Putnam
California
Investment Grade
Municipal Trust
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
10-31-99
[LOGO: BOSTON * LONDON * TOKYO]
From the Chairman
Dear Shareholder:
If history tells us anything about bond investing, it is this: buying a
bond fund after a bad year is often a smart thing to do. The bond market
has endured its toughest year since 1994 and the second-worst year on
record, the result of three moves by the Federal Reserve Board to raise
interest rates. Within this challenging market environment, Putnam
California Investment Grade Municipal Trust met its goals of providing
high current tax-exempt income by investing primarily in investment grade
municipal bonds. Not surprisingly though, with higher interest rates came
falling bond prices and the fund's total return performance reflects this
unavoidable relationship.
Total return for 6 months ended 10/31/99
NAV Market price
- ----------------------------------------------------------------------------
-4.54% -9.83%
- ----------------------------------------------------------------------------
Past performance is no indication of future results. Performance
information for longer periods begins on page 6.
* MANAGEMENT MAINTAINS CONFIDENCE IN MUNICIPAL BONDS
After the bond bear markets of 1989 and 1994, a large number of buying
opportunities were available to investors. Your fund's manager, Richard
Wyke, believes that similar opportunities are present now for several
reasons. The first is that a municipal bond currently offers a 6% yield,
an extremely high level for the tax-free sector, registering almost 97% of
the yield on a 30-year taxable Treasury bond. With inflation still
remarkably low at 3% or less, after-tax and after-inflation income levels
are the highest investors have seen in years.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Health care 16.7%
Utilities 15.6%
Waste management 10.8%
Education 8.5%
Housing 7.8%
Footnote reads:
*Based on net assets as of 10/31/99. Holdings will vary over time.
In addition, following three interest-rate increases by the Fed and
several inflation scares, it seems that many of the potentially negative
developments have already been priced into the market. Rick does not
expect that substantial inflation will materialize over the next several
months. In his opinion, most of the damage has been done and the worst is
over for the bond markets.
The health-care industry remains a strong contributor to your fund's
performance. Selectivity is crucial because hospitals are going though
some difficult times as a result of legislation enacted several years ago.
Many of our health care holdings are from the lower end of the
investment-grade spectrum (A+/BBB-), but they offer a healthy injection of
attractive yield into the portfolio.
One other important strategy Rick has used involves investing in
intermediate to long/intermediate maturities. As interest rates have
fallen and the yield curve has steepened, longer intermediate bonds in the
10- to 20-year range have outperformed other maturity ranges. With a steep
yield curve, prices fall more dramatically on 25- to 30-year bonds, so
this strategy helped protect the portfolio's net asset value during a
period of rising interest rates. Additionally, within each maturity range,
he relies heavily on credit analysis as a tool to evaluate investments for
the fund.
A strong local economy is important for municipal bond investors because
the ability of California municipalities to pay back their loans is based
on state and local tax collections or user fees. California is the leading
state in the nation in manufacturing and entertainment jobs and is home to
one fourth of all those employed in computer-related jobs. While the
recession in Asia cut many aerospace and electronics jobs in California,
overall the environment remains prosperous, which helps keep the state's
municipal bonds attractive to investors.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
Aa -- 8.3%
A -- 5.9%
Ba -- 6.6%
Baa -- 15.4%
Aaa -- 63.8%
Footnote reads:
*As a percentage of market value as of 10/31/99. 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.
* STRONGER POTENTIAL FOR BONDS SEEN IN NEAR FUTURE
The threat of inflation remains the primary force driving volatility in
both the bond and stock markets. The historical connection between
prolonged growth and inflation haunts the markets, even as actual reported
inflation remains low. Fortunately the most recent Fed interest-rate hike
had already been priced into the bond market's adverse behavior, clearing
the way for better performance.
Furthermore, with equities beginning to look vulnerable and with concern
over Y2K issues likely to grow in the coming months, bonds may gain appeal
as a safe haven asset in the fourth quarter.
