-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TW2xjAtTnBVvdedLk4HUALNzDCja9L20gIHh1Elo1AOevRwgUcJOdqXV+8JwhMkf V1YAb6iJYkaU+Fnh/h96oQ== 0000928816-98-000290.txt : 19981120 0000928816-98-000290.hdr.sgml : 19981120 ACCESSION NUMBER: 0000928816-98-000290 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MONEY MARKET FUND CENTRAL INDEX KEY: 0000081248 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046386436 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02608 FILM NUMBER: 98755067 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ STREET 2: MAILSTOP A-14 LEGAL DEPARTMENT CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921471 MAIL ADDRESS: STREET 1: MAILSTOP A-14 LEGAL DEPARTMENT STREET 2: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM DAILY DIVIDEND TRUST DATE OF NAME CHANGE: 19920703 N-30D 1 PUTNAM MONEY MARKET FUND Putnam Money Market Fund ANNUAL REPORT ON PERFORMANCE AND OUTLOOK 9-30-98 [LOGO: BOSTON * LONDON * TOKYO] From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] [copyright] Karsh, Ottawa Dear Shareholder: There's no doubt that the past several months have represented a trying time for most investors. Fortunately, the unprecedented string of international events that rattled global stock and bond markets had a relatively salutary effect on domestic money markets. Indeed, as foreign investors panicked about plummeting stock markets, they began a flight to quality -- selling hedge funds and emerging-markets funds in favor of the relative safety of U.S. Treasury bonds and money market funds. At the same time, however, short-term interest rates continued to fall, limiting the yields available on money market securities. Putnam Money Market Fund's recent performance reflects this mixed environment. For the 12 months ended September 30, 1998, the fund's class A shares returned 5.29% at net asset value. You can find additional performance information on pages 4, 5 and 6. * SLOWER ECONOMY PROMPTS FEDERAL RESERVE ACTION For most of the annual period, the U.S. economy continued to grow, although its pace slowed considerably as the effects of Asian, Russian, and Latin American financial crises began to emerge. After posting a torrid 5.5% gain during the first quarter of 1998, gross domestic product growth dropped back to 1.8% in the second quarter. By the end of September, government reports found exports slumping, manufacturing activity deteriorating, construction spending flattening, and consumer confidence slipping. Against this backdrop of waning economic strength and escalating fears of spreading global financial woes, many analysts and money market participants began to expect the Federal Reserve Board to reduce short-term interest rates. In fact, interest rates on money market securities had already been trending downward for some time. Your fund's manager, Joanne Driscoll, attributes this to global stock market volatility, concerns about credit quality among lower-rated bonds, and the ongoing flight to quality that drove security prices up. At the end of September, the Fed finally took action, lowering the federal funds rate for the first time in nearly three years by one quarter of a percentage point. With interest rates falling throughout the period, Joanne has redoubled efforts to maintain current income while preserving capital and staying focused on investments of superior quality. Extending portfolio duration has been one of the most important elements of her strategy. While portfolio duration was relatively neutral -- neither short nor long -- at the fund's fiscal midpoint, Joanne has since lengthened it to match or even slightly exceed the average maintained by the fund's peer group. This slightly longer duration has helped the fund lock in the highest available money market yields while reducing the frequency with which the fund must reinvest assets in the current falling interest-rate environment. * CREDIT QUALITY AND CAPITAL PRESERVATION ARE KEY CONCERNS FOR MORE INVESTORS The recent downshift in the U.S. economy has brought concerns about credit quality and capital preservation to the forefront for many investors. High quality money market funds like yours have remained attractive throughout this period, experiencing record inflows of new capital. In fact, total assets of all taxable money market funds stood at over $1 trillion by September 30. Putnam Money Market Fund has always made capital preservation and credit quality top priorities, investing in a wide spectrum of superior quality money market securities. Over the past six months, your fund manager has bolstered quality even further by increasing the portfolio's holdings of securities issued by U.S. government agencies, which are the highest quality investments available. This move was designed to further insulate the portfolio from the increasing market volatility. As always, fund management continues to seek portfolio investments that are rated by two or more nationally recognized rating services, with at least two ratings in the top two categories. If a security has been rated by only one service, its rating must be within the service's top two categories. In the coming months, your fund's manager will continue to pursue the conservative strategies that have served shareholders well thus far. She will remain especially watchful of credit quality and focused on preserving capital while continuing to seek out appropriate opportunities to generate current income in today's low interest-rate environment. