Short-Term Municipal Income Fund  (PSMYX)

A national portfolio of short-term municipal bonds seeking tax-free income with lower interest-rate sensitivity


Track this fund

Objective

The fund seeks as high a level of current income exempt from federal income tax as the managers believe is consistent with preservation of capital.

Strategy and process

  • Tax-advantaged income: Pursues income free from federal income tax with a portfolio of municipal bonds selected from many states and market sectors.
  • Focus on total return: Seeks to offer a competitive yield and the potential for price appreciation while striving to protect investors' capital through prudent security selection and active risk management.
  • High-quality, short-term portfolio: The national portfolio features a range of high-quality, short-term bonds that seek to provide tax-free income with lower interest-rate sensitivity.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $9.96
0.00% | $0.00
$10.04
09/26/17
$9.96
02/16/18
Historical fund price

Fund facts as of 01/31/18

Total net assets
$14.18M
Turnover (fiscal year end)
156%
Dividend frequency (view rate)
Monthly
Number of holdings
98
Fiscal year-end
November
CUSIP / Fund code
74676A824 / 1880
Inception date
03/18/13
Category
Tax-free Income
Open to new investors
Ticker
PSMYX

Management team

Portfolio Manager
Portfolio Manager


Literature


Munis feel knock-on effects of tax reform
The municipal bond market will likely see a reduction in supply in 2018 because of certain provisions in the new tax reform law.
Munis feel knock-on effects of tax reform
The municipal bond market will likely see a reduction in supply in 2018 because of certain provisions in the new tax reform law.

Performance

  • Total return (%) as of 12/31/17

  • Annual performance as of 12/31/17

Annualized performance 1 yr. 3 yrs. 5 yrs. Life (inception: 03/18/13 )
Before sales charge 1.77% 0.75% -- 0.77%
After sales charge N/A N/A N/A N/A
Bloomberg Barclays 3 Year Municipal Index 1.56% 0.94% 1.07% --

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. To obtain the most recent month-end performance, visit putnam.com. Performance assumes reinvestment of distributions and does not account for taxes. Returns before sales charge do not reflect the current maximum sales charges as indicated below. Had the sales charge been reflected, returns would be lower. Returns at public offering price (after sales charge) for class A and class M shares reflect the current maximum initial sales charges of 5.75% and 3.50% for equity funds and Putnam Absolute Return 500 Fund and 700 Fund, and 4.00% and 3.25% for income funds (1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and 300 Fund, and Putnam Short-Term Municipal Income Fund), respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter (except for Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and 300 Fund, and Putnam Short-Term Municipal Income Fund, which is 1% in the first year, declining to 0.5% in the second year, and is eliminated thereafter). Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Performance for class B, C, M, R, T1, and Y shares prior to their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares (with the exception of Putnam Tax-Free High Yield Fund and Putnam AMT-Free Municipal Fund, which are based on the historical performance of class B shares). Class R5/R6 shares, available to qualified employee-benefit plans only, are sold without an initial sales charge and have no CDSC. Class Y shares are generally only available for corporate and institutional clients and have no initial sales charge. Performance for Class R5/R6 shares before their inception are derived from the historical performance of class Y shares, which have not been adjusted for the lower expenses; had they, returns would have been higher. Class A, M, and T1 shares of Putnam money market funds have no initial sales charge. For a portion of the period, some funds had expenses limitations or had been sold on a limited basis with limited assets and expenses, without which returns would be lower.

Performance snapshot

  Before sales charge After sales charge
1 mt. as of 01/31/18 0.03 % -
YTD as of 02/16/18 0.12 % -

Yield

Distribution rate before sales charge
as of 02/16/18
1.57%
Distribution rate after sales charge
as of 02/16/18
1.57%
30-day SEC yield with subsidy
as of 01/31/18
1.63%
30-day SEC yield without subsidy
as of 01/31/18
0.61%

Risk-adjusted performance as of 01/31/18

Sharpe ratio (3 yrs.) 0.38
Information ratio (3 yrs.) -0.12

Volatility as of 01/31/18

Standard deviation (3 yrs.) 0.78%
Beta 0.51
R-squared 0.86

Lipper rankings as of 01/31/18

Short Municipal Debt Funds Percentile ranking Rank/Funds in category
1 yr. 23% 25/108
3 yrs. 18% 16/93
5 yrs.   --
10 yrs.   --

Morningstar ratings as of 01/31/18

Muni National Short Rating Funds in category
Overall (172)
3 yrs. (172)

Distributions

Accrual days 33
Accrual start date 01/01/18
Accrual end date 01/31/18
Payable date 01/31/18
Non-taxable income $0.012682903
Extra taxable income --
  
Record/Ex dividend date 12/27/17
Payable date 12/29/17
Income --
Extra income $0.0008
Short-term cap. gain --
Long-term cap. gain --

Lipper rankings are based on total return without sales charge relative to all share classes of funds with similar objectives as determined by Lipper. Past performance is not indicative of future results.

