.30  (.75)  —  (.75)  —  57.51  4.15*  25,732  .26*  1.41*  41.89* 
 
CLASS B                             
July 31, 2006  $57.54  1.31  (.70)  .61  (1.39)  (.75)  (2.14)  —(e)  $56.01  1.06  $138  1.10  2.31  61.89 
July 31, 2005***  56.00  .47  1.51  1.98  (.44)  —  (.44)  —  57.54  3.55*  124  .82*  .83*  41.89* 
 
CLASS C                             
July 31, 2006  $57.56  1.36  (.73)  .63  (1.40)  (.75)  (2.15)  —(e)  $56.04  1.09  $1  1.10  2.31  61.89 
July 31, 2005***  56.00  .46  1.54  2.00  (.44)  —  (.44)  —  57.56  3.59*  1  .82*  .81*  41.89* 
 
CLASS M                             
July 31, 2006  $57.54  1.57  (.81)  .76  (1.56)  (.75)  (2.31)  —(e)  $55.99  1.33  $75  .85  2.86  61.89 
July 31, 2005***  56.00  .61  1.49  2.10  (.56)  —  (.56)  —  57.54  3.76*  2  .64*  1.07*  41.89* 
 
CLASS R                             
July 31, 2006  $57.56  1.62  (.73)  .89  (1.71)  (.75)  (2.46)  —(e)  $55.99  1.56  $48  .60  2.97  61.89 
July 31, 2005***  56.00  .67  1.54  2.21  (.65)  —  (.65)  —  57.56  3.97*  1  .45*  1.19*  41.89* 
 
CLASS Y                             
July 31, 2006  $57.65  1.86  (.68)  1.18  (1.97)  (.75)  (2.72)  —(e)  $56.11  2.07  $13,756  .10  3.26  61.89 
July 31, 2005***  56.08  .89  1.53  2.42  (.85)  —  (.85)  —  57.65  4.34*  21,787  .07*  1.56*  41.89* 
 
 
See page 86 for Notes to Financial Highlights.                         
 
 
The accompanying notes are an integral part of these financial statements.                       

84                                                                                                                                                                                                       85

Financial Highlights (Continued)

* Not annualized.

** For the period May 2, 2005 (commencement of operations) to July 31, 2005.

*** For the period November 1, 2004 (commencement of operations) to July 31, 2005.

(a) Per share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.

(b) Total return does not reflect the effect of sales charges.

(c) Expense ratios do not include expenses of the underlying funds.

(d) Reflects an involuntary contractual expense limitation in effect during the period. As a result of such limitation the expenses for the following periods reflect a reduction of the following based on each funds’ average net assets.

  7/31/06  7/31/05 
Putnam RetirementReady 2050 Fund  3.23%  12.75% 
Putnam RetirementReady 2045 Fund  0.10  0.57 
Putnam RetirementReady 2040 Fund  0.08  0.40 
Putnam RetirementReady 2035 Fund  0.04  0.20 
Putnam RetirementReady 2030 Fund  0.02  0.13 
Putnam RetirementReady 2025 Fund  0.01  0.08 
Putnam RetirementReady 2020 Fund  <0.01  0.07 
Putnam RetirementReady 2015 Fund  <0.01  0.06 
Putnam RetirementReady 2010 Fund  0.01  0.09 
Putnam RetirementReady Maturity Fund  0.05  0.28 

(e) Amount represents less than $0.01 per share.

(f) The net investment income ratios and per share amounts shown for the period ending July 31, 2006 may not correspond with the expected class specific differences for the period due to the timing of sales and repurchases of fund shares in relation to when distributions from the underlying Putnam funds were received.

(1) For the period December 22, 2005 to July 31, 2006.

(2) For the period August 1, 2005 to December 19, 2005. All class R shares for Fund 2045 and Fund 2040 were liquidated on December 19, 2005.

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

86

Notes to financial statements 7/31/06

Note 1: Significant accounting policies

Each of Putnam RetirementReady Funds: Putnam RetirementReady 2050 Fund, Putnam Retirement-Ready 2045 Fund, Putnam RetirementReady 2040 Fund, Putnam RetirementReady 2035 Fund, Putnam RetirementReady 2030 Fund, Putnam Retirement-Ready 2025 Fund, Putnam RetirementReady 2020 Fund, Putnam RetirementReady 2015 Fund, Putnam RetirementReady 2010 Fund and Putnam RetirementReady Maturity Fund, (collectively the “funds”) is a series of Putnam RetirementReady Funds, a Massachusetts business trust organized on June 8, 2004 (the “Trust”). Each fund is a diversified open-ended investment company under the Investment Company Act of 1940, as amended, each of which is represented by a series of shares of beneficial interest. Each fund except the Maturity Fund seeks capital appreciation and current income consistent with a decreasing emphasis on capital appreciation and an increasing emphasis on current income as it approaches its target date. The Maturity Fund seeks as high a rate of current income as Putnam Investment Management, LLC (“Putnam Management”) believes is consistent with preservation of capital.

Currently there are ten separate funds, of which nine have a target date specified by the calendar year in the name of each fund. The target dates are in five-year increments beginning with the year 2010. The tenth fund is named Putnam RetirementReady Maturity Fund. As the other funds reach their target date, they will merge with the Maturity Fund.

These financial statements report on each fund, which may invest in the following Putnam Funds: Putnam Income Fund, Putnam Capital Opportunities Fund, The Putnam Fund for Growth and Income, Putnam Money Market Fund, Putnam International Equity Fund and Putnam Voyager Fund (the “underlying Putnam Funds”), which are managed by Putnam Management. The financial statements of the underlying Putnam Funds contain additional information about the expenses and investments of the underlying Putnam Funds and are available upon request.

Each fund offers class A, class B, class C, class M, class R and class Y shares. Class A and class M shares are sold with a maximum front-end sales charge of 5.25% and 3.25%, respectively, and generally do not pay a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, do not pay a front-end sales charge and are subject to a contingent deferred sales charge, if those shares are redeemed within six years of purchase. Class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Class R shares, which are offered to qualified employee benefit plans, are sold without a front-end sales charge or a contingent deferred sales charge. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, class M and class R shares, but do not bear a distribution fee. Class Y shares are sold to certain eligible purchasers including certain defined contribution plans (including corporate IRAs), bank trust departments and trust companies.

A 2.00% redemption fee may apply to any shares that are redeemed (either by selling or exchanging into another fund) within 5 days of purchase. The redemption fee is accounted for as an addition to paid-in-capital.

The redemption fees discussed above will be replaced, effective October 2, 2006, by a 1.00% redemption fee on any shares purchased on or after such date that are redeemed (either by selling or exchanging into another fund) within 7 days of purchase.

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

87

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

In the normal course of business, each fund enters into contracts that may include agreements to indemnify another party under given circumstances. Each 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 each fund. However, each fund expects the risk of material loss to be remote.

The following is a summary of significant accounting policies consistently followed by the funds in the preparation of their 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 during the reporting period. Actual results could differ from those estimates.

A) Security valuation The price of each fund’s shares is based on its net asset value (NAV), which is in turn based on the NAVs of the underlying Putnam Funds in which it invests. The NAV per share of each class equals the total value of its assets, less its liabilities, divided by the number of its outstanding shares. Shares are only valued as of the close of regular trading on the New York Stock Exchange each day the exchange is open. Each underlying Putnam Fund values its investments for which market quotations are readily available at the last reported sales price on their principal exchange, or official closing price for certain markets. If no sales are reported — as in the case of some securities traded over-the-counter — a security is valued at its last reported bid price. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. Accordingly, on certain days, each underlying Putnam Fund will fair value foreign equity securities taking into account multiple factors, including movements in the U.S. securities markets. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by each underlying Putnam fund to a significant extent. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate. Other investments, including certain restricted securities, are valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that each underlying Putnam 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 at a given point in time and does not reflect an actual market price, which may be different by a material amount.

B) Security transactions and related investment income Security transactions, which consist of shares of the underlying Putnam Funds, are recorded on the trade date (date the order to buy or sell is executed). Gains or losses from the sale of the underlying Putnam Funds are determined on the identified cost basis. Income and capital gain distributions from the underlying Putnam funds are recorded on the ex-dividend date.

C) Federal taxes It is the policy of each fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code of 1986 (the “Code”) applicable to regulated investment companies. It is also the intention of each fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code, as amended. Therefore, 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.

88

D) Distributions to shareholders Each fund normally distributes any net investment income and any realized capital gains, annually, except the Maturity Fund, which normally distributes any net investment income monthly and any net realized capital gains 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. These differences include temporary and permanent differences of losses on wash sale transactions, dividends payable (Maturity fund only), non-deductible offering costs and short-term capital gain distributions from underlying Putnam Fund shares for all funds. Reclassifications are made to each funds’ capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the year ended July 31, 2006, the funds reclassified the following amounts:

  Undistributed  Accumulated Net     
  Net Investment  Realized Loss on    Paid-in- 
  Income  Investment Transactions    Capital 
 
RetirementReady         
2050 Fund  $ 3,576  $ (3,001)  $  (575) 
2045 Fund  54,171  (50,360)    (3,811) 
2040 Fund  72,635  (67,645)    (4,990) 
2035 Fund  127,598  (118,437)    (9,161) 
2030 Fund  194,543  (180,617)    (13,926) 
2025 Fund  262,161  (242,552)    (19,609) 
2020 Fund  281,801  (260,243)    (21,558) 
2015 Fund  245,773  (223,845)    (21,928) 
2010 Fund  124,255  (108,633)    (15,622) 
Maturity Fund  53,636  (42,948)    (10,688) 

The tax basis components of distributable earnings and the federal tax cost as of July 31, 2006 were as follows:

                Cost for 
        Net    Undistributed    Federal 
        Unrealized   Undistributed Short-  Undistributed  Income 
  Unrealized  Unrealized    Appreciation/   Ordinary Term Long-Term  Tax 
  Appreciation  Depreciation  (Depreciation)   Income  Gain  Gain  Purposes 
 
RetirementReady                 
2050 Fund  $ 36,482  $ (106,639)  $  (70,157) $ 3,567  $ 69,787  $ 22,046 $ 4,029,680   
2045 Fund  900,631  (557,715)    342,916  23,791  188,731  813,709  25,246,702 
2040 Fund  1,186,116  (688,333)    497,783  70,989  189,461  1,179,631  34,091,075 
2035 Fund  2,138,406  (1,038,472)    1,099,934  188,487  —  2,456,249  57,464,977 
2030 Fund  3,390,537  (1,459,763)    1,930,774  400,912  1,704  3,508,283  87,835,055 
2025 Fund  4,588,665  (1,867,571)    2,721,094  699,063  —  5,442,898  120,003,542 
2020 Fund  3,952,280  (2,640,456)    1,311,824  1,240,367  —  5,456 405  154,647,164 
2015 Fund  2,004,539  (2,158,449)    (153,910)  1,430,044  20,859  4,524,466  130,446,923 
2010 Fund  285,154  (1,382,317)    (1,097,163)  1,393,304  12,812  2,055,040  87,656,402 
Maturity Fund  106,771  (954,235)    (847,464)  172,023  18,858  578,304  46,091,741 

89

E) 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.

