Putnam
Daily
Dividend
Trust
Annual
Report
October 31, 1993
For investors seeking
current income consistent
with capital preservation,
stable principal and
liquidity through a
money market fund
A member
of the Putnam
Family of Funds
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Annual Report
6 Report of Independent
Accountants
7 Portfolio of investments owned
10 Financial statements
18 Fund performance supplement
19 Your Trustees
<PAGE>
How your
fund performed
For periods ended October 31, 1993
<TABLE>
<CAPTION>
Total return*
Fund Lipper
Class Class Money Market
A B Fund Average
- ------------------------------------------------
<S> <C> <C> <C>
1 year 2.49% 1.98% 2.62%
5 years 32.42 -- 32.52
annualized 5.78 -- 5.79
10 years 90.12 -- 90.35
annualized 6.64 -- 6.65
Life-of-class** -- 3.53 4.20
annualized -- 2.32 2.78
- ------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
Distributions
12 months Investment
ended Number income Total
- ------------------------------------------------------
<S> <C> <C> <C>
Class A 12 $0.0246 $0.0246
Class B 12 $0.0195 $0.0195
- ------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------
Current returns
at the end of the Class Class
period A B
- -----------------------------------------
<S> <C> <C>
Current 30-day yield 2.64% 2.13%
Current 7-day yield 2.60 2.09
- -----------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Total return at end of most recent calendar quarter Class Class
Periods ended September 30, 1993 A B
<S> <C> <C>
1 year 2.49% 1.98%
5 years 32.94 --
annualized 5.86 --
10 years 91.11 --
annualized 6.69 --
Life-of-class -- 3.34
annualized -- 2.32
- -----------------------------------------------------------------------
</TABLE>
*Performance data represent past results. Investment return will fluctuate.
**Effective April 27, 1992, the fund began offering class B shares.
Performance for those shares will differ.
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 on 12/31/76, no investor has ever lost a penny of principal.
Please see the fund performance supplement on page 18 for additional
information about performance comparisons.
Terms you need to know
Total return is the change in value of an investment from the beginning to
the end of a period, assuming the reinvestment of all distributions.
Yield is the rate at which an investment earns interest income. The 7- and
30-day yields are the two most common gauges for measuring money market
mutual fund performance. The yields are calculated in accordance with
Securities and Exchange Commission guidelines.
Contingent deferred sales charge (CDSC) is a charge applied at the time of
the redemption of shares rather than the time of purchase. It generally
declines and eventually disappears over a stated period. The CDSC charge
applied reflects the CDSC of the fund from which the shares were exchanged.
Class A shares generally refers to fund shares purchased with an initial
sales charge. In the case of your fund, it refers to shares purchased or
acquired through the exchange of class A shares from another Putnam fund,
without a sales charge. Exchange of your fund's class A shares into another
fund may involve a sales charge, however.
Class B shares generally refers to fund shares purchased with no initial
sales charge but subject to a CDSC. 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.
<PAGE>
From the
Chairman
[George Putnam photo]
George Putnam
Chairman of the Trustees
(C) Karsh, Ottawa
Dear Shareholder:
During the fiscal year ended October 31, 1993, Putnam Daily Dividend Trust
posted solid, competitive returns. Meeting its twin objectives of stability
and income, your fund's total return was 2.49% for Class A shares and 1.98%
for Class B Shares.
During a period of rising stock and bond markets, it's easy to overlook the
virtues of money market funds, especially in comparison to other more
aggressive investments. But it's important not to lose sight of the role a
money market fund can play in your investment portfolio.
Money market funds can serve investors in several ways. By making regular
investments in a money market fund, you can establish a stable, liquid
account that earns current income. A money market fund can be the core
account in your investment portfolio. It can be the account from which you
invest in other types of mutual funds or in individual securities and the
place to which you reinvest proceeds from the redemption or sale of mutual
fund shares or securities.
Because money market funds seek to maintain a stable $1.00 share price, they
are excellent vehicles for short-term cash. If you anticipate making a big
purchase in the near future, such as a house or car; or if you expect to be
paying a large bill, such as tuition, a money market fund is an excellent
place to earn current market rates on your cash until you're ready to use it.
