N-CSR 1 a_governmentmm.htm PUTNAM INVESTMENT FUNDS a_governmentmm.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: (811-07237)
Exact name of registrant as specified in charter: Putnam Investment Funds
Address of principal executive offices: 100 Federal Street, Boston, Massachusetts 02110
Name and address of agent for service: Stephen Tate, 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: September 30, 2022
Date of reporting period: October 1, 2021 – September 30, 2022



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:


 

 

Message from the Trustees

November 10, 2022

Dear Fellow Shareholder:

Financial markets are reminding us that the journey to long-term returns often involves weathering periods of heightened volatility. This year, stocks and bonds have experienced losses, and U.S. gross domestic product has declined slightly. Persistent inflation has caused the U.S. Federal Reserve to raise interest rates to contain price pressures, an effort that may continue into 2023. At the same time, we are encouraged by recent economic data that suggests inflation rates are improving.

While this challenging environment is a test of patience, you can be confident that Putnam portfolio managers are actively working for you. As the prices of many stocks and bonds move lower, our teams are researching new and attractive investment opportunities for your fund while assessing risks.

We also would like to announce changes to the Board of Trustees. In July 2022, we welcomed Jennifer Williams Murphy and Marie Pillai as new Trustees. Both have a wealth of investment advisory and executive management experience. We also want to thank our Trustees who retired from the Board on June 30, 2022. Paul Joskow served with us since 1997, and Ravi Akhoury joined the Board in 2009. We wish them well.

Thank you for investing with Putnam.


 


Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. 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. Class A shares do not bear an initial sales charge. For a portion of the periods, the fund had expense limitations, without which returns and yields would have been lower. Yield reflects current performance more closely than total return. See below and pages 6–7 for additional performance information. To obtain the most recent month-end performance, visit putnam.com.

Lipper peer group median is provided by Lipper, a Refinitiv company.


This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 9/30/22. See above and pages 6–7 for additional fund performance information. Index descriptions can be found on pages 10–11.

Lipper peer group median is provided by Lipper, a Refinitiv company.

All Bloomberg indices are provided by Bloomberg Index Services Limited.

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Please describe the money market environment during the 12-month reporting period ended September 30, 2022.

JOANNE U.S. economic conditions were mixed. U.S. unemployment remained low, but inflation spiked, hitting 40-year highs due to supply chain disruptions and soaring energy and food prices. Faced with persistently high inflation during the second half of the period, the Federal Reserve raised the federal funds target rate five times, from 0.00%–0.25% to 3.00%–3.25%. The Russia-Ukraine War and Covid-19-related lockdowns in China heightened political and economic uncertainty, further weighing on sentiment.

While the 12-month percent change in the Consumer Price Index declined from 9.1% in June 2022 to 8.5% the following month, inflation was still running well above the Federal Reserve’s target inflation rate of 2.0%. At the Fed’s annual symposium in Jackson Hole, Wyoming, in August, Fed Chair Jerome Powell stated that any expectation of easing monetary policy was premature. At its September meeting, the Fed affirmed that ongoing interest-rate increases were appropriate and forecasted its target rate to be 4.40% by the end of 2022. It also lowered its U.S. growth forecast

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This chart shows how the fund’s top weightings have changed 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 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.


for 2022, while noting that it continues to see robust job gains.

The U.S. Treasury market underwent a substantial adjustment due the Fed’s actions and market expectations. At times, yields on some shorter-term U.S. Treasuries rose above those of longer-term bonds. As a result, the yield curve inverted during the second half of the period, which in past economic cycles has been an indicator for recession. The Fed’s sharp interest-rate increases over such a short period were beneficial for money market investors. [Shorter-term interest rates tend to be more responsive to changes in the Fed’s benchmark rate than longer-term rates.]

Within the money market sector, the London Interbank Offered Rate [LIBOR] curve rose dramatically during the reporting period. The three-month LIBOR increased 362 basis points [bps] during the reporting period to 3.75%. [One basis point is one-hundredth of one percentage point.] A similar movement occurred with the Bloomberg Short-Term Bank Yield Index [BSBY]. The three-month rate increased 352 bps during the reporting period to 3.61%. The Fed’s Secured Overnight Financing Rate [SOFR], which reflects the transaction level of repurchase agreements [repos] collateralized by U.S. Treasury securities, rose in line with the Fed’s five target-rate increases. SOFR increased 293 bps during the reporting period to 2.98%. Financial institutions use overnight repos to raise short-term cash to finance their operations. [LIBOR is expected to cease publishing on June 30, 2023.]

How did the fund perform during the 12 months ended September 30, 2022?

JONATHAN During the 12-month period ended September 30, 2022, the fund’s class A shares performed in line with the median return of the funds ranked within its Lipper peer group, U.S. Government Money Market Funds. [Median is the midpoint in a series of values laid out in numerical order.]

What was your strategy during the reporting period?

JOANNE With the Fed embarking on a policy of bringing short-term interest rates back to more neutral levels, we pursued a strategy designed to increase the fund’s income stream commensurate with the rise in interest rates. As a result, the fund was primarily invested in U.S. Treasury and/or government agency securities and repos collateralized by U.S. Treasury and/or government agency mortgage-backed securities. Repos with overnight maturities offered commensurate yields relative to other investment options, in our view. They also provide liquidity and help to satisfy requirements under Securities and Exchange Commission [SEC] 2a-7 guidelines.

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As the pace of interest-rate hikes accelerated during the period, U.S. Treasuries became highly sought after for their perceived stability and liquidity. As a result, we viewed their pricing as unattractive for much of the period. Rather, we focused on increasing the fund’s exposure to repos. We added term exposure in the 9- to 12-month maturity range with investments in U.S. government-sponsored enterprises where we saw better value and attractive yield opportunities. Holdings in the Federal Home Loan Bank System and the Federal Home Loan Mortgage Corporation exemplify our strategy in this market.

At period-end, the fund held the majority [86%] of its assets in repos. Short-term U.S. Treasury bills [2%] and U.S. government agency securities [12%] composed the balance of the portfolio’s assets on September 30, 2022.

These strategies increased the weighted average maturity [WAM] of the fund’s portfolio from 11 days on September 30, 2021, to 20 days at period-end. [WAM represents the average life of all the money market securities held in the portfolio.] The fund’s weighted average life [WAL] declined from 35 days to 23 days for the same time period. [WAL represents the average length of time for all the money market securities held in the portfolio to pay off principal at maturity.]

What is your outlook for Fed policy in the coming months?

JONATHAN Interest rates on the shortest end of the yield curve rose sharply in the second half of fiscal 2022 with the Fed’s aggressive rate hikes. With this meaningful rise in realized yields and future yield expectations, our outlook for the short end of the yield curve has improved markedly. The Fed’s economic projections are forecasting additional interest-rate increases for the rest of 2022. However, longer term, Fed officials are projecting that lower interest rates will likely be required to offset recessionary pressures once inflation is brought under control.

Given the rise in short-term interest rates, cash has become increasingly competitive with other investments. With our expectations for continued Fed monetary tightening, we believe the fund offers an attractive combination of liquidity, superior quality, and relative stability in today’s uncertain and volatile markets.

Joanne and Jonathan, thank you for this update on the fund.

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. Statements in the Q&A concerning the fund’s performance or portfolio composition relative to those of the fund’s Lipper peer group may reference information produced by Lipper Inc. or through a third party.

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Your fund’s performance

This section shows your fund’s performance and distribution information for periods ended September 30, 2022, the end of its most recent 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. See the Terms and definitions section in this report for definitions of the share classes offered by your fund.

