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.
| | | |
| | Valuation inputs |
| Investments in securities: | Level 1 | Level 2 | Level 3 |
| Municipal bonds and notes | $— | $842,262,422 | $— |
| Short-term investments | — | 8,453,380 | — |
| Totals by level | $— | $850,715,802 | $— |
|
| | | |
| | Valuation inputs |
| Other financial instruments: | Level 1 | Level 2 | Level 3 |
| Futures contracts | $(545,144) | $— | $— |
| Totals by level | $(545,144) | $— | $— |
The accompanying notes are an integral part of these financial statements.
| |
22 California Tax Exempt Income Fund |
Statement of assets and liabilities 3/31/23 (Unaudited)
| |
| ASSETS | |
| Investment in securities, at value (Notes 1 and 8): | |
| Unaffiliated issuers (identified cost $881,012,580) | $842,860,493 |
| Affiliated issuers (identified cost $7,855,309) (Note 5) | 7,855,309 |
| Interest and other receivables | 9,904,714 |
| Receivable for shares of the fund sold | 508,118 |
| Prepaid assets | 65,612 |
| Total assets | 861,194,246 |
| |
| LIABILITIES | |
| Payable for investments purchased | 8,951,914 |
| Payable for shares of the fund repurchased | 2,103,983 |
| Payable for compensation of Manager (Note 2) | 299,101 |
| Payable for custodian fees (Note 2) | 9,911 |
| Payable for investor servicing fees (Note 2) | 73,114 |
| Payable for Trustee compensation and expenses (Note 2) | 311,772 |
| Payable for administrative services (Note 2) | 4,831 |
| Payable for distribution fees (Note 2) | 456,440 |
| Payable for floating rate notes issued (Note 1) | 28,249,624 |
| Payable for variation margin on futures contracts (Note 1) | 82,586 |
| Distributions payable to shareholders | 209,049 |
| Other accrued expenses | 99,314 |
| Total liabilities | 40,851,639 |
| | |
| Net assets | $820,342,607 |
| |
| REPRESENTED BY | |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $870,889,719 |
| Total distributable earnings (Note 1) | (50,547,112) |
| Total — Representing net assets applicable to capital shares outstanding | $820,342,607 |
| |
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| Net asset value and redemption price per class A share | |
| ($722,579,318 divided by 99,616,500 shares) | $7.25 |
| Offering price per class A share (100/96.00 of $7.25)* | $7.55 |
| Net asset value and offering price per class B share ($199,571 divided by 27,536 shares)** | $7.25 |
| Net asset value and offering price per class C share ($10,310,938 divided by 1,411,770 shares)** | $7.30 |
| Net asset value, offering price and redemption price per class R6 share | |
| ($2,608,167 divided by 358,217 shares) | $7.28 |
| Net asset value, offering price and redemption price per class Y share | |
| ($84,644,613 divided by 11,632,169 shares) | $7.28 |
*On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.
**Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
|
| California Tax Exempt Income Fund 23 |
Statement of operations Six months ended 3/31/23 (Unaudited)
| |
| INVESTMENT INCOME | |
| Interest (including interest income of $115,101 from investments in affiliated issuers) (Note 5) | $15,760,288 |
| Total investment income | 15,760,288 |
| |
| EXPENSES | |
| Compensation of Manager (Note 2) | 1,777,087 |
| Investor servicing fees (Note 2) | 223,351 |
| Custodian fees (Note 2) | 10,285 |
| Trustee compensation and expenses (Note 2) | 22,757 |
| Distribution fees (Note 2) | 957,443 |
| Administrative services (Note 2) | 18,257 |
| Interest and fee expense (Note 2) | 459,183 |
| Other | 169,698 |
| Total expenses | 3,638,061 |
| Expense reduction (Note 2) | (5,868) |
| Net expenses | 3,632,193 |
| | |
| Net investment income | 12,128,095 |
| |
| REALIZED AND UNREALIZED GAIN (LOSS) | |
| Net realized gain (loss) on: | |
| Securities from unaffiliated issuers (Notes 1 and 3) | (7,376,484) |
| Futures contracts (Note 1) | 775,547 |
| Swap contracts (Note 1) | 76,500 |
| Total net realized loss | (6,524,437) |
| Change in net unrealized appreciation (depreciation) on: | |
| Securities from unaffiliated issuers | 54,216,975 |
| Futures contracts | (545,144) |
| Swap contracts | 359,295 |
| Total change in net unrealized appreciation | 54,031,126 |
| | |
| Net gain on investments | 47,506,689 |
| |
| Net increase in net assets resulting from operations | $59,634,784 |
The accompanying notes are an integral part of these financial statements.
