0000928816-11-001293.txt : 20110928 0000928816-11-001293.hdr.sgml : 20110928 20110928111213 ACCESSION NUMBER: 0000928816-11-001293 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 20110731 FILED AS OF DATE: 20110928 DATE AS OF CHANGE: 20110928 EFFECTIVENESS DATE: 20110928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEORGE PUTNAM FUND OF BOSTON CENTRAL INDEX KEY: 0000081259 IRS NUMBER: 046013677 STATE OF INCORPORATION: MA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-00058 FILM NUMBER: 111111040 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ STREET 2: MAILSTOP A 14 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 8002252581 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM EQUITY INCOME FUND/NEW DATE OF NAME CHANGE: 19940302 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM GEORGE FUND OF BOSTON DATE OF NAME CHANGE: 19920703 0000081259 S000005597 GEORGE PUTNAM FUND OF BOSTON C000015264 Class A Shares PGEOX C000015265 Class B Shares PGEBX C000015266 Class C Shares PGPCX C000015267 Class M Shares PGEMX C000015268 Class R Shares PGPRX C000015269 Class Y Shares PGEYX N-CSR 1 a_georgeputnambalanced.htm GEORGE PUTNAM BALANCED FUND a_georgeputnambalanced.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: (811-00058)
Exact name of registrant as specified in charter: George Putnam Balanced Fund
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
800 Boylston Street
Boston, Massachusetts 02199-3600
Registrant’s telephone number, including area code: (617) 292-1000
Date of fiscal year end: July 31, 2011
Date of reporting period: August 1, 2010 — July 31, 2011



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:




George Putnam
Balanced
Fund

Annual report
7 | 31 | 11

Message from the Trustees  1 

About the fund  2 

Performance snapshot  4 

Interview with your fund’s portfolio managers  5 

Your fund’s performance  10 

Your fund’s expenses  13 

Terms and definitions  15 

Trustee approval of management contract  16 

Other information for shareholders  21 

Financial statements  22 

Federal tax information  54 

About the Trustees  55 

Officers  57 

 



Message from the Trustees

Dear Fellow Shareholder:

In early August, equity markets around the world were rocked by indications of slowing economic growth and worsening debt issues in Europe and the United States. Significantly, Standard & Poor’s downgraded U.S. sovereign debt to AA+ from AAA on August 5. Markets did show signs of stabilizing after the initial shock wore off, but it seems clear that volatility will be with us in the near term.

Putnam’s investment team believes the downgrade will have limited impact on the real economy today and that many investment opportunities still exist. Long-term investors are wise to seek the counsel of their financial advisors during volatile times and to remember that market volatility historically has served as an opportunity for nimble managers to both guard against risk and pursue new opportunities. We believe that Putnam’s active, research-intensive investment approach offers shareholders a potential advantage in this environment.

We would like to thank John A. Hill, who has served as Chairman of the Trustees since 2000 and who continues on as a Trustee, for his service. We are pleased to announce that Jameson A. Baxter is the new Chair, having served as Vice Chair since 2005 and a Trustee since 1994. Ms. Baxter is President of Baxter Associates, Inc., a private investment firm, and Chair of the Mutual Fund Directors Forum. In addition, she serves as Chair Emeritus of the Board of Trustees of Mount Holyoke College, Director of the Adirondack Land Trust, and Trustee of the Nature Conservancy’s Adirondack Chapter.

Lastly, we would like to take this opportunity to welcome new shareholders to the fund and to thank all of our investors for your continued confidence in Putnam.








Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 5.75%; had they, returns would have been lower. See pages 5 and 10–12 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.

* The fund’s benchmarks (Russell 1000 Value Index and George Putnam Blended Index) were introduced on 12/31/78 and its Lipper group (Balanced Funds) was introduced on 12/31/59; they all post-date the inception of the fund’s class A shares.

George Putnam Blended Index is an unmanaged index administered by Putnam Management, 60% of which is the Russell 1000 Value Index and 40% of which is the Barclays Capital U.S. Aggregate Bond Index.

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Interview with your fund’s portfolio managers

David M. Calabro and Raman Srivastava, CFA

In what was a volatile period for both stocks and bonds, how did George Putnam Balanced Fund perform?

David: Because stocks posted strong returns for the period, the fund, which invests in both stocks and bonds, lagged its all-stock primary benchmark. The fund also lagged the return of its peer group average to a lesser extent, largely as a result of some technology-sector-related positions that suffered what we consider to be temporary setbacks in the market. The fund performed in line with its custom-blended benchmark — a 60%/40% mix of stock and bond indexes. Sector allocation was the primary driver of the fund’s results, particularly the fund’s underweight position in financials, while our stock selection in the consumer staples sector gave a solid boost to returns.

How would you characterize U.S. stock and bond markets during the period?

David: For about three quarters of the period, U.S. markets generally benefited from strong corporate fundamentals and the gradual, if occasionally questioned, U.S. economic recovery. Notably, certain developments earlier this year, including supply-chain disruptions from the crisis in Japan and political turmoil in the Middle East and North Africa, failed to set the recovery back in a material way. However, beginning in May 2011, volatility became more pronounced and widespread investor uncertainty was renewed. This was due primarily to eurozone debt issues that continued to fracture European economic stability, as well as the debt-ceiling debate in the United States, where political gridlock appeared to be heading in the direction of a U.S. debt downgrade at the close of July.


This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 7/31/11. See pages 4 and 10–12 for additional fund performance information. Index descriptions can be found on page 15.

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Since the close of the fiscal year, stocks have experienced a pullback, stemming largely from investors’ concerns over the uncertain political climate. In early August, a last-minute agreement to raise the federal debt ceiling was followed closely by Standard & Poor’s unprecedented downgrade of U.S. Treasury debt from AAA to AA+. The Federal Reserve, meanwhile, stated that its near-zero interest-rate policy would remain in place through the middle of 2013, and many market watchers saw this as a response to increased U.S. economic weakness.

Raman: In the bond markets, which were up by nearly 5% for the period, pockets of volatility existed over the year, but as with stocks, the more dramatic swings occurred toward period-end. The yield curve and interest rates remained relatively stable. From March to June, mortgage-related areas suffered significant downward pressure. Interestingly, the U.S. government’s second round of “quantitative easing,” implemented between November 2010 and June 2011, turned out to be a non-event for the bond markets: Investors quickly shifted their focus to developed-market sovereign debt issues, problem areas that dwarfed any concerns about the impact of recent government intervention in the securities markets.

How did the fund’s balanced approach help it weather volatility?

David: Without question, the fund’s focus on both stocks and bonds helped insulate it from the volatility we experienced during the year, whether these periods proceeded from short-lived, if shocking, events like Japan’s earthquake, or from deep-seated questions of sovereign insolvency at home or abroad. Whenever markets saw reasons to be hopeful, the fund’s equity investments generally reflected that optimism, and when markets experienced broad-based flights to safety, the bond portion of the portfolio provided a cushion from the equity losses. In addition, the fund’s general bias toward higher-quality securities among both


Allocations are represented as a percentage of the fund’s net assets. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities and the exclusion of as-of trades, if any, and the use of different classifications of securities for presentation purposes. Holdings and allocations may vary over time.

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stocks and bonds helped it across changing market environments.


Among the equity holdings and strategies that delivered positive results, what were some highlights?

David: The single largest contributor to performance was our strategically lower-than-benchmark weighting to financial stocks. The slow growth environment, coupled with increases in government regulation, has made it more difficult to make money in financial stocks.

In consumer staples, our positions in Philip Morris and Procter & Gamble also helped performance. In our view, both companies are well run and possess admirable earnings profiles, and yet they remain relatively undervalued.

Another large contributor to the fund’s results was Exxon Mobil, the nation’s largest oil company, which we discussed at the fund’s most recent semiannual period-end. It benefited not only from rising energy prices, which continued to increase during much of the period, but also from strong business execution and the delivery of solid earnings amid a competitive industry landscape.

How did the fund’s bond exposures help performance?

Raman: We de-emphasized certain bond sectors that experienced headwinds at times during the period, such as Treasury and agency mortgage-backed securities. Also, we experienced positive results by emphasizing several areas within higher-rated, investment-grade corporate credit, where our security selection proved helpful. Lastly, we made allocations to commercial mortgage-backed securities [CMBS] and agency collateralized mortgage obligations, two types of bond investments


This table shows the fund's top 10 equity holdings by percentage of the fund's net assets as of 7/31/11. Short-term holdings are excluded. Holdings will vary over time.

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that we believe currently offer attractive income characteristics.

By period-end, we retained our benchmark-relative overweight position in corporate bonds, which continue, in our view, to offer relatively attractive current income as well as lower sensitivity to the risk of rising interest rates. Also, we began looking to gradually reduce the fund’s exposure to the CMBS market.

Where among the fund’s stock investments did you see disappointing performance?

David: Technology was a positive contributor to performance on a sector basis, but some of the companies in which the fund held sizable positions performed poorly. These included tech infrastructure giant Cisco and computer company Hewlett-Packard. These are both bellwether, large-cap names, and we continue to believe they are undervalued. We have maintained positions in both companies.

We had some success in the health insurance space — for example, by owning the stock of health-care-services company Aetna — but that did not fully offset our decision to avoid the stock of health insurer UnitedHealth.

What is your outlook for the equity and bond markets and the fund?

Raman: Because we focus on higher-quality areas of the markets, the fund remains well positioned to weather periods of stress. By the end of the period, we expected something would be done about the U.S. debt ceiling, but that it wouldn’t be enough to appease all the ratings agencies. Going forward, we expect to see stretches of heightened volatility in the stock and bond markets, as it is hard for market participants not to get distracted by the debt-related risks in both the United States and the eurozone.

Underlying these headline issues, however, a number of positive trends exist. We expect macroeconomic data to pick up modestly, which would support a better second half of 2011. Specifically, we hope to see an increase in real incomes. Nominal incomes are likely to


This chart shows how the fund’s top weightings have changed over the past six months. Weightings are shown as a percentage of net assets. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities and the exclusion of as-of trades, if any, and the use of different classifications of securities for presentation purposes. Holdings will vary over time.

8



remain flat, but if inflation drops as a result of declining energy prices, which we expect may continue to be the case, real incomes should get a boost. This may support consumer spending, a critical area of economic output. The wild card will still be Europe, and markets are likely to remain distracted by activities of the so-called “super committee” that has been appointed to iron out the details of a U.S. plan for fiscal restraint. Though we are cautiously optimistic for equity markets, we respect the prevailing uncertainty, and thus maintain the fund’s sizable exposure to bonds and have increased our cash exposure.

David: Our investment philosophy and process remain the same. In terms of equities, we seek to own the stocks of high-quality, undervalued, well-capitalized companies that we consider to be solid franchises, regardless of the prevailing macroeconomic environment. When market conditions become increasingly volatile, we believe the best equity defense is to own companies with strong foundations that are insulated from headline risk relative to their peers.

Thank you, David and Raman, for bringing us up to date.

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

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


Portfolio Manager David M. Calabro holds a B.A. from Williams College. David joined Putnam in 2008 and has been in the investment industry since 1982.


Portfolio Manager Raman Srivastava has an M.S. in Computational Finance from Carnegie Mellon University and a B.S. from the University of Waterloo. A CFA charterholder, he joined Putnam in 1999 and has been in the investment industry since 1997.

IN THE NEWS

Citing its belief that the U.S. deficit reduction plan “falls short” of what is needed to stabilize the federal debt situation, ratings agency Standard & Poor’s on August 5 reduced the credit rating of long-term U.S. debt to AA+, one notch below the top grade of AAA, with a negative outlook. U.S. short-term debt retained its top rating of A-1+. The historic action triggered a sell-off in global equity markets, adding to recent market volatility stemming from investor concerns regarding the European sovereign debt crisis. The downgrade came just days after Congress and the White House agreed to raise the federal debt ceiling by at least $2.1 trillion, removing the threat of default through 2012. The accord, reached after weeks of contentious debate, includes more than $900 billion in spending cuts during the next 10 years, and establishes a joint congressional committee to identify $1.5 trillion in additional cuts.

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Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended July 31, 2011, the end of its most recent fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance as of the most recent calendar quarter-end and expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class R and class Y shares are not available to all investors. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.

Fund performance Total return for periods ended 7/31/11

  Class A  Class B  Class C  Class M  Class R  Class Y 
(inception dates)  (11/5/37)  (4/27/92)  (7/26/99)  (12/1/94)  (1/21/03)  (3/31/94) 

  Before  After          Before  After  Net  Net 
  sales  sales  Before  After  Before  After  sales  sales  asset  asset 
  charge  charge  CDSC  CDSC  CDSC  CDSC  charge  charge  value  value 

Annual average                     
(life of fund)  8.60%  8.52%  7.59%  7.59%  7.79%  7.79%  7.87%  7.81%  8.33%  8.67% 

10 years  16.51  9.82  8.05  8.05  8.14  8.14  10.97  7.08  13.89  19.60 
Annual average  1.54  0.94  0.78  0.78  0.79  0.79  1.05  0.69  1.31  1.81 

5 years  –5.04  –10.50  –8.57  –9.91  –8.44  –8.44  –7.27  –10.50  –6.03  –3.75 
Annual average  –1.03  –2.19  –1.78  –2.07  –1.75  –1.75  –1.50  –2.19  –1.24  –0.76 

3 years  –2.94  –8.51  –5.14  –7.76  –5.10  –5.10  –4.32  –7.66  –3.55  –2.16 
Annual average  –0.99  –2.92  –1.74  –2.66  –1.73  –1.73  –1.46  –2.62  –1.20  –0.73 

1 year  12.09  5.61  11.24  6.24  11.22  10.22  11.60  7.66  11.84  12.42 

 

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A and M shares reflect the deduction of a maximum 5.75% and 3.50% sales charge, respectively, levied at the time of purchase. Class B share returns after the contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 1% in the sixth year, and is eliminated thereafter. Class C share returns after CDSC reflect a 1% CDSC for the first year that is eliminated thereafter. Class R and Y shares have no initial sales charge or CDSC. Performance for class B, C, M, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares, except for class Y shares, for which 12b-1 fees are not applicable.

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

Class B share performance does not reflect conversion to class A shares.

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Comparative index returns For periods ended 7/31/11

    Barclays Capital    Lipper 
  Russell 1000  U.S. Aggregate  George Putnam  Balanced Funds 
  Value Index  Bond Index  Blended Index†  category average‡ 

Annual average (life of fund)  —*  —*  —*  —* 

10 years  43.21%  73.70%  65.70%  46.81% 
Annual average  3.66  5.68  5.18  3.84 

5 years  –0.04  37.47  19.43  20.08 
Annual average  –0.01  6.57  3.61  3.68 

3 years  3.82  22.66  15.68  13.35 
Annual average  1.26  7.05  4.98  4.23 

1 year  16.76  4.44  12.00  13.59 

 

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

* The fund’s benchmarks (Russell 1000 Value Index and George Putnam Blended Index) were introduced on 12/31/78. The Barclays Capital U.S. Aggregate Bond Index was introduced on 12/31/75, and the fund’s Lipper group (Balanced Funds) was introduced on 12/31/59. They all post-date the inception of the fund’s class A shares.

† George Putnam Blended Index is an unmanaged index administered by Putnam Management, 60% of which is the Russell 1000 Value Index and 40% of which is the Barclays Capital U.S. Aggregate Bond Index.

‡ Over the 1-year, 3-year, 5-year, and 10-year periods ended 7/31/11, there were 732, 691, 582, and 270 funds, respectively, in this Lipper category.


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 and class C shares would have been valued at $10,805 and $10,814, respectively, and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares ($9,650 after sales charge) would have been valued at $10,708 after sales charge. A $10,000 investment in the fund’s class R and class Y shares would have been valued at $11,389 and $11,960, respectively.

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Fund price and distribution information For the 12-month period ended 7/31/11

Distributions  Class A  Class B  Class C  Class M  Class R  Class Y 

Number  4  4  4  4  4  4 

Income  $0.200  $0.107  $0.111  $0.142  $0.170  $0.230 

Capital gains             

Total  $0.200  $0.107  $0.111  $0.142  $0.170  $0.230 

  Before  After  Net  Net  Before  After  Net  Net 
  sales  sales  asset  asset  sales  sales  asset  asset 
Share value  charge  charge  value  value  charge  charge  value  value 

7/31/10  $11.08  $11.76  $10.96  $11.02  $10.94  $11.34  $11.05  $11.12 

7/31/11  12.21  12.95  12.08  12.14  12.06  12.50  12.18  12.26 

  Before  After  Net  Net  Before  After  Net  Net 
  sales  sales  asset  asset  sales  sales  asset  asset 
Current yield (end of period)  charge  charge  value  value  charge  charge  value  value 

Current dividend rate 1  1.64%  1.54%  0.83%  0.89%  1.16%  1.12%  1.38%  1.89% 

Current 30-day SEC yield 2,3  N/A  1.63  0.97  0.97  N/A  1.18  1.48  1.98 

 

The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A and M shares, if applicable, do not take into account any sales charge levied at the time of purchase. After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (5.75% for class A shares and 3.50% for class M shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.

1 Most recent distribution, excluding capital gains, annualized and divided by share price before or after sales charge at period-end.

2 For a portion of the period, this fund’s expenses were limited, without which yields would have been lower.

3 Based only on investment income and calculated using the maximum offering price for each share class, in accordance with SEC guidelines.

Fund performance as of most recent calendar quarter
Total return for periods ended 6/30/11

  Class A  Class B  Class C  Class M  Class R  Class Y 
(inception dates)  (11/5/37)  (4/27/92)  (7/26/99)  (12/1/94)  (1/21/03)  (3/31/94) 

  Before  After          Before  After  Net  Net 
  sales  sales  Before  After  Before  After  sales  sales  asset  asset 
  charge  charge  CDSC  CDSC  CDSC  CDSC  charge  charge  value  value 

Annual average                     
(life of fund)  8.64%  8.55%  7.62%  7.62%  7.82%  7.82%  7.90%  7.85%  8.37%  8.70% 

10 years  18.83  11.98  10.16  10.16  10.25  10.25  13.20  9.23  16.10  21.95 
Annual average  1.74  1.14  0.97  0.97  0.98  0.98  1.25  0.89  1.50  2.00 

5 years  –2.57  –8.17  –6.28  –7.65  –6.15  –6.15  –4.89  –8.23  –3.64  –1.34 
Annual average  –0.52  –1.69  –1.29  –1.58  –1.26  –1.26  –1.00  –1.70  –0.74  –0.27 

3 years  –1.78  –7.44  –4.05  –6.70  –3.96  –3.96  –3.16  –6.53  –2.38  –1.00 
Annual average  –0.60  –2.54  –1.37  –2.29  –1.34  –1.34  –1.06  –2.23  –0.80  –0.33 

1 year  19.20  12.31  18.26  13.26  18.20  17.20  18.54  14.39  18.84  19.43 

 

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Your fund’s expenses

As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.

Expense ratios

  Class A  Class B  Class C  Class M  Class R  Class Y 

Total annual operating expenses for the fiscal year             
ended 7/31/10*  1.11%  1.86%  1.86%  1.61%  1.36%  0.86% 

Annualized expense ratio for the six-month period             
ended 7/31/11†  1.01%  1.76%  1.76%  1.51%  1.26%  0.76% 

 

Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report. Expenses are shown as a percentage of average net assets.

* Restated to reflect projected expenses under the management contract effective January 1, 2010.

† For the fund’s most recent fiscal half year; may differ from expense ratios based on one-year data in the financial highlights.

Expenses per $1,000

The following table shows the expenses you would have paid on a $1,000 investment in the fund from February 1, 2011, to July 31, 2011. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.

  Class A  Class B  Class C  Class M  Class R  Class Y 

Expenses paid per $1,000*†  $5.04  $8.77  $8.77  $7.53  $6.29  $3.80 

Ending value (after expenses)  $1,013.90  $1,010.00  $1,010.20  $1,011.60  $1,012.60  $1,015.20 

 

* 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 average net assets for the six months ended 7/31/11. 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.

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Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended July 31, 2011, use the following calculation method. To find the value of your investment on February 1, 2011, call Putnam at 1-800-225-1581.


Compare expenses using the SEC’s method

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

  Class A  Class B  Class C  Class M  Class R  Class Y 

Expenses paid per $1,000*†  $5.06  $8.80  $8.80  $7.55  $6.31  $3.81 

Ending value (after expenses)  $1,019.79  $1,016.07  $1,016.07  $1,017.31  $1,018.55  $1,021.03 

 

* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 7/31/11. 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.

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Terms and definitions

Important terms

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

Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

After sales charge is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge performance figures shown here assume the 5.75% maximum sales charge for class A shares and 3.50% 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 over time from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase.

Current yield is the annual rate of return earned from dividends or interest of an investment. Current yield is expressed as a percentage of the price of a security, fund share, or principal investment.

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 generally only available to corporate and institutional clients and clients in other approved programs.

Comparative indexes

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

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

George Putnam Blended Index is an unmanaged index administered by Putnam Management, 60% of which is based on the Russell 1000 Value Index and 40% of which is based on the Barclays Capital U.S. Aggregate Bond Index.

Russell 1000 Value Index is an unmanaged index of those companies in the large-cap Russell 1000 Index chosen for their value orientation.

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.

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

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Trustee approval of management contract

General conclusions

The Board of Trustees of the Putnam funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management (“Putnam Management”) and the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”).

The Board of Trustees, with the assistance of its Contract Committee, which consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended) of the Putnam funds (“Independent Trustees”), requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. Over the course of several months ending in June 2011, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided 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 on a number of occasions. At the Trustees’ June 17, 2011 meeting, the Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management and sub-management contracts, effective July 1, 2011. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not evaluated PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.)

The Independent Trustees’ approval was based on the following conclusions:

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

That the fee schedule represented 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 management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in previous years.

Management fee schedules and total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. In reviewing management fees, the Trustees generally focus

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their attention on material changes in circumstances — for example, changes in assets under management 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.

Most of the open-end Putnam funds have new management contracts, with new fee schedules reflecting the implementation of more competitive fee levels for many funds, complex-wide breakpoints for the open-end funds, and performance fees for some funds. These new management contracts have been in effect for a little over a year — since January or, for a few funds, February, 2010. The Trustees approved the new management contracts on July 10, 2009, and fund shareholders subsequently approved the contracts by overwhelming majorities of the shares voted.

