Putnam
California
Tax Exempt
Money Market
Fund
SEMIANNUAL REPORT
March 31, 1995
[graphic - scales]
BOSTON * LONDON * TOKYO
<PAGE>
Performance highlights
> "Money funds have become a competitive instrument in the investment world,
and they're going to remain competitive for a while," says Walter Frank,
chief economist for Money Fund Report, an Ashland, Mass., newsletter.
-- The Wall Street Journal, April 5, 1995
> Performance should always be considered in light of a fund's investment
strategy. Putnam California Tax Exempt Money Market Fund is designed for
investors seeking current income free from federal and California personal
income taxes, consistent with capital preservation, stable principal, and
liquidity.
SEMIANNUAL RESULTS AT A GLANCE
<TABLE>
<CAPTION>
Fund shares
Total return: at NAV
<S> <C> <C> <C>
..................................................................................................
(change in value during period
plus reinvested distributions)
6 months ended 3/31/95 1.46%
Distributions: No. Income Total
..................................................................................................
6 $0.014476 $0.014476
Current return: NAV
End of period
..................................................................................................
Current 7-day yield(1) 2.89%
Current 30-day yield(1) 2.81
Taxable equivalent(2)
Current 7-day yield(1) 5.38
Current 30-day yield(1) 5.23
</TABLE>
Performance data represent past results and are not indicative of future
results, which will fluctuate. For performance over longer periods, see page
8. (1)The 7-day and 30-day yields are the two most common gauges for
measuring money market mutual fund performance. (2)Assumes maximum 46.24%
federal and state tax rate. Results for investors subject to lower tax rates
would not be as advantageous. For some investors, investment income may also
be subject to the federal alternative minimum tax. An investment in the fund
is neither insured nor guaranteed by the U.S. government. There can be no
assurance that the fund will be able to maintain a stable net asset value of
$1.00 per share.
<PAGE>
From the Chairman
[GRAPHIC - photo of George Putnam]
(c) Karsh, Ottawa
Dear Shareholder:
Slowly but surely, optimism is returning to the markets as California
investors digest the disruptions caused by events in Orange County last
December. Because of Putnam California Tax Exempt Money Market Fund's limited
exposure to Orange County securities, as well as its broad diversification
and the high quality of its portfolio, the fund's yield was spared
significant damage in the aftermath of the defaults.
Yields on the short-term tax-exempt securities in which your fund invests
benefited from the Federal Reserve Board's increases in short-term interest
rates over the past several months.
As your fund moves into the second half of fiscal 1995, Fund Manager Lindsey
Callen is optimistic about prospects for the money markets, as well as for
your fund. California's economy remains strong and interest rates appear to
be stabilizing. In the report that follows, Lindsey reviews the fiscal year's
first half and offers her insights about the months ahead.
Respectfully yours,
[GRAPHIC - signature of George Putnam]
George Putnam
Chairman of the Trustees
May 15, 1995
<PAGE>
Report from the fund manager
Lindsey M. Callen
For the six months ended March 31, 1995, Putnam California Tax Exempt Money
Market Fund once again delivered a steady stream of double-tax-free income
while maintaining its hallmarks of superior quality and a stable $1.00 share
price. The higher short-term interest rates we have seen since early in 1994
prevailed throughout the period, providing a favorable investment climate for
your fund.
During the period, data from key sectors like manufacturing and employment
demonstrated ongoing improvement in the U.S. economy. This strength motivated
the Federal Reserve Board to continue its anti-inflation policy by raising
short-term interest rates twice more, in November 1994 and again in February
1995. However, by early March, some weakness began to emerge in housing sales
and consumer spending. In response, the Fed did not raise interest rates at
its March meeting, adopting instead a "wait-and-see" attitude until the
economy's signals become more definitive.
> SEEKING VALUE AND SCRUTINIZING QUALITY AMID TIGHT SUPPLY
Because the fiscal year for many municipalities begins in June or July, the
supply of new-issue tax-exempt securities is usually at a low ebb between
January and June of each year. This semiannual period has been no exception.
In addition, many investors have been re-assessing the credit quality of
their portfolios in the wake of the Orange County bankruptcy, which rocked
the entire tax-exempt securities market in early December 1994.
