As filed with the Securities and Exchange Commission on
December 1 , 1994
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 25 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 21 / X /
(Check appropriate box or boxes) ----
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PUTNAM MONEY MARKET FUND Registration No. 2-55091
811-2608
(Exact name of registrant as specified in charter)
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
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Pre-Effective Amendment No. / /
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Post-Effective Amendment No. 9 / X /
and ----
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X /
ACT OF 1940 ----
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Amendment No. 11 / X /
(Check appropriate box or boxes) ----
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PUTNAM TAX EXEMPT MONEY MARKET FUND Registration No. 33-15238
811-5215
(Exact name of registrant as specified in charter)
One Post Office Square, Boston, Massachusetts 02109
(Address of principal executive offices)
Registrants' Telephone Number, including Area Code
(617) 292-1000
<PAGE>
It is proposed that this filing will become effective (check
appropriate box):
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/ / immediately upon filing pursuant to paragraph (b)
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/ X / on December 1, 1994 pursuant to paragraph (b)
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/ / 60 days after filing pursuant to paragraph
(a)(i)
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/ / on (date) pursuant to paragraph (a)(i)
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/ / 75 days after filing pursuant to paragraph (a)(ii)
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/ / on (date) pursuant to paragraph (a)(ii) of rule
----- 485
If appropriate, check the following box:
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/ / this post-effective amendment designates a new
---- effective date for a previously filed post-
effective amendment.
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JOHN R. VERANI, Vice President
PUTNAM MONEY MARKET FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
One Post Office Square
Boston, Massachusetts 02109
(Name and address of agent for service)
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Copy to:
JOHN W. GERSTMAYR, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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Each Registrant has registered an indefinite number or
amount of securities under the Securities Act of 1933 pursuant to
Rule 24f-2. Rule 24f-2 notices for Putnam Money Market Fund's
fiscal period ended September 30, 1994 and for Putnam Tax Exempt
Money Market Fund's fiscal year ended September 30, 1994
were filed on November 29 , 1994.
<PAGE>
Putnam Tax Exempt Money Market Fund
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of securities being price per offering registration
being registeredregistered unit price* fee
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<C> <C> <C> <C> <C>
Shares of Beneficial
Interest 24,007,832 shs. $1.00 $290,000 $100.00
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- -----------------------------------------------------------------------------------------
* Calculated pursuant to Rule 24e-2 under the Investment Company Act of 1940. The
total amount of securities redeemed or repurchased during the Registrant's
previous fiscal year was 592,945,789 shares, 569,227,957 of which
have been used for reductions pursuant to Rules 24e-2(a) or Rule 24f-2(c) under
said Act in the current fiscal year, and 23,717,832 of which are being used
for such reduction in this Amendment.
/TABLE
<PAGE>
PUTNAM MONEY MARKET FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(A))
PART A
N-1A ITEM NO. LOCATION
1. Cover Page....................... Cover Page
2. Synopsis......................... Expenses summary
3. Condensed Financial Information.. Financial highlights;
How performance is shown
4. General Description of
Registrant....................... Objectives; How
objectives are pursued;
Organization and history
5. Management of the Fund........... Expenses summary; How
the Funds are managed;
About Putnam
Investments, Inc.
5A. Management's Discussion
of Fund Performance.............. (Contained in the Annual
Report of each
Registrant)
6. Capital Stock and Other
Securities....................... Cover Page; Organization
and history;
Determination of net
income; tax information
7. Purchase of Securities Being
Offered.......................... How to buy shares;
Distribution Plans; How
to sell shares; How to
exchange shares; How
each Fund values its
shares
8. Redemption or Repurchase......... How to buy shares; How
to sell shares; How to
exchange shares;
Organization and history
9. Pending Legal Proceedings........ Not Applicable
PART B
N-1A ITEM NO.
LOCATION
10. Cover Page....................... Cover Page
11. Table of Contents................ Cover Page
12. General Information and History.. Organization and history
(Part A)
13. Investment Objectives and
Policies......................... How objectives are
pursued (Part A);
Investment Restrictions
of the Funds;
Miscellaneous Investment
Practices
14. Management of the Registrant..... Management of the Fund
(Trustees; Officers);
Additional Officers of
the Funds
15. Control Persons and Principal
Holders of Securities............ Management of the Fund
(Trustees; Officers);
Fund Charges and
Expenses (Ownership of
Fund Shares)
16. Investment Advisory and Other
Services......................... Management of the Fund
(Trustees; Officers; The
Management Contract;
Principal Underwriter;
Investor Servicing Agent
and Custodian); Fund
Charges and Expenses;
Distribution Plans;
Independent Accountants
and Financial Statements
17. Brokerage Allocation............. Management of the Fund
(Portfolio
Transactions); Fund
Charges and Expenses
<PAGE>
18. Capital Stock and Other
Securities....................... Organization and history
(Part A); Determination
of net income; tax
information (Part A);
Suspension of
Redemptions
19. Purchase, Redemption and Pricing
of Securities Being Offered...... How to buy shares (Part
A); How to sell shares
(Part A); How to
exchange shares (Part
A); How to Buy Shares;
Determination of Net
Asset Value; Suspension
of Redemptions
20. Tax Status....................... Determination of net
income; tax information
(Part A); Taxes
21. Underwriters..................... Management of the Fund
(Principal Underwriter);
Fund Charges and
Expenses
22. Calculation of Performance Data.. How performance is shown
(Part A); Investment
Performance of the
Funds; Standard
Performance Measures
23. Financial Statements............. Independent Accountants
and Financial Statements
PART C
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of the
Registration Statement.
<PAGE>
PROSPECTUS
DECEMBER 1, 1994
PUTNAM MONEY MARKET FUND
CLASS A, B AND M SHARES
INVESTMENT STRATEGY: INCOME
PUTNAM TAX EXEMPT MONEY MARKET FUND
INVESTMENT STRATEGY: TAX-ADVANTAGED
This Prospectus explains concisely what you should know before
investing in Putnam Money Market Fund and Putnam Tax Exempt
Money Market Fund (collectively, the "Funds") . Please read
it carefully and keep it for future reference. You can find more
detailed information about the Funds in the December 1,
1994 Statement of Additional Information, as amended
from time to time. For a free copy of the Statement,
or other information, call Putnam Investor Services at 1-
800-225-1581. The Statement has been filed with the
Securities and Exchange Commission and is incorporated
into this Prospectus by reference.
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT EITHER FUND
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
THESE SECURITIES 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 THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUNDS 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.
BOSTON * LONDON * TOKYO
<PAGE>
ABOUT THE FUNDS
Expenses summary
.........................................................3
Financial highlights
.........................................................5
Objectives
.........................................................10</R
>
How objectives are pursued
.........................................................10</R
>
How performance is shown
.........................................................18</R
>
How the Funds are managed
.........................................................18</R
>
Organization and history 19
ABOUT YOUR INVESTMENT
How to buy shares
.........................................................21</R
>
Distribution Plans
.........................................................23</R
>
How to sell shares
.........................................................24</R
>
How to exchange shares
.........................................................27</R
>
How each Fund values its shares
.........................................................28
Determination of net income; tax information 28
ABOUT PUTNAM INVESTMENTS, INC. 30
<PAGE>
ABOUT THE FUNDS
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
a Fund. The following table summarizes your maximum transaction
costs from investing in each Fund and expenses incurred by each
Fund during fiscal 1994 . The Examples show the
cumulative expenses attributable to a hypothetical $1,000
investment in each Fund over specified periods.
PUTNAM MONEY MARKET FUND
CLASS A CLASS B CLASS M
SHARES SHARES SHARES
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Sales Charge
Imposed on Purchases
(as a percentage of
offering price) NONE NONE NONE
Deferred Sales Charge 5.0% in the first
(as a percentage year,
declining
of the lower of to 1.0% in the
original purchase sixth year, and
price or redemption eliminated
proceeds) NONE thereafter* NONE
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Management Fees 0.36% 0.35%
0.36%
12b-1 Fees NONE 0.50%
0.15%
Other Expenses 0.27% 0.27%
0.27%
Total Fund Operating
Expenses 0.63% 1.12%
0.78%
EXAMPLES
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and redemption at the end of each
period:
1 3 5 10
year years years years
CLASS A $6 $20 $35 $79
CLASS B $61 $66 $82 $123**
CLASS M $8 $25 $43 $97
<PAGE>
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return but no redemption:
1 3 5 10
year years years years
CLASS A $6 $20 $32 $79
CLASS B $11 $36 $62 $123***
CLASS M $8 $25 $43 $97
PUTNAM TAX EXEMPT MONEY MARKET FUND
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) NONE
Deferred Sales Charge
(as a percentage of the lower of original
purchase price or redemption proceeds) NONE
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.45%
12b-1 Fees NONE
Other Expenses 0.24%
Total Fund Operating Expenses 0.69%
EXAMPLE
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and redemption at the
end of each period:
1 3 5 10
year years years years
$7 $22 $38
$86
The tables are provided to help you understand the expenses of
investing in each Fund and your share of the operating expenses
which that Fund incurs. Management fees and "Other
expenses" shown in the table for Class A and B shares
of the Money Market Fund have been annualized based on expense
information for the Fund's most recent fiscal period. The 12b-1
fees for Class B and Class M shares of the Money Market Fund
shown in the table reflect the amount to which the Trustees
currently limit payments under the Class B and Class M
Distribution Plans. Actual management fees, "Other expenses" and
total Fund operating expenses for Class A shares were 0.33%,
0.25% and 0.58%, respectively, and actual management fees, 12b-1
fees, "Other expenses" and total Fund operating expenses for
Class B shares were 0.28%, 0.46%, 0.25% and 1.03%, respectively.
For Class M shares, management fees and "Other expenses" are
based on the operating expenses for the Money Market Fund's Class
A shares. The absence of 12b-1 fees shown in the table for
the Tax Exempt Money Market Fund reflects the termination of
payments under the Fund's Distribution Plan effective January 1,
1994. See "Distribution Plans." Actual 12b-1 fees and total
Fund operating expenses for the Tax Exempt Money Market
Fund's last fiscal year were 0.02% and 0.71% ,
respectively. The Examples do not represent past or future
expense levels. Actual expenses may be greater or less than
those shown. Federal regulations require the Examples to assume
a 5% annual return, but actual annual return has varied.
* Class B shares of the Money Market Fund are available only
by exchange of Class B shares of other Putnam funds. The
applicable contingent deferred sales charge for Class B shares
will depend upon the fund or funds from which you exchanged. See
"How to buy shares."
** Reflects conversion of the Money Market Fund's Class B
shares to Class A shares (which pay lower ongoing expenses)
approximately eight years after purchase. See "How to buy shares
- - Class B shares - Conversion of Class B shares."
FINANCIAL HIGHLIGHTS
The tables on the following pages present per share financial
information for the Money Market Fund's ten most recent
fiscal years and for the life of the Tax Exempt Money Market
Fund. No Class M shares of the Money Market Fund were
outstanding during these periods. This information has been
audited and reported on by the Funds' independent accountants.
The Report of Independent Accountants and financial statements
included in each Fund's Annual Report to shareholders for its
1994 fiscal year are incorporated by reference into
this Prospectus. The Funds' Annual Reports, which contain
additional unaudited performance information, are
available without charge upon request.
FINANCIAL HIGHLIGHTS*
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
PUTNAM MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
FOR THE APRIL 27, 1992
ELEVEN MONTHS YEAR (COMMENCEMENT OF
ENDED ENDED OPERATIONS) TO
SEPTEMBER 30 OCTOBER 31 OCTOBER 31
1994* 1993 1992
Class B
<S> <C> <C> <C>
Investment Operations
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>
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
(For a share outstanding throughout the period)
For the Ten
eleven 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> <C>
Investment Operations
Net Investment Income $.0299 $.0246 $.0353 $.0598 $.0764 $.0853 $.0655 $.0568 $.0642 $.0633
Net Realized Gain on
Investments -- -- -- .0001 -- -- -- -- -- .0001
Total from investment
operations .0299 .0246 .0353 .0599 .0764 .0853 .0655 .0568 .0642 .0634
Total Distributions: $(.0299) $(.0246)$(.0353) $(.0599)$(.0764) $(.0853) $(.0655) $(.0568) $(.0642) $(.0634)
Total Investment Return
at Net Asset
Value (%) (a) 3.03(b) 2.49 3.58 6.16 7.92 8.87 6.75 5.83 6.61 6.52(b)
Net Assets, End of Period
(in thousands) $1,101,171 $586,920$839,185 $684,987$904,186 $797,395 $659,590 $775,954 $320,874 $275,901
Ratio of Expenses to
Average Net Assets (%) .58(b) 0.70 .86 .77 .74 .85 .91 1.01 .89 .71(b)
Ratio of Net Investment
Income to Average Net
Assets (%) 3.03(b) 2.48 3.56 6.04 7.63 8.51 6.67 5.65 6.32 6.30(b)
* The fiscal year end has changed 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.
</TABLE>
<TABLE>
<CAPTION>
PUTNAM TAX EXEMPT MONEY MARKET FUND
1994 1993 1992
<S> <C> <C> <C>
INVESTMENT OPERATIONS
Net Investment Income $.0191 $ .0184 $ .0297(a)
Net Realized Gain (Loss) on Investments -- -- --
TOTAL FROM INVESTMENT OPERATIONS .0191 .0184 .0297
TOTAL DISTRIBUTIONS (.0191) (.0184) (.0297)
TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%) (b) 1.93 1.85 3.02
NET ASSETS, END OF PERIOD (in thousands) $98,397 $81,076 $81,820
Ratio of Expenses to Average Net Assets (%) .71(d) .99 .87(a)
Ratio of Net Investment Income to Average Net Assets (%) 1.97(d) 1.85 2.99(a)
For the period
October 26, 1987
(commencement of
operations) to
September 30
FINANCIAL HIGHLIGHTS (CONTINUED)
1991 1990 1989 1988
INVESTMENT OPERATIONS
Net Investment Income $ .0462(a) $ .0548(a) $ .0578(a) $ .0424(a)
Net Realized Gain (Loss) on Investments (.0001) -- -- .0002
TOTAL FROM INVESTMENT OPERATIONS .0461 .0548 .0578 .0426
TOTAL DISTRIBUTIONS (.0461) (.0548) (.0578) (.0426)
TOTAL INVESTMENT RETURN AT NET ASSET VALUE (%) (b) 4.74 5.61 5.92 4.35(c)
NET ASSETS, END OF PERIOD (in thousands) $100,077 $111,705 $98,867 $83,336
Ratio of Expenses to Average Net Assets (%) .79(a) .68(a) .69(a) .58(a)(c)
Ratio of Net Investment Income to Average Net Assets (%) 4.62(a) 5.45(a) 5.79(a) 4.29(a)(c)
* Financial highlights for periods ended through September 30, 1992 have been
restated to conform with requirements issued by the SEC in April 1993.
(a) Reflects a voluntary expense limitation, and, during the period ended
September 30, 1988, a waiver of a portion of distribution fees in effect
during the period. As a result of such limitation and waiver, expenses of the
fund for the years ended September 30, 1992, 1991, 1990, 1989 and the period
ended September 30, 1988 reflect per share reductions of approximately
$0.0029, $0.0030, $0.0034, $0.0035 and $0.0047, respectively. See Note 2.
(b) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Not Annualized.
(d) Investor servicing and custodian fees reported in the statement of operations for the year ended September 30, 1994
have been reduced by credits allowed by Putnam Fiduciary Trust Company, and such credits amounted to $216,991.
/TABLE
<PAGE>
OBJECTIVES
PUTNAM MONEY MARKET FUND SEEKS AS HIGH A RATE OF CURRENT INCOME
AS PUTNAM MANAGEMENT BELIEVES IS CONSISTENT WITH PRESERVATION OF
CAPITAL AND MAINTENANCE OF LIQUIDITY. It is designed for
investors seeking current income with stability of principal.
The Fund is not intended to be a complete investment program, and
there is no assurance it will achieve its objective.
PUTNAM TAX EXEMPT MONEY MARKET FUND SEEKS AS HIGH A LEVEL OF
CURRENT INCOME EXEMPT FROM FEDERAL INCOME TAX AS PUTNAM
MANAGEMENT BELIEVES IS CONSISTENT WITH PRESERVATION OF CAPITAL,
MAINTENANCE OF LIQUIDITY AND STABILITY OF PRINCIPAL. The Fund is
not intended to be a complete investment program, and there is no
assurance it will achieve its objective.
HOW OBJECTIVES ARE PURSUED
PUTNAM MONEY MARKET FUND
BASIC INVESTMENT STRATEGY
THE MONEY MARKET FUND INVESTS IN A PORTFOLIO OF HIGH-QUALITY
MONEY MARKET INSTRUMENTS. EXAMPLES OF THESE INSTRUMENTS INCLUDE:
o BANK CERTIFICATES OF DEPOSIT (CD'S): negotiable
certificates issued against funds deposited in a
commercial bank for a definite period of time and
earning a specified return.
o BANKERS' ACCEPTANCES: negotiable drafts or bills of
exchange, which have been "accepted" by a bank,
meaning, in effect, that the bank has unconditionally
agreed to pay the face value of the instrument on
maturity.
o PRIME COMMERCIAL PAPER: high-grade, short-term
obligations issued by banks, corporations and other
issuers.
o CORPORATE OBLIGATIONS: high-grade, short-term corporate
obligations other than prime commercial paper.
o MUNICIPAL OBLIGATIONS: high-grade, short-term municipal
obligations.
o U.S. GOVERNMENT SECURITIES: marketable securities
issued or guaranteed as to principal and interest by
the U.S. government or by its agencies or
instrumentalities.
o REPURCHASE AGREEMENTS: with respect to U.S. Treasury or
U.S. Government agency obligations.
The Money Market Fund will invest only in high-quality securities
that Putnam Management believes present minimal credit risk.
High-quality securities are securities rated at the time of
acquisition 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 Money Market Fund will maintain a dollar-
weighted average maturity of 90 days or less and will not invest
in securities with remaining maturities of more than 397 days.
The Money Market Fund may invest in variable or floating rate
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 deeded
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 Money Market Fund follows
investment and valuation policies designed to maintain a stable
net asset value of $1.00 per share. There is no assurance that
the Money Market Fund will be able to maintain a stable net asset
value of $1.00 per share.
SELECTION OF INVESTMENTS
The Money Market Fund may invest in bank certificates of deposit
and bankers' acceptances issued by banks having deposits in
excess of $2 billion (or the foreign currency equivalent) at the
close of the last calendar year. Should the Trustees decide to
reduce this minimum deposit requirement, shareholders would be
notified and this Prospectus supplemented.
Securities issued or guaranteed as to principal and interest by
the U.S. government include a variety of Treasury securities,
which differ in their interest rates, maturities and dates of
issue. Securities issued or guaranteed by agencies or
instrumentalities of the U.S. government may or may
not be supported by the full faith and credit of the United
States or by the right of the issuer to borrow from the Treasury.
Considerations of liquidity and preservation of capital mean that
the Money Market Fund may not necessarily invest in money market
instruments paying the highest available yield at a particular
time. Consistent with its investment objective, the Money Market
Fund will attempt to maximize yields by portfolio trading and by
buying and selling portfolio investments in anticipation of or in
response to changing economic and money market conditions and
trends. The Money Market Fund will also invest to take advantage
of what Putnam Management believes to be temporary disparities in
yields of different segments of the high-grade money market or
among particular instruments within the same segment of the
market. These policies, as well as the relatively short maturity
of obligations purchased by the Money Market Fund, may result in
frequent changes in the Money Market Fund's portfolio. The Money
Market Fund does not usually pay brokerage commissions in
connection with the purchase or sale of portfolio securities.
See "Management of the Fund--Portfolio Transactions--Brokerage
and research services" in the Statement of Additional Information
for a discussion of underwriters' commissions and dealers'
spreads involved in the purchase and sale of portfolio
securities.
FOREIGN INVESTMENTS. The Money Market Fund may invest without
limit in U.S. dollar-denominated commercial paper of
foreign issuers and in bank certificates of deposit and bankers'
acceptances payable in U.S. dollars and issued by foreign banks
(including U.S. branches of foreign banks) or by foreign branches
of U.S. banks. These investments subject the Money Market Fund
to investment risks different from those associated with domestic
investments. Such risks include adverse political and economic
developments in such countries, the imposition of withholding
taxes on interest income, seizure or nationalization of foreign
deposits or the adoption of other governmental restrictions which
might adversely affect the payment of principal and interest on
such obligations. Legal remedies available to investors in
certain foreign countries may be more limited than those
available with respect to investments in the United States or in
other foreign countries. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment
or delivery of securities or in the recovery of the Money Market
Fund's assets held abroad) and expenses not present in the
settlement of domestic investments. In addition, foreign
securities may be less liquid than U.S. securities, and foreign
accounting and disclosure standards may differ from United States
standards. Special tax considerations apply to foreign
securities.
A MORE DETAILED EXPLANATION OF FOREIGN INVESTMENTS, AND THE RISKS
AND SPECIAL TAX CONSIDERATIONS ASSOCIATED WITH THEM, IS INCLUDED
IN THE STATEMENT OF ADDITIONAL INFORMATION.
INTEREST RATES. The portfolio of the Money Market Fund will be
affected by general changes in interest rates resulting in
increases or decreases in the value of the obligations held by
the Money Market Fund. The value of the securities in the Money
Market Fund's portfolio can be expected to vary inversely with
changes in prevailing interest rates. Withdrawals by
shareholders could require the sale of portfolio investments at a
time when such a sale might not otherwise be desirable.
CONCENTRATION. The Money Market Fund may invest without limit 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 when, in
the opinion of Putnam Management, the yield, marketability and
availability of investments meeting the Money Market Fund's
quality standards in those industries justify any additional
risks associated with the concentration of the Money Market
Fund's assets in those industries. The Money Market Fund,
however, will invest more than 25% of its assets in the personal
credit institution or business credit institution industries only
when, to Putnam Management's knowledge, the yields then available
on securities issued by companies in such industries and
otherwise suitable for investment by the Money Market Fund exceed
the yields then available on securities issued by companies in
the banking industry and otherwise suitable for investment by the
Money Market Fund.
SECURITIES LENDING. The Money Market Fund may lend portfolio
securities amounting to not more than 25% of its assets to
broker-dealers. These transactions must be fully collateralized
at all times with cash and short-term debt obligations. These
transactions involve some risk to the Money Market Fund if the
other party should default on its obligation and the Money Market
Fund is delayed or prevented from recovering the collateral.
PUTNAM TAX EXEMPT MONEY MARKET FUND
THE TAX EXEMPT MONEY MARKET FUND FOLLOWS THE FUNDAMENTAL POLICY
THAT AT LEAST 80% OF ITS NET ASSETS NORMALLY WILL BE INVESTED IN
SHORT-TERM TAX EXEMPT SECURITIES (AS DEFINED BELOW). Subject to
this limitation, the Fund may also invest in high quality taxable
money market instruments of the type described under "Alternative
investment strategies" below.
The Tax Exempt Money Market Fund will invest in only 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 quality standards discussed below. In
connection with the purchase of Tax Exempt Securities, the Tax
Exempt Money Market Fund may acquire stand-by commitments, which
give the Tax Exempt Money Market Fund the right to resell the
security to the dealer at a specified price. Stand-by
commitments may provide additional liquidity for the Tax Exempt
Money Market Fund but are subject to the risk that the dealer may
fail to meet its obligations. The Tax Exempt Money Market Fund
does not generally expect to pay additional consideration for
stand-by commitments nor to assign any value to them.
The Tax Exempt Money Market Fund will 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 Tax Exempt Money
Market Fund will maintain a dollar-weighted average maturity of
90 days or less and will not invest in securities with remaining
maturities of more than 397 days. The Tax Exempt Money Market
Fund 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 Tax Exempt Money Market Fund
follows investment and valuation policies designed to maintain a
stable net asset value of $1.00 per share, although there is no
assurance that these policies will be successful.
Considerations of liquidity and preservation of capital mean that
the Tax Exempt Money Market Fund may not necessarily invest in
Tax Exempt Securities paying the highest available yield at a
particular time. Consistent with its investment objective, the
Tax Exempt Money Market Fund will attempt to maximize yields by
portfolio trading and by buying and selling portfolio investments
in anticipation of or in response to changing economic and money
market conditions and trends. The Tax Exempt Money Market Fund
will also invest to take advantage of what Putnam Management
believes to be temporary disparities in yields of different
segments of the market for Tax Exempt Securities or among
particular instruments within the same segment of the market.
These policies, as well as the relatively short maturity of
obligations purchased by the Tax Exempt Money Market Fund, may
result in frequent changes in the Tax Exempt Money Market Fund's
portfolio. Portfolio turnover may give rise to taxable gains.
The Tax Exempt Money Market Fund does not usually pay brokerage
commissions in connection with the purchase of portfolio
securities. See "Management of the Fund - Portfolio transactions
- - Brokerage and research services" in the Statement of Additional
Information for a discussion of underwriters' commissions and
dealers' spreads involved in the purchase and sale of portfolio
securities.
ALTERNATIVE INVESTMENT STRATEGIES. At times Putnam Management
may judge that conditions in the markets for Tax Exempt
Securities make pursuing the Tax Exempt Money Market Fund's basic
investment strategy inconsistent with the best interests of
shareholders. At such times Putnam Management may temporarily
use alternative strategies. In implementing these "defensive"
strategies, the Tax Exempt Money Market Fund may invest in high
quality money market instruments, including bank certificates of
deposit, bankers' acceptances, prime commercial paper, high-
grade, short-term corporate obligations, short-term U.S.
government securities or repurchase agreements, or other
securities Putnam Management considers consistent with such
defensive strategies. The interest income from these instruments
would be subject to federal income tax. It is impossible to
predict when, or for how long, the Tax Exempt Money Market Fund
may use these alternative strategies.
DIVERSIFICATION. Although the Tax Exempt Money Market Fund is a
"diversified" investment company under the Investment Company Act
of 1940, which means that with respect to 75% of its total assets
the Fund may not invest more than 5% of its total assets in the
securities of any one issuer (except U.S. government
obligations), up to 25% of the Fund's total assets may be
invested in the securities of any one issuer of Tax Exempt
Securities. Because of the relatively small number of issuers of
Tax Exempt Securities in which the Fund may invest , the
Fund is more likely to invest a higher percentage of its assets
in the securities of a single issuer than an investment company
which invests in a broad range of Tax Exempt Securities. This
practice involves an increased risk of loss to the Fund if the
issuer is unable to make interest or principal payments or if the
market value of such securities declines. For diversification
purposes, Tax Exempt Securities backed only by the assets and
revenues of nongovernmental users may be deemed to be issued by
the nongovernmental users.
TAX EXEMPT SECURITIES
TAX EXEMPT SECURITIES INCLUDE OBLIGATIONS ISSUED BY A
STATE , ITS POLITICAL SUBDIVISIONS, AND THEIR
AGENCIES, INSTRUMENTALITIES OR OTHER GOVERNMENTAL UNITS, THE
INTEREST FROM WHICH , IN THE OPINION OF BOND COUNSEL,
IS EXEMPT FROM FEDERAL INCOME TAX. These securities are
issued to obtain funds for various public purposes, such as the
construction of public facilities, the payment of general
operating expenses or the refunding of outstanding debts. They
may also be issued to finance various private activities,
including the lending of funds to public or private institutions
for the construction of housing, educational or medical
facilities , and may also include certain types of
industrial development bonds , private activity bonds or
notes issued by public authorities to finance privately owned
or operated facilities , or to fund short-term cash
requirements. Short-term Tax Exempt Securities may be
issued as interim financing in anticipation of tax collections,
revenue receipts or bond sales to finance various public
purposes. Tax Exempt Securities may also include obligations
issued by certain other governmental entities, such as U.S.
territories, if such debt obligations generate interest income
which is exempt from federal income tax.
THE TWO PRINCIPAL CLASSIFICATIONS OF TAX EXEMPT SECURITIES ARE
GENERAL OBLIGATION AND SPECIAL OBLIGATION (OR SPECIAL REVENUE
OBLIGATION) SECURITIES. GENERAL OBLIGATION securities involve a
pledge of the credit of an issuer possessing taxing power and are
payable from the issuer's general unrestricted revenues. Their
payment may depend on an appropriation by the issuer's
legislative body. The characteristics and methods of enforcement
of general obligation securities vary according to the law
applicable to the particular issuer. SPECIAL OBLIGATION (or
SPECIAL REVENUE OBLIGATION) securities are payable only from the
revenues derived from a particular facility or class of
facilities, or a specific revenue source, and generally are not
payable from the unrestricted revenues of the issuer. Industrial
development bonds and private activity bonds are in most
cases special obligation securities, the credit quality of which
is directly related to the private user of the facilities.
INTEREST RATES. The portfolio of the Tax Exempt Money Market
Fund will be affected by general changes in interest rates
resulting in increases or decreases in the value of the
obligations held by the Fund. Although the Tax Exempt Money
Market Fund's investment policies are designed to minimize these
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.
CONCENTRATION. The Tax Exempt Money Market Fund will not invest
more than 25% of its total assets in any one industry.
Governmental issuers of Tax Exempt Securities are not considered
part of any "industry." However, Tax Exempt Securities backed
only by the assets and revenues of nongovernmental users may for
this purpose (and for diversification purposes discussed
above) be deemed to be issued by such nongovernmental
users . Thus, the 25% limitation would apply to such
obligations.
It is nonetheless possible that the Tax Exempt Money Market Fund
may invest more than 25% of its assets in a broader segment of
the market for Tax Exempt Securities , such as
revenue obligations of hospitals and other health care
facilities, housing revenue obligations, or airport
revenue obligations. This would be the case only if Putnam
Management determined that the yields available from obligations
in a particular segment of the market justified the additional
risks associated with such concentration. Although such
obligations could be supported by the credit of governmental
users or by the credit of nongovernmental users engaged in a
number of industries, economic, business, political and other
developments generally affecting the revenues of such
issuers (for example, proposed legislation or pending
court decisions affecting the financing of such projects and
market factors affecting the demand for their services or
products) may have a general adverse effect on all Tax Exempt
Securities in such a market segment.
The Tax Exempt Money Market Fund reserves the right to invest
more than 25% of its assets in industrial development
bonds and private activity securities . The Tax
Exempt Money Market Fund also reserves the right to invest more
than 25% of its assets in securities relating to one or more
states (including the District of Columbia), territories, or
United States possessions, or any of their political
subdivisions. As a result of such an investment, the performance
of the Tax Exempt Money Market Fund may be especially affected by
factors pertaining to the economy of the relevant state and other
factors specifically affecting the ability of issuers of such
securities to meet their obligations. The ability of
governmental issuers to meet their obligations will depend
primarily on the availability of tax and other revenues to those
governments and on their fiscal conditions generally. The
amounts of tax and other revenues available to governmental
issuers may be affected from time to time by economic, political,
and demographic conditions within the particular state. In
addition, constitutional or statutory restrictions may limit a
government's power to raise revenues or increase taxes. The
availability of federal, state, and local aid to issuers of such
securities may also affect their ability to meet their
obligations. Payments of principal and interest on special
obligation securities will depend on the economic condition of
the facility or specific revenue source from whose revenues the
payments will be made, which in turn could be affected by
economic, political, and demographic conditions in the particular
state. Any reduction in the actual or perceived ability of an
issuer of Tax Exempt Securities in a particular state to meet its
obligations (including a reduction in the rating of its
outstanding securities) would likely affect adversely the market
value and marketability of its obligations and could affect
adversely the values of Tax Exempt Securities issued by others in
that state as well.
ALTERNATIVE MINIMUM TAX. As part of the Tax Exempt Money Market
Fund's fundamental 80% tax-exempt policy described above, the
Fund will not treat obligations as "Tax Exempt Securities" for
purposes of measuring compliance with such policy if they
could give rise to interest income subject to federal
alternative minimum tax for individuals. To the extent that the
Fund invests in these securities, individual as well as corporate
shareholders of the Fund, depending on their own tax status, may
be subject to federal alternative minimum tax on the part of the
Tax Exempt Money Market Fund's distributions derived from these
securities. More generally, an investment in the Fund may cause
corporate shareholders to be subject to (or result in an
increased liability under) the alternative minimum tax because a
portion of tax-exempt income is generally included in alternative
minimum taxable income of corporations.
THE FUNDS' OTHER INVESTMENT PRACTICES
TO THE EXTENT DESCRIBED BELOW, THE FUNDS MAY ALSO ENGAGE IN THE
FOLLOWING INVESTMENT PRACTICES, EACH OF WHICH MAY RESULT IN
TAXABLE INCOME OR CAPITAL GAINS AND INVOLVES CERTAIN SPECIAL
RISKS. THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS
MORE DETAILED INFORMATION ABOUT THESE PRACTICES, INCLUDING
LIMITATIONS DESIGNED TO REDUCE THESE RISKS.
REPURCHASE AGREEMENTS. Each Fund may enter into
repurchase agreements, although the Tax Exempt Money Market Fund
may only enter into repurchase agreements on up to 25% of its
assets. Under a repurchase agreement, a Fund purchases a debt
instrument for a relatively short period (usually not more than
one week), which the seller agrees to repurchase at a fixed time
and price, representing the Fund's cost plus interest. The
Money Market Fund will enter into repurchase agreements only with
commercial banks and with registered broker-dealers who are
members of a national securities exchange or market makers in
government securities, and only if the debt instrument subject to
the repurchase agreement is a U.S. Treasury or agency
obligation. Although Putnam Management will monitor
repurchase agreement transactions to ensure that they will be
fully collateralized at all times, a Fund bears a risk of loss if
the other party defaults on its obligation and the Fund is
delayed or prevented from exercising its rights to dispose of the
collateral. If the other party should become involved in
bankruptcy or insolvency proceedings, it is possible that a Fund
may be treated as an unsecured creditor and required to return
the underlying collateral to the other party's estate.
FORWARD COMMITMENTS. The Tax Exempt Money Market Fund may
purchase securities for future delivery, which may increase its
overall investment exposure and involves a risk of loss if the
value of the securities declines prior to the settlement date.
LIMITING INVESTMENT RISK
SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUNDS LIMIT INVESTMENT
RISKS FOR THEIR SHAREHOLDERS. THESE RESTRICTIONS PROHIBIT EACH
FUND FROM INVESTING MORE THAN: (a)(for both Funds) 5% of its
total assets in the securities of any one issuer (other than
obligations issued or guaranteed by the U.S. government or its
agencies or instrumentalities, and, for the Tax Exempt Money
Market Fund only, Tax Exempt Securities);* (b) (for the Money
Market Fund only) 5% of its total assets in companies that,
together with any predecessors, have been in operation less than
three years;* (c) (for the Tax Exempt Money Market Fund only) 5%
of its net assets in securities of any issuer if the party
responsible for payment, together with any predecessor, has been
in operation for less than three years (except U.S. government
and agency obligations and obligations backed by the faith,
credit and taxing power of any person authorized to issue Tax
Exempt Securities); (d) (for the Money Market Fund only) 5% of
its net assets in securities restricted as to resale;* (e) (for
the Tax Exempt Money Market Fund only) 15% of its net assets in
securities restricted as to resale, excluding restricted
securities that have been determined by the Fund's Trustees (or
the person designated by them to make such determinations) to be
readily marketable;* or (f)(for both Funds) 15% of its net assets
in any combination of securities that are not readily marketable,
in securities restricted as to resale (excluding securities
determined by the Fund's Trustees (or the person designated by
the Fund's Trustees to make such determinations) to be readily
marketable), and in repurchase agreements maturing in more than
seven days. The Funds have not invested more than 10% of their
net assets in the types of securities listed in item (f) and have
no current intention of doing so.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. See the Funds'
Statement of Additional Information for the full text of each
Fund's policies and each Fund's other fundamental
investment policies. Except for investment policies
designated as fundamental in this Prospectus or the
Statement , the investment policies described in this
Prospectus and in the Statement are not fundamental
policies. The Trustees may change any non-fundamental investment
policies without shareholder approval. As a matter of policy,
the Trustees would not materially change a Fund's investment
objective without shareholder approval.
HOW PERFORMANCE IS SHOWN
EACH FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO TIME
BE INCLUDED IN ADVERTISEMENTS ABOUT THAT FUND . "Yield"
represents an annualization of the change in value of a
shareholder account (excluding any capital changes) for a
specific seven-day period. "Effective yield" compounds each
Fund's yield for a year and is, for that reason, greater than the
Fund's yield. Yield and effective yield are computed separately
for each class of shares of the Money Market Fund. The yield and
effective yield calculations for the Money Market Fund's Class B
shares do not reflect deduction of any contingent deferred sales
charge. "Tax-equivalent" yield for the Tax Exempt Money Market
Fund shows the effect on performance of the tax-exempt status of
distributions received from the Tax Exempt Money Market Fund. It
reflects the approximate yield that a taxable investment must
earn for shareholders at stated income levels to produce an
after-tax yield equivalent to the Tax Exempt Money Market Fund's
yield or effective yield.
ALL DATA IS BASED ON EACH FUND'S PAST INVESTMENT RESULTS AND DOES
NOT PREDICT FUTURE PERFORMANCE. Investment performance, which
will vary, is based on many factors, including market conditions,
the composition of each Fund's portfolio, each Fund's operating
expenses and which class of shares you purchase , in the
case of the Money Market Fund . Investment performance also
often reflects the risks associated with each Fund's investment
objective and policies. These factors should be considered when
comparing each Fund's investment results to those of other mutual
funds and other investment vehicles. Quotations of investment
performance for any period when an expense limitation was in
effect will be greater than if the limitation had not been in
effect. The Funds' performance may be compared to various
indices. See the Statement of Additional Information.
HOW THE FUNDS ARE MANAGED
THE TRUSTEES OF EACH FUND ARE RESPONSIBLE FOR GENERALLY
OVERSEEING THE CONDUCT OF THAT FUND'S BUSINESS. Subject to such
policies as the Trustees may determine, Putnam Management
furnishes a continuing investment program for each Fund and makes
investment decisions on each Fund's behalf. Subject to the
control of the Trustees, Putnam Management also manages the
Funds' other affairs and business. Lindsey M. Callen, Vice
President of Putnam Management and Vice President of the Funds,
has had primary responsibility for the day-to-day management of
each Fund's portfolio since 1992. Ms. Callen has
been employed by Putnam Management since 1984 .
The Funds pay all expenses not assumed by Putnam Management,
including Trustees' fees, auditing, legal, custodial, investor
servicing and shareholder reporting expenses and , in the case
of the Money Market Fund, payments under its
Distribution Plans (which are in turn allocated to the
relevant class of shares ) . Each Fund also reimburses
Putnam Management for the compensation and related expenses of
certain officers of the Fund and their staff who provide
administrative services to the Funds. The total reimbursement is
determined annually by the Trustees of each Fund.
Putnam Management places all orders for purchases and sales of
the Funds' securities. In selecting broker-dealers, Putnam
Management may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider
sales of shares of a Fund (and, if permitted by law, of the other
Putnam funds) as a factor in the selection of broker-dealers.
ORGANIZATION AND HISTORY
Putnam Money Market Fund and Putnam Tax Exempt Money Market Fund
are organized as Massachusetts business trusts by Agreements and
Declarations of Trust dated November 25, 1975 and December 3,
1986, respectively. A copy of each Agreement and Declaration of
Trust, which is governed by Massachusetts law, is on file with
the Secretary of State of The Commonwealth of Massachusetts.
Prior to September 1, 1994, Putnam Money Market Fund was known as
Putnam Daily Dividend Trust.
Each Fund is an open-end, diversified management investment
company with an unlimited number of authorized shares of
beneficial interest. Although shares of the Tax Exempt Money
Market Fund may, without shareholder approval, be divided into
two or more series of such shares (each of which would constitute
a separate fund), the Tax Exempt Money Market Fund's shares are
not presently divided into series. Shares of the Funds may be
divided, without shareholder approval, into two or more classes
of shares having such preferences and special or relative rights
and privileges as the Trustees determine. The Money
Market Fund's shares are currently divided into four classes--
only three of which are currently being offered . The
Tax Exempt Money Market Fund's shares are not currently divided
into classes.
Each share has one vote, with fractional shares voting
proportionally. Shares of each class of the Money Market
Fund will vote together as a single class except when required by
law or as determined by the Trustees. Shares are freely
transferable, are entitled to dividends as declared by the
Trustees, and, if a Fund were liquidated, would receive the net
assets of that Fund. Either Fund may suspend the sale of shares
at any time and may refuse any order to purchase shares.
Although neither Fund is required to hold annual meetings of its
shareholders, shareholders of a Fund holding at least 10% of the
outstanding shares of such Fund entitled to vote have the right
to call a meeting to elect or remove Trustees, or to take other
actions as provided in its Agreement and Declaration of
Trust.
Although each Fund is offering only its own shares in this
Prospectus, it is possible that a Fund might become liable for
any misstatement in the Prospectus about the other Fund. The
Trustees of each Fund have considered this factor in approving
the use of a single prospectus.
If you own fewer shares than a minimum amount set by the Trustees
(presently 500), a Fund may choose to redeem your shares and pay
you for them. You will receive at least 30 days' written notice
before a Fund redeems your shares, and you may purchase
additional shares at any time to avoid a redemption. A Fund may
also redeem shares if you own shares above a maximum amount set
by the Trustees. There is presently no maximum for either Fund,
but a Fund's Trustees may establish one at any time, which could
apply to both present and future shareholders.
THE FUNDS' TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE
CHAIRMAN. Professor of Management, Alfred P. Sloan School of
Management, M.I.T.; JAMESON ADKINS BAXTER, President, Baxter
Associates, Inc.; HANS H. ESTIN, Vice Chairman, North American
Management Corp. ; JOHN A. HILL, Principal and Managing
Director, First Reserve Corporation; ELIZABETH T. KENNAN,
President, Mount Holyoke College; LAWRENCE J. LASSER,* Vice
President of the Putnam funds. President, Chief Executive
Officer and Director of Putnam Investments, Inc. and Putnam
Management. Director, Marsh & McLennan Companies, Inc.; ROBERT
E. PATTERSON, Executive Vice President, Cabot Partners Limited
Partnership; DONALD S. PERKINS, Director of various corporations,
including AT&T, K mart Corporation and Time Warner Inc.; GEORGE
PUTNAM, III,* President, New Generation Research, Inc.; A.J.C.
SMITH,* Chairman, Chief Executive Officer and Director, Marsh &
McLennan Companies, Inc.; and W. NICHOLAS THORNDIKE, Director of
various corporations and charitable organizations, including
Providence Journal Co. Also, Trustee of Massachusetts
General Hospital and Trustee of Eastern Utilities Associates.
The Funds' Trustees are also Trustees of other Putnam funds.
Those marked with an asterisk (*) are "interested persons" of a
Fund, Putnam Management or Putnam Mutual Funds.
ABOUT YOUR INVESTMENT
HOW TO BUY SHARES
SHARES OF THE TAX EXEMPT MONEY MARKET FUND AND CLASS A
AND M SHARES OF THE MONEY MARKET FUND. The Tax Exempt Money
Market Fund continuously offers its shares, and the Money
Market Fund continuously offers its Class A and Class M
shares, at a price of $1.00 per share, without a sales charge.
You can open an account for $1,000 or more and make additional
investments at any time for as little as $100. You can buy the
Tax Exempt Money Market Fund's shares and the Money Market Fund's
Class A and Class M shares three ways - by mail, by wire, or
through most investment dealers.
Unlike Class A shares of the Money Market Fund, Class M shares of
the Money Market Fund are subject to an ongoing distribution fee
which will cause such shares to have a higher expense ratio and
to pay lower dividends than Class A shares. See "Expenses
summary." Not all investment dealers sell both Class A and Class
M shares. Investment dealers may receive different compensation
depending upon which class of shares they sell. See "Distribution
Plans". For more information, consult your investment dealer or
Putnam Investor Services.
Because the Funds seek to be fully invested at all times,
investments must be in Same Day Funds to be accepted. Same Day
Funds are funds credited to the account of the relevant Fund's
designated bank by the Federal Reserve Bank of Boston. When
payment in Same Day Funds is available to a Fund prior to the
close of regular trading on the New York Stock Exchange, that
Fund will accept the order to purchase shares that day.
If you are considering redeeming shares, exchanging shares or
transferring shares to another person shortly after purchase, you
should pay for those shares with wired Same Day Funds or a
certified check to avoid any delay in redemption, exchange or
transfer. Otherwise, a Fund may delay the payment or the
transaction until the purchase price of those shares has been
collected or, if you exchange your shares or redeem them by
check, telephone or Telex, until 15 calendar days after the
purchase date.
After you make your initial investment in a Fund, Putnam Investor
Services will establish an Investing Account for you on that
Fund's records. This account is a complete record of all
transactions between you and the Fund, which at all times shows
the balance of shares you own. The Funds will not issue share
certificates.
BUYING SHARES BY MAIL. Complete the order form and send it to
Putnam Investor Services with your check, Federal Reserve Draft
or other negotiable bank draft drawn on a U.S. bank and payable
in U.S. dollars to the order of the Fund in which you are
investing. If you pay by check or draft, the Fund's designated
bank will make Same Day Funds available to the Fund, and the Fund
will accept the order, on the first business day after receipt of
your check or draft. If you pay by Federal Reserve Draft, the
Funds will accept the order the day it is received provided it is
received before the close of regular trading on the New York
Stock Exchange.
BUYING SHARES BY WIRE. You may invest in a Fund by bank wire
transfer of Same Day Funds to that Fund's designated bank. For
wiring instructions, see the order form. Investments in Tax
Qualified Retirement Plans cannot be made by wire.
Any commercial bank can transfer Same Day Funds by wire. Wired
funds received by a Fund's designated bank by 3:00 p.m. Boston
time are normally accepted for investment on the day received.
To be sure that a bank wire order is accepted on the same day it
is sent, your bank should wire funds as early in the day as
possible. Your bank may charge for sending Same Day Funds on
your behalf. The Funds' designated bank presently does not
charge you for receipt of wired Same Day Funds, but reserves the
right to charge for this service.
BUYING SHARES THROUGH INVESTMENT DEALERS. You may, if you wish,
purchase shares through investment dealers, which may charge a
fee for their services. Most investment dealers have a sales
agreement with Putnam Mutual Funds and will be glad to accept
your order. If you do not have a dealer, Putnam Mutual Funds can
refer you to one. Investment dealers must follow the
instructions in the order form.
CLASS B SHARES (THE MONEY MARKET FUND)
Class B shares of the Money Market Fund may only be purchased by
exchange of Class B shares of another Putnam fund. Unlike Class
A shares of the Money Market Fund, Class B shares are subject to
an ongoing distribution fee and may be subject to a sales charge
upon redemption as described below.
CONTINGENT DEFERRED SALES CHARGE ON CLASS B SHARES. A contingent
deferred sales charge ("CDSC") may be imposed upon redemption of
Class B shares of the Money Market Fund purchased through an
exchange from another Putnam fund. Upon redemption, the
applicable CDSC will be calculated as if no exchange had taken
place and you were redeeming shares of that fund. The following
types of shares may be redeemed without charge at any time: (i)
shares acquired by reinvestment of distributions, (ii) shares
that were not subject to the CDSC at the time they were
originally purchased, and (iii) shares redeemed because of death
or disability or in connection with certain withdrawals from IRA
or other retirement plans. See the Statement of Additional
Information. For other shares, the amount of the charge is
determined as a percentage of the lesser of the current market
value or the cost of the shares being redeemed. Up to 12% of
the value of Class B shares subject to a Systematic Withdrawal
Plan may also be redeemed each year without a CDSC. The
amount of the CDSC will depend on the number of years since you
invested and the dollar amount being redeemed. When determining
the amount of the CDSC, the Money Market Fund will use the CDSC
schedule of any fund from which you have exchanged your shares
that would result in your paying the highest CDSC.
In determining whether a CDSC is payable on any redemption, the
Money Market Fund will first redeem shares not subject to any
charge, and then shares held longest during the CDSC
period. The charge will not be applied to dollar amounts
representing an increase in the net asset value since the time of
purchase.
CONVERSION OF CLASS B SHARES. Class B shares of the Money Market
Fund will automatically convert into Class A shares of the Fund
at the end of the month eight years after the purchase date,
except as noted below. Because Class B shares of the Fund
are only available upon exchange of Class B shares
of another Putnam fund, Class B shares of the Fund will
convert into Class A shares of the Fund based on the time of the
initial purchase. Class B shares of the Fund acquired through
reinvestment of distributions will convert into Class A shares of
the Fund based on the date of the initial purchase to which such
shares relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures as
the Trustees may determine from time to time. The conversion of
Class B shares of the Fund to Class A shares is subject to the
continuing availability of a ruling from the Internal Revenue
Service or an opinion of counsel that such conversions will not
constitute taxable events for Federal tax purposes. There can be
no assurance that such ruling or opinion will be available, and
the conversion of Class B shares of the Fund to Class A shares
will not occur if such ruling or opinion is not available. In
such event, Class B shares would continue to be subject to higher
expenses than Class A shares for an indefinite period.
DISTRIBUTION PLANS
PUTNAM MONEY MARKET FUND
The Money Market Fund's Class B and Class M Distribution Plans
provide for payments by the Fund to Putnam Mutual Funds at the
annual rate of up to 0.75% and 1.00%, respectively, of the Fund's
average net assets attributable to Class B shares and Class M
shares. The Trustees currently limit payments under the Money
Market Fund's Class B and Class M Distribution Plans to an annual
rate of 0.50% and 0.15%, respectively, of such assets. Should
the Trustees decide in the future to approve payments in excess
of this amount, shareholders will be notified and this Prospectus
will be revised. Putnam Mutual Funds also receives the proceeds
of any contingent deferred sales charge imposed on redemptions of
Class B shares.
