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

    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.

    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%.