|
|
|
|
|
|
Valuation inputs |
Investments in securities: |
Level 1 |
Level 2 |
Level 3 |
Convertible bonds and notes |
$— |
$4,913,374 |
$— |
Corporate bonds and notes |
— |
43,707,398 |
— |
Foreign government and agency bonds and notes |
— |
14,531,168 |
— |
Mortgage-backed securities |
— |
59,552,100 |
— |
Senior loans |
— |
9,724,447 |
— |
U.S. government and agency mortgage obligations |
— |
54,609,937 |
— |
U.S. treasury obligations |
— |
147,243 |
— |
Short-term investments |
20,077,139 |
15,002,439 |
— |
Totals by level |
$20,077,139 |
$202,188,106 |
$— |
|
|
|
|
|
|
|
Valuation inputs |
Other financial instruments: |
Level 1 |
Level 2 |
Level 3 |
Forward currency contracts |
$— |
$(126,060) |
$— |
Futures contracts |
(30,191) |
— |
— |
Forward premium swap option contracts |
— |
627,143 |
— |
TBA sale commitments |
— |
(17,742,192) |
— |
Interest rate swap contracts |
— |
32,331 |
— |
Total return swap contracts |
— |
(43,888) |
— |
Credit default contracts |
— |
989,499 |
— |
Totals by level |
$(30,191) |
$(16,263,167) |
$— |
The accompanying notes are an integral part of these financial statements.
|
|
Master Intermediate Income Trust 63 |
Statement of assets and liabilities 9/30/24
|
|
ASSETS |
|
Investment in securities, at value (Notes 1 and 9): |
|
Unaffiliated issuers (identified cost $189,460,155) |
$189,406,489 |
Affiliated issuers (identified cost $32,858,756) (Note 5) |
32,858,756 |
Cash |
98,687 |
Foreign currency (cost $3,902) (Note 1) |
4,150 |
Interest and other receivables |
1,665,851 |
Receivable for investments sold |
261,810 |
Receivable for sales of TBA securities (Note 1) |
17,823,797 |
Receivable for variation margin on futures contracts (Note 1) |
5,625 |
Receivable for variation margin on centrally cleared swap contracts (Note 1) |
1,846,839 |
Unrealized appreciation on forward premium swap option contracts (Note 1) |
2,590,097 |
Unrealized appreciation on forward currency contracts (Note 1) |
8,602 |
Unrealized appreciation on OTC swap contracts (Note 1) |
278,209 |
Premium paid on OTC swap contracts (Note 1) |
1,184,416 |
Deposits with broker (Note 1) |
2,753,818 |
Prepaid assets |
6,193 |
Total assets |
250,793,339 |
|
LIABILITIES |
|
Payable for investments purchased |
1,262,609 |
Payable for purchases of TBA securities (Note 1) |
54,520,092 |
Payable for compensation of Manager (Note 2) |
307,024 |
Payable for custodian fees (Note 2) |
32,582 |
Payable for investor servicing fees (Note 2) |
20,935 |
Payable for Trustee compensation and expenses (Note 2) |
104,026 |
Payable for administrative services (Note 2) |
322 |
Payable for variation margin on futures contracts (Note 1) |
74,466 |
Payable for variation margin on centrally cleared swap contracts (Note 1) |
1,724,361 |
Distributions payable to shareholders |
1,063,662 |
Unrealized depreciation on forward premium swap option contracts (Note 1) |
1,962,954 |
Unrealized depreciation on OTC swap contracts (Note 1) |
383,123 |
Premium received on OTC swap contracts (Note 1) |
827,159 |
Unrealized depreciation on forward currency contracts (Note 1) |
134,662 |
TBA sale commitments, at value (proceeds receivable $17,790,547) (Note 1) |
17,742,192 |
Collateral on certain derivative contracts and TBA commitments, at value (Notes 1 and 9) |
1,527,243 |
Payable to broker (Note 1) |
2,756 |
Other accrued expenses |
175,112 |
Total liabilities |
81,865,280 |
|
|
Net assets |
$168,928,059 |
(Continued on next page)
|
64 Master Intermediate Income Trust |
Statement of assets and liabilities cont.
|
|
REPRESENTED BY |
|
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) |
$297,074,826 |
Total distributable earnings (Note 1) |
(128,146,767) |
Total — Representing net assets applicable to capital shares outstanding |
$168,928,059 |
|
COMPUTATION OF NET ASSET VALUE |
|
Net asset value per share |
|
($168,928,059 divided by 48,184,341 shares) |
$3.51 |
The accompanying notes are an integral part of these financial statements.
|
Master Intermediate Income Trust 65 |
Statement of operations Year ended 9/30/24
|
|
INVESTMENT INCOME |
|
Interest (net of foreign tax of $630) (including interest income of $1,696,741 from investments |
|
in affiliated issuers) (Note 5) |
$11,374,170 |
Total investment income |
11,374,170 |
|
EXPENSES |
|
Compensation of Manager (Note 2) |
1,241,124 |
Investor servicing fees (Note 2) |
82,650 |
Custodian fees (Note 2) |
71,976 |
Trustee compensation and expenses (Note 2) |
7,895 |
Administrative services (Note 2) |
4,183 |
Auditing and tax fees |
184,575 |
Other |
148,379 |
Fees waived and reimbursed by Manager (Note 2) |
(46,088) |
Total expenses |
1,694,694 |
Expense reduction (Note 2) |
(3,606) |
Net expenses |
1,691,088 |
|
|
Net investment income |
9,683,082 |
|
REALIZED AND UNREALIZED GAIN (LOSS) |
|
Net realized gain (loss) on: |
|
Securities from unaffiliated issuers (Notes 1 and 3) |
(3,441,282) |
Foreign currency transactions (Note 1) |
4,800 |
Forward currency contracts (Note 1) |
(461,083) |
Futures contracts (Note 1) |
338,602 |
Swap contracts (Note 1) |
(2,019,890) |
Written options (Note 1) |
656,224 |
Total net realized loss |
(4,922,629) |
Change in net unrealized appreciation (depreciation) on: |
|
Securities from unaffiliated issuers and TBA sale commitments |
13,877,494 |
Assets and liabilities in foreign currencies |
20,832 |
Forward currency contracts |
(213,477) |
Futures contracts |
280,262 |
Swap contracts |
1,752,691 |
Written options |
1,238,403 |
Total change in net unrealized appreciation |
16,956,205 |
|
|
Net gain on investments |
12,033,576 |
|
Net increase in net assets resulting from operations |
$21,716,658 |
The accompanying notes are an integral part of these financial statements.
|
66 Master Intermediate Income Trust |
Statement of changes in net assets
|
|
|
INCREASE (DECREASE) IN NET ASSETS |
Year ended 9/30/24 |
Year ended 9/30/23 |
Operations |
|
|
Net investment income |
$9,683,082 |
$7,673,786 |
Net realized loss on investments |
|
|
and foreign currency transactions |
(4,922,629) |
(16,562,366) |
Change in net unrealized appreciation of investments |
|
|
and assets and liabilities in foreign currencies |
16,956,205 |
11,547,355 |
Net increase in net assets resulting from operations |
21,716,658 |
2,658,775 |
Distributions to shareholders (Note 1): |
|
|
From ordinary income |
|
|
Net investment income |
(8,296,682) |
(9,939,969) |
From return of capital |
(4,454,489) |
(3,109,690) |
Decrease from capital share transactions (Note 4) |
(1,179,070) |
(5,409,828) |
Total increase (decrease) in net assets |
7,786,417 |
(15,800,712) |
|
NET ASSETS |
|
|
Beginning of year |
161,141,642 |
176,942,354 |
End of year |
$168,928,059 |
$161,141,642 |
|
NUMBER OF FUND SHARES |
|
|
Shares outstanding at beginning of year |
48,559,516 |
50,253,394 |
Shares repurchased (Note 4) |
(375,175) |
(1,693,878) |
Shares outstanding at end of year |
48,184,341 |
48,559,516 |
The accompanying notes are an integral part of these financial statements.
|
Master Intermediate Income Trust 67 |
Financial highlights (For a common share outstanding throughout the period)
|
|
|
|
|
|
PER-SHARE OPERATING PERFORMANCE |
|
|
|
|
|
|
|
|
Year ended |
|
|
|
9/30/24 |
9/30/23 |
9/30/22 |
9/30/21 |
9/30/20 |
Net asset value, beginning of period |
$3.32 |
$3.52 |
$4.08 |
$4.30 |
$4.83 |
Investment operations: |
|
|
|
|
|
Net investment incomea |
.20 |
.16 |
.18 |
.19 |
.18 |
Net realized and unrealized |
|
|
|
|
|
gain (loss) on investments |
.25 |
(.11) |
(.49) |
(.13) |
(.35) |
Total from investment operations |
.45 |
.05 |
(.31) |
.06 |
(.17) |
Less distributions: |
|
|
|
|
|
From net investment income |
(.17) |
(.20) |
(.26) |
(.03) |
(.21) |
From return of capital |
(.09) |
(.06) |
— |
(.25) |
(.15) |
Total distributions |
(.26) |
(.26) |
(.26) |
(.28) |
(.36) |
Increase from shares repurchasedb |
—f |
.01 |
.01 |
—f |
—f |
Net asset value, end of period |
$3.51 |
$3.32 |
$3.52 |
$4.08 |
$4.30 |
Market price, end of period |
$3.39 |
$3.02 |
$3.25 |
$4.07 |
$4.11 |
Total return at market price (%)c |
21.73 |
0.77 |
(14.14) |
5.82 |
(2.85) |
|
RATIOS AND SUPPLEMENTAL DATA |
|
|
|
|
|
Net assets, end of period (in thousands) |
$168,928 |
$161,142 |
$176,942 |
$208,743 |
$220,091 |
Ratio of expenses to average |
|
|
|
|
|
net assets (%)d |
1.02g |
1.09 |
1.04 |
1.01 |
1.01 |
Ratio of net investment income |
|
|
|
|
|
to average net assets (%) |
5.85g |
4.45 |
4.83 |
4.35 |
3.98 |
Portfolio turnover (%)e |
971 |
1,295 |
949 |
1,073 |
995 |
a Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period.
b See Note 4.
c Total return assumes dividend reinvestment.
d Includes amounts paid through expense offset arrangements, if any (Note 2).
e Portfolio turnover includes TBA purchase and sales commitments.
f Amount represents less than $0.01 per share.
g Reflects waivers of certain fund expenses in connection with investments in Putnam Government Money Market Fund during the period. As a result of such waivers, the expenses of the fund reflect a reduction of 0.03% as a percentage of average net assets (Notes 2 and 5).
The accompanying notes are an integral part of these financial statements.
|
68 Master Intermediate Income Trust |
Notes to financial statements 9/30/24
Unless otherwise noted, the “reporting period” represents the period from October 1, 2023 through September 30, 2024. The following table defines commonly used references within the Notes to financial statements:
|
|
References to |
Represent |
1940 Act |
Investment Company Act of 1940, as amended |
Franklin Advisers |
Franklin Advisers, Inc., a direct wholly-owned subsidiary of Franklin Templeton, and the fund’s |
|
investment manager for periods on or after July 15, 2024 |
Franklin Distributors |
Franklin Distributors, LLC, an indirect wholly-owned subsidiary of Franklin Templeton, and the |
|
fund’s distributor and principal underwriter for periods on or after August 2, 2024 |
Franklin Templeton |
Franklin Resources, Inc. |
Franklin Templeton |
Franklin Templeton Services, LLC, a wholly-owned subsidiary of Franklin Templeton |
Services |
|
JPMorgan |
JPMorgan Chase Bank, N.A. |
OTC |
Over-the-counter |
PIL |
Putnam Investments Limited, an indirect wholly-owned subsidiary of Franklin Templeton |
PSERV |
Putnam Investor Services, Inc., a wholly-owned subsidiary of Franklin Templeton |
Putnam Management |
Putnam Investment Management, LLC, an indirect wholly-owned subsidiary of Franklin |
|
Templeton, and the fund’s investment manager for periods prior to July 15, 2024 |
Putnam Retail |
Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of |
Management |
Franklin Templeton, and the fund’s distributor and principal underwriter for periods prior to |
|
August 2, 2024 |
SEC |
Securities and Exchange Commission |
State Street |
State Street Bank and Trust Company |
Putnam Master Intermediate Income Trust (the fund) is a Massachusetts business trust, which is registered under the 1940 Act as a closed-end management investment company. The goal of the fund is to seek with equal emphasis high current income and relative stability of net asset value by allocating its investments among the U.S. investment grade sector, high-yield sector, and international sector.
The fund’s shares trade on a stock exchange at market prices, which may be lower than the fund’s net asset value.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.
The fund has entered into contractual arrangements with an investment adviser, administrator, transfer agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the fund’s Agreement and Declaration of Trust, any claims asserted by a shareholder against or on behalf of the fund, including claims against Trustees and Officers, must be brought in courts located within the Commonwealth of Massachusetts.
Note 1: Significant accounting policies
The fund follows the accounting and reporting guidance in Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services – Investment Companies (ASC 946) and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles (U.S. GAAP), including, but not limited to, ASC 946. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in
|
Master Intermediate Income Trust 69 |
the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees (Trustees). The Trustees have formed a Pricing Committee to oversee the implementation of these procedures. Under compliance policies and procedures approved by the Trustees, the Trustees have designated the fund’s investment manager as the valuation designee and has responsibility for oversight of valuation. The investment manager is assisted by the fund’s administrator in performing this responsibility, including leading the cross-functional Valuation Committee (VC). The VC is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Trustees.
Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at the average of the last reported bid and ask prices, the “mid price” (prior to July 22, 2024, the most recent bid price was used), and is generally categorized as a Level 2 security.
Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.
Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by the fund’s investment manager. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.
Many securities markets and exchanges outside the U.S. close prior to the scheduled close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the scheduled close of the New York Stock Exchange. When reliable prices are not readily available for equity securities, such as when the value of a security has been affected by events after the close of the exchange or market on which the security is principally traded, but before the fund calculates its net asset value, the fund will fair value these securities as determined in accordance with procedures approved by the Trustees. This may include using an independent third-party pricing service to adjust the value of such securities to the latest indications of fair value at 4:00 p.m. (Eastern Time). These securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.
To the extent a pricing service or dealer is unable to value a security or provides a valuation that the fund’s investment manager does not believe accurately reflects the security’s fair value, the security will be valued at fair value by the fund’s investment manager, which has been designated as valuation designee pursuant to Rule 2a–5 under the 1940 Act, in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.
To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. Certain securities may be valued on the basis of a price provided by a single source. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
|
70 Master Intermediate Income Trust |
Joint trading account Pursuant to an exemptive order from the SEC, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Franklin Advisers. These balances may be invested in issues of short-term investments having maturities of up to 90 days.
Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the fair value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the fund and the counterparty. Franklin Advisers is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.
Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.
Interest income, net of any applicable withholding taxes, if any, is recorded on the accrual basis. Amortization and accretion of premiums and discounts on debt securities, if any, is recorded on the accrual basis.
The fund may have earned certain fees in connection with its senior loan purchasing activities. These fees, if any, are treated as market discount and are amortized into income in the Statement of operations.
Stripped securities The fund may invest in stripped securities which represent a participation in securities that may be structured in classes with rights to receive different portions of the interest and principal. Interest-only securities receive all of the interest and principal-only securities receive all of the principal. If the interest-only securities experience greater than anticipated prepayments of principal, the fund may fail to recoup fully its initial investment in these securities. Conversely, principal-only securities increase in value if prepayments are greater than anticipated and decline if prepayments are slower than anticipated. The fair value of these securities is highly sensitive to changes in interest rates.
Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.
Options contracts The fund uses options contracts for hedging duration and convexity, for isolating prepayment risk and for managing downside risks.
The potential risk to the fund is that the change in value of options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. Realized gains and losses on purchased options are included in realized gains and losses on investment securities. If a written call option is exercised, the premium originally received is recorded as an addition to sales proceeds. If a written put option is exercised, the premium originally received is recorded as a reduction to the cost of investments.
Exchange-traded options are valued at the last sale price. OTC traded options are valued using quotations from an independent pricing service.
Options on swaps are similar to options on securities except that the premium paid or received is to buy or grant the right to enter into a previously agreed upon interest rate or credit default contract. Forward premium swap option contracts include premiums that have extended settlement dates. The delayed settlement of the premiums is factored into the daily valuation of the option contracts. In the case of interest rate cap and floor
|
Master Intermediate Income Trust 71 |
contracts, in return for a premium, ongoing payments between two parties are based on interest rates exceeding a specified rate, in the case of a cap contract, or falling below a specified rate in the case of a floor contract.
Written option contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Futures contracts The fund uses futures contracts for hedging treasury term structure risk and for yield curve positioning.
The potential risk to the fund is that the change in value of futures contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”
Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Forward currency contracts The fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used for hedging currency exposures and for gaining exposure to currencies.
The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities.
Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Interest rate swap contracts The fund entered into OTC and/or centrally cleared interest rate swap contracts, which are arrangements between two parties to exchange cash flows based on a notional principal amount, for hedging term structure risk, for yield curve positioning and for gaining exposure to rates in various countries.
An OTC and centrally cleared interest rate swap can be purchased or sold with an upfront premium. For OTC interest rate swap contracts, an upfront payment received by the fund is recorded as a liability on the fund’s books. An upfront payment made by the fund is recorded as an asset on the fund’s books. OTC and centrally cleared interest rate swap contracts are marked to market daily based upon quotations from an independent pricing service or market makers. Any change is recorded as an unrealized gain or loss on OTC interest rate swaps. Daily fluctuations in the value of centrally cleared interest rate swaps are settled through a central clearing agent and are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Payments, including upfront premiums, received or made are recorded as realized gains or losses at the reset date or the closing of the contract. Certain OTC and centrally cleared interest rate swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract.
The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or if the counterparty defaults, in the case of OTC interest rate contracts, or the central clearing agency or a clearing member defaults, in the case of centrally cleared interest rate swap contracts, on its respective obligation to perform under the contract. The fund’s maximum risk of loss from counterparty risk or central clearing risk is the fair value of the contract. This risk may be mitigated for OTC interest rate swap contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared interest rate swap contracts through the daily exchange of variation margin. There is minimal counterparty risk with respect to centrally cleared interest rate swap contracts due to the clearinghouse guarantee fund and other resources that are available in the event of a clearing member default. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities.
|
72 Master Intermediate Income Trust |
OTC and centrally cleared interest rate swap contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
At the close of the reporting period, the fund has deposited cash valued at $2,013,834 in a segregated account to cover margin requirements on open centrally cleared interest rate swap contracts.
Total return swap contracts The fund entered into OTC and/or centrally cleared total return swap contracts, which are arrangements to exchange a market-linked return for a periodic payment, both based on a notional principal amount, for hedging sector exposure, for gaining exposure to specific sectors, for hedging inflation and for gaining exposure to inflation.
To the extent that the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the fund will receive a payment from or make a payment to the counterparty. OTC and/or centrally cleared total return swap contracts are marked to market daily based upon quotations from an independent pricing service or market maker. Any change is recorded as an unrealized gain or loss on OTC total return swaps. Daily fluctuations in the value of centrally cleared total return swaps are settled through a central clearing agent and are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Payments received or made are recorded as realized gains or losses. Certain OTC and/or centrally cleared total return swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. The fund’s maximum risk of loss from counterparty risk or central clearing risk is the fair value of the contract. This risk may be mitigated for OTC total return swap contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared total return swap contracts through the daily exchange of variation margin. There is minimal counterparty risk with respect to centrally cleared total return swap contracts due to the clearinghouse guarantee fund and other resources that are available in the event of a clearing member default. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities.
OTC and/or centrally cleared total return swap contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
Credit default contracts The fund entered into OTC and/or centrally cleared credit default contracts for hedging credit risk, for gaining liquid exposure to individual names, for hedging market risk and for gaining exposure to specific sectors.
In OTC and centrally cleared credit default contracts, the protection buyer typically makes a periodic stream of payments to a counterparty, the protection seller, in exchange for the right to receive a contingent payment upon the occurrence of a credit event on the reference obligation or all other equally ranked obligations of the reference entity. Credit events are contract specific but may include bankruptcy, failure to pay, restructuring and obligation acceleration. For OTC credit default contracts, an upfront payment received by the fund is recorded as a liability on the fund’s books. An upfront payment made by the fund is recorded as an asset on the fund’s books. Centrally cleared credit default contracts provide the same rights to the protection buyer and seller except the payments between parties, including upfront premiums, are settled through a central clearing agent through variation margin payments. Upfront and periodic payments received or paid by the fund for OTC and centrally cleared credit default contracts are recorded as realized gains or losses at the reset date or close of the contract. The OTC and centrally cleared credit default contracts are marked to market daily based upon quotations from an independent pricing service or market makers. Any change in value of OTC credit default contracts is recorded as an unrealized gain or loss. Daily fluctuations in the value of centrally cleared credit default contracts are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Upon the occurrence of a credit event, the difference between the par value and fair value of the reference obligation, net of any proportional amount of the upfront payment, is recorded as a realized gain or loss.
In addition to bearing the risk that the credit event will occur, the fund could be exposed to market risk due to unfavorable changes in interest rates or in the price of the underlying security or index or the possibility that the fund may be unable to close out its position at the same time or at the same price as if it had purchased the underlying reference obligations. In certain circumstances, the fund may enter into offsetting OTC and centrally cleared credit default contracts which would mitigate its risk of loss. Risks of loss may exceed amounts recognized on the Statement of assets and liabilities. The fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the fair value of the contract. This risk may be mitigated for OTC credit default contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared credit default contracts through the daily exchange of variation margin. Counterparty
|
Master Intermediate Income Trust 73 |
risk is further mitigated with respect to centrally cleared credit default swap contracts due to the clearinghouse guarantee fund and other resources that are available in the event of a clearing member default. Where the fund is a seller of protection, the maximum potential amount of future payments the fund may be required to make is equal to the notional amount.
OTC and centrally cleared credit default contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
At the close of the reporting period, the fund has deposited cash valued at $739,984 in a segregated account to cover margin requirements on open centrally cleared credit default contracts.
TBA commitments The fund may enter into TBA (to be announced) commitments to purchase securities for a fixed unit price at a future date beyond customary settlement time. Although the unit price and par amount have been established, the actual securities have not been specified. However, it is anticipated that the amount of the commitments will not significantly differ from the principal amount. The fund holds, and maintains until settlement date, cash or high-grade debt obligations in an amount sufficient to meet the purchase price, or the fund may enter into offsetting contracts for the forward sale of other securities it owns. Income on the securities will not be earned until settlement date.
The fund may also enter into TBA sale commitments to hedge its portfolio positions, to sell mortgage-backed securities it owns under delayed delivery arrangements or to take a short position in mortgage-backed securities. Proceeds of TBA sale commitments are not received until the contractual settlement date. During the time a TBA sale commitment is outstanding, either equivalent deliverable securities or an offsetting TBA purchase commitment deliverable on or before the sale commitment date are held as “cover” for the transaction, or other liquid assets in an amount equal to the notional value of the TBA sale commitment are segregated. If the TBA sale commitment is closed through the acquisition of an offsetting TBA purchase commitment, the fund realizes a gain or loss. If the fund delivers securities under the commitment, the fund realizes a gain or a loss from the sale of the securities based upon the unit price established at the date the commitment was entered into.
TBA commitments, which are accounted for as purchase and sale transactions, may be considered securities themselves, and involve a risk of loss due to changes in the value of the security prior to the settlement date as well as the risk that the counterparty to the transaction will not perform its obligations. Counterparty risk is mitigated by having a master agreement between the fund and the counterparty.
Unsettled TBA commitments are valued at their fair value according to the procedures described under “Security valuation” above. The contract is marked to market daily and the change in fair value is recorded by the fund as an unrealized gain or loss. Based on market circumstances, Franklin Advisers will determine whether to take delivery of the underlying securities or to dispose of the TBA commitments prior to settlement.
