Putnam
California
Tax Exempt
Income Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
3-31-00
[SCALE LOGO OMITTED]
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[COPYRIGHT] Karsh, Ottawa
Dear Shareholder:
The markets continued to provide their share of challenges and
opportunities as your fund closed its books on the first half of fiscal
year 2000. In the following report, the fund's manager discusses
performance for the period and prospects for the months ahead.
This is the last letter to you and the other shareholders of Putnam
California Tax Exempt Income Fund that I will be signing. After more
than 30 years as Chairman of the Trustees and President of the Putnam
Funds, the time has come for me to step aside. In June, John Hill will
become Chairman. John is currently an independent Trustee and has served
on the board for the past 14 years. In addition, my son, George Putnam,
III, will take on the role of President. I am confident that the
leadership of the funds will be in exceptionally strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay
in close touch with the funds. It has been my privilege to serve you.
Respectfully yours,
/S/ GEORGE PUTNAM
George Putnam
Chairman of the Trustees
May 17, 2000
Report from the Fund Manager
David E. Hamlin
The market environment that characterized much of last year continued
through the first half of Putnam California Tax Exempt Income Fund's
fiscal year, which ended March 31, 2000. The Federal Reserve Board
raised interest rates five times in the past nine months, and may do so
again, depressing bond prices in all sectors of the market. However,
crosscurrents in the market recently led to an inverted yield curve, an
unusual situation in which short-term interest rates are higher than
long-term rates. If this inverted yield curve means that the strong
economy and inflation are finally responding to the Fed's policies,
improvement may be ahead for bond investors. While we believe it is too
early to be bullish, we expect a gradual improvement in the market
climate.
Total return for 6 months ended 3/31/00
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- ------------------------------------------------------------------------
2.11% -2.73% 1.78% -3.19% 1.93% 0.94% 1.83% -1.52%
- ------------------------------------------------------------------------
Past performance is not indicative of future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 7.
The fund started the year with an average portfolio duration of about
8.4 years, a position we regard as neutral. Duration is a measure of the
price sensitivity of a bond fund to changes in interest rates. A
portfolio of securities scheduled to mature in a relatively brief
period, on average, is likely to be less volatile than a fund with a
longer average duration. As fiscal 2000 got under way, and interest
rates rose, we gradually lengthened the fund's duration to 8.51 years as
of March 31, 2000.
* FUND STRATEGIES DESIGNED TO SECURE TAX BENEFITS, INCOME
In these volatile times, one of our goals has been to capitalize on
market downturns by selectively realizing capital losses. (While your
fund's interest earnings are tax-exempt, any capital gains realized in
the sale of portfolio securities would be taxable to shareholders.) As
securities we had purchased before interest rates rose to their current
levels neared their maturity or call dates, we sold off a number of
them. In doing so, we realized tax losses that can be carried forward to
offset taxable gains the fund may realize in future years. To the extent
possible, we replaced these issues with securities that offered
comparable yields and longer maturities.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Water and sewer 16.6%
Transportation 16.0%
Utilities 10.6%
Hospitals/health care 10.6%
Housing 4.5%
Footnote reads:
*Based on net assets as of 3/31/00. Holdings will vary over time.
Our purchase activities focused on zero coupon bonds -- bonds that trade
at a deep discount to their value at maturity, offering future
appreciation potential. This strategy was positive for the fund because
zeros are noncallable, long duration instruments that at times, trade
cheaply relative to coupon bonds.
* WIDENING CREDIT SPREADS MAY PROVIDE OPPORTUNITY
Another goal has been to add to the fund's weighting in lower-rated,
higher-yielding issues. In the recent market climate, high-yield bonds
were largely ignored, as many investors pursued the relative price
stability of high-quality debt. At the same time, the U.S. government
has been using its budget surplus to buy back older Treasury issues and
has reduced new issuance, intensifying demand at the top end of the
credit spectrum. The combined effects of weak supply with stronger
demand at the high end, along with overall increases in interest rates,
have been to widen the spread, or difference, between yields on high-
and low-rated bonds, making the high-yield sector seem more attractively
valued.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW
Aaa/AAA -- 68.1%
Aa/AA -- 12.6%
A -- 5.3%
Baa/BBB -- 7.6%
Ba/BB -- 4.6
B -- 1.4%
VMIGI/A-A+ -- 0.4%
Footnote reads:
As a percentage of market value as of 3/31/00. A bond rated Baa/BBB or
higher is considered investment grade. Percentages may include unrated
bonds considered by Putnam Management to be of comparable quality. Ratings
will vary over time.
The California market is of unusually high quality and your fund has a
substantial concentration in high-grade bonds and insured securities.
From a price standpoint, this relatively high overall quality helped
insulate the portfolio somewhat during the first half of fiscal 2000,
but it will be less advantageous if yield spreads narrow, as we expect.
Consequently, we have been steering the fund cautiously into lower-rated
and non-rated investments from just over 7% at the beginning of the year
to about 9% by the middle of this year. (Bear in mind that Putnam rates
all securities in the portfolio, including those not rated by
independent rating agencies.)
"Now is a particularly good time to look at [municipals] since muni debt
is paying as much as 30-year Treasuries -- and it's tax-exempt."
- -- SmartMoney.com, April 20, 2000
Since most California municipalities financed new projects before
interest rates reached their current peaks, the supply of new issues is
low. Attractive higher-yielding bonds are scarce because investors who
find a credit they like hold it for as long as its potential remains.
Nevertheless, we have been able to find opportunities in the secondary
market, buying bonds from investors who need to raise cash. Our primary
targets in California are hospitals, airlines, and land-backed
securities.
* HOSPITALS MAY BE ON MEND, AIRLINES STAY STRONG
The Balanced Budget Act of 1996 hurt hospitals nationwide because it
changed Medicaid reimbursement schedules. Some hospitals became
insolvent and closed their doors. Only the stronger institutions
survived and now Congress is concerned that the decreased availability
of hospital beds may harm constituents. Since budget surpluses give
Congress more money to spend, relief is starting to flow into this
sector.
A closer look at municipal credit ratings
Ratings agencies such as Moody's Investor Service and Standard & Poor's Corp.
assign ratings to municipal issuers based on an in-depth analysis of the
issuer's financial condition and management, economic and debt characteristics,
and the specific revenue sources securing the bond. The highest ratings
are Aaa (Moody's) and AAA (Standard & Poor's). Bonds rated in the
Baa/BBB category or higher are considered to be investment grade.
Securities in the Ba/BB group and below are considered to be below
investment grade or high yield. If you look at "The fund's portfolio" in
the back of this report, you will see ratings next to each issuer's
name. The pie chart on p. 3 summarizes this listing to give you a sense
of the portfolio's overall quality.
Sometimes smaller bond issues are not rated because the cost of
obtaining a ratings is not justifiable. Unrated bonds can still offer
attractive investment opportunities and may end up in your fund's
portfolio. In such a case, Putnam's analysts perform their own rating of
the bonds, and they are identified in the portfolio listing by a /P
rating.
We were able to find an attractive new issue among California's
hospitals, Burnham Institute, a San Diego medical research facility in
the forefront of the fight against cancer. The Burnham Institute bonds
we purchased carried a coupon of 6 1/4%, maturing in 2029.
Another recent addition was California Statewide Community Development
Authority Special Facilities for United Airlines-Los Angeles. United had
been under a cloud during Asia's economic crisis, but now that the Asian
economy has rebounded, United's business has improved. What is more,
United's highly diversified route system includes the United States,
Latin America, and Europe. Although high fuel prices pose a risk for all
airlines, the strong economy is keeping demand high, and carriers with
prime routes are able to pass along the increased cost to their
customers. The original coupon for these bonds was 5.63%, maturing in
2034, and it is rated Baa3/BB+. But bond prices have dropped since the
issue date, and we bought the bonds in two lots, one with a yield of
6.66% and one at 6.95%.
* CALIFORNIA DIRT ALSO OFFERS PROMISE
The best place to look for high-yield California debt is in the
land-secured sector. Analysts call these dirt issues because the land
that backs them is often blank earth without any current construction.
Many of these issues are not rated by the major agencies and investors
need to be satisfied that each development's potential is realistic.
