Putnam Allstate Advisor Preferred

Putnam High Yield Subaccount

The subaccount seeks high current income. Capital growth is a secondary goal when consistent with achieving high current income.

Fund description

The subaccount seeks high current income by investing principally in corporate bonds rated below investment grade. It offers the potential for higher income than investment-grade bond funds in exchange for the increased risk that accompanies high-yield bond investments. The subaccount is diversified across a range of industries and the management team conducts intensive research to select companies that appear capable of servicing their outstanding debt obligations.

Sales story

Seeking a high level of income for investorsIncome-focused: The portfolio managers strive for a higher level of income than most bonds offer by investing in higher-yielding, lower rated corporate bonds.Focus on performance: The managers can invest across a range of industries and companies, and can adjust the fund's holdings to capitalize on market opportunities.Leading research: The fund's managers, supported by Putnam's fixed-income research division, analyze a range of bonds to build a diversified portfolio.

Management team

Daily pricing as of 10/14/19

with optional enhanced death benefits
Unit Value $23.133311 $22.457907
Unit Value Change -0.003164 -0.003348

Lipper ranking ‡ as of 06/30/19

Category: High Yield Funds

  Percentile ranking Rank/Funds in category
10 yrs. 73% 54/73
1 yr. 70% 73/104
3 yrs. 61% 61/100
5 yrs. 63% 61/96

Maturity detail includes only cash bonds and cash equivalents.

Lower rated bonds may offer higher yields in return for more risk. Variable annuities are long-term investments designed for retirement purposes. Withdrawals prior to age 59 1/2 may be subject to a 10% IRS penalty.

Credit qualities are shown as a percentage of net assets. A bond rated Baa or higher (Prime-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor's, Moody's and Fitch. Short-term cash bonds rated A-1+ are included in the AAA-rating category. Ratings and portfolio credit quality will vary over time. Credit quality includes the fixed-income portion of the portfolio. Derivative instruments, including currency forwards, are only included to the extent of any unrealized gain or loss on such instruments and are shown in the not-rated category. Cash is also shown in the not-rated category. The fund itself has not been rated by an independent rating agency.

‡ Lipper is an industry research firm whose rankings are based on total return performance, vary over time, and do not reflect the effects of sales charges. Past performance is not indicative of future results.

Quick facts as of 06/30/19

Fiscal Year End December
Asset Class Putnam Allstate Advisor Preferred
Subaccount Status Open to new investors
Number of issues 514
Turnover (fiscal year end) 31%
Net Assets $187M
Inception Date 02/01/88

Performance

Performance as of 09/30/19

Annualized Performance Last Quarter Year
to Date
1 yr. 3 yrs. 5 yrs. 10 yrs. Life of
subaccount
Restated performance
Unit Value 0.88% 10.12% 3.81% 3.52% 2.65% 5.19% 5.46%
Standardized -1.12% 8.12% 1.81% 3.52% 2.65% 5.19% 5.46%
With optional enhanced death benefit
Unit Value 0.84% 10.00% 3.66% 3.36% 2.50% 5.03% 5.30%
Standardized -1.16% 8.00% 1.66% 3.36% 2.50% 5.03% 5.30%
Actual performance
Unit Value 0.88% 10.12% 3.81% 3.52% 2.65% 5.19% 4.50%
Standardized -1.12% 8.12% 1.81% 3.52% 2.65% 5.19% 4.50%
With optional enhanced death benefit
Unit Value 0.84% 10.00% 3.66% 3.36% 2.50% 5.03% 3.90%
Standardized -1.16% 8.00% 1.66% 3.36% 2.50% 5.03% 3.90%

Annual Performance at NAV

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
47.71% 12.16% 0.08% 14.09% 6.08% -0.12% -6.91% 13.65% 5.22% -5.66%
With optional enhanced death benefit
47.48% 11.99% -0.07% 13.92% 5.91% -0.27% -7.06% 13.47% 5.06% -5.80%

Restated performance

Monthly as of 09/30/19

Unit Value 0.18%
Standardized -1.82%

YTD as of 10/14/19

Unit Value 10.05%
Standardized 8.05%

With optional enhanced death benefit

Monthly as of 09/30/19

Unit Value 0.17%
Standardized -1.83%

YTD as of 10/14/19

Unit Value 9.92%
Standardized 7.92%

Unit values and performance information shown apply to the specific annuity product listed, not the underlying Putnam Variable Trust fund. This information should not be used by investors who hold an interest in Putnam Variable Trust funds through a different annuity or other variable product. The unit values and performance of other variable products that offer Putnam Variable Trust funds may be higher or lower due to product charges and expenses or other factors.

Data is historical. Past performance is no guarantee of future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your units.

