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HIGHEST RETURN

LOWEST RETURN

HIGHEST RETURN LOWEST RETURN Alternating Market Leadership Annual returns for key indexes (1991–2011) ranked in order

Alternating Market Leadership

Annual returns for key indexes (1991–2011) ranked in order of performance (highest to lowest).

Investor Education

Q4 | 2011

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Small Cap

Small Cap

Intl

Intl

Large Cap

Large Cap

Large Cap

Large Cap

Small Cap

Small Cap

Small Cap

U.S.

Small Cap

Small Cap

Intl

Intl

Large Cap

U.S.

Mid Cap

Small Cap

U.S.

Growth

Value

Stocks

Stocks

Value

Growth

Value

Growth

Growth

Value

Value

Bonds

Growth

Value

Stocks

Stocks

Growth

Bonds

Stocks

Growth

Bonds

51.19%

29.14%

32.56%

7.78%

38.36%

23.12%

35.18%

38.71%

43.09%

22.83%

14.02%

10.25%

48.54%

22.25%

13.54%

26.34%

11.81%

5.24%

40.48%

29.09%

7.84%

Small Cap

Mid Cap

Small Cap

Cash

Large Cap

Large Cap

Large Cap

Large Cap

Large Cap

U.S.

U.S.

Cash

Small Cap

Intl

Mid Cap

Small Cap

Intl

Cash

Large Cap

Mid Cap

Large Cap

Value

Stocks

Value

Stocks

Stocks

Stocks

Stocks

Growth

Bonds

Bonds

Value

Stocks

Stocks

Value

Stocks

Growth

Stocks

Growth

41.70%

16.34%

23.77%

4.19%

37.58%

22.96%

33.36%

28.58%

33.16%

11.63%

8.44%

1.78%

46.03%

20.25%

12.65%

23.48%

11.17%

2.06%

37.21%

25.48%

2.64%

Mid Cap

Large Cap

Large Cap

Large Cap

Large Cap

Large Cap

Small Cap

Intl

Intl

Mid Cap

Cash

Small Cap

Mid Cap

Mid Cap

Large Cap

Large Cap

Small Cap

Small Cap

Small Cap

Small Cap

Large Cap

Stocks

Value

Value

Growth

Growth

Value

Value

Stocks

Stocks

Stocks

Value

Stocks

Stocks

Value

Value

Growth

Value

Growth

Value

Stocks

41.51%

13.58%

18.07%

2.62%

37.18%

21.64%

31.78%

20.00%

26.96%

8.25%

4.42%

-11.43%

40.06%

20.22%

7.05%

22.25%

7.05%

-28.92%

34.47%

24.50%

2.11%

Large Cap

Small Cap

Mid Cap

Large Cap

Mid Cap

Small Cap

Large Cap

Large Cap

Large Cap

Large Cap

Large Cap

Large Cap

Intl

Large Cap

Large Cap

Large Cap

U.S.

Large Cap

Intl

Large Cap

Large Cap

Growth

Growth

Stocks

Stocks

Stocks

Value

Growth

Value

Stocks

Value

Value

Value

Stocks

Value

Growth

Stocks

Bonds

Value

Stocks

Growth

Value

41.27%

7.77%

14.30%

1.32%

34.45%

21.37%

30.49%

15.63%

21.04%

7.01%

-5.59%

-15.52%

38.59%

16.49%

5.26%

15.79%

6.97%

-36.85%

31.78%

16.71%

0.39%

Large Cap

Large Cap

Small Cap

Small Cap

Small Cap

Mid Cap

Mid Cap

Mid Cap

Mid Cap

Cash

Mid Cap

Intl

Large Cap

Small Cap

Large Cap

Mid Cap

Mid Cap

Large Cap

Large Cap

Large Cap

Cash

Stocks

Stocks

Growth

Value

Growth

Stocks

Stocks

Stocks

Stocks

Stocks

Stocks

Value

Growth

Stocks

Stocks

Stocks

Stocks

Stocks

Value

30.47%

7.62%

13.37%

-1.54%

31.04%

19.00%

29.01%

10.09%

18.23%

6.18%

-5.62%

-15.94%

30.03%

14.31%

4.91%

15.26%

5.60%

-37.00%

26.46%

15.51%

0.10%

Large Cap

U.S.

