(logo)
Putnam
California
Investment
Grade
Municipal
Trust
Annual Report
April 30, 1994
(artwork)
For investors seeking high current income free from federal and
California income tax, consistent with preservation of capital
Contents
2 How your fund performed
3 From the Chairman
4 Report from Putnam Management
Annual Report
6 Report of Independent Accountants
7 Portfolio of investments owned
10 Financial statements
20 Tax information
21 Fund performance supplement
23 Your Trustees
<PAGE>
How your
fund performed
For periods ended April 30, 1994
Total return* Lehman
Fund Brothers
Market Municipal Consumer
(common shares) NAV price Bond Index Price Index
1 year 3.07% 0.31% 2.16% 2.36%
Life-of-fund
(since 11/27/92) 13.46 1.55 8.11 3.80
annualized 9.24 1.08 5.61 2.64
Share data (common shares) NAV Market price
April 30, 1993 $15.12 $14.875
April 30, 1994 $14.49 $13.875
Distributions(a)
Fiscal year ended
April 30, 1994 Investment Capital
(common shares) Number income gains Total
12 $0.93 $0.18 $1.11
(preferred shares) Series
320 shares A $1,807.45 $265.16 $2,072.61
Current returns Taxable equivalents+
at the end of the period Market Market
(common shares) NAV price NAV price
Current dividend rate 6.42% 6.70% 11.94% 12.46%
* Performance data represent past results. Investment return,
net asset value, and market price will fluctuate so an investor's
shares, when sold, may be worth more or less than their original
cost.
(a) Capital gains, if any, are taxable. For some investors,
investment income may also be subject to the alternative
minimum tax.
+ Assumes maximum 46.24% combined California state and federal
tax rate. Results for investors subject to lower tax rates will
differ; however, many may still be able to achieve attractive tax
benefits from a fund investment. Consult your tax advisor for
guidance.
<PAGE>
Terms you need to know
Total return is the change in value of an investment from the
beginning to the end of a period, assuming the reinvestment of
all distributions. It may be shown at net asset value or at
market price.
Net asset value (NAV) is the value of all your fund's assets,
minus any liabilities, the liquidation preference and undeclared
dividends on the remarketed preferred shares, divided by the
number of outstanding common shares. (See Note 1C in Notes to
financial statements.)
Market price is the current trading price of one share of the
fund. Market prices are set by transactions between buyers and
sellers on the New York Stock Exchange.
Current dividend rate is calculated by annualizing the income
portion of the fund's most recent distribution and dividing by
the NAV or market price on the last day of the period.
Taxable equivalent return is the return thata taxable investment
would have to produce to equal the fund's current return.
Please see the fund performance supplement on page 21 for
additional information about performance comparisons.
<PAGE>
From the
Chairman
(photograph of George Putnam)
(c) Karsh, Ottawa
George Putnam
Chairman
of the Trustees
Dear Shareholder:
Putnam California Investment Grade Municipal Trust continues to
meet its primary objective of providing attractive monthly income
free from California and federal income taxes. On April 30, 1994,
your fund's dividend rate at net asset value was 6.42% -- an
attractive tax-free yield, given the rates available on alternative
taxable investments. The fund has achieved this goal by
concentrating assets in such sectors as public works and utilities
-- industries that historically have offered relatively high-
coupon bonds. The fund's 12-month performance suffered somewhat in
the wake of rising interest rates but weathered recent turbulence
better than the market in general, based on results at net asset
value.
Interest rates rarely move smoothly and this has certainly been the
case this spring. Signs of growing strength in the economy caused
much nervousness in the bond market and renewed fears of inflation.
As a result, the Federal Reserve Board began raising short-term
interest rates for the first time in five years, sparking a
greater-than-expected level of market fluctuation. The bond market
reacted as any economist would have predicted. Prices on existing
bonds fell as interest rates on Treasury bonds increased across the
entire yield spectrum.
The ability to fine-tune a portfolio in response to changing
economic conditions demonstrates a significant advantage of
professional management. Thomas Goggins, the fund's manager, has
worked to minimize the price depreciation that naturally results
from a rising interest rate environment while capturing the higher
income potential offered by newer municipal bonds coming to market.
In spite of the bond market volatility amid speculation about
future interest rate increases, we believe Putnam California
Investment Grade Municipal Trust's methodically structured
portfolio will continue to deliver attractive levels of tax-free
income in the coming months and beyond.
Respectfully yours,
George Putnam
June 15, 1994
(C) Copyright<PAGE>
Report from Putnam Management
Top 10 holdings on 4/30/94*
------------------------------------
CA State Pub. Works Lease
Cmnwlth. of Puerto Rico
No. CA Pwr. Agcy.
