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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 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, 2018 |
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| Date of reporting period: | October 1, 2017 — March 31, 2018 |
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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
Semiannual report
3 | 31 | 18
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. The fund’s performance will be closely tied to the economic and political conditions in California, and can be more volatile than the performance of a more geographically diversified fund. 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. Certain provisions of the California Constitution and state statutes limit the taxing and spending authority of California’s government entities, which could impair the ability of California issuers to pay principal and/or interest on their obligations. 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 greater for longer-term bonds, and credit risk is 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
May 10, 2018
Dear Fellow Shareholder:
After an extended period of record advances and low volatility, global stock markets encountered some challenges in the early months of 2018. Stocks began the year against a backdrop of optimism, but quickly lost ground in February with a sharp downturn that pushed the U.S. market into correction territory. Stocks subsequently recovered somewhat, but markets have remained choppy.
While volatility and declines can be unsettling, seasoned investors recognize that they are natural and ultimately can restore balance in the financial markets. In this changing environment, Putnam’s experienced investment professionals continue to monitor risks and seek opportunities. They take a research-intensive approach to investing that includes risk management strategies designed to serve investors in all types of markets.
As always, we believe investors should maintain a well-diversified portfolio, think about long-term goals, and speak regularly with their financial advisors. 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.
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.
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| 2 California Tax Exempt Income Fund |
Source: Putnam, as of 3/31/18. 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 40.80% federal income tax rate. This rate reflects the Tax Cuts and Jobs Act of 2017 and includes the 3.80% Medicare surtax.
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| California Tax Exempt Income Fund 3 |
Performance history as of 3/31/18
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 9–10 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.
* Returns for the six-month period are not annualized, but cumulative.
This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 3/31/18. See above and pages 9–10 for additional fund performance information. Index descriptions can be found on pages 13–14.
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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.
In addition to Paul, your fund is managed by Garrett L. Hamilton, CFA.
Paul, how was the market for municipal bonds during the reporting period?
Volatility picked up in the municipal bond market in response to higher interest rates, the federal tax reform debate, and the passage of the Tax Cuts and Jobs Act. A selloff in November was in response to the proposed elimination of advance refundings, which investors feared might result in heavier near-term municipal bond supply. [Refunding occurs when an issuer refinances a bond by issuing another bond at a lower interest rate to pay off an older higher-yielding bond, thereby reducing interest costs.] In December, bond issuers rushed to issue new deals before the new tax law took effect in 2018. Total municipal bond new issue volume for December 2017 was $62.5 billion — surpassing the previous record of $52.7 billion in December 1985, which was just before the last comprehensive tax overhaul took effect. However, the flood of new issuance was well received by investors, and the municipal bond market rallied as strong demand helped buoy prices.
The Federal Reserve continued to gradually reduce its monetary policy accommodation. This included beginning to reduce its balance
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Allocations are shown as a percentage of the fund’s net assets as of 3/31/18. 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 3/31/18. 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 |
sheet in October 2017, raising the federal funds rate in December to a target range of 1.25% to 1.50%, and again in March 2018 to a target range of 1.50% to 1.75%. With interest rates rising, municipal bonds yields rose more than U.S. Treasuries but held up better than the broader fixed-income markets during the period. [Bond prices generally fall as rates rise.] Securities with longer maturities held up better than securities with shorter- and intermediate-term maturities for the period. High-yielding lower-quality municipal bonds outperformed lower-yielding, higher-quality municipal bonds.
How did the fund perform during the reporting period?
For the six months ended March 31, 2018, the fund outperformed its benchmark, the Bloomberg Barclays Municipal Bond Index, and the average return of its Lipper peer group, California Municipal Debt Funds.
What was your investment strategy in this environment?
Given our outlook for interest rates trending higher, the fund began the period with more of a barbell approach to structuring the portfolio — overweighting short-term bonds, underweighting intermediate-term bonds with maturities of 5 to 12 years, and overweighting longer-term bonds with maturities of greater than 12 to 20 years. However, as the yield curve flattened, we began steering the portfolio away from the short and long ends of the curve and focusing more on bonds with maturities of 15 to 20 years where we saw better value.
Duration positioning, which affects the portfolio’s sensitivity to interest rates, was generally neutral relative to the benchmark index. From a credit-quality standpoint, the fund held an overweight exposure to higher-quality bonds rated Aa and A. Increasing the fund’s emphasis on higher-quality bonds proved to be a headwind during the period. From a sector-positioning perspective, we placed greater focus on local government obligations, transportation, and continuing-care retirement community bonds relative to the fund’s Lipper group. This strategy was positive for performance results.
We maintained an underweight position in Puerto Rico-based issuers relative to the fund’s Lipper peers. Puerto Rico’s current economic and financial situation remains extremely difficult and could further challenge the debt restructuring process, in our view. This underweight exposure was a slight headwind, as Puerto Rico debt rallied during the period.
What are your thoughts about the new tax law and its effects on the municipal bond market?
The Tax Cuts and Jobs Act reduced corporate tax rates and, to a lesser extent, individual rates,changed some popular deductions, and eliminated advance refundings for municipal issuers. However, the tax-exempt status of municipal bonds remains intact. As such, we do not believe the new tax law will materially affect demand for municipal bonds from individuals. However, in our view, the reduction in corporate taxes may lower demand from banks, property and casualty insurers, or other corporate buyers.
The legislation, in our view, will have a more meaningful impact on the supply side of the technical equation. We believe the elimination of advance refundings could remove up to 20% of the municipal market’s annual supply — a fairly significant portion of the municipal bond supply.
What is your outlook for interest rates in the coming months?
Jerome Powell was sworn in as the new Federal Reserve chair on February 5, 2018. Investors generally believe that Chairman Powell will
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| California Tax Exempt Income Fund 7 |
implement the plan laid out by his predecessor, Janet Yellen, for gradual rate increases. At the Fed’s first meeting under Chairman Powell in March 2018, the central bank reiterated its plan for three interest-rate hikes this year but hinted that it would be open to the possibility of a fourth hike if necessary to keep the U.S. economy from overheating. The Fed also revised its outlook for three rate hikes in 2019 instead of two, and projected the unemployment rate, which stood at 4.1% at period-end, would fall to 3.8% in 2018.
We expect that strengthening global economic growth will facilitate the continued normalization of short-term interest rates from their still historic lows and the continued flattening of the yield curve, with short-term rates rising more than long-term rates. Should incoming data signal a strengthening economic outlook, we believe the Fed might be inclined to tighten a little faster to keep inflationary pressures at bay or, conversely, tighten more slowly if fiscal policy proves less stimulative. As always, we will continue to rely on in-depth research and our experienced market insights to evaluate current portfolio holdings and potential new holdings for what we believe to be attractive income and return characteristics.
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 March 31, 2018, the end of the first half of its current 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 3/31/18
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| | Annual | | | | | | | | |
| | average | | Annual | | Annual | | Annual | | |
| | (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year | 6 months |
| Class A (4/29/83) | | | | | | | | | |
| Before sales charge | 6.20% | 55.83% | 4.54% | 15.11% | 2.85% | 6.86% | 2.24% | 3.19% | 0.10% |
| After sales charge | 6.07 | 49.59 | 4.11 | 10.50 | 2.02 | 2.58 | 0.85 | –0.94 | –3.90 |
| Class B (1/4/93) | | | | | | | | | |
| Before CDSC | 5.99 | 48.13 | 4.01 | 11.39 | 2.18 | 4.85 | 1.59 | 2.55 | –0.21 |
| After CDSC | 5.99 | 48.13 | 4.01 | 9.47 | 1.83 | 1.95 | 0.65 | –2.45 | –5.14 |
| Class C (7/26/99) | | | | | | | | | |
| Before CDSC | 5.35 | 44.18 | 3.73 | 10.58 | 2.03 | 4.45 | 1.46 | 2.49 | –0.29 |
| After CDSC | 5.35 | 44.18 | 3.73 | 10.58 | 2.03 | 4.45 | 1.46 | 1.49 | –1.27 |
| Class M (2/14/95) | | | | | | | | | |
| Before sales charge | 5.82 | 51.37 | 4.23 | 13.52 | 2.57 | 6.09 | 1.99 | 3.02 | –0.04 |
| After sales charge | 5.72 | 46.45 | 3.89 | 9.83 | 1.89 | 2.64 | 0.87 | –0.32 | –3.29 |
| Class Y (1/2/08) | | | | | | | | | |
| Net asset value | 6.27 | 59.31 | 4.77 | 16.32 | 3.07 | 7.53 | 2.45 | 3.40 | 0.21 |
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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Comparative index returns For periods ended 3/31/18
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| | Annual | | | | | | | | |
| | average | | Annual | | Annual | | Annual | | |
| | (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year | 6 months |
| Bloomberg Barclays | | | | | | | | | |
| Municipal Bond Index | 6.55% | 53.87% | 4.40% | 14.43% | 2.73% | 6.90% | 2.25% | 2.66% | –0.37% |
| Lipper California | | | | | | | | | |
| Municipal Debt Funds | 6.24 | 55.93 | 4.52 | 16.60 | 3.11 | 7.40 | 2.40 | 3.18 | –0.04 |
| category average* | | | | | | | | | |
Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.
* Over the 6-month, 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 3/31/18, there were 124, 116, 107, 99, 83, and 3 funds, respectively, in this Lipper category.
Fund price and distribution information For the six-month period ended 3/31/18
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| Distributions | Class A | Class B | Class C | Class M | Class Y |
| Number | 6 | 6 | 6 | 6 | 6 |
| Income1 | $0.128691 | $0.103234 | $0.096675 | $0.116731 | $0.137389 |
| Capital gains2 | — | — | — | — | — |
| Total | $0.128691 | $0.103234 | $0.096675 | $0.116731 | $0.137389 |
| | Before | After | Net | Net | Before | After | Net |
| | sales | sales | asset | asset | sales | sales | asset |
| Share value | charge | charge | value | value | charge | charge | value |
| 9/30/17 | $8.14 | $8.48 | $8.13 | $8.19 | $8.12 | $8.39 | $8.16 |
| 3/31/18 | 8.02 | 8.35 | 8.01 | 8.07 | 8.00 | 8.27 | 8.04 |
| | 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 | 2.88% | 2.77% | 2.23% | 2.08% | 2.59% | 2.51% | 3.09% |
| Taxable equivalent4 | 6.27 | 6.03 | 4.86 | 4.53 | 5.64 | 5.47 | 6.73 |
| Current 30-day | | | | | | | |
| SEC yield5 | N/A | 1.96 | 1.41 | 1.26 | N/A | 1.72 | 2.25 |
| Taxable equivalent4 | N/A | 4.27 | 3.07 | 2.75 | N/A | 3.75 | 4.90 |
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 54.10% federal and state combined tax rate for 2018. 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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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 9/30/17 | 0.74% | 1.37% | 1.52% | 1.02% | 0.52% |
| Annualized expense ratio for the six-month | | | | | |
| period ended 3/31/18 | 0.73% | 1.36% | 1.51% | 1.01% | 0.51% |
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.
