Convertible Securities Fund (PCONX)

Offering investors the diverse benefits of convertible securities since 1972

Fund price	Yesterday's close	52-week high	52-week low
Net asset value	$24.32 0.33% ( $0.08 )	$25.54 (03/05/14)	$21.40 (04/18/13)

Historical

Management team

Eric N. Harthun, CFA (Investing since 1994)

Robert L. Salvin (Investing since 1986)

Strategy and process

Growth potential: The fund seeks to provide stock-like returns over time as the stock component of convertible securities tends to rise with the broader market.
Steady income: The fund's performance in down markets is bolstered by the contractually guaranteed income from convertible securities.
Effective diversification: The fund can provide effective diversification for many investor portfolios, because convertible securities are not highly correlated with either stocks or bonds.

Fund manager commentary

Health-care sector a driver in convertible performance

Portfolio Manager Rob Salvin talks about industry sectors, like health care and biotech, where growth is driving performance for convertibles.

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. To obtain the most recent month-end performance, visit putnam.com.

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 Putnam Absolute Return 500 Fund and 700 Fund, and 4.00% and 3.25% for income funds (1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and 300 Fund, and Putnam Short-Term Municipal Income 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 Absolute Return 100 Fund and 300 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, R, T, 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 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, M, and T 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.

Objective

The fund seeks, with equal emphasis, current income and capital appreciation. Its secondary objective is conservation of capital.

Fund facts as of 03/31/14

Fiscal year end	October
Asset Class	Value
Inception date	06/29/72
Total net assets	$922.04M
Dividend frequency	Quarterly
View distribution rate
Number of holdings	146
Open to new investors
CUSIP	746476100
Fund code	0007
Turnover (fiscal year end)	72%
Ticker	PCONX

Literature

Total return (%) as of 03/31/14

Annual Cumulative

Annualized performance	1 yr.	3 yrs.	5 yrs.	10 yrs.
Before sales charge	17.68%	8.81%	18.75%	7.13%
After sales charge	10.92%	6.69%	17.35%	6.50%
BofA ML All U.S. Convertible Index	21.13%	10.57%	19.20%	7.13%

Cumulative performance	1 yr.	3 yrs.	5 yrs.	10 yrs.
Before sales charge	17.68%	28.83%	136.11%	99.18%
After sales charge	10.92%	21.43%	122.54%	87.73%

Annual performance as of 03/31/14

	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013
Before sales charge	11.35%	2.07%	14.55%	5.88%	-39.46%	53.75%	19.55%	-6.47%	15.09%	21.96%
BofA ML All U.S. Convertible Index	9.61%	1.01%	12.83%	4.53%	-35.73%	49.13%	16.77%	-5.18%	14.96%	24.92%

Performance snapshot

	Before sales charge	After sales charge
1 mt.	-0.86 %	-6.56 %
as of 03/31/14
YTD	0.41 %	-5.36 %
as of 04/15/14

Yield

Distribution rate before sales charge as of 04/15/14	2.34%
Distribution rate after sales charge as of 04/15/14	2.20%
30-day SEC yield as of 03/31/14 (after sales charge)	0.91%

Lipper rankings as of 03/31/14

Convertible Securities	Percentile ranking	Rank/Funds in category
1 yr.	50%	38/76
3 yrs.	25%	16/63
5 yrs.	23%	12/53
10 yrs.	24%	9/37

Morningstar ratings as of 03/31/14

Convertibles	Rating	Number of funds in category
Overall	3	(74)
3 yrs.	2	(74)
5 yrs.	3	(64)
10 yrs.	3	(46)

Distributions

Record/Ex dividend date	03/26/14
Payable date	03/28/14
Income	$0.142
Extra income	--
Short-term cap. gain	--
Long-term cap. gain	--

Volatility as of 03/31/14

Standard deviation (3 yrs.)	10.06%
Beta	1.02
R-squared	0.98

Risk-adjusted performance as of 03/31/14

Alpha (3 yrs.)	-1.94
Sharpe ratio (3 yrs.)	0.87
Treynor ratio (3 yrs.)	8.63
Information ratio (3 yrs.)	-1.10

Capture ratio as of 03/31/14

Up-market (3 yrs.)	94.80
Down-market (3 yrs.)	105.42

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.

For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each 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. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. Data is historical. 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.

