Putnam
California
Investment Grade
Municipal Trust
SEMIANNUAL REPORT
October 31, 1997
[LOGO: BOSTON * LONDON * TOKYO]
Fund highlights
* "California has achieved general fund operating surpluses for each of
the past five years and . . . another is anticipated in the 1997-98
budget."
-- Fitch Investors Service, L.P.
* "The fund's primary strategies have been to accent income and minimize
interest-rate risk. This emphasis on income and capital preservation
makes the fund an attractive investment in a well-rounded portfolio,
particularly during periods when other markets experience volatility."
-- William H. Reeves, manager
CONTENTS
4 Report from Putnam Management
8 Fund performance summary
10 Portfolio holdings
12 Financial statements
18 Results of October 9, 1997 shareholder meeting
From the Chairman
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[copyright] Karsh, Ottawa
Dear Shareholder:
Against a backdrop of lingering concerns about the economy, interest
rates, and renewed inflation, the municipal bond market maintained a
semblance of stability during the six months ended October 31, 1997. In
that respect, these investors reflected the mood of the national tax-
exempt market.
Recognizing the fragility of this generally positive environment, William
Reeves, Putnam California Investment Grade Municipal Trust's manager,
pursued a slightly defensive policy during the period, which encompasses
the first half of the fund's fiscal year. As he looks toward the months
immediately ahead, Bill sees little reason to waver from this course.
In the report that follows, he provides more details about the fiscal
year's first half and provides some insights into what he believes is in
store for the second half.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
December 17, 1997
Report from the Fund Manager
William H. Reeves
Optimistic about California's economic and fiscal scenarios and mindful of
a reduced supply in the state's municipal bonds, investors pushed
California tax-exempt bond prices higher over the six months ended October
31, 1997. During the period, which coincided with the first half of Putnam
California Investment Grade Municipal Trust's current fiscal year, the
fund participated fully in this favorable market environment, producing a
total return of 7.80% at net asset value (9.43% at market price). Your
fund's performance was well ahead of the 6.36% total return posted by the
Lehman Brothers Municipal Bond Index. We attribute these results to our
emphasis on income and quality as we work to minimize share price
fluctuations. Please turn to pages 8 and 9 for more information on the
fund's performance.
* ECONOMIC STRENGTH AND LOW INFLATION RAISE INVESTOR CONFIDENCE
California municipal bond investors benefited from a favorable investment
environment at the national, state, and local levels. On the national
front, the economy continued to experience solid growth with only minimal
inflationary pressures. Reflecting this atmosphere, interest rates moved
within a narrow, well-defined range but had shifted downward by the end of
the period.
Economic strength historically has been a precursor of rising inflation, a
relationship that caused investors to drive interest rates higher -- and
bond prices lower -- as soon as signs of stronger economic growth
appeared. However, an increasing number of investors have come to believe
that as a result of improvements in productivity and technology, low
inflation can accompany steady economic growth over the longer term. This
growing confidence has provided an attractive backdrop for fixed-income
investing.
* CALIFORNIA DEMONSTRATES CONTINUED ECONOMIC AND FISCAL IMPROVEMENT
California's municipal bond investors also benefited from economic and
fiscal soundness at the state and local levels. The state continued to
enjoy brisk economic activity, particularly in the areas of entertainment,
tourism, banking, and high technology. Tax revenues from these industries
poured into state and local treasuries, enhancing California's already
solid fiscal operations.
The current prosperity represents a dramatic turnaround from the early
1990s, when the state was faced with a severe recession and a large budget
deficit. The improvement in California's economic and fiscal conditions --
which includes a balanced budget -- has attracted an increasing number of
nationally diverse investors. This growing demand has been met with a
reduction of approximately 20% in this year's supply of the state's
municipal bonds, a situation that also has forced prices higher.
