N-30D 1 PUTNAM MONEY MARKET FUND SEMIANNUAL REPORT MARCH 31, 1995 [LOGO] BOSTON * LONDON * TOKYO PERFORMANCE HIGHLIGHTS ". . .[W]ith money fund yields now heading toward 7.0 percent, many investment advisors are recommending them as a larger part of their asset allocations. Attractive real rates of return at little or no risk are a hard thing for most investors to pass up." -- Money Market Insight, Vol. 7, No. 3, March 1995 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. SEMIANNUAL RESULTS AT A GLANCE
----------------------------------------------------------------- ----------- TOTAL RETURN: CLASS A CLASS B CLASS M ----------------------------------------------------------------- ----------- (change in value during period plus reinvested distributions) 6 months ended 3/31/95 2.54% 2.28% 1.72%* ----------------------------------------------------------------- ----------- DISTRIBUTIONS: NUMBER INCOME TOTAL ----------------------------------------------------------------- ----------- Class A 6 $0.025098 $0.025098 Class B 6 0.022583 0.022583 Class M 4 0.017119 0.017119 ----------------------------------------------------------------- ----------- CURRENT RETURN: CLASS A CLASS B CLASS M ----------------------------------------------------------------- ----------- End of period Current 7-day yield(1) 5.50% 4.99% 5.38% Current 30-day yield(1) 5.42 4.92 5.48 ----------------------------------------------------------------- ----------- Performance data represent past results, do not guarantee future results and will differ for each share class. For performance over longer periods, see page 7. * The fund began offering class M shares on 12/7/94. (1) The 7-day and 30-day yields are the two most common gauges for measuring money market mutual fund performance. 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.
FROM THE CHAIRMAN [PHOTO OF GEORGE PUTNAM] (C) KARSH, OTTAWA DEAR SHAREHOLDER: CONFIDENCE LEVELS IN THE U.S. BOND MARKET HAVE INCREASED SUBSTANTIALLY SINCE PUTNAM MONEY MARKET FUND BEGAN ITS FISCAL YEAR THIS PAST OCTOBER. YOUR FUND'S PERFORMANCE AS OF MARCH 31, 1995, THE FISCAL YEAR'S HALFWAY POINT, REFLECTS THIS CHANGE FOR THE BETTER. LAST YEAR'S RISING INTEREST RATES MAY HAVE RATTLED THE FINANCIAL MARKETS, BUT THEY SEEM TO HAVE SUCCEEDED IN HEADING OFF INFLATION. THE LATTER, AFTER ALL, WAS THE FEDERAL RESERVE BOARD'S INTENT AS IT NUDGED SHORT-TERM RATES HIGHER THROUGHOUT 1994 AND INTO EARLY 1995. YIELDS ON SHORT-TERM AND GOVERNMENT SECURITIES AS WELL AS THE HIGH-QUALITY CASH-EQUIVALENTS IN WHICH YOUR FUND INVESTS HAVE BENEFITED FROM THE RECENT RISES IN INTEREST RATES. FUND MANAGER LINDSEY CALLEN LOOKS BACK ON THE FIRST HALF OF FISCAL 1995, THEN OFFERS A FORECAST FOR THE REMAINING HALF IN HER REPORT TO SHAREHOLDERS, WHICH FOLLOWS. RESPECTFULLY YOURS, [SIGNATURE] GEORGE PUTNAM CHAIRMAN OF THE TRUSTEES MAY 17, 1995 REPORT FROM THE FUND MANAGER LINDSEY M. CALLEN For the six months ended March 31, 1995, Putnam Money Market Fund once again delivered a competitive total return while maintaining its hallmarks of superior quality and a stable $1.00 share price. The higher short- term interest rates we have seen since early in 1994 prevailed throughout the period, providing a favorable investment climate for your fund. During the period, data from key sectors like manufacturing and employment demonstrated ongoing improvement in the U.S. economy. This continuing strength motivated the Federal Reserve Board to continue its anti- inflation policy by raising short-term interest rates twice more, in November 1994 and again in February 1995. However, by early March, some weakness began to emerge in housing sales and consumer spending. In response, the Fed did not raise interest rates at its March meeting, instead adopting a "wait and see" attitude until economic signals become more definitive. SEEKING VALUE AMID CREDIT-CONSCIOUSNESS AND TIGHT SUPPLY As money market securities issuers await the next major interest rate move by the Fed, many are tabling their financing needs for the time being. The market's view on the future direction of interest rates remains mixed. Some analysts are anticipating another rise from the Fed while others expect a decline as the economy shows more definite signs of slowing. In any case, the effect of this uncertainty has been to reduce the supply of money market securities during the semiannual period. The period has also witnessed a "back-to-basics" trend among many investors. Your fund has always emphasized simply structured traditional money market investments like certificates of deposit, commercial paper, government agency discount notes, and simple floating rate instruments. After a year in which many money market mutual funds reached for additional income by purchasing derivative investments which plummeted in value as interest rates began to rise, the credit quality of most fixed-income securities is now subject to greater scrutiny than it has been in years. As a result, the wisdom of our approach has been proven once again. Your fund has always focused on traditional money market securities of the highest quality. In this environment of low supply and increased credit-consciousness, we have redoubled our efforts to find well- valued securities that meet our criteria for quality, liquidity, and price sensitivity. Ideally, every holding must be rated by two or more nationally recognized rating services and receive at