With the sentiment that bonds are fairly valued as of this writing, Rick
is inclined to take slightly more risk in the fund now, extending
maturities as opportunities arise. It has always been our belief that
choppy markets provide the opportunity to add yield, find exceptional
credits, and improve call protection -- strategies that can be extremely
rewarding for shareholders over time.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
December 15, 1999
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 10/31/99, there is no guarantee the fund will
continue to hold these securities in the future.
Performance summary
This section provides information about your fund's performance, which should
always be considered in light of its 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.
TOTAL RETURN FOR PERIODS ENDED 10/31/99
Lehman Brothers
Market Municipal Consumer
(common shares) NAV price Bond Index price index
- -----------------------------------------------------------------------------
6 months -4.54% -9.83% -3.46% 1.20%
- -----------------------------------------------------------------------------
1 year -3.16 -8.52 -1.78 2.69
- -----------------------------------------------------------------------------
5 years 43.97 50.37 39.77 12.51
Annual average 7.56 8.50 6.93 2.39
- -----------------------------------------------------------------------------
Life of fund (11/27/92) 60.56 42.30 49.85 18.45
Annual average 7.08 5.23 6.02 2.48
- -----------------------------------------------------------------------------
TOTAL RETURN FOR PERIODS ENDED 9/30/99 (most recent calendar quarter)
Market
NAV price
- -----------------------------------------------------------------------------
6 months -2.96% -7.09%
- -----------------------------------------------------------------------------
1 year -1.93 -3.10
- -----------------------------------------------------------------------------
5 years 41.77 51.10
Annual average 7.23 8.61
- -----------------------------------------------------------------------------
Life of fund (11/27/92) 63.09 50.64
Annual average 7.41 6.17
- -----------------------------------------------------------------------------
Past performance is no assurance of future results. More recent returns
may be more or less than those shown. 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 10/31/99
- ----------------------------------------------------------------------------
Distributions (common shares)
- ----------------------------------------------------------------------------
Number 6
- ----------------------------------------------------------------------------
Income $0.435
- ----------------------------------------------------------------------------
Capital gains1 --
- ----------------------------------------------------------------------------
Total $0.435
- ----------------------------------------------------------------------------
Preferred shares Series A (320 shares)
- ----------------------------------------------------------------------------
Income $795.40
- ----------------------------------------------------------------------------
Capital gains1 --
- ----------------------------------------------------------------------------
Total $795.40
- ----------------------------------------------------------------------------
Share value (common shares) NAV Market price
- ----------------------------------------------------------------------------
4/30/99 $15.49 $15.562
- ----------------------------------------------------------------------------
10/31/99 14.36 13.625
- ----------------------------------------------------------------------------
Current return (common shares/end of period)
- ----------------------------------------------------------------------------
Current dividend rate2 6.06% 6.39%
- ----------------------------------------------------------------------------
Taxable equivalent3 11.06 11.66
- ----------------------------------------------------------------------------
1Capital 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.
2Income portion of most recent distribution, annualized and divided by NAV
or POP at end of period.
3Assumes maximum 45.22% 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 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 assumes reinvestment of all distributions
and interest payments and does not take into account brokerage fees or
taxes. 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.
A guide to the financial statements
These sections of the report constitute the fund's financial
statements.
The fund's portfolio lists all the fund's investments and their values as
of the last day of the reporting period. Holdings are organized by asset
type and industry sector, country, or state to show areas of concentration
and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are subtracted
from this total. The result is divided by the number of shares to
determine the net asset value per share, which is calculated separately
for each class of shares. (For funds with preferred shares, the amount
subtracted from total assets includes the net assets allocated to
remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss for
the reporting period. This is determined by adding up all the fund's
earnings -- from dividends and interest income -- and subtracting its
operating expenses. This statement also lists any net gain or loss the
fund realized on the sales of its holdings and -- for holdings that remain
in the portfolio -- any change in unrealized gains or losses over the
period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number of
the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed here
may not match the sources listed in the Statement of operations because
the distributions are determined on a tax basis and may be paid in a
different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate
table is provided for each share class.
