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| UNITED STATES
SECURITIES AND EXCHANGE COMMISSION |
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| CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
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| Investment Company Act file number: | (811-03630) |
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| Exact name of registrant as specified in charter: | Putnam California Tax Exempt Income Fund |
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| Address of principal executive offices: | One Post Office Square, Boston, Massachusetts 02109 |
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| Name and address of agent for service: | Robert T. Burns, Vice President
One Post Office Square
Boston, Massachusetts 02109 |
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| Copy to: | Bryan Chegwidden, Esq.
Ropes & Gray LLP
1211 Avenue of the Americas
New York, New York 10036 |
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| Registrant's telephone number, including area code: | (617) 292-1000 |
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| Date of fiscal year end: | September 30, 2017 |
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| Date of reporting period : | October 1, 2016 — September 30, 2017 |
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Item 1. Report to Stockholders: | |
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| The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: | |
Putnam
California Tax Exempt
Income Fund
Annual report
9 | 30 | 17
Consider these risks before investing: Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions (including perceptions about the risk of default and expectations about monetary policy or interest rates), changes in government intervention in the financial markets, and factors related to a specific issuer or industry. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. Single-state investments are at risk of common economic forces and other factors affecting a state’s tax-exempt investments. This may result in greater losses and volatility. To the extent investments in securities of issuers located outside of California are made, the fund may also be exposed to the risks affecting other states. Capital gains, if any, are taxed at the federal and, in most cases, state levels. For some investors, investment income may be subject to the federal alternative minimum tax. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have fees and expenses. Tax-exempt bonds may be issued under the Internal Revenue Code only by limited types of issuers for limited types of projects. As a result, the fund’s investments may be focused in certain market segments and be more vulnerable to fluctuations in the values of the securities it holds than a more broadly invested fund. Interest the fund receives might be taxable. You can lose money by investing in the fund.
Message from the Trustees
November 9, 2017
Dear Fellow Shareholder:
A fair amount of investor optimism has helped keep financial markets on a steady course throughout 2017. Global stock markets have generally made solid advances with low volatility, while bond market performance has been a bit more uneven. As we approach the closing weeks of the year, it is important to note that a number of macroeconomic and geopolitical risks around the world could disrupt market momentum.
In all market environments, we believe investors should remain focused on time-tested strategies: maintain a well-diversified portfolio, think about long-term goals, and speak regularly with your financial advisor. In the following pages, you will find an overview of your fund’s performance for the reporting period as well as an outlook for the coming months.
We would like to take this opportunity to recognize and thank Robert J. Darretta, John A. Hill, and W. Thomas Stephens, who recently retired from your fund’s Board of Trustees. We are grateful for their years of work on behalf of you and your fellow shareholders, and we wish them well in their future endeavors.
Thank you for investing with Putnam.
There’s an old adage in investing: “It’s not how much you make that matters, it’s how much you keep.” That’s particularly true when it comes to the fixed-income markets and the impact that taxes can have on your investment. The good news is that, unlike Treasuries or corporate bonds, the interest paid on municipal bonds is generally free from federal income taxes. Moreover, California residents generally pay no state income taxes on the distributions paid by municipal bonds issued in the Golden State. That can make municipal bonds particularly attractive to investors subject to higher personal income tax rates.
Putnam California Tax Exempt Income Fund offers an active, research-intensive investment approach.
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| 2 California Tax Exempt Income Fund |
Source: Putnam, as of 9/30/17. Past performance is no guarantee of future results. Yields for Treasuries, investment-grade corporates, and municipal bonds are represented by the average “yield to worst” — a calculation of the lowest possible yield generated without defaulting — of the Bloomberg Barclays U.S. Treasury Index, the Bloomberg Barclays U.S. Credit Index, and the Bloomberg Barclays Municipal Bond Index, respectively. You cannot invest directly in an index. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Income from municipal bonds may be subject to the alternative minimum tax. Taxable-equivalent yield and annual after-tax income are based on a 43.40% federal income tax rate. This rate reflects the American Taxpayer Relief Act of 2012 and includes the 3.80% Medicare surtax.
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| California Tax Exempt Income Fund 3 |
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 4.00%; had they, returns would have been lower. See below and pages 9–11 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.
This comparison shows your fund’s performance in the context of broad market indexes for the 12 months ended 9/30/17. See above and pages 9–11 for additional fund performance information. Index descriptions can be found on pages 14–15.
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| 4 California Tax Exempt Income Fund |
Paul holds a B.A. from Suffolk University. He has been in the investment industry since he joined Putnam in 1989.
Garrett holds an M.S. in Investment Management from Boston University and a B.S. in International Business Administration from Southern New Hampshire University. He joined Putnam in 2016 and has been in the investment industry since 2006.
Paul, how was the market environment for municipal bonds during the reporting period?
During the early months of the reporting period, municipal bonds struggled, as slowing mutual fund demand and record new issuance weighed on performance. We believe the uncertainty around U.S. income tax policy changes for individuals and corporations was an additional headwind for the asset class following the U.S. presidential election.
From January through the close of the reporting period on September 30, 2017, investor sentiment generally improved — helping municipal bonds generate a year-to-date total return of 4.66% as measured by the Bloomberg Barclays Municipal Bond Index [the benchmark]. The pace of new issuance was generally light, especially during the third quarter of 2017 when issuance fell 23% from levels seen in the same three-month period in 2016. As such, demand outpaced supply — contributing to rising prices and a narrowing of credit spreads of lower investment-grade as well as high-yield municipal bonds. [Credit spreads reflect the difference in yield between higher- and lower-quality municipal bonds.] Viewed in a
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| California Tax Exempt Income Fund 5 |
Allocations are shown as a percentage of the fund’s net assets as of 9/30/17. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the information in the portfolio schedule notes included in the financial statements due to the inclusion of derivative securities, any interest accruals, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.
Credit qualities are shown as a percentage of the fund’s net assets as of 9/30/17. A bond rated BBB or higher (SP-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. Ratings may vary over time.
Cash and net other assets, if any, represent the market value weights of cash, derivatives, and short-term securities in the portfolio. The fund itself has not been rated by an independent rating agency.
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| 6 California Tax Exempt Income Fund |
longer-term context, spreads were at or close to the narrowest point since the credit crisis during much of the reporting period. That said, overall credit fundamentals remained stable, supply/demand dynamics were favorable, and defaults remain low and isolated.
On June 14, 2017, the Federal Reserve announced its second interest-rate hike of 2017 and third since the reporting period began. In its assessment of inflation, the Fed revised its expectations downward, adding that it believed inflation would “remain somewhat below 2% in the near term.” Municipal bonds, along with other rate-sensitive investments, rallied following these more dovish statements.
In September, Fed chair Janet Yellen’s comments at the Fed’s policy meeting were somewhat more hawkish, although the Fed left interest rates unchanged. The central bank signaled that, despite recent low levels of inflation, it expected one more rate increase by year-end, and envisioned three more increases in 2018. The Fed also reaffirmed its commitment to begin in October reducing its balance sheet, which includes over $4 trillion in U.S. Treasury bonds and mortgage-backed securities that it purchased in the years following the 2008 financial crisis.
Against this backdrop, municipal bonds outperformed Treasuries, and shorter-term municipal bonds outperformed intermediate- and long-maturity municipal bonds.
How did the fund perform?
For the 12 months ended September 30, 2017, the fund underperformed the benchmark but outperformed its Lipper peer group average.
What was your investment approach?
During the period, the municipal bond yield curve steepened. We maintained an overweight exposure to lower-rated investment-grade municipal bonds and placed greater focus on essential service utilities and continuing-care retirement community bonds relative to the fund’s Lipper group.
We also maintained an underweight position in Puerto Rico-based issuers relative to the fund’s Lipper peers. This underweight exposure added to performance during the period. Puerto Rico was devastated by the recent hurricanes, which makes its current economic and financial situation even more difficult and could further challenge the debt restructuring process.
As a result of some strategic investment decisions, the fund experienced higher-than-normal turnover for the period. Following the November 2016 U.S. presidential election, prices of municipal bonds declined and their yields rose, along with other rate-sensitive investments. The sell-off was due to investor concerns that President Trump’s pro-growth agenda might lead to improved growth, higher deficits, and possibly an uptick in inflation. We took advantage of the sell-off to add what we viewed as stable credits at attractive prices, which improved the portfolio’s overall positioning, in our opinion.
What is your outlook as 2017 comes to a close?
We anticipate steady improvement in the U.S. economic backdrop and see evidence of a continued, synchronous pickup in the global economic environment. From a fiscal policy perspective, the market appears to be focused on how much stimulus might come from the new administration, and how those initiatives may affect the pulse of the U.S. economy. Should additional stimulus augment U.S. growth, we believe the Fed might be inclined to tighten a little faster, or conversely, tighten more slowly if fiscal policy proves less stimulative. At period-end, the markets were pricing in the
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| California Tax Exempt Income Fund 7 |
strong likelihood of a Fed rate hike of a quarter percentage point in December 2017.
Republican leaders released a broad framework of a tax plan just before the close of the period, which included major changes to the tax code. While the recently released Tax Cut and Jobs Act seeks to eliminate some tax breaks, it left the municipal bond tax exemption intact. We do not believe the changes in tax rates will materially affect demand for municipal bonds from individuals.
Looking ahead, we will be closely monitoring the evolution of the tax plan. It is still in the early stages of discussion with many details that still need to be hashed out, including how to pay for the cuts. We also will be following the debt ceiling debate; a budget resolution for the next fiscal year; and the confirmation of President Trump’s nomination of Jerome Powell as the next Federal Reserve chair, as Janet Yellen’s current term is due to expire in February 2018.
As always, we will continue to rely on in-depth research to evaluate new and existing holdings for attractive income and return potential.
Thank you, Paul, for your time and insights today.
The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.
Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk. Statements in the Q&A concerning the fund’s performance or portfolio composition relative to those of the fund’s Lipper peer group may reference information produced by Lipper Inc. or through a third party.
This chart shows how the fund’s top weightings have changed over the past six months. Allocations are shown as a percentage of the fund’s net assets. Current period summary information may differ from the information in the portfolio schedule notes included in the financial statements due to the inclusion of derivative securities, any interest accruals, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.
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| 8 California Tax Exempt Income Fund |
Your fund’s performance
This section shows your fund’s performance, price, and distribution information for periods ended September 30, 2017, the end of its most recent fiscal year. In accordance with regulatory requirements for mutual funds, we also include expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class Y shares are not available to all investors. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.
Fund performance Total return for periods ended 9/30/17
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| | Annual | | | | | | | |
| | average | | Annual | | Annual | | Annual | |
| | (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year |
| Class A (4/29/83) | | | | | | | | |
| Before sales charge | 6.29% | 54.04% | 4.42% | 17.43% | 3.26% | 9.85% | 3.18% | 0.26% |
| After sales charge | 6.16 | 47.88 | 3.99 | 12.73 | 2.43 | 5.46 | 1.79 | –3.75 |
| Class B (1/4/93) | | | | | | | | |
| Before CDSC | 6.08 | 46.24 | 3.87 | 13.64 | 2.59 | 7.79 | 2.53 | –0.37 |
| After CDSC | 6.08 | 46.24 | 3.87 | 11.69 | 2.24 | 4.82 | 1.58 | –5.22 |
| Class C (7/26/99) | | | | | | | | |
| Before CDSC | 5.44 | 42.54 | 3.61 | 12.94 | 2.46 | 7.36 | 2.40 | –0.52 |
| After CDSC | 5.44 | 42.54 | 3.61 | 12.94 | 2.46 | 7.36 | 2.40 | –1.49 |
| Class M (2/14/95) | | | | | | | | |
| Before sales charge | 5.90 | 49.63 | 4.11 | 15.82 | 2.98 | 9.07 | 2.94 | –0.02 |
| After sales charge | 5.80 | 44.77 | 3.77 | 12.05 | 2.30 | 5.53 | 1.81 | –3.27 |
| Class Y (1/2/08) | | | | | | | | |
| Net asset value | 6.36 | 57.61 | 4.65 | 18.65 | 3.48 | 10.54 | 3.40 | 0.48 |
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A and M shares reflect the deduction of the maximum 4.00% and 3.25% sales charge, respectively, levied at the time of purchase. Class B share returns after contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 1% in the sixth year, and is eliminated thereafter. Class C share returns after CDSC reflect a 1% CDSC for the first year that is eliminated thereafter. Class Y shares have no initial sales charge or CDSC. Performance for class B, C, M, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares, except for class Y shares, for which 12b-1 fees are not applicable.
For a portion of the periods, the fund had expense limitations, without which returns would have been lower.
Class B share performance reflects conversion to class A shares after eight years.
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| California Tax Exempt Income Fund 9 |
Comparative index returns For periods ended 9/30/17
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| | Annual | | | | | | | |
| | average | | Annual | | Annual | | Annual | |
| | (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year |
| Bloomberg Barclays | | | | | | | | |
| Municipal Bond Index | 6.66% | 55.59% | 4.52% | 15.96% | 3.01% | 9.87% | 3.19% | 0.87% |
| Lipper California | | | | | | | | |
| Municipal Debt Funds | 6.34 | 52.78 | 4.31 | 18.50 | 3.44 | 10.54 | 3.39 | 0.03 |
| category average* | | | | | | | | |
Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.
* Over the 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 9/30/17, there were 115, 111, 100, 83, and 3 funds, respectively, in this Lipper category.
Past performance does not indicate future results. At the end of the same time period, a $10,000 investment in the fund’s class B and C shares would have been valued at $14,624 and $14,254, respectively, and no contingent deferred sales charges would apply. A $10,000 investment in the fund’s class M shares ($9,675 after sales charge) would have been valued at $14,477. A $10,000 investment in the fund’s class Y shares would have been valued at $15,761.
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| 10 California Tax Exempt Income Fund |
Fund price and distribution information For the 12-month period ended 9/30/17
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| Distributions | Class A | Class B | Class C | Class M | Class Y |
| Number | 12 | 12 | 12 | 12 | 12 |
| Income1 | $0.265645 | $0.214441 | $0.201848 | $0.242272 | $0.283047 |
| Capital gains2 | — | — | — | — | — |
| Total | $0.265645 | $0.214441 | $0.201848 | $0.242272 | $0.283047 |
| | Before | After | Net | Net | Before | After | Net |
| | sales | sales | asset | asset | sales | sales | asset |
| Share value | charge | charge | value | value | charge | charge | value |
| 9/30/16 | $8.39 | $8.74 | $8.38 | $8.44 | $8.37 | $8.65 | $8.41 |
| 9/30/17 | 8.14 | 8.48 | 8.13 | 8.19 | 8.12 | 8.39 | 8.16 |
| | Before | After | Net | Net | Before | After | Net |
| Current rate | sales | sales | asset | asset | sales | sales | asset |
| (end of period) | charge | charge | value | value | charge | charge | value |
| Current dividend rate3 | 3.09% | 2.97% | 2.46% | 2.28% | 2.79% | 2.70% | 3.30% |
| Taxable equivalent4 | 6.30 | 6.05 | 5.01 | 4.65 | 5.69 | 5.50 | 6.72 |
| Current 30-day | | | | | | | |
| SEC yield5 | N/A | 1.57 | 1.00 | 0.85 | N/A | 1.31 | 1.85 |
| Taxable equivalent4 | N/A | 3.20 | 2.04 | 1.73 | N/A | 2.67 | 3.77 |
The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A and M shares, if applicable, do not take into account any sales charge levied at the time of purchase. After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (4.00% for class A shares and 3.25% for class M shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.
1 For some investors, investment income may be subject to the federal alternative minimum tax.
2 Capital gains, if any, are taxable for federal and, in most cases, state purposes.
3 Most recent distribution, including any return of capital and excluding capital gains, annualized and divided by share price before or after sales charge at period-end.
4 Assumes maximum 50.93% federal and state combined tax rate for 2017. Results for investors subject to lower tax rates would not be as advantageous.
5 Based only on investment income and calculated using the maximum offering price for each share class, in accordance with SEC guidelines.
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| California Tax Exempt Income Fund 11 |
Your fund’s expenses
As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.
Expense ratios
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| | Class A | Class B | Class C | Class M | Class Y |
| Total annual operating expenses for the fiscal | | | | | |
| year ended 9/30/16* | 0.73% | 1.36% | 1.51% | 1.01% | 0.51% |
| Annualized expense ratio for the six-month | | | | | |
| period ended 9/30/17† | 0.74% | 1.37% | 1.52% | 1.02% | 0.52% |
Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.
Expenses are shown as a percentage of average net assets.
* Restated to reflect current fees resulting from a change to the fund’s investor servicing arrangements effective 9/1/16.
