-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ERaFJoAJ5GkWDS0GtS//BLb7F8qO94dPM7GFAweR+1UWlCZQibOD99pcv+H0PEuQ wYcVOIqGpjsurnDFsEsymg== 0000950146-94-000195.txt : 19941108 0000950146-94-000195.hdr.sgml : 19941108 ACCESSION NUMBER: 0000950146-94-000195 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941107 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUTNAM MONEY MARKET FUND CENTRAL INDEX KEY: 0000081248 STANDARD INDUSTRIAL CLASSIFICATION: 0000 IRS NUMBER: 046386436 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02608 FILM NUMBER: 94557822 BUSINESS ADDRESS: STREET 1: ONE POST OFFICE SQ STREET 2: MAILSTOP A-14 LEGAL DEPARTMENT CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172921141 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 ANNUAL REPORT Putnam Money Market Fund* ANNUAL REPORT September 30, 1994 *Formerly Putnam Daily Dividend Trust (graphic balance scales) B O S T O N * L O N D O N * T O K Y O Performance highlights > "Money funds are among the few investments to benefit from the Fed's interest rate hikes so far this year. While the average stock and bond fund has lost money since January 12, money fund yields have climbed from 2.7% to 3.9%." --Money, August 1994 > Performance should always be considered in light of a fund's investment strategy. Putnam Money Market Fund is designed for investors seeking current income consistent with capital preservation, stable principal and liquidity. FISCAL 1994 RESULTS AT A GLANCE
Total return Class A Class B 11 months ended 9/30/94(1) (change in value plus reinvested earnings) 3.03% 2.54% Current return Current 7-day yield(2) 4.21% 3.72% Current 30-day yield(2) 4.08 3.60 Distributions No. Income Total Class A 11 $0.029891 $0.029891 Class B 11 $0.025052 $0.025052
Performance data represent past results. For performance over longer periods, see page 6. (1)Eleven-month performance represents a change in the fund's fiscal year end from 10/31 to 9/30. (2)The yield is the rate at which an investment earns interest income. The 7-day and 30-day yields are the two most common gauges for measuring money market mutual fund performance. From the Chairman (George Putnam photo) (C) Karsh, Ottawa Dear Shareholder: Because a mutual fund's name should reflect its investment focus, Putnam Money Market Fund seems a more appropriate designation for what was formerly Putnam Daily Dividend Trust. One of the oldest money market funds, it was introduced in 1976 at a time when investing in short-term credit instruments was a relatively new concept for the public at large. The new name became official on September 1, 1994. Your fund has also advanced the date of its fiscal year end by one month, from October 31 to September 30. The change is being made to improve internal coordination. It should have no effect on shareholders other than the receipt of these reports a month earlier than usual. This report covers the 11-month 1994 fiscal period; your next report will cover the six months ended March 31, 1995. The bond market volatility that has given anxiety to most fixed-income investors actually worked in your fund's favor; the rise in short-term interest rates has raised yields on the money market instruments in which the fund invests. Fund Manager Lindsey Callen discusses this and other aspects of the fund's performance and prospects in the report that follows. Respectfully yours, (signature of George Putnam) George Putnam Chairman of the Trustees October 19, 1994 Report from the fund manager Lindsey M. Callen For the 11 months ended September 30, 1994, Putnam Money Market Fund continued to provide a competitive total return while emphasizing capital preservation and maintaining a stable $1.00 share price. (The abbreviated fiscal period was necessitated by a change in the fund's fiscal year end, from October 31 to September 30.) After reaching historic lows in the fall of 1993, short-term interest rates rose during early 1994, creating a more favorable investment climate for your fund. Throughout fiscal '94, the indicators that measure the strength of business remained positive. Factors such