Putnam
California
Investment Grade
Municipal Trust
ANNUAL REPORT ON PERFORMANCE AND OUTLOOK
4-30-00
[SCALE LOGO OMITTED]
FROM THE CHAIRMAN
[GRAPHIC OMITTED: PHOTO OF GEORGE PUTNAM]
[COPYRIGHT] Karsh, Ottawa
Dear Shareholder:
The markets continued to provide their share of challenges and
opportunities as your fund closed its books on fiscal year 2000. In the
following report, the fund's manager discusses performance for the
period and prospects for the months ahead.
This is the last letter to you and the other shareholders of Putnam
California Investment Grade Municipal Trust that I will be signing.
After more than 30 years as Chairman of the Trustees and President of
the Putnam Funds, the time has come for me to step aside. As of July 1,
2000, John Hill will become Chairman. John is currently an independent
Trustee and has served on the board for the past 14 years. In addition,
my son, George Putnam, III, will take on the role of President. I am
confident that the leadership of the funds will be in exceptionally
strong hands.
I will become Chairman Emeritus, remain a Putnam shareholder, and stay
in close touch with the funds. It has been my privilege to serve you.
Respectfully yours,
/S/GEORGE PUTNAM
George Putnam
Chairman of the Trustees
June 21, 2000
REPORT FROM THE FUND MANAGER
Richard P. Wyke
The health of California's economy, like that of the rest of the nation,
remains quite strong, providing municipalities with higher tax revenues
and improving creditworthiness. But for municipal bond holders, the
prosperity poses a quandary. Strong economic growth raises the risk of
higher inflation -- and higher interest rates to combat that threat --
eroding the value of tax-free investments. What is a municipal bond
investor to do?
For one thing, sit tight. Even if more interest-rate increases are in
the cards over the near term, the Federal Reserve Board's aggressive
tightening is reassuring investors that inflation will not spiral out of
control. In the meantime, we have been making the most of the buying
opportunities in the bond market selloff, positioning Putnam California
Investment Grade Municipal Trust for brighter days.
Total return for 12 months ended 4/30/00
NAV Market price
-------------------------------
-2.76% -8.02%
-------------------------------
Past performance is not indicative of future results. Performance
information for longer periods begins on page 6.
* VIGILANT FED AT HELM
The Federal Reserve Board's aggressive interest-rate policy and growing
inflation fears have had a negative effect on bond prices, as evidenced
by the performance of your fund during its fiscal year, the 12 months
ended April 30, 2000. Bonds did experience a temporary reprieve in mid
February when the U.S. Treasury announced a buyback program of
outstanding debt. This event, combined with rising expectations that the
economy would begin to slow down in the second half of the year, sparked
a powerful rally in fixed-income markets. Yields on tax-free securities
at the long end of the municipal bond yield curve fell approximately 45
basis points.
[GRAPHIC OMITTED: horizontal bar chart TOP INDUSTRY SECTORS]
TOP INDUSTRY SECTORS*
Health care 29.3%
Education 18.1%
Utilities 15.9%
Water and sewer 9.2%
Housing 6.5%
Footnote reads:
*Based on net assets as of 4/30/00. Holdings will vary over time.
New statistics came to light in March and April, however, indicating
that the economy was not cooling down. Consumer spending, the growth
engine for the past two years, remains robust, and inflationary
pressures exist. With investors' upbeat mood effectively squelched,
municipal bond prices retreated for the balance of the reporting period.
Interest rates at both ends of the yield curve began to climb again in
expectation of more aggressive Fed tightening.
Despite the increase in short-term rates, leveraging strategies remain a
powerful tool for enhancing the fund's dividend. This technique involves
issuing preferred shares that pay dividends at prevailing short-term
rates and then selling these shares to corporate and institutional
investors. The resulting proceeds are then invested in longer-term bonds
with higher yields. The difference between the dividends paid to the
holders of the preferred shares and the income earned by the fund from
its longer-term investments augments the flow of income to holders of
common shares.
