-----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, OHgZPNd3bE6OgIZMpOrhiLd59lc48KFlKt+GIoJvWZslnJZVdtGSejyHloqfFUKD AmFn+8S6552pRGyuofHOrA== 0000928816-99-000334.txt : 19991124 0000928816-99-000334.hdr.sgml : 19991124 ACCESSION NUMBER: 0000928816-99-000334 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MONEY MARKET FUND CENTRAL INDEX KEY: 0000081248 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046386436 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02608 FILM NUMBER: 99762655 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ STREET 2: MAILSTOP A-14 LEGAL DEPARTMENT CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921471 MAIL ADDRESS: STREET 1: MAILSTOP A-14 LEGAL DEPARTMENT STREET 2: ONE POST OFFICE SQUARE CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: PUTNAM DAILY DIVIDEND TRUST DATE OF NAME CHANGE: 19920703 N-30D 1 PUTNAM MONEY MARKET FUND Putnam Money Market Fund ANNUAL REPORT ON PERFORMANCE AND OUTLOOK 9-30-99 [LOGO: BOSTON * LONDON * TOKYO] From the Chairman [GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM] [copyright] Karsh, Ottawa Dear Shareholder: For most of the 12 months ended September 30, 1999, the money market sustained positive momentum. The economy continued to grow, inflation stayed in check, and interest rates trended upward. Elsewhere in the U.S. financial universe, the stock market continued on its upward path while the bond market suffered its second-worst year on record. Even within the stock and money markets, there were pockets of volatility, especially surrounding the Federal Reserve Board's two short-term interest rate increases in June and August. Nonetheless, the money market remained one of the calmest sectors in the financial marketplace, and funds such as Putnam Money Market Fund continued to attract new assets. Your fund's recent performance reflects the relatively favorable atmosphere that prevailed in the money market sector over this period. Total return for 12 months ended 9/30/99 Class A Class B Class C Class M NAV NAV CDSC NAV CDSC NAV - ----------------------------------------------------------------------- 4.89% 4.37% -0.63% 4.45% 3.45% 4.73% - ----------------------------------------------------------------------- Past performance is no indication of future results. Performance information for longer periods and explanation of performance calculation methods begin on page 5. * SLIGHTLY LONGER DURATION CAPTURES INCOME What a difference a year makes. Just last September the economy appeared so much in danger of stalling that the Fed lowered short-term interest rates three times in just seven weeks. Since then, economic growth has been fairly steady. In fact, over the summer, the Fed became concerned that the economy was overheating and actually raised interest rates twice, in June and again in August. The tightenings helped to slow second-quarter growth to 1.6% -- compared to 4.3% in the first quarter of 1999. Despite widespread expectations of a third increase, the Fed left rates alone at its early October meeting. Nonetheless, current market interest rates reflect an expectation that the Fed will raise rates again in the months ahead. This expectation has driven up yields, and in fact, the Fed stated its bias toward tightening rates should inflation appear stronger. In this environment of higher interest rates, duration management was an important tool for your fund's manager, Joanne Driscoll. In order to lock in the highest available money market rates, she kept portfolio duration slightly longer than the market average throughout the past six months. Besides allowing the fund to capture additional income, this longer duration also enables the fund to avoid reinvesting assets in January, a time when money market yields traditionally drop due to increased demand for money market assets. * Y2K FEARS SPUR SUPPLY AND DEMAND In recent months, expectations of interest-rate increases have not been the only engine fueling rising money market yields. Since August, fears of a funding crunch at the end of 1999 have spurred corporations to issue more short-term securities than usual. Historically, this supply surge occurs later in the year, typically in November and December. This year, however, concerns that Y2K complications may affect financial markets -- along with a Bond Market Association recommendation to curtail security issuance near the end of the year -- have corporations scrambling early to cover their year-end financing needs. Investors have been quick to take advantage of today's higher money market yields. They have also been motivated at least partly by fears of Y2K complications at year's end and have staged a flight to quality in response. Indeed, assets invested in money market funds like this one have grown dramatically over the past year. With new assets pouring into your fund, Joanne has continued to seek out new investment opportunities. The corporate sector has provided many of these opportunities, since yields there are higher than in the government sector, in which a decreasing supply has dampened yields. With its longer duration, the fund has been well positioned to maximize the income advantage now being offered by corporate year-end funding pressures. In the coming months, Joanne will continue to take advantage of opportunities for higher yield while keeping a firm grasp on superior credit quality and capital preservation. As we approach the new year, when yields on money market securities should decline gradually, she plans to bring portfolio duration back to a more neutral position. As always, she will remain focused on implementing the conservative strategies that have served shareholders well thus far. Respectfully yours, /S/GEORGE PUTNAM George Putnam Chairman of the Trustees November 17, 1999 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 9/30/99, there is no guarantee the fund will continue to hold these securities in the future. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve your investment at $1.00 per share, it is possible to lose money by investing in the fund. PERFORMANCE COMPARISONS (9/30/99) Current return* - ------------------------------------------------------------------------- Passbook savings account 1.25% - ------------------------------------------------------------------------- Taxable money market fund (7-day yield) 4.82 - ------------------------------------------------------------------------- 3-month certificate of deposit 3.85 - ------------------------------------------------------------------------- Putnam Money Market Fund (7-day yield) - ------------------------------------------------------------------------- Class A 4.89 - ------------------------------------------------------------------------- Class B 4.38 - ------------------------------------------------------------------------- Class C 4.37 - ------------------------------------------------------------------------- Class M 4.73 - ------------------------------------------------------------------------- The net asset value of money market mutual funds is uninsured and designed to be fixed, while distributions vary daily. Investment returns will fluctuate. The principal value on passbook savings and on bank CDs is generally insured up to certain limits by state and federal agencies. Unlike stocks, which incur more risk, CDs offer a fixed rate of return. Unlike money market funds, bank CDs may be subject to substantial penalties for early withdrawals. *Sources: BankBoston (passbook savings), Bank Rate Monitor (3-month CDs), IBC/Donaghue's Money Fund Report (taxable money market fund compound 7-day yield). Performance summary This section provides information about your fund's performance, which should always be considered in light of its investment strategy. Putnam Money Market Fund is designed for investors seeking current income consistent with capital preservation, stable principal, and liquidity. TOTAL RETURN FOR PERIODS ENDED 9/30/99 (most recent calendar quarter) Class A Class B Class C Class M (inception dates) (10/1/76) (4/27/92) (2/1/99) (12/8/94) NAV NAV CDSC NAV CDSC NAV - ------------------------------------------------------------------------------- 1 year 4.89% 4.37% -0.63% 4.45% 3.45% 4.73% - ------------------------------------------------------------------------------- 5 years 28.70 25.52 23.52 25.62 25.62 27.74 Annual average 5.18 4.65 4.32 4.67 4.67 5.02 - ------------------------------------------------------------------------------- 10 years 62.43 54.78 54.78 54.89 54.89 60.02 Annual average 4.97 4.46 4.46 4.47 4.47 4.81 - ------------------------------------------------------------------------------- Life of fund 404.16 350.04 350.04 350.38 350.38 387.05 Annual average 7.29 6.76 6.76 6.76 6.76 7.13 - ------------------------------------------------------------------------------- Current return (end of period) - ------------------------------------------------------------------------------- Current 7-day yield1 4.89% 4.38% 4.37% 4.73% - ------------------------------------------------------------------------------- Current 30-day yield1 4.82 4.31 4.30 4.66 - ------------------------------------------------------------------------------- 1The 7-day and 30-day yields are the two most common gauges for measuring money market mutual fund performance. COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 9/30/99 Lipper Money Consumer Market Fund Average price index - ------------------------------------------------------------------------ 1 year 4.40% 2.75% - ------------------------------------------------------------------------ 5 years 27.25 12.38 Annual average 4.94 2.36 - ------------------------------------------------------------------------ 10 years 61.05 34.32 Annual average 4.88 2.99 - ------------------------------------------------------------------------ Life of fund 407.69 191.49 Annual average 7.32 4.76 - ------------------------------------------------------------------------ Past performance is no assurance of future results. More recent returns may be more or less than those shown. Returns shown for class B and class M shares for periods prior to their inception are derived from the historical performance of class A shares, adjusted to reflect the higher operating expenses applicable to such shares. One-, five- (ten-year when available), and life of fund returns for class B shares reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declines to 1% in the sixth year, and is eliminated thereafter. For class C shares, returns for periods prior to their inception are derived from the historical performance of class A shares, adjusted to reflect both the CDSC currently applicable to class C shares, which is 1% for the first year and is eliminated thereafter, and the higher operating expenses applicable to class C shares. All returns assume reinvestment of distributions at NAV. Fund performance data do not take into account any adjustment for taxes payable on reinvested distributions. Investment returns will fluctuate. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve your investment at $1.00 per share, it is possible to lose money by investing in the fund. The fund's holdings do not match those in the Lipper average. Yield data more closely reflect the current earnings of the fund. DISTRIBUTION INFORMATION 12 MONTHS ENDED 9/30/99 Class A Class B Class C Class M - ------------------------------------------------------------------------------ Distributions (number) 12 12 8 12 - ------------------------------------------------------------------------------ Income $0.047821 $0.042867 $0.028384 $0.046323 - ------------------------------------------------------------------------------ Capital gains -- -- -- -- - ------------------------------------------------------------------------------ Total $0.047821 $0.042867 $0.028384 $0.046323 - ------------------------------------------------------------------------------ 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. Class A shares generally are fund shares purchased with an initial sales charge. In the case of your fund, which has no class A 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 and class C shares generally are fund shares purchased with no initial sales charge but subject to a contingent deferred sales charge (CDSC) upon redemption. However, class B and class C shares of your fund can be acquired only through exchange of class B or class C shares from another fund or purchased by certain systematic plan shareholders. A contingent deferred sales charge is a charge applied at the time of redemption of class B and class C shares. The CDSC schedule may vary depending on whether the shares were acquired through exchange or through a systematic investment plan purchase. Consult your prospectus for details. Class M shares generally have a lower initial sales charge and a higher 12b-1 fee than class A shares and no sales charge on redemption. In the case of your fund, which has no class M 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. Comparative benchmarks Lipper Money Market Fund Average, used for performance comparison purposes, is an arithmetic average of the total return of all money market mutual funds tracked by Lipper Analytical Services. Lipper is an independent rating organization for the mutual fund industry. Lipper rankings vary for other periods. The fund's holdings do not match those in the Lipper average. It is not possible to invest directly in an index. Consumer price index (CPI) is a commonly used measure of inflation; it does not represent an investment return. A guide to the financial statements These sections of the report, 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 non-investment 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 for the reporting period. This is determined by adding up all the fund's earnings -- from dividends and interest income -- and subtracting its operating expenses. This statement also lists any net gain or loss the fund realized on the sales of its holdings and -- for holdings that remain in the portfolio -- any change in unrealized gains or losses over the 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-ended funds, a separate table is provided for each share class. Report of independent accountants For the fiscal year ended September 30, 1999 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, 1999, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of investments owned at September 30, 1999 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP Boston, Massachusetts November 9, 1999
The fund's portfolio September 30, 1999 COMMERCIAL PAPER (89.6%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE Domestic (62.6%) (a) - -------------------------------------------------------------------------------------------------------------------------- $ 25,000,000 American General Finance Corp. 5.32s 11/23/99 $ 24,800,500 40,000,000 American General Finance Corp. 5.30s 10/5/99 39,970,556 41,000,000 Asset Securitization Co-op Corp. 5.93s 1/28/00 40,189,567 189,000,000 Associates Corp. of North America 5.58s 10/1/99 188,970,705 27,000,000 Bankamerica Corp. 4.81s 11/3/99 26,877,345 39,000,000 Bank Of America FSB 5.31s 11/19/99 38,712,375 44,000,000 Bank Of New York Co. 5.31s 10/25/99 43,837,750 34,000,000 Bank One Corp. 5.32s 12/14/99 33,623,167 40,000,000 Chase Manhattan Corp. 5.32s 11/17/99 39,716,267 30,000,000 Chase Manhattan Corp. 5.32s 11/1/99 29,858,133 30,000,000 Chevron Transport Corp. 5.70s 2/24/00 