Putnam
Money
Market
Fund
SEMIANNUAL REPORT
March 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "Should the interest rate environment change, our strategy will
include focusing on maximizing income while maintaining a very
high-quality portfolio of securities."
-- Lindsey C. Strong, Manager
Putnam Money Market Fund
CONTENTS
4 Report from Putnam Management
7 Fund performance summary
10 Portfolio holdings
13 Financial statements
[GRAPHIC OMMITTED: photo of George Putnam]
(copyright) Karsh, Ottawa
From the Chairman
Dear Shareholder:
For most of the first half of Putnam Money Market Fund's current fiscal
year, the six months ended March 31, 1996, bonds enjoyed one of the most
vibrant markets in recent memory, only to turn abruptly downward toward
the end of the period. The bond market was reacting to concern over a
pickup in inflation resulting from economic overheating.
Fund Manager Lindsey C. Strong, foreseeing the potential for such
volatility, had earlier shifted your fund's portfolio to shorter
maturities. This move gave the fund a considerable advantage over many
other funds. With the portfolio concentrated in high-quality corporate
issues and shorter-term government agency securities, Lindsey believes
share price and income stream should be preserved in a market
environment that may remain somewhat unsettled over the next few months.
She provides a full discussion of your fund's performance and outlook in
the report that follows.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
May 15, 1996
Report from the Fund Manager
Lindsey C. Strong
For the six months ended March 31, 1996, Putnam Money Market Fund
continued to provide a competitive total return, while focusing on
capital preservation and maintaining a stable $1.00 share price.
Throughout the period, we maintained the fund's conservative investment
strategy, which emphasizes short-term instruments of the highest quality
in its pursuit of current income.
* PORTFOLIO MATURITIES ADJUSTED IN A SHIFTING ECONOMY
During the semiannual period, the economic environment in which your
fund was managed shifted from one of slow economic growth and declining
interest rates to one of stronger growth and uncertainty about the
direction of interest rates. Because money market funds mainly invest in
short-term government and corporate debt, their yields rise and fall
with the short-term interest rates that are controlled by the Federal
Reserve Board. The slow-growth, low-inflation environment that persisted
throughout 1995 prompted the Fed to trim short-term interest rates by
one quarter of a percentage point in December 1995 and again in January
1996. In this declining interest rate environment, our strategy
emphasized extending the fund's average maturity in order to lock in
higher yields.
However, early in 1996, stronger-than-expected economic growth began to
raise concerns that inflation might rise faster than had been previously
thought. February's employment gain figures were twice what analysts had
forecast, fueling these concerns. March employment statistics were also
robust. While the Fed took no action in February and March, many
analysts believe that the strong economic news makes additional interest
rate declines unlikely. Because of the uncertainty of this investment
climate, we have adopted a more neutral strategy. We began to reduce the
fund's average maturity so we would be in a position to take advantage
of incrementally higher yields, should interest rates begin to rise.
* CREDIT ANALYSIS AND DIVERSIFICATION REMAIN ESSENTIAL
Maintaining the fund's superior quality and stable $1.00 share price
have always been two of our highest priorities. The money market
instruments for the fund must be rated in one of the two highest
categories by at least two nationally recognized rating services at the
time of purchase. If only one rating service has evaluated the security,
it must be rated in one of the two highest categories by that service.
If the securities are unrated, they must be judged by Putnam Management
to be of equivalent quality. We believe this stringent investment policy
of including only the highest-quality securities in the portfolio has
led to your fund's consistent and positive results.
Your fund's manager also takes care to build and maintain a prudently
diversified portfolio. In today's complex economic environment, we
believe diversification is especially important. We diversify the fund
by investing in a variety of traditional money market securities such as
commercial paper, U.S. government and agency obligations, bank notes,
certificates of deposit, and repurchase agreements.
* OUR OUTLOOK
We are cautiously optimistic in our outlook for the economy and interest
rates. Rising long-term interest rates, a weak bond market, and strong
employment data suggest that more robust economic growth and possibly
higher inflation may be ahead. We believe short-term interest rates
could remain at current levels or edge upward. Given this projected
environment, we plan to maintain the fund's average maturity at a
neutral level. In our opinion, this should keep the fund sufficiently
flexible to take advantage of buying opportunities that may arise, while
protecting its income stream.