Your fund has always emphasized superior quality, and we will be even more
demanding when scrutinizing potential investments in the future. Currently,
up to 75% of your fund's investments are insured or backed by bank letters of
credit. These features add a significant measure of quality assurance, even
for those issues rated in the highest categories by nationally recognized
rating services, and make many of our holdings among the highest-quality
securities available. We intend to maintain the portfolio's high
<PAGE>
percentage of insured and bank-backed securities going forward, and may even
expand it, should appropriate investment opportunities arise.
The combination of a reduced supply of securities and the cautious,
re-evaluative stance of investors produced a rather quiet period for the
market. While prices of tax-exempt securities fell initially when Orange
County announced its bankruptcy, the market rebounded after January.
Nonetheless, activity remained quite low for the rest of the period. In this
environment, we purchased few new securities and concentrated instead on
managing the portfolio to maximize its income potential in the current
interest-rate climate.
> CREDIT CONSCIOUSNESS HERALDS MARKET CHANGES
It appears that issuers of tax-exempt money market securities will face
stricter disclosure and credit quality requirements in the fiscal year ahead.
While simply structured tax-exempt money market instruments have always been
the mainstay of your fund's portfolio, many comparable mutual funds had begun
to purchase derivative
PERFORMANCE COMPARISONS (3/31/95)
<TABLE>
<CAPTION>
Current After-tax
return* return
<S> <C> <C>
.................................................................................
Passbook savings account 2.17 % 2.17 %
.................................................................................
Taxable money market fund (7-day yield) 5.58 5.58
.................................................................................
3-month certificate of deposit (annual yield) 4.20 4.20
.................................................................................
Putnam California Tax Exempt
Money Market Fund (7-day yield) 2.89 5.38
</TABLE>
The net asset value of money market mutual funds is uninsured and there can
be no assurance that the fund will be able to maintain a $1.00 fixed share
price, while distributions vary daily. Investment returns will fluctuate. The
principal value on passbook savings and bank CDs are generally insured up to
certain limits by state and federal agencies. Unlike money market funds,
early withdrawals from bank CDs may be subject to substantial penalties.
*Sources: Bank of Boston (passbook savings), Bank Rate Monitor (3-month CDs),
IBC/Donaghue's Money Fund Report (taxable money market fund 7-day yield).
<PAGE>
securities in order to reach for additional income. Unfortunately, the value
of many of these securities plummeted when interest rates rose. This caused
liquidity problems for many funds and contributed to Orange County's
bankruptcy. Now, many investors have come to realize the wisdom of your
fund's conservative approach. In fact, even the credit quality of many
traditional instruments is now being scrutinized more closely.
When California municipalities issue new securities in the months ahead, many
may be forced to provide additional quality assurances such as bank letters
of credit or to offer higher rates of interest in order to attract investors.
Gone will be the complex financing deals that led to so many difficulties
over the past year. Instead, issuers will be getting "back to basics" with
the traditional tax-exempt money market instruments your fund has always
favored. In this newly credit-conscious environment, we will be redoubling
our efforts to find well-valued securities that meet our strict criteria for
quality, liquidity, and price sensitivity.
> STAYING NEUTRAL AND FLEXIBLE
With the pace of interest rate increases slowing down in the past six months
and their future direction somewhat uncertain, we have begun to lengthen the
average maturity of the portfolio slightly. This places the fund in a more
neutral position, as opposed to the more aggressive shorter average maturity
we had adopted when interest rates were moving steadily upward. We have also
begun to re-evaluate the fund's floating-rate securities position, which was
developed to maximize the fund's income when interest rates were rising
rapidly. Once the supply of tax-exempt securities increases, we will target
those floating-rate securities whose yields reset at longer intervals rather
than on a weekly basis. These moves are designed to help the fund benefit
from potential interest rate increases while protecting it from any declines
that might occur as the market adjusts to economic change.
