PUTNAM CALIFORNIA TAX EXEMPT MONEY MARKET FUND (the "fund")
Prospectus Supplement dated December 11, 1996 to
Prospectus dated February 1, 1996, as revised July 30, 1996
The fund, along with four other Putnam money market funds, has
purchased insurance, which, among other things, will insure a
fund against a decrease in the value of a security held by it due
to default or bankruptcy. Most securities and instruments in
which the funds invest, other than U.S. Government securities,
are covered by this insurance. The insurance may provide the
fund with some protection in the event of a decrease in value of
certain of its portfolio securities due to default or bankruptcy,
but does not insure or guarantee that the fund will maintain a
stable net asset value of $1.
The maximum amount of total coverage under the policy is $30
million, subject to a deductible in respect of each loss equal to
the lesser of $1 million or 0.30% of the fund's net assets. As
of the date of this supplement, the fund's net assets totaled
$29,855,611. Each of the money market funds that has purchased
the insurance has access to the full amount of insurance under
the policy, subject to the deductible. Accordingly, depending
upon the circumstances, the fund may not be entitled to recover
under the policy, even though it has experienced a loss that
would otherwise be insurable. The annual cost to the fund of
purchasing the insurance is expected to equal approximately 0.02%
of the fund's average net assets. This amount is not reflected
in the expense information shown in the prospectus under the
heading "Expenses summary."
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