PUTNAM
CALIFORNIA
INVESTMENT GRADE
MUNICIPAL TRUST
SEMIANNUAL REPORT
October 31, 1995
[LOGO]
BOSTON * LONDON * TOKYO
<PAGE>
FUND HIGHLIGHTS
"Municipal bonds have been playing catch-up in this year's market.
Fears over flat-tax proposals left these investments lagging in the
first half of the year. That underperformance has created some great
opportunities for investors who think the market has overreacted to
the potential for a flat tax."
- -- William H. Reeves, Portfolio Manager, Putnam California Investment
Grade Municipal Trust
"Today, long-term muni yields stand at 88% of Treasury yields, down
slightly from the summer peak but still above customary levels in the
low- to mid-80% range. To many investment pros, that narrower-than-
normal spread between muni and Treasury yields spells bargains."
- -- Money, November 1995
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
10 Portfolio holdings
13 Financial statements
<PAGE>
FROM THE CHAIRMAN
[PHOTO OF GEORGE PUTNAM]
(C) KARSH, OTTAWA
DEAR SHAREHOLDER:
THE PERIOD ENCOMPASSING THE FIRST HALF OF PUTNAM CALIFORNIA INVESTMENT
GRADE MUNICIPAL TRUST'S FISCAL YEAR FOLLOWED ONE OF THE MOST SEVERE
BOND MARKET DOWNTURNS ON RECORD AND ENDED IN THE MIDST OF ONE OF THE
MARKET'S STRONGEST RALLIES.
THE BENEFITS OF THE MARKET'S UPTURN DURING THE SIX MONTHS ENDED
OCTOBER 31, 1995, WERE DAMPENED SOMEWHAT FOR TAX- FREE BOND INVESTORS.
TALK OF A FLAT TAX IGNITED CONCERNS THAT THE TAX ADVANTAGE LONG
ENJOYED BY MUNICIPAL SECURITIES WOULD BE LOST. AS IS SO OFTEN THE
CASE, HOWEVER, THE MARKET OVERREACTED, AND BY THE FISCAL YEAR'S
MIDPOINT IT HAD RECOGNIZED THIS FACT.
FUND MANAGER WILLIAM H. REEVES BELIEVES THAT PROSPECTS OF A FLAT TAX
BEING ENACTED ANY TIME SOON ARE QUITE SLIM. FURTHERMORE, THE FEDERAL
RESERVE BOARD'S SUCCESS IN SLOWING THE PACE OF THE ECONOMY HAS
CONTRIBUTED TO A FAVORABLE ENVIRONMENT FOR BONDS. LOW INFLATION AND
RELATIVELY STABLE BOND YIELDS POINT TO A CONTINUATION OF THOSE
FAVORABLE CONDITIONS THROUGH THE SECOND HALF OF YOUR FUND'S FISCAL
YEAR.
RESPECTFULLY YOURS,
[SIGNATURE]
GEORGE PUTNAM
CHAIRMAN OF THE TRUSTEES
DECEMBER 20, 1995
<PAGE>
REPORT FROM THE FUND MANAGER
WILLIAM REEVES
California's improving economy and efforts by Orange County to put its
financial house back in order have considerably improved prospects for
municipal bonds from around the Golden State. In fact, after
underperforming the national tax-free markets in 1994, California's
municipal-bond market is now regaining its eminent position in the tax-
free bond market. In addition, relatively stable, low interest rates,
as well as low inflation and modest economic growth, have further
enhanced the attractiveness and performance of the state's municipal
bonds.
With all these positive influences, municipal-bond investors might
have had reasons to celebrate, had it not been for Congressional talk
of tax reform, the flat-tax proposal in particular. While uneasy
investors reacted to the perceived effects of a flat tax and not to
any hard facts, their uncertainty depressed demand for tax-free bonds
and dampened the strong rally that began early in calendar 1995.
Putnam California Investment Grade Municipal Trust's performance at
the end of the first half of fiscal 1996 reflected this subdued mood
of the municipal-bond market. For the six months ended October 31,
1995, your fund posted a total return of 8.87% at net asset value,
less than half its performance of 19.47% at NAV on a calendar year-to-
date basis.
FLAT-TAX FEARS CREATING BUYING OPPORTUNITY
The mere talk of a flat tax, which would reduce or even eliminate the
beneficial treatment now accorded municipal bonds, was enough to send
the tax-free market into decline. The underperformance of otherwise
fundamentally sound bonds has created tremendous value, especially for
investors who think the municipal market has overreacted to talk of
such a tax -- which has yet to be formally proposed, let alone enacted
into law.
