PUTNAM TAX EXEMPT MONEY MARKET FUND
N14EL24/A, 1994-04-05
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          AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
                                   APRIL 5, 1994                 

                         REGISTRATION NO. 33-15238
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C.  20549
                                             

                                 FORM N-14

          REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                       PRE-EFFECTIVE AMENDMENT NO. 1
                                             

                    PUTNAM TAX EXEMPT MONEY MARKET FUND
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

           ONE POST OFFICE SQUARE, BOSTON, MASSACHUSETTS  02109
                 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                               617-292-1000
                     (AREA CODE AND TELEPHONE NUMBER)
                                             

                      JOHN R. VERANI, VICE PRESIDENT
                    PUTNAM TAX EXEMPT MONEY MARKET FUND
                          ONE POST OFFICE SQUARE
                       BOSTON, MASSACHUSETTS  02109
                  (NAME AND ADDRESS OF AGENT FOR SERVICE)
                                             

                                 COPY TO:

                        JOHN W. GERSTMAYR, ESQUIRE
                               ROPES & GRAY
                          ONE INTERNATIONAL PLACE
                       BOSTON, MASSACHUSETTS  02110

     APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:  AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

       

     AN INDEFINITE AMOUNT OF THE REGISTRANT'S SECURITIES HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-
2 UNDER THE INVESTMENT COMPANY ACT OF 1940.  IN RELIANCE UPON
SUCH RULE, NO FILING FEE IS BEING PAID AT THIS TIME.  A RULE 24F-
2 NOTICE FOR THE REGISTRANT FOR THE YEAR ENDED SEPTEMBER 30, 1993
WAS FILED ON NOVEMBER 29, 1993.<PAGE>
                           CROSS-REFERENCE SHEET


FORM N-14 ITEM      CAPTION IN PROSPECTUS/PROXY STATEMENT OF
                    CALIFORNIA TAX EXEMPT MONEY MARKET FUND AND
                    NEW YORK TAX EXEMPT MONEY MARKET FUND (PART
                    A)

  1                 CROSS-REFERENCE SHEET;
                    FRONT COVER

  2                 FRONT COVER

  3                 SYNOPSIS; RISK FACTORS

  4                 INTRODUCTION; PROPOSAL REGARDING APPROVAL OR
                    DISAPPROVAL OF AGREEMENT AND PLAN OF
                    REORGANIZATION; BACKGROUND AND REASONS FOR
                    THE PROPOSED REORGANIZATION; INFORMATION
                    ABOUT THE REORGANIZATION

5, 6                FRONT COVER -- INCORPORATED BY REFERENCE TO
                    SPECIFIED DOCUMENTS

  7                 INTRODUCTION; PROPOSAL REGARDING APPROVAL OR
                    DISAPPROVAL OF AGREEMENT AND PLAN OF
                    REORGANIZATION; INFORMATION ABOUT THE
                    REORGANIZATION; VOTING INFORMATION

  8, 9              NOT APPLICABLE

FORM N-14 ITEM      CAPTION IN STATEMENT OF ADDITIONAL
                    INFORMATION (PART B)              

  10, 11            COVER PAGE

  12                NOT APPLICABLE

  13                COVER PAGE -- INCORPORATED BY REFERENCE TO
                    SPECIFIED DOCUMENTS

  14                INDEPENDENT ACCOUNTANTS AND FINANCIAL
                    STATEMENTS

PART C

THE INFORMATION REQUIRED TO BE INCLUDED IN PART C IS SET FORTH
UNDER THE APPROPRIATE ITEM, SO NUMBERED, IN PART C TO THIS
REGISTRATION STATEMENT.
<PAGE>

              PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND 

                          ONE POST OFFICE SQUARE

                        BOSTON, MASSACHUSETTS 02109


                                                           APRIL 13  , 1994


TO THE SHAREHOLDERS:

     ENCLOSED YOU WILL FIND SEVERAL DOCUMENTS BEING FURNISHED TO
YOU IN CONNECTION WITH A MEETING OF PUTNAM CALIFORNIA TAX EXEMPT
MONEY MARKET FUND (THE "CALIFORNIA FUND") SHAREHOLDERS TO BE HELD
        JUNE 2, 1994 AT 1:00 P.M. IN BOSTON, MASSACHUSETTS.  I
HOPE THIS MATERIAL WILL RECEIVE YOUR IMMEDIATE ATTENTION AND
THAT, IF YOU CANNOT ATTEND THE MEETING IN PERSON, YOU WILL VOTE
YOUR PROXY PROMPTLY.

     THE TRUSTEES OF         THE CALIFORNIA         FUND ARE
RECOMMENDING THAT SHAREHOLDERS APPROVE A REORGANIZATION OF THE
CALIFORNIA FUND IN WHICH YOUR SHARES OF THE CALIFORNIA FUND
        WOULD, IN EFFECT, BE EXCHANGED AT NET ASSET VALUE FOR
SHARES OF PUTNAM TAX EXEMPT MONEY MARKET FUND (THE "MONEY MARKET
FUND").  UNDER THE PROPOSED PLAN OF REORGANIZATION, THE
CALIFORNIA FUND WILL TRANSFER ALL OF ITS ASSETS TO THE MONEY
MARKET FUND IN RETURN FOR SHARES OF THE MONEY MARKET FUND AND THE
ASSUMPTION BY THE MONEY MARKET FUND OF ALL OF THE LIABILITIES OF
THE CALIFORNIA FUND.  AFTER THE TRANSFER, THE SHARES OF THE MONEY
MARKET FUND WILL BE DISTRIBUTED TO HOLDERS OF CALIFORNIA FUND
SHARES THEREBY LIQUIDATING THE CALIFORNIA FUND.          BOTH
FUNDS ARE MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC. ("PUTNAM
MANAGEMENT") AND HAVE THE SAME TRUSTEES.  YOU SHOULD NOTE THAT A
SIMILAR REORGANIZATION INVOLVING PUTNAM NEW YORK TAX EXEMPT MONEY
MARKET FUND (THE "NEW YORK FUND") AND THE MONEY MARKET FUND IS
CONCURRENTLY BEING SUBMITTED TO THE SHAREHOLDERS OF THE NEW YORK
FUND.

     EACH FUND SEEKS AS HIGH A LEVEL OF CURRENT INCOME EXEMPT
FROM FEDERAL INCOME TAX (AND, IN THE CASE OF THE CALIFORNIA FUND,
EXEMPT FROM CALIFORNIA INCOME TAX) AS PUTNAM MANAGEMENT BELIEVES
IS CONSISTENT WITH MAINTENANCE OF LIQUIDITY AND STABILITY OF
PRINCIPAL.  THE PRINCIPAL DIFFERENCE BETWEEN THE FUNDS IS THAT
THE CALIFORNIA FUND NORMALLY INVESTS IN         TAX-EXEMPT
SECURITIES OF CALIFORNIA ISSUERS WHILE THE MONEY MARKET FUND
NORMALLY INVESTS IN         TAX-EXEMPT SECURITIES OF ISSUERS
LOCATED IN         VARIOUS STATES (INCLUDING THE DISTRICT OF
COLUMBIA).  BECAUSE OF THE SIMILARITIES BETWEEN THE FUNDS, THE
PROPOSED REORGANIZATION WILL NOT AFFECT THE GENERAL STRATEGY OR
STYLE IN WHICH THE PORTFOLIO MANAGER WILL MANAGE YOUR INVESTMENT. 
SHAREHOLDERS SHOULD RECOGNIZE, HOWEVER, THAT INCOME DISTRIBUTIONS
RECEIVED BY THEM ON SHARES OF THE MONEY MARKET FUND FOLLOWING THE
REORGANIZATION WILL NOT        BE EXEMPT FROM CALIFORNIA INCOME
TAX.

     PUTNAM MANAGEMENT BELIEVES THAT COMBINING YOUR FUND WITH THE
MONEY MARKET FUND OFFERS SHAREHOLDERS OF THE CALIFORNIA FUND AN
OPPORTUNITY TO PURSUE A SIMILAR INVESTMENT OBJECTIVE WITH GREATER
ECONOMIES OF SCALE THAT, OVER THE LONGER TERM, WILL RESULT IN
LOWER OPERATING EXPENSE RATIOS.  FURTHER, PUTNAM MANAGEMENT IS
CONCERNED THAT IF CURRENT TRENDS IN THE FUND'S NET ASSET LEVELS
CONTINUE, THE CALIFORNIA FUND MIGHT SOON BE BURDENED WITH AN
UNECONOMICALLY HIGH EXPENSE RATIO.

YOUR TRUSTEES BELIEVE THAT THE PROPOSED COMBINATION WITH THE
MONEY MARKET FUND IS IN THE BEST INTERESTS OF SHAREHOLDERS AND
RECOMMEND THAT YOU VOTE IN FAVOR OF IT.

     THE NOTICE OF MEETING OF SHAREHOLDERS AND THE ACCOMPANYING
PROSPECTUS/PROXY STATEMENT AND FORM OF PROXY ARE ENCLOSED. 
PLEASE READ THEM CAREFULLY.  IF YOU ARE UNABLE TO ATTEND THE
MEETING IN PERSON, WE URGE YOU TO SIGN, DATE        AND RETURN
THE PROXY CARD SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE
WITH YOUR INSTRUCTIONS.

     SINCE THE MEETING IS LESS THAN EIGHT WEEKS AWAY, I URGE YOU
TO GIVE THE ENCLOSED MATERIAL YOUR PROMPT ATTENTION SO THAT YOUR
FUND WILL NOT HAVE TO INCUR THE EXPENSE OF ADDITIONAL MAILINGS.

                              SINCERELY YOURS,



                              GEORGE PUTNAM
                              CHAIRMAN<PAGE>


              PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND

                     NOTICE OF MEETING OF SHAREHOLDERS

TO THE SHAREHOLDERS OF PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET
FUND

     NOTICE IS HEREBY GIVEN THAT A MEETING OF SHAREHOLDERS (THE
"MEETING") OF PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND (THE
"FUND" OR THE "CALIFORNIA FUND") WILL BE HELD AT ONE POST OFFICE
SQUARE, 8TH FLOOR, BOSTON, MASSACHUSETTS, ON         JUNE 2,
1994, AT 1:00         P.M., BOSTON TIME, FOR THE FOLLOWING
PURPOSES:

     1.   TO CONSIDER AND ACT UPON AN AGREEMENT AND PLAN OF
          REORGANIZATION PROVIDING FOR THE TRANSFER OF ALL OF THE
          ASSETS OF THE FUND TO PUTNAM TAX EXEMPT MONEY MARKET
          FUND (THE "MONEY MARKET FUND") IN EXCHANGE FOR SHARES
          OF THE MONEY MARKET FUND AND THE ASSUMPTION BY THE
          MONEY MARKET FUND OF ALL OF THE LIABILITIES OF THE
          FUND, AND THE DISTRIBUTION OF SUCH SHARES TO THE
          SHAREHOLDERS OF THE FUND IN LIQUIDATION OF THE FUND;
          AND

     2.   TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME
          BEFORE THE MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS
          THEREOF.

     THE TRUSTEES HAVE FIXED THE CLOSE OF BUSINESS ON
MARCH         11, 1994 AS THE RECORD DATE FOR DETERMINATION OF
SHAREHOLDERS ENTITLED TO NOTICE OF, AND TO VOTE AT, THE MEETING.

     EACH SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND IN PERSON IS
REQUESTED TO DATE, FILL IN, SIGN        AND RETURN PROMPTLY THE
ENCLOSED FORM OF PROXY.

                                   BY THE TRUSTEES


          GEORGE PUTNAM, CHAIRMAN
          WILLIAM F. POUNDS, VICE CHAIRMAN                  
          JAMESON ADKINS BAXTER              ROBERT E. PATTERSON
          HANS H. ESTIN                      DONALD S. PERKINS
          JOHN A. HILL                       GEORGE PUTNAM, III
          ELIZABETH T. KENNAN                A.J.C. SMITH   
                  LAWRENCE J. LASSER                   W.
  NICHOLAS THORNDIKE
                              
                                             
  
  BOSTON, MASSACHUSETTS
  APRIL 13, 1994
  
     YOUR PROMPT ATTENTION TO THE ENCLOSED FORM OF PROXY WILL
    HELP TO AVOID THE EXPENSE OF ADDITIONAL MAILINGS.<PAGE>
  PROSPECTUS/PROXY STATEMENT
  
          APRIL 6  , 1994
  
  ACQUISITION OF THE ASSETS OF
  
  PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND 
  ONE POST OFFICE SQUARE
  BOSTON, MASSACHUSETTS  02109
  (617) 292-1000
  
  BY AND IN EXCHANGE FOR SHARES OF
  
  PUTNAM TAX EXEMPT MONEY MARKET FUND
  ONE POST OFFICE SQUARE
  BOSTON, MASSACHUSETTS  02109
  (617) 292-1000
  
                           TABLE OF CONTENTS
  
  SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
         
  RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . .   
         
  INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . .           
  
  PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF
    AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . .           
  
  BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION . .           
  INFORMATION ABOUT THE REORGANIZATION . . . . . . . . . . . . . . .   
         
  VOTING INFORMATION . . . . . . . . . . . . . . . . . . . .           
  
  AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . .EXHIBIT A
  
     AN INVESTMENT IN THE MONEY MARKET FUND IS NEITHER
  INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.  THERE CAN BE
  NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE
  NET ASSET VALUE OF $1.00 PER SHARE.
  
     THIS PROSPECTUS/PROXY STATEMENT RELATES TO THE PROPOSED
  TRANSFER OF ALL OF THE ASSETS OF PUTNAM CALIFORNIA TAX EXEMPT 
  MONEY MARKET FUND (THE "CALIFORNIA FUND") TO PUTNAM TAX
  EXEMPT MONEY MARKET FUND (THE "MONEY MARKET FUND") IN
  EXCHANGE FOR SHARES OF BENEFICIAL INTEREST OF THE MONEY
  MARKET FUND (THE "MONEY MARKET FUND SHARES") AND THE
  ASSUMPTION BY THE MONEY MARKET FUND OF ALL OF THE LIABILITIES
  OF THE CALIFORNIA FUND.  (THE MONEY MARKET FUND AND THE
  CALIFORNIA FUND ARE COLLECTIVELY REFERRED TO HEREIN AS THE
  "FUNDS", AND EACH IS REFERRED TO INDIVIDUALLY AS A "FUND"). 
  FOLLOWING THE TRANSFER, THE MONEY MARKET FUND SHARES RECEIVED
  BY THE CALIFORNIA FUND WILL BE DISTRIBUTED TO SHAREHOLDERS OF
  THE CALIFORNIA FUND IN LIQUIDATION OF THE CALIFORNIA FUND. 
  AS A RESULT OF THE PROPOSED TRANSACTION, EACH SHAREHOLDER OF
  THE CALIFORNIA FUND WILL RECEIVE, SUBJECT TO ANY APPLICABLE
  STATE AND FEDERAL TAXES, A NUMBER OF FULL AND FRACTIONAL
  MONEY MARKET FUND SHARES EQUAL IN VALUE AT THE DATE OF THE
  EXCHANGE TO THE AGGREGATE VALUE OF THE SHARES OF THE
  CALIFORNIA FUND HELD BY THE SHAREHOLDER.
  
     CALIFORNIA FUND SHAREHOLDERS SHOULD NOTE THAT A
  VIRTUALLY IDENTICAL REORGANIZATION INVOLVING THE ACQUISITION
  OF THE ASSETS OF PUTNAM NEW YORK TAX EXEMPT MONEY FUND (THE
  "NEW YORK FUND") BY THE MONEY MARKET FUND IS CONCURRENTLY
  BEING SUBMITTED FOR THE APPROVAL OF THE SHAREHOLDERS OF THE
  NEW YORK FUND.  THE REORGANIZATION INVOLVING THE CALIFORNIA
  FUND IS NOT IN ANY WAY CONTINGENT UPON THE COMPLETION OF THE
  REORGANIZATION INVOLVING THE NEW YORK FUND.
     
     This Prospectus/Proxy Statement explains concisely what
  you should know before investing in the Money Market Fund. 
  Please read it and keep it for future reference.  This
  Prospectus/Proxy Statement is accompanied by the Prospectus,
  dated February 1, 1994, of the Money Market Fund which
  contains information about the Money Market Fund and is
  incorporated into this Prospectus/Proxy Statement by
  reference.
  
     The following documents have been filed with the
  Securities and Exchange Commission and are also incorporated
  into this Prospectus/Proxy Statement by reference:  (i) the
  current Statement of Additional Information of the Money
  Market Fund, dated February 1, 1994,        (ii) the current
  Prospectus and Statement of Additional Information of the
  California Fund, each dated February 1, 1994        and (iii)
  a Statement of Additional Information dated         April 6,
  1994 relating to the transactions described in this
  Prospectus/Proxy Statement        .  For a free copy of any
  or all of these Prospectuses or Statements of Additional
  Information, call Putnam Investor Services at 1-800-225-1581. 
          Proxy materials, information statements and other
  information filed by the registrant can be inspected and
  copied at the Public Reference Facilities maintained by the
  Securities and Exchange Commission at 450 Fifth Street, N.W.,
  Washington, D.C. 20549.  Copies of such material can also be
  obtained from the Public Reference Branch, Office of Consumer
  Affairs and Information Services, Securities and Exchange
  Commission, Washington, D.C. 20549 at prescribed rates.
  
     THE SECURITIES OFFERED BY THE ACCOMPANYING
  PROSPECTUS/PROXY STATEMENT HAVE NOT BEEN APPROVED OR
  DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
  STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
  UPON THE ACCURACY OR ADEQUACY OF SUCH PROSPECTUS/PROXY
  STATEMENT.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
  OFFENSE.
  
  SHARES OF THE MONEY MARKET FUND ARE NOT DEPOSITS OR
  OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY FINANCIAL
  INSTITUTION        , ARE NOT INSURED BY THE FEDERAL DEPOSIT
  INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
  AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF
    PRINCIPAL.<PAGE>
                               SYNOPSIS
             PROPOSED TRANSACTION.  The Trustees of the
  California Fund have approved an Agreement and Plan of
  Reorganization providing for the transfer of all of the
  assets of the California Fund to the Money Market Fund in
  exchange for the assumption by the Money Market Fund of all
  of the liabilities of the California Fund and for a number of
  Money Market Fund Shares equal in value to the value of the
  net assets of the California Fund transferred to the Money
  Market Fund.  Following the transfer, the California Fund
  will distribute the Money Market Fund Shares received by it
  to its shareholders of record, in complete liquidation of the
  California Fund.  A small amount of gain or loss         may
  be recognized for federal income tax purposes by the
  California Fund and its shareholders as a result of the
  reorganization.          See "Information About the
  Reorganization -- Federal Income Tax Consequences." 
             For the reasons set forth below under
  "Background and Reasons for the Proposed Reorganization", the
  Funds' Trustees, including the Trustees who are not
  interested persons of either Fund (the "Independent
  Trustees"), have concluded that (i) the interests of the
  Funds' existing shareholders will not be diluted as a result
  of the transactions contemplated by the reorganization and
  that (ii) the reorganization would be in the best interests
  of the Funds' shareholders        .  The Trustees recommend
  approval of the reorganization.  The Money Market Fund and
  the California Fund have the same Trustees.
     In addition, the Trustees of the Putnam New York Tax
  Exempt Money Market Fund (the "New York Fund"), which are
  also the Trustees of the Funds, have approved a        
  similar reorganization of the Money Market Fund and the New
  York Fund (also sometimes referred to as a "Fund") which is
  concurrently being submitted for the approval of the
  shareholders of the New York Fund.  As a result of this
  additional proposed reorganization, this Prospectus/Proxy
  Statement in certain sections describes the consequences of
  combining the assets of all three Funds on a pro-forma basis. 
  However, the reorganization is not in any way contingent upon
  the completion of the reorganization involving The New York
  Fund.
     CERTAIN TAX CONSEQUENCES RELATING TO THE REORGANIZATION. 
  The reorganization is expected to be a taxable transaction
  for the California Fund and its shareholders.  As a result,
  California Fund shareholders acquiring Money Market Fund
  shares in the transaction may realize a small amount of
  taxable gain which will be reflected in their distribution
  for the month in which the reorganization occurs.  See
  "Information About the Reorganization -- Federal Income Tax
  Consequences."  In addition, following the reorganization,
  California Fund shareholders will receive distributions with
  respect to their Money Market Fund shares which are not
  exempt from California State income tax.
     INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
         .  The California Fund and the Money Market Fund are
  both         money market funds with similar investment
  objectives and similar investment policies except as
  described below.  Each Fund seeks as high a level of current
  income exempt from federal income tax (and, in the case of
  the California Fund,         from California         State
  tax) as Putnam Management believes is consistent with
  maintenance of liquidity and stability of principal.  The
  California Fund primarily invests in short-term, high
  quality, California Tax Exempt Securities (as defined below). 
  It is a fundamental policy of the California Fund that at
  least 90% of the Fund's income distributions normally will be
  exempt from both federal and California personal income tax. 
  The Money Market Fund follows the fundamental policy of
  normally investing at least 80% of its assets in short-term
  "Tax Exempt Securities".  Although the Funds have adopted
  slightly different percentage policies with respect to
  investment in securities generating income which is exempt
  from federal income tax (and California State income tax in
  the case of the California Fund), in practice each Fund is
  managed such that all of its income distributions ordinarily
  will be exempt from federal income tax (and California State
  income tax in the case of the California Fund). 
     "Tax Exempt Securities" are debt obligations issued by a
  state (including the District of Columbia), a territory or a
  United States possession, or any of their political
  subdivisions, the interest from which is, in the opinion of
  bond counsel, exempt from federal tax.  "California Tax
  Exempt Securities" are the same such securities, the interest
  of which is also, in the opinion of bond counsel, exempt from
  California state personal income tax.  Each Fund invests in
          the following Tax Exempt Securities: (i) municipal
  notes; (ii) municipal bonds; (iii) municipal securities
  backed by the U.S. government; (iv) short-term discount notes
  (tax-exempt commercial paper); (v) participation interests in
  any of the foregoing; and (vi) unrated securities or new
  types of tax-exempt instruments which         become
  available in the future if Putnam Management determines they
  meet         the Fund's quality standards.  
     The Funds invest only in high-quality Tax Exempt
  Securities and other money market instruments that Putnam
  Management believes present minimal credit risk.  High-
  quality securities are securities rated in one of the two
  highest categories by at least two nationally recognized
  rating services (or, if only one rating service has rated the
  security, by that service) or if the security is unrated,
  judged to be of equivalent quality by Putnam Management.  The
  Funds maintain a dollar-weighted average maturity of 90 days
  or less and do not invest in securities with remaining
  maturities of more than 397 days.  The Funds may invest in
  variable or floating-rate Tax Exempt Securities which bear
  interest at rates subject to periodic adjustment or which
  provide for periodic recovery of principal on demand.  Under
  certain conditions, these securities may be deemed to have
  remaining maturities equal to the time remaining until the
  next interest adjustment date or the date on which principal
  can be recovered on demand.  The Funds follow investment and
  valuation policies designed to maintain a stable net asset
  value of $1.00 per share.  However, there can be no assurance
  that the Fund will be able to maintain a stable net asset
  value of $1.00 per share.
     The principal difference         between the Funds'
          is that the California Fund normally invests        
  so that at least 90% of the California Fund's income
  distributions normally will be exempt from both federal
  income tax and California personal income tax while the Money
  Market Fund's distributions normally will be exempt only from
  federal income tax.  Because of the relatively small number
  of issuers of California Tax Exempt Securities, the
  California Fund is more likely to invest a higher percentage
  of its assets in the securities of a single issuer than the
  Money Market Fund, which invests in a broad range of        
  Tax Exempt Securities.
     Despite these differences, the securities currently held
  by the California Fund are substantially similar in kind to
  those securities currently held by the Money Market Fund.
     Because both Funds have comparable investment
  objectives, similar investment policies and currently invest
  in certain of the same issues, the reorganization will not
  affect the general strategy or style in which the merged
  Money Market Fund will be managed.  Shareholders should
  recognize, however, that income distributions received by
  them on shares of the Money Market Fund following the
  reorganization will not be exempt, for the most part, from
  California income tax.
             MANAGEMENT FEES AND OTHER EXPENSES.  Both Funds
  pay a quarterly fee to Putnam Management based on their
  respective average net assets, as determined at the close of
  business each day during the quarter, at an annual rate of
  .45% of the first $500 million of average net assets, .35% of
  the next $500 million, .30% of the next $500 million and .25%
  of any amount over $1.5 billion.  This would result in an
  effective fee rate of .45% based on combined average net
  assets of the Funds (including the New York Fund) of        
  approximately $43.5 million at January 31, 1994.  Each of the
  Funds currently pays management fees at the rate of .45%. 
  Because it does not project such combined asset levels to
  increase beyond $500 million, Putnam Management has advised
  the Trustees that it expects the effective management fee
  rate paid by the Money Market Fund would not change following
  the proposed reorganization.
      The Funds have adopted identical distribution plans
  pursuant to Rule 12b-1 under the Investment Company Act of
  1940 to permit the Funds to compensate Putnam Mutual Funds
  Corp. ("Putnam Mutual Funds") by paying it a fee at an annual
  rate of up to 0.35% of the Fund's average net assets for
  services provided and expenses incurred by it in promoting
  the sale of shares of the Funds, reducing redemptions, or
  maintaining or improving services provided to shareholders by
  Putnam Mutual Funds or dealers.  The Trustees had previously
  authorized payments under each Fund's plan at an annual rate
  of up to 0.10% of average net assets.  However, the Trustees
  have terminated payments under each Fund's distribution plan
  effective January 1, 1994        .  See "Distribution Plans"
  in the enclosed Money Market Fund Prospectus for a detailed
  description of the distribution plan.
     Based on         expenses for the month ended January
  31, 1994, Putnam Management estimates that the Money Market
          Fund's total annual fund operating expenses        
  are currently 0.83% of average net assets, reflecting the
  termination of distribution plan payments effective January
  1, 1994.  Based on         expenses for the month ended
  January 31, 1994, Putnam Management estimates that, the
  California         Fund's total fund operating expenses
          are currently 0.80% of average net assets, reflecting
  the termination of distribution plan effective January 1,
  1994.  Following the reorganization, the total operating
  expenses of the Money Market Fund are expected to be 0.83% of
  average net assets on a pro forma basis, assuming the
  acquisition by the Money Market Fund of the assets of both of
  the California and New York Funds and excluding costs of the
  reorganization itself.  Total operating expenses of the Money
  Market Fund following the reorganization are expected to be
  0.86% on a pro forma basis, assuming the acquisition of the
  assets of only the California Fund.
             OPERATING PROCEDURES.  The procedures for
  purchasing and redeeming shares of the California Fund and
  shares of the Money Market Fund, and for exchanging such
  shares of each Fund for shares of other Putnam funds, are
  identical and are described in detail in the enclosed Money
  Market Fund Prospectus.
    <PAGE>
                             RISK FACTORS
     An Investment in the Funds is neither insured nor
  guaranteed by the U.S. Government.  There can be no
  assurances that the Money Market Fund will be able to
  maintain a stable net asset value of $1.00 per share.
  However, because the Money Market Fund and the California
  Fund (but for the California Fund's pursuit of income exempt
  from California income tax) share comparable investment
  objectives and very similar investment policies, the risks of
  an investment in the Money Market Fund are similar to the
  risks of an investment in the California Fund, except as
  provided below.  The market value of the Funds'        
  investments will be affected by general changes in interest
  rates resulting in increases or decreases in the value of the
  obligations held by the Funds.  Although the Funds'
  investment policies are designed to minimize the changes and
  to maintain a net asset value of $1.00 per share, there is no
  assurance that these policies will be successful. 
  Withdrawals by shareholders could require the sale of
  portfolio investments at a time when such a sale might not
  otherwise be desirable.  Since the California Fund's
  portfolio investments generally emphasize Tax Exempt
  Securities of California issuers, the value of its shares may
  be especially affected by factors pertaining to the
  California economy and other factors specifically affecting
  the ability of issuers of such securities to meet their
  obligations.  The Money Market Fund, on the other hand, may
  take full advantage of the entire range of short-term high-
  quality Tax Exempt Securities.
    <PAGE>
                                 INTRODUCTION
     This Prospectus/Proxy Statement is furnished in
  connection with the proposed reorganization of Putnam
  California Tax Exempt Money Market Fund (the "California
  Fund") by the transfer of all of its assets and liabilities
  to Putnam Tax Exempt Money Market Fund (the "Money Market
  Fund") and the solicitation of proxies by and on behalf of
  the Trustees of the California Fund for use at the Meeting of
  Shareholders       .  The Meeting is to be held on May 5,
  1994 at 1:00 p.m. at One Post Office Square, 8th Floor,
  Boston, Massachusetts.  This Prospectus/Proxy Statement and
  the enclosed form of proxy are being mailed to shareholders
  on or about         April 13  , 1994.
     Any shareholder giving a proxy has the power to revoke
  it by mail (addressed to the California Fund's Clerk at the
  principal office of the California Fund, One Post Office
  Square, Boston, Massachusetts 02109) or in person at the
  meeting, by executing a superseding proxy, or by submitting a
  notice of revocation to the California Fund.  All properly
  executed proxies received in time for the meeting will be
  voted as specified in the proxy, or, if no specification is
  made, FOR the proposal (set forth in item (1) of the Notice
  of Meeting) to implement the reorganization of the California
  Fund by the transfer of all of its assets to the Money Market
  Fund in exchange for Money Market Fund Shares and the
  assumption by the Money Market Fund of all of the liabilities
  of the California Fund.
     At March         11, 1994 there were outstanding
  50,277,513 shares of beneficial interest of the California
  Fund.  Only shareholders of record on March         11, 1994
  will be entitled to notice of and to vote at the meeting. 
  Each share is entitled to one vote, with fractional shares
  voting proportionally.  
     The California Fund's Trustees know of no matters other
  than those set forth herein to be brought before the meeting. 
  If, however, any other matters properly come before the
  meeting, it is the Trustees' intention that proxies will be
  voted on such matters in accordance with the judgment of the
  persons named in the enclosed form of proxy.
     In addition, shareholders of the California Fund should
  note that the Trustees of Putnam New York Tax Exempt Money
  Market Fund (the "New York Fund," sometimes also referred to
  as a "Fund"), which are the same as the Trustees of the
  Funds, have approved a         similar reorganization of the
  Money Market Fund and the New York Fund which is concurrently
  being submitted for the approval of the shareholders of the
  New York Fund.  As a result of this additional proposed
  reorganization, this Prospectus/Proxy Statement in certain
  sections describes the consequences of combining the assets
  of all three Funds on a pro forma basis.  The reorganization
  involving the California Fund is not in any way contingent on
  the completion of the reorganization involving the New York
  Fund.
             PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF
                 AGREEMENT AND PLAN OF REORGANIZATION
  
     The shareholders of the California Fund are being asked
  to approve or disapprove the Agreement and Plan of
  Reorganization by and between the Money Market Fund and the
  California Fund, dated as of         December 3, 1993 (the
  "Agreement"), a copy of which is attached to this
  Prospectus/Proxy Statement as Exhibit A.  The Agreement
  provides, among other things, for the transfer of all of the
  assets of the California Fund to the Money Market Fund in
  exchange for the assumption by the Money Market Fund of all
  of the liabilities of the California Fund and for a number of
  Money Market Fund Shares, calculated based on the value of
  the net assets of the California Fund acquired by the Money
  Market Fund and the net asset value per share of the Money
  Market Fund, all as more fully described below under
  "Information about the Reorganization".  After receipt of the
  Money Market Fund Shares, the California Fund will cause the
  Money Market Fund Shares to be distributed to its
  shareholders in complete liquidation of the California Fund
  and the legal existence of the California Fund as a separate
  business trust under Massachusetts law will be terminated. 
  In addition, the California Fund will file an application for
  deregistration under Section 8(f) of the Investment Company
  Act of 1940.
     Prior to the date of the transfer (the "Exchange Date"),
  the California Fund will declare a distribution to
  shareholders which, together with all previous distributions,
  will have the effect of distributing to shareholders all of
  its investment company taxable income and net realized
  capital gains, if any, through the Exchange Date.
     The Trustees of the California Fund have voted
  unanimously to approve the proposed transaction and to
  recommend that shareholders also approve the transaction. 
  The affirmative vote of two-thirds (66 2/3%) of the
  outstanding shares of beneficial interest of the California
  Fund that are entitled to be voted at the Meeting is
  necessary for the consummation of the proposed transaction. 
  The Money Market Fund and the California Fund have the same
  Trustees.
     A shareholder of the California Fund objecting to the
  proposed transaction is not entitled under either
  Massachusetts law or the Agreement and Declaration of Trust
  to demand payment for and an appraisal of his or her
  California Fund shares if the transaction is consummated over
  his or her objection.  Like shares of the California Fund,
  shares of the Money Market Fund are redeemable for cash at
  their net asset value on any day on which the New York Stock
  Exchange is open.
     In the event that this proposal is not approved by the
  shareholders of the California Fund, the California Fund will
  continue to be managed as a separate fund in accordance with
  its current investment objectives and policies, and the
  Trustees may consider such alternatives as may be in the best
  interests of the shareholders.
  
        BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
  
     The Trustees of each of the Money Market Fund and the
  California Fund, including all Trustees who are not
  "interested persons" of the Money Market Fund and the
  California Fund, have determined that the reorganization
  would be in the best interests of each Fund's shareholders,
  and that the interests of existing shareholders of each of
  the Funds would not be diluted as a result of effecting the
  reorganization.  The Trustees        have unanimously
  approved the proposed reorganization and have recommended its
  approval by shareholders.
     The principal reasons why the Trustees are recommending
  the reorganization are:
     (1)  Economies of Scale.  Putnam Management believes the
  proposed reorganization over the longer-term will achieve
  economies of scale for the shareholders of the California
  Fund by permitting them to invest in a substantially larger
          fund with a         similar investment objective and
          investment policies.  Such economies of scale are not
  expected to have an immediate positive impact on shareholders
  of the California Fund.  However, given the small size and
  declining asset base of the California Fund, Putnam
  Management believes that California Fund shareholders
  eventually will benefit from lower operating expenses.
     Based upon the projections of Putnam Management, the
  Trustees believe that immediately following the combination
  of the Funds (and the proposed concurrent combination of the
  New York Fund into the Money Market Fund) the expense ratio
  of the Money Market Fund will be slightly higher than the
  expenses the California Fund would likely incur if the
  combination were not effected.  Putnam Management has advised
  the Trustees that it expects, based on the projected relative
  sizes of the two Funds, that the management fees paid by the
  Money Market Fund after the proposed reorganization would
  likely remain stable at the effective rate of 0.45% of
  average net assets.  Putnam Management also estimates that
  the total annual expense rate of 0.90% of average net assets
  currently paid by shareholders of the California Fund would
  increase to         0.83% of average net assets after the
  contemplated reorganization, assuming net assets of
  $157,311,000 for the Money Market, California and New York
  Funds combined (and to         0.86% of average net assets,
  assuming net assets of $112,108,000 for the Money Market and
  California Funds combined).
             Notwithstanding these expense projections based
  on         net asset levels as of January 31, 1994, Putnam
  Management has advised the Trustees that over the longer-term
  it expects there will be expense benefits for California Fund
  shareholders as a result of the reorganization because of the
  California Fund's declining asset base.  The California Fund
  experienced net redemptions of $13.4 million (equivalent to
  nearly 25% of the Fund's total assets at the end of the year)
  for the fiscal year ended September 30, 1993.  Putnam
  Management believes that such redemptions of California Fund
  shares are in large measure a consequence of the historically
  low yields of short term California Tax Exempt Securities
  under current interest rate conditions.  Putnam Management
  does not expect these conditions to change significantly in
  the near future.  As a result, Putnam Management believes
  that the California Fund likely will not experience
  substantial asset growth in the near term and may in fact
  continue to experience a high level of redemptions.  If such
  redemptions continue and the Fund is not combined with the
  Money Market Fund, total operating expenses could increase
  significantly and yields would decline commensurately as
  existing economies of scale are lost.
     (2)  Performance Benefits.  Putnam Management believes
  that the economies of scale expected to be realized over the
  longer-term as a result of the reorganization and other
  factors relating to the small size of the California Fund
  will result in long-term performance benefits for California
  Fund shareholders acquiring Money Market Fund Shares pursuant
  to the reorganization.  The yield net of expenses for both
  the California Fund and the Money Market Fund for the thirty-
  day period ended January 31, 1994 was 1.74%.  The annualized
  yield net of expenses for the combined Funds on a pro-forma
  basis         was 1.85% (1.82% excluding the assets of the
  New York Fund) based on results for the month ending
  January 31, 1994.  The annualized tax equivalent yield for
  the California Fund, the Money Market Fund and the three
  combined Funds on a pro-forma basis         were 3.24%, 2.88%
  and 3.06% (3.01% excluding the assets of the New York Fund),
  respectively, based on results for the month ending
  January 31, 1994.  The California Fund's higher tax
  equivalent yield reflects the fact that California Fund
  distributions are exempt from both federal and California
  state personal income taxes for California shareholders while
  Money Market Fund distributions are subject to California and
  other relevant state income taxation.
             Notwithstanding the current tax equivalent yield
  advantage of the California Fund, Putnam Management expects
  that over the longer-term the combined Funds would realize
  performance advantages over the California Fund if the
  reorganization were not implemented as a result of the
  projected long-term higher operating expenses of the
  California Fund and the investment management limitations
  inherent in a portfolio with a steadily declining asset base. 
  Putnam Management believes that the California Fund may not
  be able to maintain a sufficient net asset level to achieve
    competitive investment returns over the long-term.<PAGE>
  
                 INFORMATION ABOUT THE REORGANIZATION
             AGREEMENT AND PLAN OF REORGANIZATION.  The
  proposed Agreement and Plan of Reorganization        
  provides that the Money Market Fund will acquire all of the
  assets of the California Fund in exchange for the assumption
  by the Money Market Fund of all of the liabilities of the
  California Fund and for the issuance of shares of the Money
  Market Fund, all as of the Exchange Date (defined in the
  Agreement to be the next full business day following the
  Valuation Time, defined in the Plan as 4:00 p.m. Boston time
  on May 9, 1994 or such other date as may be agreed upon by
  the parties).  The following discussion of the Agreement is
  qualified in its entirety by the full text of the Agreement,
  which is attached as Exhibit A to this Prospectus/Proxy
  Statement.
     The California Fund will sell all of its assets to the
  Money Market Fund, and in exchange, the Money Market Fund
  will assume all of the liabilities of the California Fund and
  deliver to the California Fund a number of full and
  fractional shares of the Money Market Fund having an
  aggregate net asset value equal to the value of assets of the
  California Fund transferred to the Money Market Fund, less
  the value of the liabilities of the California Fund assumed
  by the Money Market Fund attributable to shares of the Money
  Market Fund. 
     As a result of the proposed transaction, each
  shareholder of the California Fund will receive that number
  of full and fractional Money Market Fund shares equal in
  aggregate value at the Exchange Date to the value of the
  shares of the California Fund held by the shareholder.  It is
  expected that the shares of the Funds will effectively be
  exchanged on a one-for-one basis since each Fund normally
  maintains a stable net asset value of $1.00 per share. 
  Portfolio securities of the Money Market Fund         will be
  valued in accordance with the amortized cost method of
  valuation         described under "How the Fund values its
  shares" in the enclosed Money Market Fund Prospectus.  For
  purposes of the Reorganization, Portfolio Securities of the
  Money Market Fund will be valued at fair market value
  pursuant to procedures which the Money Market Fund would use
  for such valuation in determining the fair market value of
  the Money Market Fund's assets as if the assets were to be
  sold or the value evidenced on a given day.  It is expected
  that the reorganization will be accounted for as a taxable
  transaction as described more fully below under "Federal
  Income Tax Consequences."  The Trustees of the California
  Fund have determined that the interests of the California
  Fund's shareholders will not be diluted as a result of the
  transactions contemplated by the reorganization, and the
  Trustees of both Funds have determined that the proposed
  reorganization is in the best interests of each Fund.
     Immediately following the Exchange Date, the California
  Fund will distribute pro rata to its shareholders of record
  as of the close of business on the Exchange Date the full and
  fractional Money Market Fund shares received by the
  California Fund.  Such liquidation and distribution will be
  accomplished by the establishment of accounts on the share
  records of the Money Market Fund in the name of such
  California Fund shareholders, each account representing the
  respective number of full and fractional Money Market Fund
  shares due such shareholder.        
     The consummation of the reorganization is subject to the
  conditions set forth in the Agreement.  The Agreement may be
  terminated and the reorganization abandoned at any time,
  before or after approval by the shareholders, prior to the
  Exchange Date by mutual consent of the Money Market Fund and
  the California Fund or, if any condition set forth in the
  Agreement has not been fulfilled and has not been waived by
  the party entitled to its benefits, by such party.
             All fees and expenses, including legal and
  accounting expenses, portfolio transfer taxes (if any) or
  other similar expenses incurred in connection with the
  consummation of the transactions contemplated by the
  Agreement will be allocated ratably between the two Funds in
  proportion to their net assets as of the day of the transfer,
  except that the costs of proxy materials and proxy
  solicitations will be borne by the California Fund.  However,
  to the extent that any payment by the Money Market Fund of
  such fees or expenses would result in the disqualification of
  the Money Market Fund or the California Fund as a "regulated
  investment company" within the meaning of Section 851 of the
  Internal Revenue Code of 1986, as amended (the "Code"), such
  fees and expenses will be paid directly by the party
  incurring them.  
                             DESCRIPTION OF SHARES
     Full and fractional shares of the Money Market Fund will
  be issued to the California Fund's shareholders in accordance
  with the procedure under the Agreement as described above.
  Shares of the Money Market Fund are not subject to any sales
  charges, redemption fees and, at present, any payments under
  its distribution plan.  
     Each share of the Money Market Fund will be fully paid
  and nonassessable when issued, will be transferable without
  restriction, and will have no preemptive or conversion
  rights.  Like that of the California Fund, the Money Market
  Fund's Agreement and Declaration of Trust permits the Fund to
  divide its shares, without shareholder approval, into two or
  more series of shares representing separate investment
  portfolios and to further divide any such series, without
  shareholder approval, into two or more classes of shares
  having such preferences and special or relative rights and
  privileges as the Trustees may determine.  Neither Fund's
  shares are presently divided into series.
     Under Massachusetts law, shareholders could, under
  certain circumstances, be held personally liable for the
  obligations of the Money Market Fund.  However, the Agreement
  and Declaration of Trust disclaims shareholder liability for
  acts or obligations of the Money Market Fund and requires
  that notice of such disclaimer         be given in each
  agreement, obligation, or instrument entered into or executed
  by the Money Market Fund or the Trustees.  The Agreement and
  Declaration of Trust provides for indemnification out of Fund
  property for all loss and expense of any shareholder held
  personally liable for the obligations of the Money Market
  Fund.  Thus, the risk of a shareholder incurring financial
  loss on account of shareholder liability is limited to
  circumstances in which the Money Market Fund would be unable
  to meet its obligations.  The likelihood of such
  circumstances is remote.  The shareholders of the California
  Fund are currently subject to this same risk of shareholder
  liability.
             FEDERAL INCOME TAX CONSEQUENCES.  Because the
  Fund's portfolio manager will be disposing of certain assets
  in order to hold investments appropriate to the Combined
  Funds, it is expected that the reorganization will be a
  taxable transaction under the Code.  As a consequence, (i)
  the California Fund will recognize         gain or        
  loss, if any, upon the disposition of its assets in the
  reorganization, (ii) the shareholders of the California Fund
  may recognize a gain or a loss upon the exchange of their
  shares for Money Market Fund Shares, (iii) the basis of Money
  Market Shares received by California Fund shareholders in
  place of their California Fund shares will be the net asset
  value of such Money Market Shares on the Valuation Date, and
  (iv) the holding period for determining whether Money Market
  Shares received in connection with the reorganization are a
  capital asset will commence on the Exchange Date
     Each of the Funds normally values its assets according
  to the amortized cost method of valuation described in the
  enclosed Money Market Fund Prospectus        .  This
  valuation method disregards minor unrealized gains or losses
  resulting from fluctuating market         prices of        
  the Fund's         investments in order to permit         a
  Fund to maintain a stable daily net asset value of $1.00 per
  share.  However, for purposes of the Reorganization, the
  assets of the California Fund will be valued at fair market
  value         and any such gains or losses in the Fund's
  portfolio would be realized as of the time of the
  Reorganization.  Any difference between fair market value and
  amortized cost         will be reflected in the Fund's
  accrued but unpaid dividend account for that month        ,
  consistent with the Fund's Agreement and Declaration of Trust
  and with the provisions of the Code governing regulated
  investment companies.  It is currently expected that any
  gains which may be realized by California Fund shareholders
  as a result of the Reorganization would be very small
  relative to the value of their shares.
             CAPITALIZATION.  The following tables show the
  capitalization of the Money Market Fund and the California
  Fund as of January 31, 1994 and on a pro forma basis as of
  that date, giving effect to the proposed acquisition of
  assets at net asset value:
  
                                    (UNAUDITED)


                 The MoneyCalifornia New York  Pro Forma Pro Forma
                Market Fund  Fund      Fund   Combined(1)Combined(2)

Net assets                $68,635   $43,473   $45,203  $157,311  $112,108
(000's omitted)
       
Shares         outstanding           68,535    43,473          
45,203          157,311   112,108
(000's omitted)        

Net asset value         per share          $     1.00$     1.00     $    
1.00        $      1.00         $      1.00

_______________

(1)  Reflects combination of the Money Market, California and New
York Funds.