† Expense ratios for each class are for the fund’s most recent fiscal half year. As a result of this, ratios may differ from expense ratios based on one-year data in the financial highlights.
Expenses per $1,000
The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 4/1/17 to 9/30/17. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
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| | Class A | Class B | Class C | Class M | Class Y |
| Expenses paid per $1,000*† | $3.77 | $6.96 | $7.73 | $5.19 | $2.65 |
| Ending value (after expenses) | $1,030.80 | $1,027.60 | $1,027.90 | $1,030.70 | $1,031.90 |
* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 9/30/17. The expense ratio may differ for each share class.
† Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.
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| 12 California Tax Exempt Income Fund |
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended 9/30/17, use the following calculation method. To find the value of your investment on 4/1/17, call Putnam at 1-800-225-1581.
Compare expenses using the SEC’s method
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
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| | Class A | Class B | Class C | Class M | Class Y |
| Expenses paid per $1,000*† | $3.75 | $6.93 | $7.69 | $5.16 | $2.64 |
| Ending value (after expenses) | $1,021.36 | $1,018.20 | $1,017.45 | $1,019.95 | $1,022.46 |
* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 9/30/17. The expense ratio may differ for each share class.
† Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year.
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| California Tax Exempt Income Fund 13 |
Terms and definitions
Important terms
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.
Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.
After sales charge is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge performance figures shown here assume the 4.00% maximum sales charge for class A shares and 3.25% for class M shares.
Contingent deferred sales charge (CDSC) is generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B CDSC declines over time from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase.
Share classes
Class A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).
Class B shares are closed to new investments and are only available by exchange from another Putnam fund or through dividend and/or capital gains reinvestment. They are not subject to an initial sales charge and may be subject to a CDSC.
Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC.
Class Y shares are not subject to an initial sales charge or CDSC, and carry no 12b-1 fee. They are generally only available to corporate and institutional clients and clients in other approved programs.
Fixed-income terms
Current rate is the annual rate of return earned from dividends or interest of an investment. Current rate is expressed as a percentage of the price of a security, fund share, or principal investment.
Yield curve is a graph that plots the yields of bonds with equal credit quality against their differing maturity dates, ranging from shortest to longest. It is used as a benchmark for other debt, such as mortgage or bank lending rates.
Comparative indexes
Bloomberg Barclays Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds.
Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.
BofA Merrill Lynch U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.
S&P 500 Index is an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.
Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofAML”), used with permission. BofAML permits use of the BofAML indices and related data on an “as is” basis, makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the BofAML indices or any data
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| 14 California Tax Exempt Income Fund |
included in, related to, or derived therefrom, assumes no liability in connection with the use of the foregoing, and does not sponsor, endorse, or recommend Putnam Investments, or any of its products or services.
Lipper is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.
Other information for shareholders
Proxy voting
Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2017, are available in the Individual Investors section of putnam.com, and on the Securities and Exchange Commission (SEC) website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Form N-Q on the SEC’s website at www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s website or the operation of the Public Reference Room.
Trustee and employee fund ownership
Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of September 30, 2017, Putnam employees had approximately $509,000,000 and the Trustees had approximately $90,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.
Important notice regarding Putnam’s privacy policy
In order to conduct business with our shareholders, we must obtain certain personal information such as account holders’ names, addresses, Social Security numbers, and dates of birth. Using this information, we are able to maintain accurate records of accounts and transactions.
It is our policy to protect the confidentiality of our shareholder information, whether or not a shareholder currently owns shares of our funds. In particular, it is our policy not to sell information about you or your accounts to outside marketing firms. We have safeguards in place designed to prevent unauthorized access to our computer systems and procedures to protect personal information from unauthorized use.
Under certain circumstances, we must share account information with outside vendors who provide services to us, such as mailings and proxy solicitations. In these cases, the service providers enter into confidentiality agreements with us, and we provide only the information necessary to process transactions and perform other services related to your account. Finally, it is our policy to share account information with your financial representative, if you’ve listed one on your Putnam account.
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| California Tax Exempt Income Fund 15 |
Trustee approval of management contract
General conclusions
The Board of Trustees of The Putnam Funds oversees the management of each fund and, as required by law, determines annually whether to approve the continuance of your fund’s management contract with Putnam Investment Management, LLC (“Putnam Management”) and the sub-management contract with respect to your fund between Putnam Management and its affiliate, Putnam Investments Limited (“PIL”). The Board, with the assistance of its Contract Committee, requests and evaluates all information it deems reasonably necessary under the circumstances in connection with its annual contract review. The Contract Committee consists solely of Trustees who are not “interested persons” (as this term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of The Putnam Funds (“Independent Trustees”).
At the outset of the review process, members of the Board’s independent staff and independent legal counsel discussed with representatives of Putnam Management the annual contract review materials furnished to the Contract Committee during the course of the previous year’s review, identifying possible changes in these materials that might be necessary or desirable for the coming year. Following these discussions and in consultation with the Contract Committee, the Independent Trustees’ independent legal counsel requested that Putnam Management and its affiliates furnish specified information, together with any additional information that Putnam Management considered relevant, to the Contract Committee. Over the course of several months ending in June 2017, the Contract Committee met on a number of occasions with representatives of Putnam Management, and separately in executive session, to consider the information that Putnam Management provided. Throughout this process, the Contract Committee was assisted by the members of the Board’s independent staff and by independent legal counsel for The Putnam Funds and the Independent Trustees.
In May 2017, the Contract Committee met in executive session to discuss and consider its recommendations with respect to the continuance of the contracts. At the Trustees’ June 2017 meeting, the Contract Committee met in executive session with the other Independent Trustees to review a summary of the key financial, performance and other data that the Contract Committee considered in the course of its review. The Contract Committee then presented its written report, which summarized the key factors that the Committee had considered and set forth its recommendations. The Contract Committee recommended, and the Independent Trustees approved, the continuance of your fund’s management and sub-management contracts, effective July 1, 2017. (Because PIL is an affiliate of Putnam Management and Putnam Management remains fully responsible for all services provided by PIL, the Trustees have not attempted to evaluate PIL as a separate entity, and all subsequent references to Putnam Management below should be deemed to include reference to PIL as necessary or appropriate in the context.)
The Independent Trustees’ approval was based on the following conclusions:
• That the fee schedule in effect for your fund represented reasonable compensation in light of the nature and quality of the services being provided to the fund, the fees paid by competitive funds, the costs incurred by Putnam Management in providing services to the fund, and the continued application of certain reductions and waivers noted below; and
• That the fee schedule in effect for your fund represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the fund at current asset levels.
These conclusions were based on a comprehensive consideration of all information provided to the Trustees and were not the result of any single factor. Some of the factors that figured particularly in the Trustees’ deliberations and how the Trustees considered these factors are described below, although individual Trustees may have evaluated the information presented differently, giving different weights to various factors. It is also important to recognize that the management arrangements for your fund and the other Putnam funds are the result of many years of review and discussion between the Independent Trustees and Putnam Management, that some aspects of the arrangements may receive greater scrutiny in some years than others, and that the Trustees’ conclusions may be based, in part, on their consideration of fee arrangements in previous years. For example, with some minor exceptions, the funds’ current fee arrangements under the management contracts were first implemented at the beginning of 2010
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| 16 California Tax Exempt Income Fund |
following extensive review by the Contract Committee and discussions with representatives of Putnam Management, as well as approval by shareholders.
Management fee schedules and total expenses
The Trustees reviewed the management fee schedules in effect for all Putnam funds, including fee levels and breakpoints. The Trustees also reviewed the total expenses of each Putnam fund, recognizing that in most cases management fees represented the major, but not the sole, determinant of total costs to fund shareholders. (In a few instances, funds have implemented so-called “all-in” management fees covering substantially all routine fund operating costs.)
In reviewing fees and expenses, the Trustees generally focus their attention on material changes in circumstances — for example, changes in assets under management, changes in a fund’s investment strategy, changes in Putnam Management’s operating costs or profitability, or changes in competitive practices in the mutual fund industry — that suggest that consideration of fee changes might be warranted. The Trustees concluded that the circumstances did not indicate that changes to the management fee structure for your fund would be appropriate at this time.
Under its management contract, your fund has the benefit of breakpoints in its management fee schedule that provide shareholders with economies of scale in the form of reduced fee rates as assets under management in the Putnam family of funds increase. The Trustees concluded that the fee schedule in effect for your fund represented an appropriate sharing of economies of scale between fund shareholders and Putnam Management.
As in the past, the Trustees also focused on the competitiveness of each fund’s total expense ratio. In order to support the effort to have fund expenses meet competitive standards, the Trustees and Putnam Management have implemented certain expense limitations that were in effect during your fund’s fiscal year ending in 2016. These expense limitations were: (i) a contractual expense limitation applicable to specified retail open-end funds, including your fund, of 25 basis points (until September 1, 2016, this limitation was 32 basis points) on investor servicing fees and expenses and (ii) a contractual expense limitation applicable to specified open-end funds, including your fund, of 20 basis points on so-called “other expenses” (i.e., all expenses exclusive of management fees, distribution fees, investor servicing fees, investment-related expenses, interest, taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses). These expense limitations attempt to maintain competitive expense levels for the funds. Most funds, including your fund, had sufficiently low expenses that these expense limitations were not operative during their fiscal years ending in 2016. Putnam Management has agreed to maintain the 25 basis points expense limitation until at least August 31, 2018 and to maintain the 20 basis points expense limitation until at least January 30, 2019. Putnam Management’s support for these expense limitation arrangements was an important factor in the Trustees’ decision to approve the continuance of your fund’s management and sub-management contracts.
The Trustees reviewed comparative fee and expense information for a custom group of competitive funds selected by Broadridge Financial Solutions, Inc. (“Broadridge”). This comparative information included your fund’s percentile ranking for effective management fees and total expenses (excluding any applicable 12b-1 fee), which provides a general indication of your fund’s relative standing. In the custom peer group, your fund ranked in the first quintile in effective management fees (determined for your fund and the other funds in the custom peer group based on fund asset size and the applicable contractual management fee schedule) and in the second quintile in total expenses (excluding any applicable 12b-1 fees) as of December 31, 2016. The first quintile represents the least expensive funds and the fifth quintile the most expensive funds. The fee and expense data reported by Broadridge as of December 31, 2016 reflected the most recent fiscal year-end data available in Broadridge’s database at that time.
In connection with their review of fund management fees and total expenses, the Trustees also reviewed the costs of the services provided and the profits realized by Putnam Management and its affiliates from their contractual relationships with the funds. This information included trends in revenues, expenses and profitability of Putnam Management and its affiliates relating to the investment management, investor servicing and distribution services provided to the funds. In this regard, the Trustees also reviewed an analysis of Putnam Management’s revenues, expenses and profitability, allocated on a fund-by-fund basis, with respect to the funds’ management, distribution, and investor servicing contracts. For
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| California Tax Exempt Income Fund 17 |
each fund, the analysis presented information about revenues, expenses and profitability for each of the agreements separately and for the agreements taken together on a combined basis. The Trustees concluded that, at current asset levels, the fee schedules in place represented reasonable compensation for the services being provided and represented an appropriate sharing between fund shareholders and Putnam Management of such economies of scale as may exist in the management of the Putnam funds at that time.
The information examined by the Trustees in connection with their annual contract review for the Putnam funds included information regarding fees charged by Putnam Management and its affiliates to institutional clients, including defined benefit pension and profit-sharing plans, charities, college endowments, foundations, sub-advised third-party mutual funds, state, local and non-U.S. government entities, and corporations. This information included, in cases where an institutional product’s investment strategy corresponds with a fund’s strategy, comparisons of those fees with fees charged to the Putnam funds, as well as an assessment of the differences in the services provided to these different types of clients as compared to the services provided to the Putnam Funds. The Trustees observed that the differences in fee rates between these clients and the Putnam funds are by no means uniform when examined by individual asset sectors, suggesting that differences in the pricing of investment management services to these types of clients may reflect, among other things, historical competitive forces operating in separate markets. The Trustees considered the fact that in many cases fee rates across different asset classes are higher on average for mutual funds than for institutional clients, as well as the differences between the services that Putnam Management provides to the Putnam funds and those that it provides to its other clients. The Trustees did not rely on these comparisons to any significant extent in concluding that the management fees paid by your fund are reasonable.
Investment performance
The quality of the investment process provided by Putnam Management represented a major factor in the Trustees’ evaluation of the quality of services provided by Putnam Management under your fund’s management contract. The Trustees were assisted in their review of the Putnam funds’ investment process and performance by the work of the investment oversight committees of the Trustees, which meet on a regular basis with the funds’ portfolio teams and with the Chief Investment Officers and other senior members of Putnam Management’s Investment Division throughout the year. In addition, in response to a request from the Independent Trustees, Putnam Management provided the Trustees with in-depth presentations regarding each of the equity and fixed income investment teams, including the operation of the teams and their investment approaches. The Trustees concluded that Putnam Management generally provides a high-quality investment process — based on the experience and skills of the individuals assigned to the management of fund portfolios, the resources made available to them, and in general Putnam Management’s ability to attract and retain high-quality personnel — but also recognized that this does not guarantee favorable investment results for every fund in every time period.
The Trustees considered that 2016 was a challenging year for the performance of the Putnam funds, with generally disappointing results for the international and global equity funds and taxable fixed income funds, mixed results for small-cap equity, Spectrum, global asset allocation, equity research and tax exempt fixed income funds, but generally strong results for U.S. equity funds. The Trustees noted, however, that they were encouraged by the positive performance trend since mid-year 2016 across most Putnam Funds. In particular, from May 1, 2016 through April 30, 2017, 51% of Putnam Fund assets were in the top quartile and 87% were above the median of the Putnam Funds’ competitive industry rankings. They noted that the longer-term performance of the Putnam funds generally continued to be strong, exemplified by the fact that the Putnam funds were ranked by the Barron’s/Lipper Fund Families survey as the 5th-best performing mutual fund complex out of 54 complexes for the five-year period ended December 31, 2016. In addition, while the survey ranked the Putnam Funds 52nd out of 61 mutual fund complexes for the one-year period ended 2016, the Putnam Funds have ranked 1st or 2nd in the survey for the one-year period three times since 2009 (most recently in 2013). They also noted, however, the disappointing investment performance of some funds for periods ended December 31, 2016 and considered information provided by Putnam Management regarding the factors contributing to the underperformance and actions being taken to improve the performance of these particular funds. The Trustees indicated their intention to continue
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| 18 California Tax Exempt Income Fund |
to monitor closely the performance of those funds, including the effectiveness of any efforts Putnam Management has undertaken to address underperformance and whether additional actions to address areas of underperformance are warranted.
For purposes of the Trustees’ evaluation of the Putnam Funds’ investment performance, the Trustees generally focus on a competitive industry ranking of each fund’s total net return over a one-year, three-year and five-year period. For a number of Putnam funds with relatively unique investment mandates for which Putnam Management informed the Trustees that meaningful competitive performance rankings are not considered to be available, the Trustees evaluated performance based on their total gross and net returns and, in most cases, comparisons of those returns with the returns of selected investment benchmarks. In the case of your fund, the Trustees considered that its class A share cumulative total return performance at net asset value was in the following quartiles of its Lipper Inc. (“Lipper”) peer group (Lipper California Municipal Debt Funds) for the one-year, three-year and five-year periods ended December 31, 2016 (the first quartile representing the best-performing funds and the fourth quartile the worst-performing funds):
| |
| One-year period | 2nd |
| Three-year period | 3rd |
| Five-year period | 3rd |
Over the one-year, three-year and five-year periods ended December 31, 2016, there were 122, 117 and 103 funds, respectively, in your fund’s Lipper peer group. (When considering performance information, shareholders should be mindful that past performance is not a guarantee of future results.)
The Trustees also considered Putnam Management’s continued efforts to support fund performance through initiatives including structuring compensation for portfolio managers and research analysts to enhance accountability for fund performance, emphasizing accountability in the portfolio management process, and affirming its commitment to a fundamental-driven approach to investing. The Trustees noted further that Putnam Management continued to strengthen its fundamental research capabilities by adding new investment personnel.
Brokerage and soft-dollar allocations; investor servicing
The Trustees considered various potential benefits that Putnam Management may receive in connection with the services it provides under the management contract with your fund. These include benefits related to brokerage allocation and the use of soft dollars, whereby a portion of the commissions paid by a fund for brokerage may be used to acquire research services that are expected to be useful to Putnam Management in managing the assets of the fund and of other clients. Subject to policies established by the Trustees, soft dollars generated by these means are used predominantly to acquire brokerage and research services (including third-party research and market data) that enhance Putnam Management’s investment capabilities and supplement Putnam Management’s internal research efforts. However, the Trustees noted that a portion of available soft dollars continues to be used to pay fund expenses. The Trustees indicated their continued intent to monitor regulatory and industry developments in this area with the assistance of their Brokerage Committee, including any developments with respect to the European Union’s updated Markets in Financial Instruments Directive and its potential impact on PIL’s use of client commissions to obtain investment research. The Trustees also indicated their continued intent to monitor the allocation of the Putnam funds’ brokerage in order to ensure that the principle of seeking best price and execution remains paramount in the portfolio trading process.