Because these management contracts had been implemented only recently, the Contract Committee had limited practical experience with the operation of the new fee structures. Under its new management contract, your fund has the benefit of breakpoints in its management fee that provide shareholders with significant economies of scale in the form of reduced fee levels as assets under management in the Putnam family of funds increase. The Contract Committee observed that the complex-wide breakpoints of the open-end funds had only been in place for a short while, and the Trustees will examine the operation of this new breakpoint structure in future years in light of further experience.

As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to ensure that expenses of the Putnam funds continue to meet evolving competitive standards, the Trustees and Putnam Management agreed in 2009 to implement certain expense limitations. These expense limitations serve in particular to maintain competitive expense levels for funds with large numbers of small shareholder accounts and funds with relatively small net assets. Most funds, including your fund, had sufficiently low expenses that these expense limitations did not apply. The expense limitations were: (i) a contractual expense limitation applicable to all retail open-end funds of 37.5 basis points on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to all open-end funds of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, investor servicing fees, distribution fees, investment-related expenses, interest, taxes, brokerage commissions and extraordinary expenses). Putnam Management’s support for these expense limitations was an important factor in the Trustees’ decision to approve the continuance of your fund’s management and sub-management contracts.

The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Lipper Inc. This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fee), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the 2nd quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the 3rd quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2010 (the first quintile representing the least expensive funds and the fifth quintile the most expensive funds). The fee and expense data reported by Lipper as of December 31, 2010 reflected the most recent fiscal year-end data available in Lipper’s database at that time.

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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 provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing of such economies of scale as may exist in the management of the funds at that time.

The information examined by the Trustees as part of their annual contract review for the Putnam funds 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, and the like. This information included comparisons of those fees with fees charged to the funds, as well as an assessment of the differences in the services provided to these different types of clients. The Trustees observed that the differences in fee rates between institutional clients and 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 may reflect historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes 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 its institutional clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.

Investment performance

The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of several investment oversight committees of the Trustees, which met on a regular basis with the funds’ portfolio teams and with the Chief Investment Officer and other members of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period. The Trustees considered 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 Committee noted the substantial improvement in the performance of most Putnam funds during the 2009–2010 period and Putnam Management’s ongoing efforts to strengthen its investment personnel and processes. The

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Committee also noted the disappointing investment performance of some funds for periods ended December 31, 2010 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor performance trends to assess the effectiveness of these efforts and to evaluate whether additional actions to address areas of underperformance are warranted.

In the case of your fund, the Trustees considered that its class A share cumulative total return performance at net asset value was in the following quartiles of its Lipper Inc. peer group (Lipper Balanced Funds) for the one-year, three-year and five-year periods ended December 31, 2010 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):

One-year period  3rd 

Three-year period  4th 

Five-year period  4th 

 

Over the one-year, three-year and five-year periods ended December 31, 2010, there were 758, 711 and 581 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.)

The Trustees expressed continued concern about your fund’s general underperformance, and in particular its fourth quartile performance over the three- and five-year periods ended December 31, 2010, and considered the circumstances that may have contributed to this disappointing performance. The Trustees considered Putnam Management’s observation that the fund’s underperformance over these periods was due in significant part to the fund’s particularly weak performance in 2007 and 2008. They noted Putnam Management’s assessment that performance in 2007 was hurt by poor stock selection, particularly within the information technology, financials, and consumer discretionary sectors, and that performance in 2008 was hurt by the fund’s exposure to mortgage-backed securities and collateralized mortgage obligations. The Trustees also considered steps that Putnam Management had taken to support improved performance, noting in particular that, in November 2008, a new portfolio manager replaced the three individuals on the portfolio management team with responsibility for the fund’s equity investments and that the fund’s relative performance since then (December 1, 2008 through December 31, 2010) had improved to the second quartile. The Trustees also considered a number of other changes that Putnam Management had made in recent years in efforts to support and improve fund performance generally. These changes included Putnam Management’s efforts to increase accountability and to reduce complexity in the portfolio management process for the Putnam equity funds by moving generally from a portfolio management team structure to a decision-making process that vests full authority and responsibility with individual portfolio managers and by affirming its commitment to a fundamental-driven approach to investing. The Trustees noted that Putnam Management had also worked to strengthen its fundamental research capabilities by adding new investment personnel to the large-cap equity research team and by bringing U.S. and international research under common leadership. In addition, the Trustees recognized that Putnam Management has adjusted the compensation structure for portfolio managers and research analysts so that only those who achieve top-quartile returns over a rolling three-year basis are eligible for full bonuses.

As a general matter, the Trustees believe 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

19



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 performance issues, the Trustees concluded that it is preferable to seek change within Putnam Management to address performance shortcomings. In the Trustees’ view, the alternative of engaging a new investment adviser for an underperforming fund would entail significant disruptions and would not provide any greater assurance of improved investment performance.

Brokerage and soft-dollar allocations; investor servicing

The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft-dollar credits acquired through these means are used primarily to supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft-dollar credits continues to be allocated to the payment of fund expenses. The Trustees indicated their continued intent to monitor regulatory developments in this area with the assistance of their Brokerage Committee and also indicated their continued intent to monitor the potential benefits associated with fund brokerage and soft-dollar allocations and trends in industry practices to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.

Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management contract, the Trustees reviewed your fund’s investor servicing agreement with Putnam Investor Services, Inc. (“PSERV”) and its distributor’s contracts and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are reasonable in relation to the nature and quality of such services.

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Other information for shareholders

Important notice regarding Putnam’s privacy policy

In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ names, addresses, Social Security numbers, and dates of birth. Using this information, we are able to maintain accurate records of accounts and transactions.

It is our policy to protect the confidentiality of our shareholder information, whether or not a shareholder currently owns shares of our funds. In particular, it is our policy not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use.

Under certain circumstances, we must share account information with outside vendors who provide services to us, such as mailings and proxy solicitations. In these cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. Finally, it is our policy to share account information with your financial representative, if you’ve listed one on your Putnam account.

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, 2011, are available in the Individual Investors section at putnam.com, and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Forms N-Q on the SEC’s website 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 website or the operation of the Public Reference Room.

Trustee and employee fund ownership

Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of July 31, 2011, Putnam employees had approximately $350,000,000 and the Trustees had approximately $74,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.

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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 non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)

Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal 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 highlights table also includes the current reporting period.

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Report of Independent Registered Public Accounting Firm

To the Trustees and Shareholders of
George Putnam Balanced Fund:

In our opinion, the accompanying statement of assets and liabilities, including the portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of George Putnam Balanced Fund (the “fund”) (formerly known as The George Putnam Fund of Boston) at July 31, 2011, and the results of its operations, the changes in its net assets and the 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 fund’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, 2011 by correspondence with the custodian and transfer agent provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
September 14, 2011

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The fund’s portfolio 7/31/11

COMMON STOCKS (57.7%)*  Shares  Value 

 
Banking (6.0%)     
Bank of America Corp.  321,853  $3,125,193 

Bank of New York Mellon Corp. (The)  239,900  6,023,889 

BB&T Corp.  98,900  2,539,752 

Comerica, Inc.  87,400  2,799,422 

Fifth Third Bancorp  131,100  1,658,415 

JPMorgan Chase & Co.  573,500  23,198,075 

PNC Financial Services Group, Inc.  61,200  3,322,548 

State Street Corp.  220,400  9,139,988 

SunTrust Banks, Inc.  48,600  1,190,214 

U.S. Bancorp  395,300  10,301,518 

Wells Fargo & Co.  397,700  11,111,738 

    74,410,752 
Basic materials (1.8%)     
Alcoa, Inc.  155,100  2,284,623 

Dow Chemical Co. (The)  69,100  2,409,517 

E.I. du Pont de Nemours & Co.  129,800  6,674,316 

Nucor Corp.  113,300  4,406,237 

PPG Industries, Inc.  63,400  5,338,280 

Weyerhaeuser Co. R  35,072  701,089 

    21,814,062 
Capital goods (2.9%)     
Avery Dennison Corp.  30,400  959,120 

Deere & Co.  32,800  2,575,128 

Eaton Corp.  67,900  3,255,805 

Emerson Electric Co.  28,500  1,399,065 

Illinois Tool Works, Inc.  73,400  3,655,320 

Ingersoll-Rand PLC  72,500  2,712,950 

Lockheed Martin Corp.  22,600  1,711,498 

Northrop Grumman Corp.  77,000  4,659,270 

Parker Hannifin Corp.  55,600  4,393,512 

Raytheon Co.  85,500  3,824,415 

United Technologies Corp.  86,000  7,124,240 

    36,270,323 
Communication services (4.4%)     
AT&T, Inc.  620,082  18,143,599 

Comcast Corp. Class A  298,800  7,177,176 

DIRECTV Class A †  42,600  2,158,968 

DISH Network Corp. Class A †  47,800  1,416,314 

Time Warner Cable, Inc.  49,200  3,606,852 

Verizon Communications, Inc.  495,500  17,486,195 

Vodafone Group PLC ADR (United Kingdom)  149,600  4,203,760 

    54,192,864 
Conglomerates (2.3%)     
3M Co.  34,100  2,971,474 

General Electric Co.  867,400  15,535,134 

Honeywell International, Inc.  111,900  5,941,890 

Tyco International, Ltd.  86,600  3,835,514 

    28,284,012 

 

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COMMON STOCKS (57.7%)* cont.  Shares  Value 

 
Consumer cyclicals (5.3%)     
Carnival Corp.  75,000  $2,497,500 

Ford Motor Co. †  140,600  1,716,726 

Home Depot, Inc. (The)  78,600  2,745,498 

Kimberly-Clark Corp.  112,000  7,320,320 

Limited Brands, Inc.  31,800  1,203,948 

Lowe’s Cos., Inc.  65,200  1,407,016 

Marriott International, Inc. Class A  41,520  1,349,400 

News Corp. Class A  134,600  2,156,292 

Omnicom Group, Inc.  70,700  3,317,244 

Staples, Inc.  199,800  3,208,788 

Target Corp.  104,300  5,370,407 

Time Warner, Inc.  246,200  8,656,392 

TJX Cos., Inc. (The)  157,400  8,704,220 

Viacom, Inc. Class B  166,500  8,061,930 

Wal-Mart Stores, Inc.  45,900  2,419,389 

Walt Disney Co. (The)  154,600  5,970,652 

    66,105,722 
Consumer finance (0.4%)     
American Express Co.  91,000  4,553,640 

    4,553,640 
Consumer staples (5.0%)     
Avon Products, Inc.  81,700  2,142,991 

Clorox Co.  23,500  1,682,365 

Coca-Cola Co. (The)  49,500  3,366,495 

Colgate-Palmolive Co.  28,300  2,387,954 

CVS Caremark Corp.  219,200  7,967,920 

General Mills, Inc.  49,400  1,845,090 

Hertz Global Holdings, Inc. †  82,100  1,155,147 

Kellogg Co.  44,400  2,476,632 

Kraft Foods, Inc. Class A  139,962  4,811,894 

Lorillard, Inc.  15,200  1,614,544 

Newell Rubbermaid, Inc.  197,900  3,071,408 

PepsiCo, Inc.  37,500  2,401,500 

Philip Morris International, Inc.  204,900  14,582,733 

Procter & Gamble Co. (The)  163,300  10,041,317 

SYSCO Corp.  92,100  2,817,339 

    62,365,329 
Energy (7.7%)     
Anadarko Petroleum Corp.  20,800  1,717,248 

Apache Corp.  14,700  1,818,684 

Chevron Corp.  222,800  23,175,656 

ConocoPhillips  68,900  4,960,111 

Devon Energy Corp.  49,400  3,887,780 

Exxon Mobil Corp.  283,900  22,652,381 

Hess Corp.  40,900  2,804,104 

Marathon Oil Corp.  61,400  1,901,558 

Marathon Petroleum Corp. †  30,700  1,344,353 

National Oilwell Varco, Inc.  20,500  1,651,685 

 

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COMMON STOCKS (57.7%)* cont.  Shares  Value 

 
Energy cont.     
Newfield Exploration Co. †  49,900  $3,364,258 

Noble Corp. (Switzerland)  78,100  2,879,547 

Occidental Petroleum Corp.  87,600  8,600,568 

Schlumberger, Ltd.  60,595  5,475,970 

Total SA ADR (France)  137,800  7,450,846 

Valero Energy Corp.  68,700  1,725,744 

    95,410,493 
Financials (3.0%)     
Aflac, Inc.  58,900  2,712,934 

Citigroup, Inc.  196,250  7,524,225 

Goldman Sachs Group, Inc. (The)  83,210  11,230,854 

MetLife, Inc.  68,400  2,818,764 

Progressive Corp. (The)  174,300  3,430,224 

Prudential Financial, Inc.  159,700  9,371,196 

    37,088,197 
Health care (8.8%)     
Abbott Laboratories  35,600  1,826,992 

Aetna, Inc.  160,600  6,663,294 

Baxter International, Inc.  158,400  9,214,128 

Bristol-Myers Squibb Co.  119,400  3,422,004 

Celgene Corp. †  63,900  3,789,270 

Covidien PLC (Ireland)  113,912  5,785,590 

Johnson & Johnson  299,900  19,430,521 

McKesson Corp.  15,000  1,216,800 

Medtronic, Inc.  94,400  3,403,120 

Merck & Co., Inc.  298,100  10,174,153 

Novartis AG ADR (Switzerland)  28,600  1,750,320 

Pfizer, Inc.  919,758  17,696,144 

Quest Diagnostics, Inc.  110,700  5,978,907 

St. Jude Medical, Inc.  106,900  4,970,850 

Stryker Corp.  60,500  3,287,570 

Teva Pharmaceutical Industries, Ltd. ADR (Israel)  37,400  1,744,336 

Thermo Fisher Scientific, Inc. †  110,300  6,627,927 

WellPoint, Inc.  25,600  1,729,280 

    108,711,206 
Insurance (1.9%)     
ACE, Ltd.  12,200  817,156 

Allstate Corp. (The)  166,500  4,615,380 

Chubb Corp. (The)  97,600  6,098,048 

Marsh & McLennan Cos., Inc.  138,300  4,078,467 

RenaissanceRe Holdings, Ltd.  23,300  1,621,447 

Travelers Cos., Inc. (The)  116,700  6,433,671 

    23,664,169 
Investment banking/Brokerage (0.3%)     
Morgan Stanley  190,040  4,228,390 

    4,228,390 
Real estate (0.6%)     
CreXus Investment Corp. R  132,500  1,392,575 

Digital Realty Trust, Inc. R  12,900  789,609 

 

26



COMMON STOCKS (57.7%)* cont.  Shares  Value 

 
Real estate cont.     
Equity Residential Trust R  37,048  $2,290,307 

ProLogis, Inc. R  45,581  1,624,051 

Simon Property Group, Inc. R  14,162  1,706,663 

    7,803,205 
Technology (4.5%)     
Adobe Systems, Inc. †  78,900  2,187,108 

Apple, Inc. †  3,100  1,210,488 

BMC Software, Inc. †  24,200  1,045,924 

Cisco Systems, Inc.  448,700  7,165,739 

EMC Corp. †  220,200  5,742,816 

Hewlett-Packard Co.  189,800  6,673,368 

IBM Corp.  23,100  4,200,735 

Intel Corp.  193,300  4,316,389 

KLA-Tencor Corp.  51,600  2,054,712 

L-3 Communications Holdings, Inc.  22,200  1,756,464 

Microsoft Corp.  173,700  4,759,380 

Oracle Corp.  88,100  2,694,098 

Qualcomm, Inc.  91,500  5,012,370 

SanDisk Corp. †  56,000  2,381,680 

Texas Instruments, Inc.  100,600  2,992,850 

Yahoo!, Inc. †  116,700  1,528,770 

    55,722,891 
Transportation (0.3%)     
FedEx Corp.  15,200  1,320,576 

United Parcel Service, Inc. Class B  24,300  1,682,046 

    3,002,622 
Utilities and power (2.5%)     
Ameren Corp.  165,300  4,763,946 

American Electric Power Co., Inc.  108,400  3,995,624 

Dominion Resources, Inc.  31,800  1,540,710 

Duke Energy Corp.  60,000  1,116,000 

Edison International  138,300  5,265,081 

Entergy Corp.  93,700  6,259,160 

Exelon Corp.  20,400  899,028 

NextEra Energy, Inc.  39,600  2,187,900 

PG&E Corp.  127,550  5,284,397 

    31,311,846 
 
Total common stocks (cost $629,392,064)    $714,939,723 
 
 
CORPORATE BONDS AND NOTES (16.7%)*  Principal amount  Value 

 
Basic materials (1.0%)     
Allegheny Technologies, Inc. sr. unsec. unsub. notes 9 3/8s, 2019  $275,000  $357,245 

ArcelorMittal sr. unsec. unsub. 9.85s, 2019 (France)  1,545,000  2,009,494 

Dow Chemical Co. (The) sr. unsec. unsub. notes 8.55s, 2019  1,190,000  1,572,102 

Freeport-McMoRan Copper & Gold, Inc. sr. unsec. notes 8 3/8s,     
2017 (Indonesia)  1,450,000  1,576,875 

Georgia-Pacific, LLC sr. unsec. unsub. notes 7 3/4s, 2029  850,000  1,022,530 

International Paper Co. sr. unsec. notes 9 3/8s, 2019  1,018,000  1,348,208 

 

27



CORPORATE BONDS AND NOTES (16.7%)* cont.  Principal amount  Value 

 
Basic materials cont.     
International Paper Co. sr. unsec. notes 8.7s, 2038  $10,000  $13,046 

International Paper Co. sr. unsec. notes 7.95s, 2018  221,000  271,710 

International Paper Co. sr. unsec. unsub. notes 7.3s, 2039  20,000  22,983 

Rio Tinto Finance USA, Ltd. company guaranty sr. unsec. notes     
9s, 2019 (Australia)  450,000  613,176 

Rio Tinto Finance USA, Ltd. company guaranty sr. unsec. notes     
5.2s, 2040 (Australia)  570,000  584,094 

Rohm & Haas Co. sr. unsec. unsub. notes 7.85s, 2029  385,000  487,521 

Sealed Air Corp. sr. notes 7 7/8s, 2017  585,000  636,260 

Teck Resources Limited sr. notes 10 3/4s, 2019 (Canada)  35,000  44,538 

Teck Resources Limited sr. notes 10 1/4s, 2016 (Canada)  51,000  61,200 

Teck Resources Limited sr. notes 9 3/4s, 2014 (Canada)  16,000  19,501 

Teck Resources Limited sr. unsec. unsub. notes 7s, 2012 (Canada)  30,000  31,770 

Temple-Inland, Inc. sr. unsec. unsub. notes 6 5/8s, 2018  195,000  218,746 

Union Carbide Corp. sr. unsec. unsub. bonds 7 3/4s, 2096  180,000  202,752 

Xstrata Finance Canada, Ltd. 144A company guaranty 5.8s,     
2016 (Canada)  735,000  827,631 

    11,921,382 
Capital goods (0.3%)     
Allied Waste North America, Inc. company guaranty sr. unsec. notes     
6 7/8s, 2017  1,595,000  1,724,594 

Legrand SA unsec. unsub. debs. 8 1/2s, 2025 (France)  767,000  1,008,699 

Parker Hannifin Corp. sr. unsec. unsub. notes Ser. MTN, 6 1/4s, 2038  975,000  1,163,982 

Republic Services, Inc. company guaranty sr. unsec. unsub. notes     
5 1/2s, 2019  240,000  269,450 

United Technologies Corp. sr. unsec. notes 5.7s, 2040  100,000  111,943 

    4,278,668 
Communication services (1.5%)     
American Tower Corp. sr. unsec. notes 7 1/4s, 2019  800,000  951,548 

American Tower Corp. sr. unsec. unsub. notes 4 5/8s, 2015  555,000  596,241 

AT&T, Inc. company guaranty sr. unsec. unsub. notes 5.35s, 2040  351,000  349,598 

AT&T, Inc. sr. unsec. unsub. bonds 5 1/2s, 2018  705,000  808,616 

AT&T, Inc. sr. unsec. unsub. notes 6.3s, 2038  1,194,000  1,324,776 

Bellsouth Capital Funding unsec. notes 7 7/8s, 2030  1,380,000  1,773,602 

CenturyLink, Inc. sr. unsec. debs. bonds Ser. G, 6 7/8s, 2028  715,000  691,632 

CenturyLink, Inc. sr. unsec. unsub. notes Ser. P, 7.6s, 2039  305,000  307,549 

Comcast Cable Communications company guaranty sr. unsub.     
notes 8 7/8s, 2017  290,000  376,099 

Comcast Corp. company guaranty sr. unsec. unsub. notes     
6.95s, 2037  225,000  264,041 

Cox Communications, Inc. 144A notes 5 7/8s, 2016  289,000  333,486 

Crown Castle Towers, LLC 144A company guaranty sr. notes     
4.883s, 2020  710,000  732,674 

France Telecom notes 8 1/2s, 2031 (France)  180,000  252,489 

Koninklijke (Royal) KPN NV sr. unsec. unsub. bonds 8 3/8s,     
2030 (Netherlands)  70,000  91,192 

NBC Universal, Inc. 144A notes 6.4s, 2040  380,000  422,069 

NBC Universal, Inc. 144A notes 5.15s, 2020  295,000  319,685 

 

28



CORPORATE BONDS AND NOTES (16.7%)* cont.  Principal amount  Value 

 
Communication services cont.     
Rogers Communications, Inc. company guaranty sr. unsec. bonds     
8 3/4s, 2032 (Canada)  $95,000  $129,588 

Rogers Communications, Inc. sec. notes 6 3/8s, 2014 (Canada)  122,000  137,977 

SBA Tower Trust 144A company guaranty asset backed notes     
5.101s, 2017  1,125,000  1,185,283 

TCI Communications, Inc. company guaranty 7 7/8s, 2026  2,395,000  3,122,735 

Telecom Italia Capital SA company guaranty sr. unsec. unsub. notes     
6.999s, 2018 (Italy)  320,000  337,255 

Telefonica Emisones SAU company guaranty 6.221s, 2017 (Spain)  845,000  927,213 

Time Warner Cable, Inc. company guaranty sr. notes 7.3s, 2038  640,000  765,130 

Time Warner Cable, Inc. company guaranty sr. unsec. notes     
7 1/2s, 2014  150,000  173,344 

Time Warner Cable, Inc. company guaranty sr. unsec. unsub. notes     
6 3/4s, 2039  355,000  406,869 

Verizon Communications, Inc. sr. unsec. unsub. notes 8 3/4s, 2018  110,000  147,455 

