Intermediate-Term Municipal Income Fund (Class Y)  (PIMYX)

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

Highlights

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 $10.20
0.00% | $0.00
$10.39
09/08/17
$10.10
04/26/18
Historical fund price

Fund facts as of 06/30/18

Total net assets
$14.83M
Turnover (fiscal year end)
91%
Dividend frequency (view rate)
Monthly
Number of holdings
122
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


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 06/30/18

  • Annual performance as of 06/30/18

Annualized Total return (%) as of 06/30/18

Annualized performance 1 yr. 3 yrs. 5 yrs. Life (inception: 03/18/13 )
Before sales charge 1.53% 2.11% 2.55% 1.94%
After sales charge N/A N/A N/A N/A
Bloomberg Barclays 7 Year Municipal Index 0.30% 2.20% 2.80% --

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. 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 Multi-Asset Absolute Return Fund, and 4.00% and 3.25% for income funds (2.25% and 0.75% for Putnam Short Duration Bond Fund and 1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Fixed Income Absolute Return 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 Short Duration Bond Fund, Putnam Fixed Income Absolute Return 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, 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. 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 06/30/18 0.07 % -
YTD as of 07/16/18 0.11 % -

Yield

Distribution rate before sales charge
as of 07/16/18
2.03%
Distribution rate after sales charge
as of 07/16/18
2.03%
30-day SEC yield with subsidy
as of 06/30/18
2.01%
30-day SEC yield without subsidy
as of 06/30/18
1.05%

Risk-adjusted performance as of 06/30/18

Sharpe ratio (3 yrs.) 0.55
Information ratio (3 yrs.) -0.11

Volatility as of 06/30/18

Standard deviation (3 yrs.) 2.75%
Beta 0.85
R-squared 0.95

Lipper rankings as of 06/30/18

Intermediate Municipal Debt Funds Percentile ranking Rank/Funds in category
1 yr. 28% 60/218
3 yrs. 48% 93/193
5 yrs. 55% 97/177
10 yrs.   --

Morningstar ratings as of 06/30/18

Muni National Interm Rating Funds in category
Overall (261)
3 yrs. (261)
5 yrs. (233)

Distributions

Accrual days 29
Accrual start date 06/01/18
Accrual end date 06/29/18
Payable date 06/29/18
Non-taxable income $0.017584007
Extra taxable income --

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.


Holdings

Top 10 holdings as of 06/30/18

Port Auth Ny & Nj-Amt 05.0000 09/01/2021 3.35%
Harris Cnty Toll Road 05.0000 08/15/2033 2.00%
Philadelphia Sd-A 05.0000 09/01/2027 1.95%
Clifton Hgr Edu Fin 04.0000 08/15/2030 1.82%
Ohio St-A 04.0000 02/01/2033 1.79%
Nj Trn Sys Ser A 05.8750 12/15/2038 1.71%
Gilliam Wst Var-A-Con 02.2500 08/01/2025 1.69%
Virginia St Cmwlth-A 05.0000 05/15/2032 1.60%
Washington St-A-Cops 05.0000 07/01/2033 1.60%
California-Cm-Amt-Ref 02.0000 12/01/2020 1.59%
Top 10 holdings, percent of portfolio 19.10%