as employment growth and the rise in home and automobile sales pointed to a more robust economy. Side by side with these trends, however, came concerns that the rate of inflation might pick up. In moves to keep inflation at bay, the Federal Reserve Board began a series of short-term interest rate increases. By the end of your fund's fiscal year, the federal funds rate--the interest rate banks charge each other for overnight loans--had climbed from 3.00% to 4.75%; the discount rate--the rate the Fed charges member banks for loans--increased from 3% to 4%. > CAPTURING HIGHER YIELDS During the period, our strategy emphasized increasing the fund's income by taking advantage of higher interest rates. At the same time, we maintained our commitment to a high-quality portfolio. We structured the fund so that it was in the best possible position to benefit from each incremental rise in interest rates. For example, we reduced the average maturity of portfolio securities, so that the fund would not be locked into lower-yielding investments in a rising-interest-rate environment. We also built a position in floating-rate securities, targeting those with yields that reset on a weekly basis. Interest rates on floating-rate securities adjust at regular intervals, so when market rates rise, investors benefit soon after. > YOUR FUND'S HALLMARK: SUPERIOR QUALITY Superior portfolio quality is one of your fund's most important attributes. Ideally, every holding must be rated by two or more nationally recognized rating services and receive at least two ratings within the top two categories. If a security has only been rated by one service, its rating must be within that service's top category. If the securities are nonrated, Putnam Management must judge them to be of equivalent quality. After a security is selected for the portfolio, we continue to monitor quality, while making sure each holding provides a balance of attractive yield and relative stability. > OUR OUTLOOK We believe the economy will continue to grow and that the Fed will maintain its anti-inflation policy of periodically raising short-term interest rates. In this environment, we expect to focus on capturing the highest possible yields for the fund while maintaining the portfolio's high quality. To this end, we anticipate continuing our strategy of investing in traditional money market instruments. We will continue adding floating-rate securities to the portfolio to take advantage of rising interest rates. Furthermore, we expect to keep the average maturity of the portfolio relatively short and believe our emphasis on traditional, high-quality instruments should enable the fund to maintain the stability that is most shareholders' top priority. PERFORMANCE COMPARISONS (9/30/94)*
Current return: Passbook savings account 2.17% Taxable money market fund 7-day yield 4.35 3-month certificate of deposit 3.25 Putnam Money Market Fund (7-day yield) Class A 4.21 Class B 3.72
*The net asset value of money market mutual funds is uninsured and designed to be fixed, while distributions vary daily. The principal value on passbook savings and bank CDs are generally insured up to certain limits by state and federal agencies. Unlike money market funds, early withdrawals from bank CDs may be subject to substantial penalties. Investment returns will fluctuate. Sources: Bank of Boston (passbook savings), Bank Rate Monitor (3-month CDs), IBC/Donaghue's Money Fund Report (taxable money market fund 7-day yield). Performance summary This section provides, at a glance, information about your fund's performance. Total return shows how the value of your investment changed over time, assuming you held the shares through the entire period and reinvested all distributions back into the fund. We show total return in two ways: on a cumulative long-term basis and on average how the fund might have grown each year over varying periods. For comparative purposes, we show how the fund performed relative to appropriate indexes and benchmarks. TOTAL RETURN FOR PERIODS ENDED 9/30/94