Verizon New Jersey, Inc. debs. 8s, 2022  770,000  950,104 

Verizon Pennsylvania, Inc. debs. 8.35s, 2030  980,000  1,226,249 

    19,104,499 
Consumer cyclicals (0.9%)     
Advance Auto Parts, Inc. company guaranty sr. unsec. notes     
5 3/4s, 2020  475,000  514,887 

CBS Corp. company guaranty sr. unsec. notes 7 7/8s, 2030  730,000  891,744 

Choice Hotels International, Inc. company guaranty sr. unsec. unsub.     
notes 5.7s, 2020  430,000  448,504 

DIRECTV Holdings, LLC/DIRECTV Financing Co., Inc. company     
guaranty sr. unsec. notes 6.35s, 2040  370,000  403,327 

DIRECTV Holdings, LLC/DIRECTV Financing Co., Inc. company     
guaranty sr. unsec. unsub. notes 5 7/8s, 2019  820,000  935,113 

Expedia, Inc. company guaranty sr. unsec. notes 7.456s, 2018  325,000  361,563 

Expedia, Inc. company guaranty sr. unsec. unsub. notes 5.95s, 2020  555,000  554,870 

Expedia, Inc. 144A company guaranty sr. notes 8 1/2s, 2016  800,000  871,000 

FUEL Trust 144A company guaranty asset backed notes     
4.207s, 2016  1,245,000  1,265,599 

Grupo Televisa SA sr. unsec. bonds 6 5/8s, 2040 (Mexico)  300,000  329,935 

Grupo Televisa SA sr. unsec. notes 6s, 2018 (Mexico)  290,000  324,999 

Lender Processing Services, Inc. company guaranty sr. unsec. unsub.     
notes 8 1/8s, 2016  846,000  858,690 

News America Holdings, Inc. company guaranty 7 3/4s, 2024  1,045,000  1,260,031 

Owens Corning company guaranty sr. unsec. notes 9s, 2019  324,000  390,420 

Time Warner Entertainment Co., LP debs. 8 3/8s, 2023  170,000  222,855 

Time Warner, Inc. company guaranty sr. unsec. bonds 7.7s, 2032  520,000  650,913 

Time Warner, Inc. company guaranty sr. unsec. notes 4.7s, 2021  120,000  125,638 

Time Warner, Inc. debs. 9.15s, 2023  340,000  471,227 

    10,881,315 
Consumer staples (1.4%)     
Altria Group, Inc. company guaranty sr. unsec. notes 9.7s, 2018  375,000  505,451 

Altria Group, Inc. company guaranty sr. unsec. notes 9 1/4s, 2019  595,000  794,052 

Anheuser-Busch InBev Worldwide, Inc. company guaranty sr. unsec.     
unsub. notes 8.2s, 2039  165,000  240,535 

 

29



CORPORATE BONDS AND NOTES (16.7%)* cont.  Principal amount  Value 

 
Consumer staples cont.     
Anheuser-Busch InBev Worldwide, Inc. company guaranty sr. unsec.     
unsub. notes 7 3/4s, 2019  $1,730,000  $2,254,335 

Bacardi, Ltd. 144A unsec. notes 4 1/2s, 2021 (Bermuda)  495,000  518,159 

Campbell Soup Co. debs. 8 7/8s, 2021  855,000  1,184,013 

CVS Caremark Corp. jr. unsec. sub. bonds FRB 6.302s, 2037  2,293,000  2,235,675 

CVS Pass-Through Trust 144A company guaranty notes     
7.507s, 2032  744,039  883,695 

CVS Pass-Through Trust 144A pass-through certificates     
6.117s, 2013  144,677  152,250 

Darden Restaurants, Inc. sr. unsec. unsub. notes 6.8s, 2037  810,000  933,173 

Diageo Investment Corp. company guaranty 8s, 2022 (Canada)  820,000  1,086,429 

Fortune Brands, Inc. sr. unsec. unsub. notes 3s, 2012  850,000  861,537 

General Mills, Inc. sr. unsec. notes 5.65s, 2019  130,000  150,932 

H.J. Heinz Finance Co. 144A company guaranty 7 1/8s, 2039  360,000  445,056 

Kraft Foods, Inc. sr. unsec. unsub. notes 6 1/2s, 2040  2,009,000  2,332,434 

Kroger Co. company guaranty 6 3/4s, 2012  275,000  286,273 

Kroger Co. company guaranty 6.4s, 2017  500,000  598,420 

McDonald’s Corp. sr. unsec. Ser. MTN, 6.3s, 2038  535,000  653,070 

McDonald’s Corp. sr. unsec. notes 5.7s, 2039  600,000  672,368 

Tyson Foods, Inc. sr. unsec. notes 8 1/4s, 2011  285,000  285,713 

WPP Finance UK company guaranty sr. unsec. notes 8s, 2014     
(United Kingdom)  690,000  808,064 

    17,881,634 
Energy (0.9%)     
Anadarko Finance Co. company guaranty sr. unsec. unsub. notes     
Ser. B, 7 1/2s, 2031  985,000  1,181,910 

BP Capital Markets PLC company guaranty sr. unsec. unsub. notes     
4.742s, 2021 (United Kingdom)  655,000  711,773 

BP Capital Markets PLC company guaranty sr. unsec. unsub. notes     
4 1/2s, 2020 (United Kingdom)  175,000  187,148 

Chesapeake Energy Corp. sr. unsec. notes 7 5/8s, 2013  10,000  10,925 

El Paso Pipeline Partners Operating Co., LP company guaranty     
sr. unsec. notes 6 1/2s, 2020  235,000  266,431 

Ente Nazionale Idrocarburi (ENI) SpA 144A sr. unsec. notes 4.15s,     
2020 (Italy)  825,000  791,315 

EOG Resources, Inc. sr. unsec. notes 5 5/8s, 2019  205,000  237,588 

Kerr-McGee Corp. company guaranty sr. unsec. unsub. notes     
7 7/8s, 2031  340,000  422,299 

Motiva Enterprises, LLC 144A sr. notes 5.2s, 2012  225,000  234,851 

Motiva Enterprises, LLC 144A sr. unsec. notes 6.85s, 2040  220,000  265,469 

Newfield Exploration Co. sr. sub. notes 6 5/8s, 2016  650,000  671,125 

Noble Holding International, Ltd. company guaranty sr. unsec. notes     
6.05s, 2041  390,000  417,056 

Petrobras International Finance Co. company guaranty sr. unsec.     
notes 6 3/4s, 2041 (Brazil)  300,000  336,481 

Petrobras International Finance Co. company guaranty sr. unsec.     
notes 5 3/8s, 2021 (Brazil)  825,000  878,712 

Petrobras International Finance Co. company guaranty sr. unsec.     
notes 3 7/8s, 2016 (Brazil)  355,000  368,120 

 

30



CORPORATE BONDS AND NOTES (16.7%)* cont.  Principal amount  Value 

 
Energy cont.     
Pride International, Inc. sr. unsec. notes 7 7/8s, 2040  $760,000  $967,100 

Ras Laffan Liquefied Natural Gas Co., Ltd. 144A company guaranty     
sr. notes 5 1/2s, 2014 (Qatar)  675,000  743,344 

Spectra Energy Partners LP sr. unsec. notes 4.6s, 2021  245,000  251,736 

Statoil ASA company guaranty sr. unsec. notes 5.1s, 2040 (Norway)  480,000  498,044 

Weatherford Bermuda company guaranty sr. unsec. notes 9 5/8s,     
2019 (Switzerland)  180,000  240,961 

Weatherford International, Inc. company guaranty sr. unsec. unsub.     
notes 6.8s, 2037  245,000  276,984 

Weatherford International, Inc. company guaranty sr. unsec. unsub.     
notes 6.35s, 2017  280,000  323,949 

Weatherford International, Ltd. sr. notes 5 1/2s, 2016 (Switzerland)  455,000  507,591 

    10,790,912 
Financials (7.0%)     
Aflac, Inc. sr. unsec. notes 6.9s, 2039  500,000  540,282 

Aflac, Inc. sr. unsec. notes 6.45s, 2040  345,000  358,041 

American Express Bank FSB notes Ser. BKN1, 5.55s, 2012  1,160,000  1,220,278 

American Express Bank FSB sr. unsec. FRN Ser. BKNT, 0.486s, 2017  545,000  517,030 

American International Group, Inc. jr. sub. bonds FRB 8.175s, 2058  300,000  327,000 

American International Group, Inc. sr. unsec. Ser. MTN, 5.85s, 2018  665,000  705,034 

AON Corp. jr. unsec. sub. notes 8.205s, 2027  1,150,000  1,338,623 

Assurant, Inc. sr. unsec. notes 6 3/4s, 2034  525,000  535,492 

Banco do Brasil SA 144A unsec. sub. notes 5 7/8s, 2022 (Brazil)  950,000  965,881 

Bank Nederlandse Gemeenten 144A bonds 1 3/4s,     
2015 (Netherlands)  12,100,000  12,136,684 

Bank of America NA sub. notes Ser. BKNT, 5.3s, 2017  315,000  325,348 

Bank One Corp. unsec. unsub. notes 5.9s, 2011  1,000,000  1,014,698 

BankAmerica Capital III bank guaranteed jr. unsec. FRN 0.819s, 2027  2,755,000  2,021,900 

Barclays Bank PLC jr. unsec. sub. notes FRN 6.278s, 2049     
(United Kingdom)  145,000  118,175 

Barclays Bank PLC 144A jr. unsec. sub. notes FRN 6.86s, 2049     
(United Kingdom)  280,000  248,500 

Barclays Bank PLC 144A sub. notes 10.179s, 2021 (United Kingdom)  804,000  996,960 

Barclays Bank PLC 144A unsec. sub. notes 6.05s, 2017     
(United Kingdom)  1,415,000  1,479,258 

Bear Stearns Cos., Inc. (The) sr. notes 6.4s, 2017  500,000  580,388 

Bear Stearns Cos., Inc. (The) sr. unsec. notes 7 1/4s, 2018  331,000  398,223 

Bosphorus Financial Services, Ltd. 144A sr. notes FRN 2.061s, 2012  445,875  444,248 

Camden Property Trust sr. unsec. notes 4 7/8s, 2023 R  1,040,000  1,056,041 

Capital One Bank USA NA sub. notes 8.8s, 2019  385,000  483,880 

Capital One Capital III company guaranty 7.686s, 2036  320,000  327,200 

Capital One Capital V company guaranty jr. unsec. sub. notes     
10 1/4s, 2039  450,000  476,100 

Citigroup, Inc. sr. unsec. sub. FRN 0.522s, 2016  123,000  111,701 

Citigroup, Inc. sub. notes 5s, 2014  1,369,000  1,441,081 

Citigroup, Inc. unsec. sub. notes 6 1/8s, 2036  200,000  198,421 

Citigroup, Inc. unsec. sub. notes 5 5/8s, 2012  290,000  301,934 

CNA Financial Corp. sr. unsec. unsub. notes 5 3/4s, 2021  210,000  223,617 

 

31



CORPORATE BONDS AND NOTES (16.7%)* cont.  Principal amount  Value 

 
Financials cont.     
CNA Financial Corp. unsec. notes 6 1/2s, 2016  $435,000  $494,353 

Commonwealth Bank of Australia 144A sr. unsec. notes 3 3/4s,     
2014 (Australia)  1,220,000  1,289,717 

Corrections Corporation of America company guaranty sr. notes     
7 3/4s, 2017  279,000  302,715 

Credit Suisse Guernsey sr. unsec. notes 5.3s, 2019  475,000  512,202 

Credit Suisse Guernsey, Ltd. jr. unsec. sub. notes FRN 5.86s, 2017     
(United Kingdom)  934,000  868,620 

Deutsche Bank AG/London sr. unsec. notes 3 7/8s, 2014     
(United Kingdom)  635,000  670,347 

Deutsche Bank Capital Funding Trust VII 144A jr. unsec. sub. bonds     
FRB 5.628s, 2016  470,000  404,200 

Developers Diversified Realty Corp. sr. unsec. unsub. notes     
7 7/8s, 2020 R  605,000  715,932 

Duke Realty LP sr. unsec. notes 6 1/2s, 2018 R  361,000  406,763 

Duke Realty LP sr. unsec. notes 6 1/4s, 2013 R  19,000  20,439 

Erac USA Finance, LLC 144A sr. notes 4 1/2s, 2021  785,000  801,995 

Fleet Capital Trust V bank guaranteed jr. sub. FRN 1.247s, 2028  1,057,000  823,359 

GATX Financial Corp. notes 5.8s, 2016  560,000  623,334 

GE Capital Trust I unsec. sub. bonds FRB 6 3/8s, 2067  355,000  362,100 

General Electric Capital Corp. sr. unsec. 5 5/8s, 2018  260,000  290,224 

General Electric Capital Corp. sr. unsec. FRN Ser. MTN, 0.466s, 2016  455,000  434,389 

General Electric Capital Corp. sr. unsec. notes Ser. MTN, 6 7/8s, 2039  1,589,000  1,841,878 

Genworth Financial, Inc. sr. unsec. unsub. notes 7 5/8s, 2021  1,410,000  1,346,550 

Goldman Sachs Group, Inc. (The) sr. notes 7 1/2s, 2019  805,000  947,424 

Goldman Sachs Group, Inc. (The) sub. notes 6 3/4s, 2037  745,000  749,624 

Hartford Financial Services Group, Inc. (The) sr. unsec. unsub.     
notes 6 5/8s, 2040  1,540,000  1,619,153 

HBOS PLC 144A unsec. sub. bonds 6s, 2033 (United Kingdom)  890,000  660,947 

Highwood Realty LP sr. unsec. bonds 5.85s, 2017 R  1,005,000  1,112,665 

HSBC Finance Capital Trust IX FRN 5.911s, 2035  2,000,000  1,850,000 

HSBC Holdings PLC sub. notes 6 1/2s, 2037 (United Kingdom)  905,000  940,180 

ING Bank NV 144A sr. unsec. notes FRN 1.297s, 2013 (Netherlands)  1,535,000  1,535,098 

International Lease Finance Corp. sr. unsec. notes 6 1/4s, 2019  275,000  271,563 

JPMorgan Chase Bank NA sub. notes Ser. BKNT, 6s, 2017  1,000,000  1,126,326 

JPMorgan Chase Capital XVIII bonds Ser. R, 6.95s, 2036  499,000  511,753 

JPMorgan Chase Capital XXIII company guaranty jr. unsec. sub.     
notes FRN 1.261s, 2047  2,443,000  1,908,420 

JPMorgan Chase Capital XXV bonds Ser. Y, 6.8s, 2037  523,000  530,193 

Liberty Mutual Group, Inc. 144A company guaranty jr. sub. notes     
FRB 10 3/4s, 2058  1,285,000  1,696,200 

Liberty Mutual Insurance Co. 144A notes 7.697s, 2097  1,060,000  1,009,989 

Lloyds TSB Bank PLC bank guaranty sr. unsec. unsub. notes 6 3/8s,     
2021 (United Kingdom)  280,000  294,703 

Lloyds TSB Bank PLC company guaranty sr. unsec. sub. notes     
Ser. MTN, 6 1/2s, 2020 (United Kingdom)  1,850,000  1,834,442 

Macquarie Bank Ltd. 144A unsec. sub. notes 6 5/8s, 2021 (Australia)  1,020,000  1,053,101 

 

32



CORPORATE BONDS AND NOTES (16.7%)* cont.  Principal amount  Value 

 
Financials cont.     
Massachusetts Mutual Life Insurance Co. 144A notes 8 7/8s, 2039  $815,000  $1,156,450 

Merrill Lynch & Co., Inc. jr. sub. bonds 7 3/4s, 2038  1,565,000  1,712,529 

MetLife Capital Trust IV 144A jr. sub. debs. 7 7/8s, 2037  1,300,000  1,425,688 

MetLife, Inc. jr. unsec. sub. notes 6.4s, 2036  590,000  584,711 

Metropolitan Life Global Funding I 144A notes 3.65s, 2018  100,000  101,915 

Nationwide Financial Services notes 5 5/8s, 2015  465,000  504,366 

Nationwide Mutual Insurance Co. 144A notes 8 1/4s, 2031  415,000  472,855 

Nordea Bank AB 144A jr. unsec. sub. notes FRN 5.424s,     
2015 (Sweden)  525,000  513,188 

Nordea Bank AB 144A sub. notes 4 7/8s, 2021 (Sweden)  1,300,000  1,277,306 

OneAmerica Financial Partners, Inc. 144A bonds 7s, 2033  370,000  355,600 

OneBeacon US Holdings, Inc. company guaranty sr. unsec. notes     
5 7/8s, 2013  125,000  130,669 

Pacific LifeCorp 144A sr. notes 6s, 2020  365,000  399,195 

Progressive Corp. (The) jr. unsec. sub. notes FRN 6.7s, 2037  2,020,000  2,085,650 

Prudential Financial, Inc. sr. notes 7 3/8s, 2019  600,000  727,218 

Prudential Financial, Inc. sr. notes 6.2s, 2015  190,000  214,114 

Prudential Holdings LLC sr. notes FRN Ser. AGM, 1.122s, 2017  210,000  199,268 

Royal Bank of Scotland Group PLC sr. unsec. unsub. notes 6.4s, 2019     
(United Kingdom)  355,000  368,656 

Santander Issuances S.A. Unipersonal 144A bank guaranty unsec.     
sub. notes 5.911s, 2016 (Spain)  900,000  929,636 

Simon Property Group LP sr. unsec. unsub. notes 10.35s, 2019 R  216,000  304,438 

Simon Property Group LP sr. unsec. unsub. notes 5.65s, 2020 R  361,000  404,779 

Societe Generale SA 144A jr. unsec. sub. bonds FRB 0.996s,     
2017 (France)  385,000  270,566 

Standard Chartered PLC 144A jr. sub. bonds FRB 7.014s, 2049     
(United Kingdom)  800,000  788,079 

State Street Capital Trust IV company guaranty jr. unsec. sub. bonds     
FRB 1.247s, 2037  1,790,000  1,467,727 

Tanger Properties, LP sr. unsec. notes 6 1/8s, 2020 R  265,000  300,089 

TD Ameritrade Holding Corp. company guaranty sr. unsec. unsub.     
notes 5.6s, 2019  480,000  521,406 

Teachers Insurance & Annuity Association of America 144A     
notes 6.85s, 2039  750,000  886,377 

Vornado Realty LP sr. unsec. unsub. notes 4 1/4s, 2015 R  555,000  583,082 

Wachovia Bank NA sub. notes Ser. BKNT, 6s, 2017  1,060,000  1,201,345 

Wachovia Corp. sr. unsec. notes 5 3/4s, 2017  145,000  164,953 

WEA Finance LLC/WT Finance Aust. Pty. Ltd. 144A company     
guaranty sr. unsec. notes 6 3/4s, 2019  1,050,000  1,215,992 

Wells Fargo Bank NA unsec. sub. notes FRN 0.471s, 2016  710,000  665,842 

Westpac Capital Trust III 144A unsec. sub. notes FRN 5.819s,     
2013 (Australia)  1,010,000  1,002,243 

Willis Group Holdings PLC company guaranty sr. unsec. unsub. notes     
5 3/4s, 2021 (United Kingdom)  710,000  740,142 

ZFS Finance USA Trust V 144A bonds FRB 6 1/2s, 2037  159,000  159,000 

    86,587,990 

 

33



CORPORATE BONDS AND NOTES (16.7%)* cont.  Principal amount  Value 

 
Government (0.4%)     
International Bank for Reconstruction & Development unsec. unsub.     
bonds 7 5/8s, 2023  $4,000,000  $5,627,404 

    5,627,404 
Health care (0.2%)     
Aetna, Inc. sr. unsec. unsub. notes 6 3/4s, 2037  95,000  114,024 

Coventry Health Care, Inc. sr. unsec. notes 5.45s, 2021  450,000  474,725 

Quest Diagnostics, Inc. company guaranty sr. unsec. notes     
6.95s, 2037  335,000  394,014 

Quest Diagnostics, Inc. company guaranty sr. unsec. notes     
4 3/4s, 2020  121,000  128,778 

UnitedHealth Group, Inc. sr. unsec. notes 5.8s, 2036  180,000  190,059 

Ventas Realty LP/Capital Corp. sr. notes 6 3/4s, 2017 R  470,000  503,076 

WellPoint, Inc. notes 7s, 2019  155,000  189,441 

    1,994,117 
Technology (0.2%)     
Computer Sciences Corp. sr. unsec. notes 6 1/2s, 2018  281,000  306,907 

Dell, Inc. sr. unsec. notes 5 7/8s, 2019  715,000  822,741 

KLA-Tencor Corp. sr. unsec. notes 6.9s, 2018  915,000  1,052,748 

Xerox Corp. sr. unsec. notes 4 1/2s, 2021  395,000  406,869 

    2,589,265 
Transportation (0.4%)     
Burlington Northern Santa Fe Corp. debs. 5 3/4s, 2040  145,000  156,625 

Burlington Northern Santa Fe Corp. sr. unsec. notes 4.7s, 2019  176,000  191,719 

Burlington Northern Santa Fe, LLC sr. unsec. notes 5.4s, 2041  605,000  628,955 

Continental Airlines, Inc. pass-through certificates Ser. 97-4A,     
6.9s, 2018  167,734  178,008 

Continental Airlines, Inc. pass-through certificates Ser. 98-1A,     
6.648s, 2017  388,751  412,076 

Norfolk Southern Corp. sr. unsec. notes 6s, 2111  390,000  405,663 

Northwest Airlines Corp. pass-through certificates Ser. 00-1,     
7.15s, 2019  1,369,008  1,370,788 

Southwest Airlines Co. pass-through certificates Ser. 07-1,     
6.15s, 2022  744,175  805,570 

Union Pacific Corp. 144A pass-through certificates 5.214s, 2014  590,000  646,219 

    4,795,623 
Utilities and power (2.5%)     
AEP Texas North Co. sr. notes Ser. B, 5 1/2s, 2013  500,000  531,436 

Appalachian Power Co. sr. notes Ser. L, 5.8s, 2035  510,000  532,580 

Atmos Energy Corp. sr. unsub. notes 6.35s, 2017  1,230,000  1,447,340 

Beaver Valley Funding Corp. sr. bonds 9s, 2017  493,000  536,680 

Boardwalk Pipelines LP company guaranty 5 7/8s, 2016  975,000  1,109,517 

Bruce Mansfield Unit pass-through certificates 6.85s, 2034  2,229,339  2,457,765 

Commonwealth Edison Co. 1st mtge. 6.15s, 2017  275,000  325,458 

Commonwealth Edison Co. 1st mtge. sec. bonds 5 7/8s, 2033  500,000  545,625 

Consolidated Natural Gas Co. sr. notes Ser. A, 5s, 2014  530,000  587,614 

DCP Midstream, LLC 144A sr. unsec. notes 5.35s, 2020  375,000  406,876 

Dominion Resources, Inc. jr. sub. notes FRN Ser. 06-B, 6.3s, 2066  2,310,000  2,249,940 