We see two reasons for the decline in bond supply. First, stronger
economic growth generated an increase in tax revenues. This improved cash
flow lowered the need for debt financing. Second, California voters passed
Proposition 218, an ordinance requiring voter approval by a two-thirds
majority of any new taxes or fees. Prior to Proposition 218, the state and
its localities could unilaterally impose increases in taxes or fees. The
need for voter approval delayed the funding process and to some extent
appears to have curbed new issuance. We are watchful for any negative
credit implications that may result from Proposition 218, although its
passage had a positive effect on California municipal bond prices over the
reporting period.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Hospitals/health care 19.7%
Housing 13.3%
Utilities 10.9%
Water and sewerage 9.0%
Education 8.3%
Footnote reads:
*Based on net assets as of 10/31/97. Holdings will vary over time.
* EMPHASIS ON QUALITY AND INCOME DRIVE PERFORMANCE
As in the past, high credit quality and attractive income remained key
criteria for our prospective bond purchases during the period.
Approximately 70% of the portfolio's net assets were invested in bonds
rated Aaa or Aa, the highest ratings assigned by Moody's Investors
Service. The substantial weightings in these categories gave your fund an
average portfolio quality of Aa.
In addition to maximizing safety and security, we also believed higher-
rated bonds provided the best relative value this year. As investors
continued to seek higher yields in the face of falling interest rates and
a healthy economy, many became more comfortable taking on additional
credit risk. This trend helped drive up lower-rated bond prices relative
to those of higher-rated bonds and drive their yields lower. As the yield
differential narrowed, we believed that investors were not being
appropriately compensated for the additional credit risk of lower-rated
bonds and that higher-rated bonds offered better value.
To keep the fund's yield competitive, we invested in bonds with high
coupons, which not only generated an attractive income stream but
cushioned price fluctuations. We continued to use inverse floaters,
derivative securities whose coupons move in the opposite direction of
short-term interest rates. Before acquiring an inverse floater, we subject
it to in-depth analysis and those that are acquired for the portfolio are
monitored closely on a continuing basis.
We also continued to employ portfolio leverage to further enhance income
during the period. Using this strategy, we issue preferred shares that pay
dividends at current short-term interest rates and reinvest the proceeds
from these sales in longer-term bonds carrying higher yields. The
difference between the income generated by the longer-term bonds and the
dividends the fund pays to the preferred shareholders significantly
increased the income distributed to the fund's shareholders during the
period.
Minimizing market risk was another key aspect of your fund's strategy over
this period. We sought to accomplish this by focusing on bonds with
intermediate-term maturities, which gave the portfolio an average duration
of 8.2 years. Duration measures a portfolio's sensitivity to interest-rate
risk -- the longer a fund's duration, the greater the interest-rate risk.
We believed intermediate-term bonds also offered attractive relative
value, providing more than 85% of the yield but incurring less than 60% of
the interest-rate risk of bonds maturing in 30 years.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
Aaa 55.2%
Aa 13.3%
A 14.6%
Baa 10.4%
Ba 6.5%
Footnote reads:
*As a percentage of market value as of 10/31/97. A bond rated Baa or
higher is considered investment grade. All ratings reflect Moody's
descriptions unless noted otherwise; percentages may include unrated
bonds considered by Putnam Management to be of comparable quality.
Ratings will vary over time.
* STATE'S OUTLOOK REMAINS FAVORABLE
Our outlook for California municipal bonds is quite positive at present.
We expect solid economic growth within the state to continue to strengthen
California's fiscal operations and attract demand for its municipal bonds.
We also look for supply to remain limited as a result of implementation of
Proposition 218. This supply/demand environment should bode well for the
state's municipal bond prices in the months ahead.
On the national front, we expect the economy to continue growing at a
moderate pace. Although we do not expect a sharp resurgence in inflation,
we are mindful that the strength and duration of the current expansion
could begin to stimulate price pressures. With this economic projection as
a backdrop, we will maintain a defensive posture, continuing to accent
income and quality.
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 10/31/97, there is no guarantee the fund will
continue to hold these securities in the future.
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 California
income taxes, consistent with capital preservation.
TOTAL RETURN FOR PERIODS ENDED 10/31/97
(common shares)
Lehman Bros.
