Putnam Prospectus

Prospectus Supplement All retail Putnam funds, except Putnam Money Market Fund and Putnam Tax Exempt Money Market Fund dated August 1, 2008 The period during which a contingent deferred sales charge may apply to redemptions of class A shares purchased without an initial sales charge is reduced to nine months for shares purchased on August 1, 2008 and later. Accordingly, How do I sell or exchange fund shares? — Additional requirements — Deferred sales charges for class B, class C and certain class A and class M shares is revised by amending the third sentence to read: “Unless otherwise agreed with Putnam Retail Management, class A shares that are part of a purchase of $1 million or more (other than by a qualified retirement plan) will be subject to a 1.00% deferred sales charge if redeemed within nine months of purchase.” Putnam Money Market Fund and Putnam Tax Exempt Money Market Fund The period during which a contingent deferred sales charge may apply to redemptions of class A shares purchased without an initial sales charge is reduced to nine months for shares of other Putnam funds purchased on August 1, 2008 and later, which are subsequently exchanged for shares of Putnam Money Market Fund or Putnam Tax Exempt Money Market Fund. Accordingly, How do I buy fund shares? — Which class of shares is best for me? — Money Market Fund (class A, M and T shares only) and Tax Exempt Money Market Fund is revised by amending the first sentence to read: “Unless otherwise agreed with Putnam Retail Management, a deferred sales charge of 1.00% may apply to class A and class T shares obtained by exchanging shares from another Putnam fund that were originally purchased without an initial sales charge, if the shares are redeemed within nine months of the original purchase.” 252376 7/08 Putnam Money Market Fund Putnam Tax Exempt Money Market Fund 1 | 30 | 08 Prospectus enclosed These INCOME FUNDS invest mainly in high-quality, short-term fixed-income securities. This page is not part of the prospectus. What makes Putnam different? A time-honored tradition in money management Since 1937, our values have been rooted in a profound sense of responsibility for the money entrusted to us. A prudent approach to investing In 1830, Massachusetts Supreme Judicial Court Justice Samuel Putnam established The Prudent Man Rule, a legal foundation for responsible money management. THE PRUDENT MAN RULE All that can be required of a trustee to invest is that he shall conduct himself faithfully and exercise a sound discretion. He is to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested. We use a research-driven team approach to seek consistent, dependable, superior investment results over time, although there is no guarantee a fund will meet its objectives. Funds for every investment goal We offer a broad range of mutual funds and other financial products so investors and their financial representatives can build diversified portfolios. A commitment to doing what’s right for investors With a focus on investment performance, below-average expenses, and in-depth information about our funds, we put the interests of investors first and seek to set the standard for integrity and service. Industry-leading service We help investors, along with their financial representatives, make informed investment decisions with confidence. This page is not part of the prospectus. Putnam Money Market Fund Putnam Tax Exempt Money Market Fund 1 | 30 | 08 Prospectus Contents Fund summaries . . . . . . . . . . . . . . . . . . . . . .2 Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Main investment strategies . . . . . . . . . . . . .2 Main risks . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Investor profile . . . . . . . . . . . . . . . . . . . . . .3 Past performance . . . . . . . . . . . . . . . . . . . .3 Costs associated with your investment . . .6 What are each fund’s main investment strategies and related risks? . . . . . . . . . . . .8 Who oversees and manages the funds? .13 How does a fund price its shares? . . . . . .15 How do I buy fund shares? . . . . . . . . . . . .16 How do I sell or exchange fund shares? . . . . . . . . . . . . . . . . . . . . . . . .20 Policy on excessive short-term trading . . .23 Distribution plans and payments to dealers . . . . . . . . . . . . . . . . . . . . . . . . . .24 Fund distributions and taxes . . . . . . . . . .27 Financial highlights . . . . . . . . . . . . . . . . . . .29 Putnam Money Market Fund Class A, B, C, M, R and T shares Investment Category: Income Putnam Tax Exempt Money Market Fund Class A shares Investment Category: Tax Exempt Income This prospectus explains what you should know about these mutual funds before you invest. Please read it carefully. Putnam Investment Management, LLC (Putnam Management), which has managed mutual funds since 1937, manages these funds. These securities have not been approved or disapproved by the Securities and Exchange Commission nor has the Commission passed upon the accuracy or adequacy of this prospectus. Any statement to the contrary is a crime. Fund summaries GOALS ΩΩ Putnam Money Market Fund. TheΩfundΩseeksΩasΩhighΩaΩrateΩofΩ currentΩincomeΩasΩweΩbelieveΩisΩconsistentΩwithΩpreservationΩofΩ capitalΩandΩmaintenanceΩofΩliquidity. ΩΩ Putnam Tax Exempt Money Market Fund. TheΩfundΩseeksΩasΩ highΩaΩlevelΩofΩcurrentΩincomeΩexemptΩfromΩfederalΩincomeΩtaxΩasΩ weΩbelieveΩisΩconsistentΩwithΩpreservationΩofΩcapital,ΩmaintenanceΩ ofΩliquidityΩandΩstabilityΩofΩprincipal. MAIN INVESTMENT STRATE GIE S Putnam Money Market Fund — Income ΩΩ WeΩinvestΩmainlyΩinΩinstrumentsΩthat: ΩΩareΩhighΩqualityΩand ΩΩhaveΩshort-termΩmaturity. Putnam Tax Exempt Money Market Fund — Tax-exempt income ΩΩ WeΩinvestΩmainlyΩinΩinstrumentsΩthat: ΩΩΩpayΩinterestΩthatΩisΩexemptΩfromΩfederalΩincomeΩtaxΩbutΩmayΩbeΩ subjectΩtoΩtheΩfederalΩalternativeΩminimumΩtaxΩ(AMT), ΩΩareΩhighΩquality,Ωand ΩΩhaveΩshort-termΩmaturity. UnderΩnormalΩcircumstances,ΩweΩinvestΩatΩleastΩ80%ΩofΩtheΩfund’sΩnetΩ assetsΩinΩshort-termΩtaxΩexemptΩinvestments.ΩThisΩinvestmentΩpolicyΩ cannotΩbeΩchangedΩwithoutΩtheΩapprovalΩofΩtheΩfund’sΩshareholders. MAIN R ISKS ForΩbothΩfunds,ΩtheΩmainΩrisksΩthatΩcouldΩadverselyΩaffectΩtheΩvalueΩ ofΩaΩfund’sΩsharesΩandΩtheΩtotalΩreturnΩonΩyourΩinvestmentΩinclude: ΩΩ TheΩriskΩthatΩtheΩeffectsΩofΩinflationΩmayΩerodeΩtheΩvalueΩofΩyourΩ investmentΩoverΩtime. ΩΩ TheΩriskΩthatΩtheΩfundΩwillΩnotΩmaintainΩaΩnetΩassetΩvalueΩofΩ$1.00ΩperΩ share,ΩdueΩtoΩeventsΩsuchΩasΩdeteriorationΩinΩtheΩcreditΩqualityΩofΩissuersΩ whoseΩsecuritiesΩtheΩfundΩholds,ΩorΩanΩincreaseΩinΩinterestΩrates. 2 ProsPectus ΩΩ ForΩtheΩTaxΩExemptΩMoneyΩMarketΩFund,ΩtheΩriskΩthatΩtheΩinterestΩ theΩfundΩreceivesΩmightΩbeΩtaxable. AΩfundΩmayΩnotΩachieveΩitsΩgoal,ΩandΩisΩnotΩintendedΩasΩaΩcompleteΩ investmentΩprogram.ΩAnΩinvestmentΩinΩaΩfundΩisΩnotΩaΩdepositΩinΩ aΩbankΩandΩisΩnotΩinsuredΩorΩguaranteedΩbyΩtheΩFederalΩDepositΩ InsuranceΩCorporationΩorΩanyΩotherΩgovernmentΩagency.ΩAlthoughΩ eachΩfundΩseeksΩtoΩpreserveΩtheΩvalueΩofΩyourΩinvestmentΩatΩ$1.00Ω perΩshare,ΩitΩisΩpossibleΩtoΩloseΩmoneyΩbyΩinvestingΩinΩeitherΩfund. INVE ST OR PROFILE TheΩMoneyΩMarketΩFundΩisΩdesignedΩforΩinvestorsΩseekingΩasΩhighΩaΩ levelΩofΩcurrentΩincomeΩasΩweΩbelieveΩisΩconsistentΩwithΩpreservationΩ ofΩcapitalΩandΩmaintenanceΩofΩliquidity.ΩTheΩTaxΩExemptΩMoneyΩ MarketΩFundΩisΩdesignedΩforΩinvestorsΩseekingΩasΩhighΩaΩlevelΩofΩcurrentΩincomeΩexemptΩfromΩfederalΩincomeΩtaxΩasΩweΩbelieveΩisΩconsistentΩwithΩpreservationΩofΩcapital,ΩmaintenanceΩofΩliquidityΩΩ andΩstabilityΩofΩprincipal.ΩItΩshouldΩnotΩbeΩyourΩsoleΩinvestment.Ω P AST P ER FORMANCE TheΩperformanceΩinformationΩbelowΩgivesΩsomeΩindicationΩofΩtheΩ risksΩandΩpotentialΩrewardsΩassociatedΩwithΩanΩinvestmentΩinΩeachΩofΩ theΩfunds.ΩTheΩbarΩchartsΩshowΩcalendarΩyearΩreturnsΩandΩtheΩaverageΩannualΩtotalΩreturnΩoverΩtheΩpastΩ10ΩyearsΩforΩeachΩfund’sΩclassΩAΩ shares.ΩAlthoughΩthisΩinformationΩcanΩbeΩvaluable,ΩitΩisΩimportantΩtoΩ rememberΩthatΩpastΩperformanceΩisΩnotΩnecessarilyΩanΩindicationΩofΩ futureΩresults. 3 ProsPectus MON Ey MARKET FuNd CALENdAR yEAR TOTAL RET u RNS FOR CL AS S A SHARES Annu al p e rformance of A shares at NAV 8% 6% 4% 2% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 6.09% 5.28% 4.92% 3.97% 2.81% 1.42% 0.72% 0.91% 4.71% 4.97% Average annual return: 3.56% ΩΩ InΩtheΩfund’sΩbestΩcalendarΩquarterΩduringΩthisΩperiodΩ(Q4Ω00),ΩaΩ $1,000ΩinvestmentΩwouldΩhaveΩgrownΩ1.59%ΩtoΩ$1,016. ΩΩ InΩtheΩfund’sΩworstΩcalendarΩquarterΩduringΩthisΩperiodΩ(Q1Ω04),ΩaΩ $1,000ΩinvestmentΩwouldΩhaveΩgrownΩ0.15%ΩtoΩ$1,002. Average Annual Total Returns (for periods ending 12/31/07) ————————————————————————————————————————————————————————— Past 1 year 4 .97% -0 .56% 3 .45% 4 .81% 4 .44% 4 .71% 4 .49% Past 5 years 2 .81% 1 .93% 2 .30% 2 .65% 2 .33% 2 .55% Past 10 years ————————————————————————————————————————————————————————— Class A Class B Class C Class M Class R Class T Lipper Money Market Funds category average (no deduction for taxes) 3 .56% 3 .05% 3 .06% 3 .41% 3 .06% 3 .31% ————————————————————————————————————————————————————————— 2 .40% 3 .17% ClassΩBΩandΩclassΩCΩshareΩperformanceΩreflectsΩtheΩmaximumΩ applicableΩdeferredΩsalesΩchargeΩassumingΩsharesΩhadΩbeenΩ redeemedΩonΩ12/31/07Ωand,ΩforΩclassΩBΩshares,ΩdoesΩnotΩassumeΩ conversionΩtoΩclassΩAΩshares.ΩForΩperiodsΩbeforeΩtheΩinceptionΩofΩ classΩCΩsharesΩ(2/1/99),ΩclassΩRΩsharesΩ(1/21/03)ΩandΩclassΩTΩsharesΩ (12/31/01),ΩperformanceΩshownΩforΩtheseΩclassesΩinΩtheΩtableΩisΩ basedΩonΩtheΩperformanceΩofΩtheΩfund’sΩclassΩAΩshares,ΩadjustedΩtoΩ reflectΩtheΩappropriateΩsalesΩchargeΩandΩtheΩhigherΩ12b-1ΩfeesΩpaidΩ byΩtheΩclassΩC,ΩclassΩRΩandΩclassΩTΩshares. 