F) Organization and offering Expenses incurred by each fund in connection with its organization, its registration with the Securities and Exchange Commission and with various states and the initial public offering of its shares were $86,966 (2050 Fund; $76,976), except Maturity Fund which incurred $132,666 plus $12,500 in organization costs.

The organization costs were expensed as occurred and the offering costs have been amortized over a twelve month period on a straight line basis.

Note 2: Management fee, administrative services and other transactions

Putnam Management is paid for management and investment advisory services monthly at an annual rate of 0.05% based on the average net assets of each fund.

Effective July 1, 2006, Putnam Management has agreed to waive fees and reimburse expenses of each fund through July 31, 2007, to the extent necessary to ensure that each fund’s expenses (exclusive of the underlying Putnam fund expenses) do not exceed the simple average of the expenses of all front-end load funds viewed by Lipper Inc. as having the same investment classifi-cation or objective as the funds. The expense reimbursement is based on a comparison of each funds’ expenses with the average annualized operating expenses of the funds in its Lipper peer group for each calendar quarter during the last fiscal year, excluding 12b-1 fees and without giving effect to any expense offset and brokerage service arrangements that may reduce fund expenses.

Putnam Management has agreed to limit its compensation (and, to the extent necessary, bear other expenses) through July 31, 2007, to the extent that expenses of each fund (exclusive of brokerage commissions, interest, taxes extraordinary expenses, and fees and expenses of the underlying funds in which each fund invests and payments under the fund’s distribution plan) would exceed an annual rate of 0.10% of each fund’s average net assets.

For the year ended July 31, 2006, each funds’ expenses were limited to the lower of the limits specified above and accordingly, Putnam Management waived the following of its management fee from each fund:

  Fees waived and reimbursed 
  by the Manager 
____________________________________________________________
RetirementReady   
2050 Fund  $59,547 
2045 Fund  21,020 
2040 Fund  21,394 
2035 Fund  18,549 
2030 Fund  13,443 
2025 Fund  6,684 
2020 Fund  3,757 
2015 Fund  3,154 
2010 Fund  12,026 
Maturity Fund  23,796 

Each fund has adopted distribution plans (the “Plans”) with respect to its class A, class B, class C, class M and class R shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management, a wholly-owned subsidiary of Putnam, LLC and Putnam Retail Management GP, Inc., for services provided and expenses incurred in distributing shares of the funds. The Plans provide for payments by each fund to Putnam Retail Management at an annual rate of up to 0.35%, 1.00%, 1.00%, 1.00% and 1.00% of the average net assets attributable to class A, class B, class C, class M and class R shares, respectively. The Trustees have approved payment by the funds’ at an annual rate of 0.25%, 1.00%, 1.00%, 0.75% and 0.50% of the average net assets attributable to class A, class B, class C, class M, and class R shares, respectively.

90

For the year ended July 31, 2006, Putnam Retail Management, acting as underwriter, received net commissions from the sale of class A and class M shares, and received contingent deferred sales charges (CDSC) from redemptions of class B and class C shares, respectively:

  Class A  Class M     
  Net  Net  Class B  Class C 
  Commissions  Commissions  CDSC  CDSC 
 
RetirementReady         
2050 Fund  $ 2,579  $ —  $ —  $315 
2045 Fund  1,249  —  —  — 
2040 Fund  438  —  58  — 
2035 Fund  2,919  16  433  — 
2030 Fund  1,074  12  1,388  424 
2025 Fund  4,655  492  620  — 
2020 Fund  1,773  687  566  — 
2015 Fund  1,237  226  1,124  — 
2010 Fund  151  14  295  — 
Maturity Fund  92  —  —  — 
Total  $16,167  $1,447  $4,484  $739 

A deferred sales charge of up to 1.00% and 0.65% is assessed on certain redemptions of class A and class M shares, respectively. For the year ended July 31, 2006, Putnam Management acting as underwriter, received no monies on class A and class M redemptions, respectively.

Note 3: Purchases and sales of securities

During the year ended July 31, 2006, cost of purchases and proceeds from sales of underlying Putnam Funds were as follows:

    Purchases  Sales 
 
2050 Fund  $  5,312,443  $ 1,802,981 
2045 Fund    20,319,527  11,268,212 
2040 Fund    27,421,920  14,693,479 
2035 Fund    40,935,698  25,577,626 
2030 Fund    55,763,284  37,951,432 
2025 Fund    70,941,537  60,166,161 
2020 Fund    98,645,811  63,817,017 
2015 Fund    78,893,462  89,036,662 
2010 Fund    55,667,588  51,697,076 
Maturity Fund    28,240,311  29,627,202 

Note 4: Capital shares

Class A and Class Y shares of all funds (with the exception of 2050 Fund) were formed with an initial in-kind contribution from another Putnam trust.

At July 31, 2006, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:

91

RetirementReady 2050 Fund     
CLASS A  Shares    Amount 
 
Year ended 7/31/06:       
Shares sold  64,652    $ 3,672,572 
Shares issued       
in connection with       
reinvestment       
of distributions  477    26,522 
  65,129    3,699,094 
Shares       
repurchased  (19,621)    (1,130,209) 
Net increase  45,508    $ 2,568,885 
Year ended 7/31/05:       
Shares sold  5,756    $304,997 
Shares issued       
in connection with       
reinvestment       
of distributions  —    — 
  5,756    304,997 
Shares       
repurchased  (724)    (39,118) 
Net increase  5,032    $265,879 
CLASS B  Shares    Amount 
 
Year ended 7/31/06:       
Shares sold  393    $ 21,983 
Shares issued       
in connection with       
reinvestment       
of distributions  17    919 
  410    22,902 
Shares       
repurchased  (191)    (10,895) 
Net increase  219    $ 12,007 
Year ended 7/31/05:       
Shares sold  600    $ 30,564 
Shares issued       
in connection with       
reinvestment       
of distributions  —    — 
  600    30,564 
Shares       
repurchased  (20)    (1,085) 
Net increase  580    $ 29,479 

CLASS C  Shares    Amount  
 
Year ended 7/31/06:       
Shares sold  —    $— 
Shares issued       
in connection with       
reinvestment       
of distributions  2    112 
  2    112 
Shares repurchased  (59)    (3,350) 
Net decrease  (57)    $(3,238)
Year ended 7/31/05:       
Shares sold  78    $ 3,971 
Shares issued       
in connection with       
reinvestment       
of distributions  —    — 
  78    3,971 
Shares       
repurchased  —    — 
Net increase  78    $ 3,971
 
CLASS M  Shares    Amount  
 
Year ended 7/31/06:       
Shares sold  —    $ — 
Shares issued       
in connection with       
reinvestment       
of distributions  2    90 
  2    90 
Shares       
repurchased  (6)    (364) 
Net decrease  (4)    $ (274)  
Year ended 7/31/05:       
Shares sold  59    $2,997
Shares issued       
in connection with       
reinvestment       
of distributions  —    — 
  59    2,997 
Shares       
repurchased  —    — 
Net increase  59    $2,997

92

CLASS R  Shares    Amount 
 
Year ended 7/31/06:       
Shares sold  148    $8,716 
Shares issued       
in connection with       
reinvestment       
of distributions  1    32 
  149    8,748 
Shares       
repurchased  —*    (16) 
Net increase  149    $8,732 
Year ended 7/31/05:       
Shares sold  20    $1,000 
Shares issued       
in connection with       
reinvestment       
of distributions  —    — 
  20    1,000 
Shares       
repurchased  —    — 
Net increase  20    $1,000 
 
CLASS Y  Shares    Amount 
 
Year ended 7/31/06:       
Shares sold  23,536    $1,333,220  
Shares issued       
in connection with       
reinvestment       
of distributions  155    8,600 
  23,691    1,341,820 
Shares       
repurchased  (7,646)    (428,012) 
Net increase  16,045  $913,808 
Year ended 7/31/05:       
Shares sold  2,483    $131,152 
Shares issued       
in connection with       
reinvestment       
of distributions  —    — 
  2,483    131,152 
Shares       
repurchased  (28)    (1,487) 
Net increase  2,455    $129,665 

RetirementReady 2045 Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  163,725  $11,892,306 
Shares issued     
in connection with     
reinvestment     
of distributions  7,269  516,875 
  170,994  12,409,181 
Shares     
repurchased  (77,294)  (5,594,554) 
Net increase  93,700  $ 6,814,627 
Year ended 7/31/05:     
Shares sold  139,349  $ 9,287,225 
Shares issued     
in connection with     
reinvestment     
of distributions  386  26,219 
  139,735  9,313,444 
Shares     
repurchased  (24,736)  (1,684,933) 
Net increase  114,999  $ 7,628,511 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  1,099  $ 77,943 
Shares issued     
in connection with     
reinvestment     
of distributions  12  821 
  1,111  78,764 
Shares     
repurchased  (202)  (13,982) 
Net increase  909  $ 64,782 
Year ended 7/31/05:     
Shares sold  262  $ 17,051 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  8 
  262  17,059 
Shares     
repurchased  (13)  (839) 
Net increase  249  $ 16,220 