You can also use a money market fund to balance an aggressive investment
portfolio.
As the economy continues to improve and the financial markets reach historic
highs, this might be an appropriate time to review your investment portfolio
and the role your money market fund plays in your overall investment
strategy.
Respectfully yours,
[George Putnam signature]
George Putnam
December 15, 1993
<PAGE>
Report from
Putnam Management
For the fiscal year ended October 31, 1993, Putnam Daily Dividend Trust was
managed against a backdrop of slow economic growth, low inflation and low
interest rates. In this type of environment, there's a great deal of
competition to obtain extra yield. Consequently, the market is under pressure
to develop more sophisticated products than the normal bank CDs and
commercial paper that are the staples of money market fund investments. While
Putnam analysts survey the entire range of products in the marketplace, we
avoid investments that fail our strict standards for quality and stability
and those that do not fit the money market fund structure.
Investing in the money market Money market mutual funds invest in short-term
securities sold in the market, where large companies, banks and other
institutions invest their surplus cash for short periods of time. Money
market securities include Treasury bills, certificates of deposit of large
banks, and commercial paper; that is, the short-term debt of large U.S. and
foreign corporations. In the investment spectrum, these are generally the
safest, most stable securities available. All money market investments are
U.S. dollar-denominated, so when we refer to foreign debt, we mean debt of
domestic subsidiaries of foreign banks and/or corporations issued in the
United States.
Sluggish economic growth and declining interest rates have been consistent
themes for more than a year. During periods of declining interest rates,
money market fund managers strive to lock in the highest yields for the
longest amount of time by extending the average maturity of the portfolio.
Two years ago, for example, the average maturity of your fund's holdings was
70-90 days. As interest rates hit their lows during the past year, we began
to shorten the maturity of the portfolio. In October 1992, the average
maturity was 81 days; by the end of the fiscal year, it was 50 days. While
this is not a dramatic change, we have positioned the portfolio to be
flexible enough to take advantage of higher yields if interest rates begin to
rise.
Cumulative total return on a $10,000 investment since 11/1/83
<TABLE>
<CAPTION>
Daily Dividend Trust
Class A shares
(date/year) Lipper Money Market Average at NAV
<S> <C> <C>
11/1/83 10000 10000
10/31/84 11013 11020
10/31/85 11906 11921
10/31/86 12697 12709
10/31/87 13448 13450
10/31/88 14374 14358
10/31/89 15645 15631
10/31/90 16881 16868
10/31/91 17915 17908
10/31/92 18557 18549
10/31/93 19035 19009
</TABLE>
Past performance is no assurance of future results. Performance of Class B
shares will vary from performance of Class A shares due to differences in
sales charges and 12b-1 fees.
Changing the allocation Investing in floating rate commercial paper is
another way we can take advantage of interest rates that may be headed
upward. These short-term securities have fixed maturities (one year, for
example), but their yields are tied to a certain market index or formula. If
interest rates rise, yields on these securities will also go up. We have seen
many floating-rate securities come to market recently. As with other
investment vehicles, we are scrutinizing their credit risk and quality before
making a decision on whether or not to invest in them.
Over the past year, we also changed our portfolio allocation between
government securities and corporate bonds. Going into the fiscal year, 30% of
the portfolio was in government securities, since the yield spreads between
government and corporate debt were narrow and these investments carried less
risk than corporate debt obligations. As the economy improved, however, yield
spreads between government and corporate securities widened. Through our
credit analysis process, we were able to identify companies with improving
credit risk. Consequently, we progressively moved assets out of the
government sector throughout the year, until about 90% of the portfolio's
assets were invested in corporate debt and just over 10% in government
securities.
Performance comparisons (10/31/93)*
Passbook savings 2.00%
Taxable money market fund (7-day yield) 2.66%
3-month CD 2.55%
Putnam Daily Dividend Trust Class A 2.60%
(7-day yield) Class B 2.09%
Looking ahead In general, we believe the economy will continue its slow but
steady recovery. We believe interest rates have reached their lows, and we're
starting to hear some concern that inflation may increase. While the Federal
Reserve Board had adopted a neutral stance toward interest rates
over the past year or so, it has made clear that its primary focus is on
keeping inflation down. If economic growth is moderate, the Fed can continue
to sit on the sidelines. But if it appears that inflation will pick up to a
significant degree, we believe the Fed will tighten credit, and interest
rates will rise. In this event, your fund should be in a position to take
advantage of the resulting opportunities.