|
| 24 California Tax Exempt Income Fund |
Statement of changes in net assets
| | |
| INCREASE (DECREASE) IN NET ASSETS | Six months ended 3/31/23* | Year ended 9/30/22 |
| Operations | | |
| Net investment income | $12,128,095 | $23,422,975 |
| Net realized loss on investments | (6,524,437) | (8,998,767) |
| Change in net unrealized appreciation (depreciation) | | |
| of investments | 54,031,126 | (156,862,027) |
| Net increase (decrease) in net assets resulting | | |
| from operations | 59,634,784 | (142,437,819) |
| Distributions to shareholders (Note 1): | | |
| From ordinary income | | |
| Taxable net investment income | | |
| Class A | (80,627) | (122,570) |
| Class B | (23) | (48) |
| Class C | (1,181) | (2,201) |
| Class R6 | (325) | (190) |
| Class Y | (10,390) | (23,664) |
| Net realized short-term gain on investments | | |
| Class A | — | (3,733,143) |
| Class B | — | (1,448) |
| Class C | — | (66,663) |
| Class R6 | — | (5,793) |
| Class Y | — | (719,960) |
| From tax-exempt net investment income | | |
| Class A | (10,368,246) | (19,809,029) |
| Class B | (2,338) | (5,377) |
| Class C | (110,735) | (222,233) |
| Class R6 | (41,864) | (39,436) |
| Class Y | (1,347,067) | (3,343,678) |
| From net realized long-term gain on investments | | |
| Class A | — | (13,323,465) |
| Class B | — | (5,168) |
| Class C | — | (237,941) |
| Class R6 | — | (20,675) |
| Class Y | — | (2,569,565) |
| Decrease from capital share transactions (Note 4) | (42,343,691) | (153,180,842) |
| Total increase (decrease) in net assets | 5,328,297 | (339,870,908) |
| |
| NET ASSETS | | |
| Beginning of period | 815,014,310 | 1,154,885,218 |
| End of period | $820,342,607 | $815,014,310 |
*Unaudited.
The accompanying notes are an integral part of these financial statements.
|
| California Tax Exempt Income Fund 25 |
Financial highlights
(For a common share outstanding throughout the period)
| | | | | | | | | | | | | |
| | INVESTMENT OPERATIONS | LESS DISTRIBUTIONS | RATIOS AND SUPPLEMENTAL DATA |
| | | | | | | | | | | | | Ratio of net | |
| | Net asset | | Net realized | | | | | | | | Ratio | investment | |
| | value, | | and unrealized | Total from | From net | From | | Net asset | Total return | Net assets, | of expenses | income (loss) | Portfolio |
| | beginning | Net investment | gain (loss) | investment | investment | net realized gain | Total | value, end | at net asset | end of period | to average | to average | turnover |
| Period ended | of period | income (loss) | on investments | operations | income | on investments | distributions | of period | value (%)a | (in thousands) | net assets (%)b | net assets (%) | (%) |
| Class A | | | | | | | | | | | | | |
| March 31, 2023** | $6.84 | .11 | .40 | .51 | (.10) | — | (.10) | $7.25 | 7.53* | $722,579 | .45*c | 1.46* | 12* |
| September 30, 2022 | 8.29 | .19 | (1.31) | (1.12) | (.18) | (.15) | (.33) | 6.84 | (13.92) | 722,335 | .80c | 2.33 | 27 |
| September 30, 2021 | 8.28 | .18 | .12 | .30 | (.18) | (.11) | (.29) | 8.29 | 3.63 | 956,034 | .76c | 2.11 | 29 |
| September 30, 2020 | 8.33 | .19 | .09 | .28 | (.20) | (.13) | (.33) | 8.28 | 3.45 | 980,931 | .75c | 2.39 | 41 |