TBA purchase commitments outstanding at period end, if any, are listed within the fund’s portfolio and TBA sale commitments outstanding at period end, if any, are listed after the fund’s portfolio.
Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements that govern OTC derivative and foreign exchange contracts and Master Securities Forward Transaction Agreements that govern transactions involving mortgage-backed and other asset-backed securities that may result in delayed delivery (Master Agreements) with certain counterparties entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral pledged to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, are presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
With respect to ISDA Master Agreements, termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term or short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.
|
74 Master Intermediate Income Trust |
At the close of the reporting period, the fund had a net liability position of $504,114 on open derivative contracts subject to the Master Agreements. Collateral pledged by the fund at period end for these agreements totaled $260,637 and may include amounts related to unsettled agreements.
Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.
Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset and income on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.
Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred for an unlimited period and the carry forwards will retain their character as either short-term or long-term capital losses. At September 30, 2024, the fund had the following capital loss carryovers available, to the extent allowed by the Code, to offset future net capital gain, if any:
|
|
|
|
Loss carryover |
|
Short-term |
Long-term |
Total |
$41,166,336 |
$68,312,376 |
$109,478,712 |
Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer $264,619 to its fiscal year ending September 30, 2025 of late year ordinary losses ((i) ordinary losses recognized between January 1, 2024 and September 30, 2024, and/or (ii) specified ordinary and currency losses recognized between November 1, 2023 and September 30, 2024.
Distributions to shareholders Distributions to shareholders from net investment income, if any, are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The fund uses targeted distribution rates, whose principal source of the distribution is ordinary income. However,the balance of the distribution, if any, comes first from capital gain and then will constitute a return of capital. A return of capital is not taxable; rather it reduces a shareholder’s tax basis in their shares of the fund. The fund may make return of capital distributions to achieve the targeted distribution rates. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences include temporary and/or permanent differences from late year loss deferrals, from dividends payable, from foreign currency gains and losses, from defaulted bond interest, from income on swap contracts and from interest-only securities. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations. At the close of the reporting period, the fund reclassified $425,242 to decrease accumulated net investment loss and $425,242 to increase accumulated net realized loss.
Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses
|
Master Intermediate Income Trust 75 |
that may be realized and distributed to shareholders. The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:
|
|
Unrealized appreciation |
$13,141,934 |
Unrealized depreciation |
(30,491,004) |
Net unrealized depreciation |
(17,349,070) |
Capital loss carryforward |
(109,478,712) |
Late year ordinary loss deferral |
(264,619) |
Cost for federal income tax purposes |
$223,320,957 |
Note 2: Management fee, administrative services and other transactions
Effective July 15, 2024, Putnam Management transferred its management contract with the fund to Franklin Advisers. As a result of the transfer, Franklin Advisers replaced Putnam Management as the investment adviser of the fund. In connection with the transfer, the fund’s portfolio managers, along with supporting research analysts and certain other investment staff of Putnam Management, also became employees of Franklin Advisers.
In addition, Putnam Management transferred to Franklin Advisers the sub-management contract between Putnam Management and PIL in respect of the fund.
The fund pays Franklin Advisers for management and investment advisory services quarterly based on the average net assets (including assets, but excluding liabilities, attributable to leverage for investment purposes) of the fund. The fee is based on the following annual rates:
|
|
|
|
|
|
of the first $500 million of average |
|
|
of the next $5 billion of average |
0.750% |
net assets, |
|
0.480% |
net assets, |
|
of the next $500 million of average |
|
|
of the next $5 billion of average |
0.650% |
net assets, |
|
0.470% |
net assets, |
|
of the next $500 million of average |
|
|
of the next $5 billion of average |
0.600% |
net assets, |
|
0.460% |
net assets, |
|
of the next $5 billion of average |
|
|
of the next $5 billion of average |
0.550% |
net assets, |
|
0.450% |
net assets, |
|
of the next $5 billion of average |
|
|
of the next $5 billion of average |
0.525% |
net assets, |
|
0.440% |
net assets, |
|
of the next $5 billion of average |
|
|
of the next $8.5 billion of average net |
0.505% |
net assets, |
|
0.430% |
assets and |
|
of the next $5 billion of average |
|
0.420% |
of any excess thereafter. |
0.490% |
net assets, |
|
|
|
For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.750% of the fund’s average net assets.
The fund invests in Putnam Government Money Market Fund, an open-end management investment company managed by Franklin Advisers. Management fees paid by the fund are reduced by an amount equal to the management fees paid by Putnam Government Money Market Fund with respect to assets invested by the fund in Putnam Government Money Market Fund. For the reporting period, management fees paid were reduced by $46,088 relating to the fund’s investment in Putnam Government Money Market Fund.
Effective July 15, 2024, Franklin Advisers retained Putnam Management as sub-adviser for the fund pursuant to a new sub-advisory agreement. Pursuant to the agreement, Putnam Management provides certain advisory and related services to the fund. Franklin Advisers pays a monthly fee to Putnam Management based on the costs of Putnam Management in providing these services to the fund, which may include a mark-up not to exceed 15% over such costs.
During the reporting period, PIL was authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Franklin Advisers from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. Effective November 1, 2024, PIL, and its investment professionals, merged into Franklin Templeton Investment Management Limited (FTIML), an affiliate of the investment manager, and FTIML became a sub-advisor to the fund. If Franklin Advisers were to engage the services of FTIML or PIL, Franklin
|
76 Master Intermediate Income Trust |
Advisers would pay a quarterly sub-management fee to FTIML or PIL for its services at an annual rate of 0.20% of the average net assets of the portion of the fund managed by FTIML or PIL.
On January 1, 2024, a subsidiary of Franklin Templeton acquired Putnam U.S. Holdings I, LLC (“Putnam Holdings”), the parent company of Putnam Management and PIL, in a stock and cash transaction (the “Transaction”). As a result of the Transaction, Putnam Management and PIL became indirect, wholly-owned subsidiaries of Franklin Templeton. The Transaction also resulted in the automatic termination of the investment management contract between the fund and Putnam Management and the sub-management contract for the fund between Putnam Management and PIL that were in place for the fund before the Transaction (together, the “Previous Advisory Contracts”). However, Putnam Management and PIL continued to provide uninterrupted services with respect to the fund pursuant to new investment management and sub-management contracts that were approved by fund shareholders at a shareholder meeting held in connection with the Transaction and that took effect on January 1, 2024 (together, the “New Advisory Contracts”). The terms of the New Advisory Contracts are substantially similar to those of the Previous Advisory Contracts, and the fee rates payable under the New Advisory Contracts are the same as the fee rates under the Previous Advisory Contracts.
Effective June 1, 2024, Franklin Templeton Services provides certain administrative services to the fund. The fee for those services is paid by the fund’s investment manager based on the fund’s average daily net assets and is not an additional expense of the fund.
The fund reimburses Franklin Advisers an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
PSERV, an affiliate of Franklin Advisers, provides investor servicing agent functions to the fund. PSERV was paid a monthly fee for investor servicing at an annual rate of 0.05% of the fund’s average daily net assets. The amounts incurred for investor servicing agent functions during the reporting period are included in Investor servicing fees in the Statement of operations.
The fund has entered into expense offset arrangements with PSERV and State Street whereby PSERV’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $3,606 under the expense offset arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $127, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable from July 1, 1995 through December 31, 2023. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
Note 3: Purchases and sales of securities
During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:
|
|
|
|
Cost of purchases |
Proceeds from sales |
Investments in securities, including TBA commitments (Long-term) |
$1,769,965,651 |
$1,833,816,649 |
U.S. government securities (Long-term) |
— |
— |
Total |
$1,769,965,651 |
$1,833,816,649 |
|
Master Intermediate Income Trust 77 |
The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.
Note 4: Shares repurchased
In September 2024, the Trustees approved the renewal of the repurchase program to allow the fund to repurchase up to 10% of its outstanding common shares over the 365 day period ending September 30, 2025 (based on shares outstanding as of September 30, 2024). Prior to this renewal, the Trustees had approved a repurchase program to allow the fund to repurchase up to 10% of its outstanding common shares over the 366 day period ending September 30, 2024 (based on shares outstanding as of September 30, 2023). Repurchases are made when the fund’s shares are trading at less than net asset value (and, therefore, increase the net asset value per share of the fund’s remaining shares) and in accordance with procedures approved by the fund’s Trustees.
For the reporting period, the fund repurchased 375,175 common shares for an aggregate purchase price of $1,179,070, which reflects a weighted-average discount from net asset value per share of 7.84%. The weighted-average discount reflects the payment of commissions by the fund to execute repurchase trades.
For the previous fiscal year, the fund repurchased 1,693,878 common shares for an aggregate purchase price of $5,409,828, which reflected a weighted-average discount from net asset value per share of 8.51%. The weighted-average discount reflected the payment of commissions by the fund to execute repurchase trades.
At the close of the reporting period, Putnam Investments, LLC owned approximately 2,753 shares of the fund (0.006% of the fund’s shares outstanding), valued at $9,663 based on net asset value.
Note 5: Affiliated transactions
Transactions during the reporting period with any company which is under common ownership or control were as follows:
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
outstanding |
|
|
|
|
|
and fair |
|
Fair value as |
Purchase |
Sale |
Investment |
value as |
Name of affiliate |
of 9/30/23 |
cost |
proceeds |
income |
of 9/30/24 |
Short-term investments |
|
|
|
|
|
Putnam Government |
|
|
|
|
|
Money Market Fund |
|
|
|
|
|
Class G† |
$— |
$47,345,439 |
$47,345,439 |
$291,411 |
$— |
Putnam Government |
|
|
|
|
|
Money Market Fund |
|
|
|
|
|
Class P† |
— |
40,660,144 |
21,963,005 |
575,884 |
18,697,139 |
Putnam Short Term |
|
|
|
|
|
Investment Fund |
|
|
|
|
|
Class P‡ |
15,473,951 |
7,697,136 |
9,009,470 |
829,446 |
14,161,617 |
Total Short-term |
|
|
|
|
|
investments |
$15,473,951 |
$95,702,719 |
$78,317,914 |
$1,696,741 |
$32,858,756 |
† Management fees paid by the fund are reduced by an amount equal to the management fees paid by Putnam Government Money Market Fund with respect to assets invested by the fund in Putnam Government Money Market Fund (Note 2). There were no realized or unrealized gains or losses during the period.
‡ Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management and Franklin Advisers, as applicable. There were no realized or unrealized gains or losses during the period.
Note 6: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities
|
78 Master Intermediate Income Trust |
involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.
The fund may invest a significant portion of its assets in securitized debt instruments, including mortgage-backed and asset-backed investments. The yields and values of these investments are sensitive to changes in interest rates, the rate of principal payments on the underlying assets and the market’s perception of the issuers. The market for these investments may be volatile and limited, which may make them difficult to buy or sell.
Note 7: Senior loan commitments
Senior loans are purchased or sold on a when-issued or delayed delivery basis and may be settled a month or more after the trade date, which from time to time can delay the actual investment of available cash balances; interest income is accrued based on the terms of the securities. Senior loans can be acquired through an agent, by assignment from another holder of the loan, or as a participation interest in another holder’s portion of the loan. When the fund invests in a loan or participation, the fund is subject to the risk that an intermediate participant between the fund and the borrower will fail to meet its obligations to the fund, in addition to the risk that the borrower under the loan may default on its obligations.
Note 8: Summary of derivative activity
The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:
|
|
Purchased swap option contracts (contract amount) |
$244,100,000 |
Written swap option contracts (contract amount) |
$166,800,000 |
Futures contracts (number of contracts) |
200 |
Forward currency contracts (contract amount) |
$23,500,000 |
OTC interest rate swap contracts (notional) |
$3,000,000 |
Centrally cleared interest rate swap contracts (notional) |
$532,700,000 |
OTC total return swap contracts (notional) |
$1,900,000 |
OTC credit default contracts (notional) |
$11,200,000 |
Centrally cleared credit default contracts (notional) |
$9,400,000 |
The following is a summary of the fair value of derivative instruments as of the close of the reporting period:
|
|
|
|
|
Fair value of derivative instruments as of the close of the reporting period |
|
|
ASSET DERIVATIVES |
LIABILITY DERIVATIVES |
Derivatives not |
|
|
|
|
accounted for as |
Statement of |
|
Statement of |
|
hedging instruments |
assets and |
|
assets and |
|
under ASC 815 |
liabilities location |
Fair value |
liabilities location |
Fair value |
|
Receivables, Net |
|
|
|
|
assets — Unrealized |
|
Payables, Net assets — |
|
Credit contracts |
appreciation |
$1,680,388* |
Unrealized depreciation |
$734,777 |
Foreign exchange |
|
|
|
|
contracts |
Investments, Receivables |
8,602 |
Payables |
134,662 |
|
Investments, |
|
|
|
|
Receivables, Net |
|
|
|
|
assets — Unrealized |
|
Payables, Net assets — |
|
Interest rate contracts |
appreciation |
8,332,850 * |
Unrealized depreciation |
7,703,567* |
Total |
|
$10,021,840 |
|
$8,573,006 |
* Includes cumulative appreciation/depreciation of futures contracts and/or centrally cleared swaps as reported in the fund’s portfolio. Only current day’s variation margin is reported within the Statement of assets and liabilities.
|
Master Intermediate Income Trust 79 |
The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):
|
|
|
|
|
|
Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments |
|
Derivatives not accounted |
|
|
Forward |
|
|
for as hedging instruments |
|
|
currency |
|
|
under ASC 815 |
Options |
Futures |
contracts |
Swaps |
Total |
Credit contracts |
$— |
$— |
$— |
$1,260,001 |
$1,260,001 |
Foreign exchange contracts |
— |
— |
(461,083) |
— |
$(461,083) |
Interest rate contracts |
1,641,458 |
338,602 |
— |
(3,279,891) |
$(1,299,831) |
Total |
$1,641,458 |
$338,602 |
$(461,083) |
$(2,019,890) |
$(500,913) |
|
Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) |
on investments |
|
|
|
|
|
Derivatives not accounted |
|
|
Forward |
|
|
for as hedging instruments |
|
|
currency |
|
|
under ASC 815 |
Options |
Futures |
contracts |
Swaps |
Total |
Credit contracts |
$— |
$— |
$— |
$(93,246) |
$(93,246) |
Foreign exchange contracts |
— |
— |
(213,477) |
— |
$(213,477) |
Interest rate contracts |
(1,177,635) |
280,262 |
— |
1,845,937 |
$948,564 |
Total |
$(1,177,635) |
$280,262 |
$(213,477) |
$1,752,691 |
$641,841 |
|
80 Master Intermediate Income Trust |
|
This page left blank intentionally. |
|
Master Intermediate Income Trust 81 |
Note 9: Offsetting of financial and derivative assets and liabilities
The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of America N.A. |
Barclays Bank PLC |
Barclays Capital, Inc. (clearing broker) |
Citibank, N.A. |
Citigroup Global Markets, Inc. |
Deutsche BankAG |
Goldman Sachs International |
HSBC Bank USA, National Association |
JPMorgan Chase Bank N.A. |
JPMorgan Securities LLC |
Merrill Lynch International |
Mizuho Capital Markets LLC |
Morgan Stanley & Co. International PLC |
NatWest Markets PLC |
State Street Bank and Trust Co. |
Toronto- Dominion Bank |
UBS AG |
Wells Fargo Bank, N.A. |
WestPac Banking Corp. |
Total |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTC Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
swap contracts*# |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
Centrally cleared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
swap contracts§ |
— |
— |
1,142,162 |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
1,142,162 |
OTC Total return |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
swap contracts*# |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
OTC Credit default |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
protection sold *# |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
OTC Credit default |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
protection |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
purchased*# |
— |
— |
— |
— |
801,751 |
— |
14,682 |
— |
— |
7,589 |
111,981 |
— |
94,262 |
— |
— |
— |
— |
— |
— |
1,030,265 |
Centrally cleared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credit default |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts§ |
— |
— |
704,677 |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
704,677 |
Futures contracts§ |
— |
— |
— |
— |
— |
— |
— |
— |
— |
5,625 |
— |
— |
— |
— |
— |
— |
— |
— |
— |
5,625 |
Forward currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts# |
— |
5,053 |
— |
— |
— |
— |
605 |
802 |
— |
— |
— |
— |
— |
92 |
372 |
— |
775 |
— |
903 |
8,602 |
Forward premium |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
swap option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts# |
119,060 |
302,877 |
— |
158,364 |
— |
250,045 |
36,933 |
— |
1,422,488 |
— |
— |
5,886 |
140,348 |
— |
— |
— |
154,096 |
— |
— |
2,590,097 |
Total Assets |
$119,060 |
$307,930 |
$1,846,839 |
$158,364 |
$801,751 |
$250,045 |
$52,220 |
$802 |
$1,422,488 |
$13,214 |
$111,981 |
$5,886 |
$234,610 |
$92 |
$372 |
$— |
$154,871 |
$— |
$903 |
$5,481,428 |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTC Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
swap contracts*# |
— |
— |
— |
— |
— |
— |
— |
— |
43,145 |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
43,145 |
Centrally cleared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
swap contracts§ |
— |
— |
1,025,398 |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
1,025,398 |
OTC Total return |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
swap contracts*# |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
43,888 |
— |
— |
— |
— |
— |
— |
43,888 |
OTC Credit default |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
protection sold *# |
13,574 |
— |
— |
— |
407,074 |
— |
65,708 |
— |
— |
68,990 |
47,857 |
— |
87,686 |
— |
— |
— |
— |
— |
— |
690,889 |
OTC Credit default |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
protection |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
purchased*# |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|
|
82 Master Intermediate Income Trust |
Master Intermediate Income Trust 83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank of America N.A. |
Barclays Bank PLC |
Barclays Capital, Inc. (clearing broker) |
Citibank, N.A. |
Citigroup Global Markets, Inc. |
Deutsche BankAG |
Goldman Sachs International |
HSBC Bank USA, National Association |
JPMorgan Chase Bank N.A. |
JPMorgan Securities LLC |
Merrill Lynch International |
Mizuho Capital Markets LLC |
Morgan Stanley & Co. International PLC |
NatWest Markets PLC |
State Street Bank and Trust Co. |
Toronto- Dominion Bank |
UBS AG |
Wells Fargo Bank, N.A. |
WestPac Banking Corp. |
Total |
Centrally cleared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
credit default |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts§ |
$— |
$— |
$698,963 |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$698,963 |
Futures contracts§ |
— |
— |
— |
— |
— |
— |
— |
— |
— |
74,466 |
— |
— |
— |
— |
— |
— |
— |
— |
— |
74,466 |
Forward currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts# |
5,838 |
781 |
— |
5,950 |
— |
— |
9,507 |
17,253 |
1,458 |
— |
— |
— |
56,636 |
2,347 |
14,648 |
13,405 |
5,233 |
— |
1,606 |
134,662 |
Forward premium |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
swap option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contracts# |
156,034 |
— |
— |
123,274 |
— |
243,456 |
104,805 |
— |
998,926 |
— |
— |
1,787 |
257,837 |
— |
— |
— |
76,835 |
— |
— |
1,962,954 |
Total Liabilities |
$175,446 |
$781 |
$1,724,361 |
$129,224 |
$407,074 |
$243,456 |
$180,020 |
$17,253 |
$1,043,529 |
$143,456 |
$47,857 |
$1,787 |
$446,047 |
$2,347 |
$14,648 |
$13,405 |
$82,068 |
$— |
$1,606 |
$4,674,365 |
Total Financial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Derivative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets |
$(56,386) |
$307,149 |
$122,478 |
$29,140 |
$394,677 |
$6,589 |
$(127,800) |
$(16,451) |
$378,959 |
$(130,242) |
$64,124 |
$4,099 |
$(211,437) |
$(2,255) |
$(14,276) |
$(13,405) |
$72,803 |
$— |
$(703) |
$807,063 |
Total collateral |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
received |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(pledged)†## |
$— |
$307,149 |
$— |
$— |
$380,000 |
$6,589 |
$(118,906) |
$— |
$378,959 |
$— |
$64,124 |
$— |
$(141,731) |
$— |
$— |
$— |
$72,803 |
$— |
$— |
|
Net amount |
$(56,386) |
$— |
$122,478 |
$29,140 |
$14,677 |
$— |
$(8,894) |
$(16,451) |
$— |
$(130,242) |
$— |
$4,099 |
$(69,706) |
$(2,255) |
$(14,276) |
$(13,405) |
$— |
$— |
$(703) |
|
Controlled collateral |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
received (including |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TBA commitments)** |
$— |
$330,000 |
$— |
$— |
$380,000 |
$110,000 |
$— |
$— |
$450,000 |
$— |
$137,582 |
$— |
$— |
$— |
$— |
$— |
$110,000 |
$9,661 |
$— |
$1,527,243 |
Uncontrolled |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
collateral received |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
$— |
Collateral (pledged) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(including TBA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
commitments)** |
$— |
$— |
$— |
$— |
$— |
$— |
$(118,906) |
$— |
$— |
$— |
$— |
$— |
$(141,731) |
$— |
$— |
$— |
$— |
$— |
$— |
$(260,637) |
* Excludes premiums, if any. Included in unrealized appreciation and depreciation on OTC swap contracts on the Statement of assets and liabilities.
** Included with Investments in securities on the Statement of assets and liabilities.
† Additional collateral may be required from certain brokers based on individual agreements.
# Covered by master netting agreement (Note 1).
##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.
§ Includes current day’s variation margin only as reported on the Statement of assets and liabilities, which is not collateralized. Cumulative appreciation/(depreciation) for futures contracts and centrally cleared swap contracts is represented in the tables listed after the fund’s portfolio. Collateral pledged for initial margin on futures contracts and centrally cleared swap contracts, which is not included in the table above, amounted to $391,749 and $2,753,818, respectively.
|
|
84 Master Intermediate Income Trust |
Master Intermediate Income Trust 85 |
Federal tax information (Unaudited)
For the reporting period, a portion of the fund’s distribution represents a return of capital and is therefore not taxable to shareholders. The return of capital is partly due to foreign currency losses and/or losses on swaps.
The fund designated $5,440 of income eligible as qualifying for the dividends received deduction for corporations.
For the reporting period, the fund hereby designates $5,440, or the maximum amount allowable, of its taxable ordinary income earned as qualified dividends taxed at the individual net capital gain rates.