Dominion Resources, Inc. sr. unsec. unsub. notes Ser. 07-A, 6s, 2017  10,000  11,787 

EDP Finance BV 144A sr. unsec. unsub. notes 6s, 2018     
(Netherlands)  685,000  611,118 

 

34



CORPORATE BONDS AND NOTES (16.7%)* cont.  Principal amount  Value 

 
Utilities and power cont.     
El Paso Natural Gas Co. sr. unsec. unsub. bonds 8 3/8s, 2032  $490,000  $637,442 

Electricite de France 144A notes 6.95s, 2039 (France)  655,000  802,020 

Electricite de France 144A sr. notes 5.6s, 2040 (France)  640,000  671,252 

Electricite de France 144A sr. notes 4.6s, 2020 (France)  440,000  470,158 

Enel Finance Intl. SA 144A company guaranty sr. unsec. notes 5 1/8s,     
2019 (Luxembourg)  360,000  359,449 

Energy Transfer Partners LP sr. unsec. unsub. notes 6.05s, 2041  850,000  850,212 

Energy Transfer Partners LP sr. unsec. unsub. notes 4.65s, 2021  280,000  279,907 

Enterprise Products Operating, LLC company guaranty sr. unsec.     
unsub. notes 5.95s, 2041  435,000  453,732 

Enterprise Products Operating, LLC company guaranty sr. unsec.     
unsub. notes 3.2s, 2016  610,000  630,979 

FirstEnergy Corp. notes Ser. B, 6.45s, 2011  164,000  166,541 

Iberdrola International BV company guaranty sr. unsec. unsub.     
notes 6 3/4s, 2036  185,000  193,790 

ITC Holdings Corp. 144A notes 5 7/8s, 2016  272,000  315,188 

ITC Holdings Corp. 144A sr. unsec. notes 6.05s, 2018  365,000  414,030 

Kansas Gas & Electric bonds 5.647s, 2021  328,828  355,115 

KCP&L Greater Missouri Operations Co. sr. unsec. unsub. notes     
11 7/8s, 2012  735,000  806,197 

Nevada Power Co. mtge. sec. notes 7 1/8s, 2019  295,000  360,964 

NiSource Finance Corp. company guaranty sr. unsec. notes     
10 3/4s, 2016  360,000  475,629 

Pacific Gas & Electric Co. sr. unsec. notes 6.35s, 2038  350,000  406,541 

Pacific Gas & Electric Co. sr. unsub. 5.8s, 2037  140,000  152,884 

Potomac Edison Co. 144A 1st mtge. 5.8s, 2016  331,000  378,935 

Power Receivable Finance, LLC 144A sr. notes 6.29s, 2012  367,608  367,931 

PPL Energy Supply LLC bonds Ser. A, 5.7s, 2015  50,000  54,590 

PPL WEM Holdings PLC 144A sr. unsec. notes 5 3/8s, 2021     
(United Kingdom)  1,285,000  1,353,817 

Puget Sound Energy, Inc. jr. sub. FRN Ser. A, 6.974s, 2067  656,000  670,760 

Spectra Energy Capital, LLC company guaranty sr. unsec. unsub.     
notes 6.2s, 2018  1,080,000  1,247,656 

Spectra Energy Capital, LLC sr. notes 8s, 2019  820,000  1,033,019 

Teco Finance, Inc. company guaranty sr. unsec. unsub. notes     
6.572s, 2017  110,000  130,645 

Texas-New Mexico Power Co. 144A 1st mtge. sec. 9 1/2s, 2019  1,024,000  1,340,514 

Trans-Canada Pipelines, Ltd. jr. unsec. sub. notes FRN 6.35s,     
2067 (Canada)  975,000  998,695 

Union Electric Co. 1st mtge. sr. sec. bonds 6.7s, 2019  960,000  1,155,001 

Wisconsin Energy Corp. jr. unsec. sub. notes FRN 6 1/4s, 2067  1,945,000  1,960,560 

    30,847,889 
 
Total corporate bonds and notes (cost $192,011,789)    $207,300,698 

 

35



U.S. GOVERNMENT AND AGENCY     
MORTGAGE OBLIGATIONS (11.2%)*  Principal amount  Value 

 
U.S. Government Guaranteed Mortgage Obligations (2.6%)     
Government National Mortgage Association     
Pass-Through Certificates     
4 1/2s, May 20, 2041  $19,957,379  $21,296,707 
4s, February 20, 2041  10,857,318  11,225,025 

    32,521,732 
U.S. Government Agency Mortgage Obligations (8.6%)     
Federal Home Loan Mortgage Corporation Pass-Through Certificates     
6s, March 1, 2035  10,608  11,790 
3 1/2s, January 1, 2041  555,848  543,645 

Federal National Mortgage Association Pass-Through Certificates     
6s, TBA, August 1, 2041  24,000,000  26,388,749 
5 1/2s, with due dates from July 1, 2033 to November 1, 2038  9,888,131  10,752,388 
5s, with due dates from August 1, 2033 to January 1, 2039  5,515,464  5,906,109 
4 1/2s, TBA, August 1, 2041  59,000,000  61,590,457 
3 1/2s, December 1, 2040  962,422  942,723 

    106,135,861 
 
Total U.S. government and agency mortgage obligations (cost $136,731,398)  $138,657,593 
 
 
U.S. GOVERNMENT AGENCY OBLIGATIONS (0.4%)*  Principal amount  Value 

 
Morgan Stanley 2s, FDIC guaranteed notes, September 22, 2011  $2,500,000  $2,506,505 

Wells Fargo & Co.     
3s, FDIC guaranteed notes, December 9, 2011  1,100,000  1,110,995 
2 1/8s, FDIC guaranteed notes, June 15, 2012  1,400,000  1,421,850 

Total U.S. government agency obligations (cost $5,010,356)    $5,039,350 
 
 
U.S. TREASURY OBLIGATIONS (1.5%)*  Principal amount  Value 

 
U.S. Treasury Notes     
3 1/8s, April 30, 2013  $11,700,000  $12,271,061 
1 1/4s, April 15, 2014  3,100,000  3,164,785 
0 5/8s, February 28, 2013  2,700,000  2,712,656 

Total U.S. treasury obligations (cost $18,093,359)    $18,148,502 
 
 
CONVERTIBLE PREFERRED STOCKS (1.5%)*  Shares  Value 

 
Apache Corp. Ser. D, $3.00 cv. pfd.  58,652  $3,819,712 

General Motors Co. Ser. B, $2.375 cv. pfd.  78,496  3,635,346 

Hartford Financial Services Group, Inc. (The) $1.182 cv. pfd.  145,819  3,517,883 

MetLife, Inc. $3.75 cv. pfd.  30,500  2,377,170 

PPL Corp. $4.75 cv. pfd.  55,331  3,130,628 

PPL Corp. $4.375 cv. pfd.  43,000  2,361,130 

Total convertible preferred stocks (cost $18,430,135)    $18,841,869 
 
 
MORTGAGE-BACKED SECURITIES (0.8%)*  Principal amount  Value 

 
CS First Boston Mortgage Securities Corp. Ser. 04-C1, Class B,     
4.855s, 2037  $1,407,000  $1,430,134 

Federal Home Loan Mortgage Corp.     
Ser. T-56, Class A, IO, 0.524s, 2043  5,936,444  107,598 
Ser. T-56, Class 3, IO, 0.471s, 2043  6,935,635  3,251 

 

36



MORTGAGE-BACKED SECURITIES (0.8%)* cont.  Principal amount  Value 

 
Federal Home Loan Mortgage Corp.     
Ser. T-56, Class 1, IO, 0.292s, 2043  $9,253,084  $5,783 
Ser. T-56, Class 2, IO, 0.119s, 2043  8,311,953  775 

Federal National Mortgage Association Ser. 01-79, Class BI, IO,     
0.311s, 2045  1,966,692  20,896 

GMAC Commercial Mortgage Securities, Inc. 144A Ser. 99-C3,     
Class G, 6.974s, 2036  208,043  189,319 

GS Mortgage Securities Corp. II 144A Ser. 98-C1, Class F, 6s, 2030  946,542  956,007 

JPMorgan Chase Commercial Mortgage Securities Corp.     
Ser. 07-LDPX, Class A2, 5.434s, 2049  984,480  1,028,533 

LB Commercial Conduit Mortgage Trust 144A     
Ser. 99-C1, Class F, 6.41s, 2031  715,303  726,033 
Ser. 99-C1, Class G, 6.41s, 2031  765,731  723,616 
Ser. 98-C4, Class H, 5.6s, 2035  1,074,000  1,146,916 

Merrill Lynch Mortgage Investors, Inc. FRB Ser. 98-C3, Class E,     
6.83s, 2030  644,000  685,973 

Morgan Stanley Capital I     
FRB Ser. 07-HQ12, Class A2, 5.592s, 2049  1,529,741  1,561,820 
FRB Ser. 07-HQ12, Class A2FL, 0.437s, 2049  703,919  628,670 

PNC Mortgage Acceptance Corp. 144A Ser. 00-C1, Class J,     
6 5/8s, 2033  456,000  18,240 

Structured Adjustable Rate Mortgage Loan Trust 144A Ser. 04-NP2,     
Class A, 0.537s, 2034  386,960  298,926 

Wachovia Bank Commercial Mortgage Trust 144A FRB     
Ser. 05-WL5A, Class L, 3.487s, 2018  771,000  462,600 

Total mortgage-backed securities (cost $9,962,968)    $9,995,090 
 
 
INVESTMENT COMPANIES (0.6%)*  Shares  Value 

 
Utilities Select Sector SPDR Fund  213,900  $7,092,924 

Total investment companies (cost $5,522,769)    $7,092,924 
 
 
MUNICIPAL BONDS AND NOTES (0.2%)*  Principal amount  Value 

 
CA State G.O. Bonds (Build America Bonds), 7 1/2s, 4/1/34  $215,000  $261,677 

IL State G.O. Bonds     
4.421s, 1/1/15  420,000  437,405 
4.071s, 1/1/14  1,250,000  1,305,213 

North TX, Thruway Auth. Rev. Bonds (Build America Bonds),     
6.718s, 1/1/49  350,000  409,301 

OH State U. Rev. Bonds (Build America Bonds), 4.91s, 6/1/40  275,000  273,303 

Total municipal bonds and notes (cost $2,511,508)    $2,686,899 
 
 
CONVERTIBLE BONDS AND NOTES (0.1%)*  Principal amount  Value 

 
Omnicare, Inc. cv. sr. sub. notes 3 3/4s, 2025  $619,000  $800,058 

Total convertible bonds and notes (cost $619,000)    $800,058 
 
 
ASSET-BACKED SECURITIES (0.1%)*  Principal amount  Value 

 
First Plus Home Loan Trust Ser. 97-3, Class B1, 7.79s, 2023     
(In default) †  $194,241  $19 

G-Star, Ltd. 144A FRB Ser. 02-2A, Class BFL, 2.187s, 2037  308,000  238,700 

GE Business Loan Trust 144A Ser. 04-2, Class D, 2.937s, 2032  415,101  78,869 

 

37



ASSET-BACKED SECURITIES (0.1%)* cont.  Principal amount  Value 

 
Structured Asset Securities Corp. 144A Ser. 98-RF3,     
Class A, IO, 6.1s, 2028  $1,301,008  $195,242 

TIAA Real Estate CDO, Ltd. Ser. 03-1A, Class E, 8s, 2038  1,805,291  216,635 

Total asset-backed securities (cost $740,598)    $729,465 
 
 
FOREIGN GOVERNMENT BONDS AND NOTES (0.1%)*  Principal amount  Value 

 
Hungary (Republic of) sr. unsec. unsub. notes 7 5/8s, 2041  $226,000  $241,578 

Korea Development Bank sr. unsec. unsub. notes 4s, 2016  450,000  465,767 

Total foreign government bonds and notes (cost $683,904)    $707,345 
 
 
SHORT-TERM INVESTMENTS (15.8%)*  Shares  Value 

 
Putnam Money Market Liquidity Fund 0.05% e  195,723,889  $195,723,889 

Total short-term investments (cost $195,723,889)    $195,723,889 
 
 
TOTAL INVESTMENTS     

Total investments (cost $1,215,433,737)    $1,320,663,405 

 

Key to holding’s abbreviations

 

ADR  American Depository Receipts 
FDIC Guaranteed  Federal Deposit Insurance Corp. Guaranteed 
FRB  Floating Rate Bonds 
FRN  Floating Rate Notes 
G.O. Bonds  General Obligation Bonds 
IO  Interest Only 
MTN  Medium Term Notes 
SPDR  S&P Depository Receipts 
TBA  To Be Announced Commitments 

 

Notes to the fund’s portfolio

Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from August 1, 2010 through July 31, 2011 (the reporting period).

* Percentages indicated are based on net assets of $1,239,838,802.

† Non-income-producing security.

e See Note 5 to the financial statements regarding investments in Putnam Money Market Liquidity Fund. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

R Real Estate Investment Trust.

At the close of the reporting period, the fund maintained liquid assets totaling $87,532,500 to cover certain forward commitments.

Debt obligations are considered secured unless otherwise indicated.

144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

ADR after the name of a foreign holding represents ownership of foreign securities on deposit with a custodian bank.

See Note 1 to the financial statements regarding TBA’s.

The rates shown on FRB and FRN are the current interest rates at the close of the reporting period.

The dates shown on debt obligations are the original maturity dates.

38



Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures (ASC 820) establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

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

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

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

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

    Valuation inputs  

Investments in securities:  Level 1  Level 2  Level 3 

Common stocks:       

Basic materials  $21,814,062  $—  $— 

Capital goods  36,270,323     

Communication services  54,192,864     

Conglomerates  28,284,012     

Consumer cyclicals  66,105,722     

Consumer staples  62,365,329     

Energy  95,410,493     

Financials  151,748,353     

Health care  108,711,206     

Technology  55,722,891     

Transportation  3,002,622     

Utilities and power  31,311,846     

Total common stocks  $714,939,723  $—  $— 
 
Asset-backed securities    729,465  $— 

Convertible bonds and notes    800,058   

Convertible preferred stocks    18,841,869   

Corporate bonds and notes    207,300,698   

Foreign government bonds and notes    707,345   

Investment Companies  7,092,924     

Mortgage-backed securities    9,995,090   

Municipal bonds and notes    2,686,899   

U.S. Government Agency Obligations    5,039,350   

U.S. Government and Agency Mortgage Obligations    138,657,593   

U.S. Treasury Obligations    18,148,502   

Short-term investments  195,723,889     

Totals by level  $917,756,536  $402,906,869  $— 

 

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

39



Statement of assets and liabilities 7/31/11

ASSETS   

Investment in securities, at value (Note 1):   
Unaffiliated issuers (identified cost $1,019,709,848)  $1,124,939,516 
Affiliated issuers (identified cost $195,723,889) (Note 5)  195,723,889 

Cash  95,937 

Dividends, interest and other receivables  6,104,287 

Receivable for shares of the fund sold  268,024 

Receivable for investments sold  8,478,784 

Total assets  1,335,610,437 
 
LIABILITIES   

Payable for investments purchased  3,880,112 

Payable for purchases of delayed delivery securities (Note 1)  87,646,250 

Payable for shares of the fund repurchased  2,326,704 

Payable for compensation of Manager (Note 2)  571,029 

Payable for investor servicing fees (Note 2)  196,402 

Payable for custodian fees (Note 2)  14,636 

Payable for Trustee compensation and expenses (Note 2)  471,800 

Payable for administrative services (Note 2)  6,577 

Payable for distribution fees (Note 2)  327,709 

Other accrued expenses  330,416 

Total liabilities  95,771,635 
 
Net assets  $1,239,838,802 

 
REPRESENTED BY   

Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)  $2,089,002,649 

Undistributed net investment income (Note 1)  1,066,153 

Accumulated net realized loss on investments (Note 1)  (955,459,668) 

Net unrealized appreciation of investments  105,229,668 

Total — Representing net assets applicable to capital shares outstanding  $1,239,838,802 
 
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE   

Net asset value and redemption price per class A share   
($1,034,828,461 divided by 84,722,983 shares)  $12.21 

Offering price per class A share (100/94.25 of $12.21)*  $12.95 

Net asset value and offering price per class B share ($39,030,510 divided by 3,232,077 shares)**  $12.08 

Net asset value and offering price per class C share ($22,013,493 divided by 1,813,045 shares)**  $12.14 

Net asset value and redemption price per class M share ($75,159,943 divided by 6,232,929 shares)  $12.06 

Offering price per class M share (100/96.50 of $12.06)*  $12.50 

Net asset value, offering price and redemption price per class R share   
($1,216,233 divided by 99,843 shares)  $12.18 

Net asset value, offering price and redemption price per class Y share   
($67,590,162 divided by 5,514,700 shares)  $12.26 

 

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

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

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

40



Statement of operations Year ended 7/31/11

INVESTMENT INCOME   

Dividends (net of foreign tax of $90,855)  $20,914,828 

Interest (including interest income of $140,987 from investments in affiliated issuers) (Note 5)  13,203,551 

Total investment income  34,118,379 
 
EXPENSES   

Compensation of Manager (Note 2)  6,924,911 

Investor servicing fees (Note 2)  2,784,051 

Custodian fees (Note 2)  29,182 

Trustee compensation and expenses (Note 2)  113,896 

Administrative services (Note 2)  39,160 

Distribution fees — Class A (Note 2)  2,700,114 

Distribution fees — Class B (Note 2)  483,815 

Distribution fees — Class C (Note 2)  230,369 

Distribution fees — Class M (Note 2)  598,186 

Distribution fees — Class R (Note 2)  7,023 

Other  540,493 

Total expenses  14,451,200 
 
Expense reduction (Note 2)  (32,004) 

Net expenses  14,419,196 
 
Net investment income  19,699,183 

 
Net realized gain on investments (Notes 1 and 3)  106,963,794 

Net unrealized appreciation of investments and TBA sales during the year  23,125,657 

Net gain on investments  130,089,451 
 
Net increase in net assets resulting from operations  $149,788,634 

 

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

41



Statement of changes in net assets

DECREASE IN NET ASSETS  Year ended 7/31/11  Year ended 7/31/10 

Operations:     
Net investment income  $19,699,183  $31,482,845 

Net realized gain on investments  106,963,794  57,899,301 

Net unrealized appreciation of investments  23,125,657  74,204,562 

Net increase in net assets resulting from operations  149,788,634  163,586,708 

Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income     

Class A  (18,171,051)  (23,990,906) 

Class B  (451,746)  (1,095,926) 

Class C  (216,716)  (334,513) 

Class M  (967,653)  (1,379,889) 

Class R  (20,173)  (27,793) 

Class Y  (1,374,319)  (2,304,612) 

From return of capital     
Class A    (2,565,707) 

Class B    (117,204) 

Class C    (35,775) 

Class M    (147,572) 

Class R    (2,972) 

Class Y    (246,467) 

Increase in capital from settlement payments (Note 6)  476,149   

Redemption fees (Note 1)  1  1,216 

Decrease from capital share transactions (Note 4)  (196,021,434)  (267,358,125) 

Total decrease in net assets  (66,958,308)  (136,019,537) 
 
NET ASSETS     

Beginning of year  1,306,797,110  1,442,816,647 

End of year (including undistributed net investment     
income of $1,066,153 and $0, respectively)  $1,239,838,802  $1,306,797,110 

 

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

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43



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

INVESTMENT OPERATIONS:  LESS DISTRIBUTIONS:      RATIOS AND SUPPLEMENTAL DATA:   

                              Ratio     
                              of expenses  Ratio of net   
                              to average  investment   
  Net asset  Net  Net realized                      Ratio  net assets  income (loss)   
  value,  investment  and unrealized  Total from  From  From  From  Total    Non-recurring  Net asset  Total return  Net assets,  of expenses  excluding  to average  Portfolio 
  beginning  income  gain (loss)  investment  net investment  net realized gain  return  distribu-  Redemption  reimburse-  value, end  at net asset  end of period  to average  interest  net assets  turnover 
Period ended  of period  (loss) a  on investments  operations  income  on investments  of capital  tions  fees b  ments  of period  value (%) c  (in thousands)  net assets (%) d   expense (%) d  (%)  (%) e 

Class A                                   
July 31, 2011  $11.08  .19  1.14  1.33  (.20)      (.20)    f  $12.21  12.09  $1,034,828  1.05  1.05  1.57  176 
July 31, 2010  10.14  .25  .93  1.18  (.22)    (.02)  (.24)      11.08  11.83  1,077,209  1.13 h  1.13 h  2.27  341 
July 31, 2009  13.99  .27  (3.49)  (3.22)  (.44)  (.09)  (.10)  (.63)    g  10.14  (22.58)  1,146,770  1.34 i,j  1.14 j  2.61 j  233 
July 31, 2008  18.10  .61  (2.55)  (1.94)  (.64)  (1.53)    (2.17)      13.99  (11.84)  2,173,291  1.00 j  1.00 j  3.80 j  124 
July 31, 2007  18.21  .48  1.46  1.94  (.52)  (1.53)    (2.05)      18.10  10.99  3,184,271  .96 j  .96 j  2.61 j  144 

Class B                                   
July 31, 2011  $10.96  .10  1.13  1.23  (.11)      (.11)    f  $12.08  11.24  $39,031  1.80  1.80  .82  176 
July 31, 2010  10.02  .17  .94  1.11  (.15)    (.02)  (.17)      10.96  11.09  56,880  1.88 h  1.88 h  1.54  341 
July 31, 2009  13.83  .19  (3.46)  (3.27)  (.37)  (.09)  (.08)  (.54)    g  10.02  (23.23)  86,981  2.09 i,j  1.89 j  1.85 j  233 
July 31, 2008  17.90  .48  (2.52)  (2.04)  (.50)  (1.53)    (2.03)      13.83  (12.50)  206,269  1.75 j  1.75 j  2.99 j  124 
July 31, 2007  18.02  .33  1.46  1.79  (.38)  (1.53)    (1.91)      17.90  10.15  413,532  1.71 j  1.71 j  1.82 j  144 

