Tax Exempt Income Fund (Class A)  (PTAEX)

Seeking a high level of tax-free income since 1976

Highlights

Objective

The fund seeks as high a level of current income exempt from federal income tax as we believe to be consistent with preservation of capital.

Strategy and process

  • Tax-advantaged income: The fund pursues income free from federal income tax with a portfolio of municipal bonds selected from many states and market sectors.
  • Focus on performance: The portfolio managers seek a competitive yield and to protect investor's capital through careful investment analysis and risk management.
  • A diversified portfolio: A broadly diversified portfolio enables the managers to pursue current tax-free income opportunities while managing risk and seeking to preserve capital.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $8.41
0.00% | $0.00
$8.71
12/06/17
$8.41
09/24/18
Historical fund price

Fund facts as of 05/31/18

Total net assets
$959.48M
Turnover (fiscal year end)
35%
Dividend frequency (view rate)
Monthly
Number of holdings
494
Fiscal year-end
September
CUSIP / Fund code
746870104 / 0009
Inception date
12/31/76
Category
Tax-free Income
Open to new investors
Ticker
PTAEX

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

Consistency of positive performance over five years

Performance represents 5-year returns in rolling quarter-end periods since inception.

Performance shown above does not reflect the effects of any sales charges. Note that returns of 0.00% are counted as positive periods. For complete fund performance, please see below.

22.07%

Best 5-year annualized return

(for period ending 12/31/86)


-1.95%

Worst 5-year annualized return

(for period ending 12/31/81)


7.01%

Average 5-year annualized return


  • 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. 10 yrs.
Before sales charge 2.03% 2.76% 3.43% 4.23%
After sales charge -2.05% 1.38% 2.59% 3.80%
Bloomberg Barclays Municipal Bond Index 1.56% 2.85% 3.53% 4.43%

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 08/31/18 0.16 % -3.85 %
YTD as of 09/24/18 -0.71 % -4.69 %

Yield

Distribution rate before sales charge
as of 09/24/18
3.05%
Distribution rate after sales charge
as of 09/24/18
2.93%
30-day SEC yield as of 08/31/18
(after sales charge)
2.16%

Risk-adjusted performance as of 05/31/18

Sharpe ratio (3 yrs.) 0.75
Information ratio (3 yrs.) -0.16

Volatility as of 05/31/18

Standard deviation (3 yrs.) 2.84%
Beta 0.86
R-squared 0.97

Lipper rankings as of 05/31/18

Time period Rank/Funds in category Percentile ranking
1 yr. 91/256 36%
3 yrs. 124/230 54%
5 yrs. 107/196 55%
10 yrs. 69/154 45%
Lipper category: General & Insured Municipal Debt Funds

Morningstar Ratings as of 05/31/18

Time period Funds in category Morningstar Rating
Overall 146
3 yrs. 146
5 yrs. 126
10 yrs. 105
Morningstar category: Muni National Long

Distributions

Accrual days 34
Accrual start date 08/01/18
Accrual end date 09/03/18
Payable date 08/31/18
Non-taxable income $0.023469093
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

Portfolio composition as of 05/31/18

Municipal bonds and notes 94.57%
Cash and net other assets 5.43%

Fixed income statistics as of 05/31/18

Average stated maturity 17.10 yrs.
Average effective maturity 5.77 yrs.
Option adjusted duration 6.48 yrs.
Duration to worst 4.65 yrs.
Average yield to maturity 3.67%
Average coupon 4.56%
Average price $106.63
AMT exposure 9.89%

Quality rating as of 05/31/18

AAA 8.81%
AA 28.23%
A 38.72%
BBB 15.20%
BB 1.38%
B 0.51%
Not Rated 1.72%
Cash and net other assets 5.43%

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: Capital gains, if any, are taxable for federal and, in most cases, state purposes. For some investors, investment income may be subject to the federal alternative minimum tax. Income from federally tax-exempt funds may be subject to state and local taxes. 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 might be taxable. 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. 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 05/31/18

Utilities 14.44%
Transportation 13.99%
Health care 13.75%
State Debt 11.02%
Special Tax 8.68%
Local Debt 8.34%
Education 7.67%
Cash and net other assets 5.43%
Prerefunded 4.04%
 
Other
12.64%
Financials 3.21%
Industrials 2.87%
Land 2.06%
Tobacco 1.97%
Other 1.65%
Housing 0.88%

Sectors will vary over time.


Expenses

Expense ratio

Class A Class B Class C Class M Class R6 Class Y
Total expense ratio 0.77% 1.40% 1.55% 1.05% 0.53% 0.55%
What you pay 0.77% 1.40% 1.55% 1.05% 0.53% 0.55%

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 Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds. You cannot invest directly in an index.

Consider these risks before investing: Capital gains, if any, are taxable for federal and, in most cases, state purposes. For some investors, investment income may be subject to the federal alternative minimum tax. Income from federally tax-exempt funds may be subject to state and local taxes. 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 might be taxable. 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. 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.