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 10/1/17 to 3/31/18. 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*† | $3.64 | $6.77 | $7.52 | $5.04 | $2.55 |
| Ending value (after expenses) | $1,001.00 | $997.90 | $997.10 | $999.60 | $1,002.10 |
* 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 3/31/18. 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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Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended 3/31/18, use the following calculation method. To find the value of your investment on 10/1/17, 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*† | $3.68 | $6.84 | $7.59 | $5.09 | $2.57 |
| Ending value (after expenses) | $1,021.29 | $1,018.15 | $1,017.40 | $1,019.90 | $1,022.39 |
* 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 3/31/18. 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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| 12 California Tax Exempt Income Fund |
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.
ICE BofAML (Intercontinental Exchange Bank of America 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.
ICE Data Indices, LLC (“ICE BofAML”), used with permission. ICE BofAML permits use of the ICE 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 ICE BofAML indices or any data included in, related to, or derived therefrom; assumes no liability in connection with the use of the foregoing; and does not
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| California Tax Exempt Income Fund 13 |
sponsor, endorse, or recommend Putnam Investments, or any of its products or services.
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.
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
Important notice regarding delivery of shareholder documents
In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.
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 SEC’s 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 March 31, 2018, Putnam employees had approximately $509,000,000 and the Trustees had approximately $80,000,000 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.
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| 14 California Tax Exempt Income Fund |
Financial statements
These sections of the report, as well as the accompanying Notes, 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 period.
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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.
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.
|
| California Tax Exempt Income Fund 15 |
The fund’s portfolio 3/31/18 (Unaudited)
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. For certain |
| AMBAC AMBAC Indemnity Corporation | securities, the rate may represent a fixed rate currently |
| BAM Build America Mutual | in place at the close of the reporting period. |
| COP Certificates of Participation | G.O. Bonds General Obligation Bonds |
| FCS Farm Credit System | NATL National Public Finance Guarantee Corp. |
| FGIC Financial Guaranty Insurance Company | U.S. Govt. Coll. U.S. Government Collateralized |
| FHL Banks Coll. Federal Home Loan Banks | VRDN Variable Rate Demand Notes, which are floating- |
| System Collateralized | rate securities with long-term maturities that carry |
| FHLMC Coll. Federal Home Loan Mortgage | coupons that reset and are payable upon demand |
| Corporation Collateralized | either daily, weekly or monthly. The rate shown is the |
| FNMA Coll. Federal National Mortgage | current interest rate at the close of the reporting |
| Association Collateralized | period. Rates are set by remarketing agents and may |
| take into consideration market supply and demand, |
| credit quality and the current SIFMA Municipal Swap |
| | Index rate, which was 1.58% as of the close of the |
| | reporting period. |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* | Rating** | Principal amount | Value |
| California (95.3%) | | | |
| ABAG Fin. Auth. for Nonprofit Corps. Rev. Bonds | | | |
| (Sharp Hlth. Care), 6.25%, 8/1/39 | | | |
| (Prerefunded 8/1/19) | AA | $14,000,000 | $14,859,180 |
| (Episcopal Sr. Cmntys.), 6.125%, 7/1/41 | A–/F | 2,045,000 | 2,259,071 |
| (Episcopal Sr. Cmntys.), Ser. A, 5.00%, 7/1/42 | A–/F | 700,000 | 746,739 |
| (O’Connor Woods), 5.00%, 1/1/33 | AA– | 2,300,000 | 2,560,774 |
| 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 | 484,340 |
| 5.00%, 9/2/33 | AA | 745,000 | 863,083 |
| 5.00%, 9/2/32 | AA | 350,000 | 407,344 |
| 5.00%, 9/2/30 | AA | 2,080,000 | 2,441,296 |
| 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 | 1,103,350 |
| 5.00%, 4/1/32 | AA– | 3,000,000 | 3,339,660 |
| Alameda Cnty., Joint Pwrs. Auth. Lease Rev. Bonds, | | | |
| (Multiple Cap.), Ser. A, 5.00%, 12/1/34 | Aa1 | 4,960,000 | 5,563,285 |
| Alameda, Corridor Trans. Auth. Rev. Bonds | | | |
| Ser. B, 5.00%, 10/1/37 | BBB+ | 1,750,000 | 1,955,083 |
| Ser. B, AGM, 5.00%, 10/1/37 | AA | 450,000 | 511,263 |
| Ser. A, AMBAC, zero %, 10/1/19 | BBB+ | 365,000 | 351,177 |
| Ser. A, AMBAC, U.S. Govt. Coll., zero %, 10/1/19 | | | |
| (Escrowed to maturity) | Aaa | 4,635,000 | 4,522,555 |
| Anaheim, Hsg. & Pub. Impt. Auth. Rev. Bonds, Ser. B | | | |
| 5.00%, 10/1/36 | Aa3 | 1,400,000 | 1,548,134 |
| 5.00%, 10/1/35 | Aa3 | 2,000,000 | 2,214,560 |
|
| 16 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Anaheim, Pub. Fin. Auth. Rev. Bonds, Ser. A | | | |
| 5.00%, 5/1/46 | AA– | $2,500,000 | $2,799,425 |
| 5.00%, 5/1/39 | AA– | 1,000,000 | 1,125,720 |
| Bay Area Toll Auth. of CA Rev. Bonds | | | |
| Ser. S-6, 5.00%, 10/1/54 | AA– | 8,650,000 | 9,567,160 |
| Ser. F-1, 5.00%, 4/1/54 | AA | 14,330,000 | 15,776,040 |
| (San Francisco Bay Area Sub. Toll Bridge), Ser. S-7, | | | |
| 4.00%, 4/1/33 | AA– | 14,050,000 | 15,013,128 |
| 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 | 102,459 |
| (Adventist Hlth. Syst.-West), Ser. A, 5.75%, 9/1/39 | | | |
| (Prerefunded 9/1/19) | A | 10,500,000 | 11,087,265 |
| (Cedars Sinai Med. Ctr.), 5.00%, 8/15/39 | | | |
| (Prerefunded 8/15/19) | Aa3 | 5,400,000 | 5,653,854 |
| (Adventist Hlth. Syst./West), Ser. A, 4.00%, 3/1/33 | A | 4,575,000 | 4,778,130 |
| CA Muni. Fin. Auth. Rev. Bonds | | | |
| (Biola U.), 5.80%, 10/1/28 (Prerefunded 10/1/18) | Baa1 | 220,000 | 224,708 |
| (Channing House), Ser. B, 5.00%, 5/15/47 | AA– | 6,530,000 | 7,439,629 |
| (Eisenhower Med. Ctr.), Ser. A, 5.00%, 7/1/42 | Baa2 | 300,000 | 333,759 |
| (Cmnty. Med. Ctr.), Ser. A, 5.00%, 2/1/42 | A– | 3,400,000 | 3,743,570 |
| (Biola U., Inc.), 5.00%, 10/1/39 | Baa1 | 1,000,000 | 1,136,730 |
| (Biola U., Inc.), 5.00%, 10/1/37 | Baa1 | 500,000 | 570,990 |
| (Channing House), Ser. B, 5.00%, 5/15/37 | AA– | 250,000 | 290,950 |
| (Cmnty. Med. Ctr.), Ser. A, 5.00%, 2/1/37 | A– | 1,000,000 | 1,110,620 |
| (Biola U., Inc.), 5.00%, 10/1/36 | Baa1 | 1,250,000 | 1,430,775 |
| (Cmnty. Med. Ctr.), Ser. A, 5.00%, 2/1/36 | A– | 1,800,000 | 2,006,334 |
| (Retirement Hsg. Foundation Oblig. Group), Ser. A, | | | |
| 5.00%, 11/15/32 | A–/F | 425,000 | 518,755 |
| (Channing House), Ser. B, 5.00%, 5/15/32 | AA– | 150,000 | 176,712 |
| (Retirement Hsg. Foundation Oblig. Group), Ser. A, | | | |
| 5.00%, 11/15/31 | A–/F | 750,000 | 911,010 |
| (Retirement Hsg. Foundation Oblig. Group), Ser. A, | | | |
| 5.00%, 11/15/30 | A–/F | 250,000 | 301,898 |
| 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 | 3,151,980 |
| CA Pub. Fin. Auth. Rev. Bonds, (Henry Mayo Newhall | | | |
| Memorial Hosp.), 5.00%, 10/15/37 | BBB– | 1,000,000 | 1,102,060 |
| CA School Fac. Fin. Auth. Rev. Bonds, (Alliance | | | |
| College-Ready Pub. Schools), Ser. C, 5.00%, 7/1/31 | BBB | 1,425,000 | 1,568,327 |
| CA School Fac. Fin. Auth. 144A Rev. Bonds, (Alliance | | | |