(2)  Reflects the combination of the Money Market and California
Funds.


    Unaudited pro forma financial statements of the Funds as
  of and for the period ended September 30, 1993 are included
  in the Statement of Additional Information.  Because the
  Agreement provides that the Money Market Fund will be the
  surviving fund following the reorganization and because the
  Money Market Fund's investment objective and policies will
  remain unchanged, the pro forma financial statements reflect
  the transfer of the assets and liabilities of the California
  Fund and the New York Fund to the Money Market Fund as
  contemplated by the Agreement and the proposed combination of
  the New York Fund with the Money Market Fund.
                          VOTING INFORMATION
    Proxies are being solicited from the California Fund's
  shareholders by the Trustees for the Meeting of Shareholders
  to be held on         June 2, 1994 at 1:00 p.m., at One Post
  Office Square, 8th Floor, Boston, Massachusetts, or at such
  later time made necessary by adjournment.  A proxy may be
  revoked at any time at or before the meeting by oral or
  written notice to Beverly Marcus, Clerk of the Fund, c/o
  Putnam California Tax Exempt Money Market Fund        , One
  Post Office Square, Boston, Massachusetts 02109 or as
  otherwise described in the "Introduction       " above. 
  Unless revoked, all valid proxies will be voted in accordance
  with the specification thereon or, in the absence of
  specifications, FOR approval of the Agreement and Plan of
  Reorganization.  The transactions contemplated by the
  Agreement and Plan of Reorganization will be consummated only
  if approved by the affirmative vote of the holders of at
  least two-thirds (66 2/3%) of the outstanding shares of the
  California Fund that are entitled to vote thereon at the
  Meeting.  In the event the shareholders do not approve the
  reorganization, the Money Market Fund's Trustees will
  consider possible alternative arrangements in the best
  interests of the Money Market Fund and its shareholders.
    Proxies are being solicited by mail.  Additional
  solicitations may be made by telephone, telegraph, or
  personal contact by officers or employees of Putnam
  Management and its affiliates or by proxy soliciting firms
  retained by the California Fund or the Money Market Fund. 
  The California Fund may also arrange to have votes recorded
  by telephone.  If this procedure were subject to a successful
  legal challenge, such votes would not be counted at the
  meeting.  The California Fund has retained at its expense
  Tritech Services, Four Corporate Place, Corporate Park 287,
  Piscataway, New Jersey 08854, to aid in the solicitation of
  proxies for a fee not to exceed         $7,800 plus
  reasonable out-of-pocket expenses.
    Shareholders of record of the California Fund at the close
  of business on March         11, 1994 (the "record date")
  will be entitled to vote at the Meeting or any adjournment
  thereof.  The holders of 30% of the shares of the California
  Fund outstanding at the close of business on the record date
  present in person or represented by proxy will constitute a
  quorum for the         Meeting; however, as noted above, the
  affirmative vote of at least two-thirds (66 2/3%) of the
  shares outstanding at the close of business on the record
  date is necessary to approve the reorganization. 
  Shareholders are entitled to one vote for each share held,
  with fractional shares voting proportionally.
    Votes cast by proxy or in person at the meeting will be
  counted by persons appointed by the California Fund as
  tellers for the meeting.  The tellers will count the total
  number of votes cast "for" approval of the proposal for
  purposes of determining whether sufficient affirmative votes
  have been cast.  The tellers will count shares represented by
  proxies that reflect abstentions and "broker non-votes"
  (i.e., shares held by brokers or nominees as to which (i)
  instructions have not been received from the beneficial
  owners or the persons entitled to vote and (ii) the broker or
  nominee does not have the discretionary voting power on a
  particular matter) as shares that are present and entitled to
  vote on the matter for purposes of determining the presence
  of a quorum.  Abstentions and broker non-votes have the
  effect of a negative vote on the proposal.
       As of        March 11, 1994 as shown on the books of the
  California Fund, there were issued and outstanding 50,277,513 
  shares of beneficial interest of the California Fund.  As
  of        February 28, 1994, the officers and Trustees of the
  California Fund as a group beneficially owned less than 1% of
  the outstanding shares of the California Fund.  At       
  February 28, 1994, to the best of the knowledge of the
  California Fund, no person owned beneficially 5% or more of
  the outstanding shares of the California Fund.
    The votes of the shareholders of the Money Market Fund are
  not being solicited, since their approval or consent is not
  necessary for this transaction.  As of        February 28,
  1994, the officers and Trustees of the Money Market Fund as a
  group beneficially owned less than 1% of the outstanding
  shares of the Money Market Fund.  At        February 28,
  1994, to the best of the knowledge of the Money Market Fund,
  no person beneficially owned 5% or more of the outstanding
  shares of the Money Market Fund.
  
  THE BOARD OF TRUSTEES OF PUTNAM CALIFORNIA TAX EXEMPT MONEY
  MARKET FUND, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
            RECOMMENDS APPROVAL OF THE PLAN.<PAGE>
            PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
  
                        PROXY FOR A MEETING OF
                  SHAREHOLDERS,         June 2, 1994
  
    THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE
  FUND.
  
  The undersigned hereby appoints George Putnam, Hans H. Estin
  and William F. Pounds, and each of them separately, proxies,
  with power of substitution, and hereby authorizes them to
  represent and to vote, as designated below, at the Meeting of
  Shareholders of Putnam California Tax Exempt Money Market
  Fund on         June 2, 1994, at 1:00 P.M., Boston time, and
  at any adjournments thereof, all of the shares of the Fund
  which the undersigned would be entitled to vote if personally
  present.
  THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
  DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.  IF NO
  DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
  IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
  SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. 
  THE TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE
  SIDE.
  
  PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
  ENCLOSED ENVELOPE.
  
  NOTE: Please sign exactly as name appears on this card.  All
  joint owners should sign.  When signing as executor,
  administrator, attorney, trustee or guardian or as custodian
  for a minor, please give full title as such, if a corpora-
  
  tion, please sign in full corporate name and indicate the
  signer's office.  If a partner, sign in the partnership name.
  
  
  CHANGE OF ADDRESS NOTIFICATION.  Please use this form to
  inform us of any change in address or telephone number or to
  provide us with your comments.  Detach this form from the
  Proxy Ballot and return it with your executed proxy in the
  enclosed envelope.
  
  Has your address changed?
  
  Do you have any comments?
  
  1. Approval of the Agreement and Plan of Reorganization
  providing for the transfer of all of the assets of Putnam
  California Tax Exempt Money Market Fund (the "Fund") to
  Putnam Tax Exempt Money Market Fund (the "Money Market Fund")
  in exchange for shares of the Money Market Fund and the
  assumption by the Money Market Fund of all of the liabilities
  of the Fund, and the distribution of such shares to the
  shareholders of the Fund in liquidation of the Fund.
  
                   FOR       AGAINST        ABSTAIN
                   [ ]         [ ]            [ ]
  
  Please be sure to sign and date this Proxy.
  
  
  
  Shareholder sign here
  
  
  
  Co-owner sign here
  
  
  Dated:               , 199
    <PAGE>
                  PUTNAM TAX EXEMPT MONEY MARKET FUND
  
                  Statement of Additional Information
  
           (Putnam California Tax Exempt Money Market Fund)
  
                                April 6  , 1994
  
    This Statement of Additional Information contains material
  which may be of interest to investors but which is not
  included in the Prospectus/Proxy Statement (the "Prospectus")
  of Putnam Tax Exempt Money Market Fund ("Money Market Fund")
  dated         April 6  , 1994 relating to the sale of all or
  substantially all of the assets of Putnam California Tax
  Exempt Money Market Fund ("California Fund") to Money Market
  Fund.  California Fund's Statement of Additional Information
  dated February 1, 1994 and Money Market Fund's Statement of
  Additional Information dated February 1, 1994 respectively,
  have been filed with the Securities and Exchange Commission
  and are incorporated herein by reference.  This Statement is
  not a Prospectus and is authorized for distribution only when
  it accompanies or follows delivery of the Prospectus.  This
  Statement should be read in conjunction with the Prospectus. 
  Investors may obtain a free copy of the Prospectus or either
  or both of the Statements of Additional Information by
  writing Putnam Investor Services, One Post Office Square,
  Boston, MA 02109 or by calling 1-800-225-1581.
  
           INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
  
    Coopers & Lybrand are the independent accountants for the
  Money Market Fund and Price Waterhouse are the independent
  accountants for the California Fund, each providing audit
  services, tax return review and other tax consulting services
  and assistance and consultation in connection with the review
  of various Securities and Exchange Commission filings for
  their respective Funds.  The Report of Independent
  Accountants and financial statements included in the Money
  Market Fund's Annual Report for the fiscal year ended
  September 30, 1993, filed electronically on November 24, 1993
  (811-5215), are incorporated by reference into this Statement
  of Additional Information.  The Report of Independent
  Accountants and financial statements included in the
  California Fund's Annual Report for the fiscal year ended
  September 30, 1993, filed electronically on January 27, 1994
  (811-5333), are incorporated by reference into this Statement
  of Additional Information.  The financial highlights and the
  financial statements of each fund incorporated by reference
  into the Prospectus/Proxy Statements and the Statement of
  Additional Information have been so included and incorporated
  in reliance upon the reports of both Coopers & Lybrand and
  Price Waterhouse, given on their authority as experts in
  auditing and accounting.
  
  
  
  
                           Table of Contents
  
  Unaudited Pro Forma combined Financial Statements of the
  Money Market Fund and the California Fund
  ...............................
  
  
  Unaudited Pro Forma combined Financial Statements of the
  Money Market Fund, the California Fund and the New York Tax
  Exempt Money Market Fund ...................
  
    <PAGE>
              PUTNAM TAX EXEMPT MONEY MARKET FUND
  
                             AND
                             
         PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
  
  
    PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
    
  
  The accompanying unaudited pro forma combining investment
  portfolio and statement of assets and liabilities assumes
  that the exchange described in the next paragraph occurred as
  of September 30, 1993 and the unaudited pro forma combining
  statement of operations of Putnam Tax Exempt Money Market
  Fund ("Tax Exempt Money Market") as if the combination with
  Putnam California Tax Exempt Money Market Fund ("California
  Tax Exempt Money Market") had been consummated at the
  beginning of the fiscal year indicative of future operations
  or actual results that would have occurred had the
  combination been consummated at the beginning of the fiscal
  year presented.  These statements have been derived from the
  September 30, 1993 audited annual reports of Tax Exempt Money
  Market and California Tax Exempt Money Market. 
  
  The pro forma statements give effect to the proposed transfer
  of all the assets of California Tax Exempt Money Market to
  Tax Exempt Money Market in exchange for the assumption by Tax
  Exempt Money Market of all of the liabilities of California
  Tax Exempt Money Market and for a number of Tax Exempt Money
  Market shares equal in value to the value of the net assets
  of California Tax Exempt Money Market transferred to Tax
  Exempt Money Market.  Under generally accepted accounting
  principles, the historical cost of the investment securities
  will be carried forward to the surviving entity and the
  results of operations of Tax Exempt Money Market for pre-
  combined periods will not be restated.  The pro forma
  statements do not reflect the expenses of any of the funds in
  carrying out its obligations under the Agreement and Plan of
  Reorganization.
  
  The unaudited pro forma combining statements should be read
  in conjunction with the separate financial statements of Tax
  Exempt Money Market and California Tax Exempt Money Market
  included elsewhere in this statement of additional
  information.
  
  
  
  
  
  
  
  
  
  
  
  
  
  
              PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
  
                      SEPTEMBER 30, 1993
  
  The pro forma adjustments to these financial statements are
  comprised of:
  
    (A)  Increase in management and investment advisory fee of
         Tax Exempt Money Market paid to Putnam Investment
         Management, Inc. to reflect the new fee structure
         applied to the combined assets including California
         Tax Exempt Money Market.
  
    (B)  Decrease of expenses as a result of the merger.
  
  
  
  
  
    <PAGE>
<TABLE>
  <CAPTION>
  
  
                                             PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  
  Pro Forma Combining
  Statement of 
  Assets and Liabilities
  September 30, 1993
  (Unaudited)
  
  
  
                                      Tax Exempt Money    California Tax Exempt    Pro Forma      Pro Forma
                                           Market Fund        Money Market Fund  Adjustments       Combined
  <S> <C>                                          <C>                      <C>          <C>
  Assets
  Investments in securities, 
    at amortized cost                      $80,838,174              $45,321,271                $126,159,445
   (combined cost, $126,159,445)
  Cash                                          44,571                   36,432                      81,003
  Dividends, interest and other receivables    364,273                  172,992                     537,265
  Receivable for shares of the Fund sold       180,479                   40,026                     220,505
   
  Total assets                              81,427,497               45,570,721            0    126,998,218
  
  Liabilities
  Distributions payable to shareholders          6,945                   57,028                      63,973
  Payable for shares of the Fund repurchased   179,377                   21,010                     200,387
  Payable for compensation of Manager           81,370                   53,282                     134,652
  Payable for distribution fees                 18,083                   19,782                      37,865
  Payable for administrative services            1,551                    1,313                       2,864
  Payable for compensation of Trustees             148                      125                         273
  Payable for investor servicing and 
    custodian fees                              52,412                   27,360                      79,772
  Other accrued expenses                        11,827                   26,713                      38,540
  
  Total liabilities                            351,713                  206,613            0        558,326
  
  
  Net assets                               $81,075,784              $45,364,108           $0   $126,439,892
  
  
  Represented by
  Shares outstanding                        81,075,784               45,364,108                 126,439,892
  
  Net asset value per share                      $1.00                   $1.00                        $1.00
  
  
  </TABLE>
    <PAGE>
<TABLE>
  <CAPTION>
                                             PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  
  Pro Forma Combining
  Statement of Operations
  Year ended September 30, 1993
  (Unaudited)
  
  <S> <C>                                               <C>                     <C>          <C>
                                           Tax Exempt Money   California Tax Exempt    Pro Forma     Pro Forma
                                                Market Fund       Money Market Fund  Adjustments      Combined
  Investment income:
  Interest                                       $2,253,568              $1,431,540                 $3,685,108
  
       Total investment income                    2,253,568              1,431,540             0     3,685,108
  
  Expenses:
  Compensation of Manager                           357,072                 241,375       495(A)       598,942
  Investor servicing and custodian fees             244,681                 114,899      (54)(B)       359,526
  Compensation of Trustees                            9,565                   6,103            0        15,668
  Reports to shareholders                            13,248                  13,114  (11,296)(B)        15,066
  Postage                                            10,322                   4,767            0        15,089
  Auditing                                           14,786                  17,444  (17,099)(B)        15,131
  Legal                                              12,128                  12,034            0        24,162
  Administrative services                             5,676                   4,642            0        10,318
  Distribution fees                                  78,252                  60,823            0       139,075
  Amortization of organization fees                     271                       0            0           271
  Other                                              40,202                     115            0        40,317
  
       Total expenses                               786,203                 475,316     (27,954)     1,233,565
  
  Net investment income                           1,467,365                 956,224       27,954     2,451,543
  
  
  Net realized gain on investments                    3,603                       0                      3,603
  
  Net gain on investments                             3,603                       0            0         3,603
  
  
  Net increase in net assets resulting from
     operations                                  $1,470,968                $956,224      $27,954    $2,455,146
  
  
  </TABLE>
    <PAGE>
<TABLE>
  <CAPTIONS>
  
  The Pro Forma Combining Investment Portfolio of
  Putnam Tax Exempt Money Market Fund,
  Putnam California Tax Exempt Money Market Fund and
  
  
  September 30, 1993
  (UNAUDITED)
                            Tax Exempt Money                        California Tax Exempt   
                              Market Fund                           Money Market Fund         Pro Forma Combined   
  
  Municipal Bonds
  and Notes (92.9%)(a)       Principal                     Principal                       Principal
   Rating             Amount     Value   Rating     Amount     Value   Rating      Amount      Value
  <S> <C>                <C>       <C>      <C>        <C>       <C>      <C>         <C>        <C>
  California (38.5%)
  
  CA Higher Ed. Loan Auth.
     Inc. Student Loan
     Variable Rate Demand Notes
     (VRDN), 2.9s, 8/1/03       VMIG1           $1,000,000$1,000,000       --          --         --       --  $1,000,0
  
  CA Hlth. Fac. Auth.  
     VRDN (Kaiser Permanente Med.)
     2 1/4s, 10/1/13      --        --       --       A-1+$1,500,000           $1,500,000         --1,500,0001,500,0
  
  CA Hlth. Fac. Fin. Auth.
     VRDN
     2 3/4s, 8/1/17                                  VMIG1   985,000  985,000          --    985,000  985,000
     (Kaiser Permanente Med.
     Project), Ser. A,
     2.7s, 8/15/25        --        --       --       A-1+ 2,000,0002,000,000          --  2,000,0002,000,000
  
  CA Pub. Cap. Impt. Fin.
     Auth. VRDN (Pooled
     Project), 2.6s, 6/1/28         --       --         --     VMIG13,000,000   3,000,000         --3,000,0003,000,0
  
  
  Chula Vista, Coml. Dev
     VRDN (South Bay
     Ambulatory Surgical
     Ctr.), Ser. A, 2.9s, 
     12/1/99              --        --       --      VMIG1 1,260,0001,260,000          --  1,260,0001,260,000
  
  Fontana, Certif. of
     Participation VRDN,
     4 1/4s, 7/1/21      A-2 3,000,0003,000,000         --        --       --          --  3,000,0003,000,000
  
  Hermosa Beach, Parking
     Auth. Certif. of
     Participation VRDN,
     2.6s, 12/1/13        --        --       --        A-1 1,600,0001,600,000          --  1,600,0001,600,000
  
  Irvine Ranch, Wtr. Dist.
     VRDN, Ser. B, 3.35s,
     10/1/04              --        --       --       A-1+ 2,100,0002,100,000          --  2,100,0002,100,000
  
  Kern, Cmnty College
     Dist. Cerif. of
     Participation VRDN
     (Fin. project), 3s, 3/1/18     --       --         --      A-1+2,000,000   2,000,000         --         
  2,000,000        2,000,000
  
  Loma Linda, Hosp. VRDN
     (Loma Linda U. Med.
     Ctr.), Ser. B, 2.9s,12/1/15    --       --         --      A-1+2,000,000   2,000,000         --         
  2,000,000        2,000,000
  
  Los Angeles Cnty.,
     Cmnty. Dev. Certif. of
     Participation VRDN
     (Willow Brook Project.),
     2.8s, 11/1/15        --        --       --        A-1 2,200,0002,200,000          --  2,200,0002,200,000
    <PAGE>
California (cont.)
  
  Los Angeles Cnty., Hsg.
     Auth. Multi-Fam. Hsg.
     VRDN (River Park Apt.
     Project), Ser. D, 3.05s,
     9/1/10               --        --       --      VMIG1 2,000,0002,000,000          --  2,000,0002,000,000
  
  Los Angeles, Multi-Fam.
     Hsg. VRDN (Masselin
     Manor Project), 3s, 7/1/15     --       --         --     VMIG12,000,000   2,000,000         --         
  2,000,000        2,000,000
  
  Los Angeles, Unified
     School Dist. Tax &
     Rev. Anticipation
     Notes (TRAN), 3 1/4s,
     7/15/94              --        --       --      SP-1+ 2,500,0002,509,594          --  2,500,0002,509,594
  
  Moorpark, Multi-Fam.
     VRDN (Le Club Apts.
     Project), Ser. A, 3.05s,
     11/1/15              --        --       --       A-1+ 2,000,0002,000,000          --  2,000,0002,000,000
  
  Oakland, Certif. of
     Participation VRDN
     (Cap. Equipment
     Project), 3.4s, 12/1/15        --       --         --     VMIG12,000,000   2,000,000         --2,000,000 2,000,000
  
  Orange Cnty., Certif of
     Participation VRDN
     (Sanitation Dist.)
     3.35s, 8/1/15        --        --       --      VMIG1 1,000,0001,000,000          --  1,000,0001,000,000
  
  Orange Cnty., TRAN,
     Ser A. 3s, 6/30/94   --        --       --      VMIG1 2,000,0002,007,290          --  2,000,0002,007,290
    <PAGE>
  Palm Springs, Cmnty.
     Redev. Agcy. Certif.
     of Participation VRDN 
     (Headquarters Hotel-7),
     2.95s, 12/1/14       --        --       --        A-1   200,000  200,000          --    200,000  200,000
     (Headquarters Hotel-10), 
     2.95s, 12/1/14       --        --       --        A-1 2,100,0002,100,000          --  2,100,0002,100,000
  
  Sacramento Cnty.,
     Multi-Fam. Hsg. VRDN
     (River Oaks Apts.)
     Ser. E, 3.05s, 9/15/07         --       --         --     VMIG12,000,000   2,000,000         --2,000,000 2,000,000
  
  Sacramento Cnty., TRAN
     3s, 7/29/94          --        --       --      SP-1+ 1,000,0001,000,358          --  1,000,0001,000,358
  
  San Bernardino Cnty.
     Hsg. Auth. Multi-Fam,
     VRDN (Brookside
     Meadows), Ser. A,
     4.2s, 8/1/05         --        --       --      VMIG2 1,000,0001,000,000          --  1,000,0001,000,000
  
  San Diego Cnty., TRAN
     Ser. A, 3 1/4s, 7/29/94        --       --         --     SP-1+2,500,000   2,509,029         --2,500,000 2,509,029
  
  Triunfo, Sanitation Dist.
     Certif. of Participation
     VRDN (Wastewater
     Reclamaiton Project),
     3s, 6/1/19           --        --       --       A-1+ 2,200,0002,200,000          --  2,200,0002,200,000
  
  Union City, Hsg. Mtge.
     VRDN (Green Haven 
     Apts. Project), Ser. A,
     3.35s, 10/1/11       --        --       --      VMIG2 1,500,0001,500,000          --  1,500,0001,500,000
  
       --                 -- 4,000,000                  --44,671,271       --          -- 48,671,271
  
  Colorado (1.4%)
  
  Denver, Urban Renewal
     Auth. Tax Increment
     VRDN, Ser. A, 2.9s,
     3/1/10            SP-1+   945,000  945,000         --        --       --          --    945,000  945,000
  
  Lakewood, Multi-Fam.
     Hsg. VRDN (St. Moritz
     and Diamond Head),
     Financial Guaranty
     Insurance Corp., 2.8s,
     10/1/07           VMIG1   800,000  800,000         --        --       --          --    800,000  800,000
  
                          -- 1,745,000       --         --        --       --          --  1,745,000
  
  
  District of Columbia (1.4%)
  
  DC Hosp. Rev Bonds
     (Medlantic Healthcare),
     Ser. A, Municiap Bond
     Insurance Association
     (MBIA), 3s, 8/15/94 AAA 1,765,0001,765,000         --        --       --          --  1,765,0001,765,000
  
                          -- 1,765,000       --         --        --       --          --  1,765,000
  
  
  Georgia (2.0%)
  
  Atlanta, Urban Res. fin.
     Auth. Multi-Fam. Mtge.
     VRDN (Rental-West
     Paces), Ser. A, 2 1/2s,
     12/1/08            A-1+ 1,500,0001,500,000         --        --       --          --  1,500,0001,500,000
    <PAGE>
  Dekalb Co., Hsg. Auth.
     VRDN, 3.1s, 12/1/07A-1+ 1,000,0001,000,000         --        --       --          --  1,000,0001,000,000
  
       --                 -- 2,500,000       --         --        --       --          --  2,500,000
  
  
  Illinois (2.2%)
  
  Elmhurst, VRDN
     (Joint Accreditation
     Commission), 3.15s,
     7/1/18            VMIG1 2,000,0002,000,000         --        --       --          --  2,000,0002,000,000
  
  IL Hlth. Fac, Auth. VRDN
     (Midwest Cambridge Pro-
     ject), 2.8s, 1/1/15         A-1/P  800,000    800,000        --       --          --         --  800,000   800,000
  
       --                 -- 2,800,000       --         --        --       --          --  2,800,000
  
  Iowa (3.3%)
  
  Des Moines, Private
     College VRDN (U. of
     Osteopathic Medicine &
     Hlth.), 2.45s, 5/15/15       A-1+1,140,000  1,140,000        --       --          --         --1,140,000 1,140,000
  
  Salix, Mid-West Pwr.
     VRDN, 3.2s, 5/1/23VMIG1 3,095,0003,095,000         --        --       --          --  3,095,0003,095,000
  
       --                 -- 4,235,000       --         --        --       --          --  4,235,000
  
  Kentucky (1.3%)
  
  Jefferson Cnty., Indl. Dev
     VRDN (Belknap Inc.
     Project), 2.7s, 12/1/14       A-11,584,000  1,584,000        --       --          --         --1,584,000 1,584,000
  
         --                 -- 1,584,000       --         --        --       --          --  1,584,000<PAGE>
  
  Louisiana (2.9%)
  
  LA State Recvy. Dist.
    Sales Tax VRDN, MBIA,
     3.40s, 7/1/98     VMIG1 2,500,0002,500,000         --        --       --          --  2,500,0002,500,000
  
  Orleans, Levee Dist. Impt.
     VRDN, 3.95s, 11/1/14        VMIG11,170,000  1,170,000        --       --          --         --1,170,000 1,170,000
  
       --                 -- 3,670,000       --         --        --       --   3,670,000  3,670,000
  
  Massachusetts (4.7%)
  
  MA State General
     Obligation Bonds
     Ser. B, VRDN, 2.2s,
     12/1/97           VMIG1 3,000,0003,000,000         --        --       --          --  3,000,0003,000,000
     3s, 11/18/93      SP-1+ 1,000,0001,000,713         --        --       --          --  1,000,0001,000,713
  
  MA State Hsg. Fin. Agcy.
     Rev Bonds, 2 3/4s,
     6/1/17            VMIG1 2,000,0002,000,000         --        --       --          --  2,000,0002,000,000
  
       --                --  6,000,713       --         --        --       --  6,000,000   6,000,713
  
  Michigan (3.3%)
  
  Delta Cnty., Economic
     Dev. Corp. Env. Impt.
     VRDN (Escambia 
     Paper), Ser. C, 2.55s,
     12/1/23             P-1 2,300,0002,300,000         --        --       --          --  2,300,0002,300,000
  
  MI State Job Dev. Auth.
     VRDN, 2 3/4s, 12/1/14         A-11,900,000  1,900,000        --       --          --         --1,900,000 1,900,000
  
       --                 -- 4,200,000       --         --        --       --  4,200,000   4,200,000
    <PAGE>
Minnesota (3.0%)
  
  Albert Lea, Indl. Dev
     VRDN (Joyce Intl. Inc.
     Project), 2.7s, 7/1/94        A-1  400,000    400,000        --       --          --         --  400,000   400,000
  
  Minneapolis-St. Paul, Hsg.
     Fin. Board Single Fam.
     VRDN (Phase VI)
     Ser. B, Government
     National Mortgage
     Assn. (GNMA) Coll,
     2 1/2s, 8/1/13    SP-1+ 1,865,0001,865,000         --        --       --          --  1,865,0001,865,000
  
  St. Louis Park, Indl. Dev.
     VRDN (Unicare Home
     Inc. Project), 
     2 3/4s, 8/1/14      A-1 1,500,0001,500,000         --        --       --          --  1,500,0001,500,000
       --                 -- 3,765,000       --         --        --       --   3,765,000  3,765,000
  
  
  Mississippi (2.6%)
  
  Jackson Cnty., VRDN,
     2.408s, 12/1/16     P-1 3,300,0003,300,000         --        --       --          --  3,300,0003,300,000
  
       --                 -- 3,300,000       --         --        --       --   3,300,000  3,300,000
  
  Missouri (0.8%)
  
  MO State Hlth. & Ed. Auth.
     VRDN, 3s, 6/1/14  VMIG1 1,000,0001,000,000         --        --       --          --  1,000,0001,000,000
  
       --                 -- 1,000,000       --         --        --       --   1,000,000  1,000,000
  New Hampshire (0.8%)
  
  NH State Bus. Fin. Auth.
     VRDN, 2.95s, 11/1/20        VMIG11,000,000  1,000,000        --       --          --         --1,000,000 1,000,000
  
       --                 -- 1,000,000       --         --        --       --   1,000,000  1,000,000
  
  New Jersey (1.0%)
  
  Cape May Cnty., Muni.
     Util. Auth. Rev. Bonds,       AAA1,300,000  1,322,226        --       --          --         --1,300,000 1,322,226
     Ser. A, MBIA, 7 1/4s,
     1/1/16
  
       --                 -- 1,322,226       --         --        --       --   1,300,000  1,322,226
  
  
  New York (2.2%)
  
  NY City, Hsg. Dev. Corp.
     Mtge. VRDN
     (Carnegie Park Project),
     3.25s, 12/1/16      AAA 2,810,0002,810,000         --        --       --          --  2,810,0002,810,000
  
       --                 -- 2,810,000       --         --        --       --   2,810,000  2,810,000
  
  
  Ohio (2.4%)
  
  Ohio Cnty., Kentucky Poll.
     Control VRDN, 3 1/4s,
     10/1/15             P-1 3,000,0003,000,000         --        --       --          --  3,000,0003,000,000
       --                 -- 3,000,000       --         --        --       --   3,000,000  3,000,000
  
  
  Oklahoma (5.7%)
  
  OK State School Dist.
     Cash Management
     Certif. of Participation,
     3.18s, 6/29/94    SP-1+ 2,000,0002,006,234         --        --       --          --  2,000,0002,006,234
  
  Oklahoma Cnty., Indl.
     Auth. VRDN (Fred
     Jones Mtg. Co. Project),
     2 3/4s, 10/1/21     A-1 1,715,0001,715,000         --        --       --          --  1,715,0001,715,000
  
  Shawnee, Hosp. Auth. Rev.
     Bonds (Midamerica 
     Healthcare), Ser. B,
     6.15s, 10/1/14     A-1+   485,000  485,000         --        --       --          --    485,000  485,000
  
  Tulsa Cnty. Indl. Auth. 
     Hlth. Care VRDN
     (Laureate Psychiatric
     Project), 2.4s, 12/15/08     A-1+3,000,000  3,000,000        --       --          --         --         
  3,000,000        3,000,000
  
       --                 -- 7,206,234       --         --        --       --   7,200,000  7,206,234
  
  
  Pennsylvania (2.0%)
  
  Allegheny Cnty., Hosp.
     Dev. Auth. VRDN
     MBIA, 3.05s, 3/1/20         VMIG11,760,000  1,760,000        --       --          --         --1,760,000 1,760,000
  
  Delaware Cnty., Indl. Dev.
     Auth. Arpt. Fac. VRDN
     (UPS Project), 3.4s,
     12/1/15            A-1+   800,000  800,000         --        --       --          --    800,000  800,000
  
       --                 -- 2,560,000       --         --        --       --   2,560,000  2,560,000
    <PAGE>
South Dakota (2.3%)
  
  Rapid City, Economic
     Dev. VRDN (Civic Ctr.
     Assn. Partnership),
     3 1/4s, 12/1/16     P-1 2,970,0002,970,000         --        --       --          --  2,970,0002,970,000
  
       --                 -- 2,970,000       --         --        --       --   2,970,000  2,970,000
  
  Texas (2.8%)
  
  Bexar Cnty. Hsg. Fin.
     Corp. VRDN, Ser. A,
     3.2s, 11/1/06       A-1 2,500,0002,500,000         --        --       --          --  2,500,0002,500,000
  
  Orange Cnty., Naval &
     Port. Dist. Indl. Dev.
     Corp. Solid Waste
     Disposal VRDN
     (Horsehead Res. Dev.
     Project), 3.65s, 10/1/22      A-11,000,000  1,000,000        --       --          --         --         
  1,000,000        1,000,000
  
       --                 -- 3,500,000       --         --        --       --  3,500,000   3,500,000
  
  
  Washington (0.8%)
  
  Washington State Hsg.
     Fin. Auth. VRDN, Ser. D,
     2.8s, 1/1/26      SP-1+ 1,000,0001,000,000         --        --       --          --  1,000,0001,000,000
  
       --                 -- 1,000,000       --         --        --       --          --  1,000,000
  
  
  Wisconsin (5.5%)
  
  Alma, Poll. Control VRDN
     (Dairyland Pwr. Coop.
     Project), 2 3/4s, 2/1/15      P-12,900,000  2,900,000        --       --          --         --         
    2,900,000        2,900,000<PAGE>
  
  WI Hsg. & Economic Dev.
     VRDN, 3.3s, 3/1/20SP-1+ 2,000,0002,000,000         --        --       --          --  2,000,0002,000,000
  
  WI State Tax & Rev.
     Anticipaition Notes,
     3 1/4s, 6/15/94   SP-1+ 2,000,0002,005,001         --        --       --          --  2,000,0002,005,001
  
       --                 -- 6,905,001       --         --        --       --   6,900,000  6,905,001
  
  
  Total Municipal Bonds 
    and Notes             --        --         $72,838,174        --       -- $44,671,271         --       --$117,509,445
  
  (Combined cost $117,509,445)
  
  (Tax Exempt Money Market $72,838,174)
  
  (California Tax Exempt Money Market $44,671,271)
  
  
  
  Municipal Commercial Paper (6.9%) (a)
                   Principal                     Principal                      Principal
  Rating              Amount     Value   Rating     Amount     Value   Rating      Amount      Value
  
  Orange Cnty., Airport
     Rev. Bonds (John
     Wayne Airport),
     Municipal Bond
     Insurance Assn.,
     3s, 7/1/94           --        --       --      SP-1+   650,000  650,000          --    650,000  650,000
  
  Lake Cnty., Rev. Bonds,
     3 1/4s, 11/4/93    A-1+ 3,000,0003,000,000         --        --       --          --  3,000,0003,000,000
  
  Sweetwater Cnty., Rev.
     Bonds, 2 1/2s, 10/6/93       A-1+3,000,000  3,000,000        --       --          --         --3,000,000 3,000,000
    <PAGE>
Wake Cnty., Indl. Fac. &
     Poll. Control Fin. Auth.
     Rev. Bonds, 2 3/4s,
     12/2/93             A-1 2,000,0002,000,000         --        --       --          --  2,000,0002,000,000
  
  Total Municipal Commercial 
    Paper                 --        --          $8,000,000        --       --    $650,000         --         $8,650,000$8,650,000
  
  (Combined cost $8,650,000)
  (Tax Exempt Money market $8,000,000)
  (California Tax Exempt Money Market $650,000)
  
  Total Combined Investments        --       --$80,838,174        --      --  $45,321,271         --                -$126,159,445
  (combined cost $126,159,445)
  (Tax Exempt Money Market $80,838,174)
  (California Tax Exempt Money Market $45,321,271)
  
  
  (a) Percentages are based on proforma combined net assets of $126,439,892 which 
      correspond to a proforma combined net asset value per share of $1.00.
  