The underperformance of tax-free securities during the semiannual
period illustrates an important facet of investing --
<PAGE>
the tendency of investors to buy and sell in response to current
events rather than rationally assessing a security's long-term value.
At Putnam, we attempt to capitalize on price distortions and the
opportunities they create through an investment process that relies on
discipline. In-depth credit research and strict buy and sell rules are
critical to provide rational evaluation of short-term events and their
impact on long-term prospects.
Although the potential for tax reform is real, we believe the
municipal markets appear to be overreacting to the moment. Not only is
genuine reform unlikely before 1997, we believe the magnitude of
restructuring that is currently being proposed will make the existing
plans politically unfeasible.
ATTRACTIVE CURRENT YIELDS REFLECT VALUE IN TAX-FREE MARKETS
Because a bond's yield moves in the opposite direction of its price,
one benefit of a market under pressure is the emergence of higher-
yielding securities. Currently, municipal-bond yields are at
attractive levels compared with Treasury bonds of similar maturities.
In fact, municipal-bond yields, which have traditionally traded
between 78% and 84% of Treasury yields, traded closer to 90% or higher
for much of the first half
[BAR CHART]
Hospital/Health care 15.3%
Water & Sewage 14.9%
Utilities 7.2%
* Based on net assets on 10/31/95. Holdings will vary over time.
<PAGE>
of fiscal 1996. This higher yield ratio suggests municipal bonds have
become quite attractive on a valuation basis.
Another way to evaluate the attractiveness of an investment in the
fund is to compare its tax-free yield with that of a taxable
investment. An investor in the maximum 46.24% combined state and
federal tax bracket would have to receive 11.61% from an equivalent
taxable investment to match the fund's 6.24% current dividend rate at
net asset value. (Of course, taxpayers in lower brackets would benefit
to a lesser degree.)
PORTFOLIO EMPHASIS ON QUALITY AND LOW VOLATILITY
During the period, the fund maintained its core position in premium
bonds. The balance -- approximately one third -- is invested in
discount and noncallable bonds. We believe this ratio provides a near-
optimal mix of income and total return potential in today's non-
inflationary environment.
Premium bonds, which are most important for the level of income they
provide, generally experience less price volatility in response to
interest rate changes than do discount bonds. Therein lies the
conservative nature of these high-quality instruments. The discount
and noncallable bonds play more of an aggressive role and typically
appreciate faster than premium and current-coupon bonds in a rising
market environment.
Given our initial assumption that interest rates were likely to remain
flat or even decline during the course of the fiscal year, the fund
has maintained a modestly long duration of approximately 11 years. We
believe this strategy will improve the fund's prospects for price
appreciation in the coming months.
INVESTMENT APPROACH CAUTIOUS BUT OPPORTUNISTIC
Interest rate and inflation trends are expected to be favorable for
the balance of the fiscal year. By all accounts, the Federal Reserve
Board has successfully engineered a soft landing, that is, the slowing
of economic growth to a sustainable level. We believe it now appears
that the Fed's pace and degree of interest rate increases during 1994
have paved the way for solid economic growth with low inflation -- a
situation that is giving bond investors something to cheer about.
[PIE CHART]
AAA AA A BBB BBB/Ba VMIGI BBB/Baa
- -----------------------------------------------------------------
47.0 9.0 18.6 16.6 3.7 1.6 3.5
Expressed as a percentage of the market value of the portfolio on
10/31/95. A bond rated BBB or higher is considered investment grade.
Holdings will vary over time.
The issuance of California municipal bonds is down by approximately
20% from levels at this time last year, more than in many other parts
of the country. At the same time, the demand has increased because of
the state's improving budget and economic situation. We believe
California municipal bonds have the potential to outperform the rest
of the market over the next several months.
The relative underperformance of municipal bonds during the period
makes prospects for these tax-free investments quite attractive for
the balance of fiscal 1996. We believe that municipals may benefit if
flat-tax fears subside and the underlying fundamentals, which remain
quite strong, recapture the attention of investors.
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 10/31/95, there is no guarantee
the fund will continue to hold these securities in the future.
<PAGE>
PERFORMANCE SUMMARY
Performance should always be considered in light of a fund's
investment strategy. Putnam California Investment Grade Municipal
Trust is designed for investors seeking high current income free from
federal and state income tax, consistent with preservation of capital.
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.
