Active Income

Mortgage Securities Fund (Class Y)  (PUSYX)

Seeking opportunities through mortgage-backed securities

Highlights

Objective

The fund seeks as high a level of current income as Putnam Management believes is consistent with preservation of capital.

Strategy and process

  • Broad securitized opportunitiesThe fund invests in mortgage sectors, including agency MBS and CMOs, and non-agency RMBS and CMBS, and ABS.
  • Higher potential returns By investing in mortgage-backed bonds, the fund can offer the potential for higher returns than an investment strategy focused only on agency MBS.
  • Leading research The fund's portfolio managers use proprietary models to assist in the evaluation of mortgage-backed bonds and to manage the fund's interest-rate risk.

Fund price and assets

Net asset value
(prior close)
$8.43
0.24% | $0.02
52-week high $8.72 (06/28/23)
52-week low $7.93 (10/19/23)
Net assets and outstanding shares Download CSV
(Optional)

Yield

Distribution rate before sales charge
as of 06/14/24
9.40%
Distribution rate after sales charge
as of 06/14/24
9.40%
30-day SEC yield as of 05/31/24 7.18%

Consistency of positive performance over five years

Performance represents 5-year returns in rolling quarter-end periods since inception.

Performance shown does not reflect the effects of any sales charges. Note that returns of 0.00% are counted as positive periods. For complete fund performance, please click on the performance tab.

12.45%

Best 5-year annualized return

(for period ending 06/30/89)


-1.44%

Worst 5-year annualized return

(for period ending 09/30/23)


5.47%

Average 5-year annualized return


Fund facts as of 05/31/24

Total net assets
$418.60M
Turnover (fiscal year end)
1,500%
Dividend frequency (view rate)
Monthly
Number of holdings
452
Fiscal year-end
September
CUSIP / Fund code
746885409 / 1817
Inception date
04/11/94
Category
Taxable Income
Open to new investors
Ticker
PUSYX

Management team

Chief Investment Officer, Fixed Income
Co-Head of Structured Credit
Co-Head of Structured Credit

Literature


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Performance

  • Total return (%) as of 03/31/24

  • Annual performance as of 03/31/24

Annualized Total return (%) as of 03/31/24

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge 5.01% -3.96% -0.49% 0.55%
After sales charge N/A N/A N/A N/A
Bloomberg U.S. MBS Index 1.39%-2.84%-0.39%1.12%
Putnam Mortgage Securities Linked Benchmark 1.39%-2.84%-0.39%1.01%

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. The "before sales charge" performance does not reflect the current maximum sales charges, which we explain below. If performance did reflect the charges, it would be lower. The "after sales charge" performance (or returns at public offering price) varies by share class and fund. For class A and class M shares, the current maximum initial sales charges are 5.75% and 3.50% for equity funds and 4.00% and 3.25% for income funds, respectively (with these exceptions: 2.25% for class A of Floating Rate Income Fund, Short-Term Municipal Income Fund, Short Duration Bond Fund, and Strategic Intermediate Municipal Fund). Class B share performance reflects the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declines to 1% in the sixth year, and is eliminated thereafter (except for Floating Rate Income Fund and Short Duration Bond Fund; for these funds, the CDSC is 1% in the first year, declines to 0.5% in the second year, and is eliminated thereafter). Class C share performance reflects a 1% CDSC the first year that is eliminated thereafter. Performance for class B, C, M, N, R, and Y shares prior to their inception is derived from the historical performance of class A shares by adjusting for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares (note, for two funds - Tax-Free High Yield Fund and Strategic Intermediate Municipal Fund performance prior to inception is based on the historical performance of class B shares). Performance for class A, C, R6, and Y shares of Mortgage Opportunities Fund before their inception is derived from the historical performance of class I shares, which has been adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares. The "after sales charge" performance (at public offering price) for class N shares reflects the current maximum initial sales charge of 1.50%. Class R, R3, R4, R5, and R6 shares, which are available to qualified employee-benefit plans only, are sold without an initial sales charge and have no CDSC. Class Y shares are generally only available for corporate and institutional clients and have no initial sales charge. Performance for class R3 and R4 shares prior to their inception is derived from the historical performance of class Y shares by adjusting for the higher operating expenses for such shares. Performance for class R5 shares before their inception is derived from the historical performance of class Y shares, which has not been adjusted for the lower expenses; had it been adjusted, performance would be higher (with the exception of the Sustainable Retirement Maturity, 2025, 2030, 2035, and 2040 Funds, for which performance is derived from the historical performance of class R6 shares and has been adjusted for the higher operating expenses for such shares; and the Sustainable Retirement 2045, 2050, 2055, and 2060 Funds, for which performance is derived from the historical performance of class R6 shares and has not been adjusted for the lower expenses; had it been adjusted, performance would be higher). Performance for class R6 shares before their inception is derived from the historical performance of class Y shares, which has not been adjusted for the lower operating expenses; had it been adjusted, performance would be higher. For a portion of the period, some funds had expenses limitations or had been sold on a limited basis with limited assets and expenses. Had these limits not been in place, performance would be lower.