  
  </TABLE>
    <PAGE>
         PUTNAM TAX EXEMPT MONEY MARKET FUND,
  
         PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
  
                             AND
  
         PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND
  
    PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
    
  
  The accompanying unaudited pro forma combining investment
  portfolio and statement of assets and liabilities assumes
  that the exchange described in the next paragraph occurred as
  of September 30, 1993 and the unaudited pro forma combining
  statement of operations of Putnam Tax Exempt Money Market
  Fund ("Tax Exempt Money Market") as if the combination with
  Putnam California Tax Exempt Money Market Fund ("California
  Money Market") and Putnam New York Tax Exempt Money Market
  Fund ("New York Tax Exempt Money Market") had been
  consummated at the beginning of the fiscal year indicative of
  future operations or actual results that would have occurred
  had the combination been consummated at the beginning of the
  fiscal year presented.  These statements have been derived
  from the September 30, 1993 audited annual reports of Tax
  Exempt Money Market and California Tax Exempt Money Market
  and from New York Tax Exempt Money Market's books and records
  utilized in calculating the daily net asset value at
  September 30, 1993, and for the twelve month period then
  ended.
  
  The pro forma statements give effect to the proposed transfer
  of all the assets of California Tax Exempt Money Market and
  New York Tax Exempt Money Market to Tax Exempt Money Market
  in exchange for the assumption by Tax Exempt Money Market of
  all of the liabilities of California Tax Exempt Money Market
  and New York Tax Exempt Money Market and for a number of Tax
  Exempt Money Market shares equal in value to the value of the
  net assets of California Tax Exempt Money Market and New York
  Tax Exempt Money Market transferred to Tax Exempt Money
  Market.  Under generally accepted accounting principles, the
  historical cost of the investment securities will be carried
  forward to the surviving entity and the results of operations
  of Tax Exempt Money Market for pre-combined periods will not
  be restated.  The pro forma statements do not reflect the
  expenses of any of the funds in carrying out its obligations
  under the Agreement and Plan of Reorganization.
  
  The unaudited pro forma combining statements should be read
  in conjunction with the separate financial statements of Tax
  Exempt Money Market, California Tax Exempt Money Market and
  New York Tax Exempt Money Market included elsewhere in this
  statement of additional information.
  
  
  
  
  
              PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
  
                      SEPTEMBER 30, 1993
  
  The pro forma adjustments to these financial statements are
  comprised of:
  
    (A)  Increase in management and investment advisory fee
         of Tax Exempt Money Market paid to Putnam         
  Investments, Inc. to reflect the new fee structure       
  applied to the combined assets including California           Tax
  Exempt Money Market and New York Tax Exempt         Money
  Market.
  
    (B)  Decrease of expenses as a result of the merger.
  
    (C)  Elimination of the voluntary expense limitation and
         absorption of expenses by Putnam Investments, Inc.
         due to the increased combined asset based.
  
    
      <PAGE>
<TABLE>
  <CAPTIONS>
                                             PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  Pro Forma Combining
  Statement of 
  Assets and Liabilities
  September 30, 1993
  (Unaudited)
  <S> <C>                                     <C>                    <C>                    <C>   <C>
                                 Tax Exempt Money  California Tax Exempt  New York Tax Exempt  Pro Forma  Pro Forma
                                      Market Fund      Money Market Fund    Money Market Fund Adjustments Combined
  Assets
  
  Investments in securities, 
    at amortized cost                 $80,838,174            $45,321,271          $52,409,756           $178,569,201
     (combined cost, $178,569,201)
  Cash                                     44,571                 36,432              775,896              856,899
  Dividends, interest and other receivables                      364,273              172,992          266,457            803,722
  Receivable for shares of the Fund sold  180,479                 40,026            1,987,554             2,208,059
  
  Total assets                         81,427,497             45,570,721           55,439,663      0     182,437,881
  
  Liabilities
  Distributions payable to shareholders     6,945                 57,028               50,559              114,532
  Payable for shares of the Fund repurchased                     179,377               21,010        1,645,549           1,845,936
  Payable for compensation of Manager      81,370                 53,282               19,030              153,682
  Payable for distribution fees            18,083                 19,782               12,722              50,587
  Payable for administrative services       1,551                  1,313                1,313               4,177
  Payable for compensation of Trustees        148                    125                  125                398
  Payable for investor servicing and 
    custodian fees                         52,412                 27,360               21,927              101,699
  Other accrued expenses                   11,827                 26,713               13,644              52,184
  
  Total liabilities                       351,713                206,613            1,764,869      0      2,323,195
  
  Net assets                          $81,075,784            $45,364,108          $53,674,794     $0    $180,114,686
    <PAGE>
  Represented by
  
  Shares outstanding                   81,075,784             45,364,108           53,674,794            180,114,686
  
  Net asset value per share                 $1.00                  $1.00               $1.00                $1.00
  
  
  </TABLE>
    <PAGE>
<TABLE>
  <CAPTIONS>
  
                                             PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  Pro Forma Combining
  Statement of Operations
  Year ended September 30, 1993
  (Unaudited)
  
  <S> <C>                                     <C>                    <C>                    <C>    <C>
                                 Tax Exempt Money  California Tax Exempt  New York Tax Exempt   Pro Forma   Pro Forma
                                      Market Fund      Money Market Fund    Money Market Fund  Adjustments  Combined
  Investment income:
  Interest                             $2,253,568             $1,431,540           $1,462,840              $5,147,948
  
       Total investment income          2,253,568              1,431,540            1,462,840       0       5,147,948
  
  Expenses:                                                                                                     
                                                                                                    
  Compensation of Manager                 357,072                241,375              248,196    455(A)      847,098
  Investor servicing and custodian fees   244,681                114,899              106,941  (11,787)(B)   454,734
  Compensation of Trustees                  9,565                  6,103                6,243       0        21,911
  Reports to shareholders                  13,248                 13,114               15,057  (18,819)(B)   22,600
  Postage                                  10,322                  4,767                6,595       0        21,684
  Auditing                                 14,786                 17,444               14,069  (31,168)(B)   15,131
  Legal                                    12,128                 12,034               11,857       0        36,019
  Administrative services                   5,676                  4,642                4,642       0        14,960
  Distribution fees                        78,252                 60,823               57,125       0        196,200
  Amortization of organization fees           271                      0                    0       0          271
  Registration fees                             0                      0                6,725       0         6,725
  Other                                    40,202                    115                1,861       0        42,178
  Fees waived and other expenses 
   absorbed by Manager                          0                      0             (11,461)   11,461(C)       0
  
       Total expenses                     786,203                475,316              467,850   (49,858)    1,679,511
  
  Net investment income                 1,467,365                956,224              994,990    49,858     3,468,437
  
  Net realized gain on investments          3,603                      0                4,409                 8,012
  
  Net gain on investments                   3,603                      0                4,409       0         8,012
  
  Net increase in net assets resulting from
     operations                        $1,470,968               $956,224             $999,399    $49,858   $3,476,449
  
  
  </TABLE>
    <PAGE>
<TABLE>
  <CAPTION>
  
  The Pro Forma Combining Investment Portfolio of
  Putnam Tax Exempt Money Market Fund,
  Putnam California Tax Exempt Money Market Fund and
  Putnam New York Tax Exempt Money Market Fund
  
  September 30, 1993
  (UNAUDITED)
  
                          Tax Exempt Money               California Tax Exempt           New York Tax Exempt    
                          Market Fund                    Money Market Fund               Money Market Fund Pro Forma 
  
  Municipal Bonds
  and Notes (94.3%)(a)         Principal                       Principal                 Principal          Rating           Amount 
  <S> <C>              <C>    <C>    <C>     <C>      <C>    <C>     <C>       <C>    <C>      <C>     <C>
  California (27.0%)
  
  CA Higher Ed. Loan Auth.
     Inc. Student Loan
     Variable Rate Demand Notes
     (VRDN), 2.9s, 8/1/03   VMIG1     $1,000,000      $1,000,000       -         -      -        -       -      -    -
         
,000,000
  
  CA Hlth. Fac. Auth. 
     VRDN (Kaiser Permanente Med.)
     2 1/4s, 10/1/13     -      -      -    A-1+      $1,500,000        $1,500,000      -        -       -      - 
            
,500,000
  
  CA Hlth. Fac. Fin. Auth.
     VRDN
     2 3/4s, 8/1/17                        VMIG1  985,000985,000       -         -      -        - 985,000985,000
     (Kaiser Permanente Med.
     Project), Ser. A,
     2.7s, 8/15/25       -      -      -    A-1+2,000,000      2,000,000         -      -        -       -   2,000,000     
 
  
  CA Pub. Cap. Impt. Fin.
     Auth. VRDN (Pooled
     Project), 2.6s, 6/1/28     -      -       -    VMIG1      3,000,000 3,000,000      -        -       -      -     
  3,000,000      3,000,000
  
  Chula Vista, Coml. Dev
     VRDN (South Bay
     Ambulatory Surgical
     Ctr.), Ser. A, 2.9s, 12/1/99      -       -        -  VMIG1         1,260,000       1,260,000       -      -    - 
 
  1,260,000      1,260,000
  
  Fontana, Certif. of
     Participation VRDN,
     4 1/4s, 7/1/21    A-2     3,000,000        3,000,000      -       -         -      -        -       -      -                   
,000,000
    <PAGE>
Hermosa Beach, Parking
 Parking
     Auth. Certif. of
     Participation VRDN,
     2.6s, 12/1/13       -      -      -     A-11,600,000      1,600,000         -      -        -       -   1,600,000
Irvine Ranch
     VRDN, Ser. B, 3.35s,
     10/1/04             -      -      -    A-1+2,100,000      2,100,000         -      -        -       -   2,100,000
           
  
  Kern, Cmnty College
     Dist. Cerif. of
     Participation VRDN
     (Fin. project), 3s, 3/1/18 -      -       -     A-1+      2,000,000 2,000,000      -        -       -      -     
  2,000,000      2,000,000
  
  Loma Linda, Hosp. VRDN
     (Loma Linda U. Med.
     Ctr.), Ser. B, 2.9s, 12/1/15      -       -        -   A-1+         2,000,000       2,000,000       -      -    -
 
  2,000,000      2,000,000
  
  Los Angeles Cnty.,
     Cmnty. Dev. Certif. of
     Participation VRDN
     (Willow Brook Project.),
     2.8s, 11/1/15       -      -      -     A-12,200,000      2,200,000         -      -        -       -   2,200,000 
         
  
  Los Angeles Cnty., Hsg.
     Auth. Multi-Fam. Hsg.
     VRDN (River Park Apt.
     Project), Ser. D, 3.05s,
     9/1/10              -      -      -   VMIG12,000,000      2,000,000         -      -        -       -   2,000,000
           
  
  Los Angeles, Multi-Fam. 
     Hsg. VRDN (Masselin
     Manor Project), 3s, 7/1/15 -      -       -    VMIG1      2,000,000 2,000,000      -        -       -      -     
  2,000,000      2,000,000
  
  Los Angeles, Unified
     School Dist. Tax &
     Rev. Anticipation
     Notes (TRAN), 3 1/4s,
     7/15/94             -      -      -   SP-1+2,500,000      2,509,594         -      -        -       -   2,500,000
              
  
  Moorpark, Multi-Fam.
     VRDN (Le Club Apts.
     Project), Ser. A, 3.05s,
     11/1/15             -      -      -    A-1+2,000,000      2,000,000         -      -        -       -   2,000,000
              
  
  Oakland, Certif. of
     Participation VRDN
     (Cap. Equipment
     Project), 3.4s, 12/1/15    -      -       -    VMIG1      2,000,000 2,000,000      -        -       -      -     
  2,000,000      2,000,000
    <PAGE>
Orange Cnty., Certif of
     Participation VRDN
     (Sanitation Dist.)
     3.35s, 8/1/15       -      -      -   VMIG11,000,000      1,000,000         -      -        -       -   1,000,000
              
  
  Orange Cnty., TRAN,
     Ser A. 3s, 6/30/94  -      -      -   VMIG12,000,000      2,007,290         -      -        -       -   2,000,000 
             
  
  Palm Springs, Cmnty.
     Redev. Agcy. Certif.
     of Participation VRDN
     (Headquarters Hotel-7),
     2.95s, 12/1/14      -      -      -     A-1  200,000200,000       -         -      -        - 200,000200,000
     (Headquarters Hotel-10),
     2.95s, 12/1/14      -      -      -     A-12,100,000      2,100,000         -      -        -       -   2,100,000
              
  
  Sacramento Cnty.,
     Multi-Fam. Hsg. VRDN
     (River Oaks Apts.)
     Ser. E, 3.05s, 9/15/07     -      -       -    VMIG1      2,000,000 2,000,000      -        -       -      -     
  2,000,000      2,000,000
  
  Sacramento Cnty., TRAN
     3s, 7/29/94         -      -      -   SP-1+1,000,000      1,000,358         -      -        -       -   1,000,000
 
  
  San Bernardino Cnty.
     Hsg. Auth. Multi-Fam,
     VRDN (Brookside
     Meadows), Ser. A,
     4.2s, 8/1/05        -      -      -   VMIG21,000,000      1,000,000         -      -        -       -   1,000,000
              
  
  San Diego Cnty., TRAN
     Ser. A, 3 1/4s, 7/29/94    -      -       -    SP-1+      2,500,000 2,509,029      -        -       -      -     
  2,500,000      2,509,029
  
  Triunfo, Sanitation Dist.
     Certif. of Participation
     VRDN (Wastewater
     Reclamaiton Project),
     3s, 6/1/19          -      -      -    A-1+2,200,000      2,200,000         -      -        -       -   2,200,000 
             
  
  Union City, Hsg. Mtge.
     VRDN (Green Haven 
     Apts. Project), Ser. A,
     3.35s, 10/1/11      -      -      -   VMIG21,500,000      1,500,000         -      -        -       -   1,500,000  
            
  
        -                -     4,000,000                -     44,671,271         -      -        -       -      - 
                  
  
  Colorado (1.0%)
  
  Denver, Urban Renewal
     Auth. Tax Increment
     VRDN, Ser. A, 2.9s,
       3/1/10          SP-1+945,000945,000       -        -      -       -         -      -        - 945,000945,000<PAGE>
  
  Lakewood, Multi-Fam.
     Hsg. VRDN (St. Moritz
     and Diamond Head),
     Financial Guaranty
     Insurance Corp., 2.8s,
     10/1/07         VMIG1800,000800,000       -        -      -       -         -      -        - 800,000800,000
  
                         -     1,745,000       -        -      -       -         -      -        -       -   1,745,000
  
  District of Columbia (1.0%)
  
  DC Hosp. Rev Bonds
     (Medlantic Healthcare),
     Ser. A, Municiap Bond
     Insurance Association
     (MBIA), 3s, 8/15/94      AAA      1,765,0001,765,000      -       -         -      -        -       -      -    
               
  
                         -     1,765,000       -        -      -       -         -      -        -       -   1,765,000
  
  Georgia (1.4%)
  
  Atlanta, Urban Res. fin.
     Auth. Multi-Fam. Mtge.
m. Mtge.
     VRDN (Rental-West
     Paces), Ser. A, 2 1/2s,
     12/1/08          A-1+     1,500,000        1,500,000      -       -         -      -        -       -      - 
                  
  
  Dekalb Co., Hsg. Auth.
     VRDN, 3.1s, 12/1/07     A-1+      1,000,0001,000,000      -       -         -      -        -       -      - 
                  
,000,000
        -                -     2,500,000       -        -      -       -         -      -        -       -   2,500,000
  
  Illinois (1.6%)
s (1.6%)
  
  Elmhurst, VRDN
     (Joint Accreditation
     Commission), 3.15s,
     7/1/18          VMIG1     2,000,000        2,000,000      -       -         -      -        -       -      - 
                  
  
  IL Hlth. Fac, Auth. VRDN
     (Midwest Cambridge Project),
     2.8s, 1/1/15    A-1/P800,000800,000       -        -      -       -         -      -        - 800,000800,000
  
        -                -     2,800,000       -        -      -       -         -      -        -       -   2,800,000
  
,000
  
  Iowa (2.4%)
  
  Des Moines, Private
     College VRDN (U. of
     Osteopathic Medicine &
     Hlth.), 2.45s, 5/15/15  A-1+      1,140,0001,140,000      -       -         -      -        -       -      -     
  1,140,000      1,140,000
    <PAGE>
Salix, Mid-West Pwr.
     VRDN, 3.2s, 5/1/23     VMIG1      3,095,0003,095,000      -       -         -      -        -       -      -  
                 
  
        -                -     4,235,000       -        -      -       -         -      -        -       -   4,235,000
  
  Kentucky (0.9%)
  
  Jefferson Cnty., Indl. Dev.
     VRDN (Belknap Inc.
nap Inc.
     Project), 2.7s, 12/1/14  A-1      1,584,0001,584,000      -       -         -      -        -       -      -  
   
  1,584,000      1,584,000
  
        -                -     1,584,000       -        -      -       -         -      -        -       -   1,584,000
  
  Louisiana (2.0%)
  
  LA State Recvy. Dist.
    Sales Tax VRDN, MBIA,
     3.40s, 7/1/98   VMIG1     2,500,000        2,500,000      -       -         -      -        -       -      -  
                 
,500,000
  
  Orleans, Levee Dist. Impt.
     VRDN, 3.95s, 11/1/14   VMIG1      1,170,0001,170,000      -       -         -      -        -       -      - 
                  
,170,000
  
        -                -     3,670,000       -        -      -       -         -      -        -      3,670,000 
                  
  
  Massachusetts (3.3%)
  
  MA State General
     Obligation Bonds
     Ser. B, VRDN, 2.2s,
     12/1/97         VMIG1     3,000,000        3,000,000      -       -         -      -        -       -      -  
                 
,000,000
     3s, 11/18/93    SP-1+     1,000,000        1,000,713      -       -         -      -        -       -      -  
                 
,000,713
  
  MA State Hsg. Fin. Agcy.
     Rev Bonds, 2 3/4s,
     6/1/17          VMIG1     2,000,000        2,000,000      -       -         -      -        -       -      -  
                 
,000,000
  
        -                -     6,000,713       -        -      -       -         -      -        -      6,000,000  
                 
  
  Michigan (2.3%)
  
  Delta Cnty., Economic
     Dev. Corp. Env. Impt.
     VRDN (Escambia 
     Paper), Ser. C, 2.55s,
     12/1/23           P-1     2,300,000        2,300,000      -       -         -      -        -       -      - 
                  
,300,000
  
  MI State Job Dev. Auth.
     VRDN, 2 3/4s, 12/1/14    A-1      1,900,0001,900,000      -       -         -      -        -       -      -   
                
,900,000
  
        -                -     4,200,000       -        -      -       -         -      -        -      4,200,000 
                  
    <PAGE>
Minnesota (2.1%)
  
  Albert Lea, Indl. Dev.
     VRDN (Joyce Intl. Inc.
     Project), 2.7s, 7/1/94   A-1400,000 400,000        -      -       -         -      -        -       -  
     
  400,000          400,000
  
  Minneapolis-St. Paul, Hsg.
     Fin. Board Single Fam.
     VRDN (Phase VI)
     Ser. B, Government
     National Mortgage
     Assn. (GNMA) Coll,
     2 1/2s, 8/1/13  SP-1+     1,865,000        1,865,000      -       -         -      -        -       -      -  
                 
,865,000
  
  St. Louis Park, Indl. Dev.
     VRDN (Unicare Home
     Inc. Project), 2 3/4s, 8/1/14   A-1        1,500,000      1,500,000         -      -        -       -      -    - 
             
  -              1,500,000     1,500,000
  
        -                -     3,765,000       -        -      -       -         -      -        -      3,765,000 
                  
  
  Mississippi (1.8%)
  
  Jackson Cnty., VRDN,
     2.408s, 12/1/16   P-1     3,300,000        3,300,000      -       -         -      -        -       -      - 
                  
  
        -                -     3,300,000       -        -      -       -         -      -        -      3,300,000 
                  
  
  Missouri (0.6%)
  
  MO State Hlth. & Ed. Auth.
     VRDN, 3s, 6/1/14VMIG1     1,000,000        1,000,000      -       -         -      -        -       -      - 
                  
  
        -                -     1,000,000       -        -      -       -         -      -        -      1,000,000 
                  
  
  New Hampshire (0.6%)
  
  NH State Bus. Fin. Auth.
     VRDN, 2.95s, 11/1/20   VMIG1      1,000,0001,000,000      -       -         -      -        -       -      -  
                 
  
        -                -     1,000,000       -        -      -       -         -      -        -      1,000,000 
                  
  
  New Jersey (0.7%)
  
  Cape May Cnty., Muni.
     Util. Auth. Rev. Bonds,  AAA      1,300,0001,322,226      -       -         -      -        -       -      -  
   
  1,300,000      1,322,226
     Ser. A, MBIA, 7 1/4s,
     1/1/16
        -                -     1,322,226       -        -      -       -         -      -        -      1,300,000 
                  
    <PAGE>
New York (30.7%)
  
  Erie Cnty., Anticipation
     Notes, 3.3s, 8/5/94 -      -      -       -        -      -    MIG1$2,000,000      $2,003,268       -   2,000,000  
            
  
  Monroe Cnty., Indl. Dev.
     Agcy. VRDN (Columbia/
     Sussex) 5s, 11/1/14 -      -      -       -        -      -     AAA 2,410,000       2,410,000       -   2,410,000
              
  
  NY City, Rev. Anticipation
     Notes (RAN)   
     3.05s, 3/15/97      -      -      -       -        -      -   VMIG1 2,500,000       2,500,000       -   2,500,000
              
  
  NY City G.O. Dly VRDN,
     3.3s, 8/15/18       -      -      -       -        -      -   VMIG1 1,800,000       1,800,000           1,800,000 
             
  
  NY City, Hsg. Dev. Corp.
     Mtge. VRDN
     (Carnegie Park Project),
     3.25s, 12/1/16    AAA     2,810,000        2,810,000      -       -         -    AAA4,000,000      4,000,000    - 
             
000
     (Parkgate Tower Project),
     2.9s, 12/1/07       -      -      -       -        -      -     A-1   585,000585,000        - 585,000585,000
  
     (Upper Fifth Ave.
     Project), Ser A, 2.8s, 
     1/1/16              -      -      -       -        -      -   VMIG1 1,000,000       1,000,000       -   1,000,000
              
     (East 96th St. Project),
     Ser. A, 2.35s, 8/1/15      -      -       -        -      -       -     VMIG1       2,000,000      2,000,000    -  
            
  
  NY City, Indl Dev. Agcy.
     VRDN, 3.1s, 12/1/01 -      -      -       -        -      -   VMIG1 1,000,000       1,000,000       -   1,000,000
              
  
  NY City, Indl Dev. Agcy.
     (Laguardia Arpt project)
     2.15s, 12/01/15     -      -      -       -        -      -     A-1 2,000,000       2,000,000       -   2,000,000 
             
  
  NY City, Muni. Wtr. & Swr.
     Syst. Rev. Anticipation
     Notes 
     Ser. A, 2 3/4s, 4/15/94    -      -       -        -      -       -      SP-1       3,000,000      3,005,385    -  
            
  3,000,000      3,005,385
  
  Ny State Energy
     Research & Dev. Auth.
     Poll. Controll VRDN
     (NY State Elec. & Gas
     Corp.) Ser. D, 2.9s,
     12/1/15             -      -      -       -        -      -    A-1+   100,000100,000        - 100,000100,000
     (NY State Elec. & Gas
     Corp.), Ser. A, 2 3/4s,
     3/1/15              -      -      -       -        -      -    A-1+ 2,000,000       2,000,000       -   2,000,000
              
    <PAGE>
   (NY State Elec. & Gas
     Corp.), Ser. C, 2.6s,
     7/15/15             -      -      -       -        -      -    A-1+ 2,000,000       1,999,999       -   2,000,000
              
     (NY State Energy
     Rochester Gas) 2.15s,
     10/01/14            -      -      -       -        -      -     A-1 1,000,000       1,000,000       -   1,000,000
              
  
     (Lilco Project), Ser. B,
     2 1/2s, 3/1/16      -      -      -       -        -      -   VMIG1 2,250,000       2,250,000       -   2,250,000
              
     (Niagra Mohawk Pwr.
     Corp.) Ser. A, 3.55s,
     7/1/15              -      -      -       -        -      -     A-1 2,000,000       2,000,000       -   2,000,000
              
  
  NY State Env. Fac. Corp.
     Resource Recvy. VRDN
     (Equity Huntington
     Project), 2.2s, 11/1/14    -      -       -        -      -       -       A-1       2,000,000      2,000,000    - 
             
  2,000,000      2,000,000
  
  NY State Job Dev. Auth.
     VRDN
     Ser. A, 3.25s, 3/1/05      -      -       -        -      -       -       A-1       2,000,000      2,000,000    - 
             
     Ser. B, 2.6s, 3/1/00-      -      -       -        -      -    A-1+   605,000605,000        - 605,000605,000
     Ser. C, 2.6s, 3/1/00-      -      -       -        -      -    A-1+ 1,800,000       1,800,000       -   1,800,000
              
     Ser. E, 2.35s, 3/1/99      -      -       -        -      -       -      A-1+245,000  245,000       -245,000 
                  
  
  NY State Med. Care Fac.
     Fin. Agcy. VRDN, 3s,
     11/1/08             -      -      -       -        -      -   VMIG1 4,600,000       4,600,000       -   4,600,000
              
  
  NY State Tax & Rev.
     Anticipation Notes,
     2 3/4s, 12/31/93    -      -      -       -        -      -    SP1+ 2,000,000       2,002,429       -   2,000,000 
             
  
  Nassau Cnty., RAN,
     3.2s, 10/26/93      -      -      -       -        -      -   SP-1+ 1,000,000       1,000,738       -   1,000,000
              
     3.35s, 11/15/93     -      -      -       -        -      -   SP-1+ 1,000,000       1,001,300       -   1,000,000
              
  
  North Hempstead
     Solid Waste Mgmt.
     Auth. VRDN, 2.5s,
     1/1/12              -      -      -       -        -      -    A-1+ 1,500,000       1,500,000       -   1,500,000
              
  
  Suffolk Cnty., Wtr. Auth.
             Anticipation Notes, 
     3 1/4s, 12/2/93     -      -      -       -        -      -    MIG1 2,000,000       2,001,339       -   2,000,000
              
  
  Westchester Cnty., TAN
     2.75s, 10/21/93     -      -      -       -        -      -   VMIG1 2,000,000       2,000,298       -   2,000,000
              
  
        -                -     2,810,000       -        -      -        52,395,000      52,409,756       -  55,205,000
              
  
    <PAGE>
Ohio (1.7%)
  
  Ohio Cnty., Kentucky Poll.
     Control VRDN, 3 1/4s,
     10/1/15           P-1     3,000,000        3,000,000      -       -         -      -        -       -      - 
                  
  
        -                -     3,000,000       -        -      -       -         -      -        -      3,000,000
                   
  
  Oklahoma (4.0%)
  
  OK State School Dist.
     Cash Management
     Certif. of Participation,
     3.18s, 6/29/94  SP-1+     2,000,000        2,006,234      -       -         -      -        -       -      - 
                  
  
  Oklahoma Cnty., Indl.
     Auth. VRDN (Fred
     Jones Mtg. Co. Project),
     2 3/4s, 10/1/21   A-1     1,715,000        1,715,000      -       -         -      -        -       -      - 
                  
  
  Shawnee, Hosp. Auth. Rev.
     Bonds (Midamerica 
     Healthcare), Ser. B,
     6.15s, 10/1/14   A-1+485,000485,000       -        -      -       -         -      -        - 485,000485,000
  
  Tulsa Cnty. Indl. Auth.
     Hlth. Care VRDN
     (Laureate Psychiatric
     Project), 2.4s, 12/15/08A-1+      3,000,0003,000,000      -       -         -      -        -       -      - 
    
  3,000,000      3,000,000
  
        -                -     7,206,234       -        -      -       -         -      -        -      7,200,000
                   
  
  Pennsylvania (1.4%)
  
  Allegheny Cnty., Hosp.
     Dev. Auth. VRDN
     MBIA, 3.05s, 3/1/20    VMIG1      1,760,0001,760,000      -       -         -      -        -       -      - 
                  
  
  Delaware Cnty., Indl. Dev.
     Auth. Arpt. Fac. VRDN
     (UPS Project), 3.4s,
     12/1/15          A-1+800,000800,000       -        -      -       -         -      -        - 800,000800,000
  
        -                -     2,560,000       -        -      -       -         -      -        -      2,560,000
                   
  
  South Dakota (1.6%)
  
  Rapid City, Economic
     Dev. VRDN (Civic Ctr.
     Assn. Partnership),
     3 1/4s, 12/1/16   P-1     2,970,000        2,970,000      -       -         -      -        -       -      -
                   
  
        -                -     2,970,000       -        -      -       -         -      -        -      2,970,000
                   
  
  
  Texas (1.9%)
  
  Bexar Cnty. Hsg. Fin.
     Corp. VRDN, Ser. A,
     3.2s, 11/1/06     A-1     2,500,000        2,500,000      -       -         -      -        -       -      - 
                  
  
  Orange Cnty., Naval & 
     Port. Dist. Indl. Dev.
     Corp. Solid Waste
     Disposal VRDN
     (Horsehead Res. Dev.
     Project), 3.65s, 10/1/22 A-1      1,000,0001,000,000      -       -         -      -        -       -      - 
    
  1,000,000      1,000,000
  
        -                -     3,500,000       -        -      -       -         -      -        -      3,500,000
                   
  
  Washington (0.5%)
  
  Washington State Hsg.
     Fin. Auth. VRDN, Ser. D,
     2.8s, 1/1/26    SP-1+     1,000,000        1,000,000      -       -         -      -        -       -      -
                   
000
  
        -                -     1,000,000       -        -      -       -         -      -        -       -   1,000,000
  
  Wisconsin (3.8%)
  
  Alma, Poll. Control VRDN
     (Dairyland Pwr. Coop.
     Project), 2 3/4s, 2/1/15 P-1      2,900,0002,900,000      -       -         -      -        -       -      -
     
  2,900,000      2,900,000
  
  WI Hsg. & Economic Dev.
     VRDN, 3.3s, 3/1/20     SP-1+      2,000,0002,000,000      -       -         -      -        -       -      - 
                  
  
  WI State Tax & Rev.
     Anticipaition Notes,
     3 1/4s, 6/15/94 SP-1+     2,000,000        2,005,001      -       -         -      -        -       -      -
                   
  
        -        6,900,000     6,905,001       -        -      -       -         -      -        -       -   6,905,001
  
  Total Municipal Bonds and Notes      -       -     $72,838,174       -         -     $44,671,271       -      - 
                  
  -           $169,919,201
  (Combined cost $169,919,201)
  (Tax Exempt Money Market $72,838,174)
  (California Tax Exempt Money Market $44,671,271)
  (New York Tax Exempt Money Market $52,409,756)
  
    <PAGE>
  Municipal Commercial Paper (4.8%) (a)
                 Principal                      Principal                Principal                      Principal
   Rating           Amount  Value Rating  Amount    Value Rating  Amount     Value Rating   Amount   Value
  
  Orange Cnty., Airport
     Rev. Bonds (John
     Wayne Airport),
     Municipal Bond
     Insurance Assn.,
     3s, 7/1/94          -      -      -   SP-1+  650,000650,000       -         -      -        - 650,000650,000
  
  Lake Cnty., Rev. Bonds,
     3 1/4s, 11/4/93  A-1+     3,000,000        3,000,000      -       -         -      -        -       -      -
                   
  
  Sweetwater Cnty., Rev.
     Bonds, 2 1/2s, 10/6/93  A-1+      3,000,0003,000,000      -       -         -      -        -       -      -     
  3,000,000      3,000,000
  
  Wake Cnty., Indl. Fac. &
     Poll. Control Fin. Auth.
     Rev. Bonds, 2 3/4s,
     12/2/93           A-1     2,000,000        2,000,000      -       -         -      -        -       -      - 
                  
  
  Total Municipal Commercial Paper     -       -      $8,000,000       -         -        $650,000       -      -    - 
             
  -             $8,650,000    $8,650,000
  (Combined cost $8,650,000)
  (Tax Exempt Money market $8,000,000)
  (California Tax Exempt Money Market $650,000)
  (New York Tax Exempt Money Market $0)
  
  
  Total Combined Investments    -      -      $80,838,174      -       -      $45,321,271        -       - $52,409,756
              
  -           $178,569,201
  (combined cost $178,569,201)
  (Tax Exempt Money Market $80,838,174)
  (California Tax Exempt Money Market $45,321,271)
  (New York Tax Exempt Money Market $52,409,756)
  
  (a) Percentages are based on proforma combined net assets of $180,114,686 which 
      correspond to a proforma combined net asset value per share of $1.00.
  
  
    /TABLE
<PAGE>
  
  
             PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND 
  
                        One Post Office Square
  
                      Boston, Massachusetts 02109
  
  
                                                         April 13, 1994
  
  
  To the Shareholders:
  
    Enclosed you will find several documents being furnished
  to you in connection with a meeting of Putnam New York Tax
  Exempt Money Market Fund (the "New York Fund") shareholders
  to be held         June 2, 1994 at 1:00 p.m. in Boston,
  Massachusetts.  I hope this material will receive your
  immediate attention and that, if you cannot attend the
  meeting in person, you will vote your proxy promptly.
  
    The Trustees of         the New York         Fund are
  recommending that shareholders approve a reorganization of
  the New York Fund in which your shares of the New York Fund
          would, in effect, be exchanged at net asset value for
  shares of Putnam Tax Exempt Money Market Fund (the "Money
  Market Fund").  Under the proposed plan of reorganization,
  the New York Fund will transfer all of its assets to the
  Money Market Fund in return for shares of the Money Market
  Fund and the assumption by the Money Market Fund of all of
  the liabilities of the New York Fund.  After the transfer,
  the shares of the Money Market Fund will be distributed to
  holders of New York Fund shares thereby liquidating the New
  York Fund.          Both Funds are managed by Putnam
  Investment Management, Inc. ("Putnam Management") and have
  the same Trustees.  You should note that a similar
  reorganization involving Putnam California Tax Exempt Money
  Market Fund (the "California Fund") and the Money Market Fund
  is concurrently being submitted to the Shareholders of the
  California Fund.
  
    Each Fund seeks as high a level of current income exempt
  from federal income tax (and, in the case of the New York
  Fund, exempt from New York income tax) as Putnam Management
  believes is consistent with maintenance of liquidity and
  stability of principal.  The principal difference between the
  Funds is that the New York Fund normally invests in        
  tax-exempt securities of New York issuers while the Money
  Market Fund normally invests in         tax-exempt securities
  of issuers located in         various states (including the
  District of Columbia).  Because of the similarities between
  the Funds, the proposed reorganization will not affect the
  general strategy or style in which the Portfolio Manager will
  manage your investment.  Shareholders should recognize,
  however, that income distributions received by them on shares
  of the Money Market Fund following the reorganization will
  not        be exempt from New York income tax.
  
    Putnam Management believes that combining your fund with
  the Money Market Fund offers shareholders of the New York
  Fund an opportunity to pursue a similar investment objective
  with greater economies of scale that, over the longer term,
  will result in lower operating expense ratios.  Further,
  Putnam Management is concerned that if current trends in the
  Fund's net asset levels continue, the New York Fund might
  soon be burdened with an uneconomically high expense ratio.
  
  YOUR TRUSTEES BELIEVE THAT THE PROPOSED COMBINATION WITH THE
  MONEY MARKET FUND IS IN THE BEST INTERESTS OF SHAREHOLDERS
  AND RECOMMEND THAT YOU VOTE IN FAVOR OF IT.
  
    The Notice of Meeting of Shareholders and the accompanying
  Prospectus/Proxy Statement and form of proxy are enclosed. 
  Please read them carefully.  If you are unable to attend the
  meeting in person, we urge you to sign, date        and
  return the proxy card so that your shares may be voted in
  accordance with your instructions.
  
    Since the meeting is less than eight weeks away, I urge
  you to give the enclosed material your prompt attention so
  that your fund will not have to incur the expense of
  additional mailings.
  
                             Sincerely yours,
  
  
  
                             George Putnam
                               Chairman<PAGE>
             PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND
  
                   NOTICE OF MEETING OF SHAREHOLDERS
  
  To the Shareholders of Putnam New York Tax Exempt Money
  Market Fund
  
    NOTICE IS HEREBY GIVEN that a Meeting of Shareholders (the
  "Meeting") of Putnam New York Tax Exempt Money Market Fund
  (the "Fund" or the "New York Fund") will be held at One Post
  Office Square, 8th Floor, Boston, Massachusetts, on        
  June 2, 1994, at 1:00         p.m., Boston time, for the
  following purposes:
  
    1.   To consider and act upon an Agreement and Plan of
           Reorganization providing for the transfer of all of
           the assets of the Fund to Putnam Tax Exempt Money
           Market Fund (the "Money Market Fund") in exchange for
           shares of the Money Market Fund and the assumption by
           the Money Market Fund of all of the liabilities of
           the Fund, and the distribution of such shares to the
           shareholders of the Fund in liquidation of the Fund;
           and
  
    2.   To transact such other business as may properly come
           before the Meeting or any adjournment or adjournments
           thereof.
  
    The Trustees have fixed the close of business on
  March         11, 1994 as the record date for determination
  of shareholders entitled to notice of, and to vote at, the
  Meeting.
  
    Each shareholder who does not expect to attend in person
  is requested to date, fill in, sign        and return
  promptly the enclosed form of proxy.
  
                                  By the Trustees
  
  
         George Putnam, Chairman
         William F. Pounds, Vice Chairman                  
         Jameson Adkins Baxter              Robert E. Patterson
         Hans H. Estin                      Donald S. Perkins
         John A. Hill                       George Putnam, III
         Elizabeth T. Kennan                A.J.C. Smith   
    
         Lawrence J. Lasser                 W. Nicholas Thorndike
                             
                                            
  
  Boston, Massachusetts
  April 13, 1994
  
    Your prompt attention to the enclosed form of proxy will
    help to avoid the expense of additional mailings.<PAGE>
  PROSPECTUS/PROXY STATEMENT
  
          April 6, 1994
  
  Acquisition of the assets of
  
  Putnam New York Tax Exempt Money Market Fund 
  One Post Office Square
  Boston, Massachusetts  02109
  (617) 292-1000
  
  By and in exchange for shares of
  
  Putnam Tax Exempt Money Market Fund
  One Post Office Square
  Boston, Massachusetts  02109
  (617) 292-1000
  
                           TABLE OF CONTENTS
  
  SYNOPSIS . . . . . . . . . . . . . . . . . . . . . . . .        6    
  
  RISK FACTORS . . . . . . . . . . . . . . . . . . . . . .        14   
  
  INTRODUCTION . . . . . . . . . . . . . . . . . . . . . .        16   
  
  PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF
    AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . .        18   
  
  BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION .        20   
  
  INFORMATION ABOUT THE REORGANIZATION . . . . . . . . . .        24   
  
  VOTING INFORMATION . . . . . . . . . . . . . . . . . . . . . . .30   
  
  AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . .Exhibit A
  
    An investment in the Money Market Fund is neither insured
  nor guaranteed by the U.S. Government.  There can be no
  assurance that the Fund will be able to maintain a stable net
  asset value of $1.00 per share.
  