The views expressed throughout the report are exclusively those of
Putnam Management and are not meant as investment advice. Although the
described holdings were viewed favorably as of 3/31/96, there is no
guarantee the fund will continue to hold these securities in the future.
PERFORMANCE COMPARISONS (3/31/96)
Current
return
- -------------------------------------------------------------
Passbook savings account 2.00%
- -------------------------------------------------------------
Taxable money market fund 7-day yield 4.79
- -------------------------------------------------------------
3-month certificate of deposit (as of 4/1/96) 4.04
- -------------------------------------------------------------
Putnam Money Market Fund (7-day yield)
- -------------------------------------------------------------
Class A 4.95
- -------------------------------------------------------------
Class B 4.45
- -------------------------------------------------------------
Class M 4.80
- -------------------------------------------------------------
The net asset value of money market mutual funds is uninsured and
designed to be fixed, while distributions vary daily. Investment returns
will fluctuate. The principal value on passbook savings and bank CDs are
generally insured up to certain limits by state and federal agencies.
CDs, unlike stocks which incur more risks, offer a fixed rate of return.
Unlike money market funds, early withdrawals from bank CDs may be
subject to substantial penalties. Sources: Bank of Boston (passbook
savings), Bank Rate Monitor (3-month CDs), IBC/Donaghue's Money Fund
Report (taxable money market fund 7-day yield).
Performance summary
Performance should always be considered in light of a fund's investment
strategy. Putnam Money Market Fund is designed for investors seeking
current income consistent with capital preservation, stable principal,
and liquidity.
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions in the fund.
TOTAL RETURN FOR PERIODS ENDED 3/31/96
Class A Class B Class M
(inception date) (10/1/76) (4/27/92) (12/8/94)
NAV NAV NAV
- -----------------------------------------------------------------------
6 months 2.63% 2.38% 2.54%
- -----------------------------------------------------------------------
1 year 5.43 4.90 5.26
- -----------------------------------------------------------------------
5 years 22.09 -- --
Annual average 4.07 -- --
- -----------------------------------------------------------------------
10 years 72.48 -- --
Annual average 5.60 -- --
- -----------------------------------------------------------------------
Life of class -- 13.88 7.08
Annual average -- 3.36 5.28
- -----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/96
Lipper
Money Market Consumer
Fund Index Price Index
- -----------------------------------------------------------------------
6 months 2.58% 1.63%
- -----------------------------------------------------------------------
1 year 5.41 2.84
- -----------------------------------------------------------------------
5 years 22.61 15.33
Annual average 4.16 2.89
- -----------------------------------------------------------------------
10 years 74.53 43.11
Annual average 5.73 3.65
- -----------------------------------------------------------------------
Life of class B 16.25 11.61
Annual average 3.92 2.84
- -----------------------------------------------------------------------
Life of class M 7.29 4.01
Annual average 5.42 3.00
- -----------------------------------------------------------------------
Fund performance data do not take into account any adjustment for taxes
payable on reinvested distributions. Performance data represent past
results and are not indicative of future returns. Investment returns
will fluctuate. An investment in the fund is neither insured nor
guaranteed by the U.S. government. There can be no assurance that the
fund will be able to maintain a stable net asset value of $1.00 per
share. The fund's holdings do not match those in the Lipper Average.
TERMS AND DEFINITIONS
Class A shares generally are fund shares purchased with an initial sales
charge. In the case of your fund, which has no sales charge, the
reference is to shares purchased or acquired through the exchange of
class A shares from another Putnam fund. Exchange of your fund's class A
shares into another fund may involve a sales charge, however.
Class B shares generally are fund shares purchased with no initial sales
charge but subject to a contingent deferred sales charge (CDSC) upon
redemption. However, class B shares of your fund can be acquired only
through exchange of class B shares from another fund or purchased by
certain systematic plan shareholders. A contingent deferred sales charge
is a charge applied at the time of redemption of class B shares and
assumes redemption at the end of the period. The CDSC schedule will vary
depending on whether the shares were acquired through exchange or
through a systematic investment plan purchase. Consult your prospectus
for details.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption. In the case of
your fund, which has no sales charge, exchange of your fund's class M
shares into another fund may involve a sales charge, however.
Net asset value (NAV) is the value of all fund assets, minus
liabilities, divided by the number of outstanding shares. It does not
include any initial or contingent deferred sales charge.
