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Not FDIC Insured

May Lose Value

No Bank Guarantee

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What isa bond?A loan to a corporationor government.

• Investors lend the money

• Repaid in specified period of time (up to 30 years)

• Repaid with specified amount of interest income

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Risk versus return• Amount of income reflects creditworthiness of

issuerHighest-quality bonds(rated AAA or AA) = Lowest yields

•U.S. Treasury bonds•Municipal bonds•Bonds issued by corporations with a spotless track record of honoring their debt obligations

Medium-quality bonds(ratings from AA to BB)= Moderate yields

•Non-U.S. government bonds•Bonds issued by corporations in decent financial health

Lowest-quality bonds(rated BB or lower) = Highest yields

•Emerging-market bonds•Bonds issued by new corporations or those in poor financial health

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Taxable or tax free?

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Consider thetax-equivalent yield

Mu

nic

ipal

bon

d

yield

Your tax bracket

15.0% 25.0% 28.0% 36.8%* 38.8%* 43.4%*

3% 3.53 4.00 4.17 4.75 4.90 5.30

4% 4.71 5.33 5.56 6.33 6.54 7.07

5% 5.88 6.67 6.94 7.91 8.17 8.83

6% 7.06 8.00 8.33 9.49 9.80 10.60Equivalent yield of a taxable bond

For illustrative purposes only.

* Includes 3.8% Medicare surtax effective 1/1/13

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Mu

nic

ipal

bon

d

yield

Your tax bracket

15.0% 25.0% 28.0% 36.8%* 38.8%* 43.4%*

3% 3.53 4.00 4.17 4.75 4.90 5.30

4% 4.71 5.33 5.56 6.33 6.54 7.07

5% 5.88 6.67 6.94 7.91 8.17 8.83

6% 7.06 8.00 8.33 9.49 9.80 10.60Equivalent yield of a taxable bond

Consider thetax-equivalent yield

An investor subject to a 36.8% tax rate with a 5% tax-free yield will get the equivalent of a 7.91% after-tax yield.

An investor subject to a 36.8% tax rate with a 5% tax-free yield will get the equivalent of a 7.91% after-tax yield.

For illustrative purposes only.

* Includes 3.8% Medicare surtax effective 1/1/13

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Calculating tax-equivalent yield

= Tax-equivalent yield

Tax-free yield

100 – your tax rate

= 7.91%5

100 – 36.8

For illustrative purposes only.

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What benefits canbonds provide?

• Interest income during the life of the bond

• Potential for capital appreciation if interestrates decline and/or market dynamics change

• Potential to reduce overall volatility of portfolio composed primarily of equities

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One predictable thing about the market — it is unpredictable

Past performance does not indicate future results.Indexes are unmanaged and show broad market performance. It is not possible to invest directly in an index.

Highestreturn

Lowestreturn

U.S. Small-Cap Growth Stocks | Russell 2000 Growth Index International stocks | MSCI EAFE Index (ND)U.S. Large-Cap Growth Stocks | Russell 1000 Growth Index U.S. Bonds | Barclays U.S. Aggregate Bond Index

U.S. Small-Cap Value Stocks | Russell 2000 Value IndexCash | BofA Merrill Lynch U.S. 3-month Treasury Bill Index

U.S. Large-Cap Value Stocks | Russell 1000 Value Index

Changes in market performance, 1992–20141992 1994 1996 1998 2000 2002 2004 2006 2008

2010

2012 2014

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When stocks get shaky,bonds can add stability

Data is as of 12/31/14 and is historical. Past performance does not guarantee future results. Stocks are represented by the S&P 500 Index, which is an unmanaged index of common stock performance. Bonds are represented by the Barclays Aggregate Bond Index, an unmanaged index of U.S. investment-grade fixed-income securities. It is not possible to invest directly in an index.

Annual market results (%)

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Active rebalancing

Stocks

Bonds

Balancedportfolio

Out-of-balanceportfolio

Stocks are represented by the S&P 500 Index and bonds by the Barclays U.S. Aggregate Bond Index. Indexes are unmanaged and represent broad market performance. It is not possible to invest directly in an index. Data is historical. Past performance is not a guarantee of future results. Diversification and rebalancing will not necessarily prevent you from losing money; however, they may reduce volatility and potentially limit downside losses.

Without rebalancing: The market controls asset allocation and investors don’t systematically rotate out of less attractive and into more attractive investments

28%40%

60% 72%

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Active rebalancing

Balancedportfolio

Stocks are represented by the S&P 500 Index and bonds by the Barclays U.S. Aggregate Bond Index. Indexes are unmanaged and represent broad market performance. It is not possible to invest directly in an index. Data is historical. Past performance is not a guarantee of future results. Diversification and rebalancing will not necessarily prevent you from losing money; however, they may reduce volatility and potentially limit downside losses.

40%40%

60% 60%

Balancedportfolio

Stocks

Bonds

Without rebalancing: The market controls asset allocation and investors don’t systematically rotate out of less attractive and into more attractive investments

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A BALANCED APPROACH

A WORLD OF INVESTING

A COMMITMENT TO EXCELLENCE

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Why Putnam for fixed income?

• Over 75 years of fixed-income investing experience

• Manages $55.7 billion in fixed-income securities

• More than 80 investment professionals organized into specialist teams

As of 6/30/14.

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Putnam American Government Income Fund

Putnam Diversified Income Trust

Putnam Emerging Market Income Fund

Putnam Floating Rate Income Fund

Putnam Global Income Trust

Putnam High Yield Trust

Putnam Income Fund

Putnam Short Duration Income Fund

Putnam Tax Exempt Income Fund

Putnam Tax-Free High Yield Fund

Putnam fixed-income funds cover all bond sectors

U.S. governmentsecurities

Investment-gradecorporate bonds

International bonds High-yield bonds Emerging-market bonds

Tax-free investment- grade bonds

Tax-free high-yieldbonds

Floating rate loans Mortgage-backed securities

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Building a solid financialfoundation with bonds

• What is a bond?

• Taxable or tax free: Which is right for you?

• When stocks are shaky, bonds often are stable– Adding bonds reduces volatility

• Work with a trusted financial advisor– To select the right investments

– To ensure that accounts are set up with your futurein mind

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