Putnam analysts visit sites, talking with builders, potential
home-buyers, and people in surrounding communities.
During the first half of the fiscal year, we bought Roseville,
California, Special Tax, North Roseville Community Facilities District
Number One. The bonds were issued at 5.75%, maturing in 2023, and were
not rated by any independent agency. We did our own analysis and bought
the bonds on the secondary market at a yield of 7.15%.
Another new dirt issue in your fund's portfolio is the Infrastructure
Financing Authority for Brentwood, California, also not rated by
independent agencies. They were issued with coupons of 5.625% and 5.60%,
maturing in 2029 and 2019, respectively. Lake Elsinore is still another
example of a new addition to the portfolio backed by land in what we
believe to be an excellent location -- east of Los Angeles and north of
San Diego. We purchased these bonds with a coupon of 6.70% maturing in
2033.
* FUND MANAGER LOOKS FOR BETTER BOND MARKET BEHAVIOR
Volatile markets such as those we have been experiencing are especially
hard on bond investors who have come to expect income-oriented
investments to provide relative stability. However, such periods also
provide opportunity in the form of higher yields. The current ratio of
municipal bond yields to U.S. Treasury yields is about 97% -- an
extremely high level of tax-free income for most municipal bond
investors.
In addition, although rising interest rates have a negative impact on
principal values, they also keep inflation down in the longer run, and
inflation is the bond market's worst enemy. Looking ahead, as the Fed's
policies begin to impact the economy, the bond markets, including the
municipal bond market, should respond accordingly.
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 3/31/00, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy. Putnam
California Tax Exempt Income Fund is designed for investors seeking as
high a level of current income exempt from federal and California income
tax as is consistent with preservation of principal.
<TABLE>
<CAPTION>
TOTAL RETURN FOR PERIODS ENDED 3/31/00
Class A Class B Class C Class M
(inception dates) (4/29/83) (1/4/93) (7/26/99) (2/14/95)
NAV POP NAV CDSC NAV CDSC NAV POP
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
6 months 2.11% -2.73% 1.78% -3.19% 1.93% 0.94% 1.83% -1.52%
- ----------------------------------------------------------------------------------------
1 year -1.31 -6.04 -1.83 -6.52 -1.94 -2.88 -1.49 -4.66
- ----------------------------------------------------------------------------------------
5 years 30.37 24.21 26.36 24.37 25.41 25.41 28.36 24.16
Annual average 5.45 4.43 4.79 4.46 4.63 4.63 5.12 4.42
- ----------------------------------------------------------------------------------------
10 years 91.18 82.09 77.56 77.56 76.53 76.53 84.20 78.18
Annual average 6.69 6.18 5.91 5.91 5.85 5.85 6.30 5.95
- ----------------------------------------------------------------------------------------
Life of fund 264.16 246.85 218.77 218.77 218.21 218.21 238.76 227.73
Annual average 7.94 7.63 7.09 7.09 7.08 7.08 7.48 7.27
- ----------------------------------------------------------------------------------------
</TABLE>
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/00
Lehman Brothers Municipal Consumer
Bond Index price index
- -------------------------------------------------------------------------
6 months 2.13% 2.03%
- -------------------------------------------------------------------------
1 year -0.08 3.69
- -------------------------------------------------------------------------
5 years 34.30 13.15
Annual average 6.07 2.50
- -------------------------------------------------------------------------
10 years 99.60 33.02
Annual average 7.15 2.89
- -------------------------------------------------------------------------
Life of fund 288.60 73.63
Annual average 8.35 3.31
- -------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. Returns for class A and class M
shares reflect the current maximum initial sales charges of 4.75% and
3.25%, respectively. Class B share returns for the 1-, 5-, and 10-year
(where available) and life-of-fund periods reflect the applicable
contingent deferred sales charge (CDSC), which is 5% in the first year,
declines to 1% in the sixth year, and is eliminated thereafter. Returns
shown for class B and class M shares for periods prior to their
inception are derived from the historical performance of class A shares,
adjusted to reflect both the initial sales charge or CDSC, if any,
currently applicable to each class and in the case of class B and class
M shares the higher operating expenses applicable to such shares. For
class C shares, returns for periods prior to their inception are derived
from the historical performance of class A shares, adjusted to reflect
both the CDSC currently applicable to class C shares, which is 1% for
the first year and is eliminated thereafter, and the higher operating
expenses applicable to class C shares. All returns assume reinvestment
of distributions at NAV. Investment return and principal value will
fluctuate so that an investor's shares when redeemed may be worth more
or less than their original cost.
<TABLE>
<CAPTION>
PRICE AND DISTRIBUTION INFORMATION 6 MONTHS ENDED 3/31/00
Class A Class B Class C Class M
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions (number) 6 6 6 6
- ----------------------------------------------------------------------------------------------------------------------
Income $0.218027 $0.191493 $0.194615 $0.205567
- ----------------------------------------------------------------------------------------------------------------------
Capital gains 1 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total $0.218027 $0.191493 $0.194615 $0.205567
- ----------------------------------------------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- ----------------------------------------------------------------------------------------------------------------------
9/30/99 $8.25 $8.66 $8.24 $8.26 $8.24 $8.52
- ----------------------------------------------------------------------------------------------------------------------
3/31/00 8.20 8.61 8.19 8.22 8.18 8.45
- ----------------------------------------------------------------------------------------------------------------------
Current return (end of period)
- ----------------------------------------------------------------------------------------------------------------------
Current dividend rate 2 5.32% 5.07% 4.68% 4.53% 5.01% 4.85%
- ----------------------------------------------------------------------------------------------------------------------
Taxable equivalent 3 9.71 9.26 8.54 8.27 9.15 8.85
- ----------------------------------------------------------------------------------------------------------------------
Current 30-day SEC yield 4 4.98 4.74 4.33 4.17 4.68 4.53
- ----------------------------------------------------------------------------------------------------------------------
Taxable equivalent 3 9.09 8.65 7.90 7.61 8.54 8.27
- ----------------------------------------------------------------------------------------------------------------------
1 Capital gains, if any, are taxable for federal and, in most cases,
state tax purposes. For some investors, investment income may also be
subject to the federal alternative minimum tax. Investment income may be
subject to state and local taxes.
2 Income portion of most recent distribution, annualized and divided by
NAV or POP at end of period.
3 Assumes maximum 45.22% combined federal and state tax rate. Results
for investors subject to lower tax rates would not be as advantageous.
4 Based on investment income, calculated using SEC guidelines.
</TABLE>
Terms and definitions
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.
Class A shares are generally subject to an initial sales charge.
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
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 4.75% maximum 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 or C shares and assumes redemption at the
end of the period. Your fund's class B 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. The CDSC for class C shares is 1% for one
year after purchase.
Comparative benchmarks
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 assumes reinvestment of all
distributions and interest payments and does not take into account
brokerage fees or taxes. Securities in the fund do not match those in
the index and performance of the fund will differ. It is not possible to
invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Welcome to www.putnaminv.com
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A guide to the financial statements
These sections of the report constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss
for the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that
remain in the portfolio -- any change in unrealized gains or losses over
the period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment
results, per-share distributions, expense ratios, net investment income
ratios and portfolio turnover in one summary table, reflecting the five
most recent reporting periods. In a semiannual report, the highlight
table also includes the current reporting period. For open-end funds, a
separate table is provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
March 31, 2000 (Unaudited)
KEY TO ABBREVIATIONS
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FHA Insd. -- Federal Housing Administration Insured
FRB -- Floating Rate Bonds
FSA -- Financial Security Assurance
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
IF COP -- Inverse Floating Rate Certificate of Participation
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (99.5%) (a)
PRINCIPAL AMOUNT RATING (RAT) VALUE
<S> <C> <C>
California (97.9%)
- ----------------------------------------------------------------------------------------------------------------------------
Alameda, Corridor Trans. Auth. Rev. Bonds Ser. A
$ 9,500,000 5 1/4s, 10/1/21 Aaa $ 9,048,750
10,195,000 5 1/8s, 10/1/14 Aaa 10,093,050
21,425,000 4 3/4s, 10/1/25 Aaa 18,452,281
16,000,000 Anaheim, IF COP, MBIA, 8.77s, 7/16/23 Aaa 17,140,000
24,000,000 Anaheim, Pub. Fin. Auth. IFB, MBIA, 8.872s, 12/28/18 Aaa 27,450,000
Anaheim, Pub. Fin. Auth. Lease Rev. Bonds
(Pub. Improvements.)