Lipper Consumer Class A Class B Money Market Price NAV NAV Fund Average Index 11 months 3.03% 2.54% 2.91% 2.54% 1 year 3.26 2.72 3.13 2.96 5 years 26.21 -- 26.22 19.52 Annual average 4.77 -- 4.77 3.63 10 years 79.49 -- 79.40 42.29 Annual average 6.02 -- 6.02 3.59 Life of class B -- 6.15 7.26 7.10 Annual average -- 2.49 2.94 2.86
The fund began operations on October 1, 1976, offering shares now known as class A. Effective April 27, 1992, the fund began offering class B shares. Performance data represent past results, will differ for each share class and should not be taken as an assurance of future performance. Investment returns will fluctuate. An investment in the fund is neither insured nor guaranteed by the U.S. government. There can be no assurance that the fund will be able to maintain a stable net asset value of $1.00 per share. However, since the fund's inception, no investor has ever lost a penny of net asset value. TERMS AND DEFINITIONS Class A shares generally are fund shares purchased with an initial sales charge. In the case of your fund, which has no sales charge, the reference is to shares purchased or acquired through the exchange of class A shares from another Putnam fund. Exchange of your fund's class A shares into another fund may involve a sales charge, however. Class B shares generally are fund shares purchased with no initial sales charge but subject to a contingent deferred sales charge (CDSC) upon redemption. However, class B shares of your fund can be acquired only through exchange of class B shares from another Putnam fund. They are subject to the same CDSC schedule as the fund from which they were exchanged. Net asset value (NAV) is the value of all fund assets, minus liabilities, divided by the number of outstanding shares. It does not include any initial or contingent deferred sales charge. COMPARATIVE BENCHMARKS Lipper Money Market Fund Average, used for performance comparison purposes, is an arithmetic average of the total return of all money market mutual funds tracked by Lipper Analytical Services. Lipper is an independent rating organization for the mutual fund industry. Lipper rankings vary for other periods. The fund's holdings do not match those in the Lipper Average. Consumer Price Index (CPI) is a commonly used measure of inflation; it does not represent an investment return. Report of Independent Accountants To the Trustees and Shareholders of Putnam Money Market Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments owned and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Putnam Money Market Fund (formerly Daily Dividend Trust) (the "fund") at September 30, 1994, 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, 1994 by correspondence with the custodian and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Boston, Massachusetts October 31, 1994 Portfolio of investments owned September 30, 1994
COMMERCIAL PAPER (65.3%)(a) MATURITY PRINCIPAL AMOUNT DATE VALUE Domestic (45.7%) $15,000,000 AES Barbers Point Inc. 4.65s (Bank of America Letter of Credit (LOC)) 10/14/94 $ 14,972,875 40,000,000 Bell Atlantic Financial Services, Inc. 4.8s 10/20/94 39,893,332 10,000,000 Bell Atlantic Financial Services, Inc. 4.8s 10/19/94 9,974,667 20,000,000 Corporate Asset Funding Co. Inc. 5s 11/21/94 19,855,556 10,300,000 Corporate Asset Funding Co. Inc. 4.75s 10/3/94 10,295,923 10,000,000 Corporate Asset Funding Co. Inc. 4.72s 11/7/94 9,950,178 16,100,000 Corporate Receivables Corp. 4.85s 12/5/94 15,956,844 10,000,000 Corporate Receivables Corp. 4.75s 10/4/94 9,994,722 5,760,000 Delaware Funding Corp. 4.95s 10/11/94 5,751,288 20,000,000 Ford Motor Credit Co. 4.8s 10/26/94 19,930,667 35,000,000 Ford Motor Credit Co. 4.75s 10/5/94 34,976,910 15,000,000 General Electric Capital Corp. 4.78s 10/13/94 14,974,108 20,000,000 General Electric Capital Corp. 4.75s 10/4/94 19,989,444 20,000,000 General Electric Capital Corp. 4.7s 12/5/94 19,827,667 30,000,000 General Motors Acceptance Corp. 4.82s 10/12/94 29,951,800 20,000,000 Goldman Sachs Group L.P. 5.2s 3/13/95 19,526,222 20,000,000 Goldman Sachs Group L.P. 4.775s 10/5/94 19,986,736 8,000,000 Goldman Sachs Group L.P. 3.32s 10/3/94 