<PAGE>
> OUR OUTLOOK
Although the California economy has absorbed more than its fair share of
costly occurrences from natural and other sources, it now appears to be on
the road to recovery. Major indicators evidence solid improvement and
businesses are growing. Barring any additional natural disasters, we believe
the economy should continue to improve overall. The interest-rate cycle seems
to be near its peak, yet rates are not excessively high and could remain at
their current levels for some time. The supply of tax-exempt money market
securities remains extremely low, as befits these months prior to the
beginning of most municipalities' new fiscal years.
In this climate, we will maintain our strategy of diversifying your fund's
assets among a variety of tax-exempt securities. We also expect to maintain a
neutral average portfolio maturity and to continue taking advantage of
potentially higher interest rates through a position in floating-rate
securities. Meanwhile, we believe our focus on traditional, high-quality
instruments should enable the fund to maintain the stability that is most
shareholders' top priority.
<PAGE>
Performance summary
This section provides, at a glance, information about your fund's
performance. Total return shows how the value of the fund's shares changed
over time, assuming you held the shares through the entire period and
reinvested all distributions back into the fund. We show total return in two
ways: on a cumulative long-term basis and on average how the fund might have
grown each year over varying periods. For comparative purposes, we show how
the fund performed relative to appropriate indexes and benchmarks.
TOTAL RETURN FOR PERIODS ENDED 3/31/95
<TABLE>
<CAPTION>
Lipper
California
Fund shares Tax Exempt Consumer
at Money Market Price
NAV Fund Average Index
<S> <C> <C> <C>
6 months 1.46% 1.57% 1.34%
1 year 2.56 2.73 2.85
5 years 15.43 16.83 17.64
Annual average 2.91 3.16 3.30
Life of fund 30.68 32.03 31.31
Annual average 3.67 3.82 3.73
</TABLE>
Fund performance data do not take into account any adjustment for taxes
payable on reinvested distributions. The fund began operations on 10/26/87.
Performance data represent past results and are not indicative of future
returns. Investment returns will fluctuate.
<PAGE>
TERMS AND DEFINITIONS
Net asset value (NAV) is the value of all fund assets, minus liabilities,
divided by the number of outstanding shares. It does not include any initial
or contingent deferred sales charge.
COMPARATIVE BENCHMARKS
Lipper California Tax Exempt Money Market Fund Average, used for performance
comparison purposes, is an arithmetic average of the total return of all
money market mutual funds tracked by Lipper Analytical Services. Lipper is an
independent rating organization for the mutual fund industry. Lipper rankings
vary for other periods. The fund's holdings do not match those in the Lipper
Average.
Consumer Price Index (CPI) is a commonly used measure of inflation; it does
not represent an investment return.
<PAGE>
Relative risk/reward potential of Putnam funds
These illustrations provide a simplified guide to the risk/reward potential
for funds within each category of the Putnam Family of Funds and are not
intended as investment advice. Your investment advisor can help you evaluate
your risk tolerance.
These rankings are relative only to Putnam funds and should not be compared
to other investments. There is no guarantee that one Putnam fund will be less
volatile than another, since each fund has its own investment risks. That's
why it is essential to read the fund's prospectus before investing.
PUTNAM GROWTH FUNDS
[Line Chart. Funds shown in progression from lower elements to higher elements.]
Lower Risk
Lower Reward
Potential
Investors
Diverisified Equity(1)
Global Growth(1)
Vista
Natural Resources
Health Sciences
Voyager
Overseas Growth(1)
Europe Growth(1)
New Opportunities(2)
OTC Emerging Growth(2)
Asia Pacific(1)
Higher Risk
Higher Reward
Potential
[End of Line Chart]
PUTNAM GROWTH AND INCOME FUNDS
[Line Chart. Funds shown in progression from lower elements to higher elements.]
Lower Risk
Lower Reward
Potential
Managed Income
Utilities Growth and Income
George Putnam
Convertible Income-Growth
Equity Income
Fund for Growth and Income
Putnam Growth and Income Fund II
Dividend Growth
Higher Risk
Higher Reward
Potential
[End of Line Chart]
(1)Foreign investments are subject to certain risks, such as currency
fluctuations and political developments, that are not present with
domestic investments.
(2)This fund invests all or a portion of its assets in small to medium-sized
companies, which increases the risk of price fluctuations.