<TABLE>
<CAPTION>
The fund's portfolio
October 31, 1999 (Unaudited)
KEY TO ABBREVIATIONS
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
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 (97.6%) (a)
PRINCIPAL AMOUNT RATING (RAT) VALUE
<S> <C> <C> <C>
California (97.6%)
- --------------------------------------------------------------------------------------------------------------------------
ABAG Fin. Auth. COP
$ 2,000,000 (American Baptist Homes), Ser. A, 6.2s, 10/1/27 BBB $ 1,927,500
1,000,000 (Odd Fellows Home), 6s, 8/15/24 AA- 988,750
4,200,000 Anaheim, Pub. Fin. Auth. Lease Rev. Bonds
(Pub. Impts.), Ser. C, FSA, 6s, 9/1/16 Aaa 4,373,250
3,000,000 Berkeley, Hlth. Fac. Rev. Bonds
(Alta Bates Med. Ctr.), Ser. A, 6.55s, 12/1/22 A2 3,251,250
1,000,000 CA Cmnty. Dev. Auth. Rev. Bonds
(United Airlines), Ser. A, 5.7s, 10/1/33 Baa3 891,250
2,600,000 CA Edl. Fac. Auth. Rev. Bonds (U. of San Francisco),
6.4s, 10/1/17 Aaa 2,804,750
CA Hlth. Fac. Fin. Auth. Rev. Bonds, Ser. A
3,000,000 (Henry Mayo Newhall), 8s, 10/1/18 AA- 3,040,950
1,500,000 (Sinai Med. Ctr.), 6 1/4s, 12/1/34 A2 1,471,875
3,575,000 CA Poll. Control Fin. Auth. Rev. Bonds
(Southern CA Edison Co.), AMBAC, 6s, 7/1/27 Aaa 3,557,125
2,000,000 CA State Dept. Wtr. Resources IFB
(Central Valley), 8.199s, 12/1/12
(acquired 11/27/92, cost $2,198,104) (RES) Aa2 2,615,000
2,000,000 CA State Pub. Wks. Board Lease Rev. Bonds
(Dept. of Corrections Monterey Cnty. Sole),
Ser. A, 7s, 11/1/19 Aaa 2,260,000
1,250,000 CA Statewide Cmnty. Dev. Auth. COP
(The Internext Group), 5 3/8s, 4/1/30 BBB 1,042,188
1,500,000 CA Statewide Cmty. Dev. Auth Rev. Bonds
(United Airlines, Inc.), 5 5/8s, 10/1/34 Baa3 1,320,000
1,750,000 Delano, COP (Delano Regl. Med. Ctr.),
5.6s, 1/1/26 BBB- 1,491,875
1,500,000 Duarte, COP, Ser. A, 5 1/4s, 4/1/31 BBB+ 1,213,125
1,500,000 Foothill/Eastern Corridor Agcy. CA Toll
Road Rev. Bonds, 5 3/4s, 1/15/40 BBB- 1,361,250
1,500,000 Los Angeles, Dept. of Wtr. & Pwr. Elec. Rev.
Bonds, MBIA, 6s, 6/1/13 Aaa 1,548,750
3,120,000 Los Angeles, Multi-Fam. Rev. Bonds
(Mission Plaza Apts.), Ser. A, GNMA Coll.,
7.8s, 1/20/35 AAA 3,424,200
1,500,000 Metropolitan Wtr. Dist. Rev. Bonds
(Southern CA Waterwks.), Ser. B, MBIA,
4 3/4s, 7/1/21 Aaa 1,263,750
Northern CA Pwr. Agcy. Multi. Cap. Fac. IFB, MBIA
2,830,000 9.446s, 8/1/25 Aaa 3,215,588
2,370,000 6.538s, 8/1/25 Aaa 2,740,313
4,950,000 Orange Cnty., Pub. Fin. Auth. Waste Mgt. Syst. Rev.