Putnam Management may also receive benefits from payments that the funds make to Putnam Management’s affiliates for investor or distribution services. In conjunction with the annual review of your fund’s management and sub-management contracts, the Trustees reviewed your fund’s investor servicing agreement with Putnam Investor Services, Inc. (“PSERV”) and its distributor’s contracts and distribution plans with Putnam Retail Management Limited Partnership (“PRM”), both of which are affiliates of Putnam Management. The Trustees concluded that the fees payable by the funds to PSERV and PRM, as applicable, for such services are fair and reasonable in relation to the nature and quality of such services, the fees paid by competitive funds, and the costs incurred by PSERV and PRM, as applicable, in providing such services. Furthermore, the Trustees were of the view that the services provided were required for the operation of the funds, and that they were of a quality at least equal to those provided by other providers.
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| California Tax Exempt Income Fund 19 |
Financial statements
These sections of the report, as well as the accompanying Notes, preceded by the Report of Independent Registered Public Accounting Firm, 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 non-investment 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 liquidation preference of preferred shares.)
Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal year.
Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, 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 highlights table also includes the current reporting period.
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| 20 California Tax Exempt Income Fund |
Report of Independent Registered Public Accounting Firm
The Board of Trustees and Shareholders
Putnam California Tax Exempt Income Fund:
We have audited the accompanying statement of assets and liabilities of Putnam California Tax Exempt Income Fund (the fund), including the fund’s portfolio, as of September 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2017, by correspondence with the custodian and brokers or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Putnam California Tax Exempt Income Fund as of September 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
November 9, 2017
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| California Tax Exempt Income Fund 21 |
The fund’s portfolio 9/30/17
Key to holding’s abbreviations
| |
| ABAG Association Of Bay Area Governments | FRN Floating Rate Notes: the rate shown is the current |
| AGC Assured Guaranty Corp. | interest rate or yield at the close of the reporting period. |
| AGM Assured Guaranty Municipal Corporation | Rates may be subject to a cap or floor. |
| AMBAC AMBAC Indemnity Corporation | G.O. Bonds General Obligation Bonds |
| BAM Build America Mutual | NATL National Public Finance Guarantee Corp. |
| COP Certificates of Participation | Radian Insd. Radian Group Insured |
| FCS Farm Credit System | U.S. Govt. Coll. U.S. Government Collateralized |
| FGIC Financial Guaranty Insurance Company | VRDN Variable Rate Demand Notes, which are floating- |
| FHL Banks Coll. Federal Home Loan Banks | rate securities with long-term maturities that carry |
| System Collateralized | coupons that reset and are payable upon demand |
| FHLMC Coll. Federal Home Loan Mortgage | either daily, weekly or monthly. The rate shown is the |
| Corporation Collateralized | current interest rate at the close of the reporting |
| FNMA Coll. Federal National Mortgage | period. Rates are set by remarketing agents and may |
| Association Collateralized | take into consideration market supply and demand, |
| credit quality and the current SIFMA Municipal Swap |
| | Index rate, which was 0.94% as of the close of the |
| | reporting period. |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* | Rating** | Principal amount | Value |
| California (96.3%) | | | |
| ABAG Fin. Auth. for Nonprofit Corps. Rev. Bonds | | | |
| (Sharp Hlth. Care), 6.25%, 8/1/39 | Aa3 | $14,000,000 | $15,199,520 |
| (Episcopal Sr. Cmntys.), 6.125%, 7/1/41 | BBB+/F | 2,045,000 | 2,291,975 |
| (Episcopal Sr. Cmntys.), Ser. A, 5.00%, 7/1/42 | BBB+/F | 700,000 | 756,623 |
| (O’Connor Woods), 5.00%, 1/1/33 | AA– | 2,300,000 | 2,627,934 |
| ABAG Fin. Auth. for Nonprofit Corps. Special Tax | | | |
| Bonds (Windemere Ranch Infrastructure Fin. | | | |
| Program), Ser. A, AGM | | | |
| 5.00%, 9/2/34 | AA | 420,000 | 492,349 |
| 5.00%, 9/2/33 | AA | 745,000 | 877,536 |
| 5.00%, 9/2/32 | AA | 350,000 | 414,915 |
| 5.00%, 9/2/30 | AA | 2,085,000 | 2,505,649 |
| ABAG Fin. Auth. Non-Profit Corps Insd. Sr. Living Rev. | | | |
| Bonds (Odd Fellows Home of CA), Ser. A | | | |
| 5.00%, 4/1/42 | AA– | 1,000,000 | 1,127,050 |
| 5.00%, 4/1/32 | AA– | 3,000,000 | 3,439,170 |
| Alameda Cnty., Joint Pwrs. Auth. Lease Rev. Bonds | | | |
| (Multiple Cap.), Ser. A, 5.00%, 12/1/34 | Aa1 | 4,960,000 | 5,740,506 |
| Alameda, Corridor Trans. Auth. Rev. Bonds | | | |
| Ser. B, 5.00%, 10/1/37 | BBB+ | 1,750,000 | 1,998,920 |
| Ser. B, AGM, 5.00%, 10/1/37 | AA | 450,000 | 515,903 |
| Ser. A, AMBAC, zero %, 10/1/19 | BBB+ | 365,000 | 348,038 |
| Ser. A, AMBAC, U.S. Govt. Coll., zero %, 10/1/19 | | | |
| (Escrowed to maturity) | Aaa | 4,635,000 | 4,539,195 |
| Anaheim, Pub. Fin. Auth. Rev. Bonds | | | |
| (Elec. Syst. Distr. Fac.), Ser. A, 5.375%, 10/1/36 | Aa3 | 3,000,000 | 3,396,510 |
| Ser. A, 5.00%, 5/1/46 | AA– | 2,500,000 | 2,847,600 |
| Ser. A, 5.00%, 5/1/39 | AA– | 1,000,000 | 1,155,340 |
|
| 22 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Bay Area Toll Auth. of CA Mandatory Put Bonds | | | |
| (14/2/18), Ser. B, 1.50%, 4/1/47 | AA | $1,040,000 | $1,040,000 |
| Bay Area Toll Auth. of CA Rev. Bonds | | | |
| Ser. S-6, 5.00%, 10/1/54 | AA– | 8,650,000 | 9,786,610 |
| Ser. F-1, 5.00%, 4/1/54 | AA | 14,330,000 | 16,135,867 |
| (San Francisco Bay Area Sub. Toll Bridge), Ser. S-7, | | | |
| 4.00%, 4/1/33 | AA– | 14,050,000 | 15,288,086 |
| CA Hlth. Fac. Fin. Auth. Rev. Bonds | | | |
| (Providence Hlth. & Svcs.), Ser. C, 6.50%, 10/1/38 | | | |
| (Prerefunded 10/1/18) | AAA/P | 100,000 | 105,439 |
| (Adventist Hlth. Syst.-West), Ser. A, 5.75%, 9/1/39 | | | |
| (Prerefunded 9/1/19) | A | 10,500,000 | 11,441,640 |
| (Stanford Hosp.), Ser. A-2, 5.25%, 11/15/40 | Aa3 | 1,000,000 | 1,124,000 |
| (Scripps Hlth.), Ser. A, 5.00%, 11/15/40 | AA | 1,500,000 | 1,669,410 |
| (Cedars Sinai Med. Ctr.), 5.00%, 8/15/39 | | | |
| (Prerefunded 8/15/19) | Aa3 | 5,400,000 | 5,799,438 |
| (Scripps Hlth.), Ser. A, 5.00%, 11/15/32 | AA | 1,000,000 | 1,129,800 |
| (Adventist Hlth. Syst./West), Ser. A, 4.00%, 3/1/33 | A | 4,575,000 | 4,839,344 |
| CA Muni. Fin. Auth. Rev. Bonds | | | |
| (U. of La Verne), Ser. A, 6.25%, 6/1/40 | | | |
| (Prerefunded 6/1/20) | A3 | 4,000,000 | 4,548,920 |
| (Biola U.), 5.875%, 10/1/34 (Prerefunded 10/1/18) | Baa1 | 12,470,000 | 13,077,663 |
| (Biola U.), 5.80%, 10/1/28 (Prerefunded 10/1/18) | Baa1 | 220,000 | 230,558 |
| (Eisenhower Med. Ctr.), Ser. A, 5.75%, 7/1/40 | | | |
| (Prerefunded 7/1/20) | Baa2 | 9,000,000 | 10,122,930 |
| (Eisenhower Med. Ctr.), Ser. A, 5.00%, 7/1/42 | Baa2 | 300,000 | 337,923 |
| (Cmnty. Med. Ctr.), Ser. A, 5.00%, 2/1/42 | A– | 3,400,000 | 3,808,476 |
| (Biola U., Inc.), 5.00%, 10/1/39 | Baa1 | 1,000,000 | 1,147,390 |
| (Biola U., Inc.), 5.00%, 10/1/37 | Baa1 | 500,000 | 576,460 |
| (Cmnty. Med. Ctr.), Ser. A, 5.00%, 2/1/37 | A– | 1,000,000 | 1,133,770 |
| (Biola U., Inc.), 5.00%, 10/1/36 | Baa1 | 1,250,000 | 1,445,800 |
| (Cmnty. Med. Ctr.), Ser. A, 5.00%, 2/1/36 | A– | 1,800,000 | 2,046,978 |
| (Retirement Hsg. Foundation Oblig. Group), Ser. A, | | | |
| 5.00%, 11/15/32 | A–/F | 425,000 | 527,094 |
| (Retirement Hsg. Foundation Oblig. Group), Ser. A, | | | |
| 5.00%, 11/15/31 | A–/F | 750,000 | 927,428 |
| (Retirement Hsg. Foundation Oblig. Group), Ser. A, | | | |
| 5.00%, 11/15/30 | A–/F | 250,000 | 308,473 |
| CA Muni. Fin. Auth. Sr. Living Rev. Bonds (Pilgrim | | | |
| Place Claremont), Ser. A, 6.125%, 5/15/39 | | | |
| (Prerefunded 5/15/19) | AA– | 3,000,000 | 3,247,440 |
| CA Pub. Fin. Auth. Rev. Bonds (Henry Mayo Newhall | | | |
| Memorial Hosp.), 5.00%, 10/15/37 | BBB– | 1,000,000 | 1,098,230 |
| CA School Fac. Fin. Auth. Rev. Bonds (Alliance | | | |
| College-Ready Pub. Schools), Ser. C, 5.00%, 7/1/31 | BBB | 1,425,000 | 1,614,098 |
| CA School Fac. Fin. Auth. 144A Rev. Bonds (Alliance | | | |
| College-Ready Pub. Schools), Ser. A | | | |
| 5.00%, 7/1/36 | BBB | 1,250,000 | 1,390,500 |
| 5.00%, 7/1/31 | BBB | 1,830,000 | 2,072,841 |
| CA School Fin. Auth. Rev. Bonds (Kipp LA Projects), | | | |
| Ser. A, 5.125%, 7/1/44 | BBB | 1,000,000 | 1,110,770 |
|
| California Tax Exempt Income Fund 23 |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| CA State G.O. Bonds | | | |
| 6.50%, 4/1/33 | Aa3 | $20,000,000 | $21,605,800 |
| 5.75%, 4/1/31 | Aa3 | 10,000,000 | 10,699,700 |
| 5.00%, 11/1/47 | Aa3 | 15,000,000 | 17,563,650 |
| 5.00%, 10/1/44 | Aa3 | 13,905,000 | 16,065,142 |
| 5.00%, 12/1/43 | Aa3 | 1,500,000 | 1,728,570 |
| 5.00%, 11/1/43 | Aa3 | 4,145,000 | 4,768,740 |
| 5.00%, 8/1/37 | Aa3 | 6,930,000 | 8,120,782 |
| 5.00%, 4/1/37 | Aa3 | 2,000,000 | 2,288,320 |
| 5.00%, 8/1/36 | Aa3 | 6,280,000 | 7,380,570 |
| 4.00%, 11/1/32 | Aa3 | 5,000,000 | 5,495,900 |
| 4.00%, 8/1/31 | Aa3 | 7,400,000 | 8,126,532 |
| CA State VRDN, 0.75%, 5/1/33 | VMIG1 | 4,100,000 | 4,100,000 |
| CA State Dept. of Wtr. Resources FRN Mandatory Put | | | |
| Bonds (12/1/20) (Central Valley Wtr. Syst.), Ser. AU, | | | |
| 1.16%, 12/1/35 | AAA | 8,000,000 | 8,002,960 |
| CA State Edl. Fac. Auth. Rev. Bonds | | | |
| (CA Lutheran U.), 5.75%, 10/1/38 | Baa1 | 5,000,000 | 5,212,500 |
| (Pacific U.), 5.50%, 11/1/39 (Prerefunded 11/1/19) | AAA/P | 100,000 | 109,100 |
| (U. of the Pacific), 5.50%, 11/1/39 | A2 | 1,085,000 | 1,171,583 |
| (U. of the Pacific), U.S. Govt. Coll., 5.50%, 11/1/39 | | | |
| (Prerefunded 11/1/19) | AAA/P | 65,000 | 70,915 |
| (CA College of Arts), 5.25%, 6/1/30 | Baa2 | 1,360,000 | 1,522,901 |
| (U. of the Pacific), 5.25%, 11/1/29 | A2 | 1,265,000 | 1,363,291 |
| (Loyola-Marymount U.), Ser. A, 5.125%, 10/1/40 | A2 | 2,955,000 | 3,143,647 |
| (Pepperdine U.), 5.00%, 10/1/49 | AA | 2,000,000 | 2,296,360 |
| (Occidental College), 5.00%, 10/1/45 | Aa3 | 425,000 | 481,147 |
| (Pepperdine U.), 5.00%, 9/1/45 | AA | 1,000,000 | 1,144,440 |
| (Santa Clara U.), 5.00%, 4/1/45 | Aa3 | 2,500,000 | 2,827,975 |
| (Pepperdine U.), 5.00%, 12/1/44 | AA | 2,000,000 | 2,325,920 |
| (Pepperdine U.), 5.00%, 10/1/41 | AA | 1,500,000 | 1,740,555 |
| (Occidental College), 5.00%, 10/1/38 | Aa3 | 595,000 | 681,757 |
| (U. of Redlands), Ser. A, 5.00%, 10/1/38 | A3 | 500,000 | 573,285 |
| (U. of Redlands), Ser. A, 5.00%, 10/1/37 | A3 | 425,000 | 488,321 |
| (U. of the Pacific), 5.00%, 11/1/36 | A2 | 500,000 | 573,180 |