Market Municipal Consumer
NAV price Bond Index Price Index
- --------------------------------------------------------------------------
6 months 7.80% 9.43% 6.36% 0.87%
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1 year 9.14 15.67 8.50 2.08
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Life of fund (11/27/92) 54.20 48.30 41.23 13.80
Annual average 9.18 8.32 7.27 2.66
- --------------------------------------------------------------------------
Performance data represent past results and do not reflect future
performance. They 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.
PRICE AND DISTRIBUTION INFORMATION
6 months ended 10/31/97
- --------------------------------------------------------------------------
Distributions (common shares)
- --------------------------------------------------------------------------
Number 6
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Income $0.465
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Capital gains1 --
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Total $0.465
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Preferred shares Series A (320 shares)
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Income $939.36
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Total $939.36
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Share value (common shares) NAV Market price
- --------------------------------------------------------------------------
4/30/97 $14.80 $15.000
- --------------------------------------------------------------------------
10/31/97 15.49 15.9375
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Current return
(common shares, end of period)
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Current dividend rate2 6.00% 5.84%
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Taxable equivalent3 10.96 10.66
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1 Capital gains, if any, are taxable for federal and, in most cases, state
tax purposes. For some investors, investment income may also be subject
to the federal alternative minimum tax. Investment income may be subject
to state and local taxes.
2 Income portion of most recent distribution, annualized and divided by
NAV or market price at end of period.
3 Assumes maximum 45.22% combined federal and state tax rate. Results for
investors subject to lower tax rates would not be as advantageous.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested all
distributions in the fund.
Net asset value (NAV) is the value of all your fund's assets, minus any
liabilities and the net assets allocated to 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 American
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. Securities in the fund
do not match those in the indexes and performance of the fund will differ.
It is not possible to invest directly in an index.
Consumer Price Index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
<TABLE>
<CAPTION>
Portfolio of investments owned
October 31, 1997 (Unaudited)
Key to Abbreviations
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FNMA Coll. -- Federal National Mortgage Association Collateralized
FRB -- Floating Rate Bonds
FSA -- Financial Security Assurance
GNMA Coll. -- Government National Mortgage Association Collateralized
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
MUNICIPAL BONDS AND NOTES (95.6%) *
PRINCIPAL AMOUNT RATINGS** VALUE
California (95.6%)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Anaheim, Pub. Fin. Auth. Lease Rev. Bonds
(Pub. Impts.)
$4,200,000 Ser. C, FSA, 6s, 9/1/16 Aaa $4,614,750
3,200,000 Ser. A, FSA, 5s, 9/1/27 Aaa 3,060,000
3,000,000 Berkeley, Hlth. Fac. Rev. Bonds (Alta Bates
Med. Ctr.), Ser. A, 6.55s, 12/1/22 Baa 3,360,000
1,500,000 Big Bear Lake Wtr. Rev. Bonds, MBIA, 6s, 4/1/22 Aaa 1,661,250
3,600,000 CA Edl. Fac. Auth. Rev. Bonds
(U. of San Francisco), 6.4s, 10/1/17 AAA 4,005,000
CA Hlth. Fac. Fin. Auth. Rev. Bonds
3,000,000 (Henry Mayo Newhall), Ser. A, 8s, 10/1/18 A 3,158,940
2,000,000 (Catholic Healthcare West), Ser. E, AMBAC,
5 1/4s, 7/1/16 Aaa 1,982,500
CA Hsg. Fin. Agcy. Home Mtge. Rev. Bonds
3,020,000 Ser. C, 8.3s, 8/1/19 AA 3,114,013
2,760,000 Ser. A, 7 3/4s, 8/1/17 Aa 2,901,450
2,885,000 CA Poll. Control Fin. Auth. Rev. Bonds
(Pacific Gas & Elec. Co.), Ser. B, 8 7/8s, 1/1/10 A 2,952,769
2,000,000 CA State Dept. Wtr. Resources IFB
(Central Valley), 9.367s, 12/1/12
(acquired 11/27/92, cost $2,198,104) [DBL. DAGGER] Aa 2,930,000
2,000,000 CA State Pub. Wks. Board Lease Rev. Bonds
(Dept. of Corrections Monterey Cnty. Sole),
Ser. A, 7s, 11/1/19 AAA 2,345,000
3,150,000 Irvine Ranch, Wtr. Dist. Jt. Pwr. Agcy. Rev. Bonds
(Issue II), FNMA Coll., 8 1/4s, 8/15/23 A 3,250,706
3,120,000 Los Angeles, Multi-Fam. Rev. Bonds (Mission
Plaza Apts.), Ser. A, GNMA Coll., 7.8s, 1/20/35 AAA 3,420,300
5,500,000 Northern CA Pwr. Agcy. Multi. Cap. Fac. IFB,
MBIA, 9.045s, 9/2/25 Aaa 6,586,248
2,000,000 Orange Cnty., Pub. Fac. Corp. COP (Solid Waste
Management), 7 7/8s, 12/1/13 Baa 2,093,260
3,250,000 Rancho, Wtr. Dist. Fin. Auth. IFB, AMBAC,
8.974s, 8/17/21 Aaa 3,875,625
2,800,000 San Bernardino, Dept. of Trans. Lease Fin. Auth.
