(logo)
Putnam
California
Tax Exempt
Income Fund
Semiannual
Report
March 31, 1994
(artwork)
For investors seeking
high current income
free from federal and
California income
taxes, consistent with
capital preservation
A member
of the Putnam
Family of Funds
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Semiannual Report
7 Portfolio of investments owned
18 Financial statements
27 Fund performance supplement
<PAGE>
How your
fund performed
For periods ended March 31, 1994
Total return* Fund Lehman Bros.
Class A Class B Municipal Consumer
NAV POP NAV CDSC Bond Index Price Index
6 months -4.64% -9.12% -4.95% -9.57% -4.16% 1.45%
1 year 2.06 -2.81 1.37 -3.43 2.32 2.51
5 years 50.34 43.18 -- -- 52.91 20.36
annualized 8.50 7.44 -- -- 8.86 3.78
10 years 155.04 142.87 -- -- 165.26 43.47
annualized 9.81 9.28 -- -- 10.25 3.68
Life-of-class
(class A) 161.57 149.18 5.04 1.11 169.28 49.29
annualized 9.20 8.72 4.04 0.89 9.50 3.74
(class B) -- -- 5.02 1.09 6.12 3.74
annualized -- -- 4.03 10.35 4.87 2.98
Share data Class A Class B
NAV POP NAV
September 30, 1993 $8.92 $9.36 $8.91
March 31, 1994 $8.24 $8.65 $8.23
Distributions
6 months ended Investment Capital
March 31, 1994 Number income gains Total
Class A 7 0.252855 0.025 0.277855
Class B 7 0.225060 0.025 0.250060
Taxable
Current returns Class A equivalents+ Class B equivalent++
at the end of
the period NAV POP NAV POP NAV NAV
Current dividend
rate 6.16% 5.87% 11.46% 10.92% 5.52% 10.27%
Current 30-day
yield 5.46 5.20 10.16 9.67 4.77 8.87
*Performance data represent past results. Investment return and
principal value will fluctuate so an investor's shares, when
sold, may be worth more or less than their original cost.
+The fund began investment operations April 29, 1983 offering
shares now known as class A shares. Effective January 1, 1993,
the fund began offering class B shares. Performance for each
share class will differ.
(a)Capital gains, if any, are taxable for federal and, in most
cases, state purposes.
++Taxable equivalent rates cited assume the maximum combined
state and federal tax rate of 46.24%. Results for investors
subject to lower tax rates would not be as advantageous, although
many such investors would have the opportunity to receive
attractive tax benefits from a fund investment. Consult your tax
advisor for more guidance.
Please see the fund performance supplement on page 27 for
additional information about performance comparisons.
Terms you need to know
Total return is the change in value of an investment from the
beginning to the end of a period, assuming the reinvestment of
all distributions. It may be shown at net asset value or at
public offering price.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, divided by the number of outstanding
shares, not reflecting any sales charge.
Public offering price (POP) is the price of a mutual fund share
plus the maximum sales charge levied at the time of purchase.
Contingent deferred sales charge (CDSC) is a charge applied at
the time of the redemption of shares rather than the time of
purchase. It generally declines and eventually disappears over a
stated period.
Class A shares are the shares of your fund offered subject to an
initial sales charge. Your fund's POP includes the maximum 4.75%
sales charge.
Class B shares are the shares of your fund offered with no
initial sales charge. Within the first six years of purchase,
they are subject to a CDSC declining from 5% to 1%. After the
sixth year, the CDSC no longer applies.
Current dividend rate is calculated by annualizing the net
investment income paid to shareholders in the fund's most recent
distribution, then dividing by the NAV or POP on the last day of
the period.
Current 30-day yield, based only on the fund's net investment
income earnings, is calculated in accordance with Securities and
Exchange Commission guidelines.
Taxable equivalent return is the rate at which a taxable
investment would have to generate income to equal the fund's
current dividend rate or yield.
<PAGE>
From the
Chairman
(photograph of George Putnam)
(c) Karsh, Ottawa
George Putnam
Chairman
of the Trustees
Dear Shareholder:
Just as its parent state has withstood natural disaster in recent
months, Putnam California Tax Exempt Income Fund is weathering
the impact of a sudden, but not entirely unexpected municipal
bond market downturn. After more than two years of rewarding
performance, the market underwent a substantial correction toward
the end of your fund's semiannual period, dampening total return
for the six months ended March 31, 1994.
Throughout these challenging market conditions, shareholders can
take comfort in the achievements of the fund's management team,
which, in emphasizing securities of the highest quality, has
imparted strong defensive characteristics to the portfolio.
The good news is that Putnam California Tax Exempt Income Fund
continued to provide you with high current income free from
federal and California personal income taxes. With combined
maximum federal and state tax brackets approaching 50%, your
tax-free municipal bond fund represents a very good value
compared with other fixed-income investments and markets. Please
see the table on page 2 for complete performance information.
Portfolio Manager William H. Reeves and his team are dedicated to
maintaining your fund's primary objective of tax-exempt income.
In the following report from Putnam Management, Bill points to
such economic fundamentals as improving credit quality, supply
and demand that are expected to preserve the fund's attractive
taxable-equivalent yield. Although the fund, like most others,
lost valuable ground during early 1994, we believe there is
potential to gain much of it back throughout the remainder of the
fiscal year.
Respectfully yours,
George Putnam
May 18, 1994
<PAGE>
Report from
Putnam Management
Although share prices for Putnam California Tax Exempt Income
Fund reflect the impact of recent increases in short-term
interest rates, the fund continued to produce attractive tax-free
income for shareholders during the six-month period ended March
31, 1994. An investor in the maximum combined state and federal
bracket (46.24%) would have had to receive 11.46% from an
equivalent taxable investment to match the 6.16% dividend rate
provided by the class A shares of your fund at net asset value.
Investors in lower brackets would also have had the opportunity
for substantial tax benefits.
The market correction affecting the last two months of your
fund's semiannual period was a direct response to the Federal
Reserve's short-term interest rate increases, billed as
pre-emptive strikes against the possibility of returning
inflation. While short-term performance results for the fund show
the impact of the correction, long-term results continue to put
it ahead of others in its class. Lipper Analytical Services
ranked the fund as #2 of the 9 California funds tracked over the
ten years ended Mrch 31, 1994, and among the top quartile of all
36 counterpart funds tracked over the five years ended March 31,
1994. (Lipper is an independent research company whose ranking
vary over time and do not reflect the effects of sales charges.
Results for class B shares and other periods will differ. Please
see the table on page 2 for complete performance information.)
Economy on the mend The California economy remains one of the
world's largest, ranking just behind that of France. Although the
differences in southern and northern California are palpable, the
state's diversified economy seems to have stabilized in 1993. In
northern California, the business climate is positive. The state
is being well-managed fiscally, and the goal of a balanced budget
could be as close as two years away. The Los Angeles earthquake
in January 1994 had no measurable impact on any holding in the
portfolio. Construction is strong, helped in part by post-quake
rebuilding and the resulting infusion of federal funds.
An emphasis on quality We plan to keep the portfolio on the same
track it has successfully followed since the late '80s. Our basic
strategy, first, is to maintain a very high level of overall
credit quality. Our objectives are to continue to provide as high
a level of current income as is consistent with capital
preservation and to maintain above-average total return.
<PAGE>
The quality of portfolio issues remained extremely high at the
end of the period: 68% of the portfolio was in bonds rated AAA
and AA; 26% more in bonds rated A and BBB. We continue to focus
heavily on large, highly liquid, essential services bonds, whose
issuers are highly visible and perceived as too well established
to fail. As a consequence, the liquidity of these bonds is
intrinsic in the scope of the issuing organizations, the vital
services which they provide, and the universal recognition they
command in the investment community. For further protection, a
significant portion of bonds in the portfolio are insured.
Although we had slightly lengthened portfolio maturity while
interest rates were declining, a number of the fund holdings were
refinanced or prerefunded during the period. Prerefunding takes
place when an issuer floats a second bond in order to raise funds
to pay off an older bond, generally at the first call date. The
proceeds from the second bond are invested in a top-quality
instrument, usually U.S. Treasury securities, that will mature
close to the time that the older bond can be called. The added
safety is often perceived as equal to a credit upgrade by the
market, and it can boost the bond's price. This process actually
shortened maturity again, removing some risk from the portfolio,
reducing price volatility, and strengthening the credit quality
of the prerefunded issues.
