| UNITED STATES SECURITIES AND EXCHANGE COMMISSION | ||
| Washington, D.C. 20549 | ||
FORM N-CSR | ||
| CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES | ||
| Investment Company Act file number: | (811-04345) |
| Exact name of registrant as specified in charter: | Putnam Tax Free Income Trust |
| Address of principal executive offices: | One Post Office Square, Boston, Massachusetts 02109 |
| Name and address of agent for service: | Robert T. Burns, Vice President One Post Office Square Boston, Massachusetts 02109 |
| Copy to: | Bryan Chegwidden, Esq. Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036 |
| Registrant's telephone number, including area code: | (617) 292-1000 |
| Date of fiscal year end: | July 31, 2017 |
| Date of reporting period: | August 1, 2016 — January 31, 2017 |
Item 1. Report to Stockholders: |
| The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940: | |||
Putnam
AMT-Free Municipal
Fund
Semiannual report
1 | 31 | 17
Consider these risks before investing: Capital gains, if any, are taxable for federal and, in most cases, state purposes. 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 generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have fees and expenses. The fund may invest significantly in particular segments of the tax-exempt debt market, making it more vulnerable to fluctuations in the values of the securities it holds than a fund that invests more broadly. 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 of the risk of default, changes in government intervention in the financial markets, and factors related to a specific issuer. These factors may also lead to periods of high volatility and reduced liquidity in the bond markets. You can lose money by investing in the fund.
Message from the Trustees
March 14, 2017
Dear Fellow Shareholder:
In the early weeks of 2017, investor sentiment generally brightened at the prospect of moving beyond the challenges of the past year, when political uncertainty, among other issues, tested global financial markets. As stock markets delivered modest gains, the exuberance that greeted the new year calmed somewhat as investors reconsidered a number of ongoing macroeconomic risks. In addition, many bond investors remained cautious as the potential for inflation increased.
As always, we believe investors should continue to focus on time-tested strategies: maintain a well-diversified portfolio, keep a long-term view, and do not overreact to short-term market fluctuations. To help ensure that your portfolio is aligned with your individual goals, time horizon, and tolerance for risk, we also believe it is a good idea to speak regularly with your financial advisor.
In today’s environment, we favor the investment approach practiced at Putnam — active strategies based on fundamental research. Putnam portfolio managers, backed by a network of global analysts, bring years of experience to navigating changing market conditions and pursuing investment opportunities. In the following pages, you will find an overview of your fund’s performance for the reporting period ended January 31, 2017, as well as an outlook for the coming months.
Thank you for investing with Putnam.
| 2 AMT-Free Municipal Fund |
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 4.00%; had they, returns would have been lower. See below and pages 9–11 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com.
* Performance for class A shares before their inception (9/20/93) is derived from the historical performance of class B shares.
† Returns for the six-month period are not annualized, but cumulative.
This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 1/31/17. See above and pages 9–11 for additional fund performance information. Index descriptions can be found on page 13.
| AMT-Free Municipal Fund 3 |
Paul M. Drury, CFA
Portfolio Manager
Paul holds a B.A. from Suffolk University. He has been in the investment industry since he joined Putnam in 1989.
In addition to Paul, your fund is managed by Garrett L. Hamilton, CFA. Garrett holds an M.S. in Investment Management from Boston University and a B.S. in International Business Administration from Southern New Hampshire University. He joined Putnam in 2016 and has been in the investment industry since 2006.
Paul, what was the market backdrop like for municipal bonds during the six-month reporting period ended January 31, 2017?
Prices of municipal bonds declined and their yields moved higher in response to slowing mutual fund demand and record new-issue supply during the reporting period. One factor contributing to the spike in issuance was the decision by many issuers to move up their municipal bond offerings ahead of the U.S. presidential election and a potential interest-rate hike by the Federal Reserve before the end of 2016, which came to pass on December 14. As a result, municipal bond issuance for 2016, which totaled $445 billion, proved to be a record-setting year.
On the demand side, outflows began to outpace inflows — a measure of investor interest — as investors moved into a more optimistic “risk-on” posture following the presidential election and transferred assets into more economically sensitive investments or higher-risk investments, such as stocks. Consequently, municipal bond prices fell further and their yields rose accordingly, contributing to a steeper municipal bond yield curve for the balance of the reporting period. We believe the uncertainty around U.S.
| 4 AMT-Free Municipal Fund | |
Allocations are shown as a percentage of the fund’s net assets as of 1/31/17. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the information in the portfolio schedule notes included in the financial statements due to the inclusion of derivative securities, any interest accruals, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.
Credit qualities are shown as a percentage of the fund’s net assets as of 1/31/17. 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.
| AMT-Free Municipal Fund 5 |
income tax policy changes for individuals and corporations was an additional headwind for the asset class post-election.
The net effect of these developments was a weaker supply/demand [technical] picture for the municipal bond market. For the six months ended January 31, 2017, the Bloomberg Barclays Municipal Bond Index [the benchmark index] returned –3.34%, underperforming the BofA Merrill Lynch U.S. 3-Month Treasury Bill Index, which returned 0.20%. Against this backdrop, lower-yielding, higher-rated municipal bonds slightly outperformed higher-yielding, lower-rated municipal bonds. Municipal bonds with longer maturities underperformed those with shorter maturities.
How did the fund perform for the reporting period?
For the six months ended January 31, 2017, the fund underperformed its benchmark index and its Lipper peer group average. The fund’s position in municipal bonds issued by FirstEnergy Solutions was negatively affected when its parent company announced possible restructuring plans.
As part of our effort to manage a portfolio free from the alternative minimum tax [AMT], we sought to avoid AMT non-qualified, private-equity municipal bonds that might increase the portfolio’s AMT exposure. Private-equity bonds are issued by states and municipalities for nongovernmental projects, such as building a new stadium. In this way, the investment income earned by the fund is exempt from federal personal income taxes, thereby helping to limit a shareholder’s AMT exposure. As of January 31, 2017, the fund did not own any bonds that could be subject to the AMT.
What was your investment approach during the reporting period?
Municipal credit spreads [the difference in yield between higher- and lower-quality municipal bonds] widened in this somewhat negative environment. Since municipal bonds tend to be highly correlated with U.S. Treasury bonds over long periods of time, the large move in Treasury yields pushed municipal bond yields higher — further contributing to the widening of credit spreads, especially in the A and BBB subsectors of the investment-grade universe. We believe this development was mainly due to high-yielding municipal bond funds selling their more liquid investment-grade holdings to meet redemptions.
During the reporting period, we believed that downside risks included the possibility of interest rates moving higher should the U.S. economic backdrop continue to improve or flows to municipal bonds turning decidedly negative. As such, we maintained a slightly more defensive duration posture and a somewhat higher cash allocation to help potentially insulate the portfolio from any market pressure from a Fed decision to raise short-term rates. We also believed this strategy would give us greater flexibility to act swiftly when timely investment opportunities presented themselves — as they did when the selloff in municipal bonds rated A and BBB created more value in those bonds, especially compared with lower-rated municipal bond securities, in our view.
Given this backdrop, many of our broader investment themes remained in place. They included duration positioning, or interest-rate sensitivity, that was slightly below the median of the fund’s Lipper peer group; overweight exposure, relative to the benchmark index, to municipal bonds rated BBB; a preference for higher-education, essential service utilities, and continuing-care retirement community bonds relative to its Lipper group; and an underweight position in Puerto Rico-based issuers relative to
| 6 AMT-Free Municipal Fund |
the fund’s Lipper peers. The fund also continued to be weighted more toward essential service revenue bonds than toward general obligation bonds, which typically rely on the taxing power of state and local governments.
What are your thoughts about the recent U.S. presidential election and future Fed rate policy?
With the election behind us, fiscal and monetary policy uncertainty has increased, in our view. Accordingly, we believe the market has begun to price in a greater range of outcomes. Little is known regarding President Trump’s formal policy initiatives, but what can be inferred thus far has been generally interpreted by the market as constructive for economic growth, which we believe could lead to higher inflation. As such, the market is beginning to question the relationship between the timing of the next interest-rate hike and the pace of subsequent hikes. The prospect of more fiscal stimulus against a monetary policy backdrop that is still accommodative by historical measures has the market increasingly concerned about higher inflation, in our view.
While there is still a lot that is unknown, our first read is that fiscal policy will become more stimulative, which may mean that the economy will have less dependence on accommodative monetary policy, and that there is greater potential for higher short-term rates. All that said, we believe that we are still dealing with relatively low, but improving, domestic trend growth; demographic headwinds; a data-dependent Fed; and improving global growth. The economic impact of new policy initiatives is yet to be seen, but we believe that we are still in an environment of gradual normalization by historical standards, but perhaps a little less gradual than the environment that existed before the election.
What is your view of the municipal bond market as 2017 begins?
The technical picture may have weakened in recent months, but we still view the asset class as fairly valued. While the $33 billion of new issuance in January 2017 was the heaviest level of new issue supply on record for that month, the markets anticipate supply to taper off as the year progresses. As such, we believe that we
This chart shows how the fund’s top weightings have changed over the past six months. Allocations are shown as a percentage of the fund’s net assets. Current period summary information may differ from the information in the portfolio schedule notes included in the financial statements due to the inclusion of derivative securities, any interest accruals, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.
| AMT-Free Municipal Fund 7 |
may see technicals coming into more attractive balance near term. Fundamentals are generally sound, in our view, despite a handful of challenging situations such as Puerto Rico. With the widening of credit spreads and more attractive prices, however, we are finding what we believe to be selective investment opportunities in Illinois and New Jersey. In addition, default rates remained low relative to other fixed-income markets at period-end. On a historical basis, the five-year cumulative default rate stands at 0.08%.
That said, 2017 is likely to be a volatile and uncertain year, in our view. Under the new administration, we believe that tax reform is shaping up to be a centerpiece of a Trump presidency. While the tax exemption of municipal bonds may be called into question, a number of market analysts believe that the tax-exempt status of municipal bond income reinforces Trump’s infrastructure investment and job creation goals. In our view, tax-exempt municipal bonds have long been a vital and effective tool for financing public projects, such as roads, schools, and hospitals, as state and local governments have turned to the municipal bond market to fund these projects. We will be following the debate closely to see if tax reform actually materializes, and how the details of tax reform may shape the outlook for municipal bonds.
Thank you, Paul, for your time and insights today.
The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.
Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk. Statements in the Q&A concerning the fund’s performance or portfolio composition relative to those of the fund’s Lipper peer group may reference information produced by Lipper Inc. or through a third party.
| 8 AMT-Free Municipal Fund |
This section shows your fund’s performance, price, and distribution information for periods ended January 31, 2017, the end of the first half of its current fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information as of the most recent calendar quarter-end and expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class Y shares are not available to all investors. See the Terms and Definitions section in this report for definitions of the share classes offered by your fund.
Fund performance Total return for periods ended 1/31/17
| Annual | |||||||||
| average | Annual | Annual | Annual | ||||||
| (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year | 6 months | |
| Class A (9/20/93) | |||||||||
| Before sales charge | 5.79% | 48.70% | 4.05% | 15.16% | 2.86% | 11.45% | 3.68% | –0.49% | –3.67% |
| After sales charge | 5.65 | 42.76 | 3.62 | 10.55 | 2.03 | 6.99 | 2.28 | –4.47 | –7.52 |
| Class B (9/9/85) | |||||||||
| Before CDSC | 5.79 | 41.42 | 3.53 | 11.64 | 2.23 | 9.47 | 3.06 | –1.11 | –3.97 |
| After CDSC | 5.79 | 41.42 | 3.53 | 9.71 | 1.87 | 6.47 | 2.11 | –5.93 | –8.71 |
| Class C (7/26/99) | |||||||||
| Before CDSC | 5.14 | 37.65 | 3.25 | 10.78 | 2.07 | 8.88 | 2.88 | –1.26 | –4.10 |
| After CDSC | 5.14 | 37.65 | 3.25 | 10.78 | 2.07 | 8.88 | 2.88 | –2.22 | –5.04 |
| Class M (6/1/95) | |||||||||
| Before sales charge | 5.55 | 44.63 | 3.76 | 13.59 | 2.58 | 10.53 | 3.39 | –0.82 | –3.85 |
| After sales charge | 5.44 | 39.92 | 3.42 | 9.90 | 1.91 | 6.94 | 2.26 | –4.04 | –6.98 |
| Class Y (1/2/08) | |||||||||
| Net asset value | 5.64 | 51.03 | 4.21 | 16.50 | 3.10 | 12.22 | 3.92 | –0.26 | –3.62 |
Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A and M shares reflect the deduction of the maximum 4.00% and 3.25% sales charge, respectively, levied at the time of purchase. Class B share returns after contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 1% in the sixth year, and is eliminated thereafter. Class C share returns after CDSC reflect a 1% CDSC for the first year that is eliminated thereafter. Class Y shares have no initial sales charge or CDSC. Performance for class A, C, M, and Y shares before their inception is derived from the historical performance of class B shares, adjusted for the applicable sales charge (or CDSC) and, for class C shares, the higher operating expenses for such shares.
For a portion of the periods, the fund had expense limitations, without which returns would have been lower.
Class B share performance reflects conversion to class A shares after eight years.
| AMT-Free Municipal Fund 9 |
Comparative index returns For periods ended 1/31/17
| Annual | |||||||||
| average | Annual | Annual | Annual | ||||||
| (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year | 6 months | |
| Bloomberg | |||||||||
| Barclays Municipal | 6.55% | 52.97% | 4.34% | 15.61% | 2.94% | 11.50% | 3.70% | –0.28% | –3.34% |
| Bond Index | |||||||||
| Lipper General & | |||||||||
| Insured Municipal | |||||||||
| Debt Funds | 6.05 | 43.47 | 3.65 | 15.71 | 2.94 | 11.53 | 3.69 | –0.45 | –3.59 |
| category average* | |||||||||
Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.
