Putnam
Money
Market
Fund*
ANNUAL REPORT
September 30, 1994
*Formerly Putnam Daily Dividend Trust
(graphic balance scales)
B O S T O N * L O N D O N * T O K Y O
<PAGE>
Performance highlights
> "Money funds are among the few investments to benefit from the Fed's
interest rate hikes so far this year. While the average stock and bond fund
has lost money since January 12, money fund yields have climbed from 2.7%
to 3.9%."
--Money, August 1994
> Performance should always be considered in light of a fund's investment
strategy. Putnam Money Market Fund is designed for investors seeking
current income consistent with capital preservation, stable principal and
liquidity.
FISCAL 1994 RESULTS AT A GLANCE
<TABLE>
<CAPTION>
Total return Class A Class B
<S> <C> <C> <C>
11 months ended 9/30/94(1)
(change in value plus
reinvested earnings) 3.03% 2.54%
Current return
Current 7-day yield(2) 4.21% 3.72%
Current 30-day yield(2) 4.08 3.60
Distributions No. Income Total
Class A 11 $0.029891 $0.029891
Class B 11 $0.025052 $0.025052
</TABLE>
Performance data represent past results. For performance over longer periods,
see page 6.
(1)Eleven-month performance represents a change in the fund's fiscal year end
from 10/31 to 9/30.
(2)The yield is the rate at which an investment earns interest income. The
7-day and 30-day yields are the two most common gauges for measuring money
market mutual fund performance.
<PAGE>
From the Chairman
(George Putnam photo)
(C) Karsh, Ottawa
Dear Shareholder:
Because a mutual fund's name should reflect its investment focus, Putnam
Money Market Fund seems a more appropriate designation for what was formerly
Putnam Daily Dividend Trust. One of the oldest money market funds, it was
introduced in 1976 at a time when investing in short-term credit instruments
was a relatively new concept for the public at large. The new name became
official on September 1, 1994.
Your fund has also advanced the date of its fiscal year end by one month,
from October 31 to September 30. The change is being made to improve internal
coordination. It should have no effect on shareholders other than the receipt
of these reports a month earlier than usual. This report covers the 11-month
1994 fiscal period; your next report will cover the six months ended March
31, 1995.
The bond market volatility that has given anxiety to most fixed-income
investors actually worked in your fund's favor; the rise in short-term
interest rates has raised yields on the money market instruments in which the
fund invests. Fund Manager Lindsey Callen discusses this and other aspects of
the fund's performance and prospects in the report that follows.
Respectfully yours,
(signature of George Putnam)
George Putnam
Chairman of the Trustees
October 19, 1994
<PAGE>
Report from the fund manager
Lindsey M. Callen
For the 11 months ended September 30, 1994, Putnam Money Market Fund
continued to provide a competitive total return while emphasizing capital
preservation and maintaining a stable $1.00 share price. (The abbreviated
fiscal period was necessitated by a change in the fund's fiscal year end,
from October 31 to September 30.) After reaching historic lows in the fall of
1993, short-term interest rates rose during early 1994, creating a more
favorable investment climate for your fund.
Throughout fiscal '94, the indicators that measure the strength of business
remained positive. Factors such as employment growth and the rise in home and
automobile sales pointed to a more robust economy. Side by side with these
trends, however, came concerns that the rate of inflation might pick up. In
moves to keep inflation at bay, the Federal Reserve Board began a series of
short-term interest rate increases. By the end of your fund's fiscal year,
the federal funds rate--the interest rate banks charge each other for
overnight loans--had climbed from 3.00% to 4.75%; the discount rate--the rate
the Fed charges member banks for loans--increased from 3% to 4%.
> CAPTURING HIGHER YIELDS
During the period, our strategy emphasized increasing the fund's income by
taking advantage of higher interest rates. At the same time, we maintained
our commitment to a high-quality portfolio. We structured the fund so that it
was in the best possible position to benefit from each incremental rise in
interest rates. For example, we reduced the average maturity of portfolio
securities, so that the fund would not be locked into lower-yielding
investments in a rising-interest-rate environment. We also built a position
in floating-rate securities, targeting those with yields that reset on a
weekly basis. Interest rates on floating-rate securities adjust at regular
intervals, so when market rates rise, investors benefit soon after.