TOTAL RETURN FOR PERIODS ENDED 10/31/95
<TABLE><CAPTION>
<S> <C> <C>
(common shares)
NAV MARKET PRICE
- ----------------------------------------------------------------------
6 months 8.87% 2.51%
- ----------------------------------------------------------------------
1 year 17.58 17.35
- ----------------------------------------------------------------------
Life-of-fund (since 11/27/92) 31.12 11.04
Annual average 9.69 3.64
- ----------------------------------------------------------------------
COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 10/31/95
LEHMAN BROS. MUNICIPAL CONSUMER
BOND INDEX PRICE INDEX
- ----------------------------------------------------------------------
6 months 6.76% 1.19%
- ----------------------------------------------------------------------
1 year 14.84 2.81
Life-of-fund (since 11/27/92) 23.10 8.24
Annual average 7.35 2.74
- ----------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/95
(most current calendar quarter)
NAV MARKET PRICE
- ----------------------------------------------------------------------
6 months 6.22% 2.50%
- ----------------------------------------------------------------------
1 year 11.21 9.73
- ----------------------------------------------------------------------
Life-of-fund (since 11/27/92) 27.93 9.39
Annual average 9.06 3.21
- ----------------------------------------------------------------------
<FN>
Performance data represent past results, do not reflect future
performance, and do not take into account any adjustment for taxes
payable on reinvested distributions. Investment returns, net asset
value and market price will fluctuate so that an investor's shares,
when sold, may be worth more or less than their original cost.
</TABLE>
<PAGE>
PRICE AND DISTRIBUTION INFORMATION
(Six months ended 10/31/95)
<TABLE><CAPTION>
<S> <C> <C>
DISTRIBUTIONS
(COMMON SHARES) NAV
- ----------------------------------------------------------------------
Number 6
- ----------------------------------------------------------------------
Income $0.465
- ----------------------------------------------------------------------
Total 0.465
Preferred shares Series A (320 shares)
- ----------------------------------------------------------------------
Total $1,069.75
- ----------------------------------------------------------------------
SHARE VALUE: (common shares) NAV MARKET PRICE
- ----------------------------------------------------------------------
4/30/95 (common shares) $14.16 $13.625
- ----------------------------------------------------------------------
10/31/95 (common shares) 14.90 13.500
- ----------------------------------------------------------------------
CURRENT RETURN (end of period)
- ----------------------------------------------------------------------
Current dividend rate1 6.24% 6.89%
- ----------------------------------------------------------------------
Taxable equivalent2 11.61 12.81
- ----------------------------------------------------------------------
<FN>
1Income portion of most recent distribution, annualized and divided by
NAV or market price at end of period. 2Assumes maximum 46.24% federal
tax rate. Results for investors subject to lower tax rates would not
be as advantageous.
</TABLE>
TERMS AND DEFINITIONS
NET ASSET VALUE (NAV) is the value of all your fund's assets, minus
any liabilities, the liquidation preference and cumulative undeclared
dividends paid on the remarketed preferred shares, divided by the
number of outstanding common shares.
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.
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 does not take into account brokerage
commissions or other costs, may include bonds different from those in
the fund, and may pose different risks than the fund.
CONSUMER PRICE INDEX (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
<PAGE>
PORTFOLIO OF INVESTMENTS OWNED
October 31, 1995 (Unaudited)
KEY TO ABBREVIATIONS
AMBAC AMBAC Indemnity Corporation
CGIC Capital Guaranty Insurance Company
COP Certificate of Participation
FGIC Financial Guaranty Insurance Company
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
IFB Inverse Floating Bonds
MBIA Municipal Bond Investors Assurance Corporation
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (100.3%)*
<TABLE><CAPTION>
<S> <C> <C> <C>
PRINCIPAL AMOUNT RATINGS** VALUE
CALIFORNIA (100.3%)
- ----------------------------------------------------------------------
$3,000,000 Berkeley, Hlth. Fac. Rev. Bonds
(Alta Bates Med. Ctr.), Ser. A, 6.55s,
12/1/22 Baa $3,003,750
3,600,000 CA Edl. Fac. Rev. Bonds
(U. of San Francisco), 6.4s, 10/1/17 A 3,766,500
3,000,000 CA Hlth. Fac. Fin. Auth. Rev. Bonds
(Henry Mayo Newhall ), Ser. A, 8s, 10/1/18 A 3,296,250
2,000,000 (Kaiser Permante), Ser. C, 5.6s, 5/1/33 AA 1,852,500
8,500,000 CA Hsg. Fin. Agcy. Home Mtge.
Rev. Bonds, Ser. D, zero %, 8/1/20 Aa 1,232,500
2,885,000 CA Poll. Control Fin. Auth. Rev.