least two ratings within the top two categories. If the security has only been rated by one service, its rating must be within that service's top category. ADOPTING A NEUTRAL, FLEXIBLE STANCE With the pace of interest rate increases slowing during the past six months and their future direction somewhat uncertain, we have begun to lengthen the average maturity of the portfolio slightly to place it in a more neutral position. We have also begun to re-evaluate our floating-rate securities position, which had been built up to maximize the fund's income when interest rates were rising rapidly. Many of the fund's floating-rate holdings will mature in the next month or so. If we decide to purchase additional floating-rate securities, we will target those whose yields reset every three months rather than on a weekly basis. This approach is intended to help the fund benefit from additional interest rate increases while helping to protect it from any declines that might occur as the market adjusts to economic change. OUR OUTLOOK We share the opinion of the members of the Federal Reserve Board -- that it is too early to tell whether the economy is indeed slowing down or simply taking a breather. Some weakness has emerged, although one or two months of data do not make a trend. The interest-rate cycle seems to be near its peak, yet rates are not excessively high and could remain at their current levels for some time. Accordingly, we are keeping the fund flexible. We expect to maintain a neutral average portfolio maturity and to continue taking advantage of potentially higher interest rates through a position in floating-rate securities. Meanwhile, we believe our emphasis on traditional high-quality instruments should enable the fund to maintain the stability that is most shareholders' top priority. [FN] The views expressed in this report are exclusively those of Putnam Management, and are not meant as investment advice. Although the described holdings were viewed favorably as of 3/31/95, there is no guarantee the fund will continue to hold these securities in the future. Past performance is no guarantee of future results.
PERFORMANCE COMPARISONS (3/31/95)* ----------------------------------------------------------------- ----------- CURRENT RETURN ----------------------------------------------------------------- ----------- PASSBOOK SAVINGS ACCOUNT 2.17% ----------------------------------------------------------------- ----------- TAXABLE MONEY MARKET FUND 7-DAY YIELD 5.58 ----------------------------------------------------------------- ----------- 3-MONTH CERTIFICATE OF DEPOSIT 4.20 ----------------------------------------------------------------- ----------- PUTNAM MONEY MARKET FUND (7-DAY YIELD) ----------------------------------------------------------------- ----------- CLASS A 5.50 ----------------------------------------------------------------- ----------- CLASS B 4.99 ----------------------------------------------------------------- ----------- CLASS M 5.38 ----------------------------------------------------------------- ----------- * The net asset value of money market mutual funds is uninsured and there is no assurance the fund will maintain a $1.00 fixed share price. Distributions vary daily. The principal value on passbook savings and bank CDs are generally insured up to certain limits by state and federal agencies. Unlike money market funds, early withdrawals from bank CDs may be subject to substantial penalties. Investment returns will fluctuate. Sources: Bank of Boston (passbook savings), Bank Rate Monitor (3- month CDs), IBC/Donaghue's Money Market Fund Report (taxable money market fund 7-day yield). PERFORMANCE SUMMARY 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 back into the fund. We show total return in two ways: on a cumulative long-term basis and on average how the fund might have grown each year over varying periods. For comparative purposes, we show how the fund performed relative to appropriate indexes and benchmarks. TOTAL RETURN FOR PERIODS ENDED 3/31/95
LIPPER MONEY MARKET CLASS A CLASS B CLASS M FUND NAV NAV POP NAVAVERAGE CPI ----------------------------------------------------------------- ------- 6 month 2.54% 2.28% -2.72% -- 2.58% 1.34% ----------------------------------------------------------------- ------- 1 year 4.47 3.93 -1.07 -- 4.34 2.85 ----------------------------------------------------------------- ------- 5 years 24.46 -- -- -- 24.43 17.64 Annual average4.47 -- -- -- 4.47 3.30 ----------------------------------------------------------------- ------- 10 years 76.05 -- -- -- 76.07 42.29 Annual average5.82 -- -- -- 5.82 3.59 ----------------------------------------------------------------- ------- Life of class B-- 8.57 5.57 -- 9.95 8.53 Annual average -- 2.85 1.87 -- 3.30 2.83 ----------------------------------------------------------------- ------- Life of class M-- -- -- 1.72% 1.75 1.14 ----------------------------------------------------------------- ------- Fund performance data do not take into account any adjustment for taxes payable on reinvested distributions. The fund began operations on 10/1/76, offering shares now known as class A. Effective 4/27/92, the fund began offering class B shares, and on 12/7/94, class M shares. Performance data represent past results and will differ for each share class, and should not be taken as an assurance for future performance. Investment returns will fluctuate.