[GRAPHIC OMITTED: pie chart CREDIT QUALITY OVERVIEW]
CREDIT QUALITY OVERVIEW*
AAA/Aaa -- 61.1%
AA/Aa -- 10.8%
A -- 6.6%
BBB/Baa -- 15.0%
BB/Ba -- 6.5%
Footnote reads:
*As a percentage of market value as of 4/30/00. 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.
* SEEKING OPPORTUNITY IN VOLATILITY
Managing a closed-end fund presents special advantages. We do not need
to be concerned with shareholder redemptions and liquidity reserves, so
we can concentrate exclusively on positioning the portfolio to take
advantage of prevailing market trends. Our challenge is to be nimble
enough to capture opportunities as they arise. Fortunately Putnam's size
and presence in the municipal bond market give us what we regard as a
considerable competitive advantage and often provide access to new
offerings that might be unavailable to smaller participants.
"Now is a particularly good time to look at [municipals] since muni debt is
paying as much as 30-year Treasuries -- and it's tax-exempt."
-- SmartMoney.com, April 20, 2000
Much of our effort has been focused on extending the fund's duration,
which climbed from 8.26 years to 9.84 years over the course of the year.
Duration measures the portfolio's maturity structure and indicates how
much bond prices will move up or down with each percentage point shift
in interest rates. A longer duration can mean a more volatile net asset
value if rates increase but also one more likely to appreciate
substantially when rates decline.
Improving the call structure of the fund is also of paramount concern. A
bond's provisions may allow the issuer to call the bond in at or after a
specified date prior to maturity. Such a bond is often called in before
maturity when prevailing interest rates are lower than they were when
the bond was issued. Redemption can force an investor to reinvest at the
prevailing lower rates. Consequently, exposure to callable bonds always
has some potential to affect a fund's income stream. By avoiding
callable bonds and buying noncallable bonds, which cannot be called for
redemption before their specified maturity dates, we can provide more
reliable returns.
The fund's investments in transportation and toll revenue bonds have
long been strong contributors to its income stream. Rising oil prices
are squeezing profit margins, but passenger demand remains high, and
carriers have been able to pass along the incremental cost increase to
their customers. Investments in United Airlines bonds are profiting from
the company's highly diversified route system in the United States,
Latin America, and Europe. The Foothill Eastern Corridor Agency Toll
Road Revenue bonds are revenue-generating securities supported by
commuters traveling from the residential areas of Riverside County to
the employment area of Irvine. While these holdings, along with others
discussed in this report, were viewed favorably at the end of the
period, all are subject to review and adjustment in accordance with the
fund's investment strategy and may vary in the future.
* QUALITY PORTFOLIO ADDS STABILITY IN VOLATILE MARKETS
Given the fairly inhospitable market conditions of the past year, the
fund's emphasis on high-quality investments has proved advantageous.
Higher-quality bonds generally carry lower credit risk and fluctuate
less in price during periods of uncertainty than bonds with lower credit
quality. The fund's large pool of prerefunded bonds, which are generally
considered to have a credit rating of AAA, also contributed to a more
stable net asset value. In a prerefunding, the municipality issues new
bonds to pay off the original bond issue at the first call date or
maturity. Proceeds from the new issue in an amount sufficient to pay off
the entire original bond issue are invested in an escrow fund made up of
short-term U.S. securities. We sold a few of the prerefunded bonds,
which have very short maturities, and replaced them with bonds offering
a similar yield but much longer maturities.
While insured municipal bonds have historically yielded about 85% of
comparable U.S. Treasury bonds, that ratio is now approximately 95%.
That ratio translates into an exceptionally high level of tax-free
income, which is good news for municipal bond fund shareholders.
Since the Fed's monetary policy acts with a lag, we continue to believe
that inflation pressures remain tame and the Fed's rate increases will
eventually take hold and slow the economy. The markets are likely to be
unstable near term, but once economic reports show that growth is
slowing, bond markets, including the municipal bond market, should
respond positively.
