-----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, QJfwTVEsJ2OVBmGfHnXFBSNjXFs0mRxQmEbuXgg14JWGWwaLRh1EfSrLmHtssqKL akutzSEazhJ9QPjjl9h4ow== 0000928816-03-000325.txt : 20030513 0000928816-03-000325.hdr.sgml : 20030513 20030513142914 ACCESSION NUMBER: 0000928816-03-000325 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030513 EFFECTIVENESS DATE: 20030513 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: 03695152 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 SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK 3-31-03 [GRAPHIC OMITTED: GOURDS] [SCALE LOGO OMITTED] FROM THE TRUSTEES [GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III] Dear Fellow Shareholder: With interest rates at 40-year lows and the 7-day average yield for all taxable money market funds the lowest on record, the managers of Putnam Money Market Fund had their work cut out for them during the six months ended March 31, 2003. In this environment, the fund's class A, M, and T shares at net asset value were able to deliver results slightly above the Lipper Money Market Funds category average. You will find the details on page 7. For a good many investors these days, any returns in the plus column are a welcome respite from the ongoing volatility pervading the equity and fixed-income markets. Your fund's managers are working hard to ensure that you can wait out the turbulence with your assets moored in the comparatively calm harbor of the money markets. Meanwhile, your fund's managers continue to seek out the highest-quality money-market-eligible securities with a focus on diversification and an eye toward extending the portfolio's average days to maturity to seek the highest possible income without sacrificing quality. As we look back on one of the most challenging periods in recent investment history, we would like you to know how much we appreciate your patience and continued confidence in Putnam. We believe those who maintain a long-term focus and a diversified approach to investing should eventually be rewarded for their fortitude. Respectfully yours, /S/ JOHN A. HILL /S/ GEORGE PUTNAM, III John A. Hill George Putnam, III Chairman of the Trustees President of the Funds May 21, 2003 REPORT FROM FUND MANAGEMENT FUND HIGHLIGHTS * For the six months ended March 31, 2003, Putnam Money Market Fund's class A shares had a total return of 0.52% at net asset value. * The fund's six-month returns for class A, M, and T shares were slightly ahead of the 0.34% return for the Lipper Money Market Funds category average. * See the Performance Summary on page 7 for complete fund performance, comparative index performance, and Lipper data. * PERFORMANCE COMMENTARY Money market funds continued to enjoy tremendous popularity during the six months ended March 31, 2003, as investors sought financial refuge from widespread uncertainty at home and abroad. For your fund, which invests solely in high-quality, money-market-eligible securities, this conservative mood and a preference for only the safest of investments has been very positive for the holdings in your portfolio. We also believe that our efforts to extend the average days to maturity when feasible, while keeping a portion of the portfolio flexible to capture any short-term upticks in interest rates, has maximized the fund's income potential in the current flat-to-declining interest-rate environment. The fund's diversification has also been an important factor in its relative success. With its exposure to domestic and foreign issuers, different security types and various income structures (fixed-rate, floating-rate and callable notes), we believe the fund's income strategy protects its $1.00 share value while capturing the highest level of income that is consistent with our commitment to quality. Fund Profile By emphasizing high-quality short-term fixed-income securities, Putnam Money Market Fund seeks to protect principal by seeking to maintain a constant $1.00 share price while providing shareholders with easy access to their money. Putnam Money Market Fund may be appropriate for investors seeking current income consistent with capital preservation, stability of principal, and liquidity of assets. * MARKET OVERVIEW The sharp decline in interest rates over the past two and a half years, which culminated in the Federal Reserve Board's half a percentage point reduction in the federal funds rate on November 6, 2002, has been unprecedented. For income funds, this fall in interest rates resulted in a similarly dramatic reduction in yields in a relatively short time. As a result, in late December, the 7-day average yield for money market funds dropped to record lows. With interest rates hovering at their lowest levels in forty years, our efforts to maintain the fund's positive yield have been quite challenging but, we think, relatively successful. The uncertainty surrounding the war in Iraq has weighed heavily on the financial markets, prompting many investors to flee to more predictable, high-quality investments. This trend clearly benefited your fund; its assets grew just under 10% during the period. The yield curve remains rather flat, especially in the one- to six-month maturity range, suggesting how limited our choices are in picking up incremental yield. With demand for money market securities high, yields have come under further pressure as a result of an imbalance in supply/demand dynamics. This imbalance was greatest in the commercial paper market, where a contraction of issuance has occurred as a result of the general slowing of economic activity and potential accounting changes affecting the asset-backed sector. The fund ended the reporting period with a neutral to slightly longer average maturity, which we expect to maintain for the near term. MARKET SECTOR PERFORMANCE 6 MONTHS ENDED 3/31/03 Bonds Lipper Money Market Funds category average 0.34% - -------------------------------------------------------------------------- Lehman Intermediate Treasury Bond Index 1.52% - -------------------------------------------------------------------------- Lehman Aggregate Bond Index (government and corporate bonds) 2.99% - -------------------------------------------------------------------------- Citigroup World Government Bond Index 7.98% - -------------------------------------------------------------------------- Equities S&P 500 Index (broad market) 5.02% - -------------------------------------------------------------------------- Russell 1000 Index (large-cap stocks) 4.98% - -------------------------------------------------------------------------- Russell 2000 Index (small-cap stocks) 1.39% - -------------------------------------------------------------------------- These indexes provide an overview of performance in different market sectors for the six months ended 3/31/03. * STRATEGY OVERVIEW At the beginning of the fund's fiscal year, there were mixed signals about the strength of the U.S. economy, prompting the Federal Reserve Board to become more cautious. Given the lack of any clear direction for interest rates or the war with Iraq, we believed our best course would be to minimize risk. To that end, we focused on a blended strategy that required buying U.S. government agency notes and repurchase agreements with maturities out to one year and shorter-maturity money market instruments in both