The Form 1099 that will be mailed to you in January 2025 will show the tax status of all distributions paid to your account in calendar 2024.
|
86 Master Intermediate Income Trust |
Results of any shareholder votes (Unaudited)
April 26, 2024 annual meeting
At the meeting, each of the nominees for Trustees was elected, as follows:
|
|
|
|
Votes for |
Votes withheld |
Liaquat Ahamed |
36,364,012 |
2,054,334 |
Barbara M. Baumann |
36,540,982 |
1,877,365 |
Katinka Domotorffy |
36,494,791 |
1,923,556 |
Catharine Bond Hill |
36,518,471 |
1,899,876 |
Kenneth R. Leibler |
36,456,683 |
1,961,664 |
Jennifer Williams Murphy |
36,540,814 |
1,877,533 |
Marie Pillai |
36,419,542 |
1,998,804 |
George Putnam III |
36,520,873 |
1,897,474 |
Robert L. Reynolds |
36,547,394 |
1,870,953 |
Manoj P. Singh |
36,377,553 |
2,040,794 |
Mona K. Sutphen |
36,463,417 |
1,954,930 |
Jane E. Trust |
36,453,737 |
1,964,610 |
At the meeting, a proposal to fix the number of Trustees at 12 was approved as follows:
|
|
|
Votes for |
Votes against |
Abstentions/Votes withheld |
36,341,671 |
1,595,731 |
480,942 |
November 27, 2023 special meeting
At the meeting, a new Management Contract for your fund with Putnam Investment Management, LLC was approved, as follows:
|
|
|
Votes for |
Votes against |
Abstentions/Votes withheld |
27,996,853 |
1,871,287 |
822,942 |
At the meeting, a new Sub-Management Contract for your fund between Putnam Investment Management, LLC and Putnam Investments Limited was approved, as follows:
|
|
|
Votes for |
Votes against |
Abstentions/Votes withheld |
27,931,231 |
1,938,373 |
821,477 |
All tabulations are rounded to the nearest whole number.
|
Master Intermediate Income Trust 87 |
|
88 Master Intermediate Income Trust |
|
Master Intermediate Income Trust 89 |
* Ms. Murphy is the founder, controlling member, and Chief Executive Officer of Runa Digital Assets, LLC (“RDA”), the investment manager of Runa Digital Partners, LP (“RDP”), a private investment fund. Ms. Murphy also holds a controlling interest in RDP’s general partner and is a limited partner in RDP. A subsidiary of Franklin Templeton and certain individuals employed by Franklin Templeton or its affiliates have made passive investments as limited partners in RDP (one of whom serves on the advisory board for RDA, which has no governance or oversight authority over RDA), representing in the aggregate approximately 33% of RDP as of October 31, 2023. In addition, if certain conditions are met, Franklin Templeton will be entitled to receive a portion of any incentive compensation allocable to RDP’s general partner. For so long as Franklin Templeton maintains its investment in RDP, Ms. Murphy also has agreed upon request to advise and consult with Franklin Templeton and its affiliates on the market for digital assets. Ms. Murphy provides similar service to other limited partners in RDP that request her advice. Ms. Murphy also is entitled to receive deferred cash compensation in connection with her prior employment by an affiliate of Franklin Templeton, which employment ended at the end of 2021. With regard to Ms. Murphy, the relationships described above may give rise to a potential conflict of interest with respect to the Funds.
† Mr. Reynolds is an “interested person” (as defined in the 1940 Act) of the fund and Franklin Advisers. He is President of your fund and each of the other Putnam funds and holds direct beneficial interest in shares of Franklin Templeton, of which Franklin Advisers is an indirect wholly-owned subsidiary.
‡ Ms. Trust is an “interested person” (as defined in the 1940 Act) of the fund and Franklin Advisers by virtue of her positions with certain affiliates of Franklin Advisers.
The address of each Trustee is 100 Federal Street, Boston, MA 02110.
As of September 30, 2024, the Putnam family of funds included 89 mutual funds, 4 closed-end funds, and 12 exchange-traded funds. Each Trustee serves as Trustee of all funds in the Putnam family of funds. Ms. Trust also serves as Trustee of 123 other funds that are advised by one or more affiliates of Franklin Advisers.
Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.
|
90 Master Intermediate Income Trust |
Officers
In addition to Robert L. Reynolds, the other officers of the fund are shown below:
|
|
Kevin R. Blatchford (Born 1967) |
Monica Krogh (Born 1981) |
Vice President and Assistant Treasurer |
Vice President and Assistant Treasurer |
Since 2024 |
Since 2024 |
Director, Financial Reporting, Putnam Holdings |
Assistant Treasurer, Fund Administration and Oversight, |
|
Franklin Templeton |
James F. Clark (Born 1974) |
|
Vice President and Chief Compliance Officer |
Denere P. Poulack (Born 1968) |
Since 2016 |
Assistant Vice President, Assistant Clerk, |
Chief Compliance Officer, Putnam Management |
and Assistant Treasurer |
and Putnam Holdings |
Since 2004 |
|
Graham Cole (Born 1984) |
Stephen J. Tate (Born 1974) |
Vice President and Assistant Treasurer |
Vice President and Chief Legal Officer |
Since 2024 |
Since 2021 |
Director, Global Fund Tax, Franklin Templeton |
Deputy General Counsel, Franklin Templeton, and |
|
Secretary, Putnam Holdings, Putnam Management, and |
Lindsey Hicks (Born 1979) |
Putnam Retail Management |
Vice President and Assistant Treasurer |
|
Since 2024 |
Ryan Wheeler (Born 1985) |
Controller, Fund Administration and Oversight, |
Vice President and Assistant Treasurer |
Franklin Templeton |
Since 2024 |
|
Director, Fund Administration and Reporting, |
Michael J. Higgins (Born 1976) |
Franklin Templeton |
Vice President, Treasurer, and Clerk |
|
Since 2010 |
Jeffrey White (Born 1971) |
|
Vice President, Principal Financial Officer, Principal |
Jonathan S. Horwitz (Born 1955) |
Accounting Officer, and Assistant Treasurer |
Executive Vice President, Principal Executive Officer, |
Since 2024 |
and Compliance Liaison |
|
Since 2004 |
|
|
Kelley Hunt (Born 1984) |
|
AML Compliance Officer |
|
Since 2024 |
|
Manager, U.S. Financial Crime Compliance, |
|
Franklin Templeton |
|
The address of each Officer, other than as noted below, is 100 Federal Street, Boston, MA 02110. Mr. Cole’s address is 5000 Yonge St, Toronto, ON, Canada M2N0A7. Ms. Hick’s address is 3355 Data Drive, Rancho Cordova, CA 95670. Ms. Krogh’s and Mr. Wheeler’s address is 300 S.E. 2nd Street, Ft. Lauderdale, FL 33301. Ms. Hunt’s address is 100 Fountain Parkway, St. Petersburg, FL 33716. Mr. White’s address is One Franklin Parkway, San Mateo, CA 94403.
|
Master Intermediate Income Trust 91 |
Fund information
|
|
|
Investment Manager |
Trustees |
Michael J. Higgins |
Franklin Advisers, Inc. |
Barbara M. Baumann, Chair |
Vice President, Treasurer, |
One Franklin Parkway |
Liaquat Ahamed |
and Clerk |
San Mateo, CA 94403 |
Katinka Domotorffy |
|
|
Catharine Bond Hill |
Jonathan S. Horwitz |
Investment Sub-Advisors |
Gregory G. McGreevey |
Executive Vice President, |
Putnam Investments Limited |
Jennifer Williams Murphy |
Principal Executive Officer, |
Cannon Place, 78 Cannon Street |
Marie Pillai |
and Compliance Liaison |
London, England EC4N 6HL |
George Putnam III |
|
|
Robert L. Reynolds |
Kelley Hunt |
Putnam Investment |
Manoj P. Singh |
AML Compliance Officer |
Management, LLC |
Mona K. Sutphen |
|
100 Federal Street |
Jane E. Trust |
Monica Krogh |
Boston, MA 02110 |
|
Vice President and |
|
Officers |
Assistant Treasurer |
Marketing Services |
Robert L. Reynolds |
|
Franklin Distributors, LLC |
President, The Putnam Funds |
Denere P. Poulack |
One Franklin Parkway |
|
Assistant Vice President, |
San Mateo, CA 94403 |
Kevin R. Blatchford |
Assistant Clerk, and |
|
Vice President and |
Assistant Treasurer |
Custodian |
Assistant Treasurer |
|
State Street Bank |
|
Stephen J. Tate |
and Trust Company |
James F. Clark |
Vice President and |
|
Vice President and |
Chief Legal Officer |
Legal Counsel |
Chief Compliance Officer |
|
Ropes & Gray LLP |
|
Ryan Wheeler |
|
Graham Cole |
Vice President and |
Independent Registered |
Vice President and |
Assistant Treasurer |
Public Accounting Firm |
Assistant Treasurer |
|
PricewaterhouseCoopers LLP |
|
Jeffrey White |
|
Lindsey Hicks |
Vice President, |
|
Vice President and |
Principal Financial Officer, |
|
Assistant Treasurer |
Principal Accounting Officer, |
|
|
and Assistant Treasurer |
Call 1-800-225-1581 Monday through Friday between 8:00 a.m. and 8:00 p.m. Eastern Time, or visit putnam.com or franklintempleton.com anytime for up-to-date information about the fund’s NAV.
Item 2. Code of Ethics:
(a) The fund’s principal executive,
financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund's investment manager, or Franklin Templeton.
As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investment Management, LLC and Franklin
Templeton which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates
the Code of Ethics of Franklin Templeton with respect to all of its officers and Trustees who are employees of Putnam Investment Management,
LLC and Franklin Templeton. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial
and accounting officers.
(c) In connection with
the acquisition of Putnam Investments by Franklin Templeton, the Putnam Investments Code of Ethics was amended effective January 1, 2024
to reflect revised compliance processes, including: (i) Compliance with the Putnam Investments Code of Ethics will be viewed as compliance
with the Franklin Templeton Code for certain Putnam employees who are dual-hatted in Franklin Templeton advisory entities (ii) Certain
Franklin Templeton employees are required to hold shares of Putnam mutual funds at Putnam Investor Services, Inc. and (iii) Certain provisions
of the Putnam Investments Code of Ethics are amended that are no longer needed due to organizational changes. Effective March 4,
2024, the majority of legacy Putnam employees transitioned to Franklin Templeton policies outlined in the Franklin Templeton Code.
Item 3. Audit Committee Financial Expert:
The Funds' Audit, Compliance and Risk Committee
is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission
(“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Trustees
believe that each member of the Audit, Compliance and Risk Committee also possesses a combination of knowledge and experience with respect
to financial accounting matters, as well as other attributes, that qualifies him or her for service on the Committee. In addition, the
Trustees have determined that each of Mr. McGreevey and Mr. Singh qualifies as an “audit committee financial expert” (as
such term has been defined by the Regulations) based on their review of his or her pertinent experience and education.The SEC has stated,
and the funds' amended and restated agreement and Declaration of Trust provides, that the designation or identification of a person as
an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability
that are greater than the duties, obligations and liability imposed on such person as a member of the Audit, Compliance and Risk Committee
and the Board of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and
Services:
The following table presents fees billed
in each of the last two fiscal years for services rendered to the fund by the fund’s independent auditor:
Fiscal
year
ended |
Audit
Fees |
Audit-Related
Fees |
Tax
Fees |
All
Other Fees |
|
|
|
|
|
September
30, 2024 |
$170,849 |
$— |
$13,696 |
$— |
September
30, 2023 |
$177,492 |
$— |
$15,196 |
$— |
For the fiscal years ended September 30,
2024 and September 30, 2023, the fund’s independent auditor billed aggregate non-audit fees in the amounts of $974,493 and $235,828
respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management
that provides ongoing services to the fund.
Audit Fees represent fees billed for the
fund's last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration
statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees represent fees billed
in the fund’s last two fiscal years for services traditionally performed by the fund’s auditor, including accounting consultation
for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required
by statute or regulation.
Tax Fees represent fees billed in the fund’s
last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance
with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities.
Pre-Approval Policies of the Audit, Compliance
and Risk Committee. The Audit, Compliance and Risk Committee of the Putnam funds has determined that, as a matter of policy, all work
performed for the funds by the funds’ independent auditors will be pre-approved by the Committee itself and thus will generally
not be subject to pre-approval procedures.
The Audit, Compliance and Risk Committee
also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds’ independent
auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain
of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement,
the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such
requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the
independence of the audit firm.
The following table presents fees billed
by the fund’s independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X.
Fiscal
year
ended |
Audit-
Related
Fees |
Tax
Fees |
All
Other
Fees |
Total
Non-Audit
Fees |
|
|
|
|
|
September
30, 2024 |
$— |
$791,963 |
$168,834 |
$960,797 |
September
30, 2024 |
$— |
$
220,632 |
$— |
$
220,632 |
(i) Not applicable
(j) Not applicable
Item 5. Audit Committee of Listed Registrants
(a) The fund has a separately-designated
Audit, Compliance and Risk Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended.
The Audit, Compliance and Distribution Risk of the fund's Board of Trustees is composed of the following persons:
Gregory G. McGreevey
Marie Pillai
Manoj P. Singh
Mona Sutphen
(b) Not applicable
Item 6. Investments:
The registrant’s schedule of investments
in unaffiliated issuers is included in the Report to Stockholders in Item 1 above.
Item 7. Financial Statements and Financial
Highlights for Open-End Management Investment Companies.
Not applicable
Item 8. Changes in and Disagreements with
Accountants for Open-End Management Investment Companies.
Not applicable
Item 9. Proxy Disclosure for Open-End
Management Investment Companies.
Not applicable
Item 10. Remuneration Paid to Directors,
Officers, and Others of Open-End Management Investment Companies.
Not applicable
Item 11. Statement Regarding Basis for
Approval of Investment Advisory Contract.
Included in Item 1 above, as applicable
Item 12. Disclosure of Proxy Voting Policies
and Procedures For Closed-End Management Investment Companies:
The Trustees of the Putnam Funds have delegated proxy voting authority
for the securities held in the funds’ portfolios to Putnam Management and have approved Putnam Management’s current proxy
voting guidelines and procedures
Putnam Investments
Proxy Voting Procedures
Introduction and Summary
Many of Putnam’s investment management clients have delegated to Putnam
the authority to vote proxies for shares in the client accounts Putnam manages. Putnam believes that the voting of proxies can be an important
tool for institutional investors to promote best practices in corporate governance and votes all proxies in the best interests of its
clients as investors. In Putnam’s view, strong corporate governance policies, most notably oversight by an independent board of
qualified directors, best serve investors’
interests. Putnam will vote proxies and maintain records of voting of shares
for which Putnam has proxy voting authority in accordance with its fiduciary obligations and applicable law.
Putnam’s voting policies are rooted in our views that (1) strong,
independent corporate governance is important to long-term company financial performance, and (2) long-term investors’ active engagement
with company management, including through the proxy voting process, strengthens issuer accountability and overall market discipline,
potentially reducing risk and improving returns over time. Our voting program is offered as a part of our investment management services,
at no incremental fee to Putnam, and, while there can be no guarantees, it is intended to offer potential investment benefits over a long-term
horizon. Our voting policies are designed with investment considerations in mind, not as a means to pursue particular political, social,
or other goals. As a result, we may not support certain proposals whose costs to the issuer (including implementation costs, practicability,
and other factors), in Putnam’s view, outweigh their investment merits.
This memorandum sets forth Putnam’s policies for voting proxies. It
covers all accounts for which Putnam has proxy voting authority. These accounts include the Putnam Mutual Funds1
and Putnam Exchange-Traded Funds, US and international institutional accounts and funds managed or sub-advised by The Putnam Advisory
Company, LLC, Putnam Investments Limited and Putnam Fiduciary Trust Company, LLC. In addition, the policies include US mutual funds and
other accounts sub-advised by Putnam Investment Management, LLC.2
Proxy Committee
Putnam
has a Proxy Committee composed of senior professionals, including from the Putnam Equity investment team and the Putnam Equity Sustainability
Strategy group. The Chief Investment Officer of Putnam Equity appoints the members of the Proxy Committee. The Proxy Committee is responsible
for setting general policy as to proxies. Specifically, the Committee:
| 1. | Reviews these procedures and the Proxy Voting Guidelines annually
and approves any amendments considered to be advisable. |
| 2. | Considers
special proxy issues as they may from time to time arise. |
_____________________
1 Effective January 27, 2023, the Board of Trustees of the Putnam Mutual Funds delegated proxy voting authority to Putnam Investment Management, LLC, the investment manager to the Putnam Mutual Funds.
2 The Putnam Proxy Voting Procedures and Guidelines will apply also to certain funds and institutional and other accounts managed by Franklin Advisers, Inc. (“FAV”) but formerly managed or sub-advised by one of the Putnam adviser entities identified above, pursuant to sub-advisory agreements in effect from time to time between FAV and the relevant Putnam entity(ies).
| 3. | Must approve all vote overrides recommended by investment professionals. |
Proxy Voting Administration
The Putnam Sustainability Strategy group administers Putnam’s proxy
voting through a Proxy Voting Team. The Proxy Voting Team has the following duties:
| 1. | Annually
prepares the Proxy Voting Guidelines and distributes them to the Proxy Committee for review. |
| 2. | Coordinates
the Proxy Committee’s review of any new or unusual proxy issues and serves as Secretary thereto. |
| 3. | Manages
the process of referring issues to portfolio managers for voting instructions. |
| 4. | Oversees
the work of any third-party vendor hired to process proxy votes (as of the date of these procedures Putnam has engaged Institutional
Shareholder Services (ISS) to process proxy votes) and the process of setting up the voting process with ISS and custodial banks for
new clients. |
| 5. | Coordinates responses to investment professionals’ questions on proxy issues and proxy policies, including forwarding specialized
proxy research from ISS and other vendors and forwards information to investment professionals prepared by other areas at Putnam. |
| 6. | Implements
the exception process with respect to referred items on securities held solely in accounts managed by the Global Asset Allocation (“GAA”)
team within Franklin Templeton Investment Solutions described in more detail in the Proxy Referral section below. |
| 7. | Maintains required records of proxy votes on behalf of the appropriate Putnam client accounts. |
| 8. | Prepares and distributes reports required by Putnam clients. |
Proxy Voting Guidelines
Putnam maintains written voting guidelines
(“Guidelines”) setting forth voting positions determined by the Proxy Committee on those issues believed most likely to arise
day to day. The Guidelines may call for votes to be cast normally in favor of or opposed to a matter or may deem the matter an item to
be referred to investment professionals on a case-by-case basis. A copy of the Guidelines is attached to this memorandum as Exhibit A.
In light of our views on the importance of
issuer governance and investor engagement, which we believe are applicable across our various strategies and clients, regardless of a
specific portfolio’s investment objective, Putnam will vote all proxies in accordance with the Guidelines, subject to two exceptions
as follows:
| 1. | If the portfolio managers of client accounts holding the stock of a company with a proxy vote believe that following the Guidelines
in any specific case would not be in the clients’ best interests, they may request the Proxy Voting Team not to follow the guidelines
in such case. The request must be in writing and include an explanation of the rationale for doing so. The Proxy Voting Team will review
any such request with the Proxy Committee (or, in cases with limited time, with the Chair of the Proxy Committee acting on the Proxy Committee’s
behalf) prior to implementing the request. |
| 2. | Putnam
may accept instructions to vote proxies under client specific guidelines subject to review and acceptance by the Investment Division
and the Legal and Compliance Department. |
Other
| 1. | Putnam
may elect not to vote when the security is no longer held. |
| 2. | Putnam
will abstain on items that require case-by-case review when a vote recommendation from the appropriate investment professional(s)
cannot be obtained due to restrictive voting deadlines or other prohibitive operational or administrative requirements. |
| 3. | Where
securities held in Putnam client accounts, including the Putnam mutual funds, have been loaned to third parties in connection with a
securities lending program administered by Putnam (through securities lending agents overseen by Putnam), Putnam has instructed lending
agents to recall U.S. securities on loan to vote proxies, in accordance with Putnam’s securities lending procedures. Due to differences
in non-U.S. markets, Putnam does not currently seek to recall non-U.S. securities on loan. In addition, where Putnam does not administer
a client’s securities lending program, this recall policy does not apply, since Putnam generally does not have information on loan
details or authority to effect recalls in those cases. It is possible that, for impracticability or other reasons, a recalled security
may not be returned to the relevant custodian in time to allow Putnam to vote the relevant proxy. |
| 4. | Putnam
will make its reasonable best efforts to vote all proxies except when impeded by circumstances that are reasonably beyond its control
and responsibility, such as custodial proxy voting services, in part or whole, not available or not established by a client, or custodial
error. |
Proxy Voting Referrals
Under the Guidelines, certain proxy matters will be referred to Portfolio
Managers. The Portfolio Manager receiving the referral request may delegate the vote decision to an appropriate Analyst from among a list
of eligible analysts (such list to be approved by the Chief Investment Officer of the Putnam Equity group and the Director of Equity
Research for the Putnam Equity group). The
Analyst will be required to make the affirmation and disclosures identified in (3) below. Normally specific referral items will be referred
to the portfolio team leader (or another member of the portfolio team he or she designates) whose accounts hold the greatest number of
shares of the issuer of the proxies through the Proxy Referral Administration Database. The referral request contains (1) a field that
will be used by the portfolio team leader or member for recommending a vote on each referral item, (2) a field for describing any contacts
relating to the proxy referral item the portfolio team may have had with any Franklin Templeton employee outside Putnam Equity or with
any person other than a proxy solicitor acting in the normal course of proxy solicitation, and (3) a field for portfolio managers to
affirm that they are making vote recommendations in the best interest of client accounts and have disclosed to Compliance any potential
conflicts of interest relevant to their vote recommendation.
Putnam may vote any referred items on securities held solely in accounts
managed by the GAA team within Franklin Templeton Investment Solutions (and not held by any other investment product team) in accordance
with the recommendation of Putnam’s third-party proxy voting service provider. The Proxy Voting Team will first give the relevant
portfolio manager(s) on the GAA team the opportunity to review the referred items and vote on them. If the portfolio manager(s) on the
GAA team do not decide to make any active voting decision on any of the referred items, the items will be voted in accordance with the
service provider’s recommendation. If the security is also held by other investment teams at Putnam Equity, the items will be referred
to the largest holder who is not a member of the GAA team.
The portfolio team leader or members who
have been requested to provide a recommendation on a proxy referral item will complete the referral request. Upon receiving each completed
referral request from the applicable Portfolio Manager or Analyst, the Proxy Voting Team will review the completed request for accuracy
and completeness, and will follow up with investment personnel as appropriate.
Conflicts of Interest
A potential conflict of interest may arise when voting proxies of an issuer
which has a significant business relationship with Putnam. For example, Putnam could manage a defined benefit or defined contribution
pension plan for the issuer.
Putnam’s policy is to vote proxies based solely on the investment
merits of the proposal. In order to guard against conflicts, the following procedures have been adopted:
| 1. | The Proxy Committee is composed of senior professionals, including Portfolio Managers in Putnam Equity
and the Putnam Equity Sustainability Strategy group. None of these individuals or groups reports to Franklin Templeton’s marketing
businesses. |
| 2. | No Franklin Templeton employee outside Putnam Equity may contact any portfolio manager about any proxy
vote without first contacting the Proxy Voting Team or a senior lawyer in the Legal and Compliance Department. There is no prohibition
on employees seeking to communicate investment-related information to investment professionals except for Putnam’s restrictions
on dissemination of material, non-public information. However, the Proxy Voting Team will coordinate the delivery of such information
to investment professionals to avoid appearances of conflict. |
| 3. | Investment professionals responding to referral requests must disclose any contacts with third parties
other than normal contact with proxy solicitation firms and must affirm that they are making vote recommendations in the best interest
of client accounts and have disclosed to the Proxy Voting Team any potential conflicts of interest relevant to their vote recommendation. |
| 4. | The Proxy Voting Team will review the name of the issuer of each proxy that contains a referral item against various sources of Putnam
business relationships maintained by the Legal and Compliance Department or Client Service for potential material business relationships
(i.e., conflicts of interest). For referrals, the Proxy Voting Team will complete the Proxy Voting Conflict of Interest Disclosure
Form (attached as Exhibit B and C) via the Proxy Referral Administration Database and will prepare a quarterly report for the Putnam
Chief Compliance Officer identifying all completed Conflict of Interest Disclosure forms. |
| 5. | Putnam’s Proxy Voting Guidelines may only be overridden with the written recommendation from a member of the Investment Division
and concurrence of the Proxy Committee (or, in cases with limited time, with the Chair of the Proxy Committee on the Proxy Committee’s
behalf). |
The Putnam Equity Sustainability Strategy Group
will retain copies of the following books and records:
| 1. | A copy of the Proxy Voting Procedures and Guidelines as are from time to time in effect; |
| 2. | A copy of each proxy statement received with respect to securities in client accounts; |
| 3. | Records of each vote cast for each client; |
| 4. | Internal documents generated in connection with a proxy referral, such as emails, memoranda, etc. |
| 5. | Written reports to clients on proxy voting and all client requests for information and Putnam’s
response. |
All records will be maintained for seven years. A proxy
vendor may on Putnam’s behalf maintain the records noted in 2 and 3 above if it commits to providing copies promptly upon request.