| September 30, 2019 | 7.95 | .23 | .46 | .69 | (.23) | (.08) | (.31) | 8.33 | 8.85 | 1,016,247 | .72 | 2.78 | 41 |
| September 30, 2018 | 8.14 | .24 | (.19) | .05 | (.24) | — | (.24) | 7.95 | .66 | 1,023,401 | .73 | 2.95 | 40 |
| Class B | | | | | | | | | | | | | |
| March 31, 2023** | $6.84 | .09 | .40 | .49 | (.08) | — | (.08) | $7.25 | 7.21* | $200 | .75*c | 1.16* | 12* |
| September 30, 2022 | 8.28 | .14 | (1.30) | (1.16) | (.13) | (.15) | (.28) | 6.84 | (14.35) | 207 | 1.40c | 1.72 | 27 |
| September 30, 2021 | 8.27 | .13 | .12 | .25 | (.13) | (.11) | (.24) | 8.28 | 3.01 | 426 | 1.36c | 1.53 | 29 |
| September 30, 2020 | 8.32 | .14 | .08 | .22 | (.14) | (.13) | (.27) | 8.27 | 2.80 | 888 | 1.38c | 1.78 | 41 |
| September 30, 2019 | 7.94 | .17 | .47 | .64 | (.18) | (.08) | (.26) | 8.32 | 8.17 | 1,888 | 1.36 | 2.15 | 41 |
| September 30, 2018 | 8.13 | .19 | (.19) | — | (.19) | — | (.19) | 7.94 | .02 | 2,526 | 1.37 | 2.32 | 40 |
| Class C | | | | | | | | | | | | | |
| March 31, 2023** | $6.89 | .08 | .41 | .49 | (.08) | — | (.08) | $7.30 | 7.09* | $10,311 | . 82*c | 1.09* | 12* |
| September 30, 2022 | 8.35 | .13 | (1.32) | (1.19) | (.12) | (.15) | (.27) | 6.89 | (14.58) | 10,534 | 1.55c | 1.57 | 27 |
| September 30, 2021 | 8.33 | .12 | .13 | .25 | (.12) | (.11) | (.23) | 8.35 | 2.97 | 17,822 | 1.51c | 1.38 | 29 |
| September 30, 2020 | 8.38 | .13 | .08 | .21 | (.13) | (.13) | (.26) | 8.33 | 2.62 | 26,718 | 1.53c | 1.62 | 41 |
| September 30, 2019 | 8.00 | .16 | .47 | .63 | (.17) | (.08) | (.25) | 8.38 | 7.95 | 30,969 | 1.51 | 1.99 | 41 |
| September 30, 2018 | 8.19 | .18 | (.19) | (.01) | (.18) | — | (.18) | 8.00 | (.13) | 35,019 | 1.52 | 2.17 | 40 |
| Class R6 | | | | | | | | | | | | | |
| March 31, 2023** | $6.87 | .12 | .40 | .52 | (.11) | — | (.11) | $7.28 | 7.64* | $2,608 | .32*c | 1.59* | 12* |
| September 30, 2022 | 8.32 | .21 | (1.31) | (1.10) | (.20) | (.15) | (.35) | 6.87 | (13.65) | 2,364 | .55c | 2.62 | 27 |
| September 30, 2021 | 8.31 | .20 | .12 | .32 | (.20) | (.11) | (.31) | 8.32 | 3.89 | 1,484 | .52c | 2.34 | 29 |
| September 30, 2020 | 8.36 | .21 | .08 | .29 | (.21) | (.13) | (.34) | 8.31 | 3.68 | 661 | .53c | 2.63 | 41 |
| September 30, 2019 | 7.97 | .24 | .48 | .72 | (.25) | (.08) | (.33) | 8.36 | 9.15 | 2,142 | .51 | 2.99 | 41 |
| September 30, 2018 † | 8.01 | .09 | (.04) | .05 | (.09) | — | (.09) | 7.97 | .61* | 10 | .19* | 1.15* | 40 |
| Class Y | | | | | | | | | | | | | |
| March 31, 2023** | $6.87 | .12 | .40 | .52 | (.11) | — | (.11) | $7.28 | 7.64* | $84,645 | .32*c | 1.59* | 12* |
| September 30, 2022 | 8.32 | .21 | (1.31) | (1.10) | (.20) | (.15) | (.35) | 6.87 | (13.64) | 79,574 | .55c | 2.53 | 27 |
| September 30, 2021 | 8.30 | .20 | .13 | .33 | (.20) | (.11) | (.31) | 8.32 | 4.01 | 179,118 | .51c | 2.37 | 29 |
| September 30, 2020 | 8.35 | .21 | .08 | .29 | (.21) | (.13) | (.34) | 8.30 | 3.67 | 168,885 | .53c | 2.60 | 41 |
| September 30, 2019 | 7.97 | .24 | .47 | .71 | (.25) | (.08) | (.33) | 8.35 | 9.06 | 109,280 | .51 | 2.98 | 41 |
| September 30, 2018 | 8.16 | .26 | (.19) | .07 | (.26) | — | (.26) | 7.97 | .87 | 90,267 | .52 | 3.16 | 40 |
See notes to financial highlights at the end of this section.