Performance snapshot

  Before sales charge After sales charge
1 mt. as of 05/31/24 2.03% -
YTD as of 06/14/24 or prior close 3.06% -

Yield

Distribution rate before sales charge
as of 06/14/24
9.40%
Distribution rate after sales charge
as of 06/14/24
9.40%
30-day SEC yield as of 05/31/24 7.18%

Risk-adjusted performance as of 04/30/24

Sharpe ratio (3 yrs.) -0.90
Information ratio (3 yrs.) -0.18

Volatility as of 04/30/24

Standard deviation (3 yrs.) 8.03%
Beta 0.95
R-squared 0.86

Fixed income statistics as of 04/30/24

Average effective duration 6.52 yrs.

Lipper rankings as of 04/30/24

Time period Rank/Funds in category Percentile ranking
1 yr. 30/151 20%
3 yrs. 94/132 71%
5 yrs. 74/119 62%
10 yrs. 68/90 75%
Lipper category: U.S. Mortgage Funds

Morningstar Ratings as of 04/30/24

Time period Funds in category Morningstar Rating
Overall 556
3 yrs. 556
5 yrs. 528
10 yrs. 376
Morningstar category: Intermediate Core-Plus Bond

Distributions

Record/Ex dividend date 05/16/24
Payable date 05/20/24
Income $0.066
Extra income --
Short-term cap. gain --
Long-term cap. gain --

Lipper rankings are based on total return without sales charge relative to all share classes of funds with similar objectives as determined by Lipper. Past performance is not indicative of future results.

Morningstar Ratings for the specific share classes only; other classes may have different performance characteristics.

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a 3-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% 3-year rating for 36–59 months of total returns, 60% 5-year rating/40% 3-year rating for 60–119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all three rating periods.

Some of Morningstar's proprietary calculations, including the Morningstar Rating™, are not customarily calculated based on adjusted historical returns. However, for new share classes/channels, Morningstar may calculate an extended performance Morningstar Rating that is based, in part, on adjusted historical (or "pre-inception") returns for periods prior to the inception of the share class of the fund shown herein ("Report Share Class").

The extended performance is calculated by creating a performance stream consisting of the Report Share Class and older share class(s). Morningstar adjusts the historical total returns of the older share class(es) of a fund to reflect higher expenses in the Report Share Class. Morningstar does not hypothetically adjust returns upwards for lower expenses.

The extended performance Morningstar Risk-Adjusted Return is then calculated for 3-, 5-, and 10-year time periods and used to determine the extended performance Morningstar Rating. The extended performance Morningstar Rating for this fund does not affect the retail fund data published by Morningstar, as the bell curve distribution on which the ratings are based includes only funds with actual returns. The Overall Morningstar Rating for multi-share open-end funds will be either based on actual performance only or extended performance only. Once the share class turns three years old, the Overall Morningstar Rating will be based on actual ratings only. The Overall Morningstar Rating for multi-share variable annuities is based on a weighted average of any ratings that are available.

While the inclusion of pre-inception data, in the form of extended performance, can provide valuable insight into the probable long-term behavior of newer share classes of a fund, investors should be aware that an adjusted historical return can only provide an approximation of that behavior. For example, the fee structures of a retail share class will vary from that of an institutional share class, as retail shares tend to have higher operating expenses and sales charges. These adjusted historical returns are not actual returns. The underlying investments in the share classes used to calculate the pre-performance string will likely vary from the underlying investments held in the fund after inception. Calculation methodologies utilized by Morningstar may differ from those applied by other entities, including the fund itself.

