Putnam
California
Tax Exempt
Income Fund
SEMIANNUAL REPORT
March 31, 1996
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "With investment-grade municipal bonds capturing almost 90% of the
yields on 30-year Treasuries, the outlook for the municipal bond
market -- including California's -- appears to us to be positive over
the near term."
-- William H. Reeves, Manager
Putnam California Tax Exempt Income Fund
* "The fund has been a consistent outperformer in the muni California
category. Its above-average yield and long-term total returns,
combined with moderate risk statistics, make this offering an
excellent choice for California-based investors seeking triple-tax-
free income."
-- Value Line Mutual Fund Survey, March 5, 1996
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
10 Portfolio holdings
19 Financial statements
[GRAPHIC OMMITTED: photo of George Putnam]
(copyright) Karsh, Ottawa
From the Chairman
Dear Shareholder:
For most of the first half of Putnam California Tax Exempt Income Fund's
current fiscal year, the six months ended March 31, 1996, tax-free bonds
rose in the updraft of one of the most vibrant bond markets in recent
memory. Concern over the possible negative effects of a flat tax on
municipal bonds, however, dampened performance relative to other fixed-
income investments.
On the other hand, when the bond market turned abruptly downward toward
the end of the period, flat-tax fears were abating. This improved
outlook for municipal bonds tended to cushion their decline. The bond
market was reacting to concern over a pickup in inflation resulting from
economic overheating.
Putnam Management believes this new worry is premature and expects the
rest of 1996 will bring steady but manageable growth. Fund Manager
William Reeves provides a full discussion of your fund's performance and
outlook in the report that follows.
Finally, I am pleased to welcome the shareholders of Putnam California
Intermediate Tax Exempt Fund. Shareholders of that fund approved the
merger into your fund on March 7, 1996, effective March 11, 1996.
Respectfully yours,
/S/George Putnam
George Putnam
Chairman of the Trustees
May 15, 1996
Report from the Fund Manager
William H. Reeves
The whole is often more than the sum of its parts, and this is
especially true of the first half of your fund's 1996 fiscal year. A
glance at Putnam California Tax Exempt Income Fund's total return for
the six months ended March 31, 1996, only tells part of the story.
During the first three months, sluggish growth, historically low
interest rates, and low inflation contributed to an ideal environment
for bonds. The fund ended the first half of the semiannual period on a
high note. For example, class A shares posted a total return of 5.75% at
net asset value (0.70% at public offering price) for the three months
ended December 31. However, your fund, like all other fixed-income
investments, lost ground in March as investors, reacting to February's
stronger-than-expected employment figures, anticipated an interest-rate
increase. While March's performance erased some of the gains made
earlier in the period, the fund's return of 3.27% for Class A shares at
net asset value for the semiannual period ended March 31, 1996, was
respectable and well ahead of its Lipper California municipal debt
category average of 2.96%. Returns for class B and class M shares, which
can be found on pages 8 and 9, reflect a similar pattern.
* FLAT-TAX FEARS RECEDE
Since the spring of 1995, the municipal bond market has been
overshadowed by talk of tax reform. Central to this debate has been the
flat tax, which in its purest form would jeopardize the tax advantages
enjoyed by municipal bonds. For the better part of a year, the threat of
such an event has been largely responsible for the underperformance of
tax-free bonds relative to the rest of the fixed-income market.
However, much of the momentum for a major overhaul to the current tax
structure has evaporated. Although we expect discussions of broader tax
reform to reappear this fall as the presidential election nears, our
current assessment is that any radical changes in the tax code appear
less likely than they did a few months ago.
* MARKET FUNDAMENTALS RECAPTURE INVESTORS' ATTENTION
With flat-tax fears subsiding, underlying fundamentals are once again at
the forefront of investors' minds. Overall, the economic environment for
fixed-income investments remains favorable. Inflation is the primary
barometer of fixed-income returns and it continues to be fairly subdued
and relatively stable. Low inflation makes longer-term bonds
particularly attractive and your fund continues to invest substantially
in high-quality, longer-maturity issues.
Recent historically low interest rates have also played a role in your
fund's performance. Signs of a slowdown in economic activity, most
notably sluggish retail sales during the holiday season, led the Federal
Reserve Board to reduce short-term interest rates by a quarter of a
percentage point on December 19, 1995. By year's end, the yield on the
bellwether 30-year Treasury bond was approaching 6%, giving bond
investors an extra measure of holiday cheer.
Early in the period, we lengthened the portfolio's duration in hopes of
increasing its total return potential given the lower interest-rate
environment. Duration is a measure of the portfolio's maturity structure
and reflects the price sensitivity of the portfolio holdings to changes
in interest rates. Typically, bonds with longer maturities are more
sensitive to these changes and thus may offer greater potential for
appreciation when rates are declining.
[GRAPHIC OMITTED: pie chart PORTFOLIO QUALITY OVERVIEW
showing:
AAA - 59.60%
AA - 8.62%
A - 8.48%
BBB - 13.03%
BB - 5.21%
B - 0.29%
VMIG -
(Short-term
investment) - 4.77%
Based on portfolio market value as of 3/31/96. Based on Standard and
Poor's rating terminology. While the fund has the flexibility to invest
in higher-yielding lower-rated bonds, generally at least 75% of the
portfolio will be investment-grade. Investment-grade securities are
those rated BBB or higher by Standard & Poor's or Moody's Investors
Service, Inc. Holdings will vary over time.]
The Fed lowered interest rates again by a quarter of a percentage point
on January 31, 1996, further bolstering bond investors' euphoria.
However, by early March, evidence of rapid employment growth fueled
fears of inflation and a possible end to the Fed's program of lowering
short-term rates, bringing the extended rally to an abrupt halt.
The performance of the fund, like that of most other fixed-income
investments, suffered in the wake of the government's job numbers. Bond
prices had their worst day in nearly two decades, with the 30-year
Treasury bond off $30.94 for each $1,000 invested. Its yield climbed
about a quarter of a percentage point to 6.72%.
Interest rates remained skittish during March, indicating that the bond
market was at a loss as to how to interpret conflicting economic data.
We expect to remain on the course set out early in the period, holding
the fund's duration fairly steady at 7.75 years.
Federal Reserve Chairman Alan Greenspan has commented that economic
growth should continue without fueling inflation. The recent spike in
interest rates is having a dampening effect on such interest-rate-
sensitive industries as the housing market, suggesting that growth in
some areas may be balanced by slowdowns in others. With increases in
consumer prices being called "moderate" and producer prices "well-
behaved," the overall economy appears to be on track for noninflationary
trend growth of 2.0% to 2.5% for the balance of the fund's fiscal year.
* LOW SUPPLY OF CALIFORNIA BONDS MIRRORS NATIONAL TREND
The recent uptick in interest rates has further exacerbated an already
tight supply of the state's municipal bonds. Refinancing, for all
practical purposes, is nonexistent. New bond issuance fell again in
1995, for the third year in a row. In addition, bond calls and
redemptions indicate that, for the second consecutive year, more bonds
are likely to leave the market than come into it. This continuing
decline in supply is having a positive effect on prices.
As a result of the scarcity of new issues, some bonds at the lower end
of the investment-grade spectrum are trading at higher prices relative
to the AAA-rated sector than would otherwise be the case. We are relying
on our in-house analytical capabilities to determine which bonds we
believe offer the most attractive balance of credit quality, yield, and
relative price stability.
[GRAPHIC OMMITTED: horizontal bar chart TOP INDUSTRY SECTORS*
showing:
Utilities - 15.9%
Water and sewer - 15.7%
Hospitals/health care - 10.5%
Education - 7.2%
Highways - 6.9%
*Based on net assets on 3/31/96. Holdings will vary over time.
* OUTLOOK CAUTIOUS, BUT CONSTRUCTIVE
A climate of steadier economic growth clearly requires a more cautious
approach to fixed-income investing. Greater emphasis will be placed on
coupon income, stressing the importance of astute credit analysis. As
more weight is placed on enhancing the price stability and liquidity of
the portfolio, careful maturity selection and a focus toward larger,
well-known municipal names will play an increasingly vital role in your
fund's strategy over the next six months.