*The principal 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 mutual funds, substantial penalties may
apply to early withdrawals of bank CDs. Performance data represent past
performance. Investment returns will fluctuate. Sources: Bank of Boston
(passbook savings). Bank Rate Monitor (3-month CDs). IBC/Donoghue's Money
Fund Report (taxable money market fund 7-day yield).
<PAGE>
Putnam
Daily Dividend
Trust
Annual Report
For the Fiscal Year Ended October 31, 1993
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam Daily Dividend Trust
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 Daily
Dividend Trust at October 31, 1993, 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 Trust'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 securities owned at October 31, 1993 by correspondence with
the custodian, provide a reasonable basis for the opinion expressed above.
Price Waterhouse
Boston, Massachusetts
December 10, 1993
<PAGE>
Portfolio of
investments owned
October 31, 1993
<TABLE>
<CAPTION>
Commercial Paper (85.1%)(a)
Maturity
Principal Amount Date Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic (49.2%)
$10,000,000 AT&T Capital Corp. 3.18s 1/18/94 $ 9,930,216
10,000,000 Bankers Trust New York Corp. 3.2s 12/13/93 9,961,776
10,000,000 Bankers Trust New York Corp. 3.19s 2/16/94 9,904,300
24,380,000 Ciesco L.P. 3s 11/1/93 24,373,905
10,000,000 Corporate Receivables Corp. 3.15s 11/8/93 9,993,000
10,000,000 Corporate Receivables Corp. 3.1s 12/10/93 9,965,555
15,000,000 CS First Boston Group Inc. 3.12s 12/6/93 14,953,200
7,000,000 Delaware Funding Corp. 3.16s 11/4/93 6,997,542
15,000,000 Delaware Funding Corp. 3.1s 11/2/93 14,997,417
15,000,000 Ford Motor Credit Co. 3.16s 11/15/93 14,980,250
10,000,000 Ford Motor Credit Co. 3.08s 11/17/93 9,985,455
10,000,000 General Electric Capital Corp. 3.2s 11/19/93 9,983,111
10,000,000 General Electric Capital Corp. 3.16s 11/3/93 9,997,366
5,000,000 General Motors Acceptance Corp. 3.175s 11/29/93 4,987,211
7,000,000 General Motors Acceptance Corp. 3.175s 11/22/93 6,986,417
15,000,000 General Motors Acceptance Corp. 3.175s 11/8/93 14,989,417
10,000,000 Goldman Sachs Group LP 3.275s 2/15/94 9,902,659
5,000,000 Goldman Sachs Group LP 3 1/4s 12/14/93 4,980,139
10,000,000 Goldman Sachs Group LP 3.2s 2/25/94 9,895,999
10,000,000 Household Finance Corp. 3.15s 11/18/93 9,984,250
15,000,000 Household Finance Corp. 3.15s 11/10/93 14,986,875
5,000,000 Merrill Lynch & Co. Inc. 3.27s 2/22/94 4,948,224
5,000,000 Merrill Lynch & Co. Inc. 3.22s 3/16/94 4,939,177
15,000,000 Merrill Lynch & Co. Inc. 3.15s 11/29/93 14,961,937
10,000,000 Preferred Receivables Funding Corp. 3.12s 11/29/93 9,974,866
15,000,000 Preferred Receivables Funding Corp. 3.12s 11/22/93 14,971,400
10,000,000 Republic New York Corp. 3.2s 1/14/94 9,933,332
7,500,000 USAA Capital Corp. 3.09s 11/9/93 7,494,206
- -------------------------------------------------------------------------------------------------------------------------------
$299,959,202
- -------------------------------------------------------------------------------------------------------------------------------
Foreign (35.9%)(b)
3,650,000 Abbey National PLC 3.22s 1/20/94 3,623,555
15,000,000 Abbey National PLC 3.21s 2/28/94 14,839,500
15,000,000 ABN-AMRO North America Finance Inc. 3.2s 1/21/94 14,890,666
9,500,000 AES Shady Point Inc. (Letter of Credit, Bank of Tokyo) 3.13s 11/22/93 9,481,828