| (U. of Redlands), Ser. A, 5.00%, 10/1/36 | A3 | 750,000 | 864,173 |
| (Occidental College), 5.00%, 10/1/35 | Aa3 | 500,000 | 579,855 |
| (U. of Redlands), Ser. A, 5.00%, 10/1/35 | A3 | 1,000,000 | 1,132,760 |
| (Occidental College), 5.00%, 10/1/34 | Aa3 | 960,000 | 1,120,819 |
| (Chapman U.), 5.00%, 4/1/31 | A2 | 2,425,000 | 2,695,388 |
| (Loyola-Marymount U.), Ser. A, NATL, | | | |
| zero %, 10/1/28 | A2 | 355,000 | 253,953 |
| CA State Hlth. Fac. Fin. Auth. Rev. Bonds | | | |
| (Lucile Salter Packard Children’s Hosp. | | | |
| at Stanford), Ser. A, 5.00%, 11/15/56 | A1 | 3,000,000 | 3,452,250 |
| (Children’s Hosp. Los Angeles), Ser. A, | | | |
| 5.00%, 8/15/42 | BBB+ | 4,000,000 | 4,496,800 |
| (Sutter Hlth.), Ser. A, 5.00%, 11/15/41 | Aa3 | 5,500,000 | 6,295,575 |
| (Sutter Hlth.), Ser. A, 5.00%, 11/15/38 | Aa3 | 1,000,000 | 1,169,560 |
| (Sutter Hlth.), Ser. A, 5.00%, 11/15/37 | Aa3 | 3,000,000 | 3,525,840 |
|
| 24 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| CA State Hlth. Fac. Fin. Auth. Rev. Bonds | | | |
| (Sutter Hlth.), Ser. A, 5.00%, 11/15/36 | Aa3 | $500,000 | $588,595 |
| (Cedars Sinai Med. Ctr.), Ser. B, 5.00%, 8/15/35 | Aa3 | 5,000,000 | 5,875,400 |
| (Providence St. Joseph Hlth.), Ser. A, | | | |
| 5.00%, 10/1/30 | Aa3 | 1,550,000 | 1,828,938 |
| (Providence St. Joseph Hlth.), Ser. A, | | | |
| 5.00%, 10/1/29 | Aa3 | 800,000 | 950,280 |
| (Providence St. Joseph Hlth.), Ser. A, | | | |
| 4.00%, 10/1/35 | Aa3 | 1,000,000 | 1,058,090 |
| CA State Infrastructure & Econ. Dev. Bank | | | |
| Mandatory Put Bonds (6/1/22) (Pacific Gas & Elec. | | | |
| Co.), Ser. F, 1.75%, 11/1/26 | A2 | 2,000,000 | 2,004,440 |
| CA State Infrastructure & Econ. Dev. | | | |
| Bank Rev. Bonds | | | |
| (Academy Motion Picture Arts & Sciences Oblig. | | | |
| Group), 5.00%, 11/1/41 | Aa2 | 1,000,000 | 1,151,090 |
| (J. David Gladstone Inst.), Ser. A, 5.00%, 10/1/31 | A– | 4,000,000 | 4,481,360 |
| (CA Science Ctr. Phase II), 5.00%, 5/1/31 | A | 1,000,000 | 1,186,710 |
| (Indpt. Syst. Operator Corp.), 5.00%, 2/1/30 | A1 | 7,000,000 | 7,957,460 |
| CA State Infrastructure & Econ. Dev. Bank VRDN (Los | | | |
| Angeles Museum), Ser. A, 0.71%, 9/1/37 | VMIG1 | 3,295,000 | 3,295,000 |
| CA State Muni Fin. Auth. Solid Waste Mandatory Put | | | |
| Bonds (1/2/18) (Republic Svcs., Inc.), 1.10%, 9/1/21 | A–2 | 2,800,000 | 2,800,000 |
| CA State Muni. Fin. Auth Mobile Home Park Rev. | | | |
| Bonds (Caritas Affordable Hsg., Inc.), Ser. A, | | | |
| 5.00%, 8/15/30 | BBB+ | 1,000,000 | 1,105,590 |
| CA State Poll. Control Fin. Auth. Rev. Bonds | | | |
| (San Jose Wtr. Co.), 5.10%, 6/1/40 | A | 4,500,000 | 4,860,855 |
| (Wtr. Furnishing), 5.00%, 11/21/45 | Baa3 | 7,000,000 | 7,537,460 |
| (San Jose Wtr. Co.), 4.75%, 11/1/46 | A | 2,250,000 | 2,434,298 |
| CA State Poll. Control Fin. Auth. Wtr. Fac. Rev. Bonds | | | |
| (American Wtr. Cap. Corp.), 5.25%, 8/1/40 | A | 4,000,000 | 4,385,680 |
| CA State Pub. Wks. Board Rev. Bonds | | | |
| (Dept. of Ed. — Riverside Campus), Ser. B, | | | |
| 6.00%, 4/1/26 | A1 | 2,625,000 | 2,813,921 |
| Ser. G-1, 5.75%, 10/1/30 (Prerefunded 10/1/19) | Aaa | 9,000,000 | 9,851,490 |
| Ser. B, 5.00%, 10/1/39 | A1 | 1,500,000 | 1,711,365 |
| (Various Cap.), Ser. I, 5.00%, 11/1/38 | A1 | 1,880,000 | 2,142,316 |
| (Dept. of Corrections-State Prisons), Ser. A, | | | |
| AMBAC, 5.00%, 12/1/19 | A1 | 4,565,000 | 4,781,335 |
| CA State Tobacco Securitization Agcy. Rev. Bonds | | | |
| (Kern Cnty. Tobacco Funding Corp.), 5.00%, 6/1/40 | BBB/P | 5,000,000 | 5,625,200 |
| CA State U. Rev. Bonds | | | |
| (Systemwide), Ser. A, 5.00%, 11/1/45 | Aa2 | 7,305,000 | 8,444,434 |
| Ser. A, 5.00%, 11/1/38 | Aa2 | 2,250,000 | 2,630,385 |
| (Systemwide), Ser. A, 5.00%, 11/1/38 | Aa2 | 5,000,000 | 5,936,900 |
| Ser. A, 5.00%, 11/1/37 | Aa2 | 10,290,000 | 12,086,840 |
| Ser. A, 5.00%, 11/1/35 | Aa2 | 4,500,000 | 5,273,325 |
|
| California Tax Exempt Income Fund 25 |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| CA Statewide Cmnty. Dev. Auth. Rev. Bonds | | | |
| (Sr. Living — Presbyterian Homes), | | | |
| 7.25%, 11/15/41 | BBB– | $6,000,000 | $6,613,920 |
| (Sutter Hlth.), Ser. A, 6.00%, 8/15/42 | Aa3 | 5,000,000 | 5,619,900 |
| (American Baptist Homes West), 5.75%, 10/1/25 | BBB+/F | 950,000 | 1,022,219 |
| (899 Charleston, LLC), Ser. A, 5.375%, 11/1/49 | BB/P | 1,000,000 | 1,059,330 |
| (Sutter Hlth.), Ser. B, 5.25%, 11/15/48 | | | |
| (Prerefunded 5/15/18) | Aa3 | 2,000,000 | 2,053,360 |
| (899 Charleston, LLC), Ser. A, 5.25%, 11/1/44 | BB/P | 300,000 | 315,540 |
| (John Muir Hlth.), Ser. A, 5.00%, 8/15/51 | A1 | 1,000,000 | 1,116,690 |
| (Front Porch Cmnty. & Svcs.), Ser. A, 5.00%, 4/1/47 | A– | 2,000,000 | 2,250,900 |
| (John Muir Hlth.), Ser. A, 5.00%, 8/15/46 | A1 | 1,365,000 | 1,529,810 |
| (American Baptist Homes of the West), | | | |
| 5.00%, 10/1/45 | BBB+/F | 2,550,000 | 2,816,603 |
| AGM, 5.00%, 11/15/44 | AA | 5,195,000 | 5,866,869 |
| (American Baptist Homes of the West), | | | |
| 5.00%, 10/1/43 | BBB+/F | 1,190,000 | 1,281,309 |
| (Episcopal Cmntys. and Svcs.), 5.00%, 5/15/42 | A–/F | 3,250,000 | 3,572,303 |
| (Kaiser Permanente), Ser. A, 5.00%, 4/1/42 | AA– | 9,790,000 | 11,032,938 |
| (Culinary Institute of America (The)), Ser. B, | | | |
| 5.00%, 7/1/41 | Baa2 | 380,000 | 423,206 |
| (Enloe Med. Ctr.), 5.00%, 8/15/38 | AA– | 2,750,000 | 3,154,195 |
| (Enloe Med. Ctr.), 5.00%, 8/15/35 | AA– | 1,580,000 | 1,828,692 |
| (Episcopal Cmntys. and Svcs.), 5.00%, 5/15/32 | A–/F | 600,000 | 665,556 |
| (Front Porch Cmnty. & Svcs.), Ser. A, 5.00%, 4/1/30 | A– | 310,000 | 365,949 |
| (Terraces at San Joaquin Gardens), Ser. A, | | | |
| 5.00%, 10/1/22 | BB/P | 2,685,000 | 2,937,578 |
| (Front Porch Cmnty. & Svcs.), Ser. A, 4.00%, 4/1/47 | A– | 1,625,000 | 1,658,508 |
| (Cmnty. Fac. Dist. No. 1-Zone 1B), zero %, 9/1/20 | BB/P | 375,000 | 334,864 |
| CA Statewide Cmnty. Dev. Auth. 144A Rev. Bonds | | | |
| (American Baptist Homes West), 6.25%, 10/1/39 | BBB+/F | 4,500,000 | 4,831,785 |
| (CA Baptist U.), Ser. A, 5.00%, 11/1/41 | BB/P | 1,035,000 | 1,118,338 |
| (CA Baptist U.), Ser. A, 5.00%, 11/1/32 | BB/P | 720,000 | 798,113 |
| CA Statewide Fin. Auth. Tobacco Settlement Rev. | | | |
| Bonds, Class B, 5.625%, 5/1/29 | Baa2 | 2,015,000 | 2,062,957 |
| Carlsbad, Unified School Dist. G.O. Bonds, FGIC, | | | |
| NATL, zero %, 11/1/21 | Aa2 | 2,250,000 | 2,123,843 |
| Castaic Lake, Wtr. Agcy. COP (Water Syst. Impt.), | | | |
| AMBAC, zero %, 8/1/27 | AA+ | 10,000,000 | 7,513,600 |
| Centinela Valley, Union High School Dist. G.O. | | | |
| Bonds, Ser. C, AGM, 4.00%, 8/1/34 | AA | 5,000,000 | 5,325,150 |
| Cerritos, G.O. Bonds (Cerritos Cmnty. College Dist.), | | | |
| Ser. A, 5.00%, 8/1/39 | Aa2 | 9,275,000 | 10,602,902 |
| Chula Vista, Indl. Dev. Rev. Bonds (San Diego Gas) | | | |
| Ser. C, 5.875%, 2/15/34 | Aa2 | 2,600,000 | 2,791,204 |
| Ser. D, 5.875%, 1/1/34 | Aa2 | 5,000,000 | 5,367,700 |
| Chula Vista, Muni. Fin. Auth. Special Tax Bonds | | | |
| 5.50%, 9/1/30 | BBB+ | 740,000 | 855,551 |
| 5.50%, 9/1/29 | BBB+ | 2,165,000 | 2,510,772 |
| Clovis, Unified School Dist. G.O. Bonds (Election | | | |
| 2012), Ser. D, 5.00%, 8/1/37 | Aa2 | 3,000,000 | 3,486,120 |
|
| 26 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Coast, Cmnty. College Dist. G.O. Bonds | | | |
| (Election 2012), Ser. A, 5.00%, 8/1/38 | Aa1 | $7,000,000 | $7,988,190 |
| NATL, zero %, 8/1/22 | Aa1 | 1,280,000 | 1,180,122 |
| NATL, zero %, 8/1/21 | Aa1 | 4,500,000 | 4,261,140 |
| Commerce, Redev. Agcy. Tax Alloc. Bonds (Redev. | | | |
| Area 1), U.S. Govt. Coll., zero %, 8/1/21 (Escrowed | | | |
| to maturity) | AAA/P | 11,080,000 | 9,471,960 |
| Corona-Norco, School Dist. Pub. Fin. Auth. | | | |
| Special Tax Bonds | | | |
| Ser. A, 5.00%, 9/1/35 | A– | 585,000 | 649,602 |
| Ser. A, 5.00%, 9/1/32 | A– | 1,125,000 | 1,268,741 |
| (Sr. Lien), Ser. A, 5.00%, 9/1/28 | A– | 275,000 | 316,470 |
| Corona-Norco, Unified School Dist. Special Tax | | | |
| Bonds (Cmnty. Fac. Dist. No. 98-1), 5.00%, 9/1/28 | A– | 1,590,000 | 1,829,772 |
| Desert Cmnty. College Dist. G.O. Bonds, | | | |
| 5.00%, 8/1/36 | Aa2 | 1,000,000 | 1,171,280 |
| Eastern CA Muni. Waste Wtr. Dist. Rev. Bonds, Ser. A, | | | |
| 5.00%, 7/1/45 | AA+ | 2,740,000 | 3,176,920 |
| El Dorado, Irrigation Dist. Rev. Bonds, Ser. C, | | | |
| 4.00%, 3/1/34 | Aa3 | 1,500,000 | 1,603,830 |
| Emeryville, Redev. Successor Agcy. Tax Alloc. | | | |
| Bonds, Ser. A, AGM | | | |
| 5.00%, 9/1/34 | AA | 500,000 | 571,035 |
| 5.00%, 9/1/33 | AA | 385,000 | 442,311 |
| 5.00%, 9/1/32 | AA | 450,000 | 520,061 |
| 5.00%, 9/1/31 | AA | 590,000 | 685,916 |
| 5.00%, 9/1/30 | AA | 815,000 | 953,151 |
| Folsom Cordova, Unified School Dist. G.O. Bonds | | | |
| (School Fac. Impt. Dist. No. 1), Ser. A, NATL, | | | |
| zero %, 10/1/25 | Aa3 | 1,505,000 | 1,231,948 |
| Fontana, Cmnty. Facs. Special Tax Bonds (Sierra | | | |
| Hills School Dist. No. 22) | | | |
| 5.00%, 9/1/34 | BBB/P | 1,000,000 | 1,107,520 |
| 5.00%, 9/1/31 | BBB/P | 880,000 | 987,342 |
| Foothill-Eastern Trans. Corridor Agcy. Rev. Bonds | | | |
| (Toll Road), Ser. B-1, 3.95%, 1/15/53 | Baa3 | 7,000,000 | 7,010,920 |
| Foothill/Eastern Corridor Agcy. Rev. Bonds, Ser. A, | | | |
| 6.00%, 1/15/53 | Baa3 | 8,000,000 | 9,250,640 |
| Fullerton, Cmnty. Fac. Dist. No. 1 Special Tax Bonds | | | |
| (Amerige Heights), 5.00%, 9/1/32 | A– | 1,000,000 | 1,122,220 |
| Garden Grove, Unified School Dist. G.O. Bonds (2010 | | | |
| Election), Ser. C | | | |
| 5.00%, 8/1/31 | Aa2 | 1,500,000 | 1,775,340 |
| 5.00%, 8/1/30 | Aa2 | 1,000,000 | 1,185,390 |
| 5.00%, 8/1/29 | Aa2 | 500,000 | 593,610 |
| Golden State Tobacco Securitization | | | |
| Corp. Rev. Bonds | | | |
| Ser. A, 5.00%, 6/1/45 | A1 | 14,000,000 | 15,913,100 |
| Ser. A, 5.00%, 6/1/40 | A1 | 16,940,000 | 19,342,431 |
| Ser. A, 5.00%, 6/1/33 | A1 | 4,355,000 | 5,089,732 |
| Ser. A-1, 5.00%, 6/1/33 | B+ | 7,845,000 | 7,845,078 |
|
| California Tax Exempt Income Fund 27 |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Golden State Tobacco Securitization | | | |
| Corp. Rev. Bonds | | | |
| Ser. A-1, 5.00%, 6/1/27 | BBB | $2,000,000 | $2,403,900 |
| Ser. A-1, 5.00%, 6/1/26 | BBB+ | 1,100,000 | 1,313,873 |
| Ser. A, AMBAC, zero %, 6/1/24 | A1 | 12,000,000 | 10,454,880 |
| Grossmont-Cuyamaca, Cmnty. College Dist. G.O. | | | |
| Bonds (Election 2012), Ser. A, 5.25%, 8/1/38 | Aa2 | 4,000,000 | 4,692,440 |
| Hartnell Cmnty. College Dist. G.O. Bonds, Ser. A | | | |
| zero %, 8/1/37 | Aa2 | 3,500,000 | 1,567,055 |
| zero %, 8/1/36 | Aa2 | 4,750,000 | 2,244,375 |
| zero %, 8/1/35 | Aa2 | 1,000,000 | 501,100 |
| Hayward, Unified School Dist. G.O. Bonds, | | | |
| 5.00%, 8/1/38 | A+ | 1,995,000 | 2,242,220 |
| Imperial Irrigation Elec. Dist. Rev. Bonds | | | |
| Ser. A, 6.25%, 11/1/31 (Prerefunded 11/1/20) | AA– | 1,000,000 | 1,157,400 |
| Ser. A, 5.50%, 11/1/41 (Prerefunded 11/1/20) | AA– | 9,000,000 | 10,212,660 |
| Ser. A, 5.125%, 11/1/38 (Prerefunded 11/1/18) | AA– | 365,000 | 381,542 |