U.S. and foreign issuers. While the portfolio's percentage of holdings held across all sectors of the money market changed to some degree, the most dramatic shift in assets occurred in the government/agency sector, which more than doubled over the six months ended March 31. Money market securities with longer maturities ranging up to one year provide stability of income by locking in yields. Shorter-term instruments provide us with the opportunity to take advantage of occasional short-term upticks in yields. This was the case in February, when the announcement of favorable economic data and the ensuing rally in the stock market helped the yield curve steepen somewhat, increasing the difference between shorter-term and longer-term securities. In addition to maintaining the fund's flexibility, our strategy had the intended effect of extending the average days to maturity. Over the course of the reporting period, the average days to maturity climbed from 49 days on September 30, 2002, to 59 days on March 31, 2003. [GRAPHIC OMITTED: horizontal bar chart SECTOR WEIGHTINGS COMPARED*] SECTOR WEIGHTINGS COMPARED* as of 9/30/02 as of 3/31/03 U.S. government obligations 0.0% 6.8% Repurchase agreements 3.7% 2.5% Foreign money market Instruments 34.1% 35.9% Domestic money market instruments (exclusive of U.S. government obligations) 62.2% 54.8% *This chart shows how the fund's weightings have changed over the last six months. Weightings are shown as a percentage of market value. Holdings will vary over time. * HOW SECTOR ALLOCATIONS AFFECTED PERFORMANCE The outlook for the multibillion-dollar U.S. commercial paper sector improved during the six months under review. Yield spreads between higher- and lower-rated corporate issues tightened, suggesting that much of the risk brought on by stagnant economic growth and questionable accounting practices has eased. Of course, your fund only invests in the Tier-1 rated paper, but the improving fundamentals of the sector have been beneficial for outstanding issues, such as those held by your fund. Given the reduced issuance in the commercial paper sector that we saw in 2002, we redeployed assets to U.S. government agency notes, where we have a much larger supply to choose from. We purchased callable securities issued by the Federal Home Loan Bank (FHLB) and the Federal National Mortgage Association (FNMA) in February, which carried an above-market yield that is fixed for the life of the note. Given our outlook that the Federal Reserve Board is unlikely to lower interest rates over the near term (which would cause the notes to be called away) or to raise rates, the fund should benefit from the incremental income paid on the notes until maturity. To balance this interest-rate exposure, we selectively purchased floating-rate notes issued by high-quality issuers. These money-market-eligible securities have a one-year maturity, but the interest rate resets monthly or quarterly to capitalize on the potential for rising interest rates. We have found opportunities to purchase these securities from issuers such as Goldman Sachs, Banc One Corp., and Merrill Lynch & Co. These firms have performed well during this difficult period, with their earnings being driven by their cost control efforts and the strength of their business lines. The foreign short-term market continues to offer opportunity. The bulk of the fund's offshore assets are invested in commercial paper and certificates of deposit issued by well-established banking entities across Europe and Canada. We have become more cautious about bank issuers in weakening economies such as Germany. But we remain very positive on several large, well-diversified banks in Europe, including Barclays Bank PLC (U.K.) and Rabobank Nederland (Netherlands). We believe banks such as these will continue to demonstrate prudent management and maintain strong balance sheets. Please note that all holdings discussed in this report are subject to review in accordance with the fund's investment strategy and may vary in the future. PERFORMANCE COMPARISONS (3/31/03) Current return* - ----------------------------------------------------------------------- Passbook savings account 0.50% - ----------------------------------------------------------------------- Taxable money market fund (7-day yield) 0.73% - ----------------------------------------------------------------------- 3-month certificate of deposit 1.23% - ----------------------------------------------------------------------- Putnam Money Market Fund (7-day yield) - ----------------------------------------------------------------------- Class A 0.79% - ----------------------------------------------------------------------- Class B 0.29% - ----------------------------------------------------------------------- Class C 0.29% - ----------------------------------------------------------------------- Class M 0.64% - ----------------------------------------------------------------------- Class R 0.37% - ----------------------------------------------------------------------- Class T 0.53% - ----------------------------------------------------------------------- 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), Bank Rate Monitor (3-month CDs), and IBC/Donaghue's Money Fund Report (taxable money market fund compound 7-day yield). * THE FUND'S MANAGEMENT TEAM 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. THE OUTLOOK FOR YOUR FUND The following commentary reflects anticipated developments that could affect your fund over the next six months, as well as your management team's plans for responding to them. While the possibility for further interest-rate reductions remains, there is just as much a probability that interest rates may have bottomed as of this writing. When interest rates do begin to rise, as they historically have in all economic cycles, we believe that Putnam Money Market Fund is in a good position to capture the higher income potential. As geopolitical tensions ease, we believe investors will refocus their attention on the health of the U.S. economy. This is likely to bring some redeployment of assets as they better align their portfolios to reflect their economic outlook. After three years of corporate America and the financial markets correcting for the excess of the late 1990s, we believe the groundwork is being laid for a return to a more disciplined, healthier market. We believe that money market securities can be an important component of a diversified portfolio because of their ability to help preserve principal in a variety of market conditions. The views expressed in this report are exclusively those of Putnam Management. They are not meant as investment advice. 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. PERFORMANCE SUMMARY This section provides information about your fund's performance during its semiannual period, which ended March 31, 2003. Performance should always be considered in light of a fund's investment strategy. Past performance does not indicate future results. A profile of your fund's strategy appears on the first page of this report. See pages 8 and 9 for definitions of some terms used in this section.