* Over the 6-month, 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 1/31/17, there were 265, 262, 230, 207, 152, and 29 funds, respectively, in this Lipper category.
Fund price and distribution information For the six-month period ended 1/31/17
| Distributions | Class A | Class B | Class C | Class M | Class Y | ||
| Number | 6 | 6 | 6 | 6 | 6 | ||
| Income 1 | $0.236010 | $0.188572 | $0.176809 | $0.215466 | $0.254062 | ||
| Capital gains 2 | — | — | — | — | — | ||
| Total | $0.236010 | $0.188572 | $0.176809 | $0.215466 | $0.254062 | ||
| Before | After | Net | Net | Before | After | Net | |
| sales | sales | asset | asset | sales | sales | asset | |
| Share value | charge | charge | value | value | charge | charge | value |
| 7/31/16 | $15.71 | $16.36 | $15.73 | $15.76 | $15.76 | $16.29 | $15.73 |
| 1/31/17 | 14.90 | 15.52 | 14.92 | 14.94 | 14.94 | 15.44 | 14.91 |
| Before | After | Net | Net | Before | After | Net | |
| Current rate | sales | sales | asset | asset | sales | sales | asset |
| (end of period) | charge | charge | value | value | charge | charge | value |
| Current dividend rate 3 | 3.18% | 3.05% | 2.56% | 2.40% | 2.91% | 2.81% | 3.41% |
| Taxable equivalent 4 | 5.62 | 5.39 | 4.52 | 4.24 | 5.14 | 4.96 | 6.02 |
| Current 30-day | |||||||
| SEC yield 5 | N/A | 1.80 | 1.27 | 1.12 | N/A | 1.57 | 2.11 |
| Taxable equivalent 4 | N/A | 3.18 | 2.24 | 1.98 | N/A | 2.77 | 3.73 |
The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A and M shares, if applicable, do not take into account any sales charge levied at the time of purchase. After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (4.00% for class A shares and 3.25% for class M shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.
1 For some investors, investment income may be subject to the federal alternative minimum tax.
2 Capital gains, if any, are taxable for federal and, in most cases, state purposes.
3 Most recent distribution, including any return of capital and excluding capital gains, annualized and divided by share price before or after sales charge at period-end.
4 Assumes maximum 43.40% federal tax rate for 2017. Results for investors subject to lower tax rates would not be as advantageous.
5 Based only on investment income and calculated using the maximum offering price for each share class, in accordance with SEC guidelines.
| 10 AMT-Free Municipal Fund |
Fund performance as of most recent calendar quarter Total return for periods ended 12/31/16
| Annual | |||||||||
| average | Annual | Annual | Annual | ||||||
| (life of fund) | 10 years | average | 5 years | average | 3 years | average | 1 year | 6 months | |
| Class A (9/20/93) | |||||||||
| Before sales charge | 5.79% | 47.29% | 3.95% | 17.57% | 3.29% | 12.80% | 4.10% | –0.19% | –4.26% |
| After sales charge | 5.65 | 41.40 | 3.52 | 12.87 | 2.45 | 8.29 | 2.69 | –4.18 | –8.09 |
| Class B (9/9/85) | |||||||||
| Before CDSC | 5.79 | 39.98 | 3.42 | 14.05 | 2.66 | 10.79 | 3.48 | –0.74 | –4.55 |
| After CDSC | 5.79 | 39.98 | 3.42 | 12.09 | 2.31 | 7.79 | 2.53 | –5.57 | –9.27 |
| Class C (7/26/99) | |||||||||
| Before CDSC | 5.13 | 36.34 | 3.15 | 13.17 | 2.51 | 10.28 | 3.31 | –0.95 | –4.68 |
| After CDSC | 5.13 | 36.34 | 3.15 | 13.17 | 2.51 | 10.28 | 3.31 | –1.92 | –5.62 |
| Class M (6/1/95) | |||||||||
| Before sales charge | 5.55 | 43.35 | 3.67 | 16.12 | 3.03 | 11.94 | 3.83 | –0.38 | –4.37 |
| After sales charge | 5.44 | 38.69 | 3.32 | 12.35 | 2.36 | 8.30 | 2.69 | –3.62 | –7.48 |
| Class Y (1/2/08) | |||||||||
| Net asset value | 5.64 | 49.48 | 4.10 | 18.94 | 3.53 | 13.58 | 4.34 | 0.05 | –4.14 |
See the discussion following the fund performance table on page 9 for information about the calculation of fund performance.
As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.
Expense ratios
| Class A | Class B | Class C | Class M | Class Y | |
| Total annual operating expenses for the fiscal | |||||
| year ended 7/31/16* | 0.80% | 1.41% | 1.56% | 1.06% | 0.56% |
| Annualized expense ratio for the six-month | |||||
| period ended 1/31/17 | 0.80% | 1.41% | 1.56% | 1.06% | 0.56% |
Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.
Expenses are shown as a percentage of average net assets.
* Restated to reflect current fees resulting from a change to the fund’s investor servicing arrangements effective 9/1/16.
| AMT-Free Municipal Fund 11 |
Expenses per $1,000
The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 8/1/16 to 1/31/17. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.
| Class A | Class B | Class C | Class M | Class Y | |
| Expenses paid per $1,000 *† | $3.96 | $6.97 | $7.70 | $5.24 | $2.77 |
| Ending value (after expenses) | $963.30 | $960.30 | $959.00 | $961.50 | $963.80 |
* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 1/31/17. The expense ratio may differ for each share class.
† Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.
Estimate the expenses you paid
To estimate the ongoing expenses you paid for the six months ended 1/31/17, use the following calculation method. To find the value of your investment on 8/1/16, call Putnam at 1-800-225-1581.
Compare expenses using the SEC’s method
The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.
| Class A | Class B | Class C | Class M | Class Y | |
| Expenses paid per $1,000 *† | $4.08 | $7.17 | $7.93 | $5.40 | $2.85 |
| Ending value (after expenses) | $1,021.17 | $1,018.10 | $1,017.34 | $1,019.86 | $1,022.38 |
* Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 1/31/17. The expense ratio may differ for each share class.
† Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year.
| 12 AMT-Free Municipal Fund | |
Terms and definitions
Important terms
Total return shows how the value of the fund’s shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund.
Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.
After sales charge is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge performance figures shown here assume the 4.00% maximum sales charge for class A shares and 3.25% for class M shares.
Contingent deferred sales charge (CDSC) is generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B CDSC declines over time from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase.
Share classes
Class A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).
Class B shares are not subject to an initial sales charge and may be subject to a CDSC.
Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC.
Class Y shares are not subject to an initial sales charge or CDSC, and carry no 12b-1 fee.
They are generally only available to corporate and institutional clients and clients in other approved programs.
Fixed-income terms
Current rate is the annual rate of return earned from dividends or interest of an investment. Current rate is expressed as a percentage of the price of a security, fund share, or principal investment.
Yield curve is a graph that plots the yields of bonds with equal credit quality against their differing maturity dates, ranging from shortest to longest. It is used as a benchmark for other debt, such as mortgage or bank lending rates.
Comparative indexes
Bloomberg Barclays Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds.
Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.
BofA Merrill Lynch U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.
S&P 500 Index is an unmanaged index of common stock performance.
Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.
Lipper is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.
| AMT-Free Municipal Fund 13 |
Other information for shareholders
Important notice regarding delivery of shareholder documents
In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.
Proxy voting
Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2016, are available in the Individual Investors section of putnam.com, and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.
Fund portfolio holdings
The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain the fund’s Form N-Q on the SEC’s website at www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You may call the SEC at 1-800-SEC-0330 for information about the SEC’s website or the operation of the Public Reference Room.
Trustee and employee fund ownership
Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of January 31, 2017, Putnam employees had approximately $465,000,000 and the Trustees had approximately $135,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.
| 14 AMT-Free Municipal Fund | |
Financial statements
These sections of the report, as well as the accompanying Notes, constitute the fund’s financial statements.
The fund’s portfolio lists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.
Statement of assets and liabilities shows how the fund’s net assets and share price are determined. All investment and non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)
Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal period.
Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.
Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.
| AMT-Free Municipal Fund 15 |
The fund’s portfolio 1/31/17 (Unaudited)
| Key to holding’s abbreviations | |
| ABAG Association Of Bay Area Governments | FRB Floating Rate Bonds: the rate shown is the current |
| interest rate at the close of the reporting period | |
| AGM Assured Guaranty Municipal Corporation | |
| G.O. Bonds General Obligation Bonds | |
| AMBAC AMBAC Indemnity Corporation | |
| GNMA Coll. Government National Mortgage | |
| BAM Build America Mutual | Association Collateralized |
| COP Certificates of Participation | NATL National Public Finance Guarantee Corp. |
| FCS Farm Credit System | PSFG Permanent School Fund Guaranteed |
| FGIC Financial Guaranty Insurance Company | U.S. Govt. Coll. U.S. Government Collateralized |
| FHLMC Coll. Federal Home Loan Mortgage | VRDN Variable Rate Demand Notes, which are floating- |
| Corporation Collateralized | rate securities with long-term maturities that carry |
| coupons that reset and are payable upon demand | |
| FNMA Coll. Federal National Mortgage | either daily, weekly or monthly. The rate shown is the |