Large Cap

Large Cap

Small Cap

Small Cap

Small Cap

U.S.

Large Cap

Large Cap

Small Cap

Mid Cap

Large Cap

Large Cap

Small Cap

Small Cap

Large Cap

Large Cap

Small Cap

Large Cap

Mid Cap

Value

Bonds

Stocks

Value

Value

Growth

Growth

Bonds

Value

Stocks

Growth

Stocks

Growth

Stocks

Value

Growth

Stocks

Growth

Value

Stocks

Stocks

24.55%

7.40%

10.08%

-1.98%

25.75%

11.26%

12.95%

8.69%

7.35%

-9.10%

-9.23%

-16.19%

29.75%

10.88%

4.71%

13.35%

5.49%

-38.44%

20.58%

15.06%

-1.55%

U.S.

Large Cap

U.S.

Mid Cap

U.S.

Intl

U.S.

Cash

Cash

Intl

Large Cap

Large Cap

Large Cap

Large Cap

Small Cap

Large Cap

Cash

Small Cap

Large Cap

Intl

Small Cap

Bonds

Growth

Bonds

Stocks

Bonds

Stocks

Bonds

Stocks

Stocks

Stocks

Stocks

Growth

Growth

Growth

Growth

Value

Stocks

Growth

16.00%

4.99%

9.75%

-2.09%

18.47%

6.05%

9.65%

5.23%

4.85%

-14.17%

-11.89%

-22.10%

28.68%

6.30%

4.15%

9.07%

5.00%

-38.54%

19.69%

7.75%

-2.91%

Intl

Cash

Cash

Small Cap

Intl

Cash

Cash

Small Cap

U.S.

Large Cap

Large Cap

Large Cap

U.S.

U.S.

Cash

Cash

Large Cap

Mid Cap

U.S.

U.S.

Small Cap

Stocks

Growth

Stocks

Growth

Bonds

Growth

Growth

Growth

Bonds

Bonds

Value

Stocks

Bonds

Bonds

Value

12.13%

3.93%

3.19%

-2.43%

11.21%

5.31%

5.33%

1.23%

-0.82%

-22.42%

-20.42%

-27.88%

4.10%

4.34%

3.07%

4.85%

-0.17%

-41.46%

5.93%

6.54%

-5.50%

Cash

Intl

Large Cap

U.S.

Cash

U.S.

Intl

Small Cap

Small Cap

Small Cap

Intl

Small Cap

Cash

Cash

U.S.

U.S.

Small Cap

Intl

Cash

Cash

Intl

Stocks

Growth

Bonds

Bonds

Stocks

Value

Value

Growth

Stocks

Growth

Bonds

Bonds

Value

Stocks

Stocks

6.38%

-12.17%

2.87%

-2.92%

6.03%

3.63%

1.78%

-6.45%

-1.49%

-22.43%

-21.44%

-30.26%

1.15%

1.33%

2.43%

4.33%

-9.78%

-43.38%

0.21%

0.13%

-12.14%

Large-Cap Growth Stocks are represented by the Russell 1000 Growth Index, which is an unmanaged index of capitalization-weighted are represented by the Russell 1000 Growth Index, which is an unmanaged index of capitalization-weighted stocks chosen for their growth orientation.

Small-Cap Growth Stocks are represented by the Russell 2000 Growth Index, which is an unmanaged index of those are represented by the Russell 2000 Growth Index, which is an unmanaged index of those companies in the Russell 2000 Index chosen for their growth orientation.

Large-Cap Value Stocks are represented by the Russell 1000 Value Index, which is an unmanaged index of capitalization-weighted are represented by the Russell 1000 Value Index, which is an unmanaged index of capitalization-weighted stocks chosen for their value orientation.

stocks chosen for their value orientation. Small-Cap Value Stocks are represented by the Russell 2000

Small-Cap Value Stocks are represented by the Russell 2000 Value Index, which is an unmanaged index of those are represented by the Russell 2000 Value Index, which is an unmanaged index of those companies in the Russell 2000 Index chosen for their value orientation.