29,301,750 30,000,000 Chevron Transport Corp. 5.32s 11/15/99 29,796,067 25,000,000 Chevron UK Investment PLC 5.33s 11/18/99 24,818,632 47,156,000 Ciesco L.P. 5.32s 10/20/99 47,016,628 39,000,000 Citicorp 5.27s 10/1/99 38,994,291 43,000,000 Corporate Asset Funding Co. Inc. 5.16s 10/27/99 42,833,590 50,000,000 Corporate Receivables Corp. 5.40s 11/9/99 49,700,000 40,000,000 Corporate Receivables Corp. 5.36s 12/1/99 39,630,756 31,000,000 Corporate Receivables Corp. 5.35s 10/28/99 30,871,006 50,000,000 Corporate Receivables Corp. 5.35s 10/18/99 49,866,250 43,000,000 CXC Inc. 5.37s 11/9/99 42,743,433 43,000,000 CXC Inc. 5.35s 10/26/99 42,833,853 50,000,000 DaimlerChrysler NA Holding Corp. 5.33s 10/25/99 49,814,931 31,056,000 Delaware Funding Corp. 5.38s 11/12/99 30,856,431 40,000,000 Delaware Funding Corp. 5.32s 10/6/99 39,964,533 42,000,000 Delaware Funding Corp. 5.17s 10/21/99 41,873,335 43,000,000 Eureka Securitization Inc. 5.712s 2/22/00 43,000,000 35,000,000 Eureka Securitization Inc. 5.38s 12/14/99 34,607,708 40,000,000 Eureka Securitization Inc. 5.38s 12/6/99 39,599,489 40,000,000 Eureka Securitization Inc. 5.35s 11/2/99 39,803,833 30,000,000 Eureka Securitization Inc. 5.34s 10/28/99 29,875,400 74,000,000 Falcon Asset Securitization Corp. 5.39s 11/10/99 73,545,743 37,342,000 Falcon Asset Securitization Corp. 5.36s 10/27/99 37,191,885 36,000,000 Falcon Asset Securitization Corp. 5.32s 10/15/99 35,920,200 44,852,000 Falcon Asset Securitization Corp. 5.22s 11/8/99 44,598,362 25,000,000 Fleet Financial Group 5.77s 3/8/00 24,358,889 34,000,000 Fleet Financial Group 5.75s 2/25/00 33,196,278 32,500,000 Florens Containers, Inc. (Bank of America (LOC)) 5.30s 11/3/99 32,337,319 19,000,000 Formosa Plastics Corp. (Bank of America (LOC)) 5.24s 12/10/99 18,803,646 35,000,000 Formosa Plastics Corp. (Bank of America (LOC)) 5.19s 10/14/99 34,929,358 50,000,000 General Electric Capital Corp. 5.33s 11/26/99 49,578,042 49,000,000 General Electric Capital Corp. 5.33s 10/13/99 48,905,689 50,000,000 General Electric Capital Corp. 5.30s 10/4/99 49,970,556 23,000,000 General Electric Capital Corp. 5.02s 10/7/99 22,977,549 34,000,000 Goldman Sachs 4.82s 10/15/99 33,931,717 135,000,000 Household Finance Corp. 5.60s 10/1/99 134,979,000 35,000,000 International Business Machines Corp. 6.25s 1/19/00 34,787,326 40,000,000 International Business Machines Corp. 5.30s 10/8/99 39,952,889 42,000,000 Lehman Brothers Hldg. 5.40s 11/15/99 41,710,200 30,000,000 Merrill Lynch & Co., Inc. 5.29s 10/5/99 29,977,958 50,000,000 Metlife Funding 5.30s 11/5/99 49,735,000 40,000,000 Metlife Funding 5.30s 10/26/99 39,846,889 35,000,000 Metlife Funding 5.29s 10/19/99 34,902,282 54,000,000 Metlife Funding 5.29s 10/7/99 53,944,455 34,500,000 Morgan Stanley Dean Witter & Co. 5.43s 2/4/00 33,839,124 43,000,000 PNC Bank NA 5.41s 11/29/99 42,612,283 42,000,000 PNC Bank NA 5.41s 11/22/99 41,665,482 40,000,000 Preferred Receivables Funding Corp. 5.87s 1/31/00 39,197,767 40,000,000 Preferred Receivables Funding Corp. 5.42s 11/2/99 39,801,267 25,750,000 Preferred Receivables Funding Corp. 4.82s 10/29/99 25,650,018 30,170,000 Sheffield Receivables Corp. 5.39s 11/15/99 29,962,212 63,050,000 Sheffield Receivables Corp. 5.37s 10/14/99 62,918,331 46,000,000 Sigma Finance, Inc. 5.40s 11/24/99 45,620,500 40,000,000 Sigma Finance, Inc. 5.39s 11/16/99 39,718,522 45,500,000 Sigma Finance, Inc. 5.21s 10/15/99 45,401,227 25,000,000 Sigma Finance, Inc. 4.86s 10/8/99 24,973,000 35,000,000 Sigma Finance, Inc. 4.86s 10/7/99 34,966,925 45,600,000 Wal-Mart Stores, Inc. 5.29s 11/30/99 45,191,259 40,000,000 Wal-Mart Stores, Inc. 5.28s 10/12/99 39,929,600 36,200,000 Windmill Funding Corp. 5.86s 1/14/00 35,575,389 25,000,000 Windmill Funding Corp. 5.83s 1/18/00 24,554,653 36,000,000 Windmill Funding Corp. 5.39s 11/22/99 35,714,330 25,000,000 Windmill Funding Corp. 5.38s 12/16/99 24,712,319 25,000,000 Windmill Funding Corp. 5.38s 11/4/99 24,869,236 -------------- 3,061,312,957 Foreign (27.0%) (a) - -------------------------------------------------------------------------------------------------------------------------- 29,000,000 Abbey National North America Corp. 4.74s (United Kingdom) 10/29/99 28,889,268 90,000,000 Aegon Funding Corp. 5.76s (Netherlands) 3/29/00 87,395,611 25,000,000 Banco Bradesco S.A. (Barclays (LOC)) 5.485s (United Kingdom) 6/16/00 24,009,653 27,000,000 Banco Bradesco S.A. (Barclays (LOC)) 5.20s (United Kingdom) 12/20/99 26,684,100 45,000,000 Banco De Galicia Y Buenos Aires S.A. (Bayerische Vereninsbank (LOC)) 5.40s (Germany) 11/23/99 44,635,500 20,000,000 Banco Mercantil Del Norte S.A. (Bayerische Vereninsbank (LOC)) 5.24s (Germany) 11/29/99 19,825,333 43,000,000 CBA Delaware Finance 5.37s (Australia) 12/3/99 42,589,493 35,000,000 CBA Delaware Finance 5.35s (Australia) 12/17/99 34,594,292 42,000,000 CBA Delaware Finance 5.35s (Australia) 12/2/99 41,606,775 53,000,000 Credit Suisse First Boston 5.80s (Switzerland) 2/10/00 51,864,328 30,000,000 Credit Suisse First Boston 5.70s (Switzerland) 2/9/00 29,373,000 34,000,000 Credit Suisse First Boston International Guernsey 5.82s (Switzerland) 2/14/00 33,246,957 32,000,000 Credit Suisse First Boston International