| Association Collateralized | current interest rate at the close of the reporting period. |
| MUNICIPAL BONDS AND NOTES (97.6%)* | Rating** | Principal amount | Value |
| Alabama (0.9%) | |||
| AL State Port Auth. Docks Fac. Rev. Bonds, | |||
| 6.00%, 10/1/40 | A– | $1,000,000 | $1,131,800 |
| Lower AL Gas Dist. Rev. Bonds (Gas Project), Ser. A, | |||
| 5.00%, 9/1/46 | A3 | 750,000 | 860,813 |
| Selma, Indl. Dev. Board Rev. Bonds (Gulf | |||
| Opportunity Zone Intl. Paper Co.), Ser. A, | |||
| 6.25%, 11/1/33 | BBB | 1,500,000 | 1,669,365 |
| 3,661,978 | |||
| Arizona (3.1%) | |||
| Coconino Cnty., Poll. Control Rev. Bonds (Tucson | |||
| Elec. Pwr. Co. — Navajo), Ser. A, 5.125%, 10/1/32 | A3 | 1,000,000 | 1,048,690 |
| El Mirage G.O. Bonds, AGM, 5.00%, 7/1/42 | AA | 750,000 | 833,093 |
| Glendale, Indl. Dev. Auth. Rev. Bonds (Midwestern | |||
| U.), 5.125%, 5/15/40 | A | 2,125,000 | 2,310,916 |
| Glendale, Indl. Dev. Auth. Sr. Living Fac. Rev. Bonds | |||
| (Royal Oaks Life Care Cmnty.) | |||
| 4.00%, 5/15/31 | A/F | 1,000,000 | 1,014,690 |
| 4.00%, 5/15/29 | A/F | 1,000,000 | 1,036,080 |
| Queen Creek, Excise Tax & State Shared Rev. Rev. | |||
| Bonds, 5.00%, 8/1/32 | AA | 1,000,000 | 1,158,800 |
| Salt Verde, Fin. Corp. Gas Rev. Bonds, | |||
| 5.50%, 12/1/29 | Baa1 | 1,000,000 | 1,188,100 |
| Scottsdale, Indl. Dev. Auth. Hosp. Rev. Bonds | |||
| (Scottsdale Hlth. Care), Ser. C, AGM, 5.00%, 9/1/35 | AA | 2,000,000 | 2,177,220 |
| U. Med. Ctr. Corp. Hosp. Rev. Bonds, U.S. Govt. Coll., | |||
| 6.50%, 7/1/39 (Prerefunded 7/1/19) | AAA/P | 1,750,000 | 1,964,848 |
| 12,732,437 | |||
| California (13.4%) | |||
| ABAG Fin. Auth. for Nonprofit Corps. Rev. Bonds | |||
| (Episcopal Sr. Cmntys.), 6.125%, 7/1/41 | BBB+/F | 500,000 | 548,700 |
| Bay Area Toll Auth. of CA Rev. Bonds (Toll Bridge), | |||
| Ser. S-4, 5.00%, 4/1/33 | AA– | 800,000 | 913,520 |
| 16 AMT-Free Municipal Fund | |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| California cont. | |||
| CA Hlth. Fac. Fin. Auth. Rev. Bonds (Adventist | |||
| Hlth. Syst.-West), Ser. A, 5.75%, 9/1/39 | |||
| (Prerefunded 9/1/19) | A | $1,000,000 | $1,112,710 |
| CA Muni. Fin. Auth. Rev. Bonds | |||
| (U. of La Verne), Ser. A, 6.25%, 6/1/40 | Baa1 | 1,000,000 | 1,112,550 |
| (Biola U.), 5.00%, 10/1/38 | Baa1 | 1,200,000 | 1,292,028 |
| CA Muni. Fin. Auth. Sr. Living Rev. Bonds (Pilgrim | |||
| Place Claremont), Ser. A, 5.875%, 5/15/29 | |||
| (Prerefunded 5/15/19) | AA– | 1,500,000 | 1,658,520 |
| CA State G.O. Bonds | |||
| 6.50%, 4/1/33 | Aa3 | 3,500,000 | 3,907,260 |
| 5.00%, 11/1/43 | Aa3 | 1,000,000 | 1,119,960 |
| 5.00%, 2/1/38 | Aa3 | 3,000,000 | 3,330,420 |
| CA State Infrastructure & Econ. Dev. Bank | |||
| Rev. Bonds (J. David Gladstone Inst.), Ser. A, | |||
| 5.00%, 10/1/31 | A– | 1,000,000 | 1,119,130 |
| CA State Pub. Wks. Board Rev. Bonds | |||
| (Riverside Campus), Ser. B, 6.00%, 4/1/25 | A1 | 3,000,000 | 3,282,570 |
| Ser. G-1, 5.25%, 10/1/23 | A1 | 3,000,000 | 3,280,800 |
| CA Statewide Cmnty. Dev. Auth. Rev. Bonds | |||
| (Sr. Living — Presbyterian Homes), | |||
| 6.625%, 11/15/24 | BBB– | 2,000,000 | 2,211,860 |
| (Sutter Hlth.), Ser. B, 5.25%, 11/15/48 | Aa3 | 1,550,000 | 1,619,921 |
| AGM, 5.00%, 11/15/44 | AA | 500,000 | 555,005 |
| Chula Vista, Muni. Fin. Auth. Special Tax Bonds, | |||
| 5.50%, 9/1/30 | BBB+ | 775,000 | 898,380 |
| Foothill-De Anza, Cmnty. College Dist. COP | |||
| 5.00%, 4/1/36 | AA+ | 200,000 | 224,714 |
| 5.00%, 4/1/35 | AA+ | 250,000 | 281,798 |
| 5.00%, 4/1/33 | AA+ | 300,000 | 341,223 |
| Golden State Tobacco Securitization Corp. Rev. | |||
| Bonds, Ser. A, AMBAC, zero %, 6/1/24 | A1 | 5,000,000 | 4,046,050 |
| Los Angeles, Dept. of Arpt. Rev. Bonds (Los Angeles | |||
| Intl. Arpt.) | |||
| Ser. A, 5.00%, 5/15/40 | AA | 1,000,000 | 1,100,210 |
| Ser. B, 5.00%, 5/15/33 | AA– | 500,000 | 571,935 |
| M-S-R Energy Auth. Rev. Bonds, Ser. A, | |||
| 6.50%, 11/1/39 | BBB+ | 750,000 | 1,013,183 |
| Merced, City School Dist. G.O. Bonds (Election | |||
| of 2003), NATL | |||
| zero %, 8/1/25 | AA– | 1,190,000 | 899,652 |
| zero %, 8/1/24 | AA– | 1,125,000 | 889,414 |
| zero %, 8/1/23 | AA– | 1,065,000 | 882,235 |
| zero %, 8/1/22 | AA– | 1,010,000 | 870,196 |
| Northern CA Pwr. Agcy. Rev. Bonds (Hydroelec. | |||
| Project No. 1), Ser. A, 5.00%, 7/1/31 | A+ | 500,000 | 565,050 |
| Oakland, Alameda Cnty. Unified School Dist. G.O. | |||
| Bonds (Election of 2006), Ser. A, 6.50%, 8/1/24 | |||
| (Prerefunded 8/1/19) | Aa3 | 2,500,000 | 2,823,325 |
| Orange Cnty., Trans. Auth Toll Road Rev. Bonds | |||
| (91 Express Lanes), 5.00%, 8/15/30 | AA– | 530,000 | 604,603 |
| AMT-Free Municipal Fund 17 |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| California cont. | |||
| Sacramento, City Fin. Auth. Tax Alloc. Bonds, Ser. A, | |||
| FGIC, NATL, zero %, 12/1/21 | AA– | $5,500,000 | $4,892,292 |
| Sacramento, Regl. Trans. Dist. Rev. Bonds (Farebox), | |||
| 5.00%, 3/1/27 | A3 | 500,000 | 553,545 |
| San Francisco, City & Cnty. Arpt. Comm. Rev. Bonds | |||
| (Intl. Arpt.), Ser. F, 5.00%, 5/1/40 | A1 | 1,250,000 | 1,365,338 |
| San Francisco, City & Cnty., Redev. Agcy. Cmnty. | |||
| Successor Tax Alloc. Bonds (Mission Bay South | |||
| Redev.), Ser. A, 5.00%, 8/1/43 | A– | 350,000 | 385,557 |
| Santa Ana, Fin. Auth. Lease Rev. Bonds (Police | |||
| Admin. & Holding), NATL, 6.25%, 7/1/17 | AA– | 1,840,000 | 1,879,358 |
| Tuolumne Wind Project Auth. Rev. Bonds | |||
| (Tuolumne Co.), Ser. A, 5.25%, 1/1/24 | |||
| (Prerefunded 1/1/19) | AA– | 1,000,000 | 1,078,060 |
| Ventura Cnty., COP (Pub. Fin. Auth. III), 5.00%, | |||
| 8/15/20 (Prerefunded 8/15/19) | AA+ | 1,000,000 | 1,094,010 |
| Yucaipa Special Tax Bonds (Cmnty. Fac. Dist. | |||
| No. 98-1 Chapman Heights), 5.375%, 9/1/30 | BBB+ | 375,000 | 413,329 |
| 54,738,411 | |||
| Colorado (1.7%) | |||
| CO State Hlth. Fac. Auth. Rev. Bonds | |||
| (Valley View Assn.), 5.25%, 5/15/42 | A– | 2,000,000 | 2,011,540 |
| (Evangelical Lutheran Good Samaritan Society | |||
| Oblig. Group (The)), Ser. A, 5.00%, 6/1/40 | Baa1 | 1,000,000 | 1,055,670 |
| Denver City & Cnty., Arpt. Rev. Bonds | |||
| (Sub. Syst.), Ser. B, 5.25%, 11/15/32 | A2 | 1,500,000 | 1,724,550 |
| Ser. B, 5.00%, 11/15/37 | A1 | 500,000 | 562,600 |
| E-470 CO Pub. Hwy. Auth. Rev. Bonds, Ser. A, NATL, | |||
| zero %, 9/1/34 | AA– | 3,525,000 | 1,634,613 |
| 6,988,973 | |||
| Connecticut (0.4%) | |||
| CT State Hlth. & Edl. Fac. Auth. Rev. Bonds | |||
| (Masonicare Issue), Ser. F | |||
| 5.00%, 7/1/34 | BBB+/F | 1,250,000 | 1,284,913 |
| 5.00%, 7/1/33 | BBB+/F | 250,000 | 258,138 |
| 1,543,051 | |||
| Delaware (0.7%) | |||
| DE State Hlth. Fac. Auth. VRDN (Christiana Care), | |||
| Ser. A, 0.62%, 10/1/38 | VMIG1 | 3,000,000 | 3,000,000 |
| 3,000,000 | |||
| District of Columbia (1.5%) | |||
| DC, Wtr. & Swr. Auth. Pub. Util. Rev. Bonds | |||
| (Green Bond), Ser. A, 5.00%, 10/1/45 | AA+ | 2,500,000 | 2,825,825 |
| Ser. B, 5.00%, 10/1/37 | AA+ | 1,010,000 | 1,148,168 |
| Metro. Washington, Arpt. Auth. Dulles Toll Rd. Rev. | |||
| Bonds (Dulles Metrorail), 5.00%, 10/1/53 | Baa1 | 2,000,000 | 2,088,540 |
| 6,062,533 | |||
| 18 AMT-Free Municipal Fund | |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Florida (5.0%) | |||
| Brevard Cnty., Hlth. Care Fac. Auth. Rev. Bonds | |||
| (Health First, Inc.), U.S. Govt. Coll., 7.00%, 4/1/39 | |||
| (Prerefunded 4/1/19) | A2 | $1,250,000 | $1,402,463 |
| Broward Cnty., Arpt. Syst. Rev. Bonds, Ser. O, | |||
| 5.375%, 10/1/29 | A1 | 1,000,000 | 1,090,000 |
| Citizens Property Insurance Corp. Rev. Bonds, | |||
| Ser. A-1, 5.00%, 6/1/25 | A1 | 1,200,000 | 1,417,656 |
| Double Branch Cmnty. Dev. Dist. Special Assmt. | |||
| Bonds, Ser. A-1, 4.25%, 5/1/34 | A– | 360,000 | 364,316 |
| Halifax Hosp. Med. Ctr. Rev. Bonds, 5.00%, 6/1/36 | A– | 1,375,000 | 1,476,668 |
| Lakeland, Hosp. Syst. Rev. Bonds (Lakeland Regl. | |||
| Hlth. Syst.), 5.00%, 11/15/30 | A2 | 1,500,000 | 1,661,355 |
| Marco Island, Util. Sys. Rev. Bonds, Ser. A, 5.00%, | |||
| 10/1/34 (Prerefunded 10/1/20) | Aa3 | 1,000,000 | 1,125,350 |
| Miami-Dade Cnty., Expressway Auth. Toll Syst. Rev. | |||
| Bonds, Ser. A | |||
| 5.00%, 7/1/40 | A2 | 1,000,000 | 1,087,390 |
| 5.00%, 7/1/28 | A2 | 500,000 | 584,130 |
| Orange Cnty., Hlth. Fac. Auth. Rev. Bonds | |||
| (Presbyterian Retirement Cmntys.), 5.00%, 8/1/34 | A–/F | 1,000,000 | 1,066,870 |
| Orlando & Orange Cnty., Expressway Auth. Rev. | |||
| Bonds, AGM, 5.00%, 7/1/25 | AA | 500,000 | 574,895 |
| Orlando Cmnty. Redev. Agcy. Tax Alloc. Bonds | |||
| (Republic Drive/Universal), 5.00%, 4/1/23 | A–/F | 1,630,000 | 1,796,211 |
| Palm Beach Cnty., Hlth. Fac. Auth. Rev. Bonds | |||
| (Acts Retirement-Life Cmnty.), 5.50%, 11/15/33 | |||
| (Prerefunded 11/15/20) | A–/F | 3,000,000 | 3,428,970 |
| (Acts Retirement-Life Cmnty., Inc.), | |||
| 5.00%, 11/15/32 | A–/F | 2,000,000 | 2,157,140 |
| South Lake Hosp. Dist. Rev. Bonds (South Lake | |||
| Hosp.), Ser. A, 6.00%, 4/1/29 | Baa1 | 660,000 | 707,553 |
| Southeast Overtown Park West Cmnty. Redev. Agcy. | |||
| 144A Tax Alloc. Bonds, Ser. A-1, 5.00%, 3/1/30 | BBB+ | 240,000 | 260,556 |
| 20,201,523 | |||
| Georgia (3.2%) | |||
| Atlanta, Tax Allocation Bonds (Beltline), Ser. B, | |||
| 5.00%, 1/1/31 | A2 | 675,000 | 763,992 |
| Atlanta, Arpt. Passenger Fac. Charge Rev. Bonds | |||
| 5.00%, 1/1/34 | Aa3 | 200,000 | 225,460 |
| 5.00%, 1/1/32 | Aa3 | 1,000,000 | 1,136,000 |
| Atlanta, Wtr. & Waste Wtr. Rev. Bonds | |||
| Ser. A, 6.25%, 11/1/39 (Prerefunded 11/1/19) | Aa3 | 1,500,000 | 1,700,820 |
| 5.00%, 11/1/40 | Aa3 | 3,000,000 | 3,376,890 |
| Fulton Cnty., Dev. Auth. Rev. Bonds (GA Tech Athletic | |||
| Assn.), Ser. A, 5.00%, 10/1/42 | A2 | 900,000 | 1,009,971 |
| Gainesville & Hall Cnty., Hosp. Auth. Rev. | |||
| Bonds (Northeast GA Hlth. Syst., Inc.), Ser. A, | |||
| 5.00%, 2/15/37 ## | A | 3,000,000 | 3,274,050 |
| Muni. Election Auth. of GA Rev. Bonds (Plant Voltage | |||
| Units 3 & 4), Ser. A, 5.50%, 7/1/60 | A+ | 1,500,000 | 1,698,210 |
| 13,185,393 | |||