7,997,787 40,000,000 Household Finance Corp. 4.75s 10/6/94 39,968,333 35,000,000 IBM Credit Corp. 4.82s 10/19/94 34,910,964 30,000,000 J.P. Morgan & Co., Inc. 4.75s 10/11/94 29,956,458 15,000,000 Merrill Lynch & Co. Inc. 5.05s 2/21/95 14,697,000 25,000,000 Merrill Lynch & Co. Inc. 4.77s 10/12/94 24,960,250 20,000,000 New Center Asset Trust 4.88s 11/22/94 19,856,311 20,000,000 New Center Asset Trust 4.77s 10/4/94 19,989,400 25,000,000 Preferred Receivables Funding Corp. 4.85s 11/30/94 24,794,549 20,000,000 Preferred Receivables Funding Corp. 4.8s 10/25/94 19,933,333 9,000,000 Preferred Receivables Funding Corp. 4.75s 10/13/94 8,984,563 20,000,000 Sears Roebuck Acceptance Corp. 4.93s 10/24/94 19,934,267 10,000,000 Sears Roebuck Acceptance Corp. 4.92s 10/28/94 9,961,733 $591,753,887 Foreign (19.6%) (b) $30,000,000 Bridgestone/Firestone Inc. 4.8s (Sumitomo Bank LOC) 10/3/94 $ 29,988,000 10,000,000 Directors Mortgage Loan Corp. 4.81s (Banque Nationale LOC) 10/20/94 9,973,278 10,500,000 Dresdner Bank AG 5.12s 1/13/95 10,343,200 30,000,000 Dresdner U.S. Finance Inc. 4.85s 10/3/94 29,987,875 10,000,000 FPL Fuels Inc. 4.8s (Sumitomo Bank LOC) 10/5/94 9,993,333 5,000,000 Fletcher Challenge Finance U.S.A. Inc. 5.03s (Credit Suisse LOC) 11/16/94 4,967,165 10,745,000 MP Funding Corp. 4.77s (Credit Suisse LOC) 10/12/94 10,727,915 9,650,000 Maguire/Thomas Partners 4.8s (Sumitomo Bank LOC) 10/5/94 9,643,567 COMMERCIAL PAPER PRINCIPAL AMOUNT MATURITY DATE VALUE Foreign (continued) $30,000,000 National Australia Funding Inc. 4.76s 10/7/94 $ 29,972,233 25,000,000 Pemex Capital Inc. 4.9s (Credit Suisse LOC) 10/25/94 24,914,931 15,000,000 Pemex Capital Inc. 4.83s (Credit Suisse LOC) 10/24/94 14,951,700 15,000,000 Pemex Capital Inc. 4.75s (Swiss Bank LOC) 10/13/94 14,974,271 13,600,000 Pemex Capital Inc. 4.75s (Swiss Bank LOC) 10/11/94 13,580,261 39,515,000 Union Bank of Switzerland 5s 10/3/94 39,498,535 $253,516,264 Total Commercial Paper (cost $845,270,151) $845,270,151 U.S. GOVERNMENT & AGENCY OBLIGATIONS (19.9%) (a) PRINCIPAL AMOUNT MATURITY DATE VALUE $25,000,000 Federal Home Loan Banks 4.34s 10/17/94 $ 24,948,764 10,000,000 Federal Home Loan Banks 4.62s 10/3/94 9,996,150 10,000,000 Federal Home Loan Mortgage Corp. 4.9s 11/22/94 9,927,861 25,000,000 Federal National Mortgage Association Discount Notes, 5.45s 3/28/95 24,322,634 20,000,000 Federal National Mortgage Association Discount Notes, 5.09s 2/21/95 19,592,800 30,000,000 Federal National Mortgage Association Discount Notes, 5.06s 12/21/94 29,654,233 30,000,000 Federal National Mortgage Association Discount Notes, 5.03s 12/20/94 29,660,475 20,000,000 Federal National Mortgage Association Discount Notes, 4.91s 11/28/94 19,839,061 25,000,000 Federal National Mortgage Association Discount Notes, 4.72s 11/29/94 24,803,333 15,000,000 Federal National Mortgage Association Discount Notes, 4.66s 12/19/94 14,844,667 25,000,000 Federal National Mortgage Association Discount Notes, 4.65s 11/1/94 24,896,667 10,000,000 Federal National Mortgage Association Discount Notes, 4.6s 10/7/94 9,991,056 15,000,000 Federal National Mortgage Association Discount Notes, 4.17s 10/17/94 14,970,463 Total U.S. Government & Agency Obligations (cost $257,448,164) $257,448,164 FLOATING RATE NOTES (6.1%) (a) PRINCIPAL AMOUNT MATURITY DATE VALUE Domestic (4.2%) $15,000,000 Merrill Lynch & Co. Inc. 5.07s 11/28/94 $ 15,000,000 20,000,000 Morgan Guaranty Trust Co. 4.98s 4/18/95 19,997,808 20,000,000 Pittsburgh National Bank 5.02s 4/21/95 19,993,308 $ 54,991,116 Foreign (1.9%) (b) $25,000,000 Abbey National PLC 5.045s 4/27/95 $ 25,000,000 Total Floating Rate Notes (cost $79,991,116) $ 79,991,116 BANK NOTES (5.6%) (a) PRINCIPAL AMOUNT MATURITY DATE VALUE Domestic $20,000,000 First National Bank of Boston 4.8s 10/24/94 $ 20,000,000 15,000,000 First National Bank of Boston 4.8s 10/18/94 15,000,000 20,000,000 First National Bank of Boston 4.65s 10/3/94 20,000,000 17,000,000 Pittsburgh National Bank 3.53s 11/4/94 16,994,333 Total Bank Notes (cost $71,994,333) $ 71,994,333 CERTIFICATES OF DEPOSIT (4.6%) (a)(b) PRINCIPAL AMOUNT MATURITY DATE VALUE Foreign $15,000,000 Commerzbank AG 3.6s 2/1/95 $ 14,995,455 20,000,000 Rabobank Nederland N.V. 5.18s 1/27/95 20,001,898 25,000,000 Societe Generale 5.45s 5/22/95 25,001,808 Total Certificates of Deposit (cost $59,999,161) $ 59,999,161 Total Investments (cost $1,314,702,925) (c) $1,314,702,925