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 investment plan shareholders. CONTINGENT DEFERRED SALES CHARGE (CDSC) is a charge applied at the time of the 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 than class A shares and no sales charge on redemption. 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 AVERAGE, used for performance comparison purposes, is an arithmetic average of the total return of all money market mutual funds tracked by Lipper Analytical Services. Lipper is an independent rating organization for the mutual fund industry. Lipper rankings vary for other periods. The fund's holdings do not match those in the Lipper Average. CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it does not represent an investment return. PUTNAM FAMILY OF FUNDS PUTNAM GROWTH FUNDS Asia Pacific Growth Fund Capital Appreciation Fund* Diversified Equity Trust Europe Growth Fund Global Growth Fund Health Sciences Trust Investors Fund Natural Resources Fund New Opportunities Fund OTC Emerging Growth Fund Overseas Growth Fund Vista Fund Voyager Fund PUTNAM GROWTH AND INCOME FUNDS 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 Managed Income Trust Utilities Growth and Income Fund PUTNAM INCOME FUNDS Adjustable Rate U.S. Government Fund American Government Income Fund Diversified Income Trust Federal Income Trust Global Government Income Trust High Yield Advantage Fund High Yield Trust Income Fund Preferred Income Fund Intermediate U.S. Government Income Fund U.S. Government Income Trust PUTNAM TAX-FREE INCOME FUNDS Intermediate Tax Exempt Fund 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 seeking 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(S) [FN] * Temporarily closed to new investment. + Not available in all states. ++ Relative to above. (S) 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. Read it carefully before you invest or send money. A PUTNAM PERSPECTIVE ON RISK AND REWARD You've probably been told how important it is to understand the relationship between an investment's potential rewards and its accompanying risks. Given the cautionary nature of such instructions, it may take most investors a while to realize that risk has a positive side. EVERY RISK SIGNALS A POTENTIAL REWARD. Selecting only those investments that offer the greatest degree of security generally leads to only modest rewards. Furthermore, even insured or guaranteed investments may be subject to changes in their rates of return or, in some cases, in their principal values. Experienced investors know that no investment is truly risk free and are therefore willing to take on some measure of risk in order to increase their potential gains. THE GREATER THE RISK, THE GREATER THE POTENTIAL REWARD. Accepting an appropriate level of investment risk can give you a better chance of outpacing inflation over time and seeking to maximize your investment's return. How much risk? Your financial advisor's feedback and your time horizon can make all the difference in determining how much risk is compatible with your investment goals and your peace of mind. FITTING YOUR FUND SELECTION TO YOUR RISK TOLERANCE How do you find the right balance between investment risks and their potential rewards? It's helpful to understand the types of risks that can apply to different types of investments, and to look at your own portfolio with this perspective. For short-term goals, your first priority may be managing market risk. Longer-term investors may be more concerned with inflation risk. And all income-oriented investors should consider interest- rate, credit, and prepayment risks carefully. Within each of Putnam's four investment categories, you can select funds with differing levels of risk and reward potential to customize your portfolio. A RUNDOWN OF RISK TYPES MARKET RISK Most important for stock funds, but relevant to all funds, this is a measure of how sensitive a fundOs holdings are to changes in general market conditions. Remember, though, that securities that lose value quickly in market declines may also show the strongest gains in more favorable environments. INTEREST-RATE RISK Since bond prices fall as interest rates rise, this type of risk is a particular concern for fixed-income investors. However, interest-rate increases can also have a substantial negative effect on the stock market. INFLATION RISK If your investments cannot keep pace with inflation, your money will begin to lose its purchasing power. Stock investments are generally considered among the best ways of addressing inflation risk over the long term. CREDIT AND PREPAYMENT RISK Credit risk is the concern that the securityOs issuer will not be able to meet its payment, while prepayment risk involves the premature payoff of a loan, with a resulting loss of interest income. Professional management and in- depth research are invaluable in managing both these risks. LIQUIDITY RISK Not all investments can be readily converted into cash at their perceived market values. Liquidity risk can affect the price of securities held in the fundOs portfolio and, thus, the fundOs share prices. This list covers only the most general types of risks; however, each investment will also have its own specific risks. You will find a more detailed discussion of these risk considerations in each fundOs prospectus. PORTFOLIO OF INVESTMENTS OWNED March 31, 1995 (Unaudited)
