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  • Putnam Diversified Income Trust

    IMPORTANT NOTICE: Beginning on January 1, 2021, reports like this one will no longer automatically be sent by mail. See inside for more information.

    FUND SYMBOL CLASS A

    PDINX

    Annual report 9 | 30 | 19

    Income funds invest in bonds and other securities with the goal of providing a steady stream of income over time.

  • Putnam Diversified Income Trust Annual report 9 | 30 | 19

    Message from the Trustees 1

    Interview with your fund’s portfolio manager 3

    Your fund’s performance 9

    Your fund’s expenses 11

    Consider these risks before investing 13

    Terms and definitions 14

    Other information for shareholders 16

    Important notice regarding Putnam’s privacy policy 16

    Trustee approval of management contract 17

    Audited financial statements 21

    Report of Independent Registered Public Accounting Firm 22

    Federal tax information 128

    About the Trustees 129

    Officers 131

    IMPORTANT NOTICE: Delivery of paper fund reports In accordance with regulations adopted by the Securities and Exchange Commission, beginning on January 1, 2021, reports like this one will no longer be sent by mail unless you specifically request it. Instead, they will be on Putnam’s website, and you will be notified by mail whenever a new one is available, and provided with a website link to access the report.

    If you wish to stop receiving paper reports sooner, or if you wish to continue to receive paper reports free of charge after January 1, 2021, please see the back cover or insert for instructions. If you invest through a bank or broker, your choice will apply to all funds held in your account. If you invest directly with Putnam, your choice will apply to all Putnam funds in your account.

    If you already receive these reports electronically, no action is required.

  • November 12, 2019

    Dear Fellow Shareholder:

    We believe your mutual fund investment offers a number of advantages, such as investment diversification and daily liquidity. Putnam funds also include a commitment to active investing. Putnam’s portfolio managers and analysts take a research-intensive approach that incorporates risk management strategies designed to serve you through changing conditions.

    To support your overall investment program, we believe that the counsel of a financial advisor is prudent. For over 80 years, Putnam has recognized the importance of professional investment advice. Your financial advisor can help in many ways, including defining and planning for goals, determining your appropriate level of risk, and reviewing your investments on a regular basis.

    As always, your fund’s Board of Trustees remains committed to protecting the interests of Putnam shareholders like you. We thank you for investing with Putnam.

    Respectfully yours,

    Robert L. Reynolds President and Chief Executive Officer Putnam Investments

    Kenneth R. Leibler Chair, Board of Trustees

    Message from the Trustees

  • Performance history as of 9/30/19

    Annualized total return (%) comparison

    LIFE OF FUND* (since 10/3/88)

    10 YEARS 5 YEARS 3 YEARS 1 YEAR

    6.07 5.52 5.33

    0.56

    3.48

    2.66

    1.00

    2.52

    5.92

    1.54

    3.56

    5.00

    2.46

    4.25

    The fund — class A shares before sales charge Putnam Diversified Income Trust (PDINX)

    Fund’s benchmark ICE BofAML U.S. Treasury Bill Index

    Fund’s Lipper peer group average Alternative Credit Focus Funds

    Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 4.00%; had they, returns would have been lower. See below and pages 9–11 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.

    * The fund’s benchmark, the ICE BofAML U.S. Treasury Bill Index, was introduced on 6/30/92, which post-dates the inception of the fund.

    Recent broad market index and fund performance

    10.30%

    5.00%

    4.25%

    2.46%

    U.S. bonds (Bloomberg Barclays U.S. Aggregate Bond Index)

    Putnam Diversified Income Trust (class A shares before sales charge)

    U.S. stocks (S&P 500 Index)

    Fund’s benchmark (ICE BofAML U.S. Treasury Bill Index)

    This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 9/30/19. See above and pages 9–11 for additional fund performance information. Index descriptions can be found on page 15.

    2 Diversified Income Trust

  • Interview with your fund’s portfolio manager

    D. William Kohli Portfolio Manager

    Bill Kohli is Chief Investment Officer, Fixed Income. He has an M.B.A. from the Haas School of Business at the University of California, Berkeley, and a B.A. from the University of California, San Diego. Bill joined Putnam in 1994 and has been in the investment industry since 1988.

    Michael J. Atkin; Robert L. Davis, CFA; Brett S. Kozlowski, CFA; Michael V. Salm; and Paul D. Scanlon, CFA, are also Portfolio Managers of the fund.

    Bill, could you describe the investment environment during the fund’s annual reporting period? The economy slowed from the more robust trajectory it achieved in 2018, and markets experienced greater volatility as investors sought to recalibrate their outlook. The U.S.–China trade conflict worsened over much of the period, adding to market worries.

    Risk assets experienced volatility and substan- tial declines during the first three months of the period — the fourth quarter of calendar 2018 — and again shortly before the end of the period, in August 2019. In the first instance, the U.S. Federal Reserve persevered in raising short- term interest rates, causing investors to fear a policy error that could lead to a recession. The Fed lifted short-term rates to a range of 2.25% to 2.50% at its December 2018 policy meeting.

    From that point, however, the Fed signaled greater flexibility on monetary policy. Risk assets rallied with impressive vigor in the first three months of 2019. Also, the United States and China maintained a brief moratorium on new tariffs early in the year. However, in May, trade talks reached an impasse. The two

    Bill Kohli discusses the investing environment and fund performance for the 12 months ended September 30, 2019, as well as his outlook for the fund.

    Interview with your fund’s portfolio manager

    Performance history as of 9/30/19

    Annualized total return (%) comparison

    LIFE OF FUND* (since 10/3/88)

    10 YEARS 5 YEARS 3 YEARS 1 YEAR

    6.07 5.52 5.33

    0.56

    3.48

    2.66

    1.00

    2.52

    5.92

    1.54

    3.56

    5.00

    2.46

    4.25

    The fund — class A shares before sales charge Putnam Diversified Income Trust (PDINX)

    Fund’s benchmark ICE BofAML U.S. Treasury Bill Index

    Fund’s Lipper peer group average Alternative Credit Focus Funds

    Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 4.00%; had they, returns would have been lower. See below and pages 9–11 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.

    * The fund’s benchmark, the ICE BofAML U.S. Treasury Bill Index, was introduced on 6/30/92, which post-dates the inception of the fund.

    Recent broad market index and fund performance

    10.30%

    5.00%

    4.25%

    2.46%

    U.S. bonds (Bloomberg Barclays U.S. Aggregate Bond Index)

    Putnam Diversified Income Trust (class A shares before sales charge)

    U.S. stocks (S&P 500 Index)

    Fund’s benchmark (ICE BofAML U.S. Treasury Bill Index)

    This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 9/30/19. See above and pages 9–11 for additional fund performance information. Index descriptions can be found on page 15.

    Diversified Income Trust 3

  • nations began to introduce a series of new tariffs and other trade restraints.

    For the period as a whole, U.S. GDP [gross domestic product] growth remained positive but slowed. The Fed cut interest rates in July and in September, the first such reductions since 2008. Yields fell, and defaults remained few. The yield on the benchmark 10-year U.S. Treasury fell to 1.68% at the end of the period, September 30, 2019. This was down from 2.41% from six months earlier and from 3.05% 12 months earlier. The Bloomberg Barclays U.S. Aggregate Bond Index — a broad gauge of the investment-gr