The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product 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 Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-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 three-year period actually has the greatest impact because it is included in all three rating periods.

The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The ratio is calculated by dividing the manager’s returns by the returns of the index during the up-market, and multiplying that factor by 100. The down-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager’s returns by the returns of the index during the down-market and multiplying that factor by 100.


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Holdings

Top 10 holdings as of 01/31/18

Mi St Fin Auth-B-Ref 05.0000 07/01/2021 3.65%
Ny Mtge Agy-186-Amt 02.0000 04/01/2019 3.62%
Fort Bend Isd-D-Ref 01.5000 08/01/2042 3.57%
Virginia Clg Bldg-B 05.0000 09/01/2019 3.09%
Grant Cnty Wa Public 02.0000 01/01/2044 2.88%
Ca Infrastructure-A2 01.6060 10/01/2047 2.17%
Pa Turnpike Commn-A-2 01.7300 12/01/2018 2.16%
San Fran Arpt-Rf-34e 05.7500 05/01/2020 1.80%
N Calif Gas-Libor 01.7650 07/01/2019 1.80%
Ct Hlth & Eductnl-A 01.3000 07/01/2048 1.78%
Top 10 holdings, percent of portfolio 26.52%

Full portfolio holdings as of 12/31/17

NY MTGE AGY-186-AMT 02.0000 04/01/2019 3.18%
FORT BEND ISD-D-REF 01.5000 08/01/2042 3.17%
VIRGINIA CLG BLDG-B 05.0000 09/01/2019 2.71%
GRANT CNTY WA PUBLIC 02.0000 01/01/2044 2.54%
OH ST-A-JOB READY 04.5000 05/01/2021 2.08%
ALVIN TX INDEP SCH DI 05.0000 02/15/2022 1.92%
CA INFRASTRUCTURE-A2 01.5930 10/01/2047 1.91%
MO H/E VAR-WA UNIV-C 01.0100 09/01/2030 1.90%
PA TURNPIKE COMMN-A-2 01.8800 12/01/2018 1.90%
TRIBORO B&T-VAR 01.3980 01/01/2033 1.89%
MET TRANSPRTN AUTH NY 05.0000 11/15/2020 1.73%
SAN FRAN ARPT-RF-34E 05.7500 05/01/2020 1.58%
CT HLTH & EDUCTNL-A 01.3000 07/01/2048 1.57%
DALLAS ISD-B3-BLDG 05.0000 02/15/2036 1.40%
ATLANTIC CITY NJ-B 05.0000 03/01/2020 1.35%
PASCO CNTY SCH BRD-A 05.0000 08/01/2018 1.32%
NEW JERSEY ST TRANSPR 05.0000 06/15/2019 1.31%
MAIN ST NAT GAS INC-A 05.0000 03/15/2018 1.29%
SAN ANTONIO ELEC-A 02.2500 02/01/2033 1.29%
BURKE CO DEV-5TH-REMK 01.8000 10/01/2032 1.27%
CYPRESS-FAIRBANKS ISD 01.4000 02/15/2040 1.27%
SAN ANTONIO -B 02.0000 05/01/2044 1.27%
PUBLIC FIN AUTH WI SO 01.2500 10/01/2025 1.26%
TOMBALL ISD-B3-VAR 01.1000 02/15/2043 1.26%
NY ENERGY VAR-A1-BROO 01.9800 12/01/2020 1.25%
DENVER ARPT-B-VAR 01.9550 11/15/2031 1.24%
MET TRANS AUTH-A2A 01.6800 11/01/2026 1.23%
RIVERSIDE-A-REF-WTR 01.8600 10/01/2035 1.23%
ATLANTA TAX ALLOC-REF 05.0000 12/01/2021 1.05%
KY PPTY & BLDGS-D-REF 05.0000 05/01/2021 1.05%
HIGH PLAINS CO MET DI 04.0000 12/01/2021 1.02%
MTA HUDSON RAIL YRD-A 05.0000 11/15/2046 1.00%
NIAGARA FRONTIER-B 05.0000 04/01/2019 1.00%
ILLINOIS ST-REF 05.0000 02/01/2018 0.97%
LOUISA VA INDL DEV AU 01.8500 11/01/2035 0.96%
BETHLEHAM SD-FLTR 01.5790 01/01/2030 0.95%
CA POLLUTN-VAR-REF-A P/P 144A 01.2200 08/01/2023 0.95%
FARMINGTON POLL-A-REF 01.8750 04/01/2029 0.95%
NJ TURNPIKE AUTH-C5 01.5550 01/01/2028 0.95%
