a_sustainableleaders.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:	(811-06128)


	Exact name of registrant as specified in charter:	Putnam Sustainable Leaders Fund


	Address of principal executive offices:	100 Federal Street, Boston, Massachusetts 02110


	Name and address of agent for service:	Robert T. Burns, Vice President 100 Federal Street Boston, Massachusetts 02110


	Copy to:	Bryan Chegwidden, Esq. Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036


	Registrant's telephone number, including area code:	(617) 292-1000


	Date of fiscal year end:	June 30, 2021


	Date of reporting period:	July 1, 2020 — December 31, 2020


	Item 1. Report to Stockholders:


	The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:

Putnam
Sustainable Leaders
Fund

Semiannual report
12 | 31 | 20


Message from the Trustees	1
About the fund	2
Interview with your fund’s portfolio managers	5
Your fund’s performance	9
Your fund’s expenses	11
Consider these risks before investing	13
Terms and definitions	14
Other information for shareholders	15
Financial statements	16

Message from the Trustees

February 16, 2021

Dear Fellow Shareholder:

The world welcomed 2021 with high hopes for improvement in the global economy and public health. Although COVID-19 infections have reached new levels, distribution of vaccines is underway, boosting optimism about a return to normal in the not-too-distant future. In the United States, new proposals to rebuild the economy are anticipated from the Biden administration. The stock and bond markets started the year in good shape, indicating that investors are willing to look beyond current challenges and see the potential for renewed economic growth.

Putnam continues to employ active strategies that seek superior investment performance for you and your fellow shareholders. Putnam’s portfolio managers and analysts take a research-intensive approach that includes risk management strategies designed to serve you through changing conditions.

As always, thank you for investing with Putnam.

The managers of Putnam Sustainable Leaders Fund invest in companies that they believe have demonstrated a commitment to sustainable business practices. This commitment may be reflected through environmental, social, or corporate governance (ESG) policies, practices, or outcomes. Putnam believes that these types of companies can deliver more profitable, durable financial returns with lower risk profiles.

An enhanced analytical process

Sustainable investing is not a different asset class or investment style; it is an enhanced analytical approach. In our rapidly changing world, it is important for all investors to understand the risks and opportunities that lie beyond conventional financial statements. Thoughtful research that integrates relevant ESG considerations creates a more complete view of long-term fundamental business prospects. Recent research on investment performance indicates that companies adopting better corporate practices can also achieve better stock performance.

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Targeting companies with sustainable business practices

In analyzing companies for the portfolio, the fund’s managers look for excellence in areas such as clean and efficient materials use, plans to reduce carbon or water intensity, focus on employee well-being, improvements in workplace equality and diversity, and alignment of management incentives with the company’s sustainability objectives.

Rigorous analysis of company financial strength

With the goal of delivering capital appreciation for investors over time, the fund’s managers focus on companies with the potential to produce strong financial performance. They consider factors such as the stock’s valuation and the company’s financial strength, growth potential, competitive position, future earnings, and cash flows.

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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 below and pages 9–10 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.

Before March 21, 2018 the fund was managed with a materially different investment strategy and may have achieved materially different performance results under its current investment strategy from that shown for periods before this date.

* The Russell 3000 Growth – S&P 500 Linked Benchmark represents performance of the Russell 3000 Growth Index from the inception date of the fund, August 31, 1990, through July 31, 2019 and performance of the S&P 500 Index from August 1, 2019, and thereafter.

† Source: Lipper, a Refinitiv company.

‡ Returns for the six-month period are not annualized, but cumulative.

This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 12/31/20. See above and pages 9–10 for additional fund performance information. Index descriptions can be found on pages 14–15.

* Source: Bloomberg Index Services Limited.

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How was the investing environment for U.S. stocks during the six-month reporting period?

STEPHANIE The period began in July 2020, when stocks were enjoying a remarkable rebound after steep declines earlier in the year. Stocks advanced solidly for two months but faced some challenges in September. Market volatility picked up as COVID-19 cases began to surge globally and uncertainty surrounded the U.S. presidential election. Stocks posted losses in September and October as investors grappled with slow economic growth and rising unemployment. The market rebounded again in November, as stocks were buoyed by optimism about COVID-19 vaccines. The S&P 500 Index posted its best November performance ever, and the Dow Jones Industrial Average recorded its largest monthly gain in 33 years. Market advances continued in December, and both the Dow Jones Industrial Average and the S&P 500 Index closed 2020 at record highs.

How did the fund perform in this environment?

KATHERINE For the six-month reporting period, the fund delivered a gain of 23.39%, outperforming its S&P 500 Index benchmark,

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Allocations are shown as a percentage of the fund’s net assets as of 12/31/20. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.

This table shows the fund’s top 10 holdings by percentage of the fund’s net assets as of 12/31/20. Short-term holdings and derivatives, if any, are excluded. Holdings may vary over time.

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which returned 22.16%. The fund slightly underperformed its Lipper peer group, Multi-Cap Core Funds, which delivered an average return of 23.69% for the period.

What were some holdings that contributed to performance during the period?

STEPHANIE The top performer for the period was AES, a company that generates and distributes electrical power in 15 countries. AES reported strong earnings and cash flow during the period. The company is one of the biggest drivers of the shift to renewable power generation and is part of an important joint venture in energy storage technology. Investors have responded favorably to AES’s partnerships and projects that contribute to the global transition to cleaner energy.

Another highlight was Hilton Worldwide Holdings, owner and operator of the Hilton, Hampton Inn, Embassy Suites, and Tru hotel brands. Hilton, along with the rest of the travel and tourism industry, struggled amid the COVID-19 pandemic as consumers worldwide canceled travel plans and occupancy rates declined. However, the stock recovered considerably during the six-month period, especially after distribution began for two COVID-19 vaccines with impressive efficacy results. Investors grew optimistic about a return to normal, with the expectation that more consumers will begin booking hotels for leisure and business.

We expect there will be opportunities for leaders like Hilton to gain share and further improve their long-term business prospects. We see promising potential for Hilton’s LightStay initiative, which helps hotel operators track data and improve performance on metrics such as water and energy use, which in turn, can help reduce costs. Hilton’s activity has already had an impact on standards and programs for the broader hotel and hospitality industry, and we believe there is potential for its influence to be even greater in the future.

KATHERINE Another contributor to performance during the period was First Solar. First Solar is a manufacturer of thin film PV solar energy modules used for utility-scale solar installations. As the cost of solar panels has declined, installation growth has accelerated. First Solar, as a leader in the industry, has benefited from this growth. The company also announced solid progress on its cost and productivity goals during the period, leading to higher gross margins and better-than-expected earnings guidance for the year. Looking forward, there is potential for an extension of certain solar tax credits under the new Biden administration that could benefit First Solar and others in the industry. Regardless of the regulatory backdrop, we believe robust growth in utility-scale solar is likely for the next several years.

Could you discuss some holdings that detracted from the fund’s performance during the period?

KATHERINE One detractor was Vertex Pharmaceuticals, a leading biotechnology company. During the period, Vertex announced disappointing data for one of its pipeline drugs and discontinued development of that drug, which drove underperformance for the stock. Despite this setback, Vertex still has a very strong cystic fibrosis franchise and long-term pipeline optionality. We continued to hold Vertex in the portfolio at the end of the period.

STEPHANIE Another detractor during the period was Baxter International. Baxter is a medical device company that serves several areas of healthcare, including renal care and medication delivery. In addition to the negative impact of fewer elective procedures due to the pandemic, Baxter faced delays in its next-generation pump product. Baxter also

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was denied add-on payment coverage from the Centers for Medicare & Medicaid Services for a new dialysis solution it was bringing to market. All these challenges lowered the expected growth potential for the company. Despite these setbacks, we continued to hold Baxter at period-end. We believe the company can improve its margins and that its strong balance sheet offers potential for accretive merger or acquisition activity.

Fidelity National Information Services also detracted from fund performance during the period. The company’s payments business is very sensitive to consumer spending, including spending in brick-and-mortar locations, which has suffered during the pandemic and has led to disappointing organic growth. Longer term, we believe the business will benefit from continued cost and revenue synergies from its WorldPay acquisition. We expect the business will get back to high single-digit earnings growth, and we continued to hold the stock at period-end.

As the fund enters the second half of its fiscal year, what is your outlook?