Exhibit A to Proxy Procedures
Putnam Investments Proxy Voting Guidelines
The proxy voting guidelines below summarize Putnam’s positions on
various issues of concern to investors and indicate how client portfolio securities will be voted on proposals dealing with a particular
issue. The proxy voting service is instructed to vote all proxies relating to client portfolio securities in accordance with these guidelines,
except as otherwise instructed by the Proxy Voting Team.
Putnam’s voting policies are rooted in our views that (1) strong,
independent corporate governance is important to long-term company financial performance, and (2) long-term investors’ active engagement
with company management, including through the proxy voting process, strengthens issuer accountability and overall market discipline,
potentially reducing risk and improving returns over time. Our voting program is offered as a part of our investment management services,
at no incremental fee to Putnam, and, while there can be no guarantees, it is intended to offer potential investment benefits over a long-term
horizon. Our voting policies are designed with investment considerations in mind, not as a means to pursue particular political, social,
or other goals. As a result, we may not support certain proposals whose costs to the issuer (including implementation costs, practicability,
and other factors), in Putnam’s view, outweigh their investment merits.
These proxy voting policies are intended to be decision-making guidelines.
The guidelines are not exhaustive and do not include all potential voting issues. In addition, as contemplated by and subject to Putnam’s
Proxy Voting Procedures, because proxy issues and the circumstances of individual companies are so varied, portfolio teams may recommend
votes that may vary from the general policy choices set forth in the guidelines.
The following guidelines are grouped according to the types of proposals
generally presented to shareholders. Part I deals with proposals which have been approved and recommended by a company’s board of
directors. Part II deals with proposals submitted by shareholders for inclusion in proxy statements. Part III addresses unique considerations
pertaining to non-US issuers.
I. Board-Approved Proposals
Proxies will be voted for board-approved proposals, except
as follows:
A. Matters Relating to the Board of Directors
Uncontested Election of Directors
The board of directors has the important role of overseeing management and
its performance on behalf of shareholders. Proxies will be voted for the election of the company’s nominees for directors
(and/or subsidiary directors) and for board-approved proposals on other matters relating to the board of directors (provided
that such nominees and other matters have been approved by an independent nominating committee), except as follows:
| Ø | Putnam will withhold votes from the entire board of directors if: |
| • | The
board does not have a majority of independent directors, |
| • | The
board does not have nominating, audit and compensation committees composed solely of independent directors, or |
| • | The
board has more than 15 members or fewer than five members, absent special circumstances. |
| Ø | Putnam may refrain from withholding votes from the board due to insufficient key committee independence due to director resignation,
change in board structure, or other specific circumstances, provided that the company has stated (for example in an 8-K), or it can otherwise
be determined, that the board will address committee composition to ensure compliance with the applicable corporate governance code in
a timely manner after the shareholder meeting and the company has a history of appropriate board independence. |
Unless otherwise indicated, for the
purposes of determining whether a board has a majority of independent directors and independent nominating, audit, and compensation committees,
an independent director is a director who (1) meets all requirements to serve as an independent director of a company under the final
NYSE Corporate Governance Rules (e.g., no material business relationships with the company and no present or recent employment relationship
with the company (including employment of an immediate family member as an executive officer)), and (2) has not accepted directly or
indirectly any consulting, advisory, or other compensatory fee (excluding immaterial fees for transactional services as defined by the
NYSE Corporate Governance rules) from the company other than in his or her capacity as a member of the board of directors or any board
committee. Putnam believes that the receipt of such compensation for services other than service as a director raises significant independence
issues.
| Ø | Putnam will withhold votes from any nominee for director who is considered an independent director by the company and
who has received compensation within the last three years from the company for the provision of professional services (e.g., investment
banking, consulting, legal or financial advisory fees). |
| Ø | Putnam will withhold votes from any nominee for director who attends fewer than 75% of board and committee meetings.
Putnam may refrain from withholding votes on a case-by-case basis if a valid reason for the absence exists, such as illness,
personal emergency, potential conflict of interest, etc. |
| Ø | Putnam will withhold votes from any incumbent nominee for director who served on a board that has not acted to implement
a policy requested in a shareholder |
proposal that received the support of a majority of the votes
actually cast on the matter at its previous two annual meetings, or
| Ø | Putnam will withhold votes from any incumbent nominee for director who served on a board that adopted, renewed, or made
a material adverse modification to a shareholder rights plan (commonly referred to as a “poison pill”) without shareholder
approval during the current or prior calendar year. (This is applicable to any type of poison pill, for example, advance-warning type
pill, EGM pill, and Trust Defense Plans in Japan.) |
Putnam will refrain from opposing the board members who served
at the time of the adoption of the poison pill if the duration is one year or less, if the plan contains other suitable restrictions;
or if the company publicly discloses convincing rationale for its adoption and seeks shareholder approval of future renewals of the poison
pill. (Suitable restrictions could include but are not limited to, a higher threshold for passive investors. Convincing rationale could
include circumstances such as, but not limited to, extreme market disruption or conditions, stock volatility, substantial merger, active
investor interest, or takeover attempts.)
| Ø | Numerous studies of gender diversity on boards have shown that diverse boards are associated, over the long term, with, among other
things, higher financial returns and lower volatility. Putnam will withhold votes from the chair of the Nominating Committee
if: |
| • | there are no women on the board, or |
| • | in the case of a board of seven members or more, there are fewer than two women on the board, or |
| • | there is no apparent racial or ethnic diversity on the board, and the board has not provided sufficient disclosure regarding its plans
to achieve racial or ethnic diversity |
| Ø | Putnam will withhold votes from the Nominating Committee Chair for companies that have not provided any disclosure of
both the board’s diversity (e.g., race or ethnicity) at the aggregate board or individual director level and the company’s
policies, or plans to establish such policies, regarding the consideration of diversity in identifying director nominees. Putnam expects
companies to provide both disclosure of diversity within their current board composition as well as its policies regarding its approach
to board diversity. |
(Note: Gender diversity is addressed under a separate guideline.)
Putnam is concerned about over-committed directors. In some cases, directors
may serve on too many boards to make a meaningful contribution. This may be particularly true for senior executives of public companies
(or other directors with substantially full-time employment) who serve on more than a few outside boards.
| Ø | Putnam will vote against any non-executive nominee for director who serves on more than four (4) public company boards,
except where Putnam would otherwise be withholding votes for the entire board of directors. For the purpose of this guideline, boards
of affiliated registered investment companies and other similar entities such as UCITS will count as one board. Generally, Putnam will
withhold support from directors serving on more than four unaffiliated public company boards, although an exception may be made in the
case of a director who represents an investing firm with the sole purpose of managing a portfolio of investments that includes the company. |
| Ø | Putnam will withhold votes from any nominee for director who serves as an executive officer of any public company
(“home company”) while serving on more than two (2) public company boards other than the home company board. (Putnam
will withhold votes from the nominee at each company where Putnam client portfolios own shares.) In addition, if Putnam client portfolios
are shareholders of the executive's home company, Putnam will withhold votes from members of the company's governance committee. For the
purpose of this guideline, boards of affiliated registered investment companies and other similar entities such as UCITS will count as
one board. |
| Ø | Putnam will withhold votes from any nominee for director of a public company (Company A) who is employed as a senior
executive of another public company (Company B) if a director of Company B serves as a senior executive of Company A (commonly referred
to as an “interlocking directorate”). |
Board independence depends not only on its members’ individual relationships,
but also the board’s overall attitude toward management. Independent boards are committed to good corporate governance practices
and, by providing objective independent judgment, enhancing shareholder value. Putnam may withhold votes on a case-by-case basis from
some or all directors that, through their lack of independence, have failed to observe good corporate governance practices or, through
specific corporate action, have demonstrated a disregard for the interest of shareholders.
Note: Designation of executive director is based on company disclosure.
| Ø | Putnam will vote against proposals that provide that a director may be removed only for cause. Putnam will generally
vote for proposals that permit the removal of directors with or without cause. |
| Ø | Putnam will vote against proposals authorizing a board to fill a director vacancy without shareholder approval. |
| Ø | Putnam will vote on a case-by-case basis on subsidiary director nominees if Putnam will be voting against the nominees
of the parent company’s board. |
| Ø | Putnam will vote on a case-by-case basis for director nominees, including nominees for positions on Supervisory Boards
or Supervisory Committees, or similar board entities (depending on board structure), for (re)election when cumulative voting applies. |
| Ø | Putnam will vote for proposals to approve annual directors’ fees, except that Putnam will vote on a case-by-case
basis if Putnam’s independent proxy voting service has recommended a vote against such proposal. Additionally, Putnam will vote
for proposals to approve the grant of equity awards to directors, except that Putnam will consider these proposals on a
case-by-case basis if Putnam’s proxy service provider is recommending a vote against the proposal. |
Classified Boards
| Ø | Putnam will vote against proposals to classify a board, absent special circumstances indicating that shareholder interests
would be better served by this structure. |
Ratification of Auditors
| Ø | Putnam will vote on a case-by-case basis on proposals to ratify the selection of independent auditors if there is evidence
that the audit firm’s independence or the integrity of an audit is compromised. (Otherwise, Putnam will vote for.) |
Contested Elections of Directors
| Ø | Putnam will vote on a case-by-case basis in contested elections of directors. |
B. Executive Compensation
Putnam will vote on a case-by-case basis on board-approved
proposals relating to executive compensation, except as follows:
| Ø | Putnam will vote for stock option and restricted stock plans that will result in an average annual dilution of 1.67%
or less (based on the disclosed term of the plan and including all equity-based plans), except where Putnam would otherwise be withholding
votes for the entire board of directors in which case Putnam will evaluate the plans on a case-by-case basis. |
| Ø | Putnam will vote against stock option and restricted stock plans that will result in an average annual dilution of greater
than 1.67% (based on the disclosed term of the plan and including all equity plans). |
| Ø | Putnam will vote against any stock option or restricted
stock plan where the company's actual grants of stock options and restricted stock under all equity-based compensation plans during the
prior three (3) fiscal years have resulted in an average annual dilution of greater than 1.67%. |
| • | Additionally, if the annualized dilution cannot be calculated, Putnam will vote for plans where the Total Potential
Dilution is 5% or less. If the annualized dilution cannot be calculated and the Total Potential Dilution exceeds 5%, then Putnam will
vote against. Note: Such plans must first pass all of Putnam's other screens. |
| Ø | Putnam will vote proposals to issue equity grants to executives on a case-by-case basis. |
| Ø | Putnam will vote against stock option plans that permit replacing or repricing of underwater options (and against
any proposal to authorize such replacement or repricing of underwater options). |
| Ø | Putnam will vote against stock option plans that permit issuance of options with an exercise price below the stock’s
current market price. |
| Ø | Putnam will vote against stock option plans/ restricted stock plans with evergreen features
providing for automatic share replenishment. |
| Ø | Putnam will vote for bonus plans under which payments are treated as performance-based compensation that is deductible
under Section 162(m) of the Internal Revenue Code of 1986, as amended, except as follows: |
| | Vote on a case-by-case basis on such proposals if any of the following circumstances exist:
|
| • | the amount per employee under the plan is unlimited, or |
| • | the maximum award pool is undisclosed, or |
| • | the incentive bonus plan’s performance criteria are undisclosed, or |
| • | the independent proxy voting service recommends a vote against. |
| Ø | Putnam will vote in favor of the annual presentation of advisory votes on executive compensation (Say-on-Pay). |
| Ø | Putnam will generally vote for advisory votes on executive compensation (Say-on-Pay). However, Putnam will vote against
an advisory vote if the company fails (receives an F grade) to effectively link executive compensation to company performance according
to benchmarking performed by the independent proxy voting service. |
| • | Putnam will vote on a case-by-case basis if the company receives an F grade by the independent proxy voting service
and the recommendation by that service is favorable. |
| • | Additionally, if there is no grade attributed to the company's executive pay, Putnam will generally vote for, unless
the recommendation of the independent proxy voting service is against, in which case Putnam will review the proposal on a case-by-case
basis. |
| Ø | Putnam will vote on a case-by-case basis on severance agreements (e.g., golden and tin parachutes) |
| Ø | Putnam will withhold votes from members of a Board of Directors which has approved compensation arrangements Putnam’s
investment personnel have determined are grossly unreasonable at the next election at which such director is up for re-election. |
| Ø | Putnam will vote for employee stock purchase plans that have the following features: (1) the shares purchased under
the plan are acquired for no less than 85% of their market value, (2) the offering period under the plan is 27 months or less, and (3)
dilution is 10% or less. |
| Ø | Putnam will vote for Non-qualified Employee Stock Purchase Plans with all the following features: |
1) Broad-based participation (i.e., all employees of the
company with the exclusion of individuals with 5 percent or more of beneficial ownership of the company).
2) Limits on employee contribution, which may be a fixed
dollar amount or expressed as a percent of base salary.
3) Company matching contribution up to 25 percent of employee's
contribution, which is effectively a discount of 20 percent from market value.
4) No discount on the stock price on the date of purchase
since there is a company matching contribution.
Putnam will vote against Non-qualified Employee Stock
Purchase Plans when any of the plan
features do not meet the above criteria.
Putnam may vote against executive compensation proposals on a case-by-case
basis where compensation is excessive by reasonable corporate standards, or where a company fails to provide transparent disclosure of
executive compensation. In voting on proposals
relating to executive compensation, Putnam will consider whether the proposal
has been approved by an independent compensation committee of the board.
C. Capitalization
Putnam will vote on a case-by-case basis on board-approved
proposals involving changes to a company’s capitalization, except as follows:
| Ø | Putnam will vote for proposals relating to the authorization of additional common stock, except that Putnam will evaluate
such proposals on a case-by-case basis if (i) they relate to a specific transaction or to common stock with special voting
rights, (ii) the company has a non-shareholder approved poison pill in place, or (iii) the company has had sizeable stock placements to
insiders within the past three years at prices substantially below market value without shareholder approval. |
| Ø | Putnam will vote for proposals to effect stock splits (excluding reverse stock splits.) |
| Ø | Putnam will vote for proposals authorizing share repurchase programs, except that Putnam will vote on a case-by-case
basis if there are concerns that there may be abusive practices related to the share repurchase programs. |
| D. | Acquisitions, Mergers, Reorganizations and |
Other Transactions
Putnam will vote on a case-by-case basis on business transactions
such as acquisitions, mergers, reorganizations involving business combinations, liquidations and sale of all or substantially all of a
company’s assets.
E. Anti-Takeover Measures
Putnam will vote against board-approved proposals to adopt
anti-takeover measures such as supermajority voting provisions, issuance of blank check preferred stock, the creation of a separate class
of stock with disparate voting rights, control share acquisition provisions, targeted share placements, and ability to make greenmail
payments, except as follows:
| Ø | Putnam will vote on a case-by-case basis on proposals to ratify or approve shareholder rights plans; |
| Ø | Putnam will vote on a case-by-case basis on proposals to adopt fair price provisions. |
| Ø | Putnam will vote on a case-by-case basis on proposals to issue blank check preferred stock in the case of REITs (only). |
| Ø | Putnam will generally vote for proposals that enable or expand shareholders’ ability to take action by written
consent. |
| Ø | Putnam will vote on a case-by-case basis on proposals to increase shares of an existing class of stock with disparate
voting rights from another share class. |
| Ø | Putnam will vote on a case-by-case basis on shareholder or board-approved proposals to eliminate supermajority
voting provisions at controlled companies (companies in which an individual or a group voting collectively holds a majority of the voting
interest). |
| Ø | Putnam will vote on a case-by-case basis on board-approved proposals to adopt supermajority voting provisions
at controlled companies (companies in which an individual or a group voting collectively holds a majority of the voting interest). |
| Ø | Putnam will vote on a case-by-case basis on proposals
to issue blank check preferred stock if appropriate “de-clawed” language is present. Specifically, appropriate de-clawed
language will include cases where the Company states (i.e., through 8-K, proxy statement or other public disclosure) it
will not use the preferred stock for anti-takeover purposes, or in order to implement a shareholder rights plan, or discloses a
commitment to submit any future issuances of preferred stock to be used in a shareholder rights plan/anti-takeover purpose to a shareholder
vote prior to its adoption. |
F. Other Business Matters
Putnam will vote for board-approved proposals approving routine
business matters such as changing the company’s name and procedural matters relating to the shareholder meeting, except as follows:
| Ø | Putnam will vote on a case-by-case basis on proposals to amend a company’s charter or bylaws (except for charter
amendments necessary or to effect stock splits, to change a company’s name, to authorize additional shares of common stock or other
matters which are considered routine (for example, director age or term limits), technical in nature, fall within Putnam’s guidelines
(for example, regarding board size or virtual meetings), are required pursuant to regulatory and/or listing rules, have little or no economic
impact or will not negatively impact shareholder rights). |
| Ø | Additionally, Putnam believes the bundling of items, whether the items are related or unrelated, is generally not in shareholders’
best interest. We may vote against the entire bundled proposal if we would normally vote against |
| | any of the items if presented individually. In these cases, we
will review the bundled proposal on a case-by-case basis. |
| Ø | Putnam generally supports quorum requirements if the level is set high enough to ensure a broad range of shareholders is represented
in person or by proxy but low enough so that the Company can transact necessary business. Putnam will vote on a case-by-case
basis on proposals seeking to change quorum requirements; however, Putnam will normally support proposals that seek to comply with market
or exchange requirements. |
| Ø | Putnam will vote on a case-by-case basis on proposals seeking to change a company’s state of incorporation. However,
Putnam will vote for mergers and reorganizations involving business combinations designed solely to reincorporate a company
in Delaware. |
| Ø | Putnam will vote against authorization to transact other unidentified, substantive business at the meeting. |
| Ø | Putnam will vote against proposals where there is a lack of information to make an informed voting decision. |
| Ø | Putnam will vote as follows on proposals to adjourn shareholder meetings: |
If Putnam is withholding support for the board of the company
at the meeting, any proposal to adjourn should be referred for case-by-case analysis.
If Putnam is not withholding support for the board, Putnam will
vote in favor of adjourning, unless the vote concerns an issue that is being referred back to Putnam for case-by-case review. Under such
circumstances, the proposal to adjourn should also be referred to Putnam for case-by-case analysis.
| Ø | Putnam will vote against management proposals to adopt a specific state’s courts, or a specific U.S. district
court as the exclusive forum for certain disputes, except that Putnam will vote for proposals adopting the State of Delaware,
or the Delaware Chancery Court, as the exclusive forum, for corporate law matters for issuers incorporated in Delaware. Requiring shareholders
to bring actions solely in one state may discourage the pursuit of derivative claims by increasing their difficulty and cost. However,
Putnam’s guideline recognizes the expertise of the Delaware state court system in handling disputes involving Delaware corporations.
In addition, Putnam will withhold votes from the chair of the Nominating/Governance committee if a company amends its Bylaws,
or takes other actions, to adopt a specific state’s courts (other than Delaware courts, for issuers incorporated in Delaware) or
a specific U.S. district court as the exclusive forum for certain disputes without shareholder approval. |
| Ø | Putnam will vote on a case-by-case basis on management proposals seeking to adopt a bylaw amendment allowing the company
to shift legal fees and costs to unsuccessful plaintiffs in intra-corporate litigation (fee-shifting bylaw). Additionally, Putnam will
vote against the Chair of the Nominating/Governance committee if a company adopts a fee-shifting bylaw amendment without
shareholder approval. |
| Ø | Putnam will support management/shareholder proxy access proposals as long as the proposals align with the following principles for
a shareholder (or up to 20 shareholders together as a group) to receive proxy access: |
1) The required minimum aggregate ownership
of the Company’s outstanding common stock is no greater than 3%;
2) The required minimum holding period
for the shareholder proponent(s) is no greater than two years; and
3) The shareholder(s) are permitted to
nominate at least 20% of director candidates for election to the board.
Proposals requesting shares be held for 3 years will be reviewed
on a case-by-case basis. Putnam will vote against proposals requesting shares be held for more than
three years. Proposals that meet Putnam’s stated criteria and include other requirements relating to issues such as, but not limited
to, shares on loan or compensation agreements with nominees, will be reviewed on a case-by-case basis.
Additionally, shareholder proposals seeking an amendment to a
company’s proxy access policy which include any one of the supported criteria under Putnam’s guidelines, for example, a 2-year
holding period for shareholders, will be reviewed on a case-by-case basis.
| Ø | Putnam supports management / shareholder proposals giving shareholders the right to call a special meeting as long as the ownership
requirement in such proposals is at least 15% of the company's outstanding common stock and not more than 25%. |
In general, Putnam will vote for management or shareholder
proposals to reduce the ownership requirement below a company’s existing threshold, as long as the new threshold is at least 15%
and not greater than 25% of the company’s outstanding common stock.
Putnam will vote against any proposal with an ownership
requirement exceeding 25% of the company’s common stock or an ownership requirement that is less than 15% of the company's
outstanding common stock.
In cases where there are competing management and shareholder
proposals giving shareholders the right to call a special meeting, Putnam will generally vote for the
proposal which has the lower minimum shareholder ownership threshold,
as long as that threshold is within Putnam’s recommended minimum/maximum thresholds. If only one of the competing proposals has
a threshold that falls within Putnam’s threshold range, Putnam will normally support that proposal as long as it represents an improvement
(reduction) from the previous requisite ownership level. Putnam will normally vote against both proposals if neither proposal
has a requisite ownership level between 15% and 25% of the company’s outstanding common stock.
| Ø | Putnam will generally vote for management or shareholder proposals to allow a company
to hold virtual-only or hybrid shareholder meetings or to amend its articles/charter/by-laws to allow for virtual-only or hybrid shareholder
meetings, provided the proposal does not preclude in-person meetings (at any given time), and does not otherwise limit or impair
shareholder participation; and if the company has provided clear disclosure to
ensure that shareholders can effectively participate in virtual-only shareholder meetings and meaningfully communicate with company management
and directors. Additionally, Putnam may consider the rationale of
the proposal and whether there have been concerns about the company’s previous meeting practices. |
Disclosure should address the following:
| • | the ability of shareholders to ask questions during the
meeting |
| • | including time guidelines for shareholder questions |
| • | rules around what types of questions are allowed |
| • | and rules for how questions and comments will be recognized and disclosed to meeting participants |
| • | the manner in which appropriate questions received during the meeting will be addressed by the board |
| • | procedures, if any, for posting appropriate questions received
during the meeting and the company’s answers on the investor page of their website as soon as is practical after the meeting |
| • | technical and logistical issues related to accessing the
virtual meeting platform; and |
| • | procedures for accessing technical support to assist in the
event of any difficulties accessing the virtual meeting |
Putnam may vote against proposals that do not meet these criteria.
Additionally,
Putnam may vote against the Chair of the Governance Committee when the
board is planning to hold a virtual-only shareholder meeting and the company has not provided sufficient disclosure (as noted above)
or shareholder access to the meeting.
| Ø | Putnam will vote for proposals to approve a company’s board-approved climate transition action plan (“say
on climate” proposals in which the company’s board proposes that shareholders indicate their support for the company’s
plan), unless the proxy voting service has recommended a vote against the proposal, in which case Putnam will vote on a case-by-case
basis on the proposal. |
| Ø | Putnam will vote on a case-by-case basis on board-approved proposals that conflict with shareholder proposals. |
II. Shareholder Proposals
Shareholder proposals are non-binding votes that are often opposed by management.
