PUTNAM CALIFORNIA TAX EXEMPT INCOME FUND
PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND
Prospectus Supplement dated June 1, 1994 to
Prospectus dated February 1, 1994
The date of this Prospectus has been changed to June 1, 1994.
The name of Putnam California Tax Exempt Income Fund has changed
to Putnam California Tax Exempt Income Trust and its shares are
now divided into two series: Putnam California Tax Exempt Income
Fund and Putnam California Intermediate Tax Exempt Fund. Shares
of Putnam California Intermediate Tax Exempt Fund are not offered
by this Prospectus.
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On December 3, 1993, the Trustees of Putnam California Tax Exempt
Money Market Fund (the "California Money Market Fund") and Putnam
Tax Exempt Money Market Fund (the "Money Market Fund") approved a
proposed plan of reorganization pursuant to which the Money
Market Fund will acquire all of the assets and assume all of the
liabilities of the California Money Market Fund. The proposed
reorganization is subject to the approval of the shareholders of
the California Money Market Fund. Under the plan of
reorganization, shareholders would receive one share of the Money
Market Fund for each share of the California Money Market Fund
held by them.
The Money Market Fund normally invests at least 80% of its net
assets in short-term Tax Exempt Securities (as defined in its
Prospectus). However, dividends paid by the Money Market Fund to
residents of California may be subject to state and local income
tax.
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The paragraph below the Examples on page 6 of the Prospectus is
replaced by the following:
The tables are provided to help you understand the expenses of
investing in each Fund and your share of the operating expenses
which that Fund incurs. The 12b-1 fees for Class A shares of the
Income Fund shown in the table reflect the amounts to which the
Fund's Trustees currently limit payments under the Class A
Distribution Plan. The 12b-1 fees for Class B shares of the
Income Fund shown in the table reflect the amounts to which the
Fund's Trustees currently limit payments under the Class B
Distribution Plan. Management fees and other expenses for Class
B shares of the Income Fund are based on the operating expenses
of the Class A shares of the Income Fund. The 12b-1 fees for the
Money Market Fund shown in the table reflect the termination of
payments under the Money Market Fund's Distribution Plan
effective January 1, 1994. See "Distribution Plans". Actual
12b-1 fees and total operating expenses of the Money Market
Fund's last fiscal year were 0.10% and 0.89%, respectively. The
Examples for each Fund do not represent past or future expense
levels. Actual expenses incurred by each Fund may be greater or
less than those shown. Federal regulations require the Examples
to assume a 5% annual return, but actual annual return has
varied.
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Under "How to buy shares - Class A shares" in the Prospectus, the
second paragraph, the CDSC chart on page 26 and the first and
second paragraphs below the CDSC chart have been replaced by the
following:
There is no initial sales charge on purchases of Class A shares
of $1 million or more. However, a contingent deferred sales
charge ("CDSC") of 1.00% or 0.50%, respectively, is imposed on
redemptions of such shares within the first or second year after
purchase, based on the lower of the shares' cost and current net
asset value. Any shares acquired by reinvestment of
distributions will be redeemed without a CDSC. In addition,
shares purchased by certain investors investing $1 million or
more that have made arrangements with Putnam Mutual Funds and
whose dealer of record waived the commission described in the
next paragraph are not subject to the CDSC. In determining
whether a CDSC is payable, the Fund will first redeem shares not
subject to any charge. Putnam Mutual Funds receives the entire
amount of any CDSC you pay. See the Statement of Additional
Information for more information about the CDSC.
Except as stated below, Putnam Mutual Funds pays investment
dealers of record commissions on sales of Class A shares of $1
million or more based on an investor's cumulative purchases
during the one-year period beginning with the date of the initial
purchase at net asset value and each subsequent one-year period
beginning with the first purchase at net asset value purchase
following the end of the prior period. Such commissions are paid
at the rate of 1.00% of the amount under $3 million, 0.50% of the
next $47 million and 0.25% thereafter. On sales at net asset
value to a participant-directed qualified retirement plan
initially investing less than $20 million in Putnam funds and
other investments managed by Putnam Management or its affiliates
(including a plan sponsored by an employer with more than 750
employees), Putnam Mutual Funds pays commissions on cumulative
purchases during the life of the account at the rate of 1.00% of
the amount under $3 million and 0.50% thereafter. On sales at
net asset value to all other participant-directed qualified
retirement plans, Putnam Mutual Funds pays commissions on the
initial investment and on subsequent net quarterly sales at the
rate of 0.15%.
YOU MAY BE ELIGIBLE TO BUY CLASS A SHARES OF THE INCOME FUND AT
REDUCED SALES CHARGES. Consult your investment dealer or Putnam
Mutual Funds for details about Putnam's Combined Purchase
Privilege, Cumulative Quantity Discount, Statement of Intention,
Group Sales Plan, Employee Benefit Plans and other plans.
Descriptions are also included in the order form and in the
Statement of Additional Information. Shares may be sold at net
asset value to certain categories of investors and the CDSC may
be waived under certain circumstances. See "How to buy shares -
The Income Fund - Class A and B shares -- General" below.
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The second paragraph on page 31 of the Prospectus has been
replaced by the following:
In order to compensate investment dealers (including, for this
purpose, certain financial institutions) for services provided in
connection with sales of Class A shares and the maintenance of
shareholder accounts, Putnam Mutual Funds makes quarterly
payments to qualifying dealers based on the average net asset
value of Class A shares of the Income Fund which are attributable
to shareholders for whom the dealers are designated as the dealer
of record. This calculation excludes until one year after
purchase shares purchased at net asset value after March 31, 1994
by shareholders investing $1 million or more and by participant-
directed qualified retirement plans sponsored by employers with
more than 750 employees ("NAV Shares"), except for shares owned
by certain investors investing $1 million or more that have made
arrangements with Putnam Mutual Funds and whose dealer of record
waived the sales commission. Except as stated below, Putnam
Mutual Funds makes such payments at the annual rate of 0.15% of
such average net asset value for Class A shares outstanding as of
December 31, 1992 and 0.20% of such average net asset value of
shares acquired after that date (including shares acquired
through reinvestment of distributions). For participant-directed
qualified retirement plans initially investing less than $20
million in Putnam funds and other investments managed by Putnam
Management or its affiliates, Putnam Mutual Funds' payments to
qualifying dealers on NAV Shares are 100% of the rate stated
above if average plan assets in Putnam funds (excluding money
market funds) during the quarter are less than $20 million, 60%
of the stated rate if average plan assets are at least $20
million but less than $30 million, and 40% of the stated rate if
average plan assets are $30 million or more. For all other
participant-directed qualified retirement plans purchasing NAV
Shares, Putnam Mutual Funds makes quarterly payments to
qualifying dealers at the annual rate of 0.10% of the average net
asset value of such shares.