© 2023 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The ratio is calculated by dividing the manager’s returns by the returns of the index during the up-market, and multiplying that factor by 100. The down-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager’s returns by the returns of the index during the down-market and multiplying that factor by 100.


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Holdings

Fnma Fn30 Tba Umbs 06.0000 05/01/2054 21.67%
Fnma Fn30 Tba Umbs 02.0000 05/01/2054 19.02%
Fnma Fn30 Tba Umbs 02.5000 05/01/2054 13.74%
Fnma Fn30 Tba Umbs 03.5000 05/01/2054 6.96%
Fnma Fn30 Tba Umbs 03.0000 05/01/2054 6.67%
Fnma Fn30 Tba Umbs 05.0000 05/01/2054 6.26%
Gnma Gii30 Tba 02.5000 05/01/2054 4.81%
Gnma Gii30 Tba 02.0000 05/01/2054 4.43%
Fnma Fn30 Tba Umbs 04.0000 05/01/2054 4.37%
Fnma Fn30 Tba Umbs 04.5000 05/01/2054 4.06%
Top 10 holdings, percent of portfolio 91.98%



Fixed income statistics as of 04/30/24

Average effective maturity 13.84 yrs.
Average effective duration 6.52 yrs.
Average yield to maturity 7.59%
Average coupon 8.89%

Portfolio composition as of 04/30/24

  Cash investments Non-cash investments Total portfolio
  Weight Spread duration Weight Spread duration Weight Spread duration
Agency pass-through 0.00% 0.00 122.22% 6.92 122.22% 6.92
Agency CMO 31.59% 1.23 0.00% 0.00 31.59% 1.23
Commercial MBS 28.61% 0.74 -1.62% -0.03 26.99% 0.72
Residential MBS (non-agency) 23.83% 0.67 0.00% 0.00 23.83% 0.67
Asset-backed securities (ABS) 1.50% 0.01 0.00% 0.00 1.50% 0.01
Interest rate swaps 0.00% 0.00 0.00% -4.74 0.00% -4.74
U.S. Treasury/agency 0.00% 0.00 0.00% -0.42 0.00% -0.42
Net cash 14.47% 0.00 0.00% 0.00 14.47% 0.00

Spread duration is displayed in years and reflects the contribution by sector to the portfolio's total spread duration with the exception of the Treasury and Interest-rate swap sectors where effective duration is displayed. Spread duration estimates the price sensitivity of a specific sector or asset class to a 100 basis-point movement, 1%, (either widening or narrowing) in its yield spread relative to Treasuries. Effective duration provides a measure of a portfolio's interest-rate sensitivity. The longer a portfolio's duration, the more sensitive the portfolio is to shifts in the interest rates. Allocations may not total 100% of net assets because the table includes the notional value of derivatives (the economic value for purposes of calculating periodic payment obligations), in addition to the market value of securities.

Maturity detail as of 04/30/24

0 - 1 yr. -96.47%
1 - 5 yrs. 40.62%
5 - 10 yrs. 116.48%
10 - 15 yrs. 39.90%
Over 15 yrs. -0.54%

Quality rating as of 04/30/24

AAA 34.90%
AA 2.16%
A 4.47%
BBB 8.18%
BB 6.54%
B 5.76%
CCC and Below 4.90%
Not Rated 18.61%
Net cash 14.47%

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: Funds that invest in government securities are not guaranteed. Mortgage- and asset-backed securities are subject to prepayment risk, which means that they may increase in value less than other bonds when interest rates decline and decline in value more than other bonds when interest rates rise. The fund may have to invest the proceeds from prepaid investments in other investments with less attractive terms and yields.

The fund’s investments in mortgage-backed securities and asset-backed securities, and in certain other securities and derivatives, may be or become illiquid. The fund’s exposure to mortgage-backed securities may make the fund’s net asset value more susceptible to economic, market, political, and other developments affecting the housing or real estate markets and the servicing of mortgage loans secured by real estate properties. The fund currently has significant investment exposure to commercial mortgage-backed securities. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds. Default risk is generally higher for non-qualified mortgages. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Unlike bonds, funds that invest in bonds have fees and expenses. The value of investments in the fund’s portfolio may fall or fail to rise over 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 (such as the housing or real estate markets). These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings or in relevant markets.