<PAGE>
> YOUR FUND'S HALLMARK: SUPERIOR QUALITY
Superior portfolio quality is one of your fund's most important attributes.
Ideally, every holding must be rated by two or more nationally recognized
rating services and receive at least two ratings within the top two
categories. If a security has only been rated by one service, its rating must
be within that service's top category. If the securities are nonrated, Putnam
Management must judge them to be of equivalent quality. After a security is
selected for the portfolio, we continue to monitor quality, while making sure
each holding provides a balance of attractive yield and relative stability.
> OUR OUTLOOK
We believe the economy will continue to grow and that the Fed will maintain
its anti-inflation policy of periodically raising short-term interest rates.
In this environment, we expect to focus on capturing the highest possible
yields for the fund while maintaining the portfolio's high quality. To this
end, we anticipate continuing our strategy of investing in traditional money
market instruments. We will continue adding floating-rate securities to the
portfolio to take advantage of rising interest rates. Furthermore, we expect
to keep the average maturity of the portfolio relatively short and believe
our emphasis on traditional, high-quality instruments should enable the fund
to maintain the stability that is most shareholders' top priority.
PERFORMANCE COMPARISONS (9/30/94)*
<TABLE>
<CAPTION>
Current return:
<S> <C>
Passbook savings account 2.17%
Taxable money market fund 7-day yield 4.35
3-month certificate of deposit 3.25
Putnam Money Market Fund (7-day yield)
Class A 4.21
Class B 3.72
</TABLE>
*The net asset value of money market mutual funds is uninsured and designed
to be fixed, while distributions vary daily. The principal value on passbook
savings and bank CDs are generally insured up to certain limits by state and
federal agencies. Unlike money market funds, early withdrawals from bank CDs
may be subject to substantial penalties. Investment returns will fluctuate.
Sources: Bank of Boston (passbook savings), Bank Rate Monitor (3-month CDs),
IBC/Donaghue's Money Fund Report (taxable money market fund 7-day yield).
<PAGE>
Performance summary
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of your investment changed over
time, assuming you held the shares through the entire period and reinvested
all distributions back into the fund. We show total return in two ways: on a
cumulative long-term basis and on average how the fund might have grown each
year over varying periods. For comparative purposes, we show how the fund
performed relative to appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 9/30/94
<TABLE>
<CAPTION>
Lipper Consumer
Class A Class B Money Market Price
NAV NAV Fund Average Index
<S> <C> <C> <C> <C>
11 months 3.03% 2.54% 2.91% 2.54%
1 year 3.26 2.72 3.13 2.96
5 years 26.21 -- 26.22 19.52
Annual average 4.77 -- 4.77 3.63
10 years 79.49 -- 79.40 42.29
Annual average 6.02 -- 6.02 3.59
Life of class B -- 6.15 7.26 7.10
Annual average -- 2.49 2.94 2.86
</TABLE>
The fund began operations on October 1, 1976, offering shares now known as
class A. Effective April 27, 1992, the fund began offering class B shares.
Performance data represent past results, will differ for each share class and
should not be taken as an assurance of future performance. Investment returns
will fluctuate. An investment in the 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. However, since the
fund's inception, no investor has ever lost a penny of net asset value.
<PAGE>
TERMS AND DEFINITIONS
Class A shares generally are fund shares purchased with an initial sales
charge. In the case of your fund, which has no sales charge, the reference is
to shares purchased or acquired through the exchange of class A shares from
another Putnam fund. Exchange of your fund's class A shares into another fund
may involve a sales charge, however.