| Ser. C, 5.00%, 11/1/37 | AA– | 1,500,000 | 1,750,065 |
| Ser. C, 5.00%, 11/1/36 | AA– | 1,460,000 | 1,709,456 |
| Inglewood, Redev. Agcy. Successor Tax Allocation | | | |
| Bonds (Merged Redev.), Ser. A, BAM | | | |
| 5.00%, 5/1/38 | AA | 250,000 | 283,990 |
| 5.00%, 5/1/34 | AA | 500,000 | 582,245 |
| Inland Valley, Dev. Agcy. Successor Tax Alloc. Bonds, | | | |
| Ser. A, 5.25%, 9/1/37 | A– | 4,925,000 | 5,625,384 |
| Irvine, Cmnty. Fac. Dist. No. 13-3 Special Tax Bonds | | | |
| (Great Park Impt. Area No. 1), 5.00%, 9/1/39 | BBB–/P | 1,000,000 | 1,091,990 |
| (Great Park Impt. Area No. 4), 4.00%, 9/1/41 | BB–/P | 2,500,000 | 2,539,325 |
| Irvine, Impt. Board Act of 1915 Special Assmt. Bonds | | | |
| (Ltd. Oblig. Assmt. Dist. No. 13-1), 5.00%, 9/2/29 | BBB+ | 705,000 | 782,888 |
| (Dist No. 12-1), 5.00%, 9/2/23 | BBB+ | 1,000,000 | 1,138,720 |
| Irvine, Unified School Dist. Special Tax Bonds | | | |
| (Cmnty. Fac. Dist. No. 09-1), Ser. A, 5.00%, 9/1/47 | BB+/P | 200,000 | 223,514 |
| (Cmnty. Fac. Dist. No. 09-1), Ser. C, 5.00%, 9/1/47 | BB+/P | 1,000,000 | 1,117,570 |
| (Cmnty. Fac. Dist. No. 09-1), Ser. A, 5.00%, 9/1/42 | BB+/P | 400,000 | 448,804 |
| (Cmnty. Fac. Dist. No. 09-1), Ser. B, 5.00%, 9/1/42 | BB+/P | 1,000,000 | 1,122,010 |
| BAM, 5.00%, 9/1/38 | AA | 2,500,000 | 2,815,825 |
| Jurupa, Pub. Fin. Auth. Special Tax Bonds, Ser. A | | | |
| 5.00%, 9/1/33 | A– | 600,000 | 682,812 |
| 5.00%, 9/1/32 | A– | 2,475,000 | 2,835,014 |
| Kaweah, Delta Hlth. Care Dist. Rev. Bonds, Ser. B, | | | |
| 5.00%, 6/1/40 | A3 | 1,500,000 | 1,653,165 |
| La Verne, COP (Brethren Hillcrest Homes), | | | |
| 5.00%, 5/15/29 | BBB–/F | 635,000 | 682,917 |
| Lake Elsinore, Pub. Fin. Auth. Local Agcy. Special Tax | | | |
| Bonds (Canyon Hills Impt. Areas), Ser. A & C | | | |
| 5.00%, 9/1/33 | BB+/P | 1,105,000 | 1,233,954 |
| 5.00%, 9/1/31 | BB+/P | 1,045,000 | 1,178,029 |
| Las Virgenes, Unified School Dist. G.O. Bonds, AGM, | | | |
| zero %, 11/1/23 | Aa1 | 1,395,000 | 1,230,139 |
|
| 28 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Long Beach Marina, Rev. Bonds, 5.00%, 5/15/40 | BBB/F | $1,000,000 | $1,112,920 |
| Long Beach, Bond Fin. Auth. Rev. Bonds | | | |
| (Natural Gas Purchase), Ser. A, 5.50%, 11/15/28 | Baa1 | 5,000,000 | 6,168,700 |
| (Aquarium of the Pacific), 5.00%, 11/1/30 | A1 | 1,000,000 | 1,129,460 |
| Long Beach, Cmnty. College Dist. G.O. Bonds (2008 | | | |
| Election), Ser. B | | | |
| 5.00%, 8/1/39 | Aa2 | 5,000,000 | 5,709,150 |
| zero %, 8/1/34 | Aa2 | 1,500,000 | 835,215 |
| zero %, 8/1/33 | Aa2 | 625,000 | 363,706 |
| Long Beach, Harbor Rev. Bonds | | | |
| (Green Bond), Ser. B, 5.00%, 5/15/43 | AA | 2,000,000 | 2,306,660 |
| Ser. A, 5.00%, 5/15/40 | AA | 5,000,000 | 5,793,600 |
| Long Beach, Unified School Dist. G.O. Bonds, | | | |
| Ser. D-1, zero %, 8/1/37 | Aa2 | 1,000,000 | 459,960 |
| Los Angeles Cnty., Pub. Wks. Fin. Auth. Rev. Bonds, | | | |
| Ser. A, 5.00%, 12/1/44 | Aa2 | 1,000,000 | 1,141,130 |
| Los Angeles Cnty., School Dist. COP (Headquarters | | | |
| Bldg.), Ser. B | | | |
| 5.00%, 10/1/31 | A1 | 1,125,000 | 1,299,128 |
| 5.00%, 10/1/30 | A1 | 1,250,000 | 1,446,713 |
| Los Angeles Ctny., Pub. Wks. Fin. Auth. Lease Rev. | | | |
| Bonds, Ser. D, 5.00%, 12/1/45 | Aa2 | 3,000,000 | 3,459,510 |
| Los Angeles, Cmnty. College Dist. G.O. Bonds | | | |
| (Election of 2008), Ser. A, U.S. Govt. Coll., 6.00%, | | | |
| 8/1/33 (Prerefunded 8/1/19) | Aa1 | 9,000,000 | 9,823,230 |
| Ser. G, 4.00%, 8/1/34 | Aa1 | 2,610,000 | 2,788,263 |
| Los Angeles, Cmnty. Fac. Dist. No. 4 Special Tax | | | |
| Bonds (Playa Vista Phase 1) | | | |
| 5.00%, 9/1/31 | BBB+ | 1,500,000 | 1,714,110 |
| 5.00%, 9/1/30 | BBB+ | 1,500,000 | 1,721,235 |
| 5.00%, 9/1/29 | BBB+ | 1,500,000 | 1,733,535 |
| Los Angeles, Dept. of Arpt. Rev. Bonds | | | |
| Ser. D, 5.00%, 5/15/41 | AA | 4,000,000 | 4,529,360 |
| (Los Angeles Intl. Arpt.), Ser. A, 5.00%, 5/15/40 | AA | 5,000,000 | 5,459,450 |
| (Los Angeles Intl. Arpt.), Ser. D, 5.00%, 5/15/40 | AA | 11,500,000 | 12,556,735 |
| Ser. D, 5.00%, 5/15/36 | AA | 1,375,000 | 1,571,020 |
| (Los Angeles Intl. Arpt.), Ser. B, 5.00%, 5/15/32 | AA– | 1,000,000 | 1,162,070 |
| (Los Angeles Intl. Arpt.), Ser. B, 5.00%, 5/15/31 | AA– | 1,190,000 | 1,384,934 |
| (Los Angeles Intl. Arpt.), 5.00%, 5/15/29 | AA | 4,225,000 | 4,853,934 |
| Los Angeles, Dept. of Wtr. & Pwr. Rev. Bonds | | | |
| Ser. D, 5.00%, 7/1/44 | Aa2 | 5,000,000 | 5,691,350 |
| (Pwr. Syst.), Ser. B, 5.00%, 7/1/43 | Aa2 | 1,500,000 | 1,706,205 |
| Los Angeles, Harbor Dept. Rev. Bonds | | | |
| FNMA Coll., FHLMC Coll., 7.60%, 10/1/18 | | | |
| (Escrowed to maturity) | AA+ | 2,635,000 | 2,715,315 |
| (Green Bond), Ser. C, 4.00%, 8/1/39 | Aa2 | 2,200,000 | 2,311,848 |
| Los Angeles, Muni. Impt. Corp. Lease Rev. Bonds | | | |
| (Real Property), Ser. B, 4.00%, 11/1/33 | AA– | 3,480,000 | 3,740,374 |
| Los Angeles, Unified School Dist. G.O. Bonds | | | |
| (Election 2008), Ser. A, 5.00%, 7/1/40 | Aa2 | 2,000,000 | 2,322,480 |
| Ser. D, 5.00%, 1/1/34 | Aa2 | 3,865,000 | 4,123,955 |
|
| California Tax Exempt Income Fund 29 |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Los Angeles, Waste Wtr. Syst. Rev. Bonds (Green | | | |
| Bond), Ser. C, 5.00%, 6/1/45 | AA+ | $2,500,000 | $2,854,550 |
| M-S-R Energy Auth. Rev. Bonds, Ser. A, | | | |
| 6.50%, 11/1/39 | BBB+ | 6,000,000 | 8,576,623 |
| Merced, City School Dist. G.O. Bonds (Election 2014), | | | |
| 5.00%, 8/1/45 | Aa3 | 3,500,000 | 3,953,740 |
| Merced, Union High School Dist. G.O. Bonds, AGM | | | |
| zero %, 8/1/44 | AA | 8,655,000 | 2,329,926 |
| zero %, 8/1/39 | AA | 5,005,000 | 1,777,125 |
| Metro. Wtr. Dist. Rev. Bonds (Southern CA Wtr. Wks.), | | | |
| 5.75%, 8/10/18 | AAA | 5,100,000 | 5,261,874 |
| Modesto, Irrigation Dist. Elec. Rev. Bonds | | | |
| 5.00%, 10/1/34 | A+ | 500,000 | 581,745 |
| 5.00%, 10/1/32 | A+ | 1,340,000 | 1,574,138 |
| Ser. A, AGM, 5.00%, 7/1/32 | AA | 800,000 | 909,584 |
| 5.00%, 10/1/31 | A+ | 780,000 | 921,047 |
| Ser. A, AGM, 5.00%, 7/1/31 | AA | 1,600,000 | 1,821,936 |
| Modesto, Irrigation Dist. Fin. Auth. Elec. Syst. Rev. | | | |
| Bonds, Ser. A, 5.00%, 10/1/40 | A+ | 2,790,000 | 3,158,587 |
| Mt. San Antonio, Cmnty College Dist. G.O. Bonds | | | |
| (Election 2008), Ser. A-13, 5.00%, 8/1/34 | Aa1 | 2,000,000 | 2,326,060 |
| Murrieta Valley, Unified School Dist. G.O. Bonds, | | | |
| AGM, zero %, 9/1/31 | AA | 2,000,000 | 1,263,300 |
| Murrieta, Pub. Fin. Auth. Special Tax Bonds, | | | |
| 5.00%, 9/1/26 | BBB– | 1,000,000 | 1,104,620 |
| Napa Valley, Cmnty. College Dist. G.O. Bonds | | | |
| (Election of 2002), Ser. C, NATL | | | |
| zero %, 8/1/22 | Aa2 | 5,000 | 3,955 |
| zero %, 8/1/21 | Aa2 | 1,825,000 | 1,500,789 |
| North Natomas, Cmnty. Fac. Special Tax Bonds | | | |
| (Dist. No. 4), Ser. E, 5.25%, 9/1/33 | BBB+ | 1,500,000 | 1,647,840 |
| Northern CA Pwr. Agcy. Rev. Bonds (Hydroelec. | | | |
| Project No. 1), Ser. A | | | |
| 5.00%, 7/1/32 | A+ | 700,000 | 789,502 |
| 5.00%, 7/1/30 | A+ | 1,000,000 | 1,131,240 |
| Oakland, G.O. Bonds, Ser. A, 5.00%, 1/15/35 | Aa2 | 2,000,000 | 2,337,720 |
| Oakland, Alameda Cnty. Unified School | | | |
| Dist. G.O. Bonds | | | |
| (Election of 2006), Ser. A, 6.125%, 8/1/29 | | | |
| (Prerefunded 8/1/19) | Aa3 | 4,000,000 | 4,374,920 |
| Ser. A, 5.00%, 8/1/40 | Aa3 | 4,000,000 | 4,635,920 |
| Ser. C, 5.00%, 8/1/38 | Aa3 | 1,500,000 | 1,756,440 |
| Ser. A, 5.00%, 8/1/35 | Aa3 | 1,000,000 | 1,172,050 |
| 5.00%, 8/1/31 | Aa3 | 1,000,000 | 1,211,010 |
| Orange Cnty., Cmnty. Fac. Dist. Special Tax Bonds | | | |
| (Ladera Ranch — No. 04-1), Ser. A | | | |
| 5.00%, 8/15/33 | BBB | 1,750,000 | 1,896,265 |
| 5.00%, 8/15/32 | BBB | 1,000,000 | 1,086,650 |
| Orange Cnty., Sanitation Dist. Waste Wtr. Rev. | | | |
| Bonds, Ser. A, 5.00%, 2/1/37 | AAA | 3,190,000 | 3,700,655 |
|
| 30 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Orange Cnty., Trans. Auth Toll Road Rev. Bonds | | | |
| (91 Express Lane), 5.00%, 8/15/29 | AA– | $1,050,000 | $1,214,714 |
| Orange Cnty., Wtr. Dist. Rev. Bonds, Ser. A, | | | |
| 4.00%, 8/15/41 | AAA | 2,240,000 | 2,374,669 |
| Palm Desert, Redev. Agcy. Successor Tax Allocation | | | |
| Bonds, Ser. A, BAM | | | |
| 5.00%, 10/1/30 | AA | 350,000 | 415,734 |
| 5.00%, 10/1/29 | AA | 825,000 | 988,334 |
| 5.00%, 10/1/27 | AA | 600,000 | 736,896 |
| Peralta Cmnty. College Dist. G.O. Bonds, Ser. A | | | |
| 5.00%, 8/1/34 | Aa3 | 1,000,000 | 1,171,280 |
| 5.00%, 8/1/32 | Aa3 | 2,000,000 | 2,367,460 |
| Pico Rivera, Pub. Fin. Auth. Lease Rev. Bonds | | | |
| 5.75%, 9/1/39 (Prerefunded 9/1/19) | AA– | 6,000,000 | 6,532,140 |
| 5.50%, 9/1/31 (Prerefunded 9/1/19) | AA– | 1,000,000 | 1,083,970 |
| NATL, 5.25%, 9/1/32 | AA– | 1,000,000 | 1,201,620 |
| NATL, 5.25%, 9/1/30 | AA– | 1,295,000 | 1,573,257 |
| Poway, Unified School Dist. G.O. Bonds (Election | | | |
| of 2008), zero %, 8/1/29 | Aa3 | 11,350,000 | 7,925,024 |
| Poway, Unified School Dist. Pub. Fin. Auth. | | | |
| Special Tax Bonds | | | |
| 5.00%, 9/15/32 | BBB | 495,000 | 549,999 |
| 5.00%, 9/15/28 | BBB | 1,105,000 | 1,247,059 |
| Rancho Cordova, Cmnty. Fac. Dist. | | | |
| Special Tax Bonds | | | |
| (Sunridge Anatolia), Ser. 03-1, 5.00%, 9/1/32 | BBB–/P | 1,250,000 | 1,328,963 |
| (Sunridge Anatolia No. 03-1), 4.00%, 9/1/27 | BBB–/P | 425,000 | 456,973 |
| Redding, Elec. Syst. Rev. Bonds, NATL, 6.368%, | | | |
| 7/1/22 (Escrowed to maturity) | A | 2,240,000 | 2,532,186 |
| Redwood City, Redev. Agcy., Tax Alloc. Bonds | | | |
| (Redev. Area 2-A), AMBAC, zero %, 7/15/22 | A | 3,230,000 | 2,874,862 |
| Regents of the U. of CA Med. Ctr. (The) Rev. Bonds, | | | |
| Ser. L, 5.00%, 5/15/41 | Aa3 | 2,000,000 | 2,303,320 |
| Ripon, Redev. Agcy. Tax Alloc. Bonds (Cmnty. | | | |
| Redev.), NATL, 4.75%, 11/1/36 | A3 | 1,395,000 | 1,395,725 |
| Riverside Cnty., Pub. Fin. Auth. Tax Allocation | | | |
| Bonds, Ser. A, BAM, 4.00%, 10/1/40 | AA | 1,250,000 | 1,296,975 |
| Riverside Cnty., Trans. Comm. Toll Rev. Bonds, | | | |
| Ser. A, 5.75%, 6/1/44 | BBB– | 750,000 | 841,260 |
| Rocklin, Special Tax Bonds, 5.00%, 9/1/35 | BB/P | 3,500,000 | 3,893,190 |
| Rohnert Pk., Cmnty. Dev. Agcy. Tax Alloc. Bonds | | | |
| (Rohnert Redev.), NATL, zero %, 8/1/25 | A | 1,340,000 | 1,085,413 |
| Romoland, School Dist. Special Tax Bonds (Cmnty. | | | |
| Fac. Dist. No. 91-1), 5.00%, 9/1/41 | BB/P | 1,000,000 | 1,109,640 |
| Roseville, Special Tax Bonds (Westpark Cmnty. Pub. | | | |
| Fac. Dist. No. 1) | | | |
| 5.00%, 9/1/37 | BBB–/P | 1,250,000 | 1,365,013 |
| 5.00%, 9/1/33 | BBB–/P | 1,000,000 | 1,106,480 |
| Roseville, Elec. Syst. Fin. Auth. Rev. Bonds | | | |
| 5.00%, 2/1/34 | AA– | 1,625,000 | 1,906,320 |
| Ser. A, 5.00%, 2/1/34 | AA– | 200,000 | 235,892 |
|
| California Tax Exempt Income Fund 31 |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Roseville, Elec. Syst. Fin. Auth. Rev. Bonds | | | |
| 5.00%, 2/1/33 | AA– | $1,455,000 | $1,711,924 |
| Ser. A, 5.00%, 2/1/33 | AA– | 250,000 | 296,673 |
| 5.00%, 2/1/32 | AA– | 500,000 | 590,030 |