| College-Ready Pub. Schools), Ser. A | | | |
| 5.00%, 7/1/36 | BBB | 1,250,000 | 1,374,638 |
| 5.00%, 7/1/31 | BBB | 1,830,000 | 2,064,203 |
| CA School Fin. Auth. Rev. Bonds, (Kipp LA Projects), | | | |
| Ser. A, 5.125%, 7/1/44 | BBB | 1,000,000 | 1,086,300 |
| CA State G.O. Bonds | | | |
| 6.50%, 4/1/33 | Aa3 | 20,000,000 | 20,971,200 |
| 5.00%, 10/1/44 | Aa3 | 13,905,000 | 15,648,548 |
| 5.00%, 12/1/43 | Aa3 | 1,500,000 | 1,667,445 |
|
| California Tax Exempt Income Fund 17 |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| CA State G.O. Bonds | | | |
| 5.00%, 11/1/43 | Aa3 | $4,145,000 | $4,608,287 |
| 5.00%, 8/1/37 | Aa3 | 6,930,000 | 7,999,576 |
| 5.00%, 8/1/36 | Aa3 | 6,280,000 | 7,264,327 |
| 5.00%, 11/1/30 | Aa3 | 11,465,000 | 13,709,274 |
| 5.00%, 10/1/29 | Aa3 | 4,000,000 | 4,695,240 |
| 4.00%, 11/1/32 | Aa3 | 5,000,000 | 5,422,150 |
| 4.00%, 8/1/31 | Aa3 | 7,400,000 | 7,975,424 |
| (Veterans Bond), 2.00%, 12/1/20 | Aa2 | 6,000,000 | 5,996,820 |
| CA State VRDN, 1.50%, 5/1/33 | VMIG1 | 4,100,000 | 4,100,000 |
| CA State Charter School Fin. Auth. 144A Rev. Bonds, | | | |
| (Summit Pub. Schools) | | | |
| 5.00%, 6/1/53 | Baa3 | 2,350,000 | 2,523,054 |
| 5.00%, 6/1/47 | Baa3 | 1,000,000 | 1,081,600 |
| CA State Dept. of Wtr. Resources FRN Mandatory Put | | | |
| Bonds (12/1/20), (Central Valley Wtr. Syst.), Ser. AU, | | | |
| 1.80%, 12/1/35 | AAA | 8,000,000 | 8,001,680 |
| CA State Edl. Fac. Auth. Rev. Bonds | | | |
| (CA Lutheran U.), 5.75%, 10/1/38 | Baa1 | 5,000,000 | 5,101,550 |
| (Pacific U.), 5.50%, 11/1/39 (Prerefunded 11/1/19) | AAA/P | 100,000 | 105,986 |
| (U. of the Pacific), 5.50%, 11/1/39 | A2 | 1,085,000 | 1,145,066 |
| (U. of the Pacific), U.S. Govt. Coll., 5.50%, 11/1/39 | | | |
| (Prerefunded 11/1/19) | AAA/P | 65,000 | 68,891 |
| (CA College of Arts), 5.25%, 6/1/30 | Baa2 | 1,360,000 | 1,496,150 |
| (U. of the Pacific), 5.25%, 11/1/29 | A2 | 1,265,000 | 1,328,516 |
| (Loyola-Marymount U.), Ser. A, 5.125%, 10/1/40 | A2 | 2,955,000 | 3,095,215 |
| (Pepperdine U.), 5.00%, 10/1/49 | AA | 2,000,000 | 2,282,440 |
| (Occidental College), 5.00%, 10/1/45 | Aa3 | 425,000 | 474,117 |
| (Pepperdine U.), 5.00%, 9/1/45 | AA | 1,000,000 | 1,117,200 |
| (Santa Clara U.), 5.00%, 4/1/45 | Aa3 | 2,500,000 | 2,798,300 |
| (Pepperdine U.), 5.00%, 12/1/44 | AA | 2,000,000 | 2,259,140 |
| (Pepperdine U.), 5.00%, 10/1/41 | AA | 1,500,000 | 1,721,025 |
| (Occidental College), 5.00%, 10/1/38 | Aa3 | 595,000 | 669,238 |
| (U. of Redlands), Ser. A, 5.00%, 10/1/37 | A3 | 425,000 | 480,824 |
| (U. of the Pacific), 5.00%, 11/1/36 | A2 | 500,000 | 557,275 |
| (Occidental College), 5.00%, 10/1/35 | Aa3 | 500,000 | 567,390 |
| (U. of Redlands), Ser. A, 5.00%, 10/1/35 | A3 | 1,000,000 | 1,119,730 |
| (Occidental College), 5.00%, 10/1/34 | Aa3 | 960,000 | 1,090,771 |
| (Chapman U.), Ser. B, 4.00%, 4/1/47 | A2 | 4,940,000 | 5,075,356 |
| (Loyola-Marymount U.), Ser. A, NATL, | | | |
| zero %, 10/1/28 | A2 | 355,000 | 252,579 |
| 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 | 3,403,980 |
| (Children’s Hosp. Los Angeles), Ser. A, | | | |
| 5.00%, 8/15/42 | BBB+ | 4,000,000 | 4,475,480 |
| (Sutter Hlth.), Ser. A, 5.00%, 11/15/41 | Aa3 | 5,500,000 | 6,203,945 |
| (Cedars Sinai Med. Ctr.), Ser. B, 5.00%, 8/15/35 | Aa3 | 5,000,000 | 5,766,900 |
| (Providence St. Joseph Hlth.), Ser. A, | | | |
| 5.00%, 10/1/30 | Aa3 | 1,550,000 | 1,806,200 |
|
| 18 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| CA State Hlth. Fac. Fin. Auth. Rev. Bonds | | | |
| (Providence St. Joseph Hlth.), Ser. A, | | | |
| 5.00%, 10/1/29 | Aa3 | $800,000 | $930,264 |
| (Providence St. Joseph Hlth.), Ser. A, | | | |
| 4.00%, 10/1/35 | Aa3 | 1,000,000 | 1,049,220 |
| CA State Infrastructure & Econ. Dev. Bank | | | |
| Mandatory Put Bonds (6/1/22), (Pacific Gas & Elec. | | | |
| Co.), Ser. F, 1.75%, 11/1/26 | A3 | 2,000,000 | 1,923,380 |
| CA State Infrastructure & Econ. Dev. | | | |
| Bank Rev. Bonds | | | |
| (Academy Motion Picture Arts & Sciences Oblig. | | | |
| Group), 5.00%, 11/1/41 | Aa2 | 1,000,000 | 1,111,220 |
| (J. David Gladstone Inst.), Ser. A, 5.00%, 10/1/31 | A– | 4,000,000 | 4,341,000 |
| (CA Science Ctr. Phase II), 5.00%, 5/1/31 | A | 1,000,000 | 1,159,270 |
| (Segerstrom Ctr. for the Arts), 5.00%, 1/1/25 | A– | 3,000,000 | 3,480,900 |
| CA State Muni. Fin. Auth Mobile Home | | | |
| Park Rev. Bonds | | | |
| (Caritas Sr. Hsg. Network), Ser. A, 5.00%, 8/15/31 | BBB | 600,000 | 678,492 |
| (Caritas Affordable Hsg., Inc.), Ser. A, | | | |
| 5.00%, 8/15/30 | BBB+ | 1,000,000 | 1,097,050 |
| (Caritas Sr. Hsg. Network), Ser. A, 5.00%, 8/15/30 | BBB | 685,000 | 778,146 |
| CA State Poll. Control Fin. Auth. Rev. Bonds | | | |
| (San Jose Wtr. Co.), 5.10%, 6/1/40 | A | 4,500,000 | 4,777,740 |
| (Wtr. Furnishing), 5.00%, 11/21/45 | Baa3 | 7,000,000 | 7,461,650 |
| (San Jose Wtr. Co.), 4.75%, 11/1/46 | A | 2,250,000 | 2,434,253 |
| CA State Poll. Control Fin. Auth. Solid Waste Disp. | | | |
| 144A Mandatory Put Bonds (4/16/18), (Republic | | | |
| Svcs., Inc.), Ser. A-1, 1.55%, 11/1/42 | A–2 | 7,000,000 | 6,998,740 |
| CA State Poll. Control Fin. Auth. Wtr. Fac. Rev. Bonds, | | | |
| (American Wtr. Cap. Corp.), 5.25%, 8/1/40 | A | 4,000,000 | 4,282,760 |
| CA State Pub. Wks. Board Rev. Bonds | | | |
| (Dept. of Ed. — Riverside Campus), Ser. B, 6.00%, | | | |
| 4/1/26 (Prerefunded 4/1/19) | Aaa | 2,625,000 | 2,742,233 |
| Ser. G-1, 5.75%, 10/1/30 (Prerefunded 10/1/19) | Aaa | 9,000,000 | 9,558,990 |
| Ser. B, 5.00%, 10/1/39 | A1 | 1,500,000 | 1,675,830 |
| (Various Cap.), Ser. I, 5.00%, 11/1/38 | A1 | 1,880,000 | 2,099,377 |
| (Dept. of Corrections-State Prisons), Ser. A, | | | |
| AMBAC, 5.00%, 12/1/19 | A1 | 3,670,000 | 3,804,983 |
| CA State Tobacco Securitization Agcy. Rev. Bonds, | | | |
| (Kern Cnty. Tobacco Funding Corp.), 5.00%, 6/1/40 | BBB/P | 5,000,000 | 5,387,850 |
| CA State U. Rev. Bonds | | | |
| (Systemwide), Ser. A, 5.00%, 11/1/45 | Aa2 | 7,305,000 | 8,334,713 |
| (Systemwide), Ser. A, 5.00%, 11/1/41 | Aa2 | 13,340,000 | 15,261,627 |
| Ser. A, 5.00%, 11/1/38 | Aa2 | 2,250,000 | 2,587,478 |
| Ser. A, 5.00%, 11/1/37 | Aa2 | 10,290,000 | 11,856,138 |
| CA Statewide Cmnty. Dev. Auth. Rev. Bonds | | | |
| (Sr. Living — Presbyterian Homes), | | | |
| 7.25%, 11/15/41 | BBB+/F | 6,000,000 | 6,469,440 |
| (Sutter Hlth.), Ser. A, 6.00%, 8/15/42 | Aa3 | 5,000,000 | 5,458,700 |
| (American Baptist Homes West), 5.75%, 10/1/25 | BBB+/F | 950,000 | 1,007,551 |
| (899 Charleston, LLC), Ser. A, 5.375%, 11/1/49 | BB/P | 1,000,000 | 1,071,040 |
|
| California Tax Exempt Income Fund 19 |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| CA Statewide Cmnty. Dev. Auth. Rev. Bonds | | | |
| (899 Charleston, LLC), Ser. A, 5.25%, 11/1/44 | BB/P | $300,000 | $319,170 |
| (John Muir Hlth.), Ser. A, 5.00%, 8/15/51 | A1 | 1,000,000 | 1,114,080 |
| (Front Porch Cmnty. & Svcs.), Ser. A, 5.00%, 4/1/47 | A– | 2,000,000 | 2,226,520 |
| (John Muir Hlth.), Ser. A, 5.00%, 8/15/46 | A1 | 1,365,000 | 1,531,271 |
| (American Baptist Homes of the West), | | | |
| 5.00%, 10/1/45 | BBB+/F | 2,550,000 | 2,786,181 |
| AGM, 5.00%, 11/15/44 | AA | 5,195,000 | 5,761,515 |
| (American Baptist Homes of the West), | | | |
| 5.00%, 10/1/43 | BBB+/F | 1,190,000 | 1,270,777 |
| (Episcopal Cmntys. and Svcs.), 5.00%, 5/15/42 | A–/F | 3,250,000 | 3,482,928 |
| (Culinary Institute of America (The)), Ser. B, | | | |
| 5.00%, 7/1/41 | Baa2 | 380,000 | 420,782 |
| (Enloe Med. Ctr.), 5.00%, 8/15/38 | AA– | 2,750,000 | 3,116,273 |
| (Enloe Med. Ctr.), 5.00%, 8/15/35 | AA– | 1,580,000 | 1,799,920 |
| (Episcopal Cmntys. and Svcs.), 5.00%, 5/15/32 | A–/F | 600,000 | 648,546 |
| (Front Porch Cmnty. & Svcs.), Ser. A, 5.00%, 4/1/30 | A– | 310,000 | 357,238 |