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees November 18, 1998 The views expressed here are exclusively those of Putnam Management. They are not meant as investment advice. Although the described holdings were viewed favorably as of 9/30/98, there is no guarantee the fund will continue to hold these securities in the future. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve your investment at $1.00 per share, it is possible to lose money by investing in the fund. PERFORMANCE COMPARISONS (9/30/98) Current return* - ---------------------------------------------------------------- Passbook savings account 1.74% - ---------------------------------------------------------------- Taxable money market fund (7-day yield) 5.05 - ---------------------------------------------------------------- 3-month certificate of deposit 3.96 - ---------------------------------------------------------------- Putnam Money Market Fund (7-day yield) - ---------------------------------------------------------------- Class A 5.32 - ---------------------------------------------------------------- Class B 4.82 - ---------------------------------------------------------------- Class M 5.17 - ---------------------------------------------------------------- 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 on bank CDs is generally insured up to certain limits by state and federal agencies. Unlike stocks, which incur more risk, CDs offer a fixed rate of return. Unlike money market funds, bank CDs may be subject to substantial penalties for early withdrawals. *Sources: BankBoston (passbook savings), Bank Rate Monitor (3-month CDs), IBC/Donaghue's Money Fund Report (taxable money market fund compound 7-day yield). Performance summary This section provides information about your fund's performance, which should always be considered in light of its investment strategy. Putnam Money Market Fund is designed for investors seeking current income consistent with capital preservation, stable principal, and liquidity. TOTAL RETURN AND YIELDS FOR PERIODS ENDED 9/30/98 Class A Class B Class M (inception date) (10/1/76) (4/27/92) (12/8/94) NAV NAV CDSC NAV - ------------------------------------------------------------------------------ 1 year 5.29% 4.78% -0.22% 5.14% - ------------------------------------------------------------------------------ 5 years 26.71 23.54 21.54 25.75 Annual average 4.85 4.32 3.98 4.69 - ------------------------------------------------------------------------------ 10 years 68.45 60.50 60.50 65.93 Annual average 5.35 4.84 4.84 5.19 - ------------------------------------------------------------------------------ Current return (end of period) - ------------------------------------------------------------------------------ Current 7-day yield1 5.32% 4.82% 4.82% 5.17% - ------------------------------------------------------------------------------ Current 30-day yield1 5.31 4.86 4.86 5.16 - ------------------------------------------------------------------------------ 1The 7-day and 30-day yields are the two most common gauges for measuring money market mutual fund performance. COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 9/30/98 Lipper Money Consumer Market Average Price Index - ------------------------------------------------------------------------------ 1 year 4.93% 1.36% - ------------------------------------------------------------------------------ 5 years 25.60 12.61 Annual average 4.66 2.40 - ------------------------------------------------------------------------------ 10 years 67.34 36.39 Annual average 5.28 3.15 - ------------------------------------------------------------------------------ Past performance is no assurance of future results. Fund performance data do not take into account any adjustment for taxes payable on reinvested distributions. Investment returns will fluctuate. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve your investment at $1.00 per share, it is possible to lose money by investing in the fund. The fund's holdings do not match those in the Lipper average. Yield data more closely reflect the current earnings of the fund. Returns shown for class B and class M shares for periods prior to their inception are derived from the historical performance of class A shares, adjusted to reflect the higher operating expenses applicable to such shares. One-, five- (when available), and life of fund returns for class B shares reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declines to 1% in the sixth year, and is eliminated thereafter. All returns assume reinvestment of distributions at NAV. This performance information does not reflect any market volatility that may have occurred since the date of the information. As a result, more recent returns may be more or less than those shown. DISTRIBUTION INFORMATION 12 months ended 9/30/98 Class A Class B Class M - -------------------------------------------------------------------- Distributions (number) 12 12 12 - -------------------------------------------------------------------- Income $0.051708 $0.046753 $0.050201 - -------------------------------------------------------------------- Total $0.051708 $0.046753 $0.050201 - -------------------------------------------------------------------- TERMS AND DEFINITIONS 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. Net asset value (NAV) is the value of all your fund's assets, minus any liabilities, divided by the number of outstanding shares. 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 generally 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. 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 and performance of the fund will differ. It is not possible to invest directly in an index. Consumer Price Index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Report of independent accountants For the fiscal year ended September 30, 1998 To the Trustees and Shareholders of Putnam Money Market Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments owned, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam Money Market Fund (the "fund") at September 30, 1998, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at September 30, 1998 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Boston, Massachusetts November 10, 1998
Portfolio of investments owned September 30, 1998 COMMERCIAL PAPER (85.4%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE Domestic (61.9%) - -------------------------------------------------------------------------------------------------------------------------- $30,000,000 Asset Securitization Co-op Corp. 5.51s 11/6/98 $ 29,830,108 25,000,000 Asset Securitization Co-op Corp. 5.51s 11/2/98 24,873,729 25,000,000 Asset Securitization Co-op Corp. 5.51s 10/29/98 24,889,035 25,000,000 Bank Of New York Co. 5 1/2s 10/30/98 24,885,417 19,500,000 Bellsouth Capital Funding Corp. 5.52s 10/9/98 19,473,090 25,000,000 Chevron Transport Corp. 5.52s 10/16/98 24,938,667 25,000,000 Chevron Transport Corp. 5.52s 10/7/98 24,973,167 25,000,000 Chevron Transport Corp. 5.51s 11/4/98 24,866,076 22,000,000 Ciesco L. P. 5.51s 10/20/98 21,932,656 30,000,000 Corporate Asset Funding Co. Inc. 5.51s 10/7/98 29,967,858 20,000,000 Corporate Asset Funding Co. Inc. 5.49s 11/19/98 19,847,500 35,000,000 Corporate Receivables Corp. 5 1/2s 11/20/98 34,727,292 33,000,000 Corporate Receivables Corp. 5.46s 12/10/98 32,644,645 28,000,000 Corporate Receivables Corp. 5.45s 12/11/98 27,694,800 20,000,000 Corporate Receivables Corp. 5.45s 10/7/98 19,978,806 25,000,000 CXC Inc. 5.52s 10/22/98 24,915,667 25,000,000 CXC Inc. 5.49s 11/18/98 24,813,188 19,000,000 CXC Inc. 5.45s 12/9/98 18,798,653 40,000,000 CXC Inc. 5.38s 12/8/98 39,587,533 30,000,000 Eureka Securitization Inc. 5.55s 10/9/98 29,958,375 20,000,000 Eureka Securitization Inc. 5.52s 11/12/98 19,868,133 25,000,000 Eureka Securitization Inc. 5.51s 11/20/98 24,804,854 35,000,000 Eureka Securitization Inc. 5.51s 11/2/98 34,823,221 16,000,000 Eureka Securitization Inc. 5.47s 12/2/98 15,846,840 37,000,000 Falcon Asset Securitization Corp. 5.53s 10/5/98 36,971,582 18,180,000 Falcon Asset Securitization Corp. 5.2s 12/3/98 18,011,936 27,000,000 Florens Containers, Inc. (Bank of America (LOC)) 5.52s 11/9/98 26,834,400 25,000,000 Florens Containers, Inc. (Bank of America (LOC)) 5 1/2s 12/14/98 24,713,541 29,000,000 Ford Motor Credit Puerto Rico, Inc. 5.53s 10/2/98 28,991,091 21,000,000 Ford Motor Credit Puerto Rico, Inc. 5.53s 10/1/98 20,996,774 25,000,000 Ford Motor Credit Puerto Rico, Inc. 5.51s 10/7/98 24,973,215 14,250,000 Formosa Plastics Corp. (Bank of America (LOC)) 5.46s 12/16/98 14,083,584 25,000,000 Formosa Plastics Corp. (Bank of America (LOC)) 5.4s 12/17/98 24,707,500 30,500,000 Formosa Plastics Corp. (Bank of America (LOC)) 5.37s 12/18/98 30,140,583 40,000,000 General Electric Capital Corp. 5 1/2s, 11/3/98 39,792,222 24,900,000 General Electric Capital Corp. 5.48s 11/17/98 24,718,064 40,000,000 General Electric Capital Corp. 5.36s 1/26/99 39,297,244 91,014,000 General