CA Health Fac. Fin. Auth.
Rancho Wtr. Dist. Fin. Auth.
Vallejo
Stanislaus
CA Poll. Control Fin. Auth.
Central Coast Wtr. Auth.
Santa Maria
*Based on net assets.Portfolio holdings are subject to change.
Favorable economic and supply/demand trends were not enough to
offset the dampening effect this spring's sudden interest rate
increases had on bond prices. Nevertheless, Putnam California
Investment Grade Municipal Trust's total return performance for the
12 months ended April 30, 1994, was 3.07% at net asset value,
outperforming the Lehman Brothers Municipal Bond Index, which
returned 2.16% for the same period. The portfolio's diversity
appears to have been a crucial factor in softening the impact of
the rate increases.
On a yield basis, the fund continues to meet its objective of
providing a stable source of tax-exempt income. To bring home the
tax advantages of a fund investment, consider this: to keep pace
with the fund's 6.42% dividend rate at net asset value at the end
of the period, shareholders who pay the maximum 46.24% federal and
state rate would have had to receive 11.94% from an equivalent
taxable investment. Most investors in lower brackets would also
enjoy substantial tax benefits.
Inflation fears fuel rising rates Having reached a 20-year bottom
in October 1993, low interest rates dominated the financial
landscape until the last three months of the fiscal year, when they
began to climb noticeably. Strong economic indicators for the
fourth quarter of 1993 and throughout the first months of 1994
aggravated fears of rising inflation and led the Federal Reserve
Board to raise short-term interest rates three times in three
months. As a result, the 30-year Treasury bond yield reached 7.31%
by the end of the period -- a considerable increase from the 20-
year low of 5.79% last October.
Municipal bonds have not been immune to the price depreciation that
naturally follows interest rate increases; however, the news is not
all bad. Investors, preoccupied with short-term losses and
inflationary fears, may well overlook sound buying opportunities.
With the aid of our extensive in-house research capabilities, we're
able to identify and capture promising securities at attractive
prices. Of course, there is an obvious benefit of rising interest
rates: the fund's income stream can directly benefit from the
purchase of new bonds coming to market -- bonds that carry a
higher coupon than has been available during recent months.
Proactive management In a rising interest rate environment,
judicious management can be invaluable in cushioning the price
fluctuation that accompanies rate increases. Consequently, we've
been reducing the fund's position in residual interest bonds
(RIBS). The price and yield of these bonds, also called inverse
floaters, rise in tandem as interest rates decline, contributing to
the fund's income and total return performance. While the RIBS
continue to provide attractive yields in the higher interest rate
climate, we thought it prudent to reduce the position from about
20% to approximately 15% of fund assets in an effort to soften
price volatility.
The proceeds from the sale of the RIBS have been invested in what
we call "credit story" bonds -- bonds chosen more for the
creditworthiness of the bond's issuer than for their current price
or yield. In this way, we are deliberately removing some of the
unpredictability of a volatile interest rate market and replacing
it with what we perceive is a more manageable risk: the ability of
an issuer to repay its debt.
Three of the newly purchased bonds are worth mentioning. The
education sector saw the addition of $4 million Vallejo, California
Certificate of Participation, which funded the development of a
marine park outside San Francisco. The issuer, a nonprofit
organization, is actively involved in scientific research and is
one of the larger employers in Vallejo. While these bonds are not
currently rated by the major rating agencies, our research finds
them comparable to bonds with a BBB rating -- making them strong
candidates for capital appreciation potential. Visible evidence of
sounder finances and a turnaround in management prompted us to add
Baa-rated Berkeley California Alta Bates Medical Center Bonds. Our
third selection, Stanislaus California Certificate of
Participation, falls in the pollution control arena. We believe the
combination of attractive prices and yields make each of these
bonds an outstanding buy.
A longer view The fundamental outlook for municipal bonds remains
a positive one. Favorable supply/demand trends have played and are
expected to continue to play a pivotal role in your fund's
performance during the upcoming fiscal year. Rising interest rates
have had a sobering effect on the refinancing phenomenon, reducing
supply from one of the largest sources of new issues. In the face
of higher taxes and strengthening demand, shrinking supply could
further enhance the value of the bonds in the portfolio, and thus,
the fund's net asset value.
<PAGE>
While the economy has been slow to recover, we believe California,
particularly the southern region, stands to benefit from the
increased business resulting from the North American Free Trade
Agreement. As the state's economy improves, prospects for lower-
rated bonds improve. Coupled with the more attractive pricing
environment, our hands-on research intensive management approach
will be critical to uncovering investment opportunities all along
the credit quality spectrum.