Full portfolio holdings as of 03/31/18

MI ST FIN AUTH-B-REF 05.0000 07/01/2021 3.45%
PORT AUTH NY & NJ-AMT 05.0000 09/01/2021 3.34%
MD HLTH & HGR EDU-A 01.8640 05/15/2046 2.03%
HARRIS CNTY TOLL ROAD 05.0000 08/15/2033 2.00%
PHILADELPHIA SD-A 05.0000 09/01/2027 1.93%
CLIFTON HGR EDU FIN 04.0000 08/15/2030 1.84%
NJ TRN SYS SER A 05.8750 12/15/2038 1.76%
VIRGINIA ST CMWLTH-A 05.0000 05/15/2032 1.63%
CALIFORNIA ST MUNI FI 05.0000 05/15/2032 1.62%
CALIFORNIA-CM-AMT-REF 02.0000 12/01/2020 1.60%
SAN DIEGO PUB FACS 05.0000 10/15/2029 1.60%
KANSAS CITY MO SANTN 05.0000 01/01/2028 1.59%
WASHINGTON ST-A-COPS 05.0000 07/01/2033 1.57%
MET TRANSPRTN-B 05.0000 11/15/2038 1.52%
ATLANTIC CITY NJ-B 05.0000 03/01/2020 1.46%
SAN BERNARDINO CCD-A 04.0000 08/01/2033 1.45%
DALLAS ETC ARPT-B-AMT 04.5000 11/01/2045 1.41%
ARLINGTON HGR EDU-A 04.0000 12/01/2031 1.20%
GOLDEN ST TOBACCO SEC 05.0000 06/01/2033 1.17%
READING SD 05.0000 03/01/2028 1.17%
ANAHEIM CA HSG & PUBL 05.0000 10/01/2036 1.13%
KY PPTY & BLDGS-D-REF 05.0000 05/01/2021 1.12%
DALLAS ISD-B5-BLDG 05.0000 02/15/2036 1.10%
NJ ECON-REF-K-SCH FAC 05.5000 12/15/2019 1.05%
BURKE CNTY DEV AUTH 01.8500 12/01/2049 1.02%
MET TRANS AUTH-A2A 02.1700 11/01/2026 1.01%
VT EDU HLTH BLDG FIN 05.0000 12/01/2025 1.00%
PALM DESERT REDEV-A 05.0000 10/01/2026 0.82%
GLENDALE AZ EXCISE TA 05.0000 07/01/2026 0.80%
INGLEWOOD REDEV-A-REF 05.0000 05/01/2031 0.80%
ROCHESTER SD-I 05.0000 05/01/2025 0.80%
BROWARD CO ARPT-A-AMT 05.0000 10/01/2025 0.79%
HIGH PLAINS CO MET DI 05.0000 12/01/2029 0.79%
JEFFERSON CO-REV-REF 05.0000 09/15/2029 0.79%
NJ HLTH CARE FAC FIN 05.0000 07/01/2025 0.79%
SA ENERGY ACQ PUB FAC 05.5000 08/01/2025 0.79%
TSASC INC-A-REF 05.0000 06/01/2026 0.79%
ARLINGTON HGR EDU-A 05.0000 08/15/2026 0.78%
FOOTHILL ETC CLG DIST 05.0000 04/01/2033 0.78%
NEW JERSEY ST EDUCTNL 05.0000 07/01/2034 0.78%
PA TURNPIKE-B1 05.0000 06/01/2029 0.78%
PHILADELPHIA AUTH-A 05.0000 12/01/2023 0.78%
CHICAGO WTRWKS-REMK 05.0000 11/01/2030 0.77%
PUBLIC FIN AUTH-AMT 05.0000 09/30/2025 0.77%
WHITING IN ENVRNMNTL 05.0000 11/01/2045 0.77%
CHICAGO ARPT-AMT 05.0000 01/01/2023 0.76%
CHICAGO OHARE-C-AMT 05.2500 01/01/2027 0.76%
CUMBERLAND CNTY PA MU 05.0000 01/01/2032 0.76%
ILLINOIS ST FIN AUTH 05.0000 11/01/2031 0.76%
NEW JERSEY ST ECON DE 05.0000 11/01/2026 0.76%
OHIO HOSP REVENUE-A 05.0000 01/15/2031 0.76%
TX PRIVATE ACT-SR LIE 07.0000 06/30/2040 0.76%
LOS ANGELES REDEV-D 05.0000 09/01/2028 0.75%
MI FIN AUTH-B-LOC GOV 05.0000 07/01/2029 0.75%
WARREN HLTHCR-A-REF 05.0000 07/01/2040 0.75%
GAINESVILLE ETC DEV 05.0000 03/01/2027 0.74%
GLENDALE INDL DEV-REF 04.0000 05/15/2024 0.74%
SC PUB SVC AUTH-B-REF 05.0000 12/01/2038 0.74%
BAY AREA CA TOLL AUTH 04.0000 04/01/2033 0.73%
BLACK BELT ENERGY GAS 04.0000 12/01/2048 0.73%