93

CLASS C  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  4  $ 350 
Shares issued     
in connection with     
reinvestment     
of distributions  6  392 
  10  742 
Shares     
repurchased  (16)  (1,178) 
Net decrease  (6)  $ (436) 
Year ended 7/31/05:     
Shares sold  140  $ 9,149 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  8 
  140  9,157 
Shares     
repurchased  —  — 
Net increase  140  $ 9,157 
 
CLASS M  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  2  $ 100 
Shares issued     
in connection with     
reinvestment     
of distributions  5  358 
  7  458 
Shares     
repurchased  (22)  (1,562) 
Net decrease  (15)  $(1,104) 
Year ended 7/31/05:     
Shares sold  124  $ 8,100 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  9 
  124  8,109 
Shares     
repurchased  —  — 
Net increase  124  $ 8,109 

CLASS R  Shares    Amount 
 
Year ended 7/31/06:         
Shares sold  421    $ 29,866 
Shares issued         
in connection with         
reinvestment         
of distributions  —      — 
  421      29,866 
Shares         
repurchased  (184)      (13,288)  
Net increase  237      $ 16,578 
Year ended 7/31/05:         
Shares sold  16      $ 1,000 
Shares issued         
in connection with         
reinvestment         
of distributions  —*      9 
  16      1,009 
Shares         
repurchased  —      — 
Net increase  16    $  1,009 
 
CLASS Y  Shares    Amount 
 
Year ended 7/31/06:         
Shares sold  71,420    $5,689,901 
Shares issued         
in connection with         
reinvestment         
of distributions  4,706    364,939 
  76,126    6,054,840 
Shares         
repurchased  (47,764)    (3,763,088) 
Net increase  28,362    $2,291,752 
Year ended 7/31/05:         
Shares sold  147,105    $10,617,638   
Shares issued         
in connection with         
reinvestment         
of distributions  456     33,627  
  147,561    10,651,265 
Shares         
repurchased  (44,461)    (3,276,807) 
Net increase  103,100    $7,374,458 

94

RetirementReady 2040 Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  213,210  $15,454,374 
Shares issued     
in connection with     
reinvestment     
of distributions  10,838  768,863 
  224,048  16,223,237 
Shares     
repurchased  (94,047)  (6,795,750) 
Net increase  130,001  $ 9,427,487 
Year ended 7/31/05:     
Shares sold  201,751  $13,432,389 
Shares issued     
in connection with     
reinvestment     
of distributions  595  40,513 
  202,346  13,472,902 
Shares     
repurchased  (29,638)  (2,028,812) 
Net increase  172,708  $11,444,090 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  1,392  $ 99,628 
Shares issued     
in connection with     
reinvestment     
of distributions  31  2,108 
  1,423  101,736 
Shares     
repurchased  (145)  (10,278) 
Net increase  1,278  $ 91,458 
Year ended 7/31/05:     
Shares sold  559  $ 36,439 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  7 
  559  36,446 
Shares     
repurchased  (16)  (1,118) 
Net increase  543  $ 35,328 

CLASS C  Shares  Amount   
 
Year ended 7/31/06:         
Shares sold  10  $742    
Shares issued         
in connection with         
reinvestment         
of distributions  1  53    
  11  795    
Shares         
repurchased  —   —    
Net increase  11  $795    
Year ended 7/31/05:         
Shares sold  16  $1,000   
Shares issued         
in connection with         
reinvestment         
of distributions  —*  7    
  16  1,007   
Shares         
repurchased  —  —    
Net increase  16  $1,007   
 
 
CLASS M  Shares  Amount   
 
Year ended 7/31/06:         
Shares sold  286  $20,827   
Shares issued         
in connection with         
reinvestment         
of distributions  8  554    
  294  21,381   
Shares         
repurchased  (133)  (9,256)   
Net increase  161  $12,125   
Year ended 7/31/05:         
Shares sold  163  $10,514   
Shares issued         
in connection with         
reinvestment         
of distributions  1  48    
  164  10,562   
Shares         
repurchased  —   —    
 
Net increase  164  $10,562   


95

CLASS R  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  753  $55,814 
Shares issued     
in connection with     
reinvestment     
of distributions  —  — 
  753  55,814 
Shares     
repurchased  (147)  (10,631) 
Net increase  606  $45,183 
Year ended 7/31/05:     
Shares sold  16  $ 1,000 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  8 
  16  1,008 
Shares     
repurchased  —  — 
Net increase  16  $ 1,008 
 
CLASS Y  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  93,045  $ 7,301,334 
Shares issued     
in connection with     
reinvestment     
of distributions  5,791  446,361 
  98,836  7,747,695 
Shares     
repurchased  (56,087)  (4,388,421) 
Net increase  42,749  $ 3,359,274 
Year ended 7/31/05:     
Shares sold  178,174  $12,698,509 
Shares issued     
in connection with     
reinvestment     
of distributions  608  44,746 
  178,782  12,743,255 
Shares     
repurchased  (61,629)  (4,516,550) 
Net increase  117,153  $ 8,226,705 

RetirementReady 2035 Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  275,372  $ 19,451,653 
Shares issued     
in connection with     
reinvestment     
of distributions  18,656  1,293,241 
  294,028  20,744,894 
Shares     
repurchased  (152,080)  (10,727,902) 
Net increase  141,948  $ 10,016,992 
Year ended 7/31/05:     
Shares sold  360,622  $ 23,573,692 
Shares issued     
in connection with     
reinvestment     
of distributions  1,059  70,868 
  361,681  23,644,560 
Shares     
repurchased  (55,571)  (3,729,992) 
Net increase  306,110  $ 19,914,568 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  4,100  $280,021 
Shares issued     
in connection with     
reinvestment     
of distributions  127  8,449 
  4,227  288,470 
Shares     
repurchased  (669)  (46,052) 
Net increase  3,558  $242,418 
Year ended 7/31/05:     
Shares sold  1,020  $ 65,875 
Shares issued     
in connection with     
reinvestment     
of distributions  1  86 
  1,021  65,961 
Shares     
repurchased  (30)  (1,972) 
Net increase  991  $ 63,989 

96

CLASS C  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  87  $ 6,076 
Shares issued     
in connection with     
reinvestment     
of distributions  1  55 
  88  6,131 
Shares     
repurchased  —  — 
Net increase  88  $6,131 
Year ended 7/31/05:     
Shares sold  16  $1,000 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  6 
  16  1,006 
Shares     
repurchased  —  — 
Net increase  16  $1,006 
 
CLASS M  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  271  $18,607 
Shares issued     
in connection with     
reinvestment     
of distributions  18  1,218 
  289  19,825 
Shares     
repurchased  (47)  (3,357) 
Net increase  242  $16,468 
Year ended 7/31/05:     
Shares sold  320  $20,500 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  21 
  320  20,521 
Shares     
repurchased  (16)  (1,113) 
Net increase  304  $19,408 

CLASS R  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  892  $ 60,919 
Shares issued       
in connection with       
reinvestment       
of distributions  —*  6  
  892  60,925  
Shares       
repurchased  (541)  (36,845) 
Net increase  351  $ 24,080 
Year ended 7/31/05:       
Shares sold  17  $1,000  
Shares issued       
in connection with       
reinvestment       
of distributions  —*  7  
  17  1,007  
Shares       
repurchased  —  —  
Net increase  17  $1,007  
 
CLASS Y  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  167,410  $12,826,136 
Shares issued       
in connection with       
reinvestment       
of distributions  13,824  1,043,003 
  181,234  13,869,139 
Shares       
repurchased  (108,649)  (8,348,643) 
Net increase  72,585  $ 5,520,496 
Year ended 7/31/05:       
Shares sold  392,772  $27,498,593 
Shares issued       
in connection with       
reinvestment       
of distributions  1,366  98,944  
  394,138  27,597,537 
Shares       
repurchased  (119,116)  (8,593,017) 
Net increase  275,022  $19,004,520 

97

RetirementReady 2030 Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  370,745  $ 25,892,322 
Shares issued     
in connection with     
reinvestment     
of distributions  26,897  1,841,348 
  397,642  27,733,670 
Shares repurchased  (209,795)  (14,637,787) 
Net increase  187,847  $ 13,095,883 
Year ended 7/31/05:     
Shares sold  586,145  $ 37,817,855 
Shares issued     
in connection with     
reinvestment     
of distributions  1,483  98,122 
  587,628  37,915,977 
Shares     
repurchased  (111,043)  (7,387,036) 
Net increase  476,585  $ 30,528,941 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  2,296  $ 156,819 
Shares issued     
in connection with     
reinvestment     
of distributions  206  13,804 
  2,502  170,623 
Shares     
repurchased  (1,396)  (95,815) 
Net increase  1,106  $ 74,808 
Year ended 7/31/05:     
Shares sold  3,414  $220,060 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  6 
  3,414  220,066 
Shares     
repurchased  (57)  (3,631) 
Net increase  3,357  $216,435 

CLASS C  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  944  $ 63,856 
Shares issued     
in connection with     
reinvestment     
of distributions  31  2,019 
  975  65,875 
Shares     
repurchased  (669)  (46,052) 
Net increase  306  $ 19,823 
Year ended 7/31/05:     
Shares sold  332  $ 21,379 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  6 
  332  21,385 
Shares     
repurchased  —  — 
Net increase  332  $ 21,385 
 