Guernsey 5.80s (Switzerland) 3/2/00 31,206,044 39,400,000 Credit Suisse First Boston International Guernsey 5.79s (Switzerland) 3/6/00 38,398,780 27,500,000 Demir Funding Corp. (Bayerische Vereinsbank (LOC)) 5.19s (Germany) 10/12/99 27,452,425 36,880,000 Den Danske Corp. Inc. 5.18s (Denmark) 10/22/99 36,763,254 42,000,000 Den Danske Corp. Inc. 4.83s (Denmark) 11/30/99 41,656,265 41,000,000 Deutsche Bank Financial Inc. 5.17s (Germany) 12/15/99 40,552,508 30,000,000 ED & F Man Finance Inc. (Rabobank New York (LOC)) 5.40s (Netherlands) 12/7/99 29,694,000 30,000,000 ED & F Man Finance Inc. (Rabobank New York (LOC)) 5.38s (Netherlands) 12/10/99 29,681,683 44,400,000 ED & F Man Finance Inc. (Rabobank New York (LOC)) 5.34s (Netherlands) 10/13/99 44,314,382 25,000,000 Formosa Plastics Corp. (ABN AMRO Bank N.V. (LOC)) 5.87s (Netherlands) 2/18/00 24,425,229 26,000,000 Formosa Plastics Corp. (ABN AMRO Bank N.V. (LOC)) 5.18s (Netherlands) 10/19/99 25,928,919 45,500,000 Formosa Plastics Corp. (ABN AMRO Bank N.V. (LOC)) 5.15s (Netherlands) 10/13/99 45,415,383 18,000,000 Nacional Financiera, S.N.C. (Barclays (LOC)) 4.87s (United Kingdom) 11/12/99 17,895,295 24,850,000 Northern Rock PLC 5.36s (United Kingdom) 11/3/99 24,724,204 25,000,000 Northern Rock PLC 5.34s (United Kingdom) 11/9/99 24,851,667 45,000,000 PEMEX Capital, Inc.(Societe General (LOC)) 5.25s (France) 10/29/99 44,809,688 30,000,000 Toronto Dominion Holdings 4.77s (Canada) 11/5/99 29,856,900 20,000,000 Transportation de Gas del Sur S.A. (Dresdner Bank AG (LOC)) 5.21s (Germany) 10/22/99 19,936,322 20,000,000 Transportation de Gas del Sur S.A. (Dresdner Bank AG (LOC)) 5.19s (Germany) 10/20/99 19,942,333 20,000,000 Transportation de Gas del Sur S.A. (Dresdner Bank AG (LOC)) 5.18s (Germany) 10/18/99 19,948,200 30,425,000 United Bank of Switzerland 5.60s (Switzerland) 10/1/99 30,420,267 30,000,000 United Bank of Switzerland 5.52s (Switzerland) 6/2/00 29,992,236 25,000,000 United Bank of Switzerland 4.79s (Switzerland) 10/12/99 24,960,083 21,000,000 Unibanco-Grand Cayman (WestDeutscke Landesbank (LOC)) 5.40s (Germany) 7/13/00 20,095,950 43,000,000 Union Bank Of Switzerland 4.84s (Switzerland) 12/13/99 42,572,198 50,000,000 United Mexican States (Barclays (LOC)) 5.35s (Mexico) 10/22/99 49,836,528 38,300,000 Westpac Capital Corp. 5.33s (Australia) 11/16/99 38,033,485 -------------- 1,318,078,538 -------------- Total Commercial Paper (cost $4,379,391,495) $4,379,391,495 CERTIFICATES OF DEPOSIT (10.5%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- $34,000,000 ABN AMRO Bank N.V. 5.70s (Netherlands) 7/10/00 $ 33,987,202 34,000,000 Bank Of Nova Scotia 5.57s (Canada) 6/12/00 33,993,047 35,000,000 Bayerische Hypo-und Verinsbank AG 5.15s (Germany) 4/20/00 34,990,627 53,000,000 Bayerische Landesbank Girozentrale 5.12s (Germany) 3/21/00 52,944,950 35,000,000 Canadian Imperial Bank Of Commerce 5.12s (Canada) 2/23/00 34,993,256 34,000,000 Chase Manhattan Corp. 5.61s 2/15/00 34,000,000 30,000,000 Chase Manhattan Corp. 4.93s 10/6/99 30,000,000 35,000,000 Commerzbank AG 5.65s (Germany) 6/26/00 34,989,917 35,000,000 Commerzbank AG 5.27s (Germany) 5/18/00 34,989,346 34,000,000 Commerzbank AG 5.22s (Germany) 5/12/00 33,989,915 30,000,000 Commerzbank AG 5.09s (Germany) 2/16/00 29,996,696 25,000,000 Deutsche Bank. 5.41s (Germany) 5/22/00 24,992,125 30,000,000 Deutsche Bank 5.10s (Germany) 2/8/00 29,995,848 35,000,000 Deutsche Bank 5.10s (Germany) 1/13/00 34,997,088 34,000,000 National Westminster Bank PLC Euro 5.42s (United Kingdom) 12/21/99 34,000,202 -------------- Total Certificates of Deposit (cost $512,860,219) $ 512,860,219 CORPORATE BONDS AND NOTES (2.8%) (a) MATURITY PRINCIPAL AMOUNT DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- $39,000,000 Abbey National Treasury Service FRN 5.38s (United Kingdom) 5/1/00 $ 38,974,650 34,000,000 Goldman Sachs Group, Inc. notes 6.00s 8/7/00 34,000,000 35,000,000 National Rural Utilities notes 5.59s 6/26/00 35,000,000 30,000,000 Wells Fargo & Co. notes 5.35s 3/31/00 29,988,477 -------------- Total Corporate Bonds and Notes (cost $137,963,127) $ 137,963,127 U.S. GOVERNMENT & AGENCY OBLIGATIONS (0.6%) (a) (cost $31,195,104) MATURITY PRINCIPAL AMOUNT DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- $31,471,000 Federal Home Loan Banks 5.26s 11/29/99 $ 31,195,104 - -------------------------------------------------------------------------------------------------------------------------- Total Investments (cost $5,061,409,945) (b) $5,061,409,945 - -------------------------------------------------------------------------------------------------------------------------- (a) Percentages indicated are based on net assets of $4,886,152,923. (b) The aggregate identified cost on a tax basis is the same. The rates shown on Floating Rate Notes (FRN) are the current interest rates shown at September 30, 1999, 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, 1999: (as percentage of Market Value) Australia 2.4% Canada 2.0 Denmark 1.5 France 1.0 Germany 10.3 Mexico 1.0 Netherlands 6.3 Switzerland 6.2 United Kingdom 4.4 United States 64.9 ----- Total 100.0% The accompanying notes are an integral part of these financial statements.