Class B shares generally are fund shares purchased with no initial sales
charge but subject to a contingent deferred sales charge (CDSC) upon
redemption. However, class B shares of your fund can be acquired only through
exchange of class B shares from another Putnam fund. They are subject to the
same CDSC schedule as the fund from which they were exchanged.
Net asset value (NAV) is the value of all fund assets, minus liabilities,
divided by the number of outstanding shares. It does not include any initial
or contingent deferred sales charge.
COMPARATIVE BENCHMARKS
Lipper Money Market Fund Average, used for performance comparison purposes,
is an arithmetic average of the total return of all money market mutual funds
tracked by Lipper Analytical Services. Lipper is an independent rating
organization for the mutual fund industry. Lipper rankings vary for other
periods. The fund's holdings do not match those in the Lipper Average.
Consumer Price Index (CPI) is a commonly used measure of inflation; it does
not represent an investment return.
<PAGE>
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam Money Market Fund
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments owned and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Putnam Money
Market Fund (formerly Daily Dividend Trust) (the "fund") at September 30,
1994, and the results of its operations, the changes in its net assets, and
the financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of investments owned at
September 30, 1994 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
October 31, 1994
<PAGE>
Portfolio of investments owned
September 30, 1994
<TABLE>
<CAPTION>
COMMERCIAL PAPER (65.3%)(a)
MATURITY
PRINCIPAL AMOUNT DATE VALUE
<C> <S> <C> <C>
Domestic (45.7%)
$15,000,000 AES Barbers Point Inc. 4.65s (Bank of
America Letter of Credit (LOC)) 10/14/94 $ 14,972,875
40,000,000 Bell Atlantic Financial Services, Inc.
4.8s 10/20/94 39,893,332
10,000,000 Bell Atlantic Financial Services, Inc.
4.8s 10/19/94 9,974,667
20,000,000 Corporate Asset Funding Co. Inc. 5s 11/21/94 19,855,556
10,300,000 Corporate Asset Funding Co. Inc. 4.75s 10/3/94 10,295,923
10,000,000 Corporate Asset Funding Co. Inc. 4.72s 11/7/94 9,950,178
16,100,000 Corporate Receivables Corp. 4.85s 12/5/94 15,956,844
10,000,000 Corporate Receivables Corp. 4.75s 10/4/94 9,994,722
5,760,000 Delaware Funding Corp. 4.95s 10/11/94 5,751,288
20,000,000 Ford Motor Credit Co. 4.8s 10/26/94 19,930,667
35,000,000 Ford Motor Credit Co. 4.75s 10/5/94 34,976,910
15,000,000 General Electric Capital Corp. 4.78s 10/13/94 14,974,108
20,000,000 General Electric Capital Corp. 4.75s 10/4/94 19,989,444
20,000,000 General Electric Capital Corp. 4.7s 12/5/94 19,827,667
30,000,000 General Motors Acceptance Corp. 4.82s 10/12/94 29,951,800
20,000,000 Goldman Sachs Group L.P. 5.2s 3/13/95 19,526,222
20,000,000 Goldman Sachs Group L.P. 4.775s 10/5/94 19,986,736
8,000,000 Goldman Sachs Group L.P. 3.32s 10/3/94 7,997,787
40,000,000 Household Finance Corp. 4.75s 10/6/94 39,968,333
35,000,000 IBM Credit Corp. 4.82s 10/19/94 34,910,964
30,000,000 J.P. Morgan & Co., Inc. 4.75s 10/11/94 29,956,458
15,000,000 Merrill Lynch & Co. Inc. 5.05s 2/21/95 14,697,000
25,000,000 Merrill Lynch & Co. Inc. 4.77s 10/12/94 24,960,250
20,000,000 New Center Asset Trust 4.88s 11/22/94 19,856,311
20,000,000 New Center Asset Trust 4.77s 10/4/94 19,989,400
25,000,000 Preferred Receivables Funding Corp. 4.85s 11/30/94 24,794,549
20,000,000 Preferred Receivables Funding Corp. 4.8s 10/25/94 19,933,333
9,000,000 Preferred Receivables Funding Corp. 4.75s 10/13/94 8,984,563
20,000,000 Sears Roebuck Acceptance Corp. 4.93s 10/24/94 19,934,267
10,000,000 Sears Roebuck Acceptance Corp. 4.92s 10/28/94 9,961,733
$591,753,887
Foreign (19.6%) (b)
$30,000,000 Bridgestone/Firestone Inc. 4.8s (Sumitomo
Bank LOC) 10/3/94 $ 29,988,000
10,000,000 Directors Mortgage Loan Corp. 4.81s
(Banque Nationale LOC) 10/20/94 9,973,278
10,500,000 Dresdner Bank AG 5.12s 1/13/95 10,343,200
30,000,000 Dresdner U.S. Finance Inc. 4.85s 10/3/94 29,987,875
10,000,000 FPL Fuels Inc. 4.8s (Sumitomo Bank LOC) 10/5/94 9,993,333
5,000,000 Fletcher Challenge Finance U.S.A. Inc.