COMPARATIVE BENCHMARKS
Lipper Money Market Fund Index, used for performance comparison
purposes, is an arithmetic average of the total return of all money
market mutual funds tracked by Lipper Analytical Services (Lipper).
Lipper is an independent rating organization for the mutual fund
industry. Lipper rankings vary for other periods.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
PUTNAM GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Diversified Equity Trust
Europe Growth Fund
Global Growth Fund
Health Sciences Trust
International New Opportunities Fund
Investors Fund
Natural Resources Fund
New Opportunities Fund
OTC Emerging Growth Fund
Overseas Growth Fund
Vista Fund
Voyager Fund
Voyager Fund II
PUTNAM GROWTH
AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
The Putnam Fund for Growth and Income
Growth and Income Fund II
New Value Fund
Utilities Growth and Income Fund
PUTNAM INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Diversified Income Trust II
Federal Income Trust
Global Governmental Income Trust
High Yield Advantage Fund
High Yield Trust
Income Fund
Intermediate U.S. Government Income Fund
Preferred Income Fund
U.S. Government Income Trust
PUTNAM TAX-FREE
INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds*
Arizona, California, Florida, Massachusetts, Michigan, Minnesota,
New Jersey, New York, Ohio and Pennsylvania
LIFESTAGE SM FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments to help maximize your return and reduce your risk.
The three portfolios:
Putnam Asset Allocation: Balanced Portfolio
Putnam Asset Allocation: Conservative Portfolio
Putnam Asset Allocation: Growth Portfolio
MOST CONSERVATIVE
INVESTMENTS+
Putnam money market funds:
California Tax Exempt Money Market Fund
Money Market Fund
New York Tax Exempt Money Market Fund
Tax Exempt Money Market Fund
CDs and savings accounts++
* Not available in all states.
+ Relative to above.
++ Not offered by Putnam Investments. Certificates of deposit offer a
fixed rate of return and may be insured up to certain limits by
federal/state agencies. Savings accounts may also be insured up to
certain limits. Please call your financial advisor or Putnam at
1-800-225-1581 to obtain a prospectus for any Putnam fund. It
contains more complete information, including charges and expenses.
Please read it carefully before you invest or send money.
<TABLE>
<CAPTION>
Portfolio of investments owned
March 31, 1996 (Unaudited)
COMMERCIAL PAPER (67.8%)* MATURITY
PRINCIPAL AMOUNT DATE VALUE
<S> <C> <C> <C> <C>
DOMESTIC (48.5%)
- -----------------------------------------------------------------------------------------------------
$20,000,000 American Telephone & Telegraph Co. 5.48s 4/17/96 $19,942,156
30,000,000 American Telephone & Telegraph Co. 5.25s 4/2/96 29,982,500
20,000,000 Bank of America 5.30s 4/17/96 19,944,055
35,000,000 Bank of America 5.05s 7/29/96 34,401,014
50,000,000 Ciesco Inc. 5.23s 4/12/96 49,898,306
25,000,000 Corporate Asset Funding Co. Inc. 5.35s 5/2/96 24,873,681
30,000,000 Corporate Asset Funding Co. Inc. 5.0s 5/16/96 29,790,800
15,000,000 Delaware Funding Corp. 5.12s (acquired 2/1/96,
cost $14,808,000) ++ 5/1/96 14,929,600
45,000,000 Dresdner U. S. Finance Inc. 4.925s 8/26/96 44,076,562
15,000,000 Falcon Asset Securitization Co. 5.25s