Bonds (Pacific Gas & Elec Co. Project),
Ser. B, 8 7/8s, 1/1/10 A 3,191,531
CA Poll. Control Fin. Auth. VRDN
(Shell Oil Co. Project),
900,000 Ser. B, 3.8s, 10/1/11 VMIGI 900,000
500,000 Ser A, 3.8s, 10/1/06 VMIGI 500,000
2,000,000 CA State Dept. Wtr. Resources IFB
(Central Valley Project), 9.55s, 12/1/12
(acquired 11/27/92, cost $2,188,785)+ AA 2,605,000
2,000,000 CA State Dept. Wtr. Resources Rev.
Bonds (Central Valley Project), Ser. L, MBIA,
5 1/2s, 12/1/23 AAA 1,932,500
2,000,000 CA State Pub. Wks. Board Lease Rev.
Bonds (Dept. of Corrections Monterey
Cnty. Soledad II), Ser. A 7s, 11/1/19 A 2,185,000
2,000,000 CA Statewide Cmntys. Dev. Auth. COP
(Insured Hlth. Facs., Unihealth), Ser. A,
AMBAC, 5 3/4s 10/1/25 AAA 1,975,000
3,000,000 Calleguas-Las Virgines Pub. Fing. Auth.
Rev. Bonds (Calleguas Muni. Wtr. Dist.
Project), FGIC, 5 1/8s, 7/1/21 AAA 2,752,500
3,000,000 Foothill/Eastern Trans. Corridor Agcy.
Rev. Bonds (California Toll Roads),
Ser. A, 6s, 1/1/34 BBB 2,842,500
<PAGE>
PRINCIPAL AMOUNT RATINGS** VALUE
CALIFORNIA (CONTINUED)
- ----------------------------------------------------------------------
$3,150,000 Irvine Ranch, Wtr. Dist. Jt. Pwr.
Agcy. Rev. Bonds (Issue II), FNMA,
8 1/4s, 8/15/23 A $3,390,188
2,350,000 Long Beach, Fing. Auth. Rev.
Bonds, AMBAC, 5 1/2s, 11/1/22 AAA 2,258,938
5,500,000 Los Angeles Cnty. Metro. Trans.
Auth. Rev. Bonds, AMBAC, 5 1/2s, 7/1/17 AAA 5,369,375
3,120,000 Los Angeles Multi. Fam. Rev. Bonds
(Mission Plaza Apts. Project),
Ser. A, GNMA Coll, 7.8s, 1/20/35 AAA 3,334,500
2,000,000 Metropolitan Wtr. Dist. Southn.
CA Wtrwks. Rev. Bonds 5 1/2s, 7/1/13 AA 1,957,500
5,500,000 Northn. CA Pwr. Agcy. Multi. Cap.
Facs. IFB, MBIA, 8.892s, 8/1/25 AAA 6,077,500
2,000,000 Orange Cnty., Pub. Fac. Corp. COP
(Solid Waste Management), 7 7/8s,
12/1/13 BBB 2,027,500
4,000,000 Rancho, Wtr. Dist. Fin. Auth.
IFB, AMBAC, 8.974s, 8/17/21 AAA 4,930,000
1,630,000 Richmond, Jt. Pwr. Fin. Auth. Rev. Bonds.
(Impt. Dists. 851 & 853), Ser. B, 8 1/2s,
9/2/19 BBB/P 1,680,905
2,890,000 Riverside, Hosp. Rev. Bonds
(Riverside Cmnty. Hosp.), Ser. A,
6 3/4s, 11/1/15 BBB 2,806,913
4,000,000 San Bernardino Jt. Pwrs. Fing. Auth.
Tax Allocation Rev. Bonds Ser. A, CGIC,
5 3/4s, 10/1/15 AAA 3,980,000
2,000,000 San Francisco Bay Area Rapid Tran.
Dist. FGIC, 5 1/2s, 7/1/20 AAA 1,937,500
4,750,000 Santa Clara Cnty. Fin. Auth. Lease
Rev. Bonds (VMC Fac. Replacement Project),
Ser. A, AMBAC, 6 7/8s, 11/15/14 AAA 5,254,688
4,500,000 Vallejo, COP (Marine World Foundation),
8.1s, 2/1/21 BBB/P 4,758,750
West Contra Costa U. School Dist. COP
1,860,000 7 1/8s, 1/1/24 Ba 1,950,673
1,140,000 6 7/8s, 1/1/09 Ba 1,191,300
- ----------------------------------------------------------------------
TOTAL INVESTMENTS (cost $79,361,791)*** $84,941,761
- ----------------------------------------------------------------------
<FN>
NOTES
* Percentages indicated are based on net assets of $84,666,370. Net
assets available to common shareholders are $68,646,960.