10,000,000 Ser. A, FSA, 5s, 3/1/37 Aaa 8,762,500
16,080,000 Ser. C, FSA, zero %, 3/1/37 AAA 1,809,000
12,485,000 Ser. C, FSA, zero %, 9/1/34 AAA 1,623,050
30,275,000 Berkeley, Hlth. Fac. Rev. Bonds
(Alta Bates Med. Ctr.), Ser. A, 6.55s, 12/1/22 A2 32,394,250
Brentwood, Infrastructure Auth. Rev. Bonds, Ser. 94-1
11,230,000 5 5/8s, 9/2/29 BB/P 9,278,788
2,485,000 5.6s, 9/2/19 BB/P 2,133,994
20,000,000 CA Edl. Fac. Auth. Rev. Bonds (U. of Southern CA),
Ser. C, 5 1/8s, 10/1/28 AA+ 18,375,000
CA Hlth. Fac. Auth. Rev. Bonds
9,000,000 (CedarKnoll), Ser. B, 7 1/2s, 8/1/20 A+/P 9,284,760
12,500,000 (INSD-Sutter Hlth.), Ser. A, 5.35s, 8/15/28 Aaa 11,703,125
21,000,000 (Catholic Healthcare West.), Ser. A, AMBAC,
5s, 7/1/21 Aaa 19,136,250
35,385,000 CA Hlth. Fac. Fin. Auth. IFB, Ser. B, MBIA, 5s, 7/1/14 AAA 33,704,213
14,150,000 CA Housing Fin. Agcy. IFB, FHA Insd., 8.48s, 8/1/23 Aa2 15,034,375
10,290,000 CA Poll. Control Fin. Auth. Solid Waste Disp.
Rev. Bonds (Keller Canyon Landfill Co.),
6 7/8s, 11/1/27 BB- 10,007,025
36,775,000 CA Pub. Cap. Impt. Fin. Auth. Rev. Bonds
(Jt. Pwrs. Agcy.), Ser. B, MBIA, 8.1s, 3/1/18 Aaa 37,188,719
24,200,000 CA State Dept. Wtr. Resources IFB (Central Valley),
9.264s, 12/1/12 (acquired 10/23/97,
cost $25,632,450) (RES) Aa2 32,488,500
25,000,000 CA State Dept. Wtr. Resources Rev. Bonds, Ser. O,
MBIA, 4 3/4s, 12/1/29 Aaa 21,468,750
CA State G.O. Bonds
37,100,000 FRB, 8.751s, 9/1/12 (acquired 7/11/96,
cost $36,543,500) (RES) AA- 44,566,375
10,000,000 AMBAC, 6 1/2s, 9/1/06 Aaa 11,037,500
24,365,000 6s, 2/1/10 AA- 26,466,481
16,365,000 6s, 10/1/08 AA- 17,735,569
14,700,000 6s, 2/1/08 AA- 15,839,250
16,545,000 AMBAC, 5 1/2s, 4/1/11 AAA 17,330,888
10,000,000 (Veterans), Ser. BH, 5.4s, 12/1/14 AA- 9,975,000
10,000,000 (Veterans), Ser. BH, 5.35s, 12/1/13 AA- 9,975,000
10,000,000 (Veterans), Ser. BH, 5 1/4s, 12/1/12 Aaa 9,975,000
10,000,000 4 3/4s, 2/1/29 AAA 8,512,500
20,800,000 Ser. 33, MBIA, zero %, 10/1/11 AAA 11,518,000
60,000,000 Ser. 27, MBIA, zero %, 9/1/11 A+ 33,300,000
25,500,000 CA State Rev. Bonds, FGIC, 8s, 11/1/07 Aaa 29,930,625
CA State Pub. Wks. Board Lease Rev. Bonds
24,000,000 (Dept. of Corrections-State Prisons), Ser. A,
7s, 9/1/09 Aaa 24,785,040
28,000,000 (Dept. of Corrections-State Prisons), Ser. A,
MBIA, 6 1/2s, 9/1/17 Aaa 31,535,000
59,000,000 (Dept. of Corrections-State Prisons), Ser. A,
6.43s, 9/1/19 Aaa 61,655,000
10,105,000 Ser. A, AMBAC, 5.8s, 1/1/13 (SEG) Aaa 10,559,725
7,205,000 (CA Cmnty. Colleges), Ser. A, 5 1/2s, 12/1/09 A+ 7,511,213
6,000,000 (Regents U. CA), Ser. A, 5 1/4s, 12/1/09 Aa3 6,195,000
6,000,000 (Regents U. CA), Ser. A, 5 1/4s, 12/1/07 Aa3 6,240,000
33,500,000 (Dept. of Corrections-State Prisons), Ser. A,
AMBAC, 5s, 12/1/19 Aaa 31,490,000
6,555,000 (Libr. & Courts Annex), Ser. A, 5s, 5/1/18 A+ 5,997,825
CA Statewide Cmnty. Dev. Auth. COP
15,000,000 (The Internext Group), 5 3/8s, 4/1/30 BBB 11,700,000
10,000,000 (Childrens Hosp.), MBIA, 4 3/4s, 6/1/21 Aaa 8,775,000
CA Statewide Cmnty. Dev. Auth. Multi-Fam.
Rev. Bonds
6,000,000 5.3s, 6/1/29 BBB+ 5,917,500
5,000,000 (Equity Res. Hsg.), Ser. B, 5.2s, 12/1/29 A3 4,893,750
CA Statewide Cmnty. Dev. Auth. Apt. Dev.
Rev. Bonds (Irvine Apt. Cmntys.)
12,500,000 Ser. A-4, 5 1/4s, 5/15/25 Baa2 11,921,875
20,000,000 Ser. A-3, 5.1s, 5/15/25 Baa2 18,950,000
17,580,000 CA Statewide Cmty. Dev. Auth Rev. Bonds
(United Airlines, Inc.), 5 5/8s, 10/1/34 Baa3 15,096,825
8,000,000 Capistrano, U. School Dist. Cmnty. Fac.
Special Tax Bonds (Ladera), 5 3/4s, 9/1/29 BB-/P 6,970,000
32,000,000 Chino Basin, Regl. Fin. Auth. Rev. Bonds, AMBAC,
5 3/4s, 8/1/22 Aaa 32,080,000
4,425,000 Chula Vista Special Tax Bonds (Cmnty. Facs.