Some proposals relate to matters that are financially immaterial to the company’s business, while others may be impracticable or
costly for a company to implement. At the same time, well-crafted shareholder proposals may serve the purpose of raising issues that are
material to a company’s business for management’s consideration and response. Putnam seeks to weigh the costs of different
types of proposals against their expected financial benefits. More specifically:
Putnam will vote in accordance with the recommendation of the company’s
board of directors on all shareholder proposals, except as follows:
| Ø | Putnam will vote for shareholder proposals that are consistent with Putnam’s proxy voting guidelines for board-approved
proposals. |
| Ø | Putnam will vote for shareholder proposals to declassify a board, absent special circumstances which would indicate
that shareholder interests are better served by a classified board structure. |
| Ø | Putnam will vote for shareholder proposals to require shareholder approval of shareholder rights plans. |
| Ø | Putnam will vote for shareholder proposals asking that director nominees receive support from holders of a majority
of votes cast or a majority of shares outstanding of the company in order to be (re) elected. |
| Ø | Putnam will review on a case-by-case basis, shareholder proposals requesting that the board adopt a policy whereby,
in the event of a significant restatement of financial results or significant extraordinary write-off, the board will recoup, to the fullest
extent practicable, for the benefit of the company, all performance-based bonuses or awards that were made to senior executives based
on having met or exceeded specific performance targets to the extent that the specified performance targets were not met. |
| Ø | Putnam will vote for shareholder proposals urging the board to seek shareholder approval of any future supplemental
executive retirement plan ("SERP"), or individual retirement arrangement, for senior executives that provides credit for additional
years of service not actually worked, preferential benefit formulas not |
| | provided under the company's tax-qualified retirement plans, accelerated
vesting of retirement benefits or retirement perquisites and fringe benefits that are not generally offered to other company employees.
(Implementation of this policy shall not breach any existing employment agreement or vested benefit.) |
| Ø | Putnam will vote for shareholder proposals requiring companies to report on their executive retirement benefits. (Deferred
compensation, split-dollar life insurance, SERPs and pension benefits) |
| Ø | Putnam will vote for shareholder proposals requesting that a company establish a pay-for-superior-performance standard
whereby the company discloses defined financial and/or stock price performance criteria (along with the detailed list of comparative peer
group) to allow shareholders to sufficiently determine the pay and performance correlation established in the company’s performance-based
equity program. In addition, no multi-year award should be paid out unless the company’s performance exceeds, during the
current CEO’s tenure (three or more years), its peer median or mean performance on selected financial and stock price performance
criteria. |
| Ø | Putnam will vote for shareholder proposals urging the board to disclose in a separate report to shareholders, the Company’s
relationships with its executive compensation consultants or firms. Specifically, the report should identify the entity that retained
each consultant (the company, the board or the compensation committee) and the types of services provided by the consultant in the past
five years (non-compensation-related services to the company or to senior management and a list of all public company clients where the
Company’s executives serve as a director.) |
| Ø | Putnam will vote for shareholder proposals requiring companies to accelerate vesting of equity awards under management
severance agreements only if both of the following conditions are met: |
| • | the company undergoes a change in control, and |
| • | the change in control results in the termination of employment for the person receiving the severance payment. |
| Ø | Putnam will vote for shareholder proposals requiring that the chair’s position be filled by an independent director
(separate chair/CEO). However, Putnam will vote on a case-by-case basis on such proposals when the company’s board
has a lead-independent director (or already has an independent or separate chair) and Putnam is supporting the nominees for the
board of directors. |
| Ø | Putnam will vote for shareholder proposals seeking the submission of golden coffins to a shareholder vote or the elimination
of the practice altogether. |
| Ø | Putnam will vote for shareholder proposals seeking a policy that forbids any director who receives more than 25% withhold
votes cast (based on for and withhold votes) from serving on any key board committee for two years and asking the board to find replacement
directors for the committees if need be. |
| Ø | Putnam will vote for shareholder proposals urging the board to seek shareholder approval of severance agreements (e.g.,
golden and tin parachutes). |
| • | However, Putnam will vote against such proposals when the company has a policy that minimally requires shareholder approval
of severance agreements for executives that provides for cash severance benefits exceeding 2.99 times the sum of the executive's base
salary plus target annual non-equity incentive plan bonus opportunity. |
Putnam will vote on a case-by-case basis on approving
such compensation arrangements.
| Ø | Putnam will vote for shareholder proposals requiring companies to make cash payments under management severance agreements
only if both of the following conditions are met: the company undergoes a change in control, and the change in control results in the
termination of employment for the person receiving the severance payment. |
| Ø | Putnam will vote on a case-by-case basis on shareholder proposals to limit a company’s ability to make excise
tax gross-up payments under management severance agreements as well as proposals to limit income or other tax gross-up payments. |
| Ø | Putnam will vote in accordance with the recommendation of the company’s board of directors on shareholder proposals
regarding corporate political spending, unless Putnam is voting against the directors, in which case the proposal would be reviewed on
a case-by-case basis. |
| Ø | Putnam will vote on a case-by-case basis on shareholder proposals that conflict with board-approved proposals. |
Environmental and Social
| Ø | Putnam believes that sustainable environmental practices and sustainable social policies are important components of long-term value
creation. Companies should evaluate the potential risks to their business operations that are directly related to environmental and social
factors (among others). In evaluating shareholder proposals relating to environmental and social initiatives, Putnam takes into account
(1) the relevance and materiality of the proposal to the company’s business, (2) whether the proposal is well crafted (e.g., whether
it references |
science-based targets, or standard global protocols), and (3)
the practicality or reasonableness of implementing the proposal.
Putnam may support well-crafted and well-targeted proposals that
request additional reporting or disclosure on a company’s plans to mitigate risk to the company related to the following issues
and/or their strategies related to these issues: Environmental issues, including but not limited to, climate change, greenhouse gas emissions,
renewable energy, and broader sustainability issues; and Social issues, including but not limited to, fair pay, employee diversity and
development, safety, labor rights, supply chain management, privacy and data security.
In addition, Putnam will consider proposals related to Artificial
Intelligence (“AI”) on a case-by-case basis.
Putnam will consider factors such as (i) the industry in which
the company operates, (ii) the company's current level of disclosure, (iii) the company's level of oversight, (iv) the company’s
management of risk arising out of these matters, (v) whether the company has suffered a material financial impact. Other factors may also
be considered.
Putnam will consider the recommendation of its third-party proxy
service provider and may consider other factors such as third-party evaluations of ESG performance.
Additionally, Putnam may vote on a case-by-case
basis on proposals which ask a company to take action beyond reporting where our third-party proxy service provider has identified one
or more reasons to warrant a vote FOR.
III. Voting Shares of Non-US Issuers
Many non-US jurisdictions impose material
burdens on voting proxies. There are three primary types of limits as follows:
| (1) | Share blocking. Shares must be frozen for certain periods of time to vote via proxy. |
| (2) | Share re-registration. Shares must be re-registered out of the name of the local custodian or nominee
into the name of the client for the meeting and, in many cases, then re-registered back. Shares are normally blocked in this period. |
| (3) | Powers of Attorney. Detailed documentation from a client must be given to the local sub-custodian. In
many cases Putnam is not authorized to deliver this information or sign the relevant
documents. |
Putnam’s policy is to weigh the benefits to clients from voting in
these jurisdictions against the detriments of not doing so. For example, in a share blocking jurisdiction, it will normally not be in
a client’s interest to freeze shares simply to participate in a non- contested routine meeting. More specifically, Putnam will normally
not vote shares in non-US jurisdictions imposing burdensome proxy voting requirements except in significant votes (such as contested elections
and major corporate transactions) where directed by portfolio managers.
Putnam recognizes that the laws governing non-US issuers will vary
significantly from US law and from jurisdiction to jurisdiction. Accordingly, it may not be possible or even advisable to apply these
guidelines mechanically to non-US issuers. However, Putnam believes that shareholders of all companies are protected by the existence
of a sound corporate governance and disclosure framework. Accordingly, Putnam will vote proxies of non-US issuers in accordance
with the foregoing guidelines where applicable, except as follows:
| Ø | Putnam will vote for shareholder proposals calling for a majority of the directors to be independent of management. |
| Ø | Putnam will vote for shareholder proposals that implement corporate governance standards similar to those established
under U.S. federal law and the listing requirements of U.S. stock exchanges, and that do not otherwise violate the laws of the jurisdiction
under which the company is incorporated. |
| Ø | Putnam will vote on a case-by-case basis on proposals relating to (1) the issuance of common stock in excess of 20%
of a company’s outstanding common stock where shareholders do not have preemptive rights, or (2) the issuance of common stock in
excess of 100% of a company’s outstanding common stock where shareholders have preemptive rights. |
| Ø | Putnam will vote for proposals to authorize share repurchase programs that are recommended for approval by Putnam’s
proxy voting service provider, otherwise Putnam will vote against such proposals; except that Putnam will vote on a case-by-case
basis if there are concerns that there may be abusive practices related to the share repurchase programs. |
| Ø | Putnam will vote against authorizations to repurchase shares or issue shares or convertible debt instruments with or
without preemptive rights when such authorization can be used as a takeover defense without shareholder approval. Putnam will not apply
this policy to a company with a shareholder who controls more than 50% of its voting rights. |
| Ø | Putnam will generally vote for proposals that include debt issuances, however substantive/non-routine proposals, and proposals
that fall outside of normal market practice or reasonable standards, will be reviewed on a case-by-case basis. |
| Ø | Putnam will vote for board-approved routine, market-practice proposals. These proposals are limited to (1) those issues
that will have little or no economic impact, such as technical, editorial, or mandatory regulatory compliance items, (2) those issues
that will not adversely affect and/or which clearly improve shareholder rights/values, and which do not violate Putnam’s proxy voting
guidelines, or (3) those issues that do not seek to deviate from existing laws or regulations. Examples include but are not limited to,
related party transactions (non-strategic), profit-and-loss transfer agreements (Germany), authority to increase paid-in capital (Taiwan).
Should any unusual circumstances be identified concerning a normally routine issue, such proposals will be referred back to Putnam for
internal review. |
| Ø | Putnam will generally vote for proposals regarding amendments seeking to expand business lines or to amend the corporate
purpose, provided the proposal would not include a significant or material departure from the company’s current business, and/or
will provide the company with greater flexibility in the performance of its activities. |
| Ø | Putnam will normally vote for management proposals concerning allocation of income and the distribution of dividends.
However, Putnam portfolio teams will override this guideline when they conclude that the proposals are outside the market norms (i.e.,
those seen as consistently and unusually small or large compared to market practices). |
| Ø | Putnam will generally vote for proposals seeking to adjust the par value of common stock. However, non-routine, substantive
proposals will be reviewed on a case-by-case basis. |
| Ø | Putnam will vote against proposals that would authorize the company to reduce the notice period for calling special
or extraordinary general meetings to less than 21-Days. |
| Ø | Putnam will generally vote for proposals relating to transfer of reserves/increase of reserves (i.e., France, Japan).
However, Putnam will vote on a case-by-case basis if the proposal falls outside of normal market practice. |
| Ø | Putnam will generally vote for proposals to increase the maximum variable pay ratio. However, Putnam will vote on a
case-by-case basis if we are voting against a company’s remuneration report or if the proposal seeks an increase in
excess of 200%. |
| Ø | Putnam will review stock option plans on a case-by-case basis which allow for the options exercise price to be reduced
by dividend payments (if the plan would normally pass Putnam’s Guidelines). |
| Ø | Putnam will generally vote for requests to provide loan guarantees however, Putnam will vote on a case-by-case
basis if the total amount of guarantees is in excess of 100% of the company’s audited net assets. |
| Ø | Putnam will generally support remuneration report/policy proposals (i.e., advisory/binding) where a company’s executive compensation
is linked directly with the performance of the business and executive. Putnam will generally support compensation proposals which incorporate
a mix of reasonable salary and performance based short- and long-term incentives. Companies should demonstrate that their remuneration
policies are designed and managed to incentivize and retain executives while growing the company’s long-term shareholder value. |
Generally, Putnam will vote against remuneration
report/policy proposals (i.e., advisory/binding) in the following cases:
| • | Disconnect
between pay and performance |
| • | No
performance metrics disclosed; |
| • | No
relative performance metrics utilized; |
| • | Single
performance metric was used and it was an absolute measure; |
| • | Performance
goals were lowered when management failed or was unlikely to meet original goals; |
| • | Long
Term Incentive Plan is subject to retesting (e.g., Australia); |
| • | Service
contracts longer than 12 months (e.g., United Kingdom); |
| • | Allows
vesting below median for relative performance metrics; |
| • | Ex-gratia
/ non-contractual payments have been made (e.g., United Kingdom and Australia); |
| • | Contains
provisions to automatically vest upon change-of-control; or |
| • | Other
poor compensation practices or structures. |
| • | Pension
provisions for new executives is not at the same level as the majority of the wider workforce;
pension provisions for incumbent executives are not set to decrease over time (United Kingdom) |
| • | Proposed
CEO salary increases are not justifiably appropriate in comparison to wider workforce or
rationale for exception increases is not fully disclosed (United Kingdom) |
| Ø | Putnam will vote on a case-by-case basis on bonus payments to executive directors or senior
management; however, Putnam will vote against payments that include outsiders or independent statutory auditors. |
Matters Relating to Board of Directors
Uncontested Board Elections
Asia: China, Hong Kong, India,
Indonesia, Philippines, Taiwan and Thailand
| Ø | Putnam will vote against the entire board of directors if |
| • | fewer than one-third of the directors are independent directors, or |
| • | the board has not established audit, compensation and nominating committees each composed of a majority of independent
directors, or |
| • | the chair of the audit, compensation or nominating committee is not an independent director. |
Commentary: Companies listed in China (or dual-listed in China and
Hong Kong) often have a separate supervisory committee in addition to a standard board of directors containing audit, compensation, and
nominating committees. The supervisory committee provides oversight of the financial affairs of the company and supervises members of
the board and management, while the board of directors makes decisions related to the company's business and investment strategies. The
supervisory committee normally comprises employee representatives and shareholder representatives. Shareholder representatives are elected
by shareholders of the company while employee representatives are elected by the company's staff. Shareholder representatives may be independent
or may be affiliated with the company or its substantial shareholders. Current laws and regulations neither provide a basis for evaluation
of supervisor independence nor do they require a supervisor to be independent.
| Ø | Putnam will generally vote in favor of nominees to the Supervisory Committee |
Australia
| Ø | Putnam will vote against the entire board of directors if |
| • | fewer than a majority of the directors are independent, or |
| • | the board has not established an audit committee composed solely of non-executive directors, a majority
of whom, including the chair of the committee (who should not be the board chair), should be independent directors, or |
| • | the board has not established nominating and compensation committees each composed of a majority of
independent, non-executive directors, with an independent chair. |
Brazil
| Ø | Putnam will vote against proposals requesting cumulative voting unless there are more candidates than number of seats
available, in which case vote for. |
| Ø | Putnam will vote for proposals for the proportional allocation of cumulative votes if Putnam is supporting the entire
slate of nominees. Putnam will vote against such proposals if Putnam is not supporting the entire slate. |
| Ø | Putnam will abstain on individual director allocation proposals if Putnam is voting for the proportional allocation
of cumulative votes. Putnam will vote on a case-by-case basis on individual director allocation proposals if Putnam is voting
against the proportional allocation of votes. |
| Ø | Putnam will vote for proposals to cumulate votes of common and preferred shareholders if the nominees are known and
Putnam is supporting the applicable nominees; Putnam will vote against such proposals if Putnam is not supporting the known
nominees, or if the nominees are unknown. |
| Ø | Putnam will generally vote against proposals seeking the recasting of votes for amended slate (as new candidates could
be included in the amended slate without prior disclosure to shareholders). |
| Ø | Putnam will vote against proposals regarding instructions if meeting is held on second call if election of directors
is part of the recasting as the slate can be amended without (prior) disclosure to shareholders. |
| Ø | Putnam will vote against proposals regarding the casting of minority votes to the candidate with largest number of votes. |
Canada
Canadian corporate governance requirements mirror corporate governance reforms
that have been adopted by the NYSE and other U.S. national securities exchanges and stock markets. As a result, Putnam will vote on matters
relating to the board of directors of Canadian issuers in accordance with the guidelines applicable to U.S. issuers.
Commentary: Like the UK’s Combined Code on Corporate Governance,
the policies on corporate governance issued by Canadian securities regulators embody the “comply and explain” approach to
corporate governance. Because Putnam believes that the board independence standards contained in the proxy voting guidelines are integral
to the protection of investors in Canadian companies, these standards will be applied in a prescriptive manner.
Continental Europe (ex-Germany)
| Ø | Putnam will vote against the entire board of directors if |
| • | fewer than a majority of the directors are independent directors, or |
| • | the board has not established audit, nominating and compensation committees each composed of a majority of independent
directors. |
Commentary:
An “independent director” under the European Commission’s guidelines is one who is free of any business, family or other
relationship, with the company, its controlling shareholder or the management of either, that creates a conflict of interest such as to
impair his judgment. A “non-executive director” is one who is not engaged in the daily management of the company.
In France, Employee Representatives are employed by the company and represent
rank and file employees. These representatives are elected by company employees. The law also provides for the appointment of employee
shareholder representatives, if the employee shareholdings exceed 3% of the share capital. Employee shareholder representatives are elected
by the company’s shareholders (via general meeting).
Germany
| Ø | For companies subject to “co-determination,” Putnam will vote for the election of nominees to the supervisory
board, except: |
| Ø | Putnam will vote against the Supervisory Board if |
| • | the
board has not established an audit committee comprising an Independent chair. |
| • | the
audit committee chair serves as board chair. |
| • | the
board contains more than two former management board members. |
| Ø | Putnam will vote against the election of a former member of the company’s managerial board to chair of the supervisory
board. |
Commentary: German corporate governance is characterized by
a two-tier board system - a managerial board composed of the company’s executive officers, and a supervisory board. The supervisory
board appoints the members of the managerial board. Shareholders elect members of the supervisory board, except that in the case of companies
with a large number of employees, company employees are allowed to elect some of the supervisory board members (one-half of supervisory
board members are elected by company employees at companies with more than 2,000 employees; one-third of the supervisory board members
are elected by company employees at companies with
more than 500 employees but fewer than 2,000). This practice is known
as co-determination.
Israel
Non-Controlled Banks: Director elections at Non-Controlled
banks are overseen by the Supervisor of the Banks and nominees for election as "other" (non-external) directors and external
directors (under Companies Law and Directive 301) are put forward by an external and independent committee. As such,
| Ø | Putnam’s guidelines regarding board Nominating Committees will not apply |
| Ø | Putnam will vote on a case-by-case on nominees when there are more nominees than seats available. |
Italy
Election of directors and statutory auditors:
| Ø | Putnam will apply the director guidelines to the majority shareholder supported list and vote accordingly (for or
against) if multiple lists of director candidates are presented. If there is no majority shareholder supported slate of
nominees, Putnam will support the shareholder slate of nominees that is recommended for approval by Putnam’s service provider. |
| Ø | Putnam will vote against the entire list of director nominees if the list is bundled as one proposal and if Putnam
would otherwise be voting against any one director nominee. |
| Ø | Putnam will generally vote for the majority shareholder supported list of statutory auditor nominees. |
Note: Pursuant to Italian law, directors and statutory auditors are elected
through a slate voting system whereby candidates are presented in lists submitted by shareholders representing a minimum percentage of
share capital.
| Ø | Putnam will withhold votes from any director not identified in the proxy materials. (Example: Co-opted director nominees.) |
Japan
| Ø | For companies that have established a U.S.-style corporate governance structure, Putnam will withhold votes from
the entire board of directors if: |
| • | the board does not have a majority of outside directors, |
| • | the board has not established nominating and compensation committees composed of a majority of outside directors, |
| • | the board has not established an audit committee composed of a majority of independent directors, or |
| • | the board does not have at least two independent directors for companies with a controlling shareholder. |
| Ø | For companies that have established a statutory auditor board structure: |
| • | Putnam will withhold votes from the appointment of members of a company’s board of statutory auditors if a majority
of the members of the board of statutory auditors is not independent. |
| Ø | For companies that have established a statutory auditor board structure, Putnam will withhold votes
from the entire board of directors if: |
| • | the board does not have at least two outside directors, or |
| • | the board does not have at least two independent directors for companies with a controlling shareholder. |
| • | Putnam will vote against any statutory auditor nominee who attends fewer than 75% of board and committee meeting without
valid reasons for the absences (i.e., illness, personal emergency, etc.) (Note that Corporate Law requires disclosure of outsiders' attendance
but not that of insiders, who are presumed to have no more important time commitments.) |
| Ø | For companies that have established an audit committee board structure (one-tier / one committee), Putnam
will withhold votes from the entire board of directors if: |
| • | the board does not have at least two outside directors, |
| • | the board does not have at least two independent directors for companies with a controlling shareholder,
or |
| • | the board has not established an audit committee composed of a majority of independent directors |
Election of Executive Director and Election of Supervisory
Director - REIT
REITs have a unique two-tier board structure with generally one
or more executive directors and two or more supervisory directors. The number of supervisory directors must be greater than, not equal
to, the number of executive directors. Shareholders are asked to vote on both types of directors. Putnam will vote as follows, provided
each board of executive / supervisory directors meets legal requirements.
Ø
Putnam will generally vote for the election of Executive Director
Ø
Putnam will generally vote for the election of Supervisory Directors
Commentary:
Definition of outside director and independent director:
The Japanese Companies Act
focuses on two director classifications: Insider or Outsider. An outside director is a director who is not a director,
executive, executive director, or employee of the company or its parent company, subsidiaries or affiliates. Further,
a director, executive, executive director or employee, who have executive responsibilities, of the company or subsidiaries can
regain eligibility ten years after his or her resignation, provided certain other requirements are met. An outside
director is designated as an “independent” director based on the Tokyo Stock Exchange listing rules. An outside director
is “independent” if that person can make decisions completely independent from the managers of the company, its parent,
subsidiaries, or affiliates and does not have a material relationship with the company (i.e., major client, trading partner, or
other business relationship; familial relationship with current director or executive; etc.). The guidelines have incorporated these
definitions in applying the board independence standards above.
Korea
Putnam will withhold votes from the entire board of directors
if:
| • | For
large companies (i.e., those with assets of at least KRW 2 trillion); the board does not have at least three independent directors or
less than a majority of directors are independent directors, |
| • | For
small companies (i.e., those with assets of less than KRW 2 trillion), fewer than one-fourth of the directors are independent directors, |
| • | The
board has not established a nominating committee with at least half of the members being outside directors, or |
| • | the board has not established an audit committee composed of at least three members and in which at least two-thirds
of its members are independent directors. |
Commentary: For purposes of these guidelines, an “outside director”
is a director who is independent from the management or controlling shareholders of the company and holds no interests that might impair
performing his or her duties impartially from the company, management or controlling shareholder. In determining whether a director is
an outside director, Putnam will also apply the standards included in Article 382 of the Korean Commercial Act, i.e., no employment
relationship with the company for a period of two years before serving on the committee, no director or employment relationship with the
company’s largest shareholder, etc.) and may consider other business relationships that would affect the independence of an outside
director.
Ø
Putnam will generally vote for proposals to amend the Executive Officer Retirement Allowance Policy unless the recipients
of the grants include non-executives; the proposal would have a negative impact on shareholders, or the proposal appear to be outside
of normal market practice, in which case Putnam will vote against.
Malaysia
| Ø | Putnam will vote against the entire board of directors if: |
| • | less than 50% of the directors are independent directors, or less than a majority of the directors are independent directors for large
companies, |
| • | the board has not established an audit committee with all members being independent directors, including the committee chair, |
| • | the board has not established a nominating committee with all members being non-executive directors, a majority of whom are independent,
including the committee chair; the board chair should not serve as a member of the nomination committee, or |
| • | the board has not established a compensation committee with all members being non-executive directors, a majority of whom are
independent; the board chair should not serve as a member of the remuneration committee. |
Nordic Markets – Finland, Norway, Sweden
| Ø | Putnam will vote against the entire board of directors if: |
Board Independence:
| • | The board does not have a majority of directors independent from the company
and management. (Sweden, Finland, Norway) |
| • | The board does not have at least two directors independent from the company
and its major shareholders holding > 10% of the Company’s share capital. (Sweden, Finland, Norway) |
| • | An executive director is a member of the board. (Norway) |
Audit Committee:
| • | The audit committee does not consist of a majority of directors independent
from the company and management. (Sweden, Finland) |
| • | The audit committee does not have at least one director independent from the
company and its major shareholders holding > 10% of the Company’s share capital. (Sweden, Finland) |
| • | The audit committee is not majority independent. (Norway) |
Remuneration Committee:
| • | The remuneration committee is not fully independent of the company, excluding
the chair. (Sweden) |
| • | The remuneration committee is not majority independent of the company. (Finland) |
| • | The remuneration committee does not consist fully of non-executive directors.