<PAGE>
Annual
Report
For the year ended April 30, 1994
Report of Independent Accountants
To the Trustees and Shareholders of
Putnam California Investment Grade Municipal Trust
In our opinion, the accompanying statement of assets and
liabilities, including the portfolio of investments owned (except
for bond ratings), and the related statements of operations and of
changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Putnam
California Investment Grade Municipal Trust (the "Fund") at April
30, 1994, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits
of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of investments owned
at April 30, 1994 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where
confirmations from brokers were not received, provide a reasonable
basis for the opinion expressed above.
Price Waterhouse
Boston, Massachusetts
June 17, 1994
<PAGE>
<TABLE>
<CAPTION>
Portfolio of
investments owned
April 30, 1994
Municipal Bonds and Notes (97.1%)(a)
Principal Amount Ratings(b) Value
<S> <C> <C> <C>
California (86.9%)
$ 3,260,000 Avalon, Cmnty. Impt. Agcy. Tax Alloc.
Rev. Bonds (Community Improvement
Project), Ser. B, 6.4s, 8/1/22 A $ 3,113,300
3,000,000 Berkeley, Hlth. Facs. Rev. Bonds
(Alta Bates Med. Ctr.), Ser. A, 6.55s, 12/1/22 Baa 2,782,500
CA Hlth. Facs. Fin. Auth. Variable Rate
Demand Notes (VRDN), Ser. A
1,000,000 (Sutter Hlth.), 2.95s, 3/1/20 VMIG1 1,000,000
4,500,000 (St. Joseph Hlth. Syst.), 2.9s, 7/1/13 VMIG1 4,500,000
2,000,000 CA Hlth. Facs. Fin. Rev. Bonds
(Pacific Presbyterian), Ser. B, 6 3/4s, 6/1/15 A 2,000,000
8,500,000 CA Hsg. Fin. Agcy. Home Mtge. Rev. Bonds,
Ser. D, zero %, 8/1/20 Aa 1,094,375
3,300,000 CA Poll. Control Fin. Auth. Solid Waste Disposal
Rev. Bonds (Keller Canyon Landfill Co.
Project), 6 7/8s, 11/1/27 A 3,448,500
2,000,000 CA State Dept. of Wtr. Resources, Residual
Interest Bonds (RIBS) (Central Valley Project),
10.703s, 12/1/12 (acquired 11/27/92,
cost $2,198,104)(c) AA 2,460,000
CA State Pub. Works Board Lease Rev. Bonds
(CA State U. Projects), Ser. A
2,500,000 6.7s, 10/1/17 A 2,559,375
5,500,000 6.6s, 12/1/22 AAA 6,077,500
500,000 CA Statewide Cmnty. Dev. Auth. Certif. of
Participation, 6 1/2s, 8/1/22 A $ 486,875<PAGE>
1,500,000 Carson, Redev. Agcy. Rev. Bonds
(Redev. Project Area No. 1), 6 3/8s, 10/1/16 Baa 1,430,625
3,200,000 Central Coast Wtr. Auth. Rev. Bonds
(State Wtr. Project), American Municipal Bond
Assurance Corp. (AMBAC), 6.6s, 10/1/22(d) AAA 3,268,000
1,000,000 El Cajon, Redev. Agcy. Tax Alloc. Rev. Bonds
(El Cajon Redev. Project), AMBAC, 6.6s, 10/1/22 AAA 1,025,000
2,180,000 Fresno, Certif. of Participation (Unified School Dist.),
7 1/4s, 3/1/07 A 2,264,475
5,500,000 No. CA Pwr. Agcy. Multi. Cap. Facs. RIBS,
Municipal Bond Insurance Assn. (MBIA),
10.105s, 9/2/25 AAA 5,788,750
2,750,000 Poway, Certif. of Participation, Financial
Security Assurance, Inc. (FSA), (Cap. Impt.
Project), 7s, 7/1/20 AAA 2,880,625
3,000,000 Rancho Mirage, Hosp. Certif. of Participation
(Eisenhower Memorial Hosp.), 7s, 3/1/12 Baa/P 2,977,500
4,000,000 Rancho, Wtr. Dist. Fin. Auth. RIBS, AMBAC,
9.974s, 8/17/21 AAA 4,595,000
2,890,000 Riverside, Hosp. Rev. Bonds
(Riverside Cmnty. Hosp.), Ser. A, 6 3/4s, 11/1/15 BBB $2,720,213
3,200,000 Santa Maria, Certif. of Participation
(Marian Med. Ctr.), 6 3/4s, 9/1/22 A 3,132,000
3,300,000 Stanislaus, Solid Waste Facs. Certif. of
Participation (Ogden Martin Syst., Inc.