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 4/30/00, 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 4/30/00
Lehman Brothers
Market Municipal Consumer
NAV price Bond Index price index
-------------------------------------------------------------------
1 year -2.76% -8.02% -0.92% 3.01%
-------------------------------------------------------------------
5 years 35.68 34.01 33.34 12.71
Annual average 6.29 6.03 5.92 2.42
-------------------------------------------------------------------
Life of fund
(since 11/27/92) 63.42 45.16 53.79 20.56
Annual average 6.84 5.15 5.98 2.55
-------------------------------------------------------------------
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 12 MONTHS ENDED 4/30/00
----------------------------------------------------------------------
Distributions (common shares)
----------------------------------------------------------------------
Number 12
----------------------------------------------------------------------
Income $0.8700
----------------------------------------------------------------------
Capital gains1
Short-term 0.0056
----------------------------------------------------------------------
Total $0.8756
----------------------------------------------------------------------
Preferred shares Series A (320 shares)
----------------------------------------------------------------------
Income $1,884.79
----------------------------------------------------------------------
Capital gains1 11.31
----------------------------------------------------------------------
Total $1,896.10
----------------------------------------------------------------------
Share value (common shares) NAV Market price
----------------------------------------------------------------------
4/30/99 $15.49 $15.562
----------------------------------------------------------------------
4/30/00 14.14 13.438
----------------------------------------------------------------------
Current return (common shares/end of period)
----------------------------------------------------------------------
Current dividend rate2 6.15% 6.47%
----------------------------------------------------------------------
Taxable equivalent3 11.23 11.81
----------------------------------------------------------------------
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 market price at end of period.
3Assumes maximum 45.22% federal and state tax rate. Results for
investors subject to lower tax rate would not be as advantageous.
TOTAL RETURN FOR PERIODS ENDED 3/31/00 (most recent calendar quarter)
Market
NAV price
------------------------------------------------------------------
1 year -1.69% -15.50%
------------------------------------------------------------------
5 years 37.06 28.37
Annual average 6.51 5.12
------------------------------------------------------------------
Life of fund (11/27/92) 65.09 37.00
Annual average 7.07 4.38
------------------------------------------------------------------
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.
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 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, preceded by the Report of independent
accountants, 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.
REPORT OF INDEPENDENT ACCOUNTANTS
For the fiscal year ended April 30, 2000
To the Trustees and Shareholders of
California Investment Grade Municipal Trust
In our opinion, the accompanying statement of assets and liabilities,
including the fund's portfolio, except for bond ratings, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial
position of California Investment Grade Municipal Trust (the "fund") at
April 30, 2000, and the results of its operations, the changes in its
net assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of investments owned at April