5.03s (Credit Suisse LOC) 11/16/94 4,967,165
10,745,000 MP Funding Corp. 4.77s (Credit Suisse
LOC) 10/12/94 10,727,915
9,650,000 Maguire/Thomas Partners 4.8s (Sumitomo
Bank LOC) 10/5/94 9,643,567
<PAGE>
COMMERCIAL PAPER
PRINCIPAL AMOUNT MATURITY DATE VALUE
Foreign (continued)
$30,000,000 National Australia Funding Inc. 4.76s 10/7/94 $ 29,972,233
25,000,000 Pemex Capital Inc. 4.9s (Credit Suisse
LOC) 10/25/94 24,914,931
15,000,000 Pemex Capital Inc. 4.83s (Credit Suisse
LOC) 10/24/94 14,951,700
15,000,000 Pemex Capital Inc. 4.75s (Swiss Bank LOC) 10/13/94 14,974,271
13,600,000 Pemex Capital Inc. 4.75s (Swiss Bank LOC) 10/11/94 13,580,261
39,515,000 Union Bank of Switzerland 5s 10/3/94 39,498,535
$253,516,264
Total Commercial Paper (cost $845,270,151) $845,270,151
U.S. GOVERNMENT & AGENCY OBLIGATIONS (19.9%) (a)
PRINCIPAL AMOUNT MATURITY DATE VALUE
$25,000,000 Federal Home Loan Banks 4.34s 10/17/94 $ 24,948,764
10,000,000 Federal Home Loan Banks 4.62s 10/3/94 9,996,150
10,000,000 Federal Home Loan Mortgage Corp. 4.9s 11/22/94 9,927,861
25,000,000 Federal National Mortgage Association
Discount Notes, 5.45s 3/28/95 24,322,634
20,000,000 Federal National Mortgage Association
Discount Notes, 5.09s 2/21/95 19,592,800
30,000,000 Federal National Mortgage Association
Discount Notes, 5.06s 12/21/94 29,654,233
30,000,000 Federal National Mortgage Association
Discount Notes, 5.03s 12/20/94 29,660,475
20,000,000 Federal National Mortgage Association
Discount Notes, 4.91s 11/28/94 19,839,061
25,000,000 Federal National Mortgage Association
Discount Notes, 4.72s 11/29/94 24,803,333
15,000,000 Federal National Mortgage Association
Discount Notes, 4.66s 12/19/94 14,844,667
25,000,000 Federal National Mortgage Association
Discount Notes, 4.65s 11/1/94 24,896,667
10,000,000 Federal National Mortgage Association
Discount Notes, 4.6s 10/7/94 9,991,056
15,000,000 Federal National Mortgage Association
Discount Notes, 4.17s 10/17/94 14,970,463
Total U.S. Government & Agency
Obligations (cost $257,448,164) $257,448,164
FLOATING RATE NOTES (6.1%) (a)
PRINCIPAL AMOUNT MATURITY DATE VALUE
Domestic (4.2%)
$15,000,000 Merrill Lynch & Co. Inc. 5.07s 11/28/94 $ 15,000,000
20,000,000 Morgan Guaranty Trust Co. 4.98s 4/18/95 19,997,808
20,000,000 Pittsburgh National Bank 5.02s 4/21/95 19,993,308
$ 54,991,116
Foreign (1.9%) (b)
$25,000,000 Abbey National PLC 5.045s 4/27/95 $ 25,000,000
Total Floating Rate Notes (cost $79,991,116) $ 79,991,116
<PAGE>
BANK NOTES (5.6%) (a)
PRINCIPAL AMOUNT MATURITY DATE VALUE
Domestic
$20,000,000 First National Bank of Boston 4.8s 10/24/94 $ 20,000,000
