-----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, HPUlf2q76nbpmFX5/mYeqHWHuIkho9ZWKHUAzN7Zm74yrfITXCse+aqyjFeLvYnh nvOvqL/oNXHN2wafy6iILw== 0000928816-02-000885.txt : 20021114 0000928816-02-000885.hdr.sgml : 20021114 20021114135618 ACCESSION NUMBER: 0000928816-02-000885 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 EFFECTIVENESS DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MONEY MARKET FUND CENTRAL INDEX KEY: 0000081248 IRS NUMBER: 046386436 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02608 FILM NUMBER: 02823946 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 mm.txt PUTNAM MONEY MARKET FUND Putnam Money Market Fund ANNUAL REPORT ON PERFORMANCE AND OUTLOOK 9-30-02 [GRAPHIC OMITTED: GOURDS] [SCALE LOGO OMITTED] FROM THE TRUSTEES [GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III] Dear Fellow Shareholder: During Putnam Money Market Fund's fiscal year ended September 30, 2002, money market funds remained popular repositories for the assets of investors seeking to ride out the ongoing volatility in global equity markets. Your fund's managers encountered their share of challenges in this environment as low interest rates and declining issuance of commercial paper made the task of maintaining current income levels somewhat difficult. The success of their efforts is reflected in the fund's performance during the period, which came in above the average of the 385 money market funds tracked by Lipper, Inc. You will find details on page 6. The results are also a tribute to the fund's management team, which scoured the world's financial markets in its search for what it believed to be the most promising opportunities for meeting your fund's investment objective. The team also made some subtle shifts in strategy in its pursuit of the highest possible current return. In the following report, the managers provide a detailed review of the factors that most significantly affected fund performance during the period and offer their thoughts on prospects for the fiscal year that has just begun. Respectfully yours, /S/ JOHN A. HILL /S/ GEORGE PUTNAM, III John A. Hill George Putnam, III Chairman of the Trustees President of the Funds November 20, 2002 REPORT FROM FUND MANAGEMENT This fund is managed by the Putnam Core Fixed-Income Money Market Team Over the past 12 months, weaker economic growth and the dramatic decline in stock prices and personal wealth have contributed to a new realism about investing in the financial markets. Investors are assuming a back-to-basics mentality, which has meant an increased focus on lower-risk investment strategies designed to protect principal. Putnam Money Market Fund has been a beneficiary of this thinking, as it seeks to provide a level of current income that is consistent with capital preservation, stability of principal, and liquidity. Although historically low interest rates and declining issuance in the commercial paper market have complicated our search for attractive levels of income, your fund completed fiscal 2002 with a total return that surpassed the average return for the 385 money market funds tracked by Lipper, Inc. See page 6 for details. Total return for 12 months ended 9/30/02 Class A Class B Class C Class M Class T NAV NAV CDSC NAV CDSC NAV NAV - ----------------------------------------------------------------------- 1.67% 1.16% -3.84% 1.17% 0.17% 1.52% 1.45% - ----------------------------------------------------------------------- Past performance does not indicate future results. Performance information for longer periods and explanation of performance calculation methods begin on page 6. * WEAK ECONOMY KEEPS INTEREST RATES LOW Midway through the fund's fiscal year, which ended September 30, 2002, there were indications that the U.S. economy was poised to recover late in 2002. Even the Federal Reserve Board, with its neutral bias, was beginning to anticipate improving fundamentals. However, by the close of the fund's fiscal year, a stream of disheartening news concerning corporate malfeasance, layoffs, and slowed consumer spending had thoroughly doused this premature optimism. The deterioration in economic fundamentals has contributed to a steady decline in consumer confidence since May. Consumer demand, which has kept the economy chugging along, appears to be slowing as a result. With the changes in growth expectations have come changes in the Federal Reserve Board's monetary policy and, ultimately, changes in our efforts to adjust the portfolio in response to macroeconomic factors and our overall long-term outlook. During the last quarter of 2001, when the Federal Reserve Board reduced the federal funds rate twice, from 3% to 1.75%, we attempted to keep the fund's income stream as high as possible by extending the portfolio's average days to maturity. By doing this, we were able to lock in as high a level of income as we could for as long as possible. Early in 2002, investors began to anticipate the likelihood of rising interest rates in response to signs of stronger economic growth. We believed that the market's expectations were premature and took advantage of the concurrent rise in short-term rates by purchasing six- to nine-month securities. We also purchased floating-rate instruments to help the fund respond more quickly to rising interest rates. (Floating-rate securities generally have a one-year maturity but reset monthly or quarterly to reflect the current market yield.) In this way, we were able to spread portfolio assets more evenly across maturities. Midway through the fiscal year, the weighted average maturity stood at 71 days. However, when stronger economic growth failed to materialize over the summer months, the Fed's outlook became more cautious. Needless to say, the increase in the federal funds rate never materialized. Reversing course, investors began to anticipate a Fed easing of 25 basis points, which would push the federal funds rate down to 1.50%. This expectation of a rate reduction caused the yield curve to become inverted. For the balance of the fund's fiscal year, we thought that a drop in short-term rates was unlikely and assumed a neutral position -- buying shorter-maturity instruments as portfolio holdings matured. On September 30, the fund's weighted average maturity was 49 days. * COMMERCIAL PAPER CREDIT CONCERNS PROMPT SHIFT TO GOVERNMENT-BACKED SECURITIES The multibillion-dollar commercial paper market, which is an attractive, low-cost source of short-term corporate funding, began to encounter difficulties back in 2001 when economic growth began to stall. Rising investor concerns about credit quality and the questionable reporting by several high-profile corporations prompted investors to abandon the commercial paper market throughout your fund's fiscal year. As a result, this attractive source of low-cost, short-term funding evaporated as corporate issuance slowed when buyers dwindled. For the 12 months ended September 30, the amount of total commercial paper outstanding fell 6%. Fund Profile By emphasizing high-quality short-term fixed-income securities, this fund seeks to protect principal by attempting to maintain a constant $1.00 share price while providing shareholders with easy access to their money. Putnam Money Market Fund is designed for investors seeking current income consistent with capital preservation, stability of principal, and liquidity. Believing that we were not being adequately compensated for the added market risk of commercial paper investments, we reduced the fund's exposure early in the fiscal year. We invested proceeds from maturing commercial paper in U.S. government agency notes, such as those issued by the Federal National Mortgage Association (FNMA) and the Federal Home Loan Bank (FHLB), and U.S. government collateralized repurchase agreements. The presence of these repurchase agreements and agency notes proved rewarding in this more cautious environment. However, as the fund's holdings came due in the latter half of the fiscal year, we invested the proceeds in shorter-maturity instruments in both U.S. and foreign markets. With so much uncertainty at the close of the fiscal year, we thought it best to maintain the fund's flexibility until the direction of interest rates becomes more evident. We continue to seek the highest-quality commercial paper that is issued by diversified, stable companies. We strive to preserve your fund's assets by investing in the largest, most established issuers of short-term debt, such as Citigroup, Bank of America, General Electric, and Royal Dutch Shell. We're avoiding commercial paper issued by companies in more cyclical industries, whose fate is more closely correlated with the strength of the economy. We increased the fund's exposure to foreign holdings slightly during the second half of the fiscal year. Much of the fund's offshore investments on September 30 consisted of commercial paper and certificates of deposit issued by large, well-established banking entities in Canada and the United Kingdom. These holdings add diversity to the fund's portfolio. * NEUTRAL POSITIONING UNTIL UNCERTAINTY CLEARS As the door opens on the fund's new fiscal year, we maintain our neutral view of the markets. With so much in question as of this writing -- from the direction of interest rates to the potential for an outbreak of renewed hostilities in the Middle East, we believe there is too much uncertainty to take on unnecessary risk. However, should interest rates begin to rise, we expect to take the opportunity to buy longer-maturity instruments to extend the average days to maturity and lock in the higher income. We believe this cautious but opportunistic approach will maximize our flexibility and enable us to move quickly once the clouds clear. 