Motors Acceptance Corp. 5.8s 10/1/98 90,999,337 35,000,000 Goldman Sachs 5 1/2s 11/25/98 34,700,556 33,000,000 Goldman Sachs 5.24s 2/25/99 32,289,107 40,000,000 Goldman Sachs 5.24s 2/24/99 39,144,133 129,000,000 Household Finance Corp. 5.8s 10/1/98 128,979,217 40,000,000 International Business Machines Corp. 5.52s 10/6/98 39,963,200 26,000,000 Lehman Brothers Hldg. 5.6s 10/30/98 25,878,667 22,000,000 Lehman Brothers Hldg. 5.55s 11/12/98 21,854,158 18,000,000 Lehman Brothers Hldg. 5.53s 11/30/98 17,831,335 31,000,000 Lehman Brothers Hldg. 5.53s 11/12/98 30,795,236 20,000,000 Merrill Lynch & Co., Inc. 5.53s 11/30/98 19,812,594 25,000,000 Merrill Lynch & Co., Inc. 5.52s 10/14/98 24,946,333 25,000,000 Merrill Lynch & Co., Inc. 5.51s 12/2/98 24,758,937 30,000,000 Merrill Lynch & Co., Inc. 5 1/2s 12/3/98 29,706,667 35,000,000 Morgan (J.P.) & Co., Inc. 5.546s 7/7/99 34,984,175 30,000,000 Morgan (J.P.) & Co., Inc. 5.51s 11/5/98 29,834,700 33,481,000 Morgan (J.P.) & Co., Inc. 5.46s 12/21/98 33,064,608 25,000,000 Morgan Stanley Dean Witter & Co. 5.3s 2/10/99 24,510,486 20,000,000 Morgan Stanley Dean Witter & Co. 5.3s 2/26/99 19,561,278 33,000,000 Morgan Stanley Dean Witter & Co. 5 1/4s 3/10/99 32,225,187 35,000,000 National Rural Utilities Cooperative Finance Corp. 5.47s 11/19/98 34,734,097 20,000,000 National Rural Utilities Co-operative Finance Corp. 5.1s 2/12/99 19,617,500 30,000,000 NationsBank Corp. 5.42s 10/8/98 29,963,867 27,000,000 Orix America, Inc. (Bank of America (LOC)) 5.37s 10/9/98 26,963,753 30,000,000 Orix America, Inc. (Bank of America (LOC)) 5.33s 10/9/98 29,960,025 32,000,000 PNC Bank NA 5.51s 10/27/98 31,867,760 25,000,000 PNC Bank NA 5 1/2s 11/23/98 24,793,750 30,000,000 Preferred Receivable Fundings Corp. 5.53s 10/13/98 29,940,092 20,277,000 Preferred Receivables Fundings Corp. 5.49s 11/6/98 20,162,587 21,650,000 Preferred Receivables Fundings Corp. 5 1/4s 11/18/98 21,498,450 31,000,000 Sheffield Receivables Corp. 5.58s 10/22/98 30,894,290 30,000,000 Sheffield Receivables Corp. 5.54s 10/14/98 29,935,367 20,000,000 Windmill Funding Corp. 5.54s 10/15/98 19,953,833 25,000,000 Windmill Funding Corp. 5.53s 10/23/98 24,911,674 13,349,000 Windmill Funding Corp. 5.51s 11/10/98 13,265,231 40,000,000 Windmill Funding Corp. 5.48s 11/18/98 39,701,644 -------------- $2,137,174,877 Foreign (23.5%) - -------------------------------------------------------------------------------------------------------------------------- $24,000,000 Abbey National North America Corp. 5 1/2s (United Kingdom) 11/23/98 $ 23,802,000 25,000,000 Banco Nacional De Comercio Ext. (Barclays (LOC)) 5.47s (United Kingdom) 10/13/98 24,950,618 22,000,000 Banco Nacional De Comercio Ext. (Barclays (LOC)) 5.46s (United Kingdom) 10/13/98 21,956,623 20,000,000 Banco Nacional De Mexico, S. A. (Barclays (LOC)) 5.52s (United Kingdom) 11/3/98 19,895,733 33,000,000 Banco Nacional De Mexico, S. A. (Barclays (LOC)) 5.52s (United Kingdom) 10/28/98 32,858,320 15,000,000 Banco Nacional De Mexico, S. A. (Barclays (LOC)) 5.51s (United Kingdom) 12/10/98 14,836,996 25,000,000 Bank Of Nova Scotia 5.52s (Canada) 10/20/98 24,923,333 20,000,000 Canadian Imperial Bank Of Commerce 5.66s (Canada) 2/26/99 19,996,065 34,000,000 Commonwealth Bank of Australia 5.47s (Australia) 12/17/98 33,597,043 22,000,000 Commonwealth Bank of Australia 5.46s (Australia) 12/31/98 21,693,027 22,000,000 Commonwealth Bank of Australia 5.45s (Australia) 10/19/98 21,936,719 25,000,000 Contifinancial Corp 5.53s (Dresdner (LOC)) (Germany) 11/5/98 24,861,750 26,000,000 Contifinancial Corp. 5.53s (Dresdner (LOC)) (Germany) 10/27/98 25,892,165 25,000,000 Contifinancial Corp. 5.53s (Dresdner (LOC)) (Germany) 10/20/98 24,923,194 16,000,000 Credit Suisse First Boston 5.51s (Switzerland) 11/13/98 15,892,249 40,000,000 Credit Suisse First Boston 5.51s (Switzerland) 10/21/98 39,871,433 26,000,000 Credit Suisse First Boston 5 1/2s (Switzerland) 12/7/98 25,729,889 35,000,000 Credit Suisse First Boston 5.45s (Switzerland) 12/9/98 34,629,097 31,000,000 Demir Funding Corp. (Bayerische Vereinsbank (LOC)) 5.52s (Germany) 10/13/98 30,938,207 25,000,000 Deutsche Bank Financial Inc. 5.51s (Germany) 10/26/98 24,900,514 39,000,000 Diageo Capital PLC 5.52s (United Kingdom) 10/8/98 38,952,160 40,000,000 Diageo Capital PLC 5.51s (United Kingdom) 10/2/98 39,987,756 20,000,000 Garanti Funding Corp. (Bayerische Vereinsbank (LOC)) 5 1/2s (Germany) 11/4/98 19,893,056 31,000,000 Galicia Buenos Aires Funding Corp. (Dresdner Bank AG (LOC)) 5.14s (Germany) 3/9/99 30,291,822 21,000,000 Girsa Funding Corp. (Societe General (LOC)) 5.54s (France) 1/27/99 20,615,432 35,000,000 Scotiabanc Inc. 5.53 (Canada) 10/5/98 34,973,118 35,000,000 Svenska Handelsbanken 5.51s (Sweden) 11/4/98 34,812,507 21,250,000 TEB Funding Corporation (Societe General (LOC)) 5.42s (France) 12/2/98 21,048,444 