** The Moody's or Standard & Poor's ratings indicated are believed
to be the most recent ratings available at October 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 October 31, 1995.
Securities rated by Putnam are indicated by "/P" and are not
publicly rated.
+ Restricted as to public resale. At the date of acquistion these
securities were valued at cost. There were no outstanding
securities of the same class as those held. Total market value of
restricted securities owned at October 31, 1995 was $2,605,000 or
3% of net assets.
*** The aggregate identified cost on a tax basis is $79,361,791,
resulting in gross unrealized appreciation and depreciation of
$5,621,133 and $41,163, respectively, or net unrealized
appreciation of $5,579,970.
The fund had the following insurance concentration greater than
10% of net assets at October 31, 1995:
AMBAC 23.4%
The fund had the following industry group concentrations greater
than 10% of net assets at October 31,1995
Hospitals/Health Care 15.3%
Water & Sewerage 14.9
Utilities 12.6
The rates shown on VRDNs and IFBs are the current interest rates
at October 31, 1995, which are subject to change based on the
terms of the security.
</TABLE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995 (Unaudited)
<TABLE>
<S> <C>
ASSETS
- ----------------------------------------------------------------------
Investments in securities, at value
(identified cost $79,361,791) (Note 1) $84,941,761
- ----------------------------------------------------------------------
Cash 666,061
- ----------------------------------------------------------------------
Interest receivable 1,561,523
- ----------------------------------------------------------------------
Unamortized organization expenses (Note 1) 2,391
- ----------------------------------------------------------------------
TOTAL ASSETS 87,171,736
- ----------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------
Distributions payable to shareholders 357,033
- ----------------------------------------------------------------------
Payable for securities purchased 1,974,753
- ----------------------------------------------------------------------
Payable for compensation of Manager (Note 3) 149,488
- ----------------------------------------------------------------------
Payable for compensation of Trustees (Note 3) 60
- ----------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 3) 2,192
- ----------------------------------------------------------------------
Payable for administrative services (Note 3) 426
- ----------------------------------------------------------------------
Other accrued expenses 21,414
- ----------------------------------------------------------------------
TOTAL LIABILITIES 2,505,366
- ----------------------------------------------------------------------
NET ASSETS $84,666,370
- ----------------------------------------------------------------------
REPRESENTED BY
- ----------------------------------------------------------------------
Remarketed preferred shares, without par value;
320 shares authorized (320 shares issued at $50,000
per share liquidation preference) (Note 2) $16,000,000
- ----------------------------------------------------------------------
Common shares, without par value; unlimited shares
authorized; 4,607,092 shares outstanding (Note 1) 64,176,446
- ----------------------------------------------------------------------
Undistributed net investment income (Note 1) 92,974
- ----------------------------------------------------------------------
Accumulated net realized loss on investments (Note 1) (1,183,020)
- ----------------------------------------------------------------------
Net unrealized appreciation of investments 5,579,970
- ----------------------------------------------------------------------
NET ASSETS $84,666,370
- ----------------------------------------------------------------------
COMPUTATION OF NET ASSET VALUE
- ----------------------------------------------------------------------
Remarketed preferred shares at liquidation preference $16,000,000
- ----------------------------------------------------------------------
Cumulative undeclared dividends on remarketed preferred shares 19,410
- ----------------------------------------------------------------------
Net assets allocated to remarketed preferred shares at
liquidation preference 16,019,410
- ----------------------------------------------------------------------
Net assets available to common shares:
- ----------------------------------------------------------------------
Net asset value per share $14.90 ($68,646,960 divided
by 4,607,092 shares) 68,646,960
- ----------------------------------------------------------------------
NET ASSETS $84,666,370
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
Six months ended October 31, 1995 (Unaudited)
<TABLE>
<S> <C>
TAX EXEMPT INTEREST INCOME $2,797,268
- ----------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------
Compensation of Manager (Note 3) 295,796
- ----------------------------------------------------------------------
Investor servicing and custodian fees (Note 3) 34,689
- ----------------------------------------------------------------------
Compensation of Trustees (Note 3) 3,774
- ----------------------------------------------------------------------
Auditing 20,604
- ----------------------------------------------------------------------
Amortization of organization expenses (Note 1) 1,660
- ----------------------------------------------------------------------
Reports to shareholders 12,672
- ----------------------------------------------------------------------
Legal 5,731
- ----------------------------------------------------------------------
Postage 11,021
- ----------------------------------------------------------------------
Administrative services (Note 3) 1,756
- ----------------------------------------------------------------------
Preferred share remarketing agent fees 403
- ----------------------------------------------------------------------
Other 1,159
- ----------------------------------------------------------------------
TOTAL EXPENSES 389,265