Class C                                   
July 31, 2011  $11.02  .10  1.13  1.23  (.11)      (.11)    f  $12.14  11.22  $22,013  1.80  1.80  .82  176 
July 31, 2010  10.08  .16  .95  1.11  (.15)    (.02)  (.17)      11.02  11.06  22,814  1.88 h  1.88 h  1.52  341 
July 31, 2009  13.90  .19  (3.47)  (3.28)  (.37)  (.09)  (.08)  (.54)    g  10.08  (23.17)  23,296  2.09 i,j  1.89 j  1.86 j  233 
July 31, 2008  17.97  .49  (2.52)  (2.03)  (.51)  (1.53)    (2.04)      13.90  (12.41)  46,134  1.75 j  1.75 j  3.03 j  124 
July 31, 2007  18.09  .34  1.45  1.79  (.38)  (1.53)    (1.91)      17.97  10.16  69,893  1.71 j  1.71 j  1.86 j  144 

Class M                                   
July 31, 2011  $10.94  .13  1.13  1.26  (.14)      (.14)    f  $12.06  11.60  $75,160  1.55  1.55  1.07  176 
July 31, 2010  10.01  .19  .94  1.13  (.18)    (.02)  (.20)      10.94  11.33  79,010  1.63 h  1.63 h  1.77  341 
July 31, 2009  13.82  .21  (3.44)  (3.23)  (.40)  (.09)  (.09)  (.58)    g  10.01  (22.99)  81,025  1.84 i,j  1.64 j  2.13 j  233 
July 31, 2008  17.89  .53  (2.52)  (1.99)  (.55)  (1.53)    (2.08)      13.82  (12.23)  128,094  1.50 j  1.50 j  3.31 j  124 
July 31, 2007  18.02  .38  1.45  1.83  (.43)  (1.53)    (1.96)      17.89  10.42  176,993  1.46 j  1.46 j  2.10 j  144 

Class R                                   
July 31, 2011  $11.05  .16  1.14  1.30  (.17)      (.17)    f  $12.18  11.84  $1,216  1.30  1.30  1.32  176 
July 31, 2010  10.11  .22  .94  1.16  (.20)    (.02)  (.22)      11.05  11.59  1,345  1.38 h  1.38 h  2.03  341 
July 31, 2009  13.94  .24  (3.47)  (3.23)  (.42)  (.09)  (.09)  (.60)    g  10.11  (22.71)  1,493  1.59 i,j  1.39 j  2.30 j  233 
July 31, 2008  18.04  .57  (2.54)  (1.97)  (.60)  (1.53)    (2.13)      13.94  (12.04)  4,274  1.25 j  1.25 j  3.66 j  124 
July 31, 2007  18.15  .44  1.46  1.90  (.48)  (1.53)    (2.01)      18.04  10.76  2,044  1.21 j  1.21 j  2.38 j  144 

Class Y                                   
July 31, 2011  $11.12  .22  1.15  1.37  (.23)      (.23)    f  $12.26  12.42  $67,590  .80  .80  1.82  176 
July 31, 2010  10.17  .28  .95  1.23  (.25)    (.03)  (.28)      11.12  12.18  69,539  .88 h  .88 h  2.55  341 
July 31, 2009  14.04  .29  (3.50)  (3.21)  (.47)  (.09)  (.10)  (.66)    g  10.17  (22.42)  103,251  1.09 i,j  .89 j  2.87 j  233 
July 31, 2008  18.15  .66  (2.55)  (1.89)  (.69)  (1.53)    (2.22)      14.04  (11.57)  257,459  .75 j  .75 j  4.05 j  124 
July 31, 2007  18.26  .53  1.46  1.99  (.57)  (1.53)    (2.10)      18.15  11.24  385,361  .71 j  .71 j  2.86 j  144 

 

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

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

44  45 

 



Financial highlights (Continued)

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 Amount represents less than $0.01 per share.

c Total return assumes dividend reinvestment and does not reflect the effect of sales charges.

d Includes amounts paid through expense offset and brokerage/service arrangements (Note 2).

e Portfolio turnover excludes dollar roll transactions.

f Reflects a non-recurring reimbursement related to restitution amounts in connection with a distribution plan approved by the Securities and Exchange Commission (SEC) which amounted to less than $0.01 per share outstanding on July 21, 2011. Also reflects a non-recurring reimbursal related to short-term trading related lawsuits, which amounted to less than $0.01 per share outstanding on May 11, 2011 (Note 6).

g Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Bear Stearns & Co., Inc. and Bear Stearns Securities Corp., which amounted to less than $0.01 per share outstanding as of May 21, 2009.

h Excludes the impact of a current period reduction to interest expense related to the resolution of certain terminated derivatives contracts, which amounted to 0.02% of average net assets as of July 31, 2010.

i Includes interest accrued in connection with certain terminated derivative contracts, which amounted to 0.20% of average net assets as of July 31, 2009 (Note 2).

j Reflects an involuntary contractual expense limitation in effect during the period. For periods prior to July 31, 2009, certain fund expenses were waived in connection with the fund’s investment in Putnam Prime Money Market Fund. As a result of such limitation and/or waivers, the expenses of each class reflect a reduction of the following amounts:

  Percentage of 
  average net assets 

July 31, 2009  0.01% 

July 31, 2008  <0.01 

July 31, 2007  <0.01 

 

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

46



Notes to financial statements 7/31/11

Note 1: Significant accounting policies

George Putnam Balanced Fund (the fund) (formerly known as The George Putnam Fund of Boston) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks a balanced investment producing both capital growth and current income by investing primarily in value-oriented stocks of large companies and government, corporate and mortgage-backed bonds. The fund may invest a significant portion of its assets in securitized debt instruments, including mortgage-backed and asset-backed investments. The yields and values of these investments are sensitive to changes in interest rates, the rate of principal payments on the underlying assets and the market’s perception of the issuers. The market for these investments may be volatile and limited, which may make them difficult to buy or sell.

The 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 5.75% and 3.50%, 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 not available to all investors, are sold at net asset value. 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 not available to all investors.

Prior to August 2, 2010, a 1.00% redemption fee applied to certain shares that were redeemed (either by selling or exchanging into another fund) within 7 days of purchase. The redemption fee was accounted for as an addition to paid-in-capital. Effective August 2, 2010, this redemption fee no longer applies to shares redeemed.

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

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.

The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. Unless otherwise noted, the “reporting period” represents the period from August 1, 2010 through July 31, 2011.

A) Security valuation Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities. 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 and is generally categorized as a Level 2 security.

Market quotations are not considered to be readily available for certain debt obligations and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Investment Management, LLC (Putnam Management), the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities

47



(which considers such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.

Many securities markets and exchanges outside the U.S. close prior to the 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, the fund will fair value foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. These securities, which will generally represent a transfer from a Level 1 to a Level 2 security, will be classified as Level 2. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.

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

Such valuations and procedures are reviewed periodically by the Trustees. Certain securities may be valued on the basis of a price provided by a single source. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

B) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

C) Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis. Interest income is recorded on the accrual basis. Dividend income, net of applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair market value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain. All premiums/discounts are amortized/accreted on a yield-to-maturity basis.

Securities purchased or sold on a delayed delivery basis may be settled a month or more after the trade date; interest income is accrued based on the terms of the securities. Losses may arise due to changes in the market value of the underlying securities or if the counterparty does not perform under the contract.

D) Stripped securities The fund may invest in stripped securities which represent a participation in securities that may be structured in classes with rights to receive different portions of the interest and principal. Interest-only securities receive all of the interest and principal-only securities receive all of the principal. If the interest-only securities experience greater than anticipated prepayments of principal, the fund may fail to recoup fully its initial investment in these securities. Conversely, principal-only securities increase in value if prepayments are greater than anticipated and decline if prepayments are slower than anticipated. The market value of these securities is highly sensitive to changes in interest rates.

E) TBA purchase commitments The fund may enter into TBA (to be announced) commitments to purchase securities for a fixed unit price at a future date beyond customary settlement time. Although the unit price has been established, the principal value has not been finalized. However, it is anticipated that the amount of the commitments will not significantly differ from the principal amount. The fund holds, and maintains until settlement

48



date, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or the fund may enter into offsetting contracts for the forward sale of other securities it owns. Income on the securities will not be earned until settlement date. TBA purchase commitments may be considered securities themselves, and involve a risk of loss if the value of the security to be purchased declines prior to the settlement date, which risk is in addition to the risk of decline in the value of the fund’s other assets. Unsettled TBA purchase commitments are valued at fair value of the underlying securities, according to the procedures described under “Security valuation” above. The contract is marked to market daily and the change in market value is recorded by the fund as an unrealized gain or loss.

Although the fund will generally enter into TBA purchase commitments with the intention of acquiring securities for its portfolio or for delivery pursuant to options contracts it has entered into, the fund may dispose of a commitment prior to settlement if Putnam Management deems it appropriate to do so.

F) TBA sale commitments The fund may enter into TBA sale commitments to hedge its portfolio positions or to sell mortgage-backed securities it owns under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date. During the time a TBA sale commitment is outstanding, equivalent deliverable securities, or an offsetting TBA purchase commitment deliverable on or before the sale commitment date, are held as “cover” for the transaction.

Unsettled TBA sale commitments are valued at the fair value of the underlying securities, generally according to the procedures described under “Security valuation” above. The contract is marked to market daily and the change in market value is recorded by the fund as an unrealized gain or loss. If the TBA sale commitment is closed through the acquisition of an offsetting TBA purchase commitment, the fund realizes a gain or loss. If the fund delivers securities under the commitment, the fund realizes a gain or a loss from the sale of the securities based upon the unit price established at the date the commitment was entered into. TBA sale commitments outstanding at period end, if any, are listed after the fund’s portfolio.

G) Dollar rolls To enhance returns, the fund may enter into dollar rolls (principally using TBAs) in which the fund sells securities for delivery in the current month and simultaneously contracts to purchase similar securities on a specified future date. During the period between the sale and subsequent purchase, the fund will not be entitled to receive income and principal payments on the securities sold. The fund will, however, retain the difference between the initial sales price and the forward price for the future purchase. The fund will also be able to earn interest on the cash proceeds that are received from the initial sale on settlement date. The fund may be exposed to market or credit risk if the price of the security changes unfavorably or the counterparty fails to perform under the terms of the agreement.

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

I) Line of credit The fund participates, along with other Putnam funds, in a $325 million unsecured committed line of credit and a $185 million unsecured uncommitted line of credit, both provided by State Street Bank and Trust Company (State Street). Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to the Federal Funds rate plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.02% of the committed line of credit and $50,000 for the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.13% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.

J) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code. The fund is subject to the provisions of Accounting Standards Codification ASC 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for

49



excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

At July 31, 2011, the fund had a capital loss carryover of $949,794,002 available to the extent allowed by the Code to offset future net capital gain, if any. The amounts of the carryovers and the expiration dates are:

Loss carryover Expiration 

$310,017,859  July 31, 2017 

639,776,143  July 31, 2018 

 

Under the recently enacted Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future years will be required to be utilized prior to the losses incurred in pre-enactment tax years. As a result of this ordering rule, pre-enactment capital loss carry forwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

K) Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences include temporary and/or permanent differences of losses on wash sale transactions and interest only securities. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. For the reporting period ended, the fund reclassified $2,568,628 to decrease distribution in excess of net investment income and $570,869 to decrease paid-in-capital, with an increase to accumulated net realized losses of $1,997,759.

The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:

Unrealized appreciation  $136,450,258 
Unrealized depreciation  (36,886,257) 

Net unrealized appreciation  99,564,001 
Undistributed ordinary income  1,066,153 
Capital loss carryforward  (949,794,002) 
Cost for federal income tax purposes  $1,221,099,404 

 

Note 2: Management fee, administrative services and other transactions

The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of most open-end funds, as defined in the fund’s management contract, sponsored by Putnam Management. Such annual rates may vary as follows:

0.680%  of the first $5 billion, 
0.630%  of the next $5 billion, 
0.580%  of the next $10 billion, 
0.530%  of the next $10 billion, 
0.480%  of the next $50 billion, 
0.460%  of the next $50 billion, 
0.450%  of the next $100 billion, 
0.445%  of any excess thereafter. 

 

Putnam Management has contractually agreed, through June 30, 2012, to waive fees or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate

50



of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.

Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. Putnam Management pays a quarterly sub-management fee to PIL for its services at an annual rate of 0.40% of the average net assets of the portion of the fund managed by PIL.

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

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

Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing based on the fund’s retail asset level, the number of shareholder accounts in the fund and the level of defined contribution plan assets in the fund. Investor servicing fees will not exceed an annual rate of 0.375% of the fund’s average net assets. The amounts incurred for investor servicing agent functions during the reporting period are included in Investor servicing fees in the Statement of operations.

The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the fund’s expenses were reduced by $4,886 under the expense offset arrangements and by $27,118 under the brokerage/service arrangements.

Each independent Trustee of the fund receives an annual Trustee fee, of which $877, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

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

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

The fund has adopted distribution plans (the Plans) with respect to 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 Limited Partnership, a wholly-owned subsidiary of Putnam Investments, LLC and Putnam Retail Management GP, Inc., for services provided and expenses incurred in distributing shares of the fund. The Plans provide for payments by the fund to Putnam Retail Management Limited Partnership 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 fund 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.

For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $63,883 and $431 from the sale of class A and class M shares, respectively, and received $37,364 and $694 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.

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 reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $28 and no monies on class A and class M redemptions, respectively.

51



Note 3: Purchases and sales of securities

During the reporting period, cost of purchases and proceeds from sales of investment securities other than short-term investments aggregated $2,073,641,170 and $2,394,887,969, respectively. These figures include the cost of purchases and proceeds from sales of long-term U.S. government securities of $293,705,378 and $445,404,956, respectively.

Note 4: Capital shares

At the close of the reporting period, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:

   Year ended 7/31/11   Year ended 7/31/10 

Class A  Shares  Amount  Shares  Amount 

Shares sold  5,472,625  $65,405,057  7,157,334  $78,048,797 

Shares issued in connection with         
reinvestment of distributions  1,397,797  16,355,108  2,245,104  23,924,226 

   6,870,422  81,760,165  9,402,438  101,973,023 

Shares repurchased  (19,352,341)  (230,270,993)  (25,337,071)  (275,336,040) 

Net decrease  (12,481,919)  $(148,510,828)  (15,934,633)  $(173,363,017) 

 
   Year ended 7/31/11   Year ended 7/31/10 

Class B  Shares  Amount  Shares  Amount 

Shares sold  243,230  $2,864,261  386,438  $4,173,271 

Shares issued in connection with         
reinvestment of distributions  37,617  432,516  109,999  1,153,267 

   280,847  3,296,777  496,437  5,326,538 

Shares repurchased  (2,240,199)  (26,420,196)  (3,984,205)  (42,971,075) 

Net decrease  (1,959,352)  $(23,123,419)  (3,487,768)  $(37,644,537) 

 
   Year ended 7/31/11   Year ended 7/31/10 

Class C  Shares  Amount  Shares  Amount 

Shares sold  179,473  $2,124,913  253,971  $2,769,571 

Shares issued in connection with         
reinvestment of distributions  17,193  200,066  31,584  333,793 

   196,666  2,324,979  285,555  3,103,364 

Shares repurchased  (454,627)  (5,374,980)  (526,722)  (5,706,290) 

Net decrease  (257,961)  $(3,050,001)  (241,167)  $(2,602,926) 

 
   Year ended 7/31/11   Year ended 7/31/10 

Class M  Shares  Amount  Shares  Amount 

Shares sold  541,294  $6,360,649  612,804  $6,557,334 

Shares issued in connection with         
reinvestment of distributions  82,446  952,265  143,532  1,508,597 

   623,740  7,312,914  756,336  8,065,931 

Shares repurchased  (1,610,861)  (19,063,596)  (1,629,586)  (17,541,774) 

Net decrease  (987,121)  $(11,750,682)  (873,250)  $(9,475,843) 

 

52



   Year ended 7/31/11   Year ended 7/31/10 

Class R  Shares  Amount  Shares  Amount 

Shares sold  22,170  $263,068  32,634  $353,434 

Shares issued in connection with         
reinvestment of distributions  1,730  20,173  2,899  30,765 

   23,900  283,241  35,533  384,199 

Shares repurchased  (45,784)  (555,084)  (61,588)  (675,039) 

Net decrease  (21,884)  $(271,843)  (26,055)  $(290,840) 

 
   Year ended 7/31/11   Year ended 7/31/10 

Class Y  Shares  Amount  Shares  Amount 

Shares sold  714,819  $8,287,925  582,706  $6,333,794 

Shares issued in connection with         
reinvestment of distributions  116,179  1,362,985  236,812  2,532,185 

   830,998  9,650,910  819,518  8,865,979 

Shares repurchased  (1,570,037)  (18,965,571)  (4,718,963)  (52,846,941) 

Net decrease  (739,039)  $(9,314,661)  (3,899,445)  $(43,980,962) 

 

Note 5: Investment in Putnam Money Market Liquidity Fund

The fund invested in Putnam Money Market Liquidity Fund, an open-end management investment company managed by Putnam Management. Investments in Putnam Money Market Liquidity Fund are valued at its closing net asset value each business day. Income distributions earned by the fund are recorded as interest income in the Statement of operations and totaled $140,987 for the reporting period. During the reporting period, cost of purchases and proceeds of sales of investments in Putnam Money Market Liquidity Fund aggregated $701,884,900 and $573,715,264, respectively. Management fees charged to Putnam Money Market Liquidity Fund have been waived by Putnam Management.

Note 6: Regulatory matters and litigation

In late 2003 and 2004, Putnam Management settled charges brought by the SEC and the Massachusetts Securities Division in connection with excessive short-term trading in Putnam funds. In July 2011, the fund recorded a receivable of $465,203 related to restitution amounts in connection with a distribution plan approved by the SEC. This amount is reported in the Increase in capital from settlement payments line on the Statement of changes in net assets. These allegations and related matters have served as the general basis for certain lawsuits, including purported class action lawsuits against Putnam Management and, in a limited number of cases, some Putnam funds. In May 2011, the fund received a payment of $10,946 related to settlement of those lawsuits. This amount is reported in the Increase in capital from settlement payments line on the Statement of changes in net assets. Putnam Management has agreed to bear any costs incurred by the Putnam funds as a result of these matters.

Note 7: Market and credit risk

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default.

53



Federal tax information (Unaudited)

The fund designated 86.50% of ordinary income distributions as qualifying for the dividends received deduction for corporations. For its tax year ended July 31, 2011, the fund hereby designates 91.39%, or the maximum amount allowable, of its taxable ordinary income distributions as qualified dividends taxed at the individual net capital gain rates.

For the tax year ended July 31, 2011, pursuant to §871(k) of the Internal Revenue Code, the fund hereby designates $9,341,132 of distributions paid as qualifying to be taxed as interest-related dividends.

The Form 1099 that will be mailed to you in January 2012 will show the tax status of all distributions paid to your account in calendar 2011.

54



About the Trustees

Independent Trustees

Name     
Year of birth     
Position held  Principal occupations during past five years  Other directorships 

Ravi Akhoury  Advisor to New York Life Insurance Company. Trustee of  Jacob Ballas Capital 
Born 1947  American India Foundation and of the Rubin Museum.  India, a non-banking 
Trustee since 2009  From 1992 to 2007, was Chairman and CEO of MacKay  finance company 
  Shields, a multi-product investment management firm  focused on private 
  with over $40 billion in assets under management.  equity advisory services; 
    RAGE Frameworks, 
    Inc., a private software 
    company 

Barbara M. Baumann  President and Owner of Cross Creek Energy Corporation,  SM Energy Company, a 
Born 1955  a strategic consultant to domestic energy firms and direct  domestic exploration 
Trustee since 2010  investor in energy projects. Trustee of Mount Holyoke  and production 
  College and member of the Investment Committee for the  company; UniSource 
  college’s endowment. Former Chair and current board  Energy Corporation, 
  member of Girls Incorporated of Metro Denver. Member of  an Arizona utility; CVR 
  the Finance Committee, The Children’s Hospital of Denver.  Energy, a petroleum 
    refiner and fertilizer 
    manufacturer; Cody 
    Resources Management, 
    LLP, a privately held 
    energy, ranching, and 
    commercial real estate 
    company 

Jameson A. Baxter  President of Baxter Associates, Inc., a private investment  None 
Born 1943  firm. Chair of Mutual Fund Directors Forum. Chair Emeritus   
Trustee since 1994,  of the Board of Trustees of Mount Holyoke College.   
Vice Chair from 2005  Director of the Adirondack Land Trust and Trustee of the   
to 2011, and Chair  Nature Conservancy’s Adirondack Chapter.   
since 2011     

Charles B. Curtis  Former President and Chief Operating Officer of the  Edison International; 
Born 1940  Nuclear Threat Initiative, a private foundation dealing  Southern California 
Trustee since 2001  with national security issues. Senior Advisor to the Center  Edison 
for Strategic and International Studies. Member of the   
  Council on Foreign Relations.   

Robert J. Darretta  Health Care Industry Advisor to Permira, a global private  UnitedHealth 
Born 1946  equity firm. Until April 2007, was Vice Chairman of the  Group, a diversified 
Trustee since 2007  Board of Directors of Johnson & Johnson. Served as  health-care company 
Johnson & Johnson’s Chief Financial Officer for a decade.   

John A. Hill  Founder and Vice-Chairman of First Reserve  Devon Energy 
Born 1942  Corporation, the leading private equity buyout firm  Corporation, a leading 
Trustee since 1985 and  focused on the worldwide energy industry. Serves as a  independent natural gas 
Chairman from 2000  Trustee and Chairman of the Board of Trustees of Sarah  and oil exploration and 
to 2011  Lawrence College. Also a member of the Advisory Board  production company 
  of the Millstein Center for Corporate Governance and   
  Performance at the Yale School of Management.   

 

55



Name     
Year of birth     
Position held  Principal occupations during past five years  Other directorships 

Paul L. Joskow  Economist and President of the Alfred P. Sloan  TransCanada 
Born 1947  Foundation, a philanthropic institution focused primarily  Corporation, an energy 
Trustee since 1997  on research and education on issues related to science,  company focused on 
  technology, and economic performance. Elizabeth and  natural gas transmission 
  James Killian Professor of Economics, Emeritus at the  and power services; 
  Massachusetts Institute of Technology (MIT). Prior to  Exelon Corporation, an 
  2007, served as the Director of the Center for Energy and  energy company focused 
  Environmental Policy Research at MIT.  on power services 

Kenneth R. Leibler  Founder and former Chairman of Boston Options  Northeast Utilities, 
Born 1949  Exchange, an electronic marketplace for the trading  which operates New 
Trustee since 2006  of derivative securities. Vice Chairman of the Board of  England’s largest energy 
  Trustees of Beth Israel Deaconess Hospital in Boston,  delivery system 
Massachusetts. Until November 2010, director of Ruder   
Finn Group, a global communications and advertising firm.   

