Short Duration Income Fund (Class Y)  (PSDYX)

Seeking capital preservation and a higher rate of current income

Highlights

Objective

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

Strategy and process

  • A broader opportunity set: The fund invests in a diversified portfolio composed of short duration, investment-grade money market and other fixed-income securities.
  • Active risk management: In today's complex bond market, the fund's experienced managers actively manage risk with the goal of superior risk-adjusted performance over time.
  • Higher income potential: Access to a wider range of income opportunities means the fund may offer higher income potential than other short-term investments.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $10.05
0.00% | $0.00
$10.07
11/27/17
$10.05
11/15/18
Historical fund price

Fund facts as of 10/31/18

Total net assets
$13,503.30M
Turnover (fiscal year end)
36%
Dividend frequency (view rate)
Monthly
Number of issuers
326
Fiscal year-end
July
CUSIP / Fund code
74676P698 / 1878
Inception date
10/17/11
Category
Taxable Income
Open to new investors
Ticker
PSDYX

Management team

Co-Head of Fixed Income
Portfolio Manager
Portfolio Manager


Manager commentary | Q3 2018

Liquidity is key in short-duration strategies

Portfolio Manager Emily Shanks discusses liquidity management in short-duration income strategies.



Performance

Consistency of positive performance over five years

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

Performance shown above 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 see below.

1.05%

Best 5-year annualized return

(for period ending 09/30/18)


0.78%

Worst 5-year annualized return

(for period ending 03/31/17)


0.87%

Average 5-year annualized return


  • Total return (%) as of 09/30/18

  • Annual performance as of 09/30/18

Annualized Total return (%) as of 09/30/18

Annualized performance 1 yr. 3 yrs. 5 yrs. Life (inception: 10/17/11 )
Before sales charge 1.87% 1.41% 1.05% 0.99%
After sales charge N/A N/A N/A N/A
ICE BofAML U.S. Treasury Bill Index 1.54% 0.82% 0.52% --

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 Putnam Multi-Asset Absolute Return Fund, and 4.00% and 3.25% for income funds (2.25% and 0.75% for Putnam Short Duration Bond Fund and 1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Fixed Income Absolute Return 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 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, T1, 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). 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, M, and T1 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 10/31/18 0.20 % -
YTD as of 11/16/18 1.81 % -

Yield

Distribution rate before sales charge
as of 11/16/18
2.46%
Distribution rate after sales charge
as of 11/16/18
2.46%
30-day SEC yield with subsidy
as of 10/31/18
2.33%
30-day SEC yield without subsidy
as of 10/31/18
2.19%

Risk-adjusted performance as of 10/31/18

Sharpe ratio (3 yrs.) 3.05
Information ratio (3 yrs.) 3.32

Volatility as of 10/31/18

Standard deviation (3 yrs.) 0.21%
Beta 0.71
R-squared 0.39

Morningstar Ratings as of 10/31/18

Time period Funds in category Morningstar Rating
Overall 144
3 yrs. 144
5 yrs. 116
Morningstar category: Ultrashort Bond

Distributions

Accrual days 31
Accrual start date 10/01/18
Accrual end date 10/31/18
Payable date 10/31/18
Income $0.020131905
Extra taxable income --
Short-term cap. gain $0.0011
Long-term cap. gain $0.0011
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.


Holdings

Top 10 issuers as of 10/31/18

TD Ameritrade 1.04%
Wells Fargo 1.04%
Morgan Stanley 1.03%
Credit Suisse 1.02%
Citigroup 0.98%
US Bank 0.96%
Bb&T Corporation 0.96%
UBS 0.95%
JPMorgan Chase 0.94%
Suntrust Bank 0.94%
Top 10 issuers, percent of portfolio 9.86%

Full portfolio holdings

Prior top 10 issuers

Top 10 issuers as of 10/31/18
TD Ameritrade
Wells Fargo
Morgan Stanley
Credit Suisse
Citigroup
US Bank
Bb&T Corporation
UBS
JPMorgan Chase
Suntrust Bank
Issuers represent 9.86% of portfolio
Top 10 issuers as of 09/30/18
Citigroup
TD Bank
Wells Fargo
Morgan Stanley
JPMorgan Chase
Bank of America
ABN AMRO Group
US Bank
Credit Suisse
UBS
Issuers represent 9.38% of portfolio
Top 10 issuers as of 08/31/18
Wells Fargo
Citigroup
Bank of America
ABN AMRO Group
JPMorgan Chase
TD Bank
Morgan Stanley
SEB
Northrop Grumman
Societe General
Issuers represent 9.53% of portfolio
Top 10 issuers as of 07/31/18
Wells Fargo
HSBC Holdings
JPMorgan Chase
TD Bank
Morgan Stanley
Citigroup
SEB
Bank of America
Mitsubishi UFJ Financial
Royal Bank Of Canada
Issuers represent 10.18% of portfolio