| (Terraces at San Joaquin Gardens), Ser. A, | | | |
| 5.00%, 10/1/22 | BB/P | 2,685,000 | 2,906,862 |
| (Front Porch Cmnty. & Svcs.), Ser. A, 4.00%, 4/1/47 | A– | 1,625,000 | 1,649,554 |
| (Cmnty. Fac. Dist. No. 1-Zone 1B), zero %, 9/1/20 | BB/P | 375,000 | 334,845 |
| CA Statewide Cmnty. Dev. Auth. 144A Rev. Bonds | | | |
| (American Baptist Homes West), 6.25%, 10/1/39 | BBB+/F | 4,500,000 | 4,759,650 |
| (CA Baptist U.), Ser. A, 5.00%, 11/1/41 | BB/P | 1,535,000 | 1,664,999 |
| (CA Baptist U.), Ser. A, 5.00%, 11/1/32 | BB/P | 720,000 | 793,663 |
| CA Statewide Fin. Auth. Tobacco Settlement Rev. | | | |
| Bonds, Class B, 5.625%, 5/1/29 | Baa2 | 1,860,000 | 1,861,767 |
| Castaic Lake, Wtr. Agcy. COP, (Water Syst. Impt.), | | | |
| AMBAC, zero %, 8/1/27 | AA+ | 10,000,000 | 7,471,200 |
| Centinela Valley, Union High School Dist. G.O. | | | |
| Bonds, Ser. C, AGM, 4.00%, 8/1/34 | AA | 5,000,000 | 5,343,050 |
| Ceres, Unified School Dist. G.O. Bonds, BAM | | | |
| zero %, 8/1/40 | AA | 1,285,000 | 532,363 |
| zero %, 8/1/39 | AA | 1,075,000 | 464,819 |
| zero %, 8/1/38 | AA | 1,000,000 | 452,840 |
| zero %, 8/1/36 | AA | 545,000 | 269,731 |
| zero %, 8/1/34 | AA | 715,000 | 387,230 |
| zero %, 8/1/33 | AA | 250,000 | 141,595 |
| Cerritos, G.O. Bonds, (Cerritos Cmnty. College Dist.), | | | |
| Ser. A, 5.00%, 8/1/39 | Aa2 | 9,275,000 | 10,490,582 |
| Chula Vista, Indl. Dev. Rev. Bonds, (San Diego Gas) | | | |
| Ser. C, 5.875%, 2/15/34 | Aa2 | 2,600,000 | 2,719,288 |
| Ser. D, 5.875%, 1/1/34 | Aa2 | 5,000,000 | 5,229,400 |
| Chula Vista, Muni. Fin. Auth. Special Tax Bonds | | | |
| 5.50%, 9/1/30 | BBB+ | 740,000 | 839,656 |
| 5.50%, 9/1/29 | BBB+ | 2,165,000 | 2,462,384 |
| Clovis, Unified School Dist. G.O. Bonds, (Election | | | |
| 2012), Ser. D, 5.00%, 8/1/37 | Aa2 | 3,000,000 | 3,423,720 |
| 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 | 9,450,132 |
|
| 20 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Corona-Norco, School Dist. Pub. Fin. Auth. | | | |
| Special Tax Bonds | | | |
| Ser. A, 5.00%, 9/1/35 | A– | $585,000 | $646,407 |
| Ser. A, 5.00%, 9/1/32 | A– | 1,125,000 | 1,247,254 |
| (Sr. Lien), Ser. A, 5.00%, 9/1/28 | A– | 275,000 | 307,079 |
| Corona-Norco, Unified School Dist. Special Tax | | | |
| Bonds, (Cmnty. Fac. Dist. No. 98-1), 5.00%, 9/1/28 | A– | 1,590,000 | 1,775,474 |
| Desert Cmnty. College Dist. G.O. Bonds, | | | |
| 5.00%, 8/1/36 | Aa2 | 1,000,000 | 1,160,510 |
| Eastern CA Muni. Waste Wtr. Dist. Rev. Bonds, Ser. A, | | | |
| 5.00%, 7/1/45 | AA+ | 2,740,000 | 3,139,656 |
| El Dorado, Irrigation Dist. Rev. Bonds, Ser. C, | | | |
| 4.00%, 3/1/34 | Aa3 | 1,500,000 | 1,580,025 |
| Emeryville, Redev. Successor Agcy. Tax Alloc. | | | |
| Bonds, Ser. A, AGM | | | |
| 5.00%, 9/1/34 | AA | 500,000 | 565,385 |
| 5.00%, 9/1/33 | AA | 385,000 | 436,555 |
| 5.00%, 9/1/32 | AA | 450,000 | 511,682 |
| 5.00%, 9/1/31 | AA | 590,000 | 672,736 |
| 5.00%, 9/1/30 | AA | 815,000 | 931,871 |
| 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 | 1,219,185 |
| Fontana, Cmnty. Facs. Special Tax Bonds, (Sierra | | | |
| Hills School Dist. No. 22) | | | |
| 5.00%, 9/1/34 | BBB/P | 1,000,000 | 1,088,440 |
| 5.00%, 9/1/31 | BBB/P | 880,000 | 965,782 |
| Foothill-Eastern Trans. Corridor Agcy. Rev. Bonds, | | | |
| (Toll Road), Ser. B-1, 3.95%, 1/15/53 | Baa3 | 7,000,000 | 7,005,040 |
| Foothill/Eastern Corridor Agcy. Rev. Bonds, Ser. A, | | | |
| 6.00%, 1/15/53 | Baa3 | 8,000,000 | 9,357,760 |
| Fullerton, Cmnty. Fac. Dist. No. 1 Special Tax Bonds, | | | |
| (Amerige Heights), 5.00%, 9/1/32 | A– | 1,000,000 | 1,094,580 |
| Golden State Tobacco Securitization | | | |
| Corp. Rev. Bonds | | | |
| Ser. A, 5.00%, 6/1/45 | A1 | 14,000,000 | 15,734,180 |
| Ser. A, 5.00%, 6/1/40 | A1 | 16,940,000 | 19,107,981 |
| Ser. A, 5.00%, 6/1/33 | A1 | 4,355,000 | 4,969,621 |
| Ser. A-1, 5.00%, 6/1/33 | B+ | 7,845,000 | 7,852,845 |
| Ser. A-1, 5.00%, 6/1/27 | BBB | 2,000,000 | 2,304,400 |
| Ser. A-1, 5.00%, 6/1/26 | BBB+ | 1,100,000 | 1,265,033 |
| Ser. A, AMBAC, zero %, 6/1/24 | A1 | 12,000,000 | 10,259,280 |
| Hartnell Cmnty. College Dist. G.O. Bonds, Ser. A | | | |
| zero %, 8/1/37 | Aa2 | 3,500,000 | 1,584,555 |
| zero %, 8/1/36 | Aa2 | 4,750,000 | 2,270,595 |
| zero %, 8/1/35 | Aa2 | 1,000,000 | 502,960 |
| Hayward, Unified School Dist. G.O. Bonds, | | | |
| 5.00%, 8/1/38 | A+ | 1,995,000 | 2,194,340 |
| Imperial Irrigation Elec. Dist. Rev. Bonds | | | |
| Ser. A, 5.125%, 11/1/38 (Prerefunded 11/1/18) | AA– | 365,000 | 372,577 |
| Ser. C, 5.00%, 11/1/37 | AA– | 1,500,000 | 1,710,285 |
| Ser. C, 5.00%, 11/1/36 | AA– | 1,460,000 | 1,670,313 |
|
| California Tax Exempt Income Fund 21 |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Inglewood, Redev. Agcy. Successor Tax Allocation | | | |
| Bonds, (Merged Redev.), Ser. A, BAM | | | |
| 5.00%, 5/1/38 | AA | $250,000 | $284,570 |
| 5.00%, 5/1/34 | AA | 500,000 | 572,950 |
| Inland Valley, Dev. Agcy. Successor Tax Alloc. Bonds, | | | |
| Ser. A, 5.25%, 9/1/37 | A– | 4,925,000 | 5,498,418 |
| 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 | 1,082,460 |
| (Great Park Impt. Area No. 4), 4.00%, 9/1/41 | BB–/P | 2,500,000 | 2,537,450 |
| Irvine, Impt. Board Act of 1915 Special Assmt. Bonds | | | |
| (Ltd. Oblig. Assmt. Dist. No. 13-1), 5.00%, 9/2/29 | BBB+ | 705,000 | 770,170 |
| (Dist No. 12-1), 5.00%, 9/2/23 | BBB+ | 1,000,000 | 1,113,140 |
| Irvine, Unified School Dist. Special Tax Bonds | | | |
| (Cmnty. Fac. Dist. No. 09-1), Ser. A, 5.00%, 9/1/47 | BB+/P | 200,000 | 221,000 |
| (Cmnty. Fac. Dist. No. 09-1), Ser. C, 5.00%, 9/1/47 | BB+/P | 1,000,000 | 1,105,000 |
| (Cmnty. Fac. Dist. No. 09-1), Ser. A, 5.00%, 9/1/42 | BB+/P | 400,000 | 443,680 |
| (Cmnty. Fac. Dist. No. 09-1), Ser. B, 5.00%, 9/1/42 | BB+/P | 1,000,000 | 1,109,200 |
| BAM, 5.00%, 9/1/38 | AA | 2,500,000 | 2,760,650 |
| Jurupa, Pub. Fin. Auth. Special Tax Bonds, Ser. A | | | |
| 5.00%, 9/1/33 | A– | 600,000 | 672,102 |
| 5.00%, 9/1/32 | A– | 2,475,000 | 2,780,093 |
| Kaweah, Delta Hlth. Care Dist. Rev. Bonds, Ser. B, | | | |
| 5.00%, 6/1/40 | A3 | 1,500,000 | 1,633,425 |
| La Verne, COP, (Brethren Hillcrest Homes), | | | |
| 5.00%, 5/15/29 | BBB–/F | 635,000 | 677,208 |
| 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 | 1,209,378 |
| 5.00%, 9/1/31 | BB+/P | 1,045,000 | 1,152,583 |
| Long Beach Marina, Rev. Bonds, 5.00%, 5/15/40 | BBB/F | 1,000,000 | 1,103,670 |
| Long Beach, Bond Fin. Auth. Rev. Bonds | | | |
| (Natural Gas Purchase), Ser. A, 5.50%, 11/15/28 | A3 | 5,000,000 | 6,028,050 |
| (Aquarium of the Pacific), 5.00%, 11/1/30 | A1 | 1,000,000 | 1,101,250 |
| Long Beach, Cmnty. College Dist. G.O. Bonds, (2008 | | | |
| Election), Ser. B | | | |
| zero %, 8/1/34 | Aa2 | 1,500,000 | 844,440 |
| zero %, 8/1/33 | Aa2 | 625,000 | 368,869 |
| Long Beach, Harbor Rev. Bonds | | | |
| (Green Bond), Ser. B, 5.00%, 5/15/43 | AA | 2,000,000 | 2,275,860 |
| Ser. A, 5.00%, 5/15/40 | AA | 5,000,000 | 5,706,600 |
| Long Beach, Unified School Dist. G.O. Bonds, | | | |
| Ser. D-1, zero %, 8/1/37 | Aa2 | 1,000,000 | 453,310 |
| Los Angeles Cnty., Pub. Wks. Fin. Auth. Rev. Bonds, | | | |
| Ser. A, 5.00%, 12/1/44 | Aa2 | 1,000,000 | 1,124,400 |
| Los Angeles Ctny., Pub. Wks. Fin. Auth. Lease Rev. | | | |
| Bonds, Ser. D, 5.00%, 12/1/45 | Aa2 | 3,000,000 | 3,366,360 |
| 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 | 9,529,020 |
| Ser. G, 4.00%, 8/1/34 | Aa1 | 2,610,000 | 2,773,256 |
|
| 22 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Los Angeles, Cmnty. Fac. Dist. No. 4 Special Tax | | | |
| Bonds, (Playa Vista Phase 1) | | | |
| 5.00%, 9/1/31 | BBB+ | $1,500,000 | $1,683,975 |
| 5.00%, 9/1/30 | BBB+ | 1,500,000 | 1,690,530 |
| 5.00%, 9/1/29 | BBB+ | 1,500,000 | 1,700,865 |