Top 10 holdings as of 03/31/14

Micron Technology	2.63%
Gilead Sciences	2.58%
Liberty Interactive Llc	2.28%
Chesapeake Energy Corp	1.85%
United Technologies Corp	1.84%
Xilinx	1.73%
Sandisk Corp	1.68%
Priceline.Com	1.66%
Siemens Financieringsmaatschappij Nv	1.57%
Amg Capital Trust Ii	1.42%
Top 10 holdings, percent of portfolio	19.24%

Full portfolio | Prior top 10

Full portfolio holdings as of 12/31/13

GILEAD SCIENC P/P CV 01.6250 05/01/2016	3.15 %
MICRON TECH P/P 144A CV 01.6250 02/15/2033	3.09 %
CHESAPEAKE ENRGY P/P 144A 05.7500 CUM CV PFD	2.03 %
UNITED TECHNOLOGIES CORP 07.5000 CUM CV PFD	1.78 %
PRICELINE.COM CV 01.0000 03/15/2018	1.72 %
SIEMENS FINANCIERINGSMAT USD 01.6500 08/16/2019	1.62 %
XILINX INC CV 02.6250 06/15/2017	1.56 %
WEYERHAEUSER CO 06.3750 CUM CV PFD	1.52 %
NOVELLUS SYS CV 02.6250 05/15/2041	1.43 %
AMG CAPITAL TRUST II 05.1500 CV PFD	1.39 %
MGM RESORTS CV 04.2500 04/15/2015	1.38 %
BROOKDALE SNR LIVING CV 02.7500 06/15/2018	1.23 %
LIBERTY INTER P/P 144A CV 00.7500 03/30/2043	1.20 %
INTEL CORP CV 03.2500 08/01/2039	1.17 %
HOST HOTELS P/P 144A CV 02.5000 10/15/2029	1.13 %
ARCELORMITTAL 06.0000 CUM CV PFD	1.12 %
ON SEMICONDUCTOR CORP CV 02.6250 12/15/2026	1.12 %
FOREST CITY CV 04.2500 08/15/2018	1.05 %
JARDEN CORP CV 01.8750 09/15/2018	1.05 %
BANK OF AMERICA CORP 07.2500 CV PFD	1.01 %
CROWN CASTLE INTL CORP 04.5000 CUM CV PFD	1.01 %
ISTAR FINANCIAL INC CV 03.0000 11/15/2016	0.95 %
SALESFORCE.CO P/P 144A CV 00.2500 04/01/2018	0.94 %
ARES CAPITAL CORP CV 05.7500 02/01/2016	0.92 %
LIBERTY INTERACTIVE CV 03.5000 01/15/2031	0.92 %
LINEAR TECHNOLOGY CORP CV 03.0000 05/01/2027	0.91 %
STANLEY BLACK & DECKER I 06.2500 CV PFD	0.90 %
VECTOR GROUP LTD CV 02.5000 01/15/2019	0.90 %
LIBERTY INTER P/P 144A CV 01.0000 09/30/2043	0.89 %
ALEXANDRIA REAL ESTATE E 07.0000 CUM CV PFD	0.88 %
SANDISK CORP P/P 144A CV 00.5000 10/15/2020	0.87 %
POST HOLDINGS INC P/P 144A 03.7500 CUM CV PFD	0.86 %
FIDELITY NATL CV 04.2500 08/15/2018	0.82 %
NEXTERA ENERGY INC 05.5990 CV PFD	0.82 %
SAFEGUARD SCI CV 05.2500 05/15/2018	0.82 %
SBA COMM CV 04.0000 10/01/2014	0.82 %
GENESEE & WYOMING INC 05.0000 CV PFD	0.81 %
COBALT INTL ENERGY INC CV 02.6250 12/01/2019	0.80 %
ENDO HLTH SOLUTIONS IN CV 01.7500 04/15/2015	0.79 %
PPL CORPORATION 08.7500 CV PFD	0.78 %