Statement of assets and liabilities September 30, 1999 Assets - ----------------------------------------------------------------------------------------------- Investments in securities, at amortized cost (Note 1) $5,061,409,945 - ----------------------------------------------------------------------------------------------- Cash 5,035 - ----------------------------------------------------------------------------------------------- Interest and other receivables 15,892,605 - ----------------------------------------------------------------------------------------------- Receivable for shares of the fund sold 31,496,312 - ----------------------------------------------------------------------------------------------- Total assets 5,108,803,897 Liabilities - ----------------------------------------------------------------------------------------------- Distributions payable to shareholders 729,522 - ----------------------------------------------------------------------------------------------- Payable for securities purchased 34,787,326 - ----------------------------------------------------------------------------------------------- Payable for shares of the fund repurchased 182,172,389 - ----------------------------------------------------------------------------------------------- Payable for compensation of Manager (Note 2) 3,646,384 - ----------------------------------------------------------------------------------------------- Payable for investor servicing and custodian fees (Note 2) 283,058 - ----------------------------------------------------------------------------------------------- Payable for compensation of Trustees (Note 2) 36,233 - ----------------------------------------------------------------------------------------------- Payable for administrative services (Note 2) 7,938 - ----------------------------------------------------------------------------------------------- Payable for distribution fees (Note 2) 465,973 - ----------------------------------------------------------------------------------------------- Other accrued expenses 522,151 - ----------------------------------------------------------------------------------------------- Total liabilities 222,650,974 - ----------------------------------------------------------------------------------------------- Net assets $4,886,152,923 Represented by - ----------------------------------------------------------------------------------------------- Paid-in capital (Note 4) $4,886,152,923 - ----------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class A share ($3,691,475,399 divided by 3,691,475,399 shares) * $1.00 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class B share ($1,041,452,406 divided by 1,041,452,406 shares)** $1.00 - ----------------------------------------------------------------------------------------------- Net asset value and offering price per class C share ($17,090,859 divided by 17,090,859 shares)** $1.00 - ----------------------------------------------------------------------------------------------- Net asset value, offering and redemption price per class M share ($136,134,259 divided by 136,134,259 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. For investors who acquired class B and class C shares through an exchange, the applicable contingent deferred sales charge will depend upon the fund which you exchanged. The accompanying notes are an integral part of these financial statements.
Statement of operations Year ended September 30, 1999 Interest income $213,889,955 - ----------------------------------------------------------------------------------------------- Expenses: - ----------------------------------------------------------------------------------------------- Compensation of Manager (Note 2) 12,884,015 - ----------------------------------------------------------------------------------------------- Investor servicing and custodian fees (Note 2) 5,286,055 - ----------------------------------------------------------------------------------------------- Compensation of Trustees (Note 2) 55,500 - ----------------------------------------------------------------------------------------------- Administrative services (Note 2) 31,766 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class B (Note 2) 4,057,955 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class C (Note 2) 18,723 - ----------------------------------------------------------------------------------------------- Distribution fees -- Class M (Note 2) 158,302 - ----------------------------------------------------------------------------------------------- Reports to shareholders 124,190 - ----------------------------------------------------------------------------------------------- Registration fees 812,898 - ----------------------------------------------------------------------------------------------- Auditing 42,402 - ----------------------------------------------------------------------------------------------- Legal 25,116 - ----------------------------------------------------------------------------------------------- Postage 442,678 - ----------------------------------------------------------------------------------------------- Other 60,854 - ----------------------------------------------------------------------------------------------- Total expenses 24,000,454 - ----------------------------------------------------------------------------------------------- Expense reduction (Note 2) (829,504) - ----------------------------------------------------------------------------------------------- Net expenses 23,170,950 - ----------------------------------------------------------------------------------------------- Net investment income 190,719,005 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations $190,719,005 - ----------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Statement of changes in net assets Year ended September 30 ------------------------------- 1999 1998 - --------------------------------------------------------------------------------------------------------------- Increase in net assets - --------------------------------------------------------------------------------------------------------------- Operations: - --------------------------------------------------------------------------------------------------------------- Net investment income $ 190,719,005 $ 139,881,316 - --------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 190,719,005 139,881,316 - --------------------------------------------------------------------------------------------------------------- Distributions to shareholders: - --------------------------------------------------------------------------------------------------------------- From net investment income Class A (151,295,146) (113,849,258) - --------------------------------------------------------------------------------------------------------------- Class B (34,510,760) (22,607,932) - --------------------------------------------------------------------------------------------------------------- Class C (151,030) -- - --------------------------------------------------------------------------------------------------------------- Class M (4,762,069) (3,424,126) - --------------------------------------------------------------------------------------------------------------- Increase from capital share transactions (Note 4) 1,432,680,477 849,862,355 - --------------------------------------------------------------------------------------------------------------- Total increase in net assets 1,432,680,477 849,862,355 Net assets - --------------------------------------------------------------------------------------------------------------- Beginning of year 3,453,472,446 2,603,610,091 - --------------------------------------------------------------------------------------------------------------- End of year $4,886,152,923 $3,453,472,446 - --------------------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements.