| Ser. A, 5.00%, 2/1/32 | AA– | 350,000 | 418,205 |
| Ser. A, 5.00%, 2/1/30 | AA– | 125,000 | 151,664 |
| Ser. A, 5.00%, 2/1/29 | AA– | 100,000 | 122,172 |
| Ser. A, 5.00%, 2/1/28 | AA– | 150,000 | 184,812 |
| Sacramento Cnty., Arpt. Syst. Rev. Bonds, | | | |
| Ser. A, AGM | | | |
| 5.00%, 7/1/28 | AA | 1,500,000 | 1,545,390 |
| 5.00%, 7/1/26 | AA | 5,000,000 | 5,153,600 |
| 5.00%, 7/1/25 | AA | 3,990,000 | 4,112,852 |
| Sacramento, City Fin. Auth. Tax Alloc. Bonds, | | | |
| Ser. A, FGIC, NATL | | | |
| zero %, 12/1/23 | A | 10,000,000 | 8,565,000 |
| zero %, 12/1/22 | A | 7,500,000 | 6,648,075 |
| Sacramento, Muni. Util. Dist. Rev. Bonds | | | |
| Ser. Y, 5.00%, 8/15/32 | Aa3 | 1,500,000 | 1,724,175 |
| Ser. B, 5.00%, 8/15/31 | Aa3 | 2,905,000 | 3,392,110 |
| Ser. Y, 5.00%, 8/15/31 | Aa3 | 500,000 | 575,985 |
| Ser. X, U.S. Govt. Coll., 5.00%, 8/15/28 | | | |
| (Prerefunded 8/15/21) | AAA/P | 420,000 | 479,606 |
| Sacramento, Regl. Trans. Dist. Rev. Bonds (Farebox), | | | |
| 5.00%, 3/1/42 | A3 | 1,805,000 | 1,952,035 |
| San Bernardino Cnty., Special Tax Bonds, | | | |
| 5.00%, 9/1/33 | BBB–/P | 2,500,000 | 2,746,075 |
| San Bernardino, Cmnty. College Dist. G.O. Bonds | | | |
| (Election of 2008), Ser. D, 5.00%, 8/1/45 | Aa2 | 1,500,000 | 1,705,605 |
| San Diego Cmnty. Fac. Dist. No. 3 Special Tax Bonds, | | | |
| 5.00%, 9/1/36 | BBB/P | 980,000 | 1,036,811 |
| San Diego Cnty., Regl. Arpt. Auth. Rev. Bonds, Ser. B, | | | |
| 5.00%, 7/1/38 | A1 | 2,000,000 | 2,253,380 |
| San Diego Cnty., Regl. Trans. Comm. Rev. Bonds, | | | |
| Ser. A, 5.00%, 4/1/48 | AAA | 14,330,000 | 16,663,354 |
| San Diego Cnty., Wtr. Auth. Rev. Bonds, Ser. B | | | |
| 5.00%, 5/1/38 | AAA | 10,000,000 | 11,783,900 |
| 5.00%, 5/1/36 | AAA | 5,000,000 | 5,938,350 |
| 5.00%, 5/1/35 | AAA | 4,000,000 | 4,774,480 |
| San Diego, Cmnty College Dist. G.O. Bonds | | | |
| 5.00%, 8/1/41 | Aaa | 1,500,000 | 1,761,600 |
| 4.00%, 8/1/41 | Aaa | 2,345,000 | 2,475,265 |
| San Diego, Pub. Fac. Fin. Auth. Rev. Bonds | | | |
| Ser. A, 5.25%, 3/1/40 | Aa3 | 1,000,000 | 1,100,100 |
| Ser. A, 5.25%, 9/1/35 | Aa3 | 1,500,000 | 1,653,750 |
| Ser. A, 5.25%, 3/1/25 | Aa3 | 6,065,000 | 6,745,311 |
| (Cap. Impt.), Ser. A, 5.00%, 10/15/35 | AA– | 500,000 | 583,335 |
| (Ballpark), 5.00%, 10/15/27 | AA– | 2,000,000 | 2,425,040 |
| Ser. A, 5.00%, 9/1/26 | Aa3 | 6,265,000 | 6,913,678 |
|
| 32 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| San Diego, Pub. Fac. Fin. Auth. Tax Alloc. Bonds | | | |
| (Southcrest), Ser. B, Radian Insd., 5.125%, 10/1/22 | | | |
| (Prerefunded 10/1/17) | AA | $1,000,000 | $1,000,000 |
| San Diego, Pub. Fac. Fin. Auth. Swr. Rev. Bonds, | | | |
| Ser. A, 5.25%, 5/15/29 (Prerefunded 5/15/20) | AA+ | 1,245,000 | 1,381,303 |
| San Diego, Pub. Fac. Fin. Auth. Wtr. Rev. | | | |
| Bonds, Ser. B | | | |
| FCS, FHL Banks Coll., FNMA Coll., U.S. Govt. Coll., | | | |
| 5.00%, 8/1/41 | Aa3 | 3,475,000 | 4,063,213 |
| 5.00%, 8/1/37 | Aa3 | 3,000,000 | 3,533,490 |
| San Diego, Unified School Dist. G.O. Bonds (Election | | | |
| of 2008), Ser. C, zero %, 7/1/44 | Aa2 | 10,000,000 | 3,721,800 |
| San Francisco City & Cnty. Arpt. Comm. Intl. | | | |
| Arpt. Rev. Bonds | | | |
| Ser. A, 5.25%, 5/1/33 | A1 | 4,000,000 | 4,637,040 |
| (San Francisco Intl. Arpt.), Ser. 2, 5.00%, 5/1/41 | A1 | 5,000,000 | 5,710,600 |
| San Francisco City & Cnty., G.O. Bonds, Ser. A | | | |
| 4.00%, 6/15/36 | Aa1 | 5,155,000 | 5,468,836 |
| 4.00%, 6/15/33 | Aa1 | 3,550,000 | 3,801,766 |
| San Francisco City & Cnty., Rev. Bonds (Pub. Util. | | | |
| Comm.), 4.00%, 11/1/39 | Aa3 | 5,000,000 | 5,268,500 |
| San Francisco City & Cnty., Intl. Arpt. Comm. Rev. | | | |
| Bonds, Ser. B, 5.00%, 5/1/43 | A1 | 3,280,000 | 3,677,175 |
| San Francisco City & Cnty., Redev. Agcy. Cmnty. | | | |
| Successor Special Tax Bonds (No. 6 Mission Bay | | | |
| South Pub. Impts.), Ser. A, 5.00%, 8/1/31 | BBB/P | 1,140,000 | 1,260,065 |
| San Francisco, City & Cnty. Arpt. Comm. Rev. Bonds | | | |
| (Intl. Arpt.) | | | |
| Ser. F, 5.00%, 5/1/40 | A1 | 4,750,000 | 5,159,973 |
| Ser. G, 5.00%, 5/1/40 | A1 | 4,400,000 | 4,779,764 |
| San Francisco, City & Cnty. Redev. Fin. Auth. Tax | | | |
| Alloc. Bonds (Mission Bay South Redev.), Ser. D, | | | |
| 6.625%, 8/1/39 (Prerefunded 8/1/19) | BBB+ | 1,250,000 | 1,378,450 |
| San Francisco, City & Cnty., Redev. Agcy. Cmnty. | | | |
| Successor Tax Alloc. Bonds (Mission Bay South | | | |
| Redev.), Ser. A, 5.00%, 8/1/43 | A– | 1,750,000 | 1,953,123 |
| San Joaquin Hills, Trans. Corridor Agcy. Toll Road | | | |
| Rev. Bonds, Ser. A, 5.00%, 1/15/34 | BBB | 7,125,000 | 8,021,040 |
| San Jose, Redev. Agcy. Tax Alloc. Bonds (Merged | | | |
| Area Redev.), Ser. B, Radian Insd., 5.00%, 8/1/32 | AA | 3,935,000 | 3,945,546 |
| San Marcos, Unified School Dist. G.O. Bonds | | | |
| (Election 2010), Ser. B, zero %, 8/1/51 | Aa3 | 6,425,000 | 1,707,701 |
| San Mateo, Union High School Dist. G.O. Bonds | | | |
| (Election 2010), stepped-coupon zero % (6.700%, | | | |
| 9/1/28), 9/1/41 †† | Aaa | 4,105,000 | 3,493,519 |
| Santa Clara Valley, Wtr. Dist. Rev. Bonds, Ser. A, | | | |
| 5.00%, 6/1/46 | Aa1 | 1,500,000 | 1,741,590 |
| Santaluz, Cmnty. Fac. Dist. No. 2 Special Tax Bonds | | | |
| (Impt. Area No. 1), Ser. A | | | |
| 5.25%, 9/1/27 (Prerefunded 9/1/21) | A– | 3,265,000 | 3,605,180 |
| 5.25%, 9/1/26 (Prerefunded 9/1/21) | A– | 1,485,000 | 1,642,648 |
| 5.10%, 9/1/30 (Prerefunded 9/1/21) | A– | 480,000 | 522,288 |
|
| California Tax Exempt Income Fund 33 |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Santee, CDC Successor Agcy. Tax Allocation Bonds, | | | |
| Ser. A, BAM | | | |
| 5.00%, 8/1/32 | AA | $2,000,000 | $2,336,840 |
| 5.00%, 8/1/31 | AA | 2,410,000 | 2,830,304 |
| 5.00%, 8/1/30 | AA | 2,440,000 | 2,878,102 |
| Saugus, Unified School Dist. G.O. Bonds, FGIC, | | | |
| NATL, zero %, 8/1/24 | Aa2 | 1,210,000 | 1,050,570 |
| School Fin. Fac. Auth. 144A Rev. Bonds (Kipp | | | |
| LA Projects), Ser. A, 5.00%, 7/1/45 | BBB | 1,500,000 | 1,668,600 |
| South Orange Cnty., Pub. Fin. Auth. Special Tax | | | |
| Bonds, Ser. A | | | |
| 5.00%, 8/15/32 | BBB+ | 1,000,000 | 1,087,410 |
| 5.00%, 8/15/30 | BBB+ | 1,130,000 | 1,234,638 |
| South Western Cmnty. College Dist. G.O. Bonds | | | |
| (Election 2008), Ser. D | | | |
| 5.00%, 8/1/44 | Aa2 | 4,000,000 | 4,536,360 |
| zero %, 8/1/37 | Aa2 | 3,100,000 | 1,286,004 |
| Southern CA Pub. Pwr. Auth. Mandatory Put Bonds | | | |
| (7/1/22) (Magnolia Pwr.), Ser. 1, 2.00%, 7/1/36 | AA– | 4,000,000 | 4,074,440 |
| Southern CA Pub. Pwr. Auth. Rev. Bonds | | | |
| (Natural Gas No. 1), Ser. A, 5.25%, 11/1/24 | A3 | 2,850,000 | 3,388,023 |
| (Natural Gas), Ser. A, 5.25%, 11/1/21 | A3 | 1,500,000 | 1,699,410 |
| Ser. A, 5.00%, 7/1/40 | AA– | 6,860,000 | 7,473,970 |
| Southwestern Cmnty. College Dist. G.O. Bonds | | | |
| (Election of 2008), Ser. C, zero %, 8/1/46 | Aa2 | 5,000,000 | 1,555,400 |
| Stockton, Pub. Fin. Auth. Special Tax Bonds, Ser. A, | | | |
| BAM, 4.00%, 9/2/27 | AA | 570,000 | 628,345 |
| Stockton, Pub. Wtr. Fin. Auth. Rev. Bonds (Delta Wtr. | | | |
| Supply), Ser. A | | | |
| 6.25%, 10/1/40 | A | 1,250,000 | 1,528,138 |
| 6.25%, 10/1/38 | A | 2,235,000 | 2,749,206 |
| 6.125%, 10/1/35 | A | 750,000 | 924,428 |
| Stockton, Unified School Dist. G.O. Bonds (Election | | | |
| 2012), Ser. A, AGM, 5.00%, 8/1/38 | AA | 1,000,000 | 1,131,180 |
| Sunnyvale, Cmnty. Fac. Dist. Special Tax Bonds, | | | |
| 7.65%, 8/1/21 | B+/P | 2,215,000 | 2,221,556 |
| Sweetwater, G.O. Bonds (Union High School Dist.), | | | |
| 5.00%, 8/1/35 | A1 | 2,330,000 | 2,689,612 |
| Tobacco Securitization Auth. of Southern | | | |
| CA Rev. Bonds | | | |
| Class A1-SNR, 5.125%, 6/1/46 | B+ | 5,000,000 | 5,007,400 |
| Ser. A1-SNR, 5.00%, 6/1/37 | BB+ | 2,000,000 | 2,005,460 |
| Tracy, Operational Partnership, Joint Powers Auth. | | | |
| Lease Rev. Bonds, AGC | | | |
| 6.375%, 10/1/38 | AA | 2,200,000 | 2,310,418 |
| 6.25%, 10/1/33 | AA | 3,000,000 | 3,148,380 |
| Tustin Cmnty., Fac. Dist. Special Tax Bonds | | | |
| (No. 06-1 Legacy Columbus Villages), Ser. A, | | | |
| 5.00%, 9/1/37 | BBB+ | 2,100,000 | 2,345,175 |
| Twin Rivers, Unified School Dist. G.O. Bonds, Ser. A, | | | |
| BAM, 5.00%, 8/1/40 | AA | 2,000,000 | 2,232,560 |
|
| 34 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (99.9%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| U. of CA Rev. Bonds | | | |
| Ser. O, FHL Banks Coll., U.S. Govt. Coll., 5.25%, | | | |
| 5/15/39 (Prerefunded 5/15/19) | AAA/P | $1,620,000 | $1,730,938 |
| Ser. M, 5.00%, 5/15/47 | Aa3 | 10,000,000 | 11,650,600 |
| Ser. AR, 5.00%, 5/15/35 | Aa2 | 2,670,000 | 3,164,030 |
| Ser. K, 4.00%, 5/15/46 | Aa3 | 3,000,000 | 3,140,250 |
| Union, G.O. Bonds, Ser. A, 5.00%, 9/1/44 | Aa1 | 1,890,000 | 2,182,969 |
| Ventura Cnty., COP (Pub. Fin. Auth. III) | | | |
| 5.75%, 8/15/29 (Prerefunded 8/15/19) | AA+ | 1,500,000 | 1,631,715 |
| 5.75%, 8/15/28 (Prerefunded 8/15/19) | AA+ | 1,745,000 | 1,898,228 |
| Yucaipa Special Tax Bonds (Cmnty. Fac. Dist. No. | | | |
| 98-1 Chapman Heights), 5.375%, 9/1/30 | BBB+ | 2,350,000 | 2,575,365 |
| | | | 1,240,385,099 |
| Delaware (0.5%) | | | |
| DE State Hlth. Fac. Auth. VRDN (Christiana Care), | | | |
| Ser. A, 0.88%, 10/1/38 | VMIG1 | 6,285,000 | 6,285,000 |
| | | | 6,285,000 |
| Guam (0.3%) | | | |
| Territory of GU, Govt. Wtr. Wks. Auth. Wtr. & Waste | | | |
| Wtr. Syst. Rev. Bonds, 5.625%, 7/1/40 | A– | 2,450,000 | 2,604,105 |
| Territory of GU, Pwr. Auth. Rev. Bonds, Ser. A, AGM, | | | |
| 5.00%, 10/1/30 | AA | 1,000,000 | 1,114,210 |
| | | | 3,718,315 |
| Mississippi (0.5%) | | | |
| MS State Bus. Fin. Commission Gulf Opportunity | | | |
| Zone VRDN (Chevron USA, Inc.), Ser. E, | | | |
| 0.91%, 12/1/30 | VMIG1 | 6,050,000 | 6,050,000 |
| | | | 6,050,000 |
| Missouri (0.3%) | | | |
| MO State Hlth. & Edl. Fac. Auth. VRDN (WA U. (The)), | | | |
| Ser. C, 0.85%, 9/1/30 | VMIG1 | 4,000,000 | 4,000,000 |
| | | | 4,000,000 |
| Oklahoma (0.4%) | | | |
| OK State Tpk. Auth. VRDN, Ser. F, 0.85%, 1/1/28 | VMIG1 | 5,605,000 | 5,605,000 |
| | | | 5,605,000 |
| Puerto Rico (0.3%) | | | |
| Children’s Trust Fund Tobacco Settlement (The) | | | |
| Rev. Bonds, 5.625%, 5/15/43 | Ba2 | 3,350,000 | 3,353,685 |
| | | | 3,353,685 |
| Texas (0.4%) | | | |
| Harris Cnty., Cultural Ed. Fac. Fin. Corp. VRDN (The | | | |
| Methodist Hosp.), Ser. C-1, 0.88%, 12/1/24 | A-1+ | 5,000,000 | 5,000,000 |
| | | | 5,000,000 |
| Utah (0.9%) | | | |
| Murray City, Hosp. VRDN (IHC Hlth. Svcs., Inc.) | | | |
| Ser. C, 0.87%, 5/15/36 | Aa1 | 5,000,000 | 5,000,000 |
| Ser. A, 0.85%, 5/15/37 | VMIG1 | 6,300,000 | 6,300,000 |
| | | | 11,300,000 |
| |
| TOTAL INVESTMENTS | | | |
| Total investments (cost $1,209,090,691) | | | $1,285,697,099 |
|
| California Tax Exempt Income Fund 35 |
Notes to the fund’s portfolio
Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from October 1, 2016 through September 30, 2017 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter.