12,600,000 Bombardier Capital Inc. (Letter of Credit, National West) 3.11s 11/2/93 12,597,823
20,000,000 BP Australia Finance 3.1s 11/16/93 19,972,444
3,000,000 Hartz 667 Commercial Paper Corp. (Letter of Credit, Mitsubishi Bank) 3.4s 2/7/94 2,971,950
5,000,000 Maguire/Thomas Partnership (Letter of Credit, Sumitomo Bank) 3.13s 12/2/93 4,986,088
8,000,000 Michelin Tire Corp. (Letter of Credit, Societe Generale) 3.24s 2/2/94 7,932,320
10,000,000 Mitsubishi Motor Credit of America (Letter of Credit, Bank of Tokyo) 3.15s 12/2/93 9,972,000
15,000,000 Mitsubishi Motor Credit of America (Letter of Credit, Bank of Tokyo) 3.15s 11/9/93 14,988,212
10,000,000 Orchard Funding Inc. (Letter of Credit, Sumitomo Bank) 3.16s 12/3/93 9,971,033
5,000,000 Pemex Capital Inc. (Letter of Credit, Swiss Bank) 3.12s 11/29/93 4,987,432
15,000,000 Pemex Capital Inc. (Letter of Credit, Swiss Bank) 3.12s 11/9/93 14,988,300
5,022,000 Queensland Alumina Ltd. (Letter of Credit, Credit Suisse) 3.12s 11/9/93 5,018,082
11,697,000 Queensland Alumina Ltd. (Letter of Credit, Credit Suisse) 3.1s 12/7/93 11,659,731
10,000,000 Rabobank Nederland 3.22s 3/16/94 9,878,355
15,000,000 Rabobank Nederland 3.2s 1/28/94 14,881,332
8,000,000 Rockefeller Center Properties (Letter of Credit, Credit Suisse) 3.12s 11/30/93 7,979,199
7,250,000 Societe General North America Inc. 3.1s 11/30/93 7,231,270
6,000,000 Southwest Gas Corp. (Letter of Credit, Union Bank of Switzerland) 3.1s 11/19/93 5,990,183
10,000,000 SRD Finance Inc. (Letter of Credit, Sumitomo Bank) 3.15s 11/2/93 9,998,250
- -------------------------------------------------------------------------------------------------------------------------------
$218,839,553
- -------------------------------------------------------------------------------------------------------------------------------
Total Commercial Paper
(cost $518,798,755) $518,798,755
U.S. Government and Agency Obligations (10.9%) (a)
$15,000,000 Federal National Mortgage Assn. Discount Notes, 3.24s 1/27/94 $ 14,881,200
10,000,000 Federal National Mortgage Assn. Discount Notes, 3.22s 6/30/94 9,783,544
12,000,000 Federal National Mortgage Assn. Discount Notes, 3.14s 3/31/94 11,841,953
10,000,000 Federal National Mortgage Assn. Discount Notes, 3.14s 11/1/93 9,999,127
10,000,000 Federal National Mortgage Assn. Discount Notes, 3.12s 12/2/93 9,972,266
10,000,000 Student Loan Marketing Assn., 3.62s 6/30/94 9,996,663
- -------------------------------------------------------------------------------------------------------------------------------
Total U.S. Government and Agency Obligations (cost $66,474,753) $ 66,474,753
Certificate of Deposit (3.3%) (a)(b)
$10,000,000 Societe Generale North America Inc. 3.27s 1/24/94 $ 10,000,000
10,000,000 Union Bank of Switzerland 4.1s 12/2/93 10,002,931
- -------------------------------------------------------------------------------------------------------------------------------
Total Certificate of Deposit
(cost $20,002,931) $ 20,002,931
Floating Rates Notes (1.6%) (a) (cost $9,998,000)
$10,000,000 Corporate Asset Funding Co. Inc. 3.128s 5/15/94 $ 9,998,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Investments
(cost $615,274,439) (c) $615,274,439
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes
(a) Percentages are based on total net assets of $609,697,958 which
correspond 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 October
31, 1993, which are subject to change based on the terms of the security.