Project), 7 5/8s, 1/1/10 BBB 3,555,750
2,000,000 U. of CA Rev. Bonds (Multiple Purpose Projects),
Ser. A, 6 7/8s, 9/1/16 A 2,235,000
4,500,000 Vallejo, Certif. of Participation
(Marine World Foundation), 8.1s, 2/1/21 BBB/P 4,584,375
West Contra Costa U. School Dist.
Certif. of Participation
860,000 7 1/8s, 1/1/24 BBB 836,350
1,140,000 6 7/8s, 1/1/09 BBB 1,117,200
71,933,288
<PAGE>
Puerto Rico (10.2%)
Cmnwlth. of Puerto Rico, Hwy. & Trans. Auth. Rev. Bonds
$ 4,000,000 Ser. V, 6 5/8s, 7/1/12 Baa $ 4,065,000
4,000,000 Ser. T, 6 1/2s, 7/1/22 AAA 4,395,000
8,460,000
Total Investments(cost $78,736,336)(e) $80,393,288
/TABLE
<PAGE>
Notes
(a) Percentages indicated are based on total net assets of
$82,813,005. Net assets available to common shareholders are
$66,774,522, which correspond to a net asset value per common share
of $14.49.
(b) The Moody's or Standard & Poor's ratings indicated are
believed to be the most recent ratings available at April 30, 1994
for the securities listed. Ratings are generally ascribed to
securities at the time of issuance. While the rating agencies may
from time to time revise such ratings, they undertake no obligation
to do so, and the ratings do not necessarily represent ratings the
agencies would ascribe to these securities at April 30, 1994.
Securities rated by Putnam are indicated by "/P" and are not
publicly rated. Ratings are not covered by the Report of
Independent Accountants.
(c) Restricted as to public resale. At the date of acquisition,
this security was valued at cost. There were no outstanding
unrestricted securities of the same class as that held. Total
market value of the restricted security owned at April 30, 1994 was
$2,460,000 or 3.0% of net assets.
(d) A portion of this security was pledged to cover margin
requirements for future contracts at April 30, 1994. The market
value segregated with the custodian for transactions in future
contracts was $2,042,500.
(e) The aggregate identified cost for federal income tax purposes
is $78,736,336, resulting in gross unrealized appreciation and
depreciation of $2,748,784 and $1,091,832, respectively, or net
unrealized appreciation of $1,656,952.
The rates shown on Variable Rate Demand Notes (VRDN) and Residual
Interest Bonds (RIBS) are current interest rates at April 30, 1994,
which are subject to change based on the terms of the security.
The Fund had the following industry group concentrations greater
than 10% at April 30, 1994 (as a percentage of net assets):
Utilities 13.9%
Hospitals 13.2
Transportation 10.2
The Fund had the following insurance concentration greater than
10% at April 30, 1994 (as a percentage of net assets):
AMBAC 10.7%
<PAGE>
Futures Contracts Outstanding (at April 30, 1994)
Total Aggregate Expiration Unrealized
Value Face Value Data Appreciation
US Treasury
Bond Futures
(Sell) $5,225,000 $5,302,969 Jun/94 $77,969
US Treasury
Note Futures
(Sell) 1,053,120 1,082,490 Jun/94 29,370
$107,339
<PAGE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
April 30, 1994
<S> <C> <C>
Assets
Investments in securities, at value (identified cost $78,736,336) (Note 1) $80,393,288
Cash 10,332
Interest receivable 1,260,838
Unamortized organization expenses (Note 1) 7,334
Receivable for securities sold 3,728,391
Variation margin on futures contracts 13,438
Total assets 85,413,621
Liabilities
Distributions payable to shareholders $409,332
Payable for securities purchased 2,000,750
Payable for compensation of Manager (Note 4) 143,932
Payable for compensation of Trustees (Note 4) 78
Payable for investor servicing and custodian fees (Note 4) 15,421
Payable for administrative services (Note 4) 2,088
Other accrued expenses 29,015
Total liabilities 2,600,616
Net assets $82,813,005
Represented by
Series A remarketed preferred shares, without par value;
320 shares authorized (320 shares issued at $50,000
per share liquidation preference) (Note 3) $16,000,000
Common shares, without par value; unlimited shares
authorized; 4,607,092 shares outstanding 64,177,325
Undistributed net investment income 230,778
Accumulated net realized gain on investments 640,611
Net unrealized appreciation of investments 1,764,291
<PAGE>
Net assets
Computation of net asset value
Remarketed preferred shares at liquidation preference $16,000,000
Cumulative undeclared capital gain dividends on remarketed
preferred shares 38,483
Net assets allocated to remarketed preferred sharesat
liquidation preference 16,038,483
Net assets available to common shares: Net asset
value per share $14.49 ($66,774,522 divided by 4,607,092 shares) 66,774,522