Rev. Bonds, Ser. A, 5 1/2s, 12/1/14 A 2,852,500
2,200,000 San Diego, Multi-Fam. Hsg. FRB (Flores-A-RMK),
3.45s, 6/1/05 AA+ 2,200,000
2,000,000 San Francisco, Bldg. Auth. Lease Rev. Bonds
(San Francisco Civic Ctr. Complex), Ser. A,
AMBAC, 5 1/4s, 12/1/16 Aaa 1,990,000
4,750,000 Santa Clara Cnty., Fin. Auth. Lease Rev. Bonds
(VMC Fac. Replacement), Ser. A, AMBAC,
6 7/8s, 11/15/14 Aaa 5,539,688
3,000,000 U. of CA Hosp. Rev. Bonds (U. of CA, Med. Ctr.),
AMBAC, 5 3/4s, 7/1/15 Aaa 3,138,750
5,000,000 Vallejo COP (Marine World Foundation),
7s, 2/1/17 BB/P 5,381,250
3,345,000 Victor, Elementry School Dist. COP (School
Construction Refinancing), MBIA, 6.45s, 5/1/18 Aaa 3,880,200
West Contra Costa, U. School Dist. COP
1,860,000 7 1/8s, 1/1/24 BBB 2,015,775
1,140,000 6 7/8s, 1/1/09 BBB 1,244,025
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Total Investments (cost $76,756,412) *** $83,553,999
- -------------------------------------------------------------------------------------
* Percentages indicated are based on net assets of $87,376,109
** The Moody's or Standard & Poor's ratings indicated are believed to be
the most recent ratings available at October 31, 1997 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, 1997. Securities rated by Putnam are
indicated by "/P" and are not publicly rated.
*** The aggregate identified cost on a tax basis is $76,756,412,
resulting in gross unrealized appreciation and depreciation of
$7,290,570 and $492,983, respectively, or net unrealized appreciation
of $6,797,587.
[DBL. DAGGER] Restricted, excluding 144A securities, as to public resale. The total
market value of restricted securities held at October 31, 1997 was
$2,930,000 or 3.4% of net assets.
The fund had the following industry group concentrations greater than
10% at October 31, 1997 (as a percentage of net assets):
Hospitals/healthcare 19.7%
Housing 13.3
Utilities 10.9
The fund had the following insurance concentrations greater than 10%
at October 31, 1997 (as a percentage of net assets):
AMBAC 18.9%
MBIA 13.9
The rate shown on Floating Rate Bonds are the current interest rates
shown at October 31, 1997, which are subject to change based on the
terms of the security.
The rates shown on IFB, which are securities paying interest rates
that vary inversely to changes in the market interest rates, and
VRDN's are the current interest rates at October 31, 1997.