The accompanying notes are an integral part of these financial statements.
| |
| 26 California Tax Exempt Income Fund | California Tax Exempt Income Fund 27 |
Financial highlights cont.
* Not annualized.
** Unaudited.
† For the period May 22, 2018 (commencement of operations) to September 30, 2018.
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:
| |
| | Percentage of average net assets |
| March 31, 2023 | 0.06% |
| September 30, 2022 | 0.03 |
| September 30, 2021 | 0.01 |
| September 30, 2020 | 0.01 |
The accompanying notes are an integral part of these financial statements.
|
| 28 California Tax Exempt Income Fund |
Notes to financial statements 3/31/23 (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. Additionally, references to “OTC”, if any, represent over-the-counter and references to “ESG”, if any, represent environmental, social and governance. Unless otherwise noted, the “reporting period” represents the period from October 1, 2022 through March 31, 2023.
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 and/or California 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 invests 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 the following share classes. The expenses for each class of shares may differ based on the distribution and investor servicing fees of each class, which are identified in Note 2.
| | | |
| Share class | Sales charge | Contingent deferred sales charge | Conversion feature |
| | | 1.00% on certain redemptions of shares | |
| Class A | Up to 4.00% | bought with no initial sales charge | None |
| | | | Converts to class A shares |
| Class B* | None | 5.00% phased out over six years | after 8 years |
| | | | Converts to class A shares |
| Class C | None | 1.00% eliminated after one year | after 8 years |
| Class R6† | None | None | None |
| Class Y† | None | None | None |
* 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.
† 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 Amended and Restated 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.
|
| California Tax Exempt Income Fund 29 |
Note 1: Significant accounting policies
The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
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.
Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.
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, net of any applicable withholding taxes, if any, is recorded on the accrual basis. Amortization and accretion of premiums and discounts on debt securities, if any, is recorded on the accrual basis.
Futures contracts The fund uses futures contracts for hedging treasury term structure risk and for yield curve positioning.
The potential risk to the fund is that the change in value of futures contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the
|
| 30 California Tax Exempt Income Fund |
Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”
Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.
Total return swap contracts The fund entered into OTC and/or centrally cleared total return swap contracts, which are arrangements to exchange a market-linked return for a periodic payment, both based on a notional principal amount, for hedging and gaining exposure to interest rate and term structure risk.
To the extent that the total return of the security, index or other financial measure underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the fund will receive a payment from or make a payment to the counterparty. OTC and/or centrally cleared total return swap contracts are marked to market daily based upon quotations from an independent pricing service or market maker. Any change is recorded as an unrealized gain or loss on OTC total return swaps. Daily fluctuations in the value of centrally cleared total return swaps are settled through a central clearing agent and are recorded in variation margin on the Statement of assets and liabilities and recorded as unrealized gain or loss. Payments received or made are recorded as realized gains or losses. Certain OTC and/or centrally cleared total return swap contracts may include extended effective dates. Payments related to these swap contracts are accrued based on the terms of the contract. The fund could be exposed to credit or market risk due to unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index, the possibility that there is no liquid market for these agreements or that the counterparty may default on its obligation to perform. The fund’s maximum risk of loss from counterparty risk or central clearing risk is the fair value of the contract. This risk may be mitigated for OTC total return swap contracts by having a master netting arrangement between the fund and the counterparty and for centrally cleared total return swap contracts through the daily exchange of variation margin. There is minimal counterparty risk with respect to centrally cleared total return swap contracts due to the clearinghouse guarantee fund and other resources that are available in the event of a clearing member default. Risk of loss may exceed amounts recognized on the Statement of assets and liabilities.
OTC and/or centrally cleared total return swap contracts outstanding, including their respective notional amounts at period end, if any, are listed after the fund’s portfolio.
Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral pledged to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio.
Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.
Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.
At the close of the reporting period, the fund did not have a net liability position on open derivative contracts subject to the Master Agreements.