We believe that the recent market correction, coupled with the
diminished influence of flat-tax fears, may offer investors who have
shied away from municipals an attractive opportunity to retest the
waters. Furthermore, municipal yields remain generous on a tax-
equivalent basis, providing an attractive alternative to Treasuries and
investment-grade corporate bonds.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 3/31/96, there is no guarantee the fund will
continue to hold these securities in the future. Certain high-income
investors may be subject to the alternative minimum tax on a portion of
investment income. Income may be subject to state and local taxes.
Captial gains, if any, are taxable for federal, and in most cases, state
purposes.
Performance Summary
Performance should always be considered in light of a fund's investment
strategy. Putnam California Tax Exempt Income Fund is designed for
investors seeking high current income free from federal and California
income taxes, consistent with capital preservation.
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares
changed over time, assuming you held the shares through the entire
period and reinvested all distributions in the fund.
TOTAL RETURN FOR PERIODS ENDED 3/31/96
Class A Class B Class M
(inception date) (4/29/83) (1/4/93) (2/14/95)
NAV POP NAV CDSC NAV POP
- -----------------------------------------------------------------------
6 months 3.27% -1.66% 2.81% -2.19% 3.11% -0.23%
- -----------------------------------------------------------------------
1 year 7.68 2.59 6.97 1.97 7.32 3.80
- -----------------------------------------------------------------------
5 years 45.82 38.96 -- -- -- --
Annual average 7.84 6.80 -- -- -- --
- -----------------------------------------------------------------------
10 years 114.18 104.05 -- -- -- --
Annual average 7.91 7.39 -- -- -- --
- -----------------------------------------------------------------------
Life of class B -- -- 19.21 16.21 -- --
Annual average -- -- 5.57 4.75 -- --
- -----------------------------------------------------------------------
Life of class M -- -- -- -- 9.87 6.34
Annual average -- -- -- -- 8.46 5.44
- -----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/96
Lehman Bros. Consumer
Municipal Bond Index Price Index
- ---------------------------------------------------------------------
6 months 2.87% 1.63%
- ---------------------------------------------------------------------
1 year 8.38 2.84
- ---------------------------------------------------------------------
5 years 44.68 15.33
Annual average 7.66 2.89
- ---------------------------------------------------------------------
10 years 113.06 43.11
Annual average 7.86 3.65
- ---------------------------------------------------------------------
Life of class B 21.24 9.72
Annual average 6.11 2.91
- ---------------------------------------------------------------------
Life of class M 12.82 3.59
Annual average 10.92 3.09
- ---------------------------------------------------------------------
Performance data represent past results, do not reflect future
performance, and will differ for each share class. They do not take into
account any adjustment for taxes payable on reinvested distributions or,
for class A shares, distribution fees prior to implementation of the
class A distribution plan in 1990. The fund began operations on 4/29/83,
offering shares now known as class A. Effective 1/4/93, the fund began
offering class B shares and on 2/14/95, class M shares. Investment
returns and net asset value will fluctuate so that an investor's shares,
when sold, may be worth more or less than their original cost. POP
assumes 4.75% maximum sales charge for class A shares and 3.25% for
class M shares. CDSC for class B shares assumes the applicable sales
charge, with the maximum being 5%.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 3/31/96
Class A Class B Class M
- ------------------------------------------------------------------------
Distributions (number) 6 6 6
- ------------------------------------------------------------------------
Income $0.236419 $0.207981 $0.222669
- ------------------------------------------------------------------------
Share value: NAV POP NAV NAV POP
- ------------------------------------------------------------------------
9/30/95 $8.37 $8.79 $8.37 $8.36 $8.64
- ------------------------------------------------------------------------
3/31/96 8.41 8.83 8.40 8.40 8.68
- ------------------------------------------------------------------------
Current return
End of period
- ------------------------------------------------------------------------
Current dividend rate1 5.64% 5.37% 4.98% 5.34% 5.16%
- ------------------------------------------------------------------------
Taxable equivalent2 10.49 9.99 9.26 9.93 9.60
- ------------------------------------------------------------------------
Current 30-day SEC yield3 5.19 4.95 4.47 4.86 4.70
- ------------------------------------------------------------------------
Taxable equivalent2 9.65 9.21 8.31 9.04 8.74
- ------------------------------------------------------------------------
1 Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period. 2 Assumes maximum 46.24% combined federal
and state tax rate. Results for investors subject to lower tax rates
would not be as advantageous. For some investors, investment income may
be subject to federal alternative minimum tax. 3 Based only on
investment income, calculated using SEC guidelines.
TERMS AND DEFINITIONS
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities, divided by the number of outstanding shares, not including
any initial or contingent deferred 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. POP performance
figures shown here assume the maximum 4.75% sales charge for class A
shares and 3.25% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B shares and assumes redemption at the end of
the period. Your fund's CDSC declines from a 5% maximum during the first
year to 1% during the sixth year. After the sixth year, the CDSC no
longer applies.
Lehman Brothers Municipal Bond Index is an unmanaged list of long-term
fixed-rate investment-grade tax-exempt bonds representative of the
municipal bond market. The index does not take into account brokerage
commissions or other costs, may include bonds different from those in
the fund, and may pose different risks than the fund.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
<TABLE>
<CAPTION>
Portfolio of investments owned
March 31, 1996 (Unaudited)
Key to Abbreviations
- -----------------------------------------------------------------------------------------------------------
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FHA Insd. -- Federal Housing Administration Insured
FNMA Coll. -- Federal National Mortgage Association Collateralized
FSA -- Financial Security Assurance
GO Bonds -- General Obligation Bonds
IF -- Inverse Floater
IFB -- Inverse Floating Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
RAW -- Revenue Anticipation Warrants
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (98.1%)*
PRINCIPAL AMOUNT
RATINGS** VALUE
<S> <C> <C> <C> <C>
California (97.9%)
- ----------------------------------------------------------------------------------------------------------
$16,000,000 Anaheim, IF COP, MBIA, 8.524s 7/16/23 AAA 16,690,000
24,000,000 Anaheim, Pub. Fing. Auth. IFB, MBIA, 8.87s,
12/28/18 AAA 27,210,000
Berkeley Hlth. Fac. Rev. Bonds
(Alta Bates Med. Ctr.), Ser. A
30,275,000 6.55s, 12/1/22 BBB 29,783,031
8,500,000 6 1/2s, 12/1/11 BBB 8,478,750
10,000,000 Beverly Hills COP (Civic Ctr.Impt.), 6 3/4s 6/1/19 AA 10,612,500
CA Edl. Fac. Auth. Rev. Bonds
7,030,000 (Pomona College), 8 1/8s, 1/1/17 AAA 7,395,138
15,745,000 (U. of Southern CA Project), Ser. B, 6 3/4s,
10/1/15 AA 16,866,831
CA Hlth. Fac. Fin. Auth. Rev. Bonds
21,000,000 (Catholic), Ser. B, AMBAC, 5s, 7/1/21 AAA 18,585,000
9,000,000 (CedarKnoll), Ser. B, 7 1/2s, 8/1/20 A 9,652,500
10,000,000 (Mercy Health Systems), Ser. C, MBIA, 7 1/4s,
7/1/15 AAA 11,050,000
2,340,000 (Summit Med. Ctr.), Ser. 85A, 9s, 5/1/15 BB 2,352,262
2,000,000 (Summit Med. Ctr.) Ser. A, 7.6s, 5/1/15 BB 2,030,000
12,335,000 (Summit Med. Ctr.), Ser. B, 7.6s, 5/1/15 BB 12,520,025
8,330,000 (Summit Med. Ctr.) Ser. B, 7 1/2s, 5/1/09 BB 8,454,950
11,445,000 (Valley Presbyterian Hosp. Project), Ser. A, 9s,
5/1/12 BB 11,443,398
24,000,000 CA Hlth. Fac. Fin. Auth. G.O. Bonds, AMBAC,
5.293s, 7/1/17 AAA 22,470,000
CA Hlth. Facs. Fin. Auth. VRDN
1,300,000 (Sutter Hlth.), Ser. A, 3.55s, 3/1/20 VMIGI 1,300,000
1,100,000 (St. Francis Memorial Hospital), Ser. B, 3.55s,
11/1/19 VMIGI 1,100,000
35,385,000 CA Hlth. Facs. Fin. Auth. IFB, Stepped-Coupon
Ser. B, MBIA, 4.625s (5s, 1/2/99), 7/1/14++ AAA 31,050,338
14,800,000 CA Hsg. Fin. Agcy. Hone Mtge. IFB, 9.237s 8/1/23 AA 16,076,500
4,445,000 CA Hsg. Fin. Agcy. Home Mtge. Rev. Bonds, Ser. A,
7 3/4s, 8/1/17 AA 4,706,144
CA Poll. Control Fin. Auth Rev. Bonds .