- ----------------------------------------------------------------------
Expense reduction (Note 2) (40,861)
- ----------------------------------------------------------------------
NET EXPENSES 348,404
- ----------------------------------------------------------------------
NET INVESTMENT INCOME 2,448,864
- ----------------------------------------------------------------------
Net realized gain on investments (Notes 1 and 4) 1,608,101
- ----------------------------------------------------------------------
Net unrealized appreciation of investments during
the period 1,825,225
- ----------------------------------------------------------------------
NET GAIN ON INVESTMENTS 3,433,326
- ----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,882,190
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
Statement of changes in net assets
<TABLE><CAPTION>
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31* APRIL 30
- ----------------------------------------------------------------------
1995 1995
- ----------------------------------------------------------------------
INCREASE IN NET ASSETS
- ----------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------
Net investment income $2,448,864 $4,805,233
- ----------------------------------------------------------------------
Net realized gain (loss) on investments 1,608,101 (2,683,740)
- ----------------------------------------------------------------------
Net unrealized appreciation of investments1,825,225 1,990,454
- ----------------------------------------------------------------------
Net increase in net assets resulting from
operations 5,882,190 4,111,947
- ----------------------------------------------------------------------
DISTRIBUTIONS TO REMARKETED PREFERRED
SHAREHOLDERS
- ----------------------------------------------------------------------
From net investment income (342,319) (538,541)
- ----------------------------------------------------------------------
From net realized gains -- (71,815)
- ----------------------------------------------------------------------
In excess of net realized gains -- (12,038)
- ----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
operations applicable to common shareholders
(excluding cumulative undeclared dividends and
capital gain dividends on remarketed preferred
shares of $19,410 and $42,607
respectively.) 5,539,871 3,489,553
- ----------------------------------------------------------------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
- ----------------------------------------------------------------------
From net investment income (2,142,156) (4,369,764)
- ----------------------------------------------------------------------
From net realized gains -- (568,796)
- ----------------------------------------------------------------------
In excess of net realized gains -- (95,343)
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,397,715 (1,544,350)
- ----------------------------------------------------------------------
NET ASSETS
- ----------------------------------------------------------------------
Beginning of period 81,268,655 82,813,005
- ----------------------------------------------------------------------
END OF PERIOD (including undistributed
net investment income of $92,974 and
$128,585 respectively) $84,666,370 $81,268,655
- ----------------------------------------------------------------------
NUMBER OF FUND SHARES
- ----------------------------------------------------------------------
COMMON SHARES OUTSTANDING AT BEGINNING
AND END OF PERIOD 4,607,092 4,607,092
- ----------------------------------------------------------------------
REMARKETED PREFERRED SHARES OUTSTANDING AT
BEGINNING AND END OF PERIOD 320 320
- ----------------------------------------------------------------------
<FN>
* Unaudited.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE><CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD
NOVEMBER 27, 1992
SIX MONTHS (COMMENCEMENT OF
ENDED OPERATIONS TO)
- ----------------------------------------------------------------------
OCTOBER 30 YEAR ENDED APRIL 30 APRIL 30
- ----------------------------------------------------------------------
1995* 1995 1994 1993
- ----------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $14.16 $14.49 $15.12 $14.02**
- ----------------------------------------------------------------------
INVESTMENT OPERATIONS:
Net investment income .53 1.04 1.03 .41(a)
- ----------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .74 (.15) (.40) 1.12
TOTAL FROM INVESTMENT OPERATIONS1.27 .89 .63 1.53
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
From net investment income:
to preferred shareholders (.07) (.12) (.12) (.03)***
to common shareholders (.46) (.95) (.93) (.31)
From net realized gain:
to preferred shareholders -- (.01) (.02) --
to common shareholders -- (.12) (.18) --
In excess of net realized
gain to common shareholders -- (.02) -- --
- ----------------------------------------------------------------------
TOTAL DISTRIBUTIONS (.53) (1.22) (1.25) (.34)
- ----------------------------------------------------------------------
Preferred share offering costs -- -- (.01) (.09)***
- ----------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD
(common shares) $14.90 $14.16 $14.49 $15.12
- ----------------------------------------------------------------------
MARKET VALUE, END OF PERIOD
(common shares) $13.50 $13.63 $13.88 $14.88
- ----------------------------------------------------------------------
TOTAL INVESTMENT RETURN AT
MARKET VALUE (common shares) (%)(b) 2.51(d) 6.67 .31 1.23(d)
- ----------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(total fund) (in thousands) $84,666 $81,269 $82,813 $85,647
- ----------------------------------------------------------------------
Ratio of expenses to
average net assets (%) (c)(e).58(d) 1.20 1.07 .33(a)(d)
- ----------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c)3.7(d) 6.52 5.84 2.69(a)(d)
- ----------------------------------------------------------------------
Portfolio turnover rate (%)43.26(d) 101.23 54.06 43.46(d)
- ----------------------------------------------------------------------
<FN>
* Unaudited.