    THIS PROSPECTUS/PROXY STATEMENT RELATES TO THE PROPOSED
  TRANSFER OF ALL OF THE ASSETS OF PUTNAM NEW YORK TAX EXEMPT 
  MONEY MARKET FUND (THE "NEW YORK FUND") TO PUTNAM TAX EXEMPT
  MONEY MARKET FUND (THE "MONEY MARKET FUND") IN EXCHANGE FOR
  SHARES OF BENEFICIAL INTEREST OF THE MONEY MARKET FUND (THE
  "MONEY MARKET FUND SHARES") AND THE ASSUMPTION BY THE MONEY
  MARKET FUND OF ALL OF THE LIABILITIES OF THE NEW YORK FUND. 
  (THE MONEY MARKET FUND AND THE NEW YORK FUND ARE COLLECTIVELY
  REFERRED TO HEREIN AS THE "FUNDS", AND EACH IS REFERRED TO
  INDIVIDUALLY AS A "FUND").  FOLLOWING THE TRANSFER, THE MONEY
  MARKET FUND SHARES RECEIVED BY THE NEW YORK FUND WILL BE
  DISTRIBUTED TO SHAREHOLDERS OF THE NEW YORK FUND IN
  LIQUIDATION OF THE NEW YORK FUND.  AS A RESULT OF THE
  PROPOSED TRANSACTION, EACH SHAREHOLDER OF THE NEW YORK FUND
  WILL RECEIVE, SUBJECT TO ANY APPLICABLE STATE AND FEDERAL
  TAXES, A NUMBER OF FULL AND FRACTIONAL MONEY MARKET FUND
  SHARES EQUAL IN VALUE AT THE DATE OF THE EXCHANGE TO THE
  AGGREGATE VALUE OF THE SHARES OF THE NEW YORK FUND HELD BY
  THE SHAREHOLDER.
  
    NEW YORK FUND SHAREHOLDERS SHOULD NOTE THAT A VIRTUALLY
  IDENTICAL REORGANIZATION INVOLVING THE ACQUISITION OF THE
  ASSETS OF PUTNAM CALIFORNIA TAX EXEMPT MONEY FUND (THE
  "CALIFORNIA FUND") BY THE MONEY MARKET FUND IS CONCURRENTLY
  BEING SUBMITTED FOR THE APPROVAL OF THE SHAREHOLDERS OF THE
  CALIFORNIA FUND.  THE REORGANIZATION INVOLVING THE NEW YORK
  FUND IS NOT IN ANY WAY CONTINGENT UPON THE COMPLETION OF THE
  REORGANIZATION INVOLVING THE CALIFORNIA FUND.
     
    This Prospectus/Proxy Statement explains concisely what
  you should know before investing in the Money Market Fund. 
  Please read it and keep it for future reference.  This
  Prospectus/Proxy Statement is accompanied by the Prospectus,
  dated February 1, 1994, of the Money Market Fund which
  contains information about the Money Market Fund and is
  incorporated into this Prospectus/Proxy Statement by
  reference.
  
    The following documents have been filed with the
  Securities and Exchange Commission and are also incorporated
  into this Prospectus/Proxy Statement by reference: (i) the
  current Statement of Additional Information of the Money
  Market Fund, dated February 1, 1994,        (ii) the current
  Prospectus and Statement of Additional Information of the New
  York Fund, each dated February 1, 1994,        (iii) the
  Report of Independent Accountants and Financial Statements
  included in the New York Fund's Annual Report to Shareholders
  for the 1993 fiscal year, and the Report of Independent
  Accountants and Financial Statements in the Fund's Annual
  Report to Shareholders for the 1993 fiscal year,         and
  (iv) a Statement of Additional Information dated        
  April 6, 1994 relating to the transactions described in this
  Prospectus/Proxy Statement        .  For a free copy of any
  or all of these Prospectuses        , Statements of
  Additional Information or Reports, call Putnam Investor
  Services at 1-800-225-1581.          Proxy materials,
  information statements and other information filed by the
  registrant can be inspected and copied at the Public
  Reference Facilities maintained by the Securities and
  Exchange Commission at 450 Fifth Street, N.W., Washington,
  D.C. 20549.  Copies of such material can also be obtained
  from the Public Reference Branch, Office of Consumer Affairs
  and Information Services, Securities and Exchange Commission,
  Washington, D.C. 20549 at prescribed rates.
  
  
    THE SECURITIES OFFERED BY THE ACCOMPANYING
  PROSPECTUS/PROXY STATEMENT HAVE NOT BEEN APPROVED OR
  DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
  STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
  UPON THE ACCURACY OR ADEQUACY OF SUCH PROSPECTUS/PROXY
  STATEMENT.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
  OFFENSE.
  
  SHARES OF THE MONEY MARKET FUND ARE NOT DEPOSITS OR
  OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY FINANCIAL
  INSTITUTION        , ARE NOT INSURED BY THE FEDERAL DEPOSIT
  INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
  AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF
    PRINCIPAL.<PAGE>
                               SYNOPSIS
    Proposed Transaction.  The Trustees of the New York Fund
  have approved an Agreement and Plan of Reorganization
  providing for the transfer of all of the assets of the New
  York Fund to the Money Market Fund in exchange for the
  assumption by the Money Market Fund of all of the liabilities
  of the New York Fund and for a number of Money Market Fund
  Shares equal in value to the value of the net assets of the
  New York Fund transferred to the Money Market Fund. 
  Following the transfer, the New York Fund will distribute the
  Money Market Fund Shares received by it to its shareholders
  of record, in complete liquidation of the New York Fund.  A
  small amount of gain or loss         may be recognized for
  federal income tax purposes by the New York Fund and its
  shareholders as a result of the reorganization.          See
  "Information About the Reorganization -- Federal Income Tax
  Consequences." 
            For the reasons set forth below under "Background
  and Reasons for the Proposed Reorganization", the Funds'
  Trustees, including the Trustees who are not interested
  persons of either Fund (the "Independent Trustees"), have
  concluded that the interests of the Funds' existing
  shareholders will not be diluted as a result of the
  transactions contemplated by the reorganization and that the
  reorganization would be in the best interests of the Funds'
  shareholders        .  The Trustees recommend approval of the
  reorganization.  The Money Market Fund and the New York Fund
  have the same Trustees.
    In addition, the Trustees of the Putnam California Tax
  Exempt Money Market Fund (the "California Fund"), which are
  also the Trustees of the Funds, have approved a        
  similar reorganization of the Money Market Fund and the
  California Fund (also sometimes referred to as a "Fund")
  which is concurrently being submitted for the approval of the
  shareholders of the California Fund.  As a result of this
  additional proposed reorganization, this Prospectus/Proxy
  Statement in certain sections describes the consequences of
  combining the assets of all three Funds on a pro-forma basis. 
  However, the reorganization is not in any way contingent upon
  the completion of the reorganization involving the California
  Fund.
    CERTAIN TAX CONSEQUENCES RELATING TO THE REORGANIZATION. 
  The reorganization is expected to be a taxable transaction
  for the New York Fund and its shareholders.  As a result, New
  York Fund shareholders acquiring Money Market Fund Shares in
  the transaction may realize a small amount of taxable gain
  which will be reflected in their distribution for the month
  in which the reorganization occurs.  See "Information About
  the Reorganization -- Federal Income Tax Consequences."  In
  addition, following the reorganization, New York Fund
  shareholders will receive distributions with respect to their
  Money Market Fund Shares which are not exempt from New York
  State and City income tax.
    INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS        . 
  The New York Fund and the Money Market Fund are both        
  money market funds with similar investment objectives and
  similar investment policies except as described below.  Each
  Fund seeks as high a level of current income exempt from
  federal income tax (and, in the case of the New York Fund,
          from New York         State and local         tax)
          as Putnam Management believes is consistent with
  maintenance of liquidity and stability of principal.  The New
  York Fund primarily invests in short-term, high quality, New
  York Tax Exempt Securities (as defined below).  It is a
  fundamental policy of the New York Fund that at least 90% of
  the Fund's income distributions normally will be exempt from
  both federal and New York state and local personal income
  tax.  The Money Market Fund follows the fundamental policy of
  normally investing at least 80% of its assets in short-term
  "Tax Exempt Securities".  Although the Funds have adopted
  slightly different percentage policies with respect to
  investment in securities generating income which is exempt
  from federal income tax (and New York State and City income
  tax in the case of the New York Fund), in practice each Fund
  is managed such that all of its income distributions
  ordinarily will be exempt from federal income tax (and New
  York State and City income tax in the case of the New York
  Fund).
    "Tax Exempt Securities" are debt obligations issued by a
  state (including the District of Columbia), a territory or a
  United States possession, or any of their political
  subdivisions, the interest from which is, in the opinion of
  bond counsel, exempt from federal tax.  "New York Tax Exempt
  Securities" are the same such securities, the interest of
  which is also, in the opinion of bond counsel, exempt from
  New York state and local personal income tax.  Each Fund
  invests in         the following Tax Exempt Securities: (i)
  municipal notes; (ii) municipal bonds; (iii) municipal
  securities backed by the U.S. government; (iv) short-term
  discount notes (tax-exempt commercial paper); (v)
  participation interests in any of the foregoing; and (vi)
  unrated securities or new types of tax-exempt instruments
  which         become available in the future if Putnam
  Management determines they meet         the Fund's quality
  standards.  
    The Funds invest only in high-quality Tax Exempt
  Securities and other money market instruments that Putnam
  Management believes present minimal credit risk.  High-
  quality securities are securities rated in one of the two
  highest categories by at least two nationally recognized
  rating services (or, if only one rating service has rated the
  security, by that service) or if the security is unrated,
  judged to be of equivalent quality by Putnam Management.  The
  Funds maintain a dollar-weighted average maturity of 90 days
  or less and do not invest in securities with remaining
  maturities of more than 397 days.  The Funds may invest in
  variable or floating-rate Tax Exempt Securities which bear
  interest at rates subject to periodic adjustment or which
  provide for periodic recovery of principal on demand.   Under
  certain conditions, these securities may be deemed to have
  remaining maturities equal to the time remaining until the
  next interest adjustment date or the date on which principal
  can be recovered on demand.  The Funds follow investment and
  valuation policies designed to maintain a stable net asset
  value of $1.00 per share.  However, there can be no assurance
  that the Fund will be able to maintain a stable net asset
  value of $1.00 per share.
    The principal difference         between the Funds is that
  the New York Fund normally invests         so that at least
  90% of the New York Fund's income distributions normally will
  be exempt from both federal income tax and New York personal
  income tax while the Money Market Fund's distributions
  normally will be exempt only from federal income tax. 
  Because of the relatively small number of issuers of New York
  Tax Exempt Securities, the New York Fund is more likely to
  invest a higher percentage of its assets in the securities of
  a single issuer than the Money Market Fund, which invests in
  a broad range of tax exempt securities.
    Despite these differences, the securities currently held
  by the New York Fund are substantially similar in kind to
  those securities currently held by the Money Market Fund.
    Because both Funds have comparable investment objectives,
  similar investment policies and currently invest in certain
  of the same issues, the reorganization will not affect the
  general strategy or style in which the merged Money Market
  Fund will be managed.  Shareholders should recognize,
  however, that income distributions received by them on shares
  of the Money Market Fund following the reorganization will
  not be exempt        from New York income tax.
            MANAGEMENT FEES AND OTHER EXPENSES.  Both Funds
  pay a quarterly fee to Putnam Management based on their
  respective average net assets, as determined at the close of
  business each day during the quarter, at an annual rate of
  .45% of the first $500 million of average net assets, .35% of
  the next $500 million, .30% of the next $500 million and .25%
  of any amount over $1.5 billion.  This would result in an
  effective fee rate of .45% based on combined average net
  assets of the Funds (including the California Fund) of
          approximately $177.4 million at January 31, 1994. 
  Each of the Funds currently pays management fees at the rate
  of .45%.  Because it does not project such combined asset
  levels to increase beyond $500 million, Putnam Management has
  advised the Trustees that it expects the effective management
  fee rate paid by the Money Market Fund would not change
  following the proposed reorganization.
     The Funds have adopted identical distribution plans
  pursuant to Rule 12b-1 under the Investment Company Act of
  1940 to permit the Funds to compensate Putnam Mutual Funds
  Corp. ("Putnam Mutual Funds") by paying it a fee at an annual
  rate of up to 0.35% of the Fund's average net assets for
  services provided and expenses incurred by it in promoting
  the sale of shares of the Funds, reducing redemptions, or
  maintaining or improving services provided to shareholders by
  Putnam Mutual Funds or dealers.  The Trustees had previously
  authorized payments under each Fund's plan at an annual rate
  of up to 0.10% of average net assets.  However, the Trustees
  have terminated payments under each Fund's distribution plan
  effective January 1, 1994        .  See "Distribution Plans"
  in the enclosed Money Market Fund Prospectus for a detailed
  description of the distribution plan.
    Based on         expenses for the month ended January 31,
  1994, Putnam Management estimates that the Money Market
          Fund's total annual fund operating expenses        
  are currently .94% of average net assets, reflecting the
  termination of distribution plan payments effective January
  1, 1994.  Based on         expenses for the month ended
  January 31, 1994, Putnam Management estimates that        the
  New York         Fund's total annual fund operating expenses
          are currently 0.79% of average net assets, reflecting
  the termination of distribution plan effective January 1,
  1994.  Following the reorganization, the total annual
  operating expenses of the Money Market Fund are expected to
  be 0.83% of average net assets on a pro forma basis, assuming
  the acquisition by the Money Market Fund of the assets of
  both of the New York and California Funds and excluding costs
  of the reorganization itself.  Total annual operating
  expenses of the Money Market Fund following the
  reorganization are expected to be 0.85% on a pro forma basis,
  assuming the acquisition of the assets of only the New York
  Fund.
            OPERATING PROCEDURES.  The procedures for
  purchasing and redeeming shares of the New York Fund and
  shares of the Money Market Fund, and for exchanging such
  shares of each Fund for shares of other Putnam funds, are
  identical and are described in detail in the enclosed Money
  Market Fund Prospectus.
    <PAGE>
                             RISK FACTORS
    An Investment in the Funds is neither insured nor
  guaranteed by the U.S. Government.  There can be no
  assurances that the Money Market Fund will be able to
  maintain a stable net asset value of $1.00 per share.
  However, because the Money Market Fund and the New York Fund
  (but for the New York Fund's pursuit of income exempt from
  New York income tax) share comparable investment objectives
  and very similar investment policies, the risks of an
  investment in the Money Market Fund are similar to the risks
  of an investment in the New York Fund, except as provided
  below.  The market value of the Funds'         investments
  will be affected by general changes in interest rates
  resulting in increases or decreases in the value of the
  obligations held by the Funds.  Although the Funds'
  investment policies are designed to minimize the changes and
  to maintain a net asset value of $1.00 per share, there is no
  assurance that these policies will be successful. 
  Withdrawals by shareholders could require the sale of
  portfolio investments at a time when such a sale might not
  otherwise be desirable.  Since the New York Fund's portfolio
  investments generally emphasize Tax Exempt Securities of New
  York issuers, the value of its shares may be especially
  affected by factors pertaining to the New York economy and
  other factors specifically affecting the ability of issuers
  of such securities to meet their obligations.  The Money
  Market Fund, on the other hand, may take full advantage of
  the entire range of short-term high-quality Tax Exempt
  Securities.
    <PAGE>
                             INTRODUCTION
    This Prospectus/Proxy Statement is furnished in connection
  with the proposed reorganization of Putnam New York Tax
  Exempt Money Market Fund (the "New York Fund") by the
  transfer of all of its assets and liabilities to Putnam Tax
  Exempt Money Market Fund (the "Money Market Fund") and the
  solicitation of proxies by and on behalf of the Trustees of
  the New York Fund for use at the Meeting of
  Shareholders       .  The Meeting is to be held on        
  June 2, 1994 at 1:00 p.m. at One Post Office Square, 8th
  Floor, Boston, Massachusetts.  This Prospectus/Proxy
  Statement and the enclosed form of proxy are being mailed to
  shareholders on or about         April 13, 1994.
    Any shareholder giving a proxy has the power to revoke it
  by mail (addressed to the New York Fund's Clerk at the
  principal office of the New York Fund, One Post Office
  Square, Boston, Massachusetts 02109) or in person at the
  meeting, by executing a superseding proxy, or by submitting a
  notice of revocation to the New York Fund.  All properly
  executed proxies received in time for the meeting will be
  voted as specified in the proxy, or, if no specification is
  made, FOR the proposal (set forth in item (1) of the Notice
  of Meeting) to implement the reorganization of the New York
  Fund by the transfer of all of its assets to the Money Market
  Fund in exchange for Money Market Fund Shares and the
  assumption by the Money Market Fund of all of the liabilities
  of the New York Fund.
    At March         11, 1994 there were outstanding
  53,999,106 shares of beneficial interest of the New York
  Fund.  Only shareholders of record on March         11, 1994
  will be entitled to notice of and to vote at the meeting. 
  Each share is entitled to one vote, with fractional shares
  voting proportionally.  
    The New York Fund's Trustees know of no matters other than
  those set forth herein to be brought before the meeting.  If,
  however, any other matters properly come before the meeting,
  it is the Trustees' intention that proxies will be voted on
  such matters in accordance with the judgment of the persons
  named in the enclosed form of proxy.
    In addition, shareholders of the New York Fund should note
  that the Trustees of Putnam California Tax Exempt Money
  Market Fund (the "California Fund," sometimes also referred
  to as a "Fund"), which are the same as the Trustees of the
  Funds, have approved a         similar reorganization of the
  Money Market Fund and the California Fund which is
  concurrently being submitted for the approval of the
  shareholders of the California Fund.  As a result of this
  additional proposed reorganization, this Prospectus/Proxy
  Statement in certain sections describes the consequences of
  combining the assets of all three Funds on a pro forma basis. 
  The reorganization involving the New York Fund is not in any
  way contingent on the completion of the reorganization
  involving the California Fund.
             PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF
                 AGREEMENT AND PLAN OF REORGANIZATION
  
    The shareholders of the New York Fund are being asked to
  approve or disapprove the Agreement and Plan of
  Reorganization by and between the Money Market Fund and the
  New York Fund, dated as of         December 3, 1993 (the
  "Agreement"), a copy of which is attached to this
  Prospectus/Proxy Statement as Exhibit A.  The Agreement
  provides, among other things, for the transfer of all of the
  assets of the New York Fund to the Money Market Fund in
  exchange for the assumption by the Money Market Fund of all
  of the liabilities of the New York Fund and for a number of
  Money Market Fund Shares, calculated based on the value of
  the net assets of the New York Fund acquired by the Money
  Market Fund and the net asset value per share of the Money
  Market Fund, all as more fully described below under
  "Information about the Reorganization".  After receipt of the
  Money Market Fund Shares, the New York Fund will cause the
  Money Market Fund Shares to be distributed to its
  shareholders in complete liquidation of the New York Fund and
  the legal existence of the New York Fund as a separate
  business trust under Massachusetts law will be terminated. 
  In addition, the New York Fund will file an application for
  deregistration under Section 8(f) of the Investment Company
  Act of 1940.
    Prior to the date of the transfer (the "Exchange Date"),
  the New York Fund will declare a distribution to shareholders
  which, together with all previous distributions, will have
  the effect of distributing to shareholders all of its
  investment company taxable income and net realized capital
  gains, if any, through the Exchange Date.
    The Trustees of the New York Fund have voted unanimously
  to approve the proposed transaction and to recommend that
  shareholders also approve the transaction.  The affirmative
  vote of two-thirds (66 2/3%) of the outstanding shares of
  beneficial interest of the New York Fund that are entitled to
  be voted at the Meeting is necessary for the consummation of
  the proposed transaction.  The Money Market Fund and the New
  York Fund have the same Trustees.
    A shareholder of the New York Fund objecting to the
  proposed transaction is not entitled under either
  Massachusetts law or the Agreement and Declaration of Trust
  to demand payment for and an appraisal of his or her New York
  Fund shares if the transaction is consummated over his or her
  objection.  Like shares of the New York Fund, shares of the
  Money Market Fund are redeemable for cash at their net asset
  value on any day on which the New York Stock Exchange is
  open.
    In the event that this proposal is not approved by the
  shareholders of the New York Fund, the New York Fund will
  continue to be managed as a separate fund in accordance with
  its current investment objectives and policies, and the
  Trustees may consider such alternatives as may be in the best
  interests of the shareholders.
  
        BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
  
    The Trustees of each of the Money Market Fund and the New
  York Fund, including all Trustees who are not "interested
  persons" of the Money Market Fund and the New York Fund, have
  determined that the reorganization would be in the best
  interests of each Fund's shareholders, and that the interests
  of existing shareholders of each of the Funds would not be
  diluted as a result of effecting the reorganization.  The
  Trustees        have unanimously approved the proposed
  reorganization and have recommended its approval by
  shareholders.
    The principal reasons why the Trustees are recommending
  the reorganization are:
    (1)  Economies of Scale.  Putnam Management believes the
  proposed reorganization over the longer-term will achieve
  economies of scale for the shareholders of the New York Fund
  by permitting them to invest in a substantially larger
          fund with a         similar investment objective and
          investment policies.  Such economies of scale are not
  expected to have an immediate positive impact on shareholders
  of the New York Fund.  However, given the small size and
  declining asset base of the New York Fund, Putnam Management
  believes that New York Fund shareholders eventually will
  benefit from lower operating expenses.
    Based upon the projections of Putnam Management, the
  Trustees believe that immediately following the combination
  of the Funds (and the proposed concurrent combination of the
  California Fund into the Money Market Fund) the expense ratio
  of the Money Market Fund will be slightly higher than the
  expenses the New York Fund would likely incur if the
  combination were not effected.  Putnam Management has advised
  the Trustees that it expects, based on the projected relative
  sizes of the two Funds, that the management fees paid by the
  Money Market Fund after the proposed reorganization would
  likely remain stable at the effective rate of 0.45% of
  average net assets.  Putnam Management also estimates that
  the total annual expense rate of 0.79% of average net assets
  currently paid by shareholders of the New York Fund would
  increase to 0.83% of average net assets after the
  contemplated reorganization, assuming average net assets of
  $177,444,844 for the Money Market, New York and California
  Funds combined (and to 0.85% of average net assets, assuming
  average net assets of $126,985,018 for the Money Market and
  New York Funds combined).
            Notwithstanding these expense projections based on
          net asset levels as of January 31, 1994, Putnam
  Management has advised the Trustees that over the longer-term
  it expects there will be expense benefits for New York Fund
  shareholders as a result of the reorganization because of the
  New York Fund's declining asset base.  The New York Fund
  experienced net redemptions of $13.4 million (equivalent to
  nearly 25% of the Fund's total assets at the end of the year)
  for the fiscal year ended November 30, 1993.  Putnam
  Management believes that such redemptions of New York Fund
  shares are in large measure a consequence of the historically
  low yields of short-term New York Tax Exempt Securities under
  current interest rate conditions.  Putnam Management does not
  expect these conditions to change significantly in the near
  future.  As a result, Putnam Management believes that the New
  York Fund likely will not experience substantial asset growth
  in the near term and may in fact continue to experience a
  high level of redemptions.  If such redemptions continue and
  the Fund is not combined with the Money Market Fund, total
  operating expenses could increase significantly and yields
  would decline commensurately as existing economies of scale
  are lost.
    (2)  Performance Benefits.  Putnam Management believes
  that the economies of scale expected to be realized over the
  longer-term as a result of the reorganization and other
  factors relating to the small size of the New York Fund will
  result in long-term performance benefits for New York Fund
  shareholders acquiring Money Market Fund Shares pursuant to
  the reorganization.  The annualized yield net of expenses for
  both the New York Fund and the Money Market Fund for the
  thirty-day period ended January 31, 1994 was 1.74%.  The
  annualized yield net of expenses for the combined Funds on a
  pro-forma basis         was 1.85% (1.83% excluding the assets
  of the California Fund) based on results for the month ending
  January 31, 1994.  The annualized tax-equivalent yield
  (assuming the maximum marginal tax rates) for the New York
  Fund, the Money Market Fund and the three combined Funds on a
  pro-forma basis         were 3.12%, (3.28% including the
  effect of exemption from New York City income tax), 2.88% and
  3.06%   (3.03% excluding the assets of the California Fund),
  respectively, based on results for the month ending
  January 31, 1994.  The New York Fund's higher tax-equivalent
  yield reflects the fact that New York Fund distributions are
  exempt from both federal and New York state personal income
  taxes for New York shareholders while Money Market Fund
  distributions are subject to New York and other relevant
  state income taxation.
            Notwithstanding the         tax-equivalent yield
  advantage of the New York Fund, Putnam Management expects
  that over the longer-term the combined Funds would realize
  performance advantages over the New York Fund if the
  reorganization were not implemented as a result of the
  projected long-term higher operating expenses of the New York
  Fund and the investment management limitations inherent in a
  portfolio with a steadily declining asset base.  Putnam
  Management does not believe that the New York Fund will be
  able to maintain a sufficient net asset level to achieve
  competitive investment returns over the long-term.
    <PAGE>
                 INFORMATION ABOUT THE REORGANIZATION
    Agreement and Plan of Reorganization.  The proposed
  Agreement and Plan of Reorganization         provides that
  the Money Market Fund will acquire all of the assets of the
  New York Fund in exchange for the assumption by the Money
  Market Fund of all of the liabilities of the New York Fund
  and for the issuance of shares of the Money Market Fund, all
  as of the Exchange Date (defined in the Agreement to be the
  next full business day following the Valuation Time, defined
  in the Plan as 4:00 p.m. Boston time on May 9, 1994 or such
  other date as may be agreed upon by the parties).  The
  following discussion of the Agreement is qualified in its
  entirety by the full text of the Agreement, which is attached
  as Exhibit A to this Prospectus/Proxy Statement.
    The New York Fund will sell all of its assets to the Money
  Market Fund, and in exchange, the Money Market Fund will
  assume all of the liabilities of the New York Fund and
  deliver to the New York Fund a number of full and fractional
  shares of the Money Market Fund having an aggregate net asset
  value equal to the value of assets of the New York Fund
  transferred to the Money Market Fund, less the value of the
  liabilities of the New York Fund assumed by the Money Market
  Fund attributable to shares of the Money Market Fund.    
    As a result of the proposed transaction, each shareholder
  of the New York Fund will receive that number of full and
  fractional Money Market Fund shares equal in aggregate value
  at the Exchange Date to the value of the shares of the New
  York Fund held by the shareholder.  It is expected that the
  shares of the Funds will effectively be exchanged on a one-
  for-one basis since each Fund normally maintains a stable net
  asset value of $1.00 per share.  Portfolio securities of the
  Money Market Fund         will be valued in accordance with
  the amortized cost method of valuation         described
  under "How the Fund values its shares" in the enclosed Money
  Market Fund Prospectus.  For purposes of the Reorganization,
  Portfolio Securities of the Money Market Fund will be valued
  at fair market value pursuant to procedures which the Money
  Market Fund would use for such valuation in determining the
  fair market value of the Money Market Fund's assets as if the
  assets were to be sold or the value evidenced on a given day. 
  It is expected that the reorganization will be accounted for
  as a taxable transaction as described more fully below under
  "Federal Income Tax Consequences."  The Trustees of the New
  York Fund have determined that the interests of the New York
  Fund's shareholders will not be diluted as a result of the
  transactions contemplated by the reorganization, and the
  Trustees of both Funds have determined that the proposed
  reorganization is in the best interests of each Fund.
    Immediately following the Exchange Date, the New York Fund
  will distribute pro rata to its shareholders of record as of
  the close of business on the Exchange Date the full and
  fractional Money Market Fund shares received by the New York
  Fund.  Such liquidation and distribution will be accomplished
  by the establishment of accounts on the share records of the
  Money Market Fund in the name of such New York Fund
  shareholders, each account representing the respective number
  of full and fractional Money Market Fund shares due such
  shareholder.        
    The consummation of the reorganization is subject to the
  conditions set forth in the Agreement.  The Agreement may be
  terminated and the reorganization abandoned at any time,
  before or after approval by the shareholders, prior to the
  Exchange Date by mutual consent of the Money Market Fund and
  the New York Fund or, if any condition set forth in the
  Agreement has not been fulfilled and has not been waived by
  the party entitled to its benefits, by such party.
            All fees and expenses, including legal and
  accounting expenses, portfolio transfer taxes (if any) or
  other similar expenses incurred in connection with the
  consummation of the transactions contemplated by the
  Agreement will be allocated ratably between the two Funds in
  proportion to their net assets as of the day of the transfer,
  except that the costs of proxy materials and proxy
  solicitations will be borne by the New York Fund.  However,
  to the extent that any payment by the Money Market Fund of
  such fees or expenses would result in the disqualification of
  the Money Market Fund or the New York Fund as a "regulated
  investment company" within the meaning of Section 851 of the
  Internal Revenue Code of 1986, as amended (the "Code"), such
  fees and expenses will be paid directly by the party
  incurring them.  
                             DESCRIPTION OF SHARES
    Full and fractional shares of the Money Market Fund will
  be issued to the New York Fund's shareholders in accordance
  with the procedure under the Agreement as described above.
  Shares of the Money Market Fund are not subject to any sales
  charges, redemption fees and, at present, any payments under
  its distribution plan.  
    Each share of the Money Market Fund will be fully paid and
  nonassessable when issued, will be transferable without
  restriction, and will have no preemptive or conversion
  rights.  Like that of the New York Fund, the Money Market
  Fund's Agreement and Declaration of Trust permits the Fund to
  divide its shares, without shareholder approval, into two or
  more series of shares representing separate investment
  portfolios and to further divide any such series, without
  shareholder approval, into two or more classes of shares
  having such preferences and special or relative rights and
  privileges as the Trustees may determine.  Neither Fund's
  shares are presently divided into series.    
    Under Massachusetts law, shareholders could, under certain
  circumstances, be held personally liable for the obligations
  of the Money Market Fund.  However, the Agreement and
  Declaration of Trust disclaims shareholder liability for acts
  or obligations of the Money Market Fund and requires that
  notice of such disclaimer         be given in each agreement,
  obligation, or instrument entered into or executed by the
  Money Market Fund or the Trustees.  The Agreement and
  Declaration of Trust provides for indemnification out of Fund
  property for all loss and expense of any shareholder held
  personally liable for the obligations of the Money Market
  Fund.  Thus, the risk of a shareholder incurring financial
  loss on account of shareholder liability is limited to
  circumstances in which the Money Market Fund would be unable
  to meet its obligations.  The likelihood of such
  circumstances is remote.  The shareholders of the New York
  Fund are currently subject to this same risk of shareholder
  liability.
            FEDERAL INCOME TAX CONSEQUENCES.  Because the
  Fund's portfolio manager will be disposing of certain assets
  in order to hold investments appropriate to the combined
  Funds, it is expected that the reorganization will be a
  taxable transaction under the Code.  As a consequence, (i)
  the New York Fund will recognize a gain or a loss, if any,
  upon the disposition of its assets in the reorganization,
  (ii) the shareholders of the New York Fund may recognize a
  gain or a loss upon the exchange of their shares for Money
  Market Fund Shares, (iii) the basis of Money Market Shares
  received by New York Fund shareholders in place of their New
  York Fund shares will be the net asset value of such Money
  Market Shares on the Valuation Date, and (iv) the holding
  period for determining whether Money Market Shares received
  in connection with the reorganization are a capital asset
  will commence on the Exchange Date
    Each of the Funds normally values its assets according to
  the amortized cost method of valuation described in the
  enclosed Money Market Fund Prospectus        .  This
  valuation method disregards minor unrealized gains or losses
  resulting from fluctuating market         prices of        
  the Fund's         investments in order to permit         a
  Fund to maintain a stable daily net asset value of $1.00 per
  share.  However, for purposes of the Reorganization, the
  assets of the New York Fund will be valued at fair market
  value         and any such gains or losses in the Fund's
  portfolio would be realized as of the time of the
  Reorganization.  Any difference between fair market value and
  amortized cost         will be reflected in the Fund's
  accrued but unpaid dividend account for that month        
  consistent with the Fund's Agreement and Declaration and
  Trust and with the         provisions of the Code governing
  regulated investment companies.  It is currently expected
  that any gains which may be realized by New York Fund
  shareholders as a result of the Reorganization would be very
  small relative to the value of their shares.
    Capitalization.  The following tables show the
  capitalization of the Money Market Fund and the New York Fund
  as of January 31, 1994 and on a pro forma basis as of that
  date, giving effect to the proposed acquisition of assets at
  net asset value:
  
                                    (UNAUDITED)


                 The Money New York California Pro Forma Pro Forma
                Market Fund  Fund      Fund   Combined(1)Combined(2)

Net assets                $68,635   $45,203   $43,473  $157,311  $113,838
(000's omitted)
       
Shares         outstanding           68,535    45,203          
43,473          157,311   113,838
(000's omitted)        

Net asset value         per share          $     1.00$     1.00     $    
1.00        $      1.00         $      1.00

_______________

(1)  Reflects combination of the Money Market, California and New
York Funds.

(2)  Reflects the combination of the Money Market and New York
Funds.


    Unaudited pro forma financial statements of the Funds as
  of and for the period ended September 30, 1993 are included
  in the Statement of Additional Information.  Because the
  Agreement provides that the Money Market Fund will be the
  surviving fund following the reorganization and because the
  Money Market Fund's investment objective and policies will
  remain unchanged, the pro forma financial statements reflect
  the transfer of the assets and liabilities of the California
  Fund and the New York Fund to the Money Market Fund as
  contemplated by the Agreement and the proposed combination of
  the California Fund with the Money Market Fund.
                          VOTING INFORMATION
    Proxies are being solicited from the New York Fund's
  shareholders by the Trustees for the Meeting of Shareholders
  to be held on         June 2, 1994 at 1:00 p.m., at One Post
  Office Square, 8th Floor, Boston, Massachusetts, or at such
  later time made necessary by adjournment.  A proxy may be
  revoked at any time at or before the         Meeting by oral
  or written notice to Beverly Marcus, Clerk of the Fund, c/o
  Putnam New York Tax Exempt Money Market Fund        , One
  Post Office Square, Boston, Massachusetts 02109 or as
  otherwise described in the "Introduction       " above. 
  Unless revoked, all valid proxies will be voted in accordance
  with the specification thereon or, in the absence of
  specifications, FOR approval of the Agreement and Plan of
  Reorganization.  The transactions contemplated by the
  Agreement and Plan of Reorganization will be consummated only
  if approved by the affirmative vote of the holders of at
  least two-thirds (66 2/3%) of the outstanding shares of the
  New York Fund that are entitled to vote thereon at the
  Meeting.  In the event the shareholders do not approve the
  reorganization, the Money Market Fund's Trustees will
  consider possible alternative arrangements in the best
  interests of the Money Market Fund and its shareholders.
    Proxies are being solicited by mail.  Additional
  solicitations may be made by telephone, telegraph, or
  personal contact by officers or employees of Putnam
  Management and its affiliates or by proxy soliciting firms
  retained by the New York Fund or the Money Market Fund.  The
  New York Fund may also arrange to have votes recorded by
  telephone.  If this procedure were subject to a successful
  legal challenge, such votes would not be counted at the
  meeting.  The New York Fund has retained at its expense
  Tritech Services, Four Corporate Place, Corporate Park 287,
  Piscataway, New Jersey 08854, to aid in the solicitation of
  proxies for a fee not to exceed         $7,800 plus
  reasonable out-of-pocket expenses.
    Shareholders of record of the New York Fund at the close
  of business on March         11, 1994 (the "record date")
  will be entitled to vote at the Meeting or any adjournment
  thereof.  The holders of 30% of the shares of the New York
  Fund outstanding at the close of business on the record date
  present in person or represented by proxy will constitute a
  quorum for the         Meeting; however, as noted above, the
  affirmative vote of at least two-thirds (66 2/3%) of the
  shares outstanding at the close of business on the record
  date is necessary to approve the reorganization. 
  Shareholders are entitled to one vote for each share held,
  with fractional shares voting proportionally.
    Votes cast by proxy or in person at the meeting will be
  counted by persons appointed by the New York Fund as tellers
  for the meeting.  The tellers will count the total number of
  votes cast "for" approval of the proposal for purposes of
  determining whether sufficient affirmative votes have been
  cast.  The tellers will count shares represented by proxies
  that reflect abstentions and "broker non-votes" (i.e., shares
  held by brokers or nominees as to which (i) instructions have
  not been received from the beneficial owners or the persons
  entitled to vote and (ii) the broker or nominee does not have
  the discretionary voting power on a particular matter) as
  shares that are present and entitled to vote on the matter
  for purposes of determining the presence of a quorum. 
  Abstentions and broker non-votes have the effect of a
  negative vote on the proposal.
       As of        March 11, 1994 as shown on the books of the
  New York Fund, there were issued and outstanding 53,999,106
  shares of beneficial interest of the New York Fund.  As
  of        February 28, 1994, the officers and Trustees of the
  New York Fund as a group beneficially owned less than 1% of
  the outstanding shares of the New York Fund.  At       
  February 28, 1994, to the best of the knowledge of the New
  York Fund, no person owned beneficially 5% or more of the
  outstanding shares of the New York Fund.
    The votes of the shareholders of the Money Market Fund are
  not being solicited, since their approval or consent is not
  necessary for this transaction.  As of        February 28,
  1994, the officers and Trustees of the Money Market Fund as a
  group beneficially owned less than 1% of the outstanding
  shares of the Money Market Fund.  At         February 28,
  1994, to the best of the knowledge of the Money Market Fund,
  no person beneficially owned 5% or more of the outstanding
  shares of the Money Market Fund.
  
  THE BOARD OF TRUSTEES OF PUTNAM NEW YORK TAX EXEMPT MONEY
  MARKET FUND, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
            RECOMMENDS APPROVAL OF THE PLAN.<PAGE>
             PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND
  
                        PROXY FOR A MEETING OF
                  SHAREHOLDERS,         JUNE 2, 1994
  
    THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE
  FUND.
  
  The undersigned hereby appoints George Putnam, Hans H. Estin
  and William F. Pounds, and each of them separately, proxies,
  with power of substitution, and hereby authorizes them to
  represent and to vote, as designated below, at the Meeting of
  Shareholders of Putnam New York Tax Exempt Money Market Fund
  on         June 2, 1994, at 1:00 P.M., Boston time, and at
  any adjournments thereof, all of the shares of the Fund which
  the undersigned would be entitled to vote if personally
  present.
  THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
  DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.  IF NO
  DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
  IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
  SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. 
  THE TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL ON THE REVERSE
  SIDE.
  
  PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
  ENCLOSED ENVELOPE.
  
  NOTE: Please sign exactly as name appears on this card.  All
  joint owners should sign.  When signing as executor,
  administrator, attorney, trustee or guardian or as custodian
  for a minor, please give full title as such, if a corpora-
  
  tion, please sign in full corporate name and indicate the
  signer's office.  If a partner, sign in the partnership name.
  
  
  CHANGE OF ADDRESS NOTIFICATION.  Please use this form to
  inform us of any change in address or telephone number or to
  provide us with your comments.  Detach this form from the
  Proxy Ballot and return it with your executed proxy in the
  enclosed envelope.
  
  Has your address changed?
  
  Do you have any comments?
  
  1. Approval of the Agreement and Plan of Reorganization
  providing for the transfer of all of the assets of Putnam New
  York Tax Exempt Money Market Fund (the "Fund") to Putnam Tax
  Exempt Money Market Fund (the "Money Market Fund") in
  exchange for shares of the Money Market Fund and the
  assumption by the Money Market Fund of all of the liabilities
  of the Fund, and the distribution of such shares to the
  shareholders of the Fund in liquidation of the Fund.
  