By positioning a portion of the fund's assets in inverse floaters
or residual interest bonds (RIBS) -- bonds with variable interest
rates tied to another interest rate, such as the Treasury bill
rate -- we have achieved a measure of appreciation, which helped
cushion the portfolio value in an otherwise depreciating market.
The risk exposure added by including these bonds in the portfolio
has been balanced by the purchase of higher quality bonds.
Recently, some of the inverse floaters held in the portfolio,
discussed in the previous annual report, have been prerefunded,
reducing their risk.
1994 market outlook After last year's record supply of new
issues, driven primarily by refinancings and prerefundings, we
anticipate a reduction of as much as 50% in the volume of
high-quality, new-issue bonds. New cash available from an
estimated $300 million of bonds scheduled to be called this year
may return to the market for reinvestment, boosting demand for
the diminishing bond supply.
With nearly $4 billion in total assets as of March 31, 1994, your
fund is the second largest California municipal bond fund tracked
by Lipper Analytical Services, as well as the eighth largest
open-end tax-exempt fund. This sheer size, together with Putnam's
credit research team, can be advantageous in pursuing new issues.
Rather than invest in specific market sectors, Putnam California
Tax Exempt Income Fund has concentrated on issue quality per se.
Your fund's portfolio should benefit from any increasing demand
for value.
<PAGE>
Putnam still believes the U.S. economy is operating on a sound
footing, and has not entered an inflationary growth cycle. We
envision a controlled annual growth rate of 3 1/2 - 4%, with
inflation staying relatively benign. Municipal bond investments
should continue to perform well in such an environment, and for
investors seeking high current income free from California and
federal personal income taxes, we believe your fund continues to
be a most attractive choice.
<PAGE>
<TABLE>
<CAPTION>
Portfolio of
investments owned
March 31, 1994 (Unaudited)
Municipal Bonds and Notes (95.4%)(a)
Principal Amount Ratings(b) Value
<S> <C> <C> <C> <C>
California (94.7%)
Anaheim, Certif. of
Participation
Residual Interest
Bonds (RIBS)
$16,000,000 (Convention Ctr.),
Municipal Bond
Insurance Assn.
(MBIA), 9.57s, 1/1/20 AAA $16,340,000
20,000,000 Anaheim, Pub. Fin.
Auth. Tax Alloc.
RIBS, MBIA, 10.27s,
12/28/18 AAA 21,300,000
Berkeley, Hlth. Fac.
Rev. Bonds (Alta
Bates Med. Ctr.)
Ser. A
23,825,000 6.55s, 12/1/22 Baa 22,127,469
8,500,000 6 1/2s, 12/1/11 BBB 8,043,125
32,165,000 Beverly Hills, Certif.
of Participation
(Civic Ctr. Impt.
Project), 6 3/4s,
6/1/19 AA 33,290,775
4,500,000 Buena Park, Cmnty.
Redev. Agcy. Tax
Alloc. Rev. Bonds
(Central Bus. Dist.),
Financial Guaranty
Insurance Co.
(FGIC), 8.9s,
11/1/15 AAA 4,927,500
11,825,000 Burbank, Redev. Agcy.
Tax Alloc. Rev. Bonds
Ser. A, 6s, 12/1/23 A 10,657,281
CA Edl. Fac. Auth.
Rev. Bonds
7,030,000 (Pomona College),
8 1/8s, 1/1/17 AAA 7,820,875
15,745,000 (U. of Southern CA
Project), Ser. B,
6 3/4s, 10/1/15 AA 16,866,831
10,280,000 (Stanford U.), Ser. I,
6s, 1/1/18 AAA 10,228,600
CA Hlth. Fac. Fin.
Auth. Rev. Bonds
10,000,000 (Sutter Cmnty. Hosp.
of Sacramento),
9 1/8s, 1/1/05 A 10,537,500
6,700,000 (Summit Med. Ctr.),
Ser. 85A, 9s, 5/1/15 Ba 6,909,375
12,000,000 (Valley Presbyterian
Hosp. Project),
Ser. A, 9s, 5/1/12 B 12,135,000
10,000,000 (Mercy Hlth. Syst.),
Ser. C, MBIA, 7 1/4s,
7/1/15 AAA 11,212,500
35,385,000 CA Hlth. Fac. Fin. Auth.
Rev. Bonds, MBIA,
5s, 7/1/14 AAA 32,200,350
CA Hlth. Fac. Fin.
Auth. Rev. Bonds
12,335,000 (Summit Med. Ctr.),
Ser. B, 7.6s, 5/1/15 Ba 12,227,069
2,000,000 (Summit Med. Ctr.),
Ser. A, 7.6s, 5/1/15 Ba 1,982,500
9,000,000 (CedarKnoll), Ser. B,
7 1/2s, 8/1/20 A 9,720,000<PAGE>
8,970,000 (Summit Med. Ctr.),
Ser. B, 7 1/2s, 5/1/09 Ba 8,824,238
15,610,000 (Sutter Hosp.), Ser. A,
American Municipal
Bond Assurance
Corp. (AMBAC), 6.7s,
1/1/13 AAA 16,195,375
CA Hlth. Fac. Fin.
Auth. Variable Rate
Demand Notes
1,100,000 (St. Joseph Hlth. Syst.),
Ser. A, 2 3/4s,
7/1/13 VMIG1 1,100,000
1,500,000 (Orange Cnty. Childrens
Hosp.), MBIA, 1.7s,
11/1/21 VMIG1 1,500,000
CA Hsg. Fin. Agcy.
Home Mtge. Rev. Bonds
9,660,000 Ser. C, 8.3s, 8/1/19 Aa 10,251,675
8,305,000 Ser. D, 7 7/8s, 8/1/31 Aa 8,979,781
9,175,000 Ser. A, 7 3/4s, 8/1/17 Aa 9,840,188
8,080,000 Ser. A, 7.7s, 8/1/30 Aa 8,645,600
12,515,000 Ser. E, 7.65s, 8/1/29 Aa 13,312,831
CA Poll. Control Fin.
Auth. Res. Recvy.
Rev. Bonds
10,500,000 (Waste Management
Inc.), Ser. A, 7.15s,
2/1/11 AA 11,497,500
CA Poll. Control Fin.
Auth. Rev. Bonds
12,500,000 (Pacific Gas & Elec.
Co.), Ser. A, 8.2s,
12/1/18 A 13,828,125
16,670,000 (Pacific Gas & Elec.
Co.), Ser. B, 6.35s,
6/1/09 A 16,711,675<PAGE>
CA Poll. Control Fin.
Auth. Solid Waste
Disposal Rev. Bonds
11,990,000 (Keller Canyon Landfill
Co. Project), 6 7/8s,
11/1/27 A 12,559,525
10,000,000 (North Cnty. Recycling
Ctr.), Ser. A, 6 3/4s,
7/1/17 AAA 10,512,500
41,260,000 CA Pub. Cap. Impt.
Fin. Auth. Rev. Bonds,
Ser. A, Bond Investors
Guaranty Insurance
(BIGI), 8.1s, 3/1/18 AAA 45,024,975
6,500,000 CA Special Dist. Fin.
Auth. Certif. of
Participation, Ser. A,
8 1/2s, 7/1/18 Baa 7,231,250
CA State Dept. of Wtr.
Resources RIBS
24,200,000 (Central Valley Project)
11.052s, 12/1/12
(acquired 11/25/92,
cost $23,299,797.87;
acquired 2/01/94,
cost $4,272,145.89)(c) AA 29,191,250
26,620,000 (Central Valley Project),
Ser. H, 8s, 12/1/16 AAA 28,749,600
CA State General
Obligation (G.O)
Bonds
7,030,000 MBIA, 5 1/2s, 4/1/09 AAA 6,573,050
16,545,000 5 1/2s, 4/1/11 AA 15,407,531
25,460,000 MBIA, 5s, 11/1/22 AAA 21,004,500
5,150,000 4 3/4s, 9/1/18 AAA 4,120,000
20,800,000 Ser. 33, zero %, 10/1/11 Aa 6,968,000
60,000,000 Ser. 27, zero %, 9/1/11 Aa 20,175,000<PAGE>
CA State Pub. Works
Board Lease RIBS
29,500,000 AMBAC, 10.052s,
9/1/19 (acquired
7/14/92, cost
$31,379,150)(c) A 34,330,625
CA State Pub. Works
Board Lease Rev.
