SecProbe.io

CORRESP
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   a_emecorresp.htm

   Putnam Investments

   100 Federal Street

   Boston, MA 02110

   February 19, 2020

Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Attn: Patrick Scott and Jeffrey Long

   Re:

   Comments on Registration Statement on Form N-14 (File No. 333-235895), filed with

   the Securities and Exchange Commission (the “Commission”) on January 10, 2020 (the

   “Registration Statement”), of Putnam Emerging Markets Equity Fund (the “Registrant”)

Dear Mr. Scott:

This letter responds to the comments that Mr. Scott provided telephonically on February 4, 2020 to Venice Monagan of Putnam Investment Management, LLC (“Putnam Management”), investment adviser to the Funds (as defined below), and Yana D. Guss of Ropes & Gray LLP, counsel to the Funds, and that Mr. Long provided telephonically on February 5, 2020 to Ms. Monagan and Tim Cormier and Ms. Guss of Ropes and Gray LLP, on behalf of the staff of the Commission (the “Commission Staff”) regarding the Registration Statement. The Registration Statement relates to the proposed merger of Putnam International Growth Fund (the “Acquired Fund”) with and into the Registrant (the Acquired Fund and the Registrant are collectively referred to as the “Funds”). For convenience of reference, I have summarized each of the Commission Staff’s comments before the Registrant’s response. The Commission Staff’s comments will be addressed in a filing pursuant to Rule 497 under the Securities Act of 1933, as amended, following the effective date of the Registration Statement.

General Comments

1. Comment: All information must be finalized with all brackets removed and all material information provided.

Response: The Registrant will provide all material information and remove all brackets.

2. Comment: Please consider identifying the Registrant as the “Acquiring Fund” to clarify throughout the Registration Statement that the Registrant is the acquiring fund.

Response: As requested, the Registrant has added references in several places making clear that the Registrant is the acquiring fund.

3. Comment: In the second paragraph of the “President’s Letter” to shareholders that precedes Part A of the Registration Statement, please add a sentence clarifying that the Registrant invests primarily in equity securities of emerging market companies, while the Acquired Fund invests mainly in the common stocks of established and emerging markets companies.

Response: The Registrant notes that this information is already included in the third and fourth sentences of this paragraph and respectfully declines to repeat this disclosure. These sentences state:

   Putnam International Growth Fund invests mainly in growth stocks of

   companies of any size in established and emerging markets outside the

   United States, while Putnam Emerging Markets Equity Fund invests in

   growth or value stocks or both of emerging market companies that

   Putnam Management believes have favorable investment potential.

   Under normal circumstances, Putnam Emerging Markets Equity Fund

   invests at least 80% of its net assets in equity securities of emerging

   market companies.

4. Comment: In the third paragraph of the President’s Letter, please reconcile the statement “Putnam Emerging Markets Equity Fund has a better performance record than Putnam International Growth Fund over the one-, three-, and five-year periods ended September 30, 2019” with the performance data provided as of December 31, 2019 for the Registrant and Acquired Fund on pages 11-12 in response to the question “How does the investment performance of the funds compare?” in the “Questions and Answers Regarding the Proposed Merger” section.

Response: The requested changes have been made. The Registrant has deleted the sentence referenced in the Commission Staff’s comment and revised the third paragraph of the President’s Letter to discuss performance data as of December 31, 2019, consistent with the data provided on pages 11-12 in response to the question “How does the investment performance of the funds compare? in the “Questions and Answers Regarding the Proposed Merger” section.

5. Comment: In the third paragraph of the President’s Letter, the Registrant states that “[f]ollowing the merger, Putnam International Growth Fund shareholders would be invested in a larger fund with a lower total expense ratio, subject to the application of the combined fund’s management fee performance adjustment, if any.” Please reconcile this statement with the data provided in the last paragraph in response to the question “How do the management fees and other expenses of the funds compare, and what are they estimated to be following the proposed merger?” in the “Questions and Answers Regarding the Proposed Merger” section.