In order to compensate investment dealers (including, for this
purpose, certain financial institutions) for services provided in
connection with sales of Class M shares and the maintenance of
shareholder accounts, Putnam Mutual Funds makes quarterly
payments to qualifying dealers based on the average net asset
value of Class M shares of the Fund which are attributable to
shareholders for whom the dealers are designated as the dealer of
record. Putnam Mutual Funds makes such payments at the annual
rate of 0.15% of such average net asset value of Class M
shares.
PUTNAM TAX EXEMPT MONEY MARKET FUND
The Tax Exempt Money Market Fund's Distribution Plan provides for
payments by the Fund to Putnam Mutual Funds at the annual rate of
up to 0.35% of the Fund's average net assets. At present, no
payments are being made under the Plan. Should the Tax Exempt
Money Market Fund's Trustees decide in the future to approve
payments, shareholders will be notified and this Prospectus will
be revised.
GENERAL
The purpose of each Distribution Plan is to permit the
Fund to compensate Putnam Mutual Funds for services provided and
expenses incurred by it in promoting the sale of shares of the
Fund, reducing redemptions, or maintaining or improving services
provided to shareholders by Putnam Mutual Funds or dealers.
Putnam Mutual Funds may suspend or modify the payments made to
dealers described above, and such payments are subject to the
continuation of the Class M Distribution Plan , the
terms of Service Agreements between dealers and Putnam Mutual
Funds, and any applicable limits imposed by the National
Association of Securities Dealers, Inc.
HOW TO SELL SHARES
You can sell your shares to your Fund any day the New York Stock
Exchange is open, by check, by telephone or Telex, by mail or
through your investment dealer. Your Fund must receive your
properly completed application before you may sell shares;
certain methods require additional documentation (see below). To
enable shareholders to earn daily dividends as long as possible,
the Funds have arranged the following methods of selling shares:
SELLING SHARES BY CHECK. If you would like to use a Fund's
check writing service, mark the proper box on the order
form and complete the signature card and, if applicable, the
resolution. Upon receiving the properly completed order
form, signature card and resolution, your Fund will
provide checks drawn on that Fund's designated bank.
These checks may be made payable to the order of any person in
the amount of $500 or more. When a check is presented
for payment, a sufficient number of full and fractional
shares in your account will be redeemed at that day's net
asset value to cover the amount of the check . An
additional amount of shares will be redeemed to cover any
applicable CDSC.
Shareholders utilizing a Fund's checks are subject to that
Fund's designated bank's rules governing checking accounts.
There is currently no charge to the shareholder for the use of
checks. You should make sure that there are sufficient shares in
the account to cover the amount of any check drawn
plus any applicable CDSC. If insufficient shares
are in the account, the check will be returned marked
"insufficient funds" and no shares will be redeemed. Because
dividends declared on shares held in your account, the imposition
of any applicable CDSC, or prior withdrawals may cause the value
of your account to change, it is impossible to determine in
advance your account's total value. Accordingly, you should not
write a check for the entire value of your account or close your
account by writing a check. Redemptions by check will
be confirmed at least monthly.
SELLING SHARES BY TELEPHONE OR TELEX. If you would like to sell
shares by telephone or Telex with proceeds directed to your bank
account, please mark the proper box on the order form. You may
sell shares by calling toll-free 1-800-225-1581 or by Telex 94-
0153. On the following business day, the amounts withdrawn from
your account will either be mailed by check or wired in Same Day
Funds to the bank account designated on your application. (To
wire proceeds, the amount must be $1,000 or more and your
designated bank must be a commercial bank within the United
States.) You may change your designated bank account by sending
a written request to Putnam Investor Services with your signature
guaranteed by a bank, broker-dealer or certain other financial
institutions. See the Statement of Additional Information for
more information about how to obtain a signature guarantee.
If you would like to redeem your shares by telephone and have the
proceeds sent to your address as it appears on the records of
Putnam Investor Services, you may use Putnam's Telephone
Redemption Privilege to redeem shares valued up to $100,000 from
your account unless you have notified Putnam Investor Services of
an address change within the preceding 15 days. Unless an
investor indicates otherwise on the Account Application, Putnam
Investor Services will be authorized to act upon redemption and
transfer instructions received by telephone from a shareholder,
or any person claiming to act as his or her representative, who
can provide Putnam Investor Services with his or her account
registration and address as it appears on Putnam Investor
Services' records. Putnam Investor Services will employ these
and other reasonable procedures to confirm that instructions
communicated by telephone are genuine; if it fails to employ
reasonable procedures, Putnam Investor Services may be liable for
any losses due to unauthorized or fraudulent instructions. For
information, consult Putnam Investor Services. During periods of
unusual market changes and shareholder activity, you may
experience delays in contacting Putnam Investor Services by
telephone, in which case you may wish to submit a written
redemption request, as described below, or contact your
investment dealer. The Telephone Redemption Privilege may be
modified or terminated without notice.
SELLING SHARES BY MAIL. You may also sell shares of a Fund by
sending a written withdrawal request to: Putnam Investor
Services, P.O. Box 41203, Providence, RI 02940-1203. If you sell
shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives
must be guaranteed by a bank, broker-dealer or certain other
financial institutions. See the Statement of Additional
Information for more information about how to obtain a signature
guarantee.
Putnam Investor Services may require additional documentation
from shareholders which are corporations, partnerships, agents,
fiduciaries or surviving joint owners. Corporations,
partnerships, agents, trusts and fiduciary accounts must submit a
completed resolution in proper form before selling shares by
telephone or check. Resolution forms are available from Putnam
Investor Services. If you are currently a shareholder and did
not request the check writing service or telephone/Telex
redemption privilege on your initial order form, you must first
complete and return an authorization form, available from Putnam
Investor Services. A shareholder may revoke authorization for
check writing service or telephone/Telex redemption by
written notice at any time, effective when Putnam Investor
Services receives such notice.
The Funds reserve the right to terminate or modify the terms of
the check writing service or telephone/Telex redemption
privilege, or to charge shareholders for the use of these
services at any time.
THE FUNDS GENERALLY SEND YOU PAYMENT FOR YOUR SHARES THE BUSINESS
DAY AFTER YOUR REQUEST IS RECEIVED. Under unusual circumstances,
a Fund may suspend redemptions, or postpone payment for more than
seven days, as permitted by federal securities law. If, however,
your request is made by telephone or Telex shortly after
purchase and the shares being sold were paid for by an
uncertified check, your Fund will pay for the shares on the 15th
calendar day after the purchase of the shares. Putnam Investor
Services will first redeem shares of your Fund purchased by
direct cash investment.
HOW TO EXCHANGE SHARES
Shareholders of the Funds who received their shares in exchange
for shares of another Putnam fund with a sales charge can
exchange their shares for shares of other Putnam funds at net
asset value beginning 15 days after purchase. Other shareholders
of the Funds may need to pay a sales charge which varies
depending on the fund to which they exchange and the amount
exchanged. Shareholders of the Money Market Fund may exchange
their shares only for shares of the same class of another Fund.
If the other Putnam fund offers only one class of shares, only
Class A shares may be exchanged for such class. Shareholders of
the Tax Exempt Money Market Fund exchanging into funds with more
than one class of shares may exchange their shares only for Class
A shares. If you exchange shares subject to a CDSC, the
transaction will not be subject to the CDSC. However, when you
redeem the shares acquired through the exchange, the redemption
may be subject to the CDSC, depending on when you originally
purchased the shares and using the schedule of any fund into or
from which you have exchanged your shares that would result in
your paying the highest CDSC applicable to your class of shares.
For purposes of computing the CDSC, the length of time you have
owned your shares will be measured from the date of original
purchase and will not be affected by the exchange.
To exchange your shares, simply complete an Exchange
Authorization Form and send it to Putnam Investor Services.
Exchange Authorization Forms are available by calling or writing
Putnam Investor Services. A Telephone Exchange Privilege is
currently available for amounts up to $500,000. Putnam Investor
Services' procedures for telephonic transactions are described
above under "How to sell shares." For federal income tax
purposes, an exchange is treated as a sale of shares. Since the
net income of a Fund is declared as a dividend each time it is
determined, the net asset value per share of a Fund
generally remains at $1.00 immediately after each
determination and dividend declaration ; therefore ,
an exchange generally will not give rise to gain or loss. Ask
your investment dealer or Putnam Investor Services for
prospectuses of other Putnam funds. Shares of certain Putnam
funds are not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity and
in other circumstances where Putnam Management or the
Trustees believe doing so would be in the best interests of a
Fund, each Fund reserves the right to revise or terminate the
exchange privilege, limit the amount or number of exchanges or
reject any exchange. Shareholders would be notified of any such
action to the extent required by law. Consult Putnam Investor
Services before requesting an exchange. See each Fund's
Statement of Additional Information to find out more about the
exchange privilege.
HOW EACH FUND VALUES ITS SHARES
THE TAX EXEMPT MONEY MARKET FUND CALCULATES THE NET ASSET VALUE
OF A SHARE, AND THE MONEY MARKET FUND CALCULATES THE NET ASSET
VALUE OF A SHARE OF EACH CLASS, BY DIVIDING THE TOTAL VALUE OF
ITS ASSETS, LESS LIABILITIES, BY THE NUMBER OF ITS SHARES
OUTSTANDING. SHARES ARE VALUED AS OF THE CLOSE OF REGULAR
TRADING ON THE NEW YORK STOCK EXCHANGE EACH DAY THE EXCHANGE IS
OPEN.
The Funds value their portfolio investments at amortized cost
according to Securities and Exchange Commission Rule 2a-7. 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.
DETERMINATION OF NET INCOME; TAX INFORMATION
THE FUNDS DETERMINE THEIR NET INCOME ONCE EACH DAY THE NEW YORK
STOCK EXCHANGE IS OPEN, AS OF THE CLOSE OF REGULAR TRADING ON THE
EXCHANGE. Each determination of a Fund's net income includes (i)
all accrued investment income on portfolio investments of the
Fund, (ii) plus or minus all realized and unrealized gains and
losses on the Fund's portfolio investments, (iii) less all
accrued expenses of the Fund. (The Funds will not have
unrealized gains or losses so long as they value their
investments by the amortized cost method.)
All of the net income of the Funds is declared each day that the
Funds are open for business as a dividend to shareholders of
record at the time of each declaration. Shareholders begin
earning dividends on the day after a Fund accepts their order.
Each month's dividends will be paid on the last business day of
each month. A shareholder who withdraws the entire balance of an
account at any time during the month will be paid all dividends
declared through the date of the withdrawal.
Distributions paid by the Money Market Fund with respect to Class
A shares will generally be greater than those paid with respect
to Class B and Class M shares because expenses attributable to
Class B and Class M shares will generally be higher.
YOU CAN CHOOSE FROM TWO DISTRIBUTION OPTIONS: (1) automatically
reinvest all distributions in additional Fund shares; or (2)
receive all distributions in cash. You can change your
distribution option by notifying Putnam Investor Services in
writing. If you do not select an option when you open your
account, all distributions will be reinvested. All distributions
reinvested in additional Fund shares will be invested in shares
of the class on which the distribution s are paid.
You will receive a statement confirming reinvestment of
distributions in additional Fund shares (or in shares of other
Putnam funds for Dividends Plus accounts) promptly following the
quarter in which the reinvestment occurs.
If a check representing a Fund distribution is not cashed within
a specified period, Putnam Investor Services will notify you that
you have the option of requesting another check or reinvesting
the distribution in that Fund or in another Putnam fund. If
Putnam Investor Services does not receive your election, the
distribution will be reinvested in your Fund. Similarly, if
correspondence sent by a Fund or Putnam Investor Services is
returned as "undeliverable," Fund distributions will
automatically be reinvested in that Fund or in another Putnam
fund.
With Putnam Dividends PLUS, you can invest distributions from net
investment income in shares of the same class of another Putnam
fund. A sales charge will apply (unless the shares were acquired
by exchange from a Putnam fund that assessed a sales charge or
the dividends are invested in another Putnam money market fund).
Contact Putnam Investor Services for details.
Each Fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal
taxes on income and gains it distributes to shareholders. Each
Fund will distribute substantially all of its ordinary income and
capital gain net income, if any, on a current basis.
Distributions designated by the Tax Exempt Money Market Fund as
"exempt-interest dividends" are not generally subject to federal
income tax. However, if you receive Social Security or railroad
retirement benefits, you should consult your tax adviser to
determine what effect, if any, an investment in the Tax Exempt
Money Market Fund may have on the taxation of your benefits. In
addition, an investment in the Tax Exempt Money Market Fund may
result in liability for federal alternative minimum tax and for
state and local taxes, both for individual and corporate
shareholders.
All Money Market Fund distributions and all Tax Exempt Money
Market Fund distributions other than exempt-interest dividends
will be taxable to you as ordinary income, except that any
distributions of net long-term capital gains will be taxed as
such, regardless of how long you have held the shares.
Distributions will be taxable as described above whether received
in cash or in shares through the reinvestment of distributions.
Early in each year each Fund will notify you of the amount and
tax status of distributions paid to you by that Fund for the
preceding year.
The foregoing is a summary of certain federal income tax
consequences of investing in each Fund. You should consult your
tax adviser to determine the precise effect of an investment in
the Funds on your particular tax situation (including possible
liability for alternative minimum tax and for state and local
taxes).
ABOUT PUTNAM INVESTMENTS, INC.
PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of the Funds and
of other Putnam funds. Putnam Fiduciary Trust Company is the
Funds' custodian. Putnam Investor Services, a division of Putnam
Fiduciary Trust Company, is the Funds' investor servicing and
transfer agent.
Putnam Management, Putnam Mutual Funds and Putnam
Fiduciary Trust Company are subsidiaries of Putnam Investments,
Inc., which is wholly owned by Marsh & McLennan
Companies, Inc., a publicly - owned holding company whose
principal businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment management.
<PAGE>
Make the most of your Putnam privileges
The following services are available to you as a Putnam mutual
fund shareholder.
SYSTEMATIC INVESTMENT PLAN*
Invest as much as you wish ($25 or more) on any day of the month
except for the 29th, 30th, or 31st. The amount will be
automatically transferred from your checking or savings account.
SYSTEMATIC WITHDRAWAL*
Make regular withdrawals of $50 or more monthly, quarterly, or
semiannually from an account valued at $10,000 or more. You may
establish your withdrawal on any day of the month except for the
29th, 30th, or 31st.
REINSTATEMENT PRIVILEGE
Reinvest the proceeds of checks you receive for dividends,
capital gains, or redemptions. You may return any dividend,
capital gain, or redemption to Putnam within 90 days of the
transaction and it will be reinvested in a Putnam fund at net
asset value. You may also reinvest a portion of your redemption
proceeds at net asset value within 90 days of the transaction.
For more information about any of these services and privileges,
call your investment advisor or a Putnam customer service
representative toll free at 1-800-225-1581.
*Investors may not maintain, within the same fund, simultaneous
plans for systematic investment or exchange and systematic
withdrawal or exchange.
<PAGE>
PUTNAM MONEY MARKET FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
One Post Office Square
Boston, MA 02109
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
CUSTODIAN
Putnam Fiduciary Trust Company
One Post Office Square
Boston, MA 02109
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. (Putnam Tax Exempt Money Market Fund)
One Post Office Square
Boston, MA 02109
Price Waterhouse LLP (Putnam Money Market Fund)
160 Federal Street
Boston, MA 02110
PUTNAMINVESTMENTS
One Post Office Square
Boston, Massachusetts 02109
Toll-free 1-800-225-1581
<PAGE>
PUTNAM
MONEY MARKET FUND
ONE POST OFFICE SQUARE , BOSTON, MA 02109
CLASS A SHARES
INVESTMENT STRATEGY: INCOME
PROSPECTUS - DECEMBER 1, 1994
This Prospectus explains concisely what you should know before
investing in Class A shares of Putnam Money Market Fund (the
"Fund") offered without a sales charge through eligible
employer-sponsored defined contribution plans ("defined
contribution plans"). Please read it carefully and keep
it for future reference. You can find more detailed information
about the Fund in the December 1, 1994 Statement of
Additional Information, as amended from time to time. For a free
copy of the Statement, or for other information, call Putnam
Investor Services at 1-800-752-9894. The Statement has been
filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference.
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.
THESE SECURITIES 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 THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PUTNAM INVESTMENTS
PUTNAM DEFINED
CONTRIBUTION PLANS
<PAGE>
ABOUT THE FUND
Expenses
summary. ...................................2
Financial
highlights. ...............................3
Objective. ...........................................5</R
> How objective is
pursued.
..........................5 How
performance is shown. ...........................8
How the Fund is
managed. ............................9
Organization and
history. ...........................9
ABOUT YOUR INVESTMENT
How to buy
shares. .................................11
How to sell
shares. ................................11
How to exchange
shares. ............................12
How the Fund values its shares.....................12
Determination of net income; tax information.......13
ABOUT PUTNAM INVESTMENTS,
INC. ..........................13
ABOUT THE FUND
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing in
the Fund. The following table summarizes expenses
incurred by the Fund based on its most recent fiscal year. The
Example shows the cumulative expenses attributable to a
hypothetical $1,000 investment in Class A shares of the
Fund over specified periods.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.36%
Other Expenses 0.27%
Total Fund Operating Expense 0.63%
The table is provided to help you understand the expenses of
investing in the Fund and your share of the operating expenses
that the Fund incurs.
EXAMPLE
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and redemption at the end of each
period:
1 3 5 10
year years years years
$6 $20 $35 $79
Management fees and "Other expenses" have been annualized
based on information for the Fund's most recent fiscal period.
Actual management fees, "other expenses" and total operating
expenses for the last fiscal period were 0.33%, 0.25% and 0.58%,
respectively .
The Example does not represent past or future expense
levels , and actual expenses may be greater or less than
those shown. Federal regulations require the Example to assume a
5% annual return, but actual annual return has varied.
The Example does not reflect any charges or expenses related to
your employer's plan.
See "Organization and history" for information about any other
class of shares offered by the Fund.
FINANCIAL HIGHLIGHTS
The table on the following page presents per share financial
information for the Fund's Class A shares for the ten most recent
fiscal years. This information has been derived from the Fund's
financial statements, which have been audited and reported on by
the Fund's independent accountants. The Report of Independent
Accountants and financial statements included in the Fund's
Annual Report to shareholders for the 1994 fiscal year are
incorporated by reference into this Prospectus. The Fund's
Annual Report, which contains additional unaudited performance
information, is available without charge upon request.
FINANCIAL HIGHLIGHTS*
(For a share outstanding throughout the period)
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
For the
Ten
eleven 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> <C>
Investment Operations
Net Investment Income $.0299 $.0246 $.0353
$.0598 $.0764 $.0853 $.0655 $.0568
$.0642 $.0633
Net Realized Gain on
Investments -- -- --
.0001 -- -- -- --
-- .0001
Total from investment
operations .0299 .0246 .0353
.0599 .0764 .0853 .0655 .0568
.0642 .0634
Total Distributions: $(.0299) $(.0246)$(.0353)
$(.0599) $(.0764) $(.0853)$(.0655) $(.0568)
$(.0642) $(.0634)
Total Investment Return
at Net Asset
Value (%) (a) 3.03(b) 2.49 3.58
6.16 7.92 8.87 6.75 5.83
6.61 6.52(b)
Net Assets, End of Period
(in thousands) $1,101,171 $586,920$839,185
$684,987 $904,186 $797,395$659,590 $775,954
$320,874 $275,901
Ratio of Expenses to
Average Net Assets (%) .58(b) 0.70 .86
.77 .74 .85 .91
1.01 .89 .71(b)
Ratio of Net Investment
Income to Average Net
Assets (%) 3.03(b) 2.48 3.56
6.04 7.63 8.51 6.67 5.65
6.32 6.30(b)
* The fiscal year end has changed 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.
</TABLE>
OBJECTIVE
PUTNAM MONEY MARKET FUND SEEKS AS HIGH A RATE OF CURRENT
INCOME AS PUTNAM INVESTMENT MANAGEMENT , INC., THE
FUND'S INVESTMENT MANAGER ("PUTNAM MANAGEMENT"), BELIEVES IS
CONSISTENT WITH PRESERVATION OF CAPITAL AND MAINTENANCE OF
LIQUIDITY. It is designed for investors seeking current income
with stability of principal. The Fund is not intended to be a
complete investment program, and there is no assurance it will
achieve its objective.
HOW OBJECTIVE IS PURSUED
BASIC INVESTMENT STRATEGY
THE FUND INVESTS IN A PORTFOLIO OF HIGH-QUALITY MONEY MARKET
INSTRUMENTS. EXAMPLES OF THESE INSTRUMENTS INCLUDE:
o BANK CERTIFICATES OF DEPOSIT (CD'S): negotiable
certificates issued against funds deposited in a
commercial bank for a definite period of time and
earning a specified return.
o BANKERS' ACCEPTANCES: negotiable drafts or bills of
exchange, which have been "accepted" by a bank,
meaning, in effect, that the bank has unconditionally
agreed to pay the face value of the instrument on
maturity.
o PRIME COMMERCIAL PAPER: high-grade, short-term
obligations issued by banks, corporations and other
issuers.
o CORPORATE OBLIGATIONS: high-grade, short-term corporate
obligations other than prime commercial paper.
o MUNICIPAL OBLIGATIONS: high-grade, short-term
municipal obligations.
o U.S. GOVERNMENT SECURITIES: marketable securities
issued or guaranteed as to principal and interest by
the U.S. government or by its agencies or
instrumentalities.
o REPURCHASE AGREEMENTS: with respect to U.S. Treasury or
U.S. Government agency obligations.
The Fund will invest only in high-quality securities that Putnam
Management believes present minimal credit risk. High-quality
securities are securities rated at the time of acquisition 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 Fund will maintain a dollar-weighted average
maturity of 90 days or less and will not invest in securities
with remaining maturities of more than 397 days. The Fund may
invest in variable or floating rate 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 Fund follows investment and valuation
policies designed to maintain a stable net asset value of $1.00
per share. There is no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
<PAGE>
SELECTION OF INVESTMENTS
The Fund may invest in bank certificates of deposit and bankers'
acceptances issued by banks having deposits in excess of $2
billion (or the foreign currency equivalent) at the close of the
last calendar year. Should the Trustees decide to reduce this
minimum deposit requirement, shareholders would be notified and
this Prospectus supplemented.
Securities issued or guaranteed as to principal and interest by
the U.S. government include a variety of Treasury securities,
which differ in their interest rates, maturities and dates of
issue. Securities issued or guaranteed by agencies or
instrumentalities of the U.S. government may or may
not be supported by the full faith and credit of the United
States or by the right of the issuer to borrow from the Treasury.
Considerations of liquidity and preservation of capital mean that
the Fund may not necessarily invest in money market instruments
paying the highest available yield at a particular time.
Consistent with its investment objective, the Fund will attempt
to maximize yields by portfolio trading and by buying and selling
portfolio investments in anticipation of or in response to
changing economic and money market conditions and trends. The
Fund will also invest to take advantage of what Putnam Management
believes to be temporary disparities in yields of different
segments of the high-grade money market or among particular
instruments within the same segment of the market. These
policies, as well as the relatively short maturity of obligations
purchased by the Fund, may result in frequent changes in the
Fund's portfolio. The Fund does not usually pay brokerage
commissions in connection with the purchase or sale of portfolio
securities. See "Management of the Fund--Portfolio
Transactions--Brokerage and research services" in the Statement
of Additional Information for a discussion of underwriters'
commissions and dealers' spreads involved in the purchase and
sale of portfolio securities.
FOREIGN INVESTMENTS. The Fund may invest without limit in
U.S. dollar denominated commercial paper of foreign
issuers and in bank certificates of deposit and bankers'
acceptances payable in U.S. dollars and issued by foreign banks
(including U.S. branches of foreign banks) or by foreign branches
of U.S. banks. These investments subject the Fund to investment
risks different from those associated with domestic investments.
Such risks include adverse political and economic developments in
such countries, the imposition of withholding taxes on interest
income, seizure or nationalization of foreign deposits or the
adoption of other governmental restrictions which might adversely
affect the payment of principal and interest on such obligations.
Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect
to investments in the United States or in other foreign
countries. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery
of securities or in the recovery of the Fund's assets held
abroad) and expenses not present in the settlement of domestic
investments. In addition, foreign securities may be less liquid
than U.S. securities, and foreign accounting and disclosure
standards may differ from United States standards. Special tax
considerations apply to foreign securities.
<PAGE>
A MORE DETAILED EXPLANATION OF FOREIGN INVESTMENTS, AND THE RISKS
AND SPECIAL TAX CONSIDERATIONS ASSOCIATED WITH THEM, IS
INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
INTEREST RATES. The portfolio of the Fund will be
affected by general changes in interest rates resulting in
increases or decreases in the value of the obligations held by
the Fund. The value of the securities in the Fund's portfolio
can be expected to vary inversely with changes in
prevailing interest rates. Withdrawals by shareholders could
require the sale of portfolio investments at a time when such a
sale might not otherwise be desirable.
CONCENTRATION. The Fund may invest without limit 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 when, in the opinion of
Putnam Management, the yield, marketability and availability of
investments meeting the Fund's quality standards in those
industries justify any additional risks associated with
the concentration of the Fund's assets in those industries. The
Fund, however, will invest more than 25% of its assets in the
personal credit institution or business credit institution
industries only when, to Putnam Management's knowledge, the
yields then available on securities issued by companies in such
industries and otherwise suitable for investment by the Fund
exceed the yields then available on securities issued by
companies in the banking industry and otherwise suitable for
investment by the Fund.
OTHER INVESTMENT PRACTICES
THE FUND MAY ALSO ENGAGE TO A LIMITED EXTENT IN THE FOLLOWING
INVESTMENT PRACTICES, EACH OF WHICH INVOLVES CERTAIN SPECIAL
RISKS. THE STATEMENT OF ADDITIONAL INFORMATION CONTAINS MORE
DETAILED INFORMATION ABOUT THESE PRACTICES, INCLUDING LIMITATIONS
DESIGNED TO REDUCE THESE RISKS.
REPURCHASE AGREEMENTS. Under a repurchase agreement, the Fund
purchases a debt instrument for a relatively short period
(usually not more than one week), which the seller agrees to
repurchase at a fixed time and price, representing the Fund's
cost plus interest. The Fund will enter into repurchase
agreements only with commercial banks and with registered broker-
dealers who are members of a national securities exchange or
market makers in government securities, and only if the debt
instrument subject to the repurchase agreement is a U.S. Treasury
or agency obligation. Although Putnam Management will monitor
repurchase agreement transactions to ensure that they will be
fully collateralized at all times, the Fund bears a risk of loss
if the other party defaults on its obligation and the Fund is
delayed or prevented from exercising its rights to dispose of the
collateral. If the other party should become involved in
bankruptcy or insolvency proceedings, it is possible that the
Fund may be treated as an unsecured creditor and required to
return the underlying collateral to the other party's estate.
SECURITIES LENDING. The Fund may lend portfolio securities
amounting to not more than 25% of its assets to broker-dealers.
These transactions must be fully collateralized at all times with
cash and short-term debt obligations. These transactions involve
some risk to the Fund if the other party should default on its
obligation and the Fund is delayed or prevented from recovering
the collateral .
LIMITING INVESTMENT RISK
SPECIFIC INVESTMENT RESTRICTIONS HELP THE FUND LIMIT INVESTMENT
RISKS FOR ITS SHAREHOLDERS. THESE RESTRICTIONS PROHIBIT THE FUND
FROM INVESTING MORE THAN: (a) 5% of its total assets in the
securities of any one issuer (other than obligations issued or
guaranteed by the U.S. government or its agencies or
instrumentalities);* (b) 5% of its total assets in companies
that, together with any predecessors, have been in operation less
than three years;* (c) 5% of its net assets in securities
restricted as to resale;* or (d) 15% of its net assets in any
combination of securities that are not readily marketable, in
securities restricted as to resale (excluding securities
determined by the Fund's Trustees (or the person designated by
the Fund's Trustees to make such determinations) to be readily
marketable), and in repurchase agreements maturing in more than
seven days. The Fund has not invested more than 10% of its net
assets in the types of securities listed in item (d) and has no
current intention of doing so.
Restrictions marked with an asterisk (*) above are summaries of
fundamental investment policies. See the Statement of
Additional Information for the full text of these policies and
the Fund's other fundamental investment policies. Except
for investment policies designated as fundamental in this
Prospectus or the Statement, the investment policies described in
this Prospectus and in the Statement are not fundamental
policies. The Trustees may change any non-fundamental investment
policies without shareholder approval. As a matter of policy,
the Trustees would not materially change the Fund's investment
objective without shareholder approval.
HOW PERFORMANCE IS SHOWN
THE FUND'S INVESTMENT PERFORMANCE MAY FROM TIME TO TIME BE
INCLUDED IN ADVERTISEMENTS ABOUT THE FUND. "Yield" represents an
annualization of the change in value of a shareholder account
(excluding any capital changes) for a specific seven-day period.
"Effective yield" compounds the Fund's yield for a year and is,
for that reason, greater than the Fund's yield.
ALL DATA IS BASED ON THE FUND'S PAST INVESTMENT RESULTS AND DOES
NOT PREDICT FUTURE PERFORMANCE. Investment performance, which
will vary, is based on many factors, including market conditions,
the composition of the Fund's portfolio, the Fund's
operating expenses and which class of shares you purchase .
Investment performance also often reflects the risks associated
with the Fund's investment objective and policies. These factors
should be considered when comparing the Fund's investment results
to those of other mutual funds and other investment vehicles.
Quotations of investment performance for any period when an
expense limitation was in effect will be greater than if the
limitation had not been in effect. The Fund's performance may be
compared to various indices. See the Statement of Additional
Information.
HOW THE FUND IS MANAGED
THE TRUSTEES OF THE FUND ARE RESPONSIBLE FOR GENERALLY OVERSEEING
THE CONDUCT OF THE FUND'S BUSINESS. Subject to such policies as
the Trustees may determine, Putnam Management furnishes a
continuing investment program for the Fund and makes investment
decisions on its behalf. Subject to the control of the Trustees,
Putnam Management also manages the Fund's other affairs and
business. Lindsey M. Callen, Vice President of Putnam Management
and Vice President of the Fund, has had primary responsibility
for the day-to-day management of the Fund's portfolio since
1992. Ms. Callen has been employed by Putnam Management
since 1984 .
The Fund pays all expenses not assumed by Putnam Management,
including Trustees' fees and auditing, legal, custodial, investor
servicing and shareholder reporting expenses and payments under
its Distribution Plans (which are in turn
allocated to the relevant class of shares). The Fund also
reimburses Putnam Management for the compensation and related
expenses of certain officers of the Fund and their staff who
provide administrative services to the Fund. The total
reimbursement is determined annually by the Trustees.
Putnam Management places all orders for purchases and sales of
the Fund's securities. In selecting broker-dealers, Putnam
Management may consider research and brokerage services furnished
to it and its affiliates. Subject to seeking the most favorable
price and execution available, Putnam Management may consider
sales of shares of the Fund (and, if permitted by law, of the
other Putnam funds) as a factor in the selection of broker-
dealers.
<PAGE>
ORGANIZATION AND HISTORY
Putnam Money Market Fund is a Massachusetts business trust
organized on November 25, 1975. A copy of the Agreement and
Declaration of Trust, which is governed by Massachusetts law, is
on file with the Secretary of State of The Commonwealth of
Massachusetts. Prior to September 1, 1994, the Money Market
Fund was known as Putnam Daily Dividend Trust.
The Fund is an open-end, diversified management investment
company with an unlimited number of authorized shares of
beneficial interest. Shares of the Fund may, without shareholder
approval, be divided into two or more classes of shares having
such preferences and special or relative rights and privileges as
the Trustees may determine. The Fund's shares are currently
divided into four classes --only three of which are
currently being offered. Only the Fund's Class A shares are
offered by this Prospectus. Class B shares are offered only in
exchange for Class B shares of other Putnam funds and bear a
12b-1 fee and are subject to a contingent deferred sales charge
upon redemption. Class M shares are offered at net asset value,
but also bear a 12b-1 fee. Class B shares are subject to a higher
12b-1 fee than Class M shares. Because of the 12b-1 fee and, in
the case of Class B shares, the contingent deferred sales charge,
the investment performance of Class A shares will be greater than
that of Class B shares or Class M shares.
Each share has one vote, with fractional shares voting
proportionally. Shares of each class will vote together as a
single class except when otherwise required by law or as
determined by the Trustees. Shares are freely transferable, are
entitled to dividends as declared by the Trustees, and, if the
Fund were liquidated, would receive the net assets of the Fund.
The Fund may suspend the sale of shares at any time and may
refuse any order to purchase shares. Although the Fund is not
required to hold annual meetings of its shareholders,
shareholders holding at least 10% of the outstanding shares
entitled to vote have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.
If you own fewer shares than a minimum amount set by the Trustees
(presently 500), the Fund may choose to redeem your shares and
pay you for them. You will receive at least 30 days' written
notice before the Fund redeems your shares, and you may purchase
additional shares at any time to avoid a redemption. The Fund
may also redeem shares if you own shares above a maximum amount
set by the Trustees. There is presently no maximum, but the
Trustees may establish one at any time, which could apply to both
present and future shareholders.
THE FUND'S TRUSTEES: GEORGE PUTNAM,* CHAIRMAN. President of the
Putnam funds. Chairman and Director of Putnam Management and
Putnam Mutual Funds Corp. ("Putnam Mutual Funds"). Director,
Marsh & McLennan Companies, Inc.; WILLIAM F. POUNDS, VICE
CHAIRMAN. Professor of Management, Alfred P. Sloan School of
Management, M.I.T.; JAMESON ADKINS BAXTER, President, Baxter
Associates, Inc.; HANS H. ESTIN, Vice Chairman, North American
Management Corp. ; JOHN A. HILL, Principal and Managing
Director, First Reserve Corporation; ELIZABETH T. KENNAN,
President, Mount Holyoke College; LAWRENCE J. LASSER,* Vice
President of the Putnam funds. President, Chief Executive
Officer and Director of Putnam Investments, Inc. and Putnam
Management. Director, Marsh & McLennan Companies, Inc.; ROBERT
E. PATTERSON, Executive Vice President, Cabot Partners Limited
Partnership; DONALD S. PERKINS, Director of various corporations,
including AT&T, K mart Corporation and Time Warner Inc.; GEORGE
PUTNAM, III,* President, New Generation Research, Inc.; A.J.C.
SMITH,* Chairman, Chief Executive Officer and Director, Marsh &
McLennan Companies, Inc.; and W. NICHOLAS THORNDIKE, Director of
various corporations and charitable organizations, including
Providence Journal Co. Also, Trustee of Massachusetts
General Hospital and Trustee of Eastern Utilities Associates.
The Fund's Trustees are also Trustees of other Putnam funds.
Those marked with an asterisk (*) are "interested persons" of the
Fund, Putnam Management or Putnam Mutual Funds.
ABOUT YOUR INVESTMENT
HOW TO BUY SHARES
ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
EMPLOYER'S DEFINED CONTRIBUTION PLAN. FOR MORE INFORMATION ABOUT
HOW TO PURCHASE SHARES OF THE FUND THROUGH YOUR EMPLOYER'S PLAN
OR LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT YOUR EMPLOYER. Shares are sold to eligible defined
contribution plans at the net asset value per share next
determined after receipt of an order by Putnam Mutual Funds.
Orders must be received by Putnam Investor Services before the
close of regular trading on the New York Stock Exchange in order
to receive that day's net asset value. Because the Fund seeks to
be fully invested at all times, investments must be in SAME DAY
FUNDS to be accepted. Same Day Funds are funds credited to the
account of a bank designated by Putnam Fiduciary Trust Company
with the Boston Federal Reserve Bank. When payment in Same Day
Funds is available to the Fund prior to the close of regular
trading on the New York Stock Exchange, the Fund will accept the
order to purchase shares that day. To eliminate the need for
safekeeping, the Fund will not issue certificates for your
shares. Shares of the Fund are offered to other shareholders
pursuant to another Prospectus and may be subject to a contingent
deferred sales charge. Sales personnel may receive different
compensation depending on which class of shares they sell.
HOW TO SELL SHARES
SUBJECT TO ANY RESTRICTIONS IMPOSED BY YOUR EMPLOYER'S PLAN, YOU
CAN SELL YOUR SHARES THROUGH THE PLAN TO THE FUND ANY DAY THE NEW
YORK STOCK EXCHANGE IS OPEN. For more information about how to
sell shares of the Fund through your employer's plan, including
any charges that may be imposed by the plan, please consult
with your employer.
Your plan administrator must send a signed letter of instruction
to Putnam Investor Services. The price you will receive is the
next net asset value calculated after the Fund receives your
request in proper form. All requests must be received by the
Fund prior to the close of regular trading on the New York Stock
Exchange in order to receive that day's net asset value. If you
sell shares having a net asset value of $100,000 or more, the
signatures of registered owners or their legal representatives
must be guaranteed by a bank, broker-dealer or certain other
financial institutions. See the Statement of Additional
Information for more information about where to obtain a
signature guarantee .
THE FUND GENERALLY PROVIDES PAYMENT FOR REDEEMED SHARES
THE BUSINESS DAY AFTER THE REQUEST IS RECEIVED. Under unusual
circumstances, the Fund may suspend redemptions , or
postpone payment for more than seven days, as permitted by
federal securities law. The Fund will only redeem shares
for which it has received payment.
HOW TO EXCHANGE SHARES
Subject to any restrictions contained in your plan, you can
exchange your shares for shares of other Putnam funds
available through your plan at net asset value. Contact
your plan administrator or Putnam Investor Services on how to
exchange your shares or how to obtain prospectuses of other
Putnam funds in which you may invest. Shares of certain Putnam
funds are not available to residents of all states.
The exchange privilege is not intended as a vehicle for short-
term trading. Excessive exchange activity may interfere with
portfolio management and have an adverse effect on all
shareholders. In order to limit excessive exchange activity and
in other circumstances where Putnam Management or the
Trustees believe doing so would be in the best interests of
the Fund, the Fund reserves the right to revise or terminate the
exchange privilege, limit the amount or number of exchanges or
reject any exchange. Shareholders would be notified of any such
action. Consult Putnam Investor Services before requesting an
exchange. See the Statement of Additional Information to find
out more about the exchange privilege.
HOW THE FUND VALUES ITS SHARES
THE FUND CALCULATES THE NET ASSET VALUE OF A SHARE OF EACH
CLASS BY DIVIDING THE TOTAL VALUE OF ITS ASSETS, LESS
LIABILITIES, BY THE NUMBER OF ITS SHARES OUTSTANDING. SHARES ARE
VALUED AS OF THE CLOSE OF REGULAR TRADING ON THE NEW YORK STOCK
EXCHANGE EACH DAY THE EXCHANGE IS OPEN.
The Fund values its portfolio investments at amortized cost
according to Securities and Exchange Commission Rule 2a-7.
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.
DETERMINATION OF NET INCOME; TAX INFORMATION
THE FUND DETERMINES ITS NET INCOME ONCE EACH DAY THE NEW YORK
STOCK EXCHANGE IS OPEN, AS OF THE CLOSE OF REGULAR TRADING ON THE
EXCHANGE. Each determination of the Fund's net income includes
(i) all accrued investment income on portfolio investments
of the Fund, (ii) plus or minus all realized and unrealized gains
and losses on the Fund's portfolio investments, (iii) less all
accrued expenses of the Fund. (The Fund will not have unrealized
gains or losses so long as it values its investments by the
amortized cost method.)
All of the net income of the Fund is declared each day that the
Fund is open for business as a dividend to shareholders of record
at the time of each declaration. Shareholders begin earning
dividends on the day after the Fund accepts their order. The
Fund's net income for Saturdays, Sundays, and holidays is
declared as a dividend on the next business day. Each month's
dividends will be paid on the last business day of each month. A
shareholder who withdraws the entire balance of an account at any
time during the month will be paid all dividends declared through
the date of the withdrawal.
Since the net income of the Fund is declared as a dividend each
time it is determined, the net asset value per share of the Fund
generally remains at $1 per share immediately after each
determination and dividend declaration.
The terms of your plan will govern how your plan may receive
distributions from the Fund. Generally, periodic distributions
from the Fund to your plan are reinvested in additional Fund
shares, although your plan may permit Fund distributions from net
investment income to be received by you in cash. If another
option is not selected, all distributions will be reinvested in
additional Fund shares.
The Fund intends to qualify as a "regulated investment company"
for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal
taxes on income and gains it distributes to shareholders.
The Fund will distribute substantially all of its ordinary income
and capital gain net income on a current basis. Generally, Fund
distributions are taxable as ordinary income, except that any
distributions of net long-term capital gains will be
taxable as such. However, distributions by the Fund to
employer-sponsored defined contribution plans that qualify for
tax-exempt treatment under federal income tax laws will not be
taxable. Special tax rules apply to investments through such
plans. You should consult your tax adviser to determine the
suitability of the Fund as an investment through such a plan and
the tax treatment of distributions (including distributions of
amounts attributable to an investment in the Fund) from such a
plan.
The foregoing is a summary of certain federal income tax
consequences of investing in the Fund. You should consult your
tax adviser to determine the precise effect of an investment in
the Fund on your particular tax situation (including
possible liability for state and local taxes).
ABOUT PUTNAM INVESTMENTS, INC.
PUTNAM MANAGEMENT HAS BEEN MANAGING MUTUAL FUNDS SINCE 1937.
Putnam Mutual Funds is the principal underwriter of the Fund and
of other Putnam funds. Putnam Defined Contribution Plans is a
division of Putnam Mutual Funds. Putnam Fiduciary Trust Company
is the Fund's custodian. Putnam Investor Services, a division of
Putnam Fiduciary Trust Company, is the Fund's investor servicing
and transfer agent.
Putnam Management, Putnam Mutual Funds and Putnam
Fiduciary Trust Company are located at One Post Office Square,
Boston, Massachusetts 02109 and are subsidiaries of Putnam
Investments, Inc., which is wholly owned by Marsh &
McLennan Companies, Inc., a publicly - owned holding company
whose principal businesses are international insurance and
reinsurance brokerage, employee benefit consulting and investment
management.
<PAGE>
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<PAGE>
PUTNAM MONEY MARKET FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1994
This Statement of Additional Information is not a Prospectus and
is only authorized for distribution when accompanied or preceded
by a Putnam Money Market Fund and Putnam Tax Exempt Money
Market Fund (the "Funds") Prospectus dated December 1, 1994 and
as amended from time to time. This Statement contains
information which may be useful to investors but which is not
included in the Prospectus. If a Fund has more than one
form of current Prospectus, each reference to the Prospectus in
this Statement shall include all the Fund's Prospectuses, unless
otherwise noted. The Statement should be read together with the
applicable Prospectus. Investors may obtain a free copy of the
applicable Prospectus from Putnam Investor Services, Mailing
address: P.O. Box 41203, Providence, RI 02940-1203.
Part I of this Statement contains specific information about the
Funds . Part II includes information about the
Funds and the other Putnam funds.
<PAGE>
TABLE OF CONTENTS
PART I PAGE
TAX EXEMPT SECURITIES . . . . . . . . . . . . . . . . . .I-3
SECURITIES RATINGS . . . . . . . . . . . . . . . . . . . . .I-5
RATINGS OF COMMERCIAL PAPER AND CORPORATE OBLIGATIONS . . .I-7
FUND CHARGES AND EXPENSES . . . . . . . . . . . . . . .I- 14
AMORTIZED COST VALUATION AND DAILY DIVIDENDS. . . . . .I- 18
INVESTMENT PERFORMANCE OF THE FUND. . . . . . . . . . .I- 19
EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIESI-25
ADDITIONAL OFFICERS OF THE FUNDS . . . . . . . .I- 26
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS. . . .I- 26
PART II
MISCELLANEOUS INVESTMENT PRACTICES. . . . . . . . . . . . . . II-1
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-22
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . .II-27
DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . . . . .II-36
HOW TO BUY SHARES . . . . . . . . . . . . . . . . . . . . . .II-38
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . .II-49
INVESTOR SERVICES . . . . . . . . . . . . . . . . . . . . . .II-50
SIGNATURE GUARANTEES. . . . . . . . . . . . . . . . . . . . .II-56
SUSPENSION OF REDEMPTIONS . . . . . . . . . . . . . . . . . .II-56
SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . . . . .II-57
STANDARD PERFORMANCE MEASURES . . . . . . . . . . . . . . . .II-57
COMPARISON OF PORTFOLIO PERFORMANCE . . . . . . . . . . . . .II-58
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .II-63
<PAGE>
PUTNAM MONEY MARKET FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
PART I
TAX EXEMPT SECURITIES
GENERAL DESCRIPTION. As used in the Prospectus and in this
Statement, the term "Tax Exempt Securities" includes debt
obligations issued by a State, its political subdivisions (for
example, counties, cities, towns, villages, districts and
authorities) and their agencies, instrumentalities or other
governmental units, the interest from which is, in the opinion of
bond counsel, exempt from federal income tax. Such obligations
are issued to obtain funds for various public purposes, including
the construction of a wide range of public facilities, such as
airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works.
Other public purposes for which Tax Exempt Securities may be
issued include the refunding of outstanding obligations or
obtaining funds for general operating expenses. Short-term Tax
Exempt Securities are generally issued by state and local
governments and public authorities as interim financing in
anticipation of tax collections, revenue receipts, or bond sales
to finance such public purposes. In addition, certain types of
"private activity" bonds may be issued by public authorities to
finance such projects as privately operated housing facilities
and certain local facilities for water supply, gas, electricity
or sewage or solid waste disposal, student loans, or the
obtaining of funds to lend to public or private institutions for
the construction of facilities such as educational, hospital and
housing facilities. Such obligations are included within the
term Tax Exempt Securities if the interest paid thereon is, in
the opinion of bond counsel, exempt from federal income tax (such
interest may, however, be subject to federal alternative minimum
tax). Other types of private activity bonds, the proceeds of
which are used for the construction, repair or improvement of, or
to obtain equipment for, privately operated industrial or
commercial facilities, may constitute Tax Exempt Securities,
although the current federal tax laws place substantial
limitations on the size of such issues. Tax Exempt Securities
also include short-term discount notes (tax-exempt commercial
paper), which are promissory notes issued by municipalities to
enhance their cash flows.
STAND-BY COMMITMENTS. When the Tax Exempt Money Market Fund
purchases Tax Exempt Securities, it has the authority to acquire
stand-by commitments from banks and broker-dealers with respect
to those Tax Exempt Securities. A stand-by commitment may be
considered a security independent of the Tax Exempt Security to
which it relates. The amount payable by a bank or dealer during
the time a stand-by commitment is exercisable, absent unusual
circumstances, would be substantially the same as the market
value of the underlying Tax Exempt Security to a third party at
any time. The Tax Exempt Money Market Fund expects that stand-by
commitments generally will be available without the payment of
direct or indirect consideration. The Tax Exempt Money Market
Fund does not expect to assign any value to stand-by commitments.
YIELDS. The yields on Tax Exempt Securities depend on a variety
of factors, including general money market conditions, effective
marginal tax rates, the financial condition of the issuer,
general conditions of the Tax Exempt Security market, the size of
a particular offering, the maturity of the obligation and the
rating of the issue. The ratings of Moody's Investors Service,
Inc. and Standard & Poor's Corporation represent their opinions
as to the quality of the Tax Exempt Securities which they
undertake to rate. It should be emphasized, however, that
ratings are general and are not absolute standards of quality.
Consequently, Tax Exempt Securities with the same maturity and
interest rate but with different ratings may have the same yield.
Yield disparities may occur for reasons not directly related to
the investment quality of particular issues or the general
movement of interest rates, due to such factors as changes in the
overall demand or supply of various types of Tax Exempt
Securities or changes in the investment objectives of investors.
Subsequent to purchase by the Tax Exempt Money Market Fund, an
issue of Tax Exempt Securities or other investments may cease to
be rated or its rating may be reduced below the minimum rating
required for purchase by the Tax Exempt Money Market Fund.
Neither event will require the elimination of an investment from
the Tax Exempt Money Market Fund's portfolio, but Putnam
Management will consider such an event in its determination of
whether the Tax Exempt Money Market Fund should continue to hold
an investment in its portfolio.
"MORAL OBLIGATION" BONDS. The Tax Exempt Money Market Fund does
not currently intend to invest in so-called "moral obligation"
bonds, where repayment is backed by a moral commitment of an
entity other than the issuer, unless the credit of the issuer
itself, without regard to the "moral obligation," meets the
investment criteria established for investments by the Fund.
ADDITIONAL RISKS. Securities in which the Tax Exempt Money
Market Fund may invest, including Tax Exempt Securities, are
subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the
federal Bankruptcy Code, and laws, if any, which may be enacted
by Congress or state legislatures extending the time for payment
of principal or interest, or both, or imposing other constraints
upon enforcement of such obligations. There is also the
possibility that as a result of litigation or other conditions
the power or ability of issuers to meet their obligations for the
payment of interest and principal on their Tax Exempt Securities
may be materially affected.
From time to time, proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income
tax exemption for interest on debt obligations issued by states
and their political subdivisions. Federal tax laws limit the
types and amounts of tax-exempt bonds issuable for certain
purposes, especially for industrial development bonds and other
private activity bonds. Such limits may affect the future supply
and yields of these types of Tax Exempt Securities. Further
proposals limiting the issuance of tax-exempt bonds may well be
introduced in the future. If it appeared that the availability
of Tax Exempt Securities for investment by the Tax Exempt Money
Market Fund and the value of that Fund's portfolio could be
materially affected by such changes in law, the Trustees of the
Tax Exempt Money Market Fund would reevaluate its investment
objective and policies and consider changes in the structure of
the Fund or its dissolution.