Annualized fund performance Total return for periods ended 9/30/22    Current rate 
          (end of period)* 
          Current 
  Life of fund  5 years  3 years  1 year  7-day yield 
Class A (4/14/16)           
Net asset value  0.61%  0.76%  0.33%  0.48%  2.46% 
Class B (6/16/16)           
Before CDSC  0.61  0.76  0.33  0.48  2.46 
After CDSC  0.61  0.37  -0.67  –4.52  — 
Class C (6/16/16)           
Before CDSC  0.61  0.76  0.33  0.48  2.46 
After CDSC  0.61  0.76  0.33  –0.52  — 
Class G (8/30/16)           
Net asset value  0.70  0.85  0.37  0.53  2.59 
Class I (4/14/16)           
Net asset value  0.70  0.85  0.37  0.53  2.59 
Class P (4/14/16)           
Net asset value  0.70  0.85  0.37  0.53  2.59 
Class R (6/16/16)           
Net asset value  0.61  0.76  0.33  0.48  2.46 

 

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. None of the share classes carry an initial sales charge. Class B share returns reflect the applicable contingent deferred sales charge (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 reflect a 1% CDSC for the first year that is eliminated thereafter. Class A, G, I, P, and R shares generally have no CDSC. Performance for class B, C, G, and R shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and the expense waiver in effect at that time.

* The 7-day yield is the most common gauge for measuring money market mutual fund performance. Yield reflects current performance more closely than total return.

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

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Comparative annualized Lipper returns For periods ended 9/30/22

  Life of fund  5 years  3 years  1 year 
Lipper U.S. Government Money Market Funds         
category median*  0.61%  0.77%  0.35%  0.48% 

 

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

Lipper peer group median is provided by Lipper, a Refinitiv company.

* Over the 1-year, 3-year, 5-year, and life-of-fund periods ended 9/30/22, there were 127, 120, 110, and 98 funds, respectively, in this Lipper category.

Fund distribution information For the 12-month period ended 9/30/22

Distributions  Class A  Class B  Class C  Class G  Class I  Class P  Class R 
Number  12  12  12  12  12  12  12 
Income  $0.004777  $0.004782  $0.004777  $0.005314  $0.005317  $0.005315  $0.004777 
Capital gains  —  —  —  —  —  —  — 
Total  $0.004777  $0.004782  $0.004777  $0.005314  $0.005317  $0.005315  $0.004777 

 

The classification of distributions, if any, is an estimate. Final distribution information will appear on your year-end tax forms.


Your fund’s expenses

As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. In the most recent six-month period, your fund’s expenses were limited; had expenses not been limited, they would have been higher. 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 G  Class I  Class P  Class R 
Total annual operating expenses for the               
fiscal year ended 9/30/21  0.51%  0.51%  0.51%  0.37%  0.37%  0.37%  0.51% 
Annualized expense ratio for the               
six-month period ended 9/30/22*†  0.47%  0.47%  0.47%  0.36%  0.36%  0.36%  0.47% 

 

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.

* Reflects a voluntary waiver of certain fund expenses.

† Expense ratios for each class are for the fund’s most recent fiscal half year. As a result of this, ratios may differ from expense ratios based on one-year data in the financial highlights.

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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 4/1/22 to 9/30/22. 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 G  Class I  Class P  Class R 
Expenses paid per $1,000*†  $2.36  $2.36  $2.36  $1.81  $1.81  $1.81  $2.36 
Ending value (after expenses)  $1,004.70  $1,004.70  $1,004.70  $1,005.30  $1,005.30  $1,005.30  $1,004.70 

 

* 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 9/30/22. 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 (183); and then dividing that result by the number of days in the year (365).

Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended 9/30/22, use the following calculation method. To find the value of your investment on 4/1/22, 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 G  Class I  Class P  Class R 
Expenses paid per $1,000*†  $2.38  $2.38  $2.38  $1.83  $1.83  $1.83  $2.38 
Ending value (after expenses)  $1,022.71  $1,022.71  $1,022.71  $1,023.26  $1,023.26  $1,023.26  $1,022.71 

 

* 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 9/30/22. The expense ratio may differ for each share class.

† 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 (183); and then dividing that result by the number of days in the year (365).

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Consider these risks before investing

You can 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.

The values of money market investments usually rise and fall in response to changes in interest rates. Interest-rate risk is generally lowest for investments with short maturities (a significant part of the fund’s investments). Changes in the financial condition of an issuer or counterparty, changes in specific economic or political conditions that affect a particular type of issuer, and changes in general economic or political conditions can increase the risk of default by an issuer or counterparty, which can affect a security’s or instrument’s credit quality or value. 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.

Certain securities in which the fund may invest, including securities issued by certain U.S. government agencies and U.S. government-sponsored enterprises, are not guaranteed by the U.S. government or supported by the full faith and credit of the United States. Mortgage-backed investments carry the risk that they may increase in value less when interest rates decline and decline in value more when interest rates rise. We may have to invest the proceeds from prepaid investments, including mortgage- and asset-backed investments, in other investments with less attractive terms and yields.

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.

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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.

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

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

Share classes

Class A shares generally are fund shares purchased with an initial sales charge. In the case of your fund, which has no sales charge, the reference is to shares purchased or acquired through the exchange of class A shares from another Putnam fund. Exchange of your fund’s class A shares into another fund may involve a sales charge, however.

Class B shares are closed to new investments and are only available by exchange from class B shares of 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 G shares require no minimum initial investment amount and no minimum subsequent investment amount. There is no initial or deferred sales charge. They are available only to Putnam fund-of-funds accounts.

Class I shares are not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are only available to institutional clients and other investors who meet minimum investment requirements.

Class P shares require no minimum initial investment amount and no minimum subsequent investment amount. There is no initial or deferred sales charge. They are available only to other Putnam funds.

Class R shares are not subject to an initial sales charge or CDSC and are only available to employer-sponsored retirement plans.

Comparative rates

London Interbank Offered Rate (LIBOR) is set by the British Bankers Association (BBA). It is based on offered interbank deposit rates contributed in accordance with the instructions to BBA LIBOR contributor banks.

Secured Overnight Financing Rate (SOFR) is a broad overnight secured market rate that reflects the rates of U.S. Treasury repurchase agreements (repos). SOFR is not a credit-sensitive rate and is highly correlated to supply and demand dynamics in the repo market.

Comparative indexes

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

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.

Lipper Money Market Funds category median  represents the midpoint among the total returns of all money market mutual funds tracked by Lipper.

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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”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approve or endorse this material, or guarantee the accuracy or completeness of any information herein, or make any warranty, express or implied, 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.

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 medians reflect performance trends for funds within a category.

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Other information for shareholders

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, 2022, are available in the Individual Investors section of putnam.com and on the Securities and Exchange Commission (SEC) 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 September 30, 2022, Putnam employees had approximately $428,000,000 and the Trustees had approximately $57,000,000 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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Important notice regarding Putnam’s privacy policy

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

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

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

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Trustee approval of management contract

General conclusions

The Board of Trustees of The Putnam Funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management, LLC (“Putnam Management”) and the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”). The Board, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of The Putnam Funds (“Independent Trustees”).

At the outset of the review process, members of the Board’s independent staff and independent legal counsel considered any possible changes to the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review and, as applicable, identified those changes to Putnam Management. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management and its affiliates furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2022, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for The Putnam Funds and the Independent Trustees.

In May 2022, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the continuance of the contracts. At the Trustees’ June 2022 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial, performance and other data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its recommendations. The Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management contract and the approval of your fund’s amended and restated sub-management contract, effective July 1, 2022. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not attempted to evaluate PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.)