12,500,000 (Pacific Gas & Elec. Co.), Ser. A, 8.2s,
12/1/18 A 13,218,750
11,990,000 Solid Waste Disposal (Keller Canyon
Landfill Co. Project), 6 7/8s, 11/1/27 A 12,469,600
CA Poll. Control Fin. Auth. VRDN
1(Shell Oil Co. Project)
7,700,000 Ser. B, 3 1/2s, 10/1/11 VMIGI 7,700,000
1,200,000 Ser. A, 3 1/2s, 10/1/07 VMIGI 1,200,000
1,800,000 Ser. C, 3 1/2s, 11/1/00 VMIGI 1,800,000
CA Poll. Control Fin. Auth. VRDN
(Southern CA Edison)
1,600,000 Ser. C, 3.4s, 2/28/08 VMIGI 1,600,000
1,600,000 Ser. D, 3.4s, 2/28/08 VMIGI 1,600,000
40,005,000 CA Pub. Cap. Impt. Fin. Auth. Rev. Bonds
(Pooled Project, Jt. Pwrs. Agcy.), Ser. B, MBIA, 8.1s,
3/1/18 AAA 42,905,363
6,500,000 CA Special Dist. Fin. Auth. COP, Ser. A, 8 1/2s,
7/1/18 Baa 6,963,125
10,000,000 CA State RAW, Ser. C, 5 3/4s 4/25/96 VMIGI 10,014,800
CA State G.O. Bonds
7,030,000 MBIA, 5 1/2s, 4/1/09 AAA 7,205,750
16,545,000 AMBAC, 5 1/2s, 4/1/11 AAA 16,503,638
25,460,000 MBIA, 5s, 11/1/22 AAA 22,468,450
10,445,000 FGIC 5s, 11/1/22 AAA 9,217,713
8,070,000 FGIC 4 3/4s, 9/1/23 AAA 6,839,325
60,000,000 Ser. 27, MBIA, zero %, 9/1/11 AAA 24,975,000
20,800,000 Ser. 33, MBIA, zero %, 10/1/11 AAA 8,606,000
37,100,000 CA State FB, 5s, 9/1/12 (acquired 10/27/92,
cost $35,987,000)++ A 41,876,625
CA State Dept. Wtr. Resources Rev. Bonds
(Central Valley Project)
48,400,000 6.93s, 12/1/13 AA 55,539,000
25,000,000 MBIA, 4 3/4s, 12/1/29 AAA 20,875,000
CA State Pub. Works Board Lease Rev. Bonds
24,000,000 (Dept. of Corrections-State Prisons), Ser. A, 7s,
9/1/09 AAA 26,820,000
20,690,000 (U. of CA Project), Ser. A, 7s, 9/1/15 AAA 23,121,075
59,000,000 6.43s, 9/1/19 AAA 65,195,000
28,000,000 (Dept. of Corrections-Calipatria State Project),
Ser. A, MBIA, 6 1/2s, 9/1/17 AAA 30,625,000
7,000,000 (Dept. of Corrections-Madera State Prison),
Ser. E, 5 1/2s, 6/1/19 A 6,518,750
14,610,000 (Dept. of Corrections-State Prison), Ser. D,
5 3/8s, 6/1/12 A 13,806,450
9,050,000 (Dept. of Corrections-Del Norte), Ser. C, MBIA,
5 1/8s, 12/1/08 AAA 8,880,313
33,500,000 (Dept. of Corrections-State Prison), Ser. A,
AMBAC, 5s, 12/1/19 AAA 30,150,000
18,000,000 CA State U. IFB, 9.985s, 11/1/21 (acquired 3/2/92,
cost $19,013,580)++ AAA 21,015,000
CA Statewide Cmntys. Dev. Auth. COP
240,000 6 3/4s, 12/1/04 A 261,600
400,000 (United Western Med. Ctrs.), 6 1/2s, 12/1/04 A 426,500
5,100,000 (San Gabriel Valley), Ser. A, MBIA, 5 3/8s, 9/1/09 AAA 5,049,000
10,000,000 (Childrens Hosp.), MBIA, 4 3/4s, 6/1/21 AAA 8,462,500
14,000,000 Castaic Lake, Wtr. Agcy. COP
(Wtr. Syst. Impt. Project), MBIA, 7 1/8s, 8/1/16 AAA 15,697,500
200,000 Central Valley Fing. Auth. Rev. Bonds
(Carson Ice-Cogeneration Project), 5.8s, 7/1/04 BBB 201,250
16,000,000 Chino Basin, Regl. Fin. Auth. IFB, AMBAC,
7.750s, 8/1/22 AAA 15,120,000
Commerce, Redev. Agcy. Rev. Bonds
(Project No. 1), Ser. 91-A
8,845,000 7 1/4s, 8/1/21 BBB 9,154,575
68,280,000 zero %, 8/1/21 BBB 10,924,800
10,000,000 Concord, Redev. Agcy. Tax Alloc. Rev. Bonds
(Central Concord Redev. Project), AMBAC,
5 1/4s, 7/1/19 AAA 9,200,000
Contra Costa Wtr. Dist. Rev. Bonds, Ser. G, MBIA
36,915,000 5s, 10/1/26 AAA 32,808,206
25,000,000 5s, 10/1/24 AAA 22,281,250
35,000,000 Contra Costa Home Mtge. Fin. Auth. Rev. Bonds,
MBIA, zero %, 9/1/17 AAA 8,968,750
10,000,000 Corona COP (Vista Hosp. Syst.), Ser. B, 9 1/2s,
7/1/20 B/P 10,487,500
12,400,000 Culver City, Redev. Fin. Auth. Rev. Bonds, AMBAC,
5s, 11/1/23 AAA 10,912,000
Duarte COP (City of Hope Med. Ctr.)
21,000,000 6 1/4s, 4/1/23 Baa 19,740,000
15,000,000 6 1/8s, 4/1/13 Baa 14,250,000
14,000,000 East Bay Muni. Util. Dist. Rev. Bonds, Ser. E, FGIC,
5s, 4/1/15 AAA 12,670,000
16,000,000 East Bay Muni. Util. Dist. Wtr. Syst. Rev. Bonds,
FGIC, 4 3/4, 6/1/21 AAA 13,640,000
10,725,000 El Camino, Hosp. Dist. Rev. Bonds, Ser. A, AMBAC,
6 1/4s, 8/15/17 AAA 10,912,688
Foothill/Eastern Trans. Corridor Agcy. Rev. Bonds
(CA Toll Roads), Ser. A
57,650,000 6 1/2s, 1/1/32 Baa 57,722,063
66,875,000 6s, 1/1/34 Baa 62,360,938
27,080,000 5s, 1/1/35 Baa 21,562,450
850,000 zero %, 1/1/04 Baa 525,938
Fresno Swr. Rev. Bonds, Ser. A, MBIA
5,000,000 5s, 9/1/23 AAA 4,437,500
8,000,000 4 3/4s, 9/1/26 AAA 6,730,000
11,460,000 Fresno Unified Sch. Dist. COP, 7 1/4s, 3/1/07 A 12,419,775
18,145,000 Hawaian Gardens Redev. Agcy. Rev. Bonds
(Project No. 1), 6.35s, 12/1/33 BBB 16,579,994
7,790,000 Irvine Impt. Board Dist. No. 89-10, VRDN,
3 1/2s, 9/2/15 VMIGI 7,790,000
Irvine Ranch Wtr. Dist. VRDN
4,100,000 3.55s, 4/1/33 VMIGI 4,100,000
1,200,000 Ser. B, 3.35s, 10/1/09 VMIGI 1,200,000
1,300,000 Ser. A, 3 1/4s, 5/1/09 VMIGI 1,300,000
Irvine Ranch, Wtr. Dist. Jt. Pwr. Agcy. Rev. Bonds
56,000,000 (Issue II), FNMA Coll., 8 1/4s, 8/15/23 A 59,850,000
23,000,000 (Issue II), 8.2s, 8/15/08 A 24,581,250
25,010,000 (Issue I), 7 7/8s, 2/15/23 A 26,166,713
6,000,000 Local Govt. Fin. Joint Pwr. Auth. Rev. Bonds
(Anaheim Redev. Agcy.), Ser. A, 8.2s, 9/1/15 A 6,652,500
10,120,000 Loma Linda Hosp. Rev. Bonds (Loma Linda U. Med.