Bonds,
20,690,000 (U. of CA Project),
Ser. A, 7s, 9/1/15 AAA 23,172,800
24,000,000 (Dept. of Corrections-
State Prisons), Ser. A,
7s, 9/1/09 AAA 26,880,000
9,700,000 (Secretary of State),
Ser. A, 6 3/4s, 12/1/12 A 10,027,375
21,400,000 (U. of CA Project),
Ser. A, 6.6s, 12/1/22(e) AAA 23,647,000
28,000,000 (Dept. of Corrections-
Calipatria State
Prison), Ser. A,
6 1/2s, 9/1/17 A 28,315,000
5,200,000 (U. of CA Project),
Ser. A, AMBAC,
6.4s, 12/1/16 AAA 5,226,000
5,000,000 (Cmnty. College
Project), Ser. A,
AMBAC, 6s, 12/1/12 AAA 4,868,750
19,000,000 (Dept. of Corrections-
State Prisons),
Ser. D. 5 3/8s, 6/1/18 A 16,506,250
23,610,000 (Dept. of Corrections-
State Prisons),
Ser. D. 5 3/8s, 6/1/12 A 21,042,413
6,795,000 (Dept. of Corrections-
State Prisons), Ser. A,
AMBAC, 5 1/4s,
12/1/13 AAA 6,073,031<PAGE>
8,000,000 (Dept. of Corrections-
State Prisons),
Ser. D, 5 1/4s, 6/1/08 A 7,300,000
9,000,000 (Dept. of Corrections-
State Prisons), Ser C,
5 1/8s, 12/1/08 A 8,201,250
25,000,000 (Dept. of Corrections-
State Prisons), Ser. A,
AMBAC, 5s, 12/1/19 AAA 20,906,250
37,100,000 CA State RIBS, 9.758s,
9/1/12 (acquired
10/27/92, cost
$35,987,000)(c) AAA 38,676,750
18,000,000 CA State U. RIBS,
AMBAC, 11.165s,
11/1/21 (acquired
8/5/91, cost
$19,013,580)(c) AAA 20,542,500
CA Statewide Cmntys,
Dev. Auth. Certif.
of Participation
4,000,000 (Salk Institute), 6.2s,
7/1/24 AAA 3,835,000
3,000,000 (Salk Institute), 6.1s,
7/1/14 AAA 2,895,000
5,000,000 (Catholic H.C. West),
MBIA, 5 1/2s, 7/1/23 AAA 4,437,500
4,370,000 Calleguas-Las Virgines,
Pub. Fin. Auth.
Installment Purchase
Rev. Bonds (Calleguas
Muni. Wtr. Dist.),
FGIC, 5 1/8s, 7/1/14 AAA 3,801,900
14,000,000 Castaic Lake, Wtr.
Agcy. Certif. of
Participation (Wtr.
Syst. Impt. Project),
MBIA, 7 1/8s, 8/1/16 AAA 15,155,000<PAGE>
11,750,000 Central Coast Wtr.
Auth. Rev. Bonds
(State Wtr. Project),
AMBAC, 6.6s,
10/1/22 AAA 12,014,375
Central San Joaquin
Valley Risk Mgmt.
Auth. Rev. Bonds
1,000,000 zero %, 2/1/00 A 706,250
1,960,000 zero %, 2/1/99 A 1,484,700
1,955,000 zero %, 8/1/99 A 1,436,925
1,465,000 zero %, 8/1/98 A 1,150,025
Commerce, Redev.
Agcy. Rev. Bonds
8,845,000 (Project No. 1), Ser. 91-A,
7 1/4s, 8/1/21 BBB 9,055,057
68,280,000 (Project No. 1), Ser. 91-A,
zero %, 8/1/21 BBB 10,839,450
4,775,000 Contra Costa Cnty.,
Multi-Fam. Hsg.
Rev. Bonds (Del
Norte Place), Ser. B,
Government
National Mortgage
Assn. (GNMA) Coll.,
7.85s, 8/20/33 AAA 5,216,688
35,000,000 Contra Costa, Home
Mtge. Fin. Auth.
Rev. Bonds, MBIA,
zero %, 9/1/17 AAA 8,093,750
Corona, Certif. of
Participation
10,000,000 (Vista Hosp. Syst.),
Ser. B, 9 1/2s, 7/1/20 BB/P 10,537,500
Duarte, Certif. of
Participation (City
of Hope Med. Ctr.)
21,000,000 6 1/4s, 4/1/23 Baa 19,530,000
15,000,000 6 1/8s, 4/1/13 Baa 14,062,500
4,000,000 6s, 4/1/08 Baa 3,805,000
East Bay, Muni. Util.
Dist. Wtr. Syst. Rev.
Bonds MBIA,
9,000,000 5s, 6/1/21 AAA 7,470,000
7,900,000 5s, 6/1/14 AAA 6,764,375
East Bay, Muni. Util.
Special Dist. Rev.
Bonds,
14,000,000 Ser. E, 5s, 4/1/15 AA 12,250,000
7,900,000 El Cajon San Diego
Cnty., Civic Ctr.
Auth. Rev. Bonds,
(East Cnty. Regl.
Ctr.), 6.7s, 12/1/07 A 8,512,250
10,725,000 El Camino, Hosp. Dist.
Rev. Bonds, Ser. A,
AMBAC, 6 1/4s,
8/15/17 AAA 10,537,313
11,460,000 Fresno, Unified School
Dist. Certif. of
Participation, 7 1/4s,
3/1/07 A 11,932,725
4,250,000 Fresno, Wtr. Syst. Rev.
Bonds Ser. A, 7.3s,
6/1/20 A 4,722,813
10,000,000 Intermodal Container
Transfer Fac. Jt.
Pwr. Auth. Rev.
Bonds, Ser. A,
7.7s, 11/1/14 Aa 10,962,500
4,300,000 Irvine Ranch, Wtr.
Dist. Cons. VRDN,
Ser. A, 2 1/4s, 5/1/09 VMIG1 4,300,000
Irvine Ranch Wtr.
Dist. Impt. VRDN
2,800,000 3.4s, 3/1/15 VMIG1 2,800,000
4,000,000 (Dist. No. 282), Ser. C,
2.55s, 10/1/10 A 4,000,000
Irvine Ranch, Wtr.
Dist. Certif. of
Participation
3,800,000 2.6s, 8/1/16 VMIG1 3,800,000
Irvine Ranch, Wtr. Dist.
Jt. Pwr. Agcy. Rev.
Bonds
56,000,000 8 1/4s, 8/15/23 BBB 60,200,000
23,000,000 8.2s, 8/15/08 BBB 24,753,750
25,010,000 7 7/8s, 2/15/23 A 26,510,600
2,000,000 Kern, Cmnty. College
Dist. Variable Certif.
of Participation (Fin.
Project), 2s, 3/1/18 AAA 2,000,000
La Habra, Certif. of
Participation (Friendly
Hills Hlth. Care
Foundation), Ser. A
38,000,000 7.15s, 7/1/23 BB/P 37,857,500
12,000,000 7.05s, 7/1/13 BB/P 11,895,000
5,125,000 6.7s, 7/1/03 BB/P 5,028,906
5,630,000 6.3s, 7/1/99 BB/P 5,545,550
6,000,000 Local Govt. Fin. Jt.
Pwr. Auth. Rev.
Bonds (Anaheim
Redev. Agcy.), Ser. A,
8.2s, 9/1/15 A 6,907,500
Loma Linda, Hosp.
Rev. Bonds (Loma
Linda U. Med. Ctr.