Dist. No. 97-3), 6.05s, 9/1/29 BB 4,082,063
Commerce Redev. Agcy. Rev. Bonds
(No. 1), Ser. 91-A
8,845,000 7 1/4s, 8/1/21 BBB- 9,353,588
68,280,000 zero %, 8/1/21 BBB- 17,411,400
12,000,000 Contra Costa Cnty., COP (Merrrithew
Memorial Hosp.), MBIA, 5 3/8s, 11/1/17 Aaa 11,730,000
35,000,000 Contra Costa, Home Mtge. Fin. Auth. Rev. Bonds,
MBIA, zero %, 9/1/17 Aaa 12,512,500
Contra Costa, Wtr. Dist. Rev. Bonds, Ser. G, MBIA
36,915,000 5s, 10/1/26 Aaa 33,361,931
41,500,000 5s, 10/1/24 Aaa 37,765,000
10,000,000 Corona, COP (Vista Hosp. Syst.), Ser. B, 9 1/2s,
7/1/20 (acquired 10/23/92, cost $10,000,000) (RES) B-/P 9,400,000
19,000,000 Delano, COP (Delano Regl. Med. Ctr.), 5.6s, 1/1/26 BBB- 15,461,250
Duarte, COP, Ser. A
15,000,000 5 1/4s, 4/1/31 BBB+ 12,187,500
7,500,000 5 1/4s, 4/1/24 BBB+ 6,262,500
21,000,000 East Bay, Muni. Util. Rev. Bonds, MBIA, 4 3/4s, 6/1/28 Aaa 17,955,000
23,850,000 East Bay, Muni. Util. Dist. Rev. Bonds
(Wastewater Treatment), FGIC, 4 3/4s, 6/1/21 Aaa 21,196,688
10,725,000 El Camino, Hosp. Dist. Rev. Bonds, Ser. A, AMBAC,
6 1/4s, 8/15/17 Aaa 11,026,909
Foothill/Eastern Corridor Agcy. CA Toll Road
Rev. Bonds
19,000,000 5 3/4s, 1/15/40 BBB- 17,741,250
7,850,000 MBIA, 5 1/2s, 1/15/09 AAA 8,222,875
8,945,000 MBIA, 5 1/2s, 1/15/08 AAA 9,381,069
5,000,000 MBIA, 5 3/8s, 1/15/14 AAA 5,062,500
Foothill/Eastern Trans. Corridor Agcy. Rev. Bonds
(CA Toll Roads), Ser. A
34,150,000 6 1/2s, 1/1/32 AAA 37,778,438
38,875,000 6s, 1/1/34 AAA 41,887,813
11,460,000 Fresno, Unified Sch. Dist. COP, 7 1/4s, 3/1/07 A3 11,948,769
1,800,000 Indio, Multi-Fam. Rev. Bonds VRDN (Carreon),
Ser. A, 3 1/4s, 8/1/26 VMIG1 1,800,000
Irvine, Impt. Special Assmnt. Bonds
2,750,000 (Assmt. Dist. No. 97-17), 6s, 9/2/23 BB/P 2,598,750
1,000,000 (Assmt. Dist. No. 94-13), 6s, 9/2/22 BB/P 922,500
2,000,000 (Assmt. Dist. No. 94-13), 5 7/8s, 9/2/17 BB/P 1,867,500
5,000,000 (Assmt. Dist. No. 97-17), 5 7/8s, 9/2/17 BB/P 4,737,500
10,510,000 Kern, High School Dist. G.O. Bonds, Ser. 14, MBIA,
9.184s, 2/1/13 (acquired 6/29/98,
cost $14,124,599) (RES) Aaa 12,642,164
14,180,000 Lake Elsinore, Pub. Fin. Auth. Tax. Alloc., Ser. C,
6.7s, 10/1/33 BB+/P 14,020,475
21,530,000 Los Angeles, Bldg. Auth. Rev. Bonds (CA Dept.
Gen Svcs.), Ser. A, MBIA, 5 5/8s, 5/1/11 Aaa 22,767,975
200,000 Los Angeles, Cmnty. Redev. Agcy. Multi-Fam.,
(Promenade Towers), 3.05s, 4/1/09
(Barclays Bank (LOC)) Aaa 200,000
Los Angeles Cnty., CA Pub. Wks. Fin. Auth.
Rev Bonds, Ser. A, AMBAC
7,000,000 5 1/2s, 10/1/10 Aaa 7,315,000
8,000,000 5 1/2s, 10/1/09 Aaa 8,390,000
9,000,000 5 1/2s, 10/1/08 Aaa 9,472,500
8,000,000 Los Angeles Cnty., COP (Disney Parking Project),
AMBAC, 4 3/4s, 3/1/23 AAA 6,960,000
8,000,000 Los Angeles Cnty., Metropolitan Trans. Auth.
Rev. Bonds, Ser. B, FSA, 4 3/4s, 7/1/28 Aaa 6,830,000
Los Angeles Cnty., Metropolitan Trans. Auth.
Sales Tax Rev. Rev. Bonds
15,715,000 Ser. A, AMBAC, 5 1/2s, 7/1/08 Aaa 16,520,394
12,150,000 Ser. A (2nd Ser.), AMBAC, 5s, 7/1/25 Aaa 11,010,938
6,765,000 (1st Tier-Prop A), Ser. A, FSA, 5s, 7/1/15 Aaa 6,519,769
15,235,000 Los Angeles Cnty., Pub. Wks. Fin. Auth. Rev. Bonds,
Ser. A, MBIA, 5 3/4s, 9/1/07 Aaa 16,301,450
13,000,000 Los Angeles Cnty., Sanitation Dist. Fin. Auth.
Rev. Bonds (Capital), Ser. A, MBIA, 5s, 10/1/23 Aaa 11,878,750
Los Angeles, Convention & Exhibition Ctr.
Auth. Lease
37,465,000 COP, 9s, 12/1/20 Aaa 45,519,961
19,300,000 IFB, MBIA, 6.49s, 8/15/18 (acquired 9/15/94,
cost $14,332,566) (RES) Aaa 18,576,250
Los Angeles, Dept. of Wtr. & Pwr. Rev. Bonds
5,605,000 (Waterworks), 7s, 2/15/22 AA 5,717,268
51,200,000 (Electric Plant), Ser. Issue II, 6.8s, 6/1/31 Aa3 53,440,000
25,000,000 Los Angeles, Harbor Dept. Rev. Bonds, 7.6s, 10/1/18 AAA 31,250,000
26,235,000 Los Angeles, Pension Auth. COP, Ser. A, MBIA,
6.9s, 6/30/08 Aaa 29,973,488
Los Angeles, Uni. School Dist. G.O. Bonds, Ser. B,
FGIC
6,380,000 5 3/8s, 7/1/14 Aaa 6,451,775
7,455,000 5 3/8s, 7/1/13 Aaa 7,594,781
5,500,000 5 3/8s, 7/1/12 Aaa 5,644,375
8,785,000 5 3/8s, 7/1/11 Aaa 9,070,513
34,700,000 Los Angeles, Wastewater Syst. IFB, 9.08s, 6/1/19
(acquired 12/4/97, cost $34,083,081) (RES) Aaa 38,864,000
Metropolitan Wtr. Dist. G.O. Bonds, Ser. A,
4,000,000 5 1/4s, 3/1/14 Aaa 4,005,000
2,500,000 5 1/4s, 3/1/13 Aaa 2,531,250
20,000,000 Metropolitan Wtr. Dist. IFB (Southern CA
Waterworks.), 6.90s, 8/10/18 Aa2 21,275,000
Metropolitan Wtr. Dist. Rev. Bonds
22,600,000 (Southern CA Waterworks.), 5.95s, 8/5/22 Aa2 23,814,750
10,000,000 Ser. A, 5 1/2s, 7/1/10 Aa2 10,462,500
26,255,000 (Southern CA Waterworks.), Ser. C, 5s, 7/1/27 Aa2 23,695,138
33,445,000 Ser. A., 5s, 7/1/26 Aa2 30,225,919
15,000,000 (Southern CA Waterworks.), Ser. B, MBIA,
4 3/4s, 7/1/21 Aaa 13,218,750
8,275,000 Modesto, Dist. Fin. Auth. Rev. Bonds, Ser. A, MBIA,
5 3/4s, 10/1/10 Aaa 8,812,875
10,350,000 Modesto, Irr. Dist. Fin. Auth. Rev. Bonds
(Domestic Wtr. Project), Ser. D, AMBAC,
4 3/4s, 9/1/22 Aaa 9,043,313
16,600,000 Mount Diablo, Hosp. Dist. Rev. Bonds, Ser. A,
AMBAC, 5s, 12/1/13 Aaa 16,268,000
Northern CA Pwr. Agcy. Multi. Cap. Fac. IFB,
4,945,000 MBIA, 9.24s, 8/1/25 AAA 5,402,413
6,265,000 MBIA, 9.24s, 8/1/25, Prerefunded AAA 7,024,631
4,770,000 9.24s, 8/1/17 AAA 5,217,188
3,620,000 9.24s, 8/1/17, Prerefunded AAA 4,077,025
Northern CA Pwr. Agcy. Pub. Pwr. Rev. Bonds,
Ser. A, AMBAC
3,925,000 5.8s, 7/1/09 AAA 4,234,094
7,720,000 5.8s, 7/1/09, Unrefunded Aaa 8,279,700
Northern CA Pwr. Agcy. Rev. Bonds
(Hydroelectric), Ser. A, MBIA
5,780,000 5 1/4s, 7/1/12 AAA 5,873,925
5,440,000 5 1/4s, 7/1/11 AAA 5,562,400
Oakland CA, Bldg., Auth. Rev. Bonds, AMBAC
6,540,000 5 1/2s, 4/1/13 Aaa 6,719,850
6,295,000 5 1/2s, 4/1/12 Aaa 6,515,325
1,900,000 Oakland, VRDN (Cap. Equip.), 3.2s, 12/1/15
(National Westminister Bank (LOC)) A-1+ 1,900,000
14,800,000 Oakland, Redev. Agcy. Rev. Bonds, MBIA,
5.95s, 9/1/19 Aaa 15,096,000
1,800,000 Ontario, Multi-Fam. Rev. Bonds (Res. Park mtg. Ctr.),
Ser. A, FRB, 6.40s, 8/1/07 (Royal Bk.
