Intermediate-Term Municipal Income Fund  (PIMYX)

A national portfolio of intermediate-term municipal bonds seeking tax-free income with moderate 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, intermediate-term portfolio:The national portfolio features a range of high-quality, intermediate-term bonds that seek to provide tax-free income with moderate interest-rate sensitivity.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $10.32
0.00% | $0.00
$10.39
09/08/17
$9.93
12/15/16
Historical fund price

Fund facts as of 11/30/17

Total net assets
$13.12M
Turnover (fiscal year end)
16%
Dividend frequency (view rate)
Monthly
Number of holdings
120
Fiscal year-end
November
CUSIP / Fund code
74676A766 / 1881
Inception date
03/18/13
Category
Tax-free Income
Open to new investors
Ticker
PIMYX

Management team


Portfolio Manager

Portfolio Manager


Literature


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Performance

  • Total return (%) as of 09/30/17

  • Annual performance as of 09/30/17

Annualized performance 1 yr. 3 yrs. 5 yrs. Life (inception: 03/18/13 )
Before sales charge 1.07% 2.24% -- 2.20%
After sales charge N/A N/A N/A N/A
Bloomberg Barclays 7 Year Municipal Index 0.88% 2.75% 2.56% --

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 11/30/17 -0.42 % -
YTD as of 12/15/17 5.36 % -

Yield

Distribution rate before sales charge
as of 12/15/17
1.92%
Distribution rate after sales charge
as of 12/15/17
1.92%
30-day SEC yield with subsidy
as of 11/30/17
1.62%
30-day SEC yield without subsidy
as of 11/30/17
0.61%

Risk-adjusted performance as of 11/30/17

Sharpe ratio (3 yrs.) 0.58
Information ratio (3 yrs.) -0.26

Volatility as of 11/30/17

Standard deviation (3 yrs.) 2.83%
Beta 0.84
R-squared 0.95

Lipper rankings as of 11/30/17

Intermediate Municipal Debt Funds Percentile ranking Rank/Funds in category
1 yr. 17% 35/209
3 yrs. 50% 99/197
5 yrs.   --
10 yrs.   --

Morningstar ratings as of 11/30/17

Muni National Interm Rating Funds in category
Overall (260)
3 yrs. (260)

Distributions

Accrual days 30
Accrual start date 11/01/17
Accrual end date 11/30/17
Payable date 11/30/17
Non-taxable income $0.016958969
Extra taxable income $0.0

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 11/30/17

Wstrn Muni Wtr Dt-A 01.5000 10/01/2039 2.28%
Clifton Hgr Edu Fin 04.0000 08/15/2030 2.11%
Ct Hlth & Eductnl-A 01.3000 07/01/2048 1.90%
Washington St-A-Cops 05.0000 07/01/2033 1.85%
California St Muni Fi 05.0000 05/15/2032 1.83%
Nyc Transtnl Fin-A1 05.0000 08/01/2037 1.78%
Met Transprtn-B 05.0000 11/15/2038 1.72%
Met Transprtn Auth Ny 05.0000 11/15/2020 1.67%
Dallas Etc Arprt-A 05.0000 11/01/2043 1.63%
Atlantic City Nj-B 05.0000 03/01/2020 1.63%
Top 10 holdings, percent of portfolio 18.40%