KATHERINE The complexities of 2020 gave us an opportunity to test our processes and performance in an extreme set of conditions. Sustainable investing strategies fared well, as did our active investment approach. Regardless of the economic backdrop, our focus remains on individual stock selection. With our research-driven process, we consider fundamentals, valuation, and sustainability analysis for the companies we examine. Looking ahead, we believe that our range of investment opportunities will expand even further. Across every sector, we are seeing many more companies increasing their focus on relevant, strategic sustainability issues.

Thank you both for your time and 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.

This chart shows the fund’s largest allocation shifts, by percentage, over the past six months. Allocations are shown as a percentage of the fund’s net assets. Current period summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.

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Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended December 31, 2020, the end of the first half of its current fiscal year. In accordance with regulatory requirements for mutual funds, we also include 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, R6, and 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 12/31/20


	Annual
	average		Annual		Annual		Annual
	(life of fund)	10 years	average	5 years	average	3 years	average	1 year	6 months
Class A (8/31/90)
Before sales charge	12.44%	309.86%	15.15%	140.30%	19.17%	72.98%	20.04%	28.50%	23.39%
After sales charge	12.22	286.29	14.47	126.48	17.76	63.03	17.70	21.11	16.30
Class B (3/1/93)
Before CDSC	12.22	286.06	14.46	131.48	18.28	69.15	19.15	27.55	22.94
After CDSC	12.22	286.06	14.46	129.48	18.07	66.15	18.44	22.55	17.94
Class C (7/26/99)
Before CDSC	12.16	280.33	14.29	131.47	18.28	69.15	19.15	27.56	22.93
After CDSC	12.16	280.33	14.29	131.47	18.28	69.15	19.15	26.56	21.93
Class R (1/21/03)
Net asset value	12.16	299.72	14.86	137.32	18.87	71.68	19.74	28.18	23.24
Class R6 (5/22/18)
Net asset value	12.70	321.59	15.48	144.07	19.54	74.80	20.46	28.97	23.61
Class Y (7/19/94)
Net asset value	12.69	320.35	15.44	143.35	19.47	74.28	20.34	28.84	23.55

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A shares reflect the deduction of the maximum 5.75% sales charge levied at the time of purchase. Class B share returns after 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, R6, and Y shares have no initial sales charge or CDSC. Performance for class B, C, 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. Performance for class R6 shares prior to their inception is derived from the historical performance of class Y shares and has not been adjusted for the lower investor servicing fees applicable to class R6 shares; had it, returns would have been higher.

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

The fund has had performance fee adjustments that may have had a positive or negative impact on returns.

Class B share performance reflects conversion to class A shares after eight years.

Class C share performance reflects conversion to class A shares after 10 years.

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Comparative index returns For periods ended 12/31/20


	Annual
	average		Annual		Annual		Annual
	(life of fund)	10 years	average	5 years	average	3 years	average	1 year	6 months
S&P 500 Index	10.71%	267.00%	13.88%	103.04%	15.22%	48.85%	14.18%	18.40%	22.16%
Russell 3000
Growth – S&P 500	10.54	308.49	15.11	118.77	16.95	57.20	16.27	18.40	22.16
Linked Benchmark^*
Lipper Multi-Cap
Core Funds	10.28	209.44	11.82	84.15	12.86	38.96	11.45	16.82	23.69
category average^†

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

^*The Russell 3000 Growth – S&P 500 Linked Benchmark represents performance of the Russell 3000 Growth Index from the inception date of the fund, August 31, 1990, through July 31, 2019 and performance of the S&P 500 Index from August 1, 2019, and thereafter.

^†Over the 6 month, 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 12/31/20, there were 598, 588, 541, 481, 342, and 26 funds, respectively, in this Lipper category.

Fund price and distribution information For the six-month period ended 12/31/20


Distributions	Class A		Class B	Class C	Class R	Class R6	Class Y
Number	1		1	1	1	1	1
Income	$0.332		—	—	$0.134	$0.691	$0.592
Capital gains
Long-term gains	7.534		$7.534	$7.534	7.534	7.534	7.534
Short-term gains	0.474		0.474	0.474	0.474	0.474	0.474
Total	$8.340		$8.008	$8.008	$8.142	$8.699	$8.600
	Before	After	Net	Net	Net	Net	Net
	sales	sales	asset	asset	asset	asset	asset
Share value	charge	charge	value	value	value	value	value
6/30/20	$98.08	$104.06	$70.32	$78.62	$93.85	$107.06	$106.79
12/31/20	112.51	119.37	78.28	88.48	107.35	123.45	123.16

The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A 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) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.

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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 R	Class R6	Class Y
Total annual operating expenses for the
fiscal year ended 6/30/20	1.03%	1.78%	1.78%	1.28%	0.66%	0.78%
Annualized expense ratio for the
six-month period ended 12/31/20^*	1.06%	1.81%	1.81%	1.31%	0.71%	0.81%

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.

^*Includes an increase of 0.09% from annualizing the performance fee adjustment for the six months ended 12/31/20.

Expenses per $1,000

The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 7/1/20 to 12/31/20. 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 R	Class R6	Class Y
Expenses paid per $1,000^*†	$5.97	$10.17	$10.17	$7.37	$4.00	$4.56
Ending value (after expenses)	$1,233.90	$1,229.40	$1,229.30	$1,232.40	$1,236.10	$1,235.50

^*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 12/31/20. 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 12/31/20, use the following calculation method. To find the value of your investment on 7/1/20, 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 R	Class R6	Class Y
Expenses paid per $1,000^*†	$5.40	$9.20	$9.20	$6.67	$3.62	$4.13
Ending value (after expenses)	$1,019.86	$1,016.08	$1,016.08	$1,018.60	$1,021.63	$1,021.12

^†Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year.

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Consider these risks before investing

The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions; investor sentiment and market perceptions; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry, or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. Growth stocks may be more susceptible to earnings disappointments, and the market may not favor growth-style investing. Investments in small and/or midsize companies increase the risk of greater price fluctuations. International investing involves currency, economic, and political risks. Emerging-market securities have illiquidity and volatility risks. Investing with a focus on companies that exhibit a commitment to sustainable business practices may result in the fund investing in certain types of companies, industries or sectors that underperform the market as a whole. From time to time, the fund may invest a significant portion of its assets in companies in one or more related industries or sectors, which would make the fund more vulnerable to adverse developments affecting those industries or sectors. In evaluating an investment opportunity, we may make investment decisions based on information and data that is incomplete or inaccurate. In addition, a company’s business practices, products or services may change over time. As a result of these possibilities, among others, the fund may temporarily hold securities that are inconsistent with the fund’s sustainable investment criteria. Due to changes in the products or services of the companies in which the fund invests, the fund may temporarily hold securities that are inconsistent with its sustainable investment criteria. Our investment techniques, analyses, and judgments may not produce the outcome we intend. The investments we select for the fund may not perform as well as other securities that we do not select for the fund. We, or the fund’s other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.

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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.

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.

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 closed to new investments and are only available by exchange from another Putnam fund or through dividend and/or capital gains reinvestment. They are not subject to an initial sales charge and 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 R shares are not subject to an initial sales charge or CDSC and are only available to employer-sponsored retirement plans.

Class R6 shares are not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are generally only available to employer-sponsored retirement plans, corporate and institutional clients, and clients in other approved programs.

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

Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities. Source: Bloomberg Index Services Limited.

ICE BofA (Intercontinental Exchange Bank of America) 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.

Russell 3000 Growth Index is an unmanaged index of those companies in the broad-market Russell 3000 Index chosen for their growth orientation.

Russell 3000 Growth – S&P 500 Linked Benchmark represents performance of the Russell 3000 Growth Index from the inception date of the fund, August 31, 1990, through July 31, 2019, and performance of the S&P 500 Index from August 1, 2019, and thereafter.

S&P 500 Index is an unmanaged index of common stock performance.

Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.

BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). BARCLAYS® is a trademark and service mark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Bloomberg or Bloomberg’s licensors, including Barclays, own all proprietary rights in the Bloomberg Barclays Indices. Neither Bloomberg nor Barclays approves or

14 Sustainable Leaders Fund

endorses this material, or guarantees the accuracy of completeness of any information herein, or makes any warranty, express or limited, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

ICE Data Indices, LLC (“ICE BofA”), used with permission. ICE BofA permits use of the ICE BofA indices and related data on an “as is” basis; makes no warranties regarding same; does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the ICE BofA indices or any data included in, related to, or derived therefrom; assumes no liability in connection with the use of the foregoing; and does not sponsor, endorse, or recommend Putnam Investments, or any of its products or services.

Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.

Lipper, a Refinitiv company, 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.

Other information for shareholders

Important notice regarding delivery of shareholder documents

In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.

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, 2020, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.

Prior to its use of Form N-PORT, the fund filed its complete schedule of its portfolio holdings with the SEC on Form N-Q, which is available online at www.sec.gov.

Trustee and employee fund ownership

Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of December 31, 2020, Putnam employees had approximately $541,000,000 and the Trustees had approximately $76,000,000 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, 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 period.

Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.

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.

16 Sustainable Leaders Fund

The fund’s portfolio 12/31/20 (Unaudited)


COMMON STOCKS (98.0%)*	Shares	Value
Airlines (0.5%)
JetBlue Airways Corp. ^†	1,955,700	$28,435,878
		28,435,878
Banks (4.2%)
Bank of America Corp.	5,465,000	165,644,150
First Republic Bank	570,700	83,852,951
		249,497,101
Beverages (1.5%)
Heineken NV (Netherlands)	784,532	87,490,871
		87,490,871
Biotechnology (2.4%)
Amgen, Inc.	361,100	83,024,112
Vertex Pharmaceuticals, Inc. ^†	244,300	57,737,862
		140,761,974
Building products (1.4%)
Johnson Controls International PLC	1,776,300	82,757,817
		82,757,817
Capital markets (2.7%)
BlackRock, Inc.	217,997	157,293,555
		157,293,555
Chemicals (4.5%)
Ecolab, Inc.	271,600	58,763,376
Koninklijke DSM NV (Netherlands)	428,607	73,834,413
Linde PLC	326,200	85,956,962
Novozymes A/S Class B (Denmark)	763,536	43,819,958
		262,374,709
Commercial services and supplies (1.3%)
GFL Environmental, Inc. (Canada) ^S	2,545,955	74,290,967
		74,290,967
Containers and packaging (2.3%)
Avery Dennison Corp.	373,000	57,856,030
Ball Corp.	835,000	77,805,300
		135,661,330
Electric utilities (2.2%)
NextEra Energy, Inc.	899,200	69,373,280
Orsted AS (Denmark)	298,195	60,988,263
		130,361,543
Equity real estate investment trusts (REITs) (2.1%)
American Tower Corp. ^R	229,500	51,513,570
Boston Properties, Inc. ^R	790,300	74,707,059
		126,220,629
Food and staples retail (1.7%)
Walmart, Inc.	712,000	102,634,800
		102,634,800
Food products (0.8%)
McCormick & Co., Inc. (non-voting shares)	519,600	49,673,760
		49,673,760

Sustainable Leaders Fund 17


COMMON STOCKS (98.0%)* cont.	Shares	Value
Health-care equipment and supplies (4.7%)
Baxter International, Inc.	747,500	$59,979,400
Cooper Cos., Inc. (The)	208,500	75,752,220
Danaher Corp.	623,800	138,570,932
		274,302,552
Health-care providers and services (0.7%)
CVS Health Corp.	610,000	41,663,000
		41,663,000
Hotels, restaurants, and leisure (3.8%)
Chipotle Mexican Grill, Inc. ^†	66,400	92,077,544
Hilton Worldwide Holdings, Inc.	797,036	88,678,225
Vail Resorts, Inc.	158,700	44,270,952
		225,026,721
Household durables (—%)
HC Brillant Services GmbH (acquired 8/2/13, cost $69) (Private)
(Germany) ^{† ∆∆ F}	104	95
		95
Independent power and renewable electricity producers (2.2%)
AES Corp. (The)	5,381,000	126,453,500
		126,453,500
Industrial conglomerates (2.8%)
Honeywell International, Inc.	443,953	94,428,803
Roper Technologies, Inc.	162,400	70,009,016
		164,437,819
Insurance (2.8%)
AXA SA (France)	3,525,410	84,577,651
Prudential PLC (United Kingdom)	4,375,794	80,769,438
		165,347,089
Interactive media and services (1.1%)
Alphabet, Inc. Class A ^†	36,900	64,672,416
		64,672,416
Internet and direct marketing retail (5.7%)
Amazon.com, Inc. ^†	89,377	291,094,633
Etsy, Inc. ^†	253,255	45,056,597
		336,151,230
IT Services (5.1%)
Fidelity National Information Services, Inc.	796,500	112,672,890
Okta, Inc. ^{† S}	215,130	54,698,954
Visa, Inc. Class A ^S	617,800	135,131,394
		302,503,238
Leisure products (1.7%)
Hasbro, Inc. ^S	1,043,041	97,566,055
		97,566,055
Life sciences tools and services (1.8%)
Thermo Fisher Scientific, Inc.	229,500	106,896,510
		106,896,510
Machinery (1.2%)
Stanley Black & Decker, Inc.	390,700	69,763,392
		69,763,392

18 Sustainable Leaders Fund


COMMON STOCKS (98.0%)* cont.	Shares	Value
Multi-utilities (0.5%)
Ameren Corp.	357,900	$27,937,674
		27,937,674
Multiline retail (1.6%)
Target Corp.	549,600	97,020,888
		97,020,888
Personal products (1.7%)
Unilever PLC (United Kingdom)	1,699,270	102,892,645
		102,892,645
Pharmaceuticals (3.2%)
AstraZeneca PLC (United Kingdom)	511,588	51,112,232
Eli Lilly and Co.	168,300	28,415,772
Merck & Co., Inc.	725,600	59,354,080
Roche Holding AG (Switzerland)	145,054	50,610,483
		189,492,567
Road and rail (1.7%)
Union Pacific Corp.	471,900	98,259,018
		98,259,018
Semiconductors and semiconductor equipment (6.5%)
Applied Materials, Inc.	700,100	60,418,630
ASML Holding NV (Netherlands)	201,400	98,226,808
First Solar Inc. ^†	491,507	48,619,872
NXP Semiconductors NV	473,700	75,323,037
Texas Instruments, Inc.	578,500	94,949,205
		377,537,552
Software (12.0%)
Adobe, Inc. ^†	277,900	138,983,348
DocuSign, Inc. ^†	273,400	60,776,820
Microsoft Corp.	1,893,500	421,152,271
Salesforce.com, Inc. ^†	121,700	27,081,901
Talend SA ADR ^{† S}	1,292,750	49,564,035
		697,558,375
Specialty retail (1.7%)
Home Depot, Inc. (The)	385,900	102,502,758
		102,502,758
Technology hardware, storage, and peripherals (6.5%)
Apple, Inc.	2,895,828	384,247,417
		384,247,417
Textiles, apparel, and luxury goods (1.4%)
Levi Strauss & Co. Class A ^S	4,182,742	83,989,459
		83,989,459
Total common stocks (cost $3,248,562,441)		$5,763,676,904


	Expiration	Strike
WARRANTS (—%)* ^†	date	price	Warrants	Value
Seneca Biopharma, Inc. Ser. K, (acquired 4/20/17,
cost $—) ^∆∆	1/9/22	$946.40	55,497	$—
Total warrants (cost $—)				$—

Sustainable Leaders Fund 19


CONVERTIBLE PREFERRED STOCKS (—%)*	Shares	Value
UNEXT.com, LLC $0.00 cv. pfd. (acquired 4/14/00, cost $10,451,238)
(Private) ^{† ∆∆ F}	$125,000	$—
Total convertible preferred stocks (cost $10,451,238)		$—


	Principal amount/
SHORT-TERM INVESTMENTS (4.4%)*		shares	Value
Putnam Cash Collateral Pool, LLC 0.14% ^d	Shares	138,264,320	$138,264,320
Putnam Short Term Investment Fund Class P 0.17% ^L	Shares	117,983,307	117,983,307
U.S. Treasury Bills 0.079%, 3/18/21 ^∆		$2,600,000	2,599,631
Total short-term investments (cost $258,847,202)			$258,847,258


TOTAL INVESTMENTS
Total investments (cost $3,517,860,881)	$6,022,524,162

Key to holding’s abbreviations


ADR	American Depository Receipts: represents ownership of foreign securities on deposit with a custodian bank

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 July 1, 2020 through December 31, 2020 (the reporting period). Within the following notes to the portfolio, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures.