Financial highlights (For a share outstanding throughout the period) CLASS A - ------------------------------------------------------------------------------------------------------------------------------------ Per-share operating performance Year ended September 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income .0478 .0517 .0505 .0507 .0521 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations .0478 .0517 .0505 .0507 .0521 - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.0478) (.0517) (.0505) (.0507) (.0521) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) 4.89 5.29 5.17 5.19 5.33 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $3,691,475 $2,598,891 $2,134,223 $1,659,288 $1,189,640 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .48 .58 .57 .57 .62 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 4.73 5.20 5.06 5.00 5.23 - ------------------------------------------------------------------------------------------------------------------------------------ + 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)
Financial highlights (For a share outstanding throughout the period) CLASS B - ------------------------------------------------------------------------------------------------------------------------------------ Per-share operating performance Year ended September 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income .0429 .0468 .0455 .0457 .0469 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations .0429 .0468 .0455 .0457 .0469 - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.0429) (.0468) (.0455) (.0457) (.0469) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) 4.37 4.78 4.65 4.67 4.80 - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $1,041,452 $759,748 $410,885 $438,316 $256,533 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .98 1.08 1.07 1.07 1.12 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 4.24 4.69 4.57 4.51 4.75 - ------------------------------------------------------------------------------------------------------------------------------------ + 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)
Financial highlights (For a share outstanding throughout the period) CLASS C - ------------------------------------------------------------------------------------------------------------------------------------ For the period Per-share February 1, 1999+ operating performance to September 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income .0284 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations .0284 - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.0284) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) 2.87* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $17,091 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .65* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 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)
Financial highlights (For a share outstanding throughout the period) CLASS M - ------------------------------------------------------------------------------------------------------------------------------------ For the period Per-share Dec. 8, 1994+ operating performance Year ended September 30 to Sept. 30 - ------------------------------------------------------------------------------------------------------------------------------------ 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Net investment income .0463 .0502 .0490 .0490 .0434 - ------------------------------------------------------------------------------------------------------------------------------------ Total from investment operations .0463 .0502 .0490 .0490 .0434 - ------------------------------------------------------------------------------------------------------------------------------------ Total distributions (.0463) (.0502) (.0490) (.0490) (.0434) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios and supplemental data - ------------------------------------------------------------------------------------------------------------------------------------ Total return at net asset value (%)(a) 4.73 5.14 5.01 5.02 4.43* - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $136,134 $94,833 $58,502 $29,075 $8,440 - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets (%)(b) .63 .73 .72 .72 .67* - ------------------------------------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets (%) 4.58 5.04 4.92 4.82 4.29* - ------------------------------------------------------------------------------------------------------------------------------------ + 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)
Notes to financial statements September 30, 1999 Note 1 Significant accounting policies Putnam Money Market Fund (the "fund"), is registered under the Investment Company Act of 1940, as amended as a diversified, open-end management investment company. The fund seeks current income consistent with preservation of capital and maintenance of liquidity. The fund achieves its objective by investing in a portfolio of high-grade short-term obligations. The fund may invest up to 100% of its assets in the banking industry and in commercial paper and short-term corporate obligations of issuers in the personal credit institution and business credit industries. The fund offers class A, class B, class C, and class M shares. The fund began offering class C shares on February 1, 1999. 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 systemic investments 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 contingent deferred sales charge schedule as the fund from which they were exchanged. Class M shares pay an ongoing distribution fee lower than class B and class C shares but are not subject to a contingent deferred sales charge. Expenses of the fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the distribution fees applicable to such class). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro-rata share of the net assets of the fund, if 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 generally accepted accounting principles and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of 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 as set forth in Rule 2a-7 under the Investment Company Act of 1940. The amortized cost of an instrument is determined by valuing it at cost originally and thereafter amortizing any discount or premium from its face value at a constant rate until maturity. B) Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Investment Management, Inc. ("Putnam Management"), the fund's manager, a wholly-owned subsidiary of Putnam Investments, Inc. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Security transactions Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis. D) Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986, as amended. Therefore, no provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. E) Interest income and distributions to shareholders Interest is recorded on the accrual basis. Income dividends are recorded daily by the fund and are distributed monthly to the shareholders. Distributions of realized gains, if any, are paid at least annually. F) Amortization of bond premium and accretion of bond discount Premiums and discounts from purchases of short-term investments are amortized/accreted using the straight-line method. Note 2 Management fee, administrative services and other transactions Compensation of Putnam Management, for management and investment advisory services, is paid quarterly based on the average net assets of the fund. Such fee is based on the following annual rates: 0.50% of the first $100 million of average net assets, 0.40% of the next $100 million, 0.35% of the next $300 million, 0.325% of the next $500 million, and 0.30% thereafter. The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. Custodial functions for the fund's assets are provided by Putnam Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. For the year ended September 30, 1999, fund expenses were reduced by $829,504 under expense offset arrangements with PFTC. Investor servicing and custodian fees reported in the Statement of operations exclude these credits. The fund could have invested a portion of the assets utilized in connection with the expense offset arrangements in an income producing asset if it had not entered into such arrangements. Each Trustee of the fund receives an annual Trustee fee, of which $2,933 has been allocated to the fund, and an additional fee for each Trustee's meeting attended. Trustees who are not interested persons of Putnam Management and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan") which