Returns shown for the subaccounts for periods before their inception are derived from the historical performance of the underlying fund, adjusted to reflect the mortality, expense risk, and surrender charges applicable to this product and do not factor in the annual $30 contract maintenance fee. Additional riders and options for insurance-related charges will increase expenses and lower returns. Please see the prospectus for details. For a portion of the period, subaccounts may have limited expenses, without which returns would have been lower.

Variable annuities are long-term investments designed for retirement purposes. Putnam Capital Manager products are flexible-premium variable annuities held by Talcott Resolution Life, Inc., Simsbury, CT.

Putnam Allstate variable annuities are flexible-premium deferred variable annuities issued by Allstate Life Insurance Company (Allstate Life); underwritten by Allstate Distributors, L.L.C., both of Northbrook, IL; and sold through registered representatives or bank employees who are licensed insurance agents. Please check for availability in your specific state.

These policies have limitations and are sold by prospectus only. The prospectus contains details on the variable annuity, the subaccounts, contract features, fees, expenses, and other pertinent information.

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus containing this and other information for any variable annuity or variable life product that invests in Putnam Variable Trust funds, contact your financial advisor for a contract prospectus and prospectus for the underlying funds. You may also call Talcott Resolution at 1-800-521-0538 or Allstate at 1-800-390-1277. Read the prospectuses carefully before investing.

For the most recent month-end performance, please call Talcott Resolution at 1-800-521-0538 or Allstate at 1-800-390-1277.

Maturity detail includes only cash bonds and cash equivalents.

Lower rated bonds may offer higher yields in return for more risk. Variable annuities are long-term investments designed for retirement purposes. Withdrawals prior to age 59 1/2 may be subject to a 10% IRS penalty.

Credit qualities are shown as a percentage of net assets. A bond rated Baa or higher (Prime-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor's, Moody's and Fitch. Short-term cash bonds rated A-1+ are included in the AAA-rating category. Ratings and portfolio credit quality will vary over time. Credit quality includes the fixed-income portion of the portfolio. Derivative instruments, including currency forwards, are only included to the extent of any unrealized gain or loss on such instruments and are shown in the not-rated category. Cash is also shown in the not-rated category. The fund itself has not been rated by an independent rating agency.

Lipper is an industry research firm whose rankings are based on total return performance, vary over time, and do not reflect the effects of sales charges. Past performance is not indicative of future results.

Risk Characteristics as of 06/30/19

Avg. Eff. Maturity 4.11
Avg. Eff. Duration 3.13
Avg. Coupon 5.99
Avg. Yield to Maturity 5.74
Alpha (%) --
Beta 1.03
R Squared 0.98
Standard Deviation (3 yrs.) 4.50

Maturity Details

0 to 1 yr. 17.34%
1 to 5 yrs. 51.03%
5 to 10 yrs. 27.74%
10 to 15 yrs. 2.20%
Over 15 yrs. 1.69%

Quality Ratings

A 0.22%
BBB 8.51%
BB 41.42%
B 32.34%
CCC and Below 9.23%
Not Rated 1.98%
Net cash 6.30%

Holdings

Top 10 holdings as of 06/30/19

Bausch Health 2.05%
Sprint Communications 1.85%
Altice USA 1.85%
Charter Communications 1.68%
Ally Financial 1.21%
Community Health Systems 1.12%
T-Mobile 0.94%
Tenet Healthcare 0.93%
DELL Technologies 0.86%
Intelsat 0.86%
Top 10 holdings, total: 13.35%

Prior top 10 holdings

Top 10 holdings as of 06/30/19
1: Bausch Health 2.05%
2: Sprint Communications 1.85%
3: Altice USA 1.85%
4: Charter Communications 1.68%
5: Ally Financial 1.21%
6: Community Health Systems 1.12%
7: T-Mobile 0.94%
8: Tenet Healthcare 0.93%
9: DELL Technologies 0.86%
10: Intelsat 0.86%
Holdings represent 13.35% of portfolio
Top 10 holdings as of 05/31/19
1: Bausch Health 2.07%
2: Sprint Communications 1.92%
3: Altice USA 1.90%
4: Charter Communications 1.62%
5: Altice Numericable 1.23%
6: Ally Financial 1.21%
7: Community Health Systems 1.15%
8: T-Mobile 0.96%
9: DELL Technologies 0.91%
10: Intelsat 0.90%
Holdings represent 13.87% of portfolio
Top 10 holdings as of 04/30/19
1: Bausch Health 1.97%
2: Altice USA 1.83%
3: Sprint Communications 1.76%
4: Charter Communications 1.40%
5: Ally Financial 1.19%
6: Community Health Systems 1.10%
7: Altice Numericable 1.01%
8: T-Mobile 0.92%
9: Intelsat 0.89%
10: Navistar International 0.88%
Holdings represent 12.95% of portfolio
Top 10 holdings as of 03/31/19
1: Bausch Health 1.98%
2: Cequel Communications 1.85%
3: Sprint Communications 1.78%
4: Charter Communications 1.41%
5: Ally Financial 1.19%
6: Community Health 1.10%
7: Altice Numericable 0.99%
8: T-Mobile 0.91%
9: Navistar International 0.88%
10: Intelsat 0.86%
Holdings represent 12.95% of portfolio