of Canada (LOC)) VMIG1 1,800,000
Orange Cnty., COP, Ser. A, MBIA
14,520,000 6s, 7/1/26 Aaa 14,792,250
25,285,000 6s, 7/1/07 Aaa 27,339,406
1,600,000 Orange Cnty., Apt. Dev. VRDN (Harbor Pointe),
Ser. D, 3.15s, 12/1/06 VMIG1 1,600,000
Orange Cnty., Local Trans. Auth. Rev. Bonds,
Ser. A, MBIA
5,000,000 5 1/2s, 2/15/09 Aaa 5,243,750
8,000,000 5 1/2s, 2/15/08 Aaa 8,390,000
7,845,000 5 1/2s, 2/15/07 Aaa 8,247,056
Orange Cnty., Trans. Auth. Sales Tax Rev. Bonds, Ser. A
11,445,000 5.7s, 2/15/11 Aaa 12,174,619
11,700,000 5.7s, 2/15/10 Aaa 12,445,875
13,960,000 5.7s, 2/15/09 Aaa 14,832,500
8,210,000 5.7s, 2/15/08 Aaa 8,723,125
16,830,000 Orange Cnty., Wtr. Dist. COP, Ser. A, 5s, 8/15/18 AA 15,757,088
12,840,000 Oxnard, Redev. Agcy. Tax Alloc. Rev. Bonds
(Cent. City Revitalization), Ser. A, 6 1/2s, 9/1/16 BBB 13,209,150
31,850,000 Palm Desert, Fin. Auth. Tax Alloc. IFB, MBIA,
9.10s, 4/1/22 Aaa 33,561,938
24,855,000 Pasadena, Cap. Impt. IF COP, AMBAC, 5.35s, 2/1/14 Aaa 25,631,719
Pleasanton, Jt. Pwr. Fin. Auth. Rev. Bonds, Ser. B
5,395,000 6 3/4s, 9/2/17 BBB/P 5,577,081
8,315,000 6.6s, 9/2/08 BBB/P 8,626,813
4,505,000 6 1/2s, 9/2/04 BBB/P 4,713,356
5,790,000 6 1/8s, 9/2/02 BBB/P 5,920,275
10,000,000 PR Elec. Pwr. Auth. Rev. Bonds, Ser. CC, MBIA,
5 1/2s, 7/1/08 Aaa 10,362,500
30,000,000 Rancho Cucamonga, Wtr. Dist. Fin. Auth. Rev. Bonds,
AMBAC, 6.427s, 8/17/21 Aaa 31,275,000
10,400,000 Redding, Elec. Syst. Rev. Bonds, MBIA,
10.018s, 7/8/22 Aaa 12,155,000
1,600,000 Riverside Cnty., Hsg. Auth. Multi-Fam. Rev. Bonds
VRDN (Mtn. View Apts.), Ser. A, 3s, 8/1/25 VMIG1 1,600,000
4,250,000 Riverside Cnty., Pub. Fin. Auth. COP, 5.8s, 5/15/29 BBB- 3,532,813
11,790,000 Riverside Cnty., Pub. Fin. Auth. Impt. Special Assmt.
Bonds (Rancho Village), Ser. B, 6 1/4s, 9/2/13 BBB 11,318,400
11,200,000 Roseville, Cmnty. Facs. Dist. 1 Special Tax,
5 3/4s, 9/1/23 BB+/P 9,814,000
12,725,000 Sacramento City Fin. Auth. Lease Rev. Bonds,
Ser. A, AMBAC, 5 3/8s, 11/1/14 Aaa 12,979,500
22,750,000 Sacramento Cnty., COP (Pub. Facs. Project),
AMBAC, 4 3/4s, 10/1/27 AAA 19,508,125
27,000,000 Sacramento, Muni. Util. Dist. Elec. IFB, FGIC,
8.89s, 8/15/18 Aaa 29,160,000
12,000,000 Sacramento, Muni. Util. Dist. Elec. Rev. Bonds,
Ser. A, MBIA, 6 1/4s, 8/15/10 Aaa 13,275,000
5,000,000 Sacramento, Special Tax Bonds (Northern
Natomas Cmnty. Fac.), Ser. 4-A, 5.7s, 9/1/23 BB/P 4,450,000
San Diego Cnty., COP
4,000,000 (Burnham Institute), 6 1/4s, 9/1/29 Ba3 3,950,000
15,800,000 AMBAC, 5 1/4s, 9/1/06 Aaa 16,293,750
10,000,000 (Downtown Courthouse), AMBAC,
4 1/2s, 5/1/23 Aaa 8,337,500
21,400,000 San Diego Cnty., IF COP, MBIA, 6.36s, 11/18/19 Aaa 22,068,750
12,000,000 San Diego Cnty., Wtr. Auth. Wrt. Rev. COP, Ser. A,
FGIC, 5s, 5/1/14 Aaa 11,730,000
5,000,000 San Diego Cnty., Wtr. Auth. COP, Ser. A,
5 3/4s, 5/1/11 Aa3 5,343,750
San Diego Cnty., Wtr. Auth. IF COP
20,000,000 Ser. 91-B, MBIA, 8.02s, 4/8/21 Aaa 23,825,000
28,350,000 Ser. B, MBIA, 8.02s, 4/21/11 Aaa 34,409,813
10,000,000 San Diego, Conv. Ctr. Expansion Fing Auth. Lease
Rev. Bonds, Ser. A, 4 3/4s, 4/1/28 Aaa 8,550,000
15,350,000 San Diego, Pub. Fac. Fin. Auth. Swr. Rev. Bonds,
FGIC, 5s, 5/15/25 Aaa 13,930,125
San Diego, Regl. Bldg. Auth. Lease COP, MBIA
8,425,000 6.9s, 5/1/23 Aaa 9,162,188
7,250,000 6.85s, 5/1/13 Aaa 7,621,563
175,000 San Diego, Single Fam. Mtge. Rev. Bonds,
zero %, 8/1/16 A3 36,969
20,500,000 San Diego, Wtr. Util. Rev. Bonds, FGIC,
4 3/4s, 8/1/28 Aaa 17,527,500
15,000,000 San Francisco, City & Cnty. Arpt. Rev. Bonds,
FSA, 4 3/4s, 5/1/29 AAA 12,900,000
32,300,000 San Francisco, City & Cnty. G.O. Bonds, Ser. 1,
FGIC, 5 3/4s, 6/15/07 Aaa 34,520,625
San Francisco, City & Cnty. Arpt. Comm. Intl. Arpt.
Rev. Bonds, Ser. 22, AMBAC
3,670,000 5 1/4s, 5/1/13 Aaa 3,660,825
3,490,000 5 1/4s, 5/1/12 Aaa 3,507,450
3,315,000 5 1/4s, 5/1/11 AAA 3,352,294
10,000,000 San Francisco, Rapid Transit Dist. Sales Tax
Rev. Bonds, 5 1/2s, 7/1/09 A3 10,500,000
10,000,000 San Francisco, State Bldg. Auth. Lease Rev. Bonds
(San Francisco Civic Ctr. Complex), Ser. A,
AMBAC, 5 1/4s, 12/1/21 Aaa 9,525,000
1,200,000 San Jacinto, U. School Dist. IF COP, FSA,
3 1/4s, 9/1/27 VMIG1 1,200,000
San Joaquin Cnty., COP (General Hosp.)