Large-Cap Stocks are represented by the S&P 500 Index, which is an unmanaged index of common stock are represented by the S&P 500 Index, which is an unmanaged index of common stock performance.

Mid-Cap Stocks are represented by the Russell Midcap Index, an unmanaged index that measures the performance of are represented by the Russell Midcap Index, an unmanaged index that measures the performance of the 800 smallest companies in the Russell 1000 Index.

International Stocks are represented by the MSCI EAFE Index (ND), which is an unmanaged index of international are represented by the MSCI EAFE Index (ND), which is an unmanaged index of international stocks from Europe, Australasia, and the Far East.

U.S. Bonds are represented by the Barclays Capital U.S. Aggregate Bond Index, which is an unmanaged index are represented by the Barclays Capital U.S. Aggregate Bond Index, which is an unmanaged index used as a general measure of fixed-income securities.

Cash is represented by the BofA Merrill Lynch U.S. 3-month T-Bill Index, which is an unmanaged is represented by the BofA Merrill Lynch U.S. 3-month T-Bill Index, which is an unmanaged index used as a general measure for money market or cash instruments.

Data is historical. Past performance is not a guarantee of future results. It is not possible to invest directly in an index.

How proper diversification can help your strategy

Over time, diversifying across several asset classes can help manage risk and potentially boost returns. Consider the three scenarios below, illustrating different asset allocation strategies. In each situation, $10,000 was invested annually from 1991 to 2011. The first scenario shows the results of investing in last year’s winner (the best-performing asset class), while the second shows the returns generated by investing in last year’s loser (the worst-performing asset class). The third scenario shows the results of an asset allocation plan that consistently invests across several asset classes in equal proportion each year.

CHASING THE WINNERS

Investing in last year’s best-performing asset class

$366,189

average annual total return 5.46%

INVESTING WITH THE LOSERS

Investing in last year’s worst-performing asset class

$369,014

average annual total return 5.53%

ASSET ALLOCATION

Investing consistently across several asset classes

$411,898

average annual total return 6.47%

PERFORMANCE RESULTS THROUGH 12/31/11

 
 

1 year

5 years

10 years

Russell 2000 Growth Index

-2.91%

2.09%

4.48%

Russell Midcap Index

-1.55

1.41

6.99

Russell 2000 Value Index

-5.50

-1.87

6.40

Russell 1000 Growth Index

2.64

2.50

2.60

Russell 1000 Value Index

0.39

-2.64

3.89

S&P 500 Index

2.11

-0.25

2.92

MSCI EAFE Index (ND)

-12.14

-4.72

4.67

Barclays Capital U.S. Aggregate Bond Index

7.84

6.50

5.78

BofA Merrill Lynch 3-month Treasury Bill Index

0.10

1.48

1.95

Source: Putnam Investments.

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial representative. Please read the prospectus carefully before investing.

Consider these risks before investing: The indexes and corresponding alternating market leadership chart represent various investment styles referred to in the three hypothetical scenarios. The asset allocation scenario represents an investment allocated across all nine indexes shown in the chart at left. It is not possible to invest directly in an index. All indexes are unmanaged and measure common sectors of the stock, growth, value, non-U.S., and bond indexes. Mutual fund performance may differ from the performance of the relevant index(es). Past performance does not indicate future results. This analysis has been figured on an annual basis. More recent returns may be lower or higher than those shown.

Securities indexes assume reinvestment of distributions and interest payments and do not take into account brokerage fees and taxes. Securities in the indexes do not match those in Putnam funds, and performance will differ. It is not possible to invest directly in an index.

International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Investments in small companies involve higher risk of volatility. The use of derivatives involves additional risks, such as the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. There is a risk that you may have more or less than the original amount invested when you sell your shares. Mutual funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long- term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses. Diversification does not assure a profit or protect against loss. It is possible to lose money in a diversified portfolio.

* Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. Although the fund seeks to

preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in this fund.

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