Prior to June 1, 2018, the fund was known as Putnam Absolute Return 100 Fund. All fund data for dates prior to June 1, 2018, reflect the fund's previous investment strategy in effect at that time.

Short Duration Bond Fund (Class Y)  (PARYX)

Pursuing income with a multi-sector, lower duration approach

Short Duration Bond Fund received an  Overall Morningstar Rating™  of  
Short Duration Bond Fund (PARYX)

Highlights

Objective

The fund seeks as high a rate of current income as we believe is consistent with preservation of capital.

Strategy and process

  • Sector diversification: The fund invests in a diversified portfolio of fixed-income securities, including corporate debt, bank loans, sovereign debt, and securitized assets, such as mortgage-backed and asset-backed securities.
  • Managing rate sensitivity: The fund invests in short-term bonds and other securities, and generally maintains an effective duration, or interest-rate sensitivity, of three years or less.
  • Fundamental approach: The fund's experienced portfolio managers implement active strategies that consider several factors, including credit, interest-rate, and prepayment risks, and general market conditions.

Fund price

 Yesterday’s close 52-week high 52-week low
Net asset value $10.19
0.10% | $0.01 		$10.19
10/03/19 		$10.00
01/28/19
(Optional)

Fund facts as of 12/31/19

Total net assets
$1,211.21M
Turnover (fiscal year end)
18%
Dividend frequency (view rate)
Monthly
Number of holdings
543
Fiscal year-end
October
CUSIP / Fund code
746764380 / 1863
Inception date
12/23/08
Class Y  
Category
Fixed Income
Open to new investors
Ticker
PARYX

Management team

Emily E. Shanks

Portfolio Manager

Albert Chan, CFA

Portfolio Manager

D. William Kohli

Chief Investment Officer, Fixed Income

Brett S. Kozlowski, CFA

Portfolio Manager

Manager commentary | Q4 2019

How a short-duration strategy stays diversified

Portfolio Manager Emily Shanks discusses positioning in the short-duration bond strategy.

Literature

Performance

  • Total return (%) as of 12/31/19

  • Annual performance as of 12/31/19

Annualized Total return (%) as of 12/31/19

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge 4.89% 3.52% 2.54% 1.83%
After sales charge N/A N/A N/A N/A
ICE BofA 1-3 Year U.S. Corporate Index 5.43%2.97%2.46%2.63%
ICEBofA US TBill-ICEBofA 1-3yr US Corp Linkd Bench 5.43%2.79%1.75%0.94%

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. Returns before sales charge do not reflect the current maximum sales charges as indicated below. Had the sales charge been reflected, returns would be lower. Returns at public offering price (after sales charge) for class A and class M shares reflect the current maximum initial sales charges of 5.75% and 3.50% for equity funds and 4.00% and 3.25% for income funds (2.25% for class A of Putnam Floating Rate Income Fund, Short-Term Municipal Income, Short Duration Bond Fund, and Fixed Income Absolute Return Fund), respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter (except for Putnam Floating Rate Income Fund, Putnam Short Duration Bond Fund, Putnam Fixed Income Absolute Return Fund, and Putnam Short-Term Municipal Income Fund, which is 1% in the first year, declining to 0.5% in the second year, and is eliminated thereafter). Class C shares reflect 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, adjusted for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares (with the exception of Putnam Tax-Free High Yield Fund and Putnam AMT-Free Municipal Fund, which are based on the historical performance of class B shares). Performance for class A, C, and Y shares of Putnam Mortgage Opportunities Fund before their inception is derived from the historical performance of class I shares, which have been adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares. Returns at public offering price (after sales charge) for class N shares reflect the current maximum initial sales charge of 1.50%. Class R5/R6 shares, 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 R5/R6 shares before their inception are derived from the historical performance of class Y shares, which have not been adjusted for the lower expenses; had they, returns would have been higher. Class A shares of Putnam money market funds have no initial sales charge. For a portion of the period, some funds had expenses limitations or had been sold on a limited basis with limited assets and expenses, without which returns would be lower.

Performance snapshot

  Before sales charge After sales charge
1 mt. as of 12/31/19 0.21% -
YTD as of 01/24/20 0.46% -

Yield

Distribution rate before sales charge
as of 01/24/20		 2.53%
Distribution rate after sales charge
as of 01/24/20		 2.53%
30-day SEC yield as of 12/31/19 2.31%

Risk-adjusted performance as of 12/31/19

Sharpe ratio (3 yrs.) 2.38
Information ratio (3 yrs.) 0.97

Volatility as of 12/31/19

Standard deviation (3 yrs.) 0.80%
Beta 0.55
R-squared 0.33

Lipper rankings as of 12/31/19

Time period Rank/Funds in category Percentile ranking
1 yr. 106/365 29%
3 yrs. 13/314 5%
5 yrs. 35/273 13%
10 yrs. 113/175 65%
Lipper category: Short Investment Grade Debt Funds

Morningstar Ratings™ as of 12/31/19

Time period Funds in category Morningstar Rating™
Overall 488
3 yrs. 488
5 yrs. 442
10 yrs. 280
Morningstar category: Short-Term Bond

Distributions

Accrual days 30
Accrual start date 12/02/19
Accrual end date 12/31/19
Payable date 12/31/19
Income $0.02150004
Extra taxable income --
Dividend frequency Monthly

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.

The Morningstar RatingTM 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 three-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 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 three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-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 three-year period actually has the greatest impact because it is included in all three rating periods.