SECURITIES RATINGS
PUTNAM TAX EXEMPT MONEY MARKET FUND
The following rating services describe rated securities as
follows:
MOODY'S INVESTORS SERVICE, INC.
BONDS
Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt-edge". Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa -- Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what
are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger
than in Aaa securities.
<PAGE>
NOTES
MIG 1/VMIG 1 -- This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the
market for refinancing.
MIG 2/VMIG 2 -- This designation denotes high quality. Margins
of protection are ample although not so large as in the preceding
group.
COMMERCIAL PAPER
Issuers rated PRIME-1 (or related supporting
institutions) have a superior capacity for repayment of short-
term promissory obligations. Prime-1 repayment capacity will
normally be evidenced by the following characteristics:
-- Leading market positions in well established
industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with moderate
reliance on debt and ample asset protection.
-- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.
-- Well established access to a range of financial markets
and assured sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
STANDARD & POOR'S CORPORATION
BONDS
AAA -- Debt rated AAA has the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is
extremely strong.
AA -- Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only
in small degree.
<PAGE>
NOTES
SP-1 -- Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a (+).
SP-2 -- Satisfactory capacity to pay principal and interest.
COMMERCIAL PAPER
A-1 -- This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety
characteristics are denoted with a (+).
A-2 -- Capacity for timely payment on issues with this
designation is strong. However, the relative degree of safety is
not as high as for issues designated "A-1".
RATINGS OF COMMERCIAL PAPER AND CORPORATE OBLIGATIONS
PUTNAM MONEY MARKET FUND
COMMERCIAL PAPER
Moody's Investors Service, Inc.
Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be
evidenced by the following characteristics:
-- Leading market positions in well established
industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
-- Broad margins in earnings coverage of fixed
financial charges and high internal cash
generation.
-- Well established access to a range of financial
markets and assured sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
STANDARD & POOR'S CORPORATION
Standard & Poor's Corporation describes its highest ("A")
rating for commercial paper as follows, with the number 1, 2, and
3 being used to denote relative strength within the "A"
classification: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt rating should be "A" or
better; in some instances "BBB" credits may be allowed if other
factors outweigh the "BBB". The issuer should have access to at
least two additional channels of borrowing. Basic earnings and
cash flow should have an upward trend, with allowances made for
unusual circumstances. Typically, the issuer's industry should
be well-established and the issuer should have a strong position
within its industry. The reliability and quality of management
should be unquestioned.
CORPORATE OBLIGATIONS
MOODY'S INVESTORS SERVICE, INC.
Moody's describes its three highest ratings for corporate
bonds as follows: Bonds which are rated Aaa are judged to be of
the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of
such issues. Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
compromise what are generally known as high grade bonds. They
are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be
other elements present which make the long term risk appear
somewhat larger than in Aaa securities. Bonds which are rated A
possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to
impairment some time in the future.
STANDARD & POOR'S CORPORATION
Standard & Poor's describes its three highest ratings for
corporate bonds as follows: Ratings of AAA are the highest
assigned by Standard & Poor's to debt obligations and indicate an
extremely strong capacity to pay principal and interest. Bonds
rated AA also qualify as high quality obligations. Capacity to
pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions.
INVESTMENT RESTRICTIONS OF THE FUNDS
AS FUNDAMENTAL INVESTMENT RESTRICTIONS OF EACH FUND, WHICH MAY
NOT BE CHANGED WITHOUT A VOTE OF A MAJORITY OF THE OUTSTANDING
VOTING SECURITIES OF THE RELEVENT FUND, A FUND MAY NOT AND WILL
NOT TAKE ANY OF THE FOLLOWING ACTIONS WITH RESPECT TO SUCH FUND:
(1a) (MONEY MARKET FUND) Borrow money in excess of one-third of
the value (taken at the lower of cost or current value) of its
total assets (not including the amount borrowed) at the time the
borrowing is made, and then only as a temporary measure to
facilitate the meeting of redemption requests (not for leverage)
which might otherwise require the untimely disposition of
portfolio investments or for extraordinary or emergency purposes.
Such borrowings will be repaid before any additional investments
are made. Interest paid on such borrowings would reduce the
yield on the Fund's investments.
(1b) (TAX EXEMPT MONEY MARKET FUND) Borrow money in excess of
10% of the value (taken at the lower of cost or current value) of
its total assets (not including the amount borrowed) at the time
the borrowing is made, and then only from banks as a temporary
measure to facilitate the meeting of redemption requests (not for
leverage) which might otherwise require the untimely disposition
of portfolio investments or for extraordinary or emergency
purposes. Such borrowings will be repaid before any additional
investments are purchased.
(2a) (MONEY MARKET FUND) Pledge, hypothecate, mortgage or
otherwise encumber its assets in excess of 10% of its total
assets (taken at the lower of cost or current value) and then
only to secure borrowings permitted by restriction 1 above.
(2b) (TAX EXEMPT MONEY MARKET FUND) Pledge, hypothecate,
mortgage, or otherwise encumber its assets in excess of 10% of
its total assets (taken at the lower of cost or current value)
and then only to secure borrowings permitted by restriction 1b
above. For the purposes of this restriction, collateral
arrangements with respect to margin for financial futures
contracts or related options are not deemed to be a pledge of
assets.
(3a) (MONEY MARKET FUND)Purchase securities on margin (except
such short-term credits as may be necessary for the clearance of
purchases and sales of securities).
<PAGE>
(3b) (TAX EXEMPT MONEY MARKET FUND) Purchase securities on
margin, except such short-term credits as may be necessary for
the clearance of purchases and sales of securities, but it may
make margin payments in connection with financial futures
contracts or related options.
(4a) (MONEY MARKET FUND) Make short sales of securities or
maintain a short position for the account of the Fund unless at
all times when a short position is open it either owns an equal
amount of such securities or owns securities convertible into or
exchangeable for securities of the same issue as, and equal in
amount to, the securities sold short.
(4b) (TAX EXEMPT MONEY MARKET FUND) Make short sales of
securities or maintain a short position for the account of the
Fund unless at all times when a short position is open it owns an
equal amount of such securities or owns securities which, without
payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in
amount to, the securities sold short.
(5) (FOR BOTH FUNDS) Underwrite securities issued by other
persons except to the extent that, in connection with the
disposition of its portfolio investments, it may be deemed to be
an underwriter under federal securities laws.
(6) (MONEY MARKET FUND) Concentrate more than 25% of its assets
in any one industry, except that the Fund may invest up to 100%
of its assets (i) in the banking industry, (ii) in the personal
credit institution or business credit institution industries when
in the opinion of management yield differentials make such
investments desirable, or (iii) in any combination of these.
(7a) (MONEY MARKET FUND) Purchase or sell real estate, although
it may purchase securities of issuers which deal in real estate
and may purchase securities which are secured by interests in
real estate.
(7b) (TAX EXEMPT MONEY MARKET FUND) Purchase or sell real estate,
although it may purchase securities which are secured by or
represent interests in real estate.
(8a) (MONEY MARKET FUND) Purchase or sell commodities or
commodity contracts.
(8b) (TAX EXEMPT MONEY MARKET FUND) Purchase or sell commodities
or commodity contracts except financial futures contracts and
related options.
<PAGE>
(9a) (MONEY MARKET FUND) Make loans, except by purchase of debt
obligations and through repurchase agreements, provided, however,
that repurchase agreements maturing in more than seven days will
not exceed 10% of the Fund's total assets (taken at current
value), or through the lending of its portfolio securities with
respect to not more than 25% of its total assets.
(9b) (TAX EXEMPT MONEY MARKET FUND) Make loans, except by
purchase of debt obligations in which the Fund may invest
consistent with its investment policies, and through repurchase
agreements.
(10) (FOR BOTH FUNDS) Invest in securities of any issuer if, to
the knowledge of the Fund, officers and Trustees of the Fund or
officers and directors of Putnam Management who beneficially own
more than 0.5% of the shares or securities of that issuer
together own more than 5%.
(11a) (MONEY MARKET FUND) Invest in securities of any issuer if,
immediately after such investment, more than 5% of the total
assets of the Fund taken at current value would be invested in
securities of such issuer, provided that this limitation does not
apply to obligations issued or guaranteed as to interest and
principal by the U.S. government or its agencies.
(11b) (TAX EXEMPT MONEY MARKET FUND) Invest in securities of any
issuer if, immediately after such investment, more than 5% of the
total assets of the Fund taken at current value would be invested
in the securities of such issuer; provided that this limitation
does not apply to obligations issued or guaranteed as to interest
and principal by the U.S. government, its agencies or
instrumentalities and, for
(12a) (MONEY MARKET FUND) Acquire more than 10% of the voting
securities of any issuer or more than 10% of any class of
securities of any issuer. (For these purposes all preferred
stocks of an issuer are regarded as a single class, and all debt
securities of an issuer are regarded as a single class.)
(12b) (TAX EXEMPT MONEY MARKET FUND) Acquire more than 10% of
the voting securities of any issuer.
(13a) (MONEY MARKET FUND) Purchase securities restricted as to
resale if, as a result, such investments would exceed 5% of the
value of the Fund's net assets.
(13b) (TAX EXEMPT MONEY MARKET FUND) Purchase securities which
are restricted as to resale, if, as a result, such investments
would exceed 15% of the value of the Fund's net assets, excluding
restricted securities that have been determined by the Trustees
of the Fund (or the person designated by them to make such
determinations) to be readily marketable.
(14) (MONEY MARKET FUND) Invest in securities of businesses less
than three years old (including predecessors), if, as a result,
more than 5% of the Fund's total assets (taken at current value)
would then be invested in such securities.
(15) (TAX EXEMPT MONEY MARKET FUND) Purchase securities (other
than securities of the U.S. government, its agencies or
instrumentalities) if as a result of such purchase more than 25%
of the Fund's total assets would be invested in any one industry.
(16) (TAX EXEMPT MONEY MARKET FUND) Issue any class of securities
which is senior to the Fund's shares of beneficial interest.
IT IS CONTRARY TO THE PRESENT POLICY OF EACH FUND, WHICH POLICY
MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL, WITH RESPECT TO
EITHER FUND TO:
(1) (MONEY MARKET FUND) Make investments for the purpose of
gaining control of a company's management.
(2a) (MONEY MARKET FUND) Invest in securities of other investment
companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets.
(2b) (TAX EXEMPT MONEY MARKET FUND) Invest in securities of
registered open-end investment companies, except as they may be
acquired as part of a merger or consolidation or acquisition of
assets or by purchases in the open market involving only
customary brokers' commissions.
(3a) (MONEY MARKET FUND) Purchase options or puts, calls,
straddles, spreads or any combination thereof in connection with
the purchase of fixed-income securities; however, the Fund may
acquire warrants or other rights to subscribe for securities of
companies issuing such fixed-income securities or securities of
parents or subsidiaries of such companies.
(3b) (TAX EXEMPT MONEY MARKET FUND) Engage in puts, calls,
straddles, spreads or any combination thereof, except that the
Fund may buy and sell put and call options (and any combination
thereof) on securities, on financial futures contracts, and on
securities indices and may, in connection with the purchase of
fixed-income securities, acquire attached warrants or other
rights to subscribe for securities of companies issuing such
fixed-income securities or securities of parents or subsidiaries
of such companies. (The Fund's investment policies do not
currently permit the Fund to exercise warrants or rights with
respect to equity securities.)
(4) (FOR BOTH FUNDS) Buy or sell oil, gas, or other mineral
leases, rights or royalty contracts.
(5) (FOR BOTH FUNDS) Invest in (a) securities which at the time
of such investment are not readily marketable, (b) securities
restricted as to resale (excluding securities determined by the
Fund's Trustees (or the person designated by the Fund's Trustees
to make such determinations) to be readily marketable), and (c)
repurchase agreements maturing in more than seven days, if, as a
result, more than 15% of the Fund's net assets (taken at current
value) would then be invested in the aggregate in securities
described in (a), (b) and (c) above.
(6a) (MONEY MARKET FUND) Purchase or sell real property
(including limited partnership interests), except that the Fund
may (a) purchase or sell readily marketable interests in real
estate investment trusts or readily marketable securities of
companies which invest in real estate (b) purchase or sell
securities that are secured by interests in real estate or
interests therein, or (c) acquire real estate through exercise of
its rights as a holder of obligations secured by real estate or
interests therein or sell real estate so acquired.
(7) (TAX EXEMPT MONEY MARKET FUND) Invest in securities of any
issuer if the party responsible for payment, together with any
predecessor, has been in operation for less than three years,
and, as a result of the investment, the aggregate of such
investments would exceed 5% of the value of a Fund's net assets;
provided, however, that this restriction shall not apply to any
obligation of the United States or its agencies or for the
payment of which is pledged the faith, credit and taxing power of
any person authorized to issue Tax Exempt Securities.
(8) (MONEY MARKET FUND) Engage in arbitrage provisions (i.e. buy
and sell a security simultaneously on different exchanges).
Changes in the above policies will be reflected in the Funds'
Prospectus or in this Statement. The Funds have undertaken to
certain state securities authorities that certain of these
policies will not be changed without approval of such authorities
so long as shares of a Fund are registered for sale in such
states. Changes in these policies could result in increased
investment risk.
---------------
All percentage limitations on investments will apply at the time
of the making of an investment and shall not be considered
violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment. Although
certain of the Funds' investment restrictions permit the Funds to
borrow money to a limited extent, the Funds do not currently
intend to do so and did not do so last year. Although non-
fundamental investment policy (3a) above generally permits the
Money Market Fund to acquire warrants or other rights to
subscribe for securities, the Money Market Fund does not
presently intend to acquire rights or warrants to subscribe for
securities of companies issuing fixed-income securities other
than such warrants or other rights which are attached to such
fixed-income securities. (The Money Market Fund did not engage
in the practices permitted by fundamental investment restriction
(1a) and policy (3a) above last year.) The Tax Exempt Money
Market Fund has no present intention of engaging in options or
futures transactions.
The Investment Company Act of 1940 provides that a "vote of a
majority of the outstanding voting securities" of a Fund means
the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of a Fund, or (2) 67% or more of the shares
present at a meeting if more than 50% of the outstanding shares
are represented at the meeting in person or by proxy.
FUND CHARGES AND EXPENSES
PUTNAM MONEY MARKET FUND
MANAGEMENT FEES
Under a Management Contract dated December 21, 1988, the Money
Market Fund pays a quarterly fee to Putnam Management based on
the average net assets of the Money Market Fund, as determined at
the close of each business day during the quarter, at an annual
rate of 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 0.30% of any amount over $1
billion. For its 1992 and 1993 fiscal years, and the 1994 fiscal
period ended September 30, 1994, pursuant to the Management
Contract, the Money Market Fund incurred fees of $2,520,020,
$2,363,285 and $3,334,454, respectively.
BROKERAGE COMMISSIONS
It is anticipated that most purchases and sales of portfolio
investments will be with the issuer or with major dealers in
money market instruments acting as principal. Accordingly, it is
not anticipated that the Money Market Fund will pay significant
brokerage commissions. The Money Market Fund incurred no
brokerage commissions in fiscal 1992, 1993 or 1994. In
underwritten offerings, the price paid by the Money Market Fund
includes a disclosed, fixed commission or discount retained by
the underwriter. There is generally no stated commission in the
case of securities purchased from or sold to dealers, but the
prices of such securities usually include an undisclosed dealer's
mark-up or mark-down. The Money Market Fund incurred no
underwriting commissions in fiscal 1992, 1993 or 1994.
<PAGE>
ADMINISTRATIVE EXPENSE REIMBURSEMENT
The Money Market Fund reimbursed Putnam Management $17,685
for administrative services in fiscal 1994, including $16,303
for the compensation of certain officers of the Money Market Fund
and their staff and contributions to the Putnam Investments, Inc.
Profit Sharing Retirement Plan for their benefit.
QUALIFICATION AND REGISTRATION FEES
The Money Market Fund pays all fees for its qualification or
registration as an issuer or broker-dealer or for registration of
its shares in states in which the Money Market Fund sells its
shares, as well as out-of-pocket expenses incurred in connection
with such qualifications or registrations.
TRUSTEE FEES
Each Trustee of the Money Market Fund receives an annual fee of
$2,310 and an additional fee for each Trustees' meeting attended.
Trustees who are not interested persons of Putnam Management and
who serve on committees of the Trustees receive additional fees
for attendance at certain committee meetings. The Money Market
Fund incurred Trustees' fees aggregating $23,907 in fiscal 1994.
OWNERSHIP OF FUND SHARES
At October 31, 1994, the officers and Trustees of the Money
Market Fund as a group owned less than 1% of the outstanding
shares of any class of the Money Market Fund, and to the
knowledge of the Money Market Fund no person owned of record or
beneficially 5% of more of the shares of any class of the Money
Market Fund. No Class M shares of the Money Market Fund were
outstanding at October 31, 1994.
CLASS A SALES CHARGES AND CONTINGENT DEFERRED SALES CHARGES
Class A shares are distributed directly by the Money Market Fund
through Putnam Mutual Funds, which acts as principal underwriter
for the Money Market Fund. Putnam Mutual Funds does not receive
any fee for its services.
During fiscal 1993 and 1994, Putnam Mutual Funds received $83,377
and $107,387, respectively, in contingent deferred sales charges
upon redemptions of Class A shares of the Money Market Fund.
<PAGE>
CLASS B CONTINGENT DEFERRED SALES CHARGES AND 12B-1 FEES
During fiscal 1992, 1993 and 1994, Putnam Mutual Funds received
$3,360, $86,763 and $977,137, respectively, in contingent
deferred sales charges upon redemptions of Class B shares of the
Money Market Fund. During fiscal 1994, the Money Market Fund
incurred $557,530 in 12b-1 fees to Putnam Mutual Funds pursuant
to the Money Market Fund's Class B Distribution Plan.
INVESTOR SERVICING AND CUSTODY FEES AND EXPENSES
During the fiscal period ended September 30, 1994, the Money
Market Fund incurred $2,178,345 in fees and out-of-pocket
expenses for investor servicing and custody services provided by
Putnam Fiduciary Trust Company.
The fee paid to Putnam Fiduciary Trust Company is subject to
adjustment if the average number of shareholder accounts
maintained during the year varies by more than a fixed percentage
of the number of accounts maintained at the beginning of the
year.
PUTNAM TAX EXEMPT MONEY MARKET FUND
MANAGEMENT FEES
Under a Management Contract dated July 9, 1992, the Tax Exempt
Money Market Fund pays a quarterly fee to Putnam Management based
on the average net assets of the Tax Exempt Money Market Fund, as
determined at the close of each business day during the quarter,
at an annual rate of 0.45% of the first $500 million of the Tax
Exempt Money Market Fund's average net assets, 0.35% of the next
$500 million, 0.30% of the next $500 million and 0.25% of any
amount over $1.5 billion. For its 1992, 1993 and 1994 fiscal
years, pursuant to the Management Contract (and a management
contract in effect prior to July 9, 1992, under which the fee
payable to Putnam Management was paid at the annual rate of 0.50%
of the Tax Exempt Money Market Fund's average net assets), the
Tax Exempt Money Market Fund incurred fees of $190,911, $357,072
and $398,614, respectively. (This reflects a reduction of
$275,388 for fiscal 1992, pursuant to an expense limitation in
effect during the period, which was terminated as of September
30, 1992).
BROKERAGE COMMISSIONS
It is anticipated that most purchases and sales of portfolio
investments will be with the issuer or with major dealers in
money market instruments acting as principal. Accordingly, it is
not anticipated that the Tax Exempt Money Market Fund will pay
significant brokerage commissions. The Tax Exempt Money Market
Fund paid no brokerage commissions in fiscal 1992, 1993 or 1994.
In underwritten offerings, the price paid by the Tax Exempt Money
Market Fund includes a disclosed, fixed commission or discount
retained by the underwriter. There is generally no stated
commission in the case of securities purchased from or sold to
dealers, but the prices of such securities usually include an
undisclosed dealer's mark-up or mark-down. The Tax Exempt Money
Market Fund paid no underwriting commissions in fiscal 1992, 1993
or 1994.
ADMINISTRATIVE EXPENSE REIMBURSEMENT
The Tax Exempt Money Market Fund reimbursed Putnam Management
$6,201 for administrative services in fiscal 1994, including
$5,740 for the compensation of certain officers of the Tax Exempt
Money Market Fund and their staff and contributions to the Putnam
Investments, Inc. Profit Sharing Retirement Plan for their
benefit.
QUALIFICATION AND REGISTRATION FEES
The Tax Exempt Money Market Fund pays all fees for its
qualification or registration as an issuer or broker-dealer or
for registration of its shares in states in connection with such
qualifications or registrations.
TRUSTEE FEES
Each Trustee of the Tax Exempt Money Market Fund receives an
annual fee of $630, and an additional fee for each Trustees'
meeting attended. Trustees who are not interested persons of
Putnam Management and who serve on committees of the Trustees
receive additional fees for attendance at certain committee
meetings. The Tax Exempt Money Market Fund incurred Trustees'
fees aggregating $11,099 in fiscal 1994.
OWNERSHIP OF FUND SHARES
At October 31, 1994 the officers and Trustees of the Tax Exempt
Money Market Fund as a group owned less than 1% of the
outstanding shares of the Tax Exempt Money Market Fund, and to
the knowledge of the Tax Exempt Money Market Fund no person owned
of record or beneficially 5% or more of the shares of the Tax
Exempt Money Market Fund.
SALES CHARGES AND 12B-1 FEES
Shares are distributed directly by the Tax Exempt Money Market
Fund through Putnam Mutual Funds, which acts as principal
underwriter for the Tax Exempt Money Market Fund. During fiscal
1994, the Tax Exempt Money Market Fund incurred $18,293 in 12b-1
fees to Putnam Mutual Funds pursuant to the Tax Exempt Money
Market Fund's Distribution Plan.
INVESTOR SERVICING AND CUSTODY FEES AND EXPENSES
During the 1994 fiscal year, the Tax Exempt Money Market Fund
incurred $65,779 in fees and out-of-pocket expenses for investor
servicing and custody services provided by Putnam Fiduciary Trust
Company.
AMORTIZED COST VALUATION AND DAILY DIVIDENDS
The valuation of each Fund's portfolio instruments at amortized
cost is permitted in accordance with Securities and Exchange
Commission Rule 2a-7 and certain procedures adopted by the
Trustees. 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, regardless of the effect of fluctuating interest rates
on the market value of the instrument. Although the amortized
cost method provides certainty in valuation, it may result at
times in determinations of value that are higher or lower than
the price a Fund would receive if the instruments were sold.
Consequently, in the absence of circumstances described below,
changes in the market value of portfolio instruments during
periods of rising or falling interest rates will not normally be
reflected either in the computation of net asset value of a
Fund's portfolio or in the daily computation of net income.
Under the procedures adopted by the Trustees, the Funds must
maintain a dollar-weighted average portfolio maturity of 90 days
or less, purchase only instruments having remaining maturities of
397 days or less and invest in securities determined by the
Trustees to be of high quality with minimal credit risks. The
Trustees have also established procedures designed to stabilize,
to the extent reasonably possible, a Fund's price per share as
computed for the purpose of distribution, redemption and
repurchase at $1.00. These procedures include review of a Fund's
portfolio holdings by the Trustees, at such intervals as they may
deem appropriate, to determine whether the Fund's net asset value
calculated by using readily available market quotations deviates
from $1.00 per share, and, if so, whether such deviation may
result in material dilution or is otherwise unfair to existing
shareholders. In the event the Trustees determine that such a
deviation exists, they will take such corrective action as they
regard as necessary and appropriate, including the sale of
portfolio instruments prior to maturity to realize capital gains
or losses or to shorten the average portfolio maturity;
withholding dividends; redemption of shares in kind; or
establishing a net asset value per share by using readily
available market quotations.
Since the net income of a Fund is declared as a dividend each
time it is determined, the net asset value per share of that Fund
remains at $1.00 per share immediately after such determination
and dividend declaration. Any increase in the value of a
shareholder's investment in a Fund representing the reinvestment
of dividend income is reflected by an increase in the number of
shares of that Fund in the shareholder's account on the last
business day of each month for the Money Market Fund and on the
first day of the next month for the Tax Exempt Money Market Fund.
It is expected that a Fund's net income will be positive each
time it is determined. However, if because of realized losses on
sales of portfolio investments, a sudden rise in interest rates,
or for any other reason the net income of a Fund determined at
any time is a negative amount, a Fund will offset such amount
allocable to each then shareholder's account from dividends
accrued during the month with respect to such account. If at the
time of payment of a dividend (either at the regular monthly
dividend payment date, or, in the case of a shareholder who is
withdrawing all or substantially all of the shares in an account,
at the time of withdrawal), such negative amount exceeds a
shareholder's accrued dividends, the Fund will reduce the number
of outstanding shares by treating the shareholder as having
contributed to the capital of the Fund that number of full and
fractional shares which represent the amount of the excess. Each
shareholder is deemed to have agreed to such contribution in
these circumstances by his or her investment in the Fund.
INVESTMENT PERFORMANCE OF THE FUND
STANDARD PERFORMANCE MEASURES
PUTNAM MONEY MARKET FUND
Based on the seven-day period ended September 30, 1994, the Money
Market Fund's yield for Class A shares was 4.21%, and the Money
Market Fund's effective yield for Class A shares was 4.30%.
Based on the seven-day period ended September 30, 1994, the Money
Market Fund's yield for Class B shares was 3.72%, and the Money
Market Fund's effective yield for Class B shares was 3.77%. See
"Other Performance Information" below for the inception date of
each class. No Class M shares of the Money Market Fund were
outstanding at September 30, 1994. See "Standard Performance
Measures" in Part II of this Statement for information on how the
Money Market Fund's investment performance is calculated.
PUTNAM TAX EXEMPT MONEY MARKET FUND
Based on the seven-day period ended September 30, 1994 the Tax
Exempt Money Market Fund's tax-exempt yield was 2.56%, and the
Tax Exempt Money Market Fund's tax-exempt effective yield was
2.80%. A shareholder in a 39.60% federal tax bracket would have
to earn 4.24% from a taxable investment to produce an after-tax
yield equal to the Fund's tax exempt yield of 2.56%. See
"Standard Performance Measures" in Part II of this Statement for
information on how the Tax Exempt Money Market Fund's investment
performance is calculated.
<PAGE>
PERFORMANCE RATINGS
PUTNAM MONEY MARKET FUND
For the fiscal period ended September 30, 1994, the Class A
shares of the Money Market Fund were ranked 82 of 243 money
market funds by Lipper Analytical Services, Inc. For the fiscal
period ended September 30, 1994, the Class B shares of the Money
Market Fund were not ranked or rated. No Class M shares of the
Money Market Fund were outstanding during fiscal 1994. See
"Comparison of Portfolio Performance" in Part II of this
Statement for information about how these rankings are
determined. Past performance is no guarantee of future results.
PUTNAM TAX EXEMPT MONEY MARKET FUND
For the 1994 fiscal year, the Tax Exempt Money Market Fund was
ranked 93 of 120 tax exempt money market funds by Lipper
Analytical Services, Inc. See "Comparison of Portfolio
Performance" in Part II of this Statement for information about
how this ranking is determined. Past performance is no guarantee
of future results.
OTHER PERFORMANCE INFORMATION
The table below shows total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment
in one share of a Fund during the life of that Fund. This was a
period of fluctuating interest rates for the Money Market Fund.
The tables do not project the future performance of the Funds.
No Class M shares of the Money Market Fund were outstanding
during these periods.<PAGE>
<TABLE>
<CAPTION>
PUTNAM MONEY MARKET FUND - CLASS A SHARES
CUMULATIVE
NET ASSET VALUE
DISTRIBUTIONS AT YEAR-END CONSUMER
FISCAL FROM NET WITH ALL PRICE INDEX
YEAR CUMULA- INVESTMENT DISTRIBUTIONS CUMULA-
ENDED ANNUAL TIVE INCOME REINVESTED ANNUAL TIVE
- -----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
12/31/76 (1) -- +1.1% $0.01114 $1.01 -- +1.0%
12/31/77 +4.3% +5.5 0.04220 1.05 +6.7% +7.8
12/31/78 +6.8 +12.6 0.06574 1.13 +9.0 +17.5
12/31/79 +10.7 +24.6 0.10186 1.25 +13.3 +33.2
12/31/80 +13.2 +41.1 0.12448 1.41 +12.5 +49.8
12/31/81 +17.1 +65.2 0.15912 1.65 +8.9 +63.2
12/31/82 +13.0 +86.6 0.12244 1.87 +3.8 +69.4
12/31/83 +8.7 +102.9 0.08375 2.03 +3.8 +75.9
12/31/84 +10.3 +123.8 0.09859 2.24 +4.0 +82.8
10/31/85 (2) +6.5 +138.4 0.06338 2.38 +3.2 +88.7
10/31/86 +6.6 +154.1 0.06420 2.54 +1.5 +91.5
10/31/87 +5.8 +169.0 0.05681 2.69 +4.5 +100.2
10/31/88 +6.8 +187.1 0.06549 2.87 +4.3 +108.7
10/31/89 +8.9 +212.6 0.08526 3.13 +4.5 +118.1
10/31/90 +7.9 +237.3 0.07644 3.37 +6.3 +131.8
10/31/91 +6.2 +258.1 0.05994 3.58 +2.9 +138.5
10/31/92 +3.6 +270.9 0.03527 3.71 +3.2 +146.2
10/31/93 +2.5 +280.2 0.02466 3.80 +2.8 +153.0
09/30/94 (3) +3.0 +291.7 0.02989 3.92 +2.5 +159.4
-------
Total distributions $1.37066
(1) Investment operations began October 1, 1976.
(2) January 1, 1985 - October 31, 1985.
(3) November 1, 1993 - September 30, 1994.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
PUTNAM MONEY MARKET FUND - CLASS B SHARES
CUMULATIVE
NET ASSET VALUE
DISTRIBUTIONS AT YEAR-END CONSUMER
FISCAL FROM NET WITH ALL PRICE INDEX
YEAR CUMULA- INVESTMENT DISTRIBUTIONS CUMULA-
ENDED ANNUAL TIVE INCOME REINVESTED ANNUAL TIVE
- -----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
10/31/92 (1) -- +1.5% $0.01510 $1.02 -- +1.6%
10/31/93 +2.0% +3.5 0.01959 1.04 +2.8% +4.4
09/30/94 (2) +2.5 +6.2 0.02505 1.06 +2.5 +7.1
--------
Total distributions $0.05974
(1) Class B shares were offered beginning April 27, 1992.
(2) November 1, 1993 - September 30, 1994.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
PUTNAM TAX EXEMPT MONEY MARKET FUND
PUTNAM TAX CUMULATIVE
EXEMPT NET ASSET VALUE
MONEY MARKET DISTRIBUTIONS AT YEAR-END CONSUMER
FISCAL FUND FROM NET WITH ALL PRICE INDEX
YEAR CUMULA- INVESTMENT DISTRIBUTIONS CUMULA-
ENDED ANNUAL TIVE INCOME REINVESTED ANNUAL TIVE
- -------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
09/30/88(1) -- +4.4% $0.04263 $1.04 -- +3.9%
09/30/89 +5.9% +10.5 0.05767 1.11 +4.3% +8.4
09/30/90 +5.6 +16.7 0.05468 1.17 +6.2 +15.1
09/30/91 +4.7 +22.3 0.04643 1.22 +3.4 +19.0
09/30/92 +3.0 +25.9 0.02975 1.26 +3.0 +22.6
09/30/93 +1.9 +28.3 0.01835 1.28 +2.7 +25.9
09/30/94 +1.9 +30.8 0.01915 1.31 +3.0 +29.6
Total distributions $0.26866
(1) Investment operations began October 26, 1987.
/TABLE
<PAGE>
The tables are not adjusted for any taxes payable on reinvested
distributions or, in the case of the Money Market Fund, for any
contingent deferred sales charges which would be applied upon
redemption of Class B shares. The total values for the Funds as
of the end of each period reflect reinvestment of all
distributions and all changes in net asset value.
The Consumer Price Index, prepared by the U.S. Bureau of Labor
Statistics, is a commonly used measure of the rate of inflation.
The index shows the average change in the cost of selected
consumer goods and services and does not represent a return on an
investment vehicle.
From time to time a Fund may compare its performance to Bank
Passbook Savings Accounts, Bank Money Market Accounts or
Certificates of Deposit. Unlike an investment in the Funds,
these investments may be federally insured and thus there is less
risk of loss of principal. Also unlike the Funds, these
investments may pay a guaranteed yield for a given period of
time, provided that the investor does not withdraw funds before
maturity. The yield of a Fund is not fixed and will fluctuate
over time. Consequently, no yield quotation should be considered
as representative of what the yield of a Fund may be for any
specified period in the future. In addition, the maturity of
these investments may differ from the average maturity of a
Fund's portfolio, which will in turn affect the yield.
<PAGE>
<TABLE>
<CAPTION>
EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES
The table below shows the effect of the tax status of Tax Exempt Securities on the effective yield received by their
individual holders under the federal income tax laws expected to be in effect for 1995. It gives the approximate yield
a taxable security must earn at various income levels to produce after-tax yields equivalent to those of tax-exempt
securities yielding from 3.0% to 8.0%.
- -----------------------------------------------------------------------------------------
MARGINAL
TAXABLE INCOME* FEDERAL TAX-EXEMPT YIELD
------------------------ INCOME ------------------------------------
TAX
JOINT SINGLE RATE** 3% 4% 5% 6% 7% 8%
- -----------------------------------------------------------------------------------------
EQUIVALENT TAXABLE YIELD
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-38,000 $0-22,750 15.0% 3.5% 4.7% 5.9% 7.0% 8.2% 9.4%
38,001-91,850 22,751-55,100 28.0 4.2 5.6 6.9 8.3 9.7 11.1
91,851-140,000 *** 55,101-115,000 *** 31.0 4.3 5.8 7.3 8.7 10.1 11.6
140,001-250,000 *** 115,001-250,000 *** 36.0 4.7 6.3 7.8 9.4 10.9 12.5
over 250,000 *** over 250,000 *** 39.6 5.0 6.6 8.3 9.9 11.6 13.3
- ------------------------------------------------------------------------------------------
* This amount represents taxable income as defined in the Internal Revenue Code of 1986, as amended (the "Code").
** These rates are the marginal federal income tax rates on taxable income expected to be in effect for 1995 under
the Code.
*** The amount of taxable income in this bracket may be affected by the phase-out of personal exemptions and the
limitation on itemized deductions under the Code.
Of course, there is no assurance that the Funds will achieve any specific tax-exempt yield. While it is expected that
the Funds will invest principally in obligations which pay interest exempt from federal income tax, other income
received by the Funds may be taxable. The table does not take into account any state or local taxes payable on Fund
distributions.
/TABLE
<PAGE>
ADDITIONAL OFFICERS OF THE FUNDS
In addition to the persons listed as officers of the Funds in
Part II of this Statement, the following persons are also
officers of the Funds. Officers of Putnam Management hold the
same offices in Putnam Management's parent company, Putnam
Investments, Inc.
GARY N. COBURN, Vice President. Senior Managing Director of
Putnam Management. Director, Putnam Investments, Inc. Vice
President of certain of the Putnam funds.
LINDSEY M. CALLEN, Vice President. Vice President of Putnam
Management. Vice President of certain of the Putnam funds.
WILLIAM F. MCGUE, Vice President. Senior Vice President of
Putnam Management. Vice President of certain of the Putnam
funds.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
PUTNAM MONEY MARKET FUND
Price Waterhouse LLP, 160 Federal Street, Boston, MA 02110, are
the Money Market 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 period ended
September 30, 1994, filed electronically on November 7, 1994
(811-2608), are incorporated by reference into this Statement of
Additional Information. The financial highlights in the
Prospectus and the financial statements incorporated by reference
into the Prospectus and the Statement of Additional Information
have been so included and incorporated in reliance upon the
report of the independent accountants, given on their authority
as experts in auditing and accounting.
PUTNAM TAX EXEMPT MONEY MARKET FUND
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA
02109 are the Tax Exempt Money Market Fund's independent
accountants, providing audit services, tax return review services
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 Tax Exempt Money Market
Fund's Annual Report for the fiscal year ended September 30,
1994, filed electronically on November 16, 1994 (811-5215), are
incorporated by reference into this Statement of Additional
Information. The financial highlights in the Prospectus and the
financial statements incorporated by reference into the
Prospectus and the Statement of Additional Information have been
so included and incorporated in reliance upon the reports of the
independent accountants, given on their authority as experts in
auditing and accounting.
<PAGE>
<PAGE>
TABLE OF CONTENTS
MISCELLANEOUS INVESTMENT PRACTICES . . . . . . . . . . . . . . . . . . II-1
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-22
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . .II-27
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . .II-36
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-38
DISTRIBUTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . .II-49
INVESTOR SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . .II-50
SIGNATURE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . .II-56
SUSPENSION OF REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . .II-56
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . .II-57
STANDARD PERFORMANCE MEASURES. . . . . . . . . . . . . . . . . . . . .II-57
COMPARISON OF PORTFOLIO PERFORMANCE. . . . . . . . . . . . . . . . . .II-58
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-63
<PAGE>
THE PUTNAM FUNDS
STATEMENT OF ADDITIONAL INFORMATION
PART II
The following information applies generally to your Fund and to
the other Putnam funds. In certain cases the discussion applies
to some but not all of the funds or their shareholders, and you
should refer to your Prospectus to determine whether the matter
is applicable to you or your Fund. You will also be referred to
Part I for certain information applicable to your particular
Fund. Shareholders who purchase shares at net asset value
through employer-sponsored defined contribution plans should also
consult their employer for information about the extent to which
the matters described below apply to them.
MISCELLANEOUS INVESTMENT PRACTICES
YOUR FUND'S PROSPECTUS STATES WHICH OF THE FOLLOWING INVESTMENT
PRACTICES ARE AVAILABLE TO YOUR FUND. THE FACT THAT YOUR FUND IS
AUTHORIZED TO ENGAGE IN A PARTICULAR PRACTICE DOES NOT
NECESSARILY MEAN THAT IT WILL ACTUALLY DO SO. YOU SHOULD
DISREGARD ANY PRACTICE DESCRIBED BELOW WHICH IS NOT MENTIONED IN
THE PROSPECTUS.
SHORT-TERM TRADING
In seeking the Fund's objective, Putnam Management will buy or
sell portfolio securities whenever Putnam Management believes it
appropriate to do so. In deciding whether to sell a portfolio
security, Putnam Management does not consider how long the Fund
has owned the security. From time to time the Fund will buy
securities intending to seek short-term trading profits. A
change in the securities held by the Fund is known as "portfolio
turnover" and generally involves some expense to the Fund. These
expenses may include brokerage commissions or dealer mark-ups and
other transaction costs on both the sale of securities and the
reinvestment of the proceeds in other securities. If sales of
portfolio securities cause the Fund to realize net short-term
capital gains, such gains will be taxable as ordinary income. As
a result of the Fund's investment policies, under certain market
conditions the Fund's portfolio turnover rate may be higher than
that of other mutual funds. Portfolio turnover rate for a fiscal
year is the ratio of the lesser of purchases or sales of
portfolio securities to the monthly average of the value of
portfolio securities -- excluding securities whose maturities at
acquisition were one year or less. The Fund's portfolio turnover
rate is not a limiting factor when Putnam Management considers a
change in the Fund's portfolio.
<PAGE>
LOWER-RATED SECURITIES
The Fund may invest in lower-rated fixed-income securities
(commonly known as "junk bonds"), to the extent described in the
Prospectus. The lower ratings of certain securities held by the
Fund reflect a greater possibility that adverse changes in the
financial condition of the issuer or in general economic
conditions, or both, or an unanticipated rise in interest rates,
may impair the ability of the issuer to make payments of interest
and principal. The inability (or perceived inability) of issuers
to make timely payment of interest and principal would likely
make the values of securities held by the Fund more volatile and
could limit the Fund's ability to sell its securities at prices
approximating the values the Fund had placed on such securities.
In the absence of a liquid trading market for securities held by
it, the Fund may be unable at times to establish the fair value
of such securities. The rating assigned to a security by Moody's
Investors Service, Inc. or Standard & Poor's Corporation (or by
any other nationally recognized securities rating organization)
does not reflect an assessment of the volatility of the
security's market value or the liquidity of an investment in the
security. See the Prospectus or Part I of this Statement for a
description of security ratings.
Like those of other fixed-income securities, the values of
lower-rated securities fluctuate in response to changes in
interest rates. Thus, a decrease in interest rates will
generally result in an increase in the value of the Fund's
assets. Conversely, during periods of rising interest rates, the
value of the Fund's assets will generally decline. In addition,
the values of such securities are also affected by changes in
general economic conditions and business conditions affecting the
specific industries of their issuers. Changes by recognized
rating services in their ratings of any fixed-income security and
in the ability of an issuer to make payments of interest and
principal may also affect the value of these investments.
Changes in the value of portfolio securities generally will not
affect cash income derived from such securities, but will affect
the Fund's net asset value. The Fund will not necessarily
dispose of a security when its rating is reduced below its rating
at the time of purchase, although Putnam Management will monitor
the investment to determine whether its retention will assist in
meeting the Fund's investment objective.
At times, a substantial portion of the Fund's assets may be
invested in securities as to which the Fund, by itself or
together with other funds and accounts managed by Putnam
Management and its affiliates, holds a major portion or all of
such securities. Although Putnam Management generally considers
such securities to be liquid because of the availability of an
institutional market for such securities, it is possible that,
under adverse market or economic conditions or in the event of
adverse changes in the financial condition of the issuer, the
Fund could find it more difficult to sell such securities when
Putnam Management believes it advisable to do so or may be able
to sell such securities only at prices lower than if such
securities were more widely held. Under such circumstances, it
may also be more difficult to determine the fair value of such
securities for purposes of computing the Fund's net asset value.
In order to enforce its rights in the event of a default under
such securities, the Fund may be required to take possession of
and manage assets securing the issuer's obligations on such
securities, which may increase the Fund's operating expenses and
adversely affect the Fund's net asset value. In the case of
tax-exempt funds, any income derived from the Fund's ownership or
operation of such assets would not be tax-exempt. In addition,
the Fund's intention to qualify as a "regulated investment
company" under the Internal Revenue Code may limit the extent to
which the Fund may exercise its rights by taking possession of
such assets.
Certain securities held by the Fund may permit the issuer at its
option to "call", or redeem, its securities. If an issuer were
to redeem securities held by the Fund during a time of declining
interest rates, the Fund may not be able to reinvest the proceeds
in securities providing the same investment return as the
securities redeemed.
If the Fund's Prospectus describes so-called "zero-coupon" bonds
and "payment-in-kind" bonds as possible investments, the Fund may
invest without limit in such bonds unless otherwise specified in
the Prospectus. Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in
cash or in additional bonds. Because zero-coupon bonds do not
pay current interest, their value is subject to greater
fluctuation in response to changes in market interest rates than
bonds which pay interest currently. Both zero-coupon and
payment-in-kind bonds allow an issuer to avoid the need to
generate cash to meet current interest payments. Accordingly,
such bonds may involve greater credit risks than bonds paying
interest currently. Even though such bonds do not pay current
interest in cash, the Fund is nonetheless required to accrue
interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, the Fund could
be required at times to liquidate investments in order to satisfy
its dividend requirements.
The amount of information about the financial condition of an
issuer of tax exempt securities may not be as extensive as that
which is made available by corporations whose securities are
publicly traded. Therefore, to the extent the Fund invests in
tax exempt securities in the lower rating categories, the
achievement of the Fund's goals is more dependent on Putnam
Management's investment analysis than would be the case if the
Fund were investing in securities in the higher rating
categories.
INVESTMENTS IN MISCELLANEOUS FIXED INCOME SECURITIES
Unless otherwise specified in the Prospectus or elsewhere in this
Statement of Additional Information, if the Fund may invest in
inverse floating obligations and premium securities, it may do so
without limit. The Fund, however, currently does not intend to
invest more than 15% of its assets in inverse floating
obligations under normal market conditions.
SECURITIES LOANS
The Fund may make secured loans of its portfolio securities, on
either a short-term or long-term basis, amounting to not more
than 25% of its total assets, thereby realizing additional
income. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of
the securities or possible loss of rights in the collateral
should the borrower fail financially. As a matter of policy,
securities loans are made to broker-dealers pursuant to
agreements requiring that loans be continuously secured by
collateral consisting of cash or short-term debt obligations at
least equal at all times to the value of the securities on loan,
"marked-to-market" daily. The borrower pays to the Fund an
amount equal to any dividends or interest received on securities
lent. The Fund retains all or a portion of the interest received
on investment of the cash collateral or receives a fee from the
borrower. Although voting rights, or rights to consent, with
respect to the loaned securities pass to the borrower, the Fund
retains the right to call the loans at any time on reasonable
notice, and it will do so to enable the Fund to exercise voting
rights on any matters materially affecting the investment. The
Fund may also call such loans in order to sell the securities.
FORWARD COMMITMENTS
The Fund may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time
("forward commitments") if the Fund holds, and maintains until
the settlement date in a segregated account, cash or high-grade
debt obligations in an amount sufficient to meet the purchase
price, or if the Fund enters into offsetting contracts for the
forward sale of other securities it owns. In the case of to-be-
announced ("TBA") purchase commitments, the unit price and the
estimated principal amount are established when the Fund enters
into a contract, with the actual principal amount being within a
specified range of the estimate. Forward commitments may be
considered securities in themselves, and involve a risk of loss
if the value of the security to be purchased declines prior to
the settlement date, which risk is in addition to the risk of
decline in the value of the Fund's other assets. Where such
purchases are made through dealers, the Fund relies on the dealer
to consummate the sale. The dealer's failure to do so may result
in the loss to the Fund of an advantageous yield or price.
Although the Fund will generally enter into forward commitments
with the intention of acquiring securities for its portfolio or
for delivery pursuant to options contracts it has entered into,
the Fund may dispose of a commitment prior to settlement if
Putnam Management deems it appropriate to do so. The Fund may
realize short-term profits or losses upon the sale of forward
commitments.
The Fund may enter into TBA sale commitments to hedge its
portfolio positions or to sell mortgage-backed securities it owns
under delayed delivery arrangements. Proceeds of TBA sale
commitments are not received until the contractual settlement
date. During the time a TBA sale commitment is outstanding,
equivalent deliverable securities, or an offsetting TBA purchase
commitment deliverable on or before the sale commitment date, are
held as "cover" for the transaction. Unsettled TBA sale
commitments are valued at current market value of the underlying
securities. If the TBA sale commitment is closed through the
acquisition of an offsetting purchase commitment, the Fund
realizes a gain or loss on the commitment without regard to any
unrealized gain or loss on the underlying security. If the Fund
delivers securities under the commitment, the Fund realizes a
gain or loss from the sale of the securities based upon the unit
price established at the date the commitment was entered into.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements up to the limit
specified in the Prospectus. A repurchase agreement is a
contract under which the Fund acquires a security for a
relatively short period (usually not more than one week) subject
to the obligation of the seller to repurchase and the Fund to
resell such security at a fixed time and price (representing the
Fund's cost plus interest). It is the Fund's present intention
to enter into repurchase agreements only with commercial banks
and registered broker-dealers and only with respect to
obligations of the U.S. government or its agencies or
instrumentalities. Repurchase agreements may also be viewed as
loans made by the Fund which are collateralized by the securities
subject to repurchase. Putnam Management will monitor such
transactions to ensure that the value of the underlying
securities will be at least equal at all times to the total
amount of the repurchase obligation, including the interest
factor. If the seller defaults, the Fund could realize a loss on
the sale of the underlying security to the extent that the
proceeds of sale including accrued interest are less than the
resale price provided in the agreement including interest. In
addition, if the seller should be involved in bankruptcy or
insolvency proceedings, the Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal
and interest if the Fund is treated as an unsecured creditor and
required to return the underlying collateral to the seller's
estate.
Pursuant to an exemptive order issued by the Securities and
Exchange Commission, the Fund may transfer uninvested cash
balances into a joint account, along with cash of other Putnam
funds and certain other accounts. These balances may be invested
in one or more repurchase agreements and/or short-term money
market instruments.
OPTIONS ON SECURITIES
WRITING COVERED OPTIONS. The Fund may write covered call options
and covered put options on optionable securities held in its
portfolio, when in the opinion of Putnam Management such
transactions are consistent with the Fund's investment objectives
and policies. Call options written by the Fund give the
purchaser the right to buy the underlying securities from the
Fund at a stated exercise price; put options give the purchaser
the right to sell the underlying securities to the Fund at a
stated price.
The Fund may write only covered options, which means that, so
long as the Fund is obligated as the writer of a call option, it
will own the underlying securities subject to the option (or
comparable securities satisfying the cover requirements of
securities exchanges). In the case of put options, the Fund will
hold cash and/or high-grade short-term debt obligations equal to
the price to be paid if the option is exercised. In addition,
the Fund will be considered to have covered a put or call option
if and to the extent that it holds an option that offsets some or
all of the risk of the option it has written. The Fund may write
combinations of covered puts and calls on the same underlying
security.
The Fund will receive a premium from writing a put or call
option, which increases the Fund's return on the underlying
security in the event the option expires unexercised or is closed
out at a profit. The amount of the premium reflects, among other
things, the relationship between the exercise price and the
current market value of the underlying security, the volatility
of the underlying security, the amount of time remaining until
expiration, current interest rates, and the effect of supply and
demand in the options market and in the market for the underlying
security. By writing a call option, the Fund limits its
opportunity to profit from any increase in the market value of
the underlying security above the exercise price of the option
but continues to bear the risk of a decline in the value of the
underlying security. By writing a put option, the Fund assumes
the risk that it may be required to purchase the underlying
security for an exercise price higher than its then-current
market value, resulting in a potential capital loss unless the
security subsequently appreciates in value.
The Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction, in
which it purchases an offsetting option. The Fund realizes a
profit or loss from a closing transaction if the cost of the
transaction (option premium plus transaction costs) is less or
more than the premium received from writing the option. Because
increases in the market price of a call option generally reflect
increases in the market price of the security underlying the
option, any loss resulting from a closing purchase transaction
may be offset in whole or in part by unrealized appreciation of
the underlying security owned by the Fund.
If the Fund writes a call option but does not own the underlying
security, and when it writes a put option, the Fund may be
required to deposit cash or securities with its broker as
"margin", or collateral, for its obligation to buy or sell the
underlying security. As the value of the underlying security
varies, the Fund may have to deposit additional margin with the
broker. Margin requirements are complex and are fixed by
individual brokers, subject to minimum requirements currently
imposed by the Federal Reserve Board and by stock exchanges and
other self-regulatory organizations.
PURCHASING PUT OPTIONS. The Fund may purchase put options to
protect its portfolio holdings in an underlying security against
a decline in market value. Such protection is provided during
the life of the put option since the Fund, as holder of the
option, is able to sell the underlying security at the put
exercise price regardless of any decline in the underlying
security's market price. In order for a put option to be
profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the
premium and transaction costs. By using put options in this
manner, the Fund will reduce any profit it might otherwise have
realized from appreciation of the underlying security by the
premium paid for the put option and by transaction costs.
PURCHASING CALL OPTIONS. The Fund may purchase call options to
hedge against an increase in the price of securities that the
Fund wants ultimately to buy. Such hedge protection is provided
during the life of the call option since the Fund, as holder of
the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying
security's market price. In order for a call option to be
profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and
transaction costs.
RISK FACTORS IN OPTIONS TRANSACTIONS
The successful use of the Fund's options strategies depends on
the ability of Putnam Management to forecast correctly interest
rate and market movements. For example, if the Fund were to
write a call option based on Putnam Management's expectation that
the price of the underlying security would fall, but the price
were to rise instead, the Fund could be required to sell the
security upon exercise at a price below the current market price.
Similarly, if the Fund were to write a put option based on Putnam
Management's expectation that the price of the underlying
security would rise, but the price were to fall instead, the Fund
could be required to purchase the security upon exercise at a
price higher than the current market price.
When the Fund purchases an option, it runs the risk that it will
lose its entire investment in the option in a relatively short
period of time, unless the Fund exercises the option or enters
into a closing sale transaction before the option's expiration.
If the price of the underlying security does not rise (in the
case of a call) or fall (in the case of a put) to an extent
sufficient to cover the option premium and transaction costs, the
Fund will lose part or all of its investment in the option. This
contrasts with an investment by the Fund in the underlying
security, since the Fund will not realize a loss if the
security's price does not change.
The effective use of options also depends on the Fund's ability
to terminate option positions at times when Putnam Management
deems it desirable to do so. There is no assurance that the Fund
will be able to effect closing transactions at any particular
time or at an acceptable price.
If a secondary market in options were to become unavailable, the
Fund could no longer engage in closing transactions. Lack of
investor interest might adversely affect the liquidity of the
market for particular options or series of options. A market may
discontinue trading of a particular option or options generally.
In addition, a market could become temporarily unavailable if
unusual events -- such as volume in excess of trading or clearing
capability -- were to interrupt its normal operations.
A market may at times find it necessary to impose restrictions on
particular types of options transactions, such as opening
transactions. For example, if an underlying security ceases to
meet qualifications imposed by the market or the Options Clearing
Corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening
transactions in existing series may be prohibited. If an options
market were to become unavailable, the Fund as a holder of an
option would be able to realize profits or limit losses only by
exercising the option, and the Fund, as option writer, would
remain obligated under the option until expiration or exercise.
Disruptions in the markets for the securities underlying options
purchased or sold by the Fund could result in losses on the
options. If trading is interrupted in an underlying security,
the trading of options on that security is normally halted as
well. As a result, the Fund as purchaser or writer of an option
will be unable to close out its positions until options trading
resumes, and it may be faced with considerable losses if trading
in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation or other options
markets may impose exercise restrictions. If a prohibition on
exercise is imposed at the time when trading in the option has
also been halted, the Fund as purchaser or writer of an option
will be locked into its position until one of the two
restrictions has been lifted. If the Options Clearing
Corporation were to determine that the available supply of an
underlying security appears insufficient to permit delivery by
the writers of all outstanding calls in the event of exercise, it
may prohibit indefinitely the exercise of put options. The Fund,
as holder of such a put option, could lose its entire investment
if the prohibition remained in effect until the put option's
expiration.
Special risks are presented by internationally-traded options.
Because of time differences between the United States and various
foreign countries, and because different holidays are observed in
different countries, foreign options markets may be open for
trading during hours or on days when U.S. markets are closed. As
a result, option premiums may not reflect the current prices of
the underlying interest in the United States.
Over-the-counter ("OTC") options purchased by the Fund and assets
held to cover OTC options written by the Fund may, under certain
circumstances, be considered illiquid securities for purposes of
any limitation on the Fund's ability to invest in illiquid
securities.
FUTURES CONTRACTS AND RELATED OPTIONS
Subject to applicable law, and unless otherwise specified in the
Prospectus, the Fund may invest without limit in the types of
futures contracts and related options identified in the
Prospectus. A financial futures contract sale creates an
obligation by the seller to deliver the type of financial
instrument called for in the contract in a specified delivery
month for a stated price. A financial futures contract purchase
creates an obligation by the purchaser to take delivery of the
type of financial instrument called for in the contract in a
specified delivery month at a stated price. The specific
instruments delivered or taken, respectively, at settlement date
are not determined until on or near that date. The determination
is made in accordance with the rules of the exchange on which the
futures contract sale or purchase was made. Futures contracts
are traded in the United States only on commodity exchanges or
boards of trade -- known as "contract markets" -- approved for
such trading by the Commodity Futures Trading Commission (the
"CFTC"), and must be executed through a futures commission
merchant or brokerage firm which is a member of the relevant
contract market.
Although futures contracts (other than index futures) by their
terms call for actual delivery or acceptance of commodities or
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery.
Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific
type of financial instrument or commodity with the same delivery
date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid
the difference and realizes a gain. Conversely, if the price of
the offsetting purchase exceeds the price of the initial sale,
the seller realizes a loss. Similarly, the closing out of a
futures contract purchase is effected by the purchaser's entering
into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the purchaser realizes a gain, and if
the purchase price exceeds the offsetting sale price, he realizes
a loss. In general 40% of the gain or loss arising from the
closing out of a futures contract traded on an exchange approved
by the CFTC is treated as short-term gain or loss, and 60% is
treated as long-term gain or loss.
Unlike when the Fund purchases or sells a security, no price is
paid or received by the Fund upon the purchase or sale of a
futures contract. Upon entering into a contract, the Fund is
required to deposit with its custodian in a segregated account in
the name of the futures broker an amount of cash and/or U.S.
Government Securities. This amount is known as "initial margin."
The nature of initial margin in futures transactions is different
from that of margin in security transactions in that futures
contract margin does not involve the borrowing of funds to
finance the transactions. Rather, initial margin is similar to a
performance bond or good faith deposit which is returned to the
Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Futures contracts
also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance
margin", to and from the broker (or the custodian) are made on a
daily basis as the price of the underlying security or commodity
fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as "marking to
the market." For example, when the Fund has purchased a futures
contract on a security and the price of the underlying security
has risen, that position will have increased in value and the
Fund will receive from the broker a variation margin payment
based on that increase in value. Conversely, when the Fund has
purchased a security futures contract and the price of the
underlying security has declined, the position would be less
valuable and the Fund would be required to make a variation
margin payment to the broker.
The Fund may elect to close some or all of its futures positions
at any time prior to their expiration in order to reduce or
eliminate a hedge position then currently held by the Fund. The
Fund may close its positions by taking opposite positions which
will operate to terminate the Fund's position in the futures
contracts. Final determinations of variation margin are then
made, additional cash is required to be paid by or released to
the Fund, and the Fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
OPTIONS ON FUTURES CONTRACTS. The Fund may purchase and write
call and put options on futures contracts it may buy or sell and
enter into closing transactions with respect to such options to
terminate existing positions. Options on future contracts give
the purchaser the right in return for the premium paid to assume
a position in a futures contract at the specified option exercise
price at any time during the period of the option. The Fund may
use options on futures contracts in lieu of writing or buying
options directly on the underlying securities or purchasing and
selling the underlying futures contracts. For example, to hedge
against a possible decrease in the value of its portfolio
securities, the Fund may purchase put options or write call
options on futures contracts rather than selling futures
contracts. Similarly, the Fund may purchase call options or
write put options on futures contracts as a substitute for the
purchase of futures contracts to hedge against a possible
increase in the price of securities which the Fund expects to
purchase. Such options generally operate in the same manner as
options purchased or written directly on the underlying
investments.
As with options on securities, the holder or writer of an option
may terminate his position by selling or purchasing an offsetting
option. There is no guarantee that such closing transactions can
be effected.
The Fund will be required to deposit initial margin and
maintenance margin with respect to put and call options on
futures contracts written by it pursuant to brokers' requirements
similar to those described above in connection with the
discussion of futures contracts.
RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS.
Successful use of futures contracts by the Fund is subject to
Putnam Management's ability to predict movements in the direction
of interest rates and other factors affecting securities markets.
For example, if the Fund has hedged against the possibility of
decline in the values of its investments and the values of its
investments increase instead, the Fund will lose part or all of
the benefit of the increase through payments of daily maintenance
margin. The Fund may have to sell investments at a time when it
may be disadvantageous to do so in order to meet margin
requirements.
Compared to the purchase or sale of futures contracts, the
purchase of call or put options on futures contracts involves
less potential risk to the Fund because the maximum amount at
risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the purchase of
a call or put option on a futures contract would result in a loss
to the Fund when the purchase or sale of a futures contract would
not, such as when there is no movement in the prices of the
hedged investments. The writing of an option on a futures
contract involves risks similar to those risks relating to the
sale of futures contracts.
There is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render
certain market clearing facilities inadequate, and thereby result
in the institution by exchanges of special procedures which may
interfere with the timely execution of customer orders.
To reduce or eliminate a hedge position held by the Fund, the
Fund may seek to close out a position. The ability to establish
and close out positions will be subject to the development and
maintenance of a liquid secondary market. It is not certain that
this market will develop or continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid
secondary market on an exchange include the following: (i) there
may be insufficient trading interest in certain contracts or
options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii)
trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of contracts or
options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v)
the facilities of an exchange or a clearing corporation may not
at all times be adequate to handle current trading volume; or
(vi) one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the
trading of contracts or options (or a particular class or series
of contracts or options), in which event the secondary market on
that exchange for such contracts or options (or in the class or
series of contracts or options) would cease to exist, although
outstanding contracts or options on the exchange that had been
issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with
their terms.
U.S. TREASURY SECURITY FUTURES CONTRACTS AND OPTIONS. If the
Fund invests in tax-exempt securities issued by a governmental
entity, the Fund may purchase and sell futures contracts and
related options on U.S. Treasury securities when, in the opinion
of Putnam Management, price movements in Treasury security
futures and related options will correlate closely with price
movements in the tax-exempt securities which are the subject of
the hedge. U.S. Treasury security futures contracts require the
seller to deliver, or the purchaser to take delivery of, the type
of U.S. Treasury security called for in the contract at a
specified date and price. Options on U.S. Treasury security
futures contracts give the purchaser the right in return for the
premium paid to assume a position in a U.S. Treasury security
futures contract at the specified option exercise price at any
time during the period of the option.
Successful use of U.S. Treasury security futures contracts by the
Fund is subject to Putnam Management's ability to predict
movements in the direction of interest rates and other factors
affecting markets for debt securities. For example, if the Fund
has sold U.S. Treasury security futures contracts in order to
hedge against the possibility of an increase in interest rates
which would adversely affect tax-exempt securities held in its
portfolio, and the prices of the Fund's tax-exempt securities
increase instead as a result of a decline in interest rates, the
Fund will lose part or all of the benefit of the increased value
of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily maintenance margin requirements at
a time when it may be disadvantageous to do so.
There is also a risk that price movements in U.S. Treasury
security futures contracts and related options will not correlate
closely with price movements in markets for tax-exempt
securities. For example, if the Fund has hedged against a
decline in the values of tax-exempt securities held by it by
selling Treasury security futures and the values of Treasury
securities subsequently increase while the values of its
tax-exempt securities decrease, the Fund would incur losses on
both the Treasury security futures contracts written by it and
the tax-exempt securities held in its portfolio. Putnam
Management will seek to reduce this risk by monitoring movements
in markets for U.S. Treasury security futures and options and for
tax-exempt securities closely. The Fund will only purchase or
sell Treasury security futures or related options when, in the
opinion of Putnam Management, price movements in Treasury
security futures and related options will correlate closely with
price movements in tax-exempt securities in which the Fund
invests.
INDEX FUTURES CONTRACTS. An index futures contract is a contract
to buy or sell units of an index at a specified future date at a
price agreed upon when the contract is made. Entering into a
contract to buy units of an index is commonly referred to as
buying or purchasing a contract or holding a long position in
the index. Entering into a contract to sell units of an index is
commonly referred to as selling a contract or holding a short
position. A unit is the current value of the index. The Fund
may enter into stock index futures contracts, debt index futures
contracts, or other index futures contracts appropriate to its
objective. The Fund may also purchase and sell options on index
futures contracts.
For example, the Standard & Poor's Composite 500 Stock Price
Index ("S&P 500") is composed of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The S&P 500
assigns relative weightings to the common stocks included in the
Index, and the value fluctuates with changes in the market values
of those common stocks. In the case of the S&P 500, contracts
are to buy or sell 500 units. Thus, if the value of the S&P 500
were $150, one contract would be worth $75,000 (500 units x
$150). The stock index futures contract specifies that no
delivery of the actual stocks making up the index will take
place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the
difference between the contract price and the actual level of the
stock index at the expiration of the contract. For example, if
the Fund enters into a futures contract to buy 500 units of the
S&P 500 at a specified future date at a contract price of $150
and the S&P 500 is at $154 on that future date, the Fund will
gain $2,000 (500 units x gain of $4). If the Fund enters into a
futures contract to sell 500 units of the stock index at a
specified future date at a contract price of $150 and the S&P 500
is at $152 on that future date, the Fund will lose $1,000 (500
units x loss of $2).
There are several risks in connection with the use by the Fund of
index futures as a hedging device. One risk arises because of
the imperfect correlation between movements in the prices of the
index futures and movements in the prices of securities which are
the subject of the hedge. Putnam Management will, however,
attempt to reduce this risk by buying or selling, to the extent
possible, futures on indices the movements of which will, in its
judgment, have a significant correlation with movements in the
prices of the securities sought to be hedged.
Successful use of index futures by the Fund for hedging purposes
is also subject to Putnam Management's ability to predict
movements in the direction of the market. It is possible that,
where the Fund has sold futures to hedge its portfolio against a
decline in the market, the index on which the futures are written
may advance and the value of securities held in the Fund's
portfolio may decline. If this occurred, the Fund would lose
money on the futures and also experience a decline in value in
its portfolio securities. It is also possible that, if the Fund
has hedged against the possibility of a decline in the market
adversely affecting securities held in its portfolio and
securities prices increase instead, the Fund will lose part or
all of the benefit of the increased value of those securities it
has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Fund has
insufficient cash, it may have to sell securities to meet daily
variation margin requirements at a time when it is
disadvantageous to do so.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the
index futures and the portion of the portfolio being hedged, the
prices of index futures may not correlate perfectly with
movements in the underlying index due to certain market
distortions. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors
may close futures contracts through offsetting transactions which
could distort the normal relationship between the index and
futures markets. Second, margin requirements in the futures
market are less onerous than margin requirements in the
securities market, and as a result the futures market may attract
more speculators than the securities market does. Increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortions in the futures market and also because of the
imperfect correlation between movements in the index and
movements in the prices of index futures, even a correct forecast
of general market trends by Putnam Management may still not
result in a successful hedging transaction over a short time
period.
OPTIONS ON STOCK INDEX FUTURES. Options on index futures are
similar to options on securities except that options on index
futures give the purchaser the right, in return for the premium
paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during
the period of the option. Upon exercise of the option, the
delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the index
futures contract, at exercise, exceeds (in the case of a call) or
is less than (in the case of a put) the exercise price of the
option on the index future. If an option is exercised on the
last trading day prior to its expiration date, the settlement
will be made entirely in cash equal to the difference between the
exercise price of the option and the closing level of the index
on which the future is based on the expiration date. Purchasers
of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.
OPTIONS ON INDICES
As an alternative to purchasing call and put options on index
futures, the Fund may purchase and sell call and put options on
the underlying indices themselves. Such options would be used in
a manner identical to the use of options on index futures.
INDEX WARRANTS
The Fund may purchase put warrants and call warrants whose values
vary depending on the change in the value of one or more
specified securities indices ("index warrants"). Index warrants
are generally issued by banks or other financial institutions and
give the holder the right, at any time during the term of the
warrant, to receive upon exercise of the warrant a cash payment
from the issuer based on the value of the underlying index at the
time of exercise. In general, if the value of the underlying
index rises above the exercise price of the index warrant, the
holder of a call warrant will be entitled to receive a cash
payment from the issuer upon exercise based on the difference
between the value of the index and the exercise price of the
warrant; if the value of the underlying index falls, the holder
of a put warrant will be entitled to receive a cash payment from
the issuer upon exercise based on the difference between the
exercise price of the warrant and the value of the index. The
holder of a warrant would not be entitled to any payments from
the issuer at any time when, in the case of a call warrant, the
exercise price is greater than the value of the underlying index,
or, in the case of a put warrant, the exercise price is less than
the value of the underlying index. If the Fund were not to
exercise an index warrant prior to its expiration, then the Fund
would lose the amount of the purchase price paid by it for the
warrant.
The Fund will normally use index warrants in a manner similar to
its use of options on securities indices. The risks of the
Fund's use of index warrants are generally similar to those
relating to its use of index options. Unlike most index options,
however, index warrants are issued in limited amounts and are not
obligations of a regulated clearing agency, but are backed only
by the credit of the bank or other institution which issues the
warrant. Also, index warrants generally have longer terms than
index options. Although the Fund will normally invest only in
exchange-listed warrants, index warrants are not likely to be as
liquid as certain index options backed by a recognized clearing
agency. In addition, the terms of index warrants may limit the
Fund's ability to exercise the warrants at such time, or in such
quantities, as the Fund would otherwise wish to do.
FOREIGN SECURITIES
Under its current policy, which may be changed without
shareholder approval, the Fund may invest up to the limit of its
total assets specified in its Prospectus in securities
principally traded in markets outside the United States.
Eurodollar certificates of deposit are excluded for purposes of
this limitation. Foreign investments can be affected favorably
or unfavorably by changes in currency exchange rates and in
exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Securities of
some foreign companies are less liquid or more volatile than
securities of U.S. companies, and foreign brokerage commissions
and custodian fees are generally higher than in the United
States. Investments in foreign securities can involve other
risks different from those affecting U.S. investments, including
local political or economic developments, expropriation or
nationalization of assets and imposition of withholding taxes on
dividend or interest payments. To hedge against possible
variations in foreign exchange rates, the Fund may purchase and
sell forward foreign currency contracts. These represent
agreements to purchase or sell specified currencies at specified
dates and prices. The Fund will only purchase and sell forward
foreign currency contracts in amounts Putnam Management deems
appropriate to hedge existing or anticipated portfolio positions
and will not use such forward contracts for speculative purposes.
Foreign securities, like other assets of the Fund, will be held
by the Fund's custodian or by a subcustodian.
FOREIGN CURRENCY TRANSACTIONS
Unless otherwise specified in the Prospectus, the Fund may engage
without limit in currency exchange transactions, as well as
foreign currency forward and futures contracts, to protect
against uncertainty in the level of future currency exchange
rates. In addition, the Fund may write covered call and put
options on foreign currencies for the purpose of increasing its
current return.
Generally, the Fund may engage in both "transaction hedging" and
"position hedging". When it engages in transaction hedging, the
Fund enters into foreign currency transactions with respect to
specific receivables or payables, generally arising in connection
with the purchase or sale of portfolio securities. The Fund will
engage in transaction hedging when it desires to "lock in" the
U.S. dollar price of a security it has agreed to purchase or
sell, or the U.S. dollar equivalent of a dividend or interest
payment in a foreign currency. By transaction hedging the Fund
will attempt to protect itself against a possible loss resulting
from an adverse change in the relationship between the U.S.
dollar and the applicable foreign currency during the period
between the date on which the security is purchased or sold, or
on which the dividend or interest payment is earned, and the date
on which such payments are made or received.
The Fund may purchase or sell a foreign currency on a spot (or
cash) basis at the prevailing spot rate in connection with the
settlement of transactions in portfolio securities denominated in
that foreign currency. The Fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward
contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes the Fund may also purchase
exchange-listed and over-the-counter call and put options on
foreign currency futures contracts and on foreign currencies. A
put option on a futures contract gives the Fund the right to
assume a short position in the futures contract until the
expiration of the option. A put option on a currency gives the
Fund the right to sell the currency at an exercise price until
the expiration of the option. A call option on a futures
contract gives the Fund the right to assume a long position in
the futures contract until the expiration of the option. A call
option on a currency gives the Fund the right to purchase the
currency at the exercise price until the expiration of the
option.
When it engages in position hedging, the Fund enters into foreign
currency exchange transactions to protect against a decline in
the values of the foreign currencies in which its portfolio
securities are denominated (or an increase in the value of
currency for securities which the Fund expects to purchase, when
the Fund holds cash or short-term investments). In connection
with position hedging, the Fund may purchase put or call options
on foreign currency and on foreign currency futures contracts and
buy or sell forward contracts and foreign currency futures
contracts. The Fund may also purchase or sell foreign currency
on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved
will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of
market movements in the value of those securities between the
dates the currency exchange transactions are entered into and the
dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward
or futures contract. Accordingly, it may be necessary for the
Fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of
the security or securities being hedged is less than the amount
of foreign currency the Fund is obligated to deliver and a
decision is made to sell the security or securities and make
delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities if
the market value of such security or securities exceeds the
amount of foreign currency the Fund is obligated to deliver.
Transaction and position hedging do not eliminate fluctuations in
the underlying prices of the securities which the Fund owns or
intends to purchase or sell. They simply establish a rate of
exchange which one can achieve at some future point in time.
Additionally, although these techniques tend to minimize the risk
of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the
increase in value of such currency.
The Fund may seek to increase its current return or to offset
some of the costs of hedging against fluctuations in current
exchange rates by writing covered call options and covered put
options on foreign currencies. The Fund receives a premium from
writing a call or put option, which increases the Fund's current
return if the option expires unexercised or is closed out at a
net profit. The Fund may terminate an option that it has written
prior to its expiration by entering into a closing purchase
transaction in which it purchases an option having the same terms
as the option written.
The Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. Putnam Management
will engage in such "cross hedging" activities when it believes
that such transactions provide significant hedging opportunities
for the Fund. Cross hedging transactions by the Fund involve the
risk of imperfect correlation between changes in the values of
the currencies to which such transactions relate and changes in
the value of the currency or other asset or liability which is
the subject of the hedge.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign
currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number
of days from the date of the contract as agreed by the parties,
at a price set at the time of the contract. In the case of a
cancelable forward contract, the holder has the unilateral right
to cancel the contract at maturity by paying a specified fee.
The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage
for trades. A foreign currency futures contract is a
standardized contract for the future delivery of a specified
amount of a foreign currency at a future date at a price set at
the time of the contract. Foreign currency futures contracts
traded in the United States are designed by and traded on
exchanges regulated by the CFTC, such as the New York Mercantile
Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the
maturity date of a forward contract may be any fixed number of
days from the date of the contract agreed upon by the parties,
rather than a predetermined date in a given month. Forward
contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange
contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires
no margin or other deposit.
At the maturity of a forward or futures contract, the Fund either
may accept or make delivery of the currency specified in the
contract, or at or prior to maturity enter into a closing
transaction involving the purchase or sale of an offsetting
contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to
the original forward contract. Closing transactions with respect
to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes
responsibility for closing out such contracts.
Positions in the foreign currency futures contracts may be closed
out only on an exchange or board of trade which provides a
secondary market in such contracts. Although the Fund intends to
purchase or sell foreign currency futures contracts only on
exchanges or boards of trade where there appears to be an active
secondary market, there is no assurance that a secondary market
on an exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse
price movements, the Fund would continue to be required to make
daily cash payments of variation margin.
FOREIGN CURRENCY OPTIONS. In general, options on foreign
currencies operate similarly to options on securities and are
subject to many similar risks. Foreign currency options are
traded primarily in the over-the-counter market, although options
on foreign currencies have recently been listed on several
exchanges. Options are traded not only on the currencies of
individual nations, but also on the European Currency Unit
("ECU"). The ECU is composed of amounts of a number of
currencies, and is the official medium of exchange of the
European Community's European Monetary System.
The Fund will only purchase or write foreign currency options
when Putnam Management believes that a liquid secondary market
exists for such options. There can be no assurance that a liquid
secondary market will exist for a particular option at any
specific time. Options on foreign currencies are affected by all
of those factors which influence foreign exchange rates and
investments generally.
The value of any currency, including U.S. dollars and foreign
currencies, may be affected by complex political and economic
factors applicable to the issuing country. In addition, the
exchange rates of foreign currencies (and therefore the values
of foreign currency options) may be affected significantly,
fixed, or supported directly or indirectly by U.S. and foreign
government actions. Government intervention may increase risks
involved in purchasing or selling foreign currency options, since
exchange rates may not be free to fluctuate in response to other
market forces.
The value of a foreign currency option reflects the value of an
exchange rate, which in turn reflects relative values of two
currencies, the U.S. dollar and the foreign currency in question.
Because foreign currency transactions occurring in the interbank
market involve substantially larger amounts than those that may
be involved in the exercise of foreign currency options,
investors may be disadvantaged by having to deal in an odd lot
market for the underlying foreign currencies in connection with
options at prices that are less favorable than for round lots.
Foreign governmental restrictions or taxes could result in
adverse changes in the cost of acquiring or disposing of foreign
currencies.
There is no systematic reporting of last sale information for
foreign currencies and there is no regulatory requirement that
quotations available through dealers or other market sources be
firm or revised on a timely basis. Available quotation
information is generally representative of very large round-lot
transactions in the interbank market and thus may not reflect
exchange rates for smaller odd-lot transactions (less than $1
million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To
the extent that options markets are closed while the markets for
the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be
reflected in the options markets.
SETTLEMENT PROCEDURES. Settlement procedures relating to the
Fund's investments in foreign securities and to the Fund's
foreign currency exchange transactions may be more complex than
settlements with respect to investments in debt or equity
securities of U.S. issuers, and may involve certain risks not
present in the Fund's domestic investments. For example,
settlement of transactions involving foreign securities or
foreign currency may occur within a foreign country, and the Fund
may be required to accept or make delivery of the underlying
securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay
any fees, taxes or charges associated with such delivery. Such
investments may also involve the risk that an entity involved in
the settlement may not meet its obligations.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers
do not charge a fee for currency conversion, they do realize a
profit based on the difference (the "spread") between prices at
which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the Fund at one
rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
RESTRICTED SECURITIES
The SEC Staff currently takes the view that any designation by
the Trustees of the authority to determine that a restricted
security is readily marketable (as described in the investment
restrictions of the Funds) must be pursuant to written procedures
established by the Trustees. It is the present intention of the
Funds' Trustees that, if the Trustees decide to delegate such
determinations to Putnam Management or another person, they would
do so pursuant to written procedures, consistent with the Staff's
position. Should the Staff modify its position in the future,
the Trustees would consider what action would be appropriate in
light of the Staff's position at that time.
TAXES
TAXATION OF THE FUND. The Fund intends to qualify each year as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In order so to
qualify and to qualify for the special tax treatment accorded
regulated investment companies and their shareholders, the Fund
must, among other things:
(a) Derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and
gains from the sale of stock, securities and foreign currencies,
or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its
business of investing in such stock, securities, or currencies;
(b) derive less than 30% of its gross income from the sale or
other disposition of certain assets (including stock or
securities and certain options, futures contracts, forward
contracts and foreign currencies) held for less than three
months;
(c) distribute with respect to each taxable year at least 90% of
the sum of its taxable net investment income, its net tax-exempt
income, and the excess, if any, of net short-term capital gains
over net long-term capital losses for such year; and
(d) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of the Fund's
assets is represented by cash and cash items, U.S. Government
securities, securities of other regulated investment companies,
and other securities limited in respect of any one issuer to a
value not greater than 5% of the value of the Fund's total assets
and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities (other than those of the
U.S. Government or other regulated investment companies) of any
one issuer or of two or more issuers which the Fund controls and
which are engaged in the same, similar, or related trades or
businesses.
If the Fund qualifies as a regulated investment company that is
accorded special tax treatment, the Fund will not be subject to
federal income tax on income paid to its shareholders in the form
of dividends (including capital gain dividends).
If the Fund failed to qualify as a regulated investment company
accorded special tax treatment in any taxable year, the Fund
would be subject to tax on its taxable income at corporate rates,
and all distributions from earnings and profits, including any
distributions of net tax-exempt income and net long-term capital
gains, would be taxable to shareholders as ordinary income. In
addition, the Fund could be required to recognize unrealized
gains, pay substantial taxes and interest and make substantial
distributions before requalifying as a regulated investment
company that is accorded special tax treatment.
If the Fund fails to distribute in a calendar year substantially
all of its ordinary income for such year and substantially all of
its capital gain net income for the one-year period ending
October 31 (or later if the Fund is permitted so to elect and so
elects), plus any retained amount from the prior year, the Fund
will be subject to a 4% excise tax on the undistributed amounts.
A dividend paid to shareholders by the Fund in January of a year
generally is deemed to have been paid by the Fund on December 31
of the preceding year, if the dividend was declared and payable
to shareholders of record on a date in October, November or
December of that preceding year. The Fund intends generally to
make distributions sufficient to avoid imposition of the 4%
excise tax.
EXEMPT-INTEREST DIVIDENDS. The Fund will be qualified to pay
exempt-interest dividends to its shareholders only if, at the
close of each quarter of the Fund's taxable year, at least 50% of
the total value of the Fund's assets consists of obligations the
interest on which is exempt from federal income tax.
Distributions that the Fund properly designates as exempt-
interest dividends are treated by shareholders as interest
excludable from their gross income for federal income tax
purposes but may be taxable for federal alternative minimum tax
purposes and for state and local purposes. If the Fund intends
to be qualified to pay exempt-interest dividends, the Fund may be
limited in its ability to enter into taxable transactions
involving forward commitments, repurchase agreements, financial
futures, and options contracts on financial futures, tax-exempt
bond indices, and other assets.
Part or all of the interest on indebtedness, if any, incurred or
continued by a shareholder to purchase or carry shares of a Fund
paying exempt-interest dividends is not deductible. The portion
of interest that is not deductible is equal to the total interest
paid or accrued on the indebtedness, multiplied by the percentage
of the Fund's total distributions (not including distributions
from net long-term capital gains) paid to the shareholder that
are exempt-interest dividends. Under rules used by the Internal
Revenue Service for determining when borrowed funds are
considered used for the purpose of purchasing or carrying
particular assets, the purchase of shares may be considered to
have been made with borrowed funds even though such funds are not
directly traceable to the purchase of shares.
In general, exempt-interest dividends, if any, attributable to
interest received on certain private activity obligations and
certain industrial development bonds will not be tax-exempt to
any shareholders who are "substantial users" of the facilities
financed by such obligations or bonds or who are "related
persons" of such substantial users.
A Fund which is qualified to pay exempt-interest dividends will
inform investors within 60 days of the Fund's fiscal year-end of
the percentage of its income distributions designated as
tax-exempt. The percentage is applied uniformly to all
distributions made during the year. The percentage of income
designated as tax-exempt for any particular distribution may be
substantially different from the percentage of the Fund's income
that was tax-exempt during the period covered by the
distribution.
HEDGING TRANSACTIONS. If the Fund engages in transactions,
including hedging transactions in options, futures contracts, and
straddles, or other similar transactions, it will be subject to
special tax rules (including mark-to-market, straddle, wash sale,
and short sale rules), the effect of which may be to accelerate
income to the Fund, defer losses to the Fund, cause adjustments
in the holding periods of the Fund's securities, or convert
short-term capital losses into long-term capital losses. These
rules could therefore affect the amount, timing and character of
distributions to shareholders. The Fund will endeavor to make
any available elections pertaining to such transactions in a
manner believed to be in the best interests of the Fund.
Under the 30% of gross income test described above (see "Taxation
of the Fund"), the Fund will be restricted in selling assets held
or considered under Code rules to have been held for less than
three months, and in engaging in certain hedging transactions
(including hedging transactions in options and futures) that in
some circumstances could cause certain Fund assets to be treated
as held for less than three months.
Certain of the Fund's hedging activities (including its
transactions, if any, in foreign currencies or foreign
currency-denominated instruments) are likely to produce a
difference between its book income and its taxable income. If
the Fund's book income exceeds its taxable income, the
distribution (if any) of such excess will be treated as a
dividend to the extent of the Fund's remaining earnings and
profits (including earnings and profits arising from tax-exempt
income), and thereafter as a return of capital or as gain from
the sale or exchange of a capital asset, as the case may be. If
the Fund's book income is less than its taxable income, the Fund
could be required to make distributions exceeding book income to
qualify as a regulated investment company that is accorded
special tax treatment.
RETURN OF CAPITAL DISTRIBUTIONS. If the Fund makes a
distribution to you in excess of its current and accumulated
"earnings and profits" in any taxable year, the excess
distribution will be treated as a return of capital to the extent
of your tax basis in your shares, and thereafter as capital gain.
A return of capital is not taxable, but it reduces your tax basis
in your shares, thus reducing any loss or increasing any gain on
a subsequent taxable disposition by you of your shares.
SECURITIES ISSUED OR PURCHASED AT A DISCOUNT. The Fund's
investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a
discount may) require the Fund to accrue and distribute income
not yet received. In order to generate sufficient cash to make
the requisite distributions, the Fund may be required to sell
securities in its portfolio that it otherwise would have
continued to hold.
CAPITAL LOSS CARRYOVER. The amounts and expiration dates of any
capital loss carryovers available to the Fund are shown in Note 1
(Federal income taxes) to the financial statements included in
Part I of this Statement or incorporated by reference into this
Statement.
FOREIGN CURRENCY-DENOMINATED SECURITIES AND RELATED HEDGING
TRANSACTIONS. The Fund's transactions in foreign currencies,
foreign currency-denominated debt securities and certain foreign
currency options, futures contracts, and forward contracts (and
similar instruments) may give rise to ordinary income or loss to
the extent such income or loss results from fluctuations in the
value of the foreign currency concerned.
If more than 50% of the Fund's assets at year end consists of the
debt and equity securities of foreign corporations, the Fund may
elect to permit shareholders to claim a credit or deduction on
their income tax returns for their pro rata portion of qualified
taxes paid by the Fund to foreign countries. In such a case,
shareholders will include in gross income from foreign sources
their pro rata shares of such taxes. A shareholder's ability to
claim a foreign tax credit or deduction in respect of foreign
taxes paid by the Fund may be subject to certain limitations
imposed by the Code, as a result of which a shareholder may not
get a full credit or deduction for the amount of such taxes.
Shareholders who do not itemize on their federal income tax
returns may claim a credit (but no deduction) for such foreign
taxes.
Investment by the Fund in certain "passive foreign investment
companies" could subject the Fund to a U.S. federal income tax or
other charge on the proceeds from the sale of its investment in
such a company; however, this tax can be avoided by making an
election to mark such investments to market annually or to treat
the passive foreign investment company as a "qualified electing
fund."
SALE OR REDEMPTION OF SHARES. The sale, exchange or redemption
of Fund shares may give rise to a gain or loss. In general, any
gain or loss realized upon a taxable disposition of shares will
be treated as long-term capital gain or loss if the shares have
been held for more than 12 months, and otherwise as short-term
capital gain or loss. However, if a shareholder sells shares at
a loss within six months of purchase, any loss will be disallowed
for Federal income tax purposes to the extent of any exempt-
interest dividends received on such shares. In addition, any
loss (not already disallowed as provided in the preceding
sentence) realized upon a taxable disposition of shares held for
six months or less will be treated as long-term, rather than
short-term, to the extent of any long-term capital gain
distributions received by the shareholder with respect to the
shares. All or a portion of any loss realized upon a taxable
disposition of Fund shares will be disallowed if other Fund
shares are purchased within 30 days before or after the
disposition. In such a case, the basis of the newly purchased
shares will be adjusted to reflect the disallowed loss.
SHARES PURCHASED THROUGH TAX-QUALIFIED PLANS. Special tax rules
apply to investments though defined contribution plans and other
tax-qualified plans. Shareholders should consult their tax
adviser to determine the suitability of shares of a fund as an
investment through such plans and the precise effect of an
investment on their particular tax situation.
BACKUP WITHHOLDING. The Fund generally is required to withhold
and remit to the U.S. Treasury 31% of the taxable dividends and
other distributions paid to any individual shareholder who fails
to furnish the Fund with a correct taxpayer identification number
(TIN), who has underreported dividends or interest income, or who
fails to certify to the Fund that he or she is not subject to
such withholding. Shareholders who fail to furnish their currect
TIN are subject to a penalty of $50 for each such failure unless
the failure is due to reasonable cause and not wilful neglect.
An individual's taxpayer identification number is his or her
social security number.
MANAGEMENT OF THE FUND
TRUSTEES
*+GEORGE PUTNAM, Chairman and President. Chairman and Director
of Putnam Management and Putnam Mutual Funds. Director, The
Boston Company, Inc., Boston Safe Deposit and Trust Company,
Freeport-McMoRan, Inc., General Mills, Inc., Houghton Mifflin
Company, Marsh & McLennan Companies, Inc. and Rockefeller Group,
Inc.
+WILLIAM F. POUNDS, Vice Chairman. Professor of Management,
Alfred P. Sloan School of Management, Massachusetts Institute of
Technology. Director of EG&G, Inc., Fisher Price, Inc., IDEXX,
M/A-COM, Inc., and Sun Company, Inc.
JAMESON A. BAXTER, Trustee. President, Baxter Associates, Inc.
(consultants to management). Director of Avondale Federal Savings
Bank, ASHTA Chemicals, Inc. and Banta Corporation. Chairman of
the Board of Trustees, Mount Holyoke College.
+HANS H. ESTIN, Trustee. Vice Chairman, North American
Management Corp. (a registered investment adviser). Director of
The Boston Company, Inc. and Boston Safe Deposit and Trust
Company.
ELIZABETH T. KENNAN, Trustee. President of Mount Holyoke
College. Director, the Kentucky Home Life Insurance Companies,
NYNEX Corporation, Northeast Utilities and Talbots and Trustee of
the University of Notre Dame.
*LAWRENCE J. LASSER, Trustee and Vice President. President,
Chief Executive Officer and Director of Putnam Investments, Inc.
and Putnam Investment Management, Inc. Director of Marsh &
McLennan Companies, Inc. Vice President of the Putnam funds.
JOHN A. HILL, Trustee. Chairman and Managing Director, First
Reserve Corporation (a registered investment adviser). Director,
Lantana Corporation, Maverick Tube Corporation, Snyder Oil
Corporation and various First Reserve Funds.
+ROBERT E. PATTERSON, Trustee. Executive Vice President, Cabot
Partners Limited Partnership (a registered investment adviser).
DONALD S. PERKINS, Trustee. Director of various corporations,
including American Telephone & Telegraph Company, AON Corp.,
Cummins Engine Company, Inc., Illinois Power Company, Inland
Steel Industries, Inc., K mart Corporation, LaSalle Street Fund,
Inc., Springs Industries, Inc., TBG, Inc. and Time Warner Inc.
*#GEORGE PUTNAM, III, Trustee. President, New Generation
Research, Inc. (publisher of bankruptcy information). Director,
World Environment Center.
*A.J.C. SMITH, Trustee. Chairman, Chief Executive Officer and
Director, Marsh & McLennan Companies, Inc.
W. NICHOLAS THORNDIKE, Trustee. Director of various corporations
and charitable organizations, including Courier Corporation and
Providence Journal Co. Also, Trustee and President of
Massachusetts General Hospital and Trustee of Bradley Real Estate
Trust and Eastern Utilities Associates.
OFFICERS
CHARLES E. PORTER, Executive Vice President. Managing Director
of Putnam Investments, Inc. and Putnam Investment Management,
Inc. Executive Vice President of the Putnam funds.
PATRICIA C. FLAHERTY, Senior Vice President. Senior Vice
President of Putnam Investments, Inc. and Putnam Investment
Management, Inc.
WILLIAM N. SHIEBLER, Vice President. Director and Senior
Managing Director of Putnam Investments, Inc. President, Chief
Operating Officer and Director of Putnam Mutual Funds. Vice
President of the Putnam funds.
GORDON H. SILVER, Vice President. Senior Managing Director of
Putnam Investments, Inc. and Putnam Investment Management, Inc.
Director, Putnam Investments, Inc. and Putnam Investment
Management, Inc. Vice President of the Putnam funds.
JOHN R. VERANI, Vice President. Senior Vice President of Putnam
Investments, Inc. and Putnam Investment Management, Inc. Vice
President of the Putnam funds.
PAUL M. O'NEIL, Vice President. Vice President of Putnam
Investments, Inc. and Putnam Investment Management, Inc. Vice
President of the Putnam funds.
JOHN D. HUGHES, Vice President and Treasurer. Vice President and
Treasurer of the Putnam funds.
KATHERINE HOWARD, Assistant Vice President. Assistant Vice
President of the Putnam funds.
BEVERLY MARCUS, Clerk and Assistant Treasurer. Clerk and
Assistant Treasurer of the Putnam funds.
*Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) of the Fund, Putnam Management or
Putnam Mutual Funds.
+Members of the Executive Committee of the Trustees. The
Executive Committee meets between regular meetings of the
Trustees as may be required to review investment matters and
other affairs of the Fund and may exercise all of the powers of
the Trustees.
#George Putnam, III is the son of George Putnam.
-----------------
Certain other officers of Putnam Management are officers of your
Fund. SEE "ADDITIONAL OFFICERS OF THE FUND" IN PART I OF THIS
STATEMENT. The mailing address of each of the officers and
Trustees is One Post Office Square, Boston, Massachusetts 02109.
Except as stated below, the principal occupations of the officers
and Trustees for the last five years have been with the employers
as shown above, although in some cases they have held different
positions with such employers. Also, prior to January, 1992, Ms.
Baxter was Vice President and Principal, Regency Group, Inc. and
Consultant, The First Boston Corporation. Prior to May, 1991,
Mr. Pounds was Senior Advisor to the Rockefeller Family and
Associates, Chairman of Rockefeller Trust Company and Director of
Rockefeller Group, Inc. Prior to November, 1990, Mr. Shiebler
was President and Chief Operating Officer of the Intercapital
Division of Dean Witter Reynolds, Inc., Vice President of the
Dean Witter Funds and Director of Dean Witter Trust Company.
Each Trustee of the Fund receives an annual fee and an additional
fee for each Trustees' meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings and for special services rendered
in that connection. All of the Trustees are Trustees of all the
Putnam funds and each receives fees for his or her services. FOR
DETAILS OF TRUSTEES' FEES PAID BY THE FUND, SEE "FUND CHARGES AND
EXPENSES" IN PART I OF THIS STATEMENT.
The Agreement and Declaration of Trust of the Fund provides that
the Fund will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the
Fund, except if it is determined in the manner specified in the
Agreement and Declaration of Trust that they have not acted in
good faith in the reasonable belief that their actions were in
the best interests of the Fund or that such indemnification would
relieve any officer or Trustee of any liability to the Fund or
its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. The
Fund, at its expense, provides liability insurance for the
benefit of its Trustees and officers.
Putnam Management, Putnam Mutual Funds and Putnam Fiduciary Trust
Company are subsidiaries of Putnam Investments, Inc., a holding
company which is in turn wholly owned by Marsh & McLennan
Companies, Inc., a publicly owned holding company whose principal
operating subsidiaries are international insurance and
reinsurance brokers, investment managers and management
consultants.
Trustees and officers of the Fund who are also officers of Putnam
Management or its affiliates or who are stockholders of Marsh &
McLennan Companies, Inc. will benefit from the advisory fees,
sales commissions, distribution fees (if any), custodian fees and
transfer agency fees paid or allowed by the Fund.
PUTNAM MANAGEMENT
Putnam Management is one of America's oldest and largest money
management firms. Putnam Management's staff of experienced
portfolio managers and research analysts selects securities and
constantly supervises the Fund's portfolio. By pooling an
investor's money with that of other investors, a greater variety
of securities can be purchased than would be the case
individually; the resulting diversification helps reduce
investment risk. Putnam Management has been managing mutual funds
since 1937. Today, the firm serves as the investment manager for
the funds in the Putnam Family, with over $65 billion in assets
in over 4.0 million shareholder accounts at June 30, 1994. An
affiliate, The Putnam Advisory Company, Inc., manages domestic
and foreign institutional accounts and mutual funds, including
the accounts of many Fortune 500 companies. Another affiliate,
Putnam Fiduciary Trust Company, provides investment advice to
institutional clients under its banking and fiduciary powers. At
June 30, 1994, Putnam Management and its affiliates managed over
$92 billion in assets, including nearly $52 billion in tax exempt
securities and over $32 billion in retirement plan assets.
THE MANAGEMENT CONTRACT
Under a Management Contract between the Fund and Putnam
Management, subject to such policies as the Trustees may
determine, Putnam Management, at its expense, furnishes
continuously an investment program for the Fund and makes
investment decisions on behalf of the Fund. Subject to the
control of the Trustees, Putnam Management also manages,
supervises and conducts the other affairs and business of the
Fund, furnishes office space and equipment, provides bookkeeping
and clerical services (including determination of the Fund's net
asset value, but excluding shareholder accounting services) and
places all orders for the purchase and sale of the Fund's
portfolio securities. Putnam Management may place Fund portfolio
transactions with broker-dealers which furnish Putnam Management,
without cost to it, certain research, statistical and quotation
services of value to Putnam Management and its affiliates in
advising the Fund and other clients. In so doing, Putnam
Management may cause the Fund to pay greater brokerage
commissions than it might otherwise pay.
FOR DETAILS OF PUTNAM MANAGEMENT'S COMPENSATION UNDER THE
MANAGEMENT CONTRACT, SEE "FUND CHARGES AND EXPENSES" IN PART I OF
THIS STATEMENT. Putnam Management's compensation under the
Management Contract may be reduced in any year if the Fund's
expenses exceed the limits on investment company expenses imposed
by any statute or regulatory authority of any jurisdiction in
which shares of the Fund are qualified for offer or sale. The
term "expenses" is defined in the statutes or regulations of such
jurisdictions, and generally, excludes brokerage commissions,
taxes, interest, extraordinary expenses and, if the Fund has a
Distribution Plan, payments made under such Plan. The only such
limitation as of the date of this Statement (applicable to any
Fund registered for sale in California) was 2.5% of the first $30
million of average net assets, 2% of the next $70 million and
1.5% of any excess over $100 million.
Under the Management Contract, Putnam Management may reduce its
compensation to the extent that the Fund's expenses exceed such
lower expense limitation as Putnam Management may, by notice to
the Fund, declare to be effective. The expenses subject to this
limitation are exclusive of brokerage commissions, interest,
taxes, deferred organizational and extraordinary expenses and,
if the Fund has a Distribution Plan, payments required under such
Plan. THE TERMS OF ANY EXPENSE LIMITATION FROM TIME TO TIME IN
EFFECT ARE DESCRIBED IN EITHER THE PROSPECTUS OR PART I OF THIS
STATEMENT.
In addition to the fee paid to Putnam Management, the Fund
reimburses Putnam Management for the compensation and related
expenses of certain officers of the Fund and their assistants who
provide certain administrative services for the Fund and the
other funds in the Putnam Family, each of which bears an
allocated share of the foregoing costs. The aggregate amount of
all such payments and reimbursements is determined annually by
the Trustees. THE AMOUNT OF THIS REIMBURSEMENT FOR THE FUND'S
MOST RECENT FISCAL YEAR IS INCLUDED IN "FUND CHARGES AND
EXPENSES" IN PART I OF THIS STATEMENT. Putnam Management pays
all other salaries of officers of the Fund. The Fund pays all
expenses not assumed by Putnam Management including, without
limitation, auditing, legal, custodial, investor servicing and
shareholder reporting expenses. The Fund pays the cost of
typesetting for its Prospectuses and the cost of printing and
mailing any Prospectuses sent to its shareholders. Putnam Mutual
Funds pays the cost of printing and distributing all other
Prospectuses.
The Management Contract provides that Putnam Management shall not
be subject to any liability to the Fund or to any shareholder of
the Fund for any act or omission in the course of or connected
with rendering services to the Fund in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties on the part of Putnam Management.