4 ProsPectus TheΩfund’sΩperformanceΩisΩcomparedΩtoΩtheΩLipperΩMoneyΩMarketΩ FundsΩcategoryΩaverage,ΩanΩarithmeticΩaverageΩofΩtheΩtotalΩreturnΩ ofΩallΩmoneyΩmarketΩmutualΩfundsΩtrackedΩbyΩLipperΩAnalyticalΩ Services.ΩTheΩfund’sΩperformanceΩwasΩpreviouslyΩcomparedΩtoΩtheΩ MerrillΩLynchΩ91-DayΩTreasuryΩBillΩIndex,ΩanΩunmanagedΩindexΩthatΩ seeksΩtoΩmeasureΩtheΩperformanceΩofΩU.S.ΩTreasuryΩbillsΩcurrentlyΩ availableΩinΩtheΩmarketplace.ΩΩThisΩindexΩwasΩreplacedΩbyΩtheΩLipperΩ MoneyΩMarketΩFundsΩcategoryΩaverage,ΩwhichΩisΩmoreΩrepresentativeΩofΩtheΩtypesΩofΩsecuritiesΩgenerallyΩheldΩbyΩtheΩfund.ΩTheΩaverageΩ annualΩtotalΩreturnsΩofΩtheΩMerrillΩLynchΩ91-DayΩTreasuryΩBillΩIndexΩ forΩtheΩ1-year,Ω5-year,ΩandΩ10-yearΩperiodΩendingΩonΩ12/31/07ΩwasΩ 5.00%,Ω3.07%,ΩΩandΩΩ3.77%,ΩΩrespectively.Ω T Ax ExEMPT MONEy MARKE T FuNd CALENdAR yEAR TOTAL RET u RNS FOR CL AS S A SHARES An nu al pe rformance of A shares at NAV 6% 4% 2.91% 2% 2.67% 3.55% 2.34% 0.97% 2.92% 1.86% 0.56% 0.59% 2003 2004 2005 2006 3.14% Average annual return: 2.15% 0% 1998 1999 2000 2001 2002 2007 ΩΩInΩtheΩfund’sΩbestΩcalendarΩquarterΩduringΩthisΩperiodΩ(Q4Ω00),ΩaΩ $1,000ΩinvestmentΩwouldΩhaveΩgrownΩ0.93%ΩtoΩ$1,009. ΩΩInΩtheΩfund’sΩworstΩcalendarΩquarterΩduringΩthisΩperiodΩ(Q3Ω03),ΩaΩ $1,000ΩinvestmentΩwouldΩhaveΩgrownΩ0.09%ΩtoΩ$1,001. 5 ProsPectus ————————————————————————————————————————————————————————— Average Annual Total Returns (for periods ending 12/31/07) ————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————— Class A Lipper Tax Exempt Money Market Funds category average (no deduction for taxes) 3 .14% 1 .81% 2 .15% 3 .00% 1 .73% 2 .12% Past 1 year Past 5 years Past 10 years ————————————————————————————————————————————————————————— TheΩfund’sΩperformanceΩforΩportionsΩofΩtheΩperiodΩbenefitedΩfromΩPutnamΩManagement’sΩagreementΩtoΩlimitΩtheΩfund’sΩexpenses.ΩTheΩfund’sΩ performanceΩisΩcomparedΩtoΩtheΩLipperΩTaxΩExemptΩMoneyΩMarketΩ FundsΩcategoryΩaverage,ΩanΩarithmeticΩaverageΩofΩtheΩtotalΩreturnΩofΩallΩ tax-exemptΩmoneyΩmarketΩmutualΩfundsΩtrackedΩbyΩLipperΩAnalyticalΩ Services.ΩTheΩfund’sΩperformanceΩwasΩpreviouslyΩcomparedΩtoΩtheΩMerrillΩLynchΩ91-DayΩTreasuryΩBillΩIndex,ΩanΩunmanagedΩindexΩthatΩseeksΩ toΩmeasureΩtheΩperformanceΩofΩU.S.ΩTreasuryΩbillsΩcurrentlyΩavailableΩ inΩtheΩmarketplace.ΩThisΩindexΩwasΩreplacedΩbyΩtheΩLipperΩTaxΩExemptΩ MoneyΩMarketΩFundsΩcategoryΩaverage,ΩwhichΩisΩmoreΩrepresentativeΩ ofΩtheΩtypesΩofΩsecuritiesΩgenerallyΩheldΩbyΩtheΩfund.ΩTheΩaverageΩannualΩ totalΩreturnsΩofΩtheΩMerrillΩLynchΩ91-DayΩTreasuryΩBillΩIndexΩforΩtheΩ 1-year,Ω5-yearΩandΩ10-yearΩperiodsΩendingΩonΩ12/31/07ΩwereΩ5.00%,Ω3.07%,Ω andΩ3.77%,Ωrespectively. C OST S ASSOCIATEd WITH yOuR INVESTMENT ThisΩtableΩsummarizesΩtheΩfeesΩandΩexpensesΩyouΩmayΩpayΩifΩyouΩ investΩinΩaΩfund.ΩExpensesΩareΩbasedΩonΩtheΩfund’sΩlastΩfiscalΩyear. Shareholder Fees (fees paid directly from your investment)* ————————————————————————————————————————————————————————— Maximum Deferred Sales Charge (Load) Maximum Sales (as a percentage of Charge (Load) the original purchase Imposed on Purchases price or redemption (as a percentage proceeds, whichever of the offering price) is lower) NONE NONE NONE NONE NONE NONE NONE** 5 .00% 1 .00% NONE** NONE NONE** NONE** Money Market Fund Class A Class B Class C Class M Class R Class T ————————————————————————————————————————————————————————— Tax Exempt Money Market Fund Class A NONE ————————————————————————————————————————————————————————— 6 ProsPectus Total Annual Fund Operating Expenses (expenses that are deducted from fund assets) AllΩmutualΩfundsΩpayΩongoingΩfeesΩforΩinvestmentΩmanagementΩandΩ otherΩservices.ΩTheseΩcharges,ΩexpressedΩasΩaΩpercentageΩofΩfundΩ assets,ΩareΩknownΩasΩtheΩTotalΩAnnualΩFundΩOperatingΩExpenses. TheΩtablesΩbelowΩshowΩeachΩfund’sΩannualΩoperatingΩexpensesΩforΩtheΩ fiscalΩyearΩendedΩSeptemberΩ30,Ω2007Ω(exceptΩasΩotherwiseΩindicated). ———————————————————————————————————————————————————————— ———————————————————————————————————————————————————————— N/A 0 .50% 0 .50% 0 .15% 0 .50% 0 .25% 0 .24% 0 .24% 0 .24% 0 .24% 0 .24% 0 .24% 0 .54% 1 .04% 1 .04% 0 .69% 1 .04% 0 .79% Management Fees Distribution (12b-1) Fees Total Annual Other Fund Operating Expenses^ Expenses Money Market Fund Class A 0 .30% Class B 0 .30% Class C 0 .30% Class M 0 .30% Class R 0 .30% Class T 0 .30% ———————————————————————————————————————————————————————— * Certain investments in class A, class M, and class T shares may qualify for discount on applicable sales charges . See How do I buy fund shares? for details . ** A deferred sales charge of 1 .00% on class A shares and class T shares and 0 .15% on class M shares may be imposed on certain redemptions of shares obtained through exchange of class A, class M or class T shares of another Putnam fund that were originally brought without an initial sales charge . ^ Include estimated expenses attributable to the fund’s investment in Putnam Prime Money Market Fund that the fund bears indirectly . ———————————————————————————————————————————————————————— Management Fees Distribution (12b-1) Other Fees Expenses Total Annual Fund Expense Operating Reimburse- Net Expenses ment Expenses 0 .74% (0 .15)% 0 .59% Tax Exempt Money Market Fund*** Class A 0 .45% N/A 0 .29% ———————————————————————————————————————————————————————— ———————————————————————————————————————————————————————— * Certain investments in class A shares may qualify for discounts on applicable sales charges . See How do I buy fund shares? for details . ** A deferred sales charge of 1 .00% on class A shares may be imposed on certain redemptions of shares obtained through exchange of class A shares of another Putnam fund that were originally bought without an initial sales charge . *** Reflects Putnam Management’s contractual obligation to limit fund expenses through September 30, 2008 . For information regarding expense limitations, see Charges and Expenses in the statement of additional information (“SAI”) . 7 ProsPectus How do these fees and expenses look in dollar terms? ThisΩexampleΩtakesΩtheΩmaximumΩup-frontΩsalesΩchargeΩ(orΩapplicableΩcontingentΩdeferredΩsalesΩcharge)ΩandΩannualΩoperatingΩexpensesΩforΩeachΩshareΩclassΩandΩtranslatesΩthemΩintoΩdollarΩamounts,Ω showingΩtheΩcumulativeΩeffectΩofΩtheseΩcostsΩoverΩtime.ΩThisΩhelpsΩ youΩmoreΩeasilyΩcompareΩtheΩcostΩofΩinvestingΩinΩeachΩfundΩtoΩtheΩ costΩofΩinvestingΩinΩotherΩmutualΩfunds.ΩTheΩexampleΩmakesΩcertainΩ assumptions.ΩItΩassumesΩthatΩyouΩinvestΩ$10,000ΩinΩeachΩfundΩforΩtheΩ timeΩperiodsΩshownΩandΩthen,ΩexceptΩasΩshownΩforΩclassΩBΩsharesΩandΩ classΩCΩsharesΩforΩtheΩMoneyΩMarketΩFund,ΩredeemΩallΩyourΩsharesΩatΩ theΩendΩofΩthoseΩperiods.ΩItΩalsoΩassumesΩaΩ5%ΩreturnΩonΩyourΩinvestmentΩeachΩyearΩandΩthatΩeachΩfund’sΩoperatingΩexpensesΩremainΩtheΩ same.ΩTheΩexamplesΩareΩhypothetical;ΩyourΩactualΩcostsΩandΩreturnsΩ mayΩbeΩhigherΩorΩlower. ExAMPLE: Sales charge plus annual operating expenses on a $10,000 investment over time ————————————————————————————————————————————————————————— 1 year 3 years 5 years 10 years ————————————————————————————————————————————————————————— $ 55 $606 $106 $206 $106 $ 70 $106 $ 81 $173 $631 $331 $331 $331 $221 $331 $252 $221 $302 $774 $574 $574 $574 $384 $574 $439 $397 $ 677 $1,130* $1,130* $1,271 $1,271 $ 859 $1,271 $ 978 $ 904 Money Market Fund Class A Class B Class B (no redemption) Class C Class C (no redemption) Class M Class R Class T Tax Exempt Money Market Fund Class A $ 60 ————————————————————————————————————————————————————————— * Reflects conversion of class B shares to class A shares, which pay no 12b-1 fees . Conversion occurs eight years after purchase . What are each fund’s main investment strategies and related risks? ThisΩsectionΩcontainsΩgreaterΩdetailΩinΩtheΩfund’sΩinvestmentΩstrategiesΩandΩtheΩrelatedΩrisksΩyouΩwouldΩfaceΩasΩaΩfundΩshareholder.Ω ItΩisΩimportantΩtoΩkeepΩinΩmindΩthatΩriskΩandΩrewardΩgenerallyΩgoΩ hand-in-hand;ΩtheΩhigherΩtheΩpotentialΩreward,ΩtheΩgreaterΩtheΩrisk.ΩΩ 8 ProsPectus AsΩmentionedΩinΩtheΩfundΩsummaries,ΩweΩpursueΩeachΩfund’sΩgoalΩ byΩinvestingΩmainlyΩinΩshort-termΩinvestments.ΩWeΩwillΩconsiderΩ amongΩotherΩthings,Ωcredit,ΩandΩinterestΩrateΩasΩwellΩasΩgeneralΩ marketΩconditionsΩwhenΩdecidingΩwhetherΩtoΩbuyΩorΩsellΩinvestmentsΩforΩeachΩfund.ΩTheΩmainΩinvestmentΩstrategiesΩandΩrelatedΩ risksΩforΩeachΩfundΩareΩsetΩoutΩbelowΩinΩtheΩfollowingΩorder:ΩthoseΩ relatingΩonlyΩtoΩtheΩMoneyΩMarketΩFund,ΩthoseΩrelatingΩonlyΩtoΩtheΩ TaxΩExemptΩMoneyΩMarketΩFundΩandΩfinallyΩthoseΩrelatingΩtoΩbothΩ ofΩtheΩfunds. MON Ey MARKET FuNd WeΩpursueΩtheΩfund’sΩgoalΩbyΩinvestingΩinΩmoneyΩmarketΩinvestments,ΩsuchΩasΩcertificatesΩofΩdeposit,ΩcommercialΩpaperΩ(includingΩ asset-backedΩcommercialΩpaper),ΩU.S.ΩgovernmentΩdebtΩandΩrepurchaseΩagreements,ΩcorporateΩobligationsΩandΩbankersΩacceptancesΩ issuedΩbyΩbanksΩwithΩdepositsΩinΩexcessΩofΩ$2ΩbillionΩ(orΩtheΩforeignΩ currencyΩequivalent)ΩatΩtheΩcloseΩofΩtheΩlastΩcalendarΩyear.ΩIfΩtheΩ TrusteesΩchangeΩthisΩminimumΩdepositΩrequirement,ΩshareholdersΩ willΩbeΩnotified. ΩΩ Concentration of investments. WeΩmayΩinvestΩwithoutΩlimitΩinΩ moneyΩmarketΩinvestmentsΩfromΩtheΩbanking,ΩpersonalΩcreditΩandΩ businessΩcreditΩindustries.ΩHowever,ΩweΩmayΩinvestΩoverΩ25%ΩofΩtheΩ fund’sΩtotalΩassetsΩinΩmoneyΩmarketΩinvestmentsΩfromΩtheΩpersonalΩ creditΩorΩbusinessΩcreditΩindustriesΩonlyΩwhenΩweΩdetermineΩthatΩ theΩyieldsΩonΩthoseΩinvestmentsΩexceedΩtheΩyieldsΩthatΩareΩavailableΩ fromΩeligibleΩinvestmentsΩofΩissuersΩinΩtheΩbankingΩindustry. TheΩfund’sΩsharesΩmayΩbeΩmoreΩvulnerableΩtoΩdecreasesΩinΩvalueΩthanΩ thoseΩofΩmoneyΩmarketΩfundsΩthatΩinvestΩinΩissuersΩinΩaΩgreaterΩnumberΩofΩindustries.