Response: The Registrant has revised the disclosure in the above-referenced section and notes that this paragraph is now consistent with the applicable sentence in the third paragraph of the President’s Letter which states that Putnam International Growth Fund shareholders would be invested in a larger fund with a lower total expense ratio. As revised, the last paragraph will read as follows:

   As of November 30, 2019, the total annual fund operating expense ratio

   after expense reimbursement of Putnam International Growth Fund was

   1.37%. As of November 30, 2019, the total annual fund operating

   expense ratio after expense reimbursement of Putnam Emerging Markets

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   Equity Fund was 1.27%. The combined fund is expected to have a total

   annual operating expense ratio of 1.28% after expense reimbursement,

   which does not reflect non-recurring expenses related to the merger. For

   more detailed information about fees and expenses, please see

   “Information about the Proposed Merger -- Fees and Expenses.”

6. Comment: In response to the question “Why is the merger being proposed?” in the “Questions and Answers Regarding the Proposed Merger” section, please identify factors that may weigh against the merger, such as the change in portfolio manager, the significant portfolio repositioning anticipated in connection with the merger, and the possibility that the advisory fee may increase following the merger due to the application of a performance adjustment.

Response: The Registrant has added the following sentence in response to the question “Why is the merger being proposed?” in the “Questions and Answers Regarding the Proposed Merger” section:

   Putnam Management also considered that certain factors, including the change in portfolio manager, the

   significant portfolio repositioning anticipated in connection with the merger, and the possibility that the

   advisory fee may increase following the merger due to the application of a performance adjustment, may

   weigh against the merger.

7. Comment: In response to the question “Why is the merger being proposed?” in the “Questions and Answers Regarding the Proposed Merger” section, please clarify what constitutes “improved commercial and scale prospects.”

Response: The Registrant has revised the disclosure in the above-referenced section as follows (additions shown as underlined text):

   Putnam Management also believes that the combined fund would have improved commercial and scale

   prospects (i.e., an increased likelihood that Putnam Emerging Markets Equity Fund would be placed on

   additional broker-dealer platforms for future sale).

8. Comment: On page 6, in response to the question “Why is the merger being proposed?” in the “Questions and Answers Regarding the Proposed Merger” section, the Registration Statement states: “In addition, the proposed merger is expected to result in expense savings for Putnam International Growth Fund shareholders.” Please qualify this sentence, if it is possible that shareholders of the Acquired Fund may not experience expense savings following the application of a performance adjustment.

Response: The requested change has been made. The sentence will be revised as follows (changes shown as underlined text):

   In addition, the proposed merger is expected to result in expense savings for Putnam International Growth Fund

   shareholders, subject to the application of the combined fund’s management fee performance adjustment, if any.

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9. Comment: On page 9, in response to the question “How do the management fees and other expenses of the funds compare, and what are they estimated to be following the proposed merger?” in the “Questions and Answers Regarding the Proposed Merger” section, please clarify that the lower total expenses that Acquired Fund shareholders are expected to experience as a result of the merger are contingent on the Acquiring Fund’s performance fee adjustment, which would reduce the management fee if the Registrant fails to match the performance of its benchmark index. Please also confirm supplementally whether the Registrant is subject to a fee waiver or expense limitation agreement with Putnam Management. Please note that a fee waiver or expense limitation must exist for one year following the date of the Registration Statement in order to be included in the Registrant’s fee table.

Response: The Registrant respectfully notes that the discussion on page 9 in response to the question “How do the management fees and other expenses of the funds compare, and what are they estimated to be following the proposed merger?” states that:

   As a result of the performance adjustment, shareholders of Putnam International Growth Fund could pay more

   in management fees by investing in Putnam Emerging Markets Equity Fund than by investing in Putnam

   International Growth Fund when Putnam Emerging Markets Equity Fund outperforms its benchmark index

   by more than the amount Putnam International Growth Fund outperforms its benchmark index. Conversely,

   shareholders of  Putnam International Growth Fund could pay less in management fees by investing in

   Putnam Emerging Markets Equity Fund when Putnam Emerging Markets Equity Fund underperforms its

   benchmark index by more than the amount Putnam International Growth Fund underperforms its benchmark

   index.

The Registrant will add the following disclosure:

   Putnam Emerging Markets Equity Fund’s management contract will be amended such that, after completion

   of the merger, its performance adjustment will be calculated based on the combined assets of Putnam

   Emerging Markets Equity Fund and Putnam International Growth Fund for any portion of a performance

   period that precedes the merger, unless the use of the combined assets results in a fee payable by Putnam

   Emerging Markets Equity Fund under the amended management contract that is higher than the management

   fee that would have been paid under Putnam Emerging Markets Equity Fund’s current management contract.