20,000,000 Transportation de Gas del Sur S. A. (Dresdner Bank AG (LOC)) 5.52s (Germany) 10/19/98 19,941,733 12,960,000 United Bank of Switzerland 5 3/4s (Switzerland) 10/1/98 12,957,930 30,000,000 United Bank of Switzerland 5.46s (Switzerland) 12/8/98 29,686,050 -------------- $ 811,244,983 -------------- Total Commercial Paper (cost $2,948,419,860) $2,948,419,860 CERTIFICATES OF DEPOSIT (5.9%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- $30,000,000 Bank Of New York Co. 5 1/2s 2/17/99 $ 29,964,348 30,000,000 Canadian Imperial Bank of Commerce 5.55s (Canada) 10/6/98 30,000,000 11,000,000 Credit Suisse 5.6s (Switzerland) 10/13/98 10,999,688 25,000,000 Fleet National Bank 5.59s 11/30/98 25,000,000 25,000,000 National Australia Bank 5.85s (Australia) 10/5/98 25,000,000 27,000,000 Rabobank Nederland 5.71s (Netherlands) 5/21/99 26,984,992 21,000,000 Societe Generale 5.785s (France) 5/12/99 20,995,488 16,000,000 Societe Generale 5.7s (France) 3/3/99 15,992,336 20,000,000 Societe Generale 5.695s (France) 3/23/99 19,995,330 -------------- Total Certificates of Deposit (cost $204,932,182) $ 204,932,182 U.S. GOVERNMENT & AGENCY OBLIGATIONS (4.8%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- $40,000,000 Federal Home Loan Banks 5.06s 12/28/98 $ 39,499,622 50,000,000 Federal National Mortgage Associations 5.21s 12/23/98 49,392,165 80,000,000 Federal National Mortgage Association 5.12s 3/4/99 78,236,444 -------------- Total U. S. Government & Agency Obligations (cost $167,128,231) $ 167,128,231 BANK NOTES (2.9%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- $20,000,000 First National Bank of Boston 5.65s 11/10/98 $ 20,000,000 26,000,000 First National Bank of Boston 5.59s 10/8/98 26,000,000 30,000,000 First National Bank of Boston 5.58s 11/13/98 30,000,000 25,000,000 Westpac Banking Corp 6s (Australia) 12/11/98 25,000,000 -------------- Total Bank Notes (cost $101,000,000) $ 101,000,000 FOREIGN GOVERNMENT BONDS AND NOTES (1.2%) (a)(cost $41,460,300) PRINCIPAL AMOUNT MATURITY DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- $42,000,000 Canada Treasury bills 5.55s 10/6/98 $ 41,460,300 - -------------------------------------------------------------------------------------------------------------------------- Total Investments (cost $3,462,940,573) (b) $3,462,940,573 - -------------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $3,453,472,446. (b) The aggregate identified cost on a tax basis is the same. The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities September 30, 1998 Assets - ----------------------------------------------------------------------------------------------- Investments in securities, at amortized cost (Note 1) $3,462,940,573 - ----------------------------------------------------------------------------------------------- Cash 937 - ----------------------------------------------------------------------------------------------- Interest and other receivables 9,193,567 - ----------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 39,344,767 - ----------------------------------------------------------------------------------------------- Total assets 3,511,479,844 Liabilities - ----------------------------------------------------------------------------------------------- Distributions payable to shareholders 553,570 - ----------------------------------------------------------------------------------------------- Payable for securities purchased 21,498,450 - ----------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 32,318,931 - ----------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 2,492,063 - ----------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 379,994 - ----------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 43,474 - ----------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 7,588 - ----------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 346,670 - ----------------------------------------------------------------------------------------------- Other accrued expenses 366,658 - ----------------------------------------------------------------------------------------------- Total liabilities 58,007,398 - ----------------------------------------------------------------------------------------------- Net assets $3,453,472,446 Represented by - ----------------------------------------------------------------------------------------------- Paid-in capital (Note 4) $3,453,472,446 - ----------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class A share ($2,598,891,158 divided by 2,598,891,158 shares) * $1.00 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($759,748,495 divided by 759,748,495 shares)** $1.00 - ----------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class M share ($94,832,793 divided by 94,832,793 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. For investors who acquired class B shares through an exchange, the applicable contingent deferred sales charge will depend upon the fund which you exchanged. The accompanying notes are an integral part of these financial statements.