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
October 31, 1997 (Unaudited)
<S> <C>
Assets
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Investments in securities, at value
(identified cost $76,756,412) (Note 1) $83,553,999
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Cash 865,255
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Interest receivable 1,483,529
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Receivable for securities sold 2,040,000
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Total assets 87,942,783
Liabilities
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Distributions payable to shareholders 357,028
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Payable for compensation of Manager (Note 2) 156,135
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Payable for investor servicing and custodian fees (Note 2) 4,864
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Payable for compensation of Trustees (Note 2) 6,133
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Payable for administrative services (Note 2) 362
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Other accrued expenses 42,152
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Total liabilities 566,674
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Net assets $87,376,109
Represented by
- ----------------------------------------------------------------------------------------------------
Series A remarketed preferred shares (320 shares issued and
outstanding at $50,000 per share) (Note 4) $16,000,000
- ----------------------------------------------------------------------------------------------------
Paid-in capital -- common shares (unlimited shares authorized) (Note 1) 64,107,285
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Undistributed net investment income (Note 1) 127,642
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment (Note 1) 343,595
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 6,797,587
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Total -- Representing net assets applicable to
capital shares outstanding $87,376,109
Computation of net asset value
- ----------------------------------------------------------------------------------------------------
Series A remarketed preferred shares $16,000,000
- ----------------------------------------------------------------------------------------------------
Cumulative undeclared dividends on remarketed preferred shares 23,340
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Net assets allocated to remarketed preferred shares -- liquidation preference $16,023,340
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Net assets available to common shares $71,352,769
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Net asset value per common share ($71,352,769 divided by 4,607,092 shares) $15.49
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended October 31, 1997 (Unaudited)
<S> <C>
Tax exempt interest income $2,774,802
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Expenses:
- ----------------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 307,725
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Investor servicing and custodian fees (Note 2) 41,218
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Compensation of Trustees (Note 2) 4,733
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Administrative services (Note 2) 2,170
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Reports to shareholders 6,532
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Auditing 27,391
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Legal 7,785
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Postage 6,556
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Exchange listing fees 2,002
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Preferred share remarketing agent fees 18,684
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Other 3,672
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Total expenses 428,468
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Expense reduction (Note 2) (23,778)
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Net expenses 404,690
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Net investment income 2,370,112
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Net realized gain on investments (Notes 1 and 3) 399,874
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments period during the period 2,844,176
- ----------------------------------------------------------------------------------------------------
Net gain on investments 3,244,050
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Net increase in net assets resulting from operations $5,614,162
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of changes in net assets
Six months ended Year ended
October 31 April 30
1997* 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase in net assets
- ----------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------
Net investment income $2,370,112 $4,862,731
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments 399,874 236,300
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 2,844,176 890,339
- ----------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 5,614,162 5,989,370
- ----------------------------------------------------------------------------------------------------
Distributions to remarketed preferred shareholders:
- ----------------------------------------------------------------------------------------------------
From net investment income (300,594) (550,902)
- ----------------------------------------------------------------------------------------------------
From net realized gain on investments -- (13,379)
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Net increase in net assets resulting from operations
applicable to common shareholders (excluding cumulative
undeclared dividends on remarketed preferred shares
of $23,340 and $42,253, respectively) 5,313,568 5,425,089
- ----------------------------------------------------------------------------------------------------
Distributions to common shareholders:
- ----------------------------------------------------------------------------------------------------
From net investment income (2,142,101) (4,183,999)
- ----------------------------------------------------------------------------------------------------
From net realized gain on investments -- (100,243)
- ----------------------------------------------------------------------------------------------------
Total increase in net assets 3,171,467 1,140,847
Net assets
- ----------------------------------------------------------------------------------------------------
Beginning of period 84,204,642 83,063,795