** Represents initial net asset value of $14.10 less offering
expenses of approximately $0.08.
*** Preferred shares were issued on February 18, 1993.
(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 3).
(b) Total investment return assumes dividend reinvestment and does
not reflect the effect of sales charges.
(c) Ratios reflect net assets available to common shares, net
investment income ratio also reflects reduction for income
dividend distributions and declared payments to preferred
shareholders.
(d) Not annualized.
(e) The ratio of expenses to average net assets for the six months
ended October 31, 1995 includes amounts paid through expense
offset arrangements. Prior period ratios exclude these amounts.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1995 (Unaudited)
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 and cumulative undeclared
dividends paid on remarketed preferred shares, by the total number of
common shares outstanding.
<PAGE>
D FEDERAL TAXES It is the policy of the fund to distribute all of its
income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to
distribute an amount sufficient to avoid imposition of any excise tax
under Section 4982 of the Internal Revenue Code of 1986. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held and for excise tax on
income and capital gains. At April 30, 1995 the fund had a capital
loss carryover of approximately $753,425 which may be available to
offset future realized gains to the extent provided by regulations.
This amount will expire on April 30, 2003.
E DISTRIBUTIONS TO SHAREHOLDERS Distributions to common and preferred
shareholders are recorded by the fund on the ex-dividend (common and
preferred) 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 28 day period. The
applicable dividend rate for the remarketed preferred shares on
California Investment Grade Municipal Trust was 3.69%.
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.
F AMORTIZATION OF BOND PREMIUM AND DISCOUNT Any premium resulting from
the purchase of securities in excess of maturity value is amortized on
a yield-to-maturity basis. Discount on zero-coupon bonds, step-up
bonds and original issue discount bonds is accreted according to the
effective yield method.
<PAGE>
G UNAMORTIZED ORGANIZATION EXPENSES Expenses incurred by the fund in
connection with its organization, its registration with the Securities
and Exchange Commission and with various states and the initial public
offering of its shares were $12,024. These expenses are being
amortized on a straight-line basis over a five-year period.
NOTE 2
REMARKETED PREFERRED SHARES 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.
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. For the six months ended October 31, 1995, there
were no such restrictions on the fund.
NOTE 3
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 during the period).
<PAGE>
The fund reimburses Putnam Management for the compensation and related
expenses of certain officers of the fund and their staff who provide
administrative services to the fund. The aggregate amount of all such
reimbursements is determined annually by the Trustees.
Trustees of the fund receive an annual Trustee's fee of $530 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.
During the six months ended October 31,
1995, the fund adopted a Trustee Fee Deferral Plan (the "Plan") which
allows the Trustees to defer the receipt of all or a portion of
Trustees fees payable on or after July 1, 1995. The deferred fees
remain in the fund and are invested in the fund or in other Putnam
funds until distribution in accordance with the Plan.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-ownedsubsidiary of Putnam
Investments, Inc. Investor servicing agent functions are provided by
PutnamInvestor Services, a division of PFTC.
For the six months ended October 31, 1995, fund expenses were reduced
by $40,861 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 offset arrangments in an
income-producing asset if it had not entered into such arrangements.
NOTE 4
PURCHASES AND SALES OF SECURITIES During the six months ended October
31, 1995, purchases and sales of investment securities other than
short-term investments aggregated $42,253,805 and $34,535,303,
respectively. In determining the net gain or loss on securities sold,
the cost of securities has been determined on the identified cost
basis.