(3)While U.S. government backing of individual securities does not insure
your principal, which will fluctuate, it does guarantee that the fund's
government-backed holdings will make timely payments of interest and
principal.
<PAGE>
PUTNAM INCOME FUNDS
[Line Chart. Funds shown in progression from lower elements to higher elements.]
Lower Risk
Lower Reward
Potential
Money Market(4)
Adjustable Rate U.S. Gov't.(3)
Intermediate U.S. Gov't Income
U.S. Gov't. Income(3)
American Gov't. Income(3)
Federal Income(3)
Diversified Income(1),(3),(5)
Income
Preferred Income
Global Gov't.(1),(5)
High Yield(5)
High Yield Advantage(5)
Higher Risk
Higher Reward
Potential
[End Line Chart]
PUTNAM TAX-FREE FUNDS(6)
[Line Chart. Funds shown in progression from lower elements to higher elements.]
Lower Risk
Lower Reward
Potential
Tax Exempt Money Market(4)
Intermediate Tax Exempt
Tax-Free Insured(7)
Tax Exempt Income
Single-state tax-free funds*
Municipal Income
Tax-Free High Yield(5)
Higher Risk
Higher Reward
Potential
[End of Line Chart]
*State tax-free funds available for Arizona, California, Florida,
Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, and
Pennsylvania. Not available in all states.
LIFESTAGE(SM) 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 are:
> Putnam Asset Allocation: Balanced Portfolio
> Putnam Asset Allocation: Conservative Portfolio
> Putnam Asset Allocation: Growth Portfolio
Please call your financial advisor -- or Putnam at 1-800-225-1581 -- to
obtain a prospectus for any Putnam fund. The prospectus contains more
complete information, including risk considerations, charges, and expenses.
Read it carefully before you invest or send money.
(4)The fund is managed to maintain a steady price of $1.00 per share,
although there is no assurance this price can be maintained in the future.
(5)The lower credit ratings of high-yield corporate and municipal bonds
reflect a greater possibility that adverse changes in the economy or their
issuers may affect their ability to pay principal and interest on the bonds.
(6)Income may be subject to state and local taxes. Capital gains, if any, are
taxable for federal and, in most cases, state purposes.
(7)Bond insurance does not guarantee principal or protect against changes in
market price.
<PAGE>
Portfolio of investments owned
March 31, 1995 (Unaudited)
MUNICIPAL BONDS AND NOTES (92.0%)*
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT RATINGS** VALUE
<C> <S> <C> <C>
California
$2,000,000 Anaheim, Variable Rate Demand Notes (VRDN) Certif. of
Participation (COP) (Police Fac. Refing. Project), American
Municipal Bond Assurance Corporation (AMBAC), 4s, 8/1/08
(the Indl. Bk. of Japan Letter of Credit (LOC)) VMIG1 $ 2,000,000
CA Hlth. Facs. Fing. Auth. VRDN
1,800,000 (Hlth. Dimensions Inc.) Ser. A, 4-1/2s, 8/1/17 (Bk. of
America LOC) VMIG1 1,800,000
1,600,000 (Sutter Hlth.), Ser. A, 4.1s, 3/1/20 (Morgan Gty. Tr. Co.