COMERCIAL PAPER (60.5%)* PRINCIPAL AMOUNT MATURITY DATE VALUE DOMESTIC (40.1%) ----------------------------------------------------------------- -------------------------- $10,000,000 AES Barbers Point Inc. 6.05s (Bank of America Letter of Credit (LOC)) 4/6/95 $ 9,991,598 8,000,000 AES Barbers Point Inc. 6.02s (Bank of America LOC) 5/12/95 7,945,151 15,000,000 AES Barbers Point Inc. 6s (Bank of America LOC) 4/27/95 14,935,000 25,000,000 American Telephone & Telegraph Co. 6.12s 9/18/95 24,277,500 10,000,000 American Telephone & Telegraph Co. 6.12s 6/20/95 9,864,000 5,000,000 Corporate Asset Funding Co. Inc. 6.17s 10/24/95 4,823,470 5,200,000 Corporate Asset Funding Co. Inc. 6.15s 9/18/95 5,048,983 15,000,000 Corporate Asset Funding Co. Inc. 5.95s 4/6/95 14,987,603 25,000,000 Corporate Receivables Corp. 5.98s 4/7/95 24,975,084 12,000,000 Corporate Receivables Corp. 5.98s 4/4/95 11,994,020 7,000,000 Dayton Hudson Corp. 6.02s 4/18/95 6,980,101 20,000,000 Dayton Hudson Corp. 6.02s 4/17/95 19,946,488 15,000,000 Dayton Hudson Corp. 6.02s 4/3/95 14,994,983 25,000,000 Delaware Funding Corp. 6s 4/20/95 24,920,834 15,000,000 Ford Motor Credit Co. 6.1s 4/19/95 14,954,250 30,000,000 Ford Motor Credit Co. 5.96s 4/10/95 29,955,300 25,000,000 General Electric Capital Corp. 6.53s 7/10/95 24,546,528 25,000,000 General Electric Capital Corp. 6.3s 4/4/95 24,986,875 25,000,000 General Electric Capital Corp. 6.08s 4/17/95 24,932,444 25,000,000 General Motors Acceptance Corp. 6.08s 4/5/95 24,983,111 9,250,000 Heinz (H.J.) Co. 5.99s 5/4/95 9,199,210 25,000,000 Heller Financial Inc. 6s 4/25/95 24,900,000 13,000,000 Metlife Funding Inc. 5.95s 4/5/95 12,991,406 25,000,000 Morgan (J.P.) & Co., Inc. 6.07s 6/28/95 24,629,055 20,000,000 Nationsbank Corp. 6.14s 9/18/95 19,420,111 40,000,000 New Center Asset Trust, 6.05s 6/28/95 39,408,444 15,000,000 Penney (J.C.) Funding Corp. 6.15s 4/19/95 14,953,876 25,000,000 Preferred Receivables Funding Corp. 5.98s 4/18/95 24,929,403 20,000,000 Preferred Receivables Funding Corp. 5.98s 4/4/95 19,990,033 20,000,000 Sheffield Receivables Corp. 6.18s 4/25/95 19,917,600 ------------ $550,382,461 FOREIGN (20.4%)*** ----------------------------------------------------------------- -------------------------- $15,000,000 AES Shady Point Inc. 6s (Bank of Tokyo LOC) 4/27/95 $14,935,000 40,000,000 ABN-AMRO North America Finance Inc. 6.43s 7/20/95 39,214,111 10,000,000 ABN-AMRO North America Finance Inc. 5.98s 5/2/95 9,948,455 17,000,000 Bayerische Landesbank Girozentrale, 6.05s 6/14/95 16,788,586 10,300,000 Commerzbank AG, 5.85s 5/10/95 10,234,724 22,000,000 Commerzbank U.S. Finance Inc. 6.2s 4/5/95 21,984,845 15,000,000 Commerzbank U.S. Finance Inc. 5.95s 4/6/95 14,987,604 7,000,000 FPL Fuels Inc. 6.05s (Sumitomo Bank LOC) 5/1/95 6,964,708 8,025,000 Fundex Corp. 6.05s (Sumitomo Bank LOC) 4/10/95 8,012,863 53,000 Fundex Corp. 6.05s (Sumitomo Bank LOC) 4/10/95 52,920 COMERCIAL PAPER PRINCIPAL AMOUNT MATURITY DATE VALUE FOREIGN (continued) ----------------------------------------------------------------- -------------------------- $6,000,000 Maguire/Thomas Partners, 6.03s (Sumitomo Bank LOC) 4/25/95 $ 5,975,880 15,000,000 Michelin Tire Corp. 5.98s (Societe Generale LOC) 4/19/95 14,955,150 15,000,000 Pemex Capital Inc. 6.12s (Swiss Bank LOC) 4/20/95 14,951,550 15,000,000 Pemex Capital Inc. 6.02s (Swiss Bank LOC) 5/4/95 14,917,225 15,000,000 Pemex Capital Inc. 6s (Credit Suisse LOC) 4/24/95 14,942,500 10,000,000 Pemex Capital Inc. 6s (Credit Suisse LOC) 4/18/95 9,971,667 6,436,000 Queensland Alumina, 6s (Credit Suisse LOC) 4/18/95 6,417,765 55,000,000 Union Bank Switzerland, 6.35s 4/3/95 54,970,896 ------------ 280,226,449 ----------------------------------------------------------------- -------------------------- TOTAL COMMERCIAL PAPER (cost $830,608,910) $830,608,910 ----------------------------------------------------------------- --------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (19.5%)*
PRINCIPAL AMOUNT MATURITY DATE VALUE ----------------------------------------------------------------- -------------------------- $15,000,000 FEDERAL HOME LOAN MORTGAGE CORP. 5.93S 4/24/95 $14,943,171 25,000,000 Federal Home Loan Mortgage Corp. 5.88s 4/24/95 24,906,083 10,000,000 Federal Home Loan Mortgage Corp. 5.86s 5/15/95 9,928,378 25,000,000 Federal National Mortgage Association Discount Notes, 6.51s 7/11/95 24,543,396 40,000,000 Federal National Mortgage Association Discount Notes, 6.1s 5/3/95 39,783,111 25,000,000 Federal National Mortgage Association Discount Notes, 6.09s 9/11/95 24,310,646 25,000,000 Federal National Mortgage Association Discount Notes, 5.98s 6/30/95 24,626,250 30,000,000 Federal National Mortgage Association Discount Notes, 5.98s 6/19/95 29,606,316 50,000,000 Federal National Mortgage Association Discount Notes, 5.92s 4/3/95 49,983,555 25,000,000 Federal National Mortgage Association Discount Notes, 5.6s 4/6/95 24,980,556 ----------------------------------------------------------------- -------------------------- TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (cost $267,611,462) $267,611,462 ----------------------------------------------------------------- --------------------------
BANK NOTES (5.6%)*