(Finland) |
| • | The remuneration committee is not fully independent of management (Norway)
|
| • | The remuneration committee is not majority independent from the company and
its major shareholders holding > 50% of the Company’s share capital. (Sweden, Finland, Norway) |
Board Nomination
Committee:
| • | The nomination committee does not consist of a majority of directors independent
from the company. (Finland) |
| • | An executive is a member of the nomination committee. (Finland) |
External Nomination
Committee: Vote against the establishment of the nomination committee and its guidelines when:
| • | The external committee is not majority independent of the company and management.
(Sweden) |
| • | The external committee does not have at least one director not affiliated to
largest shareholder on the committee. (Sweden) |
| • | The external committee does not meet best practice based on ISS analysis. (Finland) |
| • | The external committee is not majority independent of the board and management.
(Norway) |
| • | The external committee has more than one member of the board of the directors
sitting on the committee. (Norway) |
| • | There is insufficient disclosure provided for new nominees (Norway) |
| • | An executive is a member of the committee. (Norway) |
Russia
| Ø | Putnam will vote on a case-by-case basis for the election of nominees to the board of directors. |
Commentary: In Russia, director elections are handled through
a cumulative voting process. Cumulative voting allows shareholders to cast all of their votes for a single nominee for the board of directors,
or to allocate their votes among nominees in any other way. In contrast, in “regular” voting, shareholders may not give more
than one vote per share to any single nominee. Cumulative voting can help to strengthen the ability of minority shareholders to elect
a director.
Singapore
| Ø | Putnam will vote against from the entire board of directors if |
| • | in the case of a board with an independent director serving as chair, fewer than one-third of the directors are independent directors;
or, in the case of a board not chaired by an independent director, fewer than half of the directors are independent directors, |
| • | the board has not established audit and compensation committees, each with an independent director serving as chair,
with at least a majority of the members being independent directors, and with all of the directors being non-executive directors, or |
| • | the board has not established a nominating committee, with an independent director serving as chair, and with at least a majority
of the members being independent directors. |
United Kingdom, Ireland
Commentary:
Application of guidelines: Although the Combined Code has adopted
the “comply and explain” approach to corporate governance, Putnam believes that the guidelines discussed above with respect
to board independence standards are integral to the protection of investors in UK companies. As a result, these guidelines will be applied
in a prescriptive manner.
Definition of independence: For the purposes of these guidelines,
a non-executive director shall be considered independent if the director meets the independence standards in section A.3.1 of the Combined
Code (i.e., no material business or employment relationships with the company, no remuneration from the company for non-board services,
no close family ties with senior employees or directors of the company, etc.), except that Putnam does not view service on the board for
more than nine years as affecting a director’s independence.
Smaller companies: A smaller company is one that is below the FTSE
350 throughout the year immediately prior to the reporting year.
| Ø | Putnam will withhold votes from the entire board of directors if: |
| • | the board, excluding the Non-Executive Chair, is not comprised of at least half independent non-executive directors, |
| • | the board has not established a Nomination committee composed of a majority of independent non-executive directors, excluding the
Non-Executive Chair, or |
| • | the board has not established a Compensation committee composed of (1) at least three directors (in the case of smaller companies,
as defined by the Combined Code, two directors) and (2) solely of independent non-executive directors. The company chair may be a member
of, but not chair, the Committee provided he or she was considered independent on appointment as chair, or |
| • | The board has not established an Audit Committee composed of, (1) at least three directors (in the case of smaller companies as defined
by the Combined Code, two directors) and (2) solely of independent non-executive directors. The board chair may not serve on the audit
committee of large or small companies. |
All other jurisdictions
| Ø | In the absence of jurisdiction specific guidelines, Putnam will vote as follows for boards/supervisory boards: |
| • | Putnam will vote against the entire board of directors if |
| • | fewer than a majority of the directors are independent directors, or |
| • | the board has not established audit, nominating and compensation committees each composed of a majority of independent directors. |
Additional Commentary regarding all Non-US jurisdictions:
Whether a director is considered “independent” or not
will be determined by reference to local corporate law or listing standards.
Some jurisdictions may legally require or allow companies to have
a certain number of employee representatives, employee shareholder representatives (e.g., France) and/or shareholder representatives on
their board. Putnam generally does not consider these representatives independent. The presence of employee representatives or employee
shareholder representatives on the board and key committees is generally legally mandated. In most markets, shareholders do not have
the ability to vote on the election of employee representatives or employee shareholder representatives. In some markets, significant
shareholders have a legal right to nominate shareholder representatives. Shareholders are required to approve the election of shareholder
representatives to the board. Unlike employee representatives, there are no legal requirements regarding the presence of shareholder
representatives on the board or its committees.
| Ø | Putnam will not include employee or employee shareholder representatives in the independence calculation of the board or key
committees, nor in the calculation of the size of the board. |
| Ø | Putnam will include shareholder representatives in the independence calculation of the board and key committees, and in the
calculation of the size of the board. |
| Ø | Putnam will generally support shareholder or employee representatives if included in the agenda Putnam will vote on a case-by-case
basis when there are more candidates than seats. Additionally, Putnam will vote against such nominees when there is insufficient
information disclosed. |
| Ø | Putnam Investments’ policies regarding the provision of professional services and transactional relationship with regard to
directors will apply. |
| Ø | Putnam will vote for independent nominees for alternate director, unless such nominees do not meet Putnam’s individual
director standards. |
Shareholder nominated directors/self-nominated directors
| Ø | Putnam will vote against shareholder nominees if Putnam supports the board of directors. |
| Ø | Putnam will vote on a case-by case basis if Putnam will be voting against the current board. |
| Ø | Putnam will vote on a case-by-case basis if the proposal regarding a self-nominated/shareholder nominated director nominee would
add an additional seat to the board if the nominee is approved. |
Other Business Matters
Japan
A. Article Amendments
| Ø | The Japanese Companies Act gives companies the option to adopt a U.S.-Style corporate structure (i.e., a board of directors and audit,
nominating, and compensation committees). Putnam will vote for proposals to amend a company’s articles of incorporation
to adopt the U.S.-Style “Board with Committees” structure. However, the independence of the outside directors is critical
to effective corporate governance under this new system. Putnam will, therefore, scrutinize the backgrounds of the outside director nominees
at such companies, and will vote against the amendment where Putnam believes the board lacks the necessary level of independence
from the company or a substantial shareholder. |
| Ø | Putnam will vote on a case-by-case basis on granting the board the authority to repurchase shares at its discretion. |
| Ø | Putnam will vote against amendments to delete a requirement directing the company to reduce authorized capital by
the number of treasury shares cancelled. If issued share capital decreases while authorized capital remains unchanged, then the company
will have greater leeway to issue new shares (for example as a private placement or a takeover defense). |
| Ø | Putnam will vote against proposals to authorize appointment of special directors. Under the new Corporate Law, companies
are allowed to appoint, from among their directors, "special directors" who will be authorized to make decisions regarding the
purchase or sale of important assets and major borrowing or lending, on condition that the board has at least six directors, including
at least one non-executive director. At least three special directors must participate in the decision-making process and decisions shall
be made by a majority vote of the special directors. However, the law does not require any of the special directors to be non-executives,
so in effect companies may use this mechanism to bypass outsiders. |
| Ø | Putnam will generally vote for proposals to create new class of shares or to conduct a share consolidation of outstanding
shares to squeeze out minority shareholders. |
| Ø | Putnam will vote against proposals seeking to enable companies to establish specific rules governing the exercise
of shareholder rights. (Note: Such as, shareholders' right to submit shareholder proposals or call special meetings.) |
B. Compensation Related Matters
| Ø | Putnam will vote against option plans which allow the grant of options to suppliers, customers, and other outsiders. |
| Ø | Putnam will vote against stock option grants to independent internal statutory auditors. The granting of stock options
to internal auditors, at the discretion of the directors, can compromise the independence of the auditors and provide incentives to ignore
accounting problems, which could affect the stock price over the long term. |
| Ø | Putnam will vote against the payment of retirement bonuses to directors and statutory auditors when one or more of the
individuals to whom the grants are being proposed has not served in an executive capacity for the company. Putnam will also vote against
payment of retirement bonuses to any directors or statutory auditors who have been designated by the company as independent. Retirement
bonus proposals are all-or-nothing, meaning that split votes against individual payments cannot be made. If any one individual does not
meet Putnam’s criteria, Putnam will vote against the entire bundled item. |
C. Other Business Matters
| Ø | Putnam votes for mergers by absorptions of wholly-owned subsidiaries by their parent companies. These deals do not require
the issuance of shares, and do not result in any dilution or new obligations for shareholders of the parent company. These transactions
are routine. |
| Ø | Putnam will vote for the acquisition if it is between parent and wholly-owned subsidiary. |
| Ø | Putnam will vote for the formation of a holding company, if routine. Holding companies are once again legal in Japan
and a number of companies, large and small, have sought approval to adopt a holding company structure. Most of the proposals are intended
to help clarify operational authority for the different business areas in which the company is engaged and promote effective allocation
of corporate resources. As most of the reorganization proposals do not entail any share issuances or any change in shareholders’
ultimate ownership interest in the operating units, Putnam will treat most such proposals as routine. |
| Ø | Putnam will vote against proposals that authorize the board to vary the AGM record date. |
| Ø | Putnam will vote for proposals to abolish the retirement bonus system |
| Ø | Putnam will vote for board-approved director/officer indemnification proposals |
| Ø | Putnam will vote on a case-by-case basis on private placements (Third-party share issuances). Where Putnam views the
share issuance necessary to avoid bankruptcy or to put the company back on solid financial footing, Putnam will generally vote for.
When a private placement allows a particular shareholder to obtain a controlling stake in the company at a discount to market prices,
or where the private placement otherwise disadvantages ordinary shareholders, Putnam will vote against. |
| Ø | Putnam will generally vote against shareholder rights plans (poison pills). However, if all of the following criteria
are met, Putnam will evaluate such poison pills on a case-by-case basis: |
1) The poison pill must have a duration of no more than three
years.
2) The trigger threshold must be no less than 20 percent of issued
capital.
3) The company must have no other types of takeover defenses in
place.
4) The company must establish a committee to evaluate any takeover
offers, and the members of that committee must all meet Putnam’s' definition of independence.
5) At least 20 percent, and no fewer than two, of the directors
must meet Putnam’s definition of independence. These independent directors must also meet Putnam’s guidelines on board meeting
attendance.
6) The directors must stand for reelection on an annual basis.
7) The company must release its proxy materials no less than three
weeks before the meeting date.
| Ø | Putnam will vote against proposals to allow the board to decide on income allocation without shareholder vote. |
| Ø | Putnam will vote against proposals to limit the liability of External Audit Firms (“Accounting Auditors”) |
| Ø | Putnam will vote against proposals seeking a reduction in board size that eliminates all vacant seats. |
| Ø | Putnam may generally vote against proposals seeking an increase in authorized capital that leaves the company with as
little as 25 percent of the authorized capital outstanding (general request). However, such proposals will be evaluated on a company specific
basis, taking into consideration such factors as current |
authorization outstanding, existence (or lack thereof) of preemptive
rights and rationale for the increase.
| Ø | Putnam will vote for corporate split agreement and transfer of sales operations to newly created wholly-owned subsidiaries
where the transaction is a purely internal one which does not affect shareholders' ownership interests in the various operations. All
other proposals will be referred back to Putnam for case-by-case review. These reorganizations usually accompany the switch
to a holding company structure, but may be used in other contexts. |
United Kingdom
| Ø | Putnam will not apply the U.S. standard 15% discount cap for employee share purchase schemes at U.K. companies. As such, Putnam will
generally vote for ‘Save-As-You-Earn’ schemes in the U.K which allow for no more than a 20% purchase discount,
and which otherwise comply with U.K. law and Putnam standards. |
France
| Ø | Putnam will not apply the U.S. standard 15% discount cap for employee share purchase schemes at French companies. As such, Putnam
will generally vote for employee share purchase schemes in France that allow for no greater than a 30% purchase discount,
or 40% purchase discount if the vesting period is equal to or greater than ten years, and which otherwise comply with French law and Putnam
standards. |
| Ø | Putnam will generally vote for the Remuneration Report (established based on SRD II), however Putnam will vote on a
case-by-case basis when Putnam is voting against both the ex-Post Remuneration Report (CEO) and ex-Ante Remuneration Policy
(CEO, or proposal including CEO remuneration package) in the current year, and Putnam’s third party service provider(s) is recommending
a vote against. |
Canada
| Ø | Putnam will generally vote for Advance Notice provisions for submitting director nominations not less than 30 days prior
to the date of the annual meeting. For Advance Notice provisions where the minimum number of days to submit a shareholder nominee is less
than 30 days prior to the meeting date, Putnam will vote on a case-by-case basis. Putnam will also vote on a case-by-case
basis if the company's policy expressly prohibits the commencement of a new notice period in the event the originally scheduled meeting
is adjourned or postponed. |
Hong Kong
| Ø | Putnam will vote for proposals to approve a general mandate permitting the company to engage in non-pro rata share
issuances of up to 20% of total equity in a year if the company’s board meets Putnam’s independence standards; if the company’s
board does not meet Putnam’s independence standards, then Putnam will vote against these proposals. |
Additionally, Putnam will vote for proposals to
approve the reissuance of shares acquired by the company under a share repurchase program, provided that: (1) Putnam supported (or would
have supported, in accordance with these guidelines) the share repurchase program, (2) the reissued shares represent no more than 10%
of the company’s outstanding shares (measured immediately before the reissuance), and (3) the reissued shares are sold for no less
than 85% of current market value.
This policy supplements policies regarding share issuances as stated above
under section
III. Voting Shares of Non-US Issuers.
Taiwan
| Ø | Putnam will vote against proposals to release the board of directors from the non-compete restrictions specified
in Taiwanese Company Law. However, Putnam will vote for such proposals if the directors are engaged in activities with a
wholly- owned subsidiary of the company. |
Australia
| Ø | Putnam will vote for proposals to carve out, from the general cap on non-pro rata share issues of 15% of total equity
in a rolling 12-month period, a particular proposed issue of shares or a particular issue of shares made previously within the 12-month
period, if the company’s board meets Putnam’s independence standards; if the company’s board does not meet Putnam’s
independence standards, then Putnam will vote against these proposals. |
| Ø | Putnam will vote for proposals renewing partial takeover provisions. |
| Ø | Putnam will vote on a case-by-case basis on Board-Spill proposals. |
Turkey
Putnam will vote on a case-by-case basis on proposals involving
related party transactions. However, Putnam will vote against when such proposals do not provide information on the specific
transaction(s) to be entered into with the board members or executives.
Item 13. Portfolio Managers of Closed-End
Investment Companies
(a)(1) Portfolio Managers. The officers of the investment manager
identified below are primarily responsible for the day-to-day management of the fund’s portfolio as
of the filing date of this report. Effective September 30, 2024, Brett Kozlowski, Robert Davis and Robert Salvin are no longer
Portfolio Managers of the fund and Patick A. Klein, Benjamin Cryer and Matthew J. Walkup were added as Portfolio Managers of the fund.
Portfolio Managers |
Joined Fund |
Employer |
Positions Over Past Five Years |
Albert Chan, CFA |
2020 |
Franklin Advisors
2024 – Present
Putnam Investments
2002-2024 |
Portfolio Manager |
Benjamin, Cryer, CFA |
2024 |
Franklin Advisors
2006 – Present |
Portfolio Manager
|
Patrick Klein, PhD |
2024 |
Franklin Advisors
2005 – Present |
Portfolio Manager |
Michael Salm |
2011 |
Franklin Advisors
2024 – Present
Putnam Investments
1997-2024 |
Portfolio Manager |
Matthew Walkup |
2024 |
Franklin Advisors
2005 – Present
Putnam Investments
2014-2024 |
Portfolio Manager |
(a)(2) Other Accounts Managed by the Fund’s Portfolio Managers.
The following table shows the number and approximate assets of other investment
accounts (or portions of investment accounts) that the fund’s Portfolio Managers managed as of the fund’s most recent fiscal
year-end. Unless noted, none of the other accounts pays a fee based on the account’s performance.
Portfolio Leader or Member |
Other SEC-registered open-end and closed-end funds |
Other accounts that pool assets from more than one
client |
Other accounts (including separate accounts, managed
account programs and single-sponsor defined contribution plan offerings) |
|
Number of accounts |
Assets |
Number of accounts |
Assets |
Number of accounts |
Assets |
Michael Salm |
25* |
$30,841,200,000 |
33** |
$27,742,745,558 |
25*** |
$9,283,300,000
|
Patrick Klein |
21 |
$21,725,800,000
|
9 |
$2,119,200,000
|
16**** |
$7,308,100,000
|
Benjamin B. Cryer |
5 |
$4,541,100,000
|
3 |
$1,044,800,000 |
0 |
$0
|
Albert Chan |
12***** |
$4,444,400,000
|
16 |
$8,002,500,000
|
0 |
$0
|
Matthew Walkup |
5 |
$2,957,200,000
|
1 |
$211,500,000
|
0 |
$0
|
* 1 account, with total assets of $665,500,000
pay an advisory fee based on account performance.
** 1 account, with total assets of $11,300,000 pay an advisory fee based
on account performance
*** 3 accounts, with total assets of $804,890,000
pay an advisory fee based on account performance.
**** 1 account, with total assets of $1,243,000,000
pay an advisory fee based on account performance.
***** 1 account, with total assets of $1,310,000,000 pay an advisory fee
based on account performance.
Potential conflicts of interest in managing multiple accounts. Like
other investment professionals with multiple clients, the fund’s Portfolio Managers may face certain potential conflicts of interest
in connection with managing both the fund and the other accounts listed under “Other Accounts Managed by the Fund’s Portfolio
Managers” at the same time. The paragraphs below describe some of these potential conflicts, which the investment manager believes
are faced by investment professionals at most major financial firms. As described below, the investment manager and the Trustees of the
Putnam funds have adopted compliance policies and procedures that attempt to address certain of these potential conflicts.
The management of accounts with different
advisory fee rates and/or fee structures, including accounts that pay advisory fees based on account performance (“performance fee
accounts”), may raise potential conflicts of interest by creating an incentive to favor higher-fee accounts. These potential conflicts
may include, among others:
• The most attractive
investments could be allocated to higher-fee accounts or performance fee accounts.
• The trading of higher-fee
accounts could be favored as to timing and/or execution price. For example, higher-fee accounts could be permitted to sell securities
earlier than other accounts when a prompt sale is desirable or to buy securities at an earlier and more opportune time.
• The trading of other
accounts could be used to benefit higher-fee accounts (front- running).
• The investment management
team could focus their time and efforts primarily on higher-fee accounts due to a personal stake in compensation.
The investment manager
attempts to address these potential conflicts of interest relating to higher-fee accounts through various compliance policies that are
generally intended to place all accounts, regardless of fee structure, on the same footing for investment management purposes. For example,
under the investment manager’s policies:
• Performance
fee accounts must be included in all standard trading and allocation procedures with all other accounts.
• All
accounts must be allocated to a specific category of account and trade in parallel with allocations of similar accounts based on the
procedures generally applicable to all accounts in those groups (e.g., based on relative risk budgets of accounts).
• All
trading must be effected through Putnam’s trading desks and normal queues and procedures must be followed (i.e., no special treatment
is permitted for performance fee accounts or higher-fee accounts based on account fee structure).
• Front
running is strictly prohibited.
• The
fund’s Portfolio Manager(s) may not be guaranteed or specifically allocated any portion of a performance fee.
As part of these policies, the investment
manager has also implemented trade oversight and review procedures in order to monitor whether particular accounts (including higher-fee
accounts or performance fee accounts) are being favored over time.
Potential conflicts of interest may
also arise when the Portfolio Manager(s) have personal investments in other accounts that may create an incentive to favor those accounts.
As a general matter and subject to limited exceptions, the investment managers investment professionals do not have the opportunity to
invest in client accounts, other than the Putnam funds. However, in the ordinary course of business, the investment manager or related
persons may from time to time establish “pilot” or “incubator” funds for the purpose of testing proposed investment
strategies and products prior to offering them to clients. These pilot accounts may be in the form of registered investment companies,
private funds such as partnerships or separate accounts established by Putnam Management or an affiliate. The investment manager or an
affiliate supplies the funding for these accounts. Putnam employees, including the fund’s Portfolio Manager(s), may also invest
in certain pilot accounts. The investment manager, and to the extent applicable, the Portfolio Manager(s) will benefit from the favorable
investment performance of those funds and accounts. Pilot funds and accounts may, and frequently do, invest in the same securities as
the client accounts. The investment manager policy is to treat pilot accounts in the same manner as client accounts for purposes of
trading allocation – neither favoring nor disfavoring them except as is legally required. For example, pilot accounts are normally
included in the investment managers daily block trades to the same extent as client accounts (except
that pilot accounts do not participate in initial public offerings).
A potential conflict of interest may arise
when the fund and other accounts purchase or sell the same securities. On occasions when the Portfolio Manager(s) consider the purchase
or sale of a security to be in the best interests of the fund as well as other accounts, the investment managers trading desk may, to
the extent permitted by
applicable laws and regulations, aggregate the securities to be sold or
purchased in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades may create the potential
for unfairness to the fund or another account if one account is favored over another in allocating the securities purchased or sold –
for example, by allocating a disproportionate amount of a security that is likely to increase in value to a favored account. The investment
manager trade allocation policies generally provide that each day’s transactions in securities that are purchased or sold by multiple
accounts are, insofar as possible, averaged as to price and allocated between such accounts (including the fund) in a manner which in
Franklin Advisers opinion is equitable to each account and in accordance with the amount being purchased or sold by each account. Certain
exceptions exist for specialty, regional or sector accounts. Trade allocations are reviewed on a periodic basis as part of the investment
managers trade oversight procedures in an attempt to ensure fairness over time across accounts.
“Cross trades,” in which one Putnam account sells a particular
security to another account (potentially saving transaction costs for both accounts), may also pose a potential conflict of interest.
Cross trades may be seen to involve a potential conflict of interest if, for example, one account is permitted to sell a security to another
account at a higher price than an independent third party would pay,
or if such trades result
in more attractive investments being allocated to higher-fee accounts.
The investment manager and the fund’s Trustees have adopted compliance procedures that provide that any transactions between the
fund and another Putnam-advised account are to be made at an independent current market price, as required by law.
Another potential conflict of interest may arise based on the different
investment objectives and strategies of the fund and other accounts. For example, another account may have a shorter-term investment horizon
or different investment objectives, policies or restrictions than the fund. Depending on another account’s objectives or other factors,
the Portfolio Manager(s) may give advice and make decisions that may differ from advice given, or the timing or nature of decisions made,
with respect to the fund. In addition, investment decisions are the product of many factors in addition to basic suitability for the particular
account involved. Thus, a particular security may be bought or sold for certain accounts even though it could have been bought or sold
for other accounts at the same time. More rarely, a particular security may be bought for one or more accounts managed by the Portfolio
Manager(s) when one or more other accounts are selling the security (including short sales). There may be circumstances when purchases
or sales of portfolio securities for one or more accounts may have an adverse effect on other accounts. As noted above, the investment
manager has implemented trade oversight and review procedures to monitor whether any account is systematically favored over time.