(acquired 3/15/96, cost $14,794.375) ++ 6/17/96 14,825,000
40,000,000 Falcon Asset Securitization Co. 5.16s
(acquired 2/23/96, cost $39,690,400) ++ 4/17/96 39,891,067
55,000,000 Fleet Mortgage Corp 5.26s 4/1/96 54,975,891
15,000,000 Ford Motor Credit Co. 5.35s 4/12/96 14,968,791
15,000,000 Ford Motor Credit Co. 5.32s 5/3/96 14,922,416
30,000,000 Ford Motor Credit Co. 5.00s 6/13/96 29,683,333
30,000,000 General Electric Capital Services 5.52s 4/11/96 29,940,200
30,000,000 General Electric Capital Services 5.36s 5/3/96 29,843,667
30,000,000 General Motors Acceptance Corp. 5.39s 4/22/96 29,892,199
25,000,000 General Motors Acceptance Corp. 5.36s 4/15/96 24,936,722
35,000,000 IBM Credit Corp. 5.27s 4/25/96 34,861,662
25,000,000 Metlife Fuding Inc. 5.25s 6/13/96 14,833,750
25,000,000 Morgan (J.P.) & Co., Inc. 5.22s 4/8/96 24,963,750
10,000,000 National Rural Utilities Cooperative Finance
Corp. 5.28s 4/16/96 9,973,600
25,000,000 National Rural Utilities Cooperative Finance
Corp. 5.27s 5/13/96 24,835,312
19,000,000 National Rural Utilities Cooperative Finance
Corp. 5.15s 4/15/96 18,953,793
22,000,000 Nations Bank Florida 5.26s 7/1/96 21,668,912
55,000,000 New Center Asset Trust 5.55s 4/1/96 55,000,000
20,000,000 Preferred Receivables Funding Corp. 5.45s 4/11/96 19,960,638
10,000,000 Preferred Receivables Funding Corp. 5.25s 4/2/96 9,994,167
14,025,000 Preferred Receivables Funding Corp. 5.22s 4/4/96 14,012,797
10,000,000 Preferred Receivables Funding Corp. 5.15s 4/22/96 9,965,666
30,000,000 Sears Roebuck Acceptance Corp. 5.32s 5/10/96 29,813,800
25,000,000 Sears Roebuck Acceptance Corp. 5.30s 6/18/96 24,701,875
7,300,000 Sheffield Receivables Corp. 5.22s 4/15/96 7,282,005
27,000,000 Sheffield Receivables Corp. 5.20s
(acquired 2/26/96, cost $26,808,900) ++ 4/15/96 26,933,700
15,000,000 Sheffield Receivables Corp. 5.17s 4/22/96 14,948,300
--------------
$914,421,687
FOREIGN (19.3%)
- -----------------------------------------------------------------------------------------------------
$40,000,000 Abbey National North America Corp. 5.05s
(United Kingdom) 7/26/96 $39,332,277
15,000,000 Abbey National North America Corp. 4.88s
(United Kingdom) 8/23/96 14,701,100
40,000,000 ABN Amro North America Finance 5.57s
(Netherlands) 4/5/96 39,956,677
15,000,000 ABN Amro North America Finance 5.35s
(Netherlands) 4/9/96 14,975,479
40,000,000 Den Danske Bank 5.567s (Denmark) 4/29/96 39,808,248
19,000,000 Den Danske Bank 5.30s (Denmark) 7/31/96 18,653,144
40,000,000 Deutsche Bank Financial Inc. 4.92s (Germany) 7/2/96 39,480,666
14,000,000 Fletcher Challenge Finance U.S.A.
(Credit Suisse (LOC)) 5.28s (Switzerland) 5/20/96 13,893,227
35,000,000 National Australia Funding 5.75s (Australia) 4/8/96 34,947,889
20,000,000 Royal Bank of Canada 5.48s (Canada) 4/26/96 19,914,755
25,000,000 Royal Bank of Canada 5.07s (Canada) 7/1/96 24,669,042
40,000,000 Toronto Dominion Holdings 5.37s (Canada) 4/3/96 39,970,166
25,000,000 Union Bank of Switzerland 5.43s (Switzerland) 4/1/96 25,000,000
--------------
$365,302,670
--------------
Total Commercial Paper (cost $279,724,357) $1,279,724,357
U.S. GOVERNMENT & AGENCY OBLIGATIONS (12.1%)* MATURITY
PRINCIPAL AMOUNT DATE VALUE
- -----------------------------------------------------------------------------------------------------
$40,000,000 Federal Home Loan Mortgage Corp.