CLASS M  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  9,524  $672,494 
Shares issued     
in connection with     
reinvestment     
of distributions  38  2,534 
  9,562  675,028 
Shares     
repurchased  (1,285)  (90,490) 
Net increase  8,277  $584,538 
Year ended 7/31/05:     
Shares sold  656  $ 42,065 
Shares issued     
in connection with     
reinvestment     
of distributions  1  19 
  657  42,084 
Shares     
repurchased  (16)  (1,107) 
Net increase  641  $ 40,977 

98

CLASS R  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  1,156  $78,424 
Shares issued     
in connection with     
reinvestment     
of distributions  35  2,341 
  1,191  80,765 
Shares     
repurchased  (19)  (1,318) 
Net increase  1,172  $79,447 
Year ended 7/31/05:     
Shares sold  16  $ 1,000 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  6 
  16  1,006 
Shares     
repurchased  —  — 
Net increase  16  $ 1,006 
 
CLASS Y  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  205,779  $ 15,452,168 
Shares issued     
in connection with     
reinvestment     
of distributions  23,565  1,741,944 
  229,344  17,194,112 
Shares     
repurchased  (168,124)  (12,627,519) 
Net increase  61,220  $ 4,566,593 
Year ended 7/31/05:     
Shares sold  660,572  $ 45,720,136 
Shares issued     
in connection with     
reinvestment     
of distributions  1,970  140,095 
  662,542  45,860,231 
Shares     
repurchased  (157,294)  (11,151,475) 
Net increase  505,248  $ 34,708,756 

RetirementReady 2025 Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  407,888  $ 29,844,516 
Shares issued     
in connection with     
reinvestment     
of distributions  36,976  2,661,545 
  444,864  32,506,061 
Shares     
repurchased  (271,412)  (19,895,127) 
Net increase  173,452  $ 12,610,934 
Year ended 7/31/05:     
Shares sold  749,266  $ 50,939,822 
Shares issued     
in connection with     
reinvestment     
of distributions  2,245  156,581 
  751,511  51,096,403 
Shares     
repurchased  (79,886)  (5,588,087) 
Net increase  671,625  $ 45,508,316 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  9,062  $ 636,921 
Shares issued     
in connection with     
reinvestment     
of distributions  223  15,546 
  9,285  652,467 
Shares     
repurchased  (2,108)  (149,078) 
Net increase  7,177  $ 503,389 
Year ended 7/31/05:     
Shares sold  3,335  $ 224,324 
Shares issued     
in connection with     
reinvestment     
of distributions  1  79 
  3,336  224,403 
Shares     
repurchased  (315)  (21,538) 
Net increase  3,021  $ 202,865 

99

CLASS C  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  982  $ 68,590 
Shares issued     
in connection with     
reinvestment     
of distributions  34  2,389 
  1,016  70,979 
Shares     
repurchased  (190)  (13,462) 
Net increase  826  $ 57,517 
Year ended 7/31/05:     
Shares sold  805  $ 53,851 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  5 
  805  53,856 
Shares     
repurchased  (162)  (10,883) 
Net increase  643  $ 42,973 
 
CLASS M  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  3,061  $ 217,680 
Shares issued     
in connection with     
reinvestment     
of distributions  134  9,360 
  3,195  227,040 
Shares     
repurchased  (1,908)  (135,302) 
Net increase  1,287  $ 91,738 
Year ended 7/31/05:     
Shares sold  2,595  $ 174,769 
Shares issued     
in connection with     
reinvestment     
of distributions  3  210 
  2,598  174,979 
Shares     
repurchased  (136)  (9,205) 
Net increase  2,462  $ 165,774 

CLASS R  Shares    Amount 
 
Year ended 7/31/06:       
Shares sold  1,546    $107,082 
Shares issued       
in connection with       
reinvestment       
of distributions  2    107 
  1,548    107,189 
Shares       
repurchased  (1)    (32) 
Net increase  1,547    $107,157 
Year ended 7/31/05:       
Shares sold  17    $1,100 
Shares issued       
in connection with       
reinvestment       
of distributions  —*    6 
  17    1,106 
Shares       
repurchased  —    — 
Net increase  17    $1,106 
 
CLASS Y  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  275,688  $ 20,166,475 
Shares issued       
in connection with       
reinvestment       
of distributions  37,104  2,677,422 
  312,792  22,843,897 
Shares       
repurchased  (333,322)  (24,452,585) 
Net decrease  (20,530)  $ (1,608,688) 
Year ended 7/31/05:       
Shares sold  1,066,126  $ 72,184,005 
Shares issued       
in connection with       
reinvestment       
of distributions  3,473  242,685  
  1,069,599  72,426,690 
Shares       
repurchased  (232,832)  (16,221,045) 
Net increase  836,767  $ 56,205,645 

100

RetirementReady 2020 Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  719,907  $ 47,935,826 
Shares issued     
in connection with     
reinvestment     
of distributions  40,617  2,667,365 
  760,524  50,603,191 
Shares     
repurchased  (338,491)  (22,549,870) 
Net increase  422,033  $ 28,053,321 
Year ended 7/31/05:     
Shares sold  966,386  $ 60,449,034 
Shares issued     
in connection with     
reinvestment     
of distributions  2,435  155,610 
  968,821  60,604,644 
Shares     
repurchased  (163,745)  (10,502,397) 
Net increase  805,076  $ 50,102,247 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  5,957  $391,792 
Shares issued     
in connection with     
reinvestment     
of distributions  212  13,699 
  6,169  405,491 
Shares     
repurchased  (1,489)  (97,626) 
Net increase  4,680  $307,865 
Year ended 7/31/05:     
Shares sold  3,870  $241,046 
Shares issued     
in connection with     
reinvestment     
of distributions  1  90 
  3,871  241,136 
Shares     
repurchased  (165)  (10,331) 
Net increase  3,706  $230,805 

CLASS C  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  892  $ 57,848 
Shares issued     
in connection with     
reinvestment     
of distributions  46  2,957 
  938  60,805 
Shares     
repurchased  (198)  (13,000) 
Net increase  740  $ 47,805 
Year ended 7/31/05:     
Shares sold  1,047  $ 65,321 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  14 
  1,047  65,335 
Shares     
repurchased  (112)  (7,088) 
Net increase  935  $ 58,247 
 
CLASS M  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  5,414  $ 354,513 
Shares issued     
in connection with     
reinvestment     
of distributions  251  16,199 
  5,665  370,712 
Shares     
repurchased  (1,674)  (110,026) 
Net increase  3,991  $ 260,686 
Year ended 7/31/05:     
Shares sold  4,399  $ 275,169 
Shares issued     
in connection with     
reinvestment     
of distributions  2  151 
  4,401  275,320 
Shares     
repurchased  (163)  (10,340) 
Net increase  4,238  $ 264,980 

101

CLASS R  Shares    Amount 
 
Year ended 7/31/06:       
Shares sold  1,534    $101,025 
Shares issued       
in connection with       
reinvestment       
of distributions  37    2,404 
  1,571    103,429 
Shares       
repurchased  (18)    (1,195) 
Net increase  1,553    $102,234
Year ended 7/31/05:       
Shares sold  17    $1,000 
Shares issued       
in connection with       
reinvestment       
of distributions  —*    5 
  17    1,005 
Shares       
repurchased  —    — 
Net increase  17    $1,005 
 
CLASS Y  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  373,901  $ 26,497,931 
Shares issued       
in connection with       
reinvestment       
of distributions  38,855  2,730,709 
  412,756  29,228,640 
Shares       
repurchased  (323,785)  (22,981,862) 
Net increase  88,971  $ 6,246,778 
Year ended 7/31/05:       
Shares sold  1,201,457  $ 79,676,616 
Shares issued       
in connection with       
reinvestment       
of distributions  3,409  232,313  
  1,204,866  79,908,929 
Shares       
repurchased  (259,586)  (17,614,284) 
Net increase  945,280  $ 62,294,645 

RetirementReady 2015 Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  500,567  $ 33,271,733 
Shares issued     
in connection with     
reinvestment     
of distributions  51,641  3,377,298 
  552,208  36,649,031 
Shares     
repurchased  (386,600)  (25,763,157) 
Net increase  165,608  $ 10,885,874 
Year ended 7/31/05:     
Shares sold  967,008  $ 61,873,192 
Shares issued     
in connection with     
reinvestment     
of distributions  2,324  151,730 
  969,332  62,024,922 
Shares     
repurchased  (130,178)  (8,533,217) 
Net increase  839,154  $ 53,491,705 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  6,506  $ 423,755 
Shares issued     
in connection with     
reinvestment     
of distributions  168  10,782 
  6,674  434,537 
Shares     
repurchased  (3,394)  (220,823) 
Net increase  3,280  $ 213,714 
Year ended 7/31/05:     
Shares sold  2,544  $ 165,518 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  23 
  2,544  165,541 
Shares     
repurchased  (52)  (3,423) 
Net increase  2,492  $ 162,118 

102

CLASS C  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  2,359  $154,370 
Shares issued     
in connection with     
reinvestment     
of distributions  113  7,235 
  2,472  161,605 
Shares     
repurchased  (251)  (16,547) 
Net increase  2,221  $145,058 
Year ended 7/31/05:     
Shares sold  1,432  $ 91,452 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  46 
  1,432  91,498 
Shares     
repurchased  (71)  (4,656) 
Net increase  1,361  $ 86,842 
 
CLASS M  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  2,202  $ 146,369 
Shares issued     
in connection with     
reinvestment     
of distributions  144  9,311 
  2,346  155,680 
Shares     
repurchased  (2,345)  (155,420) 
Net increase  1  $ 260 
Year ended 7/31/05:     
Shares sold  2,161  $ 138,387 
Shares issued     
in connection with     
reinvestment     
of distributions  1  71 
  2,162  138,458 
Shares     
repurchased  (16)  (1,075) 
Net increase  2,146  $ 137,383 

CLASS R  Shares    Amount 
 
Year ended 7/31/06:       
Shares sold  507    $ 33,440 
Shares issued       
in connection with       
reinvestment       
of distributions  27    1,758 
  534    35,198 
Shares       
repurchased  (494)    (32,350)  
Net increase  40    $2,848 
Year ended 7/31/05:       
Shares sold  16    $1,000 
Shares issued       
in connection with       
reinvestment       
of distributions  —*    4 
  16    1,004 
Shares       
repurchased  —    — 
Net increase  16    $1,004 
 