Project)
11,270,000 Ser. B, AMBAC, 7s,
12/1/15 AAA 12,143,425
19,110,000 Ser. A, 6 1/2s, 12/1/18 BBB 17,987,288
10,120,000 Ser. A, 6s, 12/1/23 BBB 8,753,800
5,970,000 Ser. A, 5 3/4s, 12/1/03 BBB 5,641,650
2,000,000 Ser. B, 1.80s, 12/1/15 A 2,000,000<PAGE>
18,370,000 Los Angeles Cnty.,
Capital Asset
Leasing Corp. RIBS,
AMBAC 3.8s,
12/1/07 AAA 18,071,488
Los Angeles Cnty.,
Certif. of Participation
14,250,000 (Marina Del Rey),
Ser. A, 6 1/2s, 7/1/08 BBB/P 13,858,125
9,250,000 (Marina Del Rey),
Ser. A, 6 1/4s,
7/1/03 BBB/P 9,065,000
12,750,000 (Master Project),
10.598s, 6/1/15 A 13,116,563
24,340,000 Los Angeles Cnty.,
Hlth. Fac. Auth.
Lease Rev. Bonds
(Olive View Med.
Ctr.), 7 1/2s, 3/1/08 A 27,199,950
26,235,000 Los Angeles Cnty.,
Ltd. Interest Muni.
Oblig. Certif.
stepped-coupon,
Ser. A, zero %
(6.9s, 6/30/96),
6/30/08(d) A 24,365,756
Los Angeles Cnty.,
Metro. Trans. Auth.
Sales Tax Rev. Bonds
20,000,000 Ser. C, AMBAC,
5 1/4s, 7/1/23 AAA 17,100,000
12,000,000 Ser. A, FGIC, 5s,
7/1/21 AAA 9,915,000
19,495,000 Los Angeles Cnty.,
Pension Oblig.
Certif. of Participation
Ser. A, 6 7/8s, 6/30/07 A 20,591,594<PAGE>
5,000,000 Los Angeles Cnty.,
Public Works Fin.
Auth. Rev. Bonds
5s, 3/1/11 AA 4,356,250
Los Angeles Cnty.,
Sanitation Dist. Fin.
Auth. Rev. Bonds
16,000,000 (Capital Project),
Ser. A, 5 1/4s, 10/1/19 AA 13,700,000
13,000,000 5s, 10/1/23 AA 10,627,500
Los Angeles Cnty.,
Trans. Comm. Sales
Tax Rev. Bonds,
13,565,000 Ser. A, 8s, 7/1/16 AAA 15,226,713
10,000,000 Ser. A, 6.9s, 7/1/21 Aaa 11,187,500
11,000,000 Los Angeles, Cmnty.
Redev. Agcy. Fin.
Auth. Rev. Bonds
(Beacon-Normandie),
Ser. B, 6 5/8s, 9/1/14 Baa 10,601,250
37,245,000 Los Angeles, Cmnty.
Redev. Agcy. Tax
Alloc. Rev. Bonds
(Central Business
Dist.), Ser. G, 6 3/4s,
7/1/10 A 36,825,994
37,465,000 Los Angeles,
Convention and
Exhibition Ctr. Auth.
Certif. of Participation,
9s, 12/1/20 AAA 48,423,513
27,650,000 Los Angeles,
Convention &
Exhibition Ctr. Auth.
Lease Rev. Bonds
Ser. A, MBIA, 5 3/8s,
8/15/18 AAA 24,366,563<PAGE>
Los Angeles, Dept. of
Wtr. & Pwr. Elec.
Plant RIBS
28,600,000 Ser. 91-2, 10.827s,
6/1/31 (acquired
6/7/91, cost
$28,556,814)(c) AA 34,320,000
38,205,000 6 3/4s, 12/15/29 AA 41,547,938
13,000,000 5 1/4s, 11/15/26 AA 11,001,250
11,000,000 Los Angeles, Dept. of
Wtr. & Pwr. Waterworks
Rev. Bonds, 7s,
2/15/22 AA 11,990,000
25,000,000 Los Angeles, Harbor
Dept. Rev. Bonds
7.6s, 10/1/18 AAA 28,156,250
1,250,000 Los Angeles, Hosp.
Certif. of Participation
(Hollywood Presbyterian
Hosp.), 9s, 7/1/13 A 1,314,063
2,000,000 Los Angeles, Multi-Fam.
Hsg. VRDN
(Masselin Manor
Project), 1.9s,
7/1/15 VMIG1 2,000,000
Los Angeles, State
Bldg. Auth. Lease
Rev. Bonds (State
Dept. General Svcs.),
Ser. A
27,250,000 7 1/2s, 3/1/11 AAA 30,451,875
21,530,000 5 5/8s, 5/1/11 A 19,995,988
Los Angeles, Waste
Wtr. Syst. Rev. Bonds
25,000,000 RIBS Ser. 91-5,
(AMBAC), 3s, 6/1/21
(acquired 6/20/91,
cost $24,974,500)(c) AAA 30,281,250<PAGE>
34,700,000 RIBS 9.08s, 6/1/19
(acquired 7/13/92,
cost $36,256,642)(c) AAA/P 35,654,250
19,850,000 RIBS 7.566s, 11/1/08
(acquired 11/08/93,
cost $20,973,066)(c) AAA 17,865,000
4,000,000 Ser. D, 4.7s, 11/1/19 AAA 3,165,000
17,150,000 Ser. B, 7.15s, 6/1/20 A 19,293,750
20,105,000 Ser. A, 7s, 2/1/20 AAA 22,366,813
10,000,000 MSR Pub. Pwr. Agcy.
Rev. Bonds (San
Juan Project), Ser. C,
6 7/8s, 7/1/19 A 10,437,500
Metro. Wtr. Dist. RIBS
20,000,000 (Southern CA Project),
8.395s, 8/10/18 AA 17,800,000
Metro. Wtr. Dist. of
Southern CA
Waterworks Rev.
Bonds
16,780,000 Ser. A, 5 3/4s, 7/1/21 AA 15,500,525
27,830,000 5 1/2s, 7/1/19 AA 24,664,338
12,750,000 Modesto, Certif. of
Participation
(Geysers Geothermal
Pwr. Project), Ser 86-A,
7 1/4s, 10/1/15 A 13,499,063
16,600,000 Mount Diablo, Hosp.
Dist. Rev. Bonds
Ser. A, AMBAC 5s,
12/1/13 AAA 15,977,500
7,000,000 North City West,
School Fac. Fin.
Auth. Rev. Bonds
(Special Tax Cmnty.
Fac. Dist. No. 1),
Ser. A, 7.85s, 9/1/19 BAA 7,332,500<PAGE>
9,500,000 Northern CA Pwr.
Agcy. Multi.-Cap.
Fac. RIBS, MBIA,
10.298s, 8/1/25 AAA 9,986,875
8,450,000 10.105s, 8/15/17 AAA 8,731,892
Northern CA Pwr. Agcy.
Pub. Pwr. Rev. Bonds
22,980,000 (Geothermal Project
No. 3), Ser. 84-A,
11 1/2s, 7/1/10 AAA 24,042,825
17,000,000 (Hydro. Elec. Project
No. 1), Ser. B-1, 8s,
7/1/24 AAA 19,125,000
9,945,000 (Hydro. Elec. Project
No. 1), Ser. E, 7.15s,
7/1/24 A 10,578,994
34,030,000 (Geothermal Project
No. 3), Ser. A, 7s,
7/1/07 A 35,944,188
Northern CA Trans.
Rev. Bonds (CA-OR
Trans. Project),
Ser. A, MBIA
5,000,000 7s, 5/1/10 AAA 5,556,250
5,000,000 5.3s, 5/1/10 AAA 4,600,000
7,500,000 Oakland, Certif. of
Participation
(Oakland Museum),
Ser. A, AMBAC,
6s, 4/1/12 AAA 7,209,375
Oakland, Redev. Agcy.
Certif. of Participation
6,500,000 (Oakland Convention
Ctr.-George P.
Scotland Memorial),
10 1/4s, 9/1/14 A 6,873,750
7,000,000 Ser. A, 9 1/4s, 8/1/16 AAA 7,621,250<PAGE>
7,400,000 Oakland, Redev. Agcy.
RIBS, MBIA, 9.304s,
9/1/19 AAA 6,993,000
Orange Cnty., Certif.
of Participation
10,000,000 (Solid Waste
Management), 7 7/8s,
12/1/13 A 10,975,000
4,500,000 (Solid Waste
Management), 7 7/8s,
12/1/07 A 4,972,500
25,000,000 (Juvenile Justice Ctr.