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

Abbvie P/P 144a 02.6000 11/21/2024 1.08%
Comcast Corporation 03.7000 04/15/2024 0.86%
Citigroup 04.0440 06/01/2024 0.83%
Jpmorgan Chase 03.3750 05/01/2023 0.80%
Cas 2017-C02 2ed3 03.1420 09/25/2029 0.78%
Goldman Sachs Group 03.6250 02/20/2024 0.76%
Bristol-Myers P/P 144a 02.9000 07/26/2024 0.76%
Ubs Group Ag P/P 144a 03.4910 05/23/2023 0.75%
Morgan Stanley 03.7000 10/23/2024 0.64%
CAS 2016-C01 1M2 08.5420 08/25/2028 0.63%
Top 10 holdings, percent of portfolio 7.89%

Fixed income statistics as of 12/31/19

Average effective maturity 2.33 yrs.
Average effective duration 1.80 yrs.
Average yield to maturity 2.14%
Average coupon 2.96%

Maturity detail as of 12/31/19

0 - 1 yr. 26.95%
1 - 5 yrs. 71.45%
5 - 10 yrs. 1.56%
Over 15 yrs. 0.04%

Quality rating as of 12/31/19

AAA 9.93%
AA 12.55%
A 27.33%
BBB 27.23%
BB 1.01%
B 0.71%
CCC and Below 0.12%
Not Rated 1.64%
Net cash 19.48%

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: Allocation of assets among fixed-income strategies and sectors may hurt performance. The effects of inflation may erode the value of your investment over time. 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. 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. Unlike bonds, funds that invest in bonds have fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk, which means that they may increase in value less when interest rates decline and decline in value more when interest rates rise. The fund may have to invest the proceeds from prepaid investments, including mortgage- and asset-backed investments, in other investments with less attractive terms and yields. International investing involves currency, economic, and political risks. Emerging-market securities have illiquidity and volatility risks. The fund may not achieve its goal, and it is not intended to be a complete investment program. 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. The fund's prospectus lists additional risks.

Credit qualities are shown as a percentage of the fund's net assets. A bond rated BBB or higher (A-3 or higher, for short-term debt) 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, if any, 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.

Country allocation as of 12/31/19

United States 91.36%
Canada 2.30%
United Kingdom 0.96%
France 0.95%
Bermuda 0.82%
Switzerland 0.75%
Luxembourg 0.68%
Norway 0.55%
Australia 0.50%
 
Other		 1.13%
Japan 0.30%
Sweden 0.26%
Netherlands 0.17%
Germany 0.16%
Ireland 0.16%
Israel 0.08%

Expenses

Expense ratio

 Class A Class B Class C Class R Class R6 Class Y
Total expense ratio 0.63% 0.83% 1.38% 0.88% 0.38% 0.38%
What you pay 0.63% 0.83% 1.38% 0.88% 0.38% 0.38%

Sales charge

 Breakpoint Class A Class B Class C Class R Class R6 Class Y
$0-$49,999 2.25% / 2.00% 0.00% / 1.00% 0.00% / 1.00% -- -- --
$50,000-$99,999 2.25% / 2.00% 0.00% / 1.00% 0.00% / 1.00% -- -- --
$100,000-$249,999 1.25% / 1.00% -- 0.00% / 1.00% -- -- --
$250,000-$499,999 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 $250,000+) Class B Class C Class R Class R6 Class Y
0 to 9 mts. 1.00% 1.00% 1.00% -- -- --
9 to 12 mts. 0.00% 1.00% 1.00% -- -- --
2 yrs. -- 0.50% 0.00% -- -- --
3 yrs. -- -- 0.00% -- -- --
4 yrs. -- -- 0.00% -- -- --
5 yrs. -- -- 0.00% -- -- --
6 yrs. -- -- 0.00% -- -- --
7+ yrs. -- -- 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 $250,000 and participant-directed qualified retirement plans, see a Putnam fund prospectus and the statement of additional information.

The ICE BofA 1-3 Year U.S. Corporate Index is an unmanaged index U.S. investment-grade corporate debt with a remaining term to maturity of less than 3 years. The ICE BofA U.S. Treasury Bill Index is an unmanaged index that tracks the performance of U.S. dollar denominated U.S. Treasury Bills publicly issued in the U.S. domestic market. Qualifying securities must have a remaining term of at least one month to final maturity and a minimum amount outstanding of $1 billion. The ICE BofA U.S. Treasury Bill-ICE BofA 1-3 Year U.S. Corporate Linked Benchmark represents performance of the ICE BofA U.S. Treasury Bill Index from the inception date of the fund through May 31, 2018, and performance of the ICE BofA 1-3 Year U.S. Corporate Index from June 1, 2018 thereafter. You cannot invest directly in an index.

Each fund seeks to earn a positive total return that exceeds the rate of inflation by a targeted amount over a reasonable period of time regardless of market conditions. There can be no assurance that a fund will meet its objective. The fund is not intended to outperform stocks and bonds during strong market rallies. Consult your financial advisor to determine which fund fits into your investment goals and time horizon.

Consider these risks before investing: Allocation of assets among fixed-income strategies and sectors may hurt performance. The effects of inflation may erode the value of your investment over time. 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. 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. Unlike bonds, funds that invest in bonds have fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk, which means that they may increase in value less when interest rates decline and decline in value more when interest rates rise. The fund may have to invest the proceeds from prepaid investments, including mortgage- and asset-backed investments, in other investments with less attractive terms and yields. International investing involves currency, economic, and political risks. Emerging-market securities have illiquidity and volatility risks. The fund may not achieve its goal, and it is not intended to be a complete investment program. 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. The fund's prospectus lists additional risks.

Credit qualities are shown as a percentage of the fund's net assets. A bond rated BBB or higher (A-3 or higher, for short-term debt) 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, if any, 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.