The Putnam announcement said that the Trustees’ action was “not related to the portfolio’s credit quality, but was instead a reaction to marketwide liquidity issues.” Putnam said that the fund, “…like Putnam’s other money market funds, has no exposure to securities of Lehman Brothers, Washington Mutual or AIG at the parent-company level.”
The announcement said that the fund’s net asset value calculated on September 16, 2008 was $1.00 per share, but that on September 17, “the fund experienced significant redemption pressure.” The Putnam announcement noted that “serious constraints on liquidity in money market instruments created the risk that in order to process redemptions, the fund would realize losses in selling its portfolio securities,” and that, “in the face of these challenges, the Trustees determined to close the fund to ensure equitable treatment of all fund shareholders.”
An Orderly Distribution
“Putnam and the Trustees believe that this action is in the best interests of shareholders because it ensures an orderly distribution of assets in light of the current unusual market conditions and treats all shareholders in an equitable manner.”
The announcement said that Putnam and the trustees are “working to develop a detailed plan of distribution, with the goal of providing shareholders with the opportunity to receive distributions as expeditiously as possible, depending on market conditions.” Putnam said that the fund intends to provide additional information shortly regarding the plan as part of ongoing communications to shareholders.
The announcement said that the action was “specific to the institutional Putnam Prime Money Market Fund in response to that fund’s specific circumstances,” and does not relate to other Putnam funds, including the retail Putnam Money Market Fund and Putnam VT Money Market Fund, or to stable value funds managed by Putnam for defined contribution clients.