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

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

• That the fee schedule in effect for your fund represented an appropriate sharing between fund shareholders and Putnam Management of any economies of scale as may exist in the management of the fund at current asset levels.

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

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with certain exceptions primarily involving newer or repositioned funds, the current fee arrangements under the vast majority of the funds’ management contracts were first implemented at the beginning of 2010 following extensive review by the Contract Committee and discussions with representatives of Putnam Management, as well as approval by shareholders.

Management fee schedules and total expenses

The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with reduced fee levels as assets under management in the Putnam family of funds increase. The Trustees also reviewed the total expenses of each Putnam fund, recognizing that in most cases management fees represented the major, but not the sole, determinant of total costs to fund shareholders. (Two funds have implemented so-called “all-in” management fees covering substantially all routine fund operating costs.) The Trustees considered that the proposed amended and restated sub-management contract would lower the sub-management fees paid by Putnam Management to PIL.

In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment strategy, changes in Putnam Management’s operating costs or profitability, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not indicate that changes to the management fee schedule for your fund would be appropriate at this time.

As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. The Trustees and Putnam Management and the funds’ investor servicing agent, Putnam Investor Services, Inc. (“PSERV”), have implemented expense limitations that were in effect during your fund’s fiscal year ending in 2021. These expense limitations were: (i) a contractual expense limitation applicable to specified open-end funds, including your fund, of 25 basis points on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to specified open-end funds, including your fund, of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, distribution fees, investor servicing fees, investment-related expenses, interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses). These expense limitations attempt to maintain competitive expense levels for the funds. Most funds, including your fund, had sufficiently low expenses that these expense limitations were not operative during their fiscal years ending in 2021. Putnam Management and PSERV have agreed to maintain these expense limitations until at least January 30, 2024. In addition, in light of market conditions, Putnam Management voluntarily waived fees and/ or reimbursed certain fund expenses in order to enhance your fund’s annualized net yield beginning in March 2020. This fee waiver was voluntary and, in light of rising interest rates, was discontinued in May 2022. Putnam Management and PSERV’s commitment to the contractual expense limitation arrangements, which were intended to support an effort to have fund expenses meet competitive standards, was an important factor in the Trustees’ decision to approve the continuance of your fund’s management contract and to approve your fund’s amended and restated sub-management contract.

The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Broadridge Financial Solutions, Inc. (“Broadridge”). This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fees), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the first quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the second quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2021. The first quintile represents the least expensive funds and the fifth quintile the most expensive funds. The fee and expense data reported by Broadridge as of December 31, 2021 reflected the most recent fiscal year-end data available in Broadridge’s database at that time.

In connection with their review of fund management fees and total expenses, the Trustees also reviewed the costs of the services provided and the profits realized by Putnam Management and

Government Money Market Fund 15 

 

 

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

The information examined by the Trustees in connection with their annual contract review for the Putnam funds included information regarding services provided and fees charged by Putnam Management and its affiliates to other clients, including collective investment trusts offered in the defined contribution and defined benefit retirement plan markets, sub-advised mutual funds, private funds sponsored by affiliates of Putnam Management, model-only separately managed accounts and Putnam Management’s exchange-traded funds. This information included, in cases where a product’s investment strategy corresponds with a fund’s strategy, comparisons of those fees with fees charged to the Putnam funds, as well as an assessment of the differences in the services provided to these clients as compared to the services provided to the Putnam funds. The Trustees observed that the differences in fee rates between these clients and the Putnam funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients may reflect, among other things, historical competitive forces operating in separate marketplaces. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for other clients, and the Trustees also considered the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its other clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.

Investment performance

The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of Putnam Management’s investment process and performance by the work of the investment oversight committees of the Trustees and the full Board of Trustees, which meet on a regular basis with individual portfolio managers and with senior management of Putnam Management’s Investment Division throughout the year. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period.

The Trustees considered that, in the aggregate, the Putnam funds’ performance was generally solid in 2021 against a backdrop of strong U.S. economic and financial market growth. The Trustees considered Putnam Management’s observation that, despite an environment of generally strong growth, there had been various headwinds experienced in 2021. For the one-year period ended December 31, 2021, the Trustees noted that the Putnam funds, on an asset-weighted basis, ranked in the 52nd percentile of their peers as determined by Lipper Inc. (“Lipper”) and, on an asset-weighted-basis, delivered a gross return that trailed their benchmarks by 0.1%. Over the longer-term, the Committee noted that, on an asset-weighted basis, the Putnam funds delivered strong aggregate performance relative to their Lipper peers over the three-, five- and ten-year periods ended December 31, 2021, ranking in the 31st, 29th and 21st percentiles, respectively, and that the funds, in the aggregate, outperformed their benchmarks on a gross basis for each of those periods.

16 Government Money Market Fund 

 

 

In addition to the performance of the individual Putnam funds, the Trustees considered, as they had in prior years, the performance of The Putnam Fund complex versus competitor fund complexes. In particular, the Trustees considered The Putnam Fund complex’s performance as reported in the Barron’s/Lipper Fund Families survey (the “Survey”), which ranks mutual fund companies based on their performance across a variety of asset types. The Trustees noted that The Putnam Fund complex continued to rank highly in the Survey, especially over the longer-term, with The Putnam Funds ranking as the 6th best performing mutual fund complex out of 45 complexes for the ten-year period and 13th out of 49 complexes for the five-year period. The Trustees noted that 2021 marked the fifth consecutive year that The Putnam Funds have ranked in the top ten fund complexes for the ten-year period. The Trustees also considered that The Putnam Fund complex’s Survey performance over the one-year period was solid, with The Putnam Funds ranking 27th out of 51 complexes. In addition to the Survey, the Trustees also considered the Putnam funds’ ratings assigned by Morningstar Inc., noting that 25 of the funds were four- or five-star rated at the end of 2021 (representing a decrease of one fund year-over-year) and that this included nine funds that had achieved a five-star rating (representing an increase of two funds year-over-year). They also noted, however, the disappointing investment performance of some Putnam funds for periods ended December 31, 2021 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue to monitor closely the performance of those funds and evaluate whether additional actions to address areas of underperformance may be warranted.

For purposes of the Trustees’ evaluation of the Putnam funds’ investment performance, the Trustees generally focus on a competitive industry ranking of each fund’s total net return over a one-year, three-year and five-year period. For a number of Putnam funds with relatively unique investment mandates for which Putnam Management informed the Trustees that meaningful competitive performance rankings are not considered to be available, the Trustees evaluated performance based on their total gross and net returns and comparisons of those returns to the returns of selected investment benchmarks. In the case of your fund, the Trustees considered that its class A share cumulative total return performance at net asset value was in the following quartiles of its Lipper peer group (Lipper U.S. Government Money Market Funds) for the one-year, three-year and five-year periods ended December 31, 2021 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):

One-year period  2nd 
Three-year period  3rd 
Five-year period  3rd 

 

Over the one-year, three-year and five-year periods ended December 31, 2021, there were 135, 124 and 114 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.)

The Trustees considered Putnam Management’s continued efforts to support fund performance through certain initiatives, including structuring compensation for portfolio managers to enhance accountability for fund performance, emphasizing accountability in the portfolio management process and affirming its commitment to a fundamental-driven approach to investing. The Trustees noted further that Putnam Management had made selective hires and internal promotions in 2021 to strengthen its investment team.