| Los Angeles, Dept. of Arpt. Rev. Bonds | | | |
| Ser. A, 5.00%, 5/15/47 | AA– | 10,000,000 | 11,328,700 |
| (Los Angeles Intl. Arpt.), Ser. D, 5.00%, 5/15/40 | AA | 11,500,000 | 12,248,305 |
| Ser. D, 5.00%, 5/15/36 | AA | 1,375,000 | 1,537,855 |
| Ser. B, 5.00%, 5/15/34 ## | AA | 2,500,000 | 2,915,925 |
| Ser. A, 5.00%, 5/15/33 | AA– | 3,300,000 | 3,744,246 |
| (Los Angeles Intl. Arpt.), Ser. B, 5.00%, 5/15/32 | AA– | 1,000,000 | 1,123,440 |
| (Los Angeles Intl. Arpt.), 5.00%, 5/15/29 | AA | 4,225,000 | 4,688,483 |
| Ser. A, 4.00%, 5/15/34 | AA– | 1,155,000 | 1,192,988 |
| Los Angeles, Dept. of Wtr. & Pwr. Rev. Bonds | | | |
| Ser. D, 5.00%, 7/1/44 | Aa2 | 5,000,000 | 5,601,650 |
| (Pwr. Syst.), Ser. B, 5.00%, 7/1/43 | Aa2 | 1,500,000 | 1,671,390 |
| (Pwr. Syst.), Ser. A, 5.00%, 7/1/34 ## | Aa2 | 1,350,000 | 1,593,149 |
| (Pwr. Syst.), Ser. A, 5.00%, 7/1/33 ## | Aa2 | 1,000,000 | 1,184,770 |
| (Pwr. Syst.), Ser. A, 5.00%, 7/1/32 ## | Aa2 | 1,500,000 | 1,784,160 |
| Ser. B, 5.00%, 12/1/18 | Aa2 | 2,000,000 | 2,041,620 |
| Los Angeles, Harbor Dept. Rev. Bonds | | | |
| FNMA Coll., FHLMC Coll., 7.60%, 10/1/18 | | | |
| (Escrowed to maturity) | AA+ | 2,635,000 | 2,712,680 |
| (Green Bond), Ser. C, 4.00%, 8/1/39 | Aa2 | 2,200,000 | 2,306,348 |
| Los Angeles, Muni. Impt. Corp. Lease Rev. Bonds, | | | |
| (Real Property), Ser. B, 4.00%, 11/1/33 | AA– | 3,480,000 | 3,695,377 |
| Los Angeles, Unified School Dist. G.O. Bonds | | | |
| (Election 2008), Ser. A, 5.00%, 7/1/40 | Aa2 | 2,000,000 | 2,282,380 |
| Ser. D, 5.00%, 1/1/34 | Aa2 | 3,865,000 | 4,018,363 |
| (Election 2008), Ser. B-1, 5.00%, 7/1/33 | Aa2 | 20,000,000 | 23,841,800 |
| (Election 2008), Ser. B-1, 5.00%, 7/1/32 | Aa2 | 5,000,000 | 5,988,800 |
| M-S-R Energy Auth. Rev. Bonds, Ser. A, | | | |
| 6.50%, 11/1/39 | BBB+ | 6,000,000 | 8,448,300 |
| Merced, City School Dist. G.O. Bonds, (Election | | | |
| 2014), 5.00%, 8/1/45 | Aa3 | 3,500,000 | 3,959,725 |
| Merced, Union High School Dist. G.O. Bonds, AGM | | | |
| zero %, 8/1/44 | AA | 8,655,000 | 2,545,955 |
| zero %, 8/1/39 | AA | 5,005,000 | 1,935,734 |
| Metro. Wtr. Dist. Rev. Bonds, (Southern CA Wtr. | | | |
| Wks.), 5.75%, 8/10/18 | AAA | 5,100,000 | 5,177,214 |
| Modesto, Irrigation Dist. Elec. Rev. Bonds | | | |
| 5.00%, 10/1/34 | A+ | 500,000 | 580,185 |
| 5.00%, 10/1/32 | A+ | 1,340,000 | 1,571,445 |
| Ser. A, AGM, 5.00%, 7/1/32 | AA | 800,000 | 890,208 |
| 5.00%, 10/1/31 | A+ | 780,000 | 916,656 |
| Ser. A, AGM, 5.00%, 7/1/31 | AA | 1,600,000 | 1,785,392 |
| Modesto, Irrigation Dist. Fin. Auth. Elec. Syst. Rev. | | | |
| Bonds, Ser. A, 5.00%, 10/1/40 | A+ | 2,790,000 | 3,108,534 |
|
| California Tax Exempt Income Fund 23 |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Mt. San Antonio, Cmnty College Dist. G.O. Bonds, | | | |
| (Election 2008), Ser. A-13, 5.00%, 8/1/34 | Aa1 | $2,000,000 | $2,248,960 |
| Murrieta Valley, Unified School Dist. G.O. Bonds, | | | |
| AGM, zero %, 9/1/31 | AA | 2,000,000 | 1,265,820 |
| Murrieta, Pub. Fin. Auth. Special Tax Bonds, | | | |
| 5.00%, 9/1/26 | BBB– | 1,000,000 | 1,086,340 |
| Napa Valley, Cmnty. College Dist. G.O. Bonds, | | | |
| (Election of 2002), Ser. C, NATL | | | |
| zero %, 8/1/22 | Aa2 | 5,000 | 4,051 |
| zero %, 8/1/21 | Aa2 | 1,825,000 | 1,500,789 |
| Norco, Special Tax Bonds, (Norco Ridge Ranch), BAM | | | |
| 5.00%, 9/1/33 | AA | 660,000 | 763,996 |
| 5.00%, 9/1/30 | AA | 2,190,000 | 2,564,381 |
| North Natomas, Cmnty. Fac. Special Tax Bonds, | | | |
| (Dist. No. 4), Ser. E, 5.25%, 9/1/33 | BBB+ | 1,500,000 | 1,677,705 |
| Northern CA Gas Auth. No. 1 FRN Rev. Bonds, Ser. B, | | | |
| 1.765%, 7/1/19 | A3 | 6,310,000 | 6,315,616 |
| Oakland, G.O. Bonds, Ser. A, 5.00%, 1/15/35 | Aa2 | 2,000,000 | 2,292,260 |
| 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 | 4,238,920 |
| Ser. A, 5.00%, 8/1/40 | Aa3 | 4,000,000 | 4,491,800 |
| Ser. C, 5.00%, 8/1/38 | Aa3 | 3,235,000 | 3,732,284 |
| Ser. C, 5.00%, 8/1/37 | Aa3 | 8,520,000 | 9,859,600 |
| Ser. A, 5.00%, 8/1/35 | Aa3 | 1,000,000 | 1,139,110 |
| Orange Cnty., Cmnty. Fac. Dist. Special Tax Bonds, | | | |
| (Ladera Ranch — No. 04-1), Ser. A | | | |
| 5.00%, 8/15/33 | BBB | 1,750,000 | 1,899,958 |
| 5.00%, 8/15/32 | BBB | 1,000,000 | 1,087,380 |
| Orange Cnty., Wtr. Dist. Rev. Bonds, Ser. A, | | | |
| 4.00%, 8/15/41 | AAA | 2,240,000 | 2,363,155 |
| Palm Desert, Redev. Agcy. Successor Tax Allocation | | | |
| Bonds, Ser. A, BAM | | | |
| 5.00%, 10/1/30 | AA | 350,000 | 413,291 |
| 5.00%, 10/1/29 | AA | 825,000 | 979,250 |
| 5.00%, 10/1/27 | AA | 600,000 | 719,088 |
| Peralta Cmnty. College Dist. G.O. Bonds, Ser. A | | | |
| 5.00%, 8/1/34 | Aa3 | 1,000,000 | 1,133,460 |
| 5.00%, 8/1/32 | Aa3 | 2,000,000 | 2,289,600 |
| Pico Rivera, Pub. Fin. Auth. Lease Rev. Bonds | | | |
| 5.75%, 9/1/39 (Prerefunded 9/1/19) | AA– | 6,000,000 | 6,344,220 |
| 5.50%, 9/1/31 (Prerefunded 9/1/19) | AA– | 1,000,000 | 1,053,900 |
| NATL, 5.25%, 9/1/32 | AA– | 1,000,000 | 1,203,210 |
| NATL, 5.25%, 9/1/30 | AA– | 1,295,000 | 1,554,907 |
| Poway, Unified School Dist. G.O. Bonds, (Election | | | |
| of 2008), zero %, 8/1/29 | Aa3 | 11,350,000 | 7,807,665 |
| Poway, Unified School Dist. Pub. Fin. Auth. | | | |
| Special Tax Bonds | | | |
| 5.00%, 9/15/32 | BBB | 490,000 | 536,349 |
| 5.00%, 9/15/28 | BBB | 1,105,000 | 1,225,301 |
|
| 24 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Pub. Fin. Auth. Rev. Bonds, (Sharp Healthcare), | | | |
| Ser. A, 4.00%, 8/1/47 | AA | $10,000,000 | $10,236,600 |
| Rancho Cordova, Cmnty. Fac. Dist. | | | |
| Special Tax Bonds | | | |
| (Sunridge Anatolia), Ser. 03-1, 5.00%, 9/1/32 | BBB–/P | 1,250,000 | 1,359,550 |
| (Sunridge Anatolia No. 03-1), 4.00%, 9/1/27 | BBB–/P | 425,000 | 453,445 |
| Redding, Elec. Syst. Rev. Bonds, NATL, 6.368%, | | | |
| 7/1/22 (Escrowed to maturity) | A | 2,240,000 | 2,449,082 |
| Redwood City, Redev. Agcy., Tax Alloc. Bonds, | | | |
| (Redev. Area 2-A), AMBAC, zero %, 7/15/22 | A | 3,230,000 | 2,902,704 |
| Regents of the U. of CA Med. Ctr. (The) Rev. Bonds, | | | |
| Ser. L, 5.00%, 5/15/41 | Aa3 | 2,000,000 | 2,273,860 |
| Ripon, Redev. Agcy. Tax Alloc. Bonds, (Cmnty. | | | |
| Redev.), NATL, 4.75%, 11/1/36 | Baa2 | 1,380,000 | 1,380,607 |
| Riverside Cnty., Pub. Fin. Auth. Tax Allocation | | | |
| Bonds, Ser. A, BAM, 4.00%, 10/1/40 | AA | 1,250,000 | 1,288,888 |
| Riverside Cnty., Redev. Successor Agcy. Tax Alloc. | | | |
| Bonds, (Hsg.), Ser. B | | | |
| BAM, stepped-coupon zero % (5.000%, 10/1/21), | | | |
| 10/1/41 †† | A | 1,990,000 | 1,886,062 |
| stepped-coupon zero % (5.000%, 10/1/21), | | | |
| 10/1/37 †† | A | 1,010,000 | 963,288 |
| stepped-coupon zero % (5.000%, 10/1/21), | | | |
| 10/1/32 †† | AA | 290,000 | 280,978 |
| BAM, stepped-coupon zero % (5.000%, 10/1/21), | | | |
| 10/1/29 †† | AA | 775,000 | 758,624 |
| stepped-coupon zero % (5.000%, 10/1/21), | | | |
| 10/1/28 †† | AA | 235,000 | 230,942 |
| BAM, stepped-coupon zero % (5.000%, 10/1/21), | | | |
| 10/1/26 †† | AA | 500,000 | 495,650 |
| BAM, stepped-coupon zero % (5.000%, 10/1/21), | | | |
| 10/1/24 †† | AA | 445,000 | 430,796 |
| Riverside Cnty., Trans. Comm. Toll Rev. Bonds, | | | |
| Ser. A, 5.75%, 6/1/44 | BBB– | 750,000 | 836,505 |
| Rocklin, Special Tax Bonds, 5.00%, 9/1/35 | BB/P | 3,500,000 | 3,849,615 |
| Rohnert Pk., Cmnty. Dev. Agcy. Tax Alloc. Bonds, | | | |
| (Rohnert Redev.), NATL, zero %, 8/1/25 | A– | 1,340,000 | 1,073,434 |
| Romoland, School Dist. Special Tax Bonds, (Cmnty. | | | |
| Fac. Dist. No. 91-1), 5.00%, 9/1/41 | BB/P | 1,000,000 | 1,114,270 |
| Roseville, Special Tax Bonds, (Westpark Cmnty. | | | |
| Pub. Fac. Dist. No. 1) | | | |
| 5.00%, 9/1/37 | BBB–/P | 1,250,000 | 1,386,063 |
| 5.00%, 9/1/33 | BBB–/P | 1,000,000 | 1,117,900 |