Ctr. Project), Ser. A, 6s, 12/1/23 BBB 9,044,750
7,675,000 Los Angeles Cmty. Redev. Agcy. Multi-Fam. VRDN,
(Promenade Tower), 3.3s, 4/1/09 VMIGI 7,675,000
25,000,000 Los Angeles Harbor Dept. Rev. Bonds, 7.6s,
10/1/18 AAA 27,562,500
375,000 Los Angeles Multi-Fam. Rev. Bonds (Mahal Apts.),
Ser. A, FHA Insd., 6 1/4s, 8/20/04 AAA 391,875
34,700,000 Los Angeles Wastewtr. Syst. IFB, 8.733s, 6/1/19
(acquired 11/18/94, cost $33,460,631)++ AAA 37,085,625
Los Angeles Wastewtr. Syst. Rev. Bonds
17,150,000 Ser. B, 7.15s, 6/1/20 AAA 19,165,125
20,105,000 Ser. A, 7s, 2/1/20 AAA 22,241,156
50,000,000 Ser. 91-5, AMBAC, 6.519s, 6/1/21 AAA 54,812,500
700,000 Los Angeles Cnty., Cmnty. VRDN,
(Willow Bay Project), 3.2s, 11/1/15 VMIGI 700,000
13,565,000 Los Angeles Cnty. Trans. Comm. Sales Tax Rev.
Bonds, Ser. A, 8s, 7/1/16 AAA 14,514,550
8,750,000 Los Angeles Cnty. Trans. Commn. Sales Tax VRDN,
Ser. A, FGIC, 2.95s, 7/1/12 VMIGI 8,750,000
24,340,000 Los Angeles Cnty., Hlth. Fac. Auth. Lease Rev.
Bonds (Olive View Med. Ctr.), 7 1/2s, 3/1/08 AAA 26,317,625
19,600,000 Los Angeles Cnty., Metro Trans. Auth. Sales Tax
VRDN, Ser. A, MBIA, 3s, 7/1/20 VMIGI 19,600,000
Los Angeles Cnty., Metro. Trans. Auth. Sales Tax
Rev. Bonds
21,000,000 Ser. B, AMBAC, 5 1/4s, 7/1/23 AAA 19,215,000
81,335,000 Ser. A, FGIC, 5s, 7/1/21 AAA 71,981,475
9,500,000 Los Angeles Cnty., Pub. Works Fin. Auth. Lease
Rev. Bonds (Multi-Capital Fac. Project 4), MBIA,
4 3/4s, 12/1/10 AAA 8,716,250
13,000,000 Los Angeles Cnty., Sanitation Dist. Fin. Auth.
Rev. Bonds (Multi-Capital Fac. Project 4), Ser. A,
MBIA, 5s, 10/1/23 AAA 11,456,250
Los Angeles, Convention & Exhibition Ctr. Auth.
37,465,000 COP, 9s, 12/1/20 AAA 48,844,994
29,100,000 IFB, 6.447s, 8/15/18 (acquired 9/15/94,
cost $21,610,242)++ AAA 24,916,875
Los Angeles, Dept. of Wtr. & Pwr. Elec. Plant Rev. Bonds
11,000,000 7s, 2/15/22 AA 11,935,000
51,200,000 Second Issue, 6.8s, 6/1/31 AA 57,152,000
38,205,000 Second Issue, 6 3/4s, 12/15/29 AA 41,738,963
6,000,000 Ser. 91-2, 6.533s, 6/1/31 AA 6,750,000
25,000,000 (Second Issue Electric Plant), FGIC, 5.4s,
11/15/31 AAA 22,875,000
17,760,000 (Second Issue Electric Plant), MBIA, 5 1/4s,
11/15/26 AAA 15,939,600
6,300,000 (Second Issue Electric Plant), MBIA, 4 3/4s,
10/15/20 AAA 5,307,750
26,235,000 Los Angeles Cnty. Pension COP, Ser. A, FSA,
zero %, 6/30/08 AAA 28,563,356
Los Angeles, State Bldg. Auth. Lease Rev. Bonds
(State Dept. General Svcs.)
27,250,000 Ser. A, 7 1/2s, 3/1/11 AAA 29,498,125
21,530,000 MBIA, 5 5/8s, 5/1/11 AAA 21,637,650
18,600,000 Metro Wtr. Dist. Rev. Bonds (Southern California
Waterwks.), Ser. A, AMBAC, VRDN, 2.95s,
6/1/23 VMIGI 18,600,000
Metro Wtr. Dist. Rev. Bonds (Southern California
Waterwks.)
20,000,000 7.718s, 8/10/18 AA 19,900,000
8,600,000 5.95s, 8/5/22 AA 8,664,500
8,780,000 Ser. A, FGIC, 5 3/4s, 7/1/21 AAA 8,692,200
15,000,000 Ser. B, MBIA, 4 3/4s, 7/1/21 AAA 12,787,500
2,000,000 Metro Wtr. Dist. IFB, (Southern California Waterwks.),
7.559s, 8/5/22 AA 2,017,500
67,490,000 Modesto, Irrigation Dist. Fin. Auth. Rev. Bonds
(Geysers Pwr. Project), 5.692s, 10/1/15 A 5,646,888
2,000,000 Moorpark Multi-Fam. Variable Rate COP (LE Club
Apartments Project), Ser. A, 3.1s, 11/1/15 VMIGI 2,000,000
16,600,000 Mount Diablo Hosp. Dist. Rev. Bonds, Ser. A,
AMBAC, 5s, 12/1/13 AAA 15,064,500
Northern CA Pwr. Agcy. Multi Cap. Facs. IFB, MBIA
9,500,000 9.121s, 9/2/25 AAA 10,568,750
8,450,000 9.121s, 8/15/17 AAA 9,295,000
17,000,000 Northern CA Pwr. Agcy. Pub. Rev. Bonds
(Hydro. Elec. Project No. 1), Ser. B-1, 8s, 7/1/24 AAA 18,381,250
10,000,000 Oakland COP (Oakland Museum), Ser. A, AMBAC,
6s, 4/1/12 AAA 10,100,000
14,800,000 Oakland, Redev. Agcy. Rev. Bonds, MBIA, 5.95s,
9/1/19 AAA 14,818,500
25,000,000 Orange Cnty. COP (Juvenile Justice Ctr. Fac.),
AMBAC, 6s, 6/1/17 AAA 25,031,250
Orange Cnty. Pub. Fac. Corp. COP (Solid Waste
Management)
4,180,000 7 7/8s, 12/1/07 BBB 4,362,875
10,000,000 7 7/8s, 12/1/13 BBB 10,400,000
1,300,000 Orange Cnty. Wtr. Dist., Variable Rate COP,
Ser. A, FGIC, 3 1/2s, 8/15/15 VMIGI 1,300,000
5,000,000 Orange Cnty., Variable Rate COP, Ser. A.,
3.55s, 8/1/15 VMIGI 5,000,000
Orange Cnty., Dev. Agcy. Tax. Alloc. Rev. Bonds
(Santa Ana Heights Project)
15,000,000 6 1/8s, 9/1/23 BBB 13,931,250
250,000 5.8s, 9/1/03 BBB 247,188
19,830,000 Orange Cnty., Wtr. Dist. COP, Ser. A, 5s 8/15/18 AA 17,177,738
12,840,000 Oxnard, Redev. Agcy. Tax Alloc. Rev. Bonds
(Cent. City Revitalization), Ser. A, 6 1/2s, 9/1/16 BBB 12,647,400
22,850,000 Palm Desert, Fing. Auth. Tax Alloc. IFB, MBIA,
8.915s, 4/1/22 AAA 24,592,313
24,855,000 Pasadena, Variable Rate COP, AMBAC,
3.43s, 2/1/14 VMIGI 23,674,388
6,000,000 Pittsburg, Redev. Agcy. Tax Alloc. Rev. Bonds
(Los Medanos Project), Ser. B, FSA, 5.8s, 8/1/34 AAA 5,835,000
Pleasanton, Jt. Pwr. Fing. Auth. Rev. Bonds, Ser. B
5,990,000 6 3/4s, 9/2/17 BBB/P 5,795,325
9,110,000 6.6s, 9/2/08 BBB/P 9,075,838
4,870,000 6 1/2s, 9/2/04 BBB/P 4,949,138
9,910,000 6 1/8s, 9/2/02 BBB/P 9,959,550
7,095,000 Rancho, Redev. Agcy. Tax Alloc. Rev. Bonds