Brokerage and soft-dollar allocations; investor servicing

The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft dollars generated by these means are used predominantly to acquire brokerage and research services (including third-party research and market data) that enhance Putnam Management’s investment capabilities and supplement Putnam Management’s internal research efforts. The Trustees indicated their continued intent to monitor regulatory and industry developments

Government Money Market Fund 17 

 

 

in this area with the assistance of their Brokerage Committee. In addition, with the assistance of their Brokerage Committee, the Trustees indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.

Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management and sub-management contracts, the Trustees reviewed your fund’s investor servicing agreement with PSERV and its distributor’s contract and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are fair and reasonable in relation to the nature and quality of such services, the fees paid by competitive funds and the costs incurred by PSERV and PRM, as applicable, in providing such services. Furthermore, the Trustees were of the view that the investor services provided by PSERV were required for the operation of the funds, and that they were of a quality at least equal to those provided by other providers.

18 Government Money Market Fund 

 

 

Audited financial statements

These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, constitute the fund’s audited 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.

Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios and net investment income ratios in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.

Government Money Market Fund 19 

 

 

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Putnam Investment Funds and Shareholders of
Putnam Government Money Market Fund:

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the fund’s portfolio, of Putnam Government Money Market Fund (one of the funds constituting Putnam Investment Funds, referred to hereafter as the “Fund”) as of September 30, 2022, the related statement of operations for the year ended September 30, 2022, the statement of changes in net assets for each of the two years in the period ended September 30, 2022, including the related notes, and the financial highlights for each of the three years in the period ended September 30, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of September 30, 2022, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended September 30, 2022 and the financial highlights for each of the three years in the period ended September 30, 2022 in conformity with accounting principles generally accepted in the United States of America.

The financial statements of the Fund as of and for the year ended September 30, 2019 and the financial highlights for each of the periods ended on or prior to September 30, 2019 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated November 8, 2019 expressed an unqualified opinion on those financial statements and financial highlights.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of September 30, 2022 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
November 10, 2022

We have served as the auditor of one or more investment companies in the Putnam Investments family of funds since at least 1957. We have not been able to determine the specific year we began serving as auditor.

20 Government Money Market Fund 

 

 

The fund’s portfolio 9/30/22

REPURCHASE AGREEMENTS (86.2%)* Principal
amount		 Value
Interest in $100,000,000 joint tri-party repurchase agreement dated 9/30/2022 with BNP Paribas due 10/3/2022 — maturity value of $45,111,425 for an effective yield of 3.040% (collateralized by Agency Mortgage-Backed Securities with coupon rates ranging from 0.000% to 6.450% and due dates ranging from 6/1/2023 to 10/1/2052, valued at $102,025,840) $45,100,000 $45,100,000
Interest in $341,543,000 joint tri-party repurchase agreement dated 9/30/2022 with BofA Securities, Inc. due 10/3/2022 — maturity value of $45,395,535 for an effective yield of 3.050% (collateralized by Agency Mortgage-Backed Securities with coupon rates ranging from 2.000% to 6.000% and due dates ranging from 12/1/2033 to 10/1/2052, valued at $348,373,860) 45,384,000 45,384,000
Interest in $416,200,000 joint tri-party repurchase agreement dated 9/30/2022 with Citigroup Global Markets, Inc. due 10/3/2022 — maturity value of $45,111,463 for an effective yield of 3.050% (collateralized by Agency Mortgage-Backed Securities with coupon rates ranging from 2.000% to 6.500% and due dates ranging from 6/20/2052 to 7/20/2052, valued at $424,524,000) 45,100,000 45,100,000
Interest in $50,000,000 joint tri-party repurchase agreement dated 9/30/2022 with JPMorgan Securities, LLC due 10/3/2022 — maturity value of $44,891,407 for an effective yield of 3.050% (collateralized by Agency Mortgage-Backed Securities with coupon rates ranging from 1.923% to 7.500% and due dates ranging from 9/1/2028 to 7/1/2052, valued at $51,012,964) 44,880,000 44,880,000
Total repurchase agreements (cost $180,464,000) $180,464,000

U.S. GOVERNMENT AGENCY
OBLIGATIONS (12.1%)*		 Yield (%) Maturity
date		 Principal
amount		 Value
Federal Farm Credit Banks Funding Corporation FRB 3.300 6/9/23 $2,150,000 $2,154,202
Federal Farm Credit Banks Funding Corporation FRB 3.040 1/20/23 750,000 750,063
Federal Farm Credit Banks Funding Corporation unsec. bonds 3.021 5/10/23 2,000,000 1,965,276
Federal Farm Credit Banks Funding Corporation unsec. FRB 3.040 1/13/23 1,000,000 1,000,079
Federal Home Loan Banks discount notes 3.150 3/27/23 2,250,000 2,215,817
Federal Home Loan Banks discount notes 4.029 3/24/23 945,000 926,958
Federal Home Loan Banks discount notes 3.558 3/1/23 3,696,000 3,641,762
Federal Home Loan Banks discount notes 3.108 12/9/22 2,375,000 2,360,957
Federal Home Loan Banks discount notes 2.646 11/29/22 2,250,000 2,240,339
Federal Home Loan Mortgage Corporation unsec. notes 3.015 6/19/23 1,610,000 1,606,988
Federal Home Loan Mortgage Corporation unsec. notes 2.984 5/5/23 2,000,000 1,969,391
Federal National Mortgage Association unsec. notes 4.235 9/12/23 1,124,000 1,110,076
Federal National Mortgage Association unsec. notes 0.127 10/5/22 1,340,000 1,340,275
Federal National Mortgage Association unsec. notes 3.112 5/22/23 2,000,000 1,963,902
Total U.S. government agency obligations (cost $25,246,085) $25,246,085


Government Money Market Fund 21



U.S. TREASURY OBLIGATIONS (2.1%)* Yield (%) Maturity
date		 Principal
amount		 Value
U.S. Treasury Bills 0.105 10/6/22 $2,200,000 $2,199,968
U.S. Treasury Bills 0.219 11/3/22 2,150,000 2,149,575
Total U.S. treasury obligations (cost $4,349,543) $4,349,543

TOTAL INVESTMENTS
Total investments (cost $210,059,628) $210,059,628

Key to holding’s abbreviations
FRB Floating Rate Bonds: The rate shown is the current interest rate at the close of the reporting period. Rates may be subject to a cap or floor. For certain securities, the rate may represent a fixed rate currently in place at the close of the reporting period.

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 October 1, 2021 through September 30, 2022 (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 $209,280,106.
The dates shown on debt obligations are the original maturity dates.
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
Repurchase agreements $— $180,464,000 $—
U.S. government agency obligations — 25,246,085 —
U.S. treasury obligations — 4,349,543 —
Totals by level $— $210,059,628 $—


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


22 Government Money Market Fund


Statement of assets and liabilities 9/30/22

ASSETS   
Investment in securities, at value, (Notes 1 and 6):   
Unaffiliated issuers (identified cost $29,595,628)  $29,595,628 
Repurchase agreements (identified cost $180,464,000)  180,464,000 
Cash  22,028 
Interest and other receivables  90,162 
Receivable for shares of the fund sold  530,288 
Prepaid assets  31,320 
Total assets  210,733,426 
 
LIABILITIES   
Payable for shares of the fund repurchased  1,301,836 
Payable for compensation of Manager (Note 2)  48,868 
Payable for custodian fees (Note 2)  5,663 
Payable for investor servicing fees (Note 2)  37,703 
Payable for Trustee compensation and expenses (Note 2)  4,291 
Payable for administrative services (Note 2)  785 
Other accrued expenses  54,174 
Total liabilities  1,453,320 
 
Net assets  $209,280,106 
 
REPRESENTED BY   
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)  $209,280,106 
Total distributable earnings (Note 1)  — 
Total — Representing net assets applicable to capital shares outstanding  $209,280,106 
 
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE   
Net asset value, offering price and redemption price per class A share   
($154,580,571 divided by 154,584,919 shares)  $1.00 
Net asset value and offering price per class B share ($188,680 divided by 188,694 shares)*  $1.00 
Net asset value and offering price per class C share ($1,560,779 divided by 1,560,827 shares)*  $1.00 
Net asset value and offering price per class G share ($52,512,770 divided by 52,510,779 shares)  $1.00 
Net asset value and offering price per class I share ($10,455 divided by 10,457 shares)  $1.00 
Net asset value, offering price and redemption price per class P share   
($9,999 divided by 10,000 shares)  $1.00 
Net asset value, offering price and redemption price per class R share   
($416,852 divided by 416,875 shares)  $1.00 

 

* 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.