Net assets $82,813,005
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
For the year ended April 30, 1994
<S> <C> <C>
Tax exempt interest income $5,532,433
Expenses:
Compensation of Manager (Note 4) $611,986
Investor servicing and custodian fees (Note 4) 63,136
Compensation of Trustees (Note 4) 7,023
Administrative services (Note 4) 1,230
Auditing 46,672
Exchange listing fees 8,510
Reports to shareholders 5,270
Amortization of organization expenses (Note 1) 3,292
Postage 1,812
Preferred share remarketing agent fees 6,022
Other 14,961
Total expenses 769,914
Net investment income 4,762,519
Net realized gain on investments (Notes 1 and 4) 1,167,376
Net realized gain on futures 209
Net unrealized depreciation of investments during the period (2,940,139)
Net loss on investments (1,772,554)
Net increase in net assets resulting from operations $2,989,965
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Statement of
changes in net assets
For the period
November 27, 1992
For the (commencement of
year ended operations) to
April 30 April 30
1994 1993*
<S> <C> <C>
Increase (decrease)in net assets
Operations:
Net investment income $4,762,519 $1,881,837
Net realized gain on investments 1,167,376 387,138
Net realized gain on futures 209 --
Net unrealized appreciation (depreciation)
of investments (2,940,139) 4,704,430
Net increase in net assets resulting from operations 2,989,965 6,973,405
Distributions to remarketed preferred shareholders from:
Net investment income (578,383) (123,066)
Net realized gains (84,851) --
Net increase in net assets resulting from operations
applicable to common shareholders (excluding
cumulative undeclared capital gain dividends on
remarketed preferred shares of $38,483 and $0,
respectively) 2,326,731 6,850,339
Distributions to common shareholders from:
Net investment income (4,284,931) (1,428,469)
Net realized gains (829,261)
Increase from capital share transactions:
Issuance of remarketed preferred shares (Note 3) -- 16,000,000
Issuance of common shares (Note 2) -- 64,550,039
Underwriting commissions and offering costs on
remarketed preferred shares (Note 3) (46,642) (424,801)
<PAGE>
Total increase (decrease) in net assets (2,834,103) 85,547,108
Net assets 85,647,108 100,000
End of period (including undistributed net
investment income of $230,778 and $330,302,
respectively) $82,813,005 $85,647,108
Number of fund shares
Common shares outstanding at beginning of period 4,607,092 7,092
Shares issued in public offering -- 4,600,000
Common shares outstanding at end of period 4,607,092 4,607,092
Remarketed preferred shares at beginning of period 320 --
Remarketed preferred shares issued in public offering -- 320**
Remarketed preferred shares outstanding at end of period 320 320
* See Note 2.
** From issuance on February 18, 1993 (Note 3).
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Financial
Highlights
(For a share outstanding throughout the period)
For the period
November 27, 1992
For the (commencement of
year ended operations) to
April 30 April 30
1994 1993*
<S> <C> <C>
Net Asset Value, Beginning of Period (common shares) $15.12 $14.02*
Investment Operations:
Net Investment Income 1.03 .41(a)
Net Realized and Unrealized Gain (Loss) on Investments (.40) 1.12
Total from Investment Operations .63 1.53
Less Distributions from:
Net Investment Income:
to Preferred Shareholders (.12) (.03)**
to Common Shareholders (.93) (.31)
Net Realized Gains
to Preferred Shareholders (.02) --
to Common Shareholders (.18) --
Total Distributions (1.25) (.34)
Preferred Share Offering Costs (.01) (.09)**
Net Asset Value, End of Period (common shares) $14.49 $15.12
Market Value, End of Period (common shares) $13.88 $14.88
Total Investment Return at Market Value
(common shares) (%)(b) 0.31 2.86(c)
Net Assets, End of Period (Total Fund) (in thousands) $82,813 $85,647
Ratio of Expenses to Average Net Assets (%)(d) 1.07 .78(a)(c)
Ratio of Net Investment Income to Average Net Assets (%)(d) 5.84 6.33(a)(c)
Portfolio Turnover Rate (%) 54.06 43.46(e)
* Represents initial net asset value of $14.10 less offering expenses of approximately
$0.08.
** Preferred shares were issued on February 18, 1993. See Note 3.
(a) Reflects a waiver of the management fee for the period November 27, 1992 to February
19, 1993. As a result of such waiver, expenses of the Fund for the period ended April 30,
1993 reflect a reduction of approximately $0.02 per share. See Note 4.
(b) Total investment return assumes dividend reinvestment and does not reflect the effect
of sales charges.
(c) Annualized.