Tender option bond transactions The fund may participate in transactions whereby a fixed-rate bond is transferred to a tender option bond trust (TOB trust) sponsored by a broker. The TOB trust funds the purchase of the fixed rate bonds by issuing floating-rate bonds to third parties and allowing the fund to retain the residual interest in the TOB trust’s assets and cash flows, which are in the form of inverse floating rate bonds. The inverse
|
| California Tax Exempt Income Fund 31 |
floating rate bonds held by the fund give the fund the right to (1) cause the holders of the floating rate bonds to tender their notes at par, and (2) to have the fixed-rate bond held by the TOB trust transferred to the fund, causing the TOB trust to collapse. The fund accounts for the transfer of the fixed-rate bond to the TOB trust as a secured borrowing by including the fixed-rate bond in the fund’s portfolio and including the floating rate bond as a liability in the Statement of assets and liabilities. At the close of the reporting period, the fund’s investments with a value of $42,702,420 were held by the TOB trust and served as collateral for $28,249,624 in floating-rate bonds outstanding. For the reporting period ended, the fund incurred interest expense of $386,062 for these investments based on an average interest rate of 2.74%.
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 $320 million syndicated unsecured committed line of credit, provided by State Street ($160 million) and JPMorgan Chase Bank, N.A. ($160 million), and a $235.5 million unsecured uncommitted line of credit, provided by State Street. Prior to May 2, 2023, the fund participated, along with other Putnam funds, in a $100 million ($317.5 million prior to October 14, 2022) 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 Bank Funding Rate for the committed line of credit and 1.30% plus the higher of (1) the Federal Funds rate and (2) the Overnight Bank Funding Rate for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds and a $75,000 fee has been paid by the participating funds to State Street as agent of the syndicated committed line of credit. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.
Federal taxes It is the policy of the fund to distribute all of its income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
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.
Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer certain capital losses of $11,148,061 recognized during the period between November 1, 2021, and September 30, 2022 to its fiscal year ending September 30, 2023.
Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The aggregate identified cost on a tax basis is $888,741,834, resulting in gross unrealized appreciation and depreciation of $11,572,360 and $50,143,536, respectively, or net unrealized depreciation of $38,571,176.
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.
|
| 32 California Tax Exempt Income Fund |
Note 2: Management fee, administrative services and other transactions
The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:
| | | | |
| 0.590% | of the first $5 billion, | | 0.390% | of the next $50 billion, |
| 0.540% | of the next $5 billion, | | 0.370% | of the next $50 billion, |
| 0.490% | of the next $10 billion, | | 0.360% | of the next $100 billion and |
| 0.440% | of the next $10 billion, | | 0.355% | of any excess thereafter. |
For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.215% of the fund’s average net assets.
Putnam Management has contractually agreed, through January 30, 2024, to waive fees and/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 0.20% 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 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.
Class R6 shares paid a monthly fee based on the average net assets of class R6 shares at an annual rate of 0.05%.
During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:
| | | | |
| Class A | $196,346 | | Class R6 | 672 |
| Class B | 56 | | Class Y | 23,439 |
| Class C | 2,838 | | Total | $223,351 |
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 $5,868 under the expense offset arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $744, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
|
| California Tax Exempt Income Fund 33 |
The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the Plans) with respect to the following share classes pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (Maximum %) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (Approved %) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:
| | | |
| | Maximum % | Approved % | Amount |
| Class A | 0.35% | 0.25% | $904,277 |
| Class B | 1.00% | 0.85% | 876 |
| Class C | 1.00% | 1.00% | 52,290 |
| Total | | | $957,443 |
For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $3,742 from the sale of class A shares and received $0 and $34 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 no monies 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) | $99,107,369 | $122,200,370 |
| U.S. government securities (Long-term) | — | — |
| Total | $99,107,369 | $122,200,370 |
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.