Fac.), AMBAC, 6s,
6/1/17 AAA 23,718,750
Orange Cnty., Dev.
Agcy. Tax Allocation
Rev. Bonds (Santa
Ana Heights Project)
15,000,000 6 1/8s, 9/1/23 Baa 13,762,500
3,000,000 6s, 9/1/15 BBB 2,756,250
3,000,000 Orange Cnty., Impt.
Board Act of 1915
VRDN (Irvine Coast
Assessment Dist. No.
88-1), 2.65s, 9/2/18 VMIG1 3,000,000
Orange Cnty.,
Sanitation Dist. Variable
Certif. of Participation
9,000,000 4.6s, 8/1/15 VMIG1 9,000,000
2,000,000 AMBAC, 2.2s, 8/1/16 VMIG1 2,000,000
22,850,000 Palm Desert, Fin.
Auth. Tax Allocation
RIBS, MBIA, 9.911s,
4/1/22 AAA 24,106,750
24,855,000 Pasadena, Variable
Certif. of Participation,
AMBAC, 5.35s,
2/1/14(e) AAA 22,462,706<PAGE>
Pleasanton, Jt. Pwr.
Fin. Auth. Rev. Bonds
6,070,000 Ser. B, 6 3/4s, 9/2/17 BBB/P 5,857,550
7,255,000 Ser. B, 6.6s, 9/2/08 BBB/P 6,883,181
4,925,000 Ser. B, 6 1/2s, 9/2/04 BBB 4,721,844
14,565,000 Ser. B, 6 1/8s, 9/2/02 BBB/P 14,055,225
9,905,000 Ser. A, 6s, 9/2/05 Baa 9,459,275
Pomona, Pub. Fin.
Auth. Rev. Bonds,
10,000,000 (Southwest Pomona
Redev.) 5 3/4s, 2/1/20 Baa 8,712,500
5,000,000 (Southwest Pomona
Redev.), 5.7s, 2/1/13 Baa 4,462,500
10,000,000 Pomona, Single Fam.
Mtge. Rev. Bonds
Ser. A, 7.6s, 5/1/23 AAA 11,575,000
14,000,000 Rancho Cucamonga,
Redev. Agcy. Tax
Alloc. Rev. Bonds
(Rancho Redev.
Project), MBIA,
6 3/4s, 9/1/20 AAA 14,787,500
13,350,000 Rancho Mirage, Redev.
Agcy. Tax Allocation
(White Wtr. Redev.
Project), MBIA, 5s,
4/1/24 AAA 10,963,688
Rancho, Wtr. Dist. Fin.
Auth. RIBS, AMBAC
22,000,000 9.524s, 8/17/21(e) AAA 25,602,500
3,000,000 5s, 8/15/14 AAA 2,568,750
4,000,000 4 3/4s, 8/15/21 AAA 3,190,000
10,400,000 Redding, Elec.
Syst. Certif. of
Participation RIBS,
MBIA, 9.918s,
7/8/22 AAA 10,894,000<PAGE>
24,495,000 Riverside Cnty., Asset
Leasing Corp. Rev.
Bonds (Riverside
Cnty. Hosp. Project),
Ser. A, 6 1/4s, 6/1/19 A 23,515,200
6,640,000 Riverside, Elec. Rev.
Bonds, 5s, 10/1/13 AA 5,793,400
12,700,000 Riverside, Hosp. Rev.
Bonds (Kaiser
Permanente), Ser. A,
9s, 12/1/15 AA 13,747,750
10,000,000 Sacramento Cnty.,
Certif. of Participation
(Sacramento Main
Detention), MBIA,
5 1/2s, 6/1/10 AAA 9,400,000
16,610,000 Sacramento Cnty.,
Hsg. Auth. Multi.-Fam.
Rev. Bonds, Ser. 85-2,
zero %, 11/1/97 AAA 12,582,075
15,355,000 Sacramento Cnty.,
Sanitation Dist. Fin.
Auth. Rev. Bonds,
4 3/4s, 12/1/23 AA 11,938,513
7,000,000 Sacramento, Fin. Auth.
Lease Rev. Bonds,
Ser. A, AMBAC, 5.4s,
11/1/20 AAA 6,221,250
Sacramento, Muni. Util.
Dist. Elec. Rev. Bonds
25,000,000 FGIC, 9 7/8s, 8/15/18 AAA 25,437,500
34,835,000 Ser. V, 7 7/8s, 8/15/16 AAA 39,711,900
5,930,000 Ser. V, 7 1/2s, 8/15/18 AAA 6,574,888
25,900,000 Ser. R, 7 1/8s, 2/1/13 AAA 28,231,000
9,500,000 Ser. A, MBIA, 6 1/4s,
8/15/10 AAA 9,701,875
9,265,000 Ser. C, MBIA, 5 3/4s,
11/15/07 AAA 9,149,188<PAGE>
22,500,000 San Bernadino Cnty.,
Certif. of Participation
(West Valley Detention
Ctr.), MBIA, 6s,
11/1/18 AAA 21,403,125
14,615,000 San Bernardino, Hosp.
Rev. Bonds (San
Bernardino Cmnty.
Hosp.), 7 7/8s, 12/1/19 Ba 14,797,688
5,585,000 San Diego Cnty., Cap.
Asset Leasing Corp.
Rev. Bonds (Hlth.
Svcs. Complex
Project), 6 3/4s, 12/1/10 A 6,024,819
San Diego Cnty., Certif.
of Participation RIBS
8,000,000 MBIA, 10.048s, 11/18/19 AAA 8,280,000
8,850,000 (Vista Detention Fac.
Expansion Project),
7 7/8s, 4/1/07 AAA 9,834,563
15,800,000 AMBAC, 5 1/4s, 9/1/06 AAA 15,898,750
San Diego Cnty., Wtr.
Auth. Certif. of
Participation RIBS
17,500,000 Ser. 91-B, MBIA
8.02s, 4/8/21 AAA 18,025,000
28,350,000 8.02s, 4/21/11 AAA 29,342,250
5,000,000 5.681s, 5/1/08 AAA 4,862,500
8,450,000 San Diego, Indl. Dev.
Rev. Bonds (San
Diego Gas & Elec.
Co.), Ser. A, 9 1/4s,
9/1/20 Aa 9,136,563
San Diego, Regl. Bldg.
Auth. Lease RIBS,
MBIA
11,000,000 5.7s, 5/1/23 AAA 10,023,750
14,100,000 5.65s, 5/1/13 AAA 13,148,250<PAGE>
San Diego, Swr. Rev.
Bonds, Ser. A
12,000,000 5 1/4s, 5/15/20 A 10,185,000
11,550,000 5s, 5/15/23 A 9,355,500
30,975,000 San Diego, Single Fam.
Mtge. Rev. Bonds,
Issue A, zero %, 8/1/16 A 3,833,156
San Joaquin Hills,
Trans. Toll Agcy.
Rev. Bonds
67,750,000 6 3/4s, 1/1/32 BB/P 64,785,938
31,810,000 5s, 1/1/33 BB/P 23,141,775
San Jose, Certif. of
Participation
13,000,000 (Convention Ctr.
Project), 7 7/8s,
9/1/10 AAA 14,316,250
30,700,000 San Jose, Redev. Agcy.
Tax Allocation Rev.
Bonds (Merged Area
Redev. Project), MBIA,
5s, 8/1/20 AAA 25,442,625
1,590,000 San Pablo, Redev.
Agcy. Single Fam.
Mtge. Rev. Bonds,
10 1/8s, 12/1/14 A 1,701,300
11,525,000 Santa Clara Cnty.,
Certif. of Participation
(Cap. Project No. 1),
8s, 10/1/16 AAA 12,735,125
3,000,000 Santa Rosa, Hosp.
Rev. Bonds (Kaiser
Permanente), Ser. A,
9s, 12/1/15 AA 3,243,750
5,365,000 Scotts Valley, Certif.
of Participation (Pub.
Impt. Project), 6 3/4s,
10/1/20 BBB 5,190,638<PAGE>
Southern CA Pub. Pwr.
Auth. Rev. Bonds
11,880,000 6s, 7/1/20 AA 11,256,300
20,000,000 (Transmission Project),
Ser. B, 7 3/8s, 7/1/21 AA 21,550,000
Southern CA Pub.