CT HLTH-U-REMK 01.0000 07/01/2033 0.88%
MA HSG FIN AGY-169 04.0000 12/01/2044 0.82%
PR COMWLTH REF-IMPT-A 05.5000 07/01/2019 0.82%
GREAT LAKES MI WTR AU 05.0000 07/01/2024 0.75%
CA SCH FIN AUTH 05.0000 06/01/2022 0.74%
JEFFERSON CO-REV-REF 05.0000 09/15/2022 0.73%
OHIO ST-A-REF 05.0000 09/15/2021 0.72%
LAS VEGAS REDEV-REF 05.0000 06/15/2022 0.71%
SC PUB SVC AUTH-D 05.0000 12/01/2022 0.71%
ST PUB SCH BLDG-A 05.0000 06/01/2023 0.71%
UNIV OF COLORADO CO H 05.0000 11/15/2038 0.71%
PUBLIC FIN AUTH-AMT 05.0000 09/30/2022 0.70%
RI HLTH & EDUCTNL-REF 05.0000 05/15/2022 0.70%
GLENDALE INDL DEV-REF 04.0000 05/15/2022 0.69%
NEW JERSEY ST ECON DE 05.0000 11/01/2021 0.69%
MYRTLE BEACH SC TAX I 05.0000 10/01/2019 0.68%
NY DORM AUTH 05.0000 07/01/2019 0.68%
OJCO HLTH FACS AUTH-R 05.0000 06/01/2020 0.68%
CHICAGO BOE-E-REF 05.0000 12/01/2021 0.67%
CHICAGO WSTWTR TRANS 05.0000 01/01/2019 0.67%
IL FIN AUTH 05.0000 11/15/2019 0.67%
ILLINOIS ST-A 05.0000 04/01/2021 0.67%
MASSACHUSETTS ST DEV 05.0000 07/01/2019 0.67%
MICHIGAN ST FIN AUTH 05.0000 11/15/2019 0.67%
N TX MUNI WTR DIST 05.0000 06/01/2019 0.67%
NJ ECON DEV-A 05.0000 07/15/2019 0.67%
NJ HLTH CARE FACS FIN 05.0000 07/01/2019 0.67%
NJ ECON DEV AUTH-AAA 05.0000 06/15/2019 0.66%
PALM BEACH HLTH-REF 04.0000 11/15/2019 0.66%
SC PUB SVC-B-REF 04.0000 12/01/2019 0.66%
CENTRAL PLAINS 05.2500 12/01/2018 0.65%
MINNEAPOLIS HLTH-REF 04.0000 11/15/2018 0.65%
MONROE CO-REF 04.0000 06/01/2019 0.65%
PHILADELPHIA AUTH-A 04.0000 12/01/2018 0.65%
TSASC INC-A-REF 04.0000 06/01/2019 0.65%
CHICAGO TRANSIT AUTH 05.0000 06/01/2018 0.64%
FARMINGTON NM POLL CO 02.1250 06/01/2040 0.64%
MONTGOMERY CO IND DEV 03.0000 12/01/2018 0.64%
SAN ANTONIO TX ELEC & 02.0000 02/01/2033 0.64%
VT EDU HLTH BLDG FIN 03.0000 12/01/2018 0.64%
YPSILANTI SD-A-REF 04.0000 05/01/2018 0.64%
E-470 HWY-A-LIBOR 01.9460 09/01/2039 0.63%
SOUTHLANDS CO MET DT 03.0000 12/01/2022 0.63%
WASHINGTON ST HLTH CA 02.1430 01/01/2042 0.63%
MET PIER EXPO-PREREF 00.0000 06/15/2018 0.60%
MAIN ST NAT GAS INC-B 05.0000 03/15/2020 0.58%
MD ECON DEV CORP-REF 04.0000 07/01/2020 0.58%
SA ENERGY ACQ PUB FAC 05.5000 08/01/2025 0.58%
ILLINOIS ST FIN AUTH 05.0000 11/01/2023 0.55%
IRVINE SPL TAX-REF 04.0000 09/01/2018 0.49%
CA STWD CMNTYS-REF 01.3750 04/01/2028 0.48%
MULTNOMAH CO HOSP FAC 03.0000 12/01/2018 0.48%
WV EDA-A-REF 01.9000 03/01/2040 0.48%
MN HSG FIN AGY-A-RSDL 04.0000 07/01/2038 0.47%
ESCAMBIA HLTH FACS-A 05.0000 08/15/2018 0.39%
MT BRD HSG-A2-SFH-AMT 03.0000 12/01/2043 0.39%
CHICAGO-A-REF 05.0000 01/01/2021 0.35%
PHILADELPHIA SD-D-REF 05.0000 09/01/2020 0.34%
AZ INDL DEV-A-REF P/P 144A 04.0000 07/01/2021 0.33%
CHICAGO-A 05.0000 01/01/2019 0.33%
WV DEV AUTH-C-REF 03.2500 05/01/2019 0.32%
KY ST ECON DEV-A 05.0000 06/01/2020 0.30%
GAINESVILLE ETC DEV 05.0000 03/01/2027 0.29%
ROSEVILLE SPL TAX-REF 04.0000 09/01/2019 0.27%
ESCAMBIA HLTH FACS-A 05.1250 08/15/2020 0.21%
PHOENIX INDL DEV AUTH 03.7500 07/01/2024 0.17%
PHOENIX INDL DEV AUTH 03.0000 07/01/2020 0.16%
L A ARPT-INTL ARPT-A 05.2500 05/15/2024 0.13%
MET PIER EXPO-UNREF 00.0000 06/15/2018 0.03%

