AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
APRIL 6 , 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. 2
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 --1,500,000 1,500,0
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 --3,000,000 3,000,0
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 2,000,0
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 2,000,0
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 2,509,0
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 -- -- -- -- 800,000 800,0
-- -- 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 -- -- -- --1,140,0001,140,0
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 1,584,0
-- -- 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 -- -- -- --1,170,0001,170,0
-- -- 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 1,900,0
-- -- 4,200,000 -- -- -- -- 4,200,000 4,200,000
Minnesota (3.0%)
Albert Lea, Indl. Dev
VRDN (Joyce Intl. Inc.
Project), 2.7s, 7/1/94 A-1 400,000 400,000 -- -- -- -- 400,000 400,0
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 1,000,0
-- -- 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 -- -- -- --1,300,0001,322,2
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 1,760,0
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 -- -- -- -- 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 -- -- $117,509,4
(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 3,000,0
<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 -- $8,650,0
(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 -- -$126,159,4
(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 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 - - - -
,500,000
CA Hlth. Fac. Fin. Auth.
n. 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 - - - -
,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
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+ 2,000,000 2,000,000 - - - -
,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 -
- - -
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 -
- - - -
,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 - -
- -
,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 - -
- -
,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 - - - -
- - -
,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 - - - -
- - -
,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%)
Elmhurst, VRDN
(Joint Accreditation
Commission), 3.15s,
7/1/18 VMIG1 2,000,000 2,000,000 - - - -
- - -
,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
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 - - - -
- - -
,140,000
<PAGE>
Salix, Mid-West Pwr.
VRDN, 3.2s, 5/1/23 VMIG1 3,095,0003,095,000 - - - -
- - -
,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 - - - -
- - -
,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
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
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 - - - -
- - -
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 -
(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 - - - - - - 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 -
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-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 -
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 - 605,000
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
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 - - - - -
- -
- - 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 - - - - - - -
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 - - - - -
- -
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 - - - - -
- -
- - 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 - - - - -
- -
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 - - - - -
- -
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
(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 corporation, 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 2,000,00
0 -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 - - - - 3,000,000
3,000,000
- - 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 - - - - 2,000,000
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 - - - - 1,715,000
1,715,000
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
<PAGE>
Pennsylvania (2.0%)
Allegheny Cnty., Hosp.
Dev. Auth. VRDN
MBIA, 3.05s, 3/1/20 VMIG1 1,760,000 1,760,000 - - - - 1,760,000
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
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 - - - - 2,970,000
2,970,000
- - 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 - - - - 2,500,000
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 1,000,000 1,000,000 - - - - 1,000,000
1,000,000
- - 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 - - - - 1,000,000
1,000,000
- - 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 - - - - 2,900,000
2,900,000
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 - - - AAA4,000,000
4,000,000 -
(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 3,000,000
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 -
100,000 100,000
(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 2,000,000
2,000,000 -
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., In
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 6th 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 6 ,
1994
George Putnam of the Trustees; Principal
Executive Officer;
Trustee
* Vice Chairman and April 6 ,
1994
William F. Pounds Trustee
* Principal Financial April 6 ,
1994 John D. Hughes Officer; Vice President;
Treasurer
* Principal Accounting April 6 ,
1994
Paul G. Bucuvalas Officer; Assistant
Treasurer
<PAGE>
Signature Title Date
* Trustee April 6 ,
1994
Jameson A. Baxter
* Trustee April 6 ,
1994
Hans H. Estin
* Trustee April 6 ,
1994
John A. Hill
* Trustee April 6 ,
1994
Elizabeth T. Kennan
* Trustee April 6 ,
1994
Lawrence J. Lasser
* Trustee April 6 ,
1994
Robert E. Patterson
* Trustee April 6 ,
1994
Donald S. Perkins
* Trustee April 6 ,
1994
George Putnam, III
* Trustee April 6 ,
1994
A.J.C. Smith
* Trustee April 6 ,
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. 2 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. 2
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 6 , 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. 2 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. 2 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. 2 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 6, 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 6, 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