The fund’s Portfolio Manager(s) may also face other potential
conflicts of interest in managing the fund, and the description above is not a complete description of every conflict that could be deemed
to exist in managing both the fund and other accounts.
(a)(3) Compensation of portfolio managers. Portfolio managers
are evaluated and compensated across the group of specified products they manage, in part, based on their performance relative to peers
or performance ahead of the applicable benchmark, depending on the product, based on a blend of 3-year and 5-year performance. In addition,
evaluations take into account individual contributions and a subjective component.
Each portfolio manager is assigned an industry-competitive incentive
compensation target consistent with this goal and evaluation framework. Actual incentive compensation may be higher or lower than the
target, based on group, individual, and subjective performance, and may also reflect the performance of Putnam as a firm.
Incentive compensation includes a cash bonus and may also include grants
of deferred cash, stock or options. In addition to incentive compensation, portfolio managers receive fixed annual salaries typically
based on level of responsibility and experience.
For Putnam Managed Municipal Income Trust and Putnam Municipal Opportunities
Trust, Franklin evaluates performance based on the fund’s peer ranking in the fund’s Lipper category. This peer ranking is
based on pre-tax performance.
For Putnam Master Intermediate Income Trust and Putnam Premier Income
Trust, Putnam evaluates performance based on the peer ranking of related products managed by the investment manager with similar strategies
in those products’ Lipper categories. This peer ranking is based on pre-tax performance.
One or more of the portfolio managers of Putnam Master Intermediate
Income Trust and Putnam Premier Income Trust receive a portion of the performance fee payable by a private fund managed by Putnam (the
“Private Fund”) in connection with their service as members of the Private Fund portfolio management team. See “Other
Accounts Managed by the Fund’s Portfolio Managers—Potential conflicts of interest in managing multiple accounts” in
(a)(2) above for information on how the investment manager addresses potential conflicts of interest resulting from an individual’s
management of more than one account.
(a)(4) Fund ownership. The following table shows the dollar ranges
of shares of the fund owned by the professionals listed above at the end of the fund’s last two fiscal years, including investments
by their immediate family members and amounts invested through retirement and deferred compensation plans.
*: Assets in the fund
|
Year |
$0 |
$0-$10,000 |
$10,001-$50,000 |
$50,001-$100,000 |
$100,001-$500,000 |
$500,001-$1,000,000 |
$1,000,001 and over |
Michael Salm |
2024 |
* |
|
|
|
|
|
|
|
2023 |
* |
|
|
|
|
|
|
Patrick Klein |
2024# |
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin Cryer |
2024# |
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert Chan |
2024 |
* |
|
|
|
|
|
|
|
2023 |
* |
|
|
|
|
|
|
Matthew Walkup |
2024# |
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
#Portfolio Manager of the fund effective
September 30, 2024.
(b) Not applicable
Item 14. Purchases of Equity Securities
by Closed-End Management Investment Companies and Affiliated Purchasers:
Registrant
Purchase of Equity Securities |
|
|
|
|
|
|
Maximum |
|
|
|
Total
Number |
Number
(or |
|
|
|
of
Shares |
Approximate
|
|
|
|
Purchased
|
Dollar
Value ) |
|
|
|
as
Part |
of
Shares |
|
|
|
of
Publicly |
that
May Yet Be |
|
Total
Number |
Average |
Announced |
Purchased |
|
of
Shares |
Price
Paid |
Plans
or |
under
the Plans |
Period |
Purchased |
per
Share |
Programs* |
or
Programs** |
|
|
|
|
|
October 1 - October 31,
20223 |
— |
— |
— |
4,855,961 |
November 1 - November
30, 2023 |
87,682 |
$3.07 |
87,682 |
4,768,279 |
December 1 - December
31, 2023 |
133,362 |
$3.18 |
133,362 |
4,634,917 |
January 1 - January 31,
2024 |
— |
— |
— |
4,634,917 |
February 1 - February
28, 2024 |
— |
— |
— |
4,634,917 |
March 1 - March 31, 2024 |
54,869 |
$3.19 |
54,869 |
4,580,048 |
April 1 - April 30, 2024 |
82,798 |
$3.11 |
82,798 |
4,497,250 |
May 1 - May
31, 2024 |
16,464 |
$3.16 |
16,464 |
4,480,786 |
June 1 - June 30, 2024 |
— |
— |
— |
4,480,786 |
July 1 - July 31, 2024 |
— |
— |
— |
4,480,786 |
August 1 - August 31,
2024 |
— |
— |
— |
4,480,786 |
September 1 - September
30, 2024 |
— |
— |
— |
4,480,786 |
* In October 2005, the Board of Trustees
of the Putnam Funds initiated the closed-end fund share repurchase program, which, as subsequently amended, authorized the fund to repurchase
of up to 10% of its fund's outstanding common shares over the two-years ending October 5, 2007. The Trustees have subsequently renewed
the program on an annual basis. The program renewed by the Board in September 2023, which was in effect between October 1, 2023 and September
30, 2024, allowed the fund to repurchase up to 4,855,961 of its shares. The program renewed by the Board in September 2024, which is
in effect between October 1, 2024 and September 30, 2025, allows the fund to repurchase up to 4,818,434 of its shares.
** Information from October 1, 2023 forward
is based on the total number of shares eligible for repurchase under the program as amended through September 20, 2023.
In September 2024, the Trustees approved
the renewal of the repurchase program of the fund to repurchase up to 10% of its outstanding common shares over the 365 day period ending
September 30, 2025 (based on shares outstanding as of September 30, 2024).
Item 15. Submission of Matters to a Vote
of Security Holders:
Not applicable
Item 16. Controls and Procedures:
(a) The registrant's principal executive
officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of
the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and
operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the
registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules
and forms.
(b) Changes in internal control over financial
reporting: Not applicable
Item 17. Disclosures of Securities Lending
Activities for Closed-End Investment Companies:
Not Applicable
Item 18. Recovery of Erroneously Awarded
Compensation.
(a) No
(b) No
Item 19. Exhibits:
(a)(1) The Code of Ethics of The Putnam Funds
and Franklin Templeton, are filed herewith.
(a)(2) Any policy required by the listing
standards adopted pursuant to Rule 10D-1 under the Exchange Act (17 CFR 240.10D-1) by the registered national securities exchange or
registered national securities association upon which the registrant’s securities are listed.
(a)(3)
A separate certification for each principal executive and principal financial officer of the registrant
as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)), are filed herewith:
(b) The certifications required by Rule 30a-2(b)
under the Investment Company Act of 1940, as amended, are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Putnam Master Intermediate Income Trust
By (Signature and Title):
/s/Jeffrey White
Jeffrey White
Principal Accounting Officer
Date: November 22, 2024
Pursuant to the requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
By (Signature and Title):
/s/Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer
Date: November 22, 2024
By (Signature and Title):
/s/Jeffrey White
Jeffrey White
Principal Financial Officer
Date: November 22, 2024
|
|
|
I, Jonathan S. Horwitz, the Principal Executive Officer of the funds listed on Attachment A, certify that:
|
|
|
|
1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A:
|
|
|
|
2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report;
|
|
|
|
3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report;
|
|
|
|
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
|
|
|
|
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared;
|
|
|
|
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and
|
|
|
|
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the registrant’s report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
|
|
5. The registrant’s other certifying officer and I have disclosed to each registrant’s auditors and the audit committee of each registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant’s ability to record, process, summarize, and report financial information; and
|
|
|
|
b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant’s internal control over financial reporting.
|
|
|
|
Jonathan S. Horwitz Principal Executive Officer
|
|
|
|
I, Jeffrey White, the Principal Financial Officer of the funds listed on Attachment A, certify that:
|
|
|
|
1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A:
|
|
|
|
2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report;
|
|
|
|
3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report;
|
|
|
|
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
|
|
|
|
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared;
|
|
|
|
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and
|
|
|
|
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the registrant’s report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
|
|
5. The registrant’s other certifying officer and I have disclosed to each registrant’s auditors and the audit committee of each registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant’s ability to record, process, summarize, and report financial information; and
|
|
|
|
b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant’s internal control over financial reporting.
|
|
|
|
Jeffrey White Principal Financial Officer
|
|
|
|
Period (s) ended September 30, 2024
|
|
|
|
Putnam California Tax Exempt Income Fund
|
|
|
|
Putnam Diversified Income Trust
|
|
|
|
Putnam Dynamic Asset Allocation Balanced Fund
|
|
|
|
Putnam Dynamic Asset Allocation Growth Fund
|
|
|
|
Putnam Dynamic Asset Allocation Conservative Fund
|
|
|
|
Putnam Government Money Market Fund
|
|
|
|
Putnam Master Intermediate Income Trust
|
|
|
|
Putnam Mortgage Securities Fund
|
|
|
|
Putnam Tax Exempt Income Fund
|
|
|
|
Section 906 Certifications
|
|
|
|
I, Jonathan S. Horwitz, the Principal Executive Officer of the Funds listed on Attachment A, certify that, to my knowledge:
|
|
|
|
1. The form N-CSR of the Funds listed on Attachment A for the period ended September 30, 2024, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
|
2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended September 30, 2024 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.
|
|
|
|
Jonathan S. Horwitz Principal Executive Officer
|
|
|
|
Section 906 Certifications
|
|
|
|
I, Jeffrey White, the Principal Financial Officer of the Funds listed on Attachment A, certify that, to my knowledge:
|
|
|
|
1. The form N-CSR of the Funds listed on Attachment A for the period ended September 30, 2024, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
|
|
2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended September 30, 2024 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.
|
|
|
|
Jeffrey White Principal Financial Officer
|
|
|
|
Period (s) ended September 30, 2024
|
|
|
|
Putnam California Tax Exempt Income Fund
|
|
|
|
Putnam Diversified Income Trust
|
|
|
|
Putnam Dynamic Asset Allocation Balanced Fund
|
|
|
|
Putnam Dynamic Asset Allocation Growth Fund
|
|
|
|
Putnam Dynamic Asset Allocation Conservative Fund
|
|
|
|
Putnam Government Money Market Fund
|
|
|
|
Putnam Master Intermediate Income Trust
|
|
|
|
Putnam Mortgage Securities Fund
|
|
|
|
Putnam Tax Exempt Income Fund
|
[GRAPHIC OMITTED: FRANKLIN TEMPLETON LOGO]
[GRAPHIC OMITTED: STOCK MARKET GRAPH]
Personal Investments and
Insider Trading Policy (“the policy”)
(This Policy serves as a code of ethics adopted pursuant to Rule 17j-1 under the
Investment Company Act of 1940 and Rule 204A-1 under the Investment Advisers Act of 1940)
Revised
March 4, 2024
SECTION 1. PURPOSE OF THE POLICY |
1 |
1.1 Scope and Purpose of the Policy |
2 |
1.2 Statement of Principles |
2 |
1.3 Prohibited Activities |
2 |
1.4 Monitoring of the Policy and Additional Information |
3 |
SECTION 2. PERSONAL INVESTMENTS |
3 |
2.1 Statement on Covered Employee Investments |
3 |
2.2 Categories of Persons Subject to the Policy |
3 |
2.3 Accounts and Transactions Covered by the Policy |
4 |
2.4 Prohibited Transactions |
4 |
2.5 Additional Prohibitions and Requirements for Access Persons and Portfolio Persons |
5 |
2.6 Reporting Requirements |
6 |
2.7 Pre-Clearance Requirements |
7 |
2.8 Requirements for Independent Directors |
7 |
SECTION 3. INSIDER TRADING |
8 |
3.1 Policy on Insider Trading |
8 |
SECTION 4. RELATED POLICIES AND REQUIREMENTS |
9 |
4.1 Statement on Other Policies and Requirements |
9 |
SECTION 5. ADMINISTRATION OF THE POLICY, WAIVERS & REPORTING VIOLATIONS |
9 |
5.1 Code of Ethics Committee; Reporting to FT Fund Boards |
9 |
5.2 Violations of the Policy |
9 |
5.3 Waivers of the Policy |
9 |
5.4 Reporting Violations |
10 |
This document is the proprietary product of Franklin Templeton. Any
unauthorized use, reproduction or transfer of this document is strictly prohibited. Franklin Templeton © 2024. All Rights
Reserved.
Personal investments and insider trading policy | March 2024 2 |
SECTION 1. PURPOSE OF THE POLICY
1.1 Scope and Purpose
of the Policy
The Franklin Templeton Personal
Investments and Insider Trading Policy (the “Policy”) applies to the personal investment activities of all Covered Employees
(as defined in section 2.2 of the Policy) of Franklin Resources, Inc. (“FRI”) and all of its subsidiaries (collectively, “Franklin
Templeton”).
Franklin Templeton provides services
to the funds that are advised or sub-advised by a Franklin Templeton investment adviser (the “FT Funds”) and other client
accounts (“Client Accounts”). Thus, for purposes of this Policy, “FT Fund” includes all open-end and closed-end
funds within the Franklin Templeton Group of Funds, as well as any other fund that is advised or sub-advised by a Franklin Templeton investment
adviser, such as the Putnam Funds.
The purpose of the Policy is
to summarize the values, principles and business practices that guide Franklin Templeton’s business conduct and to establish a set
of principles to guide Covered Employees regarding the conduct expected of them when managing their personal investments.
1.2 Statement of
Principles
All Covered Employees are required
to conduct themselves in a lawful, honest and ethical manner in their business practices and to maintain an environment that fosters fairness,
respect and integrity.
Franklin Templeton’s policy
is that the interests of the FT Funds and Client Accounts are paramount and come before the interests of any employee. Information concerning
the securities, which include derivatives, such as futures, options and swaps, holdings and financial circumstances of the FT Funds and
Client Accounts, as well as the identity of certain Client Accounts, is confidential and Covered Employees are required to safeguard this
information.
The personal investment activities
of Covered Employees must be conducted in a manner to avoid actual or potential conflicts of interest with the FT Funds and Client Accounts.
In particular, to the extent that a Covered Employee learns of an investment opportunity because of his or her position with Franklin
Templeton (e.g., internal or third party research, Franklin Templeton or company sponsored conferences, or communications with company
officers), the Covered Employee must give preference to the FT Funds or Client Accounts.
Personal transactions in a security
may not be executed, regardless of quantity, if the Covered Employee has access to information regarding, or knowledge or even a presumed
knowledge of, FT Fund or Client Account activity in such security, including proposed activity and recommendations.
1.3 Prohibited Activities
Covered Employees generally are
prohibited from engaging or participating in any activity that has the potential to cause harm to an FT Fund or Client Account. Examples
of prohibited activities include, but are not limited to:
| • | Making investment decisions, changes in research ratings and trading decisions other than exclusively
for the benefit of, and in the best interest of, the FT Funds or Client Accounts; |
| • | Taking, delaying or omitting to take any action with respect to any research recommendation, report
or rating or any investment or trading decision for an FT Fund or Client Account in order to avoid economic injury to themselves or anyone
other than the FT Funds or Client Accounts; |
| • | Purchasing or selling a security on the basis of knowledge of a possible trade by or for an FT Fund
or Client Account with the intent of personally profiting from, or avoiding a loss with respect to, personal holdings in the same or related
securities; |
Personal investments and insider trading policy | March 2024 3 |
| • | Revealing to any other person (except in the normal course of the Covered Employee’s duties on
behalf of an
FT Fund or Client Account) any information regarding securities transactions by any FT Fund or Client Account or the consideration by
any FT Fund or Client Account of any such securities transactions; or |
| • | Engaging in any act, practice or course of business that operates or would operate as a fraud or deceit
on an FT Fund or Client Account or engaging in any manipulative practice with respect to any FT Fund or Client Account. |
1.4 Monitoring of
the Policy and Additional Information
Questions regarding the Policy
and related requirements should be directed to the Code of Ethics Department located in San Mateo, CA. The Code of Ethics Department
can be reached by e-mail at lpreclear@franklintempleton.com. The Code of Ethics Department uses PTA, http://coeprod/pta/index.jsp,
an automated transaction pre-clearance system, to manage the oversight of personal investments. Administration of the Policy is the responsibility
of the Code of Ethics Committee.
SECTION 2. PERSONAL INVESTMENTS
2.1 Statement on
Covered Employee Investments
Franklin Templeton recognizes
the importance to Covered Employees of managing their own financial resources. However, because of the potential conflicts of interest
inherent in its business, Franklin Templeton has implemented this Policy with regard to personal investments of Covered Employees. This
Policy is designed to minimize these conflicts and help ensure that Franklin Templeton focuses on meeting its duties as a fiduciary to
the FT Funds or Client Accounts.
Covered Employees should be aware
that their ability to invest in certain securities and to liquidate those positions may be severely restricted under this Policy due to
trading by the FT Funds or Client Accounts, including during times of market volatility. Therefore, as a general matter, Franklin Templeton
encourages Covered Employees to exercise caution when investing in individual securities, particularly in situations where a Covered Employee
wishes to invest in securities held or likely to be held by the FT Funds or Client Accounts.
Franklin Templeton also discourages
Covered Employees from engaging in a pattern of securities transactions that is so excessively frequent as to potentially impact the Covered
Employee’s ability to carry out their assigned responsibilities, increases the possibility of potential conflicts or violates the
Policy or the FT Funds’ prospectuses.
2.2 Categories of
Persons Subject to the Policy
All persons subject to the Policy
are assigned to the following categories based on their access to information regarding, or involvement in, investment activities. In
limited circumstances, certain affiliates of FRI may adopt separate policies or codes of ethics governing personal trading to address
the specific features of their investment activities and operations. Persons subject to other personal trading policies or codes of ethics
adopted by Franklin Templeton or its affiliates generally are exempt from this Policy. Please consult the Code of Ethics Department if
you have any questions about how this Policy applies to you.
Covered Employees: Covered
Employees are: (1) partners, officers, directors (or persons occupying a similar status or having similar functions) and employees (including
certain designated temporary employees or consultants) of any Franklin Templeton investment adviser, as well as any other persons who
provide advice on behalf of any Franklin Templeton investment adviser and are subject to the supervision and control of that investment
adviser; (2) Access Persons, as defined below; and (3) Independent directors of FT Funds within the Franklin Templeton Group of Funds
and independent directors of Franklin Templeton investment advisers (collectively, “Independent Directors”).
Personal investments and insider trading policy | March 2024 4 |
Access Persons: Access
Persons are those who have access to non-public information regarding FT Funds’ or Client Accounts’ securities transactions;
or have access to recommendations that are non-public; or have access to non-public information regarding the portfolio holdings of the
FT Funds or Client Accounts.
Portfolio Persons: Portfolio
Persons, a subset of Access Persons, are those who, in connection with their regular functions or duties, make or participate in the decision
to purchase or sell a security by an FT Fund or Client Account or if his or her functions relate to the making of any recommendations
about those purchases or sales.
Please see the Appendix to this
Policy for a table indicating how the provisions of the Policy apply to each category of persons. In addition, please see section 2.8
of the Policy for a description of the requirements for Independent Directors.
2.3 Accounts and
Transactions Covered by the Policy
The Policy covers two types of
securities accounts and transactions: (1) those in which Covered Employees have or share investment control, and (2) those in which Covered
Employees have direct or indirect beneficial ownership. Generally, a person has a beneficial ownership in a security if he or she, directly
or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary
interest in the security. “Pecuniary interest” has the same meaning as in Rule 16a-1(a)(2) under the Securities Exchange Act
of 1934. Generally, a pecuniary interest in a security means the opportunity, directly or indirectly, to profit or share in any profit
derived from a transaction in the security. Covered Employees are presumed to have a pecuniary interest in securities held by members
of their immediate family or domestic partners sharing the same household.
Certain types of securities and
investments are exempt from the Policy. These include, but are not limited to, direct obligations of the U.S. government, money market
instruments, and registered open-end funds other than the FT Funds. Cryptocurrencies and digital assets must be precleared and are reportable
only, (1) by members of those investment teams investing in cryptocurrencies, or any FT employee involved in trading or the creation and
redemption process for any FT digital currency Fund or account, and (2) for the cryptocurrencies in which they are investing on behalf
of clients or funds, and (3) those involved in the creation and redemption process for any FT digital currency ETF must also preclear
their investments in FT digital Funds. Please consult the Code of Ethics Department for further information about specific types of securities
that are exempt from the Policy.
2.4 Prohibited Transactions
Trading that Conflicts with FT Funds or Client Accounts
Covered Employees are prohibited
from any trading activity that conflicts with the FT Funds’ or Client Accounts’ trading activity. Examples of prohibited trading
activity include, but are not limited to:
| • | “front running” or trading ahead of an FT Fund or Client Account; and |
| • | trading parallel to or against an FT Fund or Client Account. |
Short Sales of Securities Issued by Franklin Resources
and FT Sponsored Closed-end Funds and Exchange Traded Funds (ETFs)
Covered Employees are prohibited
from effecting short sales, including “short sales against the box,” of securities issued by FRI, or any FT sponsored closed-end
funds or FT exchange traded funds (ETFs). This prohibition includes economically equivalent transactions such as call or put options,
swap transactions or other derivatives that would result in having a net short exposure to FRI or any closed-end fund or ETF sponsored
or advised by Franklin Templeton.
Pledged Securities
Personal investments and insider trading policy | March 2024 5 |
Directors and Executive Officers
are also prohibited from pledging, hypothecating or otherwise encumbering securities issued by Franklin Resources as described in greater
detail in the FRI Code of Ethics and Business Conduct.
Trading in Shares of the FT Funds
A Covered Employee is prohibited
from buying or selling shares of an FT Fund while in possession of material non-public information about the FT Fund. Specifically, Covered
Employees are prohibited from taking personal advantage of their non-public knowledge of recent or impending investment activities of
FT Funds or the FT Funds’ investment advisers or any other non-public information that a reasonable investor would likely consider
important in making his or her investment decisions, including information that may have a material effect on an FT Fund’s share
price or net asset value.
In addition, Covered Employees
must keep confidential at all times non-public information they may obtain about an FT Fund, including but not limited to information
such as portfolio holdings, pricing or valuation of an FT Fund’s portfolio holdings, recent or impending securities transactions
by an FT Fund, changes related to an FT Fund’s investment adviser, offerings of new FT Funds, changes to investment minimums, FT
Fund closures or liquidations, changes to investment personnel, FT Fund flow activity, and information on current or prospective FT Fund
shareholders.
Please consult your local Legal
or Compliance department if you have any questions about materiality, confidentiality, or any other concerns before trading on or sharing
non-public information relating to FT Funds.
Special
Provision Relating to Ownership of Putnam Funds
Employees
of Putnam Investment Management, LLC, The Putnam Advisory Company LLC, Putnam Investments Limited and of the principal underwriter of
the Putnam open-end U.S. mutual funds (currently Putnam Retail Management Limited Partnership) (collectively, the “Putman Entities”)
must hold shares of Putnam open-end U.S. mutual funds through the Putnam transfer agent (Putnam Investor Services, Inc.) and all transactions
must be executed through Putnam Retail Management as dealer of record. Holding Putnam mutual fund shares in discretionary accounts is
prohibited. This requirement does not apply to shares of Putnam mutual funds owned in retirement accounts or other accounts required to
be held through third-party administrators.
Short-Term Trading in Open-end FT Funds
Franklin Templeton discourages
short-term or excessive trading, often referred to as “market timing,” in shares of the open-end FT Funds. Covered Employees
must be familiar with the “Frequent Trading Policy” or its equivalent described in the prospectus of each open-end FT Fund
in which they invest and must not engage in trading activity that might violate the purpose or intent of such policy. Accordingly, all
Covered Employees must comply with the purpose and intent of each open-end FT Fund’s Frequent Trading Policy or its equivalent and
must not engage in any short-term trading (if the relevant FT Fund has adopted a policy regarding short-term trading) or excessive trading
in open-end FT Funds.