CLASS Y  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  324,159  $ 21,518,681 
Shares issued       
in connection with       
reinvestment       
of distributions  51,956  3,404,647 
  376,115  24,923,328 
Shares       
repurchased  (659,792)  (44,530,750) 
Net decrease  (283,677)  $ (19,607,422) 
Year ended 7/31/05:       
Shares sold  1,580,630  $100,777,637 
Shares issued       
in connection with       
reinvestment       
of distributions  4,412  288,518 
  1,585,042  101,066,155 
Shares       
repurchased  (338,707)  (22,049,504) 
Net increase  1,246,335  $ 79,016,651 

103

RetirementReady 2010 Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  463,948  $ 27,381,349 
Shares issued     
in connection with     
reinvestment     
of distributions  28,873  1,687,326 
  492,821  29,068,675 
Shares     
repurchased  (391,177)  (23,091,112) 
Net increase  101,644  $ 5,977,563 
Year ended 7/31/05:     
Shares sold  792,156  $ 45,695,501 
Shares issued     
in connection with     
reinvestment     
of distributions  1,730  100,806 
  793,886  45,796,307 
Shares     
repurchased  (135,996)  (7,981,501) 
Net increase  657,890  $ 37,814,806 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  5,253  $ 304,449 
Shares issued     
in connection with     
reinvestment     
of distributions  47  2,691 
  5,300  307,140 
Shares     
repurchased  (2,777)  (160,695) 
Net increase  2,523  $ 146,445 
Year ended 7/31/05:     
Shares sold  2,377  $ 135,908 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  9 
  2,377  135,917 
Shares     
repurchased  (944)  (53,661) 
Net increase  1,433  $ 82,256 

CLASS C  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  457  $26,618 
Shares issued     
in connection with     
reinvestment     
of distributions  22  1,263 
  479  27,881 
Shares     
repurchased  (92)  (5,356) 
Net increase  387  $22,525 
Year ended 7/31/05:     
Shares sold  386  $22,060 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  5 
  386  22,065 
Shares     
repurchased  (137)  (7,932) 
Net increase  249  $14,133 
 
CLASS M  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  1,477  $86,324 
Shares issued     
in connection with     
reinvestment     
of distributions  78  4,486 
  1,555  90,810 
Shares     
repurchased  (322)  (18,715) 
Net increase  1,233  $72,095 
Year ended 7/31/05:     
Shares sold  1,180  $67,786 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  3 
  1,180  67,789 
Shares     
repurchased  (252)  (14,775) 
Net increase  928  $53,014 

104

CLASS R  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  1,719  $ 99,897 
Shares issued       
in connection with       
reinvestment       
of distributions  70  4,019  
  1,789  103,916 
Shares       
repurchased  (412)  (24,065) 
Net increase  1,377  $ 79,851 
Year ended 7/31/05:       
Shares sold  18  $1,000  
Shares issued       
in connection with       
reinvestment       
of distributions  —*  3  
  18  1,003  
Shares       
repurchased  —  —  
Net increase  18  $1,003   
 
CLASS Y  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  229,493  $ 14,132,242 
Shares issued       
in connection with       
reinvestment       
of distributions  26,556  1,621,242 
  256,049  15,753,484 
Shares       
repurchased  (294,224)  (18,259,103) 
Net decrease  (38,175)  $ (2,505,619) 
Year ended 7/31/05:       
Shares sold  973,198  $ 58,232,489 
Shares issued       
in connection with       
reinvestment       
of distributions  2,210  134,208 
  975,408  58,366,697 
Shares       
repurchased  (261,767)  (15,896,047) 
Net increase  713,641  $ 42,470,650 

RetirementReady Maturity Fund   
CLASS A  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  284,325  $ 16,176,384 
Shares issued     
in connection with     
reinvestment     
of distributions  23,475  1,330,584 
  307,800  17,506,968 
Shares     
repurchased  (197,660)  (11,228,688) 
Net increase  110,140  $ 6,278,280 
Year ended 7/31/05:     
Shares sold  533,275  $ 30,165,928 
Shares issued     
in connection with     
reinvestment     
of distributions  4,211  239,131 
  537,486  30,405,059 
Shares     
repurchased  (90,078)  (5,120,464) 
Net increase  447,408  $ 25,284,595 
 
CLASS B  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  672  $ 37,838 
Shares issued     
in connection with     
reinvestment     
of distributions  81  4,574 
  753  42,412 
Shares     
repurchased  (453)  (25,762) 
Net increase  300  $ 16,650 
Year ended 7/31/05:     
Shares sold  2,290  $128,303 
Shares issued     
in connection with     
reinvestment     
of distributions  16  888 
  2,306  129,191 
Shares     
repurchased  (143)  (8,235) 
Net increase  2,163  $120,956 

105

CLASS C  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  —  $—  
Shares issued       
in connection with       
reinvestment       
of distributions  1  39  
  1  39  
Shares       
repurchased  —  —  
Net increase  1  $39  
Year ended 7/31/05:       
Shares sold  18  $1,000 
Shares issued       
in connection with       
reinvestment       
of distributions  —*  8  
  18  1,008 
Shares       
repurchased  —  —  
Net increase  18  $1,008 
 
CLASS M  Shares  Amount 
 
Year ended 7/31/06:       
Shares sold  1,319  $74,164 
Shares issued       
in connection with       
reinvestment       
of distributions  8  456  
  1,327  74,620 
Shares       
repurchased  (18)  (1,017) 
Net increase  1,309  $73,603 
Year ended 7/31/05:       
Shares sold  53  $ 3,000 
Shares issued       
in connection with       
reinvestment       
of distributions  —*  17  
  53  3,017 
Shares       
repurchased  (17)  (1,000) 
Net increase  36  $ 2,017 

CLASS R  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  839  $46,798 
Shares issued     
in connection with     
reinvestment     
of distributions  3  183 
  842  46,981 
Shares     
repurchased  —  — 
Net increase  842  $46,981 
Year ended 7/31/05:     
Shares sold  18  $ 1,000 
Shares issued     
in connection with     
reinvestment     
of distributions  —*  12 
  18  1,012 
Shares     
repurchased  —  — 
Net increase  18  $ 1,012 
 
CLASS Y  Shares  Amount 
 
Year ended 7/31/06:     
Shares sold  114,640  $ 6,536,020 
Shares issued     
in connection with     
reinvestment     
of distributions  12,721  723,234 
  127,361  7,259,254 
Shares     
repurchased  (260,138)  (14,877,302) 
Net decrease  (132,777)  $ (7,618,048) 
Year ended 7/31/05:     
Shares sold  565,289  $ 31,918,267 
Shares issued     
in connection with     
reinvestment     
of distributions  6,108  347,085 
  571,397  32,265,352 
Shares     
repurchased  (195,227)  (11,102,917) 
Net increase  376,170  $ 21,162,435 

* Represents fractional shares issued in connection with reinvestment of distributions.

106

Note 5: Initial capitalization and offering of shares

The Trust was established as a Massachusetts business trust on June 8, 2004. During the period June 8, 2004, to September 14, 2004, the Trust had no operations other than those related to organizational matters, including the initial capital contribution of $100,000 and the issuance of 1,786 Putnam RetirementReady Maturity Fund class B shares to Putnam LLC. The Trust commenced investment operations on November 1, 2004.

At July 31, 2006, Putnam LLC and its affiliates owned the following shares of each fund:

    Percentage of  Value at 
  Shares owned  shares outstanding  July 31, 2006 
 
2050 Fund class C  21  100.00%  $  1,029 
2050 Fund class M  21  38.18%    1,030 
2050 Fund class R  21  12.43%    1,032 
2045 Fund class R  14  5.53%    1,000 
2040 Fund class C  17  62.96%    1,061 
2040 Fund class R  14  2.25%    1,000 
2035 Fund class C  17  16.35%    1,062 
2035 Fund class R  15  4.08%    1,000 
2025 Fund class R  17  1.08%    1,063 
Maturity Fund class B  1,776  72.94%    99,284 
Maturity Fund class C  19  100.0%    1,045 
Maturity Fund class M  19  1.41%    1,050 
Maturity Fund class R  19  2.21%    1,054 

Note 6: Transactions with affiliated issuers

Transactions during the year with companies in which the fund owned at least 5% or more of the outstanding voting securities, or a company which is under common ownership or control were as follows:

RetirementReady 2050 Fund           
Affiliates  Purchase cost  Sales cost    Investment income  Market value 
 
Putnam Capital Opportunities Fund  $ 792,524  $ 258,860    $1,212  $ 582,024 
Putnam Fund for Growth and Income  1,309,473  415,623    6,469  997,280 
Putnam International Equity Fund  1,532,000  476,945    7,561  1,210,864 
Putnam Voyager Fund  1,334,310  411,387    2,421  969,147 
Putnam Income Fund  215,266  70,393    3,181  161,506 
Putnam Money Market Fund  128,870  94,478    1,386  38,702 
Totals  $5,312,443  $1,727,686    $22,230  $3,959,523 
 
Market values are shown for those securities affiliated at year end.       

