Diversifcation and rebalancing are vital

Diversication is an important part o any retirementplanning strategy. Choosing a mix o dierent invest-ments can help you reduce risk and increase yourexposure to market opportunities. However, an unpre-dictable market and the demands o a busy lie can otenmake getting and keeping your retirement portolio ontrack a challenge.

Investors may not be staying on track

Because your ideal asset allocation and risk exposurewill change as you get closer to retirement, your port-olio should be rebalanced periodically to remain ontrack with your investment objectives. However, studiesshow that most investors know they should rebalance,but ew actually do. Alternatively, many investors reacton emotion during periods o market volatility, andinstead o rebalancing, exchange out o undervaluedasset classes. A recent study conducted by the indepen-dent research rm DALBAR showed that investors whoreallocate investments on their own typically do so atthe worst possible time. For the 20-year period endedDecember 31, 2009, typical equity und investors aver-aged 3.17% compared with 8.20% or investors who heldstock in companies represented by the S&P 500 or theull period.

Pension Protection Actsimplifes decision-making

Considered among the most important retirement legis-lation in decades, the Pension Protection Act o 2006 isintended to help plan sponsors and participants saeguarduture retirement savings and to prepare workers or asuccessul retirement. The act provides specic guidanceon deault investments to encourage diversication. Itsqualied deault investment alternatives include balanced,lie-cycle, and target retirement unds such as PutnamRetirementReady Funds. An increasing number o retire-ment plans have embraced these types o unds, and theirpopularity will likely gain momentum in coming years.

LIFE-CyCLE FUNDS gROW MORE POPULAR

02040608020092008200720062005

Percentage of plansoering life-cycle funds

Source:

Proft Sharing Council o America,

August 2010

Putnam RetirementReady® Funds

Build a diversifed retirement plan account in one easy step

Investor Education

Putnam RetirementReady Funds:One-step diversifcation, automaticallocations

With Putnam RetirementReady Funds, portolio diversi-cation and adjustments are automatic. Each und has adierent “target” date based on when the und’s investorsexpect to retire and begin withdrawing assets rom theiraccounts, typically at retirement. The unds are generallyweighted toward more aggressive, higher-risk invest-ments when the target date is more distant, and towardmore conservative, lower-risk investments when thetarget date is near.Simply select the und with the target year that mostclosely matches your anticipated date o retirement.Your und will automatically be rebalanced, and your riskexposure will gradually be reduced as you get closer toretirement. Putnam Retirement Income Fund Liestyle 1†is designed or participants who are in or near retirement.Each und is designed to be used as a single-choiceapproach to diversication and generally should not beused in combination with a retirement plan’s other undoptions. RetirementReady Funds can also be used withinIRA accounts and other tax-advantaged plans. The prin-cipal value o the unds is not guaranteed at any time,including the target year.

Underlin Putnam fund

RetirementReady Funds allocate your retirementsavings across a series o underlying unds basedon your targeted retirement date.

2055Fund2050Fund2045Fund2040Fund2035Fund2030Fund

Putnam Asset Allocation: Equit Portfolio

73%73%59%41%17%0%

Putnam Asset Allocation: growth Portfolio

16%16%30%47%68%68%

Putnam Asset Allocation: Balanced Portfolio

0%0%0%0%0%10%

Putnam Asset Allocation: Conservative Portfolio

0%0%0%0%0%0%

Putnam Mone Market Fund*

1%1%1%1%1%3%

Putnam Absolute Return 700 Fund

8%8%8%8%8%11%

Putnam Absolute Return 500 Fund

2%2%2%2%4%5%

Putnam Absolute Return 300 Fund

0%0%0%0%0%1%

Putnam Absolute Return 100 Fund

1%1%1%2%3%3%

Asset class weihtinFixed IncomeEquit

The unds gradually shit rom aggressive, higher-riskinvestments toward more conservative, lower-riskinvestments as retirement approaches.

Absolute return fund investmentsTraditional fund investments

Putnam Absolute Return Funds represent an increasinglygreater portion o the portolios over time, and aredesigned to seek to protect against volatility andthe harmul eects o adverse investment returns.

6%95%6%94%9%92%13%87%19%81%28%74%12%88%12%88%12%88%

Equity and xed-income allocations are

hpothetical

estimates based on strategic allocations to equity and xed income o each Putnam Asset AllocationFund set orth in its prospectus, and the assumptions that Putnam Money Market Fund, Putnam Absolute Return 100 Fund, and Putnam Absolute Return300 Fund are equivalent to xed income, Putnam Absolute Return 500 Fund is equivalent to 50% xed income/50% equity; and Putnam Absolute Return700 Fund is equivalent to equity. Actual allocations will vary.

Because o rounding in the calculation o allocations among underlying Putnam unds, actual allocations may be more or less than these percentages and total portolio percentages may be more or less than 100%.

Mone market funds are not insured or uaranteed b the Federal Deposit Insurance Corporation (FDIC) or an otherovernmental aenc. Althouh a mone market fund seeks to preserve the value of our investment at $1.00 per share,it is possible to lose mone b investin in this fund.

Putnam RetirementReady Maturity Fund was renamed Putnam Retirement Income Fund Liestyle 1 on June 16, 2011.

13%87%16%84%23%77%

RetirementReady is a smart,innovative strategy

Experienced manaers

With 15 members and more than14 years o experience managing multi-asset class porto-lios, Putnam’s Global Asset Allocation Team is one o themost tenured in the industry.

A rane of investment opportunities

The unds provideexposure to alternative asset classes such as real estateinvestment trusts and emerging markets, while alsooering active currency management. Unlike a typicalprediversied oering, RetirementReady portolios cantarget investments that have exhibited low correlationwith traditional asset classes.

Strateic and tactical implementation

The team imple-ments diversication in all aspects o managing the und:with the underlying investments, across asset classes,and with its approach to asset allocation. By diversiyingbeyond simple asset-class exposures and consideringtime horizons and methodologies, this strategy oersthe potential or solid long-term returns with careullymanaged downside risk.

Active investment manaement

Unlike target-maturitystrategies that use a und-o-unds approach, eachRetirementReady portolio is proessionally managedor comprehensive diversication, risk management,and efcient rebalancing.

Putnam places a greater ocus onincome as retirement nears

At Putnam, we recognize that income generation is criticalto those investors in or near retirement. Unlike workersearly in their career, who oten pursue growth, investorsapproaching retirement view capital preservation andincome as higher priorities, because they may lack the timehorizon or exibility to retire when markets are perormingwell, or to add to their accounts during market downturns.Reecting investors’ needs, Putnam RetirementReadyFunds seek to position assets or growth over an investor’sworking lietime, while reducing market risk as retirementapproaches. As an investor approaches the maturityphase o the retirement savings path, the underlyingportolio mix — or “glide path” — shits to emphasizecapital preservation and income generation.

Putnam includes Absolute Return strategiesto dampen volatility

For many years, retirement plan sponsors who investon behal o pension and dened benet plans haveemployed “total return” strategies with the goal omanaging volatility and providing greater perormanceconsistency. This investment discipline is designed to helpdeliver on the sponsors’ commitment to uture income.Putnam Absolute Return Funds are managed with a similarocus and can be part o a 401(k) plan. These unds aredesigned to pursue positive returns in good markets andbad. Their goal is to outperorm ination, as measured by

2025Fund2020Fund2015FundRetirementIncomeFundLifestle 1