Statement of operations Year ended September 30, 1998 Interest income $156,701,286 - ----------------------------------------------------------------------------------------------- Expenses: - ----------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 8,788,929 - ----------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 5,412,041 - ----------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 72,026 - ----------------------------------------------------------------------------------------------- Administrative services (Note 2) 24,582 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 2,403,508 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 101,771 - ----------------------------------------------------------------------------------------------- Reports to shareholders 108,499 - ----------------------------------------------------------------------------------------------- Registration fees 548,980 - ----------------------------------------------------------------------------------------------- Auditing 54,633 - ----------------------------------------------------------------------------------------------- Legal 30,473 - ----------------------------------------------------------------------------------------------- Postage 319,275 - ----------------------------------------------------------------------------------------------- Other 411,228 - ----------------------------------------------------------------------------------------------- Total expenses 18,275,945 - ----------------------------------------------------------------------------------------------- Expense reduction (Note 2) (1,455,975) - ----------------------------------------------------------------------------------------------- Net expenses 16,819,970 - ----------------------------------------------------------------------------------------------- Net investment income 139,881,316 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $139,881,316 - ----------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Year ended September 30 ------------------------------- 1998 1997 - --------------------------------------------------------------------------------------------------------------- Increase in net assets - --------------------------------------------------------------------------------------------------------------- Operations: - --------------------------------------------------------------------------------------------------------------- Net investment income $ 139,881,316 $ 130,577,733 - --------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 139,881,316 130,577,733 - --------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - --------------------------------------------------------------------------------------------------------------- From net investment income Class A (113,849,258) (106,719,970) - --------------------------------------------------------------------------------------------------------------- Class B (22,607,932) (21,583,487) - --------------------------------------------------------------------------------------------------------------- Class M (3,424,126) (2,274,276) - --------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 849,862,355 476,931,642 - --------------------------------------------------------------------------------------------------------------- Total increase in net assets 849,862,355 476,931,642 Net assets - --------------------------------------------------------------------------------------------------------------- Beginning of year 2,603,610,091 2,126,678,449 - --------------------------------------------------------------------------------------------------------------- End of year $3,453,472,446 $2,603,610,091 - --------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) CLASS A - ------------------------------------------------------------------------------------------------------------------------------------ For the eleven Per-share months ended operating performance Year ended September 30 Sept. 30++ - ------------------------------------------------------------------------------------------------------------------------------------ 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income $.0517 $.0505 $.0507 $.0521 $.0299 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations .0517 .0505 .0507 .0521 .0299 - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions $(.0517) $(.0505) $(.0507) $(.0521) $(.0299) - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 5.29 5.17 5.19 5.33 3.03* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $2,598,891 $2,134,223 $1,659,288 $1,189,640 $1,101,171 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .58 .57 .57 .62 .58* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 5.20 5.06 5.00 5.23 3.03* - ------------------------------------------------------------------------------------------------------------------------------------ + Commencement of operations. ++ The fiscal year end has advanced from October 31 to September 30. * Not annualized. (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 period ended September 30, 1995 and thereafter, includes amounts paid through expense offset arrangements. Prior period ratios exclude these amounts (Note 2).