| AMT-Free Municipal Fund 19 |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Guam (0.3%) | |||
| Territory of GU, Rev. Bonds, Ser. A, 5.375%, 12/1/24 | |||
| (Prerefunded 12/1/19) | BBB+ | $1,000,000 | $1,109,810 |
| Territory of GU, Pwr. Auth. Rev. Bonds, Ser. A, AGM, | |||
| 5.00%, 10/1/30 | AA | 200,000 | 220,840 |
| 1,330,650 | |||
| Hawaii (0.1%) | |||
| HI State Dept. Budget & Fin. Rev. Bonds (Kahala Nui), | |||
| 5.25%, 11/15/37 | BBB+/F | 250,000 | 265,183 |
| 265,183 | |||
| Illinois (8.4%) | |||
| Chicago, G.O. Bonds | |||
| Ser. A, 6.00%, 1/1/38 | BBB+ | 1,600,000 | 1,605,824 |
| Ser. B-2, 5.50%, 1/1/37 | BBB+ | 2,000,000 | 1,936,460 |
| Ser. A, 5.25%, 1/1/33 | BBB+ | 700,000 | 663,096 |
| Chicago, Board of Ed. G.O. Bonds, Ser. C, | |||
| 5.25%, 12/1/35 | B | 750,000 | 627,510 |
| Chicago, Motor Fuel Tax Rev. Bonds, AGM, | |||
| 5.00%, 1/1/31 | AA | 500,000 | 543,435 |
| Chicago, O’Hare Intl. Arpt. Rev. Bonds | |||
| Ser. A, 5.75%, 1/1/39 | A2 | 700,000 | 786,191 |
| Ser. D, 5.25%, 1/1/33 | A2 | 1,000,000 | 1,125,630 |
| Ser. F, 5.00%, 1/1/40 | A2 | 1,045,000 | 1,114,858 |
| Chicago, Sales Tax Rev. Bonds, 5.00%, 1/1/32 | AA | 1,000,000 | 1,027,570 |
| Chicago, Waste Wtr. Transmission Rev. Bonds | |||
| 5.00%, 1/1/44 | A | 500,000 | 523,150 |
| (2nd Lien), 5.00%, 1/1/39 | A | 565,000 | 592,888 |
| Ser. C, 5.00%, 1/1/33 | A | 405,000 | 432,220 |
| Chicago, Waste Wtr. Transmission Rev. Bonds , Ser. C | |||
| 5.00%, 1/1/39 | A | 750,000 | 789,488 |
| 5.00%, 1/1/34 | A | 400,000 | 425,212 |
| Chicago, Wtr. Wks Rev. Bonds, 5.00%, 11/1/39 | A | 675,000 | 721,386 |
| IL Fin. Auth. Rev. Bonds | |||
| (Rush U. Med. Ctr.), Ser. B, U.S. Govt. Coll., NATL, | |||
| 5.75%, 11/1/28 (Prerefunded 11/1/18) | Aaa | 1,500,000 | 1,617,165 |
| (Elmhurst Memorial), Ser. A, 5.625%, 1/1/37 | |||
| (Prerefunded 1/1/18) | A | 1,000,000 | 1,042,110 |
| (American Wtr. Cap. Corp.), 5.25%, 10/1/39 | A | 1,575,000 | 1,661,200 |
| IL State G.O. Bonds | |||
| 5.25%, 2/1/30 | Baa2 | 500,000 | 513,530 |
| 5.00%, 11/1/34 | Baa2 | 400,000 | 398,572 |
| 5.00%, 3/1/34 | Baa2 | 1,000,000 | 996,550 |
| 5.00%, 2/1/29 | Baa2 | 1,400,000 | 1,433,180 |
| 5.00%, 2/1/28 | Baa2 | 150,000 | 154,521 |
| 5.00%, 8/1/21 | Baa2 | 1,000,000 | 1,055,490 |
| IL State Fin. Auth. Rev. Bonds | |||
| (Art Institute of Chicago (The)), 5.00%, 3/1/30 | AA– | 1,500,000 | 1,703,625 |
| (Riverside Hlth. Syst.), 4.00%, 11/15/32 | A+ | 400,000 | 392,172 |
| IL State Toll Hwy. Auth. Rev. Bonds, Ser. A, | |||
| 5.00%, 12/1/32 | Aa3 | 2,000,000 | 2,250,720 |
| 20 AMT-Free Municipal Fund | |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Illinois cont. | |||
| Metro. Pier & Exposition Auth. Dedicated State | |||
| Tax Rev. Bonds (McCormick), Ser. A, NATL, | |||
| zero %, 12/15/22 | AA– | $5,500,000 | $4,448,400 |
| Metro. Wtr. Reclamation Dist. of Greater Chicago | |||
| G.O. Bonds, Ser. A, 5.00%, 12/1/31 | AA+ | 1,000,000 | 1,143,460 |
| Regl. Trans. Auth. Rev. Bonds, Ser. A, AMBAC, | |||
| 8.00%, 6/1/17 | Aa3 | 2,600,000 | 2,657,928 |
| 34,383,541 | |||
| Indiana (1.0%) | |||
| IN Muni. Pwr. Agcy. Supply Syst. Rev. Bonds, Ser. B, | |||
| 5.75%, 1/1/29 (Prerefunded 1/1/19) | A1 | 1,000,000 | 1,086,490 |
| IN State Fin. Auth. Rev. Bonds (BHI Sr. Living), | |||
| 5.75%, 11/15/41 | BBB+/F | 1,000,000 | 1,086,310 |
| IN State Fin. Auth. Econ. Dev. Mandatory Put Bonds | |||
| (3/1/17) (Republic Svcs., Inc.), Ser. B, 0.90%, 5/1/28 | A–2 | 2,000,000 | 1,999,680 |
| 4,172,480 | |||
| Kansas (0.4%) | |||
| KS State Dev. Fin. Auth. Rev. Bonds (Lifespace | |||
| Cmnty’s. Inc.), Ser. S, 5.00%, 5/15/30 | A/F | 1,455,000 | 1,516,561 |
| 1,516,561 | |||
| Kentucky (1.8%) | |||
| KY Pub. Trans. Infrastructure Auth. Rev. Bonds (1st | |||
| Tier Downtown Crossing), Ser. A, 6.00%, 7/1/53 | Baa3 | 500,000 | 556,635 |
| KY State Property & Bldg. Comm. Rev. Bonds | |||
| (Project No. 84), NATL, 5.00%, 8/1/20 | Aa3 | 1,650,000 | 1,835,757 |
| Louisville & Jefferson Cnty., Metro. Govt. Hlth. | |||
| Syst. Rev. Bonds (Norton Healthcare, Inc.), Ser. A, | |||
| 5.00%, 10/1/32 | A– | 2,750,000 | 3,030,995 |
| Owen Cnty., Wtr. Wks. Syst. Rev. Bonds | |||
| (American Wtr. Co.) | |||
| Ser. A, 6.25%, 6/1/39 | A | 800,000 | 871,384 |
| Ser. B, 5.625%, 9/1/39 | A | 1,000,000 | 1,068,730 |
| 7,363,501 | |||
| Louisiana (0.2%) | |||
| Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. A, | |||
| 5.00%, 5/15/23 | A | 800,000 | 891,944 |
| 891,944 | |||
| Maryland (0.7%) | |||
| MD State Hlth. & Higher Edl. Fac. Auth. Rev. Bonds | |||
| (U. of MD Med. Syst.), AMBAC, 5.25%, 7/1/28 | |||
| (Prerefunded 7/1/18) | A2 | 2,000,000 | 2,099,700 |
| (Meritus Med. Ctr.), 5.00%, 7/1/40 | BBB | 500,000 | 537,245 |
| 2,636,945 | |||
| Massachusetts (6.8%) | |||
| MA State G.O. Bonds | |||
| Ser. J, 5.00%, 12/1/37 | Aa1 | 4,000,000 | 4,599,240 |
| Ser. E, 4.00%, 4/1/46 | Aa1 | 4,275,000 | 4,328,352 |
| MA State Dept. Trans. Rev. Bonds (Metro Hwy. Syst.), | |||
| Ser. B, 5.00%, 1/1/37 | A+ | 1,000,000 | 1,077,050 |
| AMT-Free Municipal Fund 21 |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Massachusetts cont. | |||
| MA State Dev. Fin. Agcy. Rev. Bonds | |||
| (Sabis Intl.), Ser. A, 6.80%, 4/15/22 | |||
| (Prerefunded 10/15/19) | BBB | $700,000 | $799,792 |
| (Harvard U.), Ser. A, U.S. Govt. Coll., 5.50%, | |||
| 11/15/36 (Prerefunded 11/15/18) | Aaa | 1,370,000 | 1,477,148 |
| (Harvard U.), Ser. A, U.S. Govt. Coll., 5.50%, | |||
| 11/15/36 (Prerefunded 11/15/18) | AAA/P | 445,000 | 478,980 |
| (Emerson College), Ser. A, 5.50%, 1/1/30 | BBB+ | 2,000,000 | 2,157,180 |
| (Suffolk U.), 5.125%, 7/1/40 | Baa2 | 500,000 | 520,990 |
| (Dana-Farber Cancer Inst.), Ser. N, 5.00%, 12/1/41 | A1 | 1,100,000 | 1,219,735 |
| (Caregroup), Ser. I, 5.00%, 7/1/36 | A3 | 300,000 | 332,004 |
| MA State Dev. Fin. Agcy. Solid Waste Disp. FRB | |||
| (Dominion Energy Brayton Point), Ser. 1, U.S. Govt. | |||
| Coll., 5.75%, 12/1/42 (Prerefunded 5/1/19) | Baa2 | 1,000,000 | 1,098,800 |
| MA State Edl. Fin. Auth. Rev. Bonds, Ser. A, | |||
| 5.50%, 1/1/22 | AA | 1,000,000 | 1,092,240 |
| MA State Hlth. & Edl. Fac. Auth. Rev. Bonds | |||
| (Suffolk U.), Ser. A, 6.25%, 7/1/30 | Baa2 | 2,000,000 | 2,170,340 |
| (Northeastern U.), Ser. A, 5.00%, 10/1/35 | A2 | 1,650,000 | 1,811,007 |
| MA State Hsg. Fin. Agcy. Rev. Bonds, Ser. 162, FNMA | |||
| Coll., FHLMC Coll., 2.75%, 12/1/41 | Aa1 | 450,000 | 453,780 |
| MA State Port Auth. Rev. Bonds, Ser. A, 5.00%, 7/1/27 | Aa2 | 1,245,000 | 1,494,149 |
| MA State School Bldg. Auth. Sales Tax Rev. Bonds, | |||
| Ser. C, 5.00%, 8/15/37 | AA+ | 1,000,000 | 1,131,880 |
| Metro. Boston, Trans. Pkg. Corp. Rev. Bonds, | |||
| 5.25%, 7/1/36 | A1 | 1,500,000 | 1,694,670 |
| 27,937,337 | |||
| Michigan (5.0%) | |||
| Detroit, Wtr. Supply Syst. Rev. Bonds, Ser. B | |||
| AGM, 6.25%, 7/1/36 | AA | 5,000 | 5,520 |
| AGM, U.S. Govt. Coll., 6.25%, 7/1/36 | |||
| (Prerefunded 7/1/19) | AA | 1,570,000 | 1,753,470 |
| Great Lakes, Wtr. Auth. Swr. Rev. Bonds (Brazos | |||
| Presbyterian Homes, Inc.), Ser. C, 5.00%, 7/1/36 | Baa1 | 2,500,000 | 2,696,400 |
| Karegnondi, Wtr. Auth. Rev. Bonds (Wtr. Supply | |||
| Syst.), Ser. A, 5.25%, 11/1/27 | A2 | 1,000,000 | 1,136,410 |
| Kentwood, Economic Dev. Rev. Bonds (Holland | |||
| Home Oblig. Group), 5.00%, 11/15/37 | BBB–/F | 1,000,000 | 1,023,240 |
| MI State Fin. Auth. Rev. Bonds | |||
| (Beaumont Hlth. Credit Group), Ser. A, | |||
| 5.00%, 11/1/44 | A1 | 1,000,000 | 1,081,550 |
| (Henry Ford Hlth Syst.), 5.00%, 11/15/41 | A | 600,000 | 645,630 |
| Ser. H-1, 5.00%, 10/1/39 | AA– | 525,000 | 571,237 |
| (Local Govt. Loan Program — Detroit Wtr. & Swr. | |||
| Dept. (DWSD)), Ser. C, 5.00%, 7/1/35 | Baa1 | 400,000 | 429,796 |
| (Local Govt. Loan Program — Detroit Wtr. & Swr. | |||
| Dept. (DWSD)), Ser. D-2, 5.00%, 7/1/34 | Baa1 | 200,000 | 215,640 |
| (Detroit Wtr. & Swr.), Ser. C-6, 5.00%, 7/1/33 | A3 | 140,000 | 152,172 |
| (Detroit), Ser. C-3, 5.00%, 4/1/28 | A2 | 700,000 | 794,010 |
| MI State Hosp. Fin. Auth. Rev. Bonds, Ser. A, 6.125%, | |||
| 6/1/39 (Prerefunded 6/1/19) | AA+ | 1,000,000 | 1,110,500 |
| 22 AMT-Free Municipal Fund | |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Michigan cont. | |||
| MI State Strategic Fund Ltd. Oblig. Rev. Bonds | |||
| (Detroit Edison Co.), AMBAC, 7.00%, 5/1/21 | Aa3 | $4,000,0100 | $4,795,360 |
| Midland Cnty., Bldg. Auth. Rev. Bonds, AGM, 5.00%, | |||
| 10/1/25 (Prerefunded 10/1/18) | AA | 1,000,000 | 1,064,010 |
| Northern Michigan U. Rev. Bonds, Ser. A, AGM, | |||
| 5.00%, 12/1/27 | AA | 1,775,000 | 1,851,538 |
| Western MI U. Rev. Bonds, AGM, 5.00%, 11/15/28 | |||
| (Prerefunded 5/15/18) | AA | 1,000,000 | 1,049,940 |
| 20,376,423 | |||
| Minnesota (0.6%) | |||
| Minneapolis & St. Paul, Metro. Arpt. Comm. Rev. | |||
| Bonds, Ser. A, 5.00%, 1/1/32 | A+ | 500,000 | 565,315 |
| Minneapolis Hlth. Care Syst. Rev. Bonds (Fairview | |||
| Hlth. Svcs. Oblig. Group), Ser. A, 5.00%, 11/15/44 | A+ | 500,000 | 555,070 |
| Minneapolis, Rev. Bonds (National Marrow | |||
| Donor Program), U.S. Govt. Coll., 4.875%, 8/1/25 | |||
| (Prerefunded 8/1/18) | AAA/P | 1,350,000 | 1,424,088 |
| 2,544,473 | |||
| Mississippi (0.5%) | |||
| MS Bus. Fin. Corp. Gulf Opportunity Zone Rev. | |||
| Bonds, Ser. A, 5.00%, 5/1/37 | A2 | 1,750,000 | 1,850,748 |
| 1,850,748 | |||
| Missouri (0.8%) | |||
| Cape Girardeau Cnty., Indl. Dev. Auth. Hlth. Care | |||
| Fac. Rev. Bonds (St. Francis Med. Ctr.), Ser. A, 5.75%, | |||
| 6/1/39 (Prerefunded 6/1/19) | A+ | 1,150,000 | 1,268,623 |
| MO State Hlth. & Edl. Fac. Auth. Rev. Bonds (WA U. | |||
| (The)), Ser. A, 5.375%, 3/15/39 (Prerefunded 3/15/18) | Aaa | 2,000,000 | 2,097,120 |
| 3,365,743 | |||
| Nebraska (0.9%) | |||
| Central Plains, Energy Rev. Bonds (NE Gas No. 3), | |||
| 5.00%, 9/1/32 | A3 | 1,000,000 | 1,089,130 |
| NE State Pub. Pwr. Dist. Rev. Bonds, Ser. C, | |||
| 5.00%, 1/1/35 | A1 | 2,245,000 | 2,517,251 |
| 3,606,381 | |||
| Nevada (1.4%) | |||
| Clark Cnty., Arpt. Rev. Bonds, Ser. A-2, 5.00%, 7/1/33 | A1 | 525,000 | 589,103 |
| Clark Cnty., Impt. Dist. Special Assmt. Bonds | |||
| (Mountains Edge Local No. 142), 5.00%, 8/1/20 | BBB | 445,000 | 472,643 |