ΩToΩtheΩextentΩthatΩtheΩfundΩinvestsΩsignificantlyΩinΩ aΩparticularΩindustry,ΩitΩrunsΩanΩincreasedΩriskΩofΩlossΩifΩeconomicΩorΩ otherΩdevelopmentsΩaffectingΩthatΩindustryΩcauseΩtheΩpricesΩofΩrelatedΩ moneyΩmarketΩinvestmentsΩtoΩfall. AtΩtimes,ΩtheΩfundΩandΩotherΩaccountsΩthatΩweΩandΩourΩaffiliatesΩ manageΩmayΩownΩallΩorΩmostΩofΩtheΩdebtΩofΩaΩparticularΩissuer.ΩThisΩ concentrationΩofΩownershipΩmayΩmakeΩitΩmoreΩdifficultΩtoΩsell,ΩorΩ determineΩtheΩfairΩvalueΩof,ΩtheseΩinvestments. 9 ProsPectus ΩΩ Foreign investments. WeΩmayΩinvestΩinΩmoneyΩmarketΩinstrumentsΩofΩforeignΩissuersΩthatΩareΩdenominatedΩinΩU.S.Ωdollars.Ω ForeignΩinvestmentsΩinvolveΩcertainΩspecialΩrisks,ΩsuchΩasΩunfavorableΩpoliticalΩandΩlegalΩdevelopments,ΩlimitedΩfinancialΩinformation,Ω andΩeconomicΩandΩfinancialΩstability.ΩInΩaddition,ΩtheΩliquidityΩofΩ theseΩinvestmentsΩmayΩbeΩmoreΩlimitedΩthanΩdomesticΩinvestments.Ω ForeignΩsettlementΩproceduresΩmayΩalsoΩinvolveΩadditionalΩrisks. T Ax ExEMPT MONEy MARK E T FuNd WeΩpursueΩtheΩfund’sΩgoalΩbyΩinvestingΩmainlyΩinΩshort-termΩtaxΩ exemptΩinvestments.ΩTheΩamountΩofΩinformationΩaboutΩissuersΩofΩ taxΩexemptΩdebtΩmayΩnotΩbeΩasΩextensiveΩasΩthatΩwhichΩisΩavailableΩ byΩcompaniesΩwhoseΩsecuritiesΩareΩpubliclyΩtraded. ΩΩ Tax-exempt investments. TheseΩinvestmentsΩareΩissuedΩbyΩ publicΩauthoritiesΩtoΩraiseΩmoneyΩforΩpublicΩpurposes,ΩsuchΩasΩloansΩ forΩtheΩconstructionΩofΩhousing,ΩschoolsΩorΩhospitals,ΩorΩtoΩprovideΩ temporaryΩfinancingΩinΩanticipationΩofΩtheΩreceiptΩofΩtaxesΩandΩotherΩ revenue.ΩTheyΩalsoΩincludeΩprivateΩactivityΩobligationsΩofΩpublicΩ authoritiesΩtoΩfinanceΩprivatelyΩownedΩorΩoperatedΩfacilities.ΩChangesΩ inΩlawΩorΩadverseΩdeterminationsΩbyΩtheΩInternalΩRevenueΩServiceΩ mayΩmakeΩtheΩincomeΩfromΩsomeΩofΩtheseΩobligationsΩtaxable. InterestΩincomeΩfromΩprivateΩactivityΩbondsΩmayΩbeΩsubjectΩtoΩfederalΩAMTΩforΩindividuals.ΩAsΩaΩpolicyΩthatΩcannotΩbeΩchangedΩwithoutΩ theΩapprovalΩofΩfundΩshareholders,ΩweΩcannotΩincludeΩtheseΩinvestmentsΩforΩtheΩpurposeΩofΩcomplyingΩwithΩtheΩinvestmentΩpoliciesΩ describedΩinΩtheΩMain Investment StrategiesΩsection. ΩΩ Concentration of investments. WeΩmayΩmakeΩsignificantΩ investmentsΩinΩaΩsegmentΩofΩtheΩtax-exemptΩdebtΩmarket,ΩsuchΩasΩ revenueΩbondsΩforΩhealthΩcareΩfacilities,ΩhousingΩorΩairports.ΩTheseΩ investmentsΩmayΩcauseΩtheΩvalueΩofΩaΩfund’sΩsharesΩtoΩchangeΩmoreΩ thanΩtheΩvaluesΩofΩsharesΩofΩfundsΩthatΩinvestΩinΩaΩgreaterΩvarietyΩofΩ investments.ΩCertainΩeventsΩmayΩadverselyΩaffectΩallΩinvestmentsΩ withinΩaΩparticularΩmarketΩsegment.ΩExamplesΩincludeΩlegislationΩ orΩcourtΩdecisions,ΩconcernsΩaboutΩpendingΩlegislationΩorΩcourtΩ decisionsΩorΩlowerΩdemandΩforΩtheΩservicesΩorΩproductsΩprovidedΩ byΩaΩparticularΩmarketΩsegment. 10 ProsPectus AtΩtimes,ΩtheΩfundΩandΩotherΩaccountsΩthatΩweΩandΩourΩaffiliatesΩ manageΩmayΩownΩallΩorΩmostΩofΩtheΩdebtΩofΩaΩparticularΩissuer.ΩThisΩ concentrationΩofΩownershipΩmayΩmakeΩitΩmoreΩdifficultΩtoΩsell,ΩorΩtoΩ determineΩtheΩfairΩvalueΩof,ΩtheseΩinvestments. B OTH FuNdS ΩΩ Interest rate risk. TheΩvaluesΩofΩmoneyΩmarketΩinvestmentsΩusuallyΩriseΩandΩfallΩinΩresponseΩtoΩchangesΩinΩinterestΩrates.ΩDecliningΩ interestΩratesΩgenerallyΩincreaseΩtheΩvalueΩofΩexistingΩmoneyΩmarketΩ investments,ΩandΩrisingΩinterestΩratesΩgenerallyΩdecreaseΩtheΩvalueΩofΩ existingΩmoneyΩmarketΩinvestments.ΩChangesΩinΩtheΩvaluesΩofΩmoneyΩ marketΩinvestmentsΩusuallyΩwillΩnotΩaffectΩtheΩamountΩofΩincomeΩ theΩfundsΩreceiveΩfromΩthem,ΩbutΩcouldΩaffectΩtheΩvalueΩofΩaΩfund’sΩ shares.ΩInterestΩrateΩriskΩisΩgenerallyΩlowestΩforΩinvestmentsΩwithΩ shortΩmaturities,ΩandΩtheΩshort-termΩnatureΩofΩmoneyΩmarketΩΩ investmentsΩisΩdesignedΩtoΩreduceΩthisΩrisk. AΩfund’sΩaverageΩportfolioΩmaturityΩwillΩnotΩexceedΩ90ΩdaysΩandΩ neitherΩfundΩmayΩholdΩanΩinvestmentΩwithΩmoreΩthanΩ397ΩdaysΩ remainingΩtoΩmaturity.ΩTheseΩshort-termΩinvestmentsΩgenerallyΩ haveΩlowerΩyieldsΩthanΩlonger-termΩinvestments. SomeΩinvestmentsΩthatΩweΩpurchaseΩforΩtheΩfundsΩhaveΩanΩinterestΩrateΩthatΩchangesΩbasedΩonΩaΩmarketΩinterestΩrate,ΩandΩallowΩ theΩholderΩtoΩdemandΩpaymentΩofΩprincipalΩandΩaccruedΩinterestΩ beforeΩtheΩscheduledΩmaturityΩdate.ΩWeΩmeasureΩtheΩmaturityΩ ofΩtheseΩobligationsΩusingΩtheΩrelativelyΩshortΩperiodΩinΩwhichΩ paymentΩcouldΩbeΩdemanded.ΩBecauseΩtheΩinterestΩrateΩonΩtheseΩ investmentsΩcanΩchange,ΩtheseΩinvestmentsΩareΩunlikelyΩtoΩbeΩableΩ toΩlockΩinΩfavorableΩlonger-termΩinterestΩrates. ΩΩ Credit quality. TheΩfundsΩbuyΩonlyΩhighΩqualityΩinvestments.Ω TheseΩare: ΩΩΩratedΩinΩoneΩofΩtheΩtwoΩhighestΩcategoriesΩbyΩatΩleastΩtwoΩnationallyΩ recognizedΩratingΩservices, ΩΩΩratedΩbyΩoneΩratingΩserviceΩinΩoneΩofΩtheΩservice’sΩtwoΩhighestΩ categoriesΩ(ifΩonlyΩoneΩratingΩserviceΩhasΩprovidedΩaΩrating)Ωor ΩΩunratedΩinvestmentsΩthatΩweΩdetermineΩareΩofΩequivalentΩquality. 11 ProsPectus TheΩcreditΩqualityΩofΩanΩinvestmentΩmayΩbeΩsupportedΩorΩenhancedΩ byΩanotherΩcompanyΩorΩfinancialΩinstitutionΩthroughΩtheΩuseΩofΩaΩ letterΩofΩcreditΩorΩsimilarΩarrangements.ΩTheΩmainΩriskΩinΩinvestmentsΩbackedΩbyΩaΩletterΩofΩcreditΩisΩthatΩtheΩproviderΩofΩtheΩletterΩofΩ creditΩwillΩnotΩbeΩableΩtoΩfulfillΩitsΩobligationsΩtoΩtheΩissuer. ΩΩ Other investments. InΩadditionΩtoΩtheΩmainΩinvestmentΩstrategiesΩdescribedΩabove,ΩweΩmayΩmakeΩotherΩtypesΩofΩinvestmentsΩandΩ beΩsubjectΩtoΩotherΩrisksΩasΩdescribedΩinΩtheΩstatementΩofΩadditionalΩ informationΩ(SAI). ΩΩ Alternative strategies. AtΩtimesΩweΩmayΩjudgeΩthatΩmarketΩconditionsΩmakeΩpursuingΩaΩfund’sΩusualΩinvestmentΩstrategiesΩinconsistentΩwithΩtheΩbestΩinterestsΩofΩitsΩshareholders.ΩWeΩthenΩmayΩ temporarilyΩuseΩalternativeΩstrategiesΩthatΩareΩmainlyΩdesignedΩtoΩ limitΩlosses.ΩHowever,ΩweΩmayΩchooseΩnotΩtoΩuseΩtheseΩstrategiesΩforΩ aΩvarietyΩofΩreasons,ΩevenΩinΩveryΩvolatileΩmarketΩconditions.ΩTheseΩ strategiesΩmayΩcauseΩaΩfundΩtoΩmissΩoutΩonΩinvestmentΩopportunities,ΩmayΩproduceΩtaxableΩincomeΩforΩPutnamΩTaxΩExemptΩMoneyΩ MarketΩFund,ΩandΩmayΩpreventΩaΩfundΩfromΩachievingΩitsΩgoal. ΩΩ Changes in policies. TheΩTrusteesΩmayΩchangeΩaΩfund’sΩgoal,Ω investmentΩstrategiesΩandΩotherΩpoliciesΩwithoutΩshareholderΩ approval,ΩexceptΩasΩotherwiseΩindicated. ΩΩ Portfolio transactions. TheΩfund’sΩdailyΩtransactionsΩonΩstockΩ exchanges,ΩcommoditiesΩmarketsΩandΩfuturesΩmarketsΩinvolveΩ theΩpaymentΩbyΩtheΩfundsΩofΩbrokerageΩcommissions.ΩTheΩMoneyΩ MarketΩFundΩandΩtheΩTaxΩExemptΩMoneyΩMarketΩFundΩmadeΩnoΩ paymentsΩinΩbrokerageΩcommissionsΩduringΩtheΩlastΩfiscalΩyear.Ω AdditionalΩinformationΩregardingΩPutnam’sΩbrokerageΩselectionΩ proceduresΩisΩincludedΩinΩtheΩSAI. InvestorsΩshouldΩexerciseΩcautionΩinΩcomparingΩbrokerageΩcommissionsΩforΩdifferentΩtypesΩofΩfunds.ΩForΩexample,ΩwhileΩbrokerageΩcommissionsΩrepresentΩoneΩcomponentΩofΩaΩfund’sΩtransactionΩ costs,ΩtheyΩdoΩnotΩreflectΩanyΩundisclosedΩamountΩofΩprofitΩorΩ “mark-up”ΩincludedΩinΩtheΩpriceΩpaidΩbyΩtheΩfundΩforΩprincipalΩ transactionsΩ(transactionsΩmadeΩdirectlyΩwithΩaΩdealerΩorΩotherΩ counterparty),ΩincludingΩmostΩfixedΩincomeΩsecuritiesΩandΩcertainΩ derivatives.ΩInΩaddition,ΩbrokerageΩcommissionsΩdoΩnotΩreflectΩ 12 ProsPectus otherΩelementsΩofΩtransactionΩcosts,ΩincludingΩtheΩextentΩtoΩwhichΩ theΩfund’sΩpurchaseΩandΩsaleΩtransactionsΩmayΩchangeΩtheΩmarketΩ priceΩforΩanΩinvestmentΩ(theΩ“marketΩimpact”). ΩΩ Portfolio holdings. TheΩSAIΩincludesΩaΩdescriptionΩofΩeachΩ fund’sΩpoliciesΩwithΩrespectΩtoΩtheΩdisclosureΩofΩitsΩportfolioΩholdings.ΩForΩinformationΩonΩeachΩfund’sΩportfolio,ΩyouΩmayΩvisitΩtheΩ PutnamΩInvestmentsΩwebsite,Ωwww.putnam.com/individual,Ω whereΩeachΩfund’sΩtopΩ10ΩholdingsΩandΩrelatedΩportfolioΩinformationΩmayΩbeΩviewedΩmonthlyΩbeginningΩapproximatelyΩ15ΩdaysΩafterΩ theΩendΩofΩeachΩmonth,ΩandΩfullΩportfolioΩholdingsΩmayΩbeΩviewedΩ beginningΩonΩtheΩsixthΩbusinessΩdayΩafterΩtheΩendΩofΩeachΩcalendarΩ quarterΩand,ΩifΩdeterminedΩbyΩtheΩfunds’ΩChiefΩComplianceΩOfficer,Ω moreΩfrequently,ΩbutΩonlyΩtoΩtheΩextentΩitΩisΩinΩtheΩbestΩinterestΩofΩ aΩfund’sΩshareholders.ΩThisΩinformationΩwillΩremainΩavailableΩ onΩtheΩwebsiteΩuntilΩtheΩfundΩfilesΩaΩFormΩN-CSRΩorΩN-QΩwithΩtheΩ SecuritiesΩandΩExchangeΩCommissionΩ(SEC)ΩforΩtheΩperiodΩthatΩ includesΩtheΩdateΩofΩtheΩinformation,ΩafterΩwhichΩsuchΩinformationΩ canΩbeΩfoundΩonΩtheΩSEC’sΩwebsiteΩatΩhttp://www.sec.gov. Who oversees and manages the funds? THE FuNdS’ TRuSTEES AsΩaΩshareholderΩofΩaΩmutualΩfund,ΩyouΩhaveΩcertainΩrightsΩandΩ protections,ΩincludingΩrepresentationΩbyΩaΩBoardΩofΩTrustees.ΩTheΩ PutnamΩFunds’ΩBoardΩofΩTrusteesΩoverseesΩtheΩgeneralΩconductΩ ofΩeachΩfund’sΩbusinessΩandΩrepresentsΩtheΩinterestsΩofΩtheΩPutnamΩfundΩshareholders.ΩTheΩPutnamΩFunds’ΩBoardΩofΩTrusteesΩ includesΩTrusteesΩwhoΩareΩelectedΩbyΩshareholderΩvoteΩatΩleastΩonceΩ everyΩfiveΩyearsΩandΩatΩleastΩ75%ΩofΩwhomΩareΩindependentΩ(notΩanΩ officerΩofΩaΩfundΩorΩaffiliatedΩwithΩPutnamΩManagement). TheΩTrusteesΩperiodicallyΩreviewΩtheΩfunds’ΩinvestmentΩperformanceΩ andΩtheΩqualityΩofΩotherΩservicesΩsuchΩasΩadministration,Ωcustody,ΩandΩ investorΩservices.ΩAtΩleastΩannually,ΩtheΩTrusteesΩreviewΩtheΩfeesΩpaidΩ toΩPutnamΩManagementΩandΩitsΩaffiliatesΩforΩprovidingΩorΩoverseeingΩtheseΩservices,ΩasΩwellΩasΩtheΩoverallΩlevelΩofΩeachΩfund’sΩoperatingΩexpenses.ΩInΩcarryingΩoutΩtheirΩresponsibilities,ΩtheΩTrusteesΩareΩ assistedΩbyΩanΩadministrativeΩstaff,ΩauditorsΩandΩlegalΩcounselΩthatΩareΩ 13 ProsPectus selectedΩbyΩtheΩTrusteesΩandΩareΩindependentΩofΩPutnamΩManagementΩ andΩitsΩaffiliates. Contacting the funds’ Trustees AddressΩcorrespondenceΩto:Ω TheΩPutnamΩFundsΩTrusteesΩ OneΩPostΩOfficeΩSquareΩ Boston,ΩMAΩ02109 THE FuNdS’ INVESTMENT MANAGER TheΩTrusteesΩhaveΩretainedΩPutnamΩManagementΩtoΩbeΩeachΩfund’sΩ investmentΩmanager,ΩresponsibleΩforΩmakingΩinvestmentΩdecisionsΩ forΩtheΩfundsΩandΩmanagingΩtheΩfunds’ΩotherΩaffairsΩandΩbusiness.