NY LOC) VMIG1 1,600,000
3,000,000 CA Pub. Cap. Impt. Fing. Auth. VRDN (Pooled Project) Ser. C,
4.3s, 6/28/95 (National Westminster Bk. USA LOC) VMIG1 3,000,000
2,000,000 CA State Rev. Anticipation Notes (RAN), Ser. A, 5s, 6/28/95 MIG1 2,003,825
2,000,000 Contra Costa, Trans. Auth. VRDN, Ser. A, Financial Guaranty
Insurance Corp. (FGIC), 3.9s, 3/1/09 VMIG1 2,300,000
2,000,000 Fontana, VRDN COP (Empire Ctr. Project), 4.2s, 7/1/21
(Sakura Bk. LOC) A-1 2,000,000
1,810,000 Loma Linda, Hosp. VRDN (U. Med. Ctr.) Ser. C, 4.05s, 12/1/15
(The Indl. Bk. of Japan LOC) A-1 1,810,000
1,440,000 Los Angeles Cnty., Tax and Revenue Anticipation Notes
(TRAN), 4-1/2s, 6/30/95 MIG1 1,440,973
2,200,000 Los Angeles Cnty., Cmnty. Dev. Comm. VRDN (Willowbrook
Project), 4s, 11/1/15 (Wells Fargo Bk. NA LOC) P-1 2,200,000
Los Angeles Cnty., Hsg. Auth. Multi-Fam. Hsg. VRDN
2,000,000 (Riverpark Apts. Project), Ser. D, 3.9s, 9/1/10 (Dai-Ichi
Kangyo Bk. of CA LOC) VMIG1 2,000,000
2,000,000 (Malibu Meadows II Projects), Ser. B, 4s, 12/1/15 (Sumitomo
Bk. LOC) A-1 2,000,000
2,000,000 Los Angeles Cnty., Trans. Comm. Sales Tax VRDN, Ser. A,
FGIC, 3.9s, 7/1/12 (The Indl. Bk. of Japan LOC) VMIG1 2,000,000
1,800,000 Monterey Peninsula, Wtr. Mgmt. Dist. VRDN COP (Waste Wtr.
Reclamation Project), 4.1s, 7/1/22 (Sumitomo Bk., LOC) VMIG1 1,800,000
2,000,000 Moorpark, Multi-Fam. VRDN (Le Club Apts. Project), 4.1s,
11/1/15 (Citibank, NA LOC) A-1 2,000,000
2,100,000 Oakland, TRAN, 4-1/2s, 7/24/95 MIG1 2,103,219
2,000,000 Oakland, VRDN COP (Cap. Equip. Project), 4.55s, 12/1/15
(National Westminster Bk. PLC LOC) A-1 2,000,000
Palm Springs, Cmnty. Redev. Agcy. VRDN COP
1,900,000 (Headquarters Hotel 10 Project), 4.1s, 12/1/14 (First Bk.
Natl. Assn. LOC) A-1 1,900,000
200,000 (Headquarters Hotel 7 Project), 4.1s, 12/1/14 (First Bk.
Natl. Assn. LOC) A-1 200,000
2,000,000 Pomona, Redev. Agcy. Multi-Fam. VRDN (Bauer Group Apt.),
4.4s, 12/1/07 (Bk. America Natl. Tr. & Savings Assoc. LOC)
(Escrowed in government treasuries) MIG1 2,000,000
Sacramento Cnty., Multi-Family Hsg. VRDN
1,495,000 (Smoketree), Ser. A, 4s, 4/15/10 A-1+ 1,495,000
2,000,000 (River Oaks Apts.) Ser. E, 4.2s, 9/15/07 (Dai-Ichi Kangyo
Bk., Ltd. LOC) VMIG1 2,000,000
2,000,000 San Diego, Hsg. Auth. Multi-Fam. VRDN (Paseo Pt. Apts.),
Ser. A, 4.1s, 8/1/15 (Bk. of Tokyo, Ltd. LOC) VMIG1 2,000,000
<PAGE>
PRINCIPAL AMOUNT RATINGS** VALUE
California (continued)
$2,000,000 San Diego, Cmty. Regl. Trans. Comm. Sales Tax VRDN, FGIC,
Ser. A, 3.9s, 4/1/08 (Canadian Imperial Bank of Canada LOC) VMIG1 $ 2,000,000
1,000,000 Santa Clara, Cnty. Hsg. Auth. Multi-Fam. VRDN (Foxchase
Apts.), FGIC, 4s, 11/1/07 VMIG1 1,000,000
2,000,000 Southn. CA Pub. Pwr Auth. VRDN, AMBAC, 3.85s, 7/1/19 (Swiss
Bk. Corp. LOC) VMIG1 2,000,000
2,000,000 Upland, Hsg. Auth. Multi-Fam. VRDN (Upland Village Green
Project), 3-3/4s, 9/1/10 (Bk. of Tokyo Ltd. LOC) VMIG1 2,000,000
Total Municipal Bonds and Notes (cost $50,653,017) $50,653,017
MUNICIPAL COMMERCIAL PAPER (7.3%)*
$2,000,000 CA Poll. Control VRDN (Pacific Gas & Elec. Co.) 4.15s,
5/8/95 (Morgan Gty. LOC) A-1+ $2,000,000
2,000,000 Sacramento, Muni. Utility Dist., VRDN Ser. H 4.05S, 8/11/95
(Morgan Gty. & Bk. of America LOC) A-1 2,000,000
Total Municipal Commercial Paper
(cost $4,000,000) $4,000,000
Total Investments (cost $54,653,017)*** $54,653,017
</TABLE>
<PAGE>
NOTES
* Percentages indicated are based on net assets of $55,061,569, which
correspond to a net asset value per share of $1.00.