| Reno, Sales Tax VRDN (Reno Trans. Rail Access | |||
| Corridor (ReTRAC)), 0.70%, 6/1/42 | VMIG1 | 4,650,000 | 4,650,000 |
| 5,711,746 | |||
| New Hampshire (0.5%) | |||
| NH State Hlth. & Ed. Fac. Auth. Rev. Bonds (Southern | |||
| NH Med. Ctr.), 5.00%, 10/1/37 | A– | 2,000,000 | 2,163,860 |
| 2,163,860 | |||
| New Jersey (2.5%) | |||
| Bayonne, G.O. Bonds (Qualified Gen. Impt.), BAM, | |||
| 5.00%, 7/1/39 | AA | 700,000 | 761,873 |
| NJ State Econ. Dev. Auth. Rev. Bonds | |||
| Ser. AAA, 5.00%, 6/15/36 | A3 | 350,000 | 349,118 |
| Ser. B, 5.00%, 11/1/26 | A3 | 3,000,000 | 3,136,350 |
| AMT-Free Municipal Fund 23 |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| New Jersey cont. | |||
| NJ State Higher Ed. Assistance Auth. Rev. Bonds | |||
| (Student Loan), Ser. A, 5.625%, 6/1/30 | AA | $1,000,000 | $1,076,800 |
| NJ State Tpk. Auth. Rev. Bonds, Ser. A, 5.00%, 1/1/33 | A+ | 1,350,000 | 1,519,587 |
| NJ State Trans. Trust Fund Auth. Rev. Bonds | |||
| (Trans. Syst.), Ser. B, 5.25%, 6/15/36 | A3 | 1,000,000 | 1,011,980 |
| (Federal Hwy. Reimbursement Notes), | |||
| 5.00%, 6/15/30 | A+ | 800,000 | 840,240 |
| (Federal Hwy. Reimbursement Notes), | |||
| 5.00%, 6/15/28 | A+ | 750,000 | 799,020 |
| (Federal Hwy. Reimbursement Notes), | |||
| 5.00%, 6/15/27 | A+ | 650,000 | 696,137 |
| 10,191,105 | |||
| New Mexico (0.2%) | |||
| Sante Fe, Retirement Fac. Rev. Bonds (El Castillo | |||
| Retirement Res.), 5.00%, 5/15/42 | BBB– | 980,000 | 992,632 |
| 992,632 | |||
| New York (10.3%) | |||
| Erie Cnty., Indl. Dev. Agcy. School Fac. Rev. Bonds | |||
| (City School Dist. Buffalo), Ser. A, AGM, 5.75%, 5/1/27 | |||
| (Prerefunded 5/1/18) | Aa2 | 4,000,000 | 4,234,840 |
| Hudson Yards, Infrastructure Corp. Rev. Bonds, | |||
| Ser. A, 5.75%, 2/15/47 | A2 | 1,000,000 | 1,134,630 |
| Liberty, Dev. Corp. Rev. Bonds (Goldman Sachs | |||
| Headquarters), 5.25%, 10/1/35 | A3 | 1,000,000 | 1,191,020 |
| Metro. Trans. Auth. Mandatory Put Bonds (2/15/20), | |||
| Ser. C-2B, 5.00%, 11/15/34 | AA– | 2,000,000 | 2,181,900 |
| Metro. Trans. Auth. Rev. Bonds | |||
| Ser. B, 5.00%, 11/15/37 | AA– | 2,000,000 | 2,259,000 |
| Ser. D, 5.00%, 11/15/36 | AA– | 3,000,000 | 3,351,840 |
| Metro. Trans. Auth. Dedicated Tax Fund Rev. Bonds, | |||
| Ser. A, 5.25%, 11/15/34 | AA | 1,900,000 | 2,249,429 |
| NY City, G.O. Bonds | |||
| Ser. D-1, 5.00%, 10/1/36 | Aa2 | 1,400,000 | 1,579,340 |
| Ser. A-1, 5.00%, 8/1/30 | Aa2 | 2,000,000 | 2,337,360 |
| NY City, Muni. Wtr. & Swr. Syst. Fin. Auth. Rev. Bonds | |||
| (2nd Gen. Resolution), Ser. CC-1, 5.00%, 6/15/46 | Aa1 | 2,000,000 | 2,246,240 |
| Ser. AA, 5.00%, 6/15/34 | Aa1 | 1,000,000 | 1,123,040 |
| NY City, Transitional Fin. Auth. Rev. Bonds | |||
| Ser. E-1, 5.00%, 2/1/39 | AAA | 2,000,000 | 2,271,080 |
| (Future Tax), Ser. E-1, 5.00%, 2/1/38 | AAA | 2,000,000 | 2,266,060 |
| (Future Tax), Ser. E-1, 5.00%, 2/1/35 | AAA | 1,500,000 | 1,714,620 |
| NY City, Transitional Fin. Auth. Bldg. Aid Rev. Bonds, | |||
| Ser. S-1, 5.00%, 7/15/40 | Aa2 | 910,000 | 1,016,042 |
| NY City, Trust for Cultural Resources Rev. | |||
| Bonds (Museum of Modern Art (The)), Ser. 1-E, | |||
| 4.00%, 2/1/23 | Aa2 | 800,000 | 896,688 |
| NY State Dorm. Auth. Rev. Bonds, Ser. A, | |||
| 5.00%, 3/15/38 | AAA | 1,000,000 | 1,124,650 |
| NY State Dorm. Auth. Personal Income Tax Rev. | |||
| Bonds (Ed.), Ser. B, 5.75%, 3/15/36 | AAA | 2,000,000 | 2,179,040 |
| 24 AMT-Free Municipal Fund | |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| New York cont. | |||
| NY State Urban Dev. Corp. Rev. Bonds | |||
| (Personal Income Tax (Group C)), Ser. A, | |||
| 5.00%, 3/15/37 | AAA | $2,000,000 | $2,270,780 |
| (Personal Income Tax), Ser. A, 5.00%, 3/15/35 | AAA | 1,000,000 | 1,143,880 |
| Port Auth. of NY & NJ Special Oblig. Rev. Bonds | |||
| (JFK Intl. Air Term.), 6.00%, 12/1/42 | Baa1 | 900,000 | 1,016,028 |
| Syracuse, Indl. Dev. Agcy. School Fac. Rev. | |||
| Bonds (Syracuse City School Dist.), Ser. A, AGM, | |||
| 5.00%, 5/1/25 | Aa2 | 1,000,000 | 1,046,910 |
| Triborough, Bridge & Tunnel Auth. Rev. Bonds, | |||
| Ser. A, 5.00%, 11/15/41 | Aa3 | 1,250,000 | 1,417,600 |
| 42,252,017 | |||
| North Carolina (0.5%) | |||
| NC Cap. Fin. Agcy. Edl. Fac. Rev. Bonds | |||
| (Meredith College), Ser. A, 6.00%, 6/1/31 | BBB | 485,000 | 505,457 |
| (Meredith College), Ser. A, 6.00%, 6/1/31 | |||
| (Prerefunded 6/1/18) | AAA/P | 15,000 | 15,970 |
| NC Eastern Muni. Pwr. Agcy. Syst. Rev. Bonds, Ser. A, | |||
| 5.50%, 1/1/26 (Prerefunded 1/1/19) | AAA/F | 1,500,000 | 1,624,170 |
| 2,145,597 | |||
| Ohio (3.7%) | |||
| American Muni. Pwr., Inc. Rev. Bonds (Meldahl | |||
| Hydroelectric (Green Bond)), Ser. A, 5.00%, 2/15/26 | A | 500,000 | 587,690 |
| Buckeye, Tobacco Settlement Fin. Auth. Rev. | |||
| Bonds, Ser. A-2 | |||
| 5.75%, 6/1/34 | B– | 500,000 | 452,630 |
| 5.375%, 6/1/24 | B– | 1,000,000 | 921,980 |
| Franklin Cnty., Hlth. Care Fac. Rev. Bonds | |||
| (Friendship Village of Dublin Oblig. Group), | |||
| 5.00%, 11/15/34 | BBB+/F | 700,000 | 729,722 |
| Hamilton Cnty., Sales Tax Rev. Bonds, Ser. A, | |||
| 5.00%, 12/1/32 | A1 | 2,000,000 | 2,244,380 |
| Lorain Cnty., Hosp. Rev. Bonds (Catholic Hlth. | |||
| Partners), Ser. C-2, AGM, 5.00%, 4/1/24 | AA | 2,000,000 | 2,088,740 |
| Lucas Cnty., Hlth. Care Fac. Rev. Bonds (Sunset | |||
| Retirement Cmntys.), 5.50%, 8/15/30 | A–/F | 650,000 | 716,365 |
| OH Hsg. Fin. Agcy. Rev. Bonds (Single Fam. Mtge.), | |||
| Ser. 1, GNMA Coll., FNMA Coll., FHMLC Coll., | |||
| 5.00%, 11/1/28 | Aaa | 235,000 | 244,308 |
| OH State Rev. Bonds (Northeast OH Regl. Swr. Dist.), | |||
| 5.00%, 11/15/44 | Aa1 | 1,015,000 | 1,130,334 |
| OH State Air Quality Dev. Auth., Poll. Control | |||
| Mandatory Put Bonds (4/1/20) (FirstEnergy Nuclear | |||
| Generation, LLC), Ser. B, 3.625%, 10/1/33 | Caa1 | 1,000,000 | 410,000 |
| OH State Higher Edl. Fac. Rev. Bonds (U. of Dayton), | |||
| Ser. A, 5.625%, 12/1/41 | A+ | 1,000,000 | 1,129,360 |
| OH State Major New Infrastructure Rev. Bonds, | |||
| Ser. 16-1, 5.00%, 12/15/28 | Aa2 | 850,000 | 1,010,047 |
| OH State Tpk. Comm. Rev. Bonds | |||
| (Infrastructure), Ser. A-1, 5.25%, 2/15/32 | A1 | 700,000 | 803,376 |
| 5.00%, 2/15/48 | A1 | 1,250,000 | 1,366,088 |
| AMT-Free Municipal Fund 25 |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Ohio cont. | |||
| Scioto Cnty., Hosp. Rev. Bonds (Southern OH Med. | |||
| Ctr.), 5.00%, 2/15/33 | A2 | $500,000 | $559,295 |
| Warren Cnty., Hlth. Care Fac. Rev. Bonds (Otterbein | |||
| Homes Oblig. Group), Ser. A, 5.75%, 7/1/33 | A | 500,000 | 570,870 |
| 14,965,185 | |||
| Oregon (0.3%) | |||
| Keizer, Special Assmt. Bonds (Keizer Station), Ser. A, | |||
| 5.20%, 6/1/31 | A1 | 335,000 | 350,594 |
| OR Hlth. Sciences U. Rev. Bonds, Ser. A, 5.75%, | |||
| 7/1/39 (Prerefunded 7/1/19) | Aa3 | 750,000 | 829,718 |
| 1,180,312 | |||
| Pennsylvania (6.4%) | |||
| Allegheny Cnty., G.O. Bonds, Ser. C-72, | |||
| 5.25%, 12/1/32 | AA– | 670,000 | 779,029 |
| Allegheny Cnty., Hosp. Dev. Auth. Rev. Bonds | |||
| (U. of Pittsburgh Med.), 5.625%, 8/15/39 | Aa3 | 500,000 | 540,680 |
| Berks Cnty., Muni. Auth. Rev. Bonds (Reading Hosp. | |||
| & Med. Ctr.), Ser. A-3, 5.50%, 11/1/31 | AA– | 3,000,000 | 3,270,540 |
| Dallas, Area Muni. Auth. U. Rev. Bonds (Misericordia | |||
| U.), 5.00%, 5/1/29 | Baa3 | 300,000 | 316,563 |
| Dauphin Cnty., Gen. Auth. Hlth. Syst. Rev. Bonds | |||
| (Pinnacle Hlth. Syst.), Ser. A | |||
| 6.00%, 6/1/29 | A+ | 1,305,000 | 1,426,548 |
| 6.00%, 6/1/29 (Prerefunded 6/1/19) | AAA/P | 1,195,000 | 1,323,642 |
| Delaware River Port Auth. PA & NJ Rev. Bonds, | |||
| 5.00%, 1/1/30 | A | 3,000,000 | 3,385,890 |
| PA Econ. Dev. Fin. Auth. Wtr. Fac. Rev. Bonds | |||
| (American Wtr. Co.), 6.20%, 4/1/39 | A1 | 1,900,000 | 2,078,904 |
| PA State Higher Edl. Fac. Auth. Rev. Bonds (East | |||
| Stroudsburg U.), 5.00%, 7/1/31 | Baa3 | 760,000 | 808,404 |
| PA State Pub. School Bldg. Auth. Rev. Bonds | |||
| (Northampton Cnty. Area Cmnty. College | |||
| Foundation), BAM, 5.00%, 6/15/33 | AA | 1,885,000 | 2,118,231 |
| PA State Tpk. Comm. Rev. Bonds, Ser. A, | |||
| 5.00%, 12/1/38 | A1 | 650,000 | 714,825 |
| PA State Tpk. Comm. Oil Franchise Tax Rev. Bonds, | |||
| Ser. B, 5.00%, 12/1/26 | A2 | 500,000 | 581,775 |
| Philadelphia, Gas Wks. Rev. Bonds | |||
| Ser. 9th, 5.25%, 8/1/40 | A | 855,000 | 923,682 |
| Ser. 9th, U.S. Govt. Coll., 5.25%, 8/1/40 | |||
| (Prerefunded 8/1/20) | AAA/P | 545,000 | 614,526 |
| (1998 Gen. Ordinance), Ser. 14, 5.00%, 10/1/34 | A | 1,000,000 | 1,105,600 |
| Philadelphia, Wtr. & Waste Wtr. Rev. Bonds, | |||
| 5.00%, 11/1/26 | A1 | 2,220,000 | 2,549,759 |
| Pittsburgh & Allegheny Cnty., Sports & Exhib. Auth. | |||
| Hotel Rev. Bonds, AGM, 5.00%, 2/1/35 | AA | 1,225,000 | 1,338,460 |
| Pittsburgh, G.O. Bonds, Ser. B, 5.00%, 9/1/25 | A1 | 1,250,000 | 1,427,113 |
| Westmoreland Cnty., Muni. Auth. Rev. Bonds, BAM, | |||
| 5.00%, 8/15/27 | AA | 250,000 | 289,433 |
| Wilkes-Barre, Fin. Auth. Rev. Bonds (U. of Scranton), | |||
| 5.00%, 11/1/40 | A– | 500,000 | 546,270 |
| 26,139,874 | |||
| 26 AMT-Free Municipal Fund | |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Rhode Island (0.5%) | |||
| RI Hlth. & Edl. Bldg. Corp. Rev. Bonds (Lifespan | |||
| Oblig. Group-Hosp. Fin.) | |||
| 5.00%, 5/15/33 | BBB+ | $365,000 | $394,226 |
| 5.00%, 5/15/26 | BBB+ | 580,000 | 654,304 |
| Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. B, | |||
| 5.00%, 6/1/50 | BBB–/P | 1,000,000 | 996,710 |
| 2,045,240 | |||
| South Carolina (1.3%) | |||
| Myrtle Beach, Tax Allocation Bonds (Myrtle Beach | |||
| Air Force Base Redev.), 5.00%, 10/1/28 | A2 | 575,000 | 662,469 |
| SC State Pub. Svc. Auth. Rev. Bonds | |||
| (Santee Cooper), Ser. A, 5.75%, 12/1/43 | AA– | 3,000,000 | 3,589,650 |
| Ser. A, 5.50%, 12/1/54 | AA– | 1,000,000 | 1,114,550 |
| 5,366,669 | |||
| Tennessee (0.5%) | |||
| Johnson City, Hlth. & Edl. Fac. Board Hosp. | |||
| Rev. Bonds (Mountain States Hlth. Alliance), | |||
| 6.00%, 7/1/38 | Baa1 | 1,850,000 | 2,010,451 |
| 2,010,451 | |||
| Texas (8.5%) | |||