(Rancho Redev. Project), MBIA, 6 3/4s, 9/1/20 AAA 7,777,894
Rancho, Wtr. Dist. Fing. Auth. Rev. Bonds
44,000,000 AMBAC, 6.427s, 8/17/21 AAA 48,620,000
5,000,000 FGIC, 4 7/8s, 8/1/15 AAA 4,450,000
20,800,000 Redding Elec. Syst. COP, MBIA, 6.368s, 7/1/22 AAA 22,464,000
4,940,000 Richmond, Jt. Pwr. Fing. Auth. Rev. Bonds
Ser. B, 8 1/2s, 9/2/19 BBB/P 5,093,782
24,495,000 Riverside Cnty., Asset Leasing Corp. Rev. Bonds
(Riverside Cnty. Hosp. Project), Ser. A, 6 1/4s,
6/1/19 A 24,495,000
25,000,000 Sacramento Muni. Util. Dist. Elec. IFB, FGIC, 8.818s,
8/15/18 AAA 26,687,500
Sacramento Muni. Util. Dist. Elec. Rev. Bonds
34,835,000 Ser. V, 7 7/8s, 8/15/16 AAA 38,405,588
5,930,000 Ser. V, 7 1/2s, 8/15/18 AAA 6,382,163
25,900,000 Ser. R, 7 1/8s, 2/1/13 AAA 27,139,056
9,500,000 Ser. A, MBIA, 6 1/4s, 8/15/10 AAA 10,271,875
3,250,000 Ser. J, AMBAC, 5 1/2s, 8/15/21 AAA 3,107,813
1,600,000 Sacramento Cnty. COP (Ctr. & Ct. House Project),
3s, 2/1/13 A 1,600,000
10,000,000 Sacramento Cnty. COP (Sacramento Main
Detention), MBIA, 5 1/2s, 6/1/10 AAA 9,925,000
16,610,000 Sacramento Cnty., Hsg. Auth. Multi-Fam. Rev. Bonds,
Ser. 85-2, (Issue II), FNMA Coll., zero %, 11/1/97 AAA 14,679,088
14,355,000 Sacramento Cnty., Santn. Dist. Fin. Auth. Rev. Bonds,
MBIA, 4 3/4s, 12/1/23 AAA 12,147,919
Sacramento Cogen. Auth. Rev. Bonds (Procter &
Gamble Project)
19,000,000 6 1/2s, 7/1/21 BBB 19,190,000
400,000 6s, 7/1/03 BBB 409,500
San Bernardino Jt. Pwr. Fin. Auth. Lease Rev. Bonds
(Dept. of Transp. Lease), Ser. A
5,000,000 5 1/2s, 12/1/14 A 4,668,750
6,000,000 5 1/2s, 12/1/20 A 5,505,000
15,000,000 San Bernardino Cnty. COP (Med. Ctr. Fing. Project),
MBIA, 5s, 8/1/28 AAA 13,106,250
San Diego Swr. Rev. Bonds, Ser. A, AMBAC
12,000,000 5 1/4s, 5/15/20 AAA 11,025,000
11,520,000 5s, 5/15/23 AAA 10,152,000
12,755,000 San Diego Single-Fam. Mtge. Rev. Bonds, Ser. A,
zero %, 8/1/16 A 1,881,363
8,850,000 San Diego Cnty. COP (Vista Detention
Fac. Expn. Project 7 7/8s 4/1/07 AAA 9,373,566
15,800,000 San Diego Cnty. COP, 5 1/4s, 9/1/06 AAA 16,234,500
10,200,000 San Diego Cnty. IF COP, MBIA, 9.156s, 11/18/19 AAA 10,939,500
San Diego Cnty., Wtr. Auth. Wtr. IF COP,
Ser. 91-B, MBIA
17,500,000 8.77s, 4/8/21 AAA 18,812,500
28,350,000 8.728s, 4/21/11 AAA 32,389,875
325,000 San Diego Hsg. Auth. Multi-Fam. Rev. Bonds
(Hillside Gardens Apts.), Ser. A, 5.7s, 11/1/05 AAA 328,656
26,500,000 San Diego Pub. Facs. Fing. Auth. Swr. Rev. Bonds,
FGIC, 5s, 5/15/25 AAA 23,353,125
San Diego, Regl. Bldg. Auth. Rev. Bonds, MBIA,
Stepped-Coupon
11,000,000 6.9s (5.7s, 5/2/98), 5/1/23++ AAA 11,178,750
14,100,000 6.85s (5.65s, 5/2/98), 5/1/13++ AAA 14,329,125
5,000,000 San Elijo, Jt. Pwr. Auth. Rev. Bonds, FGIC, 5s, 3/1/20 AAA 4,437,500
San Joaquin Hills, Trans. Corridor Agcy. Toll Rd.
Rev. Bonds
77,825,000 6 3/4s, 1/1/32 BB/P 79,867,906
34,125,000 5s, 1/1/33 BB/P 27,769,219
515,000 zero %, 1/1/04 BB/P 375,306
13,000,000 San Jose COP (Convention Ctr. Project), 7 7/8s,
9/1/10 AAA 13,491,010
San Jose, Redev. Agcy. Tax Alloc. Rev. Bonds
(Merged Area Redev. Project), MBIA
14,700,000 5s, 8/1/20 AAA 13,119,750
29,100,000 4 3/4s, 8/1/24 AAA 24,589,500
8,545,000 4 3/4s, 8/1/22 AAA 7,263,250
20,000,000 San Mateo Cnty., Jt. Pwr. Fin. Auth Lease IFB, FSA,
7.631s, 7/15/29 AAA 18,875,000
17,800,000 santa Clara Wtr. Dist. IF COP, FGIC, 7.97s, 2/1/15 AAA 17,577,500
11,525,000 Santa Clara Cnty. COP (Cap. Project No. 1), 8s,
10/1/16 AAA 12,000,637
300,000 Santa Clara Cnty. Multi-Fam. Hsg. VRDN, (Foxchase
Apts.), Ser. E, FGIC, 3 1/4s, 11/1/07 VMIGI 300,000
45,200,000 South Orange Cnty., Pub. Fin. Auth. Spl. Tax Rev.
Bonds, FGIC, 5 1/2s, 8/15/15 AAA 42,996,500
30,000,000 Southern CA Pub. Pwr. Auth. VRDN (Transmission
Project), 2.95s, 7/1/19 VMIGI 30,000,000
Southern CA Pub. Pwr. Auth. Rev. Bonds
20,000,000 (Transmission Project), Ser. B, 7 3/8s, 7/1/21 AA 20,657,400
18,535,000 (Palo Verde Project), Ser. B, 7 1/8s, 7/1/15 AAA 19,069,549
17,995,000 (Transmission Project), Ser. B, 7s, 7/1/22 AA 18,595,493
11,800,000 (Palo Verde Project), Ser. A, 6 7/8s, 7/1/15 AAA 12,133,232
11,200,000 (Transmission Project), Ser. B, MBIA, 5 1/2s,
7/1/23 AAA 10,556,000
13,635,000 (Mead Adelanto Project), Ser. A, AMBAC, 5s,
7/1/17 AAA 12,339,675
20,540,000 (Pwr. Project), Ser. A, AMBAC, 5s, 7/1/15 AAA 18,588,700
5,500,000 (Palo Verde Project), Ser. A, AMBAC, 5s, 7/1/15 AAA 5,005,000
29,050,000 (Mead Adelanto-Project), Ser. A, AMBAC,
4 7/8s, 7/1/20 AAA 25,309,813
Stanislaus Waste-to Energy Fing. Agcy. Rev. Bonds
(Ogden Martin Syst. Inc. Project)
10,000,000 7 5/8s, 1/1/10 BBB 10,675,000
8,720,000 7 1/2s, 1/1/05 BBB 9,286,800
Thousand Oaks, Cmnty. Fac. Dist. Spl. Tax
Rev. Bonds (No. 94-1)
$18,775,000 6 7/8s, 9/1/24 BB/P 19,009,675
33,515,000 zero %, 9/1/14 BB/P 9,426,094
8,500,000 Turlock Hlth. Fac. COP (Emanuel Med. Ctr. Inc.),
5 3/4s, 10/15/23 BBB 7,161,250
370,000 U. of CA COP (UCLA Ctr. Chiller/Cogen
Project), 5s, 11/1/04 Aa 369,538
29,700,000 U. of CA IFB, MBIA, 9.721s, 9/1/16 (acquired
8/12/92, cost $33,601,600)++ AAA 37,681,875
U. of CA Rev. Bonds (UCSD Med. Ctr. Satellite
Med. Fac.)