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 9/30/02, there is no guarantee the fund will continue to hold these securities in the future. Money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. Although the fund seeks to maintain a constant share price of $1.00, it is possible to lose money by investing in this fund. The fund is managed by the Putnam Core Fixed-Income Money Market Team. The members of the team are Joanne Driscoll (Portfolio Leader), James Prusko (Portfolio Member), and Kevin Cronin. PERFORMANCE COMPARISONS (9/30/02) Current return* - ----------------------------------------------------------------------- Passbook savings account 0.75% - ----------------------------------------------------------------------- Taxable money market fund 7-day yield 1.25 - ----------------------------------------------------------------------- 3-month certificate of deposit 1.76 - ----------------------------------------------------------------------- Putnam Money Market Fund (7-day yield) - ----------------------------------------------------------------------- Class A 1.33 - ----------------------------------------------------------------------- Class B 0.83 - ----------------------------------------------------------------------- Class C 0.84 - ----------------------------------------------------------------------- Class M 1.18 - ----------------------------------------------------------------------- Class T 1.08 - ----------------------------------------------------------------------- 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: FleetBoston (passbook savings), Federal Reserve Board of Governors (3-month CDs), and IBC/Donaghue's Money Fund Report (taxable money market fund compound 7-day yield). PUTNAM'S POLICY ON CONFIDENTIALITY In order to conduct business with our shareholders, we must obtain certain personal information such as account holders' addresses, telephone numbers, Social Security numbers, and the names of their financial advisors. We use this information to assign an account number and to help us maintain accurate records of transactions and account balances. It is our policy to protect the confidentiality of your information, whether or not you currently own shares of our funds, and in particular, not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use. Under certain circumstances, we share this information with outside vendors who provide services to us, such as mailing and proxy solicitation. In those cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. We may also share this information with our Putnam affiliates to service your account or provide you with information about other Putnam products or services. It is also our policy to share account information with your financial advisor, if you've listed one on your Putnam account. If you would like clarification about our confidentiality policies or have any questions or concerns, please don't hesitate to contact us at 1-800-225-1581, Monday through Friday, 8:30 a.m. to 7:00 p.m., or Saturdays from 9:00 a.m. to 5:00 p.m. Eastern Time. PERFORMANCE SUMMARY This section provides information about your fund's performance, which should always be considered in light of its investment strategy.
TOTAL RETURN FOR PERIODS ENDED 9/30/02 Class A Class B Class C Class M Class T (inception date) (10/1/76) (4/27/92) (2/1/99) (12/8/94) (12/31/01) NAV NAV CDSC NAV CDSC NAV NAV - -------------------------------------------------------------------------------- 1 year 1.67% 1.16% -3.84% 1.17% 0.17% 1.52% 1.45% - -------------------------------------------------------------------------------- 5 years 24.78 21.71 19.71 21.81 21.81 23.87 23.29 Annual average 4.53 4.01 3.66 4.02 4.02 4.37 4.28 - -------------------------------------------------------------------------------- 10 years 53.89 46.33 46.33 46.46 46.46 51.63 50.27 Annual average 4.40 3.88 3.88 3.89 3.89 4.25 4.16 - -------------------------------------------------------------------------------- Annual average (life of fund) 6.92 6.39 6.39 6.40 6.40 6.76 6.66 - -------------------------------------------------------------------------------- Current return (end of period) - -------------------------------------------------------------------------------- Current 7-day yield 1 1.33% 0.83% 0.84% 1.18% 1.08% - -------------------------------------------------------------------------------- Current 30-day yield 1 1.36 0.86 0.86 1.21 1.11 - -------------------------------------------------------------------------------- 1 The 7-day and 30-day yields are the two most common gauges for measuring money market mutual fund performance. Yield more closely reflects current performance than total return.
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 9/30/02 Merrill Lynch 91-Day Treasury Lipper Money Market Consumer Bill Index Fund Average price index - -------------------------------------------------------------------------- 1 year 1.99% 1.26% 1.46% - -------------------------------------------------------------------------- 5 years 25.53 22.39 12.09 Annual average 4.65 4.12 2.31 - -------------------------------------------------------------------------- 10 years 57.97 51.44 27.95 Annual average 4.68 4.24 2.50 - -------------------------------------------------------------------------- Annual average (life of fund) --* 6.91 4.50 - -------------------------------------------------------------------------- Past performance does not indicate future results. More recent returns may be less or more than those shown. Investment return will fluctuate. Performance assumes reinvestment of distributions. Class A, M, and T shares have no initial sales charge. 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. Class C shares reflect a 1% CDSC for the first year that is eliminated thereafter. Performance for class B, C, M, and T shares before their inception are derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and higher or lower operating expenses for such shares. *Inception date of the index was 12/31/77, after the fund's inception. LIPPER INFORMATION: The average annualized return for the 385 funds in the Lipper Money Market Funds category over the 12 months ended 9/30/02 was 1.26%. Over the 5- and 10-year periods ended 9/30/02, annualized returns for the category were 4.12% and 4.24%, respectively. DISTRIBUTION INFORMATION 12 MONTHS ENDED 9/30/02 Class A Class B Class C Class M Class T - ------------------------------------------------------------------------------ Distributions (number) 12 12 12 12 9 - ------------------------------------------------------------------------------ Income $0.016558 $0.011574 $0.011590 $0.015067 $0.009237 - ------------------------------------------------------------------------------ Total $0.016558 $0.011574 $0.011590 $0.015067 $0.009237 - ------------------------------------------------------------------------------ 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 price, or value, of one share of a mutual fund, without a sales charge. NAVs fluctuate with market conditions. The NAV is calculated by dividing the net value of all the fund's assets by the number of outstanding shares. Contingent deferred sales charge (CDSC) is a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund's class B CDSC declines from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase. 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 may be subject to a sales charge upon redemption. Class C shares are not subject to an initial sales charge and are subject to a contingent deferred sales charge only if the shares are redeemed during the first year. 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, the reference is to shares purchased or acquired through the exchange of class M shares from another Putnam fund. Exchange of your fund's class M shares into another fund may involve a sales charge, however. Class T shares are not subject to an initial sales charge or a sales charge on redemption (except on certain redemptions of shares bought without an initial sales charge); however, they are subject to a 12b-1 fee. COMPARATIVE BENCHMARKS Merrill Lynch 91-Day Treasury Bill Index* is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace. Lipper Money Market Fund Average* is an arithmetic average of the total return of all money market mutual funds. 