5,790,000 5 1/4s, 9/1/14 Aaa 5,746,575
5,040,000 5 1/4s, 9/1/13 Aaa 5,046,300
5,250,000 5 1/4s, 9/1/12 Aaa 5,295,938
San Joaquin Hills, Trans. Corridor Agcy. Toll Road
Rev. Bonds, Ser. A
77,825,000 Sr. Lien, 6 3/4s, 1/1/32 Aaa 83,759,156
10,000,000 MBIA, 5 1/4s, 1/15/30 Aaa 9,300,000
34,125,000 5s, 1/1/33 Baa3 28,281,094
25,000,000 MBIA, zero %, 1/15/32 AAA 3,812,500
21,625,000 MBIA, zero %, 1/15/23 AAA 5,676,563
29,100,000 San Jose, Redev. Agcy. Tax Alloc. Rev. Bonds
(Merged Area Redev), MBIA, 4 3/4s, 8/1/24 Aaa 25,171,500
San Marcos, Pub. Fac. Auth. Rev. Bonds
3,000,000 5.8s, 9/1/27 BB-/P 2,666,250
1,635,000 5.8s, 9/1/18 BB-/P 1,534,856
3,000,000 5 1/2s, 9/1/10 BB-/P 2,932,500
40,000,000 San Mateo Cnty., Jt. Pwr. Fin. Auth. Rev. Bonds,
FSA, 5 3/4s, 7/15/29 Aaa 42,400,000
5,000,000 Santa Ana, COP (City Hall Expansion), FSA,
4.7s, 1/1/28 Aaa 4,237,500
35,600,000 Santa Clara, Wtr. Dist. Rev. Bonds, FGIC,
5 3/4s, 2/1/15 Aaa 36,534,500
7,525,000 Sierra View, Health Care Dist. Rev. Bonds LOC,
5.4s, 7/1/22 BBB- 5,897,719
45,200,000 South Orange Cnty., Pub. Fin. Auth. Rev. Bonds,
FGIC, 5 1/2s, 8/15/15 Aaa 45,482,500
Southern CA Pub. Pwr. Auth. Rev. Bonds
5,465,000 (Southern transmission), Ser. A, MBIA,
5 1/4s, 7/1/11 Aaa 5,587,963
42,690,000 (Mead Adelanto), Ser. A, AMBAC, 4 7/8s, 7/1/20 Aaa 38,741,175
3,000,000 Stockton, Cmnty. Fac. Dist. Spl. Tax. Rev. Bonds
(Mello Roos-Weston Ranch), Ser. A, 5.8s, 9/1/14 BB+/P 2,760,000
1,000,000 Stockton, Multi-Fam. Hsg. VRDN (Mariners
Pointe Assoc.), Ser. A, 3 1/4s, 9/1/18 A-1+ 1,000,000
11,450,000 Sunnyvale, Special Tax, 6 3/4s, 8/1/02 BB+/P 11,450,000
Thousand Oaks, Cmnty. Fac. Dist. Special Tax
Rev. Bonds (No. 94-1)
21,775,000 6 7/8s, 9/1/24 B/P 21,829,438
33,000,000 zero %, 9/1/14 B/P 12,086,250
10,195,000 U. of CA Hosp. Med. Center Rev. Bonds, AMBAC,
5.7s, 7/1/11 Aaa 10,602,800
38,932,000 U. of CA Rev. Bonds (UCSD Med. Ctr. Satellite
Med. Fac.), 7.9s, 12/1/19 A-/P 39,350,908
10,000,000 Vallejo, COP (Marine World Foundation),
7.2s, 2/1/26 BB+/P 10,587,500
36,945,000 Valley Hlth. Syst. COP, 6 7/8s, 5/15/23 BB+/P 35,282,475
6,885,000 Valley Hlth. Syst. Hosp. Rev. Bonds, Ser. A,
6 1/2s, 5/15/15 BBB- 6,446,081
1,700,000 Vallejo, Hsg. Auth. VRDN, 3 1/4s, 1/1/08 VMIG1 1,700,000
----------------
3,062,023,968
Puerto Rico (1.6%)
- ----------------------------------------------------------------------------------------------------------------------------
9,010,000 Cnmwlth. of PR, G.O. Bonds, MBIA, 5 3/4s, 7/1/11 A 9,573,125
9,000,000 Cmnwlth. of PR, Infrastructure Fin. Auth.
Rev. Bonds, Ser. A, AMBAC, 5 1/2s, 7/1/08 Aaa 9,326,250
Cmnwlth. of PR, Pub. Impt. G.O. Bonds, FSA
8,500,000 5 1/2s, 7/1/11 AAA 8,850,625
5,000,000 5 1/2s, 7/1/10 AAA 5,206,250
7,215,000 5 1/2s, 7/1/09 AAA 7,512,619
10,000,000 PR Elec. Pwr. Auth. Rev. Bonds, Ser. AA, MBIA,
5 3/8s, 7/1/27 Aaa 9,500,000
----------------
49,968,869
- ----------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $2,994,962,920) (b) $ 3,111,992,837
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Percentages indicated are based on net assets of $3,128,856,755.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at March 31, 2000 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, 2000. Securities rated by Putnam are indicated
by "/P" and are not publicly rated.
(b) The aggregate identified cost on a tax basis is $2,996,740,955,
resulting in gross unrealized appreciation and depreciation of
$173,268,039 and $58,016,157, respectively, or net unrealized
appreciation of $115,251,882.
(SEG) A portion of this security was pledged and segregated with the
custodian to cover margin requirements for futures contracts at March
31, 2000.
(RES) Restricted, excluding 144A securities, as to public
resale. The total market value of restricted securities held at March
31, 2000 was $156,537,289 or 5.00% of net assets.
The rates shown on Floating Rate Bonds (FRB) are the current
interest rates shown at March 31, 2000, which are subject to change
based on the terms of the security.
The rates shown on IFB and IF COP, which are securities paying
interest rates that vary inversely to changes in the market interest
rates, and VRDN's are the current interest rates at March 31, 2000.
The fund had the following industry group concentrations greater
than 10% at March 31, 2000 (as a percentage of net assets):
Water and sewer 16.6%
Transportation 16.0
Utilities 10.6
Health care/hospitals 10.6
The fund had the following insurance concentrations greater than
10% at March 31, 2000 (as a percentage of net assets):
MBIA 23.6%
AMBAC 13.9
- ----------------------------------------------------------------------------
Futures Contracts Outstanding at March 31, 2000 (Unaudited)
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
- ----------------------------------------------------------------------------
US Treasury
Bond (Short) $92,607,750 $90,120,541 Jun-00 $(2,487,209)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of assets and liabilities
March 31, 2000 (Unaudited)
Assets
- ----------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value
(identified cost $2,994,962,920) (Note 1) $3,111,992,837
- ----------------------------------------------------------------------------------------------
Cash 580,322
- ----------------------------------------------------------------------------------------------
Interest and other receivables 42,484,254
- ----------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 3,176,389
- ----------------------------------------------------------------------------------------------
Total assets 3,158,233,802
Liabilities
- ----------------------------------------------------------------------------------------------
Payable for variation margin 474,000
- ----------------------------------------------------------------------------------------------
Distributions payable to shareholders 7,276,124
- ----------------------------------------------------------------------------------------------
Payable for securities purchased 11,450,000
- ----------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 4,753,981
- ----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 3,533,847
- ----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 87,027
- ----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 48,433
- ----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 6,980
- ----------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 1,681,457
- ----------------------------------------------------------------------------------------------
Other accrued expenses 65,198
- ----------------------------------------------------------------------------------------------
Total liabilities 29,377,047
- ----------------------------------------------------------------------------------------------
Net assets $3,128,856,755
Represented by
- ----------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $3,035,110,075
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 3,944,757
- ----------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (24,740,785)
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 114,542,708
- ----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $3,128,856,755
Computation of net asset value and offering price
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($2,558,608,008 divided by 312,117,518 shares) $8.20
- ----------------------------------------------------------------------------------------------
Offering price per class A share (100/95.25 of $8.20)* $8.61
- ----------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($550,496,225 divided by 67,225,152 shares)** $8.19
- ----------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($3,343,445 divided by 406,968 shares)** $8.22
- ----------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($16,409,077 divided by 2,005,343 shares) $8.18
- ----------------------------------------------------------------------------------------------
Offering price per class M share (100/96.75 of $8.18)*** $8.45
- ----------------------------------------------------------------------------------------------
* 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.