Discount Notes 4.99s 5/13/96 $39,750,500
25,000,000 Federal Home Loan Banks Discount Notes 4.93s 9/3/96 24,459,069
Federal National Mortgage Association
Discount Notes
25,000,000 5.48s 4/12/96 24,946,735
55,000,000 5.20s 4/18/96 54,841,111
25,000,000 5.16s 5/3/96 24,874,583
10,245,000 5.12s 8/9/96 10,051,209
25,000,000 5.06s 10/30/96 24,244,514
26,000,000 4.88s 8/15/96 25,510,102
--------------
Total U.S. Government & Agency Obligations
(cost $228,677,823) $228,677,823
BANK NOTES (6.1%)* MATURITY
PRINCIPAL AMOUNT DATE VALUE
- -----------------------------------------------------------------------------------------------------
$20,000,000 First National Bank of Boston 5.73s 4/24/96 $20,000,000
30,000,000 First National Bank of Boston 5.70s 4/17/96 30,000,000
25,000,000 Morgan Guaranty Trust Co. 5.75s 8/7/96 25,000,000
15,000,000 Nationsbank Texas 5.42s 4/10/96 15,000,000
25,000,000 Nationsbank Texas 5.15s 6/7/96 25,000,000
--------------
Total Bank Notes (cost $115,000,000) $115,000,000
CERTIFICATES OF DEPOSIT (8.5%)* MATURITY
PRINCIPAL AMOUNT DATE VALUE
- -----------------------------------------------------------------------------------------------------
$45,000,000 Bayerische Landesbank 5.75s (Germany) 4/30/96 $45,001,106
25,000,000 Bayerische Landesbank 5.06s (Germany) 7/8/96 25,003,100
50,000,000 Commerzbank AG 5.16s (Germany) 5/29/96 50,005,315
15,000,000 Societe General 5.75s (France) 4/22/96 15,000,000
25,000,000 Union Bank of Switzerland 5.10s (Switzerland) 8/21/96 25,000,000
--------------
Total Certificates of Deposit (cost $160,009,521) $160,009,521
REPURCHASE AGGREEMENT (5.9%)*(cost $111,462,600)
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------
$111,412,000 Interest in $337,282,000 joint repurchase agreement dated
March 29, 1996 with Lehman Brothers Inc., due
April 1, 1996 with respect to various U.S. Treasury
obligations -- maturity value of $111,462,600 for an
effective yield of 5.45% $111,462,600
- -----------------------------------------------------------------------------------------------------
Total Investments (cost $1,894,874,301)*** $1,894,874,301
- -----------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $1,886,564,513.
*** The aggregate identified cost on a tax basis is the same.
++ Restricted as to public resale, excluding 144A securities. The total market value of restricted
securities owned at March 31, 1996 was $96,579,367 or 5.1% of net assets.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
March 31, 1996 (Unaudited)
<S> <C>
Assets
- ------------------------------------------------------------------------------------
Investments in securities, at amortized cost (Note 1) $1,894,874,301
- ------------------------------------------------------------------------------------
Interest and other receivables 4,882,057
- ------------------------------------------------------------------------------------
Receivable for shares of the fund sold 29,373,654
- ------------------------------------------------------------------------------------
Total assets 1,929,130,012
Liabilities
- ------------------------------------------------------------------------------------
Payable to subcustodian (Note 2) 579,100
- ------------------------------------------------------------------------------------
Distributions payable to shareholders 1,190,475
- ------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 38,496,941
- ------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 1,381,271
- ------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 698,853
- ------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 3,110
- ------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 6,117
- ------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 155,835
- ------------------------------------------------------------------------------------
Other accrued expenses 53,797
- ------------------------------------------------------------------------------------
Total liabilities 42,565,499
- ------------------------------------------------------------------------------------
Net assets $1,886,564,513
Represented by
- ------------------------------------------------------------------------------------
Paid-in-capital (Note 4) $1,886,564,513
- ------------------------------------------------------------------------------------
Net asset value, offering and redemption price per class A share
($1,504,946,725 divided by 1,504,946,725 shares)* $1.00
- ------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($364,859,636 divided by 364,859,636 shares)** $1.00
- ------------------------------------------------------------------------------------
Net asset value, offering and redemption price per class M share
($16,758,152 divided by 16,758,152 shares)* $1.00
- ------------------------------------------------------------------------------------
* Offered at net asset value.
** Class B shares are available only by exchange of class B shares from
other Putnam funds and to certain systematic investment plan investors.