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. Lipper Inc. is a third-party industry ranking entity that ranks funds (without sales charges) with similar current investment styles or objectives as determined by Lipper. *Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index. A GUIDE TO THE FINANCIAL STATEMENTS These sections of the report, as well as the accompanying Notes, preceded by the Report of independent accountants, constitute the fund's financial statements. The fund's portfolio lists all the fund's investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification. Statement of assets and liabilities shows how the fund's net assets and share price are determined. All investment and noninvestment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the net assets allocated to remarketed preferred shares.) Statement of operations shows the fund's net investment gain or loss. This is done by first adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings -- as well as any unrealized gains or losses over the period -- is added to or subtracted from the net investment result to determine the fund's net gain or loss for the fiscal year. Statement of changes in net assets shows how the fund's net assets were affected by distributions to shareholders and by changes in the number of the fund's shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Financial highlights provide an overview of the fund's investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlight table also includes the current reporting period. For open-end funds, a separate table is provided for each share class. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees and Shareholders of Putnam Money Market Fund In our opinion, the accompanying statement of assets and liabilities, including the fund's portfolio, 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, 2002, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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, 2002 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts November 6, 2002
THE FUND'S PORTFOLIO September 30, 2002 COMMERCIAL PAPER (88.3%) * MATURITY PRINCIPAL AMOUNT DATE VALUE Domestic (54.2%) - ------------------------------------------------------------------------------------------------------------------- $50,000,000 AIG Funding Corp. 1.78s 10/24/02 $49,940,667 34,000,000 American General Finance Corp. 1.79s 10/10/02 33,983,094 50,000,000 American General Finance Corp. 1.75s 10/31/02 49,924,653 20,500,000 American General Finance Corp. 1.74s 11/1/02 20,468,293 20,000,000 B-One Australia, Ltd. 1.77s 3/6/03 19,845,617 20,000,000 CBA (Delaware) Finance 1.79s 1/13/03 19,895,583 25,000,000 Chevron Corp. 1.74s 10/18/02 24,978,250 45,000,000 Citicorp. 1.78s 10/28/02 44,937,700 64,000,000 Citicorp. 1.77s 12/13/02 63,767,147 50,000,000 Citicorp. 1.77s 11/25/02 49,862,333 40,000,000 Citicorp. 1.76s 11/21/02 39,898,311 69,000,000 Corporate Receivables Corp. 1.76s 11/21/02 68,824,587 48,050,000 Corporate Receivables Corp. 1.73s 10/3/02 48,043,073 39,000,000 Eureka Securitization 1.77s 11/19/02 38,904,125 44,000,000 Eureka Securitization 1.765s 11/1/02 43,930,969 40,000,000 Eureka Securitization 1.76s 11/6/02 39,927,644 46,000,000 Eureka Securitization 1.76s 11/5/02 45,919,040 26,000,000 Eureka Securitization 1.75s 11/7/02 25,951,972 31,000,000 Eureka Securitization 1.75s 10/8/02 30,987,944 40,000,000 Federal Home Loan Mtge. Assoc. 1.91s 12/27/02 39,813,244 35,000,000 Florens Containers, Inc. (Bank of America NT & SA (LOC)) 1.76s 10/25/02 34,957,222 51,000,000 General Electric Capital International Funding 1.82s 11/29/02 50,845,300 30,000,000 General Electric Capital International Funding 1.77s 10/28/02 29,958,700 58,000,000 General Electric Capital International Funding 1.71s 11/20/02 57,859,495 43,000,000 General Electric Capital International Funding 1.7s 2/19/03 42,711,661 40,000,000 Goldman Sachs Group 2.02s 11/4/02 39,921,444 30,000,000 Goldman Sachs Group 1.79s 10/17/02 29,974,642 33,000,000 Goldman Sachs Group 1.76s 11/18/02 32,920,947 40,000,000 Goldman Sachs Group 1.76s 10/18/02 39,964,800 70,000,000 HBOS Treasury Services PLC 1.81s 12/5/02 70,001,192 50,000,000 HBOS Treasury Services PLC 1.765s 12/27/02 49,784,278 25,300,000 HBOS Treasury Services PLC 1.76s 11/12/02 25,246,814 30,000,000 ING America Insurance Holdings 2.57s 12/20/02 29,826,525 48,950,000 ING America Insurance Holdings 1.75s 11/22/02 48,823,886 44,000,000 ING America Insurance Holdings 1.74s 12/10/02 43,849,007 23,446,000 Jupiter Securitization Corp. 1.83s 11/1/02 23,407,861 75,000,000 Jupiter Securitization Corp. 1.8s 10/15/02 74,943,750 25,000,000 Jupiter Securitization Corp. 1.78s 12/16/02 24,904,819 33,000,000 Jupiter Securitization Corp. 1.76s 10/9/02 32,985,480 39,000,000 Mont Blanc Capital Corp. 1.77s 11/14/02 38,913,712 39,000,000 Mont Blanc Capital Corp. 1.74s 11/21/02 38,901,980 37,750,000 Mont Blanc Capital Corp. 1.73s 10/10/02 37,731,859 113,000,000 Mont Blanc Capital Corp. 1.7s 10/16/02 112,914,116 60,000,000 Morgan Stanley, Dean Witter & Co. 2s 10/1/02 59,996,667 50,000,000 Morgan Stanley, Dean Witter & Co. 1.75s 12/3/02 49,844,444 65,000,000 Morgan Stanley, Dean Witter & Co. 1.75s 11/27/02 64,816,736 35,000,000 NATC California, LLC (Chase Manhattan Bank (LOC))1.78s 10/22/02 34,961,928 86,000,000 NATC California, LLC (Chase Manhattan Bank (LOC))1.78s 10/21/02 85,910,703 40,000,000 NATC California, LLC (Chase Manhattan Bank (LOC))1.74s 10/23/02 39,955,533 20,000,000 NATC California, LLC (Chase Manhattan Bank (LOC))1.74s 10/22/02 19,978,733 20,000,000 NATC California, LLC (Chase Manhattan Bank (LOC))1.74s 10/21/02 19,979,700 30,605,000 Old Line Funding Corp. 1.73s 10/1/02 30,603,529 40,000,000 Preferred Receivables Funding Corp. 1.78s 10/7/02 39,986,156 45,000,000 Preferred Receivables Funding Corp. 1.78s 10/4/02 44,991,100 50,000,000 Preferred Receivables Funding Corp. 1.76s 11/20/02 49,875,333 69,000,000 Preferred Receivables Funding Corp. 1.76s 11/18/02 68,834,707 30,135,000 Quincy Capital Corp. 1.77s 10/18/02 30,108,331 69,000,000 Quincy Capital Corp. 1.74s 10/3/02 68,989,995 54,000,000 Quincy Capital Corp. 1.73s 10/2/02 53,994,810 75,000,000 Receivables Capital Corp. 1.77s 12/4/02 74,760,313 75,000,000 Receivables Capital Corp. 1.76s 10/11/02 74,959,667 21,378,000 Receivables Capital Corp. 1.72s 12/19/02 21,296,289 30,000,000 Salomon Smith Barney Holding, Inc. 1.77s 11/26/02 29,915,925 50,000,000 Sheffield Receivables Corp. 1.78s 12/18/02 49,804,694 43,000,000 Sheffield Receivables Corp. 1.77s 11/4/02 42,926,004 44,000,000 Sheffield Receivables Corp. 1.77s 10/9/02 43,980,530 50,000,000 Thunder Bay Funding, Inc. 1.8s 11/15/02 49,885,000 25,063,000 Thunder Bay Funding, Inc. 1.78s 11/7/02 25,015,909 11,000,000 Thunder Bay Funding, Inc. 1.78s 10/8/02 10,995,649 40,000,000 Thunder Bay Funding, Inc. 1.77s 12/23/02 39,834,800 25,084,000 Thunder Bay Funding, Inc. 1.77s 11/18/02 25,023,568 8,510,000 Thunder Bay Funding, Inc. 1.76s 10/18/02 8,502,511 48,403,000 Thunder Bay Funding, Inc. 1.75s 10/1/02 48,400,647 69,320,000 Thunder Bay Funding, Inc. 1.74s 11/20/02 69,149,126 261,000,000 UBS Finance (Delaware), LLC 1.97s 10/1/02 260,985,717 44,000,000 Wells Fargo Financial, Inc. 1.77s 10/16/02 43,965,387 34,000,000 Wells Fargo Financial, Inc. 1.76s 10/24/02 33,960,107 50,000,000 Wells Fargo Financial, Inc. 1.75s 10/30/02 49,927,083 24,000,000 Windmill Funding Corp. 1.78s 11/7/02 23,991,693 25,000,000 Windmill Funding Corp. 1.78s 11/6/02 24,954,264 25,000,000 Windmill Funding Corp. 1.77s 10/4/02 24,995,083 25,000,000 Windmill Funding Corp. 1.76s 11/7/02 24,953,556 45,000,000 Windmill Funding Corp. 1.76s 10/7/02 44,984,600 20,500,000 Windmill Funding Corp. 1.74s 10/4/02 20,496,037 ------------- 3,741,646,300 Foreign (34.1%) - ------------------------------------------------------------------------------------------------------------------- 47,000,000 Abbey National Treasury Services 2.59s (United Kingdom) 3/31/03 47,000,000 50,000,000 Abbey National, LLC 1.75s (United Kingdom) 11/13/02 49,893,056 65,000,000 ABN Amro Bank N.V. 1.81s (Netherlands) 12/31/02 64,999,995 40,000,000 Aegon Funding Corp. 1.78s (Netherlands) 12/19/02 39,841,778 43,000,000 Bank of Nova Scotia 1.909s (Canada) 12/23/02 42,996,989 26,000,000 Bank of Nova Scotia 1.76s (Canada) 12/2/02 26,000,453 25,500,000 Bank of Nova Scotia 1.725s (Canada) 9/25/03 25,502,550 50,000,000 Bayerische Hypo- Vereinsbank AG 2.65s (Germany) 11/29/02 50,000,000 48,000,000 Canadian Imperial Bank of Commerce 2.1s (Canada) 12/16/02 47,991,888 71,000,000 Canadian Imperial Bank of Commerce 1.91s (Canada) 12/31/02 71,034,334 69,000,000 Danske Bank A/S 