107

RetirementReady 2045 Fund           
Affiliates    Purchase cost  Sales cost  Investment income  Market value 
 
Putnam Capital Opportunities Fund  $  3,227,229  $ 1,642,222  $ 20,338  $ 3,759,764 
Putnam Fund for Growth and Income    5,065,601  2,550,259  73,198  6,448,423 
Putnam International Equity Fund    5,693,999  3,229,098  119,223  7,824,485 
Putnam Voyager Fund    5,193,377  2,441,317  41,366  6,261,525 
Putnam Income Fund    886,920  438,394  34,610  1,045,396 
Putnam Money Market Fund    252,401  160,736  9,304  250,025 
Totals    $20,319,527  $10,462,026  $298,039  $25,589,618 
 
Market values are shown for those securities affiliated at year end.     
RetirementReady 2040 Fund           
Affiliates    Purchase cost Sales cost  Investment income  Market value 
 
Putnam Capital Opportunities Fund  $  4,044,131  $ 2,157,854  $ 27,318  $ 4,739,624 
Putnam Fund for Growth and Income    6,386,586  3,195,565  94,853  8,359,831 
Putnam International Equity Fund    7,267,813  3,898,415  151,405  10,213,305 
Putnam Voyager Fund    6,629,325  3,151,576  55,594  8,119,262 
Putnam Income Fund    1,894,971  761,012  65,279  2,117,582 
Putnam Money Market Fund    1,199,094  366,019  26,958  1,039,254 
Totals    $27,421,920 $13,530,441  $421,407  $34,588,858 
 
Market values are shown for those securities affiliated at year end.     
RetirementReady 2035 Fund           
Affiliates    Purchase cost  Sales cost  Investment income  Market value 
 
Putnam Capital Opportunities Fund  $  5,708,159  $ 3,576,503  $ 48,352  $ 7,443,955 
Putnam Fund for Growth and Income    9,295,747  5,004,804  172,159  14,142,770 
Putnam International Equity Fund    9,455,752  6,461,187  266,626  15,492,442 
Putnam Voyager Fund    9,430,174  5,287,055  101,244  13,160,737 
Putnam Income Fund    4,992,345  2,149,135  196,199  5,970,506 
Putnam Money Market Fund    2,053,521  919,223  73,400  2,354,501 
Totals    $40,935,698 $23,397,907  $857,980  $58,564,911 
 
Market values are shown for those securities affiliated at year end.     

108

RetirementReady 2030 Fund             
Affiliates  Purchase cost  Sales cost    Investment income   Market value 
 
Putnam Capital Opportunities Fund  $ 7,239,578  $ 5,048,680  $  72,941    $10,519,410 
Putnam Fund for Growth and Income  11,468,684  7,451,627    257,451    19,849,087 
Putnam International Equity Fund  12,142,835  8,796,139    398,746    22,809,532 
Putnam Voyager Fund  12,053,140  7,474,853    157,619    19,272,331 
Putnam Income Fund  9,391,133  4,471,780    439,113    12,798,866 
Putnam Money Market Fund  3,467,914  1,677,469    145,627    4,516,603 
Totals  $55,763,284  $34,920,548    $1,471,497    $89,765,829 
 
Market values are shown for those securities affiliated at year end.         
RetirementReady 2025 Fund             
Affiliates  Purchase cost  Sales cost    Investment income   Market value 
 
Putnam Capital Opportunities Fund  $ 8,590,987  $ 7,340,766  $  100,217  $  13,171,539 
Putnam Fund for Growth and Income  13,642,987  11,205,013    360,948    25,880,621 
Putnam International Equity Fund  13,862,804  12,718,793    546,280    28,662,427 
Putnam Voyager Fund  14,429,466  11,276,794    224,439    25,128,633 
Putnam Income Fund  12,894,693  8,343,558    747,492    19,982,453 
Putnam Money Market Fund  7,520,600  4,013,625    329,284    9,898,963 
Totals  $70,941,537  $54,898,549    $2,308,660    $122,724,636 
 
Market values are shown for those securities affiliated at year end.         
RetirementReady 2020 Fund             
Affiliates  Purchase cost  Sales cost    Investment income    Market value 
 
Putnam Capital Opportunities Fund  $10,649,085  $ 7,561,615  $  105,098  $  15,195,946 
Putnam Fund for Growth and Income  17,745,468  11,208,007    408,442    31,290,997 
Putnam International Equity Fund  13,619,906  10,828,900    464,680    25,309,496 
Putnam Voyager Fund  18,771,986  11,282,968    245,053    30,373,009 
Putnam Income Fund  27,130,791  12,760,939    1,335,936   38,063,974 
Putnam Money Market Fund  10,728,575  5,585,505    529,959    15,725,566 
Totals  $98,645,811  $59,227,934    $3,089,168    $155,958,988 
 
Market values are shown for those securities affiliated at year end.         

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RetirementReady 2015 Fund         
Affiliates  Purchase cost  Sales cost  Investment income  Market value 
 
Putnam Capital Opportunities Fund  $ 8,317,055  $ 8,473,456  $ 90,399  $ 12,678,168 
Putnam Fund for Growth and Income  11,687,895  14,117,464  332,911  22,186,662 
Putnam International Equity Fund  6,180,476  10,420,880  281,119  11,879,417 
Putnam Voyager Fund  12,345,276  14,205,943  198,784  21,539,666 
Putnam Income Fund  26,435,723  24,343,732  1,593,151  40,997,010 
Putnam Money Market Fund  13,927,037  12,304,750  752,449  21,012,090 
Totals  $78,893,462  $83,866,225  $3,248,813  $130,293,013 
 
Market values are shown for those securities affiliated at year end.     
RetirementReady 2010 Fund         
Affiliates  Purchase cost  Sales cost  Investment income  Market value 
 
Putnam Capital Opportunities Fund  $ 3,838,920  $ 4,236,433  $ 43,870  $ 5,032,279 
Putnam Fund for Growth and Income  6,003,694  6,367,919  157,721  10,361,278 
Putnam International Equity Fund  1,537,147  2,446,368  71,035  2,618,889 
Putnam Voyager Fund  6,305,382  6,388,328  99,512  10,058,348 
Putnam Income Fund  23,408,476  18,881,112  1,435,527  35,878,065 
Putnam Money Market Fund  14,573,969  11,929,311  844,202  22,610,379 
Totals  $55,667,588  $50,249,471  $2,651,867  $86,559,238 
 
Market values are shown for those securities affiliated at year end.     
RetirementReady Maturity Fund         
Affiliates  Purchase cost  Sales cost  Investment income  Market value 
 
Putnam Capital Opportunities Fund  $ 1,652,263  $ 1,676,575  $ 17,344  $ 2,187,867 
Putnam Fund for Growth and Income  2,667,375  2,888,415  68,904  4,507,277 
Putnam International Equity Fund  —  —  —  — 
Putnam Voyager Fund  2,779,639  2,881,621  42,374  4,373,078 
Putnam Income Fund  12,931,138  13,028,571  870,803  20,558,436 
Putnam Money Market Fund  8,209,896  8,829,542  539,693  13,617,619 
Totals  $28,240,311  $29,304,724  $1,539,118  $45,244,277 
 
Market values are shown for those securities affiliated at year end.     

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Note 7: Regulatory matters and litigation

Putnam Management has entered into agreements with the Securities and Exchange Commission and the Massachusetts Securities Division settling charges connected with excessive short-term trading by Putnam employees and, in the case of the charges brought by the Massachusetts Securities Division, by participants in some Putnam-administered 401(k) plans. Pursuant to these settlement agreements, Putnam Management will pay a total of $193.5 million in penalties and restitution, with $153.5 million being paid to certain open-end funds and their shareholders. The amount will be allocated to shareholders and funds pursuant to a plan developed by an independent consultant and will be paid following approval of the plan by the SEC and the Massachusetts Securities Division.

The Securities and Exchange Commission’s and Massachusetts Securities Division’s allegations and related matters also serve as the general basis for numerous lawsuits, including purported class action lawsuits filed against Putnam Management and certain related parties, including certain Putnam funds. Putnam Management will bear any costs incurred by Putnam funds in connection with these lawsuits. Putnam Management believes that the likelihood that the pending private lawsuits and purported class action lawsuits will have a material adverse financial impact on the trust is remote, and the pending actions are not likely to materially affect its ability to provide investment management services to its clients, including the Putnam funds.

Putnam Management and Putnam Retail Management are named as defendants in a civil suit in which the plaintiffs allege that the management and distribution fees paid by certain Putnam funds were excessive and seek recovery under the Investment Company Act of 1940. Putnam Management and Putnam Retail Management have contested the plaintiffs’ claims and the matter is currently pending in the U.S. District Court for the District of Massachusetts. Based on currently available information, Putnam Management believes that this action is without merit and that it is unlikely to have a material effect on Putnam Management’s and Putnam Retail Management’s ability to provide services to their clients, including the trust.

Note 8: New accounting pronouncement

In June 2006, FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (the “Interpretation”). The Interpretation prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken by a filer in the filer’s tax return. The Interpretation will become effective for fiscal years beginning after December 15, 2006 but will also apply to tax positions reflected in each fund’s financial statements as of that date. No determination has been made whether the adoption of the Interpretation will require each fund to make any adjustments to its net assets or have any other effect on each fund’s financial statements.

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Federal tax information
(Unaudited)

Each fund has designated the following percentages of that fund’s distributions from net investment income as qualifying for the dividends received deduction for corporations.

Fund Name  Qualifying % 
_________________________________________________________________________
RetirementReady   
2050 Fund  12.29% 
2045 Fund  25.44 
2040 Fund  24.55 
2035 Fund  27.05 
2030 Fund  25.59 
2025 Fund  21.43 
2020 Fund  22.04 
2015 Fund  14.04 
2010 Fund  12.63 
Maturity Fund  9.60 

For its tax year ended July 31, 2006, each fund hereby designates the following amounts or the maximum amount allowable, of its net taxable income as qualified dividends taxed at individual net capital gain rates.

Fund Name  Qualifying % 
_________________________________________________________________________
RetirementReady   
2050 Fund  16.74% 
2045 Fund  35.32 
2040 Fund  33.35 
2035 Fund  36.51 
2030 Fund  34.37 
2025 Fund  28.62 
2020 Fund  26.81 
2015 Fund  15.22 
2010 Fund  11.68 
Maturity Fund  7.35 

Pursuant to Section 852 of the Internal Revenue Code, as amended, each fund hereby designates the following amounts as long term capital gains, for its taxable year ended 7/31/06.