                   FOR       AGAINST        ABSTAIN
                   [ ]         [ ]            [ ]
  
  Please be sure to sign and date this Proxy.
  
  
  
  Shareholder sign here
  
  
  
  Co-owner sign here
  
  
  Dated:               , 199
    <PAGE>
                  PUTNAM TAX EXEMPT MONEY MARKET FUND
  
                  Statement of Additional Information
  
                                 April 6, 1994
  
            (Putnam New York Tax Exempt Money Market Fund)
  
    This Statement of Additional Information contains material
  which may be of interest to investors but which is not
  included in the Prospectus/Proxy Statement (the "Prospectus")
  of Putnam Tax Exempt Money Market Fund ("Money Market Fund")
  dated         April 6, 1994 relating to the sale of all or
  substantially all of the assets of Putnam New York Tax Exempt
  Money Market Fund ("New York Fund") to Money Market Fund. 
  The New York Fund's Statement of Additional Information dated
  April 1, 1993 and The Money Market Fund's Statement of
  Additional Information dated February 1, 1994, respectively,
  have been filed with the Securities and Exchange Commission
  and are incorporated herein by reference.  This Statement is
  not a Prospectus and is authorized for distribution only when
  it accompanies or follows delivery of the Prospectus.  This
  Statement should be read in conjunction with the Prospectus. 
  Investors may obtain a free copy of the Prospectus or either
  or both of the Statements of Additional Information by
  writing Putnam Investor Services, One Post Office Square,
  Boston, MA 02109 or by calling 1-800-225-1581.
  
           INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
  
    Coopers & Lybrand are each Fund's independent accountants,
  providing audit services, tax return review and other tax
  consulting services and assistance and consultation in
  connection with the review of various Securities and Exchange
  Commission filings.  The Report of Independent Accountants
  and financial statements included in the Money Market Fund's
  Annual Report for the fiscal year ended September 30, 1993,
  filed electronically on November 24, 1993 (811-5215) are
  incorporated by reference into this Statement of Additional
  Information.  The Report of Independent Accountants and
  financial statements included in the New York Fund's Annual
  Report for the fiscal year ended November 30, 1993 filed
  electronically on January 28, 1994 (811-5335) are
  incorporated by reference into this Statement of Additional
  Information.  The financial statements referred to above, and
  the financial highlights of each Fund incorporated by
  reference into the Prospectus/Proxy Statements and the
  Statement of Additional Information have been so included and
  incorporated in reliance upon the report of Coopers &
  Lybrand, given on the authority of that Firm as experts in
    auditing and accounting.<PAGE>
  
                           Table of Contents
  
  
  Unaudited Pro Forma combined Financial Statements of the
  Money Market Fund and the New York Fund
  ...............................
  
  
  Unaudited Pro Forma combined Financial Statements of the
  Money Market Fund, the California Fund and the New York Tax
  Exempt Money Market Fund ...................
                              
    <PAGE>
              PUTNAM TAX EXEMPT MONEY MARKET FUND
  
                             AND
  
         PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND
  
    PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
    
  
  The accompanying unaudited pro forma combining investment
  portfolio and statement of assets of liabilities assumes that
  the exchange described in the next paragraph occurred as of
  September 30, 1993 and the unaudited pro forma combining
  statement of operations of Putnam Tax Exempt Money Market
  Fund ("Tax Exempt Money Market") as if the combination with
  Putnam New York Tax Exempt Money Market Fund ("New York Tax
  Exempt Money Market") had been consummated at the beginning
  of fiscal year indicative of future operations or actual
  results that would have occurred had the combination been
  consummated at the beginning of the fiscal year presented. 
  These statements have been derived from the September 30,
  1993 audited annual report for Tax Exempt Money Market and
  from New York Tax Exempt Money Market's books and records
  utilized in calculating daily net asset value at September
  30, 1993, and for the twelve month period then ended.
  
  The pro forma statements give effect to the proposed transfer
  of all the assets of New York Tax Exempt Money Market to Tax
  Exempt Money Market in exchange for the assumption by Tax
  Exempt Money Market of all of the liabilities of New York Tax
  Exempt Money Market and for a number of Tax Exempt Money
  Market shares equal in value to the value of the net assets
  of New York Tax Exempt Money Market  transferred to Tax
  Exempt Money Market.  Under the generally accepted accounting
  principles, the historical cost of investment securities will
  be carried forward to the surviving entity and the results of
  operations of Tax Exempt Money Market for pre-combined
  periods will not be restated.  The pro forma statements do
  not reflect the expenses of any of the funds in carrying out
  its obligations under the Agreement and Plan of
  Reorganization.
  
  The unaudited pro forma combining statements should be read
  in conjunction with the separate financial statements of Tax
  Exempt Money Market and New York Tax Exempt Money Market
  included elsewhere in this statement of additional
  information.
  
  
  
  
  
  
  
  
  
  
  
  
              PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
  
                      SEPTEMBER 30, 1993
  
  The pro forma adjustments to these financial statements are
  comprised of:
  
    (A)  Increase in management and investment advisory fee of
         Tax Exempt Money Market paid to Putnam Investment
         Management, Inc. and to reflect the new fee structure
         applied to the combined assets including New York Tax
         Exempt Money Market.
  
    (B)  Decrease of expenses as a result of the merger.
  
    (C)  Elimination of the voluntary expense limitation and
         absorption of expenses by Putnam Investment       
  Management, Inc. due to the increased combined asset     
    based.
  
    <PAGE>
<TABLE>
  <CAPTIONS>
  
  
  Pro Forma Combining
  Statement of
  Assets and Liabilities
  September 30, 1993
  (Unaudited)
  
  <S> <C>                              <C>                 <C>          <C>
                          Tax Exempt Money New York Tax Exempt    Pro Forma     Pro Forma
                               Market Fund   Money Market Fund  Adjustments      Combined
  Assets
  
  Investments in securities, 
    at amortized cost          $80,838,174         $52,409,756               $133,247,930
    (combined cost, $133,247,930)
  Cash                              44,571             775,896                    820,467
  Dividends, interest and 
    other receivables              364,273             266,457                    630,730
  Receivable for shares of 
    the Fund sold                  180,479           1,987,554                  2,168,033
  
  Total assets                  81,427,497          55,439,663            0   136,867,160
  
  Liabilities
  Distributions payable to shareholders                  6,945       50,559                  57,504
  Payable for shares of the 
    Fund repurchased               179,377           1,645,549                  1,824,926
  Payable for compensation of Manager                   81,370       19,030                 100,400
  Payable for distribution fees     18,083              12,722                     30,805
  Payable for administrative services1,551               1,313                      2,864
  Payable for compensation of Trustees 148                 125                        273
  Payable for investor servicing 
    and custodian fees              52,412              21,927                     74,339
  Other accrued expenses            11,827              13,644                     25,471
  
    <PAGE>
Total liabilities                  351,713           1,764,869            0     2,116,582
  
  Net assets                   $81,075,784         $53,674,794           $0  $134,750,578
  
  Represented by
  
  Shares outstanding            81,075,784          53,674,794                134,750,578
  Net asset value per share          $1.00               $1.00                      $1.00
  
  
  </TABLE>
    <PAGE>
<TABLE>
  <CAPTION>
  
  
  Pro Forma Combining
  Statement of Operations
  Year ended September 30, 1993
  (Unaudited)
  
  <S> <C>                             <C>                 <C>          <C>
                         Tax Exempt Money New York Tax Exempt    Pro Forma     Pro Forma
                              Market Fund   Money Market Fund  Adjustments      Combined
  Investment income:
  Interest                     $2,253,568          $1,462,840                 $3,716,408
  
     Total investment income    2,253,568           1,462,840            0     3,716,408
  
  Expenses:
  Compensation of Manager         357,072             248,196       281(A)       605,549
  Investor servicing and 
    custodian fees                244,681             106,941   (1,568)(B)       350,054
  Compensation of Trustees          9,565               6,243            0        15,808
  Reports to shareholders          13,248              15,057  (13,239)(B)        15,066
  Postage                          10,322               6,595            0        16,917
  Auditing                         14,786              14,069  (13,724)(B)        15,131
  Legal                            12,128              11,857            0        23,985
  Administrative services           5,676               4,642            0        10,318
  Distribution fees                78,252              57,125            0       135,377
  Amortization of organization fees   271                   0            0           271
  Registration fees                     0               6,725            0         6,725
  Other                            40,202               1,861            0        42,063
  Fees waived and other expenses 
    absorbed by Manager                 0            (11,461)    11,461(C)             0
  
     Total expenses               786,203             467,850     (16,789)     1,237,264
  
  Net investment income         1,467,365             994,990       16,789     2,479,144
  
    <PAGE>
Net realized gain on investments    3,603               4,409                      8,012
  
  Net gain on investments           3,603               4,409            0         8,012
  
  Net increase in net assets resulting 
    from operations            $1,470,968            $999,399      $16,789    $2,487,156
  
  
  </TABLE>
  
  
    <PAGE>
<TABLE>
  <CAPTION>
  
  The Pro Forma Combining Investment Portfolio of
  Putnam Tax Exempt Money Market Fund,
  Putnam New York Tax Exempt Money Market Fund
  
  September 30, 1993
  (UNAUDITED)
  
                                     Tax Exempt Money                         New York Tax Exempt   
                                        Market Fund                           Money Market Fund  Pro Forma Com
  Municipal Bonds
  and Notes (92.9%)(a)              Principal                        Principal                    Principal
   Rating                   Amount      Value     Rating     Amount      Value  Rating    Amount      Value
  <S> <C>                      <C>        <C>        <C>        <C>        <C>     <C>       <C>        <C>
  California (3.0%)
  
  CA Higher Ed. Loan Auth.
     Inc. Student Loan
     Variable Rate Demand Notes
     (VRDN), 2.9s, 8/1/03    VMIG1 $1,000,000 $1,000,000          -          -       -         - $1,000,000  $
  
  Fontana, Certif. of
     Participation VRDN,
     4 1/4s, 7/1/21            A-2  3,000,000  3,000,000          -          -       -         -  3,000,0003,000,000
  
  
        -                        -  4,000,000          -          -          -       -         -  4,000,000
  
  Colorado (1.3%)
  
  Denver, Urban Renewal
     Auth. Tax Increment
     VRDN, Ser. A, 2.9s,
     3/1/10                  SP-1+    945,000    945,000          -          -       -         -    945,000  945,000
    <PAGE>
Lakewood, Multi-Fam.
     Hsg. VRDN (St. Moritz
     and Diamond Head),
     Financial Guaranty
     Insurance Corp., 2.8s,
     10/1/07                 VMIG1    800,000    800,000          -          -       -         -    800,000  800,000
  
                                 -  1,745,000          -          -          -       -         -  1,745,000
  
  
  District of Columbia (1.3%)
  
  DC Hosp. Rev Bonds
     (Medlantic Healthcare),
     Ser. A, Municiap Bond
     Insurance Association
     (MBIA), 3s, 8/15/94       AAA  1,765,000  1,765,000          -          -       -         -  1,765,0001,765,000
  
                                 -  1,765,000          -          -          -       -         -  1,765,000
  
  
  Georgia (1.9%)
  
  Atlanta, Urban Res. fin.
     Auth. Multi-Fam. Mtge.
     VRDN (Rental-West
     Paces), Ser. A, 2 1/2s,
     12/1/08                  A-1+  1,500,000  1,500,000          -          -       -         -  1,500,0001,500,000
  
  Dekalb Co., Hsg. Auth.
     VRDN, 3.1s, 12/1/07      A-1+  1,000,000  1,000,000          -          -       -         -  1,000,0001,000,000
  
        -                        -  2,500,000          -          -          -       -         -  2,500,000
    <PAGE>
  Illinois (2.1%)
  
  Elmhurst, VRDN
     (Joint Accreditation
     Commission), 3.15s,
     7/1/18                  VMIG1  2,000,000  2,000,000          -          -       -         -  2,000,0002,000,000
  
  IL Hlth. Fac, Auth. VRDN
     (Midwest Cambridge Project),
     2.8s, 1/1/15            A-1/P    800,000    800,000          -          -       -         -    800,000  800,000
  
        -                        -  2,800,000          -          -          -       -         -  2,800,000
  
  
  Iowa (3.1%)
  
  Des Moines, Private
     College VRDN (U. of
     Osteopathic Medicine &
     Hlth.), 2.45s, 5/15/15   A-1+  1,140,000  1,140,000          -          -       -         -  1,140,0001,140,000
  
  Salix, Mid-West Pwr.
     VRDN, 3.2s, 5/1/23      VMIG1  3,095,000  3,095,000          -          -       -         -  3,095,0003,095,000
  
        -                        -  4,235,000          -          -          -       -         -  4,235,000
  
  
  Kentucky (1.2%)
  
  Jefferson Cnty., Indl. Dev.
     VRDN (Belknap Inc.
     Project), 2.7s, 12/1/14   A-1  1,584,000  1,584,000          -          -       -         -  1,584,0001,584,000
  
        -                        -  1,584,000          -          -          -       -         -  1,584,000
    <PAGE>
Louisiana (2.7%)
  
  LA State Recvy. Dist.
    Sales Tax VRDN, MBIA,
     3.40s, 7/1/98           VMIG1  2,500,000  2,500,000          -          -       -         -  2,500,0002,500,000
  
  Orleans, Levee Dist. Impt.
     VRDN, 3.95s, 11/1/14    VMIG1  1,170,000  1,170,000          -          -       -         -  1,170,0001,170,000
  
        -                        -  3,670,000          -          -          -       -3,670,000   3,670,000
  
  
  Massachusetts (4.4%)
  
  MA State General
     Obligation Bonds
     Ser. B, VRDN, 2.2s,
     12/1/97                 VMIG1  3,000,000  3,000,000          -          -       -         -  3,000,0003,000,000
     3s, 11/18/93            SP-1+  1,000,000  1,000,713          -          -       -         -  1,000,0001,000,713
  
  MA State Hsg. Fin. Agcy.
     Rev Bonds, 2 3/4s,
     6/1/17                  VMIG1  2,000,000  2,000,000          -          -       -         -  2,000,0002,000,000
  
        -                        -  6,000,713          -          -          -       - 6,000,000  6,000,713
  
  Michigan (3.1%)
  
  Delta Cnty., Economic
     Dev. Corp. Env. Impt.
     VRDN (Escambia 
     Paper), Ser. C, 2.55s,
     12/1/23                   P-1  2,300,000  2,300,000          -          -       -         -  2,300,0002,300,000
  
  MI State Job Dev. Auth.
     VRDN, 2 3/4s, 12/1/14     A-1  1,900,000  1,900,000          -          -       -         -  1,900,0001,900,000
  
        -                        -  4,200,000          -          -          -       - 4,200,000  4,200,000
    <PAGE>
  Minnesota (2.8%)
  
  Albert Lea, Indl. Dev.
     VRDN (Joyce Intl. Inc.
     Project), 2.7s, 7/1/94    A-1    400,000    400,000          -          -       -         -    400,000  400,000
  
  Minneapolis-St. Paul, Hsg.
     Fin. Board Single Fam.
     VRDN (Phase VI)
     Ser. B, Government
     National Mortgage
     Assn. (GNMA) Coll,
     2 1/2s, 8/1/13          SP-1+  1,865,000  1,865,000          -          -       -         -  1,865,0001,865,000
  
  St. Loius Park, Indl. Dev.
     VRDN (Unicare Home
     Inc. Project), 2 3/4s, 
     8/1/14                    A-1  1,500,000  1,500,000          -          -       -         -  1,500,0001,500,000
  
        -                        -  3,765,000          -          -          -       - 3,765,000  3,765,000
  
  
  Mississippi (2.4%)
  
  Jackson Cnty., VRDN,
     2.408s, 12/1/16           P-1  3,300,000  3,300,000          -          -       -         -  3,300,0003,300,000
  
        -                        -  3,300,000          -          -          -       - 3,300,000  3,300,000
  
  
  Missouri (0.7%)
  
  MO State Hlth. & Ed. Auth.
     VRDN, 3s, 6/1/14        VMIG1  1,000,000  1,000,000          -          -       -         -  1,000,0001,000,000
  
        -                        -  1,000,000          -          -          -       -1,000,000   1,000,000
    <PAGE>
New Hampshire (0.7%)
  
  NH State Bus. Fin. Auth.
     VRDN, 2.95s, 11/1/20    VMIG1  1,000,000  1,000,000          -          -       -         -  1,000,0001,000,000
  
        -                        -  1,000,000          -          -          -       - 1,000,000  1,000,000
  
  New Jersey (1.0%)
  
  Cape May Cnty., Muni.
     Util. Auth. Rev. Bonds,   AAA  1,300,000  1,322,226          -          -       -         -  1,300,0001,322,226
     Ser. A, MBIA, 7 1/4s,
     1/1/16
  
        -                        -  1,322,226          -          -          -       - 1,300,000  1,322,226
  
  
  New York (41.0%)
  
  Erie Cnty., Anticipation
     Notes, 3.3s, 8/5/94         -          -          -       MIG1 $2,000,000        $2,003,268          -2,000,000
              
  
  Monroe Cnty., Indl. Dev.
     Agcy. VRDN (Columbia/
     Sussex) 5s, 11/1/14         -          -          -        AAA  2,410,000         2,410,000          -2,410,000 
               
  
  NY City, Rev. Anticipation
     Notes (RAN)   
     3.05s, 3/15/97              -          -          -      VMIG1  2,500,000         2,500,000          -2,500,000
                
  
  NY City G.O. Dly VRDN,
     3.3s, 8/15/18               -          -          -      VMIG1  1,800,000         1,800,000           1,800,000 
               
  
  NY City, Hsg. Dev. Corp.
     Mtge. VRDN
     (Carnegie Park Project),
     3.25s, 12/1/16            AAA  2,810,000  2,810,000        AAA  4,000,000         4,000,000          -6,810,000 
               
     (Parkgate Tower Project),
       2.9s, 12/1/07               -          -          -        A-1    585,000 585,000         -    585,000  585,000
<PAGE>
  
     (Upper Fifth Ave.
     Project), Ser A, 2.8s, 
     1/1/16                      -          -          -      VMIG1  1,000,000         1,000,000          -1,000,000 
               
     (East 96th St. Project),
     Ser. A, 2.35s, 8/1/15       -          -          -      VMIG1  2,000,000         2,000,000          -    
                    2
  
  NY City, Indl Dev. Agcy.
     VRDN, 3.1s, 12/1/01         -          -          -      VMIG1  1,000,000         1,000,000          -1,000,000 
               
  
  NY City, Indl Dev. Agcy.
     (Laguardia Arpt. project)
     2.15s, 12/01/15             -          -          -        A-1  2,000,000         2,000,000          -2,000,000
                
  
  NY City, Muni. Wtr. & Swr.
     Syst. Rev. Anticipation
     Notes 
     Ser. A, 2 3/4s, 4/15/94     -          -          -       SP-1  3,000,000         3,005,385          -3,000,000 
               
  
  Ny State Energy
     Research & Dev. Auth.
     Poll. Control VRDN
     (NY State Elec. & Gas
     Corp.) Ser. D, 2.9s,
     12/1/15                     -          -          -       A-1+    100,000 100,000         -    100,000  100,000
     (NY State Elec. & Gas
     Corp.), Ser. A, 2 3/4s,
     3/1/15                      -          -          -       A-1+  2,000,000         2,000,000          -2,000,000
                
     (NY State Elec. & Gas
     Corp.), Ser. C, 2.6s,
     7/15/15                     -          -          -       A-1+  2,000,000         1,999,999          -2,000,000
                
     (NY State Energy
     Rochester Gas) 2.15s,
     10/01/14                    -          -          -        A-1  1,000,000         1,000,000          -1,000,000
                
  
     (Lilco Project), Ser. B,
     2 1/2s, 3/1/16              -          -          -      VMIG1  2,250,000         2,250,000          -2,250,000
                
    <PAGE>
   (Niagra Mohawk Pwr.
     Corp.) Ser. A, 3.55s,
     7/1/15                      -          -          -        A-1  2,000,000         2,000,000          -2,000,000
                
  
  NY State Env. Fac. Corp.
     Resource Recvy. VRDN
     (Equity Huntington
     Project), 2.2s, 11/1/14     -          -          -        A-1  2,000,000         2,000,000          -2,000,000
                
  
  NY State Job Dev. Auth.
     VRDN
     Ser. A, 3.25s, 3/1/05       -          -          -        A-1  2,000,000         2,000,000          -2,000,000
                
     Ser. B, 2.6s, 3/1/00        -          -          -       A-1+    605,000 605,000         -    605,000  605,000
     Ser. C, 2.6s, 3/1/00        -          -          -       A-1+  1,800,000         1,800,000          -1,800,000
                
     Ser. E, 2.35s, 3/1/99       -          -          -       A-1+    245,000 245,000         -    245,000  245,000
  
  NY State Med. Care Fac.
     Fin. Agcy. VRDN, 3s,
     11/1/08                     -          -          -      VMIG1  4,600,000         4,600,000          -4,600,000
                
  
  NY State Tax & Rev.
     Anticipation Notes,
     2 3/4s, 12/31/93            -          -          -       SP1+  2,000,000         2,002,429          -2,000,000
                
  
  Nassau Cnty., RAN,
     3.2s, 10/26/93              -          -          -      SP-1+  1,000,000         1,000,738          -1,000,000
                
     3.35s, 11/15/93             -          -          -      SP-1+  1,000,000         1,001,300          -1,000,000
                
  
  North Hempstead
     Solid Waste Mgmt.
     Auth. VRDN, 2.5s,
     1/1/12                      -          -          -       A-1+  1,500,000         1,500,000          -1,500,000
                
  
  Suffolk Cnty., Wtr. Auth.
             Anticipation Notes, 
     3 1/4s, 12/2/93             -          -          -       MIG1  2,000,000         2,001,339          -2,000,000
                
    <PAGE>
  Westchester Cnty., TAN
     2.75s, 10/21/93             -          -          -      VMIG1  2,000,000         2,000,298          -2,000,000
                
  
        -                        -  2,810,000            52,395,000 52,409,756       -55,205,000 55,219,756
  
  
  Ohio (2.2%)
  
  Ohio Cnty., Kentucky Poll.
     Control VRDN, 3 1/4s,
     10/1/15                   P-1  3,000,000  3,000,000          -          -       -         -  3,000,0003,000,000
  
        -                        -  3,000,000          -          -          -       - 3,000,000  3,000,000
  
  Oklahoma (5.4%) 
  
  OK State School Dist.
     Cash Management
     Certif. of Participation,
     3.18s, 6/29/94          SP-1+  2,000,000  2,006,234          -          -       -         -  2,000,0002,006,234
  
  Oklahoma Cnty., Indl.
     Auth. VRDN (Fred
     Jones Mtg. Co. Project),
     2 3/4s, 10/1/21           A-1  1,715,000  1,715,000          -          -       -         -  1,715,0001,715,000
  
  Shawnee, Hosp. Auth. Rev.
     Bonds (Midamerica 
     Healthcare), Ser. B,
     6.15s, 10/1/14           A-1+    485,000    485,000          -          -       -         -    485,000  485,000
  
  Tulsa Cnty. Indl. Auth. 
     Hlth. Care VRDN
     (Laureate Psychiatric
     Project), 2.4s, 12/15/08 A-1+  3,000,000  3,000,000          -          -       -         -  3,000,0003,000,000
  
        -                        -  7,206,234          -          -          -       - 7,200,000  7,206,234
    <PAGE>
Pennsylvania (2.0%)
  
  Allegheny Cnty., Hosp.
     Dev. Auth. VRDN
     MBIA, 3.05s, 3/1/20     VMIG1  1,760,000  1,760,000          -          -       -         -  1,760,0001,760,000
  
  Delaware Cnty., Indl. Dev.
     Auth. Arpt. Fac. VRDN
     (UPS Project), 3.4s,
     12/1/15                  A-1+    800,000    800,000          -          -       -         -    800,000  800,000
  
        -                        -  2,560,000          -          -          -       - 2,560,000  2,560,000
  
  South Dakota (2.2%)
  
  Rapid City, Economic
     Dev. VRDN (Civic Ctr.
     Assn. Partnership),
     3 1/4s, 12/1/16           P-1  2,970,000  2,970,000          -          -       -         -  2,970,0002,970,000
  
        -                        -  2,970,000          -          -          -       - 2,970,000  2,970,000
  
  
  Texas (2.6%)
  
  Bexar Cnty. Hsg. Fin.
     Corp. VRDN, Ser. A,
     3.2s, 11/1/06             A-1  2,500,000  2,500,000          -          -       -         -  2,500,0002,500,000
  
  Orange Cnty., Naval & 
     Port. Dist. Indl. Dev.
     Corp. Solid Waste
     Disposal VRDN
     (Horsehead Res. Dev.
     Project), 3.65s, 10/1/22  A-1  1,000,000  1,000,000          -          -       -         -  1,000,0001,000,000
  
        -                        -  3,500,000          -          -          -       - 3,500,000  3,500,000
  
    <PAGE>
Washington (0.7%)
  
  Washington State Hsg.
     Fin. Auth. VRDN, Ser. D,
     2.8s, 1/1/26            SP-1+  1,000,000  1,000,000          -          -       -         -  1,000,0001,000,000
  
        -                        -  1,000,000          -          -          -       -         -  1,000,000
  
  
  Wisconsin (5.1%)
  
  Alma, Poll. Control VRDN
     (Dairyland Pwr. Coop.
     Project), 2 3/4s, 2/1/15  P-1  2,900,000  2,900,000          -          -       -         -  2,900,0002,900,000
  
  WI Hsg. & Economic Dev.
     VRDN, 3.3s, 3/1/20      SP-1+  2,000,000  2,000,000          -          -       -         -  2,000,0002,000,000
  
  WI State Tax & Rev.
     Anticipaition Notes,
     3 1/4s, 6/15/94         SP-1+  2,000,000  2,005,001          -          -       -         -  2,000,0002,005,001
  
        -                        -  6,905,001          -          -          -       - 6,900,000  6,905,001
  
  
  Total Municipal Bonds and Notes-         - $72,838,174          -         -        $52,409,756          -        -    $12
  (Combined cost $125,247,930)
  (Tax Exempt Money Market $72,838,174)
  (New York Tax Exempt Money Market $52,409,756)
  
  Municipal Commercial Paper (6.0%) (a)
                         Principal                        Principal                    Principal
   Rating                   Amount      Value     Rating     Amount      Value  Rating    Amount      Value
  
  Lake Cnty., Rev. Bonds,
     3 1/4s, 11/4/93          A-1+  3,000,000  3,000,000          -          -       -         -  3,000,0003,000,000
  
  Sweetwater Cnty., Rev.
       Bonds, 2 1/2s, 10/6/93   A-1+  3,000,000  3,000,000          -          -       -         -  3,000,0003,000,000<PAGE>
  Wake Cnty., Indl. Fac. &
     Poll. Control Fin. Auth.
     Rev. Bonds, 2 3/4s,
     12/2/93                   A-1  2,000,000  2,000,000          -          -       -         -  2,000,0002,000,000
  
  Total Municipal Commercial Paper          -          - $8,000,000          -       -         -          -$
  (Combined cost $8,000,000)
  (Tax Exempt Money market $8,000,000)
  (New York Tax Exempt Money Market $0)
  
  Total Combined Investments     -          -$80,838,174          -          -       $52,409,756      
             -             $13
  (combined cost $133,247,930)
  (Tax Exempt Money Market $80,838,174)
)
  (New York Tax Exempt Money Market $52,409,756)
  
  
  (a) Percentages are based on proforma combined net assets of $134,750,578 which 
      correspond to a proforma combined net asset value per share of $1.00.
  
  
  </TABLE>
      <PAGE>
      PUTNAM TAX EXEMPT MONEY MARKET FUND,
  
           PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
  
                               AND
  
           PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND
  
      PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
      
  
  The accompanying unaudited pro forma combining investment
  portfolio and statement of assets and liabilities assumes
  that the exchange described in the next paragraph occurred as
  of September 30, 1993 and the unaudited pro forma combining
  statement of operations of Putnam Tax Exempt Money Market
  Fund ("Tax Exempt Money Market") as if the combination with
  Putnam California Tax Exempt Money Market Fund ("California
  Money Market") and Putnam New York Tax Exempt Money Market
  Fund ("New York Tax Exempt Money Market") had been
  consummated at the beginning of the fiscal year indicative of
  future operations or actual results that would have occurred
  had the combination been consummated at the beginning of the
  fiscal year presented.  These statements have been derived
  from the September 30, 1993 audited annual reports of Tax
  Exempt Money Market and California Tax Exempt Money Market
  and from New York Tax Exempt Money Market's books and records
  utilized in calculating the daily net asset value at
  September 30, 1993, and for the twelve month period then
  ended.
  
  The pro forma statements give effect to the proposed transfer
  of all the assets of California Tax Exempt Money Market and
  New York Tax Exempt Money Market to Tax Exempt Money Market
  in exchange for the assumption by Tax Exempt Money Market of
  all of the liabilities of California Tax Exempt Money Market
  and New York Tax Exempt Money Market and for a number of Tax
  Exempt Money Market shares equal in value to the value of the
  net assets of California Tax Exempt Money Market and New York
  Tax Exempt Money Market transferred to Tax Exempt Money
  Market.  Under generally accepted accounting principles, the
  historical cost of the investment securities will be carried
  forward to the surviving entity and the results of operations
  of Tax Exempt Money Market for pre-combined periods will not
  be restated.  The pro forma statements do not reflect the
  expenses of any of the funds in carrying out its obligations
  under the Agreement and Plan of Reorganization.
  
  The unaudited pro forma combining statements should be read
  in conjunction with the separate financial statements of Tax
  Exempt Money Market, California Tax Exempt Money Market and
  New York Tax Exempt Money Market included elsewhere in this
  statement of additional information.
  
  
  
  
  
  
                PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
  
                        SEPTEMBER 30, 1993
  
  The pro forma adjustments to these financial statements are
  comprised of:
  
      (A)  Increase in management and investment advisory fee
           of Tax Exempt Money Market paid to Putnam         
  Investments, Inc. to reflect the new fee structure         
  applied to the combined assets including California        
  Tax Exempt Money Market and New York Tax Exempt       Money
  Market.
  
      (B)  Decrease of expenses as a result of the merger.
  
      (C)  Elimination of the voluntary expense limitation and
           absorption of expenses by Putnam Investments, Inc.
           due to the increased combined asset based.
  
    <PAGE>
<TABLE>
  <CAPTIONS>
                                             PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  Pro Forma Combining
  Statement of 
  Assets and Liabilities
  September 30, 1993
  (Unaudited)
  <S>                                           <C>                   <C>                 <C>     <C>         <C>
                                   Tax Exempt Money California Tax Exempt New York Tax Exempt  Pro Forma   Pro Forma
                                        Market Fund     Money Market Fund   Money Market Fund Adjustments  Combined
  Assets
  
  Investments in securities, 
    at amortized cost                   $80,838,174           $45,321,271         $52,409,756            $178,569,201
     (combined cost, $178,569,201)
  Cash                                       44,571                36,432             775,896               856,899
  Dividends, interest and other receivables 364,273               172,992             266,457               803,722
  Receivable for shares of the Fund sold    180,479                40,026           1,987,554              2,208,059
  
  Total assets                           81,427,497            45,570,721          55,439,663      0      182,437,881
  
  Liabilities
  Distributions payable to shareholders       6,945                57,028              50,559               114,532
  Payable for shares of the Fund repurchased179,377                21,010           1,645,549              1,845,936
  Payable for compensation of Manager        81,370                53,282              19,030               153,682
  Payable for distribution fees              18,083                19,782              12,722               50,587
  Payable for administrative services         1,551                 1,313               1,313                4,177
  Payable for compensation of Trustees          148                   125                 125                 398
  Payable for investor servicing and 
    custodian fees                           52,412                27,360              21,927               101,699
  Other accrued expenses                     11,827                26,713              13,644               52,184
  
  Total liabilities                         351,713               206,613           1,764,869      0       2,323,195
  
  Net assets                            $81,075,784           $45,364,108         $53,674,794     $0     $180,114,686
    <PAGE>
  Represented by
  
  Shares outstanding                     81,075,784            45,364,108          53,674,794             180,114,686
  
  Net asset value per share                   $1.00                 $1.00              $1.00                 $1.00
  
  
  </TABLE>
    <PAGE>
<TABLE>
  <CAPTIONS>
  
                                             PUTNAM TAX EXEMPT MONEY MARKET FUND
  
  Pro Forma Combining
  Statement of Operations
  Year ended September 30, 1993
  (Unaudited)
  
  <S> <C>                                     <C>                    <C>                   <C>    <C>
                                 Tax Exempt Money  California Tax Exempt New York Tax Exempt   Pro Forma   Pro Forma
                                      Market Fund      Money Market Fund   Money Market Fund  Adjustments  Combined
  Investment income:
  Interest                             $2,253,568             $1,431,540          $1,462,840              $5,147,948
  
       Total investment income          2,253,568              1,431,540           1,462,840       0       5,147,948
  
  Expenses:                                                                                                    
                                                                                                   
  Compensation of Manager                 357,072                241,375             248,196    455(A)      847,098
  Investor servicing and custodian fees   244,681                114,899             106,941  (11,787)(B)   454,734
  Compensation of Trustees                  9,565                  6,103               6,243       0        21,911
  Reports to shareholders                  13,248                 13,114              15,057  (18,819)(B)   22,600
  Postage                                  10,322                  4,767               6,595       0        21,684
  Auditing                                 14,786                 17,444              14,069  (31,168)(B)   15,131
  Legal                                    12,128                 12,034              11,857       0        36,019
  Administrative services                   5,676                  4,642               4,642       0        14,960
  Distribution fees                        78,252                 60,823              57,125       0        196,200
  Amortization of organization fees           271                      0                   0       0          271
  Registration fees                             0                      0               6,725       0         6,725
  Other                                    40,202                    115               1,861       0        42,178
  Fees waived and other expenses 
   absorbed by Manager                          0                      0            (11,461)   11,461(C)       0
  
       Total expenses                     786,203                475,316             467,850   (49,858)    1,679,511
  
  Net investment income                 1,467,365                956,224             994,990    49,858     3,468,437
  
    <PAGE>
Net realized gain on investments            3,603                      0               4,409                 8,012
  
  Net gain on investments                   3,603                      0               4,409       0         8,012
  
  Net increase in net assets resulting from
     operations                        $1,470,968               $956,224            $999,399    $49,858   $3,476,449
  
  
  </TABLE>
    <PAGE>
<TABLE>
  <CAPTION>
  
  The Pro Forma Combining Investment Portfolio of
  Putnam Tax Exempt Money Market Fund,
  Putnam California Tax Exempt Money Market Fund and
  Putnam New York Tax Exempt Money Market Fund
  
  September 30, 1993
  (UNAUDITED)
  
                           Tax Exempt Money              California Tax Exempt           New York Tax Exempt    
                           Market Fund                   Money Market Fund               Money Market Fund   Pro Form
  
  Municipal Bonds
  and Notes (94.3%)(a)          Principal                       Principal                Principal                      
   Rating            Amount  Value Rating Amount    Value Rating   Amount    Value Rating   Amount    Value
  <S> <C>               <C>    <C>    <C>    <C>      <C>    <C>      <C>      <C>    <C>      <C>      <C>
  California (27.0%)
  
  CA Higher Ed. Loan Auth.
     Inc. Student Loan
     Variable Rate Demand Notes
     (VRDN), 2.9s, 8/1/03    VMIG1    $1,000,000      $1,000,000        -        -      -        -        -       -    -
            
  
  CA Hlth. Fac. Auth. 
     VRDN (Kaiser Permanente Med.)
     2 1/4s, 10/1/13      -      -      -   A-1+      $1,500,000        $1,500,000      -        -        - 
  -                 
  
  CA Hlth. Fac. Fin. Auth.
     VRDN
     2 3/4s, 8/1/17                        VMIG1  985,000985,000        -        -      -        -  985,000 985,000
     (Kaiser Permanente Med.
     Project), Ser. A,
     2.7s, 8/15/25        -      -      -   A-1+2,000,000       2,000,000        -      -        -        
- -    2,000,000            
  
  CA Pub. Cap. Impt. Fin.
     Auth. VRDN (Pooled
     Project), 2.6s, 6/1/28      -      -      -    VMIG1       3,000,0003,000,000      -        
- -        -       -                 
  
  Chula Vista, Coml. Dev
     VRDN (South Bay
     Ambulatory Surgical
     Ctr.), Ser. A, 2.9s, 12/1/99-      -      -    VMIG1       1,260,0001,260,000      -        -        -       -     
  1,260,000       1,260,000
  
  Fontana, Certif. of
     Participation VRDN,
     4 1/4s, 7/1/21     A-2     3,000,000       3,000,000      -        -        -      -        -        -       - 
                
    <PAGE>
Hermosa Beach, Parking
     Auth. Certif. of
     Participation VRDN,
     2.6s, 12/1/13        -      -      -    A-11,600,000       1,600,000        -      -        -        
- -    1,600,000            
  
  Irvine Ranch, Wtr. Dist.
     VRDN, Ser. B, 3.35s,
     10/1/04              -      -      -   A-1+2,100,000       2,100,000        -      -        -        
- -    2,100,000            
  
  Kern, Cmnty College
     Dist. Cerif. of
     Participation VRDN
     (Fin. project), 3s, 3/1/18  -      -      -     A-1+       2,000,0002,000,000      -        -        
- -       -     
  2,000,000       2,000,000
  
  Loma Linda, Hosp. VRDN
     (Loma Linda U. Med.
     Ctr.), Ser. B, 2.9s, 12/1/15-      -      -     A-1+       2,000,0002,000,000      -        -        
- -       -     
  2,000,000       2,000,000
  
  Los Angeles Cnty.,
     Cmnty. Dev. Certif. of
     Participation VRDN
     (Willow Brook Project.),
     2.8s, 11/1/15        -      -      -    A-12,200,000       2,200,000        -      -        -
        -    2,200,000            
  
  Los Angeles Cnty., Hsg.
     Auth. Multi-Fam. Hsg.
     VRDN (River Park Apt.
     Project), Ser. D, 3.05s,
     9/1/10               -      -      -  VMIG12,000,000       2,000,000        -      -        -        -    2,000,000
            
  
  Los Angeles, Multi-Fam. 
     Hsg. VRDN (Masselin
     Manor Project), 3s, 7/1/15  -      -      -    VMIG1       2,000,0002,000,000      -        -        -   
    -     
  2,000,000       2,000,000
  
  Los Angeles, Unified
     School Dist. Tax &
     Rev. Anticipation
     Notes (TRAN), 3 1/4s,
     7/15/94              -      -      -  SP-1+2,500,000       2,509,594        -      -        -        -
    2,500,000            
  
  Moorpark, Multi-Fam.
     VRDN (Le Club Apts.
     Project), Ser. A, 3.05s,
     11/1/15              -      -      -   A-1+2,000,000       2,000,000        -      -        -        -    
2,000,000            
  
  Oakland, Certif. of
     Participation VRDN
     (Cap. Equipment
     Project), 3.4s, 12/1/15     -      -      -    VMIG1       2,000,0002,000,000      -        -        - 
      -     
  2,000,000       2,000,000
    <PAGE>
Orange Cnty., Certif of
     Participation VRDN
     (Sanitation Dist.)
     3.35s, 8/1/15        -      -      -  VMIG11,000,000       1,000,000        -      -        -        -    
1,000,000            
  
  Orange Cnty., TRAN,
     Ser A. 3s, 6/30/94   -      -      -  VMIG12,000,000       2,007,290        -      -        -        -    
2,000,000            
  