For open-end FT Funds within
the Franklin Templeton Group of Funds, including FT Funds purchased through a 401(k) plan, trading activity by Covered Employees is monitored
and any trading patterns or behaviors that may constitute short-term or excessive trading is reported to the Code of Ethics Department.
These reports will include descriptions of any actions taken and any sanctions or penalties imposed in response to such trading activity.
This policy does not apply to purchases and sales of money market funds.
2.5 Additional Prohibitions
and Requirements for Access Persons and Portfolio Persons
Initial Public Offerings
Access Persons are prohibited
from investing in securities sold in an initial public offering or a secondary offering
(including Initial Coin Offerings (“ICOs”)) by an issuer except for offerings of securities made by closed-end FT Funds advised
or sub-advised by Franklin Templeton. However, IPOs may be permissible in certain circumstances
Personal investments and insider trading policy | March 2024 6 |
or jurisdictions. Please contact the Code of Ethics
department or your local Compliance Officer in advance of executing any IPO.
Short Sales of Securities
Portfolio Persons are prohibited
from selling short any security held by the FT Funds, including “short sales against the box.” This prohibition also applies
to effecting economically equivalent transactions, including, but not limited to, sales of uncovered call options, sales of put options
while not owning the underlying security, and short sales of bonds that are convertible into equity positions, swaps or other derivatives
where the security is held by FT Funds.
Short Swing Rule
Portfolio Persons are subject
to a short swing rule whereby they cannot sell shares of a security at a price higher than any price paid within the prior 60 calendar
days or buy a security at a price below any price which they sold it within the past 60 calendar days, including transactions in derivatives
and transactions that may occur in margin and option accounts. Any profits made must be disgorged. Please consult the Code of Ethics Department
for any exemptions and how profits are calculated.
Disclosure of Interest in Securities or Private
Investments
Portfolio Persons are required
to disclose any interest they have in the securities of an issuer or direct investment in any company if they are involved in either analysis
or investment decisions related to the issuer or company. Portfolio Persons must re-disclose any such interest if they participate in
later recommendations or investment decisions related to the issuer or company.
Portfolio Persons must also disclose
any personal transactions they are contemplating in the securities referenced above, any position they hold with the issuer and any proposed
business relationship between the issuer and the Portfolio Person or any party in which the Portfolio Person has an interest.
The disclosures above must be
made to their Chief Investment Officer and /or Director of Research.
2.6 Reporting Requirements
All Accounts
All Covered Employees must complete
an Initial Code of Ethics Certification no later than 10 calendar days after the date the person is notified by a member of the Human
Resources Department of the requirement to do so. Additionally, by February 15th of each subsequent year they must complete
an annual certification that they have complied with and will comply with the Policy.
Access Persons must also file
an Initial Broker Accounts Certification and Initial Holdings Certification no later than 10 calendar days after the date the person is
notified by a member of the Human Resources Department of the requirement to do so. Additionally, by February 15th of
each subsequent year, Access Persons must file a then current annual report of all personal securities accounts and securities
holdings and must certify that they have complied with and will comply with the Policy.
Non-Discretionary Accounts
On a quarterly basis,
and no later than 30 calendar days after the end of each calendar quarter, every Access Person must report all transactions in securities
covered by this Policy, except for those executed through an Automatic Investment Plan or that would duplicate information already provided
in broker confirmations or statements sent to the Code of Ethics Department directly from the broker.
No later than 30 calendar days
after the calendar quarter, Access Persons must report any account established in which any securities were held during that calendar
quarter.
Discretionary Accounts
Personal investments and insider trading policy | March 2024 7 |
Reporting of transactions is
not required for discretionary accounts. A discretionary account is managed by a non-affiliated
third party (registered broker-dealer, a registered investment adviser, or other investment manager acting in a similar fiduciary capacity)
who exercises sole investment discretion.
The Access Person must certify
initially and annually thereafter that they do not have investment control of the discretionary account other than the right to terminate.
If the Access Person makes or participates in an investment decision for an account that has been reported as a discretionary account,
any transactions related to that investment decision must be pre-cleared. If there is any uncertainty about whether a particular account
would be deemed discretionary for purposes of the Policy, please consult the Code of Ethics Department.
2.7 Pre-Clearance
Requirements
Securities Transactions
Access Persons must obtain pre-clearance
from the Code of Ethics Department before buying or selling any security (other than those not requiring pre-clearance, a full list of
which is available from the Code of Ethics Department) and are always prohibited from executing transactions in a security if aware that
the FT Funds or Client Accounts are active or contemplate being active in the security (even if the transactions have been pre-cleared).
Pre-clearance requests should be submitted via PTA.
Private Investments and Limited Offerings
Access Persons must obtain pre-clearance
from the Code of Ethics Department before investing in a private placement or purchasing other securities in a limited offering. For example,
investments in private or unregistered funds (i.e., hedge funds) are required to be pre-cleared under the Policy.
Discretionary Accounts
Transactions in discretionary
accounts do not need to be pre-cleared if satisfactory evidence has been provided to the Code of Ethics Department that sole investment
discretion has been granted to an investment manager. If the Access Person makes or participates in an investment decision for an account
that has been reported as a discretionary account, any transactions related to that investment decision must be pre-cleared.
Exemptions from Pre-Clearance
Certain types of securities and
transactions are exempt from pre-clearance requirements. Examples of these types of securities and transactions include, but are not limited
to, shares issued by FRI; shares of open-end Funds and ETFs (including FT open-ended Funds and ETFs) and closed-end funds (not including
FT sponsored closed-end Funds which must be precleared); certain government obligations and transactions effected pursuant to dividend
reinvestment plans. In addition, transactions in small quantities of securities (e.g., in the case of equity securities, 500 shares within
a 30 calendar day period) are not required to be pre-cleared. Please consult the Code of Ethics Department for further information about
the types of securities and transactions that are exempt from the pre-clearance requirements of the Policy.
“Intent” Is Important
While pre-clearance of Access
Persons’ transactions is a cornerstone of Franklin Templeton’s compliance efforts, it cannot detect inappropriate or illegal
transactions where the intent conflicts with the principles of the Policy. Thus, the fact that a proposed transaction received pre-clearance
is not a defense against a charge of violating the Policy or the securities laws. For example, even if an Access Person received pre-clearance
for a transaction, that transaction might constitute front-running if it occurred shortly before a transaction by an FT Fund or Client
Account that the Access Person was aware of. In cases like this, the intent may not be evident when a particular transaction request is
analyzed for pre-clearance.
2.8 Requirements
for Independent Directors
Pre-clearance and Reporting Requirements
Personal investments and insider trading policy | March 2024 8 |
Unless covered by a separate
policy, an Independent Director is subject to the pre-clearance and transaction reporting requirements of the Policy only if such Independent
Director, at the time of his or her transaction, knew or should have known that, during the 15 calendar day period before or after the
date of the Independent Director’s transaction, the security was purchased or sold or considered for purchase or sale by an FT Fund
or Client Account. The pre-clearance and reporting requirements of the Policy do not apply to securities transactions conducted in an
account where an Independent Director has granted full investment discretion to a brokerage firm, bank or investment adviser or conducted
in a trust account in which the trustee has full investment discretion. Independent Directors are not required to disclose any securities
holdings or brokerage accounts, including brokerage accounts where he/she has granted discretionary authority to a brokerage firm, bank
or investment adviser.
Initial and Annual Acknowledgment Reports
An Independent Director must
complete and return an executed Acknowledgment Form to the Code of Ethics Department no later than 10 calendar days after the date the
person becomes an Independent Director. Independent Directors will be asked to certify by February 15th of each year
that they have complied with and will comply with the Policy by filing the Acknowledgment Form with the Code of Ethics Department.
SECTION 3. INSIDER TRADING
3.1 Policy on Insider
Trading
Insider trading, or trading on
material non-public information, is against the law and penalties are severe, both for individuals involved in such unlawful conduct and
their employers. No Covered Employee may (1) trade, either personally or on behalf of the FT Funds or Client Accounts, while in possession
of material non-public information, or (2) communicate material non-public information to others.
Material non-public information
may be obtained by many means, both in connection with a Covered Employee’s job functions (e.g., from meetings with company executives
or consultations with expert networks) or independent of the Covered Employee’s employment or relationship with Franklin Templeton
(e.g., from friends or relatives).
Before trading for themselves
or others (including FT Funds and Client Accounts) in the securities of a company about which a Covered Employee potentially may have
material non-public information, the Covered Employee should consider the following questions:
| • | First, is the information material? Information is considered material if there is a substantial likelihood
that a reasonable investor would consider the information to be important in making his or her investment decision, or if it is reasonably
certain to have a substantial effect on the price of the company’s securities. |
| • | Second, is the information non-public? Information is non-public until it has been effectively communicated
to the marketplace. For example, information in a report filed with the U.S. Securities and Exchange Commission, or that appears in a
publication of general circulation (e.g., The Wall Street Journal or Reuters) would be considered public. If the information has been
obtained from someone who is betraying an obligation not to share the information (e.g., a company insider), that information is very
likely to be non-public. |
If, after consideration of these
questions, the Covered Employee believes that the information that they have about a company may be material and non-public, or if the
Covered Employee has questions as to whether the information is material or non-public, he or she must report the matter immediately to
Trading Desk Compliance/IC, the designated Compliance Officer or Legal Department. In addition, the Covered Employee must not purchase
or sell any securities issued by such company on behalf of themselves or others (including on behalf of any FT Fund or Client Account),
or communicate the information inside or outside Franklin Templeton.
Personal investments and insider trading policy | March 2024 9 |
Trading Desk Compliance/IC or
the Compliance Officer will promptly contact the Legal Department for advice. After review of the facts, the Legal Department, Trading
Desk Compliance/IC or the Compliance Officer will provide instructions to the Covered Employee. If the information in the Covered Employee’s
possession is determined to be material and non-public, the Covered Employee is required to keep the information confidential and secure.
Those securities for which the Covered Employee has material non-public information will be placed on restricted trading lists for a timeframe
determined by the Compliance Officer.
SECTION 4. RELATED POLICIES AND REQUIREMENTS
4.1 Statement on
Other Policies and Requirements
In addition to the Policy, Covered
Employees are required to observe the applicable policies and procedures prescribed in the Code of Ethics and Business Conduct,
the policies contained in the U.S. and non-U.S. employee handbooks (as applicable), and various other policies adopted by Franklin Templeton.
SECTION 5. ADMINISTRATION OF THE POLICY, WAIVERS &
REPORTING VIOLATIONS
5.1 Code of Ethics
Committee; Reporting to FT Fund Boards
The Code of Ethics Committee
is responsible for the administration of the Policy and provides oversight of compliance with the personal trading requirements of the
Policy. Among other things, the Committee has the authority and responsibility to review the Policy periodically, review sanction guidelines
for violations of the Policy and review trading violations and waivers granted.
At least annually, the FT Fund
Boards who have adopted this policy will be provided with a report describing any issues arising under the Policy if requested. FT Fund
Boards may require more frequent reporting, including detailing all violations of the Policy.
5.2 Violations of
the Policy
A Covered Employee that violates
this Policy will be sanctioned in a manner commensurate with the violation. Prescribed sanctions range from warning memos for a first
time failure to pre-clear a transaction to the immediate sale of positions, disgorgement of profits, personal trading suspensions and
other sanctions, up to and including termination and reporting to regulatory authorities for more serious violations.
5.3 Waivers of the
Policy
The Chief Compliance Officer
of the relevant investment adviser, or primary regional officer, may, in his or her discretion,
waive compliance by any Covered Employee with the provisions of the Policy, if he or she finds that such a waiver:
| (1) | is necessary to alleviate undue hardship or in view of unforeseen circumstances or is otherwise appropriate
under all the relevant facts and circumstances; |
| (2) | will not be inconsistent with the purposes and objectives of the Policy; |
| (3) | will not adversely affect the interests of the FT Funds or Client Accounts or the interests of Franklin
Templeton; and |
| (4) | will not result in a transaction or conduct that would violate provisions of applicable laws or regulations. |
Any waiver will be in writing,
will contain a statement of the basis for it, and any waivers granted by the Chief Compliance Officer of the relevant investment adviser,
or primary regional officer, will be reported to the SVP of Regulatory Compliance.
Personal investments and insider trading policy | March 2024 10 |
5.4 Reporting Violations
Covered Employees are required
to report violations of the Policy or the related Procedures, whether by themselves or by others.
Franklin Templeton is dedicated
to providing Covered Employees with the means and opportunity to report violations of the Policy or the related Procedures, or other instances
of wrongdoing, or any concerns they may have regarding ethical violations or accounting, internal control or auditing matters, including
fraud. Several means are provided by which reports to the Compliance and Ethics Hotline can be made including:
Online at: https://franklintempleton.ethicspoint.com
U.S., U.S. Territories or Canada
can call toll-free 1-800-648-7932
All other countries can call
collect at 704-540-0139
Franklin Templeton will not allow
retaliation against any Covered Employee who has submitted a report of a violation of the Policy or the related Procedures in good faith.
Personal investments and insider trading policy | March 2024 11 |
Appendix
|
Covered Employees |
Access Persons |
Portfolio Persons |
Independent Directors |
Prohibited Activities (Section 1.3) |
X |
X |
X |
X |
Prohibited Transactions and Other Requirements (Sections 2.4 and 2.5) |
Prohibition on Trading Activity that Conflicts with FT Funds or Client Accounts |
X |
X |
X |
X |
Prohibition on Short Sales of FRI and Closed-end FT Funds |
X |
X |
X |
X |
Trading in Shares of the FT Funds When in Possession of Material Non-Public Information |
X |
X |
X |
X |
Short-Term Trading in Open-end FT Funds |
X |
X |
X |
X |
Prohibition on Investments in Initial Public Offerings |
|
X |
X |
|
Prohibition on Short Sales of All Securities |
|
|
X |
|
Short Swing Rule |
|
|
X |
|
Disclosure of Interest in Securities |
|
|
X |
|
Reporting Requirements (Section 2.6) |
Initial Certification/Acknowledgment |
X |
X |
X |
X |
Initial Disclosure of Accounts and Holdings |
|
X |
X |
|
Annual Disclosure of Accounts and Holdings |
|
X |
X |
|
Annual Certification of Compliance |
X |
X |
X |
X |
Quarterly Disclosure of Transactions |
|
X |
X |
X* |
Quarterly Disclosure of New Accounts |
|
X |
X |
|
Pre-Clearance Requirements (Section 2.7) |
|
X |
X |
X* |
Insider Trading (Section 3) |
X |
X |
X |
X |
Requirement to Report Violations (Section 5.4) |
X |
X |
X |
X |
*Only applicable if the Independent Director, at the time of his or her transaction, knew or should have known that, during the 15 calendar
day period before or after the date of the Independent Director’s transaction, the security was purchased or sold or considered
for purchase or sale by an FT Fund or Client Account.
THE PUTNAM FUNDS
Code of Ethics
Each of The Putnam Funds
(the “Funds”) has determined to adopt this Code of Ethics with respect to certain activities by officers and Trustees of the
Funds which might be deemed to create possible conflicts of interest and to establish reporting requirements and enforcement procedures
with respect to such activities.
| I. | Rules Applicable to Officers and Trustees Affiliated with Putnam Investment Management, LLC or Franklin
Resources, Inc. or any of its other Subsidiaries |
| A. | Incorporation of Adviser’s Code of Ethics. The provisions, other than Section 2.8, of the
Franklin Templeton Personal Investments and Insider Trading Policy for employees of Franklin Resources, Inc. and all of its subsidiaries
(the “Franklin Code of Ethics”), which is attached as Appendix A hereto, are hereby incorporated herein as the Funds’
Code of Ethics applicable to officers and Trustees of the Funds who are employees of the Funds or officers, directors or employees of
Putnam Investment Management, LLC or Franklin Resources, Inc. or any of its other subsidiaries . A violation of the Franklin Code of Ethics
shall constitute a violation of the Funds’ Code of Ethics. |
| B. | Reports. Officers and Trustees of each of the Funds who are made subject to the Franklin Code of
Ethics pursuant to the preceding paragraph shall file the reports required by the Franklin Code of Ethics. A report filed in accordance
with the Franklin Code of Ethics shall be deemed to be filed with each of the Funds of which the reporting individual is an officer or
Trustee. |
| (1) | The Funds’ Chief Compliance Officer shall cause the reported personal securities transactions to
be compared with completed and contemplated portfolio transactions of each of the Funds to determine whether a violation of this Code
may have occurred. Before making any determination that a violation has been committed by any person, the Funds’ Chief Compliance
Officer shall give such person an opportunity to supply additional explanatory material. |
| (2) | If the Funds’ Chief Compliance Officer determines that a violation of any provision of this Code
has or may have occurred, he shall submit his written determination, together with any additional explanatory material, to the Audit,
Compliance and Risk Committee of the Funds at its next meeting when Code of Ethics matters are discussed. |
| D. | Sanctions. In addition to reporting violations of this Code to the Audit, Compliance and Risk Committee
of the Funds as provided in Section I-C(2), the Funds’ Chief Compliance Officer shall also report to such Committee any sanctions
imposed with respect to such violations. |
| II. | Rules Applicable to Unaffiliated Trustees |
| (1) | “Beneficial ownership” shall be interpreted in the same manner as it would be in determining
whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder. |
| (2) | “Control” means the power to exercise a controlling influence over the management or policies
of a company, unless such power is solely the result of an official position with such company. |
| (3) | “Covered Person” means an affiliated person of the Fund, who is not made subject to the Franklin
Code of Ethics pursuant to Part I hereof. |
| (4) | “Interested Trustee” means a Trustee of a Fund who is an “interested person” of
the Fund within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”). |
| (5) | “Purchase or sale of a security” includes, among other things, the writing of an option to
purchase or sell a security. |
| (6) | “Security” shall have the same meaning as that set forth in Section 2(a)(36) of the Investment
Company Act (in effect, all securities) except that it shall not include securities issued by the Government of the United States or an
agency thereof, bankers’ acceptances, bank certificates of deposit, commercial paper and high-quality short-term debt investments,
including repurchase agreements, and shares of registered open-end investment companies, but shall include any security convertible into
or exchangeable for a security. |
| (7) | “Security Held or to be Acquired by a Fund” means: (i) any security, as defined herein, which,
within the most recent 15 days: (A) is or has been held by the Fund, or (B) is being or has been considered by the Fund or its investment
adviser for purchase by the Fund, and (ii) any option to purchase or sell, and any security convertible into or exchangeable for, a security
described in (i) above. |
| (8) | “Unaffiliated Trustee” means a Trustee who is not made subject to the Franklin Code of Ethics
pursuant to Part I hereof. |
| B. | Prohibited Actions. No Covered Person, in connection with the purchase or sale, directly or indirectly,
by such Covered Person of a security held or to be acquired by the Fund, shall: |
| (1) | Employ any device, scheme or artifice to defraud the Fund; |
| (2) | Make any untrue statement of a material fact to the Fund or omit to state a material fact necessary in
order to make the statements made to the Fund, in light of the circumstances under which they are made, not misleading; |
| (3) | Engage in any act, practice or course of business that operates or would operate as a fraud or deceit
on the Fund; or |
| (4) | Engage in any manipulative practice with respect to the Fund. |
| (1) | Every Unaffiliated Trustee of a Fund shall file with the Funds’ Compliance Liaison a report containing
the information described in Section II-C(2) of this Code with respect to purchases or sales of any security in which such Unaffiliated
Trustee has, or by reason of such transaction acquires, any direct or indirect beneficial ownership, if such Trustee, at the time of that
transaction, knew or, in the ordinary course of fulfilling his or her official duties as a Trustee of the Fund, should have known that,
during the 15-day period immediately preceding or after the date of the transaction by the Trustee: |
| (a) | such security was or is to be purchased or sold by the Fund or |
| (b) | such security was or is being considered for purchase or sale by the Fund; |
provided, however, that
an Unaffiliated Trustee shall not be required to make a report with respect to transactions effected for any account over which such person
does not have any direct or indirect influence or control.
| (2) | Every report shall be made not later than 10 days after the end of the calendar quarter in which the transaction
to which the report relates was effected, and shall contain the following information: |
| (a) | The date of the transaction, the title, the number of shares, the interest rate and maturity date (if
applicable) and the principal amount of each security involved; |
| (b) | The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition); |
| (c) | The price at which the transaction was effected; |
| (d) | The name of the broker, dealer or bank with or through whom the transaction was effected; and |
| (e) | The date that the report is submitted by each Unaffiliated Trustee. |
| (3) | Any such report may contain a statement that the report shall not be construed as an admission by the
person making such report that he has any direct or indirect beneficial ownership in the security to which the report relates. |
| (4) | Notwithstanding anything to the contrary contained herein, an Unaffiliated Trustee who is an “interested
person” of the Funds shall file the reports required by Rule 17j-1(d)(1) under the Investment Company Act with the Funds’
Chief Compliance Officer. Such reports shall be reviewed by such Officer as provided in Section I-C(1) and any related violations shall
be reported to the Audit, Compliance and Risk Committee as provided in Section I-C(2). |
| (1) | The Compliance Liaison of the Funds, in consultation with the Funds’ Chief Compliance Officer, shall
cause the reported personal securities transactions that he receives pursuant to Section II-C(1) to be compared with completed and contemplated
portfolio transactions of the Funds to determine whether any prohibited action listed in Section II-B may have occurred. |
| (2) | Before making any determination that a violation of this Code has occurred, the Compliance Liaison shall
give the person involved an opportunity to supply additional information regarding the transaction in question. |
| E. | Sanctions. If the Compliance Liaison determines that a violation of this Code has occurred, he
shall so advise the Funds’ Audit, Compliance and Risk Committee, and provide the Committee with a report of the matter, including
any additional information supplied by such person. The Committee may impose such sanctions as it deems appropriate. |
| A. | Amendments to the Franklin Code of Ethics. Any amendment to the Franklin Code of Ethics shall be
deemed an amendment to Section 1-A of this Code effective 30 days after written notice of such amendment shall have been received by the
Chair of the Funds, unless the Trustees of the Funds expressly determine that such amendment shall become effective at an earlier or later
date or shall not be adopted or shall be adopted only in part. |
| B. | Records. The Funds shall maintain records in the manner and to the extent set forth below, which
records may be maintained in any manner permitted under the Investment Company Act and shall be available for examination by representatives
of the Securities and Exchange Commission. |
| (1) | A copy of this Code and any other code which is, or at any time within the past five years has been, in
effect shall be preserved in an easily accessible place; |
| (2) | A record of any violation of this Code and of any action taken as a result of such violation shall be
preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation
occurs; |
| (3) | A copy of each report made by an officer or Trustee pursuant to this Code shall be preserved for a period
of not less than five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place; |
| (4) | A list of all persons who are, or within the past five years have been, required to make reports pursuant
to this Code shall be maintained in an easily accessible place; and |
| (5) | To the extent any record required to be kept by this section is also required to be kept by pursuant to
the Franklin Code of Ethics, the Funds’ Chief Compliance Officer shall maintain or cause to be maintained such record on behalf
of the Funds as well. |
| C. | Confidentiality. All reports of securities transactions and any other information filed with any
Fund pursuant to this Code shall be treated as confidential, but are subject to review as provided herein and by personnel of the Securities
and Exchange Commission. |
| D. | Interpretation of Provisions. The Trustees may from time to time adopt such interpretations of
this Code as they deem appropriate. |
| E. | Delegation by Chair. The Chair of the Funds may from time to time delegate any or all of his or
her responsibilities under this Code, either generally or as to specific instances, to such officer or Trustee of the Funds as he or she
may designate. |
As revised June 28, 2024.
Putnam Master Intermedia... (NYSE:PIM)
Historical Stock Chart
From Nov 2024 to Dec 2024
Putnam Master Intermedia... (NYSE:PIM)
Historical Stock Chart
From Dec 2023 to Dec 2024