Ω TheΩbasisΩforΩtheΩTrustees’ΩapprovalΩofΩeachΩfund’sΩmanagementΩ contractΩdescribedΩbelowΩisΩdiscussedΩinΩeachΩfund’sΩannualΩreportΩ toΩshareholdersΩdatedΩSeptemberΩ30,Ω2007.ΩEachΩfundΩpaysΩPutnamΩ ManagementΩaΩquarterlyΩmanagementΩfeeΩforΩtheseΩservicesΩbasedΩ onΩeachΩfund’sΩaverageΩnetΩassets.ΩTheΩMoneyΩMarketΩFundΩandΩ TaxΩExemptΩMoneyΩMarketΩFundΩeachΩpaidΩPutnamΩManagementΩ managementΩfeesΩ(afterΩapplicableΩwaivers)ΩofΩ0.30%ΩofΩaverageΩ netΩassetsΩforΩeachΩfund’sΩlastΩfiscalΩyear.ΩPutnamΩManagement’sΩ addressΩisΩOneΩPostΩOfficeΩSquare,ΩBoston,ΩMAΩ02109. ΩΩ Compensation of investment professionals. PutnamΩ ManagementΩbelievesΩthatΩitsΩinvestmentΩmanagementΩteamsΩ shouldΩbeΩcompensatedΩprimarilyΩbasedΩonΩtheirΩsuccessΩinΩ helpingΩinvestorsΩachieveΩtheirΩgoals.ΩTheΩportionΩofΩPutnamΩ Investments’ΩtotalΩincentiveΩcompensationΩpoolΩthatΩisΩavailableΩ toΩPutnamΩManagement’sΩInvestmentΩDivisionΩisΩbasedΩprimarilyΩ onΩitsΩdelivery,ΩacrossΩallΩofΩtheΩportfoliosΩitΩmanages,ΩofΩconsistent,Ω dependableΩandΩsuperiorΩperformanceΩoverΩtime.ΩTheΩpeerΩgroupΩ forΩeachΩofΩtheΩMoneyΩMarketΩFundΩandΩtheΩTaxΩExemptΩMoneyΩ MarketΩFund,Ωrespectively,ΩisΩeachΩfund’sΩbroadΩinvestmentΩcategoryΩasΩdeterminedΩbyΩLipperΩInc.ΩTheΩportionΩofΩtheΩincentiveΩ compensationΩpoolΩavailableΩtoΩyourΩinvestmentΩmanagementΩ teamΩvariesΩbasedΩprimarilyΩonΩitsΩdelivery,ΩacrossΩallΩofΩtheΩportfoliosΩitΩmanages,ΩofΩconsistent,ΩdependableΩandΩsuperiorΩperformanceΩoverΩtime.ΩPerformanceΩisΩmeasuredΩforΩthisΩpurposeΩonΩaΩ before-taxΩbasisΩforΩtheΩMoneyΩMarketΩFund,ΩandΩonΩaΩtax-adjustedΩ 14 ProsPectus basisΩtoΩrecognizeΩtheΩdifferentΩfederalΩincomeΩtaxΩtreatmentΩforΩ capitalΩgainsΩdistributionsΩandΩexempt-interestΩdistributionsΩforΩ theΩTaxΩExemptΩMoneyΩMarketΩFund. ΩΩΩConsistentΩperformanceΩmeansΩbeingΩaboveΩmedianΩoverΩoneΩyear. ΩΩΩDependableΩperformanceΩmeansΩnotΩbeingΩinΩtheΩ4thΩquartileΩofΩtheΩ peerΩgroupΩoverΩone,ΩthreeΩorΩfiveΩyears. ΩΩΩSuperiorΩperformanceΩ(whichΩisΩtheΩlargestΩcomponentΩofΩ PutnamΩManagement’sΩincentiveΩcompensationΩprogram)Ω meansΩbeingΩinΩtheΩtopΩthirdΩofΩtheΩpeerΩgroupΩoverΩthreeΩandΩ fiveΩyears. InΩdeterminingΩanΩinvestmentΩmanagementΩteam’sΩportionΩofΩtheΩ incentiveΩcompensationΩpoolΩandΩallocatingΩthatΩportionΩtoΩindividualΩ teamΩmembers,ΩPutnamΩManagementΩretainsΩdiscretionΩtoΩrewardΩorΩ penalizeΩteamsΩorΩindividuals,ΩasΩitΩdeemsΩappropriate,ΩbasedΩonΩotherΩ factors.ΩTheΩsizeΩofΩtheΩoverallΩincentiveΩcompensationΩpoolΩeachΩyearΩ dependsΩinΩlargeΩpartΩonΩPutnam’sΩprofitabilityΩforΩtheΩyear,ΩwhichΩisΩ influencedΩbyΩitsΩassetsΩunderΩmanagement.ΩIncentiveΩcompensationΩ isΩgenerallyΩpaidΩasΩcashΩbonuses,ΩbutΩaΩportionΩofΩincentiveΩcompensationΩmayΩinsteadΩbeΩpaidΩasΩgrantsΩofΩrestrictedΩstock,ΩoptionsΩorΩ otherΩformsΩofΩcompensation,ΩbasedΩonΩtheΩfactorsΩdescribedΩabove.Ω InΩadditionΩtoΩincentiveΩcompensation,ΩinvestmentΩteamΩmembersΩ receiveΩannualΩsalariesΩthatΩareΩtypicallyΩbasedΩonΩseniorityΩandΩexperience.ΩIncentiveΩcompensationΩgenerallyΩrepresentsΩatΩleastΩ70%ΩofΩ theΩtotalΩcompensationΩpaidΩtoΩinvestmentΩteamΩmembers. How does a fund price its shares? TheΩpriceΩofΩaΩfund’sΩsharesΩisΩbasedΩonΩitsΩnetΩassetΩvalueΩ(NAV).Ω TheΩNAVΩperΩshareΩofΩeachΩclassΩequalsΩtheΩtotalΩvalueΩofΩitsΩassets,Ω lessΩitsΩliabilities,ΩdividedΩbyΩtheΩnumberΩofΩitsΩoutstandingΩshares.Ω SharesΩareΩonlyΩvaluedΩasΩofΩtheΩcloseΩofΩregularΩtradingΩonΩtheΩNewΩ YorkΩStockΩExchangeΩ(NYSE)ΩeachΩdayΩtheΩexchangeΩisΩopen. AΩfundΩvaluesΩitsΩinvestmentsΩatΩamortizedΩcost,ΩwhichΩapproximatesΩ marketΩvalue. 15 ProsPectus How do I buy fund shares? ΩΩ Opening an account. YouΩcanΩopenΩaΩfundΩaccountΩbyΩcontactingΩyourΩfinancialΩrepresentativeΩorΩPutnamΩInvestorΩServicesΩ atΩ1-800-225-1581ΩandΩobtainingΩaΩPutnamΩaccountΩapplication.ΩTheΩ completedΩapplication,ΩalongΩwithΩaΩcheckΩmadeΩpayableΩtoΩtheΩ fund,ΩmustΩthenΩbeΩreturnedΩtoΩPutnamΩInvestorΩServicesΩatΩtheΩΩ followingΩaddress: PutnamΩInvestorΩServicesΩ P.O.ΩBoxΩ8383Ω Boston,ΩMAΩ02266-8383 YouΩcanΩopenΩaΩfundΩaccountΩwithΩasΩlittleΩasΩ$500.ΩTheΩminimumΩ investmentΩisΩwaivedΩifΩyouΩmakeΩregularΩinvestmentsΩweekly,Ω semi-monthly,ΩorΩmonthlyΩthroughΩautomaticΩdeductionsΩfromΩ yourΩbankΩcheckingΩorΩsavingsΩaccount.ΩAlthoughΩPutnamΩisΩΩ currentlyΩwaivingΩtheΩminimum,ΩitΩreservesΩtheΩrightΩtoΩrejectΩinitialΩinvestmentsΩunderΩtheΩminimumΩinΩitsΩdiscretion.ΩSharesΩareΩ soldΩatΩaΩNAVΩofΩ$1.00ΩperΩshare,ΩwithoutΩanyΩinitialΩsalesΩcharge. IfΩyouΩparticipateΩinΩaΩretirementΩplanΩthatΩoffersΩtheΩMoneyΩMarketΩFund,ΩpleaseΩconsultΩyourΩemployerΩforΩinformationΩonΩhowΩ toΩpurchaseΩsharesΩofΩtheΩfundΩthroughΩtheΩplan,ΩincludingΩanyΩ restrictionsΩorΩlimitationsΩthatΩmayΩapply. MutualΩfundsΩmustΩobtainΩandΩverifyΩinformationΩthatΩidentifiesΩ investorsΩopeningΩnewΩaccounts.ΩIfΩtheΩfundΩisΩunableΩtoΩcollectΩtheΩ requiredΩinformation,ΩPutnamΩInvestorΩServicesΩmayΩnotΩbeΩableΩ toΩopenΩyourΩfundΩaccount.ΩInvestorsΩmustΩprovideΩtheirΩfullΩname,Ω residentialΩorΩbusinessΩaddress,ΩSocialΩSecurityΩorΩtaxΩidentificationΩnumber,ΩandΩdateΩofΩbirth.ΩEntities,ΩsuchΩasΩtrusts,Ωestates,Ω corporationsΩandΩpartnerships,ΩmustΩalsoΩprovideΩotherΩidentifyingΩinformation.ΩPutnamΩInvestorΩServicesΩmayΩshareΩidentifyingΩ informationΩwithΩthirdΩpartiesΩforΩtheΩpurposeΩofΩverification.ΩIfΩ PutnamΩInvestorΩServicesΩcannotΩverifyΩidentifyingΩinformationΩ afterΩopeningΩyourΩaccount,ΩtheΩfundΩreservesΩtheΩrightΩtoΩcloseΩ yourΩaccount. 16 ProsPectus Also,ΩtheΩfundΩmayΩperiodicallyΩcloseΩtoΩnewΩpurchasesΩofΩsharesΩorΩ refuseΩanyΩorderΩtoΩbuyΩsharesΩifΩtheΩfundΩdeterminesΩthatΩdoingΩsoΩ wouldΩbeΩinΩtheΩbestΩinterestsΩofΩtheΩfundΩandΩitsΩshareholders. Purchasing additional shares OnceΩyouΩhaveΩanΩexistingΩaccount,ΩyouΩcanΩmakeΩadditionalΩ investmentsΩatΩanyΩtimeΩinΩanyΩamountΩinΩtheΩfollowingΩways: ΩΩ Through a f inancial representative. YourΩrepresentativeΩwillΩ beΩresponsibleΩforΩfurnishingΩallΩnecessaryΩdocumentsΩtoΩPutnamΩ InvestorΩServicesΩandΩmayΩchargeΩyouΩforΩhisΩorΩherΩservices. ΩΩ Through Putnam’s Systematic Investing Program. ΩYouΩ canΩmakeΩregularΩinvestmentsΩweekly,Ωsemi-monthlyΩorΩmonthlyΩ throughΩautomaticΩdeductionsΩfromΩyourΩbankΩcheckingΩorΩsavingsΩ account.Ω(NotΩavailableΩforΩclassΩBΩandΩclassΩCΩsharesΩofΩtheΩMoneyΩ MarketΩFund.) ΩΩ Via the Internet or phone. IfΩyouΩhaveΩanΩexistingΩPutnamΩ fundΩaccountΩandΩyouΩhaveΩcompletedΩandΩreturnedΩanΩElectronicΩ InvestmentΩAuthorizationΩForm,ΩyouΩcanΩbuyΩadditionalΩsharesΩ onlineΩatΩwww.putnam.comΩorΩbyΩcallingΩPutnamΩInvestorΩ ServicesΩatΩ1-800-225-1581. ΩΩ By mail. YouΩmayΩalsoΩrequestΩaΩbookΩofΩinvestmentΩstubsΩforΩyourΩ account.ΩCompleteΩanΩinvestmentΩstubΩandΩwriteΩaΩcheckΩforΩtheΩ amountΩyouΩwishΩtoΩinvest,ΩpayableΩtoΩtheΩappropriateΩfund.ΩReturnΩ theΩcheckΩandΩinvestmentΩstubΩtoΩPutnamΩInvestorΩServices. ΩΩ By wire transfer. ΩYouΩmayΩbuyΩfundΩsharesΩbyΩbankΩwireΩtransferΩofΩsame-dayΩfunds.ΩPleaseΩcallΩPutnamΩInvestorΩServicesΩatΩ 1-800-225-1581ΩforΩwiringΩinstructions.ΩAnyΩcommercialΩbankΩcanΩ transferΩsame-dayΩfundsΩbyΩwire.ΩTheΩfundΩwillΩnormallyΩacceptΩ wiredΩfundsΩforΩinvestmentΩonΩtheΩdayΩreceivedΩifΩtheyΩareΩreceivedΩ byΩtheΩfund’sΩdesignatedΩbankΩbeforeΩtheΩcloseΩofΩregularΩtradingΩ onΩtheΩNYSE.ΩYourΩbankΩmayΩchargeΩyouΩforΩwiringΩsame-dayΩ funds.ΩAlthoughΩtheΩfund’sΩdesignatedΩbankΩdoesΩnotΩcurrentlyΩ chargeΩyouΩforΩreceivingΩsame-dayΩfunds,ΩitΩreservesΩtheΩrightΩtoΩ chargeΩforΩthisΩservice.ΩYouΩcannotΩbuyΩsharesΩforΩtax-qualifiedΩ retirementΩplansΩbyΩwireΩtransfer. 17 ProsPectus ToΩeliminateΩtheΩneedΩforΩsafekeeping,ΩtheΩfundsΩwillΩnotΩissueΩΩ certificatesΩforΩshares. W HIC H C LASS OF SHARES IS B EST FOR ME? ThisΩprospectusΩoffersΩclassΩAΩsharesΩofΩtheΩTaxΩExemptΩMoneyΩ MarketΩFundΩandΩaΩchoiceΩofΩfiveΩclassesΩofΩfundΩsharesΩofΩtheΩ MoneyΩMarketΩFund:ΩA,ΩB,ΩC,ΩMΩandΩT.ΩQualifiedΩemployee-benefitΩ plansΩmayΩalsoΩchooseΩclassΩRΩshares. ForΩtheΩMoneyΩMarketΩFund,ΩthisΩallowsΩyouΩtoΩchooseΩamongΩdifferentΩtypesΩofΩdeferredΩsalesΩchargesΩandΩdifferentΩlevelsΩofΩongoingΩoperatingΩexpenses,ΩasΩillustratedΩinΩtheΩCosts associated with your investment.ΩTheΩclassΩofΩsharesΩthatΩisΩbestΩforΩyouΩdependsΩonΩ aΩnumberΩofΩfactors,ΩincludingΩtheΩamountΩyouΩplanΩtoΩinvestΩandΩ howΩlongΩyouΩplanΩtoΩholdΩtheΩshares.Ω Money Market Fund (class A, M and T shares only) and Tax Exempt Money Market Fund UnlessΩotherwiseΩagreedΩwithΩPutnamΩRetailΩManagement,ΩaΩ deferredΩsalesΩchargeΩofΩ1.00%ΩmayΩapplyΩtoΩclassΩAΩandΩclassΩTΩ sharesΩobtainedΩbyΩexchangingΩsharesΩfromΩanotherΩPutnamΩfundΩ thatΩwereΩoriginallyΩpurchasedΩwithoutΩanΩinitialΩsalesΩcharge,ΩifΩ theΩsharesΩareΩredeemedΩwithinΩ18ΩmonthsΩofΩtheΩoriginalΩpurchase.Ω AΩdeferredΩsalesΩchargeΩofΩ0.15%ΩmayΩapplyΩtoΩclassΩMΩsharesΩthatΩ wereΩobtainedΩbyΩexchangingΩsharesΩfromΩanotherΩPutnamΩfundΩ thatΩwereΩoriginallyΩpurchasedΩwithoutΩaΩsalesΩchargeΩforΩcertainΩ rolloverΩaccountsΩifΩredeemedΩwithinΩoneΩyearΩofΩpurchase. SharesΩnotΩsubjectΩtoΩanyΩchargeΩwillΩbeΩredeemedΩfirst,ΩfollowedΩbyΩ sharesΩheldΩtheΩlongest.ΩTheΩdeferredΩsalesΩchargeΩwillΩbeΩbasedΩonΩ theΩlowerΩofΩtheΩshares,ΩoriginalΩcostΩandΩcurrentΩNAV,ΩbecauseΩyouΩ mayΩhaveΩacquiredΩtheΩsharesΩinΩanΩexchangeΩfromΩaΩfundΩwhoseΩshareΩ valuesΩfluctuated.ΩYouΩmayΩsellΩsharesΩacquiredΩbyΩreinvestmentΩofΩ distributionsΩwithoutΩaΩchargeΩatΩanyΩtime. OrdersΩforΩclassΩMΩsharesΩofΩoneΩorΩmoreΩPutnamΩfunds,ΩotherΩthanΩ classΩMΩsharesΩsoldΩtoΩqualifiedΩemployee-benefitΩplans,ΩwillΩbeΩ refusedΩwhenΩtheΩtotalΩvalueΩofΩtheΩpurchase,ΩplusΩexistingΩaccountΩ balancesΩthatΩareΩeligibleΩtoΩbeΩlinkedΩunderΩaΩrightΩofΩaccumulationΩ forΩpurchasesΩofΩclassΩMΩshares,ΩisΩ$1,000,000ΩorΩmore.