Full portfolio holdings as of 09/30/17

WSTRN MUNI WTR DT-A 01.5000 10/01/2039 2.37%
CLIFTON HGR EDU FIN 04.0000 08/15/2030 2.16%
CT HLTH & EDUCTNL-A 01.3000 07/01/2048 1.95%
WASHINGTON ST-A-COPS 05.0000 07/01/2033 1.90%
NYC TRANSTNL FIN-A1 05.0000 08/01/2037 1.82%
MET TRANSPRTN-B 05.0000 11/15/2038 1.80%
DALLAS ETC ARPRT-A 05.0000 11/01/2043 1.71%
ATLANTIC CITY NJ-B 05.0000 03/01/2020 1.68%
FL BOE LOTTERY SER B 05.0000 07/01/2022 1.63%
CYPRESS-FAIRBANKS ISD 01.4000 02/15/2040 1.56%
MASSACHUSETTS ST-D-1 01.0500 08/01/2043 1.55%
ARLINGTON HGR EDU-A 04.0000 12/01/2031 1.42%
READING SD 05.0000 03/01/2028 1.40%
GOLDEN ST TOBACCO SEC 05.0000 06/01/2033 1.38%
CA CMNTY DEV AUTH-A 05.0000 04/01/2042 1.34%
DALLAS ISD-B5-BLDG 05.0000 02/15/2036 1.31%
KY PPTY & BLDGS-D-REF 05.0000 05/01/2021 1.31%
NJ ECON-REF-K-SCH FAC 05.5000 12/15/2019 1.23%
VT EDU HLTH BLDG FIN 05.0000 12/01/2025 1.18%
BURKE CNTY DEV AUTH 01.8500 12/01/2049 1.17%
MET TRANS AUTH-A2A 01.3600 11/01/2026 1.17%
PALM DESERT REDEV-A 05.0000 10/01/2026 0.98%
SA ENERGY ACQ PUB FAC 05.5000 08/01/2025 0.96%
BROWARD CO ARPT-A-AMT 05.0000 10/01/2025 0.95%
GLENDALE AZ EXCISE TA 05.0000 07/01/2026 0.95%
ROCHESTER SD-I 05.0000 05/01/2025 0.95%
INGLEWOOD REDEV-A-REF 05.0000 05/01/2031 0.94%
NJ HLTH CARE FAC FIN 05.0000 07/01/2025 0.94%
ARLINGTON HGR EDU-A 05.0000 08/15/2026 0.93%
HIGH PLAINS CO MET DI 05.0000 12/01/2029 0.93%
JEFFERSON CO-REV-REF 05.0000 09/15/2029 0.93%
TSASC INC-A-REF 05.0000 06/01/2026 0.93%
FOOTHILL ETC CLG DIST 05.0000 04/01/2033 0.92%
PA TURNPIKE-B1 05.0000 06/01/2029 0.92%
CHICAGO OHARE-C-AMT 05.2500 01/01/2027 0.91%
CHICAGO WTRWKS-REMK 05.0000 11/01/2030 0.91%
NEW JERSEY ST ECON DE 05.0000 11/01/2026 0.91%
NEW JERSEY ST EDUCTNL 05.0000 07/01/2034 0.91%
WHITING IN ENVRNMNTL 05.0000 11/01/2045 0.91%
CHICAGO ARPT-AMT 05.0000 01/01/2023 0.90%
ILLINOIS ST FIN AUTH 05.0000 11/01/2031 0.90%
LOS ANGELES REDEV-D 05.0000 09/01/2028 0.90%
OHIO HOSP REVENUE-A 05.0000 01/15/2031 0.90%
PHILADELPHIA AUTH-A 05.0000 12/01/2023 0.90%
TX PRIVATE ACT-SR LIE 07.0000 06/30/2040 0.89%
UNIV OF COLORADO CO H 05.0000 11/15/2038 0.89%
WARREN HLTHCR-A-REF 05.0000 07/01/2040 0.89%
CUMBERLAND CNTY PA MU 05.0000 01/01/2032 0.88%
GLENDALE INDL DEV-REF 04.0000 05/15/2024 0.88%
MI FIN AUTH-B-LOC GOV 05.0000 07/01/2029 0.88%
SC PUB SVC AUTH-B-REF 05.0000 12/01/2038 0.87%
BAY AREA CA TOLL AUTH 04.0000 04/01/2031 0.86%
ILLINOIS ST-A 05.0000 04/01/2021 0.86%
ILLINOIS ST-REF 05.0000 02/01/2026 0.86%
BAY AREA CA TOLL AUTH 04.0000 04/01/2033 0.85%
CAPE GIRARDEAU CNTY M 05.0000 03/01/2020 0.84%
CAPE GIRARDEAU DEV-A 05.0000 06/01/2019 0.84%
CARLISLE SD-IMPT 04.0000 12/01/2031 0.84%
HOUSTON ARPT FAC-C 05.0000 07/15/2020 0.84%