| Central TX Regl. Mobility Auth. Rev. Bonds (Sr. Lien), | |||
| Ser. A, 5.00%, 1/1/33 | BBB+ | 300,000 | 323,667 |
| Clifton, Higher Ed. Fin. Corp. Rev. Bonds (IDEA Pub. | |||
| Schools), Ser. B, 5.00%, 8/15/27 | BBB | 350,000 | 394,965 |
| Dallas Cnty., Util. & Reclamation Dist. G.O. Bonds, | |||
| Ser. B, AMBAC, 5.375%, 2/15/29 | A2 | 2,500,000 | 2,503,850 |
| Dallas, Area Rapid Transit Rev. Bonds, Ser. A, | |||
| 5.00%, 12/1/46 | AA+ | 2,500,000 | 2,810,850 |
| Harris Cnty., Cultural Ed. Fac. Fin. Corp. Rev. | |||
| Bonds (YMCA of the Greater Houston Area), Ser. A, | |||
| 5.00%, 6/1/38 | Baa3 | 500,000 | 528,255 |
| Houston, Util. Syst. Rev. Bonds | |||
| Ser. D, 5.00%, 11/15/39 | Aa2 | 1,000,000 | 1,123,100 |
| Ser. B, 5.00%, 11/15/36 | Aa2 | 3,000,000 | 3,439,530 |
| Leander, Indpt. School Dist. G.O. Bonds, Ser. A, | |||
| PSFG, 5.00%, 8/15/40 | AAA | 2,000,000 | 2,262,160 |
| Lower CO River Auth. Transmission Svcs. Contract | |||
| Corp. Rev. Bonds, 5.00%, 5/15/32 | A | 475,000 | 535,449 |
| Matagorda Cnty., Poll. Control Rev. Bonds (Central | |||
| Pwr. & Light Co.), Ser. A, 6.30%, 11/1/29 | Baa1 | 600,000 | 650,412 |
| New Hope, Cultural Ed. Fac. Fin. Corp. Rev. Bonds | |||
| (Tarleton State U. Collegiate Student Hsg.), Ser. A, | |||
| 5.00%, 4/1/35 | Baa3 | 800,000 | 846,056 |
| (Collegiate Hsg.-Tarleton St.), 5.00%, 4/1/29 | Baa3 | 500,000 | 547,895 |
| (TX A&M U. Collegiate & Student Hsg. College | |||
| Station I, LLC), Ser. A, 5.00%, 4/1/29 | Baa3 | 530,000 | 580,769 |
| North TX, Tollway Auth. Rev. Bonds | |||
| (1st Tier), Ser. A, 6.25%, 1/1/24 | A | 655,000 | 715,470 |
| (1st Tier), Ser. A, FCS, U.S. Govt. Coll., 6.25%, | |||
| 1/1/24 (Prerefunded 1/1/19) | AA/P | 2,845,000 | 3,115,047 |
| AMT-Free Municipal Fund 27 |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Texas cont. | |||
| North TX, Tollway Auth. Rev. Bonds | |||
| (1st Tier), Ser. A, FCS, NATL, U.S. Govt. Coll., | |||
| 5.125%, 1/1/28 (Prerefunded 1/1/18) | AA– | $1,315,000 | $1,363,813 |
| (1st Tier), Ser. A, NATL, 5.125%, 1/1/28 | AA– | 185,000 | 190,890 |
| Ser. A, 5.00%, 1/1/39 | A1 | 1,200,000 | 1,330,920 |
| SA Energy Acquisition Pub. Fac. Corp. Rev. Bonds | |||
| (Gas Supply), 5.50%, 8/1/25 | A3 | 1,000,000 | 1,137,210 |
| Tarrant Cnty., Cultural Ed. Fac. Fin. Corp. Retirement | |||
| Fac. Rev. Bonds (Buckner Retirement Svcs., Inc.) | |||
| 5.25%, 11/15/37 | A/F | 560,000 | 565,270 |
| 5.25%, 11/15/37 (Prerefunded 11/15/17) | AAA/P | 440,000 | 453,561 |
| TX Private Activity Surface Trans. Corp. Rev. Bonds | |||
| (LBJ Infrastructure), 7.00%, 6/30/40 | Baa3 | 500,000 | 572,355 |
| TX State G.O. Bonds (Trans. Auth.), Ser. A, | |||
| 5.00%, 10/1/44 | Aaa | 4,750,000 | 5,385,313 |
| TX State Muni. Gas Acquisition & Supply Corp. III Rev. | |||
| Bonds, 5.00%, 12/15/28 | A3 | 1,000,000 | 1,084,410 |
| TX State Trans. Comm. Tpk. Syst. Rev. Bonds (1st | |||
| Tier), Ser. A, 5.00%, 8/15/41 | A3 | 2,150,000 | 2,334,578 |
| 34,795,795 | |||
| Vermont (0.2%) | |||
| VT State Edl. & Hlth. Bldg. Fin. Agcy. Rev. Bonds | |||
| (U. of VT Med. Ctr.), Ser. A, 5.00%, 12/1/36 | A3 | 750,000 | 813,345 |
| 813,345 | |||
| Virginia (0.1%) | |||
| Fairfax Cnty., Econ. Dev. Auth. Res. Care Fac. Rev. | |||
| Bonds (Goodwin House, Inc.), Ser. A, 5.00%, 10/1/36 | BBB/F | 350,000 | 383,901 |
| 383,901 | |||
| Washington (1.6%) | |||
| WA State G.O. Bonds, Ser. A-1, 5.00%, 8/1/37 | Aa1 | 750,000 | 849,120 |
| WA State Higher Ed. Fac. Auth. Rev. | |||
| Bonds (Whitworth U.), 5.125%, 10/1/24 | |||
| (Prerefunded 10/1/19) | Baa1 | 2,500,000 | 2,745,825 |
| WA State Hlth. Care Fac. Auth. Rev. Bonds | |||
| (WA Hlth. Svcs.), 7.00%, 7/1/39 | |||
| (Prerefunded 7/1/19) | Baa1 | 1,000,000 | 1,132,040 |
| Ser. B, NATL, 5.00%, 2/15/27 | AA– | 900,000 | 913,284 |
| (Central WA Hlth. Svcs. Assn.), 4.00%, 7/1/36 | Baa1 | 810,000 | 759,213 |
| 6,399,482 | |||
| West Virginia (0.1%) | |||
| WV State Econ. Dev. Auth. Solid Waste Disp. Fac. | |||
| FRB (Appalachian Pwr. Co.), Ser. A, 5.375%, 12/1/38 | Baa1 | 500,000 | 550,225 |
| 550,225 | |||
| Wisconsin (1.1%) | |||
| WI State Rev. Bonds, Ser. A | |||
| 6.00%, 5/1/27 | Aa3 | 1,810,000 | 1,990,330 |
| U.S. Govt. Coll., 6.00%, 5/1/27 | |||
| (Prerefunded 5/1/19) | 190,000 | 209,819 | |
| 28 AMT-Free Municipal Fund | |
| MUNICIPAL BONDS AND NOTES (97.6%)* cont. | Rating** | Principal amount | Value |
| Wisconsin cont. | |||
| WI State Hlth. & Edl. Fac. Auth. Rev. Bonds | |||
| (Prohealth Care, Inc.), 6.625%, 2/15/39 | |||
| (Prerefunded 2/15/19) | AAA/P | $1,250,000 | $1,385,000 |
| (Three Pillars Sr. Living), 5.00%, 8/15/33 | A/F | 1,000,000 | 1,082,060 |
| 4,667,209 | |||
| Wyoming (0.5%) | |||
| Sweetwater Cnty., Poll. Control Rev. Bonds (Idaho | |||
| Power Co.), 5.25%, 7/15/26 | A1 | 1,800,000 | 1,957,374 |
| 1,957,374 | |||
| TOTAL INVESTMENTS | |||
| Total investments (cost $383,325,731) | $399,088,228 | ||
Notes to the fund’s portfolio
Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from August 1, 2016 through January 31, 2017 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures and references to “OTC”, if any, represent over-the-counter.
* Percentages indicated are based on net assets of $408,778,174.
** The Moody’s, Standard & Poor’s or Fitch ratings indicated are believed to be the most recent ratings available at the close of the reporting period for the securities listed. Ratings are generally ascribed to securities at the time of issuance. While the agencies may from time to time revise such ratings, they undertake no obligation to do so, and the ratings do not necessarily represent what the agencies would ascribe to these securities at the close of the reporting period. Securities rated by Fitch are indicated by “/F.” Securities rated by Putnam are indicated by “/P.” The Putnam rating categories are comparable to the Standard & Poor’s classifications. If a security is insured, it will usually be rated by the ratings organizations based on the financial strength of the insurer. For further details regarding security ratings, please see the Statement of Additional Information.
## Forward commitment, in part or in entirety (Note 1).
144A after the name of an issuer represents securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
On Mandatory Put Bonds, the rates shown are the current interest rates at the close of the reporting period and the dates shown represent the next mandatory put dates.
The dates shown parenthetically on prerefunded bonds represent the next prerefunding dates.
The dates shown on debt obligations are the original maturity dates.
The fund had the following sector concentrations greater than 10% at the close of the reporting period
(as a percentage of net assets):
| Prerefunded | 14.6% | ||
| Health care | 14.3 | ||
| Utilities | 14.0 | ||
| Transportation | 12.2 | ||
| State debt | 11.9 | ||
| AMT-Free Municipal Fund 29 |
ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:
Level 1: Valuations based on quoted prices for identical securities in active markets.
Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.
The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:
| Valuation inputs | |||
| Investments in securities: | Level 1 | Level 2 | Level 3 |
| Municipal bonds and notes | $— | $399,088,228 | $— |
| Totals by level | $— | $399,088,228 | $— |
During the reporting period, transfers within the fair value hierarchy, if any, did not represent, in the aggregate, more than 1% of the fund’s net assets measured as of the end of the period. Transfers are accounted for using the end of period pricing valuation method.
The accompanying notes are an integral part of these financial statements.
| 30 AMT-Free Municipal Fund | |
Statement of assets and liabilities 1/31/17 (Unaudited)
| ASSETS | |
| Investment in securities, at value (Note 1): | |
| Unaffiliated issuers (identified cost $383,325,731) | $399,088,228 |
| Cash | 9,685,593 |
| Interest and other receivables | 4,466,641 |
| Receivable for shares of the fund sold | 1,452,014 |
| Receivable for investments sold | 80,000 |
| Receivable for custodian fees (Note 2) | 4,448 |
| Prepaid assets | 48,054 |
| Total assets | 414,824,978 |
| LIABILITIES | |
| Payable for investments purchased | 1,575,920 |
| Payable for purchases of delayed delivery securities (Note 1) | 3,329,220 |
| Payable for shares of the fund repurchased | 474,339 |
| Payable for compensation of Manager (Note 2) | 151,770 |
| Payable for investor servicing fees (Note 2) | 39,286 |
| Payable for Trustee compensation and expenses (Note 2) | 149,153 |
| Payable for administrative services (Note 2) | 4,316 |
| Payable for distribution fees (Note 2) | 95,204 |
| Distributions payable to shareholders | 161,349 |
| Other accrued expenses | 66,247 |
| Total liabilities | 6,046,804 |
| Net assets | $408,778,174 |
| REPRESENTED BY | |
| Paid-in capital (Unlimited shares authorized) (Notes 1 and 4) | $400,959,586 |
| Undistributed net investment income (Note 1) | 196,695 |
| Accumulated net realized loss on investments (Note 1) | (8,140,604) |
| Net unrealized appreciation of investments | 15,762,497 |
| Total — Representing net assets applicable to capital shares outstanding | $408,778,174 |
| COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE | |
| Net asset value and redemption price per class A share | |
| ($327,609,872 divided by 21,989,271 shares) | $14.90 |
| Offering price per class A share (100/96.00 of $14.90)* | $15.52 |
| Net asset value and offering price per class B share ($2,514,684 divided by 168,595 shares)** | $14.92 |
| Net asset value and offering price per class C share ($32,748,304 divided by 2,191,717 shares)** | $14.94 |
| Net asset value and redemption price per class M share ($818,096 divided by 54,746 shares) | $14.94 |
| Offering price per class M share (100/96.75 of $14.94)† | $15.44 |
| Net asset value, offering price and redemption price per class Y share | |
| ($45,087,218 divided by 3,023,794 shares) | $14.91 |
* On single retail sales of less than $100,000. On sales of $100,000 or more the offering price is reduced.
** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
† On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.
The accompanying notes are an integral part of these financial statements.
| AMT-Free Municipal Fund 31 |
Statement of operations Six months ended 1/31/17 (Unaudited)
| INVESTMENT INCOME | |
| Interest income | $8,565,166 |
| Total investment income | 8,565,166 |
| EXPENSES | |
| Compensation of Manager (Note 2) | 969,458 |
| Investor servicing fees (Note 2) | 127,514 |
| Custodian fees (Note 2) | 5,206 |
| Trustee compensation and expenses (Note 2) | 10,858 |
| Distribution fees (Note 2) | 601,713 |
| Administrative services (Note 2) | 7,818 |
| Other | 122,928 |
| Total expenses | 1,845,495 |
| Expense reduction (Note 2) | (11,219) |
| Net expenses | 1,834,276 |
| Net investment income | 6,730,890 |
| Net realized gain on investments (Notes 1 and 3) | 46,288 |
| Net unrealized depreciation of investments during the period | (24,146,573) |
| Net loss on investments | (24,100,285) |
| Net decrease in net assets resulting from operations | $(17,369,395) |
The accompanying notes are an integral part of these financial statements.
| 32 AMT-Free Municipal Fund | |
Statement of changes in net assets
| INCREASE (DECREASE) IN NET ASSETS | Six months ended 1/31/17* | Year ended 7/31/16 |
| Operations | ||
| Net investment income | $6,730,890 | $13,315,431 |
| Net realized gain (loss) on investments | 46,288 | (54,910) |
| Net unrealized appreciation (depreciation) of investments | (24,146,573) | 11,265,292 |
| Net increase (decrease) in net assets resulting | ||
| from operations | (17,369,395) | 24,525,813 |
| Distributions to shareholders (Note 1): | ||
| From ordinary income | ||
| Taxable net investment income | ||
| Class A | (22,048) | (69,384) |
| Class B | (171) | (585) |
| Class C | (2,232) | (5,776) |
| Class M | (54) | (300) |
| Class Y | (3,126) | (7,732) |
| From tax-exempt net investment income | ||
| Class A | (5,394,617) | (10,985,717) |
| Class B | (33,305) | (75,647) |
| Class C | (395,092) | (723,562) |
| Class M | (16,972) | (41,009) |
| Class Y | (851,338) | (1,417,234) |
| Increase (decrease) from capital share transactions (Note 4) | (16,122,795) | 72,577,506 |
| Total increase (decrease) in net assets | (40,211,145) | 83,776,373 |
| NET ASSETS | ||
| Beginning of period | 448,989,319 | 365,212,946 |
| End of period (including undistributed net investment | ||
| income of $196,695 and $184,760, respectively) | $408,778,174 | $448,989,319 |
* Unaudited.
The accompanying notes are an integral part of these financial statements.
| AMT-Free Municipal Fund 33 |
Financial highlights (For a common share outstanding throughout the period)
| INVESTMENT OPERATIONS | LESS DISTRIBUTIONS | RATIOS AND SUPPLEMENTAL DATA | ||||||||||
| Ratio | ||||||||||||
| Net realized | of net investment | |||||||||||
| Net asset value, | and unrealized | Total from | From | Total return | Net assets, | Ratio of expenses | income (loss) | |||||
| beginning | Net investment | gain (loss) | investment | net investment | Total | Net asset value, | at net asset value | end of period | to average | to average | Portfolio | |
| Period ended | of period | income (loss) | on investments | operations | income | distributions | end of period | (%) a | (in thousands) | net assets (%) b | net assets (%) | turnover (%) |
| Class A | ||||||||||||
| January 31, 2017** | $15.71 | .24 | (.81) | (.57) | (.24) | (.24) | $14.90 | (3.67)* | $327,610 | .40 * | 1.54* | 16* |
| July 31, 2016 | 15.28 | .53 | .43 | .96 | (.53) | (.53) | 15.71 | 6.39 | 358,847 | .80c | 3.41c | 11 |
| July 31, 2015 | 15.26 | .57 | .02 | .59 | (.57) | (.57) | 15.28 | 3.86 | 306,111 | .78 | 3.69 | 10 |
| July 31, 2014 | 14.74 | .57 | .52 | 1.09 | (.57) | (.57) | 15.26 | 7.56 | 333,666 | .78 | 3.85 | 11 |
| July 31, 2013 | 15.75 | .55 | (1.01) | (.46) | (.55) | (.55) | 14.74 | (3.06) | 356,787 | .77 | 3.54 | 16 |
| July 31, 2012 | 14.66 | .61 | 1.08 | 1.69 | (.60) | (.60) | 15.75 | 11.77 | 398,419 | .78 | 3.98 | 10 |
| Class B | ||||||||||||
| January 31, 2017** | $15.73 | .19 | (.81) | (.62) | (.19) | (.19) | $14.92 | (3.97)* | $2,515 | .71* | 1.23* | 16* |
| July 31, 2016 | 15.30 | .43 | .43 | .86 | (.43) | (.43) | 15.73 | 5.73 | 2,874 | 1.42c | 2.79c | 11 |
| July 31, 2015 | 15.27 | .47 | .03 | .50 | (.47) | (.47) | 15.30 | 3.29 | 2,757 | 1.40 | 3.07 | 10 |
| July 31, 2014 | 14.76 | .48 | .51 | .99 | (.48) | (.48) | 15.27 | 6.82 | 2,958 | 1.40 | 3.24 | 11 |
| July 31, 2013 | 15.76 | .46 | (1.01) | (.55) | (.45) | (.45) | 14.76 | (3.59) | 3,826 | 1.38 | 2.92 | 16 |
| July 31, 2012 | 14.67 | .52 | 1.08 | 1.60 | (.51) | (.51) | 15.76 | 11.09 | 3,654 | 1.40 | 3.37 | 10 |
| Class C | ||||||||||||
| January 31, 2017** | $15.76 | .18 | (.82) | (.64) | (.18) | (.18) | $14.94 | (4.10)* | $32,748 | .79* | 1.16* | 16* |
| July 31, 2016 | 15.33 | .41 | .43 | .84 | (.41) | (.41) | 15.76 | 5.56 | 33,064 | 1.57c | 2.63c | 11 |
| July 31, 2015 | 15.30 | .45 | .03 | .48 | (.45) | (.45) | 15.33 | 3.13 | 24,934 | 1.55 | 2.92 | 10 |
| July 31, 2014 | 14.78 | .45 | .52 | .97 | (.45) | (.45) | 15.30 | 6.71 | 26,761 | 1.55 | 3.09 | 11 |
| July 31, 2013 | 15.78 | .43 | (1.00) | (.57) | (.43) | (.43) | 14.78 | (3.73) | 37,026 | 1.53 | 2.77 | 16 |
| July 31, 2012 | 14.69 | .49 | 1.09 | 1.58 | (.49) | (.49) | 15.78 | 10.88 | 39,662 | 1.55 | 3.20 | 10 |
| Class M | ||||||||||||
| January 31, 2017** | $15.76 | .22 | (.82) | (.60) | (.22) | (.22) | $14.94 | (3.85)* | $818 | .53* | 1.39 * | 16* |
| July 31, 2016 | 15.33 | .49 | .43 | .92 | (.49) | (.49) | 15.76 | 6.09 | 1,535 | 1.07c | 3.13c | 11 |
| July 31, 2015 | 15.30 | .52 | .03 | .55 | (.52) | (.52) | 15.33 | 3.64 | 1,091 | 1.05 | 3.42 | 10 |
| July 31, 2014 | 14.78 | .53 | .52 | 1.05 | (.53) | (.53) | 15.30 | 7.25 | 988 | 1.05 | 3.58 | 11 |
| July 31, 2013 | 15.78 | .51 | (1.00) | (.49) | (.51) | (.51) | 14.78 | (3.24) | 1,120 | 1.03 | 3.27 | 16 |
| July 31, 2012 | 14.69 | .57 | 1.08 | 1.65 | (.56) | (.56) | 15.78 | 11.44 | 887 | 1.05 | 3.72 | 10 |
| Class Y | ||||||||||||
| January 31, 2017** | $15.73 | .25 | (.82) | (.57) | (.25) | (.25) | $14.91 | (3.62)* | $45,087 | .28* | 1.66* | 16* |
| July 31, 2016 | 15.30 | .56 | .43 | .99 | (.56) | (.56) | 15.73 | 6.63 | 52,668 | .57c | 3.61c | 11 |
| July 31, 2015 | 15.27 | .60 | .03 | .63 | (.60) | (.60) | 15.30 | 4.17 | 30,320 | .55 | 3.92 | 10 |
| July 31, 2014 | 14.75 | .60 | .52 | 1.12 | (.60) | (.60) | 15.27 | 7.80 | 26,374 | .55 | 4.08 | 11 |
| July 31, 2013 | 15.76 | .59 | (1.01) | (.42) | (.59) | (.59) | 14.75 | (2.83) | 30,338 | .53 | 3.77 | 16 |
| July 31, 2012 | 14.66 | .65 | 1.09 | 1.74 | (.64) | (.64) | 15.76 | 12.09 | 32,122 | .55 | 4.17 | 10 |
* Not annualized.
** Unaudited.
a Total return assumes dividend reinvestment and does not reflect the effect of sales charges.
b Includes amounts paid through expense offset arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.
c Reflects a voluntary waiver of certain fund expenses in effect during the period. As a result of such waiver, the expenses of each class reflect a reduction of less than 0.01% as a percentage of average net assets (Note 2).
| The accompanying notes are an integral part of these financial statements. |
| 34 AMT-Free Municipal Fund | AMT-Free Municipal Fund 35 |
Notes to financial statements 1/31/17 (Unaudited)
Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from August 1, 2016 through January 31, 2017.
Putnam AMT-Free Municipal Fund (the fund) is a diversified series of Putnam Tax-Free Income Trust (the Trust), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The goal of the fund is to seek high current income exempt from federal income tax. The fund invests mainly in bonds that pay interest that is exempt from federal income tax, are investment-grade in quality, and have intermediate- to long-term maturities (i.e., three years or longer). The fund does not intend to invest in securities the interest on which is subject to the alternative minimum tax (AMT). Under normal circumstances, Putnam Management invests at least 80% of the fund’s net assets in tax-exempt investments. This investment policy cannot be changed without the approval of the fund’s shareholders. Putnam Management may consider, among other factors, credit, interest rate and prepayment risks, as well as general market conditions, when deciding whether to buy or sell investments.
The fund offers class A, class B, class C, class M and class Y shares. Effective April 1, 2017, purchases of class B shares will be closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment. Class A and class M shares are sold with a maximum front-end sales charge of 4.00% and 3.25%, respectively. Class A shares generally are not subject to a contingent deferred sales charge, and class M and class Y shares are not subject to a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, are not subject to a front-end sales charge and are subject to a contingent deferred sales charge if those shares are redeemed within six years of purchase. Class C shares are subject to a one-year 1.00% contingent deferred sales charge and do not convert to class A shares. The expenses for class A, class B, class C, and class M shares may differ based on the distribution fee of each class, which is identified in Note 2. Class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, and class M shares, but do not bear a distribution fee. Class Y shares are not available to all investors.
In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.
The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.
Under the fund’s Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.
Note 1: Significant accounting policies
The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.
Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined
| 36 AMT-Free Municipal Fund | |
by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.
Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.
Tax-exempt bonds and notes are generally valued on the basis of valuations provided by an independent pricing service approved by the Trustees. Such services use information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. These securities will generally be categorized as Level 2.
Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.
Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.
Interest income is recorded on the accrual basis. All premiums/discounts are amortized/accreted on a yield-to-maturity basis. The premium in excess of the call price, if any, is amortized to the call date; thereafter, any remaining premium is amortized to maturity.
Securities purchased or sold on a delayed delivery basis may be settled at a future date beyond customary settlement time; interest income is accrued based on the terms of the securities. Losses may arise due to changes in the fair value of the underlying securities or if the counterparty does not perform under the contract.
Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.
Lines of credit The fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 million unsecured uncommitted line of credit, both provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to the higher of (1) the Federal Funds rate and (2) the overnight LIBOR plus 1.25% for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit plus a $25,000 flat fee and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.
Federal taxes It is the policy of the fund to distribute all of its income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
| AMT-Free Municipal Fund 37 |
The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.
At July 31, 2016, the fund had a capital loss carryover of $7,502,443 available to the extent allowed by the Code to offset future net capital gain, if any. The amounts of the carryovers and the expiration dates are:
| Loss carryover | |||
| Short-term | Long-term | Total | Expiration |
| $3,738,439 | N/A | $3,738,439 | * |
| 3,337,309 | N/A | 3,337,309 | July 2018 |
| 426,695 | N/A | 426,695 | July 2019 |
* Under the Regulated Investment Company Modernization Act of 2010, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred will be required to be utilized prior to the losses incurred in pre-enactment tax years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
Pursuant to federal income tax regulations applicable to regulated investment companies, the fund has elected to defer certain capital losses of $625,366 recognized during the period between November 1, 2015 and July 31, 2016 to its fiscal year ending July 31, 2017.