  Palm Springs, Cmnty.
     Redev. Agcy. Certif.
     of Participation VRDN
     (Headquarters Hotel-7),
     2.95s, 12/1/14       -      -      -    A-1  200,000200,000        -        -      -        -  200,000 
200,000
     (Headquarters Hotel-10),
     2.95s, 12/1/14       -      -      -    A-12,100,000       2,100,000        -      -        -        -    
2,100,000            
  
  Sacramento Cnty.,
     Multi-Fam. Hsg. VRDN
     (River Oaks Apts.)
     Ser. E, 3.05s, 9/15/07      -      -      -    VMIG1       2,000,0002,000,000      -        -        
- -       -                 
  
  Sacramento Cnty., TRAN
     3s, 7/29/94          -      -      -  SP-1+1,000,000       1,000,358        -      -        -        -    
1,000,000            
  
  San Bernardino Cnty.
     Hsg. Auth. Multi-Fam,
     VRDN (Brookside
     Meadows), Ser. A,
     4.2s, 8/1/05         -      -      -  VMIG21,000,000       1,000,000        -      -        -        -    
1,000,000            
  
  San Diego Cnty., TRAN
     Ser. A, 3 1/4s, 7/29/94     -      -      -    SP-1+       2,500,0002,509,029      -        -        -
       -     
  2,500,000       2,509,029
  
  Triunfo, Sanitation Dist.
     Certif. of Participation
     VRDN (Wastewater
     Reclamaiton Project),
     3s, 6/1/19           -      -      -   A-1+2,200,000       2,200,000        -      -        -        -    
2,200,000            
  
  Union City, Hsg. Mtge.
     VRDN (Green Haven 
     Apts. Project), Ser. A,
     3.35s, 10/1/11       -      -      -  VMIG21,500,000       1,500,000        -      -        -        -    
1,500,000            
  
        -                 -     4,000,000               -      44,671,271        -      -        -        -
       -                 
  
  Colorado (1.0%)
  
  Denver, Urban Renewal
     Auth. Tax Increment
     VRDN, Ser. A, 2.9s,
       3/1/10           SP-1+945,000945,000      -        -      -        -        -      -        -  945,000 945,000
<PAGE>
  
  Lakewood, Multi-Fam.
     Hsg. VRDN (St. Moritz
     and Diamond Head),
     Financial Guaranty
     Insurance Corp., 2.8s,
     10/1/07          VMIG1800,000800,000      -        -      -        -        -      -        -  800,000
 800,000
  
                          -     1,745,000      -        -      -        -        -      -        -        -    
1,745,000
  
  District of Columbia (1.0%)
  
  DC Hosp. Rev Bonds
     (Medlantic Healthcare),
     Ser. A, Municiap Bond
     Insurance Association
     (MBIA), 3s, 8/15/94AAA     1,765,000       1,765,000      -        -        -      -        -        -
       -                 
  
                          -     1,765,000      -        -      -        -        -      -        -        -
    1,765,000
  
  Georgia (1.4%)
  
  Atlanta, Urban Res. fin.
     Auth. Multi-Fam. Mtge.
     VRDN (Rental-West
     Paces), Ser. A, 2 1/2s,
     12/1/08           A-1+     1,500,000       1,500,000      -        -        -      -        -        -
       -                 
  
  Dekalb Co., Hsg. Auth.
     VRDN, 3.1s, 12/1/07      A-1+     1,000,0001,000,000      -        -        -      -        -        -       
- -                 
        -                 -     2,500,000      -        -      -        -        -      -        -        -    
2,500,000
  
  Illinois (1.6%)
  
  Elmhurst, VRDN
     (Joint Accreditation
     Commission), 3.15s,
     7/1/18           VMIG1     2,000,000       2,000,000      -        -        -      -        -        -       
- -                 
  
  IL Hlth. Fac, Auth. VRDN
     (Midwest Cambridge Project),
     2.8s, 1/1/15     A-1/P800,000800,000      -        -      -        -        -      -        -  800,000 
800,000
  
        -                 -     2,800,000      -        -      -        -        -      -        -        -    
2,800,000
  
  Iowa (2.4%)
  
  Des Moines, Private
     College VRDN (U. of
     Osteopathic Medicine &
     Hlth.), 2.45s, 5/15/15   A-1+     1,140,0001,140,000      -        -        -      -        -        -
       -                 
    <PAGE>
Salix, Mid-West Pwr.
     VRDN, 3.2s, 5/1/23      VMIG1     3,095,0003,095,000      -        -        -      -        -        -       -
                 
  
        -                 -     4,235,000      -        -      -        -        -      -        -        -   
 4,235,000
  
  Kentucky (0.9%)
  
  Jefferson Cnty., Indl. Dev.
     VRDN (Belknap Inc.
     Project), 2.7s, 12/1/14   A-1     1,584,0001,584,000      -        -        -      -        -        -
       -     
  1,584,000       1,584,000
  
        -                 -     1,584,000      -        -      -        -        -      -        -        -    
1,584,000
  
  Louisiana (2.0%)
  
  LA State Recvy. Dist.
    Sales Tax VRDN, MBIA,
     3.40s, 7/1/98    VMIG1     2,500,000       2,500,000      -        -        -      -        -        -
       -                 
  
  Orleans, Levee Dist. Impt.
     VRDN, 3.95s, 11/1/14    VMIG1     1,170,0001,170,000      -        -        -      -        -        -
       -                 
  
        -                 -     3,670,000      -        -      -        -        -      -        -3,670,000  
  3,670,000
  
  Massachusetts (3.3%)
  
  MA State General
     Obligation Bonds
     Ser. B, VRDN, 2.2s,
     12/1/97          VMIG1     3,000,000       3,000,000      -        -        -      -        -        -  
     -                 
     3s, 11/18/93     SP-1+     1,000,000       1,000,713      -        -        -      -        -        - 
      -                 
  
  MA State Hsg. Fin. Agcy.
     Rev Bonds, 2 3/4s,
     6/1/17           VMIG1     2,000,000       2,000,000      -        -        -      -        -        - 
      -                 
  
        -                 -     6,000,713      -        -      -        -        -      -        -6,000,000    
6,000,713
  
  Michigan (2.3%)
  
  Delta Cnty., Economic
     Dev. Corp. Env. Impt.
     VRDN (Escambia 
     Paper), Ser. C, 2.55s,
     12/1/23            P-1     2,300,000       2,300,000      -        -        -      -        -        -  
     -                 
  
  MI State Job Dev. Auth.
     VRDN, 2 3/4s, 12/1/14     A-1     1,900,0001,900,000      -        -        -      -        -        - 
      -                 
  
        -                 -     4,200,000      -        -      -        -        -      -        -4,200,000   
 4,200,000
    <PAGE>
Minnesota (2.1%)
  
  Albert Lea, Indl. Dev.
     VRDN (Joyce Intl. Inc.
     Project), 2.7s, 7/1/94    A-1400,000400,000        -      -        -        -      -        -        - 
400,000                 
  
  Minneapolis-St. Paul, Hsg.
     Fin. Board Single Fam.
     VRDN (Phase VI)
     Ser. B, Government
     National Mortgage
     Assn. (GNMA) Coll,
     2 1/2s, 8/1/13   SP-1+     1,865,000       1,865,000      -        -        -      -        -        - 
      -                 
  
  St. Louis Park, Indl. Dev.
     VRDN (Unicare Home
     Inc. Project), 2 3/4s, 8/1/14    A-1       1,500,000       1,500,000        -      -        -        - 
      -    -            
  1,500,000       1,500,000
  
        -                 -     3,765,000      -        -      -        -        -      -        -3,765,000    
3,765,000
  
  Mississippi (1.8%)
  
  Jackson Cnty., VRDN,
     2.408s, 12/1/16    P-1     3,300,000       3,300,000      -        -        -      -        -        - 
      -                 
  
        -                 -     3,300,000      -        -      -        -        -      -        -3,300,000    
3,300,000
  
  Missouri (0.6%)
  
  MO State Hlth. & Ed. Auth.
     VRDN, 3s, 6/1/14 VMIG1     1,000,000       1,000,000      -        -        -      -        -        - 
      -                 
  
        -                 -     1,000,000      -        -      -        -        -      -        -1,000,000    
1,000,000
  
  New Hampshire (0.6%)
  
  NH State Bus. Fin. Auth.
     VRDN, 2.95s, 11/1/20    VMIG1     1,000,0001,000,000      -        -        -      -        -        -
       -                 
  
        -                 -     1,000,000      -        -      -        -        -      -        -1,000,000    
1,000,000
  
  New Jersey (0.7%)
  
  Cape May Cnty., Muni.
     Util. Auth. Rev. Bonds,   AAA     1,300,0001,322,226      -        -        -      -        -        - 
      -     
  1,300,000       1,322,226
     Ser. A, MBIA, 7 1/4s,
     1/1/16
        -                 -     1,322,226      -        -      -        -        -      -        -1,300,000    
1,322,226
    <PAGE>
New York (30.7%)
  
  Erie Cnty., Anticipation
     Notes, 3.3s, 8/5/94  -      -      -      -        -      -     MIG1      $2,000,000        $2,003,268
       -                 
  
  Monroe Cnty., Indl. Dev.
     Agcy. VRDN (Columbia/
     Sussex) 5s, 11/1/14  -      -      -      -        -      -      AAA2,410,000       2,410,000        
- -    2,410,000            
  
  NY City, Rev. Anticipation
     Notes (RAN)   
     3.05s, 3/15/97       -      -      -      -        -      -    VMIG12,500,000       2,500,000        
- -    2,500,000            
  
  NY City G.O. Dly VRDN,
     3.3s, 8/15/18        -      -      -      -        -      -    VMIG11,800,000       1,800,000        
     1,800,000            
  
  NY City, Hsg. Dev. Corp.
     Mtge. VRDN
     (Carnegie Park Project),
     3.25s, 12/1/16     AAA     2,810,000       2,810,000      -        -        -    AAA4,000,0004,000,000     
  -                 
     (Parkgate Tower Project),
     2.9s, 12/1/07        -      -      -      -        -      -      A-1  585,000585,000        -  585,000 
585,000
  
     (Upper Fifth Ave.
     Project), Ser A, 2.8s, 
     1/1/16               -      -      -      -        -      -    VMIG11,000,000       1,000,000        -    
1,000,000            
     (East 96th St. Project),
     Ser. A, 2.35s, 8/1/15-      -      -      -        -      -    VMIG12,000,000       2,000,000        -    
2,000,000            
  
  NY City, Indl Dev. Agcy.
    VRDN, 3.1s, 12/1/01  -      -      -      -        -      -    VMIG11,000,000       1,000,000        -    
1,000,000            
  
  NY City, Indl Dev. Agcy.
     (Laguardia Arpt project)
     2.15s, 12/01/15      -      -      -      -        -      -      A-12,000,000       2,000,000        -    
2,000,000            
  
  NY City, Muni. Wtr. & Swr.
     Syst. Rev. Anticipation
     Notes 
     Ser. A, 2 3/4s, 4/15/94     -      -      -        -      -        -     SP-1       3,000,0003,005,385    
   -     
  3,000,000       3,005,385
  
  Ny State Energy
     Research & Dev. Auth.
     Poll. Controll VRDN
     (NY State Elec. & Gas
     Corp.) Ser. D, 2.9s,
     12/1/15              -      -      -      -        -      -     A-1+  100,000100,000        -  100,000 100,000
     (NY State Elec. & Gas
     Corp.), Ser. A, 2 3/4s,
     3/1/15               -      -      -      -        -      -     A-1+2,000,000       2,000,000        -    2,000,000            
    <PAGE>
   (NY State Elec. & Gas
     Corp.), Ser. C, 2.6s,
     7/15/15              -      -      -      -        -      -     A-1+2,000,000       1,999,999        -    2,000,000            
     (NY State Energy
     Rochester Gas) 2.15s,
     10/01/14             -      -      -      -        -      -      A-11,000,000       1,000,000        -    1,000,000 
           
  
     (Lilco Project), Ser. B,
     2 1/2s, 3/1/16       -      -      -      -        -      -    VMIG12,250,000       2,250,000        -    2,250,000            
     (Niagra Mohawk Pwr.
     Corp.) Ser. A, 3.55s,
     7/1/15               -      -      -      -        -      -      A-12,000,000       2,000,000        -    2,000,000            
  
  NY State Env. Fac. Corp.
     Resource Recvy. VRDN
     (Equity Huntington
     Project), 2.2s, 11/1/14     -      -      -        -      -        -      A-1       2,000,0002,000,000       -     
  2,000,000       2,000,000
  
  NY State Job Dev. Auth.
     VRDN
     Ser. A, 3.25s, 3/1/05-      -      -      -        -      -      A-12,000,000       2,000,000        -    2,000,000 
           
     Ser. B, 2.6s, 3/1/00 -      -      -      -        -      -     A-1+  605,000605,000        -  605,000 605,000
     Ser. C, 2.6s, 3/1/00 -      -      -      -        -      -     A-1+1,800,000       1,800,000        -    1,800,000
            
     Ser. E, 2.35s, 3/1/99-      -      -      -        -      -     A-1+  245,000245,000        -  245,000 245,000
  
  NY State Med. Care Fac.
     Fin. Agcy. VRDN, 3s,
     11/1/08              -      -      -      -        -      -    VMIG14,600,000       4,600,000        -    4,600,000
            
  
  NY State Tax & Rev.
     Anticipation Notes,
     2 3/4s, 12/31/93     -      -      -      -        -      -     SP1+2,000,000       2,002,429        -    2,000,000 
           
  
  Nassau Cnty., RAN,
     3.2s, 10/26/93       -      -      -      -        -      -    SP-1+1,000,000       1,000,738        -    
1,000,000            
     3.35s, 11/15/93      -      -      -      -        -      -    SP-1+1,000,000       1,001,300        -    1,000,000
            
  
  North Hempstead
     Solid Waste Mgmt.
     Auth. VRDN, 2.5s,
     1/1/12               -      -      -      -        -      -     A-1+1,500,000       1,500,000        -    1,500,000
            
  
  Suffolk Cnty., Wtr. Auth.
             Anticipation Notes, 
     3 1/4s, 12/2/93      -      -      -      -        -      -     MIG12,000,000       2,001,339        -    2,000,000
            
  
  Westchester Cnty., TAN
     2.75s, 10/21/93      -      -      -      -        -      -    VMIG12,000,000       2,000,298        -    2,000,000
            
  
        -                 -     2,810,000      -        -      -               52,395,000        52,409,756       - 
                
  
    <PAGE>
Ohio (1.7%)
  
  Ohio Cnty., Kentucky Poll.
     Control VRDN, 3 1/4s,
     10/1/15            P-1     3,000,000       3,000,000      -        -        -      -        -        -       
- -                 
  
        -                 -     3,000,000      -        -      -        -        -      -        -3,000,000    
3,000,000
  
  Oklahoma (4.0%)
  
  OK State School Dist.
     Cash Management
     Certif. of Participation,
     3.18s, 6/29/94   SP-1+     2,000,000       2,006,234      -        -        -      -        -        -      
 -                 
  
  Oklahoma Cnty., Indl.
     Auth. VRDN (Fred
     Jones Mtg. Co. Project),
     2 3/4s, 10/1/21    A-1     1,715,000       1,715,000      -        -        -      -        -        -  
     -                 
  
  Shawnee, Hosp. Auth. Rev.
     Bonds (Midamerica 
     Healthcare), Ser. B,
     6.15s, 10/1/14    A-1+485,000485,000      -        -      -        -        -      -        -  485,000 485,000
  
  Tulsa Cnty. Indl. Auth.
     Hlth. Care VRDN
     (Laureate Psychiatric
     Project), 2.4s, 12/15/08 A-1+     3,000,0003,000,000      -        -        -      -        -        -   
    -     
  3,000,000       3,000,000
  
        -                 -     7,206,234      -        -      -        -        -      -        -7,200,000    7,206,234
  
  Pennsylvania (1.4%)
  
  Allegheny Cnty., Hosp.
     Dev. Auth. VRDN
     MBIA, 3.05s, 3/1/20     VMIG1     1,760,0001,760,000      -        -        -      -        -        -       
- -                 
  
  Delaware Cnty., Indl. Dev.
     Auth. Arpt. Fac. VRDN
     (UPS Project), 3.4s,
     12/1/15           A-1+800,000800,000      -        -      -        -        -      -        -  800,000 800,000
  
        -                 -     2,560,000      -        -      -        -        -      -        -2,560,000    2,560,000
  
  South Dakota (1.6%)
  
  Rapid City, Economic
     Dev. VRDN (Civic Ctr.
     Assn. Partnership),
     3 1/4s, 12/1/16    P-1     2,970,000       2,970,000      -        -        -      -        -        -       -  
               
  
        -                 -     2,970,000      -        -      -        -        -      -        -2,970,000    
2,970,000
  
  
  Texas (1.9%)
  
  Bexar Cnty. Hsg. Fin.
     Corp. VRDN, Ser. A,
     3.2s, 11/1/06      A-1     2,500,000       2,500,000      -        -        -      -        -        - 
      -                 
  
  Orange Cnty., Naval & 
     Port. Dist. Indl. Dev.
     Corp. Solid Waste
     Disposal VRDN
     (Horsehead Res. Dev.
     Project), 3.65s, 10/1/22  A-1     1,000,0001,000,000      -        -        -      -        -        - 
      -     
  1,000,000       1,000,000
  
        -                 -     3,500,000      -        -      -        -        -      -        -3,500,000   
 3,500,000
  
  Washington (0.5%)
  
  Washington State Hsg.
     Fin. Auth. VRDN, Ser. D,
     2.8s, 1/1/26     SP-1+     1,000,000       1,000,000      -        -        -      -        -        -  
     -                 
  
        -                 -     1,000,000      -        -      -        -        -      -        -        - 
   1,000,000
  
  Wisconsin (3.8%)
  
  Alma, Poll. Control VRDN
     (Dairyland Pwr. Coop.
     Project), 2 3/4s, 2/1/15  P-1     2,900,0002,900,000      -        -        -      -        -        -  
     -     
  2,900,000       2,900,000
  
  WI Hsg. & Economic Dev.
     VRDN, 3.3s, 3/1/20      SP-1+     2,000,0002,000,000      -        -        -      -        -        -
       -                 
  
  WI State Tax & Rev.
     Anticipaition Notes,
     3 1/4s, 6/15/94  SP-1+     2,000,000       2,005,001      -        -        -      -        -        -  
     -                 
  
        -         6,900,000     6,905,001      -        -      -        -        -      -        -        -    
6,905,001
  
  Total Municipal Bonds and Notes-      -     $72,838,174      -        -     $44,671,271        -        -  
$52,409,756            
  -            $169,919,201
  (Combined cost $169,919,201)
  (Tax Exempt Money Market $72,838,174)
  (California Tax Exempt Money Market $44,671,271)
  (New York Tax Exempt Money Market $52,409,756)
  
    <PAGE>
  Municipal Commercial Paper (4.8%) (a)
                  Principal                     Principal                Principal                Principal
   Rating            Amount  Value Rating Amount    Value Rating   Amount    Value Rating   Amount    Value
  
  Orange Cnty., Airport
     Rev. Bonds (John
     Wayne Airport),
     Municipal Bond
     Insurance Assn.,
     3s, 7/1/94           -      -      -  SP-1+  650,000650,000        -        -      -        -  650,000 650,000
  
  Lake Cnty., Rev. Bonds,
     3 1/4s, 11/4/93   A-1+     3,000,000       3,000,000      -        -        -      -        -        -       -
                 
  
  Sweetwater Cnty., Rev.
     Bonds, 2 1/2s, 10/6/93   A-1+     3,000,0003,000,000      -        -        -      -        -        -       -
                 
  
  Wake Cnty., Indl. Fac. &
     Poll. Control Fin. Auth.
     Rev. Bonds, 2 3/4s,
     12/2/93            A-1     2,000,000       2,000,000      -        -        -      -        -        -       -
                 
  
  Total Municipal Commercial Paper      -      -      $8,000,000        -        -        $650,000        -       -
    -            
  $8,650,000     $8,650,000
  (Combined cost $8,650,000)
  (Tax Exempt Money market $8,000,000)
  (California Tax Exempt Money Market $650,000)
  (New York Tax Exempt Money Market $0)
  
  Total Combined Investments     -      -     $80,838,174      -        -     $45,321,271        -        -  
$52,409,756            
  -            $178,569,201
  (combined cost $178,569,201)
  (Tax Exempt Money Market $80,838,174)
  (California Tax Exempt Money Market $45,321,271)
  (New York Tax Exempt Money Market $52,409,756)
  
  (a) Percentages are based on proforma combined net assets of $180,114,686 which 
      correspond to a proforma combined net asset value per share of $1.00.
  
  </TABLE>
  


Part C.   OTHER INFORMATION

Item 15.  Indemnification


The information required by this item is incorporated herein by
reference to the Registrant's initial Registration Statement on
Form N-1A (File No. 33-15238) under the Securities Act of 1933
and the Investment Company Act of 1940 (File No. 811-5215).

Item 16.  Exhibits

     (1)            Agreement and Declaration of Trust, as
                    amended through July 13, 1992 - Incorporated
                    by reference to Post-Effective Amendment No.
                    6 to the Registrant's Registration Statement
                    on Form N-1A (File No. 33-15238).  

     (2)            By-Laws, as amended through September 9, 1993
                    - Incorporated by reference to Post-Effective
                    Amendment No. 7 to the Registrant's
                    Registration Statement on Form N-1A (File No.
                    33-15238).

     (3)            Not Applicable.

     (4)            Agreement and Plan of Reorganization
                    constitutes Exhibit A included in Part A
                    hereof.

     (5)            Portions of Agreement and Declaration of
                    Trust Relating to Shareholders' Rights --
                    Incorporated by Reference to Post-Effective
                    Amendment No. 7 to Registrant's Registration
                    Statement on Form N-1A (File No. 33-15238).

     (6)            Copy of Management Contract dated July 9,
                    1992 -- Incorporated by reference to the
                    Registrant's Post-Effective Amendment No. 6
                    to the Registrant's Registration Statement on
                    Form N-1A (File No. 33-15238). 

     (7)  a.        Copy of Distribution Contract dated September
                    9, 1988 -- Incorporated by reference to Post-
                    Effective Amendment No. 2 to the Registrant's
                    Registration Statement on Form N-1A (File No.
                    33-15238).

          b.        Copy of Specimen Dealer Sales Contract --
                    Incorporated by reference to Post-Effective  
                    Amendment No. 5 to the Registrant's
                    Registration Statement on Form N1-A (File No.
                    33-15238).
 
          c.        Copy of Specimen Financial Institutional
                    Sales Contract -- Incorporated by reference
                    to Post-Effective Amendment No. 5 to the
                    Registrant's Registration Statement on Form
                    N1-A (File No. 33-15238).

     (8)            Not Applicable.

     (9)            Copy of Custodian Agreement with Putnam
                    Fiduciary Trust Company dated May 3, 1991, as
                    amended July 13, 1992 -- Incorporated by
                    reference to Post-Effective Amendment No. 23
                    to the Registrant's Registration Statement.

     (10)  a.       Copy of Distribution Plan and Agreement dated
                    September 9, 1988 -- Incorporated by
                    reference to Post-Effective Amendment No. 19
                    to Registrant's Registration Statement on
                    Form N-1A.

           b.       Copy of Specimen Dealer Service Agreement --
                    Incorporated by reference to Post-Effective
                    Amendment No. 19 to Registrant's Registration
                    Statement on Form N-1A.

           c.       Copy of Specimen Financial Institution
                    Service Agreement -- Incorporated by
                    reference to Post-Effective Amendment No. 19
                    to Registrant's Registration Statement on
                    Form N-1A. 

     (11)           Opinion of Ropes & Gray, including consent --
                    filed herewith.

     (12)              Not Applicable.            

     (13)           Copy of Investor Servicing Agreement dated
                    June 3, 1991 with Putnam Fiduciary Trust
                    Company -- Incorporated by reference to Post-
                    Effective Amendment No. 5 to the Registrant's
                    Registration Statement on Form N-1A (File No.
                    33-15238).

     (14)           Consent of Independent Accountants - filed
                    herewith.

     (15)           Financial Schedules in Support of most recent
                    balance sheet incorporated by reference to
                    Post-Effective Amendment No. 7 to the
                    Registrant's Registration Statement on Form
                    N1-A (File No. 33-15238).

     (16)           Power of Attorney - filed herewith.

     (17)           Copy of Rule 24f-2 Notice for Registrant for
                    the year ended September 30, 1993, filed on
                    November 29, 1993 -- filed herewith.

Item 17.  Undertakings

(1)  The undersigned Registrant agrees that prior to any public
     reoffering of the securities registered through the use of a
     prospectus which is a part of this Registration Statement by
     any person or party who is deemed to be an underwriter
     within the meaning of Rule 145(c) under the Act, the
     reoffering prospectus will contain the information called
     for by the applicable registration form for reofferings by
     persons who may be deemed underwriters, in addition to the
     information called for by the other items of the applicable
     form.

(2)  The undersigned Registrant agrees that every prospectus that
     is filed under paragraph (1) above will be filed as a part
     of an amendment to this Registration Statement and will not
     be used until the amendment is effective, and that, in
     determining any liability under the Act, each post-effective
     amendment shall be deemed to be a new Registration Statement
     for the securities offered therein, and the offering of the
     securities at that time shall be deemed to be the initial
     bona fide offering of them.
<PAGE>
                                  NOTICE


     A copy of the Agreement and Declaration of Trust, as
amended, of Putnam Tax Exempt Money Market Fund (the "Fund"), is
on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this Registration
Statement has been executed on behalf of the Fund by officers of
the Fund as officers and by its Trustees as trustees and not
individually, and the obligations of or arising out of this
Registration Statement are not binding upon any of the Trustees,
officers, or shareholders of the Fund individually, but are
binding only upon the assets and property of the Fund.
<PAGE>
            SIGNATURES


     Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this    Pre-Effective Amendment
No. 1 to the     Registration Statement to be signed on its
behalf by the undersigned, in the City of Boston and The
Commonwealth of Massachusetts on the    5th     day of
   April    , 1994.

                              PUTNAM TAX EXEMPT MONEY MARKET FUND 
    


                              /s/Gordon H. Silver    
                              Gordon H. Silver
                              Vice President 

     Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.


   Signature       Title                       Date

 
         *         President and Chairman          April 5    ,
1994
George Putnam      of the Trustees; Principal
                   Executive Officer;
                   Trustee


         *         Vice Chairman and               April 5    ,
1994
William F. Pounds  Trustee



         *          Principal Financial            April 5    ,
1994 John D. Hughes      Officer; Vice President;
                    Treasurer


         *          Principal Accounting           April 5    ,
1994
Paul G. Bucuvalas   Officer; Assistant
                    Treasurer




<PAGE>
     Signature           Title                 Date


        *                Trustee                  April 5    ,
1994
Jameson A. Baxter


        *                Trustee                  April 5    ,
1994
Hans H. Estin


        *                Trustee                  April 5    ,
1994  
John A. Hill     


        *                Trustee                  April 5    ,
1994  
Elizabeth T. Kennan


        *                Trustee                  April 5    ,
1994  
Lawrence J. Lasser 


        *                Trustee                  April 5    ,
1994  
Robert E. Patterson


        *                Trustee                  April 5    ,
1994  
Donald S. Perkins 


        *                Trustee                  April 5    ,
1994  
George Putnam, III


        *                Trustee                  April 5    ,
1994  
A.J.C. Smith


        *                Trustee                  April 5    ,
1994  
W. Nicholas Thorndike


*By /s/Gordon H. Silver
    Gordon H. Silver
    Attorney-in-fact                       
                          <PAGE>
                                     EXHIBIT INDEX

Exhibit

   EX-11            Opinion of Ropes & Gray, including consent.

   EX-14            Consent of Independent Accountants.

   EX-16            Power of Attorney.
   
   EX-17            Copy of Rule 24f-2 Notice for Registrant for  
                    the year ended September 30, 1993, filed on
                    November 29, 1993.



<PAGE>

                              February 15, 1994




Putnam Tax Exempt Money Market Fund
One Post Office Square
Boston, Massachusetts  02109

Ladies and Gentlemen:

     We have acted as counsel to Putnam Tax Exempt Money Market
Fund (the "Fund") in connection with the Registration Statement
of the Fund on Form N-14 (File No. 33-15238) (the "Registration
Statement"), under the Securities Act of 1933, as amended (the
"Act"), relating to the proposed combination of the Fund with the
Putnam California Tax Exempt Money Market Fund (the "California
Fund") and the Putnam New York Tax Exempt Money Market Fund ( the
"New York Fund"), and the issuance of shares of the Fund in
connection therewith (the "Shares"), all in accordance with the
terms of the Agreement and Plan of Reorganization between the
Fund and the California Fund and the Agreement and Plan of
Reorganization between the Fund and the New York Fund, each dated
on or about February 15, 1994 (the "Agreements"). 
     We have examined the Fund's Agreement and Declaration of
Trust on file in the office of the Secretary of State of The
Commonwealth of Massachusetts and the Clerk of the City of Boston
and the Fund's By-Laws, as amended, and are familiar with the
actions taken by the Fund's Trustees in connection with the
issuance and sale of the Shares.  We have also examined such
other documents and records as we have deemed necessary for the
purpose of this opinion.

     Based upon the foregoing, we are of the opinion that:

     1.  The Fund is a duly organized and validly existing
unincorporated association under the laws of The Commonwealth of
Massachusetts and is authorized to issue an unlimited number of
its shares of beneficial interest.

     2.  The Shares have been duly authorized and, when issued in
accordance with the Agreement, will be validly issued, fully
paid, and nonassessable by the Fund.

     The Fund is an entity of the type commonly known as a
"Massachusetts business trust."  Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of the Fund.  However, the
Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Fund and requires that
notice of such disclaimer be given in each note, bond, contract,
instrument, certificate, or undertaking entered into or executed
by the Fund or its Trustees.  The Agreement and Declaration of
Trust provides for indemnification out of the property of the
Fund for all loss and expense of any shareholder of the Fund held
personally liable solely by reason of his being or having been a
shareholder. Thus, the risk of a shareholder's incurring
financial loss on account of being a shareholder is limited to
circumstances in which the Fund itself would be unable to meet
its obligations.

     We understand that this opinion is to be used in connection
with the registration of the Shares for offering and sale
pursuant to the Act.  We consent to the filing of this opinion
with and as part of the registration Statement and to the
references to our firm in the related prospectus under the
captions "Taxation" and "Legal Matters."

                              Very truly yours,

                              /s/ Ropes & Gray

                              Ropes & Gray
                              

<PAGE>
                      CONSENT OF INDEPENDENT ACCOUNTANTS

   To the Board of Trustees of
Putnam Tax Exempt Money Market Fund:    


We hereby consent to the incorporation by reference in the
Prospectus/Proxy Statement and the Statement of Additional
Information constituting part of the    Pre-Effective Amendment
No. 1 to     Registration Statement of Putnam Tax Exempt Money
Market Fund on Form N-14 (File No. 33-15238) of our report dated
November 10, 1993,relating to the financial statements and
financial highlights appearing in the September 30, 1993, Annual
Report of Putnam California Tax Exempt Money Market Fund, which
financial statements and financial highlights are also
incorporated by reference into    Pre-Effective Amendment No. 1
to     the Registration Statement.  We also consent to the
reference to us under the caption "Independent Accountants and
Financial Statements" in such Statement of Additional
Information.



PRICE WATERHOUSE


Boston, Massachusetts
   April 5    , 1994

<PAGE>
                      CONSENT OF INDEPENDENT ACCOUNTANTS


To the Board of Trustees of
Putnam Tax Exempt Money Market Fund:

We consent to the incorporation by reference in    Pre-Effective
Amendment No. 1 to     the Registration
Statement of Putnam Tax Exempt Money Market Fund on Form N-14
(File No.33-15238) of our report dated November 8, 1993, on our
audit of the financial statements and "Financial highlights" of
Putnam Tax Exempt Money Market Fund, which report is included in
the Annual Report to Shareholders, for the year ended September
30, 1993, which is incorporated by reference in the    Pre-
Effective Amendment No. 1 to     Registration Statement; and our
report dated January 12, 1994, on our audit of the financial
statements and "Financial highlights" of Putnam New York Tax
Exempt Money Market Fund, which report is included in the Annual
Report to Shareholders, for the year ended November 30, 1993,
which is incorporated by reference in the    Pre-Effective
Amendment No. 1 to     Registration Statement.  We also consent
to the reference to our Firm under the caption "Independent
Accountants and Financial Statements" in the Statement of
Additional Information.

                              COOPERS & LYBRAND


Boston, Massachusetts
   April 4    , 1994
<PAGE>
                             POWER OF ATTORNEY

     We, the undersigned Officers and Trustees of Putnam Tax
Exempt Money Market Fund, hereby severally constitute and appoint
George Putnam, Charles E. Porter, Gordon H. Silver, Edward A.
Benjamin, Timothy W. Diggins and John W. Gerstmayr, and each of
them singly, our true and lawful attorneys, with full power to
them and each of them, to sign for us, and in our names and in
the capacities indicated below, the Registration Statements on
Form N-14 of Putnam Tax Exempt Money Market Fund and any and all
amendments (including post-effective amendments) to said
Registration Statements and to file the same with all exhibits
thereto, and other documents in connection thereunder, with the
Securities and Exchange Commission, granting unto our said
attorneys, and each of them acting alone, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to
all intents and purposes as he or she might or could do in
person, and hereby ratify and confirm all that said attorneys or
any of them may lawfully do or cause to be done by virtue
thereof.

     WITNESS our hands and common seal on the date set forth
below.

 Signature           Title                    Date



                     Principal Executive              
GEORGE PUTNAM        Officer; President and
                     Chairman of the Trustees December 2, 1993


                     Trustee; Vice Chairman   December 2, 1993
WILLIAM F. POUNDS    



                     Principal Financial            
JOHN D. HUGHES       Officer; Treasurer       December 2, 1993



                     Principal Accounting             
PAUL G. BUCUVALAS    Officer; Assistant 
                       Treasurer               December 2, 1993



   HANS H. ESTIN             Trustee                  December 2,
1993  


   ELIZABETH T. KENNAN       Trustee                  December 2,
1993  



   LAWRENCE J. LASSER        Trustee                  December 2,
1993  



   JOHN A. HILL              Trustee                  December 2,
1993  
       


   ROBERT E. PATTERSON       Trustee                  December 2,
1993  

 

   DONALD S. PERKINS         Trustee                  December 2,
1993  


       
GEORGE PUTNAM, III            Trustee                  December
2,    1993  



A.J.C. SMITH          Trustee                  December 2,    
1993  



   W. NICHOLAS THORNDIKE     Trustee                  December 2,
1993  
       


<PAGE>
                             POWER OF ATTORNEY

 I, the undersigned Trustee of Putnam Tax Exempt Money Market
Fund, hereby severally constitute and appoint George Putnam,
Charles E. Porter, Gordon H. Silver, Edward A. Benjamin, Timothy
W. Diggins and John W. Gerstmayr, and each of them singly, my
true and lawful attorneys, with full power to them and each of
them, to sign for me, and in my name and in the capacity
indicated below, the Registration Statements on Form N-14 of
Putnam Tax Exempt Money Market Fund and any and all amendments
(including post-effective amendments) to said Registration
Statements and to file the same with all exhibits thereto, and
other documents in connection thereunder, with the Securities and
Exchange Commission, granting unto my said attorneys, and each of
them acting alone, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in
the premises, as fully to all intents and purposes as he or she
might or could do in person, and hereby ratify and confirm all
that said attorneys or any of them may lawfully do or cause to be
done by virtue thereof.

 WITNESS my hand and seal on the date set forth below.

 Signature                  Title             Date



                            
JAMESON A. BAXTER           Trustee           January 6, 1994
                                              
<PAGE>

                    Putnam Tax Exempt Money Market Fund
                          One Post Office Square
                       Boston, Massachusetts  02109


                              November 30, 1993



Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549-1004
Via EDGAR

RE:  Rule 24f-2 Notice for Putnam Tax Exempt Money Market Fund
     (Reg. No. 33-15238) (the "Fund")

Ladies and Gentlemen:

     Pursuant to Rule 24f-2 under the Investment Company Act of
1940, you are hereby notified as follows:

     (a)  the fiscal year of the Fund for which this notice is
     filed is the year ended September 30, 1993.

     (b)  the number or amount of securities of the same class or
     series of the Fund which had been registered under the
     Securities Act of 1933 other than pursuant to Rule 24f-2 but
     which remained unsold at the beginning of the year was: 
     NONE.

     (c)  the number or amount of securities the Fund registered
     during such fiscal year other than pursuant to Rule 24f-2
     was:  37,677,133 shares.

     (d)  the number or amount of securities of the Fund sold
     during such fiscal year was: 324,783,397 shares.

     (e)  the number or amount of securities of the Fund sold
     during such fiscal year in reliance upon registration
     pursuant to Rule 24f-2 was: 287,106,264 shares.*

     We are including in this filing, as an exhibit, an opinion
of counsel for the Fund to the effect that the securities, the
registration of which this notice makes definite in number, were
legally issued, fully paid and non-assessable.  
<PAGE>


Securities and Exchange Commission
November 30, 1993
Page Two



                              Very truly yours,

                              Putnam Tax Exempt Money Market Fund

                                   /s/ John D. Hughes  
                              By:  -----------------------------
                                   John D. Hughes
                                   Vice President and Treasurer


- -----------------------------------------------------------------
*Calculation of filing fee pursuant to Rule 24f-2(c):


(1)  Aggregate sales price of securities
     sold pursuant to Rule 24f-2 during                       
$287,106,264
     the fiscal year (see Para. (e) above):              
- -----------------

(2)  (a)  Aggregate redemption or
          repurchase price of securities
          redeemed or repurchased during
          fiscal year:                                        
$327,039,308

     (b)  Amount previously applied
          during fiscal year:                                     
    NONE

     (c)  Available credit:                                   
$327,039,308

     (d)  Amount of available credit
          applied in this notice:                             
$287,106,264
                                                          
- ----------------

(3)  Securities deemed sold for filing
     fee calculation:                                             
    NONE

(4)  Filing fee due:  (1/29 of 1% of #3):                         
    NONE


                    Putnam Tax Exempt Money Market Fund
                         Certificate of Treasurer


     I, John D. Hughes, hereby certify that I am the Treasurer of
Putnam Tax Exempt Money Market Fund (the "Fund") and that all of
the 287,106,264 shares indicated in Paragraph (e) of the attached
Notice pursuant to Rule 24f-2 as having been sold in reliance
upon registration under Rule 24f-2 during the Fund's fiscal year
ended September 30, 1993 were issued and the full consideration
therefor authorized or specified to be received by the Fund in
its Bylaws had been received by that date.

     Executed this 11th day of November, 1993.


                              /s/ John D. Hughes
                              ----------------------------------
                              John D. Hughes
                              Vice President and Treasurer






                                                                  EXHIBIT A



                   AGREEMENT AND PLAN OF REORGANIZATION

     This Agreement and Plan of Reorganization (the "Agreement")
is made as of    December 3, 1993     in Boston, Massachusetts,
by and between Putnam Tax Exempt Money Market Fund, a
Massachusetts business trust (the "Money Market Fund"), and
Putnam California Tax Exempt Money Market Fund, a Massachusetts
business trust (the "California Fund")(collectively, the
"Funds").

                          PLAN OF REORGANIZATION

     (a)  The California Fund will sell, assign, convey, transfer
and deliver to the Money Market Fund on the Exchange Date (as
defined in Section 7) all of its properties and assets existing
at the Valuation Time.  In consideration therefor, the Money
Market Fund shall, on the Exchange Date, assume all of the
liabilities of the California Fund existing at the Valuation Time
and deliver to the California Fund, a number of full and
fractional shares of beneficial interest of the Money Market Fund
("Money Market Fund Shares") having an aggregate net asset value
equal to the value of assets of the California Fund attributable
to shares of the California Fund transferred to the Money Market
Fund on such date less the value of the liabilities of the
California Fund attributable to shares of the California Fund
assumed by the Money Market Fund on that date.