ΩInvestorsΩ consideringΩcumulativeΩpurchasesΩofΩ$1,000,000ΩorΩmoreΩshouldΩ 18 ProsPectus considerΩwhetherΩclassΩAΩsharesΩwouldΩbeΩmoreΩadvantageousΩandΩ consultΩtheirΩfinancialΩrepresentative. Money Market Fund (class B and C shares only) IfΩyouΩsellΩ(redeem)ΩclassΩBΩsharesΩwithinΩsixΩyearsΩafterΩyouΩΩ boughtΩthem,ΩyouΩwillΩpayΩaΩdeferredΩsalesΩchargeΩaccordingΩtoΩΩ theΩfollowingΩschedule: Year after purchase 1 2 3 4 5 6 7+ —————————————————————————————————————— —————————————————————————————————————— Charge 5% 4% 3% 3% 2% 1% 0% SharesΩnotΩsubjectΩtoΩanyΩchargeΩwillΩbeΩredeemedΩfirst,ΩfollowedΩbyΩ sharesΩheldΩlongest.ΩTheΩdeferredΩsalesΩchargeΩwillΩbeΩbasedΩonΩtheΩ lowerΩofΩtheΩshares’ΩoriginalΩcostΩandΩcurrentΩNAV,ΩbecauseΩyouΩmayΩ haveΩacquiredΩtheΩsharesΩinΩanΩexchangeΩfromΩaΩfundΩwhoseΩshareΩ valuesΩfluctuated.ΩYouΩmayΩsellΩsharesΩacquiredΩbyΩreinvestmentΩofΩ distributionsΩwithoutΩaΩchargeΩatΩanyΩtime. IfΩyouΩsellΩ(redeem)ΩclassΩCΩsharesΩwithinΩoneΩyearΩafterΩyouΩboughtΩ them,ΩyouΩwillΩpayΩaΩdeferredΩsalesΩchargeΩofΩ1.00%. OrdersΩforΩclassΩBΩsharesΩofΩoneΩorΩmoreΩPutnamΩfundsΩwillΩbeΩ refusedΩwhenΩtheΩtotalΩvalueΩofΩtheΩpurchase,ΩplusΩexistingΩaccountΩ balancesΩthatΩareΩeligibleΩtoΩbeΩlinkedΩunderΩaΩrightΩofΩaccumulationΩ forΩpurchasesΩofΩclassΩAΩshares,ΩisΩ$100,000ΩorΩmore.ΩInvestorsΩconsideringΩcumulativeΩpurchasesΩofΩ$100,000ΩorΩmoreΩshouldΩconsiderΩ whetherΩclassΩAΩsharesΩwouldΩbeΩmoreΩadvantageousΩandΩconsultΩ theirΩfinancialΩrepresentative. ClassΩBΩsharesΩconvertΩautomaticallyΩtoΩclassΩAΩsharesΩafterΩeightΩ years,ΩeliminatingΩtheΩ12b-1Ωfee. OrdersΩforΩclassΩCΩsharesΩofΩoneΩorΩmoreΩPutnamΩfunds,ΩotherΩthanΩ classΩCΩsharesΩsoldΩtoΩqualifiedΩemployee-benefitΩplans,ΩwillΩbeΩ refusedΩwhenΩtheΩtotalΩvalueΩofΩtheΩpurchase,ΩplusΩexistingΩaccountΩ balancesΩthatΩareΩeligibleΩtoΩbeΩlinkedΩunderΩaΩrightΩofΩaccumulationΩ forΩpurchasesΩofΩclassΩAΩshares,ΩisΩ$1,000,000ΩorΩmore.ΩInvestorsΩ consideringΩcumulativeΩpurchasesΩofΩ$1,000,000ΩorΩmoreΩshouldΩ considerΩwhetherΩclassΩAΩsharesΩwouldΩbeΩmoreΩadvantageousΩandΩ consultΩtheirΩfinancialΩrepresentative. 19 ProsPectus ΩΩ General (all classes). BecauseΩeachΩfundΩseeksΩtoΩbeΩfullyΩinvestedΩatΩallΩtimes,ΩaΩfundΩonlyΩsellsΩsharesΩtoΩyouΩwhenΩitΩreceivesΩ “same-dayΩfunds,”ΩwhichΩareΩmoniesΩthatΩareΩcreditedΩtoΩaΩfund’sΩ designatedΩbankΩaccountΩatΩtheΩFederalΩReserveΩBankΩofΩBoston.Ω IfΩaΩfundΩreceivesΩsame-dayΩfundsΩbeforeΩtheΩcloseΩofΩtradingΩonΩtheΩ NYSE,ΩitΩwillΩacceptΩtheΩorderΩtoΩbuyΩsharesΩthatΩday. ΩΩ you may be eligible for reductions and waivers of deferred sales charges. DeferredΩsalesΩchargesΩmayΩbeΩreducedΩorΩwaivedΩ underΩcertainΩcircumstancesΩandΩforΩcertainΩgroups.ΩInformationΩ aboutΩreductionsΩandΩwaiversΩofΩsalesΩchargesΩisΩincludedΩinΩtheΩ SAI.ΩYouΩmayΩconsultΩyourΩfinancialΩrepresentativeΩorΩPutnamΩ RetailΩManagementΩforΩassistance. How do I sell or exchange fund shares? YouΩcanΩsellΩyourΩsharesΩbackΩtoΩtheΩappropriateΩfundΩorΩexchangeΩ themΩforΩsharesΩofΩtheΩsameΩclassΩofΩanotherΩPutnamΩfundΩanyΩdayΩ theΩNYSEΩisΩopen,ΩeitherΩthroughΩyourΩfinancialΩrepresentativeΩorΩ directlyΩtoΩtheΩfund.ΩClassΩTΩsharesΩmayΩbeΩexchangedΩforΩclassΩAΩ sharesΩofΩanyΩotherΩfundΩthatΩoffersΩclassΩAΩshares.ΩShareholdersΩ ofΩclassΩA,ΩclassΩMΩorΩclassΩTΩsharesΩwill,ΩinΩmostΩcases,ΩbeΩrequiredΩ toΩpayΩaΩsalesΩcharge,ΩwhichΩvariesΩdependingΩonΩtheΩfundΩtoΩwhichΩ theyΩexchangeΩsharesΩandΩtheΩamountΩexchanged.ΩPaymentΩforΩ redemptionΩmayΩbeΩdelayedΩuntilΩtheΩfundΩcollectsΩtheΩpurchaseΩ priceΩofΩshares,ΩwhichΩmayΩbeΩupΩtoΩ10ΩcalendarΩdaysΩafterΩtheΩΩ purchaseΩdate. RegardingΩexchanges,ΩnotΩallΩPutnamΩfundsΩofferΩallΩclassesΩofΩ sharesΩorΩmayΩbeΩopenΩtoΩnewΩinvestors.ΩIfΩyouΩexchangeΩsharesΩ subjectΩtoΩaΩdeferredΩsalesΩcharge,ΩtheΩtransactionΩwillΩnotΩbeΩΩ subjectΩtoΩtheΩdeferredΩsalesΩcharge.ΩWhenΩyouΩredeemΩtheΩsharesΩ acquiredΩthroughΩtheΩexchange,Ωhowever,ΩtheΩredemptionΩmayΩbeΩ subjectΩtoΩtheΩdeferredΩsalesΩcharge,ΩdependingΩuponΩwhenΩyouΩ originallyΩpurchasedΩtheΩshares.ΩTheΩdeferredΩsalesΩchargeΩwillΩbeΩ computedΩusingΩtheΩscheduleΩofΩanyΩfundΩintoΩorΩfromΩwhichΩyouΩ haveΩexchangedΩyourΩsharesΩthatΩwouldΩresultΩinΩyourΩpayingΩtheΩ highestΩdeferredΩsalesΩchargeΩapplicableΩtoΩyourΩclassΩofΩshares.Ω ForΩpurposesΩofΩcomputingΩtheΩdeferredΩsalesΩcharge,ΩtheΩlengthΩofΩ 20 ProsPectus timeΩyouΩhaveΩownedΩyourΩsharesΩwillΩbeΩmeasuredΩfromΩtheΩdateΩ ofΩoriginalΩpurchaseΩandΩwillΩnotΩbeΩaffectedΩbyΩanyΩsubsequentΩ exchangesΩamongΩfunds.Ω ΩΩ Selling or exchanging shares through your financial representative. YourΩrepresentativeΩmustΩreceiveΩyourΩrequestΩ inΩproperΩformΩbeforeΩtheΩcloseΩofΩregularΩtradingΩonΩtheΩNYSEΩforΩ youΩtoΩreceiveΩthatΩday’sΩNAV,ΩlessΩanyΩapplicableΩdeferredΩsalesΩ charge.ΩYourΩrepresentativeΩwillΩbeΩresponsibleΩforΩfurnishingΩallΩ necessaryΩdocumentsΩtoΩPutnamΩInvestorΩServicesΩonΩaΩtimelyΩ basisΩandΩmayΩchargeΩyouΩforΩhisΩorΩherΩservices. ΩΩ Selling or exchanging shares directly with the fund. PutnamΩ InvestorΩServicesΩmustΩreceiveΩyourΩrequestΩinΩproperΩformΩbeforeΩ theΩcloseΩofΩregularΩtradingΩonΩtheΩNYSEΩinΩorderΩtoΩreceiveΩthatΩ day’sΩNAV,ΩlessΩanyΩapplicableΩsalesΩcharge. By mail.ΩSendΩaΩletterΩofΩinstructionΩsignedΩbyΩallΩregisteredΩΩ ownersΩorΩtheirΩlegalΩrepresentativesΩtoΩPutnamΩInvestorΩServices. By telephone. YouΩmayΩuseΩPutnam’sΩtelephoneΩredemptionΩ privilegeΩtoΩredeemΩsharesΩvaluedΩatΩlessΩthanΩ$100,000ΩunlessΩyouΩ haveΩnotifiedΩPutnamΩInvestorΩServicesΩofΩanΩaddressΩchangeΩwithinΩtheΩprecedingΩ15Ωdays,ΩinΩwhichΩcaseΩotherΩrequirementsΩmayΩ apply.ΩUnlessΩyouΩindicateΩotherwiseΩonΩtheΩaccountΩapplication,Ω PutnamΩInvestorΩServicesΩwillΩbeΩauthorizedΩtoΩacceptΩredemptionΩinstructionsΩreceivedΩbyΩtelephone.ΩAΩtelephoneΩexchangeΩ privilegeΩisΩcurrentlyΩavailableΩforΩamountsΩupΩtoΩ$500,000.ΩTheΩ telephoneΩredemptionΩandΩexchangeΩprivilegesΩmayΩbeΩmodifiedΩorΩ terminatedΩwithoutΩnotice. Via the Internet . YouΩmayΩalsoΩexchangeΩsharesΩviaΩtheΩInternetΩ atΩwww.putnam.com.Ω ΩΩ Selling shares by check. IfΩyouΩwouldΩlikeΩtoΩuseΩtheΩcheck-writingΩservice,ΩmarkΩtheΩproperΩboxΩonΩtheΩapplicationΩorΩauthorizationΩformΩandΩcompleteΩtheΩsignatureΩcardΩ(and,ΩifΩapplicable,ΩtheΩ resolution).ΩTheΩfundΩwillΩsendΩyouΩchecksΩwhenΩitΩreceivesΩtheseΩ properlyΩcompletedΩdocuments.ΩYouΩcanΩthenΩmakeΩtheΩchecksΩ payableΩtoΩtheΩorderΩofΩanyone.ΩTheΩfundΩwillΩredeemΩaΩsufficientΩ numberΩofΩfullΩandΩfractionalΩsharesΩinΩyourΩaccountΩatΩtheΩnextΩ 21 ProsPectus NAVΩthatΩisΩcalculatedΩafterΩtheΩcheckΩisΩacceptedΩtoΩcoverΩtheΩ amountΩofΩtheΩcheckΩandΩanyΩapplicableΩdeferredΩsalesΩcharge.Ω TheΩminimumΩredemptionΩamountΩperΩcheckΩisΩ$250.ΩCurrently,Ω PutnamΩisΩwaivingΩthisΩminimum. TheΩuseΩofΩchecksΩisΩsubjectΩtoΩtheΩrulesΩofΩyourΩfund’sΩdesignatedΩ bankΩforΩitsΩcheckingΩaccounts.ΩIfΩyouΩdoΩnotΩhaveΩaΩsufficientΩnumberΩofΩsharesΩinΩyourΩaccountΩtoΩcoverΩtheΩamountΩofΩtheΩcheckΩandΩ anyΩapplicableΩdeferredΩsalesΩcharge,ΩtheΩcheckΩwillΩbeΩreturnedΩ andΩnoΩsharesΩwillΩbeΩredeemed.ΩBecauseΩitΩisΩnotΩpossibleΩtoΩ determineΩyourΩaccount’sΩvalueΩinΩadvance,ΩyouΩshouldΩnotΩwriteΩ aΩcheckΩforΩtheΩentireΩvalueΩofΩyourΩaccountΩorΩtryΩtoΩcloseΩyourΩ accountΩbyΩwritingΩaΩcheck.ΩTheΩfundsΩmayΩchangeΩorΩendΩcheckwritingΩprivilegesΩatΩanyΩtimeΩwithoutΩnotice.ΩTheΩcheck-writingΩ serviceΩisΩnotΩavailableΩforΩtax-qualifiedΩretirementΩplans. ΩΩ Additional requirements. InΩcertainΩsituations,ΩforΩexample,ΩifΩ youΩsellΩsharesΩwithΩaΩvalueΩofΩ$100,000ΩorΩmore,ΩtheΩsignaturesΩofΩallΩ registeredΩownersΩorΩtheirΩlegalΩrepresentativesΩmustΩbeΩguaranteedΩbyΩ aΩbank,Ωbroker-dealerΩorΩcertainΩotherΩfinancialΩinstitutions.ΩInΩaddition,ΩPutnamΩInvestorΩServicesΩusuallyΩrequiresΩadditionalΩdocumentsΩ forΩtheΩsaleΩofΩsharesΩbyΩaΩcorporation,Ωpartnership,ΩagentΩorΩfiduciary,Ω orΩsurvivingΩjointΩowner.ΩForΩmoreΩinformationΩconcerningΩPutnam’sΩ signatureΩguaranteeΩandΩdocumentationΩrequirements,ΩcontactΩ PutnamΩInvestorΩServices. TheΩfundΩalsoΩreservesΩtheΩrightΩtoΩreviseΩorΩterminateΩtheΩexchangeΩ privilege,ΩlimitΩtheΩamountΩorΩnumberΩofΩexchangesΩorΩrejectΩanyΩ exchange.ΩTheΩfundΩintoΩwhichΩyouΩwouldΩlikeΩtoΩexchangeΩmayΩalsoΩ rejectΩyourΩexchange.ΩTheseΩactionsΩmayΩapplyΩtoΩallΩshareholdersΩorΩ onlyΩtoΩthoseΩshareholdersΩwhoseΩexchangesΩPutnamΩManagementΩ determinesΩareΩlikelyΩtoΩhaveΩaΩnegativeΩeffectΩonΩtheΩfundΩorΩotherΩ PutnamΩfunds.ΩConsultΩPutnamΩInvestorΩServicesΩbeforeΩrequestingΩ anΩexchange.ΩAskΩyourΩfinancialΩrepresentativeΩorΩPutnamΩInvestorΩ ServicesΩforΩprospectusesΩofΩotherΩPutnamΩfunds.ΩSomeΩPutnamΩ fundsΩareΩnotΩavailableΩinΩallΩstates. 22 ProsPectus ΩΩ Payment information. AΩfundΩgenerallyΩsendsΩyouΩpaymentΩforΩ yourΩsharesΩtheΩbusinessΩdayΩafterΩyourΩrequestΩisΩreceived.ΩUnderΩ unusualΩcircumstances,ΩtheΩfundΩmayΩsuspendΩredemptions,ΩorΩ postponeΩpaymentΩforΩmoreΩthanΩsevenΩdays,ΩasΩpermittedΩbyΩ federalΩsecuritiesΩlaw.ΩΩYouΩwillΩnotΩreceiveΩinterestΩonΩuncashedΩ redemptionΩchecks.Ω ΩΩ Redemption by the fund. IfΩyouΩownΩfewerΩsharesΩthanΩtheΩ minimumΩsetΩbyΩtheΩTrusteesΩ(presentlyΩ500Ωshares),ΩaΩfundΩmayΩ redeemΩyourΩsharesΩwithoutΩyourΩpermissionΩandΩsendΩyouΩtheΩ proceeds.ΩToΩtheΩextentΩpermittedΩbyΩapplicableΩlaw,ΩeachΩfundΩ mayΩalsoΩredeemΩsharesΩifΩyouΩownΩmoreΩthanΩaΩmaximumΩamountΩ setΩbyΩtheΩTrustees.ΩThereΩisΩpresentlyΩnoΩmaximum,ΩbutΩtheΩ TrusteesΩcouldΩsetΩaΩmaximumΩthatΩwouldΩapplyΩtoΩbothΩpresentΩ andΩfutureΩshareholders. Policy on excessive short-term trading ΩΩ Policy on excessive short-term trading. BecauseΩtheΩfundsΩareΩ moneyΩmarketΩfundsΩthatΩinvestorsΩmayΩseekΩtoΩuseΩasΩaΩsourceΩofΩ short-termΩliquidity,ΩPutnamΩManagementΩandΩtheΩfunds’ΩTrusteesΩ haveΩnotΩadoptedΩpoliciesΩtoΩdiscourageΩshort-termΩtradingΩinΩtheΩ funds.