*** 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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of operations
Six months ended March 31, 2000 (Unaudited)
<S> <C>
Tax exempt interest income: $97,460,253
- ----------------------------------------------------------------------------------------------
Expenses:
- ----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 7,269,916
- ----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 895,792
- ----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 29,733
- ----------------------------------------------------------------------------------------------
Administrative services (Note 2) 14,170
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 2,607,182
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 2,449,557
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 10,208
- ----------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 38,766
- ----------------------------------------------------------------------------------------------
Reports to shareholders 3,821
- ----------------------------------------------------------------------------------------------
Auditing 17,910
- ----------------------------------------------------------------------------------------------
Legal 32,904
- ----------------------------------------------------------------------------------------------
Postage 33,144
- ----------------------------------------------------------------------------------------------
Other 221,913
- ----------------------------------------------------------------------------------------------
Total expenses 13,625,016
- ----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (282,977)
- ----------------------------------------------------------------------------------------------
Net expenses 13,342,039
- ----------------------------------------------------------------------------------------------
Net investment income 84,118,214
- ----------------------------------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 3) 5,202,616
- ----------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Note 1) 27,777
- ----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and futures during the period (30,468,208)
- ----------------------------------------------------------------------------------------------
Net loss on investments (25,237,815)
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $58,880,399
- ----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
March 31 September 30
2000* 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Decrease in net assets
- -------------------------------------------------------------------------------------------------------
Operations:
- -------------------------------------------------------------------------------------------------------
Net investment income $ 84,118,214 $ 171,706,496
- -------------------------------------------------------------------------------------------------------
Net realized gain on investments 5,230,393 9,290,056
- -------------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (30,468,208) (254,103,995)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 58,880,399 (73,107,443)
- -------------------------------------------------------------------------------------------------------
Distributions to shareholders:
- -------------------------------------------------------------------------------------------------------
From net investment income
Class A (70,210,234) (145,190,669)
- -------------------------------------------------------------------------------------------------------
Class B (13,650,841) (27,516,818)
- -------------------------------------------------------------------------------------------------------
Class C (46,382) (2,056)
- -------------------------------------------------------------------------------------------------------
Class M (395,933) (810,742)
- -------------------------------------------------------------------------------------------------------
From net realized gain on investments
Class A -- (16,229,723)
- -------------------------------------------------------------------------------------------------------
Class B -- (3,456,456)
- -------------------------------------------------------------------------------------------------------
Class M -- (84,929)
- -------------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (233,126,029) (76,044,936)
- -------------------------------------------------------------------------------------------------------
Total decrease in net assets (258,549,020) (342,443,772)
Net assets
- -------------------------------------------------------------------------------------------------------
Beginning of period 3,387,405,775 3,729,849,547
- -------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $3,944,757 and $4,129,933, respectively) $3,128,856,755 $3,387,405,775
- -------------------------------------------------------------------------------------------------------
* Unaudited
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS A
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share March 31
operating performance (Unaudited) Year ended September 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.25 $8.89 $8.71 $8.46 $8.37 $8.09
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income .22 .42(c) .44(c) .44 .47 .48
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.05) (.59) .21 .28 .09 .31
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .17 (.17) .65 .72 .56 .79
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.22) (.42) (.43) (.45) (.47) (.48)(d)
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.05) (.04) (.02) -- --
- --------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- (.03)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.22) (.47) (.47) (.47) (.47) (.51)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.20 $8.25 $8.89 $8.71 $8.46 $8.37
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 2.11* (2.01) 7.75 8.71 6.81 10.07
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,558,608 $2,754,624 $3,073,178 $3,087,795 $3,149,797 $3,168,277
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .37* .77 .77 .74 .74 .74
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.69* 4.85 5.06 5.20 5.60 5.86
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.59* 13.91 30.88 23.51 29.47 47.73
- --------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number of shares
outstanding during the period.
(d) Distributions in excess of net investment income amounted to less than $0.01 per share for each class.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS B
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share March 31
operating performance (Unaudited) Year ended September 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.24 $8.88 $8.70 $8.45 $8.37 $8.08
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income .19 .36(c) .39(c) .39 .42 .42
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.05) (.58) .21 .27 .07 .32
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .14 (.22) .60 .66 .49 .74
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.19) (.37) (.38) (.39) (.41) (.42)(d)
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.05) (.04) (.02) -- --
- --------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- (.03)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.19) (.42) (.42) (.41) (.41) (.45)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.19 $8.24 $8.88 $8.70 $8.45 $8.37
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 1.78* (2.65) 7.05 8.02 5.99 9.47
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $550,496 $616,446 $641,686 $573,309 $510,394 $416,367
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .69* 1.42 1.42 1.39 1.39 1.39
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.37* 4.21 4.41 4.54 4.94 5.17
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.59* 13.91 30.88 23.51 29.47 47.73
- --------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number
of shares outstanding during the period.
(d) Distributions in excess of net investment income amounted to less than $0.01 per share for each class.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS C
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 July 26, 1999+
operating performance (Unaudited) to Sept. 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value,
beginning of period $8.26 $8.47
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income .19 .04(c)
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.04) (.18)
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .15 (.14)
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.19) (.07)
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- --
- --------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.19) (.07)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.22 $8.26
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 1.93* (1.70)*
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $3,343 $1,018
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .77* .29*
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.29* .81*
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.59* 13.91
- --------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number of shares
outstanding during the period.
(d) Distributions in excess of net investment income amounted to less than $0.01 per share for each class.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
CLASS M
- --------------------------------------------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 Feb. 14, 1995+
operating performance (Unaudited) Year ended September 30 to Sept. 30
- --------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $8.24 $8.88 $8.70 $8.45 $8.36 $8.13
- --------------------------------------------------------------------------------------------------------------------------
Investment operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income .21 .38(c) .41(c) .42 .45 .29
- --------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (.06) (.57) .22 .27 .08 .24
- --------------------------------------------------------------------------------------------------------------------------
Total from
investment operations .15 (.19) .63 .69 .53 .53
- --------------------------------------------------------------------------------------------------------------------------
Less distributions:
- --------------------------------------------------------------------------------------------------------------------------
From net
investment income (.21) (.40) (.41) (.42) (.44) (.30)(d)
- --------------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments -- (.05) (.04) (.02) -- --
- --------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain on investments -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.21) (.45) (.45) (.44) (.44) (.30)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.18 $8.24 $8.88 $8.70 $8.45 $8.36
- --------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- --------------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(a) 1.83* (2.31) 7.43 8.39 6.48 6.56*
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $16,409 $15,318 $14,986 $13,898 $9,149 $4,108
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b) .52* 1.07 1.07 1.04 1.04 .69*
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%) 2.54* 4.56 4.76 4.92 5.24 3.52*
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 3.59* 13.91 30.88 23.51 29.47 47.73
- --------------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
(b) Includes amounts paid through expense offset arrangements (Note 2).
(c) Per share net investment income has been determined on the basis of the weighted average number of shares
outstanding during the period.
(d) Distributions in excess of net investment income amounted to less than $0.01 per share for each class.
</TABLE>
Notes to financial statements
March 31, 2000 (Unaudited)
Note 1
Significant accounting policies
Putnam California Tax Exempt Income Fund (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, class C 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 C shares have a higher ongoing distribution fee than
class B shares and have a one year 1.00% contingent deferred sales
charge and do not convert to class A shares. Class M shares are sold
with a maximum front end sales charge of 3.25% and pay an ongoing
distribution fee that is higher than class A shares but lower than class
B and class C 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 of the financial statements and the reported
amounts of increases and decreases in net assets from operations during
the reporting period. 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.
Restricted securities are stated at fair value following procedures
approved by the trustees. 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). Gains or losses on securities sold are determined
on the identified cost basis.
Interest income is recorded on the accrual basis. Securities purchased
or sold on a when-issued or delayed delivery basis may be settled a
month or more after the trade date; interest income is accrued based on
the terms of the security. Losses may arise due to changes in the market
value of the underlying securities or if the counterparty does not
perform under the contract.
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 in which it may invest 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. 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. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
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) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintain an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended March 31, 2000, the fund had no borrowings against the line of
credit.
E) 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, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax
on income and capital gains.