15,000,000 First National Bank of Boston 4.8s 10/18/94 15,000,000
20,000,000 First National Bank of Boston 4.65s 10/3/94 20,000,000
17,000,000 Pittsburgh National Bank 3.53s 11/4/94 16,994,333
Total Bank Notes (cost $71,994,333) $ 71,994,333
CERTIFICATES OF DEPOSIT (4.6%) (a)(b)
PRINCIPAL AMOUNT MATURITY DATE VALUE
Foreign
$15,000,000 Commerzbank AG 3.6s 2/1/95 $ 14,995,455
20,000,000 Rabobank Nederland N.V. 5.18s 1/27/95 20,001,898
25,000,000 Societe Generale 5.45s 5/22/95 25,001,808
Total Certificates of Deposit (cost $59,999,161) $ 59,999,161
Total Investments (cost $1,314,702,925) (c) $1,314,702,925
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES
(a) Percentages indicated are based on net assets of $1,295,358,171 which
corresponds to a net asset value per share of $1.00 for both class A and
class B shares.
(b) U.S. dollar-denominated.
(c) The aggregate identified cost on a tax basis is the same.
Rates shown on floating rate notes are the current interest rates on
September 30, 1994, which are subject to change based on the terms of the
security.
Percent of total net assets invested in foreign countries at September 30,
1994:
<TABLE>
<CAPTION>
<S> <C>
Switzerland 9.5%
Netherlands 5.4
Japan 3.8
Germany 3.2
Australia 2.3
Great Britain 1.9
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of assets and liabilities
September 30, 1994
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments in securities, at amortized cost (Note 1) $ 1,314,702,925
Cash 5,162
Interest and other receivables 2,517,340
Receivable for shares of the fund sold 19,426,606
Total assets 1,336,652,033
Liabilities
Payable for securities purchased 24,333,889
Payable for shares of the fund repurchased 15,259,806
Distributions payable to shareholders 226,934
Payable for compensation of Manager (Note 2) 718,887
Payable for administrative services (Note 2) 4,987
Payable for compensation of Trustees (Note 2) 733
Payable for distribution fees (Note 2) 75,065
Payable for investor servicing and custodian fees (Note 2) 583,025
Other accrued expenses 90,536
Total liabilities 41,293,862
Net assets $ 1,295,358,171
Represented by
Paid-in capital (Note 4) $ 1,295,358,171
Net asset value, offering and redemption price per class A share
($1,101,171,393 divided by 1,101,171,393 shares)* $ 1.00
Net asset value and offering price per class B share
($194,186,778 divided by 194,186,778 shares)** $ 1.00
</TABLE>
* Class A shares are offered at net asset value.
** Class B shares are available only by exchange of class B shares from other
Putnam funds. The applicable contingent deferred sales charge will depend
upon the fund from which you exchanged.