|
| 34 California Tax Exempt Income Fund |
Note 4: Capital shares
At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions, including, if applicable, direct exchanges pursuant to share conversions, in capital shares were as follows:
| | | | |
| | SIX MONTHS ENDED 3/31/23 | YEAR ENDED 9/30/22 |
| Class A | Shares | Amount | Shares | Amount |
| Shares sold | 3,768,533 | $26,865,632 | 4,721,873 | $35,368,652 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 1,223,869 | 8,716,187 | 3,965,736 | 31,045,883 |
| | 4,992,402 | 35,581,819 | 8,687,609 | 66,414,535 |
| Shares repurchased | (10,910,187) | (77,434,861) | (18,469,147) | (140,963,662) |
| Net decrease | (5,917,785) | $(41,853,042) | (9,781,538) | $(74,549,127) |
| |
| | SIX MONTHS ENDED 3/31/23 | YEAR ENDED 9/30/22 |
| Class B | Shares | Amount | Shares | Amount |
| Shares sold | — | $— | — | $— |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 332 | 2,360 | 1,529 | 12,041 |
| | 332 | 2,360 | 1,529 | 12,041 |
| Shares repurchased | (3,006) | (21,405) | (22,813) | (175,343) |
| Net decrease | (2,674) | $(19,045) | (21,284) | $(163,302) |
| |
| | SIX MONTHS ENDED 3/31/23 | YEAR ENDED 9/30/22 |
| Class C | Shares | Amount | Shares | Amount |
| Shares sold | 102,937 | $743,262 | 188,728 | $1,473,551 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 14,707 | 105,453 | 62,931 | 500,119 |
| | 117,644 | 848,715 | 251,659 | 1,973,670 |
| Shares repurchased | (234,410) | (1,674,645) | (858,420) | (6,616,199) |
| Net decrease | (116,766) | $(825,930) | (606,761) | $(4,642,529) |
| |
| | SIX MONTHS ENDED 3/31/23 | YEAR ENDED 9/30/22 |
| Class R6 | Shares | Amount | Shares | Amount |
| Shares sold | 132,557 | $926,319 | 287,968 | $2,128,110 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 5,785 | 41,387 | 8,566 | 66,094 |
| | 138,342 | 967,706 | 296,534 | 2,194,204 |
| Shares repurchased | (124,128) | (883,856) | (130,892) | (976,349) |
| Net increase | 14,214 | $83,850 | 165,642 | $1,217,855 |
|
| California Tax Exempt Income Fund 35 |
| | | | |
| | SIX MONTHS ENDED 3/31/23 | YEAR ENDED 9/30/22 |
| Class Y | Shares | Amount | Shares | Amount |
| Shares sold | 4,517,088 | $32,110,018 | 5,460,875 | $42,089,584 |
| Shares issued in connection with | | | | |
| reinvestment of distributions | 162,274 | 1,160,750 | 475,621 | 3,726,796 |
| | 4,679,362 | 33,270,768 | 5,936,496 | 45,816,380 |
| Shares repurchased | (4,636,913) | (33,000,292) | (15,884,094) | (120,860,119) |
| Net increase (decrease) | 42,449 | $270,476 | (9,947,598) | $(75,043,739) |
Note 5: Affiliated transactions
Transactions during the reporting period with any company which is under common ownership or control were as follows:
| | | | | |
| | | | | | Shares |
| | | | | | outstanding |
| | | | | | and fair |
| | Fair value as | Purchase | Sale | Investment | value as |
| Name of affiliate | of 9/30/22 | cost | proceeds | income | of 3/31/23 |
| Short-term investments | | | | | |
| Putnam Short Term | | | | | |
| Investment Fund* | $2,312,477 | $101,905,131 | $96,362,299 | $115,101 | $7,855,309 |
| Total Short-term | | | | | |
| investments | $2,312,477 | $101,905,131 | $96,362,299 | $115,101 | $7,855,309 |
* Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.
Note 6: 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.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced its intention to cease compelling banks to provide the quotations needed to sustain LIBOR after 2021. ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative basis at the end of 2021 and is expected to cease publication of a majority of U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. LIBOR has historically been a common benchmark interest rate index used to make adjustments to variable-rate loans. It is used throughout global banking and financial industries to determine interest rates for a variety of financial instruments and borrowing arrangements. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Various financial industry groups have been planning for the transition away from LIBOR, but there are obstacles to converting certain longer-term securities and transactions to new reference rates. Markets are developing slowly and questions around liquidity in these rates and how to appropriately adjust these rates to mitigate any economic value transfer at the time of transition remain a significant concern. Neither the effect of the transition process nor its ultimate success can yet be known. The transition process might lead to increased volatility and illiquidity in markets that rely on LIBOR to determine interest rates. It could also lead to a reduction in the value of some LIBOR-based investments and reduce the effectiveness of related transactions, such as hedges. While some LIBOR-based instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate-setting methodology, not all may have such provisions and there may be significant uncertainty regarding the effectiveness of any such alternative methodologies. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur at any time.
|
| 36 California Tax Exempt Income Fund |
The Covid–19 pandemic and efforts to contain its spread have resulted in, among other effects, significant market volatility, exchange trading suspensions and closures, declines in global financial markets, higher default rates, significant changes in fiscal and monetary policies, and economic downturns and recessions. The effects of the Covid–19 pandemic have negatively affected, and may continue to negatively affect, the global economy, the economies of the United States and other individual countries, the financial performance of individual issuers, sectors, industries, asset classes, and markets, and the value, volatility, and liquidity of particular securities and other assets. The effects of the Covid–19 pandemic also are likely to exacerbate other risks that apply to the fund, which could negatively impact the fund’s performance and lead to losses on your investment in the fund. The duration of the Covid–19 pandemic and its effects cannot be determined with certainty.