(d) Ratios reflect net assets available to common shares only; net investment income
ratio also reflects reduction for dividend payments to preferred shareholders.
(e) Not annualized.
</TABLE>
<PAGE>
Notes to
financial statements
April 30, 1994
Note 1 Significant accounting policies
The Fund is registered under the Investment Company Act of 1940, as
amended, as a non-diversified, closed-end management investment
company. The Fund's investment objective is to seek high current
income exempt from federal income tax and California personal
income tax. The Fund intends to achieve its objective by investing
in investment grade municipal securities constituting a portfolio
that the Fund's Manager believes to be consistent with preservation
of capital.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
A) Security valuation Tax-exempt bonds and notes are stated on the
basis of valuations provided by a pricing service, approved by the
Trustees, which uses information with respect to transactions in
bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities
in determining value. The fair value of restricted securities is
determined by the Manager following procedures approved by the
Trustees, and such valuations and procedures are reviewed
periodically by the Trustees.
B) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to
buy or sell is executed). Interest income is recorded on the
accrual basis.
C) Determination of net asset value Net asset value of the common
shares is determined by dividing the value of all assets of the
Fund (including accrued interest and dividends), less all
liabilities (including accrued expenses), and the liquidation value
of any outstanding remarketed preferred shares, by the total number
of common shares outstanding.
D) Futures A futures contract is an agreement between two parties
to buy and sell a security at a set price on a future date. Upon
entering into such a contract, the Fund is required to pledge to
the broker an amount of cash or securities equal to the minimum
"initial margin" requirements of the exchange. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as "variation
margin", and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value
of the underlying securities may not correspond to the change in
value of the futures contracts.
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.
Therefore, no provision has been made for federal taxes on income,
capital gains or unrealized appreciation of securities held or
excise tax on income and capital gains.
F) Distributions to shareholders Distributions to common and
preferred shareholders are recorded by the Fund on the ex-dividend
date. Dividends on remarketed preferred shares become payable,
when, as, and if declared by the trustees. Each dividend period for
the remarketed preferred shares is generally a 30-day period until
January 13, 1995. The applicable dividend rate for the remarketed
preferred shares on April 30, 1994 was 3.90% per annum and is fixed
until January 13, 1995. Each subsequent dividend period will
generally be a 28-day period and the applicable dividend rate will
be the dividend rate determined by the remarketing agent.
G) Amortization of bond premium and discount Any premium resulting
from the purchase of securities in excess of maturity value is
amortized on a yield-to-maturity basis. Discount on zero-coupon
bonds, stepped-coupon bonds and original issue discount bonds is
accreted according to the effective yield method.
H) Unamortized organization expenses Expenses incurred by the Fund
in connection with its organization aggregated $12,024. These
expenses are being amortized on a straight-line basis over a five-
year period.
Note 2 Initial capitalization and offering of shares
The Fund was established as a Massachusetts business trust under
the laws of the Commonwealth of Massachusetts on October 5, 1992.
During the period October 5, 1992 to November 26, 1992 the Fund had
no operations other than those related to organizational matters,
including the initial capital contribution of $100,000, and the
issuance of 7,092 common shares to Putnam Mutual Funds Corp., a
wholly owned subsidiary of Putnam Investments, Inc. on November 12,
1992.
On November 27, 1992, the Fund completed the initial offering of
4,000,000 of its common shares for which it received net proceeds
of $56,400,000 before deducting $309,961 of initial offering
expenses. Such offering expenses and the Fund's organizational
expenditures were paid initially by Putnam Investment Management,
Inc. "Putnam Management," the Fund's Manager, a wholly owned
subsidiary of Putnam Investments, Inc. and the Fund reimburses the
Manager for such costs. Regular investment operations commenced on
November 27, 1992.
On January 19, 1993, the Fund completed a supplemental offering of
600,000 common shares for which it received net proceeds of
$8,460,000.
Note 3 Remarketed preferred shares
On February 18, 1993, the Fund issued 320 remarketed preferred
shares. Proceeds to the Fund, before underwriting expenses of
$280,000 and offering expenses of $191,443, amounted to
$16,000,000. Such offering expenses and the Fund's underwriting
expenditures were paid initially by Putnam Investment Management,
Inc., the Fund's Manager, and the Fund reimbursed the Manager for
such costs. These expenses were charged against net assets of the
Fund available to common shareholders. The remarketed preferred
shares are redeemable at the option of the Fund on any remarketing
date at a redemption price of $50,000 per share, plus an amount
equal to any dividends accumulated on a daily basis but unpaid
through the redemption date (whether or not such dividends have
been declared) and, in certain circumstances, a call premium. There
were no undeclared income dividends on remarketed preferred shares
at April 30, 1994.