Financial highlights (For a share outstanding throughout the period) CLASS B - ------------------------------------------------------------------------------------------------------------------------------------ For the eleven Per-share months ended operating performance Year ended September 30 Sept. 30++ - ------------------------------------------------------------------------------------------------------------------------------------ 1998 1997 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income $.0468 $.0455 $.0457 $.0469 $.0251 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations .0468 .0455 .0457 .0469 .0251 - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions $(.0468) $(.0455) $(.0457) $(.0469) $(.0251) - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 4.78 4.65 4.67 4.80 2.54* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $759,748 $410,885 $438,316 $256,533 $194,187 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) 1.08 1.07 1.07 1.12 1.03* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 4.69 4.57 4.51 4.75 2.77* - ------------------------------------------------------------------------------------------------------------------------------------ + Commencement of operations. ++ The fiscal year end has advanced from October 31 to September 30. * Not annualized. (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 period ended September 30, 1995 and thereafter, includes amounts paid through expense offset arrangements. Prior period ratios exclude these amounts (Note 2).
Financial highlights (For a share outstanding throughout the period) CLASS M - ------------------------------------------------------------------------------------------------------------------------------------ For the period Per-share Dec. 8, 1994+ operating performance Year ended September 30 to Sept. 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income $.0502 $.0490 $.0490 $.0434 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations .0502 .0490 .0490 .0434 - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions $(.0502) $(.0490) $(.0490) $(.0434) - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total investment return at net asset value (%)(a) 5.14 5.01 5.02 4.43* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $94,833 $58,502 $29,075 $8,440 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .73 .72 .72 .67* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 5.04 4.92 4.82 4.29* - ------------------------------------------------------------------------------------------------------------------------------------ + Commencement of operations. ++ The fiscal year end has advanced from October 31 to September 30. * Not annualized. (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 period ended September 30, 1995 and thereafter, includes amounts paid through expense offset arrangements. Prior period ratios exclude these amounts (Note 2).
Notes to financial statements September 30, 1998 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 investments plans. Shareholders who acquired class B shares through an exchange are subject to the same contingent deferred sales charge schedule as the fund from which they were exchanged. Class B shares, which convert to Class A shares, after approximately eight years, 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 such class). 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) 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 and certain other accounts managed by Putnam Investment Management, Inc. ("Putnam Management"), the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Security transactions Security transactions are accounted for on the trade date (date the order to buy or sell is executed). D) 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, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. E) 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. F) Amortization of bond premium and accretion of bond discount Premiums and discounts from purchases of short-term investments are amortized/accreted using the straight-line method. 