EO /11 | ‹#› Not FDIC Insured May Lose Value No Bank Guarantee EO /11 | 1

EO /11 | ‹#› What is a bond? A loan to a corporation or government. Investors lend the money Repaid in specified period of time (up to 30 years) Repaid with specified amount of interest income

EO /11 | ‹#› Risk versus return Amount of income reflects creditworthiness of issuer Highest-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) = Average 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 corporations in poor financial health

EO /11 | ‹#› Taxable or tax free?

EO /11 | ‹#› Consider the tax-equivalent yield Municipal bond yield Your tax bracket 15%25%28%33%35% 3% % % % Equivalent yield of a taxable bond

EO /11 | ‹#› Municipal bond yield Your tax bracket 15%25%28%33%35% 3% % % % Equivalent yield of a taxable bond Consider the tax-equivalent yield An investor in the 33% tax bracket with a 5% tax-free yield will get the equivalent of a 7.46% after-tax yield. For illustrative purposes only.

EO /11 | ‹#› Calculating tax-equivalent yield = Tax-equivalent yield Tax-free yield 100 – your tax rate = 7.46% – 33 For illustrative purposes only.

EO /11 | ‹#› What benefits do bonds provide? Interest income during the life of the bond Potential for capital appreciation if interest rates decline Potential to reduce overall volatility of an equity portfolio

EO /11 | ‹#› 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. Highest return Lowest return U.S. Small-Cap Growth Stocks | Russell 2000 Growth IndexInternational stocks | MSCI EAFE Index U.S. Large-Cap Growth Stocks | Russell 1000 Growth IndexU.S. Bonds | Barclays Capital 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, 2000–2010

EO /11 | ‹#› Small-Cap Growth Stocks 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 Growth Stocks are represented by the Russell 1000 Growth Index, which is an unmanaged index of capitalization-weighted stocks chosen for their growth orientation. Small-Cap Value Stocks 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 Value Stocks are represented by the Russell 1000 Value Index, which is an unmanaged index of capitalization-weighted stocks chosen for their value orientation. International Stocks are represented by the MSCI EAFE Index, which is an unmanaged index of international stocks from Europe, Australasia, and the Far East. U.S. Bonds are represented by the Barclays Capital 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 Treasury Bill Index, which is an unmanaged index used as a general measure for money market or cash instruments.

EO /11 | ‹#› When stocks get shaky, bonds can add stability Data is as of 12/31/10 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 Capital 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 (%) U.S. stocks U.S. bonds

EO /11 | ‹#› Active rebalancing Stocks Bonds Balanced portfolio Out of balance portfolio Stocks are represented by the S&P 500 Index and bonds by the Barclays Capital 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 62% 38% 57% 43%

EO /11 | ‹#› 67% 33% 55% 45% 67% 33% 67% 33% Active rebalancing Stocks Bonds Balanced portfolio Stocks are represented by the S&P 500 Index and bonds by the Barclays Capital 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.. With rebalancing: Asset allocation remains consistent

EO /11 | ‹#› A BALANCED APPROACH A WORLD OF INVESTING A COMMITMENT TO EXCELLENCE EO /10 | 14

EO /11 | ‹#› Why Putnam for fixed income? Over 70 years of fixed-income investing experience Manages nearly $46.66 billion in U.S. fixed-income securities and over $56.50 billion in U.S. and international fixed-income securities More than 70 investment professionals organized into specialist teams As of 1/31/11.

EO /11 | ‹#› Putnam American Government Income Fund Putnam Diversified Income Trust Putnam Floating Rate Income Fund Putnam Global Income Trust Putnam High Yield Trust Putnam Income Fund Putnam Tax Exempt Income Fund Putnam Tax-Free High Yield Fund Putnam fixed-income funds cover all bond sectors U.S. government securities Investment-grade corporate bonds International bondsHigh-yield bondsU.S. government income trust Tax-free investment- grade bonds Tax-free high-yield bonds Floating rate loansMortgage-backed securities

EO /11 | ‹#› Building a solid financial foundation 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 future in mind

EO /11 | ‹#› 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. You can lose money by investing in a fund. Any given fund may not achieve its goal, and is not intended as a complete investment program. All funds have risk. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. The use of derivatives involves special risks and may result in losses. 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. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Putnam Floating Rate Income Fund is not a money market fund and does not seek to maintain a stable net asset value. Although floating rate instruments may reduce risk related to changes in interest rates, they do not eliminate it. In addition, the fund is subject to other significant risks associated with below-investment-grade securities, such as the risk of default in payment on the instruments. Accordingly, the shares of the fund will fluctuate with market conditions. This information is not meant as tax or legal advice. Please consult with the appropriate tax or legal professional regarding your particular circumstances before making any investment decisions.

EO /11 | ‹#› 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 or call Putnam at Please read the prospectus carefully before investing. Putnam Retail Management putnam.com

EO /11 | ‹#› EO /10 | 20