Robert E. Patterson  Senior Partner of Cabot Properties, LP and Co-Chairman  None 
Born 1945  of Cabot Properties, Inc., a private equity firm investing in   
Trustee since 1984  commercial real estate. Past Chairman and Trustee of the   
  Joslin Diabetes Center.   

George Putnam, III  Chairman of New Generation Research, Inc., a publisher  None 
Born 1951  of financial advisory and other research services, and   
Trustee since 1984  founder and President of New Generation Advisors, LLC,   
  a registered investment advisor to private funds.   
Director of The Boston Family Office, LLC, a registered   
  investment advisor.   

W. Thomas Stephens  Retired as Chairman and Chief Executive Officer of Boise  TransCanadaPipelines 
Born 1942  Cascade, LLC, a paper, forest products, and timberland  Ltd., an energy 
Trustee from 1997 to 2008  assets company, in December 2008. Prior to 2010,  infrastructure company 
and since 2009  Director of Boise Inc., a manufacturer of paper and   
  packaging products.   

Interested Trustee     

Robert L. Reynolds*  President and Chief Executive Officer of Putnam  None 
Born 1952  Investments since 2008. Prior to joining Putnam   
Trustee since 2008 and  Investments, served as Vice Chairman and Chief   
President of the Putnam  Operating Officer of Fidelity Investments from   
Funds since July 2009  2000 to 2007.   

 

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

As of July 31, 2011, there were 106 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, removal, or death.

* Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund, Putnam Management, and/or Putnam Retail Management. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.

56



Officers

In addition to Robert L. Reynolds, the other officers of the fund are shown below:

Jonathan S. Horwitz (Born 1955)  Robert T. Burns (Born 1961) 
Executive Vice President, Principal Executive  Vice President and Chief Legal Officer 
Officer, Treasurer and Compliance Liaison  Since 2011 
Since 2004  General Counsel, Putnam Investments and 
Putnam Management 
Steven D. Krichmar (Born 1958) 
Vice President and Principal Financial Officer  James P. Pappas (Born 1953) 
Since 2002  Vice President 
Chief of Operations, Putnam Investments and  Since 2004 
Putnam Management  Director of Trustee Relations, 
Putnam Investments and Putnam Management 
Janet C. Smith (Born 1965) 
Vice President, Assistant Treasurer and  Judith Cohen (Born 1945) 
Principal Accounting Officer  Vice President, Clerk and Assistant Treasurer 
Since 2007  Since 1993 
Director of Fund Administration Services, 
Putnam Investments and Putnam Management  Michael Higgins (Born 1976) 
Vice President, Senior Associate Treasurer and 
Beth S. Mazor (Born 1958)  Assistant Clerk 
Vice President  Since 2010 
Since 2002  Manager of Finance, Dunkin’ Brands (2008– 
Manager of Trustee Relations, Putnam  2010); Senior Financial Analyst, Old Mutual Asset 
Investments and Putnam Management  Management (2007–2008); Senior Financial 
Analyst, Putnam Investments (1999–2007) 
Robert R. Leveille (Born 1969) 
Vice President and Chief Compliance Officer  Nancy E. Florek (Born 1957) 
Since 2007  Vice President, Assistant Clerk, Assistant 
Chief Compliance Officer, Putnam Investments,  Treasurer and Proxy Manager 
Putnam Management, and Putnam Retail  Since 2000 
Management 
Susan G. Malloy (Born 1957)
Mark C. Trenchard (Born 1962)  Vice President and Assistant Treasurer 
Vice President and BSA Compliance Officer  Since 2007 
Since 2002  Director of Accounting & Control Services, 
Director of Operational Compliance,  Putnam Management 
Putnam Investments and Putnam   
Retail Management   

 

The principal occupations of the officers for the past five years have been with the employers as shown above although in some cases, they have held different positions with such employers. The address of each Officer is One Post Office Square, Boston, MA 02109.

57



The Putnam family of funds

The following is a list of Putnam’s open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial advisor at 1-800-225-1581 and ask for a prospectus. Please read the prospectus carefully before investing.

Growth  Value 
Growth Opportunities Fund  Convertible Securities Fund 
International Growth Fund  Prior to September 30, 2010, the fund was known as 
Multi-Cap Growth Fund  Putnam Convertible Income-Growth Trust 
Prior to September 1, 2010, the fund was known as  Equity Income Fund 
Putnam New Opportunities Fund  George Putnam Balanced Fund 
Small Cap Growth Fund  Prior to September 30, 2010, the fund was known as 
Voyager Fund  The George Putnam Fund of Boston 
  The Putnam Fund for Growth and Income 
Blend  International Value Fund 
Asia Pacific Equity Fund  Multi-Cap Value Fund 
Capital Opportunities Fund  Prior to September 1, 2010, the fund was known as 
Capital Spectrum Fund  Putnam Mid Cap Value Fund 
Emerging Markets Equity Fund  Small Cap Value Fund 
Equity Spectrum Fund 
Europe Equity Fund  Income 
Global Equity Fund  American Government Income Fund 
International Capital Opportunities Fund  Diversified Income Trust 
International Equity Fund  Floating Rate Income Fund 
Investors Fund  Global Income Trust 
Multi-Cap Core Fund  High Yield Advantage Fund 
Research Fund  High Yield Trust 
Income Fund 
  Money Market Fund* 
  U.S. Government Income Trust 

 

* An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

58



Tax-free income  Asset Allocation 
AMT-Free Municipal Fund  Putnam Asset Allocation Funds — portfolios 
Tax Exempt Income Fund  with allocations to stocks, bonds, and 
Tax Exempt Money Market Fund*  money market instruments that are adjusted 
Tax-Free High Yield Fund  dynamically within specified ranges as 
market conditions change. 
State tax-free income funds: 
Arizona, California, Massachusetts, Michigan,  Asset Allocation: Balanced Portfolio 
Minnesota, New Jersey, New York, Ohio,  Asset Allocation: Conservative Portfolio 
and Pennsylvania  Asset Allocation: Growth Portfolio 
 
Absolute Return  Putnam RetirementReady Funds — portfolios 
Absolute Return 100 Fund  with automatically adjusting allocations to 
Absolute Return 300 Fund  stocks, bonds, and money market instruments, 
Absolute Return 500 Fund  becoming more conservative over time. 
Absolute Return 700 Fund   
  Putnam RetirementReady 2055 Fund 
Global Sector  Putnam RetirementReady 2050 Fund 
Global Consumer Fund  Putnam RetirementReady 2045 Fund 
Global Energy Fund  Putnam RetirementReady 2040 Fund 
Global Financials Fund  Putnam RetirementReady 2035 Fund 
Global Health Care Fund  Putnam RetirementReady 2030 Fund 
Global Industrials Fund  Putnam RetirementReady 2025 Fund 
Global Natural Resources Fund  Putnam RetirementReady 2020 Fund 
Global Sector Fund  Putnam RetirementReady 2015 Fund 
Global Technology Fund   
Global Telecommunications Fund  Putnam Retirement Income Lifestyle 
Global Utilities Fund  Funds — portfolios with managed 
  allocations to stocks, bonds, and money 
  market investments to generate 
  retirement income. 
 
  Putnam Retirement Income Lifestyle 1 
  Prior to June 16, 2011, the fund was known as Putnam 
  RetirementReady Maturity Fund 
  Putnam Retirement Income Lifestyle 2 
  Putnam Retirement Income Lifestyle 3 
  Prior to June 16, 2011, the fund was known as Putnam 
  Income Strategies Fund 

 

A short-term trading fee of 1% may apply to redemptions or exchanges from certain funds within the time period specified in the fund's prospectus.

Check your account balances and the most recent month-end performance in the Individual Investors section at putnam.com.

59



Services for shareholders

Investor services

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

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

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

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

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

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

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

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

For more information

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

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

60



Fund information

Founded over 70 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 funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.

Investment Manager  John A. Hill  Mark C. Trenchard 
Putnam Investment  Paul L. Joskow  Vice President and 
Management, LLC  Kenneth R. Leibler  BSA Compliance Officer 
One Post Office Square  Robert E. Patterson   
Boston, MA 02109  George Putnam, III  Robert T. Burns 
  Robert L. Reynolds  Vice President and 
Investment Sub-Manager  W. Thomas Stephens  Chief Legal Officer 
Putnam Investments Limited     
57–59 St James’s Street  Officers  James P. Pappas 
London, England SW1A 1LD  Robert L. Reynolds  Vice President 
  President   
Marketing Services    Judith Cohen 
Putnam Retail Management  Jonathan S. Horwitz  Vice President, Clerk and 
One Post Office Square  Executive Vice President,  Assistant Treasurer 
Boston, MA 02109  Principal Executive 
  Officer, Treasurer and  Michael Higgins 
Custodian  Compliance Liaison  Vice President, Senior Associate 
State Street Bank  Treasurer and Assistant Clerk 
and Trust Company  Steven D. Krichmar   
  Vice President and  Nancy E. Florek 
Legal Counsel  Principal Financial Officer  Vice President, Assistant Clerk, 
Ropes & Gray LLP  Assistant Treasurer and 
Janet C. Smith  Proxy Manager 
Independent Registered  Vice President, Assistant 
Public Accounting Firm  Treasurer and Principal  Susan G. Malloy 
PricewaterhouseCoopers LLP  Accounting Officer  Vice President and 
  Assistant Treasurer 
Trustees  Beth S. Mazor   
Jameson A. Baxter, Chair  Vice President   
Ravi Akhoury   
Barbara M. Baumann  Robert R. Leveille   
Charles B. Curtis  Vice President and   
Robert J. Darretta  Chief Compliance Officer   
   

 

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





Item 2. Code of Ethics:
(a) The fund’s principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund’s investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers.

(c) In May 2008, the Code of Ethics of Putnam Investment Management, LLC was updated in its entirety to include the amendments adopted in August 2007 as well as a several additional technical, administrative and non-substantive changes. In May of 2009, the Code of Ethics of Putnam Investment Management, LLC was amended to reflect that all employees will now be subject to a 90-day blackout restriction on holding Putnam open-end funds, except for portfolio managers and their supervisors (and each of their immediate family members), who will be subject to a one-year blackout restriction on the funds that they manage or supervise. In June 2010, the Code of Ethics of Putnam Investments was updated in its entirety to include the amendments adopted in May of 2009 and to change certain rules and limits contained in the Code of Ethics. In addition, the updated Code of Ethics included numerous technical, administrative and non-substantive changes, which were intended primarily to make the document easier to navigate and understand. In July 2011, the Code of Ethics of Putnam Investments was updated to reflect several technical, administrative and non-substantive changes resulting from changes in employee titles.

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 each of Mr. Leibler, Mr. Hill, Mr. Darretta and Ms. Baumann qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education. The SEC has stated 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 ended Audit Fees Audit-Related Fees Tax Fees All Other Fees

July 31, 2011 $213,382 $-- $9,375 $ —
July 31, 2010 $219,196 $-- $9,166 $1,921*


*   Includes fees of $1,921 billed by the fund’s independent auditor to the fund for procedures necessitated by regulatory and litigation matters for the fiscal year ended July 31, 2010. These fees were reimbursed to the fund by Putnam Investment Management, LLC (“Putnam Management”).
For the fiscal years ended July 31, 2011and July 31, 2010, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $181,757 and $416,246 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 relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements.

Audit-Related Fees represent fees billed in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation.

Tax Fees represent fees billed in the fund’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities.

All Other Fees represent procedures necessitated by regulatory and litigation matters.

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. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm.

The following table presents fees billed by the fund’s independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.


Fiscal year ended Audit-Related Fees Tax Fees All Other Fees Total Non-Audit Fees

July 31, 2011 $ — $173,510 $ — $ —
July 31, 2010 $ — $249,107 $ — $ —

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.

George Putnam Balanced Fund
By (Signature and Title):
/s/Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: September 28, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title):
/s/Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer

Date: September 28, 2011
By (Signature and Title):
/s/Steven D. Krichmar
Steven D. Krichmar
Principal Financial Officer

Date: September 28, 2011
EX-99.CERT 2 b_001certifications.htm EX-99.CERT b_001certifications.htm

Certifications

I, Jonathan S. Horwitz, the Principal Executive Officer of the funds listed on Attachment A, certify that:

1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A:

2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report;

3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:


a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared;


b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and


d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed to each registrant’s auditors and the audit committee of each registrant’s board of directors (or persons performing the equivalent functions):


a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant’s ability to record, process, summarize, and report financial information; and


b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant’s internal control over financial reporting.

Date: September 27, 2011

/s/ Jonathan S. Horwitz
_______________________
Jonathan S. Horwitz
Principal Executive Officer














Certifications

I, Steven D. Krichmar, the Principal Financial Officer of the funds listed on Attachment A, certify that:

1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A:

2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report;

3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:


a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared;


b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and


d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed to each registrant’s auditors and the audit committee of each registrant’s board of directors (or persons performing the equivalent functions):


a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant’s ability to record, process, summarize, and report financial information; and


b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant’s internal control over financial reporting.

Date: September 27, 2011

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















Attachment A

N-CSR

Period (s) ended July 31, 2011
               Putnam Premier Income Trust
               Putnam Research Fund
               Putnam Investors Fund
               Putnam Voyager Fund
               Putnam Tax Free High Yield Fund
               Putnam AMT-Free Insured Municipal Fund
               Putnam Growth Opportunities Fund
               George Putnam Balanced Fund
               Putnam RetirementReady – Funds:
               Putnam RetirementReady – 2055
               Putnam RetirementReady – 2050
               Putnam RetirementReady – 2045
               Putnam RetirementReady – 2040
               Putnam RetirementReady – 2035
               Putnam RetirementReady – 2030
               Putnam RetirementReady – 2025
               Putnam RetirementReady – 2020
               Putnam RetirementReady – 2015
               Putnam Retirement Income Fund Lifestyle 1
EX-99.906 CERT 3 c_001noscertification.htm EX-99.906 CERT c_001noscertification.htm

Section 906 Certifications

I, Jonathan S. Horwitz, the Principal Executive Officer of the Funds listed on Attachment A, certify that, to my knowledge:

1. The form N-CSR of the Funds listed on Attachment A for the period ended July 31, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended July 31, 2011 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.

Date: September 27 2011

/s/ Jonathan S. Horwitz
______________________
Jonathan S. Horwitz
Principal Executive Officer














Section 906 Certifications

I, Steven D. Krichmar, the Principal Financial Officer of the Funds listed on Attachment A, certify that, to my knowledge:

1. The form N-CSR of the Funds listed on Attachment A for the period ended July 31, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended July 31, 2011 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.

Date: September 27 2011

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















Attachment A

N-CSR

Period (s) ended July 31, 2011
               Putnam Premier Income Trust
               Putnam Research Fund
               Putnam Investors Fund
               Putnam Voyager Fund
               Putnam Tax Free High Yield Fund
               Putnam AMT-Free Insured Municipal Fund
               Putnam Growth Opportunities Fund
               George Putnam Balanced Fund
               Putnam RetirementReady – Funds:
               Putnam RetirementReady – 2055
               Putnam RetirementReady – 2050
               Putnam RetirementReady – 2045
               Putnam RetirementReady – 2040
               Putnam RetirementReady – 2035
               Putnam RetirementReady – 2030
               Putnam RetirementReady – 2025
               Putnam RetirementReady – 2020
               Putnam RetirementReady – 2015
               Putnam Retirement Income Fund Lifestyle 1
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M.MMY)SD\8SS5O54:33+A$5F8H0`HR3^'?Z=Z@TE%0R8C5.!TM##_`#ZT('L/ MU9)W@'V>6-'YXD9IS/!1L/$&!)N]\]OIS51W(G:VJ-.UMH[2!88\D M#))8Y))ZDT^0!HV!X!!'7%5M*$(T^/R`P7^+=G.[OG//6G:CYOV4^3O^\N_9 M][9GYL>^,^_I2ENT.#T31G:7<7"WD5M)>1749C./+D5RN,8SA1^>:UYPA@D$ MAPFTY/H*SK%46\7[$MR(-I\WSA)C/&,;^<]>GXU?NIA!;N[*6P.`%+9/X"D] MBEN8^DR*]Y"I!"PHT<1$`CW#"]3N/;'&!_AL74236[H\:2#&0K]">V:RM,QN(R9)(B9&:U,?EXQA0-H/L"3GCIWK7E_P!4_P`F_P"4_+Z^U$M@1D:.T*W`V23+YL9*0B%XH<#N MH;OSV(^E:TS!8FRR`D8&\\9[5C:4DZ:@%E@8`(=N[S&$8P",%B1W(XYXK7N8 M_-@=1NSC(VN5)/U%#V!;F%H"A;TJBPC:#D@Q9(PO`VNCK'TT8N8O M+2XSY9\[S1(`K<=-W!YSTS]?78IL`HHHI`%%%%`!1110`4444`%%%%`$5Q;P MW41CGC61#V(Z?3T-8EWX8B?+6DS1'D['^8>PSU'ZUT%%7&HS7>S:-ITX`>SB&/[@ MV?RQ4/\`PCNE?\^O_D1_\:M5X]B'A9]SA":*[K_A'-*_Y]?_`"(_^-%'UB(O MJL^Z-6DI:*XST!"*:0?4TZB@!F#ZFC!]33Z*`&8/J:,'U-/HH`9@^IHP?4T^ MB@!F#ZFC!]33Z*`&8/J:7'K3J*`$`I:*6@!*6DI:`"BBB@`HHHH`****`"BB MB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`**** M`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH` M****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`H MHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BB MB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`**** /`"BBB@`HHHH`****`/_9 ` end EX-99.P CODE ETH 18 a_nf68stixmod7.htm a_nf68stixmod7.htm

Amendments to Putnam’s Code of Ethics – June 2011

The following sections of the Code are rewritten to read in their entirety as follows:

Definitions

Access Person Putnam has identified certain employees as Access Persons due to their position or access to investment information. Access Persons are held to a higher standard under the Code than other employees. Please ask the Code of Ethics Officer if you have any question whether you are an Access Person. The following employees are Access Persons:

• All employees of Putnam’s Investment Management Division

• Employees of the Operations Division within the following specific groups and departments:

» Fund Administration Group

» investment Services and Operations Group

» Accounting Services Group

» Custody Services Group

• Any employee in the following groups or divisions who reports directly to a member of the Operating Committee:

» Mutual Fund Shareholder Services Group

» Accounting, Custody, and Control Services Group

» Global Marketing and Products Division

» Defined Contribution Division

» Global Distribution Division

• All members of Putnam’s Operating Committee

• All employees of Putnam investments Limited (PiL) and all other Putnam employees based in Europe

• All directors and officers of a registered investment advisor affiliate, e.g., Putnam investment Management, LLC (PIM), or The Putnam Advisory Company, LLC (PAC)

• All employees who have access to My Putnam (unless access is limited to the Wall Street Journal, Factiva, or other systems that do not allow access to non-public information about Putnam products, as determined by the Code of Ethics Officer)

• Employees who have systems access or other access to non-public information about any client’s purchase or sale of securities or to information regarding portfolio holdings or recommendations with respect to such purchases or sales

Others as determined by the Code of Ethics Officer


Section 8 — Sanctions

The Code of Ethics Oversight Committee has adopted the following minimum monetary sanctions for violations of the Code. These sanctions apply even if the exception results from inadvertence rather than intentional misbehavior. The Code of Ethics Oversight Committee will review and approve sanctions on employees. However, the sanctions noted below are only minimums, and the Committee reserves the right to impose sanctions it believes fit the circumstances, such as higher monetary sanctions, trading bans, suspension, or termination of employment. The Committee’s belief that an employee has violated the Code of Ethics intentionally may result in more severe sanctions than outlined in the guidelines.

8.1. Sanctions for violations of Sections 1-3.

The minimum sanction per violation of the Rules in Sections 1, 2 or 3 is disgorgement of any profits or payment of avoided losses and the following payments:

  Investment Division,  All other employees not
  Operating Committee  included in the criteria
  Member, and any  for inclusion in the higher
  employee who reports  sanction schedule
  directly to an Operating
  Committee Member   
  (administrative assistants  
  will be excluded from the  
  higher sanction schedule)  

1st violation  $250  $50 

2nd violation  $500  $100 

3rd violation  Minimum monetary sanction for a 2nd violation with a
  ban on all new personal securities transactions for time
  period determined by the Code of Ethics Oversight
  Committee   

 


8.2. Sanctions for violations of Sections 4-6.

The minimum sanction for violations of the rules in Sections 4-6 is as follows:

  Investment Division,  All other employees not
  Operating Committee  included in the criteria
  Member, and any  for inclusion in the higher
  employee who reports  sanction schedule
  directly to an Operating
  Committee Member   
  (administrative assistants  
  will be excluded from the   
  higher sanction schedule)  

1st violation  Warning  Warning 

2nd violation  $50  $25 

3rd violation  $100  $50 

 

8.3. Sanctions for violations of Section 7.

All violations concerning the use of material, non-public information, failure to report inside information, or insider trading will be presented to the Code of Ethics Oversight Committee to determine the appropriate sanction, up to and including termination. Severe criminal penalties may also be imposed.

The reference period for determining generally whether a violation is initial or subsequent will be three years.


EX-99.P CODE ETH 19 a_nf68mod9.htm a_nf68mod9.htm
working@PUTNAM  JUNE 2010 
 

Putnam’s

Code of Ethics


[Graphic omitted: Portrait of Samuel Putnam]


[Graphic omitted: Putnam Investments logo]



Putnam Investments Code of Ethics

Putnam Investments is required by law to adopt a Code of Ethics (the “Code”). The objective of the Code is to ensure that Putnam’s employees comply with all applicable laws and avoid any conflict of interest that might result in any harm to our clients. Putnam owes a fiduciary duty to its clients. This Code of Ethics is designed to strengthen the trust and confidence our clients place in us and to demonstrate that our clients’ interests come first.

Adherence to the Code is a fundamental condition of employment at Putnam. Every employee is expected to adhere to the requirements of the Code. Any employee failing to do so may be subject to disciplinary action, including financial penalties and termination of employment, as determined by the Code of Ethics Officer, the Code of Ethics Oversight Committee, or the Chief Executive Officer of Putnam Investments.