^*Percentages indicated are based on net assets of $5,880,324,697.

^†This security is non-income-producing.

^∆∆This security is restricted with regard to public resale. The total fair value of this security and any other restricted securities (excluding 144A securities), if any, held at the close of the reporting period was $95, or less than 0.1% of net assets.

^∆This security, in part or in entirety, was pledged and segregated with the custodian for collateral on certain derivative contracts at the close of the reporting period. Collateral at period end totaled $1,559,688 and is included in Investments in securities on the Statement of assets and liabilities (Notes 1 and 8).

^dAffiliated company. See Notes 1 and 5 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

^FThis security is valued by Putnam Management at fair value following procedures approved by the Trustees. Securities are classified as Level 3 for ASC 820 based on the securities’ valuation inputs. At the close of the reporting period, fair value pricing was also used for certain foreign securities in the portfolio (Note 1).

^LAffiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

^RReal Estate Investment Trust.

^SSecurity on loan, in part or in entirety, at the close of the reporting period (Note 1).

At the close of the reporting period, the fund maintained liquid assets totaling $1,229,996 to cover certain derivative contracts.

Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.

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

20 Sustainable Leaders Fund


FORWARD CURRENCY CONTRACTS at 12/31/20 (aggregate face value $152,268,173) (Unaudited)
						Unrealized
		Contract	Delivery		Aggregate	appreciation/
Counterparty	Currency	type^*	date	Value	face value	(depreciation)
Bank of America N.A.
	British Pound	Sell	3/17/21	$16,081,913	$15,841,297	$(240,616)
Barclays Bank PLC
	British Pound	Sell	3/17/21	4,197,512	4,099,223	(98,289)
HSBC Bank USA, National Association
	British Pound	Sell	3/17/21	2,474,782	2,437,681	(37,101)
JPMorgan Chase Bank N.A.
	Euro	Sell	3/17/21	58,115,744	57,835,376	(280,368)
State Street Bank and Trust Co.
	Euro	Sell	3/17/21	20,154,022	20,017,445	(136,577)
UBS AG
	Euro	Sell	3/17/21	52,282,670	52,037,151	(245,519)
Unrealized appreciation						—
Unrealized (depreciation)						(1,038,470)
Total						$(1,038,470)

^*The exchange currency for all contracts listed is the United States Dollar.

Sustainable Leaders Fund 21

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^*:
Communication services	$64,672,416	$—		$—
Consumer discretionary	942,257,111	—		95
Consumer staples	255,201,205	87,490,871		—
Financials	406,790,656	165,347,089		—
Health care	651,393,888	101,722,715		—
Industrials	517,944,891	—		—
Information technology	1,761,846,582	—		—
Materials	280,381,668	117,654,371		—
Real estate	126,220,629	—		—
Utilities	223,764,454	60,988,263		—
Total common stocks	5,230,473,500	533,203,309		95

Convertible preferred stocks	—	—		—
Warrants	—	—		—
Short-term investments	117,983,307	140,863,951		—
Totals by level	$5,348,456,807	$674,067,260		$95

			Valuation inputs
Other financial instruments:	Level 1	Level 2		Level 3
Forward currency contracts	$—	$(1,038,470)		$—
Totals by level	$—	$(1,038,470)		$—

^*Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation.

At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio.

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

22 Sustainable Leaders Fund

Statement of assets and liabilities 12/31/20 (Unaudited)


ASSETS
Investment in securities, at value, including $135,373,716 of securities on loan (Notes 1 and 8):
Unaffiliated issuers (identified cost $3,261,613,254)	$5,766,276,535
Affiliated issuers (identified cost $256,247,627) (Note 5)	256,247,627
Cash	11
Foreign currency (cost $47) (Note 1)	48
Dividends, interest and other receivables	5,215,215
Foreign tax reclaim	955,718
Receivable for shares of the fund sold	3,777,017
Prepaid assets	61,841
Total assets	6,032,534,012

LIABILITIES
Payable for shares of the fund repurchased	2,450,354
Payable for compensation of Manager (Note 2)	3,118,926
Payable for custodian fees (Note 2)	61,330
Payable for investor servicing fees (Note 2)	1,363,704
Payable for Trustee compensation and expenses (Note 2)	2,258,073
Payable for administrative services (Note 2)	65,125
Payable for distribution fees (Note 2)	3,323,256
Unrealized depreciation on forward currency contracts (Note 1)	1,038,470
Collateral on securities loaned, at value (Note 1)	138,264,320
Other accrued expenses	265,757
Total liabilities	152,209,315

Net assets	$5,880,324,697

REPRESENTED BY
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)	$3,164,306,516
Total distributable earnings (Note 1)	2,716,018,181
Total — Representing net assets applicable to capital shares outstanding	$5,880,324,697

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
Net asset value and redemption price per class A share
($5,363,339,933 divided by 47,667,964 shares)	$112.51
Offering price per class A share (100/94.25 of $112.51)^*	$119.37
Net asset value and offering price per class B share ($33,779,813 divided by 431,520 shares)^**	$78.28
Net asset value and offering price per class C share ($42,781,989 divided by 483,546 shares)^**	$88.48
Net asset value, offering price and redemption price per class R share
($9,244,792 divided by 86,116 shares)	$107.35
Net asset value, offering price and redemption price per class R6 share
($88,966,607 divided by 720,673 shares)	$123.45
Net asset value, offering price and redemption price per class Y share
($342,211,563 divided by 2,778,705 shares)	$123.16

^*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.

Sustainable Leaders Fund 23

Statement of operations Six months ended 12/31/20 (Unaudited)


INVESTMENT INCOME
Dividends (net of foreign tax of $862,652)	$31,787,936
Interest (including interest income of $113,415 from investments in affiliated issuers) (Note 5)	113,793
Securities lending (net of expenses) (Notes 1 and 5)	223,522
Total investment income	32,125,251

EXPENSES
Compensation of Manager (Note 2)	17,520,678
Investor servicing fees (Note 2)	4,016,289
Custodian fees (Note 2)	64,803
Trustee compensation and expenses (Note 2)	120,534
Distribution fees (Note 2)	6,710,834
Administrative services (Note 2)	96,281
Other	570,125
Total expenses	29,099,544
Expense reduction (Note 2)	(4,450)
Net expenses	29,095,094

Net investment income	3,030,157

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities from unaffiliated issuers (Notes 1 and 3)	295,874,066
Foreign currency transactions (Note 1)	26,370
Forward currency contracts (Note 1)	(8,952,419)
Total net realized gain	286,948,017
Change in net unrealized appreciation (depreciation) on:
Securities from unaffiliated issuers	851,210,437
Assets and liabilities in foreign currencies	82,391
Forward currency contracts	(1,018,955)
Total change in net unrealized appreciation	850,273,873

Net gain on investments	1,137,221,890

Net increase in net assets resulting from operations	$1,140,252,047

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

24 Sustainable Leaders Fund

Statement of changes in net assets


INCREASE IN NET ASSETS	Six months ended 12/31/20*	Year ended 6/30/20
Operations
Net investment income	$3,030,157	$11,574,264
Net realized gain on investments
and foreign currency transactions	286,948,017	327,514,877
Change in net unrealized appreciation of investments
and assets and liabilities in foreign currencies	850,273,873	250,852,336
Net increase in net assets resulting from operations	1,140,252,047	589,941,477
Distributions to shareholders (Note 1):
From ordinary income
Net investment income
Class A	(14,836,252)	(14,107,553)
Class R	(11,977)	(10,179)
Class R6	(467,043)	(441,234)
Class Y	(1,520,344)	(1,118,028)
Net realized short-term gain on investments
Class A	(21,181,876)	(23,588,192)
Class B	(192,033)	(290,263)
Class C	(211,035)	(247,753)
Class R	(42,368)	(49,012)
Class R6	(320,374)	(356,830)
Class Y	(1,217,303)	(1,092,809)
From net realized long-term gain on investments
Class A	(336,675,646)	(267,272,358)
Class B	(3,052,274)	(3,288,903)
Class C	(3,354,300)	(2,807,237)
Class R	(673,413)	(555,340)
Class R6	(5,092,193)	(4,043,155)
Class Y	(19,348,436)	(12,382,366)
Increase (decrease) from capital share transactions (Note 4)	191,964,232	(26,970,876)
Total increase in net assets	924,019,412	231,319,389

NET ASSETS
Beginning of period	4,956,305,285	4,724,985,896
End of period	$5,880,324,697	$4,956,305,285

^*Unaudited.