DEALERTRACK CV 01.5000 03/15/2017	0.77 %
DOMINION RESOURCES INC 06.1250 CUM CV PFD	0.77 %
MENTOR GRAPH CVSBDB 04.0000 04/01/2031	0.77 %
INCYTE CORP P/P 144A CV 01.2500 11/15/2020	0.76 %
LIBERTY MEDIA P/P 144A CV 01.3750 10/15/2023	0.74 %
MEDIDATA SOL P/P 144A CV 01.0000 08/01/2018	0.74 %
CEMEX SAB DE USD 04.8750 03/15/2015	0.73 %
CUBIST PHARMACEUTICALS CV 02.5000 11/01/2017	0.73 %
L-3 COMMS HLDGS INC CV 03.0000 08/01/2035	0.73 %
LEVEL 3 COMM INC. CV 06.5000 10/01/2016	0.73 %
SANDISK CORP CV 01.5000 08/15/2017	0.72 %
TELEFLEX INC CV 03.8750 08/01/2017	0.72 %
WELLPOINT INC CV 02.7500 10/15/2042	0.72 %
BLUCORA INC P/P 144A CV 04.2500 04/01/2019	0.70 %
CARDTRONICS P/P 144A CV 01.0000 12/01/2020	0.70 %
WRIGHT MEDCL CV 02.0000 08/15/2017	0.70 %
ALLSCRIPTS P/P 144A CV 01.2500 07/01/2020	0.69 %
GOODYEAR TIRE & RUBBER 05.8750 CUM CV PFD	0.69 %
CONTINENTAL FIN TRUST II 06.0000 CUM CV PFD	0.68 %
CIENA CORP P/P 144A CV 03.7500 10/15/2018	0.67 %
METLIFE INC 05.0000 CV PFD	0.67 %
WELLS FARGO & COMPANY 07.5000 CV PFD	0.67 %
BOTTOMLINE TECH CV 01.5000 12/01/2017	0.64 %
ENCORE CAPITA P/P 144A CV 03.0000 07/01/2020	0.64 %
VISHAY INTER P/P 144A CV 02.2500 05/15/2041	0.62 %
CUBIST PHARMA P/P 144A CV 01.1250 09/01/2018	0.61 %
HOLOGIC INC CV 02.0000 03/01/2042	0.61 %
STANDARD PACIFIC CORP CV 01.2500 08/01/2032	0.61 %
YANDEX NV P/P 144A 01.1250 12/15/2018	0.61 %
CHESAPEAKE ENERGY CORP CV 02.5000 05/15/2037	0.60 %
CONCUR TECH P/P 144A CV 00.5000 06/15/2018	0.60 %
HORNBECK OFF CV 01.5000 09/01/2019	0.60 %
TRINITY INDUSTRIES INC CVSBNT 03.8750 06/01/2036	0.60 %
WALTER INVESTMENT MGMT CV 04.5000 11/01/2019	0.59 %
YAHOO INC P/P 144A CV 00.0000 12/01/2018	0.59 %
RADIAN GROUP INC. CV 03.0000 11/15/2017	0.58 %
MEDICINES CO CV 01.3750 06/01/2017	0.57 %
PDL BIO PHARMA INC CV 03.7500 05/01/2015	0.57 %
AUXILIUM PHARMA CV 01.5000 07/15/2018	0.56 %
CBIZ INC P/P 144A CV 04.8750 10/01/2015	0.56 %
COVANTA HLDG CV 03.2500 06/01/2014	0.56 %
INVENSENSE P/P 144A CV 01.7500 11/01/2018	0.55 %
PHOTRONICS CV 03.2500 04/01/2016	0.55 %
TIVO INC P/P 144A CV 04.0000 03/15/2016	0.54 %
XM SATELLITE P/P 144A CV 07.0000 12/01/2014	0.54 %
HALCON RESOURCES CORP 05.7500 CUM CV PFD	0.53 %
TRW AUTOMOTIV CV 03.5000 12/01/2015	0.52 %
DFC GLOBAL CORP CV 03.2500 04/15/2017	0.51 %
FINISAR CORP P/P 144A CV 00.5000 12/15/2033	0.51 %