Fund Name  Amount 
_________________________________________________________________________
RetirementReady   
2050 Fund  $22,046 
2045 Fund  813,709 
2040 Fund  1,179,631 
2035 Fund  2,466,333 
2030 Fund  3,530,620 
2025 Fund  5,447,170 
2020 Fund  5,463,402 
2015 Fund  4,529,441 
2010 Fund  2,074,224 
Maturity Fund  578,304 

The Form 1099 you receive in January 2007 will show the tax status of all distributions paid to your account in calendar 2006.

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Brokerage commissions
(Unaudited)

Brokerage commissions are paid to firms that execute trades on behalf of your fund. When choosing these firms, Putnam is required by law to seek the best execution of the trades, taking all relevant factors into consideration, including expected quality of execution and commission rate. The RetirementReady Funds, however, invest in shares of other Putnam mutual funds, rather than in stocks and bonds. For that reason, the funds do not incur brokerage charges.

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About the Trustees

Jameson A. Baxter (Born 1943), Trustee since 1994, Vice Chairman since 2005

Ms. Baxter is the President of Baxter Associates, Inc., a private investment firm that she founded in 1986.

Ms. Baxter serves as a Director of ASHTA Chemicals, Inc., Banta Corporation (a printing and digital imaging firm), Ryerson Tull, Inc. (a steel service corporation), the Mutual Fund Directors Forum, Advocate Health Care and BoardSource, formerly the National Center for Nonprofit Boards. She is Chairman Emeritus of the Board of Trustees, Mount Holyoke College, having served as Chairman for five years and as a board member for thirteen years. Until 2002, Ms. Baxter was a Director of Intermatic Corporation (a manufacturer of energy control products).

Ms. Baxter has held various positions in investment banking and corporate finance, including Vice President and Principal of the Regency Group, and Vice President of and Consultant to First Boston Corporation. She is a graduate of Mount Holyoke College.

Charles B. Curtis (Born 1940), Trustee since 2001

Mr. Curtis is President and Chief Operating Officer of the Nuclear Threat Initiative (a private foundation dealing with national security issues) and serves as Senior Advisor to the United Nations Foundation.

Mr. Curtis is a member of the Council on Foreign Relations and the Trustee Advisory Council of the Applied Physics Laboratory, Johns Hopkins University. Until 2003, Mr. Curtis was a member of the Electric Power Research Institute Advisory Council and the University of Chicago Board of Governors for Argonne National Laboratory. Prior to 2002, Mr. Curtis was a Member of the Board of Directors of the Gas Technology Institute and the Board of Directors of the Environment and Natural Resources Program Steering Committee, John F. Kennedy School of Government, Harvard University. Until 2001, Mr. Curtis was a member of the Department of Defense Policy Board and Director of EG&G Technical Services, Inc. (a fossil energy research and development support company).

From August 1997 to December 1999, Mr. Curtis was a Partner at Hogan & Hartson L.L.P., a Washington, D.C. law firm. Prior to May 1997, Mr. Curtis was Deputy Secretary of Energy and Under Secretary of the U.S. Department of Energy. He served as Chairman of the Federal Energy Regulatory Commission from 1977 to 1981 and has held positions on the staff of the U.S. House of Representatives, the U.S. Treasury Department, and the SEC.

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Myra R. Drucker (Born 1948), Trustee since 2004

Ms. Drucker is Chair of the Board of Trustees of Commonfund (a not-for-profit firm specializing in asset management for educational endowments and foundations), Vice Chair of the Board of Trustees of Sarah Lawrence College, and a member of the Investment Committee of the Kresge Foundation (a charitable trust). She is also a director of New York Stock Exchange LLC, a wholly-owned subsidiary of the publicly-traded NYSE Group, Inc. She is an advisor to Hamilton Lane LLC and RCM Capital Management (investment management firms).

Ms. Drucker is an ex-officio member of the New York Stock Exchange (NYSE) Pension Managers Advisory Committee, having served as Chair for seven years and a member of the Executive Committee of the Committee on Investment of Employee Benefit Assets.

Until August 31, 2004, Ms. Drucker was Managing Director and a member of the Board of Directors of General Motors Asset Management and Chief Investment Officer of General Motors Trust Bank. Ms. Drucker also served as a member of the NYSE Corporate Accountability and Listing Standards Committee and the NYSE/NASD IPO Advisory Committee.

Prior to joining General Motors Asset Management in 2001, Ms. Drucker held various executive positions in the investment management industry. Ms. Drucker served as Chief Investment Officer of Xerox Corporation (a technology and service company in the document industry), where she was responsible for the investment of the company’s pension assets. Ms. Drucker was also Staff Vice President and Director of Trust Investments for International Paper (a paper, paper distribution, packaging and forest products company) and previously served as Manager of Trust Investments for Xerox Corporation. Ms. Drucker received a B.A. degree in Literature and Psychology from Sarah Lawrence College and pursued graduate studies in economics, statistics and portfolio theory at Temple University.

John A. Hill (Born 1942), Trustee since 1985 and Chairman since 2000

Mr. Hill is Vice Chairman of First Reserve Corporation, a private equity buyout firm that specializes in energy investments in the diversified worldwide energy industry.

Mr. Hill is a Director of Devon Energy Corporation, TransMontaigne Oil Company and various private companies controlled by First Reserve Corporation, as well as Chairman of TH Lee, Putnam Investment Trust (a closed-end investment company advised by an affiliate of Putnam Management). He is also a Trustee of Sarah Lawrence College. Until 2005, he was a Director of Continuum Health Partners of New York.

Prior to acquiring First Reserve Corporation in 1983, Mr. Hill held executive positions in investment banking and investment management with several firms and with the federal government, including Deputy Associate Director of the Office of Management and Budget and Deputy

115

Director of the Federal Energy Administration. He is active in various business associations, including the Economic Club of New York, and lectures on energy issues in the United States and Europe. Mr. Hill holds a B.A. degree in Economics from Southern Methodist University and pursued graduate studies there as a Woodrow Wilson Fellow.

Paul L. Joskow (Born 1947), Trustee since 1997

Dr. Joskow is the Elizabeth and James Killian Professor of Economics and Management, and Director of the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology.

Dr. Joskow serves as a Director of National Grid plc (a UK-based holding company with interests in electric and gas transmission and distribution and telecommunications infrastructure) and TransCanada Corporation (an energy company focused on natural gas transmission and power services). He also serves on the Board of Overseers of the Boston Symphony Orchestra. Prior to February 2005, he served on the board of the Whitehead Institute for Biomedical Research (a non-profit research institution) and has been President of the Yale University Council since 1993. Prior to February 2002, he was a Director of State Farm Indemnity Company (an automobile insurance company), and, prior to March 2000, he was a Director of New England Electric System (a public utility holding company).

Dr. Joskow has published five books and numerous articles on topics in industrial organization, government regulation of industry, and competition policy. He is active in industry restructuring, environmental, energy, competition and privatization policies — serving as an advisor to governments and corporations worldwide. Dr. Joskow holds a Ph.D. and M. Phil from Yale University and a B.A. from Cornell University.

Elizabeth T. Kennan (Born 1938), Trustee since 1992

Dr. Kennan is a Partner of Cambus-Kenneth Farm (thoroughbred horse and cattle breeding). She is President Emeritus of Mount Holyoke College.

Dr. Kennan served as Chairman and is now Lead Director of Northeast Utilities. Until 2005, she was a Director of Talbots, Inc. She has served as Director on a number of other boards, including Bell Atlantic, Chastain Real Estate, Shawmut Bank, Berkshire Life Insurance and Kentucky Home Life Insurance. She is a Trustee of the National Trust for Historic Preservation, of Centre College and of Midway College in Midway, Kentucky. Until 2006, she was a member of The Trustees of Reservations. Dr. Kennan has served on the oversight committee of the Folger Shakespeare Library, as President of Five Colleges Incorporated, as a Trustee of Notre Dame University and is active in various educational and civic associations.

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As a member of the faculty of Catholic University for twelve years, until 1978, Dr. Kennan directed the post-doctoral program in Patristic and Medieval Studies, taught history and published numerous articles. Dr. Kennan holds a Ph.D. from the University of Washington in Seattle, an M.S. from St. Hilda’s College at Oxford University and an A.B. from Mount Holyoke College. She holds several honorary doctorates.

Robert E. Patterson (Born 1945), Trustee since 1984

Mr. Patterson is Senior Partner of Cabot Properties, L.P. and Chairman of Cabot Properties, Inc. (a private equity firm investing in commercial real estate).

Mr. Patterson serves as Chairman Emeritus and Trustee of the Joslin Diabetes Center and as a Director of Brandywine Trust Group, LLC. Prior to June 2003, he was a Trustee of Sea Education Association. Prior to December 2001, he was President and Trustee of Cabot Industrial Trust (a publicly traded real estate investment trust). Prior to February 1998, he was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership (a registered investment adviser involved in institutional real estate investments). Prior to 1990, he served as Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, Inc. (the predecessor company of Cabot Partners).

Mr. Patterson practiced law and held various positions in state government and was the founding Executive Director of the Massachusetts Industrial Finance Agency. Mr. Patterson is a graduate of Harvard College and Harvard Law School.

W. Thomas Stephens (Born 1942), Trustee since 1997

Mr. Stephens is Chairman and Chief Executive Officer of Boise Cascade, L.L.C. (a paper, forest products and timberland assets company).

Until 2005, Mr. Stephens was a director of TransCanadaPipelines, Ltd. Until 2004, Mr. Stephens was a Director of Xcel Energy Incorporated (a public utility company), Qwest Communications, and Norske Canada, Inc. (a paper manufacturer). Until 2003, Mr. Stephens was a Director of Mail-Well, Inc. (a diversified printing company). He served as Chairman of Mail-Well until 2001 and as CEO of MacMillan-Bloedel, Ltd. (a forest products company) until 1999.

Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of Johns Manville Corporation. He holds B.S. and M.S. degrees from the University of Arkansas.