MTA HUDSON RAIL YRD-A 05.0000 11/15/2046 0.84%
PA HSG-115A-AMT 03.3500 10/01/2023 0.83%
SC PUB SVC-B-REF 04.0000 12/01/2019 0.83%
MARTIN CO DEV-REF 04.2000 12/15/2025 0.81%
NIAGARA DEV CORP-A 05.0000 05/01/2018 0.81%
CA STWD CMNTYS-REF 01.9000 04/01/2028 0.80%
E-470 HWY-B-LIBOR 01.8790 09/01/2039 0.79%
SAN ANTONIO TX ELEC & 02.0000 02/01/2033 0.79%
CA DEPT WTR-AU-VAR 01.1300 12/01/2035 0.78%
CHESTER CO IDA-A 03.0000 08/01/2019 0.78%
CT HLTH & EDU FACS 02.8750 09/01/2020 0.78%
FARMINGTON NM POLL CO 01.8750 04/01/2033 0.78%
MISSION ECON-VAR-A 01.1000 01/01/2020 0.78%
WASHINGTON ST HLTH CA 01.9290 01/01/2042 0.78%
MD ECON DEV CORP-REF 04.0000 07/01/2020 0.71%
OAKLAND USD 05.5000 08/01/2023 0.70%
CHICAGO BOE CAB-SCH-A 00.0000 12/01/2021 0.69%
CHICAGO OHARE-A-REF 05.0000 01/01/2022 0.67%
CHICAGO WTR DIST-B 05.0000 12/01/2021 0.67%
CO ST HLTH FACS-EVANG 05.0000 12/01/2022 0.67%
GLENDALE IDA REF-MID 05.2500 05/15/2021 0.67%
NJ HLTH CARE-REF 05.0000 09/15/2023 0.64%
CHICAGO-A-REF 04.0000 01/01/2024 0.62%
BRAZOS HBR-DOW CHEM 05.9000 05/01/2038 0.61%
MI HOSP FIN-F4-VAR 01.9500 11/15/2047 0.60%
GREAT LAKES WTR-C-REF 05.0000 07/01/2036 0.53%
NJ HLTH-RF-HOLY NAME 04.2500 07/01/2018 0.48%
PHILADELPHIA GAS-9TH 05.0000 08/01/2022 0.47%
LORAIN PORT-A-REF 05.0000 11/15/2023 0.46%
PARK CREEK CO MET-A 05.0000 12/01/2025 0.46%
ABAG FIN AUTH-B-REF 05.0000 07/01/2022 0.45%
CHICAGO WSTWTR TRANS 05.0000 01/01/2026 0.45%
LAS VEGAS REDEV-REF 05.0000 06/15/2022 0.45%
MASSACHUSETTS TPK -A 05.1250 01/01/2023 0.45%
MI FIN AUTH-C 05.0000 07/01/2026 0.45%
ST PUB SCH BLDG-A 05.0000 06/15/2028 0.45%
WEST SHORE AREA AUTH 05.0000 07/01/2025 0.45%
ILLINOIS ST 05.0000 07/01/2023 0.43%
MAIN ST NAT GAS INC-B 05.0000 03/15/2021 0.43%
RAILSPLITTER 05.2500 06/01/2020 0.43%
DEEPHAVEN CHTR-REF-A 04.4000 07/01/2025 0.42%
HAMILTON CO HLTH 04.0000 01/01/2021 0.42%
NYS HSG-A-AFFORDABLE 03.8000 05/01/2020 0.42%
IL FIN AUTH 05.0000 11/15/2022 0.41%
AZ INDL DEV-A-REF P/P 144A 04.0000 07/01/2021 0.40%
E HEMPFIELD TWP IDA 05.0000 07/01/2030 0.34%
GAINESVILLE ETC DEV 05.0000 03/01/2027 0.31%
WAYNE ARPT-RF-C-DETRO 05.0000 12/01/2017 0.28%
DENVER ARPT-AMT-SER A 05.0000 11/15/2020 0.26%
KY ST ECON DEV-A 05.0000 06/01/2020 0.26%
ALAMEDA CORRIDOR-A 05.0000 10/01/2021 0.23%
ALAMEDA CORRIDOR-A 05.0000 10/01/2024 0.23%
CHICAGO WTR REF-SER A 05.0000 12/01/2021 0.22%
LYCOMING CNTY HLTH-A 05.1000 07/01/2020 0.21%
NJ HLTH-RF-HOLY NAME 04.5000 07/01/2020 0.21%
NJ TRANSN TR FD-A 05.0000 06/15/2020 0.21%
NORTHAMPTON HSP-A-ST 05.0000 08/15/2020 0.21%
RAILSPLITTER 05.2500 06/01/2021 0.18%
LAS VEGAS IMPT DIST 05.0000 06/01/2024 0.17%
MA H/E-PARTNERS HLTHC 04.0000 07/01/2019 0.12%