The applicable contingent deferred sales charge will depend upon the fund from
which you exchanged.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended March 31, 1996 (Unaudited)
- ------------------------------------------------------------------------------------
<S> <C>
Interest Income: $45,205,918
- ------------------------------------------------------------------------------------
Expenses:
- ------------------------------------------------------------------------------------
Compensation of Manager (Note 2) $2,676,533
- ------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,243,254
- ------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 20,616
- ------------------------------------------------------------------------------------
Administrative services (Note 2) 11,837
- ------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 750,654
- ------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 9,418
- ------------------------------------------------------------------------------------
Reports to shareholders 10,806
- ------------------------------------------------------------------------------------
Registration fees 133,122
- ------------------------------------------------------------------------------------
Auditing 17,143
- ------------------------------------------------------------------------------------
Legal 11,612
- ------------------------------------------------------------------------------------
Postage 93,332
- ------------------------------------------------------------------------------------
Other 12,023
- ------------------------------------------------------------------------------------
Total expenses 4,990,350
- ------------------------------------------------------------------------------------
Expense reduction (Note 2) (221,348)
- ------------------------------------------------------------------------------------
Net expenses 4,769,002
- ------------------------------------------------------------------------------------
Net investment income 40,436,916
- ------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $40,436,916
- ------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
- ------------------------------------------------------------------------------------------------------
Six months ended Year ended
March 31 September 30
1996* 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ------------------------------------------------------------------------------------------------------
Operations:
- ------------------------------------------------------------------------------------------------------
Net investment income $40,436,916 $71,482,615
- ------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 40,436,916 71,482,615
- ------------------------------------------------------------------------------------------------------
Distributions to shareholders
- ------------------------------------------------------------------------------------------------------
From net investment income
Class A (33,080,719) (59,886,945)
- ------------------------------------------------------------------------------------------------------
Class B (7,040,384) (11,472,948)
- ------------------------------------------------------------------------------------------------------
Class M (315,813) (122,722)
- ------------------------------------------------------------------------------------------------------
Increase from capital share transactions (Note 4) 431,951,047 159,255,295
- ------------------------------------------------------------------------------------------------------
Total increase in net assets 431,951,047 159,255,295
- ------------------------------------------------------------------------------------------------------
Net assets
- ------------------------------------------------------------------------------------------------------
Beginning of period 1,454,613,466 1,295,358,171
- ------------------------------------------------------------------------------------------------------
End of period $1,886,564,513 $1,454,613,466
- ------------------------------------------------------------------------------------------------------
* Unaudited
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
December 8,
1994
Six months (commencement Six months
ended of operations) ended Year ended
March 31 September 30 March 31 September 30
- ----------------------------------------------------------------------------------------------
1996* 1995 1996* 1995
- ----------------------------------------------------------------------------------------------
Class M
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income $0.0252 $0.0434 $0.0237 $0.0469
- ----------------------------------------------------------------------------------------------
Net realized gain
on investments -- -- -- --
- ----------------------------------------------------------------------------------------------
Total from investment
operations .0252 .0434 .0237 .0469
- ----------------------------------------------------------------------------------------------
Total distributions: (.0252) $(.0434) (.0237) $(.0469)
- ----------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (a) 2.54(c) 4.43(c) 2.38(c) 4.80
- ----------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $16,758 $8,440 $364,860 $256,533
- ----------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .32(c) .67(c) .52(c) 1.12
- ----------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.52(c) 4.29(c) 2.35(c) 4.75
- ----------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (Continued)
(For a share outstanding throughout the period)
April 27, 1992
For the eleven Year (commencement Six months
months ended ended of operations) ended of
September 30 Ocotber 31 to October 30 March 31
- ----------------------------------------------------------------------------------------------
1994 1993 1992 1996*
- ----------------------------------------------------------------------------------------------
Class B
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income $.0251 $.0195 $0.0151 $.0262
- ----------------------------------------------------------------------------------------------
Net realized gain
on investments -- -- -- --
- ----------------------------------------------------------------------------------------------
Total from investment
operations .0251 .0195 .0151 .0262
- ----------------------------------------------------------------------------------------------
Total distributions: $(.0251) $(.0195) $(.0151) $(.0262)
- ----------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (a) 2.54(c) 1.98 1.52(c) 2.63(c)
- ----------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $194,187 $22,777 $2,864 $1,504,947
- ----------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 1.03(c) 1.20 .70(c) .27(c)
- ----------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.77(c) 1.98 1.50(c) 2.58(c)
- ----------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (Continued)
(For a share outstanding throughout the period)
Year For the eleven
Year ended months ended
September 30 September 30 Year ended October 30
- ------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net investment income $0.0521 $.0299 $.0246 $0.353 $.0598
- ------------------------------------------------------------------------------------------------------
Net realized gain
on investments -- -- -- -- .0001
- ------------------------------------------------------------------------------------------------------
Total from investment
operations 0.0521 .0299 .0246 .0353 .0599
- ------------------------------------------------------------------------------------------------------
Total distributions: $(.0521) $(.0299) $(.0246) $(.0353) $(.0599)
- ------------------------------------------------------------------------------------------------------
Total investment return at
net asset value (%) (a) 5.33 3.03(c) 2.49 3.58 6.16
- ------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $1,189,640 $1,101,171 $586,920 $839,185 $684,987
- ------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) 0.62 .58(c) .70 .86 .77
- ------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.23 3.03(c) 2.48 3.56 6.04
- ------------------------------------------------------------------------------------------------------
* Unaudited
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) The ratio of expenses to average net assets for the periods ended September 30, 1995 and thereafter,
includes amounts paid through expense offset arrangements. Prior period ratios exclude these amounts.