It is anticipated that dividends paid to holders of remarketed
preferred shares will be considered tax-exempt dividends under the
Internal Revenue Code of 1986, as amended. To the extent that the
Fund earns taxable income and capital gains by the conclusion of a
fiscal year, it is required to apportion to the holders of the
remarketed preferred shares throughout that year additional
dividends as necessary to result in an after-tax yield equivalent
to the applicable dividend rate for the period. As ofApril 30,
1994, the Fund apportioned additional dividends of $78,008.
Under the Investment Company Act of 1940, the Fund is required to
maintain asset coverage of at least 200% with respect to the
remarketed preferred shares as of the last business day of each
month in which any such shares are outstanding. Additionally, the
Fund is required to meet more stringent asset coverage requirements
under the terms of the remarketed preferred shares and the shares'
rating agencies. Should these requirements not be met, or should
dividends accrued on the remarketed preferred shares not be paid,
the Fund may be restricted in its ability to declare dividends to
common shareholders or may be required to redeem certain of the
remarketed preferred shares. At April 30, 1994, there were no such
restrictions on the Fund.
<PAGE>
Note 4 Management fee, administrative services, and other
transactions
Compensation of Putnam Management, the Fund's Manager, for
management and investment advisory services is paid quarterly based
on the average net assets of the Fund, including net assets
attributable to remarketed preferred shares. Such fee is based on
the annual rate of 0.70% of the first $500 million of the average
net asset value of the Fund, 0.60% of the next $500 million, 0.55%
of the next $500 million and 0.50% of any excess over $1.5 billion
of such average net asset value.
If dividends payable on remarketed preferred shares during any
dividend payment period plus any expenses attributable to
remarketed preferred shares for that period exceed the Fund's net
income attributable to the proceeds of the remarketed preferred
shares during that period, then the fee payable to Putnam
Management for that period will be reduced by the amount of the
excess (but not more than .70% of the liquidation preference of the
remarketed preferred shares outstanding duringthe period).
In connection with the initial offering of shares of the Fund,
Putnam Management agreed to waive its management fee for the period
November 27, 1992 (commencement of operations) to February 19,
1993.
The Fund also reimburses the Manager for the compensation and
related expenses of certain officers of the Fund and their staff
who provide administrative services to the Fund. The aggregate
amount of all such reimbursements is determined annually by the
Trustees. For the year ended April 30, 1994 the Fund paid $1,230
for these services.
Trustees of the Fund receive an annual Trustee's fee of $540 and an
additional fee for each Trustees' meeting attended. Trustees who
are not interested persons of the Manager and who serve on
committees of the Trustees receive additional fees for attendance
at certain committee meetings.
Custodial functions for the Fund'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. Fees paid for these investor
servicing and custodial functions for the year ended April 30, 1994
amounted to $63,136.
Investor servicing and custodian fees reported in the Statement of
operations for the year ended April 30, 1994 have been reduced by
credits allowed by PFTC.
<PAGE>
Note 5 Purchases and sales of securities
During the year ended April 30, 1994, purchases and sales of
investment securities other than short-term investments aggregated
$44,680,952 and $52,020,542, respectively. Purchases and sales of
short-term municipal obligations aggregated $31,700,000 and
$27,100,000, respectively. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
The following is a summary of futures contracts activity during the
year:
Sales of Futures Contracts
Number of Aggregate
Contracts Face Value
Contracts opened 70 $7,345,772
Contracts closed (10) (960,313)
Contracts open end of year 60 $6,385,459
<PAGE>
Federal tax information
The Fund has designated all distributions from net investment
income paid during the fiscal year as exempt-interest dividends.
Thus 100% of these distributions are exempt from federal income tax
and California personal income tax. The Form 1099 you will receive
in January 1995 will tell you the tax status of any distributions
paid to your account in calendar 1994. The income earned from each
state will also be reported to you at this time. The Fund also paid
short-term capital gains distribution of .1597 per share and long-
term capital gains of .0387 during the fiscal year. This amount was
previously reported to you on Form 1099 in January 1994.
Fund performance supplement
Putnam California Investment Grade Municipal Trust is a portfolio
managed for high current income free from California state tax and
federal income tax, consistent with preservation of capital.
The Lehman Brothers Municipal Bond Index is an unmanaged list of
long-term, fixed-rate, investment-grade, tax-exempt bonds
representative of the municipal bond market. The index does not
take into account brokerage commissions or other costs, may include
bonds different from those in the fund, and may pose different
risks from the fund.
The Consumer Price Index is a commonly used measure of inflation;
it does not represent an investment return.
The fund performance supplement has been prepared by Putnam
Management to provide additional information about the fund and the
indexes used for performance comparisons. The information is not
part of the portfolio of investments owned or the financial
statements.