Government Money Market Fund 23 

 

 

Statement of operations Year ended 9/30/22

INVESTMENT INCOME   
Interest  $1,552,274 
Total investment income  1,552,274 
 
EXPENSES   
Compensation of Manager (Note 2)  568,668 
Investor servicing fees (Note 2)  220,676 
Custodian fees (Note 2)  9,809 
Trustee compensation and expenses (Note 2)  8,187 
Administrative services (Note 2)  5,741 
Blue sky expense  72,541 
Other  94,641 
Fees waived and reimbursed by Manager (Note 2)  (427,498) 
Total expenses  552,765 
Expense reduction (Note 2)  (1,096) 
Net expenses  551,669 
 
Net investment income  1,000,605 
 
REALIZED AND UNREALIZED GAIN (LOSS)   
Net realized gain (loss) on:   
Securities from unaffiliated issuers (Notes 1 and 3)  121 
Total net realized gain  121 
 
Net gain on investments  121 
 
Net increase in net assets resulting from operations  $1,000,726 

 

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

24 Government Money Market Fund 

 

 

Statement of changes in net assets

INCREASE (DECREASE) IN NET ASSETS  Year ended 9/30/22  Year ended 9/30/21 
Operations     
Net investment income  $1,000,605  $15,563 
Net realized gain on investments  121  567 
Net increase in net assets resulting from operations  1,000,726  16,130 
Distributions to shareholders (Note 1):     
From ordinary income     
Net investment income     
Class A  (715,708)  (9,765) 
Class B  (730)  (28) 
Class C  (6,338)  (166) 
Class G  (278,904)  (5,501) 
Class I  (55)  (1) 
Class P  (52)  —* 
Class R  (1,947)  (102) 
Increase (decrease) from capital share transactions (Note 4)  4,350,473  (3,044,067) 
Total increase (decrease) in net assets  4,347,465  (3,043,500) 
 
NET ASSETS     
Beginning of year  204,932,641  207,976,141 
End of year  $209,280,106  $204,932,641 

 

* Amount represents less than $1.

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

Government Money Market Fund 25 

 

 

Financial highlights

(For a common share outstanding throughout the period)

  INVESTMENT OPERATIONS      LESS DISTRIBUTIONS        RATIOS AND SUPPLEMENTAL DATA   
                      Ratio of net 
                      investment 
      Net realized                income (loss) 
  Net asset value,    and unrealized  Total from  From        Net assets,  Ratio of expenses  to average 
  beginning  Net investment  gain (loss)  investment  net investment  Total  Net asset value,  Total return at net  end of period  to average net assets  net assets 
Period ended­  of period­  income (loss)  on investments­  operations­  income­  distributions  end of period­  asset value (%)a  (in thousands)  (%)b  (%) 
Class A                       
September 30, 2022­  $1.00­  .0048­  —­d  0.0048­  (.0048)  (0.0048)  $1.00­  .48­  $154,581­  .28­c  .48­c 
September 30, 2021­  1.00­  .0001­  —­d  0.0001­  (.0001)  (0.0001)  1.00­  .01­  145,641­  .09­c  .01­c 
September 30, 2020­  1.00­  .0050­  —­  0.0050­  (.0051)  (0.0051)  1.00­  .51­  150,291­  .33­c  .33­c 
September 30, 2019­  1.00­  .0177­  —­d  0.0177­  (.0178)  (0.0178)  1.00­  1.79­  61,605­  .62­  1.76­ 
September 30, 2018  1.00­  .0100­  —­  0.0100­  (.0099)  (0.0099)  1.00­  1.00­  98,391­  .55­  .94­ 
Class B                       
September 30, 2022­  $1.00­  .0048­  —­d  0.0048­  (.0048)  (0.0048)  $1.00­  .48­  $189­  .28­c  .40­c 
September 30, 2021­  1.00­  .0001­  —­d  0.0001­  (.0001)  (0.0001)  1.00­  .01­  202­  .09­c  .01­c 
September 30, 2020­  1.00­  .0051­  —­  0.0051­  (.0051)  (0.0051)  1.00­  .51­  378­  .33­c  .37­c 
September 30, 2019­  1.00­  .0177­  —­d  0.0177­  (.0178)  (0.0178)  1.00­  1.80­  182­  .62­  1.77­ 
September 30, 2018  1.00­  .0101­  —­  0.0101­  (.0100)  (0.0100)  1.00­  1.00­  255­  .55­  1.08­ 
Class C                       
September 30, 2022­  $1.00­  .0048­  —­d  0.0048­  (.0048)  (0.0048)  $1.00­  .48­  $1,561­  .28­c  .47­c 
September 30, 2021­  1.00­  .0001­  —­d  0.0001­  (.0001)  (0.0001)  1.00­  .01­  1,404­  .09­c  .01­c 
September 30, 2020­  1.00­  .0050­  —­  0.0050­  (.0050)  (0.0050)  1.00­  .50­  2,279­  .34­c  .40­c 
September 30, 2019­  1.00­  .0177­  —­d  0.0177­  (.0178)  (0.0178)  1.00­  1.79­  1,718­  .62­  1.77­ 
September 30, 2018  1.00­  .0101­  —­  0.0101­  (.0100)  (0.0100)  1.00­  1.00­  380­  .55­  1.04­ 
Class G                       
September 30, 2022­  $1.00­  .0053­  —­d  0.0053­  (.0053)  (0.0053)  $1.00­  .53­  $52,513­  .23­c  .49­c 
September 30, 2021­  1.00­  .0001­  —­d  0.0001­  (.0001)  (0.0001)  1.00­  .01­  57,037­  .09­c  .01­c 
September 30, 2020­  1.00­  .0058­  —­  0.0058­  (.0058)  (0.0058)  1.00­  .58­  53,693­  .28­c  .60­c 
September 30, 2019­  1.00­  .0192­  —­d  0.0192­  (.0193)  (0.0193)  1.00­  1.95­  48,641­  .45­  1.93­ 
September 30, 2018  1.00­  .0117­  —­  0.0117­  (.0116)  (0.0116)  1.00­  1.17­  42,877­  .41­  1.17­ 
Class I                       
September 30, 2022­  $1.00­  .0053­  —­d  0.0053­  (.0053)  (0.0053)  $1.00­  .53­  $10­  .23­c  .51­c 
September 30, 2021­  1.00­  .0001­  —­d  0.0001­  (.0001)  (0.0001)  1.00­  .01­  10­  .09­c  —­c,e 
September 30, 2020­  1.00­  .0058­  —­  0.0058­  (.0058)  (0.0058)  1.00­  .58­  10­  .28­c  .60­c 
September 30, 2019­  1.00­  .0192­  —­d  0.0192­  (.0193)  (0.0193)  1.00­  1.95­  10­  .45­  1.93­ 
September 30, 2018  1.00­  .0117­  —­  0.0117­  (.0116)  (0.0116)  1.00­  1.17­  10­  .41­  1.17­ 
Class P                       
September 30, 2022­  $1.00­  .0053­  —­d  0.0053­  (.0053)  (0.0053)  $1.00­  .53­  $10­  .23­c  .51­c 
September 30, 2021­  1.00­  .0001­  —­d  0.0001­  (.0001)  (0.0001)  1.00­  .01­  10­  .09­c  .01­c 
September 30, 2020­  1.00­  .0058­  —­  0.0058­  (.0058)  (0.0058)  1.00­  .58­  10­  .28­c  .60­c 
September 30, 2019­  1.00­  .0192­  —­d  0.0192­  (.0193)  (0.0193)  1.00­  1.95­  10­  .45­  1.93­ 
September 30, 2018  1.00­  .0117­  —­  0.0117­  (.0116)  (0.0116)  1.00­  1.17­  10­  .41­  .71­ 

 

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

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

26 Government Money Market Fund  Government Money Market Fund 27 

 

 

Financial highlights cont.