- ----------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $127,642 and $200,225, respectively) $87,376,109 $84,204,642
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
- ----------------------------------------------------------------------------------------------------
* Unaudited
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ----------------------------------------------------------------------------------------------------------------------
Six months ended For the period
Per-share October 31 Nov. 27, 1992+
operating performance (Unaudited) Year ended April 30 to April 30
- ----------------------------------------------------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (common shares) $14.80 $14.55 $14.16 $14.49 $15.12 $14.02(e)
- ----------------------------------------------------------------------------------------------------------------------
Investment operations:
- ----------------------------------------------------------------------------------------------------------------------
Net investment income .51 1.06 1.04 1.04 1.03 .41(a)
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments .71 .24 .41 (.15) (.40) 1.12
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.22 1.30 1.45 .89 .63 1.53
- ----------------------------------------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------------------------------------
From net investment income
- ---------------------------------------------------------------------------------------------------------------------
To preferred shareholders (.06) (.12) (.13) (.12) (.12) (.03)(f)
- ----------------------------------------------------------------------------------------------------------------------
To common shareholders (.47) (.91) (.93) (.95) (.93) (.31)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain
on investments
- ----------------------------------------------------------------------------------------------------------------------
To preferred shareholders -- --(g) -- (.01) (.02) --
- ----------------------------------------------------------------------------------------------------------------------
To common shareholders -- (.02) -- (.12) (.18) --
- ----------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain to common shareholders --
- ----------------------------------------------------------------------------------------------------------------------
To preferred shareholders -- -- --(g) -- --
- ----------------------------------------------------------------------------------------------------------------------
To common shareholders -- -- (.02) -- --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.53) (1.05) (1.06) (1.22) (1.25) (.34)
- ----------------------------------------------------------------------------------------------------------------------
Preferred share offering costs -- -- -- (.01) (.09)(f)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $15.49 $14.80 $14.55 $14.16 $14.49 $15.12
- ----------------------------------------------------------------------------------------------------------------------
Market value, end of period
(common shares) $15.94 $15.00 $14.38 $13.63 $13.88 $14.88
- ----------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------------------------------------
Total investment return at market
value (common shares) (%)(b) 9.43 11.02 12.68 6.67 .31 1.23*
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(total fund) (in thousands) $87,376 $84,205 $83,064 $81,269 $82,813 $85,647
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c)(d) .61 1.23 1.26 1.20 1.07 .33(a)*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(c) 2.97 6.28 6.11 6.52 5.84 2.69(a)*
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 2.05 35.98 125.01 101.23 54.06 43.46*
- ----------------------------------------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Reflects a waiver of the management fee. 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.
(b) Total investment return assumes dividend reinvestment and does not
reflect the effect of sales charges.
(c) Ratio reflects net assets available to common shares only; net
investment income ratio also reflects reduction for dividend payments
to preferred shareholders.
(d) The ratio of expenses to average net assets for the year ended
April 30, 1996 and thereafter includes amounts paid through expense
offset arrangements. Prior period ratios exclude these amounts. (Note 2)
(e) Represents initial net asset value of $14.10 less offering expenses
of approximately $0.08.
(f) Preferred shares were issued on February 18, 1993.
(g) Distributions amounted to less than $0.01 per share.
</TABLE>
Notes to financial statements
October 31, 1997 (Unaudited)
Note 1
Significant accounting policies
Putnam California Investment Grade Municipal Trust (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 Putnam Investment Management, Inc. ("Putnam
Management"), the fund's Manager, a wholly-owned subsidiary of Putnam
Investments, Inc. 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
preparation of financial statements is in conformity with generally
accepted accounting principles and requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. Actual results could differ from those estimates.
A) Security valuation Tax-exempt bonds and notes are stated on the basis
of valuations provided by a pricing service, approved by the Trustees,
which uses information with respect to transactions in bonds, quotations
from bond dealers, market transactions in comparable securities and
various relationships between securities in determining value. 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, less all
liabilities and the liquidation preference of any outstanding remarketed
preferred shares, by the total number of common shares outstanding.
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, as amended. Therefore, no provision has been made
for federal taxes on income, capital gains or unrealized appreciation on
securities held nor for excise tax on income and capital gains.
E) 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 28 day period. The applicable dividend rate for the remarketed
preferred shares on October 31, 1997 was 3.55%. The amount and character
of income and gains to be distributed are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. Reclassifications are made to the fund's capital accounts to
reflect income and gains available for distribution (or available capital
loss carryovers) under income tax regulations.
F) Amortization of bond premium and accretion of bond discount Any premium
resulting from the purchase of securities in excess of maturity value is
amortized on a yield-to-maturity basis. Discounts on original issue
discount bonds are accreted according to the effective yield method.