1.76s (Denmark) 11/13/02 68,851,573 120,000,000 Danske Bank A/S 1.76s (Denmark) 11/12/02 119,747,733 30,000,000 Den Norske Bank 1.885s (Norway) 12/27/02 29,861,767 47,000,000 Den Norske Bank 1.79s (Norway) 5/27/03 46,441,470 82,000,000 Den Norske Bank 1.79s (Norway) 12/11/02 81,706,440 50,000,000 Deutsche Bank AG 2.5s (Germany) 12/30/02 49,975,206 50,000,000 Deutsche Bank AG 2.43s (Germany) 12/31/02 50,000,000 66,000,000 Dexia Delaware, LLC 1.76s (Belgium) 10/8/02 65,974,187 25,000,000 Diageo Capital PLC 1.9s (United Kingdom) 4/7/03 24,750,625 30,000,000 ED&F Man Finance, Inc. (Rabobank Nederland (LOC)) 2.02s (Netherlands) 11/26/02 29,904,050 65,000,000 Halifax PLC 1.782s (United Kingdom) 12/17/02 65,000,000 50,000,000 Halifax PLC 1.753s (United Kingdom) 10/9/02 49,999,487 50,000,000 Nordea North America, Inc. 1.77s (Sweden) 10/17/02 49,958,208 25,000,000 PEMEX Capital, Inc. (Barclays (LOC)) 1.94s (United Kingdom) 11/4/02 24,952,847 69,000,000 Royal Bank of Canada 1.9s (Canada) 2/26/03 68,457,392 30,000,000 Royal Bank of Canada 1.691s (Canada) 9/22/03 29,985,600 50,000,000 Scotiabanc, Inc. 1.75s (Canada) 12/9/02 49,829,861 45,712,000 Shell Finance PLC 1.93s (United Kingdom) 10/25/02 45,650,733 43,000,000 Shell Finance PLC 1.9s (United Kingdom) 5/9/03 42,498,453 54,000,000 Shell Finance PLC 1.77s (United Kingdom) 4/3/03 53,508,825 43,000,000 Shell Finance PLC 1.77s (United Kingdom) 12/11/02 42,847,780 42,000,000 Shell Finance PLC 1.77s (United Kingdom) 10/29/02 41,940,115 26,000,000 Shell Finance PLC 1.75s (United Kingdom) 11/26/02 25,927,958 22,000,000 Shell Finance PLC 1.74s (United Kingdom) 4/10/03 21,795,840 84,000,000 Societe Generale 1.86s (France) 12/23/02 83,635,440 85,000,000 Societe Generale 1.8s (France) 12/30/02 84,613,250 85,000,000 Societe Generale 1.71s (France) 11/14/02 84,818,313 50,000,000 Spintab AB 1.84s (Sweden) 10/9/02 49,977,000 43,000,000 Spintab AB 1.83s (Sweden) 10/9/02 42,980,328 50,000,000 Spintab AB 1.81s (Sweden) 10/9/02 49,977,375 65,000,000 Spintab AB 1.75s (Sweden) 11/22/02 64,832,535 22,000,000 Transamerican Finance Corp. 1.78s (Netherlands) 2/12/03 21,853,150 23,972,000 Transamerican Finance Corp. 1.77s (Netherlands) 11/19/02 23,913,069 25,000,000 Transamerican Finance Corp. 1.77s (Netherlands) 11/12/02 24,947,146 40,000,000 Transamerican Finance Corp. 1.77s (Netherlands) 11/8/02 39,923,300 25,000,000 Transamerican Finance Corp. 1.77s (Netherlands) 10/29/02 24,964,354 50,000,000 Transamerican Finance Corp. 1.71s (Netherlands) 11/15/02 49,890,750 65,000,000 Westdeutsche Landesbank Girozentrale 1.9s (Germany) 4/17/03 64,317,319 -------------- 2,355,470,522 -------------- Total Commercial Paper (cost $6,097,116,822) $6,097,116,822 CORPORATE BONDS AND NOTES (8.0%) (a) PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------- $62,000,000 Credit Suisse First Boston USA, Inc. FRN Ser. B MTN, 2.511s, 2002 $62,000,000 60,000,000 Goldman Sachs & Co. 144A FRB 1.88s, 2003 60,000,000 60,000,000 Goldman Sachs & Co. 144A FRB 1.853s, 2003 60,000,000 49,000,000 Merrill Lynch & Company, Inc. FRN Ser.B MTN, 2.925s, 2003 48,994,718 25,000,000 Merrill Lynch & Company, Inc. FRN Ser.B MTN, 2.666s, 2003 24,998,640 55,000,000 Merrill Lynch & Company, Inc. FRN Ser.B MTN, 2.343s, 2003 55,000,000 48,000,000 Merrill Lynch & Company, Inc. FRN Ser.B MTN, 2.273s, 2002 48,000,000 69,000,000 Merrill Lynch & Company, Inc. FRN Ser.B MTN, 2.247s, 2003 69,000,000 25,000,000 National City Bank sr. notes FRN, 2.407s, 2002 25,000,539 44,000,000 Swedbank (New York) dep. notes FRN Ser. YCD, 2.45s, 2002 43,995,943 55,000,000 US Bank NA notes FRN 2.501s, 2002 54,979,788 ------------- Total Corporate Bonds and Notes (cost $551,969,628) $551,969,628 REPURCHASE AGREEMENTS (3.6%) (a) (cost $250,370,000) PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------- $250,370,000 Interest in $417,395,000 joint tri-party repurchase agreement dated September 30, 2002 with Warburg Securities due October 1, 2002 with respect to various U.S. Government obligations -- maturity value of $250,383,562 for an effective yield of 1.95% $250,370,000 - ------------------------------------------------------------------------------------------------------------------- Total Investments (cost $6,899,456,450) $6,899,456,450 - ------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $6,903,286,082. 144A after the name of a security represents those exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The rates shown on Floating Rate Bonds (FRB) and Floating Rate Notes (FRN) are the current interest rates shown at September 30, 2002, which are subject to change based on the terms of the security. DIVERSIFICATION BY COUNTRY Distribution of investments by country of issue at September 30, 2002: (as percentage of Market Value) Belgium 1.0% Canada 5.2 Denmark 2.7 France 3.7 Germany 3.1 Netherlands 4.6 Norway 2.3 Sweden 3.7 United Kingdom 7.8 United States 65.9 ----- Total 100.0% The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES September 30, 2002 Assets - ------------------------------------------------------------------------------------------- Investments in securities, at amortized cost (Note 1) $6,899,456,450 - ------------------------------------------------------------------------------------------- Cash 260,603 - ------------------------------------------------------------------------------------------- Interest and other receivables 5,921,603 - ------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 100,523,262 - ------------------------------------------------------------------------------------------- Total assets 7,006,161,918 Liabilities - ------------------------------------------------------------------------------------------- Distributions payable to shareholders 153,955 - ------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 95,646,003 - ------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 5,289,479 - ------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 918,523 - ------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 126,861 - ------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 8,865 - ------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 528,004 - ------------------------------------------------------------------------------------------- Other accrued expenses 204,146 - ------------------------------------------------------------------------------------------- Total liabilities 102,875,836 - ------------------------------------------------------------------------------------------- Net assets $6,903,286,082 Represented by - ------------------------------------------------------------------------------------------- Paid-in capital (Note 4) $6,903,286,082 - ------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class A share ($5,512,532,271 divided by 5,512,532,271 shares)* $1.00 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($1,193,458,923 divided by 1,193,458,923 shares)** $1.00 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($79,226,521 divided by 79,226,521 shares)** $1.00 - ------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class M share ($105,938,427 divided by 105,938,427 shares)* $1.00 - ------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class T share ($12,129,940 divided by 12,129,940 shares)* $1.00 - ------------------------------------------------------------------------------------------- * Offered at net asset value. ** Class B and class C shares are available only by exchange of class B and class C shares from other Putnam funds and to certain systematic investment plan investors. Redemption price per share is equal to net asset value less an applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS Year ended September 30, 2002 Interest income $139,433,614 - ------------------------------------------------------------------------------------------- Expenses: - ------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 19,797,626 - ------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 10,821,688 - ------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 80,128 - ------------------------------------------------------------------------------------------- Administrative services (Note 2) 49,414 - ------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 5,086,515 - ------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 348,318 - ------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 161,007 - ------------------------------------------------------------------------------------------- Distribution fees -- Class T (Note 2) 11,063 - ------------------------------------------------------------------------------------------- Other 1,540,286 - ------------------------------------------------------------------------------------------- Total expenses 37,896,045 - ------------------------------------------------------------------------------------------- Expense reduction (Note 