1 


Table of Contents

Putnam Investments Code of Ethics  1 
 
Definitions  3 
 
Section 1 — Personal Securities Rules for All Employees  5 
1.1. Pre-clearance Requirements  5 
1.2. Restricted List  6 
1.3. Prohibited Transactions  6 
 
Section 2 — Putnam Mutual Funds  7 
2.1. Holding Putnam Mutual Fund Shares at Putnam  7 
2.2. Putnam Mutual Funds — Employee Holding Periods and Linked Accounts  7 
2.3. Putnam Mutual Funds — Closed-End Fund Rules  8 
 
Section 3 — Additional Rules for Access Persons and Certain Investment Professionals  8 
3.1. 60-Day Short-Term Rule — All Access Persons  8 
3.2. 7-Day Pre-Trade Rule (Portfolio Managers and Analysts)  8 
3.3. 7-Day Post-Trade Rule (Portfolio Managers and Analysts)  9 
3.4. Contra-Trading Rule (Portfolio Managers and Team Leaders)  9 
3.5. No Personal Benefit (Portfolio Managers and Analysts)  9 
 
Section 4 — Reporting Requirements  9 
4.1. Brokerage/Securities Accounts — Initial and Annual Requirements  9 
4.2. Separate Provisions for Brokerage/Securities Accounts That Are   
Professionally Managed (Discretionary) Accounts — Initial and Annual Requirements  10 
4.3. Account Confirmations and Statements  10 
 
Section 5 — Additional Reporting, Certification, and Training Requirements  10 
5.1. Initial/Annual Holdings Report — Access Persons Only  10 
5.2. Quarterly Transaction Report — Access Persons Only  10 
5.3. Annual Certification — All Employees  11 
5.4. Training Requirements — All Employees  11 
5.5. Maintenance and Distribution of the Code of Ethics  11 
5.6. Procedures and Timeliness  11 
 
Section 6 — General Ethics Rules for All Employees  11 
6.1. Outside Business Activities  11 
6.2. Charitable or Non-profit Roles/Role as Trustee or Fiduciary Outside Putnam Investments  12 
6.3. Family Members’ Conflict Policy  12 
6.4. CFA Institute Code of Ethics and Standards of Professional Conduct  12 
6.5. Business Ethics, Ombudsman, and Hotlines  13 
 
Section 7 — Insider Trading  13 
7.1. Material, Non-Public Information and Insider Trading  13 
7.2. Reporting and Restrictions  13 
7.3. Special Provisions Applicable to Putnam Affiliates  14 
7.4. PIL Employees  14 
 
Section 8 — Sanctions  14 
8.1. Sanctions for Violations of Sections 1–3  14 
8.2. Sanctions for Violations of Sections 4–6  14 
8.3. Sanctions for Violations of Section 7  14 
 
Section 9 — Procedures for Determinations and Exemptions  15 
 
Appendix A — Contra-Trading Rule Clearance Form  16 

2 


Definitions

Access Person Putnam has identified certain employees as Access Persons due to their position or access to investment information. Access Persons are held to a higher standard under the Code than other employees. Please ask the Code of Ethics Officer if you have any question whether you are an Access Person. The following employees are Access Persons:

• All employees of Putnam’s Investment Management Division

• Employees of the Operations Division within the following specific groups and departments:

» Fund Administration Group

» Investment Services and Operations Group

» Accounting Services Group

» Custody Services Group

• Senior Managing Directors and Managing Directors in:

» Mutual Fund Shareholder Services Group

» Accounting, Custody, and Control Services Group

» Global Marketing and Products Division

» Global Distribution Division

• All members of Putnam’s Operating Committee

• All employees of Putnam Investments Limited (PIL) and all other Putnam employees based in Europe

• All directors and officers of a registered investment advisor affiliate, e.g., Putnam Investment Management, LLC (PIM), or The Putnam Advisory Company, LLC (PAC)

• All employees who have access to My Putnam (unless access is limited to the Wall Street Journal, Factiva, or other systems that do not allow access to non-public information about Putnam products, as determined by the Code of Ethics Officer)

• Employees who have systems access or other access to non-public information about any client’s purchase or sale of securities or to information regarding portfolio holdings or recommendations with respect to such purchases or sales

• Others as determined by the Code of Ethics Officer

Approved Indices means any securities index (which is typically a broad-based index) determined by the Code of Ethics Officer to present minimal risks of abuse. All Approved Indices are posted on the Putnam Compliance intranet homepage and the Code of Ethics PTA system.

Closed-end fund means a fund that has a fixed number of shares outstanding and does not redeem its shares. Closed-end funds typically trade like stocks on an exchange.

The Code of Ethics Officer and the Deputy Code of Ethics Officer are responsible for enforcing and interpreting the Code. The following are the current members of the Code of Ethics staff, each of whom can answer employee questions and provide other assistance regarding the Code:

Code of Ethics Officer:  Bob Leveille  (617) 760-1858 

Deputy Code of Ethics Officer:  Rick DeGregorio  (617) 760-1201 

Compliance Analyst:  Dana Scribner-Shea  (617) 760-7182 


3 


Code of Ethics Oversight Committee has oversight responsibility for administering the Code of Ethics. Members include the Code of Ethics Officer and other members of Putnam’s senior management appointed by the Chief Executive Officer of Putnam. The Committee reviews and approves Code revisions, violations, and sanctions. In certain instances, requests for exemptions may require the approval of the Committee. The Committee meets on a quarterly basis or as otherwise necessary.

Exchange-Traded Fund (ETF) means a fund (other than a closed-end fund) that can be traded on an exchange throughout the day like a stock. ETFs often track an index. Examples include (but are not limited to) SPDRs, WEBs, QQQQs, iShares, and HLDRs.

Immediate Family means the Putnam employee’s spouse, domestic partner, fiancé(e), or other family members who are living in the same household. Immediate Family also includes any other family members, including in-laws, for whom the Putnam employee can exercise investment discretion, regardless of whether or not they live in the same household.

Private Placement means any offering of a security not offered to the public and not requiring registration with the relevant securities authorities.

Putnam means any or all of Putnam Investments, LLC and its subsidiaries (other than PanAgora Asset Management, Inc.), any one of which shall be a Putnam company.

Putnam employee, or employee, means any employee of Putnam and, for purposes of all rules in Sections 1, 2, and 3, also includes the following:

• Members of the Immediate Family of a Putnam employee;

• Any trust in which a Putnam employee or Immediate Family member is a trustee with investment discretion;

• Any account for a partnership in which a Putnam employee or Immediate Family member is a general partner or a partner with investment discretion;

• Any closely held entity (such as a partnership, limited liability company, or corporation) in which a Putnam employee or Immediate Family member holds a controlling interest and with respect to which he or she has investment discretion;

• Any account (including any retirement, pension, deferred compensation, or similar account) in which a Putnam employee or Immediate Family member has a substantial economic interest and over which the Putnam employee or Immediate Family member exercises investment discretion;

• Any account other than a Putnam client account that receives investment advice of any sort from the employee or Immediate Family member, or as to which the employee or Immediate Family member has investment discretion.

Security The instruments required to be pre-cleared under Section 1.1 are considered to be securities for purposes of this Code and are also required to be reported by Access Persons under Section 4. In addition, transactions in exchange-traded funds (ETFs), exchange-traded notes (ETNs), exchange-traded commodities (ETCs), options, futures, and other derivative securities are required to be reported by Access Persons under Section 4, even for those instruments that are not required to be pre-cleared pursuant to Section 1.1(c).

4 


Section 1 — Personal Securities Rules for All Employees

Putnam maintains the Code of Ethics PTA system to assist employees in fulfilling their obligations under the Code of Ethics. This system can be accessed by selecting the Code of Ethics PTA link, which appears on Putnam’s intranet page in the Secure Information Section under My Essentials. This system allows the automated pre-clearance of publicly traded equities and other securities trading on major U.S. and other exchanges. To pre-clear an options contract for a publicly traded security, pre-clear the underlying security in the Code of Ethics PTA system. To request clearance to trade bonds or other securities, you must contact the Code of Ethics staff. Pre-clearance hours are 9:00 a.m. to 4:00 p.m. EST.

1.1. Pre-clearance Requirements

1.1(a) Employees must pre-clear all trades in the following securities:

• Stocks of companies

• Bonds (including corporate, municipal, high-yield, and convertible bonds)

• Options, warrants, and all other derivatives of any underlying securities which themselves require pre-clearance. Examples include options and futures based on specific stocks or based on indices that are not Approved Indices (see “Definitions” section)

• Exchange-traded funds (ETFs ) other than those based on Approved Indices or based on other instruments listed below (under Section 1.1(c)) that do not require pre-clearance

• Exchange-traded notes (ETNs) other than those based on Approved Indices

• Closed-end funds, including Putnam closed-end funds

Employees must also pre-clear the following transactions:

• Private placements and purchases of hedge funds or other private investment funds must receive pre-approval from the Code of Ethics Oversight Committee

• Donating or gifting of securities

• Shares purchased by subscription or by mail (if purchasing directly from a company’s transfer agent by check, you must pre-clear the day the check is to be mailed)

• Tendering securities from your personal account

1.1(b) Provisions Applicable to Pre-Clearances

A pre-clearance is only valid for trading on the day it is obtained. However, trades by employees in Putnam’s Asian or European offices, or trades by any employees in securities listed on Asian or European stock exchanges, may be executed within one business day after pre-clearance is obtained. If the Code of Ethics system does not recognize a security, if an employee is unable to use the system, or if he or she has any questions with respect to the system or pre-clearance, the employee must contact the Code of Ethics staff.

1.1(c) Exceptions from Pre-Clearance Requirements

Pre-clearance is not required for certain transactions. (Please note that reporting may still be required for Access Persons even when pre-clearance is not required. See Sections 4 and 5 for reporting requirements.)

Pre-clearance is not required for:

• Open-end mutual funds

• Currencies

• Commodities

• Treasury securities and other U.S. and other sovereign government debt (Please note that agency securities, such as securities issued by Fannie Mae and Freddie Mac, require pre-clearance.)

• Certificates of deposit (CDs), commercial paper, repurchase agreements, bankers’ acceptances, and other money market instruments

5 


• Options and futures and all other derivatives of securities not requiring pre-clearance (Please note that examples include options and futures based on Approved Indices (see Definitions) and Treasury futures.)

• ETFs and ETNs based on Approved Indices

• Exchange-traded commodities (ETCs)

• Withdrawals or distributions from a Putnam Retirement Plan that result in the sale of MMC stock

• Trades in approved discretionary accounts (see Section 4.2 for additional information)

• Transactions that are involuntary (i.e., not initiated by the employee or an immediate family member covered under the Code), including dividend reinvestments under an automatic program of a publicly traded issuer and broker actions not initiated by the employee, such as option assignments or sales out of the brokerage account to cover fees or margin calls (provided the employee may not have withdrawn funds from the margin account in the prior 10 days)

1.2. Restricted List

Employees may not trade in securities that are on Putnam’s restricted list, except as set forth below under “Large-/Mid-Cap Exemption.” There are a number of reasons why a security may appear on the Restricted List, and securities are placed on the Restricted List under criteria, and in specific circumstances, as determined by the Code of Ethics Officer or the Code of Ethics Oversight Committee. If a security is not on the Restricted List, other classes of securities of the same issuer (e.g., preferred or convertible preferred stock) may be on the Restricted List. It is the employee’s responsibility to identify with particularity the class of securities being pre-cleared.

Large-/Mid-Cap Exemption. An employee may trade up to 1,000 shares of a security appearing on the Restricted List if it is an equity security of an issuer with a market capitalization greater than $2 billion. However, these transactions must still be pre-cleared. Market capitalization is defined as outstanding shares multiplied by current price per share.

1.3. Prohibited Transactions

The following transactions and activities are prohibited for all employees:

1. Good-Until-Canceled Orders (GTC). Any order not executed on the day of pre-clearance must be resubmitted for pre-clearance before being executed on a subsequent day.

2. Short sales of any security that is subject to pre-clearance requirements. However, short sales against the box are permitted. In addition, opening an option position that would result in a short position in the underlying security upon assignment or expiration is also prohibited. For example, buying a put option without owning a number of shares at least equal to the delivery obligation under the contract, or selling a naked call option, would be prohibited.

3. Purchasing securities in an initial public offering (IPO). Although exceptions from this prohibition will rarely be granted, employees may request an exemption from the Code of Ethics Officer, who may grant exceptions in unusual cases such as when an immediate family member’s association or employment with the issuer warrants consideration or when the employee has had a pre-existing status for at least two years as a policyholder or depositor in connection with a bank or insurance company conversion from mutual or cooperative form to stock form.

4. Trading with Material Non-public Information (see Section 7)

5. Personal Trading with Putnam Client Portfolios. Putnam employees may not buy or sell securities when the employee knows a Putnam client account is on the other side of the trade.

6. Participating in an Investment Club

7. Spread Betting. PIL employees may not enter into any spread betting contracts on financial instruments.

8. Excessive Trading. Employees are prohibited from making more than 10 trades in individual securities in any given quarter across all their accounts (including accounts held by Immediate Family members). For purposes of applying this rule, securities that are required to be pre-cleared shall be the only securities counted, and trading the same security in the same direction (buy or sell) over a period of five business days will be counted as one transaction.

6


Section 2 — Putnam Mutual Funds

2.1. Holding Putnam Mutual Fund Shares at Putnam

Putnam employees must hold shares of Putnam open-end U.S. mutual funds through accounts maintained at Putnam, with Putnam Retail Management (PRM) listed as the dealer of record. All transactions must be executed through Putnam and not through an outside broker or other intermediary.

These requirements also apply to:

• Self-directed IRA accounts holding Putnam fund shares;

• Variable annuities and variable insurance contracts, such as Putnam/Hartford Capital Manager and Allstate Advisor, which invest in Putnam Variable Trusts (must list PRM as dealer but may be held at the insurer).

In limited circumstances, retirement, pension, deferred compensation, and similar accounts (and variable insurance arrangements) that cannot be legally transferred to Putnam may be allowed to hold Putnam funds upon approval of the Code of Ethics Officer. For example, a spouse of a Putnam employee may have a 401(k)/ Profit Sharing Plan with his or her employer that invests in Putnam funds. The employee must notify the Code of Ethics Officer in writing, provide the reason why the account cannot be transferred to Putnam, and arrange for a quarterly statement of transactions in such account to be sent to the Code of Ethics staff, if approved.

2.2. Putnam Mutual Funds — Employee Holding Periods and Linked Accounts

Employees may not, within a 90-calendar day period, make a purchase followed by a sale or a sale followed by a purchase of shares of the same open-end Putnam mutual fund, even if the transactions occur in different accounts.

Employees who have sole or shared supervisory or portfolio management responsibility for a Putnam open-end mutual fund or a U.S. registered mutual fund to which Putnam acts as advisor or sub-advisor may not, within a one-year period, make a purchase followed by a sale or a sale followed by a purchase of shares of such fund, even if the transactions occur in different accounts.

All employees are required to ensure that their Immediate Family members’ accounts holding Putnam mutual funds are linked to comply with the disclosure and holding period requirements. To ensure these accounts are linked, log on to Putnam’s intranet home page at http://intranet/home/index.shtml, and select My Essentials/Linked Mutual Fund Accounts.

The above holding period restrictions do not apply to:

• 401(k)/Profit Sharing (or other employee benefit plan) contributions, withdrawals, loans, or distributions, including employer contributions or forfeitures to an employee’s account. However, exchanges within these accounts are subject to these holding period restrictions.

• Putnam’s Money Market Funds or Putnam Stable Value Fund

• Systematic investments, exchanges, or redemptions and payroll deductions. However, once these programs are established/revised, they may not be changed again for 90 days. Employees subject to a one-year holding period with respect to a fund may establish a semiannual or annual automatic rebalancing program, although it may only be changed on an annual basis.

• Dividend reinvestments, distributions, fund mergers, and share class conversions

• Qualified redemptions (i.e., from the Putnam CollegeAdvantage 529 Plan for matters such as tuition, school fees, books, supplies, and equipment required by the school, room and board, disability, and death)

In special situations, such as financial hardship or disability, an exemption from the holding period requirements may be provided by the Code of Ethics Oversight Committee upon written application by the employee.

7 


2.3. Putnam Mutual Funds — Closed-End Fund Rules

2.3(a) Pre-clearance and Reporting. Putnam closed-end fund shares are subject to the same pre-clearance and reporting requirements as other stocks. A list of the Putnam closed-end funds can be obtained from the Code of Ethics staff.

2.3(b) Special Rules Applicable to Managing Directors in the Investment Division, Operating Committee members, and officers of the Putnam Funds. Managing Directors in Putnam’s Investment Division, Putnam Operating Committee members, and officers of the Putnam Funds will not receive clearance to engage in any combination of purchase and sale, or sale and purchase, of the shares of a given closed-end fund within six months of each other. Therefore, purchases should be made only if you intend to hold the shares more than six months, and sales should not be made if you plan to purchase more shares of that fund within six months.

Section 3 — Additional Rules for Access Persons and Certain Investment Professionals

3.1. 60-Day Short-Term Rule — All Access Persons

Access Persons may not sell a security at a price higher than any price paid for that security within the past 60 calendar days, or buy a security at a price below which he or she sold it within the past 60 days. This rule applies to transactions across all accounts of the employee. All trades for the previous 60 days will be compared to the trade date for the transaction in question to determine whether a violation has occurred. Thus, if an employee buys a security for $10, buys it again for $15, and then sells shares of this security for $12, this will be considered a violation even though some shares of the security in question were bought for a higher price. Access Persons may also not open an option transaction for a contract that expires in 60 days or less. Although portfolio managers and analysts may sell securities at a profit within 60 days of purchase in order to comply with the requirements of the 7-Day Pre-Trade and 7-Day Post-Trade Rules (described below), any profit must be disgorged to charity.

3.2. 7-Day Pre-Trade Rule (Portfolio Managers and Analysts)

3.2(a) Portfolio Managers: (i) Before a portfolio manager places an order to buy a security for any Putnam client portfolio that he manages, he must sell that security or related derivative security if he has purchased it in his personal account within the preceding seven calendar days; or (ii) upon entering an order to sell a security for any Putnam client portfolio that he manages, he must disgorge to charity any losses avoided if he sold the security in his personal account within the preceding seven calendar days. Disgorgements will be measured by the difference between the selling price for the personal account and the selling price for the client account, multiplied by the number of shares sold for the personal account.

3.2(b) Analysts: (i) Before an analyst makes a purchase or an outperform recommendation for a security (including designation of a security for inclusion in the portfolio of Putnam Research Fund), he must sell that security or related derivative security if he has purchased it in his personal account within the preceding seven calendar days; or (ii) upon making a sell or an underperform recommendation for a security (including designation of a security for sale from the portfolio of Putnam Research Fund), he must disgorge to charity any losses avoided if he sold the security in his personal account within the preceding seven calendar days. Disgorgements will be measured by the difference between the selling price for the personal account and the price at the time that the recommendation is made, multiplied by the number of shares sold for the personal account.

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3.3. 7-Day Post-Trade Rule (Portfolio Managers and Analysts)

3.3(a) Portfolio Managers: No portfolio manager shall: (i) sell any security or related derivative security for her personal account until seven calendar days have elapsed after the date of the most recent purchase of that security or related derivative security by any Putnam client portfolio she manages or co-manages; or (ii) purchase any security or related derivative security for her personal account until seven calendar days have elapsed after the date of the most recent sale of that security or related derivative security from any Putnam client portfolio that she manages or co-manages.

3.3(b) Analysts: No analyst shall: (i) sell any security or related derivative security for his personal account until seven calendar days have elapsed after the date of his most recent buy or outperform recommendation for that security or related derivative security (including designation of a security for inclusion in the portfolio of Putnam Research Fund); or (ii) purchase any security or related derivative security for his personal account until seven calendar days have elapsed after the date of his most recent sell or underperform recommendation for that security or related derivative security (including the removal of a security from the portfolio of Putnam Research Fund).

3.4. Contra-Trading Rule (Portfolio Managers and Team Leaders)

3.4(a) Portfolio Managers: No portfolio manager shall, without prior clearance and written approval, sell in his personal account any securities or related derivative securities that are held in any Putnam client portfolio that he manages or co-manages (see Appendix A for the Contra-Trading Rule Clearance Form).

3.4(b) Team Leaders: No Team Leader within the Investment Division shall, without prior clearance and written approval, sell in his personal account any securities or related derivative securities that are held in any Putnam client portfolio managed in his team (see Appendix A for the Contra-Trading Rule Clearance Form).

3.5. No Personal Benefit (Portfolio Managers and Analysts)

No portfolio manager shall cause, and no analyst shall recommend, an action that would cause a Putnam client to take action for the portfolio manager’s or analyst’s own personal benefit. A portfolio manager who trades in, or an analyst who recommends, particular securities for a Putnam client account in order to support the price of securities in his personal account, or who “front runs” a Putnam client order, is in violation of this Rule.

Section 4 — Reporting Requirements

4.1. Brokerage/Securities Accounts — Initial and Annual Requirements

All employees (on their own behalf and on behalf of their Immediate Family members) are required to report the existence of any accounts which have the capability of purchasing any securities. This Rule includes all brokerage accounts, accounts held directly at an issuer’s transfer agent, and securities held in physical certificate form by an employee or any Immediate Family member of the employee. The only investment accounts excluded from this rule are accounts that are only permitted to hold open-end mutual funds (other than Putnam open-end funds) and no other investments.

To satisfy this requirement, a new employee must enter the requested information in the Code of Ethics PTA system within the required time frame below:

• Access Persons — within 10 days of hire

• Non-access Persons — within 30 days of hire

Existing employees opening a new account (including accounts being opened for Immediate Family members) must disclose them in the system in advance of the first personal securities transaction in the account.

All employees will be required to certify annually that all accounts requiring disclosure are accurately listed in the Code of Ethics PTA system.

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4.2. Separate Provisions for Brokerage/Securities Accounts That Are Professionally Managed (Discretionary) Accounts — Initial and Annual Requirements

If you wish to establish a professionally managed or discretionary account (including professionally managed or discretionary accounts being opened for Immediate Family members), where you completely turn over decision-making authority to a professional money manager who is not subject to this Code, you must disclose the existence of the account and receive approval from the Code of Ethics staff in advance of the first personal securities transaction. You do not need to pre-clear or report securities transactions in these accounts. Please note a discretionary account may not purchase an IPO or hold Putnam open-end mutual funds.

The broker or advisor maintaining discretion over the account may not be a family member of the Putnam employee.