Pwr. Auth. Rev. Bonds
18,535,000 (Palo Verde Project),
Ser. B, 7 1/8s, 7/1/15 AAA 20,040,969
17,995,000 (Transmission Project),
Ser. B, 7s, 7/1/22 AA 19,457,094
11,800,000 (Palo Verde Project),
Ser. A, 6 7/8s, 7/1/15 AAA 12,699,750
7,900,000 (Palo Verde Project),
Ser. A, 6 7/8s, 7/1/15 AA 8,275,250
25,855,000 (Multi-Purpose Projects),
6s, 7/1/18 A 24,271,381
13,500,000 (Southern Transmission
Project), 5 3/4s, 7/1/21 AA 12,318,750
11,200,000 (Transmission Project),
Ser. B, 5 1/2s, 7/1/23 AA 9,870,000
5,330,000 (Multi-Purpose Projects),
5 1/2s, 7/1/20 A 4,690,400
8,500,000 (San Juan Unit 3),
Ser. A, MBIA, 5 1/4s,
1/1/14 AAA 7,522,500
13,635,000 (Mead Adelanto Project),
Ser. A, AMBAC, 5s,
7/1/17 AAA 11,521,575
5,500,000 (Palo Verde Project),
Ser. A, AMBAC, 5s,
7/1/15 AAA 4,688,750
20,540,000 (Palo Verde Project),
Ser. A, 5s, 7/1/15 AA 17,484,675
21,800,000 Stanislaus, Solid Waste
Fac. Certif. of
Participation (Ogden
Martin Syst. Inc.
Project) 7 5/8s,
1/1/10 BBB 23,544,000
10,000,000 7 1/2s, 1/1/05 BBB 10,737,500
6,830,000 Stockton, Hlth. Fac.
Rev. Bonds (Dameron
Hosp. Assn.) Ser. A,
11 3/8s, 12/1/14 AAA 7,376,400
8,460,000 Torrance, Hosp. Rev.
Bonds (Torrance
Memorial Hosp. Med.
Ctr.), 6 3/4s, 1/1/12 A 8,597,475
2,200,000 Triunpho, Sanitation Dist.
Variable Certif. of
Participation (Wastewater
Reclamation Project),
1.9s, 6/1/19 A 2,200,000
Turlock, Hlth. Fac.
Certif. of Participation
(Emanuel Med. Ctr.)
8,500,000 5 3/4s, 10/15/23 BBB 7,097,500
5,000,000 5 5/8s, 10/15/13 BBB 4,262,500
3,650,000 5 1/4s, 10/15/03 BBB 3,376,250
U. of CA RIBS
29,700,000 MBIA, 10.968s 9/1/16
(acquired 8/12/92,
cost $33,601,600)(c) AAA 36,085,500
11,500,000 (Multi-Purpose Projects),
MBIA, 5s, 9/1/16 AAA 9,602,500
36,147,000 (USCD Med. Ctr. Satellite
Med. Fac.), 7.9s,
12/1/19 BBB 39,038,760
54,500,000 (UCSD Med. Ctr. Satellite
Med. Fac.), 7.9s,
12/1/96 AAA 59,405,000
6,000,000 (Multi-Purpose
Projects), Ser. A,
6 7/8s, 9/1/16 A 6,712,500
16,240,000 (Multi-Purpose
Projects), Ser. C,
5 1/8s, 9/1/09 AAA 14,534,800
7,000,000 (Hsg. Syst.), Ser. A,
MBIA, 5s, 11/1/13 AAA 5,993,750
7,440,000 (Multi-Purpose
Projects), Ser. B,
4.9s, 9/1/08 AAA 6,640,200
13,000,000 (Multi-Purpose
Projects), Ser. C,
AMBAC, 4 7/8s, 9/1/19 AAA 10,546,250
10,325,000 (Multi-Purpose
Projects), Ser. B,
4 3/4s, 9/1/14 AAA 8,453,594
7,000,000 Vallejo, Sanitation &
Flood Control Dist.
Certif. of Participation,
FGIC, 5s, 7/1/19 AAA 5,906,250
36,945,000 Valley Hlth. Syst.
Certif. of Participation,
6 7/8s, 5/15/23 BB/P 34,959,206
13,430,000 Washington Township,
Hosp. Dist. Rev.
Bonds, 5 1/2s, 7/1/18 A 11,566,588
3,495,742,229
Puerto Rico (0.7%)
$18,100,000 Cmnwlth. of Puerto
Rico, Pub. Impt.
G.O. Bonds 7.7s,
7/1/20 AAA 20,996,000
3,500,000 Puerto Rico, Hsg. Fin.
Corp. Single Fam.
Mtge. RIBS GNMA
Coll., 10.407s, 8/4/25 AAA 3,574,375
24,570,375
Total Investments
(cost $3,394,385,271)(f) $3,520,312,604
/TABLE
<PAGE>
(a) Percentages indicated are based on net assets of
3,688,973,703 which correspond to a net asset value per share for
class A and class B shareholders of $8.24 and $8.23,
respectively.
(b) The Moody's or Standard & Poor's ratings indicated are
believed to be the most recent ratings available at March 31,
1994 for the securities listed. Ratings are generally ascribed to
securities at the time of issuance. While the rating agencies may
from time to time revise such ratings, they undertake no
obligation to do so, and the ratings indicated do not necessarily
represent ratings which the rating agencies would ascribe to
these securities at March 31, 1994. Securities rated by Putnam
are indicated by "/P" and are not publicly rated.
(c) Restricted as to public resale. At the date of acquisition,
these securities were valued at cost. There were no outstanding
unrestricted securities of the same class as those held. Total
market value of restricted securities owned at March 31, 1994 was
$276,947,125 or 7.5% of net assets.
(d) The interest rate and date shown parenthetically represent
the new interest rate to be paid and the date the fund will begin
accruing this rate.
(e) A portion of this security was pledged to cover margin
requirements for future contracts at March 31, 1994. The market
value segregated with the custodian for transactions in future
contracts was $15,239,500.
(f) The aggregate identified cost on a tax basis is
$3,401,058,985 resulting in gross unrealized appreciation and
depreciation of $208,523,058 and $89,269,439, respectively, or
net unrealized appreciation of $119,253,619.
The rates shown on Variable Rate Demand Notes (VRDN) and Residual
Interest Bonds (RIBS) and stepped-coupon bonds are current
interest rates at March 31, 1994, which are subject to change
based on the terms of the security.
The Fund had the following industry group concentrations greater
than 10% on March 31, 1994 (as a percentage of net assets):
Water & Sewer 17.5%
Utilities 13.4%
Hospitals 11.9%
The Fund had the following insurance concentration greater than
10% on March 31, 1994 (as a percentage of net assets):
MBIA 12.4%
<PAGE>
Futures Contracts Outstanding at March 31, 1994
Total Aggregate Expiration Unrealized
Value Face Value DateAppreciation
U.S. Treasury
Bond Futures
(Sell) 159,375,001 $163,815,538 Jun/94 4,440,537
<PAGE>
<TABLE>
<CAPTION>
Statement of
assets and liabilities
March 31, 1994 (Unaudited)
<S> <C> <C>
Assets
Investments in securities, at value (identified
cost $3,394,385,271) (Note 1) $3,520,312,604
Cash 6,092,380
Receivable for securities sold 132,771,053
Interest receivable 58,701,745
Receivable for shares of the fund sold 10,182,264
Total assets 3,728,060,046
Liabilities
Payable for securities purchased $12,742,067
Distributions payable to shareholders 10,380,256
Payable for shares of the fund repurchased 9,060,246
Payable for compensation of Manager (Note 2) 4,255,029
Payable for investor servicing and custodian fees (Note 2) 558,777
Payable for administrative services (Note 2) 9,849
Payable for compensation of Trustees (Note 2) 210
Payable for distribution fees (Note 2) 2,014,428
Other accrued expenses 65,481
Total liabilities 39,086,343
Net assets $3,688,973,703
Represented by
Paid-in capital (Notes 4 and 5) $3,568,015,564
Distributions in excess of net investment income (683,634)
Accumulated net realized loss on investment transactions (8,726,097)
Net unrealized appreciation of investments and futures 130,367,870
<PAGE>
Total--Representing net assets applicable to capital
shares outstanding $3,688,973,703
Computation of net asset value and offering price
Net asset value and redemption price of class A shares
($3,380,965,225 divided by 410,534,315 shares) $8.24
Offering price per class A share (100/95.25 of $8.24)* $8.65
Net asset value and offering price of class B shares
($308,008,478 divided by 37,438,307 shares)** $8.23
*On single retail sales of less than $25,000. On sales of $25,000 or more and on group
sales the offering price is reduced.