2) (512,145) - ------------------------------------------------------------------------------------------- Net expenses 37,383,900 - ------------------------------------------------------------------------------------------- Net investment income 102,049,714 - ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $102,049,714 - ------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS Year ended September 30 ------------------------------------ 2002 2001 - -------------------------------------------------------------------------------------------------- Increase in net assets - -------------------------------------------------------------------------------------------------- Operations: - -------------------------------------------------------------------------------------------------- Net investment income $102,049,714 $253,041,971 - -------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 102,049,714 253,041,971 - -------------------------------------------------------------------------------------------------- Distributions to shareholders: (Note 1) - -------------------------------------------------------------------------------------------------- From net investment income Class A (87,229,262) (210,571,237) - -------------------------------------------------------------------------------------------------- Class B (12,239,608) (34,379,519) - -------------------------------------------------------------------------------------------------- Class C (854,060) (2,870,454) - -------------------------------------------------------------------------------------------------- Class M (1,674,176) (5,220,761) - -------------------------------------------------------------------------------------------------- Class T (52,608) -- - -------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 313,838,888 1,991,981,676 - -------------------------------------------------------------------------------------------------- Total increase in net assets 313,838,888 1,991,981,676 Net assets - -------------------------------------------------------------------------------------------------- Beginning of year 6,589,447,194 4,597,465,518 - -------------------------------------------------------------------------------------------------- End of year $6,903,286,082 $6,589,447,194 - -------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS A - ----------------------------------------------------------------------------------------------------- Per-share operating performance Year ended September 30 - ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------- Net investment income .0166 .0493 .0564 .0478 .0517 - ----------------------------------------------------------------------------------------------------- Total from investment operations .0166 .0493 .0564 .0478 .0517 - ----------------------------------------------------------------------------------------------------- Total distributions (.0166) (.0493) (.0564) (.0478) (.0517) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 1.67 5.04 5.79 4.89 5.29 - ----------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $5,512,532 $5,215,127 $3,780,309 $3,691,475 $2,598,891 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) .50 .50 .49 .48 .58 - ----------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 1.68 4.77 5.69 4.73 5.20 - ----------------------------------------------------------------------------------------------------- (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS B - ----------------------------------------------------------------------------------------------------- Per-share operating performance Year ended September 30 - ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------- Net investment income .0116 .0443 .0513 .0429 .0468 - ----------------------------------------------------------------------------------------------------- Total from investment operations .0116 .0443 .0513 .0429 .0468 - ----------------------------------------------------------------------------------------------------- Total distributions (.0116) (.0443) (.0513) (.0429) (.0468) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 1.16 4.52 5.25 4.37 4.78 - ----------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $1,193,459 $1,162,039 $649,826 $1,041,452 $759,748 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.00 1.00 .99 .98 1.08 - ----------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 1.19 4.26 5.13 4.24 4.69 - ----------------------------------------------------------------------------------------------------- (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS C - ---------------------------------------------------------------------------------------- For the period Per-share Feb. 1, 1999+ operating performance Year ended September 30 to Sept. 30 - ---------------------------------------------------------------------------------------- 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 - ---------------------------------------------------------------------------------------- Net investment income .0116 .0444 .0513 .0284 - ---------------------------------------------------------------------------------------- Total from investment operations .0116 .0444 .0513 .0284 - ---------------------------------------------------------------------------------------- Total distributions (.0116) (.0444) (.0513) (.0284) - ---------------------------------------------------------------------------------------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 - ---------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 1.17 4.53 5.26 2.87* - ---------------------------------------------------------------------------------------- Ratios and supplemental data - ---------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $79,227 $90,226 $52,872 $17,091 - ---------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) 1.00 1.00 .99 .65* - ---------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 1.20 4.32 5.34 2.83* - ---------------------------------------------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS M - ----------------------------------------------------------------------------------------------------- Per-share operating performance Year ended September 30 - ----------------------------------------------------------------------------------------------------- 2002 2001 2000 1999 1998 - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------- Net investment income .0151 .0478 .0551 .0463 .0502 - ----------------------------------------------------------------------------------------------------- Total from investment operations .0151 .0478 .0551 .0463 .0502 - ----------------------------------------------------------------------------------------------------- Total distributions (.0151) (.0478) (.0551) (.0463) (.0502) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) 1.52 4.89 5.65 4.73 5.14 - ----------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $105,938 $122,055 $114,458 $136,134 $94,833 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) .65 .65 .64 .63 .73 - ----------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) 1.55 4.70 5.51 4.58 5.04 - ----------------------------------------------------------------------------------------------------- (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS T - ------------------------------------------------- For the period Per-share December 31, 2001+ operating performance to September 30 - ------------------------------------------------- 2002 - ------------------------------------------------- Net asset value, beginning of period $1.00 - ------------------------------------------------- Net investment income .0092 - ------------------------------------------------- Total from investment operations .0092 - ------------------------------------------------- Total distributions (.0092) - ------------------------------------------------- Net asset value, end of period $1.00 - ------------------------------------------------- Total return at net asset value (%)(a) .93* - ------------------------------------------------- Ratios and supplemental data - ------------------------------------------------- Net assets, end of period (in thousands) $12,130 - ------------------------------------------------- Ratio of expenses to average net assets (%)(b) .56* - ------------------------------------------------- Ratio of net investment income to average net assets (%) .88* - ------------------------------------------------- + Commencement of operations. * Not annualized. (a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Includes amounts paid through expense offset arrangements (Note 2). The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS September 30, 2002 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 pursues 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, class C, class M and class T shares. The fund began offering class T shares on December 31, 2001. Each class of shares is sold without a front-end sales charge. Class B and class C shares are offered only in exchange for class B and class C shares of other Putnam funds, or purchased by certain systematic investment plans. 