Note 7: Summary of derivative activity
The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:
| |
| Futures contracts (number of contracts) | 200 |
| OTC total return swap contracts (notional) | $610,000 |
The following is a summary of the fair value of derivative instruments as of the close of the reporting period:
| | | | |
| Fair value of derivative instruments as of the close of the reporting period | |
| | ASSET DERIVATIVES | LIABILITY DERIVATIVES |
| Derivatives not | | | | |
| accounted for as | Statement of | | Statement of | |
| hedging instruments | assets and | | assets and | |
| under ASC 815 | liabilities location | Fair value | liabilities location | Fair value |
| Interest rate contracts | Receivables | $— | Payables | $545,144* |
| Total | | $— | | $545,144 |
* Includes cumulative appreciation/depreciation of futures contracts as reported in the fund’s portfolio. Only current day’s variation margin is reported within the Statement of assets and liabilities.
The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):
| | | |
| Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments | |
| Derivatives not accounted for as hedging | | | |
| instruments under ASC 815 | Futures | Swaps | Total |
| Interest rate contracts | $775,547 | $76,500 | $852,047 |
| Total | $775,547 | $76,500 | $852,047 |
| |
| Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss) |
| on investments | | | |
| Derivatives not accounted for as hedging | | | |
| instruments under ASC 815 | Futures | Swaps | Total |
| Interest rate contracts | $(545,144) | $359,295 | $(185,849) |
| Total | $(545,144) | $359,295 | $(185,849) |
|
| California Tax Exempt Income Fund 37 |
Note 8: Offsetting of financial and derivative assets and liabilities
The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.
| | |
| | JPMorgan Securities LLC | Total |
| Assets: | | |
| Futures contracts§ | $— | $— |
| Total Assets | $— | $— |
| Liabilities: | | |
| Futures contracts§ | 82,586 | 82,586 |
| Total Liabilities | $82,586 | $82,586 |
| Total Financial and Derivative Net Assets | $(82,586) | $(82,586) |
| Total collateral received (pledged)†## | $— | |
| Net amount | $(82,586) | |
| Controlled collateral received (including | | |
| TBA commitments)** | $— | $— |
| Uncontrolled collateral received | $— | $— |
| Collateral (pledged) (including TBA commitments)** | $— | $— |
** Included with Investments in securities on the Statement of assets and liabilities.
† Additional collateral may be required from certain brokers based on individual agreements.
##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.
§ Includes current day’s variation margin only as reported on the Statement of assets and liabilities, which is not collateralized. Cumulative appreciation/(depreciation) for futures contracts and centrally cleared swap contracts is represented in the tables listed after the fund’s portfolio. Collateral pledged for initial margin on futures contracts, which is not included in the table above, amounted to $512,385.
|
| 38 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 | Income |
| Core Equity Fund | Convertible Securities Fund |
| Emerging Markets Equity Fund | Core Bond Fund |
| Focused Equity Fund | Diversified Income Trust |
| Focused International Equity Fund | Floating Rate Income Fund |
| International Capital Opportunities Fund | Global Income Trust |
| International Equity Fund | Government Money Market Fund* |
| Research Fund | High Yield Fund |
| Income Fund |
| Global Sector | Money Market Fund† |
| Global Health Care Fund | Mortgage Opportunities Fund |
| Global Technology Fund | Mortgage Securities Fund |
| Short Duration Bond Fund |
| Growth | Ultra Short Duration Income Fund |
| Large Cap Growth Fund | |
| Small Cap Growth Fund | Tax-free Income |
| Sustainable Future Fund | Intermediate-Term Municipal Income Fund |
| Sustainable Leaders Fund | Short-Term Municipal Income Fund |
| Strategic Intermediate Municipal Fund |
| Value | Tax Exempt Income Fund |
| International Value Fund | Tax-Free High Yield Fund |
| Large Cap Value Fund | |
| Small Cap Value Fund | State tax-free income funds:‡ |
| | California, Massachusetts, Minnesota, |
| | New Jersey, New York, Ohio, and Pennsylvania |
|
| California Tax Exempt Income Fund 39 |
| |
| Asset Allocation | Asset Allocation (cont.) |
| George Putnam Balanced Fund | Retirement Advantage Maturity Fund |
| Retirement Advantage 2065 Fund |
| Dynamic Asset Allocation Balanced Fund | Retirement Advantage 2060 Fund |
| Dynamic Asset Allocation Conservative Fund | Retirement Advantage 2055 Fund |
| Dynamic Asset Allocation Growth Fund | Retirement Advantage 2050 Fund |
| Retirement Advantage 2045 Fund |
| Multi-Asset Income Fund | Retirement Advantage 2040 Fund |
| | Retirement Advantage 2035 Fund |
| | Retirement Advantage 2030 Fund |
| | Retirement Advantage 2025 Fund |
| |
| | Sustainable Retirement Maturity Fund |
| | Sustainable Retirement 2065 Fund |
| | Sustainable Retirement 2060 Fund |
| | Sustainable Retirement 2055 Fund |
| | Sustainable Retirement 2050 Fund |
| | Sustainable Retirement 2045 Fund |
| | Sustainable Retirement 2040 Fund |
| | Sustainable Retirement 2035 Fund |
| | Sustainable Retirement 2030 Fund |
| | Sustainable Retirement 2025 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.