  INVESTMENT OPERATIONS      LESS DISTRIBUTIONS        RATIOS AND SUPPLEMENTAL DATA   
                      Ratio of net 
                      investment 
      Net realized                income (loss) 
  Net asset value,    and unrealized  Total from  From        Net assets,  Ratio of expenses  to average 
  beginning  Net investment  gain (loss)  investment  net investment  Total  Net asset value,  Total return at net  end of period  to average net assets  net assets 
Period ended­  of period­  income (loss)  on investments­  operations­  income­  distributions  end of period­  asset value (%)a  (in thousands)  (%)b  (%) 
Class R                       
September 30, 2022­  $1.00­  .0048­f ­  —­d  0.0048­  (.0048)  (0.0048)  $1.00­  .48­  $417­  .27­c,f  .32­c 
September 30, 2021­  1.00­  .0001­  —­d  0.0001­  (.0001)  (0.0001)  1.00­  .01­  629­  .09­c  .01­c 
September 30, 2020­  1.00­  .0050­  —­  0.0050­  (.0051)  (0.0051)  1.00­  .51­  1,316­  .32­c  .21­c 
September 30, 2019­  1.00­  .0177­  —­d  0.0177­  (.0178)  (0.0178)  1.00­  1.79­  570­  .62­  1.78­ 
September 30, 2018  1.00­  .0101­  —­  0.0101­  (.0100)  (0.0100)  1.00­  1.00­  551­  .55­  1.03­ 

 

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

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

c Reflects a voluntary waiver of certain fund expenses in effect during the period relating to the enhancement of certain annualized net yields of the fund. As a result of such waivers, the expenses of each class reflect a reduction of the following amounts as a percentage of average net assets:

  9/30/22  9/30/21  9/30/20 
Class A  0.23%  0.42%  0.22% 
Class B  0.24  0.42  0.22 
Class C  0.23  0.42  0.22 
Class G  0.15  0.29  0.13 
Class I  0.15  0.29  0.13 
Class P  0.15  0.29  0.13 
Class R  0.24  0.42  0.24 

 

d Amount represents less than $0.0001.

e Amount represents less than 0.01%.

f The ratio of net investment income and net investment income per share amounts shown may not correspond with the expected class specific difference due to the timing of redemptions from the class.

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

28 Government Money Market Fund  Government Money Market Fund 29 

 

 

Notes to financial statements 9/30/22

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 October 1, 2021 through September 30, 2022.

Putnam Government Money Market Fund (the fund) is a diversified series of Putnam Investment Funds (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The goal of the fund is to seek as high a rate of current income as Putnam Management believes is consistent with preservation of capital and maintenance of liquidity. The fund invests at least 99.5 percent of the fund’s total assets in cash, U.S. government securities and repurchase agreements that are fully collateralized by U.S. government securities or cash. The fund invests mainly in debt securities that are obligations of the U.S. government, its agencies and instrumentalities and accordingly are backed by the full faith and credit of the United States (e.g., U.S. Treasury bills) or by the credit of a federal agency or government-sponsored entity (e.g., securities issued by Fannie Mae and Freddie Mac). The U.S. government securities in which the fund invests may also include variable and floating rate instruments and when-issued and delayed delivery securities (i.e., payment or delivery of the securities occurs at a future date for a predetermined price). Under normal circumstances, the fund invests at least 80% of the fund’s net assets in U.S. government securities and repurchase agreements that are fully collateralized by U.S. government securities. This policy may be changed only after 60 days’ notice to shareholders. The securities purchased by the fund are subject to quality, maturity, diversification and other requirements pursuant to rules promulgated by the Securities and Exchange Commission. Putnam Management may consider, among other factors, credit and interest rate risks and characteristics of the issuer or counterparty, as well as general market conditions, when deciding whether to buy or sell investments.

The fund offers the following share classes. The expenses for each class of shares may differ based on the distribution and investor servicing fees of each class, which are identified in Note 2.

Share class  Sales charge  Contingent deferred sales charge  Conversion feature 
    1.00% on certain redemptions of shares   
Class A  None  bought with no initial sales charge  None 
      Converts to class A shares 
Class B*  None  5.00% phased out over six years  after 8 years 
      Converts to class A shares 
Class C  None  1.00% eliminated after one year  after 8 years 
Class G#  None  None  None 
Class I§  None  None  None 
Class PΔ  None  None  None 
Class R†  None  None  None 

 

* 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.

† Not available to all investors.

# Only available to other Putnam fund-of-funds accounts.

§ Intended for institutional and other investors who meet the $5,000,000 minimum investment and who are not purchasing through an intermediary.

Δ Only available to other Putnam funds and other accounts managed by Putnam Management or its affiliates.

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.

30 Government Money Market Fund 

 

 

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 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 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. Shares of each class would receive their pro-rata share of the net assets of the fund, if the fund were liquidated. 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.

The valuation of the fund’s portfolio instruments is determined by means of the amortized cost method (which approximates fair value) as set forth in Rule 2a–7 under the Investment Company Act of 1940. The amortized cost of an instrument is determined by valuing it at its original cost and thereafter amortizing any discount or premium from its face value at a constant rate until maturity and is generally categorized as a Level 2 security.

Joint trading account Pursuant to an exemptive order from the SEC, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Management. These balances may be invested in issues of short-term investments having maturities of up to 90 days.

Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the fair value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements, which totaled $184,096,570 at the end of the reporting period, is held at the counterparty’s custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Interest income, including amortization and accretion of premiums and discounts, is recorded on the accrual basis. Gains or losses on securities sold are determined on the identified cost basis.

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 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.

Government Money Market Fund 31 

 

 

Lines of credit The fund participates, along with other Putnam funds, in a $100 million ($317.5 million prior to October 14, 2022) 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 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 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 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.

Distributions to shareholders Income dividends are recorded daily by the fund and are paid monthly. Distributions from capital gains, if any, are 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. For the reporting period, there were no material temporary or permanent differences. 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. At the close of the reporting period, the fund reclassified $2,562 to decrease distributions in excess of net investment income, $2,441 to decrease paid-in capital and $121 to decrease accumulated net realized gain.

The aggregate identified cost on a financial reporting and tax basis is the same.

Expenses of the Trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the Trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund.

Note 2: Management fee, administrative services and other transactions

The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of 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:

0.440%  of the first $5 billion,  0.240%  of the next $50 billion, 
0.390%  of the next $5 billion,  0.220%  of the next $50 billion, 
0.340%  of the next $10 billion,  0.210%  of the next $100 billion and 
0.290%  of the next $10 billion,  0.205%  of any excess thereafter. 

