SecProbe.io

CORRESP
1
filename1.htm

   a_focusedeqcorresp.htm

Putnam
Investments

100 Federal Street

Boston, MA 02110

February 28, 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. 333-235893), filed with the
Securities and Exchange Commission (the “Commission”) on January 10, 2020 (the
“Registration Statement”), of Putnam Funds Trust (the “Registrant”), on behalf
of its series, Putnam Focused Equity Fund (the “Surviving Fund”)

Dear
Messrs. Scott and Long:

            This
letter responds to the comments that Mr. Long provided telephonically to Venice
Monagan of Putnam Investment Management, LLC (“Putnam Management”), investment
adviser to the Funds (as defined below), and Timothy Cormier and Yana D. Guss
of Ropes and Gray LLP, counsel to the Funds, on February 5, 2020 on behalf of
the staff of the Commission (the “Commission Staff”) regarding the Registration
Statement, and that Mr. Scott provided telephonically to Ms. Monagan and Mr.
Cormier on February 5, 2020 on behalf of the Commission Staff regarding the
Registration Statement. The Registration Statement relates to the merger of
each of Putnam Capital Spectrum Fund and Putnam Equity Spectrum Fund
(collectively, the “Acquired Funds”) with and into the Surviving Fund (the
Acquired Funds and the Surviving Fund 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 pre-effective amendment to the
Registration Statement to be filed on or around March 2, 2020.

General
Comments

1.      Comment:
Please amend the Registration Statement to include a delaying amendment in
accordance with Rule 473 under the Securities Act of 1933, as amended.

Response: The requested filing was made on February 5,
2020.

2.      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.

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

1

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

4.    Comment:
Under the heading “Agreement and Plan of Reorganization” in the “Information
about the Proposed Mergers” section of Part A of the Registration Statement
(the “prospectus/proxy statement”), please remove the language that states “The following discussion of the Plan is
qualified in its entirety by the full text of the Plan” since the summary of
the plan should be accurate without reference to the appendix.

Response: The Registrant confirms that the summary of
the Plan is accurate. The Registrant has revised the quoted language to read:
“The following discussion of the Plan is a summary provided for your reference
only.  Please read the Agreement in its entirety in Appendix A.”

5.    Comment:
In response to the question “How do the investment objectives, strategies,
policies, and restrictions of your fund and Putnam Focused Equity Fund
compare?” in the “Questions and Answers Regarding the Proposed Mergers”
section, please further highlight the differences between the Surviving Fund’s
and the Acquired Funds’ investment objectives, strategies, policies, and
restrictions.  Please make conforming changes throughout the Registration
Statement, where applicable.

Response: The Registrant has revised disclosure in the
above-referenced section as follows and has made similar conforming changes, as
applicable (additions shown as underlined and deletions shown as strike-through
text):

Both Putnam Capital Spectrum Fund and
Putnam Equity Spectrum Fund have identical or similar investment objectives and
similar investment strategies to Putnam Focused Equity Fund, with Putnam
Equity Spectrum Fund and Putnam Focused Equity Fund seeking capital
appreciation and Putnam Capital Spectrum Fund seeking total return.  Both
Putnam Capital Spectrum Fund and Putnam Equity Spectrum Fund have similar
investment strategies to Putnam Focused Equity Fund, as all three funds
employ an investment strategy focused on investing in a limited number of
issuers.  Each fund, however, there are some differences between
how the funds invest.  All three funds invests in equity
securities, with Putnam Equity Spectrum Fund and Putnam Capital Spectrum Fund
investing in equity securities of companies of any size and Putnam Focused
Equity Fund investing mainly in equity securities of large and midsize
companies.  Each of Putnam Equity Spectrum Fund and Putnam Focused Equity
Fund invests, under normal circumstances, at least 80% of its net assets in
equity investments, including common stocks, preferred stocks, convertible
securities, and warrants.  Putnam Focused Equity Fund, however, may
also consider investments in American Depositary Receipts (“ADRs”) and Global
Depositary Receipts (“GDRs”) towards its 80% investment policy.  Putnam
Capital Spectrum Fund may also invest to a significant extent in fixed-income
securities, although in recent years that has not been
the case.  Both Putnam Capital Spectrum Fund and Putnam Equity Spectrum
Fund expect to invest in companies that employ significant leverage in their
capital structure and may engage in short sales of securities, while Putnam
Focused Equity Fund does not have a stated investment strategy related to
leveraged companies or short sales of securities.