**Redemption price per share is equal to net asset value less any applicable contingent
deferred sales charge.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
operations
Six months ended March 31, 1994 (Unaudited)
<S> <C> <C>
Tax exempt interest income $ 125,071,493
Expenses:
Compensation of Manager (Note 2) $8,578,828
Investor servicing and custodian fees (Note 2) 1,111,171
Compensation of Trustees (Note 2) 38,395
Auditing 41,387
Legal 23,565
Postage 73,747
Reports to shareholders 17,738
Administrative services (Note 2) 25,183
Distribution fees -- Class A (Note 2) 3,601,838
Distribution fees -- Class B (Note 2) 1,152,556
Registration fees 91,249
Other expenses 26,168
Total expenses 14,781,825
Net investment income 110,289,668
Net realized gain on investments (Notes 1 and 3) 11,116,386
Net realized gain on futures (Notes 1 and 3) 111,550
Net unrealized depreciation of investments and futures
contracts during the period (306,766,373)
Net loss on investments (295,538,437)
Net decrease in net assets resulting from operations $(185,248,769)
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of
changes in net assets
Six months ended Year ended
March 31 September 30
1994* 1993
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 110,289,668 $ 200,894,657
Net realized gain on investments 11,116,386 6,404,745
Net realized gain (loss) on futures 111,550 (1,878,498)
Net unrealized appreciation (depreciation) of
investments and futures contracts (306,766,373) 219,500,380
Net increase (decrease) in net assets
resulting from operations (185,248,769) 424,921,284
Distributions to shareholders from
Net investment income:
Class A (103,475,901) (198,606,196)
Class B (6,888,743) (3,652,739)
Net realized gain on investments:
Class A (10,221,384) (13,426,704)
Class B (763,153) --
Increase from capital share transactions (Note 4)185,733,520 746,437,801
Total increase (decrease) in net assets (120,864,430) 955,673,446
Net assets
Beginning of period 3,809,838,133 2,854,164,687
End of period (including distributions in excess of and
undistributed net investment income of $(683,634)
and $27,295, respectively) $3,688,973,703 $3,809,838,133
*Unaudited.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial highlights*
(For a share outstanding throughout the period)
January 4, 1993
(commencement
Six months ended of operations) to Six months ended Year ended
March 31 September 30 March 31 September 30
1994** 1993 1994** 1993
Class B Class A
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $8.91 $8.37 $8.92 $8.39
Investment
operations
Net Investment
Income .22 .32 .25 .53
Net Realized and
Unrealized Gain
(Loss) on Investments (.65) .55 (.65) .57
Total from
Investment Activities (.43) .87 (.40) 1.10
Less Distributions from:
Net Investment Income (.22) (.33) (.25) (.53)
Net Realized Gain
on Investments (.03) -- (.03) (.04)
Total Distributions (.25) (.33) (.28) (.57)
Net Asset Value,
End of Period $8.23 $8.91 $8.24 $8.92
<PAGE>
Total Investment
Return at Net
Asset Value (%)(a) (9.90)(b) 14.20(b) (9.28)(b) 13.63
Net Assets,
End of Period
(in thousands) $308,008 $209,657 $3,380,965 $3,600,182
Ratio of expenses
to Average Net
Assets (%) 1.36(b) 1.35(b) .72(b) .69
Ratio of Net
Investment Income
to Average Net
Assets (%) 5.03(b) 4.98(b) 5.78(b) 6.16
Portfolio Turnover (%) 9.47(c) 22.95(c) 9.47(c) 22.95
See page 22 for notes to Financial highlights.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial highlights*(continued)
Eleven
months
ended Year ended
Year ended September 30 September 30 October 31
1992 1991 1990 1989 1988 1987 1986 1985 1984
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period $8.11 $7.70 $7.83 $7.67 $7.14 $7.80 $6.97 $6.48 $6.80
Investment
operations
Net Investment
Income .54 .54 .54 .56 .57 .57 .61 .58 .62
Net Realized and
Unrealized Gain
(Loss) on Investments .27 .41 (.10) .16 .52 (.66) .83 .49 (.32)
Total from
Investment Activities .81 .95 .44 .72 1.09 (.09) 1.44 1.07 .30
Less Distributions from:
Net Investment Income (.53) (.54) (.54) (.56) (.56) (.57) (.61) (.58) (.62)
Net Realized Gain
on Investments -- -- (.03) -- -- -- -- -- --
Total Distributions (.53) (.54) (.57) (.56) (.56) (.57) (.61) (.58) (.62)
Net Asset Value,
End of Period $8.39 $8.11 $7.70 $7.83 $7.67 $7.14 $7.80 $6.97 $6.48
<PAGE>
Total Investment
Return at Net
Asset Value (%)(a) 10.34 12.71 5.75 9.63 15.69 (1.52) 21.36 18.37(b) 4.66
Net Assets,
End of Period
(in thousands) $2,854,165 $2,295,154 $1,807,931 $1,541,563 $1,228,401$1,088,122 $811,399 $463,189 $302,450
Ratio of expenses
to Average Net
Assets (%) .60 .56 .52 .52 .51 .52 .53 .60(b) .65
Ratio of Net
Investment Income
to Average Net
Assets (%) 6.53 6.79 6.90 7.09 7.51 7.22 7.91 9.05(b) 9.32
Portfolio Turnover (%) 31.25 35.76 33.42 60.77 95.05 93.46 65.88 80.61(c) 167.68
*Financial highlights for periods ended through September 30, 1992 have been restated to conform with requirements
issued by the SEC in April, 1993.
**Unaudited.
(a)Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Annualized.
(c)Not annualized.
/TABLE
<PAGE>
Notes to
financial statements
March 31, 1994 (Unaudited)
Note 1 Significant accounting policies
The Fund is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment
company. The Fund seeks as high a level of current income exempt
from federal income tax and California personal income tax as
Putnam Management believes is consistent with preservation of
capital by investing primarily in a diversified portfolio of
longer-term California tax exempt securities.
The Fund offers both class A and class B shares. The Fund
commenced its public offering of class B shares on January 4,
1993. Class A shares are sold with a maximum front-end sales
charge of 4.75%. Class B shares do not pay a front-end sales
charge, but pay a higher ongoing distribution fee than class A
shares, and are subject to a contingent deferred sales charge if
those shares are redeemed within six years of purchase. Expenses
of the Fund are borne pro-rata by the holders of both classes of
shares, except that each class bears expenses unique to that
class (including the distribution fees applicable to such class),
and 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. In addition, the Trustees declare separate
dividends on each class of shares.
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 Tax-exempt bonds and notes are stated on
the basis of valuations provided by a pricing service, approved
by the Trustees, which uses information with respect to
transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships
between securities in determining value. The fair value of
restricted securities is determined by the Manager following
procedures approved by the Trustees, and such valuations and
procedures are reviewed periodically by the Trustees.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order
to buy or sell is executed). Interest income is recorded on the
accrual basis.
<PAGE>
C) Futures A futures contract is an agreement between two parties
to buy and sell a security at a set price on a future date. Upon
entering into such a contract, the Fund is required to pledge to
the broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the exchange. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as "variation
margin", and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it
was closed. The potential risk to the Fund is that the change in
value of the underlying securities may not correspond to the
change in value of the futures contracts.
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 taxes on
income, capital gains or unrealized appreciation of securities
held and excise tax on income and capital gains.
E) Distributions to shareholders Income dividends are recorded
daily by the Fund and are distributed monthly. Capital gains
distributions, if any, are recorded on the ex-dividend date and
paid annually.