30, 2000 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 7, 2000
<TABLE>
<CAPTION>
THE FUND'S PORTFOLIO
April 30, 2000
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
G.O. Bonds -- General Obligation Bonds
IFB -- Inverse Floating Rate Bonds
MBIA -- Municipal Bond Investors Assurance Corporation
VRDN -- Variable Rate Demand Notes
MUNICIPAL BONDS AND NOTES (98.3%) (a)
PRINCIPAL AMOUNT RATING (RAT) VALUE
<S> <C> <C>
California (98.3%)
-------------------------------------------------------------------------------------------------------------------
ABAG Fin. Auth. COP
$ 2,000,000 (American Baptist Homes), Ser. A, 6.2s, 10/1/27 BBB $ 1,770,000
1,000,000 (Odd Fellows Home), 6s, 8/15/24 AA- 978,750
2,000,000 Alameda, Recreational Fac. Imps. COP, MBIA,
5 3/4s, 12/1/21 AAA 1,992,500
4,200,000 Anaheim, Pub. Fin. Auth. Lease Rev. Bonds
(Pub. Impts.), Ser. C, FSA, 6s, 9/1/16 Aaa 4,436,250
3,000,000 Berkeley, Hlth. Fac. Rev. Bonds (Alta Bates
Med. Ctr.), Ser. A, 6.55s, 12/1/22 A2 3,187,500
1,000,000 CA Cmnty. Dev. Auth. Rev. Bonds
(United Airlines, Inc.), Ser. A, 5.7s, 10/1/33 Baa3 856,250
2,600,000 CA Edl. Fac. Auth. Rev. Bonds (U. of San Francisco),
6.4s, 10/1/17 Aaa 2,749,500
CA Hlth. Facs. Fin. Auth. Rev. Bonds
3,000,000 (Henry Mayo Newhall), Ser. A, 8s, 10/1/18 AA- 3,038,850
1,500,000 (Sinai Med. Ctr.), Ser. A, 6 1/4s, 12/1/34 A2 1,473,750
1,600,000 (Sutter Health), Ser. A, 5 3/8s, 8/15/30 AAA 1,454,000
2,065,000 CA Hsg. Fin. Agcy. Rev. Bonds (Multi-Fam. Hsg. III),
Ser. B, MBIA, 5 1/2s, 8/1/39 AAA 1,848,175
2,000,000 CA State Dept. Wtr. Resources IFB (Central Valley),
9.35s, 12/1/12 (acquired 11/27/92,
cost $2,198,104) (RES) Aa2 2,627,500
2,000,000 CA State G.O. Bonds, 5 3/4s, 12/1/29 AA- 1,970,000
2,000,000 CA State Pub. Wks. Board Lease Rev. Bonds
(Dept. of Corrections Monterey Cnty. Soledad),
Ser. A, 7s, 11/1/19 Aaa 2,210,000
1,250,000 CA Statewide Cmnty. Dev. Auth. COP
(The Internext Group), 5 3/8s, 4/1/30 BBB 1,006,250
1,500,000 CA Statewide Cmnty. Dev. Auth. Rev. Bonds
(United Airlines, Inc.), 5 5/8s, 10/1/34 Baa3 1,267,500
1,750,000 Delano, COP (Delano Regl. Med. Ctr.), 5.6s, 1/1/26 BBB- 1,408,750
1,500,000 Duarte, COP, Ser. A, 5 1/4s, 4/1/31 Baa2 1,200,000
1,500,000 Foothill/Eastern Corridor Agcy. CA Toll Road
Rev. Bonds, 5 3/4s, 1/15/40 BBB- 1,381,875
600,000 Indio, Multi-Fam. Rev. Bonds VRDN (Carreon),
Ser. A, 5.75s, 8/1/26 A-1+ 600,000
3,120,000 Los Angeles, Multi-Fam. Rev. Bonds (Mission
Plaza Apts.), Ser. A, GNMA Coll., 7.8s, 1/20/35 AAA 3,404,700
1,500,000 Metropolitan Wtr. Dist. Rev. Bonds (Southern CA
Waterwks.), Ser. B, MBIA, 4 3/4s, 7/1/21 Aaa 1,278,750
Northern CA Pwr. Agcy. Multi. Cap. Fac. IFB
2,830,000 MBIA, 6.538s, 8/1/25 Aaa 3,070,550
2,370,000 MBIA, 6.538s, 8/1/25 Prerefunded Aaa 2,642,550
2,950,000 Orange Cnty., Pub. Fin. Auth. Waste Mgt. Syst.
Rev. Bonds, AMBAC, 5 3/4s, 12/1/10 Aaa 3,068,000
3,250,000 Rancho, Wtr. Dist. Fin. Auth. IFB, AMBAC,
9.524s, 8/17/21 Aaa 3,522,188
5,000,000 Sacramento, Muni. Util. Dist. Elec. Rev. Bonds,
FGIC, 6.3s, 8/15/18 Aaa 5,175,000
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 5,230,936
3,000,000 U. of CA Hosp. Rev. Bonds (U. of CA, Med. Ctr.),
AMBAC, 5 3/4s, 7/1/15 Aaa 3,030,000
5,000,000 Vallejo, COP (Marine World Foundation), 7s, 2/1/17 BB+/P 5,212,500
3,345,000 Victor, Elementary School Dist. COP (School
Construction Refinancing), MBIA, 6.45s, 5/1/18 Aaa 3,671,138
West Contra Costa U. School Dist. COP
1,860,000 7 1/8s, 1/1/24 Baa3 1,918,125
1,055,000 6 7/8s, 1/1/09 Baa3 1,126,213
-------------------------------------------------------------------------------------------------------------------
Total Investments (cost $78,111,402) (b) $79,808,050
-------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $81,166,053.