     (b)  Upon consummation of the transactions described in
paragraph (a) of this Plan, the California Fund shall distribute
in complete liquidation to its shareholders of record as of the
Exchange Date the Money Market Fund Shares, each shareholder
being entitled to receive that proportion of such Money Market
Fund Shares which the number of shares of beneficial interest of
the California Fund held by such shareholder bears to the number
of shares of the California Fund outstanding on such date.
       
     (c)  As promptly as practicable after the liquidation of the
California Fund as aforesaid, the California Fund shall be
dissolved pursuant to the provisions of its Agreement and
Declaration of Trust, as amended, and applicable law, and its
legal existence terminated.

     (d)  It is intended that the reorganization described in
this Plan shall be a taxable transaction under the Internal
Revenue Code of 1986, as amended (the "Code").

                                 AGREEMENT

     The Money Market Fund and the California Fund agree as
     follows:

     1.   Representations and Warranties of the Money Market
Fund.  The Money Market Fund represents and warrants to and
agrees with the California Fund that:

     (a)  The Money Market Fund is a business trust duly
established and validly existing under the laws of The
Commonwealth of Massachusetts and has power to own all of its
properties and assets and to carry out its obligations under this
Agreement.  The Money Market Fund is not required to qualify as a
foreign association in any jurisdiction.  The Money Market Fund
has all necessary federal, state and local authorizations to
carry on its business as now being conducted and to carry out
this Agreement.

     (b)  The Money Market Fund is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as
an open-end management investment company, and such registration
has not been revoked or rescinded and is in full force and
effect.

     (c)  A statement of assets and liabilities, statements of
operations, and statements of changes in net assets and schedules
of investments (indicating their market values) of the Money
Market Fund for the year ended September 30, 1993, such
statements and schedules having been audited by Coopers &
Lybrand, independent accountants, have been furnished to the
California Fund.  Such statements of assets and liabilities and
schedules fairly present the financial position of the Money
Market Fund as of their dates and said statements of operations
and changes in net assets fairly reflect the results of its
operations and changes in net assets for the periods covered
thereby in conformity with generally accepted accounting
principles.

     (d)  Post-Effective Amendment No.   (File No. 811-5215) to
the Registration Statement of the Money Market Fund under the
1940 Act, as filed with the Securities and Exchange Commission
(the "Commission") on    February 18, 1994    , previously
furnished to the California Fund, did not as of such date and
does not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.

     (e)  There are no material legal, administrative or other
proceedings pending or, to the knowledge of the Money Market
Fund, threatened against the Money Market Fund which assert
liability on the part of the Money Market Fund.

     (f) There are no material contracts outstanding to which the
Money Market Fund is a party, other than as will be disclosed in
the Proxy Statement.

     (g)  The Money Market Fund has no known liabilities of a
material nature, contingent or otherwise, other than those shown
as belonging to it on its statement of assets and liabilities as
of September 30, 1993 and those incurred in the ordinary course
of the Money Market Fund's business as an investment company
since September 30, 1993.  

     (h)  No consent, approval, authorization or order of any
court or governmental authority is required for the consummation
by the Money Market Fund of the transactions contemplated by this
Agreement, except such as may be required under the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the
1940 Act, state securities or blue sky laws (which term as used
herein shall include the laws of the District of Columbia and of
Puerto Rico) or the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "H-S-R Act").

     (i)  The registration statement (the "Registration
Statement") filed with the Commission by the Money Market Fund on
Form N-14 relating to the Money Market Fund Shares issuable
hereunder, and the proxy statement of the California Fund
included therein (the "Proxy Statement"), on the effective date
of the Registration Statement (i) will comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and
the 1940 Act and the rules and regulations thereunder and (ii)
will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at
the time of the shareholders' meeting referred to in Section 8(a)
and at the Exchange Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part
(the "Prospectus"), as amended or supplemented by any amendments
or supplements filed with the Commission by the California Fund,
will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that none of the representations and
warranties in this subsection shall apply to statements in or
omissions from the Registration Statement, the Prospectus or the
Proxy Statement made in reliance upon and in conformity with
information furnished by the California Fund for use in the
Registration Statement, the Prospectus or the Proxy Statement.

     (j)  All of the issued and outstanding shares of beneficial
interest of the Money Market Fund have been offered for sale and
sold in conformity with all applicable federal securities laws.

     (k)  The Money Market Fund is and will at all times through
the Exchange Date qualify for taxation as a "regulated investment
company" under Sections 851 and 852 of the Code.
     
     (l)  The issuance of the Money Market Fund Shares pursuant
to this Agreement will be in compliance with all applicable
federal securities laws.

     (m)  The Money Market Fund shares to be issued to the
California Fund have been duly authorized and, when issued and
delivered pursuant to this Agreement, will be legally and validly
issued and will be fully paid and nonassessable by the Money
Market Fund, and no shareholder of the Money Market Fund will
have any preemptive right of subscription or purchase in respect
thereof.
 
     2.   Representations and Warranties of the California Fund. 
The California Fund represents and warrants to and agrees with
the Money Market Fund that:

     (a)  The California Fund is a business trust duly
established and validly existing under the laws of The
Commonwealth of Massachusetts and has power to carry on its
business as it is now being conducted and to carry out this
Agreement.  The California Fund is not required to qualify as a
foreign association in any jurisdiction.  The California Fund has
all necessary federal, state and local authorizations to own all
of its properties and assets and to carry on its business as now
being conducted and to carry out this Agreement.

     (b)  The California Fund is registered under the 1940 Act as
an open-end management investment company and such registration
has not been revoked or rescinded and is in full force and
effect.

     (c)  A statement of assets and liabilities, statements of
operations, and statements of changes in net assets and schedules
of investments (indicating their market values) of the California
Fund for the fiscal year ended September 30, 1993, such
statements and schedules having been audited by Price Waterhouse,
independent accountants, have been furnished to the Money Market
Fund.  Such statements of assets and liabilities and schedules
fairly present the financial position of the California Fund as
of their dates, and said statements of operations and changes in
net assets fairly reflect the results of its operations and
changes in financial position for the periods covered thereby in
conformity with generally accepted accounting principles.

     (d)  Post-Effective Amendment No. 6 (File No. 811-5333) to
the Registration Statement of the California Fund under the 1940
Act, as filed with the Commissioner on February 1, 1994,
previously furnished to the Money Market Fund, did not contain as
of its date any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading.

     (e) There are no material legal, administrative or other
proceedings pending or, to the knowledge of the California Fund,
threatened against the California Fund which assert liability or
may, if successfully prosecuted to their conclusion, result in
liability on the part of the California Fund, other than as have
been disclosed in the Prospectus.

     (f)  There are no material contracts outstanding to which
the California Fund is a party, other than as will be disclosed
in the Proxy Statement.

     (g)  The California Fund has no known liabilities of a
material nature, contingent or otherwise, other than those shown
on the California Fund's statement of assets and liabilities as
of September 30, 1993 referred to above and those incurred in the
ordinary course of the business of the California Fund as an
investment company since such date.  Prior to the Exchange Date,
the California Fund will advise the Money Market Fund of all
material liabilities, contingent or otherwise, incurred by it
subsequent to September 30, 1993, whether or not incurred in the
ordinary course of business.

     (h)  As used in this Agreement, the term "Investments" shall
mean the California Fund's investments shown on the schedule of
its investments as of September 30, 1993 referred to in
Section 2(c) hereof, as supplemented with such changes as the
California Fund shall make after advising the Money Market Fund
of such proposed changes, and changes resulting from stock
dividends, stock split-ups, mergers and similar corporate
actions, but excluding such investments as the Money Market Fund
may designate in a writing addressed to the California Fund as
being unsuitable for the Money Market Fund to acquire by reason
of charter limitations or of investment restrictions disclosed in
the Money Market Fund Prospectus.  

     (i)  The California Fund has filed or will file all federal
and state tax returns which, to the knowledge of the California
Fund's officers, are required to be filed by the California Fund
and has paid or will pay all federal and state taxes shown to be
due on said returns or on any assessments received by the
California Fund.  All tax liabilities of the California Fund have
been adequately provided for on its books, and no tax deficiency
or liability of the California Fund has been asserted, and no
question with respect thereto has been raised, by the Internal
Revenue Service or by any state or local tax authority for taxes
in excess of those already paid.

     (j)  At both the Valuation Time (as defined in Section 3(c))
and the Exchange Date, the California Fund will have full right,
power and authority to sell, assign, transfer and deliver the
Investments and any other assets and liabilities of the Money
Market Fund to be transferred to the California Fund pursuant to
this Agreement.  At the Exchange Date, subject only to the
delivery of the Investments and any such other assets and
liabilities as contemplated by this Agreement, the Money Market
Fund will acquire the Investments and any such other assets
subject to no encumbrances, liens or security interests
whatsoever and without any restrictions upon the transfer
thereof.

     (k)  No registration under the Securities Act of 1933, as
amended (the "1933 Act"), of any of the Investments would
be required if they were, as of the time of such transfer,
the subject of a public distribution by either of the Money
Market Fund or the California Fund, except as previously
disclosed to the Money Market Fund by the California Fund.

     (l)  No consent, approval, authorization or order of any
court or governmental authority is required for the consummation
by the California Fund of the transactions contemplated by this
Agreement, except such as may be required under the 1933 Act, the
1934 Act, the 1940 Act, state securities laws or the H-S-R Act.

     (m)  The Registration Statement, the Prospectus and the
Proxy Statement, on the Effective Date of the Registration
Statement and insofar as they do not relate to the Money Market
Fund (i) will comply in all material respects with the provisions
of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and at the time of the shareholders'
meeting referred to in Section 8(a) below and on the Exchange
Date, the Prospectus, as amended or supplemented by any
amendments or supplements filed with the Commission by the Money
Market Fund, insofar as it does not relate to the Money Market
Fund, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in
this subsection shall apply only to statements of fact relating
to the California Fund contained in the Registration Statement,
the Prospectus or the Proxy Statement, or omissions to state in
any thereof a material fact relating to the California Fund, as
such Registration Statement, Prospectus and Proxy Statement shall
be furnished to the California Fund in definitive form as soon as
practicable following effectiveness of the Registration Statement
and before any public distribution of the Prospectus or Proxy
Statement.

     (n)  The California Fund is and will at all times through
the Exchange Date qualify for taxation as a "regulated investment
company" under Sections 851 and 852 of the Code.

     (o)  At the Exchange Date, the California Fund will have
sold such of its assets, if any, as necessary to assure that,
after giving effect to the acquisition of the assets of the
California Fund pursuant to this Agreement, the Money Market Fund
will remain a "diversified company" within the meaning of
Section 5(b)(1) of the 1940 Act and in compliance with such other
mandatory investment restrictions as are set forth in the
prospectus and statement of additional information of the Money
Market Fund dated February 1, 1994 (collectively, the "Money
Market Fund Prospectus"), previously furnished to the California
Fund.  The Money Market Fund Shares to be issued to the
California Fund have been duly authorized and, when issued and
delivered pursuant to this Agreement, will be legally and validly
issued and will be fully paid and nonassessable by the California
Fund, and no shareholder of the Money Market Fund will have any
preemptive right of subscription or purchase in respect thereof.

     3.   Reorganization.  (a) Subject to the requisite approval
of the shareholders of the California Fund and to the other terms
and conditions contained herein (including the California Fund's
obligation to distribute to its shareholders all of its
investment company taxable income and net capital gain as
described in Section 9(l) hereof), the California Fund agrees to
sell, assign, convey, transfer and deliver to the Money Market
Fund, and the Money Market Fund agrees to acquire from the
California Fund, on the Exchange Date all of the Investments and
all of the cash and other properties and assets of the New York
Fund, whether accrued or contingent of the California Fund
(including cash received by the California Fund upon the
liquidation by the California Fund of any investments purchased
by the California Fund after September 30, 1993 and designated by
the Money Market Fund as being unsuitable for it to acquire), in
exchange for that number of shares of beneficial interest of the
Money Market Fund provided for in Section 4 and the assumption by
the Money Market Fund of all of the liabilities of the California
Fund.  Pursuant to this Agreement, the California Fund will, as
soon as practicable after the Exchange Date, distribute all of
the Money Market Fund Shares received by it to the shareholders
of the California Fund in exchange for their shares of beneficial
interest of the California Fund.

     (b)  The California Fund will pay or cause to be paid to the
Money Market Fund any interest    ,     cash    or such    
dividends   , rights     and other payments received by it on or
after the Exchange Date with respect to the Investments and other
assets transferred to the Money Market Fund hereunder received by
it on or after the Exchange Date.     Any such distribution    
shall be deemed included in the assets transferred to the Money
Market Fund at the Exchange Date and shall not be separately
valued unless the securities in respect of which such
distribution is made shall have gone "ex" such distribution prior
to the Valuation Time, in which case any such distribution which
remains unpaid at the Exchange Date shall be included in the
determination of the value of the assets of the California Fund
acquired by the Money Market Fund.

     (c)  The Valuation Time shall be 4:00 p.m. Boston time on 
May 9, 1994 or such earlier or later day as may be mutually
agreed upon in writing by the parties hereto (the "Valuation
Time").

     4.   Exchange Date; Valuation Time.  On the Exchange Date,
the Money Market Fund will deliver to the California Fund, a
number of full and fractional Money Market Fund Shares having an
aggregate net asset value equal to the value of assets of the
California Fund attributable to shares of the California Fund
transferred to the Money Market Fund on such date less the value
of the liabilities of the California Fund attributable to shares
of the California Fund assumed by the Money Market Fund on that
date, determined as hereafter provided in this Section 4.

     (a)  The net asset value of the Money Market Fund Shares to
be delivered to the California Fund, the value of the assets of
the California Fund and the value of the liabilities of the
California Fund to be assumed by the Money Market Fund shall in
each case be determined as of the Valuation Time.

     (b)  The net asset value of the Money Market Fund Shares
shall be computed in the manner set forth in the current Money
Market Fund Prospectus.  The value of the assets and liabilities
of the California Fund shall be determined by the Money Market
Fund, in cooperation with the California Fund, pursuant to
procedures which the Money Market Fund would use in determining
the fair market value of the Money Market Fund's assets as if
such assets were to be evidenced or sold on a given day. 
Accordingly, the Money Market Fund shall not employ the amortized
cost method of valuation in valuing the California Fund's assets.

        (c)  No adjustment shall be made in     the net asset
value of either the California Fund or the Money Market Fund to
take into account differences in realized and unrealized gains
and losses.
       
     (d)  The Money Market Fund shall issue the Money Market Fund
Shares to the California Fund in one certificate (excluding any
fractional share) registered in the name of the California Fund. 
The California Fund shall distribute the Money Market Fund Shares
to the shareholders of the California Fund by redelivering such
certificate to the Money Market Fund's transfer agent which will
as soon as practicable set up open accounts for each California
Fund shareholder in accordance with written instructions
furnished by the California Fund.
       
     (e)  The Money Market Fund shall assume all liabilities of
the California Fund, whether accrued or contingent, in connection
with the acquisition of assets and subsequent dissolution of the
California Fund or otherwise.

     5.   Expenses, Fees, etc.  (a) All fees and expenses,
including legal and accounting expenses, portfolio transfer taxes
(if any) or other similar expenses incurred in connection with
the consummation by the California Fund and the Money Market Fund
of the transactions contemplated by this Agreement will be
allocated ratably between the two Funds in proportion to their
net assets as of the Valuation Time, except that the costs of
proxy materials and proxy solicitation will be borne by the
California Fund; provided, however, that such expenses will in
any event be paid by the party directly incurring such expenses
if and to the extent that the payment by the other party of such
expenses would result in the disqualification of the Money Market
Fund or the California Fund, as the case may be, as a "regulated
investment company" within the meaning of Section 851 of the
Code.

     (b)  In the event the transactions contemplated by this
Agreement are not consummated by reason of the Money Market
Fund's being either unwilling or unable to go forward (other than
by reason of the nonfulfillment or failure of any condition to
the Money Market Fund's obligations referred to in Section 8(a)
or Section 9) the Money Market Fund shall pay directly all
reasonable fees and expenses incurred by the California Fund in
connection with such transactions, including, without limitation,
legal, accounting and filing fees.

     (c)  In the event the transactions contemplated by this
Agreement are not consummated by reason of the California Fund's
being either unwilling or unable to go forward (other than by
reason of the nonfulfillment or failure of any condition to the
California Fund's obligations referred to in Section 8(a) or
Section 10), the California Fund shall pay directly all
reasonable fees and expenses incurred by the Money Market Fund in
connection with such transactions, including without limitation
legal, accounting and filing fees.

     (d)  In the event the transactions contemplated by this
Agreement are not consummated for any reason other than (i) the
Money Market Fund's or the California Fund's being either
unwilling or unable to go forward or (ii) the nonfulfillment or
failure of any condition to the Money Market Fund's or the
California Fund's obligations referred to in Section 8(a),
Section 9 or Section 10 of this Agreement, then each of the Money
Market Fund and the California Fund shall bear all of its own
expenses incurred in connection with such transactions.

     (e)  Notwithstanding any other provisions of this Agreement,
if for any reason the transactions contemplated by this Agreement
are not consummated, no party shall be liable to the other party
for any damages resulting therefrom, including without limitation
consequential damages, except as specifically set forth above.

     6.   Permitted Assets.  The Money Market Fund agrees to
advise the California Fund promptly if at any time prior to the
Exchange Date the assets of the California Fund include any
assets that the Money Market Fund is not permitted, or reasonably
believes to be unsuitable for it, to acquire, including without
limitation any security that, prior to its acquisition by the
California Fund, the Money Market Fund has informed the
California Fund is unsuitable for the Money Market Fund to
acquire.

     7.   Exchange Date.  Delivery of the assets of the
California Fund to be transferred, assumption of the liabilities
of the California Fund to be assumed and the delivery of the
Money Market Fund Shares to be issued shall be made at the
offices of Ropes & Gray, One International Place, Boston,
Massachusetts, at 10:00 A.M. on the next full business day
following the Valuation Time, or at such other time and date
agreed to by the Money Market Fund and the California Fund, the
date and time upon which such delivery is to take place being
referred to herein as the "Exchange Date."

     8.   Meeting of Shareholders; Dissolution.  (a) The
California Fund agrees to call a meeting of its shareholders as
soon as is practicable after the effective date of the
Registration Statement for the purpose of considering the sale of
all of its assets to and the assumption of all of its liabilities
by the Money Market Fund as herein provided, adopting this
Agreement, and authorizing the liquidation and dissolution of the
California Fund, and it shall be a condition to the obligations
of each of the parties hereto that the holders of at least
two-thirds (66 2/3%) of the shares of beneficial interest of the
California Fund shall have approved such vote at such a meeting
on or before the Valuation Time.

     (b)  The California Fund agrees that the liquidation and
dissolution of the California Fund will be effected in the manner
provided in the California Fund's Agreement and Declaration of
Trust in accordance with applicable law,        and that on and
after the Exchange Date, the California Fund shall not conduct
any business except in connection with its liquidation and
dissolution.

     (c)  The Money Market Fund will, as promptly as practicable
after the preparation and delivery to the Money Market Fund by
the California Fund of a preliminary version of the Proxy
Statement which is satisfactory to the Money Market Fund and to
Ropes & Gray for inclusion in the Registration Statement, file
the Registration Statement with the Commission.  Each of the
California Fund and the Money Market Fund will cooperate with the
other, and each will furnish to the other the information
relating to itself required by the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder to be set forth
in the Registration Statement, including the Prospectus and the
Proxy Statement.

    9.    Conditions to the Money Market Fund's Obligations.  The
obligations of the Money Market Fund hereunder shall be subject
to the following conditions:

    (a)  That this Agreement shall have been adopted and the
transactions contemplated hereby shall have been approved by the
affirmative vote of the holders of at least two-thirds (66 2/3%)
of the outstanding shares of beneficial interest of the
California Fund.

    (b)  That the California Fund shall have furnished to the
Money Market Fund a statement of the California Fund's assets and
liabilities, with values determined as provided in Section 4 of
this Agreement, together with a list of Investments and all other
assets of the California Fund with their respective tax costs,
all as of the Valuation Time, certified on the California Fund's
behalf by its President (or any Vice President) and Treasurer,
and a certificate of both such officers, dated the Exchange Date,
that there has been no material adverse change in the financial
position of the California Fund since September 30, 1993 other
than changes in the Investments and other assets and properties
of the California Fund since that date or changes in the market
value of the Investments and other assets of the California Fund,
or changes due to net redemptions of shares of the California
Fund, dividends paid or losses from operations.

    (c)  That the California Fund shall have furnished to the
Money Market Fund a statement, dated the Exchange Date, signed by
the California Fund's President (or any Vice President) and
Treasurer certifying that as of the Valuation Time and as of the
Exchange Date all representations and warranties of the
California Fund made in this Agreement are true and correct in
all material respects as if made at and as of such dates and the
California Fund has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to such dates.

    (d)  That the California Fund shall have delivered to the
Money Market Fund a letter from Price Waterhouse dated the
Exchange Date stating that such firm reviewed the federal and
state income tax returns of the California Fund for the year
ended September 30, 1993, and for the period from September 30,
1993 to the Exchange Date, and that, in the course of such
review, nothing came to their attention which caused them to
believe that such returns did not properly reflect, in all
material respects, the federal and state income taxes of the
California Fund for the periods covered thereby, or that the
California Fund would not qualify as a regulated investment
company for federal income tax purposes. 

    (e)  That there shall not be any material litigation pending
with respect to the matters contemplated by this Agreement.

    (f)  That the Money Market Fund shall have received an
opinion of Ropes & Gray, in form satisfactory to the Money Market
Fund and dated the Exchange Date, to the effect that (i) the
California Fund is a business trust duly established and validly
existing under the laws of The Commonwealth of Massachusetts, and
the California Fund is not, to the knowledge of such counsel,
required to qualify to do business as a foreign association in
any jurisdiction, (ii) this Agreement has been duly authorized,
executed, and delivered by the California Fund and, assuming that
the Registration Statement, the Prospectus and the Proxy
Statement comply with the 1933 Act, the 1934 Act and the 1940 Act
and assuming due authorization, execution and delivery of this
Agreement by the Money Market Fund, is a valid and binding
obligation of the California Fund, (iii) the California Fund has
power to sell, assign, convey, transfer and deliver the assets
contemplated hereby and, upon consummation of the transactions
contemplated hereby in accordance with the terms of this
Agreement, the California Fund will have duly sold, assigned,
conveyed, transferred and delivered such assets to the Money
Market Fund, (iv) the execution and delivery of this Agreement
did not, and the consummation of the transactions contemplated
hereby will not, violate the California Fund's Agreement and
Declaration of Trust, as amended, or any provision of any
agreement known to such counsel to which the California Fund is a
party or by which it is bound, and (v) no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the California Fund of the
transactions contemplated hereby, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities or blue sky laws
and the H-S-R Act, it being understood that with respect to
investment restrictions as contained in the California Fund's
Agreement and Declaration of Trust, Bylaws or then-current
prospectus or statement of additional information, such counsel
may rely upon a certificate of an officer of the California Fund
whose responsibility it is to advise the California Fund with
respect to such matters.

    (g)  That the Money Market Fund shall have received an
opinion of Ropes & Gray, in form satisfactory to the Money Market
Fund, with respect to the matters specified in Section 10(f) of
this Agreement, and such other matters as the Money Market Fund
may reasonably deem necessary or desirable.

    (h)  That the assets of the California Fund to be acquired
by the Money Market Fund will include no assets which the Money
Market Fund, by reason of charter limitations or of investment
restrictions disclosed in the Money Market Fund Prospectus in
effect on the Exchange Date, may not properly acquire.

    (i)  That the Registration Statement shall have become
effective under the 1933 Act, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of
the Money Market Fund, contemplated by the Commission.

    (j)  That the Money Market Fund shall have received from the
Commission, any relevant state securities administrator, the
Federal Trade Commission (the "FTC") and the Department of
Justice (the "Department") such order or orders as Ropes & Gray
deems reasonably necessary or desirable under the 1933 Act, the
1934 Act, the 1940 Act, any applicable state securities or blue
sky laws and the H-S-R Act in connection with the transactions
contemplated hereby, and that all such orders shall be in full
force and effect.

    (k)  That all proceedings taken by the California Fund in
connection with the transactions contemplated by this Agreement
and all documents incidental thereto shall be satisfactory in
form and substance to the Money Market Fund and Ropes & Gray.

    (l)  That, prior to the Exchange Date, the California Fund
shall have declared a dividend or dividends which, together with
all previous such dividends, shall have the effect of
distributing to the shareholders of the California Fund all of
the California Fund's investment company taxable income for its
taxable years ending on or after September 30, 1993 and on or
prior to the Exchange Date (computed without regard to any
deduction for dividends paid), and all of its net capital gain
realized in each of its taxable years ending on or after
September 30, 1993 and on or prior to the Exchange Date.

    (m)  That the California Fund's custodian shall have
delivered to the Money Market Fund a certificate identifying all
of the assets of the California Fund held by such custodian as of
the Valuation Time.

    (n)  That the California Fund's transfer agent shall have
provided to the Money Market Fund (i) the originals or true
copies of all of the records of the California Fund in the
possession of such transfer agent as of the Exchange Date, (ii) a
certificate setting forth the number of shares of the California
Fund outstanding as of the Valuation Time and (iii) the name and
address of each holder of record of any such shares and the
number of shares held of record by each such shareholder.

    (o)  That all of the issued and outstanding shares of
beneficial interest of the California Fund shall have been
offered for sale and sold in conformity with all applicable state
securities or blue sky laws and, to the extent that any audit of
the records of the California Fund or its transfer agent by the
Money Market Fund or its agents shall have revealed otherwise,
either (i) the California Fund shall have taken all actions that
in the opinion of the Money Market Fund or its counsel are
necessary to remedy any prior failure on the part of the
California Fund to have offered for sale and sold such shares in
conformity with such laws or (ii) the California Fund shall have
furnished (or caused to be furnished) surety, or deposited (or
caused to be deposited) assets in escrow, for the benefit of the
Money Market Fund in amounts sufficient and upon terms
satisfactory, in the opinion of the Money Market Fund or its
counsel, to indemnify the Money Market Fund against any expense,
loss, claim, damage or liability whatsoever that may be asserted
or threatened by reason of such failure on the part of the
California Fund to have offered and sold such shares in
conformity with such laws.

    (p)  That the Money Market Fund shall have received from
Price Waterhouse a letter addressed to the Money Market Fund
dated as of the Exchange Date satisfactory in form and substance
to the Money Market Fund to the effect that, on the basis of
limited procedures agreed upon by the Money Market Fund and
described in such letter (but not an examination in accordance
with generally accepted auditing standards), as of the Valuation
Time the value of the assets of the California Fund to be
exchanged for the Money Market Fund Shares has been determined in
accordance with         procedures customarily utilized    to
determine the fair market value of     assets    of such
character    .

    10.  Conditions to the California Fund's Obligations.  The
obligations of the California Fund hereunder shall be subject to
the following conditions:

    (a)  That this Agreement shall have been adopted and the
transactions contemplated hereby shall have been approved by the
affirmative vote of the holders of at least two-thirds (66 2/3%)
of the outstanding shares of beneficial interest of the
California Fund.

    (b)  That the Money Market Fund shall have furnished to the
California Fund a statement of the Money Market Fund's net
assets, together with a list of portfolio holdings with values
determined as provided in Section 4, all as of the Valuation
Time, certified on the Money Market Fund's behalf by its
President (or any Vice President) and Treasurer (or any Assistant
Treasurer), and a certificate of both such officers, dated the
Exchange Date, to the effect that as of the Valuation Time and as
of the Exchange Date there has been no material adverse change in
the financial position of the Money Market Fund since September
30, 1993, other than changes in its portfolio securities since
that date, changes in the market value of its portfolio
securities, changes due to net redemptions, dividends paid or
losses from operations.

    (c)  That the Money Market Fund shall have executed and
delivered to the California Fund an Assumption of Liabilities
dated as of the Exchange Date pursuant to which the Money Market
Fund will assume all of the liabilities of the California Fund
existing at the Valuation Time in connection with the
transactions contemplated by this Agreement.

    (d)  That the Money Market Fund shall have furnished to the
California Fund a statement, dated the Exchange Date, signed by
the Money Market Fund's President (or any Vice President) and
Treasurer (or any Assistant Treasurer) certifying that as of the
Valuation Time and as of the Exchange Date all representations
and warranties of the Money Market Fund made in this Agreement
are true and correct in all material respects as if made at and
as of such dates, and that the Money Market Fund has complied
with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied at or prior to each of such
dates.

    (e)  That there shall not be any material litigation
pending with respect to the matters contemplated by this
Agreement.

    (f)  That the California Fund shall have received an opinion
of Ropes & Gray, in form satisfactory to the California Fund and
dated the Exchange Date, to the effect that (i) the Money Market
Fund is an unincorporated voluntary association duly established
and validly existing in conformity with the laws of The
Commonwealth of Massachusetts, and, to the knowledge of such
counsel, is not required to qualify to do business as a foreign
association in any jurisdiction except as may be required by
state securities or blue sky laws, (ii) the Money Market Fund
Shares to be delivered to the California Fund as provided for by
this Agreement are duly authorized and upon such delivery will be
validly issued and will be fully paid and nonassessable by the
Money Market Fund and no shareholder of the Money Market Fund has
any preemptive right to subscription or purchase in respect
thereof, (iii) this Agreement has been duly authorized, executed
and delivered by the Money Market Fund and, assuming that the
Prospectus, the Registration Statement and the Proxy Statement
comply with the 1933 Act, the 1934 Act and the 1940 Act and
assuming due authorization, execution and delivery of this
Agreement by the California Fund, is a valid and binding
obligation of the Money Market Fund, (iv) the execution and
delivery of this Agreement did not, and the consummation of the
transactions contemplated hereby will not, violate the Money
Market Fund's Agreement and Declaration of Trust, as amended, or
By-laws, or any provision of any agreement known to such counsel
to which the Money Market Fund is a party or by which it is
bound, it being understood that with respect to investment
restrictions as contained in the Money Market Fund's Agreement
and Declaration of Trust, as amended, By-Laws or then-current
prospectus or statement of additional information, such counsel
may rely upon a certificate of an officer of the Money Market
Fund whose responsibility it is to advise the Money Market Fund
with respect to such matters, (v) no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the Money Market Fund of the
transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities or blue sky laws,
and (vi) the Registration Statement has become effective under
the 1933 Act, and to the best of the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the
1933 Act.

    (g) That all proceedings taken by the Money Market Fund in
connection with the transactions contemplated by this Agreement
and all documents incidental thereto shall be satisfactory in
form and substance to the California Fund and Ropes & Gray.

    (h)  That the Registration Statement shall have become
effective under the 1933 Act, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of
the Money Market Fund, contemplated by the Commission.

    (i)  That the California Fund shall have received from the
Commission, any relevant state securities administrator, the FTC
and the Department such order or orders as Ropes & Gray deems
reasonably necessary or desirable under the 1933 Act, the 1934
Act, the 1940 Act, any applicable state securities or blue sky
laws and the H-S-R Act in connection with the transactions
contemplated hereby, and that all such orders shall be in full
force and effect.

    11. Indemnification.  (a)  The California Fund will
indemnify and hold harmless   , out of the assets of the
California Fund but no other assets,     the Money Market Fund,
its trustees and its officers (for purposes of this subparagraph,
the "Indemnified Parties") against any and all expenses, losses,
claims, damages and liabilities at any time imposed upon or
reasonably incurred by any one or more of the Indemnified Parties
in connection with, arising out of, or resulting from any claim,
action, suit or proceeding in which any one or more of the
Indemnified Parties may be involved or with which any one or more
of the Indemnified Parties may be threatened by reason of any
untrue statement or alleged untrue statement of a material fact
relating to the California Fund contained in the Registration
Statement, the Prospectus or the Proxy Statement or any amendment
or supplement to any of the foregoing, or arising out of or based
upon the omission or alleged omission to state in any of the
foregoing a material fact relating to the California Fund
required to be stated therein or necessary to make the statements
relating to the California Fund therein not misleading,
including, without limitation, any amounts paid by any one or
more of the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding, or
threatened claim, action, suit or proceeding made with the
consent of the California Fund.  The Indemnified Parties will
notify the California Fund in writing within ten days after the
receipt by any one or more of the Indemnified Parties of any
notice of legal process or any suit brought against or claim made
against such Indemnified Party as to any matters covered by this
Section 12(a).  The California Fund shall be entitled to
participate at its own expense in the defense of any claim,
action, suit or proceeding covered by this Section 12(a), or, if
it so elects, to assume at its expense by counsel satisfactory to
the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and if the California Fund elects to assume
such defense, the Indemnified Parties shall be entitled to
participate in the defense of any such claim, action, suit or
proceeding at their expense.  The California Fund's obligation
under this Section 12(a) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so
that the California Fund will pay in the first instance any
expenses, losses, claims, damages and liabilities required to be
paid by it under this Section 12(a) without the necessity of the
Indemnified Parties' first paying the same.

    (b)  The Money Market Fund will indemnify and hold harmless,
out of the assets of the Money Market Fund but no other assets,
the California Fund, its trustees and its officers (for purposes
of this subparagraph, the "Indemnified Parties") against any and
all expenses, losses, claims, damages and liabilities at any time
imposed upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or
resulting from any claim, action, suit or proceeding in which any
one or more of the Indemnified Parties may be involved or with
which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue
statement of a material fact relating to the Money Market Fund
contained in the Registration Statement, the Prospectus or the
Proxy Statement, or any amendment or supplement to any thereof,
or arising out of, or based upon, the omission or alleged
omission to state in any of the foregoing a material fact
relating to the Money Market Fund required to be stated therein
or necessary to make the statements relating to the Money Market
Fund therein not misleading, including without limitation any
amounts paid by any one or more of the Indemnified Parties in a
reasonable compromise or settlement of any such claim, action,
suit or proceeding, or threatened claim, action, suit or
proceeding made with the consent of the Money Market Fund.  The
Indemnified Parties will notify the Money Market Fund in writing
within ten days after the receipt by any one or more of the
Indemnified Parties of any notice of legal process or any suit
brought against or claim made against such Indemnified Party as
to any matters covered by this Section 12(b).  The Money Market
Fund shall be entitled to participate at its own expense in the
defense of any claim, action, suit or proceeding covered by this
Section 12(b), or, if it so elects, to assume at its expense by
counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and, if the Money
Market Fund elects to assume such defense, the Indemnified
Parties shall be entitled to participate in the defense of any
such claim, action, suit or proceeding at their own expense.  The
Money Market Fund's obligation under this Section 12(b) to
indemnify and hold harmless the Indemnified Parties shall
constitute a guarantee of payment so that the Money Market Fund
will pay in the first instance any expenses, losses, claims,
damages and liabilities required to be paid by it under this
Section 12(b) without the necessity of the Indemnified Parties'
first paying the same.

    12.  No Broker, etc.  Each of the California Fund and the
Money Market Fund represents that there is no person who has
dealt with it who by reason of such dealings is entitled to any
broker's or finder's or other similar fee or commission arising
out of the transactions contemplated by this Agreement.

    13.  Termination.  The California Fund and the Money Market
Fund may, by mutual consent of their respective trustees,
terminate this Agreement, and the California Fund or the Money
Market Fund, after consultation with counsel and by consent of
their respective trustees or an officer authorized by such
trustees, may waive any condition to their respective obligations
hereunder.  If the transactions contemplated by this Agreement
have not been substantially completed by December 31, 1994, this
Agreement shall automatically terminate on that date unless a
later date is agreed to by the California Fund and the Money
Market Fund.

    14.  Rule 145.  Pursuant to Rule 145 under the 1933 Act, the
Money Market Fund will, in connection with the issuance of any
Money Market Fund Shares to any person who at the time of the
transaction contemplated hereby is deemed to be an affiliate of a
party to the transaction pursuant to Rule 145(c), cause to be
affixed upon the certificates issued to such person (if any) a
legend as follows:

         "THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD
         OR OTHERWISE TRANSFERRED EXCEPT TO PUTNAM TAX EXEMPT
         MONEY MARKET FUND OR ITS PRINCIPAL UNDERWRITER UNLESS
         (i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
         EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
         OR (ii) IN THE OPINION OF COUNSEL REASONABLY
         SATISFACTORY TO PUTNAM TAX EXEMPT MONEY MARKET FUND
         SUCH REGISTRATION IS NOT REQUIRED."

and, further, the Money Market Fund will issue stop transfer
instructions to the Money Market Fund's transfer agent with
respect to such shares.  The California Fund will provide the
Money Market Fund on the Exchange Date with the name of any
California Fund shareholder who is to the knowledge of the
California Fund an affiliate of the California Fund on such date.

    15.  Covenants, etc. Deemed Material.  All covenants,
agreements, representations and warranties made under this
Agreement and any certificates delivered pursuant to this
Agreement shall be deemed to have been material and relied upon
by each of the parties, notwithstanding any investigation made by
them or on their behalf.

    16.  Sole Agreement; Amendments.  This Agreement supersedes
all previous correspondence and oral communications between the
parties regarding the subject matter hereof, constitutes the only
understanding with respect to such subject matter, may not be
changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by
the laws of The Commonwealth of Massachusetts.

    17.  Agreements and Declarations of Trust.  Copies of the
Agreements and Declarations of Trust of the California Fund and
the Money Market Fund, respectively, are on file with the
Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf
of the trustees of the California Fund and the Money Market Fund,
respectively, as trustees and not individually and that the
obligations of this instrument are not binding upon any of the
trustees, officers or shareholders of the California Fund or the
Money Market Fund individually but are binding only upon the
assets and property of the California Fund and the Money Market
Fund, respectively.
<PAGE>
    This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall
be deemed to be an original.

                             PUTNAM TAX EXEMPT MONEY MARKET FUND



                             By:    /s/ Gordon H. Silver    
                                Vice President



                             PUTNAM CALIFORNIA TAX EXEMPT 
                               MONEY MARKET FUND



                             By:    /s/ Gordon H. Silver     
                                Vice President

 

<PAGE>



                                                                  EXHIBIT A



                   AGREEMENT AND PLAN OF REORGANIZATION

    This Agreement and Plan of Reorganization (the "Agreement")
is made as of    December 3, 1993     in Boston, Massachusetts,
by and between Putnam Tax Exempt Money Market Fund, a
Massachusetts business trust (the "Money Market Fund"), and
Putnam New York Tax Exempt Money Market Fund, a Massachusetts
business trust (the "New York Fund")(collectively, the "Funds").

                          PLAN OF REORGANIZATION

    (a)  The New York Fund will sell, assign, convey, transfer
and deliver to the Money Market Fund on the Exchange Date (as
defined in Section 7) all of its properties and assets existing
at the Valuation Time.  In consideration therefor, the Money
Market Fund shall, on the Exchange Date, assume all of the
liabilities of the New York Fund existing at the Valuation Time
and deliver to the New York Fund, a number of full and fractional
shares of beneficial interest of the Money Market Fund ("Money
Market Fund Shares") having an aggregate net asset value equal to
the value of assets of the New York Fund attributable to shares
of the New York Fund transferred to the Money Market Fund on such
date less the value of the liabilities of the New York Fund
attributable to shares of the New York Fund assumed by the Money
Market Fund on that date.

    (b)  Upon consummation of the transactions described in
paragraph (a) of this Plan, the New York Fund shall distribute in
complete liquidation to its shareholders of record as of the
Exchange Date the Money Market Fund Shares, each shareholder
being entitled to receive that proportion of such Money Market
Fund Shares which the number of shares of beneficial interest of
the New York Fund held by such shareholder bears to the number of
shares of the New York Fund outstanding on such date.
       