ΩHowever,ΩbecauseΩveryΩlargeΩcashΩflowsΩbasedΩonΩshort-termΩ tradingΩmay,ΩunderΩsomeΩmarketΩconditions,ΩdecreaseΩtheΩfund’sΩ performance,ΩPutnamΩManagementΩandΩtheΩfundΩreserveΩtheΩrightΩ toΩreviseΩorΩterminateΩtheΩexchangeΩprivilege,ΩlimitΩtheΩamountΩorΩ numberΩofΩexchangesΩorΩrejectΩanyΩexchange.ΩTheΩfundΩinΩwhichΩ youΩwouldΩlikeΩtoΩexchangeΩmayΩalsoΩrejectΩyourΩexchange.ΩΩTheseΩ actionsΩmayΩapplyΩtoΩallΩshareholdersΩorΩonlyΩtoΩthoseΩshareholdersΩ whoseΩexchangesΩPutnamΩManagementΩdeterminesΩareΩlikelyΩtoΩ haveΩaΩnegativeΩeffectΩonΩtheΩfundΩorΩotherΩPutnamΩfunds.ΩConsultΩ PutnamΩInvestorΩServicesΩbeforeΩrequestingΩanΩexchange. 23 ProsPectus Distribution plans and payments to dealers PutnamΩfundsΩareΩdistributedΩprimarilyΩthroughΩdealersΩ(includingΩanyΩbroker,Ωdealer,Ωbank,ΩbankΩtrustΩdepartment,ΩregisteredΩ investmentΩrepresentative,ΩfinancialΩplanner,ΩretirementΩplanΩ administrator,ΩandΩanyΩotherΩinstitutionΩhavingΩaΩselling,Ωservices,Ω orΩanyΩsimilarΩagreementΩwithΩPutnamΩRetailΩManagementΩorΩoneΩ ofΩitsΩaffiliates).ΩInΩorderΩtoΩpayΩforΩtheΩmarketingΩofΩfundΩsharesΩ andΩservicesΩprovidedΩtoΩshareholders,ΩtheΩfundΩhasΩadoptedΩdistributionΩ(12b-1)Ωplans,ΩwhichΩincreaseΩtheΩannualΩoperatingΩexpensesΩ youΩpayΩeachΩyearΩinΩcertainΩshareΩclasses,ΩasΩdescribedΩinΩtheΩsectionΩCosts associated with your investment.ΩPutnamΩRetailΩManagementΩandΩitsΩaffiliatesΩalsoΩmakeΩadditionalΩpaymentsΩtoΩdealersΩ thatΩdoΩnotΩincreaseΩyourΩfundΩexpenses,ΩasΩdescribedΩbelow. ΩΩ distribution (12b-1) plans. TheΩMoneyΩMarketΩFundΩhasΩ adoptedΩdistributionΩplansΩtoΩpayΩforΩtheΩmarketingΩofΩitsΩclassΩB,Ω classΩC,ΩclassΩM,ΩclassΩRΩandΩclassΩTΩsharesΩandΩforΩservicesΩprovidedΩtoΩshareholders.ΩTheΩplansΩprovideΩforΩpaymentsΩatΩannualΩ ratesΩ(basedΩonΩaverageΩnetΩassets)ΩofΩupΩtoΩ0.75%ΩonΩclassΩBΩshares,Ω 0.35%ΩonΩclassΩTΩsharesΩandΩ1.00%ΩonΩclassΩC,ΩclassΩMΩandΩclassΩRΩ shares.ΩTheΩTrusteesΩcurrentlyΩlimitΩpaymentsΩonΩclassΩMΩsharesΩ toΩ0.15%,ΩonΩclassΩTΩsharesΩtoΩ0.25%ΩandΩonΩclassΩB,ΩclassΩCΩsharesΩ andΩclassΩRΩsharesΩtoΩ0.50%ΩofΩaverageΩnetΩassets,Ωrespectively.Ω BecauseΩtheseΩfeesΩareΩpaidΩoutΩofΩtheΩfund’sΩassetsΩonΩanΩongoingΩ basis,ΩtheyΩwillΩincreaseΩtheΩcostΩofΩyourΩinvestment.ΩTheΩhigherΩ feesΩforΩclassΩB,ΩclassΩC,ΩclassΩM,ΩclassΩRΩandΩclassΩTΩsharesΩmeansΩ theyΩhaveΩhigherΩexpenseΩratiosΩandΩlowerΩdividendsΩthanΩclassΩAΩ shares.ΩBecauseΩclassΩC,ΩclassΩM,ΩclassΩRΩandΩclassΩTΩshares,ΩunlikeΩ classΩBΩshares,ΩdoΩnotΩconvertΩtoΩclassΩAΩshares,ΩclassΩC,ΩclassΩM,Ω classΩRΩandΩclassΩTΩsharesΩmayΩcostΩyouΩmoreΩoverΩtimeΩthanΩΩ classΩBΩshares. TaxΩExemptΩMoneyΩMarketΩFundΩhasΩadoptedΩaΩdistributionΩplanΩ toΩpayΩforΩtheΩmarketingΩofΩitsΩsharesΩandΩforΩservicesΩprovidedΩ toΩshareholders.ΩTheΩplanΩprovidesΩforΩpaymentsΩatΩannualΩratesΩ (basedΩonΩaverageΩnetΩassets)ΩofΩupΩtoΩ0.35%,ΩalthoughΩtheΩfundΩisΩ notΩcurrentlyΩmakingΩpaymentsΩunderΩtheΩplan. 24 ProsPectus ΩΩ Payments to dealers. IfΩyouΩpurchaseΩyourΩsharesΩthroughΩaΩ dealer,ΩyourΩdealerΩgenerallyΩreceivesΩpaymentsΩfromΩPutnamΩRetailΩ ManagementΩrepresentingΩsomeΩorΩallΩofΩtheΩsalesΩchargesΩandΩdistributionΩ(12b-1)Ωfees,ΩifΩany,ΩshownΩinΩtheΩtablesΩunderΩtheΩheadingΩ Costs associated with your investmentΩatΩtheΩfrontΩofΩthisΩprospectus. PutnamΩRetailΩManagementΩandΩitsΩaffiliatesΩalsoΩpayΩadditionalΩ compensationΩtoΩselectedΩdealersΩinΩrecognitionΩofΩtheirΩmarketingΩ supportΩand/orΩprogramΩservicingΩ(eachΩofΩwhichΩisΩdescribedΩinΩ moreΩdetailΩbelow).ΩTheseΩpaymentsΩmayΩcreateΩanΩincentiveΩforΩaΩ dealerΩfirmΩorΩitsΩrepresentativesΩtoΩrecommendΩorΩofferΩsharesΩofΩ theΩfundΩorΩotherΩPutnamΩfundsΩtoΩitsΩcustomers.ΩTheseΩadditionalΩ paymentsΩareΩmadeΩbyΩPutnamΩRetailΩManagementΩandΩitsΩaffiliatesΩandΩdoΩnotΩincreaseΩtheΩamountΩpaidΩbyΩyouΩorΩtheΩfundΩasΩ shownΩunderΩtheΩheadingΩCosts associated with your investment. TheΩadditionalΩpaymentsΩtoΩdealersΩbyΩPutnamΩRetailΩManagementΩandΩitsΩaffiliatesΩareΩgenerallyΩbasedΩonΩoneΩorΩmoreΩofΩtheΩ followingΩfactors:ΩaverageΩnetΩassetsΩofΩaΩfundΩattributableΩtoΩthatΩ dealer,ΩsalesΩorΩnetΩsalesΩofΩaΩfundΩattributableΩtoΩthatΩdealer,ΩorΩ reimbursementΩofΩticketΩchargesΩ(feesΩthatΩaΩdealerΩfirmΩchargesΩitsΩ representativesΩforΩeffectingΩtransactionsΩinΩfundΩshares),ΩorΩonΩtheΩ basisΩofΩaΩnegotiatedΩlumpΩsumΩpaymentΩforΩservicesΩprovided. Marketing support payments,ΩwhichΩareΩgenerallyΩavailableΩtoΩ mostΩdealersΩengagingΩinΩsignificantΩsalesΩofΩPutnamΩfundΩshares,Ω areΩnotΩexpected,ΩwithΩcertainΩlimitedΩexceptions,ΩtoΩexceedΩ 0.085%ΩofΩtheΩaverageΩassetsΩofΩPutnam’sΩretailΩmutualΩfundsΩ attributableΩtoΩthatΩdealerΩonΩanΩannualΩbasis.ΩTheseΩpaymentsΩ areΩmadeΩforΩmarketingΩsupportΩservicesΩprovidedΩbyΩtheΩdealers,Ω includingΩbusinessΩplanningΩassistance,ΩeducatingΩdealerΩpersonnelΩaboutΩtheΩPutnamΩfundsΩandΩshareholderΩfinancialΩplanningΩ needs,ΩplacementΩonΩtheΩdealer’sΩpreferredΩorΩrecommendedΩfundΩ companyΩlist,ΩandΩaccessΩtoΩsalesΩmeetings,ΩsalesΩrepresentativesΩ andΩmanagementΩrepresentativesΩofΩtheΩdealer. Program servicing payments,ΩwhichΩareΩpaidΩinΩsomeΩinstancesΩtoΩ dealersΩinΩconnectionΩwithΩinvestmentsΩinΩtheΩfundΩbyΩretirementΩ plansΩandΩotherΩinvestmentΩprograms,ΩareΩnotΩexpected,ΩwithΩ certainΩlimitedΩexceptions,ΩtoΩexceedΩ0.20%ΩofΩtheΩtotalΩassetsΩinΩ 25 ProsPectus theΩprogramΩonΩanΩannualΩbasis.ΩTheseΩpaymentsΩareΩmadeΩforΩ programΩservicesΩprovidedΩbyΩtheΩdealer,ΩincludingΩparticipantΩ recordkeeping,Ωreporting,ΩorΩtransactionΩprocessing,ΩasΩwellΩasΩ servicesΩrenderedΩinΩconnectionΩwithΩfund/investmentΩselectionΩ andΩmonitoring,ΩemployeeΩenrollmentΩandΩeducation,ΩplanΩbalanceΩ rolloverΩorΩseparation,ΩorΩotherΩsimilarΩservices. Other payments.ΩPutnamΩRetailΩManagementΩandΩitsΩaffiliatesΩ mayΩmakeΩotherΩpaymentsΩ(includingΩpaymentsΩinΩconnectionΩwithΩ educationalΩseminarsΩorΩconferences)ΩorΩallowΩotherΩpromotionalΩ incentivesΩtoΩdealersΩtoΩtheΩextentΩpermittedΩbyΩSECΩandΩNASDΩ rulesΩandΩbyΩotherΩapplicableΩlawsΩandΩregulations.ΩCertainΩdealersΩalsoΩreceiveΩadditionalΩpaymentsΩfromΩtheΩfund’sΩtransferΩagentΩ inΩrecognitionΩofΩsubaccountingΩorΩotherΩservicesΩtheyΩprovideΩtoΩ shareholdersΩorΩplanΩparticipantsΩwhoΩinvestΩinΩtheΩfundΩorΩotherΩ PutnamΩfundsΩthroughΩtheirΩretirementΩplan.ΩTheseΩpaymentsΩareΩ notΩexpected,ΩwithΩcertainΩexceptionsΩforΩaffiliatedΩandΩunaffiliatedΩ entitiesΩnotedΩinΩtheΩSAI,ΩtoΩexceedΩ0.13%ΩofΩtheΩtotalΩassetsΩofΩsuchΩ shareholdersΩorΩplanΩparticipantsΩinΩtheΩfundΩorΩotherΩPutnamΩfundsΩ onΩanΩannualΩbasis.ΩSeeΩtheΩdiscussionΩinΩtheΩSAIΩunderΩtheΩheadingΩ Management — Investor Servicing AgentΩforΩmoreΩdetails. YouΩcanΩfindΩaΩlistΩofΩallΩdealersΩtoΩwhichΩPutnamΩmadeΩmarketingΩ supportΩand/orΩprogramΩservicingΩpaymentsΩinΩ2007ΩinΩtheΩSAI,Ω whichΩisΩonΩfileΩwithΩtheΩSECΩandΩisΩalsoΩavailableΩonΩPutnam’sΩ websiteΩatΩwww.putnam.com.ΩYouΩcanΩalsoΩfindΩotherΩdetailsΩinΩtheΩ SAIΩaboutΩtheΩpaymentsΩmadeΩbyΩPutnamΩRetailΩManagementΩandΩ itsΩaffiliatesΩandΩtheΩservicesΩprovidedΩbyΩyourΩdealer.ΩYourΩdealerΩ mayΩchargeΩyouΩfeesΩorΩcommissionsΩinΩadditionΩtoΩthoseΩdisclosedΩ inΩthisΩprospectus.ΩYouΩcanΩalsoΩaskΩyourΩdealerΩaboutΩanyΩpaymentsΩitΩreceivesΩfromΩPutnamΩRetailΩManagementΩandΩitsΩaffiliatesΩandΩanyΩservicesΩyourΩdealerΩprovides,ΩasΩwellΩasΩaboutΩfeesΩ and/orΩcommissionsΩitΩcharges. 26 ProsPectus Fund distributions and taxes EachΩfundΩdeclaresΩaΩdistributionΩdailyΩofΩallΩitsΩnetΩincome.ΩEachΩ fundΩnormallyΩdistributesΩanyΩnetΩinvestmentΩincomeΩmonthly.Ω YouΩmayΩchooseΩtoΩreinvestΩdistributionsΩfromΩnetΩinvestmentΩ income,ΩcapitalΩgainsΩorΩbothΩinΩadditionalΩsharesΩofΩthisΩfundΩorΩ otherΩPutnamΩfunds,ΩorΩyouΩmayΩreceiveΩthemΩinΩcashΩinΩtheΩformΩ ofΩaΩcheckΩorΩanΩelectronicΩdepositΩtoΩyourΩbankΩaccount.ΩIfΩyouΩ doΩnotΩselectΩanΩoptionΩwhenΩyouΩopenΩyourΩaccount,ΩallΩdistributionsΩwillΩbeΩreinvested.ΩIfΩyouΩchooseΩtoΩreceiveΩdistributionsΩ inΩcash,ΩbutΩcorrespondenceΩfromΩtheΩfundΩorΩPutnamΩInvestorΩ ServicesΩisΩreturnedΩasΩ“undeliverable,”ΩtheΩdistributionΩoptionΩonΩ yourΩaccountΩmayΩbeΩconvertedΩtoΩreinvestΩfutureΩdistributionsΩinΩ theΩfundΩorΩotherΩPutnamΩfunds.ΩYouΩwillΩnotΩreceiveΩinterestΩonΩ uncashedΩdistributionΩchecks. InΩorderΩforΩanyΩportionΩofΩaΩfund’sΩdistributionsΩtoΩbeΩexemptΩfromΩtheΩ personalΩincomeΩtaxΩofΩtheΩrelevantΩstate,ΩtheΩfundΩandΩitsΩinvestmentsΩ mustΩmeetΩcertainΩrequirementsΩthatΩvaryΩaccordingΩtoΩtheΩrelevantΩ state.ΩAΩfundΩorΩitsΩinvestmentsΩmayΩfailΩtoΩmeetΩtheΩrelevantΩstate’sΩ requirementsΩforΩaΩvarietyΩofΩreasons,ΩwhichΩmayΩincreaseΩtheΩamountΩ ofΩtaxesΩpayableΩbyΩshareholders.ΩInΩaddition,ΩaΩfund’sΩdistributionsΩ mayΩbeΩsubjectΩtoΩotherΩstateΩorΩlocalΩtaxes,ΩsuchΩasΩaΩstate’sΩAMT.Ω PleaseΩreferΩtoΩtheΩSAIΩforΩfurtherΩinformationΩconcerningΩtheΩtaxationΩ ofΩfundΩdistributionsΩbyΩtheΩrelevantΩstate. TheΩSupremeΩCourtΩisΩcurrentlyΩconsideringΩanΩappealΩofΩaΩstateΩ courtΩdecisionΩthatΩmightΩsignificantlyΩaffectΩhowΩstatesΩtaxΩin-stateΩ andΩout-of-stateΩmunicipalΩbonds.ΩΩAΩKentuckyΩcourtΩdecisionΩheldΩ thatΩKentucky’sΩtaxΩexemptionΩofΩinterestΩonΩitsΩownΩbondsΩandΩitsΩ taxationΩofΩinterestΩonΩtheΩbondsΩofΩotherΩstatesΩisΩunconstitutional.ΩΩ IfΩtheΩSupremeΩCourtΩaffirmsΩthisΩholding,ΩthisΩdecisionΩcouldΩhaveΩ implicationsΩforΩtheΩtaxΩtreatmentΩofΩtheΩbondsΩheldΩbyΩtheΩfund.ΩΩ ForΩmoreΩinformationΩonΩtheΩpotentialΩimpactΩofΩtheΩdecisionΩonΩtheΩ fund,ΩpleaseΩseeΩtheΩSAI. 27 ProsPectus ForΩfederalΩincomeΩtaxΩpurposes,ΩdistributionsΩofΩnetΩinvestmentΩ incomeΩotherΩthanΩ“exempt-interestΩdividends”ΩasΩdescribedΩ belowΩforΩtheΩTaxΩExemptΩMoneyΩMarketΩFundΩareΩtaxableΩasΩ ordinaryΩincome.ΩGenerally,ΩgainsΩrealizedΩbyΩtheΩfundΩonΩtheΩsaleΩ orΩexchangeΩofΩinvestmentsΩareΩtaxableΩtoΩyou,ΩevenΩthoughΩtheΩ incomeΩfromΩsuchΩinvestmentsΩgenerallyΩisΩtax-exempt.