Putnam Spectrum Funds

Seeking returns from opportunities
in leveraged companies

With a career that spans the history of
leveraged investing, portfolio manager David Glancy has deep expertise and specialized skills.

Can increase return on equity | Total return and lower volatility potential | Performance history of leveraged companies

Debt securities of leveraged companies offer total return and lower volatility potential

The debt securities of leveraged companies include high-yield bonds and bank loan securities, investments that can provide attractive total return through a combination of current income and capital appreciation. In addition, the debt of leveraged companies tends to be less volatile than the equity securities, as measured by standard deviation over three years ended December 31, 2011 (see graph below).

With these characteristics, debt securities can help to diversify a portfolio of leveraged company stocks. Adding high-yield bonds and bank loans to a portfolio of leveraged company stocks can significantly reduce its volatility, even during a bear market.

Diversification across equity and debt securities reduced volatility in 3-year index performance (12/31/08-12/31/11)

This chart is for informational purposes only. It does not reflect the performance of any Putnam fund, which will differ. Leveraged company stocks are represented by the Credit Suisse Leveraged Equity Index. The hypothetical portfolio is composed of a 50% allocation to the Credit Suisse Leveraged Equity Index, a 30% allocation to the JPMorgan Developed High Yield Index, and a 20% allocation to the Barclays Capital U.S. High Yield Loan Index, which is an unmanaged index that provides broad and comprehensive total return metrics of the universe of U.S. dollar denominated syndicated term loans. Indexes are unmanaged and do not reflect any fees or expenses, and you cannot invest directly in an index. Past performance is not indicative of future results, and results may differ over other performance periods. Standard deviation measures how widely a set of values varies from the mean. It is a historical measure of the variability of return earned by an investment portfolio. Diversification does not assure a profit or protect against loss. It is possible to lose money in a diversified portfolio.

Read David Glancy’s latest insight into why leveraged companies are choosing to pay more for financing.

Product Information

Fund Fact Sheets (pdf)

Literature (pdf)

Consider these risks before investing: Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Our focus on leveraged companies and the fund's "non-diversified" status can increase the fund's vulnerability to these factors. Our use of short selling may increase these risks.

Additional risks associated with Putnam Capital Spectrum Fund: Funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses. Our focus on leveraged companies and the fund's "non-diversified" status can increase the fund's vulnerability to these factors. Our use of short selling may increase these risks.

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus or summary prospectus containing this and other information for any Putnam fund or product, click on the prospectus section or call your financial representative or call Putnam at 1-800-225-1581. Please read carefully the prospectus if available before investing.

Putnam Retail Management