    (c)  As promptly as practicable after the liquidation of the
New York Fund as aforesaid, the New York Fund shall be dissolved
pursuant to the provisions of its Agreement and Declaration of
Trust, as amended, and applicable law, and its legal existence
terminated.

    (d)  It is intended that the reorganization described in
this Plan shall be a taxable transaction under the Internal
Revenue Code of 1986, as amended (the "Code").

                                 AGREEMENT

    The Money Market Fund and the New York Fund agree as
    follows:

    1.   Representations and Warranties of the Money Market
Fund.  The Money Market Fund represents and warrants to and
agrees with the New York Fund that:

    (a)  The Money Market Fund is a business trust duly
established and validly existing under the laws of The
Commonwealth of Massachusetts and has power to own all of its
properties and assets and to carry out its obligations under this
Agreement.  The Money Market Fund is not required to qualify as a
foreign association in any jurisdiction.  The Money Market Fund
has all necessary federal, state and local authorizations to
carry on its business as now being conducted and to carry out
this Agreement.

    (b)  The Money Market Fund is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as
an open-end management investment company, and such registration
has not been revoked or rescinded and is in full force and
effect.

    (c)  A statement of assets and liabilities, statements of
operations, and statements of changes in net assets and schedules
of investments (indicating their market values) of the Money
Market Fund for the year ended September 30, 1993, such
statements and schedules having been audited by independent
accountants, have been furnished to the New York Fund.  Such
statements of assets and liabilities and schedules fairly present
the financial position of the Money Market Fund as of their dates
and said statements of operations and changes in net assets
fairly reflect the results of its operations and changes in net
assets for the periods covered thereby in conformity with
generally accepted accounting principles.

    (d)  Post-Effective Amendment No. 8 (File No. 811-5215) to
the Registration Statement of the Money Market Fund under the
1940 Act, as filed with the Securities and Exchange Commission
(the "Commission") on November 27, 1992, previously furnished to
the New York Fund, did not as of such date and does not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading.

    (e)  There are no material legal, administrative or other
proceedings pending or, to the knowledge of the Money Market
Fund, threatened against the Money Market Fund which assert
liability on the part of the Money Market Fund.

    (f) There are no material contracts outstanding to which the
Money Market Fund is a party, other than as will be disclosed in
the Proxy Statement.

    (g)  The Money Market Fund has no known liabilities of a
material nature, contingent or otherwise, other than those shown
as belonging to it on its statement of assets and liabilities as
of September 30, 1993 and those incurred in the ordinary course
of the Money Market Fund's business as an investment company
since September 30, 1993.  

    (h)  No consent, approval, authorization or order of any
court or governmental authority is required for the consummation
by the Money Market Fund of the transactions contemplated by this
Agreement, except such as may be required under the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the
1940 Act, state securities or blue sky laws (which term as used
herein shall include the laws of the District of Columbia and of
Puerto Rico) or the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "H-S-R Act").

    (i)  The registration statement (the "Registration
Statement") filed with the Commission by the Money Market Fund on
Form N-14 relating to the Money Market Fund Shares issuable
hereunder, and the proxy statement of the New York Fund included
therein (the "Proxy Statement"), on the effective date of the
Registration Statement (i) will comply in all material respects
with the provisions of the 1933 Act, the 1934 Act and the 1940
Act and the rules and regulations thereunder and (ii) will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading; and at the time of
the shareholders' meeting referred to in Section 8(a) and at the
Exchange Date, the prospectus contained in the Registration
Statement of which the Proxy Statement is a part (the
"Prospectus"), as amended or supplemented by any amendments or
supplements filed with the Commission by the New York Fund, will
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however,
that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the
Registration Statement, the Prospectus or the Proxy Statement
made in reliance upon and in conformity with information
furnished by the New York Fund for use in the Registration
Statement, the Prospectus or the Proxy Statement.

    (j)  All of the issued and outstanding shares of beneficial
interest of the Money Market Fund have been offered for sale and
sold in conformity with all applicable federal securities laws.

    (k)  The Money Market Fund is and will at all times through
the Exchange Date qualify for taxation as a "regulated investment
company" under Sections 851 and 852 of the Code.
    
    (l)  The issuance of the Money Market Fund Shares pursuant
to this Agreement will be in compliance with all applicable
federal securities laws.

    (m)  The Money Market Fund shares to be issued to the New
York Fund have been duly authorized and, when issued and
delivered pursuant to this Agreement, will be legally and validly
issued and will be fully paid and nonassessable by the Money
Market Fund, and no shareholder of the Money Market Fund will
have any preemptive right of subscription or purchase in respect
thereof.
 
    2.   Representations and Warranties of the New York Fund. 
The New York Fund represents and warrants to and agrees with the
Money Market Fund that:

    (a)  The New York Fund is a business trust duly established
and validly existing under the laws of The Commonwealth of
Massachusetts and has power to carry on its business as it is now
being conducted and to carry out this Agreement.  The New York
Fund is not required to qualify as a foreign association in any
jurisdiction.  The New York Fund has all necessary federal, state
and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted and to carry
out this Agreement.

    (b)  The New York Fund is registered under the 1940 Act as
an open-end management investment company and such registration
has not been revoked or rescinded and is in full force and
effect.

    (c)  A statement of assets and liabilities, statements of
operations, and statements of changes in net assets and schedules
of investments (indicating their market values) of the New York
Fund for the fiscal year ended November 30, 1993, such statements
and schedules having been audited by Coopers & Lybrand,
independent accountants, have been furnished to the Money Market
Fund.  Such statements of assets and liabilities and schedules
fairly present the financial position of the New York Fund as of
their dates, and said statements of operations and changes in net
assets fairly reflect the results of its operations and changes
in financial position for the periods covered thereby in
conformity with generally accepted accounting principles.

    (d)  Post-Effective Amendment No. 6 (File No. 811-5355) to
the Registration Statement of the New York Fund under the 1940
Act, as filed with the Commissioner on January 1, 1994,
previously furnished to the Money Market Fund, did not contain as
of its date any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein not misleading.

    (e) There are no material legal, administrative or other
proceedings pending or, to the knowledge of the New York Fund,
threatened against the New York Fund which assert liability or
may, if successfully prosecuted to their conclusion, result in
liability on the part of the New York Fund, other than as have
been disclosed in the Prospectus.

    (f)  There are no material contracts outstanding to which
the New York Fund is a party, other than as will be disclosed in
the Proxy Statement.

    (g)  The New York Fund has no known liabilities of a
material nature, contingent or otherwise, other than those shown
on the New York Fund's statement of assets and liabilities as of
November 30, 1993 referred to above and those incurred in the
ordinary course of the business of the New York Fund as an
investment company since such date.  Prior to the Exchange Date,
the New York Fund will advise the Money Market Fund of all
material liabilities, contingent or otherwise, incurred by it
subsequent to November 30, 1993, whether or not incurred in the
ordinary course of business.

    (h)  As used in this Agreement, the term "Investments" shall
mean the New York Fund's investments shown on the schedule of its
investments as of November 30, 1993 referred to in Section 2(c)
hereof, as supplemented with such changes as the New York Fund
shall make after advising the Money Market Fund of such proposed
changes, and changes resulting from stock dividends, stock
split-ups, mergers and similar corporate actions, but excluding
such investments as the Money Market Fund may designate in a
writing addressed to the New York Fund as being unsuitable for
the Money Market Fund to acquire by reason of charter limitations
or of investment restrictions disclosed in the Money Market Fund
Prospectus.   

    (i)  The New York Fund has filed or will file all federal
and state tax returns which, to the knowledge of the New York
Fund's officers, are required to be filed by the New York Fund
and has paid or will pay all federal and state taxes shown to be
due on said returns or on any assessments received by the New
York Fund.  All tax liabilities of the New York Fund have been
adequately provided for on its books, and no tax deficiency or
liability of the New York Fund has been asserted, and no question
with respect thereto has been raised, by the Internal Revenue
Service or by any state or local tax authority for taxes in
excess of those already paid.

    (j)  At both the Valuation Time (as defined in Section 3(c))
and the Exchange Date, the New York Fund will have full right,
power and authority to sell, assign, transfer and deliver the
Investments and any other assets and liabilities of the Money
Market Fund to be transferred to the New York Fund pursuant to
this Agreement.  At the Exchange Date, subject only to the
delivery of the Investments and any such other assets and
liabilities as contemplated by this Agreement, the Money Market
Fund will acquire the Investments and any such other assets
subject to no encumbrances, liens or security interests
whatsoever and without any restrictions upon the transfer
thereof.

    (k)  No registration under the Securities Act of 1933, as
amended (the "1933 Act"), of any of the Investments would
be required if they were, as of the time of such transfer,
the subject of a public distribution by either of the Money
Market Fund or the New York Fund, except as previously disclosed
to the Money Market Fund by the New York Fund.

    (l)  No consent, approval, authorization or order of any
court or governmental authority is required for the consummation
by the New York Fund of the transactions contemplated by this
Agreement, except such as may be required under the 1933 Act, the
1934 Act, the 1940 Act, state securities laws or the H-S-R Act.

    (m)  The Registration Statement, the Prospectus and the
Proxy Statement, on the Effective Date of the Registration
Statement and insofar as they do not relate to the Money Market
Fund (i) will comply in all material respects with the provisions
of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and at the time of the shareholders'
meeting referred to in Section 8(a) below and on the Exchange
Date, the Prospectus, as amended or supplemented by any
amendments or supplements filed with the Commission by the Money
Market Fund, insofar as it does not relate to the Money Market
Fund, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in
this subsection shall apply only to statements of fact relating
to the New York Fund contained in the Registration Statement, the
Prospectus or the Proxy Statement, or omissions to state in any
thereof a material fact relating to the New York Fund, as such
Registration Statement, Prospectus and Proxy Statement shall be
furnished to the New York Fund in definitive form as soon as
practicable following effectiveness of the Registration Statement
and before any public distribution of the Prospectus or Proxy
Statement.

    (n)  The New York Fund is and will at all times through the
Exchange Date qualify for taxation as a "regulated investment
company" under Sections 851 and 852 of the Code.

    (o)  At the Exchange Date, the New York Fund will have sold
such of its assets, if any, as necessary to assure that, after
giving effect to the acquisition of the assets of the New York
Fund pursuant to this Agreement, the Money Market Fund will
remain a "diversified company" within the meaning of
Section 5(b)(1) of the 1940 Act and in compliance with such other
mandatory investment restrictions as are set forth in the
prospectus and statement of additional information of the Money
Market Fund dated February 1, 1994 (collectively, the "Money
Market Fund Prospectus"), previously furnished to the New York
Fund.  The Money Market Fund Shares to be issued to the New York
Fund have been duly authorized and, when issued and delivered
pursuant to this Agreement, will be legally and validly issued
and will be fully paid and nonassessable by the New York Fund,
and no shareholder of the Money Market Fund will have any
preemptive right of subscription or purchase in respect thereof.

    3.   Reorganization.  (a) Subject to the requisite approval
of the shareholders of the New York Fund and to the other terms
and conditions contained herein (including the New York Fund's
obligation to distribute to its shareholders all of its
investment company taxable income and net capital gain as
described in Section 9(l) hereof), the New York Fund agrees to
sell, assign, convey, transfer and deliver to the Money Market
Fund, and the Money Market Fund agrees to acquire from the New
York Fund, on the Exchange Date all of the Investments and all of
the cash and other properties and assets of the New York Fund,
whether accrued or contingent, of the New York Fund (including
cash received by the New York Fund upon the liquidation by the
New York Fund of any investments purchased by the New York Fund
after September 30, 1993 and designated by the Money Market Fund
as being unsuitable for it to acquire), in exchange for that
number of shares of beneficial interest of the Money Market Fund
provided for in Section 4 and the assumption by the Money Market
Fund of all of the liabilities of the New York Fund.  Pursuant to
this Agreement, the New York Fund will, as soon as practicable
after the Exchange Date, distribute all of the Money Market Fund
Shares received by it to the shareholders of the New York Fund in
exchange for their shares of beneficial interest of the New York
Fund.

    (b)  The New York Fund will pay or cause to be paid to the
Money Market Fund any interest    ,     cash    or such    
dividends   , rights     and other payments received by it on or
after the Exchange Date with respect to the Investments and other
assets transferred to the Money Market Fund hereunder received by
it on or after the Exchange Date.     Any such distribution    
shall be deemed included in the assets transferred to the Money
Market Fund at the Exchange Date and shall not be separately
valued unless the securities in respect of which such
distribution is made shall have gone "ex" such distribution prior
to the Valuation Time, in which case any such distribution which
remains unpaid at the Exchange Date shall be included in the
determination of the value of the assets of the New York Fund
acquired by the Money Market Fund.

    (c)  The Valuation Time shall be 4:00 p.m. Boston time on 
May 9, 1994 or such earlier or later day as may be mutually
agreed upon in writing by the parties hereto (the "Valuation
Time").

    4.   Exchange Date; Valuation Time.  On the Exchange Date,
the Money Market Fund will deliver to the New York Fund, a number
of full and fractional Money Market Fund Shares having an
aggregate net asset value equal to the value of assets of the New
York Fund attributable to shares of the New York Fund transferred
to the Money Market Fund on such date less the value of the
liabilities of the New York Fund attributable to shares of the
New York Fund assumed by the Money Market Fund on that date,
determined as hereafter provided in this Section 4.

    (a)  The net asset value of the Money Market Fund Shares to
be delivered to the New York Fund, the value of the assets of the
New York Fund and the value of the liabilities of the New York
Fund to be assumed by the Money Market Fund shall in each case be
determined as of the Valuation Time.

    (b)  The net asset value of the Money Market Fund Shares
shall be computed in the manner set forth in the current Money
Market Fund Prospectus.  The value of the assets and liabilities
of the New York Fund shall be determined by the Money Market
Fund, in cooperation with the New York Fund, pursuant to
procedures which the Money Market Fund would use in determining
the fair market value of the Money Market Fund's assets as if
such assets were to be purchased or sold on a given day. 
Accordingly, the Money Market fund shall not employ the amortized
cost method of valuation in valuing the California Fund's assets.

       (c)  No adjustment shall be made in     the net asset
value of either the New York Fund or the Money Market Fund to
take into account differences in realized and unrealized gains
and losses.
       
    (d)  The Money Market Fund shall issue the Money Market Fund
Shares to the New York Fund in one certificate (excluding any
fractional share) registered in the name of the New York Fund. 
The New York Fund shall distribute the Money Market Fund Shares
to the shareholders of the New York Fund by redelivering such
certificate to the Money Market Fund's transfer agent which will
as soon as practicable set up open accounts for each New York
Fund shareholder in accordance with written instructions
furnished by the New York Fund.
       
    (e)  The Money Market Fund shall assume all liabilities of
the New York Fund, whether accrued or contingent, in connection
with the acquisition of assets and subsequent dissolution of the
New York Fund or otherwise.

    5.   Expenses, Fees, etc.  (a) All fees and expenses,
including legal and accounting expenses, portfolio transfer taxes
(if any) or other similar expenses incurred in connection with
the consummation by the New York Fund and the Money Market Fund
of the transactions contemplated by this Agreement will be
allocated ratably between the two Funds in proportion to their
net assets as of the Valuation Time, except that the costs of
proxy materials and proxy solicitation will be borne by the New
York Fund; provided, however, that such expenses will in any
event be paid by the party directly incurring such expenses if
and to the extent that the payment by the other party of such
expenses would result in the disqualification of the Money Market
Fund or the New York Fund, as the case may be, as a "regulated
investment company" within the meaning of Section 851 of the
Code.

    (b)  In the event the transactions contemplated by this
Agreement are not consummated by reason of the Money Market
Fund's being either unwilling or unable to go forward (other than
by reason of the nonfulfillment or failure of any condition to
the Money Market Fund's obligations referred to in Section 8(a)
or Section 9) the Money Market Fund shall pay directly all
reasonable fees and expenses incurred by the New York Fund in
connection with such transactions, including, without limitation,
legal, accounting and filing fees.

    (c)  In the event the transactions contemplated by this
Agreement are not consummated by reason of the New York Fund's
being either unwilling or unable to go forward (other than by
reason of the nonfulfillment or failure of any condition to the
New York Fund's obligations referred to in Section 8(a) or
Section 10), the New York Fund shall pay directly all reasonable
fees and expenses incurred by the Money Market Fund in connection
with such transactions, including without limitation legal,
accounting and filing fees.

    (d)  In the event the transactions contemplated by this
Agreement are not consummated for any reason other than (i) the
Money Market Fund's or the New York Fund's being either unwilling
or unable to go forward or (ii) the nonfulfillment or failure of
any condition to the Money Market Fund's or the New York Fund's
obligations referred to in Section 8(a), Section 9 or Section 10
of this Agreement, then each of the Money Market Fund and the New
York Fund shall bear all of its own expenses incurred in
connection with such transactions.

    (e)  Notwithstanding any other provisions of this Agreement,
if for any reason the transactions contemplated by this Agreement
are not consummated, no party shall be liable to the other party
for any damages resulting therefrom, including without limitation
consequential damages, except as specifically set forth above.

    6.   Permitted Assets.  The Money Market Fund agrees to
advise the New York Fund promptly if at any time prior to the
Exchange Date the assets of the New York Fund include any assets
that the Money Market Fund is not permitted, or reasonably
believes to be unsuitable for it, to acquire, including without
limitation any security that, prior to its acquisition by the New
York Fund, the Money Market Fund has informed the New York Fund
is unsuitable for the Money Market Fund to acquire.

    7.   Exchange Date.  Delivery of the assets of the New York
Fund to be transferred, assumption of the liabilities of the New
York Fund to be assumed and the delivery of the Money Market Fund
Shares to be issued shall be made at the offices of Ropes & Gray,
One International Place, Boston, Massachusetts, at 10:00 A.M. on
the next full business day following the Valuation Time, or at
such other time and date agreed to by the Money Market Fund and
the New York Fund, the date and time upon which such delivery is
to take place being referred to herein as the "Exchange Date."

    8.   Meeting of Shareholders; Dissolution.  (a) The New York
Fund agrees to call a meeting of its shareholders as soon as is
practicable after the effective date of the Registration
Statement for the purpose of considering the sale of all of its
assets to and the assumption of all of its liabilities by the
Money Market Fund as herein provided, adopting this Agreement,
and authorizing the liquidation and dissolution of the New York
Fund, and it shall be a condition to the obligations of each of
the parties hereto that the holders of at least two-thirds (66
2/3%) of the shares of beneficial interest of the New York Fund
shall have approved such vote at such a meeting on or before the
Valuation Time.

    (b)  The New York Fund agrees that the liquidation and
dissolution of the New York Fund will be effected in the manner
provided in the New York Fund's Agreement and Declaration of
Trust in accordance with applicable law,        and that on and
after the Exchange Date, the New York Fund shall not conduct any
business except in connection with its liquidation and
dissolution.

    (c)  The Money Market Fund will, as promptly as practicable
after the preparation and delivery to the Money Market Fund by
the New York Fund of a preliminary version of the Proxy Statement
which is satisfactory to the Money Market Fund and to Ropes &
Gray for inclusion in the Registration Statement, file the
Registration Statement with the Commission.  Each of the New York
Fund and the Money Market Fund will cooperate with the other, and
each will furnish to the other the information relating to itself
required by the 1933 Act, the 1934 Act and the 1940 Act and the
rules and regulations thereunder to be set forth in the
Registration Statement, including the Prospectus and the Proxy
Statement.

    9.   Conditions to the Money Market Fund's Obligations.  The
obligations of the Money Market Fund hereunder shall be subject
to the following conditions:

    (a)  That this Agreement shall have been adopted and the
transactions contemplated hereby shall have been approved by the
affirmative vote of the holders of at least two-thirds (66 2/3%)
of the outstanding shares of beneficial interest of the New York
Fund.

    (b)  That the New York Fund shall have furnished to the
Money Market Fund a statement of the New York Fund's assets and
liabilities, with values determined as provided in Section 4 of
this Agreement, together with a list of Investments and all other
Assets of the Texas Fund with their respective tax costs, all as
of the Valuation Time, certified on the New York Fund's behalf by
its President (or any Vice President) and Treasurer, and a
certificate of both such officers, dated the Exchange Date, that
there has been no material adverse change in the financial
position of the New York Fund since November 30, 1993 other than
changes in the Investments and other assets and properties of the
New York Fund since that date or changes in the market value of
the Investments and other assets of the New York Fund, or changes
due to net redemptions of shares of the New York Fund, dividends
paid or losses from operations.

    (c)  That the New York Fund shall have furnished to the
Money Market Fund a statement, dated the Exchange Date, signed by
the New York Fund's President (or any Vice President) and
Treasurer certifying that as of the Valuation Time and as of the
Exchange Date all representations and warranties of the New York
Fund made in this Agreement are true and correct in all material
respects as if made at and as of such dates and the New York Fund
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior
to such dates.

    (d)  That the New York Fund shall have delivered to the
Money Market Fund a letter from Coopers & Lybrand dated the
Exchange Date stating that such firm reviewed the federal and
state income tax returns of the New York Fund for the year ended
November 30, 1993, and for the period from September 30, 1993 to
the Exchange Date, and that, in the course of such review,
nothing came to their attention which caused them to believe that
such returns did not properly reflect, in all material respects,
the federal and state income taxes of the New York Fund for the
periods covered thereby, or that the New York Fund would not
qualify as a regulated investment company for federal income tax
purposes. 

    (e)  That there shall not be any material litigation pending
with respect to the matters contemplated by this Agreement.

    (f)  That the Money Market Fund shall have received an
opinion of Ropes & Gray, in form satisfactory to the Money Market
Fund and dated the Exchange Date, to the effect that (i) the New
York Fund is a business trust duly established and validly
existing under the laws of The Commonwealth of Massachusetts, and
the New York Fund is not, to the knowledge of such counsel,
required to qualify to do business as a foreign association in
any jurisdiction, (ii) this Agreement has been duly authorized,
executed, and delivered by the New York Fund and, assuming that
the Registration Statement, the Prospectus and the Proxy
Statement comply with the 1933 Act, the 1934 Act and the 1940 Act
and assuming due authorization, execution and delivery of this
Agreement by the Money Market Fund, is a valid and binding
obligation of the New York Fund, (iii) the New York Fund has
power to sell, assign, convey, transfer and deliver the assets
contemplated hereby and, upon consummation of the transactions
contemplated hereby in accordance with the terms of this
Agreement, the New York Fund will have duly sold, assigned,
conveyed, transferred and delivered such assets to the Money
Market Fund, (iv) the execution and delivery of this Agreement
did not, and the consummation of the transactions contemplated
hereby will not, violate the New York Fund's Agreement and
Declaration of Trust, as amended, or any provision of any
agreement known to such counsel to which the New York Fund is a
party or by which it is bound, and (v) no consent, approval,
authorization or order of any court or governmental authority is
required for the consummation by the New York Fund of the
transactions contemplated hereby, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities or blue sky laws
and the H-S-R Act, it being understood that with respect to
investment restrictions as contained in the New York Fund's
Agreement and Declaration of Trust, Bylaws or then-current
prospectus or statement of additional information, such counsel
may rely upon a certificate of an officer of the New York Fund
whose responsibility it is to advise the New York Fund with
respect to such matters.

    (g)  That the Money Market Fund shall have received an
opinion of Ropes & Gray, in form satisfactory to the Money Market
Fund, with respect to the matters specified in Section 10(f) of
this Agreement, and such other matters as the Money Market Fund
may reasonably deem necessary or desirable.

    (h)  That the assets of the New York Fund to be acquired by
the Money Market Fund will include no assets which the Money
Market Fund, by reason of charter limitations or of investment
restrictions disclosed in the Money Market Fund Prospectus in
effect on the Exchange Date, may not properly acquire.

    (i)  That the Registration Statement shall have become
effective under the 1933 Act, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of
the Money Market Fund, contemplated by the Commission.

    (j)  That the Money Market Fund shall have received from the
Commission, any relevant state securities administrator, the
Federal Trade Commission (the "FTC") and the Department of
Justice (the "Department") such order or orders as Ropes & Gray
deems reasonably necessary or desirable under the 1933 Act, the
1934 Act, the 1940 Act, any applicable state securities or blue
sky laws and the H-S-R Act in connection with the transactions
contemplated hereby, and that all such orders shall be in full
force and effect.

    (k)  That all proceedings taken by the New York Fund in
connection with the transactions contemplated by this Agreement
and all documents incidental thereto shall be satisfactory in
form and substance to the Money Market Fund and Ropes & Gray.

    (l)  That, prior to the Exchange Date, the New York Fund
shall have declared a dividend or dividends which, together with
all previous such dividends, shall have the effect of
distributing to the shareholders of the New York Fund all of the
New York Fund's investment company taxable income for its taxable
years ending on or after November 30, 1993 and on or prior to the
Exchange Date (computed without regard to any deduction for
dividends paid), and all of its net capital gain realized in each
of its taxable years ending on or after September 30, 1993 and on
or prior to the Exchange Date.

    (m)  That the New York Fund's custodian shall have delivered
to the Money Market Fund a certificate identifying all of the
assets of the New York Fund held by such custodian as of the
Valuation Time.

    (n)  That the New York Fund's transfer agent shall have
provided to the Money Market Fund (i) the originals or true
copies of all of the records of the New York Fund in the
possession of such transfer agent as of the Exchange Date, (ii) a
certificate setting forth the number of shares of the New York
Fund outstanding as of the Valuation Time and (iii) the name and
address of each holder of record of any such shares and the
number of shares held of record by each such shareholder.

    (o)  That all of the issued and outstanding shares of
beneficial interest of the New York Fund shall have been offered
for sale and sold in conformity with all applicable state
securities or blue sky laws and, to the extent that any audit of
the records of the New York Fund or its transfer agent by the
Money Market Fund or its agents shall have revealed otherwise,
either (i) the New York Fund shall have taken all actions that in
the opinion of the Money Market Fund or its counsel are necessary
to remedy any prior failure on the part of the New York Fund to
have offered for sale and sold such shares in conformity with
such laws or (ii) the New York Fund shall have furnished (or
caused to be furnished) surety, or deposited (or caused to be
deposited) assets in escrow, for the benefit of the Money Market
Fund in amounts sufficient and upon terms satisfactory, in the
opinion of the Money Market Fund or its counsel, to indemnify the
Money Market Fund against any expense, loss, claim, damage or
liability whatsoever that may be asserted or threatened by reason
of such failure on the part of the New York Fund to have offered
and sold such shares in conformity with such laws.

    (p)  That the Money Market Fund shall have received from
Coopers & Lybrand a letter addressed to the Money Market Fund
dated as of the Exchange Date satisfactory in form and substance
to the Money Market Fund to the effect that, on the basis of
limited procedures agreed upon by the Money Market Fund and
described in such letter (but not an examination in accordance
with generally accepted auditing standards), as of the Valuation
Time the value of the assets of the New York Fund to be exchanged
for the Money Market Fund Shares has been determined in
accordance with         procedures customarily utilized    to
determine the fair market value of     assets    of such
character    .

    10.  Conditions to the New York Fund's Obligations.  The
obligations of the New York Fund hereunder shall be subject to
the following conditions:

    (a)  That this Agreement shall have been adopted and the
transactions contemplated hereby shall have been approved by the
affirmative vote of the holders of at least two-thirds (66 2/3%)
of the outstanding shares of beneficial interest of the New York
Fund.

    (b)  That the Money Market Fund shall have furnished to the
New York Fund a statement of the Money Market Fund's net assets,
together with a list of portfolio holdings with values determined
as provided in Section 4, all as of the Valuation Time, certified
on the Money Market Fund's behalf by its President (or any Vice
President) and Treasurer (or any Assistant Treasurer), and a
certificate of both such officers, dated the Exchange Date, to
the effect that as of the Valuation Time and as of the Exchange
Date there has been no material adverse change in the financial
position of the Money Market Fund since September 30, 1993, other
than changes in its portfolio securities since that date, changes
in the market value of its portfolio securities, changes due to
net redemptions, dividends paid or losses from operations.

    (c)  That the Money Market Fund shall have executed and
delivered to the New York Fund an Assumption of Liabilities dated
as of the Exchange Date pursuant to which the Money Market Fund
will assume all of the liabilities of the New York Fund existing
at the Valuation Time in connection with the transactions
contemplated by this Agreement.

    (d)  That the Money Market Fund shall have furnished to the
New York Fund a statement, dated the Exchange Date, signed by the
Money Market Fund's President (or any Vice President) and
Treasurer (or any Assistant Treasurer) certifying that as of the
Valuation Time and as of the Exchange Date all representations
and warranties of the Money Market Fund made in this Agreement
are true and correct in all material respects as if made at and
as of such dates, and that the Money Market Fund has complied
with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied at or prior to each of such
dates.

    (e)  That there shall not be any material litigation
pending with respect to the matters contemplated by this
Agreement.

    (f)  That the New York Fund shall have received an opinion
of Ropes & Gray, in form satisfactory to the New York Fund and
dated the Exchange Date, to the effect that (i) the Money Market
Fund is an unincorporated voluntary association duly established
and validly existing in conformity with the laws of The
Commonwealth of Massachusetts, and, to the knowledge of such
counsel, is not required to qualify to do business as a foreign
association in any jurisdiction except as may be required by
state securities or blue sky laws, (ii) the Money Market Fund
Shares to be delivered to the New York Fund as provided for by
this Agreement are duly authorized and upon such delivery will be
validly issued and will be fully paid and nonassessable by the
Money Market Fund and no shareholder of the Money Market Fund has
any preemptive right to subscription or purchase in respect
thereof, (iii) this Agreement has been duly authorized, executed
and delivered by the Money Market Fund and, assuming that the
Prospectus, the Registration Statement and the Proxy Statement
comply with the 1933 Act, the 1934 Act and the 1940 Act and
assuming due authorization, execution and delivery of this
Agreement by the New York Fund, is a valid and binding obligation
of the Money Market Fund, (iv) the execution and delivery of this
Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate the Money Market Fund's
Agreement and Declaration of Trust, as amended, or By-laws, or
any provision of any agreement known to such counsel to which the
Money Market Fund is a party or by which it is bound, it being
understood that with respect to investment restrictions as
contained in the Money Market Fund's Agreement and Declaration of
Trust, as amended, By-Laws or then-current prospectus or
statement of additional information, such counsel may rely upon a
certificate of an officer of the Money Market Fund whose
responsibility it is to advise the Money Market Fund with respect
to such matters, (v) no consent, approval, authorization or order
of any court or governmental authority is required for the
consummation by the Money Market Fund of the transactions
contemplated herein, except such as have been obtained under the
1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws, and (vi) the
Registration Statement has become effective under the 1933 Act,
and to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.

    (g) That all proceedings taken by the Money Market Fund in
connection with the transactions contemplated by this Agreement
and all documents incidental thereto shall be satisfactory in
form and substance to the New York Fund and Ropes & Gray.

    (h)  That the Registration Statement shall have become
effective under the 1933 Act, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of
the Money Market Fund, contemplated by the Commission.

    (i)  That the New York Fund shall have received from the
Commission, any relevant state securities administrator, the FTC
and the Department such order or orders as Ropes & Gray deems
reasonably necessary or desirable under the 1933 Act, the 1934
Act, the 1940 Act, any applicable state securities or blue sky
laws and the H-S-R Act in connection with the transactions
contemplated hereby, and that all such orders shall be in full
force and effect.

    11. Indemnification.  (a)  The New York Fund will indemnify
and hold harmless   , out of the assets of the New York Fund but
no other assets,     the Money Market Fund, its trustees and its
officers (for purposes of this subparagraph, the "Indemnified
Parties") against any and all expenses, losses, claims, damages
and liabilities at any time imposed upon or reasonably incurred
by any one or more of the Indemnified Parties in connection with,
arising out of, or resulting from any claim, action, suit or
proceeding in which any one or more of the Indemnified Parties
may be involved or with which any one or more of the Indemnified
Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to the New
York Fund contained in the Registration Statement, the Prospectus
or the Proxy Statement or any amendment or supplement to any of
the foregoing, or arising out of or based upon the omission or
alleged omission to state in any of the foregoing a material fact
relating to the New York Fund required to be stated therein or
necessary to make the statements relating to the New York Fund
therein not misleading, including, without limitation, any
amounts paid by any one or more of the Indemnified Parties in a
reasonable compromise or settlement of any such claim, action,
suit or proceeding, or threatened claim, action, suit or
proceeding made with the consent of the New York Fund.  The
Indemnified Parties will notify the New York Fund in writing
within ten days after the receipt by any one or more of the
Indemnified Parties of any notice of legal process or any suit
brought against or claim made against such Indemnified Party as
to any matters covered by this Section 12(a).  The New York Fund
shall be entitled to participate at its own expense in the
defense of any claim, action, suit or proceeding covered by this
Section 12(a), or, if it so elects, to assume at its expense by
counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and if the New York
Fund elects to assume such defense, the Indemnified Parties shall
be entitled to participate in the defense of any such claim,
action, suit or proceeding at their expense.  The New York Fund's
obligation under this Section 12(a) to indemnify and hold
harmless the Indemnified Parties shall constitute a guarantee of
payment so that the New York Fund will pay in the first instance
any expenses, losses, claims, damages and liabilities required to
be paid by it under this Section 12(a) without the necessity of
the Indemnified Parties' first paying the same.

    (b)  The Money Market Fund will indemnify and hold harmless,
out of the assets of the Money Market Fund but no other assets,
the New York Fund, its trustees and its officers (for purposes of
this subparagraph, the "Indemnified Parties") against any and all
expenses, losses, claims, damages and liabilities at any time
imposed upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or
resulting from any claim, action, suit or proceeding in which any
one or more of the Indemnified Parties may be involved or with
which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue
statement of a material fact relating to the Money Market Fund
contained in the Registration Statement, the Prospectus or the
Proxy Statement, or any amendment or supplement to any thereof,
or arising out of, or based upon, the omission or alleged
omission to state in any of the foregoing a material fact
relating to the Money Market Fund required to be stated therein
or necessary to make the statements relating to the Money Market
Fund therein not misleading, including without limitation any
amounts paid by any one or more of the Indemnified Parties in a
reasonable compromise or settlement of any such claim, action,
suit or proceeding, or threatened claim, action, suit or
proceeding made with the consent of the Money Market Fund.  The
Indemnified Parties will notify the Money Market Fund in writing
within ten days after the receipt by any one or more of the
Indemnified Parties of any notice of legal process or any suit
brought against or claim made against such Indemnified Party as
to any matters covered by this Section 12(b).  The Money Market
Fund shall be entitled to participate at its own expense in the
defense of any claim, action, suit or proceeding covered by this
Section 12(b), or, if it so elects, to assume at its expense by
counsel satisfactory to the Indemnified Parties the defense of
any such claim, action, suit or proceeding, and, if the Money
Market Fund elects to assume such defense, the Indemnified
Parties shall be entitled to participate in the defense of any
such claim, action, suit or proceeding at their own expense.  The
Money Market Fund's obligation under this Section 12(b) to
indemnify and hold harmless the Indemnified Parties shall
constitute a guarantee of payment so that the Money Market Fund
will pay in the first instance any expenses, losses, claims,
damages and liabilities required to be paid by it under this
Section 12(b) without the necessity of the Indemnified Parties'
first paying the same.

    12.  No Broker, etc.  Each of the New York Fund and the
Money Market Fund represents that there is no person who has
dealt with it who by reason of such dealings is entitled to any
broker's or finder's or other similar fee or commission arising
out of the transactions contemplated by this Agreement.

    13.  Termination.  The New York Fund and the Money Market
Fund may, by mutual consent of their respective trustees,
terminate this Agreement, and the New York Fund or the Money
Market Fund, after consultation with counsel and by consent of
their respective trustees or an officer authorized by such
trustees, may waive any condition to their respective obligations
hereunder.  If the transactions contemplated by this Agreement
have not been substantially completed by December 31, 1994, this
Agreement shall automatically terminate on that date unless a
later date is agreed to by the New York Fund and the Money Market
Fund.

    14.  Rule 145.  Pursuant to Rule 145 under the 1933 Act, the
Money Market Fund will, in connection with the issuance of any
Money Market Fund Shares to any person who at the time of the
transaction contemplated hereby is deemed to be an affiliate of a
party to the transaction pursuant to Rule 145(c), cause to be
affixed upon the certificates issued to such person (if any) a
legend as follows:

         "THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD
         OR OTHERWISE TRANSFERRED EXCEPT TO PUTNAM TAX EXEMPT
         MONEY MARKET FUND OR ITS PRINCIPAL UNDERWRITER UNLESS
         (i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
         EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
         OR (ii) IN THE OPINION OF COUNSEL REASONABLY
         SATISFACTORY TO PUTNAM New York TAX EXEMPT MONEY MARKET
         FUND SUCH REGISTRATION IS NOT REQUIRED."

and, further, the Money Market Fund will issue stop transfer
instructions to the Money Market Fund's transfer agent with
respect to such shares.  The New York Fund will provide the Money
Market Fund on the Exchange Date with the name of any New York
Fund shareholder who is to the knowledge of the New York Fund an
affiliate of the New York Fund on such date.

    15.  Covenants, etc. Deemed Material.  All covenants,
agreements, representations and warranties made under this
Agreement and any certificates delivered pursuant to this
Agreement shall be deemed to have been material and relied upon
by each of the parties, notwithstanding any investigation made by
them or on their behalf.

    16.  Sole Agreement; Amendments.  This Agreement supersedes
all previous correspondence and oral communications between the
parties regarding the subject matter hereof, constitutes the only
understanding with respect to such subject matter, may not be
changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by
the laws of The Commonwealth of Massachusetts.

    17.  Agreements and Declarations of Trust.  Copies of the
Agreements and Declarations of Trust of the New York Fund and the
Money Market Fund, respectively, are on file with the Secretary
of State of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the
trustees of the New York Fund and the Money Market Fund,
respectively, as trustees and not individually and that the
obligations of this instrument are not binding upon any of the
trustees, officers or shareholders of the New York Fund or the
Money Market Fund individually but are binding only upon the
assets and property of the New York Fund and the Money Market
Fund, respectively.
<PAGE>
    This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall
be deemed to be an original.

                             PUTNAM TAX EXEMPT MONEY MARKET FUND



                             By:    /s/ Gordon H. Silver    
                                Vice President



                             PUTNAM NEW YORK TAX EXEMPT 
                               MONEY MARKET FUND



                             By:    /s/ Gordon H. Silver    
                                Vice President

 







                    PUTNAM TAX EXEMPT MONEY MARKET FUND
                          One Post Office Square
                             Boston, MA  02109


                              April 5, 1994




Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C.  20549

     Re:  Putnam Tax Exempt Money Market Fund - Registration
          Statement on Form N-14 (File No. 33-52351   
          

Ladies and Gentlemen:

     Putnam Tax Exempt Money Market Fund respectfully requests
that the effectiveness of the above-referenced registration
statement be accelerated to April 6, 1994 or as soon thereafter
as practicable.

                              Very truly yours,

                              PUTNAM TAX EXEMPT
                              MONEY MARKET FUND


                              By:                     
                                 Gordon H. Silver
                                 Vice President
     
cc:  Ms. Ruth Armstrong Sanders


<PAGE>





                         PUTNAM MUTUAL FUNDS CORP.
                          One Post Office Square
                             Boston, MA  02109


                         April 5, 1994




Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C.  20549

     Re:  Putnam Tax Exempt Money Market Fund - Registration
          Statement on Form N-14 (File No. 33-52351)        
          

Ladies and Gentlemen:

     Putnam Mutual Funds Corp., principal underwriter for Putnam
Tax Exempt Money Market Fund, respectfully requests that the
effectiveness of the above-referenced registration statement be
accelerated to April 6, 1994 or as soon thereafter as
practicable.

                              Very truly yours,

                              PUTNAM MUTUAL FUNDS CORP.
                                

                              By:                     
                                 William N. Shiebler
                                 President
     
cc:  Ms. Ruth Armfield Sanders




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