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Richard B. Worley (Born 1945), Trustee since 2004

Mr. Worley is Managing Partner of Permit Capital LLC, an investment management firm.

Mr. Worley serves on the Executive Committee of the University of Pennsylvania Medical Center, is a Trustee of The Robert Wood Johnson Foundation (a philanthropic organization devoted to health care issues) and is a Director of The Colonial Williamsburg Foundation (a historical preservation organization). Mr. Worley also serves on the investment committees of Mount Holyoke College and World Wildlife Fund (a wildlife conservation organization).

Prior to joining Permit Capital LLC in 2002, Mr. Worley served as Chief Strategic Officer of Morgan Stanley Investment Management. He previously served as President, Chief Executive Officer and Chief Investment Officer of Morgan Stanley Dean Witter Investment Management and as a Managing Director of Morgan Stanley, a financial services firm. Mr. Worley also was the Chairman of Miller Anderson & Sherrerd, an investment management firm.

Mr. Worley holds a B.S. degree from University of Tennessee and pursued graduate studies in economics at the University of Texas.

Charles E. Haldeman, Jr.* (Born 1948), Trustee since 2004

Mr. Haldeman is President and Chief Executive Officer of Putnam, LLC (“Putnam Investments”). He is a member of Putnam Investments’ Executive Board of Directors and Advisory Council. Prior to November 2003, Mr. Haldeman served as Co-Head of Putnam Investments’ Investment Division.

Prior to joining Putnam Investments in 2002, Mr. Haldeman held executive positions in the investment management industry. He previously served as Chief Executive Officer of Delaware Investments and President & Chief Operating Officer of United Asset Management. Mr. Haldeman was also a partner and director of Cooke & Bieler, Inc. (an investment management firm).

Mr. Haldeman currently serves on the Board of Governors of the Investment Company Institute and as a Trustee of Dartmouth College, and he is a member of the Partners HealthCare Systems Investment Committee. He is a graduate of Dartmouth College, Harvard Law School and Harvard Business School. Mr. Haldeman is also a Chartered Financial Analyst (CFA) charterholder.

118

George Putnam, III* (Born 1951), Trustee since 1984 and President since 2000

Mr. Putnam is President of New Generation Research, Inc. (a publisher of financial advisory and other research services), and of New Generation Advisers, Inc. (a registered investment advisor to private funds). Mr. Putnam founded the New Generation companies in 1986.

Mr. Putnam is a Director of The Boston Family Office, LLC (a registered investment adviser). He is a Trustee of St. Mark’s School and Shore Country Day School, and until 2002 was a Trustee of the Sea Education Association.

Mr. Putnam previously worked as an attorney with the law firm of Dechert LLP (formerly known as Dechert Price & Rhoads) in Philadelphia. He is a graduate of Harvard College, Harvard Business School and Harvard Law School.

The address of each Trustee is One Post Office Square, Boston, MA 02109.

As of July 31, 2006, there were 108 Putnam Funds. All Trustees serve as Trustees of all Putnam funds.

Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 72, death, or removal.

* Trustees who are or may be deemed to be “interested persons” (as defined in the Investment Company Act of 1940) of the fund, Putnam Management, Putnam Retail Management, or Marsh & McLennan Companies, Inc., the parent company of Putnam, LLC and its affiliated companies. Messrs. Haldeman and Putnam, III are deemed “interested persons” by virtue of their positions as officers of the fund, Putnam Management or Putnam Retail Management and as shareholders of Marsh & McLennan Companies, Inc. Mr. Putnam, III is the President of your fund and each of the other Putnam funds. Mr. Haldeman is President and Chief Executive Officer of Putnam Investments.

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Officers

In addition to George Putnam, III, the other officers of the fund are shown below:

Charles E. Porter (Born 1938)
Executive Vice President, Associate Treasurer,
Compliance Liaison and Principal
Executive Officer
Since 1989

Jonathan S. Horwitz (Born 1955)
Senior Vice President and Treasurer
Since 2004

Prior to 2004, Managing Director,
Putnam Investments

Steven D. Krichmar (Born 1958)
Vice President and Principal Financial Officer
Since 2002

Senior Managing Director, Putnam
Investments. Prior to July 2001, Partner,
PricewaterhouseCoopers LLP

Michael T. Healy (Born 1958)
Assistant Treasurer and Principal
Accounting Officer
Since 2000

Managing Director, Putnam Investments

Beth S. Mazor (Born 1958)
Vice President
Since 2002

Managing Director, Putnam Investments

James P. Pappas (Born 1953)
Vice President
Since 2004

Managing Director, Putnam Investments
and Putnam Management. During 2002,
Chief Operating Officer, Atalanta/Sosnoff
Management Corporation; prior to 2001,
President and Chief Executive Officer,
UAM Investment Services, Inc.

Richard S. Robie, III (Born 1960)
Vice President
Since 2004

Senior Managing Director, Putnam
Investments, Putnam Management
and Putnam Retail Management. Prior
to 2003, Senior Vice President, United
Asset Management Corporation

Francis J. McNamara, III (Born 1955)
Vice President and Chief Legal Officer
Since 2004

Senior Managing Director, Putnam
Investments, Putnam Management
and Putnam Retail Management. Prior
to 2004, General Counsel, State Street
Research & Management Company

Charles A. Ruys de Perez (Born 1957)
Vice President and Chief Compliance Officer
Since 2004

Managing Director, Putnam Investments

Mark C. Trenchard (Born 1962)
Vice President and BSA Compliance Officer
Since 2002

Managing Director, Putnam Investments

Judith Cohen (Born 1945)
Vice President, Clerk and Assistant Treasurer
Since 1993

Wanda M. McManus (Born 1947)
Vice President, Senior Associate Treasurer
and Assistant Clerk
Since 2005

Nancy E. Florek (Born 1957)
Vice President, Assistant Clerk,
Assistant Treasurer and Proxy Manager
Since 2005

The address of each Officer is One Post Office Square, Boston, MA 02109.

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Fund information

Founded over 65 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 mutual funds in growth, value, blend, fixed income, and international.

Investment Manager
Putnam Investment
Management, LLC
One Post Office Square
Boston, MA 02109

Marketing Services
Putnam Retail Management
One Post Office Square
Boston, MA 02109

Custodian
Putnam Fiduciary
Trust Company

Legal Counsel
Ropes & Gray LLP

Independent Registered
Public Accounting Firm
PricewaterhouseCoopers LLP

Trustees
John A. Hill, Chairman
Jameson Adkins Baxter,
Vice Chairman
Charles B. Curtis
Myra R. Drucker
Charles E. Haldeman, Jr.
Paul L. Joskow
Elizabeth T. Kennan
Robert E. Patterson
George Putnam, III
W. Thomas Stephens
Richard B. Worley

Officers
George Putnam, III
President

Charles E. Porter
Executive Vice President,
Associate Treasurer,
Compliance Liaison and
Principal Executive Officer

Jonathan S. Horwitz
Senior Vice President
and Treasurer

Steven D. Krichmar
Vice President and
Principal Financial Officer

Michael T. Healy
Assistant Treasurer and
Principal Accounting Officer

Beth S. Mazor
Vice President

James P. Pappas
Vice President

Richard S. Robie, III
Vice President

Francis J. McNamara, III
Vice President and
Chief Legal Officer

Charles A. Ruys de Perez
Vice President and
Chief Compliance Officer

Mark C. Trenchard
Vice President and
BSA Compliance Officer

Judith Cohen
Vice President, Clerk and
Assistant Treasurer

Wanda M. McManus
Vice President, Senior Associate
Treasurer and Assistant Clerk

Nancy E. Florek
Vice President, Assistant Clerk,
Assistant Treasurer
and Proxy Manager

This report is for the information of shareholders of Putnam RetirementReady Funds. 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 www.putnam.com. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a 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) None

Item 3. Audit Committee Financial Expert:

The Funds' Audit and Compliance 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 of the members of the Audit and Compliance Committee also possess a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualify them for service on the Committee. In addition, the Trustees have determined that all members of the Funds' Audit and Compliance Committee meet the financial literacy requirements of the New York Stock Exchange's rules and that Mr. Patterson, Mr. Stephens and Mr. Hill qualify as "audit committee financial experts" (as such term has been defined by the Regulations) based on their review of their pertinent experience and education. Certain other Trustees, although not on the Audit and Compliance Committee, would also qualify as "audit committee financial experts." The SEC has stated 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 and Compliance 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  Audit  Audit-Related  Tax  All Other 
ended  Fees  Fees  Fees  Fees 
 
July 31, 2006  $119,053  $--  $23,561  $- 
July 31, 2005*  $99,425  $--  $28,575  $ - 

* The Trust commenced operations on November 1, 2004.

For the fiscal years ended July 31, 2006 and July 31, 2005, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $293,232 and $223,904 respectively, 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.

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 and Compliance Committee. The Audit and Compliance 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 and Compliance 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.

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  Audit-    All  Total 
year  Related  Tax  Other  Non-Audit 
ended  Fees  Fees  Fees  Fees 
July 31,         
2006  $ -  $ 153,160  $ -  $ - 
July         
30, 2005  $ -  $ -  $ -  $ - 

Item 5. Audit Committee of Listed Registrants

Not applicable

Item 6. Schedule of Investments:

The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.

Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management
Investment Companies:

Not applicable

Item 8. Portfolio Managers of Closed-End Investment Companies

Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and
Affiliated Purchasers:

Not applicable

Item 10. Submission of Matters to a Vote of Security Holders:

Not applicable

Item 11. Controls and Procedures:

(a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

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

Item 12. Exhibits:

(a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith.

(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.

(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith.

SIGNATURES

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

Putnam RetirementReady Funds

By (Signature and Title):

/s/Michael T. Healy
Michael T. Healy
Principal Accounting Officer

Date: September 28, 2006

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/Charles E. Porter
Charles E. Porter
Principal Executive Officer

Date: September 28, 2006

By (Signature and Title):

/s/Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Date: September 28, 2006