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 those shares are redeemed within six years of purchase (including any holding period of the shares in other Putnam funds). Class C shares are subject to the same fees and expenses as class B shares, except that class C shares have a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. Shareholders who acquired class B and class C shares through an exchange are subject to the same deferred sales charge schedule as the fund from which they were exchanged. Class M and class T shares pay an ongoing distribution fee lower than class B and class C shares and 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 that 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 accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. 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 (which approximates market value) 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 its original cost and thereafter amortizing any discount or premium from its face value at a constant rate until maturity. B) Joint trading account The fund may transfer uninvested cash balances, including cash collateral received under security lending arrangements, into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Investment Management, LLC ("Putnam Management"), the fund's manager, an indirect wholly-owned subsidiary of Putnam, LLC. These balances may be invested in issuers of high-grade short-term investments having maturities of up to 397 days for collateral received under security lending arrangements and up to 90 days for other cash investments. 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. Collateral for certain tri-party repurchase agreements is held at the counterparty's custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management 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) Security transactions and related investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Interest is recorded on the accrual basis. Premiums and discounts from short-term investments are amoritized/accreted at a constant rate until maturity. E) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, 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. F) Distributions to shareholders Income dividends are recorded daily by the fund and are paid monthly to the shareholders. 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 wholly-owned subsidiary of Putnam, LLC. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. The fund has entered into an arrangement with PFTC whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's expenses. For the year ended September 30, 2002, the fund's expenses were reduced by $512,145 under these arrangements. Each independent Trustee of the fund receives an annual Trustee fee, of which $3,576 has been allocated to the fund, and an additional fee for each Trustees meeting attended. 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 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 a 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, class C, class M and class T shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management, a wholly-owned subsidiary of Putnam, LLC and Putnam Retail Management GP, 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 Retail Management at an annual rate up to 0.75%, 1.00%, 1.00% and 0.35% of the average net assets attributable to class B, class C, class M shares and class T shares, respectively. The Trustees have approved payment by the fund at an annual rate of 0.50%, 0.50%, 0.15% and 0.25% of the average net assets attributable to class B, class C, class M and class T shares, respectively. For the year ended September 30, 2002, Putnam Retail Management, acting as the underwriter received net commissions of $6,794,079 and 174,525 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1% on class A and class T shares, and 0.15% for class M shares may be assessed on certain redemptions. For the year ended September 30, 2002, Putnam Retail Management, acting as underwriter received no monies in contingent deferred sales charges from redemptions of class A, class T or Class M shares acquired through exchanges from other Putnam funds. Note 3 Purchases and sales of securities During the year ended September 30, 2002, cost of purchases and proceeds from sales (including maturities) of investment securities (all short-term obligations) aggregated $135,314,638,718 and $135,198,286,383, respectively. Note 4 Capital shares At September 30, 2002, 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 2002 2001 - --------------------------------------------------------------------------- Shares sold 9,387,236,895 12,053,696,344 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 84,364,207 205,478,374 - --------------------------------------------------------------------------- 9,471,601,102 12,259,174,718 Shares repurchased (9,174,195,954) (10,824,356,828) - --------------------------------------------------------------------------- Net increase 297,405,148 1,434,817,890 - --------------------------------------------------------------------------- Year ended September 30 - --------------------------------------------------------------------------- Class B 2002 2001 - --------------------------------------------------------------------------- Shares sold 1,483,572,641 2,051,734,389 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 11,157,218 31,917,019 - --------------------------------------------------------------------------- 1,494,729,859 2,083,651,408 Shares repurchased (1,463,309,443) (1,571,439,127) - --------------------------------------------------------------------------- Net increase 31,420,416 512,212,281 - --------------------------------------------------------------------------- Year ended September 30 - --------------------------------------------------------------------------- Class C 2002 2001 - --------------------------------------------------------------------------- Shares sold 587,433,756 724,876,309 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 776,797 2,592,162 - --------------------------------------------------------------------------- 588,210,553 727,468,471 Shares repurchased (599,210,265) (690,114,346) - --------------------------------------------------------------------------- Net increase/ (decrease) (10,999,712) 37,354,125 - --------------------------------------------------------------------------- Year ended September 30 - --------------------------------------------------------------------------- Class M 2002 2001 - --------------------------------------------------------------------------- Shares sold 433,265,530 916,967,155 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 1,570,131 4,993,849 - --------------------------------------------------------------------------- 434,835,661 921,961,004 Shares repurchased (450,952,565) (914,363,624) - --------------------------------------------------------------------------- Net increase (decrease) (16,116,904) 7,597,380 - --------------------------------------------------------------------------- For the period December 31, 2001 (commencement of operations) to September 30 - --------------------------------------------------------------------------- Class T 2002 - --------------------------------------------------------------------------- Shares sold 22,566,017 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 52,538 - --------------------------------------------------------------------------- 22,618,555 Shares repurchased (10,488,615) - --------------------------------------------------------------------------- Net increase 12,129,940 - --------------------------------------------------------------------------- FEDERAL TAX INFORMATION (Unaudited) The Form 1099 you receive in January 2003 will show the tax status of all distributions paid to your account in calendar 2002.
