Putnam is closing down one of its money market funds and distributing the assets:
The Board of Trustees of the Putnam Funds announced today that it has voted to close the institutional Putnam Prime Money Market Fund, effective as of 5:00 p.m. on September 17, 2008, and distribute all fund assets. Putnam Prime Money Market Fund is offered to institutional clients with a minimum initial investment of $10 million. The Trustees' action was not related to the portfolio's credit quality, but was instead a reaction to marketwide liquidity issues. 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 fund's net asset value calculated on September 16, 2008 was $1.00 per share. On September 17, the fund experienced significant redemption pressure. 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. In the face of these challenges, the Trustees determined to close the fund to ensure equitable treatment of all fund shareholders.
I've had several people ask me if their money market funds are safe. This might be a good time for a brief primer on what a money market fund does (though of course, a better time would have been before we all plowed our money into them).
For consumers, money market funds generally function as a cross between a mutual fund and a bank account. The idea is, you buy shares at a dollar a share. The plan will invest those shares into low-risk* securities, like commercial paper and treasury notes. However, unlike a mutual fund, a money market fund strives to keep its per-share Net Asset Value (NAV) at exactly $1 per share. The idea is that, just like a bank account, every one dollar you put in entitles you to draw exactly one dollar out. Any interest or appreciation on the fund's assets are distributed as income to the shareholders. This is the yield that you see quoted on your bank's prospectus--typically higher than a bank account, but not that much higher.