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

Sustainable Leaders Fund 25

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


	INVESTMENT OPERATIONS				LESS DISTRIBUTIONS							RATIOS AND SUPPLEMENTAL DATA
														Ratio of net
	Net asset	Net	Net realized			From							Ratio of	investment
	value,	investment	and unrealized	Total from	From net	net realized			Non-recurring	Net asset	Total return	Net assets,	expenses	income (loss)
	beginning	income	gain (loss) on	investment	investment	gain on	From return	Total	reimburse-	value, end	at net asset	end of period	to average	to average	Portfolio
Period ended	of period	(loss)^a	investments	operations	income	investments	of capital	distributions	ments	of period	value (%)^b	(in thousands)	net assets (%)^c	net assets (%)	turnover (%)
Class A
December 31, 2020^**	$98.08	.06	22.71	22.77	(.33)	(8.01)	—	(8.34)	—	$112.51	23.39^*	$5,363,340	.53^*	.05^*	8^*
June 30, 2020	92.99	.23	11.58	11.81	(.31)	(6.41)	—	(6.72)	—	98.08	13.30	4,535,812	1.03	.25	44
June 30, 2019	95.86	.14	12.06	12.20	(.04)	(15.03)	—	(15.07)	—^g	92.99	15.46	4,298,012	1.04	.16	30
June 30, 2018	83.77	.04	16.44	16.48	(.45)	(3.94)	—	(4.39)	—	95.86	20.16	4,085,165	.99	.04	87
June 30, 2017	67.21	.30^e	16.26	16.56	—	—	—	—	—	83.77	24.64	3,648,574	1.01	.40^e	76
June 30, 2016	78.35	.05	(2.64)	(2.59)	(.39)	(8.11)	(.05)	(8.55)	—	67.21	(3.56)	3,221,906	1.03^d	.07^d	58
Class B
December 31, 2020^**	$70.32	(.25)	16.22	15.97	—	(8.01)	—	(8.01)	—	$78.28	22.94^*	$33,780	.91^*	(.33)^*	8^*
June 30, 2020	68.68	(.35)	8.40	8.05	—	(6.41)	—	(6.41)	—	70.32	12.45	33,752	1.78	(.52)	44
June 30, 2019	75.26	(.41)	8.86	8.45	—	(15.03)	—	(15.03)	—^g	68.68	14.60	43,671	1.79	(.60)	30
June 30, 2018	66.70	(.52)	13.02	12.50	—	(3.94)	—	(3.94)	—	75.26	19.26	51,481	1.74	(.72)	87
June 30, 2017	53.91	(.21)^e	13.00	12.79	—	—	—	—	—	66.70	23.72	57,979	1.76	(.35)^e	76
June 30, 2016	64.63	(.39)	(2.17)	(2.56)	—	(8.11)	(.05)	(8.16)	—	53.91	(4.30)	63,183	1.78^d	(.68)^d	58
Class C
December 31, 2020^**	$78.62	(.29)	18.16	17.87	—	(8.01)	—	(8.01)	—	$88.48	22.93^*	$42,782	.91^*	(.33)^*	8^*
June 30, 2020	76.05	(.38)	9.36	8.98	—	(6.41)	—	(6.41)	—	78.62	12.47	38,033	1.78	(.51)	44
June 30, 2019	81.69	(.45)	9.84	9.39	—	(15.03)	—	(15.03)	—^g	76.05	14.60	38,196	1.79	(.59)	30
June 30, 2018	72.09	(.58)	14.12	13.54	—	(3.94)	—	(3.94)	—	81.69	19.26	34,733	1.74	(.74)	87
June 30, 2017	58.28	(.23)^e	14.04	13.81	—	—	—	—	—	72.09	23.70	66,307	1.76	(.35)^e	76
June 30, 2016	69.19	(.41)	(2.34)	(2.75)	—	(8.11)	(.05)	(8.16)	—	58.28	(4.29)	60,469	1.78^d	(.68)^d	58
Class R
December 31, 2020^**	$93.85	(.08)	21.72	21.64	(.13)	(8.01)	—	(8.14)	—	$107.35	23.24^*	$9,245	.66^*	(.08)^*	8^*
June 30, 2020	89.28	(.01)	11.10	11.09	(.11)	(6.41)	—	(6.52)	—	93.85	13.01	8,167	1.28	(.02)	44
June 30, 2019	92.81	(.08)	11.58	11.50	—	(15.03)	—	(15.03)	—^g	89.28	15.18	8,443	1.29	(.10)	30
June 30, 2018	81.27	(.19)	15.94	15.75	(.27)	(3.94)	—	(4.21)	—	92.81	19.85	8,210	1.24	(.22)	87
June 30, 2017	65.36	.11^e	15.80	15.91	—	—	—	—	—	81.27	24.34	7,930	1.26	.15^e	76
June 30, 2016	76.43	(.12)	(2.59)	(2.71)	(.20)	(8.11)	(.05)	(8.36)	—	65.36	(3.82)	6,378	1.28^d	(.17)^d	58
Class R6
December 31, 2020^**	$107.06	.27	24.82	25.09	(.69)	(8.01)	—	(8.70)	—	$123.45	23.61^*	$88,967	.36^*	.23^*	8^*
June 30, 2020	100.88	.61	12.62	13.23	(.64)	(6.41)	—	(7.05)	—	107.06	13.71	74,725	.66	.61	44
June 30, 2019	102.51	.52	13.09	13.61	(.21)	(15.03)	—	(15.24)	—^g	100.88	15.89	68,654	.67	.53	30
June 30, 2018^†	103.52	.01	(1.02)	(1.01)	—	—	—	—	—	102.51	(.98)^*	58,846	.07^*	-^f*	87
Class Y
December 31, 2020^**	$106.79	.21	24.76	24.97	(.59)	(8.01)	—	(8.60)	—	$123.16	23.55^*	$342,212	.41^*	.18^*	8^*
June 30, 2020	100.64	.50	12.59	13.09	(.53)	(6.41)	—	(6.94)	—	106.79	13.59	265,816	.78	.51	44
June 30, 2019	102.50	.40	13.05	13.45	(.28)	(15.03)	—	(15.31)	—^g	100.64	15.74	208,467	.79	.41	30
June 30, 2018	89.27	.29	17.55	17.84	(.67)	(3.94)	—	(4.61)	—	102.50	20.46	178,886	.74	.30	87
June 30, 2017	71.44	.52^e	17.31	17.83	—	—	—	—	—	89.27	24.96	199,737	.76	.64^e	76
June 30, 2016	82.75	.24	(2.80)	(2.56)	(.59)	(8.11)	(.05)	(8.75)	—	71.44	(3.32)	142,456	.78^d	.32^d	58

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

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


26 Sustainable Leaders Fund	Sustainable Leaders Fund 27

Financial highlights cont.

Before March 21, 2018, the fund was managed with a materially different investment strategy and may have achieved materially different performance results under its current investment strategy from that shown for periods before that date.

^*Not annualized.

^**Unaudited.

^†For the period May 22, 2018 (commencement of operations) to June 30, 2018.

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

^bTotal return assumes dividend reinvestment and does not reflect the effect of sales charges.

^cIncludes amounts paid through expense offset and/or brokerage/service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.

^dReflects a voluntary waiver of certain fund expenses in effect during the period. As a result of such waiver, the expenses of each class reflect a reduction of less than 0.01% as a percentage of average net assets.

^eReflects a dividend received by the fund from a single issuer which amounted to the following amounts:


	Per share	Percentage of average net assets
Class A	$0.22	0.29%
Class B	0.18	0.30
Class C	0.19	0.29
Class R	0.21	0.28
Class Y	0.22	0.27

^fAmount represents less than 0.01%.

^gReflects a non-recurring reimbursement pursuant to a settlement between the Securities and Exchange Commission (the SEC) and Canadian Imperial Holdings, Inc. and CIBC World Markets Corp., which amounted to less than $0.01 per share outstanding on March 6, 2019.