F) Amortization of bond premium and discount Any premium
resulting from the purchase of securities is amortized using the
effective yield method for bonds issued after September 27, 1985,
and on a straight-line basis for bonds issued prior thereto. The
premium in excess of the call price, if any, is amortized to the
call date; thereafter, the remaining excess premium is amortized
to maturity. Discount on zero-coupon bonds, original issue
discount bonds and stepped-coupon bonds is accreted using the
effective yield method.
Note 2 Management fee, administrative services, and other
transactions
Compensation of Putnam Investment Management, Inc. ("Putnam
Management"), the Fund's Manager, a wholly-owned subsidiary of
Putnam Investments, Inc., 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: 0.6% of the first $500 million of average net assets, 0.5%
of the next $500 million, 0.45% of the next $500 million, and
0.4% of any amount over $1.5 billion, subject, under current law,
to reduction in any year to the extent that expenses (exclusive
of brokerage, interest and taxes) of the Fund exceed 2.5% of the
first $30 million of average net assets, 2% of the next $70
million and 1.5% of any excess 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 six months ended March 31, 1994, the Fund paid
$25,183 for these services.
Trustees of the Fund receive an annual Trustee's fee of $4,660,
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 Putnam Fiduciary
Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
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 six months
ended March 31, 1994 amounted to $1,111,171.
Investor servicing and custodian fees reported in the Statement
of operations for the six months ended March 31, 1994 have been
reduced by credits allowed by PFTC.
The Fund has adopted a distribution plan with respect to its
class A shares (the "Class A Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940. The purpose of the class A
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 A shares. The
Trustees have approved payment by the Fund to Putnam Mutual Funds
Corp. at an annual rate of 0.20% of the average net assets
attributable to class A shares. For the six months ended March
31, 1994, the Fund paid distribution fees of $3,601,838 for class
A shares.
During the six months ended March 31, 1994, Putnam Mutual Funds
Corp., acting as an underwriter, received net commissions of
$430,352 from the sale of class A shares of the Fund.
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. For the six months ended March 31, 1994,
Putnam Mutual Funds Corp., acting as an underwriter, received
$105,136 on such redemptions.
<PAGE>
The Fund has adopted a separate distribution plan with respect to
its class B shares (the "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. for
services provided and expenses incurred by it in distributing
class B shares. The class B Plan provides for payments by the
Fund to Putnam Mutual Funds Corp. at an annual rate of .85% of
the Fund's average net assets attributable to class B shares. For
the six months ended March 31, 1994, the Fund paid Putnam Mutual
Funds Corp. distribution fees of $1,152,556 for Class B shares.
Putnam Mutual Funds Corp. also receives the proceeds on the
contingent deferred sales charges on certain class B share
redemptions within six years of purchase. 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., acting as an
underwriter, received contingent deferred sales charges of
$254,822 from redemptions for the six months ended March 31,
1994.
Note 3 Purchases and sales of securities
During the six months ended March 31, 1994, purchases and sales
of investment securities other than short-term investments
aggregated $414,419,298 and $354,869,185, respectively. Purchases
and sales of short-term municipal obligations aggregated
$137,749,680 and $129,727,055, respectively. In determining the
net gain or loss on securities sold, the cost of securities has
been determined on the identified cost basis.
Transactions in futures contracts during the period are
summarized as follows:
Sales of Futures Contracts
Number of Aggregate
Contracts Face Value
Contracts opened 2,500 $ 273,305,688
Contracts closed (1,000) (109,490,150)
Open at end of period 1,500 $ 163,815,538
<PAGE>
<TABLE>
<CAPTION>
Note 4 Capital shares
At March 31, 1994, there was an unlimited number of shares of beneficial interest
authorized, divided into two classes, Class A and Class B capital stock. Transactions in
capital shares were as follows:
Six months ended Year ended
March 31 September 30
1994 1993
Class A Shares Amount Shares Amount
Shares sold 28,622,917 $251,992,656 87,662,983 $750,416,527
Shares issued in connection with
reinvestment of distributions 6,433,504 56,154,176 12,746,668 109,221,501
35,056,421 308,146,832 100,409,651 859,638,028
Shares repurchased (28,078,399) (244,880,901) (36,970,600)(317,203,921)
Net increase 6,978,022 $ 63,265,931 63,439,051 $542,434,107
January 4, 1993
(commencement of
Six months ended operations) to
March 31 September 30
1994 1993
Class B Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 14,773,783 $129,913,894 24,025,104 $208,410,028
Shares issued in connection
with reinvestment of distributions485,705 4,227,140 236,070 2,065,977
15,259,488 134,141,034 24,261,174 210,476,005
Shares repurchased (1,339,606) (11,673,445) (742,749) (6,472,311)
Net increase 13,919,882 $122,467,589 23,518,425 $204,003,694
/TABLE
<PAGE>
Note 5 Reclassification of Capital Accounts
Effective October 1, 1993, Putnam California Tax Exempt Income
Fund, Inc. has adopted the provisions of the AICPA Statement of
Position (SOP) 93-2 "Determination, Disclosure and Financial
Statement Presentation of Income, Capital Gain and Return of
Capital Distributions, by Investment Companies." The purpose of
this SOP is to report the accumulated net investment income
(loss) and accumulated net realized gain (loss) accounts in such
a manner at to approximate amounts available for future
distributions (or to offset future realized capital gains) and to
achieve uniformity in the presentation of distributions by
investment companies.
In implementing the SOP the Fund has reclassified $635,953 to
decrease undistributed net investment income and $923,810 to
increase accumulated net realized gain with a decrease of
$287,857, to additional paid-in capital. These adjustments
represent the cumulative amounts necessary to report these
balances on a tax basis as of March 31, 1993, the close of the
fund's last fiscal year-end for financial reporting and tax
purposes.
Fund
performance
supplement
Putnam California Tax Exempt Income Fund is a portfolio managed
for high current income free from federal and state income taxes
and consistent with capital preservation. This fund invests at
least 75% of its portfolio in investment-grade tax-exempt bonds.
The balance may be invested in securities rated below
investment-grade.
The Lehman Brothers Municipal Bond Index is an unmanaged list of
approximately 8,000 investment-grade, fixed rate, long-term
maturity tax-exempt bonds, which are selected to be
representative of the market in terms of price movement and
sector distribution. The average quality of bonds held in the
index may differ from the average quality of those bonds in which
the fund invests. The index does not include bonds in certain of
the lower rating classifications in which the fund may invest.
The index does not take into account brokerage commissions or
other costs and may pose different risks from the fund. Total
return performance for the index reflects mathematically derived
changes of market price and reinvestment of interest payments, as
computed by Lehman Brothers. The fund's portfolio contains
securities that do not match those in the index.
The Consumer Price Index is a commonly used measure of inflation;
it does not represent an investment return.
Morningstar, Inc., is an industry research firm, rates funds
biweekly relative to funds with similar investment objectives. A
rating is based on risk-adjusted, 3-, 5-, and 10-year total
return, as applicable, adjusted for sales charges. Lipper
Analytical Services, Inc., is an industry research firm whose
rankings vary over time and do not reflect the effects of sales
charges.
The fund performance supplement has been prepared by Putnam
Management to provide additional information about the fund and
the indexes used for performance comparisons. The information is
not part of the portfolio of investments owned or the financial
statements and notes.
Fund performance data do not take into account any adjustment
made for payments under the fund's distribution plan for class A
shares prior to its implementation in fiscal 1993, or any taxes
payable on reinvested distributions.
<PAGE>
Putnam
California
Tax Exempt
Income Fund
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
Investor servicing agent
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581
Custodian
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
(DALBAR logo)
Putnam Investor Services
has received the DALBAR
award each year since the
award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components,
Putnam outperformed
the industry standard
in every category.
<PAGE>
Officers
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John R. Verani
Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
James E. Erickson
Vice President
Paul O'Neil
Vice President
William H. Reeves
Vice President
and Fund Manager
William N. Shiebler
Vice President
John D. Hughes
Vice President
and Treasurer
Beverly Marcus
Clerk and
Assistant Treasurer
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
<PAGE>
This report is for the information of shareholders of Putnam
California Tax Exempt Income 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.
AOT/A64-11894
PUTNAMINVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- -----------------
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
- ------------------
<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
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(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g, the name of the fund) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(5) Bullet points and similar graphic signals are omitted.
(6) Page numbering is different.