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of operations
Eleven months ended September 30, 1994
<TABLE>
<CAPTION>
<S> <C>
Interest income: $37,425,101
Expenses:
Compensation of Manager (Note 2) 3,334,454
Investor servicing and custodian fees (Note 2) 2,178,345
Compensation of Trustees (Note 2) 23,907
Reports to shareholders 44,672
Auditing 34,898
Legal 17,071
Registration fees 162,974
Postage 98,563
Administrative services (Note 2) 17,685
Distribution fees class B (Note 2) 557,530
Other 17,785
Total expenses 6,487,884
Net investment income 30,937,217
Net realized gain on investments 42
Net increase in net assets resulting from operations $ 30,937,259
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of changes in net assets
<TABLE>
<CAPTION>
Eleven months
ended Year ended
September 30 October 31
1994 1993
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 30,937,217 $ 15,628,626
Net realized gain on investments 42 1,728
Net increase in net assets resulting from operations 30,937,259 15,630,354
Distributions to shareholders from:
Net investment income
Class A (27,575,242) (15,452,211)
Class B (3,361,975) (176,415)
Net realized gain on investments
Class A (40) (1,713)
Class B (2) (15)
Increase (decrease) from capital share transactions
(Note 4) 685,660,213 (232,350,806)
Total increase (decrease) in net assets 685,660,213 (232,350,806)
Net assets
Beginning of period 609,697,958 842,048,764
End of period $1,295,358,171 $ 609,697,958
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Financial Highlights
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
For the April 27, 1992
eleven months Year (commencement of
ended ended operations) to
September 30 October 31 October 31
1994* 1993 1992
Investment Operations Class B
<S> <C> <C> <C>
Net Investment Income $ .0251 $ .0195 $ .0151
Net Realized Gain on Investments -- -- --
Total from investment operations .0251 .0195 .0151
Total Distributions: $ (.0251) $(.0195) $(.0151)
Total Investment Return at Net Asset Value (%) (a) 2.54(b) 1.98 1.52(b)
Net Assets, End of Period (in thousands) $194,187 $22,777 $ 2,864
Ratio of Expenses to Average Net Assets (%) 1.03(b) 1.20 .70(b)
Ratio of Net Investment Income to Average Net Assets (%) 2.77(b) 1.98 1.50(b)
</TABLE>
See page 17 for notes to Financial Highlights.
<PAGE>
<TABLE>
<CAPTION>
For the
eleven Ten
months months
ended ended
September 30 Year ended October 31 October 31
1994* 1993 1992 1991 1990 1989 1988 1987 1986 1985
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ .0299 $ .0246 $ .0353 $ .0598 $ .0764 $ .0853 $ .0655 $ .0568 $ .0642 $ .0633
-- -- -- .0001 -- -- -- -- -- .0001
.0299 .0246 .0353 .0599 .0764 .0853 .0655 .0568 .0642 .0634
$ (.0299) $ (.0246) $ (.0353) $ (.0599) $ (.0764) $ (.0853) $ (.0655) $ (.0568) $ (.0642) $ (.0634)
3.03(b) 2.49 3.58 6.16 7.92 8.87 6.75 5.83 6.61 6.52(b)
$1,101,171 $586,920 $839,185 $684,987 $904,186 $797,395 $659,590 $775,954 $320,874 $275,901
.58(b) 0.70 .86 .77 .74 .85 .91 1.01 .89 .71(b)
3.03(b) 2.48 3.56 6.04 7.63 8.51 6.67 5.65 6.32 6.30(b)
</TABLE>
* The fiscal year end has advanced from October 31 to September 30.
(a) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b) Not annualized.
<PAGE>
Notes to financial statements
September 30, 1994
Note 1
Significant accounting policies
Putnam Money Market Fund (the "fund"), formerly Putnam Daily Dividend Trust,
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The fund seeks current
income consistent with preservation of capital and maintenance of liquidity.
The fund achieves its objective by investing in a portfolio of high-grade
short-term obligations. The fund may invest up to 100% of its assets in the
banking industry and in commercial paper and short-term corporate obligations
of issuers in the personal credit institution and business credit industries.