Sector Weightings as of 06/30/19

Cash Investment Non-Cash Investment Total Portfolio
Weight Spread Duration Weight Spread Duration Weight Spread Duration
High-yield corporate bonds 76.51% 2.44 0.00% 0.00 76.51% 2.44
Investment-grade corporate bonds 8.13% 0.46 0.00% 0.00 8.13% 0.46
Net cash 6.30% 0.00 0.00% 0.00 6.30% 0.00
Bank loans 5.04% 0.21 0.00% 0.00 5.04% 0.21
Equity investments 1.46% 0.00 0.00% 0.00 1.46% 0.00
Emerging-market bonds 1.16% 0.04 0.00% 0.00 1.16% 0.04
Convertible securities 0.96% 0.01 0.00% 0.00 0.96% 0.01
International Treasury/agency 0.44% 0.03 0.00% 0.00 0.44% 0.03

Spread duration is displayed in years and reflects the contribution by sector to the portfolio's total spread duration with the exception of the Treasury and Interest-rate swap sectors where effective duration is displayed. Spread duration estimates the price sensitivity of a specific sector or asset class to a 100 basis-point movement, 1%, (either widening or narrowing) in its yield spread relative to Treasuries. Effective duration provides a measure of a portfolio's interest-rate sensitivity. The longer a portfolio's duration, the more sensitive the portfolio is to shifts in the interest rates. Allocations may not total 100% of net assets because the table includes the notional value of derivatives (the economic value for purposes of calculating periodic payment obligations), in addition to the market value of securities.

Portfolio allocations will vary over time. The unclassified sector (where applicable) includes exchange traded funds and other securities not able to be classified by sector.

Maturity detail includes only cash bonds and cash equivalents.

Lower rated bonds may offer higher yields in return for more risk. Variable annuities are long-term investments designed for retirement purposes. Withdrawals prior to age 59 1/2 may be subject to a 10% IRS penalty.

Credit qualities are shown as a percentage of net assets. A bond rated Baa or higher (Prime-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor's, Moody's and Fitch. Short-term cash bonds rated A-1+ are included in the AAA-rating category. Ratings and portfolio credit quality will vary over time. Credit quality includes the fixed-income portion of the portfolio. Derivative instruments, including currency forwards, are only included to the extent of any unrealized gain or loss on such instruments and are shown in the not-rated category. Cash is also shown in the not-rated category. The fund itself has not been rated by an independent rating agency.

Top Industry Sectors as of 06/30/19

Consumer cyclicals 18.92%
Communication services 12.78%
Basic materials 11.84%
Energy 11.28%
Financials 9.39%
Health care 8.67%
Capital goods 7.27%
Net Cash 6.30%
Consumer staples 5.18%
 
Other
8.37%
Technology 5.06%
Utilities 3.05%
Transportation 0.26%

Country Allocation as of 06/30/19

United States 84.55%
Canada 5.26%
United Kingdom 1.75%
Luxembourg 1.52%
France 1.39%
Ireland 1.20%
Netherlands 1.07%
Switzerland 0.72%
Mexico 0.46%
 
Other
2.08%
Bermuda 0.45%
Norway 0.44%
Israel 0.39%
Indonesia 0.32%
Cayman Islands 0.27%
Germany 0.11%
Jamaica 0.10%

Expenses

Sales Charges/Fees

Breakpoint Sales Charge Dealer Allowance CDSC Liab
$0 - $0 0.00% 0.00% N

Maturity detail includes only cash bonds and cash equivalents.

Lower rated bonds may offer higher yields in return for more risk. Variable annuities are long-term investments designed for retirement purposes. Withdrawals prior to age 59 1/2 may be subject to a 10% IRS penalty.

Credit qualities are shown as a percentage of net assets. A bond rated Baa or higher (Prime-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor's, Moody's and Fitch. Short-term cash bonds rated A-1+ are included in the AAA-rating category. Ratings and portfolio credit quality will vary over time. Credit quality includes the fixed-income portion of the portfolio. Derivative instruments, including currency forwards, are only included to the extent of any unrealized gain or loss on such instruments and are shown in the not-rated category. Cash is also shown in the not-rated category. The fund itself has not been rated by an independent rating agency.

‡ Lipper is an industry research firm whose rankings are based on total return performance, vary over time, and do not reflect the effects of sales charges. Past performance is not indicative of future results.

CDSC

Year Percent
1 2.00%
2 1.00%
3+ 0.00%