PUTNAM MONEY MARKET FUND AND
PUTNAM TAX EXEMPT MONEY MARKET FUND
Supplement dated February 1, 1995 to
Prospectus dated December 1, 1994
Effective February 1, 1995, Class B shares of Putnam Money Market
Fund will be offered to investors opening Dollar Cost Averaging
accounts. Accordingly, the Prospectus is revised as follows:
The first footnote under "Expenses Summary" is deleted.
The four paragraphs under "How to buy shares -- Class B shares
(the Money Market Fund) are replaced by the following text:
Class B shares of the Money Market Fund may only be
purchased (i) by investors opening Dollar Cost Averaging
accounts pursuant to which all of the amount invested will
be reinvested in other Putnam funds within 24 months of the
initial purchase and (ii) by exchange of Class B shares of
another Putnam fund. Class B shares of the Money Market
Fund are sold without an initial sales charge, although a
contingent deferred sales charge ("CDSC") will be imposed if
you redeem shares of the Fund within six years of purchase.
The following types of shares may be redeemed without charge
at any time: (i) shares acquired by reinvestment of
distributions and (ii) shares otherwise exempt from the
CDSC, as described in "How to buy shares -- General" below.
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. The amount of the
CDSC will depend on the number of years since you invested
and the dollar amount being redeemed, according to the
following table:
Contingent Deferred
Sales Charge as a
Percentage of
Years Since Purchase Dollar Amount
Payment Made Subject to Charge
- ------------------- -------------------
0-1. . . . . . . . . . . . . . . . . .5.0%
1-2. . . . . . . . . . . . . . . . . .4.0%
2-3. . . . . . . . . . . . . . . . . .3.0%
3-4. . . . . . . . . . . . . . . . . .3.0%
4-5. . . . . . . . . . . . . . . . . .2.0%
5-6. . . . . . . . . . . . . . . . . .1.0%
6 and thereafter. . . . . . . . . . . . . . .NONE
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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 six-
year period. For this purpose, the amount of any increase
in a share's value above its initial purchase price is not
regarded as a share exempt from the CDSC. Thus, when a
share that has appreciated in value is redeemed during the
six-year period, a CDSC is assessed on its initial purchase
price. For information on how sales charges are calculated
if you exchange your shares, see "How to exchange shares."
Putnam Mutual Funds receives the entire amount of any CDSC
you pay. Orders for Class B shares for $250,000 or more
will be treated as orders for Class A shares or declined.
Although Class B shares are sold without an initial sales
charge, Putnam Mutual Funds pays a sales commission equal to
4.00% of the amount invested to dealers who sell Class B
shares. These commissions are not paid on exchanges from
other Putnam funds and sales to investors exempt from the
CDSC.
(over, please)
Conversion of Class B shares. Class B shares of the Money
Market Fund will automatically convert into Class A shares
at the end of the month eight years after the purchase date,
except as noted below. Class B shares acquired by
exchanging Class B shares of another Putnam fund will
convert into Class A shares based on the time of the initial
purchase. Class B shares acquired through reinvestment of
distributions will convert into Class A shares 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 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 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.
<PAGE>
General. The Money Market Fund may sell Class B shares at
net asset value without a CDSC to the Fund's current and
retired Trustees (and their families), current and retired
employees (and their families) of Putnam Management and
affiliates, registered representatives and other employees
(and their families) of broker-dealers having sales
agreements with Putnam Mutual Funds, employees (and their
families) of financial institutions having sales agreements
with Putnam Mutual Funds (or otherwise having an arrangement
with a broker-dealer or financial institution with respect
to sales of Fund shares), financial institution trust
departments investing an aggregate of $1 million or more in
Putnam funds, clients of certain administrators of
tax-qualified plans, employee benefit plans of companies
with more than 750 employees, tax-qualified plans when
proceeds from repayments of loans to participants are
invested (or reinvested) in Putnam funds, "wrap accounts"
for the benefit of clients of broker-dealers, financial
institutions or financial planners adhering to certain
standards established by Putnam Mutual Funds, and investors
meeting certain requirements who sold shares of certain
Putnam closed-end funds pursuant to a tender offer by the
closed-end fund. In addition, the Fund may sell shares at
net asset value without a CDSC in connection with the
acquisition by the Fund of assets of an investment company
or personal holding company, and the CDSC will be waived on
redemptions of shares arising out of death or disability or
in connection with certain withdrawals from IRA or other
retirement plans. 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. See the Statement of Additional
Information.
********
In addition, the information contained under the heading
"Financial Highlights" is supplemented by the following: The
Total Investment Return at Net Asset Value for Putnam Tax Exempt
Money Market Fund for the fiscal year ended September 30, 1994
was 1.93%.