(Note 2).
(c) Not annualized.
</TABLE>
Notes to financial statements
March 31, 1996 (Unaudited)
Note 1
Significant accounting policies
Putnam Money Market Fund (the "fund"), is registered under the
Investment Company Act of 1940, as amended as a diversified, open-end
management investment company. The fund seeks current income consistent
with preservation of capital and maintenance of liquidity. The fund
achieves its objective by investing in a portfolio of high-grade short-
term obligations. The fund may invest up to 100% of its assets in the
banking industry and in commercial paper and short-term corporate
obligations of issuers in the personal credit institution and business
credit industries.
The fund offers class A, class B and class M shares. Each class of
shares is sold without a front-end sales charge. Class B shares are
offered only in exchange for class B shares of other Putnam funds, or
purchased by certain systematic investment plans. Shareholders are
subject to the same contingent deferred sales charge schedule as the
fund from which they were exchanged. Class B shares pay an ongoing
distribution fee, and are subject to a contingent deferred sales charge
if the shares are redeemed within six years of purchase (including any
holding period of the shares in other Putnam funds). Class M shares pay
an ongoing distribution fee lower than class B shares but are not
subject to a contingent deferred sales charge.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to class B and class M
shares). Each class votes as a class only with respect to its own
distribution plan or other matters on which a class vote is required by
law or determined by the Trustees. Shares of each class would receive
their pro-rata share of the net assets of the fund, if the fund were
liquidated. In addition, the Trustees declare separate dividends on each
class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates.
A) Security valuation The valuation of the fund's portfolio instruments
is determined by means of the amortized cost method as set forth in Rule
2a-7 under the Investment Company Act of 1940. The amortized cost of an
instrument is determined by valuing it at cost originally and thereafter
amortizing any discount or premium from its face value at a constant
rate until maturity.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed).
C) Joint trading account Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the fund may transfer uninvested
cash balances into a joint trading account along with the cash of other
registered investment companies managed by Putnam Investment Management,
Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc. and certain other accounts. These
balances may be invested in one or more repurchase agreements and/or
short-term money market instruments.
D) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to 102% of the resale price, including accrued
interest. Putnam Management is responsible for determining that the
value of these underlying securities is at all times at least equal to
102% of the resale price, including accrued interest.
E) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986. Therefore, no provision has
been made for federal taxes on income, capital gains or unrealized
appreciation on securities held and for excise tax on income and capital
gains.
F) Interest income and distributions to shareholders Interest is
recorded on the accrual basis. Income dividends (and distributions of
realized gains, if any) are recorded daily by the fund and are
distributed monthly to the shareholders. The amount and character of
income and gains to be distributed are determined in accordance with
income tax regulations which may differ from generally accepted
accounting principles.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average nets assets of
the fund. Such fee is based on the following annual rates: 0.5% of the
first $100 million of average net assets 0.4% of the next $100 million,
0.35% of the next $300 million, 0.325% of the next $500 million, and
0.3% of any amount over $1 billion, subject under current law to
reduction in any year by the amount of certain brokerage commissions and
fees (less expenses) received by affiliates of Putnam Managment on the
fund's portfolio transactions.
The fund 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 aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustees fee of $2,340 and an
additional fee for each Trustee's 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 fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows
the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund
and are invested in the fund or in other Putnam funds until distribution
in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended March 31, 1996, fund expenses were reduced by
$221,348 under expense offset arrangements with PFTC. Investor servicing
and custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested the assets utilized in connection
with the expense offset arrangements in an income producing asset if it
had not entered into such arrangements.