allows the Trustees to defer the receipt of all or a portion of Trustees Fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan. The fund has adopted an unfunded noncontributory defined benefit pension plan (the "Pension Plan") covering all Trustees of the fund who have served as Trustee for at least five years. Benefits under the Pension Plan are equal to 50% of the Trustee's average total retainer and meeting fees for the three years preceding retirement. Pension expense for the fund is included in Compensation of Trustees in the Statement of operations. Accrued pension liability is included in Payable for compensation of Trustees in the Statement of assets and liabilities. The fund has adopted a distribution plan (the "Plans") with respect to its class B, class C and class M shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Mutual Funds Corp., a wholly-owned subsidiary of Putnam Investments, Inc., for services provided and expenses incurred by it in distributing shares of the fund. The Plans provide for payment by the fund to Putnam Mutual Funds Corp. at an annual rate of up to 0.75%, 0.75% and 1.00% of the fund's average net assets attributable to class B, class C and class M shares, respectively. The Trustees have approved payment by the fund to an annual rate of 0.50%, 0.50% and 0.15% of the average net assets attributable to class B, class C and class M shares, respectively. For the year ended September 30, 1999, Putnam Mutual Funds Corp., acting as underwriter received $5,738,943 and $4,937 in contingent deferred sales charges from redemptions of class B and class C shares, respectively. A deferred sales charge of up to 1% is assessed on certain redemptions of class A shares. For the year ended September 30, 1999, Putnam Mutual Funds, Corp., acting as the underwriter received no monies in contingent deferred sales charges from redemptions of class A shares acquired through an exchange from another fund. Note 3 Purchases and sales of securities During the year ended September 30, 1999, purchases and sales (including maturities) of investment securities (all short-term obligations) aggregated $76,248,853,478 and $110,713,122, respectively. In determining the net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. Note 4 Capital shares At September 30, 1999, 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 - ----------------------------------------------------------------------------- 1999 1998 - ----------------------------------------------------------------------------- Class A - ----------------------------------------------------------------------------- Shares sold 10,270,592,982 6,667,169,273 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 145,761,022 108,688,157 - ----------------------------------------------------------------------------- 10,416,354,004 6,775,857,430 Shares repurchased (9,323,769,763) (6,311,189,399) - ----------------------------------------------------------------------------- Net increase 1,092,584,241 464,668,031 - ----------------------------------------------------------------------------- Year ended September 30 - ----------------------------------------------------------------------------- 1999 1998 - ----------------------------------------------------------------------------- Class B - ----------------------------------------------------------------------------- Shares sold 2,660,145,189 2,232,701,520 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 32,075,627 20,739,502 - ----------------------------------------------------------------------------- 2,692,220,816 2,253,441,022 Shares repurchased (2,410,516,905) (1,904,577,891) - ----------------------------------------------------------------------------- Net increase 281,703,911 348,863,131 - ----------------------------------------------------------------------------- For the period February 1, 1999 (commencement of operations) to September 30, 1999 - ----------------------------------------------------------------------------- Class C - ----------------------------------------------------------------------------- Shares sold 29,815,064 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 151,030 - ----------------------------------------------------------------------------- 29,966,094 Shares repurchased (12,875,235) - ----------------------------------------------------------------------------- Net increase 17,090,859 - ----------------------------------------------------------------------------- Year ended September 30 - ----------------------------------------------------------------------------- 1999 1998 - ----------------------------------------------------------------------------- Class M - ----------------------------------------------------------------------------- Shares sold 829,077,838 361,506,694 - ----------------------------------------------------------------------------- Shares issued in connection with reinvestment of distributions 4,690,359 3,282,134 - ----------------------------------------------------------------------------- 833,768,197 364,788,828 Shares repurchased (792,466,731) (328,457,635) - ----------------------------------------------------------------------------- Net increase 41,301,466 36,331,193 - ----------------------------------------------------------------------------- Federal tax information (Unaudited) The Form 1099 you receive in January 2000 will show the tax status of all distributions paid to your account in calendar 1999. 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 Asia Pacific Growth Fund Capital Appreciation Fund [DBL. DAGGER] Capital Opportunities Fund Europe Growth Fund Global Equity Fund Global Growth Fund Global Natural Resources Fund Growth Opportunities Fund Health Sciences Trust International Growth Fund International New Opportunities Fund Investors Fund New Opportunities Fund [DBL. DAGGER] OTC & Emerging Growth Fund Research Fund Tax Smart Equity Fund Vista Fund Voyager Fund Voyager Fund II GROWTH AND INCOME FUNDS Balanced Retirement Fund Convertible Income-Growth Trust Equity Income Fund The George Putnam Fund of Boston Global Growth and Income Fund The Putnam Fund for Growth and Income Growth and Income Fund II International Growth and Income Fund New Value Fund Small Cap Value Fund Utilities Growth and Income Fund INCOME FUNDS American Government Income Fund Diversified Income Trust Global Governmental Income Trust High Yield Advantage Fund [DBL. DAGGER] High Yield Trust [DBL. DAGGER] High Yield Trust II Income Fund Intermediate U.S. Government Income Fund Money Market Fund ** Preferred Income Fund Strategic Income 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 [SECTION MARK] Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio and Pennsylvania State tax-free money market funds [SECTION MARK] ** 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 * Formerly Putnam Diversified Income Trust II [DBL. DAGGER] Closed to new investors. Some exceptions may apply. Contact Putnam for details. [SECTION MARK] Not available in all states. ** 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.putnaminv.com. Fund information WEB SITE www.putnaminv.com INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman John A. Hill, Vice Chairman Jameson Adkins Baxter Hans H. Estin Ronald J. Jackson Paul L. Joskow Elizabeth T. Kennan Lawrence J. Lasser John H. Mullin III Robert E. Patterson George Putnam, III A.J.C. Smith W. Thomas Stephens W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President John D. Hughes Senior Vice President and Treasurer Lawrence J. Lasser Vice President Gordon H. Silver Vice President Ian C. Ferguson Vice President Brett C. Browchuk Vice President Stephen Oristaglio Vice President Edward H. D'Alelio Vice President Joanne Driscoll Vice President and Fund Manager 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. For more information or to request a prospectus, call toll free: 1-800-225-1581. You can also learn more at Putnam Investments' Web site: www.putnaminv.com. Shares of mutual funds are not deposits or obligations of, or guaranteed or endorsed by, any financial institution; are not insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other agency; and involve risk, including the possible loss of the principal amount invested. [LOGO OMITTED] PUTNAM INVESTMENTS The Putnam Funds One Post Office Square Boston, Massachusetts 02109 - --------------------- BULK RATE U.S. POSTAGE PAID PUTNAM INVESTMENTS - --------------------- For account balances, economic forecasts, and the latest on Putnam funds, visit www.putnaminv.com AN039 56145 010/879/534 11/99 -----END PRIVACY-ENHANCED MESSAGE-----