Check your account balances and the most recent month-end performance in the Individual Investors section at putnam.com.
|
| 40 California Tax Exempt Income Fund |
Fund information
Founded over 85 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 funds across income, value, blend, growth, sustainable, and asset allocation categories.
| | |
| Investment Manager | Trustees | Richard T. Kircher |
| Putnam Investment | Kenneth R. Leibler, Chair | Vice President and |
| Management, LLC | Barbara M. Baumann, Vice Chair | BSA Compliance Officer |
| 100 Federal Street | Liaquat Ahamed | |
| Boston, MA 02110 | Katinka Domotorffy | Martin Lemaire |
| | Catharine Bond Hill | Vice President and |
| Investment Sub-Advisor | Jennifer Williams Murphy | Derivatives Risk Manager |
| Putnam Investments Limited | Marie Pillai | |
| 16 St James’s Street | George Putnam III | Susan G. Malloy |
| London, England SW1A 1ER | Robert L. Reynolds | Vice President and |
| Manoj P. Singh | Assistant Treasurer |
| Marketing Services | Mona K. Sutphen | |
| Putnam Retail Management | | Alan G. McCormack |
| Limited Partnership | Officers | Vice President and |
| 100 Federal Street | Robert L. Reynolds | Derivatives Risk Manager |
| Boston, MA 02110 | President | |
| | | Denere P. Poulack |
| Custodian | James F. Clark | Assistant Vice President, |
| State Street Bank | Vice President, Chief Compliance | Assistant Clerk, and |
| and Trust Company | Officer, and Chief Risk Officer | Assistant Treasurer |
| | | |
| | Michael J. Higgins | Janet C. Smith |
| Legal Counsel | Vice President, Treasurer, | Vice President, |
| Ropes & Gray LLP | and Clerk | Principal Financial Officer, |
| | | Principal Accounting Officer, |
| | Jonathan S. Horwitz | and Assistant Treasurer |
| Executive Vice President, | |
| | Principal Executive Officer, | Stephen J. Tate |
| | and Compliance Liaison | Vice President and |
| | | Chief Legal Officer |
| | | |
| | | Mark C. Trenchard |
| | | Vice President |
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.
| |
| Item 3. Audit Committee Financial Expert: |
| |
| Item 4. Principal Accountant Fees and Services: |
| |
| Item 5. Audit Committee of Listed Registrants |
| |
| Item 6. Schedule of Investments: |
| |
| The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. |
| |
| Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
| |
| Item 8. Portfolio Managers of Closed-End Investment Companies |
| |
| Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
| |
| Item 10. Submission of Matters to a Vote of Security Holders: |
| |
| Item 11. Controls and Procedures: |
| |
| (a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. |
| |
| (b) Changes in internal control over financial reporting: Not applicable |
| |
| Item 12. Disclosures of Securities Lending Activities for Closed-End Investment Companies: |
| |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
| |
| Putnam California Tax Exempt Income Fund |
| |
| By (Signature and Title): |
| |
| /s/ Janet C. Smith
Janet C. Smith
Principal Accounting Officer
|
| |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
| |
| By (Signature and Title): |
| |
| /s/ Jonathan S. Horwitz
Jonathan S. Horwitz
Principal Executive Officer
|
| |
| By (Signature and Title): |
| |
| /s/ Janet C. Smith
Janet C. Smith
Principal Financial Officer
|