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

28 Sustainable Leaders Fund

Notes to financial statements 12/31/20 (Unaudited)

Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from July 1, 2020 through December 31, 2020.

Putnam Sustainable Leaders Fund (the fund) 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 goal of the fund is to seek long-term capital appreciation. The fund invests mainly in common stocks of U.S. companies of any size, with a focus on companies that Putnam Management believes exhibit a commitment to sustainable business practices. Stocks of companies that exhibit a commitment to sustainable business practices are typically, but not always, considered to be growth stocks. Growth stocks are stocks of companies whose earnings are expected to grow faster than those of similar firms, and whose business growth and other characteristics may lead to an increase in stock price. Putnam Management considers, among other factors, a company’s sustainable business practices (as described below), valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments. The fund may also invest in non-U.S. companies.

Sustainable investing. Putnam Management believes that companies that exhibit leadership in sustainable business practices also often exhibit more profitable, durable financial returns with lower risk profiles. Accordingly, in selecting investments, Putnam Management focuses on companies that it believes have a demonstrated commitment to sustainable business practices in areas that are relevant and material to their long-term financial returns and risk profiles. This commitment may be reflected through environmental, social and/or corporate governance (ESG) policies, practices or outcomes. The fund’s approach to sustainable investing incorporates fundamental research together with consideration of ESG factors. Environmental factors include, for example, a company’s carbon intensity and use of resources like water or minerals. Sustainability measures in the area might include plans to reduce waste, increase recycling, or improve product design to be less resource intensive. Social factors include, for example, labor practices and supply chain management. Sustainability measures in this area might include programs to improve employee well-being, commitment to workplace equality and diversity, or improved stewardship of supplier relationships and working conditions. Corporate governance factors include, for example, board composition and executive compensation. Sustainability measures in this area might include improvements in board independence or diversity, or alignment of management incentives with the company’s strategic sustainability objectives. It is likely that sustainable business practices, as well as the metrics and measurements that Putnam Management uses to evaluate them, will continue to evolve over time.

The fund offers class A, class B, class C, class R, class R6 and class Y shares. Purchases of class B shares are closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class A shares generally are not subject to a contingent deferred sales charge, and class R, class R6 and class Y shares are not subject to a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, are not subject to 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 are subject to a one-year 1.00% contingent deferred sales charge and generally convert to class A shares after approximately ten years. 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 and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class R6 and class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C and class R shares, but do not bear a distribution fee, and in the case of class R6 shares, bear a lower investor servicing fee, which is identified in Note 2. Class R6 and class Y shares are not available to all investors.

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

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these

Sustainable Leaders Fund 29

contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

Note 1: Significant accounting policies

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

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.

Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.

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 under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.

Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.

Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.

Many securities markets and exchanges outside the U.S. close prior to the scheduled 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 scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value certain 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. The foreign equity securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. 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. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.

30 Sustainable Leaders Fund

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 in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.

Interest income, net of any applicable withholding taxes, if any, and including amortization and accretion of premiums and discounts on debt securities, is recorded on the accrual basis. Dividend income, net of any 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 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.

Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.

Forward currency contracts The fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to hedge foreign exchange risk.

The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities.

Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other

Sustainable Leaders Fund 31

things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral pledged to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio.

Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.

Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.

At the close of the reporting period, the fund had a net liability position of $1,038,470 on open derivative contracts subject to the Master Agreements. Collateral pledged by the fund at period end for these agreements totaled $1,559,688 and may include amounts related to unsettled agreements.

Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The remaining maturities of the securities lending transactions are considered overnight and continuous. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending, net of expenses, is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $138,264,320 and the value of securities loaned amounted to $135,373,716.

Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment 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.

Lines of credit The fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 million unsecured uncommitted line of credit, both provided by 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 1.25% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate (overnight LIBOR prior to October 16, 2020) for the committed line of credit and 1.30% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate (1.30% prior to October 16, 2020) for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% 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.

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

The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains

32 Sustainable Leaders Fund

or unrealized appreciation on securities held nor for 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.

The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.

Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The aggregate identified cost on a tax basis is $3,544,043,894, resulting in gross unrealized appreciation and depreciation of $2,511,472,822 and $34,031,024, respectively, or net unrealized appreciation of $2,477,441,798.

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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. 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.

Note 2: Management fee, administrative services and other transactions

The fund pays Putnam Management a management fee (base 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 all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:


0.710%	of the first $5 billion,	0.510%	of the next $50 billion,
0.660%	of the next $5 billion,	0.490%	of the next $50 billion,
0.610%	of the next $10 billion,	0.480%	of the next $100 billion and
0.560%	of the next $10 billion,	0.475%	of any excess thereafter.

In addition, the monthly management fee consists of the monthly base fee plus or minus a performance adjustment for the month. The performance adjustment is determined based on performance over the thirty-six month period then ended. Each month, the performance adjustment is calculated by multiplying the performance adjustment rate and the fund’s average net assets over the performance period and dividing the result by twelve. The resulting dollar amount is added to, or subtracted from the base fee for that month. The performance adjustment rate is equal to 0.03 multiplied by the difference between the fund’s annualized performance (measured by the fund’s class A shares) and the annualized performance of the benchmark indices described below each measured over the performance period. The maximum annualized performance adjustment rate is +/–0.12% The monthly base fee is determined based on the fund’s average net assets for the month, while the performance adjustment is determined based on the fund’s average net assets over the thirty-six month performance period. This means it is possible that, if the fund underperforms significantly over the performance period, and the fund’s assets have declined significantly over that period, the negative performance adjustment may exceed the base fee. In this event, Putnam Management would make a payment to the fund.

Effective August 1, 2019, the fund’s benchmark index is the S&P 500 Index. Before August 1, 2019, the fund’s benchmark index was the Russell 3000 Growth Index. Because the performance adjustment is based on a rolling thirty-six-month performance period, there is a transition period during which the fund’s performance is compared to a composite index that reflects the performance of the Russell 3000 Growth Index for the portion of the performance period before August 1, 2019, and the performance of the S&P 500 Index for the remainder of the period.

Because the performance adjustment is based on the fund’s performance relative to its applicable benchmark index, and not its absolute performance, the performance adjustment could increase Putnam Management’s

Sustainable Leaders Fund 33

fee even if the fund’s shares lose value during the performance period provided that the fund outperformed its benchmark index, and could decrease Putnam Management’s fee even if the fund’s shares increase in value during the performance period provided that the fund underperformed its benchmark index.

For the reporting period, the management fee represented an effective rate (excluding the impact of any expense waiver in effect) of 0.319% of the fund’s average net assets, which included an effective base fee of 0.275% and an increase of 0.044% ($2,401,395) based on performance.

Putnam Management has contractually agreed, through October 30, 2021 to waive fees and/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, acquired fund fees and 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 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. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% 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 for class A, class B, class C, class R and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribution account (retail account) of the fund; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts.

Class R6 shares paid a monthly fee based on the average net assets of class R6 shares at an annual rate of 0.05%.

During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:


Class A	$3,709,074	Class R6	20,608
Class B	25,241	Class Y	224,660
Class C	30,006	Total	$4,016,289
Class R	6,700

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. For the reporting period, the fund’s expenses were reduced by $4,450 under the expense offset arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $3,753, 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.

34 Sustainable Leaders Fund

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 the following share classes 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, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (Maximum %) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (Approved %) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:


	Maximum %	Approved %	Amount
Class A	0.35%	0.25%	$6,312,088
Class B	1.00%	1.00%	171,713
Class C	1.00%	1.00%	204,230
Class R	1.00%	0.50%	22,803
Total			$6,710,834

For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $115,246 from the sale of class A shares and received $2,738 and $561 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.

A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $283 on class A redemptions.

Note 3: Purchases and sales of securities

During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:


	Cost of purchases	Proceeds from sales
Investments in securities (Long-term)	$433,135,941	$644,017,265
U.S. government securities (Long-term)	—	—
Total	$433,135,941	$644,017,265

The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.