2

6.    Comment:
Please consider clarifying why the Trustees of each Acquired Fund considered
each merger to be in the best interests of the Acquired Fund’s shareholders
despite certain differences between the Surviving Fund’s and the Acquired
Fund’s investment strategies.

Response: The Registrant notes that, as disclosed in
the prospectus/proxy statement, the Acquired Funds’ Trustees considered the
similarities and differences in investment strategies between each Acquired
Fund and the Surviving Fund in determining that each merger was in the best
interests of the Acquired Fund’s shareholders.  The Trustees also considered,
as disclosed in the prospectus/proxy statement, Putnam Management’s
representation that each Acquired Fund’s shareholders may benefit from improved
performance following the completion of the mergers.  The Registrant has
revised the discussion to clarify that Putnam Management’s views as to the
potential improvements in performance were based on the employment of the
Surviving Fund’s investment strategy (as opposed to the investment strategy of
each Acquired Fund) over the long term.

7.   Comment:
Please disclose supplementally whether Putnam Management anticipates any
liquidity concerns in connection with the repositioning of each Acquired Fund’s
portfolio in advance of each merger, particularly in light of each Acquired
Fund’s investment strategy to focus its investments in a limited number of
issuers.

Response: The Registrant confirms that Putnam
Management has represented that it does not expect material liquidity issues in
connection with repositioning each Acquired Fund’s portfolio in advance of each
merger and that a significant percentage of each Acquired Fund’s larger
portfolio holdings are expected to be sold in the ordinary course by the
Acquired Funds’ portfolio manager in her day-to-day management of each Acquired
Fund.

8.   Comment:
Please confirm supplementally whether a fee waiver or expense limitation
agreement with Putnam Management impacted the fees and expenses reported for
the Funds in the prospectus/proxy statement and, if applicable, please disclose
the fee waiver or expense limitation agreement in the prospectus/proxy
statement.  Please also confirm supplementally whether any fee waiver or
expense limitation agreement in place for the Funds is subject to recoupment by
Putnam Management.

Response: The Registrant confirms that the Funds’ fees
and expenses reported in the prospectus/proxy statement were not impacted by a
fee waiver or expense limitation agreement with Putnam Management.  The
Registrant also confirms that recoupment is not permitted under any fee waiver
or expense limitation agreement currently in place for the Funds.

3

9.   Comment:
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
mergers?” in the “Questions and Answers Regarding the Proposed Mergers”
section, please consider simplifying the disclosure describing each Acquired
Fund’s performance fee adjustment.  Please also supplementally disclose whether
the Registrant expects there to be any outstanding performance fee adjustments
at the time of the mergers, and, if so, whether the outstanding amounts will be
a liability assumed by the Surviving Fund in connection with the mergers.  If
it is anticipated that there will be an outstanding performance fee adjustment
at the time of one or both of the mergers, please disclose that in the
prospectus/proxy statement.

Response: The Registrant has revised the introductory
sentence of the third paragraph of the above-referenced section as follows
(additions shown as underlined text):

The monthly base management fee described above for Putnam Capital
Spectrum Fund and Putnam Equity Spectrum Fund is increased or reduced by a performance
adjustment (as discussed further below, the performance adjustment for each
fund is increased or reduced based on the fund’s performance versus a specific
benchmark; in the case of Putnam Capital Spectrum Fund, the Capital Spectrum
Blended Index (defined below), and in the case of Putnam Equity Spectrum Fund,
the S&P 500 Index).

The Registrant confirms that it does not anticipate that there
will be any outstanding performance fee adjustments at the time of either
merger. Performance fee adjustments will be accrued through the merger date.
Any related asset or liability will transfer to the Surviving Fund in
connection with each merger.

10.  Comment: Please
consider adding additional disclosure regarding the Trustees’ consideration of
the anticipated higher expense ratio to be paid by each Acquired Fund’s
shareholders following the consummation of each merger.