The aggregate identified cost on a tax basis is $383,253,471, resulting in gross unrealized appreciation and depreciation of $21,210,105 and $5,375,348, respectively, or net unrealized appreciation of $15,834,757.
Distributions to shareholders Income dividends are recorded daily by the fund and are paid monthly. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations.
Expenses of the Trust Expenses directly charged or attributable to any fund will be paid from the assets of that fund. Generally, expenses of the Trust will be allocated among and charged to the assets of each fund on a basis that the Trustees deem fair and equitable, which may be based on the relative assets of each fund or the nature of the services performed and relative applicability to each fund.
Note 2: Management fee, administrative services and other transactions
The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:
| 0.590% | of the first $5 billion, | 0.390% | of the next $50 billion, | |
| 0.540% | of the next $5 billion, | 0.370% | of the next $50 billion, | |
| 0.490% | of the next $10 billion, | 0.360% | of the next $100 billion and | |
| 0.440% | of the next $10 billion, | 0.355% | of any excess thereafter. | |
For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.220% of the fund’s average net assets.
| 38 AMT-Free Municipal Fund | |
Putnam Management has contractually agreed, through November 30, 2017, to waive fees or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.
Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.40% of the average net assets of the portion of the fund managed by PIL.
The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.
Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.
Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class M, and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribution account (“retail account”) of the fund; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts.
Prior to September 1, 2016, Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class M, class Y shares that included (1) a per account fee for each retail account of the fund and each of the other funds in its specified category, which was totaled and then allocated to each fund in the category based on its average daily net assets; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Prior to September 1, 2016, Putnam Investor Services, Inc. had agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes would not exceed an annual rate of 0.320% of the fund’s average assets attributable to such accounts.
During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:
| Class A | $101,531 | Class M | 355 | |
| Class B | 786 | Class Y | 14,883 | |
| Class C | 9,959 | Total | $127,514 | |
The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. For the reporting period, the fund’s expenses were reduced by $11,219 under the expense offset arrangements.
Each Independent Trustee of the fund receives an annual Trustee fee, of which $319, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.
The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.
| AMT-Free Municipal Fund 39 |
The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.
The fund has adopted distribution plans (the “Plans”) with respect to the following class shares pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (“Maximum %”) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the following annual rate (“Approved %”) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:
| Maximum % | Approved % | Amount | |
| Class A | 0.35% | * | $413,854 |
| Class B | 1.00% | 0.85% | 11,604 |
| Class C | 1.00% | 1.00% | 173,193 |
| Class M | 1.00% | 0.50% | 3,062 |
| Total | $601,713 | ||
* Equals the weighted average of (i) 0.20% on the net assets of the fund attributable to class A shares purchased and paid for prior to April 1, 2005 and (ii) 0.25% on all other net assets of the fund attributable to class A shares.
For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $14,430 and $30 from the sale of class A and class M shares, respectively, and received $82 and $556 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.
A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received no monies on class A redemptions.
Note 3: Purchases and sales of securities
During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:
| Cost of purchases | Proceeds from sales | |
| Investments in securities (Long-term) | $66,541,430 | $69,142,068 |
| U.S. government securities (Long-term) | — | — |
| Total | $66,541,430 | $69,142,068 |
The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.
| 40 AMT-Free Municipal Fund | |
Note 4: Capital shares
At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. Transactions in capital shares were as follows:
| SIX MONTHS ENDED 1/31/17 | YEAR ENDED 7/31/16 | |||
| Class A | Shares | Amount | Shares | Amount |
| Shares sold | 2,807,959 | $43,171,010 | 6,023,811 | $93,321,657 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 308,842 | 4,693,102 | 601,316 | 9,291,999 |
| 3,116,801 | 47,864,112 | 6,625,127 | 102,613,656 | |
| Shares repurchased | (3,964,452) | (59,984,398) | (3,815,550) | (58,989,647) |
| Net increase (decrease) | (847,651) | $(12,120,286) | 2,809,577 | $43,624,009 |
| SIX MONTHS ENDED 1/31/17 | YEAR ENDED 7/31/16 | |||
| Class B | Shares | Amount | Shares | Amount |
| Shares sold | 6,671 | $100,756 | 38,095 | $590,720 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 2,048 | 31,155 | 4,597 | 71,086 |
| 8,719 | 131,911 | 42,692 | 661,806 | |
| Shares repurchased | (22,823) | (344,648) | (40,174) | (621,108) |
| Net increase (decrease) | (14,104) | $(212,737) | 2,518 | $40,698 |
| SIX MONTHS ENDED 1/31/17 | YEAR ENDED 7/31/16 | |||
| Class C | Shares | Amount | Shares | Amount |
| Shares sold | 423,201 | $6,541,165 | 676,351 | $10,515,460 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 22,688 | 345,367 | 39,620 | 613,912 |
| 445,889 | 6,886,532 | 715,971 | 11,129,372 | |
| Shares repurchased | (352,439) | (5,335,378) | (244,589) | (3,795,064) |
| Net increase | 93,450 | $1,551,154 | 471,382 | $7,334,308 |
| SIX MONTHS ENDED 1/31/17 | YEAR ENDED 7/31/16 | |||
| Class M | Shares | Amount | Shares | Amount |
| Shares sold | 634 | $9,777 | 25,105 | $387,966 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 1,077 | 16,470 | 2,591 | 40,160 |
| 1,711 | 26,247 | 27,696 | 428,126 | |
| Shares repurchased | (44,368) | (671,676) | (1,466) | (22,743) |
| Net increase (decrease) | (42,657) | $(645,429) | 26,230 | $405,383 |
| SIX MONTHS ENDED 1/31/17 | YEAR ENDED 7/31/16 | |||
| Class Y | Shares | Amount | Shares | Amount |
| Shares sold | 587,768 | $9,004,398 | 1,753,881 | $27,153,658 |
| Shares issued in connection with | ||||
| reinvestment of distributions | 43,817 | 666,672 | 71,987 | 1,114,753 |
| 631,585 | 9,671,070 | 1,825,868 | 28,268,411 | |
| Shares repurchased | (956,880) | (14,366,567) | (459,005) | (7,095,303) |
| Net increase (decrease) | (325,295) | $(4,695,497) | 1,366,863 | $21,173,108 |
| AMT-Free Municipal Fund 41 |
Note 5: Market, credit and other risks
In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default.
Note 6: New pronouncements
In October 2016, the SEC adopted amendments to rules under the Investment Company Act of 1940 (“final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. The final rules amend Regulation S-X and require funds to provide standardized, enhanced derivative disclosure in fund financial statements in a format designed for individual investors. The amendments to Regulation S-X also update the disclosures for other investments and investments in and advances to affiliates and amend the rules regarding the general form and content of fund financial statements. The compliance date for the amendments to Regulation S-X is August 1, 2017. Putnam Management is currently evaluating the amendments and their impact, if any, on the fund’s financial statements.
| 42 AMT-Free Municipal Fund | |
Putnam family of funds
The following is a list of Putnam’s open-end mutual funds offered to the public. Investors should carefully consider the investment objective, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, contact your financial advisor or call Putnam Investor Services at 1-800-225-1581. Please read the prospectus carefully before investing.
| Growth | Income |
| Growth Opportunities Fund | American Government Income Fund |
| International Growth Fund | Diversified Income Trust |
| Multi-Cap Growth Fund | Emerging Markets Income Fund |
| Small Cap Growth Fund | Floating Rate Income Fund |
| Global Income Trust | |
| Blend | Government Money Market Fund* |
| Capital Opportunities Fund | High Yield Advantage Fund |
| Capital Spectrum Fund | High Yield Trust |
| Emerging Markets Equity Fund | Income Fund |
| Equity Spectrum Fund | Money Market Fund† |
| Europe Equity Fund | Short Duration Income Fund |
| Global Equity Fund | U.S. Government Income Trust |
| International Capital Opportunities Fund | |
| International Equity Fund | Tax-free Income |
| Investors Fund | AMT-Free Municipal Fund |
| Low Volatility Equity Fund | Intermediate-Term Municipal Income Fund |
| Multi-Cap Core Fund | Short-Term Municipal Income Fund |
| Research Fund | Tax Exempt Income Fund |
| Tax-Free High Yield Fund | |
| Value | |
| Convertible Securities Fund | State tax-free income funds‡: |
| Equity Income Fund | Arizona, California, Massachusetts, Michigan, |
| Global Dividend Fund | Minnesota, New Jersey, New York, Ohio, |
| The Putnam Fund for Growth and Income | and Pennsylvania. |
| International Value Fund | |
| Multi-Cap Value Fund | |
| Small Cap Value Fund |
| AMT-Free Municipal Fund 43 |
| Absolute Return | Retirement Income Fund Lifestyle 1 — a portfolio |
| Absolute Return 100 Fund® | with managed allocations to stocks, bonds, |
| Absolute Return 300 Fund® | and money market investments to generate |
| Absolute Return 500 Fund® | retirement income. |
| Absolute Return 700 Fund® | |
| RetirementReady® Funds — portfolios with | |
| Global Sector | adjusting allocations to stocks, bonds, and |
| Global Consumer Fund | money market instruments, becoming more |
| Global Energy Fund | conservative over time. |
| Global Financials Fund | |
| Global Health Care Fund | RetirementReady® 2060 Fund |
| Global Industrials Fund | RetirementReady® 2055 Fund |
| Global Natural Resources Fund | RetirementReady® 2050 Fund |
| Global Sector Fund | RetirementReady® 2045 Fund |
| Global Technology Fund | RetirementReady® 2040 Fund |
| Global Telecommunications Fund | RetirementReady® 2035 Fund |
| Global Utilities Fund | RetirementReady® 2030 Fund |
| RetirementReady® 2025 Fund | |
| Asset Allocation | RetirementReady® 2020 Fund |
| George Putnam Balanced Fund | |
| Global Asset Allocation Funds — four | |
| investment portfolios that spread your money | |
| across a variety of stocks, bonds, and money | |
| market instruments. | |
| Dynamic Asset Allocation Balanced Fund | |
| Dynamic Asset Allocation Conservative Fund | |
| Dynamic Asset Allocation Growth Fund | |
| Dynamic Risk Allocation Fund |
* You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
† You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the fund’s liquidity falls below required minimums because of market conditions or other factors. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund’s sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
‡ Not available in all states.
Check your account balances and the most recent month-end performance in the Individual Investors section at putnam.com.
| 44 AMT-Free Municipal Fund | |
Fund information
Founded over 75 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage over 100 funds across income, value, blend, growth, asset allocation, absolute return, and global sector categories.
| Investment Manager | Trustees | James F. Clark |
| Putnam Investment | Jameson A. Baxter, Chair | Vice President and |
| Management, LLC | Kenneth R. Leibler, Vice Chair | Chief Compliance Officer |
| One Post Office Square | Liaquat Ahamed | |
| Boston, MA 02109 | Ravi Akhoury | Michael J. Higgins |
| Barbara M. Baumann | Vice President, Treasurer, | |
| Investment Sub-Advisor | Robert J. Darretta | and Clerk |
| Putnam Investments Limited | Katinka Domotorffy | |
| 57–59 St James’s Street | Catharine Hill | Janet C. Smith |
| London, England SW1A 1LD | John A. Hill | Vice President, |
| Paul L. Joskow | Principal Financial Officer, | |
| Marketing Services | Robert E. Patterson | Principal Accounting Officer, |
| Putnam Retail Management | George Putnam, III | and Assistant Treasurer |
| One Post Office Square | Robert L. Reynolds | |
| Boston, MA 02109 | Manoj Singh | Susan G. Malloy |
| W. Thomas Stephens | Vice President and | |
| Custodian | Assistant Treasurer | |
| State Street Bank | Officers | |
| and Trust Company | Robert L. Reynolds | Mark C. Trenchard |
| President | Vice President and | |
| Legal Counsel | BSA Compliance Officer | |
| Ropes & Gray LLP | Jonathan S. Horwitz | |
| Executive Vice President, | Nancy E. Florek | |
| Principal Executive Officer, | Vice President, Director of | |
| and Compliance Liaison | Proxy Voting and Corporate | |
| Governance, Assistant Clerk, | ||
| Robert T. Burns | and Associate Treasurer | |
| Vice President and | ||
| Chief Legal Officer |
This report is for the information of shareholders of Putnam AMT-Free Municipal Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.
Item 2. Code of Ethics: |
| Not applicable |
Item 3. Audit Committee Financial Expert: |
| Not applicable |
Item 4. Principal Accountant Fees and Services: |
| Not applicable |
Item 5. Audit Committee of Listed Registrants |
| Not applicable |
Item 6. Schedule of Investments: |
| The registrant's schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above. |
Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies: |
| Not applicable |
Item 8. Portfolio Managers of Closed-End Investment Companies |
| Not Applicable |
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers: |
| Not applicable |
Item 10. Submission of Matters to a Vote of Security Holders: |
| Not applicable |
Item 11. Controls and Procedures: |
| (a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. |
| (b) Changes in internal control over financial reporting: Not applicable |
| Item 12. Exhibits: |
| (a)(1) Not applicable |
| (a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith. |
| (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith. |
| SIGNATURES |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |
| Putnam Tax Free Income Trust |
| By (Signature and Title): |
| /s/ Janet C. Smith Janet C. Smith Principal Accounting Officer |
| Date: March 31, 2017 |
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. |
| By (Signature and Title): |
| /s/ Jonathan S. Horwitz Jonathan S. Horwitz Principal Executive Officer |
| Date: March 31, 2017 |
| By (Signature and Title): |
| /s/ Janet C. Smith Janet C. Smith Principal Financial Officer |
| Date: March 31, 2017 |