TRUSTEES Name, Address, 1 Date of Birth, Position(s) Held with Fund and Length of Service Principal Occupation(s) as a Putnam Fund Trustee 2 During Past 5 Years Other Directorships Held by Trustee - ------------------------------------------------------------------------------------------------------- Jameson A. Baxter (9/6/43), President, Baxter Director of ASHTA Chemicals, Inc., Trustee since 1994 Associates, Inc. Banta Corporation (a printing and (a management digital imaging firm), Intermatic consulting and private Corporation (manufacturer of energy investments firm) control products), Ryerson Tull, Inc. (a steel service corporation), Advocate Health Care, and the National Center for Nonprofit Boards. Chairman Emeritus of the Board of Trustees, Mount Holyoke College. Also held various positions in investment banking and corporate finance, including Vice President and principal of the Regency Group and consultant to First Boston Corp. Charles B. Curtis (4/27/40), President and Chief Member of the Council on Foreign Trustee since 2001 Operating Officer, Relations, the Electric Power Nuclear Threat Research Institute Advisory Council, Initiative (a private the Board of Directors of the Gas foundation dedicated Technology Institute, the University to reducing the threat of Chicago Board of Governors for of weapons of mass Argonne National Laboratory, the destruction), also serves Board of Directors of the as Senior Advisor to the Environment and Natural Resources United Nations Program Steering Committee, Foundation John F. Kennedy School of Government, Harvard University. Prior to 2002, Mr. Curtis was a member of the Board of Directors of the Gas Technology Institute. Until 2001, Mr. Curtis was a Member of the Department of Defense's Policy Board and Director of EG&G Technical Services, Inc. (fossil energy research and development support) and prior to May 1997, Mr. Curtis was Deputy Secretary of Energy. John A. Hill (1/31/42), Vice-Chairman and Director of Devon Energy Trustee since 1985 and Managing Director, Corporation (formerly known as Chairman since 2000 First Reserve Snyder Oil Corporation), Corporation TransMontaigne Oil Company, (a registered investment Continuum Health Partners of advisor investing in New York, Sarah Lawrence College, companies in the and various private companies owned world-wide energy by First Reserve Corporation. industry on behalf of Trustee of TH Lee, Putnam institutional investors) Investment Trust (a closed-end investment company). Prior to acquiring First Reserve in 1983, Mr. Hill held executive positions with several advisory firms and various positions with the federal government, including Associate Director of the Office of Manage ment and Budget and Deputy Director of the Federal Energy Administration. Ronald J. Jackson Private investor Former Chairman, President, and (12/17/43), Chief Executive Officer of Fisher- Trustee since 1996 Price, Inc. (a toy manufacturer). Previously served as President and Chief Executive Officer of Stride- Rite, Inc. and Kenner Parker Toys. Also held financial and marketing positions with General Mills, Parker Brothers, and Talbots. President of the Kathleen and Ronald J. Jackson Foundation (charitable trust). Member of the Board of Overseers of WGBH (public television and radio). Member of the Board of Overseers of the Peabody Essex Museum. Paul L. Joskow (6/30/47), Elizabeth and James Director, National Grid Group Trustee since 1997 Killian Professor of (a UK-based holding company Economics and with interests in electric power, Management and natural gas distribution, and Director of the Center telecommunications networks), and for Energy and the Whitehead Institute for Environmental Policy Biomedical Research (a non-profit Research, Massachusetts research institution). President of the Institute of Technology Yale University Council. Prior to February 2002, March 2000, and September 1998, Dr. Joskow was a Director of State Farm Indemnity Company (an automobile insurance company), Director of New England Electric System (a public utility holding company) and a consultant to National Economic Research Associates, respectively. Elizabeth T. Kennan Chairman, Cambus- Director, Northeast Utilities, and (2/25/38), Kenneth Bloodstock (a Talbots (a distributor of women's Trustee since 1992 limited liability company apparel). Trustee of Centre College. involved in thoroughbred Prior to 2001, Dr. Kennan was a horse breeding and member of the Oversight Committee farming), President of Folger Shakespeare Library. Emeritus of Mount Prior to September 2000, June 2000, Holyoke College and November 1999, Dr. Kennan was a Director of Chastain Real Estate, Bell Atlantic, and Kentucky Home Life Insurance, respectively. Prior to 1995, Dr. Kennan was a Trustee of Notre Dame University. For 12 years, she was on the faculty of Catholic University. John H. Mullin, III Chairman and CEO Director Alex. Brown Realty, Inc., (6/15/41), of Ridgeway Farm Sonoco Products, Inc. (a packaging Trustee since 1997 (a limited liability company), The Liberty Corporation company engaged in (a company engaged in the timber and farming) broadcasting industry), and Progress Energy, Inc. (a utility company, formerly known as Carolina Power & Light). Trustee Emeritus of Washington & Lee University. Prior to October 1997, January 1998, and May 2001, Mr. Mullin was a Director of Dillon, Read and Co. Inc., The Ryland Group, Inc., and Graphic Packaging International Corp., respectively. Robert E. Patterson Senior Partner of Cabot Chairman of the Joslin Diabetes (3/15/45), Properties, LLP and Center, Trustee of SEA Education Trustee since 1984 Chairman of Cabot Association, and Director of Properties, Inc. Brandywine Trust Company (a trust company). Prior to February 1998, Mr. Patterson was Executive Vice President and Director of Acquisitions of Cabot Partners Limited Partnership. Prior to December 2001, Mr. Patterson was President and Trustee of Cabot Industrial Trust (publicly traded real estate investment trust). Prior to 1990, Mr. Patterson was Executive Vice President of Cabot, Cabot & Forbes Realty Advisors, the predecessor of Cabot Partners, and prior to that was Senior Vice President of the Beal Companies. W. Thomas Stephens Corporate Director Director of Qwest Communications (9/2/42), (communications company), Xcel Trustee since 1997 Energy Incorporated (public utility company), TransCanada Pipelines, Norske Canada, Inc. (paper manufacturer) and Mail-Well (printing and envelope company). Prior to July 2001 and October 1999, Mr. Stephens was Chairman of Mail- Well and MacMillan-Bloedel (forest products company). Prior to 1996, Mr. Stephens was Chairman and Chief Executive Officer of Johns Manville. W. Nicholas Thorndike Director of various Trustee of Northeastern University and (3/28/33), corporations and Honorary Trustee of Massachusetts Trustee since 1992 charitable General Hospital. Prior to organizations, September 2000, April 2000, and including Courier December 2001, Mr. Thorndike was Corporation (a book a Director of Bradley Real Estate, manufacturer) and Inc., a Trustee of Eastern Utilities Providence Journal Co. Associates, and a Trustee of Cabot (a newspaper publisher) Industrial Trust, respectively. Previously served as Chairman of the Board and managing partner of Wellington Management/Thorndike Doran Paine & Lewis, and Chairman and Director of Ivest Fund. Lawrence J. Lasser* President and Chief Director of Marsh & McLennan (11/1/42), Executive Officer Companies, Inc. and the United Way Trustee since 1992 of Putnam of Massachusetts Bay. Member of the Vice President since 1981 Investments Trust Board of Governors of the Investment and Putnam Investment Company Institute, Trustee of the Management, LLC Museum of Fine Arts, Boston, a Trustee and Member of the Finance and Executive Committees of Beth Israel Deaconess Medical Center, Boston, and a Member of the CareGroup Board of Managers Investment Committee, the Council on Foreign Relations, and the Commercial Club of Boston. George Putnam, III* President, New Director of The Boston Family (8/10/51), Generation Research, Office, L.L.C. (registered investment Trustee since 1984 and Inc. (a publisher of advisor), Trustee of the SEA President since 2000 financial advisory and Education Association, Trustee of other research services St. Mark's School, and Trustee of relating to bankrupt and Shore Country Day School. distressed companies) Previously, Mr. Putnam was an and New Generation attorney with the firm of Dechert Advisers, Inc. Price & Rhoads. (a registered investment adviser) A.J.C. Smith (4/13/34),* Director of Marsh & Director of Trident Corp. (a limited Trustee since 1986 McLennan partnership with over 30 institutional Companies, Inc. investors). Trustee of the Carnegie Hall Society, the Educational Broadcasting Corporation and the National Museums of Scotland. Chairman of the Central Park Conservancy. Member of the Board of Overseers of the Joan and Sanford I. Weill Graduate School of Medical Sciences of Cornell University. Fellow of the Faculty of Actuaries in Edinburgh, the Canadian Institute of Actuaries, and the Conference of Actuaries. Associate of the Society of Actuaries. Member of the American Actuaries, the International Actuarial Association and the International Association of Consulting Actuaries. Prior to May 2000 and November 1999, Mr. Smith was Chairman and CEO, respectively, of Marsh & McLennan Companies, Inc. - -------------------------------------------------------------------------------------------------------- 1 The address of each Trustee is One Post Office Square, Boston, MA 02109. As of September 30, 2002, there were 103 Putnam Funds. 2 Each Trustee serves for an indefinite term, until his or her resignation, death, or removal. * Trustees who are or may be deemed to be "interested persons" (as defined in the Investment Company Act of 1940) of the fund, Putnam Management or Putnam Retail Management. Messrs. Putnam, III, Lasser, and Smith are deemed "interested persons" by virtue of their positions as officers or shareholders of the fund, or officers of Putnam Management, Putnam Retail Management, or Marsh & McLennan Companies, Inc., the parent company of Putnam Management and Putnam Retail Management. George Putnam, III, is the President of your Fund and each of the other Putnam Funds. Lawrence J. Lasser has been the President, Chief Executive Officer, and a Director of Putnam Investments Trust and Putnam Management since 1985, having begun his career there in 1969. Mr. Lasser currently also serves as a Director of Marsh & McLennan Companies, Inc., the parent company of Putnam Management. A.J.C. Smith is a Director of Marsh & McLennan Companies, Inc.