PRINCIPAL AMOUNT MATURITY DATE VALUE ----------------------------------------------------------------- -------------------------- DOMESTIC ----------------------------------------------------------------- -------------------------- $15,000,000 First National Bank of Boston, 6.36s 9/26/95 $15,002,650 25,000,000 First National Bank of Boston, 6.25s 4/24/95 25,004,340 10,000,000 First National Bank of Boston, 6.19s 4/12/95 10,001,719 25,000,000 Pittsburgh National Bank, 5.9s 4/26/95 25,004,097 ----------------------------------------------------------------- -------------------------- TOTAL BANK NOTES (cost $75,012,806) $75,012,806 ----------------------------------------------------------------- --------------------------
FLOATING RATE NOTES (4.7%)*
PRINCIPAL AMOUNT MATURITY DATE VALUE ----------------------------------------------------------------- -------------------------- DOMESTIC (2.9%) ----------------------------------------------------------------- -------------------------- $20,000,000 Morgan Guaranty Trust Co. 6.05s 4/18/95 $19,999,315 20,000,000 Pittsburgh National Bank, 6.09s 4/21/95 20,003,383 ----------- $40,002,698 FOREIGN (1.8%) ----------------------------------------------------------------- -------------------------- $25,000,000 Abbey National, PLC, 6.115s 4/27/95 $25,004,247 ----------------------------------------------------------------- -------------------------- TOTAL FLOATING RATE NOTES (cost $65,006,945) $65,006,945 ----------------------------------------------------------------- --------------------------
CERTIFICATES OF DEPOSIT (3.3%)*
PRINCIPAL AMOUNT MATURITY DATE VALUE ----------------------------------------------------------------- -------------------------- FOREIGN ----------------------------------------------------------------- -------------------------- $20,000,000 Rabobank Nederland N.V. 6.3s 4/5/95 $20,003,987 25,000,000 Societe Generale 5.45s 5/22/95 25,005,593 ----------------------------------------------------------------- -------------------------- TOTAL CERTIFICATES OF DEPOSIT (cost $45,009,580) $45,009,580 ----------------------------------------------------------------- --------------------------
REPURCHASE AGREEMENT (6.4%)*
PRINCIPAL AMOUNT VALUE ----------------------------------------------------------------- -------------------------- $87,949,000 Interest in $510,221,000 joint repurchase agreement dated March 31, 1995 with Goldman Sachs & Co., Inc., due April 3, 1995 with respect to various U.S. Treasury obligations -- maturity value of $87,95,027 for an effective yield of 6.28% $87,995,027 ----------------------------------------------------------------- -------------------------- TOTAL INVESTMENTS (cost $1,371,244,730)*** $1,371,244,730 ----------------------------------------------------------------- -------------------------- * Percentages indicated are based on net assets of $1,372,474,764 which corresponds to a net asset value per share of $1.00 for class A, class B and class M shares. *** The aggregate identified cost on a tax basis is the same. Rates shown on floating rate notes are the current interest rates on March 31, 1995, which are subject to change based on the terms of the security. Percent of total net assets invested in foreign countries at March 31, 1995: Switzerland 8.5% Germany 4.7 Netherlands 3.6 Japan 2.6 France 1.1
16 STATEMENT OF ASSETS AND LIABILITIES March 31, 1995 (Unaudited)
ASSETS ----------------------------------------------------------------- -------------- Investments in securities, at amortized cost (Note 1) $1,371,244,730 ----------------------------------------------------------------- -------------- Cash 41 ----------------------------------------------------------------- -------------- Interest and other receivables 2,764,318 ----------------------------------------------------------------- -------------- Receivable for shares of the fund sold 17,356,819 ----------------------------------------------------------------- -------------- Other assets 34,262 ----------------------------------------------------------------- -------------- TOTAL ASSETS $1,391,400,170 ----------------------------------------------------------------- -------------- LIABILITIES ----------------------------------------------------------------- -------------- Payable for shares of the fund repurchased 16,878,987 ----------------------------------------------------------------- -------------- Distributions payable to shareholders 477,254 ----------------------------------------------------------------- -------------- Payable for compensation of Manager (Note 2) 736,657 ----------------------------------------------------------------- -------------- Payable for administrative services (Note 2) 7,044 ----------------------------------------------------------------- -------------- Payable for compensation of Trustees (Note 2) 112 ----------------------------------------------------------------- -------------- Payable for distribution fees (Note 2) 98,729 ----------------------------------------------------------------- -------------- Payable for investor servicing and custodian fees (Note 2) 579,129 ----------------------------------------------------------------- -------------- Other accrued expenses 147,494 ----------------------------------------------------------------- -------------- TOTAL LIABILITIES 18,925,406 ----------------------------------------------------------------- -------------- NET ASSETS $1,372,474,764 ----------------------------------------------------------------- -------------- REPRESENTED BY ----------------------------------------------------------------- -------------- Paid-in capital (Note 4) $1,372,474,764 ----------------------------------------------------------------- -------------- Net asset value, offering and redemption price per class A share ($1,119,967,294 divided by 1,119,967,294 shares)* $1.00 ----------------------------------------------------------------- -------------- Offering price per class B share ($251,706,804 divided by 251,706,804 shares)** $1.00 ----------------------------------------------------------------- -------------- Offering price per class M share ($800,666 by 800,666 shares)*** $1.00 ----------------------------------------------------------------- -------------- * Class A shares are 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 for shares acquired through exchange will depend upon the fund from which you exchanged. *** Class M shares are offered at net asset value.
STATEMENT OF OPERATIONS Six months ended March 31, 1995 (Unaudited)
TAX EXEMPT INTEREST INCOME $38,991,117 ----------------------------------------------------------------- ------------------ EXPENSES: ----------------------------------------------------------------- ------------------ Compensation of Manager (Note 2) 2,432,268 ----------------------------------------------------------------- ------------------ Investor servicing and custodian fees (Note 2) 1,556,288 ----------------------------------------------------------------- ------------------ Compensation of Trustees (Note 2) 17,315 ----------------------------------------------------------------- ------------------ Reports to shareholders 80,605 ----------------------------------------------------------------- ------------------ Auditing 18,273 ----------------------------------------------------------------- ------------------ Legal 26,419 ----------------------------------------------------------------- ------------------ Registration fees 139,107 ----------------------------------------------------------------- ------------------ Postage 52,086 ----------------------------------------------------------------- ------------------ Administrative services (Note 2) 16,041 ----------------------------------------------------------------- ------------------ Distribution fees -- class B (Note 2) 580,851 ----------------------------------------------------------------- ------------------ Distribution fees -- class M (Note 2) 136 ----------------------------------------------------------------- ------------------ Other 42,796 ----------------------------------------------------------------- ------------------ TOTAL EXPENSES 4,962,185 ----------------------------------------------------------------- ------------------ NET INVESTMENT INCOME 34,028,932 ----------------------------------------------------------------- ------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $34,028,932 ----------------------------------------------------------------- ------------------
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ELEVEN MONTHS ENDED ENDED MARCH 31 SEPTEMBER 30 ----------------------------------------------------------------- --------------- 1995* 1994 ----------------------------------------------------------------- --------------- INCREASE IN NET ASSETS ----------------------------------------------------------------- --------------- Operations: ----------------------------------------------------------------- --------------- Net investment income $ 34,028,932 $ 30,937,217 ----------------------------------------------------------------- --------------- Net realized loss on investments -- 42 ----------------------------------------------------------------- --------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 34,028,932 30,937,259 ----------------------------------------------------------------- --------------- Distributions to shareholders from: ----------------------------------------------------------------- --------------- Net investment income ----------------------------------------------------------------- --------------- Class A (28,742,988) (27,575,242) ----------------------------------------------------------------- --------------- Class B (5,281,212) (3,361,975) ----------------------------------------------------------------- --------------- Class M (4,732) -- ----------------------------------------------------------------- --------------- Net realized gain on investments ----------------------------------------------------------------- --------------- Class A -- (40) ----------------------------------------------------------------- --------------- Class B -- (2) ----------------------------------------------------------------- --------------- Increase from capital share transactions (Note 4) 77,116,593 685,660,213 ----------------------------------------------------------------- --------------- TOTAL INCREASE IN NET ASSETS 77,116,593 685,660,213 NET ASSETS ----------------------------------------------------------------- --------------- Beginning of period 1,295,358,171 609,697,958 ----------------------------------------------------------------- --------------- END OF PERIOD $1,372,474,764 $1,295,358,171 ----------------------------------------------------------------- --------------- * Unaudited.