ΩTaxesΩonΩ distributionsΩofΩcapitalΩgainsΩareΩdeterminedΩbyΩhowΩlongΩaΩfundΩ ownedΩtheΩinvestmentsΩthatΩgeneratedΩthem,ΩratherΩthanΩbyΩhowΩ longΩyouΩhaveΩownedΩyourΩshares.ΩProperlyΩdesignatedΩdistributionsΩofΩgainsΩfromΩinvestmentsΩthatΩtheΩfundsΩownedΩforΩmoreΩ thanΩoneΩyearΩareΩtaxableΩasΩlong-termΩcapitalΩgains.ΩDistributionsΩ ofΩgainsΩfromΩinvestmentsΩthatΩtheΩfundsΩownedΩforΩoneΩyearΩorΩlessΩ areΩtaxableΩasΩordinaryΩincome.ΩTaxΩExemptΩMoneyΩMarketΩFundΩ doesΩnotΩexpectΩtoΩdistributeΩgainsΩtaxableΩasΩcapitalΩgains,ΩwhichΩ wouldΩbeΩsubjectΩtoΩdifferentΩtaxΩtreatment,ΩasΩdetailedΩinΩtheΩSAI.Ω DistributionsΩareΩtaxableΩtoΩyouΩevenΩifΩtheyΩareΩpaidΩfromΩincomeΩ orΩgainsΩearnedΩbyΩtheΩfundsΩbeforeΩyourΩinvestmentΩ(andΩthusΩ wereΩincludedΩinΩtheΩpriceΩyouΩpaid).ΩDistributionsΩareΩalsoΩtaxableΩ whetherΩyouΩreceiveΩthemΩinΩcashΩorΩreinvestΩthemΩinΩadditionalΩ sharesΩofΩoneΩofΩtheseΩfundsΩorΩotherΩPutnamΩfunds. DistributionsΩbyΩtheΩMoneyΩMarketΩFundΩtoΩretirementΩplansΩthatΩ qualifyΩforΩtax-exemptΩtreatmentΩunderΩfederalΩincomeΩtaxΩlawsΩ willΩnotΩbeΩtaxable.ΩSpecialΩtaxΩrulesΩapplyΩtoΩinvestmentsΩthroughΩ suchΩplans.ΩYouΩshouldΩconsultΩyourΩtaxΩadvisorΩtoΩdetermineΩtheΩ suitabilityΩofΩtheΩfundΩasΩanΩinvestmentΩthroughΩsuchΩaΩplanΩandΩtheΩ taxΩtreatmentΩofΩdistributionsΩ(includingΩdistributionsΩofΩamountsΩ attributableΩtoΩanΩinvestmentΩinΩtheΩfund)ΩfromΩsuchΩaΩplan. FundΩdistributionsΩforΩtheΩTaxΩExemptΩMoneyΩMarketΩFundΩthatΩ areΩdesignatedΩasΩ“exemptΩdividends”ΩareΩnotΩgenerallyΩsubjectΩ toΩfederalΩincomeΩtax.ΩHowever,ΩifΩyouΩreceiveΩsocialΩsecurityΩorΩ railroadΩretirementΩbenefits,ΩyouΩshouldΩconsultΩyourΩtaxΩadvisorΩ toΩdetermineΩwhatΩeffect,ΩifΩany,ΩanΩinvestmentΩinΩtheΩTaxΩExemptΩ MoneyΩMarketΩFundΩmayΩhaveΩonΩtheΩfederalΩtaxationΩofΩyourΩbenefits.ΩInΩaddition,ΩanΩinvestmentΩinΩtheΩfundΩmayΩresultΩinΩliabilityΩ forΩfederalΩAMT,ΩforΩbothΩindividualΩandΩcorporateΩshareholders. 28 ProsPectus TheΩMoneyΩMarketΩFund’sΩinvestmentsΩinΩforeignΩsecurities,ΩifΩany,ΩmayΩ beΩsubjectΩtoΩforeignΩwithholdingΩtaxes.ΩInΩthatΩcase,ΩtheΩfund’sΩreturnΩonΩ thoseΩinvestmentsΩwouldΩbeΩdecreased.ΩShareholdersΩgenerallyΩwillΩnotΩ beΩentitledΩtoΩclaimΩaΩcreditΩorΩdeductionΩwithΩrespectΩtoΩforeignΩtaxes.Ω AnyΩgainΩresultingΩfromΩtheΩsaleΩorΩexchangeΩofΩyourΩsharesΩwillΩ generallyΩalsoΩbeΩsubjectΩtoΩtax.ΩYouΩshouldΩconsultΩyourΩtaxΩadvisorΩ forΩmoreΩinformationΩonΩyourΩownΩtaxΩsituation,ΩincludingΩpossibleΩ foreign,ΩstateΩandΩlocalΩtaxes. Financial highlights TheΩfinancialΩhighlightsΩtablesΩareΩintendedΩtoΩhelpΩyouΩunderstandΩ eachΩfund’sΩrecentΩfinancialΩperformance.ΩCertainΩinformationΩreflectsΩ financialΩresultsΩforΩaΩsingleΩfundΩshare.ΩTheΩtotalΩreturnsΩrepresentΩtheΩ rateΩthatΩanΩinvestorΩwouldΩhaveΩearnedΩorΩlostΩonΩanΩinvestmentΩinΩaΩ fund,ΩassumingΩreinvestmentΩofΩallΩdividendsΩandΩdistributions.ΩThisΩ informationΩhasΩbeenΩderivedΩfromΩeachΩfund’sΩfinancialΩstatements,Ω whichΩhaveΩbeenΩauditedΩbyΩPricewaterhouseCoopersΩLLP.ΩItsΩreportΩ andΩeachΩfund’sΩfinancialΩstatementsΩareΩincludedΩinΩeachΩfund’sΩ annualΩreportΩtoΩshareholders,ΩwhichΩisΩavailableΩuponΩrequest. 29 ProsPectus Financial highlights (For a common share outstanding throughout the period) Money Market Fund INVESTMENT OPERATIONS: Period ended Net asset value, beginning of period Net investment income (loss) Net realized gain (loss) on investments Total from investment operations CLASS A September 30, 2007 September 30, 2006 September 30, 2005 September 30, 2004 September 30, 2003 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 .0486(c,d) .0425(c,f) .0226(c) .0068(c) .0087 .0436(c,d) .0375(c,f) .0176(c) .0018(c) .0037 .0436(c,d) .0375(c,f) .0176(c) .0018(c) .0037 .0471(c,d) .0410(c,f) .0211(c) .0053(c) .0072 .0436(c,d) .0375(c,f) .0176(c) .0027(c) .0025 .0461(c,d) .0400(c,f) .0201(c) .0043(c) .0062 —(e) — — — —(e) —(e) — — — —(e) —(e) — — — —(e) —(e) — — — —(e) —(e) — — — —(e) —(e) — — — —(e) .0486 .0425 .0226 .0068 .0087 .0436 .0375 .0176 .0018 .0037 .0436 .0375 .0176 .0018 .0037 .0471 .0410 .0211 .0053 .0072 .0436 .0375 .0176 .0027 .0025 .0461 .0400 .0201 .0043 .0062 CLASS B September 30, 2007 September 30, 2006 September 30, 2005 September 30, 2004 September 30, 2003 CLASS C September 30, 2007 September 30, 2006 September 30, 2005 September 30, 2004 September 30, 2003 CLASS M September 30, 2007 September 30, 2006 September 30, 2005 September 30, 2004 September 30, 2003 CLASS R September 30, 2007 September 30, 2006 September 30, 2005 September 30, 2004 September 30, 2003† CLASS T September 30, 2007 September 30, 2006 September 30, 2005 September 30, 2004 September 30, 2003 see notes to financial highlights at the end of this section. 30 ProsPectus LESS DISTRIBUTIONS: RATIOS AND SUPPLEMENTAL DATA: From net investment income Total distributions Net asset value, end of period Total return at net asset value (%)(a) Net assets, end of period (in thousands) Ratio of expenses to average net assets (%)(b) Ratio of net investment income (loss) to average net assets (%) ( .0489) ( .0425) ( .0226) ( .0068) ( .0087) ( .0439) ( .0375) ( .0176) ( .0018) ( .0037) ( .0439) ( .0375) ( .0176) ( .0018) ( .0037) ( .0474) ( .0410) ( .0211) ( .0053) ( .0072) ( .0439) ( .0375) ( .0176) ( .0027) ( .0025) ( .0464) ( .0400) ( .0201) ( .0043) ( .0062) ( .0489) ( .0425) ( .0226) ( .0068) ( .0087) ( .0439) ( .0375) ( .0176) ( .0018) ( .0037) ( .0439) ( .0375) ( .0176) ( .0018) ( .0037) ( .0474) ( .0410) ( .0211) ( .0053) ( .0072) ( .0439) ( .0375) ( .0176) ( .0027) ( .0025) ( .0464) ( .0400) ( .0201) ( .0043) ( .0062) $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 $1 .00 1 .00 1 .00 1 .00 1 .00 5 .01 4 .34 2 .29 .68 .87 4 .49 3 .82 1 .78 .18 .37 4 .49 3 .82 1 .78 .18 .37 4 .86 4 .19 2 .13 .53 .72 4 .49 3 .82 1 .78 .27 .25* 4 .75 4 .08 2 .03 .43 .62 $3,394,996 2,870,990 3,087,756 3,537,907 4,745,555 $117,474 174,158 290,268 520,456 874,069 $19,456 15,723 33,259 40,935 61,755 $42,641 41,887 44,682 54,390 74,921 $3,974 153,985 1,687 131 1 $14,743 9,507 180,132 124,394 95,779 .54(c) .50(c,f) .53(c) .53(c) .52 1 .04(c) 1 .00(c,f) 1 .03(c) 1 .03(c) 1 .02 1 .04(c) 1 .00(c,f) 1 .03(c) 1 .03(c) 1 .02 .69(c) .65(c,f) .68(c) .68(c) .67 1 .04(c) 1 .00(c,f) 1 .03(c) 1 .03(c) .71* .79(c) .75(c,f) .78(c) .78(c) .77 4 .84(c,d) 4 .26(c,f) 2 .21(c) .70(c) .88 4 .34(c,d) 3 .70(c,f) 1 .63(c) .19(c) .39 4 .34(c,d) 3 .71(c,f) 1 .64(c) .21(c) .38 4 .69(c,d) 4 .11(c,f) 2 .05(c) .55(c) .74 4 .32(c,d) 4 .22(c,f) 1 .99(c) .30(c) .25* 4 .59(c,d) 3 .77(c,f) 2 .02(c) .46(c) .52 31 ProsPectus Financial highlights (continued) * † (a) (b) (c) Not annualized. For the period January 21, 2003 (commencement of operations) to September 30, 2003. Total return assumes dividend reinvestment and does not reflect the effect of sales charges. Includes amounts paid through expense offset arrangements. Reflects waivers of certain fund expenses in connection with investments in Putnam Prime Money Market Fund during the period. As a result of such waivers, the expenses of each class reflect a reduction of the following amounts: Percentage of average net assets <0.01% <0.01 <0.01 <0.01 September 30, 2007 September 30, 2006 September 30, 2005 September 30, 2004 (d) Reflects a non-recurring reallocation of balance credits which amounted to $0.0003 per share and 0.03% of average net assets. (e) Amount represents less than $0.0001 per share. (f) Reflects a non-recurring reimbursement from Putnam Investments relating to the calculation of certain amounts paid by the fund to Putnam in previous years for transfer agent services, which amounted to less than $0.01 per share and 0.04% of average net assets for the period ended September 30, 2006. 32 ProsPectus Financial highlights (For a common share outstanding throughout the period) Putnam Tax Exempt Money Market Fund CLASS A PER-SHARE OPERATING PERFORMANCE 9/30/07 9/30/06 $1 .00 Year ended 9/30/05 $1 .00 9/30/04 $1 .00 9/30/03 $1 .00 Net asset value, beginning of period $1 .00 Investment operations: Net investment income Net realized gain on investments Total from investment operations Less distributions: From net investment income Total distributions Net asset value, end of period Total return at net asset value (%)(a) .0319(c) — .0319 ( .0312) ( .0312) $1.00 3 .17 .0270(c,d,e) — .0270 ( .0270) ( .0270) $1.00 2 .74 .0153(c,d) .0044(c) — .0153 ( .0153) ( .0153) $1.00 1 .54 — .0044 ( .0044) ( .0044) $1.00 .44 .0065(c) —(f) .0065 ( .0065) ( .0065) $1.00 .65 RATIOS AND SUPPLEMENTAL DATA Net assets, end of period (in thousands) Ratio of expenses to average net assets (%)(b) Ratio of net investment income to average net assets (%) (Continued on next page) $74,596 $125,056 .59(c) 3 .16(c) $114,429 $124,293 $148,603 .60(c) .47(c) .64(c) .62(c) .54(c,d,e) 2 .71(c,d,e) .55(c,d) 1 .51(c,d) 33 ProsPectus Financial highlights (continued) (a) Total return assumes dividend reinvestment. (b) Includes amounts paid through expense offset arrangements. (c) Reflects an involuntary contractual expense limitation in effect during the period. As a result of such limitation, the expenses of the fund reflect a reduction of the following amounts: Percentage of average net assets 0.15% 0.11 0.12 0.20 0.15 September 30, 2007 September 30, 2006 September 30, 2005 September 30, 2004 September 30, 2003 (d) Reflects a voluntary waiver of fund expenses in effect from July 1, 2005 through December 31, 2005. As a result of this waiver, the expenses of the fund reflect a reduction of the following amounts: Percentage of average net assets 0.02% 0.02 September 30, 2006 September 30, 2005 (e) Reflects a non-recurring accrual related to a reimbursement paid to the fund by Putnam Investments relating to the calculation of certain amounts paid by the fund to Putnam in previous years for transfer agent services which amounted to less than $0.01 per share and 0.02% of average net assets. (f) Amount represents less than $0.0001 per share. 