F) Distributions to shareholders Income dividends are recorded daily by
the fund and are paid monthly. Capital gain distributions, if any, are
recorded on the ex-dividend date and paid at least 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.
G) Amortization of bond premium and accretion of bond discount Any
premium resulting from the purchase of securities in excess of maturity
value is amortized on a yield-to-maturity basis. 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. Discounts on zero
coupon bonds and original issue discount bonds are accreted according to
the yield-to-maturity basis.
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, at the lesser of (i) an annual rate of 0.50% of the average
net asset value of the fund or (ii) the following annual rates expressed
as a percentage of the fund's average net assets: 0.60% of the first
$500 million, 0.50% of the next $500 million, 0.45% of the next $500
million, 0.40% of the next $5 billion, 0.375% of the next $5 billion,
0.355% of the next $5 billion, 0.34% of the next $5 billion, and 0.33%
thereafter.
The fund reimburses Putnam Management an allocated amount 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.
Custodial functions for the fund's assets 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.
For the six months ended March 31, 2000, fund expenses were reduced by
$282,977 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 a portion of the assets utilized
in connection with the expense offset arrangements in an income
producing asset if it had not entered into such arrangements.
Each Trustee of the fund receives an annual Trustee fee, of which $2,657
has been allocated to the fund, and an additional fee for each Trustee's
meeting attended. Trustees receive additional fees for attendance at
certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral 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
Invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
Meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C 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%, 1.00% and 1.00% of the average net assets attributable to class
A, class B, class C and class M shares, respectively. The Trustees have
approved payment by the fund to an annual rate of 0.20%, 0.85%, 1.00%
and 0.50% of the average net assets attributable to class A, class B,
class C and class M shares, respectively.
For the six months ended March 31, 2000, Putnam Mutual Funds Corp.,
acting as underwriter received net commissions of $52,719 and $327 from
the sale of class A and class M shares, respectively, and received
$817,236 and $103 in contingent deferred sales charges from redemptions
of class B and class C shares, respectively. A deferred sales charge of
up to 1% is assessed on certain redemptions of class A shares. For the
six months ended March 31, 2000, Putnam Mutual Funds Corp., acting as
underwriter received $68,079 on class A redemptions.
Note 3
Purchases and sales of securities
During the six months ended March 31, 2000, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $114,782,573 and $335,255,273, respectively.
Purchases and sales of short-term municipal obligations aggregated
$155,050,000 and $145,450,000, respectively.
Note 4
Capital shares
At March 31, 2000, there were an unlimited number of shares of
beneficial interest authorized. Transactions in capital shares were as
follows:
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 13,542,529 $109,167,769
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 4,202,042 33,932,941
- ---------------------------------------------------------------------------
17,744,571 143,100,710
Shares
repurchased (39,479,690) (318,721,088)
- ---------------------------------------------------------------------------
Net decrease (21,735,119) $(175,620,378)
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 34,043,617 $294,035,932
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 9,287,889 80,283,664
- ---------------------------------------------------------------------------
43,331,506 374,319,596
Shares
repurchased (55,252,585) (475,786,481)
- ---------------------------------------------------------------------------
Net decrease (11,921,079) $(101,466,885)
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 2,637,668 $21,287,291
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 935,549 7,544,799
- ---------------------------------------------------------------------------
3,573,217 28,832,090
Shares
repurchased (11,136,904) (89,688,102)
- ---------------------------------------------------------------------------
Net decrease (7,563,687) $(60,856,012)
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 12,340,402 $107,145,509
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,050,990 17,706,479
- ---------------------------------------------------------------------------
14,391,392 124,851,988
Shares
repurchased (11,868,943) (101,944,941)
- ---------------------------------------------------------------------------
Net increase 2,522,449 $22,907,047
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 288,996 $2,336,167
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 2,954 23,940
- ---------------------------------------------------------------------------
291,950 2,360,107
Shares
repurchased (8,149) (65,001)
- ---------------------------------------------------------------------------
Net increase 283,801 $2,295,106
- ---------------------------------------------------------------------------
For the period July 26, 1999
(commencement of operations) to
September 30, 1999
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 123,087 $1,018,164
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 198 1,636
- ---------------------------------------------------------------------------
123,285 1,019,800
Shares
repurchased (118) (979)
- ---------------------------------------------------------------------------
Net increase 123,167 $1,018,821
- ---------------------------------------------------------------------------
Six months ended March 31, 2000
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 5,436,756 $43,653,807
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 37,743 304,219
- ---------------------------------------------------------------------------
5,474,499 43,958,026
Shares
repurchased (5,327,912) (42,902,771)
- ---------------------------------------------------------------------------
Net increase 146,587 $1,055,255
- ---------------------------------------------------------------------------
Year ended September 30, 1999
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 15,730,155 $134,521,486
- ---------------------------------------------------------------------------
Shares issued in
connection with
reinvestment of
distributions 71,587 617,194
- ---------------------------------------------------------------------------
15,801,742 135,138,680
Shares
repurchased (15,630,504) (133,642,599)
- ---------------------------------------------------------------------------
Net increase 171,238 $1,496,081
- ---------------------------------------------------------------------------
The Putnam family of funds
The following is a complete list of Putnam's open-end mutual funds.
Please call your financial advisor or Putnam at 1-800-225-1581 to obtain
a prospectus for any Putnam fund. It contains more complete information,
including charges and expenses. Please read it carefully before you
invest or send money.
GROWTH FUNDS
Asia Pacific Growth Fund
Capital Appreciation Fund
Capital Opportunities Fund
Europe Growth Fund
Global Equity Fund
Global Growth Fund
Global Natural Resources Fund
Growth Opportunities Fund
Health Sciences Trust
International Growth Fund
International New Opportunities Fund
Investors Fund
New Century Growth Fund
New Opportunities Fund
OTC & Emerging Growth Fund
Research Fund
Tax Smart Equity Fund
Vista Fund
Voyager Fund
Voyager Fund II
GROWTH AND INCOME FUNDS
Balanced Retirement Fund
Convertible Income-Growth Trust
Equity Income Fund
The George Putnam Fund of Boston
Global Growth and Income Fund
The Putnam Fund for Growth and Income
Growth and Income Fund II
International Growth and Income Fund
New Value Fund
Small Cap Value Fund
Utilities Growth and Income Fund
INCOME FUNDS
American Government Income Fund
Diversified Income Trust
Global Governmental Income Trust
High Yield Advantage Fund [DBL. DAGGER]
High Yield Trust [DBL. DAGGER]
High Yield Trust II
Income Fund
Intermediate U.S. Government Income Fund
Money Market Fund**
Preferred Income Fund
Strategic Income Fund*
U.S. Government Income Trust
TAX-FREE INCOME FUNDS
Municipal Income Fund
Tax Exempt Income Fund
Tax Exempt Money Market Fund**
Tax-Free High Yield Fund
Tax-Free Insured Fund
State tax-free income funds [SECTION MARK]
Arizona, California, Florida, Massachusetts, Michigan, Minnesota, New
Jersey, New York, Ohio and Pennsylvania
State tax-free money market funds [SECTION MARK]**
California, New York
ASSET ALLOCATION FUNDS
Putnam Asset Allocation Funds--three investment portfolios that spread
your money across a variety of stocks, bonds, and money market
investments.
The three portfolios:
Asset Allocation: Balanced Portfolio
Asset Allocation: Conservative Portfolio
Asset Allocation: Growth Portfolio
* Formerly Putnam Diversified Income Trust II
[DBL. DAGGER] Closed to new investors. Some exceptions may apply. Contact
Putnam for details.
[SECTION MARK] Not available in all states.
** An investment in a money market fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although the funds seek to preserve your investment at $1.00 per share, it
is possible to lose money by investing in the fund.
Check your account balances and current performance at www.putnaminv.com.
Fund information
WEB SITE
www.putnaminv.com
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
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
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
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Jerome J. Jacobs
Vice President
David E. Hamlin
Vice President and Fund Manager
Richard A. Monaghan
Vice President
Richard G. Leibovitch
Vice President
John R. Verani
Vice President
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.
You can also learn more at Putnam Investments' Web site: www.putnaminv.com.
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
the principal amount invested.
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PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
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BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
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For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
SA045-60359 027/337/677 5/00