Sustainable Leaders Fund 35

Note 4: Capital shares

At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions, including, if applicable, direct exchanges pursuant to share conversions, in capital shares were as follows:


	SIX MONTHS ENDED 12/31/20		YEAR ENDED 6/30/20
Class A	Shares	Amount	Shares	Amount
Shares sold	489,136	$53,631,041	1,539,127	$144,405,024
Shares issued in connection with
reinvestment of distributions	3,191,474	351,764,301	3,176,055	287,841,981
	3,680,610	405,395,342	4,715,182	432,247,005
Shares repurchased	(2,256,507)	(247,558,329)	(4,690,680)	(428,582,779)
Net increase	1,424,103	$157,837,013	24,502	$3,664,226

	SIX MONTHS ENDED 12/31/20		YEAR ENDED 6/30/20
Class B	Shares	Amount	Shares	Amount
Shares sold	2,854	$220,409	10,051	$654,905
Shares issued in connection with
reinvestment of distributions	41,795	3,206,536	54,365	3,547,322
	44,649	3,426,945	64,416	4,202,227
Shares repurchased	(93,068)	(7,203,364)	(220,338)	(14,574,867)
Net decrease	(48,419)	$(3,776,419)	(155,922)	$(10,372,640)

	SIX MONTHS ENDED 12/31/20		YEAR ENDED 6/30/20
Class C	Shares	Amount	Shares	Amount
Shares sold	31,271	$2,748,437	110,622	$8,208,240
Shares issued in connection with
reinvestment of distributions	40,814	3,538,960	40,595	2,961,391
	72,085	6,287,397	151,217	11,169,631
Shares repurchased	(72,309)	(6,286,538)	(169,667)	(12,566,320)
Net increase (decrease)	(224)	$859	(18,450)	$(1,396,689)


	YEAR ENDED 6/30/20^*
Class M	Shares	Amount
Shares sold	3,163	$248,225
Shares issued in connection with reinvestment of distributions	—	—
	3,163	248,225
Shares repurchased	(766,326)	(62,447,659)
Net decrease	(763,163)	$(62,199,434)


	SIX MONTHS ENDED 12/31/20		YEAR ENDED 6/30/20
Class R	Shares	Amount	Shares	Amount
Shares sold	10,319	$1,089,426	19,347	$1,671,060
Shares issued in connection with
reinvestment of distributions	6,914	727,197	7,071	614,082
	17,233	1,816,623	26,418	2,285,142
Shares repurchased	(18,133)	(1,858,795)	(33,975)	(3,023,076)
Net decrease	(900)	$(42,172)	(7,557)	$(737,934)

36 Sustainable Leaders Fund


	SIX MONTHS ENDED 12/31/20		YEAR ENDED 6/30/20
Class R6	Shares	Amount	Shares	Amount
Shares sold	44,100	$5,356,883	146,610	$14,681,376
Shares issued in connection with
reinvestment of distributions	48,611	5,877,078	49,045	4,841,219
	92,711	11,233,961	195,655	19,522,595
Shares repurchased	(70,028)	(8,359,199)	(178,235)	(17,650,129)
Net increase	22,683	$2,874,762	17,420	$1,872,466

	SIX MONTHS ENDED 12/31/20		YEAR ENDED 6/30/20
Class Y	Shares	Amount	Shares	Amount
Shares sold	373,665	$44,784,785	782,097	$77,788,340
Shares issued in connection with
reinvestment of distributions	179,072	21,599,617	144,198	14,207,822
	552,737	66,384,402	926,295	91,996,162
Shares repurchased	(263,155)	(31,314,213)	(508,482)	(49,797,033)
Net increase	289,582	$35,070,189	417,813	$42,199,129

^*Effective November 25, 2019, the fund converted all of its class M shares to class A shares and class M shares were no longer able to be purchased.

Note 5: Affiliated transactions

Transactions during the reporting period with any company which is under common ownership or control were as follows:


					Shares
					outstanding
					and fair
	Fair value as	Purchase	Sale	Investment	value as
Name of affiliate	of 6/30/20	cost	proceeds	income	of 12/31/20
Short-term investments
Putnam Cash Collateral
Pool, LLC^*	$270,949,625	$823,274,894	$955,960,199	$266,694	$138,264,320
Putnam Short Term
Investment Fund^**	133,724,785	431,185,689	446,927,167	113,415	117,983,307
Total Short-term
investments	$404,674,410	$1,254,460,583	$1,402,887,366	$380,109	$256,247,627

^*No management fees are charged to Putnam Cash Collateral Pool, LLC (Note 1). Investment income shown is included in securities lending income on the Statement of operations. There were no realized or unrealized gains or losses during the period.

^**Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.

Note 6: Market, credit and other risks

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.

Sustainable Leaders Fund 37

Beginning in January 2020, global financial markets have experienced, and may continue to experience, significant volatility resulting from the spread of a virus known as COVID–19. The outbreak of COVID–19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand, and general market uncertainty. The effects of COVID–19 have adversely affected, and may continue to adversely affect, the global economy, the economies of certain nations, and individual issuers, all of which may negatively impact the fund’s performance.

Note 7: Summary of derivative activity

The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:


Forward currency contracts (contract amount)	$142,300,000
Warrants (number of warrants)	55,000

The following is a summary of the fair value of derivative instruments as of the close of the reporting period:


Fair value of derivative instruments as of the close of the reporting period
	ASSET DERIVATIVES		LIABILITY DERIVATIVES
Derivatives not
accounted for as	Statement of		Statement of
hedging instruments	assets and		assets and
under ASC 815	liabilities location	Fair value	liabilities location	Fair value
Foreign exchange
contracts	Receivables	$—	Payables	$1,038,470
Equity contracts	Investments	—	Payables	—
Total		$—		$1,038,470

The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):


Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments
Derivatives not accounted		Forward
for as hedging instruments		currency
under ASC 815	Warrants	contracts	Total
Foreign exchange contracts	$—	$(8,952,419)	$(8,952,419)
Equity contracts	—	—	—
Total	$—	$(8,952,419)	$(8,952,419)


Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss)
on investments
Derivatives not accounted		Forward
for as hedging instruments		currency
under ASC 815	Warrants	contracts	Total
Foreign exchange contracts	$—	$(1,018,955)	$(1,018,955)
Equity contracts	—	—	—
Total	$—	$(1,018,955)	$(1,018,955)

38 Sustainable Leaders Fund

Note 8: Offsetting of financial and derivative assets and liabilities

The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.


	Bank of America N.A.	Barclays Bank PLC	HSBC Bank USA, National Association	JPMorgan Chase Bank N.A.	State Street Bank and Trust Co.	UBS AG	Total
Assets:
Forward currency	$—	$—	$—	$—	$—	$—	$—
contracts^#
Total Assets	$—	$—	$—	$—	$—	$—	$—
Liabilities:
Forward currency	240,616	98,289	37,101	280,368	136,577	245,519	1,038,470
contracts^#
Total Liabilities	$240,616	$98,289	$37,101	$280,368	$136,577	$245,519	$1,038,470
Total Financial
and Derivative	$(240,616)	$(98,289)	$(37,101)	$(280,368)	$(136,577)	$(245,519)	$(1,038,470)
Net Assets
Total collateral	$(160,968)	$—	$—	$(280,368)	$(136,577)	$(245,519)
received (pledged)^†##
Net amount	$(79,648)	$(98,289)	$(37,101)	$—	$—	$—
Controlled collateral
received (including	$—	$—	$—	$—	$—	$—	$—
TBA commitments)^**
Uncontrolled
collateral received	$—	$—	$—	$—	$—	$—	$—
Collateral (pledged)
(including TBA	$(160,968)	$—	$—	$(627,874)	$(191,962)	$(578,884)	$(1,559,688)
commitments)^**

^**Included with Investments in securities on the Statement of assets and liabilities.

^†Additional collateral may be required from certain brokers based on individual agreements.

^#Covered by master netting agreement (Note 1).

^##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.

Sustainable Leaders Fund 39

Putnam family of funds

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


Blend	Income
Emerging Markets Equity Fund	Convertible Securities Fund
Focused Equity Fund	Diversified Income Trust
Global Equity Fund	Floating Rate Income Fund
International Capital Opportunities Fund	Global Income Trust
International Equity Fund	Government Money Market Fund^*
Multi-Cap Core Fund	High Yield Fund
Research Fund	Income Fund
	Money Market Fund^†
Global Sector	Mortgage Opportunities Fund
Global Health Care Fund	Mortgage Securities Fund
Global Technology Fund	Short Duration Bond Fund
	Ultra Short Duration Income Fund
Growth
Growth Opportunities Fund	Tax-free Income
Small Cap Growth Fund	Intermediate-Term Municipal Income Fund
Sustainable Future Fund	Short-Term Municipal Income Fund
Sustainable Leaders Fund	Strategic Intermediate Municipal Fund
	Tax Exempt Income Fund
Value	Tax-Free High Yield Fund
Equity Income Fund
International Value Fund	State tax-free income funds^‡:
Small Cap Value Fund	California, Massachusetts, Minnesota,
	New Jersey, New York, Ohio, and Pennsylvania.