Percentage of total net assets invested in foreign countries at October 31,
1993:
Japan 10.2%
Switzerland 10.0
Netherlands 6.5
United Kingdom 5.1
France 4.1
Australia 3.3
<PAGE>
Statement of
assets and liabilities
October 31, 1993
<TABLE>
<S> <S> <C> <C>
Assets Investments in securities, at amortized cost (Note 1) $615,274,439
Cash 6,025
Interest and other receivables 296,881
Receivable for shares of the Fund sold 2,461,575
--------------------------------------------------------------------------------------------------------
Total assets 618,038,920
Liabilities Payable for shares of the Fund repurchased $6,746,926
Payable for compensation of Manager (Note 2) 600,773
Payable for administrative services (Note 2) 1,158
Payable for compensation of Trustees (Note 2) 133
Payable for investor servicing and custodian (Note 2) 772,614
Payable for distribution fees (Note 2) 8,141
Other accrued expenses 211,217
--------------------------------------------------------------------------------------------------------
Total liabilities 8,340,962
--------------------------------------------------------------------------------------------------------
Net assets $609,697,958
--------------------------------------------------------------------------------------------------------
Represented by Paid-in capital (Note 4) $609,697,958
--------------------------------------------------------------------------------------------------------
Net asset value, offering and redemption price per Class A share
($586,920,462 divided by 586,920,462 shares)** $1.00
Net asset value and offering price per Class B share
($22,777,496 divided by 22,777,496 shares)** $1.00
--------------------------------------------------------------------------------------------------------
</TABLE>
*Class A shares are offered at net asset value.
**Class B shares are available only by exchange from Class B shares of other
Putnam Funds. The applicable contingent deferred sales charge applied upon
redemption will depend upon the Fund from which you exchanged.
<PAGE>
Statement of
operations
Year ended October 31, 1993
<TABLE>
<S> <C> <C>
========================================================================================================
Interest income $20,028,264
Expenses:
Compensation of Manager (Note 2) 2,363,285
Investor servicing and custodian fees (Note 2) 1,677,616
Compensation of Trustees (Note 2) 21,083
Reports to shareholders 46,241
Auditing 37,213
Legal 13,956
Postage 54,196
Administrative services (Note 2) 20,098
Registration fees 92,044
Distribution fees--Class B (Note 2) 43,307
Other 30,599
--------------------------------------------------------------------------------------------------------
Total expenses 4,399,638
--------------------------------------------------------------------------------------------------------
Net investment income 15,628,626
--------------------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 1,728
--------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $15,630,354
--------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statement of
changes in net assets
<TABLE>
<CAPTION>
Year ended October 31
1993 1992
<S> <C> <C> <C>
========================================================================================================
Increase Operations:
(decrease) in net
assets Net investment income $ 15,628,626 $ 24,052,787
Net realized gain on investments 1,728 12,500
--------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 15,630,354 24,065,287
Distributions to shareholders from:
Net investment income
Class A (15,452,211) (24,043,261)
Class B (176,415) (9,526)
Net realized gain on investments
Class A (1,713) (12,498)
Class B (15) (2)
Increase (decrease) from capital share transactions (Note 4) (232,350,806) 157,061,890
--------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (232,350,806) 157,061,890
Net assets Beginning of year 842,048,764 684,986,874
--------------------------------------------------------------------------------------------------------
End of year $ 609,697,958 $842,048,764
--------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Financial
Highlights*
(For a share
outstanding
throughout
the period)
<TABLE>
<CAPTION>
April 27,
1992
(commence-
Year ment of
ended operations)
October to October
31 31 Year ended October 31
------- ----------- ---------------------------------------------------------------------------------
1993 1992 1993 1992 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------
Class B Class A
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Operations