** The Moody's or Standard & Poor's ratings indicated are believed to be the
most recent ratings available at March 31, 1995 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, 1995. Securities
rated by Putnam are indicated by "/P" and are not publicly rated.
Moody's Investors Service, Inc. and Standard & Poor's Corp. are the leading
independent rating agencies for debt securities. Moody's Investment Grade, or
"MIG", for most short-term municipal obligations, adding a "V" ("VMIG") for
bonds with a demand or variable feature; the designation "P" is used for tax
exempt commercial paper. Standard & Poor's uses "SP" for notes maturing in
three years or less, "A" for bonds with a demand or variable feature.
Moody's Investor Service, Inc.
MIG1/VMIG1=Best quality; strong protection of cash flow, superior liquidity
and broad access to refinancing
MIG2/VMIG2=High quality; ample protection of cash flow, liquidity support
and ability to refinance
AAA=Strong capacity to pay interest and repay principal and differs from the
higher rated issues only in a small degree
Standard & Poor's Corp.
P-1=Superior capacity for repayment
P-2=Strong capacity for repayment
SP-1=Overwhelming safety characteristics
SP-2=Strong capacity to pay principal interest
A-1+=Overwhelming degree of credit protection
A-1=Strong degree of safety
A-2=Considered strong but lacks solid strength for timely repayment
*** The aggregate identified cost on a tax basis is the same.
The rates shown on Variable Rate Demand Notes (VRDN) are the current interest
rates at March 31, 1995, which are subject to change based on the terms of
the security.
The fund had the following industry group concentrations greater than 10% on
March 31, 1995 (as a percentage of net assets):
<TABLE>
<CAPTION>
<S> <C>
Housing 31.2%
Building & Construction 24.0
Hospital/Healthcare 10.0
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of assets and liabilities
March 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments in securities, at amortized cost (Note 1) $54,653,017
Cash 30,777
Dividends and interest receivable 706,996
Receivable for shares of the fund sold 756,215
Total assets 56,147,005
Liabilities
Payable for shares of the fund repurchased 918,058
Distributions payable to shareholders 100,927
Payable for compensation of Manager (Note 2) 57,013
Payable for administrative services (Note 2) 1,159
Payable for compensation of Trustees (Note 2) 119
Other accrued expenses 8,160
Total liabilities 1,085,436
Net assets $55,061,569
Represented by
Paid-in capital (Note 4) $55,061,569
Net asset value and redemption price per share $1.00
($55,061,569 divided by 55,061,569 shares)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of operations
Six months ended March 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Tax exempt interest income $884,945
Expenses:
Compensation of Manager (Note 2) 117,890
Compensation of Trustees (Note 2) 2,827
Reports to shareholders 17,893
Auditing 16,345
Administrative services (Note 2) 2,462
Other expenses 663
Total expenses 158,080
Net investment income 726,865
Net increase in net assets resulting from operations $726,865
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of changes in net assets
<TABLE>
<CAPTION>
Six months
ended Year ended
March 31 September 30
1995* 1994
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 726,865 $ 896,489
Net increase in net assets resulting
from operations 726,865 896,489
Distributions to shareholders from:
Net investment income (726,865) (896,489)
Increase (decrease) from capital share
transactions (Note 4) 10,262,797 (565,336)
Total increase (decrease) in net assets 10,262,797 (565,336)
Net assets
Beginning of period 44,798,772 45,364,108
End of period $55,061,569 $44,798,772
</TABLE>
* Unaudited.