The Management Contract may be terminated without penalty by vote
of the Trustees or the shareholders of the Fund, or by Putnam
Management, on 30 days' written notice. It may be amended only
by a vote of the shareholders of the Fund. The Management
Contract also terminates without payment of any penalty in the
event of its assignment. The Management Contract provides that
it will continue in effect only so long as such continuance is
approved at least annually by vote of either the Trustees or the
shareholders, and, in either case, by a majority of the Trustees
who are not "interested persons" of Putnam Management or the
Fund. In each of the foregoing cases, the vote of the
shareholders is the affirmative vote of a "majority of the
outstanding voting securities" as defined in the Investment
Company Act of 1940.
PORTFOLIO TRANSACTIONS
INVESTMENT DECISIONS. Investment decisions for the Fund and for
the other investment advisory clients of Putnam Management and
its affiliates are made with a view to achieving their respective
investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular
client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or
sold for other clients at the same time. Likewise, a particular
security may be bought for one or more clients when one or more
other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also
sometimes happens that two or more clients simultaneously
purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged
as to price and allocated between such clients in a manner which
in Putnam Management's opinion is equitable to each and in
accordance with the amount being purchased or sold by each.
There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on
other clients.
BROKERAGE AND RESEARCH SERVICES. Transactions on U.S. stock
exchanges, commodities markets and futures markets and other
agency transactions involve the payment by the Fund of negotiated
brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the
transaction. Transactions in foreign investments often involve
the payment of fixed brokerage commissions, which may be higher
than those in the United States. There is generally no stated
commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Fund usually
includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the
underwriter or dealer. It is anticipated that most purchases and
sales of securities by funds investing primarily in tax-exempt
securities and certain other fixed-income securities will be with
the issuer or with underwriters of or dealers in those
securities, acting as principal. Accordingly, those funds would
not ordinarily pay significant brokerage commissions with respect
to securities transactions. SEE "FUND CHARGES AND EXPENSES" IN
PART I OF THIS STATEMENT FOR INFORMATION CONCERNING COMMISSIONS
PAID BY THE FUND.
It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other
institutional investors to receive brokerage and research
services (as defined in the Securities Exchange Act of 1934, as
amended (the "1934 Act")) from broker-dealers that execute
portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements.
Consistent with this practice, Putnam Management receives
brokerage and research services and other similar services from
many broker-dealers with which Putnam Management places the
Fund's portfolio transactions and from third parties with which
these broker-dealers have arrangements. These services include
such matters as general economic and market reviews, industry and
company reviews, evaluations of investments, recommendations as
to the purchase and sale of investments, newspapers, magazines,
pricing services, quotation services, news services and personal
computers utilized by Putnam Management's managers and analysts.
Where the services referred to above are not used exclusively by
Putnam Management for research purposes, Putnam Management, based
upon its own allocations of expected use, bears that portion of
the cost of these services which directly relates to their
non-research use. Some of these services are of value to Putnam
Management and its affiliates in advising various of their
clients (including the Fund), although not all of these services
are necessarily useful and of value in managing the Fund. The
management fee paid by the Fund is not reduced because Putnam
Management and its affiliates receive these services even though
Putnam Management might otherwise be required to purchase some of
these services for cash.
Putnam Management places all orders for the purchase and sale of
portfolio investments for the Fund and buys and sells investments
for the Fund through a substantial number of brokers and dealers.
In so doing, Putnam Management uses its best efforts to obtain
for the Fund the most favorable price and execution available,
except to the extent it may be permitted to pay higher brokerage
commissions as described below. In seeking the most favorable
price and execution, Putnam Management, having in mind the Fund's
best interests, considers all factors it deems relevant,
including, by way of illustration, price, the size of the
transaction, the nature of the market for the security or other
investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the
broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the
Management Contract, Putnam Management may cause the Fund to pay
a broker-dealer which provides "brokerage and research services"
(as defined in the 1934 Act) to Putnam Management an amount of
disclosed commission for effecting securities transactions on
stock exchanges and other transactions for the Fund on an agency
basis in excess of the commission which another broker-dealer
would have charged for effecting that transaction. Putnam
Management's authority to cause the Fund to pay any such greater
commissions is also subject to such policies as the Trustees may
adopt from time to time. Putnam Management does not currently
intend to cause the Fund to make such payments. It is the
position of the staff of the Securities and Exchange Commission
that Section 28(e) does not apply to the payment of such greater
commissions in "principal" transactions. Accordingly Putnam
Management will use its best effort to obtain the most favorable
price and execution available with respect to such transactions,
as described above.
The Management Contract provides that commissions, fees,
brokerage or similar payments received by Putnam Management or an
affiliate in connection with the purchase and sale of portfolio
investments of the Fund, less any direct expenses approved by the
Trustees, shall be recaptured by the Fund through a reduction of
the fee payable by the Fund under the Management Contract.
Putnam Management seeks to recapture for the Fund soliciting
dealer fees on the tender of the Fund's portfolio securities in
tender or exchange offers. Any such fees which may be recaptured
are likely to be minor in amount.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking
the most favorable price and execution available and such other
policies as the Trustees may determine, Putnam Management may
consider sales of shares of the Fund (and, if permitted by law,
of the other Putnam funds) as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund.
PRINCIPAL UNDERWRITER
Putnam Mutual Funds is the principal underwriter of shares of the
Fund and the other continuously offered Putnam funds. Putnam
Mutual Funds is not obligated to sell any specific amount of
shares of the Fund and will purchase shares for resale only
against orders for shares. SEE "FUND CHARGES AND EXPENSES" IN
PART I OF THIS STATEMENT FOR INFORMATION ON SALES CHARGES AND
OTHER PAYMENTS RECEIVED BY PUTNAM MUTUAL FUNDS.
INVESTOR SERVICING AGENT AND CUSTODIAN
Putnam Investor Services, a division of Putnam Fiduciary Trust
Company ("PFTC"), is the Fund's investor servicing agent
(transfer, plan and dividend disbursing agent), for which it
receives fees which are paid monthly by the Fund as an expense of
all its shareholders. The fee paid to Putnam Investor Services
is determined by the Trustees taking into account the number of
shareholder accounts and transactions. Putnam Investor Services
has won the DALBAR Quality Tested Service Seal every year since
the award's 1990 inception. Over 10,000 tests of 38 separate
shareholders service components demonstrated that Putnam Investor
Services exceeded the industry standard in all categories.
PFTC is the custodian of the Fund's assets. In carrying out its
duties under its custodian contract, PFTC may employ one or more
subcustodians whose responsibilities will include safeguarding
and controlling the Fund's cash and securities, handling the
receipt and delivery of securities and collecting interest and
dividends on the Fund's investments. PFTC and any subcustodians
employed by it have a lien on the securities of the Fund (to the
extent permitted by the Fund's investment restrictions) to secure
charges and any advances made by such subcustodians at the end of
any day for the purpose of paying for securities purchased by the
Fund. The Fund expects that such advances will exist only in
unusual circumstances. Neither PFTC nor any subcustodian
determines the investment policies of the Fund or decides which
securities the Fund will buy or sell. PFTC pays the fees and
other charges of any subcustodians employed by it. The Fund may
from time to time pay custodial expenses in full or in part
through the placement by Putnam Management of the Fund's
portfolio transactions with the subcustodians or with a third-
party broker having an agreement with the subcustodians. The
Fund pays PFTC an annual fee based on the Fund's assets,
securities transactions and securities holdings and reimburses
PFTC for certain out-of-pocket expenses incurred by it or any
subcustodian employed by it in performing custodial services.
SEE "FUND CHARGES AND EXPENSES" IN PART I OF THIS STATEMENT FOR
INFORMATION ON FEES AND REIMBURSEMENTS FOR INVESTOR SERVICING AND
CUSTODY RECEIVED BY PFTC. THE FEES MAY BE REDUCED BY CREDITS
ALLOWED BY PFTC.
DETERMINATION OF NET ASSET VALUE
The Fund determines the net asset value per share of each class
of shares once each day the New York Stock Exchange (the
"Exchange") is open. Currently, the Exchange is closed
Saturdays, Sundays and the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving and Christmas. The Fund determines net
asset value as of the close of regular trading on the Exchange,
currently 4:00 p.m. However, equity options held by the Fund are
priced as of the close of trading at 4:10 p.m., and futures
contracts on U.S. Government securities and index options held by
the Fund are priced as of their close of trading at 4:15 p.m.
Securities for which market quotations are readily available are
valued at prices which, in the opinion of the Trustees or Putnam
Management, most nearly represent the market values of such
securities. Currently, such prices are determined using the last
reported sale price or, if no sales are reported (as in the case
of some securities traded over-the-counter), the last reported
bid price, except that certain U.S. Government securities are
stated at the mean between the last reported bid and asked
prices. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates
market value. All other securities and assets are valued at
their fair value following procedures approved by the Trustees.
Liabilities are deducted from the total, and the resulting amount
is divided by the number of shares of the class outstanding.
Reliable market quotations are not considered to be readily
available for long-term corporate bonds and notes, certain
preferred stocks, tax-exempt securities, and certain foreign
securities. These investments are stated at fair value on the
basis of valuations furnished by pricing services approved by the
Trustees, which determine valuations for normal,
institutional-size trading units of such securities using methods
based on market transactions for comparable securities and
various relationships between securities which are generally
recognized by institutional traders.
If any securities held by the Fund are restricted as to resale,
Putnam Management determines their fair value following
procedures approved by the Trustees. The fair value of such
securities is generally determined as the amount which the Fund
could reasonably expect to realize from an orderly disposition of
such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary
from case to case. However, consideration is generally given to
the financial position of the issuer and other fundamental
analytical data relating to the investment and to the nature of
the restrictions on disposition of the securities (including any
registration expenses that might be borne by the Fund in
connection with such disposition). In addition, specific factors
are also generally considered, such as the cost of the
investment, the market value of any unrestricted securities of
the same class, the size of the holding, the prices
of any recent transactions or offers with respect to such
securities and any available analysts' reports regarding the
issuer.
Generally, trading in certain securities (such as foreign
securities) is substantially completed each day at various times
prior to the close of the Exchange. The values of these
securities used in determining the net asset value of the Fund's
shares are computed as of such times. Also, because of the
amount of time required to collect and process trading
information as to large numbers of securities issues, the values
of certain securities (such as convertible bonds, U.S. Government
securities, and tax-exempt securities) are determined based on
market quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange which will
not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such
securities occur during such period, then these securities will
be valued at their fair value following procedures approved by
the Trustees.
Money market funds generally value their portfolio securities at
amortized cost according to Rule 2a-7 under the Investment
Company Act of 1940.
HOW TO BUY SHARES
General
The Prospectus contains a general description of how investors
may buy shares of the Fund and states whether the Fund offers
more than one class of shares. This Statement contains
additional information which may be of interest to investors.
Class A shares and Class M shares are sold with a sales charge
payable at the time of purchase (except for Class A shares and
Class M shares of money market funds). As used in this Statement
and unless the context requires otherwise, the term "Class A
shares" includes shares of Funds that offer only one class of
shares. The Prospectus contains a table of applicable sales
charges. For information about how to purchase Class A shares of
a Putnam fund at net asset value through an employer's defined
contribution plan, please consult your employer. Certain
purchases of Class A shares and Class M shares may be exempt from
a sales charge or, in the case of Class A shares, may be subject
to a contingent deferred sales charge ("CDSC"). See "General--
Sales without sales charges or contingent deferred sales
charges", "Additional Information About Class A and Class M
Shares", and "Contingent Deferred Sales Charges--Class A shares".
Class B shares and Class C shares are sold subject to a CDSC
payable upon redemption within a specified period after purchase.
The Prospectus contains a table of applicable CDSCs.
Class Y shares, which are available only to employer-sponsored
defined contribution plans initially investing at least $250
million in a combination of Putnam funds and other investments
managed by Putnam Management or its affiliates, are not subject
to sales charges or a CDSC.
Certain purchase programs described below are not available to
defined contribution plans. Consult your employer for
information on how to purchase shares through your plan.
The Fund is currently making a continuous offering of its shares.
The Fund receives the entire net asset value of shares sold. The
Fund will accept unconditional orders for shares to be executed
at the public offering price based on the net asset value per
share next determined after the order is placed. In the case of
Class A shares and Class M shares, the public offering price is
the net asset value plus the applicable sales charge, if any. No
sales charge is included in the public offering price of other
classes of shares. In the case of orders for purchase of shares
placed through dealers, the public offering price will be based
on the net asset value determined on the day the order is placed,
but only if the dealer receives the order before the close of
regular trading on the Exchange. If the dealer receives the
order after the close of the Exchange, the price will be based on
the net asset value next determined. If funds for the purchase
of shares are sent directly to Putnam Investor Services, they
will be invested at the public offering price based on the net
asset value next determined after receipt. Payment for shares of
the Fund must be in U.S. dollars; if made by check, the check
must be drawn on a U.S. bank.
Initial and subsequent purchases must satisfy the minimums stated
in the Prospectus, except that (i) individual investments under
certain employee benefit plans or Tax Qualified Retirement Plans
may be lower, (ii) persons who are already shareholders may make
additional purchases of $50 or more by sending funds directly to
Putnam Investor Services (see "Your Investing Account" below),
and (iii) for investors participating in systematic investment
plans and military allotment plans, the initial and subsequent
purchases must be $25 or more. Information about these plans is
available from investment dealers or from Putnam Mutual Funds.
As a convenience to investors, shares may be purchased through a
systematic investment plan. Preauthorized monthly bank drafts
for a fixed amount (at least $25) are used to purchase Fund
shares at the applicable public offering price next determined
after Putnam Mutual Funds receives the proceeds from the draft
(normally the 20th of each month, or the next business day
thereafter). Further information and application forms are
available from investment dealers or from Putnam Mutual Funds.
Except for Putnam funds that declare a distribution daily,
distributions to be reinvested are reinvested without a sales
charge in shares of the same class as of the ex-dividend date
using the net asset value determined on that date, and are
credited to a shareholder's account on the payment date.
Dividends for Putnam money market funds are credited to a
shareholder's account on the payment date. Distributions for
Putnam Tax-Free Income Trust and Putnam Corporate Asset Trust are
reinvested without a sales charge as of the last day of the
period for which distributions are paid using the net asset value
determined on that date, and are credited to a shareholder's
account on the payment date. Distributions for all other Putnam
funds that declare a distribution daily are reinvested without a
sales charge as of the next day following the period for which
distributions are paid using the net asset value determined on
that date, and are credited to a shareholder's account on the
payment date.
PAYMENT IN SECURITIES. In addition to cash, the Fund may accept
securities as payment for Fund shares at the applicable net asset
value. Generally, the Fund will only consider accepting
securities to increase its holdings in a portfolio security, or
if Putnam Management determines that the offered securities are a
suitable investment for the Fund and in a sufficient amount for
efficient management.
While no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than
$100,000 per issue as payment for shares. The Fund may reject in
whole or in part any or all offers to pay for purchases of Fund
shares with securities, may require partial payment in cash for
such purchases to provide funds for applicable sales charges, and
may discontinue accepting securities as payment for Fund shares
at any time without notice. The Fund will value accepted
securities in the manner described in the section "Determination
of Net Asset Value" for valuing shares of the Fund. The Fund
will only accept securities which are delivered in proper form.
The Fund will not accept options or restricted securities as
payment for shares. The acceptance of securities by certain
Funds in exchange for Fund shares are subject to additional
requirements. In the case of Putnam Capital Appreciation Fund,
Putnam Diversified Equity Trust, Putnam Equity Income Fund,
Putnam Europe Growth Fund, Putnam Growth and Income Fund II,
Putnam High Yield Advantage Fund, Putnam Intermediate Tax Exempt
Fund, Putnam Municipal Income Fund, Putnam OTC Emerging Growth
Fund, Putnam Overseas Growth Fund and Putnam Total Return Bond
Funds, transactions involving the issuance of Fund shares for
securities or assets other than cash will be limited to a bona-
fide re-organization or statutory merger and to other
acquisitions of portfolio securities that meet all the following
conditions: (a) such securities meet the investment objectives
and policies of the Fund; (b) such securities are acquired for
investment and not for resale; (c) such securities are liquid
securities which are not restricted as to transfer either by law
or liquidity of market; and (d) such securities have a value
which is readily ascertainable, as evidenced by a listing on the
American Stock Exchange, the New York Stock Exchange or NASDAQ.
In addition, Putnam Global Governmental Income Trust may accept
only investment grade bonds with prices regularly stated in
publications generally accepted by investors, such as the London
Financial Times and the Association of International Bond Dealers
manual, or securities listed on the New York or American Stock
Exchanges or with NASDAQ, and Putnam Diversified Income Trust may
accept only bonds with prices regularly stated in publications
generally accepted by investors. For federal income tax
purposes, a purchase of Fund shares with securities will be
treated as a sale or exchange of such securities on which the
investor will realize a taxable gain or loss. The processing of
a purchase of Fund shares with securities involves certain delays
while the Fund considers the suitability of such securities and
while other requirements are satisfied. For information
regarding procedures for payment in securities, contact Putnam
Mutual Funds. Investors should not send securities to the Fund
except when authorized to do so and in accordance with specific
instructions received from Putnam Mutual Funds.
SALES WITHOUT SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES.
The Fund may sell shares without a sales charge or CDSC to:
(i) current and retired Trustees of the Fund; officers of
the Fund; directors and current and retired U.S. full-time
employees of Putnam Management, Putnam Mutual Funds, their
parent corporations and certain corporate affiliates;
family members of and employee benefit plans for the
foregoing; and partnerships, trusts or other entities in
which any of the foregoing has a substantial interest;
(ii) employee benefit plans, for the repurchase of shares
in connection with repayment of plan loans made to plan
participants (if the sum loaned was obtained by redeeming
shares of a Putnam fund sold with a sales charge) (not
offered by tax-exempt funds);
(iii) clients of administrators of tax-qualified employee
benefit plans which have entered into agreements with
Putnam Mutual Funds (not offered by tax-exempt funds);
(iv) registered representatives and other employees of
broker-dealers having sales agreements with Putnam Mutual
Funds; employees of financial institutions having sales
agreements with Putnam Mutual Funds or otherwise having an
arrangement with any such broker-dealer or financial
institution with respect to sales of Fund shares; and
their spouses and children under age 21 (Putnam Mutual
Funds is regarded as the dealer of record for all such
accounts);
(v) investors meeting certain requirements who sold shares
of certain Putnam closed-end funds pursuant to a tender
offer by such closed-end fund;
(vi) a trust department of any financial institution
purchasing shares of the Fund in its capacity as trustee
of any trust, if the value of the shares of the Fund and
other Putnam funds purchased or held by all such trusts
exceeds $1 million in the aggregate; and
(vii) "wrap accounts" maintained for clients of broker-
dealers, financial institutions or financial planners who
have entered into agreements with Putnam Mutual Funds with
respect to such accounts.
In addition, the Fund may issue its shares at net asset value in
connection with the acquisition of substantially all of the
securities owned by other investment companies or personal
holding companies.
PAYMENTS TO DEALERS. Putnam Mutual Funds may, at its expense,
pay concessions in addition to the payments disclosed in the
Prospectus to dealers which satisfy certain criteria established
from time to time by Putnam Mutual Funds relating to increasing
net sales of shares of the Putnam funds over prior periods, and
certain other factors.
ADDITIONAL INFORMATION ABOUT CLASS A AND CLASS M SHARES
The underwriter's commission is the sales charge shown in the
Prospectus less any applicable dealer discount. Putnam Mutual
Funds will give dealers ten days' notice of any changes in the
dealer discount. Putnam Mutual Funds retains the entire sales
charge on any retail sales made by it.
Putnam Mutual Funds offers several plans by which an investor may
obtain reduced sales charges on purchases of Class A shares and
Class M shares. The variations in sales charges reflect the
varying efforts required to sell shares to separate categories of
purchasers. These plans may be altered or discontinued at any
time.
COMBINED PURCHASE PRIVILEGE. The following persons may qualify
for the sales charge reductions or eliminations shown in the
Prospectus by combining into a single transaction the purchase of
Class A shares or Class M shares with other purchases of any
class of shares:
(i) an individual, or a "company" as defined in Section
2(a)(8) of the Investment Company Act of 1940 (which
includes corporations which are corporate affiliates of
each other);
(ii) an individual, his or her spouse and their children
under twenty-one, purchasing for his, her or their own
account;
(iii) a trustee or other fiduciary purchasing for a single
trust estate or single fiduciary account (including a
pension, profit-sharing, or other employee benefit trust
created pursuant to a plan qualified under Section 401 of
the Internal Revenue Code);
(iv) tax-exempt organizations qualifying under Section
501(c)(3) of the Internal Revenue Code (not including
403(b) plans); and
(v) employee benefit plans of a single employer or of
affiliated employers, other than 403(b) plans.
A combined purchase currently may also include shares of any
class of other continuously offered Putnam funds (other than
money market funds) purchased at the same time through a single
investment dealer, if the dealer places the order for such shares
directly with Putnam Mutual Funds.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A
purchaser of Class A shares or Class M shares may qualify for a
cumulative quantity discount by combining a current purchase (or
combined purchases as described above) with certain other shares
of any class of Putnam funds already owned. The applicable sales
charge is based on the total of:
(i) the investor's current purchase; and
(ii) the maximum public offering price (at the close of
business on the previous day) of:
(a) all shares held by the investor in all of the
Putnam funds (except money market funds); and
(b) any shares of money market funds acquired by
exchange from other Putnam funds; and
(iii) the maximum public offering price of all shares
described in paragraph (ii) owned by another shareholder
eligible to participate with the investor in a "combined
purchase" (see above).
To qualify for the combined purchase privilege or to obtain the
cumulative quantity discount on a purchase through an investment
dealer, when each purchase is made the investor or dealer must
provide Putnam Mutual Funds with sufficient information to verify
that the purchase qualifies for the privilege or discount. The
shareholder must furnish this information to Putnam Investor
Services when making direct cash investments.
STATEMENT OF INTENTION. Investors may also obtain the reduced
sales charges for Class A shares or Class M shares shown in the
Prospectus for investments of a particular amount by means of a
written Statement of Intention, which expresses the investor's
intention to invest that amount (including certain "credits," as
described below) within a period of 13 months in shares of any
class of the Fund or any other continuously offered Putnam fund
(excluding money market funds). Each purchase of Class A shares
or Class M shares under a Statement of Intention will be made at
the public offering price applicable at the time of such purchase
to a single transaction of the total dollar amount indicated in
the Statement. A Statement of Intention may include purchases of
shares made not more than 90 days prior to the date that an
investor signs a Statement; however, the 13-month period during
which the Statement is in effect will begin on the date of the
earliest purchase to be included.
An investor may receive a credit toward the amount indicated in
the Statement equal to the maximum public offering price as of
the close of business on the previous day of all shares he or she
owns on the date of the Statement which are eligible for purchase
under a Statement (plus any shares of money market funds acquired
by exchange of such eligible shares). Investors do not receive
credit for shares purchased by the reinvestment of distributions.
Investors qualifying for the "combined purchase privilege" (see
above) may purchase shares under a single Statement of Intention.
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount, and must be invested immediately. Class A shares or
Class M shares purchased with the first 5% of such amount will be
held in escrow to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount
indicated is not purchased. When the full amount indicated has
been purchased, the escrow will be released. If an investor
desires to redeem escrowed shares before the full amount has been
purchased, the shares will be released from escrow only if the
investor pays the sales charge that, without regard to the
Statement of Intention, would apply to the total investment made
to date.
To the extent that an investor purchases more than the dollar
amount indicated on the Statement of Intention and qualifies for
a further reduced sales charge, the sales charge will be adjusted
for the entire amount purchased at the end of the 13-month
period, upon recovery from the investor's dealer of its portion
of the sales charge adjustment. Once received from the dealer,
which may take a period of time or may never occur, the sales
charge adjustment will be used to purchase additional shares at
the then current offering price applicable to the actual amount
of the aggregate purchases. These additional shares will not be
considered as part of the total investment for the purpose of
determining the applicable sales charge pursuant to the Statement
of Intention. No sales charge adjustment will be made unless and
until the investor's dealer returns any excess commissions
previously received.
To the extent that an investor purchases less than the dollar
amount indicated on the Statement of Intention within the 13-
month period, the sales charge will be adjusted upward for the
entire amount purchased at the end of the 13-month period. This
adjustment will be made by redeeming shares from the account to
cover the additional sales charge, the proceeds of which will be
paid to the investor's dealer and Putnam Mutual Funds in
accordance with the Prospectus. If the account exceeds an amount
that would otherwise qualify for a reduced sales charge, that
reduced sales charge will be applied.
Statements of Intention are not available for certain employee
benefit plans.
Statement of Intention forms may be obtained from Putnam Mutual
Funds or from investment dealers. Interested investors should
read the Statement of Intention carefully.
REDUCED SALES CHARGE FOR GROUP PURCHASES OF CLASS A SHARES.
Members of qualified groups may purchase Class A shares of the
Fund at a group sales charge rate of 4.5% of the public offering
price (4.71% of the net amount invested). The dealer discount on
such sales is 3.75% of the offering price.
To receive the group rate, group members must purchase Class A
shares through a single investment dealer designated by the
group. The designated dealer must transmit each member's initial
purchase to Putnam Mutual Funds, together with payment and
completed application forms. After the initial purchase, a
member may send funds for the purchase of Class A shares directly
to Putnam Investor Services. Purchases of Class A shares are
made at the public offering price based on the net asset value
next determined after Putnam Mutual Funds or Putnam Investor
Services receives payment for the shares. The minimum investment
requirements described above apply to purchases by any group
member. Only Class A shares are included in calculating the
purchased amount.
Qualified groups include the employees of a corporation or a sole
proprietorship, members and employees of a partnership or
association, or other organized groups of persons (the members of
which may include other qualified groups) provided that: (i) the
group has at least 25 members of which at least 10 members
participate in the initial purchase; (ii) the group has been in
existence for at least six months; (iii) the group has some
purpose in addition to the purchase of investment company shares
at a reduced sales charge; (iv) the group's sole organizational
nexus or connection is not that the members are credit card
holders of a company, policy holders of an insurance company,
customers of a bank or broker-dealer, clients of an investment
adviser or security holders of a company; (v) the group agrees to
provide its designated investment dealer access to the group's
membership by means of written communication or direct
presentation to the membership at a meeting on not less
frequently than an annual basis; (vi) the group or its investment
dealer will provide annual certification in form satisfactory to
Putnam Investor Services that the group then has at least 25
members and that at least ten members participated in group
purchases during the immediately preceding 12 calendar months;
and (vii) the group or its investment dealer will provide
periodic certification in form satisfactory to Putnam Investor
Services as to the eligibility of the purchasing members of the
group.
Members of a qualified group include: (i) any group which meets
the requirements stated above and which is a constituent member
of a qualified group; (ii) any individual purchasing for his or
her own account who is carried on the records of the group or on
the records of any constituent member of the group as being a
good standing employee, partner, member or person of like status
of the group or constituent member; or (iii) any fiduciary
purchasing shares for the account of a member of a qualified
group or a member's beneficiary. For example, a qualified group
could consist of a trade association which would have as its
members individuals, sole proprietors, partnerships and
corporations. The members of the group would then consist of the
individuals, the sole proprietors and their employees, the
members of the partnerships and their employees, and the
corporations and their employees, as well as the trustees of
employee benefit trusts acquiring Class A shares for the benefit
of any of the foregoing.
A member of a qualified group may, depending upon the value of
Class A shares of the Fund owned or proposed to be purchased by
the member, be entitled to purchase Class A shares of the Fund at
non-group sales charge rates shown in the Prospectus which may be
lower than the group sales charge rate, if the member qualifies
as a person entitled to reduced non-group sales charges. Such a
group member will be entitled to purchase at the lower rate if,
at the time of purchase, the member or his or her investment
dealer furnishes sufficient information for Putnam Mutual Funds
or Putnam Investor Services to verify that the purchase qualifies
for the lower rate.
Interested groups should contact their investment dealer or
Putnam Mutual Funds. The Fund reserves the right to revise the
terms of or to suspend or discontinue group sales at any time.
EMPLOYEE BENEFIT PLANS; INDIVIDUAL ACCOUNT PLANS. The term
"employee benefit plan" means any plan or arrangement, whether or
not tax-qualified, which provides for the purchase of Class A
shares. The term "affiliated employer" means employers who are
affiliated with each other within the meaning of Section
2(a)(3)(C) of the Investment Company Act of 1940. The term
"individual account plan" means any employee benefit plan whereby
(i) Class A shares are purchased through payroll deductions or
otherwise by a fiduciary or other person for the account of
participants who are employees (or their spouses) of an employer,
or of affiliated employers, and (ii) a separate Investing Account
is maintained in the name of such fiduciary or other person for
the account of each participant in the plan.
The table of sales charges in the Prospectus applies to sales to
employee benefit plans, except that the Fund may sell Class A
shares at net asset value to employee benefit plans, including
individual account plans, of employers or of affiliated employers
which have at least 750 employees to whom such plan is made
available, in connection with a payroll deduction system of plan
funding (or other system acceptable to Putnam Investor Services)
by which contributions or account information for plan
participation are transmitted to Putnam Investor Services by
methods acceptable to Putnam Investor Services. The Fund may
also sell Class A shares at net asset value to employee benefit
plans of employers or of affiliated employers which have at least
750 employees, if such plans are qualified under Section 401 of
the Internal Revenue Code.
Additional information about employee benefit plans and
individual account plans is available from investment dealers or
from Putnam Mutual Funds.
CONTINGENT DEFERRED SALES CHARGES
CLASS A SHARES. Class A shares purchased at net asset value by
shareholders investing $1 million or more, including purchases
pursuant to any Combined Purchase Privilege, Right of
Accumulation or Statement of Intention, are subject to a CDSC of
1.00% or 0.50%, respectively, if redeemed within the first or
second year after purchase. The Class A CDSC is imposed on the
lower of the cost and the current net asset value of the shares
redeemed. The CDSC does not apply to shares sold without a sales
charge through participant-directed qualified retirement plans
and shares purchased by certain investors investing $1 million or
more that have made arrangements with Putnam Mutual Funds and
whose dealer of record waived the commission described in the
next paragraph.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of Class A shares of $1
million or more based on an investor's cumulative purchases of
such shares, including purchases pursuant to any Combined
Purchase Privilege, Right of Accumulation or Statement of
Intention, during the one-year period beginning with the date of
the initial purchase at net asset value and each subsequent one-
year period beginning with the first net asset value purchase
following the end of the prior period. Such commissions are paid
at the rate of 1.00% of the amount under $3 million, 0.50% of the
next $47 million and 0.25% thereafter. On sales at net asset
value to a participant-directed qualified retirement plan
initially investing less than $20 million in Putnam funds and
other investments managed by Putnam Management or its affiliates
(including a plan sponsored by an employer with more than 750
employees), Putnam Mutual Funds pays commissions on cumulative
purchases during the life of the account at the rate of 1.00% of
the amount under $3 million and 0.50% thereafter. On sales at
net asset value to all other participant-directed qualified
retirement plans, Putnam Mutual Funds pays commissions on the
initial investment and on subsequent net quarterly sales (gross
sales minus gross redemptions during the quarter) at the rate of
0.15%. Money market fund shares are excluded from all commission
calculations, except for determining the amount initially
invested by a participant-directed qualified retirement plan.
Commissions on sales at net asset value to such plans are subject
to Putnam Mutual Funds' right to reclaim such commissions if the
shares are redeemed within two years.
Different CDSC and commission rates may apply to shares purchased
before April 1, 1994.
CLASS B AND CLASS C SHARES. Investors who set up an Automatic
Cash Withdrawal Plan (ACWP) for a Class B and Class C share
account (see "Plans Available To Shareholders -- Automatic Cash
Withdrawal Plan") may withdraw through the ACWP up to 12% of the
net asset value of the account (calculated as set forth below)
each year without incurring any CDSC. Shares not subject to a
CDSC (such as shares representing reinvestment of distributions)
will be redeemed first and will count toward the 12% limitation.
If there are insufficient shares not subject to a CDSC, shares
subject to the lowest CDSC liability will be redeemed next until
the 12% limit is reached. The 12% figure is calculated on a pro
rata basis at the time of the first payment made pursuant to a
ACWP and recalculated thereafter on a pro rata basis at the time
of each ACWP payment. Therefore, shareholders who have chosen a
ACWP based on a percentage of the net asset value of their
account of up to 12% will be able to receive ACWP payments
without incurring a CDSC. However, shareholders who have chosen
a specific dollar amount (for example, $100 per month from a fund
that pays income distributions monthly) for their periodic ACWP
payment should be aware that the amount of that payment not
subject to a CDSC may vary over time depending on the net asset
value of their account. For example, if the net asset value of
the account is $10,000 at the time of payment, the shareholder
will receive $100 free of the CDSC (12% of $10,000 divided by 12
monthly payments). However, if at the time of the next payment
the net asset value of the account has fallen to $9,400, the
shareholder will receive $94 free of any CDSC (12% of $9,400
divided by 12 monthly payments) and $6 subject to the lowest
applicable CDSC. This ACWP privilege may be revised or
terminated at any time.
ALL SHARES. No CDSC is imposed on shares of any class subject to
a CDSC ("CDSC Shares") to the extent that the CDSC Shares
redeemed (i) are no longer subject to the holding period
therefor, (ii) resulted from reinvestment of distributions on
CDSC Shares, or (iii) were exchanged for shares of another Putnam
fund, provided that the shares acquired in such exchange or
subsequent exchanges (including shares of a Putnam money market
fund) will continue to remain subject to the CDSC, if applicable,
until the applicable holding period expires. In determining
whether the CDSC applies to each redemption of CDSC Shares, CDSC
Shares not subject to a CDSC are redeemed first.
The Fund will waive any CDSC on redemptions, in the case of
individual or Uniform Transfers to Minors Act accounts, in case
of death or disability or for the purpose of paying benefits
pursuant to tax-qualified retirement plans. Such payments
currently include, without limitation, (1) distributions from an
IRA due to death or disability, (2) a return of excess
contributions to an IRA or 401(k) plan, and (3) distributions
from retirement plans qualified under section 401(a) or section
403(b)(7) (a "403(b) plan") of the Internal Revenue Code of 1986,
as amended (the "Code"), due to death, disability, retirement or
separation from service. The Fund will also waive any CDSC in
the case of the death of one joint tenant. These waivers may be
changed at any time. Additional waivers may apply to IRA
accounts opened prior to February 1, 1994.
DISTRIBUTION PLAN
If the Fund or a class of shares of the Fund has adopted a
Distribution Plan, the Prospectus describes the principal
features of the Plan. This Statement contains additional
information which may be of interest to investors.
Continuance of a Plan is subject to annual approval by a vote of
the Trustees, including a majority of the Trustees who are not
interested persons of the Fund and who have no direct or indirect
interest in the Plan or related arrangements (the "Qualified
Trustees"), cast in person at a meeting called for that purpose.
All material amendments to a Plan must be likewise approved by
the Trustees and the Qualified Trustees. No Plan may be amended
in order to increase materially the costs which the Fund may bear
for distribution pursuant to such Plan without also being
approved by a majority of the outstanding voting securities of
the Fund or the relevant class of the Fund, as the case may be.
A Plan terminates automatically in the event of its assignment
and may be terminated without penalty, at any time, by a vote of
a majority of the Qualified Trustees or by a vote of a majority
of the outstanding voting securities of the Fund or the relevant
class of the Fund, as the case may be.
If Plan payments are made to reimburse Putnam Mutual Funds for
payments to dealers based on the average net asset value of Fund
shares attributable to shareholders for whom the dealers are
designated as the dealer of record, "average net asset value"
attributable to a shareholder account means the product of (i)
the Fund's average daily share balance of the account and (ii)
the Fund's average daily net asset value per share (or the
average daily net asset value per share of the class, if
applicable). For administrative reasons, Putnam Mutual Funds may
enter into agreements with certain dealers providing for the
calculation of "average net asset value" on the basis of assets
of the accounts of the dealer's customers on an established day
in each quarter.
Financial institutions receiving payments from Putnam Mutual
Funds as described above may be required to comply with various
state and federal regulatory requirements, including among others
those regulating the activities of securities brokers or dealers.
INVESTOR SERVICES
SHAREHOLDER INFORMATION
Each time shareholders buy or sell shares, they will receive a
statement confirming the transaction and listing their current
share balance. (Under certain investment plans, a statement may
only be sent quarterly.) Shareholders will receive a statement
confirming reinvestment of distributions in additional Fund
shares (or in shares of other Putnam funds for Dividends Plus
accounts) promptly following the quarter in which the
reinvestment occurs. To help shareholders take full advantage of
their Putnam investment, they will receive a Welcome Kit and a
periodic publication covering many topics of interest to
investors. The Fund also sends annual and semiannual reports
that keep shareholders informed about its portfolio and
performance, and year-end tax information to simplify their
recordkeeping. Easy-to-read, free booklets on special subjects
such as the Exchange Privilege and IRAs are available from Putnam
Investor Services. Shareholders may call Putnam Investor
Services toll-free weekdays at 1-800-225-1581 between 8:30 a.m.
and 7:00 p.m. Boston time for more information, including account
balances.
YOUR INVESTING ACCOUNT
The following information provides more detail concerning the
operation of a Putnam Investing Account. For further information
or assistance, investors should consult Putnam Investor Services.
Shareholders who purchase shares through a defined contribution
plan should note that not all of the services or features
described below may be available to them, and they should contact
their employer for details.
A shareholder may reinvest a recent cash distribution without a
front-end sales charge or without the reinvested shares being
subject to a CDSC, as the case may be, by delivering to Putnam
Investor Services the uncashed distribution check, endorsed to
the order of the Fund. Putnam Investor Services must receive the
properly endorsed check within 30 days after the date of the
check. Upon written notice to shareholders, the Fund may permit
shareholders who receive cash distributions to reinvest amounts
representing returns of capital without a sales charge or without
being subject to the CDSC.
The Investing Account also provides a way to accumulate shares of
the Fund. In most cases, after an initial investment of $500, a
shareholder may send checks to Putnam Investor Services for $50
or more, made payable to the Fund, to purchase additional shares
at the applicable public offering price next determined after
Putnam Investor Services receives the check. For Putnam
Corporate Asset Trust, the minimum initial investment is $25,000
and the minimum subsequent investment is $5,000. Checks must be
drawn on a U.S. bank and must be payable in U.S. dollars.
Putnam Investor Services acts as the shareholder's agent whenever
it receives instructions to carry out a transaction on the
shareholder's account. Upon receipt of instructions that shares
are to be purchased for a shareholder's account, shares will be
purchased through the investment dealer designated by the
shareholder. Shareholders may change investment dealers at any
time by written notice to Putnam Investor Services, provided the
new dealer has a sales agreement with Putnam Mutual Funds.
Shares credited to an account are transferable upon written
instructions in good order to Putnam Investor Services and may be
sold to the Fund as described under "How to buy shares, sell
shares and exchange shares" in the Prospectus. Money market
funds and certain other funds will not issue share certificates.
A shareholder may send any certificates which have been
previously issued to Putnam Investor Services for safekeeping at
no charge to the shareholder.
Putnam Mutual Funds, at its expense, may provide certain
additional reports and administrative material to qualifying
institutional investors with fiduciary responsibilities to assist
these investors in discharging their responsibilities.
Institutions seeking further information about this service
should contact Putnam Mutual Funds, which may modify or terminate
this service at any time.
Putnam Investor Services may make special services available to
shareholders with investments exceeding $1,000,000. Contact
Putnam Investor Services for details.
The Fund pays Putnam Investor Services' fees for maintaining
Investing Accounts.
REINSTATEMENT PRIVILEGE
CLASS A SHARES AND CLASS M SHARES
An investor who has sold shares to the Fund may reinvest (within
90 days) the proceeds of such sale in shares of the Fund, or may
be able to reinvest (within 90 days) the proceeds in shares of
the other continuously offered Putnam funds (through the Exchange
Privilege described in the Prospectus and below). Any such
reinvestment would be at the net asset value of the shares of the
fund(s) the investor selects, next determined after Putnam Mutual
Funds receives a Reinstatement Authorization and will not be
subject to any sales charge, including a CDSC.
CLASS B SHARES AND CLASS C SHARES
An investor who has sold Class B and Class C shares to the Fund
may reinvest (within 90 days) the proceeds of such sale in Class
B and Class C shares of the Fund, or may be able to reinvest
(within 90 days) the proceeds in Class B and Class C shares of
other Putnam funds (through the Exchange Privilege described in
the Prospectus and below). Upon such reinvestment, the investor
would receive Class B and Class C shares at the net asset value
next determined after Putnam Mutual Funds receives a
Reinstatement Authorization subject to the applicable CDSC
calculated for this purpose using the date of the original
purchase.
ALL SHARES
Exercise of the Reinstatement Privilege does not alter the
federal income tax treatment of any capital gains realized on a
sale of Fund shares, but to the extent that any shares are sold
at a loss and the proceeds are reinvested in shares of the Fund,
some or all of the loss may be disallowed as a deduction.
Consult your tax adviser.
Investors who desire to exercise this Privilege should contact
their investment dealer or Putnam Investor Services.
EXCHANGE PRIVILEGE
Except as otherwise set forth in this section, by calling Putnam
Investor Services, investors may exchange shares valued up to
$500,000 between accounts with identical registrations, provided
that no certificates are outstanding for such shares and no
address change has been made within the preceding 15 days.
During periods of unusual market changes and shareholder
activity, shareholders may experience delays in contacting Putnam
Investor Services by telephone to exercise the Telephone Exchange
Privilege.
Putnam Investor Services also makes exchanges promptly after
receiving a properly completed Exchange Authorization Form and,
if issued, share certificates. If the shareholder is a
corporation, partnership, agent, or surviving joint owner, Putnam
Investor Services will require additional documentation of a
customary nature. Because an exchange of shares involves the
redemption of Fund shares and reinvestment of the proceeds in
shares of another Putnam fund, completion of an exchange may be
delayed under unusual circumstances if the Fund were to suspend
redemptions or postpone payment for the Fund shares being
exchanged, in accordance with federal securities laws. Exchange
Authorization Forms and prospectuses of the other Putnam funds
are available from Putnam Mutual Funds or investment dealers
having sales contracts with Putnam Mutual Funds. The prospectus
of each fund describes its investment objective(s) and policies,
and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
Shares of certain Putnam funds are not available to residents of
all states. The Fund reserves the right to change or suspend the
Exchange Privilege at any time. Shareholders would be notified
of any change or suspension. Additional information is available
from Putnam Investor Services.
Shares of the Fund must be held at least 15 days by the
shareholder requesting an exchange. There is no holding period
if the shareholder acquired the shares to be exchanged through
reinvestment of distributions, transfer from another shareholder,
prior exchange or certain employer-sponsored defined contribution
plans. In all cases, the shares to be exchanged must be
registered on the records of the Fund in the name of the
shareholder requesting the exchange.
Shareholders of other Putnam funds may also exchange their shares
at net asset value for shares of the Fund, as set forth in the
current prospectus of each fund.
For federal income tax purposes, an exchange is a sale on which
the investor generally will realize a capital gain or loss
depending on whether the net asset value at the time of the
exchange is more or less than the investor's basis. The Exchange
Privilege may be revised or terminated at any time. Shareholders
would be notified of any such change or suspension.
DIVIDENDS PLUS
Shareholders may invest the Fund's distributions of net
investment income or distributions combining net investment
income and short-term capital gains in shares of the same class
of another continuously offered Putnam fund (the "receiving
fund") using the net asset value per share of the receiving fund
determined on the date the Fund's distribution is payable. No
sales charge or CDSC will apply to the purchased shares unless
the Fund is a money market fund. The prospectus of each fund
describes its investment objective(s) and policies, and
shareholders should obtain a prospectus and consider these
objective(s) and policies carefully before investing their
distributions in the receiving fund. Shares of certain Putnam
funds are not available to residents of all states.
The minimum account size requirement for the receiving fund will
not apply if the current value of your account in this Fund is
more than $5,000.
Shareholders of other Putnam funds (except for money market
funds, whose shareholders must pay a sales charge or become
subject to a CDSC) may also use their distributions to purchase
shares of the Fund at net asset value.
For federal tax purposes, distributions from the Fund which are
reinvested in another fund are treated as paid by the Fund to the
shareholder and invested by the shareholder in the receiving fund
and thus, to the extent comprised of taxable income and deemed
paid to a taxable shareholder, are taxable.
The Dividends PLUS program may be revised or terminated at any
time.
PLANS AVAILABLE TO SHAREHOLDERS
The Plans described below are fully voluntary and may be
terminated at any time without the imposition by the Fund or
Putnam Investor Services of any penalty. All Plans provide for
automatic reinvestment of all distributions in additional shares
of the Fund at net asset value. The Fund, Putnam Mutual Funds or
Putnam Investor Services may modify or cease offering these Plans
at any time.
AUTOMATIC CASH WITHDRAWAL PLAN. An investor who owns or buys
shares of the Fund valued at $10,000 or more at the current
public offering price may open a Withdrawal Plan and have a
designated sum of money ($50 or more) paid monthly, quarterly,
semi-annually or annually to the investor or another person.
(Payments from the Fund can be combined with payments from other
Putnam funds into a single check through a Designated Payment
Plan.) Shares are deposited in a Plan account, and all
distributions are reinvested in additional shares of the Fund at
net asset value (except where the Plan is utilized in connection
with a charitable remainder trust). Shares in a Plan account are
then redeemed at net asset value to make each withdrawal payment.
Payment will be made to any person the investor designates;
however, if shares are registered in the name of a trustee or
other fiduciary, payment will be made only to the fiduciary,
except in the case of a profit-sharing or pension plan where
payment will be made to a designee. As withdrawal payments may
include a return of principal, they cannot be considered a
guaranteed annuity or actual yield of income to the investor.
The redemption of shares in connection with a Withdrawal Plan
generally will result in a gain or loss for tax purposes. Some
or all of the losses realized upon redemption may be disallowed
pursuant to the so-called wash sale rules if shares of the same
fund from which shares were redeemed are purchased (including
through the reinvestment of fund distributions) within a period
beginning 30 days before, and ending 30 days after, such
redemption. In such a case, the basis of the replacement shares
will be increased to reflect the disallowed loss. Continued
withdrawals in excess of income will reduce and possibly exhaust
invested principal, especially in the event of a market decline.
The maintenance of a Withdrawal Plan concurrently with purchases
of additional shares of the Fund would be disadvantageous to the
investor because of the sales charge payable on such purchases.
For this reason, the minimum investment accepted while a
Withdrawal Plan is in effect is $1,000, and an investor may not
maintain a Plan for the accumulation of shares of the Fund (other
than through reinvestment of distributions) and a Withdrawal Plan
at the same time. The cost of administering these Plans for the
benefit of those shareholders participating in them is borne by
the Fund as an expense of all shareholders. The Fund, Putnam
Mutual Funds or Putnam Investor Services may terminate or change
the terms of the Withdrawal Plan at any time. A Withdrawal Plan
will be terminated if communications mailed to the shareholder
are returned as undeliverable.
Investors should consider carefully with their own financial
advisers whether the Plan and the specified amounts to be
withdrawn are appropriate in their circumstances. The Fund and
Putnam Investor Services make no recommendations or
representations in this regard.
TAX QUALIFIED RETIREMENT PLANS; 403(B) AND SEP PLANS. (NOT
OFFERED BY FUNDS INVESTING PRIMARILY IN TAX-EXEMPT SECURITIES.)
Investors may purchase shares of the Fund through the following
Tax Qualified Retirement Plans, available to qualified
individuals or organizations:
Standard and variable profit-sharing (including 401(k))
and money purchase pension plans; and
Individual Retirement Account Plans (IRAs).
Each of these Plans has been qualified as a prototype plan by the
Internal Revenue Service. Putnam Investor Services will furnish
services under each plan at a specified annual cost. Putnam
Fiduciary Trust Company serves as trustee under each of these
Plans.
Forms and further information on these Plans are available from
investment dealers or from Putnam Mutual Funds. In addition,
specialized professional plan administration services are
available on an optional basis; contact Putnam Defined
Contribution Plan Services at 1-800-225-2465, extension 8600.
A 403(b) Retirement Plan is available for employees of public
school systems and organizations which meet the requirements of
Section 501(c)(3) of the Internal Revenue Code. Forms and
further information on the 403(b) Plan are also available from
investment dealers or from Putnam Mutual Funds. Shares of the
Fund may also be used in simplified employee pension (SEP) plans.
For further information on the Putnam prototype SEP plan, contact
an investment dealer or Putnam Mutual Funds.
Consultation with a competent financial and tax adviser regarding
these Plans and consideration of the suitability of Fund shares
as an investment under the Employee Retirement Income Security
Act of 1974, or otherwise, is recommended.
SIGNATURE GUARANTEES
Redemption requests for shares having a net asset value of
$100,000 or more must be signed by the registered owners or their
legal representatives and must be guaranteed by a bank,
broker/dealer, municipal securities dealer or broker, government
securities dealer or broker, credit union, national securities
exchange, registered securities association, clearing agency,
savings association or trust company, provided such institution
is acceptable under and conforms with Putnam Fiduciary Trust
Company's signature guarantee procedures. A copy of such
procedures is available upon request. If you want your
redemption proceeds sent to an address other than your address as
it appears on Putnam's records, you must provide a signature
guarantee. Putnam Investor Services usually requires additional
documentation for the sale of shares by a corporation,
partnership, agent or fiduciary, or a surviving joint owner.
Contact Putnam Investor Services for details.
SUSPENSION OF REDEMPTIONS
The Fund may not suspend shareholders' right of redemption, or
postpone payment for more than seven days, unless the New York
Stock Exchange is closed for other than customary weekends or
holidays, or if permitted by the rules of the Securities and
Exchange Commission during periods when trading on the Exchange
is restricted or during any emergency which makes it
impracticable for the Fund to dispose of its securities or to
determine fairly the value of its net assets, or during any other
period permitted by order of the Commission for protection of
investors.