As part of the custodian contract between the subcustodian bank and
PFTC, the subcustodian bank has a lien on the securities of the fund to
the extent permitted by the funds investment restrictions to cover any
advances made by the subcustodian bank for the settlement of securities
purchased by the fund. At March 31, 1996, the payable to the
subcustodian bank represents the amount due for cash advance for the
settlement of a security purchased.
The fund has adopted distribution plans (the "Plans") with respect to
its class B shares and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of
Putnam Investments Inc., for services provided and expenses incurred by
it in distributing shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.75% and
1.00% of the average net assets attributable to class B and class M
shares, respectively. The Trustees have approved payment by the fund at
an annual rate of 0.50% and 0.15% of the average net assets attributable
to class B and class M shares, respectively.
For the six months ended March 31, 1996, Putnam Mutual Funds Corp.,
acting as underwriter received $759,338 in contingent deferred sales
charges from redemptions of class B shares. A deferred sales charge of
up to 1% is assessed on certain redemptions of class A shares acquired
through an exchange from another fund. For the six months ended March
31, 1996, Putnam Mutual Funds Corp., acting as underwriter received
$52,520 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended March 31, 1996, purchases and sales
(including maturities) of investment securities (all short-term
obligations) aggregated $19,729,250,835 and $19,362,043,328,
respectively. In determining the net gain or loss on securities sold,
the cost of securities has been determined on the identified cost basis.
Note 4
Capital shares
At March 31, 1996, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares at a constant net
asset value of $1.00 per share were as follows:
Six months ended Year ended
March 31 September 30
- ----------------------------------------------------
Class A 1996 1995
- ----------------------------------------------------
Shares sold 3,740,012,721 4,779,510,741
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 30,474,921 54,658,336
- ----------------------------------------------------
3,770,487,642 4,834,169,077
Shares
repurchased (3,455,180,499) (4,745,700,888)
- ----------------------------------------------------
Net increase 315,307,143 88,468,189
- ----------------------------------------------------
Six months ended Year ended
March 31 September 30
- ----------------------------------------------------
Class B 1996 1995
- ----------------------------------------------------
Shares sold 928,212,516 1,012,064,608
Shares issued in
connection with
reinvestment of
distributions 6,157,913 9,599,944
- ----------------------------------------------------
934,370,429 1,021,664,552
Shares
repurchased (826,044,228) (959,317,895)
- ----------------------------------------------------
Net increase 108,326,201 62,346,657
- ----------------------------------------------------
For the period
December 8, 1994
(commencement of
Six months ended operations) to
March 31 September 30
- ----------------------------------------------------
Class M 1996 1995
- ----------------------------------------------------
Shares sold 47,144,469 16,449,326
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 294,549 109,559
- ----------------------------------------------------
47,439,018 16,558,885
Shares
repurchased (39,121,315) (8,118,436)
- ----------------------------------------------------
Net increase 8,317,703 8,440,449
- ----------------------------------------------------
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investor Services has won the DALBAR Quality Tested Service Seal
for the past six years. In 1995, over 146,000 tests of 56 shareholder
service components demonstrated that Putnam outperformed the industry
standard in every category.
* HELP YOUR INVESTMENT GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market fund or from your checking or savings
account.*
* SWITCH FUNDS EASILY
You can move money from one account to another with the same class of
shares without a service charge. (This privilege is subject to change or
termination.)
* ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares any business day at
the then-current net asset value, which may be more or less than the
original cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a
helpful Putnam representative.
To make an additional investment in this or any other Putnam fund,
contact your financial advisor or call our toll-free number: 1-800-225-
1581.
* Regular investing of course, does not guarantee a profit or protect
against a loss in a declining market.
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
William F. McGue
Vice President
Blake E. Anderson
Vice President
Lindsey C. Strong
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam Money
Market Fund. It may also be used as sales literature when preceded or
accompanied by the current prospectus, which gives details of sales
charges, investment objectives, and operating policies of the fund, and
the most recent copy of Putnam's Quarterly Performance Summary. For more
information or to request a prospectus, call toll-free: 1-800-225-1581.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, are not insured by the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board
or any other agency, and involve risk, including the possible loss of
the principal amount invested.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
24538-010/879/534 5/96