<PAGE>
SELECTED QUARTERLY DATA
(UNAUDITED)
<TABLE><CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET INCREASE
NET REALIZED (DECREASE) IN
AND UNREALIZED NET ASSETS
INVESTMENT NET INVEST- GAIN (LOSS) ON RESULTING FROM
INCOME MENT INCOME INVESTMENTS OPERATIONS
QUARTER PER PER PER PER
ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
- --------------------------------------------------------------------------------
- -------
10/31/95 $1,427,347 $.31 $1,101,331 $.23 $2,382,822 $.51 $3,484,153 $.74
- --------------------------------------------------------------------------------
- -------
7/31/95 $1,369,921 $.30 $1,028,411 $.22 $1,050,504 $.23 $2,078,915 $.45
- --------------------------------------------------------------------------------
- -------
4/30/95 $1,389,764 $.30 $1,034,349 $.22 $2,341,857 $.50 $3,376,206 $.72
- --------------------------------------------------------------------------------
- -------
1/31/95 $1,372,289 $.30 $1,088,151 $.24 $ 256,135 $.05 $1,344,286 $.29
- --------------------------------------------------------------------------------
- -------
10/31/94 $1,465,080 $.32 $1,092,630 $.23 $(3,778,702) $(.81) $(2,686,072) $(.58)
- --------------------------------------------------------------------------------
- -------
7/31/94 $1,356,924 $.29 $1,008,950 $.22 $ 487,424 $.11 $1,496,374 $.33
- --------------------------------------------------------------------------------
- -------
4/30/94 $1,365,012 $.29 $1,004,269 $.21 $(6,920,591) $(1.51) $(6,001,179) $(1.32)
- --------------------------------------------------------------------------------
- -------
1/31/94 $1,383,360 $.30 $1,007,194 $.24 $ 705,801 $.15 $1,782,995 $.39
- --------------------------------------------------------------------------------
- -------
10/31/93 $1,399,089 $.31 $1,045,563 $.23 $2,986,551 $.65 $4,032,114 $.88
- --------------------------------------------------------------------------------
- -------
7/31/93 $1,384,972 $.30 $1,057,110 $.23 $1,455,691 $.31 $2,512,801 $.54
- --------------------------------------------------------------------------------
- -------
<FN>
Per common share.
</TABLE>
<PAGE>
RESULTS OF OCTOBER 5, 1995 SHAREHOLDER MEETING
An annual meeting of shareholders of the fund was held on October 5,
1995. At the meeting, each of the nominees for Trustees was elected,
as follows:
VOTES FOR VOTES WITHHELD
- ----------------------------------------------------------------------
Jameson Adkins Baxter 4,341,105 58,148
- ----------------------------------------------------------------------
Hans H. Estin 4,344,530 54,722
- ----------------------------------------------------------------------
Elizabeth T. Kennan 4,340,918 58,334
- ----------------------------------------------------------------------
Lawrence J. Lasser 4,338,429 60,823
- ----------------------------------------------------------------------
Donald S. Perkins 4,344,717 54,536
- ----------------------------------------------------------------------
William F. Pounds 4,342,117 57,136
- ----------------------------------------------------------------------
George Putnam 4,344,217 55,036
- ----------------------------------------------------------------------
George Putnam, III 4,339,497 59,755
- ----------------------------------------------------------------------
E. Shapiro 4,333,718 65,535
- ----------------------------------------------------------------------
A.J.C. Smith 4,343,906 55,346
- ----------------------------------------------------------------------
W. Nicholas Thorndike 4,343,700 55,553
- ----------------------------------------------------------------------
A proposal to ratify the selection of Price Waterhouse LLP as auditors
for the fund was approved as follows: 4,331,987 votes for, and 15,834
votes against, with 51,432 abstentions and broker non-votes. All
tabulations have been rounded to the nearest whole number. Fund
information
<PAGE>
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 COUNCIL
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
James E. Erickson
Vice President
Blake Anderson
Vice President
William H. Reeves
Vice President and Fund Manager
William N. Shiebler
Vice President
John R. Verani
Vice President
Paul M. O'Neil
Vice President
John D. Hughes
Vice President and Treasurer
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>
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
Bulk Rate
U.S. Postage
PAID
Putnam
Investments
21693-184 12/95
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED
AND EDGAR-FILED TEXTS.
(1) Rule lines for tables are omitted.
(2) Italic typefaces is displayed in normal type.
(3) Boldface type is displayed in capital letters.
(4) Headers (e.g. the names of the fund) and footers (e.g. page
numbers and OThe accompanying notes are an integral part of these
financial statementsO) are omitted.
(5) Because the printed page breaks are not reflected, certain
tabular and columnar headings and symbols are displayed
differently in this filing.
(6) Bullet points and similar graphic symbols are omitted.
(7) Page numbering is different.