Prior top 10 holdings

Top 10 holdings as of 11/30/17
Wstrn Muni Wtr Dt-A 01.5000 10/01/2039
Clifton Hgr Edu Fin 04.0000 08/15/2030
Ct Hlth & Eductnl-A 01.3000 07/01/2048
Washington St-A-Cops 05.0000 07/01/2033
California St Muni Fi 05.0000 05/15/2032
Nyc Transtnl Fin-A1 05.0000 08/01/2037
Met Transprtn-B 05.0000 11/15/2038
Met Transprtn Auth Ny 05.0000 11/15/2020
Dallas Etc Arprt-A 05.0000 11/01/2043
Atlantic City Nj-B 05.0000 03/01/2020
Holdings represent 18.40% of portfolio
Top 10 holdings as of 10/31/17
Wstrn Muni Wtr Dt-A 01.5000 10/01/2039
Clifton Hgr Edu Fin 04.0000 08/15/2030
Ct Hlth & Eductnl-A 01.3000 07/01/2048
Washington St-A-Cops 05.0000 07/01/2033
California St Muni Fi 05.0000 05/15/2032
Nyc Transtnl Fin-A1 05.0000 08/01/2037
Met Transprtn-B 05.0000 11/15/2038
Dallas Etc Arprt-A 05.0000 11/01/2043
Atlantic City Nj-B 05.0000 03/01/2020
Fl Boe Lottery Ser B 05.0000 07/01/2022
Holdings represent 18.81% of portfolio
Top 10 holdings as of 09/30/17
Wstrn Muni Wtr Dt-A 01.5000 10/01/2039
Clifton Hgr Edu Fin 04.0000 08/15/2030
Ct Hlth & Eductnl-A 01.3000 07/01/2048
Washington St-A-Cops 05.0000 07/01/2033
Nyc Transtnl Fin-A1 05.0000 08/01/2037
Met Transprtn-B 05.0000 11/15/2038
Dallas Etc Arprt-A 05.0000 11/01/2043
Atlantic City Nj-B 05.0000 03/01/2020
Fl Boe Lottery Ser B 05.0000 07/01/2022
Cypress-Fairbanks Isd 01.4000 02/15/2040
Holdings represent 18.58% of portfolio
Top 10 holdings as of 08/31/17
Wstrn Muni Wtr Dt-A 01.5000 10/01/2039
Clifton Hgr Edu Fin 04.0000 08/15/2030
Ct Hlth & Eductnl-A 01.3000 07/01/2048
Washington St-A-Cops 05.0000 07/01/2033
Nyc Transtnl Fin-A1 05.0000 08/01/2037
Met Transprtn-B 05.0000 11/15/2038
Dallas Etc Arprt-A 05.0000 11/01/2043
Fl Boe Lottery Ser B 05.0000 07/01/2022
Cypress-Fairbanks Isd 01.4000 02/15/2040
Arlington Hgr Edu-A 04.0000 12/01/2031
Holdings represent 17.87% of portfolio