Bonds, AMBAC, 5 3/4s, 12/1/10 Aaa 5,141,810
3,250,000 Rancho, Wtr. Dist. Fin. Auth. IFB, AMBAC,
9.274s, 8/17/21 Aaa 3,635,938
5,000,000 Sacramento, Muni. Util. Dist. Elec. Rev. Bonds,
FGIC, 6.3s, 8/15/18 Aaa 5,256,250
4,750,000 Santa Clara Cnty. Fin. Auth. Lease Rev. Bonds
(VMC Fac. Replacement), Ser. A, AMBAC,
6 7/8s, 11/15/14 (SEG) Aaa 5,349,688
3,000,000 U. of CA Hosp. Rev. Bonds (U. of CA, Med. Ctr.),
AMBAC, 5 3/4s, 7/1/15 Aaa 3,022,500
5,000,000 Vallejo, COP (Marine World Foundation),
7s, 2/1/17 BB+/P 5,268,750
3,345,000 Victor, Elementary School Dist. COP
(School Construction Refinancing),
MBIA, 6.45s, 5/1/18 Aaa 3,625,144
West Contra Costa U. School Dist. COP
1,860,000 7 1/8s, 1/1/24 BBB+ 1,959,975
1,100,000 6 7/8s, 1/1/09 BBB+ 1,179,750
- --------------------------------------------------------------------------------------------------------------------------
Total Investments (cost $77,964,942) (b) $ 80,242,544
- --------------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $82,189,315.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to be the most recent ratings available at
October 31, 1999 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, 1999. Securities
rated by Putnam are indicated by "/P" and are not publicly rated.
(b) The aggregate identified cost on a tax basis is $77,964,942, resulting in gross unrealized appreciation and
depreciation of $4,318,860 and $2,041,258, respectively, or net unrealized appreciation of $2,277,602.
(RES) Restricted, excluding 144A securities, as to public resale. The total market value of restricted securities held at
October 31, 1999 was $2,615,000 or 3.2% of net assets.
(SEG) A portion of this security was pledged and segregated with the custodian to cover margin requirements for futures
contracts at October 31, 1999.
The rates shown on IFB, which are securities paying interest rates that vary inversely to changes in the market
interest rates.
The fund had the following industry group concentrations greater than 10% at October 31, 1999 (as a percentage of
net assets):
Health care 16.7%
Utilities 15.6
Waste management 10.8
The fund had the following insurance concentrations greater than 10% at October 31, 1999 (as a percentage of net
assets):
AMBAC 25.2%
MBIA 15.1
- -------------------------------------------------------------------------------
Futures Contracts Outstanding at October 31, 1999 (Unaudited)
Aggregate Face Expiration Unrealized
Total Value Value Date Depreciation
- -------------------------------------------------------------------------------
Municipal Bond
Index (Long) $1,434,875 $1,479,028 Dec-98 $(44,153)
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of assets and liabilities
October 31, 1999 (Unaudited)
<S> <C>
Assets
- -----------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $77,964,942) (Note 1) $80,242,544
- -----------------------------------------------------------------------------------------------
Cash 1,619,269
- -----------------------------------------------------------------------------------------------
Interest receivable 1,239,116
- -----------------------------------------------------------------------------------------------
Receivable for securities sold 1,081,688
- -----------------------------------------------------------------------------------------------
Receivable for variation margin 13,000
- -----------------------------------------------------------------------------------------------
Total assets 84,195,617
Liabilities
- -----------------------------------------------------------------------------------------------
Distributions payable to shareholders 333,986
- -----------------------------------------------------------------------------------------------
Payable for securities purchased 1,466,999
- -----------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 147,636
- -----------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 3,988
- -----------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 10,231
- -----------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 357
- -----------------------------------------------------------------------------------------------
Other accrued expenses 43,105
- -----------------------------------------------------------------------------------------------
Total liabilities 2,006,302
- -----------------------------------------------------------------------------------------------
Net assets $82,189,315
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
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 318,312
- -----------------------------------------------------------------------------------------------
Distributions in excess of net realized gain on investments (Note 1) (469,731)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 2,233,449
- -----------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $82,189,315
Computation of net asset value
- -----------------------------------------------------------------------------------------------
Series A remarketed preferred shares $16,000,000
- -----------------------------------------------------------------------------------------------
Cumulative undeclared dividends on remarketed preferred shares 25,337
- -----------------------------------------------------------------------------------------------
Net assets allocated to remarketed preferred
shares -- liquidation preference $16,025,337
- -----------------------------------------------------------------------------------------------
Net assets available to common shares $66,163,978
- -----------------------------------------------------------------------------------------------
Net asset value per common share ($66,163,978 divided by 4,607,092 shares) $14.36