| Roseville, Elec. Syst. Fin. Auth. Rev. Bonds, Ser. A | | | |
| 5.00%, 2/1/34 | AA– | 200,000 | 232,328 |
| 5.00%, 2/1/33 | AA– | 250,000 | 291,045 |
| 5.00%, 2/1/32 | AA– | 350,000 | 410,442 |
| 5.00%, 2/1/30 | AA– | 125,000 | 148,199 |
| 5.00%, 2/1/29 | AA– | 100,000 | 118,472 |
| 5.00%, 2/1/28 | AA– | 150,000 | 179,012 |
|
| California Tax Exempt Income Fund 25 |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Sacramento Cnty., Arpt. Syst. Rev. Bonds, | | | |
| Ser. A, AGM | | | |
| 5.00%, 7/1/28 | AA | $1,500,000 | $1,513,650 |
| 5.00%, 7/1/26 | AA | 5,000,000 | 5,046,750 |
| 5.00%, 7/1/25 | AA | 3,990,000 | 4,027,307 |
| Sacramento, City Fin. Auth. Tax Alloc. Bonds, | | | |
| Ser. A, FGIC, NATL | | | |
| zero %, 12/1/23 | A– | 10,000,000 | 8,524,500 |
| zero %, 12/1/22 | A– | 7,500,000 | 6,615,600 |
| Sacramento, Regl. Trans. Dist. Rev. Bonds, | | | |
| (Farebox), 5.00%, 3/1/42 | A3 | 1,805,000 | 1,912,091 |
| San Bernardino Cnty., Special Tax Bonds, | | | |
| 5.00%, 9/1/33 | BBB–/P | 2,500,000 | 2,755,850 |
| San Bernardino, Cmnty. College Dist. G.O. Bonds | | | |
| (Election of 2008), Ser. D, 5.00%, 8/1/45 | Aa2 | 1,500,000 | 1,689,660 |
| Ser. B, 4.00%, 8/1/34 | Aa2 | 10,000,000 | 10,673,700 |
| San Diego Cmnty. Fac. Dist. No. 3 Special Tax Bonds, | | | |
| 5.00%, 9/1/36 | BBB/P | 980,000 | 1,029,078 |
| San Diego Cnty., Regl. Arpt. Auth. Rev. Bonds, Ser. B, | | | |
| 5.00%, 7/1/38 | A1 | 2,000,000 | 2,181,520 |
| San Diego Cnty., Wtr. Auth. Rev. Bonds, Ser. B | | | |
| 5.00%, 5/1/38 | AAA | 10,000,000 | 11,627,500 |
| 5.00%, 5/1/35 | AAA | 4,000,000 | 4,679,440 |
| San Diego, Assn. of Govt. South Bay Expressway Toll | | | |
| Rev. Bonds, Ser. A | | | |
| 5.00%, 7/1/42 | A | 3,000,000 | 3,413,610 |
| 5.00%, 7/1/38 | A | 1,000,000 | 1,143,010 |
| San Diego, Cmnty College Dist. G.O. Bonds | | | |
| 5.00%, 8/1/41 | Aaa | 1,500,000 | 1,745,985 |
| 4.00%, 8/1/41 | Aaa | 2,345,000 | 2,467,081 |
| San Diego, Pub. Fac. Fin. Auth. Rev. Bonds | | | |
| Ser. A, 5.25%, 3/1/40 | Aa3 | 1,000,000 | 1,073,420 |
| Ser. A, 5.25%, 9/1/35 | Aa3 | 1,500,000 | 1,613,805 |
| (Cap. Impt.), Ser. A, 5.00%, 10/15/35 | AA– | 500,000 | 569,145 |
| (Ballpark), 5.00%, 10/15/27 | AA– | 2,000,000 | 2,338,380 |
| 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 | 4,005,772 |
| 5.00%, 8/1/37 | Aa3 | 3,000,000 | 3,491,970 |
| San Diego, Tobacco Settlement Funding Corp. Rev. | | | |
| Bonds, Ser. C, 4.00%, 6/1/32 | BBB | 1,000,000 | 1,012,500 |
| San Diego, Unified School Dist. G.O. Bonds, | | | |
| (Election 2012), Ser. I, 4.00%, 7/1/34 | Aa2 | 5,000,000 | 5,354,950 |
| San Francisco City & Cnty. Arpt. Comm. Intl. | | | |
| Arpt. Rev. Bonds | | | |
| Ser. A, 5.25%, 5/1/33 | A1 | 4,000,000 | 4,472,840 |
| (San Francisco Intl. Arpt.), Ser. 2, 5.00%, 5/1/41 | A1 | 5,000,000 | 5,605,800 |
| San Francisco City & Cnty., G.O. Bonds, Ser. A | | | |
| 4.00%, 6/15/36 | Aaa | 5,155,000 | 5,420,637 |
| 4.00%, 6/15/33 | Aaa | 3,550,000 | 3,755,545 |
|
| 26 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| San Francisco City & Cnty., Rev. Bonds, (Pub. Util. | | | |
| Comm.), 4.00%, 11/1/39 | Aa3 | $5,000,000 | $5,259,500 |
| San Francisco City & Cnty., Intl. Arpt. Comm. Rev. | | | |
| Bonds, Ser. B, 5.00%, 5/1/43 | A1 | 3,280,000 | 3,598,094 |
| San Francisco City & Cnty., Pub. Util. Comm. Waste | | | |
| Wtr. Rev. Bonds, Ser. B, 4.00%, 10/1/42 | AA | 5,000,000 | 5,098,950 |
| 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 | 1,256,668 |
| San Francisco, City & Cnty. Arpt. Comm. Rev. Bonds, | | | |
| (Intl. Arpt.) | | | |
| Ser. F, 5.00%, 5/1/40 | A1 | 4,750,000 | 5,022,555 |
| Ser. G, 5.00%, 5/1/40 | A1 | 4,400,000 | 4,652,472 |
| 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 | 1,331,138 |
| 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 | 1,957,778 |
| San Joaquin Hills, Trans. Corridor Agcy. Toll Road | | | |
| Rev. Bonds, Ser. A, 5.00%, 1/15/34 | BBB | 7,125,000 | 7,864,558 |
| San Marcos, Unified School Dist. G.O. Bonds, | | | |
| (Election 2010), Ser. B, zero %, 8/1/51 | Aa3 | 6,425,000 | 1,620,192 |
| 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 | 3,505,957 |
| Santa Clara Valley, Wtr. Dist. Rev. Bonds, Ser. A, | | | |
| 5.00%, 6/1/46 | Aa1 | 1,500,000 | 1,717,170 |
| 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 | 3,581,444 |
| 5.25%, 9/1/26 (Prerefunded 9/1/21) | A– | 1,485,000 | 1,627,902 |
| 5.10%, 9/1/30 (Prerefunded 9/1/21) | A– | 480,000 | 522,192 |
| Santee, CDC Successor Agcy. Tax Allocation Bonds, | | | |
| Ser. A, BAM | | | |
| 5.00%, 8/1/32 | AA | 2,000,000 | 2,302,300 |
| 5.00%, 8/1/31 | AA | 2,410,000 | 2,785,815 |
| 5.00%, 8/1/30 | AA | 2,440,000 | 2,832,254 |
| School Fin. Fac. Auth. 144A Rev. Bonds, (Kipp | | | |
| LA Projects), Ser. A, 5.00%, 7/1/45 | BBB | 1,500,000 | 1,625,820 |
| South Orange Cnty., Pub. Fin. Auth. Special Tax | | | |
| Bonds, Ser. A | | | |
| 5.00%, 8/15/32 | BBB+ | 1,000,000 | 1,087,380 |
| 5.00%, 8/15/30 | BBB+ | 1,130,000 | 1,234,875 |
| South Western Cmnty. College Dist. G.O. Bonds, | | | |
| (Election 2008), Ser. D | | | |
| 5.00%, 8/1/44 | Aa2 | 4,000,000 | 4,480,680 |
| zero %, 8/1/37 | Aa2 | 3,100,000 | 1,328,381 |
| Southern CA Pub. Pwr. Auth. Rev. Bonds | | | |
| (Natural Gas No. 1), Ser. A, 5.25%, 11/1/24 | A3 | 2,850,000 | 3,261,227 |
| (Natural Gas), Ser. A, 5.25%, 11/1/21 | A3 | 1,500,000 | 1,654,920 |
| Ser. A, 5.00%, 7/1/40 | AA– | 6,860,000 | 7,309,261 |
|
| California Tax Exempt Income Fund 27 |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| California cont. | | | |
| Southwestern Cmnty. College Dist. G.O. Bonds, | | | |
| (Election of 2008), Ser. C, zero %, 8/1/46 | Aa2 | $5,000,000 | $1,533,000 |
| Stockton, Pub. Fin. Auth. Special Tax Bonds, Ser. A, | | | |
| BAM, 4.00%, 9/2/27 | AA | 570,000 | 625,427 |
| Stockton, Pub. Wtr. Fin. Auth. Rev. Bonds, (Delta Wtr. | | | |
| Supply), Ser. A | | | |
| 6.25%, 10/1/40 | A | 1,250,000 | 1,470,300 |
| 6.25%, 10/1/38 | A | 2,235,000 | 2,643,893 |
| 6.125%, 10/1/35 | A | 750,000 | 887,918 |
| Stockton, Unified School Dist. COP | | | |
| 5.00%, 2/1/36 | A | 1,000,000 | 1,136,260 |
| 5.00%, 2/1/35 | A | 2,410,000 | 2,744,870 |
| 5.00%, 2/1/34 | A | 2,295,000 | 2,622,175 |
| 5.00%, 2/1/31 | A | 1,325,000 | 1,533,171 |
| Stockton, Unified School Dist. G.O. Bonds, (Election | | | |
| 2012), Ser. A | | | |
| 5.00%, 8/1/42 | AA | 2,000,000 | 2,208,280 |
| AGM, 5.00%, 8/1/38 | AA | 1,000,000 | 1,105,950 |
| Sunnyvale, Cmnty. Fac. Dist. Special Tax Bonds, | | | |
| 7.65%, 8/1/21 | B+/P | 2,215,000 | 2,220,670 |
| Sweetwater, G.O. Bonds, (Union High School Dist.), | | | |
| 5.00%, 8/1/35 | A1 | 2,330,000 | 2,652,868 |
| Tobacco Securitization Auth. of Southern | | | |
| CA Rev. Bonds | | | |
| Class A1-SNR, 5.125%, 6/1/46 | B+ | 5,000,000 | 5,006,900 |
| Ser. A1-SNR, 5.00%, 6/1/37 | BB+ | 2,000,000 | 2,004,580 |
| Tracy, Operational Partnership, Joint Powers Auth. | | | |
| Lease Rev. Bonds, AGC | | | |
| 6.375%, 10/1/38 | AA | 2,200,000 | 2,251,414 |
| 6.25%, 10/1/33 | AA | 3,000,000 | 3,068,280 |
| Tustin Cmnty., Fac. Dist. Special Tax Bonds, | | | |
| (No. 06-1 Legacy Columbus Villages), Ser. A, | | | |
| 5.00%, 9/1/37 | BBB+ | 2,100,000 | 2,377,179 |
| Twin Rivers, Unified School Dist. G.O. Bonds, Ser. A, | | | |
| BAM, 5.00%, 8/1/40 | AA | 2,000,000 | 2,206,700 |
| 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 | 1,685,529 |
| Ser. AR, 5.00%, 5/15/35 | Aa2 | 2,670,000 | 3,136,102 |
| Union, G.O. Bonds, Ser. A, 5.00%, 9/1/44 | Aa1 | 1,890,000 | 2,135,984 |
| Yucaipa Special Tax Bonds, (Cmnty. Fac. Dist. No. | | | |
| 98-1 Chapman Heights), 5.375%, 9/1/30 | BBB+ | 2,350,000 | 2,534,381 |
| | | | 1,165,923,710 |
| Delaware (0.6%) | | | |
| DE State Hlth. Fac. Auth. VRDN, (Christiana Care), | | | |