Note 2
Management fee, administrative services and other transactions
Compensation of Putnam Management, for management and investment advisory
services is paid quarterly based on the average net assets of the fund.
Such fee is based on the following annual rates: 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, 0.50% of any excess over $1.5
billion.
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).
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The aggregate
amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund's assets are provided by Putnam Fiduciary
Trust Company (PFTC), a wholly-owned subsidiary of Putnam Investments,
Inc. Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
For the six months ended October 31, 1997, fund expenses were reduced by
$23,778 under expense offset arrangements with PFTC. Investor servicing
and custodian fees reported in the Statement of operations exclude these
credits. The fund could have invested a portion of the assets utilized in
connection with the expense offset arrangements in an income producing
asset if it had not entered into such arrangements.
Trustees of the funds receive an annual Trustees fee of which $455 has
been allocated to the fund and an additional fee for each Trustee's
meeting attended. Trustees who are not interested persons of Putnam
Management and who serve on committees of the Trustees receive additional
fees for attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
in the fund and are invested in certain Putnam funds until distribution in
accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as Trustee for at least five years. Benefits under the Pension Plan
are equal to 50% of the Trustee's average total retainer and meeting fees
for the three years preceding retirement. Pension expense for the fund is
included in Compensation of trustees in the Statement of operations.
Accrued pension liability is included in Payable for compensation of
Trustees in the Statement of assets and liabilities.
Note 3
Purchase and sales of securities
During the six months ended October 31, 1997, purchases and sales of
investment securities other than short-term investments aggregated
$1,713,600 and $5,758,647, respectively. There were no purchases and sales
of U.S. government obligations. In determining the net gain or loss on
securities sold, the cost of securities has been determined on the
identified cost basis.
Note 4
Remarketed preferred shares
The remarketed preferred shares are redeemable at the option of the fund
on any dividend payment 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.
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. To the extent that the fund earns taxable income and capital
gains by the conclusion of a fiscal year, it will be required to apportion
to the holders of the remarketed preferred shares throughout that year
additional dividends as necessary to result in an after-tax equivalent to
the applicable dividend rate for the period.
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 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 October 31, 1997, no such restrictions have been
placed on the fund.
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Results of October 9, 1997 shareholder meeting
A meeting of shareholders of the fund was held on October 9, 1997. At the
meeting, each of the nominees for Trustees was elected, as follows:
Common Shares Preferred Shares
Votes Votes
Votes for withheld Votes for withheld
Jameson Adkins Baxter 4,359,967 71,560 320 0
Hans H. Estin 4,358,667 72,860 320 0
R.J. Jackson 4,361,967 69,560 320 0
Elizabeth T. Kennan 4,358,867 72,660 320 0
Lawrence J. Lasser 4,352,267 79,260 320 0
Donald S. Perkins 4,356,433 75,094 320 0
William F. Pounds 4,342,752 88,775 320 0
George Putnam 4,360,367 71,160 320 0
George Putnam, III 4,358,411 73,116 320 0
A.J.C. Smith 4,360,045 71,482 320 0
W. Nicholas Thorndike 4,339,417 92,110 320 0
A proposal to ratify the selection of Price Waterhouse LLP as auditors for
the fund was approved as follows:
Common Shares -- 4,359,342 votes for, and 9,305 votes against, with 62,880
abstentions and non-broker votes.
Preferred Shares -- 320 votes for, and 0 votes against, with 0 abstentions
and non-broker votes.
All tabulations are rounded to nearest whole number.
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
Ronald J. Jackson
Elizabeth T. Kennan
Lawrence J. Lasser
Robert E. Patterson
Donald S. Perkins
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam
President
Charles E. Porter
Executive Vice President
Patricia C. Flaherty
Senior Vice President
John D. Hughes
Senior Vice President and Treasurer
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Gary N. Coburn
Vice President
William J. Curtin
Vice President
Jerome J. Jacobs
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
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.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
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Bulk Rate
U.S. Postage
PAID
Putnam
Investments
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36863-184 12/97