In order for the account to be considered discretionary, the employee must:

1. Complete an initial certification (as well as annual certifications each year) in which both the employee and the broker/advisor certify that the Putnam employee does not participate in investment decisions on the account; and

2. Ensure that copies of broker statements are delivered to Putnam Investments.

4.3. Account Confirmations and Statements

All employees are required to ensure that copies of all confirmations and statements are delivered to Putnam for all accounts described in Section 4.1 above, and to ensure that copies of all statements (but not confirmations) are delivered to Putnam for all discretionary accounts described in Section 4.2. When the employee discloses the account as required, the Code of Ethics staff will issue a 407 letter, or other communication to the entity where the employee’s account is held, requesting that confirmations and statements be sent to Putnam on the employee’s behalf. However, it is ultimately the employee’s responsibility to ensure his or her broker has complied with this request.

If it is discovered these reports are not being delivered to Putnam, the Code of Ethics staff will bring this issue to the employee’s attention and request he or she assist in rectifying the issue. If it is determined that a broker has failed to comply with requests to deliver these reports, Putnam reserves the right to require the employee to close the account within 30 days by transferring the account to another dealer willing to comply with this requirement (any trades as a result of a transfer must be pre-cleared).

Section 5 — Additional Reporting, Certification, and Training Requirements

5.1. Initial/Annual Holdings Report — Access Persons Only

Access Persons must disclose their securities holdings, including all holdings for Immediate Family member accounts, within 10 days of hire (or within 10 days of becoming an Access Person) and then on an annual basis thereafter (within 45 days after the end of the year). The report of securities holdings must include all securities that require pre-clearance under Section 1.1, as well as holdings in non-U.S. sovereign government debt, ETFs, ETNs, ETCs, options, futures and other derivative securities, and holdings of Putnam open-end U.S. mutual funds not held through a Putnam account and U.S. registered mutual funds to which Putnam acts as advisor or sub-advisor (see Section 4).

5.2. Quarterly Transaction Report — Access Persons Only

Access Persons must disclose and certify all of their personal securities transactions, including transactions for Immediate Family member accounts, within 20 calendar days following the end of each quarter. In addition to the securities requiring pre-clearance under Section 1.1, Access Persons are also required to disclose and certify all personal transactions in non-U.S. sovereign government debt, as well as ETFs, ETNs, ETCs, options, futures, and other derivative securities, not just those requiring pre-clearance.

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5.3. Annual Certification — All Employees

Each calendar year, all employees will be required to certify that they have reviewed and understand the rules and requirements of the Code and that the list of brokerage accounts (for the employee and all Immediate Family members) disclosed in the Code of Ethics PTA system is accurate. An e-mail notification will be sent informing employees of their requirement and the due date.

5.4. Training Requirements — All Employees

As deemed necessary by the Code of Ethics staff, employees will be required to complete training on Putnam’s Code of Ethics. E-mail notifications will be sent notifying employees of the requirements and the due date.

5.5. Maintenance and Distribution of the Code of Ethics

When revisions are made to the Code of Ethics, all employees will receive a revised version of the Code. The Code will be available to all employees on Putnam’s intranet site. Hard copies may be requested by contacting the Code of Ethics staff.

5.6. Procedures and Timeliness

The certifications and reports required by the Code are completed in the Code of Ethics PTA system. There are strict deadlines for these filings. Planned absences, vacations, and business trips are not valid excuses for failing to meet a deadline. Employees will receive instructions regarding these submissions and the due dates. Please contact the Code of Ethics staff for assistance.

Section 6 — General Ethics Rules for All Employees

Putnam employees are expected to act ethically at all times in connection with their employment. In addition to complying with the specific provisions of this section, employees should contact the Code of Ethics staff or the Ombudsman if they are not sure how to proceed in any circumstances involving ethical issues or questions.

6.1. Outside Business Activities

No Putnam employee shall serve as employee, officer, director, trustee, or general partner of a corporation or entity other than Putnam, without prior written approval of the Code of Ethics Officer, who may also confirm that the employee’s manager has approved such outside position. Requests for a role at a publicly traded company are especially disfavored and are closely reviewed. Permission will be granted only in extenuating circumstances.

All employees must provide a written request seeking approval from the Code of Ethics Officer by entering the details of the proposed position in the Code of Ethics PTA system. Employees may not engage in any outside employment activity until they receive an e-mail approving their request. Employees hired at Putnam with an outside position must disclose the position upon hire in the system and may be required to resign such position if the position presents conflicts of interest or other issues.

FINRA-licensed employees under PRM also have an obligation to disclose outside positions to, and receive approval from the PRM Compliance Department. Employees must also keep this information accurate by updating their profile in the Code of Ethics system and updating the PRM Compliance Department if they change or terminate a position previously approved.

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6.2. Charitable or Non-profit Roles/Role as Trustee or Fiduciary Outside Putnam Investments

6.2(a) An employee may serve as a volunteer, officer, director, or trustee of a charitable or not-for-profit institution, provided that the employee abides by the Code of Ethics with respect to any investment activity for which she has any discretion or input as a volunteer, officer, director, or trustee. The pre-clearance and reporting requirements of the Code of Ethics do not apply to the trading activities of such charitable or not-for-profit institutions for which an employee serves as a volunteer, officer, director, or trustee unless the employee has discretion for the account. You must contact the Code of Ethics staff if you are asked to serve in a role in which you may have discretion, investment, or financial authority for a charitable or not-for-profit institution to discuss whether such position is permissible and whether you must perform any additional actions prior to serving in such role.

6.2(b) Except as stated below, no Putnam employee shall serve as a trustee, an executor, a custodian, or any other fiduciary, or as an investment advisor or a counselor for any account outside Putnam.

Putnam employees may serve as a fiduciary with respect to a religious or charitable trust or foundation, provided that the employee abides by the Code of Ethics with respect to any investment activity for which she has any discretion or input. The pre-clearance and reporting requirements of the Code of Ethics apply to the trading activities of such a religious or charitable trust or foundation if the employee has discretion for the account.

6.2(c) Family Trust or Estate Exception. Putnam employees may serve as a fiduciary with respect to a family trust or estate, as long as the employee abides by all of the Rules of the Code of Ethics with respect to any investment activity over which he has any discretion.

6.3. Family Members’ Conflict Policy

No employee or member of an employee’s Immediate Family shall have any direct or indirect personal financial interests in companies that do business with Putnam, unless such interest is disclosed and approved by the Code of Ethics Officer.

6.3(a) Corporate Purchase of Goods and Services — Putnam will not acquire goods and services from any firm in which a member of an employee’s Immediate Family serves as a sales representative or in a senior management capacity, or has an ownership interest (excluding normal investment holdings in public companies), unless permission is obtained from the Assistant Treasurer and the Code of Ethics Officer. Any employee who is aware of a proposal to purchase goods and services from a firm with which a member of the employee’s Immediate Family has one of these associations must notify the Assistant Treasurer and the Code of Ethics Officer.

6.3(b) Portfolio Trading – Putnam will not allocate any client trades to any firm that employs a member of an employee’s Immediate Family as a sales representative to Putnam (in a primary, secondary, or backup role). Any Putnam employee who is aware that an Immediate Family member serves as a broker-dealer’s sales representative to Putnam should inform the Code of Ethics Officer.

6.3(c) Definition of Immediate Family (specific to this rule) – “Immediate Family” of an employee means (1) spouse, fiancé(e), or domestic partner of the employee, (2) any child, sibling, or parent of an employee and any person married to a child, sibling or parent of an employee, and (3) any other person who lives in the same household as the employee.

6.4. CFA Institute Code of Ethics and Standards of Professional Conduct

All members of the Investment Division and any other CFA Institute Members or Candidates must follow and abide by the spirit of the Code of Ethics and the Standards of Professional Conduct of the CFA Institute. The text of the CFA Institute Code of Ethics and Standards of Professional Conduct can be found on the Putnam Compliance Department intranet home page, which is accessible from the Putnam intranet home page. The terms of Putnam’s Code of Ethics shall govern in any case where there is a conflict between the terms of this Code and the CFA Institute Code of Ethics and Standards of Professional Conduct. Please contact the Code of Ethics Officer with any questions.

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6.5. Business Ethics, Ombudsman, and Hotlines

6.5(a) If a Putnam employee suspects that fraudulent, illegal, or other irregular activity (including violations of the Code of Ethics) might be occurring at Putnam, the activity should be reported immediately to Putnam’s Controller, Chief Compliance Officer or Code of Ethics Officer, through the Ombudsman or hotlines described below or through Putnam’s Human Resources department.

6.5(b) Putnam has established the office of the corporate ombudsman as a resource to help employees address legal or ethical issues in the workplace and to allow employees to voice concerns or seek clarity on issues. The Ombudsman provides a confidential, independent, and impartial source to employees to discuss potential violations of law or of company standards without fear of retribution, and serves as a neutral party with no vested interest in a particular outcome.

6.5(c) An employee who does not feel comfortable reporting activity in the manner described in 6.5(a) above may instead contact any of the following on an anonymous basis:

• The Putnam Ethics hotline at 1-888-475-4210,

• The Putnam Funds Trustees’ hotline at 1-866-858-4155, or

• Putnam’s Ombudsman at 1-866-ombuds7 (866-662-8377).

Section 7 — Material, Non-Public Information and Insider Trading

7.1. Material, Public Information and Insider Trading

Antifraud provisions of the U.S. securities laws as well as the laws of other countries generally prohibit persons who possess material, non-public information from trading on or communicating that information to others. Putnam’s policy calls for strict compliance with such laws. Unlawful trading while in possession of material, non-public information is a very serious matter and can be a crime punishable by imprisionment. There is also significant monetary liability for an inside trader, which can include liability to private plaintiffs and/or the Securities and Exchange Commission, which can seek a court order requiring a violator to pay back profits, as well as penalties substantially greater than those profits. In certain cases, controlling persons of inside traders, including supervisors of inside traders or Putnam itself, can be liable for penalties.

Employees found to have conducted this activity will be immediately referred to the Code of Ethics Oversight Committee or Putnam’s Chief Executive Officer to determine the appropriate sanction, up to and including termination.

While employees in the Investment Division are most likely to come into contact with material, non-public information, the rules (and sanctions) in this area apply to all Putnam employees (see Section 7.2 for information on what to do if you believe you may have material, non-public information).

7.2. Reporting and Restrictions

Any employee who believes he or she is (or may be) in possession of material, non-public information must immediately contact Putnam’s Code of Ethics Officer or an attorney in Putnam’s Legal Department, and provide details on the information received and the source. The employee must also take precautions to maintain the confidentiality of the information in question.

After reviewing the facts and circumstances, Putnam’s Code of Ethics Officer or Putnam’s Legal Department will make a determination as to whether possession of the information warrants restricting trading activity in the issuer’s securities for client accounts as well as personal securities transactions for employees.

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7.3. Special Provisions Applicable to Putnam Affiliates

Any employee wishing to place a trade in the securities of Great-West Lifeco Inc., Power Financial Corporation, Power Corporation of Canada, or IGM Financial Inc. must contact the Code of Ethics Officer or the Deputy Code of Ethics Officer to request manual approval of the pre-clearance request. An employee requesting such approval must certify that he or she is not in possession of any material, non-public information regarding the company in which he or she is seeking to place a trade. The decision whether or not to grant the pre-clearance request is in the sole discretion of the Code of Ethics Officer and the Deputy Code of Ethics Officer. The Code of Ethics Officer and Deputy Code of Ethics Officer will reject any such request for pre-clearance made by members of Putnam’s Operating Committee and certain members of the Chief Financial Officer’s staff from the end of each calendar quarter to the date of announcement of Great-West Lifeco Inc.’s earnings for such quarter.

7.4. PIL Employees

For PIL employees, these topics are covered by the FSA’s Market Abuse rules. PIL employees receive information on this topic in their annual instructor-led code of ethics and compliance training.

Section 8 — Sanctions

The Code of Ethics Oversight Committee has adopted the following minimum monetary sanctions for violations of the Code. These sanctions apply even if the exception results from inadvertence rather than intentional misbehavior. The Code of Ethics Oversight Committee will review and approve sanctions on employees. However, the sanctions noted below are only minimums, and the Committee reserves the right to impose sanctions it believes fit the circumstances, such as higher monetary sanctions, trading bans, suspension, or termination of employment. The Committee’s belief that an employee has violated the Code of Ethics intentionally may result in more severe sanctions than outlined in the guidelines.

8.1. Sanctions for Violations of Sections 1–3

The minimum sanction per violation of the Rules in Sections 1, 2, or 3 is disgorgement of any profits or payment of avoided losses and the following payments:

Officer level  SMD/MD/SVP  VP/AVP/Non-officer 

1st violation  $250  $50 

2nd violation  $500  $100 

  Minimum monetary sanction as above with ban on all new personal 
3rd violation  securities transactions


8.2. Sanctions for Violations of Sections 4–6

The minimum sanction for violations of the rules in Sections 4–6 is as follows:

Officer level  SMD/MD/SVP  VP/AVP/Non-officer 

1st violation  Warning  Warning 

2nd violation  $50  $25 

Subsequent violation  $100  $50 


8.3. Sanctions for Violations of Section 7

All violations concerning the use of material, non-public information, failure to report inside information, or insider trading will be presented to the Code of Ethics Oversight Committee to determine the appropriate sanction, up to and including termination. Severe criminal penalties may also be imposed.

The reference period for determining generally whether a violation is initial or subsequent will be three years.

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Section 9 — Procedures for Determinations and Exemptions

No perceived ambiguity in the Code of Ethics shall excuse any violation. Any employee who has a question concerning the applicability of the Code or believes the Code to be ambiguous in a particular situation should request a determination from the Code of Ethics Officer in advance of the conduct. Employees may also request an exemption from the Code of Ethics if they do so in advance of the conduct or transaction sought to be exempted.

Any employee seeking a determination or exemption shall provide the Code of Ethics Officer with such information as the Code of Ethics Officer deems necessary to render the determination or make a decision on the exemption.

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Appendix A — Contra-Trading Rule Clearance Form

To: Code of Ethics Officer

From:  Date: 

Re: Sale of Personal Security   

This serves as prior written approval to sell the following personal security:

Name of portfolio manager contemplating personal sale:   

Security to be sold:   

Number of shares to be sold:   

Fund(s) holding security:   

Number of shares held by fund:   

Reason for the personal sale:   

Specify the reason why the sale is inappropriate for fund: (Please attach additional sheets if necessary.) 

 
 
 
 
CIO approval:   Date: 

Code of Ethics Officer:   

Deputy Code of Ethics Officer approval:   Date: 


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Putnam Investments | One Post Office Square | Boston, MA 02109 | putnam.com

262362 6/10



EX-99.P CODE ETH 20 a_nf69mod6.htm a_nf69mod6.htm
THE PUTNAM FUNDS 
Code of Ethics

Each of The Putnam Funds (the "Funds") has determined to adopt this Code of Ethics with respect to certain activities by officers and Trustees of the Funds which might be deemed to create possible conflicts of interest and to establish reporting requirements and enforcement procedures with respect to such activities.

I. Rules Applicable to Officers and Trustees Affiliated with Putnam Investments Trust or Its Subsidiaries

A. Incorporation of Adviser's Code of Ethics. The provisions of the Code of Ethics for employees of Putnam Investments Trust and its subsidiaries (the "Putnam Investments Code of Ethics"), which is attached as Appendix A hereto, are hereby incorporated herein as the Funds' Code of Ethics applicable to officers and Trustees of the Funds who are employees of the Funds or officers, directors or employees of Putnam Investments Trust or its subsidiaries. A violation of the Putnam Investments' Code of Ethics shall constitute a violation of the Funds' Code.

B. Reports. Officers and Trustees of each of the Funds who are made subject to the Putnam Investments' Code of Ethics pursuant to the preceding paragraph shall file the reports required by the Putnam Investments' Code of Ethics with the Code of Ethics Officer designated therein. A report filed with the Code of Ethics Officer shall be deemed to be filed with each of the Funds of which the reporting individual is an officer or Trustee.

C. Review and Reporting.

(1) The Code of Ethics Officer shall cause the reported personal securities transactions to be compared with completed and contemplated portfolio transactions of each of the Funds to determine whether a violation of this Code may have occurred. Before making any determination that a violation has been committed by any person, the Code of Ethics Officer shall give such person an opportunity to supply additional explanatory material.

(2) If the Code of Ethics Officer determines that a violation of any provision of this Code has or may have occurred, he shall submit his written determination, together with any additional explanatory material, to the Audit and Compliance Committee of the Funds at its next meeting when Code of Ethics matters are discussed.

D. Sanctions. In addition to reporting violations of this Code to the Audit and Compliance Committee of the Funds as provided in Section I-C(2), the Code of Ethics Officer shall also report to such Committee any sanctions imposed with


respect to such violations. The Committee reserves the right to impose such additional sanctions as it deems appropriate.

II. Rules Applicable to Unaffiliated Trustees

A. Definitions.

(1) "Beneficial ownership" shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder.

(2) "Control" means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company.

(3) "Covered Person" means an affiliated person of the Fund, who is not made subject to the Putnam Investments Code of Ethics pursuant to Part I hereof.

(4) "Interested Trustee" means a Trustee of a Fund who is an "interested person" of the Fund within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act").

(5) "Purchase or sale of a security" includes, among other things, the writing of an option to purchase or sell a security.

(6) "Security" shall have the same meaning as that set forth in Section 2(a)(36) of the Investment Company Act (in effect, all securities) except that it shall not include securities issued by the Government of the United States or an agency thereof, bankers' acceptances, bank certificates of deposit, commercial paper and high-quality short-term debt investments, including repurchase agreements, and shares of registered open-end investment companies, but shall include any security convertible into or exchangeable for a security.

(7) "Security Held or to be Acquired by a Fund" means: (i) any security, as defined herein, which, within the most recent 15 days: (A) is or has been held by the Fund, or (B) is being or has been considered by the Fund or Putnam Investments for purchase by the Fund, and (ii) any option to purchase or sell, and any security convertible into or exchangeable for, a security described in (i) above.

(8) "Unaffiliated Trustee" means a Trustee who is not made subject to the Putnam Investments Code of Ethics pursuant to Part I hereof.

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B. Prohibited Actions. No Covered Person, in connection with the purchase or sale, directly or indirectly, by such Covered Person of a security held or to be acquired by the Fund, shall:

(1) Employ any device, scheme or artifice to defraud the Fund;

(2) Make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading;

(3) Engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Fund; or

(4) Engage in any manipulative practice with respect to the Fund.

C. Reporting.

(1) Every Unaffiliated Trustee of a Fund shall file with the Funds' Compliance Liaison a report containing the information described in Section II-C(2) of this Code with respect to purchases or sales of any security in which such Unaffiliated Trustee has, or by reason of such transaction acquires, any direct or indirect beneficial ownership, if such Trustee, at the time of that transaction, knew or, in the ordinary course of fulfilling his official duties as a Trustee of the Fund, should have known that, during the 15-day period immediately preceding or after the date of the transaction by the Trustee:

(a) such security was or is to be purchased or sold by the Fund or

(b) such security was or is being considered for purchase or sale by the Fund;

provided, however, that an Unaffiliated Trustee shall not be required to make a report with respect to transactions effected for any account over which such person does not have any direct or indirect influence or control.

(2) Every report shall be made not later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall contain the following information:

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(a) The date of the transaction, the title, the number of shares, the interest rate and maturity date (if applicable) and the principal amount of each security involved;

(b) The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

(c) The price at which the transaction was effected;

(d) The name of the broker, dealer or bank with or through whom the transaction was effected; and

(e) the date that the report is submitted by each Unaffiliated Trustee.

(3) Any such report may contain a statement that the report shall not be construed as an admission by the person making such report that he has any direct or indirect beneficial ownership in the security to which the report relates.

(4) Notwithstanding anything to the contrary contained herein, an Unaffiliated Trustee who is an "interested person" of the Funds shall file the reports required by Rule 17j-1(d)(1) under the Investment Company Act with the Code of Ethics Officer of Putnam Investments. Such reports shall be reviewed by such Officer as provided in Section I-D(1) and any related violations shall be reported by him to the Audit and Compliance Committee as provided in Section I-C(2). The Committee may impose such additional sanctions as it deems appropriate.

D. Review and Reporting.

(1) The Compliance Liaison of the Funds, in consultation with the Code of Ethics Officer of Putnam Investments, shall cause the reported personal securities transactions that he receives pursuant to Section II-C(1) to be compared with completed and contemplated portfolio transactions of the Funds to determine whether any prohibited action listed in Section II-B may have occurred.

(2) Before making any determination that a violation of this Code has occurred, the Compliance Liaison shall give the person involved an opportunity to supply additional information regarding the transaction in question.

E. Sanctions. If the Compliance Liaison determines that a violation of this Code has occurred, he shall so advise the Funds' Audit and Compliance Committee, and provide the Committee with a report of the matter, including any additional information supplied by such person. The Committee may impose such sanctions as it deems appropriate.

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III. Miscellaneous

A. Amendments to the Putnam Investments' Code of Ethics. Any amendment to the Putnam Investments' Code of Ethics shall be deemed an amendment to Section 1-A of this Code effective 30 days after written notice of such amendment shall have been received by the Chairman of the Funds, unless the Trustees of the Funds expressly determine that such amendment shall become effective at an earlier or later date or shall not be adopted.

B. Records. The Funds shall maintain records in the manner and to the extent set forth below, which records may be maintained on microfilm under the conditions described in Rule 31a-2(f)(1) under the Investment Company Act and shall be available for examination by representatives of the Securities and Exchange Commission.

(1) A copy of this Code and any other code which is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place;

(2) A record of any violation of this Code and of any action taken as a result of such violation shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs;

(3) A copy of each report made by an officer or Trustee pursuant to this Code shall be preserved for a period of not less than five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place;

(4) A list of all persons who are, or within the past five years have been, required to make reports pursuant to this Code shall be maintained in an easily accessible place; and

(5) To the extent any record required to be kept by this section is also required to be kept by Putnam Investments pursuant to the Putnam Investments' Code of Ethics, Putnam Investments shall maintain such record on behalf of the Funds as well.

C. Confidentiality. All reports of securities transactions and any other information filed with any Fund pursuant to this Code shall be treated as confidential, but are subject to review as provided herein and by personnel of the Securities and Exchange Commission.

D. Interpretation of Provisions. The Trustees may from time to time adopt such interpretations of this Code as they deem appropriate.

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E. Delegation by Chairman. The Chairman of the Funds may from time to time delegate any or all of his responsibilities under this Code, either generally or as to specific instances, to such officer or Trustee of the Funds as he may designate.

As revised
September 11, 2009

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