| Ser. A, 1.72%, 10/1/38 | VMIG1 | 7,495,000 | 7,495,000 |
| | | | 7,495,000 |
|
| 28 California Tax Exempt Income Fund |
| | | |
| MUNICIPAL BONDS AND NOTES (98.1%)* cont. | Rating** | Principal amount | Value |
| Guam (0.3%) | | | |
| Territory of GU, Govt. Wtr. Wks. Auth. Wtr. & | | | |
| Waste Wtr. Syst. Rev. Bonds, 5.625%, 7/1/40 | | | |
| (Prerefunded 7/1/20) | A– | $2,450,000 | $2,657,981 |
| Territory of GU, Pwr. Auth. Rev. Bonds, Ser. A, AGM, | | | |
| 5.00%, 10/1/30 | AA | 1,000,000 | 1,086,580 |
| | | | 3,744,561 |
| Massachusetts (0.2%) | | | |
| MA State VRDN, (Construction Loan), Ser. A, | | | |
| 1.61%, 3/1/26 | VMIG1 | 1,200,000 | 1,200,000 |
| MA State Hlth. & Edl. Fac. Auth. VRDN, (Baystate | | | |
| Med. Ctr.), Ser. J-2, 1.65%, 7/1/44 | VMIG1 | 800,000 | 800,000 |
| | | | 2,000,000 |
| Minnesota (0.3%) | | | |
| Minneapolis & St. Paul, Hsg. & Redev. Auth. | | | |
| Hlth. Care VRDN, (Allina Hlth. Syst.), Ser. B-1, | | | |
| 1.71%, 11/15/35 | VMIG1 | 1,000,000 | 1,000,000 |
| Rochester, Hlth. Care Fac. VRDN, (Mayo Clinic), | | | |
| Ser. B, 1.56%, 11/15/38 | VMIG1 | 2,000,000 | 2,000,000 |
| | | | 3,000,000 |
| Mississippi (0.4%) | | | |
| MS State Bus. Fin. Commission Gulf Opportunity | | | |
| Zone VRDN, (Chevron USA, Inc.), Ser. E, | | | |
| 1.70%, 12/1/30 | VMIG1 | 5,250,000 | 5,250,000 |
| | | | 5,250,000 |
| Nevada (0.7%) | | | |
| Reno, Sales Tax VRDN, (Reno Trans. Rail Access | | | |
| Corridor (ReTRAC)), 1.78%, 6/1/42 | VMIG1 | 8,980,000 | 8,980,000 |
| | | | 8,980,000 |
| Texas (0.3%) | | | |
| Harris Cnty., Cultural Ed. Fac. Fin. Corp. VRDN, (The | | | |
| Methodist Hosp.), Ser. C-1, 1.72%, 12/1/24 | A-1+ | 4,095,000 | 4,095,000 |
| | | | 4,095,000 |
| |
| TOTAL INVESTMENTS | | | |
| Total investments (cost $1,157,453,543) | | | $1,200,488,271 |
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, 2017 through March 31, 2018 (the reporting period). Within the following notes to the portfolio, 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 “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures.
* Percentages indicated are based on net assets of $1,223,850,921.
** 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. For further details regarding security ratings, please see the Statement of Additional Information.
|
| California Tax Exempt Income Fund 29 |
†† 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.
## Forward commitment, in part or in entirety (Note 1).
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 | 17.1% | |
| State debt | 14.2 | |
| Transportation | 12.8 | |
| Utilities | 11.2 | |
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 | $— | $1,200,488,271 | $— |
| Totals by level | $— | $1,200,488,271 | $— |
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.
|
| 30 California Tax Exempt Income Fund |
Statement of assets and liabilities 3/31/18 (Unaudited)
| |
| ASSETS | |
| Investment in securities, at value, including of securities on loan (Note 1): | |
| Unaffiliated issuers (identified cost $1,157,453,543) | $1,200,488,271 |
| Cash | 19,992,771 |
| Interest and other receivables | 14,583,950 |
| Receivable for shares of the fund sold | 182,686 |
| Receivable for custodian fees (Note 2) | 26,162 |
| Prepaid assets | 8,138 |
| Total assets | 1,235,281,978 |
| |
| LIABILITIES | |
| Payable for purchases of delayed delivery securities (Note 1) | 7,454,479 |
| Payable for shares of the fund repurchased | 1,591,478 |
| Payable for compensation of Manager (Note 2) | 450,941 |
| Payable for investor servicing fees (Note 2) | 161,341 |
| Payable for Trustee compensation and expenses (Note 2) | 465,315 |
| Payable for administrative services (Note 2) | 7,204 |
| Payable for distribution fees (Note 2) | 626,573 |
| Distributions payable to shareholders | 554,289 |
| Other accrued expenses | 119,437 |
| Total liabilities | 11,431,057 |
| | |
| Net assets | $1,223,850,921 |
| |
| REPRESENTED BY | |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $1,177,715,254 |
| Undistributed net investment income (Note 1) | 5,550,006 |
| Accumulated net realized loss on investments (Note 1) | (2,449,067) |
| Net unrealized appreciation of investments | 43,034,728 |
| Total — Representing net assets applicable to capital shares outstanding | $1,223,850,921 |
| |
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| Net asset value and redemption price per class A share | |
| ($1,079,650,197 divided by 134,636,414 shares) | $8.02 |
| Offering price per class A share (100/96.00 of $8.02)* | $8.35 |
| Net asset value and offering price per class B share ($2,861,570 divided by 357,219 shares)** | $8.01 |
| Net asset value and offering price per class C share ($44,413,759 divided by 5,504,860 shares)** | $8.07 |
| Net asset value and redemption price per class M share ($2,768,033 divided by 346,118 shares) | $8.00 |
| Offering price per class M share (100/96.75 of $8.00)† | $8.27 |
| Net asset value, offering price and redemption price per class Y share | |
| ($94,157,362 divided by 11,707,801 shares) | $8.04 |
* 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 31 |
Statement of operations Six months ended 3/31/18 (Unaudited)
| |
| INVESTMENT INCOME | |
| Interest income | $23,576,384 |
| Total investment income | 23,576,384 |
| |
| EXPENSES | |
| Compensation of Manager (Note 2) | 2,734,053 |
| Investor servicing fees (Note 2) | 326,469 |
| Custodian fees (Note 2) | 8,682 |
| Trustee compensation and expenses (Note 2) | 14,689 |
| Distribution fees (Note 2) | 1,462,125 |
| Administrative services (Note 2) | 22,142 |
| Other | 142,356 |
| Total expenses | 4,710,516 |
| Expense reduction (Note 2) | (65,138) |
| Net expenses | 4,645,378 |
| | |
| Net investment income | 18,931,006 |
| |
| REALIZED AND UNREALIZED GAIN (LOSS) | |
| Net realized gain (loss) on: | |
| Securities from unaffiliated issuers (Notes 1 and 3) | 15,483,279 |
| Total net realized gain | 15,483,279 |
| Change in net unrealized appreciation (depreciation) on: | |
| Securities in unaffiliated issuers and TBA sale commitments | (33,571,680) |
| Total change in net unrealized (depreciation) | (33,571,680) |
| | |
| Net loss on investments | (18,088,401) |
| | |
| Net increase in net assets resulting from operations | 842,605 |
The accompanying notes are an integral part of these financial statements.
|
| 32 California Tax Exempt Income Fund |
Statement of changes in net assets
| | |
| DECREASE IN NET ASSETS | Six months ended 3/31/18* | Year ended 9/30/17 |
| Operations | | |
| Net investment income | $18,931,006 | $41,776,474 |
| Net realized gain on investments | 15,483,279 | 24,323,973 |
| Net unrealized depreciation of investments | (33,571,680) | (66,146,554) |
| Net increase (decrease) in net assets resulting | | |
| from operations | 842,605 | (46,107) |
| Distributions to shareholders (Note 1): | | |
| From ordinary income | | |
| Taxable net investment income | | |
| Class A | (1,109,278) | (1,143,824) |
| Class B | (3,340) | (4,494) |
| Class C | (46,724) | (54,313) |
| Class M | (2,803) | (3,747) |
| Class Y | (89,948) | (72,603) |
| From tax-exempt net investment income | | |
| Class A | (16,734,691) | (37,115,354) |
| Class B | (39,111) | (110,291) |
| Class C | (513,154) | (1,289,173) |
| Class M | (39,533) | (108,292) |
| Class Y | (1,427,222) | (2,672,660) |
| Decrease from capital share transactions (Note 4) | (43,638,985) | (72,856,936) |
| Total decrease in net assets | (62,802,184) | (115,477,794) |
| |
| NET ASSETS | | |
| Beginning of period | 1,286,653,105 | 1,402,130,899 |
| End of period (including undistributed net investment | | |
| income of $5,550,006 and $6,624,804, respectively) | $1,223,850,921 | $1,286,653,105 |
* Unaudited.