Net Investment
Income $ .0195 $ .0151 $ .0246 $ .0353 $ .0598 $ .0764 $ .0853 $ .0655 $ .0568 $ .0642
Net Realized and
Unrealized
Gain on
Investments -- -- -- -- .0001 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total from
Investment
Operations .0195 .0151 .0246 .0353 .0599 .0764 .0853 .0655 .0568 .0642
- ------------------------------------------------------------------------------------------------------------------------------
Total
Distributions $(.0195) $(.0151) $ (.0246) $ (.0353) $ (.0599) $ (.0764) $ (.0853) $ (.0655) $ (.0568) $ (.0642)
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment
Return at
Net Asset
Value (%) (a) 1.98 2.98(b) 2.49 3.58 6.16 7.92 8.87 6.75 5.83 6.61
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets,
End of Period
(in thousands) $22,777 $2,864 $586,920 $839,185 $684,987 $904,186 $797,395 $659,590 $775,954 $320,874
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of
Expenses to
Average Net
Assets (%) 1.20 1.37(b) .70 .86 .77 .74 .85 .91 1.01 .89
Ratio of Net
Investment
Income to
Average Net
Assets (%) 1.98 2.93(b) 2.48 3.56 6.04 7.63 8.51 6.67 5.65 6.32
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Ten
months Year
ended ended
October December
31 31
------- --------------------
1985 1984 1983
- ---------------------------------------------------
Class A
- ---------------------------------------------------
<S> <C> <C> <C>
Investment
Operations
Net Investment
Income $ .0633 $ .0983 $ .0837
Net Realized and
Unrealized
Gain on
Investments .0001 .0003 --
- ---------------------------------------------------
Total from
Investment
Operations .0634 .0986 .0837
- ---------------------------------------------------
Total
Distributions $ (.0634) $ (.0986) $ (.0837)
- ---------------------------------------------------
Total Investment
Return at
Net Asset
Value (%) (a) 7.86(b) 10.32 8.70
- ---------------------------------------------------
Net Assets,
End of Period
(in thousands) $275,901 $260,186 $282,335
- ---------------------------------------------------
Ratio of
Expenses to
Average Net
Assets (%) .85(b) .85 .85
Ratio of Net
Investment
Income to
Average Net
Assets (%) 7.56(b) 9.79 8.29
===================================================
</TABLE>
* Financial Highlights for periods ended through October 31, 1992 have been
restated to conform with requirements issued by the SEC in April 1993.
(a) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(b) Annualized.
<PAGE>
Notes to
financial statements
October 31, 1993
Note 1
Significant
accounting
policies
The Fund 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 institution industries.
The Fund offers both Class A and Class B shares. The Fund commenced its
public offering of Class B shares on April 27, 1992. Class A and Class B
shares are sold without a front-end sales charge. Class B shares are offered
only in exchanges for Class B shares of other Putnam funds. They 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) and 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. (formerly
known as The Putnam Management Company, Inc.), the Fund's Manager, a wholly-
owned subsidiary of Putnam Investments, Inc. (formerly, The Putnam Companies,
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
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 income 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 to reduction in any year to the extent
that expenses (exclusive of brokerage, interest and taxes) 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 year ended
October 31, 1993, the Fund paid $20,098 for these services.
Trustees of the Fund receive an annual Trustee's fee of $1,340 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 are being provided to the Fund by Putnam Fiduciary Trust
Company (PFTC), a wholly-owned subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are currently provided by Putnam Investor
Services, a division of PFTC. Fees paid for these investor servicing and
custodial functions for the year ended October 31, 1993 amounted to
$1,677,616.
Investor servicing and custodian fees reported in the Statement of operations
for the year ended October 31, 1993 have been reduced by credits allowed by
PFTC.
The Fund has adopted a distribution plan with respect to its Class B shares
(the "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., (formerly known as Putnam Financial Services, Inc.) 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. For the year
ended October 31, 1993, the Fund paid Putnam Mutual Funds Corp. distribution
fees of $43,307 for Class B shares.