The accompanying notes are an integral part of these financial statements.
<PAGE>
Financial Highlights
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
Six months
ended
March 31 Year ended September 30
1995* 1994 1993
<S> <C> <C> <C>
Net investment income $ .0145 $ .0192 $ .0175
Net realized gain on investments .0100 -- --
Total from investment operations $ .0245 $ .0192 $ .0175
Total distributions: $(.0245) $(.0192) $(.0175)
Total investment return at net
asset value (%) (b) 1.46(c) 1.94 1.77
Net assets, end of period (in
thousands) $55,062 $44,799 $45,364
Ratio of expenses to average net
assets (%) .31(c) .67 .89
Ratio of net investment income to
average net assets (%) 1.40(c) 1.84 1.78
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the period
October 26, 1987
(commencement
of operations) to
Year ended September 30 September 30
1992 1991 1990 1989 1988
<S> <C> <C> <C> <C>
$ .0262(a) $ .0407(a) $ .0513(a) $ .0566(a) $ .0416(a)
.0001 -- -- .0001 .0001
$ .0263 $ .0407 $ .0513 $ .0567 $ .0417
$(.0263) $(.0407) $(.0513) $(.0567) $(.0417)
2.67 4.15 5.26 5.82 4.25(c)
$58,858 $69,184 $87,095 $73,136 $43,436
.85(a) .80(a) .69(a) .69(a) .58(a)(c)
2.70(a) 4.03(a) 5.12(a) 5.65(a) 4.21(a)(c)
</TABLE>
* Unaudited.
(a) Reflects an expense limitation and, during the period ended September 30,
1988, a wavier of a portion of distribution fees in effect during the period.
As a result of such limitation and waiver, expenses of the fund for the years
ended September 30, 1992, 1991, 1990, 1989 and for the period ended September
30, 1988, reflect per share reductions of $0.0026, $0.0033, $0.0033, $0.0043
and $0.0051, respectively.
(b) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c) Not annualized.
<PAGE>
Notes to financial statements
March 31, 1995 (Unaudited)
Note 1
Significant accounting policies
The fund is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company. The fund seeks as
high a level of current income exempt from federal income tax and California
personal income tax as is consistent with preservation of capital,
maintenance of liquidity and stability of principal by investing primarily in
a diversified portfolio of short-term California tax-exempt securities.
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A) Security valuation The valuation of the fund's portfolio instruments is
determined by means of the amortized cost method as set forth in Rule 2a-7
under the Investment Company Act of 1940. The amortized cost of an instrument
is determined by valuing it at cost originally and thereafter amortizing any
discount or premium from its face value at a constant rate until maturity.
B) Security transactions Security transactions are accounted for on trade
date (date the order to buy or sell is executed).
C) Federal taxes It is the policy of the fund to distribute all of its income
within the prescribed time and otherwise comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies. It is
also the intention of the fund to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Internal Revenue Code
of 1986. Therefore, no provision has been made for federal income and excise
taxes on income and capital gains.
D) Interest income and distributions to shareholders Interest is recorded on
the accrual basis. Income distributions (and distributions of capital gains,
if any) are recorded daily by the fund and are distributed to shareholders
monthly.
Note 2
Management fee, administrative services, and other transactions
Compensation of Putnam Investment Management, Inc. ("Putnam Management"), the
fund's Manager, a wholly-owned subsidiary of Putnam Investments, Inc., for
management and investment advisory services is paid quarterly based on the
average nets assets of the fund. Such fee is based on the following annual
rates: 0.45% of the first $500 million of average net assets, 0.35% of the
next $500 million, 0.30% of the next $500 million, and 0.25% of any amount
over $1.5 billion, subject, under current law, to reduction in any year by
the amount of certain brokerage commissions and fees (less expenses) received
by affiliates of the Manager on the fund's portfolio transactions.
The fund also reimburses the Manager for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $390 and an
additional fee for each Trustees'meeting attended. Trustees who are not
interested persons of the Manager and who serve on committees of the Trustees
receive additional fees for attendance at certain committee meetings.