Response: The Registrant confirms that, as disclosed
in the Registration Statement, the Trustees considered Putnam Management’s
representation that, following the completion of the mergers, shareholders of
each Acquired Fund would be invested in a larger fund with a total expense
ratio that would be higher, solely because the Acquired Funds’ current negative
performance fee adjustments would not apply to the Surviving Fund.  The
Registrant believes that the current disclosure in the Registration Statement
appropriately describes the Trustee’s consideration of the higher total expense
ratio and the reason why the total expense ratio would be higher, and makes it
clear that this was one of many factors considered by the Trustees in
connection with their ultimate determination that each merger was in the best
interests of each Acquired Fund.

11.  Comment: Because each
merger is not contingent on the consummation of the other, under the heading
“Annual Fund Operating Expenses (expenses you pay each year as a percentage of the value of your investment)” in the
section “Information about the Proposed Mergers,” please disclose pro forma
annual fund operating expense tables for the merger combination with the lowest
cost, highest cost, and most probable cost outcome.

4

Response: The Registrant has updated the disclosure to
include the requested pro forma annual fund operating expense tables.

12.  Comment: In the
section “Trustees’ Considerations Relating to the Proposed Mergers” in the
“Information about the Proposed Mergers” section, please clarify what is meant
by “unfavorable commercial prospects” in relation to the Acquired Funds.
Additionally, please consider disclosing whether either “unfavorable commercial
prospects for the Acquired Funds” or Putnam Management’s “ongoing financial
commitment as a result of the negative performance fee adjustments” weighed
more heavily in Putnam Management’s determination that the continued operation
of the Acquired Funds was not a sustainable ongoing financial arrangement.

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

Putnam Management informed the Trustees of the Acquired Funds that, given
the unfavorable commercial prospects for the Acquired Funds (i.e., a
lower likelihood that either Acquired Fund would be placed on additional
broker-dealer platforms for future sale) and the likely significant ongoing
financial commitment as a result of the negative performance fee adjustments,
it did not view the continued operation of the Acquired Funds as a sustainable
ongoing financial arrangement for it.

In addition, the Registrant notes Putnam Management’s
representation that it did not attribute more weight to either of the
above-referenced factors in determining that the continued operation of the
Acquired Funds was not a sustainable ongoing financial arrangement and,
therefore, does not believe that additional disclosure is necessary regarding
the consideration of these factors.

13.  Comment: In the
section “Trustees’ Considerations Relating to the Proposed Mergers” in the
“Information about the Proposed Mergers” section, as well as elsewhere in the
Registration Statement, it states that Putnam Equity Spectrum Fund and the
Surviving Fund each invests, under normal circumstances, at least 80% of its
net assets in equity investments.  Please supplementally confirm whether each
Fund is currently in compliance with that investment policy.  In addition,
please confirm whether Putnam Equity Spectrum Fund and the Surviving Fund were
in compliance with that policy when the Trustees were considering approval of
the mergers, and, if not, please consider disclosing whether the Trustees
considered either Fund’s non-compliance with the investment policy in the
course of their deliberations.

Response: The Registrant confirms that each of Putnam
Equity Spectrum Fund and the Surviving Fund  is currently in compliance with
the above-referenced investment policies and was in
compliance with those polices during the time when the Trustees were
considering approval of the mergers. However, in view of Putnam Management’s
determination in November 2019 to make changes in Putnam Equity Spectrum Fund’s
portfolio management team, anticipated portfolio composition changes, and
expectation of increased redemptions following public disclosure of the
portfolio management changes and the proposed merger, management of the fund’s
liquidity position was a key consideration during this period, particularly in
light of the concentrated nature of the fund’s portfolio. Consequently, at
times during the above-referenced period, Putnam Equity Spectrum Fund’s equity holdings
represented less than 80% of the fund’s net assets, with the remainder of the
fund’s assets held in cash, cash equivalents and other short-term investments
for the purpose of increasing the fund’s liquidity in light of the factors
discussed above, and Putnam Management concluded that “normal circumstances”
did not exist with respect to Putnam Equity Spectrum Fund during this period.
The Trustees have received multiple updates regarding the portfolio liquidity
of Putnam Equity Spectrum Fund in connection with their consideration of the
merger, including a discussion of the steps the fund was taking to manage
liquidity in light of the pending change in the fund’s portfolio management
team.

5

14.  Co