(RAT) The Moody's or Standard & Poor's ratings indicated are believed to
be the most recent ratings available at April 30, 2000 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 April 30, 2000. Securities rated by Putnam are indicated
by "/P" and are not publicly rated. Ratings are not covered by the
Report of independent accountants.
(b) The aggregate identified cost on a tax basis is $78,111,402,
resulting in gross unrealized appreciation and depreciation of
$3,841,495 and $2,144,847, respectively, or net unrealized appreciation
of $1,696,648.
(RES) Restricted, excluding 144A securities, as to public resale. The
total market value of restricted securities held at April 30, 2000 was
$2,627,500 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 April
30, 2000.
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 April 30,
2000.
The fund had the following industry group concentrations greater
than 10% at April 30, 2000 (as a percentage of net assets):
Health care 29.3%
Education 18.1
Utilities 15.9
The fund had the following insurance concentrations greater than
10% at April 30, 2000 (as a percentage of net assets):
AMBAC 18.3%
MBIA 17.9
----------------------------------------------------------------------
Futures Contracts Outstanding at April 30, 2000
Aggregate Face Expiration Unrealized
Total Value Value Date Appreciation
----------------------------------------------------------------------
Municipal Bond
Index (Long) $3,355,875 $3,329,047 Jun-00 $26,828
----------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000
<S> <C>
Assets
-------------------------------------------------------------------------------------------
Investments in securities, at value
(identified cost $78,111,402) (Note 1) $79,808,050
-------------------------------------------------------------------------------------------
Cash 565,822
-------------------------------------------------------------------------------------------
Interest receivable 1,282,119
-------------------------------------------------------------------------------------------
Receivable for variation margin 4,500
-------------------------------------------------------------------------------------------
Total assets 81,660,491
Liabilities
-------------------------------------------------------------------------------------------
Distributions payable to shareholders 333,985
-------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 139,694
-------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 5,082
-------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 11,155
-------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 347
-------------------------------------------------------------------------------------------
Other accrued expenses 4,175
-------------------------------------------------------------------------------------------
Total liabilities 494,438
-------------------------------------------------------------------------------------------
Net assets $81,166,053
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) 64,109,972
-------------------------------------------------------------------------------------------
Undistributed net investment income (Note 1) 200,458
-------------------------------------------------------------------------------------------
Accumulated net realized loss (Note 1) (867,853)
-------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,723,476
-------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $81,166,053
Computation of net asset value
-------------------------------------------------------------------------------------------
Series A remarketed preferred shares $16,000,000
-------------------------------------------------------------------------------------------
Cumulative undeclared dividends on remarketed preferred shares 5,260
-------------------------------------------------------------------------------------------
Net assets allocated to remarketed preferred
shares -- liquidation preference $16,005,260
-------------------------------------------------------------------------------------------
Net assets available to common shares $65,160,793
-------------------------------------------------------------------------------------------
Net asset value per common share ($65,160,793 divided by 4,607,092 shares) $14.14
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended April 30, 2000
<S> <C>
Tax exempt interest income: $ 5,211,856
-------------------------------------------------------------------------------------------
Expenses:
-------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 580,803
-------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 75,862
-------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 9,776
-------------------------------------------------------------------------------------------
Administrative services (Note 2) 4,213
-------------------------------------------------------------------------------------------
Reports to shareholders 9,624
-------------------------------------------------------------------------------------------
Registration fees 75
-------------------------------------------------------------------------------------------
Auditing 68,144
-------------------------------------------------------------------------------------------
Legal 4,948
-------------------------------------------------------------------------------------------
Postage 3,383
-------------------------------------------------------------------------------------------
Preferred share remarketing agent fees 50,444
-------------------------------------------------------------------------------------------
Other 4,121
-------------------------------------------------------------------------------------------
Total expenses 811,393
-------------------------------------------------------------------------------------------
Expense reduction (Note 2) (41,675)
-------------------------------------------------------------------------------------------
Net expenses 769,718
-------------------------------------------------------------------------------------------
Net investment income 4,442,138
-------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (534,748)
-------------------------------------------------------------------------------------------
Net realized loss on futures contracts (Note 1) (97,139)
-------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and futures during the year (5,385,758)