Custodian functions for the fund are provided by the Putnam Fiduciary Trust
<PAGE>
Company (PFTC), a subsidiary of Putnam Investments, Inc. Investor servicing
agent functions are provided by Putnam Investor Services, a division of PFTC.
Investor servicing and custodian fees reported in the statement of operations
for the six months ended March 31, 1995 have been reduced by credits allowed
by PFTC.
The fund has adopted a distribution plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940, but is not currently making any payments
under the plan.
Putnam Mutual Funds Corp., acting as the underwriter, receives proceeds from
contingent deferred sales charges. These charges apply only to certain shares
that have been exchanged from other Putnam Funds. Putnam Mutual Funds Corp.
received no monies in contingent sales charges from such redemptions for the
six months ended March 31, 1995.
Note 3
Purchases and sales of securities
During the six months ended March 31, 1995, purchases and sales (including
maturities) of investment securities (all short-term obligations) aggregated
$47,177,236 and $49,035,058, respectively. In determining the net gain or
loss on securities sold, the cost of securities has been determined on the
identified cost basis.
Note 4
Capital shares
At March 31, 1995, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares, at a constant net asset
value of $1.00 per share, were as follows:
<TABLE>
<CAPTION>
Six months
ended Year ended
March 31 September 30
1995 1994
<S> <C> <C>
Shares sold 76,096,068 125,528,473
Shares issued in connection with
reinvestment
of distributions 628,928 834,320
76,724,996 126,362,793
Shares repurchased (66,462,199) (126,928,129)
Net increase (decrease) 10,262,797 (565,536)
</TABLE>
<PAGE>
Our commitment to quality service
> CHOOSE AWARD-WINNING SERVICE.
Putnam Investor Services has won the DALBAR Quality Tested Service Seal for
the past five years. The award is presented annually by DALBAR Inc., an
independent firm that monitors and evaluates the quality of service provided
by mutual fund companies throughout the United States. During 1994, DALBAR
ranked firms by conducting 80,000 anonymous performance evaluations based on
55 service components.
> HELP YOUR INVESTMENT GROW.
Set up a systematic program for investing with as little as $25 a month from
a Putnam fund or from your checking or savings account.*
> SWITCH FUNDS EASILY.
You can move money from one account to another with the same class of shares
without a service charge. (This privilege is subject to change or
termination.)
> ACCESS YOUR MONEY QUICKLY.
You can get checks sent regularly or redeem shares any business day the
then-current net asset value, which may be more or less than the original
cost of the shares.
For details about any of these or other services, contact your financial
advisor or call the toll-free number shown below and speak with a helpful
Putnam representative.
> To make an additional investment in this or any other Putnam fund, contact
your financial advisor or call our toll-free number: 1-800-225-1581.
*Regular investing, of course, does not guarantee a profit or protect against
a loss in a declining market. Investors should consider their ability to
continue purchasing shares during periods of low price levels.
<PAGE>
Fund information
INVESTMENT MANAGER
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
George Putnam, Chairman
William F. Pounds, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
John A. Hill
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
Eli Shapiro
A.J.C. Smith
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
William F. McGue
Vice President
Blake E. Anderson
Vice President
Lindsey M. Callen
Vice President and
Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
Beverly Marcus
Clerk and Assistant Treasurer
This report is for the information of shareholders of Putnam California Tax
Exempt Money Market Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives details of
sales charges, investment objectives and operating policies of the fund, and
the most recent copy of Putnam's quarterly Performance Summary. For more
information or to request a prospectus, call toll- free: 1-800-225-1581.
Shares of mutual funds are not deposits or obligations of, or guaranteed or
endorsed by, any financial institution, are not insured by the Federal
Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or any other
agency, and involve risk, including the possible loss of principal amount
invested.
<PAGE>
[Graphic - Putnam Investments logo]
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
064-17790
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS:
(1) Bold and italic typefaces are displayed in normal type.
(2) Headers (e.g., the name of the fund) are omitted.
(3) Certain tabular and columnar headings and symbols are displayed
differently in this filing.
(4) Bullet points and similar graphic signals are omitted.
(5) Page numbering is omitted.
(6) Trademark symbol replaced with (TM)