   Under those circumstances, Putnam Management has agreed to reduce its management fee to reflect the

   lower amount that would have been payable based only on the assets of Putnam Emerging

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   Markets Equity Fund’s. As a result, after the merger, Putnam Emerging Markets Equity Fund shareholders

   may pay a lower management fee, but would never pay a higher management fee than they would have paid

    under the fund’s current management contract.

In connection with the inclusion of the above-referenced disclosure, the Registrant will make a POS-EX filing for the purpose of refiling the Registrant’s management contract, as amended.

The Registrant also confirms that the Registrant is subject to an expense limitation agreement with Putnam Management whereby Putnam Management is contractually obligated to limit certain fund expenses through February 28, 2021.

10. Comment: On page 9, in response to the question “How do the management fees and other expenses of the funds compare, and what are they estimated to be following the proposed merger?” in the “Questions and Answers Regarding the Proposed Merger” section, please clarify whether Acquired Fund shareholders will be subject to a higher base management fee following the merger.

Response: The Registrant respectfully notes that the third sentence of the second paragraph in response to the question “How do the management fees and other expenses of the funds compare, and what are they estimated to be following the proposed merger?” in the “Questions and Answers Regarding the Proposed Merger” section states that “At every asset level, Putnam Emerging Markets Equity Fund pays the same base management fee as a percentage of net assets as Putnam International Growth Fund.”

11. Comment: On page 9, in response to the question “How do the management fees and other expenses of the funds compare, and what are they estimated to be following the proposed merger?” in the “Questions and Answers Regarding the Proposed Merger” section, please clarify whether the Funds are subject to the same performance adjustment minimum and maximum rate and, if not, please so state.

Response: The Registrant confirms that the Funds are subject to the same performance adjustment. The Registrant notes that, on page 9, in response to the question “How do the management fees and other expenses of the funds compare, and what are they estimated to be following the proposed merger?” in the “Questions and Answers Regarding the Proposed Merger” section, the Registration Statement provides: “The maximum annualized performance adjustment rate for each Fund is 0.21%, and the minimum annualized performance adjustment rate for each Fund is -0.21%.”

12. Comment: On page 10, in response to the question “How do the management fees and other expenses of the funds compare, and what are they estimated to be following the proposed merger?” in the “Questions and Answers Regarding the Proposed Merger” section, please confirm whether the total expenses disclosed in the final paragraph are correct.

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Response: The Registrant has revised the disclosure in the above-referenced section as follows:

   As of November 30, 2019, the total annual fund operating expense ratio after expense reimbursement of

   Putnam International Growth Fund was 1.37%. As of November 30, 2019, the total annual fund operating

   expense ratio after expense reimbursement of Putnam Emerging Markets Equity Fund was 1.27%. The

   combined fund is expected to have a total annual operating expense ratio of 1.28% after expense

   reimbursement, which does not reflect non-recurring expenses related to the merger. For more detailed

   information about fees and expenses, please see “Information about the Proposed Merger -- Fees and

   Expenses.”

13. Comment: On page 15, in response to the question “What are the costs associated with the mergers?” in the “Questions and Answers Regarding the Proposed Mergers” section, please add disclosure stating that the costs provided do not include portfolio repositioning costs, including brokerage costs. To the extent significant portfolio repositioning is expected in connection with the merger, please also disclose who will bear the costs of portfolio repositioning, and the expected costs of portfolio repositioning in dollars and as a percentage of the net assets of the Acquired Fund.

Response: The requested changes have been made. The Registrant will revise the disclosure as follows (changes shown as underlined text):

   These costs represent legal and accounting expenses, portfolio transfer taxes (if any), the costs of printing and

    mailing this prospectus/proxy statement, proxy solicitation costs, SEC filing fees, and other similar expenses

   incurred in connection with the consummation of the proposed merger and related transactions contemplated

   by the Plan (but excluding portfolio repositioning costs and related brokerage costs).

The Registrant will add the following disclosure:

   If shareholders approve the proposed merger, Putnam Int