FINANCIAL HIGHLIGHTS (For a share outstanding throughout the period)
FOR THE FOR THE DECEMBER 8, 1994 SIX ELEVEN APRIL 27, 1992 SIX ELEVEN (COMMENCEMENT MONTHS MONTHS YEAR(COMMENCEMENTMONTHS MONTHS OF OPERATIONS) ENDED ENDED ENDEDOF OPERATIONS)ENDED ENDED TO MARCH 31MARCH 31SEPTEMBER 30OCTOBER 31TO OCTOBER 31 MARCH 31 SEPTEMBER 30 --------------------------------------------------------------------------- ------------------------------- 1995** 1995** 1994* 1993 1992 1995** 1994* --------------------------------------------------------------------------- ------------------------------- CLASS M CLASS B CLASS A --------------------------------------------------------------------------- ------------------------------- Net investment income $.0170 $.0230 $.0251 $.0195 $.0151 $.0300 $.0299 --------------------------------------------------------------------------- ------------------------------- Net realized gain on investments -- -- -- -- -- (.0060) -- --------------------------------------------------------------------------- ------------------------------- TOTAL FROM INVESTMENT OPERATIONS .0170 .0230 .0251 .0195 .0151 .0243 .0299 --------------------------------------------------------------------------- ------------------------------- TOTAL DISTRIBUTIONS$(.0170)$(.0230)$(.0251)$(.0195)$(.0151)$(.0240)$(.0299) --------------------------------------------------------------------------- ------------------------------- TOTAL INVESTMENT RETURN AT NET ASSET VALUE 1.72(b) 2.28(b) 2.54(b) 1.98 1.52(b)2.54(b) 3.03(b) --------------------------------------------------------------------------- ------------------------------- NET ASSETS, END OF PERIOD$800,666$251,707 $194,187$22,777 $2,864$1,119,967$1,101, 171 --------------------------------------------------------------------------- ------------------------------- Ratio of expenses to average net assets (%) .27(b) .57(b) 1.03(b) 1.20 .70(b) .32(b) .58(b) --------------------------------------------------------------------------- ------------------------------- Ratio of net investment income to average net assets (%)1.59(b)2.26(b) 2.77(b) 1.98 1.50(b)2.51(b) 3.03(b) --------------------------------------------------------------------------- -------------------------------
FINANCIAL HIGHLIGHTS (continued)
TEN MONTHS ENDED YEAR ENDED OCTOBER 31 OCTOBER 31 --------------------------------------------------------------------------- ------------------------------- 1993 1992 1991 1990 1989 1988 1987 1986 1985 --------------------------------------------------------------------------- ------------------------------- Class A --------------------------------------------------------------------------- ------------------------------- $.0246 $.0353 $.0598 $.0764 $.0853 $.0655 $.0568 $.0642 $.0633 --------------------------------------------------------------------------- ------------------------------- -- -- .0001 -- -- -- -- -- .0001 --------------------------------------------------------------------------- ------------------------------- .0246 .0353 .0599 .0764 .0853 .0655 .0568 .0642 .0634 --------------------------------------------------------------------------- ------------------------------- $(.0246)$ (.0353)$(.0599)$ (.0764)$ (.0853)$ (.0655)$ (.0568)$(.0642) $(. 0634) --------------------------------------------------------------------------- ------------------------------- 2.49 3.58 6.16 7.92 8.87 6.75 5.83 6.61 6.52(b) --------------------------------------------------------------------------- ------------------------------- $586,920$839,185$684,987$904,186$797,395$659,590$775,954$320,874$275,901 --------------------------------------------------------------------------- ------------------------------- .70 .86 .77 .74 .85 .91 1.01 .89 .71(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 advanced from October 31 to September 30. ** Unaudited. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Not annualized.