The accompanying notes are an integral part of these financial statements. NOTES (a) Percentages indicated are based on net assets of $1,295,358,171 which corresponds to a net asset value per share of $1.00 for both class A and class B shares. (b) U.S. dollar-denominated. (c) The aggregate identified cost on a tax basis is the same. Rates shown on floating rate notes are the current interest rates on September 30, 1994, which are subject to change based on the terms of the security. Percent of total net assets invested in foreign countries at September 30, 1994:
Switzerland 9.5% Netherlands 5.4 Japan 3.8 Germany 3.2 Australia 2.3 Great Britain 1.9
The accompanying notes are an integral part of these financial statements. Statement of assets and liabilities September 30, 1994
Assets Investments in securities, at amortized cost (Note 1) $ 1,314,702,925 Cash 5,162 Interest and other receivables 2,517,340 Receivable for shares of the fund sold 19,426,606 Total assets 1,336,652,033 Liabilities Payable for securities purchased 24,333,889 Payable for shares of the fund repurchased 15,259,806 Distributions payable to shareholders 226,934 Payable for compensation of Manager (Note 2) 718,887 Payable for administrative services (Note 2) 4,987 Payable for compensation of Trustees (Note 2) 733 Payable for distribution fees (Note 2) 75,065 Payable for investor servicing and custodian fees (Note 2) 583,025 Other accrued expenses 90,536 Total liabilities 41,293,862 Net assets $ 1,295,358,171 Represented by Paid-in capital (Note 4) $ 1,295,358,171 Net asset value, offering and redemption price per class A share ($1,101,171,393 divided by 1,101,171,393 shares)* $ 1.00 Net asset value and offering price per class B share ($194,186,778 divided by 194,186,778 shares)** $ 1.00
* Class A shares are offered at net asset value. ** Class B shares are available only by exchange of class B shares from other Putnam funds. The applicable contingent deferred sales charge will depend upon the fund from which you exchanged. The accompanying notes are an integral part of these financial statements. Statement of operations Eleven months ended September 30, 1994
Interest income: $37,425,101 Expenses: Compensation of Manager (Note 2) 3,334,454 Investor servicing and custodian fees (Note 2) 2,178,345 Compensation of Trustees (Note 2) 23,907 Reports to shareholders 44,672 Auditing 34,898 Legal 17,071 Registration fees 162,974 Postage 98,563 Administrative services (Note 2) 17,685 Distribution fees class B (Note 2) 557,530 Other 17,785 Total expenses 6,487,884 Net investment income 30,937,217 Net realized gain on investments 42 Net increase in net assets resulting from operations $ 30,937,259
The accompanying notes are an integral part of these financial statements. Statement of changes in net assets
Eleven months ended Year ended September 30 October 31 1994 1993 Increase (decrease) in net assets Operations: Net investment income $ 30,937,217 $ 15,628,626 Net realized gain on investments 42 1,728 Net increase in net assets resulting from operations 30,937,259 15,630,354 Distributions to shareholders from: Net investment income Class A (27,575,242) (15,452,211) Class B (3,361,975) (176,415) Net realized gain on investments Class A (40) (1,713) Class B (2) (15) Increase (decrease) from capital share transactions (Note 4) 685,660,213 (232,350,806) Total increase (decrease) in net assets 685,660,213 (232,350,806) Net assets Beginning of period 609,697,958 842,048,764 End of period $1,295,358,171 $ 609,697,958
The accompanying notes are an integral part of these financial statements. Financial Highlights (For a share outstanding throughout the period)