MET TRANS AUTH-C1-REF 04.0000 11/15/2032 0.73%
CARLISLE SD-IMPT 04.0000 12/01/2031 0.72%
HOUSTON ARPT FAC-C 05.0000 07/15/2020 0.72%
ILLINOIS ST-A 05.0000 04/01/2021 0.72%
MTA HUDSON RAIL YRD-A 05.0000 11/15/2046 0.72%
CAPE GIRARDEAU CNTY M 05.0000 03/01/2020 0.71%
CAPE GIRARDEAU DEV-A 05.0000 06/01/2019 0.71%
ILLINOIS ST-REF 05.0000 02/01/2026 0.71%
SC PUB SVC-B-REF 04.0000 12/01/2019 0.71%
MARTIN CO DEV-REF 04.2000 12/15/2025 0.70%
PA HSG-115A-AMT 03.3500 10/01/2023 0.70%
NIAGARA DEV CORP-A 05.0000 05/01/2018 0.69%
CA STWD CMNTYS-REF 01.9000 04/01/2028 0.68%
CHESTER CO IDA-A 03.0000 08/01/2019 0.68%
CT HLTH & EDU FACS 02.8750 09/01/2020 0.68%
E-470 HWY-B-LIBOR 02.3190 09/01/2039 0.68%
SAN ANTONIO TX ELEC & 02.0000 02/01/2033 0.68%
SOUTHLANDS CO MET DT 03.5000 12/01/2027 0.68%
WASHINGTON ST HLTH CA 02.3690 01/01/2042 0.68%
FARMINGTON NM POLL CO 01.8750 04/01/2033 0.67%
MD ECON DEV CORP-REF 04.0000 07/01/2020 0.61%
CHICAGO BOE CAB-SCH-A 00.0000 12/01/2021 0.59%
OAKLAND USD 05.5000 08/01/2023 0.59%
CHICAGO WTR DIST-B 05.0000 12/01/2021 0.57%
CO ST HLTH FACS-EVANG 05.0000 12/01/2022 0.57%
CHICAGO OHARE-A-REF 05.0000 01/01/2022 0.56%
GLENDALE IDA REF-MID 05.2500 05/15/2021 0.56%
NJ HLTH CARE-REF 05.0000 09/15/2023 0.55%
BRAZOS HBR-DOW CHEM 05.9000 05/01/2038 0.52%
CHICAGO-A-REF 04.0000 01/01/2024 0.52%
MI HOSP FIN-F4-VAR 01.9500 11/15/2047 0.51%
GREAT LAKES WTR-C-REF 05.0000 07/01/2036 0.45%
NJ HLTH-RF-HOLY NAME 04.2500 07/01/2018 0.41%
PARK CREEK CO MET-A 05.0000 12/01/2025 0.40%
PHILADELPHIA GAS-9TH 05.0000 08/01/2022 0.40%
LORAIN PORT-A-REF 05.0000 11/15/2023 0.39%
ABAG FIN AUTH-B-REF 05.0000 07/01/2022 0.38%
CHICAGO WSTWTR TRANS 05.0000 01/01/2026 0.38%
LAS VEGAS REDEV-REF 05.0000 06/15/2022 0.38%
MASSACHUSETTS TPK -A 05.1250 01/01/2023 0.38%
MI FIN AUTH-C 05.0000 07/01/2026 0.38%
WEST SHORE AREA AUTH 05.0000 07/01/2025 0.38%
RAILSPLITTER 05.2500 06/01/2020 0.37%
ST PUB SCH BLDG-A 05.0000 06/15/2028 0.37%
CHICAGO BOE-E-REF 05.0000 12/01/2021 0.36%
DEEPHAVEN CHTR-REF-A 04.4000 07/01/2025 0.36%
ILLINOIS ST 05.0000 07/01/2023 0.36%
MAIN ST NAT GAS INC-B 05.0000 03/15/2021 0.36%
NYS HSG-A-AFFORDABLE 03.8000 05/01/2020 0.36%
AZ INDL DEV-A-REF P/P 144A 04.0000 07/01/2021 0.35%
HAMILTON CO HLTH 04.0000 01/01/2021 0.35%
IL FIN AUTH 05.0000 11/15/2022 0.34%
E HEMPFIELD TWP IDA 05.0000 07/01/2030 0.29%
DENVER ARPT-AMT-SER A 05.0000 11/15/2020 0.22%
KY ST ECON DEV-A 05.0000 06/01/2020 0.22%
CHICAGO WTR REF-SER A 05.0000 12/01/2021 0.19%
LYCOMING CNTY HLTH-A 05.1000 07/01/2020 0.18%
NJ HLTH-RF-HOLY NAME 04.5000 07/01/2020 0.18%
NJ TRANSN TR FD-A 05.0000 06/15/2020 0.18%
NORTHAMPTON HSP-A-ST 05.0000 08/15/2020 0.18%
LAS VEGAS IMPT DIST 05.0000 06/01/2024 0.15%
RAILSPLITTER 05.2500 06/01/2021 0.15%
MA H/E-PARTNERS HLTHC 04.0000 07/01/2019 0.11%