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 net assets of the fund. Such fee is based on the following annual rates: 0.50% of the first $100 million of average net assets, 0.40% of the next $100 million, 0.35% of the next $300 million, 0.325% of the next $500 million, and 0.30% thereafter. The fund reimburses Putnam Management an allocated amount 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. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the year ended September 30, 1998, fund expenses were reduced by $1,455,975 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 a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Each Trustee of the fund receives an annual Trustee fee, of which $1,690 has been allocated to the fund, 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 has adopted a Trustee Fee Deferral Plan (the "Deferral 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 certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. 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 to 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 year ended September 30, 1998, Putnam Mutual Funds Corp., acting as underwriter received $3,309,921 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. For the year ended September 30, 1998, Putnam Mutual Funds Corp., acting as the underwriter received no monies in contingent deferred sales charges from redemptions of class A shares acquired through an exchange from another fund. For the year ended September 30, 1998, Putnam Mutual Funds Corp., acting as underwriter received no monies on class A redemptions. Note 3 Purchases and sales of securities During the year ended September 30, 1998, purchases and sales (including maturities) of investment securities (all short-term obligations) aggregated $65,217,124,270 and $64,264,846,755, 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 September 30, 1998, 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: Year ended September 30 - -------------------------------------------------------------------- Class A 1998 1997 - -------------------------------------------------------------------- Shares sold 6,667,169,273 15,480,603,384 - -------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 108,688,157 101,004,236 - -------------------------------------------------------------------- 6,775,857,430 15,581,607,620 Shares repurchased (6,311,189,399) (15,106,672,041) - -------------------------------------------------------------------- Net increase 464,668,031 474,935,579 - -------------------------------------------------------------------- Year ended September 30 - -------------------------------------------------------------------- Class B 1998 1997 - -------------------------------------------------------------------- Shares sold 2,232,701,520 2,550,729,879 - -------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 20,739,502 19,704,929 - -------------------------------------------------------------------- 2,253,441,022 2,570,434,808 Shares repurchased (1,904,577,891) (2,597,865,336) - -------------------------------------------------------------------- Net increase (decrease) 348,863,131 (27,430,528) - -------------------------------------------------------------------- Year ended September 30 - -------------------------------------------------------------------- Class M 1998 1997 - -------------------------------------------------------------------- Shares sold 361,506,694 431,207,895 - -------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,282,134 2,183,663 - -------------------------------------------------------------------- 364,788,828 433,391,558 Shares repurchased (328,457,635) (403,964,967) - -------------------------------------------------------------------- Net increase 36,331,193 29,426,591 - -------------------------------------------------------------------- Federal tax information (Unaudited) The Form 1099 you receive in January 1999 will show the tax status of all distributions paid to your account in calendar 1998. 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 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman John A. Hill, Vice Chairman Jameson Adkins Baxter Hans H. Estin Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Thomas Stephens 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 Ian C. Ferguson Vice President Steven M. Oristaglio Vice President Jerome J. Jacobs Vice President Blake E. Anderson Vice President Joanne Driscoll Vice President and Fund Manager William N. Shiebler Vice President John R. Verani 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. You can also learn more at Putnam Investments' website: http://www.putnaminv.com. 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. [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 www.putnaminv.com BULK RATE U.S. POSTAGE PAID PUTNAM INVESTMENTS AN039 47017 010/879/534 11/98 -----END PRIVACY-ENHANCED MESSAGE-----