TOTAL RETURN FOR PERIODS ENDED 3/31/03 Class A Class B Class C Class M Class R Class T (inception dates) (10/1/76) (4/27/92) (2/1/99) (12/8/94) (1/21/03) (12/31/01) NAV NAV CDSC NAV CDSC NAV NAV NAV - ------------------------------------------------------------------------------------------------------- 6 months 0.52% 0.27% -4.73% 0.27% -0.73% 0.45% 0.29% 0.40% - ------------------------------------------------------------------------------------------------------- 1 year 1.25 0.75 -4.25 0.75 -0.25 1.10 0.76 1.00 - ------------------------------------------------------------------------------------------------------- 5 years 22.27 19.26 17.26 19.37 19.37 21.39 19.26 20.81 Annual average 4.10 3.59 3.24 3.60 3.60 3.95 3.59 3.85 - ------------------------------------------------------------------------------------------------------- 10 years 52.77 45.27 45.27 45.40 45.40 50.53 45.34 49.15 Annual average 4.33 3.80 3.80 3.81 3.81 4.17 3.81 4.08 - ------------------------------------------------------------------------------------------------------- Annual average (life of fund) 6.81 6.28 6.28 6.28 6.28 6.65 6.26 6.54 - ------------------------------------------------------------------------------------------------------- Current return (end of period) - ------------------------------------------------------------------------------------------------------- Current 7-day yield 1 0.79% 0.29% 0.29% 0.64% 0.37% 0.53% - ------------------------------------------------------------------------------------------------------- Current 30-day yield 0.81 0.31 0.32 0.66 0.37 0.56 - ------------------------------------------------------------------------------------------------------- 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. Class R shares have no initial sales charge or CDSC. Performance for B, C, M, R, and T shares before their inception is 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. 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 3/31/03 Merrill Lynch 91-Day Lipper Money Market Treasury Bill Index Funds category average* - ----------------------------------------------------------------------- 6 months 0.73% 0.34% - ----------------------------------------------------------------------- 1 year 1.67 0.86 - ----------------------------------------------------------------------- 5 years 23.28 19.89 Annual average 4.28 3.69 - ----------------------------------------------------------------------- 10 years 56.70 49.99 Annual average 4.59 4.13 - ----------------------------------------------------------------------- Annual average (life of fund) -- + 6.81 - ----------------------------------------------------------------------- Past performance does not indicate future results. More recent returns may be less or more than those shown. Investment return will fluctuate. * Over the 6-month and 1-, 5-, and 10-year periods ended 3/31/03, there were 402, 390, 266, and 152 funds, respectively, in this Lipper category. + Inception date of index was 12/31/77, after the fund's inception. DISTRIBUTION INFORMATION 6 MONTHS ENDED 3/31/03 Class A Class B Class C Class M Class R Class T - ------------------------------------------------------------------------------- Distributions (number) 6 6 6 6 3 6 - ------------------------------------------------------------------------------- Income $0.005225 $0.002740 $0.002740 $0.004479 $0.000690 $0.003970 - ------------------------------------------------------------------------------- Capital gains -- -- -- -- -- -- - ------------------------------------------------------------------------------- Total $0.005225 $0.002740 $0.002740 $0.004479 $0.000690 $0.003970 - ------------------------------------------------------------------------------- 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 R shares are not subject to an initial sales charges or CDSC and are available only to certain defined contribution plans. Class T shares are not subject to an initial sales charges or 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 INDEXES 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. Lehman Intermediate Treasury Bond Index is an unmanaged index of Treasury bonds with maturities between 1 and up to 10 years. Lehman Aggregate Bond Index is an unmanaged index of U.S. fixed-income securities. Citigroup (formerly Salomon Smith Barney) World Government Bond Index is an unmanaged index of government bonds from 14 countries. S&P 500 Index is an unmanaged index of common stock performance. Russell 1000 Index is an unmanaged index of the largest 1000 companies in the Russell 3000 Index. Russell 2000 Index is an unmanaged index of common stocks that generally measure performance of small to midsize companies within the Russell 3000 Index. Lipper Money Market Funds category 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. 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. Lipper category averages reflect performance trends for funds within a category and are based on results at net asset value. 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 NOTE ABOUT DUPLICATE MAILINGS In response to investors' requests, the SEC has modified mailing regulations for proxy statements, semiannual and annual reports, and prospectuses. Putnam is now able to send a single copy of these materials to customers who share the same address. This change will automatically apply to all shareholders except those who notify us. If you would prefer to receive your own copy, please call Putnam at 1-800-225-1581. A GUIDE TO THE FINANCIAL STATEMENTS These sections of the report, as well as the accompanying Notes, 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 period. 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.
THE FUND'S PORTFOLIO March 31, 2003 (Unaudited) COMMERCIAL PAPER (74.1%)* MATURITY PRINCIPAL AMOUNT DATE VALUE Domestic (48.8%) (a) - ------------------------------------------------------------------------------------------------------------------- $69,000,000 American Express Co. 1.21s 5/7/03 $68,914,191 25,000,000 American General Finance Corp. 1.26s 4/15/03 24,986,875 50,000,000 Asset Securitization Cooperative Corp. 1.18s 5/8/03 49,937,722 33,564,000 Atlantis One Funding Corp. 1.28s 7/28/03 33,421,987 50,000,000 Atlantis One Funding Corp. 1.26s 4/9/03 49,984,250 50,000,000 Atlantis One Funding Corp. 1 1/4s 5/9/03 49,932,292 20,000,000 Atlantis One Funding Corp. 1.24s 6/27/03 19,939,378 66,000,000 Bank of America Corp. 1 1/4s 4/21/03 65,951,875 50,000,000 Bank One Corp. 1.18s 5/15/03 49,926,250 25,000,000 Ciesco L.P. 1 1/4s 6/5/03 24,942,708 43,000,000 Citicorp 1.3s 4/17/03 42,973,603 40,000,000 Citicorp 1.3s 4/11/03 39,984,111 61,000,000 Citicorp 1 1/4s 6/6/03 60,858,090 66,000,000 Citicorp 1 1/4s 5/29/03 65,864,792 75,000,000 Corporate Asset Funding Corp. 1.27s 5/28/03 74,846,542 50,000,000 Corporate Asset Funding Corp. 1.18s 5/12/03 49,931,167 40,000,000 Corporate Receivables Corp. 1.28s 4/25/03 39,964,444 39,400,000 Corporate Receivables Corp. 1.28s 4/10/03 39,385,991 40,000,000 Corporate Receivables Corp. 1.27s 4/24/03 39,966,133 67,000,000 Corporate Receivables Corp. 1.26s 5/6/03 66,915,580 34,741,000 Delaware Funding Corp 1.4s 4/1/03 34,739,649 57,000,000 Delaware Funding Corp. 1.27s 4/2/03 56,995,978 25,000,000 Eureka Securitization, Inc. 1.28s 5/14/03 24,960,889 70,000,000 Eureka Securitization, Inc. 1.27s 4/2/03 69,995,061 40,000,000 Eureka Securitization, Inc. 1.23s 6/19/03 39,890,667 55,000,000 Eureka Securitization, Inc. 1.23s 5/1/03 54,941,746 81,000,000 