SHAREHOLDER LIABILITY
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
agreement, obligation, or instrument entered into or executed by
the 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 Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to
meet its obligations. The likelihood of such circumstances is
remote.
STANDARD PERFORMANCE MEASURES
Yield and total return data for the Fund may from time to time be
presented in Part I of this Statement and in advertisements. In
the case of funds with more than one class of shares, all
performance information is calculated separately for each class.
The data is calculated as follows.
Total return for one-, five- and ten-year periods (or for such
shorter periods as the Fund has been in operation or shares of
the relevant class have been outstanding) is determined by
calculating the actual dollar amount of investment return on a
$1,000 investment in the Fund made at the beginning of the
period, at the maximum public offering price for Class A shares
and Class M shares and net asset value for other classes of
shares, and then calculating the annual compounded rate of return
which would produce that amount. Total return for a period of
one year is equal to the actual return of the Fund during that
period. Total return calculations assume deduction of the Fund's
maximum sales charge or CDSC, if applicable, and reinvestment of
all Fund distributions at net asset value on their respective
reinvestment dates.
The Fund's yield is presented for a specified thirty-day period
(the "base period"). Yield is based on the amount determined by
(i) calculating the aggregate amount of dividends and interest
earned by the Fund during the base period less expenses accrued
for that period, and (ii) dividing that amount by the product of
(A) the average daily number of shares of the Fund outstanding
during the base period and entitled to receive dividends and (B)
the per share maximum public offering price for Class A shares or
Class M shares, as appropriate and net asset value for other
classes of shares on the last day of the base period. The result
is annualized on a compounding basis to determine the yield. For
this calculation, interest earned on debt obligations held by the
Fund is generally calculated using the yield to maturity (or
first expected call date) of such obligations based on their
market values (or, in the case of receivables-backed securities
such as GNMA's, based on cost). Dividends on equity securities
are accrued daily at their stated dividend rates.
If the Fund is a money market fund, yield is computed by
determining the percentage net change, excluding capital changes,
in the value of an investment in one share over the seven-day
period for which yield is presented (the "base period"), and
multiplying the net change by 365/7 (or approximately 52 weeks).
Effective yield represents a compounding of the yield by adding 1
to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power
equal to 365/7, and subtracting 1 from the result.
If the Fund is a tax-exempt fund, the tax-equivalent yield during
the base period may be presented for shareholders in one or more
stated tax brackets. Tax-equivalent yield is calculated by
adjusting the tax-exempt yield by a factor designed to show the
approximate yield that a taxable investment would have to earn to
produce an after-tax yield equal, for that shareholder, to the
tax-exempt yield. The tax-equivalent yield will differ for
shareholders in other tax brackets.
At times, Putnam Management may reduce its compensation or assume
expenses of the Fund in order to reduce the Fund's expenses. The
per share amount of any such fee reduction or assumption of
expenses during the Fund's past ten fiscal years (or for the life
of the Fund, if shorter) is reflected in the table in the section
entitled "Financial history" in the Prospectus. Any such fee
reduction or assumption of expenses would increase the Fund's
yield and total return during the period of the fee reduction or
assumption of expenses.
All data are based on past performance and do not predict future
results.
COMPARISON OF PORTFOLIO PERFORMANCE
Independent statistical agencies measure the Fund's investment
performance and publish comparative information showing how the
Fund, and other investment companies, performed in specified time
periods. Three agencies whose reports are commonly used for such
comparisons are set forth below. From time to time, the Fund may
distribute these comparisons to its shareholders or to potential
investors. THE AGENCIES LISTED BELOW MEASURE PERFORMANCE BASED
ON THEIR OWN CRITERIA RATHER THAN ON THE STANDARDIZED
PERFORMANCE MEASURES DESCRIBED IN THE PRECEDING SECTION.
LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund
rankings monthly. The rankings are based on total return
performance calculated by Lipper, reflecting generally
changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a
variety of performance periods, for example year-to-date,
1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset
category.
MORNINGSTAR, INC. distributes mutual fund ratings twice a
month. The ratings are divided into five groups:
highest, above average, neutral, below average and lowest.
They represent a fund's historical risk/reward ratio
relative to other funds with similar objectives. The
performance factor is a weighted-average assessment of the
Fund's 3-year, 5-year, and 10-year total return
performance (if available) reflecting deduction of
expenses and sales charges. Performance is adjusted using
quantitative techniques to reflect the risk profile of the
fund. The ratings are derived from a purely quantitative
system that does not utilize the subjective criteria
customarily employed by rating agencies such as Standard &
Poor's Corporation and Moody's Investor Service, Inc.
CDA/WIESENBERGER'S MANAGEMENT RESULTS publishes mutual
fund rankings and is distributed monthly. The rankings
are based entirely on total return calculated by
Weisenberger for periods such as year-to-date, 1-year,
3-year, 5-year and 10-year. Mutual funds are ranked in
general categories (e.g., international bond,
international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of
sales charges or fees.
Independent publications may also evaluate the Fund's
performance. Certain of those publications are listed below, at
the request of Putnam Mutual Funds, which bears full
responsibility for their use and the descriptions appearing
below. From time to time the Fund may distribute evaluations by
or excerpts from these publications to its shareholders or to
potential investors. The following illustrates the types of
information provided by these publications.
BUSINESS WEEK publishes mutual fund rankings in its
Investment Figures of the Week column. The rankings are
based on 4-week and 52-week total return reflecting
changes in net asset value and the reinvestment of all
distributions. They do not reflect deduction of any sales
charges. Funds are not categorized; they compete in a
large universe of over 2000 funds. The source for
rankings is data generated by Morningstar, Inc.
INVESTOR'S BUSINESS DAILY publishes mutual fund rankings
on a daily basis. The rankings are depicted as the top 25
funds in a given category. The categories are based
loosely on the type of fund, e.g., growth funds, balanced
funds, U.S. government funds, GNMA funds, growth and
income funds, corporate bond funds, etc. Performance
periods for sector equity funds can vary from 4 weeks to
39 weeks; performance periods for other fund groups vary
from 1 year to 3 years. Total return performance reflects
changes in net asset value and reinvestment of dividends
and capital gains. The rankings are based strictly on
total return. They do not reflect deduction of any sales
charges. Performance grades are conferred from A+ to E.
An A+ rating means that the fund has performed within the
top 5% of a general universe of over 2000 funds; an A
rating denotes the top 10%; an A- is given to the top 15%,
etc.
BARRON'S periodically publishes mutual fund rankings. The
rankings are based on total return performance provided by
Lipper Analytical Services. The Lipper total return data
reflects changes in net asset value and reinvestment of
distributions, but does not reflect deduction of any sales
charges. The performance periods vary from short-term
intervals (current quarter or year-to-date, for example)
to long-term periods (five-year or ten-year performance,
for example). Barron's classifies the funds using the
Lipper mutual fund categories, such as Capital
Appreciation Funds, Growth Funds, U.S. Government Funds,
Equity Income Funds, Global Funds, etc. Occasionally,
Barron's modifies the Lipper information by ranking the
funds in asset classes. "Large funds" may be those with
assets in excess of $25 million; "small funds" may be
those with less than $25 million in assets.
THE WALL STREET JOURNAL publishes its Mutual Fund
Scorecard on a daily basis. Each Scorecard is a ranking
of the top-15 funds in a given Lipper Analytical Services
category. Lipper provides the rankings based on its total
return data reflecting changes in net asset value and
reinvestment of distributions and not reflecting any sales
charges. The Scorecard portrays 4-week, year-to-date,
one-year and 5-year performance; however, the ranking is
based on the one-year results. The rankings for any given
category appear approximately once per month.
FORTUNE magazine periodically publishes mutual fund
rankings that have been compiled for the magazine by
Morningstar, Inc. Funds are placed in stock or bond fund
categories (for example, aggressive growth stock funds,
growth stock funds, small company stock funds, junk bond
funds, Treasury bond funds, etc.), with the top-10 stock
funds and the top-5 bond funds appearing in the rankings.
The rankings are based on 3-year annualized total return
reflecting changes in net asset value and reinvestment of
distributions and not reflecting sales charges.
Performance is adjusted using quantitative techniques to
reflect the risk profile of the fund.
MONEY magazine periodically publishes mutual fund rankings
on a database of funds tracked for performance by Lipper
Analytical Services. The funds are placed in 23 stock or
bond fund categories and analyzed for five-year risk
adjusted return. Total return reflects changes in net
asset value and reinvestment of all dividends and capital
gains distributions and does not reflect deduction of any
sales charges. Grades are conferred (from A to E): the
top 20% in each category receive an A, the next 20% a B,
etc. To be ranked, a fund must be at least one year old,
accept a minimum investment of $25,000 or less and have
had assets of at least $25 million as of a given date.
FINANCIAL WORLD publishes its monthly Independent
Appraisals of Mutual Funds, a survey of approximately 1000
mutual funds. Funds are categorized as to type, e.g.,
balanced funds, corporate bond funds, global bond funds,
growth and income funds, U.S. government bond funds, etc.
To compete, funds must be over one year old, have over $1
million in assets, require a maximum of $10,000 initial
investment, and should be available in at least 10 states
in the United States. The funds receive a composite past
performance rating, which weighs the intermediate- and
long-term past performance of each fund versus its
category, as well as taking into account its risk, reward
to risk, and fees. An A+ rated fund is one of the best,
while a D-rated fund is one of the worst. The source for
Financial World rating is Schabacker investment management
in Rockville, MD.
FORBES magazine periodically publishes mutual fund ratings
based on performance over at least two bull and bear
market cycles. The funds are categorized by type,
including stock and balanced funds, taxable bond funds,
municipal bond funds, etc. Data sources include Lipper
Analytical Services and CDA Investment Technologies. The
ratings are based strictly on performance at net asset
value over the given cycles. Funds performing in the top
5% receive an A+ rating; the top 15% receive an A rating;
and so on until the bottom 5% receive an F rating. Each
fund exhibits two ratings, one for performance in "up"
markets and another for performance in "down" markets.
KIPLINGER'S PERSONAL FINANCE MAGAZINE (formerly Changing
Times), periodically publishes rankings of mutual funds
based on one-, three- and five-year total return
performance reflecting changes in net asset value and
reinvestment of dividends and capital gains and not
reflecting deduction of any sales charges. Funds are
ranked by tenths: a rank of 1 means that a fund was among
the highest 10% in total return for the period; a rank of
10 denotes the bottom 10%. Funds compete in categories of
similar funds--aggressive growth funds, growth and income
funds, sector funds, corporate bond funds, global
governmental bond funds, mortgage-backed securities funds,
etc. Kiplinger's also provides a risk-adjusted grade in
both rising and falling markets. Funds are graded against
others with the same objective. The average weekly total
return over two years is calculated. Performance is
adjusted using quantitative techniques to reflect the risk
profile of the fund.
U.S. NEWS AND WORLD REPORT periodically publishes mutual
fund rankings based on an overall performance index (OPI)
devised by Kanon Bloch Carre & Co., a Boston research
firm. Over 2000 funds are tracked and divided into 10
equity, taxable bond and tax-free bond categories. Funds
compete within the 10 groups and three broad categories.
The OPI is a number from 0-100 that measures the relative
performance of funds at least three years old over the
last 1, 3, 5 and 10 years and the last six bear markets.
Total return reflects changes in net asset value and the
reinvestment of any dividends and capital gains
distributions and does not reflect deduction of any sales
charges. Results for the longer periods receive the most
weight.
THE 100 BEST MUTUAL FUNDS YOU CAN BUY (1992), authored by
Gordon K. Williamson. The author's list of funds is
divided into 12 equity and bond fund categories, and the
100 funds are determined by applying four criteria.
First, equity funds whose current management teams have
been in place for less than five years are eliminated.
(The standard for bond funds is three years.) Second, the
author excludes any fund that ranks in the bottom 20
percent of its category's risk level. Risk is determined
by analyzing how many months over the past three years the
fund has underperformed a bank CD or a U.S. Treasury bill.
Third, a fund must have demonstrated strong results for
current three-year and five-year performance. Fourth, the
fund must either possess, in Mr. Williamson's judgment,
"excellent" risk-adjusted return or "superior" return with
low levels of risk. Each of the 100 funds is ranked in
five categories: total return, risk/volatility,
management, current income and expenses. The rankings
follow a five-point system: zero designates "poor"; one
point means "fair"; two points denote "good"; three points
qualify as a "very good"; four points rank as "superior";
and five points mean "excellent."
In addition, Putnam Mutual Funds may distribute to shareholders
or prospective investors illustrations of the benefits of
reinvesting tax-exempt or tax-deferred distributions over
specified time periods, which may include comparisons to fully
taxable distributions. These illustrations use hypothetical
rates of tax-advantaged and taxable returns and are not intended
to indicate the past or future performance of any fund.
DEFINITIONS
"Putnam Management" -- Putnam Investment Management,
Inc., the Fund's investment
manager.
"Putnam Mutual Funds" -- Putnam Mutual Funds Corp., the
Fund's principal underwriter.
"Putnam Fiduciary Trust -- Putnam Fiduciary Trust Company,
Company" the Fund's custodian.
"Putnam Investor Services" -- Putnam Investor Services, a
division of Putnam Fiduciary
Trust Company, the Fund's
investor servicing agent.
<PAGE>
PUTNAM
MONEY MARKET FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Index to Financial Statements and Supporting
Schedules:
(1) Financial Statements for Putnam Money
Market Fund and Putnam Tax Exempt Money
Market Fund :
Statement of assets and liabilities --
September 30, 1994(a) .
Statement of operations -- period ended
September 30, 1994 for Putnam Money Market
Fund and year ended September 30, 1994 for
Putnam Tax Exempt Money Market Fund(a).
Statement of changes in net assets --
period ended September 30, 1994 and
year ended October 31, 1993 for Putnam
Money Market Fund and years ended September
30, 1994 and 1993 for Putnam Tax Exempt Money
Market Fund(a).
Financial highlights (a)(b) .
Notes to financial statements(a).
(2) Supporting Schedules:
Schedule I -- Portfolio of investments owned
-- September 30, 1994(a) .
Schedules II through IX omitted because the
required matter is not present.
- ----------------------
(a) Incorporated by reference into Parts A
and B.
(b) Included in Part A.
<PAGE>
(b) Exhibits :
1a . Agreement and Declaration of
Trust as amended and
restated on July 7, 1994 for
Putnam Money Market Fund --
Exhibit 1.
1b. Agreement and Declaration of Trust, as
amended July 13, 1992, for Putnam Tax Exempt
Money Market Fund - - Incorporated by
reference to Post-Effective Amendment No.
6 to the Registrant's Registration
Statement.
2. By-Laws , as amended through
February 1, 1994 for Putnam Money Market
Fund and Putnam Tax Exempt Money Market Fund
-- Exhibit 2.
3. Not applicable.
4a. Portions of Agreement and Declaration of
Trust Relating to Shareholders' Rights for
Putnam Money Market Fund - -
Exhibit 3.
4b. Portions of Agreement and Declaration of
Trust Relating to Shareholders' Rights for
Putnam Tax Exempt Money Market Fund --
Incorporated by reference to Post-Effective
Amendment No. 7 to the Registrant's
Registration Statement.
4c. Portions of By-Laws Relating to
Shareholders' Rights for Putnam Money
Market Fund and Putnam Tax Exempt Money
Market Fund --Exhibit 4.
5a . Copy of Management Contract dated
December 21, 1988 for Putnam Money
Market Fund - -Incorporated by
reference to Post-Effective Amendment
No. 17 to the Registrant's Registration
Statement.
5b. Copy of Management Contract dated July
9, 1992 for Putnam Tax Exempt Money
Market Fund -- Incorporated by reference
to the Registrant's Post-Effective
Amendment No. 6 to the Registrant's
Registration Statement.
6a. Copy of Distributor's Contract dated
September 1, 1994 for Putnam Money Market
Fund -- Exhibit 5.
6b. Copy of Distributor's Contract dated May
6, 1994 for Putnam Tax Exempt Money Market
Fund -- Exhibit 6.
6c. Copy of Specimen Dealer Sales Contract
for Putnam Money Market Fund - -
Incorporated by reference to Post-
Effective Amendment No. 21 to the
Registrant's Registration Statement.
6d. Copy of Specimen Dealer Sales Contract
for Putnam Tax Exempt Money Market Fund
--Incorporated by reference to Post-
Effective Amendment No. 5 to the
Registrant's Registration Statement.
6e . Copy of Specimen Financial
Institution Sales Contract for
Putnam Money Market Fund - -
Incorporated by reference to Post-
Effective Amendment No. 21 to the
Registrant's Registration
Statement.
6f. Copy of Specimen Financial Institution
Sales Contract for Putnam Tax Exempt
Money Market Fund -- Incorporated by
reference to Post-Effective Amendment
No. 5 to the Registrant's Registration
Statement.
7. Not applicable .
8a . Copy of Custodian Agreement with Putnam
Fiduciary Trust Company dated May 3,
1991, as amended July 13, 1992 for
Putnam Money Market Fund -- Incorporated
by reference to Post-Effective Amendment
No. 23 to the Registrant's Registration
Statement.
8b. Copy of Custodian Agreement with Putnam
Fiduciary Trust Company dated May 3, 1991, as
amended July 13, 1992 for Putnam Tax Exempt
Money Market Fund -- Incorporated by
reference to Post-Effective Amendment No. 7
to the Registrant's Registration
Statement.
9a . Copy of Investor Servicing Agreement
dated June 3, 1991 with Putnam Fiduciary
Trust Company for Putnam Money Market
Fund - -Incorporated by reference to
Post-Effective Amendment No. 21 to the
Registrant's Registration Statement.
9b. Copy of Investor Servicing Agreement
dated June 3, 1991 with Putnam Fiduciary
Trust Company for Putnam Tax Exempt
Money Market Fund -- Incorporated by
reference to Post-Effective Amendment
No. 5 to the Registrant's Registration
Statement.
10a . Opinion of Ropes & Gray, including
consent for Putnam Tax Exempt
Money Market Fund - -
Exhibit 7 .
11. Not applicable.
12. Not applicable.
13a . Class B Investment Letter from The
Putnam Management Company, Inc. to the
Registrant dated April 24, 1992 for
Putnam Money Market Fund - -
Incorporated by reference to Post-
Effective Amendment No. 22 to the
Registrant's Registration Statement.
13b. Investment Letter from The Putnam Management
Company, Inc. to Putnam Tax Exempt Money
Market Fund - - Incorporated by reference
to the Registrant's Pre -Effective
Amendment No. 2 to the Registrant's
Registration Statement.
14. Not applicable.
15a. Copy of Class B Distribution Plan and
Agreement dated April 24, 1992 for Putnam
Money Market Fund - - Incorporated by
reference to Post-Effective Amendment No. 22
to the Registrant's Registration Statement.
15b. Copy of Class M Distribution Plan and
Agreement dated November 28, 1994 for Putnam
Money Market Fund -- Exhibit 8.
15c. Copy of Distribution Plan and Agreement dated
July 10, 1987, as amended on January 1, 1990
for Putnam Tax Exempt Money Market Fund --
Incorporated by reference to the Registrant's
Post-Effective Amendment No. 4 to the
Registrant's Registration Statement.
15d. Copy of Specimen Dealer Service
Agreement for Putnam Money Market
Fund - - Incorporated by reference to
Post-Effective Amendment No. 22 to the
Registrant's Registration Statement.
15e. Copy of Specimen Dealer Service
Agreement for Putnam Tax Exempt Money
Market Fund --Incorporated by reference
to the Registrant's Post-Effective
Amendment No. 25 to the Registrant's
Registration Statement.
15f . Copy of Specimen Financial Institution
Service Agreement for Putnam Money
Market Fund - - Incorporated by
reference to Post-Effective Amendment
No. 22 to the Registrant's Registration
Statement.
15g. Copy of Specimen Financial Institution
Service Agreement for Putnam Tax Exempt
Money Market Fund -- Incorporated by
reference to the Registrant's Post-
Effective Amendment No. 6 to the
Registrant's Registration Statement.
16a . Schedules for computation of
performance quotations for
Putnam Money Market Fund - -
Exhibit 9.
16b. Schedules for computation of performance
quotations for Putnam Tax Exempt Money Market
Fund -- Exhibit 10.
17a. Financial Data Schedules for Class A shares
of Putnam Money Market Fund -- Exhibit 11.
17b. Financial Data Schedules for Class B shares
of Putnam Money Market Fund -- Exhibit 12.
17c. Financial Data Schedules for Putnam Tax
Exempt Money Market Fund -- Exhibit 13.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANTS
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of September 30, 1994 the number of shares of
beneficial interest of Registrants held of record were as
follows:
Number of
Record Holders
- ----------------
Putnam Money Market Fund - Class A 46,542
Putnam Money Market Fund - Class B 7,193
Putnam Tax Exempt Money Market Fund 4,787
No Class M shares for the Money Market Fund were outstanding as
of September 30, 1994 .
ITEM 27. INDEMNIFICATION
The information required by this item is incorporated
by reference from Putnam Money Market Fund's
Registration Statement on Form N-8B-1 under the Investment
Company Act of 1940 (File No. 811-2608) and for Putnam Tax
Exempt Money Market Fund, incorporated by reference to its
Initial Registration Statement on Form N-1A (File No. 811-
5215) .
<PAGE>
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Except as set forth below, the directors and officers
of the Registrant's investment adviser have been engaged during
the past two fiscal years in no business, vocation or employment
of a substantial nature other than as directors or officers of
the investment adviser or certain of its corporate affiliates.
Certain officers of the investment adviser serve as officers of
some or all of the Putnam funds. The address of the investment
adviser, its corporate affiliates and the Putnam Funds is One
Post Office Square, Boston, Massachusetts 02109.
NAME NON-PUTNAM BUSINESS AND OTHER
CONNECTIONS
John V. Adduci Prior to July, 1993, Human Resources
Assistant Vice President Manager, First Security Services, 80
Main St., Reading, MA 01867
Gail S. Attridge Prior to November, 1993, International
Vice President Analyst, Keystone Custodian Funds,
200 Berkley Street, Boston, MA 02116
James E. Babcock Prior to June, 1994, Interest
Assistant Vice President Supervisor, Salomon Brothers, Inc.
7 World Trade Center, New York, NY
10048
Prior to June, 1993, Audit Manager,
Coopers & Lybrand, One Sylvan Way,
Parsipanny, NJ 07054
Robert K. Baumbach Prior to August, 1994, Vice President
Vice President and Analyst, Keystone Custodian
funds, 200 Berkely St., Boston, MA
02110
Sharon A. Berka Prior to January, 1994, Vice
Vice President President - Compensation Manager,
BayBanks, Inc., 175 Federal Street,
Boston, MA 02110
Edward P. Bousa Prior to October, 1992, Vice President
Senior Vice President and Portfolio Manager, Fidelity
Investments, 82 Devonshire St.,
Boston, MA 02109
Michael F. Bouscaren Prior to May, 1994, President and
Senior Vice President Chairman of the Board of Directors
at Salomon Series Funds, Inc. and a
Director of Salomon Brothers Asset
Management, 7 World Trade Center,
New York, NY 10048
Brett Browchuk Prior to April, 1994, Managing
Managing Director Director, Fidelity Investments, 82
Devonshire St., Boston, MA 02109
Carolyn S. Bunten Prior to July, 1993, Assistant Trader,
Assistant Vice President Scudder Stevens & Clark, Inc., 175
Federal St., Boston, MA 02110
Andrea Burke Prior to August, 1994, Vice President
Vice President and Portfolio Manager, Back Bay
Advisors, 399 Boylston St., Boston,
MA 02116
John M. Burton Prior to June, 1994, Manager --
Assistant Vice President Marketing Asset Management Pension
Services, The Travelers, Inc., 1
Tower Square, Hartford, CT 06183
Patricia A. Carey Prior to May, 1993, Research Analyst,
Assistant Vice President John Hancock Financial Services, 100
Clarendon St., Boston, MA 02116
Peter Carman Prior to August, 1993, Chief
Senior Managing Director Investment Officer, Chairman, U.S.
Equity Investment Policy Committee,
Member of Board of Directors,
Sanford C. Bernstein & Co., Inc.,
767 Fifth Avenue, New York, NY 10153
Steven Cheshire Prior to January, 1994, Assistant
Vice President Vice President, Wellington
Management, 75 State Street, Boston,
MA 02109
Anna Coppola Prior to May, 1993, Associate,
Assistant Vice President Heidrick & Struggles, One Post
Office Square, Boston, MA 02109
Kathleen Crews Prior to February, 1993, Assistant
Assistant Vice President Vice President, Alliance Capital
Management, L.P., 1345 Avenue of
the Americas, New York, NY 10105
York, NY
Kenneth L. Daly Prior to September, 1993, Vice
Senior Vice President President, Fidelity Investments,
82 Devonshire St., Boston, MA 02109
<PAGE>
John A. DeTore Prior to January, 1994, Director of
Managing Director Quantitative Portfolio Management,
Wellington Management, 75 State
Street, Boston, Ma 02109
Michael G. Dolan Prior to February, 1994, Senior
Assistant Vice President Financial Analyst, General Electric
Company, 1000 Western Ave., Lynn, MA
01905
Joseph Eagleeye Prior to August, 1994, Associate,
Assistant Vice President David Taussig & Associates, 424
University Ave., Sacremento, CA
95813
Richard B. England Prior to December, 1992, Investment
Senior Vice President Officer, Aetna Equity Investors,
151 Farmington Avenue, Hartford,
CT, 06156
Jonathan H. Francis Prior to March, 1993, President,
Senior Vice President J.H. Francis & Co., N. Pheasant
Lane, Westport, CT 06880
James F. Giblin Prior to April, 1993, Managing
Senior Vice President Director, CIGNA Corp. Investments,
Inc., 900 Cottage Grove Rd.
Bloomfield, CT 06152
Thomas C. Goggins Prior to June, 1993, Portfolio
Vice President Manager, Transamerica Investment
Services, 1150 South Olive Street,
Los Angeles, CA 90015
Mark D. Goodwin Prior to May, 1994, Manager, Audit &
Assistant Vice President Operations Analysis, Mitre
Corporation, 202 Burlington Rd.,
Bedford, MA 01730
Stephen Gorman Prior to July, 1994, Financial
Assistant Vice President Analyst, Boston Harbor Trust
Company, 100 Federal St., Boston, MA
02110
Daniel J. Grim Prior to May 1993, Consultant,
Vice President Connie Lee, 2445 M Street N.W.,
Washington, D.C. 20037;
Chief Operating Officer, Boardwalk,
Inc., Minocqua, WI 54548
<PAGE>
Billy P. Han Prior to December, 1992, Vice
Vice President President, Scudder, Stevens & Clark,
Inc., 160 Federal Street, Boston, MA
02110
Deborah R. Healy Prior to June, 1994, Senior Equity
Senior Vice President Trader, Fidelity Management &
Research Company, 82 Devonshire St.,
Boston, MA 02109
Lisa Heitman Prior to July, 1994, Securities
Analyst, Lord, Abbett & Company, 767
Fifth Ave., New York, NY 10153
Michael F. Hotchkiss Prior to May, 1994, Vice President,
Vice President Massachusetts Financial Services,
500 Boylston St., Boston, MA 02116
Walter Hunnewell, Jr. Prior to April, 1994, Managing
Vice President Director, Veronis, Suhler &
Associates, 350 Park Avenue, New
York, NY 10022
Stephon A. Jackson Prior to December, 1992, nalyst,
Assistant Vice President Arco Investment Management Co.,
515 South Flower Street,
Los Angeles, CA 91030
Jeffrey L. Knight Prior to March, 1993, Teacher,
Vice President Greater Newburyport Educational
Collaborative, Newburyport, MA 01950
Jeffrey J. Kobylarz Prior to May, 1993, Credit Analyst,
Vice President Dean Witter Reynolds, Inc.,
Two World Trade Center,
New York, NY 10048
D. William Kohli Prior to September, 1994, Executive
Senior Vice President Vice President and Co-Director of
Global Bond Managment; Prior to
1993, Portfolio Manager, Franklin
Advisors/Templeton Investment
Counsel, 777 Mariners Island Blvd.,
San Mateo, CA 94404
<PAGE>
Karen R. Korn Prior to June, 1994, Vice President,
Vice President Assistant to the President, Designs,
Inc. 1244 Boylston St., Chestnut
Hill, MA 02167
Prior to March, 1993, Vice President,
Paine Webber, Inc., 265 Franklin
St., Boston, MA 02110
Bruce M. Landers Prior to February, 1993, Manager,
Assistant Vice President Purchasing, Vicor Coproration, 23
Frontage Road, Andover, MA 01810
Lawrence J. Lasser Director, Marsh & McLennan Companies,
President, Director Inc., 1221 Avenue of the Americas,
and Chief Executive New York, NY 10020
Officer Director, INROADS/Central New England,
Inc., 99 Bedford St., Boston,
MA 02111
John A. Libertine, Jr. Prior to December, 1992, Tax Manager,
Assistant Vice President Coopers & Lybrand, One Post Office
Square, Boston, MA 02109
Jeff Lindsay Prior to April, 1994, Vice President
Vice President and Board Member, Strategic
Portfolio Management, 900 Ashwood
Parkway, Suite 290, Atlanta, GA
30338
Robert A. Madore Prior to October, 1992, Senior Vice
Vice President President and Portfolio Manager,
Fiduciary Captial Management, Inc.
51 Sherman Hill Rd., Woodbury,
CT 06798
Frederick S. Marius Prior to September, 1992, Associate
Assistant Vice President Attorney at Skadden Arps, One
Associate Counsel Beacon St., Boston, MA 02109
Michael Martino Prior to January, 1994, Executive
Senior Vice President Vice President and Chief Investment
Officer until 1992; Senior Vice
President and Portfolio Manager from
1990 to 1992, Back Bay Advisors, 399
Boylston St, Boston, MA 02116
Andrew S. Matteis Prior to March, 1993, Vice President,
Vice President Fitch Investors Service, One
State Street Plaza, New York,
NY 10004
Susan McCormack Prior to May, 1994, Associate
Vice President Investment Banker, Merrill Lynch &
Co., 350 South Grand Ave., Suite
2830, Los Angeles, CA 90071
Michael J. Mufson Prior to June, 1993, Senior Equity
Vice President Analyst, Stein Roe & Farnham,
One South Wacker Drive, Chicago, Il
60606
Warren S. Naphtal Prior to January, 1994, Managing
Senior Vice President Director, Continental Bank, 231
So. Lasalle St., Chicago, IL 60697
Jeffrey W. Netols Prior to February, 1993, Portfolio
Senior Vice President Analyst, Associated Bank,
200 N. Adams, Greenbay, WI 54307
Patrick C. O'Donnell, Jr. Prior to May, 1994, President,
Managing Director Exeter Research, Inc., 163 Water
Street, Exeter, New Hampshire, 03833
Brian O'Keefe Prior to December, 1993, Vice
Vice President President - Foreign Exchange
Trader, Bank of Boston, 100 Federal
Street, Boston, MA 02109
Pat G. Patel Prior to April, 1993, Regional
Vice President Manager, Zacks Investment Research,
155 N. Wacker Drive, Chicago,
IL 60606
Margaret Pietropaolo Prior to January, 1994, Data Base/
Assistant Vice President Production Analyst, Wellington
Management, 75 State Street, Boston,
MA 02109
George Putnam Chairman and Director, Putnam Mutual
Chairman and Director Funds Corp.
Director, The Boston Company, Inc.,
One Boston Place, Boston, MA 02108
Director, Boston Safe Deposit and
Trust Company, One Boston Place,
Boston, MA 02108
Director, Freeport-McMoRan, Inc., 200
Park Avenue, New York, NY 10166
Director, General Mills, Inc., 9200
Wayzata Boulevard, Minneapolis,
MN 55440
Director, Houghton Mifflin Company,
One Beacon Street, Boston, MA 02108
Director, Marsh & McLennan Companies,
Inc., 1221 Avenue of the Americas,
New York, NY 10020
Director, Rockefeller Group, Inc.,
1230 Avenue of the Americas,
New York, NY 10020
Christopher A. Ray Prior to December, 1992, Vice
Vice President President and Portfolio Manager at
Scudder, Stevens & Clark, Inc., 160
Federal Street, Boston, MA 02110
Mark J. Siegel Prior to June, 1993, Vice President,
Vice President Salomon Brothers International,
Ltd., Victoria Plaza, 111 Buckingham
Palace Road, London SW1W 0SB,
England
Joanne Soja Prior to June, 1993, Managing
Senior Vice President Director/Portfolio Manager,
Chancellor Capital Management,
153 East 53rd Street, New York, NY
10002
George W. Stairs Prior to July, 1994, Equity Research
Vice President Analyst, ValueQuest Limited,
Roundy's Hill, Marblehead, MA 01945
Hillary F. Till Prior to May, 1994, Fixed-Income
Vice President Deritive Trader, Bank of Boston,
100 Federal Street, Boston, MA 02109
Prior to December, 1993, Equity
Analyst, Harvard Management Company,
600 Atlantic St., Boston, MA 02109
Bonnie L. Troped Prior to May, 1993, Assistant Vice
Vice President President/Director of Corporate
Events, The Boston Company, One
Boston Place, Boston, MA 02108
Elizabeth A. Underhill Prior to August, 1994, Vice President
Vice President and Senior Equity Analyst, State
Street Bank and Trust Company, 225
Franklin St., Boston, MA 02110
Charles C. Van Vleet Prior to August, 1994, Vice President
Senior Vice President and Fixed-Income Manager, Alliance
Capital Management, 1345 Avenue of
the Americas, New York, NY 10105
Michael R. Weinstein Prior to March, 1994, Management
Vice President Consultant, Arthur D. Little, Acorn
Park, Cambridge, MA 02140
Item 29. Principal Underwriter
(a) Putnam Mutual Funds Corp. is the principal underwriter for
each of the following investment companies, including the
Registrant:
Putnam Adjustable Rate U.S. Government Fund, Putnam American
Government Income Fund, Putnam Arizona Tax Exempt Income Fund,
Putnam Asia Pacific Growth Fund, Putnam Asset Allocation Funds,
Putnam Balanced Government Fund, Putnam California Tax Exempt
Income Trust, Putnam California Tax Exempt Money Market Fund,
Putnam Capital Appreciation Fund, Putnam Capital Growth and
Income Fund, Putnam Capital Manager Trust, Putnam Convertible
Income-Growth Trust, Putnam Corporate Asset Trust, Putnam
Diversified Equity Trust, Putnam Diversified Income Trust, Putnam
Dividend Growth Fund, Putnam Equity Income Fund, Putnam Europe
Growth Fund, Putnam Federal Income Trust, Putnam Florida Tax
Exempt Income Fund, The George Putnam Fund of Boston, Putnam
Global Governmental Income Trust, Putnam Global Growth Fund,
Putnam Growth Fund, The Putnam Fund for Growth and Income, Putnam
Health Sciences Trust, Putnam High Yield Trust, Putnam High Yield
Advantage Fund, Putnam Income Fund, Putnam Intermediate Tax
Exempt Income Fund, Putnam Investors Fund, Putnam Managed Income
Trust, Putnam Massachusetts Tax Exempt Income Fund II, Putnam
Michigan Tax Exempt Income Fund II, Putnam Minnesota Tax Exempt
Income Fund II, Putnam Money Market Fund, Putnam Municipal Income
Fund, Putnam Natural Resources Fund, Putnam New Jersey Tax Exempt
Income Fund, Putnam New Opportunities Fund, Putnam New York Tax
Exempt Income Fund, Putnam New York Tax Exempt Money Market Fund,
Putnam New York Tax Exempt Opportunities Fund, Putnam Ohio Tax
Exempt Income Fund II, Putnam OTC Emerging Growth Fund, Putnam
Overseas Growth Fund, Putnam Pennsylvania Tax Exempt Income Fund,
Putnam Research Analyst Fund, Putnam Tax-Free Income Trust,
Putnam Tax Exempt Income Fund, Putnam Tax Exempt Money Market
Fund, Putnam U.S. Government Income Trust, Putnam Utilities
Growth and Income Fund, Putnam Vista Fund, Putnam Voyager Fund
(b) The directors and officers of the Registrant's principal
underwriter are:<PAGE>
<TABLE>
<CAPTION>
Positions and Offices Positions and Offices
Name with Underwriter with Registrant
<C> <C> <C>
John V. Adduci Assistant Vice President None
Christopher S. Alpaugh Vice President None
Paulette C. Amisano Vice President None
Ronald J. Anwar Vice President None
Karen M. Apatow Assistant Vice President None
Steven E. Asher Senior Vice President None
Georgette M. Bacca Vice President None
Ira G. Baron Senior Vice President None
John L. Bartlett Senior Vice President None
Steven M. Beatty Vice President None
Matthew F. Beaudry Vice President None
Robert A. Benish Vice President None
John J. Bent Vice President None
Sharon A. Berka Vice President None
James R. Besher Vice President None
Suzanne J. Bessett Vice President None
Maureen L. Boisvert Vice President None
Keith R. Bouchard Vice President None
Leslee R. Bresnahan Vice President None
James D. Brockelman Senior Vice President None
Scott C. Brown Vice President None
Gail Buckner Senior Vice President None
Robert W. Burke Senior Managing Director None
Richard P. Busher Vice President None
Ellen S. Callahan Assistant Vice President None
William A. Campagna Senior Vice President None
Charles A. Carey Assistant Vice President None
Patricia A. Cartwright Assistant Vice President None
Christopher D. Caton Assistant Vice President None
Stephen J. Chaput Assisant Vice President None
Daniel J. Church Vice President None
James E. Clinton Assistant Vice President None
Kathleen M. Collman Managing Director None
Mark L. Coneeny Vice President None
Donald A. Connelly Senior Vice President None
Anna Coppola Assistant Vice President None
F. Nicholas Corvinus Senior Vice President None
Kenneth L. Daly Senior Vice President None
Edward H. Dane Assistant Vice President None
Nancy M. Days Assistant Vice President None
Daniel J. Delianedis Vice President None
J. Thomas Depres Senior Vice President None
Michael G. Dolan Assistant Vice President None
Scott M. Donaldson Vice President None
Emily J. Durbin Assistant Vice President None
David B. Edlin Senior Vice President None
James M. English Senior Vice President None
Vincent Esposito Senior Vice President None
Mary K. Farrell Assistant Vice President None
Susan H. Feldman Vice President None
Michael J. Fetcher Assistant Vice President None
Paul F. Fichera Senior Vice President None
C. Nancy Fisher Senior Vice President None
Mitchell B. Fishman Vice President None
Joseph C. Fiumara Vice President None
Patricia C. Flaherty Senior Vice President None
Judy P. Frodigh Vice President None
Samuel F. Gagliardi Vice President None
Judy S. Gates Vice President None
Richard W. Gauger Assistant Vice President None
Joseph P. Gennaco Vice President None
Steven E. Gibson Managing Director None
Mark D. Goodwin Assistant Vice President None
Robert Goodman Managing Director None
Robert G. Greenly Vice President None
Thomas W. Halloran Vice President None
Marilyn M. Hausammann Senior Vice President None
Howard W. Hawkins, III Vice President None
Deanna R. Hayes-Castro Assistant Vice President None
Paul P. Heffernan Vice President None
Susan M. Heimanson Vice President None
Bradley J. Hilsabeck Vice President None
Bess J.M. Hochstein Vice President None
Maureen A. Holmes Assistant Vice President None
William J. Hurley Senior Vice President None
Gregory E. Hyde Vice President None
Dwight D. Jacobsen Senior Vice President None
Douglas B. Jamieson Director and Senior Managing Director None
Jay M. Johnson Vice President None
Kevin M. Joyce Senior Vice President None
John P. Keating Vice President None
James J. Kilbane Vice President None
Deborah H. Kirk Senior Vice President None
Jill A. Koontz Assistant Vice President None
Howard H. Kreutzberg Senior Vice President None
Edward V. Lewandowski Senior Vice President None
Edward V. Lewandowski, Jr. Vice President None
Samuel L. Lieberman Vice President None
Rufino R. Lomba Vice President None
Maura A. Lockwood Assistant Vice President None
Robert F. Lucey Senior Managing Director None
Philip J. Lussier Managing Director None
Ann Malatos Assistant Vice President None
Renee L. Maloof Assistant Vice President None
Frederick S. Marius Assistant Vice President None
Karen E. Marotta Vice President None
Jill Maserian Vice President None
Kathleen M. McAnulty Assistant Vice President None
Anne B. McCarthy Assistant Vice President None
Mark J. McKenna Vice President None
Marla J. McDougall Assistant Vice President None
Walter S. McFarland Vice President None
Greg J. McMillan Assistant Vice President None
Robert E. McMurtrie Vice President None
Claye A. Metelmann Assistant Vice President None
J. Chris Meyer Senior Vice President None
Douglas W. Miller Vice President None
Ronald K. Mills Vice President None
Mitchell L. Moret Vice President None
Donald E. Mullen Vice President None
Brendan R. Murray Vice President None
Robert Nadherny Vice President None
Alexander L. Nelson Managing Director None
Jane M. Nickodemus Vice President None
John P. Nickodemus Vice President None
Michael C. Noonis Assistant Vice President None
Peter A. Nyhus Vice President None
Kristen P. O'Brien Vice President None
Lorie C. O'Malley Senior Vice President None
Kevin L. O'Shea Vice President None
Philip G. Padgett, Jr. Vice President None
Richard N. Pallan Senior Managing Director None
Scott A. Papes Vice President None
Cynthia O. Parr Vice President None
John D. Pataccoli Vice President None
Joseph Phoenix Vice President None
Jeffrey E. Place Senior Vice President None
Keith Plapinger Vice President None
Douglas H. Powell Vice President None
George Putnam Director Chairman & President
Susannah Psomas Vice President None
Robert B. Rowe Vice President None
Kevin A. Rowell Senior Vice President None
Thomas C. Rowley Vice President None
Deborah A. Ryan Assistant Vice President None
Charles Ruys de Perez Vice President None
Catherine A. Saunders Senior Vice President None
Robbin L. Saunders Assistant Vice President None
Karl W. Saur Vice President None
Christine A. Scordato Vice President None
Joseph W. Scott Assistant Vice President None
Kathleen G. Sharpless Senior Vice President None
John F. Sharry Managing Director None
John B. Shamburg Vice President None
Vincent P. Sheehan Vice President None
William N. Shiebler Director, Chief Executive Vice President
Officer and President
Daniel S. Shore Vice President None
Mark J. Siebold Assistant Vice President None
Gordon H. Silver Senior Managing Director Vice President
Barry Sommers Vice President None
Nicholas T. Stanojev Vice President None
Brian L. Sullivan Vice President None
Kevin J. Sullivan Vice President None
Moira A. Sullivan Vice President None
Janet C. Sweeney Vice President None
Edward M. Syring, Jr. Vice President None
James S. Tambone Senior Vice President None
B. Iris Tanner Assistant Vice President None
Louis Tasiopoulos Senior Vice President None
David S. Taylor Vice President None
John R. Telling Vice President None
Richard B. Tibbetts Senior Vice President None
Patrice M. Tirado Vice President None
Janet E. Tosi Assistant Vice President None
John C. Tredinnick Vice President None
Bonnie L. Troped Vice President None
Larry R. Unger Vice President None
Douglas J. Vander Linde Vice President None
John F. Wallin Senior Vice President None
Edward F. Whalen Vice President None
Robert J. Wheeler Senior Vice President None
John B. White Vice President None
Kirk E. Williamson Senior Vice President None
Leigh T. Williamson Vice President None
Benjamin Woloshin Vice President None
William H. Woolverton Senior Vice President and Clerk None
Timothy R. Young Vice President None
SooHee L. Zebedee Assistant Vice President None
</TABLE>
The principal business address of each person listed above is One
Post Office Square, Boston, MA 02109, except for:
Mr. Alpaugh, 5980 Richmond Highway, Alexandria, VA 22303
Mr. Anwar, 25-49 86th St. Jackson Heights, NY 11369
Mr. Baron, 31 Cala Moreya, Laguna Niguel, CA 92667
Mr. Bartlett, 7 Farifield St., Boston, MA 02116
Mr. Besher, 14000 Margaux, Town & Country, MO 63017
Ms. Besset, 1140 North LaSalle Blvd, Chicago, IL 60610
Mr. Bouchard, 18 Brice Rd., Annapolis, MD 21401
Mr. Brown, 221 East Mallord Drive, Boise, ID 83706
Ms. Buckner, 8338 Timber Trail, Pittsburgh, PA 15237
Mr. Busher, 12005 Ridge Knoll Drive, Fairfax, VA 22033
Mr. Campagna, 2179-D Lake Park Drive, Smyrna, GA 30080
Mr. Church, 4504 Sir Winston Place, Charlotte, NC 28211
Mr. Connelly, 4634 Mirada Way, Sarasota, FL 34238
Mr. Corvinus, 208 Water St., Newburyport, MA 01950
Mr. Deliandis, 206 Promontory Drive, Newport Beach, CA 92660
Mr. Edlin, 7 River Road, 305 Palmer Point, Cos Cob, CT 06807
Mr. English, 1184 Pintail Circle, Boulder, CO 80303
Mr. Goodman, 14 Clover Place, Cos Cob, CT 06807
Mr. Halloran, 978 W. Creek Lane, Westlake Village, CA 91362
Mr. Hyde, 3305 Sulky, Marietta, GA 30067
Mr. Jacobsen, 2744 Joyce Ridge Drive, Chesterfield, MO 63017
Mr. Johnson, 200 Clock Tower Place, Carmel, CA 93923
Mr. Keating, 5521 Greenville Avenue, Dallas, TX 75206
Ms. Kirk, 124 Rivermist Dr., Buffalo, NY 14202
Mr. Lewandowski, 805 Darrell Road, Hillsborough, CA 94010
Mr. Lewandowski, Jr., 2120 The Strand, Manhattan Beach, CA 90266
Mr. Lieberman, 200 Roy St., Seattle, WA 98199
Mr. McFarland, 8012 Dancing Fern Trail, Chattanooga, TN 37421
Mr. McMillan, 203 D. Zigler St., Zelienople, PA 16063
Mr. McMurtrie, 14529 Glastonbury, Detroit, MI 48223
Mr. Miller, 260 West 72nd St., New York, NY 10023
Mr. Moret, 4519 Lawn Avenue, Western Springs, IL 60558
Mr. Murray, 13 Ridge Court, Saratoga Springs, NY 12866
Mr. Nadherny, 9714 Marmount Drive, Seattle, WA 98117
Mr. and Mrs. Nickodemus, 1232 B Louden St., Cincinnati, OH 45202
Mr. Nyhus, 7203 Oak Pointe Curve, Bloomington, MN 55438
Mr. Padgett, Jr., 7709 Charleston Drive, Bethesda, MD 20817
Mr. Papes, 3102 Wood View Bridge Drive, Kansas City, KS 66103
Mr. Pataccoli, 125 41st Street, Manhattan Beach, Ca 90266
Mr. Phoenix, 1426 Asbury Avenue, Hubbard Woods, IL 60093
Mr. Place, 4211 Loch Highland Parkway, Roswell, GA 30075
Mr. Powell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowe, 109 Shore Drive, Longwood, FL 32779
Mr. Rowell, 1508 Ruth Lane, Newport Beach, CA 92660
Mr. Rowley, 237 Peeke Avenue, Kirkwood, MO 63122
Ms. Saunders, 39939 Stevenson Common, Freemont, CA 94538
Mr. Shamburg, 10603 N. 100th Street, Scottsdale, AZ 85260
Mr. Sheehan, Parkway Center, 1150 Galapago, Denver, CO 80204
Mr. Shore, 2870 Pharr Court South, N.W., Atlanta, BA 30305
Mr. Sommers, 397 North Little Pour, New City, NY 10956
Mr. B. Sullivan, 777 Pinoake Road, Mt. Lebanon, PA 15243
Ms. M. Sullivan, 493 Zinfandel Lane, St. Helena, CA 94574
Ms. Sweeney, 8 Surf Street, Marblehead, MA 01945
Mr. Syring, 7540 Mandarian Dr., Boca Raton, FL 33433
Mr. Tambone, 10 Commercial Wharf, Boston, MA 02110
Mr. Tredinnick, 2995 Glenwood Drive, Boulder, CO 80301
Mr. Telling, 1995 Delaware Ave., Buffalo, NY 14216
Mr. Unger, 212 E. Broadway, New York, NY 10002
Mr. Vessels, 7 Riverview Drive, Norwalk, CT 06850
Mr. Williamson, 32 Kramer Place, Mandeville, LA 70448
Mr. White, 23 Wellington St., Arlington, MA 02174
Mr. Woloshin, 730 North Bundy Drive, Los Angeles, CA 90049
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Persons maintaining physical possession of accounts,
books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are Registrants' Clerk, Beverly
Marcus; Registrant's investment adviser, Putnam Investment
Management, Inc.; Registrants' principal underwriter,
Putnam Mutual Funds Corp.; Registrants' custodian, Putnam
Fiduciary Trust Company ("PFTC"); and Registrants'
transfer and dividend disbursing agent, Putnam Investor Services,
a division of PFTC. The address of the Clerk, investment
adviser, principal underwriter, custodian and transfer and
dividend disbursing agent is One Post Office Square, Boston,
Massachusetts 02109.