-------------------------------------------------------------------------------------------
Net loss on investments (6,017,645)
-------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(1,575,507)
-------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Year ended April 30
-------------------------
2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets
--------------------------------------------------------------------------------------------------
Operations:
--------------------------------------------------------------------------------------------------
Net investment income $ 4,442,138 $ 4,524,308
--------------------------------------------------------------------------------------------------
Net realized loss on investments (631,887) (13,426)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (5,385,758) 861,939
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (1,575,507) 5,372,821
--------------------------------------------------------------------------------------------------
Distributions to remarketed preferred shareholders:
--------------------------------------------------------------------------------------------------
From net investment income (603,132) (530,833)
--------------------------------------------------------------------------------------------------
From net realized gains on investments (3,619) (33,938)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations
applicable to common shareholders (excluding cumulative
undeclared dividends on remarketed preferred shares of
$5,260 and $1,446, respectively) (2,182,258) 4,808,050
--------------------------------------------------------------------------------------------------
Distributions to common shareholders:
--------------------------------------------------------------------------------------------------
From net investment income (4,007,772) (4,007,852)
--------------------------------------------------------------------------------------------------
From net realized gains (25,800) (236,804)
--------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (6,215,830) 563,394
Net assets
--------------------------------------------------------------------------------------------------
Beginning of year 87,381,883 86,818,489
--------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $200,458 and $353,463, respectively) $81,166,053 $87,381,883
--------------------------------------------------------------------------------------------------
Number of fund shares
--------------------------------------------------------------------------------------------------
Common shares outstanding at beginning and end of year 4,607,092 4,607,092
--------------------------------------------------------------------------------------------------
Remarketed preferred shares outstanding at beginning
and end of year 320 320
--------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
------------------------------------------------------------------------------------------------
Per-share
operating performance Year ended April 30
------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (common shares) $15.49 $15.37 $14.80 $14.55 $14.16
------------------------------------------------------------------------------------------------
Investment operations:
------------------------------------------------------------------------------------------------
Net investment income .96 .98 1.01 1.06 1.04
------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments (1.30) .18 .61 .24 .41
------------------------------------------------------------------------------------------------
Total from investment operations (.34) 1.16 1.62 1.30 1.45
------------------------------------------------------------------------------------------------
Less distributions:
------------------------------------------------------------------------------------------------
From net investment income
------------------------------------------------------------------------------------------------
To preferred shareholders (.13) (.11) (.12) (.12) (.13)
------------------------------------------------------------------------------------------------
To common shareholders (.87) (.87) (.85) (.91) (.93)
------------------------------------------------------------------------------------------------
From net realized gain on investments
------------------------------------------------------------------------------------------------
To preferred shareholders --(d) (.01) (.01) --(d) --
------------------------------------------------------------------------------------------------
To common shareholders (.01) (.05) (.07) (.02) --
------------------------------------------------------------------------------------------------
Total distributions (1.01) (1.04) (1.05) (1.05) (1.06)
------------------------------------------------------------------------------------------------
Net asset value, end of period
(common shares) $14.14 $15.49 $15.37 $14.80 $14.55
------------------------------------------------------------------------------------------------
Market price, end of period
(common shares) $13.44 $15.56 $15.25 $15.00 $14.38
------------------------------------------------------------------------------------------------
Ratios and supplemental data
------------------------------------------------------------------------------------------------
Total return at market
value (common shares)(%)(a) (8.02) 8.11 7.71 11.02 12.68
------------------------------------------------------------------------------------------------
Net assets, end of period
(total fund)(in thousands) $81,166 $87,382 $86,818 $84,205 $83,064
------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(b)(c) 1.21 1.22 1.19 1.23 1.26
------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets (%)(b) 5.72 5.52 5.80 6.28 6.11
------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 17.48 13.87 25.26 35.98 125.01
------------------------------------------------------------------------------------------------
(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) Includes amounts paid through expense offset arrangements. (Note 2)
(d) Distributions amounted to less than $0.01 per share.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 2000
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 that 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 reporting 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.