Eureka Securitization, Inc. 1.19s 6/20/03 80,783,123 51,776,000 Falcon Asset Securitization Corp. 1.21s 6/16/03 51,642,001 49,000,000 GE Capital International Funding 1.38s 5/19/03 48,907,962 49,000,000 GE Capital International Funding 1.27s 4/16/03 48,972,342 35,000,000 GE Capital International Funding 1.27s 4/8/03 34,990,122 70,000,000 GE Capital International Funding 1 1/4s 5/15/03 69,890,625 49,000,000 Goldman Sachs Group, Inc. 1.3s 11/25/03 48,577,103 66,000,000 Goldman Sachs Group, Inc. 1.3s 11/12/03 65,461,367 48,000,000 Goldman Sachs Group, Inc. 1.2s 8/29/03 47,758,400 27,580,000 Jupiter Securitization Corp. 1.28s 5/1/03 27,549,601 58,000,000 Jupiter Securitization Corp. 1.26s 4/2/03 57,995,940 30,555,000 Morgan Stanley, Dean Witter & Co. 1.27s 5/14/03 30,507,572 50,000,000 Morgan Stanley, Dean Witter & Co. 1.27s 4/22/03 49,961,194 75,000,000 Morgan Stanley, Dean Witter & Co. 1 1/4s 5/21/03 74,867,187 85,000,000 NATC California, LLC (Chase Manhattan Bank Letter of Credit (LOC)) 1.29s 4/21/03 84,936,038 25,000,000 NATC California, LLC (Chase Manhattan Bank (LOC)) 1.28s 4/28/03 24,975,243 53,000,000 NATC California, LLC (Chase Manhattan Bank (LOC)) 1.27s 4/28/03 52,947,516 44,000,000 National City Corp. 1.26s 4/7/03 43,989,220 72,000,000 Park Avenue Receivables Corp. 1.28s 4/1/03 71,997,440 19,861,000 Preferred Receivables Funding Corp. 1.29s 4/1/03 19,860,288 28,535,000 Procter & Gamble Co. 1.21s 4/25/03 28,511,023 17,400,000 Quincy Capital Corp. 1.3s 4/17/03 17,389,318 72,800,000 Quincy Capital Corp. 1.28s 4/4/03 72,789,760 50,000,000 Quincy Capital Corp. 1.26s 4/4/03 49,992,967 42,000,000 Salomon Smith Barney Holdings, Inc. 1.35s 4/15/03 41,976,375 67,600,000 Sheffield Receivables Corp. 1.33s 6/30/03 67,372,733 50,000,000 Sheffield Receivables Corp. 1.29s 4/2/03 49,996,417 38,000,000 Sheffield Receivables Corp. 1.27s 5/5/03 37,953,081 43,960,000 Sheffield Receivables Corp. 1.21s 6/17/03 43,844,752 30,000,000 Thunder Bay Funding, Inc. 1.29s 4/4/03 29,995,700 73,113,000 Thunder Bay Funding, Inc. 1.28s 4/8/03 73,092,203 25,903,000 Thunder Bay Funding, Inc. 1.27s 4/29/03 25,876,500 26,209,000 Thunder Bay Funding, Inc. 1.26s 4/24/03 26,186,984 75,000,000 Transamerica Finance Corp. 1.37s 5/22/03 74,851,583 267,000,000 UBS Finance (Delaware), LLC 1.39s 4/1/03 266,989,691 25,000,000 Windmill Funding Corp. 1.33s 5/21/03 24,952,896 20,000,000 Windmill Funding Corp. 1.33s 5/12/03 19,968,967 30,000,000 Windmill Funding Corp. 1.27s 5/1/03 29,967,192 40,000,000 Windmill Funding Corp. 1.26s 4/29/03 39,959,394 ------------- 3,298,389,791 Foreign (25.3%) (a) - ------------------------------------------------------------------------------------------------------------------- 64,000,000 Abbey National North America, LLC 1.27s (United Kingdom) 5/13/03 63,902,916 68,000,000 Aegon Funding Corp. 1.28s (Netherlands) 5/16/03 67,888,782 45,000,000 Aegon Funding Corp. 1.27s (Netherlands) 6/3/03 44,898,400 46,000,000 Canadian Wheat Board 1.26s (Canada) 8/21/03 45,769,770 25,000,000 COFCO Capital Corp. (Rabobank Nederland (LOC)) 1.27s (Netherlands) 5/6/03 24,968,250 36,000,000 COFCO Capital Corp. (Rabobank Nederland (LOC)) 1.25s (Netherlands) 5/19/03 35,939,149 24,700,000 COFCO Capital Corp. (Rabobank Nederland (LOC)) 1.23s (Netherlands) 5/19/03 24,658,249 108,000,000 Danske Bank A/S 1.37s (Denmark) 5/27/03 107,765,730 85,000,000 Danske Bank A/S 1.34s (Denmark) 6/12/03 84,769,036 47,000,000 Den Norske Bank 1.79s (Norway) 5/27/03 46,866,794 43,000,000 Den Norske Bank 1.28s (Norway) 11/19/03 42,643,769 50,000,000 Den Norske Bank 1.275s (Norway) 5/14/03 49,922,083 87,000,000 Den Norske Bank 1.27s (Norway) 5/20/03 86,846,542 25,000,000 Diageo Capital PLC 1.9s (United Kingdom) 4/7/03 24,990,764 35,000,000 ED&F Man Treasury Management (Societe Generale (LOC)) 1.26s (France) 5/19/03 34,939,975 35,000,000 ED&F Man Treasury Management (Societe Generale (LOC)) 1.24s (France) 6/19/03 34,903,556 12,400,000 HBOS Treasury Services PLC 1.78s (United Kingdom) 4/7/03 12,395,708 44,000,000 HBOS Treasury Services PLC 1.34s (United Kingdom) 6/18/03 43,870,616 24,950,000 ING America Insurance Holdings 1.22s (Netherlands) 6/10/03 24,889,968 35,000,000 LaSalle Bank Corp. 1.26s (Netherlands) 4/14/03 34,982,850 31,290,000 PEMEX Capital, Inc. (Barclays (LOC)) 1.34s (United Kingdom) 4/10/03 31,278,353 43,000,000 Shell Finance PLC 1.9s (United Kingdom) 5/9/03 42,911,492 54,000,000 Shell Finance PLC 1.77s (United Kingdom) 4/3/03 53,992,035 22,000,000 Shell Finance PLC 1.74s (United Kingdom) 4/10/03 21,989,367 45,000,000 Shell Finance PLC 1.3s (United Kingdom) 6/16/03 44,874,875 54,000,000 Societe Generale 1.26s (France) 4/23/03 53,956,530 45,000,000 Societe Generale 1.22s (France) 5/5/03 44,946,625 25,000,000 Spintab AB 1.33s (Sweden) 4/15/03 24,986,146 25,000,000 Spintab AB 1.33s (Sweden) 4/10/03 24,990,764 55,000,000 Spintab AB 1.27s (Sweden) 6/10/03 54,862,240 27,950,000 Stadshypotek Delaware, Inc. 1.24s (Sweden) 5/2/03 27,919,193 30,000,000 Svenska Handelsbanken, Inc. 1.35s (Sweden) 6/12/03 29,917,875 50,000,000 Toronto Dominion Holdings 1.24s (Canada) 7/23/03 49,803,667 65,000,000 Westdeutsche Landesbank Girozentrale 1.9s (Germany) 4/17/03 64,941,681 66,000,000 Westdeutsche Landesbank Girozentrale 1.4s (Germany) 5/2/03 65,917,867 65,000,000 Westdeutsche Landesbank Girozentrale 1.345s (Germany) 6/13/03 64,820,293 70,000,000 Westdeutsche Landesbank Girozentrale 1.32s (Germany) 6/3/03 69,835,733 ------------- 1,709,757,643 ------------- Total Commercial Paper (cost $5,008,147,434) $5,008,147,434 CERTIFICATES OF DEPOSIT (11.3%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE - ------------------------------------------------------------------------------------------------------------------- $25,500,000 Bank of Nova Scotia FRN, 1.235s (Canada) 9/25/03 $25,501,261 20,000,000 Canadian Imperial Bank of Commerce 1.8s (Canada) 4/14/03 20,006,857 65,000,000 Canadian Imperial Bank of Commerce 1.78s (Canada) 4/3/03 64,999,081 65,000,000 Canadian Imperial Bank of Commerce 1.28s (Canada) 5/5/03 65,000,000 20,000,000 Citibank N.A. 1.28s 4/23/03 20,000,000 45,000,000 Den Norske Bank 1.3s (Denmark) 4/17/03 45,000,000 75,000,000 HBOS PLC 1.32s (United Kingdom) 6/30/03 75,000,000 65,000,000 ING Bank NV 1.28s (Netherlands) 5/6/03 65,000,000 65,000,000 ING Bank NV 1.27s (Netherlands) 6/20/03 65,000,000 43,000,000 ING Bank NV 1.27s (Netherlands) 4/11/03 43,000,000 50,000,000 Landesbank Hessen Thuringen 1.38s (Germany) 5/30/03 49,999,969 65,000,000 Nordea Bank PLC 1.37s (Sweden) 5/27/03 65,001,022 25,000,000 Nordea Bank PLC FRN, 1.26s (Sweden) 10/30/03 24,997,059 30,000,000 Royal Bank of Canada 1.691s (Canada) 9/22/03 29,992,941 43,000,000 Toronto Dominion Holdings FRN, 1.35s (Canada) 5/13/03 43,000,000 65,000,000 Wells Fargo Bank 1.26s 4/30/03 65,000,000 ------------- Total Certificates of Deposits (cost $766,498,190) $766,498,190 CORPORATE BONDS AND NOTES (7.1%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE - ------------------------------------------------------------------------------------------------------------------- $35,000,000 Bank One Corp. sr. notes FRN Ser. B, 1.565s 9/11/03 $35,045,857 49,000,000 Goldman Sachs Group, Inc. notes, 1.3s 6/30/03 49,000,000 60,000,000 Goldman Sachs Group, Inc. 144A FRN, 1.318s 4/7/03 60,000,000 49,000,000 Merrill Lynch & Co., Inc. FRN