Prior top 10 holdings

Top 10 holdings as of 01/31/18
Mi St Fin Auth-B-Ref 05.0000 07/01/2021
Ny Mtge Agy-186-Amt 02.0000 04/01/2019
Fort Bend Isd-D-Ref 01.5000 08/01/2042
Virginia Clg Bldg-B 05.0000 09/01/2019
Grant Cnty Wa Public 02.0000 01/01/2044
Ca Infrastructure-A2 01.6060 10/01/2047
Pa Turnpike Commn-A-2 01.7300 12/01/2018
San Fran Arpt-Rf-34e 05.7500 05/01/2020
N Calif Gas-Libor 01.7650 07/01/2019
Ct Hlth & Eductnl-A 01.3000 07/01/2048
Holdings represent 26.52% of portfolio
Top 10 holdings as of 12/31/17
Ny Mtge Agy-186-Amt 02.0000 04/01/2019
Fort Bend Isd-D-Ref 01.5000 08/01/2042
Virginia Clg Bldg-B 05.0000 09/01/2019
Grant Cnty Wa Public 02.0000 01/01/2044
Oh St-A-Job Ready 04.5000 05/01/2021
Alvin Tx Indep Sch Di 05.0000 02/15/2022
Ca Infrastructure-A2 01.5970 10/01/2047
Pa Turnpike Commn-A-2 02.3600 12/01/2018
Mo H/E Var-Wa Univ-C 01.5000 09/01/2030
Triboro B&T-Var 01.3980 01/01/2033
Holdings represent 23.48% of portfolio
Top 10 holdings as of 11/30/17
Hudson Cnty Nj Impt A 02.2500 10/18/2018
Ny Mtge Agy-186-Amt 02.0000 04/01/2019
Fort Bend Isd-D-Ref 01.5000 08/01/2042
Virginia Clg Bldg-B 05.0000 09/01/2019
Grant Cnty Wa Public 02.0000 01/01/2044
Oh St-A-Job Ready 04.5000 05/01/2021
Harris Cult Ed Var-C1 00.9700 12/01/2024
Ca Infrastructure-A2 01.4600 10/01/2047
Pa Turnpike Commn-A-2 01.6200 12/01/2018
Mo H/E Var-Wa Univ-C 00.9200 09/01/2030
Holdings represent 25.04% of portfolio
Top 10 holdings as of 10/31/17
Hudson Cnty Nj Impt A 02.2500 10/18/2018
Ny Mtge Agy-186-Amt 02.0000 04/01/2019
Fort Bend Isd-D-Ref 01.5000 08/01/2042
Harris Cult Ed Var-C1 00.8900 12/01/2024
Ca Infrastructure-A2 01.3690 10/01/2047
Pa Turnpike Commn-A-2 01.5700 12/01/2018
Triboro B&T-Var 01.1820 01/01/2033
In Fin Auth-A-2-Unref 00.9000 02/01/2037
Mo H/E Var-Wa Univ-C 00.8600 09/01/2030
Ct Hlth & Eductnl-A 01.3000 07/01/2048
Holdings represent 22.80% of portfolio