 

For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.275% of the fund’s average net assets.

Putnam Management has contractually agreed, through January 30, 2024, 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.

32 Government Money Market Fund 

 

 

Putnam Management may from time to time voluntarily undertake to waive fees and/or reimburse certain fund expenses in order to enhance the annualized net yield for the fund. Any such waiver or reimbursement would be voluntary and may be modified or discontinued by Putnam Management at any time without notice. During the reporting period, the fund’s expenses were reduced by $427,498 as a result of this limit. This includes the following amounts per class of class specific investor servicing fees from the fund:

  Investor servicing fee waived 
Class A    $123,875 
Class B    160 
Class C    1,140 
Class G    3,382 
Class I    1 
Class P    —* 
Class R    553 
Total    $129,111 

 

* Amount represents less than $1.

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 0.20% 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 and class R 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 G shares paid a monthly fee based on the average net assets of class G shares at an annual rate of 0.01%.

Class I shares paid a monthly fee based on the average net assets of class I shares at an annual rate of 0.01%.

Class P shares paid a monthly fee based on the average net assets of class P shares at an annual rate of 0.01%.

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

Class A  $212,092  Class I  1 
Class B  251  Class P  1 
Class C  1,916  Class R  798 
Class G  5,617  Total  $220,676 

 

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 $1,096 under the expense offset arrangements.

 

Government Money Market Fund 33 

 

 

Each Independent Trustee of the fund receives an annual Trustee fee, of which $178, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

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

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

The fund has adopted distribution plans (the Plans) with respect to 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 % 
Class B  0.75%  0.00% 
Class C  1.00%  0.00% 
Class R  1.00%  0.00% 

 

For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $10 and $146, respectively, in contingent deferred sales charges from redemptions of class B and class C shares purchased by exchange from another Putnam fund.

A deferred sales charge of up to 1.00% for class A shares may be assessed on certain redemptions. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received no monies in contingent deferred sales charges from redemptions of class A shares purchased by exchange from another Putnam fund.

Note 3: Purchases and sales of securities

During the reporting period, the cost of purchases and the proceeds from sales (including maturities) of investment securities (all short-term obligations) aggregated $41,940,491,796 and $41,934,961,681, respectively. 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 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.

34 Government Money Market Fund 

 

 

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:

  YEAR ENDED 9/30/22  YEAR ENDED 9/30/21 
Class A  Shares  Amount  Shares  Amount 
Shares sold  118,537,555  $118,537,555  114,142,584  $114,142,586 
Shares issued in connection with         
reinvestment of distributions  715,708  715,708  9,765  9,765 
  119,253,263  119,253,263  114,152,349  114,152,351 
Shares repurchased  (110,311,001)  (110,311,002)  (118,802,837)  (118,802,837) 
Net increase (decrease)  8,942,262  $8,942,261  (4,650,488)  $(4,650,486) 
 
  YEAR ENDED 9/30/22  YEAR ENDED 9/30/21 
Class B  Shares  Amount  Shares  Amount 
Shares sold  119,128  $119,128  231,305  $231,305 
Shares issued in connection with         
reinvestment of distributions  730  730  24  24 
  119,858  119,858  231,329  231,329 
Shares repurchased  (133,119)  (133,119)  (407,124)  (407,125) 
Net decrease  (13,261)  $(13,261)  (175,795)  $(175,796) 
 
  YEAR ENDED 9/30/22  YEAR ENDED 9/30/21 
Class C  Shares  Amount  Shares  Amount 
Shares sold  1,785,340  $1,785,340  936,976  $936,976 
Shares issued in connection with         
reinvestment of distributions  6,338  6,338  153  153 
  1,791,678  1,791,678  937,129  937,129 
Shares repurchased  (1,634,379)  (1,634,379)  (1,812,565)  (1,812,565) 
Net increase (decrease)  157,299  $157,299  (875,436)  $(875,436) 
 
  YEAR ENDED 9/30/22  YEAR ENDED 9/30/21 
Class G  Shares  Amount  Shares  Amount 
Shares sold  20,834,630  $20,834,631  82,380,422  $82,380,422 
Shares issued in connection with         
reinvestment of distributions  278,904  278,904  5,418  5,418 
  21,113,534  21,113,535  82,385,840  82,385,840 
Shares repurchased  (25,636,841)  (25,636,841)  (79,042,016)  (79,042,017) 
Net increase (decrease)  (4,523,307)  $(4,523,306)  3,343,824  $3,343,823 

 

Government Money Market Fund 35 

 

 

  YEAR ENDED 9/30/22  YEAR ENDED 9/30/21 
Class I  Shares  Amount  Shares  Amount 
Shares sold  —  $—  —  $— 
Shares issued in connection with         
reinvestment of distributions  56  55  —*  1 
  56  55  —*  1 
Shares repurchased  —  —  —  — 
Net increase  56  $55  —*  $1 
 
  YEAR ENDED 9/30/22  YEAR ENDED 9/30/21 
Class P  Shares  Amount  Shares  Amount 
Shares sold  —  $—  —  $— 
Shares issued in connection with         
reinvestment of distributions  —  —  —*  —** 
  —  —  —*  —** 
Shares repurchased  —  —  —  — 
Net decrease  —  $—  —*  $—** 
 
  YEAR ENDED 9/30/22  YEAR ENDED 9/30/21 
Class R  Shares  Amount  Shares  Amount 
Shares sold  103,952  $103,952  335,070  $335,070 
Shares issued in connection with         
reinvestment of distributions  1,947  1,947  99  99 
  105,899  105,899  335,169  335,169 
Shares repurchased  (318,474)  (318,474)  (1,021,341)  (1,021,342) 
Net decrease  (212,575)  $(212,575)  (686,172)  $(686,173) 

 

* Amount represents less than 1 share.

** Amount represents less than $1.00.

At the close of the reporting period, a fund within the Putnam 529 for America owned 7.1% of the outstanding shares of the fund.

At the close of the reporting period, a shareholder of record owned 11.8% of the outstanding shares of the fund.

At the close of the reporting period, the Putnam RetirementReady Funds owned 25.4% of the outstanding shares of the fund.

At the close of the reporting period, Putnam Investments, LLC owned the following shares of the fund:

  Shares owned  Percentage of ownership  Value 
Class I  10,457  100.0%  $10,455 

 

36 Government Money Market Fund 

 

 

Note 5: 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.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced its intention to cease compelling banks to provide the quotations needed to sustain LIBOR after 2021. ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative basis at the end of 2021 and is expected to cease publication of a majority of U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. LIBOR has historically been a common benchmark interest rate index used to make adjustments to variable-rate loans. It is used throughout global banking and financial industries to determine interest rates for a variety of financial instruments and borrowing arrangements. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Various financial industry groups have been planning for the transition away from LIBOR, but there are obstacles to converting certain longer-term securities and transactions to new reference rates. Markets are developing slowly and questions around liquidity in these rates and how to appropriately adjust these rates to mitigate any economic value transfer at the time of transition remain a significant concern. Neither the effect of the transition process nor its ultimate success can yet be known. The transition process might lead to increased volatility and illiquidity in markets that rely on LIBOR to determine interest rates. It could also lead to a reduction in the value of some LIBOR-based investments and reduce the effectiveness of related transactions, such as hedges. While some LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, not all may have such provisions and there may be significant uncertainty regarding the effectiveness of any such alternative methodologies. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur at any time.

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.

Government Money Market Fund 37 

 

 

Note 6: 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.