For the April 27, 1992 eleven months Year (commencement of ended ended operations) to September 30 October 31 October 31 1994* 1993 1992 Investment Operations Class B Net Investment Income $ .0251 $ .0195 $ .0151 Net Realized Gain on Investments -- -- -- Total from investment operations .0251 .0195 .0151 Total Distributions: $ (.0251) $(.0195) $(.0151) Total Investment Return at Net Asset Value (%) (a) 2.54(b) 1.98 1.52(b) Net Assets, End of Period (in thousands) $194,187 $22,777 $ 2,864 Ratio of Expenses to Average Net Assets (%) 1.03(b) 1.20 .70(b) Ratio of Net Investment Income to Average Net Assets (%) 2.77(b) 1.98 1.50(b)
See page 17 for notes to Financial Highlights.
For the eleven Ten months months ended ended September 30 Year ended October 31 October 31 1994* 1993 1992 1991 1990 1989 1988 1987 1986 1985 Class A $ .0299 $ .0246 $ .0353 $ .0598 $ .0764 $ .0853 $ .0655 $ .0568 $ .0642 $ .0633 -- -- -- .0001 -- -- -- -- -- .0001 .0299 .0246 .0353 .0599 .0764 .0853 .0655 .0568 .0642 .0634 $ (.0299) $ (.0246) $ (.0353) $ (.0599) $ (.0764) $ (.0853) $ (.0655) $ (.0568) $ (.0642) $ (.0634) 3.03(b) 2.49 3.58 6.16 7.92 8.87 6.75 5.83 6.61 6.52(b) $1,101,171 $586,920 $839,185 $684,987 $904,186 $797,395 $659,590 $775,954 $320,874 $275,901 .58(b) 0.70 .86 .77 .74 .85 .91 1.01 .89 .71(b) 3.03(b) 2.48 3.56 6.04 7.63 8.51 6.67 5.65 6.32 6.30(b)
* The fiscal year end has advanced from October 31 to September 30. (a) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges. (b) Not annualized. Notes to financial statements September 30, 1994 Note 1 Significant accounting policies Putnam Money Market Fund (the "fund"), formerly Putnam Daily Dividend Trust, 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 both class A and class B shares. Class A and class B shares are sold without a front-end sales charge. Class B shares are offered only in exchange for class B shares of other Putnam funds. Class B shares pay an ongoing distribution fee, and are subject to a contingent deferred sales charge if the shares are redeemed within six years of purchase (including any holding period of the shares in the other Putnam fund). In addition, the Trustees declare separate dividends on each class of shares. Each class bears expenses unique to that class (including the distribution fees applicable to class B shares). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. Shares of each class would receive their pro- rata share of the net assets of the fund if the fund were liquidated. The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A) Security valuation The valuation of the fund's portfolio instruments is determined by means of the amortized cost method as set forth in Rule 2a-7 under the Investment Company Act of 1940. The amortized cost of an instrument is determined by valuing it at cost originally and thereafter amortizing any discount or premium from its face value at a constant rate until maturity. B) Joint trading account Pursuant to an exemptive order issued by the Securities and Exchange Commission, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies managed by Putnam Investment Management, Inc., (Putnam Management) the fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc. and certain other accounts. These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. C) Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities the market value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. The fund's Manager is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. D) Federal taxes It is the policy of the fund to distribute all of its income within the prescribed time and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Internal Revenue Code of 1986. Therefore, no provision has been made for federal income and excise taxes on income and capital gains. E) Interest income and dividends to shareholders Interest is recorded on the accrual basis. Income dividends are declared daily by the fund and are distributed monthly. Note 2 Management fee, administrative services, and other transactions Compensation of Putnam Management for management and investment advisory services is paid quarterly based on the average net assets of the fund for the quarter. Such fee is based on the following annual rates: 0.5% of the first $100 million of average net assets, 0.4% of the next $100 million, 0.35% of the next $300 million, 0.325% of the next $500 million, and 0.3% of any amount over $1 billion, subject under current law to reduction in any year to the extent that expenses (exclusive of brokerage, interest, taxes, and credits allowed by Putnam Fiduciary Trust Company (PFTC) a wholly-owned subsidiary of Putnam Investments, Inc.) of the fund exceed 2.5% of the first $30 million of average net assets, 2.0% of the next $70 million and 1.5% of any amount over $100 million and by the amount of certain brokerage commissions and fees (less expenses) received by affiliates of the Manager on the fund's portfolio transactions. The fund also reimburses the Manager for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees. For the eleven months ended September 30, 1994, the fund paid $17,685 for these services. Trustees of the fund receive an annual Trustee's fee of $2,310 and an additional fee for each Trustees' meeting attended. Trustees who are not interested persons of the Manager and who serve on committees of the Trustees receive additional fees for attendance at certain committee meetings. Custodial functions for the fund are provided by PFTC. Investor servicing agent functions are provided by Putnam Investor Services, a division of PFTC. Fees paid for these investor servicing and custodial functions for the eleven months ended September 30, 1994 amounted to $2,178,345. Investor servicing and custodian fees reported in the Statement of operations for the eleven months ended September 30, 1994 have been reduced by credits allowed by PFTC. The fund has adopted a distribution plan with respect to its class B shares ("Class B Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940. The purpose of the Class B Plan 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 class B shares. The Class B Plan provides payments currently limited by the Trustees to .50% of the fund's average net assets attributable to class B shares, but may increase with the Trustees approval to an amount not exceeding .75% of average net assets. For the eleven months ended September 30, 1994, the fund paid Putnam Mutual Funds Corp. distribution fees of $557,530 for class B shares. A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares purchased as part of an investment of $1 million or more and acquired by an exchange from another Putnam fund. For the eleven months ended September 30, 1994, Putnam Mutual Funds Corp., acting as underwriter, received $107,387 on such redemptions. Putnam Mutual Funds Corp. also receives the proceeds on the contingent deferred sales charges on its class B share redemptions. The charge is based on declining rates, which begin at 5.00% of the net asset value of the redeemed shares. Putnam Mutual Funds Corp. has informed the fund that it received $977,137 from redemptions for the eleven months ended September 30, 1994. Note 3 Purchases and sales of securities During the eleven months ended September 30, 1994, purchases and sales (including maturities) of investment securities (all short-term obligations) aggregated $22,626,403,171 and $21,959,736,941, 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, 1994, there was an unlimited number of shares of beneficial interest authorized, divided into two classes, designated class A and class B capital stock. Transactions in capital stock were as follows:
Eleven months ended Year ended September 30 October 31 Class A 1994 1993 Shares sold $ 3,501,703,378 $ 1,954,667,214 Shares issued in connection with reinvestment of distributions 26,366,112 16,002,778 3,528,069,490 1,970,669,992 Shares repurchased (3,013,818,559) (2,222,934,715) Net increase (decrease) $ 514,250,931 $ (252,264,723) Eleven months ended Year ended September 30 October 31 Class B 1994 1993 Shares sold $ 652,248,469 $ 66,254,392 Shares issued in connection with reinvestment of distributions 2,975,467 156,162 655,223,936 66,410,554 Shares repurchased (483,814,654) (46,496,637) Net increase $ 171,409,282 $ 19,913,917
