Putnam Absolute Return Funds

Pursuing returns above inlation as measured by Treasury bills over three-year periods,with relatively low volatility.

A wide range o securities

Theundscaninvestwithoutconstraintacrossglobalmarketsandsectors

Progressive risk management

Theundspursuetheirabsolutereturntargetsusingmoderninvest-menttoolstohelpmitigaterisk

Ultimate exibility

Theundsadjustdynamicallyasopportunitieschangetopursuepositiveresultsovertime

12/23/08’09 ’10 ’11

Absolute Return 100

3.83%

Absolute Return 500

10.98%

Absolute Return 300

7.85%

Absolute Return 700

16.05%

S&P 500 Index

39.20%

Barclays Aggregate

20.69%

Treasury Bills

0.64%

Q3 | 2011

The unds have perormed with low volatilityeven when stocks and bonds ell.

CumulativeperormanceoclassAsharesbeoresaleschargeDecember(inception)throughSeptember

AnnualizedperformancefortheperiodsendedSeptember,2.

ClassAshares(inception)

yearbeforesaleschargeyearaftersaleschargeLifebeforesaleschargeLifeaftersaleschargeSharperatioStandarddeviation

AbsoluteReturnFund-0.41%-1.36% 1.37%1.00%0.92%1.38%AbsoluteReturnFund-1.38-2.382.772.400.952.80AbsoluteReturnFund0.59-5.183.831.640.924.04AbsoluteReturnFund0.36-5.395.523.291.104.91BofAMerrillLynchUSTreasuryBillIndex0.18—0.23———BarclaysCapitalUSAggregateBondIndex5.26—7.03———S&PIndex1.14—12.69———

Current perormance may be lower or higher than the quoted past perormance, which cannot guarantee uture results. Share price, principal value, and return will vary, and you may have a gain or a loss when you sell your shares. The class A share perormance shown assumes reinvestment o distributions and does not account or taxes. Ater-sales-charge returns reect a maximum load o 5.75% or Putnam Absolute Return 500 Fund and 700 Fund and 1.00% or Putnam Absolute Return100 Fund and 300 Fund. A short-term trading ee o 1% may apply to redemptions or exchanges rom certain unds within the time period specifed in the unds’ prospectus. To obtain the most recent month-end perormance, visit putnam.com.The BoA Merrill Lynch U.S. Treasury Bill Index is an unmanaged index that tracksthe perormance o U.S. dollar denominated U.S. Treasury bills publicly issued in the U.S. domestic market. The S&P 500 Index is an unmanaged index o common stock perormance. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index o U.S. investment-grade fxed-income securities. You cannot invest directly in an index. The Sharpe ratio is a measure o historical adjusted perormance calculated by dividing the und’s return minus the risk-ree rate (Citigroup 30-day T-bill) by the standard deviation o the und’s return. The higher the ratio, the better the und’s return per unit o risk. Standard deviation measures how widely a set o values varies rom the mean. For the Absolute Return Funds, it is a historical measure o the variability o return earned by an investment portolio since inception.

PutnamAbsoluteReturnFundPutnamAbsoluteReturnFund

Objective:

The unds seek a positive return,over three-year periods and regardless omarket conditions, that exceeds the rate oinlation, as measured by Treasury bills, by

1% 3%

An alternative for investors considering

short-term securities, particularly investors in or near retirementa traditional bond und

Portfolio composition9/30/116/30/11Change incomposition9/30/116/30/11Change incomposition

Agency CMO9.62%9.49%0.13%15.40%15.13%0.27%Agency pass-through14.905.779.1327.216.9020.31Asset-backed securities——————Bank loans———3.083.20-0.12Commercial MBS17.4122.81-5.4017.0123.13-6.12Commodities——————Emerging-market bonds0.590.68-0.092.462.450.01Emerging-market stocks——————High-yield corporate bonds0.880.830.055.264.910.35Investment-grade corporate bonds6.527.06-0.549.419.140.27International stocks——————Net cash56.3749.287.0934.9829.215.77Residential MBS (non-agency)7.249.71-2.4710.5413.67-3.13International Treasury/agency0.150.150.000.140.130.01U.S. Treasury0.010.010.000.030.020.01U.S. large-cap stocks——————

Total expense ratio

1.00% 1.08%

What you pay*

0.68%0.88%

Number of holdings

294496

Net assets

$409.27M $1.56B

Dividend frequency

AnnuallyAnnually

Average effective duration†

-0.42-0.93

“What you pay” reects Putnam Management’s decision to contractually limit expenses through 2/29/12.

Duration measures the sensitivity o bond prices to interest-rate changes. A negative duration indicates that a security or und may be poised to increase in value when interest rates increase.

The unds’ active strategiesare backed by researcho over 60 fxed-incomeproessionals covering everyglobal bond sector.Q3 | 2011

Putnam Absolute Return 100 and 300 Funds

Fears o sovereign deault caused a ight to the saetyo Treasuries.

•

Theundscontinuedtoocusonshort-durationnon-governmentsecuritieswhichlaggedgovernmentsecuritiesasriskstotheeconomyincreased

•

Strategiestargetingprepayment-relatedriskmortgagecreditriskandtermstructureriskhurtundperormanceinthequarter

•

Themanagerscontinuetobelievethatavarietyomortgage-backedsecuritiesofercompellingopportunitiesoverathree-yeartimerame

PutnamAbsoluteReturnFundPutnamAbsoluteReturnFund

Objective:

The unds seek a positive return,over three-year periods and regardless o market conditions, that exceeds the rate o inlation, as measured by Treasury bills, by

5%7%

An alternative for investors considering

a traditional balanced unda traditional stock und

Portfolio composition9/30/116/30/11Change incomposition9/30/116/30/11Change incomposition

Agency CMO5.90%6.67%-0.77%8.17%9.15%-0.98%Agency pass-through12.655.696.9614.107.676.43Asset-backed securities——————Bank loans5.756.02-0.275.195.54-0.35Commercial MBS9.3912.75-3.366.988.95-1.97Commodities6.153.982.178.113.954.16Emerging-market bonds2.362.84-0.482.473.02-0.55Emerging-market stocks0.620.78-0.160.670.85-0.18High-yield corporate bonds5.355.42-0.078.138.63-0.50Investment-grade corporate bonds17.6017.490.1112.1112.33-0.22International stocks0.700.560.140.800.650.15Net cash29.9424.805.1424.7522.052.70Residential MBS (non-agency)6.7711.03-4.268.9612.79-3.83International Treasury/agency——————U.S. Treasury——————U.S. large-cap stocks16.1715.360.8119.1217.701.42

Total expense ratio

1.46%1.64%

What you pay*

1.18%1.39%

Number of holdings

723663

Net assets

$811.82M$716.96M

Dividend frequency

AnnuallyAnnually

Average effective duration†

0.21-0.07