36,147,000 7.9s, 12/1/19 BBB 39,761,700
54,500,000 7.9s, 12/1/96 AAA 56,049,435
U. of CA Rev. Bonds (Multi-Purpose Projects)
11,500,000 Ser. B, MBIA, 5s, 9/1/16 AAA 10,436,250
10,000,000 Ser. C, AMBAC, 5s, 9/1/11 AAA 9,350,000
13,000,000 Ser. C, AMBAC, 4 7/8s, 9/1/19 AAA 11,342,500
10,320,000 Ser. B, MBIA, 4 3/4s, 9/1/14 AAA 9,120,300
8,000,000 Ser. C, AMBAC, 4 3/4s, 9/1/16 AAA 6,980,000
2,000,000 Upland Hsg. Auth. Multi-Fam. VRDN (Village Green
Project), 3.45s, 9/1/10 VMIGI 2,000,000
1,800,000 Vallejo Hsg. Multi-Fam., VRDN, Ser. A, 3.15s,
5/15/22 A 1,800,000
36,945,000 Valley Hlth. Syst.COP, 6 7/8s, 5/15/23 BBB 36,529,369
Washington Township, Hosp. Dist. Rev. Bonds
13,430,000 5 1/2s, 7/1/18 A 12,070,213
6,070,000 5 1/4s, 7/1/23 A 5,167,088
4,115,000 West & Central Basin Fing. Auth. Rev. Bonds
(Central Basin Project), FGIC, 5s, 8/1/16 AAA 3,708,644
2,100,000 Western Riverside Cnty. Auth. VRDN,
(Wastewtr. Treatment), 2.8s, 4/1/28 VMIGI 2,100,000
------------------
3,560,926,978
Puerto Rico (0.3%)
- ----------------------------------------------------------------------------------------------------------
8,000,000 Comwlth. of Puerto Rico Gov't Dev. Bank VRDN,
2.8s, 12/1/15 VMIGI 8,000,000
1,800,000 Comwlth. of Puerto Rico Hwy. & Transn. Auth.
VRDN, Ser. X, 2.8s, 7/1/99 VMIGI 1,800,000
------------------
9,800,000
------------------
Total Municipal Bonds and Notes (cost $3,349,530,045) $3,570,726,978
Municipal Commercial Paper (0.3%)*
PRINCIPAL AMOUNT RATINGS** VALUE
- ----------------------------------------------------------------------------------------------------------
$5,500,000 CA Pollution Control Fin. Auth. (Pacific Gas &
Electric Co.), 2 3/4s, 4/4/96 A-1+ $ 5,503,719
3,500,000 CA Pollution Control Fin. Auth. (Pacific Gas &
Electric Co.), 3.4s, 4/1/96 A-1+ 3,500,650
3,000,000 LA Metro Trans. Auth. Sales Tax Rev. 3 1/4s, 4/3/96 P-1 3,000,799
------------------
Total Municipal Commercial Paper (cost $12,005,168) $12,005,168
- ----------------------------------------------------------------------------------------------------------
Total Investments (cost $3,361,535,213)*** $3,582,732,146
- ----------------------------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $3,638,040,990.
** The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at
March 31, 1996 for the securities listed. Ratings are generally ascribed to securities at the time of
issuance. While the agencies may from time to time revise such ratings, they undertake no obligation to do
so, and the ratings do not necessarily represent what the agencies would ascribe to these securities at
March 31, 1996. Securities rated by Putnam are indicated by "/P" and are not publicly rated.
*** The aggregate identified cost on a tax cost basis is $3,361,535,213, resulting in gross unrealized
appreciation and depreciation of $252,442,238 and $31,245,305, respectively, or net unrealized appreciation
of $221,196,933.
++ The interest rate and date shown parenthetically represent the new interest rate to be paid and the date the
fund will begin receiving interest at this rate.
++ Restricted as to public resale. The total market value of the restricted securities owned at March 31,
1996 was $162,576,000 or 4.5% of net assets.
The rates shown on IF and IFB, which are securities paying variable interest rates that vary inversely to
changes in the market interest rates, FB, Variable Rate COP and VRDN are the current interest rates at
March 31, 1996, which are subject to change based on the terms of the security.
The fund had the following industry group concentrations greater than 10% at March 31, 1996 (as a percentage
of net assets):
Utilities 15.9%
Water & Sewerage 15.7%
Hospitals/Health Care 10.5%
The fund had the following insurance concentrations greater than 10% at March 31, 1996 (as a percentage of
net assets):
MBIA 19.95%
AMBAC 12.19%
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Futures Contracts Outstanding at March 31, 1996
(aggregate face value $121,791,589)
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
- ----------------------------------------------------------------------------------------------------------
UST Bonds (Short) $83,601,563 $82,895,865 Jun 96 $(705,698)
Muni Index Future
(Short) 39,396,875 38,895,724 Jun 96 (501,151)
- ----------------------------------------------------------------------------------------------------------
$(1,206,849)
- ----------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
March 31, 1996 (Unaudited)
- -------------------------------------------------------------------------------
<S> <C>
Assets
- -------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $3,361,535,213) (Note 1) $3,582,732,146
- -------------------------------------------------------------------------------
Cash 18,509,858
- -------------------------------------------------------------------------------
Interest receivable 53,197,325
- -------------------------------------------------------------------------------
Receivable for shares of the fund sold 4,936,503
- -------------------------------------------------------------------------------
Receivable for securities sold 14,052,355
- -------------------------------------------------------------------------------
Receivable from Manager (Note 2) 10,285
- -------------------------------------------------------------------------------
Total assets 3,673,438,472
Liabilities
- -------------------------------------------------------------------------------
Distributions payable to shareholders 9,826,967
- -------------------------------------------------------------------------------
Payable for securities purchased 16,965,280
- -------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,862,819
- -------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 3,873,566
- -------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 5,525
- -------------------------------------------------------------------------------
Payable for administrative services (Note 2) 10,572
- -------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,953,893
- -------------------------------------------------------------------------------
Payable for variation margin 748,438
- -------------------------------------------------------------------------------
Other accrued expenses 150,422
- -------------------------------------------------------------------------------
Total liabilities 35,397,482
- -------------------------------------------------------------------------------
Net assets $3,638,040,990
Represented by
- -------------------------------------------------------------------------------
Paid-in-capital (Notes 1, 4 and 5) $3,452,577,291
- -------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 1,431,634
- -------------------------------------------------------------------------------
Accumulated net realized loss on investments
(Note 1) (35,957,794)
- -------------------------------------------------------------------------------
Net unrealized appreciation of investments 219,989,859
- -------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $3,638,040,990
Computation of net asset value and offering price
- -------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($3,165,929,387 divided by 376,589,975 shares) $8.41
- -------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $8.41)* $8.83
- -------------------------------------------------------------------------------
Net asset value and offering price per class B share
($466,358,765 divided by 55,530,178 shares)*** $8.40
- -------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($5,752,838 divided by 685,060 shares) $8.40
- -------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.40)** $8.68
- -------------------------------------------------------------------------------
* 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.
