Fund Description

The fund normally invests at least 80% of net assets (plus any borrowings for investment purposes) in bonds paying interest exempt from federal and California state income taxes, and at least 80% of its income is expected to be exempt from federal and California taxes; qualifying derivatives may count toward the 80% policy. Subject to shareholder approval, the fund's 80% investment policy is proposed to change to municipal bonds whose income is exempt from regular federal and California state income taxes, and a policy that up to 20% of the fund's income could be derived from securities subject to the alternative minimum tax is proposed to be eliminated; the changes are not expected to substantially affect the way the fund is managed. It may buy any maturity but generally seeks longer-term, mainly investment-grade issues, with up to 10% in below investment-grade bonds. It may hold general obligation, sector-focused, private activity, and industrial revenue bonds. Due to fluctuations in availability or other reasons, the fund may invest in other municipal securities whose interest is exempt from federal but not California income taxes; while efforts will be made to minimize such investments, they could comprise up to 10% of the fund's annual income.