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
Each Registrant undertakes to furnish to each person
to whom a prospectus of that Registrant is delivered a
copy of that Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
FOR PUTNAM MONEY MARKET FUND
We hereby consent to the incorporation by reference in the
Prospectuses and Statement of Additional Information
constituting parts of this Post-Effective Amendment No. 25
to the Registration Statement on Form N-1A (File No. 2-55091)
and Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A (File No. 33-15238) for the Putnam Money
Market Fund and the Putnam Tax Exempt Money Market Fund,
respectively, (the "Registration Statements") of our
report dated October 31, 1994 , relating to the financial
statements and financial highlights appearing in the September
30, 1994 Annual Report of Putnam Money Market Fund ,
which financial statements and financial highlights are also
incorporated by reference into the Registration
Statements . We also consent to the references to us under
the heading "Independent Accountants and Financial Statements" in
such Statement of Additional Information and under the heading
"Financial highlights" in such Prospectuses.
PRICE WATERHOUSE LLP
Boston, Massachusetts
November 28, 1994
CONSENT OF INDEPENDENT ACCOUNTANTS
FOR PUTNAM TAX EXEMPT MONEY MARKET FUND
We consent to the incorporation by reference Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A (File
No. 33-15238) of our report dated November 2, 1994 on our audits
of the financial statements and Financial Highlights of Putnam
Tax Exempt Money Market Fund, which report is included in the
Annual Report for Putnam Tax Exempt Money Market Fund for the
year ended September 30, 1994, which is incorporated by reference
in the 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 L.L.P.
Boston, Massachusetts
November 28, 1994
<PAGE>
NOTICE
A copy of the Agreement and Declarations of Trust of
Putnam Money Market Fund and Putnam Tax Exempt Money Market
Fund is 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 each Registrant
by an officer of each Registrant as an officer and not
individually and the obligations of or arising out of this
instrument are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets
and property of the Registrants .
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrants
certify that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and have duly
caused this Amendment to their Registration
Statements to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of Boston,
and The Commonwealth of Massachusetts, on the 1st day of
December , 1994.
PUTNAM MONEY MARKET FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
By: Gordon H. Silver, Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statements of Putnam Money
Market Fund and Putnam Tax Exempt Money Market Fund have been
signed below by the following persons in the capacities and on
the dates indicated:
SIGNATURE TITLE
George Putnam President and Chairman of the Board;
Principal Executive Officer; Trustee
William F. Pounds Vice Chairman; Trustee
John D. Hughes Vice President; Treasurer and
Principal Financial Officer
Paul G. Bucuvalas Assistant Treasurer and Principal
Accounting Officer
Jameson Adkins Baxter Trustee
Hans H. Estin Trustee
John A. Hill Trustee
Elizabeth T. Kennan Trustee
Lawrence J. Lasser Trustee
Robert E. Patterson Trustee
Donald S. Perkins Trustee
George Putnam, III Trustee
A.J.C. Smith Trustee
W. Nicholas Thorndike Trustee
By: Gordon H. Silver, as Attorney-
in-Fact
December 1, 1994
PUTNAM MONEY MARKET FUND
--------------------
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
(formerly Putnam Daily Dividend Trust)
--------------------
This AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
made at Boston, Massachusetts, this 7th day of July, 1994, hereby
amends and restates in its entirety the Amended and Restated
Agreement and Declaration of Trust of Putnam Daily Dividend Trust
dated April 7, 1989.
WITNESSETH that
WHEREAS the Trustees have agreed to manage all property
coming into their hands as trustees of a Massachusetts business
trust in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets, which they may from
time to time acquire in any manner as Trustees hereunder IN TRUST
to manage and dispose of the same upon the following terms and
conditions for the benefit of the holders from time to time of
Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as "Putnam Money
Market Fund", and the Trustees shall conduct the business of the
Trust under that name or any other name as they may from time to
time determine.
DEFINITIONS
Section 2. Whenever used herein, unless otherwise required
by the context or specifically provided
(a) The "Trust" refers to the Massachusetts business trust
established by this Agreement and Declaration of Trust, as
amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article IV;
(c) "Shares" means the units of interest into which the
beneficial interest in the Trust shall be divided from time
to time or, if more than one class of Shares is authorized
by the Trustees, the equal proportionate transferable units
into which each class of Shares shall be divided from time
to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of
1940 and the Rules and Regulations thereunder, all as
amended from time to time;
(f) The terms "Affiliated Person", "Assignment",
"Commission", "Interested Person", "Principal Underwriter"
and "Majority Shareholder Vote" (the 67% or 50% requirement
of the third sentence of Section 2(a)(42) of the 1940 Act,
whichever may be applicable) shall have the meanings given
them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to
time;
(h) "Bylaws" shall mean the Bylaws of the Trust as amended
from time to time; and
(i) The term "class" or "class of Shares" refers to the
division of Shares into two or more classes as provided in
Article III, Section 1 hereof.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to provide investors a managed
investment primarily in securities and debt instruments.
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall at
all times be divided into Shares, without par value, each of
which shall, except as provided in the following sentence,
represent an equal proportionate interest in the Trust with each
other Share, none having priority or preference over another.
For purposes of implementing the provisions of the second
paragraph of Article VI, Section 1 hereof or otherwise, the
Trustees may, without Shareholder approval, divide the Shares
into two or more classes, Shares of each such class having such
preferences and special or relative rights and privileges
(including conversion rights, if any) as the Trustees may
determine and as shall be set forth in the Bylaws. The number of
Shares authorized shall be unlimited. The Trustees may from time
to time divide or combine the Shares of any class into a greater
or lesser number without thereby changing the proportionate
beneficial interests in the class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded on the
books of the Trust or a transfer or similar agent. No
certificates certifying the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for
the transfer of Shares and similar matters. The record books of
the Trust as kept by the Trust or any transfer or similar agent,
as the case may be, shall be conclusive as to who are the
Shareholders of each class and as to the number of Shares of each
class held from time to time by each Shareholder.
INVESTMENTS IN THE TRUST
Section 3. The Trustees shall accept investments in the
Trust from such persons and on such terms and for such
consideration, which may consist of cash or tangible or
intangible property or a combination thereof, as they from time
to time authorize.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or other
right to subscribe to any additional Shares or other securities
issued by the Trust.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 5. Shares shall be deemed to be personal property
giving only the rights provided in this Declaration of Trust or
the Bylaws. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed
to the terms of this Declaration of Trust and the Bylaws and to
have become a party thereto. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the
same nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholders, nor
except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE IV
THE TRUSTEES
ELECTION
Section 1. A Trustee may be elected either by the Trustees
or by the Shareholders. There shall not be less than three
Trustees. The number of Trustees shall be fixed by the Trustees.
Each Trustee elected by the Trustees or the Shareholders shall
serve until he or she retires, resigns, is removed or dies or
until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of his
or her successor. At any meeting called for the purpose, a
Trustee may be removed by vote of the holders of two-thirds of
the outstanding Shares.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 2. The death, declination, resignation, retirement,
removal, or incapacity of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
POWERS
Section 3. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient
to carry out that responsibility. Without limiting the
foregoing, the Trustees may adopt Bylaws not inconsistent with
this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent
that such Bylaws do not reserve that right to the Shareholders;
they may fill vacancies in or add to their number, and may elect
and remove such officers and appoint and terminate such agents as
they consider appropriate; they may appoint from their own
number, and terminate, any one or more committees consisting of
two or more Trustees, including an executive committee which may,
when the Trustees are not in session, exercise some or all of the
power and authority of the Trustees as the Trustees may
determine; they may employ one or more custodians of the assets
of the Trust and may authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities, retain
a transfer agent or a Shareholder servicing agent, or both,
provide for the distribution of Shares by the Trust, through one
or more principal underwriters or otherwise, set record dates for
the determination of Shareholders with respect to various
matters, and in general delegate such authority as they consider
desirable to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such
custodian or underwriter.
Without limiting the foregoing, the Trustees shall have
power and authority:
(a) To invest and reinvest cash, and to hold cash
uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate
or lease any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power
and discretion with relation to securities or property as
the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities;
(e) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or
other negotiable form, or in its own name or in the name of
a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) To the extent necessary or appropriate to give effect
to the preferences and special or relative rights and
privileges of any classes of Shares, to allocate assets,
liabilities, income and expenses of the Trust to a
particular class of Shares or to apportion the same among
two or more classes of Shares;
(g) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation
or issuer any security of which is held in the Trust; to
consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer, and to pay calls
or subscriptions with respect to any security held in the
Trust;
<PAGE>
(h) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in
that connection to deposit any security with, or transfer
any security to, any such committee, depositary or trustee,
and to delegate to them such power and authority with
relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree
to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(j) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge the Trust
property or any part thereof to secure any of or all such
obligations;
(m) To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for
the conduct of the business, including without limitation,
insurance policies insuring the assets of the Trust and
payment of distributions and principal on its portfolio
investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents,
investment advisers, principal underwriters, or independent
contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted
by any such person as Trustee, officer, employee, agent,
investment adviser, principal underwriter, or independent
contractor, including any action taken or omitted that may
be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such person against
such liability; and
(n) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and
carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive
and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a
<PAGE>
means of providing such retirement and other benefits, for
any or all of the Trustees, officers, employees and agents
of the Trust.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees. Except as otherwise provided herein or from time to
time in the Bylaws, any action to be taken by the Trustees may be
taken by a majority of the Trustees present at a meeting of
Trustees (a quorum being present), within or without
Massachusetts, including any meeting held by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall
constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office.
PAYMENT OF EXPENSES BY TRUST
Section 4. The Trustees are authorized to pay or to cause
to be paid out of the principal or income of the Trust, or partly
out of principal and partly out of income, as they deem fair, all
expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the Trust, or in connection with the
management thereof, including but not limited to, the Trustees'
compensation and such expenses and charges for the services of
the Trust's officers, employees, investment adviser or manager,
principal underwriter, auditor, counsel, custodian, transfer
agent, Shareholder servicing agent, and such other agents or
independent contractors and such other expenses and charges as
the Trustees may deem necessary or proper to incur.
PAYMENT OF EXPENSES BY SHAREHOLDERS
Section 5. The Trustees shall have the power, as frequently
as they may determine, to cause each Shareholder of any class to
pay directly, in advance or arrears, for charges of the Trust's
custodian or transfer, Shareholder servicing or similar agent, an
amount fixed from time to time by the Trustees, by setting off
such charges due from such Shareholder from declared but unpaid
dividends owed such Shareholder and/or by reducing the number of
Shares of such class in the account of such Shareholder by that
number of full and/or fractional Shares of such class which
represents the outstanding amount of such charges due from such
Shareholder.
OWNERSHIP OF ASSETS OF THE TRUST
Section 6. Title to all of the assets of the Trust shall at
all times be considered as vested in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
Section 7. Subject to a favorable Majority Shareholder
Vote, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory and/or management
services with any corporation, trust, association or other
organization (the "Manager"), every such contract to comply with
such requirements and restrictions as may be set forth in the
Bylaws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including without
limitation, authority to determine from time totime what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. The
Trustees may also, at any time and from time to time, contract
with the Manager or any other corporation, trust, association or
other organization, appointing it exclusive or nonexclusive
distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may
be set forth in the Bylaws; and any such contract may contain
such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or
distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent
or affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing
or other agency contract may have been or may hereafter be
made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in
the Trust, or that
(ii) any corporation, trust, association or other
organization with which an advisory or management contract
or principal underwriter's, distributor's contract, or
transfer, Shareholder servicing or other agency contract may
have been or may hereafter be made also has an advisory or
management contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder servicing
or other agency contract with one or more other
corporations, trusts, associations, or other organizations,
or has other businesses or interests,
<PAGE>
shall not affect the validity of any such contract or disqualify
any Shareholder, Trustee or officer of the Trust from voting upon
or executing the same or create any liability or accountability
to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. Subject to voting the powers of one or more
classes of Shares as set forth elsewhere in this Declaration of
Trust or in the Bylaws, the Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article IV,
Section 1, (ii) for the removal of Trustees as provided in
Article IV, Section 1, (iii) with respect to any Manager as
provided in Article IV, Section 7, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as
provided in Article IX, Section 7, (v) to the same extent as the
stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, and (vi) with
respect to such additional matters relating to the Trust as may
be required by this Declaration of Trust, the Bylaws or any
registration of the Trust with the Securities and Exchange
Commission (or any successor agency) or any state, or as the
Trustees may consider necessary or desirable. Each whole share
shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. On any matter submitted to a vote
of Shareholders, all Shares of the Trust then entitled to vote
shall, except as otherwise provided in the Bylaws, be voted in
the aggregate as a single class without regard to classes of
shares, except (1) when required by the 1940 Act or when the
Trustees shall have determined that the matter affects one or
more classes of shares materially differently, Shares shall be
voted by individual class; and (2) when the Trustees have
determined that the matter affects only the interests of one or
more classes, then only Shareholders of such classes shall be
entitled to vote thereon. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by
proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them unless
at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the
challenger. Until Shares of any class are issued, the Trustees
may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the Bylaws to be
taken by Shareholders as to such class.
VOTING POWER AND MEETINGS
Section 2. Meetings of Shareholders of any or all classes
may be called by the Trustees from time to time for the purpose
of taking action upon any matter requiring the vote or authority
of the Shareholders of such classes as herein provided or upon
any other matter deemed by the Trustees to be necessary or
desirable. Written notice of any meeting of Shareholders shall
be given or caused to be given by the Trustees by mailing such
notice at least seven days before such meeting, postage prepaid,
stating the time, place and purpose of the meeting to each
Shareholder entitled to vote at such meeting at the Shareholder's
address as it appears on the records of the Trust. If the
Trustees shall fail to call or give notice of any meeting of
Shareholders for a period of 30 days after written application by
Shareholders holding at least 10% of the then outstanding Shares
of all classes entitled to vote at such meeting requesting that a
meeting be called for a purpose requiring action by the
Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 10% of the then outstanding Shares
of all classes entitled to vote at such meeting may call and give
notice of such meeting and thereupon the meeting shall be held in
the manner provided for herein in case of call thereof by the
Trustees.
QUORUM AND REQUIRED VOTE
Section 3. Thirty percent of the Shares entitled to vote on
a particular matter shall be a quorum for the transaction of
business on that matter at a Shareholders' meeting, except that
where this Declaration of Trust requires that holders of any
class shall vote as an individual class, then thirty percent of
the aggregate number of shares of that class entitled to vote
shall be necessary to constitute a quorum for the transaction of
business by that class. Any lesser number shall be sufficient
for adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original
meeting without the necessity of further notice. Except when a
larger vote is required by any provision of this Declaration of
Trust or the Bylaws, a majority of the Shares voted shall decide
any questions and a plurality shall elect a Trustee, provided
that where this Declaration of Trust requires that the holders of
any class shall vote as an individual class, then a majority of
the Shares of that class voted on the matter (or a plurality with
respect to the election of a Trustee) shall decide that matter
insofar as that class is concerned.
<PAGE>
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote
on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or
the Bylaws) consent to the action in writing and such written
consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
ADDITIONAL PROVISIONS
Section 5. The Bylaws may include further provisions, not
inconsistent with this Declaration of Trust, regarding
Shareholders' voting powers, the conduct of meetings and related
matters.
ARTICLE VI
NET INCOME, DISTRIBUTIONS, AND REDEMPTIONS AND REPURCHASES
DISTRIBUTIONS OF NET INCOME
Section 1. The Trustees shall each year, or more frequently
if they so determine in their sole discretion, distribute to the
Shareholders an amount approximately equal to the Net Income of
the Trust, and may from time to time distribute such additional
amounts as they may authorize to the Shareholders. Such Net
Income shall consist of: (i) all interest income (including both
original issue and market discount earned on discount paper
accrued ratably to the date of maturity) accrued on portfolio
investments of the Trust, (ii) plus or minus realized or
unrealized gains and losses on portfolio investments of the Trust
determined by valuing the portfolio investments of the Trust in a
manner consistent with the requirements of the 1940 Act and any
applicable provisions of the Bylaws, and (iii) less all actual
and accrued expenses and liabilities determined in accordance
with good accounting practices. The Net Income of the Trust
allocable to any class of Shares shall be determined in such
manner as the Trustees may reasonably determine to give effect to
the allocation of any assets, liabilities, income and expenses of
the Trust to a particular class of Shares or as may otherwise be
necessary or appropriate to give effect to the preferences and
special or relative rights and privileges of any classes of
Shares. Such Net Income shall be determined by the Trustees or
as they may authorize on each business day at the times and in
the manner provided in the Bylaws, and all such Net Income, which
is a positive amount, since the last determination of Net Income,
shall be declared as a dividend. Determination of Net Income of
the Trust made by the Trustees, or as they may authorize, in good
faith, shall be binding on all parties concerned. Any such
distribution to the Shareholders shall be made to said
Shareholders pro rata in proportion to the number of Shares held
by each of them, except to the extent otherwise required or
permitted by the preferences and special or relative rights and
privileges of any classes of Shares of the Trust, provided that
any distribution to the shareholders of a particular class of
Shares shall be made to such Shareholders pro rata in proportion
to the number of Shares of such class held by each of them.
Notwithstanding the foregoing provisions for calculation and
distribution of net income, the Trustees may, from time to time
and for so long as they may deem appropriate, for purposes of
calculating and distributing income of the Trust to the
Shareholders, divide Shares into as many classes as they deem
appropriate (or, if at any time the Shares of the Trust are
otherwise divided into classes, to divide each such class of
Shares into subclasses) and pay distributions of differing
amounts to each class (or subclass) of Shares (provided all
Shares of the same class or subclass receive equal
distributions), provided, that the division of Shares into
classes (or subclasses) and the payment of differing
distributions to such classes (or subclasses) shall be made in a
manner consistent with the requirements of the 1940 Act, the
rules and regulations thereunder and exemptions therefrom, and
provided further, that except as otherwise specifically
authorized by the Trustees pursuant to this paragraph or as
otherwise deemed necessary or appropriate to give effect to the
preferences and special or relative rights and privileges of any
classes of Shares, the Trustees shall continue to calculate and
distribute net income of the Trust in the manner provided in the
preceding paragraph. Nothing contained in the foregoing paragraph
shall be construed as limiting in any way the general authority
of the Trustees to divide the Shares into two or more classes
pursuant to the provisions of Article III, Section 1 hereof.
If, for any reason, the Net Income of any class determined
at any time is a negative amount, the pro rata share of such
negative amount of each Shareholder of such class shall
constitute a liability of such Shareholder to the Trust which
shall be paid at such times and in such manner as the Trustees
may from time to time determine out of the accrued dividend
account of such Shareholder, by reducing the number of Shares of
such class in the account of such Shareholder or otherwise. As a
result of such determinations and declarations as a dividend of
the Net Income of each class, the net asset value per share of
each class (the value of all of the assets of the Trust allocable
to such class less total liabilities of the Trust allocable to
such class, divided by the number of Shares of such class
outstanding) is intended to remain at a constant amount
immediately after each such determination and declaration
subject, however, to the power of the Trustees as provided in
Section I of Article III to divide or combine the Shares of any
class into a greater or lesser number.
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are
offered by any Shareholder for redemption, upon the presentation
of a proper instrument of transfer together with a request
directed to the Trust or a person designated by the Trust that
the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Trustees may from time to time
authorize; and the Trust will pay therefor the net asset value
thereof, as described in Section 1 of this Article VI, next
determined. Payment for said Shares shall be made by the Trust
to the Shareholder within seven days after the date on which the
request is made. The obligation set forth in this Section 2 is
subject to the provision that in the event that any time the New
York Stock Exchange is closed for other than customary weekends
or holidays, or if permitted by the rules of the Securities and
Exchange Commission, during periods when trading on the Exchange
is restricted or during any emergency which makes it
impracticable for the Trust to dispose of its investments or to
determine fairly the value of its net assets, or during any other
period permitted by order of the Securities and Exchange
Commission for the protection of investors, such obligation may
be suspended or postponed by the Trustees. The Trust may also
purchase or repurchase Shares at a price not exceeding the net
asset value of such Shares in effect when the purchase or
repurchase or any contract to purchase or repurchase is made.
REDEMPTIONS AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its option and
at any time to redeem Shares of any Shareholder at the net asset
value thereof as described in Section 1 of this Article VI: (i)
if at such time such Shareholder owns Shares having an aggregate
net asset value of less than an amount determined from time to
time by the Trustees; or (ii) to the extent that such Shareholder
owns Shares equal to or in excess of a percentage of the Shares
determined from time to time by the Trustees.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
COMPENSATION
Section 1. The Trustees as such shall be entitled to
reasonable compensation from the Trust; they may fix the amount
of their compensation. Nothing herein shall in any way prevent
the employment of any Trustee for advisory, management, legal,
accounting, investment banking or other services and payment for
the same by the Trust.
LIMITATION OF LIABILITY
Section 2. The Trustees shall not be responsible or liable
in any event for any neglect or wrongdoing of any officer, agent,
employee, Manager or principal underwriter of the Trust, nor
shall any Trustee be responsible for the act or omission of any
other Trustee, but nothing herein contained shall protect any
Trustee against any liability to which he or she would otherwise
be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his or her office.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have
been executed or done only in or with respect to their or his or
her capacity as Trustees or Trustee, and such Trustees or Trustee
shall not be personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
TRUSTEES, OFFICERS, ETC.
Section 1. The Trust shall indemnify each of its Trustees
and officers (including persons who serve at the Trust's request
as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person")
against all liabilities and expenses, including but not limited
to amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees reasonably incurred by any
Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, except with respect to any
matter as to which such Covered Person shall have been finally
adjudicated in any such action, suit or other proceeding (a) not
to have acted in good faith in the reasonable belief that such
Covered Person's action was in the best interests of the Trust or
(b) to be liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office. Expenses, including counsel fees so incurred by
any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Trust in
advance to the final disposition if any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is
not authorized under this Article, provided, however, that either
(a) such Covered Person shall have provided appropriate security
for such undertaking, (b) the Trust shall be insured against
losses arising out of any such advance payments or (c) either a
majority of the disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees then in
office act on the matter), or independent legal counsel in a
written opinion shall have determined, based upon a review of
readily available facts (as opposed to a full trial type
inquiry), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this
Article.
Section 2. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise)
without an adjudication by a court, or by any other body before
which the proceeding was brought, that such Trustee, or officer
either (a) did not act in good faith in the reasonable belief
that his or her action was in the best interests of the Trust or
(b) is liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office, indemnification shall be provided if (a) approved as in
the best interests of the Trust, after notice that it involved
such indemnification by at least a majority of the disinterested
Trustees acting on the matter (providing that a majority of the
disinterested Trustees then in office act on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry), that such Trustee or
officer acted in good faith in the reasonable belief that his or
her action was in the best interests of the Trust and is not
liable to the Trust or its Shareholders by reasons of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office, or (b)
there has been obtained an opinion in writing of independent
legal counsel, based upon a review of readily available facts (as
opposed to a full trial type inquiry), to the effect that such
Covered Person appears to have acted in good faith in the
reasonable belief that his or her action was in the best
interests of the Trust and that such indemnification would not
protect such person against any liability to the Trust to which
such person would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of office. Any approval
pursuant to this paragraph shall not prevent the recovery from
any Covered Person of any amount paid to such Covered Person in
accordance with this Section as indemnification if such Covered
Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable
belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its
shareholders by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
INDEMNIFICATION NOT EXCLUSIVE
Section 3. The right of indemnification hereby provided
shall not be exclusive of or affect any other rights to which any
such Covered Person may be entitled. As used in this Article
VIII, the term "Covered Person" shall include such person's
heirs, executors and administrators and a "disinterested Trustee"
is a Trustee who is not an "interested person" of the Trust as
defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended (or who has been exempted from being an
"interested person" by any rule, regulation or order of the
Securities and Exchange Commission) and against whom none of such
actions, suits or other proceedings or another action, suit or
other proceeding on the same or similar grounds is then or has
been pending. Nothing contained in this article shall affect any
rights to indemnification to which personnel of the Trust, other
than Trustees and officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the Trust to
purchase and maintain liability insurance on behalf of any such
person.
SHAREHOLDERS
Section 4. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or
her being or having been a Shareholder and not because of his or
her acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the Trust to be
held harmless from and indemnified against all loss and expense
arising from such liability.
<PAGE>
ARTICLE IX
MISCELLANEOUS
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to, contracting
with or having any claim against the Trust shall look only to the
assets of the Trust for payment under such credit, contract or
claim; and neither the Shareholders nor the Trustees, nor any of
the Trust's officers, employees or agents, whether past, present
or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the
office of Trustee.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers or
officer shall give notice that this Declaration of Trust is on
file with the Secretary of the Commonwealth of Massachusetts and
shall recite that the same was executed or made by or on behalf
of the Trust or by them as Trustee or Trustees or as officers or
officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders
individually but are binding only upon the assets and property of
the Trust, and may contain such further recital as he or she or
they may deem appropriate, but the omission thereof shall not
operate to bind any Trustee or Trustees or officers or officer or
Shareholders individually.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested.
A Trustee shall be liable for his or her own wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes
of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this
Declaration of Trust, and shall be under no liability for any act
or omission in accordance with such advice or for failing to
follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
<PAGE>
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
Section 3. No person dealing with the Trustees shall be
bound to make any inquiry concerning the validity of any
transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the
Trust or upon its order.
TERMINATION OF TRUST
Section 4. The Trust may be terminated at any time by the
Trustees by written notice to the Shareholders, and if not
terminated earlier, shall terminate twenty years after the death
of the last survivor of the initial Trustees and the following
persons:
Ted Lawrence Benjamin, born October 7, 1966
Michael Steven Benjamin, born March 10, 1963
Robert Andrew Benjamin, born September 4, 1960
164 Prospect Street
Belmont, Massachusetts
(Children of Edward A. Benjamin)
Sarah Caroline Ellis, born August 11, 1974
45 Leewood Road
Wellesley, Massachusetts
(Daughter of Douglass N. Ellis, Jr.)
Russell A. Gaudreau, born July 3, 1972
302 Commonwealth Avenue
Boston, Massachusetts
(Son of Russell A. Gaudreau, Jr.)
Catherine Annesley Hanlon, born February 3, 1965
Susan Nelson Hanlon, born March 8, 1967
Jonathan Roger Hanlon, born December 21, 1970
Jennifer LaTourette Hanlon, born October 16, 1975
13 Moulton
Duxbury, Massachusetts
(Children of Francis X. Hanlon)
Eloise Paul Lawrence, born June 2, 1973
Abbott Wells Lawrence, born August 22, 1970
25 West Cedar Street
Boston, Massachusetts
(Children of Edward P. Lawrence)
Sarah Edgerly Pike, born September 26, 1967
William Abbott Pike, born August 2, 1966
Margaret Pike, born August 10, 1962
Susan Wendell Pike, born December 19, 1960
John Richmond Pike, born June 13, 1959
Conant Road
Lincoln, Massachusetts
(Children of John A. Pike)
Upon termination, after paying or otherwise providing for
all charges, taxes, expenses and liabilities, whether due or
accrued or anticipated may be determined by the Trustees, the
Trust shall in accordance with such procedures as the Trustees
consider appropriate reduce the remaining assets to distributable
form in cash or shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders, ratably
according to the number of Shares held by the several
Shareholders on the date of termination, except to the extent
otherwise required or permitted by the preferences and special or
relative rights and privileges of any classes of Shares of the
Trust, provided that any distribution to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro
rata in proportion to the number of Shares of such class held by
each of them.
FILING OF COPIES, REFERENCES, HEADINGS
Section 5. The original or a copy of this instrument and of
each amendment hereto shall be kept at the office of the Trust
where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the
Trust with the Secretary of The Commonwealth of Massachusetts and
with the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments
have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a
copy of this instrument or of any such amendments. In this
instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and
"hereunder", shall be deemed to refer to this instrument as
amended or affected by any such amendments. Headings are placed
herein for convenience of reference only and shall not be taken
as a part hereof or control or affect the meaning, construction
or effect of this instrument. This instrument may be executed in
any number of counterparts each of which shall be deemed an
original.
APPLICABLE LAW
Section 6. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to
be governed by and construed and administered according to the
laws of said Commonwealth. The Trust shall be of the type
commonly called a Massachusetts business trust and, without
limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
AMENDMENTS
Section 7. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then
Trustees when authorized so to do by vote of Shareholders holding
a majority of the Shares entitled to vote, except that an
amendment which in the determination of the Trustees shall affect
the holders of one or more classes of Shares but not the holders
of all outstanding classes shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of
each class affected and no vote of Shareholders of a class not
affected shall be required. Amendments having the purpose of
changing the name of the Trust or of supplying any omission,
curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not
require authorization by Shareholder vote.
*****************
This instrument shall be effective only upon filing with the
Secretary of State of The Commonwealth of Massachusetts and may
be executed in several counterparts, each of which shall be
deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned, being a majority of the
Trustees of the Trust, have hereunto set their hands and seals in
the City of Boston, Massachusetts for themselves and their
assigns, as of the day and year first above written.
<PAGE>
/s/ George Putnam /s/ Lawrence J. Lasser
- -------------------------- -------------------------
George Putnam Lawrence J. Lasser
/s/ William F. Pounds /s/ Robert E. Patterson
- -------------------------- -------------------------
William F. Pounds Robert E. Patterson
/s/ Jameson A. Baxter /s/ Donald S. Perkins
- ------------------------- -------------------------
Jameson A. Baxter Donald S. Perkins
/s/ Hans H. Estin /s/ George Putnam, III
- -------------------------- -------------------------
Hans H. Estin George Putnam, III
/s/ John A. Hill /s/ A.J.C Smith
- -------------------------- -------------------------
John A. Hill A.J.C. Smith
/s/ Elizabeth T. Kennan /s/ W. Nicholas Thorndike
- -------------------------- -------------------------
Elizabeth T. Kennan W. Nicholas Thorndike
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston, July 7, 1994
Then personally appeared each of the above named Trustees of
Putnam Money Market Fund and acknowledged the foregoing
instrument to be their free act and deed, before me,
/s/ Anne B. McCarthy
--------------------------
Anne B. McCarthy
Notary Public
My commission expires: 10/25/96
The address of the Trust is One Post Office Square, Boston,
Massachusetts 02109.
BYLAWS
OF
PUTNAM ADJUSTABLE RATE U.S. GOVERNMENT FUND,
PUTNAM AMERICAN GOVERNMENT INCOME FUND,
PUTNAM ARIZONA TAX EXEMPT INCOME FUND,
PUTNAM ASIA PACIFIC GROWTH FUND,
PUTNAM ASSET ALLOCATION FUNDS,
PUTNAM BALANCED GOVERNMENT FUND,
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND,
PUTNAM CONVERTIBLE INCOME-GROWTH TRUST,
PUTNAM DIVERSIFIED INCOME TRUST,
PUTNAM DIVIDEND GROWTH FUND,
PUTNAM EQUITY INCOME FUND,
PUTNAM EUROPE GROWTH FUND,
PUTNAM FLORIDA TAX EXEMPT INCOME FUND,
THE GEORGE PUTNAM FUND OF BOSTON,
PUTNAM GLOBAL GOVERNMENTAL INCOME TRUST,
PUTNAM GLOBAL GROWTH FUND,
PUTNAM HEALTH SCIENCES TRUST,
PUTNAM HIGH YIELD TRUST,
PUTNAM INCOME FUND,
PUTNAM INVESTORS FUND,
PUTNAM MANAGED INCOME TRUST,
PUTNAM MASSACHUSETTS TAX EXEMPT INCOME FUND II,
PUTNAM MICHIGAN TAX EXEMPT INCOME FUND II,
PUTNAM MINNESOTA TAX EXEMPT INCOME FUND II,
PUTNAM MONEY MARKET FUND,
PUTNAM MUNICIPAL INCOME FUND,
PUTNAM NEW JERSEY TAX EXEMPT INCOME FUND,
PUTNAM NEW OPPORTUNITIES FUND,
PUTNAM NEW YORK TAX EXEMPT MONEY MARKET FUND,
PUTNAM NEW YORK TAX EXEMPT OPPORTUNITIES FUND,
PUTNAM OHIO TAX EXEMPT INCOME FUND II,
PUTNAM OTC EMERGING GROWTH FUND,
PUTNAM PENNSYLVANIA TAX EXEMPT INCOME FUND,
PUTNAM RESEARCH ANALYSTS FUND,
PUTNAM TAX EXEMPT INCOME FUND,
PUTNAM TAX EXEMPT MONEY MARKET FUND,
PUTNAM TAX-FREE INCOME TRUST,
PUTNAM U.S. GOVERNMENT INCOME TRUST,
PUTNAM UTILITIES GROWTH AND INCOME FUND,
PUTNAM VISTA FUND,
PUTNAM VOYAGER FUND
(AS AMENDED THROUGH FEBRUARY 1, 1994),
PUTNAM INTERMEDIATE TAX EXEMPT FUND
(AS AMENDED THROUGH MARCH 7, 1994),
PUTNAM CALIFORNIA TAX EXEMPT INCOME TRUST,
PUTNAM NEW YORK TAX EXEMPT INCOME TRUST
(AS AMENDED THROUGH APRIL 8, 1994),
PUTNAM DIVERSIFIED EQUITY TRUST
(AS APPROVED APRIL 13, 1994)
PUTNAM HIGH YIELD ADVANTAGE FUND,
PUTNAM OVERSEAS GROWTH FUND
(AS AMENDED THROUGH JUNE 1, 1994),
PUTNAM FEDERAL INCOME TRUST
(AS AMENDED THROUGH JUNE 6, 1994),
PUTNAM NATURAL RESOURCES FUND
(AS AMENDED THROUGH JULY 1, 1994),
THE PUTNAM FUND FOR GROWTH AND INCOME
(AS AMENDED THROUGH JULY 7, 1994), <PAGE>
PUTNAM TOTAL RETURN BOND FUNDS,
PUTNAM GROWTH AND INCOME FUND II,
(AS AMENDED THROUGH OCTOBER 5, 1994) AND
PUTNAM EQUITY FUNDS
(AS AMENDED THROUGH OCTOBER 30, 1994)
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 AGREEMENT AND DECLARATION OF TRUST. These Bylaws shall
be subject to the Agreement and Declaration of Trust, as from
time to time in effect (the "Declaration of Trust"), of the
Massachusetts business trust established by the Declaration of
Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of
the Trust shall be located in Boston, Massachusetts.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1 REGULAR MEETINGS. Regular meetings of the Trustees may
be held without call or notice at such places and at such times
as the Trustees may from time to time determine, provided that
notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 SPECIAL MEETINGS. Special meetings of the Trustees may
be held at any time and at any place designated in the call of
the meeting when called by the Chairman of the Trustees, the
President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Clerk or an
Assistant Clerk or by the officer or the Trustees calling the
meeting.
2.3 NOTICE OF SPECIAL MEETINGS. It shall be sufficient
notice to a Trustee of a special meeting to send notice by mail
at least forty-eight hours or by telegram at least twenty-four
hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give
notice to him or her in person or by telephone at least
twenty-four hours before the meeting. Notice of a special
meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Trustee who
attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of
a meeting nor a waiver of a notice need specify the purposes of
the meeting.
2.4 QUORUM. At any meeting of the Trustees a majority of
the Trustees then in office shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present,
and the meeting may be held as adjourned without further notice.
2.5 NOTICE OF CERTAIN ACTIONS BY CONSENT. If in accordance
with the provisions of the Declaration of Trust any action is
taken by the Trustees by a written consent of less than all of
the Trustees, then prompt notice of any such action shall be<PAGE>
furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. The officers of the Trust
shall be a Chairman of the Trustees, a President, a Treasurer, a
Clerk and such other officers, if any, as the Trustees from time
to time may in their discretion elect. The Trust may also have
such agents as the Trustees from time to time may in their
discretion appoint. The Chairman of the Trustees and the
President shall be a Trustee and may but need not be a
shareholder; and any other officer may but need not be a Trustee
or a shareholder. Any two or more offices may be held by the
same person. A Trustee may but need not be a shareholder.
3.2 ELECTION. The Chairman of the Trustees, the President,
the Treasurer and the Clerk shall be elected by the Trustees upon
the occurrence of any vacancy in any such office. Other
officers, if any, may be elected or appointed by the Trustees at
any time. Vacancies in any such other office may be filled at
any time.
3.3 TENURE. The Chairman of the Trustees, the President,
the Treasurer and the Clerk shall hold office in each case until
he or she dies, resigns, is removed or becomes disqualified.
Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4 POWERS. Subject to the other provisions of these
Bylaws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as are commonly incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 CHAIRMAN; PRESIDENT. Unless the Trustees otherwise
provide, the Chairman of the Trustees or, if there is none or in
the absence of the Chairman of the Trustees, the President shall
preside at all meetings of the shareholders and of the Trustees.
Unless the Trustees otherwise provide, the President shall be the
chief executive officer.
3.6 TREASURER. Unless the Trustees shall provide
otherwise, the Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be
in charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
President.
3.7 CLERK. The Clerk shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which
books or a copy thereof shall be kept at the principal office of
the Trust. In the absence of the Clerk from any meeting of the
shareholders or Trustees, an Assistant Clerk, or if there be none
or if he or she is absent, a temporary Clerk chosen at such
meeting shall record the proceedings thereof in the aforesaid
books.
3.8 RESIGNATIONS AND REMOVALS. Any Trustee or officer may
resign at any time by written instrument signed by him or her and
delivered to the Chairman of the Trustees, the President or the
Clerk or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some
other time. The Trustees may remove any officer elected by them
with or without cause. Except to the extent expressly provided
in a written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or
removal, or any right to damages on account of such removal.
ARTICLE 4
COMMITTEES
4.1 QUORUM; VOTING. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall
constitute presence in person at a meeting.
ARTICLE 5
REPORTS
5.1 GENERAL. The Trustees and officers shall render
reports at the time and in the manner required by the Declaration
of Trust or any applicable law. Officers and Committees shall
render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
6.1 GENERAL. Except as from time to time otherwise
provided by the Trustees, the initial fiscal year of the Trust
shall end on such date as is determined in advance or in arrears
by the Treasurer, and subsequent fiscal years shall end on such
date in subsequent years.
<PAGE>
ARTICLE 7
SEAL
7.1 GENERAL. The seal of the Trust shall consist of a
flat-faced die with the word "Massachusetts", together with the
name of the Trust and the year of its organization cut or
engraved thereon but, unless otherwise required by the Trustees,
the seal shall not be necessary to be placed on and its absence
shall not impair the validity of, any document, instrument or
other paper executed and delivered by or on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
8.1 GENERAL. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other
manner, all deeds, leases, contracts, notes and other obligations
made by the Trustees shall be signed by the President, the Vice
Chairman, a Vice President or the Treasurer and need not bear the
seal of the Trust.
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by the
Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than the par value per share, if any, and not less
than the net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
Bylaws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the
Trust as stated in the Declaration of Trust and these Bylaws.
The officers of the Trust are severally authorized to take all
such actions as may be necessary or desirable to carry out this
Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled
to a certificate stating the number of shares of each class owned
by him, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate
is signed by a transfer agent or by a registrar. In case any
officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before
such certificate is issued, it may be issued by the Trust with
the same effect as if he were such officer at the time of its
issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust,
with the approval of any two officers of the Trust, is authorized
to issue and countersign replacement certificates for the shares
of the Trust which have been lost, stolen or destroyed upon (i)
receipt of an affidavit or affidavits of loss or non-receipt and
of an indemnity agreement executed by the registered holder or
his legal representative and supported by an open penalty surety
bond, said agreement and said bond in all cases to be in form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of
shares transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it
is held as collateral security, and the name of the pledgor shall
be stated thereon, who alone shall be liable as a shareholder and
entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.1 CERTAIN DEFINITIONS. When used herein the following
words shall have the following meanings: "Distributor" shall mean
any one or more corporations, firms or associations which have
distributor's or principal underwriter's contracts in effect with
the Trust providing that redeemable shares issued by the Trust
shall be offered and sold by such Distributor. "Manager" shall
mean any corporation, firm or association which may at the time
have an advisory or management contract with the Trust.
10.2 LIMITATIONS ON DEALINGS WITH OFFICERS OR TRUSTEES.
The Trust will not lend any of its assets to the Distributor or
Manager or to any officer or director of the Distributor or
Manager or any officer or Trustee of the Trust, and shall not
permit any officer or Trustee or any officer or director of the
Distributor or Manager to deal for or on behalf of the Trust with
himself or herself as principal or agent, or with any
partnership, association or corporation in which he or she has a
financial interest; provided that the foregoing provisions shall
not prevent (a) officers and Trustees of the Trust or officers
and directors of the Distributor or Manager from buying, holding
or selling shares in the Trust or from being partners, officers
or directors of or otherwise financially interested in the
Distributor or the Manager; (b) purchases or sales of securities
or other property if such transaction is permitted by or is
exempt or exempted from the provisions of the Investment Company
Act of 1940 or any Rule or Regulation thereunder and if such
transaction does not involve any commission or profit to any
security dealer who is, or one or more of whose partners,
shareholders, officers or directors is, an officer or Trustee of
the Trust or an officer or director of the Distributor or
Manager; (c) employment of legal counsel, registrar, transfer
agent, shareholder servicing agent, dividend disbursing agent or
custodian who is, or has a partner, shareholder, officer or
director who is, an officer or Trustee of the Trust or an officer
or director of the Distributor or Manager; (d) sharing
statistical, research, legal and management expenses and office
hire and expenses with any other investment company in which an
officer or Trustee of the Trust or an officer or director of the
Distributor or Manager is an officer or director or otherwise
financially interested.
10.3 SECURITIES AND CASH OF THE TRUST TO BE HELD BY
CUSTODIAN SUBJECT TO CERTAIN TERMS AND CONDITIONS.
(a) All securities and cash owned by the Trust
shall be held by or deposited with one or more banks or
trust companies having (according to its last published
report) not less than $1,000,000 aggregate capital,
surplus and undivided profits (any such bank or trust
company being hereby designated as "Custodian"),
provided such a Custodian can be found ready and
willing to act; subject to such rules, regulations and
orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any
Custodian to, deposit all or any part of the securities
owned by the Trust in a system for the central handling
of securities pursuant to which all securities of any
particular class or series of any issue deposited
within the system may be transferred or pledged by
bookkeeping entry, without physical delivery. The
Custodian may appoint, subject to the approval of the
Trustees, one or more subcustodians.
(b) The Trust shall enter into a written contract
with each Custodian regarding the powers, duties and
compensation of such Custodian with respect to the cash
and securities of the Trust held by such Custodian.
Said contract and all amendments thereto shall be
approved by the Trustees.
(c) The Trust shall upon the resignation or
inability to serve of any Custodian or upon change of
any Custodian:
(i) in case of such resignation or inability to
serve, use its best efforts to obtain a successor
Custodian;
(ii) require that the cash and securities owned
by the Trust be delivered directly to the successor
Custodian; and
(iii) in the event that no successor Custodian
can be found, submit to the shareholders, before
permitting delivery of the cash and securities owned by
the Trust otherwise than to a successor Custodian, the
question whether the Trust shall be liquidated or shall
function without a Custodian.
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each
shareholder of record at least semi-annually a statement of the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
10.5 DETERMINATION OF NET ASSET VALUE PER SHARE. Net asset
value per share of each class or series of shares of the Trust
shall mean: (i) the value of all the assets properly allocable
to such class or series; (ii) less total liabilities properly
allocable to such class or series; (iii) divided by the number of
shares of such class or series outstanding, in each case at the
time of each determination. Except as otherwise determined by
the Trustees, the net asset value per share of each class or
series shall be determined no less frequently than once daily,
Monday through Friday, on days on which the New York Stock
Exchange is open for trading, at such time or times that the
Trustees set at least annually.
In valuing the portfolio investments of any class or series
of shares for the determination of the net asset value per share
of such class or series, securities for which market quotations
are readily available shall be valued at prices which, in the
opinion of the Trustees or the person designated by the Trustees
to make the determination, most nearly represent the market value
of such securities, and other securities and assets shall be
valued at their fair value as determined by or pursuant to the
direction of the Trustees, which in the case of debt obligations,
commercial paper and repurchase agreements may, but need not, be
on the basis of yields for securities of comparable maturity,
quality and type, or on the basis of amortized cost. Expenses
and liabilities of the Trust shall be accrued each day.
Liabilities may include such reserves for taxes, estimated
accrued expenses and contingencies as the Trustees or their
designates may in their sole discretion deem fair and reasonable
under the circumstances. No accruals shall be made in respect of
taxes on unrealized appreciation of securities owned unless the
Trustees shall otherwise determine.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall be
called by the Clerk whenever ordered by the Trustees, the
Chairman of the Trustees or requested in writing by the holder or
holders of at least one-tenth of the outstanding shares entitled
to vote at such meeting. If the Clerk, when so ordered or
requested, refuses or neglects for more than two days to call
such meeting, the Trustees, Chairman of the Trustees or the
shareholders so requesting may, in the name of the Clerk, call
the meeting by giving notice thereof in the manner required when
notice is given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record
may apply to the Trustees for assistance in communicating with
other shareholders for the purpose of calling a meeting in order
to vote upon the question of removal of a Trustee. When ten or
more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on
the books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate
cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants'
expense, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be
misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust who
are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend
or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date
of any meeting of shareholders or more than 60 days before the
date of payment of any dividend or of any other distribution, as
the record date for determining the shareholders of such class or
series having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on
such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the record
date; or without fixing such record date the Trustees may for any
such purposes close the register or transfer books for all or
part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably designed
to verify that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
<PAGE>
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of a
particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of the
Trust (or that series) and be identical in all respects, except
as set forth below: (a) each class of shares shall be charged
with the expense of any Distribution Plan adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940
with respect to such class of shares, (b) each class of shares
will be charged with any incremental shareholder servicing
expense attributable solely to such class, as determined by the
Trustees, (c) each class of shares shall be charged with any
other expenses properly allocated to such class, as determined by
the Trustees and approved by the Securities and Exchange
Commission, (d) each class of shares shall vote as a separate
class on matters which pertain to any Rule 12b-1 Distribution
Plan pertaining to such class of shares, (e) each class of shares
will have only such exchange privileges as may from time to time
be described in the Trust's prospectus with respect to such
class, (f) each class of shares shall bear such designation as
may be approved from time to time by the Trustees and (g)
reinvestments of distributions from the Trust paid with respect
to the shares of a particular class will be paid in additional
shares of such class.
12.2. CONVERSION OF CLASS B SHARES. Except as hereinafter
provided with respect to shares acquired by exchange or
reinvestment of distributions, Class B shares of the Trust will
automatically convert into Class A shares of the Trust at the end
of the month eight years after the month of purchase, or at such
earlier time as the Trustees may in their sole discretion
determine from time to time as to all Class B shares purchased on
or before such date as the Trustees may specify. Class B shares
acquired by exchange from Class B shares of another Putnam Fund
will convert into Class A shares based on the date of the initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment shares
relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures,
which may include without limitation methods of proration or
approximation, as the Trustees may in their sole discretion
determine from time to time.
<PAGE>
ARTICLE 13
AMENDMENTS TO THE BYLAWS
13.1 GENERAL. These Bylaws may be amended or repealed, in
whole or in part, by a majority of the Trustees then in office at
any meeting of the Trustees, or by one or more writings signed by
such a majority.
NF-04F
(PORTIONS OF THE DECLARATION OF TRUST OF PUTNAM MONEY MARKET FUND
RELATING TO SHAREHOLDERS" RIGHTS)
(c) "Shares" means the units of interest into which the
beneficial interest in the Trust shall be divided from time to
time or, if more than one class of Shares is authorized by the
Trustees, the equal proportionate transferable units into which
each class of Shares shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall at all
times be divided into Shares, without par value, each of which
shall, except as provided in the following sentence, represent an
equal proportionate interest in the Trust with each other Share,
none having priority or preference over another. For purposes of
implementing the provisions of the second paragraph of Article
VI, Section 1 hereof or otherwise, the Trustees may, without
Shareholder approval, divide the Shares into two or more classes,
Shares of each such class having such preferences and special or
relative rights and privileges (including conversion rights, if
any) as the Trustees may determine and as shall be set forth in
the Bylaws. The number of Shares authorized shall be unlimited.
The Trustees may from time to time divide or combine the Shares
of any class into a greater or lesser number without thereby
changing the proportionate beneficial interests in the class.
OWNERSHIP OF SHARES
Section 2. The ownership of Shares shall be recorded on the
books of the Trust or a transfer or similar agent. No
certificates certifying the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for
the transfer of Shares and similar matters. The record books of
the Trust as kept by the Trust or any transfer or similar agent,
as the case may be, shall be conclusive as to who are the
Shareholders of each class and as to the number of Shares of each
class held from time to time by each Shareholder.
INVESTMENTS IN THE TRUST
Section 3. The Trustees shall accept investments in the Trust
from such persons and on such terms and for such consideration,
which may consist of cash or tangible or intangible property or a
combination thereof, as they from time to time authorize.
NO PREEMPTIVE RIGHTS
Section 4. Shareholders shall have no preemptive or other right
to subscribe to any additional Shares or other securities issued
by the Trust.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Section 5. Shares shall be deemed to be personal property giving
only the rights provided in this Declaration of Trust or the
Bylaws. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed
to the terms of this Declaration of Trust and the Bylaws and to
have become a party thereto. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the
same nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere
against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of
the Trust property or right to call for a partition or division
of the same or for an accounting, nor shall the ownership of
Shares constitute the Shareholders partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholders, nor
except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE IV
THE TRUSTEES
ELECTION
Section 1. A Trustee may be elected either by the Trustees or by
the Shareholders. There shall not be less than three Trustees.