Federal Tax Information For federal income tax purposes, the distributions from net investment income, totaling $.029891 and $.025052 per share for class A and class B shares, respectively, for the fiscal year ended September 30, 1994, constitute "dividend income." None of the investment income qualifies for the dividends-received deduction for corporations. The Form 1099 you receive in January 1995 will show the tax status of all distributions paid to your account in calendar 1994. As required by law, your fund reports to the Internal Revenue Service on a calendar year basis the amount of distributions paid to each shareholder. Our commitment to quality service > CHOOSE AWARD-WINNING SERVICE. Putnam Investor Services has won the DALBAR Quality Tested Service Seal every year since the award's 1990 inception. DALBAR, an independent research firm, ran more than 10,000 tests of 38 shareholder service components. In every category, Putnam outperformed the industry standard. > HELP YOUR INVESTMENT GROW. Set up a systematic program for investing with as little as $25 a month from a Putnam fund or from your own checking or savings account.* > SWITCH FUNDS EASILY. You can move money from one account to another with the same class of shares without a service charge. (This privilege is subject to change or termination.) > ACCESS YOUR MONEY QUICKLY. You can get checks sent regularly or redeem shares any business day at the then-current net asset value, which may be more or less than their original cost. For details about any of these or other services, contact your financial advisor or call the toll-free number shown below and speak with a helpful Putnam representative. > To make an additional investment in this or any other Putnam fund, contact your financial advisor or call our toll-free number: 1-800-225-1581. *Regular investing, of course, does not guarantee a profit or protect against a loss in a declining market. Investors should consider their ability to continue purchasing shares during periods of low price levels. Fund information INVESTMENT MANAGER Putnam Investment Management, Inc. One Post Office Square Boston, MA 02109 MARKETING SERVICES Putnam Mutual Funds Corp. One Post Office Square Boston, MA 02109 CUSTODIAN Putnam Fiduciary Trust Company LEGAL COUNSEL Ropes & Gray INDEPENDENT ACCOUNTANTS Price Waterhouse LLP TRUSTEES George Putnam, Chairman William F. Pounds, Vice Chairman Jameson Adkins Baxter Hans H. Estin John A. Hill Elizabeth T. Kennan Lawrence J. Lasser Robert E. Patterson Donald S. Perkins George Putnam, III A.J.C. Smith W. Nicholas Thorndike OFFICERS George Putnam President Charles E. Porter Executive Vice President Patricia C. Flaherty Senior Vice President Lawrence J. Lasser Vice President Gordon H. Silver Vice President Gary N. Coburn Vice President William F. McGue Vice President Lindsey M. Callen Vice President and Fund Manager William N. Shiebler Vice President John R. Verani Vice President Paul M. O'Neil Vice President John D. Hughes Vice President and Treasurer Beverly Marcus Clerk and Assistant Treasurer This report is for the information of shareholders of Putnam Money Market Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, which gives details of sales charges, investment objectives, and operating policies of the fund, and the most recent copy of Putnam's Quarterly Performance Summary. For more information or to request a prospectus, call toll-free: 1-800-225-1581 Bulk Rate U.S. Postage PAID Putnam Investments 010/879-14796 (Putnam Investments logo) The Putnam Funds One Post Office Square Boston, Massachusetts 02109 APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND EDGAR-FILED TEXTS: (1) Bold and italic typefaces are displayed in normal type. (2) Headers (e.g., the name of the fund) are omitted. (3) Certain tabular and columnar headings and symbols are displayed differently in this filing. (4) Bullet points and similar graphic signals are omitted. (5) Page numbering is omitted. (6) Trademark symbol replaced with (TM) (7) Section symbol replaced with (S) (8) Dagger symbol replaced with + and double-dagger replaced with ++ -----END PRIVACY-ENHANCED MESSAGE-----