Our investment techniques, analyses, and judgments may not produce the outcome we intend. We, or the fund’s other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.

Credit qualities are shown as a percentage of the fund's net assets. A bond rated BBB or higher is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. Ratings and portfolio credit quality will vary over time. Net cash represent the market value weights of cash, derivatives, and short-term securities in the portfolio. The fund itself has not been rated by an independent rating agency. Data in the chart reflect a new calculation methodology put into effect 6/30/22.


Expenses

Expense ratio

Class A Class B Class C Class R Class R6 Class Y
Total expense ratio 0.97% 1.72% 1.72% 1.22% 0.56% 0.72%
What you pay 0.97% 1.72% 1.72% 1.22% 0.56% 0.72%

Sales charge

 Breakpoint Class A Class B Class C Class R Class R6 Class Y
$0-$49,999 4.00% / 3.50% 0.00% / 4.00% 0.00% / 1.00% -- -- --
$50,000-$99,999 4.00% / 3.50% 0.00% / 4.00% 0.00% / 1.00% -- -- --
$100,000-$249,999 3.25% / 2.75% -- 0.00% / 1.00% -- -- --
$250,000-$499,999 2.50% / 2.00% -- 0.00% / 1.00% -- -- --
$500,000-$999,999 0.00% / 1.00% -- -- -- -- --
$1M-$4M 0.00% / 1.00% -- -- -- -- --
$4M-$50M 0.00% / 0.50% -- -- -- -- --
$50M+ 0.00% / 0.25% -- -- -- -- --

CDSC

  Class A (sales for $500,000+) Class B Class C Class R Class R6 Class Y
0 to 9 mts. 1.00% 5.00% 1.00% -- -- --
9 to 12 mts. 1.00% 5.00% 1.00% -- -- --
2 yrs. 0.00% 4.00% 0.00% -- -- --
3 yrs. 0.00% 3.00% 0.00% -- -- --
4 yrs. 0.00% 3.00% 0.00% -- -- --
5 yrs. 0.00% 2.00% 0.00% -- -- --
6 yrs. 0.00% 1.00% 0.00% -- -- --
7+ yrs. 0.00% 0.00% 0.00% -- -- --

Trail commissions

  Class A Class B Class C Class R Class R6 Class Y
  0.25% 0.25% 1.00% 0.50% 0.00% 0.00%
  NA NA NA NA NA NA
  NA NA NA NA NA NA

For sales and trail commission information on purchases over $500,000 and participant-directed qualified retirement plans, see a Putnam fund prospectus and the statement of additional information.

The Bloomberg U.S. MBS Index covers the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). The Bloomberg GNMA Index is an unmanaged index of Government National Mortgage Association bonds. The Putnam Mortgage Securities Linked Benchmark represents the performance of the Bloomberg GNMA Index through April 18, 2018, and the performance of the Bloomberg U.S. MBS Index thereafter. You cannot invest directly in an index.

Consider these risks before investing: Funds that invest in government securities are not guaranteed. Mortgage- and asset-backed securities are subject to prepayment risk, which means that they may increase in value less than other bonds when interest rates decline and decline in value more than other bonds when interest rates rise. The fund may have to invest the proceeds from prepaid investments in other investments with less attractive terms and yields.

The fund’s investments in mortgage-backed securities and asset-backed securities, and in certain other securities and derivatives, may be or become illiquid. The fund’s exposure to mortgage-backed securities may make the fund’s net asset value more susceptible to economic, market, political, and other developments affecting the housing or real estate markets and the servicing of mortgage loans secured by real estate properties. The fund currently has significant investment exposure to commercial mortgage-backed securities. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds. Default risk is generally higher for non-qualified mortgages. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Unlike bonds, funds that invest in bonds have fees and expenses. The value of investments in the fund’s portfolio may fall or fail to rise over 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 (such as the housing or real estate markets). These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings or in relevant markets.

Our investment techniques, analyses, and judgments may not produce the outcome we intend. We, or the fund’s other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.

Credit qualities are shown as a percentage of the fund's net assets. A bond rated BBB or higher is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. Ratings and portfolio credit quality will vary over time. Net cash represent the market value weights of cash, derivatives, and short-term securities in the portfolio. The fund itself has not been rated by an independent rating agency. Data in the chart reflect a new calculation methodology put into effect 6/30/22.