40 Sustainable Leaders Fund


Absolute Return	Asset Allocation (cont.)
Fixed Income Absolute Return Fund	Putnam Retirement Advantage Maturity Fund
Multi-Asset Absolute Return Fund	Putnam Retirement Advantage 2060 Fund
	Putnam Retirement Advantage 2055 Fund
Putnam PanAgora^**	Putnam Retirement Advantage 2050 Fund
Putnam PanAgora Managed Futures Strategy	Putnam Retirement Advantage 2045 Fund
Putnam PanAgora Market Neutral Fund	Putnam Retirement Advantage 2040 Fund
Putnam PanAgora Risk Parity Fund	Putnam Retirement Advantage 2035 Fund
	Putnam Retirement Advantage 2030 Fund
Asset Allocation	Putnam Retirement Advantage 2025 Fund
Dynamic Risk Allocation Fund
George Putnam Balanced Fund	RetirementReady^® Maturity Fund
	RetirementReady^® 2060 Fund
Dynamic Asset Allocation Balanced Fund	RetirementReady^® 2055 Fund
Dynamic Asset Allocation Conservative Fund	RetirementReady^® 2050 Fund
Dynamic Asset Allocation Growth Fund	RetirementReady^® 2045 Fund
	RetirementReady^® 2040 Fund
	RetirementReady^® 2035 Fund
	RetirementReady^® 2030 Fund
	RetirementReady^® 2025 Fund

^*You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.

^†You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.

^‡Not available in all states.

^**Sub-advised by PanAgora Asset Management.

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

Sustainable Leaders Fund 41

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.

42 Sustainable Leaders Fund

Putnam’s commitment to confidentiality

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.

Within the Putnam organization, your information is shared with those who need it to service your account or provide you with information about other Putnam products or services. Under certain circumstances, we must also 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. It is also our policy to share account information with your financial advisor, if you've provided us with information about your advisor and that person is listed on your Putnam account.

If you would like clarification about our confidentiality policies or have any questions or concerns, please don't hesitate to contact us at 1-800-225-1581, Monday through Friday, 8:00 a.m. to 8:00 p.m. Eastern Time.

Sustainable Leaders Fund 43

Fund information

Founded over 80 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage funds across income, value, blend, growth, sustainable, asset allocation, absolute return, and global sector categories.


Investment Manager	Trustees	Michael J. Higgins
Putnam Investment	Kenneth R. Leibler, Chair	Vice President, Treasurer,
Management, LLC	Liaquat Ahamed	and Clerk
100 Federal Street	Ravi Akhoury
Boston, MA 02110	Barbara M. Baumann	Jonathan S. Horwitz
	Katinka Domotorffy	Executive Vice President,
Investment Sub-Advisor	Catharine Bond Hill	Principal Executive Officer,
Putnam Investments Limited	Paul L. Joskow	and Compliance Liaison
16 St James’s Street	George Putnam, III
London, England SW1A 1ER	Robert L. Reynolds	Richard T. Kircher
	Manoj P. Singh	Vice President and BSA
Marketing Services	Mona K. Sutphen	Compliance Officer
Putnam Retail Management
100 Federal Street	Officers	Susan G. Malloy
Boston, MA 02110	Robert L. Reynolds	Vice President and
	President	Assistant Treasurer
Custodian
State Street Bank	Robert T. Burns	Denere P. Poulack
and Trust Company	Vice President and	Assistant Vice President, Assistant
	Chief Legal Officer	Clerk, and Assistant Treasurer
Legal Counsel
Ropes & Gray LLP	James F. Clark	Janet C. Smith
	Vice President, Chief Compliance	Vice President,
	Officer, and Chief Risk Officer	Principal Financial Officer,
		Principal Accounting Officer,
	Nancy E. Florek	and Assistant Treasurer
	Vice President, Director of
	Proxy Voting and Corporate	Mark C. Trenchard
	Governance, Assistant Clerk,	Vice President
	and Assistant Treasurer

This report is for the information of shareholders of Putnam Sustainable Leaders 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.

44 Sustainable Leaders Fund


	Item 2. Code of Ethics:


	Not applicable


	Item 3. Audit Committee Financial Expert:


	Not applicable


	Item 4. Principal Accountant Fees and Services:


	Not applicable


	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 180 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.


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


	Item 12. Disclosures of Securities Lending Activities for Closed-End Investment Companies:


	Not Applicable


	Item 13. Exhibits:


	(a)(1) Not applicable


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


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


	SIGNATURES


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


	Putnam Sustainable Leaders Fund


	By (Signature and Title):


	/s/ Janet C. Smith Janet C. Smith Principal Accounting Officer


	Date: February 26, 2021


	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: February 26, 2021


	By (Signature and Title):


	/s/ Janet C. Smith Janet C. Smith Principal Financial Officer


	Date: February 26, 2021


	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 180 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 half-year 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: February 26, 2021
	/s/ Jonathan S. Horwitz
	_______________________
	Jonathan S. Horwitz
	Principal Executive Officer
	Certifications
	I, Janet C. Smith, 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 180 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 half-year 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: February 26, 2021
	/s/ Janet C. Smith
	_______________________
	Janet C. Smith
	Principal Financial Officer
	Attachment A
	Period (s) ended December 31, 2020
	Putnam International Equity Fund
	Putnam International Value Fund
	Putnam Small Cap Growth Fund
	Putnam Sustainable Leaders Fund

	Putnam VT Diversified Income Fund
	Putnam VT Emerging Markets Equity Fund
	Putnam VT Equity Income Fund
	Putnam VT George Putnam Balanced Fund
	Putnam VT Global Asset Allocation Fund
	Putnam VT Global Equity Fund
	Putnam VT Global Health Care Fund
	Putnam VT Government Money Market Fund
	Putnam VT Growth Opportunities Fund
	Putnam VT High Yield Fund
	Putnam VT Income Fund
	Putnam VT International Equity Fund
	Putnam VT International Value Fund
	Putnam VT Mortgage Securities Fund
	Putnam VT Multi-Asset Absolute Return Fund
	Putnam VT Multi-Cap Core Fund
	Putnam VT Research Fund
	Putnam VT Small Cap Growth Fund
	Putnam VT Small Cap Value Fund
	Putnam VT Sustainable Future Fund
	Putnam VT Sustainable Leaders Fund


	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 December 31, 2020 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 December 31, 2020 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.
	Date: February 26, 2021
	/s/ Jonathan S. Horwitz
	______________________
	Jonathan S. Horwitz
	Principal Executive Officer
	Section 906 Certifications
	I, Janet C. Smith, 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 December 31, 2020 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 December 31, 2020 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.
	Date: February 26, 2021
	/s/ Janet C. Smith
	______________________
	Janet C. Smith
	Principal Financial Officer
	Attachment A
	Period (s) ended December 31, 2020
	Putnam International Equity Fund
	Putnam International Value Fund
	Putnam Small Cap Growth Fund
	Putnam Sustainable Leaders Fund

	Putnam VT Diversified Income Fund
	Putnam VT Emerging Markets Equity Fund
	Putnam VT Equity Income Fund
	Putnam VT George Putnam Balanced Fund
	Putnam VT Global Asset Allocation Fund
	Putnam VT Global Equity Fund
	Putnam VT Global Health Care Fund
	Putnam VT Government Money Market Fund
	Putnam VT Growth Opportunities Fund
	Putnam VT High Yield Fund
	Putnam VT Income Fund
	Putnam VT International Equity Fund
	Putnam VT International Value Fund
	Putnam VT Mortgage Securities Fund
	Putnam VT Multi-Asset Absolute Return Fund
	Putnam VT Multi-Cap Core Fund
	Putnam VT Research Fund
	Putnam VT Small Cap Growth Fund
	Putnam VT Small Cap Value Fund
	Putnam VT Sustainable Future Fund
	Putnam VT Sustainable Leaders Fund