The number of Trustees shall be fixed by the Trustees. Each
Trustee elected by the Trustees or the Shareholders shall serve
until he or she retires, resigns, is removed or dies or until the
next meeting of Shareholders called for the purpose of electing
Trustees and until the election and qualification of his or her
successor. At any meeting called for the purpose, a Trustee may
be removed by vote of the holders of two-thirds of the
outstanding Shares.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. Subject to voting the powers of one or more classes
of Shares as set forth elsewhere in this Declaration of Trust or
in the Bylaws, the Shareholders shall have power to vote only (i)
for the election of Trustees as provided in Article IV, Section
1, (ii) for the removal of Trustees as provided in Article IV,
Section 1, (iii) with respect to any Manager as provided in
Article IV, Section 7, (iv) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Article IX,
Section 7, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court
action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, and (vi) with respect to such
additional matters relating to the Trust as may be required by
this Declaration of Trust, the Bylaws or any registration of the
Trust with the Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable. Each whole share shall be entitled to
one vote as to any matter on which it is entitled to vote and
each fractional Share shall be entitled to a proportionate
fractional vote. On any matter submitted to a vote of
Shareholders, all Shares of the Trust then entitled to vote
shall, except as otherwise provided in the Bylaws, be voted in
the aggregate as a single class without regard to classes of
shares, except (1) when required by the 1940 Act or when the
Trustees shall have determined that the matter affects one or
more classes of shares materially differently, Shares shall be
voted by individual class; and (2) when the Trustees have
determined that the matter affects only the interests of one or
more classes, then only Shareholders of such classes shall be
entitled to vote thereon. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by
proxy. A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them unless
at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the
challenger. Until Shares of any class are issued, the Trustees
may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the Bylaws to be
taken by Shareholders as to such class.
VOTING POWER AND MEETINGS
Section 2. Meetings of Shareholders of any or all classes may be
called by the Trustees from time to time for the purpose of
taking action upon any matter requiring the vote or authority of
the Shareholders of such classes as herein provided or upon any
other matter deemed by the Trustees to be necessary or desirable.
Written notice of any meeting of Shareholders shall be given or
caused to be given by the Trustees by mailing such notice at
least seven days before such meeting, postage prepaid, stating
the time, place and purpose of the meeting to each Shareholder
entitled to vote at such meeting at the Shareholder's address as
it appears on the records of the Trust. If the Trustees shall
fail to call or give notice of any meeting of Shareholders for a
period of 30 days after written application by Shareholders
holding at least 10% of the then outstanding Shares of all
classes entitled to vote at such meeting requesting that a
meeting be called for a purpose requiring action by the
Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 10% of the then outstanding Shares
of all classes entitled to vote at such meeting may call and give
notice of such meeting and thereupon the meeting shall be held in
the manner provided for herein in case of call thereof by the
Trustees.
QUORUM AND REQUIRED VOTE
Section 3. Thirty percent of the Shares entitled to vote on a
particular matter shall be a quorum for the transaction of
business on that matter at a Shareholders' meeting, except that
where this Declaration of Trust requires that holders of any
class shall vote as an individual class, then thirty percent of
the aggregate number of shares of that class entitled to vote
shall be necessary to constitute a quorum for the transaction of
business by that class. Any lesser number shall be sufficient
for adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original
meeting without the necessity of further notice. Except when a
larger vote is required by any provision of this Declaration of
Trust or the Bylaws, a majority of the Shares voted shall decide
any questions and a plurality shall elect a Trustee, provided
that where this Declaration of Trust requires that the holders of
any class shall vote as an individual class, then a majority of
the Shares of that class voted on the matter (or a plurality with
respect to the election of a Trustee) shall decide that matter
insofar as that class is concerned.
<PAGE>
ACTION BY WRITTEN CONSENT
Section 4. Any action taken by Shareholders may be taken without
a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by
any express provision of this Declaration of Trust or the Bylaws)
consent to the action in writing and such written consents are
filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a
meeting of Shareholders.
ADDITIONAL PROVISIONS
Section 5. The Bylaws may include further provisions, not
inconsistent with this Declaration of Trust, regarding
Shareholders' voting powers, the conduct of meetings and related
matters.
ARTICLE VI
NET INCOME, DISTRIBUTIONS, AND REDEMPTIONS AND REPURCHASES
DISTRIBUTIONS OF NET INCOME
Section 1. The Trustees shall each year, or more frequently if
they so determine in their sole discretion, distribute to the
Shareholders an amount approximately equal to the Net Income of
the Trust, and may from time to time distribute such additional
amounts as they may authorize to the Shareholders. Such Net
Income shall consist of: (i) all interest income (including both
original issue and market discount earned on discount paper
accrued ratably to the date of maturity) accrued on portfolio
investments of the Trust, (ii) plus or minus realized or
unrealized gains and losses on portfolio investments of the Trust
determined by valuing the portfolio investments of the Trust in a
manner consistent with the requirements of the 1940 Act and any
applicable provisions of the Bylaws, and (iii) less all actual
and accrued expenses and liabilities determined in accordance
with good accounting practices. The Net Income of the Trust
allocable to any class of Shares shall be determined in such
manner as the Trustees may reasonably determine to give effect to
the allocation of any assets, liabilities, income and expenses of
the Trust to a particular class of Shares or as may otherwise be
necessary or appropriate to give effect to the preferences and
special or relative rights and privileges of any classes of
Shares. Such Net Income shall be determined by the Trustees or
as they may authorize on each business day at the times and in
the manner provided in the Bylaws, and all such Net Income, which
is a positive amount, since the last determination of Net Income,
shall be declared as a dividend. Determination of Net Income of
the Trust made by the Trustees, or as they may authorize, in good
faith, shall be binding on all parties concerned. Any such
distribution to the Shareholders shall be made to said
Shareholders pro rata in proportion to the number of Shares held
by each of them, except to the extent otherwise required or
permitted by the preferences and special or relative rights and
privileges of any classes of Shares of the Trust, provided that
any distribution to the shareholders of a particular class of
Shares shall be made to such Shareholders pro rata in proportion
to the number of Shares of such class held by each of them.
Notwithstanding the foregoing provisions for calculation and
distribution of net income, the Trustees may, from time to time
and for so long as they may deem appropriate, for purposes of
calculating and distributing income of the Trust to the
Shareholders, divide Shares into as many classes as they deem
appropriate (or, if at any time the Shares of the Trust are
otherwise divided into classes, to divide each such class of
Shares into subclasses) and pay distributions of differing
amounts to each class (or subclass) of Shares (provided all
Shares of the same class or subclass receive equal
distributions), provided, that the division of Shares into
classes (or subclasses) and the payment of differing
distributions to such classes (or subclasses) shall be made in a
manner consistent with the requirements of the 1940 Act, the
rules and regulations thereunder and exemptions therefrom, and
provided further, that except as otherwise specifically
authorized by the Trustees pursuant to this paragraph or as
otherwise deemed necessary or appropriate to give effect to the
preferences and special or relative rights and privileges of any
classes of Shares, the Trustees shall continue to calculate and
distribute net income of the Trust in the manner provided in the
preceding paragraph. Nothing contained in the foregoing paragraph
shall be construed as limiting in any way the general authority
of the Trustees to divide the Shares into two or more classes
pursuant to the provisions of Article III, Section 1 hereof.
If, for any reason, the Net Income of any class determined at any
time is a negative amount, the pro rata share of such negative
amount of each Shareholder of such class shall constitute a
liability of such Shareholder to the Trust which shall be paid at
such times and in such manner as the Trustees may from time to
time determine out of the accrued dividend account of such
Shareholder, by reducing the number of Shares of such class in
the account of such Shareholder or otherwise. As a result of
such determinations and declarations as a dividend of the Net
Income of each class, the net asset value per share of each class
(the value of all of the assets of the Trust allocable to such
class less total liabilities of the Trust allocable to such
class, divided by the number of Shares of such class outstanding)
is intended to remain at a constant amount immediately after each
such determination and declaration subject, however, to the power
of the Trustees as provided in Section I of Article III to divide
or combine the Shares of any class into a greater or lesser
number.
REDEMPTIONS AND REPURCHASES
Section 2. The Trust shall purchase such Shares as are offered
by any Shareholder for redemption, upon the presentation of a
proper instrument of transfer together with a request directed to
the Trust or a person designated by the Trust that the Trust
purchase such Shares or in accordance with such other procedures
for redemption as the Trustees may from time to time authorize;
and the Trust will pay therefor the net asset value thereof, as
described in Section 1 of this Article VI, next determined.
Payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request
is made. The obligation set forth in this Section 2 is subject
to the provision that in the event that any time the New York
Stock Exchange is closed for other than customary weekends or
holidays, or if permitted by the rules of the Securities and
Exchange Commission, during periods when trading on the Exchange
is restricted or during any emergency which makes it
impracticable for the Trust to dispose of its investments or to
determine fairly the value of its net assets, or during any other
period permitted by order of the Securities and Exchange
Commission for the protection of investors, such obligation may
be suspended or postponed by the Trustees. The Trust may also
purchase or repurchase Shares at a price not exceeding the net
asset value of such Shares in effect when the purchase or
repurchase or any contract to purchase or repurchase is made.
REDEMPTIONS AT THE OPTION OF THE TRUST
Section 3. The Trust shall have the right at its option and at
any time to redeem Shares of any Shareholder at the net asset
value thereof as described in Section 1 of this Article VI: (i)
if at such time such Shareholder owns Shares having an aggregate
net asset value of less than an amount determined from time to
time by the Trustees; or (ii) to the extent that such Shareholder
owns Shares equal to or in excess of a percentage of the Shares
determined from time to time by the Trustees.
<PAGE>
ARTICLE IX
MISCELLANEOUS
TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE
Section 1. All persons extending credit to, contracting with or
having any claim against the Trust shall look only to the assets
of the Trust for payment under such credit, contract or claim;
and neither the Shareholders nor the Trustees, nor any of the
Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by
reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the
office of Trustee.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers or
officer shall give notice that this Declaration of Trust is on
file with the Secretary of the Commonwealth of Massachusetts and
shall recite that the same was executed or made by or on behalf
of the Trust or by them as Trustee or Trustees or as officers or
officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders
individually but are binding only upon the assets and property of
the Trust, and may contain such further recital as he or she or
they may deem appropriate, but the omission thereof shall not
operate to bind any Trustee or Trustees or officers or officer or
Shareholders individually.
SHAREHOLDERS
Section 4. In case any Shareholder or former Shareholder shall
be held to be personally liable solely by reason of his or her
being or having been a Shareholder and not because of his or her
acts or omissions or for some other reason, the Shareholder or
former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the Trust to be
held harmless from and indemnified against all loss and expense
arising from such liability.
Limitation of Liability
(PORTIONS OF BYLAWS OF
PUTNAM MONEY MARKET FUND
PUTNAM TAX EXEMPT MONEY MARKET FUND
RELATING TO SHAREHOLDERS' RIGHTS)
ARTICLE 9
ISSUANCE OF SHARES AND SHARE CERTIFICATES
9.1 SALE OF SHARES. Except as otherwise determined by the
Trustees, the Trust will issue and sell for cash or securities
from time to time, full and fractional shares of its shares of
beneficial interest, such shares to be issued and sold at a price
of not less than the par value per share, if any, and not less
than the net asset value per share as from time to time
determined in accordance with the Declaration of Trust and these
Bylaws and, in the case of fractional shares, at a proportionate
reduction in such price. In the case of shares sold for
securities, such securities shall be valued in accordance with
the provisions for determining the value of the assets of the
Trust as stated in the Declaration of Trust and these Bylaws.
The officers of the Trust are severally authorized to take all
such actions as may be necessary or desirable to carry out this
Section 9.1.
9.2 SHARE CERTIFICATES. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the
Trust for the record holders of such shares, who shall in either
case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder shall be entitled
to a certificate stating the number of shares of each class owned
by him, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President
or a Vice President and by the Treasurer or an Assistant
Treasurer. Such signatures may be facsimile if the certificate
is signed by a transfer agent or by a registrar. In case any
officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before
such certificate is issued, it may be issued by the Trust with
the same effect as if he were such officer at the time of its
issue.
9.3 LOSS OF CERTIFICATES. The transfer agent of the Trust,
with the approval of any two officers of the Trust, is authorized
to issue and countersign replacement certificates for the shares
of the Trust which have been lost, stolen or destroyed upon (i)
receipt of an affidavit or affidavits of loss or non-receipt and
of an indemnity agreement executed by the registered holder or
his legal representative and supported by an open penalty surety
bond, said agreement and said bond in all cases to be in form and
content satisfactory to and approved by the President or the
Treasurer, or (ii) receipt of such other documents as may be
approved by the Trustees.
9.4 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of
shares transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured
thereby. Such new certificate shall express on its face that it
is held as collateral security, and the name of the pledgor shall
be stated thereon, who alone shall be liable as a shareholder and
entitled to vote thereon.
9.5 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
ARTICLE 10
PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS
10.4 REPORTS TO SHAREHOLDERS. The Trust shall send to each
shareholder of record at least semi-annually a statement of the
condition of the Trust and of the results of its operations,
containing all information required by applicable laws or
regulations.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A meeting of the shareholders shall be
called by the Clerk whenever ordered by the Trustees, the
Chairman of the Trustees or requested in writing by the holder or
holders of at least one-tenth of the outstanding shares entitled
to vote at such meeting. If the Clerk, when so ordered or
requested, refuses or neglects for more than two days to call
such meeting, the Trustees, Chairman of the Trustees or the
shareholders so requesting may, in the name of the Clerk, call
the meeting by giving notice thereof in the manner required when
notice is given by the Clerk.
11.2 ACCESS TO SHAREHOLDER LIST. Shareholders of record
may apply to the Trustees for assistance in communicating with
other shareholders for the purpose of calling a meeting in order
to vote upon the question of removal of a Trustee. When ten or
more shareholders of record who have been such for at least six
months preceding the date of application and who hold in the
aggregate shares having a net asset value of at least $25,000 so
apply, the Trustees shall within five business days either:
(i) afford to such applicants access to a list of
names and addresses of all shareholders as recorded on
the books of the Trust; or
(ii) inform such applicants of the approximate
number of shareholders of record and the approximate
cost of mailing material to them, and, within a
reasonable time thereafter, mail, at the applicants'
expense, materials submitted by the applicants, to all
such shareholders of record. The Trustees shall not be
obligated to mail materials which they believe to be
misleading or in violation of applicable law.
11.3 RECORD DATES. For the purpose of determining the
shareholders of any class or series of shares of the Trust who
are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to receive payment of any dividend
or of any other distribution, the Trustees may from time to time
fix a time, which shall be not more than 90 days before the date
of any meeting of shareholders or more than 60 days before the
date of payment of any dividend or of any other distribution, as
the record date for determining the shareholders of such class or
series having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on
such record date shall have such right notwithstanding any
transfer of shares on the books of the Trust after the record
date; or without fixing such record date the Trustees may for any
such purposes close the register or transfer books for all or
part of such period.
11.4 PROXIES. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably designed
to verify that such instructions have been authorized by such
shareholder shall constitute execution of such proxy by or on
behalf of such shareholder.
ARTICLE 12
PREFERENCES, RIGHTS AND PRIVILEGES OF THE
TRUST'S CLASSES OF SHARES
12.1 GENERAL. Each class of shares of the Trust or of a
particular series of the Trust, as the case may be, will
represent interests in the same portfolio of investments of the
Trust (or that series) and be identical in all respects, except
as set forth below: (a) each class of shares shall be charged
with the expense of any Distribution Plan adopted by the Trust
pursuant to Rule 12b-1 under the Investment Company Act of 1940
with respect to such class of shares, (b) each class of shares
will be charged with any incremental shareholder servicing
expense attributable solely to such class, as determined by the
Trustees (c) each class of shares shall be charged with any other
expenses properly allocated to such class, as determined by the
Trustees and approved by the Securities and Exchange Commission,
(d) each class of shares shall vote as a separate class on
matters which pertain to any Rule 12b-1 Distribution Plan
pertaining to such class of shares, (e) each class of shares will
have only such exchange privileges as may from time to time be
described in the Trust's prospectus with respect to such class,
(f) each class of shares shall bear such designation as may be
approved from time to time by the Trustees and (g) reinvestments
of distributions from the Fund paid with respect to the shares of
a particular class will be paid in additional shares of such
class.
12.2. CONVERSION OF CLASS B SHARES. Except as hereinafter
provided with respect to shares acquired by exchange or
reinvestment of distributions, Class B shares of the Fund will
automatically convert into Class A shares of the Fund at the end
of the month eight years after the month of purchase, or at such
earlier time as the Trustees may in their sole discretion
determine from time to time as to all Class B shares purchased on
or before such date as the Trustees may specify. Class B shares
acquired by exchange from Class B shares of another Putnam Fund
will convert into Class A shares based on the date of the initial
purchase of the Class B shares of such other Fund. Class B
shares acquired through reinvestment of distributions will
convert into Class A shares based on the date of the initial
purchase of Class B shares to which such reinvestment shares
relate. For this purpose, Class B shares acquired through
reinvestment of distributions will be attributed to particular
purchases of Class B shares in accordance with such procedures,
which may include without limitation methods of proration or
approximation, as the Trustees may in their sole discretion
determine from time to time.
PUTNAM MONEY MARKET FUND
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated September 1, 1994, by and
between PUTNAM MONEY MARKET FUND, a Massachusetts business trust
(the "Fund"), and PUTNAM MUTUAL FUNDS CORP., a Massachusetts
corporation ("Putnam").
WHEREAS, the Fund and Putnam are desirous of entering into
this agreement to provide for the distribution by Putnam of
shares of the Fund;
NOW, THEREFORE, in consideration of the mutual agreements
contained in the Terms and Conditions of Distributor's Contract
attached to and forming a part of this Contract (the "Terms and
Conditions"), the Fund hereby appoints Putnam as a distributor of
shares of the Fund, and Putnam hereby accepts such appointment,
all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the Fund
is 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 Fund as Trustees and
not individually, and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Fund.
IN WITNESS WHEREOF, PUTNAM MONEY MARKET FUND and PUTNAM
MUTUAL FUNDS CORP. have each caused this Distributor's Contract
to be signed in duplicate in its behalf, all as of the day and
year first above written.
PUTNAM MONEY MARKET FUND
By: -----------------------------
Executive Vice President
PUTNAM MUTUAL FUNDS CORP.
By: -----------------------------
President<PAGE>
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. RESERVATION OF RIGHT NOT TO SELL. The Fund reserves the
right to refuse at any time or times to sell any of its shares of
beneficial interest ("shares") hereunder for any reason deemed
adequate by it.
2. PAYMENTS TO PUTNAM. In connection with the distribution of
shares of the Fund, Putnam will be entitled to receive: (a)
payments pursuant to any Distribution Plan and Agreement from
time to time in effect between the Fund and Putnam with respect
to the Fund or any particular class of shares of the Fund, (b)
any contingent deferred sales charges applicable to the
redemption of shares of the Fund or of any particular class of
shares of the Fund, determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund and (c) subject to the provisions of Section 3 below,
any front-end sales charges applicable to the sale of shares of
the Fund or of any particular class of shares of the Fund, less
any applicable dealer discount.
3. SALES OF SHARES TO PUTNAM AND SALES BY PUTNAM. Putnam will
have the right, as principal, to sell shares of the Fund to
investment dealers against orders therefor (a) at the public
offering price (calculated as described below) less a discount
determined by Putnam, which discount shall not exceed the amount
of the sales charge referred to below, or (b) at net asset value.
Upon receipt of an order to purchase Fund shares from an
investment dealer with whom Putnam has a Sales Contract, Putnam
will promptly purchase shares from the Fund to fill such order.
The public offering price of a class of shares shall be the net
asset value of such shares then in effect, plus any applicable
front-end sales charge determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund or as permitted by the Investment Company Act of
1940, as amended, and the Rules and Regulations of the Securities
and Exchange Commission promulgated thereunder. In no event
shall the public offering price exceed 1000/915ths of such net
asset value, and in no event shall any applicable sales charge
exceed 8 1/2% of the public offering price. The net asset value
of the shares shall be determined in the manner provided in the
Agreement and Declaration of Trust of the Fund as then amended
and when determined shall be applicable to transactions as
provided for in the then current Prospectus and Statement of
Additional Information of the Fund.
Putnam will also have the right, as principal, to purchase
shares from the Fund at their net asset value and to sell such
shares to the public against orders therefor at the public
offering price or at net asset value.
Putnam will also have the right, as principal, to sell
shares at their net asset value and not subject to a contingent
deferred sales charge to such persons as may be approved by the
Trustees of the Fund, all such sales to comply with the
provisions of the Investment Company Act of 1940, as amended, and
the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Putnam will also have the right, as agent for the Fund, to
sell shares at the public offering price or at net asset value to
such persons and upon such conditions as the Trustees of the Fund
may from time to time determine.
On every sale the Fund shall receive the applicable net
asset value of the shares. Putnam will reimburse the Fund for
any increased issue tax paid on account of sales charges. Upon
receipt of registration instructions in proper form and payment
for shares, Putnam will transmit such instructions to the Fund or
its agent for registration of the shares purchased.
4. SALES OF SHARES BY THE FUND. The Fund reserves the right to
issue shares at any time directly to its shareholders as a stock
dividend or stock split and to sell shares to its shareholders or
to other persons approved by Putnam at not less than net asset
value.
5. REPURCHASE OF SHARES. Putnam will act as agent for the Fund
in connection with the repurchase of shares by the Fund upon the
terms and conditions set forth in the then current Prospectus and
Statement of Additional Information of the Fund.
6. BASIS OF PURCHASES AND SALES OF SHARES. Putnam will use its
best efforts to place shares sold by it on an investment basis.
Putnam does not agree to sell any specific number of shares.
Shares will be sold by Putnam only against orders therefor.
Putnam will not purchase shares from anyone other than the Fund
except in accordance with Section 5, and will not take "long" or
"short" positions in shares contrary to the Agreement and
Declaration of Trust of the Fund.
7. RULES OF NASD, ETC. Putnam will conform to the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc. and the sale of securities laws of any jurisdiction in which
it sells, directly or indirectly, any shares. Putnam also agrees
to furnish to the Fund sufficient copies of any agreements or
plans it intends to use in connection with any sales of shares in
adequate time for the Fund to file and clear them with the proper
authorities before they are put in use, and not to use them until
so filed and cleared.
8. PUTNAM INDEPENDENT CONTRACTOR. Putnam shall be an
independent contractor and neither Putnam nor any of its officers
or employees as such is or shall be an employee of the Fund.
Putnam is responsible for its own conduct and the employment,
control and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or
employees. Putnam assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all
employer taxes thereunder.
Putnam will maintain at its own expense insurance against
public liability in such an amount as the Trustees of the Fund
may from time to time reasonably request.
9. EXPENSES. Putnam will pay all expenses of qualifying shares
of the Fund for sale under the so-called "Blue Sky" laws of any
state (except expenses of any action by the Fund relating to its
Agreement and Declaration of Trust or other matters in which the
Fund has a direct concern), and expenses of preparing, printing
and distributing advertising and sales literature (apart from
expenses of registering shares under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
and the preparation and printing of Prospectuses and Statements
of Additional Information and reports as required by said Acts
and the direct expenses of the issue of shares, except that
Putnam will pay the cost of the preparation and printing of
Prospectuses and Statements of Additional Information and
shareholders' reports used by it and by others in the sale of
Fund shares to the extent such cost is not paid by others).
10. INDEMNIFICATION OF FUND. Putnam agrees to indemnify and
hold harmless the Fund and each person who has been, is, or may
hereafter be a Trustee of the Fund against expenses reasonably
incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise
out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to
state a material fact, on the part of Putnam or any agent or
employee of Putnam or any other person for whose acts Putnam is
responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon written
information furnished by the Fund. Putnam also agrees likewise
to indemnify and hold harmless the Fund and each such person in
connection with any claim or in connection with any action, suit
or proceeding which arises out of or is alleged to arise out of
Putnam's (or an affiliate of Putnam's) failure to exercise
reasonable care and diligence with respect to its services
rendered in connection with investment, reinvestment, automatic
withdrawal and other plans for shares. The term "expenses"
includes amounts paid in satisfaction of judgments or in
settlements which are made with Putnam's consent. The foregoing
rights of indemnification shall be in addition to any other
rights to which the Fund or a Trustee may be entitled as a matter
of law.
11. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT. This Contract shall automatically terminate, without
the payment of any penalty, in the event of its assignment. This
Contract may be amended only if such amendment be approved either
by action of the Trustees of the Fund or at a meeting of the
shareholders of the Fund by the affirmative vote of a majority of
the outstanding shares of the Fund, and by a majority of the
Trustees of the Fund who are not interested persons of the Fund
or of Putnam by vote cast in person at a meeting called for the
purpose of voting on such approval.
12. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This
Contract shall take effect upon the date first above written and
shall remain in full force and effect continuously (unless
terminated automatically as set forth in Section 11) until
terminated:
(a) Either by the Fund or Putnam by not more
than sixty (60) days' nor less than ten (10) days'
written notice delivered or mailed by registered
mail, postage prepaid, to the other party; or
(b) If the continuance of this Contract after
January 31, 1995 is not specifically approved at
least annually by the Trustees of the Fund or the
shareholders of the Fund by the affirmative vote of a
majority of the outstanding shares of the Fund, and
by a majority of the Trustees of the Fund who are not
interested persons of the Fund or of Putnam by vote
cast in person at a meeting called for the purpose of
voting on such approval.
Action by the Fund under (a) above may be taken either (i) by
vote of its Trustees or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund. The requirement
under (b) above that continuance of this Contract be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12
shall be without the payment of any penalty.
13. CERTAIN DEFINITIONS. For the purposes of this
Contract, the "affirmative vote of a majority of the outstanding
shares of the Fund" means the affirmative vote, at a duly called
and held meeting of shareholders of the Fund, (a) of the holders
of 67% or more of the shares of the Fund present (in person or by
proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested
person" and "assignment" shall have the meanings defined in the
Investment Company Act of 1940, as amended, subject, however, to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act.
S:\shared\discon1
PUTNAM TAX EXEMPT MONEY MARKET FUND
DISTRIBUTOR'S CONTRACT
Distributor's Contract dated May 6, 1994, by and between
PUTNAM TAX EXEMPT MONEY MARKET FUND, a Massachusetts business
trust (the "Fund"), and PUTNAM MUTUAL FUNDS CORP., a
Massachusetts corporation ("Putnam").
WHEREAS, the Fund and Putnam are desirous of entering into
this agreement to provide for the distribution by Putnam of
shares of the Fund;
NOW, THEREFORE, in consideration of the mutual agreements
contained in the Terms and Conditions of Distributor's Contract
attached to and forming a part of this Contract (the "Terms and
Conditions"), the Fund hereby appoints Putnam as a distributor of
shares of the Fund, and Putnam hereby accepts such appointment,
all as set forth in the Terms and Conditions.
A copy of the Agreement and Declaration of Trust of the Fund
is 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 Fund as Trustees and
not individually, and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets
and property of the Fund.
IN WITNESS WHEREOF, PUTNAM TAX EXEMPT MONEY MARKET FUND and
PUTNAM MUTUAL FUNDS CORP. have each caused this Distributor's
Contract to be signed in duplicate in its behalf, all as of the
day and year first above written.
PUTNAM TAX EXEMPT MONEY MARKET
FUND
By: -----------------------------
Executive Vice President
PUTNAM MUTUAL FUNDS CORP.
By: -----------------------------
President<PAGE>
TERMS AND CONDITIONS
OF
DISTRIBUTOR'S CONTRACT
1. RESERVATION OF RIGHT NOT TO SELL. The Fund reserves the
right to refuse at any time or times to sell any of its shares of
beneficial interest ("shares") hereunder for any reason deemed
adequate by it.
2. PAYMENTS TO PUTNAM. In connection with the distribution of
shares of the Fund, Putnam will be entitled to receive: (a)
payments pursuant to any Distribution Plan and Agreement from
time to time in effect between the Fund and Putnam with respect
to the Fund or any particular class of shares of the Fund, (b)
any contingent deferred sales charges applicable to the
redemption of shares of the Fund or of any particular class of
shares of the Fund, determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund and (c) subject to the provisions of Section 3 below,
any front-end sales charges applicable to the sale of shares of
the Fund or of any particular class of shares of the Fund, less
any applicable dealer discount.
3. SALES OF SHARES TO PUTNAM AND SALES BY PUTNAM. Putnam will
have the right, as principal, to sell shares of the Fund to
investment dealers against orders therefor (a) at the public
offering price (calculated as described below) less a discount
determined by Putnam, which discount shall not exceed the amount
of the sales charge referred to below, or (b) at net asset value.
Upon receipt of an order to purchase Fund shares from an
investment dealer with whom Putnam has a Sales Contract, Putnam
will promptly purchase shares from the Fund to fill such order.
The public offering price of a class of shares shall be the net
asset value of such shares then in effect, plus any applicable
front-end sales charge determined in the manner set forth in the
then current Prospectus and Statement of Additional Information
of the Fund or as permitted by the Investment Company Act of
1940, as amended, and the Rules and Regulations of the Securities
and Exchange Commission promulgated thereunder. In no event
shall the public offering price exceed 1000/915ths of such net
asset value, and in no event shall any applicable sales charge
exceed 8 1/2% of the public offering price. The net asset value
of the shares shall be determined in the manner provided in the
Agreement and Declaration of Trust of the Fund as then amended
and when determined shall be applicable to transactions as
provided for in the then current Prospectus and Statement of
Additional Information of the Fund.
Putnam will also have the right, as principal, to purchase
shares from the Fund at their net asset value and to sell such
shares to the public against orders therefor at the public
offering price or at net asset value.
Putnam will also have the right, as principal, to sell
shares at their net asset value and not subject to a contingent
deferred sales charge to such persons as may be approved by the
Trustees of the Fund, all such sales to comply with the
provisions of the Investment Company Act of 1940, as amended, and
the Rules and Regulations of the Securities and Exchange
Commission promulgated thereunder.
Putnam will also have the right, as agent for the Fund, to
sell shares at the public offering price or at net asset value to
such persons and upon such conditions as the Trustees of the Fund
may from time to time determine.
On every sale the Fund shall receive the applicable net
asset value of the shares. Putnam will reimburse the Fund for
any increased issue tax paid on account of sales charges. Upon
receipt of registration instructions in proper form and payment
for shares, Putnam will transmit such instructions to the Fund or
its agent for registration of the shares purchased.
4. SALES OF SHARES BY THE FUND. The Fund reserves the right to
issue shares at any time directly to its shareholders as a stock
dividend or stock split and to sell shares to its shareholders or
to other persons approved by Putnam at not less than net asset
value.
5. REPURCHASE OF SHARES. Putnam will act as agent for the Fund
in connection with the repurchase of shares by the Fund upon the
terms and conditions set forth in the then current Prospectus and
Statement of Additional Information of the Fund.
6. BASIS OF PURCHASES AND SALES OF SHARES. Putnam will use its
best efforts to place shares sold by it on an investment basis.
Putnam does not agree to sell any specific number of shares.
Shares will be sold by Putnam only against orders therefor.
Putnam will not purchase shares from anyone other than the Fund
except in accordance with Section 5, and will not take "long" or
"short" positions in shares contrary to the Agreement and
Declaration of Trust of the Fund.
7. RULES OF NASD, ETC. Putnam will conform to the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc. and the sale of securities laws of any jurisdiction in which
it sells, directly or indirectly, any shares. Putnam also agrees
to furnish to the Fund sufficient copies of any agreements or
plans it intends to use in connection with any sales of shares in
adequate time for the Fund to file and clear them with the proper
authorities before they are put in use, and not to use them until
so filed and cleared.
8. PUTNAM INDEPENDENT CONTRACTOR. Putnam shall be an
independent contractor and neither Putnam nor any of its officers
or employees as such is or shall be an employee of the Fund.
Putnam is responsible for its own conduct and the employment,
control and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or
employees. Putnam assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all
employer taxes thereunder.
Putnam will maintain at its own expense insurance against
public liability in such an amount as the Trustees of the Fund
may from time to time reasonably request.
9. EXPENSES. Putnam will pay all expenses of qualifying shares
of the Fund for sale under the so-called "Blue Sky" laws of any
state (except expenses of any action by the Fund relating to its
Agreement and Declaration of Trust or other matters in which the
Fund has a direct concern), and expenses of preparing, printing
and distributing advertising and sales literature (apart from
expenses of registering shares under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
and the preparation and printing of Prospectuses and Statements
of Additional Information and reports as required by said Acts
and the direct expenses of the issue of shares, except that
Putnam will pay the cost of the preparation and printing of
Prospectuses and Statements of Additional Information and
shareholders' reports used by it and by others in the sale of
Fund shares to the extent such cost is not paid by others).
10. INDEMNIFICATION OF FUND. Putnam agrees to indemnify and
hold harmless the Fund and each person who has been, is, or may
hereafter be a Trustee of the Fund against expenses reasonably
incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of
them may be a party, which arises out of or is alleged to arise
out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to
state a material fact, on the part of Putnam or any agent or
employee of Putnam or any other person for whose acts Putnam is
responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon written
information furnished by the Fund. Putnam also agrees likewise
to indemnify and hold harmless the Fund and each such person in
connection with any claim or in connection with any action, suit
or proceeding which arises out of or is alleged to arise out of
Putnam's (or an affiliate of Putnam's) failure to exercise
reasonable care and diligence with respect to its services
rendered in connection with investment, reinvestment, automatic
withdrawal and other plans for shares. The term "expenses"
includes amounts paid in satisfaction of judgments or in
settlements which are made with Putnam's consent. The foregoing
rights of indemnification shall be in addition to any other
rights to which the Fund or a Trustee may be entitled as a matter
of law.
11. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT. This Contract shall automatically terminate, without
the payment of any penalty, in the event of its assignment. This
Contract may be amended only if such amendment be approved either
by action of the Trustees of the Fund or at a meeting of the
shareholders of the Fund by the affirmative vote of a majority of
the outstanding shares of the Fund, and by a majority of the
Trustees of the Fund who are not interested persons of the Fund
or of Putnam by vote cast in person at a meeting called for the
purpose of voting on such approval.
12. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT. This
Contract shall take effect upon the date first above written and
shall remain in full force and effect continuously (unless
terminated automatically as set forth in Section 11) until
terminated:
(a) Either by the Fund or Putnam by not more
than sixty (60) days' nor less than ten (10) days'
written notice delivered or mailed by registered
mail, postage prepaid, to the other party; or
(b) If the continuance of this Contract after
January 31, 1995 is not specifically approved at
least annually by the Trustees of the Fund or the
shareholders of the Fund by the affirmative vote of a
majority of the outstanding shares of the Fund, and
by a majority of the Trustees of the Fund who are not
interested persons of the Fund or of Putnam by vote
cast in person at a meeting called for the purpose of
voting on such approval.
Action by the Fund under (a) above may be taken either (i) by
vote of its Trustees or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund. The requirement
under (b) above that continuance of this Contract be
"specifically approved at least annually" shall be construed in a
manner consistent with the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder.
Termination of this Contract pursuant to this Section 12
shall be without the payment of any penalty.
13. CERTAIN DEFINITIONS. For the purposes of this
Contract, the "affirmative vote of a majority of the outstanding
shares of the Fund" means the affirmative vote, at a duly called
and held meeting of shareholders of the Fund, (a) of the holders
of 67% or more of the shares of the Fund present (in person or by
proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested
person" and "assignment" shall have the meanings defined in the
Investment Company Act of 1940, as amended, subject, however, to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act.
S:\shared\discon1
ROPES & GRAY
One International Place
Boston, Massachusetts 02110-2624
(617) 951-7000
November 28, 1994
Putnam Tax Exempt Money Market Fund (the "Fund")
One Post Office Square
Boston, Massachusetts 02109
Gentlemen:
You have informed us that you propose to offer and sell from
time to time 24,007,832 of your shares of beneficial interest
(the "Shares"), for cash or securities at the net asset value per
share, determined in accordance with your Bylaws, which Shares
are in addition to your shares of beneficial interest which you
have previously offered and sold or which you are currently
offering.
We have examined copies of (i) your Agreement and
Declaration of Trust as on file at the office of the Secretary of
State of The Commonwealth of Massachusetts, which provides for an
unlimited number of authorized shares of beneficial interest, and
(ii) your Bylaws, which provide for the issue and sale by the
Fund of such Shares.
We assume that appropriate action will be taken to register
or qualify the sale of the Shares under any applicable state and
federal laws regulating offerings and sales of securities.
Based upon the foregoing, we are of the opinion that:
1. The Fund is a legally organized and validly existing
voluntary association with transferable shares of beneficial
interest under the laws of The Commonwealth of Massachusetts and
is authorized to issue an unlimited number of shares of
beneficial interest.
2. Upon the issue of any of the Shares referred to in the
first paragraph hereof for cash or securities at net asset value,
and the receipt of the appropriate consideration therefor as
provided in your Bylaws, such Shares so issued will be validly
issued, fully paid and nonassessable by the Fund.
<PAGE>
ROPES & GRAY
Putnam Tax Exempt Money Market Fund -2- November 28, 1994
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 agreement, obligation
or instrument 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 for
the obligations of the Fund solely by reason of his being or
having been a shareholder. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability 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 Securities Act of 1933, as amended, and the
provisions of Rule 24e-2 under the Investment Company Act of
1940, as amended. We consent to the filing of this opinion with
and as a part of Post-Effective Amendment No. 9 to your
Registration Statement No. 33-15238.
Very truly yours,
Ropes & Gray
PUTNAM MONEY MARKET FUND
CLASS M
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the
Distribution Plan for the Class M shares of Putnam Money Market
Fund, a Massachusetts business trust (the "Trust"), adopted
pursuant to the provisions of Rule 12b-1 under the Investment
Company Act of 1940 (the "Act") and the related agreement between
the Trust and Putnam Mutual Funds Corp. ("PMF"). During the
effective term of this Plan, the Trust may incur expenses
primarily intended to result in the sale of its Class M shares
upon the terms and conditions hereinafter set forth:
SECTION 1. The Trust shall pay to PMF a monthly fee at the
annual rate of 1.00% of the average net asset value of the Class
M shares of the Trust, as determined at the close of each
business day during the month, to compensate PMF for services
provided and expenses incurred by it in connection with the
offering of the Trust's Class M shares, which may include,
without limitation, payments by PMF to investment dealers with
respect to Class M shares, as set forth in the then current
Prospectus or Statement of Additional Information of the Trust,
including the payment of a service fee of up to 0.25% of such net
asset value for the purpose of maintaining or improving services
provided to shareholders by PMF and investment dealers. Such
fees shall be payable for each month within 15 days after the
close of such month. A majority of the Qualified Trustees, as
defined below, may, from time to time, reduce the amount of such
payments, or may suspend the operation of the Plan for such
period or periods of time as they may determine.
SECTION 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of the
outstanding Class M shares of the Trust;
(b) it has been approved, together with any related
agreements, by votes of the majority (or whatever greater
percentage may, from time to time, be required by Section
12(b) of the Act or the rules and regulations thereunder)
of both (i) the Trustees of the Trust, and (ii) the
Qualified Trustees of the Trust, cast in person at a
meeting called for the purpose of voting on this Plan or
such agreement; and
(c) the Trust has received the proceeds of the initial
public offering of its Class M shares.
<PAGE>
SECTION 3. This Plan shall continue in effect for a period
of more than one year after it takes effect only so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in Section 2(b).
SECTION 4. PMF shall provide to the Trustees of the Trust,
and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
SECTION 5. This Plan may be terminated at any time by vote
of a majority of the Qualified Trustees or by vote of the
majority of the outstanding Class M shares of the Trust.
SECTION 6. All agreements with any person relating to
implementation of this Plan shall be in writing, and any
agreement related to this Plan shall provide:
(a) that such agreement may be terminated at any time,
without payment of any penalty, by vote of a majority
of the Qualified Trustees or by vote of a majority of
the outstanding Class M shares of the Trust, on not
more than 60 days' written notice to any other party
to the agreement; and
(b) that such agreement shall terminate automatically in
the event of its assignment.
SECTION 7. This Plan may not be amended to increase
materially the amount of distribution expenses permitted pursuant
to Section 1 hereof without the approval of a majority of the
outstanding Class M shares of the Trust and all material
amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
SECTION 8. As used in this Plan, (a) the term "Qualified
Trustees" shall mean those Trustees of the Trust who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of this Plan or any
agreements related to it, and (b) the term "majority of the
outstanding Class M shares of the Trust" means the affirmative
vote, at a duly called and held meeting of Class M shareholders
of the Trust, (i) of the holders of 67% or more of the Class M
shares of the Trust present (in person or by proxy) and entitled
to vote at such meeting, if the holders of more than 50% of the
outstanding Class M shares of the Trust entitled to vote at such
meeting are present in person or by proxy, or (ii) of the holders
of more than 50% of the outstanding Class M shares of the Trust
entitled to vote at such meeting, whichever is less, and (c) the
terms "assignment" and "interested person" shall have the
respective meanings specified in the Act and the rules and
regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
SECTION 9. A copy of the Agreement and Declaration of
Trust of the Trust is 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
Trust as Trustees and not individually, and that the obligations
of or arising out of this instrument are not binding upon any of
the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust.
Executed as of November 28, 1994
PUTNAM MUTUAL FUNDS CORP. PUTNAM MONEY MARKET FUND
/s/ William N. Shiebler /s/ Charles E. Porter
By ____________________ By: __________________________
William N. Shiebler Executive Vice President
President
SCHEDULES FOR COMPUTATION OF PERFORMANCE QUOTATIONS
Fund name: Putnam Money Market Fund - Class A shares
Fiscal periods ending: September 30, 1994
Inception date (if less than 10 years of performance):
7 DAY YIELD FORMULA - DIVIDENDS DECLARED FOR LAST 7 DAYS / 7 *365
TOTAL DIVIDENDS DECLARED
PER SHARE FOR LAST 7 DAYS:
7 DAY YIELD = 4.21%
CALCULATION OF 7 DAY EFFECTIVE YIELD
7 DAY YIELD ^52.142857
( 1 + --------------------) -1
(100 * 52.142587)
7 DAY EFFECTIVE YIELD = 4.30%
Fund name: Putnam Money Market Fund - Class B shares
Fiscal periods ending: September 30, 1994
Inception date (if less than 10 years of performance):Class B
shares
7 DAY YIELD FORMULA - DIVIDENDS DECLARED FOR LAST 7 DAYS / 7 *365
TOTAL DIVIDENDS DECLARED
PER SHARE FOR LAST 7 DAYS:
7 DAY YIELD = 3.72%
CALCULATION OF 7 DAY EFFECTIVE YIELD
7 DAY YIELD ^52.142857
( 1 + --------------------) -1
(100 * 52.142587)
7 DAY EFFECTIVE YIELD = 3.77%
Fund name: Putnam Tax Exempt Money Market Fund
Fiscal periods ending: September 30, 1994
Inception date (if less than 10 years of performance):
7 DAY YIELD FORMULA - DIVIDENDS DECLARED FOR LAST 7 DAYS / 7 *365
TOTAL DIVIDENDS DECLARED
PER SHARE FOR LAST 7 DAYS:
7 DAY YIELD = 2.75%
CALCULATION OF 7 DAY EFFECTIVE YIELD
7 DAY YIELD ^52.142857
( 1 + --------------------) -1
(100 * 52.142587)
7 DAY EFFECTIVE YIELD = 2.80%
*****************************************************
TAX-EXEMPT EQUIVALENT YIELD
Formula: 30 day yield
--------------- = TAX EQUIVALENT YIELD
1-(Highest Individual Tax Rate)
2.56% 2.56%
- ------ = ------ = 4.24%
1-39.6% .604%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PUTNAM Money Market Fund Class A AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEPT-30-1994
<PERIOD-END> SEPT-30-1994
<INVESTMENTS-AT-COST> 1,314,702,945
<INVESTMENTS-AT-VALUE> $0
<RECEIVABLES> 21,943,946
<ASSETS-OTHER> 5,162
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $1,336,652,033
<PAYABLE-FOR-SECURITIES> $24,333,889
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> $16,959,973
<TOTAL-LIABILITIES> $41,293,862
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $0
<SHARES-COMMON-STOCK> 1,101,171,393
<SHARES-COMMON-PRIOR> $0
<ACCUMULATED-NII-CURRENT> $0
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> $0
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> $0
<NET-ASSETS> $1,295,358,171
<DIVIDEND-INCOME> $0
<INTEREST-INCOME> $37,425,101
<OTHER-INCOME> $0
<EXPENSES-NET> $6,487,884
<NET-INVESTMENT-INCOME> $30,937,217
<REALIZED-GAINS-CURRENT> 42
<APPREC-INCREASE-CURRENT> $0
<NET-CHANGE-FROM-OPS> $30,937,259
<EQUALIZATION> $0
<DISTRIBUTIONS-OF-INCOME> (27,575,242)
<DISTRIBUTIONS-OF-GAINS> (40)
<DISTRIBUTIONS-OTHER> $0
<NUMBER-OF-SHARES-SOLD> 3,501,703,378
<NUMBER-OF-SHARES-REDEEMED> (3,013,818,559)
<SHARES-REINVESTED> 26,366,112
<NET-CHANGE-IN-ASSETS> 685,660,213
<ACCUMULATED-NII-PRIOR> $0
<ACCUMULATED-GAINS-PRIOR> $0
<OVERDISTRIB-NII-PRIOR> $0
<OVERDIST-NET-GAINS-PRIOR> $0
<GROSS-ADVISORY-FEES> $3,334,454
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $6,487,884
<AVERAGE-NET-ASSETS> $0
<PER-SHARE-NAV-BEGIN> $0
<PER-SHARE-NII> $.0299
<PER-SHARE-GAIN-APPREC> $0
<PER-SHARE-DIVIDEND> $0
<PER-SHARE-DISTRIBUTIONS> $(.0299)
<RETURNS-OF-CAPITAL> $0
<PER-SHARE-NAV-END> $0
<EXPENSE-RATIO> .58%
<AVG-DEBT-OUTSTANDING> $0
<AVG-DEBT-PER-SHARE> $0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PUTNAM Money Market Fund Class B AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEPT-30-1994
<PERIOD-END> SEPT-30-1994
<INVESTMENTS-AT-COST> 1,314,702,945
<INVESTMENTS-AT-VALUE> $0
<RECEIVABLES> 21,943,946
<ASSETS-OTHER> 5,162
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $1,336,652,033
<PAYABLE-FOR-SECURITIES> $24,333,889
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> $16,959,973
<TOTAL-LIABILITIES> $41,293,862
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $0
<SHARES-COMMON-STOCK> 194,186,778
<SHARES-COMMON-PRIOR> $0
<ACCUMULATED-NII-CURRENT> $0
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> $0
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> $0
<NET-ASSETS> $1,295,358,171
<DIVIDEND-INCOME> $0
<INTEREST-INCOME> $37,425,101
<OTHER-INCOME> $0
<EXPENSES-NET> $6,487,884
<NET-INVESTMENT-INCOME> $30,937,217
<REALIZED-GAINS-CURRENT> 42
<APPREC-INCREASE-CURRENT> $0
<NET-CHANGE-FROM-OPS> $30,937,259
<EQUALIZATION> $0
<DISTRIBUTIONS-OF-INCOME> (3,361,975)
<DISTRIBUTIONS-OF-GAINS> (2)
<DISTRIBUTIONS-OTHER> $0
<NUMBER-OF-SHARES-SOLD> 652,248,469
<NUMBER-OF-SHARES-REDEEMED> (483,814,654)
<SHARES-REINVESTED> 2,975,467
<NET-CHANGE-IN-ASSETS> 685,660,213
<ACCUMULATED-NII-PRIOR> $0
<ACCUMULATED-GAINS-PRIOR> $0
<OVERDISTRIB-NII-PRIOR> $0
<OVERDIST-NET-GAINS-PRIOR> $0
<GROSS-ADVISORY-FEES> $3,334,454
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $6,487,884
<AVERAGE-NET-ASSETS> $0
<PER-SHARE-NAV-BEGIN> $0
<PER-SHARE-NII> $.0251
<PER-SHARE-GAIN-APPREC> $0
<PER-SHARE-DIVIDEND> $0
<PER-SHARE-DISTRIBUTIONS> $(.0251)
<RETURNS-OF-CAPITAL> $0
<PER-SHARE-NAV-END> $0
<EXPENSE-RATIO> 1.03%
<AVG-DEBT-OUTSTANDING> $0
<AVG-DEBT-PER-SHARE> $0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PUTNAM Tax Exempt Money Market AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEPT-30-1994
<PERIOD-END> Sept-30-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 98,082,288
<RECEIVABLES> 606,583
<ASSETS-OTHER> 19,810
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 98,708,681
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 311,354
<TOTAL-LIABILITIES> 311,354
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98,397,327
<SHARES-COMMON-STOCK> 98,397,327
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 98,397,327
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,373,535
<OTHER-INCOME> 0
<EXPENSES-NET> 632,162
<NET-INVESTMENT-INCOME> 1,741,373
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,741,373
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,741,373)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 608,686,024
<NUMBER-OF-SHARES-REDEEMED> (592,945,789)
<SHARES-REINVESTED> 1,581,308
<NET-CHANGE-IN-ASSETS> 17,321,543
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 398,614
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 632,162
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> .0
<PER-SHARE-NII> .0191
<PER-SHARE-GAIN-APPREC> .0
<PER-SHARE-DIVIDEND> .0
<PER-SHARE-DISTRIBUTIONS> (0.191)
<RETURNS-OF-CAPITAL> .0
<PER-SHARE-NAV-END> .0
<EXPENSE-RATIO> .71%
<AVG-DEBT-OUTSTANDING>
<AVG-DEBT-PER-SHARE>
</TABLE>