* Percentages indicated are based on net assets of $1,286,653,105.
** The Moody’s, Standard & Poor’s or Fitch ratings indicated are believed to be the most recent ratings available at the close of the reporting period 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 the close of the reporting period. Securities rated by Fitch are indicated by “/F.” Securities rated by Putnam are indicated by “/P.” The Putnam rating categories are comparable to the Standard & Poor’s classifications. If a security is insured, it will usually be rated by the ratings organizations based on the financial strength of the insurer. Ratings are not covered by the Report of Independent Registered Public Accounting Firm. For further details regarding security ratings, please see the Statement of Additional Information.
†† The interest rate and date shown parenthetically represent the new interest rate to be paid and the date the fund will begin accruing interest at this rate.
144A after the name of an issuer represents securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
On Mandatory Put Bonds, the rates shown are the current interest rates at the close of the reporting period and the dates shown represent the next mandatory put dates.
The dates shown parenthetically on prerefunded bonds represent the next prerefunding dates.
The dates shown on debt obligations are the original maturity dates.
The fund had the following sector concentrations greater than 10% at the close of the reporting period (as a percentage of net assets):
| | |
| Local debt | 15.0% | |
| State debt | 13.8 | |
| Utilities | 12.9 | |
| Transportation | 12.0 | |
| Health care | 11.5 | |
| Prerefunded | 10.3 | |
ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:
Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:
| | | |
| | | | Valuation inputs | |
| Investments in securities: | Level 1 | Level 2 | Level 3 |
| Municipal bonds and notes | $— | $1,285,697,099 | $— |
| Totals by level | $— | $1,285,697,099 | $— |
During the reporting period, transfers within the fair value hierarchy, if any, did not represent, in the aggregate, more than 1% of the fund’s net assets measured as of the end of the period. Transfers are accounted for using the end of period pricing valuation method.
The accompanying notes are an integral part of these financial statements.
|
| 36 California Tax Exempt Income Fund |
Statement of assets and liabilities 9/30/17
| |
| ASSETS | |
| Investment in securities, at value (Note 1): | |
| Unaffiliated issuers (identified cost $1,209,090,691) | $1,285,697,099 |
| Cash | 5,656,813 |
| Interest and other receivables | 15,363,158 |
| Receivable for shares of the fund sold | 2,425,083 |
| Receivable for investments sold | 7,860,578 |
| Prepaid assets | 11,772 |
| Total assets | 1,317,014,503 |
| |
| LIABILITIES | |
| Payable for investments purchased | 26,090,142 |
| Payable for shares of the fund repurchased | 1,742,092 |
| Payable for compensation of Manager (Note 2) | 460,793 |
| Payable for custodian fees (Note 2) | 5,315 |
| Payable for investor servicing fees (Note 2) | 110,641 |
| Payable for Trustee compensation and expenses (Note 2) | 542,840 |
| Payable for administrative services (Note 2) | 5,478 |
| Payable for distribution fees (Note 2) | 668,570 |
| Distributions payable to shareholders | 593,837 |
| Other accrued expenses | 141,690 |
| Total liabilities | 30,361,398 |
| Net assets | $1,286,653,105 |
| |
| REPRESENTED BY | |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $1,221,354,239 |
| Undistributed net investment income (Note 1) | 6,624,804 |
| Accumulated net realized loss on investments (Note 1) | (17,932,346) |
| Net unrealized appreciation of investments | 76,606,408 |
| Total — Representing net assets applicable to capital shares outstanding | $1,286,653,105 |
| |
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| Net asset value and redemption price per class A share | |
| ($1,146,709,900 divided by 140,840,642 shares) | $8.14 |
| Offering price per class A share (100/96.00 of $8.14)* | $8.48 |
| Net asset value and offering price per class B share ($3,732,767 divided by 458,935 shares)** | $8.13 |
| Net asset value and offering price per class C share ($49,093,090 divided by 5,993,727 shares)** | $8.19 |
| Net asset value and redemption price per class M share ($3,271,878 divided by 402,970 shares) | $8.12 |
| Offering price per class M share (100/96.75 of $8.12)† | $8.39 |
| Net asset value, offering price and redemption price per class Y share | |
| ($83,845,470 divided by 10,269,127 shares) | $8.16 |
* On single retail sales of less than $100,000. On sales of $100,000 or more the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
† On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
|
| California Tax Exempt Income Fund 37 |
Statement of operations Year ended 9/30/17
| |
| INVESTMENT INCOME | |
| Interest income | $51,631,740 |
| Total investment income | 51,631,740 |
| |
| EXPENSES | |
| Compensation of Manager (Note 2) | 5,668,728 |
| Investor servicing fees (Note 2) | 679,539 |
| Custodian fees (Note 2) | 16,194 |
| Trustee compensation and expenses (Note 2) | 77,398 |
| Distribution fees (Note 2) | 3,094,888 |
| Administrative services (Note 2) | 39,361 |
| Other | 326,870 |
| Total expenses | 9,902,978 |
| Expense reduction (Note 2) | (47,712) |
| Net expenses | 9,855,266 |
| |
| Net investment income | 41,776,474 |
| |
| Net realized gain on securities from unaffiliated issuers (Notes 1 and 3) | 24,323,973 |
| Net unrealized depreciation of securities in unaffiliated issuers during the year | (66,146,554) |
| Net loss on investments | (41,822,581) |
| |
| Net decrease in net assets resulting from operations | $(46,107) |
The accompanying notes are an integral part of these financial statements.
|
| 38 California Tax Exempt Income Fund |
Statement of changes in net assets
| | |
| INCREASE (DECREASE) IN NET ASSETS | Year ended 9/30/17 | Year ended 9/30/16 |
| Operations | | |
| Net investment income | $41,776,474 | $46,687,948 |
| Net realized gain on investments | 24,323,973 | 11,442,585 |
| Net unrealized appreciation (depreciation) of investments | (66,146,554) | 22,200,673 |
| Net increase (decrease) in net assets resulting | | |
| from operations | (46,107) | 80,331,206 |
| Distributions to shareholders (Note 1): | | |
| From ordinary income | | |
| Taxable net investment income | | |
| Class A | (1,143,824) | (980,978) |
| Class B | (4,494) | (4,205) |
| Class C | (54,313) | (39,045) |
| Class M | (3,747) | (2,338) |
| Class Y | (72,603) | (48,678) |
| From tax-exempt net investment income | | |
| Class A | (37,115,354) | (42,046,542) |
| Class B | (110,291) | (142,611) |
| Class C | (1,289,173) | (1,391,646) |
| Class M | (108,292) | (96,067) |
| Class Y | (2,672,660) | (2,382,085) |
| Increase (decrease) from capital share transactions (Note 4) | (72,856,936) | 29,232,940 |
| Total increase (decrease) in net assets | (115,477,794) | 62,429,951 |
| |
| NET ASSETS | | |
| Beginning of year | 1,402,130,899 | 1,339,700,948 |
| End of year (including undistributed net investment | | |
| income of $6,624,804 and $6,403,073, respectively) | $1,286,653,105 | $1,402,130,899 |
The accompanying notes are an integral part of these financial statements.
|
| California Tax Exempt Income Fund 39 |
Financial highlights (For a common share outstanding throughout the period)
| | | | | | | | | | | | |
| | INVESTMENT OPERATIONS | LESS DISTRIBUTIONS | RATIOS AND SUPPLEMENTAL DATA |
| | | | | | | | | | | | Ratio | |
| | | | Net realized | | | | | | | | of net investment | |
| | Net asset value, | | and unrealized | Total from | From | | | Total return | Net assets, | Ratio of expenses | income (loss) | |
| | beginning | Net investment | gain (loss) | investment | net investment | Total | Net asset value, | at net asset value | end of period | to average | to average | Portfolio |
| Period ended | of period | income (loss) | on investments | operations | income | distributions | end of period | (%)a | (in thousands) | net assets (%)b,c | net assets (%)c | turnover (%) |
| Class A | | | | | | | | | | | | |
| September 30, 2017 | $8.39 | .27 | (.25) | .02 | (.27) | (.27) | $8.14 | .26 | $1,146,710 | .74 | 3.23 | 31 |
| September 30, 2016 | 8.19 | .29 | .20 | .49 | (.29) | (.29) | 8.39 | 6.08 | 1,253,683 | .75d | 3.43d | 16 |
| September 30, 2015 | 8.23 | .31 | (.04) | .27 | (.31) | (.31) | 8.19 | 3.29 | 1,226,347 | .74 | 3.73 | 14 |
| September 30, 2014 | 7.81 | .32 | .42 | .74 | (.32) | (.32) | 8.23 | 9.63 | 1,278,391 | .74 | 3.99 | 11 |
| September 30, 2013 | 8.34 | .33 | (.53) | (.20) | (.33) | (.33) | 7.81 | (2.50) | 1,338,414 | .74 | 4.03 | 11 |
| Class B | | | | | | | | | | | | |
| September 30, 2017 | $8.38 | .21 | (.25) | (.04) | (.21) | (.21) | $8.13 | (.37) | $3,733 | 1.37 | 2.61 | 31 |
| September 30, 2016 | 8.18 | .23 | .21 | .44 | (.24) | (.24) | 8.38 | 5.41 | 5,059 | 1.38d | 2.81d | 16 |
| September 30, 2015 | 8.22 | .25 | (.04) | .21 | (.25) | (.25) | 8.18 | 2.64 | 5,360 | 1.37 | 3.10 | 14 |
| September 30, 2014 | 7.80 | .27 | .42 | .69 | (.27) | (.27) | 8.22 | 8.96 | 6,364 | 1.37 | 3.36 | 11 |
| September 30, 2013 | 8.34 | .28 | (.54) | (.26) | (.28) | (.28) | 7.80 | (3.24) | 7,255 | 1.37 | 3.40 | 11 |
| Class C | | | | | | | | | | | | |
| September 30, 2017 | $8.44 | .20 | (.25) | (.05) | (.20) | (.20) | $8.19 | (.52) | $49,093 | 1.52 | 2.45 | 31 |
| September 30, 2016 | 8.23 | .22 | .21 | .43 | (.22) | (.22) | 8.44 | 5.33 | 60,951 | 1.53d | 2.64d | 16 |
| September 30, 2015 | 8.27 | .24 | (.04) | .20 | (.24) | (.24) | 8.23 | 2.46 | 46,944 | 1.52 | 2.95 | 14 |
| September 30, 2014 | 7.85 | .25 | .42 | .67 | (.25) | (.25) | 8.27 | 8.73 | 44,233 | 1.52 | 3.21 | 11 |
| September 30, 2013 | 8.38 | .27 | (.53) | (.26) | (.27) | (.27) | 7.85 | (3.25) | 47,175 | 1.52 | 3.25 | 11 |
| Class M | | | | | | | | | | | | |
| September 30, 2017 | $8.37 | .24 | (.25) | (.01) | (.24) | (.24) | $8.12 | (.02) | $3,272 | 1.02 | 2.95 | 31 |
| September 30, 2016 | 8.16 | .26 | .22 | .48 | (.27) | (.27) | 8.37 | 5.92 | 3,835 | 1.03d | 3.14d | 16 |
| September 30, 2015 | 8.20 | .28 | (.04) | .24 | (.28) | (.28) | 8.16 | 3.00 | 3,033 | 1.02 | 3.45 | 14 |
| September 30, 2014 | 7.79 | .29 | .41 | .70 | (.29) | (.29) | 8.20 | 9.22 | 2,670 | 1.02 | 3.71 | 11 |
| September 30, 2013 | 8.32 | .31 | (.53) | (.22) | (.31) | (.31) | 7.79 | (2.78) | 2,606 | 1.02 | 3.75 | 11 |
| Class Y | | | | | | | | | | | | |
| September 30, 2017 | $8.41 | .28 | (.25) | .03 | (.28) | (.28) | $8.16 | .48 | $83,845 | .52 | 3.44 | 31 |
| September 30, 2016 | 8.21 | .30 | .21 | .51 | (.31) | (.31) | 8.41 | 6.29 | 78,603 | .53d | 3.63d | 16 |
| September 30, 2015 | 8.25 | .32 | (.04) | .28 | (.32) | (.32) | 8.21 | 3.50 | 58,017 | .52 | 3.95 | 14 |
| September 30, 2014 | 7.83 | .33 | .42 | .75 | (.33) | (.33) | 8.25 | 9.85 | 56,636 | .52 | 4.20 | 11 |
| September 30, 2013 | 8.36 | .35 | (.53) | (.18) | (.35) | (.35) | 7.83 | (2.28) | 54,574 | .52 | 4.25 | 11 |
a Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
b Includes amounts paid through expense offset arrangements, if any (Note 2). Also excludes acquired fund fees, if any.
c Includes interest and fees expense associated with borrowings which amounted to the following (Note 1):
| | |
| | Percentage of average net assets | |
| September 30, 2014 | <0.01% | |
| September 30, 2013 | <0.01 | |
d Reflects a voluntary waiver of certain fund expenses in effect during the period. As a result of such waivers, the expenses of each class reflect a reduction of less than .01% as a percentage of average net assets per share for each class (Note 2).
The accompanying notes are an integral part of these financial statements.
| |
| 40 California Tax Exempt Income Fund | California Tax Exempt Income Fund 41 |
Notes to financial statements 9/30/17
Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from October 1, 2016 through September 30, 2017.
Putnam California Tax Exempt Income Fund (the fund) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company. The goal of the fund is to seek as high a level of current income exempt from federal income tax and California personal income tax as Putnam Management believes to be consistent with preservation of capital. The fund invests mainly in bonds that pay interest that is exempt from federal income tax and California personal income tax (but that may be subject to federal alternative minimum tax (AMT)), are investment-grade in quality, and have intermediate- to long-term maturities (i.e., three years or longer). Under normal circumstances, Putnam Management invests so that at least 90% of the fund’s income distributions are exempt from federal income tax and California personal income tax, except during times of adverse market conditions, when more than 10% of the fund’s income distributions could be subject to these taxes. This investment policy cannot be changed without the approval of the fund’s shareholders. Putnam Management may consider, among other factors, credit, interest rate and prepayment risks, as well as general market conditions, when deciding whether to buy or sell investments.
The fund offers class A, class B, class C, class M and class Y shares. The fund registered class T shares in February 2017, however, as of the date of this report, class T shares had not commenced operations and are not available for purchase. Effective April 1, 2017, purchases of class B shares are closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment. Class A and class M shares are sold with a maximum front-end sales charge of 4.00% and 3.25%, respectively. Class A shares generally are not subject to a contingent deferred sales charge, and class M and class Y shares are not subject to a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, are not subject to a front-end sales charge and are subject to a contingent deferred sales charge if those shares are redeemed within six years of purchase. Class C shares are subject to a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. The expenses for class A, class B, class C, and class M shares may differ based on the distribution fee of each class, which is identified in Note 2. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, and class M shares, but do not bear a distribution fee. Class Y shares are not available to all investors.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the fund’s Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Note 1: Significant accounting policies
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 accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
|
| 42 California Tax Exempt Income Fund |
Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.
Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.
Tax-exempt bonds and notes are generally valued on the basis of valuations provided by an independent pricing service approved by the Trustees. Such services use information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. These securities will generally be categorized as Level 2.
Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
Security transactions and related investment income Security transactions are recorded on the trade date (the 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. All premiums/discounts are amortized/accreted on a yield-to-maturity basis. The premium in excess of the call price, if any, is amortized to the call date; thereafter, any remaining premium is amortized to maturity.
Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.
Lines of credit The fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 million unsecured uncommitted line of credit, both provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to 1.25% plus the higher of (1) the Federal Funds rate and (2) the overnight LIBOR for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit plus a $25,000 flat fee and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.
Federal taxes It is the policy of the fund to distribute all of its income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the 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 Code.
|
| California Tax Exempt Income Fund 43 |
The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. 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. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
At September 30, 2017, the fund had a capital loss carryover of $15,210,713 available to the extent allowed by the Code to offset future net capital gain, if any. For any carryover, the amount of the carryover and that carryover’s expiration date is:
| | | |
| | Loss carryover | |
| Short-term | Long-term | Total | Expiration |
| $15,210,713 | N/A | $15,210,713 | September 30, 2019 |
Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred will be required to be utilized prior to the losses incurred in pre-enactment tax years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer certain capital losses of $2,943,285 recognized during the period between November 1, 2016 and to its fiscal year ending September 30, 2017.
Distributions to shareholders Income dividends are recorded daily by the fund and are paid monthly. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. 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/or permanent differences from late year loss deferrals, and from 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. At the close of the reporting period, the fund reclassified $1,020,008 to increase undistributed net investment income, and $1,020,008 to increase accumulated net realized loss.
Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The tax basis components of distributable earnings and the federal tax cost as of the close of the reporting period were as follows:
| |
| Unrealized appreciation | $79,744,590 |
| Unrealized depreciation | (2,916,532) |
| Net unrealized appreciation | 76,828,058 |
| Undistributed tax-exempt income | 6,126,202 |
| Undistributed | 1,092,438 |
| Capital loss carryforward | (15,210,713) |
| Post-October capital loss deferral | (2,943,285) |
| Cost for federal income tax purposes | $1,208,869,041 |
|
| 44 California Tax Exempt Income Fund |
Note 2: Management fee, administrative services and other transactions
The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:
| | | | |
| 0.590% | of the first $5 billion, | | 0.390% | of the next $50 billion, |
| 0.540% | of the next $5 billion, | | 0.370% | of the next $50 billion, |
| 0.490% | of the next $10 billion, | | 0.360% | of the next $100 billion and |
| 0.440% | of the next $10 billion, | | 0.355% | of any excess thereafter. |
For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.435% of the fund’s average net assets.
Putnam Management has contractually agreed, through January 30, 2019, to waive fees or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.
Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.40% of the average net assets of the portion of the fund managed by PIL.
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 State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class M, and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribution account (“retail account”) of the fund; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts.
During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:
| | | | |
| Class A | $606,254 | | Class M | 1,937 |
| Class B | 2,243 | | Class Y | 41,005 |
| Class C | 28,100 | | Total | $679,539 |
The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $47,712 under the expense offset arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $955, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
|
| California Tax Exempt Income Fund 45 |
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 and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the Plans) with respect to the following share classes pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (“Maximum %”) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (“Approved %”) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:
| | | |
| | Maximum % | Approved % | Amount |
| Class A | 0.35% | * | $2,502,188 |
| Class B | 1.00% | 0.85% | 36,450 |
| Class C | 1.00% | 1.00% | 537,718 |
| Class M | 1.00% | 0.50% | 18,532 |
| Total | | | $3,094,888 |
* Equals the weighted average of (i) 0.20% of the net assets of the fund attributable to class A shares purchased and paid for prior to April 1, 2005 and (ii) 0.25% of all other net assets of the fund attributable to class A shares.
For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $38,376 and $428 from the sale of class A and class M shares, respectively, and received $453 and $760 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $705 on class A redemptions.
Note 3: Purchases and sales of securities
During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:
| | |
| | Cost of purchases | Proceeds from sales |
| Investments in securities (Long-term) | $393,816,924 | $485,670,145 |
| U.S. government securities (Long-term) | — | — |
| Total | $393,816,924 | $485,670,145 |
The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.
|
| 46 California Tax Exempt Income Fund |
Note 4: Capital shares
At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
| | | | |
| | YEAR ENDED 9/30/17 | YEAR ENDED 9/30/16 |
| Class A | Shares | Amount | Shares | Amount |
| Shares sold | 9,907,234 | $80,309,915 | 14,925,157 | $124,387,853 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 3,727,164 | 30,101,227 | 4,062,945 | 33,816,867 |
| | 13,634,398 | 110,411,142 | 18,988,102 | 158,204,720 |
| Shares repurchased | (22,214,249) | (179,282,295) | (19,356,462) | (161,059,629) |
| Net decrease | (8,579,851) | $(68,871,153) | (368,360) | $(2,854,909) |
| |
| | YEAR ENDED 9/30/17 | YEAR ENDED 9/30/16 |
| Class B | Shares | Amount | Shares | Amount |
| Shares sold | 1,737 | $14,001 | 49,285 | $409,584 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 13,676 | 110,252 | 17,031 | 141,549 |
| | 15,413 | 124,253 | 66,316 | 551,133 |
| Shares repurchased | (160,041) | (1,291,954) | (118,103) | (980,453) |
| Net decrease | (144,628) | $(1,167,701) | (51,787) | $(429,320) |
| |
| | YEAR ENDED 9/30/17 | YEAR ENDED 9/30/16 |
| Class C | Shares | Amount | Shares | Amount |
| Shares sold | 420,191 | $3,418,150 | 2,206,944 | $18,472,658 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 139,320 | 1,131,266 | 139,289 | 1,167,037 |
| | 559,511 | 4,549,416 | 2,346,233 | 19,639,695 |
| Shares repurchased | (1,788,220) | (14,515,232) | (825,905) | (6,914,569) |
| Net increase (decrease) | (1,228,709) | $(9,965,816) | 1,520,328 | $12,725,126 |
| |
| | YEAR ENDED 9/30/17 | YEAR ENDED 9/30/16 |
| Class M | Shares | Amount | Shares | Amount |
| Shares sold | 19,265 | $158,348 | 131,616 | $1,102,792 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 12,626 | 101,628 | 10,511 | 87,327 |
| | 31,891 | 259,976 | 142,127 | 1,190,119 |
| Shares repurchased | (87,220) | (706,409) | (55,319) | (457,174) |
| Net increase (decrease) | (55,329) | $(446,433) | 86,808 | $732,945 |
| |
| | YEAR ENDED 9/30/17 | YEAR ENDED 9/30/16 |
| Class Y | Shares | Amount | Shares | Amount |
| Shares sold | 3,483,546 | $28,241,210 | 3,613,123 | $30,221,989 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 244,988 | 1,984,065 | 207,047 | 1,729,659 |
| | 3,728,534 | 30,225,275 | 3,820,170 | 31,951,648 |
| Shares repurchased | (2,802,076) | (22,631,108) | (1,545,163) | (12,892,550) |
| Net increase | 926,458 | $7,594,167 | 2,275,007 | $19,059,098 |
|
| California Tax Exempt Income Fund 47 |
Note 5: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. The fund focuses a majority of its investments in the state of California and may be affected by economic and political developments in that state.
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| 48 California Tax Exempt Income Fund |
Federal tax information (Unaudited)
The fund has designated 97.0% of dividends paid from net investment income during the reporting period as tax exempt for Federal income tax purposes.
The Form 1099 that will be mailed to you in January 2018 will show the tax status of all distributions paid to your account in calendar 2017.
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| California Tax Exempt Income Fund 49 |
|
| 50 California Tax Exempt Income Fund |
* Mr. Reynolds is an “interested person” (as defined in the Investment Company Act of 1940) of the fund and Putnam Investments. He is President and Chief Executive Officer of Putnam Investments, as well as the President of your fund and each of the other Putnam funds.
The address of each Trustee is One Post Office Square, Boston, MA 02109.
As of September 30, 2017, there were 106 Putnam funds. All Trustees serve as Trustees of all Putnam funds.
Each Trustee serves for an indefinite term, until his or her resignation, retirement at age 75, removal, or death.
|
| California Tax Exempt Income Fund 51 |
Officers
In addition to Robert L. Reynolds, the other officers of the fund are shown below:
| |
| Jonathan S. Horwitz (Born 1955) | Susan G. Malloy (Born 1957) |
| Executive Vice President, Principal Executive Officer, | Vice President and Assistant Treasurer |
| and Compliance Liaison | Since 2007 |
| Since 2004 | Head of Accounting, Middle Office, & Control Services, |
| | Putnam Investments and Putnam Management |
| Robert T. Burns (Born 1961) | |
| Vice President and Chief Legal Officer | Mark C. Trenchard (Born 1962) |
| Since 2011 | Vice President and BSA Compliance Officer |
| General Counsel, Putnam Investments, | Since 2002 |
| Putnam Management, and Putnam Retail Management | Director of Operational Compliance, Putnam |
| | Investments and Putnam Retail Management |
| James F. Clark (Born 1974) | |
| Vice President and Chief Compliance Officer | Nancy E. Florek (Born 1957) |
| Since 2016 | Vice President, Director of Proxy Voting and Corporate |
| Chief Compliance Officer, Putnam Investments | Governance, Assistant Clerk, and Assistant Treasurer |
| and Putnam Management | Since 2000 |
| |
| Michael J. Higgins (Born 1976) | Denere P. Poulack (Born 1968) |
| Vice President, Treasurer, and Clerk | Assistant Vice President, Assistant Clerk, |
| Since 2010 | and Assistant Treasurer |
| | Since 2004 |
| Janet C. Smith (Born 1965) | |
| Vice President, Principal Financial Officer, Principal | |
| Accounting Officer, and Assistant Treasurer | |
| Since 2007 | |
| Head of Fund Administration Services, | |
| Putnam Investments and Putnam Management | |
The principal occupations of the officers for the past five years have been with the employers as shown above, although in some cases they have held different positions with such employers. The address of each officer is One Post Office Square, Boston, MA 02109.
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| 52 California Tax Exempt Income Fund |
Fund information
Founded over 75 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.
| | |
| Investment Manager | Trustees | Michael J. Higgins |
| Putnam Investment | Jameson A. Baxter, Chair | Vice President, Treasurer, |
| Management, LLC | Kenneth R. Leibler, Vice Chair | and Clerk |
| One Post Office Square | Liaquat Ahamed | |
| Boston, MA 02109 | Ravi Akhoury | Janet C. Smith |
| | Barbara M. Baumann | Vice President, |
| Investment Sub-Advisor | Katinka Domotorffy | Principal Financial Officer, |
| Putnam Investments Limited | Catharine Bond Hill | Principal Accounting Officer, |
| 57–59 St James’s Street | Paul L. Joskow | and Assistant Treasurer |
| London, England SW1A 1LD | Robert E. Patterson | |
| George Putnam, III | Susan G. Malloy |
| Marketing Services | Robert L. Reynolds | Vice President and |
| Putnam Retail Management | Manoj P. Singh | Assistant Treasurer |
| One Post Office Square | | |
| Boston, MA 02109 | Officers | Mark C. Trenchard |
| Robert L. Reynolds | Vice President and |
| Custodian | President | BSA Compliance Officer |
| State Street Bank | | |
| and Trust Company | Jonathan S. Horwitz | Nancy E. Florek |
| Executive Vice President, | Vice President, Director of |
| Legal Counsel | Principal Executive Officer, | Proxy Voting and Corporate |
| Ropes & Gray LLP | and Compliance Liaison | Governance, Assistant Clerk, |
| | | and Assistant Treasurer |
| Independent Registered Public | Robert T. Burns | |
| Accounting Firm | Vice President and | Denere P. Poulack |
| KPMG LLP | Chief Legal Officer | Assistant Vice President, Assistant |
| | | Clerk, and Assistant Treasurer |
| | James F. Clark | |
| | Vice President and | |
| | Chief Compliance Officer | |
This report is for the information of shareholders of Putnam California Tax Exempt Income Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.
| |
| (a) The fund's principal executive, financial and accounting officers are employees of Putnam Investment Management, LLC, the Fund's investment manager. As such they are subject to a comprehensive Code of Ethics adopted and administered by Putnam Investments which is designed to protect the interests of the firm and its clients. The Fund has adopted a Code of Ethics which incorporates the Code of Ethics of Putnam Investments with respect to all of its officers and Trustees who are employees of Putnam Investment Management, LLC. For this reason, the Fund has not adopted a separate code of ethics governing its principal executive, financial and accounting officers. |
| |
| Item 3. Audit Committee Financial Expert: |
| |
| The Funds' Audit, Compliance and Distributions Committee is comprised solely of Trustees who are “independent” (as such term has been defined by the Securities and Exchange Commission (“SEC”) in regulations implementing Section 407 of the Sarbanes-Oxley Act (the “Regulations”)). The Trustees believe that each of the members of the Audit, Compliance and Distributions Committee also possess a combination of knowledge and experience with respect to financial accounting matters, as well as other attributes, that qualify them for service on the Committee. In addition, the Trustees have determined that each of Mr. Patterson, Ms. Baumann and Mr. Singh qualifies as an “audit committee financial expert” (as such term has been defined by the Regulations) based on their review of his or her pertinent experience and education. The SEC has stated, and the funds' amended and restated agreement and Declaration of Trust provides, that the designation or identification of a person as an audit committee financial expert pursuant to this Item 3 of Form N-CSR does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the Audit, Compliance and Distribution Committee and the Board of Trustees in the absence of such designation or identification. |
| |
| Item 4. Principal Accountant Fees and Services: |
| |
| The following table presents fees billed in each of the last two fiscal years for services rendered to the fund by the fund's independent auditor: |
| | | | | |
| Fiscal year ended | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
|
|
| | | | | |
| September 30, 2017 | $71,908 | $ — | $7,188 | $ — |
| September 30, 2016 | $62,255 | $ — | $7,000 | $ — |
| |
| For the fiscal years ended September 30, 2017 and September 30, 2016, the fund's independent auditor billed aggregate non-audit fees in the amounts of $7,188 and $7,000 respectively, to the fund, Putnam Management and any entity controlling, controlled by or under common control with Putnam Management that provides ongoing services to the fund. |
| |
| Audit Fees represent fees billed for the fund's last two fiscal years relating to the audit and review of the financial statements included in annual reports and registration statements, and other services that are normally provided in connection with statutory and regulatory filings or engagements. |
| |
| Audit-Related Fees represent fees billed in the fund's last two fiscal years for services traditionally performed by the fund's auditor, including accounting consultation for proposed transactions or concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation. |
| |
| Tax Fees represent fees billed in the fund's last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities. |
| |
| Pre-Approval Policies of the Audit, Compliance and Distributions Committee. The Audit, Compliance and Distributions Committee of the Putnam funds has determined that, as a matter of policy, all work performed for the funds by the funds' independent auditors will be pre-approved by the Committee itself and thus will generally not be subject to pre-approval procedures. |
| |
| The Audit, Compliance and Distributions Committee also has adopted a policy to pre-approve the engagement by Putnam Management and certain of its affiliates of the funds' independent auditors, even in circumstances where pre-approval is not required by applicable law. Any such requests by Putnam Management or certain of its affiliates are typically submitted in writing to the Committee and explain, among other things, the nature of the proposed engagement, the estimated fees, and why this work should be performed by that particular audit firm as opposed to another one. In reviewing such requests, the Committee considers, among other things, whether the provision of such services by the audit firm are compatible with the independence of the audit firm. |
| |
| The following table presents fees billed by the fund's independent auditor for services required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. |
| | | | | |
| Fiscal year ended | Audit-Related Fees | Tax Fees | All Other Fees | Total Non-Audit Fees |
|
|
| | | | | |
| September 30, 2017 | $ — | $ — | $ — | $ — |
| September 30, 2016 | $ — | $ — | $ — | $ — |
| |
| Item 5. Audit Committee of Listed Registrants |
| |
|
Item 6. Schedule of Investments: |
| |
| The registrant's schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. |
| |
| Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
| |
|
Item 8. Portfolio Managers of Closed-End Investment Companies |
| |
|
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
| |
|
Item 10. Submission of Matters to a Vote of Security Holders: |
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|
Item 11. Controls and Procedures: |
| |
| (a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. |
| |
| (b) Changes in internal control over financial reporting: Not applicable |
| |
| (a)(1) The Code of Ethics of The Putnam Funds, which incorporates the Code of Ethics of Putnam Investments, is filed herewith. |
| |
| (a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith. |
| |
| (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. |
| |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
| |
| Putnam California Tax Exempt Income Fund |
| |
| By (Signature and Title): |
| |
| /s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer
|
| |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
| |
| By (Signature and Title): |
| |
| /s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer
|
| |
| By (Signature and Title): |
| |
| /s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer
|