  BofA    Citigroup  JPMorgan   
  Securities,    Global  Securities,   
  Inc.  BNP Paribas  Markets, Inc.  LLC  Total 
Assets:           
Repurchase agreements**  $45,384,000  $45,100,000  $45,100,000  $44,880,000  $180,464,000 
Total Assets  $45,384,000  $45,100,000  $45,100,000  $44,880,000  $180,464,000 
Total Financial and Derivative  $45,384,000  $45,100,000  $45,100,000  $44,880,000  $180,464,000 
Net Assets           
Total collateral received (pledged)†##  $45,384,000  $45,100,000  $45,100,000  $44,880,000   
Net amount  $—  $—  $—  $—   
Controlled collateral received (including           
TBA commitments)**  $—  $—  $—  $—  $— 
Uncontrolled collateral received  $46,291,680  $46,013,654  $46,002,000  $45,789,236  $184,096,570 
Collateral (pledged) (including TBA           
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.

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

Note 7: New accounting pronouncements

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020–04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in ASU 2020–04 provide optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of LIBOR and other interbank-offered based reference rates as of the end of 2021. The discontinuation of LIBOR was subsequently extended to June 30, 2023.ASU 2020–04 is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through December 31, 2022. The adoption of the guidance will not have a material impact on the fund’s financial statements.

38 Government Money Market Fund 

 

 

Federal tax information (Unaudited)

For the reporting period, pursuant to §871(k) of the Internal Revenue Code, the fund hereby designates $992,195 of distributions paid as qualifying to be taxed as interest-related dividends, and no monies to be taxed as short-term capital gain dividends for nonresident alien shareholders.

The Form 1099 that will be mailed to you in January 2023 will show the tax status of all distributions paid to your account in calendar 2022.

Government Money Market Fund 39 

 

 

Shareholder meeting results (Unaudited)

June 29, 2022 special meeting

At the meeting, each of the nominees for Trustees was elected, with all funds of the Trust voting together as a single class, as follows:

  Votes for  Votes withheld 
Liaquat Ahamed  275,864,949  11,885,697 
Barbara M. Baumann  276,817,419  10,933,227 
Katinka Domotorffy  276,491,274  11,259,372 
Catharine Bond Hill  277,377,580  10,373,066 
Kenneth R. Leibler  277,519,588  10,231,058 
Jennifer Williams Murphy  276,865,779  10,884,867 
Marie Pillai  276,342,951  11,407,695 
George Putnam, III  282,562,747  5,187,899 
Robert L. Reynolds  283,034,080  4,716,566 
Manoj P. Singh  276,110,551  11,640,095 
Mona K. Sutphen  276,477,167  11,273,479 

 

All tabulations are rounded to the nearest whole number.

40 Government Money Market Fund 

 

 


Government Money Market Fund 41 

 

 


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

The address of each Trustee is 100 Federal Street, Boston, MA 02110.

As of September 30, 2022, there were 102 funds in the Putnam fund complex, including 96 Putnam Funds and six funds in Putnam ETF Trust. Each Trustee serves as Trustee of all Putnam Funds. In addition to serving as Trustees of the Putnam Funds, Dr. Hill, Mses. Domotorffy and Sutphen, and Mr. Ahamed serve as Trustees of Putnam ETF Trust. Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.

42 Government Money Market Fund 

 

 

Officers

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

James F. Clark (Born 1974)  Denere P. Poulack (Born 1968) 
Vice President and Chief Compliance Officer  Assistant Vice President, Assistant Clerk, 
Since 2016  and Assistant Treasurer 
Chief Compliance Officer and Chief Risk Officer,  Since 2004 
Putnam Investments, and Chief Compliance Officer,   
Putnam Management  Janet C. Smith (Born 1965) 
  Vice President, Principal Financial Officer, Principal 
Nancy E. Florek (Born 1957)  Accounting Officer, and Assistant Treasurer 
Vice President, Director of Proxy Voting and Corporate  Since 2007 
Governance, Assistant Clerk, and Assistant Treasurer  Head of Fund Administration Services, 
Since 2000  Putnam Investments and Putnam Management 
   
Michael J. Higgins (Born 1976)  Stephen J. Tate (Born 1974) 
Vice President, Treasurer, and Clerk  Vice President and Chief Legal Officer 
Since 2010  Since 2021 
  General Counsel, Putnam Investments, 
Jonathan S. Horwitz (Born 1955)  Putnam Management, and Putnam Retail Management 
Executive Vice President, Principal Executive Officer,   
and Compliance Liaison  Mark C. Trenchard (Born 1962) 
Since 2004  Vice President 
  Since 2002 
Richard T. Kircher (Born 1962)  Director of Operational Compliance, Putnam 
Vice President and BSA Compliance Officer  Investments and Putnam Retail Management 
Since 2019   
Assistant Director, Operational Compliance, Putnam   
Investments and Putnam Retail Management   
   
Susan G. Malloy (Born 1957)   
Vice President and Assistant Treasurer   
Since 2007   
Head of Accounting and Middle Office Services,   
Putnam Investments and Putnam Management   

 

The principal occupations of the officers for the past five years have been with the employers as shown above, although in some cases they have held different positions with such employers. The address of each officer is 100 Federal Street, Boston, MA 02110.

Government Money Market Fund 43 

 

 

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.

44 Government Money Market Fund 

 

 

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

 

This report is for the information of shareholders of Putnam Government Money Market Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.

 


Item 2. Code of Ethics:
(a) The fund’s principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund’s investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers.

Item 3. Audit Committee Financial Expert:
The Funds’ Audit, Compliance and Risk Committee is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Trustees believe that each member of the Audit, Compliance and Risk Committee also possesses a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualifies him or her for service on the Committee. In addition, the Trustees have determined that each of Dr. Hill and Mr. Singh qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education.The SEC has stated, and the funds’ amended and restated agreement and Declaration of Trust provides, that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit, Compliance and Risk Committee and the Board of Trustees in the absence of such designation or identification.

Item 4. Principal Accountant Fees and Services:
The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor:


Fiscal year ended Audit Fees Audit-Related Fees Tax Fees All Other Fees
September 30, 2022 $33,248 $ — $4,601 $ —
September 30, 2021 $33,517 $ — $4,387 $ —

For the fiscal years ended September 30, 2022 and September 30, 2021, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $302,884 and $269,286 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund.

Audit Fees represent fees billed for the fund’s last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements.

Audit-Related Fees represent fees billed in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation.

Tax Fees represent fees billed in the fund’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities.

Pre-Approval Policies of the Audit, Compliance and Risk Committee. The Audit, Compliance and Risk Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds’ independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures.

The Audit, Compliance and Risk Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds’ independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm.

The following table presents fees billed by the fund’s independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2–01 of Regulation S-X.


Fiscal year ended Audit-Related Fees Tax Fees All Other Fees Total Non-Audit Fees
September 30, 2022 $ — $298,283 $ — $ —
September 30, 2021 $ — $264,899 $ — $ —

Item 5. Audit Committee of Listed Registrants
Not applicable

Item 6. Schedule of Investments:
The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.

Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies:
Not applicable

Item 8. Portfolio Managers of Closed-End Investment Companies
Not Applicable

Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:
Not applicable

Item 10. Submission of Matters to a Vote of Security Holders:
Not applicable

Item 11. Controls and Procedures:
(a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

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

Item 12. Disclosures of Securities Lending Activities for Closed-End Management Investment Companies:
Not Applicable

Item 13. Exhibits:
(a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith.

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

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

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

Putnam Investment Funds
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer

Date: November 28, 2022
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: November 28, 2022
By (Signature and Title):
/s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer

Date: November 28, 2022