- -----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of operations
Six months ended October 31, 1999 (Unaudited)
<S> <C>
Tax exempt interest income: $2,627,627
- -----------------------------------------------------------------------------------------------
Expenses:
- -----------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 297,611
- -----------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 40,343
- -----------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 4,873
- -----------------------------------------------------------------------------------------------
Administrative services (Note 2) 2,205
- -----------------------------------------------------------------------------------------------
Reports to shareholders 4,826
- -----------------------------------------------------------------------------------------------
Registration fees 75
- -----------------------------------------------------------------------------------------------
Auditing 38,611
- -----------------------------------------------------------------------------------------------
Exchange listing fees 2,000
- -----------------------------------------------------------------------------------------------
Legal 2,979
- -----------------------------------------------------------------------------------------------
Postage 1,894
- -----------------------------------------------------------------------------------------------
Preferred share remarketing agent fees 21,778
- -----------------------------------------------------------------------------------------------
Total expenses 417,195
- -----------------------------------------------------------------------------------------------
Expense reduction (Note 2) (12,940)
- -----------------------------------------------------------------------------------------------
Net expenses 404,255
- -----------------------------------------------------------------------------------------------
Net investment income 2,223,372
- -----------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (191,718)
- -----------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (89,914)
- -----------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and futures during the period (4,875,785)
- -----------------------------------------------------------------------------------------------
Net loss on investments (5,157,417)
- -----------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(2,934,045)
- -----------------------------------------------------------------------------------------------
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
1999* 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
- ---------------------------------------------------------------------------------------------------------------
Operations:
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 2,223,372 $ 4,524,308
- ---------------------------------------------------------------------------------------------------------------
Net realized loss on investments (281,632) (13,426)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (4,875,785) 861,939
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (2,934,045) 5,372,821
Distributions to remarketed preferred shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income (254,688) (530,833)
- ---------------------------------------------------------------------------------------------------------------
From net realized gains -- (33,938)
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations
applicable to common shareholders (excluding cumulative
undeclared dividends on remarketed preferred shares of
$25,337 and $1,446, respectively) (3,188,733) 4,808,050
Distributions to common shareholders:
- ---------------------------------------------------------------------------------------------------------------
From net investment income (2,003,835) (4,007,852)
- ---------------------------------------------------------------------------------------------------------------
From net realized gains -- (236,804)
- ---------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (5,192,568) 563,394
Net assets
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 87,381,883 86,818,489
- ---------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $318,312 and $353,463, respectively) $82,189,315 $87,381,883
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
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial highlights
(For a share outstanding throughout the period)
- ------------------------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share October 31
operating performance (Unaudited) Year ended April 30
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (common shares) $15.49 $15.37 $14.80 $14.55 $14.16 $14.49
- ------------------------------------------------------------------------------------------------------------------------------------
Investment operations:
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income .48 .98 1.01 1.06 1.04 1.04
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (1.11) .18 .61 .24 .41 (.15)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.63) 1.16 1.62 1.30 1.45 .89
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders (.06) (.11) (.12) (.12) (.13) (.12)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders (.44) (.87) (.85) (.91) (.93) (.95)
- ------------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders -- (.01) (.01) --(d) -- (.01)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders -- (.05) (.07) (.02) -- (.12)
- ------------------------------------------------------------------------------------------------------------------------------------
In excess of net realized
gain to common shareholders
- ------------------------------------------------------------------------------------------------------------------------------------
