Franklin California Intermediate-Term Tax-Free Income Fund - A1

Important Legal Information

• For investors subject to the alternative minimum tax, a small portion of fund dividends may be taxable. Distributions of capital gains are generally taxable.

Footnote

1. Portfolio holdings are subject to change.
2. Source: Morningstar®. For each mutual fund and exchange traded fund with at least a 3-year history, Morningstar calculates a Morningstar Rating based on how a fund ranks on a Morningstar Risk-Adjusted Return measure against other funds in the same category. This measure takes into account variations in a fund's monthly performance, and does not take into account the effects of sales charges and loads, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The weights are: 100% 3-year rating for 36-59 months of total returns, 60% 5-year rating/40% 3-year rating for 60-119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent 3-year period actually has the greatest impact because it is included in all three rating periods. Morningstar Rating is for the named share class only; other classes may have different performance characteristics. Past performance is not an indicator or a guarantee of future performance.
3. A statistical measurement of a fund's historical risk-adjusted performance. It is calculated by taking a fund's excess return over that of the three-month Treasury bill divided by its standard deviation. Higher values generally indicate better historical risk-adjusted performance. Based on the 3 years ended as of the date of the calculation.
4. A statistical measurement of the range of a fund's total returns. In general, a higher standard deviation means greater volatility. Based on the fund's monthly returns over the 3-year period ended as of the date of the calculation.
5. Percentage of the fund's returns explained by movements in the Barclays 10-Year Municipal Bond Index. 100 equals perfect correlation to the index. Based on the 3-year period ended as of the date of the calculation.
6. Performance quotations for this class reflect the following methods of calculation: a) For periods prior to the fund's Advisor Class inception dale, a restated figure is used based on the fund's oldest share class, Class Al performance, excluding the effect of Class Al's maximum initial sales charge but reflecting the effect of the Class Al Rule 12b-1 fees; and b) for periods after the fund's Advisor Class inception date, actual Advisor Class performance is used, reflecting all charges and fees applicable to that class. Effective 10/31/08, the fund began offering Advisor Class shares.
7. This fund has a distribution Record Date each business day in the calendar year. Therefore, the dates reported in the Record Date column reflect the distribution Payment Dates of the fund. Please contact Shareholder Services at 1-800/632-2301 for more information.
8. A measure of the fund's volatility relative to the market, as represented by the Barclays 10-Year Municipal Bond Index. A beta greater than 1.00 indicates volatility greater than the market. Based on the 3-year period ended as of the date of the calculation.
9. Ratings shown are assigned by one or more Nationally Recognized Statistical Rating Organizations ('NRSRO'), such as Standard & Poor's, Moody's and Fitch. When ratings from multiple agencies are available, the highest is used, consistent with the portfolio investment process. Ratings reflect an NRSRO's opinion of an issuer's creditworthiness and typically range from AAA (highest) to D (lowest). The Refunded category consists of refunded bonds secured by U.S. government or other high-quality securities. The Not Rated category consists of ratable securities that have not been rated by an NRSRO. The Not Applicable category consists of third-party ETFs and securities that only have a short-term rating and are not cash equivalents. Cash includes equivalents, which may be rated.
10. For performance reporting purposes, the inception date for Classes A/A1, R, R6, Z, and Advisor Class shares of all Franklin Templeton Funds is the date of effectiveness of the fund's registration statement or the first day the fund commenced operations. For Class C shares, generally the inception date is the first day the fund commenced offering such shares. Exceptions: Templeton Global Balanced Fund Classes A and C use the inception date of the old Class A and C shares, renamed Class A1 and Class C1. For Franklin Mutual Series Funds and Franklin International Small Cap Growth Fund, the inception date for Classes A, C, R and R6 shares is the funds' oldest class', Z or Advisor, inception date. Franklin U.S. Government Money Fund Class R6 inception date is the first day it commenced offering such shares.
11. The fund's 30-Day Standardized Yield is calculated using the net income (interest and dividends) per share earned over a trailing 30-day period (annualized), divided by the fund's share price at the end of that period. It may not equal the fund's actual income distribution rate, which reflects the fund's past dividends paid to shareholders.
12. Net Asset Value — The amount per share you would receive if you sold shares that day.
13. This fund has a distribution Record Date each business day in the calendar year. Therefore, the dates reported in the Record Date column reflect the distribution Payment Dates of the fund. Please contact Shareholder Services at 1-800/632-2301 for more information.
14. Taxable Equivalent Yield: The Taxable Equivalent Yield assumes the maximum regular federal income tax rate, maximum state personal income tax rate, and the Medicare tax in effect on June 2017. This combined rate does not consider the impact of California's surcharge on taxable incomes in excess of $1 million. For investors subject to the alternative minimum tax, a small portion of fund dividends may be taxable. Distributions of capital gains may be taxable.
15. After-tax average annual total returns represent the average change in value of an investment on an annualized basis. Returns are calculated using the highest individual federal income tax rates; state and local taxes are not considered. Your actual after-tax returns depend on your particular tax situation and may differ from those shown. The before shares sold calculation assumes taxes are paid on fund distributions (dividends and capital gains) but does not reflect taxes that may be incurred upon sale or exchange of shares. The after shares sold calculation also adjusts for taxes due if the fund investment is sold at the end of the measurement period.
16. Calculated according to the modified duration formula. Duration is an indication of a fund's sensitivity to changes in interest rates. Please note, duration numbers will change as market conditions change; therefore duration should not solely be relied upon to indicate a municipal bond fund's potential volatility.
17. Indices are unmanaged and one cannot invest directly in them. Index returns do not reflect any fees, expenses or sales charges.
18. Effective 6/1/2019, the fund's benchmark is the Linked Bloomberg Barclays Muni M.F. CA Intermediate/10-Year Muni Bond Index. The Linked Bloomberg Barclays Muni M.F. CA Intermediate/10-Year Muni Bond Index reflects performance of the Bloomberg Barclays 10-Year Municipal Bond Index from the fund's inception through 11/29/1993 and the Bloomberg Barclays Municipal M.F. CA Intermediate Index thereafter..
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20. This fund has a distribution Record Date each business day in the calendar year. Therefore, the dates reported in the Record Date column reflect the distribution Payment Dates of the fund. Please contact Shareholder Services at 1-800/632-2301 for more information.
21. For net asset value (NAV) purchases, a 1% contingent deferred sales charge (CDSC) may apply to shares redeemed within 18 months.
22. The annualized percentage difference between a fund's actual returns and its expected performance given its level of market risk, as measured by beta. Based on the 3-year period ended as of the date of the calculation.
23. The hypothetical scenario does not take into account federal, state or municipal taxes. If taxes were taken into account, the hypothetical values shown would have been lower.
24. Public Offering Price — Purchase price for each share of the fund on a given day. It includes the maximum initial sales charge, if any.
25. The Gross Expense Ratio does not include an expense reduction contractually guaranteed through 10/31/20. Fund investment results reflect the fee reduction; without this reduction, the results would have been lower. Please see the prospectus for additional information.

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