A deferred sales charge of up to 1% is assessed on certain redemptions of
Class A shares purchased as part of an investment of $1 million or more and
were acquired by an exchange from another Putnam fund. For the year ended
October 31, 1993, Putnam Mutual Funds Corp., acting as underwriter, received
$83,377 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 contingent deferred sales charges of $86,763 from redemptions during
the year ended October 31, 1993.
Note 3
Purchases
and sales
of securities
During the year ended October 31, 1993, purchases and sales (including
maturities) of investment securities (all short-term obligations) aggregated
$13,710,498,116 and $13,958,502,096, 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 October 31, 1993, 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>
Year ended October 31
------------------------------
Class A 1993 1992
- ----------------------------------------------------------------
<S> <C> <C>
Shares sold 1,954,667,214 1,794,673,649
Shares issued in connection
with reinvestment of
distributions 16,002,778 23,561,701
- ----------------------------------------------------------------
1,970,669,992 1,818,235,350
Shares repurchased (2,222,934,715) (1,664,037,039)
- ----------------------------------------------------------------
Net increase (decrease) (252,264,723) 154,198,311
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
April 27, 1992
(commencement of
Year ended operations) to
October 31, October 31,
Class B 1993 1992
- -----------------------------------------------------------------
<S> <C> <C>
Shares sold 66,254,392 5,549,492
Shares issued in connection
with reinvestment of
distributions 156,162 8,847
- -----------------------------------------------------------------
66,410,554 5,558,339
Shares repurchased (46,496,637) (2,694,760)
- -----------------------------------------------------------------
Net increase 19,913,917 2,863,579
- -----------------------------------------------------------------
</TABLE>
Fund
performance
supplement
Putnam Daily Dividend Trust is a portfolio managed for current income
consistent with capital preservation, stable principal and liquidity by
investing primarily in a diversified portfolio of High Quality short-term
securities.
The 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.
The fund performance supplement has been prepared by Putnam Management to
provide additional information about the fund and the indexes used for
performance comparisons. The information is not part of the portfolio of
investments owned or the financial statements.
Federal
tax information
For federal income tax purposes, the distributions from net investment
income, totaling $.0246 and $.0195 per share for Class A and Class B shares,
respectively, for the fiscal year ended October 31, 1993, constitute
"dividend income." None of the investment income qualifies for the
dividends-received deduction for corporations.
The Form 1099 you receive in January 1994 will show the tax status of all
distributions paid to your account in calendar 1993. 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>
Your
Trustees
George Putnam
Chairman
Chairman and President,
The Putnam Funds
William F. Pounds
Vice Chairman
Professor of Management,
Alfred P. Sloan
School of Management,
Massachusetts Institute of
Technology
Hans H. Estin
Vice Chairman,
North American
Management Corporation
John A. Hill
Principal and
Managing Director,
First Reserve Corp.
Elizabeth T. Kennan
President,
Mount Holyoke College
Lawrence J. Lasser
President and
Chief Executive Officer,
Putnam Investments, Inc.
Robert E. Patterson
Executive Vice President,
Cabot Partners
Limited Partnership
Donald S. Perkins
Director of various
corporations
George Putnam, III
President, New Generation
Research, Inc.
A.J.C. Smith
Chairman of the Board
and Chief Executive Officer,
Marsh & McLennan
Companies, Inc.
W. Nicholas Thorndike
Director of various
corporations
<PAGE>
Putnam
Daily
Dividend
Trust
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
Investor servicing agent
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581
Custodian
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
Independent accountants
Price Waterhouse
Putnam Investor Services has received the DALBAR award
each year since the award's 1990 inception. In more than 10,000 tests
of 38 shareholder service components,
Putnam outperformed the industry standard in every category.
<PAGE>
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
John R. Verani
Vice President
Gary N. Coburn
Vice President
William McGue
Vice President
Lindsey Callen
Vice President and
Fund Manager
William N. Shiebler
Vice President
John D. Hughes
Vice President
and Treasurer
Paul O'Neil
Vice President
Beverly Marcus
Clerk and
Assistant Treasurer
This report is for the information of shareholders of Putnam Daily Dividend
Trust. 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.
9678-A0A/A50
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
<PAGE>
<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) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(3) Because the printed page breaks are not reflected, 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.