Prior top 10 holdings

Top 10 holdings as of 06/30/18
Port Auth Ny & Nj-Amt 05.0000 09/01/2021
Harris Cnty Toll Road 05.0000 08/15/2033
Philadelphia Sd-A 05.0000 09/01/2027
Clifton Hgr Edu Fin 04.0000 08/15/2030
Ohio St-A 04.0000 02/01/2033
Nj Trn Sys Ser A 05.8750 12/15/2038
Gilliam Wst Var-A-Con 02.2500 08/01/2025
Virginia St Cmwlth-A 05.0000 05/15/2032
Washington St-A-Cops 05.0000 07/01/2033
California-Cm-Amt-Ref 02.0000 12/01/2020
Holdings represent 19.10% of portfolio
Top 10 holdings as of 05/31/18
Port Auth Ny & Nj-Amt 05.0000 09/01/2021
Harris Cnty Toll Road 05.0000 08/15/2033
Philadelphia Sd-A 05.0000 09/01/2027
Clifton Hgr Edu Fin 04.0000 08/15/2030
Ohio St-A 04.0000 02/01/2033
Nj Trn Sys Ser A 05.8750 12/15/2038
Gilliam Wst Var-A-Con 02.2500 08/01/2025
Virginia St Cmwlth-A 05.0000 05/15/2032
San Diego Pub Facs 05.0000 10/15/2029
California-Cm-Amt-Ref 02.0000 12/01/2020
Holdings represent 18.87% of portfolio
Top 10 holdings as of 04/30/18
Mi St Fin Auth-B-Ref 05.0000 07/01/2021
Port Auth Ny & Nj-Amt 05.0000 09/01/2021
Md Hlth & Hgr Edu-A 01.8780 05/15/2046
Harris Cnty Toll Road 05.0000 08/15/2033
Philadelphia Sd-A 05.0000 09/01/2027
Clifton Hgr Edu Fin 04.0000 08/15/2030
Ohio St-A 04.0000 02/01/2033
Nj Trn Sys Ser A 05.8750 12/15/2038
Virginia St Cmwlth-A 05.0000 05/15/2032
California-Cm-Amt-Ref 02.0000 12/01/2020
Holdings represent 21.33% of portfolio
Top 10 holdings as of 03/31/18
Mi St Fin Auth-B-Ref 05.0000 07/01/2021
Port Auth Ny & Nj-Amt 05.0000 09/01/2021
Md Hlth & Hgr Edu-A 01.8620 05/15/2046
Harris Cnty Toll Road 05.0000 08/15/2033
Philadelphia Sd-A 05.0000 09/01/2027
Clifton Hgr Edu Fin 04.0000 08/15/2030
Nj Trn Sys Ser A 05.8750 12/15/2038
Virginia St Cmwlth-A 05.0000 05/15/2032
California St Muni Fi 05.0000 05/15/2032
California-Cm-Amt-Ref 02.0000 12/01/2020
Holdings represent 21.22% of portfolio

Portfolio composition as of 06/30/18

Municipal bonds and notes 96.41%
Cash and net other assets 3.59%

Fixed income statistics as of 06/30/18

Average stated maturity 10.42 yrs.
Average effective maturity 5.39 yrs.
Option adjusted duration 5.13 yrs.
Duration to worst 4.34 yrs.
Average yield to maturity 2.98%
Average coupon 4.25%
Average price $108.00
AMT exposure 16.08%

Quality rating as of 06/30/18

AAA 9.42%
AA 35.99%
A 33.45%
BBB 13.79%
BB 2.45%
Not Rated 1.31%
Cash and net other assets 3.59%

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. 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 06/30/18

Transportation 18.77%
State Debt 16.84%
Local Debt 15.66%
Health care 11.38%
Education 8.53%
Utilities 8.42%
Special Tax 4.88%
Industrials 3.79%
Cash and net other assets 3.59%
 
Other
8.14%
Land 2.36%
Financials 1.89%
Prerefunded 1.55%
Tobacco 1.29%
Housing 1.05%

Sectors will vary over time.


Expenses

Expense ratio

Class A Class B Class C Class M Class R6 Class Y
Total expense ratio 1.92% 2.52% 2.67% 2.17% 1.64% 1.67%
What you pay† 0.85% 1.45% 1.60% 1.10% 0.57% 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 03/30/19

Sales charge

Investment Breakpoint Class A Class B Class C Class M Class R6 Class Y
$0-$49,999 4.00% 0.00% 0.00% 3.25% -- --
$50,000-$99,999 4.00% 0.00% 0.00% 2.25% -- --
$100,000-$249,999 3.25% -- 0.00% 1.25% -- --
$250,000-$499,999 2.50% -- 0.00% 1.00% -- --
$500,000-$999,999 0.00% -- -- -- -- --
$1M-$4M 0.00% -- -- -- -- --
$4M-$50M 0.00% -- -- -- -- --
$50M+ 0.00% -- -- -- -- --

CDSC

  Class A (sales for $500,000+) Class B Class C Class M Class R6 Class Y
0 to 9 mts. 1.00% 5.00% 1.00% -- -- --
9 to 12 mts. 1.00% 5.00% 1.00% -- -- --
2 yrs. 0.00% 4.00% 0.00% -- -- --
3 yrs. 0.00% 3.00% 0.00% -- -- --
4 yrs. 0.00% 3.00% 0.00% -- -- --
5 yrs. 0.00% 2.00% 0.00% -- -- --
6 yrs. 0.00% 1.00% 0.00% -- -- --
7+ yrs. 0.00% 0.00% 0.00% -- -- --

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. 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.