NOTES TO FINANCIAL STATEMENTS March 31, 1995 (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. The fund commenced its public offering of class M shares on 12/7/94. 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 CDSC 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 the other Putnam fund). Class M shares pay an ongoing distribution fee, but are not subject to a contingent deferred sales charge. In addition, the Trustees declare separate dividends on each class of shares. Each class bears expenses unique to that class (including the distribution fees applicable to class B shares). 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. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A SECURITY VALUATION The valuation of the fund's portfolio instruments is determined by means of the amortized cost method as set forth in Rule 2a-7 under the Investment Company Act of 1940. The amortized cost of an instrument is determined by valuing it at cost originally and thereafter amortizing any discount or premium from its face value at a constant rate until maturity. B JOINT TRADING ACCOUNT Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account along with the cash from 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. C REPURCHASE AGREEMENTS The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. The fund's manager is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D FEDERAL TAXES It is the policy of the fund to distribute all of its income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal income and excise taxes on income and capital gains. E INTEREST INCOME AND DISTRIBUTIONS TO SHAREHOLDERS Interest is recorded on the accrual basis. Income dividends are declared daily by the fund and are distributed monthly. NOTE 2 MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS Compensation of Putnam Management, for management and investment advisory services is paid quarterly based on the average 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 to the extent that expenses (exclusive of brokerage, interest, taxes, and credits allowed by Putnam Fiduciary Trust Company (PFTC) a wholly- owned subsidiary of Putnam Investments, Inc.) of the fund exceed 2.5% of the first $30 million of average net assets, 2.0% of the next $70 million and 1.5% of any amount over $100 million and by the amount of certain brokerage commissions and fees (less expenses) received by affiliates of the manager of the fund's portfolio transactions. The fund also reimburses the Manager for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Trustees of the fund receive an annual Trustee's fee of $2,370 and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of the Manager and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. Custodian functions for the fund are provided by PFTC. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. Investor servicing and custodian fees reported in the statement of operations for the six months ended March 31, 1995 have been reduced by credits allowed by PFTC. 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 Trustees have approved payment by the fund to Putnam Mutual Funds Corp. at an annual rate of .50% and .15% of the average net assets attributable to class B and class M shares, respectively. For the six months ended March 31, 1995, Putnam Mutual Funds Corp., acting as the underwriter received no net commissions from the sale of class A and class B shares. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares purchased as part of an investment of $1 million or more and acquired by an exchange from another Putnam fund. For the six months ended March 31, 1995, Putnam Mutual Funds Corp., acting as the underwriter received $59,667 on class A redemptions. Putnam Mutual Funds Corp. also receives the proceeds on the contingent deferred sales charges on its class B redemptions. The charge is based on declining rates, which begin at 5% of the net asset value of the redeemed shares, or based upon the rate of the fund from which a shareholder exchanges. Putnam Mutual Funds Corp. has informed the fund that it received $1,328,161 from redemptions for the six months ended March 31, 1995. NOTE 3 PURCHASES AND SALES OF SECURITIES During the six months ended March 31, 1995, purchases and sales (including maturities) of investment securities (all short-term obligations) aggregated $19,643,458,945 and $19,623,253,533, 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, 1995, there was an unlimited number of shares of beneficial interest authorized divided into three classes, designated class A, class B and class M capital shares. Transactions in capital shares, at a constant net asset value of $1.00 per share, were as follows:
SIX MONTHS ELEVEN MONTHS ENDED ENDED MARCH 31 SEPTEMBER 30 ------------------------------------------------------------ ------------------- CLASS A 1995 1994 ------------------------------------------------------------ ------------------- Shares sold 2,200,613,407 3,501,703,378 Shares issued in connection with reinvestment of distributions26,570,667 26,366,112 ------------------------------------------------------------ ------------------- 2,227,120,074 3,528,069,490 ------------------------------------------------------------ ------------------- Shares repurchased (2,208,388,173)(3,013,818,559) ------------------------------------------------------------ ------------------- NET INCREASE 18,795,901 514,250,931 ------------------------------------------------------------ -------------------
SIX MONTHS ELEVEN MONTHS ENDED ENDED MARCH 31 SEPTEMBER 30 ------------------------------------------------------------ ------------------- CLASS B 1995 1994 ------------------------------------------------------------ ------------------- Shares sold 483,110,241 652,248,469 Shares issued in connection with reinvestment of distributions4,453,352 2 ,975,467 ------------------------------------------------------------ ------------------- 487,563,593 655,223,936 ------------------------------------------------------------ ------------------- Shares repurchased (430,043,567) (483,814,654) ------------------------------------------------------------ ------------------- NET INCREASE 57,520,026 171,409,282 ------------------------------------------------------------ -------------------
DECEMBER 7, 1994 (COMMENCEMENT OF OPERATIONS) TO MARCH 31 ------------------------------------------------------------ ------------------- CLASS M 1995 ------------------------------------------------------------ ------------------- Shares sold 1,555,234 Shares issued in connection with reinvestment of distributions 4,196 ------------------------------------------------------------ ------------------- 1,559,430 ------------------------------------------------------------ ------------------- Shares repurchased (758,764) ------------------------------------------------------------ ------------------- NET INCREASE 800,666 ------------------------------------------------------------ -------------------
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 A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President Gary N. Coburn Vice President William F. McGue Vice President Lindsey M. Callen Vice President and Fund Manager Blake E. Anderson Vice President William N. Shiebler Vice President John R. Verani Vice President Paul M. O'Neil Vice President John D. Hughes Vice President and Treasurer 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 PRINCIPAL AMOUNT INVESTED. PUTNAM INVESTMENTS THE PUTNAM FUNDS One Post Office Square Boston, Massachusetts 02109 Bulk Rate U.S. Postage PAID Putnam Investments 010/879-17791 APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND EDGAR-FILED TEXTS. (1) Rule lines for tables are omitted. (2) Italic typefaces is displayed in normal type. (3) Boldface type is displayed in capital letters. (4) Headers (e.g. the names of the fund) and footers (e.g. page numbers and OThe accompanying notes are an integral part of these financial statementsO) are omitted. (5) Because the printed page breaks are not reflected, certain tabular and columnar headings and symbols are displayed differently in this filing. (6) Bullet points and similar graphic symbols are omitted. (7) Page numbering is different.