To preferred shareholders -- -- -- -- -- --(d)
- ------------------------------------------------------------------------------------------------------------------------------------
To common shareholders -- -- -- -- -- (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.50) (1.04) (1.05) (1.05) (1.06) (1.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $14.36 $15.49 $15.37 $14.80 $14.55 $14.16
- ------------------------------------------------------------------------------------------------------------------------------------
Market price, end of period
(common shares) $13.63 $15.56 $15.25 $15.00 $14.38 $13.63
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------------------------
Total return at market
value (common shares) (%)(a) (9.83)* 8.11 7.71 11.02 12.68 6.67
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(total fund) (in thousands) $82,189 $87,382 $86,818 $84,205 $83,064 $81,269
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) .61* 1.22 1.19 1.23 1.26 1.20
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(b) 2.84* 5.52 5.80 6.28 6.11 6.52
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 16.12* 13.87 25.26 35.98 125.01 101.23
- ------------------------------------------------------------------------------------------------------------------------------------
* Not annualized
(a) Total return assumes dividend reinvestment.
(b) Ratio reflects net assets available to common shares only; net investment income ratio also reflects reduction for dividend
payments to preferred shareholders.
(c) 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)
(d) Distributions amounted to less than $0.01 per share.
</TABLE>
Notes to financial statements
October 31, 1999 (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
of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the period. 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 Putnam Management
following procedures approved by the Trustees, and such valuations and
procedures are reviewed periodically by 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). Gains and losses on securities sold are determined on
the identified cost basis.
Interest income is recorded on the accrual basis.
C) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on securities
it owns or in which it may invest to increase its current returns.
The potential risk to the fund is that the change in value of futures and
options contracts may not correspond to the change in value of the hedged
instruments. In addition, losses may arise from changes in the value of
the underlying instruments, if there is an illiquid secondary market for
the contracts, or if the counterparty to the contract is unable to
perform. 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. Realized gains and
losses on purchased options are included in realized gains and losses on
investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. Exchange traded options
are valued at the last sale price, or if no sales are reported, the last
bid price for purchased options and the last ask price for written
options. Options traded over-the-counter are valued using prices supplied
by dealers.
D) Federal taxes It is the policy of the fund to distribute all of its
taxable 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, 1999 was 3.40%. 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) 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.
G) 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 yield-to-maturity basis.
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 weekly average net assets, 0.60% of the next $500 million,
0.55% of the next $500 million and 0.50% thereafter.
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 gross 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 0.70% 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 PFTC. Investor
servicing agent functions are provided by Putnam Investor Services, a
division of PFTC.
For the six months ended October 31, 1999, fund expenses were reduced by
$12,940 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.
Each Trustee of the fund receives an annual Trustee fee, of which $419 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
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, 1999, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $7,221,800 and $8,147,985, 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 Series A 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, 1999, no such restrictions have been
placed on the fund.
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learn more about investing and retirement planning, and access market
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New features will be added to the site regularly. So be sure to bookmark us at
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Fund information
WEB SITE
www.putnaminv.com
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
John A. Hill, Vice Chairman
Jameson Adkins Baxter
Hans H. Estin
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
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
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Richard P. Wyke
Vice President and Fund Manager
Richard A. Monaghan
Vice President
John R. Verani
Vice President
Call 1-800-225-1581 weekdays from 9 a.m. to 5 p.m. Eastern Time, or visit
our Web site (www.putnaminv.com) any time for up-to-date information about
the fund's NAV.
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PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
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For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
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