The accompanying notes are an integral part of these financial statements.
|
| California Tax Exempt Income Fund 33 |
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 | | | | | | | | | | | | |
| March 31, 2018** | $8.14 | .13 | (.12) | .01 | (.13) | (.13) | $8.02 | .10* | $1,079,650 | .37* | 1.50* | 20* |
| 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 | | | | | | | | | | | | |
| March 31, 2018** | $8.13 | .10 | (.12) | (.02) | (.10) | (.10) | $8.01 | (.21)* | $2,862 | .68* | 1.18* | 20* |
| 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 | | | | | | | | | | | | |
| March 31, 2018** | $8.19 | .10 | (.12) | (.02) | (.10) | (.10) | $8.07 | (.29)* | $44,414 | .75* | 1.11* | 20* |
| 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 | | | | | | | | | | | | |
| March 31, 2018** | $8.12 | .12 | (.12) | — | (.12) | (.12) | $8.00 | (.04)* | $2,768 | .51* | 1.36* | 20* |
| 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 | | | | | | | | | | | | |
| March 31, 2018** | $8.16 | .14 | (.12) | .02 | (.14) | (.14) | $8.04 | .21* | $94,157 | .26* | 1.61* | 20* |
| 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 |
See notes to financial highlights at the end of this section.
The accompanying notes are an integral part of these financial statements.
| |
| 34 California Tax Exempt Income Fund | California Tax Exempt Income Fund 35 |
Financial highlights cont.
* Not annualized.
** Unaudited.
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.
|
| 36 California Tax Exempt Income Fund |
Notes to financial statements 3/31/18 (Unaudited)
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, 2017 through March 31, 2018.
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, the fund 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. Such tax-exempt investments in which the fund will invest are issued by or for states, territories or possessions of the United States or by their political subdivisions, agencies, authorities or other government entities, and the income from these investments is exempt from both federal and California personal income tax. 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. 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 generally convert to class A shares after approximately ten years. Prior to April 1, 2018, class C shares did 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 Agreement and 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
|
| California Tax Exempt Income Fund 37 |
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.
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.
Securities purchased or sold on forward commitment or delayed delivery basis may be settled at a future date beyond customary settlement time; interest income is accrued based on the terms of the securities. Losses may arise due to changes in the fair value of the underlying securities or if the counterparty does not perform under the contract.
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
|
| 38 California Tax Exempt Income Fund |
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.
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.
The aggregate identified cost on a tax basis is $399,686,990, resulting in gross unrealized appreciation and depreciation of $806,216,529 and $5,415,248, respectively, or net unrealized appreciation of $800,801,281.
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. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. 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.
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 0.216% of the fund’s average net assets.
|
| California Tax Exempt Income Fund 39 |
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 | $289,592 | | Class M | 757 |
| Class B | 856 | | Class Y | 23,109 |
| Class C | 12,155 | | Total | $326,469 |
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 $65,138 under the expense offset arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $962, 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.
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
|
| 40 California Tax Exempt Income Fund |
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% | * | $1,205,245 |
| Class B | 1.00% | 0.85% | 14,098 |
| Class C | 1.00% | 1.00% | 235,449 |
| Class M | 1.00% | 0.50% | 7,333 |
| Total | | | $1,462,125 |
* 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 $14,098 and $4 from the sale of class A and class M shares, respectively, and received $706 and no monies 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 $0 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) | $242,100,142 | $296,651,124 |
| U.S. government securities (Long-term) | — | — |
| Total | $242,100,142 | $296,651,124 |
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.
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:
| | | | |
| | SIX MONTHS ENDED 3/31/18 | YEAR ENDED 9/30/17 |
| Class A | Shares | Amount | Shares | Amount |
| Shares sold | 4,504,757 | $36,692,309 | 9,907,234 | $80,309,915 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 1,745,479 | 14,131,909 | 3,727,164 | 30,101,227 |
| | 6,250,236 | 50,824,218 | 13,634,398 | 110,411,142 |
| Shares repurchased | (12,454,464) | (100,909,922) | (22,214,249) | (179,282,295) |
| Net decrease | (6,204,228) | $(50,085,704) | (8,579,851) | $(68,871,153) |
|
| California Tax Exempt Income Fund 41 |
| | | | |
| | SIX MONTHS ENDED 3/31/18 | YEAR ENDED 9/30/17 |
| Class B | Shares | Amount | Shares | Amount |
| Shares sold | 140 | $1,133 | 1,737 | $14,001 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 5,096 | 41,262 | 13,676 | 110,252 |
| | 5,236 | 42,395 | 15,413 | 124,253 |
| Shares repurchased | (106,952) | (867,193) | (160,041) | (1,291,954) |
| Net decrease | (101,716) | $(824,798) | (144,628) | $(1,167,701) |
| |
| | SIX MONTHS ENDED 3/31/18 | YEAR ENDED 9/30/17 |
| Class C | Shares | Amount | Shares | Amount |
| Shares sold | 294,141 | $2,402,149 | 420,191 | $3,418,150 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 58,767 | 478,822 | 139,320 | 1,131,266 |
| | 352,908 | 2,880,971 | 559,511 | 4,549,416 |
| Shares repurchased | (841,775) | (6,864,946) | (1,788,220) | (14,515,232) |
| Net decrease | (488,867) | $(3,983,975) | (1,228,709) | $(9,965,816) |
| |
| | SIX MONTHS ENDED 3/31/18 | YEAR ENDED 9/30/17 |
| Class M | Shares | Amount | Shares | Amount |
| Shares sold | 296 | $2,425 | 19,265 | $158,348 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 4,547 | 36,718 | 12,626 | 101,628 |
| | 4,843 | 39,143 | 31,891 | 259,976 |
| Shares repurchased | (61,695) | (501,610) | (87,220) | (706,409) |
| Net decrease | (56,852) | $(462,467) | (55,329) | $(446,433) |
| |
| | SIX MONTHS ENDED 3/31/18 | YEAR ENDED 9/30/17 |
| Class Y | Shares | Amount | Shares | Amount |
| Shares sold | 2,547,207 | $20,722,803 | 3,483,546 | $28,241,210 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 134,523 | 1,092,298 | 244,988 | 1,984,065 |
| | 2,681,730 | 21,815,101 | 3,728,534 | 30,225,275 |
| Shares repurchased | (1,243,056) | (10,097,142) | (2,802,076) | (22,631,108) |
| Net increase | 1,438,674 | $11,717,959 | 926,458 | $7,594,167 |
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.
|
| 42 California Tax Exempt Income Fund |
Putnam family of funds
The following is a list of Putnam’s open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, contact your financial advisor or call Putnam Investor Services at 1-800-225-1581. Please read the prospectus carefully before investing.
| |
| Blend | Value |
| Capital Opportunities Fund | Convertible Securities Fund |
| Capital Spectrum Fund | Equity Income Fund |
| Emerging Markets Equity Fund | International Value Fund |
| Equity Spectrum Fund | Small Cap Value Fund |
| Europe Equity Fund | |
| Global Equity Fund | Income |
| International Capital Opportunities Fund | Diversified Income Trust |
| International Equity Fund | Emerging Markets Income Fund |
| Investors Fund | Floating Rate Income Fund |
| Low Volatility Equity Fund | Global Income Trust |
| Multi-Cap Core Fund | Government Money Market Fund* |
| Research Fund | High Yield Fund |
| Income Fund |
| Global Sector | Money Market Fund† |
| Global Consumer Fund | Mortgage Securities Fund |
| Global Financials Fund | Short Duration Income Fund |
| Global Health Care Fund | |
| Global Industrials Fund | Tax-free Income |
| Global Natural Resources Fund | AMT-Free Municipal Fund |
| Global Sector Fund | Intermediate-Term Municipal Income Fund |
| Global Technology Fund | Short-Term Municipal Income Fund |
| Global Telecommunications Fund | Tax Exempt Income Fund |
| Global Utilities Fund | Tax-Free High Yield Fund |
| |
| Growth | State tax-free income funds‡: |
| Growth Opportunities Fund | California, Massachusetts, Minnesota, |
| International Growth Fund | New Jersey, New York, Ohio, and Pennsylvania. |
| Small Cap Growth Fund | |
| Sustainable Future Fund | |
| Sustainable Leaders Fund | |
|
| California Tax Exempt Income Fund 43 |
| |
| Absolute Return | Asset Allocation |
| Absolute Return 100 Fund® | Dynamic Risk Allocation Fund |
| Fixed Income Absolute Return Fund | George Putnam Balanced Fund |
| Multi-Asset Absolute Return Fund | |
| Dynamic Asset Allocation Balanced Fund |
| Putnam PanAgora** | Dynamic Asset Allocation Conservative Fund |
| Putnam PanAgora Managed Futures Strategy | Dynamic Asset Allocation Growth Fund |
| Putnam PanAgora Market Neutral Fund | |
| Putnam PanAgora Risk Parity Fund | Retirement Income Fund Lifestyle 1 |
| |
| | RetirementReady® 2060 Fund |
| | RetirementReady® 2055 Fund |
| | RetirementReady® 2050 Fund |
| | RetirementReady® 2045 Fund |
| | RetirementReady® 2040 Fund |
| | RetirementReady® 2035 Fund |
| | RetirementReady® 2030 Fund |
| | RetirementReady® 2025 Fund |
| | RetirementReady® 2020 Fund |
* You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
† You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
‡ Not available in all states.
** Sub-advised by PanAgora Asset Management.
Check your account balances and the most recent month-end performance in the Individual Investors section at putnam.com.
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| 44 California Tax Exempt Income Fund |
Fund information
Founded over 80 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.
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| 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, |
| 16 St James’s Street | Paul L. Joskow | and Assistant Treasurer |
| London, England SW1A 1ER | 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 |
| | Robert T. Burns | |
| | Vice President and | Denere P. Poulack |
| | 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.
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Item 3. Audit Committee Financial Expert: |
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Item 4. Principal Accountant Fees and Services: |
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Item 5. Audit Committee of Listed Registrants |
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Item 6. Schedule of Investments: |
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| The registrant's schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. |
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| Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
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Item 8. Portfolio Managers of Closed-End Investment Companies |
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Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
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Item 10. Submission of Matters to a Vote of Security Holders: |
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Item 11. Controls and Procedures: |
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| (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. |
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| (b) Changes in internal control over financial reporting: Not applicable |
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| (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. |
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| (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. |
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| 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. |
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| Putnam California Tax Exempt Fund |
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| By (Signature and Title): |
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| /s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer
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| 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. |
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| By (Signature and Title): |
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| /s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer
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| By (Signature and Title): |
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| /s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer
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