34 ProsPectus Glossary of terms Bond Capital gain/loss Class A, B, C, M, R, T, y shares Common stock distribution An Iou issued by a government or corporation that usually pays interest. A profit or loss on the sale of securities (generally stocks or bonds). types of shares, each class offering investors a different way to pay sales charges and distribution fees. A fund’s prospectus explains the availability and attributes of each type. A unit of ownership of a corporation. A payment from a mutual fund to shareholders. It may include interest from bonds and dividends from stocks (dividend distributions). It may also include profits from the sale of securities from the fund’s portfolio (capital gains distributions). the value of one share of a mutual fund without regard to sales charges. some bond funds aim for a steady NAV, representing stability; most stock funds aim to raise NAV, representing growth in the value of an investment. Net asset value (NAV) Public offering the purchase price of one class A or class M share price (POP) of a mutual fund, including the applicable “front-end” sales charge. Short-term trading fee Fee charged to shareholders of certain funds who redeem fund shares that they have held for less than a stated minimum amount of time. short-term trading fees are withheld from the proceeds of the shareholder’s redemption and are payable to the fund. A measure of performance showing the change in the value of an investment over a given period, assuming all earnings are reinvested. the percentage rate at which a fund has earned income from its investments over the indicated period. Total return yield 35 ProsPectus Make the most of your Putnam privileges Ω AsΩaΩPutnamΩmutualΩfundΩshareholder,ΩyouΩhaveΩ accessΩtoΩaΩnumberΩofΩservicesΩthatΩcanΩhelpΩyouΩ buildΩaΩmoreΩeffectiveΩandΩflexibleΩfinancialΩprogram.ΩHereΩareΩsomeΩofΩtheΩwaysΩyouΩcanΩuseΩΩ theseΩprivilegesΩtoΩmakeΩtheΩmostΩofΩyourΩPutnamΩ mutualΩfundΩinvestment. InvestΩasΩmuchΩasΩyouΩwish.ΩTheΩamountΩyouΩ chooseΩwillΩbeΩautomaticallyΩtransferredΩΩweekly,Ω semi-monthlyΩorΩmonthlyΩfromΩyourΩcheckingΩorΩ savingsΩaccount. MakeΩregularΩwithdrawalsΩΩmonthly,Ωquarterly,Ω semiannually,ΩorΩannuallyΩfromΩyourΩPutnamΩ mutualΩfundΩaccount.Ω TransferΩassetsΩautomaticallyΩfromΩoneΩΩ PutnamΩaccountΩtoΩanotherΩonΩaΩregular,ΩΩ prearrangedΩbasis. ExchangeΩmoneyΩbetweenΩPutnamΩfundsΩinΩtheΩ sameΩclassΩofΩshares.ΩTheΩexchangeΩprivilegeΩ allowsΩyouΩtoΩadjustΩyourΩinvestmentsΩasΩyourΩ objectivesΩchange.ΩAΩsignatureΩguaranteeΩisΩ requiredΩforΩexchangesΩofΩmoreΩthanΩ$500,000ΩΩ andΩsharesΩofΩallΩPutnamΩfundsΩmayΩnotΩbeΩ ΩavailableΩtoΩallΩinvestors. AΩ1.00%Ωshort-termΩtradingΩfeeΩmayΩapplyΩtoΩ exchangesΩofΩfundΩsharesΩthatΩareΩmadeΩwithinΩΩ theΩapplicableΩholdingΩperiod.ΩForΩcertainΩglobal,ΩΩ international,Ωhigh-yield,ΩandΩsmall-capΩfunds,ΩΩ Ω Sy S T E M A T I C I N V E STM ENT PLAN Ω ΩΩ Sy S T E M A T I C W I T Hd R AWAL Ω ΩΩ S y S T E M A T I C E x C H ANGE Ω ΩΩ E xC H A N G E P R I V I L EGE Ω Ω 36 ProsPectus theΩfeeΩwillΩapplyΩtoΩsharesΩheldΩforΩ90ΩdaysΩorΩΩ less.ΩForΩotherΩPutnamΩfundsΩ(otherΩthanΩmoneyΩ marketΩfunds),ΩtheΩfeeΩwillΩapplyΩtoΩsharesΩheldΩΩ forΩsevenΩdaysΩorΩless.ΩPleaseΩreadΩtheΩprospectusΩ ofΩtheΩapplicableΩfundΩforΩmoreΩdetails. Ω InvestorsΩmayΩnotΩmaintain,ΩwithinΩtheΩsameΩΩ fund,ΩsimultaneousΩplansΩforΩsystematicΩinvestmentΩorΩexchangeΩ(intoΩtheΩfund)ΩandΩsystemΩaticΩ withdrawalΩorΩexchangeΩ(outΩofΩtheΩfund).ΩTheseΩ privilegesΩareΩsubjectΩtoΩchangeΩorΩΩtermination.Ω DiversifyΩyourΩportfolioΩbyΩinvestingΩdividendsΩ andΩotherΩdistributionsΩfromΩoneΩPutnamΩfundΩ automaticallyΩintoΩanotherΩatΩnetΩassetΩvalue. YouΩmayΩreduceΩaΩfront-endΩsalesΩchargeΩbyΩΩ agreeingΩtoΩinvestΩaΩminimumΩdollarΩamountΩoverΩ 13Ωmonths.ΩDependingΩonΩyourΩfund,ΩtheΩΩminimumΩΩ isΩ$50,000ΩorΩ$100,000.ΩWheneverΩyouΩmakeΩanΩ investmentΩunderΩthisΩarrangement,ΩyouΩorΩyourΩ financialΩrepresentativeΩshouldΩnotifyΩΩPutnamΩ InvestorΩServicesΩthatΩaΩStatementΩofΩIntentionΩisΩ inΩeffect. Ω Ω ManyΩofΩtheseΩservicesΩcanΩbeΩaccessedΩonlineΩatΩ www.putnam.com. Ω d I VI d E N d S P L u S Ω Ω S T A T E M E N T O F I N T ENTI ON ForΩmoreΩinformationΩaboutΩanyΩofΩtheseΩservicesΩ andΩprivileges,ΩcallΩyourΩfinancialΩrepresentativeΩorΩ aΩΩPutnamΩcustomerΩserviceΩrepresentativeΩtollΩfreeΩ atΩΩ1-800-225-1581. 37 ProsPectus Putnam Family of Fundsa The following is a complete list of Putnam’s open-end mutual funds offered to the public. 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. P uT NA M G RO WT H F u N d S Putnam Discovery Growth Fund Putnam Growth opportunities Fund Putnam Health sciences trust Putnam International New opportunities Fund Putnam New opportunities Fund Putnam otc & emerging Growth Fund Putnam small cap Growth Fund Putnam Vista Fund Putnam Voyager Fund PuT NA M B L E N d F u N d S Putnam capital Appreciation Fund Putnam capital opportunities Fund Putnam europe equity Fund Putnam Global equity Fund Putnam Global Natural resources Fund Putnam International capital opportunities Fund Putnam International equity Fund Putnam Investors Fund Putnam research Fund Putnam tax smart equity Fund® Putnam utilities Growth and Income Fund P uT NA M V A L u E F u N d S Putnam classic equity Fund Putnam convertible Income-Growth trust Putnam equity Income Fund the George Putnam Fund of Boston the Putnam Fund for Growth and Income Putnam International Growth and Income Fund Putnam Mid cap Value Fund Putnam New Value Fund Putnam small cap Value Fund P uT NA M I N CO M E F u N d S Putnam American Government Income Fund Putnam Diversified Income trust Putnam Floating rate Income Fund Putnam Global Income trust Putnam High Yield Advantage Fund 38 ProsPectus P uT N A M I N CO M E F u N d S (cont.) Putnam High Yield trust Putnam Income Fund Putnam Money Market Fundb Putnam u.s. Government Income trust PuT NA M T A x -F R E E I N C O M E F u N d S Putnam AMt-Free Insured Municipal Fund Putnam tax exempt Income Fund Putnam tax exempt Money Market Fundb Putnam tax-Free High Yield Fund Putnam state tax-Free Income Fundsc Arizona, california, Massachusetts, Michigan, Minnesota, New Jersey, New York, ohio and Pennsylvania PuT NA M A S S E T A L L O C A T I O N F u Nd S Putnam Income strategies Fund Putnam Asset Allocation Funds — three investment portfolios that spread your money across a variety of stocks, bonds, and money market investments. the three portfolios: Putnam Asset Allocation: Balanced Portfolio Putnam Asset Allocation: conservative Portfolio Putnam Asset Allocation: Growth Portfolio PuT NA M R E T I RE M E N T R E A d y ® F u Nd S Putnam retirementready Funds — ten investment portfolios that offer diversification among stocks, bonds and money market instruments and adjust to become more conservative over time based on a target date for withdrawing assets. Putnam retirementready 2050 Fund Putnam retirementready 2045 Fund Putnam retirementready 2040 Fund Putnam retirementready 2035 Fund Putnam retirementready 2030 Fund Putnam retirementready 2025 Fund Putnam retirementready 2020 Fund Putnam retirementready 2015 Fund Putnam retirementready 2010 Fund Putnam retirementready Maturity Fund a As of 12/30/07. b An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds seek to preserve your investment at $1.00 per share, it is possible to lose money by investing in such funds. c Not available in all states. 39 ProsPectus For more information about Putnam Money Market Fund and Putnam Tax Exempt Money Market Fund EachΩfund’sΩSAIΩandΩannualΩandΩsemi-annualΩreportsΩtoΩshareholdersΩ includeΩadditionalΩinformationΩaboutΩtheΩfund.ΩTheΩSAI,ΩandΩtheΩindependentΩregisteredΩpublicΩaccountingΩfirm’sΩreportΩandΩtheΩfinancialΩstatementsΩ includedΩinΩeachΩfund’sΩmostΩrecentΩannualΩreportΩtoΩitsΩshareholders,ΩareΩ incorporatedΩbyΩreferenceΩintoΩthisΩprospectus,ΩwhichΩmeansΩtheyΩareΩpartΩ ofΩthisΩprospectusΩforΩlegalΩpurposes.ΩEachΩfund’sΩannualΩreportΩdiscussesΩ theΩmarketΩconditionsΩandΩinvestmentΩstrategiesΩthatΩsignificantlyΩaffectedΩ theΩfund’sΩperformanceΩduringΩitsΩlastΩfiscalΩyear.ΩYouΩmayΩgetΩfreeΩcopiesΩofΩ theseΩmaterials,ΩrequestΩotherΩinformationΩaboutΩanyΩPutnamΩfund,ΩorΩmakeΩ shareholderΩinquiries,ΩbyΩcontactingΩyourΩfinancialΩrepresentative,ΩbyΩvisitingΩ Putnam’sΩwebsiteΩatΩwww.putnam.com/individual,ΩorΩbyΩcallingΩPutnamΩΩ toll-freeΩatΩ1-800-225-1581. YouΩmayΩreviewΩandΩcopyΩinformationΩaboutΩaΩfund,ΩincludingΩitsΩSAI,ΩatΩ theΩSecuritiesΩandΩExchangeΩCommission’sΩPublicΩReferenceΩRoomΩinΩ Washington,ΩD.C.ΩYouΩmayΩcallΩtheΩCommissionΩatΩ1-202-942-8090ΩforΩ informationΩaboutΩtheΩoperationΩofΩtheΩPublicΩReferenceΩRoom.ΩYouΩmayΩ alsoΩaccessΩreportsΩandΩotherΩinformationΩaboutΩtheΩfundΩonΩtheΩEDGARΩ DatabaseΩonΩtheΩCommission’sΩwebsiteΩatΩhttp://www.sec.gov.ΩYouΩmayΩ getΩcopiesΩofΩthisΩinformation,ΩwithΩpaymentΩofΩaΩduplicationΩfee,ΩbyΩelectronicΩrequestΩatΩtheΩfollowingΩE-mailΩaddress:Ωpublicinfo@sec.gov,ΩorΩbyΩ writingΩtheΩCommission’sΩPublicΩReferenceΩSection,ΩWashington,ΩD.C.Ω 20549-0102.ΩYouΩmayΩneedΩtoΩreferΩtoΩtheΩfund’sΩfileΩnumber. D w w w .p utnam. com One Post Office Square Boston, Massachusetts 02109 1-800-225-1581 Address correspondence to Putnam Investor Services P.O. Box 8383 Boston, MA 02266-8383 Putnam Money Market Fund File No . 811-2608 Putnam tax exempt Money Market Fund 249324 1/08 File No . 811-5215