OFFICERS Name, Address, 1 Date of Birth, Inception of Service Position(s) Held with Fund with the Putnam Funds Principal Occupation(s) During Past 5 Years - --------------------------------------------------------------------------------------------------------------- Charles E. Porter (7/26/38), Since 1989 Managing Director, Putnam Investments Executive Vice President, Trust and Putnam Management Treasurer & Principal Financial Officer Patricia C. Flaherty Since 1993 Senior Vice President, Putnam (12/1/46), Investments Trust and Putnam Management Senior Vice President Michael T. Healy (1/24/58), Since 2000 Managing Director, Putnam Assistant Treasurer and Investments Trust Principal Accounting Officer Karnig H. Durgarian Since 2002 Senior Managing Director of Putnam (1/13/56),Vice President and Investments Trust Principal Executive Officer Steven D. Krichmar Since 2002 Managing Director of Putnam (6/27/58), Vice President and Investments Trust Principal Financial Officer Gordon H. Silver (7/3/47), Since 1990 Senior Managing Director, Putnam Vice President Investments Trust and Putnam Management Brett C. Browchuk Since 1994 Managing Director, Putnam Investments (2/27/63), Vice President Trust and Putnam Management Ian C. Ferguson (7/3/57), Since 1997 Senior Managing Director, Putnam Vice President Investments Trust and Putnam Management Richard G. Leibovitch Since 1999 Managing Director of Putnam Investments (10/31/63), Vice President Trust and Putnam Management. Prior to February 1999, Managing Director at J.P. Morgan. Richard A. Monaghan Since 1998 Managing Director, Putnam Investments (8/25/54), Trust, Putnam Management and Putnam Vice President Retail Management John R. Verani Since 1988 Senior Vice President, Putnam (6/11/39), Investments Trust and Putnam Management Vice President Stephen M. Oristaglio Since 1998 Senior Managing Director of Putnam (8/21/55), Management. Prior to July 1998, Managing Vice President Director at Swiss Bank Corp. Kevin M. Cronin Since 2000 Managing Director of Putnam Management (6/13/61), Vice President - --------------------------------------------------------------------------------------------------------------- 1 The address of each Officer is One Post Office Square, Boston, MA 02109.
THE PUTNAM FAMILY OF FUNDS The following is a complete list of Putnam's open-end mutual funds. Please call your financial advisor or Putnam at 1-800-225-1581 to obtain a prospectus for any Putnam fund. It contains more complete information, including charges and expenses. Please read it carefully before you invest or send money. GROWTH FUNDS Growth Opportunities Fund Health Sciences Trust International New Opportunities Fund New Opportunities Fund OTC & Emerging Growth Fund Small Cap Growth Fund Vista Fund Voyager Fund Voyager Fund II BLEND FUNDS Capital Appreciation Fund Capital Opportunities Fund Europe Growth Fund Global Equity Fund Global Natural Resources Fund International Growth Fund International Voyager Fund Investors Fund Research Fund Tax Smart Equity Fund Utilities Growth and Income Fund VALUE FUNDS Classic Equity Fund Convertible Income-Growth Trust Equity Income Fund The George Putnam Fund of Boston The Putnam Fund for Growth and Income International Growth and Income Fund Mid Cap Value Fund New Value Fund Small Cap Value Fund * INCOME FUNDS American Government Income Fund Diversified Income Trust Global Income Trust High Yield Advantage Fund * High Yield Trust Income Fund Intermediate U.S. Government Income Fund Money Market Fund + U.S. Government Income Trust TAX-FREE INCOME FUNDS Municipal Income Fund Tax Exempt Income Fund Tax Exempt Money Market 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 State tax-free money market funds + California, New York ASSET ALLOCATION FUNDS Putnam Asset Allocation Funds--three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments. The three portfolios: Asset Allocation: Balanced Portfolio Asset Allocation: Conservative Portfolio Asset Allocation: Growth Portfolio * Closed to new investors. + An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve your investment at $1.00 per share, it is possible to lose money by investing in the fund. Check your account balances and current performance at www.putnaminvestments.com. SERVICES FOR SHAREHOLDERS HELP YOUR INVESTMENT GROW Set up a program for systematic investing with as little as $25 a month from a Putnam fund or from your own savings or checking account. (Regular investing does not guarantee a profit or protect against loss in a declining market.) SWITCH FUNDS EASILY You can move money from one Putnam fund to another within the same class of shares without a service charge. (This privilege is subject to change or termination.) ACCESS YOUR MONEY EASILY You can have checks sent regularly or redeem shares any business day at the then-current net asset value, which may be more or less than the original cost of the shares. Class B and class C shares carry a sales charge that is applied to certain withdrawals. HOW TO BUY ADDITIONAL SHARES You may buy shares through your financial advisor or directly from Putnam. To open an account by mail, send a check made payable to the name of the fund along with a completed fund application. To add to an existing account, complete the investment slip found at the top of your Confirmation of Activity statement and return it with a check payable to your fund. VISIT US AT WWW.PUTNAMINVESTMENTS.COM A secure section of our Web site contains complete information on your account, including balances and transactions, updated daily. You may also conduct transactions, such as exchanges, additional investments, and address changes. Log on today to get your password. USE OUR TOLL-FREE NUMBER 1-800-225-1581 Ask a helpful Putnam representative or your financial advisor for details about any of these or other services, or see your prospectus. FUND INFORMATION ABOUT PUTNAM INVESTMENTS One of the largest mutual fund families in the United States, Putnam Investments has a heritage of investment leadership dating back to Judge Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition and practice since 1830. Founded 65 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We presently manage over 100 mutual funds in growth, value, blend, fixed income, and international. INVESTMENT MANAGER Putnam Investment Management, LLC One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Retail Management One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP TRUSTEES John A. Hill, Chairman Jameson Adkins Baxter Charles B. Curtis Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam, III President Charles E. Porter Executive Vice President, Treasurer and Principal Financial Officer Patricia C. Flaherty Senior Vice President Karnig H. Durgarian Vice President and Principal Executive Officer Steven D. Krichmar Vice President and Principal Financial Officer Michael T. Healy Assistant Treasurer and Principal Accounting Officer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President Stephen M. Oristaglio Vice President Kevin M. Cronin Vice President Richard G. Leibovitch Vice President Richard A. Monaghan Vice President John R. Verani Vice President 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 and Putnam's Quarterly Ranking Summary. For more information or to request a prospectus, call toll free: 1-800-225-1581. The fund's Statement of Additional Information contains additional information about the fund's Trustees and is available without charge upon request by calling 1-800-225-1581. Visit www.putnaminvestments.com or call 1-800-225-1581. NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - --------------------- PRSRT STD U.S. POSTAGE PAID PUTNAM INVESTMENTS - --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminvestments.com AN039-84049 010/879/534 11/02 -----END PRIVACY-ENHANCED MESSAGE-----