** On single retail sales of less than $50,000. On sales of $50,000 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.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended March 31,1996 (Unaudited)
<S> <C>
Tax exempt interest income $116,278,787
Expenses:
- -------------------------------------------------------------------------------
Compensation of Manager (Note 2) 8,255,247
- -------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 1,217,416
- -------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 43,371
- -------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 3,242,756
- -------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 1,903,394
- -------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 12,037
- -------------------------------------------------------------------------------
Administrative services (Note 2) 20,385
- -------------------------------------------------------------------------------
Reports to shareholders 41,054
- -------------------------------------------------------------------------------
Auditing 21,664
- -------------------------------------------------------------------------------
Legal 44,370
- -------------------------------------------------------------------------------
Postage 110,287
- -------------------------------------------------------------------------------
Registration fees 1,425
- -------------------------------------------------------------------------------
Other 65,704
- -------------------------------------------------------------------------------
Total expenses 14,979,110
- -------------------------------------------------------------------------------
Expense reduction (Note 2) (1,283,753)
- -------------------------------------------------------------------------------
Net expenses 13,695,357
- -------------------------------------------------------------------------------
Net investment income 102,583,430
- -------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 18,226,965
- -------------------------------------------------------------------------------
Net realized gain on futures contracts (Notes 1 and 3) 206,724
- -------------------------------------------------------------------------------
Net unrealized depreciation on investments during the period (8,372,495)
- -------------------------------------------------------------------------------
Net gain on investments 10,061,194
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $112,644,624
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
March 31 September 30
1996* 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (Decrease) in net assets
- -------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------
Net investment income $102,583,430 $203,426,131
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions 18,433,689 (38,287,885)
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (8,372,495) 168,915,384
- -------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 112,644,624 334,053,630
- -------------------------------------------------------------------------------------------------
Distributions to shareholders
- -------------------------------------------------------------------------------------------------
From net investment income:
Class A (89,108,454) (184,479,625)
- -------------------------------------------------------------------------------------------------
Class B (10,818,311) (19,276,314)
- -------------------------------------------------------------------------------------------------
Class M (124,233) (71,454)
- -------------------------------------------------------------------------------------------------
In excess of net investment income:
Class A -- (468,211)
- -------------------------------------------------------------------------------------------------
Class B -- (48,923)
- -------------------------------------------------------------------------------------------------
Class M -- (181)
- -------------------------------------------------------------------------------------------------
In excess of net realized gain on investments:
Class A -- (9,709,514)
- -------------------------------------------------------------------------------------------------
Class B -- (1,080,394)
- -------------------------------------------------------------------------------------------------
Increase (Decrease) from capital share transactions
(Notes 4 and 5) 36,695,267 (140,544,390)
- -------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 49,288,893 (21,625,376)
- -------------------------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------------------------
Beginning of period 3,588,752,097 3,610,377,473
- -------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $1,431,634 and distributions in excess of
net investment income $1,100,798 respectively) $3,638,040,990 $3,588,752,097
- -------------------------------------------------------------------------------------------------
*Unaudited.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- -----------------------------------------------------------------------------------------------
For the period
Six February 14, 1995 Six
months (commencement months Year
ended of operations) ended ended
March 31 to September 30 March 31 September 30
- -----------------------------------------------------------------------------------------------
1996* 1995 1996* 1995
- -----------------------------------------------------------------------------------------------
Class M Class B
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $8.36 $8.13 $8.37 $8.08
- -----------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------
Net investment income .23 .29 .21 .42
- -----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .03 .24 .03 .32
- -----------------------------------------------------------------------------------------------
Total from investment
operations .26 .53 .24 .74
- -----------------------------------------------------------------------------------------------
Distributions to share holders:
- -----------------------------------------------------------------------------------------------
From net investment income (.22) (.30)** (.21) (.42)**
- -----------------------------------------------------------------------------------------------
From net realized gain or
loss on investments -- -- -- --
- -----------------------------------------------------------------------------------------------
In excess of net realized gain
or loss on investments -- -- -- (.03)
- -----------------------------------------------------------------------------------------------
Total distributions (.22) (.30) (.21) (.45)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $8.40 $8.36 $8.40 $8.37
- -----------------------------------------------------------------------------------------------
Total investment return at
net asset value (%)(a) 3.11(b) 6.56(b) 2.81(b) 9.47
- -----------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $5,753 $4,108 $466,359 $416,367
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) .52(b) .69(b) .69(b) 1.39
- -----------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.65(b) 3.52(b) 2.49(b) 5.17
- -----------------------------------------------------------------------------------------------
Portfolio turnover (%) 26.73(b) 47.73 26.73(b) 47.73
- -----------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (Continued)
(For a share outstanding throughout the period)
- -----------------------------------------------------------------------------------------------
For the period
January 4, 1993 Six
Year (commencement months
ended of operations) ended
September 30 to September 30 March 31
- -----------------------------------------------------------------------------------------------
1994 1993 1996* 1995
- -----------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $8.91 $8.37 $8.37 $8.09
- -----------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------
Net investment income .45 .32 .24 .48
- -----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.81) .55 .04 .31
- -----------------------------------------------------------------------------------------------
Total from investment
operations (.36) .87 .28 .79
- -----------------------------------------------------------------------------------------------
Distributions to share holders:
- -----------------------------------------------------------------------------------------------
From net investment income (.45) (.33) (.24) (.48)**
- -----------------------------------------------------------------------------------------------
From net realized gain or
loss on investments (.02) -- -- --
- -----------------------------------------------------------------------------------------------
In excess of net realized gain
or loss on investments -- -- -- (.03)
- -----------------------------------------------------------------------------------------------
Total distributions (.47) (.33) (.24) (.51)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $8.08 $8.91 $8.41 $8.37
- -----------------------------------------------------------------------------------------------
Total investment return at
net asset value (%)(a) (4.15) 10.51(b) 3.27(b) 10.07
- -----------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $349,609 $209,657 $3,165,929 $3,168,277
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) 1.32 1.00(b) .37(b) .74
- -----------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.16 3.68(b) 2.82(b) 5.86
- -----------------------------------------------------------------------------------------------
Portfolio turnover (%) 21.06 22.95 26.73(b) 47.73
- -----------------------------------------------------------------------------------------------
<CAPTION>
Financial highlights (Continued)
(For a share outstanding throughout the period)
- -----------------------------------------------------------------------------------------------
Year ended September 30
- -----------------------------------------------------------------------------------------------
1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $8.92 $8.39 $8.11 $7.70
- -----------------------------------------------------------------------------------------------
Investment operations
- -----------------------------------------------------------------------------------------------
Net investment income .50 .53 .54 .54
- -----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.81) .57 .27 .41
- -----------------------------------------------------------------------------------------------
Total from investment
operations (.31) 1.10 .81 .95
- -----------------------------------------------------------------------------------------------
Distributions to share holders:
- -----------------------------------------------------------------------------------------------
From net investment income (.50) (.53) (.53) (.54)
- -----------------------------------------------------------------------------------------------
From net realized gain or
loss on investments -- -- -- --
- -----------------------------------------------------------------------------------------------
In excess of net realized gain
or loss on investments (.02) (.04) -- --
- -----------------------------------------------------------------------------------------------
Total distributions (.52) (.57) (.53) (.54)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $8.09 $8.92 $8.39 $8.11
- -----------------------------------------------------------------------------------------------
Total investment return at
net asset value (%)(a) (3.53) 13.63 10.34 12.71
- -----------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,260,769 $3,600,182 $2,854,165 $2,295,154
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets (%)(c) .68 .69 .60 .56
- -----------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 5.86 6.16 6.53 6.79
- -----------------------------------------------------------------------------------------------
Portfolio turnover (%) 21.06 22.95 31.25 35.76
- -----------------------------------------------------------------------------------------------
* Unaudited.
** Distributions in excess of net investment income amounted to less than $0.01 per share for
each class.
(a) Total investment return assumes dividend reinvestment and does not reflect the effect of
sales charges.
(b) Not annualized.
(c) The ratio of expenses to average net assets for the periods ended September 30, 1995 and
thereafter, includes amounts paid through expense offset arrangements. Prior period ratios
exclude these amounts. (Note 2)
</TABLE>
Notes to financial statements
March 31, 1996 (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 Investment Management,
Inc. ("Putnam Management"), the fund's Manager, a wholly-owned
subsidiary of Putnam Investments, Inc., believes is consistent with
preservation of capital by investing primarily in a diversified
portfolio of longer-term California tax exempt securities.
The fund offers class A, class B and class M shares. Class A shares are
sold with a maximum front-end sales charge of 4.75%. Class B shares,
which convert to class A shares after approximately eight years, 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. Class
M shares are sold with a maximum front-end sales charge of 3.25% and pay
an ongoing distribution fee that is lower than class B shares and higher
than class A shares.
Expenses of the fund are borne pro-rata by the holders of each class of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
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 preparation of financial statements is in conformity
with generally accepted accounting principles and requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities. Actual results could differ from those
estimates.
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 Putnam Management
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.
C) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or which it invests to increase its current returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices
supplied by dealers.
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 on securities held and for excise tax on income and capital
gains.