<PAGE>
<TABLE>
<CAPTION>
Selected quarterly data*
(Unaudited)*
For the period
November 27, 1992
(commencement of
Three months ended operations) to
April 30 January 31 October 31 July 31 April 30 January 31
1994 1994 1993 1993 1993** 1993
<S> <C> <C> <C> <C> <C> <C>
Total investment income
Total $1,365,012 $1,383,360 $1,399,089 $1,384,972 $1,381,531 $715,956
Per Share*** $.29 $.30 $.31 $.30 $.31 $.15
Net investment income available to common shareholders
Total $1,004,269 $1,077,194 $1,045,563 $1,057,110 $1,052,874 $705,897
Per Share*** $.21 $.24 $.23 $.23 $.23 $.15
Net realized and unrealized gain/loss on investments
Total $(6,920,597) $705,801 $2,986,551 $1,455,691 $2,824,038 $2,267,530
Per Share*** $(1.51) $.15 $.65 $.31 $.61 $.51
Net increase/decrease in net assets available
to common shareholders resulting from operations
Total $(6,001,179) $1,782,995 $4,032,114 $2,512,801 $3,876,912 $2,973,427
Per Share*** $(1.32) $.39 $.88 $.54 $.84 $.66
Net assets available to common shareholders at end of period
Total $66,774,522 $73,881,488 $74,010,364 $71,088,472 $69,647,108 $67,226,650
Per Share*** $14.49 $16.04 $16.06 $15.43 $15.12 $14.59
* In connection with the initial offering of shares of the Fund, Putnam Investment Management agreed to waive its
management fee for the period November 27, 1992 (commencement of operations) to February 19, 1993.
** Preferred shares were issued on February 18, 1993.
*** Per common share.
/TABLE
<PAGE>
Your
Trustees
George Putnam
Chairman
Chairman and President,
The Putnam Funds
William F. Pounds
Vice Chairman
The Putnam Funds,
Professor of Management,
Alfred P. Sloan
School of Management,
Massachusetts Institute of
Technology
Jameson Adkins Baxter
President,
Baxter Associates, Inc.
Hans H. Estin
Vice Chairman,
North American Management Corporation
John A. Hill
Principal and Managing Director,
First Reserve Corp.
Elizabeth T. Kennan
President
Mount Holyoke College
Lawrence J. Lasser
President and Chief Executive Officer,
Putnam Investments, Inc.
Robert E. Patterson
Executive Vice President,
Cabot Partners Limited Partnership
Donald S. Perkins
Director of various corporations
George Putnam, III
President,
New Generation Research, Inc.
A.J.C. Smith
Chairman of the Board
and Chief Executive Officer,
Marsh & McLennan Companies, Inc.
<PAGE>
W. Nicholas Thorndike
Director of various corporations
<PAGE>
Putnam
California
Investment
Grade
Municipal
Trust
Fund information
Investment manager
Putnam Investment
Management, Inc.
One Post Office Square
Boston, MA 02109
Marketing services
Putnam Mutual Funds Corp.
One Post Office Square
Boston, MA 02109
Investor servicing agent
Putnam Investor Services
Mailing address:
P.O. Box 41203
Providence, RI 02940-1203
1-800-225-1581
Custodian
Putnam Fiduciary
Trust Company
Legal counsel
Ropes & Gray
Independent accountants
Price Waterhouse
(DALBAR logo)
Putnam Investor Serives
has received the DALBAR
award each year since the
award's 1990 inception.
In more than 10,000 tests
of 38 shareholder
service components,
Putnam outperformed
the industry standard
in every category.
MCA-12458<PAGE>
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
John R. Verani
Vice President
Gary N. Coburn
Vice President
James E. Erickson
Vice President
Thomas Goggins
Vice President and Fund Manager
William N. Shiebler
Vice President
John D. Hughes
Vice President and Treasurer
Paul O'Neil
Vice President
Beverly Marcus
Clerk and Assistant Treasurer
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time for
up-to-date information about the fund's NAV or to request Putnam's
quarterly Closed-End Fund Commentary.
<PAGE>
Bulk Rate
U.S. Postage
Paid
Boston, MA
Permit No. 53749
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
APPENDIX TO FORM N30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN
PRINTED AND EDGAR-FILED TEXTS:
(1) Rule lines for tables are omitted.
(2) Boldface and italic typefaces are displayed in normal type.
(3) Headers (e.g, the name of the fund) and footers (e.g., page
numbers and "The accompanying notes are an integral part of these
financial statements") are omitted.
(4) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed differently
in this filing.
(5) Bullet points and similar graphic signals are omitted.
(6) Page numbering is different.