Portfolio composition as of 10/31/18

Investment-grade corporate bonds 47.75%
Commercial paper 39.02%
Residential MBS (non-agency) 3.26%
Agency CMO 2.76%
Certificates of deposit 2.37%
Short-term asset-backed securities 2.14%
Asset-backed commercial paper 1.61%
Asset-backed securities (ABS) 0.77%
Repurchase agreements 0.55%
Commercial MBS 0.41%
Net cash -0.64%

Fixed income statistics as of 10/31/18

Average effective maturity 1.00 yrs.
Average effective duration 0.15 yrs.
Average yield to maturity 2.97%
Average coupon 1.80%
Average price $100.30

Quality rating as of 10/31/18

A-1+ 3.26%
A-1 9.63%
A-2 27.18%
A-3 3.49%
AAA 4.72%
AA 18.54%
A 25.81%
BBB 7.44%
Not Rated 0.57%
Net cash -0.64%

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: Putnam Short Duration Income Fund is not a money market fund. The effects of inflation may erode the value of your investment over time. Funds that invest in government securities are not guaranteed. Mortgage-backed investments, unlike traditional debt investments, are also 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. We may have to invest the proceeds from prepaid investments, including mortgage-backed investments, in other investments with less attractive terms and yields. Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions (including perceptions about the risk of default and expectations about monetary policy and interest rates), changes in government intervention in the financial markets, and factors related to a specific issuer or industry. These factors may also lead to periods of 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 greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Credit risk is generally greater for debt not backed by the full faith and credit of the U.S. government. 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. You can lose money by investing in the fund.

Credit qualities are shown as a percentage of net assets as of the date indicated above. A bond rated BBB or higher (A-3/SP-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 may vary over time. Net cash, if any, represent the market value weights of cash and derivatives and may show a negative market value as a result of the timing of trade versus settlement date transactions. The fund itself has not been rated by an independent rating agency.

Country allocation as of 10/31/18

United States 69.34%
Canada 8.75%
United Kingdom 6.03%
Australia 3.49%
Netherlands 3.17%
France 2.80%
Japan 2.01%
Sweden 1.80%
Norway 0.79%
 
Other
1.82%
Finland 0.56%
Switzerland 0.53%
Denmark 0.48%
Bermuda 0.39%
Luxembourg 0.37%
Ireland 0.13%
Net cash -0.64%

Expenses

Expense ratio

Class A Class B Class C Class M Class N Class R Class R6 Class Y
Total expense ratio 0.55% 0.95% 0.95% 0.60% - 0.95% 0.44% 0.45%
What you pay† 0.40% 0.80% 0.80% 0.45% - 0.80% 0.29% 0.30%

† The fund's expense ratio is taken from the most recent prospectus and is subject to change. What you pay reflects Putnam Management's decision to contractually limit expenses through 11/30/18

Sales charge

Investment Breakpoint Class A Class B Class C Class M Class N Class R Class R6 Class Y
$0-$49,999 -- -- -- -- 1.50% -- -- --
$50,000-$99,999 -- -- -- -- 1.25% -- -- --
$100,000-$249,999 -- -- -- -- 1.00% -- -- --
$250,000-$499,999 -- -- -- -- 0.00% -- -- --
$500,000-$999,999 -- -- -- -- 0.00% -- -- --
$1M-$4M -- -- -- -- 0.00% -- -- --
$4M-$50M -- -- -- -- 0.00% -- -- --
$50M+ -- -- -- -- 0.00% -- -- --

CDSC †

Putnam Short Duration Income Fund has no redemption fees except under certain circumstances.

  Class A Class B Class C Class M Class N (sales for $250,000+) Class R Class R6 Class Y
0 to 9 mts. 1.00% 5.00% 1.00% 0.15% 0.25% -- -- --
9 to 12 mts. 1.00% 5.00% 1.00% 0.15% 0.00% -- -- --
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% -- -- -- -- --
† A deferred sales charge on class A, B and C shares may apply to certain redemptions of shares purchased by exchange from another Putnam fund. A deferred sales charge on class M shares may apply to redemptions of shares from certain rollover accounts.

The ICE BofA ML 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. You cannot invest directly in an index.

Consider these risks before investing: Putnam Short Duration Income Fund is not a money market fund. The effects of inflation may erode the value of your investment over time. Funds that invest in government securities are not guaranteed. Mortgage-backed investments, unlike traditional debt investments, are also 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. We may have to invest the proceeds from prepaid investments, including mortgage-backed investments, in other investments with less attractive terms and yields. Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions (including perceptions about the risk of default and expectations about monetary policy and interest rates), changes in government intervention in the financial markets, and factors related to a specific issuer or industry. These factors may also lead to periods of 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 greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Credit risk is generally greater for debt not backed by the full faith and credit of the U.S. government. 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. You can lose money by investing in the fund.

Credit qualities are shown as a percentage of net assets as of the date indicated above. A bond rated BBB or higher (A-3/SP-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 may vary over time. Net cash, if any, represent the market value weights of cash and derivatives and may show a negative market value as a result of the timing of trade versus settlement date transactions. The fund itself has not been rated by an independent rating agency.