The fund offers both class A and class B shares. Class A and class B shares
are sold without a front-end sales charge. Class B shares are offered only in
exchange for class B shares of other Putnam funds. Class B shares pay an
ongoing distribution fee, and are subject to a contingent deferred sales
charge if the shares are redeemed within six years of purchase (including any
holding period of the shares in the other Putnam fund). In addition, the
Trustees declare separate dividends on each class of shares. Each class bears
expenses unique to that class (including the distribution fees applicable to
class B shares). Each class votes as a class only with respect to its own
distribution plan or other matters on which a class vote is required by law
or determined by the Trustees. Shares of each class would receive their pro-
rata share of the net assets of the fund if the fund were liquidated.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A) Security valuation The valuation of the fund's portfolio instruments is
determined by means of the amortized cost method as set forth in Rule 2a-7
under the Investment Company Act of 1940. The amortized cost of an instrument
is determined by valuing it at cost originally and thereafter amortizing any
discount or premium from its face value at a constant rate until maturity.
B) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested cash
balances into a joint trading account along with the cash of other registered
investment companies managed by Putnam Investment Management, Inc., (Putnam
Management) the fund's Manager, a wholly-owned subsidiary of Putnam
Investments, Inc. and certain other accounts. These balances may be invested
in one or more repurchase agreements and/or short-term money market
instruments.
C) Repurchase agreements The fund, or any joint trading account, through its
custodian, receives delivery of the underlying securities the market value of
which at the time of purchase is required to be in an amount at least equal
to the resale price, including accrued interest. The fund's Manager is
responsible for determining that the value of these underlying securities is
<PAGE>
at all times at least equal to the resale price, including accrued interest.
D) Federal taxes It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986. Therefore, no provision has been made for federal income and excise
taxes on income and capital gains.
E) Interest income and dividends to shareholders Interest is recorded on the
accrual basis. Income dividends are declared daily by the fund and are
distributed monthly.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management for management and investment advisory
services is paid quarterly based on the average net assets of the fund for
the quarter. Such fee is based on the following annual rates: 0.5% of the
first $100 million of average net assets, 0.4% of the next $100 million, 0.35%
of the next $300 million, 0.325% of the next $500 million, and 0.3% of any
amount over $1 billion, subject under current law to reduction in any year to
the extent that expenses (exclusive of brokerage, interest, taxes, and
credits allowed by Putnam Fiduciary Trust Company (PFTC) a wholly-owned
subsidiary of Putnam Investments, Inc.) of the fund exceed 2.5% of the first
$30 million of average net assets, 2.0% of the next $70 million and 1.5% of
any amount over $100 million and by the amount of certain brokerage
commissions and fees (less expenses) received by affiliates of the Manager on
the fund's portfolio transactions.
The fund also reimburses the Manager for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees. For the eleven months
ended September 30, 1994, the fund paid $17,685 for these services. Trustees
of the fund receive an annual Trustee's fee of $2,310 and an additional fee
for each Trustees' meeting attended. Trustees who are not interested persons
of the Manager and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
Custodial functions for the fund are provided by PFTC. Investor servicing
agent functions are provided by Putnam Investor Services, a division of PFTC.
Fees paid for these investor servicing and custodial functions for the eleven
months ended September 30, 1994 amounted to $2,178,345.
Investor servicing and custodian fees reported in the Statement of operations
for the eleven months ended September 30, 1994 have been reduced by credits
allowed by PFTC.
The fund has adopted a distribution plan with respect to its class B shares
("Class B Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940. The purpose of the Class B Plan is to compensate Putnam Mutual Funds
Corp., a wholly-owned subsidiary of Putnam Investments, Inc. for services
provided and expenses incurred by it in distributing class B shares. The
Class B Plan provides payments currently limited by the Trustees to .50% of
the fund's average net assets attributable to class B shares, but may
increase with the Trustees approval to an amount not exceeding .75% of
average net assets.
<PAGE>
For the eleven months ended September 30, 1994, the fund paid Putnam Mutual
Funds Corp. distribution fees of $557,530 for class B shares.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of
class A shares purchased as part of an investment of $1 million or more and
acquired by an exchange from another Putnam fund. For the eleven months ended
September 30, 1994, Putnam Mutual Funds Corp., acting as underwriter,
received $107,387 on such redemptions.