Portfolio composition as of 11/30/17

Municipal bonds and notes 96.86%
Cash and net other assets 3.14%

Fixed income statistics as of 11/30/17

Average stated maturity 11.66 yrs.
Average effective maturity 5.56 yrs.
Option adjusted duration 5.17 yrs.
Duration to worst 4.36 yrs.
Average yield to maturity 2.68%
Average coupon 4.23%
Average price $109.30
AMT exposure 9.07%

Quality rating as of 11/30/17

AAA 14.53%
AA 33.79%
A 30.80%
BBB 14.01%
BB 3.56%
Not Rated 0.17%
Cash and net other assets 3.14%

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. Unlike bonds, funds that invest in bonds have fees and expenses. Tax-exempt bonds may be issued under the Internal Revenue Code only by limited types of issuers for limited types of projects. As a result, the fund's investments may be focused in certain market segments and be more vulnerable to fluctuations in the values of the securities it holds than a more broadly invested fund. Interest the fund receives may be taxable. 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 as of the date indicated above. 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. Short-term cash bonds are included in the cash and net other assets category. Ratings and portfolio credit quality will vary over time. Derivative instruments are only included to the extent of any unrealized gain or loss on such instruments and are shown in the cash and net other assets category. Cash is also shown in the cash and net other assets category. The fund itself has not been rated by an independent rating agency.

Top Industry Sectors as of 11/30/17

Health care 15.64%
Transportation 15.26%
State Debt 12.62%
Local Debt 12.05%
Utilities 11.67%
Education 10.13%
Special Tax 5.62%
Land 4.50%
Cash and net other assets 3.14%
 
Other
9.37%
Housing 3.00%
Prerefunded 2.04%
Tobacco 1.53%
Industrials 1.45%
Financials 1.35%

Sectors will vary over time.


Expenses

Expense ratio

Class A Class B Class C Class M Class Y
Total expense ratio 1.47% 2.07% 2.22% 1.72% 1.22%
What you pay† 0.85% 1.45% 1.60% 1.10% 0.60%

† 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 4.00% / 3.50% 0.00% / 4.00% 0.00% / 1.00% 3.25% / 3.00% --
$50,000-$99,999 4.00% / 3.50% 0.00% / 4.00% 0.00% / 1.00% 2.25% / 2.00% --
$100,000-$249,999 3.25% / 2.75% -- 0.00% / 1.00% 1.25% / 1.00% --
$250,000-$499,999 2.50% / 2.00% -- 0.00% / 1.00% 1.00% / 1.00% --
$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% 5.00% 1.00% -- --
9 to 12 mts. 0.00% 5.00% 1.00% -- --
2 yrs. -- 4.00% 0.00% -- --
3 yrs. -- 3.00% 0.00% -- --
4 yrs. -- 3.00% 0.00% -- --
5 yrs. -- 2.00% 0.00% -- --
6 yrs. -- 1.00% 0.00% -- --
7+ yrs. -- 0.00% 0.00% -- --

Trail commissions

  Class A Class B Class C Class M Class Y
  0.25% 0.25% 1.00% 0.40% 0.00%
  NA NA NA NA NA
  NA NA NA NA NA

The Bloomberg Barclays 7-Year Municipal Index is a subset of the Bloomberg Barclays Municipal Bond Index, covering those issues with remaining maturities of six to seven 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. Unlike bonds, funds that invest in bonds have fees and expenses. Tax-exempt bonds may be issued under the Internal Revenue Code only by limited types of issuers for limited types of projects. As a result, the fund's investments may be focused in certain market segments and be more vulnerable to fluctuations in the values of the securities it holds than a more broadly invested fund. Interest the fund receives may be taxable. 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 as of the date indicated above. 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. Short-term cash bonds are included in the cash and net other assets category. Ratings and portfolio credit quality will vary over time. Derivative instruments are only included to the extent of any unrealized gain or loss on such instruments and are shown in the cash and net other assets category. Cash is also shown in the cash and net other assets category. The fund itself has not been rated by an independent rating agency.