At September 30, 1995, the fund had a capital loss carryover of
approximately $17,511,000 available to offset future net capital gain,
if any, which will expire on September 30, 2003.
E) Distributions to shareholders Income dividends are recorded daily by
the fund and are distributed monthly. Capital gain distributions if any,
are recorded on the ex-dividend date and paid annually. The amount and
character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Reclassifications are made to the fund's
capital accounts to reflect income and gains available for distribution
(or available capital loss carryovers) under income tax regulations.
F) Amortization of bond premium and discount Any premium resulting from
the purchase of securities in excess of maturity value is amortized on a
yield-to-maturity basis. Discounts on zero coupon bonds, original issue
and stepped-coupon bonds are accreted according to the effective yield
method.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based on the following annual rates: 0.60% of the
first $500 million of average net assets, 0.50% of the next $500
million, 0.45% of the next $500 million and 0.40% 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,
2.0% 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 Putnam Management on the fund's
portfolio transactions.
The fund reimburses Putnam Management 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.
Trustees of the fund receive an annual Trustees fee of $4,220 and an
additional fee for each Trustee's meeting attended. Trustees who are not
interested persons of Putnam Management and who serve on committees of
the Trustees receive additional fees for attendance at certain committee
meetings.
The fund adopted a Trustee Fee Deferral Plan (the "Plan") which allows
the Trustees to defer the receipt of all or a portion of Trustees Fees
payable on or after July 1, 1995. The deferred fees remain in the fund
and are invested in the fund or in other Putnam funds until distribution
in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
Putnam Investor Services, a division of PFTC.
For the six months ended March 31, 1996, fund expenses were reduced by
$1,283,753 under expense offset arrangements with PFTC. Investor
servicing and custodian fees reported in the Statement of operations
exclude these credits. The fund could have invested the assets utilized
in connection with the expense offset arrangements in an income
producing asset if it had not entered into such arrangements.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B and class M shares pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The purpose of the Plans 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 shares of the fund. The Plans provide for payments by
the fund to Putnam Mutual Funds Corp. at an annual rate up to 0.35%,
1.00% and 1.00% of the average net assets attributable to class A, class
B and class M shares, respectively. The Trustees have approved payment
by the fund at an annual rate of 0.20%, 0.85% and 0.50% of the average
net assets attributable to class A, class B and class M shares,
respectively.
For the six months ended March 31, 1996, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $207,680 and $1,698
from the sale of class A and class M shares, respectively and received
$503,804 in contingent deferred sales charges from redemptions of class
B shares. A deferred sales charge of up to 1% is assessed on certain
redemptions of class A shares. For the six months ended March 31, 1996,
Putnam Mutual Funds Corp., acting as underwriter received $8,030 on
class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended March 31, 1996, purchases and sales of
investment securities other than short-term investments aggregated
$643,366,256 and $635,362,258, respectively. Purchases and sales of
short-term municipal obligations aggregated $205,439,520 and
$194,178,440, respectively. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
Note 4
Capital shares
At March 31, 1996, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended
March 31, 1996
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 22,913,360 $197,123,401
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,975,866 42,804,539
- ----------------------------------------------------
Shares issued in
connection with
the merger of
Putnam California
Intermediate Tax
Exempt Fund 647,033 5,467,429
- ----------------------------------------------------
28,536,259 245,395,369
Shares
repurchased (30,267,503) (259,866,662)
- ----------------------------------------------------
Net decrease (1,731,244) $(14,471,293)
- ----------------------------------------------------
Year ended
September 30, 1995
- ----------------------------------------------------
Class A Shares Amount
- ----------------------------------------------------
Shares sold 31,289,840 $254,653,620
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 11,787,749 95,613,214
- ----------------------------------------------------
43,077,589 350,266,834
Shares
repurchased (68,020,804) (548,457,685)
- ----------------------------------------------------
Net decrease (24,943,215) $(198,190,851)
- ----------------------------------------------------
Six months ended
March 31, 1996
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 8,193,563 $70,371,576
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 657,736 5,651,630
- ----------------------------------------------------
Shares issued in
connection with
the merger of
Putnam California
Intermediate Tax
Exempt Fund 449,999 3,797,994
- ----------------------------------------------------
9,301,298 79,821,200
Shares
repurchased (3,539,172) (30,355,967)
- ----------------------------------------------------
Net increase 5,762,126 $49,465,233
- ----------------------------------------------------
Year ended
September 30, 1995
- ----------------------------------------------------
Class B Shares Amount
- ----------------------------------------------------
Shares sold 12,641,962 $103,048,175
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 1,307,429 10,602,896
- ----------------------------------------------------
13,949,391 113,651,071
Shares
repurchased (7,476,020) (60,088,079)
- ----------------------------------------------------
Net increase 6,473,371 $53,562,992
- ----------------------------------------------------
Six months ended
March 31, 1996
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 731,159 $6,316,571
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 8,706 74,789
- ----------------------------------------------------
739,865 6,391,360
Shares
repurchased (546,018) (4,690,033)
- ----------------------------------------------------
Net increase 193,847 $1,701,327
- ----------------------------------------------------
For the period
February 14, 1995
(commencement of
operations) to
September 1995
- ----------------------------------------------------
Class M Shares Amount
- ----------------------------------------------------
Shares sold 561,261 $4,670,838
- ----------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,845 40,336
- ----------------------------------------------------
566,106 4,711,174
Shares
repurchased (74,893) (627,705)
- ----------------------------------------------------
Net increase 491,213 $4,083,469
- ----------------------------------------------------
Note 5
Acquisition of Putnam California Intermediate Tax Exempt Fund
On March 11, 1996 , the fund issued 647,033 and 449,999 of class A and
class B shares, respectively, to shareholders of Putnam California
Intermediate Tax Exempt Fund to acquire the fund's net assets in a tax-
free exchange approved by the shareholders. The net assets of the fund
and Putnam California Intermediate Tax Exempt Fund on March 11, 1996,
valuation date, were $3,655,538,393 and $9,315,994, respectively. On
March 11, 1996, the fund had unrealized appreciation of $353,605.
The aggregate net assets of the fund immediately following the
acquisition were $3,664,854,387.
Putnam California Intermediate Tax Exempt Fund
* RESULTS OF MARCH 7, 1996 SHAREHOLDER MEETING
A meeting of shareholders of the fund was held on March 7, 1996, to vote
on the following proposal:
Approval of the Agreement and Plan of Reorganization providing for the
transfer of all of the assets of Putnam California Intermediate Tax
Exempt Fund (the "Fund") in exchange for shares of the Income Fund and
the assumption by the Income Fund of all of the liabilities of the Fund,
and the distribution of such shares to the shareholders of the Fund in
liquidation of the Fund.
% of % of
outstanding shares
No. of shares shares voted
Affirmative 861,709.848 73.758% 90.732%
Against 73,096.682 6.257% 7.697%
Abstain 14,919.777 1.277% 1.571%
TOTAL 949,726.307 81.292% 100.000%
Our commitment to quality service
* CHOOSE AWARD-WINNING SERVICE
Putnam Investor Services has won the DALBAR Quality Tested Service Seal
for the past six years. In 1995, over 146,000 tests of 56 shareholder
service components demonstrated that Putnam outperformed the industry
standard in every category.
* HELP YOUR INVESTMENT GROW
Set up a systematic program for investing with as little as $25 a month
from a Putnam money market fund or from your checking or savings
account.*
* SWITCH FUNDS EASILY
You can move money from one account to another with the same class of
shares without a service charge. (This privilege is subject to change or
termination.)
* ACCESS YOUR MONEY QUICKLY
You can get checks sent regularly or redeem shares any business day at
the then-current net asset value, which may be more or less than the
original cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a
helpful Putnam representative.
To make an additional investment in this or any other Putnam fund,
contact your financial advisor or call our toll-free number: 1-800-225-
1581.
* Regular investing of course, does not guarantee a profit or
protect against a loss in a declining market.
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
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
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
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
James E. Erickson
Vice President
Blake E. Anderson
Vice President
William H. Reeves
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
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, and the most recent copy of Putnam's Quarterly Performance
Summary. For more information, or to request a prospectus, call toll
free: 1-800-225-1581.
Shares of mutual funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, are not insured by the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board
or any other agency, and involve risk, including the possible loss of
principal amount invested.
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- -------------------
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
- -------------------
24528-027/337/677 5/96