Ser. B, 1.271s 4/22/03 48,994,718 25,000,000 Merrill Lynch & Co., Inc. FRN Ser. B, 1 1/4s 4/16/03 24,999,890 65,000,000 National City Bank of Indiana FRN, 1.181s 12/15/03 64,993,500 84,500,000 Nordbanken AB FRN 1.37s (Sweden) 2/19/04 84,548,272 56,000,000 US Bank NA FRN 1.251s 11/24/03 55,996,080 55,000,000 US Bank NA FRN 1.235s 5/29/03 54,979,788 ------------- Total Corporate Bonds and Notes (cost $478,558,105) $478,558,105 U.S. GOVERNMENT AGENCY OBLIGATIONS (7.0%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE - ------------------------------------------------------------------------------------------------------------------- $66,000,000 Fannie Mae notes 1.44s 4/19/04 $66,000,000 26,000,000 Federal Home Loan Bank 1.225s 5/7/03 25,967,265 49,000,000 Federal Home Loan Bank bonds Ser. HT04, 1.45s, 3/19/04 49,000,000 65,000,000 Federal Home Loan Bank bonds Ser. GM04, 1.425s 3/8/04 65,000,000 65,000,000 Federal Home Loan Bank bonds Ser. LU04, 1.42s 4/21/04 65,000,000 21,400,000 Federal Home Loan Mortgage Association 1.29s 4/9/03 21,393,099 44,000,000 Federal National Mortgage Association 1.28s 12/31/03 43,570,646 47,000,000 Federal National Mortgage Association 1.27s 12/31/03 46,541,371 40,000,000 Federal National Mortgage Association 1.255s 12/12/03 39,643,022 48,000,000 Federal National Mortgage Association 1.23s 4/14/03 47,977,040 ------------- Total U.S. Government Agency Obligations (cost $470,092,443) $470,092,443 SHORT-TERM INVESTMENTS (2.6%) (a) (cost $173,490,000) PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------------- $173,490,000 Interest in $375,000,000 joint tri-party repurchase agreement dated March 31, 2003, with S.B.C. Warburg, Inc. due April 1, 2003, with respect to various U.S. Government obligations -- maturity value of $173,496,554 for an effective yield of 1.36% $173,490,000 - ------------------------------------------------------------------------------------------------------------------- Total Investments (cost $6,896,786,172) $6,896,786,172 - ------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $6,763,284,957. 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 Notes (FRN) are the current interest rates shown at March 31, 2003, which are subject to change based on the terms of the security. DIVERSIFICATION BY COUNTRY Distribution of investments by country of issue at March 31, 2003: (as a percentage of Market Value) Canada 5.0% Denmark 3.4 France 2.4 Germany 4.6 Netherlands 6.3 Norway 3.3 Sweden 4.9 United Kingdom 6.0 United States 64.1 ----- Total 100.0% The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES March 31, 2003 (Unaudited) Assets - ------------------------------------------------------------------------------------------- Investments in securities, at amortized cost (Note 1) $6,896,786,172 - ------------------------------------------------------------------------------------------- Cash 1,382,053 - ------------------------------------------------------------------------------------------- Interest and other receivables 3,706,467 - ------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 29,289,826 - ------------------------------------------------------------------------------------------- Total assets 6,931,164,518 Liabilities - ------------------------------------------------------------------------------------------- Payable for securities purchased 121,011,651 - ------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 39,792,016 - ------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 5,091,113 - ------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 1,039,718 - ------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 134,273 - ------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 4,468 - ------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 553,559 - ------------------------------------------------------------------------------------------- Other accrued expenses 252,763 - ------------------------------------------------------------------------------------------- Total liabilities 167,879,561 - ------------------------------------------------------------------------------------------- Net assets $6,763,284,957 Represented by - ------------------------------------------------------------------------------------------- Paid-in capital (Notes 1 and 4) $6,763,149,580 - ------------------------------------------------------------------------------------------- Accumulated net realized gain on investments (Note 1) 135,377 - ------------------------------------------------------------------------------------------- Total -- Representing net assets applicable to capital shares outstanding $6,763,284,957 Computation of net asset value and offering price - ------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class A share ($5,424,044,925 divided by 5,423,859,564 shares)* $1.00 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($1,144,199,039 divided by 1,144,250,147 shares)** $1.00 - ------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($50,321,251 divided by 50,322,585 shares)** $1.00 - ------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class M share ($87,616,428 divided by 87,616,055 shares)* $1.00 - ------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class R share ($1,001 divided by 1,001 shares)* $1.00 - ------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class T share ($57,102,313 divided by 57,100,228 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 any applicable contingent deferred sales charge. The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS Six months ended March 31, 2003 (Unaudited) Interest income: $52,712,027 - ------------------------------------------------------------------------------------------- Expenses: - ------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 10,401,949 - ------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 5,796,488 - ------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 56,736 - ------------------------------------------------------------------------------------------- Administrative services (Note 2) 23,132 - ------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 2,913,131 - ------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 146,821 - ------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 71,445 - ------------------------------------------------------------------------------------------- Distribution fees -- Class R (Note 2) 1 - ------------------------------------------------------------------------------------------- Distribution fees -- Class T (Note 2) 40,546 - ------------------------------------------------------------------------------------------- Other 1,232,374 - ------------------------------------------------------------------------------------------- Total expenses 20,682,623 - ------------------------------------------------------------------------------------------- Expense reduction (Note 2) (192,428) - ------------------------------------------------------------------------------------------- Net expenses 20,490,195 - ------------------------------------------------------------------------------------------- Net investment income 32,221,832 - ------------------------------------------------------------------------------------------- Net realized gain on investments (Notes 1 and 3) 135,377 - ------------------------------------------------------------------------------------------- Net gain on investments 135,377 - ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $32,357,209 - ------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS Six months ended Year ended March 31 September 30 2003* 2002 - ------------------------------------------------------------------------------------------------------- Increase (decrease) in net assets - ------------------------------------------------------------------------------------------------------- Operations: - ------------------------------------------------------------------------------------------------------- Net investment income $32,221,832 $102,049,714 - ------------------------------------------------------------------------------------------------------- Net realized gain on investments 135,377 -- - ------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 32,357,209 102,049,714 - ------------------------------------------------------------------------------------------------------- Distributions to shareholders: (Note 1) - ------------------------------------------------------------------------------------------------------- From net investment income Class A (28,242,229) (87,229,262) - ------------------------------------------------------------------------------------------------------- Class B (3,259,979) (12,239,608) - ------------------------------------------------------------------------------------------------------- Class C (168,982) (854,060) - ------------------------------------------------------------------------------------------------------- Class M (433,501) (1,674,176) - ------------------------------------------------------------------------------------------------------- Class R (1) -- - ------------------------------------------------------------------------------------------------------- Class T (117,140) (52,608) - ------------------------------------------------------------------------------------------------------- Increase (decrease) from capital share transactions (Note 4) (140,136,502) 313,838,888 - ------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (140,001,125) 313,838,888 Net assets - ------------------------------------------------------------------------------------------------------- Beginning of period 6,903,286,082 6,589,447,194 - ------------------------------------------------------------------------------------------------------- End of period $6,763,284,957 $6,903,286,082 - ------------------------------------------------------------------------------------------------------- * Unaudited The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS A - ------------------------------------------------------------------------------------------------------------------ Six months ended Per-share March 31 operating performance (Unaudited) Year ended September 30 - ------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------------------------------------------------ Net investment income .0052 .0166 .0493 .0564 .0478 .0517 - ------------------------------------------------------------------------------------------------------------------ Net realized gain on investments -- (c) -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------ Total from investment operations .0052 .0166 .0493 .0564 .0478 .0517 - ------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------ From net investment income (.0052) (.0166) (.0493) (.0564) (.0478) (.0517) - ------------------------------------------------------------------------------------------------------------------ Total distributions (.0052) (.0166) (.0493) (.0564) (.0478) (.0517) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) .52* 1.67 5.04 5.79 4.89 5.29 - ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $5,424,045 $5,512,532 $5,215,127 $3,780,309 $3,691,475 $2,598,891 - ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .26* .50 .50 .49 .48 .58 - ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) .52* 1.68 4.77 5.69 4.73 5.20 - ------------------------------------------------------------------------------------------------------------------ * 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). (c) Amount represents less than $0.0001 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS B - ------------------------------------------------------------------------------------------------------------------ Six months ended Per-share March 31 operating performance (Unaudited) Year ended September 30 - ------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------------------------------------------------ Net investment income .0027 .0116 .0443 .0513 .0429 .0468 - ------------------------------------------------------------------------------------------------------------------ Net realized gain on investments -- (c) -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------ Total from investment operations .0027 .0116 .0443 .0513 .0429 .0468 - ------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------ From net investment income (.0027) (.0116) (.0443) (.0513) (.0429) (.0468) - ------------------------------------------------------------------------------------------------------------------ Total distributions (.0027) (.0116) (.0443) (.0513) (.0429) (.0468) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) .27* 1.16 4.52 5.25 4.37 4.78 - ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $1,144,199 $1,193,459 $1,162,039 $649,826 $1,041,452 $759,748 - ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .51* 1.00 1.00 .99 .98 1.08 - ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) .27* 1.19 4.26 5.13 4.24 4.69 - ------------------------------------------------------------------------------------------------------------------ * 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). (c) Amount represents less than $0.0001 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS C - ----------------------------------------------------------------------------------------------------- Six months ended For the period Per-share March 31 February 1, 1999+ operating performance (Unaudited) Year ended September 30 to September 30 - ----------------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------- Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------- Investment operations: - ----------------------------------------------------------------------------------------------------- Net investment income .0027 .0116 .0444 .0513 .0284 - ----------------------------------------------------------------------------------------------------- Net realized gain on investments -- (c) -- -- -- -- - ----------------------------------------------------------------------------------------------------- Total from investment operations .0027 .0116 .0444 .0513 .0284 - ----------------------------------------------------------------------------------------------------- Less distributions: - ----------------------------------------------------------------------------------------------------- From net investment income (.0027) (.0116) (.0444) (.0513) (.0284) - ----------------------------------------------------------------------------------------------------- Total distributions (.0027) (.0116) (.0444) (.0513) (.0284) - ----------------------------------------------------------------------------------------------------- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 - ----------------------------------------------------------------------------------------------------- Total return at net asset value (%)(a) .27* 1.17 4.53 5.26 2.87* - ----------------------------------------------------------------------------------------------------- Ratios and supplemental data - ----------------------------------------------------------------------------------------------------- Net assets, end of period (in thousands) $50,321 $79,227 $90,226 $52,872 $17,091 - ----------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets (%)(b) .51* 1.00 1.00 .99 .65* - ----------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets (%) .28* 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). (c) Amount represents less than $0.0001 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS M - ------------------------------------------------------------------------------------------------------------------ Six months ended Per-share March 31 operating performance (Unaudited) Year ended September 30 - ------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 - ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------------------------------------------------ Net investment income .0045 .0151 .0478 .0551 .0463 .0502 - ------------------------------------------------------------------------------------------------------------------ Net realized gain on investments -- (c) -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------ Total from investment operations .0045 .0151 .0478 .0551 .0463 .0502 - ------------------------------------------------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------------------------------------------------ From net investment income (.0045) (.0151) (.0478) (.0551) (.0463) (.0502) - ------------------------------------------------------------------------------------------------------------------ Total distributions (.0045) (.0151) (.0478) (.0551) (.0463) (.0502) - ------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) .45* 1.52 4.89 5.65 4.73 5.14 - ------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $87,616 $105,938 $122,055 $114,458 $136,134 $94,833 - ------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .33* .65 .65 .64 .63 .73 - ------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) .45* 1.55 4.70 5.51 4.58 5.04 - ------------------------------------------------------------------------------------------------------------------ * 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). (c) Amount represents less than $0.0001 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS R - ------------------------------------------------- For the period January 21, 2003+ Per-share to March 31 operating performance (Unaudited) - ------------------------------------------------- 2003 - ------------------------------------------------- Net asset value, beginning of period $1.00 - ------------------------------------------------- Investment operations: - ------------------------------------------------- Net investment income .0007 - ------------------------------------------------- Net realized gain on investments -- (c) - ------------------------------------------------- Total from investment operations .0007 - ------------------------------------------------- Less distributions: - ------------------------------------------------- From net investment income (.0007) - ------------------------------------------------- Total distributions (.0007) - ------------------------------------------------- Net asset value, end of period $1.00 - ------------------------------------------------- Total return at net asset value (%)(a) .07* - ------------------------------------------------- Ratios and supplemental data - ------------------------------------------------- Net assets, end of period (in thousands) $1 - ------------------------------------------------- Ratio of expenses to average net assets (%)(b) .20* - ------------------------------------------------- Ratio of net investment income to average net assets (%) .10* - ------------------------------------------------- + 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). (c) Amount represents less than $0.0001 per share. The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS (For a common share outstanding throughout the period) CLASS T - ------------------------------------------------------------------------ Six months ended For the period Per-share March 31 December 31, 2001+ operating performance (Unaudited) to September 30 - ------------------------------------------------------------------------ 2003 2002 - ------------------------------------------------------------------------ Net asset value, beginning of period $1.00 $1.00 - ------------------------------------------------------------------------ Investment operations: - ------------------------------------------------------------------------ Net investment income .0040 .0092 - ------------------------------------------------------------------------ Net realized gain on investments -- (c) -- - ------------------------------------------------------------------------ Total from investment operations .0040 .0092 - ------------------------------------------------------------------------ Less distributions: - ------------------------------------------------------------------------ From net investment income (.0040) (.0092) - ------------------------------------------------------------------------ Total distributions (.0040) (.0092) - ------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 - ------------------------------------------------------------------------ Total return at net asset value (%)(a) .40* .93* - ------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------ Net assets, end of period (in thousands) $57,102 $12,130 - ------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .38* .56* - ------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) .36* .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). (c) Amount represents less than $0.0001 per share. The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS March 31, 2003 (Unaudited) Note 1 Significant accounting policies Putnam Money Market Fund (the "fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The fund seeks as high a rate of current income as we believe is 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, class R and class T shares. The fund began offering class R shares on January 21, 2003. 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 a higher ongoing distribution fee than class A (which does not have an approved distribution fee), class M and class T shares, 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 that is higher than class A shares but lower than class B, class C and class R shares and are not subject to contingent deferred sales charge. Class R shares pay an ongoing distribution fee that is higher than class A, class M and class T shares. Class R shares are offered to qualified employee-benefit plans. 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 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 recorded on the trade date (the date the order to buy or sell is executed). Interest income is recorded on the accrual basis. Premiums and discounts from purchases of short-term investments are amortized/accreted at a constant rate until maturity. Gains or losses on securities sold are determined on the identified cost basis. 