Putnam Mutual Funds Corp. also receives the proceeds on the contingent
deferred sales charges on its class B share redemptions. The charge is based
on declining rates, which begin at 5.00% of the net asset value of the
redeemed shares. Putnam Mutual Funds Corp. has informed the fund that it
received $977,137 from redemptions for the eleven months ended September 30,
1994.
Note 3
Purchases and sales of securities
During the eleven months ended September 30, 1994, purchases and sales
(including maturities) of investment securities (all short-term obligations)
aggregated $22,626,403,171 and $21,959,736,941, respectively. In determining
the net gain or loss on securities sold, the cost of securities has been
determined on the identified cost basis.
Note 4
Capital shares
At September 30, 1994, there was an unlimited number of shares of beneficial
interest authorized, divided into two classes, designated class A and class B
capital stock. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Eleven months ended Year ended
September 30 October 31
Class A 1994 1993
<S> <C> <C>
Shares sold $ 3,501,703,378 $ 1,954,667,214
Shares issued in connection with
reinvestment of distributions 26,366,112 16,002,778
3,528,069,490 1,970,669,992
Shares repurchased (3,013,818,559) (2,222,934,715)
Net increase (decrease) $ 514,250,931 $ (252,264,723)
Eleven months ended Year ended
September 30 October 31
Class B 1994 1993
Shares sold $ 652,248,469 $ 66,254,392
Shares issued in connection with
reinvestment of distributions 2,975,467 156,162
655,223,936 66,410,554
Shares repurchased (483,814,654) (46,496,637)
Net increase $ 171,409,282 $ 19,913,917
</TABLE>
<PAGE>
Federal Tax Information
For federal income tax purposes, the distributions from net investment
income, totaling $.029891 and $.025052 per share for class A and class B
shares, respectively, for the fiscal year ended September 30, 1994,
constitute "dividend income." None of the investment income qualifies for the
dividends-received deduction for corporations.
The Form 1099 you receive in January 1995 will show the tax status of all
distributions paid to your account in calendar 1994. As required by law, your
fund reports to the Internal Revenue Service on a calendar year basis the
amount of distributions paid to each shareholder.
<PAGE>
Our commitment to quality service
> CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested Service Seal every
year since the award's 1990 inception. DALBAR, an independent research firm,
ran more than 10,000 tests of 38 shareholder service components. In every
category, Putnam outperformed the industry standard.
> HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month from
a Putnam fund or from your own checking or savings account.*
> SWITCH FUNDS EASILY.
You can move money from one account to another with the same class of shares
without a service charge. (This privilege is subject to change or
termination.)
> ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business day at the
then-current net asset value, which may be more or less than their original
cost.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a helpful
Putnam representative.
> To make an additional investment in this or any other Putnam fund, contact
your financial advisor or call our toll-free number: 1-800-225-1581.
*Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market. Investors should consider their ability to
continue purchasing shares during periods of low price levels.
<PAGE>
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
William F. McGue
Vice President
Lindsey M. Callen
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Money Market
Fund. It may also be used as sales literature when preceded or accompanied by
the current prospectus, which gives details of sales charges, investment
objectives, and operating policies of the fund, and the most recent copy of
Putnam's Quarterly Performance Summary. For more information or to request a
prospectus, call toll-free: 1-800-225-1581
<PAGE>
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
010/879-14796
(Putnam Investments logo)
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS:
(1) Bold and italic typefaces are displayed in normal type.
(2) Headers (e.g., the name of the fund) are omitted.
(3) Certain tabular and columnar headings and symbols are displayed
differently in this filing.
(4) Bullet points and similar graphic signals are omitted.
(5) Page numbering is omitted.
(6) Trademark symbol replaced with (TM)
(7) Section symbol replaced with (S)
(8) Dagger symbol replaced with + and double-dagger replaced with ++