OFG BANCORP 08.7500 CV PFD	0.51 %
WEB.COM GROUP INC CV 01.0000 08/15/2018	0.51 %
M/I HOMES INC CV 03.0000 03/01/2018	0.50 %
GT ADV TECH INC CV 03.0000 10/01/2017	0.49 %
SWIFT TRANSPORTATION CO	0.49 %
VANTAGE DRILLING CO CV 07.8750 09/01/2042	0.49 %
GENERAL MOTORS CO	0.48 %
SERVICENOW P/P 144A CV 00.0000 11/01/2018	0.48 %
SEACOR HLDGS P/P 144A CV 03.0000 11/15/2028	0.47 %
HEALTHSOUTH CORP CV 02.0000 12/01/2043	0.46 %
METLIFE INC	0.46 %
NEWMONT MINING CORP CV 01.6250 07/15/2017	0.46 %
FORESTAR GROUP INC CV 03.7500 03/01/2020	0.45 %
SHUTTERFLY P/P 144A CV 00.2500 05/15/2018	0.45 %
GENERAL CABLE CORP CV 05.0000 11/15/2029	0.44 %
GT ADV TECH INC CV 03.0000 12/15/2020	0.44 %
INFINERA CORP P/P 144A CV 01.7500 06/01/2018	0.44 %
OUTERWALL INC CV 04.0000 09/01/2014	0.44 %
MAIDEN HOLDING LTD 07.2500 CV PFD	0.43 %
SEACOR HLDGS CV 02.5000 12/15/2027	0.42 %
TTM TECHNOLOGIES INC CV 01.7500 12/15/2020	0.42 %
LENNAR CORP P/P 144A CV 02.7500 12/15/2020	0.41 %
LUCENT TECH CAP TRUST I 07.7500 CUM CV PFD	0.39 %
RPM INTERNATIONAL INC CV 02.2500 12/15/2020	0.39 %
HERTZ GLOBAL HOLDINGS CV 05.2500 06/01/2014	0.38 %
IRIDIUM COMM I P/P 144A 07.0000 CV PFD	0.35 %
PORTFOLIO REC P/P 144A CV 03.0000 08/01/2020	0.34 %
TELE SYSTEMS CV 07.7500 06/30/2018	0.34 %
GOODRICH PETRO CV 05.0000 10/01/2032	0.33 %
INSULET CORPORATION CV 03.7500 06/15/2016	0.33 %
STANLEY BLACK & DECKER I 04.7500 CUM CV PFD	0.31 %
BIOMARIN PHARMA CV 00.7500 10/15/2018	0.28 %
BIOMARIN PHARMA CV 01.5000 10/15/2020	0.28 %
HARTFORD FINANCIAL SVCS GRP	0.28 %
JAZZ PHARMACEUTICALS PLC	0.28 %
ALLERGAN INC	0.27 %
APPLE INC	0.27 %
EXXON MOBIL CORP	0.27 %
MORGANS HOTEL CV 02.3750 10/15/2014	0.27 %
PULTEGROUP INC	0.27 %
UNISYS CORP 06.2500 CUM CV PFD	0.27 %
ACTAVIS PLC	0.26 %
JAZZ TECH INC 08.0000 06/30/2015	0.26 %
CELGENE CORP	0.25 %
UNITED TECHNOLOGIES CORP	0.25 %
FORD MOTOR CO	0.23 %
PROVIDENT FDG/PFG P/P 144A 10.1250 02/15/2019	0.23 %
MASTEC INC CV 04.2500 12/15/2014	0.22 %
SUNCOR ENERGY INC	0.22 %
SANDISK CORP	0.17 %
CHINA MEDICAL TECH INC USD 04.0000 08/15/2014	0.03 %
CHINA MEDICAL TECH P/P 144A 06.2500 12/15/2016	0.03 %
BRAZIL ETHANOL INC P/P 144A	0.00 %
LUFTHANSA MALTA BLUE P/P 144A 00.7500 04/05/2017	0.00 %
POWERWAVE TECHNOLOGIES CV 03.8750 10/01/2027	0.00 %
TOWER SEMI LTD-CW15 P/P 144A	0.00 %