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. The aggregate identified cost on a financial reporting and tax basis is the same. F) Distributions to shareholders Income dividends are recorded daily by the fund and are paid monthly to the shareholders. Distributions of realized gains, if any, are paid at least annually. Note 2 Management fee, administrative services and other transactions Putnam Management is paid for management and investment advisory services 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 six months ended March 31, 2003, the fund's expenses were reduced by $192,428 under these arrangements. Each independent Trustee of the fund receives an annual Trustee fee, of which $4,343 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, class R 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%, 1.00% and 0.35% of the average net assets attributable to class B, class C, class M, class R and class T shares, respectively. The Trustees have approved payment by the fund at the annual rates of 0.50%, 0.50%, 0.15%, 0.50% and 0.25% of the average net assets attributable to class B, class C, class M, class R and class T shares, respectively. For the six months ended March 31, 2003, Putnam Retail Management, acting as the underwriter, received net commissions of $3,424,578 and $44,465 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1.00% on class A and class T shares, and 0.15% for class M shares, may be assessed on certain redemptions. For the six months ended March 31, 2003, Putnam Retail Management, acting as underwriter, received no monies in contingent deferred sales charges from redemptions of class A, class M or class T shares acquired through exchanges from other Putnam funds. Note 3 Purchases and sales of securities During the six months ended March 31, 2003, cost of purchases and proceeds from sales (including maturities) of investment securities (all short-term obligations) aggregated $48,708,678,150 and $48,749,915,708, respectively. Note 4 Capital shares At March 31, 2003, there was an unlimited number of shares of beneficial interest authorized. Transactions in capital shares at a constant net asset value of $1.00 per share were as follows: Six months ended Year ended March 31, 2003 Sept. 30, 2002 - --------------------------------------------------------------------------- Class A - --------------------------------------------------------------------------- Shares sold 3,007,052,301 9,387,236,895 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 27,452,066 84,364,207 - --------------------------------------------------------------------------- 3,034,504,367 9,471,601,102 Shares repurchased (3,123,177,074) (9,174,195,954) - --------------------------------------------------------------------------- Net increase (decrease) (88,672,707) 297,405,148 - --------------------------------------------------------------------------- Six months ended Year ended March 31, 2003 Sept. 30, 2002 - --------------------------------------------------------------------------- Class B - --------------------------------------------------------------------------- Shares sold 507,782,504 1,483,572,641 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 3,013,636 11,157,218 - --------------------------------------------------------------------------- 510,796,140 1,494,729,859 Shares repurchased (560,004,916) (1,463,309,443) - --------------------------------------------------------------------------- Net increase (decrease) (49,208,776) 31,420,416 - --------------------------------------------------------------------------- Six months ended Year ended March 31, 2003 Sept. 30, 2002 - --------------------------------------------------------------------------- Class C - --------------------------------------------------------------------------- Shares sold 92,055,250 587,433,756 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 157,645 776,797 - --------------------------------------------------------------------------- 92,212,895 588,210,553 Shares repurchased (121,116,831) (599,210,265) - --------------------------------------------------------------------------- Net decrease (28,903,936) (10,999,712) - --------------------------------------------------------------------------- Six months ended Year ended March 31, 2003 Sept. 30, 2002 - --------------------------------------------------------------------------- Class M - --------------------------------------------------------------------------- Shares sold 46,895,021 433,265,530 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 410,482 1,570,131 - --------------------------------------------------------------------------- 47,305,503 434,835,661 Shares repurchased (65,627,875) (450,952,565) - --------------------------------------------------------------------------- Net decrease (18,322,372) (16,116,904) - --------------------------------------------------------------------------- For the period January 21, 2003 (commencement of operations) to March 31, 2003 - --------------------------------------------------------------------------- Class R - --------------------------------------------------------------------------- Shares sold 1,000 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 1 - --------------------------------------------------------------------------- Net Increase 1,001 Shares repurchased -- - --------------------------------------------------------------------------- Net increase 1,001 - --------------------------------------------------------------------------- For the period Dec. 31, 2001 (commencement Six months ended of operations) March 31, 2003 to Sept. 30, 2002 - --------------------------------------------------------------------------- Class T - --------------------------------------------------------------------------- Shares sold 60,929,351 22,566,017 - --------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 110,714 52,538 - --------------------------------------------------------------------------- 61,040,065 22,618,555 Shares repurchased (16,069,777) (10,488,615) - --------------------------------------------------------------------------- Net increase 44,970,288 12,129,940 - --------------------------------------------------------------------------- At March 31, 2003, Putnam Investments, LLC owned 1,001 class R shares of the fund (100% of class R shares outstanding), valued at $1,001. 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 over 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 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 Brett C. Browchuk Vice President Charles E. Haldeman, Jr. Vice President Lawrence J. Lasser Vice President Beth S. Mazor Vice President Richard A. Monaghan Vice President Stephen M. Oristaglio Vice President Gordon H. Silver Vice President Mark C. Trenchard Vice President Kevin M. Cronin Vice President Judith Cohen 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 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 a representative at 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 SA039-88618 010/879/2LY/534/210/2XR 5/03 -----END PRIVACY-ENHANCED MESSAGE-----