Restricted securities are stated at fair value following procedures
approved by the Trustees. 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). Gains or 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
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. At April 30, 2000, the fund had a capital loss
carryover of approximately $439,017 available to offset future net
capital gain if any, which will expire on April 30, 2008.
E) Distributions to shareholders Distributions to common and preferred
shareholders from net investment income are recorded by the fund on the
ex-dividend date. Capital gains, if any, are recorded on the ex-dividend
date and paid at least annually. 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 April 30, 2000 was 4.20%. 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. These differences include temporary and permanent
differences of post-October loss deferrals, dividends payable,
unrealized gains and losses on certain futures contracts and market
discount. 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. For the year
ended April 30, 2000, the fund reclassified $15,761 to increase
undistributed net investment income and $2,687 to increase
paid-in-capital, with an increase to accumulated net realized losses of
$18,448. The calculation of net investment income per share in the
financial highlights table excludes these adjustments.
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 Putnam
Fiduciary Trust Company (PFTC), a subsidiary of Putnam Investments, Inc.
Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
For the year ended April 30, 2000, fund expenses were reduced by $41,675
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 $430
has been allocated to the fund, and an additional fee for each Trustees
meeting attended. 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 a 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
Purchases and sales of securities
During the year ended April 30, 2000, cost of purchases and proceeds
from sales of investment securities other than short-term investments
aggregated $14,284,844 and $15,305,440, respectively. There were no
purchases and sales of U.S. government obligations.
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 April 30, 2000, no such
restrictions have been placed on the fund.
FEDERAL TAX INFORMATION
(Unaudited)
The fund has designated 100% of dividends paid from net investment
income during the fiscal year as tax exempt for Federal income tax
purposes.
The Form 1099 you receive in January 2001 will show the tax status of
all distributions paid to your account in calendar 2000.
RESULTS OF OCTOBER 7, 1999 SHAREHOLDER MEETING
(Unaudited)
A meeting of shareholders of the fund was held on October 7, 1999. At
the meeting, each of the nominees for Trustees was elected, as follows:
Common Shares
Votes
Votes for withheld
Jameson Adkins Baxter 4,153,089 67,628
Hans H. Estin 4,154,828 65,888
R.J. Jackson 4,154,204 66,513
Paul L. Joskow 4,155,907 64,810
Elizabeth T. Kennan 4,152,107 68,610
Lawrence J. Lasser 4,153,089 67,628
John H. Mullin III 4,156,489 64,228
William F. Pounds 4,154,998 65,719
George Putnam 4,154,276 66,441
George Putnam, III 4,156,489 64,228
A.J.C. Smith 4,156,489 64,228
W. Thomas Stephens 4,156,489 64,228
W. Nicholas Thorndike 4,153,089 67,628
Preferred Shares
Votes
Votes for withheld
John A. Hill 314 0
Robert E. Patterson 314 0
A proposal to ratify the selection of PricewaterhouseCoopers LLP as the
independent auditors of your fund was approved as follows:
Common shares -- 4,165,451 votes for, and 15,209 votes against, with
40,056 abstentions.
All tabulations are rounded to nearest whole number.
FUND INFORMATION
WEB SITE
www.putnaminv.com
INVESTMENT MANAGER
Putnam Investment Management, Inc.
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management, Inc.
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
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
Richard G. Leibovitch
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.
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
---------------------
BULK RATE
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminv.com
61432/184 6/00