Prior top 10 holdings

Top 10 holdings as of 03/31/14
Micron Technology
Gilead Sciences
Liberty Interactive Llc
Chesapeake Energy Corp
United Technologies Corp
Xilinx
Sandisk Corp
Priceline.Com
Siemens Financieringsmaatschappij Nv
Amg Capital Trust Ii
Holdings represent 19.24% of portfolio

Top 10 holdings as of 02/28/14
Gilead Sciences
Micron Technology
Liberty Interactive Llc
United Technologies Corp
Chesapeake Energy Corp
Priceline.Com
Xilinx
Sandisk Corp
Siemens Financieringsmaatschappij Nv
Mgm Resorts International
Holdings represent 20.29% of portfolio

Top 10 holdings as of 01/31/14
Gilead Sciences
Liberty Interactive Llc
Micron Technology
Chesapeake Energy Corp
United Technologies Corp
Sandisk Corp
Priceline.Com
Siemens Financieringsmaatschappij Nv
Xilinx
Mgm Resorts International
Holdings represent 21.62% of portfolio

Top 10 holdings as of 12/31/13
Gilead Sciences
Micron Technology
Liberty Interactive Llc
Chesapeake Energy Corp
United Technologies Corp
Sandisk Corp
Priceline.Com
Siemens Financieringsmaatschappij Nv
Xilinx
Weyerhaeuser
Holdings represent 22.10% of portfolio

Portfolio composition as of 03/31/14

Convertible bonds	73.53%
Convertible preferred stock	19.56%
Cash and net other assets	3.98%
Common stock	2.82%
Corporate bonds and notes	0.11%

Equity statistics as of 03/31/14

Median market cap	$5.20B
Weighted average market cap	$24.96B
Price to book	2.46
Price to earnings	6.30

Top Industry Sectors as of 03/31/14

Technology	24.33%
Health care	16.97%
Consumer cyclicals	15.03%
Financials	14.99%
Energy	5.78%
Communication services	4.15%
Cash and net other assets	3.98%
Basic materials	3.91%
Capital goods	2.67%
Other	8.19%

Utilities	2.30%
Consumer staples	2.24%
Transportation	2.08%
Conglomerates	1.57%

The unclassified sector (where applicable) includes exchange traded funds and other securities not able to be classified by sector.

Sectors will vary over time. Represents the equity portion of the portfolio.

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Expense ratio	Class A	Class B	Class C	Class M	Class R	Class Y
Total expense ratio	1.08%	1.83%	1.83%	1.58%	1.33%	0.83%
What you pay	1.08%	1.83%	1.83%	1.58%	1.33%	0.83%

Sales charge

Investment Breakpoint	Class A	Class B	Class C	Class M	Class R	Class Y
$0-$49,999	5.75%	--	--	3.50%	--	--
$50,000-$99,999	4.50%	--	--	2.50%	--	--
$100,000-$249,999	3.50%	--	--	1.50%	--	--
$250,000-$499,999	2.50%	--	--	1.00%	--	--
$500,000-$999,999	2.00%	--	--	1.00%	--	--
$1M-$4M	--	--	--	--	--	--
$4M-$50M	--	--	--	--	--	--
$50M+	--	--	--	--	--	--

CDSC

	Class A (sales for $1,000,000+)	Class B	Class C	Class M	Class R	Class Y
0 to 9 mts.	1.00%	5.00%	1.00%	--	--	--
9 to 12 mts.	--	5.00%	1.00%	--	--	--
2 yrs.	--	4.00%	--	--	--	--
3 yrs.	--	3.00%	--	--	--	--
4 yrs.	--	3.00%	--	--	--	--
5 yrs.	--	2.00%	--	--	--	--
6 yrs.	--	1.00%	--	--	--	--
7+ yrs.	--	--	--	--	--	--

The BofA Merrill Lynch All U.S. Convertible Index consists of convertible bonds traded in the U.S. dollar denominated investment grade and non investment grade convertible securities sold into the U.S. market and publicly traded in the United States.

Consider these risks before investing: Convertible securities prices may fall or fail to rise over time for several reasons, including both general financial market conditions and factors related to a specific company issuer or industry. These risks are generally greater for convertible securities issued by small and/or midsize companies. Convertible securities' prices may be adversely affected by underlying common stock price changes. While convertible securities tend to provide higher yields than common stocks, the higher yield may not protect against the risk of loss or mitigate any loss associated with a convertible security's price decline. Convertible securities are subject to credit risk, which is the risk that an issuer of the fund's investments may default on payment of interest or principal. Credit risk is greater for below-investment-grade convertible securities. Convertible securities may be less sensitive to interest-rate changes than non-convertible bonds because of their structural features (e.g., convertibility, "put" features). Interest-rate risk is generally greater, however, for longer-term bonds and convertible securities whose underlying stock price has fallen significantly below the conversion price. You can lose money by investing in the fund.

You can lose money by investing in a fund. Any given fund may not achieve its goal, and is not intended as a complete investment program. All funds have risk. The value and/or returns of a portfolio will fluctuate with market conditions. You may have more or less than the original amount invested when you redeem your shares.

Putnam Investments - Individual Investors

Convertible Securities Fund (PCONX)

Summary

Fund price