Portfolio composition as of 01/31/18

Municipal bonds and notes 96.25%
Cash and net other assets 3.75%

Fixed income statistics as of 01/31/18

Average stated maturity 8.52 yrs.
Average effective maturity 2.12 yrs.
Option adjusted duration 1.73 yrs.
Duration to worst 1.62 yrs.
Average yield to maturity 1.98%
Average coupon 3.36%
Average price $102.88
AMT exposure 9.32%

Quality rating as of 01/31/18

AAA 16.59%
AA 21.49%
A 38.94%
BBB 16.18%
BB 2.07%
Not Rated 0.98%
Cash and net other assets 3.75%

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

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. 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. Interest the fund receives might be taxable. 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. 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. You can lose money by investing in the fund.

Credit qualities are shown as a percentage of net assets. 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.

Top Industry Sectors as of 01/31/18

Local Debt 15.31%
Utilities 14.23%
Health care 11.50%
Education 8.79%
Transportation 8.59%
Financials 6.22%
Housing 6.16%
Special Tax 5.91%
State Debt 5.08%
 
Other
18.21%
Other 4.39%
Land 4.34%
Cash and net other assets 3.75%
Industrials 2.51%
Prerefunded 2.48%
Tobacco 0.74%

Sectors will vary over time.


Expenses

Expense ratio

Class A Class B Class C Class M Class Y
Total expense ratio 1.62% 1.82% 2.37% 1.67% 1.37%
What you pay† 0.60% 0.80% 1.35% 0.65% 0.35%

† The fund's expense ratio is taken from the most recent prospectus and is subject to change. What you pay reflects Putnam Management's decision to contractually limit expenses through 03/30/18

Sales charge/Dealer allowance

 Breakpoint Class A Class B Class C Class M Class Y
$0-$49,999 1.00% / 1.00% 0.00% / 1.00% 0.00% / 1.00% 0.75% / 0.75% --
$50,000-$99,999 1.00% / 1.00% 0.00% / 1.00% 0.00% / 1.00% 0.75% / 0.75% --
$100,000-$249,999 1.00% / 1.00% -- 0.00% / 1.00% 0.75% / 0.75% --
$250,000-$499,999 1.00% / 1.00% -- 0.00% / 1.00% 0.75% / 0.75% --
$500,000-$999,999 0.00% / 1.00% -- -- -- --
$1M-$4M 0.00% / 1.00% -- -- -- --
$4M-$50M 0.00% / 0.50% -- -- -- --
$50M+ 0.00% / 0.25% -- -- -- --

CDSC

  Class A (sales for $500,000+) Class B Class C Class M Class Y
0 to 9 mts. 1.00% 1.00% 1.00% -- --
9 to 12 mts. 0.00% 1.00% 1.00% -- --
2 yrs. -- 0.50% 0.00% -- --
3 yrs. -- -- 0.00% -- --
4 yrs. -- -- 0.00% -- --
5 yrs. -- -- 0.00% -- --
6 yrs. -- -- 0.00% -- --
7+ yrs. -- -- 0.00% -- --

Trail commissions

  Class A Class B Class C Class M Class Y
  0.25% 0.25% 1.00% 0.30% 0.00%
  NA NA NA NA NA
  NA NA NA NA NA

The Bloomberg Barclays 3 Year Municipal Index is a subset of the Bloomberg Barclays Municipal Bond Index, covering those issues with remaining maturities of two to three years. You cannot invest directly in an index.

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. 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. Interest the fund receives might be taxable. 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. 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. You can lose money by investing in the fund.

Credit qualities are shown as a percentage of net assets. 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.